Dormitory Authority Meeting September 9, 2015

Transcription

1 The Dormitory Authority of the State of New York met in a Regular Meeting at DASNY s New York City Office, One Penn Plaza, 52 nd Floor, New York, New York at 9:30 a.m. on Wednesday, September 9, The Meeting was called to order by the Chair. Roll call was taken and a quorum was present. Those Members present for and absent from the Meeting were as follows: Members Present Alfonso L. Carney, Jr., Chair, Member John B. Johnson, Jr., Vice Chair, Member Jonathan H. Gardner, Esq., Member Beryl L. Snyder, Esq., Member Dr. Roman B. Hedges, Member Gerard Romski, Esq., Member Charles Abel, Designated Representative of the Commissioner of Health, Member (ex officio) Members Absent: Sandra M. Shapard, Secretary, Member Adrian Swierczewski, Designated Representative of the Director of the Budget, Member (ex officio) Commissioner of Education, Member (ex officio) Also Present - Dormitory Authority Staff: Gerrard P. Bushell, President Michael T. Corrigan, Vice President Michael E. Cusack, Esq., General Counsel John G. Pasicznyk, Acting Chief Financial Officer Portia Lee, Managing Director of Public Finance and Portfolio Monitoring Stephen D. Curro, Managing Director of Construction Caprice G. Spann, Managing Director of the Office of Executive Initiatives Caroline V. Griffin, Chief of Staff Debra Pulenskey Drescher, Esq., Managing General Counsel Debbie Paden, Esq., Managing General Counsel Larry N. Volk, Senior Director, Portfolio Monitoring Paul M. Quigley, Acting Director, Information Services Daniel W. Petroff, Chief of Strategic and Business Development John D. Chirlin, Public Information Officer Sara Richards, Esq., Associate Counsel Andrew T. Purcell, Assistant Director, Public Finance Arthur R. Ware, Senior Financial Analyst Boby J. Manjila, Senior System Specialist Tiffany N. Bryant, Special Assistant to the President 1

2 Also Present Via Phone Matthew T. Bergin, Senior Financial Analyst David P. Ostrander, Senior Financial Analyst Others Present: B. Seth Bryant, Esq. Bryant Rabbino, LLP Howard I. Berkman, Esq. Damon Pace, Esq. Hawkins Delafield & Wood, LLP Orrick Herrington & Sutcliffe, LLP PUBLIC SESSION The Chair called the Meeting to order. He noted that the Board would hear presentations from the various rating agencies before considering the financing transactions before the Members for their consideration. Moody s Presentation The President introduced Edie F. Behr and Susan Shaffer of Moody s Investors Service. Ms. Behr provided the Members with a summary of Moody s proposed Global Higher Education Rating Methodology. She explained that Moody s had recently published a Request for Comment which described proposed changes to Moody s rating methodology for colleges and universities globally. Ms. Behr outlined the changes to the rating methodology including a rebalancing of the scorecard overview and a new emphasis on the assessment of strategic positioning. Ms. Behr moved on to discuss Debt Service Reserve Funds in Public Finance. Ms. Behr explained that the importance of a Debt Service Reserve varies by credit, and referenced certain credit factors that determine whether or not Moody s views a Debt Service Reserve Fund as necessary or useful. Specifically, she described the reserve fund as being particularly useful if inability to make a payment is likely to be due to a temporary liquidity problem, but far less useful in easing fundamental business problems. She noted that, overall, they view Debt Service Reserve Funds as providing little benefit for general credits in higher education. Ms. Behr then provided specific examples of cases where Debt Service Reserve funds were utilized to prevent or delay bond defaults. Ms. Behr concluded by thanking the Members and opening the discussion up to questions. Mr. Gardner inquired as to the treatment of endowment funds and whether they are always considered restricted. Ms. Behr responded that endowment funds are not always considered restricted. She stated that the audited financial statements of a university will break out the endowment into permanently restricted, temporarily restricted, and unrestricted funds. Dr. Hedges stated the importance of making sure that the unexpected is factored into a credit analysis, which could include competition from new business models, the impact of investment activity or fraudulent activity. Ms. Behr responded that the analysis of historical 2

