Committee on Financial Hardship — Jan 27, 2021

COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 1 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES MEETING OF THE COMMITTEE ON FINANCIAL HARDSHIP OF THE PHILADELPHIA HISTORICAL COMMISSION WEDNESDAY, 27 JANUARY 2021 REMOTE MEETING ON ZOOM ROBERT THOMAS, CHAIR CALL TO ORDER START TIME IN AUDIO RECORDING: 00:00:00 The Chair called the meeting to order at 3:00 p.m. The following Committee members joined him: Committee Member Present Absent Recused Robert Thomas, AIA, Chair X Donna Carney (Dept. of Planning & Development) X Mark Dodds (Division of Housing & Community Development) X Kelly Edwards, MUP X Dan McCoubrey, AIA, LEED AP BD+C X Owing to public health concerns surrounding the COVID-19 virus, all Commissioners, staff, applicants, and public attendees participated in the meeting remotely via Zoom video and audio-conferencing software. The following staff members were present: Jonathan Farnham, Executive Director Kim Chantry, Historic Preservation Planner III Laura DiPasquale, Historic Preservation Planner II Meredith Keller, Historic Preservation Planner II Leonard Reuter, Esq., Law Department Megan Cross Schmitt, Historic Preservation Planner II The following persons were present: Jamaine Smith Joseph McCarthy Kyle Meiser, Philly Office Retail Jaime Rodriquez, Philly Office Retail Kate Schoener, Philly Office Retail Ken Weinstein, Philly Office Retail Aaron Wunsch Georgette Bartell Linda Mayes Paul Steinke, Preservation Alliance Dee Dee Risher Nichole Renee Currie Allison Weiss, SoLo/Germantown Civic Association Keith Brooks Zarah Adams Justin Spivey, Wiss, Janney, Elstner Associates, Inc. COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 2 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES ADDRESS: 113-29 BERKLEY ST Proposal: Demolish building Review Requested: Final Approval Owner: Wayne Junction Properties Applicant: Angie Williamson, Philly Office Retail History: 1884; Keystone Dry Plate & Film Works; Moore Push Pin Individual Designation: 12/12/2014 District Designation: Wayne Junction Historic District, Contributing, 7/13/2018 Staff Contact: Kim Chantry, kim.chantry@phila.gov BACKGROUND: This application proposes to demolish the former industrial building at 113-29 Berkley Street in the Germantown section of the city. It claims that the building cannot be feasibly reused, that requiring its preservation would impose a financial hardship on the property owner. The financial hardship application will be reviewed by the Architectural Committee and Committee on Financial Hardship as well as the Historical Commission. The building at 113-29 Berkley Street is a two-story plus basement former light-manufacturing building constructed in 1884 for the Keystone Dry Plate & Film Works. It is 13,320 square feet in size. The property was

by the Architectural Committee and Committee on Financial Hardship as well as the Historical Commission. The building at 113-29 Berkley Street is a two-story plus basement former light-manufacturing building constructed in 1884 for the Keystone Dry Plate & Film Works. It is 13,320 square feet in size. The property was purchased by Wayne Junction Properties in 2018. Its last use was by Recovery King, an addiction treatment center. The Historical Commission individually designated the property as historic in 2014, and again in 2018 as a contributing building to the Wayne Junction Historic District. Both nominations were authored by Historical Commission staff. The nominations argued that the building was significant under Criteria for Designation A, G, and J. Satisfying Criterion A, John Carbutt, founder of the Keystone Dry Plate & Film Works, was a pioneer of mass-market dry plates for photography, and produced the first commercial x- ray plates in the world in his Wayne Junction factory. Edwin Moore, who operated out of the factory beginning in 1912, was the inventor of push-pins. He went on to patent picture hangers and map tacks, also manufactured out of the Wayne Junction factory. Satisfying Criteria G and J, Wayne Junction Station was the locus of mills and factories that capitalized on rail transportation to move in raw goods and send out finished products. Other industries soon followed the lead of John Carbutt, and Berkley Street between Germantown Avenue and Wayne Avenue became an industrial headquarters. Section 14-1005(6)(d) of the historic preservation ordinance prohibits the Historical Commission from approving the complete demolition of a historic building unless the Historical Commission finds that issuance of the building permit is necessary in the public interest, or unless the Historical Commission finds that the building cannot be used for any purpose for which it is or may be reasonably adapted. In order to show that the building cannot be used for any purpose for which it is or may be reasonably adapted in order to justify a demolition, the owner must demonstrate that the sale of the property is impracticable, that commercial rental cannot provide a reasonable rate of return, and that other potential uses of the property are foreclosed. This application claims that the condition of the building and the cost to repair it prohibit a sale or reuse of the building. Philly Office Retail, LLC is the management company of Wayne Junction Properties, with Ken

