June 26, 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, June 26, 2008, at 10:30 a.m., Acting Chair Pahre presiding.

Committee Members Present (6): Acting Chair Pahre; Directors Boro, Cochran, Eddie and Newhouse Segal; President Moylan (Ex Officio). Director Newhouse Segal was appointed Committee Member Pro Tem for this meeting only.

Committee Members Absent (3): Chair Stroeh; Directors Grosboll and Reilly

Other Directors Present (0): None

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/Ferry Division James P. Swindler; Public Affairs Director Mary C. Currie; Risk Management and Safety Director William Stafford; Deputy District Engineer Ewa Z. Bauer; Assistant Clerk of the Board Karen B. Engbretson; Executive Assistant to the General Manager Amorette Ko

Visitors Present: Carl Taber, Attorney; Randy Anger, Athens Administrators

     
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.


Nancy Jones was not present at the meeting. A copy of her written report is included in the staff report.

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/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 the following actions by the Auditor-Controller:

     
  a.
Ratify commitments and/or expenditures for the period May 1, 2008, through May 31, 2008, totaling $40,000.00;
   
  b.
Ratify investments made by the Auditor-Controller during the period May 13, 2008, through June 16, 2008, as follows;
     
SECURITY

PURCHASE

DATE

MATURITY

DATE

ORIGINAL

COST

PERCENT

YIELD

Dexia Delaware LLC Comm. Paper
05/31/08
06/30/08
334,902.40
2.46
Barclays Bank PLC NY Cert Deposit
05/30/08
08/29/08
5,550,000.00
2.70
Banque National De Paris Cert Deposit
06/04/08
07/07/08
5,000,000.00
2.35
CBA (Delaware) Finance Comm. Paper
06/04/08
07/07/08
3,492,588.75
2.31
Rabobank USA Fin Comm. Paper
06/04/08
07/07/08
3,841,706.46
2.36
Bank of America NA Bank Accep.
06/05/08
06/17/08
1,998,533.33
2.20
FHLMC Disc Note
06/05/08
07/21/08
5,509,821.60
2.16
FHLB Notes
06/12/08
06/08/12
3,704,237.50
4.31
Svenska Handelsbank Inc Comm. Paper
06/12/08
07/15/08
6,242,661.04
2.51
       
  c.
Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between June 17, 2008, and July 14 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 May 2008 prepared by PFM.

Action by the Board at its meeting of July 11, 2008 - Resolution
CONSENT CALENDAR

       
  AYES (6): Acting Chair Pahre; Directors Boro, Cochran, Eddie and Newhouse Segal; President Moylan (Ex Officio)
NOES (0): None
ABSENT (3): Chair Stroeh; Directors Grosboll and Reilly
       
2.

Authorize a Budget Transfer from the FY 07/08 Operating Budget to the FY 07/08 Capital Budget for Indirect Cost and Excess District Project Management Costs

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to approve a budget transfer from the FY 07/08 Operating Budget to the FY 07/08 Capital Budget for Indirect Cost and excess District Project Management costs, which are eligible for federal grant reimbursement. The report stated that following the enactment of the Transportation Equity Act for the 21st Century (TEA-21) on June 9, 1998, indirect costs became eligible for federal reimbursement. The report explained that indirect costs are costs incurred for common or joint objectives that cannot be readily and specifically identified with a particular project. Typically, indirect costs include the following: (1) costs of operating and maintaining facilities, equipment and grounds; (2) costs for depreciation or use allowances; and, (3) costs for administrative salaries and supplies. These costs are usually charged to the operating budget, but can be reimbursed by federal grants as a percentage of the direct labor and fringe cost of the capital project, which percentage is known as the Indirect Cost Rate. In order to seek reimbursement of this cost, staff has submitted the District’s Engineering Department Indirect Cost Rate Proposal and Central Service Cost Allocation Plan to the State of California, Department of Transportation (Caltrans) Audits and Investigations Department for approval on behalf of the Federal Highway Administration. The Approval Letter of the Indirect Cost Rate for FY 06/07 was received in February 2008.

The report provided a list of capital projects for which the approved Indirect Cost Rate of 119% has been calculated and recorded. These projects did not include indirect costs in their original budgets; therefore, it is recommended that a budget transfer be approved from the FY 07/08 Operating Budget to the FY 07/08 Capital Budget in the amount of $2,876,400, for Indirect Cost and excess District Project Management costs, to be funded with $2,661,500 of federal grant funds and $214,900 of District funds. A copy of the report is available in Office the District Secretary and on the District’s web site.

Staff recommended and the Committee concurred by motion made and seconded by Directors BORO/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 from the FY 07/08 Operating Budget to the FY 07/08 Capital Budget in the amount of $2,876,400, for recognition of Indirect Cost and excess District Project Management costs, to be funded with $2,661,500 of federal grant funds and $214,900 of District funds.

Action by the Board at its meeting of June 27, 2008 – Resolution
NON-CONSENT CALENDAR

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

       
3.

