Call to Order and Roll Call
The Capital Projects and Bond Oversight Committee meeting was held on Tuesday, October 15, 2013, at 1:00 p.m., in Room 169 of the Capitol Annex. Senator Chris Girdler, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senators Julian Carroll, Chris Girdler, Bob Leeper, and Christian McDaniel; Representatives Robert Damron, Steven Rudy, Kevin Sinnette, and Jim Wayne.
Guests Testifying Before the Committee: Mr. Luke Morgan, Attorney, McBrayer, McGinnis, Leslie, & Kirkland, PLLC; Ms. Lisa Beran, General Counsel, Kentucky Housing Corporation; Mr. Andrew Hawes, Senior Director of Multifamily Production, Kentucky Housing Corporation; Mr. Michael Gross, Project Manager, Overlook Development LLC; Mr. Bob Wiseman, Vice President for Facilities Management, University of Kentucky; Mr. Mitchell Payne, Associate Vice President for Business Affairs, University of Louisville; Mr. Scott Aubrey, Director, Real Properties, Finance and Administration Cabinet; Mr. Steven Collins, Director of Bluegrass Station, Department of Military Affairs; Mr. John Hicks, Deputy State Budget Director; Mr. John Covington, Executive Director, Kentucky Infrastructure Authority; Mr. Ryan Barrow, Executive Director, Office of Financial Management; and Mr. David Talley, Deputy Executive Director, Budget and Fiscal Management, Kentucky Transportation Cabinet.
LRC Staff: Kristi Culpepper, Josh Nacey, and Angela Offerman.
Approval of Minutes
Representative Rudy moved to approve the minutes of the September 17, 2013, meeting. The motion was seconded by Representative Wayne and approved by voice vote.
Correspondence Item
Kristi Culpepper, Committee Staff Administrator, presented one correspondence item for members to review. The University of Louisville submitted a letter notifying the committee that the university will proceed with projects that the committee did not take action on in August because the meeting was cancelled.
Information Items
Ms. Culpepper said there were three information items for review. The first item was the Semi-Annual Report of the Asset/Liability Commission, which detailed activity in the state’s debt and investment portfolios.
The second information item was a special investigative report on the Frontgate Apartments project, which was prepared by Mr. Cecil Dunn, Attorney, McBrayer, McGinnis, Leslie, & Kirkland, PLLC, and presented to the Kentucky Housing Corporation’s (KHC) Board of Directors on October 2, 2013.
Issuance of conduit revenue bonds for the multifamily housing project was approved by the KHC Board of Directors, the State Property and Buildings Commission, and the Capital Projects and Bond Oversight Committee in late 2012. The bonds have not been issued because of ongoing litigation.
In addition to the proceeds from tax-exempt bonds, funding for the project included a combination of competitively awarded nine percent low income housing tax credits and noncompetitive four percent tax credits. The nine percent credits were awarded to Overlook Development LLC (Overlook), which is affiliated with the developer of the project, LDG Development LLC (LDG).
According to the report, Overlook gained a competitive advantage by being certified as a Female Owned Business Enterprise (FBE) by the Louisville Metro Government Human Relations Commission. Overlook no longer has that certification, but the company was awarded the nine percent tax credit portion of the Frontgate Apartments project because of the advantage. The company also failed to acknowledge its affiliation with LDG in applications with KHC and when seeking the FBE certification and are in violation of the Qualified Allocation Plan (QAP).
The KHC Board of Directors voted to revoke the nine percent tax credits from the project, which eliminated 32 units reserved for low-income households. The board has not taken any action regarding the bond deal or the noncompetitive four percent tax credits that are associated with the issuance of bonds.
In response to questions from Representative Wayne, Mr. Luke Morgan, Attorney, McBrayer, McGinnis, Leslie, & Kirkland, PLLC, said the investigation involved reviewing current circumstances and a legal determination was not presented to the board as to whether fraud was committed. However, the board acted upon the findings of the investigation, which show the requirements of the QAP were not met.
