07-2007


GOLDEN GATE BRIDGE, HIGHWAY AND TRANSPORTATION DISTRICT

MEMORANDUM OF MINUTES

BOARD OF DIRECTORS MEETING

APRIL 13, 2007


The Board of Directors of the Golden Gate Bridge, Highway and Transportation District (District) met in regular session in the Board Room, Administration Building, Toll Plaza, San Francisco, California, on Friday, April 13, 2007, at 10:00 a.m., President Moylan presiding.

ROLL CALL

Directors Present (18): Directors Brown, Cochran, Dufty, Eddie, Hernández, Kerns, Martini, McGlashan, McGoldrick, Middlebrook, Newhouse Segal, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Ammiano; First Vice President Boro; President Moylan

Directors Absent (1): Director Grosboll

Staff Present: Auditor-Controller Joseph M. Wire; Secretary of the District Janet S. Tarantino; Attorney David J. Miller; Acting General Manager and Deputy General Manager/Bridge Kary H. Witt; Deputy General Manager/Ferry Division James P. Swindler; Deputy General Manager/Administration and Development Teri W. Mantony; Public Affairs Director Mary C. Currie; Acting District Engineer and Deputy District Engineer Ewa Z. Bauer; Executive Assistant to the General Manager Amorette Ko; Assistant Clerk of the Board Karen B. Engbretson

Visitors Present: Jerry Grace, Berkeley resident; Mac Coffey, Ph.D., Tiburon Resident

PLEDGE OF ALLEGIANCE

Director Charles McGlashan led the Board of Directors in the Pledge of Allegiance to the Flag.

PUBLIC COMMENT

Jerry Grace expressed his intention to attend the Board of Directors meetings on a regular basis and also stated that he regularly attends meetings of the Metropolitan Transportation Commission.

CONSENT CALENDAR

Directors PAHRE/MARTINI moved approval of the Consent Calendar. All items were approved by the following vote of the Board of Directors:

AYES (17): Directors Brown, Cochran, Dufty, Eddie, Hernández, Kerns, Martini, McGlashan, Middlebrook, Newhouse Segal, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Ammiano; First Vice President Boro; President Moylan
NOES (0): None
ABSENT (2): Directors Grosboll and McGoldrick

     
1. Approve the Minutes of the Following Meetings:
  a.
Building and Operating Committee/Committee of the Whole of March 22, 2007;
  b.
Finance-Auditing Committee/Committee of the Whole of March 22, 2007;
  c.
Governmental Affairs and Public Information Committee/Committee of the Whole of March 23, 2007; and,
  d.

Regular Meeting of the Board of Directors of March 23, 2007.

Carried

     
2. Denial of Claims
  a.

Claim of Philip Donian

Carried

  b.

b. Subrogation Claim of Encompass Insurance
(Insured: Michael Rieser)

Carried

     
3.
Ratify Actions by the Auditor-Controller
Resolution No. 2007-026
(Finance-Auditing Committee, March 22, 2007) ratifies actions taken by the Auditor-Controller, as follows:
     
  a.
Ratify commitments and/or expenditures for the period of February 1, 2007, through February 28, 2007, totaling $59,074.00;
     
  b.
Ratify investments made by the Auditor-Controller during the period February 13, 2007, through March 12, 2007, as follows;
     
SECURITY

PURCHASE

DATE

MATURITY

DATE

ORIGINAL

COST

PERCENT

YIELD

UBS Finance Delaware, LLC Commercial Paper
02/28/07
04/16/07
7,862,735.56
5.29
Societe Generale NA Commercial Paper
03/01/07
04/02/07
8,826,694.82
5.26
Dexia Delaware, LLC Commercial Paper
03/01/07
04/02/07
5,867,542.40
5.26
       
  c.
Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between March 13, 2007, and April 16, 2007, and all other funds not required to cover expenditures that may become available; and,
       
  d.

Accept the Investment Report for February 2007 prepared by Public Financial Management.

