Call to Order and Roll Call
The 1st meeting of the Capital Projects and Bond Oversight Committee was held on Tuesday, January 20, 2015, at 1:00 PM, 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: Senator Chris Girdler, Co-Chair; Representative Kevin Sinnette, Co-Chair; Senator Julian M. Carroll; Representatives Steven Rudy, and Jim Wayne.
Guests: 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; Mr. Ryan Barrow, Executive Director, Office of Financial Management; Mr. Colin Underhill, managing owner, Heritage Green Development, LLC; and Ms. Kristi Culpepper, Executive Director, School Facilities Construction Commission.
LRC Staff: Josh Nacey, Katherine Halloran, and Maurya Allen.
Election of House Co-Chair
Josh Nacey, Committee Staff Administrator, indicated that pursuant to KRS 45.790, a Co-Chair election was needed for the positions of Senate and House Co-Chairs. Representative Rudy nominated Representative Sinnette for the position of House Co-Chair. The motion was seconded by Representative Wayne. Representative Rudy then made a motion that nominations cease and that Representative Sinnette be elected House Co-Chair by acclamation. The motion was seconded by Representative Wayne and approved by voice vote.
Election of Senate Co-Chair
Senator Carroll nominated Senator Girdler for the position of Senate Co-Chair. The motion was seconded by Senator Girdler. Senator Carroll then made a motion that nominations cease and that Senator Girdler be elected as Senate Co-Chair by acclamation. The motion was seconded by Senator Girdler and approved by voice vote.
Approval of Minutes
Senator Carroll made a motion to approve the minutes of the December 16, 2014, meeting. The motion was seconded and approved by voice vote.
Information Items
Mr. Nacey said there were three information items to report. The first was a status report on the Louisville-Southern Indiana Ohio River Bridges Project from the Kentucky Public Transportation Infrastructure Authority. The second was the quarterly status reports on capital projects for 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 programs. The final item was an advertisement to lease space for the Office of the State Treasurer in Franklin County.
Representative Wayne noted that there was no mention in the Kentucky Public Transportation Infrastructure Authority report of an update on the environmental justice impact as required by federal law. He asked if a letter could be sent from the committee to Transportation Cabinet Secretary Mike Hancock requesting a status report on the environmental justice impact report. The committee concurred with the decision and asked staff to request a reply by next committee meeting.
Lease Reports from the Finance and Administration Cabinet
Mr. Scott Aubrey, Director of Real Properties, Finance and Administration Cabinet, presented 2 items. The first item was a lease renewal for the Department of Corrections in Fayette County. The lease was for 10,967 square feet (sq ft) at $10.66 per sq ft for an annual total of $116,908.
Senator Carroll made a motion to approve the renewed lease. The motion was seconded by Representative Sinnette and approved by roll call vote.
The second item was for a lease modification for the Kentucky State Nature Preserves Commission in Franklin County, eliminating its office space and retaining its laboratory space at its current location, reducing the annual rent by $61,146. The lease will now cover 1,628 square feet (sq ft) at $8.95 per sq ft for an annual total of $14,571 through June 30, 2020.
Senator Carroll made a motion to approve the lease modification. The motion was seconded by Representative Sinnette and approved by roll call vote.
Project Reports from the Finance and Administration Cabinet
Mr. John Hicks, Deputy State Budget Director, presented two items. The first was an appropriation increase request of $375,000 from Eastern Kentucky University for the Commonwealth Hall Partial Repurposing and Renovation project. The project was approved in 2014 Regular Session House Bill 235 for $2,500,000 from restricted funds. The increase is to fund unforeseen HVAC repairs, bringing the total project cost to $2,875,000.
Senator Carroll made a motion to approve the appropriation increase. The motion was seconded by Representative Rudy and approved by roll call vote.
The second item was a report of a pool project in excess of $600,000. The Department of Fish and Wildlife Resources reported a $1,473,850 pool project allocation to the Eagle Creek Tributary-Union County project. The project will establish 7,750 feet of tributaries to Eagle Creek in Union County. The appropriation was funded from Department of Fish and Wildlife Resources 2010-2012 and 2014-2016 Fees-in-Lieu-Of Stream Mitigation Pools. No action was required.
Kentucky Infrastructure Authority (KIA)
Mr. John Covington, Executive Director, Kentucky Infrastructure Authority, presented three items. The first item presented was a Fund A loan for the City of Frankfort in Franklin County. The request was for a $3,731,000 loan for the West Frankfort Pump Station project. The loan will have a 20-year term, an interest rate of 1.75 percent, and a debt service payment of $229,365.