Ms. Lisa Beran, General Counsel, KHC, said the board has not finally approved the four percent noncompetitive tax credits or the issuance of the bonds for the project. There is pending litigation in Louisville regarding zoning. KHC and outside counsel are taking a wait- and see-approach and are not expecting the project to come back before the board any time soon.
Mr. Andrew Hawes, Senior Director of Multifamily Production, KHC, said both the competitively awarded nine percent tax credits and noncompetitive four percent tax credits were independent of each other and were evaluated separately for financial feasibility. Mr. Hawes said it is financially possible to proceed with the four percent tax credit project.
Ms. Beran said it would be premature for KHC to make a final judgment on the project. KHC is a quasi-state agency and does not have the same sovereign immunity protections as the state. Therefore, they are conscious of possible litigation and are not taking action that may put them in that situation until more facts are known. It was the recommendation of outside counsel and the board to address the issue if and when it became germane.
Ms. Beran said KHC is evaluating whether to continue offering the set-aside point process and, if so, they will implement new procedures to raise the standards for the certification.
In response to questions from Senator McDaniel, Mr. Hawes said KHC resources are allocated on a competitive basis. The developer was seeking resources to construct multifamily housing for low- and moderate-income households. The tax-exempt bond portion of the project is still pending based on the unresolved litigation and once the litigation is resolved, the developer will have the option to move forward by coming back to KHC.
Mr. Morgan said complaints were brought to the committee approximately one year ago and, prior to that, persons who live in the area of the proposed project brought concerns to KHC, local municipal leaders, and the Finance and Administration Cabinet. KHC contacted his firm in June 2013, to review the complaints.
Mr. Michael Gross, Project Manager, Overlook Development LLC, said Ms. Lisa Dischinger signed the application for the FBE as a 51 percent member of Overlook.
In response to a question from Chairman Girdler, Mr. Gross said Overlook does not have employees, but he works as project manager on Overlook developments. Overlook was originally certified as a FBE in 2008 and recertified in 2010. The certification expired at the end of 2012. At the time of application, Overlook was in good standing with KHC and the Louisville Metro Government Human Relations Commission. During that period, Overlook has done five tax credit developments for KHC and there was never an issue with any of the developments.
Mr. Gross said the Frontgate Apartments development had opposition from the neighborhood because they did not want affordable housing built in the neighborhood.
At the time of certification renewal, the Louisville Metro Government Human Relations Commission asked Ms. Dischinger to wait on renewing the certification until the new online application was activated.
In response to questions from Senator McDaniel, Mr. Gross said Overlook did not reapply for the FBE certification because they were asked to wait for the revised online application and they were told by KHC the development could proceed without the certification. The project has incurred design, engineering, and legal fees and has not been able to move forward. Overlook will make the decision to move forward with the development based on a financial analysis.
Mr. Gross said Ms. Dischinger owns 51 percent of Overlook and is a FBE regardless of certification status. Legal staff reviewed the application and consulted with the Louisville Metro Government Human Relations Commission before certification.
Chairman Girdler said that due to the change in the scope of the project, the project will need to come back before the committee for approval.
In response to questions from Senator Carroll, Mr. Gross said the Louisville Metro Government Human Relations Commission did not take action to revoke the FBE certification. Upon the application for recertification, the commission requested additional information from Ms. Dischinger. Ms. Dischinger met with a representative from the commission to review the information. The representative requested Ms. Dischinger wait until the new online application was available.
Mr. Gross said the new application was available in August 2013. The certification expired at the end of 2012, but they had assurances from KHC staff that as long as they were in good standing, the project could proceed.
Mr. Hawes said KHC responded to Mr. Bingham that the expiration of the certification would not jeopardize the project.
