ATLANTA -- Commissioners of Lee County, Fla., Wednesday chose Raymond James & Associates, previously an outsider to county bond work, to serve as lead manager on a $20 million refunding issue.

The choice of the St. Petersburg-based firm followed the commissioners' rejection last week of Donaldson, Lufkin & Jenrette Securities Corp. for the gas-tax bonds because of concerns about Donaldson's involvement in a recent federal extortion trial in Kentucky. In March, the commissioners gave Donaldson preliminary approval to negotiate the borrowing.

The five-member county board voted 3 to 2 to approve Raymond James for the deal given the firm's response to a request for proposals send out last Friday, according to Commissioner Doug St. Cerny. The request asked each candidate to propose an underwriting spread for the transaction and to respond to three ethics questions, St. Cerny said.

However, St. Cerny noted that he voted against the selection of Raymond James because he "didn't feel that a week's time allowed for an objective choice." The other four commissioners could not be reached for comment either Wednesday or yesterday. County offices were closed Thursday in observance of Veterans' Day.

Raymond James has not served as lead manager on any of the 39 deals that Securities Data Co./Bond Buyer lists as Lee County bond offerings since 1980. According to Securities Data, the firm has served on the senior management team of only one county issue, a $7.6 million of water and sewer revenue bonds sold in July 1989.

According to NationsBanc Capital Markets vice president David L. Segal, the county's financial advisor, said yesterday that the candidates were ranked strictly on their response to the request for qualifications solicitation sent out Nov. 4.

The solicitation, sent to 52 underwriting firms, asked each to propose a total underwriting spread and to reply to three ethics questions. Firms were also asked to provide a recent pricing example with a takedown structure similar to the one proposed for the gas-tax deal.

The ethics queries asked prospective managers whether they had, in connection to a solicitation for negotiated underwriting deal: "ever been indicted or charged with any wrongdoing; ever been a target of a governmental or regulatory investigation; or ever participated in a governmental or regulatory investigation."

According to Segal, Raymond James received the highest ranking out of 24 firms that replied to the proposal request. The ranking was based on Raymond James' proposed gross spread of $3.68 per bond, the lowest among the candidates, and its "no" response to each of ethics questions,

The second lowest proposed underwriting spread was $3.98 per bond proposed by Prudential Securities, according to the memo. Donaldson responded to the RPF with the seventh-ranked proposed spread, $4.50 per bond.

According to Bruce Loucks, Lee County's director of budget services, Donaldson had been chosen by the commissioners in March on the basis of a then-current policy that rewarded the first underwriter to come up with money-saving idea. Since that time, commissioners have reevaluated this policy, but have yet to decide on new general guidelines for underwriter selection, Loucks said.

In its Nov. 3 meeting, commissioners voted to reverse themselves on the choice of Donaldson after becoming aware of press reports about the federal extortion trial of Bill Collins, husband of former Kentucky Gov. Martha Layne Collins.

Bill Collins was found guilty last month in a Frankfort, Ky., federal court of one extortion count and a related tax fraud charge. He was accused of forcing Donaldson, Lufkin and another firm, Cranston Securities Co., to make political contributions and to invest in his horse partnership businesses in exchange for state bond business between 1983 and 1987, his wife's term of office.

Donaldson, which was not charged in the case, has denied any wrongdoing.

St. Cerny said that at the Wednesday meeting, the commissioners also approved, by a 4 to 1 vote, the choice of William R. Hough & Co. to serve as lead manager on a $11.2 million refunding of tourist-tax backed stadium bonds originally sold in 1989. Smith, Mitchell & Associates was chosen co-senior on the deal.

Segal said the county is set to sell the gas-tax refunding issue and will do so as soon as possible, but given the current state of the market will probably not price the deal next week. He said the tourist tax offering will probably not be priced before sometime next month.

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