15-2006


GOLDEN GATE BRIDGE, HIGHWAY AND TRANSPORTATION DISTRICT

MEMORANDUM OF MINUTES

JOINT BOARD OF DIRECTORS MEETING/WORKSHOP

SEPTEMBER 8, 2006

     
 
The Board of Directors of the Golden Gate Bridge, Highway and Transportation District (District) met in regular session for a Joint Board of Directors Meeting/Workshop in the Log Cabin, 1299 Storey Avenue, Presidio of San Francisco, San Francisco, California, on Friday, September 8, 2006, at 10:00 a.m., President Middlebrook presiding.
     

ROLL CALL

     
 

Directors Present (15): Directors Ammiano, Brown, Cochran, Eddie, Grosboll, Kerns, Murray, Newhouse Segal, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Boro; First Vice President Moylan; President Middlebrook

Directors Absent (4): Directors Dufty, Hernández, Martini and McGoldrick

Staff Present: General Manager Celia G. Kupersmith; District Engineer Denis J. Mulligan; Auditor-Controller Joseph M. Wire; Secretary of the District Janet S. Tarantino; Attorney David J. Miller; Deputy General Manager/Bridge Division Kary H. Witt; Deputy General Manager/Bus Division Susan C. Chiaroni; Deputy General Manager/Ferry Division James P. Swindler; Deputy General Manager/Administration and Development Teri W. Mantony; Public Affairs Director Mary C. Currie; Director of Planning Alan R. Zahradnik; Deputy District Engineer Ewa Z. Bauer; Budget and Program Analysis Manager Jennifer Mennucci; Assistant Clerk of the Board Karen B. Engbretson; Executive Assistant to the General Manager Amorette Ko

Visitors Present: Rodney Pimentel, Deputy Director, San Francisco County Transportation Authority; Molly Graham, Public Involvement Director, Doyle Drive Environmental and Design Study Project; John Diamante, Threshold Center for Environmental Renewal; Jerry Grace, Oakland resident

     
PLEDGE OF ALLEGIANCE
     
  Director Reilly led the Board of Directors in the Pledge of Allegiance to the Flag.
     
PUBLIC COMMENT
     
 
John Diamante inquired as to whether the Merchant Road Slip Ramp option was severable from the Doyle Drive Replacement Project.  In response, Celia Kupersmith explained that Merchant Road Slip Ramp option was included as a possible component of the Doyle Drive Replacement Project, but would not be considered as a stand-alone project.  Mr. Diamante expressed his opposition to Alternative 5, Presidio Parkway, as identified in the Final Environmental Impact Report for the Doyle Drive Replacement Project, noting that in his opinion, Doyle Drive does not need complete replacement, but rather, basic rehabilitation and repair work.  He stated that such rehabilitation and repair work could be accomplished at a fraction of the cost of the Doyle Drive Replacement Project contemplated by the San Francisco County Transportation Authority.
     
CONSENT CALENDAR
     
 
Directors STROEH/MOYLAN moved approval of the Consent Calendar.  All items were approved by the following vote of the Board of Directors:
     
 
AYES (14):     Directors Ammiano, Brown, Cochran, Eddie, Grosboll, Kerns, Murray, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Boro; First Vice President Moylan; President Middlebrook
NOES (0):      None
ABSENT (5): Directors Dufty, Hernández, Martini, McGoldrick and Newhouse Segal
     
1.
Approve the Minutes of the Regular Meeting of the Board of Directors of August 25, 2006
     
2. Denial of Claims
     
  a.

Subrogation Claim of Permanent General Assurance Corporation
(Insured: Jeffrey Douglas Washington)

Carried

  b.

