The University of Pittsburgh Medical Center could receive tax credits to offset contributions made to the Pittsburgh Promise scholarship program if the city ever wins the right to tax nonprofits or force payments in lieu of taxes.

Under a bill proposed yesterday by Mayor Luke Ravenstahl, the health care giant would be eligible for the credits if the state Legislature or a court authorizes the city "to impose any tax or municipal service fee or payment in lieu of taxes" on UPMC or its affiliates.

The tax credit proposal was negotiated by UPMC and officials from the city and school district as a condition of UPMC's financial support for the Pittsburgh Promise.

City Council will discuss the proposal today after it voted 6-2 yesterday to expedite the legislation at the mayor's request. The agreement will be presented to the school board tomorrow.

"If the board says no, there's no Promise money," district Solicitor Ira Weiss said.

This month, UPMC pledged to give $10 million outright and up to $90 million more through a 10-year "challenge grant" to help provide college and trade school scholarships to Pittsburgh Public School graduates.

UPMC will contribute $1 for every $1.50 raised from other sources, potentially yielding as much as $225 million with the interest used to fund scholarships in perpetuity.

If the Legislature amends Act 55 to tax nonprofits or require that nonprofits make payments in lieu of taxes, the city and the school district would agree to give UPMC a $1 credit for each $1 donated to Pittsburgh Promise, Mr. Weiss said.

"I think that's a reasonable position to take," he said, adding that UPMC "made a substantial commitment here" and doesn't want to be litigating its tax-exempt status after pledging $100 million to the scholarship program.

Some, including Mr. Weiss, aren't sure UPMC will ever realize any of the credits because they don't see the Legislature acting to tax nonprofits or forcing them to make payments in lieu of taxes.

Yet while donors sometimes attach conditions to gifts, the UPMC stipulations seem extraordinary, said Ken Strmiska, managing director of community foundation services for the Council on Foundations, a membership group for the philanthropic community.

The stipulations "take a little bit of shine off of the gift" and UPMC would "win a lot more friends" without them, he said.

Mr. Ravenstahl was unavailable for comment. Alecia Sirk, his spokeswoman, said the bill was a "natural progression [in] reaffirming our commitment" to the scholarship program.

Frank Raczkiewicz, a UPMC spokesman, said the proposal, which he described as a side agreement, was "an essential condition" of the medical center's pledge to provide $100 million.

"We are willing to donate $100 million, but we don't want to pay $100 million and also have new taxes of $100 million," he said.

The proposal came under fire from some City Council members, both for its timing and intent.

Council President Doug Shields, who voted against the expedited review, said the proposal could have financial ramifications for years, especially if the city eventually gets the right to tax nonprofits.

To give up a potential revenue source without fully assessing the impact is not in the city's best interest, he said, adding that the rush to get the legislation approved was "inappropriate."

"I don't know why you would want to pre-emptively give something away that you don't have now and take things off the table while you're working on some means of finding funds for the city to operate," Mr. Shields said.

Councilman Len Bodack called the plan "corporate welfare." He said that if tax credits are ever to be awarded by the city, then the scholarship program should be open to city children in private and parochial schools, not only those in the public schools.

"If they're going to get corporate welfare and they're going to do something for the city in return for that, that's fine. They should do it for all city residents. Then we can make it a fair discussion. If they're going to do it selectively for a few it should not be discussed," he said.

Councilman William Peduto said the proposal "flies in the face" of the city's long-standing efforts to find some way to generate revenue from tax-exempt nonprofits. He called the proposal a "tax break" that other nonprofits will demand if they donate to the Pittsburgh Promise.

Councilman Jim Motznik argued there was no tax break involved.

"They're not going to get away with not paying something," Mr. Motznik said.

Lisa Fischetti, school district chief of staff, said the agreement "memorializes" the intentions of city, school district and UPMC officials who negotiated UPMC's commitment and would give the program stability when there's turnover at City Council, the school board and UPMC. She said the agreements are "no big deal" because the city and school district aren't giving up anything they have right now.

The need for agreements with the city and school district was not announced during the Dec. 5 news conference at which the mayor and Superintendent Mark Roosevelt lauded UPMC's involvement in the Pittsburgh Promise.

Ms. Fischetti acknowledged as much but said not every detail of the program could be mentioned and that "the focus that day was on the scholarship component of this."

Under the agreement, the city and the school district would not challenge UPMC's tax-exempt status during the 10 years that UPMC has agreed to contribute to the Pittsburgh Promise.

Mr. Weiss said UPMC clearly meets the definition of a public charity under the current law, so it's unlikely anyone could challenge its tax-exempt status.

He said the agreement doesn't apply to UPMC's taxable affiliates, which already pay property taxes.