DALLAS -- Mayor Wellington Webb of Denver will riot institute any major new debt programs in his first term, but says he will finish the major projects started by his predecessor, including the $2.4 billion Denver International Airport.
The new mayor in an interview also said his transition team is studying whether to replace city officials overseeing the massive airport plan. In addition, he indicated a possible shake-up among investment banking firms handling the financing.
After taking office July 1, Mayor Webb said his administration would focus on city services, not the large projects that market the administration of Mayor Federico Pena.
"I think my election to a large degree symbolized voters' concern about the level of indebtedness," he said. "My sense is that the populace also wants an increase in basic city services, as opposed to large mega projects."
Later, he added, "Wall Street should expect that we will continue the issuance of airport revenue bonds to complete the airport project, but the we then need to hold a more predictable pattern."
Since 1983, Denver has grown from a city with little debt to more than $2.39 billion of outstanding bonds. That amounts to $1,594 debt per capita, just under 500,000, according to Moody's Investors Service.
While that ratio is higher than the median of $1,041 for cities of 300,000 to 500,000 in population, rating analysts say they are not alarmed by the Denver's debt load. Both Moody's and Standard & Poor's Corp. have assigned double-A ratings to the city's general obligation bonds.
"The city's management has been proactive. Financially, they have been looking pretty good," said Adam Whiteman, vice president at Moody's. "They've sold a lot of debt compared to what they had in 1975, but they've had a lot of people coming in."
But many observers say city officials have used debt issues to borrow Denver out of the most severe economic downturn since the Great Depression. The city used $30 million of debt for a cattle show arena, $126.3 million for convention center construction, and $241 million for infrastructure projects.
"I think that what we did is take a look basically at what our needs are," Mayor Webb said. "The voters have demonstrated their faith in the future by supporting the bond projects. But those bond projects have also tended to pass by more and more narrower margins."
One project voters have supported in referendums is the construction of a new airport north of Denver. Mayor Webb said he intends to see the project completed.
"I'm a supporter of the airport," the new mayor said. "I oppose those that suggested there should be a moratorium on the airport."
Critics say that project will not be self-supporting and will draw on city revenues, even though the Denver City Council has rejected using general fund monies to pay for the airport.
But the mayor said he is confident about the economics of the project, which is rated conditional Baal by Moody's, BBB-minus by Standard & Poor's, and BBB by Fitch Investors Service.
Just last month, United Airlines said it planned to operate 45 gates from concourse B of the airport when it opens in 1994. To entice United, the top carrier at Stapleton International Airport, the city offered $175 million in incentives.
Denver also had been negotiating with United about locating a 5,000-job, $1 billion jet maintenance base at the new airport, but the carrier said last week tht a state-backed package of incentives valued at $150 million was not enough..
That announcement came on the very day the Colorado Supreme Court ruled in a 4-to-3 vote that a plan to use $115 million in state-issue, fuel tax backed certificates of participation was constitutional.
"Would we like to have the United maintenance facility? Absolutely," said Mayor Webb, who was city auditor until his election in June. "But at this point, I think we have gone as far as we can go" with incentives.
Beyond the economics of the airport are politics.
Mayor Webb has already fired Manager of Revenue Alan Charnes, citing long-running "philosophical differences." He said it is too soon to say if others, including the airport's director, George Doughty, and its finance director, Gennifer Sussman, will be retained.
"Everyone from the Pena administration is under review," he said. "Until those reviews are completed by my transition team, I can't say at this point yes or no as to whether they will be retained or at what point they will be replaced."
As for the future of the current airport financing team, the mayor indicated underwriting assignments might be shuffled before another fixed-rate offering, planned for this fall, is issued. The city has already sold $1.5 billion of revenue bonds for the projects.
"I'm sure [investment bankers] are not naive and that they would expect that a new mayor would, before a significantly large new financing goes to market, want the process reopened to allow other firms to apply in a competitive fashion," he said. "I think that would only be fair."
Investment bankers in Denver say firms on the financing team made a strategic blunder when they supporter Denver District Attorney Norm Early for mayor.
The front-runner until late in the campaign, Mr. Early was endorsed by Mayor Pena and received substantial financial and other support from bond houses involved in the airport financings. Meanwhile, Mayor Webb was the dsar horse who received support from a only few firms.
So far, the mayor is not saying what he might do.
"Most of the firms were politically somewhere else," Mayor Webb said. "As far as I'm concerned, the election is over and they will maybe see the error of their ways for future considerations the next time around."
