COMMITTEE ON CAPITAL DEVELOPMENT
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11:25 AM -- Discussion About Draft Committee Bills for 2009 Session
The chairman decided to postpone this discussion until the committee's next scheduled meeting on January 13.
11:27 AM -- Overview of November 6, 2008, Certificates of Participation Issuance
Ms. Kori Donaldson, Legislative Council Staff, provided an overview of a memorandum prepared by Legislative Council Staff about the federal mineral lease (FML) certificates of participation (COPs) issued on November 6, 2008, which was distributed to the committee (see Attachment F). Ms. Donaldson highlighted the terms and conditions of the COP issuance, stating that the total cost was $325.5 million, including $202.3 million in principal and $123.2 million interest. She referred to Attachment A of the memorandum, which lists the projects and their respective costs, including FML funds and institutional cash matches. Ms. Donaldson briefly summarized steps that were taken after the COPs were authorized by legislation. She referred to Attachment B of the memorandum, which lists the buildings that were selected to serve as collateral for the COP issuance. Ms. Donaldson noted that Wells Fargo Bank is serving as both the lessor and the trustee for the COPs, and spoke about the accounting process that will be used by the State Treasure's office. She referred the committee to Table 2 on page 4 of the memorandum, which shows the COP payment schedule for the next 10 years. She also noted the Higher Education Lease-Purchase Cash Fund and how it will be used. She concluded by stating that projects must complete expenditures by November 6, 2011, pursuant to federal requirements associated with this financing mechanism and structure.
The chairman invited Ms. Lisa Esgar, Deputy Director of the Office of State Planning and Budgeting, to come to the table to make additional comments about the FML COPs. Ms. Esgar stated that OSPB updated its FML forecast in December and communicated the latest numbers to the CDC in a December 10 letter. She stated that OSPB's December 20 forecast reflects the same data as the December 10 letter. She indicated that the Higher Education Revenues Fund is expected to have a balance of $600,000 by June 30, 2009, after making the first two COP payments in FY 2008-09 and FY 2009-10. Ms. Esgar emphasized caution with spending FML revenue during the next two years and recommended not proceeding with a second COP for the time being because FML revenue is a volatile revenue source. Ms. Esgar state that the Higher Education Maintenance and Reserve Fund balance is expected to be lower than the projected $1.9 million previously estimated.
Representative Riesberg thanked Ms. Donaldson for the memorandum and her presentation. Ms. Esgar responded to questions from the committee regarding whether or not there would be sufficient FML revenue in the future to make the scheduled COP payments. She also responded to questions about the statutorily authorized uses of the principal of the Higher Education Maintenance and Reserve Fund.
11:41 AM -- Discussion About Future Meeting Dates
Ms. Donaldson told the committee that some FY 2009-10 cash-funded requests will be ready to be heard at the next meeting on January 13, 2009.
The committee adjourned.