Claim of James Donald Rush

Carried

  c. Claim of Christopher Mosher

Carried

     
3. Ratify Actions by the Auditor-Controller
     
 
Resolution No. 2006-072 (Finance-Auditing Committee, August 24, 2006) ratifies actions taken by the Auditor-Controller, as follows:
     
  a.
Ratify commitments and/or expenditures for the period July 1, 2006, through July 31, 2006, totaling $14,745.75;
   
  b.
Ratify investments made by the Auditor-Controller during the period July 18, 2006 through August 14, 2006, as follows:
     
SECURITY

PURCHAWE

DATE

MATURITY

DATE

ORIGINAL

COST

PERCENT

YIELD

Dexia Delaware Commercial

Paper

07/19/06
08/07/06
2,963,765.08
5.25
FHLB Notes
07/19/06
06/28/11
5,014,550.00
5.531

UBS Finance Delaware

Commercial Paper

07/26/06
08/28/06
7,618,699.33
5.315

Morgan Stanley Commercial

Paper

07/26/06
08/07/06
10,633,359.00
5.25

Bank of America NA

Certificate of Deposit

08/02/06
09/14/06
6,299,000.86
5.375

Credit Suisse New York

Certificate of Deposit

08/04/06
09/05/06
4,945,000.00
5.31

General Electric Co.,

Commercial Paper

08/07/06
09/07/06
6,466,520.79
5.27

DEPFA Bank PLC NY,

Certificate of Deposit

08/07/06
09/07/06
12,000,000.00
5.30

Citigroup Funding, Inc.,

Commercial Paper

08/07/06
09/21/06
5,697,041.47
5.295

Deutsche Bank Financial, LLC,

Commercial Paper

08/10/06
09/11/06
10,045,809.61
5.26

 

     
  c.
Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between August 15, 2006, and September 11, 2006, as well as the investment of all other funds not required to cover expenditures that may become available; and,
     
  d.

Accept the Investment Report for July 2006 prepared by Public Financial Management.

Adopted

     
GENERAL MANAGER'S REPORT
     
4. Presentation of Ten-Year Service Award to Director Tom Ammiano
     
 
President Middlebrook presented a Ten-Year Service Award to Director Tom Ammiano and expressed her congratulations on behalf of the Board of Directors for his service as a member of the Board of Directors.  Director Ammiano commented on the honor and prestige of serving on the Golden Gate Bridge Board of Directors and expressed his pleasure for having been a member of the Board of Directors for the past ten years.
     
ATTORNEY’S REPORT
     
5.
Attorney David Miller reported that all items contained in the Attorney’s Report were informational.  Mr. Miller noted that, with regard to Item Nos. 6.B.1.b., Labor Coalition Negotiations and 6.B.2., Approve Actions Relative to Various Memoranda of Understanding with Employee Bargaining Units Whose Contracts Expired on 6/30/06 and to Non-Represented Employees (Exclusive of the Officers of the District) Regarding Salary, Health and Welfare Benefits and Other Terms and Conditions Related to District Employment, the various unions have not yet ratified the offer presented to the Union Coalition by the Advisory Committee for Labor Relations.  He further reported that this matter will be continued, and if an agreement is reached, it will be presented to the Board of Directors for action at its meeting of September 22, 2006.
     
ENGINEER’S REPORT
     
6.
No written report was presented by District Engineer Denis Mulligan.  A written report is presented to the Board of Directors by the District Engineer at the second Board meeting of the month.
     
REPORT OF THE BUILDING AND OPERATING COMMITTEE/COMMITTEE OF THE WHOLE MEETING OF AUGUST 24, 2006
     
7.
Urges Support of Including the Merchant Road Slip Ramp Option in Alternative No. 5, Presidio Parkway, for the Doyle Drive Replacement Project
     
 

Directors EDDIE/STROEH

Resolution No. 2006-073 urges support of including the Merchant Road Slip Ramp option in Alternative 5, Presidio Parkway, identified in the Final Environmental Impact Report for the Doyle Drive Replacement Project, in order to address existing and future safety concerns associated with the current Doyle Drive configuration; and, directs staff to transmit the attached resolution to the San Francisco County Transportation Authority immediately.

