April 24, 2008

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, April 24, 2008, at 11:30 a.m., Chair Stroeh presiding.

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

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

Staff Present: General Manager Celia G. Kupersmith; District Engineer Denis J. Mulligan; Auditor-Controller Joseph M. Wire; Secretary of the District Janet S. Tarantino; Attorneys David J. Miller and Madeline Chun; Deputy General Manager/Bridge Division Kary H. Witt; Deputy General Manager/Ferry Division James P. Swindler; Deputy General Manager/Administration and Development Teri W. Mantony; Assistant Clerk of the Board Karen B. Engbretson; Executive Assistant to the General Manager Amorette Ko

Visitors Present: Nancy Jones, PFM Asset Management LLC; David Schonbrunn, TRANSDEF

   
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 economic data released in March 2008 pointed to an intensifying slowdown in the U.S. economy, with 80,000 jobs lost in March, the largest monthly job loss in five years. She noted that consumer confidence has fallen to a 26-year low, and that the slowdown in consumer spending is due to the decrease in home equity loans, the worsening labor market and high prices for food and energy. In an attempt to stabilize the economy, the Federal Reserve Bank has continued to aggressively add liquidity to the financial markets. Ms. Jones also stated that the collapse and subsequent rescue of Bear Stearns was an event that put a halt to the panic in the financial markets, and that more recently, many banks and brokerage firms have had huge write-offs and it is anticipated that they will be able to pull through the credit crisis. She stated that it appears that the financial markets will eventually return to normal, but the process will be very slow and will likely not happen for six months or more.

Ms. Jones stated that in the midst of the current market volatility, the yields for Two-Year U.S. Treasury Notes have risen from a low of 1.35% two months ago to a current rate of 2.38%. She stated that the Portfolio Manager recently purchased a Hong Kong/Shanghai Bank Corporate Note for the District at a rate of 3.50%, a significantly high rate of return. She further stated that the Portfolio Manager will continue to seek short-term, high value securities until the economy stabilizes, and then start to lengthen out the portfolio in the future.

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/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 March 1, 2008, through March 31, 2008, totaling $114,282.00;

b.  Ratify investments made by the Auditor-Controller during the period March 18, 2008, through April 14, 2008, as follows;

   
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
Credit Suisse FB USA, Inc. Certificate of Deposit
03/18/08
06/05/08
1,040,993.36
2.60
Toronto Dominion Bank Certificate of Deposit
03/24/08
06/30/08
3,180,000.00
2.57
Bank of America Corporate Bank Acceptance
03/26/08
06/17/08
2,156,898.19
2.43
Dexia Delaware LLC Commercial Paper
03/28/08
06/30/08
1,097,296.31
2.69
FFCB Notes (Callable)
04/03/08
04/03/13
4,981,500.00
4.36
Bank of America Corporation Commercial Paper
04/04/08
06/12/08
2,729,330.72
2.61
CBA (DE) Finance Commercial Paper
04/04/08
06/12/08
3,482,222.92
2.66
       
 
c.  Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between April 15, 2008, and May 12, 2008, 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 March 2008 prepared by PFM.

Action by the Board - Resolution
CONSENT CALENDAR

AYES (6): Chair Stroeh; Directors Boro Cochran, Eddie, and Reilly; President Moylan (Ex Officio)
NOES (0): None
ABSENT (3): Vice Chair Pahre; Directors Grosboll and Middlebrook

[With the arrival of Director Middlebrook, the Committee became a Committee of the Whole]

       
2.

Authorize a Budget Increase in the FY 07/08 Ferry Transit Division Capital Budget for the Addition of the Larkspur Ferry Terminal Parking Project

In a memorandum to Committee, District Engineer Denis Mulligan, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to authorize a budget increase in the FY 07/08 Ferry Transit Division Capital Budget, in the amount of $2,530,000, to add the Larkspur Ferry Terminal Parking and Access Improvements Project (LFT Parking Project) to the budget. The report stated that this addition to FY 07/08 Ferry Transit Division Capital Budget will be funded by $1,365,240 of U.S. Department of Transportation Urban Partnership Program (UPP) funds, $729,000 of Federal Transit Administration funds and $435,760 of District funds.

The report provided background regarding the current and future parking needs at the Larkspur Ferry Terminal (LFT), as well as details regarding the UPP grant. The report stated that the LFT Parking Project will be accomplished in two phases: 1) Phase 1 will entail adding 200 more parking spaces, improve pedestrian and bicycle access, and improve parking for disabled persons; and, 2) Phase 2 will construct a four-story parking garage on a portion of the existing LFT at-grade parking lot. The report also stated that in May 2008, the Phase 1 project will be initiated with the advertisement of Contract No. 2008-FT-8, Larkspur Ferry Terminal Parking and Access Improvements, construction of which is scheduled to be completed in December 2008. In the summer of 2008, staff will issue a Request for Proposals for a consultant to perform the design, engineering and environmental work associated with the Phase 2 of the project, and it is anticipated that the parking garage project will be ready to advertise for construction in September 2009. The report stated that construction of the Phase 2 project will take an additional eighteen months to complete.

The report stated that it is recommended that the LFT Parking Project be added to the FY 07/08 Ferry Transit Division Capital Budget, and that a budget increase in the amount of $2,530,000 be authorized for this project. The report noted that the proposed FY 08/09 Ferry Transit Division Capital Budget, which will be presented to the Committee at its May 8, 2008 meeting, will include the Phase 2 project, a new multi-year $21 million project to construct a parking structure at the LFT. The remainder of the $12.8 UPP monies, in the amount of $11,434,760, will provide partial funding for the Phase 2 project. 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, Denis Mulligan clarified the difference between Phase 1 and Phase 2 of the LFT Parking Project, noting that the Phase 1 portion does not contemplate building the parking garage, but will simply reconfigure the existing at-grade parking at the LFT to accommodate vehicles more efficiently, and make improvements to the bicycle path and existing Americans with Disabilities Act (ADA) parking.

