One of the organizers of the campaign to promote a sales tax increase also works as director of an investment banking firm that would make hundreds of thousands of dollars issuing stadium bonds if the tax passes.
L. Garry Smith is a managing director in Tampa for Smith Barney, which was chosen Monday to be the lead issuer of bonds for a new NFL stadium in Tampa. The fee could be as much as $275,000.
Smith, an influential lobbyist and former chief of staff under Florida Gov. Bob Graham, also has been helping to organize the campaign for the half-cent sales tax increase to pay for the stadium as well as many public works projects.
The campaign is scheduled to kick off today at a news conference at Gaither High School at 3 p.m. One of the co-chairs is University of South Florida President Betty Castor.
In an interview Tuesday, Smith said he "couldn't evaluate" the question of whether the money he and his co-workers would make on stadium bonds posed a conflict with his political role.
Smith noted that officials of the Tampa Sports Authority who interviewed potential bond underwriters Monday asked each firm whether it would participate in the sales tax campaign, and each said it would. Smith also said the invitations to seek the bond business were wide open.
"Any firm in Tampa had the opportunity to be involved," Smith said.
The importance of Smith's previous efforts and connections was confirmed by Tampa Sports Authority board member Steve Anderson, whose last day as authority chairman was Monday.
"He has been very active in the entire project,"
Anderson said. "Garry was extremely helpful in the Tallahassee effort (to obtain a car-rental tax). . . . I think (campaign involvement) is a relevant factor."
Nevertheless, the ability of Smith's firm to sell bonds was "first and foremost" in its being chosen as lead underwriter, Anderson said.
The role of lead bond issuer was not decided by competitive bidding on Monday. Rather, the six finalist firms made presentations before a public meeting of a subcommittee of three TSA members. Each firm also quoted a service fee _ a charge per $1,000 in bonds issued.
Smith's firm, Smith Barney, presented last. TSA staff said the agenda had been set in alphabetical order. Smith Barney quoted a service fee of $3.81. But it agreed, as did some other finalists, to match the lowest quote of the day _ $3.70 from Raymond James.
The subcommittee ranked Smith Barney first and Raymond James second. Later, the full TSA board voted to make Smith Barney the lead issuer, with 40 percent of the business. Raymond James would be second, with 15 percent. Other underwriters will be chosen later.
Noting that his law firm has represented all the finalist firms at one time or another, Anderson abstained from voting. A few minutes later, the TSA unanimously chose its new chairman, Tampa Electric executive Johnny Dean Page.
Although it might seem premature to choose bond underwriters before the tax goes up for a vote Sept. 3, the stadium deal signed in March required negotiators to do so as soon as possible. That's because of the tight construction schedule for a projected 1998 stadium opening.
Those familiar with bonds say there are many factors besides service fees to consider when choosing an investment bank. Reputation is vital, as is familiarity with the market. The insurance companies, pension funds and individual investors who buy bonds have to be confident that their investment is protected through a bond's repayment requirements. Knowledge of changing tax law also is important.
Those factors are among those cited by the TSA's financial advisers, Coleman Cordell and Randall Campbell of Morgan Stanley & Co., in explaining the TSA's selection process, commonly known as "negotiated" arrangements. The TSA used negotiated arrangements when financing the Ice Palace.
Hillsborough County government, on the other hand, has used competitive bidding, in which low price is paramount, in its last 15 bond transactions, dating back to January 1992. Although there is no official policy to back up that practice, it was informally locked in place by a 1993 state attorney's investigation into a county bond transaction. Although it didn't lead to criminal charges, the investigation left county officials wary about the slightest hint of subjectivity or conflict when choosing underwriters.
Assistant Hillsborough County Administrator Ed Hunzeker, who oversees the county's competitive process, said Tuesday that one reason negotiated arrangements might better suit the TSA is because it issues bonds less frequently than the county and therefore is less well known to Wall Street underwriters. That makes the reputation and clout of an issuer's investment bankers all the more important.
"They are telling your story to potential buyers," Hunzeker said. "Once your story is told, the buyers are receptive, and you get a better price."