1
2
3
4
5
6
7
8
9
10
11
12
-- 13
14
15
16
17
18
19
20
21
22
23
24
25
KERR COUNTY COMMISSIONERS COURT
Special Session
Thursday, January 27, 2005
3:00 p.m.
Commissioners` Courtroom
Kerr County Courthouse
Kerrville, Texas
Reconvened from Wednesday, January 26, 2005
PRESENT: PAT TINLEY, Kerr County Judge
H. A. "BUSTER" BALDWIN, Commissioner Pct. 1
WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2
JONATHAN LETZ, Commissioner Pct. 3
DAVE NICHOLSON, Commissioner Pct. 4
O
2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
I N D E X
January 27, 2005
M ~ ~ l~
1.1 Consider and discuss approval of Consent and
Release Agreement with respect to Kerr County
Juvenile Detention Facility and outstanding
bonds on same, and authorize County Judge to
sign agreement
1.2 Order authorizing the Issuance, Sale and
Delivery of "Kerr County, Texas Certificates
of Obligation, Series 2005", securing the
payment thereof by authorizing the levy of
an annual ad valorem tax; and approving and
authorizing the execution of all instruments
and procedures related thereto, including a
Paying Agent/Registrar Agreement, a Purchase
Contract, and the Form of an Official Statement
--- Adjourned
PAGE
3
17
1-27-05
3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
On Thursday, January 27, 2005, at approximately 3:20
p.m., the January 26, 2005 special session of the Kerr County
Commissioners Court was reconvened in the Commissioners'
Courtroom, Kerr County Courthouse, Kerrville, Texas, and the
following proceedings were had in open court:
P R O C E E D I N G S
JUDGE TINLEY: Let me reconvene and call to
order the meeting of the Kerr County Commissioners Court.
This meeting was originally convened for January the 26th,
2005, at 3 p.m. -- 4 p.m.? 4 p.m., and it was recessed to
be reconvened at 3 p.m. this date. I got tied up on some
matters, so we're late getting tied up -- or going forward.
I have -- I've got an update on the Consent and Release
Agreement, and have reported that to the County Attorney,
all except the one last portion of it --
MS. MITCHELL: I told him.
JUDGE TINLEY: -- unless Ms. Mitchell has
reported to him. Number one, with respect to the indemnity
agreement -- aspect of that agreement, our counsel in this
matter, Mr. Spurgeon, has provided us with his opinion that
any indemnity obligation that we have under contract to our
financial adviser is unenforceable under Texas law, so he is
not concerned about that particular aspect being omitted
from the Consent and Release Agreement. The other two
issues were matters primarily as between the trustee and the
i-z~-o5
4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
trustee's counsel and the bondholders, or between the
bondholders themselves, and didn't directly affect us.
Notwithstanding that, we needed the trustee to be a
signatory -- or desired the trustee to be a signatory to the
agreement, and there had been some negotiations back and
forth about the differences they have, and I was advised by
note from our counsel that they have resolved that issue as
between the trustee and the bondholders, and they've reached
an accommodation on the bondholders paying the trustee and
the trustee's counsel in this matter, and that all 11
bondholders had, in fact, agreed to the Consent and Release
Agreement on those terms that I've just mentioned. Kerr
County, the Juvenile Board, the Facilities Corporation,
members of those boards and officers and directors, past and
present, of course, would be fully released as a result of
the transaction upon the payment of the 1.9 and the release
of the reserve funds as indicated in the agreement and as
originally documented.
COMMISSIONER BALDWIN: What about the bond
attorney and -- and the financial adviser? Are they
involved in that in any way? Are they named in any of that?
JUDGE TINLEY: No. No. Insofar as being
released?
COMMISSIONER BALDWIN: Yeah.
JUDGE TINLEY: No, they are not. They are
1-27-05
5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
not. They are not classified as a, quote, county
participant.
COMMISSIONER BALDWIN: Okay.
JUDGE TINLEY: All of the county participants
were released. The -- the bondholders reserve rights that
they may have to pursue any third parties other than the
county participants. One other aspect that I might mention,
the bondholders' counsel asked that this be a mutual
release, which I don't have any reason -- and I don't know
that Mr. Emerson can come up with any reason that we
shouldn't do that. This would certainly put the matter to
rest from all directions. I would -- with respect to any
authority that the Court might desire to give me to execute
that agreement, I would not want to execute that agreement
until we had the hard copy signature of all 11 bondholders
and the trustee, but otherwise, our counsel, Mr. Spurgeon,
is recommending that we enter into the Consent and Release
Agreement in that -- in its current format.
COMMISSIONER WILLIAMS: Judge, if this Court
approves it and we do enter into it, also would require --
required would be the Facilities Corp. and the existing
Juvenile Detention Board; is that correct?
