August 16, 1999

The State Finance Committee met in special meeting after notice duly given to the press and radio of Thurston County.

Present:

Michael J. Murphy, State Treasurer Brad Owen, Lieutenant Governor

Also Present:

Jeanne Cushman, Office of the Attorney General Allan J. Martin, Office of the State Treasurer Susan Musselman, Susan D. Musselman, Inc. Nancy Adams, Office of the State Treasurer Dean Torkelson, Seattle-Northwest Securities Svein Braseth, Office of the State Treasurer Mike Roberts, Office of Financial Management Cynthia Weed, Preston Gates & Ellis LLP Mike Colleran, Office of the State Treasurer Roy Koegen, Perkins Coie Jay Kirkevold, Office of the State Treasurer Mary P. Gaston, Perkins Coie Vicki Cox, Office of the State Treasurer Harvey Childs, Office of Financial Management Jamie Postma, Office of the State Treasurer Doug Montague, Montague DeRose and Associates Mike Clarey, Office of the State Treasurer Darlene Cimino-DeRose, Montague DeRose and Associates Sue Melvin, Office of the State Treasurer

Chairman Murphy called the meeting to order.

Lieutenant Governor Owen moved the minutes for the June 23, 1999, meeting be approved.  Chairman Murphy seconded the motion.  The motion passed and the minutes were adopted.

Chairman Murphy reported for the record that prior to July 27, 1999, the State Finance Committee had authorized the issuance and sale of $186 million in COPs for the Washington State Convention and Trade Center.  The sale has been awarded to Goldman, Sachs & Co., on a competitive offering with a True Interest Cost of 5.300162 percent.

Mr. Martin introduced proposed Resolution No. 899 authorizing the issuance and sale of $273,500,000 State of Washington Various Purpose General Obligation Bonds, Series 2000A.  Mr. Martin stated the proposed sale of these bonds is a part of the state's routine seasonal capital construction financing.  Proceeds from the Series 2000A Bonds will be used to finance projects authorized by the 1999-01 capital budget which are currently underway or to reimburse construction accounts for work already completed.  The 2000A financing plan was developed by Treasury staff in conjunction with state agency customers and the Office of Financial Management.  Bond proceeds from this proposed issue are to be deposited in the state building construction account (fund 057) and the higher education construction account (fund 01L), with transfers to the state and local improvements revolving account—waste disposal facilities (fund 051) and state and local improvements revolving account—water supply facilities (fund 072).  The Series 2000A Bonds are proposed to be sold competitively on September 29, 1999.

Mr. Martin said proposed Resolution No. 899 provides for a ten-year optional call.  This call protection has served the state well in its ability to respond to falling interest rates through refunding.  At the same time, the market does not extract a penalty for retaining the call.  The proposed resolution provides for making the bonds non-callable based on an economic finding by the Acting Deputy State Treasurer prior to sale.  Any such finding will be reviewed by the State Treasurer before a non-callable designation is made.

Proposed Resolution No. 899 provides for use of electronic bidding as well as hand delivered bids to the Office of the State Treasurer.

Bond counsel for the sale is Roy J. Koegen, Perkins Coie LLP, and the financial advisors are Dean Torkelson, Seattle-Northwest Securities Corporation and Darlene Cimino-DeRose, Montague DeRose and Associates.

Mr. Martin presented proposed Resolution No. 899 to the committee.

Resolution No. 899 authorizing the issuance and sale of $273,500,000 State of Washington Various Purpose General Obligation Bonds, Series 2000A, authorized by Chapter 14, Laws of 1989, 1st Ex. Sess., as amended, Chapter 456, Laws of 1997, Chapter 380, Laws of 1999, and Chapter 39.42 RCW.

Lieutenant Governor Owen moved adoption of Resolution No. 899.  Chairman Murphy seconded the motion and the resolution was adopted.

Chairman Murphy asked Mr. Martin to introduce proposed Resolution No. 900 authorizing the issuance and sale of $26,500,000 State of Washington General Obligation Bonds (State Housing Trust Fund), Series 2000T (Taxable).

Mr. Martin stated the proposed sale of these bonds is a part of the state's routine seasonal capital construction financing.  The 1999-01 capital budget contains a $57.5 million appropriation and a $22 million reappropriation to the Department of Community, Trade and Economic Development for housing assistance, weatherization, and affordable housing.

These programs, known collectively as the Housing Trust Fund (HTF), provide low-interest loans and grants from bond proceeds to private non-profit charities, which includes 501(c)(3) organizations.

