Gay groups are unhappy with a proposed settlement between the City of Philadelphia and a local Boy Scouts chapter, the Philadelphia Inquirer reported.

Under the settlement announced Wednesday, the city will sell its stately Beaux Arts building for less than half of its $1.1 million value to the Philadelphia chapter of the Boy Scouts, known as the Cradle of Liberty Council. In exchange, the Scouts have agreed to forgive the nearly $1 million legal tab a federal court ordered the city to pay after it ruled the city could not evict the group from a city-owned building for refusing to admit gay members.

The city decided to terminate the scout's nearly-free lease in 2007, insisting that nonprofits must abide by local anti-discrimination laws, including an ordinance that protects based on sexual orientation.

Andrew A. Chirls, a lawyer representing gay people who had worked with the city on the issue, said the city had undervalued the building: “It's a Renaissance-style mansion with an atrium and marble appointments, and you're selling it for the price of a rowhouse.”

“This [settlement] is a subsidy,” he added. “They're giving them a gift so they can discriminate in it.”

The Philadelphia chapter of the American Civil Liberties Union of Pennsylvania also criticized the proposal.

“This settlement is a bad deal not only for lesbian, gay, bisexual and transgender Philadelphians, but also for the taxpayers of the City of Philadelphia at a time when the city is struggling to balance its budget without drastic cuts in city services,” the group said in a letter.

The proposed settlement surprised Councilman Darrell L. Clarke, who was expected to introduce a bill Thursday required for the city to sell the property.

Clarke said he wanted to hear from gay groups and the building's neighbors before introducing the legislation.

“I would think any resolution of this issue would definitely include those individuals,” he said.

In 2000, the Supreme Court agreed that the Texas-based Boy Scouts of America, as a private group, can set up their own rules.

The Cradle of Liberty Council faced eviction after it refused to specifically repudiate the gay ban.