1 2 3 4 5 6 7 8 KERR COUNTY COMMISSIONERS COURT 9 Special Session 10 Wednesday, December 8, 2004 11 3:00 p.m. 12 Commissioners' Courtroom 13 Kerr County Courthouse 14 Kerrville, Texas 15 16 17 18 19 20 21 22 23 PRESENT: PAT TINLEY, Kerr County Judge H. A. "BUSTER" BALDWIN, Commissioner Pct. 1 24 WILLIAM "BILL" WILLIAMS, Commissioner Pct. 2 JONATHAN LETZ, Commissioner Pct. 3 25 DAVE NICHOLSON, Commissioner Pct. 4 2 1 I N D E X December 8, 2004 2 PAGE 1.1 Consider and discuss extension of temporary 3 Lease and Operating Agreement at Juvenile Detention Facility 3 4 1.2 Consider, discuss, and take appropriate action 5 with respect to acquisition of Kerr County Juvenile Detention Facility 3 6 --- Adjourned 46 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 On Wednesday, December 8, 2004, at 3:00 p.m., a special 2 meeting of the Kerr County Commissioners Court was held in the 3 Commissioners' Courtroom, Kerr County Courthouse, Kerrville, 4 Texas, and the following proceedings were had in open court: 5 P R O C E E D I N G S 6 JUDGE TINLEY: Let me call to order the 7 special meeting of the Kerr County Commissioners Court 8 scheduled for this date and time, Wednesday, December the 9 8th, 2004, at 3 p.m. We have two items on the agenda today, 10 and I'm going to call them both, since they kind of run 11 together. First item is consider and discuss extension of 12 temporary lease and operating agreement at Juvenile 13 Detention Facility, and secondly, consider, discuss, and 14 take appropriate action with respect to acquisition of Kerr 15 County Juvenile Detention Facility. When we last met 16 concerning this subject, the -- there were a couple of the 17 bondholders that had indicated that they needed some time in 18 order to properly respond to the offer that was on the table 19 from this Court, and they were advised that we would 20 schedule a meeting for this date and time to give them that 21 opportunity. So, at this point in time, unless one of you 22 gentlemen have something preliminary, I think it would be 23 appropriate for me to ask that the representative of the 24 bondholders give us the response. 25 MR. BRISTOW: Thank you, Judge. Let me start 12-8-04 4 1 off, if the Court will indulge me to give you a little bit 2 of background about who I am and how I got in this box. 3 The -- I generally -- generally speaking, I'm here in front 4 of Commissioners Court representing their interests. That's 5 a big part of my practice, is representing county 6 governments, and I say that only by way of background so 7 that you can kind of understand where I'm coming from, from 8 the point of view of trying to solve the problem. I got a 9 call six days ago, maybe seven days ago, from a group of 10 bondholders who, you know, had either the -- the good sense 11 or the -- or the misfortune of getting into this bond 12 transaction, and they were scratching their heads trying to 13 figure out what it is they needed to do, and needed to -- 14 obviously needed somebody or some way to pull themselves 15 together, because -- because there's 11 of them. They're in 16 different banks scattered across the country, and they got 17 me on the telephone and asked me what I could do to help in 18 this transaction. 19 The -- it became obvious to me fairly -- 20 fairly quick that -- that this is a problem that is going to 21 be difficult. It's going to be hard to solve. But that the 22 way to solve it was to get as many of the people involved in 23 the deal rowing in the same direction; get as many of the 24 people that were involved in the deal educated quickly, so 25 that they could give a timely response to a very serious 12-8-04 5 1 concern that the Commissioners Court had put on the table, 2 and that is to get some resolution to this problem in a 3 timely manner so that -- that the County can -- can make 4 decisions about what they're going to do about their 5 juvenile justice program, about what they're going to do 6 with their facility. 7 Obviously, this was having an impact on 8 budget. You know, I have a keen understanding of that, not 9 only from my background, but from having lived with this 10 transaction, trying to dissect it, understand it, analyze 11 it, break it down, figure out what it would take to get 12 these people to stop pointing fingers at other people, which 13 is -- you know, it's what lawyers do sometimes. But in -- 14 in this situation, I felt like, with a -- with a sincere 15 effort by all the parties to focus primarily on the solution 16 to this problem, and do it without pointing fingers, and do 17 it with the idea that there is a solution to it, that if 18 everybody would get on board, that we'd be able to figure 19 out a way to solve the problem. I have spent hours on the 20 phone talking to the trustee, the trustee's counsel, the 21 representatives from First Southwest, who were the 22 underwriters, their lawyers. 23 I've talked to your lawyers, talked to the 24 people at Dain Rauscher. I've talked to all the bondholders 25 several times, and last night I was pushing the bondholders 12-8-04 6 1 with all that -- just this body of information that I'll be 2 glad to discuss. If the Court wants to engage in that 3 discussion, I'll be glad to openly discuss all the pros and 4 cons and values and evaluations, and -- and pro formas and 5 details about the operations of these facilities, and be 6 glad to give my view of where it is. But the bottom line 7 is -- is that I came to the conclusion that this 8 Commissioners Court wanted an answer, they wanted it now, 9 and I undertook to try to get these 11 cats all herded and 10 going in the same direction. I don't mean that to disparage 11 the bondholders, but they -- you know, they have -- they 12 have different views. Some of them are holding these things 13 in a fiduciary capacity for trusts. Some of them are 14 holding them for their own benefit. Some of them bought 15 them from different people, and they all have different 16 ideas, and they're all very smart, intelligent bankers, and 17 they -- you know, they want to solve the problem, but they 18 all have their own ideas on how it ought to be solved. 19 The bottom line is -- is that, as I said, 20 I -- I could sense that this Commissioners Court wanted an 21 answer, they want it now. They want to know that this 22 problem can be solved, and if it can't, then they need to 23 make other decisions, and I'm -- I'm sensitive to that. The 24 proposal, as it was pitched to me -- and I -- I mean, I've 25 got a little notebook I've built here, but I haven't seen 12-8-04 7 1 all the documents. But, you know, I've put together, you 2 know, a lot of detention financing issues. I have taken 3 apart several of them, representing counties and other 4 parties, and, you know, I generally have that -- that body 5 of knowledge so that I can hopefully drive this thing in the 6 right direction. 7 The other piece of the puzzle that -- that -- 8 that I think is important is for all of us to understand 9 the -- the unique nature of juvenile detention. You know, 10 I -- again, either misfortune or good luck, I have been 11 involved with the juvenile detention attempt to privatize 12 the juvenile detention facilities across the state in the 13 mid to late 90's. I'm familiar with the movement that -- 14 where Recor came in and built several of these facilities 15 that had to be redone. I've seen good juvenile facilities. 