rate of return, and that other potential uses of the property are foreclosed. This application claims that the condition of the building and the cost to repair it prohibit a sale or reuse of the building. Philly Office Retail, LLC is the management company of Wayne Junction Properties, with Ken Weinstein as the owner of both. The application includes a cover letter from Mr. Weinstein that explains that he is seeking a finding of financial hardship owing to four main reasons: 1) the building cannot be used for any purpose for which it is, or may be, reasonably adapted, owing to years of deferred maintenance under prior ownership which requires immediate and costly repairs of critical elements; 2) the building cannot provide a reasonable rate of return as is, and COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 3 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES cannot be renovated to provide a reasonable rate of return; 3) the inability to obtain state and/or federal tax credits further increases the projected losses of a renovation; and 4) the blighted property negatively impacts ongoing redevelopment efforts in the Wayne Junction area. The cover letter concludes that: “the rehabilitation of 113 Berkley Street is impractical and infeasible due to the significant cost of necessary repairs compared to the after renovated value of the property. This creates a financial hardship for the owner which would result in a substantial financial loss both in terms of overall value and ongoing cash flow. We respectfully request that the Philadelphia Historical Commission grant this application for financial hardship.” The application includes an affidavit from Mr. Weinstein, and multiple exhibits. Exhibit “A” provides a financial expense report for 2019 and 2020 for the property. In those two years, Philly Office Retail spent $544,518 on the property. Of that, $290,000 was for removing accessory structures, site clearing and environmental remediation, and $78,000 was for architectural and engineering costs associated with the planned redevelopment of the remaining structure. Exhibit “B” provides an appraisal for the property. The cost of buying and renovating the property is $2.147 million more than the as-completed appraised market value, $3.9 million versus $1.8 million. Exhibit “C” provides a structural engineering report. The report concludes that the preservation of the building may not be economically feasible owing to its structural condition and the significant work required to stabilize and upgrade it to meet

more than the as-completed appraised market value, $3.9 million versus $1.8 million. Exhibit “C” provides a structural engineering report. The report concludes that the preservation of the building may not be economically feasible owing to its structural condition and the significant work required to stabilize and upgrade it to meet code requirements. Exhibit “D” shows the original plans for adaptive reuse. The Historical Commission staff confirms that iterations of these plans were reviewed and approved over the past two years. Exhibit “E” provides financial projections including proposed renovation budgets, pro formas, and projected rent rolls. Even with anticipated rents for all three floors, the analysis predicts a negative cash flow through its first decade with a net present value of negative $349,189. Incorporating historic tax credits results in negative cash flows every year and a net present value of negative $437,292. The analysis adjusting for a light-industrial tenant predicts negative cash flows every year and a net present value of negative $2,274,642. The owner acknowledges that Philly Office Retail has been willing to take a loss on initial value of historic properties in the past, but states that this loss is more than can be reasonably absorbed. Exhibit “F” includes letters of support for the application from immediate neighboring businesses. Exhibit “G” provides interior and exterior photographs of the subject building. The application concludes with meeting minutes from the designation of the property, and a copy of the Wayne Junction Historic District nomination. STAFF RECOMMENDATION: The staff recommends that:  The complete demolition of the designated resource triggers the demolition prohibition in Section 14-1005(6)(d) of the historic preservation ordinance. For the Historical Commission to approve the complete demolition, the applicant must demonstrate that the demolition is necessary in the public interest or that the building cannot be used for any purpose for which it is or may be reasonably adapted.  The construction cost estimate relative to the appraised value indicates that it is unlikely the building can be used for any purpose for which it is or may be reasonably adapted.  The construction cost estimate relative to the appraised value indicates that it is likely that a sale of the building for reuse purposes is impracticable without a substantial financial loss.  The financial analysis demonstrates that the building cannot be used for any purpose for which it is or may be reasonably adapted.  The Historical Commission

