Victor Rudy DiMaio has accomplished the impossible. The Hillsborough County Industrial Development Authority member has made government bonds interesting.DiMaio is a 48-year-old public relations and election campaign consultant. He hails from an old Ybor City family drenched in local politics. Those are good credentials for getting appointed to public bodies in Tampa, like the industrial development authority.
Industrial development authorities started sprouting all over Florida in the 1960s. Hillsborough formed one in 1971. IDAs entice businesses to expand or locate factories in their area with low-cost, tax-exempt bond financing that can be amortized over a longer term than conventional loans.
High-wage blue-collar jobs are especially important to Tampa, where fewer than one in five residents has a bachelor's degree, the second-lowest concentration of college graduates among major U.S. metropolitan areas.
Over the years, Hillsborough commissioners have stocked the IDA with appointees from professions such as banking and engineering. Most are the kind of people who prize discretion and shun publicity.
In that and other respects, Victor DiMaio is not a typical IDA member.
DiMaio immediately tangled with the IDA's old guard upon his appointment last year. Since then, their relationship has turned poisonous.
The IDA newcomer is frustrated by the board majority's refusal to rein in longtime general counsel Thomas K. Morrison and adopt other reforms.
Morrison, 52, single-handedly operates the IDA out of his Hyde Park law office. The New York City-born attorney serves as the authority's de facto executive director. His sole IDA compensation comes from fees generated when Morrison works on bond deals.
DiMaio's frustration boiled over in February when he lashed out at the IDA's pro-Morrison majority. "As far as I'm concerned, the board is the four stooges and Mr. Morrison," DiMaio said at a public meeting.
After another recent flare-up, authority member Kary L. McDonald requested that Morrison ask county commissioners to remove DiMaio from the IDA. The authority plans to discuss DiMaio's status in October.
DiMaio may be a hothead, but he is not entirely alone with his concerns. Fellow IDA member E. William Henry, while recoiling from DiMaio's abrasiveness, also has questioned the agency's course.
Although called an industrial development authority, the agency hasn't funded much development of industry lately. Four of the IDA's six most recent bond issues were floated for nonprofit groups, including two private schools.
Technically, neither the IDA nor the county, which recently saw its credit rating upgraded, is on the hook if authority-financed projects go bad.
Nevertheless, IDA bonds are funding fewer projects with the potential to create industrial jobs. Moreover, county debt manager Michael S. Merrill says the IDA is accepting applications for less creditworthy projects.
Last November, Morrison proudly noted that just three of 98 IDA bond issues have gone into default.
Make that four. A health care concern stopped making interest payments over the summer. A trustee is foreclosing on an IDA-funded project to ensure bondholders are repaid. Two of the four IDA defaults have occurred within the past three years.
DiMaio may be persona non grata with IDA colleagues, but his desire to change IDA ways has gained some support from another fractious government body: Hillsborough's county commission.
By federal law, the commission must approve Morrison's IDA bond recommendations. "When you have counsel who stands to make money off of a deal going through, that's not clean," said Commissioner Ronda Storms, who is a lawyer.
In an interview, Morrison told Weekly Planet that his advice isn't influenced by money because he is paid regardless of the commission vote. "The only benefits I get are the fees I earn and the friendships that I have," said Morrison.
Morrison and the IDA majority have resisted reform. Consequently, county officials postponed an IDA showdown until December.
That means the IDA's fate won't be decided until after the November election, when five of the seven commissioners could be replaced.
Downtown business interests are itching to get rid of several incumbents. While the election certainly won't turn on whether candidates favor overhauling a low-profile county agency, a more pro-downtown commission probably would maintain the IDA status quo.
Why? IDA critics say they don't have to look any further than that most downtown of interests, TECO Energy Inc. They say TECO's Tampa Electric Co. subsidiary is a major reason the IDA was created in the first place.
The Power Is OnBill Henry, an industrial architect, has told Morrison and the IDA that county commissioners want the agency to get back to basics, like funding factory expansions.
Some commissioners see the IDA as primarily a source of reduced-rate, taxpayer-subsidized financing for Tampa Electric. The IDA seems to come to Tampa Electric's rescue whenever the utility is forced by government to install anti-pollution devices on its local generating plant smokestacks. The IDA, some commissioners have concluded, is "a vestige of the old days where it's just here to do a rubber stamp of the retrofits and scrubbers for the utility companies," Henry said.
