On First Avenue, there's a hole in the ground that represents Pittsburgh's dream of turning Downtown into a neighborhood.

Four miles away in Brighton Heights, there's a weedy lot that epitomizes the recurring nightmare of tax delinquency and neighborhood stagnation.

Both are the work of Ralph A. Falbo, 68, of Squirrel Hill, a determined developer and reluctant taxpayer. A builder of scores of subsidized homes for low-income families and the elderly, he has emerged as an important player in Downtown redevelopment, even while delaying or not paying $533,000 in city, school district and county property taxes, according to records.

His 151 First Side project, Downtown, to include 82 condominiums, got a $1.5 million loan in 2004 from the Urban Redevelopment Authority.

He has proposed to Mayor Bob O'Connor a mix of housing and stores in Downtown's Fifth and Forbes area. That's one of several proposals Mr. O'Connor wants to look at, prompting him to put on hold a proposal by Washington, D.C., developer Madison Marquette to build a $50 million to $60 million residential and retail complex with city subsidies.

Told of the taxes owed by Mr. Falbo's partnerships, Mr. O'Connor said he was "disappointed to hear that, and I would encourage them to pay. ... Before I move forward [on Downtown development], I want to make sure everybody has their taxes paid up."

Mr. Falbo estimates he has done 75 local projects that have created $2 million in annual taxes. He said some late taxes reflected "what you get when you take a risk."

A partnership involving Mr. Falbo and Kingston-based Pennrose Equities bought the former St. John's Hospital in Brighton Heights in 1997. The partnership owes the city and Pittsburgh Public Schools $234,565 in back taxes, according to a list of tax-delinquent properties on the city's Web site.

That is one of the six largest property tax debts owed to the city and schools, according to the Web site. From 2000 through last year, the city, school district and a collection agent filed 10 delinquent tax liens against the partnership, demanding $65,702 in payments and penalties before the property can be sold.

The partnership owes $51,603 in back taxes and penalties to Allegheny County, according to the treasurer's office.

Mr. Falbo said the partnership hadn't paid taxes because it couldn't get financing for senior citizen housing it hoped to build and hadn't won a state grant to build homes.

"It just got stalemated, and there's no income there," Mr. Falbo said. "We're simply asking the taxing bodies to sit still while we get funding for this. ... We just need everybody to be a little patient."

"There's nothing in the law that addresses sitting still and being patient," county Treasurer John Weinstein said. "I give all the credence in the world to anyone who would take an abandoned piece of property and redevelop it. But someone owns it, and someone ought to be paying taxes on it."

Even as it failed to pay taxes, the partnership received $625,000 in loans and grants in 2002 from the URA to demolish the old hospital. The abandoned hospital had become a scene of drug dealing, teen parties and occasional fires.

Mr. Falbo said he was doing the city a favor by holding the property. "Do I just walk away and give the thing to the taxing bodies and let them deal with the drug parties and all the other problems?" he asked.

URA Executive Director Jerome Dettore said the agency usually checks to see whether developers have paid their taxes before aiding a project.

He said it wasn't uncommon for developers to delay tax payments. "I think it's wrong," he said of the practice. "I think it's unfair to the municipalities."

But, he added, Mr. Falbo "is a very good developer. He knows the funding programs. He's very good at managing the projects. He's a risk-taker."

Another partnership in which Mr. Falbo and Pennrose are involved failed to pay taxes during an assessment fight.

Their independent living center in Allegheny Center was reassessed by the county at $4.9 million, and taxed accordingly. The partnership appealed and won a reduction to $2.5 million. It appealed that and, on Feb. 1, the assessment was cut to $1,125,000.

The law requires that those appealing their assessments pay their tax bills during the process, Mr. Weinstein said. If they win, they are reimbursed.

Mr. Falbo's partnership, though, racked up $167,534 in taxes and penalties due to the city and school district, according to a lawsuit the district filed in August.

It owed the county another $79,297 before the final assessment reduction, and the county filed three delinquent tax liens in an effort to collect.

Mr. Falbo argued that state law allowed for lower assessments on low-income housing, and the taxing bodies should have considered that before suing.

Running low-income housing isn't highly profitable, because rents are capped, he said in an August interview. "Unfortunately, the taxes get paid with the residuals that are available in the budget," he said.

Mr. Falbo employed the same argument regarding the Southside Community in Clairton, which opened last year.

A partnership involving Mr. Falbo and a Media,Pa.-based business built the subsidized housing community, which includes 44 lease-to-own duplex and triplex units and 23 houses for sale. It was billed as a boon for the struggling Mon Valley city.

Before and during construction, taxes on the properties were low, but some, nonetheless, went unpaid. In 2003, the county filed 29 delinquent tax liens naming the partnership, listing overdue amounts from $1.89 to $67.

After construction, the county assessed the houses at $37,000 to $85,000, with most around $50,000. The partnership challenged those assessments and got them reduced to $3,700 each.

At that value, they'll each bring $80 a year to the financially troubled Clairton School District, Business Manager William Boucher said.

"What [Mr. Falbo] sells [his projects] as, is it's to help the community," Mr. Boucher said. "But then he puts it on our back."