Joint Committee Committee on Capital Development (04/12/2012)

Final
STAFF SUMMARY OF MEETING

COMMITTEE ON CAPITAL DEVELOPMENT

Date:	04/12/2012	ATTENDANCE

Time:	08:05 AM to 09:17 AM	Brown	X
		Renfroe	*
Place:	SCR 356	Schwartz	X
		Vigil	X
This Meeting was called to order by		Sonnenberg	X
	Senator Bacon	Bacon	X

This Report was prepared by
	Bo Pogue
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Consideration of Use of Unspent COP Proceeds Consideration of OIT Controlled Maintenance Legislation		Witness Testimony and/or Committee Discussion Only Drafting of Legislation Approved

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.

08:50 AM -- Consideration of Office of Information Technology Controlled Maintenance Legislation

Mr. Sobanet led a discussion about the potential for running committee legislation to allow the Governor's Office of Information Technology (OIT) to seek controlled maintenance funding for information technology infrastructure. Committee members received proposed statutory language to allow OIT to seek controlled maintenance funding (Attachment E), and a summary of OIT's recent risk assessment of the state's information technology infrastructure (Attachment F). Mr. Todd Olson, Chief Financial Officer for OIT, made a presentation about the merits of committing controlled maintenance funds to information technology infrastructure, and briefed the committee on the information in Attachment F. Discussion ensued regarding how OIT controlled maintenance requests would integrate with the committee's, and the Office of the State Architect's, process for prioritizing and recommending funding for controlled maintenance projects.

09:01 AM

Discussion continued regarding how OIT controlled maintenance projects would be integrated with the current controlled maintenance process. Ms. van Mourik raised concerns about the proposed legislation language contained in Attachment E, using the Colorado Financial Reporting System (COFRS) Modernization project as an example. Mr. Sobanet addressed these concerns. Discussion ensued regarding how to move forward with draft legislation to address the proposal. Discussion followed regarding the merits of creating a category for information technology controlled maintenance, and the potential for such moneys to be misspent. Mr. Larry Friedberg, State Architect, provided background on spending for controlled maintenance, and how it differs from capital construction. He spoke in favor of maintaining the current level of flexibility for spending controlled maintenance moneys, and explained how creating a separate category for OIT controlled maintenance requests may affect this flexibility.


BILL:	Office of Information Technology
TIME:	09:14:05 AM
MOVED:	Brown
MOTION:	Moved to authorize the Office of Legislative Legal Services to draft legislation about the classification of information technology projects as capital construction, and their eligibility for controlled maintenance funding. The motion passed on a vote of 6-0.
SECONDED:
		VOTE
	Brown	Yes
	Renfroe	Yes
	Schwartz	Yes
	Vigil	Yes
	Sonnenberg	Yes
	Bacon	Yes

Final YES: 6 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: PASS

09:15 AM

Discussion ensued regarding the authorization of additional moneys for controlled maintenance by the House of Representatives during its deliberations on House Bill 12-1335, the Long Bill. Representative Vigil suggested tailoring the proposed committee legislation to allow for adaptation to future changes in technology.

09:17 AM

The committee adjourned.