May 8, 2008

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, May 8, 2008, at 10:00 a.m., Chair Stroeh presiding.

Committee Members Present (8): Chair Stroeh; Vice Chair Pahre; Directors Boro, Cochran, Eddie, Grosboll and Reilly; President Moylan (Ex Officio)

Committee Members Absent (1): Director Middlebrook

Other Directors Present (1): Director Newhouse Segal

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/Bus Division Susan C. Chiaroni; Deputy General Manager/Administration and Development Teri W. Mantony; Public Affairs Director Mary C. Currie; Director of Planning Alan R. Zahradnik; Principal Planner Maurice P. Palumbo; Assistant Clerk of the Board Karen B. Engbretson; Executive Assistant to the General Manager Amorette Ko

Visitors Present: None

     
1.

Approve Proposed Variable Toll Rates for Inclusion in Toll-Related Public Hearing

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a PowerPoint presentation that described the variable toll proposal for the Golden Gate Bridge. Copies of the staff report and the PowerPoint presentation are available in the Office of the District Secretary and on the District’s web site.

At the meeting, Celia Kupersmith clarified that the Committee would not be asked to take action on the proposed variable toll rate options at this meeting, but rather, to consider the variable toll rate options which, if approved by the Board, would be included in the June 11, 2008, Toll Increase Public Hearing. Ms. Kupersmith provided background information regarding the District’s plan for variable tolls. She noted that the Board of Directors, by Resolution No. 2008-020 at its March 14, 2008, meeting, approved actions regarding the future implementation of variable tolls on the Golden Gate Bridge no later than September 2009. At that time, the Board also authorized staff to include the variable toll options, with the base toll increase options, with the public outreach materials and at the June 11th Public Hearing. She stated that staff developed and analyzed several variable toll options, discussed the options with the Board leadership and then sent the options to the Urban Partnership Program (UPP) at the U.S. Department of Transportation (DOT). She then described recent developments regarding the variable toll options, noting that DOT officials had at first considered offering their own variable toll options, then decided to only perform additional technical analysis on the District’s variable toll options. In addition, other partners in the UPP grant requested that the possibility of a future, separate toll on Doyle Drive remain on the table as a solution to the funding shortfall for the Doyle Drive reconstruction project.

Ms. Kupersmith proceeded with the PowerPoint presentation entitled, “Variable Toll Proposal for Golden Gate Bridge.” She stated that the plan for variable tolls would include the following elements:

  • Maintain an aspiration goal of achieving weekday peak vehicle average speeds of not less than 10 mph below the posted speed limit in the Corridor;
  • Exempt privately operated over-the-road buses from the variable toll component to the same extent as public transit vehicles;
  • Base the plan on both technical analysis and public input, with implementation included with a general toll increase as early as September 2008 but no later than September 2009; and,
  • Use net proceeds from the variable toll to fund District transit services.

Ms. Kupersmith differentiated between the proposed $1.00 base toll increase approved by the Board prior to the adoption of Resolution No. 2008-020 and the variable toll component, which she described as follows:

  • The amount of the variable toll increment above the base toll increase must be in a $1.00 cash increment to avoid backups associated with making change, although the FasTrak® variable toll can be in increments of less than $1.00;
  • The days and hours of the variable toll would conform to “peak” traffic hours, focusing on weekdays from 7:00 a.m. to 9:00 a.m. and from 4:00 p.m. to 6:00 p.m., and on weekends and holidays from 3:00 p.m. to 7:00 p.m.;
  • All vehicles would be subject to the variable toll, with the exception of carpools between the hours of 5:00 a.m. to 9:00 a.m. and 4:00 p.m. to 6:00 p.m. on weekdays;
  • The effects of the variable tolls would be measured by using regional 511 traffic travel time monitoring data to determine average vehicle speeds within the Golden Gate Bridge corridor (defined as the Golden Gate Bridge and its approaches, including Doyle Drive) before and after implementation of the variable tolls.

Ms. Kupersmith displayed a chart depicting the average hourly southbound traffic counts on the Golden Gate Bridge for both weekdays and weekends, which showed that the peak hours of traffic volume coincides with the proposed hours for the variable tolls. She presented the two options that staff had developed for the variable tolls, as follows:

  • Option A: Variable Toll Increment of $1.00 for cash and $0.50 for FasTrak®, resulting in tolls of $7.00 cash and $5.50 FasTrak® when added to the proposed $1.00 base toll increase; and,
  • Option B: Variable Toll Increment of $1.00 for cash and $1.00 for FasTrak®, resulting in tolls of $7.00 cash and $6.00 FasTrak® when added to the proposed $1.00 base toll increase.

