A controversial proposed settlement that would allow the regional Boy Scouts association to buy its Logan Square headquarters from the city took a step forward in City Council yesterday.

Councilman Darrell Clarke introduced an ordinance that would transfer ownership of the building to the Cradle of Liberty Council.

But written into the legislation were two conditions - that the Scouts could not sell the building for 10 years and that they must provide space for community programs, including diversity training.

"We would like to see the building be made available to others," said Clarke, whose district includes the building at 22nd and Winter streets. By Council tradition, Clarke gets to introduce property deals in his district.

Clarke had delayed introduction for several weeks amid complaints about the agreement. He stressed that there was still no final consensus on the issue, which will come up for review in the new year.

Last month, the city announced a proposed legal agreement with the Scouts that would allow the group to pay the city $500,000 to buy its 13,000-square-foot headquarters, the focus of a civil-rights dispute that began over the Scouts' national ban on gay members.

The deal has drawn criticism from the city's gay leaders and other residents. The price tag is less than half the appraised value of the building. But the city argues that the settlement would end an expensive legal fight and the risk that city taxpayers would eventually have to pay the Scouts' legal bills, now approaching $1 million.

Thomas Harrington, the Cradle of Liberty Council's CEO, said the Scouts would comply with both of Clarke's conditions.

"We plan to stay in the building for many years. Having outside groups utilize the office for meetings is consistent with what we've done for many years," said Harrington, who said that gay organizations would be welcome to hold events.

But Malcolm Lazin, executive director of the Equality Forum, criticized the agreement and said the modifications to the bill don't go far enough.

"Anything that rewards discrimination is just plain wrong. So to give the Boy Scouts the building for $500,000 is giving them a prize piece of Philadelphia property for a pittance," Lazin said, adding that the city should seek fair market value for the building.

Lazin was among a group of more than 20 prominent Philadelphians who signed a letter to Mayor Nutter this week asking him to halt the settlement.

Still, Nutter said yesterday that this deal was in the best interest of the city.

"It is our legal judgment, both in the city and with outside counsel, we have reached a conclusion that pursuing this further is a less than potentially positive outcome," Nutter said.

The dispute began with a 5-4 U.S. Supreme Court decision in 2000 that upheld the legality of the national organization's ban on gay Scouts and troop leaders.

That put the organization in conflict with the city charter's ban on discrimination rooted in sexual orientation. In 2007, the city said the regional Scouts organization would have to vacate or begin paying $200,000-a-year rent for its previously rent-free headquarters, built by the Scouts 80 years ago on city-owned property.

The Scouts then sued the city, alleging a violation of First Amendment rights. In June, a federal jury agreed that the city had violated the Scouts' rights, raising the specter that taxpayers might have to pay their legal bills, most recently estimated at $960,000.

* Also in Council yesterday, an agreement to lease Dilworth Plaza to the Center City District, which is overseeing a major overhaul of the space, was given final approval.