June 22, 2006
(For Board: July 14, 2006)

 

REPORT OF THE FINANCE-AUDITING COMMITTEE/
COMMITTEE OF THE WHOLE

 

Honorable Board of Directors
Golden Gate Bridge, Highway
  and Transportation District

Honorable Members:

A meeting of the Finance-Auditing Committee/Committee of the Whole was held in the Board Room, Administration Building, Toll Plaza, San Francisco, California, on Thursday, June 22, 2006, at 10:30 a.m., Chair Stroeh presiding.

Committee Members Present (7): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Murray and Reilly; President Middlebrook (Ex Officio)
Committee Members Absent (1): Director Boro
Other Directors Present (4): Directors Hernández, Martini, Moylan and Newhouse Segal

Committee of the Whole Members Present (11): Directors Cochran, Eddie, Hernández, Martini, Murray, Newhouse Segal, Pahre, Reilly, and Stroeh; First Vice President Moylan; President Middlebrook
Committee of the Whole Members Absent (7): Directors Ammiano, Brown, Dufty, Kerns, McGoldrick and Sandoval; Second Vice President Boro

[Note: On this date, there was one vacancy on the Board of Directors.]

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 District Engineer Ewa Z. Bauer; Assistant Clerk of the Board Karen B. Engbretson

Visitors Present: Nancy Jones, Public Financial Management

     
1. Ratify Actions by the Auditor-Controller
     
 

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith outlined commitments, disbursements and investments made on behalf of the District. A copy of the staff report is available in the Office of the District Secretary and on the District’s web site.

At the meeting, Nancy Jones described the latest economic news and current interest rates for the District’s portfolio. She reported that consumer confidence is down due to increasing fuel and energy costs, which are beginning to affect the price of consumer goods. She stated that while the economy was growing at a robust rate during the first quarter of 2006, economic growth is expected to slow down, and the Gross Domestic Product rate is expected to be only 3% by the end of the year. Ms. Jones highlighted the yield chart included in the staff report, noting that rates for two-year U.S. Treasury notes have increased from 3.5% to 5.0% over the past year, and most recently increased from 4.8% to 5.22% in just eight weeks. She noted that the current investment strategy for the District’s portfolio is to invest in shorter-term securities, since the Federal Reserve Bank has increased interest rates 16 consecutive times over the past year. She further noted that it is anticipated that the Federal Reserve Bank may stop increasing interest rates in August 2006, and accordingly, the District’s Portfolio Manager has begun to invest a portion of the District’s portfolio in two-year and three-year securities, to position the portfolio conservatively in case interest rates start falling. Ms. Jones further stated that the District’s portfolio is currently earning an average of 4.5%.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/REILLY to forward the following recommendation to the Board of Directors for its consideration:

     
 

RECOMMENDATION

     
 
The Finance-Auditing Committee recommends that the Board of Directors authorize the following actions by the Auditor-Controller:
     
  a. Ratify commitments and/or expenditures for the period May 1, 2006, through May 31, 2006, totaling $74,725.95;
     
  b. Ratify investments made by the Auditor-Controller during the period May 16, 2006, through June 12, 2006, as follows:
     
SECURITY

PURCHASE

DATE

MATURITY
DATE

ORIGINAL

COST

PERCENT

YIELD

Fannie Mae Global Notes
05/22/06
04/19/10
4,938,600.00
5.351

Heller Financial Inc., Global

Notes

05/22/06
11/01/09
4,758,795.00
5.516

Citizens Bank/Mass (Royal Bank

Scotland) CD

06/08/06
07/10/06
10,000,000.00
5.15
DEPFA Bank PLC NY CD
06/08/06
07/10/06
6,255,000.00
5.115

Morgan Stanley Commercial

Paper

06/09/06
06/26/06
7,568,016.96
5.02

Dexia Delaware Commercial

Paper

05/17/06
06/19/06
7,924,548.57
4.995
Fortis Bank NY CD
06/05/06
07/05/06
4,800,000.00
5.08

UBS Finance De Inc.

Commercial Paper

06/02/06
07/05/06
5,644,747.99
5.05
     
  c.
Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between June 13, 2006, and July 10, 2006, as well as the investment of all other funds not required to cover expenditures that may become available.
     
  d.

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

Action by the Board - Resolution
CONSENT CALENDAR

     
 
AYES (11):  Directors Cochran, Eddie, Hernández, Martini, Murray, Newhouse Segal, Pahre, Reilly, and Stroeh; First Vice President Moylan; President Middlebrook
NOES (0):   None
     
2.
Authorize Budget Increase Relative to Award of Contract No. 2007-B-2, Merchant Road Improvements and Realignment, to Granite Rock Company, dba Pavex Construction Division
     
 

This item was referred to the Finance-Auditing Committee from the Building and Operating Committee meeting of June 22, 2006, for concurrence with a budget increase. In a memorandum to Committee, Deputy District Engineer Ewa Bauer, District Engineer Denis Mulligan and General Manager Celia Kupersmith reported on staff’s recommendation regarding the award of Contract No. 2007-B-2, Merchant Road Improvements and Realignment, to Granite Rock Company, dba Pavex Construction Division. The report stated that a budget increase in the amount of $581,500 is necessary in the FY 06/07 Bridge Division Capital Budget, to be funded with $254,870 in additional federal grant funds and $326,630 from District reserves. A copy of the staff report is available in the Office of the District Secretary and on the District’s web site.

Staff recommended and the Committee concurred by motion made and seconded by Directors MURRAY/COCHRAN to forward the following recommendation to the Board of Directors for its consideration:

     
 
RECOMMENDATION
     
 

The Finance-Auditing Committee recommends that the Board of Directors authorize a budget increase in the amount of $581,500, in the FY 06/07 Bridge Division Capital Budget, to be funded with $254,870 in additional federal grant funds and $326,630 from District reserves, relative to the award of Contract No. 2007-B-2, Merchant Road Improvements and Realignment, to Granite Rock Company, dba Pavex Construction Division.

Action by the Board – Refer to the
Building and Operating Committee Meeting of June 22, 2006

     
 
AYES (11):  Directors Cochran, Eddie, Hernández, Martini, Murray, Newhouse Segal, Pahre, Reilly, and Stroeh; First Vice President Moylan; President Middlebrook
NOES (0):   None
     
3.
Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares for Eleven Months Ending May 31, 2006
     
 

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a schedule comparing categories of Bridge traffic for eleven months ending May 31, 2006. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Action by the Board – None Required

     
4. Review of Financial Statements for Eleven Months Ending May 31, 2006
     
  a. Statement of Revenue and Expenses
     
   

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a financial statement entitled, Statement of Revenues and Expenses for Eleven Months Ending May 31, 2006. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Action by the Board – None Required

     
  b. Statement of Capital Programs and Expenditures
     
   

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a financial statement entitled, Statement of Capital Programs and Expenditures for Eleven Months Ending May 31, 2006. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Action by the Board – None Required

     
5. Public Comment
     
  There was no public comment.
     
6. Adjournment
     
  All business having been concluded, the meeting was adjourned at 10:40 a.m.
     

Respectfully submitted,

/s/ J. Dietrich Stroeh, Chair
Finance-Auditing Committee