Ms. Kupersmith noted that during the past week, the DOT had considered, and then abandoned, an additional Option C, to include the following elements:

  • $7.00 cash toll all day long, with a variable toll only for FasTrak® users, which variable toll would change every half-hour during four-hour peak periods; and,
  • $6.50 cash toll, with the use of coupons, so that one day a commuter would pay $7.00 and get a coupon to use the next day and pay only $6.00.

She also stated that the DOT officials have informed the UPP partners, by way of a formal letter, that none of the $158 million in the UPP grant would be released to Bay Area agencies until the DOT officials have completed their independent analysis and are convinced that the District’s variable toll options will meet the aspiration goal of no more than a 10 mile-per-hour decrease in speed during the peak hour for 90 percent of the traffic.

Ms. Kupersmith then presented staff’s analysis of the variable toll options, noting that staff will be using traffic modeling tools developed by the San Francisco County Transportation Authority (SFCTA) to analyze how the two variable toll options will impact travel speeds in the Golden Gate Corridor. She stated that the District’s past experience with toll increases has shown that traffic decreases as much as 1 to 2 percent for each 10 percent increase in toll. She also stated that staff researched variable tolls on other facilities and found general consistency with the District’s experience regarding the correlation between increased tolls and decreased traffic. However, due to a lack of available data regarding variable tolling at certain amounts and at certain hours of the day, staff’s analysis accounts for the fact that there are still many unknowns about how much the public’s driving behavior will change due to variable tolls.

She further noted that concerns were expressed by other UPP partners that if the toll on the Golden Gate Bridge went as high as $7.00, it would cut into the ability to raise separate monies on Doyle Drive to pay for the Doyle Drive reconstruction project. She stated that there still remains a $360 million shortfall for the project; therefore, the idea of using tolling on Doyle Drive is still considered an active proposal by the SFCTA.

Ms. Kupersmith displayed a chart depicting the estimated annual revenue generation from variable tolls, noting that the figures assume that the number of cash toll payers and FasTrak® users will remain the same, and that if the ratio of cash to FasTrak® users changes, so will the amount of estimated revenue. The chart showed that, in addition to the $18.1 million to be generated from the base toll increase of $1.00, Option A would generate an estimated net total of $3.8 million per year, and that Option B would generate an estimated net total of $5.2 million per year. Another chart showed the estimated peak hour traffic reduction at the Golden Gate Bridge toll plaza, for each of the time periods in which the variable toll would be collected. She noted that it is unclear at this point how much of the traffic reduction would be attributable to commuters shifting their travel times to non-peak periods, and how much would be attributable to commuters shifting to transit instead of automobiles.

Ms. Kupersmith displayed another chart that depicted the estimated traffic speed improvement that is expected if a variable toll is implemented. She noted that there are several different speed limits throughout the Golden Gate Corridor (55 mph on Waldo Grade approaching the Bridge, 45 mph on the Bridge, 35 mph near the toll plaza, 45 mph on Doyle Drive and 30 mph on Lombard Street), and that for analysis purposes, staff used a weighted average speed limit of 39 mph for the entire corridor. Staff then used 511 travel speed data to compare the weighted speed limit with the actual speed during each of the time periods in which the variable toll would be collected. According to this technical analysis, it appears that if either one of the variable toll options is implemented, the District would reach the DOT’s aspiration goal of having 90 percent of the vehicles traveling in the Golden Gate Corridor during weekday peak travel periods maintain an average speed of not less than 10 mph below the posted speed limit. She noted that it is evident that congestion exists in the entire Golden Gate Corridor, since the 511 travel data shows that travel speeds are not at the level of the posted speed limits throughout the entire corridor.

Concluding the presentation, Ms. Kupersmith described how staff will track the variable toll traffic impacts, noting the following:

  • Track the effectiveness of the variable toll by using 511 travel data on an ongoing basis to determine whether or not the variable toll is reducing congestion in the Golden Gate Corridor as intended;
  • Track Golden Gate Transit bus and ferry ridership, to see if ridership increases as a result of implementing variable tolls and using the revenues for additional transit improvements; and,
  • Through the use of passenger surveys, determine whether any increases in transit ridership are due to the implementation of the variable tolls or due to higher gas prices.

