MEETING OF THE
SPECIAL MEETING
OF THE BOARD OF TRUSTEES
HOUSTON COMMUNITY COLLEGE
January 21, 2010
Minutes
The Board of Trustees of Houston Community College held a Special Meeting on
Thursday, January 21, 2010 at the HCC Administration Building, 3100 Main, 2nd Floor
Seminar Room A, Houston, Texas.
COMMITTEE MEMBERS PRESENT
Dr. Michael P. Williams, Chair
Neeta Sane, Vice Chair
Sandie Meyers, Secretary
Bruce Austin
Yolanda Navarro Flores
Eva Loredo
Christopher Oliver
Mary Ann Perez
ADMINISTRATION
Mary Spangler, Chancellor
Art Tyler, Deputy Chancellor/COO
Renee Byas, General Counsel
William Carter, Vice Chancellor, Information Technology
Charles Cook, Vice Chancellor for Instruction
Daniel Seymour, Vice Chancellor, Planning and Institutional Effectiveness
Diana Pino, Vice Chancellor, Student Services
Margaret Ford Fisher, President, Northeast College
Fena Garza, President, Southwest College
William Harmon, President, Central College
Irene Porcarello, President, Southeast College
Betty Young, President, Coleman College
Willie Williams, Chief Human Resources Officer
OTHERS PRESENT
Kim James, System Counsel, Bracewell & Giuliani
Clarence Grier, RBC Capital Markets
Karlos Allen, RBC Capital Markets
Tom Sage, Vinson & Elkins
Bennie Ables, President, Faculty Senate
Other administrators, citizens, and representatives of the news media
Houston Community College
Special Meeting – January 21, 2010- Page 2
CALL TO ORDER
Dr. Williams, Chair, called the meeting to order at 2:13 p.m. and declared the Board
convened to consider matters pertaining to Houston Community College as listed on the
duly posted Meeting Notice.
Dr. Williams asked everyone to pause for a moment of silence in remembrance of the
victims affected by the massive earthquake in Haiti. He mentioned that HCC is teaming
with the Red Cross to help provide assistance.
(Mrs. Flores arrived at 2:15 p.m.)
Dr. Williams noted that HCC Family express condolences to the family of Mr. Simon
Wiltz with the MIT Design Team who was fatally injured in an automobile accident.
ESTABLISHMENT OF COMMERCIAL PAPER SYSTEM AND RESOLUTION
Motion – Mrs. Sane moved and Mrs. Flores seconded.
Dr. Williams noted that the Financial Advisors were present to provide an overview of
commercial paper as a financing option and apprised that the Board could ask any
questions regarding the commercial paper tool.
Mr. Clarence Grier of RBC Capital Markets introduced the Financial Advisory Team and
provided major points regarding the commercial paper. He noted that commercial
paper is a tool, not a strategy, which allows for flexibility.
(Mr. Oliver arrived at 2:15 p.m.)
Mr. Oliver asked if the option is an unsecured line of credit. Mr. Karlos Allen noted that
the item is a bond with a long-term maturity note with credit support.
Mr. Tom Sage with Vinson & Elkins apprised that the option would be secured by a first
lien on revenues; therefore, it is not unsecured. He noted that the college has several
bonds outstanding and noted that the option is allows the establishment of borrowing in
a capital market where commercial paper will be traded. He noted that if the bonds are
issued, money is borrowed and then paid off.
Mr. Oliver asked what is the interest rate. Mr. Grier explained that the interest rate is
established based on the Securities Interest and Financial Market Association (SIFMA),
and noted that the current average rate for five years would be 3.49% and 2.44% for
two years.
Mrs. Sane asked if the interest will be locked in or if the rate is variable. Mr. Grier noted
that it is a variable rate that has been approximately 2.44%.
Houston Community College
Special Meeting – January 21, 2010- Page 3
Mr. Oliver asked what makes this option more advantageous than the current bond
method. Mr. Grier noted that the transaction provides flexibility and takes into
consideration the expense.
Mrs. Sane noted that since the interest rate is not fixed, would $30 million in commercial
paper be issued now at 2.44%. Mr. Sage noted that a program size would be
established. He noted that a large amount would not be drawn at one time but as
projects require funding. He noted that the institution determines the term for the
commercial paper such as 90 days or 45 days on a roll until paid off.
Mr. Grier noted that the interest cost would only be paid on the amount drawn. Mrs.
Sane asked what would be the strategy for repaying the principal amount. Mr. Grier
noted that there would be predefined interest, which matches revenue. Mr. Page noted
that the principal could be repaid via fixed rate or revenue bonds.
Mrs. Flores asked if there is a reimbursement resolution in place. Mr. Allen noted that
the resolution was passed in December 2009.
Mrs. Flores asked the difference regarding the bases points. Mr. Allen noted that
difference is the change in the credit market.
Mrs. Flores asked for the issuance cost on $30 million and $100 million. Mr. Allen noted
that $30 million would be approximately $150,000 and $225,000 for $100 million. Mr.
