STATE OF CONNECTICUT HEALTH AND EDUCATIONAL FACILITIES AUTHORITY Minutes of Authority Board Meeting December 6, 2005 The State of Connecticut Health and Educational Facilities Authority met in session at the Authority s office at 10 Columbus Boulevard, Hartford, Connecticut at 2:15 p.m. on Tuesday, December 6, 2005. The meeting was called to order by of the Board of Directors of the Authority, and upon roll call those present and absent were as follows: PRESENT: ABSENT: John M. Biancamano Dori Taylor Sullivan, Ph.D. Michael J. Cicchetti (Rep. Honorable Robert L. Genuario) ALSO PRESENT: Richard D. Gray, Executive Director, Jeffrey A. Asher, Managing Director/CFO, David A. Williams, Managing Director, JoAnne Mackewicz, Manager, Accounting and Client Services, Michael Morris, Manager, New Business, Cynthia Peoples, Manager, Systems and Financial Analysis, Beverly Rivest, Administrative Assistant, Jennifer P. Smyth, Document Analyst, and David Wasch, Child Care Program Manager, of the Connecticut Health and Educational Facilities Authority John D. Yarbrough, Esq., Anne H. Zucker, Esq., Susan Lofaso Henebry, Associate, and Anne Peters, Partner, of Carmody & Torrance LLP Ben Cooper, Associate, and Christopher Valentino, Associate, of Lamont Financial Services Corporation
Joseph Moniz, Esq., and G. Allen Bass, Esq., of Lewis & Munday Jeanette Weldon, Vice President, of P.G. Corbin & Company Jeremy Bass, Consultant, and Emily Abrantes, Consultant, of Public Financial Management Marie Phelan, Esq., of Pullman & Comley LLC David M. Panico, Esq., of Robinson & Cole LLP Coleman H. Casey, Esq., of Shipman & Goodwin LLP The Notice of Regular Meeting was read and ordered spread upon the Minutes of this Meeting and filed for the record.
STATE OF CONNECTICUT HEALTH AND EDUCATIONAL FACILITIES AUTHORITY Minutes of Authority Board Meeting December 6, 2005 The Meeting was called to order by, at 2:15 p.m. Upon calling the Board meeting to order, Ms. Rubin offered condolences to the family and co-workers of Stephanie Gibson, Managing Director, of Public Financial Management. Ms. Gibson recently passed away after battling a long illness. Ms. Rubin commented that Ms. Gibson was not only a business associate but a friend to many of the staff of the Authority, and requested a moment of silence in her honor. MINUTES Mr. Biancamano moved approval of the Minutes of the Regular Meeting of the Board of Directors of October 25, 2005, which motion was seconded by Dr. Cibes. Upon roll call, the Ayes, Nays, and Abstentions, were as follows: AYES NAYS ABSTENTIONS John M. Biancamano None None Dori Taylor Sullivan, Ph.D. Ms. Rubin congratulated Staff for all of their efforts regarding the results of the state audit for FY 2004. Ms. Rubin commented that this is the seventh consecutive year that the Authority has received a clean audit with no adjustments and no VCLO recommendations. CURRENT AND PENDING BOND ISSUES Financing Forecast Report Mr. Morris presented the financing forecast as of November 21, 2005, noting that many of the issues on the schedule will be discussed today and a new proposed financing for Avon Old Farms School will be added next month. The School is seeking to finance an additional $6 $7 million for projects that were originally being considered during the School s previous financing. 1
Summary of CHEFA Financings Mr. Morris continued with the summary of CHEFA financings. Since the October 25, 2005 Board meeting, three bond issues have closed, Eastern Connecticut Health Network Issue, Series C; Fairfield University Issue, Series L-1 and L-2; and Loomis Chaffee Issue, Series F. Sales reports for these Issues will be presented later in the Board meeting. Interest Rate Report Mr. Williams reported on interest rate updates. Mr. Williams commented that since the last Board meeting, interest rates have risen moderately. Mr. Williams, referring to a market update graph distributed to all in attendance at the Board meeting, commented that due to a rally in the market on the day of the meeting, the 30 Year Treasury is currently at 4.69% compared to 4.63% at the October meeting. The Revenue Bond Index is up approximately 10 basis points at 5.23%. The 1-Month LIBOR is up approximately 29 basis points at 4.33% and the BMA index is up approximately 38 basis points at 2.98%. The 10 Year Government is at 4.49%, which compares to 4.55% on the market update graph and 4.41% in October. SALES REPORTS Eastern Connecticut Health Issue, Series C Ms. Weldon presented the sales report for the Eastern Connecticut Health Issue, Series C. Ms. Weldon reported that approximately $37 million in bonds were sold on October 28, 2005. The ECHN issue was a refunding transaction that occurred under volatile market conditions. The Senior