A Special Meeting of the
Indianapolis Local Public Improvement Bond Bank (“Bond Bank”) convened at 12:00
p.m., Monday, April 16, 2007 at the City-County Building, 200 East Washington
Street, Suite 224, Indianapolis, Indiana, pursuant to notice given in
accordance with IC 5-14-1.5. Board Chair
Mary Chandler called the meeting to order after determining that a quorum was
present.
Ms. Chandler asked for a motion to
approve the minutes from March
19, 2007 and March
21, 2007. Mr. Jacob Hall commented that in the March 19 minutes
there was no indication for the approval of the 1998A Refunding. Ms. Monica
Durrett stated that it would be corrected.
Mr. Jacob Hall made the motion to approve the amended minutes, seconded
by Mr. Thomas O’Donnell upon the above referenced addition. All voted in favor
and the motion passed.
Chair Chandler first welcomed Mr. Kyle Willis (Bond
Bank) back after an extended leave. Mr. Willis stated that it was good to be back.
The first order of business was
Resolution No. 4 – Ameriplex Refunding. Mr. Brad Hartz gave a brief summery of
the proposed financing . He stated the resolution is a refunding of the 2000 D
Series bonds for the Airport industrial economic development area. He stated
that the Bond Bank will issue $9.55 million dollars to refund approximately
$8.935 million in outstanding bonds. The bonds will mature from 2011 to 2021
and based on the February 20th financial information, savings from
the refunding will be approximately $332,000 which will go back to the
qualified entities’for capital projects. The Bond Bank will try and match the
debt service closely with the existing debt service.
Chandler asked for a motion to approve
Resolution No. 4. Ms. DeVonne Richburg-Pollard made the motion to approve,
seconded by Mr. Tom O’Donnell. All voted in favor and the motion passed.
The next order of business was
Resolution No. 6 – Airport Swap. Ms. Katie Aeschliman gave a brief summary
stating that the resolution authorizes the Bond Bank to negotiate new swap
terms with UBS Investment Bank which will change the existing swap that will hedge
the 2008 variable rate bond issuance by the Indianapolis Airport Authority. She
then explained that the Bond Bank is layering a basis swap to the existing 75% of LIBOR Swap. This will result in an effective reduction of the
interest rate of approximately 70 basis points on an annual basis. Ms.
Aeschliman asked if there were any questions. Ms. Barbara A. Lawrence asked if
it was all related to the Midfield Terminal Project. Mr. Jerry Wise (Airport)
stated that that was correct; it is the 2008 financing for the Midfield
project.
Chair Chandler asked for a motion to approve
Resolution No. 6. Mr. Thomas O’Donnell made the motion to approve, seconded by
Mr. Jacob Hall. All members, with the
exception of Ms. DeVonne Richburg Pollard who recused herself , voted in favor
and the motion passed.
The next order of business was
resolution No. 5 – Fuel Hedge. Ms. Katie Aeschliman gave a brief summary
explaining the fuel hedge and its savings for the City of Indianapolis’ gas and diesel budget. Ms.
Aeschliman stated that the Bond Bank has been working with the City to find a
way to hedge their exposure to the volatile fuel market. The Bond Bank proposes
to enter into one or more series of financial swaps with the underlying hedge based on the commodity. The hedges will be based
on a NYMEX scale. Ms. Aeschliman then stated that the Bond Bank has retained
Maverick Energy Control team to help with the process. She then introduced John
Righeimer and Russ Paluch from Maverick Energy Consulting. She then explained
the process of the issuance of Requests for Proposals (RFP’s) and that the Bond
Bank asked for proposals from ten banks, received seven and five of those are
financial institutions are worthy transacting with as a counterparty. The Bond
Bank is currently going through the approval process as well as the negotiation
process with the Banks for documents needed to transact.
Ms. Aeschliman then stated that the
Bond Bank has already been before the City County Council Public Works
Committee on April 5, 2007.
The Board of Public Works adopted their resolution in early March 2007. She
went on to explained the transaction to the Board mentioning that the Public
Works Committee wanted to put a sunset date on the agreement. This typically
means that the Bond Bank cannot transact anymore after December 31, 2008 without additional
approval for the Bond Bank Board as well as the Council. Chair Chandler asked why the
limitation was imposed. Ms. Aeschliman stated that it is looked at as an
evaluation point and there is also the chance that the program would not
continue on after that point. It will give everyone a chance to evaluate how
the hedge program will work. The resolution is being heard by the Full City
County Council tonight for final adoption.
Chair Chandler asked what would be the Bond Bank’s
involvement in the hedge and the cost associated with the program. Ms.
Aeschliman explained the process to the Board and stated that they are still in
the process of getting the figures. Chair Chandler
then asked Mr. Righeimer if Maverick had other municipal clients. He stated
that they did not have any with regards to fuel, but the City of Elkhart and Fort
Wayne they have as clients but they use natural gas.
He then stated that their company has school districts that are diesel clients.
He also stated that the fuel piece is somewhat new mostly due to the volatility
over the last few years where there can be upwards of a change of 30% for fuel.
