Call to Order and Roll Call
The3rd meeting of the Capital Projects and Bond Oversight Committee was held on Wednesday, March 28, 2012, at<MeetTime> 8:30 AM, in Room 111 of the Capitol Annex. Senator Bob Leeper, Chair, called the meeting to order, and the secretary called the roll.
Guests: Scott Aubrey, Real Properties; Elizabeth Baker, University of Kentucky; Bill Harris, University of Kentucky; John Hicks, Governor’s Office for Policy and Management; Bob Jackson, Murray State University; Tim Lucas, Kentucky Department of Education; Kim Oatman Chief Facilities Officer, Murray State University; Katie Smith, Cabinet for Economic Development; Bob Tarvin, School Facilities Construction Commission; Sandy Williams, Kentucky Infrastructure Authority.
Approval of Minutes
Representative Glenn made a motion to approve the minutes of the February 23, 2012, meeting. The motion was seconded by Representative Rudy and approved by voice vote.
Shawn Bowen, Committee Staff Administrator for the Capital Planning Advisory Board, said five information items were included in members’ folders. The items included information from the Cabinet for Economic Development in response to members’ questions during a previous meeting on the Land O’ Frost Economic Development Bond; correspondence from the Division of Real Properties outlining energy efficiency measures in state-leased properties; a list of proposed legislation related to the Capital Projects and Bond Oversight Committee; and two items from the Administrative Office of the Courts (AOC). One item, sent in response to members’ questions during a previous meeting, included details on AOC’s restricted funds, and the second item was press release from AOC regarding recent damage to the Morgan County courthouse. Senator Leeper also brought to the members’ attention a packet of information on tornado damage to schools that was compiled by the Kentucky Department of Education (KDE).
Project reports from Murray State University (MuSU)
Mr. Jackson and Mr. Oatman presented two new items. The first was a request for a $600,000 (15 percent) restricted funds scope increase to construct a multipurpose practice facility for the men’s and women’s basketball programs. Representative Rudy made a motion to approve the scope increase. The motion was seconded by Representative Damron, and passed unanimously by roll call vote.
The second item was a reduction in scope on a project authorized in the 2010 Extraordinary Session House Bill 1: Complete Business and Research Center Tenant Space. The original authorization was for $1,948,000. After two revisions, MuSU reports that the scope is now $1,500,000. In response to a question from Rep. Rudy, Mr. Jackson responded that student fees would not be used to pay for the project; funds from a private donor would be used. No action was required on this item.
Project report from the University of Kentucky
Mr. Harris presented two items. The first was a report of purchase of medical equipment in excess of $200,000 funded by clinical revenues. No action was required. The second item was a report of lease over $200,000 and square footage modification for data center floor space with Windstream Communications. In response to a question from Senator Leeper, Mr. Harris said that the University currently houses for data storage in several locations, mostly in McVey Hall. Hospital data storage was built in as part of the new patient center, and as far as he knew this was the only space outside of those two locations where data was stored. In response to a question from Representative Glenn, Harris said the data systems, though house separately, shared the same “backbone.” In response to a question from Senator Buford, Mr. Harris said that the University’s lease at Coldstream had been terminated for the lessor’s failure to perform. Representative Damron made a motion to approve the lease. The motion was seconded by Senator Buford and passed unanimously by roll call vote.
Reports submitted by the Finance and Administration Cabinet
Scott Aubrey presented two lease amortization reports. The first was for the Cabinet for Health and Family Services in Boone County in order to install keypad lock devices on three staff entrances. The lower bid of $2,787 was selected and the cost will be amortized through the term of the lease. The second lease amortization presented was for the Department of Public Advocacy in Laurel County in order to install electrical outlets, a reception door key pad, and a panic button. The lower of two bids was accepted, and the cost will be amortized through the term of the lease. No action was required on either item.
John Hicks presented one new project from the Finance and Administration Cabinet, a $2,000,000 interior renovation of the Atwood Research Building at Kentucky State University. This project, to replace the HVAC system and repair and renovate interior spaces, will be paid for entirely through federal funds from the U.S. Department of Agriculture 1890 Land Grant Program. Representative Damron made a motion to approve the project. The motion was seconded by Representative Rudy and passed unanimously by roll call vote.
