Call to Order and Roll Call
The Capital Projects and Bond Oversight Committee meeting was held on Tuesday, November 18, 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, Julian Carroll, Bob Leeper, and Christian McDaniel; Representatives Robert Damron, Steven Rudy; and Kevin Sinnette.
Guests Testifying Before the Committee: Ms. Mary Vosevich, Vice President for Facilities Management, University of Kentucky; Mr. Scott Aubrey, Director of Real Properties, Finance and Administration Cabinet; Mr. John Hicks, Deputy State Budget Director; Mr. John Covington, Executive Director, 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
Senator Carroll moved to approve the minutes of the October 21, 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 was the annual Economic Development Bond Report from the Cabinet for Economic Development. The report detailed previously approved Economic Development Bond grant projects with respect to job creation and wage requirements.
The second item was a notice of advertisement for leased space from the Department of Financial Institutions in Franklin County.
The third item was a notice of advertisement for leased space from the Department of Agriculture in Franklin County.
The fourth item was the Administrative Office of the Courts Court Facility Use Allowance Contingency Fund annual status report.
Resolutions Honoring Retiring Committee Members
Senator Girdler read a resolution honoring Senator Leeper upon his retirement from the General Assembly. Chairman Sinnette read a resolution honoring Representative Damron upon his retirement from the General Assembly.
Senator Carroll made a motion to approve the resolutions. The motion was seconded by Representative Rudy and passed unanimously by voice vote.
Project Report from the University of Kentucky (UK)
Ms. Mary Vosevich, Vice President for Facilities Management, UK, presented a scope increase for the Center for Applied Energy Research Slipstream project for a $1,100,000 increase to address the discovery of below grade structures during the construction of the foundations; additional handling and crane time for the contactor; and bids exceeding the engineer’s estimates. The new project scope was $2,700,000 and was funded from a federal grant.
Senator Carroll made a motion to approve the scope increase. The motion was seconded by Senator Leeper 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 12 items. The first item was a new lease for the Department of Corrections in Jefferson County to accommodate needed additional space. The new lease was for 10,764 square feet (sq ft) at $12.75 per sq ft for an annual total of $137,241.
Senator Carroll made a motion to approve the new lease. The motion was seconded by Senator McDaniel and approved by roll call vote.
The second item was for a lease renewal for the Department of Military Affairs in Boone County, under the same terms and conditions, for a total annual rent cost of $108,000 through June 30, 2023.
Representative Damron made a motion to approve the lease renewal. The motion was seconded by Senator Carroll and approved by roll call vote.
The third item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in Clark County, under the same terms and conditions, for a total annual rent cost of $109,460 through June 30, 2016.
Senator Carroll made a motion to approve the lease renewal. The motion was seconded by Representative Damron and approved by roll call vote.
The fourth item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in Fayette County, under the same terms and conditions, for a total annual rent cost of $439,028 through June 30, 2016.
Senator McDaniel made a motion to approve the lease renewal. The motion was seconded by Senator Carroll and approved by roll call vote.
Senator Carroll made a motion to consolidate the remaining lease renewals under one motion. The motion was seconded by Senator McDaniel and approved by roll call vote.
The fifth item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in Franklin County, under the same terms and conditions, for a total annual rent cost of $116,761 through June 30, 2016.
The sixth item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in Graves County, under the same terms and conditions, for a total annual rent cost of $121,615 through June 30, 2023.
The seventh item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in Harlan County, under the same terms and conditions, for a total annual rent cost of $119,720 through June 30, 2023.
The eighth item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in Knott County, under the same terms and conditions, for a total annual rent cost of $100,119 through June 30, 2023.
The ninth item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in McCracken County, under the same terms and conditions, for a total annual rent cost of $113,817 through June 30, 2023.
The tenth item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in Montgomery County, under the same terms and conditions, for a total annual rent cost of $130,356 through June 30, 2016.
The eleventh item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in Ohio County, under the same terms and conditions, for a total annual rent cost of $107,950 through June 30, 2023.
The twelfth item was for a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services, in Rowan County, under the same terms and conditions, for a total annual rent cost of $137,269 through June 30, 2023.
