Audit: Pittsburgh property sales 'shrouded in secrecy,' open to fraud
Pittsburgh and the Pittsburgh Urban Redevelopment Authority are sitting on thousands of tax delinquent properties for years because of a public sales process that is “shrouded in secrecy” and difficult to navigate for potential buyers, according to an audit released Tuesday by the city Controller’s Office.
Controller Michael Lamb said the sales process is open to favoritism and potential fraud because it is rife with problems uncovered by the audit.
He said auditors found more than 5,000 properties are being held by the city and URA, and the city is losing thousands annually in potential tax revenue by allowing them to sit idle.
“A process that is a public process, a process that really should be very open and transparent, we find very much shrouded in secrecy both here in the Treasurer’s Office and in the URA that plays a pretty significant role in property disposition,” Lamb said. “It really creates opportunities for favoritism and potentially for fraud, and as we saw last year, we had a serious problem in that department.”
He was referring to the case of city Real Estate Manager Aaron Pickett, who oversees city property sales.
In 2017, Pickett purchased a city-owned house in Beechview for $2,500. The Pennsylvania Ethics Commission found that he violated the state’s Public Official and Employee Ethics Act by executing a sales agreement between the city and himself.
The commission fined Pickett $5,000. The city has taken no action against him following an investigation by the Office of Municipal Investigations because employees are permitted to purchase city-owned properties, Lamb said.
He called the OMI investigation “a failure” and suggested that Pittsburgh Ethics Hearing Board should conduct an investigation and dispense discipline.
“The individual was the manager of the office, was the person who set price for the property, acted as the buyer and the seller of the property,” Lamb said. “That’s a textbook definition of a conflict of interest.”
Pickett did not respond to a message left at his office seeking comment.
Tim McNulty, spokesman for Mayor Bill Peduto, declined comment on Lamb’s characterization of the Pickett case.
Lamb said potential buyers experience difficulties in navigating “cumbersome” rules for purchasing and being cleared as a buyer by the city and URA. He said the URA has denied property sales while holding parcels for as long as 50 years without specific development plans.
Between April 2017 and December 2018, 810 properties had potential buyers and the URA denied 417 of the sales, citing a variety of issues including incompatible proposed use, and that the properties were being assembled for a larger development, according to the audit.
Auditors also found in analyzing 95 properties that the city lost at least $129,000 in potential tax revenue by holding them for five years or more and denying their sales.
The URA did not immediately respond to a request for comment. McNulty referred questions to the city’s written responses contained in the audit.
The city Finance Department, which includes the Real Estate Office, said that it was working to expedite property sales by hiring two more real estate employees. It said it was working to streamline the process and do a better job of advertising sales.
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