Call to Order and Roll Call
The Capital Projects and Bond Oversight Committee meeting was held on Tuesday, May 9, 2017, at 1:00 PM, in Room 169 of the Capitol Annex. Representative Phil Moffett, Co-Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Representative Phil Moffett, Co-Chair; Senator Rick Girdler; and Representatives Larry Brown and Steven Rudy.
Guests: Mr. Chris Brummet, Director of Asset Management, Kentucky Community and Technical College System; Ms. Elizabeth Baker, Planning Director, Budget Office, University of Kentucky; Mr. Scott Aubrey, Director, Division of Real Properties, Finance and Administration Cabinet; Ms. Janice Tomes, Deputy State Budget Director, Governor’s Office for Policy Management; Mr. Deck Decker, Executive Director, Office of Administrative and Technology Services, Cabinet for Health and Family Services; Ms. Ashley Adams, Financial Analyst, Kentucky Infrastructure Authority; and Mr. Ryan Barrow, Executive Director, Office of Financial Management.
LRC Staff: Shawn Bowen, Committee Staff Administrator; Julia Wang, Legislative Analyst; and Jenny Wells, Committee Assistant.
Due to the lack of a quorum, Representative Moffett said that all agenda items would be presented as information items only, and no roll call votes would be taken.
Approval of Minutes (April 18, 2017)
Due to the lack of a quorum, this item was tabled until the June meeting.
Information Item
One item of correspondence was submitted by the School Facilities Construction Commission (SFCC) in response to a question raised at the committee’s May meeting. SFCC has indicated that general fund debt service of $188,000 annually for the Owsley County bond issue is derived from savings associated with a Guaranteed Energy Savings Contract the school may enter into to fund a portion of the project. There are no other general or federal funds involved in this project.
Project Report from the Universities
Mr. Brummet reported two lease renewals for the Kentucky Community and Technical College System Jefferson Community and Technical College. The leases, located in Jefferson and Bullitt Counties, have an annual cost of $399,775 and $204,992, respectively.
The University of Kentucky submitted four items for the committee’s consideration: two new leases, one for the College of Medicine in Bowling Green, and one for the Barnstable Brown Kentucky Diabetes and Obesity Center in Fayette County; a report of medical equipment purchases; and a request for a $1.5 million scope increase for the Renovate/Upgrade Athletics Playing Fields 2 project. The scope increase is 100 percent privately funded, and is needed to complete the project as redesigned. The revised project scope is $3.5 million, and the project will remain 100 percent privately funded. In accordance with committee’s policy regarding the use of private funds for capital projects, the university provided assurances to staff that the private donations have been received.
Lease Reports from the Finance and Administration Cabinet
Mr. Aubrey reported four leases in Franklin County will be renewed under the same terms and conditions. The lease renewals include: Cabinet for Health and Family Services, $1,127,854; Department for Local Government, $196,951; Labor Cabinet, $578,784; and Office of the Attorney General, $482,563.
Mr. Aubrey reported one lease modification for the Department of Corrections in Barren County. The department plans to renovate its leased space to accommodate three additional employees. Building modification costs of $27,800 will be amortized over the remaining lease term (through June 30, 2020). The department’s monthly rental cost will increase by approximately $751.
In regard to the four lease renewal reports, Representative Moffitt asked why the state pays more than the average cost per square foot ($8.33) for leased space in Franklin County. Mr. Aubrey said the state pays above the average cost per square foot because there are not a lot of properties in Franklin County that can provide a sufficient amount of contiguous space to house these larger agencies. He added that the average cost for leased space, which is updated annually, remains relatively low.
In response to additional questions from Representative Moffett, Mr. Aubrey said that he would gather more information for the committee regarding the number of leases held by the Office of the Attorney General, the total square footage of each lease, and the number of contract and permanent employees in the leased space.
Project Reports from the Finance and Administration Cabinet
Ms. Tomes reported two projects on behalf of the Department of Military Affairs and the Cabinet for Health and Family Services. The Department of Military Affairs plans to initiate a new unbudgeted capital project known as the Paducah Armory Solar Panel Installation project. The project will provide for the installation of grid-tied solar panels and lighting upgrades for the Field Maintenance Shop at the Paducah National Guard Armory. The project scope is $727,800, and is funded with 87 percent federal funds and 13 percent restricted funds.
The Cabinet for Health and Family Services submitted a request for a $5.1 million project scope increase for the Eligibility Systems Integration Services project. This project will integrate eligibility processing for various entitlement programs administered by the cabinet, and replace the Kentucky Automated Management and Eligibility System. The scope increase is 100 percent federally funded, and will permit the cabinet to add certain elements to the new system required under federal law. The revised project scope is $90,126,400.
In response to several questions from Representative Moffett, Mr. Decker said the cabinet is adding more tracking tools to the system to reduce fraud and abuse. He said the implementation of Benefind proceeded without the Child Care Assistance Program management due to an obligatory delay and changes to federal requirements. The cabinet is now working with the Child Care Council on several different programs which involve training to meet current federal laws.
Report from the Office of Financial Management
Ms. Adams reported three Kentucky Infrastructure Authority loans: Fund A loan, City of Benton, Marshall County, $1,780,000; Fund B loan increase, City of Bardstown, Nelson County, $1,281,000; and Fund B loan, City of Bardstown, Nelson County, $1,000,000.
Mr. Barrow reported one new bond issue: University of Kentucky General Receipts Bonds, 2017 Series C, $150,000,000. He then provided a follow-up report on three previously approved bond issues for Eastern Kentucky University General Receipts Bonds, 2017 Series A, $46,140,000; State Property and Buildings Commission Agency Fund Revenue Bonds, Project No. 116, $60,135,000; and the Kentucky Housing Corporation Multifamily Housing Revenue Bonds, Series 2017 (Parkway Manor Apartments Complex), $7,075,000.
New School Bond Issues with School Facilities Construction Commission (SFCC) Debt Service Participation
Mr. Barrow reported two new SFCC school district bond issues for Anderson and Garrard Counties, for a total of $1,231,139. Both issues will refund outstanding bonds, and no tax increase was necessary to fund the projects.
New Local School Bond Issues with 100 Percent Locally-Funded Debt Service
Ms. Bowen reported three 100 percent locally-funded school bond issues for Grayson, Jefferson, and Webster Counties. The bond issues total $42,485,000, and the scope of work includes refunding outstanding energy conservation bonds and renovations and improvements to district schools. The bond issues did not involve a tax increase.
With there being no further business, the meeting was adjourned at 1:25 p.m.