Allentown School District’s plan to sell its McKinley Elementary School site for use as affordable housing is caught up in a dispute between a nonprofit agency entering negotiations with the district and an investment firm calling for a return to a sealed bid process for sale of the property.
The investment firm, Cortex Residential, claims its former nonprofit partner, Ripple Community Inc., “unilaterally” changed the terms of their agreement on an affordable housing project proposed for the vacant school site, and has since blocked the firm from being able to pursue the project independently.
In June, the school board voted unanimously to sell the McKinley property at 1124 W. Turner St. by sealed bid, along with Cleveland Elementary School — another vacant school property at 424 N. Ninth St. The vote allowed the district to sell the properties to the highest bidders who met specific criteria determined by ASD.
But the sealed bid process was rescinded after the school board voted in August to sell the properties to charitable organizations instead.
The votes were prompted by a joint letter sent by Ripple Executive Director Sherri Brokopp Binder and Dawn Godshall, executive director of Community Action Lehigh Valley, asking the school board and Superintendent John Stanford to consider selling McKinley and Cleveland to their respective organizations.
The board voted 7-1 and 6-2 to pursue selling the properties of McKinley and Cleveland, respectively, to charitable organizations.
“We’re just grateful to the district for being able to prioritize the community in this process,” Brokopp Binder told The Morning Call in August about the board’s decision.
Created in 2015, Ripple Community Inc. is an Allentown nonprofit focused on affordable housing and services for people experiencing homelessness.
Brokopp Binder declined to speak with The Morning Call for this article, but told a reporter in August she envisioned affordable housing at the McKinley site for families transitioning out of homelessness. Godshall said in August her organization wants to build a youth center at the Cleveland site.
At the time, School Board President Nancy Wilt said the votes allowed the nonprofits to compete for the properties.
But Steven Williams, an attorney for Cortex, claims the August vote to rescind the sealed bid process for McKinley was called to block the for-profit firm from pursuing the property independently after Cortex and Ripple parted ways just a month earlier.
Jon Strauss, an owner of Cortex, declined comment, and directed questions to Williams.
Cortex alleges Ripple tried to demote the firm to a property management role, despite their agreement that granted Cortex controlling interest in the affordable housing project. However, Cortex and Ripple never had a formal contract.
As a result, representatives from Cortex announced their plans to independently pursue an affordable housing project at McKinley in July, Williams said.
The board’s vote the following month took the firm out of the running.
The district has since decided to enter into negotiations with the nonprofits for direct sales of the respective properties — McKinley Elementary to Ripple and Cleveland Elementary to Community Action Lehigh Valley. Stanford said negotiations haven’t started yet, and there is no definitive timeline for them.
Cortex also alleges Ripple continued contacting vendors the firm obtained for the pair’s initial joint affordable housing project.
Williams detailed his client’s claims in a letter sent to the school board, district administrators and Ripple in September; Williams said he has not received any response to the letter, which has been viewed by The Morning Call and confirmed to be authentic.
In the letter, Williams calls on Ripple to stop contacting Cortex’s vendors and using their work. He also calls on the district to return to a sealed bid process for sale of the McKinley Elementary site and to allow Cortex to submit a sealed bid.
Cortex, in a new partnership with the nonprofit Barefield Development Inc., wants to create 40-45 affordable apartments for senior citizens with onsite parking at the property.
Alan Jennings, former executive director of Community Action Lehigh Valley and a longtime advocate for the homeless in Allentown, said he thinks an affordable housing development for seniors would better serve the community at the McKinley site.
Jennings detailed why he believes the district shouldn’t sell the site to Ripple in a letter sent to the school board.
“One of the worst uses would be to put a sizable facility providing services to homeless people there,” he wrote. “Only those neighbors who could afford to move out would do so but the presence of a large number of homeless people there would most assuredly diminish property values.
“The city is already struggling to stimulate investment,” he continued. “Ripple should find another site that is in the best interests of all of us.”
But Stanford said the district does not plan to return to a sealed bid process, meaning Cortex’s joint project proposal with Barefield is moot for the time being.
Instead, Stanford believes in the community vision presented by Ripple and Community Action.
Leaders of the nonprofits told The Morning Call in August they see the two sites working in tandem to fulfill critical needs of the community.
Families living in the affordable housing units could send their children to the youth center, and people leaving Community Action’s Sixth Street Shelter could seek permanent housing at Ripple’s proposed Turner Street site.
“We are focused on how to provide more opportunities for students after school hours,” Stanford said. “Both proposals were aligned to our strategic direction.”
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Williams said he doesn’t have enough information to say whether Cortex will pursue a lawsuit against the district or Ripple, but said the dispute has likely already delayed the development of any affordable housing project at the McKinley site.
Following the dissolution of Cortex’s partnership with Ripple, Williams said Allentown rescinded $2 million in HUD Home funding for the affordable housing project the two proposed for the site.
Genesis Ortega, Allentown’s communications manager, said the money was never formally committed, and thus not rescinded.
“It was determined that this project is at least two years away from being shovel ready and that no one had site control,” Ortega said. “There are still outstanding questions about the project’s feasibility because of a lack of due diligence.”
Ortega said the city needed to reevaluate the project with the new partners involved, but would not share who the new partners are. Ortega instead directed The Morning Call to Ripple.
Representatives for Ripple would not talk to a reporter for this story.
Morning Call reporter Jenny Roberts can be reached at 484-903-1732 and jroberts@mcall.com.