August 5-6, 1983
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
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
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-
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-
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
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.
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