MINUTES OF

A Special Meeting of the Indianapolis Local Public Improvement Bond Bank (“Bond Bank”) convened at 12:00 noon, Monday, October 20, 2008 in the City-County Building, 200 East Washington Street, Suite 224, 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 September 15, 2008 minutes. Ms. Williams made the motion to approve, seconded by Mr. Christian. All voted in favor and the motion passed.

Mr. Taylor briefly provided an overview of the current credit markets. He stated that in the past four weeks the municipal market had been all but frozen and the market has both institutional and retail buyers fleeing to cash and Treasuries. The liquidity in the secondary market with regard to variable rate bonds and the interest rate resets have also been affected as a result. There were questions from members of the Board regarding the Bond Bank’s variable interest rates on Waterworks, TIF district and airport bonds that were issued earlier in the year. Mr. Taylor stated that with the ill-liquid market and the variable rate resets, the bonds have fallen to the banks serving as the standby bond purchase providers. Many bonds are deemed “bank bonds” and held by these banks. He then explained that there recently has been a shift in the market and retail investors have stepped in.

He provided the Board with a handout of the “AA” yield-curve reflecting the 1st, 2^nd and 3^rd quarters of the year. He explained the differences in the tracking of the expected yields and what investors are seeking in terms of return. Mr. Taylor then stated that he and Mr. Kintner are working on developing a comprehensive retail investor program in order to identify perspective buyers for the tax warrant notes on the retail side. He and Mr. Kintner would like to market heavily to retail purchasers. He then stated that the City is in a good position, has market access and anticipates having no problems placing the notes.

Ms. Williams asked if the bond insurance on the bonds was necessary. Mr. Taylor stated that the question would be addressed during the discussion of the Metropolitan Emergency Communications Agency bond resolution. Mr. House added that if a larger issuance can be carried out in the current market, it is a positive note. Mr. Taylor explained the retail market in more detail, at the request of Mr. House.

Next to be presented was Resolution No. 10 - Metropolitan Emergency Communications Agency bonds. Mr. Kintner gave an overview of the resolution. He stated that there is currently a $33 million bond anticipation note outstanding which is due at the end of 2008. The resolution authorizes the refunding of the $33 million note as well as some potential new projects that MECA may want to finance, with a total amount not to exceed $45 million. The bonds are general obligations bonds, which have already been approved by the City-County Council and the State, as well as MECA. He then stated that the resolution was revised to allow for the issuance of not only the bonds, but also bond anticipation notes, which is in conjunction with what had been previously discussed regarding the market. The term should not exceed 25-years; however, Mr. Kintner anticipates it will not exceed 15-years. He then mentioned that Don Banning and Greg Roembke were present from MECA and could answer any questions regarding the projects that have been financed.

Mr. House asked when the current BAN was issued. Mr. Kintner stated that it was December 28, 2007, which was possibly due to some of the previous notes maturing. Mr. Roembke gave a brief overview of the MECA projects and explained the main emphasis, which is the replacement of Marion County’s emergency and public safety communications system. He explained the difficulty in maintaining the infrastructure and the user equipment. He stated that he has been working with the Bond Bank and City-County Council in an effort to find different ways of replacing the system. MECA currently has a contract with Motorola to replace the voice system and their components at the cost of approximately $38 million. Additionally, the MECA Board has approved other public safety projects, which include replacing the emergency siren systems in Marion County, Indianapolis Metropolitan Police Department’s surveillance systems, and emergency CAD computers at all of the work sites throughout Marion County. He then stated that there is approximately $61 million in projects that have been approved or in the process of being completed and is estimated to cost the taxpayers of Marion County $37 million. There have been federal grants as well as the negotiation of a banding agreement with Sprint Nextel to eliminate confusion in the emergency responder radio sector. The agreement cost benefit was approximately $9.5 million for MECA. The deal with Motorola is nearing the final stage.

Mr. Banning expressed the thanks of the MECA Board and Mr. Raney, MECA’s Director. He feels they have built a state-of-the-art radio system as a result of the note proceeds. He also stated that some vital public safety systems have been implemented as a result. Ms. Williams stated that she understands the current bonds were approved by the previous City-County Council, but she wanted to know if due to the recent cuts in the City’s budget and the recent changes the State Legislature made to property taxes, what impact, if any, do the bonds have on the budget. Mr. Taylor stated that the Controller’s Office has made certain that the bond issue and the supporting property tax levy proposed fit within the existing authorized funding for MECA. There was earlier this year a reaffirmation by the MECA Board for their commitment to the project. Mr. Taylor also stated that he has been working closely with the Public Safety Director Scott Newman, Fire Chief Sanford and Police Chief Spears for their full support and commitment. Mr. House added that the resolution falls in line with Mayor Ballard’s commitment to public safety as his number one priority.

Ms. Williams asked if the 8% interest rate reflected was correct. Mr. Kintner stated that it was not to exceed the 8% interest shown in the resolution. Dawn Tabler and Tom Coverick, KeyBank, were present to address questions. Mr. Coverick explained the various dollar scenarios KeyBank has considered in order to achieve the best outcome due to the unstable equity market. He explained the short-term financing and why it would be an option. He then stated that they wanted to make sure that with the amount of supply that is coming into the market, there would be no pricing penalty on long-term debt. Ms. Tabler stated that the plan is be to ready to go with any scenario that would best benefit MECA. Mr. Taylor asked Ms. Tabler and Mr. Coverick to further explain some of their marketing thoughts and strategies. Mr. Coverick stated that if KeyBank were to go to the market at the current date, they would most likely choose a retail distribution in the range of 70-80%. KeyBank is looking at the Bond Bank’s top bondholders currently. Mr. Coverick feels that that bondholders are holding the Bond Bank’s debt would more likely be the ones to buy Bond Bank bonds going forward. Mr. Taylor asked Mr. Coverick his thoughts regarding bond insurance. Mr. Coverick stated that KeyBank would not advise to have bond insurance at this time, since it would be an additional cost to issue the bonds.