16 I've dealt with juvenile boards from various counties 17 dealing with, where do we send our kids? I know that Kerr 18 County, not too long ago, was one of the top three 19 facilities in this state, and -- and counties saw Kerr 20 County as the place to send their juveniles, so I kind of 21 know that this can be a good facility. 22 And -- and, you know, bottom line is, the -- 23 the bricks and mortar out there in that building really 24 aren't the determining factor. The determining factor of 25 that facility is operations and -- and how the programs are 12-8-04 8 1 run, and how other people who send their juveniles to this 2 facility feel about it, and whether they're willing to send 3 their kids here and pay a per diem. All that is obviously 4 very important in coming to the decision that these 5 bondholders had to come to, and that is they have to make a 6 business decision as fiduciaries as to what is the 7 appropriate value for that facility. Again, not to bother 8 you with the details, but what -- what we did was, I 9 immediately called people that I -- I knew and that they 10 knew that are in the private sector that operate detention 11 facilities. I contacted the folks in Montgomery County and 12 the folks in Williamson County who run facilities similar to 13 this and have very successful programs. 14 I looked at their -- their costs in general 15 terms and tried to get myself in a position so that -- I was 16 really hoping to have a formal analysis, but just didn't -- 17 simply did not have time to -- to pull that together. But I 18 did get a lot of opinions from a lot of different people 19 about how many juveniles are there out there? How full can 20 it stay? What kind of operational costs should they run 21 into? Because that's important in determining the value. 22 If we look at the way you value things -- and these 23 gentlemen are trying to answer to their superiors as to why 24 they would take a particular value for an asset. You look 25 at what it costs you, and you know that's a $5 million 12-8-04 9 1 ticket. You got $2.7 million in new construction out there 2 that hasn't even effectively been opened yet. So, you look 3 at that side of it, you look at the cost side of it, you 4 look at the market value. What would somebody else pay? 5 Well, there's not -- there's not much of a 6 market for used juvenile detention facilities. I mean, the 7 County is the highest and best possible user. And I 8 understand and -- and concur with the County's decision to 9 look at it from the point of view of cash flow. And -- you 10 know, I know that's what makes -- it may not make sense to 11 us, as the bondholders, because we look at it, and we just 12 paid $5 million for this -- something, and now you're 13 telling us it's -- it's only worth $1.75 million, and that's 14 a hard -- that's a hard pill to swallow. So -- but I do 15 understand what -- what cash flow means, and what it takes 16 to run these facilities. I believe that bottom line is -- 17 is that this -- this facility will work. The bondholders 18 want to cooperate with the County. They want to do 19 everything that they can, within their power, to make this 20 facility work for the County. There is no desire whatsoever 21 to be adversarial with the County. The -- the view at this 22 point in time is that they are very appreciative of the 23 County's taking the -- the initiative and making an offer so 24 that -- you know, and basically pressing them into action to 25 respond. 12-8-04 10 1 Judge, I can probably talk for hours, and I'm 2 not going to, but I -- I'd probably defer back to the Court, 3 and if you or any of the Commissioners want to have a 4 discussion or ask me questions, I mean, I'll be glad to go 5 into any side of this thing, any kind of analysis that I've 6 done on their behalf that may help you in your 7 decision-making process. But the bottom line is -- and I 8 think this is what the -- the Commissioners Court wants to 9 hear -- is that -- that, after consulting with and trying to 10 figure out how many people I really had to get on board to 11 make this thing happen -- you have to realize that -- that 12 we have a trustee. We have 11 bondholders. They have 13 lawyers. We have other parties who may or may not have 14 responsibility for the situation being what it is today, and 15 I've had to deal with and approach those folks, and -- and 16 while some of them don't have the power or the right to 17 consent to what our offer is, it certainly is a part of -- 18 of the puzzle. 19 So, I've had to go -- talked to First 20 Southwest about what we're going to do. I've had to get the 21 11 bondholders, who have very different opinions and are all 22 in very different positions, to bless an offer. But they 23 were able to -- last night, to reach a consensus on where 24 they wanted to go with this thing, and have authorized me to 25 make an offer to the County, with the idea and understanding 12-8-04 11 1 that we know it's going to take some work and we're going to 2 have to roll our sleeves up and make it happen, but given 3 where we are now and -- and the speed with which we have to 4 move, the bondholders are in a position -- and if the Court 5 will indulge me, probably the best thing for me to do is 6 just read it point by point, and then ... 7 First of all, the bondholders asked me to -- 8 to acknowledge their appreciation for your -- for your 9 offer. They have agreed to, essentially, the terms. As I 10 understood them, they -- they've agreed to them. They've 11 got a few little tweaks in terms, with the exception of the 12 price. First of all, the bondholders will agree that, upon 13 closing of the sale transaction, that the -- that documents 14 will be presented for the release of any obligation of the 15 County or its public officials arising from the bond 16 transaction, provided that the County will likewise agree to 17 take reasonable steps to reserve the rights of the 18 bondholders to pursue any claims they might have against 19 third parties, including a covenant of cooperation in good 20 faith from the County to reasonably assist in asserting any 21 such claim, provided that any such assistance shall be at no 22 cost to the County. The bondholders, obviously, reserve all 23 rights to pursue claims against any parties other than the 24 County. 25 The next point is that the -- the bondholders 12-8-04 12 1 and the County will agree that they will, within 10 days, 2 and in good faith, use their best efforts to cooperate to 3 cause all parties involved in the transaction to convene for 4 a joint discussion or mediation in an effort to resolve 5 globally all issues arising from the bond transaction. Now, 6 that -- I'll just be candid with you. In order to convince 7 the bondholders to make this offer, the bone that I proposed 8 is -- is that -- that we make every effort to not only 9 resolve the issue with the County and the sale, but also try 10 to get everybody resolved immediately. And, in order to do 11 that, I had to propose that basically y'all help us get all 12 the players to a meeting tomorrow or the next day, or as 13 soon as we can get it done, so that we can at least talk 14 about a global solution to all -- all the outstanding 15 issues. 