Grier noted that the services would be bid out.
Mrs. Flores noted that a long-term financial strategy would have to be considered
eventually and asked if there are other ways to restructure debt. Mr. Grier noted that
there is the availability of refunding of bonds, which is ongoing. He noted that this is the
purpose of commercial paper. He noted that the reimbursement resolution is in place
for this purpose.
Mrs. Flores asked if zero coupon bonds are an option. Mr. Allen noted that the
downside to zero coupon bonds would be a higher amount of premium.
Mrs. Flores asked should the college be looking at long-term cost. Mr. Grier referenced
the historical rates on page 4 of the handout and apprised that it must be determined if
the college should take advantage of the historical low interest rates.
Mrs. Flores asked who has issued commercial paper. The Financial Advisors noted that
Harris County, Austin Community College, and Dallas Community College have issued
commercial paper. She asked how would the funds be repaid, and noted that the
reserves shows that the college spent $6 million more than revenues received.
Dr. Williams noted that the college does not have a long-term strategic plan regarding
expensing available funds.
Houston Community College
Special Meeting – January 21, 2010- Page 4
Mr. Austin noted that he prefers to receive all options based on type priority, cost
(principle and interest) and source of funds. He noted that other than General
Obligation (GO) Bonds where there are identifiable public funds, all other funding is set
against a particular source of funds. He noted that there should be a dual analysis that
includes which projects need to be first and which need to come later. He noted that
the first order would be to determine the amount needed for priorities. Mr. Austin noted
that it might be better to review variable mechanisms as opposed to just reviewing
commercial papers.
Dr. Williams noted that master planning has to be the focus. He associated with the
comments by Mr. Austin.
Mr. Austin noted that areas’ annexed projects need to be out of the box and there needs
to be identifiable revenues and then the focus should be placed on existing projects
such as the needs discovered during Hurricane Ike.
Mrs. Perez reiterated that this is not the most cost effective but most flexible. Mr. Grier
noted that the major cost is associated with the funding option. He noted that there is
also a remarketing fee that would allow the bonds to be marketed.
Mrs. Perez also asked what other options are available. Dr. Williams noted that there
are several options available which would be discussed at a later time.
Mrs. Meyers asked what the funds would be used for and asked if the projects are
needs or wants. Dr. Williams noted that the administration must develop a priority list
and then the Board would need to hold a discussion.
Mrs. Meyers mentioned that the revenue must be considered especially as it relates to
the future. She noted that Mr. Austin’s comments regarding annexation should be taken
into consideration, however, it must be noted that there are communities that have also
been waiting on deliverables. Dr. Williams noted that HCC is bound to the service plans
for the annexed areas.
Dr. Spangler provided an overview of the funding priorities for the next six and twelve
months.
Mr. Oliver noted long-term strategies need to be determined and then prioritizing could
take place. Dr. Williams noted that the long-term strategy discussion has not taken
place.
Mr. Austin noted that he provided Counsel a copy of the Attorney General’s opinion
regarding bond issues.
Dr. Williams informed that the Board has discussed the priorities provided. He noted
that the priorities would need to be further discussed in closed session.
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Special Meeting – January 21, 2010- Page 5
Mrs. Sane noted that planning is the key. She apprised that a two-year budget was
been approved and asked what is the impact on the existing budget. Dr. Spangler noted
that an updated budget would be provided for the Board for review in February.
Mrs. Flores asked if the budget information would be provided in sufficient time for
proper review. Mr. Austin noted that, upon approval, the budget was contingent on a
mid-year review.
Dr. Williams noted that a workshop would be held in the near future and requested that
all Trustees attend to allow a full discussion to address questions and inquiries.
ADJOURNED TO CLOSED SESSION
Dr. Williams adjourned the meeting to Executive Session at 3:13 p.m., notice having
previously been given and reiterated in accordance with Sections 551.071, 551.072,
and/or 551.074 of the Open Meetings Law. Dr. Williams stated that any final action, vote
or decision on any item discussed in Executive Session would be taken up in Open
Session or in a subsequent Public Meeting.
Dr. Williams reconvened the meeting in Open Session at 3:41 p.m. and entertained
motions on pending matters.
(Present: Trustees Austin, Flores, Loredo, Meyers, Oliver, Sane, and Williams)
Mrs. Flores asked if a timeline could be established for a master and financial planning
discussion. Dr. Williams noted that the date would be announced at the Regular
meeting scheduled for January 28, 2010.
Motion - Mrs. Flores motioned to table discussion on the item until a meeting is held to
discuss the master and finance plans. Mr. Oliver seconded. Motion passed 7-0.
ADJOURNMENT
With no further business, the meeting adjourned at 3:42 p.m.
Recorded by:
Sharon R. Wright, Executive Administrative Assistant, Board Services
Transcribed and submitted by:
Sharon Wright, Executive Administrative Assistant, Board Services
Minutes Approved: