Call to Order and Roll Call
The Capital Projects and Bond Oversight Committee met on Tuesday, November 16, 2010, at 1:00 PM, in Room 169 of the Capitol Annex. Senator Bob Leeper, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Bob Leeper, Co-Chair; Representative Susan Westrom, Co-Chair; Senators Julian M. Carroll and Elizabeth Tori; Representatives Robert R. Damron, Steven Rudy, and Jim Wayne.
Guests: John Hicks, Governor’s Office of Policy and Management; Donald Dott, Jr., Kentucky State Nature Preserves Commission; Scott Aubrey, Finance and Administration Cabinet Division of Real Properties; Debby Milton, Kentucky Infrastructure Authority; Katie Smith, Cabinet for Economic Development; Representative Wilson Stone; Richie Sanders, Allen County Industrial Development Authority; and Brett Antle, Office of Financial Management.
LRC Staff: Kristi Culpepper, Don Mullis, and Samantha Gange.
Approval of Minutes for October 19, 2010
Representative Rudy made a motion to approve the minutes of the October 19, 2010, meeting. The motion was seconded by Senator Carroll and approved by voice vote.
Correspondence Items
Senator Leeper asked Kristi Culpepper, Staff Administrator, to discuss correspondence items. Ms. Culpepper said members’ folders contained two items of correspondence. The first item of correspondence was a notice of advertisement from the Finance and Administration Cabinet related to a proposed lease for the Department for Workforce Investment in Covington, Kentucky. The second item of correspondence was a letter from the Cabinet for Economic Development responding to questions members posed at the October 2010 meeting related to a $3 million Base Realignment and Closure-related Economic Development Bond grant to the City of Shepherdsville for the South Bullitt Interceptor Regional Wastewater project.
Information Items
Ms. Culpeper said members’ folders also contained several information items. She said the first three items were Energy Savings Performance Contracts (ESPCs) for Kentucky Community and Technical College System that were initiated in 2006 and 2008 and were not submitted to the committee at the time they were undertaken as required by statute. The first project was initiated in April 2006 and was for approximately $3.7 million for the Owensboro, Bluegrass, and Elizabethtown campuses. The second project was initiated in November 2008 and was for approximately $4.4 million for the Henderson, Hopkinsville, Bowling Green, and West Kentucky campuses. The third project was initiated in October 2008 and was for approximately $6.5 million for the Somerset, Hazard, and Southeast Kentucky campuses.
Ms. Culpepper said the last items of information were the staff and bond market updates.
University of Louisville – Report of Unbudgeted Scientific Research Equipment
Ms. Culpepper said the University of Louisville is reporting that it has used available federal funds totaling $3.6 million to acquire five items of scientific research equipment. Purchases of unbudgeted equipment must be reported to the Committee. No action was required.
Report of Pool Project In Excess of $600,000 from the Finance and Administration Cabinet.
Senator Leeper asked John Hicks, Deputy Director, Governor’s Office of Policy and Management, to present a report of a pool project. Mr. Hicks said that the Finance and Administration Cabinet is reporting approval of a pool project in excess of $600,000 for the Kentucky State Nature Preserves Commission to acquire the Faulkner Tract on Pine Mountain in Whitley County, Kentucky. The appropriation is $810,900 of which $412,000 will be from the Kentucky Heritage Land Conservation Fund and $398,000 will be from federal funds. The Nature Preserves Commission, Department of Fish and Wildlife Resources, and Division of Forestry will acquire the Faulkner Tract and the property will be managed by all three agencies as a state nature preserve. No committee action was required.
Senator Leeper asked if the co-management by all three agencies is unique. Mr. Hicks said Donald Dott, Jr., Director, Kentucky Nature Preserves Commission, was available to answer the question. Mr. Dott said this is the first project of its kind to be managed by three agencies.
Representative Westrom asked what the Heritage Land Conservation Fund is and how it receives funding. Mr. Dott said that the special-issued nature license plate monies go into the Heritage Land Conservation Fund. Additionally, monies from the unmined minerals taxes and the environmental fines from the Energy and Environment Cabinet go into a pool of funds that are used for acquiring natural lands in the state. Half of the funds are available to five state agencies and the other half of the funds are available to local governments for grants to purchase land for hunting and fishing.
