There must be days when John Street wishes he'd just run as a "downtown" candidate, and hadn't talked so much about neighborhoods.

Not that he had much choice. Downtown Philadelphia was thriving as Street campaigned for mayor in 1999. It was the neighborhoods that needed attention, and Street's concern for their needs helped put him in office, especially after he made an attention-getting promise: As mayor, he said, he would devote $250 million to ridding the neighborhoods of blight. In a city afflicted with a vast, growing stock of derelict housing, abandoned factories and burgeoning meadowland, this was a vow with resonance.

Still, even Street could not have imagined how his apparently simple pledge would assume a life of its own. What is now known as the "Neighborhood Transformation Initiative," or NTI, has become the hallmark of Street's administration, a sprawling, risky attempt to remake the city and recalibrate the way local government approaches basic matters of growth and revival. So far not a single blighted street has been targeted for renewal, not a house has fallen to the bulldozer, yet the NTI has come to permeate Philadelphia's consciousness. "It has so captured the imagination and the mindset of government," says Michael Nutter, a city councilman who is a frequent critic of Street's, "that any conversation you have with anyone ends up with some reference to NTI. This has been the most discussed program that does not exist I've ever seen."

That was probably inevitable. Even in the planning stage, it has become apparent that an initiative with such wide-ranging ambitions is far beyond the capacity of a single, overburdened city department; its promoters believe it has to become an integral part of what city government does. In particular, they argue, it has to drive city agencies to rethink how they deal with land and housing, how they relate to private and nonprofit developers, how they interact with each other and how they understand the city itself at almost a block- by-block level. Small wonder that Street is well into his third year in office and no one yet knows whether the NTI will become a beacon for distressed cities nationally or a scheme that never quite made it off the ground.

Either way, there will be consequences far beyond Philadelphia. For this city belongs to an unfortunate coterie of old industrial cities-- Baltimore, St. Louis and Detroit are among its brethren--that have missed out on the revival that marked the 1990s in places such as Boston, Chicago and New York. Those reawakened cities have their problems with poverty, housing and education, but they also have two important things Philadelphia lacks: a growing population and a healthy demand for their housing. At heart, the NTI is an attempt to build these back into Philadelphia's mix, on a scale no other city has attempted for decades.

"What you generally see is tinkering around the edges as Rome burns," says Bruce Katz, director of the Center on Urban and Metropolitan Policy at the Brookings Institution. "This is not your run-of-the-mill initiative here. It is highly unusual and very ambitious, and extremely smart in the way it has been designed. What I really like is that it treats land as one of the fundamentals. We've focused in the '90s on schools in Chicago and crime in Boston and New York. But I think with the declining cities, land is one of the critical factors-- and the ability of for-profit and nonprofit developers to get anything done with land is thwarted by a host of bureaucracies, regulations and barriers. That fundamentally is what needs to be fixed."

And it is what makes Philadelphia's experience with the NTI worth watching. If Street and his administration can figure out the roles local government must play to help neighborhoods revive--and then play them--they will have turned themselves into a national model; if they can't, it may be a long time before anyone else tries again.

To get a sense of just what's at stake, it's helpful to take a drive around Rose Gray's neighborhood. Philadelphia is a city full of distinct neighborhoods with long-standing identities, but her stretch of North Philly somehow slipped between the cracks; it doesn't even have a name.

You know you're there when you pass under the elevated train tracks just east of the Temple University campus and find yourself on streets whose gutters are lined with trash and broken glass. Although in the minds of most Philadelphians this area is just a uniform sea of blight, that's not the case; it's much more variegated than that. There are mostly vacant blocks, with one or two scruffy, vulnerable- looking houses still standing amid weed-grown fields. There are gap- toothed streets on which half the houses have been torn down and the lots are strewn with junk--old tires, a cardboard box with wood scraps sticking out, a few rusted paint cans--but the remaining houses are in decent shape. There are streets of abandoned but intact row houses, their windows boarded up or jagged with broken glass. There's a street on which the corner houses are vacant but the rest of the block is made up of small, two-story row houses with undamaged cornices and carefully planted bushes and well-painted shutters that hang straight. You can even find entire blocks of neatly kept row houses, their bricks pointed, their brass address numbers gleaming.

