DALLAS – Dallas County Judge Clay Jenkins's last-minute proposal to add two prominent Dallas firms to a syndicate pricing $168 million of debt led to accusations of meddling in a process designed to avoid political influence.
Two county commissioners – John Wiley Price and Mike Cantrell – objected to Jenkins' proposal to add Hilltop Securities and Estrada Hinojosa & Co. as senior managers on a $168 million deal that priced Thursday through a syndicate led by Siebert, Brandford & Shank.
The motion to include the two firms came at an Aug. 16 meeting, just eight days before the scheduled pricing. Jenkins' motion to add the firms was voted down.
The county judge, elected countywide, is the top administrator in a Texas county and presides over meetings of the commissioners court of elected representatives from designated county districts.
Jenkins said he was recommending the firms because they were based in Dallas and had worked with the county in the past.
Price called the two companies "legacy firms," a label applied to contractors that have been with a government entity for so many years that renewing a contract is a formality. Price, who is African-American, has challenged the use of legacy firms as a barrier to minority firms.
Siebert, Brandford & Shank, since renamed Siebert Cisneros Shank, is a minority owned firm, as is Estrada Hinojosa & Co. Hilltop Securities, which includes First Southwest Co., is the Southwest region's perennial leader among financial advisory firms. In the first half of 2016 Estrada Hinojosa ranked second. Both firms also participate in some underwriting.
County Treasurer Pauline Medrano told the Commissioners Court that the six underwriters were chosen from a pool of 14 selected after a request for proposals last March. Medrano served on the committee that made the selection, along with Jenkins, the county auditor and an assistant district attorney. The final six were named in July.
"I stand by the process," Medrano said in response to a question from Price.
The chosen financial advisors were RBC Capital Markets, which has a Dallas office, and TKG & Associates, a Dallas-based minority firm.
"Did the financial advisors fly in from Mars?" Price asked. "Do they have offices in Dallas?"
"Yes," Medrano replied.
Jenkins had also proposed adding the two firms before the public meeting, Medrano said.
Both Price and Cantrell said they were concerned about violating a process that was designed to avoid any hint of undue influence.
"That's what we brought you in for, to get away from this type of activity," Cantrell told Medrano. "When the process starts, we step back and our hands are off of it. Why are we back in the situation where someone's trying to influence an RFQ?"
In response to questions, Medrano said that adding the two firms would not change the pricing of the certificates of obligation earmarked for remodeling of county buildings and adding a parking garage.
Estrada Hinojosa chief executive Noe Hinojosa Jr. said he attended the meeting and was ready to pitch his company's business if asked. Compared to Estrada and Hilltop, the six selected firms had less experience in Dallas and fewer employees.
"From our perspective, we just wanted to see what was going on," Hinojosa said. "Our job is to try to get hired in everything Texas does."
Hinojosa said that his $250 campaign contribution to Jenkins was legal and permissible under securities laws.
"I can make it in my own name for someone I vote for in a jurisdiction I live in," Hinojosa said. "I run it by three compliance officers before I ever write a check."