16 The third thing is -- and I think this was a 17 condition that the Court had requested as well -- is that 18 this proposal is, of course, subject to preparation of 19 appropriate legal documents satisfactory to counsel for the 20 County, and the bondholders' receipt of all appropriate 21 consents, compliance with all laws, Open Meeting 22 requirements, and any necessary and appropriate legal 23 issues. The -- the final issue, before we discuss the 24 price, is that the -- the bondholders, and hopefully others, 25 but the bondholders particularly, these 11 bondholders will 12-8-04 13 1 remain open to discuss other details which would facilitate 2 or expedite this transaction, including financing options, 3 which would include, but not be limited to, the potential 4 negotiation of a swap of these revenue bonds for qualified 5 general obligation bonds of the County under appropriate 6 circumstances, and at advantageous rates and terms to the 7 County. 8 That -- and I know it'll require further 9 discussion, perhaps with your counsel, but the bottom line 10 is, if they can help solve other problems that the County 11 has -- has endured because of this, because of rating issues 12 or financing questions, they are willing to consider -- and 13 it was hard to put that in fine terms that I could pin down 14 with rate and whatnot, but, obviously, if you're looking at 15 this facility on a going-forward basis, you may wish to have 16 terms of a general obligation financing that does not 17 include immediate payment so that you have a, you know, 18 12-month period to ramp up and rehabilitate the facility and 19 get it to full capacity. You -- with this rate -- with the 20 swap of this appropriation indebtedness for -- for general 21 obligation indebtedness, you may be able to save some 22 significant closing costs. I'm -- not that I'm trying to 23 cut anything out of anybody's pocket, but that could be an 24 issue. The other thing that I would think you would be very 25 interested in is a rate that would -- that would be a rate 12-8-04 14 1 you would deserve based on general obligation of this good 2 county. 3 The final piece of it, and mainly because I'm 4 running out of words, if a lawyer ever does that, is that -- 5 that the bondholders believe -- and this -- the bondholders 6 believe, and all those parties involved that we're going to 7 have to get together to work on this global solution believe 8 that this facility is -- is well worth two and a half 9 million dollars. Their proposal is to agree to discount the 10 existing indebtedness to two and a half million dollars, and 11 that is based on their study and analysis of what the 12 facility can do. It's based on all those things I've talked 13 about. It also is based on the fact that they knew that 14 this thing had to move fast, and the idea was we had to -- 15 we had to, in essence, cut to the bottom line. And we 16 would, I guess, on behalf of the bondholders, request that 17 consideration. And I stand here ready, willing, and maybe 18 not able, but I will certainly entertain any questions and 19 encouragement. Because there's a lot of -- lot of issues 20 and a lot of complexity, but the bottom line is -- is 21 that -- that we're here on behalf the bondholders to make 22 the deal work. 23 COMMISSIONER WILLIAMS: May we have a copy of 24 the document that you read from so we can -- 25 MR. BRISTOW: Sure. Sure. 12-8-04 15 1 COMMISSIONER WILLIAMS: -- more adequately 2 examine it, please? 3 MR. BRISTOW: Sure. That -- and I'll beg the 4 Court's indulgence. This is a letter that I -- that I spit 5 out last night at 7 o'clock in my office, trying to get -- 6 get it down in writing, because I'm -- I'm scurrying with 11 7 bondholders. But -- 8 COMMISSIONER WILLIAMS: There's a lot of 9 nuances in there I don't think I understand just by 10 listening. 11 MR. BRISTOW: I understand. If you will -- 12 if you will just give me the grace to understand that it was 13 a draft, and there may be typos in it. 14 COMMISSIONER WILLIAMS: Ms. Mitchell will be 15 happy to provide us with copies if you give it to us. 16 COMMISSIONER BALDWIN: While we're doing 17 that, I'd like to ask a question of our attorney. Do you -- 18 do you understand and know what he's talking about with -- 19 about global solutions, what all that entails? 20 MR. SPURGEON: Oh, I think what he is -- is 21 suggesting is that there are -- I mean, all the other 22 parties that were involved in the transaction, he would want 23 -- he wants to bring together to talk about what 24 contributions they make into the transaction. I think it 25 was clear to me, with the conversations I've had with her, 12-8-04 16 1 that the County, the Juvenile Board, the issue will be 2 completely released. What he is -- what -- I think what 3 they are suggesting is that no other party involved in the 4 transaction should be released, including ourselves, 5 financial adviser, underwriter, underwriter's counsel, 6 perhaps, 'cause I think those are really the only other 7 parties that -- that -- unless I'm wrong, Herb, those are 8 the only other parties I think he's talking about in terms 9 of bringing together to talk about this global solution to 10 the problem. 11 JUDGE TINLEY: Is that correct, Mr. Bristow? 12 MR. BRISTOW: Yes. 13 JUDGE TINLEY: So, everybody -- 14 MR. BRISTOW: I was trying to listen to two 15 conversations at the same time. 16 JUDGE TINLEY: Everybody on the Kerr County 17 side of the fence, then, would be fully and completely 18 released in connection with anything arising out of this 19 transaction? 20 MR. BRISTOW: That is correct. 21 COMMISSIONER BALDWIN: And there's all kinds 22 of rumors floating around, and I'm not going to name any 23 names, but let's say that there was a possibility of a 24 problem on the other side of that fence somewhere. Is that 25 part of the global solution as well? Are we going to sit 12-8-04 17 1 down and visit about everybody involved in this thing? Or 2 are we just going to sit down and visit about our side of 3 the fence in the global solution? 4 MR. BRISTOW: In the global solution, in my 5 mind -- and, you know, I'm kind of flying by the seat of my 6 britches, but the global solution is, you know, the 7 bondholders are -- are obviously taking a -- a serious 8 haircut, to the tune of two and a half million. They're the 9 ones who put up the money, so they're the ones that have 10 lost, and they would like the opportunity to at least sit 11 down and talk to the potentially responsible parties, which 12 would be First Southwest, anybody involved in the issuance. 13 And -- and this -- this proposal involves a release of 14 everybody on the County's side, so I don't know -- I don't 15 think, at this point in time, we're -- we're trying to get 16 real broad. We're trying to understand who might have been 17 involved in anything that -- that was a wrongdoing. We're 18 not trying to say anybody did anything wrong, but in defense 19 of them, they need to make a judgment call as to whether or 20 not what they bought was what they thought they bought, and, 21 you know, where this thing went wrong. And if -- if 22 somebody, you know, ran off with a million dollars at 23 closing and they find that out, they would like that person 24 to come and pay that million dollars back. Is that -- 25 COMMISSIONER BALDWIN: You answered my 12-8-04 18 1 question. 