Adopted

       
GENERAL MANAGER'S REPORT
       
4.
Acting General Manager Kary Witt reported that all items contained in the General Manager’s Report were informational.
       
ATTORNEY’S REPORT
       
5.
Attorney David Miller reported that all items contained in the Attorney’s Report were informational. Mr. Miller also reported that a closed session would be held just prior to the conclusion of the meeting to discuss a matter of pending litigation listed on the agenda as Item No. 6.B.1.a., Kamalesh Singh, Lissette Singh, husband and wife, vs. the Golden Gate Bridge, Highway and Transportation District, et al.

Attorney Miller further reported that with respect to another matter of pending litigation, Golden Gate Bridge, Highway and Transportation District v. Marsh and McLennan Companies, Inc., et al., a ruling had been issued on April 5, 2007, by Judge Garrett Brown, Jr., of the United States District Court for the District of New Jersey. Mr. Miller stated that Judge Brown issued a ruling to dismiss without prejudice the claims asserting Racketeer Influenced and Corrupt Organizations Act (RICO Act) and anti-trust violations of law. Judge Brown’s ruling explicitly allows for the filing, within 30 days, of an amended complaint that would provide more detail regarding interactions between insurance brokers and carriers. Attorney Miller further stated that the lead counsel in this class action litigation will be evaluating options in light of Judge Brown’s ruling. When more definitive information is received as to the next steps to be taken by the class action members, a report will be provided to the Board of Directors (Board) at a future Board meeting during closed session. Attorney Miller noted that Judge Brown’s ruling in no way affects the actions taken by the Board of Directors at its January 12, 2007 meeting, approving acceptance of settlement offers from AIG and Zurich insurance companies in the separate action initiated by Attorney General of the State of New York.

Discussion ensued, including the following:

  • Director Sandoval inquired as to whether Judge Brown’s dismissal order could be characterized as a routine ruling. In response, Mr. Miller explained that, given the seriousness of the allegations, Judge Brown is looking for specific evidence about how relationships in the insurance industry were connected in ways that can support RICO and anti-trust claims.
  • Director Middlebrook inquired as to why more specific evidence regarding the RICO and anti-trust claims was not presented earlier in the litigation process. In response, Mr. Miller stated that in his opinion, there was no fundamental inadequacy in the way the pleadings were plead at the beginning of the litigation. The defendants availed themselves of the right to move to dismiss for failure to allege more specific grounds for relief. He further stated that there has been significant discovery undertaken since the beginning of this litigation, which should be of assistance to counsel in drafting an amended complaint.
       

ENGINEER’S REPORT

       
6.

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.

In the absence of the District Engineer, Deputy District Engineer Ewa Z. Bauer stated, when asked by President Moylan, that she was available to answer any questions raised by the Board members.

       
REPORT OF THE FINANCE-AUDITING COMMITTEE/COMMITTEE OF THE WHOLE MEETING OF APRIL 12, 2007
       
7.

Authorize a Budget Transfer from FY 06/07 District Division Capital Budget to FY 06/07 District Division Operating Budget for Data Communication Supplies

Directors STROEH/EDDIE
Resolution No. 2007-027
authorizes a budget transfer in the amount of $65,000 from the FY 06/07 District Division Capital Budget to the FY 06/07 District Division Operating Budget for the purchase of data communication supplies.

Adopted

AYES (17): Directors Brown, Cochran, Dufty, Eddie, Hernández, Kerns, Martini, McGlashan, Middlebrook, Newhouse Segal, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Ammiano; First Vice President Boro; President Moylan
NOES (0): None
ABSENT (2): Directors Grosboll and McGoldrick

       
8.