Ms. Kupersmith outlined to the Committee two scenarios for taking action on the variable toll options. She stated that the Committee could either: (1) take action at this time to bring forward to the public the variable toll options presented at this meeting, have the Board of Directors take action on the on the matter at its meeting of May 9, 2008, take public comment at the June 11th public hearing and then make a decision in July 2008 as to which variable toll option to implement and when to implement it; or, (2) defer taking action at this time and take it up later in the summer of 2008 separately from the base toll increase. Ms. Kupersmith noted that if the first scenario is followed, there will be only one public hearing covering the full range of toll increase options, giving the public the opportunity to provide feedback on both the base toll increase and the variable tolls at the same time.

Discussion ensued, including the following:

  • Chair Stroeh inquired as to what transpired at the UPP partner agency meeting held just prior to this meeting of the Committee. In response, Ms. Kupersmith described what had transpired at the meeting, noting the following highlights:
    • The meeting was set up by Mayor Newsom’s staff and included staff representatives from the UPP partner agencies, including the District, the SFCTA, the Metropolitan Transportation Commission (MTC), as well as the transportation authorities of Marin, Sonoma and Napa counties.
    • There will be another summit meeting of the UPP partner agencies, similar to those held in February 2008 to discuss the next steps for the UPP grant and the Doyle Drive project funding. This meeting is likely to take place within the next two weeks.
    • Mayor Newsom has been meeting with Will Kempton, the Director of the State of California, Department of Transportation (Caltrans) and that Mr. Kempton has agreed to further discuss the potential of locating additional state funding for the Doyle Drive project. Ms. Kupersmith acknowledged that since the State of California is currently in the midst of a serious financial crisis, this additional funding may be difficult to find.
    • At the meeting, the MTC representatives stated that there have been indications from Caltrans that the flow of state funds, including $400 million for the Doyle Drive project, may get slowed down by a couple of years. Ms. Kupersmith stated that such a delay in funding would be discouraging, because lengthy delays on a major capital project further escalate the total project costs.
    • Mayor Newsom will be traveling to Washington, D.C., during the week of May 12, 2008, to meet with the staff of the Bay Area congressional delegation, as well as the staff of Congressman Oberstar, Chair of the House Transportation and Infrastructure Committee, to seek additional federal funding for the Doyle Drive project. Ms. Kupersmith stated that a $10 million federal earmark has been requested, and that additional federal funding may be forthcoming, since the Doyle Drive project has been given a high priority among other transportation reauthorization earmarks.
    • The SFCTA will soon be issuing a Request for Proposals (RFP) for a consultant to perform Project Management Oversight for the Doyle Drive project, and included in that RFP is a list of specific work tasks regarding implementing a toll on Doyle Drive, such as location of gantries, toll collection technology and how a Doyle Drive toll would interact with any downtown San Francisco cordon congestion toll, Ms. Kupersmith emphasized that these work tasks would only be carried out once tolling on Doyle Drive was determined to be necessary, if no other funding opportunity for the Doyle Drive project can be found. She stated that the District would have an opportunity to participate in the decision-making process if the Project Management Oversight work tasks regarding tolling are initiated.
    • The latest cost estimates for the Doyle Drive project are currently at $1 billion, with only $640 million of the project costs fully funded at this time. Ms. Kupersmith stated that these cost estimates are being audited by Caltrans and the Federal Highway Administration to identify if any changes to the cost estimates are warranted.
    • Since securing right-of-way for the Doyle Drive project is one of the areas driving the costs, and that since most of this right-of-way is located within the Presidio of San Francisco, the Presidio Trust will be asked to participate as a project partner in the summit meetings.
  • Directors Grosboll and Reilly inquired regarding the timing of the variable tolls. In response, Alan Zahradnik referred to the chart depicting the average hourly southbound traffic counts on the Golden Gate Bridge, explaining that the chart shows that the highest traffic volumes in the morning occur during the hour from 8:00 a.m. to 9:00 a.m., and in the afternoon during the hour from 6:00 p.m. to 7:00 p.m. He stated that the high traffic volumes between 6:00 p.m. and 7:00 p.m. show the evidence of congestion, due to the spillover of traffic trying to cross the Bridge during the previous hour from 5:00 p.m. to 6:00 p.m.
  • Director Pahre made the following inquiries:
    • She inquired as to how the 511 travel data is collected. In response, Mr. Zahradnik stated that the 511 travel data is an excellent resource and that staff is pleased that the MTC has made the data available to the District for traffic monitoring purposes. He explained how the 511 travel data is collected continuously, 24 hours per day, every day, in 1-minute intervals from sensors that pick up signals from FasTrak® transponders. He noted that there are eight such sensors throughout the Golden Gate Corridor, in addition to the hundreds of sensors mounted throughout the Bay Area. He also noted that the sensors would only collect data from transponders that are displayed on a vehicle’s windshield, and that the 511 travel sensors would not collect data from vehicles without FasTrak® transponders, or from vehicles with FasTrak® transponders that are hidden from view. Ms. Kupersmith added that when the MTC first implemented the 511 program, there was some concerns in the community regarding privacy protection and the use of the data collected by the 511 sensors. She stated that a system was put in place to delete the data on a daily basis and not allow the data to be collected for criminal proceedings or for any other similar purpose.
    • She inquired regarding the sample size of the 511 data. In response, Mr. Zahradnik stated that with over 70 percent of the morning peak period traffic over the Golden Gate Bridge using FasTrak®, there is a large sample size for the traffic data.