2 MR. BRISTOW: Okay. 3 JUDGE TINLEY: Mr. Bristow, with respect to 4 the release of everybody on the Kerr County side of the 5 fence, in the event the County should have any obligation 6 under any contractual or indemnity agreements with any other 7 parties involved in the transaction, would -- would you 8 envision that your offer would include, in essence, an 9 indemnity of Kerr County for those obligations under those 10 contractual arrangements? 11 MR. BRISTOW: The -- the spirit and intent is 12 to release Kerr County, period. To the extent -- and I 13 think I understand there is the potential of an 14 indemnification agreement out there which I have not seen, 15 but my experience in representing county governments is that 16 -- that those indemnification agreements are not enforceable 17 against the County. If someone has an enforceable 18 indemnification agreement, and that creates liability on 19 behalf of the County, then it's our intent to release the 20 County, and we -- you know, it's not -- we're not trying to 21 trick anybody and release you here and get you back in over 22 there. And -- 23 JUDGE TINLEY: That was my whole point. If 24 we're released out the front door, but we're jerked back in 25 the back door -- 12-8-04 19 1 MR. BRISTOW: I think the spirit is to 2 release Kerr County, its officers and -- and employees, 3 directors, officers, et cetera, et cetera. 4 JUDGE TINLEY: And in the event we're pulled 5 into some litigation that we've essentially already been 6 released from, your offer then would include indemnification 7 to hold us harmless from any costs or expenses? 8 MR. BRISTOW: With that -- I mean -- 9 JUDGE TINLEY: Or exposure we had in that 10 respect? 11 MR. BRISTOW: The only -- the only 12 responsibility that we're seeking to protect is that if 13 someone did something wrong, that -- other than County 14 officials, 'cause they're released. If someone did 15 something wrong, then we would like the opportunity to 16 assert that claim. The -- the direct answer is, you know, 17 Kerr County's going to be released, and it's going to take 18 some clever, well-written release documents to accomplish 19 that. But the -- the spirit at the end of the day is -- is 20 that the bondholders, the folks that put the money up, the 21 folks that took the discount, would go hand-in-hand with the 22 County, in name, and find out if there's anything out there 23 where there's responsibility to the bondholders for that 24 loss, and go hand-in-hand with them and assert those claims 25 for the benefit of the people that lost the money. 12-8-04 20 1 There's -- I've -- I mean, it can be done. It has been done 2 before. You know, and I've got some -- some experience with 3 an almost identical situation where the county, in essence, 4 was released, and the other parties to the transaction were 5 not. 6 COMMISSIONER WILLIAMS: Mr. Bristow, thank 7 you for your presentation. I appreciate the -- your 8 providing the Court with this document. My question to you 9 is, are you empowered by the bondholders and those that you 10 stand in representation of today to negotiate from this 11 document, or is this document to be accepted on its face 12 value? 13 MR. BRISTOW: At the -- at the present 14 time -- and this is the authority I have, and it involves 15 more than just the bondholders, but I -- I absolutely have 16 the authority to make that deal. I have the bondholders -- 17 I requested that they stand by in anticipation of this 18 discussion. Obviously, I could not detail for the Court the 19 details of the financing, so I knew there were some issues 20 there to be resolved. So, the -- the short answer is, 21 that's -- that's what I have authority to do at this moment 22 in time. If the Court asks me to go ask -- to get a 23 commitment for an interest rate at negative 5 percent, I'll 24 go ask them. And I really think it -- the spirit is, we're 25 here to make the deal work. And the County -- you know, the 12-8-04 21 1 County has to make the decision too, 'cause they -- they 2 need to know it's going to work for them too. 3 And we've tried to analyze all the issues and 4 put you in a position where it will work for you, and I 5 believe that, at that number, with the right structure, with 6 what -- what I know and others know about the juvenile 7 business and where everything is, which is a bunch of stuff, 8 that that number, with the appropriate financing, that this 9 transaction will work, the facility will be successful, and 10 Kerr County Juvenile Detention Center will be back where it 11 was three years ago. But I'm trying to sell the deal, so 12 you can take what I say with a grain of salt. But I have -- 13 I have consulted with -- I've contacted people with the 14 federal immigration and customs enforcement, and 15 interrogated them about what their demand is. They have a 16 high need right now, and they were actually encouraged to 17 know there might be a juvenile facility where there would be 18 space. 19 I know that -- that there is a lot of -- 20 there was a lot of juvenile bed demand that has fallen off 21 the map in the last two years. I think it's -- you know, 22 it's turning up. I think -- my impression is that you've 23 got -- your current operator seems to be energized, and with 24 the right programs, and if you can get over the stigma of 25 having some problems in this facility, that other juvenile 12-8-04 22 1 courts, your adjoining counties, will send -- they'll send 2 kids to facilities where there's good programs. They're not 3 going to say, "We're not going to send a kid to Kerr County 4 because their facility's no good." It's not the bricks and 5 mortar; it's the program. So, I've gone astray of what you 6 asked, but -- 7 COMMISSIONER WILLIAMS: That's fine. Thank 8 you very much. 9 JUDGE TINLEY: Any more questions of Mr. 10 Bristow? 11 COMMISSIONER LETZ: Just briefly. Did you 12 talk at all about some sort of a -- I guess an arrangement 13 that, if the facility does as you're hoping, and say it may 14 do, you know, start becoming full again -- and I hate to use 15 the term "making money," but making money to service the 16 debt, that if that happens to a degree, that the bondholders 17 get paid off at that point, some of these funds? 18 MR. BRISTOW: Yes. I mean, I -- I -- we have 19 discussed every conceivable option. And there are certain 20 of the bondholders that -- that would propound that as their 21 preferred option; that we just take this facility, the 22 County operate it, get it up to speed, turn it around, and 23 pay these bonds off as it was intended. My inclination -- 24 and I was taking my leave from -- what I was hearing from 25 the Court was -- was that the Court wanted a solution. 12-8-04 23 1 COMMISSIONER LETZ: I think you misunderstood 2 what I said, I think. That the -- basically, the analysis 3 that I did when I made the motion for the 1.75 million 4 offer, I don't see how we can come anywhere close to 2 point 5 -- two and a half million. That's just my feeling. Unless 6 there's -- something changes in the next couple years, which 7 certainly could happen. This thing went down in a hurry, 8 and it can hopefully go up in a hurry. But if there was 9 a -- a year from now, if it started recovering some, then I 10 can see, you know, some sort of arrangement where we would 11 pay additional money back above the one and three-quarter 12 million at that point, but only if the facility started 13 generating enough revenue to support such payments. 