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The Navy Yard 'Set The Bar' For DEI In Philly Development. The Family Court Building Is Next

The City of Philadelphia is starting from scratch with a major redevelopment project and taking cues from an even bigger one that aims to bring racial justice to the foreground.

The Family Court Building in Philadelphia in 2014, around the time its namesake organization vacated the property.

The Philadelphia Industrial Development Corp. issued a request for qualifications for the redevelopment of the former Family Court Building at 18th and Vine streets, just off the Benjamin Franklin Parkway, on July 9. The RFQ also includes an 88K SF lot at 1901 Wood St., catty-corner to the Family Court building, and a requirement for a 60K SF expansion of the neighboring Free Library of Philadelphia’s Parkway Central Library — the largest library in the city’s system and a nearly identical building to the Family Court.

The pseudo-public agency did not specify type of use for the 247K SF Family Court Building, which has been vacant since 2014 when the Family Court relocated to 15th and Arch streets, or the neighboring property. PIDC instead stressed in its RFQ that diversity, equity and inclusion be central to any developer’s plans for the site.

“Specific commitments to and direct representation of diversity, equity and inclusion at all phases and levels of any proposed development project will carry significance in the evaluation of responses,” the RFQ read. “Of significance will be the development team’s ownership structure and programmatic considerations.”

Though PIDC and other entities in control of city land have emphasized diversity and racial equity in public-private partnerships for years, a shining example of what that could look like emerged just days after the RFQ was issued. It came from Mosaic Development Partners and Ensemble Real Estate Investments, the development team PIDC selected last year to oversee the next phase of construction at the Philadelphia Navy Yard.

Ensemble and Mosaic consider the entirety of their $2.6B development plan for the 109 acres of the Navy Yard to which they have been granted rights a commitment to meeting Environmental, Social and Governance standards. Within that ESG pledge, announced Monday, is a $1B commitment to DEI that touches every element of the project: which contractors and vendors are hired for construction, the equity structure of the project, and the people and businesses that will populate the area upon completion. 

“We believe our $2.6B ESG initiative to be one of the most significant commitments by any developer for any development in our country,” Ensemble co-founder and chairperson Kam Babaoff said in a statement. “And, as part of this ambitious plan, we are committing $1B to DEI initiatives — again, likely the largest pledge ever in our industry. Dedication to ESG, and specifically the DEI principles within it, will drive lasting positive change in this city because it will be built by Philadelphians for Philadelphians.”

Post Brothers Senior Vice President of Development Sarina Rose, Philadelphia Director of Planning and Development Anne Fadullon, JLL Research Director Lauren Gilchrist and Brookfield Properties Retail Vice President Andrea Lukens in 2019.

PIDC and the city are seeking similar DEI commitments at all levels of the Family Court project, with City of Philadelphia Director of Planning and Development Anne Fadullon making the comparison explicit in a phone interview with Bisnow.

“The Navy Yard announcement set the bar, and this project is not as large, but I think it sets an example for what we expect from these public-private partnerships going forward,” Fadullon said.

The Navy Yard’s Plan For Transformational, Generational Change

If it had to spend all $1B furthering DEI initiatives at the Navy Yard, the JV of Ensemble and Mosaic would not have enough minority- and women-owned businesses to deal with. That means part of its project timeline will need to include recruiting and developing those businesses, Mosaic principal Greg Reaves told Bisnow.

“We are working with a number of general contractors right now on the Navy Yard, and there’s a requirement to bond,” Reaves said, referring to surety bonds that guarantee contractors’ financial responsibility if they do something improper. “Most minority firms in Philadelphia will have a problem bonding for over $10M, so immediately, they would not be considered for an opportunity to lead a project of this scale.”

The JV is asking companies they work with, such as contractors that can bond for the required amount for large-scale projects, to recruit and partner with MWBEs. In that way, smaller companies can build a track record allowing backers to bond them for more money, in addition to fostering connections in the industry that could lead to more work.

“So the Navy Yard gives us the runway for a company that could bond at $10M in Year 1 to bond at $70M in Year 7,” Reaves said.

Ensemble and Mosaic plan to use the multiphase nature of the project to ensure the firms they contract with can rely on the availability of future work, which will, in turn, allow them to invest more in hiring and growth, Reaves said. To start with, the JV is spending $7.5M, half of its budget for the design phase, with 20 MWBE architectural and engineering companies, including Moody Nolan, the largest Black-owned architectural firm in the country.

A rendering of a possible multifamily development within Ensemble Real Estate Investments and Mosaic Development Partners' master plan at the Philadelphia Navy Yard.

Part of the master plan includes residential apartments, the first in Navy Yard history aside from military personnel living quarters. The JV has committed to keeping 15% of rental units as affordable based on area median income “for multiple decades,” Reaves said, though he would not commit to a percentage target until the project is farther along.

Though the first projects Ensemble and Mosaic are undertaking — a speculative lab building and a build-to-suit biomanufacturing facility — likely will set the tone for the bulk of the land, the master plan also calls for 250K SF of retail and commercial space. Reaves envisions those being flexible enough to include “maker spaces” and other uses. Of the 250K SF, 25% will be leased to MWBEs, with below-market leases allowing less-established companies to open physical locations.