Senator Carroll asked Mr. Morgan if evidence suggested a violation or if fraudulent representation existed. Mr. Morgan said Ms. Dischinger told KHC board members she had not been involved in the operations of Overlook for some time and that Frontgate was her first project after an extended absence. Ms. Dischinger stated in the 2008, 2010, and 2013, FBE applications that Overlook was a business to develop affordable rental housing and was not an affiliate or subsidiary of any other company related to the development of affordable rental housing. According to Mr. Morgan, Ms. Carolyn Miller-Cooper, Executive Director of the commission contacted Ms. Dischinger to ask about the discrepancy and to ask for clarification. Ms. Dischinger responded that she selected the wrong box on the form. Ms. Miller-Cooper said that it was Ms. Dischinger’s idea not to resubmit the application in 2013. Mr. Morgan said that Ms. Dischinger does nothing for the company and has had no communication with KHC.
Mr. Morgan said the KHC application asked if an identity of interest exists among any members of the development. Overlook responded affirmatively and explained the ownership of the companies involved in the project. Mr. Morgan said Ms. Dischinger and Overlook were put out front of the project in order to get the tax credits as a result of the FBE certification, when LDG was actually responsible for the project.
In response to a question from Senator Carroll, representatives from the Attorney General’s office told Mr. Morgan that they have notified the Louisville Metro Police Department.
Mr. Gross said the section of the QAP, referred to by Mr. Morgan, deals with the developer cap, which limits the maximum credit a developer may receive. In the application, Overlook did not disclose an affiliation with LDG because LDG did not submit an application in that round. Additionally, the QAP does not contain a requirement that a FBE must be kept for an identified period of time.
In response to a question from Senator McDaniel, Mr. Morgan said KHC was his client.
Senator McDaniel said the responsibility of the committee is the issuance of bonds and not making decisions regarding project conflicts or issues.
Ms. Culpepper said the tax-exempt bond issue, four percent tax credits, and nine percent tax credits are all funding sources for the project. A combined project was brought to the committee. It has been the tradition of the committee that when a project scope changes, the project is brought back to the committee.
Chairman Girdler said because the scope of the project has changed, a letter will be sent to KHC requesting that if the project moves forward, it will be resubmitted to the committee for approval.
Senator McDaniel made a motion that the project be resubmitted to the committee as it relates only to the issuance of bonds. The motion was seconded by Senator Leeper and approved by roll call vote.
The third information item included quarterly reports on capital projects from the Administrative Office of the Courts, the Commonwealth Office of Technology, the Finance and Administration Cabinet, and the universities that manage their own capital construction projects.
Project Reports from University of Kentucky (UK)
Mr. Bob Wiseman, Vice President for Facilities Management, UK, presented four items. The first item was the notification of the selection of construction management-at-risk delivery method for the Fit-up 8th Floor and Pharmacy project; Construct Academic Science Building project; Renovate/Expand Commonwealth Stadium project; and Renovate/Expand Gatton Building project. No action was required.
The second item was an update on the UK student housing project, which has a project scope of $277,000,000. UK will be requesting authorization for an additional $202,000,000 as part of the biennial 2014-2016 capital budget request. No action was required.
The third item was an update reporting a project scope increase of $607,600,000 to accommodate the planning and design of the Fit-up of the Clinical Decision Unit of the Patient Care Facility project. Additionally, the university reported the consolidation of the 2012-2014 authorization of $50,000,000 into the current total consolidated scope of $700,000,000 to streamline project accounting and reporting. No action was required.
The fourth item was a report of the consolidation of authorizations for the Renovate Academic Facility University Lofts Facility project by merging $7,000,000 of authorization from the Repair, Upgrade, or Improve Building Mechanical Systems capital project with the Renovate Academic Facility project for a total combined scope of $15,000,000 which will be paid from university restricted funds. No action was required.
