HARRISBURG - Control of the South Philadelphia nonprofit that former State Sen. Vincent J. Fumo described as "my baby" has been turned over to a conservator under an agreement with state authorities.

Paul R. Levy, who heads Philadelphia's Center City District, is to assess the remaining assets of Citizens' Alliance for Better Neighborhoods - now little more than a landlord to two dozen properties - and make recommendations to a judge about its future as a public charity.

The agreement with State Attorney General Tom Corbett, who sued Citizens' Alliance this year in an attempt to shutter it, also required the charity's board members - all Fumo allies - to resign.

The goal, as laid out in a seven-page consent decree reached last week, is to keep the good of Citizens' Alliance while ridding it of the bad.

"Our objective is to try to strip out all the shortcomings in Citizens' structure and move the organization and its purposes forward as effectively as we can," Mark Pacella, a chief deputy attorney general who heads Corbett's charitable trust division, said yesterday.

Fumo's aides and allies founded Citizens' Alliance in 1991 to help provide community services that city government was not providing.

It was an obscure and tiny nonprofit until the late 1990s, when Fumo secretly pressured Peco Energy to donate $17 million to it in exchange for his dropping a legal challenge against the utility in a regulatory matter. He also arranged for the Delaware River Port Authority to give it an additional $10 million.

Fumo, once among the state's most powerful politicians, is in the fourth month of a 55-month federal prison sentence after a jury found him guilty of 137 corruption charges, including allegations that he misused Citizens' Alliance funding as if it were his own.

Corbett filed a civil suit against the nonprofit in April, alleging that its board of directors and executives knowingly allowed Fumo and his former legislative aide, Ruth Arnao, who also ran Citizens' Alliance for years, to divert its funds for their personal use.

In late April, the nonprofit stopped providing the services that the South Philadelphia community had grown to expect from it - street sweeping, graffiti removal, and bulk trash pickup, among others. At the time, Citizens' Alliance said it made the move in part because the group had to use resources to cover expenses from continuing government investigations.

It will be Levy's job to audit the remaining assets of Citizens' Alliance, and recommend to the court what should happen to them and whether the nonprofit - or another - should start providing community services again.

"Clearly, there are assets and activities there that have merit. It's my job to determine which ones," said Levy, who has served as CEO of the Center City District, a business improvement effort, since it was founded in 1991.

The Attorney General's Office believes the nonprofit has about $18 million in assets, most of it tied up in 22 properties in South Philadelphia either owned directly by Citizens' Alliance or by its for-profit subsidiaries.

Tenants in the properties, most along Passyunk Avenue, range from restaurants to a state liquor store, a post office, and two charter schools.

Pending the outcome of the case, lease arrangements at those buildings will not change, said Levy, who will be paid $225 an hour from existing Citizens' assets as interim conservator. He has six months to report his findings and recommendations to Commonwealth Court Judge Dan Pellegrini.

The consent decree settles portions of Corbett's suit, namely dismissing claims against former board members and executives of the nonprofit. Corbett, however, will continue seeking restitution of more than $3 million from Fumo and Arnao, the agreement says.

Citizens' Alliance attorney Thomas A. "Buck" Riley Jr. called the deal "a really happy ending to what started out as a total recipe for disaster."

Initially, Corbett sought to rescind the nonprofit's charitable status and liquidate its assets. Now there is a possibility that Citizens' Alliance might emerge from the process to again serve the South Philadelphia community, though likely at a diminished capacity, Riley said.

"I have a real serious question whether it ever will return to what it once was," he added, "but there are significant assets there that can be used for the types of things they did in the past."

Contact staff writer Mario F. Cattabiani at 717-787-5990 or mcattabiani@phillynews.com.