Present were Regents Charles K. Kawakami, Duane K. Kurisu, Patricia Y. Lee, Ah Quon McElrath, Walter N. Nunokawa, Capsun M. Poe, Sharon R. Weiner; President Evan S. Dobelle; Secretary of the Board David Iha; and Administrative Officer Carl H. Makino. Regents Billy Bergin, Everett R. Dowling, Bert A. Kobayashi, and Kathleen K.S.L. Thurston were excused.

Also present were Dr. Joyce Tsunoda, Senior Vice President and Chancellor for Community Colleges; Dr. Rose Tseng, Senior Vice President and Chancellor, UH-Hilo; Mr. Walter S. Kirimitsu, Senior Vice President and General Counsel; Mr. Eugene Imai, Vice President for Administration; Dr. Doris Ching, Vice President for Student Affairs; Dr. Colleen Sathre, Vice President for Planning and Policy; Dr. Deane Neubauer, Interim Chancellor, University of Hawai'i at Manoa; Dr. William A. Pearman, Chancellor, UH-West O'ahu; Ms. Joanne Clark, Associate Vice President for External Affairs and University Relations; Ms. Peggy Cha, Provost, Kaua'i Community College; Mr. Walter Niemczura, APT President; Ms. Helen Hamada, APT Representative; and others.

Vice President Imai requested that the Board authorize the administration to enter into a three-year lease agreement with the Lawrence Lit Wai Chan and Linda Yee Wah Chan Revocable Living Trusts for the lease of approximately 3,410 square feet of office and training space at the Kopiko Plaza in Kailua-Kona for use in the non-credit training programs offered by Hawai'i Community College.

Hawai'i Community College has offered short-term, non credit training programs in West Hawai'i for over twenty years. The non-credit programs have been in employment preparation, business, early childhood education, hospitality, and computer training. These programs have been operating primarily in leased premises located in the old industrial area of Kailua Kona. The current site lacks public visibility and is located on an off-street with only two small classrooms and two parking stalls.

Due to increased economic activity and population growth in the Kona-Kohala area, there is now a need to expand the educational operations to include:

• A more central, visible, and professional location in the community.

• State-of-the-art technology.

• An ACT (American College Testing) site for on-line training and testing. Several hundred web- and server-based, self-paced courses will be offered at this site.

• A Business and Technology Training program to provide high-quality, on-demand training at times and in formats that mirror the varied work schedule of the community. Developed in response to training needs expressed by businesses and individuals in the West Hawai'i community, this program will increase workforce training opportunities and deliver certification programs needed in the workplace. In addition, since the coordinator will be located where she can communicate with employers, employees, human resource managers, staffing agency managers, and the local Workforce Development staff, the coordinator will be able to respond more quickly to the needs of the local community.

Hawai'i Community College selected this location after visiting several possible sites in the Kailua-Kona area. All sites were comparable in terms of rent. However, the administration has determined this site to be more favorable because of its immediate availability, accessibility to the business community, adequate on-site parking, and existing infrastructure for computer and internet connections.

Regent Kurisu moved to authorize the administration to enter into a three-year lease agreement with the Lawrence Lit Wai Chan and Linda Yee Wah Chan Revocable Living Trust for office and training space in Kailua-Kona for Hawai'i Community College, as presented in President's Memorandum No. 4 (Agenda), Item A-1, dated November 16, 2001. Regent McElrath seconded the motion which was unanimously carried.

Repurchase of Kau'iokahaloa Iki Units

Vice President Imai said in 1999 the Board approved the administration's request to convert the faculty housing Kau'iokahaloa Iki for-sale units to rental. In this conversion, unit owners were given the opportunity to sell their units back to the University, as specified in the purchasing agreement. The owner of Unit #108 in Kau'iokahaloa Iki wishes to sell the unit back to the University. It is therefore requested that the Board approve the purchase of this unit from its owner at a price reflecting the original sale price, physical improvements to the unit, and miscellaneous transaction costs.

