M1MJTES OF THE MEETING of t he FINANCE COMMITTEE OF THE STATE BOARD OF AGRICULTURE February 16, 1956 : The meeting of the Finance Committee was held at Kellogg Center starting with dinner at 6 p.m. The following members were present: Messrs. Baker, Brody, Mueller, Rouse, Smith; President Hannah; Treasurer May and Secretary McDonel. Absent: Mr. Akers; Dr. Taylor •1. The Finance Committee received the recommendations of Scudder, Stevens, and Clark as follows: Pension and Retirement Fund Amount Se curity . Approx. Approx. Price Principal Income Yield Finance Committee Recommenda- tions With available cash of about . . . .. . . . .$822,000 Recommend Purchasing: $1*00,000 Michigan State University Dormitory Revenue 3|s-12-l-76 100 iiOO, 000 $13,000 up to $14.25,000 Selected Mortgages (Ext.) 99 U20,750 19,125 3*25% ii.65 f Consolidated Investment Fund For the February Stock Buying Program Recommend SELLING to the Pension & Retirement Fund for cash: $ 7,000 U. S. Savings Bonds Series "G" 2§s-5/l/58 (of 131,000) 6,860 175 Plus Maturity of $ : 50 U. S. Savings Bonds Series "F" 2/1/56 and SALE of 21 Shrs. Northern Illinois Gas $0.80 Recommend PURCHASING 300 Shrs. American Airlines 1.00 1 Sh. Standard Oil of New Jersey Jenison Fund Ik 19 2k 37 399 7,200 17 300 In order to increase mortgage investments in this Fund, Recommend SELLING to Pension & Retirement Fund for cash (or REDEEM if cash not available): (1) U. S. Savings Bonds Series "G" 2^-s (longer maturities first) (2) U. S. Savings Bonds Series "K" 2.76s Recommend Parchasing: f $ 50,000Selected Mortgages h^s 99 Sli9,5OO 1,250 k.65% To Consolidate holdings, recommend CONVERTING: 500 Standard Oil of Indiana Convertible 3 l/8s-1982 120 600 15 2.10$ ih*Go:: Shares: II Standard Oil of Indiana (holding 150 shs, ) $l*i;0+ 52 Plus Cash to be paid for •§• share Spartan Fund For the February Stock Buying Program of about 572 26 1598 $ 3,000 15+ 2.70^+ Shares: 125 American Airlines $1.00 $ 3,000 125 Recommend PURCHASING with cash: Finance Corn Imittee Recommenda- tions j Finance Committee meeting February 16, 1956: 1. Recommendations of Scudder, Stevens,, and Clark, continued: Pension & Retirement Fund To consolidate investment in Detroit Edison, recommend CONVERTING: $ 2,000 Detroit Edison Conv. 3is- 80 shs* Detroit Edison (Holding ?00) Into II In order to improve selection, recommend SELLING: Approx. Cost P r i n c i p al $ 2,800 Income $ 65 Yield G.20H 35 2,800 liiii 5.10$ 150. Shs. Northern Illinois Gas $0.80 19 2,850 120 100 Shs. Merck & Company (Holding 1,200) Recommend PURCHASING;- |0.80 III 26 2,600 80 3.10$ With proceeds from MATURITY OF: 116,200 U. S. Savings Bonds Series "G" 2^5-2/1/56 Recommend PURCHASING: 100 $16,200 ItO5 116,000 U. S. Treasury 2^s-ll-l5-6l 99 115,8iiO UOO 2.73^^ Rackham Fund With proceeds from MATURITY OF: $2,100 U. S. Savings Bonds Series "G" 2|s-2/l/l956 100 $ 2,100 52 Recommend PURCHASING: $2,000 U. S. Treasury 2|s-ll/l5/l96l 99 1,980 50 2.13% Reserve for Rehabilitation of Structures and Acquisition of Educational Facilities With proceeds from MATURING: $95,000 U. S. Treasury 1 5/8s-3A5/l956 100 $95,000 $1, Recommend giving to Mr. May authority to act on recommendation of Either Accepting 'Treasury exchange offer to be made shortly before maturity or PURCHASING §70,000 U. S* Treasury 2|s-ll/l5/l96l 99 $9U,O5O |2,375 On motion of Mr. Mueller, seconded by Mr. Brody, it was voted to approve the above recommendations* 2. To complete the sale of securities as covered in the preceding recommendations, the following resolutions are required: a. Recommendation from Scudder, Stevens and Clark that the following securities held In the Consolidated Investment Fund be sold at market value: 21 Shares Northern Illinois Gas. On motion of Dr. Smith, seconded by-Mr. Baker, it was voted to authorize the sale of the above named securities at market value and that Philip J. May, Treasurer, be and is hereby authorized .to execute any and all necessary transfers to effectuate and carry out the sale of said securities. b. Recommendation from Scudder, Stevens & Clark that the following bonds be converted into common stock which are held in the Pension and Retirement Fund: $2,000 Detroit Edison Company ^i% due February 1, 1969. On motion of Mr. Mueller, seconded by Mr. Brody, it was voted to authorize the con- version of the above named bonds and that Philip J# May, Treasurer, be and is hereby authorized to execute any and all necessary transfers to effectuate and carry out the conversion of said bonds. I 1 I I I Finance Committee Recommenda- tions of Approval fee for Scudder, Stevens and Clark for 1956 to be 45,506- Approval of resolution re: financing #1,700,000 married apartments now under construction Finance Committee Meeting February 16, 1956:. 