Thursday July 20 4:01 PM ET

By David Morgan

PHILADELPHIA (Reuters) - Cheri Honkala figures there is a simple answer to the daunting social problem that is homelessness in Philadelphia.

``There are 24,000 homeless people in this city and 27,000 abandoned properties,'' the longtime social activist who heads the Kensington Welfare Rights Union (KWRU) says with a teasing smile. ``You don't need to know rocket science to figure out a creative way to put people in housing.''

In reality, she knows only too well that life is never that easy. In fact, it can be bitterly hard for her neighbors -- poor people who have been cast off from public assistance by welfare reform only to join the ranks of America's working poor.

So with the Republican National Convention coming to town on July 31, KWRU is offering a ``Reality Tour'' to visiting reporters in hopes of drawing attention to the misery and deprivation that the best economy in U.S. history has managed to pass by.

``This is the other side of Philadelphia. This is what more than one-third of Philadelphians have to live with,'' she said on one recent tour, driving past dilapidated houses, crumbling factories and abandoned churches in the city's Kensington section.

The tour lasts more than an hour and takes the mostly white, middle-class out-of-towners through a landscape that alternates among neat working-class homes with gardens, squalid row houses, struggling retail businesses and vacant lots.

Welfare Is No. 1 Source Of Income

``The No. 1 source of income in this neighborhood is welfare. The No. 2 source is drugs,'' Honkala said, standing beneath a mural painted in memory of more than 30 children killed by drug violence in an area known to police as the ''Badlands.''

``It's not like people here can afford to go off someplace to visit a tombstone. So they paint murals,'' she said as children gathered around, some bright-eyed and smiling, others with hard expressions, but all eager for a closer look at the visitors.

Two girls, barely 18, posed nearby in a paint-chipped doorway, their faces sporting the heavy makeup and indolence of prostitution.

Honkala explained later that the same bright-eyed children can just as easily gather at one of the neighborhood's many overgrown vacant lots to watch prostitutes ply their trade and drug addicts shoot up, or to puzzle over a dead body.

``I knew a cop who went through Vietnam, but he couldn't hack it here because of the violence,'' she said.

Philadelphia is home to large pockets of poverty and blight. The median taxable income is not quite $3,000 above the official U.S. poverty line of $16,050 per year.

Kensington, two miles (3.2 km) north of the hotels, bars and restaurants that will soon be brimming with Republicans, is the poorest legislative district in Pennsylvania, with a mixed population of 90,000 whites, blacks and Hispanics.

Once an industrial center where Mother Jones marched against child labor in 1904, its now-crumbling brick factories began to close after the Great Depression as textile manufacturing moved first to the South and then overseas.

'Operation Sunrise'

Kensington, part of a larger area once known as the city's drug and murder capital, has been among neighborhoods targeted by a police crackdown on crime known as ``Operation Sunrise.''

Honkala, a former teen-age prostitute and a single mother who danced topless to support herself and her son, has become a local celebrity since moving from Minnesota in 1987. Hard times have stalked her since infancy when her Chippewa Indian father deserted the family.

Later came life with an abusive stepfather, teen pregnancy and a failed marriage. But she managed to attend college, and in 1991 she founded KWRU with a handful of other poor women fed up with ever-diminishing services for poor people.

With its headquarters in the heart of a vibrant Hispanic area, where gleaming muscle cars pulsate with amplified rhythms of the inner city, KWRU serves as an advocate for poor people, whether they are loners in need of a place to stay, addicts looking for treatment or families newly ejected from welfare.

Support from celebrities such as Bruce Springsteen, Jackson Browne and Bonnie Raitt has helped KWRU find permanent housing for more than 450 families. But the organization main's activity is setting up tent cities and squatter camps, which tend to last only until authorities move in and start making arrests.

To some people, Pennsylvania is a model for welfare reform. The state won an $80 million bonus from the U.S. Department of Health and Human Services last year for ushering welfare recipients into jobs. In Philadelphia, welfare rolls have fallen from 212,000 people in 1997 to 100,000 of the city's 1.4 million residents.

But Honkala says reform has only swelled the ranks of the working poor who cannot earn a living wage and whose existence has been hidden by the glare of the country's larger prosperity.

Still, she offers no prescription for addressing the inequities of the U.S. economy. ``Don't get me started,'' she said. ``I just know that some people live with too much and some people with nothing. And that's wrong and bad.''

Marching On Gop For Social Justice

Come opening day of the Republican convention, Honkala will take her place among demonstrators determined to march for social justice without a permit. ``(The police) have told me I shouldn't take it as a threat but that I should expect to be in jail for no less than a week,'' she said.

She says a marker of social injustice is a lack of banks in poor neighborhoods that leaves people to contend with predatory lending practices and the high fees of check-cashing services.

``This was the last bank in the neighborhood,'' she said, pointing to a limestone edifice. ``It survived the Great Depression, but it couldn't survive the 1990s.''

Despite KWRU's lofty ideals, critics say Honkala spends too much time getting people arrested by moving one group of poor people into vacant housing earmarked for others. Sometimes her emotional rhetoric also seems one-sided.

At one point on the recent tour, Honkala stopped on a glass-strewn pavement across from a razed city block and spoke in lowered tones about an adjacent ``drug alley'' where an indolent young Hispanic man sat on the hood of his car.

``This is where poor kids who want nice jeans and sneakers come to sell drugs -- and get arrested,'' she said.

As if on cue, a disheveled-looking young woman in a filthy summer dress, with a lion's head tattoo on an arm blistered with needle marks, ambled past in the direction of that very place.

But a block away the mood of two black women was upbeat.

``This is my neighborhood and these people are really good people,'' said Tina, a blithe young woman with gold-dyed braids.

Her friend noted that the razed city block nearby would soon be home to a new school, police station and playground. ``There are things to look forward to around here,'' the friend said cheerfully.

Honkala is no stranger to big-time media coverage. A segment of ABC's current affairs program ``20/20'' once pointed out that she had four homeless people living with her in her studio apartment. When her landlord heard about it, he evicted her.

But lately there has been more media attention than usual. The BBC has been by. So have the Voice of America and a team of Swedish journalists. CNN wanted an interview, she said, but they expected her to come to the Liberty Bell, which she is barred from visiting after setting up a homeless encampment nearby on Independence Mall.

``The publicity is a double-edged sword,'' she said of the latest round of stories. ``Now everybody, their mother, their dog and their sister come to us for help.''