In 1996, $32 million seemed like a prize, and the city took it. What it gave up, to an asset recovery company, was tax debts worth $57 million.

Darrell Sapp, Post-Gazette Wilbert Washington looks at the townhouses along his street in the Hill District. Mr. Washington has lived at 219 Dinwiddie St. since his family bought the house when he was a child in 1948. Next door, to the right, is a city-owned property at 217 Dinwiddie St. Click photo for larger image.

Such sales were being done in other cities and were seen as a way to get certain cash for debts that might never be repaid. But the deal since has been compared to pawning a family heirloom to buy a fix.

It has also stymied some redevelopment efforts: Of 202 properties the city is holding in reserve for neighborhood groups to develop, 88 have liens owned by Capital Asset Research Corp.

Neighborhood groups say they are frustrated and that some housing plans have been held up for years because Capital Asset would not forgive or reduce the debt, which meant the group could not afford the properties.

Jerome Dettore, executive director of the city's Urban Redevelopment Authority, said that "deals have been killed" because Capital Asset has not waived or discounted those debts.

When the city, its school district and the water authority sold their liens to Capital Asset nine years ago, the reasoning was to get a windfall and let the company do what it's good at -- collect debts and get properties back on the tax rolls.

Pittsburgh proved thornier than some other places where the company made similar purchases. Many officials say it was a bad portfolio, with many properties so decrepit and heavily liened that whatever value they had was overwhelmed by debt. And Capital Asset's ability to charge penalties to prospective buyers was challenged in court.

"One of results of the lawsuit was that everyone had to be offered a payment plan," said Capital Asset's chief financial officer Jim Miranda. "That works to the detriment of trying to clear off liens. Some plans, if people can prove neediness, can be as low as $25 a month."

"The lawsuit all but halted the program for years," said Capital Asset spokeswoman Susan Buehler. "We're out from under it now, and things are beginning to roll."

She said that "recently, there have been a number of discussions with city officials and with developers to make sure we are all working together."

That should relieve neighborhood groups.

The Garfield Jubilee Association and the Bloomfield Garfield Corporation began planning three years ago to build 50 new single-family houses to replace blighted properties in Garfield and has built and sold 15 so far. It just closed on a $2.1 million loan to develop eight more. Five properties needed for subsequent phases threaten to hold up progress because they are burdened by Capital Asset liens.

"These tax liens can kill deals," said Aggie Brose, deputy director of the Bloomfield Garfield Corp. "They hold up the process, the cost escalates, you have a hole in the budget, and where's the money going to come from? What kills me is we had 15 people lined up for these [first-phase] properties before the landscaping was even done," she said. "The market is here. We just need the titles. Time is of the essence."

In Beltzhoover, eight new houses of the Hilltop Housing Initiative are ready to go to market, said Rick Belloli, executive director of the Southside Local Development Co., Hilltop's partner. "We anticipate a good response. Then we have to have phase two ready to go, we hope, next year. But it depends on whether we can get the titles cleared on three properties."

Capital Asset held its first sheriff sale last month and sold seven of 11 properties offered. It sold none among 11 in November and hopes to list 38 to 40 properties in the Dec. 5 sale, said Ms. Buehler.

"We all want the same thing," she said, "to move the properties and get the city fixed up."