Project Report from University of Louisville (UL)
Mr. Mitchell Payne, Associate Vice President for Business Affairs, UL, reported a $900,000 scope increase for the Expand Ulmer Stadium project. The increase was the result of higher than expected construction costs and the expansion of the project scope. The project will be paid from private funds, once raised.
In response to a question from Senator McDaniel, Mr. Payne said that he will research the status of a previously approved bond issue for a student center project and will provide a report to the committee. No action was required.
Senator Carroll made a motion to approve the scope increase. The motion was seconded by Senator McDaniel and approved by roll call vote.
Lease Reports from the Finance and Administration Cabinet
Mr. Scott Aubrey, Director, Real Properties, Finance and Administration Cabinet, presented four items. The first item was for a lease modification and amortization of leasehold improvements for the Department of Agriculture in Jefferson County. The amortization of leasehold improvements included painting of walls, addition of light fixtures, installation of bollards to protect a generator, and the installation of wall/corner guards in the food distribution warehouse.
Two estimates were obtained for the improvements and the department recommended the acceptance of the lowest bid of $13,439 ($893 from RKR Electrical Contractors for lighting and $12,546 from Charles Strange Construction LLC for all other items.) The application of interest was negotiated down from six percent to five percent per year and will expire on June 30, 2018.
In response to a question from Representative Wayne, Mr. Aubrey said the facility is used for food storage for the US Department of Agriculture commodities program.
The second item was for a lease modification and amortization of leasehold improvements for the Department of Military Affairs in Fayette County. The amortization of leasehold improvements was at the request of the tenant and included voice, data, and electrical outlets and tile in office areas.
Estimates were obtained for the improvements and included $81,450 for voice, data, and electrical outlets from Brooks Electric Company; $7,431 for tile in the office areas from Majors Floor Covering; $2,500 to remove and reinstall ceiling tiles from K & B Drywall; and $1,500 from Contract Decorating for touch-up painting. $92,881 will be amortized through the current lease term, which expires 177 months from the effective date of the lease.
In response to a question from Senator McDaniel, Mr. Steven Collins, Director of Bluegrass Station, said the project was a design/build under the built-to-suit statutes and the tenant did not know how many voice and data outlets would be needed at the beginning of the project. In order to meet the occupancy date, overtime will be necessary and will result in $13,140 in overtime expenses, which will be reimbursed by the tenant.
In response to a question from Representative Wayne, Mr. Collins said the space is leased by Consequence Management and used for military teams that are first responders to a terrorist event.
Senator Carroll made a motion to approve the lease modification. The motion was seconded by Senator McDaniel and approved by roll call vote.
The third item was for a lease modification and amortization of leasehold improvements for the Cabinet for Health and Family Services in Jefferson County. The amortization of leasehold improvements included the installation of conduit and electrical grounding to support the installation of a metro data line.
Two estimates were obtained for the improvements and the cabinet recommended the acceptance of the lowest bid of $1,550 from John Waters Inc. The cost will be amortized through the term of the lease, which will expire June 30, 2016. No action was required.
The fourth item included a quarterly lease modification report of state leases with square footage for the period of April through June 2013. No action was required.
Project Reports from the Finance and Administration Cabinet
Mr. John Hicks, Deputy State Budget Director, presented seven new unbudgeted capital projects; one scope increase; one emergency repair, maintenance, or replacement project; and a report of a pool project in excess of $600,000.
The first unbudgeted capital project request was from the Secretary of State for the approval of the Enhance Statewide Election Administration and Online Ballot Delivery System project. The project appropriation was $1,500,000 and was 100 percent federally funded.
Senator McDaniel made a motion to approve the capital project. The motion was seconded by Representative Wayne and approved by roll call vote.
The second project presented was a request from the Department of Military Affairs for the Controlled Humidity Solar project at the Wendell H. Ford Regional Training Center (WHFRTC) to install a grid-tied photovoltaic solar panel to power five controlled humidity warehouses. The project appropriation was $760,000 and was 100 percent federally funded.