These are still the good old days for Tampa Electric.
One of Tom Morrison's biggest supporters on the IDA is Tampa Electric executive Earl Haugabook. Due to his employment, Haugabook abstained in May when the IDA approved its most recent issue, a $147-million refinancing of Tampa Electric pollution-control bonds.
The IDA and Tampa Electric go way back. Three of the first four IDA issues in the early 1970s were Tampa Electric pollution-control bonds.
One of the IDA's early chairmen was the late Ellsworth G. Simmons, who joined the authority after voters kicked him off the county commission in 1972. Simmons, who chaired the commission for 18 years, also went to work for Tampa Electric as a vice president after his re-election defeat.
"More often than not, there's been a TECO representative on the IDA," said Morrison. IDA members who work for Tampa Electric abstain from voting on issues that might benefit their employer, Morrison added.
Over three-plus decades, the IDA has issued about $1.5-billion in bonds. Of that, $443-million were pollution-control bonds for Tampa Electric. Even excluding refinances, almost a third of the face value of IDA bonds have benefited Tampa Electric. No other company comes close.
The IDA subsidized Tampa Electric despite the authority's own acknowledgement that "pollution control facilities do not ordinarily provide new jobs."
Tampa Electric spokesman Ross Bannister says temporary jobs are created when anti-pollution equipment is installed.
"It might not create a lot of extra jobs in the TECO plant. But when you put a $200-million construction project in place, your economy probably gets as much boost as it does hosting the Republican National Convention," said Morrison, taking a shot at Tampa's bid to host the GOP's 2004 re-nomination gathering for President George W. Bush.
In recent months, however, DiMaio has questioned whether the IDA should continue to aid Tampa Electric, which has the highest rates of any investor-owned utility in Florida.
Tampa Electric Treasurer Sandy Callahan told the IDA that the latest refunding would save the utility $2-million in interest payments to bondholders. DiMaio wondered what that meant for electric customers. Callahan hemmed and hawed.
"So the $2-million savings is not going to the ratepayers, to serve the customers?" DiMaio asked. "It's going to pay or help pay for the equipment that's being required by the EPA for Tampa Electric?"
"Essentially, yes," Callahan replied.
For all the county's generosity, Tampa Electric executives complained that bond experts for Hillsborough commissioners were charging the company unprecedented fees to review the refinancing. "It seems unreasonable to me, as it does to TECO, that after all these years the county now deems it necessary to get its bond counsel involved at such a detailed level that causes significant additional cost for the applicant," the IDA's Tom Morrison wrote county debt manager Mike Merrill.
Merrill expressed surprise at Tampa Electric's objection to paying a county lawyer to make sure taxpayers couldn't be held liable for the utility's debt. "I don't believe the $12,000 to $15,000 cost is unreasonable or excessive in view of the benefits of tax-exempt financing, i.e. the millions of dollars in debt service savings that TECO will realize," Merrill told Morrison.
Tampa Electric hasn't been the only ungrateful IDA beneficiary.
Two years ago, the IDA issued $43-million in bonds so National Gypsum Co. could save on financing a new plant in Apollo Beach. National Gypsum promised to use reclaimed water in manufacturing wallboard there. The plant is located in a fast-growing area where regional agencies have warned Hillsborough officials to cut potable water consumption.
After the plant was built, however, Charlotte-based National Gypsum claimed it could use no more than 65 percent reclaimed water. Commissioners said a deal was a deal.
National Gypsum backed down, as did Tampa Electric, one of Hillsborough's biggest property taxpayers. Tampa Electric paid the county's $11,522 legal bill.
Morrison collected a $25,000 fee of his own on the Tampa Electric bond deal and another $25,000 from the National Gypsum issue.
The FeesThe traditionalists on the IDA have strong downtown ties. Besides the TECO connection, pro-Morrison IDA appointees Bob Miller and Mike Luetgert listed personal references such as retired GTE executive George Gage and Lykes banker Bronson Thayer on their appointment applications.
But Morrison hasn't always been on the same page with the Tampa establishment. In 1996, Morrison represented William F. Poe in an unsuccessful challenge to a new football stadium for the Tampa Bay Buccaneers.