Authorize a Budget Increase in the FY 06/07 Ferry Transit Division Capital Budget Relative to Contract No. 2007-FT-7, Vessel Refurbishment

Directors STROEH/COCHRAN
Resolution No. 2007-028
authorizes a budget increase in the amount of $325,000 in the FY 06/07 Ferry Transit Division Capital Budget, relative to Contract No. 2007-FT-7, Vessel Refurbishment, to be funded with $260,000 Federal Transit Administration (FTA) funds and $65,000 from District reserves.

Adopted

AYES (17): Directors Brown, Cochran, Dufty, Eddie, Hernández, Kerns, Martini, McGlashan, Middlebrook, Newhouse Segal, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Ammiano; First Vice President Boro; President Moylan
NOES (0): None
ABSENT (2): Directors Grosboll and McGoldrick

       
9.
Approve a Reciprocal Transfer Arrangement with the City of Petaluma and Sonoma County Transit and Amend Master Ordinance 2007 Accordingly
       
  a. Discussion by the Board
       
   

Discussion ensued, including the following:

  • Director Kerns inquired as to why this item was brought to the Finance-Auditing Committee rather than the Transportation Committee. In response, Attorney Miller explained that the Reciprocal Transfer Arrangement fell under the purview of the Finance-Auditing Committee because the action had financial implications with regard to bus fares, as the minor routing changes to Golden Gate Transit Bus Route No. 80 do not require Committee or Board action.
  • Director Brown requested that staff provide advance notice to all members of the Board of Directors when changes are made to Golden Gate Transit bus routes, especially to those members of the Board of Directors whose constituents are directly affected by any of these changes.

       
  b.
Directors STROEH/EDDIE
Ordinance No. 2007-01
approves a Reciprocal Transfer Arrangement within Petaluma with the City of Petaluma and Sonoma County Transit, relative to regional Golden Gate Transit Bus Route No. 80, effective June 10, 2007, to provide a $1.00 local fare transfer credit for continuing travel on Golden Gate Transit, in an effort to foster greater coordination between transit operators in Sonoma County; and, amends Section III, “Golden Gate Transit - Bus and Ferry Systems,” Subsection D, “Discount Fares and Transfers,” Paragraph 2, “Inter-Operator Transfers,” of Master Ordinance 2007, as amended, by replacing said paragraph in its entirety with the following:
    "2. INTER-OPERATOR TRANSFERS
     

a.  Passengers presenting a valid transfer from Alameda-Contra Costa County (AC) Transit District or Vallejo Transit or WestCat will be granted credit toward the payment of cash fare on Golden Gate Transit bus service across the Richmond Bridge from the East Bay to Marin in an amount equal to the AC Transit District local fare in effect at the time of transfer for the applicable class of rider (adult, youth, senior, or disabled).
b.  Passengers presenting a valid transfer from Petaluma Transit or Sonoma County Transit within the City of Petaluma will be granted credit toward the payment of cash fare on Golden Gate Transit bus service in the amount of $1.00 for adults, or 50 cents for youth, seniors and persons with disabilities.
c.  Except for the provision in Paragraph b., above, passengers presenting valid transfers from other public transit operators within Sonoma County will be granted a $0.10 discount off the applicable cash fare for local travel within Sonoma County on District bus services.
d.  Passengers presenting a valid transfer from Marin County Transit District rural and shuttle services will be granted credit toward payment of cash fare on Golden Gate Transit regional and Marin County Transit District local bus services for continuing travel within Marin County only. The amount of the credit will be equal to the Marin County Transit District local Marin bus fare in effect at the time of the transfer for the applicable class of rider (adult, youth, senior or disabled) on Golden Gate Transit services.”

Adopted

       
   
AYES (18): Directors Brown, Cochran, Dufty, Eddie, Hernández, Kerns, Martini, McGlashan, McGoldrick, Middlebrook, Newhouse Segal, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Ammiano; First Vice President Boro; President Moylan
NOES (0): None
ABSENT (1): Director Grosboll
       
10.