Senator Carroll made a motion to approve the new loan. The motion was seconded by Representative Sinnette and approved by roll call vote.
The second item presented was a Fund A loan for the City of Harrodsburg in Mercer County. The request was for a $1,420,000 loan for the Wastewater Collection System Rehabilitation project. The loan will have a 20-year term, an interest rate of 0.75 percent, and a debt service payment of $79,431.
Senator Carroll made a motion to approve the new loan. The motion was seconded by Representative Rudy and approved by roll call vote.
The third item presented was a Fund B loan for the Bracken County Water District in Bracken County. The request was for a $358,000 loan for the KY 19 Master Meter to Kelly Ridge project. The loan will have a 20-year term, an interest rate of 1.75 percent, and a debt service payment of $22,008.
Senator Carroll made a motion to approve the new loan. The motion was seconded by Representative Sinnette and approved by roll call vote.
Reports from the Office of Financial Management (OFM)
Mr. Ryan Barrow, Executive Director, OFM, presented four items. The first item was a new bond issue for Kentucky Higher Education Student Loan Corporation (KHESLC) Student Loan Asset-Backed Notes, Series 2015-1 (Taxable LIBOR Floating Rate Notes). The purpose of the bond issue was to finance rehabilitated Federal Family Education Loan Program (FFELP) loans and to retire the outstanding auction rate securities (ARS). The proposed sale date is February 16, 2015. The true interest cost was one month LIBOR plus 0.80 percent and it was a negotiated transaction with Hawkins Delafield & Wood LLP, bond counsel; Bank of America Merrill Lynch, underwriter; OFM, financial advisor; and Bank of New York Mellon, trustee.
Representative Rudy made a motion to approve the new bond issue. The motion was seconded by Senator Carroll and approved by roll call vote.
The second item was a new bond issue for Kentucky Housing Corporation Tax-Exempt Multifamily Housing bonds for the benefit of Heritage Green Apartments (Kingston Place), in an amount not to exceed $18,700,000. Proceeds from the funding loan will finance the acquisition, rehabilitation, and equipping of a multifamily residential rental facility, Heritage Green Apartments, by Heritage Green Development, LLC, consisting of approximately 556 units located in Louisville, Kentucky.
Representative Wayne asked if local legislators were informed of the project. Mr. Barrow replied that legislators from the area had been notified.
Representative Wayne asked for a more specific description of the project location in Louisville. Mr. Colin Underhill, developer and owner Heritage Green, clarified that the location was in South Louisville near Iroquois Park.
Representative Wayne made a motion to approve the new bond issue. The motion was seconded by Senator Carroll and approved by roll call vote.
The third item was a follow-up report for Kentucky Housing Corporation Single Family Housing Revenue Bonds, 2014 Series B, to refund certain prior bonds for economic savings. The anticipated net proceeds were not to exceed $30,000,000 and were priced on November 25, 2014 at a rate of 3.366 percent. It was a negotiated sale and Kutak Rock served as bond counsel; Citigroup 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 Mellon as Trustee. No action was required.
The fourth item was a follow-up report for Kentucky Housing Corporation Tax-Exempt Indebtedness for the benefit of Roosevelt House, LLLP, in an amount of $22,080,000. 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 320 units located in Owensboro, Kentucky. No action was required.
In response to a question from Representative Wayne asking if local legislators had been notified, Mr. Barrow said they had.
New School Bond Issues with School Facilities Construction Commission (SFCC) Debt Service Participation
Ms. Kristi Culpepper, Executive Director, School Facilities Construction Commission, reported ten school bond issues with SFCC debt service participation with a total par amount of $93,025,000. The state portion of the annual debt service payment was $1,654,135 and the local contribution was $8,201,831. Five issues will be re-funding outstanding debt and five will be funding new school projects. The bond issues did not involve tax increases.
Senator Carroll made a motion to approve the school bonds. The motion was seconded by Representative Rudy and approved by roll call vote.
New School Bond Issues with 100 Percent Locally Funded Debt Service Participation
Mr. Nacey said two local bond issues were reported to the committee. Each bond issue has 100 percent local debt service support and involves no School Facilities Construction Commission participation. No tax increases were required for either issue.
No action was required.
Mr. Nacey also said included in members’ folders was the updated debt issuance calendar.
With there being no further business, the meeting was adjourned at 1:25 p.m.