By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
By Michael Roberts
By Melanie Asmar
There. That wasn't so bad, was it?
Denver International Airport actually opened Tuesday, on its fifth debut date, after such a drawn-out, stop-and-start ordeal that everyone had almost forgotten that's what DIA was supposed to do: open.
A city does not build a $5 billion airport merely to create jobs, make developers rich, keep socialites partying, attract federal investigators and become the butt of David Letterman's jokes.
Even so, the omens weren't entirely propitious Monday. The media--1,800 registered press passes--descended on Denver from around the world, and critics had a heyday (one of those jobs created by DIA surely belongs to Gene Amole). And then the snow started falling mid-afternoon, bringing a titillating hint of tension--and a reminder of one of the reasons Denver was dumping Stapleton in the first place.
Just hours before, however, a more threatening pile of white stuff had landed in U.S. District Court: a 44-page class-action lawsuit that accuses the City of Denver of engaging in "fraud and deceit" in its sale of more than $3 billion in airport bonds. Lawsuits are not unexpected when you are building the country's largest public-works project; last week, for example, the city itself filed suit against bankrupt Continental Airlines, in part of the continuing dance over what to do with Concourse A. But this was the first filed by a bondholder, with rumors of more to come.
Monday night, after Transportation Secretary and former Denver mayor Federico Pena officially certified DIA, current mayor Wellington Webb urged everyone to focus on the future rather than the past--to go out and make DIA a success rather than "grouse" about what's already occurred. That would be easier, of course, if the past didn't keep raising its ugly, misshapen head.
At the same time Webb was making that pronouncement, Denver City Council approved two bills that will help pay off those outside attorneys now defending the city against the Securities and Exchange Commission's "informal inquiry" into DIA, and particularly the city's compliance with SEC bond-disclosure requirements. Initially, the city attorney's office had wanted another million dollars for Debevoise & Plimpton, the high-priced firm that had already gone through a half-million in just a few months on the SEC job. In a compromise with council, however, Debevoise & Plimpton's payments will top out--for now, at least--at about $1.1 million, and a lower-cost, local firm will get a $300,000 snack. But it won't end there; another firm already waits in the wings to defend city officials subpoenaed to testify.
These outside attorneys' bills--and another $14 million or so like them--are the documents that City Attorney Dan Muse originally refused to release, then recently released in censored form. He was worried, he told councilmembers, that the Debevoise & Plimpton bills in particular could provide a road map for any bondholder who wanted to sue the city.
But the lawyers for Bonnie Sonnenfeld, a Florida woman who bought $25,000 in DIA bonds in October 1992 and was the only person listed in Monday's class-action filing, seemed to do just fine without those bills.
Their suit, which really breaks no new ground, relies on a number of sources, including the Rocky Mountain News--particularly amusing, since there would have been much less confusion over the airport and its problematic baggage system if newspapers had done their job earlier and better. (Readers and viewers could get whiplash from the local press's shifting positions regarding DIA: first an economic boom, then a boondoggle, and now a take-the-long-view boon that inspired News editor Jay Ambrose to rhapsodize Tuesday, "Forget the investigations. Forget the delays...")
The city, Sonnenfeld's suit charges, while actively selling and encouraging trading in the Bonds, issued statements, including Bond offering documents or 'Official Statements,' which misrepresented the true status of the design and construction of the New Airport, and the amount of revenues likely to be generated therefrom, and concealed, among other things, the enormous risks posed by the installation of a completely automated baggage system that had never been tested at any other airport and which the City knew, as early as 1990, would likely not work and would require the City to delay the opening of the New Airport far beyond the originally announced October, 1993 opening date." Whew. As backup, the suit cites a January 29, 1995, News article that asked, "Who botched the airport baggage system?" and noted that six days before leaving office in 1991, Pena gave United Airlines a written guarantee that DIA would open with an automated baggage system. (The suit's 1990 date is apparently pegged to a study by the consulting firm of Breir Neidle Patrone, which in October of that year recommended against a completely automated system and instead suggested that automation be supplemented by the tried-and-true tug-and-cart system. And that, of course, is just the combination that got DIA opened.)
"As a result of defendant's materially misleading misstatements and omissions," the suit continues, "the market significantly overvalued the Bonds, and plaintiff and members of the Class were induced to purchase the Bonds--both in new issues and on the secondary market--at artificially inflated prices. If the true state of affairs had been disclosed, the securities would have been priced much lower than they actually were, and they would have been offered at a much higher rate of interest in order to reflect the significant risks attendant with this huge public works project which the Bonds have financed."