THE BUZZ of construction fills the air on South Street, not far from 15th. Hammers thwack away inside a building next to a refurbished storefront, while an electric drill whirs in a building across the street. The activity looks promising to merchants and workers on this long-neglected stretch of South Street.

Promising, despite disappointment that the most prominent building on the block - the long-vacant and historic Royal Theater - continues as it has for 40 years, silent and deteriorating.

"Stuff [new business] is popping up so quick," said Rich Arnold, working at the nearby Tritone bar. "It would be great if the Royal was up and running. It would bring even more people to the area."

The Royal opened in May 1920, as a first-run cinema operated for and by black Americans.

Later came live performances from Bessie Smith, Pearl Bailey and Fats Waller, whose portraits are included in the colorful murals decorating the building.

Yet today, 11 years after the development firm started by another music luminary - Kenny Gamble - bought the Royal, the theater sits shuttered, desolate and unused.

That's despite hundreds of thousands of dollars of tax money that has gone to Gamble's Universal Companies to refurbish the theater.

Initially, Gamble had promised to make the Royal part of a larger entertainment district including a rhythm-&-blues hall of fame.

But many in the Southwest Center City area see the Royal as a major hurdle to restoring South Street's glory. And another blemish on Gamble's development track record.

Public money wasted?

Despite Universal's efforts to repair the Royal's roof, the theater, which is on both the national and Philadelphia historic registers, doesn't look so royal today.

Bricks have fallen from the side walls, and treelike weeds and bushes sprout from the building.

"It's an anchor; we would love to see it developed," said a businessman on the block who didn't want to be identified because he considers himself a friend of Gamble, co-founder of Philadelphia International Records.

"But we're getting a little concerned about how long it has taken."

Maura Kennedy, spokeswoman for the city's Department of Licenses and Inspections, said that an inspector recently found that the building was "not imminently in danger of collapsing."

But others say that the Royal has become a blighting factor.

"What it is doing now is really acting like a millstone," said Juan Levy, an architect and property owner. "It is really weighing down South Street, I'd say, from the middle of the 1600 block to Broad."

Levy was part of the Royal Theater Preservation Association, which fought to save the building from demolition in the 1990s.

Levy said that his group persuaded the Preservation Alliance for Greater Philadelphia to buy the Royal in 1998 from real-estate developer Michael Singer the night before he was to go to court. The city was suing him for "demolition by neglect" of a historic building.

In 2000, Universal got $330,000 from the city's Commerce Department to acquire and restore the building, said Mark McDonald, spokesman for Mayor Nutter's office.

McDonald and officials from the U.S. Department of Housing and Urban Development said that Universal also received a $90,000 HUD grant in 2005 to repair the theater's roof and stabilize the building. Universal added that it also spent an additional $250,000 of its own money for the repairs.

Before he left office this year, former Gov. Ed Rendell awarded two state grants totaling $2.25 million to Universal for the Royal. Gov. Corbett put a hold on 750 Redevelopment Assistance Capital Program grants that Rendell signed when he came into office, and his staff is still reviewing them, said a budget office spokeswoman.

In a statement issued through a public-relations firm, Rahim Islam, president and chief executive of Universal, said that the company remains "eager" to redevelop the theater and has met with the community to explain the obstacles.

"Universal has a long history of successfully developing properties in South Philadelphia and elsewhere, and we plan to maintain that track record," Islam said.

"Unfortunately, none of the plans we have considered for the Royal has proven economically feasible to date, and the depressed condition of the real-estate and financial markets over the past three years have exacerbated that situation."

Islam said that the Royal faces some of the same challenges confronting many old theaters across the country, including the Uptown Theater, on North Broad Street.

"We are a part of this community and are sympathetic to everyone's desire to see a project completed," Islam said. "Right now the markets simply can't justify the investment required."

So, even with thousands of dollars in public money, the Royal continues to languish, another scuffed jewel in Gamble's South Philadelphia empire.

As he drove through the area each day from his Gladwyne mansion to his record company, Gamble was bothered by the blight that had overtaken his childhood neighborhood, and decided to start Universal in the 1990s.

The record-company mogul-turned-developer acquired hundreds of properties, many dilapidated and neglected, through the city's eminent-domain program for $1 each.

Even some of his fiercest critics concede that Gamble was successful in turning around the old 15th and Christian neighborhood - at least in the beginning.

Universal has built housing, a mosque, a restaurant and the Universal Institute Charter School.

But Universal's critics also point to unfinished projects, such as plans announced in 2003 to build 400 apartments and homes in an area bounded by 11th, 19th, South and Federal streets.

Today, many of those properties continue to sit vacant and blighted.

"So many properties are just sitting and rotting, and it's just taxpayer-funded blight," said a neighborhood activist who asked that her name not be published.

Hopeless on South St.

Jessie Frisby, president of the South Street West Business Association, who has owned a business on the block for 40 years, called much of the criticisms of Universal and Gamble unfair.

"That theater sat there for 30 years [before Universal bought it] and was allowed to deteriorate," said Frisby, owner of Jessie's Herbal Essence and Boutique. "The city allowed this to happen. Then when Universal purchased the theater, all of a sudden everyone is in an uproar."

She said that some of the anger directed at Gamble is "political" because new investors are eager to take part in the gentrification boom spilling over from the nearby Graduate Hospital area, near 18th and South.

"People are coming in; they are building," Frisby said. "They are making it difficult on the rest of us. Taxes are going up."

Other business owners grumble that the Royal may again be facing "demolition by neglect."

"I want him [Gamble] to succeed," said Jill Weber, whose Jet Wine Bar opened across the street from the Royal nearly a year ago. "I hope to see something great there."

But Lilavati, owner of nearby yoga studio Temple of the Lotus, was less charitable.

She said that the Royal "represents everything that's wrong with this city."

"The person who owns that building received [city and federal] money to restore that building, and nothing has been done with it," she said. "I feel like this is a city abandoned. It makes me feel hopeless."