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072709 EDA Agenda PacketCITY OF SHORE' WOOD 5755 COUNTRY CLUB ROAD ECONOMIC DEVELOPMENT AUTHORITY MEETING COUNCIL CHAMBERS MONDAY, JULY 27, 2009 7:30 P.M., or immediately following Regular City Council Meeting A. Roll Call B. Review Agenda 2. APPROVAL OF MINUTES A. EDA Minutes of July 28, 2008 (Att.- Minutes) 3. CONSENT A. Treasurer's Report (Att.- Treasurer's report) B. Approval of the Verified Claims List (Att. — Claims List) 4. NEW BUSINESS A. Selection of Officers (Att.- Executive Director's memorandum) President Liz6e Bailey Turgeon Woodruff Zerby 5. ADJOURN MINUTES 1. CONVENE ECONOMIC DEVELOPMENT AUTHORITY MEETING President Lizee called the meeting to order at 7:10 P.M. A. Roll Call Present: President Lizee; Boardmembers Bailey, Turgeon, Wellens, and Woodruff; Executive Director /Secretary Brown; Assistant Executive Director Nielsen; and Attorney Keane Absent: None B. Review Agenda Wellens moved, Turgeon seconded, approving the agenda as presented. Motion passed 510. 2. APPROVAL OF MINUTES A. EDA Minutes of June 23, 2008 Wellens moved, Turgeon seconded, ,pOroving the EDA Meeting Minutes of June 23, 2008, as presented. Motion passed 510. 3. CONSENT President Lizee reviewed the items on the consent agenda. Turgeon moved, Wellens seconded, approving the Motions Contained on the Consent Agenda. A. Treasurer's Report B. Approval of the Verified Claims List C. Investment Policy Adopting RESOLUTION NO. 08 -002 "A Resolution Adopting an Investment Policy for the Shorewood Economic Development Authority (EDA)." Motion passed 510. 4. NEW BUSINESS A. Selection of Officers Woodruff moved, Turgeon seconded, approving the Economic Development Authority Officer appointments the same as those approved on June 23, 2008, with the exception of the appointment #Za CITY OF SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY MEETING July 28, 2008 Page 2 of 3 of Brian Heck to Secretary and Executive Director effective the first day of his employment by the City of Shorewood. Motion passed 510. B. Approval of Lease Documents between the Shorewood Economic Developmenli Authority of i o. Executive Director Brown stated at their June 23, 2008, meeting the Shorewood Economic Development Authority (EDA) and the Shorewood City Council adopted a resolution pre - authorizing the sale of bonds to finance the renovation of City Hall. He then stated Paul Donna, with Northland Securities, Inc., and Andy Pratt, with Kennedy and Graven (the Shorewood Economic Development Authority's Bond Council), were present this evening to answer any questions the Shorewood EDA had regarding the Ground Lease between the City of Shorewood and the Shorewood Economic Development Authority, the Lease - Purchase Agreement between the Shorewood Economic Development Authority and the City of Shorewood, and the sale of public project lease revenue bonds for the City Hall renovation. Boardmember Bailey asked Mr. Pratt to provide an overview of the Ground Lease and Lease - Purchase Agreement. Mr. Pratt stated the transaction being considered was a very common transaction for a city who wanted to finance a building such as a city hall. He explained in the; Ground Lease the City leases the 5755 Country Club property (the entire site) to the EDA. In the Lease - Purchase agreements the EDA leases the facility back to the City. The Lease - Purchase Agreement facilitates"the issuance of the bonds by the EDA. The actual bond amount is $1,310,000. In simpler terms,, in the GrouildLease the City is similar to a landlord who leases to the tenant (in this case the EDA), .and it the Lease- Purchase agreement the EDA is the landlord and the City is the tenant. The City will make lease payments to the EDA until 2028, and those