STATE OF CONNECTICUT HEALTH AND EDUCATIONAL FACILITIES AUTHORITY

STATE OF CONNECTICUT HEALTH AND EDUCATIONAL FACILITIES AUTHORITY Minutes of Authority Board Meeting June 20, 2012 The State of Connecticut Health and Educational Facilities Authority met at 1:30 p.m. on Wednesday, June 20, 2012. The meeting was called to order at 1:35 p.m. by Barbara Rubin, Chair of the Board of Directors of the Authority. Those present and absent were as follows: PRESENT: John M. Biancamano Benson R. Cohn Patrick A. Colangelo, Vice Chair Robert S. Dakers (Rep. Secretary Benjamin B. Barnes) Peter W. Lisi Dr. Estela R. Lopez (via phone) Bryan K. Pollard, Esq. Barbara Rubin, Chair Sarah K. Sanders (Rep. Honorable Denise L. Nappier) ABSENT: None ALSO PRESENT: Jeffrey A. Asher, Executive Director Paula L. Herman, General Counsel Eileen MacDonald, Senior Transaction Specialist Kimberley Fontaine, Marketing & Philanthropy Coordinator JoAnne N. Mackewicz, Controller Michael F. Morris, Assistant Director Cynthia D. Peoples H., Assistant Director Debra M. Pinney, Manager of Administrative Services Norberto Ramirez, Compliance Internal Auditor Jennifer Smyth, Legal Services Specialist David, Wasch, Legislative Liaison/ ECE Program Specialist Jeanette W. Weldon, Managing Director of the Connecticut Health and Educational Facilities Authority

GUESTS: Marcus Anderson, Intern, Office of the State Treasurer Julie A. Balerna, Vice President, The Bank of New York Mellon Jeremy Bass, Consultant, Public Financial Management Coleman Casey, Esq., Shipman & Goodwin LLP Carrianna Field, Esq., Pullman & Comley LLC Scott Gibson, Director, RBC Capital Markets Laurie Hall, Esq., Hawkins, Delafield & Wood LLP Samuel E. Rush, Deputy Director, CHESLA Edward J. Samorajczyk, Esq., Robinson & Cole, LLP Namita T. Shah, Esq., Day Pitney, LLP Christine Shaw, Deputy State Treasurer, State of Connecticut Jason Sutherland, Intern, Office of the State Treasurer Eric P. Taylor, Esq., Harris Beach PLLC Christopher Valentino, Vice President, Lamont Financial Services Corp. Jane Warren, Esq., McCarter & English, LLP Jeffrey Weldon, Intern, Office of the State Treasurer Noreen P. White, Co-President, Acacia Financial John D. Yarbrough, Jr., Esq., Carmody & Torrance, LLP INTRODUCTIONS Mr. Asher introduced Christine Shaw, the new Deputy State Treasurer. Ms. Weldon pointed out that also in attendance today are three student interns from the State Treasurer s Office: Marcus Anderson, Jason Sutherland, and Jeffrey Weldon. Ms. Weldon also introduced another guest at today s meeting, Samuel Rush, Deputy Director of the Connecticut Higher Education Supplemental Loan Authority (CHESLA). MINUTES Ms. Rubin requested a motion for approval of the minutes of the May 16, 2012 Meeting of the Board of Directors. Mr. Pollard moved for approval of the minutes, which was seconded by Mr. Colangelo. Upon roll call, the Ayes, Nays and Abstentions were as follows: APPROVED June 20, 2012 Board Meeting Minutes 2

