In the shadows of the Family Court debacle: 1801 Vine St.

The Family Court building, completed in 1941, and its next-door twin, the Free Library, are copies of palace buildings on the Place de la Concorde public square in Paris.
The Family Court building, completed in 1941, and its next-door twin, the Free Library, are copies of palace buildings on the Place de la Concorde public square in Paris.
Posted: September 20, 2010

As he worked on securing $200 million in state funds to build a new Family Court, lawyer John H. Estey pursued an ambitious plan to redevelop the court's historic home at 1801 Vine St.

Estey reached out to two former clients of his law firm, held dozens of phone conferences and meetings, and billed the courts more than $100,000 - at more than $650 an hour - to put together the plan to build a luxury hotel and museum at the classically styled courthouse on the Benjamin Franklin Parkway.

The effort, spread over seven months of private talks last year, was mainly designed to win over one person: Gov. Rendell.

Estey, Rendell's former chief of staff, was hired by state Supreme Court Justice Ronald D. Castille to persuade Rendell to release the $200 million. But Rendell made it clear that would not happen until he was satisfied with the plans for 1801 Vine.

The effort produced a plan that intrigued city officials as well as Rendell.

But the proposal itself went nowhere. One of Estey's former clients involved in the pitch, a venture capital firm, walked away. Another one, developer Daniel Keating III, eventually decided the hotel-museum plan didn't make financial sense.

"We had a lot of problems with it," Keating said. "Other than good pictures, we ran into a lot of dead ends."

In the end, Mayor Nutter insisted on an open process for the city-owned building, one that would consider other ideas.

But that did not stop Rendell from talking about 1801 Vine as a done deal, just as the Estey-sponsored plan had imagined it, when he announced a deal in May to build the new Family Court facility.

"This would be an incredible addition to the most exciting and glamorous street in the world," Rendell said, pledging $20 million in state money to help redevelop the courthouse, two blocks from the dazzling new home of the Barnes Museum.

The negotiations over 1801 Vine St. are a hidden part of the history of the troubled Family Court deal, revealing the lengths to which Estey went to keep Rendell on board and the difficulties inherent in redeveloping a beautiful, but aging, building designed as a hall of justice, not a hotel or condominium.

Estey, a partner with the firm of Ballard Spahr L.L.P., declined requests for an interview. In an e-mail, he said the two firms that collaborated on the proposal were not Ballard clients when he was talking to them about 1801 Vine.

A Family Court deal was close to complete early this year, but the plans collapsed in May after The Inquirer revealed that Jeffrey B. Rotwitt, originally hired as the courts' real estate lawyer, was also getting paid in a side deal with the site developer, Donald W. Pulver.

The state Division of General Services is now poised to take over. But the project at 15th and Arch is tied up in Bankruptcy Court. And the fate of 1801 Vine is just as uncertain: only one development team submitted a proposal.

Early this year, Rotwitt also proposed that he and Pulver could build the 1801 Vine project as well as the new courthouse; that plan also went nowhere.

The negotiations over the Family Court pivoted on Rendell. If he doesn't release the $200 million appropriated by the legislature for the project by the time he leaves office in January, court advocates fear that the next governor might not be so disposed.

The advocates have sought a new building for years to replace 1801 Vine and the dingy, unsafe court facilities at 34 S. 11th St.

The Family Court property, completed in 1941, and its next-door twin, the Free Library, are copies of palace buildings on the Place de la Concorde public square in Paris.

"The governor wanted to make sure a good development took place and wanted to make sure it happened relatively soon, given that his term is ending," Nutter said in a recent interview.

During the last half of 2009, documents and interviews show, Estey and some other players in the deal were primarily focused not on the plans for the new courthouse, but on the fate of the old one.

Estey had been involved with the project while working for the governor's office, which he left in February 2008. He was hired by Castille three months later.

It soon became clear that the question of how to reuse 1801 Vine posed a potential obstacle to the whole courthouse plan.

Originally, former Mayor John F. Street had agreed to give the old building to the state to help offset the $200 million. Nutter killed that deal.

"We had a different idea," said Nutter, who thought the city should share in any revenue from the sale of 1801 Vine.

Starting in May 2009, according to hourly billings Estey submitted to the courts, he began talking to Keating and to officials at Guggenheim Venture Partners, a small venture capital firm based in King of Prussia that was looking for new office space in the city.

Keating, one of the city's most prominent developers, said he had known Michael Burns, Guggenheim's managing director, for years and had invested in some companies he backed. Both firms had previously hired Ballard for unrelated legal work.