2. Complete sale of securities as covered in preceding recommendiations, resolutions required: c* Recommendation from Scudder, Stevens and Clark that the follox-ri-ng bond be converted into common stock which is held in the Jenison Fund: $500 Standard Oil Company (Indiana) 3 l/3# due October 1, 1982 No* Dlf&O. On motion of Mr. Rouse, seconded by Mr* Brody, it was voted to authorize the con- version of the above named bond and that Philip J. May,, Treasurer be and is hereby authorized to execute any and all necessary transfers to effectuate and carry out the conversion of said bond* d«, Recommendation from Scudder, Stevens and Clark that the following securities held in the Pension and Retirement Fund be sold at market value: 150 shares Northern Illinois Gas. On motion of Mr.: Mueller, seconded by Dr. Smith, it was voted to authorize the sale of the above named securities at market value and that Philip J, May/ Treasurer,, be and is hereby authorized to execute any and all necessary transfers to effectuate and carry out the sale of said securities* 3# Mr. Harding of Scudder, Stevens and Clark presented the following statement: "For the first year of our supervision our fee charge was set at $5>000 on the basis of a formula worked out with the Committee *s approval and spelled out in detail in a letter to Mr. May dated May 18, 1955* Applying this same formula to the January 1,- 1956 appraisal of the account our fee charge for the current year works out to $5j5O6." On motion of Mr. Mueller, seconded by Mr. Rouse, it was voted to approve the retention of Scudder, Stevens and Clark for the calendar year 1956 at an annual fee of $5*5O6. il. Mr. Cress presented his recommendations for financing the $1,700,000 married student apartments now under construction. He has tentative commitments for the purchase of these bonds as follows: National Bank of Detroit Detroit Bank Manufacturers National Bank Ann Arbor Bank Michigan National Bank—Trust Department State Savings Bank, Ann Arbor MSU Pension and Retirement Fund Trust Companies $ U50,00Q 250,000 100,000 100,000 100,000 50,000 i;00,000 250,000 $1,700,000 The interest rate on the bonds to be $570,000 % 2.80, $380,000 @ 2.90, $750,000 an average of 3•09* 3.25; On motion of Mr. Brody, seconded by Dr. Smith, it was voted to authorize the officers to complete the financing as suggested by Mr. Cress, to accept the tentative commitments, and to issue the necessary bonds subject in form and content to the approval of ^ee Carr, our legal counsellor. The formal resolution in full which has been approved by the legal counsellor follows: RESOLUTION OF THE STATE BOARD OF AGRICULTURE RELATIVE TO THE ISSUANCE-AMD SALE OF MICHIGAN STATE UNIVERSITY OF AGRICULTURE AND APPLIED SCIENCE APARTMENT REVENUE BONDS, 1955 SERIES. WHEREAS, The State Board of Agriculture, in the exercise of its constitutional duties, has determined that it is necessary and expedient to construct, furnish, and equip, on the campus of Michigan State University of Agriculture and Applied Science at East Lansing, Michigan, eleven apartment buildings, in -which will be located eighty-eight one-bedroom apartment units and eighty-eight two-bedroom apartment units, and which, when completed and placed in operation, will be used to furnish housing accomodations primarlLy f or married students attending Michigan State University of Agriculture and Applied Science; and WHEREAS, this Board deems it necessary and expedient to issue and sell Michigan State University of Agriculture and Applied Science Apar tment Revenue Bonds, 1955 Series, in the aggregate principal amount of One Million Seven Hundred Thousand Dollars ($1,700,000.00), for the purpose of providing funds Incidental to the construction, furnishing, and equipping of said eleven apartment buildings more particularly described in the preceding paragraph, including, but not limited to, ArchitectsT fees, costs of bringing utility services to said buildings, provide necessary walks and drives, landscaping, insurance during construction, financing costs, including interest during construction, costs of unforeseen contingencies^ and other costs incidental to the construction, furnishing, and equipping herein contemplated, and to establish a Debt Service Reserve In the principal amount of One Hundred Thousand Dollars ($100,000.00); and WHEREAS, Ann Arbor Trust Company, of Ann Arbor, Michigan, has submitted for the con- sideration of this Board a form, of Trust Agreement, pursuant to the terms which Michigan State University of Agriculture and Applied Science Apartment Revenue Bonds, 1955 Series, of the face value of One Million Seven Hundred Thousand Dollars (§1,700,000*00) may be issued and sold; § L>cr± Finance Committee meeting February 16, 1956: j.lu Recommendations for financing the #1,700,000 married student apartments • I Formal resolution, continued: NOW* THEREFORE, BE IT RESOLVED by The State Board of Agriculture that it borrow the sum of One Million Seven Hundred Thousand Dollars ($1,700,000.00), through the issuance and sale of Michigan State University of Agriculture and Applied Science Apartment Revenue Bonds, 1955 Series^ under the terms and conditions more specifically set forth in the Official Statement of this Board relative to such issuance and sale; which Official Statement is incorporated herein by reference, with the same force and effect as if fully set forth herein* BE IT FURTHER RESOLVED, that the Trust agreement between this Board and Ann Arbor Trust Company, to be dated as of December 1, 1955* which conforms to