JUDGE TINLEY: The Juvenile Board and the
Facilities Corp. would -- they are signatories to it. I had
a meeting of both of those bodies scheduled for Tuesday
1-27-05
6
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
morning of this week. Because of the hiatus on this
agreement -- it was for the purpose of executing this
agreement, thinking we were going to be able to do it
Monday, and because we were not able to, I canceled that
meeting, with the understanding with both of those
organizations that we'll have to convene another meeting.
COMMISSIONER WILLIAMS: Do we need to hear
from the County Attorney about that?
MR. EMERSON: I've reviewed the documents,
and I think the Judge has basically summed it up accurately.
The Court does need to be aware that without the
indemnification agreement in there, that there is a slight
chance that one of the parties could sue us through the back
door, through another party. The answer to that, of course,
is Mr. Spurgeon's written opinion, where he says that the --
any indemnification agreement that we have is not
enforceable based on constitutional law. I would have to
defer to Mr. Spurgeon; he's the bond attorney. He's the
expert. He's the one that's been advising the Court on
this, and I have not personally researched that issue, but
we do have a written document from him to that effect.
COMMISSIONER WILLIAMS: Do we have a document
you're satisfied it's okay to approve and the Judge to sign
""~~ 24 it?
25
1-27-05
MR. EMERSON: I think it meets all the
7
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
requirements of the agreement between the parties, yes, sir.
COMMISSIONER WILLIAMS: Okay. I would move
that we approve the consent and release agreement with
respect to Kerr County Juvenile Detention Facility
outstanding bonds, and authorize the County Judge to sign
the agreement upon knowledge that all of the bondholders
have likewise executed --
JUDGE TINLEY: And the trustee.
COMMISSIONER WILLIAMS: Pardon?
MR. EMERSON: And the trustee.
COMMISSIONER WILLIAMS: And the bond trustee.
COMMISSIONER LETZ: Second.
JUDGE TINLEY: Motion made and seconded. Any
further discussion or questions concerning the motion? All
in favor of the motion, signify by raising your right hand.
(Commissioners Williams, Letz, and Nicholson
voted in favor of the motion.)
JUDGE TINLEY: All opposed?
COMMISSIONER BALDWIN: No.
(Commissioner Baldwin voted against the
motion.)
JUDGE TINLEY: Motion does carry. The matter
of the issuance and sale and delivery of the certificates of
obligation, that is a matter that we will post separately,
and I think the intention is to post it for next week. Our
financial adviser has asked, if at all possible, that that
i-z~-os
8
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
matter be scheduled for next Thursday, a week from today,
noonish, whatever that means. Late morning or early
afternoon.
COMMISSIONER WILLIAMS: It means lunchtime,
Buster.
COMMISSIONER BALDWIN: So not Wednesday?
COMMISSIONER WILLIAMS: Thursday, he said.
JUDGE TINLEY: He's -- I think Mr. Henderson
indicated something to me a few days ago, when there was
some -- some suggestion that this was going to take place on
Wednesday, that he had a commitment, and that he wanted to
be here when the Court approved the issuance of the C.O.'s,
and that he would hope that it could be done at some other
time, but if that was the only day the Court could do it, he
would try and get Mr. Traylor up here, but he really prefers
to be here.
COMMISSIONER WILLIAMS: So, what time are we
talking about?
COMMISSIONER BALDWIN: Noonish.
MS. MITCHELL: Judge? Bob Henderson will not
be here next week.
JUDGE TINLEY: Okay. He's going to have
Traylor here?
MS. MITCHELL: Mm-hmm.
JUDGE TINLEY: Okay. Traylor's taking over
1-27-05
9
,~-.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
29
25
his commitments, then. Okay.
COMMISSIONER LETZ: Is that --
JUDGE TINLEY: That's right. He had
originally --
MS. MITCHELL: He's going to be out of town
all week.
JUDGE TINLEY: He had originally planned on
taking his outing with his boys last week, and stayed
because of that, and now he's -- okay.
(Discussion off the record.)
COMMISSIONER LETZ: The 3rd is Thursday?
JUDGE TINLEY: Yes, mm-hmm. 11 o'clock?
COMMISSIONER WILLIAMS: Let me go check
something real quick.
JUDGE TINLEY: Okay.
COMMISSIONER WILLIAMS: Thursday, February --
COMMISSIONER LETZ: 3rd.
COMMISSIONER WILLIAMS: -- 3rd. What time?
JUDGE TINLEY: 11:00.
COMMISSIONER WILLIAMS: Fine with me.
JUDGE TINLEY: Okay.
COMMISSIONER BALDWIN: We went through all
that just to hear you say, "Fine with me"? God.