Ms. Williams asked the difference in the interest rates for the bonds, which would be approximately 5.25% - 5.35%, as opposed to a bond anticipation note issuance. Mr. Coverick stated that from the capital market side, you could anticipate 3.5% - 4% for a note that would mature in six to eight months. Ms. Tabler added that the other possibility would be KeyBank purchasing the note. Mr. Coverick then stated that he and Ms. Tabler are working with Mr. Taylor in order to determine which strategy will work best from a coverage perspective as well as a financial perspective. Mr. Taylor stated that with the option of a bond anticipation note, that there will be some additional issuance costs involved.

Ms. Williams asked if the resolution should be revised to omit the option of the insurance. Mr. House stated that it would not be advisable. Although the insurance market is questionable now, it is hard to determine what the insurance market will be like at the time of issuance. He then stated that it only allows multiple options once the actual issuance takes place. Mr. Kintner added that it allows the Bond Bank to go forward without coming to the Board again if things change with the financing.

Mr. House asked for a motion to approve Resolution No. 10, MECA Bonds. Mr. Miller made the motion to approve, seconded by Mr. Christian. All voted in favor and the motion passed.

Next to be discussed was the Airport Authority bonds. Mr. Jerry Wise gave a brief summary regarding the performance of the airport’s existing debt. In June 2008, the airport issued the last portion of debt to finance the new airport terminal. The Airport Authority currently has $1.25 billion in outstanding debt, and $900 million of the debt is fixed-rate bonds. The remaining $350 million is variable rate debt backed by liquidity facilities. There is also $350 million in swaps that change the variable-rate to a fixed-rate. The 75% LIBOR swap remains conservative. He explained that in reality when the bonds were first marketed it was a turbulent market environment and they had approximately 20 basis points of negative carry through the September 8, 2008 reset of the bonds. Due to the turbulent market the 20 basis points increased to 450 basis points in the weeks following the closing Lehman Bros. announcement. This affects the airport’s cash position, although the airport is currently in a very strong position. The airport has the capital they needed to finance the new airport project, but also enough to cover all the existing capital projects undertaken. From the operations side, they carry 9-14 months of cash on-hand for operating expenses. Lastly, Mr. Wise discussed debt service, rates, charges, and cash flow for capital projects. He then stated that they are not in a position where any decisions have to be made regarding the finances of the airport. Mr. Taylor thanked Mr. Wise and pointed out that his colleagues Ms. Stone and Mr. Kish were present.

Next Ms. Tamara Zahn, IDI Indianapolis Downtown Inc., gave a brief background of IDI and its purpose, stating that IDI are a public-private partnership. She then stated that the Bond Bank and the City of Indianapolis have been very important in the partnership. They have contracts to conduct city services, work to protect the investments made downtown. IDI provides oversight and help to integrate new projects into the downtown area. Ms. Williams asked what IDI’s connection with the Bond Bank is. Ms. Zahn stated that the Bond Bank’s contract is for the strategic oversight and focus leadership to supplement the contracts that IDI has in other departments for its core business. Ms. Zahn then offered additional information for the Board members at their leisure. Mr. Taylor added that the Bond Bank provides $600,000 annually of IDI’s funding, Mr. Taylor asked what other City departments contribute to IDI. Ms. Zahn stated that the Department of Public Works and the Department of Metropolitan provide financial assistance, and IDI has contract with the Parks Department, but under the new 2009 budget they will no longer have a contract with them.

The next order of business was the projected 2008 budget discussion. Mr. Taylor gave a brief update on the status of the Bond Bank’s fourth-quarter. Mr. Taylor explained both the revenue side and the expenditure side. He stated that the Bond Bank anticipates being in-line with the budget forecast, with the exception of the interest earnings which were small. Mr. Taylor commended Ms. Canatsey on her diligence in keeping expenses in-line with of the operations of the Bond Bank. Mr. House stated that although professional services were the Bond Bank’s largest increase, it was money well spent. Mr. Taylor explained that it was due to the trust work that was necessary for the audit. Mr. Taylor then stated that he would ask Ms. Mary Hauser who handles the day-to-day operations for Union Station to be present at the next Bond Bank meeting to give the board an update. Mr. Taylor informed the Board that the Mayor’s Office staff being budgeted through the Bond Bank has ceased beginning in 2009. Mr. Taylor then stated that the budget numbers are being presented in draft form and he will come before the board in November or December 2008 for final approval. He also mentioned that the fee the Bond Bank charges qualified entities has been lowered to 10 basis points.

Mr. Taylor then introduced the Bond Bank’s newest colleague, Mr. Brad Busse, who comes joins the staff as Trust Account Manager. He comes to the Bond Bank from Katz, Sapper & Miller. Mr. Taylor then thanked the rest of the staff for their hard work and listed the different upcoming projects the Bond Bank will be involved. Mr. Taylor also let the Board know that the Bond Bank is in talks with two trustees to consider retaining their services.

Mr. House asked if we could look at another larger room for our next meeting. Mr. Taylor asked the Board if they would be willing to schedule the next meeting for November 10, 2008. All members agreed. Mr. House asked for a motion to adjourn. Mr. Miller made the motion to adjourn, seconded by Mr. Carr. All voted in favor and the motion passed.

Mr. House adjourned the meeting at 1:05 p.m.