Monday, December 21, 2009

Communication breakdown

Posted By and on Mon, Dec 21, 2009 at 9:00 PM

click to enlarge MAN IN THE MIDDLE: Councilman C.T. Martin wants minority firms to get equal opportunity in an airport bond deal.
  • MAN IN THE MIDDLE: Councilman C.T. Martin wants minority firms to get equal opportunity in an airport bond deal.

A document packet of mysterious origin. A city official who denies sending a letter that bears his signature. A councilman pressuring city employees to give a lucrative deal to a contractor who’s been investigated for alleged criminal misconduct. And, up for grabs, the underwriting commissions on a whopping $1.2 billion worth of airport bonds.

Just weeks before a new Atlanta mayor and City Council come on board, one of the city’s biggest bond issues of the year — a much-needed initiative to fund the new international terminal at Hartsfield-Jackson Airport — has been delayed because of a situation that’s variously been described as a simple misunderstanding, a conspiracy to deny business to minority contractors and, most alarmingly, a suspicious effort to place two particular bond firms in a position to earn millions of dollars.

At the center of the commotion is C.T. Martin, the soft-voiced yet prickly councilman who’s represented much of Atlanta’s far western neighborhoods since 1990. Martin says he’s fighting to get Grigsby & Associates and Rice Financial Products, two out-of-state and minority-owned bond underwriters, a bigger chunk of the airport bond deal because minority companies have historically been shut out of Wall Street paydays.

But Martin’s advocacy on behalf of the two firms has proved troubling to several of his fellow councilmembers, as well as to outgoing Chief Financial Officer Jim Glass, who put the brakes on the bond deal and requested an investigation by the city’s legal department.

“We’re conducting a full compliance investigation into this matter,” City Attorney Roger Bhandari said during a Dec. 2 Council meeting. “As you know, sometimes compliance investigations can lead to criminal wrongdoing, in which case, we’ll refer it to the proper authorities. It will not just be a look at ethics. It will be a look at all facets of the law.”

The imbroglio began this fall, when Martin and fellow Councilman H. Lamar Willis expressed concern about inadequate minority participation in the upcoming airport bond deal. Historically, the city has reserved at least 25 percent of its bond underwriting business for minority-owned firms. Underwriters are selected from a list of prequalified firms by bonding experts within the city finance department, who can choose to take — or ignore — suggestions from councilmembers. For very large bond issues, like the $1.2 billion airport financing package, it’s not uncommon for six or seven firms to share the underwriting duties at different levels of involvement.

At the Council’s Sept. 8 meeting, Martin and Willis asked a finance department staffer to give a bigger share of the airport bond deal to San Francisco-based Grigsby and New York-based Rice, both of which had already been selected for a 5 percent cut each.

But it seems there was a failure to communicate.

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(Photo by Joeff Davis)

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