appraised value indicates that it is likely that a sale of the building for reuse purposes is impracticable without a substantial financial loss.  The financial analysis demonstrates that the building cannot be used for any purpose for which it is or may be reasonably adapted.  The Historical Commission may approve the application, pursuant to Section 14- 1005(6)(d) of the historic preservation ordinance. COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 4 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES START TIME OF DISCUSSION IN ZOOM RECORDING: 00:02:53 PRESENTERS:  Ms. Chantry presented the application to the Committee on Financial Hardship.  Property owner Ken Weinstein, and Kyle Meiser, Jaime Rodriguez, and Kate Schoener from Philly Office Retail represented the application. DISCUSSION:  Mr. Weinstein provided background on Philly Office Retail and its history of reusing historic buildings. He stated that a substantial amount of money has been spent on this building already, in an effort to stabilize it while plans were being developed, but that attempts to save the building have been exhausted. He stated that the building is too structurally unsound to save, but that he thankfully does not anticipate this same situation with any of the other Wayne Junction properties owned by his company. He stated that he hired Powers & Company to try to qualify for historic tax credits. After working with them for several months, it was determined that the cost for complying with the strict National Park Service requirements would be more than 20%, which was a net loss. He stated that he applied to the state to get Keystone Opportunity Zone tax credits, but was refused. He explained that he had strong anticipated leases on all three floors of the building, but even with those leases, there was a significant negative cash flow. He stated that the estimated cost to renovate the building is close to $4 million, but the appraised value would be $1.8 million. He concluded that the loss is more than can be absorbed. He stated that the deferred maintenance of the property was much worse than anticipated, and it recently became apparent to the team that the deferred maintenance has made it so the building is not able to be saved.  Mr. Thomas reviewed Option #1 of the ten-year pro formas. He asked about the tenants who were interested in leasing the building. o Mr.

anticipated, and it recently became apparent to the team that the deferred maintenance has made it so the building is not able to be saved.  Mr. Thomas reviewed Option #1 of the ten-year pro formas. He asked about the tenants who were interested in leasing the building. o Mr. Weinstein responded that the second floor was going to be office space, the first floor was going to be a café, and the lower level was going to be office suites. He confirmed that even with these tenants, the property did not provide a reasonable rate of return.  Mr. Thomas reviewed Option #2 of the ten-year pro formas. o Ms. Schoener explained that Option #2 is a light-industrial use, to determine what would happen to have a rehabilitation for a tenant that does not require a higher level of finishes. She explained that most of the cost is the structure and the restoration of the building, and not the finishes, so this pro forma shows that the construction costs are similar to Option #1, but the rents are far lower.  Mr. Thomas reviewed Option #3 of the ten-year pro formas. o Ms. Schoener explained that Option #3 is if historic tax credits were utilized. The construction cost is higher because of interior construction and finishes, and the increase in construction cost is higher than the tax credit. She outlined several interior requirements, including the ceiling which would need to be demolished and reconstructed because of the interior floors, and a different window type that was specified by the National Park Service. o Mr. Weinstein confirmed the higher construction cost, and explained that he has worked with Powers & Company on tax credit projects in the past, but this was the first instance where it was not going to work. He confirmed that the Historical Commission staff was willing to approve a scope for the rear wall that he was told the National Park Service would not approve. COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 5 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES  Mr. McCoubrey summarized the findings and conclusions from the review of the application by the Architectural Committee on 26 January 2021. He explained that the Architectural Committee voted 3-2 to recommend denial of the application, concluding that demolition of a building listed on the Philadelphia Register of Historic Places does not

