MEETING OF THE FINANCE COMMITTEE
OF THE BOARD OF TRUSTEES
HOUSTON COMMUNITY COLLEGE SYSTEM
March 22, 2006
Minutes
The Board of Trustees of the Houston Community College System held a Meeting of the
Finance Committee on Wednesday, March 22, 2006, at the System Administration Building,
Seminar Room A, Second Floor, 3100 Main, Houston, Texas.
MEMBERS PRESENT
Richard Schechter – Committee Chair
Jay K. Aiyer
Bruce A. Austin
Abel Davila
Yolanda N. Flores
Diane O. Guzman
James Murphy
Chris Oliver
Dr. Michael P Williams
ADMINISTRATION
Bruce H. Leslie, Chancellor
Doretha Eason, Deputy to the Chancellor
Irene Porcarello, Vice Chancellor, Student Success
Gloria Walker, Vice Chancellor, Finance & Administration
Winston Dahse, Interim President, Southwest College
Margaret Ford, President, Northeast College
William Harmon, President, Central College
Butch Herod for Zachary Hodges, President, Northwest College
Willie Williams, Associate Vice Chancellor, Human Resources
Carole Keeney, Interim Associate Vice Chancellor, Communications
Miles LeBlanc, General Counsel
OTHERS PRESENT
Jarvis Hollingsworth, System Counsel, Bracewell & Giuliani
Suewan Johnson, Bond Counsel, Vincent and Elkins
Mark Nitcholas, Financial Advisory, RBC Capital
David Wilcox, President, Faculty Senate
Other administrators, citizens, and representatives of the news media
Houston Community College System
Finance Committee – March 22, 2006 – Page 2
CALL TO ORDER
Mr. Schechter called the meeting to order at 4:05 p.m. and declared the Committee convened
to consider matters pertaining to the Houston Community College System as listed on the
duly posted Meeting Notice.
DISCUSS FINANCING 2004 CIP AND OTHER ASSOCIATED PROJECTS
Mr. Schechter explained that the purpose of the meeting was to discuss financing for
completion of the 2004 Capital Improvement Plan (CIP) and other associated projects.
Dr. Leslie provided a symposium of the original CIP and presented a summary of
recommendations for financing the completion of the CIP projects.
Principles:
Respect for the strategic purposes of CIP which included (1) cohesive campuses with a focus
on learning hubs and (2) classrooms especially science and technology
Physical responsibility
Recognizing community needs
Balancing across the System
Best value to tax payers
Overcome challenges to successfully complete CIP
Goals:
Effectively complete the CIP without undue burden on the budget and bridge the time gap
until annexation revenues or a second GO Bond in 2008.
Dr. Leslie apprised that the original gap defined was $82 million which included $66 million
for construction and infrastructure, $43 million for site improvements, $18 million for IT
infrastructure and contingencies; an additional $51 million has been allocated to represent
capital equipment needs for the new buildings:
Dr. Leslie presented four financing strategies for the 2004 CIP:
Financing Strategies
Recommendation #1
(This strategy allows the College to close the gap; it is time driven and dependent on
annexation in 2007 and a GO bond in 2008)
• Complete the CIP with proposed deferrals - defer Pinemont and San Jacinto projects
which would reduce gap to $29 million ($5 million will be retained for San Jacinto
programming); Finance through capitalization of $3.6 million of the $6 million
deferred maintenance fund (which generates $49 million to cover gap and $20 million
deferred maintenance fund; defer unfunded projects until either successful annexation
and/or implementation of the anticipated second GO bond in 2008 (five years after the
first); and reduce or retire the bond upon successful annexation or GO bond in 2008)
Houston Community College System
Finance Committee – March 22, 2006 – Page 3
•
•
•
Complete new projects – Public Safety Institute (PSI) as planned; design build lease
for Northline; and design build lease for Hayes Rd (defer payments until 2008 when
either annexation and/or previously discussed second bond is approved).