An architectural firm, H2L2, was brought in to do sketches. Keating brought in Andaz, a luxury label of the Hyatt hotel chain, to lend its name to the proposal. A representative of the Alexander Calder Foundation, which had long talked about opening a museum in Philadelphia, also was involved.

"We worked our butts off there," Keating said. "We had a hell of a lot of meetings."

Estey's billing documents show 66 meetings, phone calls, or e-mails with Eric Weinberg, a Guggenheim partner who worked as a Harrisburg lobbyist.

The team eventually produced a "concept paper" that was signed by Guggenheim's Burns. It was addressed to Rendell, not to anyone at the city.

It proposed an 11-story hotel tower attached to the back of the building, a 160-seat restaurant, 50,000 square feet of office space, and high-end specialty shops. The pitch says the proposal would spark development all around the neighborhood - provided the state contributed $20 million for the museum.

"In all, the private investment in this project could exceed $200 million," Burns wrote in one letter to Rendell, asking for a meeting to "move this concept to an achievable reality."

The Guggenheim firm, which has no real estate experience, said it would form a joint venture to develop the building. Keating's name does not appear on the plan, but he said he would have been a partner. Guggenheim would have been one of the tenants, he said.

"It's a name with panache," Keating said of Guggenheim. "You want to raise the level of interest to everybody out there, starting with the numero uno guy in the state."

Guggenheim officials declined to comment.

The plan depended in part on public financing: $10 million in tax credits and the $20 million in state capital financing.

City planning officials said they knew nothing about the proposal until last December, when Estey held a meeting with court administrator David Lawrence and two city officials, Duane Bumb, deputy commerce director, and Alan Greenberger, deputy mayor for planning and economic development.

"I, at least, didn't know that existed," Bumb said, adding that it was a "pretty advanced conceptual plan" when he saw it.

Keating said he had no expectation that he would get the project without some sort of bid. As for the fees earned by Ballard, he said: "I'm glad someone is getting paid for the effort. I didn't."

In an e-mailed statement, Estey said that "no Ballard lawyer has ever represented either Guggenheim Venture Partners or Keating Development with respect to the 1801 Vine project.

"Neither entity was a Ballard client in 2009 or 2010 when the discussions regarding 1801 Vine were ongoing and neither is a current Ballard client. Obviously, Ballard was not paid by either entity concerning that project."

Rotwitt and Estey began discussions about the old courthouse in the fall of 2009, documents show. In January, Rotwitt submitted a proposal of his own: He said he and Pulver could do the 1801 Vine renovations after they got finished building the new courthouse.

Rotwitt suggested that savings from the construction of the new Family Court could be used to help redo the old one.

Rotwitt pitched another no-bid deal: "The parties will take the position that this construction will be free of the public-bidding and other legal restraints" that normally govern public building projects.

Bumb said "it wasn't considered very seriously for very long."

Rotwitt's attorney, Catherine M. Recker, said Rotwitt was trying to satisfy Rendell and keep the project alive. His plan, she said, "was meant to further this goal, but it didn't go anywhere - it was merely a proposal."

Pulver had nothing to do with it, according to a spokesman.

"This was a Jeff Rotwitt solo project," said Pulver spokesman Mark Nevins.

In January, Castille, Rendell, and Nutter had a meeting, along with Estey.

By March, the city said it was ready to seek proposals for the building; Rendell's office signed off on the wording, which asks developers to combine an arts or cultural venue with office, hotel, or residential space on the upper floors.

Gary Tuma, a spokesman for Rendell, said the governor ended up satisfied that the city's ideas about 1801 Vine were close to his own. Ownership was not a big issue, he said.

"We always thought the building should be in control of the city, but we always wanted to get it done at a time when Ed Rendell was still governor," he said.

That may be a long shot. Proposals were due Sept. 10 and just one came in; Greenberger, the city planning head, would not reveal the identity of the developer.

Keating bowed out, saying the prospects for a new Family Court are simply too uncertain.

"Nobody can tell you when the building is going to be available," he said.

At best, nothing can happen at 1801 Vine for several years - if and when the new courthouse is finished.

Greenberger said he was disappointed in the response but still thought it made sense to start what promises to be a long development process now - particularly while a friendly governor is still in Harrisburg.

After the revelations about Rotwitt and Pulver, and the collapse of their plan to build the new courthouse, city officials said they were happy that there was not a similar deal on 1801 Vine.

Said Bumb: "We were very thankful that the mayor was saying no, we're going to do a transparent process here."


Contact staff writer Joseph Tanfani at 215-854-2684 or jtanfani@phillynews.com.

|
|
|
|
|