McCoubrey summarized the findings and conclusions from the review of the application by the Architectural Committee on 26 January 2021. He explained that the Architectural Committee voted 3-2 to recommend denial of the application, concluding that demolition of a building listed on the Philadelphia Register of Historic Places does not satisfy the Secretary of the Interior’s Standards for the Treatment of Historic Properties. He stated that the Architectural Committee found the cost per square foot estimates to be reasonable, and that there was a negative cash flow for the first 10 years. There was discussion of mothballing and waiting until the market improves or saving a portion of the building, but none of these scenarios would help with the negative cash flow. He stated that the Architectural Committee also looked closely at the structural report by Larsen & Landis Structural Engineers, and noted that there is a lot of settlement and cracking and likely inadequate foundations, in addition to a completely undersized interior structure. He noted that the roof trusses were found to be in acceptable condition.  Ms. Carney stated that she is impressed with the quality and amount of documentation provided in the application, and that the structural report was compelling. She commented that no one wants to see the demolition of a historic building. She noted that the nomination documents a creek running through this site on the earliest maps, and the issue of settlement for future development is concerning and should be explored further.  Mr. Thomas asked about a sale of the property being impracticable. o Mr. Weinstein responded that it took them several years to acquire the property, and they overpaid in order to try to improve Wayne Junction. He stated that this is what Philly Office Retail does, and it is hard for him to imagine a scenario where a different owner could have a different approach but still comply with City building code and still achieve a greatly reduced construction cost. He stated that his team consulted with others along the way and does not see how this would be possible. He stated that if the property were to transfer to a different owner, that owner would face the same issues that his team does. He concluded that a sale of the property is impracticable.  Mr. Thomas commented that this building is part of a historic district, and the Committee will

stated that if the property were to transfer to a different owner, that owner would face the same issues that his team does. He concluded that a sale of the property is impracticable.  Mr. Thomas commented that this building is part of a historic district, and the Committee will need to look at the impact of its decision on the historic district.  Ms. Edwards asked about the date of acquisition compared to the date of historic designation for the property. o Mr. Weinstein responded that the acquisition date was late 2018, and the property was first designated as historic in late 2014.  Mr. Dodds asked Mr. McCoubrey if the Architectural Committee discussed the condition of the façade. o Mr. McCoubrey responded that the façade is fairly deteriorated, especially at the rear. The structural engineer suggested that the rear wall and part of the side walls needed to be removed and reconstructed. The front wall has been painted so the paint would need to be removed and the masonry assessed. It would certainly require repointing and masonry replacement. He pointed out evidence of water infiltration on photographs of the front façade. He reiterated that this Committee needs to look at the cost to rehabilitate the building compared to the rate of return for the property owner. He acknowledged that this building could be rehabilitated if the economic circumstances were different, but the economic conditions necessary for a feasible reuse do not currently exist at Wayne Junction. COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 6 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES o Mr. Weinstein added that the recommendation from the mason for removing the paint was to sandblast it, owing to the type of paint, which would cause even further damage to the brick. PUBLIC COMMENT:  Paul Steinke, representing the Preservation Alliance, explained that Ken Weinstein has been a member of the Preservation Alliance’s board of directors for less than a year, and because of that, the Preservation Alliance wanted to handle this carefully. He stated that they decided to retain an independent structural engineer to review the Larsen & Landis Structural Engineers report in the application and to conduct a visual inspection of the building. He stated that this inspection was undertaken one day one day before this meeting, on 26 January 2021. The Preservation Alliance retained Justin Spivey of Wiss, Janney,

structural engineer to review the Larsen & Landis Structural Engineers report in the application and to conduct a visual inspection of the building. He stated that this inspection was undertaken one day one day before this meeting, on 26 January 2021. The Preservation Alliance retained Justin Spivey of Wiss, Janney, Elstner Associates, Inc., who visited the site with Mr. Steinke and Ian Smith of the Preservation Alliance, and Mr. Weinstein and others from Philly Office Retail. He explained that Mr. Spivey prepared a letter which he shared with the Preservation Alliance earlier today. The Preservation Alliance was not able to share that letter with this Committee owing to timing, but they intend to do so as soon as this meeting concludes. He asked that Mr. Spivey be allowed to speak next and summarize his findings.  Justin Spivey, of Wiss, Janney, Elstner Associates, Inc., concurred with Mr. Steinke’s timeline. He stated that there is ambiguity if the Larsen & Landis Structural Engineers report is utilizing the existing building code or the more stringent requirement of current building code for new structures. He explained that the existing building code would permit out-of-level floors to remain. He agreed that many elements of the building may need attention, but he is not sure that nearly all elements need repair or reinforcement as stated in the Larsen & Landis report. He acknowledged that there are tax credit implications for the scope of work proposed in the application, owing to floors being replaced. He noted that there may be a stream running beneath the building, so the scope of foundation work may need to be altered. He stated that the proposed rehabilitation scope in the application shows essentially constructing a new building inside the existing building, so perhaps the analysis could be updated to consider alternative approaches such as preserving only the brick facades and attaching those to a new building. He stated that in the proposed rehabilitation design, which is the basis for the financial hardship application, the front and most of the two side walls seem to be in repairable condition and could be retained, cost not withstanding. He suggested considering an alternative where the rear wall and roof is removed and a new building is constructed inside, which perhaps may be less expensive than trying to work beneath the existing roof. He explained that the columns that support the second floor actually