Technology fund – establish three year, $39 million Technology Fund; utilize a
student technology fee and partial use of auxiliary funds from the 3100 Main lease
revenues; include $15 million for new CIP building equipment through capital lease
program, $9 million IT development, and $15 million Instructional Equipment fund
with percentage match from corporate donations
Homestead Exemption – cancel previous approval of 10% increase in homestead
exemption
Recommendation #2
(This strategy recommends completing projects that will allow the College to remain within
the $171 million)
• Reduce the number of projects
• Defer Pinemont and San Jacinto
• Prioritize remaining projects on the basis of original CIP intent and balance across the
system
• Cost of projects helps determine what is attainable
• Defer completion of unaffordable projects until annexation and/or GO bond raises
additional revenue
• Defer Northline until new GO bond election
• Cancel Hayes Rd and locate new land/facilities upon successful annexation in Alief
• Continue PSI as separate financing strategy as previously determined
• Defer one of the following projects to cover the $15 million of new building capital
equipment (SE-Drennan; NE-Learning Hub, SW-Missouri City, and SW-West Loop)
• Fund potential projects which will total $171 million - NE Science/Technology, NE
Learning Hub, SE Learning Hub, SE Drennan, SE Morales, SW West Loop, SW
Missouri City, IT Infrastructure, IT Capital Equipment (partial), Central Learning
Hub/Science
• Projects not funded – San Jacinto, Pinemont (cancelled), Stafford, Capital Equipment,
Northline Mall, and Hayes Road
Recommendation #3
(This strategy recommends increasing the M & O tax rate by 1 cent)
• Generates $8 million in revenue which may be leveraged for $100 million
• The one cent tax can be reduced upon annexation in 2007 and/or a successful GO
bond in 2008
Houston Community College System
Finance Committee – March 22, 2006 – Page 4
Recommendation #4
(This strategy recommends a combination approach)
• Defer Pinemont and San Jacinto
• Close gap with $3.6 million portion of $6 million deferred maintenance
• Utilize Stafford funds for Northline ($35.4 million)
• Complete Northline as designed
• Finance Hayes Road as previously proposed or cancel
The Board discussed the recommendations presented by the Administration.
The meeting recessed at 5:25 p.m.
The meeting reconvened at 5:59 p.m.
(Present: Trustees Aiyer, Austin, Davila, Flores, Guzman, Murphy, Oliver, Schechter, and
Dr. Williams)
Mr. Austin motioned to approve recommendation #1 with modifications as follows to
complete the 2004 CIP and other associated projects:
•
•
•
•
Defer Stafford project ($35.4 million)
Use $12 million to purchase property for Northline
Use $11 million to build workforce HUB at Southeast
Use $12 million for technology fee on new projects
Mr. Davila seconded the motion.
The board entered a discussion of the recommendation with the modifications.
Mr. Oliver called for question on the discussion.
Mr. Murphy motioned to separate the motion on financing the CIP in order to discuss the
design build at Southeast College. Mr. Aiyer seconded the motion. Motion failed 3-6 (In
Favor: Trustees Aiyer, Murphy, and Schechter; Opposing: Trustees Austin, Davila, Flores,
Guzman, Oliver, and Dr. Williams).
Mr. Murphy noted that the recommendation is canceling a building that has been in the CIP
for Southwest that has been expressed to the voters that it would be built; however, the
recommendation is introducing a new building that is listed as $11 million for Southeast. Mr.
Austin noted that the Chancellor discussed the building in the information provided to the
Board. Mr. Oliver noted that the recommendation was not to cancel the building but to defer
the project. Mr. Murphy stated that deferring with financing issues ahead and multi-million
dollar shortfall, would call attention to the building that was not apart of the original CIP.
Houston Community College System
Finance Committee – March 22, 2006 – Page 5
The board voted on Mr. Austin’s motion to approve Recommendation #1 with modifications.
The motion passed 6-3 (In Favor: Trustees Austin, Davila, Flores, Guzman, Oliver, and Dr.
Williams; Opposing: Trustees Aiyer, Murphy, and Schechter).
The Board asked Ms. Walker to prepare the information for the Regular Board meeting
scheduled for March 29, 2006. Dr. Williams asked that dollar amounts be provided for the
debt ramifications.
ADJOURNMENT
There being no further business to come before the Committee the meeting adjourned at 6:58
p.m.
Minutes recorded, transcribed, and submitted by:
Sharon Wright, Executive Administrative Assistant, Board Services
Minutes Approved as Submitted:
April 27, 2006