The business improvement district charged with the marketing and maintenance of a Philly shopping and nightlife hot spot is pointing to apparent mismanagement under previous leadership for bleeding its budget into the red.

Now the group's new leader is launching an independent audit and canceling major events, including the popular South Street Fest.

The South Street Headhouse District collects fees from area businesses to promote events and steer traffic to Fabric Row, Headhouse Square and South Street. It is supposed to use those funds to promote the area, which has struggled with nixed new businesses, major shootings and water main breaks in the past few years, tarnishing its image.

But when then-Director Michael Harris abruptly left the organization this past summer after 11 years, cracks began to show, The Philadelphia Inquirer reported. The district failed to set a formal budget in 2023. And by December, it claimed to hold a total of just $20K in funding and a $50K credit card balance, a worrisome figure for a group that had been operating with a nearly $1M budget in years past, according to the Inquirer.

Eleanor Ingersoll took the helm as director of the SSHD at the end of the year, just as the organization’s authorization from the Philadelphia City Council was renewed after a yearlong lapse. Upon seeing the state of district books, Ingersoll called for an independent audit and moved to cut costs, including canceling the 2024 South Street Fest, which draws in tens of thousands of people each year.

A second cost-cutting measure that would have removed district-operated trash cans is off the table after public backlash.

Complaints about SSHD began racking up late last year, including accusations the organization failed to collect member fees. Some member businesses made repeated requests for an initiative to collect delinquent assessments and described multiple accounts that owed more than $10K, meeting minutes show.

SSHD was also remiss in filing court liens to collect fees owed by delinquent property owners, according to an Inquirer analysis. From April 2021 through the end of 2023, it filed no liens, but it had filed about 200 liens the two years prior.

The business district is facing legal troubles for not following through on a promise to reimburse a member for renovating vacant commercial space at condo site Abbotts Square. District member and local nonprofit drag arts group Bearded Ladies Cabaret Co. has filed suit against the SSHD, claiming it is owed $51K after fronting the cost of improvements for a new performance space.

That building ended up selling at a sheriff’s auction last year, the Inquirer reported.

The SSHD is also in danger of losing its home at Headhouse following complaints from neighbors of shoddy property upkeep. A new conservancy backed by the Society Hill Civic Association, the Philadelphia Society for the Preservation of Landmarks and other neighborhood interests will maintain the space.

Richardson Dilworth, a professor of politics at Drexel University, told the Inquirer organizations like the SSHD can operate for years despite dysfunction due to a lack of internal controls.

“There’s not a tremendous amount of [political] oversight either,” he said. “For all that, I would say it’s uncommon for there to be this level of mismanagement.”