Meeting Minutes
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State Finance Committee Meeting Minutes |
           
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August 17, 1998The State Finance Committee met in special meeting after notice duly given to the press and radio of Thurston County.
Chairman Murphy called the meeting to order. Governor Locke moved the minutes for the June 10, 1998, meeting be approved. Chairman Murphy seconded the motion. It was noted that Tim Kerr’s name was listed twice under the attendees on page one. The correction was approved. The motion passed and the minutes were adopted as corrected. Mr. Kerr introduced proposed Resolution No. 878 providing for the award of sale of $180,000,000 state of Washington Various Purpose General Obligation Bonds, Series 1999A, authorized by Chapters 39.42 and 39.53 RCW; Chapter 14, Laws of 1989, 1st Special Session, as amended by Chapter 15, Laws of 1990, 1st Executive Session; Chapter 17, Laws of 1995, 2nd Special Session; and Chapter 456, Laws of 1997, Regular Session. Mr. Kerr indicated this proposed sale of bonds is part of the state’s seasonal capital construction financing. The proceeds of these bonds would be used to finance numerous capital projects currently underway or to reimburse construction accounts for work already completed. Issue size has been developed through an agency cash flow survey conducted by Treasury staff. The bonds are scheduled to be sold competitively on September 9. In the current interest rate environment, a true interest cost (TIC) of under 5 percent is anticipated. Mr. Kerr indicated that Dan Gottlieb was the bond counsel and was present if there were any questions for him. Mr. Kerr presented proposed Resolution No. 878 to the committee.
Resolution No. 878 provides for the award of sale of $180,000,000 state of Washington Various Purpose General Obligation Bonds, Series 1999A, authorized by Chapters 39.42 and 39.53 RCW; Chapter 14, Laws of 1989, 1st Special Session, as amended by Chapter 15, Laws of 1990, 1st Executive Session; Chapter 17, Laws of 1995, 2nd Special Session; and Chapter 456, Laws of 1997, Regular Session. Governor Locke moved adoption of Resolution No. 878. Lt. Governor Owen seconded the motion and the resolution was adopted. Mr. Kerr introduced proposed Resolution No. 879 to the committee. He stated the lease purchase program was expanded to include local governments entities and was approved by the legislature during the last session. This expansion will avail local government agencies the benefit of the state’s financing economies of scale, low tax exempt interest rates, standardized documentation, and a benchmark against which all other financing can be readily measured. The application date for local government equipment financing is September 1, 1998, with the local government real estate project financing authorized to begin July 1, 2000. Mr. Kerr explained the selection of representatives from local government finance professional organizations to constitute a local government lease/purchase program advisory group. A presentation was made to the advisory group in June to elicit feedback about how program features would be viewed “on the ground” in city halls, courthouses, fire halls, and school districts throughout the state. Mr. Kerr introduced Allan Martin who will be directing the program. It was decided that a recognizable “brand” name was needed to use in marketing the program. LOCAL was chosen and means Local Option Capital Asset Lending. Unlike the lease/purchase program for state agencies, the LOCAL program is an option for use by local governments. Mr. Kerr introduced Faith Pettis as certificate counsel to answer any questions. Mr. Kerr discussed the provisions in the resolution which protects the state’s credit in case of default on the part of the local government entity. Local governments would be signing financial contracts with the Treasurer’s Office (OST) so that no matter what happens to the equipment, they are responsible to pay. Provisions allow the State Treasurer to withhold or intercept local government revenue collected by the state, such as sales and use tax, motor vehicle fuel taxes, criminal justice assistance taxes, or motor vehicle excise taxes (with some restrictions) to fulfill local agency debt service requirements. OST staff conferred with Moody’s Investors Service to work out document language describing the contingent payment plan to establish the LOCAL credit rating. Chairman Murphy stated he didn’t anticipate any problems with the local governments, but the rating agencies wanted the provisions to prevent negative effects on the state’s own credit rating. Mr. Kerr presented proposed Resolution No. 879 to the committee.
Resolution No. 879 authorizes a master financing contract up to $100,000,000 and implementing the Local Option Capital Asset Lending (LOCAL) program in accordance with RCW 39.94, as amended. Governor Locke moved adoption of Resolution No. 879. Lt. Governor Owen seconded the motion and the resolution was adopted. Mr. Kerr introduced Susan Musselman, advisor for the lease/purchase programs. Chairman Murphy gave credit to the local government advisory group for getting the word out to 1,400 local entities. Mr. Kerr stated staff would continue to monitor the market to obtain the lowest rate possible for the upcoming refunding bond sales. Mr. Kerr stated that Mr. Gottlieb was state bond counsel on the current stadium issues and staff was also working with the Governor’s and Office of Financial Management’s staff. There being nothing further to come before the committee, the meeting was adjourned at 9:20 AM.
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