MINUTES OF MEETING OF THE PRIVATE COLLEGES AND UNIVERSITIES AUTHORITY
A meeting of the Private Colleges and Universities Authority (the “Authority”) was held on Wednesday, May 5, 2021 at 11:30 a.m., in person at the offices of the law firm of Alston & Bird LLP (“Alston & Bird”), at 1201 West Peachtree Street, Atlanta, Georgia, and also by Zoom virtual conference and by telephone conference. Members Ray Cobb, George Andrews, and Jim Timberlake attended the meeting in person. Member Jim Lientz attended the meeting via telephone. Member Joe Evans attended the meeting via Zoom.
Amber Pelot, Brittany Fales and Carlos Encinas of Alston & Bird, as counsel to the Authority, were present in person. Amber Pelot attended in person, and Brittany and Carlos attended by Zoom video conference.
The following guests were present by Zoom virtual conference:
The Corporation of Mercer University
Jim Netherton
Bill Solomon
Julie Davis
Butler Snow (Bond Counsel on Behalf of Mercer University)
Blake Sharpton
Stifel
Lee White
Brad Gysin
Nick Waugh
Call to Order
Mr. Cobb called the meeting to order. All members introduced themselves.
Approval of Minutes of April 14, 2021 Meeting of the Authority
A motion was made by Mr. Lientz and seconded by Mr. Andrews to approve the minutes of the April 14, 2021 meeting as presented to the members of the Authority. The motion was approved unanimously by the members of the Authority.
Review of Application (the “Application”) related to the issuance of the Private Colleges and Universities Authority’s Revenue Bonds (Mercer University Project), Series 2021, in an amount not to exceed $90,000,000, for the benefit of Mercer (the “Series 2021 Bonds”) and related documents.
Mr. Netherton introduced the transaction, went through the highlights of the Application, and presented information regarding how the Series 2021 Bond proceeds would be used. Mr. Netherton noted that potentially five independent projects would benefit from the Series 2021 Bond proceeds as follows:
- The first project is the construction of Mercer’s third medical school building in Columbus, Georgia, with the goal of producing physicians who can work in underserved rural areas of southwest Georgia. Mr. Netherton stated the governor and important members of the governor’s office have attended events related to this project and have made statements in support of the project. He stated the project is scheduled to be completed on November 18, 2021, and classes will begin in the building in January 2021. The medical school will admit 30 students this year to start and will ramp up to admit 60 students per year, ultimately holding 240 students in total. Mercer has received other funding for part of the project, including from the Columbus community and state funding. Mr. Netherton stated $22,000,000.00 of the bond funding would be used for this project.
- The second project is the construction of new intermural fields approximately a block from Mercer’s campus, which will allow the existing fields to be repurposed to support the school’s overall growth. He stated this project will be finished in August 2021.
- The third project is the renovation of a science building located on Mercer’s Atlanta Campus. The building has historical significance. Mr. Netherton stated a construction barrier has already been erected, and the project will be finished around November 2021. The exterior disruption will be at a minimum by the fall of 2021.
- The fourth project is the construction of new apartment buildings on Mercer’s Atlanta campus, and the purchase of a condo for administrative office space. This project will be finished in August 2021, and the office space will be completed to Mercer’s specifications.
- The fifth and final project is the renovation of a five-story building on the Atlanta campus that was acquired about 15 years ago. The renovations will consist of taking pavers off of the deck that goes around the first floor, installing a new roof, completing stucco repair, and completing other exterior repairs.
Mr. Netherton then emphasized to the Authority that the prices and amounts allocated to these projects in the Application are merely estimates, and he expects to have money left over. He pointed out that the amendment to the application provides that any excess funds could be applied to a similar project of high need, in either Macon or Atlanta, provided such project would follow the Authority’s requirements.
Mr. Netherton then updated the Authority on Mercer’s bond refunding activities. He expects that, if rates are good, they will refund the Authority’s Series 2012A Bonds, maturing on October 1, 2027 and October 1, 2032 when time allows, which will improve Mercer’s financial situation.