3 financial data, which includes an assessment of investment returns and allocations, is just the starting point when analyzing a credit. Ms. Behr added that Moody s publishes research reports which identify trends in the industry that are factored into the rating of an institution. The Chair inquired whether or not the student debt component of tuition revenue is a consideration in the credit analysis. Ms. Behr responded in the affirmative and stated that Moody s considers the percentage of students who avail themselves of Pell Grants, the default rate of students on their loans, and the exposure of a university to Federal funding. Ms. Snyder asked if the methodology being discussed was the new or old criteria and if the methodology was updated periodically. Ms. Behr responded that the material being discussed was the proposed new methodology and that the methodology is reviewed annually to address changes in the industry. S&P Presentation The President introduced Cynthia Keller and Martin Arrick (by phone) of Standard and Poors ( S&P ). Ms. Keller provided the Members with an overview of the information to be discussed including the revised stand-alone hospital criteria, S&P s analysis of covenants and legal pledges, and the fiscal year 2014 median ratio overview. Ms. Keller discussed S&Ps revised Stand-Alone Hospital Criteria which is used to rate over 400 not-for-profit stand-alone hospitals. Ms. Keller indicated that the goal of the revised criteria was to improve transparency and that the majority of hospital ratings would not be impacted. Ms. Keller discussed the factors which determine the final rating, including an enterprise profile and a financial profile, as well as overriding factors and peer comparisons. The President noted that in the analytical framework, weak management can be considered a negative overriding factor, but in the financial profile, no weighting is given to financial policies. Ms. Keller responded that management and governance are considerations in both the financial and enterprise profile. Mr. Arrick added that although it is rare to include poor management as a negative overriding factor, there are certain cases where it is warranted when factors exist outside of the normal evaluation criteria. Mr. Arrick indicated that there are a number of different measurements in the criteria used to evaluate management. Dr. Hedges expressed concern about the weakness of the health care sector and noted that there are very few highly rated hospitals in New York State. He asked how the Members should think about this weakness when evaluating potential borrowers. Mr. Arrick responded that while hospitals in general have a broad rating spectrum, it is especially broad in New York State due to factors such as changing reimbursement rates and high competition. The Chair suggested a follow up conversation following the meeting to discuss this issue. Mr. Johnson requested documentation that shows the distribution of ratings in New York State. Ms. Keller indicated that she could provide that information. Mr. Abel noted that while there are some highly rated hospital systems in New York State, the New York market overall does not compare favorably to the rest of the nation. Mr. Abel noted that, through the DSRIP Program, there will be significant investment targeted at consolidation and efficiency and asked how that would be evaluated by the rating agencies. Mr. 3

4 Arrick responded that S&P considers a two year outlook horizon in its evaluation. He stated that while DSRIP funds will factor into the overall evaluation, these types of funds are typically targeted toward a specific purpose or objective and may not impact the overall credit. Mr. Arrick said that there may be a tradeoff between the enterprise profile and the financial profile. Ms. Keller added that in certain cases, consolidation can be a positive factor. Ms. Keller moved on to discuss the highlights of the 2014 Median Ratio Reports. She stated that the 2014 median ratios reflect stable to improved financial performance and added that S&P believes that these financial profiles will remain fairly stable through at least The President asked for some perspective on how hospital acquisitions are perceived by the rating agencies, including any specific issues or concerns that are considered. Ms. Keller responded that it typically depends on the market, but S&P will consider a number of factors including the overall strategy of the acquisition, pro-forma financial statements, revised payor mix, and revised market share, all of which can impact the rating. The President asked if there were other factors. Mr. Arrick responded that the benefits of the strategy are also considered and whether or not the plan of integration is reasonable in S&P s judgment. Ms. Keller added that both she and Mr. Arrick benefit from frequently meeting with hospitals to gain perspective on acquisitions. Mr. Arrick thanked the Members and offered to answer any additional questions or provide additional information if needed. Fitch Presentation The President introduced Joanne Ferrigan, Gary Sokolow, and Ann Flynn of Fitch Ratings. Ms. Ferrigan discussed the 2014 U.S. Public Finance Transition and Default Study, presented to the Members, which analyzed the rating migration and default experience of unenhanced Fitch-rated U.S. public finance securities between 1999 and Ms. Ferrigan highlighted the improvement in U.S economic conditions, the extremely low default rate in the U.S. public finance sector, and the relative stability in ratings across the sector. Ms. Ferrigan indicated that Fitch expects the majority of U.S. public finance security ratings to maintain stable outlooks in The President inquired about the issue of stability and asked what factors, given the challenges during 2008, are considered when analyzing the stability of the sector. Ms. Ferrigan responded that a large component of the analysis focuses on management and governance. Mr. Sokolow added that the ratings will have a certain allowance built in for stress, and that the vast majority of ratings between 2009 and 2014 were affirmations as institutions were able to adjust to changes in the market. Dr. Hedges reflected on his concern about the health care sector and asked if Fitch had a more favorable view of the sector. Mr. Sokolow responded that while there are certainly challenges, many hospitals are becoming more efficient and showing the ability to react to changes in market trends and reimbursement rates. He added that many have benefited from advances in technology and the shift to outpatient care has had a positive effect by lessening the need for large capital project expenditures. 4

