Why is the 17-story Center City apartment building across from Monk’s vacant and covered in


Visitors to Monk’s Café, Center City’s venerable Belgian beer bar, may have noticed that the handsome Beaux Arts apartment tower across the street has seen better days.

While it’s unusual for a building near Rittenhouse Square — one of Philadelphia’s toniest neighborhoods — to sit vacant, the tower at 16th and Spruce, formerly known as the Sprucemont, has been empty for years.

Graffiti tags crawl up the 17-story building’s flanks, and glass is missing from numerous windows. A debris chute mounted on the side of the building for demolition work leads to nothing, as if construction crews had vanished midway through their job.

And that’s basically what happened. Records show that a multimillion redevelopment project went bust, and the building was recently placed into court-appointed receivership.

Bankruptcy filing

According to court filings, Citizens Bank lent a company called USRE 257 LLC — which records connect to real estate investors David Daniel and David Schreiber — millions of dollars to rehab the apartment building. The company filed for bankruptcy earlier this year, and the 107-year-old tower was left to rot.

Earlier this month, the developers formally lost control of the building. A Philadelphia’s Court of Common Pleas judge approved a request from the bank to place the building under the control of a third party to stabilize it while financial matters are worked out in court.

“We’re not associated with that building anymore,” Daniel, a Bala Cynwyd-based real estate investor, said by phone before hanging up.

Representatives for Citizens Bank declined to comment.

Daniel, who goes by “Dovid,” lists his background as developing and managing multifamily and industrial properties, according to a profile on Brixall, a real estate investment firm where he is listed as a principal.

“He combines his free market, libertarian approach with scientific precision to make data-driven decisions and create strategic partnerships across borders and categories,” the website reads.

USRE 257 acquired the Sprucemont for more than $11 million in 2019 with plans to rehab the historically certified building into 61 rental units, a slight reduction from the earlier apartment layout to allow for some larger and more luxurious homes. In November 2020, the company secured a $14 million loan from Citizens Bank for the project.

The architect for the project, Stuart Rosenberg, said that what was meant to be a mainly cosmetic renovation quickly became a much more expensive undertaking as it became clear that building systems like the heating and plumbing needed a serious update.

“This happens to a lot of developers,” Rosenberg said. “They bite off more than they can chew, and they underestimate the difficulty, complexity, and expense of renovating old buildings.”

Work stopped abruptly in 2022, and the bank sent USRE 257 a notice of default last May. In September, attorneys for Citizens Bank filed action against the company in Philadelphia courts, seeking to collect on roughly $12 million in debt and fees.

USRE 257 filed for Chapter 11 bankruptcy less than two weeks later.

The bank’s court filings also allege that the developers stopped paying construction firms attached to the project. At least six contractors have filed legal actions against the company since early 2022.

According to Citizens Bank’s complaint, “Construction activity at the mortgaged property has ceased, and it appears borrower has abandoned it, leaving it unsecured and resulting in a danger to the public.”

Neighbors bear the burden

For those who live nearby, the vacant tower quickly became an eyesore and a safety concern.

Neighbors said they first noticed that a portable toilet used by construction contractors was not being cleaned. Graffiti began to appear on the exterior of the building, and a neighbor’s alley surveillance camera footage showed people breaking in at night.

“It’s unnerving when you’re living with your family next to a building where, at all hours of the night, people are breaking in and up to no good,” said Sean Handler, who lives next door and installed a gate across the alley at his own expense.

The property continues to accumulate violations from the city’s Department of Licenses and Inspections. There have been eight failed inspections this year.

Citizens Bank is pushing for the building to be sold to recoup some of what it’s owed. The bank sought an emergency petition to put the building into court-appointed receivership to stabilize the building, citing the damage to structure — and the bank’s investment — noting that representatives for USRE had stopped responding to emails and voicemails.

On Nov. 8, a judge granted the receivership order, which gave SREA Property Management LLC effective control of the building. According to legal filings, receivership would allow a new entity to make repairs that are “desirable for the successful marketing, management, and sale” of the building.

Rosenberg, the architect, emphasizes that the tower itself is structurally sound.

“This building is very robust; it’s not going anywhere,” Rosenberg said. “It’s not the structure. It’s just the building systems.”

There are interested buyers, such as Gowtham Reddy of New Jersey-based Genesis Capital. But the increasingly difficult financing environment amid historically fast interest rate increases has made it challenging to move forward.

“We’re trying to take ownership of it, but it’s a complicated transaction,” Reddy said.

In the meantime, neighbors are stuck with an eyesore.

For Handler, who moved in next door with his family in 2022, the vacant tower has been a blight — although it hasn’t dampened his family’s enthusiasm for Center City living.

“We love living in the city, and we are hopeful that a wonderful owner will take possession of it and turn it into the jewel that deserves to be,” Handler said.



This article was originally published by a www.inquirer.com . Read the Original article here. .