Adopted

     
 
AYES (15):    Directors Ammiano, Brown, Cochran, Eddie, Grosboll, Kerns, Murray, Newhouse Segal, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Boro; First Vice President Moylan; President Middlebrook
NOES (0):     None
ABSENT (4): Directors Dufty, Hernández, Martini and McGoldrick
     
REPORT OF THE FINANCE-AUDITING COMMITTEE/COMMITTEE OF THE WHOLE MEETING OF AUGUST 24, 2006
     
8.
All Non-Consent Calendar items contained in this report are informational, as the item requiring Board action was acted upon by the Board of Directors at their meeting of August 25, 2006.
     
REPORT OF THE GOVERNMENTAL AFFAIRS AND PUBLIC INFORMATION   COMMITTEE/COMMITTEE OF THE WHOLE MEETING OF AUGUST 25, 2006
     
9.
All items contained in this report are informational, as the item requiring Board action was acted upon by the Board of Directors at their meeting of August 25, 2006.
     
REPORT OF THE TRANSPORTATION COMMITTEE/COMMITTEE OF THE WHOLE MEETING OF SEPTEMBER 7, 2006
     
10.
Approve the Operation of Golden Gate Transit Bus Service to Accommodate the Presidio Bus Stops within the City and County of San Francisco; and, Amend Master Ordinance 2006 Accordingly
     
 

Directors BROWN/GROSBOLL

Ordinance No. 2006-07 approves the operation of Golden Gate Transit bus service to accommodate passengers traveling locally within the City and County of San Francisco to and from the Presidio bus stops located on Richardson Avenue near the Lombard Gate to the Presidio, as requested by the Golden Gate National Recreation Area and the Presidio Trust and with no objection of the San Francisco Municipal Railway; and, amends SECTION III.  GOLDEN GATE TRANSIT – BUS AND FERRY SYSTEMS, Subsection A.  GENERAL RULES, of Master Ordinance 2006, by replacing Paragraph 1.  SAN FRANCISCO BUS PASSENGERS., in its entirety, as follows:
     
  “1.

SAN FRANCISCO BUS PASSENGERS.  No local passengers will be carried within the City and County of San Francisco except those originating at or those whose destination is the bus stops at the Golden Gate Bridge Toll Plaza and/or the Presidio bus stops located on Richardson Avenue near the Lombard Gate to the Presidio.”

Adopted

     
 
AYES (15):     Directors Ammiano, Brown, Cochran, Eddie, Grosboll, Kerns, Murray, Newhouse Segal, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Boro; First Vice President Moylan; President Middlebrook
NOES (0):      None
ABSENT (4): Directors Dufty, Hernández, Martini and McGoldrick
     
SPECIAL ORDER OF BUSINESS
     
10.A. Workshop Relative to Development of a New Strategic Plan for Achieving Long-Term Financial Stability
     
  1. STAFF PRESENTATION AND BOARD DISCUSSION
     
 

In a memorandum to the Board of Directors, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a report regarding the District’s financial situation, with a review of deficit reduction actions currently underway, as well as options for eliminating the remaining portion of the deficit.  The report summarized the strategic planning process and the work of the Strategic Plan for Long-Term Financial Stability Advisory Committee (Strategic Plan Advisory Committee), which was formed to help develop an updated Strategic Plan for Achieving Long-Term Financial Stability (Strategic Plan).  The report noted that the goal of this Workshop is to develop a list of actions to be included in a final Strategic Plan, which will be presented to the Board for approval at a future Board meeting. 