AYES NAYS ABSTENTIONS Patrick Colangelo None John Biancamano 1 Benson Cohn Peter Lisi Dr. Estela Lopez Bryan Pollard Barbara Rubin Sarah Sanders Mr. Dakers entered the meeting at 1:38 p.m. MUNICIPAL SECURITIES RULEMAKING BOARD RULE G-17 Ms. White presented an overview of the changes to the MSRB Rule G-17: Duties of Underwriters to Issuers and provided a handout on the topic of discussion. Discussion ensued on the role of the underwriter and financial advisor on a transaction. GRANTS SECTOR ANALYSIS REPORT Mr. Asher reported on some of the aspects of the Grant Programs Sector Analysis Report, prepared by Mrs. Fontaine. Mr. Asher pointed out that Mrs. Fontaine has done an excellent job in managing the Grant process this year, considering that the Authority began a relatively new process in which the area foundations were not responsible for the review process and applicants submitted letters of intent directly to the Authority. Mr. Asher stated that through FY 2012 the Authority has awarded approximately $18.9 million dollars in grants. Mr. Asher believes there will be much more interest in the grant program for FY 2013 because of the positive press the Authority received this year. Mr. Asher added that for the Nonprofit Grant Program, there was a significant amount of money funded for operations, which was based on the nature of the program where the Authority was looking to provide direct services, food, shelter, and healthcare. The largest amount of money funded for the Client Grant Program was for capital improvements. Mr. Asher also reported on the distribution of grants awarded by town. The major change the Authority made with respect to the process for grant recipients was to change the application process to allow the recipient to initially submit a letter of intent, allowing them to avoid the lengthy process of completing an entire application unless the proposed project met the general guidelines and areas of interest of the Authority. Electronic submissions of applications allowed a more streamlined process for both the recipients and reviewers. 1 Mr. Biancamano abstained from voting as he was not present at the May 16, 2012 meeting. APPROVED June 20, 2012 Board Meeting Minutes 3

Mr. Asher stated that the Authority hope to sustain the Grant programs on an ongoing basis at a consistent level. CURRENT AND PENDING BOND ISSUES Financing Forecast Ms. MacDonald reported that Staff is working on two private placement issues with Webster Bank; one for Renbrook School, refinancing their Series A Issue for $8 million and the other for Masonicare for approximately $34 million to refund their Series D Issue, both of which will be presented at the July 18 Board meeting. Summary of Financings Ms. MacDonald reported that the Authority closed the Bridgeport Hospital Issue, Series D, on May 31, 2012. The Pomfret School Issue, Series B, closed on June 14, 2012 and Stamford Hospital will close its Series J issue today. Interest Rate and Market Update Ms. Peoples reported on recent market activity, money market rates, economic indices and yield curve trends. Municipal Market Activity Ms. Weldon presented her report on municipal market activity. APPOINTMENT OF CHESLA BOARD MEMBERS Mr. Asher provided a brief background on the individuals not members of the Authority Board being recommended for appointment to the CHESLA Board of Directors. Ms. Herman explained the statutory requirements applicable to the CHESLA Board composition and the length of the terms of the appointments. Ms. Rubin recommended that Authority Staff distribute a copy of the full roster of the CHESLA Board Members to the CHEFA Board of Directors. Ms. Rubin introduced Resolution #2012-12, authorizing the appointment of Mr. Peter W. Lisi, Mr., Ms. Julie B. Savino and Mr. Martin L. Budd to the CHESLA Board of Directors. Mr. Biancamano moved for the adoption of the resolution, which was seconded by Mr. Colangelo. Upon roll call, the Ayes, Nays and Abstentions were as follows: APPROVED June 20, 2012 Board Meeting Minutes 4

AYES NAYS ABSTENTIONS John Biancamano None None Patrick Colangelo Benson Cohn Robert Dakers Peter Lisi Dr. Estela Lopez Bryan Pollard Barbara Rubin Sarah Sanders SALES REPORTS Ms. Noreen White from Acacia Financial Group, Inc. presented a sales report on the Bridgeport Hospital Issue, Series D. Mr. Christopher Valentino from Lamont Financial Services presented two sales reports: (1) Pomfret School Issue, Series B and (2) Stamford Hospital Issue, Series J. STAFF MEMO Westminster School Issue, Series G Mr. Morris presented the Westminster Issue, Series G, new money financing of approximately $6.5 million. This will be a fixed-rate direct placement with Webster Bank with a 30-year amortization and a 10-year mandatory tender. Security for the transaction will be on a parity basis with the School s outstanding Series C, D, E and F issues, with a gross receipts pledge and a negative pledge. There is not a mortgage or a debt service reserve fund. The School has approximately 400 students, with nearly three quarters consisting of boarders. Westminster School has an A rating with Standard & Poor s with a Stable Outlook. The four outstanding bond issues for the School total $40.1 million. The Series G proceeds will be used to finance a portion of the construction of two new residential facilities; demolition of two existing dormitories and three faculty residences upon completion of the residence halls; construction of a new carriage house and two garages; a new faculty residence; installation of a new synthetic turf field; and reconfiguration and improvements to the School s campus. The total cost of the project is approximately $24 million, of which the School has raised $18 million with $10 million received from one donor. Financial covenants required by the bank include a balance sheet test which is similar to what is currently in place and a debt service coverage ratio test which is the same. Should the School fail to meet any of the covenants, the default rate will be 5% above of the stated interest rate. APPROVED June 20, 2012 Board Meeting Minutes 5