Manager for the transaction was Advest, Inc. and the Issue received an AA rating from S&P based on bond insurance from Radian. The true interest cost was approximately 4.8945%. The sale was consistent with other Radian transactions which have ranged from 25 basis points in the short end to 50 basis points in the middle of the curve, to 35 basis points in the long end. As a result, the underwriter was able to improve yields two to three basis points throughout the scale. Eastern Connecticut Health Network achieved a net present value savings of $1,055,249, representing a 3.23% savings based on the refunded bonds. Fairfield University Issue, Series L-1 and L-2 Mr. Cooper presented the sales report for the Fairfield University Issue, Series L-1 and L-2. Mr. Cooper stated that the Issue was comprised of two series, Series L-1 for $47,725,000 and Series L-2 for $58,850,000. The Series L-1 Bonds were issued to advance refund a portion of the University s Series H, Series I and Series J Bonds. The financing achieved a present value savings of $5.9 million which equates to 6.3% of the refunded bonds. The University chose to hedge the bonds with a BMA swap which was priced on September 8, 2005 at 3.711%. The bonds are auction rate bonds with a weekly reset and insured by MBIA at a fee of 85 basis points. The auction agent will be Wilmington Trust Company 2
and J.P. Morgan Securities will act as the initial broker-dealer. The bonds were priced on November 2, 2005, the day after the Fed increased its target rates of 4%. The bonds were well received and priced at 2.55%, six basis points through the BMA index. Since that time, the bonds have traded strongly against BMA, between 13 basis points to 48 basis points through the BMA index. Loomis Chaffee School Issue, Series F Mr. Cooper continued with the sales report for the Loomis Chaffee School Issue, Series F. Mr. Cooper reported that the Loomis Chaffee School Issue, Series F, was a $34,135,000 transaction. The Series F bonds were issued to refund a portion of the School s outstanding Series C bonds and all of the Series D bonds. The transaction achieved a present value savings of $1.4 million, or 4.3% of refunded par amount. The School, being concerned with rising rates while preparing the fixed rate funding, entered into a LIBOR-based swap intended to cash settle when the bonds priced. On August 9, 2005, the School entered into the swap with Dexia Credit Local, an AA rated bank headquartered in Paris. The swap locked in the prevailing interest rates and present value savings at that time. The bonds priced on October 18, 2005. Rates did go up after entering into the swap on August 9, 2005, and the School was paid $10,000 from the counter party, which was applied to the refunding escrow. The Senior Manager for the Bonds priced on October 18, 2005, was First Albany, co-managed by Loop Capital, and insured by AMBAC for a fee of 73.2 basis points. The School carried a stand-alone rating of A3 by Moody s. The bonds were noncallable. The bonds were retail priority through 2016 and were sold mostly to retail buyers through 2020 with institutional buyers on the long end. First Albany took approximately $3 million in bonds into their stock to be sold throughout that week. PRELIMINARY STAFF MEMOS Hospital of St. Raphael EasyLoan Mr. Morris presented a memo regarding an EasyLoan transaction for the Hospital of St. Raphael (the Hospital ). This will be the Authority s first EasyLoan transaction. The Hospital intends to finance approximately $8.3 million for equipment which was included in its FY 2005 capital budget. Mr. Morris commented that Staff is not seeking approval at this Board meeting. Because the transaction is under $10 million, no formal approval is necessary from the Board. However, Staff had indicated that any transaction exceeding $5 million would be presented to the Board for review. Overall, the Hospital has approximately $92.8 million in debt outstanding, two-thirds of which is insured by AMBAC, which has been made aware of this new financing. There are a number of entities which comprise the Obligated Group; however, the Hospital will be the sole obligor for this transaction, pending approval from the lender. The Authority will serve solely as conduit for this transaction. Approximately 15 lease companies were sent a request for proposal, with 12 of those responding with a wide range in pricing of nearly 120 basis points. The low bidder was Chase with 5-year and 7-year options; the 5-year coming 3