Approve Actions Relative to the FasTrak® Lane and Plaza/Host Equipment Replacement Project

Directors STROEH/KERNS
Resolution No. 2007-029
approves the following actions relative to the FasTrak® Lane and Plaza/Host Equipment Project:

       
  1.
Authorize a three-month extension of the Professional Services Agreement with Redman Ventures, Inc., in the amount of $15,450 per month, for a total cost of $46,350, effective May 1, 2007 through July 31, 2007, for software support for the plaza/host computer system;
  2.
Authorize a three-month extension of the Maintenance Agreement with InTranS Group, Inc., in the amount of $28,765.08 per month for a total cost of $86,295.24, effective May 1, 2007 through July 31, 2007, for lane hardware and software maintenance support services; and,
  3.

Authorize a 1.7% contract contingency fund in the amount of $70,000 for RFP No. 2006-B-19, Replacement of FasTrak® Lane and Plaza/Host Equipment.

Adopted

       
 
AYES (18): Directors Brown, Cochran, Dufty, Eddie, Hernández, Kerns, Martini, McGlashan, McGoldrick, Middlebrook, Newhouse Segal, Pahre, Reilly, Sandoval and Stroeh; Second Vice President Ammiano; First Vice President Boro; President Moylan
NOES (0): None
ABSENT (1): Director Grosboll
       
11.
Authorize Execution of a Professional Services Agreement with PFM Asset Management LLC, Relative to Request for Proposals (RFP) No. 2007-D-7, Trust and Investment Management Services for GASB 45 (OPEB) Trust
       
  a.

Discussion by the Board

Discussion ensued, including the following:

  • Director Kerns made the following inquiries regarding the recommendation to award RFP No. 2007-D-7 to PFM Asset Management LLC (PFM), rather than to Union Bank of California:
    • He noted that Public Agency Retirement Services (PARS), the trustee for Union Bank of California, already has in place the Internal Revenue Service (IRS) “private letter ruling” that confirms that tax-exempt status of OPEB Trust assets, whereas PFM would have to obtain a private letter ruling from the IRS before assuming the Trust Administrator role for the District. He inquired as to the cost of PFM obtaining the private letter ruling. In response, Auditor-Controller Joseph Wire clarified that PARS’ existing private letter ruling is for a public schools trust, and that they are currently setting up a trust with a private letter ruling that would cover other agencies, including the District. If PARS were to obtain a private letter ruling that applied only to the District, there would be an extra cost involved. Mr. Wire noted that in the recommendation the cost to obtain a private letter ruling is $10,000 in IRS fees, plus $20,000 in attorney fees, and that even with the private letter ruling extra costs, the recommendation costs would still be considerably less over time than PARS’ fees. He further noted that while both companies are very capable, PFM’s long-term fee structure for trust investments was more cost-effective to the District.
    • He inquired regarding investing in equities, noting that PFM focused on fixed income investments, but has not invested in equities for the District. In response, Mr. Wire stated that since the District is not allowed to invest in equities, PFM has not done so, but that under the OPEB Trust arrangement, the District could likely invest in equities. He noted that PFM has a successful record of investing approximately $4 billion in equities for other agencies.
    • He inquired as to whether PFM already has an OPEB Trust. In response, Mr. Wire stated that PFM would need to set up an OPEB Trust for the District, with the help of their legal advisor.
    • He inquired as to whether PFM’s long-standing relationship with the District had any bearing on PFM being selected. In response, Mr. Wire stated that the long-standing relationship was among a variety of reasons for the selection, but the relationship alone would not have been enough. The staff report points out the other reasons, the favorable pricing structure is one of them.
    • He stated that PARS invests in a broad range of funds, and inquired as to whether PFM does the same. In response, Mr. Wire stated that PFM has also a broad investment portfolio.
  • Director Sandoval made the following inquiries:
    • He inquired as to the District’s current OPEB liability, and as to the scale of profit PFM stands to earn as the OPEB Trust asset manager. In response, Mr. Wire stated that the amount of the District’s total unfunded OPEB liability is approximately $110 million. He further stated that the amount of the OPEB Trust is projected to reach the range of $30-50 million in ten years time, and that based on that amount, PFM’s asset manager and trading fees would total approximately $200,000 to $300,000 per year.
    • He inquired as to who would make investment decisions for the OPEB Trust. In response, Mr. Wire stated that PFM would be the asset manager and that a retirement board, which would be comprised of the full Board of Directors or some subset of the Board of Directors or their designees would then set up the overall investment guidelines for the OPEB Trust.
    • He inquired as to whether the District could easily terminate the agreement with PFM if CalPERS becomes available to manage the District’s OPEB Trust. In response, Mr. Wire stated that the agreement will include a termination clause that will allow the District to terminate the agreement if it so chooses.
  • Director Middlebrook suggested that staff provide information regarding the future possibility of having the California Public Employees' Retirement System (CalPERS) manage District’s OPEB Trust to the members of the Board of Directors who were not present at the April 12, 2007 meeting of the Finance-Auditing Committee. In response, Mr. Wire stated that CalPERS has begun to move into the OPEB Trust management business, and that there is a future possibility that CalPERS would be available, at a significantly reduced cost, to manage the District’s OPEB Trust. He noted that at this time, some agencies are eligible to participate in CalPERS’ OPEB Trust, but what the District understands is that it would take legislative approval for the District to participate.
  • Director McGoldrick commented that when the OPEB Trust investment guidelines are developed, that the Board should consider banning investment in companies that do business in Sudan because of the Darfur genocide.
  • Director Newhouse Segal inquired as to whether the possibility of the District participating in CalPERS’ OPEB Trust would occur before the next action regarding the OPEB Trust is brought before the Board of Directors. In response, Mr. Wire stated that it would be unlikely that CalPERS would receive the legislative approval before the July or August 2007, when it is anticipated that the Board of Directors will consider the action to establish the District’s OPEB Trust.


