In 2009, PHA awarded TSSI a three-year contract for $1,371,428. The agency decided Wednesday not to exercise the final year of the contract, shelving a contribution of $479,619.
Coney, who lives in public housing, declined to comment.
Kelly said there had been "concerns about reporting . . . and about the delivery of services" at TSSI.
The organization attracted notoriety for staging a lavish 10th-anniversary celebration for Greene as well as a catered holiday party for PHA staff in December.
Since Greene was ousted in September over secret settlements of sexual harassment cases, several federal agencies have begun examinations of PHA and TSSI.
In September, federal prosecutors in Philadelphia subpoenaed Coney's e-mails dating to 2005, as well as her organization's financial records and accounts of employees dating to 2000.
Meanwhile, in a federal lawsuit, a former PHA employee who was a TSSI liaison, Vincent Morris, alleges that Coney and an assistant misappropriated thousands of dollars. Kelly said PHA has referred that matter to its inspector general.
The sweeping changes in PHA's relationship with its nonprofit affiliate marks an attempt to "reinvent" TSSI, Kelly said, but for the time being it "will be dormant."
Kelly said Coney offered to resign Tuesday night. "She actually works for TSSI's board," he said. "It's not my place to accept her resignation."
Coney, 60, has been a divisive presence among PHA residents. While some praised her for a lifetime of advocacy on behalf of low-income residents, others felt she used her power to deny critics and opponents access to programs, services, and funding.