The report outlined the current financial deficit, which is based upon a recently updated five-year financial projection.  The report stated that the current five-year deficit is projected to be $87 million, which amount includes setting aside reserve funding for post-employment retirement benefits, as well as continued funding of the District’s capital project reserve.  The report noted that in June 2002, the five-year deficit had been estimated at $454 million.  Since that time, the District undertook several specific programs to address the deficit, including the following:  1)  staff reductions; 2)  wage freezes; 3)  employee benefit reductions; 4)  bus and ferry service reductions; 5)  fare increases; and, 6)  a toll increase in September 2002.  In addition, several other revenue enhancement programs were implemented, including the following:  1)  changes to parking fees at the Bridge; 2)  changes in the District’s property management strategies; 3)  implementation of special sales programs at the Bridge Gift Center, such as the annual Golden Gate Bridge holiday ornament; and, 4)  negotiation of a new local bus service contract with the Marin County Transit District that more accurately reflected the true cost of providing bus service.  All of the above-listed deficit reduction strategies effectively reduced the projected deficit from $454 million to $87 million.  These deficit reduction strategies were described in further detail in Appendix A to the staff report.

The report outlined several five-year deficit reduction targets for eliminating the remaining deficit, of which some of the targets are underway.  These targets were depicted graphically on a pie chart, with the amount of deficit reduction targeted for each described in detail.  The five-year targets were listed as follows:
  1.
Target A, Corporate Sponsorship Program.  Under Board direction, staff is seeking a consultant to develop a corporate sponsorship program that would raise additional revenues for the District.  This program, currently in its Request for Proposals stage, is targeted to generate a minimum of $4 million in revenue over 5 years.
  2.
Target B, Property Leases. Under Board direction, staff is aggressively seeking to lease unused properties.  This program, currently underway, is targeted to raise an additional $1 million in revenue over five years.
  3.
Target C, District Deficit Reduction.  The District has been very successful in internal deficit reduction.  The proposed deficit reduction program, currently underway, is targeted to generate an additional $3 million over five years.
  4.
Target D, Transit Revenue from Increased Ridership.  Staff estimates that by growing ridership on existing transit service, an additional $1 million in increased revenue will be generated over the next five years.
  5.
Target E, Other Revenues.  The largest deficit reduction target, in the amount of $78 million, would be addressed by specific strategies to be presented at this Workshop.
     
 
The report stated that the Strategic Plan Advisory Committee supported the above-listed deficit-reduction targets and also developed a list of deficit reduction concepts that they recommended not be considered at this time, including the following:
  1. Eliminate carpool toll discounts;
  2. Eliminate disabled driver toll discounts;
  3. Eliminate Clean-Air Vehicle toll discounts; and,
  4. Implement bicycle and pedestrian tolls.
     
 
The report discussed potential strategies to address the remaining shortfall of $78 million, as noted in Target E, above.  The annual District budget process continues to include identification of new and on-going expense reductions and revenue enhancements that will help address the District’s shortfall.  The report noted that when the District raised tolls in 2002, the Board committed to an annual review of the tolls, as well as an annual review of the financial needs of the organization.  The Strategic Plan Advisory Committee identified the need for a toll increase in the relatively near future as a necessary part of the solution to the District’s deficit, and identified several general principles that should govern any future effort to raise tolls, including the following:
  1.
A discount should remain available to FasTrak® customers;
  2.
Any increase in the cash toll rate should be in round dollars and not in cents;
  3.
FasTrak® tolls should be increased in increments of less than one dollar;
  4.
Building upon the success of the District’s multi-year approach to transit fare increases, the Board could develop a toll increase option for public review and comment that would raise tolls incrementally in several steps over an extended period of time.
  5.
Any toll increase proposal should strive to fully address the existing remaining shortfall, with the understanding that the District will always seek out innovative funding opportunities and ways to reduce expenses to address future needs of the organization.
     
 
The report outlined the general structure and timing of three possible toll increase options, as outlined below, with the understanding that additional toll options could be developed between now and the time the Board begins the process required for the adoption of any change to the Bridge tolls:
 
  • Option 1.  A 50-cent increase in FasTrak® tolls starting in July 2007, a 50-cent increase in FasTrak® tolls in July 2008, plus a $1.00 increase in the cash toll in July 2008.  This option would raise an estimated $76 million over five years.
 
