Since its last days as a dense, full-service Victorian-era corridor in the 1970s, the central North Side segment of Federal Street has exemplified the social rebuke of cities in the decades before.

By 1990, the stretch was still dense with buildings, but most were lifeless. Progress came to resemble a swath of barren lots.

A groundbreaking today signifies the first explosive infusion of tax-base potential on Federal in decades. Federal Hill, a 60-house, 40-condo project of the Central Northside Neighborhood Council, will occupy several blocks of Federal and adjoining portions of Alpine Avenue and Jacksonia Street. The 11 a.m. groundbreaking, at Federal and Hemlock Street, will begin construction of the first row of five homes, to be finished in the spring and financed for $1.8 million.

The development coincides with planning for a new Carnegie Library branch on the site of a former gas station at 1210 Federal.

By moving its Allegheny branch from an historic 115-year-old Richardsonian Romanesque landmark inside Allegheny Circle, the Carnegie system is acknowledging Federal's viability for investment.

"When the Allegheny branch sat in a traffic circle, we lost access to the pedestrian thoroughfare," said Barbara Mistick, director of the Carnegie Library of Pittsburgh.

The building was hit by lightning last April and needs repairs worth millions. The Carnegie will make repairs but has rejected its space in the shared building as too big, its operations too costly.

"We looked all across the North Side and chose the core of the neighborhood," said Ms. Mistick.

The Urban Redevelopment Authority secured the Federal site for the library.

The library's design is in the community-input stage, but Ms. Mistick said she wants it to move forward quickly. "It would be our intent to get the project started next year. And I can't tell you how excited I am about this convergence."

Allegheny General Hospital gave the corridor its first big boost when it built an office building on Federal in 2003.

The Federal Hill project hit many bumps, said Rebecca Davidson-Wagner, the neighborhood council's development specialist. Some building owners resisted selling. Properties the council had first thought could be rehabilitated became too far gone. They joined a list of demolitions to wait their turn.

The Pennsylvania Housing Finance Agency rejected the first applications because land acquisition was not advanced enough. The neighborhood's project chairman moved away and had to be replaced.

The URA helped assemble land, but much of it was heavily liened. Some land slated for future phases of construction still is, said Ms. Davidson-Wagner, "and we're going to have to pay the liens or get the city to, but it's been a struggle to get them to replenish the city buy-back fund."

Finally, there's the overarching reason for all the effort in the first place: blight. Not an easy sell to investors.

"You have bankers who say, 'You want what?'" said Ms. Davidson-Wagner, "and private developers who say, 'You want to sell a house for what?'"

The three-story brick rowhouses will match the architectural character of the neighborhood, but the comparison ends there. In blighted areas, even the most basic new house often costs more than double or triple the market value of any existing home within blocks.

In one stretch of five houses on Alpine within two blocks of Federal, every house is assessed below $40,000. The new townhouses will be priced from $120,000 to $220,000, with second deferred mortgages for people who meet income requirements.

The URA will offer the second mortgages by floating bonds. Qualified buyers' incomes can't exceed 80 percent of the median, said Jerome Dettore, executive director of the URA.

The 40 condos scheduled for later phases will cost less, and there will be scattered moderate- to low-income rental units. But Federal Hill will not address the housing needs of the poor, as almost no one does these days.

"We're having an erosion in dollars for the lowest-income people," said Elizabeth G. Hersh, executive director of the Housing Alliance of Pennsylvania, "and it's because of federal policy and a steady stream of cutbacks. There's a myth that the private market will provide these units."

Some longtime central North Side residents have cried gentrification in recent years as housing prices in parts of the neighborhood have shot up. Some have even claimed the neighborhood council is conspiring to get rid of low-income homeowners and renters.

"It's frustrating to hear that when we worked so hard to make it as affordable as we could," said Ms. Davidson-Wagner.

This back-and-forth is echoed throughout the city where neighborhood nonprofits struggle to attract investment. The near desertion of the city by those who could afford to relocate to the suburbs in the 1950s and '60s set in motion a Catch-22 for low-income people left behind, who now plead for investment and attention from the city but who, when it comes, often feel alienated by the influx of new people.

A restoration of population is good as long as economic segregation doesn't result, said Ms. Hersh. "The only thing that works is balance."

Financing for Federal Hill includes soft loans through the Pennsylvania Housing Finance Agency's Home Ownership Choice program, started in 2000 as a hand-up to distressed neighborhoods. One stipulation is that the developer work with a nonprofit group.

The agency makes a loan to the developer -- in this case, the neighborhood council and the builder -- and takes 10 percent off the top to buy securities to pay itself back so the developer doesn't have to. The money comes on the condition that the municipality match the loan.

"It's a tool to drive the cost of housing down," said Brian Hudson, CEO of the Pennsylvania Housing Finance Agency. "And it offers incentive" for nonprofit neighborhood groups.

The prices of the townhouses could not be as low as they are without incentives, said Andy Haines, a vice-president at S&A Homes, the builder.

With minimum quality standards, "you can't build a house for less than $100,000," he said. The range of cost now is $80 to $120 per square foot. These [townhouses] range from 1,400 to 2,000. Do the math."

The math puts a 1,400-square-foot house, at $120 per, at $168,000 in costs.

"Building new housing in the city is difficult," he said. "You have old water and sewer lines" that have to be separated. "Just to get water and sewer taps takes a long time. Old basements from previous houses have to be dug out. That's why a lot of developers like us -- suburban home builders -- tend not to do much work in cities. It costs more."

"Without a neighborhood group that has a commitment to economic diversity, you don't have levels of affordable [housing]," said Joan Kimmel, the Federal Hill project chairman, "It is our commitment to do that. How to build for the poor belongs to a larger national dialogue."

Mr. Hudson of the PHFA said affordability "has always been an issue."

Some counties have housing trust funds that use money from title insurance, realty transfer taxes, appropriations and unclaimed property, he said. "We're going to push for a statewide housing trust fund, and we're going to be lobbying hard" for the federal government to restore housing subsidies.