MINUTES OF Meeting of
Private Colleges and Universities Authority
A special meeting of the Private Colleges and Universities Authority (the “Authority”) was held on Thursday, May 20, 2020, by Zoom virtual conference and by telephone conference at 5:00 p.m. Members George Andrews, Joseph W.C. Montgomery, David Sims, and Bill Tanner attended the meeting via Zoom virtual conference. Amber Pelot, Colony C. Canady and Carlos Encinas of Alston & Bird, as counsel to the Authority, were also present via Zoom virtual conference for the meeting.
The following guests were also present via Zoom virtual conference:
King & Spalding (Bond Counsel and on Behalf of Emory University)
Caroline Loftin
Emory University (the “University”)
Amy Reding Andrews (via telephone)
Mauldin & Jenkins
Josh Carroll
Total Spectrum
Jeremy Collins
Call to Order
Mr. George Andrews called the meeting to order. All members and guests introduced themselves.
Pricing update related to the Private Colleges and Universities Authority’s Revenue Bonds, Series 2020, for the benefit of Emory University (the “Series 2020 Bonds”)
Ms. Loftin presented the pricing update to the Authority. She reminded the Authority that at the April 16, 2020 Authority meeting, they discussed the Series 2020 bond issuance on behalf of Emory University, where they considered and adopted the Parameters Bond in the amount not to exceed $2,100,000,000.00.
She reported that pricing went very well for Emory University and they ended up with a par amount of $486,470,000.00 of bonds issued as serial bonds maturing between September 2025 – 2041, at a premium of $118 million, amounting to sales proceeds of $604 million. Ms. Loftin noted that all of the bonds went towards the refunding of obligations of Emory University, including Series 2005-B, 2005-C, 2013-C Bonds, some of the taxable commercial paper that Emory issued relating to Emory John’s Creek and the acquisition of DeKalb Medical.
Ms. Pelot had Ms. Loftin confirm that all proceeds of the bonds would be used for refunding, and that there would be no new money projects. Ms. Loftin added that all bond proceeds would be used to take out prior debt within 90 days, but more likely by July 8, 2020, with the majority being used by June 22, 2020.
Mr. Tanner asked whether there would be a single firm underwriting the bonds, to which Ms. Loftin responded that there would be four (4) underwriters: the lead underwriter, Morgan Stanley, Bank of America, Barclays, and SunTrust.
Ms. Andrews added that the all-in TIC was 2.18% and that this was the most successful tax-exempt pricing since February. Mr. Montgomery then asked what accounted for the successful pricing, to which Ms. Loftin responded that there had been a lot of discussion regarding COVID-19 in the market, and compared to other borrowers, Emory is doing very well and continues to prove itself with its numbers and has a more positive outlook compared to other borrowers.
Consideration of Supplemental Resolution for the benefit of Emory University related to the Series 2020 Bonds
There being no additional questions or discussion, a motion was made by Mr. Montgomery and seconded by Mr. Sims to approve the Supplemental Resolution. The motion was approved unanimously by the members of the Authority.
Audit Report by Mauldin & Jenkins
Mr. Carroll presented the 2019 audit results, noting that the results were very similar to past presentations. Mr. Carroll’s report highlighted several areas of the audit review, including generally accepted auditing standards, relationship with management and an overview of the Authority’s trend of cash over the last few years. He highlighted the Authority’s use of the cash-basis of accounting, which is not generally accepted, but due to limited activity of Authority this basis of accounting is appropriate. There was no audit adjustments or past adjustments.
He added that overall, he was very pleased with the audit, that the systems in control for protecting the Authority’s accounts and funds seemed adequate, that the Authority’s counsel, Alston & Bird, was cooperative and responsive throughout the audit process and that Mauldin & Jenkins had a very good relationship with Alston & Bird and the Authority. Mr. Carroll concluded by thanking the Authority for allowing Mauldin & Jenkins to continue to provide its services to the Authority.
Mr. Montgomery inquired as to whether there were any internal controls which needed modification or improvement, to which Mr. Carroll responded that he did not see any reason to make any changes and that all checks and balances appear to be in order.
