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Hollywood Bond Deal Raised in Lauderdale Airport Expansion Debate


 
Hollywood Bond Deal Raised in Lauderdale Airport Expansion Debate
South Florida Sun-Sentinel, FL

Posted December 9 2003 

The city of Hollywood enlisted Broward County Commissioner John Rodstrom to 
sell $115 million in bonds last month as city officials stepped up pressure on 
Rodstrom and other commissioners to reconsider the long-planned expansion of 
Fort Lauderdale-Hollywood International Airport.

The underwriting team headed by Rodstrom earned $486,000 on the deal to 
refinance Hollywood water and sewer bonds, according to city financial records. 
County commissioners are set to decide today where to build a second major 
runway, and Rodstrom recently shifted his views to favor a northern runway -- 
the same plan sought by Hollywood.

The Hollywood bond deal renews questions about Rodstrom's private work as a 
broker for Citigroup Global Markets. At the same time he began urging his 
colleagues to rethink the airport expansion last year, he was helping 
Miami-Dade County finance the expansion of its airport."Having been brought on 
the carpet before, shouldn't he be extra sensitive and more alert for possible 
conflicts and disclose them?" said Fort Lauderdale resident Judy Sadlier, who 
filed an ethics complaint against Rodstrom in June over his Miami work. "It's 
the same old game."

Rodstrom declined to comment about the Hollywood bond deal, referring questions 
to Citigroup's New York office. But he defended his stand on the airport as the 
best way to handle increasing air travel with the least damage to the nearby 
neighborhoods.

"Until someone shows me otherwise, the north runway would seem to harm the 
fewest people," he said.

A spokeswoman for Citigroup said the company had long worked with Hollywood on 
water and sewer bond matters and that Rodstrom's political views had no 
connection to the deal.

County officials were not aware of Rodstrom's ties to Hollywood, but County 
Attorney Ed Dion said Monday he saw no ethical problem. He said Rodstrom would 
only have a conflict of interest under state law if he voted on a matter in 
which he directly benefited personally. He said the same thing about the Miami 
deal.

The airport has sought for a decade to extend the south runway from 5,276 feet 
to 8,920 feet so it can handle aircraft simultaneously with the current main 
runway. Alternatives under consideration are to lengthen that runway only to 
7,985 feet or to build a new 8,750-foot runway north of the main runway.

About 5,000 more people would have to deal with intense noise from air traffic 
if the south runway were built instead of the north runway. A north runway 
would take 10 more years to build and would have longer delays in bad weather 
than the south runway.

Hollywood decided to undertake the bond issue in early November to help resolve 
a dispute over utility rates with nearby cities.

Hollywood agreed to pay $9 million to Pembroke Pines, Dania Beach, Hallandale 
Beach, Miramar and Pembroke Park because a faulty metering system overcharged 
them for water and sewer service. Lower interest rates allowed Hollywood to 
refinance a 1993 bond issue, settle the rate dispute and gain about $10 million 
for other projects.

Hollywood's finance director, Carlos Garcia, said the city chose Citigroup 
three years ago to be the lead underwriter on a bond deal that was eventually 
dropped because Pembroke Pines sued over the utility rates. He said the city 
rated Citigroup as the best of about a dozen firms that bid and kept them on 
board when officials decided to refinance the debt last month.

Garcia said Citigroup sold about 60 percent of the bonds, with four other 
underwriting firms splitting the rest of the deal. Rodstrom has previously said 
he does not earn commissions on the deals he handles but receives a salary and 
performance-based bonuses as an employee of Citigroup.

Hollywood Mayor Mara Giulianti said there was no effort to influence Rodstrom. 
She said she never talked to him when the city was discussing the refinancing.

"That would be quite a stretch," Giulianti said. "A vote on something as 
important as siting the location of an expanded airport has absolutely nothing 
to do with the city selling bonds."

But others charged that Rodstrom's ties to Hollywood cast a cloud over his 
decisions as a commissioner.

"The timing certainly appears to create a conflict that is very disturbing," 
said airport expansion advocate Randy Dunlap, who is running against Rodstrom 
in next year's commission elections. "His actions raise serious questions that 
the voters will ultimately need to answer for themselves."

State ethics investigators are expected to rule as soon as next month on the 
propriety of Rodstrom's runway votes in relation to his Miami bond deal.

In that case, Rodstrom brokered a $299 million bond issue last year for Miami 
International Airport. The deal hinged on Miami's continued dominance in the 
South Florida market, and records showed that the Miami airport was concerned 
that more competition from Fort Lauderdale could harm its ability to pay for 
massive construction plans.

Rodstrom had long favored major expansion at the airport, but began advocating 
a shorter southern runway than the airport wanted. He said he was not 
influenced by the Miami deal but began to question the expansion plans after 
hundreds of residents protested at a public hearing in April 2002.

He switched stands again late last month to favor a northern runway.

He said he discovered that the north runway was more viable than he thought 
after reading a report that aviation consultants gave the commissioners on Nov. 
19. In addition to Hollywood, city leaders in Dania Beach, County Commissioner 
Suzanne Gunzburger and key environmental activists favor the north runway.

Commissioner Ben Graber said Rodstrom will have to explain his vote to his 
constituents.

"His dealings with the cities puts him in an awkward position where he might 
not be doing anything illegal but creates questions in some people's minds," 
Graber said. "When you operate in the gray zone, you will have political risk."

  
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