Call to Order and Roll Call
The4th meeting of the Capital Projects and Bond Oversight Committee was held on Thursday, April 12, 2012, at 9:00 AM, in Room 169 of the Capitol Annex. Representative Jim Glenn, Chair, called the meeting to order, and the secretary called the roll.
Members:Senator Bob Leeper, Co-Chair; Representative Jim Glenn, Co-Chair; Senators Tom Buford, Jared Carpenter, and Julian M. Carroll; and Representatives Robert R. Damron, Steven Rudy, and Jim Wayne.
Guests: Tom Denton, Vice President of Finance, Murray State University; Mark Rawlings, Hilliard-Lyons; John Hicks, Deputy State Budget Director, Governor’s Office for Policy and Management; Scott Aubrey, Director of the Division of Real Properties; Sandy Williams, Financial Analyst, Kentucky Infrastructure Authority; and Brett Antle, and Tom Howard, Office of Financial Management.
Approval of Minutes
Representative Rudy made a motion to approve the minutes of the March 28, 2012, meeting. The motion was seconded by Senator Leeper and approved by voice vote.
Shawn Bowen, Committee Staff Administrator for the Capital Planning Advisory Board, said four information items were included in members’ folders. The information items included a list of proposed legislation related to the Capital Projects and Bond Oversight Committee and quarterly reports from the Administrative Office of the Courts, the Commonwealth Office of Technology, the Finance and Administration Cabinet, and universities that manage their own construction programs.
Project Report from Murray State University
Mr. Denton presented an amendment to a Memorandum of Agreement (MOA) between Murray State University (MuSU) and the City of Murray. In November 2002, the University reported to the committee plans to use an alternative funding mechanism for the Recreation/Wellness Center project authorized in the FY 2003 Governor’s Spending Plan at a scope of $10 million restricted funds.
Under the terms of the MOA, the City of Murray agreed to issue $10 million in general obligation bonds for a term of 30 years to fund the project and MuSU would commit to assessing the Student Recreation and Wellness Center fee in amounts sufficient to cover the City’s required debt service associated with the issue.
Mr. Denton said the city has refunded the bonds, resulting in debt service savings to the University of about $2,130,000 over a 21-year period. The MOA has been amended to reflect this savings. No action was required.
Project Report from the Finance and Administration Cabinet
Mr. Hicks reported a $430,000 scope increase (8.7 percent) for the Morehead State University East Mignon Hall Renovation project. This $4.9 million bond-funded project was authorized in the 2010-12 Executive Budget. The scope increase will be used to correct unforeseen problems with the building’s shelf angles and will be funded with unexpended Housing and Dining System Revenue Bond proceeds. The revised project scope is $5,378,000. Senator Carroll made a motion to approve the scope increase. The motion was seconded by Representative Rudy and passed unanimously by roll call vote.
Lease reports from the Finance and Administration Cabinet
Mr. Aubrey reported two emergency leases in Morgan County for the Department for Workforce Investment (DWI) and the Cabinet for Health and Family Services (CHFS). Both leases were necessitated by recent tornadoes and are temporary, pending repair to their leased facilities or the acquisition of new leased space.
Representative Wayne noted that the square footage cost for both leases, $14.97 and $9.19 respectively, was above the average square footage costs for leased space in Morgan County ($6.38). Mr. Aubrey said he did not believe the lessors were engaging in price gouging with regard to these leases. DWI intends to return to its previously occupied space once it is repaired; however, the space rented by the CHFS is damaged beyond repair and they are seeking other permanent housing. No action was required on these items.
Mr. Aubrey presented three lease modification reports: Department of Corrections, Henderson County; Department of Probation and Parole, McCracken County; and Cabinet for Health and Family Services, Greenup County. No action is required for lease modifications less than $50,000.
A lease modification was presented for the Transportation Cabinet. The Cabinet plans to add 50,000 square feet of space to the facility they lease at 1841 Taylor Avenue in Jefferson County. The additional space is needed for the storage of approximately 70,000 tons of road salt. The new space will be leased at a cost of $1.97 per square foot, and the annual cost of the lease will increase from $99,528 to $198,028. Senator Carroll made a motion to approve the lease modification. The motion was seconded by Representative Rudy and passed unanimously by roll call vote.
Mr. Aubrey then presented a lease renewal report for the Cabinet for Health and Family Services in Fayette County. The annual cost of the lease, $439,028, will remain the same. Representative Rudy made a motion to approve the lease renewal. The motion was seconded by Senator Leeper and passed unanimously by roll call vote.
New Kentucky Infrastructure Authority (KIA) Fund A Loans
Ms. Williams presented two Fund A loans. The first was for the City of Flemingsburg in the amount of $500,000. Representative Wayne made a motion to approve the loan. Representative Rudy seconded the motion and it passed unanimously by roll call vote.
The second Fund A loan was for the City of Russell Springs in the amount of $719,000. Senator Carroll made a motion to approve the loan. Representative Rudy seconded the motion and it passed unanimously by roll call vote.
KIA Fund F Loan
Ms. Williams presented one Fund F loan for the City of Mount Vernon in the amount of $2,600,000. Senator Carroll made a motion to approve the loan. Representative Rudy seconded the motion and it passed unanimously by roll call vote.
[The committee normally reviews KIA projects after the KIA Board has approved them. However, in March the committee met prior to the KIA Board holding its monthly meeting. The three KIA loans were all approved contingent upon approval by the KIA Board at its April 12, 2012, meeting.]
KIA 2020 Grants
Ms. Williams presented six 2020 grants. These projects were funded with bond proceeds that went unused in previously approved projects. The grants were made to the Barkley Lake Water District, Bracken County Water District, the City of Albany, the City of Crab Orchard, Mayfield Electric and Water Systems, and Mt. Sterling Water and Sewer. Senator Leeper made a motion to approve the grants, contingent upon KIA approval. The motion was seconded by Representative Wayne and passed unanimously by roll call vote.
Ms. Williams also reported one line-item grant to the City of Berea in the amount of $500,000. This grant was authorized by the General Assembly in 2006, and no further action was required on this item.
New bond Issue-Turnpike Authority of Kentucky
Mr. Howard reported the issuance of 2012 Series A Economic Development Road Revenue Bonds in the amount of $218,000,000. Proceeds from this issue will be used to pay the cost of additions and improvements to the Kentucky Economic Development Road System. These projects represent the remaining balance of $56 million in Economic Development Road Bonds authorized by the 2010 Extraordinary Session of the General Assembly. No action was required.
New School Bond Issues
Mr. Howard reported six new school bond issues with School Facilities Construction Commission participation this month. Representative Wayne made a motion to approve the bond issues. The motion was seconded by Senator Carroll and passed unanimously by roll call vote.
There being no further business, Senator Leeper made a motion to adjourn the meeting. Representative Glenn seconded the motion and the meeting adjourned at 9:30 A.M.