Philadelphia Bars Public From Mayor’s Investor Meeting
Philadelphia Mayor Michael Nutter, whose municipality has the lowest credit rating of the five most-populous U.S. cities, will address investors at a conference financed by underwriters and closed to the public and the press.
The invitation bills tomorrow’s meeting as a chance to hear “Philadelphia leaders and investors discuss building the city’s future.” In addition to Nutter, a 55-year-old Democrat, speakers will include finance director Rob Dubow and Mark Gale, chief executive officer of Philadelphia International Airport, according to the agenda.
Philadelphia is hoping to attract investors for the city, which is rated three steps above junk by Standard & Poor’s. The city and its authorities have $8.75 billion in outstanding debt as of September, according to bond documents. Philadelphia’s pension system is 47.6 percent funded this year, the documents say.
Tours of city assets are set for the second day of the conference, including the Philadelphia Gas Works, the largest municipally owned natural-gas utility in the U.S. The city plans to hire a broker to steer the sale of the system, which may fetch as much as $496 million, according to Lazard Ltd. (LAZ)
“It is a private meeting,” said Mark McDonald, a spokesman for Nutter. Underwriters pledged to cover the $8,500 cost of the conference, he said by telephone. McDonald said the donors will be made public when the city receives the full amount.
Wells Fargo & Co. (WFC) and Jefferies & Co. were underwriters of the city’s $127 million tax- and revenue-anticipation notes offered in December, according to data compiled by Bloomberg.
Barclays Plc (BARC), Goldman Sachs Group Inc. (GS), Citigroup Inc., Siebert Branford Shank & Co. LLC, Samuel A. Ramirez & Co., Loop Capital Markets LLC and Janney Montgomery Scott LLC have also served as underwriters, according to the city’s website.
Bloomberg News wrote Nutter April 4 objecting to the press’s exclusion from the conference. The Associated Press, the Philadelphia Inquirer, and the Arlington, Virginia-based nonprofit Reporters Committee for Freedom of the Press have supported the protest.
Philadelphia, where more than a quarter of the population of 1.5 million lives in poverty, carries ratings by the three major companies that are the lowest for the top five most populous cities. It’s rated BBB+ by Standard & Poor’s, three steps above noninvestment grade. Fitch Ratings puts it one step higher, at A-, while Moody’s Investors Service ranks it two levels higher, at A2.
Sam Katz, chairman of the Pennsylvania Intergovernmental Cooperation Authority, created in a 1991 state law that oversees the city’s finances, said that with the conference being held locally, it “certainly created some concern on the part of people that it should be made public.”
He’s more troubled, however, by the fact the school district isn’t on the agenda, he said. Facing a $304 million deficit, school officials have asked the city for $60 million and the state for $120 million.
“The school district’s in a crisis,” Katz said. “They’re the same tax base.”
Philadelphia officials facing a $1.35 billion spending gap over five years voted in March to shut 9 percent of its public schools.
Philadelphia entered into $3.5 billion of swaps, and its borrowing cost may swell by as much as $186 million compared with what it would’ve paid to issue fixed-rate debt, estimated city treasurer Nancy Winkler in October. The city is lobbying to maintain its ability to engage in the transactions after a bill that would ban the practice for municipalities was introduced in the state legislature in February.
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