New Kentucky Infrastructure Authority (KIA) Fund A Loans
Ms. Williams presented eight Fund A loans: three for the Regional Water Resource Agency in Daviess County, $4,005,000, $1,586,875, and $357,335; two for the Grant County Sanitary Sewer District, $913,300 and $433,178; one for the City of Ashland in Boyd County, $4,500,000; one for the City of Murray in Calloway County, $46,000,000; and one for the Lexington-Fayette Urban County Government, $1,930,000.
In response to a question from Representative Glenn, Ms. Williams said that to her knowledge, all agencies receiving loans held public meetings on the above loans.
In response to a question from Senator Leeper, Ms. Williams said that the attorneys for the LFUCG attorneys do not feel that they have to go through the Public Service Commission. In response to another question, Ms. Williams said that since the loan approval, LFUCG has executed a contract with an engineering firm. In response to another question, Ms. Williams said that the hiring of an engineering firm should not alter the terms of the loan. An estimate of engineering fees was used for the purposes of the loan, and the loan approval was not contingent upon the engineering contract. Only the estimated fees approved by the Division of Water could be spent from the loan. In response to a question from Representative Damron, Williams said that municipals do not go through the Public Service Commission. In response to another question from Representative Damron, Ms. Williams said that the Regional Water Resource Agency (RWRA) in Daviess County would use certified engineers they have on staff, but would also hire outside engineering firms to perform some of the work. None of the loan proceeds would be reimbursed to RWRA for use of their own staff engineers’ time, and the projects are not 100 percent KIA financed.
Representative Damron made a motion to approve the Fund A loans. The motion was seconded by Senator Buford and passed unanimously by roll call vote.
KIA Fund B Loan
Ms. Williams presented one Fund B load in the amount of $505,000 for the City of Olive Hill in Carter County. The City is under an Agreed Order that requires they make the improvements included in this project. Senator Carroll made a motion to approve the project. The motion was seconded by Senator Carpenter and passed unanimously by roll call vote.
KIA Fund F Loans
Ms. Williams presented two Fund F loans: the City of Campbellsville in Taylor County for $1,875,000 and the City of Centertown in Ohio County for $922,850. In response to a question from Representative Damron, Ms. Williams said that many of their borrowers do not have bond ratings, and their borrowers would probably pay more for loans on the open market than they do through KIA. Representative Damron made a motion to approve the loans. The motion was seconded by Representative Glenn and passed unanimously by roll call vote.
Cabinet for Economic Development Reports
Katie Smith presented an Economic Development Bond (EDB) grant in the amount of $500,000 to the City of Florence for the benefit of HealthWarehouse.com. The company, an on-line pharmacy, will be required to create 224 new, full-time jobs for Kentucky residents. Senator Carpenter made a motion to approve the project. The motion was seconded by Senator Carroll and passed unanimously by roll call vote.
Ms. Smith also reported an amendment to an EDB grant to the Louisville/Jefferson Metro Government for the benefit of BAE Systems Land and Armaments LLP. The amendment will increase the company’s jobs baseline from 78 to 98 and will extend the compliance date to June 30, 2013. The company will still be required to add 58 new, full-time jobs for Kentucky residents. No action was required on this item.
New Bond Issue Report
Tom Howard reported a new bond issue: Kentucky Infrastructure Authority Wastewater and Drinking Water Revolving Revenue Bonds, Series 2012A. The bonds were sold on March 26, 2012, and will leverage the loan repayments KIA receives under its Fund A and Fund F loan programs as authorized in the 2010-1012 budget. This bond sale was scheduled to be brought before the committee on the originally scheduled meeting date of March 22, but due to potential lack of quorum, the meeting was moved to March 28.
Mr. Howard said there was a copy of the Semi-Annual Report of the Kentucky Asset-Liability Commission report in members’ folders. No action was required on this item.
New School Bond Issues
Mr. Howard said there were five new school bond issues with School Facilities Construction Commission participation this month. Representative Damron made a motion to approve the bond issues. The motion was seconded by Senator Buford and passed unanimously by roll call vote.
Bob Tarvin from SFCC, and Tim Lucas from KDE were present to answer members’ questions regarding damages to school facilities during the March 2 tornado outbreak.
Ms. Bowen said there were two new local school bond issues with 100 percent locally-funded debt service. All disclosure information has been submitted, and no further action was required.
There being no further business, Senator Leeper made a motion to adjourn. Representative Glenn seconded the motion, and the meeting adjourned at 9:30 AM.