ATLANTA -- In the first application of proposed rules curbing campaign activity by municipal market participants, the Florida Housing Finance Agency last week named a slate of 12 investment bankers for its upcoming tax-exempt deals.
Each of the firms tapped to underwrite the $250 million in bonds the agency plans to sell this summer was chosen on the condition that it pledge not to give money to state-level political candidates, Mark Hendrickson, the agency's director, said Friday.
"With these selections, the rules are effectively in place -- at least for investment bankers," he said. "The action goes a long way in furthering the goal of campaign finance reform because the underwriters that will do our deals are now locked into compliance with the rules."
Mr. Hendrickson said that although the housing agency did not vote on the rules themselves during the nine-hour board of directors' meeting last Tuesday, those rules will be approved at the next meeting. A time has not been set for that meeting, he said, but it is likely to be in mid-July.
"The sentiment was there to adopt the rules at the meeting, but we just ran out of time," Mr. Hendrickson said.
The rules, which the authority has been developing since Gov. Lawton Chiles urged it to do so in March, prohibit underwriters, bond counsel, and financial advisers involved in the housing authority's bond issues from campaign financing and fundraising for Florida's governor or elected cabinet officials.
In addition, a firm would be restricted from engaging in informal communications with any agency officials when being considered for bond work.
The proposed rules mark the first time a government entity has considered such measures, according to various industry officials. Gov. Chiles made campaign finance reform a centerpiece of his successful run for the governorship last year.
Mr. Hendrickson said the authority chose four three-member groups of senior managers, one group for each of the four deals the agency plans to sell this summer: a $150 million single-family housing bond issue; two $25 million new-money multifamily housing bond issues; and a $25 million multifamily refunding issue.
Donaldson, Lufkin & Jenrette Securities Corp., Kidder Peabody & Co., and Tampa-based H.G. Nix Inc. will serve as senior managers for the largest deal, which includes $125 million of new-money bonds and $25 million in refunding debt to be sold by Sept. 30, the housing official said. However, all of the other nine firms chosen as senior managers for the other deals can serve as co-managers on this one, he said.
Smith, Barney, Harris Upham & Co., Lehman Brothers, and Jacksonville, Fla.-based Barnett Brokerage Service were chosen as senior managers for one of the new-money multifamily issues. The other multifamily new-money issue will be underwritten by William R. Hough & Co., Goldman Sachs & Co., and Argyle Securities, a recently formed minority-owned firm based in Miami.
Bear, Stearns & Co., Raymond James & Associates, and Seattle-based Smith, Mitchell & Associates were chosen senior managers for a $25 million multifamily refunding bond issue.
Mr. Hendrickson said all the deals, except the multifamily refunding issue, must be sold by Sept. 30 to comply with Florida's deadline for use of the private-activity allotment granted to the authority for 1991.
The 12 firms, selected from a initial pool of 36 applicants, were chosen on the basis of "the creativity and detail of their proposals and their commitment to a Florida presence," Mr. Hendrickson said. In addition, he said, firms based in Florida, as well as minority- and women-owned firms, were given special consideration. The fact that firms had contributed to campaigns in the past was not taken into consideration.
"The train is coming down the track on ethics reform, and [designating underwriters under the proposed rules] can't help but make the playing field more level for firms like ours," said Anita Mitchell, senior vice president and manager of Florida public finance at Smith Mitchell, a women-owned firm. "We are very pleased to have been chosen and think it says a lot for the sensitivity of the housing agency."
Mr. Hendrickson said the 12 firms would remain the authority's designated managers on deals over the next year on a rotating basis. A year from now, the group would be reviewed and could be continued for another year. In two years, he said, the selection process would begin again.
The next step for the authority is to conduct a similar reach for eight law firms to serve as bond counsel to the authority on a rotating basis, Mr. Hendrickson said.
"In the next several days, we'll begin a selection process for bond counsel that will be similar to what we have done with the underwriters -- and they will be asked to pledge to abide by the rules," he said. The authority's current bond counsel, Tallahasee-based Bryant, Miller and Olive P.A., he said, will serve as bond counsel in the four upcoming deals, but must submit to the selection process for further work.
Mr. Hendrickson noted that a number of board members wanted to extend the selection process to the four upcoming deals. But given the press of business, he said, the board voted to retain Bryant Miller until those issues are sold.
"I needed legal counsel to do the deals, so [Bryant Miller] will remain in place this summer. However, for future deals they have to apply through the [request for proposals] process like everyone else," the housing agency official said.
Bryant Miller, which has been the authority's bond counsel since it was established in 1981, currently has a three-year contract that extends through August 1993. However, Mr. Hendrickson said that state law provides precedent for revising such contract. Officials at the firm could not be reached for comment.
