July 25, 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 Friday, July 25, 2008, at 9:45 a.m., Chair Stroeh presiding.

Committee Members Present (6): Chair Stroeh; Vice Chair Pahre; Directors Boro, Cochran, Eddie; President Moylan (Ex Officio)

Committee Members Absent (2): Directors Grosboll and Reilly

Other Directors Present (3): Directors McGlashan, Newhouse Segal and 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 Madeline Chun; Deputy General Manager/Bridge Division Kary H. Witt; Deputy General Manager/Bus Division Teri W. Mantony; Deputy General Manager/Ferry Division James P. Swindler; Public Affairs Director Mary C. Currie; Executive Assistant to the General Manager Amorette Ko; Assistant Clerk of the Board Patsy Whala

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.

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 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 June 1, 2008, through June 30, 2008, totaling $10,000.00;
     
  b.
Ratify investments made by the Auditor-Controller during the period June 17, 2008, through July 14, 2008, as follows;
     
Security

Purchase

Date

Maturity

Date

Original

Cost

Percent

Yield

FHLB Tap Bonds
06/17/08
06/17/08
4,857,050.00
4.42
Toronto Dominion Certificate of Deposit
06/30/08
07/30/08
4,640,000.00
2.40
Banque National De Paris Certificate of Deposit
07/07/08
07/30/08
5,000,000.00
2.36
CBA (Delaware) Finance Commercial Paper
07/07/08
08/21/08
7,337,000.00
2.51
       
  c.
Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between July 15, 2008, and August 11, 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 June 2008 prepared by PFM.

Action by the Board at its meeting of August 8, 2008 – Resolution
CONSENT CALENDAR

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

Receive the Independent Auditor’s Engagement Letters as Submitted by Vavrinik, Trine, Day & Co., LLP for the Annual Financial Audit

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith provided staff’s recommendation to receive the Independent Auditor’s Engagement Letter, as submitted by Vavrinik, Trine, Day & Co., LLP (VTD) for their upcoming annual audit of the District’s Financial Statements for the fiscal year ending June 30, 2008. The report stated that in the Engagement Letter, which was attached to the report, VTD reconfirms its understanding of services to be provided to the District, to ensure compliance with the Governmental Accounting Standards Board (GASB) regulations.

The report also stated that VTD is in the process of completing its first year of a three-year contract with the District. The Engagement Letter describes the scope of VTD’s audit, the audit objectives, the responsibilities of management and audit procedures pertaining to the audit, in accordance with the contract between VTD and the District. 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, Joseph Wire summarized the staff report, noting that the Engagement Letter is a routine document submitted each year by the District’s external auditors. He noted that, in accordance with GASB regulations, the auditors are reconfirming their understanding of services with the District and will submit their final report in August 2008, which will be presented to Board at its meeting in November 2008.

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 the Board of Directors receive the Engagement Letter as submitted by Vavrinik, Trine, Day & Co., LLP (VTD) for their upcoming annual audit of the District’s Financial Statements for the fiscal year ending June 30, 2008.

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

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

       
3.

Approve Actions Relative to the Execution of Change Order No. 2 to Contract No. 2008-BT-3, Fare Collection System, with GFI Genfare, a Unit of SPX Corporation

In a report to Committee, Deputy General Manager/Bus Division Teri Mantony and General Manager Celia Kupersmith provided staff’s recommendation to approve actions relative to execution of Change Order No. 2 to Contract No. 2008-BT-3, Fare Collection System, with GFI Genfare, a Unit of SPX Corporation (GFI Genfare).

The report stated that the Board of Directors, by Resolution No. 2008-012 at its meeting of February 22, 2008, authorized award of Contract No. 2008-BT-3, Fare Collection System, to GFI Genfare. The new fare collection system consists of high capacity validating fareboxes, probing equipment and reporting software, as well as refurbishment of existing revenue collection equipment, for the District’s bus fleet and revenue collection sites located in San Rafael, Santa Rosa and Novato. The report also stated that the bid specifications required that the data programming of the fare collection system be programmed based on a ride value system and configured to incorporate the District’s current fare structure. After much consideration, it has been determined that a stored value system is a more efficient and flexible method to collect fares.