Authorize a Budget Increase in the FY 07/08 Ferry Transit Division Capital Budget Relative to the Dry-Docking and Re-Powering of the M.V. Mendocino

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to approve a budget increase in the FY 07/08 Ferry Transit Division Capital Budget, in the amount of $95,000, relative to the M.V. Mendocino Re-Powering project. The report stated that the Board of Directors, by Resolution No. 2008-025 at its meeting of March 28, 2008, awarded Contract No. 2008-FT-4, Installation of the Four New Main Engines for Re-Powering of the M.V. Mendocino, and Dry-Docking for Routine U.S. Coast Guard Inspection, Hull Maintenance and Repairs, to Bay Ship and Yacht Co. As part of that action, a budget increase of $777,000 in the FY 07/08 Ferry Division Capital Budget was authorized in order to fully fund the project.

The report explained that Contract No. 2008-FT-4 was one of several contracts associated with the the M.V. Mendocino Re-Powering project. While all of these contracts are currently within the total budget for the M.V. Mendocino Re-Powering project, a mathematical error was made when determining the initial overall budget adjustment. This error, in the amount of $95,000, was the amount reserved for sales tax for the engines purchased through Contract No. 2008-FT-5, Four Main Diesel Engines for the M.V. Mendocino. The report noted that while the sales tax had been accounted for in the budget for Contract No. 2008-FT-5, that line item had inadvertently been omitted from the overall capital budget for the M.V. Mendocino Re-Powering project. The report further stated that in order to correct this error, an additional budget increase in the amount of $95,000 is needed to fully fund the this capital project. With this budget increase, the total project budget will be corrected from $3,076,970.12 to $3,172,960.12. A copy of the report is available in Office the District Secretary and on the District’s web site.

Staff recommended and the Committee concurred by motion made and seconded by Directors BORO/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 $95,000, to be funded with Federal Transit Administration grant funds, relative to the dry-docking and re-powering of the M.V. Mendocino.

Action by the Board at its meeting of June 26, 2008 – Resolution
NON-CONSENT CALENDAR

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

       
4.

Authorize a Budget Increase in the FY 07/08 Bus Transit Division Capital Budget Relative to the Award of Contract No. 2009-BT-2, San Rafael Bus Facility Security Improvements

In a report to Committee, Deputy District Engineer Ewa Bauer, District Engineer Denis Mulligan and General Manager Celia Kupersmith provided staff’s recommendation for the Committee’s concurrence with a budget increase relative to the award of Contract No. 2009-BT-2, San Rafael Bus Facility Security Improvements. The report stated that this project is included in the FY 07/08 Bus Transit Division Capital Budget in the amount of $253,000 and is 100% federally funded with U.S. Department of Homeland Security Transit Security Grant Program (TSGP) funds. The report stated that Contract No. 2009 BT-2 is being recommended for award to Sonoma County Builders, Inc., in the amount of $590,108.22. The award of this contract will require a budget increase in the FY 07/08 Bus Transit Division Operating Budget in order to fully fund this project for the total project budget of $877,419.

It is recommended that a capital budget increase FY 07/08 Bus Transit Division Capital Budget in the amount of $624,419 be authorized, to be funded with $411,119 in additional TSGP grant funds and $213,300 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 BORO/COCHRAN to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee recommends the Board of Directors authorize a budget increase in the FY 07/08 Bus Transit Division Capital Budget, in the amount of $624,419, to be funded with $411,119 in additional U.S. Department of Homeland Security Transit Security Grant Program grant funds and $213,300 from District Reserves, relative to the award of Contract No. 2009-BT-2, San Rafael Bus Facility Security Improvements, to Sonoma County Builders, Inc.

Action by the Board
Refer to the Building and Operating Committee Meeting of June 26, 2008

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

       
5.

Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares for Eleven Months Ending May 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 eleven months ending May 31, 2008. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Discussion ensued, including the following:

  • Director Boro made the following comments and inquiries:
    • He inquired regarding the District’s action plan to address overcrowding on Golden Gate Transit bus routes. In response, Celia Kupersmith explained that staff is planning to present a recommendation to the Transportation Committee at its August 2008 meeting regarding the reallocation of resources from underperforming bus routes to those routes that are experiencing overcrowding. She noted that the Marin County Transit District is also dealing with the issue of overcrowding, as high gasoline prices are prompting more people to ride transit for the first time.
    • He emphasized the importance of taking quick action to address overcrowding, and inquired as to whether the action could be expedited in order to coincide with the Bus Operator sign-ups. In response, Ms. Kupersmith stated that it would be desirable to make any necessary route changes before the end of the year, but explained that there are other factors involved other than the timing of the Bus Operator sign-ups, including the fact that since the 2003 Transit Service Reductions, there are fewer underperforming bus routes left from which to reallocate resources. In addition, some underperforming commuter routes have loyal riders who would not want to lose their favorite bus route.

Action by the Board – None Required

       
6. Review of Financial Statements for Eleven Months Ending May 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 Eleven Months Ending May 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 Eleven Months Ending May 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

       
7.

Closed Session

Attorney David Miller, at the request of Acting Chair Pahre, stated that the Committee would convene in closed session to discuss a matter of pending litigation listed on the agenda as Item No. 6.a.1., Robert McAvoy vs. Golden Gate Bridge, Highway and Transportation District (District).

After closed session, Acting Chair Pahre 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 the Committee recommended that this matter be referred to the June 27, 2008, meeting of the Board of Directors for necessary action.

       
8.

Public Comment

There was no public comment.

       
9.

Adjournment

All business having been concluded, the meeting was adjourned at 10:50 a.m.

       

 

Respectfully submitted,

/s/ Barbara L. Pahre, Acting Chair
Finance-Auditing Committee