Morrison considers that a good deed for which he is still being punished.
The trial of Poe's lawsuit was a forum for the former Tampa mayor to show how one-sided the stadium deal was for the Bucs. Poe felt most of the local news media had downplayed that before voters approved sales tax funding for the stadium.
Morrison was chief assistant city attorney when Poe was mayor in the 1970s. It wasn't until Poe became a private client in the mid-1990s, says Morrison, that anybody questioned his IDA work.
The first questioner was then-Hillsborough Commissioner Joe Chillura, father of the Raymond James Stadium sales tax. Chillura, denying that he was retaliating for the Poe litigation, demanded a review of Morrison's long association with the IDA.
"Everything was a snore until '97," said Morrison. "Then, all of a sudden, I became unpopular in some circles."
The review climaxed with a tense 1998 meeting between the IDA and County Attorney Emeline C. Acton. Morrison had agreed to reduce his fees by as much as one-half to stave off criticism. But he quickly withdrew that offer at the meeting.
After almost 20 years, the IDA looked as if it would seek bids to ensure Morrison was charging bond applicants the fairest rates for legal services. Suddenly, Morrison gave the IDA an ultimatum: Solicit other bids and I quit. The IDA acquiesced.
"Thank you very much for bringing that to a close," Morrison told the IDA. "You can imagine after 19 years I do get a little emotional about it."
Unfortunately for Morrison, DiMaio has picked up where Chillura left off.
"I've spoken to every single member of the county commission about my concerns," DiMaio told the IDA last fall, urging an end to Morrison's perpetual legal services contract. "They told me that we should make these changes to come in compliance with what they feel would be a more open, more ethical process."
IDA member Earl Haugabook, the Tampa Electric executive, denounced DiMaio. "I'm appalled at what has happened here," said Haugabook, who called DiMaio's back channel maneuvering "really a slap in the face to this authority as well as Mr. Morrison."
When Bill Henry referred to Morrison's compensation as a contingency fee, the lawyer protested: "That's one of the most insulting things I've ever heard."
Morrison says his fees for arranging bond financing for IDA applicants range from $7,500 to $30,000. At least one unsuccessful applicant, however, received a bill for almost $46,000. Morrison said he never collected a dime of that because the deal fell apart.
During the past five years, IDA bond applicants have paid the agency's general counsel $305,779, according to a schedule that Morrison provided to the Planet.
Morrison says his legal fees are quite reasonable compared to the $65,000 that a buddy of former IDA Chairman Ellsworth Simmons used to charge each bond applicant.
In the past decade, Morrison hasn't been able to bill nearly as many IDA prospects as his predecessor, for any amount. IDA bonds are less attractive to industry than in their 1980s heyday because interest rates are low and other tax incentives for economic development are on the rise.
That's one reason critics hint that Morrison isn't as picky today about which projects get to come before the IDA for financing.
Friend in Need?If Morrison wanted to confirm DiMaio's worst suspicions, he couldn't have picked a better occasion than a March 2001 meeting.
Morrison chose DiMaio's first IDA meeting to bring in West Palm Beach lawyer Morris G. "Skip" Miller, who pitched an unusual collaborative financing of an apartment building rehabilitation in Tampa.
"What really ticked me off, my very first meeting I got to the board, I was dumped a proposal in my lap," DiMaio said later of the package submitted by Miller. "Lo and behold, there was a lot of problems with that thing and I would have been voting on something that would have had a problem."
Miller is a friend of Morrison, according to DiMaio, but the two lawyers say they are just professional acquaintances.
DiMaio couldn't understand what an industrial development authority was doing with a housing proposal. His mother sits on the county housing finance authority and that's where DiMaio persuaded his IDA colleagues to send Miller.
The rehab promoter, a nonprofit called Ascend Housing Corp., eventually put on a demonstration of how not to win friends and influence people in political Tampa.
Unlike the IDA, the housing finance authority employs a financial adviser, Mark Hendrickson, who urged rejection of the Ascend rehab plan. Hendrickson said nonprofit housing ventures were too risky.
Morrison had accepted an IDA application — and a $2,500 fee — from the same party. The IDA didn't get a chance to scrutinize the Ascend proposal, says Morrison, due to DiMaio's hasty intervention.
