The City of Pittsburgh plans to reverse a decade-old sale of old tax debt, potentially freeing thousands of vacant lots and abandoned houses for development.

Mayor Luke Ravenstahl said the city, the Pittsburgh Public Schools and the Pittsburgh Water and Sewer Authority will pay a combined $6.5 million for the old debts, called liens, which were sold to a private company for $64 million throughout the late 1990s.

At the time, selling hard-to-collect debt for quick cash seemed like a good idea. But the company that bought the debts, Capital Asset Research Corp., demanded payment of the debts before properties could be redeveloped, which often scotched efforts to build new homes on old lots.

"This has been the hurdle that we faced over and over and over again," Mr. Ravenstahl said. "We now, as a city, will buy those [debts] back, have them under our control" and forgive all or part of the debt when doing so would help facilitate development.

"This is a big obstacle now out of the way from progress and development," said Aggie Brose, deputy director of Bloomfield-Garfield Corp., a neighborhood development group that has had to wrestle with old tax debt when trying to revitalize places like Dearborn Street in Garfield. "You could be paying $50,000 [in old tax debt] on a lot on Dearborn."

She said community groups will be able to pursue buying tax-delinquent lots -- a cumbersome process -- without having to worry about a Capital Asset lien ruining the effort.

Capital Asset's parent company, MBIA Inc. of Armonk, N.Y., "had interest in removing themselves from the lien process," said the mayor. He and his staff, including Chief of Staff Yarone Zober, were able to complete a negotiation on the price that was started under the late Mayor Bob O'Connor.