Philadelphia officials said Friday they have come to terms on a power-sharing agreement with the city's oversight authority, but delays related to drafting the proposal will keep them from formally submitting it to the city council until later this week.
City Finance Director David Brenner said Friday that the major obstacles to an agreement had been overcome, and it was now a matter of lawyers working out the technical language. He said details of the arrangement could not be released until that process is complete.
Ronald G. Henry, executive director of the oversight board, said, "I think we have something that works, that doesn't give away the store on either side." He said the only reason the deal would fall apart now is if the drafting process uncovers new misunderstandings among the parties.
The board, known as the Pennsylvania Intergovernmental Cooperation Authority, plans to issue deficit bonds on the city's behalf but must first win approval from the city council for the power-sharing agreement. Philadelphia officials hoped to get the agreement to the council on Friday, because the process takes at least two weeks and the city expects to run out of cash at the end of next month.
But Mr. Brenner said the agreement was given to the parties' respective lawyers for drafting, and that process took too long to get the agreement to the council as planned. City officials also tried and failed to get an agreement to the council during the previous week's session, but that delay was said to be caused by more substantive disagreements over the terms of the deal.
Mr. Brenner said certain city council members were considering meeting on Saturday to set a hearing date for the proposal and to prepare to formally introduce it at the next session, scheduled for Thursday.
The oversight authority was established in June to issue deficit bonds for the city and to offer some level of oversight for fiscal decision making. But before it can sell the bonds, expected to be about $300 million, the board has to negotiate the power-sharing agreement with the city and approve a five-year financial recovery plan.
The major obstacle to completing the negotiations has been disagreement over how much notification Philadelphia officials will have to give the board when they deviate from approved fiscal guidelines.
The delays in coming to agreeable terms have called into question whether proceeds from the bonds can reach city coffers by late October, when Mr. Brenner and other city officials say the city will be effectively insolvent. Philadelphia has already begun delaying major payments to vendors for three months, in order to improve its cash-flow position in the shorterm, Mr. Brenner said.