The Bloomberg administration and the City Council are readying “pay-to-play” legislation that would cap the amount of money those who do business with the city could dole out to political candidates.

According to sources familiar with the negotiations, the two sides of City Hall have agreed that the city will not impose an outright ban on campaign contributions, but will severely restrict the amount that some people could give. Who would the cap apply to? Lobbyists, those who do a certain amount of business with the city (the minimum dollar amount has yet to be determined), and property owners with pending zoning changes and other land-use actions.

The legislation, which is likely to be introduced in the City Council sometime within the next month, would rival the 1998 ban of corporate contributions as one of the most significant overhauls the city’s public campaign finance system has ever seen.

“The pay-to-play element would be one of the biggest changes to the campaign finance program, period,” the president of the civic group Citizens Union, Dick Dadey, said. “It would de-emphasize contributions from well-connected, big contributors and hopefully limit their influence on public policy decisions.”

The particulars of the legislation are being negotiated, but sources say there are two options for the cap on the table.

The mayor’s office is pushing for an across-the-board cap — possibly at about $200 to $250 — that would apply to candidates running for any office. The council wants a tiered cap that would start at about the same amount for council races and possibly go up to $400 to $450 for mayoral candidates. Sources said the contributions would not be eligible for public matching funds.

Either version of the cap, or a third variation, would be severely lower than the contribution limits that stand now. Under that system, contributors can give $4,950 to candidates for citywide office, $3,850 to those running to be borough president, and $2,750 to a council candidates.

For Mayor Bloomberg, passing pay-to-play legislation would be a legacy-shaping accomplishment. The mayor — a billionaire who has self-financed his campaigns and would not be affected by the new rules even if he were not term-limited — has been speaking out against contributions from those who do business with the city since 2004.

For Speaker Christine Quinn, the issue is a little trickier. She is trying to establish herself as a reformer in advance of a possible run for mayor. She simultaneously needs to ensure that her fellow council members do not feel that their financial lifelines are being cut off.

The issue of campaign contributions has been a sticking point between the council, the mayor’s office, and the Campaign Finance Board for sometime. According to the board, about 22% of contributions to candidates in the 2005 election came from contractors, lobbyists, or lobbyist clients.

The chairman of the CFB, Fredrick A.O. Schwarz Jr., said that while he wants pay-to-play passed, the other parts of the bill he has heard about do not go far enough. He said they would “weaken the board’s enforcement, cost the city money, lead to possible improprieties,” and generally undercut the CFB.

“I’ve been working to get pay-to-play legislation passed in New York City for more than twenty years,” Mr. Schwarz said in a statement. “But based on our discussions about other aspects of the proposed bill, I couldn’t support the draft bill in its current form.”

Mr. Schwarz said he is hopeful that a “clean, straightforward reform proposal” will emerge from this round of discussions.

The other provisions he refers to are not headline grabbers, but would have serious effects on candidates.

They include increasing the overall amount candidates could spend by 7.5% while eliminating the amount they could exempt from that cap. Coupling the two is a tradeoff that simplifies things for the CFB while making it harder for well-financed candidates to find creative ways to classify expenses as “exempt” and then spend more money.

The legislation is also expected to include a deadline for the CFB to return audits to candidates and a measure that would hold candidates personally liable if their campaign misused money — but only if there were “gross negligence” on the part of the candidate.

Some sources said the council would also like to see an increase in how much money the CFB matches for contributions of $100 or more.
If introduced next month, the legislation would come about a year after Mr. Bloomberg and Ms. Quinn teamed up to restrict lobbyists’ influence.

It would also come about a year after the U.S. Supreme Court struck down a Vermont law that limited contributions from anyone at $200 to $400 an election depending on the office the candidate is running for. According to published reports, the court said that while the government has the authority to set contribution caps, those amounts were too low.

A spokesman for the Center for Competitive Politics, Michael Schrimpf, said a contribution cap for those who do business with the city “forces people to either make a living or become politically engaged.”

“It’s all about the First Amendment,” he said. “You have a right, whether you have business with the city or not, to be able to express support for a candidate.”

The mayor’s office and the speaker’s office declined to comment.