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 Monday, December 17, 2001, at 9:34 a.m. in the Carolina Plaza Board Room.
Members present were: Mr. Mack I. Whittle, Jr. Chairman; Mr. Herbert C. Adams; Mr. James Bradley; Dr. C. Edward Floyd; Mr. William C. Hubbard; and Mr. Michael J. Mungo. Other trustees present were: Mr. Arthur S. Bahnmuller; Mr. A.C. Fennell, III; Mrs. Helen C. Harvey; Mr. Toney J. Lister; Mr. Miles Loadholt; Mr. Robert N. McLellan; Mr. M. Wayne Staton; and Mr. John C. von Lehe, Jr.
Others present were: President John M. Palms; Secretary Thomas L. Stepp; Executive Vice President for Academic Affairs and Provost Jerome D. Odom; Vice President and Chief Operating Officer J. Lyles Glenn; Vice President and Chief Financial Officer Richard W. Kelly; Vice President for Information Technology and Chief Information Officer William F. Hogue; Vice President for Student and Alumni Services Dennis A. Pruitt; Vice President for Human Resources Jane M. Jameson; Vice Provost and Executive Dean for Regional Campuses Chris P. Plyler; Chancellor of USC Aiken Thomas L. Hallman; Chancellor of USC Spartanburg John C. Stockwell; Dean of USC Beaufort Jane T. Upshaw; Dean of USC Lancaster John Catalano; Dean of USC Sumter C. Leslie Carpenter; Vice President of Medical Affairs and Dean of the School of Medicine Larry R. Faulkner; General Counsel Walter (Terry) H. Parham; Associate Vice Provost, Regional Campuses and Continuing Education, Carolyn A. West; Associate Dean of Academic Affairs, The Darla Moore School of Business, Rodney L. Roenfeldt; Associate Dean of Administration, The Darla Moore School of Business, Robert E. Markland; Assistant Treasurer Susan Hanna; Budget Director, Office of Budget, William P. Bragdon; Assistant Budget Director, Office of Budget, Glenda Ridgely; Assistant to the Vice President, Office of Business and Finance, Ken Corbett; Assistant Athletic Director for Development, Department of Athletics, Brad Edwards; Associate Professor, School of Law, Robert M. Wilcox; retiring faculty members: Thomas R. Haggard and Henry S. Mather of the School of Law and Donald L. Curlovic of USC Sumter; Instructor, USC Sumter, Peggy W. Curlovic; co-chairs, Beaufort Citizens Task Force for the Establishment of a Four-Year Degree Granting Institution, Richard Stewart and Wes Jones; staff member of the USC Beaufort Development Office Staci Breton; husband of Trustee Helen C. Harvey, Brantley Harvey; Bond Counsel: Robert Galloway of Haynsworth Sinkler Boyd, PA; Brent Jeffcoat of Parker Poe Adams & Bernstein, L.L.P; and Dianne McNabb of A.G. Edwards and Sons; and Director of the Office of Public Affairs Russell McKinney.
Chairman Whittle called the meeting to order and invited Board members to introduce themselves. Mr. McKinney indicated that no members of the media were in attendance. Chairman Whittle 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.
Chairman Whittle directed the Committee's attention to the agenda and called on Mr. Parham.
Mr. Bradley moved approval of the JDA Software Group, Inc., contract as described in the materials distributed for the meeting. Dr. Floyd seconded the motion. The vote was taken, and the motion carried.
Mr. Bradley moved approval of the Moore School of Business proposed program fees as described in the materials distributed for this meeting. Mr. Hubbard seconded the motion. The vote was taken, and the motion carried.
Mr. Bradley moved approval of the Athletics Facilities Revenue Bond Anticipation Notes as described in the materials distributed for this meeting. Mr. Mungo seconded the motion.
Mr. Mungo commented that the wording "pay related expenses" in the phrase "...in the amount of not exceeding $28,750,000 to defray the cost of the Project and pay related expenses" as stated in Article I, Section F of the Resolution was redundant and asked that this phrase be deleted.
In addition, Mr. Mungo believed that the requested BANS financing resolution should be reduced by the amount of the floor icing process since the hockey team would not be utilizing the arena. Mr. Bradley added that a new pro forma which detailed arena financing without hockey expenses should be generated.
