Call to Order and Roll Call
The Capital Projects and Bond Oversight Committee meeting was held on Tuesday, February 21, 2017, at 1:00 PM, in Room 154 of the Capitol Annex. Senator Stan Humphries, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Stan Humphries, Co-Chair; Senators Julian Carroll, Rick Girdler and Christian McDaniel; and Representatives Larry Brown, Phil Moffett, and Steven Rudy.
Guests: Ms. Elizabeth Baker, Planning Director, University of Kentucky; Ms. Natalie Brawner, Assistant Director of Real Properties, Finance and Administration Cabinet; Mr. Ryan Barrow, Executive Director, Office of Financial Management; and Ms. Brandi Norton, Financial Analyst, Kentucky Infrastructure Authority.
LRC Staff: Shawn Bowen, Committee Staff Administrator; Julia Wang, Legislative Analyst; and Jenny Wells, Committee Assistant.
Election of House Co-Chair
Senator Humphries, Co-Chair, said that the first order of business was to elect a House Co-Chair.
Shawn Bowen said that, pursuant to KRS 45.790, a Co-Chair position is to be addressed by election, and members of the House are to elect a House member to serve as House Co-Chair.
Representative Brown nominated Representative Moffett for the position of House Co-Chair. The motion was seconded by Representative Rudy. A motion was made that nominations cease and that Representative Moffett be elected House Co-Chair by acclamation. The motion was seconded by Representative Rudy and approved by voice vote.
Approval of Minutes
A motion was made by Senator Carroll to approve the minutes of the December 20, 2016 meeting. The motion was seconded by Representative Rudy and approved by voice vote.
Senator Humphries said that, in the interest of time, the members of the committee would hear action items only on today’s meeting agenda.
Project Report from the Universities
Ms. Elizabeth Baker, Planning Director, University of Kentucky (UK), reported that the university has leased 22,784 square feet of office space at an annual cost of $113,920. The lease will house the Center for Applied Energy Research at the Spindletop Office Building in Lexington.
A motion to approve the lease was made by Senator McDaniel, seconded by Senator Carroll and approved by unanimous roll call vote.
Ms. Baker reported that the Department of Ophthalmology and Visual Science will lease 10,177 square feet of office, classroom and clinical space at an annual cost of $388,253. The leased space is located at 110 Conn Terrace in a facility owned by Shriner’s Hospital. The lease will also include the cost of tenant improvements at $96,300 annually.
A motion to approve the lease was made by Senator Carroll, seconded by Representative Rudy, and approved by unanimous roll call vote.
Lease Reports from the Finance and Administration Cabinet
Ms. Natalie Brawner, Assistant Director of Real Properties, Finance and Administration Cabinet, reported a new lease for the Energy and Environment Cabinet in Perry County. This lease was submitted for the committee’s approval in December 2016. However, the committee raised some additional questions, and approval of the lease was postponed until the questions had been answered.
With there being no questions, Senator Carroll made a motion to approve the lease. The motion was seconded by Representative Moffett, and approved by unanimous roll call vote.
Ms. Brawner next reported leasehold improvements at the 300 Building in Franklin County. The modifications will include the installation of badge readers in several areas throughout the building at a total cost of $65,992. The agencies requesting the modifications included the Energy and Environment Cabinet, the Education and Workforce Development Cabinet, and the Department of Education.
A motion to approve the report of leasehold improvements was made by Representative Moffett, seconded by Senator Carroll, and approved by unanimous roll call vote.
Report from the Office of Financial Management
Ms. Brandi Norton, Financial Analyst, Kentucky Infrastructure Authority (KIA), reported five KIA loans: Fund A Loan Increase, City of Liberty, $4,660,000; Fund A Loan Increase, Regional Water Resource Agency, $3,566,001; Fund B Loan Increase, City of Lewisport, $267,500; Fund C Loan, City of Worthington, $300,000; and Fund F Loan, City of Prestonsburg, $3,624,000.
Senator McDaniel made a motion to roll the KIA loans into one vote. The motion was seconded by Representative Rudy, and approved by voice vote.
In response to several questions from Senator McDaniel, Ms. Norton said the City of Lewisport loan had a significant increase due to the need to revamp the original project plan. The existing pumps were unable to provide enough flow in case of an emergency or a maintenance event to keep customers with water service. Ms. Norton said that KIA was confident of the repayment ability of Lewisport for the increase in the amount of the loan.
In response to several questions from Senator Carroll, Ms. Norton said that the City of Liberty had an 8 percent water rate increase from 2015 to 2016, another 6 percent increase from 2016 to 2017, and has a water rate of $32. The water rate for Daviess County is presently $27, will increase to $28 in July 2017, and will increase to $30 in July 2018. Ms. Norton said that the modifications to the current water plan in Prestonsburg will not affect the water rate. Prestonsburg has not had a water rate increase since 2012.
A motion was made by Senator McDaniel to approve the five KIA loans, seconded by Senator Carroll, and approved by unanimous roll call vote.
Report from the Office of Financial Management
Mr. Ryan Barrow, Executive Director, Office of Financial Management, reported two new bond issues: Kentucky Higher Education Student Loan Corporation (KHESLC) Student Revenue Bonds, Senior Series 2017A, $33,700,000, and Eastern Kentucky University General Receipts Bonds, 2017 Series A, $47,400,000.
In response to a question from Senator McDaniel, Mr. Barrow said that KHESLC is a separate entity and its trust bears all financial responsibility for this bond issue. KHESLC is using the policing power of a taxing power and uses state government to issue its bonds through the tax-exempt market.
A motion was made by Senator McDaniel to approve the two new bond issues, seconded by Senator Carroll, and approved by unanimous roll call vote.
New School Bond Issues with School Facilities Construction Commission (SFCC) Debt Service Participation
Mr. Ryan Barrow reported two school bond issues with SFCC debt service participation. Both issues will finance school renovations. There were no local tax increases associated with these projects.
A motion was made by Representative Moffett to approve the school bond issues, seconded by Senator Carroll, and approved by unanimous roll call vote.
With there being no further business, the meeting adjourned at 1:20 p.m.