John Longacre in his South Philadelphia office

John Longacre in his South Philadelphia office

Developer John Longacre on how he’s changed Philly’s neighborhoods and the problems in Point Breeze (Q&A)

From American Sardine Bar to South Philly Tap Room, the former Rendell administration intern reveals why he’s invested in out-of-the-way places: ‘When we go into a place, we’re rolling the dice.’

Philadelphia developer John Longacre believes in economic development the way some Buddhists believe in meditation.

It’s not his religion, really, because he doesn’t blindly follow anyone else’s path forward. But he does have a deep, unwavering faith that stimulating private investment is the best way for cities to move ahead. That’s the tenet on which he based his company, LPMG, which he founded in the late ’90s after getting inspired during his time as a college intern in the Rendell administration. It’s the reason he buys properties in neighborhoods many others avoid — with the goal of helping turn them into more vibrant, diverse, livable communities.

That’s what he says, anyway, and if you look at his record, there’s no denying he walks the walk: From Francisville to Point Breeze, LPMG investments in real estate have changed the areas around them. His two taverns, South Philadelphia Tap Room and American Sardine Bar, are busy and buzzing at locales that never before had a citywide draw — in fact, Sardine Bar just landed at the top of Foobooz’s annual 50 Best Bars list.

Neighborhood changes are rarely hailed by everyone, however, and Longacre, 42, has plenty of skeptics, who deride him as just another greedy developer. The summer’s kerfluffle over the Point Breeze Pop-Up beer garden is a prime example of that backlash (and of also of the bureaucratic quagmire he thinks is holding Philadelphia back). Those haters are the reason he avoids social media…and, usually, interviews like this.

Are you a native Philadelphian?

I’m originally from Bucks County. I went away to college in Maryland, but I got a summer internship with Rendell, and it was just too good to give up when the school year started again. So I transferred to Temple. I got a degree in economics.

What did you do for Rendell?

He was mayor at the time. I got put in the Commerce Department. Now, Rendell was a genius. He put a ton of private sector businesspeople in his administration, filled it with extremely competent people. As a result, the intern program was really, really good. I think I was the only non-Ivy League person there.

It was a very interesting time. When Rendell took over, the city was in junk bond status and had a huge deficit. After his first term, you could see the light, and after his second term there was like a $400 million surplus. Did you ever read [Buzz Bissinger’s] A Prayer for the City? It should be required reading for people who live here.

How long did you work for Rendell?

I wasn’t working for him directly, I was working for the Commerce Department. Stephen Mullin was there, and Dee Kaplan. She’s one of my biggest inspirations. She was running what was called the Mayor’s Business Action Team, which was set up for business attention and retention. Dee would take me to meetings I had no right being in, and she’d say, “Go sit in the corner, don’t say a word.” Just so I could be exposed to it. She went out of her way to show me a lot of what really formed my opinions about what was wrong with the city, what could be done with the city.

Did you stay in government after college?

No, I went off into the private sector. But I decided to stay in Philadelphia, and I started my company, LPMG, right around that time, in the late 90s.

Did you ever work for anyone else in real estate?

Nope. Just myself. The reason I started the company was because when I was working at MBAT, I was the low man on the totem pole. They’d say, “Some tire store in South Philly needs a loading zone, go deal with it.” The offices were at the Phoenix Building, at 1601 JFK, so I’d walk from there straight down to South Philly. I’d go through these neighborhoods and get totally confused by what was going on. I’d walk through Rittenhouse, and two minutes later I’m in this completely disinvested area. It was so mind-boggling to me. I couldn’t understand it. I was like, how is it that I turn around and I’m looking at skyscrapers, but here I’m standing on a corner that looks like Beirut.

And I’d walk down commercial corridors that were littered with trash, like a trash truck pulled up and dumped on the sidewalk. I’d say to myself, that doesn’t make sense, either. So I started thinking about it, and really trying to understand it. And seeing where Rendell wound up, with the surplus and all the things that were happening, I formed the opinion that the city’s lifeblood is economic development. It fuels jobs, it fuels growth, it fuels everything. That’s when I said to myself, I want to figure out a way to rebuild neighborhoods that suffer from disinvestment…I don’t know how I’m gonna do it. But I’m gonna figure it out.

So you started a real estate company?

Well, I ran for City Council, thinking I could do it that way. Lost. But then I realized I could do it with financials. I knew it was going to be very, very challenging. But I said, I’m gonna try it. And that’s what we’ve been doing.

Do you have partners in the company?

No.

What was your first real estate investment?

I think I bought a little house in Fairmount. A teeny little house for $40 or $50,000. This was in the 90s. I went right from there into Francisville. At the time, Francisville was not unlike Point Breeze, very disinvested. So along with three others, I founded the Francisville CDC [Community Development Council]. And now that area is very, very different.

Do you still have holdings there?

No, I think we got out a year or so ago. We moved everything down here because we were having a real hard time getting stuff done up there. For various reasons. There was just too much red tape.

Isn’t there red tape everywhere?

