DA Krasner's company owed Philly school district $130K in taxes

When WHYY caught Philadelphia DA Larry Krasner with an unpaid $10,000 property tax bill on his former law office earlier this month, he called it “an oversight.” But court records linked to two real estate companies Krasner has a stake in show that the city’s top prosecutor is no stranger to tax delinquency.

In 2016, city lawyers issued a $130,000 judgment on behalf of the School District of Philadelphia for unpaid Use & Occupancy Taxes against a company called Tiger Building LP, which owns several prime downtown properties. Corporate filings show that Tiger lists another company as its principal contact, with Krasner named as president of the latter corporation.

Use & Occupancy taxes are levied on all businesses that lease or own property in Philadelphia to pay for public school services. A spokesperson for the DA acknowledged the outstanding tax bills, stating that Krasner and his partners have been working with the city to pay off the debt.

"Long before being elected District Attorney, Larry Krasner became a commercial property owner with multiple partners in Center City,” DAO spokesman Ben Waxman said. “At times, due to vacancy, late payment of rent by tenants, or economic downturn, the owning entities fell behind on taxes. When this occurred, they have found ways to catch up, or have entered into payment plans, as is reflected in public records."

Krasner declined to answer specific questions about the nature of his past business dealings, but past court filings show that the company had gone years without paying certain taxes. Subsequent judgments indicate that the group may have fallen behind on its payment plan in the past.

Krasner and another attorney, Bob Diamond, formed a corporation called Little Street of Clubs, Inc., in 2006. That entity later spun off a holding company called Tiger Building LP in 2008. The same year, Tiger Building closed on a $1.3 million deal to acquire two brownstones adjacent to Krasner’s law office in Center City.

But what should have been a prime deal in a booming downtown real estate market soon soured. Court records show that Tiger was sued by tenants in 2011 for allegedly failing to make good on promised renovations. That suit was later settled out of court.

Other records show that Diamond, Krasner’s investment partner and a real estate lawyer himself, was simultaneously facing financial turmoil. He had independently faced judgments over unpaid taxes as far back as 1997 and eventually filed for personal bankruptcy in 2014.

The two attorneys’ company appears to have fallen behind on tax payments shortly before that time. The same year Diamond filed for bankruptcy, the school district came after Tiger for some $32,000 in unpaid Use & Occupancy taxes. 

In prior emails introduced as evidence in that case, Krasner describes the company struggling to pay off its property taxes. He explains that construction delays had left the buildings with “low or no occupancy for several years” and claimed he was “cashing out retirement funds” to pay off the debt.

In the emails, Krasner asked for more time to clear the debt and proposed entering into a payment plan.

“I think it’s a reasonable request in light of the progress we are making in bringing these taxes up to date,” Krasner wrote to city officials a year before the judgment was filed.

Records indicate city Law Department lawyers dropped the case after they were unable to place the debt into receivership. But by 2016, Tiger faced a judgment filed on behalf of the school district, this time for $130,000 in unpaid Use & Occupancy taxes. 

Court records do not list a resolution for that judgment. 

Asked for the current status of Tiger’s Revenue Department accounts, the city declined to release details about the debt, stating that Use & Occupancy data is “confidential.” Mike Dunn, a spokesman for the Mayor’s Office, said only that “the taxpayer is making payments against the liened liability, but has not yet satisfied it.”

After the publication of this story, Waxman said that Krasner and partners had eventually reached an April 2017 settlement with the Law Department, agreeing to repay some $88,900 in installments to resolve the outstanding Use & Occupancy debt. He produced eleven months worth of checks he said reflected some $27,000 in payments by Tiger Building, stating that the company was now up to date on its payment plan once again – The most recent check was dated March 20th of this year.

Separately, Tiger Building has faced numerous liens filed by the Center City District, a business improvement zone that assesses a surtax on commercial properties for street cleaning, security and other downtown amenities. 

These have mostly been satisfied, but last month the CCD went after Tiger Building for another $4,000 in unpaid fees. That lien has not yet been satisfied, according to court records.

Tiger Building satisfied its mortgage on the Center City properties in 2015, according to city property records, and today valued by city assessors at some $3.6 million. Both Krasner and his wife, Judge Lisa Rau, earn six-figure salaries. Late last year, they sold their Mt. Airy home for $416,000.

Waxman added that Tiger had paid out considerable sums to the city and school district over the years. 

“The partners, whose entities have owned commercial property for more than a decade, have paid hundreds of thousands of dollars in taxes,” he said.