October 9, 1996

The State Finance Committee met in special meeting after notice duly given to the press and radio of Thurston County.

Present:

Daniel K Grimm, State Treasurer Joel Pritchard, Lieutenant Governor

Also Present:

Grant Fredricks, Department of General Administration Ray Bell, University of Puget Sound John Fricke, Office of Financial Management Douglas Chin, Department of General Administration Susan Musselman, Susan D. Musselman, Inc. Martin Reynoso, Office of the State Treasurer Svein Braseth, Office of the State Treasurer Kay L. King, Office of the State Treasurer Ned Palmer, Seafirst Jill Hanson Reinmatz, Preston Gates & Ellis Beth Frothingham, Bogle & Gates Dean Torkelson, Seattle Northwest Securities Rusty Fallis, Office of the Attorneys General Scott Sheeran, Office of the State Treasurer Patricia Richards, Public Deposit Protection Commission Tim Kerr, Office of the State Treasurer Lynn Rodeheaver, Office of the State Treasurer Vicki Cox, Office of the State Treasurer

The Chairman called the Public Deposit Protection Commission to order first then following the Commission’s agenda, adjourned the meeting and called the State Finance Committee to order.  He stated the first order of business for the State Finance Committee was adoption of the minutes of the August 29, 1996, meeting.

Lt. Governor Pritchard moved that the minutes for the meeting of August 29, 1996, be approved.  Chairman Grimm seconded the motion.  The motion passed and the minutes were adopted.

Mr. Sheeran spoke to proposed Resolution No. 847.  The resolution accepts the offer of Seafirst, on behalf of the underwriters, to purchase approximately $65,502,000 aggregate accreted value at maturity State of Washington General Obligation College Savings Bonds, Series 1996 authorized by the Committee under Resolution No. 842, and Chapter 12, Laws of 1993, 1st Special Session and Chapter 17, Laws of 1995, 2nd Special Session, and authorizing the execution of a bond purchase contract.  Mr. Sheeran stated the bond sale was successful and included a long order period from September 24th to October 3rd.  That period had been characterized by a stable to improving market condition.  On Friday, October 4th, a repricing was undertaken which improved the rates for the state and resulted in the rescheduling of the October 7th committee meeting.  This delay gave the underwriters time to contact investors to inform them of the final price.  Mr. Sheeran continued by saying the Bonds were rated AA by Moodys, Fitch and Standard & Poors.  Standard & Poors also gave the state a positive outlook which could lead to a rating upgrade next year.  The proposal from the underwriters has a true interest cost of 5.785% and will raise proceeds of approximately $32,945,000.

Mr. Torkelson discussed his hand-out.  He noted that this years interest rates (5.78%) were fluctuating at about the same level as they were a year ago (5.63%) but this year’s sale was the third largest of College Savings Bonds.  He noted the underwriters did a “bang-up job” of selling the bonds.

Mr. Palmer said that Seafirst would provide to the committee a preliminary report showing the total tickets sold, average size, geographical sales, etc.  He also noted that when the underwriters contacted the customers to see if they were still interested in a slightly smaller yield, very few orders were lost.  Chairman Grimm questioned what maturity rates were the most popular.  Mr. Palmer stated there were allot of individuals buying 5, 10, 15 year maturities, but this year investors bought a disproportionate number of 17 year maturities.  Chairman Grimm thanked Mr. Palmer, Seafirst and all of the co-managers for their successful efforts.  Mr. Palmer noted that the Bond sale had been advertised in 13 papers across the state and there was a good geographical spread of Bonds sold. 

Mr. Sheeran presented proposed Resolution No. 847 to the committee.

Resolution No. 847  accepting the offer of the underwriters to purchase $65,502,000 more or less, aggregate accreted value at maturity, State of Washington General Obligation College Savings Bonds, Series 1996, authorized by Chapter 12, Laws of 1993, 1st Special Session and Chapter 17, Laws of 1995, 2nd Special Session.

Lieutenant Governor Pritchard moved the adoption of Resolution No. 847.  Chairman Grimm seconded the motion and the resolution was adopted.

Ms. Rodeheaver spoke to proposed Resolution No. 848.  The resolution approves a financing lease, pursuant to RCW 39.94, to finance the acquisition and renovation of a Co-location Center in Tacoma by the Department of General Administration, authorizing the State Treasurer to approve terms and conditions and to execute and deliver a certificate purchase contract and authorizing the issuance of $16.3 million, more or less, certificates of participation.  The Department of General Administration has requested that the Committee authorize the real estate project.  In support of its request, the Department of General Administration has obtained the approval of the Office of Financial Management for the financial plan for the acquisition and renovation of two buildings and an adjacent parking facility in downtown Tacoma.  The financial plan has been presented to the Senate Ways and Means Committee and the House Capital Budget Committee in accordance with the referenced section of the Capital Budget.  Ms. Rodeheaver continued by saying that some of the upgrades and tenant improvements to the building would be done immediately, with others being done delayed pending the termination of a current lease of one of the buildings to the Seattle University Law School.  This lease is expected to end in August 1999; however, the school may exercise an option to extend its lease until August, 2001.  The Certificates of Participation would be issued this year and are being considered for competitive bid.

Ms. Rodeheaver presented proposed Resolution No. 848 to the committee.

Resolution No. 848  authorizing the execution of a financing contract for $8,000,000 more or less plus issuance expenses and required reserves for the Department of General Administration (Tacoma Co-Location Project), authorized by Sec. 802(1), Chapter 16, Laws of 1995, 2nd Special Session, and RCW 39.94.

Lieutenant Governor Pritchard moved the adoption of Resolution No. 848.  Chairman Grimm seconded the motion and the resolution was adopted.

Mr. Sheeran mentioned Resolution 844 (which authorized the sale of $66,950,000 State of Washington General Obligation Bonds, Housing Trust Fund) taxable bonds would be sold by Merrill Lynch (selected as lead underwriter through an RFP process), as a fixed rate sale and would likely occur in November.  He and Mr. Kerr would be meeting with the Community, Trade & Economic Development staff and bond counsel to discuss funding and timing issues.  A resolution accepting the offer to purchase the Bonds would be before the committee in November.  Mr. Sheeran then gave an update on the variable rate bonds.  He said the two variable rate issues had saved the state $1.9 million.

There being nothing further to come before the committee, the meeting was adjourned at 9:27 AM.

	STATE FINANCE COMMITTEE STATE OF WASHINGTON   _______________________________________ Daniel K Grimm, State Treasurer & Chairman   ________________________________________ Mike Lowry, Governor   ________________________________________ Joel Pritchard, Lieutenant Governor
________________________________________ N. Scott Sheeran Deputy State Treasurer & Recording Officer