New York City is planning to select four firms as senior managers for its general obligation bond syndicate and has tentatively reached a compromise on its appointment of firms to serve as financial adviser.

Though the selections are not final and are subject to change, sources familiar with the process said staff members representing Mayor Rudolph Giuliani and city Comptroller Alan Hevesi are considering the appointment of Goldman, Sachs & Co., Merrill Lynch & Co., Prudential Securities Inc., and J.P. Moran & Co, as senior managers.

The sources said that while staff members are nearing basic agreement on underwriter selections lands and are currently working on selection of co-managers, the situation is fluid and changes are possible -- and even likely.

Neither Giuliani nor Hevesi, who jointly appoint firms for these positions, have formally agreed to the appointments.

In fact, city sources said the two sides have reached final agreement on only one matter: that the city, the municipal market's largest issuer for the past two years, will appoint fewer senior managers than it did under former Mayor David N. Dinkins and former city Comptroller Elizabeth Holtzmnan,

Abraham Lackman, the mayor's budget director and one of four Giuliani officials directly representing the mayor in the underwriting selection process, said no decision has been made on underwriters or financial advisers and that the city only has recommendations from staff.

Lackman would not comment on any whether the four firms are in the running, or on any other potential selections. He said the four city officials who make underwriter selections for Giuliani himself, finance commissioner Marc Shaw, corporation counsel Paul Crotty, and deputy mayor John Dyson -- will make decisions on Thursday or Friday. The mayor's staff must then negotiate final selections with the comptroller's finance staff, headed by first deputy comptroller Michael Geffrard.

"No decision has been made yet. There are a number of options," Lackman said. "Staff has made recorranendations."

Geffrard could not be reached for conmment.

Last year, Dinkins and Holtzman selected seven firms as senior managers for the city's GO syndicate: Bear, Stearns & Co.; Goldman Sachs; CS First Boston; J.P. Morgan; Lehman Brothers; Merrill Lynch; and Prudential Securities.

Regarding the selections of financial advisers, city sources say Giuliani's staff and Hevesi's staff have tentatively agreed to extend a version of the adviser arrangement established this summer.

Under the arrangement, the New York city-based Public Resources Advisory Group had a three-month contract, which ended Sept. 30, to work as the city's financial adviser. In addition, the Philadelphia-based P.G. Crobin & Co. also had a threemonth agreement to serve as adviser for the comptroller's office.

The comptroller's office will pay Corbin out of its budget, while Public Resources will be paid from the city's expense budget. Neither Giuliani nor Heyeat has formally reached agreement on financial adviser selections, but sources with knowledge of the matter say staff has recommended that something similar to the temporary arrangement should be continued more formally when underwriter selections are made public.

The appointment of Public Resources and Corbin this summer followed a bitter public dispute between the mayor's and comptroller's office over how many firms are needed for the job.

Giuliani said only one firm was needed, Public Resources. Hevesi said the city needed the expertise of both Public Resources and EG. Corbin, given the size and complexity of city bond issues.

The debate took on racial overtones after The Bond Buyer reported that deputy mayor Dyson criticized Hevesi's position by saying the corhptroller "ought to know a bid from a watermelon." P.G. Corbin is owned by a black woman, Patricia GarrisonCotbin.

Less is known about the selection of firms for the city's Water Authority syndicate. City sources say that at the moment, staff fnemhers are likely to recommend the appointment of PaineWebber Inc. as a senior manager. PaineWebber was selected as a co-senior manager last year by Dinkins and Holtzman.

The fate of Smith Barney Inc., selected as an amhority senior manager last year, is unclear, city sources say, and will probably be settled following negotiations betwen Heyeat and Giuliani. Sources also say Morgan Stanley & Co. may also be recommended for a senior underwriting slot on the authority's syndicate.

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