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Judge To Weigh Penn Obligations Under City Law

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Universities and the cities they reside in periodically find themselves at odds over the kind and amount of compensation the institutions should proffer in exchange for taking up nontaxable land.

Sometimes, those disputes end up in court.

This week, a judge in Philadelphia is scheduled to hear testimony in a lawsuit challenging the extent of the contributions the University of Pennsylvania is making under the terms of a city ordinance.

Yet, the confrontation in Philadelphia is far from clear-cut. The lawsuit is being brought by a public-interest law firm on behalf of students, parents, and others, and it lists both the private, Ivy League university and the city as defendants. Several elected city officials, however, are sympathetic to the suit.

At issue is a 1977 city ordinance, and about the only thing the two sides agree on is its wording: "The University shall agree to establish and forever maintain at least one hundred twenty-five, four-year full tuition scholarships, or their equivalent, in any of the departments of the University, to be awarded annually by the Mayor of the City of Philadelphia to deserving students from all of the schools of the City.''

The plaintiffs contend that the ordinance calls for Penn to award 125 new full-tuition scholarships each year, for a total of 500 to be maintained at any one time.

University officials and Mayor Edward Rendell say the ordinance requires the university, where tuition for the 1992-93 academic year is $15,198, to maintain 125 full-tuition scholarships at any one time.

"It's a question of what the intention was when [the ordinance] was developed,'' said Michael B. Goldstein, a Washington lawyer who has an extensive background in "town and gown'' issues. "I would suspect that competent lawyers could study this issue and come up with arguments for either side.''

'No Fixed Pattern'

It is common for universities to make deals with cities to offset the loss in tax revenues, Mr. Goldstein said. While often these agreements take the form of outright cash payments, they can include creating special scholarships, allowing residents to use university facilities, and providing trade and services to the city.

Elaine El-Khawas, the vice president for research at the American Council on Education, said institutions also commonly collaborate with local elementary and secondary schools, establish relationships with local businesses, and develop library consortia with cities.

"There's really no fixed pattern,'' Mr. Goldstein added. "It becomes a matter of imagination.''

When agreements are not worked out amicably, the matter sometimes erupts into a dispute.

The lawsuit in Philadelphia is just the latest in a number of high-profile disputes in recent years.

Most notably, repeated efforts by the city of Evanston, Ill., to impose a tuition tax on students at Northwestern University have received national attention. The tax has never been approved, because the city council has been unable to override a mayoral veto. For its part, the private university has agreed to establish a scholarship program for city students.

An Ordinance With History

Philadelphia's scholarship ordinance dates back to 1882, when the university agreed to provide 50 scholarships to local students. That figure was increased to 125 in 1910.

The Public Interest Law Center of Philadelphia filed suit against Penn over its interpretation of the 1977 ordinance a year ago, but Common Pleas Court Judge Nelson Diaz threw the case out last April because the city was not a party to the suit.

The law center then added the city as a defendant. Earlier, Mayor Rendell chose not to join the suit as a plaintiff, and unsuccessfully sought to have the council amend the law to uphold the university's position.

Since then, the Mayor's office and the university have struck an agreement to strengthen Penn's assistance to Philadelphia students. The pact, which stipulates that Penn will maintain a total of 125 Mayor's Scholarships but will increase other recruitment and financial-aid efforts, was announced last month.

The agreement did not address the claims in the lawsuit. Spokesmen for the Mayor and the university would not comment on the suit.

"Our legal position basically is that the way we are interpreting the ordinance is the way it was meant to be interpreted, and because of some less-than-careful drafting of the ordinance in 1977 we're in the situation we're in,'' said a university spokeswoman.

Superintendent of Schools Constance E. Clayton declined to comment because the city school district is not a party to the suit.

Principals Aiding Suit

But the plaintiffs and their supporters dispute the university's interpretation.

"We don't think the university has lived up to its agreement with the city,'' said Daniel McGinley, the president of the Philadelphia Association of School Administrators, which has sided with the plaintiffs. "Students have not been made aware of the scholarships.''

Mr. McGinley has lined up current and former principals to testify on their perception of the university's commitment to city youngsters.

The scholarships, Mr. McGinley said, provide a "positive incentive'' to Philadelphia students who might otherwise not consider college.

While a decision may be weeks in coming, and an appeal could delay the final resolution of the case even longer, Mr. Goldstein said the lawsuit may be a harbinger of further legal action, especially as state, local, and institutional budgets tighten. "I think this is going to become an increasingly frustrating phenomenon,'' he said.

But Ms. El-Khawas disagreed.

"It's amazing how few of these [disputes] have come up, given local budget constraints,'' she said. Universities, especially urban ones, have long understood their responsibility to their communities, she said.

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