INQUIRER STAFF WRITER

Two nonprofits with strong ties to former State Sen. Vincent J. Fumo will no longer receive any grants funded with money from the PATCO High-Speed Line and the major bridges across the Delaware.

The Delaware River Waterfront Corp. on Thursday said it was cutting off funds to Citizens' Alliance for Better Neighborhoods and Spring Garden Community Development Corp.

The corporation's decision followed a report Tuesday by Philadelphia Inspector General Amy Kurland recommending that the two organizations no longer get the grant money because they had won it unfairly in the first place, through their ties to Fumo. The corporation (DRWC) had asked Kurland to audit how the grant money was spent.

The DRWC issued a short statement Thursday saying it would terminate the two nonprofits' operating grants. Tom Corcoran, DRWC president, was not available for further comment.

Citizens' Alliance figured heavily in the federal trial that resulted in Fumo's conviction on 137 counts of corruption, including charges that he used the nonprofit to pay thousands of dollars in personal expenses. Citizens' Alliance continues to operate, but in a much diminished capacity.

Paul Levy, who heads the Center City business improvement district, also has taken on the task of assessing the assets of Citizens' Alliance and figuring out its future. He applauded the DRWC's ruling.

"I never expected nor asked for any funds from DRWC. Given the past history of the alliance, I am very supportive of this decision," Levy said.

Patricia Freeland, a former Fumo aide who runs the Spring Garden CDC, criticized it.

"That is a really bad decision, a wrong decision on their part, and I hope that at some point I'll be able to convince them that it is a bad decision, unwarranted and incorrect," she said. She said her organization has revitalized the neighborhood by rehabilitating housing, supporting a community garden and building a parking lot, for example.

Money from the grants came through a backroom deal in which Fumo, once one of the state's most powerful Democrats, arranged for $40 million from Delaware River Port Authority rail and bridge tolls to be used to benefit Philadelphia. The money has been doled out by a committee formed by the Philadelphia Industrial Development Corp. and DRWC, both of which then had strong ties to Fumo. Of that, $15 million went to Citizens' Alliance and to the Spring Garden CDC.

Some of that grant money was to be paid over 20 years ending in 2021. Before Thursday's decision, about $10 million in grants was still scheduled to be paid to the two nonprofits. The DRWC estimated, however, that only about $3.5 million, including $800,000 in escrow, was actually available in funding.

Kurland's report also recommended that Citizens' Alliance repay about $5.4 million she argued was misspent.

Some of that money went to pay for items such as a Lincoln Navigator for Fumo, but the bulk of it, $4.5 million, was funneled through for-profit subsidiaries of Citizens' Alliance. Kurland argued that the arrangement violated tax laws, although the money was spent as intended.

On Thursday, the DRWC said it was "reserving its rights" to recover those funds.

Contact staff writer Miriam Hill

at 215-854-5520 or hillmb@phillynews.com.