DALLAS — Current and former members of the North Texas Tollway Authority’s board of directors are under investigation by the FBI as the NTTA prepares to issue $622 million of revenue bonds, according to disclosure in a preliminary official statement.
“The NTTA has been made aware of an investigation involving one or more individuals and is cooperating with the FBI and the U.S. attorney’s office in connection with that investigation,” NTTA said in a prepared statement. “We do not have any additional information.”
The disclosure comes on the heels of a consultant’s report that cites the appearance of conflicts of interest by unidentified board members but mentions no specifics. The report was commissioned by the county judges of four counties that appoint NTTA board members. The report said it did not find any evidence of criminal violations.
However, the preliminary operating statement for the upcoming issue includes a statement that the Federal Bureau of Investigation “has recently interviewed several officials of the authority regarding any knowledge the officials may have concerning the conduct of certain current and former board members, including possible conflicts of interests pertaining to authority business.”
The investigation is not expected to affect the NTTA’s finances, but the disclosure indicates that the probe could go further.
“There can be no assurance that the investigation will be limited to the matters described above or that the authority will not become a target at a later date,” according to the POS.
The FBI said it could not confirm or deny the investigation, as per policy.
While litigation prevents issuers from going to market, criminal probes generally do not. Other Texas issuers, including El Paso County, have priced debt while officials were under FBI investigation.
The NTTA’s $622 million of Series 2011D-F bonds are expected to price the first week in November through negotiation with JPMorgan as book-runner with co-senior managers Barclays Capital and Samuel A. Ramirez & Co. Co-managers are Bank of America Merrill Lynch, Jefferies & Co. and Rice Financial Products Co.
RBC Capital Markets serves as financial advisor and McCall, Parkhurst & Horton remains bond counsel, despite acrimonious debates about replacing them and other long-term “legacy contractors” to the NTTA.
The legacy contractors were among the key issues cited in the consultant’s report on NTTA business practices. An effort to open up bidding for an array of services and projects to outside companies in 2010 was poorly handled, according to the report.
Current NTTA chairman Kenneth Barr, the former mayor of Fort Worth, is the brother of an attorney who works for the law firm of Locke Lord, one of the NTTA’s legacy contractors. However, Barr told the Fort Worth Star-Telegram that his brother’s area of practice was unrelated to any business before the agency’s board.
The upcoming bond issue is for the NTTA’s first tollway in Fort Worth, the Chisholm Trail Parkway. The parkway will be financed separately from the authority’s existing system in Dallas, Denton and Collin counties.
Barr this month replaced former NTTA chairman Victor Vandergriff after Vandergriff said he realized he would not win enough votes for another term. Vandergriff, from Arlington, remains on the board.
With Barr’s ascension, NTTA executive director Allen Clemson resigned, saying that he did not expect to survive a vote of confidence from the board. Clemson was the third executive director forced to resign in the last five years. Under the terms of his separation package from the authority, Clemson was not allowed to talk about the board.