Some places worse than others. I’ve learned how to work within it, I’ve learned how to navigate the bureaucracy. But I still disagree with it. It’s the single reason that the city doesn’t have as much affordable housing as it should. The strict building standards, the ridiculous time it takes to get things through. I mean, the quickest way to get affordable housing is to loosen your building restrictions. The market will be saturated with housing, and property values will drop. Look at Houston. That’s why Houston has some of the most affordable housing in the United States of America, and that’s why their population is growing so much.

What makes it harder in Philly than in Houston — can you give an example?

Sure. Here, a single RCO [Registered Community Organization] that has something like three members could stop a project forever. That’s absurd. There’s no regulation. It could be like, two people, and even if they don’t have board meetings, or community meetings, or do the outreach they’re supposed to do, it doesn’t matter. They still have that ability.

That’s one thing. Number two, we have the worst L&I [Department of Licenses and Inspections] in the United States of America. It has to be the most dysfunctional department in the nation. They make up their own rules, they make up new laws.

How did it get that way?

Well, when Nutter first started, it was going in the right direction. They made a lot of changes, they were streamlining things. I mean, it was really, really coming together. And then it fell off the hinges. That was around 2012, something like that.

Before the Market Street collapse?

Maybe, but that’s a good example. Typical reactionary politics. This bad thing happened, so now we’re going to make it 10 times harder for everybody. Instead of figuring out what was wrong with that single circumstance and fixing it, now every single thing changed. It comes from the top down. Like, I had a building permit for a single family residential house on expedited review — which is a five-day review. It took 4½ months to get the permit. Not five days.

Would digitizing things help?

I don’t know. Just have them check their emails. We emailed the plan reviewer, in July: “Hey, where the hell are our permits?” and we got back a response that said: “I will be out of the office celebrating the Christmas holiday from December 24 to January 3. Please contact me…” In July. In the private sector, these things can’t happen or people get fired. But in the city, it’s OK. Standard operating procedure.

So the RCO and L&I are the two main things holding back development in the city?

Those, and taxes. We’re the highest taxed municipality in the US. Well, there’s one municipality higher, Bridgeport, Conn., but it’s not a major city. Business Privilege Tax, Gross Receipts Tax, Wage Tax, Net Profits Tax. Plus, our real estate tax, at 1.335 percent or something, is also higher than every other city.

When you decided to come south, what was your first investment?

SONY DSC

The namesake taps at South Philadelphia Tap Room

Danya Henninger

It was the [South Philadelphia] Tap Room [at 15th and Mifflin]. So I came down and looked at the neighborhood, and it had all these geographical economic assets. It had proximity to the central business district, access to public transportation, good housing stock, dense population, multiple commercial corridors, hospitals, stadiums. It had all this good stuff. Yet the neighborhood was a disaster! There was boarded up houses, nonconforming landlords, 19 people living in a two-story rowhome, trash everywhere. It was a bona fide disaster. This was around 12 years ago. So I rolled the dice with the Tap Room. I said to myself, “If I can’t make this thing work here, I shouldn’t be in business.”

And it was a success.

Yeah. Everybody told us, don’t do it, you’ll go bankrupt, you’re crazy. I tried getting other bar people in the city to do it with me, because I wasn’t necessarily a bar guy, and they were like, “You’re high, man, are you kidding me? No way.” And guess what?

Why did you come up with the name Newbold for the area?

It was real simple. It wasn’t anything to do with separating from Point Breeze – in fact, I like the name Point Breeze. I think it’s awesome. [Newbold] was about giving a neighborhood identity, something the residents could connect with. Because it used to be like: “Where do you live?” “Oh, I live near the Melrose Diner.” “I live right off Passyunk.” Nobody was saying they lived in Point Breeze down here, because the entire section west of Broad is designated Point Breeze. Can you identify another neighborhood of the city that has a mass that big? No.

Did you ask residents how they felt about the name?

Yes! I went to [the late] Al Brown, who was the Point Breeze leader at the time, and I said, “Hey Al, what do you think about this? We want to carve off this little portion, and we want to do it for a very specific reason. It has this commercial corridor, West Passyunk, that we want to revitalize, and it’s small enough that we can contain our green and clean efforts.” Al loved it. And when we unveiled the Newbold plan in a presentation at the University of Pennsylvania, everyone from Point Breeze who was there loved it.

But then something happened?

Well, several years later, a new group sprang up, and designated all of Point Breeze as Newbold. And somehow I got blamed for it, even though I told them it’s not our company.

What is Newbold, officially?

18th to Broad, Tasker to Wolf. That’s what we defined as Newbold. For a very specific intent: The revitalization of West Passyunk.

Has that West Passyunk revitalization been successful, do you think?

In terms of cleaning it up and making it viable, yes. We work with Horizon House, they employ people who aren’t necessarily hirable elsewhere, because of disabilities or circumstance, and they’re in charge of keeping the Avenue clean. It works great. What it still needs is more varied usage. There are still too many of the same kind of store along the strip. I will consider it a success when a big variety of amenity-based retail is here.

So when you first opened the Tap Room, were there objections?

Zero point zero zero. Everybody thought we were crazy, but no one objected. The neighbors at the Tap Room still come in every day and thank me for opening it. The immediate neighbors. They love it, because it cleaned it up, it brought energy, it brought new populations.