the terms and conditions set forth in the Official Statement of this Board and pursuant to the terms of which said Apartment Revenue Bonds, 1955 Series, maybe issued and sold, be and the same is hereby approved as to content and form* BE IT FURTHER RESOLVED that this Board issue Michigan State University of Agriculture and Applied Science Apartment Revenue Bonds, •1955.Series* of the face value of One Million Seven Hundred Thousand Dollars ($1,700,000*00), pursuant to the terms and conditions set forth in the Official Statement adopted by this Board and the Trust Agreement above referred to, and to sell the same.to provide funds to pay costs incidental to the construction, furnishing, and equipping of sixteen apartment buildings on the campus of Michigan State University of Agricul- ture and Applied Science, -which when completed and placed in operation, will contain 88 one-bed- room apartment units and 88 two-bedroom apartment units^ which will be rented primarily to married students attending Michigan State University of Agriculture and Applied Science, to pay Architects1 fees, financing costs^ costs of unforeseen contingencies and other costs incidental to such construction and financing, and to establish a Debt Service Reserve in the principal amount of One Hundred Thousand Dollars ($100,000.00)• BE IT FURTHER RESOLVED that Philip J. May, Comptroller and Treasurer of Michigan State University of Agriculture and Applied Science, be and he is hereby authorized, empowered, and directed, in the name of The State Board of Agriculture and as its corporate act and deed, to execute and sign the Apartment Revenue Bonds, 1955 Series, herein provided for* If Philip J. Hay, by reason of illness, absence, or for some other reason, is unable to sign the Apartment Revenue Bonds, 1955 Series., herein provided for, then,- in such event, the same shall be signed by Karl H* McDonel, Secretary ox the University. To facilitate the signing of bonds, said Philip J, Hay is authorized to sign said bonds as P. J. May; and if the bonds shall be signed by Karl H. McDonel, he is authorized to sign the same as K. H. McDonel, The coupons appertaining to the Apartment Revenue Bonds, 1955 Series, shall be authenticated by the facsimile signature of Karl H. McDonel, Secretary of the University* BE IT FURTHER" RESOLVED that any two of the following officers of Michigan State University of Agriculture and Applied Science, to-wit:John A* Hannah, President, Karl H. McDonel, Secretary, and Philip J, May, Comptroller and Treasurer, are hereby empowered and directed, for and in the name of The State Board of Agriculture and as its corporate act and deed, to execute the Trust Agreement hereinbefore referred to, to pledge the Net Income, as therein defined, for the 'purpose of securing and paying all payments of principal, interest, and reserves provided for in the Trust Agreement and Official Statement, and to perform all acts and deeds and execute all instruments and documents necessary, expedient, and proper in connection -with the borrowing of said sum of One Million Seren Hundred Thousand Dollars ($1,700,000*00), the issuance of the Apartment Revenue Bonds, 1955 Series, and the sale of the same. BE IT FURTHER RESOLVED that any two of said officers be and they are hereby authorized, empowered, and directed, for and in the name of The State Board of Agriculture and as its corporate act and deed, to make, consent to, and agree to any changes in the terms and conditions of said Trust Agreement which they^may deem necessary, expedient, and proper, prior to or at the time of the execution of said Trust Agreement, but no such amendment shall change the provisions therein for the amount to be borrowed, the interest to be paid thereon, the payments required to be made to the Trustee, or the security pledged• Provided, however, nothing herein contained shall be construed as limiting the right of such officers to alter or change the date of issue of said bonds, the dates for payment of interest, or the dates fixed for payments to the Trustee provided for in said Trust Agreement. BE IT FURTHER RESOLVED that said officers, either in said Trust Agreement or by the issuance of said Apartment Revenue Bonds^ 1955 Series, shall not pledge the credit of or create any liability on the part of the State of Michigan, The State Board of Agriculture, or any member or officer of this Board of any of their successors, other than to pledge the .Net Income, as defined in the Trust Agreement above referred to and as set forth in the Official Statement. BE IT FURTHER RESOLVED that any two of said officers be and they are hereby authorized, empowered, and directed, for and in the name of The State Board of Agriculture, to sell Michigan. State University of Agriculture and Applied Science Apartment Revenue Bonds, 1955 Series, of the face value of One Million Seven Hundred Thousand Dollars ($1,700,000*00) at par and accrued interest, in accordance with commitments submitted by Ann Arbor Trust Company, as Fiscal Agent of this Board; and said Ann Arbor Trust Company is hereby authorized'to accept payment for said bonds upon delivery of the same* • • •