5 Mr. Johnson inquired about the differences between New York hospitals and others around the country. Mr. Sokolow responded that many hospital systems in New York State benefit from good management, advanced information technology, and high quality. He indicated that despite this fact, many smaller stand-alone hospitals are struggling and would benefit from consolidation. Ms. Ferrigan discussed Fitch s stable outlook for the Higher Education sector. She noted while the sector as a whole is stable, there are certain sub-sectors that are suffering from changing demographics, affordability, and the impact of online programs. The President noted that a number of universities in recent years have invested significant capital in their facilities to draw additional students and advance the university s profile. He asked how Fitch analyzed the cost-benefit of these investments. Ms. Ferrigan responded that the impact would depend upon how the project fit into the university s overall strategic plan, the market for the service to be provided, and how the investment would affect the university financially. The Chair thanked the President, Ms. Lee, the Office of Public Finance, and the rating agencies for their informative presentations. The President stated he believes that the presentations provided a great deal of information that will enable DASNY to better understand its clients and the challenges faced by them in the marketplace. He thanked the rating agencies for their thorough discussion of these challenges. The Minutes of the July 15, 2015 Special Video Conference Meeting were then reviewed and approved. Recognition of Service The Chair directed the Members attention to the Resolution before them acknowledging the service of former DASNY President Paul T. Williams, Jr. The Chair stated that Mr. Williams is an extraordinary leader, and thanked him for his service. He encouraged the Members to read the Resolution for more details regarding the accomplishments of Mr. Williams tenure as President. Mr. Johnson moved the adoption of the following entitled Resolution: A RESOLUTION OF THE MEMBERS OF THE BOARD OF THE DORMITORY AUTHORITY OF THE STATE OF NEW YORK ( DASNY ) ACKNOWLEDGING WITH APPRECIATION THE SERVICE OF PAUL T. WILLIAMS, JR. Ms. Snyder seconded the motion and the Resolution was unanimously adopted. Finance Committee Report Finance Committee Chair Romski reported that the Finance Committee met the previous day, and that after discussion, had decided unanimously to recommend the following transactions 5

6 to the full Board for approval: Sales Tax Revenue Bond Program financing, Long Island University reoffering, InterAgency Council financing and St. Barnabas Hospital TELP financing. Sales Tax Revenue Bond Program The Chair introduced Howard I. Berkman, Esq. of Hawkins Delafield and Wood, LLP and B. Seth Bryant, Esq. of Bryant Rabbino, LLP, co-bond counsel on the transaction, and Mr. Purcell. Mr. Purcell presented the Single Approval Credit Summary and Staff Report recommending the issuance of multiple series of tax-exempt and/or taxable fixed and/or variable rate bonds to be issued at one or more times in an amount not to exceed $1,100,000,000 under the Sales Tax Revenue Bond Program for a term not to exceed 30 years. He stated that although the resolution authorizes DASNY to sell the Bonds on either a competitive or negotiated basis, it is currently expected that the bonds will be sold competitively. Mr. Purcell further stated that the Series 2015 Bonds will be the fourth DASNY issuance under the Sales Tax Revenue Bond Program. Mr. Purcell informed the Members that the proceeds of the Series 2015 Bonds will fund capital projects for City University of New York and SUNY Upstate Community College facilities; library facilities grants; various Dedicated Highway & Bridge Trust Fund projects; and various transportation initiatives. Mr. Purcell stated that the Series 2015 Bonds will be secured by semi-annual payments made pursuant to a Financing Agreement between DASNY and the State of New York, and by a set aside of one cent, or approximately 25% of the State s four percent sales tax collected pursuant to statute and deposited in the Sales Tax Revenue Bond Tax Fund. He further stated that current debt service coverage under the program is approximately 6.5 times total debt service. Mr. Purcell informed the Committee Members that the Series 2015 Bonds are expected to be rated AAA by Standard and Poor s, Aa1 by Moody s, and AA+ by Fitch. Mr. Berkman then further described the transaction and presented the financing documents. He stated that before the Members for their consideration is the adoption of a Supplemental Resolution authorizing the issuance of one or more series of State Sales Tax Revenue Bonds under DASNY s State Sales Tax Revenue Bond General Bond Resolution in an amount not to exceed $1,100,000,000. Mr. Berkman informed the Members that the structure of the State Sales Tax Revenue Bond Program is similar to the Personal Income Tax Revenue Bond Program, except that instead of personal income tax receipts, the source of debt service payments on the Sales Tax Bonds is a portion of the State sales and compensating use taxes. He stated that initially, one cent on every dollar of sales tax will be deposited into the Sales Tax Revenue Bond Tax Fund, and will increase to two cents at a later date. Mr. Berkman further stated that DASNY will enter into a Financing Agreement with the State, which obligates the State to make payments to DASNY in an amount sufficient to pay debt service on the bonds. He explained that all payments made pursuant to the Financing Agreement are derived from moneys on deposit in the Sales Tax Revenue Bond Tax Fund held in the joint custody of the State Comptroller and the Commissioner of Taxation and Finance, and are subject to appropriation. Mr. Bryant briefly 6

