Call to Order and Roll Call
The Capital Projects and Bond Oversight Committee meeting was held on Tuesday, December 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, Julian Carroll, Bob Leeper, and Christian McDaniel; Representatives Robert Damron, Steven Rudy, Kevin Sinnette, and Jim Wayne.
Guests Testifying Before the Committee: Ms. Terry Rutledge, Assistant Vice President for Business Affairs, University of Louisville; Ms. Elizabeth Baker, Director of Planning, University of Kentucky; 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 (KIA); Mr. Jeff Abshire, Financial Analyst, KIA; and Mr. Ryan Barrow, Executive Director, Office of Financial Management.
LRC Staff: Josh Nacey, Katherine Halloran, and Shawn Bowen.
Approval of Minutes
Senator Carroll moved to approve the minutes of the November 18, 2014, meeting. The motion was seconded by Senator Leeper and approved by voice vote.
Project Report from the University of Louisville (UofL)
Ms. Terry Rutledge, Assistant Vice President for Business Affairs, UofL, presented an interim authorization request for the Athletics Maintenance Facility project. The project is estimated to cost $1,250,000 and will be paid from private funds.
Senator Carroll made a motion to approve the request. The motion was seconded by Representative Damron and approved by roll call vote.
Project Reports from the University of Kentucky (UK)
Ms. Elizabeth Baker, Director of Planning, UK, presented four items. The first item was a report of the intent of UK to use the Construction Manager-at-Risk delivery method for the Renovate/Upgrade Academic Space project. No action was required.
The second item was a report of the purchase of unbudgeted medical equipment for an infant protection system designed to protect infant patients in the maternity and pediatric units. The $248,953 security system was paid with restricted funds. No action was required.
The third item was a lease modification for UK’s Cancer Information Services to increase space by 670 square feet (sq ft), for a total of 7,228 sq ft, at $15.24 per sq ft for an annual cost of $110,155 to accommodate programmatic needs. The lease will expire June 30, 2016.
Senator Leeper made a motion to approve the lease modification. The motion was seconded by Senator Carroll and approved by roll call vote.
The fourth item was a $6,500,000 scope increase from private donations for the Expand/Renovate Commonwealth Stadium and Nutter Training Center project to accommodate increased bid prices. The revised project total was $126,500,000.
Representative Damron 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 two items. The first item was a new lease for the Department of Public Advocacy in Franklin County for office and warehouse space. The lease was for 43,807 sq ft at an annual cost of $486,426 through June 30, 2021.
In response to questions from Senator McDaniel, Mr. Aubrey said rent continues to increase and there will be new construction to address the larger space needs and continued renovation of smaller spaces in Franklin County. Bid submissions are declining for state properties, in part, due to statutory requirements requiring 30-day cancellation clauses and not paying maintenance and insurance in the lease agreements.
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 a lease renewal for the Cabinet for Health and Family Services, Department for Community Based Services in Boone County, under the same terms and conditions, for a total annual rent cost of $288,556 through June 30, 2020.
Senator Carroll made a motion to approve the lease renewal. The motion was seconded by Senator McDaniel and approved by roll call vote.
Project Report from the Finance and Administration Cabinet
Mr. John Hicks, Deputy State Budget Director, presented an appropriation increase request of $400,000 from Eastern Kentucky University for the Construct Addition to the Ashland Building project. The project was approved in 2014 Regular Session House Bill 235 for $3,400,000 from restricted funds. The bids received were higher than expected.
In response to questions from Senator McDaniel, Mr. Hicks said the Finance and Administration Cabinet has not seen a large number of project bids coming in higher than budgeted. During the upcoming capital planning cycle, the cabinet will monitor the current market and construction costs to plan appropriately for adjustments to the construction industry.
Representative Wayne made a motion to approve the appropriation increase. The motion was seconded by Representative Damron and approved by roll call vote.
