MINUTES OF

THE INDIANAPOLIS LOCAL PUBLIC IMPROVEMENT BOND BANK

 

Minutes of the Special Meeting of the Board of Directors

 

January 5, 2009

 

 

MEMBERS PRESENT:           Briane House                                       

            Fred Miller

                                                Justin Christian

                                               Jim Carr

MEMBERS ABSENT:           Sahara Williams

 

                                                BOND BANK PRESENT:

                                    Kevin Taylor

                                    Deron Kintner

                                    Brad Busse

                                    Dario Requiz

           

Monica Durrett

Laurie Canatsey

Kyle Willis

 

                                                OTHERS PRESENT:

            Dawn Tabler, Key Bank                                   Angie Steeno, Crowe Chizek

            Tom Guevara, Crowe Chizek                           Brendon Shaughnessy, Indy Star

            Eric Green, Backstrom, McCarley                    Sharon Karst, Bank NY Mellon

            John Kirkwood, Kreig DeVault                        Sue Beesley, Bingham McHale

            Curt Fritsch, CRF Group                                  Bob Kocher, Bank NY Mellon

            Tamara Zahn, IDI                                             Terry Leffew, Raymond James

            Jim Merten, City Securities

 

 

 

            A Special Meeting of the Indianapolis Local Public Improvement Bond Bank (“Bond Bank”) convened at 2:00 p.m., Monday, January 5, 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. Taylor first gave the Board a brief overview of Resolution No.1 – Waterworks Notes and provided the Board with a handout. He gave a detailed explanation of the outstanding Waterworks bonds. He stated that there is a weekly reset for the variable-rate bonds and that the standby bond purchase provider is DEPFA Bank. He then explained that both DEPFA and MBIA, the bond insurer on the variable-rate bonds, have credit problems that caused their ratings to be downgraded, which has affected the reset market. This measure has caused the bond to fail tenders, allowing accelerated amortization of the bonds being held by DEPFA.

 

            Mr. Kintner continued by stating that once the bonds fell to the standby purchase provider, they were going to defer the bond; however, it was brought to the attention of the Bond Bank late in December that the reset would not occur as anticipated. Mr. Kintner then stated that it did not pose an immediate problem; however, timing was a factor. He then stated that Regions Bank stepped in and was able to provide the Bond Bank with a loan to meet the $15 million payment. He also stated that the Bond Bank, which would still continue negotiations with DEPFA Bank, and rather than make the $15 million payment, they have agreed to hold the $15 million as collateral for the payment. Once the bonds are refunded, DEPFA will return the $15 million back to the Bond Bank, the Bond Bank will use the proceeds to pay back Regions Bank. The resolution authorizes a short-term $15 million loan with Regions Bank. Mr. Taylor stated that short of an outright forbearance of the acceleration, the arrangement is the most favorable. He then explained how the swap payments would affect the swap outstanding which would cost an additional $3-4 million currently. By creating the escrow and holding the dollars in an account without having to refund a portion of the bonds, it will avoid the need to address the size of the swap contract.

 

            Mr. House asked if the payment that was due January 2, 2009 was $14 million. Mr. Kintner stated that the loan from Regions was $15 million; however, the loan amount needed is $14.1 million. Mr. House then asked if it was a collateral arrangement. Mr. Taylor stated that it is and explained the process and informed the Board that the loan is at the Bond Bank level and will not affect the Waterworks Departments balance sheet. Mr. Taylor then stated that he and Mr. Kintner have spent time with the interim director of the Waterworks Department and the Waterworks board members through conference calls. He also mentioned that Ms. Brenda Horn, bond counsel, was present.

            Mr. Taylor then stated that Mr. Ken Gibbs, CEO, First Albany Bank, an affiliate of DEPFA, has been working with the Bond Bank on the process. Mr. Christian asked what changed to where the Bond Bank felt the payment would have been made. Mr. Kintner explained that DEPFA informed him that they were going through similar measures with numerous issuers experiencing the same situation. Mr. House added the bond market in general is suffering and no one is getting any breaks. Mr. House asked for a motion to approve the resolution. Mr. Christian made the motion, seconded by Mr. Miller. All voted in favor and the motion passed.

 

            Before closing, Mr. Kintner informed the Board of upcoming bond issues: the first-half 2009 tax warrant borrowing, and an authorization for SRF borrowing for the Sanitary District.

 

            Mr. House adjourned the meeting at 12:20 p.m.