7 described the duties and responsibilities delegated to DASNY officers pursuant to the terms of the Supplemental Resolution. In response to a question from Mr. Johnson, Mr. Berkman clarified that the amount to be initially deposited in the Sales Tax Revenue Bond Fund is one cent on every dollar. Dr. Hedges expressed his appreciation for the information provided in connection with the State bond cap. Mr. Abel moved the adoption of the following entitled Resolution: DORMITORY AUTHORITY OF THE STATE OF NEW YORK SUPPLEMENTAL RESOLUTION 2015-S AUTHORIZING STATE SALES TAX REVENUE BONDS Mr. Gardner seconded the motion and the Resolution was unanimously adopted. Long Island University The President introduced Damon Pace, Esq. of Orrick Herrington & Sutcliffe, LLP, bond counsel on the transaction, and Ms. Lee. Ms. Lee stated that before the Members for their consideration is the adoption of a Supplemental Resolution authorizing certain amendments to the existing financing documents to facilitate the proposed purchase of DASNY s Long Island University Series 2006A-1 Bonds by a new bank, in a bank purchase mode. Ms. Lee informed the Members that in September 2010, the bonds were reoffered through a private placement to RBS Citizens Bank in a new bank purchase mode with a five year term. She stated that the Bonds are subject to mandatory tender on September 23, 2015, and that the University has selected Capital One Municipal Funding Inc. to purchase the bonds on that date. Ms. Lee explained that the bonds will be purchased in a bank purchase mode for a new five-year period, and that there will be no change in the existing security or final maturity of the bonds. She further explained that the interest rate on the bonds is expected to reset every 30 days. Ms. Lee noted that the proposed amendments to the documents provide broader authorization for another bank or QIB to purchase the bonds in a bank purchase mode when needed. She explained that these changes will create flexibility such that the Board will not need to authorize subsequent changes to a bank purchaser. Mr. Pace stated that Ms. Lee had described the transaction before the Members, and reiterated that the changes would provide greater flexibility to substitute one bank for another. Mr. Abel moved the adoption of the following entitled Resolution: DORMITORY AUTHORITY OF THE STATE OF NEW YORK SUPPLEMENTAL RESOLUTION TO THE DORMITORY AUTHORITY OF THE STATE OF NEW YORK LONG ISLAND UNIVERSITY REVENUE BOND RESOLUTION ADOPTION JULY 26, 2006, AS AMENDED AND RESTATED AS OF JUNE 25, 2008 AS SUPPLEMENTED ON MAY 27, 2009 AND JULY 28,

8 Dr. Hedges seconded the motion and the Resolution was unanimously adopted. InterAgency Council, Inc. Ms. Lee presented the Staff Report recommending the issuance of one or more series of fixed or variable rate, tax-exempt and/or taxable bonds in an aggregate amount not to exceed $24,000,000 for a term not to exceed 26 years on behalf of five members of the InterAgency Council ( IAC ) in a pooled financing. She informed the Members that the proceeds of the Series 2015 Bonds are expected to be used to refinance existing bank loans and reimburse certain institutions for cash expenditures on capital projects. Ms. Lee stated that the proceeds of the loans to be refinanced and cash expenditures were used to renovate or acquire certain properties used to provide services for the developmentally disabled. Ms. Lee stated that the Series 2015 Bonds will be secured by a pledge of the Office for People with Developmental Disabilities ( OPWDD ) revenues attributable to each financed project; a standby intercept of the OPWDD revenues attributable to each financed project; a debt service reserve fund; and mortgages on certain real property. She informed the Members that 18 of the 21 projects have received Prior Property Approval ( PPA ). Ms. Lee noted that two of the 21 projects have PPAs that are pending approval, and that the approval will be secured prior to the release of the Preliminary Official Statement. She further noted that one small non-ppa project in the amount of $275,000 is also expected to be financed with the proceeds of the Bonds. Ms. Lee explained that this project is also secured by a statutory intercept and a debt service reserve fund. She further explained that the financing still needs to be evaluated by the rating agencies. Ms. Lee informed the Members that, consistent with prior IAC transactions, each borrower will have its own loan obligation. Mr. Abel moved the adoption of the following entitled Resolution: A RESOLUTION OF THE DORMITORY AUTHORITY OF THE STATE OF NEW YORK (DASNY) AUTHORIZING STAFF AND BOND COUNSEL TO PROCEED TO TAKE THE NECESSARY ACTION TO PREPARE THE APPROPRIATE DOCUMENTS TO PROVIDE FOR THE FINANCING OF FACILITIES FOR THE INTERAGENCY COUNCIL, INC Dr. Hedges seconded the motion and the Resolution was unanimously adopted. St. Barnabas Hospital - TELP Ms. Lee presented the memorandum recommending a lease of equipment pursuant to DASNY s Tax-Exempt Leasing Program I ( TELP I ) in an amount not to exceed $13,304,506 for St. Barnabas Hospital. She reminded the Members that the current policy of the Public Authorities Control Board ( PACB ) requires TELP I leases which exceed $10,000,000 in a 12- month period to be presented to both the DASNY Board and the PACB for approval. Ms. Lee stated that this is the first TELP authorization requested for St. Barnabas in this calendar year. She further stated that the lease proceeds are expected to be used for operating room, laboratory, radiology, and other hospital equipment. 8