Kentucky Infrastructure Authority (KIA) Loans
Ms. Brandi Armstrong and Mr. Jeff Abshire, Financial Analysts, KIA, presented seven items. The first item was a new Fund A loan for the City of Catlettsburg in Boyd County. The request was for a $2,485,000 loan for the Wastewater Treatment Plant Rehabilitation and Expansion and Rehabilitation of Sanitary Sewer Collection System project. The loan will have a 20-year term, an interest rate of 0.75 percent, and a debt service payment of $125,104.
Senator Carroll made a motion to approve the new loan. The motion was seconded by Senator McDaniel and approved by roll call vote.
The second item was a new Fund A loan for the City of Morganfield in Union County. The request was for a $2,642,000 loan for Phase II Morganfield Combined Sewer Separation project. The loan will have a 20-year term, an interest rate of 1.75 percent, and a debt service payment of $162,431.
Senator McDaniel made a motion to approve the new loan. The motion was seconded by Senator Carroll and approved by roll call vote.
The third item was a Fund B loan increase for the Symsonia Water District in Graves County. The request was for an increase of $29,016 to an existing $300,000 Fund B loan for cost overruns on the New Storage Tank, Wells and Treatment Facility project. The loan will have a 20-year term, an interest rate of 1.75 percent, and a debt service payment of $20,226.
In response to questions from Senator McDaniel, Mr. Abshire said there was a misunderstanding between the utility and electrical company regarding the installation cost of underground electrical components resulting in the most significant overage costing $12,000.
Senator Carroll made a motion to approve the loan increase. The motion was seconded by Representative Rudy and approved by roll call vote with two “no” votes.
The fourth item was a new Fund C loan for the City of Richmond, for the benefit of the Richmond Water, Gas and Sewerage Works, in Madison County. The request was for a $1,422,370 loan for the Raw Water Intake Electric Relocation and Slide Remediation project. The loan will have a 20-year term, an interest rate of three percent, and a debt service payment of $97,936.
Senator Carroll made a motion to approve the new loan. The motion was seconded by Representative Wayne and approved by roll call vote.
The fifth item was a Fund F loan increase for the City of Carrollton, for the benefit of Carrollton Utilities, in Carroll County. The request was for an increase of $119,171 to an existing $1,538,817 Fund F loan to accommodate higher bids for the Carroll County Interconnect project. The loan will have a 30-year term, an interest rate of 0.75 percent, and a debt service payment of $49,474.
Senator Carroll made a motion to approve the new loan. The motion was seconded by Senator Girdler and approved by roll call vote.
The sixth item was a new Fund F loan for the Northern Kentucky Water District in Kenton County. The request was for a $4,000,000 loan for the Campbell and Kenton County Water Main and Storage Tank Improvements project. The loan will have a 20-year term, an interest rate of 1.75 percent, and a debt service payment of $247,902.
Senator Carroll made a motion to approve the new loan. The motion was seconded by Representative Damron and approved by roll call vote.
The seventh item was a new Fund F loan for the City of Pineville, for the benefit of the Pineville Utility Commission, in Bell County. The request was for a $220,000 planning and design loan for the Water Treatment Plant Expansion project. The loan will have a five-year term, an interest rate of 2.75 percent, and a debt service payment of $47,946.
Senator Carroll made a motion to approve the new loan. The motion was seconded by Representative Wayne and approved by roll call vote.
New School Bond Issues with School Facilities Construction Commission (SFCC) Debt Service Participation
Mr. Ryan Barrow, Executive Director, Office of Financial Management, reported four school bond issues with SFCC debt service participation with a total par amount of $21,855,000. The state portion of the annual debt service payment was $204,198 and the local contribution was $1,314,347. The bond issues did not involve tax increases.
Senator Carroll made a motion to approve the school bond issues. The motion was seconded by Senator Girdler and approved by roll call vote.
New School Bond Issues with 100 Percent Locally Funded Debt Service Participation
Mr. Josh Nacey, Committee Staff Administrator, reported one local school bond issue for Lee County. The bond issue was 100 percent locally funded and did not involve a tax increase. The bond issue will finance an elementary school renovation. No action was required.
With there being no further business, the meeting adjourned at 1:30 p.m.