The stretches of livable housing are mostly adjacent to a project built by Rose Gray's organization, the Asociación de Puertorriquenos en Marcha, or Association of Puerto Ricans on the March. APM is one of the more successful community development corporations in Philadelphia, with a 44,000-square-foot shopping center and supermarket, 220 units of rental housing, and a set of duplexes and single-family homes under construction.

The reason the adjoining blocks of older housing look so good is that APM paid property owners between $700 and $1,000 each to put in new windows, fix their roofs, paint their fronts and repair their brickwork. "It was an intervention to stabilize the blocks around us," Gray says. "We did not want to lose our assets."

Gray spent years in private construction, and she tends to look at the neighborhood either in terms of threats to housing she has already built--the drug dealers who live a couple of blocks away, the nearby junkyard with its mountains of scrap and bales of rusted metal--or opportunities to expand. This is because she believes that expanding-- building more housing, putting in green space and trees to buffer intact blocks, doing commercial development on the streets closest to Temple--is the only way to keep the neighborhood from losing ground.

"If we don't continue to build, all this will be lost," she says, gesturing at the lots where workmen are getting ready to start framing APM's new houses. "All the social and physical investment will start to decline, and everyone will say, 'We told you it wouldn't work!'" In essence, she argues, there is a tug-of-war going on for Philadelphia's streets, and the default winner--in the event nothing really happens-- is blight.

As in any older industrial city, there are complex reasons for this. An important one is the disappearance of the local manufacturing economy. "In 1950, 45 to 50 percent of the jobs in Philadelphia were in the manufacturing sector," says David Bartelt, who teaches geography and urban studies at Temple, "and by the early '80s it was closer to 8 percent; that's a real body blow to neighborhoods built around or with access to manufacturing."

But the disappearance of manufacturing is nothing unique to Philadelphia--every older city in America has had to face it. What puts Philadelphia in its own league is the appalling rate at which its housing and its land have been abandoned.

As a whole, the city has lost a quarter of its population since 1950, dropping from 2 million residents to 1.5 million. By the late 1970s, it had something on the order of 25,000 vacant structures, and it has more than that now. "When we looked at the data from the mid-1980s on," says Bartelt, "we found there's been an average of 1,000 demolitions a year, yet the number of vacant properties has stayed the same. So for every demolition, another went vacant."

Disastrous as this has been, the city government has done little about it. Political infighting on the city council, mayors who had other priorities, bureaucracies uninterested in innovating--all have allowed blight to spread unchecked. Even where public programs have tried to make a difference, they've on the whole been ineffectual. "When we controlled for various public programs," says Anne Shlay, of Temple's Center on Public Policy, "we found they had no effect on the rate of abandonment. One, they're not big enough; and two, they're not strategic."

As a result, Philadelphia currently has an inventory of 31,000 vacant lots, 26,000 abandoned residential structures--of which as many as 9,000 are in serious danger of collapse--and about 3,500 abandoned sites with commercial space on the ground floor and apartments above. That comes out to about 60,000 abandoned units altogether. And as Shlay's group found, a single abandoned building cuts the value of nearby houses by roughly $7,500 each, making it harder to sell them, harder to obtain funding for renovations and easier for the owner just to walk away. Abandonment, in other words, begets more abandonment. As Jeremy Nowak, who runs an inner-city investment group and is one of the NTI's chief architects, puts it, "It's not that we have a blight problem. We have a blight machine."

Abandoned housing and unused land are Philadelphia's curse. Could they also represent an opportunity? That's the argument the Street administration is trying to make. "Philadelphia's problem with abandonment is so big," says Joyce Wilkerson, the mayor's chief of staff, "that it's also an untapped resource. If you were to aggregate all the vacant land in Philadelphia, you would have a land mass the size of Center City [the downtown core]. Some of the neighborhoods are so devastated that you look around and realize, if you just took down the two or three buildings left standing, you would have acres. And we might really be positioned to do something with this land if we just get a handle on it."

But there is a yawning gulf between that realization and meaningful public policy, as the Philadelphia Interfaith Alliance can tell you. That group, a collection of the city's churches allied with the Industrial Areas Foundation, set out about a decade ago to build 1,000 units of housing along the lines of the famed Nehemiah Homes projects in Brooklyn and the Bronx--single-family, detached houses that could be bought by people of extremely modest means. The city agreed to provide the group with the land it needed, but could not get clear title to all of it and was unable to deliver more than 135 sites.

