Philly spent $7.5M in opioid settlement funds on Kensington revitalization projects. A state committee ruled it wasn’t an appropriate use of the money

A multimillion-dollar project to revitalize Philadelphia’s Kensington neighborhood — funded by money from a nationwide settlement of lawsuits against opioid manufacturers — has been rejected by a Pennsylvania committee that oversees how these settlement funds are spent.

The Pennsylvania Opioid Trust said that $7.5 million spent on the “Kensington Plan,” which aimed to aid residents of the neighborhood hardest hit by the city’s opioid crisis, did not fall under the approved uses of the funds as outlined in the settlement.

The trust can reduce or withhold future opioid settlement payments if they determine that a county is spending funds outside the purview of Exhibit E, the section of the national opioid settlement that outlines how the settlement funds can be spent. Counties have three months to “cure the misspending” before the trust would reduce or withhold funds.

Philadelphia, which is set to receive about $200 million from the settlement, paid in $20 million increments over 18 years, can appeal the decision. The city started dispersing the funds last year before Mayor Cherelle L. Parker took office. City officials declined comment on Thursday.

Some committee members said they supported the work being done in Kensington, but did not feel that it met the requirements of the settlement.

“I just think you have to do the letter of the law,” said State Sen. Christine Tartaglione, a Democrat whose district includes Kensington.

The work already funded in Kensington includes a home-repair program and money to support local schools and parks. In documents obtained by Spotlight PA last month, city officials wrote that “exposure to traumatic experiences ... has been linked to substance use disorders” and that Kensington residents’ trauma puts them at higher risk for substance use.

Officials wrote that the funds for park and school improvements would “ensure these spaces can be accessed safely by children and families living among the epicenter of the overdose crisis,” and argued that its efforts should be covered by the Exhibit E section that allows communities to spend settlement funds to “prevent opioid misuse.”

Tumar Alexander, a member of the Opioid Trust, was Philadelphia’s managing director when the funds in question were disbursed and now serves as a senior adviser to the mayor. He told the committee he would not vote to reject the Kensington expenditures.

He said Kensington was “ground zero” of the city’s opioid crisis, dealing with conditions unlike anywhere else in the state, and that its residents have been uniquely traumatized by seeing open-air drug use on the street for decades.

“This funding, this request for funding and support, intentionally through this program, was for us as a city to reckon and to say we support the revitalization and redevelopment of this community through the existing neighbors that lived through this,” he said.

The money in question was divided between the New Kensington Community Development Corporation and Impact Services, two nonprofits in Kensington, as part of the Kensington Plan, developed after years of community discussions over how to help neighbors and people in addiction in the area.

Bill McKinney, NKCDC’s executive director, said he felt that Kensington was “stuck between the city and the state” and that residents should be “furious their own legislators did this.”

The initiatives funded through the Kensington Plan are preventative measures in a neighborhood where daily life is deeply affected by the crisis, he said. For example, a settlement-funded program to help residents avoid evictions, he said, can help to prevent homelessness, open-air drug use and dealing.

“Think why someone makes it to a point of losing their home. It might be someone who is struggling with addiction: then they’ll be on the street, and we’ll spend hundreds of thousands trying to get them back into a home,” he said.

“And the guys on the corner — they ain’t driving Lamborghinis,” he said. “A lot of them are trying to keep their families in their homes. Now they’re on the corner, selling to another person who’s about to lose their home. What if we stopped that whole cycle?”

Members of the state committee said they were still considering whether a number of smaller programs financed through the Overdose Prevention and Community Healing Fund, another initiative funded with settlement money, were compliant with its requirements. The committee did vote to approve several other Philadelphia programs that received grants through that fund.