Mr. Andrews thanked Mr. Carroll and his team for their work. There being no questions or further discussion, a motion was made by Mr. Sims and seconded by Mr. Tanner to approve the audit results. The motion was approved unanimously by the members of the Authority.
Monitoring Proposal by Total Spectrum
Mr. Collins introduced himself and provided brief background about Total Spectrum, noting that they are a full-service government affairs shop, which monitors all current legislation, with identified teams that monitor and report back on specific legislation and bills. Total Spectrum proposed a fee for monitoring and services for the Authority at $3,500 per month.
Mr. Sim asked Mr. Collins to discuss how their firm engages the Governor, to which Mr. Collins explained that each agency has a Total Spectrum representative who is at the Capitol each day to push their respective legislation and they are very familiar with the members of the legislature and the Governor’s office.
Mr. Collins then spoke about timing and the impact that the COVID-19 pandemic has had, noting that ideally, it would be best to have representation at the beginning of the legislative session, but given the pandemic and session delay, it is not too late for the Authority to engage and have representation at this point in the legislative session.
Mr. Montgomery noted that in addition to monitoring, the Authority submitted a bill that would amend the Code to allow the Authority to meet by teleconference or meet by other methods, and inquired as to whether that was something Total Spectrum could assist with, to which Mr. Collins noted that such services do fall within Total Spectrum’s scope of services.
There was some discussion amongst the Authority members.
Following Mr. Collins’ exit from the meeting, the Authority members continued the conversation. The Authority members decided to engage Mr. Collins due to his experience and reasonable fee. After there were no additional discussion or questions, a motion was made by Mr. Tanner and seconded by Mr. Montgomery to approve the proposal from Total Spectrum. The motion was approved unanimously by the members of the Authority.
Mr. Andrews raised the idea of adjusting the Authority’s fee structure to recoup some of the fees the Authority spent on litigation and subsequent monitoring from the various universities and colleges. A motion was made by Mr. Tanner and seconded by Mr. Sims to delegate authority to the Chairman and Treasurer to review and amend the current policies and procedures of the Authority in order to adjust the current administrative fee cap from $35,000.00 to an amount deemed reasonable and appropriate. The motion was approved unanimously by the members of the Authority.
Treasurer’s Report
Mr. Montgomery first presented the Authority members with the Mauldin & Jenkins invoice in the amount of $8,500.00 in connection with the Authority’s annual audit. Ms. Pelot noted that she was very pleased with the services of Mauldin & Jenkins, adding that they were very thorough and diligent. There being no questions, a motion was made by Mr. Montgomery and seconded by Mr. Sims to approve and pay the Mauldin & Jenkins invoice in the amount of $8,500.00. The motion was approved unanimously by the members of the Authority.
Mr. Montgomery then presented the Authority members with the Alston & Bird invoice in the amount of $9,992.00 related to services rendered by Alston & Bird for the period of April 2020 and May 2020, in connection with the Authority’s audit and discussions with Mr. Collins related to the possible engagement of Total Spectrum for monitoring services. There being no questions or discussion, a motion was made by Mr. Montgomery and seconded by Mr. Tanner to approve and pay the Alston & Bird invoice in the amount of $9,992.00. The motion was approved unanimously by the members of the Authority.
Approval of Minutes of April 16, 2020 Meeting of the Authority
A motion was made by Mr. Montgomery and seconded by Mr. Tanner to approve the minutes of the April 16, 2020 meeting as presented to the members of the Authority. The motion was approved unanimously by the members of the Authority.
FTN Update from Mr. Andrews
In connection with the proposed change in advisor for the Authority’s investment portfolio, Mr. Andrews provided a status update to the group, noting that he had been in touch with Mr. Curtis Whitaker of FTN Financial and that his team was ready to proceed with the Authority. Mr. Andrews noted that he would have Mr. Whitaker follow up with Alston & Bird to move forward with the creation of the Authority’s account with FTN.
Other Business
Ms. Pelot reminded the Authority members to provide her with any revisions to the Authority roster.
Adjournment
A motion was made by Mr. Tanner and seconded by Mr. Montgomery to adjourn the meeting. There being no additional business, the motion was approved unanimously by the members of the Authority, and the meeting was adjourned.
Respectfully submitted,
Amber Pelot,
Assistant Secretary