MEETING OF THE
FINANCE SUB-COMMITTEE
OF THE BOARD OF TRUSTEES
HOUSTON COMMUNITY COLLEGE
October 1, 2012
Minutes
The Finance Sub-committee of the Board of Trustees of Houston Community College held
a meeting on Monday, October 1, 2012 at the HCC Administration Building, 3100 Main, 2nd
Floor, Seminar Room A, Houston, Texas.
COMMITTEE MEMBERS PRESENT
Richard Schechter Committee Chair
Bruce A. Austin, Committee Member
Sandie Mullins
Yolanda Navarro Flores
ADMINISTRATION
Mary S. Spangler, Chancellor
Art Tyler, Deputy Chancellor/COO
Renee Byas, General Counsel
William Carter, Vice Chancellor, Information Technology
Diana Pino, Vice Chancellor, Student Success
Margaret Ford Fisher, President, Northeast College
William Harmon, President, Central College
Virginia Parras for Zachary Hodges, President Northwest College
Willie Williams, Jr., Chief Human Resource Officer
OTHERS PRESENT
Jarvis Hollingsworth, System Counsel, Bracewell & Giuliani
Tod Bisch, President, Faculty Senate
Natalie Ashby, Andrews Kurth LLP
Tonya Fisher, Andrews Kurth LLP
Tom Sage, Andrews Kurth LLP
Clarence Grier, RBC Capital Markets
Other administrators, citizens and representatives from the news media
CALL TO ORDER
Mr. Schechter, Chair called the meeting to order at 11:40 a.m. and declared the Committee
convened to consider matters pertaining to Houston Community College as listed on the
duly posted Meeting Notice.
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Finance Sub-committee – October 1, 2012 - Page 2
REVIEW FINANCING OPTIONS FOR HCC TO INCLUDE COMMERCIAL PAPER AND
LINE OF CREDIT
Dr. Tyler apprised that RBC Capital Markets, Financial Advisors and Andrews Kurth LLP,
Bond Counsel were present to identify options for various opportunities for short-term
financing by either obtaining commercial paper or line of credit to minimize the impact to
taxpayers, should the bond pass.
Motion – Mr. Austin moved and Mr. Schechter seconded.
Dr. Tyler introduced Mr. Clarence Grier with RBC Capital Markets and Mr. Tom Sage with
Andrews Kurth LLP. He noted that the presentation would include an overview of existing
debt, bond election analysis, and financing options available to the college.
Mr. Grier provided a background of existing debt; he apprised that the College currently has
approximately $612 million in debt.
Mr. Schechter inquired if there are assets that outweigh the current debt. Mr. Grier noted
that the college’s assets do outweigh debt and that the AA+ rating was maintained. He
informed that the college was able to secure lower rates due to the rating.
Ms. Mullins inquired of bond rating since the original bond. Mr. Grier apprised that at least
one increase has been received since the last bond measure. Dr. Tyler informed that the
college was an AA; however, the college was able to increase its rating to AA+ even in the
current market.
(Mrs. Flores arrived at 11:47 a.m.)
Mr. Austin inquired if the college is doing better. Dr. Tyler noted that the college is probably
at a historical low regarding the interest rates.
Overview of Financing Options – Existing Debt and Bond Election
Mr. Grier informed that the market overview included 25 year bond revenue index and 20
year General Obligation (GO) Bond index. He asked the Board to consider the short-term
rate.
(Mr. Austin stepped out at 11:52 a.m.)
Mr. Schechter recessed the meeting at 11:52 a.m.
(Mr. Austin returned at 11:53 a.m.)
Mr. Schechter reconvened the meeting at 11:53 a.m.
Mr. Grier provided an overview of the existing Interest and Sinking (I&S) Debt and I&S debt
with the bond. He noted that Mr. Sage would discuss the options regarding the bond
election.
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Finance Sub-committee – October 1, 2012 - Page 3
Mr. Schechter apprised that the college would not immediately utilize all of the funding
provided by the bond election. Mr. Grier informed that the effort would be to only draw
down what is needed and thereby allow the college to only pay interest on the drawn funds.
Mr. Schechter inquired of the time frame prior to realistically beginning construction. Dr.
Tyler noted that there would probably need to be at least six months of lead time and
approximately 1 year to 15 months before there will be a need to draw down funds.
Mr. Grier apprised that RBC Capital Markets will work in conjunction with administration to
review the short-term versus long-term. Mr. Sage informed that this will be something that
will have to be managed.
Overview of Financing Options – Upfront Delivery or Drawdown
Mr. Sage noted that there are a number of options and provided an overview of (1) delivery
of funds upfront and (2) allow for System to “drawdown” on funds as needed. He provided
an overview of the interim financing that will not affect taxpayers at one time.
Mr. Austin apprised that the Board must review the discussion of land purchases as well as
design standard to review consistency in designs. He informed that an estimate should be
reviewed regarding the land purchases. He noted that square footage was not discussed.
Dr. Tyler apprised that square footage of some of the facilities was discussed such as
Coleman College and Westside projects. He informed that there was not a discussion of
the design for the projects. Dr. Tyler noted that there is an idea of how much land would
need to be purchased.
Mr. Sage apprised that the two interim financing models for consideration includes (1)
establish commercial paper program and (2) secure drawdown bank line of credit.
Mr. Grier informed that commercial paper should be considered only if for a specific project.
He noted that the line of credit would be for multiple purpose usage.
Dr. Tyler inquired of the ballpark figure for line of credit versus commercial paper. Mr. Grier
noted that the bank line would be much more favorable; however, the more accurate figure
would be provided prior to making purchases. He informed that interim financing would
diminish going to the market multiple times. He noted that going to the market too often
would signal an emergency; however, the interim financing provides an option of not having
to go to the market numerous times for smaller issues.
Mr. Sage noted that the recommendation presented for the Board to consider for interim
financing solutions for the programs to include:
(1) $125 million General Obligation Limited Tax; Tax-exempt Financing (subject to voter
approval)
(2) $50 million General Obligation Maintenance Tax; Tax-exempt Financing (non-voted)
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Finance Sub-committee – October 1, 2012 - Page 4
(3) $75 million Revenue Financing System Tax-exempt Financing (on first, second or
third lien basis)
Mr. Schechter apprised that the Finance Committee would schedule a follow up meeting in
November 2012 to further review options available.
Mr. Austin inquired if there is an institutional assessment available and noted that a trend
analysis should be developed regarding the projected figures provided by the fields. He
noted that the assessment should be done regarding investment term.
Dr. Tyler apprised that the college could have the study completed. Mr. Austin noted that
the study should be done internally.
Ms. Mullins recommended completing the assessment externally.
Mr. Schechter noted that the effort should possibly be done both internally and externally to
provide the opportunity for comparison.
ADJOURNMENT
With no further business, the meeting adjourned at 12:43 p.m.
Recorded, transcribed and submitted by:
Sharon R. Wright, Manager, Board Services
Minutes Approved:
November 15, 2012