He stated there is a possible second bond refunding at a later date regarding the Authority’s Series 2012C Bonds, but such Series 2012C Bonds are not yet eligible for refunding so this is not part of the transaction before the Authority for consideration at this meeting.
At Ms. Pelot’s request, Mr. Sharpton clarified that the Series 2012C Bonds are not being refunded at this time and such refunding is not being approved by the Authority now; accordingly, the Mercer team would be back at a later date for consideration by the Authority of the refunding of the Series 2012C Bonds, all of which will be done pursuant to a separate inducement resolution and bond resolution.
Mr. Cobb asked whether the State had implemented any requirement that Mercer’s graduating physicians must agree to take a position in underserved areas of southwest Georgia. Mr. Netherton responded that there is no such requirement, possibly because of Mercer’s positive track record of producing many physicians out of the Savannah and Macon campuses that work in underserved areas.
Mr. Cobb inquired about the historical significance of the third project described above. Mr. Netherton responded that it was a small science building from the 1920s, which evidences how much Mercer and science have grown since its establishment. He stated every building on the historic quad (except for one) is between 90 and 125 years old, and therefore with its historical significance and age, this building is being preserved but heavily renovated.
Consideration and Approval of Inducement Resolution (the “Inducement Resolution”) for the benefit of Mercer related to the Series 2021 Bonds
Mr. Sharpton introduced the Inducement Resolution by explaining to the Authority that the Authority was being asked to consider both the Inducement Resolution and the Bond Resolution simultaneously at this meeting.
He stated the purpose of the Inducement Resolution and the Letter Agreement attached thereto is to put forth the broad terms of the agreement between the Authority and Mercer. The Inducement Resolution (including the Letter Agreement): (a) provides details with respect to Mercer’s projects and outlines what the bond proceeds will be used for, (b) establishes a $90,000,000.00 not to exceed amount, (c) details how the bonds will be sold and marketed (i.e. public offering), (d) establishes timing, indemnification, and reimbursement of the Authority’s expenses if bonds remain unsold, and (e) sets forth other key parameters. He summarized that the Inducement Resolution commences the bond issuance process.
A motion was made by Mr. Andrews and seconded by Mr. Lientz to approve the Inducement Resolution. The motion was approved unanimously by the members of the Authority.
Consideration of Bond Resolution (the “Bond Resolution”) for the benefit of Mercer related to the Series 2021 Bonds.
Mr. Sharpton next presented the Bond Resolution, explaining that it provides additional detail not reflected in the Inducement Resolution related to the Series 2021 Bonds being proposed. The Bond Resolution provides the basic forms of the instruments Mercer will be using at the closing on the transaction, such as the form of supplemental loan agreement, supplemental indenture, and escrow deposit agreement.
Mr. Sharpton provided the history with respect to the Authority’s issuance of bonds for the benefit of Mercer, including noting that the Authority has already issued for the benefit of Mercer three series of bonds and this will be the fourth issuance. Such issuances all date back to the original trust agreement and loan indenture duly adopted by the Authority in 2012.
Mr. Sharpton continued, noting that the Bond Resolution will authorize the commencement of the drafting process of a preliminary official statement, the public approval TEFRA process, and the validation process. He stated this Bond Resolution will allow Ms. Pelot, Mr. Sharpton, and rest of the team to begin associated tasks, so that TEFRA approval and validation can be achieved by closing. Mr. Sharpton said he and the rest of the Mercer team and underwriting team will return to the Authority regarding pricing results and approval thereof at a later date, and that Mercer will share the final pricing details with the Authority when the bonds are sold.
Mr. Evans disclosed that he owns some of the Series 2012C Bonds not currently being refunded, so when such Series 2012C Bonds need to be refunded and the transaction comes before the Authority at such time, he will need to recuse himself for voting purposes.