“When we build these beautiful buildings, who’s going to use them?” Reaves said. “In gentrified neighborhoods, once buildings get built, people of color don’t fill them. So we might have to take some different approaches because not all those businesses have the capacity to be able to invest in a tenant space, to have the financial wherewithal or a sufficient growth strategy ... Because we’ve been working with them for years, we know we have to bring extra dollars to those deals.”

The JV has also committed to bringing in people of color-led investment entities for as much as 20% in the project’s equity. Up to 5% equity will come from a crowdfunding effort targeting local, unaccredited investors making commitments as small as hundreds of dollars, Reaves said. Mosaic has used Small Change to crowdfund in similar fashion at two of its previous projects, but it has not yet picked a crowdfunding platform for the Navy Yard.

A Rare Opportunity For Diversity In Center City

When the Family Court first moved out of the historically designated building at 1801 Vine St., PIDC issued a request for proposals to turn the property into a hotel, eventually awarding the project to Peebles Corp., led by Don Peebles. But after years of delays, PIDC terminated the agreement at the start of the year. Representatives from Peebles Corp. did not respond to requests for comment.

Clockwise from top left: Mosaic Development Partners' Greg Reaves, Evolution Energy Partners' Dailey Tipton, Philadelphia Housing Development Corp.'s Angel Hernandez and Post Brothers' Sarina Rose.

“The developer had been making a valiant effort to get that project across the finish line for quite some time, but it was determined that there was still not a clear path to doing that,” Fadullon said. “So a combination of some things, including an impact of the pandemic, was that we’re not sure about the state of the hospitality industry going forward ... It was time to start looking for an alternative.”

The Family Court Building, constructed in 1940 and listed on the National Register of Historic Places, is considered significant not only as an example of the regal Beaux-Arts architecture style, but for its array of murals on the interior. The degree of difficulty in redevelopment is raised when so much of a building must be preserved, but its prominent location overlooking Logan Square means that it could be viable for a variety of uses, Fadullon and Logan Square Neighborhood Association President Dennis Boylan said.

“That part of our neighborhood, looking north, the old [Philadelphia] Inquirer building is being renovated to the new police headquarters, there are new multifamily projects going up, the Community College of Philadelphia is vital to the area, and it’s great to see all this activity,” Boylan told Bisnow. “There are new coffee shops, restaurants, and it’s good all around. [The Family Court Building] is just a missing link, and we want it activated.”

Given its location, there are no concerns about gentrification or displacement of low-income residents. But few projects of this kind have made space for people of color to be heavily involved. Both Fadullon and Boylan see an emphasis on DEI in such a prominent place as potentially impactful for the whole city.

“We want to make sure that this project is beneficial to the community as a whole, and we have a pretty broad definition of the community,” Fadullon said. “It’s not just Center City.”

Because no type of usage has been specified yet, how to ensure diversity and inclusion will depend on who responds to the RFQ, who is on the shortlist for the ensuing request for proposals, and who, ultimately, is awarded the project. Responses to the RFQ are due Sept. 17, and there will be two site tours for interested parties at the beginning of August. The LSNA, the registered community organization whose neighborhood encompasses the property, will have a presence on the tours, Boylan said.

The city is set on keeping the Family Court building and the 1901 Wood St. lot together for whatever project is selected, and the Wood Street lot is adjacent to the Parkway Central Library. The mandated 60K SF expansion of the library must include a Children and Family Center, auditorium, storage and administrative office space, according to the RFQ.

The Family Court Building in Philadelphia, seen from Logan Square in November 2020 with its sister building, the Parkway Central Library, to the left.

Not only does the Wood Street lot expand the potential for development, but another element that isn’t part of PIDC’s RFQ could potentially be added if a developer is so inclined. The four corners of the intersection of 19th and Wood contain the edges of the library, the Family Court Building, the Wood Street lot and the John W. Hallahan Catholic Girls’ High School, which was shut down by the Archdiocese of Philadelphia. The property is up for sale, Boylan said.

“If you get a developer that’s got some real vision, you’ve got the Family Court, Hallahan and the nearby parking lot to work with,” Boylan said. “Look at that footprint in Center City — it’s one of the last big chunks.”

That chunk may become even more appealing to developers and potential users alike. The RFQ was issued just as the city received its first round of submissions for ideas to revamp the Parkway to make it more pedestrian-friendly and a more active outdoor space. As is, the multi-lane, multi-section highway, with a confusing intersection at the foot of the Art Museum, is notorious for high automobile speeds and “spectacular” crashes, Boylan said.

“It’s like a drag race at some points during the weekend,” he said.

In addition to the new police headquarters, a multifamily tower is rising adjacent to Cathedral Basilica of Saints Peter and Paul, Parkway Corp. has promised a new office building at 20th and Arch streets, and Pearl Properties is redeveloping the Embassy Suites hotel on the Parkway into a multifamily building with a Victory Brewing Co. beer hall on the ground floor. 

Whatever redesign the city eventually settles on for the Parkway, DEI will also be at the center. Local residents have been more vocal and forceful about calling for such measures in the year since the racial justice protests last summer. With that heightened level of attention, the city and nearby neighbors are aware the Parkway and the Family Court project could be the last chance in a generation to ensure a measure of equity and inclusion for people of color in this prestigious part of town. 

“It’s got to be everybody there,” Boylan said. “We try to convey the message when we talk with developers that we expect the workforce and the management, everything from top to bottom, to be focused [on DEI]. It’s critical for the growth of the city.”