Newspaper: The Patriot
Date: April 4, 1979
Title: TMI Incident May Hamper City Bond Sale
Author: Erwin Endress
Inevitable financial market effects of the accident at Three Mile Island Nuclear Generating Plant could seriously hamper Harrisburg’s ability to sell $16.4 million in general obligation bonds April 24 to build new municipal facilities in Harristown.
Such was the word to City Council Tuesday night by officials of Financial Management Services, the city’s financial advisers, who recommended a delay of at least several days in the mailing of notices of the sale and a preliminary statement.
The officials, Martin Margolis and John Black, partners in the firm, said disclosure requirements in connection with the preliminary statement now must include a section setting forth existing and potential ramifications for Harrisburg of the nuclear plant accident.
In urging the delay, Margolis asserted, “We don’t want to say that the city at this time might still have to be evacuated. That would have to be very detrimental to any bond sale.”
He stressed a section dealing with the accident at the plant is necessary in the disclosure statement which, he noted, must be “forthright,” because it’s “an event which could potentially have an effect on bondholders.”
A delay of several days, the FMS officials advised, could result in the presentation of a brighter picture in light of more optimistic reports issued over the last two days concerning conditions at the crippled plant.
“The more space we can put between the accident at the nuclear plant and the bond sale, the better,” Black counseled.
He and Margolis said the incident at the power plant could not only affect the potential interest rate but ability to sell the bonds.
Even so, council did not act to set aside its earlier decision designating April 24 for the opening of financing proposals. Nor was a delay ordered in the mailing of bond sale noticed and now-to-be revised preliminary statements.
Margolis and Black subsequently agreed with city Business Administrator John F. Frye Jr. that the mailing of notices would, in effect, constitute a “poll” of underwriters having a history of dealing in bond issues in commonwealth and especially in the midstate.
Margolis said his own preliminary contacts with underwriters already suggests that some and, perhaps, many will, when they receive the notices, suggest that the sale date of April 24 be postponed.
He said four out of five he had contacted had, “to a greater or lesser extent, suggested that the notices of sale be put off.” They and others can be expected, Margolis said, to respond to that effect in writing once the notices of sale have gone out.
But having received such recommendations, Frye reasoned, the administration and council will again be in position to decide whether to proceed or to delay the bond float.
Furthermore, Frye said, even if the sale date should finally remain unchanged, the city and council retain the right of rejecting all proposals if they appear to be unsatisfactory to the city.
“If we become more certain that the April 24 date should be put off, we will tell them (the administration and council),” Black said.
Harrisburg is preparing to float the bonds to finance a new city hall and create a municipal public safety center on Market Square in keeping with a pledge to the downtown renewal project being administered by Harristown Development Corp.
Present in the councilman’s Caucus Room as council deliberated with Frye, Margolis and Black, was William Keisling, HDC executive vice president, but Keisling did not participate in the discussion.
In a related development, Margolis and Black disclosed that as much as $1 million of the $4,225,000 bond issue floated by the city last month through a group of underwriters headed by Rothschild, Unterberg, Towbin, still remains to be sold.
The FMS officials said the Three Mile Island accident has undoubtedly affected the ability of the underwriters to sell those bonds, which were floated to build two new fire houses and to meet a $1.3 million local share requirement to the Maclay Street Neighborhood Strategy Project.
Frye and the FMS officials agreed that while a delay of several days in sending out notices for the $16.4 million issue might help, no harm would be done by sending them out Wednesday as planned because final decisions on the bard sale remain ahead in any case.
Frye said, “They (FMS) have done what we have asked them to do. They have advised us. But we have to make the final decision.”
Margolis and Black said the related preliminary statements, containing disclosure of the nuclear power plant incident and the possibility of an evacuation, will be mailed out some days later than the sale notices.
Except in terms of additional printing costs, they said, there would be “no problem” in making additions to the present draft document to include references to the power plant accident. Other last-minute revisions could also be made.
While Margolis and Black said there is no doubt that “uncertainties” related to the plant incident will have to be included, Frye said that even if they were not included, potential bond purchasers who may never before have heard of Harrisburg now associate the city with the incident and the possibility of a mass evacuation.