9 Mr. Abel moved the adoption of the following entitled Resolution: A RESOLUTION OF THE DORMITORY AUTHORITY OF THE STATE OF NEW YORK (DASNY) AUTHORIZING STAFF AND BOND COUNSEL TO PROCEED TO TAKE THE NECESSARY ACTION TO PREPARE, AND THE DORMITORY AUTHORITY TO EXECUTE ONE OR MORE MASTER LEASE AND SUBLEASE AGREEMENTS AND ANY OTHER APPROPRIATE DOCUMENTS TO MAKE EQUIPMENT HAVING A VALUE IN EXCESS OF $10,000,000 AVAILABLE TO ST. BARNABAS HOSPITAL UNDER THE TAX-EXEMPT LEASING PROGRAM Mr. Romski seconded the motion and the Resolution was unanimously adopted. President s Report The President acknowledged the presentation of the resolution recognizing the service of Paul T. Williams, Jr. and the rating agency presentations. The President stated that he thought that the rating agency presentations highlighted some of the issues that DASNY has been discussing with underwriters, health care institutions and hospitals. He noted that both he and Ms. Lee have spent a tremendous amount of time meeting with the fourteen DASNY senior managers, both in terms of the bankers who represent the municipal finance side, as well as the bankers who represent the health and higher educational institutions. The President noted that DASNY s focus has been on best execution, low cost financing and more importantly, value added services. He stated that these meetings have produced some insight and knowledge that can be brought back to DASNY. He indicated that approach will continue over the course of time. The President reported that he and several members of the Construction Division attended a meeting with SUNY Downstate Medical College. They met with individuals from the Medical College; SUNY Board of Trustee Chairman, H. Carl McCall; President of the Downstate Medical Center, Dr. John F. Williams, Jr.; and the SUCF General Manager, Robert Haelen, to discuss the Center s capital construction requirements. The President stated that the Medical Center is in need of a new parking structure, as well as additional space and residence hall improvements, but the Medical Center has been unsuccessful to date in developing these projects through traditional State finance and construction methods. The President noted that this is a very good project for DASNY because it poses an opportunity for DASNY to utilize alternative delivery methods, including public/private partnerships. He noted that Mr. Curro, Mr. Pasicznyk, Paul Koopman, Senior Director, Construction and Michael Stabulas, Director, Construction are actively involved with this initiative. He further noted that there are follow-up meetings scheduled with the Medical Center to discuss engaging DASNY consultants to assist with the development of the project. The President noted that DASNY successfully priced the $1.1 billion PIT Bond issuance at the beginning of the month. He noted that JP Morgan Securities co-lead with Bank of America, Merrill Lynch and Loop Capital Markets were co-lead managers on this transaction. He stated that DASNY had to move quickly and stated that the DASNY s team did an excellent job in finalizing this transaction considering the challenging and volatile market. 9

