Under the guidance of its new finance director, Birmingham is poised to enter the bond market for what may be the first competitive offering in city history.
Mayor William Bell hired Tom Barnett for the position, which reportedly pays $125,000 a year, according to the Birmingham News. Barnett most recently was senior vice president of public finance for Birmingham-based Sterne Agee & Leach Inc.
In a recent letter to the mayor, Barnett said his department could handle an upcoming bond issuance in-house as a competitive offering. The deal consists of $39.1 million of recovery zone economic development warrants and around $50 million of refunding warrants, and is expected to take place in late October or early November.
Barnett said the only professional costs would be those for bond counsel services to Balch & Bingham LLP and Yvonne Green-Davis PC.
Some City Council members have expressed concern about the competitive process and eliminating the use of local investment banks, the paper said. One member reportedly said selling bonds competitively is “not the market norm.”
Birmingham traditionally has sold its debt by negotiation, as do many issuers in Alabama.
The city’s general obligation rating is AA by Fitch Ratings and Standard & Poor’s, and Aa2 by Moody’s Investors Service.
Earlier this year, Sterne Agee’s chairman and chief executive officer, James Holbrook Jr., was also recruited by Bell to help the city devise the current budget and develop strategies to overcome a projected deficit. Holbrook was not paid.
