Call to Order and Roll Call
The Capital Projects and Bond Oversight Committee was held on Tuesday, September 16, 2014, at 1:00 p.m., in Room 169 of the Capitol Annex. Representative Kevin Sinnette, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senators Chris Girdler, Bob Leeper, and Christian McDaniel; Representatives Robert Damron, Steven Rudy, Kevin Sinnette, and Jim Wayne.
Guests Testifying Before the Committee: Mr. Steve Byars, Assistant Vice President for Government Relations, University of Kentucky (UK); Ms. Elizabeth Baker, Director of Planning, UK; Mr. Scott Aubrey, Director of Real Properties, Finance and Administration Cabinet; Mr. John Hicks, Deputy State Budget Director; Ms. Brandi Armstrong, Financial Analyst, Kentucky Infrastructure Authority; and Mr. Ryan Barrow, Executive Director, Office of Financial Management.
LRC Staff: Josh Nacey, Katherine Halloran, and Angela Offerman.
Approval of Minutes
Representative Wayne moved to approve the minutes of the August 19, 2014, meeting. The motion was seconded by Senator Leeper and approved by voice vote.
Information Items
Mr. Josh Nacey, Committee Staff Administrator, presented four information items. The first item included notices of advertisement for leased space from the Finance and Administration Cabinet for the Department of Workforce Investment in Daviess County, Department of Corrections in Fayette County, and Department of Public Advocacy in Franklin County.
The second item was an update on the average rental rate for medical lease space in Jefferson County.
The third item was an announcement that the committee’s webpage was updated to ensure consistency with other statutory committee webpage’s, streamline content, and improve the distribution of meeting materials.
The fourth item was an article regarding the Louisville Arena Authority receiving $1,400,000 from Yum! Center profits.
Project Reports from the University of Kentucky (UK)
Mr. Steve Byars, Assistant Vice President for Government Relations, (UK), introduced Ms. Mary Vosevich, Vice President for Facilities Management, UK, to the committee.
Ms. Elizabeth Baker, Director of Planning, UK, reported the purchase of research and medical equipment and a scope increase for a budgeted capital project. The first item purchased was a Hydrocracking Reactor used to create paraffin wax which makes diesel. The cost of the reactor was $205,000 and funded from a U.S. Department of Energy grant. No action was required.
The second item purchased was a Water-Gas Shift Reactor used to shift syngas to a certain hydrogen/carbon monoxide ratio. The cost of the reactor was $205,000 and funded from a U.S. Department of Energy grant. No action was required.
The third item was the purchase of technology equipment for the Campus Cyberinfrastructure - Network Infrastructure and Engineering Program, Advancing Science through Next Generation Software-Defined Networks project. The cost of the equipment was $656,371 and funded from a National Science Foundation grant. No action was required.
The fourth item was the purchase of a Post-Anesthesia Care Unit Central Monitoring System to enable staff to have centralized comprehensive patient information. The cost of the system was $323,813 and paid for from restricted funds. No action was required.
The fifth item was the purchase of a pediatric ambulance to service the A.B. Chandler Medical Center and Hospital. The cost of the ambulance was $224,200 and paid from restricted funds. No action was required.
The sixth item was a scope increase under 15 percent for the budgeted capital project, Construct/Expand/Renovate Ambulatory Care Facility – UK, to renovate space at the Kentucky Clinic to allow the relocation of Pediatric Hematology/Oncology services. The $1,400,000 increase was from private funds raised by DanceBlue to benefit the Kentucky Children’s Hospital Pediatric Hematology/Oncology Clinic. The authorization increased the total project scope to $21,400,000.
Senator Leeper made a motion to approve the scope increase. The motion was seconded by Representative Damron and approved by roll call vote.
Lease Reports from the Finance and Administration Cabinet
Mr. Scott Aubrey, Director of Real Properties, Finance and Administration Cabinet, presented three items. The first item was for a lease modification for the Cabinet for Health and Family Services in Franklin County reducing the space by six square feet (sq ft). The modified lease was for 20,559 sq ft for office space at $10 per sq ft for an annual cost of $205,590. The lease will expire June 30, 2015.
Representative Wayne made a motion to approve the lease modification. The motion was seconded by Representative Damron and approved by roll call vote.
The second item was for an amortization of leasehold improvements for the Energy and Environment Cabinet in Franklin County for renovations to enclose the Commissioner’s office, remove a demising wall to enlarge a support area, convert a former smoking room to a break area, enclose a conference area, and new floor coverings. Two estimates were obtained and the cabinet recommended accepting the lowest bid of $15,890 from Warnick Construction. The cost will be amortized through the term of the lease, which will expire June 30, 2016. No action was required.
The third item was for an amortization of leasehold improvements for the Department of Agriculture Offices of Agriculture Marketing and Product Promotion and State Veterinarian for significant structural renovations. The department was informed that the construction plans provided by the lessor are required to include the seal and signature of a Kentucky licensed architect and engineer.
