MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF THE TEXAS PUBLIC FINANCE AUTHORITY May 17, 2000

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1 MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF THE TEXAS PUBLIC FINANCE AUTHORITY May 17, 2000 The Board of Directors (the "Board") of the Texas Public Finance Authority (the "Authority") convened in open meeting, notice duly posted pursuant to law (a copy of which notice is attached hereto as Exhibit "A") at 11:37 A.M., Wednesday, May 17, 2000, William P. Clements Building, Committee Room 5, 300 West 15th Street, Austin, Texas. Present were: Mr. Dan Branch, Chairman; Mr. Dan Serna, Vice Chairman; Ms. Cynthia L. Meyer, Secretary; Mr. John Kerr, Board Member and Mr. Bert H.L. Mijares, Board Member. Representing the Authority's staff were: Ms. Kimberly Edwards, Executive Director, Ms. Judith Porras, General Counsel; Ms. Jeanine Barron and Ms. Marce Snyder. Present in their designated capacities were the following persons: Mike Bartolotta, First Southwest; Kay Watson, Walton Johnson; Tom Oppenheim, Morgan Keegan & Co., Jorge Rodriguez, Coastal Securities; Paul Braden, Delgado, Acosta, Braden & Jones; Jorge A. Garza, Salomon Smith Barney; Robbi J. Jones, SBK-Brooks Investment Corp; Debi Jones, Estrada Hinojosa & Co.; David Potter, U.S. Bancorp Piper Jaffray; Nancy Marstiller and Sandy Kaiser, Texas Water Development Board; Curtis V. Flowers, Loop Capital Markets; Keith Richard, Siebert Brandford Shank; Curt Shelmire, Morgan Stanley Dean Witter; Damon Smith, J P Morgan; Art Morales and Rosanne Dolguins, Ramirez & Co., Karin Werness, BancOne Capital Markets; Mike O Hara, PaineWebber, and Cheryl Allen, Southwest Securities. Item 1: Call to Order. Mr. Branch called the meeting to order at 11:37 A.M. 1

2 Item 2: Approval of minutes of the April 19, 2000 Board meeting. Mr. Branch called for any corrections or modifications to the minutes of the April 19, 2000 Board meeting. There were none. Mr. Mijares moved for approval. Ms. Meyer seconded. Motion passed unanimously. Item 8: Other Business/Staff Report. Pricing Report on Texas Public Finance Authority Building Revenue Bonds (General Services Commission Project) Series 2000A. Mr. Art Morales and Ms. Roseanne Dolgins provided a brief overview of the market conditions and the sale of the Series 2000A bonds. Ms. Dolgins commended the co-managers for their support and thanked the Board for the opportunity to serve in the role of senior manager. Mr. Bartolotta commented that Ramirez & Co. did an excellent job considering the turbulent market. Ms. Meyer, who was a member of the pricing committee, added her appreciation for the efforts of Ramirez & Co. Mr. Branch thanked Mr. Bartolotta and the staff of First Southwest for their guidance and assistance as well. Item 3: Consider and select members of an underwriting syndicate for the negotiated sale of revenue bonds to finance a third phase of the State History Museum project for the State Preservation Board. Ms. Edwards said that at the April meeting, the Board approved a request for financing, selected a negotiated sale, and named Salomon Smith Barney as the Senior Underwriter for the $30,000,000 Revenue Bonds to be issued on behalf of the State Preservation Board. Today, the Board is requested to name additional members of the underwriting syndicate. Ms. Edwards and the Financial Advisors recommended the following firms to serve as co-managers: Bear Stearns and Company; Dain Rauscher; Estrada Hinojosa & Co., Inc.; Ramirez & Co., and SBK-Brooks Investment Corporation. The recommendation was based on recognizing firms who demonstrated good performance in previous TPFA pricings and giving pool members who had not previously participated in TPFA sales an opportunity to demonstrate performance. Ms. Meyer moved to accept staff s recommendation. Mr. Serna seconded. Motion passed unanimously. Item 4: Review of the General Services Commission s rule amendments relating to Historically Underutilized Businesses and their participation in state contracts. Ms. Edwards reported that information regarding GSC s new HUB rules was previously provided to Board members for their review. The rule changes will have an impact on the HUB Business Plan in 2

