The official minutes of the University of South Carolina Board of Trustees are maintained by the Secretary of the Board. Certified copies of minutes may be requested by contacting the Board of Trustees’ Office. Electronic or other copies of original minutes are not official Board of Trustees' documents.

The Executive Committee of the University of South Carolina Board of Trustees met via telephone conference call on Wednesday, May 5, 2004, at 4:05 p.m. The call was generated from Room 206B of the Osborne Administration Building.

Members present were: Mr. Mack I. Whittle, Jr., Chairman; Mr. Herbert C. Adams; Mr. James Bradley; Mr. William C. Hubbard; and Mr. Michael J. Mungo. Dr. C. Edward Floyd was absent. Mr. Miles Loadholt was also present.

Others present were: President Andrew A. Sorensen; Secretary Thomas L. Stepp; Vice President and Chief Financial Officer Richard W. Kelly; Legal Counsel Walter (Terry) H. Parham; Vice President for Student Affairs Dennis A. Pruitt; Director of Business Affairs, Division of Business and Finance, Helen Zeigler; Assistant to the Vice President, Office of Business and Finance, Ken Corbett; and Director of University Communications, Division of University Advancement, Russ McKinney, Jr.

Before Chairman Whittle joined the conference call, Vice Chairman Adams called the meeting to order and asked Secretary Stepp to call the roll. Mr. McKinney indicated that no members of the media were in attendance. Vice Chairman Adams stated that notice of the meeting had been posted and the press notified as required by the Freedom of Information Act; the agenda and supporting materials had been circulated to members of the Committee; and a quorum was present to conduct business.

1. Energy Performance Contract: Mr. Mungo made the following motion:
   I move to authorize an Energy Performance Contract with Johnson Controls, Inc. for the design, implementation, and construction of, and annual support service for, the energy projects listed in the supplemental materials entitled "Proposed Energy Performance Contract for the University of South Carolina" dated April 27, 2004 and previously presented to the Executive Committee and the Chairman of the Buildings and Grounds Committee, subject to the following:

   " The energy savings guaranteed by Johnson Controls for each energy project shall be as set forth in the supplemental materials and shall total $5,914,531 annually upon completion of all energy projects;

   " In the event the energy savings realized by the University annually from any energy project is less than the amount guaranteed by Johnson Controls, Johnson Controls shall reimburse the University for the difference;

   " The University's construction costs associated with each energy project shall be as set forth in the supplemental materials and shall not exceed $50,030,448;

   " No energy project shall be commenced by Johnson Controls unless and until authorized by the University

   I further move that the University be authorized to execute the necessary documents with the South Carolina State Treasurer to finance the costs associated with the energy projects.

   Mr. Bradley seconded the motion.

   Responding to Mr. Bradley's question about the University's financial arrangements for this contract, Mr. Kelly made the following comments:
   The revenue sources that we will use will be those of the internal operating budget of the University to retire the debt. This is not a revenue bond issue, as we generally talk about. It will be a seven year loan with a rollover for up to seven more years through the State Treasurer's Office with the Bank of America for up to $50 million.
   

   The rates were actually bid by the State Treasurer when they established this program a few years ago; Bank of America won that process on a rate associated with the T-Bill rates. What we know at this time is that the rates are somewhere in the 3.5 - 3.6 range. We have actually calculated the savings in the information that you were provided on a proposed 4 percent rate and our savings are the revenue source to pay that back.

   A discussion ensued regarding the interest rate. Chairman Whittle asked whether the University would have the ability to fix the interest rate "at the time when we strike the deal." Mr. Kelly indicated that the University had closed at seven years with a rollover and balloon at the end of the seventh year on both the ten year note and the fourteen year note; Bank of America had agreed to guarantee the rate for the full term. The University was negotiating the terms of agreement for the rollover. It was anticipated that the terms would be tied to "no defaults on our standpoint, no defaults based on non-appropriation clauses."
   

   Chairman Whittle restated Mr. Kelly's explanation of the financing:
   Once we agree to do this, we would lock in a rate and we hope that it would be somewhere under four percent. That rate would be locked in for seven years, fixed for that seven year period on a ten year maturity. So, we have three years that will balloon. In addition to that, you have a commitment from Bank of America that they will lock in years eight, nine, and ten at a rate not to exceed the rate that we are paying on the first seven years. Therefore, we have a fixed rate on the remaining three years as well, guaranteed by Bank of America.

   Mr. Bradley called for the question. The vote was taken, and the motion carried.

2. College of Pharmacy Merger Amendment: President Sorensen advised Committee members that Senator Ron Cromer, a registered pharmacist, had filed an amendment to Appropriations Bill H4925 which stated that an extensive study of South Carolina's colleges of pharmacy would be required before the Legislature would approve a merger; it was noted that the governor could veto line item provisos. Discussion ensued regarding the strategic implications of this action.
   

Since there were no other matters to come before the Committee, Chairman Whittle declared the meeting adjourned at 4:25 p.m.

Respectfully submitted,
Thomas L. Stepp
Secretary