The third project presented was a request from the Department of Military Affairs for the Construct Security Storage Building project at WHFRTC. The project appropriation was $760,000 and was 100 percent federally funded.
The fourth project presented was a request from the Department of Military Affairs for the Construct Front Access Control Point Boone National Guard project. The project appropriation was $818,880 and was 100 percent federally funded.
The fifth project presented was a request from the Department of Military Affairs for the Construct Rear Access Control Point Boone National Guard project. The project appropriation was $760,000 and was 100 percent federally funded.
Representative Rudy made a motion to approve the Department of Military Affairs capital projects. The motion was seconded by Senator Leeper and approved by roll call vote with one “no” vote.
The sixth project presented was a request from the Transportation Cabinet for the Capital City Airport Apron Replacement project, which will remove and replace 1,425 square feet (sq ft) of concrete and repair 600 sq ft of cracks in the existing concrete. The project scope was $1,323,600 and was 90 percent federally funded and 10 percent funded with restricted funds.
Representative Wayne made a motion to approve the capital project. The motion was seconded by Representative Damron and approved by roll call vote.
The seventh project presented was a request from the Cabinet for Health and Family Services for the Eligibility Systems Integration Services project. The project will replace the obsolete Kentucky Automated Management and Eligibility System (KAMES), which was first put into place in 1993 and will integrate eligibility processing for several programs.
The $80,000,000 information technology capital project was 82.5 percent federally funded and 17.5 percent funded with restricted funds.
Representative Wayne made a motion to approve the capital project. The motion was seconded by Representative Damron and approved by roll call vote.
The eighth item presented was a request from Morehead State University (MoSU) for a $48,000 (5.6 percent) scope increase for the Construct Student Intramural Soccer Field project. The final cost of the project, after receiving competitive bids for the artificial turf, was $898,000.
The MoSU Foundation secured $458,000 in private donations. The university certified those private funds are in-hand to cover more than 51 percent of the revised project scope.
Senator Carroll made a motion to approve the scope increase contingent upon approval of the MoSU Board of Regents. The motion was seconded by Representative Wayne and approved by roll call vote.
The ninth item was an emergency repair, maintenance, or replacement project, Rebuild Morgan County Nursery project, from the Department of Natural Resources. Several buildings and major items of equipment were destroyed and a large amount of seedling inventory was lost during a tornado on March 2, 2012. The $2,131,600 project will be funded from the Fire and Tornado Fund. No action was required.
The tenth item was a report for a pool project in excess of $600,000 for the Department of Corrections Kentucky State Reformatory Kitchen and Dorm 9 Roof Replacement project. The project will be funded with $1,400,900 from the 2012-2014 Maintenance Pool. The project will replace roofs that are over 25 years old, in extremely poor condition, and leaking badly. No action was required.
Kentucky Infrastructure Authority (KIA) Loans
Mr. John Covington, Executive Director, KIA, presented five loan and one grant request. The first request was for a Fund A loan for the Grant County Sanitary Sewer District in Grant County. The request was for a $1,211,449 loan for the Bullock Pen Lake Sewer Extension project that will extend an existing sewer system to serve 53 new customers and will eliminate septic tanks and possible straight pipes that are in the Bullock Pen watershed, which is the sole source of water for the Bullock Pen Water Treatment Plant. The loan will have a 20-year term, an interest rate of three percent, and an estimate annual debt service payment of $83,413.
The second request was for a Fund A loan for the City of Frankfort in Franklin County. The request was for a $4,905,000 loan for the Kentucky Avenue Interceptor Renovation project, which involves the construction of 4,300 feet of interceptor piping for the city’s sanitary sewer system as well as rehabilitating 5,000 feet of existing piping. The loan will have a 20-year term, an interest rate of 1.75 percent, and an estimate annual debt service payment of $301,538.
