A city of Pittsburgh tax break for new housing approved in June is working where it seemed least likely, but not yet in the neighborhood for which it was really written: Downtown.

Developers of housing in East Allegheny, Elliott and Hazelwood have applied for waivers of as much as $6,200 a year in city and school property taxes for 10 years. Downtown home builders, though, have been stymied by technicalities.

Mayor Luke Ravenstahl's administration has responded by introducing amendments to the ordinance passed in June. Council is set to debate and tentatively vote on the changes Wednesday.

"We knew there were some ambiguities and some issues that should be clarified," said city Finance Director Scott Kunka.

It's unclear, though, whether the proposed changes would help two key condo builders avail themselves of the tax break.

Mr. Ravenstahl's legislation, which won council approval over a competing plan by Councilman William Peduto, applies to Downtown and 28 neighborhoods that have seen little new construction or face socioeconomic problems.

So far, all eight of the applications the administration has received for the tax break are in the distressed neighborhoods.

One is the Deutschtown section of East Allegheny. October Development has applied for the break on an Avery Street property it is rehabilitating, and plans to seek the exemption for five more properties on James, Tripoli and Suismon streets.

The firm intends to sell the homes for $100,000 to $220,000, and since the tax break applies to the first $250,000 of a new home's value, they will be free of city and school property taxes for 10 years if his applications are granted.

"We decided that we're going to concentrate on Deutschtown because of the abatement" and the neighborhood's amenities, said Al DePasquale, owner of October Development. "This could become a very, very strong neighborhood."

A prime target of Mr. Ravenstahl's tax break, though, was Downtown, where multi-million-dollar condominium and apartment projects are under way and more are sought. A handful of provisions in the legislation seem to be blunting its impact.

The ordinance, for instance, bars any properties that are in tax-increment financing districts from getting the new tax break. In TIFs, the city borrows millions of dollars to help a development, then pays off the debt using most of the future tax dollars created by the new construction.

The former Lazarus department store was aided by a TIF. Developer Millcraft industries wants to build housing atop it, but would be barred from the new tax break because of the TIF district.

The amendments would change that, by allowing new properties built atop old ones to get the break, even if they're in a TIF district.

Another provision holds that a development must apply for the tax break "at the time" when they get their building permit. That means anyone who got their building permit before the passage of the legislation, including developers of new condos at the Carlyle and 151 First Side, Downtown, could not pass the tax break on to their buyers.

That threatens to "create islands Downtown of the haves and the have-nots," said David W. Bishoff, developer of the 60-condo Carlyle. Some will have the tax breaks, but many -- including his buyers -- will not.

"The goal in Pittsburgh is to bring in 2,000 new residents," he said. "The exact date of the permit should be the least of everybody's worries. ... You can't let every piece of housing ever built become part of it. But there is a fairly easily defined period when the housing boom began."

That date would probably be in late 2005, when developer Ralph Falbo began work on 151 First Side. He, too, has had talks with the administration about changing the legislation.

The proposed amendments would allow builders to apply for the tax break within 180 days of getting their initial building permit.

"I don't see any sense where that helps anybody," said Mr. Falbo, who believes he got his first building permit in 2005.

Mr. Kunka said the administration is reviewing whether the Carlyle or 151 First Side could be eligible. "Right now, their timing is not within the parameters," he said. "We are re-examining some of the paperwork that may be there" in the building inspection files.

Another amendment, requested by the Pittsburgh Public Schools board, would bar property owners who are delinquent on property taxes from getting the break. Yet another would allow properties where less than half the space is being converted from industrial to residential uses to get partial tax breaks.

"They're working hard with the legislation," said Mr. Bishoff, "and I believe they will succeed."