Augusta Commission stalls bond refinance vote

A high-stakes contest between a minority-owned Atlanta bond underwriting firm and Augusta financial advisers shifted into high gear Tuesday, when a vote to refinance hundreds of millions in debt stalled because of a lack of Augusta Commission support.

The commission had been approached in May by an Atlanta firm, IFS Securities, about whether the package the city’s financial advisers was presenting for approval was the best deal, in the face of IFS’ promise to save the city $22 million.

Plus, IFS Vice President Craig Walker reiterated in a Monday e-mail to commissioners, “the city/county of Augusta/Richmond has never utilized an African-American firm as a prime contractor with a black population of over 50 percent … Here the city has the perfect opportunity to end the troubled track record of economic apartheid” in Augusta.

Financial adviser Dianne McNabb and special city counsel Jim Plunkett have maintained that the bond refunding deal had been in the works for some time and that competitively bidding the bond sale was the best way to handle traditional water and sewer bonds with little risk, considering the city’s high bond rating.

The bonds being refunded are from three bond issues done since 2000 to pay for nearly $400 million in utilities infrastructure improvements over the last decade, Utilities Director Tom Wiedmeier said. The city refinanced its 2002 bonds two years ago and intends to do a third issue for its 2007 bonds.

Even if the city opted to consider IFS for the deal, typically the city would need to use the official procurement process to seek bids from several providers, he said.

“I don’t see how they could go and pick the one firm,” Wiedmeier said.

Walker’s Monday e-mail, however, continued to question whether the city’s fees were the lowest McNabb could obtain and asserted that her previous employer, A.G. Edwards, had managed or co-managed four of Augusta’s last six bond transactions.

He also claimed the city’s water and sewer bond rating had dropped since the city used negotiated sales instead of competitively bid ones. McNabb denied A.G. Edwards had worked on any of the transactions and said the rating had increased.

Commissioner Bill Fennoy, who missed the committee discussion and was absent for the vote Tuesday, said he needed more information but would be willing to consider IFS’ proposal.

Commissioner Bill Lockett, who with Commissioners Marion Williams and Alvin Mason voted against moving forward with the deal Tuesday, said he was concerned about how the process had been handled but would likely agree to move forward with the package prepared by McNabb and Plunkett.

“Many misstatements were made,” Lockett said of McNabb’s and Walker’s conflicting information. “I’m quite sure if what she said was not true, more information will be forthcoming.”

Overall, the IFS proposal “opened my eyes to a lot,” Lockett said. “We will definitely be looking close, real close, in the future.”

Williams said McNabb wanted to meet privately with him to discuss the deal, but he insisted they meet “in open session” before the full commission.

“They said they did a bid process, but it never came back to us,” Williams said of the city’s use of McNabb and various others involved in the transactions. “When the other company came in and said they could get all this savings … .”

Commissioners voting to move forward with the deal Tuesday were Donnie Smith, Mary Davis and Joe Jackson. Wayne Guilfoyle, Corey Johnson and Fennoy were absent for the vote, which failed 3-4.

McNabb said she hoped to complete the deal by Oct. 2. It isn’t required but will save the city money on interest once completed.

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