Once-Shuttered Factories Are Now Manufacturing Jobs in Philadelphia

As North Kensington goes from post-industrial derelict to next hot neighborhood, CDCs and socially minded developers hope revitalization can sidestep displacement of longtime residents.

Philadelphia's Kensington neighborhood, seen from the roof of the former Orinoka Mills factory (Photo by Max Marin)

Linda Mottolo remembers when her brother worked at Orinoka Mills back in the 1980s. She also remembers a decade later, long after the jobs vanished, when her daughter would break into the shuttered factory building to shoot heroin.

Many properties in Philadelphia’s Kensington neighborhood, about 3 miles northeast of the city’s core, tell a similar story.

“There were eight rowhomes here when I moved to the neighborhood,” Mottolo says, standing amid a cluster of vacant lots, as she watches her grandchildren play. “Then they all turned to crack houses. Then they went up in flames, one by one.”

Law enforcement officials have long recognized Kensington, and the adjacent Fairhill neighborhood, as one of the largest open-air drug markets on the East Coast. In online forums, anonymous drug users refer to visiting the area as making the “hajj,” riffing on the Arabic word for holy pilgrimage. The heroin sold there is known to be among the purest available. Abandoned properties offer a glut of injection spaces. For longtime residents, this means living on the front lines of the U.S. war on drugs, in a place that saw more concentrated overdoses, more police stops and more narcotics arrests in 2015 than any other part of the city.

Yet when Mottolo and other residents look around today, they also sees hints of revitalization. Neighbors and organizers from the New Kensington Community Development Corporation (NKCDC) are talking about how to turn vacant lots from drug havens into public spaces.

“In the past few years, we’ve started seeing changes,” says Carlos Mitti, a longtime resident and president of the Somerset Neighbors for Better Living, a civic organization that works closely with NKCDC. “People who were afraid before are now coming outside and caring about their community.”

Sandy Salzman, of NKCDC, gives a tour of the Orinoka building midway through rehab. (Photo by Max Marin)

Until recently, the 5-story Orinoka Mills building, a vestige of Kensington’s former industrial glory, was indistinguishable among dozens of factories that have blighted North Philadelphia’s skyline for decades. But November marked one year since the NKCDC broke ground on a $16.2 million rehab of the old textile plant, funded with a mix of public and private dollars, including some from the city. In June, Orinoka Mills will reopen as the Orinoka Civic House, a complex with 51 units affordable to low- and moderate-income renters, a coffee shop, a community space and, equally significant, NKCDC’s new headquarters.

The project is a landmark advance in the warp-speed development of a larger swath of Philadelphia called the River Wards, the neighborhoods that sit between the Market-Frankford El transit line and the Delaware River. Over the last two decades, NKCDC’s efforts, which are fastened around community empowerment and key real estate investments, have helped stabilize parts of Kensington just south of Orinoka, efforts that in turn helped attract significant public and private capital. The Licenses and Inspections department is on track to issue more new construction permits in 2016 in the River Wards than in any other year in recent history. As of October, the agency had already surpassed the 2015 record of 220 permits, more than double the number issued for the area in 2010.

Consequently, the southern reaches of Kensington are starting to see the issues typically associated with gentrification: rising rents, anxieties about displacement and a cultural shift brought on by an influx of businesses catering to new residents. But in Mottolo’s neck of the ‘hood, where more than 50 percent of residents are living on $25,000 a year or less, those concerns are at a distance. For now, in the area around Orinoka, new development means displacement of something else: the entrenched drug trade.

Still, mindful of higher rents to the south and the signs of dealers being dislodged, local nonprofits are working together — along with residents and private real estate investors focused on social impact — to foster inclusive development with an eye on a turnaround that benefits all.

A CDC With a Plan

Just over a year ago, Kevin Gray, NKCDC’s real estate development director, was at a city auction watching regular bidders yawn at vacant parcels within the boundaries of the nonprofit’s 2013 North of Lehigh Revitalization Plan. Even $2,000 for a corner plot was no blood to the sharks.

“People just passed on them,” Gray says of the sluggish sales in the area north of the main Lehigh Avenue corridor where the Orinoka building is. “There was interest, but there weren’t a lot of people buying.”

The shrugs in North Kensington were a stark contrast to the market frenzy south of Lehigh Avenue. At a sheriff’s sale in May, a vacant lot in that section sold for $46,000, while a rehab-ready brick rowhouse — just north of Lehigh — sold for a quarter of that.