payments will be used to pay off the bond that were issued. When all of the lease payments have been paid (i.e. the bond payments have :been paid off), the City will own the facility including all of the improvements. Because the bond amor(n1is over 'million, it does count against the City's debt limit. The City has to retain the right tonQn appropriate funds to pay for its lease obligation (a requirement of State law); this requires tbeCity to annually appropriate funds in the budget for the lease payments. In response to a question froii! Boardmeinber Bailey, Executive Director Brown explained the documents had been reviewed by the law On, Kennedy & Graven and Mr. Donna with Northland Securities on behalf of the EDA and the law firm where Attorney Keane is employed has reviewed the documents on behalf of the City. Wellens moved, Woodruff seconded, approving the Ground Lease between the City of Shorewood, Minnesota, and the Shorewood Economic Development Authority dated August 1, 2008, and the Lease - Purchase Agreement between the Shorewood Economic Development Authority and the City of Shorewood, Minnesota, dated August 1, 2008. Motion passed 5/0. C. Award the Sale of Public Project Lease Revenue Bonds, Series 2008A Mr. Donna explained the EDA undertook a credit rating to issue the bonds. There was a conference call with Moody's Investor Service on July 21 to review the City's credit position. The outcome resulted in an upgrade in the City's credit rating; it reflects an upgrade to Aa3 (from Al) rating for both the annual appropriation of the outstanding lease bonds as well as the proposed bond issue and an upgrade to the City's General Obligation bond rating to Aa2 (from Aa3). The change in the rating is representative of the non- appropriation clause with a lease revenue bond versus a GO bond. Also impacting the rating was CITY OF SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY MEETING July 28,2008 Page 3mf 3 the fact the asset being financed is essential to City operations. The analyst a1Moudy`e thought the City had very strong finances, the City's formal adoption ofits reserve policy was a plus, the fact that the City had paid for u significant portion of its capital projects outufirsopnra1iugbudgc1ovorthu|umtfevvyouru was aplus, and the overall strong wealth level of the area (in particular Shorewood) was uplus. Be stated the City was somewhat ofuo anomaly iu have a rating ua high um the one just received; the City's tax base was much lower than other communities in the State or Nation that have similar credit ratings. &1c Donna d1eu explained the fiou| issue of the bonds is for an amount of $1,310,000. Northland Securities moved as quickly as it could to get to the market to secure u |ovvor interest rating for the bonds. The rating was on July 2| " , on July 23 the final budget was provided, and on July 24"' the bonds were being priced. The final tcnne represent an average iotnx:at rate of 4.51% (the rate was slightly lower than iuJuno), and the all inclusive cost im4.97Y6. The debt service payment ia$]Ol,O54for the project. The call feature is relatively aggressive; it's un eight-year call without upenalty. ln response iou question from Treasurer Woodruff Mr. Donna explained if all of the $|,3|U,OOOwere not needed then by law any remainder would have tobo used to off the bonds. `o| were pre-sold with indications of orders. The bonds have actually not been, sold at this time. The interest rate will not change if the bond sale is approved tonight. Wellens moved, Turgeon seconded, Adopting RESOLUTION NO. 08-003, "A Resolution Awarding the Sale of $1,310,000 Public Project Lease'Revenue Bolids, Series 2008A (City of Shorewood, Minnesota Lease Obligation); Fixing Their Form 'a,nd Specifications; Directing Their Execution and Delivery; and Providing for Their Payment." Motion assed 5/0. 