Given the Board's concurrence to convert for-sale units to rentals, the administration was authorized to enter into discussions with the four owners of Kau'iokahaloa Iki units to repurchase their units. The administration proposed to buy back the units at the same price the units were sold to the faculty. The difference between the current fair market price may be justified as a settlement and release of possible legal claims the faculty owner may have against the University arising from the representations and program description made during the original sale and the repurchase.

A repurchase/settlement agreement has been reached with the owner of Unit #108. In addition to the repurchase price of $355,000.00, the faculty owner is asking for recovery of all closing costs and loan fees associated with the initial purchase ($5,311.92), the improvement costs to extend the patio and lanai areas by installing concrete tiles in the front and back yards ($4,522.04), and seller's escrow costs associated with the sale back to the University (approximately $1,500.00). The total cost to the University for the repurchase of Unit #108 shall be approximately $366,334.00.

The administration has reviewed this matter with counsel and secured funds for the proposed purchase. However, it is anticipated that similar repurchases are forthcoming with the remaining 3 faculty owners. Since the remaining repurchase agreements would be similar to this, the administration further requests that it be authorized to enter into repurchase agreements, subject to availability of funds, with the remaining 3 owners of units. If terms of the repurchase differ substantially from the concepts embodied in this repurchase, prior Board approval will be sought.

Regent Kurisu moved to approve the offer to purchase Unit 108 in Kau'iokahaloa Iki from the faculty owner according to the terms described and that the administration be authorized to enter into similar repurchase agreements with the remaining three (3) faculty owners of units in Kau'iokahaloa Iki with the understanding that Board approval will be required if, upon consultation with the Board, the terms are determined to be substantially different from the repurchase of Unit 108, as presented in President's Memorandum No. 4 (Agenda), Item A-2, dated November 16, 2001. Regent Weiner seconded the motion which was unanimously carried.

New Master and Supplemental Bond Resolutions

Senior Vice President Imai requested that the Board adopt a new master bond resolution entitled, A Resolution Creating and Establishing a Network Consisting of a University System, Including Certain University Projects, and University Purposes, of the Board of Regents, University of Hawai'i, (hereafter referred to as the 2001 Resolution) and a supplemental resolution entitled, A Supplemental Resolution Authorizing the Exchange of $655,000 Principal Amount Outstanding of Board of Regents, University of Hawai'i, University System Revenue Bonds, Series D, (the Supplemental Resolution).

The 2001 Resolution would replace the existing bond resolution adopted in 1973, and authorizes the refunding of all outstanding "System Revenue Bonds" except the exchange of approximately $655,000 principal amount of System Revenue Bonds originally issued to the United States government in 1973 at the rate of 3%. The Supplemental Resolution authorizes the exchange of a principal amount not to exceed $655,000 of Series D Revenue Bonds, with a like principal amount of Series 2001A bonds and secured under the 2001 Resolution.

The 2001 Resolution is drafted in a manner which attempts to update the 1973 Resolution to reflect the current needs of an issuer in the municipal bond market. The 2001 Resolution provides the Board with greater flexibility and a wider variety of options with respect to bond financing and would make more cash available for valid capital projects in the University Revenue Undertaking Fund by reducing the mandatory restrictions. The 2001 Resolution, subject to the enactment of proposed legislation at the next session of the Legislature, provides the Board with the ability to include non-revenue producing facilities in the system and include legislative appropriations in its revenue base. In addition, the 2001 resolution permits the Board to: 1) provide reserves through the purchase of surety bonds rather than cash reserves, 2) issue variable rate debt and enter into certain related agreements, 3) allow the Board greater flexibility in the removal of facilities from the system and insurance requirements, and 4) effect the issuance of refunding bonds without requiring the time consuming necessity of Board approval to take advantage of favorable market conditions in a volatile municipal bond market.

The 2001 master resolution and supplemental resolution were prepared by Mr. Samuel I. Hellman from the law firm of Hawkins, Delafield & Wood and has been reviewed by the Department of the Attorney General and University General Counsel.

