08/05/1983

UCCSN Board of Regents' Meeting Minutes
August 5-6, 1983








08-05-1983

Pages 16-18



BOARD OF REGENTS

UNIVERSITY OF NEVADA SYSTEM

August 5, 1983



The Board of Regents met on the above date in a special meeting

in the Alumni Room, Student Union, University of Nevada, Reno,

and 399 Carlson Education building, University of Nevada, Las

Vegas, via telephonic hookup.



Members present: Mr. John R. Mc Bride, Chairman

Ms. Frankie Sue Del Papa

Mrs. Lilly Fong

Mrs. Dorothy S. Gallagher

Mr. Chris Karamanos

Mr. Daniel J. Klaich

Mrs. Jo Ann Sheerin

Mrs. June F. Whitley



Members absent: Joan Kenney



Others present: Mr. Mark Dawson, Vice Chancellor

Mr. Donald Klasic, General Counsel

Ms. Mary Lou Moser, Secretary



The meeting was called to order by Chairman Mc Bride at 3:02 P.M.



1. Approval to Appoint Investment Bankers as Co-Managers for

Refunding Certain Outstanding Revenue Bonds



At their March 16-17, 1983 meeting, the Board of Regents

authorized the refunding of the outstanding Bonds of the

University's Reno Campus, Las Vegas Campus and the Univer-

sity System. There are 12 total issues to be refunded:

5 UNR issues, 5 UNLV issues and 2 System issues. The System

issues came about by the cross pledging of revenue to retire

the debt.



There are several purposes for the refunding. First, there

will be a dollar savings by retiring some of these issues

sooner than the planned maturity dates. Second, these is-

sues are supported from student revenues that are cross

pledged between the two Campuses necessitating an on-going

audit requirement that is needlessly cumbersome and expen-

sive, but required to properly manage these issues. Third,

the reserve funds required in the bond indentures for each

of these 12 issues have left both Campuses with no flexi-

bility to issue new debt for capital projects. These re-

serve funds amounting to approximately $1.8 million on the

Reno Campus and approximately $1.8 million on the Las Vegas

Campus will be freed up for the use on each Campus as deemed

best.



In addition, the 1983 Legislature through SB 410 authorized

bonds to be issued not to exceed $5 million for construction

of the Church Fine Arts addition on the Reno Campus. With-

out the refunding of the 12 outstanding issues this new bond

issue would not be possible.



Requests for proposals to refund the outstanding issues were

submitted to 15 national and regional underwriting firms

with 9 firms responding.



A review committee comprised of Herman Westfall, Vice Presi-

dent for Business Affairs, UNLV, Ashok Dhingra, Vice Presi-

sent for Finance and Administration, UNR, Regent Dan Klaich

and Mark Dawson, Vice Chancellor for Finance and Administra-

tion, reviewed the 9 proposals with assistance of Stanton

Colton of Prudential-Bache Securities, Burrows-Smith Divi-

sion.



Vice Chancellor Dawson recommended that the firm of E. F.

Hutton be approved as Senior Manager with Merrill-Lynch and

Blythe-Eastman-Paine-Webber as the co-managers for the bond

issues described above.



The 1983 Legislature authorized the University to refund the

$40 million outstanding bonds on the Special Events Centers.

Vice Chancellor Dawson recommended that the 9 firms also be

approved with Blythe-Eastman-Paine-Webber as senior manager

and the firms of E. F. Hutton and Merrill-Lynch as co-man-

agers.



Mrs. Gallagher moved approval of the appointment of invest-

ment bankers as co-managers for refunding certain outstand-

ing revenue bonds. Mr. Karamanos seconded.



Mrs. Fong asked how the refunding could justify savings when

11 out of the 12 outstanding bonds were purchased at 3%, 5%,

6% and 7% while current bond rates are between 9% and 12%.

Vice Chancellor Dawson stated that the federal law allows

the System to invest bond proceeds at a rate equivalent to

the interest rate the System is paying. Therefore, the Sys-

tem is receiving interest at the current market value of

between 9% and 12% and paying interest on the old bond is-

sues at the current rate of retiring the market rate.



Mrs. Fong asked Vice Chancellor Dawson what the projection

of cash flow for the next year and thereafter on the re-

served funds of $1.8 million being freed up at UNR and $1.8

million at UNLV this year as a result of the refunding.

Vice Chancellor Dawson stated that the next year we are

estimating about 200,000 credit hours each at UNLV and UNR.

The current Capital Improvement Fee account is $7 per credit

hour; therefore, $1.4 million will be realized this year.

That amount will go up if student enrollment goes up on

each Campus.



Mrs. Fong then asked if the overissuance of bonds is a pos-

sibility which will cause the bonds to become taxable, how

will this keep from happening? Vice Chancellor Dawson

responded in saying that the Church Fine Arts addition is

estimated to cost of $6 million. We are issuing $5 million

in bonds. We would have to realize a savings on the bid

process in excess of $1 million over the estimation before

this becomes a concern.



Motion carried.



2. New Business



Mr. Karamanos requested Vice Chancellor Dawson to touch base

with the System's investment bank managers.



The meeting adjourned at 3:15 P.M.



Mary Lou Moser

Secretary of the Board

08-05-1983