Flying Blind

Homestead Air Force Base: Hundreds of millions of dollars. An arrogant developer. Nine compliant politicians. A vote taken so late at night you never knew what hit you.

They brought with them a fancy, computer-generated slide show, handouts, and a coterie of surprise guest speakers. They had everything a commissioner might want, except for one thing: those all-important financial documents.

The county manager and the staff of the aviation department had been requesting two key pieces of information for more than a year. First, county officials wanted to see financial statements outlining the personal wealth and holdings of the three principal HABDI partners, Carlos Herrera, Camilo Jaime, and Pedro Adrian. These statements would have to be prepared by a certified public accountant and their accuracy verified by each man. They were necessary because Herrera, Jaime, and Adrian, as part of their proposal, had personally pledged a total of $15.3 million to the project.

Second, the county wanted a "pro forma," a detailed financial plan demonstrating that the developers had carefully considered all aspects of the project and its economic viability. The pro forma, which estimates costs and revenues over a number of years, is a complex document that can take weeks to prepare, but it is also essential in marketing any major development project to potential investors.

In November 1994, when HABDI's partners submitted a broad proposal for the base, they included a pro forma. But a year later, when formal lease negotiations had finally been completed, the county manager asked for a new pro forma that reflected the substantially changed agreement. In addition, the manager informed the partners that they needed to provide certified personal financial statements and not merely letters of credit, as they had done earlier.

That last request touched off considerable debate among the HABDI partners, according to sources familiar with the discussions. All three men are established developers in Dade County, and Herrera and Adrian did not like the prospect of having their personal financial histories become a matter of public record. Jaime reportedly said he didn't mind, and he freely turned over to HABDI's attorneys his tax returns. But Adrian in particular was opposed to the idea; Herrera sided with him. As a group they decided to ignore the request for as long as possible.

At one point during HABDI's presentation at the meeting, the developers' financial adviser, Howard Gary, held up a large yellow envelope and told commissioners it contained the elusive financial statements for the three principal investors. He said he was ready to share the information with the county manager right then, during the meeting. And for a few minutes, members of the manager's staff huddled with Gary at a corner of the stage, next to a row of potted palms, and thumbed through the documents.

But the thought of reviewing complex financial records in the middle of a stressful meeting, in the dead of night, apparently struck County Manager Vidal as ludicrous. When it became apparent that HABDI was trying to force county staffers to endorse the documents as being sufficient, he announced that he would need at least 30 days to study them.

Regarding the pro forma, HABDI officials maintained that they did not want to prepare such a complicated document until after the lease was approved and all the terms and conditions were specified. To do otherwise, HABDI lobbyist Miguel DeGrandy told the commission, would be the same as trying to take a picture of a moving object A it would turn out fuzzy and unclear.

But County Manager Vidal expected HABDI to prepare a pro forma based on the final draft of the lease completed in November. Obviously the numbers might change, but at least it would have given his staff and the commission confidence that HABDI was carefully analyzing the lease and their own development proposal.

Ultimately, though, the decision came down to money. Herrera did not want to spend the $150,000 it would take to produce the pro forma until he absolutely had to.

As a result the HABDI team provoked yet another round of negative publicity, reinforcing the impression that these developers are incredibly arrogant. Worse, the intransigence made HABDI's supporters on the commission appear servile. "This commission is not going to look very good no matter how we frame it," said Chairman Art Teele, referring to HABDI'S refusal to provide the financial records in advance of the meeting. "Every commissioner here is going to have to face the public and explain how we could vote in favor of a $700 million deal without there being anybody from the county who had reviewed the financials."

Sources within HABDI's team confirm that in the days leading up to the January 10 meeting, there was a growing concern that the issue of financial documents threatened to overshadow the debate on the lease. While they hoped their offer to produce the financial statements to the manager on the night of the meeting would satisfy that portion of the request, they knew there was no way to produce a proper pro forma in a matter of days.

So they adopted a strategy that might be described as razzle-dazzle A the surprise announcement of a last-minute investor whose financial credentials were so impeccable that the commission could never again question HABDI's viability.

During the previous four months, HABDI had been engaged in preliminary discussions with a company called American Logistics Services (ALS), a firm that develops aviation-maintenance facilities at airports throughout Latin America. ALS was an attractive investor for HABDI because the company is owned in part by ServAir Inc., which in turn is owned by the Raytheon Corp., a multibillion-dollar, multinational company that last year posted profits of $800 million. If HABDI could somehow attach Raytheon's name to the project, success might be assured.

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