The broader social issues (poverty, illiteracy, health care, single parent families) of school reform in urban settings are explored in a paper divided into four parts. The first examines the impact of urbanization on the conditions of schools in the inner city. Part two analyzes the value assumptions embedded in both the first and second waves of educational reform. Part three describes the research methods used for this study, and part four describes and interprets the results of two case studies of urban elementary schools in New Orleans (Louisiana) that undertook major school restructuring. These two schools implemented the Accelerated Schools Process (ASP), a restructuring process aimed at bringing at-risk students into the mainstream. The concrete school restructuring processes used in these schools are characterized as "situated" school restructuring. The authors served as university facilitators for the restructuring, collaborating with the ASP project team from Stanford University. During the first year of the project, surface evidence indicated that both schools had successfully implemented project milestones, but there were major differences beneath the surface in how teachers in the two schools felt about the change process. The community empowerment process adds substantially to the complexities and level of effort required in a school restructuring process in the urban social context. Interventionists and school personnel are confronted by a set of moral dilemmas owing to the pervasive influence of both corporate and community interests in the restructuring process. Unless they can reach a shared understanding of how these values can enhance the restructuring process, they may not be able to contend with the conflicts that surface as part of the process. (Contains 50 references.) (SLD)