  • Option 2.  A 75-cent increase in FasTrak® tolls starting in July 2007, a 25-cent increase in FasTrak® tolls in July 2008, plus a $1.00 increase in the cash toll in July 2008.  This option would raise an estimated $78 million over five years.
 
  • Option 3.  A $1.00 increase in FasTrak® tolls starting in January 2008, plus a $1.00 increase in the cash toll in January 2008.  This option would raise an estimated $80 million over five years.
     
 

The report noted that in general, the process to undertake consideration of a toll increase requires approximately six months, including a full public examination of the toll increase options through a formal public hearing process.  Once a decision is made by the Board on a proposed toll increase, there is a six- to ten-week period needed by staff to carry out the steps necessary for implementation.

The report included a composite Strategic Plan, combining the three toll increase options described above, as well as other critical strategies to achieve long-term financial stability.  The report stated that following today’s Workshop, staff will incorporate the deficit reduction options selected by the Board into a new Strategic Plan for Achieving Long-Term Financial Stability, and present to the Finance-Auditing Committee and/or the Board of Directors a new Strategic Plan for consideration and adoption in fall 2006.  A copy of the report, including Appendix A, is available in the Office of the District Secretary.

At the meeting, Celia Kupersmith presented the staff report for discussion by the Board, noting that although the District is in a strong financial position, some difficult decisions will need to be made to address the remaining shortfall.  She noted that on September 12, 2006, there will be a pre-proposal conference for Request for Proposals (RFP) No. 2007-D-2, Consultant to Provide Development and Implementation of a Corporate Sponsorship Program (Corporate Sponsorship Program), one of the Board-approved revenue generation strategies.  She noted that at this Workshop, staff is seeking direction from the Board as to the timing of a toll increase, which is necessary to address the remaining shortfall of $78 million.
     
     

Public Comment

            
    

Jerry Grace inquired as to whether Golden Gate Transit bus and ferry fares would increase at the same time that tolls are increased.  In response, Ms. Kupersmith stated that, the Board adopted a Five-Year Transit Fare Program of annual 5% bus and ferry fare increases, beginning July 1, 2006.

Discussion ensued, including the following:
     
 
  • Director Reilly inquired as to how staff arrived at the $4 million estimate for revenue expected to be generated from the Corporate Sponsorship Program.  In response, Ms. Kupersmith stated that staff had researched a similar program undertaken by the New York/New Jersey Port Authority, and also considered the amount that would have been generated by the Celebrity Cruise Lines proposal in an effort to develop an estimate.
     
 
  • Director Ammiano made the following comments and inquiries:
    • He inquired as to whether the District was contemplating restoring bus service that had been eliminated in November 2003.  In response, Ms. Kupersmith replied that the District is not considering any significant changes to regional bus service, and that any changes to Marin local bus service would have to be undertaken by the Marin County Transit District (MCTD).
    • He stated that the Board should remain mindful of the public’s perception of the District and should maintain as much good will as possible throughout any public process for a toll increase.  Specifically, he expressed his support for maintaining the FasTrak® discount when the Board studies the various options for a potential toll increase.
    • He expressed his support for beginning the review of the various toll options in January 2007.
    • He expressed his support for congestion pricing of tolls for weekend users of the Golden Gate Bridge.
     