5. ADJOURN Woodruff moved, Turgeon, I seconded,,, Adjourning the Shorewood Economic Development Authority Meeting of Jn 28, 20OR at 7:29 P.M. Motion passed 5/0. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder Christine Liz6e, President ATTEST: Brian Heck, Executive Director SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY 5755 Country Club Road Shorewood, Minnesota 55331-8926 952.474.3236 FAX: 952.474.0128 Date: July 27, 2009 To: EDA President and Commissioners ` Fr•oni: Richard Woodruff, Treasurer s Bonnie Burton, Assistant Treasurer Re: Annual EDA Treasurer's Report and Financial Statement The EDA By -Laws require that the Treasurer shall file the Authority's financial statement with the secretary at least once per year. This memorandum and the City's annual audit report provide compliance with that requirement. The City's Comprehensive Annual Financial Report for the year ended December 31, 2008 reported: "The Economic Development Authority (EDA) of the City was created pursuant to Minnesota statutes 469.090 through 469.108 to carry out economic and industrial development and redevelopment consistent with policies established by the Council. It is comprised of the members of the City Council and has a December 31 year end. The EDA activities are blended and reported in the debt service and capital project funds. Separate financial statements are not issued for this component unit." A major activity of the EDA in July, 2008 was the issuance of Public Project Lease Revenue Bonds, Series 2008A to finance the renovation of the Shorewood City Hall. The amount of the issue was $1,310,000 at an average interest rate of 4.51 %. This project commenced in fall 2008 and was approximately 50% complete at year end. It is anticipated that the full amount of the bond issue will be used to fund the project, however if the frill amount is not needed, any remainder will be used to pay off the bonds. There were also lease revenue bonds outstanding at year end from the 2002 -2003 construction and subsequent 2007 refunding of the public safety facility. As can be seen from the attached excerpts from the financial statements, the total amount of EDA Lease Revenue Bonds outstanding at year end was $21,915,000, including the City Hall project bonds. The attached notes also provide detailed information about the Public Safety Facility Bonds outstanding at year end, along with annual debt service requirements. A subsequent event occurring in February, 2009 was the refunding of the 2002 series Public Safety Bonds, in the amount of $8.495 million. This refunding was financed with proceeds from the 2007 series bond issue that has been invested with the trustee (U.S. Bank), pending this event. The 2003 series is scheduled to be refunded February 1, 2010 in the amount of $2.110 million. The attached financial statements are excerpts from the 12/31/2008 Comprehensive Annual Financial Report and are provided for the convenience of the Commission. #3A C1_TY OF S IOREWOOD, _MEXFN`E�SOTA "COTES TO TH FINANCIAL STATEME'Nr S DECEMBER. 31. 2008 Note Ie SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Shorewood, Minnesota (the City), operates under the "Optional Plan A' form of government as defined in the State of Minnesota statutes. Under this plan, the government of the City is directed by a Council composed of an elected Mayor and four elected Council members. The Council exercises legislative authority and determines all matters of policy. The Council appoints personnel responsible for the proper administration of all affairs relating to the City. The City has considered all potential units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization's governing body, and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the City. Blended component units, although legally separate entities are, in substance, part of the City's operations and so data from these units are combined with data of the City. The City has the following component unit: Blended Component Unit The Economic Development Authority (EDA) of the City was created pursuant to Minnesota statutes 469.090 through 469.108 to carry out economic and industrial development and redevelopment consistent with policies established by the Council. It is comprised of the members of the Council and has a December 31 year end. The EDA activities are blended and reported in the Debt Service and capital projects funds. Separate financial statements are not issued for this component unit. B. Government -wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciaiy activities of the City and its component unit. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Progrmn revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds. Major individual governmental fiords and major individual enterprise funds are reported as separate columns in the fund financial statements. CITY OF ,SHOREWOOD, .M_��ESOTA NOTES TO THE FINANCIAL STATEMENTTS DECEMBER 31, 2008 Note 3; DETAILED NOTES ON ALL FUNDS - CONTINUED Lease Revenue Bonds The City also issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service. Revenue bonds outstanding at year end are as follows: Balance Authorized Interest Issue Maturity at Description and Issued Rate Date Date Year End Public Safety Fire Facility, Series 2002A $ 3,865,000 3.00 - 5.50 % 09/01/02 02/01/23 $ 3,300,000 Public Safety Police Facility, 959,206 1,974,206 1,170,000 915,279 2,085,279 Series 2002E 4,025,000 3.00 -5.50 09/01/02 02/01/23 3,435,000 Public Safety Fire Facility, 3,093,772 10,378,772 8,990,000 1,209,472 10,199,472 Series 2002C 2,060,000 3.00-5.50 09/01/02 02/01/23 1,760,000 Public Safety Fire Facility, Series 2003A 1,195,000 2.35 - 5.10 04/15/03 02/01/23 1,045,000 Public Safety Police Facility, Series 2003B 1,220,000 2.35 -5.10 04/15/03 02/01/23 1,065,000 Public Safety Fire Facility, Refunding Series 2007A 4,130,000 3.75 -5.00 01/01/07 02/01/23 4,130,000 Public Safety Police Facility, Refunding Series 2007B 4,285,000 3.75 -5.00 01/01/07 02/01/23 4,285,000 Public Safety Fire Facility, Refunding Series 2007C 1,585,000 3.75 -5.00 01/01/07 02/01/22 1,585,000 Public Project Lease Revenue Bonds, Series 2008A 1,310,000 2.85 -4.80 08/19/08 12/01/28 1,310,000 Total Lease Revenue Bonds $ 21,915,000 Aimual debt service requirements to maturity for revenue bonds are as follows: Lease Revenue Bonds Year Ending Governmental Activities December 31 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024- 2028 Total Principal Interest Total $ 520,000 $ 1,008,638 $ 1,528,638 1,015,000 959,206 1,974,206 1,170,000 915,279 2,085,279 1,220,000 865,093 2,085,093 1,270,000 810,008 2,080,008 7,285,000 3,093,772 10,378,772 8,990,000 1,209,472 10,199,472 445,000 65,400 510,400 $ 21,915,000 $ 8,926,868 $ 30,841,868 (__'lTY OF SHOREWOOD, MITNTINTESOTA N - TOTES TO THE FINANCIAL, STATEM F DECEMBER 31, 2008 Note 3: DETAILED NOTES ON ALL FLTMS - CONTINUED Construction Commitments The City has active construction projects as of December 31, 2008. At year end the commitments with contractors for these projects are as follows: Spent Remaining Project to date Commitment City Hall Construction 508,955 $ 422,8 E. Interfund Receivables, Payables and Transfers The composition of interfund balances as of December 31, 2008, is as follows: Receivable Fund Payable Fund E220se Amount Sewer General To purchase land 110,000 Street reconstruction MSA Construction For construction of a county road 550,000 