14 MR. BRISTOW: And, I mean, I -- I appreciate 15 that thought process, and -- and I -- and I think that you 16 can -- you can accomplish the same basic thing and get 17 better closure and better hope of -- of turning this thing 18 into a transaction and use the deferral or -- for example, 19 if we closed this deal today and went to closing by 12-31 or 20 whatever, or January 31, however long it takes to get the 21 lawyers to put all the papers together, we can do a swap of 22 this appropriation debt for general obligation debt at two 23 and a half million, and you defer the payments for -- you 24 know, stairstep it or do whatever your consultant will tell 25 you to do. You know, let's ramp it up slow. You can 12-8-04 24 1 accomplish the same thing, and -- you know, and get yourself 2 that time, because your cash flow -- you know, you're going 3 to have a -- you're going to have a building process. It's 4 not going to -- it could. I mean, actually, if the federal 5 demand is as high as I believe it is, I mean, you may turn 6 that switch on and it go to full speed immediately. But the 7 bondholders are willing to refinance it, turn it into 8 general obligation debt, and then defer the payments to 9 allow maximum opportunity for the facility to succeed. 10 COMMISSIONER WILLIAMS: What do you know 11 about the potential interest rate of general obligation 12 bonds under a scenario as -- as you've painted here? 13 MR. BRISTOW: I -- I mean -- 14 COMMISSIONER WILLIAMS: I'll direct the 15 question to our financial adviser. I just want to get your 16 sense of it. 17 MR. BRISTOW: It would be cheaper than what 18 you're paying now, I think. It depends on the rating, I 19 think. I mean, I don't -- 20 COMMISSIONER WILLIAMS: That's -- 21 MR. BRISTOW: I really -- 22 COMMISSIONER WILLIAMS: That's another issue. 23 MR. BRISTOW: I'll defer that to somebody 24 smarter than me. But it's -- I don't know. Somebody -- 25 MR. HENDERSON: Well, I think -- I think we 12-8-04 25 1 would want to probably identify an agreeable index, like a 2 Delphi yield curve based on maybe the A underlying credit 3 rating the County's tax-secured debt enjoyed before all this 4 happened. Obviously, S and P has lowered your rating to 5 triple B-minus at this point. We are in conversations with 6 S and P. We do not know and cannot predict what S and P is 7 going to rate the county if and when we can reach some 8 settlement with the bondholders. But -- but I would suggest 9 that we say -- you know, we pick a date and say we're going 10 to establish the yields at whatever the Delphi yield curve 11 says for a single-A rating or an A-minus rating or whatever 12 rating can be agreed upon as an index. 13 COMMISSIONER WILLIAMS: Are we -- are we 14 being held to a standard by S and P for future bond rating, 15 which obviously is out of our control, or -- or can a 16 negotiated interest rate between Kerr County and the 17 bondholders be structured? 18 MR. HENDERSON: I think the County can 19 negotiate whatever rate is mutually agreeable to the 20 bondholders and the County. We do not have to be bound by 21 what S and P says. I would suggest, in light of the fact 22 that Moody's and S and P has a very different viewpoint than 23 S -- I mean -- I'm sorry, Moody's and Fitch has a very 24 different viewpoint than S and P on these things, I would 25 not suggest that we tie ourselves to S and P's viewpoint on 12-8-04 26 1 this issue. 2 COMMISSIONER WILLIAMS: I guess these are 3 things we'll need to talk about. 4 MR. HENDERSON: Yes, sir. 5 MR. BRISTOW: That's the beauty of -- of 6 everybody rowing in the same direction. There are certain 7 components of this, if we're -- if we can get on the same 8 wavelength, that that could work to both parties' advantage. 9 And, obviously, the more advantageous we make the financing, 10 the more likely that you are to agree to the value that's 11 suggested. There -- there -- you know, I think everything's 12 on the table at this point in time. 13 JUDGE TINLEY: Any other questions for 14 Mr. Bristow before we consider going into executive session 15 to consider this proposal concerning the acquisition of the 16 facility? If not, we will go out of open session at 3:32, 17 it looks like, and as soon as we get all the arrangements 18 made, we'll go into closed session. We're going to need 19 Mr. Spurgeon, Mr. Henderson, and probably Ms. Harris. 20 (The open session was closed at 3:32 p.m., and an Executive Session was held, the 21 transcript of which is contained in a separate document.) 22 - - - - - - - - - - 23 JUDGE TINLEY: Okay, let's come back to order 24 in open session. It is 4:32. Does any member of the Court 25 have anything to offer with respect to the agenda matters 12-8-04 27 1 and -- pursuant to matters discussed in closed or executive 2 session? 3 COMMISSIONER LETZ: I make a motion that we 4 make a counter-offer of 1.9 million. Paragraph 3 will be 5 deleted in its entirety in the counter-proposal, and 6 Paragraph 2, everything after the sentence I read will be 7 deleted. The bondholders will agree that upon closing sale 8 -- I don't have my glasses, so you'll have to bear with me. 9 COMMISSIONER WILLIAMS: I'll read it. 10 Paragraph 2, Line 3, reads: "...officials arising from the 11 bond transaction," period. The rest of the paragraph be 12 deleted. All of Paragraph 3 be deleted. And the top 13 paragraph on Page 2, general obligation bonds would not be 14 what we're talking about. We'd be talking about 15 certificates of obligation. I think those are the letter 16 changes that -- 17 COMMISSIONER LETZ: And that -- Judge, you 18 may have written some notes on some other conditions that we 19 had. 20 JUDGE TINLEY: With respect to working out 21 some terms on generally cooperating with the asserting of 22 third-party claims and the release of Kerr County and the 23 Kerr County entities, and I'm speaking in the very broadest 24 sense, would include those entities, board members, public 25 officials, officers, employees, et cetera, would include the 12-8-04 28 1 assuming of obligations which any of those entities may have 2 under indemnity agreements or some other arrangements that 3 might be directed toward -- towards Kerr County as a result 4 of anything arising out of these transactions. You 5 understand what I'm speaking of? 6 MR. BRISTOW: And I'm assuming that that 7 would mean valid indemnity agreements. If they're -- if 8 they're not valid and enforceable, then they'll be of no 9 effect. 10 JUDGE TINLEY: That's correct, except that 11 you would assume any obligation and cost expenses in 12 connection with the defending on those, and you don't know 13 till the end of the road whether or not they're valid or 14 invalid. In the meantime, you may have expended costs and 15 so forth. But all costs and expenses, attorney's fees and 16 so forth, as well as any -- any loss that may be incurred as 17 a result of final judgment or settlement or otherwise. 18 MR. BRISTOW: Understood. 19 COMMISSIONER WILLIAMS: Is that your motion? 20 COMMISSIONER LETZ: That's it. 21 COMMISSIONER WILLIAMS: I would second the 22 motion with one other caveat, that whatever pro forma that 23 you may have put together, singular or plural, that support 24 the contentions that you advanced to us be provided to 25 Ms. Harris so she can review them and give us her best 12-8-04 29 1 judgment. 2 JUDGE TINLEY: Any other questions or 3 discussion on the motion? 