ATLANTA -- The Mississippi State Bond Commission on Wednesday approved a resolution authorizing competitive selection of bond counsel for state debt issues, a move state officials hope will address concerns about political patronage.
The commission's action caps a three-year effort to set specific rules for the choice and reimbursement of its bond attorneys.
In late 1989, Mississippi became one of the first states to set limits on fees paid to these professionals. But until now, there has been no formal criteria governing their selection.
"Two years after setting up the fee schedule, we now have taken the next step to assure that the state gets the best service for the best price from its bond lawyers," Mississippi Treasurer Marshall Bennett said yesterday. Mr. Bennett serves as one of three members of the commission, which also includes Gov. Kirk Fordice and Attorney General Mike Moore.
The treasurer said the commission's decision was also prompted by a desire to address what he called the "spectre of political patronage."
"I think with this action we remove any question about whether firms are getting state business because of their support for a state official," he said.
Bond lawyers in Mississippi were generally supportive of the rules, after initially resisting their adoption.
"Like other firms, we have been concerned that a request-for-proposals system would ignore the bond counsel's level of experience and concentrate solely on price," said Stephen C. Edds, a partner at Ott, Purdy & Scott, a bond counsel firm in Jackson, Miss.
"However, I think the commission has done a good job in trying to ensure competent firms will be chosen," he said. "Now it is up to them to administer those rules fairly."
Randall B. Wall, a partner at Watkins Ludlam & Stennis, said he also looked forward to an even-handed application of the new rules. "I will be glad to see rules that take the politics out of selecting bond counsel in Mississippi," he said.
The state's move also continues a national trend of states seeking to establish rules that ensure the competitive selection of bond counsel. In the South, for example, Texas, Louisiana, and Florida have in recent years established such guidelines.
In addition to the Mississippi resolution, which was passed unanimously, the commission approved a seven-page statement to be sent to law firms wishing to be considered for state bond work.
Under the guidelines spelled out in the statement, prospective bond counsel must first satisfy a series of eligibility requirements.
These requirements include having "given sole validity and tax opinions in municipal financing transactions since passage of the Tax Reform Act of 1986" and a listing in the most recent edition of the The Bond Buyer's Municipal Marketplace, a directory of municipal securities professionals.
Each firm must then respond to a series of questions about its personnel, past experience, and resources.
Using the written responses, the commission's staff will rank the candidates based on a numerically weighted evaluation criteria. The most weight will be given to the firm's experience with tax-exempt financings and its employees' qualifications, with each category accorded a weighting of up to 30 out of a 100-point total.
"Quality of services to be rendered" will be weighted at up to 20, and "general quality of response" and "ability to meet schedules" will each be assigned a weighting of up to 10.
Firms scoring over 85 will be included in a pool of candidates that will be invited to compete for individual financings.
Choice of bond firms for specific deals would be made following an additional request for proposals.
These requests would be made solely based on fees, expenses, and the ability to provide specialized legal and tax services that may be required for the specific financing, according to the commission's statement.
The fee paid to bond counsel firms will continue to be capped at the level set in 1989, Mr. Bennett said. That fee schedule sets a sliding scale ranging from $3 per $1,000 limit on the first $5 million of a bond issue to a $0.50 per $1,000 cap in fees on any amounts above $50 million.
The bond commission will established its pool of bond counsel candidates annually.
Mr. Bennett said that with the selection process now established, the commission will soon send out a request for proposals to firms wishing to be included in the state's bond counsel pool.
He said the first state financing for which bond counsel would be chosen under the new rules would be the state's upcoming $98 million general obligation bond issue, approved earlier this month by the state legislature. He said the selection process for this issue, which could be sold as early as September, would begin soon after the pool is chosen.
Mississippi's treasurer said the new rules would not affect the state's next bond issue, a $13.3 million general obligation offering whose proceeds will be used for highway construction and economic development. The commission on Wednesday decided to award bond counsel duties for that deal to Phelps Dunbar, a law firm based in Jackson, Miss., Mr. Bennett said.
He said that the under rules adopted Wednesday, Mississippi would consider joint-venture bids, partly to provide opportunity to minority or women-owned firms wishing to be considered for state bond work. However, he stressed that these firms will be evaluated using the standard criteria."