 
  • Director Brown made the following comments and inquiries:
    • He inquired as to whether the five-year deficit estimate of $87 million assumes the continuation of a long-term contractual relationship with the MCTD for the provision of Marin local bus service. In response, Ms. Kupersmith answered that the estimate assumes that the District continues its five-year contract with the MCTD.
    • He inquired as to how much of the deficit would be eliminated if the FasTrak® discount was reduced incrementally each year for four years. In response, Joseph Wire provided calculations for three options for the FasTrak® discount: 1) if the FasTrak® discount was reduced by 25 cents each year for four years, it would reduce the deficit by $32 million; 2) if the FasTrak® discount was reduced by 50 cents each year for two years, it would reduce the deficit by $41 million; and, 3) if the FasTrak® discount was reduced by $1.00 during the first year, it would reduce the deficit by $46 million.
    • He inquired as to whether the District can continue to operate with a yearly deficit of $5-6 million. In response, Mr. Wire answered that the District can operate at a deficit in the short term, as long as the deficit is addressed in the long term, and that the District will need to plan ahead for large capital projects, such as those that the District will undertake in the next few years.
     
 
  • Director Pahre made the following inquiries:
    • She inquired as to whether the five-year deficit estimate of $87 million recognizes the fact that certain union memoranda of understanding will be expiring and renegotiated in three years’ time. In response, Ms. Kupersmith stated that such an assumption is generally included in the projections.
    • She inquired as to whether operating with a deficit would affect the District’s bond rating for its commercial paper. In response, Mr. Wire stated that if the District can show the bond rating agencies that the District is making concerted efforts to eliminate its budget deficit, the bond rating would not necessarily be affected.
    • She expressed her concerns regarding staff’s workload, considering the time-intensive commitment required for the toll increase public outreach process. In response, Ms. Kupersmith stated that staff is prepared to undertake the process during whatever timeframe is selected by the Board to implement a potential toll increase, and that staff would re-schedule other projects accordingly.
    • She commended the members of the Strategic Plan Advisory Committee for their hard work over the past year on seeking solutions to the District’s deficit.
     
 
  • Director Grosboll made the following comments and inquiries:
    • He inquired as to whether the budget was balanced for FY 05/06. In response, Mr. Wire stated that the fiscal year that ended on June 30, 2006 was a positive year, and that revenues were $6 million higher than expenses.
    • He inquired as to how much of the total five-year deficit estimate of $87 million is attributed to FY 07/08. In response, Mr. Wire explained that the net loss for FY 07/08 is estimated at $4 million, and that the remainder of the $87 million is spread out over the following four fiscal years, with the amount of the yearly deficit growing exponentially each year.
    • He inquired as to whether there had been discussion of the timing of future toll increases at the time of the last toll increase in 2002. In response, Ms. Kupersmith answered in the affirmative, noting that one of the reasons for the significant 67% increase in tolls from $3.00 to $5.00 was that the tolls had not been increased in 11 years. She stated that at that time, some members of the Board, as well as some members of the public, had suggested that future toll increases be made incrementally in the future.
    • He inquired as to whether there would be any advantage to waiting until late in 2008 to increase tolls because of the potentially positive public perception of having the percentage of increase spread over a longer time period. In response, Mr. Wire presented a handout entitled, “Price Increase Comparisons,” which depicted the difference between the yearly rates of a potential toll increase implemented in 2007 versus a toll increase implemented in 2008.
    • He inquired as to whether certain projects in the Ten-Year Capital Program could be postponed in order to reduce the shortfall that the potential toll increase is expected to address. In response, Ms. Kupersmith explained that the Capital Program includes no discretionary projects that could possibly be postponed, but only includes vital capital projects such as the Golden Gate Bridge Floor Beam and Bracing Replacement/ Rehabilitation project. She further stated that the Capital Program also assumes that the District will receive 80% federal funding for major Bridge rehabilitation projects.
     
 
  • Director Moylan inquired as to whether the District might expect to lose toll customers if the FasTrak® discount were eliminated. In response, Ms. Kupersmith stated that while there might be some decrease in Bridge traffic due to elimination of the FasTrak® discount, the decrease might not necessarily be significant.
     
