DAPHNE — The Daphne City Council voted 3 to 2 last week against a bond issue that would have essentially refinanced debt incurred through two previous bonds, resulting in a more favorable interest rate.

One question raised during the discussion was whether the city should move forward in light of a recent complaint lodged against Gardnyr Michael Capital, the company that would have been working with the city to issue the new bonds.

The Mobile-based brokerage firm is accused of irregularities related to the markup of municipal bonds issued in Florida. The company allegedly marked up the price of bonds from 5.36 to 22.92 percent. Regulators also claim Gardnyr Michael failed to file in a timely manner paperwork related to work performed in Alabama.

Officials with the company have denied the allegations, saying they requested the formal charges in order to receive a hearing on the matter before regulators.

“Our attorney did make us aware that charges were pending against Gardnyr Michael for this,” said Councilman Derek Boulware.

Councilman Gus Palumbo said he isn’t as concerned about the brokerage firm’s regulatory troubles as he is in how the city conducted the request for proposal (RFP) process. He said city officials asked Gardnyr Michael to determine what other companies would charge to handle the issuance of bonds, something enabling it to submit the lowest bid without true competition.

“This entire process is flawed,” Palumbo said. “It’s a big mistake. It takes the transparency away from the way we do business in this city. We have pulled RFPs for a lot less.”

Councilman John Lake countered, noting there are websites readily available that provide the same information to anyone who wants it, suggesting Gardnyr Michael did not have an unfair advantage in its proposal.

The defeated measure would have refinanced more than $9 million gained through previous bonds. Councilman Ron Scott said approval would have saved the city around $500 per day in interest.