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Part of Minutes of the University of Kentucky Board of Trustees

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0. Authorization for Incineration of Paid Bonds and Coupons (FCR 2) Mr. Clay said it was always a pleasant duty to burn paid bonds and coupons and moved that the recommendation in FCR 2 providing for the incineration of paid bonds and coupons be approved. His motion was seconded by Governor Chandler and passed without dissent. (See FCR 2 at the end of the Minutes. P. Resolution Approving Report of the Director, Auxiliary Services, Reciting Inspection of the Housing and Dining Buildings and Appurtenant Facilities of the University's Housing and Dining System, Previously Approved by the President, as Required in Connection with the Prospective Delivery to the United States Department of Housing and Urban Development of the University's $4,584,000 "Housing and Dining System Revenue Bonds, Series K," Purchased by HUD at Public Sale on January 30, 1979 (FCR 3) Mr. Clay reminded the members of the Board that the Executive Committee, at its meeting held on January 30, 1979, awarded at public sale the University's $4,584,000 "Housing and Dining System Revenue Bonds, Series K," dated as of December 1, 1978, to the United States Department of Housing and Urban Develop- ment ("HUD") on its bid of face amount, at an interest rate of 3% per annum. The Series K Bonds (together with the Bonds of Series J, authorized and sold at the same time) were for the purposes of (a) reimbursing the Board and the University for the earlier purchase of the Linden Walk-Rose Lane Apartments, (b) financing the 200 apartment-type units of housing designed to accommodate students or married student families (completed and occupied in the Fall of 1979), and (c) substantial reconstruction of Boyd, Patterson and Jewell Halls, constituting parts of the Housing and Dining System, involving removal of all windows, installation of new thermal windows, together with thermostat control valves (presently nearing completion). Mr. Blanton stated that the $1,900,000 "Housing and Dining System Revenue Bonds, Series J," were awarded at public sale to a syndicate of municipal bond dealers and have long since been delivered and paid for. However, at the time of the award of the Series K Bonds to HUD, it was well known that it is the policy and practice of HUD not to accept and pay for Housing Bonds until such time as the buildings and appurtenant facilities intended to be financed thereby are actually completed, inspected by HUD Engineers, with an audit of all construction costs, made by HUD's accounting staff. Meanwhile, however, upon being satisfied that the progress of construction warranted advances by HUD, HUD made an advance of $2,830,000 to the University on the 28th day of August, 1979, and an advance of $1,471,000 on the 23rd day of January, 1980, upon the Board's delivery to HUD of "Revenue Bond Anticipation Notes" in those respective amounts, bearing interest at the same 3% interest rate represented by the Series K Bonds; and with the understanding of both parties that a settlement of these advances and the interest thereon will be accomplished when the Series K Bonds are delivered and paid for. One of the conditions set forth in the Board's June 1, 1965, Trust Indenture with Farmers Bank & Capital Trust Company, Frankfort, Kentucky, as Trustee, creating and establishing the issue of "Housing and Dining System Revenue Bonds," is that each Series of Bonds may rank on a basis of parity and equality as to security and source of payment with all previously issued Bonds only if there is a written report, made by a proper member of the University's staff, approved by the President, and submitted to and approved by the Board, showing that there has been a physical inspection of all of the facilities of the System and that they are found to be in a good and tenantable state of repair, ordinary wear and tear excepted. Such a certificate was made and approved by the Board prior to the