Sept 12th Audit Budget Finance Committee Meeting Document…

Jody

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AUDIT, BUDGET AND FINANCE COMMITTEE MEETING September 12, 2002 MINUTES OF THE MEETING ATTENDEES: Commissioners: Patricia Scates, Chair Frank Kiang (excused) John Protopappas Staff: Lance Bateman John Glover Patti Heilbron Jim Allen John Betterton Oliviér Flewellen Doug Waring Dan Westerlin Visitors: Members of Port Financing Team: Darlene DeRose, Montague DeRose and Associates Sara Lee, Goldman Sachs Sanjiv Handa, East Bay News Service Agenda: 1. Audited Financial Statements 2. Finance Division Debriefing 3. Discussion and Approval of 2002 Series N Refunding Bonds The meeting was called to order at 12:05 P.M. Audit Financial Statements Oliviér Flewellen, Controller presented the new format for Financial Statements for fiscal Year 2002 as required under Government Accounting Standards Boards Statement #34 (GASB 34). Flewellen reviewed the existing formats and the principal differences between those and the new requirements. The Committee inquired as to the reason for the accounting changes. Flewellen reported that the principal reason is to make the financial statements more understandable for the reader and the Government Accounting Standards Board requires it for all local government agencies. Flewellen reported that for fiscal year 2002, the audit fieldwork by the external auditors is complete. Flewellen further stated that she anticipated that the Un-audited Financial Statements for fiscal year 2002, in ...

Informations

• Publié par: Omkou
• Nombre de lectures: 9
• Langue: English

Extrait

AUDIT, BUDGET AND FINANCE COMMITTEE MEETING

September 12, 2002

MINUTES OF THE MEETING

ATTENDEES:

Commissioners:

Patricia Scates, Chair

Frank Kiang (excused)

John Protopappas

Staff:

Lance Bateman

John Betterton

John Glover

Oliviér Flewellen

Patti Heilbron

Doug Waring

Jim Allen

Dan Westerlin

Visitors:

Members of Port Financing Team:

Darlene DeRose, Montague DeRose and Associates

Sara Lee, Goldman Sachs

Sanjiv Handa, East Bay News Service

Agenda:

1. Audited Financial Statements

2.

Finance Division Debriefing

3.

Discussion and Approval of 2002 Series N Refunding Bonds

The meeting was called to order at 12:05 P.M.

Audit Financial Statements

Oliviér Flewellen, Controller presented the new format for Financial Statements for

fiscal Year 2002 as required under Government Accounting Standards Boards

Statement #34 (GASB 34).

Flewellen reviewed the existing formats and the principal

differences between those and the new requirements.

The Committee inquired as to

the reason for the accounting changes.

Flewellen reported that the principal reason is

to make the financial statements more understandable for the reader and the

Government Accounting Standards Board requires it for all local government agencies.

Flewellen reported that for fiscal year 2002, the audit fieldwork by the external

auditors is complete.

Flewellen further stated that she anticipated that the Un-audited

Financial Statements for fiscal year 2002, in the new format including footnotes,

would be completed by September 18, 2002, in time to be included in the Preliminary

Official Statement for the 2002 Series N Refunding Bond Issue.

The un-audited

statements will include a restatement of fiscal year 2001 financial results in the new

format.

Flewellen clarified that Audited Financial Statements will be available for

review by the Committee at the next ABF Committee Meeting scheduled on October

17, 2002.

Finance Divisions Briefing

The ISO 9001-2000 Certification Program will be deferred until the next ABF

Committee meeting scheduled on October 17, 2002.

Audit, Budget and Finance Committee Meeting

Page 2

September 12, 2002

Board Agenda Item: Approval of the Fourth Supplemental Agreement with

GEAC Enterprise Solutions, Inc. to Perform Training and Consulting Services

Fred Rickert, CFO, submitted a Board agenda item for the September 17, 2002 Board

Meeting asking for approval of a supplemental agreement with GEAC Enterprise

Solutions, Inc. for training and consulting services for continued implementation of the

financial accounting systems, not to exceed $450,000.

The Committee recommended

moving the Board item to the full Board for approval on September 17, 2002.

Discussion and Approval of 2002 Series N Refunding Revenue Bonds

Lance Bateman, Acting Manager of Financial Planning, distributed a Flow of Funds

Diagram for the 2002 Series N Bonds showing the sources and uses of funds for the

refunding.

In addition, Bateman distributed a computation of the estimated savings of the

refunding.

Gross savings over 20 years amounts to $48 million.

The present value of

these savings is approximately $34 million using an anticipated interest rate of

4.433%.

The net present value of these savings is approximately $17 million after

adjusting for cash contributions from the Port and setting up the Series N Debt

Service Reserve Fund.

Bateman went on to discuss the complex structure of the new

bonds.

Debt Service was calculated in such a way to maximize the cash flow savings

in the first 4 years.

The Committee inquired as to what percentage the $17 million net present value

savings represented.

Sara Lee, Vice President of Goldman Sachs responded that the

percentage was approximately 15%.

The Committee also inquired as to the

assumptions referred to on the savings chart.

Lee reported that a true interest rate

cost of 4.433%, which is slightly higher than the current market rate.

Patricia Heilbron, Deputy Port Attorney, explained the parameters of the delegation of

authority to Port management.

In a Refunding Bond Issue, one of the parameters,

the Board is required to set is the maximum interest rate on the bonds that the Board

is willing to accept.

This has the effect of setting a floor of savings that the Board

wishes to achieve.

It was suggested that if the Board sets a maximum interest rate of

5.55%, this would set the minimum level of the net present value savings to

approximately $7 million.

In the event that market interest rates exceeded the

5.55%, the Port would not have the authority to do the refunding.

The Committee

reported they would recommend Board approval of the 2002 Series N Refunding

Bonds with an interest rate not to exceed 5.55%.

The Committee noted that the structure of Series N Refunding Bonds was extremely

complicated and required a considerable amount of complex financial and tax analysis

work and expressed their appreciation to Sara Lee, Goldmans Sachs and Travis Gibbs,

O’Melveny and Myers (Bond Tax Counsel) for their efforts.

Audit, Budget and Finance Committee Meeting

Page 3

September 12, 2002

Action Items for Future Follow-up

Report on the status of the ISO 9000 project and D2 Business Consulting

Contract

Due:

October 2002

Requestor:

Commissioner Kiang

Responsible:

Fred Rickert

Establish Ground Rules for Control over Commitment of Bond Proceeds

Due:

November 2002

Requestor:

Commissioner Kiang

Responsible:

Fred Rickert

Meeting went into closed session at 12:25 p.m.

Meeting returned to open session at 1:45 p.m.

The meeting was adjourned at 1:50 p.m.

Next meeting is scheduled for Thursday, October 17, 2002 at 12:00 noon in the Board

Room.