Valuable trip or junket?
Five city commissioners and the city manager spend $8,188.65 of taxpayer money for a trip to New York about St. Augustine's bond rating for a water plant project, a trip bond agencies say wasn't necessary
By KATI BEXLEY
kati.bexley@staugustinerecord.com
Publication Date: 06/05/05
St. Augustine's five city commissioners, the city manager, and their spouses went to New York City for four days in March, spending more than $8,000 on a trip they say was necessary to ensure a good bond rating.
"One of the best tools we have for the bond rating agencies is for them to see (the commissioners) so they know who is making the decisions," City Manager Bill Harriss said. "It's PR."
However, three bond rating company representatives and city and county officials from around the state say trips like the city commission's are not needed. One county official laughed out loud when he heard that the entire City Commission went.
"Regardless of the size of the city, it's strictly what's on the paper," said Leslie Wilkins, of the Standard & Poors New York City media relations department, referring to the city's financial health. "Meeting the people won't change that."
For three nights in late March, Harriss took the commissioners to meet with three different bond-rating agencies, including Standard & Poors, and one insurance company in New York City to sell a $21.4 million utility bond for capital improvements to the water plant. The city received an A rating from all three agencies, which is the third highest rating.
Because St. Augustine is small -- its population is 13,245 -- Harriss said meeting the companies face-to-face is essential to making the city stand out.
But the city of Cocoa Beach has a population of about 12,800 and it received an AA rating, second from the highest, from Standard & Poors through a conference call, said Ken Kilgore, finance director. Its bond was for $14 million.
"(The companies) never did really suggest we pack up and go there," Kilgore said. "In our case, we didn't think it was necessary. (The companies) didn't seem to think it was necessary."
Several Florida cities and counties contacted by The Record said they sometimes send one elected official along with their finance staff to meet with bond-rating companies in New York. None send the entire commission.
"Do the (New York) companies want to meet all of the commissioners and their spouses? No," Allen MacDonald, St. Johns County Finance Director, said through laughter. "That would be an overkill."
John Incorvaia, senior vice president of Moody's, another bond agency with which the commissioners met, said a community's management is an element in his analysis of a bond.
"We need to, at some point in time, make sure we have confidence in the stability of the government (that is in charge of the bond)," Incorvaia said. "It's always helpful when we meet the decision-makers."
Incorvaia also said he does not "necessarily encourage issuers to meet with them unless they have not seen them in a long time."
The St. Augustine City Commission last went to New York City as a group in 2002, according to Harriss.
Amy Laskey, an analyst from Fitch, the third company with which the commission met, also said it is useful to meet the City Commission, but said it doesn't impact the bond rating.
"No, the rating isn't affected by whether we meet commissioners," Laskey said.
Spouses, significant others went along
The married commissioners and the city manager took their wives to New York. The two single commissioners took their significant others. The city paid for air fare and hotel accommodations for the commissioners and the city manager, but not air fare for the spouses.
They stayed at the Double Tree hotel, but a hotel representative said she could not tell if they paid for a double or single room by looking at their rates. This is because single and double room rates can range from a difference of $20 to $80 each week, and their computers can only look five days back, the hotel representative said.
All stayed three nights, except City Commissioner Susan Burk who stayed one more night to attend a meeting that the others could not attend.
The companies bought the majority of the meals for the commissioners, but Burk said they went to diners and little Italian restaurants. There is no record of the meals bought for them, except for one meal Harriss bought for the commissioners.
"We went to whatever was close by and convenient," Burk said.
'Refreshing' that commission went
Harriss said one of the reasons he asked all the commissioners to go is because of changes after the 2002 election.
Before that election, Standard & Poors approved a $4 million bond for St. Augustine to build a parking garage behind the Lightner Museum. After the election, the sentiment of the commission changed against that proposed garage, and the money was not used for that project, Harriss said. That $4 million is paying for the parking garage now being built north of downtown, Harriss said.
"The bond agencies were very concerned. That's when I said, 'I've got to stop this, or it's going to snowball,' " Harriss said. "I have convinced these New York guys we have a good commission that is unified."
Commissioner Don Crichlow said he asked the companies himself if meeting with them had an effect on bond ratings.
"I intentionally asked each one of these folks when we were up there," he said. "They said it was very refreshing to see the whole commission. They said, 'It is really impressive.' Those were (each company's) exact words."
In reply to Standard & Poors' spokeswoman saying the information on paper determines bond ratings, Commissioner Burk said they have to say that.
"It's like a bank can't say, 'I'm going to loan you money because I like you,' " she said.
Burk also said having the companies go to dinner with the commissioners' spouses and significant others personalized the bond-rating process.
"It's humanizing the event," she said. "Even though (the companies) don't want to humanize it, we want to. We want them to know the people in our city."
'Never heard' of all commissioners going
City of Port St. Lucie accountant Marcia Dedert disagrees. Her city, with a population of 130,000, has received an AA rating -- a higher rating than St. Augustine received -- for a $100 million bond from the same New York companies. She said they never send any of their City Council members to meet them.
"They ask financial questions, and they want a report on financial conditions, so that's who goes (to New York)," Dedert said. "I have not heard of (the companies) wanting to see our City Council."
Commissioner Errol Jones said the New York trip was not a vacation for him.
"I took time off my job for this. I get paid for those (vacation) days if I don't use them," he said. "I went to the meetings all day."
Trip's goal: Save citizens money
For Commissioner Joe Boles, the trip was a wise business decision for the city.
"It's a lot easier to judge a company when you know who's running it," he said. "It takes money to make money, as long as we get a good rating -- because that's what ultimately saves our community thousands of dollars."
Mayor George Gardner echoed his fellow commissioners in saying, "I wouldn't term (the New York trip) a junket. ... I'm not a bond expert, but I think it's important the city make every effort to try to get the best (bond) rating possible."
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