10 The President then discussed the Sales Tax Revenue Bond Program transaction which was a negotiated sale that closed on July 30. He recapped for the Members that this was $1.5 billion Sales Tax Revenue Bond issue. He noted that the transaction was led by Morgan Stanley with colead RBC Capital Markets and Siebert Brandford Shank & Co. LLC. He noted that due to the hard work and expertise of the Public Finance, Counsel and Finance Unit staff, DASNY was able to generate a significant savings to the State. The President stated that these bonds will be used to refund bonds issued by the NYS Thruway Authority as part of the Dedicated Highway & Bridge Trust Fund Program. The President discussed the formulation of the DASNY IT Task Force in June, which is being led by Paul Quigley, Acting Director, Information Services. He noted that Mr. Quigley has been with DASNY for thirteen years and has worked in Construction and IS with a focus on DASNY s business systems. The President noted that presently there is a very aggressive initiative being undertaken at DASNY to identify and prioritize DASNY s IT needs to be sure that DASNY has a first class IT capability that will support every one of DASNY s business functions. The President highlighted the United Bronx Parents recent ground breaking. He stated that DASNY was actively involved in the design and construction services for the project pursuant to a Memorandum of Understanding ( MOU ) between DASNY and the NYS Office of Alcoholism and Substance Abuse Services (OASAS). He reported that United Bronx Parents started this initiative in 2004 and that the project is a 36,000 square foot, five story, full service residential facility with 32 bedrooms that will accommodate up to forty (40) women and fifty-six (56) children. He stated that United Bronx Parents is licensed by OASAS and is expected to provide a safe, nurturing and therapeutic environment for homeless women and their children to overcome substance abuse and the debilitating effect of addiction on the family. The President further noted that the program is unique in its commitment to keeping families together, stating that mothers are allowed to reside with up to three children under the age of ten in their own room. He further reported that the children also attend onsite licensed daycare or school in the community. The President then stated that before the Members for consideration is the proposed Collective Bargaining Agreement with The International Union and Its Local 2110 United Auto Workers ( UAW ). He noted that the proposed Resolution includes an accompanying memorandum highlighting the terms of the proposed Collective Bargaining Agreement. He stated that the proposed Collective Bargaining Agreement with UAW is consistent with the Collective Bargaining Agreement between CSEA Local 698, which the Board considered and approved at the May 13, 2015 Meeting. He noted that the Agreement between UAW and DASNY affects a much smaller number of employees. Mr. Romski stated that he was unaware that there was a UAW bargaining unit at DASNY and inquired as to why DASNY has a UAW bargaining unit. Ms. Drescher responded that it is a product of when DASNY merged with the Medical Care Facilities Finance Agency in The President stated that there were some new additions to DASNY s staff, including Caroline V. Griffin, Chief of Staff. He noted that Ms. Griffin has worked for Governors Spitzer, Patterson and Cuomo and that she most recently served as Director of Intergovernmental Affairs to Governor Andrew Cuomo. He stated that her extensive experience in State government and relationships with elected officials across the State will be an asset to DASNY s team and 10

11 businesses. The President further stated that DASNY will draw on Ms. Griffin s strong background in budget and legislative affairs. The President explained that she will be working closely with him, as well as Mr. Corrigan, on DASNY s Operations. He stated that she will also be overseeing policy, intergovernmental relations, communication and marketing, as well as working with DASNY s leadership team. The President noted the importance of eliminating silos and having a collaborative approach in terms of how DASNY approaches the market. The President then introduced Daniel W. Petroff, Chief of Strategy and Business Development, and Tiffany N. Bryant, Special Assistant to the President. The President concluded his report by emphasizing that he is taking an aggressive and thoughtful look at whether DASNY has the right structure to execute efficiently and be impactful on behalf of its clients. Mr. Johnson stated that he had two inquiries related to healthcare. He stated that he was under the impression that Downstate Medical Center s losses reached as high as $10 million a month, and he questioned whether that situation has been corrected. Mr. Volk responded by stating that the Medical Center still has significant losses. Mr. Johnson then asked if there has been any thought on the part of staff of contacting Syracuse University after the University s announcement that it may start a medical school next to Upstate Medical Center Mr. Johnson further noted that Syracuse University had announced within the last four weeks that the University plans on starting a Medical School in conjunction with the Veterans Administration, which will be in direct competition with Upstate Medical Center. He indicated that DASNY should be cognizant of this matter. The Chair inquired with Mr. Abel as to whether this project is at the proposal stage or whether it has it been approved, and if so, when it will happen. Mr. Abel responded by stating that he believes that it is in the very early stages. He noted that the public has been aware of it since the first week in August. Mr. Johnson stated that he just wanted to make the Members aware and asked that his comment be made part of the record. The Chair thanked Mr. Johnson for the update. The Chair directed the Members to the resolution authorizing execution of the Collective Bargaining Agreement with UAW. Mr. Hedges moved the adoption of the following entitled Resolution: A RESOLUTION OF THE DORMITORY AUTHORITY OF THE STATE OF NEW YORK ( DASNY ) APPROVING AND AUTHORIZING THE EXECUTION OF A COLLECTIVE BARGAINING AGREEMENT Mr. Gardner seconded the motion and the Resolution was unanimously adopted. General Counsel s Report Mr. Cusack began his Report by acknowledging the service provided to DASNY by Carey Gabay, Esq., who was a supervising attorney in the Governor s Counsel s Office and DASNY s primary contact until a few months ago when he began work at Empire State 11

