The municipal pension board plans to meet with its lawyer today to discuss lending money to the city, but board members say they still haven't seen a loan proposal and don't expect one until after Christmas.
"We're going to get an update, but there is absolutely no vote, no deal at this point," said Joseph Herkness, a pension board member representing AFSCME District Council 47, one of four municipal employee unions. ". . . I don't think we'll be voting on anything until the end of next week."
The municipal pension fund - already saddled with about $2 billion in unfunded long-term liabilities - has hired a Washington, D.C., pension expert, attorney Ian Lanoff, for advice on legal and financial aspects of a city loan deal.
Herkness said he believes Lanoff is concerned about state laws limiting the amounts the pension fund can lend in certain types of investments.
Mayor Goode yesterday said city officials and potential lenders are still trying to negotiate a major loan that would help meet the city's cash needs over the next three months.
But he declined to estimate when the deal will come together. "I have no expectation," the mayor said.
In negotiations this week, a consortium of eight local banks proposed they join with the city pension fund and the state teachers pension fund to lend $150 million to the city - just half the $300 million the Goode administration was seeking a week ago.
The smaller deal probably would permit the city to scrape through the winter, barely meeting its payrolls and debt-service payments. But it would be insufficient, officials say, to pay hundreds of vendors who are already owed millions of dollars.
The banks' proposal called for the city to receive $100 million when the deal is closed, with the remaining $50 million coming after officials commit themselves to creating a new agency to oversee city spending, one source said.
The banks reportedly want an interest rate of 10.5 percent - twice the rate now paid by local governments with solid credit ratings - plus an origination fee of 1 percent, to be distributed among the banks, based on how much of the loan each provides.
"It seems to be that they (the banks) want to put the squeeze on Philadelphia, on the people, on the unions, and milk it for all they can, both in terms of money and their own political demands," said Thomas Paine Cronin, president of District Council 47.
A spokesman for CoresStates Financial Corp., which is leading the consortium of banks, declined comment, saying the bank won't discuss negotiations with potential customers.
Other members of the consortium are Mellon Bank (East), Fidelity, Meridian, Provident, Continental, Royal and Meritor.
Under federal law, each of the pension funds can put up no more than 25 percent of any amount loaned to the city, leaving the banks to put up at least half.
