Compton Awards Bond Sales to Black Company

The City Council has awarded a $500,000 bond-marketing job to a black-owned investment banking firm despite claims that a rival white-owned firm could do it for more than $90,000 less.

“It’s time for black folks to have their turn,” said Danny Bakewell, a prominent local black developer who acted as a consultant to the winning Grigsby, Brandford & Co. Inc. after the 4-1 council vote Tuesday.

Four of the five members of the City Council and most of the city’s top staff are black, a reflection of a community that is almost entirely composed of blacks and Latinos.

City Manager James Goins sent proposals from the two firms to the council without recommendation. He said that both Grigsby, Brandford, with headquarters in San Francisco, and rival Chilton & O’Connor Inc. of Century City were qualified and he suggested that the two could divide the job of marketing what amounts to a $25-million refinancing of a 1985 bond issue for various redevelopment projects.

To bolster its case, Chilton & O’Connor was represented before the council by consultant Laverta Montgomery. She is a former Compton city manager who is widely credited with nurturing much of the city’s redevelopment. She was dismissed in October, 1986, after a falling out with the council.

But Councilman Maxcy D. Filer, who led the move to give the entire job to Grigsby, Brandford, said the black-owned firm was also well qualified.

“We (blacks) don’t want a mere 10%. We don’t want any more crumbs. We want the whole pie,” Filer said. “We’re not picking them because they are black. We’re picking them because they are competent. And yes, they made a better presentation.”

After Bakewell’s presentation, Filer said he said he did not believe that Bakewell has a conflict of interest representing Grigsby, Brandford when he is also a developer. Bakewell developed the sprawling Compton Towne Center shopping complex across the city Hall in downtown. The selling of bonds, Filer said, is not related to developing projects, he said.

Joined in Support

Filer was joined in his support of Grigsby, Brandford by Councilmen Robert L. Adams Sr. and Floyd A. James, who also stressed his desire to employ black-owned firms. Mayor Walter R. Tucker said he was concerned about which investment company could do the best job for the city, but ended up voting for Grigsby, Brandford.

Councilwoman Jane D. Robbins, the only white member of the council, voted against Grigsby, Brandford after saying she wanted further city analysis of which firm has the most cost-effective proposal. City Controller Tim Brown said a financial comparison had not been completed.

However, James K. Chilton, chairman of Chilton & O’Connor, sent the council a letter earlier Tuesday in which he stated his firm could beat the Grigsby, Brandford proposal by up to $91,579 in fees.

He also referred to two independent studies, which he said were commissioned by the city, that recommended his company.

The investment banking firm of Charles A. Bell & Co. Inc., of San Francisco stated in an Oct. 27 report to City Manager Goins: “We are recommending Chilton & O’Connor as the one offering the highest savings to the (Community Redevelopment) Agency.” The Bell report also advocated letting one or two minority investment banking firms share in up to 40% of the deal.

Sought Second Opinion

When the city sought a second opinion, Chilton said, the United Bank of Denver wrote Brown on Nov. 8 and called the Chilton & O’Connor proposal “the most responsive.” It stated that the company should be named senior manager of the bond issue with Grigsby, Brandford as co-manager for 15% to 30% of the refinancing.

Chilton said in an interview after the vote that the competitiveness of the proposals, and not race, should have been the deciding factor.

“We hope it wasn’t a black issue and we hope it wasn’t a white issue,” he said. “We came to the city with the best proposal found by two independent firms hired by the city.”

Chilton’s projected savings were based on his firm’s estimated fee of 1.66% to sell the bonds compared to 2% bid by Grigsby, Brandford. The 2% fee on a $25 million bond issue amounts to $500,000.

But Bakewell said Chilton & O’Connor’s proposed profit level was only an estimate that could eventually increase to a level closer to that proposed by Grigsby, Brandford.