Chilli powder !!!!
That will make the wildlife and insects that pass through your garden suffer burns.
Please think again - theres always another option - always.
Its your neighbours that are at fault here. I would ask if they have a litter tray in their house - if they dont its not the cats fault. Responsability always lies with the owners.
I hope you find a more humane solution - i wonder what a vet would advise!