FOR THE PHILADELPHIA Redevelopment Authority, the run-down rowhouse on Newkirk Street near West Susquehanna Avenue was a piece of a much larger legal puzzle.

For Barbara Stevenson-Foster, the crumbling wreck was a growing threat to her home next door.

Bricks from the vacant house tumbled down, smashing her home's windows. Four trees crammed into a tiny back yard were tearing up the concrete in the alley. The house, used by many as a dumping ground, was infested with rats.

So the Daily News got involved and we have a happy ending to share - sort of. The Department of Licenses & Inspections examined the house after I called earlier this month and agreed it had to be demolished right away.

Stevenson-Foster felt her complaints had been answered with the "bum's rush" so she is pleased that the city finally listened. The demolition is now under way.

The true happy ending here would have been what the RDA originally had in mind - to give this and 21 other blighted properties to Project H.O.M.E., a nonprofit organization that rehabilitates properties for the homeless.

But the group is headed by a Catholic nun, Sister Mary Scullion, and the RDA is locked in a legal battle over whether it can give properties to groups with religious connections. The state Supreme Court heard arguments about that last week.

Scullion told me Project H.O.M.E. is not a religiously affiliated organization and the court case has made rehabbing properties more difficult.

"It can further complicate an already complicated situation," she said. "There are no easy answers. It's difficult enough to do this work without having to jump through 10 more hoops."

The RDA's troubles started in 2003 when it took a swath of properties on North 8th Street to give to a group of nuns who wanted to build a school for local kids. One property owner refused to sell and successfully appealed the RDA's condemnation of her home in Commonwealth Court.

That court ruled it was unconstitutional to take property and give it to a religious group.

George Bochetto, the RDA's attorney, told the Supreme Court last week that the agency's efforts to give the land to the Hope Partnership school was all about clearing a blighted area and had nothing to do with religion.

"It's the context that is very important here and it's the neutrality of the selection process," he argued. "We have a unified plan here to correct and improve a blighted area."

Robert Sugarman, the attorney for property owner Mary Smith, countered that the RDA was "cherry-picking" North Philadelphia properties. "There is no evidence that this is part of any comprehensive plan," he added.

It could take a couple of months for the Supreme Court to hand down a decision on the case.

And that leaves me wondering about all those vacant houses falling apart across the city that could be saved and repaired and used as homes for people who work their way through Scullion's well-regarded program.

I'm all for the separation of church and state. But who really cares if a nun heads a nonprofit if the goal is saving old houses to help give people new homes? Scullion isn't making people pass some sort of Catholic test before they get a roof over their heads.

Stevenson-Foster didn't know the RDA had taken control of the house next door. She only knew the problems got worse with each passing month as she tried to defend her house from falling debris and keep up with the clutter from illegal dumping.

"We paid to have it cleaned out," she said last week as a demolition crew gutted the house and prepared to take it down.

"Last summer, I paid $375 to have the trees cut back. I couldn't afford to do it but the tree was going to hit the house. My house is no prize, but it's all I have."*

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