The lessor, Century Investment Group LLC, provided an estimate from Burnworth Design in the amount of $4,400 to accommodate the requirement. The cost will be amortized through the term of the lease, which will expire June 30, 2019. No action was required.
Project Reports from the Finance and Administration Cabinet
Mr. John Hicks, Deputy State Budget Director, presented four items. The first item was a new unbudgeted capital project from the Department of Military Affairs. The Expand Water Service project at the Wendell H. Ford Training Center will connect the center to a recently upgraded water treatment facility in Central City. The $750,000 capital project was 100 percent federally funded by a Department of Defense grant.
Senator Leeper made a motion to approve the project. The motion was seconded by Representative Rudy and approved by roll call vote.
The second item was a new unbudgeted capital project from the Department of Military Affairs. The Truck Wash Facility at Bluegrass Station project will construct a freestanding, pre-engineered metal building to be used for washing large trucks with hand-held sprayers. The project appropriation was $698,730 and was 50 percent federally funded by the Department of Defense’s Special Operations Forces Support Activity. The remaining 50 percent of funding was from agency-restricted funds.
Representative Rudy made a motion to approve the project. The motion was seconded by Senator Leeper and approved by roll call vote with one “pass” vote.
The third item was a new unbudgeted capital project from the Department of Military Affairs. The National Guard Memorial project at the Boone National Guard Center entrance will honor those who have served in the modern Kentucky National Guard.
The project cost was $1,397,700. Of that total, $1,097,700 was from private funds and $300,000 from the General Fund. The Kentucky National Guard Memorial Fund, Inc., a nonprofit corporation, agreed to manage the project and certified the private funds were in-hand.
Senator McDaniel made a motion to approve the project. The motion was seconded by Representative Damron and approved by roll call vote.
The fourth item was a report of a pool project in excess of $600,000. The Department of Parks reported a maintenance pool project allocation for the Cumberland Falls Terrace-Dining Room Roof project. The project will replace the roof over the dining room at the Cumberland Falls State Resort Park Lodge. The project appropriation was $750,000 and was funded from three Department of Parks maintenance pools.
In response to questions from Representative Wayne, Mr. Hicks said the Department of Parks monitors the maintenance needs of all the facilities and $4,000,000 is budgeted annually. He also said $5,500,000 has been budgeted to upgrade guest accommodations. No action was required.
Kentucky Infrastructure Authority (KIA) Loan
Ms. Brandi Armstrong, Financial Analyst, KIA, presented a Fund A loan increase for the City of London for the benefit of the London Utility Commission in Laurel County. The request was for an increase of $606,202 to a previously approved loan for the London Sanitary Sewer project to move existing and replace failing water lines. The $4,371,452 loan will have a 20-year term, an interest rate of 0.75 percent, and a debt service payment of $ 220,074.
Representative Wayne made a motion to approve the loan increase. The motion was seconded by Senator McDaniel and approved by roll call vote.
Reports from the Office of Financial Management (OFM)
Mr. Ryan Barrow, Executive Director, OFM, presented three items. The first item was a new bond issue for Kentucky Housing Corporation Tax-Exempt Indebtedness for the benefit of Roosevelt House, LLLP, in an amount not to exceed $27,060,000. Proceeds from the funding loan will finance the acquisition, rehabilitation, and equipping of a multifamily residential rental facility, Roosevelt House, by SOCAYR, Inc., consisting of approximately 319 units located in Owensboro, Kentucky.
Representative Wayne made a motion to approve the new bond issue. The motion was seconded by Senator McDaniel and approved by roll call vote.
The second item was a follow up report for the Kentucky Economic Development Finance Authority (KEDFA) Healthcare Facilities Revenue Bonds, Series 2014 (Masonic Homes Independent Living II, Inc. – Miralea Project). The bond issue will finance the acquisition, construction, installation, and equipping of independent living units.
The total par amount of the bonds was $13,000,000. It was a negotiated transaction with FirstMerit Bank as the purchaser. Peck, Shaffer & Williams, a division of Dinsmore & Shohl, served as bond counsel. No action was required.
The third item was an annual report of bonds outstanding as of fiscal year end June 30, 2014. No action was required.
New School Bond Issues with School Facilities Construction Commission (SFCC) Debt Service Participation
Mr. Barrow reported seven school bond issues with SFCC debt service participation with a total par amount of $34,455,000. The state portion of the annual debt service payment was $725,345 and the local contribution was $1,996,730. The bond issues did not involve tax increases.
Senator McDaniel made a motion to approve the school bonds. The motion was seconded by Representative Wayne and approved by roll call vote.
New School Bond Issues with 100 Percent Locally Funded Debt Service Participation
Mr. Nacey said five local bond issues were reported to the committee. The bond issues were 100 percent locally funded and one involved a tax increase. No action was required.
With there being no further business, the meeting was adjourned at 1:34 p.m.