Audio posted below
Debt Review Committee
October 23, 2019
Salt Lake County Government Center
2001 S State Street #N1-200, Salt Lake City, Utah 84190
Meeting Minutes
Attendees:
K Wayne Cushing (Chair), member
Dave Delquadro (Council), member
Darrin Casper (Mayor's Finance), member
Scott Tingley (Auditor), member
Ralph Chamness (District Attorney), member
Javaid Majid (Mayor's Finance), member
Brad Kendrick (Council), member
Craig Wangsgard (District Attorney)
Rod Kitchens (Mayor's Finance)
Ben Hokanson (Mayor's Finance)
Greg Folta (Mayor's Finance)
Dina Blaes (Mayor's Finance)
Mitch Park (County Council)
Jon Bronson, (Zions Public Finance)
Eric Pehrson (Zions Public Finance)
Marcus Keller (Zions Public Finance)
Cara Bertot (Zions Public Finance)
Ben Umeadi (Treasurer)
Blake Wade (Gilmore Bell)
Brad Patterson (Gilmore Bell)
Peter Phillippi (Piper Jaffray)
Brad Langner (Piper Jaffray)
Jennifer Durham (Auditor)
Lisa Daniels (Treasurer)
Meeting called to order by Chairman Cushing.
Public Comment
None
Approval of Minutes
Thanks to Jon for making some tweaks to the September minutes. A corrected version of the minutes was sent to all Debt Review Committee members. A motion was made by Javaid and seconded by Darrin to approve the corrected September 25, 2019 minutes. All were in favor.
Financial Advisor Updates
Jon stated the recent bump in the last two weeks has been a significant jump. When unemployment rates go down it has shown as a precursor to a recession and the current rate is at a 50-year low of 3.5%. Wasatch front inflation jumped in August and home pricing has slowed. JP Morgan MMD 10-year rates forecast movement downward and then upward again in the next year. Municipal rates are drifting higher and the yield curve has steepened. The calendar of bonds in the market has been heavy and the market is handling it. Funds flowing into municipal bonds continue positive.
Conduit Issuance for Convention Hotel
Darrin stated that this has been a priority project for some time for Salt Lake County to bring in a convention center hotel. He introduced Brad Patterson and Peter Phillippi from Piper Jaffray to go over the conduit application. Craig stated Gillmore Bell will be the County's Bond Counsel. An overview of the project was presented. The owner is Salt Lake City, LLC which includes Portman Holdings, DDRM Companies and Hensel Phelps. Piper has been retained by the developer/owner to raise all the capital and that has been accomplished. This is the last piece. This request will be issued as taxable bonds and sold to accredited investors with the County as the issuer. Piper Jaffray is serving as the financier for all the funds for this $351 million project. With financing coming from a combination of sources it is critical that they all close at the same time, which is currently set as December 11, 2019. Jon asked if there will be an offering document, which there is, and that will need to come through the DRC which will be scheduled for November 20, 2019. A motion for parameters of $55 million max par, 7% interest rate, max term 30 years, max discount par 3% was made by Darrin and seconded by Javaid. All were in favor.
Disclosure Procedures: Reportable Events and Materiality
Craig has sent out a revised Policy 1060. Debt Review was eliminated from the policy and replaced with Disclosure Officer to evaluate. Materiality is being defined as 2% of the property taxes paid in the prior year. Jon asked where Disclosure Officer is defined, and Craig says it is not. He figures Darrin will appoint one of his people to be the Disclosure Officer. Dina stated that much of Policy 1060 revised is being incorporated into a Fiscal Procedures Ordinance which became a new State Law in 2018. Both of those documents should come back to the DRC before it goes on to Steering Committee. The goal is to get these revisions done by the end of November.
Due Diligence Review - G.O. Bonds
Darrin will set up a rehearsal meeting with Arlyn. The calendar, distribution list and a set of debt service numbers which were rerun due to the increase with rates were reviewed. The new Tax Impact Analysis shows that the annual cost to homeowners is down almost $3.00 from what was initially stated, and cost to businesses is down $5.31. Eric led the POS document. Darrin stated that his title is Deputy Mayor of Finance and Administration. Other corrections were addressed.
Due Diligence Review - Sales Tax Rev Bonds
Dina reported two of the three shelters are complete. South Salt Lake Shelter is the last to be completed. Inspection teams have been sent out. $10.8 million has been spent so far. The total cost is projected to be about $16 million. Greg stated they are talking to multiple CDE. Nothing firm yet. To make NMTC work we would need to transfer title of at least one facility. Jon and Cara have been working on the idea of trying to designate the bonds as Social Impact Bonds. Jon has a call into the IMCA (International Municipal Credit Association in Zurich) who controls the designation of social bonds. There's no requirement, just an agreement to enter annual reporting (like NMTC) for the life of the loan. It can't hurt us; it can only help us. It would be the first social bond in Utah.
The calendar and debt service packet were reviewed. Eric led the POS document. Eric asked Dina for a better description of the project as the details would appeal to investors.
New Business
The Debt Review Committee will meet again on November 20, 2019.
Javaid made a motion to adjourn and the meeting ended at 4:25 pm.
Handouts posted below