Further, Mr. Mungo voiced his disappointment that the construction of the arena as initially presented with the inclusion of anticipated hockey team revenues was approved but, to date, no contract had been negotiated. He was concerned that the athletic administration had misrepresented the potential viability of this source of revenue.
Mr. Whittle explained that Board approval of this resolution would authorize a dollar limit, not mandate the utilization of the full amount. More important was the fact that endorsement would ensure the continued and timely forward movement of the arena financing process. Mr. Whittle recommended that the requested amount remain unchanged and a new pro forma excluding a hockey budget be presented to the Board of Trustees for information.
Responding to Mr. Mungo's concerns, Mr. Glenn noted that a pro forma had been distributed to the Board several years ago which served as a basis for the total project approval. In that original pro forma was a provision which stipulated that minor league hockey would be programmed into the arena. And, it was understood that this activity would, or could, impact the taxable/tax-free nature of the bonds. Further, Mr. Glenn indicated that several contract discussions had been held with local hockey representatives based solely upon the idea that hockey events would be scheduled exclusively in the arena.
Within the last six weeks, however, the decision had been made to move this activity to the Coliseum. At that time, the administration realized that a stipulated 35 event night contractual obligation for hockey events would seriously impinge upon the University's performance revenue requirements in the arena. As a result of this decision, event nights were opened in the arena which should positively impact the pro forma; the tax character of the bonds, an important consideration throughout this process, would, most probably, be altered; a Coliseum revenue stream would be generated pending a contract which was satisfactory to the University and supported by hockey officials.
Mr. Glenn commented that latter stages of negotiations were being conducted at the present time. Yet to be determined was a pro forma based upon combined revenue from the Coliseum and the arena with a consolidated balance sheet or separately.
Addressing Mr. Mungo's comment about reducing the arena financing by the cost of preparing the floor for the icing process, Mr. Glenn explained that there would be a one-time saving of approximately $200,000 if the floor were stubbed, a procedure which partially prepared it to be iced on a permanent basis. Reducing the bond that particular amount, he noted, was certainly the prerogative of the Board.
Mr. Mungo asked if adequate revenue would be generated from the addition of the 35 new arena dates to maintain the validity of the original pro forma. Mr. Glenn responded that "your question is the ultimate question that we are facing right now." He believed that the total bond resolution amount of $28,500,000 would be necessary unless use of BANS financing ultimately reduced the cost of the building, the February payment notwithstanding.
Mr. Adams requested a list of those items which had been deleted from the original arena project, anticipating their possible re-introduction for approval if a significant reduction in cost was realized. Mr. Mungo again iterated his feeling, as discussed during a previous meeting, that the $1.2 million should be used exclusively to service the arena bond indebtedness.
In response to Dr. Floyd's question regarding the economic impact to the University of losing the hockey revenue, Mr. Glenn stated that approximately $485,000 per year would be forfeited if "hockey in the Coliseum does not work." A caveat to consider, he further explained, was the possibility of triggering the taxable nature of the bonds if, for example, a commercial enterprise such as hockey had maintained a permanent residence in the arena. Another was the potential for naming rights if any of the various vendor contracts generated 10 percent or greater of the total revenue. Mr. Glenn assured Committee members that University officials were carefully exploring all possibilities to ensure the issuance of tax-free bonds.
Both Mr. Mungo and Mr. Bradley stressed the importance of the University's issuing bonds through tax-exempt financing. The dollar amount of savings during a thirty-year bond issue period was estimated between $560,000 to $840,000 per year. Mr. Mungo was concerned that the Athletics Department was carrying an outstanding debt of approximately $40 million; he explicitly requested that the money saved yearly be used to reduce the principal. Mr. Bradley re-emphasized the fact that tax-exempt financing was the "bottom line of what we have to do. The savings is too much to do it any other way."
Mr. Adams called for the question. There was a motion and a second to approve the Athletics Facilities Revenue Bond Anticipation Notes as described in the materials distributed for this meeting. The vote was taken, and the motion carried.
Mr. Whittle clarified for the record that revised pro formas would be presented to the Executive Committee or to the full Board for a final review. Mr. Mungo noted that this presentation should be scheduled before February 1 when payment for the other bonds (BANS) was due so that an informed decision regarding the most appropriate financial structure could be made.
Since there were no other matters to come before the Committee, Chairman Whittle declared the meeting adjourned at 10:03 a.m.
Respectfully submitted,
Thomas L. Stepp
Secretary