Sept 12th Audit Budget  Finance Committee Meeting Document…
3 Pages
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Sept 12th Audit Budget Finance Committee Meeting Document…

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3 Pages
English

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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 ...

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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 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.