MINUTES OF

OTHERS PRESENT:

Daryl Mergenthal, BNY Mellon Sandra Mowell, Citizen

Kim Wilson, UMB Bank Molly Williams, IDI Curt Fritch, CRF Group Tamara Zahn, IDI

Hans Steck, Bingham McHale Bob Kocher, Bank of NY Mellon

Brian Shaw, Hilliard Lyons Jay Ryals, Fifth Third Bank

Jim Merten, City Securities Clayton Graham, Graham & Hurley

Tom Guevara, Crowe Horwath Angie Steeno, Crowe Horwath

Eric Green, Backstrom, McCarley & Berry Terry Leffew, Raymond James

Jeff Reed, OUCC Diana Hamilton, Sycamore Advisors

Ed Kaufmann, OUCC Ann Forey, US Bank

Kim Wilson, UMB Bank Lynn Potosky, Bose McKinney

Julie Bolling, Kreig DeVault

A Regular Meeting of the Indianapolis Local Public Improvement Bond Bank (“Bond Bank”) convened at 12:00 noon, Monday, August 31, 2009 in the City-County Building, 200 East Washington Street, Suite 107, Indianapolis, Indiana, pursuant to notice given in accordance with IC 5-14-1.5. Mr. House called the meeting to order after determining that a quorum was present.

Mr. House asked for the approval of the minutes from July 20, 2009. Mr. Miller made the motion to approve, seconded by Ms. Williams. All voted in favor and the motion passed.

Mr. House first asked Mr. Kintner to give a brief overview of the Swap and Derivative Policy. Mr. Kintner explained that it was drafted with the assistance of the Bond Bank’s swap advisor, Lamont Financial Services, who has extensive knowledge and many years of experience with swaps and derivatives. He also stated that the advisor assisted the Bond Bank with swap agreements on the recent Waterworks Refunding bonds and Consolidated TIF Refunding bonds.

Mr. Kintner continued to explain that the policy was very comprehensive due to all that the Bond Bank has experienced relative to swaps and derivatives in the last 18 months. He explained that there has never been a policy in place for the Bond Bank and felt that, for an issuer the size of the Bond Bank, it was necessary to cover a broad spectrum in policy. He pointed out some of the specific provisions of the policy, including one being that there would only be a swap entered into upon the recommendation of the Qualified Entity. He then mentioned other key elements of the agreement.

Mr. House stated that the 20% cap mentioned was a good benchmark. Mr. Kintner stated that the ratings agencies recommend no more than 20% of a debt portfolio be variable-rate. Mr. Kintner then stated that the policy also has clear and comprehensive monitoring and reporting requirements for swaps. The Bond Bank will monitor the swaps monthly and report annually to the Board or as often as the Board requests.

Mr. Taylor commended Mr. Kintner for his hard work on the agreement. Mr. Miller asked about the mandatory language in the agreement. Mr. Kintner stated that there is language in the policy that allows for flexibility. Mr. Miller asked about the cover page discriptive language regarding the management and support of Indianapolis Downtown Inc. Mr. Kintner stated that the Bond Bank does not manage IDI and will revise accordingly. Ms. Williams asked about the critical nature of getting the agreement approved at this particular time. Mr. Kintner stated that it wasn’t critical; however, there is a need to get the policy in place soon. Mr. House stated that he did not see a problem with adopting the policy today. Mr. Kintner added that there was a lot of research, resources and thought that went into formulating the policy. Ms. Williams stated that the she just needed more time to review the policy.

Mr. House moved to approve the swap and derivative policy, seconded by Mr. Miller. All voted in favor with the exception of Ms. Williams, who abstained from the vote.

Mr. Taylor then updated the Board on the CIB and some of the challenges it is facing. He stated that one of the challenges is the need to address the ratings downgrade on three debt service reserve surety policies, two of which are insured by MBIA and the third by AMBAC.

Mr. Taylor distributed a handout to the Board with a summary of the three CIB-realted sureties that total $26.3 million. He explained that due to the downgrade of the bond insurers, the sureties no longer meet the rating requirements contained in the bond indenture. Therefore, the CIB is facing a deadline of September 9, 2009 to resolve the surety issues, or face a default under the indenture. The Bond Bank has been working toward a solution that would include the State’s moral obligation pledge to replenish the reserve. The Bond Bank and the CIB are being asked to enter into an appropriation agreement in order to have the IFA’s moral obligation pledge, which would likely meet the requirements in the indenture. Mr. Taylor explained that he wanted to bring the information to the Board and make them aware of what measures were being taken on behalf of the Bond Bank. He stated that he would keep the Board updated as the situation develops.

Mr. House stated that it is an unfortunate situation and asked if there were any avenues of recourse against the bond insurers. Mr. Taylor stated that there is not any recourse to the bond insurers because they did not covenant or pledge to maintain their AAA credit ratings.

Mr. Miller asked if the Bond Bank would have a legal opinion on the Bond Bank’s authority to enter into the agreement. Mr. Taylor stated that the Bond Bank could enter into an agreement as part of the Bond Bank’s authorizing statutes. Mr. Kintner stated that there would be a legal opinion issued by the IFA counsel stating that everything is valid and binding. Mr. Kintner stated that the Bond Bank would not have its own opinion; however, he could provide an opinion if needed.

Mr. House authorized Mr. Kintner to obtain an opinion with the assistance of any counsel he chooses. Ms. Williams seconded the authorization.

Mr. Taylor updated the Board on an article that was in the Indianapolis Business Journal regarding the rating downgrade to AA+ from AAA for the City of Indianapolis from Fitch Ratings. He stated that he and the City Controller, David Reynolds, submitted a formal appeal. However, even with the new information and explanations provided, Fitch did not change their findings.

There were no other questions, Mr. House asked for a motion to adjourn. Ms. Williams made the motion to adjourn, seconded by Mr. Miller. All voted in favor and the motion passed. The meeting was adjourned at 12:25p.m.