Call to Order and Roll Call
The 12th meeting of the Capital Projects and Bond Oversight Committee was held on Tuesday, December 18, 2012, at 1:00 PM, in Room 169 of the Capitol Annex. Representative Jim Glenn, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Bob Leeper, Co-Chair; Representative Jim Glenn, Co-Chair; Senators Tom Buford, and Jared Carpenter; Representatives Robert R. Damron, Steven Rudy, and Jim Wayne.
Guests: Representative Dennis Horlander; Bryan Russell, Director, Planning Design, and Construction, Western Kentucky University; John Hicks, Deputy State Budget Director; Mike Hardin, Kentucky Department of Fish and Wildlife Resources; Scott Aubrey, Director, Division of Real Properties; Sandy Williams, Financial Analyst, Kentucky Infrastructure Authority; Robin Brewer, Financial Analyst, Office of Financial Management.
LRC Staff: Kristi Culpepper, Josh Nacey, and Christine Robertson.
Approval of Minutes
Representative Rudy made a motion to approve the minutes of the November 20, 2012, meeting. The motion was seconded by Representative Damron and approved by voice vote.
Resolution
Representative Glenn asked Kristi Culpepper, Committee Staff Administrator, to read a resolution honoring the late Representative Paul Marcotte. Representative Wayne made a motion to approve the resolution. The motion was seconded by Senator Leeper and passed unanimously by voice vote.
Information Items
Ms. Culpepper said there were two information items for members to review. The first was an article from the Herald-Leader regarding extended service fees paid to construction firms working on courthouse projects. The committee discussed the awarding of extended service fees at the September 2012 meeting. The second information item was the Capital Projects and Bonds Oversight Committee Report to the Legislative Research Commission and the 2013 General Assembly. The report summarizes the projects and transactions that the committee has reviewed over the past year.
Representative Wayne said he had been looking into the question of whether the Administrative Office of the Courts (AOC) is subject to review by the state auditor and if open records laws applied to AOC with respect to administrative issues. He suggested that the committee, depending on what he learns, might invite a representative from AOC to discuss these issues at a future meeting.
Project report submitted by Western Kentucky University (WKU)
Bryan Russell presented one report to the committee. WKU intends to use $2,300,000 from the Miscellaneous Maintenance Pool 2012-2014 for the Raymond Cravens Library/Helm Library Envelope rehabilitation project. This project will address deficient conditions that exist with the building envelope that impact the durability of the structure. In response to a question from Representative Wayne, Mr. Russell explained that the brick veneer on the exterior of the building, built in 1970, had sustained water leakage which caused rusting of the supports. In some cases, bricks have fallen from the building and pedestrian safety is a concern. No action was required.
Project reports submitted by the Finance and Administration Cabinet
John Hicks reported two pool projects in excess of $600,000 for the Kentucky Department of Fish and Wildlife Resources. Both were funded from the Fees-in-Lieu-of Stream Mitigation Project Pools. The first project was a scope increase of $6,500,000 to the Rogers Gap project previously presented to the committee in October 2011. The scope increase will fund the restoration of approximately 100,000 feet of small headwater streams and their associated wetland habitat. The total project scope, including the purchase of the land, is now $13,100,000.
The second item was a new project in the amount of $1,202,900. The Bolts Fork project will restore and enhance approximately 7,045 feet of stream in Boyd County.
In response to a question from Representative Glenn, Mike Hardin, Kentucky Department of Fish and Wildlife Resources, said that no land was taken off the tax rolls with regard to the Bolts Fork project. Instead, there exists a donated conservation easement of approximately 30 feet on either side of the stream channel.
No action was required on either project.
Lease reports submitted by the Finance and Administration Cabinet
Scott Aubrey presented two items. The first item was a report of amortization of leasehold improvements for the Transportation Cabinet in Franklin County. Building modification costs of $8,343 to install new circuits and a sub-meter will be amortized through the lease expiration date of June 30, 2017. Two estimates were obtained on the improvements, and the lowest bids were selected. No action was required.
The second item was a lease renewal exceeding $100,000 annually for the Department of Corrections in Fayette County. The department will renew its lease at 273-275 West Main Street in Lexington at an annual cost of $116,908. Representative Damron made a motion to approve the lease. The motion was seconded by Representative Wayne and passed unanimously by roll call vote.
