State and federal agencies this week failed to finalize an agreement on how to mitigate the impact of a planned elevated commuter rail project on Honolulu historical resources. A delay in completing the agreement could jeopardize plans to start construction of the $5.5 billion project in December.

The city planned to finalize the agreement Wednesday, then hold back-to-back City Council meetings next week. At both meetings, council members were expected to pass a resolution authorizing the city to execute a "programmatic agreement" with the Federal Transit Administration, Hawaii State Historic Preservation Division, National Park Service and the Advisory Council on Historic Preservation.

However, on Wednesday the Advisory Council on Historic Preservation said it wasn't ready to sign the agreement, which is required under the National Historic Preservation Act of 1966. That act requires federal agencies to take into account the impacts of their projects on historic properties.

Advisory council spokesman Bruce Milhans said Wednesday's meeting was never meant to produce a final agreement.

"There's no agreement that's ready for finalization," he said. "It seems like there is kind of a misunderstanding at a fundamental level about what the nature of the get-together was to be.

"Everything is proceeding forward, and at some point in, we will have an agreement ready to be considered, but apparently that is not yet in existence."

Once the agreement is finalized, the parties involved then decide whether to sign.

The city needs the City Council to approve the agreement before the FTA will release the final environmental impact statement for the rail project. If all goes as planned, the city expects to begin construction about five weeks later.

As of yesterday, the council planned to consider passing a resolution authorizing the city to execute the agreement in its current, unfinished form at a special Transportation Committee meeting Monday. The resolution also is on the agenda for a City Council meeting on Tuesday.

Council Chairman Todd Apo said Monday's meeting will provide a forum for city transportation officials to update the council on the status of the agreement.

"If there are still material issues left out there, it's probably not going to be approved by the council next week," Apo said.

The next opportunity for the council to pass the resolution would be Nov. 16. That would leave the city with just seven weeks to gain all other approvals needed to begin construction by year's end.

If that happens, "the opportunity is still there for (a 2009 groundbreaking) to happen," Apo said.

If the city can stick to its schedule, the first phase of service between Kapolei and Waipahu would begin in December 2012, and the full service to Ala Moana Center in March 2019.

City Transportation Director Wayne Yoshioka could not reached for comment.