Bac minutes 01 24 15

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Meeting minutes, January 24, 2014 Location and time: Fulton Branch, Cleveland Public Library, 1:15 p.m.

Commissioners present: Alfonso Sanchez, Donald Brown, Nancy Schuster, Eric Paszt, Peter van Dijk; Absent: Robert Jackson, Diane Downing Chairman Sanchez called the meeting to order.

Commissioners unanimously approved the meeting minutes for the May 20, 2014, and October 8, 2014 meetings.

Administrator James Darr distributed copies of the BAC Conflict of Interest Policy and Annual State of Understanding relating to the Policy for each Commissioner to sign.

Reports: Program Progress Update 34 Mr. Darr presented the report. Other than updated cost numbers, the only new development in the report is that the Board of Education on Dec. 16, 2014, added a 720-student preK-8 Campus International School to Segment 6 for a maximum construction cost of $22 million. Tentatively, the school is to be located on Cleveland State University property along Payne Avenue between East 21st and East 22nd Streets, with a targeted opening in August 2016. The Board on Jan. 27, 2015 is to consider a 50-year lease of the Cleveland State property for $1, with CMSD obligated to maintain the school and ownership of the school going to CSU at the lease's conclusion. [Mr. Sanchez interjected with new information that problems had arisen with the lease over concerns that state law required that the property be leased at market rates. The report was subsequently amended to include this information, including that the lease was pulled from the CMSD Board agenda, as were companion Resolutions that would have authorized an agreement with ICON LLC for Construction Manager at Risk (CMR) preconstruction services for the school for up to $117,316.44 and would have authorized an architectural and engineering design contract for Campus

International with ThenDesign Ltd. for up to $1.486 million.] The District anticipates asking the Ohio Facilities Construction Commission co-fund 450 of Campus International's planned student capacity and paying for the rest on its own, using proceeds from the sale of the District's former headquarters on East Sixth Street in Cleveland, which had been earmarked by the Board for a downtown school.

Annual Report

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Mr. Darr presented the report, noting that the schedule of meetings for 2015 was tentative and that Saturday meetings had been scheduled for the next two months to make attendance easier in cold weather. The BAC in 2014 provided input on how best to shape the Master Plan to fit enrollment trends and continued to monitor the expenditure of money borrowed under Issue 14. The BAC also established its own Web site (bondaccountability.org.

The report includes a budget outlook predicated on approval of the BAC's request for an operating subsidy from the District. [The outlook was amended on Jan. 29 to correct an error.]

Commissioners spent a significant amount of time in 2014 planning for how the construction program and its financing could be improved to better provide cost efficiency, transparency and accountability, producing these recommendations: Prompt design and delivery of monthly reports detailing projected payments to contractors and subcontractors under the CMR, DB or GC delivery methods, change orders, transfers of money to and from contingency/bid-day savings funds, and any changes to GMP amounts. Change orders should be itemized, listing amount and reason for each. Mr. Darr said this issue had been largely resolved.

Commitment to supervise the repair ("refresh/update") program through a professional construction manager, to award program contracts based on OSFC competitive-bidding protocols, and to report monthly on each project’s cost, including awarded contract amounts, itemized change orders and reasons, and total projected cost.

District public release of a detailed construction Master Plan, including cost estimates, for work co-funded by the state and of a separate detailed plan, including cost estimate and budget, for District LFI repairs and improvements.

CMSD Deputy Chief for Capital Projects said that even he did not yet have such a plan.

Establishment and disclosure of a systematic process for determining repair ("refresh/update") priorities, scope of projects, and allocation of funding.

Commitment that any future federal rebates of interest paid on any QSCBs (Qualified School Construction Bonds) sold by the District, either the $55 million already sold and any others sold in the future, will be devoted to bond retirement or to construction/repairs. Commissioner Schuster questioned whether these

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rebates were "bond money." Mr. Darr replied that they were not but that since they are issued at a higher interest cost than normal tax-exempt municipal bonds, at least the difference in interest costs should be credited to the program that taxpayers voted to fund, rather than to general District operating costs.

A commitment strongly to consider the competitive method of bond sale for each issue and, when the negotiated method is chosen, to commission after each such sale a comparison of the interest rates obtained with the prevailing contemporary market rates for securities of similar maturities and a similar credit level, both competitive and negotiated.

A commitment, when a negotiated method of bond sale is chosen, to employ underwriter-selection criteria designed only to get the best interest rates for taxpayers.

A clear explanation of and regular reports on implementation of CMR supplementary or general conditions pertaining to construction-site student visits, internships and hiring of CMSD students and/or recent graduates for each project.

Agreement that CMR subcontracts designated for contract purposes as de facto self-performed work by a majority (white male-owned) CMR will not be designated as DBE subcontracts in District reporting on compliance with goals for minority/female contract participation and, further, that CMSD will develop and implement a system for determining whether certified DBE contractors or subcontractors are performing a “commercially useful function” as defined by the District's Community Inclusion Plan Program Statement.

Commitment in the case of CMR, DB, or GC projects to add certified DBE subsubcontractors to the DBE reporting. Mr. Darr noted that by not doing this, the District was probably reporting far lower DBE participation than was occurring and the CMRs were themselves reporting.

Commitment to produce workforce reports for both construction and refresh/ update projects and that these reports include a numerical/percentage breakdown of the various groups now reported simply as “minority.”

Commitment to use of a thumbprint ID system for project workforce to not only properly account for minority participation but also possibly enhance District construction-cost savings.

New Business Commissioners unanimously approved Mr. Sanchez as Chairman, Mr. Brown as Vice Chairman, Ms. Schuster as Secretary, and Mr. Paszt as Treasurer.

Public Comments •

Patti Choby of the Cobalt Group, a CMSD consultant, said the BAC should make a special effort to present the issues in the Annual Report to

CMSD officials because the BAC could not necessarily rely on the officials reading the report.

Executive Session The Commissioners went into Executive Session for the purpose of discussing matters pertaining to personnel and possible litigation.

New Business After returning to Public Session, Commissioners unanimously approved the following amendments to the Code of Regulations in accord with Article XV of the Code: 5.3 Annual Meeting. The Annual Meeting of the Board shall be held in the month of January in each year at a place and time specified in the Notice of Annual Meeting in accord with Section 5.7.

5.14 Removal. After Notice in accord with Section 5.7 that a vote will be taken and opportunity to object, a Commissioner may be removed from the Board for cause at a regular public meeting of the Commissioners on the affirmative vote of three-fourths of the Members of the Board of Commissioners.

7.3 Removal. Any officer elected by the Board of Commissioners may be removed for cause by the affirmative vote for removal of three-fourths of the Members of the Board of Commissioners.

8.1 Administrator. In its discretion, the Board may appoint an employee or an independent contractor as its Administrator to perform the functions and to serve as the chief administrative officer of the Corporation. The Administrator will report directly to the Chairperson. The Board will fix the compensation and other terms of engagement of the Administrator, which shall include a salary plan, terms of employment, and if terminated without just cause, provision for severance pay calculated as one-half of the amount of the monthly gross pay and medical insurance premium multiplied by the number of months employed divided by 12.

Commissioners voted unanimously to authorize Commissioner Schuster to write and execute an employment agreement for the Administrator continuing the current orally agreed terms of employment and the provisions contained in Section 8.1 of the Code of Regulation.

Adjournment The meeting was adjourned about 4:30 p.m.