4 COMMISSIONER NICHOLSON: I've got a statement 5 on the motion that I'm talking -- speaking mostly, I think, 6 to the citizens of Kerr County who are here, and to the 7 press. I believe that a lot of our citizens in Kerr County 8 believe that Kerr County government has a -- a legal 9 obligation about this debt. I believe that there's a number 10 of people who think that we are reneging on a debt that we 11 owe, and I'm going to read from the -- the bond statement 12 dated December 4, 2002. It says the bonds "do not 13 constitute an obligation, either special, general, or moral, 14 of the County, the State of Texas, or any other political 15 subdivision or agency thereof." So, I want to -- I want to 16 be clear that it -- based on advice from our counsel and 17 from the clear reading of -- of the bond statements, that 18 Kerr County -- Kerr County government does not have any 19 obligation for this debt. No -- no legal, contractual, or 20 moral obligation. So, I would hope that -- that our 21 constituents and citizens of Kerr County would come to 22 understand that. That's all. 23 JUDGE TINLEY: Any other questions? 24 Comments? 25 COMMISSIONER WILLIAMS: I have another 12-8-04 30 1 comment, but I'll make it after we've had a vote. 2 JUDGE TINLEY: Okay. All in favor of that 3 motion, signify by raising your right hand. 4 (Commissioners Williams and Letz voted in favor of the motion.) 5 JUDGE TINLEY: All opposed, same sign. 6 (Commissioners Baldwin and Nicholson voted 7 against the motion.) 8 JUDGE TINLEY: The vote is 2 to 2. The chair 9 votes in favor of the motion. 10 COMMISSIONER LETZ: Judge? Due to 11 obligations, I must leave. 12 JUDGE TINLEY: All right, sir. 13 (Commissioner Letz left the meeting.) 14 JUDGE TINLEY: Is there any other business 15 presently before the Court? 16 COMMISSIONER WILLIAMS: Judge, I'd like to 17 make a statement also with respect to Kerr County and its 18 involvement. I have it prepared for members of the press 19 who want it; you're welcome to it. But I was a little bit 20 distressed this morning at the two letters of -- that were 21 -- appeared in the Kerrville Daily Times, letters to the 22 editor. My comment is that it was only a matter of time 23 before the boulder of blame would land squarely on 24 Commissioners Court desk. The two letters the editor 25 published today -- today's issue of the Kerrville Daily 12-8-04 31 1 Times clearly illustrates to me the extent to which the 2 public misunderstands the issues that affect the existence 3 and continuation of the Juvenile Detention Facility. The 4 record shows that the Juvenile Detention Facility was built 5 in 1994 by a public corporation, Recor. Kerr County was 6 involved only as a user of the facility and its services. 7 Subsequently, Recor defaulted on its financial obligations, 8 and shortly thereafter, a public-use facility was formed and 9 purchased the facility. The facility corp. leased the 10 facility to Kerr County Juvenile Board. 11 In '02 -- 2002, a new public facility 12 corporation was set up to buy the facility and borrow 13 additional funds for a planned expansion, achieving in the 14 process lower interest on a combined debt. It was at this 15 juncture that Kerr County became involved solely for the 16 purpose of leasing the facility from the Juvenile Facilities 17 Corp. and contracted with the Juvenile Board to operate the 18 facility. Since then, reserves, more than $800,000, have 19 been spent. Advocacy, Inc. has been in and out of the 20 facility investigation allegations of abuse. The Texas 21 Justice -- T.J.P.C. has conducted its investigation. 22 Therapeutic programs have been lost or discontinued. Daily 23 census has been depleted. Daily income has eroded, and only 24 in September did Commissioners Court really become aware or 25 required to be involved. It is my opinion, if there's any 12-8-04 32 1 blame to be assessed, it does not fall on this Commissioners 2 Court. 3 COMMISSIONER NICHOLSON: Well said. 4 COMMISSIONER WILLIAMS: Anybody who wants it, 5 it's there. 6 JUDGE TINLEY: Anything further? 7 MR. SPURGEON: Judge, one thing in terms of a 8 response back from the bondholders, timing and those type of 9 things. What would you request? Expect? And I guess I 10 might even pass it on to Herb to ask what might be 11 reasonable? 12 JUDGE TINLEY: I think -- I think I'd be 13 interested in what he might have to say insofar as when we 14 might expect something. Obviously, you know, it's a good -- 15 good while before dark. 16 MR. BRISTOW: I don't know, from a practical 17 standpoint, that -- I don't know if the Court is expecting a 18 response today. That -- you know, the -- the box that I'm 19 in is I've got 11 bondholders that all have to vote 20 affirmatively on any action I take. I'm certainly willing 21 to make that effort, but, I mean, the Court may have to 22 indulge me for some time. Otherwise, I mean, I could 23 suggest that -- that we reconvene soon. I understand the -- 24 the time crunch. 25 COMMISSIONER WILLIAMS: "Soon" meaning, in 12-8-04 33 1 your mind, what? 2 MR. BRISTOW: Today is Wednesday. Friday? 3 Monday? Or -- I mean, I don't mind taking a crack right 4 now, but the -- I would not want to frustrate the Court with 5 all the logistics that I've got to deal with to get a 6 response. I can -- 7 COMMISSIONER WILLIAMS: We don't want to 8 frustrate you, either, with all the logistics that we have 9 to be involved in if the facility doesn't continue to 10 operate. 11 MR. BRISTOW: Yes, sir, I understand. 12 JUDGE TINLEY: Let me pitch something else in 13 the mix. If we are to recess, I think it's generally 14 conceded that, under normal circumstances, we not do so more 15 than 24 hours, which gives us a limitation of tomorrow 16 afternoon. Otherwise, we're going to have to post, and 17 that's going to be Monday at the earliest, and that's 18 probably beyond the limits that Ms. Harris can operate under 19 with her logistics. So, I guess the most we can offer you 20 at this point is sometime before this time tomorrow. 21 MR. BRISTOW: Would the Court indulge me for 22 about ten minutes so that I can consult with those that are 23 present? 24 COMMISSIONER WILLIAMS: Sure. 25 MR. BRISTOW: I mean, I hate to do that to 12-8-04 34 1 you, but until I talk to my -- I've got to get the marching 2 orders from my client. And I will do what I can to get the 3 best case scenario so that we can -- we can deal with these 4 issues. 5 JUDGE TINLEY: All right. The Court'll be -- 6 COMMISSIONER NICHOLSON: Let me ask a 7 procedural question. The way you all are operating, if one 8 of the banks turn down the offer, then it's no deal? 9 MR. BRISTOW: That is the structure that the 10 deal is under, and that is not our choice. That's the way 11 it -- 12 COMMISSIONER NICHOLSON: So, if one of the 13 bankers present doesn't accept the deal, you might be able 14 to tell us in a few minutes that we don't have a deal. 15 MR. BRISTOW: Yeah. I mean, I can tell you 16 right now, I'm not authorized to accept that deal. What I 17 will do is get with the ones that are present; we will get 18 on the phone with the others that we've asked to stand by, 19 and -- and either get them to concur that we need to meet 20 tomorrow afternoon, or come back with whatever it is I can 21 get them to do. But -- and I'm -- I'm willing to wrestle 22 this bear any way we can get it done. So -- 23 JUDGE TINLEY: You indicated you -- you might 24 have a response for us shortly, or at least a better 25 indication of what might be a more appropriate time tomorrow 12-8-04 35 1 for us to take this matter up again? 