Maine bond squabble threatens timing of June GO deal

A bond sale Maine had planned in June for transportation projects is in limbo due to a dispute between Gov. Paul LePage and State Treasurer Terry Hayes over attorneys hired for the transaction.

The Republican governor issued a letter to Hayes last Wednesday claiming a request for proposals for bond counsel “appears designed to preclude” Maine firms from bidding since its score heavily weighted experience with other state treasuries and government agencies.

Hayes’ selection of Locke Lord LLP to handle the bond sale following the RFP was not approved by Maine’s State Procurement Review Committee.

Hayes, an independent, told The Bond Buyer Monday that she is moving forward with the bond sale and is awaiting final issuance figures from LePage needed before the close of business on Wednesday. She also noted that the RFP process did not preclude Maine firms from bidding and that the contract with Locke Lord was already finalized on May 1.

“We’re poised to go to the bond market,” said Hayes, who is announced last month plans to run for governor in 2018. “I’m waiting for the governor to provide the information.”

LePage spokesman Peter Steele said Monday that “several” Maine firms would have bid during the RFP if the criteria had been written differently. Steele said a new RFP could be issued “in an expedited fashion so there is minimal hold up for the construction projects”, but did not indicate if the governor will provide Hayes the necessary issuance details by Wednesday’s deadline to allow the bond sale to proceed next month.

Locke Lorde and predecessors it absorbed through a 2015 merger with Edwards Wildman Palmer LLP have long served as bond counsel for Maine.

The planned June bond sale would include $100 million approved by Maine voters last year for transportation projects, which would also trigger $137 million in federal matching funds. LePage said in his May 3 letter that not issuing the bonds would put $600 million in state transportation projects at risk and lead to 4,500 lost construction jobs this summer.

Hayes said the official statement for the bond transaction is being updated. A review with rating agencies has also been scheduled.

LePage held up some past bond sales last year in a clash with lawmakers over increasing timber harvesting on state-owned lands. He also threatened to block bond transactions in the spring of 2014 before lifting his objection when the Democratic-controlled legislature agreed not to decrease the size of the state's rainy day fund.

Maine general obligation bonds are rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings.