May 24, 2007
(For Board: June 8, 2007)

 

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, May 24, 2007, at 11:00 a.m., Chair Stroeh presiding.

Committee Members Present (8): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Grosboll, Middlebrook and Reilly; President Moylan (Ex Officio)
Committee Members Absent (1): Director Boro
Other Directors Present (3): Directors Hernández, Martini and McGlashan

Committee of the Whole Members Present (11): Directors Cochran, Eddie, Grosboll, Hernández, Martini, McGlashan, Middlebrook, Pahre, Reilly and Stroeh; President Moylan
Committee of the Whole Members Absent (8): Directors Brown, Dufty, Kerns, McGoldrick, Newhouse Segal and Sandoval; Second Vice President Ammiano; First Vice President Boro

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 Madeline Chun; 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: None


     
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. The report also included a copy of the District’s Investment Report from PFM Asset Management LLC (PFM). A copy of the staff report, with attachments, 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. Ms. Jones stated that the Federal Reserve Bank, at its meeting of May 9, 2007, decided to keep the target interest rates steady at 5.25%, due to continuing concerns about inflation. She noted that there has been a change in sentiment among a majority of leading economists, who believe that the fear of inflation has become more important than the slowdown in the economy. She further stated that during the week of May 21, 2007, the yields for two-year U.S. Treasury Notes hit the highest level since interest rates peaked in February 2007, with a trading range between 4.5% and 4.9%.

Ms. Jones stated that the Auditor-Controller periodically advises PFM as to the amount of District funds available for investment, and that the District’s Portfolio Manager then makes advantageous investments for the District. She noted that the Portfolio Manager recently purchased a three-year investment at 5.28%, as well as some AAA-rated, two-year and three-year municipal securities at yields of 5.11% and 5.02%, respectively, all of which anchor the District’s Portfolio above 5.0%.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/EDDIE 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 April 1, 2007, through April 30, 2007, totaling $68,207.00;
     
  b.
Ratify investments made by the Auditor-Controller during the period April 17, 2007, through May 14, 2007, as follows;
     
SECURITY

PURCHASE

DATE

MATURITY

DATE

ORIGINAL

COST

PERCENT
YIELD
Deutsche Bank, LLC, Certificate of Deposit
04/20/07
05/21/07
$10,177,000.00
5.27%
Dresdner US Finance Commercial Paper
05/02/07
06/04/07
$8,906,805.06
5.29%
Rabobank USA Finance Commercial Paper
05/07/07
06/11/07
$5,924,604.69
5.27%
CBA( DE) Finance Commercial Paper
05/07/07
06/07/07
$7,940,971.69
5.25%
San Diego CNTY California Pens
05/09/07
08/15/09
$1,092,724.50
5.11%
San Diego CNTY California Pens
05/09/07
08/15/10
$2,551,230.00
5.02%
       
  c.
Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between May 15, 2007, and June 11, 2007, 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 April 2007 prepared by PFM.

Action by the Board - Resolution
CONSENT CALENDAR

       
 
AYES (11): Directors Cochran, Eddie, Grosboll, Hernández, Martini, McGlashan, Middlebrook, Pahre, Reilly and Stroeh; President Moylan
NOES (0): None
       
2.a.

Authorize a Budget Transfer from the FY 06/07 District Division Operating Budget to the FY 06/07 Bus Transit Division Capital Budget Relative to the Award of Contract No. 2007-BT-4, Santa Rosa Bus Facility Diesel Tanks Replacement, to American Construction & Environmental Services, Inc.

This item was referred to the Finance-Auditing Committee from the Building and Operating Committee meeting of May 24, 2007, for concurrence of a budget transfer. In a report to Committee, Deputy District Engineer Ewa Bauer, District Engineer Denis Mulligan and General Manager Celia Kupersmith provided staff’s recommendation to approve actions relative to the award of Contract No. 2007-BT-4, Santa Rosa Bus Facility Diesel Tanks Replacement, to American Construction & Environmental Services, Inc. The report stated that a budget transfer in the amount of $77,000 is necessary from the FY 06/07 District Division Operating Budget to the FY 06/07 Bus Transit Division Capital Budget to fully fund the project. 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 PAHRE/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 transfer in the amount of $77,000 from the FY 06/07 District Division Operating Budget to the FY 06/07 Bus Transit Division Capital Budget relative to the award of Contract No. 2007-BT-4, Santa Rosa Bus Facility Diesel Tanks Replacement, to American Construction & Environmental Services, Inc.

Action by the Board
Refer to the Building and Operating Committee Meeting of May 24, 2007

AYES (11): Directors Cochran, Eddie, Grosboll, Hernández, Martini, McGlashan, Middlebrook, Pahre, Reilly and Stroeh; President Moylan
NOES (0): None

       
2.b.

Authorize a Budget Increase in the FY 06/07 Ferry Transit Division Capital Budget Relative to the Award of Contract No. 2007-FT-13, Larkspur Ferry Terminal Storage and Inspection Station, to Bay Area Structural, Inc.

This item was referred to the Finance-Auditing Committee from the Building and Operating Committee meeting of May 24, 2007, for concurrence of a budget increase. In a report to Committee, Deputy District Engineer Ewa Bauer, District Engineer Denis Mulligan and General Manager Celia Kupersmith provided staff’s recommendation to approve actions relative to the award of Contract No. 2007-FT-13, Larkspur Ferry Terminal Storage and Inspection Station, to Bay Area Structural, Inc. The report stated that a budget increase in the amount of $120,000 is necessary in the FY 06/07 Ferry Transit Division Capital Budget to fully fund this project. 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 PAHRE/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 $120,000 in the FY 06/07 Ferry Transit Division Capital Budget, to be funded with Federal Transit Administration grant funds in the amount of $96,000 and with District Reserves in the amount of $24,000, relative to the award of Contract No. 2007-FT-13, Larkspur Ferry Terminal Storage and Inspection Station, to Bay Area Structural, Inc.

Action by the Board
Refer to the Building and Operating Committee Meeting of May 24, 2007

AYES (11): Directors Cochran, Eddie, Grosboll, Hernández, Martini, McGlashan, Middlebrook, Pahre, Reilly and Stroeh; President Moylan
NOES (0): None

       
2.c.

Authorize a Budget Increase in the Bridge Division Capital Budget Relative to Contract No. 99-B-5, Golden Gate Bridge Seismic Retrofit (Phase II), South Approach Structures, for Construction Management and Inspection Support Services

This item was referred to the Finance-Auditing Committee from the Building and Operating Committee meeting of May 24, 2007, for concurrence with a budget increase. In a report to Committee, Deputy District Engineer Ewa Bauer, District Engineer Denis Mulligan and General Manager Celia Kupersmith provided staff’s recommendation to approve actions relative to construction management and inspection support services for Contract No. 99-B-5, Golden Gate Bridge Seismic Retrofit (Phase II), South Approach Structures. The report stated that Phase II of the Seismic Retrofit project is approaching completion, with the contractor in the process of completing all remaining change order work, finish work and site cleanup. Once this work is completed, an integrated team of District staff and consultants must undertake final field inspections and verification of materials reports and as-built plans, under an Addendum to the Ninth Amendment to the Professional Services Agreement with HNTB Corporation, Inc., and its subconsultants. The report also stated that in order to complete this work, a budget increase in the amount of $560,000 in the Bridge Division Capital Budget for the Golden Gate Bridge Seismic Retrofit Phase II Project is required, to be funded with federal grant funds programmed for the Seismic Retrofit Project. 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 PAHRE/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 $560,000 in the Bridge Division Capital Budget for the Golden Gate Bridge Seismic Retrofit Phase II Project, to be funded with federal grant funds programmed for the Seismic Retrofit Project, for additional scope of work and extension of time under an amendment to the Ninth Amendment to the Professional Services Agreement with HNTB Corporation, Inc., and its subconsultants, relative to Contract No. 99-B-5, Golden Gate Bridge Seismic Retrofit (Phase II), South Approach Structures.

Action by the Board
Refer to the Building and Operating Committee Meeting of May 24, 2007

AYES (11): Directors Cochran, Eddie, Grosboll, Hernández, Martini, McGlashan, Middlebrook, Pahre, Reilly and Stroeh; President Moylan
NOES (0): None

       
3.

Authorize Execution of an Agreement with the City and County of San Francisco for Fiscal Year 2006 Urban Areas Security Initiative Grant Program Funds to Enhance Security on the Golden Gate Bridge and Approve the Addition of this Project to the FY 06/07 Bridge Division Capital Budget