12 Development. He stated that Mr. Gabay was critically injured over Labor Day weekend in Brooklyn by a stray bullet in a gang-related incident. Mr. Cusack informed the Members that Mr. Gabay was an anchor of knowledge and integrity, and that DASNY s thoughts and prayers are with Mr. Gabay and his family during this difficult time. Mr. Cusack stated that before the Members for their consideration is a proposed Declaration of Official Intent in connection with the Health Care Facilities Transformation Program with the New York State Department of Health. He noted that the Program authorizes the award of up to $700 million in grants to improve the health care delivery system in Kings County, as well as up to $300 million to improve the health care delivery system in Oneida County. Mr. Cusack explained that this action preserves the State s right to seek reimbursement of certain costs from the proceeds of tax-exempt bonds to be issued by DASNY in the future. He further explained that DASNY has hired an outside law firm and may engage other consultants to assist with the evaluation of applications for the purposes of awarding grants under the Program, and to provide legal and other advice and assistance to DASNY and/or DOH in connection with the joint administration of the Program. Mr. Cusack informed the Members that the Declaration of Intent sets forth the intent to issue tax-exempt bonds and to reimburse, from the proceeds of such bonds, all or a portion of the expenditures incurred to pay legal and consultants fees more than 60 days prior to the date of the issuance of the bonds. Mr. Abel disclosed his interest in the Program through his employment at DOH. Mr. Romski moved the adoption of the following entitled Resolution: STATE PERSONAL INCOME TAX (GENERAL PURPOSE) OR STATE SALES TAX REVENUE BONDS OFFICIAL INTENT RESOLUTION Ms. Snyder seconded the motion and the Resolution was unanimously adopted. Mr. Cusack informed the Members that Mauro Lapetina, Managing General Counsel, has retired from DASNY after more than 30 years of service. He stated that he will work part time at DASNY for the next few months. The Members expressed their appreciation for Mr. Lapetina s service and the breadth of his institutional knowledge. Public Finance and Portfolio Monitoring Report Ms. Lee reported that six bond issues were priced since the last Regular Meeting: Icahn School of Medicine at Mount Sinai; Memorial Sloan-Kettering Cancer Center; United Health Services Hospitals, Inc. Obligated Group; Onondaga-Cortland-Madison BOCES, Sales Tax Revenue Bonds and Personal Income Tax ( PIT ) Bonds. She provided a brief market update. Ms. Lee stated that the market has been very volatile as attention has been focused on the potential rise in interest rates, the job report released last week, and the state of the Chinese economy. She informed the Members that the current one-year AAA MMD is.23%; the tenyear MMD is 2.20%; and the thirty-year MMD is 3.14%, as compared to.29%; 2.32%; and 3.30% respectively, at the last Regular Meeting. 12

13 Mr. Abel moved that the Members go into Executive Session to discuss the financial and credit history of particular corporations. Mr. Gardner seconded the motion and the Members went into Executive Session. EXECUTIVE SESSION While in Executive Session, no action was taken other than that to return to Public Session. PUBLIC SESSION Construction Report Mr. Curro directed the Members attention to the photograph on the cover of this month s Construction Division Report. He stated that the photos depict the renovation of Mason Hall at SUNY Plattsburgh. Mr. Curro informed the Members that the project involved the renovation of a 194-bed low-rise residence hall including M/E/P systems, communication and security systems, the addition of six new single rooms, the renovation of the residence hall Director s apartment, a new mailroom, a new elevator, new finishes and flooring, and a new entrance including site work. He stated that design on the $6.5 million project began in December 2013 and construction was completed in May Mr. Curro further stated that the Mason Hall project was the fourth of nine renovation projects set forth in the School s master plan adopted about five years ago. He noted that the overall program investment is approximately $90 million. Mr. Curro reported that construction expenditures to date this year are approximately $200 million, as compared to $282 million over the same time period last year. Mr. Curro summarized the SUNY summer projects. He stated that DASNY undertook six capital projects totaling approximately $61 million, as well as thirty-seven other smaller summer projects on various campuses totaling approximately $48 million. Mr. Curro informed the Members that in addition to the SUNY Plattsburgh Mason Hall project, the six capital projects consisted of the $11 million Waterbury Hall renovation at SUNY Oswego; an $11 million renovation of Tower One at Buffalo State; the construction of Ridgeview Hall at New Paltz, which cost approximately $31.4 million; a $3.2 million exterior masonry project at SUNY Purchase; and Phase II of the East Wing of Heritage Hall at SUNY Canton for $3 million. He explained that the smaller summer projects consisted of tasks such as window replacements, roof replacements, bathroom renovations, fire alarm system upgrades, laundry room renovations, site work, utilities and elevator upgrades. Mr. Curro noted that a separate project involving repairs at the SUNY Fredonia campus was completed in July, in time for the Fall semester. Mr. Curro provided a brief update with respect to several construction projects. He stated that the ASRC-CCNY project achieved substantial completion in mid-july, and the on-site focus has shifted to closing out subcontractor contracts, punchlists and day two work. Mr. Curro informed the Members that all trades are active at Bernard Fineson. He stated that although OPWDD has requested a November 2015 completion, the contractors have estimated the final completion date to be March Mr. Curro reported that DASNY is working with the contractors to determine how quickly the project can be completed. 13