in at 3.57% and the 7-year at 3.65%. The Hospital is still waiting for final credit approval from Chase. Mr. Morris went on to comment that, overall, there has been improvement in operations at the Hospital. The Hospital has experienced healthy operating margins during the past several fiscal years from FY 2002 to FY 2004. This followed three years of operating losses from FY 1999 to FY 2001. The additional debt should be manageable for the Hospital based on a debt service coverage ratio of 2.61x. Overall, the Hospital has been pleased with the bid process, although somewhat disappointed with some of the bids from lenders who had been pursuing the Hospital over the past year. Dr. Cibes posed a question regarding the reason the Foundation is being excluded from the Obligated Group for this transaction. Mr. Morris responded that the Foundation is being excluded from the Obligated Group due to the structure of the transaction. Ms. Rubin also commented that it is not a requirement for the EasyLoan program. STAFF MEMOS Danbury Hospital Issue, Series H & I Mr. Morris continued with the Danbury Hospital Issue, Series H & I. The Obligated Group for the Danbury Hospital Issue, Series H & I, will consist of the Danbury Hospital (the Hospital ) and the Development Fund. The Hospital is seeking to finance approximately $82 million. Danbury Hospital is licensed for 371 beds and currently staffs 248 beds. The Hospital has approximately $65.4 million in outstanding debt insured by either MBIA or AMBAC. AMBAC will insure the Series H issue for a fee of 87 basis points. At this time, Mr. Gray stated that the Danbury Hospital Issue is being proposed for Board approval based on a number of contingencies to be discussed later in the meeting. He went on to state that for a number of reasons that he will explain during the Yale-New Haven Hospital presentation, that the Authority is proposing different processes for the Board to evaluate Yale-New Haven Hospital. Mr. Gray also stated that this process is not a departure from the Authority s policies because there are complicating factors for both transactions. Ms. Rubin posed a question regarding what the issues are for the Danbury Hospital transaction to which Mr. Morris responded that the Hospital has secured bond insurance from AMBAC, but the commitment letter has not yet been signed. The signed letter is expected this week. Mr. Morris went on to explain that the second issue regarding the Danbury Hospital transaction is that the CON final approval is expected the week of December 12, 2005. Mr. Morris stated that although the Hospital does not have an underlying rating, it would probably be a strong A or A+ on its own. The structure of the Series H transaction is a fixed-rate transaction for approximately $42 million, half of which will be new money and the other half a refunding for Series E & F. Mr. Morris commented that the net present 4
value savings is rather low at approximately 2% or less, so the Hospital has yet to determine whether it will go forward with the refunding. The Series I portion of the issue is a variable-rate transaction for approximately $40 million and is all new money, with proceeds going toward the current project. The new money proceeds from the Series H and Series I transactions will include approximately $45 million for a new outpatient diagnostic building, medical offices and parking garage, and approximately $14 million to reimburse other recent capital expenditures. The underwriter for this transaction is UBS. Mr. Morris went on to comment that financially, the Hospital has experienced healthy operating margins for the past five years, including 4.9% in FY 2005, which is the highest level in the past five years. Excess margins are also favorable at 7.9% for FY 2005. Government payors account for less than 50% of patient revenues. The Hospital s liquidity position is favorable at $163.2 million in unrestricted cash and includes 187 days cash on hand. This falls between Moody s A and Aa medians. Cash to pro forma debt at 130% also falls between Moody s Aa and A medians. The Hospital s pro forma DSCR is strong at 5.25x. Danbury Hospital has a strong market share of 83.7% in its primary service area and 21% in its secondary service area. Competition is minimal from two area hospitals, New Milford Hospital, an 85-bed facility, and Putnam Hospital in New York, a 114-bed facility. The average daily census for Danbury Hospital has increased over the past 5 years, inpatient discharges have increased 14%, outpatient volume continues to increase, emergency room visits have increased 13%, and surgeries have increased 16% during the prior four years before declining slightly in FY 2005. The average length of stay has declined over the past 5 years from 4.5 days to 4.1 days. In FY 2004, the Hospital received approval to perform open heart surgeries and angioplasties. The Hospital is in the process of constructing a new outpatient surgery center in Ridgefield as a joint venture with community physicians which the Hospital believes will help increase its current market share. Staff is seeking final approval based on two contingencies: 1) a final documented signed letter of commitment from AMBAC, and 2) the receipt of CON approval. Ms. Rubin introduced Resolution 2005-18 (Danbury Hospital Issue, Series H & I, Authorizing), subject to the contingencies stated, which resolution was read and considered. Mr. Colangelo moved for adoption of Resolution 2005-18, which was seconded by Mr. Biancamano. 5