JUDGE TINLEY: We will -- we will post a -- a
separate agenda on that item, but for those members of the
1-27-05
10
1
2
3
4
5
6
7
8
9
10
11
12
--- 13
14
15
16
17
18
19
20
21
22
23
24
25
audience, it will be posted for February the 3rd -- that's
Thursday -- 2005, at 11 a.m.
(Discussion off the record.)
COMMISSIONER BALDWIN: Judge, I've got a
comment -- or a couple of comments I want to make in regards
to Item 1.2.
JUDGE TINLEY: All right, sir.
COMMISSIONER BALDWIN: I have in my hand a
document that was handed to me a little earlier today from
Moody's Investors Service.
JUDGE TINLEY: Mm-hmm.
COMMISSIONER BALDWIN: Which I assume that is
the company that's going to handle the bonds. And it
outlines our rating, by the way, and the amount of the sale,
expected sale date, rating descriptions, some opinions, and
an area that is called, "Nonappropriation for 2002, lease
revenue bonds." And I want to read a little bit out of this
thing, of what they say here. One of the sentences is,
"Financial performance of the facility fell short of
expectations during Fiscal Year 2004 as a result of
decreasing funding from the State." Now, Commissioner
Williams and myself were in Austin a couple weeks ago with
T.J.P.C., and they say that that is a false statement; that
that is not true, that the State did not decrease any
funding anywhere. So it appears to me that that's a false
1-27-05
11
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
statement.
It comes on down a little ways, and it says,
"Moody's recognizes that the County was within its legal
rights when it did not appropriate for its annual lease
payments. Nevertheless, we are of the opinion that when the
lease was securitized and offered publicly in the capital
markets, the County effectively indicated a greater
willingness to make continued lease payments than was
required by the minimum legal obligations spelled out in the
document." I don't recall this Commissioners Court ever
showing a willingness to make continued lease payments on
this issue. So, to me, again, there's another false
statement. And my point is, if the vote to issue bonds are
based on this document right here, then this Commissioner is
definitely not going to have anything to do with it, and
that's all I have to say. And I can't imagine the other
guys voting for something like that, too, with that kind of
information in here.
COMMISSIONER WILLIAMS: Is this not something
that our financial adviser should readily be dealing with?
JUDGE TINLEY: I -- I think he was dealing
with it and -- and interacting with the people at Moody's
about that. I've not seen the report. I was of the
understanding that -- that they were working on a rating,
and that it would -- it would be published soon, but I --
i-2~-o5
12
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
I've not seen the documentation by which that occurred.
COMMISSIONER WILLIAMS: What's the date on
it?
COMMISSIONER BALDWIN: January 26.
JUDGE TINLEY: Yesterday?
COMMISSIONER BALDWIN: Mm-hmm.
COMMISSIONER WILLIAMS: What is it entitled?
A3? You're going to have to tell us what A3 rating is all
about.
JUDGE TINLEY: The A3 rating -- their rating
system is -- my understanding, the rating system is
different from that of Standard and Poor's, which had
previously rated Kerr County, and the A3 rating is
approximately, I'm told, 4 to 8 basis points, which would --
below an A2, which is the equivalent of S & P's rating which
the County had in '02, 4 to 8 basis points being the
difference between 5.00 and 5.04 to -.08.
COMMISSIONER WILLIAMS: One hundredth of a
percent.
JUDGE TINLEY: Pardon?
COMMISSIONER WILLIAMS: One hundredth of a
percent.
JUDGE TINLEY: Mm-hmm, yeah. A basis point
is 1/100th of a percent. Very small amount.
COMMISSIONER LETZ: Are you going to forward
1-27-05
13
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
that to Mr. Henderson and ask him to --
COMMISSIONER BALDWIN: I'm sure that's where
it came from. Where else would Moody get it?
COMMISSIONER LETZ: Well, but, I mean, how --
if you follow what I'm saying, forward to it Mr. Henderson
and tell him that this needs to be corrected, 'cause it's
not a true statement.
COMMISSIONER BALDWIN: I'm just telling you
what I'm -- the reason I'm not going to vote for it is
because there are some -- there's false information here.
Someone has given Moody false information -- in my opinion,
false information. I don't -- tell me if I'm wrong. Did we
-- did this Court show a willingness to make continuing
lease payments?
COMMISSIONER WILLIAMS: This Court never had
the issue before last September.
JUDGE TINLEY: Commissioner, the second
statement that you mentioned, a willingness to -- to pay
which was greater than that as specified in -- in the
document, that is a conclusion, I think, that Moody's has
reached on their own.
COMMISSIONER BALDWIN: That may be.
JUDGE TINLEY: And they reached that
conclusion as a justification for this 4 to 8 basis points
hickey. They're saying, notwithstanding the fact that we
1-27-05
14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
had no legal obligation, they think we had a stronger
obligation than the legal obligation that -- that we
knowingly went into the transaction with and intended to
have.
