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08-08-95171 Board of Directors Room City Hall - 500 W. Markham Little Rock, Arkansas August 8, 1995 - 4:15 P.M. The Board of Directors of the City of Little Rock, Arkansas, reconvened from the August 1, 1995 regular meeting with Mayor Jim Dailey presiding. City Clerk Robbie Hancock called the roll with the following Directors present: Directors Sharp, Mason, Kumpuris, Adcock, Wilson, Hinton, Hodges, Keck, Joyce and Wyrick - total 10; Absent - None. With a quorum being present, Mayor Dailey declared the Board of Directors in session and announced that the purpose of the reconvened meeting was to consider the Ordinance providing for the issuance and sale of Airport Revenue Bonds, which was on the Agenda for third reading. Consideration was then given to Ordinance No. 16,951, entitled: AN ORDINANCE PROVIDING FOR THE ISSUANCE AND SALE OF AIRPORT REVENUE BONDS FOR THE PURPOSE OF REFUNDING OUTSTANDING AIRPORT REVENUE BONDS; PROVIDING FOR THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A SUPPLEMENTAL TRUST INDENTURE; AND PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY; (In the principal amount of $5,300,000.) City Attorney Tom Carpenter advised the Board of Directors that the last WHEREAS clause had been changed from the principal amount of $5,225,000 to $5,300,000. There was a motion by Director Keck, seconded by Director Adcock, to amend the Ordinance to change the principal amount in the last WHEREAS clause from $5,225,000 to $5,300,000, and the motion was unanimously adopted. There was a motion by Director Keck, seconded by Director Wyrick, to suspend the rules and place the Ordinance, as amended, on third and final reading, having been read the first and second times at the regular meeting held August 1, 1995. The motion was unanimously adopted by the Board Members present, being eleven in number and two - thirds or more of the members of the Board of Directors - elect, and the third and last reading of the Ordinance ensued. Mrs. Susan Fleming, representing the financial advisor Stephens, Inc., introduced Mr. Tom Pate of Hill Crawford & Lanford, Inc. Mr. Pate, speaking on behalf of the underwriters, explained the sale of the Bonds. He said the average coupon rate was 5.44 percent on the 20 year bond issue, and the longest bonds sold at an interest rate of 5.75 percent that were discounted at 98.5 cents to yield 5.87 percent. The amount of savings generated was $954,171.13, or 18% of the par amount of the current issue, which is a tremendous savings. A roll call vote was then taken on passage of the Ordinance as follows: Ayes - Directors Sharp, Mason, Kumpuris, Adcock, Wilson, Hinton, Hodges, Keck, Joyce, Wyrick and Mayor Dailey - total 11; Noes - None; Absent - None. The Emergency Clause contained in Section 8 of the foregoing Ordinance was then read and adopted by the following roll call vote: Ayes - Directors Sharp, Mason, Kumpuris, Adcock, Wilson, Hinton, Hodges, Keck, Joyce, Wyrick and Mayor Dailey - total 11; Noes - None; Absent - None. Therefore, the Ordinance, as amended, together with the Emergency Section, was declared PASSED. 1 172 Minutes August 8, 1995 Mayor Dailey then stated that Mr. P. A. Hollingsworth, a member of the Little Rock Regional Airport Commission, had asked to address the Board of Directors regarding allegations made at the Agenda Meeting on July 25, 1995, and the Board of Directors Meeting held August 1, 1995. Mr. Hollingsworth's statement was as follows: "Thank you, Mayor and members of the Board of Directors. I requested to appear today because I thought it would be incumbent upon me as an Airport Commissioner to respond to the allegations that had been made concerning my role as an Airport Commissioner in the vote on the bonds that you just approved, the one you approved almost a year ago, and the one we presently have pending before us regarding the PFC. I reviewed the tapes of the Board meetings to really get a full appreciation of the issues that were discussed here concerning my involvement. And I have also gone back and reviewed the Minutes and the tapes of the Airport Commission, going back to the 184 and 185 refunding and also dealing with the 195 PFC issuance of the Bonds. I read Mr. Carpenter, the City Attorney's report and I have thought that after reviewing all that it was incumbent upon me to respond to the allegations that there was a conflict of interest in my voting on bond counsel proposals concerning all three of the issues. I'd like to state that I am not a novice to City government. I have been both a City director and served on several commissions during the past 25 years and I am well aware, I think, of what the rules say and always have tried to abide and conducted my way in such a way as to be in compliance with not only the spirit of the rules but also the letter of the rules. I have reviewed what happened in this particular case concerning the hiring of bond counsel and I would state that it has been my experience in serving on the Airport Commission since 1990, which this Board appointed me to in 1990, that we have always gone according to a policy that the Airport Commission promulgated pursuant to FAA regulations and pursuant and consistent with Arkansas State law and with the Board of Directors ordinances that you have passed. I've always thought that we complied with those and that we certainly went beyond what was expected of us. It has been my experience since I've been on the Board that we've always complied with what we considered to be a duty to include diverse people and coming in ( ?) for our contracts. That includes underwriters, bond counsel and other people who do work at the Airport. We have generally informed people who are doing business for the Airport that we expect them to have an attitude that they would involve disadvantaged businesses or minorities, which usually in this case means blacks and in some cases women. We have consistently adhered to that and have always voted on these issues when they came before us in a fair way. I would like to refer specifically to when we went into the process of selecting bond counsel for the 184 and 185 refunding, which we did in 1994. That was around May and June of 1994 that we went through the process and Susan Fleming of Stephens was our Financial Advisor on this along with another company called Unison, which is a minority firm that also works along with Stephens to do the financial advising to the Airport Commission. When we put out our RFP we made it clear that we were going to hire minority underwriters and minority bond counsel, that we were going to have co- underwriters and co -bond counsel. In my review of the Minutes and my review of the tapes concerning the selection of bond counsel indicated to me on that