Mayor Nutter just announced that the city expects to secure a $275 million loan that will enable it to repay millions of dollars owed to thousands of vendors as soon as next week. Many of the vendors have not been paid since July.
The short-term loan is intended to help resolve the city's cash-flow problems. It is being financed by J.P. Morgan, which will in return seek a 3 percent interest rate through Nov. 30, and an 8 percent interest rate after that.
But Nutter said he expects to refinance the loan quickly through a separate bond transaction that the city would be able to pursue after the state legislature approves pending legislation to free up $700 million in future revenue.
At today's news conference, the mayor also reiterated his hope that the state House would approve the legislation - which includes a sales tax hike for the city - on Sept. 8, as House leaders have indicated. The municipal unions are opposed to the legislation, and are actively lobbying lawmakers to strip out provisions they say would limit collective bargaining on pension issues.
Given the uncertainty, Nutter is moving ahead with other steps, including letters being sent beginning Sept. 10 to residents, vendors and others in the city about possible reductions in city services such as trash collection. Those reductions would begin Oct. 2.
In addition, on Sept. 10, the city intends to submit a new pension plan for future city union workers to the state Public Employee Retirement Commission. That plan must be submitted under the pension legislation.
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