But in the months after construction workers updated the facade of Orinoka Civic House, making it look more like a new development than a derelict factory, attitudes began to shift on the auction scene. Multiple sources familiar with the Kensington real estate market say that there is now a circle of developers who will follow NKCDC wherever they go. The mentality, according to one source, is: “Let’s buy literally everything around NKCDC, [because] that’s going to be valuable.”

Beth McConnell, of the Philadelphia Association of Community Development Corporations (PACDC), notes that the traditional work of CDCs is to stabilize historically disinvested neighborhoods like Kensington and make them healthier, more attractive places to live for both the current population and new residents who might come in. There’s also a perennial concern in the CDC world over displacement, as neighborhoods that poor residents could afford become more expensive. Hence, McConnell notes, the importance of Orinoka’s affordable ambitions.

“NKCDC is seeing the trends of development pressure moving into the neighborhood, but also recognizing — for the people that are living here — they might not be able to afford some of the new stuff that’s being built,” McConnell says.

While NKCDC’s Kensington stabilization plans for north of Lehigh began years ago, their ground game is more visible than it has ever been. In line with its master plan, the group is simultaneously building affordable housing, hosting homeownership workshops, beautifying vacant lots and fostering a healthy community network.

A map from North Kensington Community Development Corporation's North of Lehigh Revitalization Plan

They’re also working on curtailing the drug market. In the months since Orinoka construction began, 24th District Police Captain Daniel O’Connor has seen the effect of the $16 million rehab.

“We have less calls for service in the area,” O’Connor said at a community meeting in October. “In the last year, there was one shooting in the immediate area of [Orinoka], which is a dramatic decrease.”

He cited a combination of factors. NKCDC has been working closely with the police district to foster public safety, by installing security cameras and improving lighting at the Orinoka site. But equally important, O’Connor said, pointing to the packed church room under the roaring El tracks, more community members are getting involved.

None of these changes is happening in isolation.

Beyond Orinoka, the final part of NKCDC’s master plan — spurring capital investment — is progressing at an unprecedented clip. Developers are moving north of Lehigh at the same pace if not faster than the Orinoka building is being converted. Those vacant lots around Orinoka that Gray saw ignored for $2,000 are netting $4,000, $6,000 and in several cases more than $10,000, at auctions.

“This is America,” says Sandy Salzman, NKCDC’s executive director. “You can’t stop private enterprise, which is why it’s so important for us to get in here and help the residents who are still here so they can stay.”

From Abandoned Factory to Job Creator

NKCDC isn’t operating in a silo. They have always kept close communication with major developers in their service area, and north of Lehigh is no exception. But what’s different now — compared to when the CDC started its work in East Kensington over a decade ago — is that smaller developers aren’t playing wait-and-see with the CDC’s capital investments. They’re jumping in early.

Half a mile north of Orinoka, Mike Parsell and his small crew at A-Frame Constructs are rehabbing a former lamp factory into “artist lofts,” which will begin renting for $750 a pop sometime next year.

“If people ask me where is the best place to make an investment and fix something up, I’m very open with them about north of Lehigh,” Parsell says.

His selling points are familiar to many people who’ve been lured to city living across the U.S. in recent years. Kensington is close to public transit and yet still affordable. It has a layered history. And it’s also one of the most diverse neighborhoods in Philadelphia: majority Latino, with sizeable white and black populations, and a large community of Asian immigrants.

Parsell plans to relocate his woodshop into the basement of the old factory, and at the same time, there are much bigger business plans for the heart of Kensington.

In January, Philadelphia developer and entrepreneur Leo Voloshin quietly purchased the 100,000-square-foot Lomax Rug Co. building for $870,000, just a few blocks north of Orinoka. He plans to move his 30-employee South Kensington-based textile design company Printfresh Studios there by next year.

The owners of Johnny Brenda’s and Standard Tap — two bars that were harbingers of development in two other Philly neighborhoods, Fishtown and Northern Liberties — have reportedly eyed a location north of Lehigh as well.

But no one has shown interest in the area quite like the real estate investment firm Shift Capital, which has an office there. Shift began purchasing properties in the neighborhood back when NKCDC’s North of Lehigh Plan was still in its draft phase. Over the last three years, the firm has acquired more than 1.3 million square feet of space in the heart of Kensington. Real estate records show that the group has added more than a dozen properties to its portfolio in the last year, from vacant corner lots along Kensington Avenue to residential buildings.

While there’s already evidence of house flipping for quick profit in the area, Shift CEO Brian Murray says he hopes that the boom in North Kensington skips other all-too-familiar patterns.