    • She inquired regarding the verbal assurance that the District representatives were given at the partner agency meeting prior to this Committee meeting that the Doyle Drive toll discussion would come after all other methods of funding the shortfall for the Doyle Drive project had been exhausted. In response, Ms. Kupersmith clarified that the specific work tasks associated with SFCTA’s Project Management Oversight RFP would only move forward after the variable toll implementation process is completed.
  • Director Reilly made the following comments and inquiries:
    • She inquired regarding the DOT’s recent actions with respect to the variable toll options. In response, Ms. Kupersmith stated that when staff negotiated with the DOT regarding the content of Resolution No. 2008-020 last March, the DOT initially stated that they would not get involved in the actual setting of the variable tolls, but then later expressed concerns as to whether the variable toll options proposed by the District would meet the aspiration goal described above. She noted that District staff was surprised to learn last week that the DOT would not release any of the $158 million to any of the UPP partners if their independent analysis shows results different from the District’s analysis. She stated that the DOT also has extremely stringent deadlines for completion of the UPP projects, all of which must be completed by September 2009. Therefore, this delay in receiving the grant monies would be particularly problematic for other UPP partners, such as the City and County of San Francisco. Ms. Kupersmith also stated that at the UPP partner agency meeting this morning, it was agreed that the UPP grant project deadlines would have to change because of the DOT’s unwillingness to release the grant monies.
    • She inquired as to whether the DOT was concerned that Resolution No. 2008-020 had been amended to state that the net proceeds of the variable toll would be used to fund only the District’s congestion relief projects and services, and would not be used to fund the Doyle Drive project. In response, Ms. Kupersmith stated that the DOT did not express any concerns regarding the use of the proceeds, and have stayed true to their original statement that the use of the proceeds is up to the local jurisdictions to decide.
  • President Moylan inquired as to whether all users of Doyle Drive, rather than only Golden Gate Bridge users, would be tolled, if such a toll is implemented. In response, Ms. Kupersmith affirmed that all users would be tolled.
  • Director Grosboll made the following comments and inquiries:
    • He inquired regarding the status of New York City’s efforts to implement a variable toll, since New York City was another of the nationwide recipients of the UPP grant program. In response, Ms. Kupersmith stated that the DOT selected five cities nationwide to be recipients of UPP grant monies, but that New York City became ineligible for the UPP grant because they failed to meet the March 31, 2008, deadline to have variable tolling authority in place. She stated that the DOT then gave UPP grant monies to the cities of Los Angeles and Chicago instead. She further stated that at a teleconference recently held among all nationwide recipients of the UPP grant, all the various cities are trying to build enthusiasm for variable tolls within their communities, and the District seems to be a little ahead of the others with actual variable toll options having been developed. She noted that there is an increasing trend for federal agencies, including the DOT, to look to local jurisdictions to raise local revenue to pay for transportation improvement projects through more tolling, rather than depend on federal earmarks.
    • He stated that it was his understanding that the use of FasTrak® has eliminated congestion and allowed for normal traffic speeds on the Golden Gate Bridge. In response, Ms. Kupersmith stated that congestion has been merely shifted downstream to other segments of the Golden Gate Corridor, specifically Doyle Drive.
  • Director Boro made the following comments:
    • He requested a written memorandum from the General Manager memorializing what was discussed at the UPP partner agency meeting earlier this morning.
    • He noted that the Urban Partnership Agreement had been signed by Executive Directors or General Managers of the agencies throughout the Bay Area, but not signed by any Board Presidents of those agencies.
    • He emphasized that if the idea of tolling on Doyle Drive resurfaces, it should be made clear that toll collection gantries would need to be installed at all of the entries into San Francisco, so that drivers from all of the counties surrounding San Francisco, not just Marin County, contribute to any toll increase. He noted that only 7 percent of the traffic in downtown San Francisco originates from Marin County. In response, Ms. Kupersmith stated that the SFCTA has a separate project, unrelated to Doyle Drive, which is looking at tolling all entrances into downtown San Francisco.
    • He expressed his concerns that if the District becomes involved in any future plans to expand tolling throughout the City and County of San Francisco, that the District’s interests be protected fully, and that the Board of Directors be given an opportunity to discuss the matter before any final decisions are made.
  • Director Newhouse Segal made the following comments and inquiries:
    • She stated that it was her understanding that the UPP was a national test of various congestion relief projects, and inquired as to whether the variable toll implementation on the Golden Gate Bridge would be temporary or permanent. In response, Ms. Kupersmith stated that there is no language in the UPP grant documents that refer to an ending date for the variable tolls, but it is expected that the variable tolls would not be permanent, but would be in place for two to four years. She noted that the Board has the authority to discontinue the variable toll at any time it chooses, especially if it is not successful in reaching its goals. Attorney Miller confirmed that the District’s legal authority to set its own tolls is not compromised by anything in the UPP grant documents. He described the District’s enabling legislation, which prescribes the circumstances involved in setting tolls, and the purposes for setting tolls. He noted that the Board of Directors has an ongoing responsibility to monitor and set the tolls on the Golden Gate Bridge.
    • She commented that when the UPP grant program was first discussed in fall of 2007, the initial goal of the program was to reduce congestion in downtown San Francisco. She noted that now it seems that the focus is on reducing congestion and increasing travel speeds in the Golden Gate Corridor, and not about reducing the number of cars traveling into San Francisco. Chair Stroeh concurred, noting that even if Doyle Drive is completely rebuilt, there will still be congestion on Lombard Street, and traffic congestion within San Francisco is a separate issue that the City and County of San Francisco needs to address.