And across the street, you also opened Ultimo and Brew?

That building took me a little bit longer to get, because it had been abandoned for 27 years, and the person that owned it was in Afghanistan. There were a ton of liens on it, and back-taxes owed. I would get these calls from Afghanistan, and they’d be breaking up and I could hardly hear him. The minute he called and said he was in Philly, I closed the deal right away.

So, the neighborhood, everyone wanted a coffee shop. I wanted to do either a breakfast spot or a craft beer takeout. But everybody wanted coffee, coffee, coffee. I have a friend who’s a musician named Denison Witmer. He came in for dinner at the Tap Room one day, and I told him about the coffee shop thing. He said, “You know, when I’m touring in DC, there is this one barista that is so unbelievable. He’s like Mr. Coffee, he’s like the best barista in the country.” I told him to get me his number.

That was Aaron Ultimo he was talking about?

Right. Several months later, I got the number, and called Aaron out of the blue. “Aaron, my name’s John Longacre, I live in Philly, you don’t know me, I have this crazy idea: I’m trying to rebuild this neighborhood, and it really needs a coffee place. I’m told you’re the best on the Eastern Seaboard.” He was like, let me think about it. I got him and his wife, Elizabeth, to come up here one day, and we walked around and I pitched him hard. And 30 days later they moved here. Now we have the best coffee in the USA right here at 15th and Mifflin.

Ultimo opened in conjunction with Brew?

We share a space. He owns Ultimo and I own Brew. And he’s expanded, and he’s going to keep expanding.

He’s opening a coffee counter inside the Hungry Pigeon in Queen Village, which is co-owned by Scott Schroeder, who’s also chef at SPTR. How did you end up hiring him?

I went after Scott when he was at Deuce. I went in and had the menu there, and it just fit us so well. So I tried to hire him, but we weren’t really that established, and we couldn’t get him. Then I went after him again when he was at his next restaurant, and we still couldn’t get him. Then I went after him again when he was at Latest Dish, and I guess it was just the right timing, and we were able to nab him.

He’s also your chef at American Sardine Bar at 18th and Federal. Why did you decide to open that?

Al Brown. He’s the single reason. It used to be a really, really bad nuisance bar. In the last year it was open, it had 238 documented police incidents. When we opened Sardine Bar there [in 2011], it was the first sit-down restaurant in Point Breeze in 50 years.

What about the Point Breeze Pop-Up garden lot, was that previously owned by Al Brown?

Al had assembled the land and was trying to get a new space for the Point Breeze Performing Arts Center built there. He got this $5 million grant from [then-Governor] Ridge, but the caveat was he had to match it with $5 million in private investment. He was never able to reach that. So then he died, and the properties were eventually taken by the IRS. I tried to help mitigate that situation — I tried to help them sell the properties before the IRS took them, but we weren’t able to and they were taken. So in 2015, I purchased them from the IRS.

And opened a pop-up garden?

The pop-up was an experiment to gauge whether or not there was an interest in getting commercial activity back on that corridor. I think we have absolutely proven that it’s not only wanted, but desperately needed. We ran thousands and thousands of people through that beer garden this summer.

But it’s not zoned commercial?

It used to be! Around a decade ago, the city came down and blanket zoned the area RM-1, which means high-density residential. Look, if I was just a greedy developer, I could build a lot of apartments and that would be that. But that wouldn’t serve the community. I went to the neighborhood groups, I talked to the residents. They said they would prefer it to be commercial, like it was when they were growing up.

So what we’re going to do is seek a variance to have it changed to mixed-use commercial again. I want to bring retail, all privately-owned, preferably local. We have a really neat plan for the Point Breeze Avenue corridor — some really cool ideas.

Do you have any properties outside of South Philly right now?

Oh yeah, we’re in three cities. Baltimore, and also Atlantic City. I mean, we only do revitalization. You’re never gonna see us in Center City. You’re never gonna see us in Northern Liberties.

What are you doing in Atlantic City?

We bought the armory building at 10 South New York Ave., and we’re doing 30 units and five commercial spaces on the bottom. You want to tell me that’s not a risk? You read about Atlantic City all the time, right? It desperately needs a middle market. It needs amenity-based retail for that market. Right now, my mom would go there to see a comedian and eat at Bobby Flay’s, or on the other side, it’s got pawn shops and rundown dive bars and strip clubs. There’s nothing for that middle market.

People have said, “Don’t let him fool you, John Longacre is not a philanthropist.”

I say that! I say that to everyone. This is not a philanthropic endeavor. We’re trying to make money! But here’s the thing: What we do is so hard from the financial side. It’s not philanthropic, but it’s mission based. Like, I could go into Center City tomorrow, and buy some 20-story building and upfit it and make a lot of money. But that’s not what we do.

We go into areas that suffer from disinvestment, and we try to bring private investment back to those areas. And it’s really, really hard. Because you can’t get national retailers there — there’s no economic site selection criteria that would ever be met. You can’t get banks to give loans to cover building costs because there’s no assets to comp off of. It’s just a much harder proposition. When we go into a place, we’re rolling the dice.

 

 

×