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County hires new advisor prior to Moody's review

By Joel Hall

jhall@news-daily.com

With Moody's Investors Service poised to possibly downgrade the county's Aa2 bond rating, the Clayton County Board of Commissioners voted to hire Jerry Cutrer as its new financial advisor. Cutrer, who will replace former financial advisor Ed Wall, will be tasked with addressing the county's financial weak points prior to the Moody's evaluation.

The board approved Cutrer in a 3-2 vote on Tuesday. Commissioners Sonna Singleton, Wole Ralph, and Gail Hambrick voted in favor of hiring Cutrer, while Commission Chairman Eldrin Bell and Commissioner Michael Edmondson were opposed.

Prior to Cutrer's approval, commissioners Singleton, Ralph, and Hambrick voted against the appointment of Porter Bingham, of Malachi Financial Products, Inc., for the same position. Bingham was the preferred choice of Bell and Edmondson, who voted in favor of hiring Bingham.

Ralph said that when Moody's reevaluates the county's financial credit rating, Moody's will judge: Whether or not the board is working together with county management; how much the county has in its fund balance; and the overall economic vitality of the county. He said he believes the services of Cutrer are better suited and better priced to help the county present a positive picture to Moody's.

"I like Porter Bingham a lot," Ralph said. However, "when you look at the scope of what we need to do, Porter's scope is much broader. Jerry Cutrer's was much more focused on what we want to do.

"Cutrer's proposal was not to exceed $30,000," he continued. "Porter Bingham's was $143,000, so the price was about four to five times greater. With the time that we have to respond to Moody's, we need a much more concentrated approach."

Ralph said Moody's has not "scheduled an official date" for review of the county's credit rating, but that it would take place within two months.

A negative change in the county's credit rating may impact its ability to issue bonds and leverage financing for large projects. A downgrade may also impact Southern Regional Medical Center, which is currently using the county's bond rating to secure a $40.2 million loan from SunTrust Banks, Inc.

Cutrer, who is president of Headlands Capital Corporation, currently serves as financial advisor to the city of Richmond Hill, Ga. According to his resume, Cutrer has a 33-year career in "municipal finance and real estate development," which includes a stint as the executive director of the Georgia Residential Finance Authority and 18 years as financial advisor to the Clayton County Housing Authority.

Hambrick, a former colleague of Cutrer at the Clayton County Housing Authority, recommended Cutrer to the board, according to commissioners.

Some members of the board, however, opposed Cutrer's hiring. Edmondson said the vote was rushed and that he believes Bingham is better qualified for the position.

"The person who was hired last night was added at the last minute," Edmondson said Wednesday. "Nobody has ever met with [Cutrer], with the exception of Commissioner Hambrick. His one-page resume sent last night said that he has 18 years working with revenue bonds. It didn't say that he had experience with financial credit ratings and that is exactly what we hired him for.

"From a historical perspective, Ed Wall had acted as the county's financial advisor for 20 years and would give us financial advice, only receiving pay when he underwrote a bond," Edmondson continued. "Now we are paying someone $175 an hour ... and don't know if he can do the job."

After more than 20 years of underwriting bonds for the county, Wall was hired under contract last October to provide investment banking services and financial advice to the county. In January, however, commissioners Ralph, Singleton, and Hambrick voted to end Wall's services to the county.

Edmondson said the proposal to hire Cutrer was added to Tuesday's agenda only "15 minutes before the session."

Singleton said she believes Cutrer will be able to meet the county's needs and spare county taxpayers from added expenses.

"He is thoroughly familiar with the rating agencies and is therefore well-qualified to help us," Singleton said in an e-mailed statement. "My expectation is that the financial advisor would help to formulate a response to the concerns raised by Moody's rating agency that best serve[s] the citizens of Clayton County. It should also be noted [that] Mr. Cutrer's proposal to help us was over $100,000 less [than] the competing proposal preferred by the chairman and Mr. Edmondson."

Cutrer's tasks will include meeting with Moody's personnel in New York to discuss requirements to maintain the county's credit rating, developing an action plan and a timetable to address Moody's requirements, and keeping commissioners updated on the county's progress.

Cutrer could not be reached for comment on Wednesday. Attempts to reach Hambrick by phone and e-mail on Wednesday proved unsuccessful. Bell was out of town on Wednesday according an assistant, and could not be reached for comment.