 
  • Director Murray made the following inquiries and comments:
    • She commented that keeping the FasTrak® discount would serve as an incentive to increase the market share of FasTrak® users on the Golden Gate Bridge.
    • She noted that the District should maintain its commitment to the environment by increasing tolls to encourage more transit use.
    • She suggested that the District pursue using congestion pricing for weekend users of the Golden Gate Bridge.
    • She inquired as to when tolls for the state-owned bridges will be increased. In response, Ms. Kupersmith stated that state bridge tolls are set to be increased to $4.00 on January 1, 2007. She also presented a handout entitled, “Golden Gate Bridge and State Bridge Toll History,” which depicted the levels of Golden Gate Bridge cash tolls, Golden Gate Bridge FasTrak® tolls and state bridge tolls, over the period from 2001 to 2007.
    • She expressed her opposition to increasing Golden Gate Bridge tolls incrementally.
    • She noted that the earlier the District begins to address its long-term financial stability, the greater the impact on reducing the deficit. She further stated that she supports beginning the toll increase process as soon as possible.
    • She stated that the toll should be increased as high as practicable in order to have the greatest impact on eliminating the deficit.
    • She commented that when calculating future revenue projections, the District should consider worst-case scenarios of future events, such as future recessions or pandemic illnesses, that could impact the workforce and consequently impact the amount of toll revenue.
     
 
  • Director Kerns expressed his support for beginning the review of the various toll options in January 2007, to coincide with state bridge toll increase.
     
 
  • Director Boro made the following comments:
    • He stated that the total five-year deficit estimate of $87 million is relatively higher than it would have been because the Board has directed staff to set aside reserve funding for post-employment retirement benefits.
    • He expressed his support for postponing the toll increase until January 2008, and noted that it may not be prudent to time the Golden Gate Bridge toll increase to coincide with the state bridge toll increase in January 2007.
    • He stated his preference for another toll increase option: A 50-cent increase in FasTrak® tolls starting in January 2008, a $1.00 increase in the cash toll in January 2008, and then a 50-cent increase in FasTrak® tolls in January 2009. He requested that staff calculate the total five-year revenue impact of his suggested increase option.
    • He expressed his support for investigating congestion pricing for weekend users of the Golden Gate Bridge.
    • He suggested that the District wait to consider a potential toll increase until after November 2006, when the outcome of the votes will be known regarding the distribution of funding, if any, on Proposition 1A – Transportation funding Protection, Legislative Constitutional Amendment and on Proposition 1B – Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act of 2006.
     
 
  • Director Cochran commented that the anticipated state bridge toll increase of $4.00 will not provide enough revenue to pay for the Bay Bridge seismic retrofit construction.  He inquired as to whether staff was aware of any future plans by the State of California to further increase state bridge tolls.  In response, Denis Mulligan stated that it is his understanding that the Bay Area Toll Authority desires to postpone any future toll increases as long as possible.
     
 
  • Director Newhouse Segal inquired as to why a toll discount is offered to FasTrak® users.  In response, Ms. Kupersmith described the District’s experience with the previous toll increase in 2002, noting that by charging a discounted $4.00 toll to FasTrak® users, there was less of a financial impact on daily commuters and regular users of the Bridge.  Director Boro commented that offering the discount led to increased FasTrak® usage on the Golden Gate Bridge, which in turn reduced the travel time across the Bridge by approximately 20 minutes.
     
 
  • Director Eddie stated that while the District should act aggressively with respect to addressing the deficit, the Board should not lose sight of the public’s good will towards the District by acting too aggressively with regards to a potential toll increase.
     
 
  • President Middlebrook inquired that if the toll increase is postponed until January 2008, using a modification of Option 1 noted above (50-cent increase in FasTrak® tolls starting in July 2008, a 50-cent increase in FasTrak® tolls in July 2009, plus a $1.00 increase in the cash toll in July 2009), would it add another year to the District’s long-term deficit.  In response, Mr. Wire stated that the five year deficit period does not change.  If the toll option is delayed, it would raise less revenue.
     