A motion was made by Mr. Andrews and seconded by Mr. Lientz to approve the Bond Resolution. The motion was approved unanimously by the members of the Authority.
Following the unanimous approval of the Bond Resolution, the Mercer team and the underwriting team exited the meeting.
Treasurer’s Report
Mr. Evans presented the Treasurer’s Report.
Resolution to add Chairman Ray Cobb and Treasurer Joe Evans to the Bank of America bank account for PCUA (in addition to Vice Chairman George Andrews and Assistant Treasurer Amber Pelot).
Mr. Evans explained that this Resolution would add Chairman Ray Cobb and Treasurer Joe Evans to the Bank of America bank account for the Authority.
A motion was made by Mr. Andrews and seconded by Mr. Lientz to approve the Resolution to add Chairman Ray Cobb and Treasurer Joe Evans to the Bank of America bank account for PCUA (in addition to Vice Chairman George Andrews and Assistant Treasurer Amber Pelot). The motion was approved unanimously by the members of the Authority.
Resolution to add Chairman Ray Cobb and Treasurer Joe Evans to the Morgan Stanley bank account for PCUA (in addition to Vice Chairman George Andrews and Assistant Treasurer Amber Pelot).
Mr. Evans explained that this Resolution would add Chairman Ray Cobb and Treasurer Joe Evans to the Morgan Stanley bank account for the Authority.
A motion was made by Mr. Andrews and seconded by Mr. Lientz to approve the Resolution to add Chairman Ray Cobb and Treasurer Joe Evans to the Morgan Stanley bank account for PCUA (in addition to Vice Chairman George Andrews and Assistant Treasurer Amber Pelot). The motion was approved unanimously by the members of the Authority.
Status of Current Bank Accounts
Mr. Evans raised a discussion regarding the Authority’s current bank accounts at Morgan Stanley and Bank of America, and the members discussed potentially moving money to a new account. Mr. Evans stated that the Authority has over $950,000.00 at Morgan Stanley, of which $748,000.00 is bond issues with a weighted average date to call of 3.5 years. After some discussion amongst the Authority members, the members concluded it may be best to leave the bonds at Morgan Stanley.
After additional discussion, the members decided: (a) to reach out to colleagues in community banking to potentially move some of the Authority’s assets that are currently in the Bank of America account (leaving a baseline amount in such account to avoid service charges), because such banks are likely to provide better rates, noting that the preference of the Chairman is to choose a bank headquartered in the state of Georgia; and (b) to leave the Morgan Stanley account as is, and as the bonds mature and cash becomes available in that account, to consider moving the funds to another bank.
Mr. Evans stated the Authority needs to reorder checks from Bank of America and approved the reordering of such checks by Alston & Bird at the expense of the Authority.
Other Business
Mr. Cobb followed up with Ms. Pelot to inquire about the status of the plaques for former board members. Ms. Pelot responded that they arrived at the office of the engraver and are currently being engraved, and hopefully they will be ready for delivery soon.
Mr. Cobb then addressed the fall webinar, which he is hopeful will allow finance leaders in private colleges and universities in the State of Georgia to gather and learn more about potential financing through the Authority. He stated he will coordinate bringing together experts to present. He stated the overall goal is to increase awareness of the Authority’s activities among smaller colleges and universities in Georgia.
Executive Session
A motion was made by Mr. Evans and seconded by Mr. Lientz to go into executive session. The motion was approved unanimously by the members of the Authority.
All attendees exited the meeting, except for the appointed members of the Authority.
A motion was made by Mr. Lientz and seconded by Mr. Evans to exit the executive session. The motion was approved unanimously by the members of the Authority.
Adjournment
A motion was made by Mr. Lientz and seconded by Mr. Andrews to adjourn the executive session. The motion was approved unanimously by the members of the Authority.
Mr. Cobb adjourned the meeting.
Respectfully submitted,
Amber Pelot,
Assistant Secretary