be retained, cost not withstanding. He suggested considering an alternative where the rear wall and roof is removed and a new building is constructed inside, which perhaps may be less expensive than trying to work beneath the existing roof. He explained that the columns that support the second floor actually pass through the first floor. He stated that the floors on the first floor are not flat and level as some tenants might desire, but they have adequate strength. He stated that the second floor joists are a little undersized for strength.  Allison Weiss, representing SoLo/Germantown Civic Association, commented that she is devastated at the possibility of losing this building. She referred to it as the most important building in the Wayne Junction Historic District. She commented that she appreciates what Philly Office Retail has done to reuse buildings in the area but does not understand why this building is being sacrificed. She asserted that there is no proposal for future development, and questioned the rush to demolish the building. She commented that she had a friend who is an engineer, who looked at the building and concluded that the foundation is sound. COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 7 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES  Dee Dee Risher, a resident of Germantown, commented that a ten-year payoff for a building of this age is not a terrible cost for restoring it. She commented that the building is a distinctive landmark in the neighborhood. She commented that she saw an early sketch of a proposed office building on this site and it was not in keeping with the character of the area. She commented that if this was a different neighborhood, the building would be saved. She stated that we need to figure out how to save historic buildings in neighborhoods that do not have the same payoff as other neighborhoods.  Mr. Farnham noted that the pro-form does not indicate that investment in the building would be recovered in 10 years, as the previous speaker indicated, but instead shows that the building will not show a positive cash flow until the tenth year. The cash flows in the earlier years are all negative, meaning the building is losing money.  Mr. Farnham reminded the public that the Historical Commission does not use the Q&A feature in Zoom to collect public comment,

building will not show a positive cash flow until the tenth year. The cash flows in the earlier years are all negative, meaning the building is losing money.  Mr. Farnham reminded the public that the Historical Commission does not use the Q&A feature in Zoom to collect public comment, and anything entered into the Q&A is not part of the public record. Members of the public must speak on the record to convey their comments.  Ms. Weiss commented that it was said earlier that there are no Keystone Opportunity Zone tax credits available, but there seems to be a tax exemption on the real estate taxes for this property for the past three years. She read from the Office of Property Assessment’s website.  Ms. Weiss commented that losing this building would devastate the historic fabric of the Wayne Junction historic district. She noted that the Van Straaten & Havey building stood on the adjacent lot until it was demolished prior to the historic district being designated by the Historical Commission. She urged the Committee to consider the impact of losing yet another historic building with no plans for redevelopment of the site.  Joseph McCarthy, architect and longtime resident of Germantown, commented that he does not understand the rush to demolish the building when there are no plans for the property. He commented that he did not see a cost for demolition and new construction in the application. He suggested that the cost to rehabilitate the building could be averaged out across the other properties owned by Mr. Weinstein in Wayne Junction.  Ms. Weiss commented this is an industrial area zoned for industrial purposes, and little consideration was given for industrial uses. She suggested that there may be an industrial application for the building that has not yet been explored.  Mr. Farnham pointed out that the application includes a full financial analysis of the reuse of the building for light industrial use. The analysis indicates that the light industrial use would not generate a reasonable rate of return. ADDITIONAL DISCUSSION:  Mr. McCoubrey stated that the idea of constructing an addition or separate building to offset the cost of rehabilitating the historic building was discussed at the Architectural Committee meeting, but the cost of the new construction did not in any way offset the cost of the rehabilitation, and it would also not be considered