COMMISSIONER WILLIAMS: That's an opinion.
But the first -- first comment's really extraneous; doesn't
need to be in there. It's extraneous material. It's
rehashing something that's gone. It's dead, it's gone.
COMMISSIONER NICHOLSON: I'm surprised that
Moody's can have any information about a small rural county
in Texas. I don't know -- I don't know how their research
works like that.
COMMISSIONER BALDWIN: When I read this, I
just -- my first thought was, and my thought is today, is
that Mr. Henderson gave them this information.
COMMISSIONER NICHOLSON: You may be right.
COMMISSIONER BALDWIN: I just can't imagine
where else they would come up with this type of thing.
COMMISSIONER NICHOLSON: That's kind of what
I'm saying. They didn't -- somebody had to give it to them,
'cause their research wouldn't produce that.
COMMISSIONER BALDWIN: Yeah, absolutely not.
COMMISSIONER LETZ: What I'm saying is -- I
mean, if you're not going to call Mr. Henderson, I'll be
glad to call him.
1-27-05
15
L
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
COMMISSIONER WILLIAMS: I will. I'll call
I him.
COMMISSIONER LETZ: Someone else needs to
I tell --
COMMISSIONER BALDWIN: You're welcome to
I this.
COMMISSIONER WILLIAMS: I'll call him.
COMMISSIONER BALDWIN: I've got a copy.
COMMISSIONER WILLIAMS: Okay, thank you.
I'll call him.
COMMISSIONER LETZ: 'Cause, I mean, it's a
false statement the other way.
JUDGE TINLEY: Bring to it his attention that
your -- the information that you received is -- is contrary
to that.
COMMISSIONER WILLIAMS: Yeah.
COMMISSIONER BALDWIN: You know, and you can
slice it any -- you know, you can slice it any way you want
to, but this county has never shown a willingness to make
continued payments.
JUDGE TINLEY: Over and above that which we
~ legally --
COMMISSIONER BALDWIN: Anywhere.
JUDGE TINLEY: -- incurred.
COMMISSIONER BALDWIN: That's correct.
1-2~-os
16
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
~^ 2 4
25
COMMISSIONER WILLIAMS: Over and above that
which was in that document.
COMMISSIONER BALDWIN: Yeah, absolutely.
COMMISSIONER LETZ: That's an opinion. And
they can -- I mean, and we -- I mean, I knew that there was
going to be a hit from us doing that.
COMMISSIONER WILLIAMS: Sure. Four basis
points is not much.
COMMISSIONER LETZ: We were told that we were
going to be -- that was going to happen.
COMMISSIONER NICHOLSON: That's not much of a
hit. Could lose that in a round of golf.
COMMISSIONER WILLIAMS: 4/100ths of a percent
is like a tap on the wrist.
JUDGE
the -- the transacti~
will not be any bond
transaction. Not --
certainly available,
necessary. It would
justified. So --
TINLEY: By way of further information,
~n is being structured such that there
insurance in connection with this
not because it's not available; it's
but because Mr. Henderson says it's not
be an additional cost that's not
COMMISSIONER WILLIAMS: That's a thought.
JUDGE TINLEY: -- the amount that we're
saving on the bond insurance premium is more than these 4 to
8 basis points over the life of -- life of these bonds,
1-27-05
17
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
according to what Mr. Henderson tells me.
COMMISSIONER WILLIAMS: That's good news.
JUDGE TINLEY: So, anything further,
gentlemen? I think we can adjourn -- actually adjourn.
COMMISSIONER BALDWIN: Adjourn.
JUDGE TINLEY: We'11 adjourn this meeting.
(Commissioners Court adjourned at 3:39 p.m.)
STATE OF TEXAS
COUNTY OF KERR I
The above and foregoing is a true and complete
transcription of my stenotype notes taken in my capacity as
County Clerk of the Commissioners Court of Kerr County,
Texas, at the time and place heretofore set forth.
DATED at Kerrville, Texas, this 1st day of February,
2005.
JANNETT PIEPER, Kerr County Clerk
B Y : _ ___ __ . ___ _
Kathy B nik, Deputy County Clerk
Certified Shorthand Reporter
1-27-05
ORDER N0.29014
KERR COUNTY JUVENILE FACILITY.
Came to be heard this the 27th day of January 2005 with a motion made by
Commissioner Williams seconded Commissioner Letz. The Court approved by a vote of
3-1-0 the consent and release agreement with respect to Kerr County Juvenile Detention
Facility outstanding bonds and authorize the County Judge to sign the agreement upon
knowledge that all of the bondholders and trustees have likewise executed.