-..-.~-._-__.- ---_.l_-l- ..-.--ll__---~-~- Nov(w~ twr I!~!)0 RESOLUTION TRUST CORPORATION Real Estate Activities in Southeast Pennsylvania ill111111 llll 142627 t 6 $4 , ,. ...I_ ..” -.. -.... .._.. - ._.. ._.” .,._ _...._ ..-__-- ___.._.-_,l____ -- -- ____-I _.._ -. . _ __ _I I ,, II ..*... .l,l_._” . .-. - .-..-..-.-- ____-_ --__-----.- ,*,L ss,, i I)‘-------- --- United States GAO General Accounting <)ffke Washington, DC 20548 <;eneral Government, Division - B-241276 November 9,19!90 The Honorable Richard T. Schulze House of Representatives Dear Mr. Schulze: On March 5, 1990, Chairman J. J. Pickle, Subcommittee on Oversight, House Committee on Ways and Means, requested certain information on Resolution Trust Corporation (RTC) activities in six geographic areas. This fact sheet addresses questions on RTC real estate holdings and property management activities in one of those areas--a portion of southeastern Pennsylvania, near Philadelphia.' Chairman Pickle asked that we send this information directly to you since you represent this area. The five other areas are being covered in separate fact sheets. Specifically, the Chairman asked for information on (1) thrifts and real estate assets placed under RTC control; (2) the names of managers of any high-value real estate properties in the inventory and what they are paid; (3) real estate assets that have been sold and the purchasers of those sold for $1 million or more; and (4) the number of real estate agents that have been qualified or disqualified for RTC contracts, and for those disqualified, the reasons why. The following discussion provides this information. THRIFTS AND REAL ESTATE ASSETS PLACED UNDER RTC CONTROL The Office of Thrift Supervision initially places troubled thrifts under the direct su ervision of RTC--which serves as conservator2 or receiver !I --when certain conditions, such as insolvency, capital inadequacy, or unsafe and unsound practices, exist. 'The Subcommittee requested information for specific zip codes, listed in appendix I, encompassing an area including portions of Berks, Bucks, Chester, Delaware, and Montgomery counties, in southeastern Pennsylvania. II 2A conservator is appointed to, among other things, operate the thrift as a going concern, and preserve and conserve the assets and properties of the thrift. 3A receiver is charged by law with the duty of winding up the affairs of a bank or savings association. B-241276 Three thrifts in Pennsylvania with total assets of about $5.9 billion were in the RTC conservatorship program as of June 30, 1990. However, none of these thrifts were located in the review area. Prior to this date, four thrifts in Pennsylvania had been resolved, that is, sold to new owners or closed if no purchaser was found. One of these four-- Hill Financial Savings Association in Red Hill, Pennsylvania --was located in the review area. Hill Financial was resolved through a purchase and assumption agreement in October 1989.4 At that time, Hill Financial and its remaining assets and liabilities were placed into receivership. It had assets totaling about $2.7 billion when it was partially acquired by Meridian Bancorp, Inc. of Reading, Pennsylvania. Meridian acquired assets valued at about $.8 billion, leaving assets valued at nearly $1.9 billion to be transferred to RTC to liquidate. About 87 percent of the assets in the Hill Financial receivership (over $1.6 billion) were financial assets (loans, securities, and mortgages). The remainder was about $150 million in real estate and about $95 million in other assets. Hill Financial's real estate assets were scattered through- out the country. Specifically, as of March 31, 1990, 575 former Hill Financial real estate assets were under RTC control. A total of 533 properties were located in 15 states other than Pennsylvania, primarily in Georgia, Texas, Tennessee, and Florida. Only 42 of Hill Financial's properties were located in Pennsylvania; 5 of them were in the review area. Also within the review area, we identified two other RTC-controlled properties previously owned by two other thrifts located elsewhere. The total asking prices for these seven properties was about $6.7 million. These properties are shown in table 1. 