Date: 04/12/2012
Final
Consideration of Use of Unspent COP Proceeds
COMMITTEE ON CAPITAL DEVELOPMENT
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08:05 AM -- Consideration of Use of Unspent COP Proceeds
The committee was called to order. A quorum was present. The committee entered into a discussion regarding how to allocate unspent proceeds from the sale of Certificates of Participation (COPs), which resulted from cost savings from a number of higher education capital projects that were constructed using COP proceeds. Committee members received updated information on three higher education capital projects, which were the next projects in line for funding pursuant to House Joint Resolution 08-1042: (1) Adams State College Richardson Hall Life Safety Renovation (Attachment A); (2) Fort Lewis College Berndt Hall Reconstruction -- Geoscience, Physics, Engineering (Attachment B); and (3) Northeastern Junior College ES French Hall Renovation (Attachment C). These projects were re-phased by the higher education institutions to align with the projected amount of available unspent COP proceeds. Committee members also received a memorandum outlining the position of the Colorado Commission on Higher Education on the matter (Attachment D). Ms. Kori Donaldson, Legislative Council Staff, briefed the committee on the information contained in attachments A through C about the re-phased projects. Ms. Esther van Mourik, Office of Legislative Legal Services, briefed the committee on the options available to the General Assembly for allocating the unspent COP proceeds, and the steps that would be required to allow the legislature to use these moneys on capital projects. Ms. van Mourik clarified the financing arrangements for funding the higher education projects pursuant to House Joint Resolution 08-1042, and responded to questions regarding the potential for depositing the unspent COP proceeds in the Capital Construction Fund for future use.
08:18 AM
Ms. van Mourik responded to questions regarding the options available to the General Assembly for using the unspent COP proceeds. Mr. Henry Sobanet, Director, Office of State Planning and Budgeting (OSPB), provided OSPB's perspective on how to use the unspent COP proceeds. Discussion ensued regarding the potential for using the unspent proceeds to fund controlled maintenance projects, and the need to run legislation to formalize the spending of the unspent proceeds. Discussion followed regarding volatility in the availability of Federal Mineral Lease moneys, which are used to back the COPs, and how this affects spending on higher education capital projects. Mr. Brett Johnson, Deputy Treasurer, discussed the ramifications of using the unspent COP proceeds to buy down the COP principal.
08:31 AM
Discussion returned to the potential for using the unspent COP proceeds on controlled maintenance projects. Mr. Johnson responded to questions about the collateral being used for the COPs. Discussion ensued regarding the ramifications of comingling higher education institution moneys with COP proceeds to fund capital construction projects at the institutions when there are project savings. Mr. Johnson briefed the committee on the types of funding contributed by higher education institutions to match the COP proceeds to fund capital projects at the institutions.
08:44 AM
Discussion continued regarding the potential for partially refunding the cash matches provided by higher education institutions for COP-funded capital projects when there are project savings. The committee discussed how to move forward with the issue of allocating the unspent COP proceeds.