The Danville City Commission voted to hire Civic Financial Advisors of Lexington as the financial advisor to oversee funding of the city’s $27.5 million water system expansion, among other potential projects.
According to city manager Ron Scott, the company was chosen over Ross-Sinclare & Associates with the Kentucky League of Cities and Morgan-Keegan with Farmers Bank in part because of a municipal securities rule prohibiting companies from underwriting or purchasing bonds if they are an independent financial advisor. Both the competing bidders may either be chosen to underwrite the bonds or be a potential buyer.
Scott said Civic Financial had the lowest price based on the cost to issue bonds. The company will receive a $5,000 minimum fee and $3,500 for every $1 million in bonds issued up to a maximum of $35,000.
Scott also said the company has knowledge of the city and its finances, and helped save the city about $187,000 during the financing of the city hall project by suggesting a variable loan rate.
When asked by Commissioner James Atkins whether there was a representative of the company present, it was noted Chris Bowling was there on behalf of the firm. Bowling, whose father John W.D. Bowling was elected to multiple terms as Danville mayor and served briefly as interim city manager last year, worked as a financial advisor on the Danville City Hall project.
In other business, Commissioner Ryan Montgomery disclosed his working relationship as an advisor to JAVE LLC., which was hired to construct the Clark’s Run raw water pump station. JAVE’s bid of $531,000 came in $110,000 lower than the next lowest bid from Southern Backhoe, Inc.
A total of five bids were submitted.
City Attorney Stephen Dexter said Montgomery, who was not able to see or impact sealed bids, had gone through the proper channels by writing a letter disclosing his involvement and removing himself from the discussion and voting. He said the city was taking the right steps to protect itself from potential conflict of interest.
Montgomery said he consulted with JAVE on its bid and would provide what would amount to less than $5,000 in consulting services during the project. He also disclosed his father Mike’s company, M&M Electric of Danville, which also employs two of his brothers, would be a subcontractor on the project, but said he has not worked with the company in more than a year.
The City Commission voted 3-1 in favor of hiring JAVE, with Montgomery abstaining and Gail Louis voting “no” because she said she didn’t want even the appearance of impropriety.