3 TPFA s strategic plan. Ms. Porras pointed out substantive changes affecting certified HUB eligibility; namely: minority or women owners must be residents of Texas; the firm must have a principal place of business in Texas; and the individual owners must be economically disadvantaged rather than socially disadvantaged. GSC has defined economically disadvantaged as any firm that has not achieved GSC s HUB graduation standards. Agencies are required to make a good faith effort to assist HUBs in receiving a portion of the total value of all contracts the agency expects to award in a fiscal year, in accordance with GSC rules. Ms. Porras said that almost all of TPFA s contracts are classified as Other Services for which the GSC HUB participation goal is 33%. GSC also published a second set of rules pertaining to subcontracting. For any contract of $100,000 or more, the agency is required to determine whether the contract provides subcontracting opportunities. The Authority s contracts for financial advisor, bond counsel, arbitrage computation services and bond sales will exceed this threshold but probably do not provide any subcontracting opportunities. Regarding contracts to sell bonds, the Board s policies are to include HUBs and or minority/women owned firms in negotiated underwriting syndicates and to require bidders to make a good faith effort to include HUB and/or minority/women owned firms in competitive bidding syndicates. The syndicate members are not subcontractors, but each is directly responsible to the Authority. A discussion ensued regarding additional GSC requirements for agencies with appropriations or budgets of $10 million or more, including HUB Coordinators and HUB outreach efforts. Ms. Porras stated that the Authority should not be subject to these requirements as its actual operating budget is significantly less than $10 million. This point needs to be clarified with the GSC and the State Auditor s Office. Mr. Branch asked if any member of the audience would like to address the Board regarding the new HUB requirements. Ms. Marilu Rumfolo, Sun American Financial, a Texas based minority firm, stressed the importance of complying with legislation to allow Texas-based HUBs the opportunity to participate in all State of Texas business. Mr. Branch responded that the Board will uphold the state law and follow the GSC guidelines as mandated. Item 5: Consider and approve the Authority s Strategic Plan for fiscal years , in accordance with Texas Government Code, Chapter Ms. Edwards walked the Board through the Authority s Strategic Plan. She said the plan had been updated to reflect the new HUB rules, and pointed out two new items: the Customer Service Survey and the Information Resources Strategic Plan. She commented that the IR plan is difficult to predict over a five-year period due to the rapidly changing nature of the industry, but staff has attempted to identify specific needs. Strategic Plans are due June 1 to the Legislative Budget Board and the 3

4 Governor s Office of Budget and Planning. Mr. Kerr inquired about determining a more accurate goal for Cost of Issuance (COI) for bond issues. A brief discussion ensued regarding the size of the issue and a correlating COI. The Board suggested that staff request the COI performance measure be modified to incorporate a sliding scale target COI for the following par amounts: $10 million, $10-50 million, $ million, over $150 million. Mr. Serna inquired about previous concerns regarding the burden of arbitrage compliance and whether it placed any limitations of efficiently investing the State s bond funds. Mr. Bartolotta and Ms. Edwards answered that arbitrage compliance has become somewhat routine since the implementation of the regulations in 1989, although there are certain costs involved. TPFA s bond proceeds are invested by the Comptroller of Public Accounts in the State s cash pool, pursuant to the Public Funds Investment Act, and the arbitrage regulations are not overly restrictive or limiting in the Authority s earnings. Mr. Mijares moved to approve the Authority s Strategic Plan, subject to the changes discussed by the Board. Ms. Meyer seconded. Motion passed unanimously. Item 6: Consider and take appropriate action on procedures for contracting for arbitrage computation and related consulting services. Ms. Edwards advised the Board that TPFA has contracted with First Southwest Asset Management Company, an affiliate of First Southwest Company, for arbitrage compliance services since She said although staff is satisfied with the quality and cost of services provided, due to the length of time since the last RFP process for this service, staff recommends issuing an RFP for arbitrage compliance services. Ms. Edwards said RFP s will be mailed to firms listed as arbitrage providers in the Bond Buyer Red Book. Mr. Kerr inquired if there were any newly certified HUB firms under the new certification definitions not on the list otherwise eligible to bid on the contract. Ms. Edwards stated that staff will verify the list to ensure any eligible firm will be mailed the RFP. Mr. Serna suggested placing an ad in the Bond Buyer. Mr. Mijares suggested utilizing the Texas Marketplace ( a website sponsored by the Texas Department of Economic Development, for all State of Texas business. Following a brief discussion, Mr. Kerr moved to issue an RFP for arbitrage compliance services. Mr. Mijares seconded. Motion passed unanimously. Item 7: Consider and take appropriate action with respect to recommendations for interest rate swaps for the Authority s commercial paper programs. Ms. Edwards reminded Board members that John Daniel, Merrill Lynch, provided information at the April meeting proposing an interest rate swap for TPFA s commercial paper. Mr. John Craft, Merrill Lynch, presented an overview of the proposed swap. Ms. Edwards said that further discussions with 4

5 bond counsel are requested as the proposed swap may require Attorney General approval and perhaps amending the original Bond Resolution for commercial paper. She requested the Board s permission to request a fee quote for these services from Vinson & Elkins, who had previously done research on TPFA s ability to enter into a swap agreement. The Board concurred. Item 9: Executive Session to consider personnel matters in accordance with Texas Government Code An Executive Session was not required. Item 10: Adjourn. Meeting was adjourned at 1:34 P.M. The foregoing minutes were approved and passed by the Board of Directors on June 20, ATTACHMENT Posting Notice - Exhibit A Cynthia L. Meyer Secretary, Board of Directors 5

MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF THE TEXAS PUBLIC FINANCE AUTHORITY July 8, 2003

MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF THE TEXAS PUBLIC FINANCE AUTHORITY July 8, 2003 The Board of Directors (the "Board") of the Texas Public Finance Authority (the "Authority") convened