The 1973 Resolution provides a limited framework with respect to the facilities permitted to be financed and the revenue base that may be pledged towards payment of the bonds issued thereunder. That Resolution was originally adopted in response to financing only revenue producing facilities, such as dormitories, student centers, and the like. At that time, the United States government was providing low interest loans to colleges and universities throughout the nation. Subsequently, the system utilized the public market to finance other revenue producing facilities as part of the system and the United States government has essentially divested itself of all of the original bonds.

Chapter 306, Hawai'i Revised Statutes, currently restricts the Board to financing revenue producing facilities. Subject to the enactment of legislation to be proposed at the 2002 Session of the Legislature, and in anticipation of such enactment, the 2001 Resolution permits the Board to designate "university purposes" as part of a "network" whether or not such purposes generate revenue, so long as the Board dedicates and commits "legislative appropriations" to the payment of bonds issued to finance such facilities. This dedication and commitment would need to be refreshed by the Board each year after the Legislative session appropriating or allocating money to the University. This aspect of the 2001 Resolution potentially expands the character of the facilities that can be financed and the revenue base. This ability allows the Board to finance additional facilities and expand its revenue base to reflect the provisions of the proposed new legislation as it takes effect without amendment to the 2001 Resolution and without the need to seek approval of holders of outstanding bonds of the Board.

The 1973 Resolution requires that the Board fund a debt service reserve for each series of bonds issued thereunder. The amount of the debt service reserve is equal to the maximum amount of principal and interest coming due in any fiscal year, the industry standard for debt service reserves. The 2001 Resolution permits the reserve to be provided with a surety bond, an approach not available or contemplated in 1973. The premium cost of such a surety bond is a fraction of what a cash funding of the debt service reserve would be.

In addition, the 1973 Resolution requires a "reserve" for facilities included in the system equal to 10% of the development cost of such facilities to be accumulated over time. This requirement necessitates the mandatory setting aside of a substantial amount of cash. The 2001 Resolution requires a "major" maintenance account equal at least to $1 million and an "ordinary" maintenance account that can be used for ordinary maintenance and to make improvements or betterments to the system, including financing, in whole or in part, additional facilities. The amount of funding of this later account is discretionary with the Board or its Designated Financial Officer.

The flow of funds of the 2001 Resolution is not significantly different from the 1973 Resolution. However, the reduction of cash for reserves and the discretionary nature of funding certain of such reserves should make more cash available to the University for other purposes.

The 1973 Resolution limits the Board's method of bond financing to the issue of fixed rate bonds. At the time the 1973 Resolution was adopted, variable rate debt was not considered as an alternative. The 1973 Resolution has no provisions allowing for the issue of variable rate bonds. The 2001 Resolution includes authority for the issue of such variable rate bonds. The 2001 Resolution also provides the authority for the Board to enter into hedge agreements, support agreements, integrated swap agreements, and other financial agreements in connection therewith. The 2001 Resolution provides authority for the host of determinations that must be made in connection with a variable rate financing, such as the determination or establishment of interest rates based on the determination of a re-marketing agent, market auction procedures, establishment and use of interest indices, provision of interest increment amounts, etc.

The 1973 Resolution allows for the issue of refunding bonds and set forth the procedure and conditions for such issue. However, the procedures do not take into account the volatility of the municipal bond market. The 2001 Resolution recognizes that market volatility and further recognizes that such volatility can give rise to occasions when it would be fiscally advantageous to the University to be able to act quickly to effect an issue of refunding bonds.

The 2001 Resolution allows the Board to delegate to an authorized officer (the "Designated Financial Officer"), for periods of up to one year, the authority to effect an issue of refunding bonds so long as certain conditions pertaining to the present value savings to the Board of such issue have been met and the Designated Financial Officer has concluded that the issue of one or more series of refunding bonds is in the best interests of the Board.

In general, the 2001 Resolution reduces the requirements for removing facilities from the network and imposes a more generic requirement with respect to insurance requirements. It should be noted that the insurance requirements are designed as security for the bondholders and in the normal course, the University will probably remain heavily insured for most risks.