Ms. Rubin introduced Resolution #2012-13, Westminster School Issue, Series G, authorizing, which resolution was included in the materials distributed to the Board. Mr. Pollard moved for adoption of Resolution #2012-13, which was seconded by Mr. Colangelo. Upon roll call, the Ayes, Nays and Abstentions were as follows: AYES NAYS ABSTENTIONS John Biancamano None None Patrick Colangelo Benson Cohn Robert Dakers Peter Lisi Dr. Estela Lopez Bryan Pollard Barbara Rubin Sarah Sanders CHEFA FINANCIAL OPERATIONS April 2012 Financial Statements Ms. Mackewicz gave the financial report for the ten months ending April 30, 2012. Revenues exceeded expenses by approximately $2.9 million before program related expenses and approximately $684,000 after program related expenses. Revenues were under budget by approximately $20,000 and expenses were under budget by approximately $76,000. There were no notable items. The Authority continues to disburse checks to the grant recipient organizations and there is approximately $128,000 left to disburse. In early FY 2013, the Authority will release the last payment to the Connecticut Data Collaborative Partnership. COMMITTEE REPORT Audit-Finance Committee Report Mr. Cohn reported that the Audit-Finance Committee met today prior to the Board meeting. The Committee s primary discussion item today being the Internal Audit Report on Organizational Governance: Governance and Risk Management Frameworks and the second being the performance evaluation of Mr. Ramirez. There were two findings and recommendations on the Internal Audit Report: (1) Create an Executive Director succession plan and (2) Self-evaluation conducted by the Board. The Committee requested that Mr. Ramirez revise the findings and recommendations in the report to better reflect the practical realities of CHEFA s size and structure. The Committee also asked that the audit report, as it will be revised, be circulated to the entire Board of Directors APPROVED June 20, 2012 Board Meeting Minutes 6

and be added to the next Board meeting agenda. The Committee also requested Staff provide a response at the next Board meeting as to the manner these recommendations apply to the Authority. EXECUTIVE DIRECTOR S REPORT Mr. Asher reported that, as of today, the Authority still does not have a lease renewal document, or finalization of its tenant improvement allowances. He has pursued discussions with the building owner s representative and has resorted to sending an email request to the president of the company to obtain assistance in speeding up the process. Apparently, the building owners need to obtain approval from the bank on lease terms, building renovations, etc. Mr. Asher notified the building representative that it has been almost a year since we began this; therefore, Management has decided to begin looking elsewhere to lease space. Mr. Asher pointed out the Connecticut Data Collaborative Conference will be held tomorrow, June 21, at Rentschler Field in East Hartford. Secretary Barnes from OPM and the co-chair of the Appropriations Committee at the Legislature have been asked to speak. The Legislature has seen the capabilities of the Data Collaborative project and there has been much interest, within the State, as well in the nonprofit community, to make sure that this project has sustainability and continued viability. The Authority has been receiving recognition for providing the funding to get this project underway and operational. OTHER BUSINESS There being no further business, at 2:27 p.m., Mr. Colangelo moved to adjourn and Mr. Biancamano seconded his motion. Upon roll call, the Ayes, Nays and Abstentions were as follows: AYES NAYS ABSTENTIONS John Biancamano None None Patrick Colangelo Benson Cohn Robert Dakers Peter Lisi Dr. Estela Lopez Bryan Pollard Barbara Rubin Sarah Sanders APPROVED June 20, 2012 Board Meeting Minutes 7

Respectfully submitted, Jeffrey A. Asher Executive Director APPROVED June 20, 2012 Board Meeting Minutes 8