November 8, 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 Mike Lowry, Governor Joel Pritchard, Lieutenant Governor

Also Present:

George M. Mack, Foster Pepper & Shefelman Susan Musselman, Susan D. Musselman Inc. Dean Torkelson, Seattle Northwest Securities Rusty Fallis, Attorney General’s Office Scott Sheeran, State Treasurer’s Office Tim Kerr, State Treasurer’s Office Patricia Richards, PDPC, State Treasurer’s Office Paul Kusakabe, WA State Convention & Trade Center Steve Beacon, State Treasurer’s Office Fred Eoff, Piper Jaffray Inc. Liz Records, U.S. Bank Lynn Rodeheaver, State Treasurer’s Office Martin Reynoso, State Treasurer’s Office Thomas R. Henderson, Office of Financial Management John Fricke, Office of Financial Management Gina B. Terry, Office of Financial Management Ann Daley, State Treasurer’s Office Vicki Cox, State Treasurer’s Office

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 October 9, 1996, meeting.

Lt. Governor Pritchard moved that the minutes for the meeting of October 9, 1996, be approved.  Governor Lowry seconded the motion.  The motion passed and the minutes were adopted.

Mr. Kerr spoke to proposed Resolution No. 849.  He indicated the financing was for a maximum authorization of up to $120,000,000.  He stated the purpose of the proposed financing is the restructuring of outstanding debt to improve overall cashflow over the next ten years for the State Trade and Convention Center (STC).  The Convention Center Corporation has requested this restructuring in a letter dated October 3, 1996.  Although the Corporation indicates in the October 3rd letter that it would have requested the restructuring in any case to improve its cash flow and reduce Treasury borrowing, the restructuring is expected to improve Convention Center finances as it embarks on the expansion project authorized by the 1995 Legislature.

Mr. Kerr continued by saying there are various alternatives to restructuring the Series AT-5 bonds to meet Convention Center objectives.  The final recommendation to be made to the Committee will represent the best economic fit for the entire package of new money COP financing and the restructuring.  Financing documents and an authorizing resolution for the Convention Center’s COP project will be presented to the Committee later in November.  A negotiated financing proposal for the restructuring would be presented to the Committee for its consideration in mid-December.

Mr. Sheeran presented proposed Resolution No. 849 to the committee.

Resolution No. 849  authorizes the negotiated issuance and sale of up to $120,000,000 fully accreted value at maturity State of Washington General Obligation Refunding Bonds, Series R-97A (State Trade and Convention Center Zero Coupon Bonds), authorized by Chapters 39.42 and 39.53 RCW.

Governor Lowry moved the adoption of Resolution No. 849.  Lieutenant Governor Pritchard seconded the motion and the resolution was adopted.

Mr. Sheeran stated as a result of improvements in the financial markets, the series R-87B Motor Vehicle Fuel Tax General Obligation Bonds, dated 12/1/86, have been identified as a series which exceeds the savings targets for current refunding bonds set forth in the Committee’s Debt Issuance Policies.  Bonds can be refunded on a current basis when they have passed their optional call dates and can be called immediately.  This opportunity for an immediate call means that incremental savings are lost or wasted each day that the old bonds remain outstanding.  Current present value savings estimates are $1.2 million which is the equivalent of 3.87% of the refunding par amount.  The policy target is 3%.

Mr. Sheeran continued by saying the committee has authorized the issuance and sale of bonds to refund the Series R-87B bonds, together with a number of other bonds, under Resolution No. 818, adopted March 29, 1995.  It is proposed that the current refunding bonds be combined in a negotiated sale with the taxable housing trust fund bonds authorized in August and presented to the Committee for consideration within two weeks.  A senior manager, Merrill Lynch, has been selected through a competitive pricing process and the taxable financing is well on its way to being prepared for entry into the market.  Taking action now, assuming current market rates, rather than waiting until the next scheduled new money sale in February of 1997, will result in additional savings of $128,000 on a present value basis.  Since these bonds have already been authorized for refunding under Resolution No. 818, no formal action of the committee is required at this time.  However, when the refunding bonds are sold, the committee will be presented with a resolution authorizing the sale to the underwriters.  It is expected that the refunding bonds along with the taxable bonds for the Housing Trust Fund will be brought to market November 20th.

Mr. Sheeran summarized additional committee action necessary for the next few months.

There being nothing further to come before the committee, the meeting was adjourned at 8:56 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