“We already know what happens in these neighborhoods. It starts with the auction pricing, but it’s a never-ending cycle of developers and real estate folk thinking that they can squeeze more money out of the neighborhood,” he says.

Murray says Shift’s model is holistic. It starts with taking industrial buildings and returning them to job creators for the neighborhood. Healthy food market Snap Kitchen brought 80 employees to the neighborhood in a Shift development in 2015. Murray says the ink is drying on a lease with a wedding company.

“This is something that I don’t think has happened,” he says. “In a lot of other gentrifying parts, a lot of folks take the industrial and convert it into condos and residential for the quickest buck.”

In 2015, Snap Kitchen set up a food prep facility in Kensington's MaKen Studios South, above, developed by Shift Capital. (Credit: Shift Capital)

Murray and Matthew Grande, co-principal at Shift, are also piloting Jumpstart Kensington, which is modeled after a successful program in Philadelphia’s Germantown. Jumpstart’s goal is to provide mentorship and short-term financing to social impact developers who want to bring opportunities back to the neighborhood.

“There’s a number of developers that I have taken on tours of the area, and they’re honest about their goal, which is just to make money,” says Casey O’Donnell, president of Impact Services Corporation, a jobs-focused nonprofit in Philadelphia. “Shift is honest about their goal too … But they really do believe in a double bottom line, if not a triple bottom line.”

City Council recently designated a number of properties in the area as Keystone Opportunity Zones, utilizing a state program that provides temporary tax relief for businesses operating in underperforming corners of the commonwealth. Of concern, however, is that there’s only a small window of time to achieve the double bottom line before the area shifts into a seller’s market, which, Murray notes, begins with the rising auction prices.

A Neighborhood’s Next Steps

On his first day at Impact last year, O’Donnell knocked on NKCDC Director Sandy Salzman’s door. After breaking down the silos and service boundaries of old, the nonprofits are now working closely with Shift and a few other civic-minded developers who are looking to job creation in both Impact and NKCDC’s areas.

Once a month, this informal coalition meets for happy hour at Bentley’s, a corner bar that Shift purchased last year.

As much as O’Donnell dislikes the nebulousness of the term, he realizes that “gentrification” is coming north of Lehigh, and also that coordination among stakeholders is necessary to deal with everything from affordable housing to public safety concerns. For example, although a greater police presence might have dampened drug sales on the corner outside Bentley’s, the tactic means dealers have just been pushed to other blocks.

“It’s like squeezing a balloon. As soon as the purchases around Orinoka started and the greater police presence at Somerset and Kensington, [drug traffic] bumped up at McPherson Square,” he says.

Maria Gonzalez, the director of HACE, the CDC that covers parts of Fairhill and West Kensington, says it’s still too early to tell how much ripple effect the incoming development will have on crime and drug sales.

“Three or four of the largest drug corners in the city are already in my neighborhood. They’re already here,” Gonzalez says. “We cannot be afraid to tackle the problem because we’ll displace it somewhere else.”

But Gonzalez adds that she hopes that leaders can be strategic in how they address root problems of the high-poverty neighborhoods.

Community building is one of those challenges. Carlos Mitti, who has lived in the neighborhood for 17 years, says that fear plays an outsize role among neighborhood residents who feel trapped from the crime and drugs around them. But the new dialogue being fostered by his neighborhood group and NKCDC has changed some of that.

“This has been the main struggle with the community,” Mitti says. “Cameras were a big no-no. People thought they would be seen as spies for the police. But now that’s changed. … They’re talking to each other more, too.”

Salzman hopes those conversations will continue after her retirement.

She plans to step down as director next year, and is looking to leave the CDC in hands capable of addressing Kensington’s next chapter. Her replacement may not be a local. NKCDC’s board of directors is conducting a national search for its new director, says board president Wesley Cascone. They’ve hired a consulting firm that recently brought executive directors to similarly sized nonprofits in the Philadelphia region.

“We can’t all be San Francisco,” Murray, the developer, says. “If you don’t have a strategic answer for that beyond the next two years, then you’re in danger of doing exactly what’s going on in Fishtown right now, where a one bedroom is $1,400 a month.”

Editor’s Note: This article has been changed to clarify that Orinoka Civic House will have low- to moderate-income rental units only and no market-rate housing.

This article is part of Next City’s Philly in Flux series made possible with the support of the William Penn Foundation.

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Max Marin is a journalist in Philadelphia.

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Tags: philadelphiajobsreal estatephilly in flux

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