Total 660,000 Interfund transfers Transfers in Nonmajor Fund General Debt Service Governmental Total Transfers out General $ - $ 885,000 885,000 Nonmajor governmental 8,366 - 8,366 Liquor 40,000 - - 40,000 Total $ 40,000 8,366 885,000 933 The City annually budgets transfers for specific purposes. Annual transfers are made as part of capital improvement I plans as well as annual budgets. For the year ended December 31, 2008, the City made the following one-time transfers: • The City Hall Construction fund transferred $3,116 of interest earnings to the 2008 Lease Revenue Bond fund as part the new debt issues financing plan. • The EDA Public Safety Facilities Project fund transferred $5,250 to the 2002 & 2003 Public Safety Lease Revenue Bond fund to cover its portion of fiscal agent fees. CITY OF SHOREWOOD, NIE 1 4TINTEESOTA N 0 N i 0 R G 0 VE RNNE N T 'k L FUNDS COMBINING BALANCE SHEET DECEMBER 31, 2008 TOTAL ASSETS LIABILITIES AND FUND BALANCES LLA,BILITEES Accounts and contracts payable Due to other funds Due to other governments TOTAL LIABILITIES FUND BALANCES Unreserved Designated for capital outlay TOTAL LIABILITIES AND FUND BALANCES Exhibit A-I Capital Projects Funds EDA Public S afety Facilities Project 67,266 387 826,748 67,653 200,338 200,338 626,410 67,653 $ 826,748 $ 67,653 City Hall Construction ASSETS Cash and temporary investments 822,153 Receivables Accrued interest 4,595 Due from other governments - Due from other funds TOTAL ASSETS LIABILITIES AND FUND BALANCES LLA,BILITEES Accounts and contracts payable Due to other funds Due to other governments TOTAL LIABILITIES FUND BALANCES Unreserved Designated for capital outlay TOTAL LIABILITIES AND FUND BALANCES Exhibit A-I Capital Projects Funds EDA Public S afety Facilities Project 67,266 387 826,748 67,653 200,338 200,338 626,410 67,653 $ 826,748 $ 67,653 CITY OF SHORE,WOOD, I,FSNNESOTA NONiM JOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITUT—ES AND CHANGES IN FUND BALANCES (DEFICITS) FOR THE YEAR ENDED DECEMBER 31, 2008 Capital Projects Funds Exhibit A -2 EDA Public S afety City Hall Facilities Construction Project REVENUES Intergovernmental Interest on investments 18,821 429 Miscellaneous Park dedication fees _ - - TOTAL REVENUES _ 18,821 429 EXPENDITURES Current General government 13,044 - Public works - Culture and recreation - - Capital outlay General government 627,682 - Public safety - 9,033 Public works - Culture and recreation - Debt Service Bond issuance costs 58,569 - TOTAL EXPENDITURES 699,295 9,033 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (680,474) (8,604) OTHER FINANCING SOURCES (USES) Long -term debt issued 1,310,000 Transfers in - - Transfers out (3,116) (5,250) TOTAL OTHER FINANCING SOURCES (USES) 1,306,884 (5,250) NET CHANGE IN FUND BALANCES 626,410 (13,854) FUND BALANCES (DEFICITS), JANUARY I - 81,507 FUND BALANCES, DECEMBER 31 S 626,410 S 67,653 ASSETS Cash and temporary investments Cash with fiscal agent Receivables Accrued interest Lease TOTAL ASSETS LIABILITIES AND FUND BALANCES LIABILITIES Deferred revenue FUND BALANCES Reserved for Debt service TOTAL LIABILITIES AND FUND BALANCES CITY OF SHOREWOOD, INfrNNESOTA DEBT SERVICE FUNDS COMBENTING BALANCE SHEET DECEMBER 31, 2008 2002/2003 2008 Public Safety Lease Revenue Building Bond - $ 3,147 10,018,277 - 18 in Ans nno - $ 20,623,277 $ 3,165 10,605,000 $ 10,018,277 3,165 $ 20,623,277 $ 3,165 Exh;bit D-1 CITY OF SHOREWOOD, - MENTNES0 1 1 - A DEBT SERVICE FUNDS COMBINING SCITEDULE OF REVENUES, EXPENDITURES AND CFIAN IN FUND BALANCES FOR THE YEAR ENDED DECEMBER 31, 2008 REVENUES Lease payments Interest on investments TOTAL REVENUES EXPENDITURES Debt service Principal Interest and service charges TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES Transfer in NET