The third request was for a Fund A loan for the City of London for benefit of the London Utility Commission in Laurel County. The request was for a $3,765,250 loan for the Downtown Sewer Rehab project, which involves the rehabilitation of the current sewer system, which was constructed in the 1920s and 1960s. Due to the age and material deterioration of the existing infrastructure, the system is unable to support the utility’s sewer needs for the downtown area. The loan will have a 20-year term, an interest rate of 0.75 percent, and a debt service payment of $189,556.
Senator Carroll made a motion to approve the Fund A loans. The motion was seconded by Representative Wayne and approved by roll call vote.
The fourth request was for a Fund F loan for the City of Williamstown in Grant County. The request was for a $2,000,000 loan for Phase I of a two-phase sewer project, which will construct two new sludge lagoons to handle water treatment backwash solids. The loan will have a 20-year term, an interest rate of 1.75 percent, and a debt service payment of $111,556. The average bill is estimated to be $23.42, which will be an increase of $268,400 in revenue.
The fifth request was for a Fund F loan for the Garrison Quincy KY-O-Heights Water District in Lewis County. The request was for a $831,000 loan to construct a 250 gallon per minute well to replace a well that was not performing, refurbish another well, and replace two pressure filters with new vertical filters. The loan will have a 20-year term, an interest rate of 0.75 percent, and a debt serve payment of $35,175. The district requested approval from the Public Service Commission (PSC) for a 45 percent rate increase, which will be implemented over three years.
In response to a question from Senator Carroll, Mr. Covington said the approval by the PSC for the rate increase is a condition of the loan.
Senator Carroll made a motion to approve the Fund F loans, subject to PSC approval for the rate increase of the Garrison Quincy KY-O-Heights Water District project. The motion was seconded by Representative Wayne and approved by roll call vote with one “pass” vote.
Mr. Covington reported an Infrastructure for Economic Development Fund (Coal) Grant for the Henderson County Fiscal Court for water and sewer extensions or repairs for $1,000,000.
Follow-up Reports from the Office of Financial Management
Mr. Ryan Barrow, Executive Director, Office of Financial Management, presented two follow-up reports and one status update on previously approved bond issues. The first report was for Morehead State University General Receipts Bonds 2013, Series A. The $9,475,000 bond issue was sold on September 10, 2013 and closed on September 24, 2013. It was a competitive sale and the purchaser was Ross, Sinclaire & Associates with an interest rate of 3.84 percent and a final maturity date of April 1, 2033.
The second report was for the Turnpike Authority of Kentucky Economic Development Road Revenue Bonds (Revitalization Projects) 2013, Series A. Proceeds from the issue will permanently finance highway projects approved within the Six-Year Highway Plan. The $187,625,000 bond issue was sold on September 12, 2013 and closed on October 2, 2013. It was a negotiated sale with Goldman Sachs with an interest rate of 4.118 percent and a final maturity date of July 1, 2033.
The third report was a status update on the financing plan for the Louisville-Southern Indiana Ohio River Bridges Project. The project was previously reported to the committee in April 2013, and a revised financing plan was reported in September 2013. Mr. Barrow said the federal government shutdown was affecting the TIFIA component of the financing and may affect the plan, as presented.
The new bonds are the Kentucky Public Transportation Infrastructure Authority (KPTIA) First Tier Toll Revenue Bonds, Series 2013, (Downtown Crossing Segment) and the Subordinate Toll Revenue Bonds Anticipation Notes, Series 2013, (Downtown Crossing Segment).
Mr. Barrow said that the bond anticipation notes will provide interim funding for the transaction to lower the cost of capital. This will fund the Kennedy Interchange, the Downtown Bridge, and the Kentucky portion of the Indiana Downtown Approach.
Mr. Barrow said they are anticipating investment grade ratings from Moody’s and Fitch. It will be a negotiated transaction with Citigroup; Peck, Shaffer and Williams LLP will serve as bond counsel; and Public Financial Management, Inc., as financial advisor. The proposed date of sale is November 21, 2013 and the closing on December 5, 2013. The estimated amount of bonds are approximately $300,000,000 and are interest bearing capital appreciation bonds (CABs) and convertible CABs.