2 MR. BRISTOW: That's -- my thinking is to ask 3 the question, guys, can we realistically get a response 4 today? That's -- let's make that decision pretty quick. If 5 we can't, let's make a decision that we can be back -- I 6 would rather not adjourn and have to repost, because I 7 understand the logistics of that. So, if you could give me 8 ten minutes to consult with the bondholders and try to make 9 a couple of quick phone calls, I will come back and tell you 10 either we look forward to seeing you tomorrow, or something 11 else. 12 JUDGE TINLEY: Okay. 13 MR. BRISTOW: Okay? 14 JUDGE TINLEY: Anything further, gentlemen? 15 Any of y'all? The Court'll be in recess for 10, 15 minutes, 16 subject to recall of the chair. 17 (Recess taken from 4:42 p.m. to 5:44 p.m.) 18 JUDGE TINLEY: We'll come back to order. The 19 Court was in recess subject to the call of the chair, and 20 it's now a quarter till 6:00 in the evening. Mr. Bristow? 21 MR. BRISTOW: Yes, Judge, Commissioners 22 Court. I'm pleased to be able to report back to you that -- 23 that I believe that we have the makings of an agreement in 24 principle. My understanding is that -- if I got the 25 corrections from the earlier motion correct, is that the 12-8-04 36 1 proposed purchase price is 1.9 million; that we were 2 striking the provision in Paragraph 2, leaving in the last 3 sentence of Paragraph 2, and that we were deleting Paragraph 4 3 and changing the word "general obligation" to C.O.'s. 5 COMMISSIONER WILLIAMS: Excuse me. 6 MR. BRISTOW: Yes? 7 COMMISSIONER WILLIAMS: Say again what you 8 said about Paragraph 2. 9 MR. BRISTOW: Okay. Paragraph 2, it's my 10 understanding -- and I was writing as fast as I could, and 11 may have missed it, but you're striking -- after the word 12 "bond transaction," striking the words, "provided that the 13 County will..." 14 COMMISSIONER WILLIAMS: That's correct. 15 Okay. 16 MR. BRISTOW: And -- but the last sentence, 17 "The bondholders reserve all rights to pursue claims against 18 any parties other than the County," is left in. 19 COMMISSIONER WILLIAMS: Okay. 20 MR. BRISTOW: I just wanted to make sure 21 we're on the same page, 'cause I was -- I was writing so 22 fast that I was -- 23 JUDGE TINLEY: In that context, does your 24 acceptance include the assumption of any indemnity 25 agreements that the County -- valid indemnity agreements 12-8-04 37 1 that the County may have with respect to -- 2 MR. BRISTOW: It is our intention -- 3 JUDGE TINLEY: -- other parties, and as well 4 as the obligation to defend at no cost and so forth? 5 MR. BRISTOW: Yeah. It is our intention that 6 if -- I mean, the County is being released, period. End of 7 story. We don't -- and the lawyers aren't going to let you 8 leave a trick in there where you can drag them back in. 9 But -- and I think we're clear on this, that -- that if some 10 -- if there is an indemnification agreement that is 11 unenforceable on its face because of law that affects county 12 government and securities and -- if it's not valid, then -- 13 then we -- we have -- we have the obligation to defend any 14 claim under that indemnification provision, but we're not -- 15 we're not confessing that until we have a chance to look at 16 whether it's enforceable or not. The -- the logistics -- 17 JUDGE TINLEY: You're not confessing the 18 validity, but you will agree -- 19 MR. BRISTOW: To defend. 20 JUDGE TINLEY: -- to defend, and if 21 determined to be valid, to indemnify the County from any 22 loss? 23 MR. BRISTOW: Yes. For -- 24 JUDGE TINLEY: Okay. 25 MR. BRISTOW: -- a written indemnification 12-8-04 38 1 that's found to be enforceable. 2 JUDGE TINLEY: Okay. 3 MR. BRISTOW: It's not our intention to in 4 any way allow the County to get sucked back in through an 5 indemnification agreement. 6 JUDGE TINLEY: Okay. 7 MR. BRISTOW: We're releasing the County, 8 period. End of story. And, like I said, I think the 9 lawyers will be able to figure that out and make sure that 10 that doesn't happen. And, you know, obviously, we'll have 11 to come back to the Court with those documents and -- and 12 get approval of them. The -- the logistical issues that -- 13 that I would like to address with the Court and beg your 14 indulgence on is, in order to avoid having to come back for 15 a meeting tomorrow, what I would like to suggest, if the 16 Court would entertain this, is that -- that, given my 17 ethical and legal constraints and the requirement that I get 18 100 percent consent, and the fact that some of these 19 investors are individuals that I can't physically get ahold 20 of right now, I believe I know that it's going to go 21 forward, and I -- you know, I will try to do everything I 22 can to make sure that the answer is yes, but I would like 23 the -- the opportunity to be able to call the County Judge 24 or the attorney or someone, and the answer be it's a go or 25 it's not a go. And I'm not interested to -- in negotiating. 12-8-04 39 1 I just want to say it's a go, and let the lawyers get turned 2 loose to draw the documents. 3 JUDGE TINLEY: Confirming that you have the 4 unanimous consents? 5 MR. BRISTOW: Yes. I cannot commit, 'cause I 6 don't have unanimous consent, and, you know, I'd lose my law 7 license if I did without getting their consent. So, I'm 8 begging your indulgence on that issue. The -- the other 9 issue is -- is that the bondholders would like to have the 10 opportunity to come back to the Court and request that the 11 -- that, in the documents, there be included a provision 12 that if, in the event and when, and under the appropriate 13 circumstances, that the facility is generating sufficient 14 revenues to cover all our operating expenses, cover the debt 15 service, and some buffer that will be agreed to, that the -- 16 the bondholders be -- they're going to ask for -- and we're 17 not asking for a commitment from you, but we're going to 18 come back and ask you to agree to allow us to recover up to 19 the two and a half million purchase price. And I'm not 20 asking you to vote on it; I'm just telling you straight-up, 21 I -- I need to be able to say we're going to ask for that. 22 And you can tell me to take a hike, but I hope that once the 23 business terms of that are worked out, that it will be 24 something that -- that you would be interested in 25 entertaining. 12-8-04 40 1 COMMISSIONER WILLIAMS: Basically predicated 2 on performance? 3 MR. BRISTOW: Yes. 4 JUDGE TINLEY: Mm-hmm. 5 MR. BRISTOW: Absolutely. It would be only 6 after there is -- and it's upside, and it's the hope that we 7 might recover up to the amount -- or the value that was -- 8 has been placed on the facility. But we would predicate it 9 on performance. And, you know, everybody hopes that it 10 happens like that. If it does, we'd like the opportunity to 11 -- just a little one, to recover some of those losses. 12 Anything I'm forgetting? 