The Interfaith Alliance went ahead and built on those 135, but had to return $4 million to investors. It took from the experience a conviction that if the city was going to do something about blight, its leaders would have to be prodded to find a way to make land available. "At the time, those 135 homes were the biggest affordable housing project in Philadelphia," says Ceci Schickel, the Interfaith Alliance's lead organizer. "But that was pathetic. I mean, here we were with 1,000 homes ready to build, we had the money in hand, and they couldn't deliver the land. If you want to turn the city around, you need a critical mass."

The NTI is an effort to achieve this. As passed by the city council in February--after months of bitter dispute between Street and Council President Anna C. Verna over how much oversight the council would exert--the Neighborhood Transformation Initiative will allow the city to float some $295 million in bonds, and use the money mostly for demolitions, land acquisition and other activities designed to turn declining land and buildings into potentially marketable assets. The city arrived at that figure by using the roughly $20 million it had been spending annually on those activities to leverage a much bigger sum; at the moment, $295 million is the amount of debt that $20 million can service each year.

The hard question at this point isn't how to raise the money--it's what do with the money once it arrives. To help answer that question, Street turned to Nowak's Reinvestment Fund, which last year produced an analysis of the city that breaks Philadelphia down into six broad types of housing markets. They range from a few small, "regional choice" areas--places such as Society Hill, where people of means want to live even though they can afford houses out in the wealthy suburbs --down through "high-value appreciating" and "steady" markets to "transitional," "distressed" and "reclamation" markets. On a map of the city, the top three tiers are clustered either right in Center City or on its northeastern and northwestern edges. But the bottom three tiers form the bulk of the land mass and hold 83 percent of Philadelphia's population.

In addition to looking at the city through the cold eye of the market, Nowak's report took the first, tentative steps toward laying out a plan of action. The role of local government, it said, would have to be different at each market level. At the higher end, the city could make it easier for the private market to function by beefing up code enforcement, making the streets look better and making sure vacancies didn't turn into abandonments. The worse the neighborhood, the more expansive the city's role, from developing "aggressive preservation programs" to "responding to all broken window symptoms" to demolishing houses, acquiring sites and assembling land either to be marketed to developers or to be placed in a land bank. In the year since that initial report came out, Nowak's group has built a block- by-block database of both market indicators and social data points-- crime statistics, foreclosures, infant mortality rates and other data --so that it now has an astoundingly rich portrait of city life to guide city officials as they begin deciding how to spend money.

It's not surprising that the 56-year-old Street should be presiding over an effort like this. Although he came to public prominence as a sometimes fiery--even pugilistic--member of the city council from North Philadelphia, he got his start as a housing activist, and he has always had a grasp of the city's political and demographic nuances. He demonstrated this as president of the city council during the 1990s, when he worked closely with Edward Rendell, his predecessor as mayor, to push some of Rendell's politically thorny financial reforms through a reluctant council.

As innovative as his administration's line of attack might be, it has also produced a political dilemma for Street. On the one hand, he needs time to develop an appropriate set of strategies and tactics and then make sure city government can pursue them. On the other, the politics of the NTI are such that Philadelphia is now filled with people--citizen activists, city council members, leaders of community organizations--who want to see results as soon as possible, and have little patience for delay.

The problem grows out of the fact that in order to deal with its blight issues effectively, the city must undertake wholesale change. Street has already proposed folding the myriad agencies that deal with housing into one "office of neighborhood preservation," but even that won't begin to resolve the problem. Part of it, of course, is the difficulty any bureaucracy faces when it tries to change how it does business. "Street likes to talk about 'the B Team,' the people in government who say, 'I'll be here after you're gone,'" says Temple's David Bartelt. "There are all these places filled with patronage appointments who have civil-service protection, so once they're in, it's very difficult to dislodge them. You get a programmed inertia."

At heart, though, the problem is systemic. Take the process for acquiring and disposing of abandoned or tax-delinquent properties. "We're all shocked and amazed with how poorly we do this stuff," says chief of staff Joyce Wilkerson. To begin with, the most up-to-date manual for the process was developed in 1974, and it is encrusted with what Wilkerson calls "urban legends": steps that are required only because someone once decided they were, not because they're part of the law. "We're trying to build a new system," she says, "and we found that 98 percent of it now is manual, it's index cards. No two people do it the same way, and people often think someone else is documenting information they're not. We never understood why we'd do a condemnation, build subsidized housing, and then people would buy the house and get these bills saying they were delinquent on their water and threatened with foreclosure. It turned out that everyone thought the person from the law department was wiping out the lien when it went through the condemnation process, but they weren't. Nobody was doing it."