In a memorandum to Committee, Capital and Grant Programs Manager Gayle S. Prior, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to approve actions relative to Fiscal Year 2006 Urban Area Security Initiative Grant Program funds and to approve the addition of a capital project to enhance security on the Golden Gate Bridge. The report stated that in June 2006, the U.S. Department of Homeland Security (DHS) announced $28 million in allocations for FY 2006 Urban Area Security Initiative (UASI) Grant Program, which included a distribution of $200,000 to the District in the Infrastructure Protection category for physical security upgrades on the Golden Gate Bridge. For the purposes of the UASI Grant Program, San Francisco, San Jose and Oakland, the three urban areas in the Bay Area, were combined into a single Super Urban Area known as the Bay Area Super UASI. It is recommended that a grant agreement be executed with the City and County of San Francisco, that reimbursement requests be executed on behalf of the District and that a $200,000 Bridge Security Enhancements Project be added to the FY 06/07 Bridge Division Capital Budget. 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 MIDDLEBROOK/PAHRE to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee recommends the Board of Directors approve the following actions relative to the U.S. Department of Homeland Security Fiscal Year 2006 Urban Areas Security Initiative Grant Program:

       
  a.
Authorize the General Manager or her designee to execute a grant agreement and related assurances with the City and County of San Francisco;
  b.
Authorize the Auditor-Controller or his designee to execute reimbursement requests on behalf of the District; and,
  c.

Approve the addition of a $200,000 Bridge Security Enhancements Project to the FY 06/07 Bridge Division Capital Budget.

Action by the Board - Resolution
NON-CONSENT CALENDAR

       
 
AYES (11): Directors Cochran, Eddie, Grosboll, Hernández, Martini, McGlashan, Middlebrook, Pahre, Reilly and Stroeh; President Moylan
NOES (0): None
       
4.

Discussion on the Draft FY 07/08 Operating and Capital Budgets

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a general overview of the proposed draft FY 07/08 Operating and Capital Budget (FY 07/08 Budget), which had been presented in detail at the May 10, 2007, meeting of the Committee. A copy of the report is available from the Office of the District Secretary and on the District’s web site.

At the meeting, Celia Kupersmith reiterated the timeline for discussions of the proposed FY 07/08 Budget. It is anticipated that the staff recommendation to approve adoption of the FY 07/08 Operating and Capital Budgets will be considered at the June 7, 2007 meeting of the Finance-Auditing Committee, and acted upon by the Board of Directors at its meeting scheduled for the June 8, 2007. Ms. Kupersmith expressed her appreciation for the feedback from the Committee provided to date on the FY 07/08 Budget. She further announced that as of May 24, 2007, 100% of the bargaining units in the Labor Coalition have ratified their contracts with the District.

Discussion ensued, including the following:

  • Director Middlebrook inquired regarding the workplans, goals and accomplishments for the various operating divisions. In response, Ms. Kupersmith stated that the Deputy General Managers for the Bridge, Bus, Ferry and Administration & Development divisions, as well as the District Engineer and Auditor-Controller, will provide overviews of their respective workplans, goals and accomplishments at the June and July meetings of the Finance-Auditing Committee.

Action by the Board – None Required

       
5.

Receive the Independent Auditor’s Financial Statements for the for the Supplemental Retirement Plan and Trust for the Year Ending June 30, 2006, as Submitted by Macias, Gini & O’Connell, LLP

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on the audit of the Golden Gate Bridge, Highway and Transportation District’s Supplemental Retirement Plan for the year ending June 30, 2006, prepared by Macias, Gini and O’Connell, LLP. The following reports were included with the staff report:

  • Independent Auditor’s Report;  
  • Management’s Discussion and Analysis; and,  
  • Basic Financial Statements.

The report further stated that staff recommends that the Committee receive the Financial Statements for the Supplemental Retirement Plan for the year ending June 30, 2006, representing the first year of this retirement plan. A copy of the staff report, including attached Independent Auditor’s reports, is available in the Office of the District Secretary and on the District’s web site.

At the meeting, Joseph Wire summarized the staff report, noting that the submittal of this audit follows the end of the first year of the Supplemental Retirement Plan, and that in subsequent years, the audit of this retirement plan will become part of the regular annual audit of the District’s financial statements.

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

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors receive the Independent Auditor’s Financial Statements for the Supplemental Retirement Plan and Trust for the Year ending June 30, 2006, as submitted by Macias, Gini & McConnell, LLP.

Action by the Board - Resolution
NON-CONSENT CALENDAR

AYES (11): Directors Cochran, Eddie, Grosboll, Hernández, Martini, McGlashan, Middlebrook, Pahre, Reilly and Stroeh; President Moylan
NOES (0): None

       
6.

Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares for Ten Months Ending April 30, 2007

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a schedule comparing categories of Bridge traffic, as well as a monthly review of Bridge traffic and tolls and transit patronage and fares, for ten months ending April 30, 2007. 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

       
7. Review of Financial Statements for Ten Months Ending April 30, 2007
       
  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 Ten Months Ending April 30, 2007. 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 Ten Months Ending April 30, 2007. 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

       
8.

Public Comment

There was no public comment.

       
9.

Adjournment

All business having been concluded, the meeting was adjourned at 11:10 a.m.

       

Respectfully submitted,

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