September 27, 2007
(For Board: October 12, 2007)

 

REPORT OF THE FINANCE-AUDITING COMMITTEE

 

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

Honorable Members:

A meeting of the Finance-Auditing Committee was held in the Board Room, Administration Building, Toll Plaza, San Francisco, California, on Thursday, September 27, 2007, at 10:40 a.m., Chair Stroeh presiding.

Committee Members Present (7): Chair Stroeh; Directors Boro, Cochran, Eddie, Grosboll and Middlebrook; President Moylan (Ex Officio)

Committee Members Absent (2): Vice Chair Pahre; Director Reilly

Other Directors Present (1): Director Sanders

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; Assistant Clerk of the Board Karen B. Engbretson

Visitors Present: Nancy Jones, PFM Asset Management LLC; V. James Link, Jr., PFM Advisors

     
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 sub-prime mortgage crisis has caused investors to pull their money out of investments, such as money market funds and investing in fixed income government securities, such as U.S. Treasury Notes. The increasing demand for Treasuries caused prices to increase, which in turn caused yields for Two-Year U.S. Treasury Notes to fall from about 5% to a current yield of 4.07%. She highlighted a chart in the PFM memorandum, which showed a comparison of yields for asset-backed commercial paper and U.S. Treasury Notes. She noted that the District does not own this type of commercial paper, which is backed by mortgages and other types of consumer receivables. She noted that PFM worked closely with Auditor-Controller Joseph Wire to temporarily move funds out of the Local Agency Investment Fund (LAIF) and invest $38 million in very high quality, well-diversified 90-day commercial paper securities at yields ranging from 5.19% to 5.71%. She further noted that the yields for LAIF will continue to decline over the next few months as the Federal Reserve overnight rate also declines.

Discussion ensued, including the following:

  • Director Boro inquired as to whether the District was allowed to invest in gold. In response, Ms. Jones stated that the District is precluded from investing in gold, just as it is precluded from investing in equities.

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/MIDDLEBROOK 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 August 1, 2007, through August 31, 2007, totaling $70,525.00;
     
  b. Ratify investments made by the Auditor-Controller during the period August 14, 2007, through September 17, 2007, as follows;
     
SECURITY

PURCHASE

DATE

MATURITY

DATE

ORIGINAL

COST

PERCENT

YIELD

Barclays Funding, LLC Commercial Paper
08/15/07
09/17/07
8,944,710.45
5.40
Societe Generale NA Commercial Paper
08/15/07
09/18/07
8,055,935.39
5.53
UBS Fin Delaware, LLC Commercial Paper
08/20/07
09/20/07
6,015,869.37
5.43
AIG Funding, Inc. Commercial Paper
08/22/07
09/17/07
3,222,647.14
5.32
UBS Fin Delaware, LLC Commercial Paper
09/05/07
12/05/07
5,999,555.61
5.63
FNMA Disc Note
09/05/07
09/06/07
6,999,018.06
5.05
Citibank NA Certificate of Deposit
09/06/07
12/06/07
7,000,000.00
5.64
Barclays Funding, LLC Commercial Paper
09/11/07
01/11/08
12,110,494.94
5.64
UBS Fin Delaware, LLC Commercial Paper
09/11/07
01/11/08
6,035,475.04
5.60
Morgan Stanley Commercial Paper
09/11/07
01/04/08
8,089,386.10
5.71
JP Morgan Chase & CO Notes
09/12/07
06/01/11
5,067,400.00
5.19
     
  c.
Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between September 18, 2007, and October 15, 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 August 2007 prepared by PFM.

Action by the Board - Resolution
CONSENT CALENDAR

     
 
AYES (7): Chair Stroeh; Directors Boro, Cochran, Eddie, Grosboll and Middlebrook; President Moylan
NOES (0): None
ABSENT (2): Vice Chair Pahre; Director Reilly
     
2.

Authorize a Budget Increase in the FY 07/08 Ferry Transit Division Capital Budget Relative to Execution of a Change Order to 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 September 27, 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 execution of Change Order No. 3 to 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 $37,000 is necessary in the FY 07/08 Ferry Transit Division Capital Budget to fully fund this project. This budget increase will be funded with Federal Transit Administration grant funds in the amount of $29,600 and $7,400 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 MIDDLEBROOK/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 $37,000 in the FY 07/08 Ferry Transit Division Capital Budget, to be funded with Federal Transit Administration grant funds in the amount of $29,600 and with District Reserves in the amount of $7,400, relative to execution of Change Order No. 3 to Contract No. 2007-FT-13, Larkspur Ferry Terminal Storage and Inspection Station.