the idea of constructing an addition or separate building to offset the cost of rehabilitating the historic building was discussed at the Architectural Committee meeting, but the cost of the new construction did not in any way offset the cost of the rehabilitation, and it would also not be considered a reasonable adaptation of the property. o Mr. Weinstein concurred. He stated that with new construction costs, the new building would either be infeasible owing to the rents, or it would just be feasible, with no surplus to offset the rehabilitation cost of the historic building. He acknowledged that if this building were located in Center City or elsewhere and COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 8 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES commanded a much higher rent, a feasible reuse might be identified. In this case, the income cannot support the investment.  Mr. Weinstein responded to the comment by Ms. Weiss regarding Keystone Opportunity Zone tax credits. He restated that it is tax credit approved by the state, and it was refused for this property. The real estate tax abatement is approved by the City, and the tax abatement would have been used for this property if it were renovated.  Ms. Schoener responded to the comment by Ms. Weiss regarding real estate taxes. She noted that they own many properties and sometimes real estate taxes are overlooked, but it appears to her that they overpaid real estate taxes in 2019. She commented that there seems to be a discrepancy, perhaps owing to the prior owner being a non-profit entity. She confirmed that real estate taxes were factored into the pro formas. She questioned the analysis offered by Ms. Weiss of the Office of Property Assessment’s data for this property on its website.  Mr. Thomas stated that the Committee needs to also consider the impact on the historic district if this building were to be demolished.  Mr. Farnham noted that there was a comment made earlier that the building would pay for itself in ten years. He stated that his reading of the pro forma indicates that in the tenth year, there would be a positive cash flow for the first time, but not necessarily that the investment in the building would have been paid for by that point. o Mr. Thomas agreed. He explained that if a building has

reading of the pro forma indicates that in the tenth year, there would be a positive cash flow for the first time, but not necessarily that the investment in the building would have been paid for by that point. o Mr. Thomas agreed. He explained that if a building has lost money for nine years and in the tenth year it goes positive by several thousand dollars, one still has to pay back all of the money and it is not until that money is paid off that the investment breaks even. o Mr. Weinstein agreed, and stated that with the negative cash flow, there is no bank in the city that would lend the funding needed for the project. o Ms. Edwards added that, as someone who works in commercial real estate where 90 percent of the portfolio is commercial office, the market is uncertain right now. The pro formas provided assume income from tenants, but if those office leases are not in health and wellness, there will be a lot of uncertainty on the execution, and losing the tenancy would negatively impact the rate of return.  Mr. Thomas asked to review a site plan of the property. o Mr. Weinstein stated that they are feeling positive about all of the other projects they are working on in the Wayne Junction area. The other properties acquired are either under construction or in design, all to be successful adaptive reuses. He confirmed that the adjacent property is an autobody garage. o Ms. Chantry explained that 113-29 Berkley Street is on the very edge of the historic district, and that the adjacent autobody garage in not within the boundaries of the historic district.  Mr. Thomas suggested that the Historical Commission could require that plans for the site are approved prior to demolition. o Mr. Weinstein responded that, if the Historical Commission approves the demolition of the building, he would demolish it in order to remove the blight. He confirmed that they do not yet have plans for the site, but are assuming it will be some sort of new construction.  Mr. Thomas stated that, if demolition of the building is approved, the Historical Commission would retain jurisdiction over the review of building permit applications for any future development at the property. o Mr. Weinstein responded that he understands this to be the case. COMMITTEE ON FINANCIAL HARDSHIP, 27