Following the discussion, the Committee concurred by motion made and seconded by Directors BORO/COCHRAN to forward to the Board of Directors at its meeting of May 9, 2008, for continued discussion and possible action, the following variable toll options which if approved by the Board, would be included in the June 11, 2008, Public Hearing:

     
OPTION
Cash/FasTrak
Variable Toll Increment

Cash/FasTrak
Total Peak Toll

7:00-9:00 a.m. / 4:00-6:00 p.m.
on Weekdays
3:00-7:00 p.m.
on Weekends and Holidays
A
$1.00 / $0.50
$7.00 / $5.50
B
$1.00 / $1.00
$7.00 / $6.00
 

Carried

AYES (8): Chair Stroeh; Vice Chair Pahre; Directors Boro, Cochran, Eddie, Grosboll and Reilly; President Moylan (Ex Officio)
NOES (0): None
ABSENT (1): Director Middlebrook

   
2.

Discussion Relative to the Draft FY 08/09 Operating and Capital Budgets

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided a summary of the development process and a general overview of the proposed draft FY 08/09 Operating and Capital Budget (FY 08/09 Budget), which contains District workplans, goals and objectives, a negotiated 3 percent pay increase for the Coalition and Amalgamated Transit Union represented employees, a 3 percent pay increase for non-represented employees, changes to the Reserve Structure and changes to the Table of Organization. The report stated that the proposed FY 08/09 Budget is a policy document that serves as an implementation tool for the Board’s policy directions that were developed in its long-term Strategic Financial Plan.

The report provided an overview of the proposed FY 08/09 Budget, which includes:

  • Operating Budget revenues of $155.2 million;
  • Operating Budget expenditures of $164.2 million;
  • Capital Budget revenues of $23.7 million;
  • Capital Budget expenditures of $32.1 million; and,
  • District reserves are budgeted to be used to fund the FY 08/09 Operating Budget shortfall of $9 million and District share of the Capital Budget of $8.4 million.

The report also included background summary information regarding the proposed FY 08/09 Budget, providing details on the Operating Budget, the Capital Budget and the use of reserves. A copy of the report, including a copy of the proposed FY 08/09 Budget, is available in the Office of the District Secretary.

At the meeting, Joseph Wire gave a brief summary of the FY 08/09 Budget document, noting that presentations of the workplans, goals and objectives of the various operating divisions would be provided at upcoming meetings of the Finance-Auditing Committee.

Action by the Board – None Required

   
3.

Public Comment

There was no public comment.

   
4.

Adjournment

All business having been concluded, the meeting was adjourned at 11:25 a.m.

   
   
   

 

Respectfully submitted,

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