The Series 2000T taxable HTF bonds are proposed to be sold competitively on September 29, 1999.  I know of no controversy or issue relating to this proposed financing.

Bond counsel for the sale is Roy Koegen, and the financial advisors are Dean Torkelson and Darlene Cimino-DeRose.

Mr. Martin mentioned that previously these bonds were structured on a ten-year schedule, but the schedule has been shortened to five and one half years for a real savings of $1.9 million.  Chairman Murphy asked if there was a budgetary impact by shortening the maturity schedule.  Mr. Braseth stated that overall, in the long term there would be less debt service per fiscal year, and there would be an interest payment savings for the state.

Mr. Martin presented proposed Resolution No. 900 to the committee.

Resolution No. 900 authorizing the issuance and sale of $26,500,000 State of Washington General Obligation Bonds (State Housing Trust Fund), Series 2000T (Taxable), authorized by Chapter 456, Laws of 1997, and Chapter 39.42 RCW.

Lieutenant Governor Owen moved adoption of Resolution No. 900.  Chairman Murphy seconded the motion and the resolution was adopted.

Chairman Murphy asked Mr. Martin to introduce proposed Resolution No. 901 authorizing the issuance and sale of an amount up to $15,000,000 State of Washington Certificates of Participation (University of Washington Sand Point and Primate Center Projects).

Mr. Martin stated that proceeds of the sale will be used for renovations to Sand Point Building No. 5.  Financing for the Primate Center will be used to fund improvements already made to the center, expand vivarium space on the third floor and add a fourth floor of administrative offices at the center's Western Avenue facility.

Mr. Martin said that in November 1993, the Seattle City Council adopted the Sand Point Reuse Plan.  Under the plan, the former Sand Point Naval Base will be divided into five areas.  The University of Washington is acquiring title to the Education area that includes 5 buildings with just fewer than 700,000 square feet on approximately 13 acres.  The property is being acquired at no cost through the U.S. Department of Education under the stipulations that it be used for educational purposes for 30 years.  Additionally, the University is required to occupy or make use of the facilities within certain specified time frames.  Before the building can be occupied, major renovation work must be completed.  This includes shell and core work, including seismic and life safety upgrades, and some tenant improvement work.

Mr. Martin stated the University of Washington Regional Primate Research Center is one of seven centers in the United States funded by the Public Health Service.  Established over 35 years ago, the Primate Center provides specialized research support for non-human biomedical studies focused on solving human health problems.

Authorization of a COP by the State Finance Committee is pursuant to an internal policy whereby no projects in the over $4 million category will be financed without approval of the State Finance Committee by resolution.

Mr. Martin presented proposed Resolution No. 901 to the committee.

Resolution No. 901 authorizing the issuance and sale of an amount up to $15,000,000 State of Washington Certificates of Participation (University of Washington Sand Point and Primate Center Projects) plus financing costs and required reserves pursuant to Chapter 379, Section 905(6)(a) and (b), Laws of 1999.

Lieutenant Governor Owen moved adoption of Resolution No. 901.  Chairman Murphy seconded the motion and the resolution was adopted.

Chairman Murphy stated that the next resolution, Resolution No. 902, appoints a secretary to the State Finance Committee.  Chairman Murphy mentioned that there had been some staff changes recently, and Mr. Allan J. Martin has been named as Deputy State Treasurer for Debt Management.  One of the traditional roles of that position has been acting as the secretary of the State Finance Committee, which does require a resolution from that Committee.

Chairman Murphy presented proposed Resolution No. 902 to the committee.

Resolution No. 902 appointing a secretary for the State Finance Committee and setting forth the duties and responsibilities of said secretary.

Lieutenant Governor Owen moved adoption of Resolution No. 902.  Chairman Murphy seconded the motion and the resolution was adopted.

Mr. Martin then introduced Mr. Mike Roberts as the new Senior Capital Budget Assistant, Office of Financial Management, and welcomed him to the business of the State Finance Committee.

There being nothing further to come before the committee, the meeting was adjourned at 9:18 AM.

	STATE FINANCE COMMITTEE STATE OF WASHINGTON   _______________________________________ Michael J. Murphy, State Treasurer & Chairman   ________________________________________ Gary Locke, Governor   ________________________________________ Brad Owen, Lieutenant Governor
________________________________________ Allan J. Martin Acting Deputy State Treasurer & Secretary