PHA nonprofit didn't file with IRS

Every time the Philadelphia Housing Authority tore down an outdated high-rise apartment building in recent years, a nonprofit corporation it controlled stepped in to develop new housing on the site.

Under the direction of PHA's longtime executive director, Carl R. Greene, the nonprofit had a free hand to select architects, engineers, contractors, and lawyers, earning millions in tax-free development fees, and amassing $66 million in assets - mainly cash and short-term bonds - by 2010.

Operating largely out of public view and with little scrutiny from federal housing officials, the nonprofit has left its mark all across the city - it has developed about 2,000 units, from the Mantua and Lucien E. Blackwell redevelopments in West Philadelphia to two senior residences in North Philadelphia, just to name a few. And more are on the drawing board.

It also provided Green with a large pool of money to apply to pet projects, such as a planned $20 million headquarters on Chestnut Street and a green roof for a senior housing complex in North Philadelphia.

But the future of the nonprofit - known by the unwieldy name Philadelphia Housing Authority Development Corp., or PHADC - could be in jeopardy because of its failure to comply with changes in the federal tax code that required certain types of nonprofits to disclose detailed financial information to the IRS starting in 2006.

As a result, it could lose its tax-exempt status, according to two former IRS officials, including Marcus Owens, who ran the tax agency's exempt organizations division for a decade.

Without its tax exemption, PHADC would have to start paying taxes on income and could face IRS penalties, draining its assets and jeopardizing tens of millions of dollars in housing deals that are under way and that depend on PHADC's being a nonprofit.

Loss of the tax exemption would be "catastrophic," said PHA's new administrator, Michael P. Kelly, who succeeded Greene after the latter was ousted in September after disclosures that he had secretly settled sexual-harassment cases with three female employees for $648,000.

Greene's attorney, Clifford E. Haines, said his client took no responsibility for the failure to file with the IRS, though Greene directly ran the nonprofit, which had no regular staff. "Mr. Greene's duties did not include tax matters," Haines said in an e-mail.