Regent Kurisu moved to adopt the 2001 and Supplemental Bond Resolutions, as presented in President's Memorandum No. 4 (Agenda), Item A-3, dated November 16, 2001. Regent Weiner seconded the motion which was unanimously carried.

Land Agreement with Campbell Estate

President Dobelle requested that Agenda Item A-4, Land Agreement with Campbell Estate be withdrawn. There were no objections from the Board.

Re-naming of the Hawaiian Studies Program at the University of Hawai'i at Manoa

Interim Chancellor Neubauer recommended that the Board re name the Hawaiian Studies program at UH Manoa, Kamakakuokalani - Gladys K. 'Ainoa Brandt Center for Hawaiian Studies.

At its October 2001 meeting, the Board of Regents, at the request of the administration, named the facilities housing the UH Manoa Center for Hawaiian Studies in honor of former University of Hawai'i Regent, Gladys K. 'Ainoa Brandt. During the Board's discussions, testimonies were received expressing support for the naming of the Hawaiian Studies program in honor of Regent Emeritus Brandt. The Board subsequently directed the administration to consider this additional matter and to forward its recommendations to the Board, assuring the University community that the prescribed procedure would be followed.

The Manoa Ad Hoc Committee of faculty, students, administrators, and a community member that were charged to consider the naming of the facility was reconvened after the October Board meeting to consider the re-naming of the Hawaiian Studies program in honor of Regent Brandt. The committee has forwarded its comments and recommendations to the Interim Manoa Chancellor.

It was through Regent Brandt's vision and wisdom that a strong and lasting foundation for Hawaiian Studies in our community was established. That foundation has led to a flourishing program today and will be the basis for expanded Hawaiian Studies programs throughout the University system in the future.

Kamakakuokalani is the family name of Regent Brandt's maternal grandmother and therefore the naming of the program honors her Hawaiian ancestors as well. Also, Kamakakuokalani means upright eye of heaven and is therefore a fitting metaphor for the Hawaiian Studies program's higher mission of seeking truth and knowledge.

The naming of the program, in addition to the facilities in honor of Regent Brandt, provides a more enduring recognition of Regent Brandt's considerable contributions to the growth in Hawaiian studies at the University.

Regent McElrath moved to rename the Center for Hawaiian Studies program at the University of Hawai'i at Mnoa, Kamakakuokalani - Gladys K. 'Ainoa Brandt Center for Hawaiian Studies, as presented in President's Memorandum No. 4 (Agenda), Item A-5, dated November 16, 2001. Regent Nunokawa seconded the motion which was unanimously carried.

Legislative Proposals, 2002 Legislature

Vice President Imai requested that the Board approve the legislative proposals to the 2002 State Legislature. The proposed legislative bills are designed to address identified needs and would:

• Authorize the University to agree to indemnify provisions in contracts;

• Appropriate funds for payment of settlement of claims;

• Grant the Board of Regents flexibility to construct and maintain University projects;

• Appropriate funds for disaster public higher education programs;

• Authorize the expenditure of funds from the Hawai'i educator loan program; and

• Exempt employees in bargaining unit 7, faculty of the UH and the community college system, from the grievance procedure.

Regent McElrath said for the benefit of those who have lost and probably will be losing jobs in the future because of 9-11, that there be a movement to include a much better group health plan for those individuals in the University system who cannot join the regular employee health plan. Our General Counsel said that he would look into the matter to see whether or not this could be done since the law as it was passed two years ago does not do a whole lot for the people who do not have access to the regular group plan of full time employees.

Gifts, Grants, and Contracts

Interim Chancellor Neubauer reported that during the time period September 16 to October 15, 2001 the University of Hawai'i system received 221 external extramural awards with a total value of $40.3 million. Last year 175 awards with a total value of $31.9 million were received during the same time period. This constitutes a 26 percent increase in the number of awards and a 27 percent increase in the total value.

