May 26, 1999

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

Present:

Michael J. Murphy, State Treasurer Gary Locke, Governor

Also Present:

Jeanne Cushman, Office of the Attorney General Tim Kerr, Office of the State Treasurer Dan Gottlieb, Gottlieb Fisher & Andrews PLLC Nancy Adams, Office of the State Treasurer Nick Cockrell, Department of General Administration, DPD Martin Reynoso, Office of the State Treasurer Jim Hoghaug, Department of General Administration, DPD Svein Braseth, Office of the State Treasurer Rob Shelley, Seattle-Northwest Securities Chris Extine, Office of the State Treasurer Chris Morrow, Seattle-Northwest Securities Faith Li Pettis, Preston Gates & Ellis LLP Susan Musselman, Susan D. Musselman, Inc. Susan Melvin, Office of the State Treasurer Bud Coffey, First & Goal, Inc. Harvey C. Childs, Office of Financial Management Robin Appleford, First & Goal, Inc. Jay Kirkevold, Office of the State Treasurer

Chairman Murphy called the meeting to order.

Chairman Murphy moved the minutes for the May 11, 1999, meeting be approved.  Governor Locke seconded the motion.  The motion passed and the minutes were adopted.

Mr. Kerr introduced proposed Resolution No. 892 providing for award of sale of up to $36,120,000 (aggregate accreted value at maturity) state of Washington General Obligation Bonds, Series 1999S-3.  Mr. Kerr stated there were seven bids for the Committee’s consideration today.  All bids had been received electronically, and all the bidders had provided Surebid surety in lieu of a good faith check.  The TIC bids for the record were:  JP Morgan Securities Inc., 5.5419 percent; Prudential Securities Inc., 5.5119 percent; Merrill Lynch, 5.4844 percent; Salomon Smith Barney, 5.4554 percent; Morgan Stanley Dean Witter, 5.4536 percent; Dain Rauscher, 5.4402 percent; and Lehman Brothers, 5.4393 percent.  The apparent winning bidder is Lehman Brothers.  Mr. Kerr noted that bond counsel had reviewed all bids to ensure compliance with bidding rules.  Proceeds from this issue will be deposited in an account with an escrow bank consistent with the stadium finance plan to pay the deferred sales tax on the project.  Those payments will be made from the years 2008 to 2017.  The winning bidder for the selection of the escrow agent was U.S. Bank Trust.  When the money arrives on June 10, it will be immediately deposited with U.S. Bank Trust and will start earning interest for the deferred sales tax.

Chairman Murphy mentioned that he was in the process of speaking with King County officials.  King County has adopted a tax level that is greater than what the state can survive under the Internal Revenue Service code.  Chairman Murphy said he will be asking King County in the near future to reduce the tax on the stadium admissions from 10 percent to 5 percent and to reduce the stadium parking tax from 10 percent to 1 percent.  If the state has too much “bad money” coming in from these sources, these bonds will have to become taxable bonds.  From a compliance perspective, the state does not want to entertain that option.

Mr. Kerr presented proposed Resolution No. 892 to the committee.

Resolution No. 892 providing for award of sale of up to $36,120,000 (aggregate accreted value at maturity) state of Washington General Obligation Bonds, Series 1999S-3, authorized by Chapter 220, Laws of 1997, and Chapter 39.42 RCW, amending Resolution Nos. 881, 888, and 891, and authorizing the execution of an escrow agreement.

Chairman Murphy moved to accept the TIC bid of 5.4393 percent from Lehman Brothers and to adopt Resolution No. 892.  Governor Locke seconded the motion and the resolution was adopted.

Chairman Murphy asked Mr. Kerr to introduce proposed Resolution No. 893 authorizing the issuance and sale of up to $8,804,000 state of Washington Certificates of Participation for the Department of General Administration “Yakima Property” Acquisition.

Mr. Kerr stated proceeds from the COP sale will be used to reimburse the Washington State Department of General Administration for the acquisition and purchase of the 99,000 square foot office building and parking lot in the city of Yakima currently occupied by the Department of Social and Heath Services.  Financing includes upgrades to the heating and ventilation system and tenant improvements.

Mr. Kerr said that timing issues involved with the transaction make it necessary that the Department of General Administration purchase the building with agency funds.  COP funds will be used to reimburse the agency and are scheduled to be sold by competitive bid on June 22, 1999.

Mr. Kerr presented proposed Resolution No. 893 to the committee.

Resolution No. 893 authorizing the issuance and sale of up to $8,804,000 state of Washington Certificates of Participation (Department of General Administration “Yakima Property” Acquisition) plus financing costs and required reserves pursuant to Section 702(1)(a), Chapter 235, Laws of 1997, as amended by Section 53(1)(a), Chapter 347, Laws of 1998, and Chapter 39.94 RCW, as amended.

Governor Locke moved adoption of Resolution No. 893.  Chairman Murphy seconded the motion and the resolution was adopted.

There being nothing further to come before the committee, the meeting was adjourned at 9:15 AM

	STATE FINANCE COMMITTEE STATE OF WASHINGTON   _______________________________________ Michael J. Murphy, State Treasurer & Chairman   ________________________________________ Gary Locke, Governor   ________________________________________ Brad Owen, Lieutenant Governor
________________________________________ Tim Kerr Deputy State Treasurer & Secretary