Public Comment

David Schonbrunn, of TRANSDEF, expressed his concerns regarding parking at the LFT, which in his opinion, reflects flawed management and planning. He stated that he believes that a better use of the UPP grant funds would be for the capital purchase of additional shuttle vehicles for ferry feeder bus service to the LFT.

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 FY 07/08 Ferry Transit Division Capital Budget in the amount of $2,530,000, for the addition of the Larkspur Ferry Terminal Parking and Access Improvements Project, to be funded by $1,365,240 of U.S. Department of Transportation Urban Partnership Program funds, $729,000 of Federal Transit Administration funds and $435,760 of District funds.

 

Action by the Board at its meeting of April 25, 2008 – Resolution
NON-CONSENT CALENDAR

AYES (11): Directors Cochran, Eddie, Grosboll, Hernández, McGlashan, Middlebrook, Newhouse Segal, Reilly and Stroeh; First Vice President Boro; President Moylan
NOES (0): None

       
3.

Approve a Revision to the Investment Policy and Amend RULE XI of the Rules of the Board

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a staff recommendation regarding a revision to the District’s Investment Policy, Rule XI of the Rules of the Board. The report stated that effective January 1, 2008, Assembly Bill No. 1745 allows California public agencies to invest in registered treasury notes and bonds issued by any of the other 49 United States, in addition to California. Previously, the Government Code had restricted the purchase of registered state warrants or treasury notes or bonds to those issued by the State of California and local agencies within California. Therefore, it is recommended that Rule XI, INVESTMENT POLICY, Section I, Permitted Investment Instruments, of the District’s Rules of the Board be amended to incorporate the updated Government Code requirements.

The report also stated that Rule XI, INVESTMENT POLICY, Section I, Permitted Investment Instruments, Subsection 3, currently states the following:

“Bonds, notes, warrants, or other evidences of indebtedness issued by any local agency, or the state, including evidences of indebtedness, payable solely out of the revenues from a revenue producing property owned, controlled, or operated by the local agency or by a department, board, agency or authority of the local agency.”

The report outlined staff’s proposed revisions to the above section, as follows (changes in bold and strikeout text):

(a) Bonds, notes, warrants, or other evidences of indebtedness issued by California or any local agency, or the state, in California, including evidences of indebtedness, payable solely out of the revenues from a revenue producing property owned, controlled, or operated by the local agency or by a department, board, agency or authority of the local agency or by the State of California; (b) registered treasury notes or bonds of any of the other 49 United States in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 United States, in addition to California.”

The report further stated that California Government Code no longer requires public agencies to submit their investment policy on an annual basis to their governing body for approval. Despite this change in California law, the annual review of the policy by the Board is still encouraged and is considered a prudent practice. 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, Joseph Wire summarized the staff report, noting that the proposed action will make changes in the District’s Investment Policy to match changes in the State of California Government Code.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/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 approve adoption of the Investment Policy, as amended, and amend RULE XI, Section I., Permitted Investment Instruments, Subsection 3, of the Rules of the Board, in order to reflect revisions to the California Government Code Assembly Bill No. 1745, by replacing Subsection 3 in its entirety with the revised text as outlined below:

“(a) Bonds, notes, warrants, or other evidences of indebtedness issued by California or any local agency in California, including evidences of indebtedness, payable solely out of the revenues from a revenue producing property owned, controlled, or operated by the local agency or by a department, board, agency or authority of the local agency or by the State of California; (b) registered treasury notes or bonds of any of the other 49 United States in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 United States, in addition to California.”

Action by the Board at its meeting of April 25, 2008 – Resolution
NON-CONSENT CALENDAR

AYES (11): Directors Cochran, Eddie, Grosboll, Hernández, McGlashan, Middlebrook, Newhouse Segal, Reilly and Stroeh; First Vice President Boro; President Moylan
NOES (0): None

       
4.

Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares for Nine Months Ending March 31, 2008

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 nine months ending March 31, 2008. 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 Nine Months Ending March 31, 2008
       
  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 Nine Months Ending March 31, 2008. 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 Nine Months Ending March 31, 2008. 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.

Review of Auditor-Controller’s Quarterly Report on Authorized Budget Adjustments and Budget Transfers

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a report summarizing budget adjustments and budget transfers authorized by the Board of Directors during the three-month period from January 1, 2008, through March 31, 2008. A copy of the report, including attached charts outlining applicable budget adjustments and transfers, is available in the Office of the District Secretary.

Action by the Board – None Required

       
7.

Review of Auditor-Controller’s Quarterly Report on Contracts and Change Orders/Contract Amendments Executed Under the General Manager’s Authority

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a report summarizing all contracts and change orders executed under the General Manager’s procurement authority, as set forth in the Rules of the Board, during the three-month period from January 1, 2008, through March 31, 2008. A copy of the report, including attached charts outlining applicable contracts and change orders, is available in the Office of the District Secretary.

Action by the Board – None Required

       
8.

Public Comment

Public comment was received relative to Item No. 2, above.

       
9.

Adjournment

All business having been concluded, the meeting was adjourned at 11:40 a.m.

       

Respectfully submitted,

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