Action by the Board
Refer to the Building and Operating Committee Meeting of September 27, 2007

AYES (7): Chair Stroeh; Directors Boro, Cochran, Eddie, Grosboll and Middlebrook; President Moylan
NOES (0): None
ABSENT (2): Vice Chair Pahre; Director Reilly

     
3.

Report by the Deputy General Manager/Ferry Transit Division Relative to the Ferry Transit Division FY 07/08 Goals and Workplans

Jim Swindler provided a report on the accomplishments, workplans and goals of the Ferry Transit Division. Mr. Swindler highlighted the Ferry Transit Division’s accomplishments for FY 06/07, as follows:

  1. Completed development of an operations manual for the District’s two high-speed ferry vessels.
  2. Applied for and received Carl Moyer grant funds to purchase new Tier II ferry engines for the M.V. Mendocino, a project which will be completed in early 2008.
  3. Established training and qualification requirements for the Senior Deckhand Program in cooperation with the Inlandboatmen's Union of the Pacific.
  4. Applied for and received U.S. Department of Homeland Security grant to support marine drill and exercise, to be led by Ferry Transit Division personnel in conjunction with other Bay Area ferry operators and local law enforcement agencies.
  5. Participated in day-long customer service training program for Ferry Transit Division operations personnel, with specific instruction in assisting customers with disabilities, providing excellent customer service and dealing with difficult customers. This customer service training program has also been expanded to include casual deckhands hired by the Ferry Transit Division from the union hall.
  6. Completed the refurbishment of the Spaulding vessel, the M.S. Marin, which was returned to service on the Sausalito-San Francisco Route on Saturday, July 28, 2007.

Mr. Swindler also highlighted the Ferry Transit Division’s goals for FY 07/08, as follows:

  1. Begin the Golden Gate Ferry Fare Gates and Automatic Ticketing Equipment project.
  2. Continue to look at creative methods and ideas to increase weekend ferry ridership for both the Larkspur and Sausalito services.
  3. Complete studies on short- and long-term solutions for parking at the Larkspur Ferry Terminal.
  4. Continue work relative to the procurement of a new high-speed passenger ferry.
  5. Apply for Carl Moyer grant funds to replace the existing engines on the M.V. Del Norte with new, cleaner Tier II or Tier III engines.
  6. Complete the Larkspur Ferry Terminal administration building improvements project.
  7. Issue a Request for Proposals for the Landside Facilities Improvements project at the Larkspur and San Francisco Ferry Terminals, to bring them into conformance with new and pending Americans with Disabilities Act regulations.
  8. Develop vessel personnel management skills to achieve a higher level of responsibility and sense of ownership for personnel and asset management.
  9. Implement a Maintenance Management and Inventory Control program, and standardize vessel equipment and parts.
  10. Utilize the skills of the newly hired Marine Projects Manager for oversight of Ferry Transit Division projects.

Discussion ensued, including the following:

  • Chair Stroeh inquired regarding planned improvements to the Larkspur Ferry Terminal parking lot. In response, Mr. Swindler stated that in the next few months, staff will be presenting to the Board of Directors a status report on the District’s short-term plans to increase parking by 150 spaces, as well as a study of long-range concepts for major improvements to the parking lot. He noted that at present, the limited parking represents a constraint to increasing ferry ridership.
  • Director Middlebrook commended Mr. Swindler for the attention being paid to customer service and vessel personnel management training, and expressed her appreciation for staff’s efforts to reduce workers compensation and Jones Act claims in the Ferry Transit Division.

Action by the Board – None Required

     
4.

Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares for Two Months Ending August 31, 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 two months ending August 31, 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

     
5.

Review of Financial Statements for Two Months Ending August 31, 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 Two Months Ending August 31, 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 Two Months Ending August 31, 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

     
6.

Closed Session

Attorney David Miller, at the request of Chair Stroeh, stated that the Committee would convene in closed session to discuss a matter of pending litigation listed on the agenda as Item No. 7.a.1., Greg McCulloch vs. Golden Gate Bridge, Highway and Transportation District (District).

After closed session, Chair Stroeh called the meeting to order in open session with a quorum present. Attorney Miller reported that the Committee met in closed session, as permitted by the Brown Act, to discuss one item of pending litigation, as listed above. Mr. Miller stated that stated that the Committee recommended that this matter be referred to the September 28, 2007 meeting of the Board of Directors for necessary action.

     
7.

Public Comment

There was no public comment.

     
8.

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