construction.  Mr. Thomas stated that, if demolition of the building is approved, the Historical Commission would retain jurisdiction over the review of building permit applications for any future development at the property. o Mr. Weinstein responded that he understands this to be the case. COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 9 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES  Ms. Carney asked that the staff display an aerial view of the historic district on the screen. o Ms. Chantry displayed the aerial view and identified each property in the historic district.  Mr. Thomas asked if the Commission would require that any new construction on the site replicate some elements of the building which was demolished. o Mr. Dodds agreed that the Commission should seek to minimize the impact of new construction on the historic district, should approval be granted for the financial hardship application. o Ms. Chantry suggested that this would be a discussion better suited for the purview of the Historical Commission; the Committee on Financial Hardship should focus on determining if the financial analysis demonstrates a finding of financial hardship. o Mr. Thomas agreed that the Historical Commission can continue this aspect of the discussion when it reviews the application.  Mr. Thomas responded to the comment by Mr. McCarthy. He explained that the Historical Commission must determine whether a building can be reasonably adapted for a new use when it is undertaking a financial hardship analysis. A reasonable adaptation does not include the construction of an entirely new building to subsidize the historic building, nor does it include income from other properties owned by the same property owner.  Mr. Weinstein responded to the comment by Ms. Weiss regarding an industrial use for the building. He stated that the property is zoned CMX-3, not for industrial use. o Mr. Farnham noted that Option #2 of the pro formas looks at using the building for light industrial use. The industrial use has been considered, and the pro forma demonstrates that one could not profitably use the building for light industrial use. COMMITTEE ON FINANCIAL HARDSHIP FINDINGS & CONCLUSIONS: The Committee on Financial Hardship found that:  The complete demolition of the designated resource triggers the demolition prohibition in Section 14-1005(6)(d) of the historic preservation ordinance. For the Historical Commission to approve the complete demolition, the applicant must demonstrate that the demolition

COMMITTEE ON FINANCIAL HARDSHIP FINDINGS & CONCLUSIONS: The Committee on Financial Hardship found that:  The complete demolition of the designated resource triggers the demolition prohibition in Section 14-1005(6)(d) of the historic preservation ordinance. For the Historical Commission to approve the complete demolition, the applicant must demonstrate that the demolition is necessary in the public interest or that the building cannot be used for any purpose for which it is or may be reasonably adapted.  The construction cost estimate relative to the appraised value indicates that it is unlikely the building can be used for any purpose for which it is or may be reasonably adapted.  The construction cost estimate relative to the appraised value indicates that it is likely that a sale of the building for reuse purposes is impracticable without a substantial financial loss.  The financial analysis demonstrates that the building cannot be used for any purpose for which it is or may be reasonably adapted.  Any future development on the site will require review and approval from the Historical Commission of a building permit application. The Committee on Financial Hardship concluded that:  The building at 113-29 Berkley Street cannot be used for any purpose for which it is or may be reasonably adapted; the sale of the property is impracticable; rental cannot provide a reasonable rate of return; and other potential uses of the property are foreclosed; pursuant to Section 14-1005(6)(d) of the Philadelphia Code. COMMITTEE ON FINANCIAL HARDSHIP, 27 JANUARY 2021 10 PHILADELPHIA HISTORICAL COMMISSION, PRESERVATION@PHILA.GOV PHILADELPHIA’S PRINCIPAL PUBLIC STEWARD OF HISTORIC RESOURCES COMMITTEE ON FINANCIAL HARDSHIP RECOMMENDATION: The Committee on Financial Hardship voted to recommend approval of the application because the building at 113-29 Berkley Street cannot be used for any purpose for which it is or may be reasonably adapted; the sale of the property is impracticable; rental cannot provide a reasonable rate of return; and other potential uses of the property are foreclosed; pursuant to Section 14-1005(6)(d) of the historic preservation ordinance. ITEM: 113-29 Berkley Street MOTION: Approval MOVED BY: Edwards SECONDED BY: McCoubrey VOTE Committee Member Yes No Abstain Absent Robert Thomas, AIA, Chair X Donna Carney (Dept. of Planning & Development) X Mark Dodds (Division of Housing & Community Development) X Kelly Edwards, MUP X Dan McCoubrey, AIA, LEED AP BD+C X Total 5 ADJOURNMENT START TIME OF DISCUSSION IN AUDIO RECORDING: 01:35:20 The Committee on

No Abstain Absent Robert Thomas, AIA, Chair X Donna Carney (Dept. of Planning & Development) X Mark Dodds (Division of Housing & Community Development) X Kelly Edwards, MUP X Dan McCoubrey, AIA, LEED AP BD+C X Total 5 ADJOURNMENT START TIME OF DISCUSSION IN AUDIO RECORDING: 01:35:20 The Committee on Financial Hardship adjourned at 4:38 p.m. PLEASE NOTE:  Minutes of the Committee on Financial Hardship are presented in action format. Additional information is available in the audio recording for this meeting. The start time for each agenda item in the recording is noted.  Application materials and staff overviews are available on the Historical Commission’s website, www.phila.gov/historical.