Upon roll call, the Ayes, Nays, and Abstentions, were as follows: AYES NAYS ABSTENTIONS John M. Biancamano None None Dori Taylor Sullivan, Ph.D. Fairfield University Issue, Series L-1 (Second Tranche) Mr. Morris presented the Staff memo for the Fairfield University Issue, Series L-1 (Second Tranche). Mr. Morris explained that the reason this series was named as such was due to the anticipation of the underwriter to add this bond issue to series L-1 which closed last week for marketing purposes. This issue for $10 million of new money will be used for renovations and new construction projects. The University has identified $21 million of projects including a co-generation plant. The structure of the financing will be a variable-rate transaction, auction rate securities and insured by MBIA with a premium of 85 basis points. The University currently has an underlying rating of A- by S&P and A3 by Moody s which was affirmed including the new money. The new money portion will be unhedged. Demand at the University has remained steady, with applications for the current academic year at 6,900, which is down from 7,600 two years ago. Mr. Morris addressed a question from Ms. Rubin at the previous Board meeting of October 25, 2005 regarding the number of applications received per available slots, stating it was a function of matriculation rather than acceptances. Matriculation has been historically low, and for Fall 2005 is 18.3%, which indicates strong competition in the northeast for Catholic universities. Financial operations at the University remain stable, with balanced budgets for over thirty years. For FY 2005, there has been a $7.2 million increase in net assets and a 5% operating margin. The University had a successful fundraising campaign with trustees pledging $50 million, and one trustee who donated $25 million. Mr. Morris commented that the only area of concern is the University s total amount of debt outstanding. Upon examination of the University s expendable resources to debt, the University is somewhat leveraged and is more in the BBB category than the A category. However, the debt should be manageable with continued operating surpluses and a favorable DSCR. Staff is recommending approval of the Fairfield University Issue, Series L-1 (Second Tranche). 6
Ms. Rubin introduced Resolution 2005-19 (Fairfield University Issue, Series L-1 (Second Tranche), Authorizing). Mr. Rifkin moved for adoption of Resolution 2005-19, which was seconded by Dr. Sullivan. Upon roll call, the Ayes, Nays, and Abstentions, were as follows: AYES NAYS ABSTENTIONS John M. Biancamano None None Dori Taylor Sullivan, Ph.D. Yale-New Haven Hospital Issue, Series I Mr. Gray began the discussion regarding the Yale-New Haven Hospital Issue, Series I. He stated that the mission of the Authority is to balance the needs of the clients, the investors and the public. With respect to Yale-New Haven Hospital, Mr. Gray stated that this has been an atypical transaction with respect to the public comments and concerns which have been exhibited. The Authority holds public hearings, which are called TEFRA hearings, which are normally not attended by the public. However, with Yale University and Yale- New Haven Hospital, members of the public did attend the TEFRA hearings, and in some cases offered testimony. One such member of the public is attending the Board meeting today. The Authority, as an entity which issues tax-exempt debt, has a responsibility to record comments from members of the public in the minutes of the TEFRA hearing. Mr. Gray stated that the Authority has recommended bond issues for Board approval with certain contingencies in the past. However, due to a number of concerns and moving parts to this particular issue, including the lack of a final commitment for bond insurance and zoning issues and other approvals that still need to be resolved; Mr. Williams will present this issue to the Board on an information-basis only. Mr. Gray went on to state that at such a time, when bond insurance is in place and local approvals are secured, and if those events occur prior to the next Board meeting scheduled for January 24, 2006, he would like to consult with the Chair to call a special telephonic Board meeting, which can be done with 24 hours notice, to vote on final approval on this particular transaction. If events dictate and those approvals are not in place prior to the next Board meeting, then the telephonic meeting will not be necessary and final approval will be addressed at the January 24, 2006 Board meeting. He also stated that this is in no way a commentary regarding Yale-New Haven Hospital, which has been an excellent client of the Authority, or its credibility, but that the Authority has a responsibility to both its clients and the public. 7