13 MR. SPURGEON: I don't think so. 14 MR. BRISTOW: With that, I guess, you know, 15 the -- the only action is for me to call, I guess, you, 16 Judge, tomorrow and say it's a done deal. The other issue, 17 just as a matter of information, is that we are going to try 18 to convene a meeting, either in Dallas or in Waco, on Friday 19 at 10 o'clock with all of the parties involved in the 20 transaction to try to work out a global solution. And, 21 obviously, we know that we have an affirmative answer to 22 this, and we're going to -- we're going to work towards a 23 global solution on Friday, and certainly would invite you, 24 Judge, to attend if you can. I understand that that's out 25 of the agreement; you don't have to. We would like -- you 12-8-04 41 1 know, like for you to participate if you can. And, 2 obviously, we'll invite everybody that's involved in the 3 deal. That's just by way of information that we're going to 4 try and get a global solution on the table A.S.A.P. 5 JUDGE TINLEY: Do any of you gentlemen have 6 any questions of Mr. Bristow at this juncture? 7 COMMISSIONER WILLIAMS: I have one. 8 JUDGE TINLEY: All right. 9 COMMISSIONER WILLIAMS: I may have missed 10 your comment with respect to Paragraph 3. 11 MR. BRISTOW: Yeah. The Paragraph 3 was 12 basically -- we were going to agree to try to get this thing 13 resolved, and you struck it, and I understand that. 14 COMMISSIONER WILLIAMS: Okay. 15 MR. BRISTOW: And it's not an obligation. 16 But in -- in that spirit, I'm just telling you that -- that 17 everybody involved in the deal's going to be invited to a 18 party on Friday to try to resolve the thing. And anybody -- 19 COMMISSIONER WILLIAMS: You want to go to 20 Waco on Friday? 21 COMMISSIONER BALDWIN: No. 22 MR. BRISTOW: And I'm just -- 23 COMMISSIONER WILLIAMS: Hometown? 24 MR. BRISTOW: And in the spirit of trying to 25 just get this thing moving and rolling in a positive 12-8-04 42 1 direction. 2 COMMISSIONER BALDWIN: Friday night in Waco 3 is the 3-A state high school football championship. 4 COMMISSIONER WILLIAMS: That's a good 5 reason -- 6 COMMISSIONER BALDWIN: May want to 7 reconsider. 8 COMMISSIONER WILLIAMS: May want to 9 reconsider that. 10 MR. BRISTOW: Well, any and all will be 11 welcome. Obviously, it'll be a private meeting, so if more 12 than one County Judge and one Commissioner comes, we'll have 13 to do something about that. 14 COMMISSIONER WILLIAMS: Dave and I spent time 15 there before; we know about Waco. 16 JUDGE TINLEY: Any -- any of you gentlemen 17 have any other questions? 18 COMMISSIONER BALDWIN: Don't have any 19 questions of him, but what is our -- what is our move now? 20 What do we do now? 21 COMMISSIONER NICHOLSON: I think they've 22 accepted the counter-offer. 23 JUDGE TINLEY: Mm-hmm. 24 MR. BRISTOW: We wait for your -- excuse me. 25 COMMISSIONER NICHOLSON: We don't have to 12-8-04 43 1 take any other action. 2 JUDGE TINLEY: Waiting for them to confirm 3 unanimous agreement to their believed acceptance, which 4 they're going to call me -- 5 COMMISSIONER BALDWIN: Tomorrow. 6 JUDGE TINLEY: -- tomorrow on. It's a matter 7 of confirmation, he believes, and he's operating in good 8 faith, as are we. So -- 9 COMMISSIONER BALDWIN: I understand. Is 10 there any further action by this Court, though? 11 COMMISSIONER NICHOLSON: Do we have to do 12 something to help Ms. Harris with the continued operation of 13 the Juvenile Detention Center? 14 JUDGE TINLEY: There will be -- there will be 15 appropriate items on the agenda for Monday to address the 16 needs of the detention facility. 17 COMMISSIONER WILLIAMS: I bet. 18 MR. SPURGEON: And, Judge, to extend the 19 lease agreement until January. We think we can probably get 20 the C.O.'s completed by then. 21 JUDGE TINLEY: That's already on the draft of 22 the agenda. 23 MR. SPURGEON: But you'll need to go through 24 the process of issuing C.O.'s, which will take a couple 25 different meetings for notice of intention and -- 12-8-04 44 1 COMMISSIONER NICHOLSON: When she goes to 2 work tonight or in the morning, whichever, she -- she can 3 operate believing that there's a good-faith deal to continue 4 for -- for a continuous operation of it. It may unravel, 5 but if you got faith, well, the good-faith effort may work. 6 MR. HARRIS: Okay. 7 JUDGE TINLEY: I think she's had probably as 8 much faith as can be expected to this point. 9 COMMISSIONER WILLIAMS: You got to know it. 10 COMMISSIONER BALDWIN: Judge, I just want to 11 make a comment, that my "no" vote is that -- is because I 12 feel like that it's just simply a bad investment for the 13 taxpayers of Kerr County. However, once the thing comes 14 together and it's approved and we're down the road -- going 15 down the road with it, then you will see me jump on board 16 and support the -- support it. If that's -- if that's the 17 wishes of this Commissioners Court, I will be a part of 18 that. 19 JUDGE TINLEY: I appreciate that. 20 COMMISSIONER NICHOLSON: As will I, 21 Commissioner. 22 JUDGE TINLEY: Thank you. 23 COMMISSIONER WILLIAMS: Which I think, also 24 -- I appreciate both -- both of your comments about it, and 25 I think as we progress down this line, once we've had an 12-8-04 45 1 opportunity to meet with Mr. Spurgeon and Mr. Henderson and 2 talk about this indebtedness restructured and other things 3 that are going to confront this Court, I think the picture 4 will crystallize a little bit more favorably. 5 JUDGE TINLEY: The overall scheme of things, 6 you're speaking of. Yeah, I think so also. We appreciate 7 your participation, your cooperation, and your strong 8 good-faith efforts, and we look forward to getting this 9 thing resolved on a smooth and -- and amicable basis. And 10 we still got a lot of work to do. 11 MR. BRISTOW: A lot of work. 12 JUDGE TINLEY: I think we all know that, and 13 we are rowing the boat the same direction, and that's what 14 it's going to take to start with. Yes, Ms. Harris? 15 MR. HARRIS: I just want to say one thing, 16 how much I appreciate the Commissioners Court for all of 17 your patience and your hard work and your study and your 18 commitment. I really appreciate y'all. And I want to tell 19 you how much I appreciate you gentlemen, because I know that 20 y'all wanted to keep the facility open, and you helped and 21 supported that, and I want to tell you how much I appreciate 22 that. 23 COMMISSIONER BALDWIN: The question is, how 24 much do you appreciate it? I mean, is there a -- is there a 25 dinner in this thing? Or -- (Laughter.) How much do you 12-8-04 46 1 appreciate it? 2 MR. HARRIS: I make a mean peach cobbler. 3 COMMISSIONER BALDWIN: All right. 4 JUDGE TINLEY: You got his attention, I can 5 assure you. 6 COMMISSIONER BALDWIN: I can change my vote 7 in a heartbeat. (Laughter.) 8 MR. HARRIS: That's worth a peach cobbler. 9 JUDGE TINLEY: At this point, I'm going to 10 recess until tomorrow afternoon at 4 o'clock. And I'm doing 11 so because just in case we need to have any housekeeping 12 issues with respect to this, in this manner, we won't have 13 to repost or anything if we've got some cleanup or -- or 14 related actions that we've got to take. So, we will stand 15 in recess until 4 p.m. Thursday, December the 9th. 16 (Commissioners Court recessed at 5:57 p.m.) 17 - - - - - - - - - - 18 19 20 21 22 23 24 25 12-8-04 47 1 STATE OF TEXAS | 2 COUNTY OF KERR | 3 The above and foregoing is a true and complete 4 transcription of my stenotype notes taken in my capacity as 5 County Clerk of the Commissioners Court of Kerr County, 6 Texas, at the time and place heretofore set forth. 7 DATED at Kerrville, Texas, this 10th day of December, 8 2004. 9 10 11 JANNETT PIEPER, Kerr County Clerk 12 BY: _________________________________ Kathy Banik, Deputy County Clerk 13 Certified Shorthand Reporter 14 15 16 17 18 19 20 21 22 23 24 25 12-8-04