       
   

Directors STROEH/EDDIE
Resolution No. 2007-030
authorizes the execution of a Professional Services Agreement with PFM Asset Management LLC, Philadelphia, PA, in an amount not to exceed $24,000 for Phase I, for Trust Administrator and Investment Advisor services relative to Request for Proposals (RFP) 2007-D-7, Trust and Investment Management Services for GASB 45 (OPEB) Trust; with the understanding that requisite funds are available in the FY 06/07 District Division Operating Budget.

Adopted

AYES (15): Directors Brown, Cochran, Dufty, Eddie, Hernández, Martini, McGlashan, Middlebrook, Newhouse Segal, Pahre, Reilly and Stroeh; Second Vice President Ammiano; First Vice President Boro; President Moylan
NOES (3): Directors Kerns, McGoldrick and Sandoval
ABSENT (1): Director Grosboll

       
CLOSED SESSION
     
12.

Attorney’s Report

Attorney David Miller, at the request of President Moylan, stated that the Board of Directors would convene in closed session to discuss a matter of pending workers’ compensation litigation listed on the agenda as Item No. 6.B.1.a., Kamalesh Singh, Lissette Singh, husband and wife, vs. the Golden Gate Bridge, Highway and Transportation District (District), et al.

After closed session, President Moylan called the meeting to order in open session with a quorum present. Attorney Miller reported that the Board of Directors met in closed session, as permitted by the Brown Act, to hear a report and a recommendation from the Finance-Auditing Committee with regard to the case of Kamalesh Singh, Lissette Singh, husband and wife, vs. District, et al. He stated that the Board unanimously provided settlement authority for disposition of this matter.

     
ADJOURNMENT
     
13.
All business having been concluded, the meeting was adjourned at 10:45 a.m., in the memory of Thomas Donoghue, Jane Johnson, Edith Grossi, Rose Morton, Frank Harrison, Theresa Rosson, Joan Bistrin, Sean Murphy and John Mohn.
     
 

Respectfully submitted,

/s/ Janet S. Tarantino
Secretary of the District