Mr. Williams continued with the Yale-New Haven Issue, Series I, as an information-only presentation. Yale-New Haven Hospital is seeking to issue $260 million par of its Issue, Series I. The proceeds will be used to construct an approximately 500,000 square-foot, 15- story North Pavilion patient care building located on the Hospital s campus in New Haven. The principal use for this building is a cancer center, bringing together various departments extensive services and research in the Hospital for cancer treatment. The facility will include initially 112 patient beds, numerous operating rooms, and a long list of other treatment modalities for both inpatient and outpatient cancer treatments. The facility will also include shell space for additional operating rooms and other facilities to meet future needs. The construction of the North Pavilion was approved by a CON approved and issued by the Office of Health Care Access on September 7, 2005 for $369.8 million in construction costs and estimated capitalized financing costs of $40.5 million. A copy of the September 7, 2005 CON was attached to the staff memo mailed to Board members. Prior to September 7, 2005, another CON, issued on July 9, 2004, approved an additional $19.99 million North Pavilion Enabling Project for preliminary expenses. An additional $3.5 million was approved this year for additional architectural work. The total project will total approximately $430-$435 million. In addition to the $260 million par of Series I, sources will include an estimated $79 million of equity from the Hospital, including $20 million for the Enabling Project, $42.5 $50.0 million of fundraising by the Hospital, and $48.7 million from the Yale University Medical School under its Occupancy Agreement for a portion of the North Pavilion. Lehman Brothers will be the Senior Manager and Senior Underwriter for this project. Series I is expected to be insured by AMBAC, rated AAA/Aaa by S&P and Moody s. After negotiations with AMBAC, FSA and MBIA, the Hospital has chosen and negotiated a term sheet with AMBAC, with an upfront premium of 75 basis points. Lehman reports that the bond insurance commitment has been approved by AMBAC s senior underwriters, reinsurance, and by the head of the group. AMBAC s committee process is expected to be completed in the week of December 19 th 23 rd, and the actual signed commitment delivered to the Hospital promptly thereafter. Mr. Williams went on to report that although all state approvals have long since been received for the project, the City of New Haven has stalled for many months approving the demolition of the existing building, and approving zoning permits for the new North Pavilion. City leaders have made numerous political demands on the Hospital as conditions of any such approvals. In November, after the city election, the New Haven Register reported that the mayor forecast city approval of the project by the end of the year 2005. The Yale-New Haven s Cancer Center is one of only 39 national cancer center institutes designated comprehensive cancer centers in the United States by the National Cancer Center Institute, and is a center of extensive cancer research nationally, as well as local and regional treatment of cancers, including tertiary and quaternary care cases. Yale-New Haven Hospital is one of the state s strongest hospitals medically, operationally and financially. Inpatient admissions continue to increase at a 2% compounded rate, a total 8
