KNOXVILLE, TENN. -- Beyond the jogging paths, past the benches peopled with picnickers in the urban green that once was the 1982 World's Fair site, stands one of the most embarrassing federal structures in America.

It isn't that the futuristic, $12 million pavilion that housed the U.S. government exhibit at the fair is ugly. It's just that it hasn't been good for much of anything since the fair ended almost five years ago. After all, who's in the market for a one-story structure with a 40-foot-high ceiling?

"It was a wonderful setting for a black-tie party we had this year with the mayor and 800 people," said Wanda MacMahan of the Knoxville Arts Council. "Beyond that, an appropriate use has not been found."

"It's like having a beautiful car out in your front yard that doesn't run," said Mayor Kyle Testerman. "It doesn't have a lot of value to you."

Wedge-shaped and airy, the pavilion rises steeply out of the downtown park like bleachers with windows instead of seats. As an exhibition hall, it was a dazzler. Escalators fed visitors up to a plaza overlooking the capacious exhibition hall, and stairways led to five lower mezzanines, each looking down on the hall from a different vantage point.

Since the fair, the one-time dazzler has become something of a disaster. The Commerce Department, overseer of the pavilion's design and construction, offered it to other federal agencies for office space, but none wanted it. The government is now completing construction of a more conventional facility for offices about a block away, also for $12 million.

Then the government held an auction to sell the pavilion to private bidders for $1.1 million -- less than one-tenth of its cost. But nobody came. The Education Department tried its luck, offering the building for $1 to anyone willing to use it for educational purposes. Again there were no takers, in part because the pavilion needed $6 million to $8 million in renovations to be transformed from an exhibition hall.

Meanwhile, city officials said, the feds have done little to maintain the building, except to send guards to keep out vandals. City crews used to call Washington for permission simply to mow the lawn.

Today, the solar collectors on the roof collect nothing but water, the glass ceilings leak, the paint peels and the pond has grown so murky that city officials dye the water blue to hide the algae. During a winter freeze, the internal sprinkling system froze, seriously damaging ceilings and walls. The electrical system and escalators broke down. Jim Begalla, the city official in charge of the site, said the city has spent $30,000 on repairs.

"Since we don't own it, spending taxpayers' money is a difficult situation," Begalla said. "But we want to preserve what we can" in case a buyer surfaces.

In many ways, the house that Washington built has come to symbolize to Knoxville all that is wrong with the federal government: It's too big; it gets in the way, and it never works the way the dreamers and schemers promise.

"There's a lot of feeling around here that only the federal government could spend $12 million on a building and devalue the land underneath it," said Courtney Pearre, a Knoxville attorney advising the city on the property.

But oh, there were dreams for the pavilion. Conceived in the Carter administration, it was supposed to accomplish what federal pavilions at world's fairs rarely did: It was to save rather than waste money, and when the fair was over, it was to create useful rather than useless space.

"There were lots of good intentions, but you know they say the streets of Hell are paved with good intentions," said Testerman. "I'm afraid this was just another paving job."

At some earlier fairs, the government built multimillion-dollar structures, only to tear them down afterwards. This time, the idea was to build a permanent building that could serve as an exhibition hall and later be "retrofitted" as an office building for federal employes in Knoxville or as a science center for the University of Tennessee.

A national competition was held, and Atlanta architect Marvin Housworth of Rosser Fabrap Architects and Engineers proposed the winning design, whose vast exhibition hall could be subdivided later into six levels of offices and a parking garage; or alternatively into three levels of laboratories and three of offices. No cost estimate was provided for the overhaul.

Even then, Housworth was skeptical about accomplishing dual goals. "Those are conflicting uses," he said in a recent interview. "You need volume for an exhibition center and floor space for an office building. If there was a flaw, it was in trying to make one building design do too much."

Before construction was complete, the General Services Administration served notice that it did not want the building for federal office space. Commerce went ahead with Housworth's design anyway, counting on the University of Tennessee to take the building for its science center. The school later refused, citing the multimillion-dollar renovation cost.

Housworth, observing the fair's energy theme, designed a building outfitted with experimental energy technologies capable of generating their own heat and air conditioning. Enter the Office of Management and Budget, slicing $3.8 million from Commerce's $24.3 million request for the pavilion.

In the cutbacks, a solar-collecting "power tower" was scrapped, as was a biomass converter that was to burn wood products rather than fossil fuels. The fair was to run only from May through October, officials observed at the time, so there really was no need for heat. The Department of Energy was outraged.

"The building is a highly visible and important project which could be a significant embarrassment to the United States," Energy officials were quoted as saying in a 1981 General Accounting Office investigation. "In a 'World's Fair,' which carries the title of 'Energy Expo '82,' the U.S. pavilion should be an exemplary model of the wise use of energy in buildings. It has not been presented as such in the drawings reviewed."

DOE did not prevail. According to Begalla, the only way to cool the building is with standard electricity, and the heat comes from a conventional gas boiler.

Despite all the headaches the pavilion has caused Knoxville, no nickname for it has caught on. Some people, noting the similarity between its shape and that of a new Hyatt hotel, call it "the box the Hyatt came in."

"If that pavilion had been built by the city or by some local people, I'm sure we'd all have settled on a derogatory name for it," said Knoxville lawyer Randy Tyree, the mayor at the time of the fair. "But since the federal government built it, I guess people here expect them to do something like that anyway."

According to Pearre, a local high-tech company, Digital AV, has considered buying or leasing the building for advanced photographic processing. The company's president was a leading financier of the fair and feels nostalgic toward the site, according to Pearre. "But he's not going to commit economic suicide out of nostalgia."

If Digital AV begs off, the city may pay the government's $1.1 million asking price, simply to end the ordeal. But politicians here would have to swallow awfully hard. The land on which the building stands was a gift from the city to the federal government. But the feds are including in the asking price the cost of the land, valued at $750,000.

Mayor Testerman is so frustrated that he said he is pressing for the city to buy the pavilion, if only to raze it and build something that won't drain the city budget. This would mean paying $1.1 million to gain control of land that the city owned before the fair began.

Sure it sounds absurd, Testerman said, "but life is like that sometimes."