Kentucky Infrastructure Authority
Sandy Williams presented one Fund A loan request to the committee. The request was for a $1,713,600 increase to a previously approved $8,906,000 loan to the City of Flemingsburg for the Wastewater Treatment Plant project. Bid amounts were substantially higher than originally projected due to three primary issues. First, the utility could not reuse an existing clarifier as a post-equalization basin due to hydraulic constraints resulting in the need for a new post-equalization structure. Second, an additional 1,700 cubic yards of concrete were required for the sequencing batch reactor (SBR) units due to the need for higher and thicker walls. Third, an increase in scope during design was required for additional electrical, instrumentation and HVAC infrastructure. Representative Wayne made a motion to approve the loan increase. The motion was seconded by Representative Damron and passed unanimously by roll call vote.
Ms. Williams presented one Fund B loan request to the committee. The request was for a $75,000 increase to a previously approved $1,000,000 loan/grant to the Marshall County Fiscal Court. The increase is necessary to address cost overruns related to higher-than-anticipated booster station costs and an unanticipated need to replace a water line.
In response to a question from Representative Glenn, Ms. Williams said that KIA does not refinance loans. When there are loan increases, the increases are done according to the terms of the original loan.
Senator Leeper made a motion to approve the loan increase. The motion was seconded by Senator Carpenter and passed unanimously by roll call vote.
Ms. Williams presented two Fund F loan requests to the committee. The first request was for $250,000 to the City of Nicholasville to replace the majority of the undersized and obsolete water distribution system in the Armory Place area of Nicholasville. The second request was for $756,100 to the City of Nicholasville to connect the Jessamine-South Elkhorn and City of Nicholasville water systems. The project will allow each system to be an alternative system for the other, in addition to Kentucky American Water being a source. Representative Wayne made a motion to approve both Fund F projects. The motion was seconded by Representative Damron and passed unanimously by roll call vote.
Ms. Williams presented two Infrastructure for Economic Development grants to the committee: one for the Knox County Fiscal Court and one for the City of Raceland. These grants were line items in the budget and no action was required.
Follow-up reports for previously approved bond issues
Representative Glenn asked Robin Brewer, Financial Analyst, Office of Financial Management, to present three items. Ms. Brewer said the first item was a follow-up report for $5,070,000 of State Property and Buildings Commission (SPBC) Revenue Refunding Bonds, Project Number 102. This bond issue advance refunded agency fund bonds SPBC issued for the University of Kentucky and produced a net present value savings of $680,089. The transaction priced on November 14, 2012. The bonds were sold on a negotiated basis and Morgan Stanley served as the underwriter. Peck, Shaffer, and Williams served as bond counsel and US Bank is the trustee.
The second item was a follow-up report for $4,810,000 of SPBC Revenue Refunding Bonds, Project Number 103. This bond issue refunded (some on a current basis, some on an advanced basis) agency fund bonds SPBC issued for Eastern Kentucky University and produced a net present value savings of $587,245. The transaction priced on November 14, 2012. The bonds were sold on a negotiated basis and Morgan Stanley served as the underwriter. Peck, Shaffer, and Williams served as bond counsel and US Bank is the trustee.
The third item was a follow-up report for $31,860,000 of SPBC Revenue Refunding Bonds, Project Number 104. This bond issue advance refunded agency fund bonds SPBC issued for the Kentucky State Fair Board and produced a net present value savings of $4,498,078. The transaction priced on November 14, 2012. The bonds were sold on a negotiated basis and Morgan Stanley served as the underwriter. Peck, Shaffer, and Williams served as bond counsel and US Bank is the trustee. No action was required on the follow-up reports.
New school bond issues with School Facilities Construction Commission (SFCC) debt service participation
Ms. Brewer said there were eleven school district bond issues being reported with SFCC debt service participation. Nine were refundings and two were for new schools and school improvements. None of the projects involve tax increases. Representative Wayne made a motion to approve the bond issues. The motion was seconded by Representative Rudy and passed unanimously by roll call vote.
New school bond issues with 100 percent locally-funded debt service participation
Ms. Culpepper said there were four local school bond issues reported to the committee this month. The bond issues, all refundings, have 100 percent local debt service support and none of the bond issues involved a tax increase. No action was required.
With there being no further business, the meeting adjourned at 1:32 p.m.