 
  • Director Brown expressed his opposition to beginning the process of discussing Golden Gate Bridge toll increase options in January 2007, noting that the 90 days between the date of this Workshop and January 2007 is too short a timeframe.  He further stated that the Board and staff need more time to discuss the possible implementation timetable of a potential toll increase.
     
 
  • In response to comments made by several of the Directors during the Workshop discussion, Attorney David Miller described the legal framework concerning the duration of the District’s deficit and whether or not the District can operate under a deficit.    He noted that the District is unique from other transit agencies in that it does not have any taxing power.  He stated that the statute that governs the District recognizes that the only ways that the District can raise revenue is through tolls, fares or by the revenue generation strategies in the Strategic Plan.  He also stated that statute directs the General Manager to report to the Board the amount of toll revenue necessary in order to meet certain obligations that consist of operating expenses, repairs and maintenance of works, capital equipment and outstanding indebtedness.  He noted that this statute has been interpreted to mean that in the short term, the District should strive for a balanced budget, but that the District does not necessarily have to guarantee that by a certain date it will be operating at a break-even level or better.  He further stated that by seeking to address the $87 million deficit at this time, the Board will be endeavoring to reach multiple-year period of financial stability.
     
  2. NEXT STEPS FOR THE STRATEGIC PLAN PROCESS
     
    a.   Motion Relative to Option to Increase Golden Gate Bridge Tolls:
     
   

After discussion at the Workshop by the Board of Directors, the following motion was made and seconded by Directors MOYLAN/KERNS:

Authorize staff to take the appropriate steps for the Board of Directors to begin the process of discussing Golden Gate Bridge toll increase options beginning January 2007, with a possible implementation date of July 2007.

Carried

     
   
AYES (10):     Directors Ammiano, Cochran, Kerns, Murray, Newhouse Segal, Pahre, Reilly and Stroeh; First Vice President Moylan; President Middlebrook
NOES (4):      Directors Brown, Eddie, Grosboll; Second Vice President Boro
ABSENT (5): Directors Dufty, Hernández, Martini, McGoldrick and Sandoval
     
    b.   Instructions to Staff
     
   
The Board instructed staff to incorporate the deficit reduction options selected by the Board at the Workshop into a new Strategic Plan for Achieving Long-Term Financial Stability and present the new Plan to the Finance-Auditing Committee and/or the Board of Directors for consideration and adoption in the fall 2006.
     
    c.   Closing Remarks by the General Manager
     
   
In conclusion, Celia Kupersmith stated that based on the direction from the Board of Directors, during the next four months between September 2006 and January 2007, staff will be further analyzing the structure of the various toll options to develop an array of toll scenarios.  She stated that these possible toll options will be presented to the Board through the Committee process for consensus, and then to the public at informal open houses to seek suggestions from the public regarding the Board’s proposed toll options, as well as any additional toll options that may be raised during the public process.  Subsequently, staff will prepare a recommendation in March 2007 for the Board of Directors to set a series of public hearings to be held in April 2007, the subject of which will be the various toll options to be presented for formal public comment.  Following the public comment period, it is anticipated that the Board will make a decision in May 2007, regarding the structure and timing of a proposed toll increase.  She noted that the concurrence by the Board at this Workshop to begin the process in January 2007 does not necessarily bind the Board to implement a toll increase in July 2007, and that the Board has the option to change the implementation date if that is the desire of the Board.
     
ADJOURNMENT
     
15.
All business having been concluded, the meeting was adjourned at 12:00 p.m., in the memory of Ruby Philena Green Genung.
     

Respectfully submitted,

/s/ Janet S. Tarantino
Secretary of the District

Attachment:   Resolution No. 2006-073, Urging Inclusion of Merchant Road Slip Ramp Option in Preferred Alternative 5, Presidio Parkway, for the Doyle Drive Replacement Project