John Westrum has some thoughts about this as well. He is the lone private developer to build in Philadelphia in recent years, and after selling out two projects of more than 70 houses each, he is convinced there is a market waiting to be tapped. "What we showed people was that there's demand for new construction in the city of Philadelphia," he says. "That had been a question no one could answer because it hadn't been done. We showed it could happen."

But he also showed that it wasn't easy. To begin with, the process for getting permit approvals turned out to be dismayingly archaic; any roadblock, no matter how far he'd gotten along the way, sent him back to the beginning. The city's specifications were written for dense urban buildings, not single-family homes--since no developers had been interested in building them--and ignored decades' worth of improved building materials.

And when it came to dealing with city employees, says Westrum, "it wasn't that they weren't cooperative, there were just too many rules and regulations on how they did their process. Like, you had to use the city to get survey work done. So we tried to pay their overtime, and still they only worked three hours a day: They got to the site, had their coffee break, then they surveyed for a little bit, then they went back to the shop to have lunch, then they came back and had another break, then they surveyed some more. They put in three hours for an eight-hour day."

Beyond the city's own workings, Street and his staff also have to worry about the simple cost of construction in Philadelphia. Construction unions--which are major political backers of the mayor-- have a monopoly on jobs in the city, and the wages they impose are considerably higher than those in the suburbs. "We have to lower the barriers to construction; we're not competitive," says Pat Smith, who heads the five-person NTI office. "We're doing an analysis of what it costs in the city versus the suburbs, and will use it as a platform to convene the unions. It's a hard and tough conversation the mayor's committed to having."

At the same time, though, some union backers want to hear that private developers are also willing to make some sacrifices with their fees--a development Westrum thinks is unlikely. "In all honesty," he says, "to entice developers to the city of Philadelphia, they're going to have to see a risk-adjusted return, which means a higher return. I mean, if it was so great to be building in the city of Philadelphia, don't you think people would be there right now?"

While all this preparation is going on, no actual NTI plan--no set of proposals for what the city intends to do in each neighborhood--as yet exists. And having sold the NTI as a program, rather than as the worldview it's become, Street now has to manage all the cross-cutting expectations that inevitably pop up when a pot of $295 million suddenly appears. Most prominently, there are those on the city council who want to know precisely what's going to be happening in their wards, who look at the fact that most of that money is earmarked for demolitions and worry that the NTI won't be fine-grained enough to reach their territory.

Michael Nutter, for instance, represents a set of neighborhoods along the city border, where residents can move just a few blocks across the city line and wind up with lower taxes and better schools. In his ward, the issue isn't so much blight itself but the specter of blight. "When you've got a store that goes out of business and the people stop paying attention to the folks who live above it, the rest of the block is fine but you've got this massive eyesore at the corner. What do we do with these properties? I need to be able to go home and explain what are the benefits of this particular program," he says. "How is it going to affect our neighborhood?"

Even in worse-off neighborhoods, says Gordon Whitman, a former community organizer who now teaches at Temple's Center on Public Policy, "people don't necessarily want or need large-scale demolition. The city needs different strategies that work in different places-- there's no up trend unless it can make existing neighborhoods more attractive places to live."

But this more targeted approach also has its critics. "What this risks becoming is a long list of perfectly worthy, many already in the pipeline, neighborhood-based redevelopment projects that ought to be funded with CDBG [federal] money," says Mark Alan Hughes, an urban affairs specialist at the University of Pennsylvania. "We're going into 20 years of debt on the theory that we'll capitalize initiatives that will save us in the long run. But really, you're not going to get the needed investment to justify paying off that debt, because for reasons of politics and budgeting most of this will go to traditional neighborhood development projects that don't give you much traction."

The truth is, until Philadelphia starts spending its NTI money, no one actually knows what changes the effort will bring. It may succeed in turning Philadelphia into an efficient marketer of its land, or it may not. It might help the Rose Grays of the city hold back the forces of decay, or it might not. It could find a way to entice private developers to reshape vast stretches of the city, or it could fail. No one knows. But as Jeremy Nowak puts it, "In some sense, you're measuring the risk of doing this versus the risk of not doing anything. So do we have a choice, given the status quo? I don't think so."