July 22, 1998
The Board of Regents of Washington State University met pursuant to call in Open Meeting at 9:00 a.m. on Wednesday, July 22, 1998, in the conference room of the law offices of Kargianis, Watkins, and Marler Offices, in Seattle, Washington.
Present: Carmen Otero, President; Regents: Richard R. Albrecht, Phyllis J. Campbell, Peter J. Goldmark, Joe King, and Janelle Milodragovich; President Samuel H. Smith, Interim Vice President for Business Affairs Ernest J. Renfro, University Counsel Sally P. Savage, Executive Director of Budget and Planning Gregory P. Royer, Senior Assistant Attorney General Toni Ursich, Executive Assistant for Business Affairs Robert Hoon, GPSA President Abraham Kannankeril, and ASWSU Vice President Steve Wymer.
1. Student Recreation Center Bond Resolution. Interim Vice President for Business Affairs Ernest J. Renfro stated that the Student Recreation Center Project is a one of great importance to the students. He said the project is on schedule, that the maximum allowable construction cost was negotiated within budget, and that the schematic design phase is complete. Mr. Renfro introduced Executive Assistant for Business Affairs Rob Hoon who reviewed the current status and schedule of the project. He said that site work will commence in September 1998, the subcontractor purchases will occur in early December 1998, and completion of the project is scheduled for December 2000, with occupancy occurring in January 2001.
Mr. Hoon then introduced the various individuals who have been involved in this project: Maureen Edelblut, a municipal bond underwriter at Salomon Smith Barney; Eltiena Campbell, an analyst in the Public Finance Department at Salomon Smith Barney; Cynthia Weed, bond counsel at Preston Gates and Ellis; and Susan Musselman, a financial consultant with her own company, Susan D. Musselman, Inc. Mr. Hoon also mentioned Jerry Bobo and Lorrie DuPont, both who are managing directors in the Public Finance Department at Salomon Smith Barney, but who were not able to be present at the meeting.
Mr. Hoon called upon Ms. Musselman who reviewed the key terms of the bond issue. Ms. Musselman stated that conditions for issuing the bonds is very favorable, with the size of the issue estimated to be approximately $46,000,000. She noted that the resolution requests authority to issue bonds up to $48,000,000. Ms. Musselman stated that the first interest payment will be April 1, 2000, the first principal payment will be April 1, 2002, the true interest cost will be 5.26 percent, and the approximate annual principal and interest payment will be $3 million. Further, the proposed issue date is August 5, 1998, with delivery of proceeds on August 20, 1998.
Ms. Musselman then reviewed the most significant provisions of the proposed resolution as follows:
á Authorizes issuance of bonds.
á Sets forth terms of the loans
Provisions of the proposed resolution continuedÉ
á Establishes commitments on the flow of funds
á Solidize security pledge
á Establishes covenants for management of this facility.
á Delegates authority to the President or Vice President for Business Affairs to execute all necessary documents to effect sale of the bonds and delivery of the proceeds.
Regent Phyllis Campbell inquired about the criteria used to determine whether bond insurance will be purchased and how reserve will be funded. Ms. Musselman responded that these questions are partly determined by mathematical computation. The inclusion of bond insurance reduced the yield in the bonds. However, Ms. Musselman indicated that investors are favorably disposed toward bond insurance and that insurance is competitively priced so that it is likely that insurance will be purchased.
In response to a question by Regent King, Mr. Hoon reviewed the S & A fee approval process, which is governed by statute. Mr. King asked that if the legislature were to abolish the S & A fee, would the University have any liability for the bonds. Bond Counsel Cynthia Weed answered this question stating that she believes that, by the legislature having authorized the pledging of these funds in support of bond payments, the legislature would not have the authority to impede a prior bond service commitment. She also pointed out that there is a reserve fund, and there is no pledge of appropriated funds inasmuch as these are revenue bonds, meaning that only revenues for the Recreation Center fees of S & A fees are pledged in support of the bonds.
Mr. Albrecht moved and Ms. Campbell recommended adoption of the resolution attached as Exhibit A and entitled ÒStudent Recreation Center Bond Resolution.Ó The motion carried unanimously.
Mr. Albrecht commented that as the chair of the Finance, Audit, and Capital Committee, over the last 18 months, Mr. Hoon has provided outstanding leadership; Ms. Musselman has provided very able professional advice protecting the interest of the University; and Mr. Royer's support has been very valuable.
ASWSU Vice President Steve Wymer addressed the Regents and talked about how excited the incoming freshmen are about this new facility. He also commented that the students feel they have had very helpful support from the President's Office and the Board in office and that the students have felt they are in complete control of this project.
The RegentsÕ meeting adjourned at 10:00 a.m.
Approved by the Board of Regents at its meeting
Held at the Lewis Alumni Centre, Pullman,
Washington, September 4, 1998.
President, Board of Regents
Secretary, Board of Regents