I. Call to Order
Chairperson Engel called the special meeting of the Board of Regents to order at 1:02 p.m.
II. Roll Call
Present were: *Mr. Dick, Mr. Engel, *Mr. Etzel, *Mr. Felker, *Mrs. Lee, *Mrs. Parks and *Mr. Roth.
* Participated in meeting via telephone conference call.
Chairperson Engel reported that he, Vice Chair Etzel and Vice President for Administration and Treasurer, Wanda Hill, met as a special committee working with the bond counsel and financial advisor on the revenue bond proposal for financing the transitional housing project, and following a presentation by bond counsel and financial advisor, gave them authority to execute the bond sale subject to ratification of the Board.
Regent Parks moved, and Regent Lee seconded, a motion to a ratify the action of the Chair and Vice Chair in authorizing the execution of the sale of bonds. Motion passed unanimously.
The University's financial advisor, John McArthur, reported that when meeting on Monday with the Chair and Vice Chair he anticipated an average rate over the twenty year life of the bonds of 3.77 percent. He reported the average rate actually improved to 3.74 over the life of the issue. He said last week a school district issued a full governmental obligation bond at 3.73 percent, the lowest rate in forty years on a G.O. bond issue. He said he is very pleased with the results and indicates he believes they are phenomenal.
Vice Chair Etzel reported that during the meeting on Monday he shared his concerns about the potential for a reduction in the Fed rate which he said is recognized to be very high, maybe as early as the end of this month, but that he was advised that even were the rate to be lowered by 25-50 basis points, the bond rates have already factored that into consideration. He said, however, that it might still be possible that the rates could go lower, notwithstanding the existing forty year low in municipal bond rates. He said he hoped the timing of the project was not detrimental to the institution being able to secure the lower rate funding.
Mayor Felker reported he had recently been visiting with a lender concerning refinancing his home loan and that individual indicated the projected decrease in the Fed rate "doesn't look that promising."
In response to a query from Regent Dick concerning the effect of a decrease in the Fed rate over the rates we have, Mr. McArthur indicated even a decrease in the Fed rate would not have a great effect as any time the Federal Reserve Board gives any indication it is making a reduction in rates, the cuts are anticipated in the bond market in advance of the potential action. He said were the Federal Reserve Board not to act, or to increase the rates rather than decrease or hold constant, that could have a disastrous effect and the rates could go the opposite way very quickly.
In response to a question from Regent Etzel about how much difference a decrease in the Fed rate by 25 basis points would have over the life of the bond in interest payments, Mr. McArthur indicated it would mean a decrease in the debt service of approximately $18,000.
The University's Bond Counsel, Don Jensen, reported that Fahnestock was proposing a bond purchase agreement. It was moved by Regent Dick, and seconded by Regent Felker, to approve the bond purchase agreement by and between the University and Fahnestock. Motion passed unanimously.
Bond Counsel Jensen reported there was a resolution to be adopted for the project. Regent Dick moved, and Regent Roth seconded, a motion to adopt "A resolution of the Board of Regents of Washburn University, Shawnee County, Kansas, authorizing and directing the issuance of building revenue bonds, Series 2003, in the principal sum of $7,500,000 for the purpose of providing funds to pay the cost of acquiring, equipping, constructing and furnishing certain building improvements, and doing all things necessary and incidental thereto; prescribing the form and details of said revenue bonds; providing for the collection, segregation and application of funds and revenues of the buildings and other lawfully available funds of the University for the purposes authorized by law; and paying the principal of and interest on said bonds, under the authority of K.S.A. 76-6a13 et. seq., as amended and supplemented." Motion passed unanimously.
Chairperson Engel, noting there was no further business to come before the Board, declared the meeting adjourned at 1:17 p.m.
Kenneth P. Hackler
Secretary, Board of Regents