Regent Kurisu moved to accept the gifts and grants and ratify the actions of the administration in executing the necessary contracts, as presented in President's Memorandum No. 4 (Agenda), Item A-7, dated November 16, 2001. Regent Kawakami seconded the motion which was unanimously carried.

In response to Regent McElrath, Interim Chancellor Neubauer said that David Duffy is one of the extraordinary people in the University of Hawai'i who has created a conservation biology industry in Hawai'i in which he serves the State and the federal government in a variety of ways. He is responsible for receiving $12 million in external funding.

Appointments, Changes in Appointments, Leaves of Absence, Promotion, Tenure, Waivers of Minimum Qualifications, Emeritus Titles, Shortening of Probationary Period, Salary Adjustments, Position Actions, Classification and Pricing

President Dobelle requested that the agenda be amended to include the appointment of Ms. Diane E. Perushek as University Librarian, Library Services, University of Hawai'i at Manoa, effective December 1, 2001.

Regent McElrath moved to amend the personnel agenda as requested by President Dobelle. Regent Kawakami seconded the motion which was unanimously carried.

President Dobelle recommended the appointments, changes in appointments, leaves of absence, promotion, tenure, waivers of minimum qualifications, emeritus titles, shortening of probationary period, salary adjustments, position actions, classification and pricing as follows:

UNIVERSITY OF HAWAI'I AT HILO

Executive

CHEN, BILL H.

Interim Vice Chancellor for Academic Affairs

Office of Vice Chancellor for Academic Affairs

October 1, 2001 - June 30, 2002, or until a

permanent Vice Chancellor is appointed

Resignations and Retirements of Board of Regents' Appointees and Civil Service Employees

The list of resignations and retirements of Board of Regents' appointees and retirements of Civil Service employees was presented for information. (The list of resignations and retirements is presented in President's Memorandum No. 4 (Agenda), Items C-1 and C-2, dated November 16, 2001.)

He announced the appointments of Mr. Paul Costello as the Vice President for External Affairs and Mr. J.R.W. Sloane as Vice President and Chief Financial Officer. Mr. Costello was the Managing Director of Weber Shandwick International of New York City, supervising corporate and financial relations, consumer lifestyle and technology. He has a bachelor's degree in communications from Southern Illinois University and received his MSW from the University of Illinois.

Mr. J.R.W. Sloane comes from a firm he founded, K@tapult, Inc. Prior to that he was the Chief Operating Officer for North America at Baring Asset Management, a global firm that manages $45 billion for institutional clients. Mr. Sloane is a graduate of Williams College and has an MBA from the Yale University School of Management.

Chairperson Ikawa also announced the passing of former Dean of the College of Engineering John Shupe.

In recognizing National Philanthropy Day, Chairperson Ikawa said that each year the Association of Fund Raising Professionals Aloha Chapter honors outstanding philanthropists and fund raising professionals. This year the outstanding philanthropist award will be presented to Regent Emeritus Donald C.W. Kim. He offered the Board's congratulations and thanked Regent Emeritus Kim for his contributions to the University of Hawai'i. His contributions created the Donald C.W. Kim Computer Laboratory in the College of Engineering. His leadership on the Board will be fondly remembered.

A second award in the category of outstanding small business philanthropy will be presented to Dowling Company. The award recognizes Regent Everett R. Dowling for his contributions to philanthropy. Our University has benefitted from Everett's generous land and financial contributions. We honor and celebrate the recognition of both Donald C.W. Kim and Everett R. Dowling for their philanthropic efforts.

Chairperson Ikawa thanked Provost Cha and the faculty and students for hosting the meeting and the culinary arts program for the delicious and well-prepared dinner. He apologized for not being able to meet with the students of Kaua'i Community College due to the length of the committee meetings. He assured that arrangements would be made to meet with the Student Affairs Committee at another date.

Chairperson Ikawa thanked Regent Kawakami for hosting breakfast. He announced that the next meeting would be held on January 18, 2002, at 8:30 a.m., at Kapi'olani Community College.

Respectfully submitted,

David Iha, Secretary