41n a purchase and assumption resolution, an assuming institution, selected by RTC through competitive bidding, purchases certain assets and assumes certain liabilities of the failed thrift. In most cases, the most desirable assets-- typically, cash, securities, and performing loans --are purchased. Real estate, personal property, nonperforming loans, junk bonds, and frequently, any subsidiaries owned by the thrift, are not generally purchased II by the acquiring institution. 2 B-241276 Table 1: Real Estate Assets Under RTC Control in the Review Area as of March 31, 1990 Asset Asset location description Receivership Geryville Pike Commercial Hill Financial Upper Hanover office building Red Hill, PA Township, PA 18073 E. Sixth St. Commercial Hill Financial Upper Hanover office building Red Hill, PA Township, PA 18076 400 Main St. Bank building Hill Financial Red Hill, PA 18076 and offices Red Hill, PA 426 Main St. Commercial Hill Financial Red Hill, PA 18076 office building Red Hill, PA 412 Main St. Single-family Hill Financial Red Hill, PA 18076 residence Red Hill, PA 1510 Chester Pike Commercial Concordia Federal Eddystone, PA 19013 office building Lansing, IL 11 Elm Drive Single-family Horizon Financial Lansdale, PA 19446a residence Southampton, PA aThis property was sold by RTC after March 31, 1990. PROPERTY MANAGEMENT As of September 12, 1990, RTC had not entered into any asset or property management contracts for real estate under its control in the review area. However, a property management contractor has been selected, but the contract had not been awarded. RTC had expected to award this contract in July 1990. It is to cover several properties located in eastern Pennsylvania, including the four commercial buildings in Upper Hanover Township and Red Hill listed in table 1. These properties were used to house the operations of RTC's Northeast Consolidated Field Office until July 2, 1990, when these operations were relocated to King of Prussia, Pennsylvania. B-241276 A'security company has been contracted to provide 24-hour guard service for $1,300 per week for the other unsold property in the review area --the vacant Eddystone commercial office building. REAL ESTATE MARKETING Environmental problems may affect the value and marketability of commercial property held by RTC in the Red Hill area. One of the four commercial office buildings formerly occupied by Hill Financial Savings and the RTC Northeast Consolidated Office was found to have excessive levels of radon. RTC has awarded a contract to determine the extent of environmental problems in this and another building. A single-family residence, an asset of the Horizon Financial receivership, was the only sale identified in the review area. The Lansdale, Pennsylvania, home was sold for $81,000 on May 2, 1990. The asking price for this property was $90,000. REAL ESTATE BROKER REGISTRATION RTC procedures do not require real estate agents to register with it because state laws and regulations require agents to work through licensed brokers. However, RTC real estate brokers interested in handling RTC property are required to register. Brokers must certify that their employees or subcontractors, including real estate agents, meet qualification and integrity requirements. As of July 24, 1990, 424 real estate brokers that wished to do work for RTC in southeastern Pennsylvania had registered with the agency. This figure included 11 brokers from within the review area, 52 brokers with Pennsylvania office addresses outside the area, and 361 brokers from other states. RTC may disqualify brokers, or any other contractors, on the basis of information provided on the Fitness and Integrity Certifications Form that must be submitted with the firm's Contractor Registration Request. As of July 31, 1990, none of the brokers with offices located in the review area had been disqualified. In fact, as of that date, only 19 firms of any type nationwide had been disqualified from being considered for RTC work. Firms may ask for a reconsideration of their status at any time after they have been disqualified. 