of 23% over the last ten years. Market share continues to increase. The medical staff has over 2,700 physicians, and the Hospital is the primary teaching hospital for the highly-rated Yale Medical School. The Hospital s over 2,000 RN s also benefit from the research and teaching of the Yale Nursing School. The Hospital s operating margins of 4.1% in FY 2004 and 4.7% in unaudited FY 2005 are in a AA rated category nationally and compare to a weighted average of only 1.43% for all CHEFA financed hospitals in 2004. Cash and investments totaled $445 million at September 30, 2005, equal to 4.0x existing debt and 1.2x pro forma debt after Series I is issued. Mr. Williams went on to state that completion of the North Pavilion will significantly improve cancer care locally in New Haven and regionally in the State of Connecticut and adjacent states; strengthen Connecticut s capabilities for research in an area of clear national priority; create more than 400 new permanent jobs after opening; create 350 construction jobs drawing from a wide range of trades; add an estimated $3 million per year in PILOT payments on an annual recurring basis to the City of New Haven; generate several million dollars in one-time building and construction fees to the City of New Haven; and by an estimate of the Connecticut Economic Resource Center, have an over $1 billion positive impact on the regional economy between 2005 2011. Staff recommends approval of the Yale-New Haven Hospital s $260 million issue, Series I, subject to AAA rated bond insurance by AMBAC, zoning approval, site plan approval, and issuance of required building approvals by the City of New Haven, and satisfactory legal documentation. Mr. Williams referred Board members to copies of the November 29, 2005 TEFRA Hearing minutes, an attached statement from the Connecticut Center for a New Economy, and a letter of response from an officer of the Hospital contained in their respective board packages. Mr. Williams urged Board members to read the documentation, and very briefly summarized the two statements. The Center for a New Economy statement focused most on the potential delays and possible changes in the project from the City of New Haven s approval process, and the suggestion that such delays could cause cost overruns, because construction did not start as planned in August 2005. The statement also questioned the funding source for a $60 million Park Street building and a $40 million garage planned for a block away. The Hospital response says that the $430 million approved in the CON will be the amount incurred, and that the Park Street building and garage totaling approximately $100 million in costs will be developed and funded by private developers. The Hospital will lease space in each of these buildings, but will not fund the construction costs. Mr. Rifkin asked whether the parking garage, even though privately funded, will be built on land currently owned by the City of New Haven which will need to be transferred. Mr. Williams responded that the two separate projects, both the parking garage and medical offices are planned for land that is currently owned by the City of New Haven, and are therefore subject to the City of New Haven selling that parcel of land. Mr. Rifkin pointed out that in order for the project to move forward, not only does the site for the North Pavilion be approved, but the City of New Haven will need to either quick-claim or sign some sort of development agreement with a private enterprise to construct the parking garage and medical office building. Mr. Williams responded that the Hospital will need to 9
secure zoning approval for the North Pavilion and the courts have overturned the existing laws governing development areas. As a result, a new zoning amendment must be approved. This new zoning law has been drafted but has not yet received final approval from the two entities of the City of New Haven which need to approve the amendment. For clarification purposes, Mr. Rifkin stated that there are two legal relationships which need to be clarified with the Yale-New Haven Hospital before the bond issue moves forward. The first is the zoning approvals and the second is the transfer of land. Mr. Williams responded that he agreed with the first point but not the second. The City needs to amend the current zoning law and provide the site approval and zoning permits for the North Pavilion within the scope of the new law. That needs to occur before construction of the North Pavilion on land already owned by the Hospital can begin. Mr. Williams went on to comment that the construction of the North Pavilion project and financing are not dependent on the City approval and developer commencement of construction of the parking garage and medical office buildings. Mr. Rifkin went on to comment that one could assume that in order for the Hospital to take on the debt incurred by the construction of the North Pavilion, and the ability of the cancer center to function properly, the zoning approval and permits are necessary for the parking garage and medical office project to begin construction. Mr. Williams showed on a map that the proposed parking garage will be located a long block away and could be very helpful for staff and visitors to the cancer center, but he was unsure that actual cancer patients would be walking to and from the parking garage. The office building is clearly not a prerequisite. Dr. Cibes posed a question