In response to another question from Representative Westrom, Mr. Dott said the fund receives $3 to $4 million annually.
Lease Reports from the Finance and Administration Cabinet
Senator Leeper asked Scott Aubrey, Assistant Director, Division of Real Properties, Finance and Administration Cabinet, to present several items related to leases. Mr. Aubrey reported four lease modifications/square footage increase of less than $50,000 for the Department of Insurance in Franklin County (PR-3862), the Cabinet for Health and Family Services (CHFS) in Jefferson County (PR-4150); Department for Workforce Investment in Franklin County (PR-4514), and CHFS in Franklin County (PR-4742). No committee action was required.
Kentucky Infrastructure Authority Fund B loans
Senator Leeper asked Debby Milton, Financial Analyst, Kentucky Infrastructure Authority (KIA), to present two Fund B loan requests. Ms. Milton said the first item was a $394,000 Fund B loan request for the City of Princeton in Caldwell County for the Jeff Watson Road Sewer System Rehabilitation project. The loan term is 20 years with an interest rate of one percent.
Ms. Milton said the second item was a $1,115,000 Fund B loan request for the City of Greenville in Muhlenberg County for construction of a new lagoon, repair to the liner of the existing lagoon, and inflow and infiltration correction. The loan term is 20 years with an interest rate of one percent.
Senator Carroll made a motion to approve the two Fund B loans. The motion was seconded by Representative Wayne and approved unanimously by roll call vote.
KIA Grants
Ms. Milton indicated various coal and tobacco development grants authorized by the General Assembly were included in members’ folders. Each project was authorized in a budget bill and no further committee action was needed.
Economic Development (EDB) projects
Senator Leeper asked Katie Smith, Deputy Commissioner, Department of Financial Incentives, Cabinet for Economic Development, to present two items related to EDB grants. Ms. Smith said the first item was and EDB grant in the amount of $90,000 to the City of Henderson for the benefit of North American Lighting (NAL). The grant proceeds will offset the cost of construction and equipping of an approximately 32,000 square foot injection mold fabrication facility. Pursuant to the EDB grant agreement, NAL will be required to create 47 new, full-time jobs within three years. Additionally, the company will be required to pay the 47 new jobs an average hourly wage of $18, excluding benefits.
Senator Carroll made a motion to approve the EDB grant for NAL. The motion was seconded by Representative Westrom and passed unanimously by roll call vote.
Ms. Smith said the second item was a $250,000 EDB grant for the Scottsville-Allen County Industrial Authority for the benefit of J.M. Smucker Company. The grant proceeds will offset the cost of constructing and equipping an approximately 20,000 square foot warehouse facility in relation to its existing 188,000 square foot manufacturing facility in Allen County. Pursuant to the EDB grant agreement, J.M. Smucker Co. will be required to create 25 new, full-time jobs within three years. Additionally, the company will be required to pay the 25 new jobs an average hourly wage of $13.80, excluding benefits.
Senator Leeper asked why the grant was going through the Scottsville-Allen County Industrial Development Authority rather than the local government. Ms. Smith said the Mayor of Scottsville requested the grant be provided through the Development Authority rather than the local government.
Senator Carroll made a motion to approve the EDB grant for Smuckers. The motion was seconded by Representative Damron and passed unanimously by roll call vote.
Follow-up Report for Previously Approved Bond Issue – Office of Financial Management
Senator Leeper asked Brett Antle, Deputy Director, Office of Financial Management, to present a follow-up report for a previously approved bond issue. Mr. Antle said the follow-up report was for the Northern Kentucky University General Receipts Refunding Bonds, 2010 Series B. Proceeds from this bond issue will refund the university’s outstanding Housing Certificates of Participation, Series 2002. The issue generated a net present savings of $556,610. The bond issue was approved by the committee at the September 2010 meeting. No committee action was needed.
School Bond Issues
Mr. Antle reported two new bond issues with School Facilities Construction Commission (SFCC) debt service participation for Henderson County and Mercer County.
Representative Wayne made a motion to approve the two new bond issues with SFCC participation. The motion was seconded by Senator Tori and passed unanimously by roll call vote.
With there being no further business, Representative Rudy made a motion to adjourn the meeting. The motion was seconded and the meeting adjourned at 1:40 p.m.