Chair Chandler then stated that it looks like a
great idea. Ms. Lawrence added that one of her concerns was the Department of
Public Works which is very fuel driven. She also mentioned that Mr. Robert
Clifford (City Controller) came up the idea and the fact that it would bring
some stability to the budget which is a very good thing.
Chair Chandler asked for a motion to approve
Resolution No.5. Ms. DeVonne Richburg Pollard made the motion to approve,
seconded by Mr. Thomas O’Donnell. All voted in favor and the motion passed.
The next order of business was
Resolution No. 7 – Voting machines. Ms. Aeschliman gave a brief summary of the
resolution. She stated that in 2003 the Bond Bank issued a 1-year note which
had the ability to be rolled up to 5 times over a five-year period. This was
for the purchase of 615 new voting machines; the total cost was $11.1 million.
The resolution authorizes the Bond Bank to roll the note until 2008; with a
balance of $7.15 million and Chase Bank will hold the note. Chair Chandler asked why the
Bond Bank chose to roll the note. Ms. Aeschliman stated that ultimately the
Clerk and Controller’s office are working through the long-term plan for paying
off the note which includes some federal grant dollars. Mr. Jacob Hall asked if
there would be other federal dollars coming in. Ms. Aeschliman stated that the
Office of Corporation Counsel, the Clerks office and the Controller’s office
are involved in the process of finding that out.
Chair Chandler asked for a motion to approve
Resolution No. 7. Mr. Jacob Hall made the motion to approve, seconded by Ms.
DeVonne Richburg Pollard. All voted in favor and the motion passed.
The next order of business was the 2007
– 1st Quarter Budget report. Ms. Laurie Canatsey gave a brief
summary of the budget. She explained some line items that looked to exceed
prior projections and explained why. She also informed the Board that other
items that appeared to exceed the budget were items that were paid out for the
year in advance. Mr. Hall made mention that the Bond Bank fees were down. Ms.
Canatsey stated that several of the fees had not yet been collected.
The next order of business was the
Union Station update. Mr. Brad Hartz gave a brief summary stating that one of the
tenants, El Sol, had recently vacated and the Bond Bank is working toward
getting that spaced leased again. The newer tenant, Brothers, is soon to be up
and running. He then stated that the City would soon take control of the
chillers and the guaranteed energy savings contract work that was done at Union
Station. Mr. Thomas O’Donnell asked if El Sol had gone out-of-business. Mr.
Hartz stated that El Sol was in bankruptcy and had run into some issues.
The next order of business was the
discussion of the Hotel Project update. Ms. Lawrence explained that the letter of
intent was reached on January 10, 2007. She noted that one of the important concerns was to the design elements of the
project and to incorporating the design element into the project agreement.
With the issue of trying to accomplish that.
Ms. Lawrence then discussed the
rating of the City from the ratings agency. The Bond Bank has been in meetings
with each of the ratings agencies over the past six months. The outcome of
those meetings is the City’s overall credit rating. Indianapolis is one of a handful of cities with a population of 500,000 or
more that enjoy a triple-A rating. The ratings not only give the City better
interest rates and more consideration from local partners, but it is also a
prestige that is to be coveted. Ms. Lawrence then stated that Standard &
Poor’s affirmed the City’s triple-A rating, which is the good news portion, the
bad news is they are looking more closely at other factors that effect The
City’s overall fiscal state, which is the operating budget, revenues, and
assessed values. She then stated that Standard & Poor’s has given the City
consideration for their consolidation, legislative efforts and addressed the
City’s ongoing fiscal issues; particularly regarding the unfunded pension
obligation. Standard & Poor’s considers those things worthy of note and has
put the City on a credit watch status. The credit watch is a sign that a
downgrade could be imminent. Therefore, the City is working hard during the
legislative session for some local flexibility in terms of revenues and dealing
with a few points that will help the Bond Bank use bonding authority for
pension obligation bonds as well as continuing the efforts on the consolidation.
She stated that she just wanted the Board aware that those considerations could
be out there with Fitch Ratings and Moody’s as well. Overall, there is the
remaining negative outlook and the fact that the City is on a credit watch.
Chair Chandler stated that the City’s effort to
address the pension liability is viewed favorably since they are working toward
rectifying the issue. Ms. Lawrence stated that it was and added that there is two
or three legislative proposals efforts along with the City’s that will give
local government more flexibility in terms of their revenue stream and the
other is a crime package which will allocate certain new revenues for crime
fighting initiatives, the third element is a piece of legislation that will
provide flexibility to issue pension obligation. Chair Chandler asked that if the City was allowed
more flexibility on the pension when does she think it will come before the
Board. Ms. Lawrence stated that it would possibly happen late 2007 or early
2008. They went on to discuss the different scenarios of the issues.
Chair Chandler asked for a motion to adjourn. Mr.
Jacob Hall made the motion, seconded by Ms. DeVonne Richburg Pollard. All voted
in favor and the motion passed.
Chair Chandler
adjourned the meeting at 12:31p.m.