The city still owes the entertainer $1.25 million as part of an agreement reached in November. Less than a month after signing the contract, city officials booted Parton from the theater that they built for him. City leaders have said they did not want to pay Parton because he fell short of contractual obligations, and, they said, misspent public funds.

Parton has argued otherwise. "I did what I promised I'd do," he said in a news conference this month in Cary.

Attorneys for the city and Parton held a marathon negotiating session Monday and came close to a deal.

"I think we made significant progress," said Johnny Loper, a Raleigh lawyer representing the city. "We intend to continue those discussions, and hopefully we will be able to resolve all of the matters at issue. If things go well, we could have a resolution by next week."

Nick Ellis, who is representing Parton, said a deal is possible next week. Neither attorney would comment on tentative terms.

The theater was the subject of discussion Tuesday night at a packed City Council meeting in this community about 90 miles northeast of Raleigh. An auditor for Roanoke Rapids scolded officials for weak oversight of city funds that Parton was allowed to use.

"There was a lack of accountability for the first advance," Greg Redman of Flowers, Stanley & Redman of Tarboro told council members. "During the initial stage of the project, the city did not exercise proper internal control procedures."

A $3 million fund was set up for Parton to get the theater going. Some of the first $254,000 given to Parton was spent on alcohol and trips to Las Vegas.

Phyllis Lee, Roanoke Rapid's manager, said the initial agreement with Parton did not provide for detailed documentation.

Leaders didn't get detailed records on that first draw until October, three months after the theater opened.

Roanoke Rapid officials had hoped the Parton name would help turn the region into a tourist mecca, much like Branson, Mo.

They planned a large entertainment district and borrowed $21.5 million to build The Randy Parton Theatre as its centerpiece. They agreed to pay Parton $750,000 a year to perform there.

The theater opened in July but fell short of attendance goals.

Disappointed, officials renegotiated Parton's contract and hired another management company. Parton's annual salary was cut to $250,000 for five years.

Two weeks later, the city kicked him out of the theater, setting up the fight over money.

Since then, the city has renamed the facility "Roanoke Rapids Theater" and cut its ties to UGL Unicco, the Boston company that was managing it.

On Tuesday, the City Council formed a theater advisory panel, composed of area residents, to help give direction to the venue.

"There's been a lot of interest in this project," Mayor Drewery Beale told those in attendance. "So I really encourage you to attend these meetings and find out what's going on."