In response to questions from Senator McDaniel, Mr. Barrow said the CABs are 40-year bonds and carry a higher interest rate to allow for the mitigation of toll revenues at the front-end of the project. As revenues grow, the debt service is adjusted to the revenue trend.
Mr. Barrow said toll revenues are projected over time to be commensurate with inflation, which accounts for the higher yield because of the expected increases in tolls. The projected toll increase is 2.5 percent annually.
In response to questions from Representative Wayne, Mr. David Talley, Deputy Executive Director, Budget and Fiscal Management, Kentucky Transportation Cabinet, said the tolling authority is comprised of six members from Kentucky and Indiana and, to his knowledge, there are no minority members. The make-up of the authority was set in the bi-state development agreement between Kentucky and Indiana.
Mr. Talley said the Kentucky Public Transportation Infrastructure Authority appointed Secretary Mike Hancock, Transportation Cabinet; Secretary Lori Flanery, Finance and Administration Cabinet; and Ms. Dana Mayton, Deputy Attorney General to the tolling authority to represent all drivers.
Mr. Barrow said the environmental justice study is not complete. According to Representative Wayne, Secretary Hancock said any proposal to alleviate or remove the burden on the working poor commuting to Indiana was ruled out.
Mr. Talley said the toll rate resolution, which contains the toll rate covenants, allows for additional environmental justice considerations later in the process. However, it recognizes any environmental justice mitigation efforts must take into account the toll rate covenants.
Mr. Barrow said it was not his understanding that the consideration of lower toll rates was dismissed by the tolling authority and the Transportation Cabinet, but the environmental justice rates may be implemented at a later date.
Mr. Barrow said the financing plan was revised when the GARVEE transactions were approved. The GARVEEs were brought forward for various financial reasons, as well as the amount of the time required to negotiate the TIFIA loan. The TIFIA loan could be delayed as a result of the federal government shutdown.
Mr. Barrow said the delay of the TIFIA loan is due to the revision of the federal loan application and incomplete regulations. The process first involves submitting a letter of intent and the application process comes at the end of the transaction. The application was submitted in October 2013. The acceptance of the application started a 90-day timeframe in which the TIFIA must be approved. Kentucky will be one of the first entities to go through the new process.
Mr. Talley said he is intent on having the financing plan executed as soon as possible to ensure the cabinet is not subject to interest rate risk longer than necessary, but factors remain outside of their control.
Mr. Barrow said it is an evolving process where the financing plan was revised to bring the GARVEEs forward to allow construction with no interruption. The timing of the TIFIA loan will be prior to the exhausting of the GARVEEs funds.
In response to questions from Representative Damron, Mr. Barrow said Public Financial Management was selected over the Office of Financial Management (OFM) as financial advisor because of the scope of the project, staff constraints, and the need for outside expertise.
Mr. Talley said Public Financial Management was selected through the cabinet’s procurement process and was bid competitively from a Request for Proposal. OFM was on the evaluation committee that reviewed the bids and made the selection. The contract was for two-years and includes two, two-year extensions. Mr. Talley will provide the contract amount to the committee.
New School Bond Issues with School Facilities Construction Commission (SFCC) Debt Service Participation
Mr. Barrow reported five school bond issues with SFCC debt service participation with a total par amount of $12,400,000. The state portion of the annual debt service payment was $386,498 and the local contribution was $581,993. The bond issues did not involve tax increases.
New School Bond Issues with 100 Percent Locally Funded Debt Service Participation
Two local school bond issues have been reported to the committee. The bond issues are 100 percent locally funded and do not involve tax increases. Both bond issues will finance improvements to existing facilities.
With there being no further business, the meeting adjourned at 3:02 p.m.