regarding the sale of the bonds and whether that would take place before all of the approvals are in place to which Mr. Gray responded that no, the POS would not be mailed before all approvals are in place. Dr. Cibes questioned the delay approving the bond issue. Mr. Gray responded that this transaction is different from other deals in terms of contingencies because of the significant amount of public comment expressed directly to the Authority and the size of the issue. Mr. Gray went on to state that he did not feel that delaying approval of the bond issue would unduly delay the Hospital once the approvals are in place. Dr. Cibes posed concern that a delay in approving the bond issue might have a chilling effect on the project itself and if that were the case, he would not encourage a delay. Dr. Sullivan commented that aside from any political issue that may exist, she felt that the Board did not have enough information in multiple areas to comfortably make a decision at this time. Mr. Gray commented that due to the significant amount of comments from both the Board and the public, that the Authority is required both by law and internal policies take into consideration, combined with the lack of a signed letter of commitment for bond insurance and appropriate zoning approvals, the Board approval structure being proposed will satisfy both the needs of the client and discharge the responsibilities of the Authority in other areas. Ms. Rubin proposed that at this time, the message the Authority should be sending to Yale- New Haven Hospital is that the Authority and the Board will make every effort to act very smoothly once all of the pieces of the transaction are in place. 10
CHEFA FINANCIAL OPERATIONS October 2005 Financial Statements Mr. Asher presented the financial statements for the month ending October 31, 2005. Mr. Asher stated that the year-to-date revenues are ahead of budget by $67,000. Total revenues to date are approximately $1.7 million. Total revenue is ahead of budget primarily because of investment income. Expenses are under budget primarily because of the timing of filling three new positions at the Authority. Bottom line excess of revenues over expenses is $187,923 ahead of budget. 457 Deferred Compensation Plan Amendments Mr. Asher presented a summary of changes to the 457 Deferred Compensation Plan Amendment No. 3. Mr. Asher stated that periodically the IRS makes changes to 457 Plan requirements. Staff is requesting an amendment which will allow either the Executive Director and one Managing Director to approve the plan amendments without requiring Board action each time only if such changes are mandated by law. However, if there is a change to the plan that is not mandated by law, then Staff would present it to the Board for approval. Ms. Rubin requested a motion to approve changes to the 457 Deferred Compensation Plan. Mr. Rifkin moved approval of those changes presented by Mr. Asher. Mr. Cohn seconded that motion. Upon roll call, the Ayes, Nays, and Abstentions, were as follows: AYES NAYS ABSTENTIONS John M. Biancamano None None Dori Taylor Sullivan, Ph.D. OTHER REPORTS Report of the Audit-Finance Committee Mr. Cohn presented to the Board the results of the Audit-Finance Committee which met prior to today s Board meeting. The Audit-Finance Committee interviewed the following firms to provide audit services for the Authority for the next three fiscal years: Blum Shapiro; Carlin Charron & Rosen; LLP, Saslow Lufkin & Buggy, LLP; and Seward and 11
Monde. The recommendation of the Audit-Finance Committee is that the Authority continues to retain the services of Carlin Charron & Rosen, LLP as auditor to the Authority for the next three fiscal years. Mr. Cohn noted that under good practice and now State statute, that no auditor can serve more than six consecutive years. Therefore, Carlin Charron & Rosen, LLP will not be eligible for the next Request for Proposal process. Ms. Rubin requested a motion to approve the recommendation of the Audit-Finance Committee to retain the services of Carlin Charron & Rosen, LLP as auditor for the Authority, noting that this firm will not be eligible in the next Request for Proposals process. Mr. Rifkin moved approval of those recommendations and Mr. Biancamano seconded that motion. Upon roll call, the Ayes, Nays, and Abstentions, were as follows: AYES NAYS ABSTENTIONS John M. Biancamano None None Dori Taylor Sulivan, Ph.D. Report of the Consultant Committee Mr. Colangelo presented to the Board the results of the Consultant Committee which met prior to today s Board meeting. The Consultant Committee interviewed the following firms to provide the legal services of Special Counsel to the Authority: Carmody & Torrance LLP; McCarter & English, LLP; and Shipman & Goodwin LLP. After a presentation by members of those firms and discussion by Committee members, the recommendation of the Consultant Committee is to appoint all three firms as Special Council to the Authority subject to negotiation of reasonable fees. Ms. Rubin requested a motion to approve the recommendation of the Consultant Committee and retain the services of Carmody & Torrance LLP; McCarter & English, LLP; and Shipman & Goodwin LLP for Special Council to the Authority. Mr. Biancamano moved approval of those recommendations and Mr. Cohn seconded that motion. 12