refunding that there were 6 or 7 majority firms, what I consider to be white firms, they were all local firms. There was only one minority firm that submitted an application and appeared before the selection commission and the Airport Commission. That was Mays and Crutcher. At no time during our deliberations was there any discussion about the hiring of Mays and Crutcher. I think everyone that was involved in the process including representatives of the City, at that time I think Brenda Donald was your representative, assumed that if they were the only firm to apply that there was no need to discuss them. There was some 2 Minutes August 8, 1995 173 discussion about the majority firms, but it was eventually decided that since Wright, Lindsey & Jennings had proposed minority participation that they would be the most qualified one to receive the bond counsel work or the co -bond counsel work. There was at no time any attempt by me to influence any of my fellow commissioners or any people who served on the selection committee to consider Mays and Crutcher. They were just a non - issue. We didn't discuss them at all. The recommendation was made by the selection commission that we hire co -bond counsel Wright, Lindsey & Jennings and Mays & Crutcher, and that was done and the financial advisor, subsequently to that June decision, in September of 194 advised us that to take advantage of the cost savings that we should have the same team to represent us in the 185 refunding and we all agreed to do that without any discussion about Mays & Crutcher. Now when we came to the 195 PFC, and I've sent Board Members the Minutes so that you can look at them, there was a selection process started again for underwriters and co -bond counsel. Once again the only minority firm that applied was Mays and Crutcher. There were 5 majority firms that applied. Three of those 5 majority firms indicated that they would probably associate with Mays & Crutcher as minority counsel. We never discussed the hiring of minority counsel. We did have quite intensive discussions about which majority firms would be hired and it really came down to 3 majority firms being considered, with the strong competition being between two of those majority firms. In this process there was never any discussion about the minority firm. There was never any attempt to sway any of the commissioners or anyone that we should hire Mays & Crutcher. It was just not discussed because they were the only minority firm that had appeared and certainly I did not say anything one way or another about their participation. When we went into the regular meeting on May 30 of 1995, the only discussion at that meeting was which of the two firms would be hired between Williams & Anderson and Wright, Lindsey & Jennings. Williams & Anderson received 3 of the votes and Wright, Lindsey & Jennings received 1 vote. There was one commissioner who was not present. We did not discuss the hiring of a minority counsel during the meeting. At the June 14 meeting it was noted that we had not hired a minority counsel and that since everyone was in agreement that Mays & Crutcher would be hired, then they were hired at that meeting as minority co -bond counsel. There was no debate about that and there was no discussion about that. It was accepted that since they were the only firm that they would be hired. Now I do not believe that I have done anything that's a conflict of interest, but I understand that there is some concern not only from this Board but from my fellow commissioners. Certainly if that appearance that I could be unfair, in the next deliberations concerning minority counsels, I will not participate in the selection of minority counsel. The truth of the matter is if there had been competition from minority counsel it would have probably become apparent to me that I had a relationship with Richard Mays which not only is business but an extremely personnel relationship. I'm the godfather of his children. He's the godfather of mine. I realize that could present problems for people that were competing with him in which I was a decision maker, but there was no competition for his position so there was no discussion so there was no need for me to advocate for him and if that had happened I am sure it would have become apparent to me, if not from the people that were competing with him, that probably I should not participate. But hind sight is always 20/20, and those facts did not occur. There was never any discussion of Mays & Crutcher. The City Attorney's report indicates that my vote was crucial in the hiring of Mays & Crutcher. That is not a fact. There was never a vote on Mays & Crutcher that was not unanimous, because they were the only minority firm applying. I wanted to appear before you to give you those facts and to state what my position is. I am a member of this community. I plan to remain a member of this community. I plan to be active in this community. I am not going to shrink away from what I consider an obligation and responsibility to participate. I do not want to do anything that brings any 3 174 Minutes August 8, 1995 reflection of impropriety upon any body that I serve and I will not do that. But I do not believe that this issue has been treated fairly in the context of what the facts are and I thought it appropriate for me to respond to you to let you know as the body that appointed me to the Airport Commission that I am going to continue to serve in the highest standard and in the best possible way that I can. But I do want you to know that I do not think that I have done anything illegal or improper in the selection of co -bond counsel. That Richard Mays as a member of Mays & Crutcher was never an issue as to whether or not he would be bond counsel. I receive no income from Mays & Crutcher. I'm not a part of that law firm. I've never been and I will not pretend to be. Whatever other things that have happened to give that perception have been totally erroneous and have been explained. The underwriters' counsel has given an opinion that there was no material adverse impact upon these bonds by the so- called relationship between Richard Mays and myself. And, Mr. Mayor, I wanted to appear before you and the other members of the Board to let you know my side because I did not want the allegations and accusations to go without at least you having a response from me. I appreciate the opportunity to speak to you. Thank you very much." There were no comments or questions by the Board of Directors. There being no further business to be presented, the reconvened meeting was adjourned at 4:35 o'clock P.M. with the Board of Directors to meet again in regular session on Tuesday, August 15, 1995, at 6:00 o'clock P.M. ATTEST: City Clerk Robbie Hancock 4 APPROVED: gMyor Jim Daile