Later, a furious Hendrickson learned that Ascend operatives were spreading a rumor that he had an ulterior motive in working to kill the Tampa apartment rehab. The rumor, never substantiated, had Hendrickson trying to deep-six the project because he had another buyer for the 232-unit Country Crossing Apartments that was to be rehabbed.
"I want to unequivocally, for the record, say that is an absolute lie and that I am truly and totally offended," Hendrickson told the housing finance authority.
The rehab promoter clumsily attempted to play the two Hillsborough bond finance authorities off each other and the Tampa Housing Authority. It didn't work. Ascend's Tampa project collapsed in acrimony.
Morrison has brought to market IDA bonds for more established tax-exempt organizations.
Since 1999, the IDA has issued $23-million in bonds for new YMCAs in New Tampa, Plant City, Town N Country and Valrico. Another $18-million in IDA bonds went to Goodwill Industries-Suncoast Inc. to open thrift stores in Dover, Ruskin and the University of South Florida area.
Then, there were the $5-million in IDA bonds to Berkeley Preparatory School and the $6.5-million to the Independent Day School of Tampa for classroom expansions.
Nobody doubts the nonprofit needs. But both IDA member Bill Henry and county commission Chairwoman Pat Frank wonder what an industrial development authority is doing funding nonprofits.
Frank tried to hold up the reappointment of IDA member Mike Luetgert in January. She told Luetgert that the IDA should forget about nonprofits and concentrate on biomedical and high-tech projects in conjunction with USF. Luetgert made no promises but was reappointed anyway.
In May, Henry asked about the prevalence of nonprofits on IDA meeting agendas. "I haven't seen any industrial applicants," Henry said. "Our focus really ought to be on financing industrial development."What's In a Name?Tom Morrison, IDA counsel for decades, has become an expert on industrial revenue bonds.
Despite their name, the bonds can fund any number of enterprises. "It's more than just widget manufacturers," said Morrison, who suggested IDA critics read the federal tax code.
Don't blame him, Morrison says; blame Congress. After abuses in the 1970s, Congress clamped down so severely that the bonds are no longer practical for anybody except nonprofits and certain manufacturers.
Morrison says he is hardly scouting for tax-exempt organizations to issue bonds for. "If there's an implication that I'm bringing them in so that I can have closings and make fees, that's nonsense," he said.
DiMaio is the IDA's biggest problem, according to Morrison.
"Nobody, in all the years that we've had TECO people involved with the authority, has ever raised that issue until the TECO representative on the IDA became the most vocal critic of Mr. DiMaio," said Morrison. DiMaio says it's nothing personal against Tampa Electric's Earl Haugabook or any other IDA member. But, he says, "I shouldn't be the only guy asking questions."
The spat between DiMaio and Haugabook descended to a new nadir at a Sept. 5 IDA meeting.
After abstaining from the IDA vote on his company's bond refinancing, Haugabook had shown up when the county commission subsequently finalized the deal. DiMaio demanded to know why. Haugabook replied that it was none of DiMaio's business. But Haugabook denied lobbying commissioners about the Tampa Electric refunding.
Moments later at the Sept. 5 IDA meeting, Morrison mentioned that state law provides the county commission with the ability to oust authority members. Kary McDonald, a civil engineer, quickly took Morrison up on his suggestion.
Haugabook pressed for an immediate vote to recommend DiMaio's removal. But Bill Henry negotiated a stay of execution in order to give DiMaio time to compose a written defense of his actions.
"I'm an Italian and a Cuban," a somewhat contrite DiMaio said near the end of the meeting. "I get emotional sometimes."
DiMaio won't vote for another bond issue until the IDA hires a financial adviser. On Sept. 5, he was the lone IDA vote against bonding $130-million for another nonprofit, Tampa's H. Lee Moffitt Cancer Center & Research Institute.
Surprisingly, Morrison may soon ask the IDA to retain a financial adviser, though not on DiMaio's account. At most, Morrison says, the IDA needs minor tinkering.
Sitting in his Platt Street law office, Morrison leaned back in a leather chair. "Personally, I don't think there's a problem with the authority," he said, "or their counsel."
Contact News Editor Francis X. Gilpin at 813-248-8888, ext. 130, or frangilpin@ weeklyplanet.com.
This article appears in Sep 25 – Oct 1, 2002.