For decades, hundreds of houses in Philadelphia and its suburbs have sheltered recovering drug users. Entrepreneurs, many themselves formerly addicted, invested in cheap, dilapidated mansions and rowhouses, filling them with addicts struggling to get clean.

Linked to Philadelphia's extensive treatment services, the houses were largely financed by the residents' small monthly welfare checks.

Until Aug. 1. That's when the state cut off those payments, ending general assistance for some 68,000 people, including several thousand addicts. Food stamps and medical assistance remain.

But without the cash, the houses are threatening to shut down. Residents and their neighbors - especially in Frankford and Kensington, where recovery houses are concentrated - fear a surge in addiction, crime, and homelessness.

"We will see more folks in the streets, more folks will be homeless, more folks will provide challenges and end up in our jails, crisis centers, and emergency centers," predicted Roland Lamb, director of Philadelphia's Office of Addiction Services.

Gary Doughty, 57, of North Philadelphia, said he could be one. "I've been drinking and drugging all my life," he said. "I'm not ready yet to go back out on my own. I'm too old to be sitting on a street corner with a cup in my hand."

Recovery houses have a mixed reputation in the city. Neighbors complain about problems ranging from crime to loitering. City officials say the houses are uneven but provide a critical service on the path to recovery. Many provide rules and connect residents to the city's drug services, considered among the best in the country.

An estimated 300 to 500 houses provide shelter for some 4,000 people each night in Philadelphia, said University of Chicago professor Robert Fairbanks, who has studied the city.

Similar pockets exist in some suburbs. Levittown in Bucks County has 68 recovery houses, in part because zoning in several townships does not exclude them, said Beverly Haberle, executive director of the Council of Southeast Pennsylvania, the regional affiliate of the National Council on Alcoholism and Drug Dependence.

At $205 per month since 1982, general assistance payments spurred the emergence of a "gray economy" of unregulated recovery houses, mostly in North Philadelphia, said Fairbanks, who published his dissertation on Kensington recovery houses in 2009.

Fairbanks said the minimal subsidy endured in Pennsylvania while other states gradually slashed it. It encouraged people to pool their cash and food stamps and live in homes where the structure and access to care provided a bridge to recovery.

He said people come to Kensington - at first blush "a strange place to come to get sober" - from Baltimore; Newark, N.J.; New York; and even Puerto Rico, because "they can get an access card [for cash assistance] and they can live." (New Jersey, with no similar support, has far fewer recovery homes.)

These houses exist around the city, but North Philadelphia, and particularly Frankford, is "the recovery-house capital," said Stephanie Scully, a recovering addict turned real estate mogul. She runs 10 recovery houses and owns 47 properties, mostly in North Philadelphia.

She, like many in the recovery-house field, credits her success a decade ago to her own stint on general assistance in a recovery house.

On the wall above her desk is written "Jails, Institutions or . . . STEPH's" in bold letters.

The extent of services ranges widely. Thirty-two houses have a relationship with the city, either through contracts or vouchers, but hundreds of others run with no oversight.

Fred Way, vice president of the National Association of Recovery Residences, in Georgia, wants to change that.

The fledgling group, begun in 2011, and the even younger Philadelphia Association of Recovery Residences want to upgrade the haphazard houses by developing standards.

Way described a lopsided ratio breakdown between good and bad recovery houses. "Eighty percent are run by people who really care," Way said, "but those 20 percent can be a major bad."

Pete Specos, president of the Frankford Civic Association, sees a different ratio. "There are 10 bad ones for every good one," he said.

Specos decried the presence of "drug addicts hanging on the corners."

"The people who live in the neighborhoods here are disgusted by it," he said, citing declining property values and high crime rates.

Lt. Derrick Wood of the 15th Police District, covering Frankford, said he had not heard any specific complaints about the homes from residents or colleagues in his nine months in the area.

What will happen now is anyone's guess. Though he dislikes the homes, Specos thinks the cuts will only worsen the situation. "A lot of these people who relied on that money for housing are going to be left out on the street, so now you're going to have more people roaming the street and more crime."

The cuts are sending tremors through residents.

"I'm going to go back to sleeping outside, ballistic animal behavior, selling drugs. I have nowhere else to go," said Tony Haile, 50, a bearded, burly Delaware native. He is terrified he will lose his place at his recovery house, Project Forever Striving in North Philadelphia.

The simple rowhouse, run by Letitia Mack, who said she has been drug-free for six years, is one of four houses she owns; 24 formerly addicted men live in her houses.

Haile's living room is cramped, with well-worn couches butting against the dining-room table. A TV blares gospel inches away from the tight seats. The men look at ease in the smoke-tinged room.

Mack connects them with education, job training, daily Alcoholics Anonymous and Narcotics Anonymous meetings, and weekly church services.

But the stability is fragile. "This place isn't going to run on feelings," Haile said.

Mack doesn't know how she'll fill the wide budget gap in her business. She is encouraging participants to seek work, which is in itself a risky move; money, she said, can be a "trigger" for recovering addicts to resume their old ways.

Already since the cut, three of her tenants had gotten their first paychecks from temporary jobs and ended up "on the street smoking crack." She said she had to kick them out so they wouldn't influence other residents.

Mack said general assistance covered 70 percent of her budget. Now she is applying for funding "from anyone that will look at our proposal" and "keeping faith in God" to keep her houses running.

Fairbanks, the Chicago professor, said, "I thought the state would not be stupid enough to cut them. They get an enormous benefit for nothing." He said the general assistance and the recovery houses became an affordable housing option, "though they weren't planned that way."

The recovery houses were not targeted by the cuts, said Anne Bale, spokeswoman for the state Department of Public Welfare. "I have never heard of those programs."

Bale said the $149 million general assistance program was one of the few funded by the state rather than the federal government, and so was one of the few line items the state had the power to cut.

Recovering heroin addict Cindy Kelly, 53, said she cycled through four recovery houses in the last two years. The worst had her in a "financial blackout" where she couldn't leave until she paid off rent that was more than her welfare check.

Some houses drift from recovery to drug dens as residents relapse and owners let them stay. Kelly recalled how one house refused to let her use an oxygen tank prescribed for her pneumonia.

Bailed out by her son, Kelly is now happy with the program at the Joy of Living, a 10-house recovery program.

She thinks others won't be so lucky. "A lot of people will be dead," she said. "I guess that's the purpose. These people are disposable."