Senator McDaniel made a motion to approve the lease renewals. The motion was seconded by Senator Carroll and approved by roll call vote.
Project Reports from the Finance and Administration Cabinet
Mr. John Hicks, Deputy State Budget Director, presented three items. The first item was a new unbudgeted capital project from the Education and Workforce Development Cabinet. The Unemployment Insurance State Identified Prevention Strategy Upgrade project will allow quicker detection of unemployment insurance claimants who are earning unreported wages. The $975,600 capital project was 100 percent federally funded from a grant from the U.S. Department of Labor.
Senator Carroll made a motion to approve the project. The motion was seconded by Senator McDaniel and approved by roll call vote.
The second item was a new unbudgeted capital project from the Education and Workforce Development Cabinet to improve registration and access to services provided by the Department of Workforce Investment agencies. The $750,000 Unemployment Insurance System Improvements project was 100 percent federally funded from a grant from the U.S. Department of Labor.
Senator Carroll made a motion to approve the project. The motion was seconded by Representative Damron and approved by roll call vote.
The third item was a new unbudgeted capital project from Morehead State University for the Construct Volleyball Facility project. The new facility will be constructed within the Academic Athletic Center and will replace the current facility plagued with structural problems. The $1,400,000 project was financed from private funds.
Senator Leeper made a motion to approve the project. The motion was seconded by Senator Carroll and approved by roll call vote.
Kentucky Infrastructure Authority (KIA) Loans
KIA submitted six loans for approval by the committee. KIA representatives were not in attendance to present the loans. Senator Girdler made a motion to request KIA be present at the December 2014, meeting to present the loans. The motion was seconded by Representative Damron and approved by voice vote.
Reports from the Office of Financial Management
Mr. Ryan Barrow, Executive Director, Office of Financial Management, presented two new bond issues. The first item presented was Kentucky Housing Corporation Single Family Housing Revenue Bonds, 2014 Series B, to refund certain prior bonds for economic savings.
The anticipated net proceeds will not exceed $30,000,000 and the proposed date of sale will be December 4, 2014, with an estimated true interest cost of 3.79 percent. It will be a negotiated sale and Kutak Rock will serve as bond counsel; Citi as underwriter; Peck, Shaffer & Williams, a division of Dinsmore & Shohl, as underwriter’s counsel; Office of Financial Management as financial advisor; and Bank of New York Trust Company as Trustee.
Senator McDaniel made a motion to approve the bond issue. The motion was seconded by Senator Leeper and approved by roll call vote.
The second item presented was State Property and Buildings Commission (SPBC) Revenue (Series A) and Refunding Revenue (Series B) Bonds, Project Number 108, to provide permanent, tax-exempt, General Fund supported financing for approximately $150,000,000 of projects authorized by the General Assembly; refund certain bonds issued by SPBC and Asset/Liability Commission (ALCo); and pay associated costs of issuance.
The anticipated net proceeds will not exceed $460,000,000 and the proposed date of sale will be December 10, 2014, with an estimated all-in true interest cost of 2.75 percent. It will be a negotiated sale and Peck, Shaffer & Williams, a division of Dinsmore & Shohl, will serve as bond counsel; Citi as underwriter; Stites & Harbison as underwriter’s counsel; and the Office of Financial Management as financial advisor.
Senator McDaniel made a motion to approve the bond issue. The motion was seconded by Senator Leeper and approved by roll call vote.
New School Bond Issues with School Facilities Construction Commission (SFCC) Debt Service Participation
Mr. Barrow reported 41 school bond issues with SFCC debt service participation with a total par amount of $257,685,000. The state portion of the annual debt service payment was $6,142,386 and the local contribution was $19,123,564. The bond issues did not involve tax increases.
Senator McDaniel made a motion to approve the school bond issues. The motion was seconded by Senator Carroll and approved by roll call vote.
New School Bond Issues with 100 Percent Locally Funded Debt Service Participation
Eight local school bond issues have been reported to the committee. The bond issues were 100 percent locally funded and do not involve tax increases. The bond issues will finance improvements to existing facilities and refinance previously approved bond issues. No action was required.
With there being no further business, the meeting adjourned at 1:41 p.m.