4 B-241276 The'fact that a firm is registered with RTC and its name is included on the contractor registry simply enables the firm to be considered for RTC contracts and receive solicitations for services. Inclusion in the registry does not imply that the firm is qualified to do work for RTC or that it is an approved RTC contractor. RTC contracting procedures require contracting officers to determine qualifications and obtain additional ethics certifications from potential contractors each time a firm is considered for a contract. OBJECTIVES, SCOPE, AND METHODOLOGY To obtain the information requested by the Chairman, we obtained a listing of assets located in the review area from RTC's computerized real estate inventory. The inventory contained information on real estate under RTC control and sales of RTC real estate as of March 31, 1990. RTC had experienced problems with the completeness and accuracy of its property inventory and placed a disclaimer on the information. We discussed with the RTC Northeast Consolidated Office Director and his staff the southeastern Pennsylvania properties listed in the inventory, and they identified one additional property in the review area not listed on the March inventory. To obtain information on real estate agents and brokers, we consulted RTC's contractor registry. We did our work from March through August 1990 in accordance with generally accepted government auditing standards. We discussed the results of our work with the Director of RTC's Northeast Consolidated Office and his staff, who agreed with the facts presented in this document. As agreed with the Subcommittee, no further distribution of this fact sheet is planned; however, we will make copies available to other interested parties upon request. The major contributors to this fact sheet are listed in appendix II. If you have any questions, please contact me on 275-8387. Management Issues 5 ir’‘i APPENDIX I APPENDIX I ' LIST OF SOUTHEASTERN PENNSYLVANIA POSTAL ZIP CODES USED TO PROPEKlCrE Zip code Post office Zip code .-..","--. ._,"I-..__ Post office 18041 East Greenville 19363 Oxford 18054 Green Lane 19365 Parkesburg 18070 Palm 19366 Pocopson 18073 Pennsburg 19372 Thorndale 18074 Perkiomenville 19373 Thornton 18076 Red Hill 19374 Toughkenamon 18084 Sumneytown 19375 Unionville 18915 Colmar 19380-83 West Chester 18924 Franconia 19390 West Grove 18957 Salford 19395 Westtown 18958 Salfordville 19401 Norristown 18964 Souderton 19403 Norristown 18969 Telford 19407-08 Norristown 18971 Tylersport 19420 Arcola 18979 Woxall 19425 Chester Springs 19013-16 Chester 19426 Collegeville 19061 Marcus Hook 19430 Creamery 19073 Newtown Square 19432 Devault 19087 Wayne 19433 (invalid code) 19301 Paoli 19435 Frederick 19311 Avondale 19438 Harleysville 19312 Berwyn 19440 Hatfield 19316 Brandamore 19442 Kimberton 19317 Chadds Ford 19446 Lansdale 19318 Chatham 19450 Lederach 19319 Cheyney 19453 Mont Clare 19320 Coatesville 19456 Oaks 19321 (invalid code) 19457 Parker Ford 19331 Concordville 19460 Phoenixville 19335 Downingtown 19464 Pottstown 19341 Exton 19468 Roye rsford 19342 Glen Mills 19472 Sassamansville 19343 Glenmoore 19473 Schwenksville 19345 Immaculata 19474 Skippack 19347 Kemblesville 19478 Spring Mount 19348 Kennett Square 19480 Uwchland 19350 Landenberg 19481-82 Valley Forge 19352 Lincoln University 19491 (invalid code) 19353 Lionville 19492 Zieglerville 19354 Lyndell 19504 Barto 19355 Malvern 19505 Bechtelsville 19357 Mendenhall 19512 Boyertown 19358 Modena 19525 Gilbertsville 19360 New London 6 f 1’ (I APPENDIX II APPENDIX II MAJOR CONTRIBUTORS TO THIS FACT SHEET GENERAL GOVERNMENTDIVISION, WASHINGTON, D.C. Gaston L. Gianni, Jr., Associate Director, Federal Management Issues Ronald L. King, Assistant Director, Federal Management Issues Stuart M. Kaufman, Senior Social Scientist ATLANTA REGIONAL OFFICE Mario L. Artesiano, Evaluator-in-Charge Kevin C. Handley, Site Senior (247001) 7 I I.S. (;ckncbr-ill Acmut~t~itrg Ol‘f?ccb I’. 0. 130x 60 15 (;;LiIllcbrst)IIrg, MI) 20877 Orctcrs may also t)cb plactd Iby calling (%02) 275-624 I. L..
Resolution Trust Corporation: Real Estate Activities in Southeast Pennsylvania
Published by the Government Accountability Office on 1990-11-09.
Below is a raw (and likely hideous) rendition of the original report. (PDF)