14 Mr. Curro stated that the design associated with the Baruch Canopy remedial repairs is complete and the contractor is currently developing a construction schedule and budget. He further stated that work on the project is expected to begin by early October and should be completed by December Mr. Curro reported that the Staten Island Courthouse will be ready for occupancy by the end of the month. He further reported that DASNY has provided completion dates to the two general contractors at the Bronx PC project, and at that time, DASNY will take over the project pursuant to the owner s right to do work contract clause. Mr. Curro informed the Members that DASNY met with the Fashion Institute of Technology ( FIT ) last week and will be providing design and construction management services in connection with the C 2 project, which has been funded to $148 million. The Chair thanked Mr. Curro for his report, and congratulated him on being awarded the FIT project, as well as for the successful, on-time completion of the SUNY summer projects. Office of Executive Initiatives Report Ms. Spann delivered the monthly report for the Office of Executive Initiatives ( OEI ). She informed the Members that the Information Services Unit ( IS ) is now in the Office of Executive Initiatives. Ms. Spann stated that one of her first responsibilities will be to determine how technology is currently used at DASNY, and how it can be utilized in the future in order to succeed in the marketplace. She noted that the effective and innovative utilization of technology, both internally and externally, is necessary to be competitive and efficient. Ms. Spann stated that she is working with key staff in the IS unit to evaluate, test, and plan for the increased utilization of technology, including new programs and devices. She further stated that her staff will focus on selecting the best applications to meet DASNY s needs. Ms. Spann informed the Members that she anticipates providing a proposal to management in the near future regarding hardware and software needs. Ms. Spann stated that the Opportunity Programs Group ( OPG ) is finalizing the responses to the recommendations set forth in the Office of the State Comptroller MWBE Audit. She further stated that OPG staff is preparing for the statewide MWBE Forum to be held in early October. Ms. Spann reported that her staff is working on an MWBE utilization tracking mechanism in order to meet or exceed the State s MWBE utilization goal of 30%, and that she plans to better integrate the OPG and IS units in order to attain this milestone. She noted that she would like IS to work more closely with the Sustainability Unit, as well. Financial Report The Chair welcomed Mr. Pasicznyk back to the Board Meetings. Mr. Pasicznyk delivered the Financial Report and noted that this month s report includes activity for the months of May, June and July. He reported that the cash and investments in the HCRA account have increased by $7.4 million and that the balance is now approximately $79 million. Mr. Pasicznyk further reported that there are open commitments against these funds totaling $49.8 million, leaving an available balance of $29.2 million. 14

15 Mr. Pasicznyk informed the Members that HCRA receipts from various entities totaled $31.9 million, including $19.6 from the New York State Department of Health pursuant to the Budget. He stated that receivables totaled $140.6 million, of which $120.4 million has been reserved. Mr. Pasicznyk further stated that advances to institutions totaled $24.6 million, including disbursements to the Health Alliance, Kingsbrook Jewish Medical Center, Brookdale University Medical Center and Interfaith Medical Center, as well as new commitments to Kingsbrook Jewish Medical Center and Brookdale University Medical Center. Mr. Pasciznyk directed the Members attention to the Operating Budget and the Treasurer s Report on Investments for the Quarter Ended June 30, He stated that the actual operating budget was slightly below the projected budget and stated that there was an overall increase of approximately $308 million in the investment balances. Mr. Pasicznyk noted that the increase in investments was primarily related to new money bond issuances including PIT, and that that amount was offset by construction expenditures, bondholder payments and defeasance activity. The Chair reminded the Members that the next meeting is scheduled for October 7, 2015 at DASNY s Albany Office. Dr. Hedges moved that the Meeting adjourn, Mr. Abel seconded the motion and the Meeting was adjourned at approximately 12:45p.m. Respectfully submitted, Michael E. Cusack Assistant Secretary 15