Though strangers to each other, Jeremey Newberg and Angela Landi have shared a passion for public service.

Newberg has committed his skills as a developer to clearing blight and rebuilding Philadelphia neighborhoods. As a city police officer, Landi devoted herself to fighting crime in those same communities.

Four years ago, their paths intersected in an unexpected and tragic way: Landi was injured chasing a suspect into the decaying shell of a rowhouse that was owned by the South Philadelphia Area Revitalization Corp. (SPARC), a taxpayer-funded nonprofit created by State Rep. William F. Keller (D., Phila) and run by Newberg.

Landi, placed on medical leave, sued, and, in July, won a $4 million judgment against SPARC, which carried $1 million of liability insurance.

Now, SPARC is all but bankrupt, unable to pay the full judgment or to continue any of its neighborhood restoration work - work that theoretically would have helped reduce crime and made Landi's job safer.

The state's taxpayers, particularly those who are city residents, are losers as well.

Much of the almost $4 million in state grants that went to SPARC is now at risk. And there is the possibility that SPARC may never complete its restoration of a 16-block stretch in the heart of South Philadelphia. That makeover, with its plans for 56 new and rehabbed houses, was to be the hoped-for catalyst for private development in the area.

"We are brokenhearted and profoundly disappointed," Newberg said during an interview at the offices of SPARC, in the 700 block of Tasker Avenue. "It hurts. We are effectively shut down."

SPARC is negotiating with its insurance carrier and Landi's attorney in hopes of reaching a settlement that will enable the corporation's project to keep going.

SPARC had targeted a fraying section of South Philadelphia bordered by Sixth and Fourth Streets, and Mifflin and Jackson Streets. Its plan was to replicate the success of Jefferson Square Homes, a 93-house development project that Newberg completed in the four-block area between Reed and Federal, and Fourth and Fifth Streets.

With almost $4 million in grants, secured largely through Keller, SPARC has acquired or controls 95 properties, mostly vacant lots and structures, which ultimately would be turned into affordable, modern houses.

Among the properties was 434 Emily St., a vacant rowhouse bought for $35,000 at a sheriff's sale on May 27, 2004.

On Nov. 8, 2005, the house was still an empty shell when Landi, a 16-year police veteran, climbed through a rear window in pursuit of a suspected car thief. She was on her way to the second floor when the staircase collapsed beneath her. According to trial testimony, she suffered nerve damage and had been unable to resume work as a police officer. She remained on the force, but on medical disability.

At trial, Landi's attorney, Donna Lee Jones, noted that the property had numerous code violations, which SPARC never addressed. A witness for SPARC said he could not recall receiving notice of the violations.

Jones also made much of how little restoration work SPARC had completed - three rehabbed houses for the $3.7 million in grants the nonprofit had received since 2002.

In a recent interview, Newberg defended what he described as a deliberate process by SPARC of acquiring a critical mass of properties before embarking on large-scale rehabs and new construction.

That was done in part, he said, to ensure that the revitalization effort wasn't piecemeal, but broad-based enough to ensure private developers there would be a return if they, too, began investing in particular neighborhoods.

The process also was drawn out because SPARC has eschewed condemnations in favor of persuading homeowners in deteriorating structures to voluntarily agree to sell their homes in exchange for new SPARC-built houses, he said.

"It is really inefficient," he said. "It takes a long time. But it is about establishing a social compact. It is trying to inject respect and civility into the process instead of just saying: 'You have to go.' "

That attitude has won Newberg and SPARC kudos from those how have worked with them.

"SPARC recognizes that every existing house doesn't have to be bulldozed down," Barbara McDuffie, executive director of the United Communities Community Development Corporation, another area nonprofit that managed the rehabilitation work SPARC did complete.

"Their main mission is to provide quality, affordable housing and allowing people to have a say in what goes into the community."

At the moment that mission is on hold.

Keller, interviewed with Newberg, was philosophical about the jury's decision.

"The verdict's over. What are you going to do about it?" he asked rhetorically.

Both he and Newberg expressed optimism that some compromise could ultimately be reached.

"It is vitally important," Newberg said of SPARC's work. "We are not just stewards of public funds. We are also stewards of the land. We are trying to remove blight. We are trying to create a safe environment. We are trying to strengthen the fabric of this community."

Contact staff writer Christopher K. Hepp at 215-854-2208 or chepp@phillynews.com.