CHANGE IN FUND BALANCES FUND BALANCES, JANUARY I FUND BALANCES, DECEMBER 31 2002/2003 Public Safety Building $ 1,037,241 1,439,096 485,000 1,455,065 (15,969) 2008 Lease Revenue S 49 LUO 5,250 3,116 (10,719) 3,165 10,028,996 - 10,018,277 $ 3,165 Exhi'lit D-2 Check No. Vendor Name Description Check Date Amount 1200 NORTHLAND TRUST SERVICES, INC. 2O02[' EAST FIRE 88/12/2008 500.00 1200 NORTHLAND TRUST SERVICES, INC. POLICE &WF|REDISCLOSURE 08/12/2008 2,000.00 I201 U.S. BANK EDA'ARB|TRAGE'POLiCE2O03B 08/12/2008 3,560.00 1201 U.S. BANK EDA'ARB|TRAGE- FIRE 2UU3A 08/12/2808 3,560.08 1202 U.S. BANK EDA-VV.F|RE20UIA-F|5CALFEES 09/06/2008 1,000.00 1202 U.S. BANK EDA'P0L|[E2OUZB'F|SCALFEES 09/06/2008 2 1202 U.S. BANK EDA-E.F|RE20U2L-F|SCALFEES 09/06/2808 1,000.00 1202 U.S. BANK EDA'VV.F|RE2UO3A'F}SCALFEES 09/06/3008 1,100.00 1202 U.S. BANK EDA'POUCE20838'F|5[ALFEES 09/06/2008 1,100.00 1203 U.S. BANK EDAWF|RE2O82A 01/27/2009 239,423.75 1203 U.S. BANK EDA-POLICE 2802B 01/27/2009 247,885.00 1203 U.S. BANK EDAE.F|RE20O2C 0I/27/2009 125,833.75 1203 U.S. BANK EUAWF|RE20U3A 01/27/2009 73,988.75 1203 U.S. BANK EDA POLICE 2O03B 0I/27/2009 74,496.35 I205 NORTHLAND TRUST SERVICES, INC. CONTINUING DISCLOSURE REPORT 02/24/2009 1,000.00 I205 NORTHLAND TRUST SERVICES, INC. CONTINUING DISCLOSURE REPORT 02/24/2009 I,000.00 1206 U.S. BANK EDAWF|RE REFUNDING 2O07A 03/10/2009 1,750.08 1206 U.S. BANK EDA POLICE REFUNDING IO07B 03/10/2009 1,750.00 1206 U.S. BANK EDAE.F|RE REFUNDING 2007[ 03/10/2009 1,750.00 1206 U.S. BANK EDAWF|RE2003A 03/10/2009 1,180.00 1206 U.S. BANK EDA POLICE 20038 03/I0/2009 1,100.00 1207 NORTHLAND TRUST SERVICES, INC. EDA,5HVVDPR[U 05/12/2009 46,733.34 1208 U.S. BANK EDA'2OO7AVV. FIRE |NT 07/13/2009 66,541.25 1208 U.S. BANK EDA'20U7B POLICE |NT 07/I3/2009 69,843.75 1208 U.S. BANK EDA-l007[E. FIRE INT. 07/I3/2009 30,861.25 I208 U.S. BANK EDA-20O3AVV. FIRE |NT 07/13/2009 23,15I.25 1208 U.S. BANK EDA'IOU3A POLICE |NT 07/I3/2009 23,658.75 Totaifor ElAChecks $ 1,046,887.09 OB SHOREWOOD ECONOMIC DEVELOPMENT AUTHORITY 5755 Country Club Road Shorewood, MIST 55331 -5926 952- 474 -3236 FAX: 952-474-0128 DATE: July 22, 2009 TO: EDA Board of Commissioners FROM: Brian Heck, Executive Director J�k RE: Selection of Officers The Selection of Officers is made at the EDA's annual meeting in July. The EDA By -Laws state the positions of Vice President and Treasurer shall be members of the Board and shall be elected at the annual meeting. The By -Laws further state that no commissioner may serve as President and Vice President at the same time. The current appointed Officers include: President — Christine Lizee (The President shall be the Mayor of the City of Shorewood) Vice - President — Laura Turgeon (Presides in the absence of the President). The Board may determine who shall serve as Vice - President. President Pro -Tem — Appointed to serve in the absence of both the President and Vice - President. The Board decided to leave this position vacant If the Board wishes to fill this position it will need to select someone for it. Treasurer — Richard Woodruff (The Treasurer shall receive and be responsible for Authority money, etc. The Board may determine who shall serve as Treasurer. Assistant Treasurer — Bonnie Burton (The Assistant Treasurer shall be the Director of Finance) Secretary — Brian Heck (The Secretary shall be the City Administrator). Executive Director — Brian Heck (The Executive Director shall be the City Administrator). Assistant Executive Director — Brad Nielsen (The Assistant Executive Director shall serve as the Director of Planning. Action Needed: The Board may determine who to appoint to the positions of Vice - President, Treasurer, and President Pro -Tem (if the Board wishes to continue the position of President Pro -Tem).