The Pittsburgh school board voted 8-1 last night to give University of Pittsburgh Medical Center possible tax credits for its $100 million commitment to the Pittsburgh Promise, leaving the fate of the scholarship fund's first big donation in the hands of City Council.

UPMC officials said this week that tax-credit approval by the school board and City Council is a condition for giving the $100 million--$10 million outright and $90 million through a 10-year challenge grant. Council delayed action Tuesday amid heated debate and a call for a public hearing.

School board member Mark Brentley Sr. tried to table the agreement then voted against it, saying he needed time to study the document. But most of the other board members offered thanks to UPMC before voting in favor of the agreement.

"The reality of it is, we're here for the kids," Theresa Colaizzi later said when asked why board members readily embraced an agreement that received such a rocky reception in City Council.

City and school officials said the agreement would be invoked only if the Legislature or courts took the unlikely step of taxing nonprofit organizations such as UPMC or required them to make payments in lieu of taxes.

Officials also stressed that the terms approved last night are similar to agreements the city and district have had with UPMC and other nonprofits that have made voluntary payments in lieu of taxes over the years.

But there's also one big difference. Payments in lieu of taxes have gone into the city and school district general coffers, then used for various purposes. The Pittsburgh Promise money would benefit only graduates of Pittsburgh Public Schools who decide to pursue higher education.

The school board last night agreed not to challenge UPMC's tax-exempt status for 10 years, and the agreement lays out two options if UPMC is forced by the Legislature or courts to pay taxes or make payments in lieu of taxes during that period. UPMC could take a tax credit for donations to the scholarship program or it could pay its taxes and proportionally reduce its commitment to the Pittsburgh Promise.

School Superintendent Mark Roosevelt said UPMC doesn't want to take a "double hit" by contributing $100 million to the Promise and then have to pay taxes on top of that. He and Mayor Luke Ravenstahl yesterday reiterated their thanks to UPMC, and they expressed dismay at the negative publicity the tax-credit issue received.

"To publicly humiliate an organization that's giving $100 million -- they could walk away right now and say they're done ... UPMC is, and has been, a target by many folks in this town, and sometimes Pittsburgh has to get out of its own way," Mr. Ravenstahl said.

Mr. Roosevelt said a city such as Pittsburgh that's seen tough times may have trouble celebrating good fortune.

"This should be the cause of enormous, enormous, celebration," he said of the UPMC commitment. He blamed controversy over the tax-credit issue on "misinformation" and "demagoguery."

On Dec. 5, the city, school district and UPMC announced the health care giant's $100 million commitment to a packed hall at Pittsburgh High School for the Creative and Performing Arts, Downtown. It was the first major donation to a scholarship program Mr. Roosevelt and Mr Ravenstahl announced a year ago.

There was no mention that day of UPMC's desire for tax credits.

Mr. Ravenstahl created a firestorm Monday when he raised the issue in City Council. When the debate continued Tuesday, Council postponed action.

Councilman Jim Motznik yesterday circulated a petition signed by five of the eight council members, urging a Dec. 26 public hearing on the issue.

"We don't want to see anything delayed," he said. "We don't want anything to come in the way of making sure that Pittsburgh Promise comes to fruition some day."

Council still could cast tentative and final votes before year's end.

Some city officials have assailed the tax-credit agreement as a back-room deal that extends special privileges to UPMC. But Mr. Ravenstahl said the tax-credit provision "was part of the agreement that we reached two or three months ago" and that he chose this week to introduce it.

City and school officials argued the issue is largely academic because it's unlikely UPMC will be forced to pay taxes.

UPMC has said its $1.5 million-a-year voluntary payment in lieu of taxes will cease when donations to the Pittsburgh Promise begin.