Philadelphia Academy Charter School will remain open, but with an unprecedented level of scrutiny from the Philadelphia School District.

The Philadelphia School Reform Commission voted unanimously yesterday to give the popular Northeast school a new, five-year operating charter starting Sept. 1, provided the school agrees to meet a list of 20 conditions.

Those include a complete overhaul of the board and new bylaws barring conflicts of interest and self-dealing. The commission has ordered the board to sever all ties with charter founder Brien N. Gardiner, former chief executive officer Kevin M. O'Shea, and their relatives, and to end contracts with businesses tied to them.

Commission Chairwoman Sandra Dungee Glenn said the commission had set deadlines and called for reports confirming that changes have been made "to give us clear assurances that things have been cleaned up."

The action comes despite a continuing federal criminal investigation and a district investigation triggered by allegations of fiscal mismanagement, nepotism and conflicts of interest.

The SRC members said they were ready to renew the charter provided the changes were made.

Two months ago the SRC delayed acting on the charter renewal to give the district's inspector general time to complete his investigation.

The delay came a day after The Inquirer disclosed the allegations and reported that Gardiner and O'Shea, a former police officer with a high school diploma, were being paid more than most school superintendents in the area.

Philadelphia Academy is also the subject of a an internal probe by lawyers from the firm of Ballard, Spahr, Andrews & Ingersoll.

Dungee Glenn said the sweeping changes the commission has ordered were more demanding than those imposed at Raising Horizons Quest Charter School in 2006 after the district inspector general found evidence of possible financial wrongdoing.

The district forced all board members there to resign, along with founder Martha Russell and her sister, Viola Bush, the school's chief financial officer. Both women await trial in U.S. District Court on charges of conspiracy and altering records.

Besides ordering all six members of the Philadelphia Academy board to resign before July 31, the commission said they must be replaced by a new board with up to seven members, including three elected parent representatives. By Oct. 31, all board members must complete training on the duties of nonprofit boards.

The commission directed the board to evaluate the performance of the charter's remaining top administrators by Nov. 30 and report the findings to the commission. The board must submit an academic achievement plan by Aug. 15 that will be monitored quarterly by the commission.

The board must replace its auditor and legal counsel and retain a management organization with charter-school expertise to advise the new charter board to make sure the school meets the commission's conditions and abides by all local, state and federal laws.

Specifically, the commission put Philadelphia Academy on notice that it must meet the state charter law's admission policies, which require new students to be chosen by lottery.

Commission members said they were responding to concerns raised about the school's lack of diversity: enrollment at the school is 87 percent white and complaints have been made alleging favoritism in its admission practices.

Kevin McKenna, a lawyer whose firm was hired last month to represent the charter school, could not be reached last night to comment on the conditions for the charter renewal.

Earlier in the day McKenna said that three new parent representatives were selected in an election last week and that they were expected to attend their first board meeting at the charter tonight.

In a bid to ensure that the charter would be renewed, five of the six members of the original board agreed last month to resign in staggered intervals by July 31. The sixth member, a parent who had been on the board for several years, has since also agreed to step down.

That board also put in motion changes that the SRC now requires: sever all ties with Gardiner and O'Shea; cease doing business with all companies with ties to the two; and immediately terminate O'Shea's sister and daughter.

They also adopted new bylaws with a policy banning conflicts of interest.

The commission said it wanted all those actions confirmed in writing by the end of June.

Philadelphia Academy, which has 1,200 students from kindergarten through 12th grade, opened in 1999. The elementary school is at 11000 Roosevelt Blvd. and the high school is nearby at 1700 Tomlinson Rd.

The district began looking into the school's financial practices as part of the charter-renewal process. That inquiry intensified after several parents alleged mismanagement and the school failed to supply requested documents.