BRADENTON, Fla. - The Palm Beach County, Fla., Commission is being urged to delay approval of a financial adviser's contract in light of a series of alleged bond-related misdeeds that led to the resignation of one commissioner and a guilty plea by her underwriter husband.
At the county board's regular meeting tomorrow, the county's office of financial management and budget is expected to recommend approval of a three-year contract with an optional two-year extension to Spectrum Municipal Services Inc., a local financial advisory firm that has worked for the county many years.
But approving the contract "is premature and may adversely impact the board's decision making on future bond-related matters," Sharon Bock, the county's elected clerk and comptroller, said in a letter last week to the county commission.
Gilt-edged Palm Beach County issued a request for proposal for financial advisers last October and received responses from Spectrum and Public Financial Management Inc.
According to county documents, a selection committee on Dec. 10 unanimously recommended Spectrum remain as financial adviser because the firm proposed an annual retainer of $18,000, which is an annual decrease of $6,000, or 25%, for financial advisory services not related to the issuance of bonds plus a fee for each bond issue.
"As you are aware, we are in the process of conducting a review of the county's debt issuance practices," Bock said in her letter to county commissioners. "Inasmuch as financial advice is a critical component of the debt issuance process, and given that the proposed contract includes an $18,000 annual retainer fee plus $25,000 to $70,000 compensation to the financial advisor per bond issue, we strongly advise the board to defer a decision on this item until after our report is submitted."
Bock, who could not immediately be reached for comment, has begun a full examination of all aspects of debt issuance by one of Florida's wealthiest counties.
The investigation is a result of the resignation Jan. 8 of former commissioner Mary McCarty who admitted that she failed to recuse herself on votes involving bond issues that benefitted the underwriting companies that employed her husband, Kevin McCarty. She also admitted that she took free or reduced hotel rooms from companies doing business with the county.
Mary McCarty appeared in court Jan. 9 and pleaded not guilty to conspiracy. She faces up to five years in prison and her trial on the conspiracy charge is scheduled March 16. She has indicated in a press release that she expects to plead guilty.
In court Jan. 16, Kevin McCarty pleaded guilty to withholding information about his wife's crime, which is a felony. He could have faced up to three years in prison. But a plea agreement, if accepted by the court, will shave off two years of prison time.
Earlier this month, at the request of Bock, Palm Beach County commissioners directed staff to cooperate with a review of the county's bond issuance procedures and selection of underwriting firms.
Currently, each of the seven county commissioners nominates a bond underwriting firm, then the firms are placed in rotation as transactions are readied.
Palm Beach County's general obligation bond rating is triple-A from all three major rating agencies. Last July, Fitch Ratings changed its outlook on the county's GOs and most other debt to negative.
Fitch cited concern about anticipated erosion of the county's financial metrics the next few years as a result of stress related to statewide property tax reforms, a weakened economy and housing market, and rapidly escalating operating costs, particularly in law local enforcement operations.