Upon roll call, the Ayes, Nays, and Abstentions, were as follows: AYES NAYS ABSTENTIONS John M. Biancamano None None Dori Taylor Sullivan, Ph.D OTHER BUSINESS Mr. Gray referred the Board to the updated Strategic Plan included in the Board package which reflects changes submitted by Board members. The biggest change is to one of the core goals that deals with the allocation of CHEFA reserves. Issuing grants and allocating the funds to do so is one of the functions of the Authority. The change to the Strategic Plan quantifies the process by which this is done. There have been no changes to the format of the Plan which is currently the Kellogg model. This model has proved to be effective and is well-received by Board members. Mr. Gray stated that he is still open to comments and suggestions from the Board members. Staff is recommending that the Board move to adopt the Strategic Plan. Mr. Gray continued to say that in that case, he will remove DRAFT from the document and the updated 2006 2011 Business Plan will become both the operating and reporting/accountability document for the next five years. Ms. Rubin complimented both the Plan and the format in which it was presented. The new Plan represents a working document that can always be amended if the need arises. Mr. Rifkin commented that he thought the Plan should be reviewed on an annual basis to which Mr. Gray responded that in fact yes, the Plan will be a part of the annual review that he presents to the Board. Ms. Rubin requested a motion to approve the recommendation of the Staff and approve the 2006 2011 Business Plan for the next five years. Dr. Cibes moved approval of the 2006 2011 Business Plan and Mr. Cohn seconded that motion. 13
Upon roll call, the Ayes, Nays, and Abstentions, were as follows: AYES NAYS ABSTENTIONS John M. Biancamano None None Dori Taylor Sullivan, Ph.D. ORAL REPORTS Targeted Nursing Program Mr. Gray reported that he has submitted to the Grant Committee the updated guidelines for the Targeted Nursing Program, as the Authority is planning to issue that RFP by the end of December. Mr. Gray stated that he would probably be requesting a telephonic meeting of the Grant Committee fairly soon after they have had a chance to review the updated guidelines. Mr. Gray is also planning to include updated information regarding the Violence Prevention Program slated for the January Board meeting. Mr. Gray has reviewed the material provided by the Connecticut Coalition Against Domestic Violence and the Office of Child Advocate and it seems to be a good investment of funds from the Targeted Investment Program. Mr. Gray feels that it will provide direct benefit to the seventeen or eighteen shelters across the State of Connecticut. 3030 Park Fairfield Health Center Mr. Gray commented that the Authority continues to deal with legal matters pertaining to 3030 Park Fairfield Health Center and that Staff will be meeting with the Receiver and its Counsel, the Department of Social Services and Attorney General s Office the following day, December 8, 2005. Mr. Gray reported that the CCRC portion of 3030 Park, which did not have a financing relationship with the Authority, is also now in receivership. He received notification earlier in the day the CCRC Receiver has secured the services of UBS as investment banker/financial advisor to assist them in the sale of that particular property. The Authority is currently appraising 3030 Park and will be making recommendations to the Board and the Treasurer s Office. Mr. Gray continued to say that the Receiver has been able to identify areas of possible cost savings in operations and Staff will continue to make the Board aware of any further developments. 14
DATE OF NEXT MEETING The Chair reminded everyone that the next Board Meeting is scheduled for Tuesday, January 24, 2006 at 2:00 p.m. There being no further business, at 3:10 p.m., Mr. Rifkin motioned to adjourn the meeting. Mr. Cohn seconded that motion. Upon roll call, the Ayes, Nays, and Abstentions were as follows: AYES NAYS ABSTENTIONS John M. Biancamano None None Dori Taylor Sullivan, Ph.D. Respectfully Submitted, Richard D. Gray Executive Director 15