Millions in NTI funds remain unspent

Fourteen years after then-Mayor John F. Street launched his signature effort to eliminate blight in Philadelphia, the city has yet to spend the last of the funds set aside for the legacy project.

About $38 million remains of the $296 million that was raised in 2001 through a bond sale. The money was intended to fund Street's ambitious Neighborhood Transformation Initiative (NTI).

Following then-Mayor Ed Rendell's focus on sprucing up Center City and the Avenue of the Arts, Street wanted to have a lasting impact in the city's neighborhoods, especially the blighted ones, by demolishing thousands of vacant buildings and acquiring properties for redevelopment.

The remaining NTI funds must be spent by March, according to the city's outside counsel. That the Nutter administration is coming to an end in January only adds to the sense of urgency to successfully close out the program. Some of the NTI funds are being aimed at finishing projects started under Nutter's watch. For instance, $638,000 is being used to remake City Hall's north apron. And $1 million more is dedicated to refurbishing the Divine Lorraine Hotel. And $4 million is designated for the Blumberg public housing project in North Philadelphia.

City Council members who have specific NTI budgets for their areas have been caught off guard by the fast-approaching deadline. Some, such as Councilwoman Maria Quiñones-Sánchez, had applied to use NTI money in recent years; it wasn't clear whether the use of funds had been approved or how much was actually left to spend.

"It's crazy, because we were working on a few projects that could've used the money," Sánchez said.

Sánchez represents the Seventh District, which includes most of Kensington and other impoverished areas in North Philadelphia. About $609,615 in NTI funds is designated for the district.

The councilwoman said some of the money is being used for new sidewalks for Norris Square Park.

People who at one point were involved with the NTI were surprised to hear that there was still money left.

"It should have been utilized in four or five years. . . . That assures a level of efficiency," said Jeremy Nowak, who, as the founding CEO of the Reinvestment Fund, was contracted in 2001 to do the NTI prelaunch data analysis. "It got slowed down by politics; it got slowed down by the transition to a new administration."

Street, who was on vacation last week, didn't return a request for comment.

Initially the NTI plan called for the demolition of 14,000 dangerous houses within five years. That would have reduced the city's total number of vacant properties by 65 percent.

In the middle of Street's tenure, there was a shift in the NTI's priorities from demolitions and blight removal to repairing properties and revamping of commercial corridors, said Eva Gladstein, who served as the NTI director from 2005 to 2007.

"Sometimes there was tension between investing smartly and investing quickly," Gladstein said.

By the time Street's administration ended, less than $50 million remained. Nutter inherited that pot of money but immediately closed down the NTI office and froze spending until an audit of the program was completed.

It wasn't until 2010 that spending resumed, and even then it was at a meager rate. The city's bond counsel told city officials in 2010 that they had to spend the bond proceeds by March 2011, but later revised that warning to say the city needed "a plan to spend it," said Brian Abernathy, current executive director of the Redevelopment Authority.

"Without specific pressure on the spend down . . . they weren't looking for immediate projects to get the money spent," Abernathy said.

The bulk of the bond proceeds have strict restrictions and can be used only for the acquisition of property in specific boundaries, for the renovation of publicly owned facilities, or for public-safety issues. Those restrictions make the money hard to spend, Abernathy said.

But now that a hard deadline has been set, Abernathy and his team are working with the various city agencies and City Council members to appropriate and spend the millions left. If not, the Philadelphia Housing Authority will benefit. The housing agency was chosen as the backup plan recipient of any unused funds.

"The PRA has identified the Philadelphia Housing Authority's acquisition activities as an eligible project with the ability to meet the timing requirements associated with the funds," the NTI budget statement for fiscal year 2016 reads.

If the money is not spent by March, the remaining NTI funds will be used to pay back the city's debt from the project. Taxpayers currently are on the hook to repay the NTI bonds through 2031.

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