The report explained that stored value cards do not expire when fares increase; therefore it will not be necessary to provide a “grace period” for cards with old fare values. The cards will expire 6 months after the cards are initialized by a farebox, eliminating the need to dispose of unused, expired inventory. Therefore, overall inventory costs are reduced and the need to purge old dated inventory will be eliminated. Additionally, fewer cards will be required (five instead of nine) reducing production costs. Magnetic striped media will be sold to customers in denominations of $18, $25, $36, $50, and $75. Fewer cards will also require less reconciliation time. Overall, among other benefits, a stored value system will help the District realize savings on printing costs and staff time.

The report further explained that switching to a stored value system will require approximately 360 engineering hours for reprogramming of the fare collection system, and GFI Genfare has provided a cost estimate of $45,000 to undertake this reprogramming. Staff recommends that Change Order No. 2 to Contract No. 2008-BT-3 be executed with GFI Genfare, for the total cost of $76,464.21, to include the reprogramming of the fare collection system, purchase of one encoding machine with training, eight hours of database training for Information Technology staff, magnetic striped media and spare cash box keys and locks.

In addition, staff recommends authorization of a budget increase in the FY 08/09 Bus Transit Division Capital Budget in the amount of $100,000, to be funded with $80,000 FTA grant funds and $20,000 from District reserves, in order to fully fund this project, and to accommodate unforeseen issues that may arise during the installation and implementation of the stored value fare collection system. This project is 80% Federal Transit Administration grant funded and 20% District funded. A copy of the report is available from the Office of the District Secretary and on the District’s web site.

At the meeting, Teri Mantony summarized the staff report, stating that staff found that a stored value fare card, which is similar to an electronic parking card, would allow passengers to prepay their bus fare and use the fare card each time they board a Golden Gate Transit bus. She noted that the project completion date is November 10, 2008.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/BORO 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 Contract No. 2008-BT-3, Fare Collection System:

       
  a.
Authorize execution of Change Order No. 2, with GFI Genfare, a unit of SPX Corporation, Elk Grove Village, IL, in the amount of $76,464.21, to cover costs for reprogramming the fare collection system to implement a stored value system that is a more efficient and flexible method to collect fares.
       
  b.

Authorize a budget increase in the FY 08/09 Bus Transit Division Capital Budget in the amount of $100,000, to be funded with $80,000 in grant funds and $20,000 from District reserves for a total project budget in the amount of $3,155,100 (80% Federal/20% District).

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

       
 
AYES (6): Chair Stroeh; Vice Chair Pahre; Directors Boro, Cochran, Eddie; President Moylan (Ex Officio)
NOES (0): None
ABSENT (2): Directors Grosboll and Reilly
       
4.

Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares for Twelve Months Ending June 30, 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 twelve months ending June 30, 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 Twelve Months Ending June 30, 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 Twelve Months Ending June 30, 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 comments and inquiries:

  • Director Sanders asked for clarification on the attachments to the staff report entitled, Statement of Revenues and Expenses for Twelve Months Ending June 30, 2008, in regards to negative figures that appear in parentheses. She inquired as to why page 4 of the report showing revenues and expenditures for the Bus Transit Division includes so many negative figures, while the summary on the first page of the report shows a positive bottom line. In response, Mr. Wire explained that the Bus Transit Division operates at a loss, and that the figures on page 4 reflect that reality. He noted that the Bridge Division has a positive cash flow, and that Bridge tolls are used to subsidize both the Bus Transit and the Ferry Transit divisions. He further explained that the revenues and expenses from all of the District’s operating divisions are then consolidated in the summary shown on page 2 of the report, resulting in a positive bottom line.

Action by the Board – None Required

       
  b.

Statement of Capital Programs and Expenditures

The staff report for the above-referenced item has been postponed until the Finance-Auditing Committee meeting of August 21, 2008.

Action by the Board – None Required

       
6.

FY 07/08 Fourth 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 April 1, 2008, through June 30, 2008. A copy of the report, including attached charts outlining applicable contracts and change orders, is available in the Office of the District Secretary.

Discussion ensued, including the following:

  • Chair Stroeh inquired as to why the staff report included so many Change Orders for Contract No. 99-B-5, Golden Gate Bridge, Seismic Retrofit (Phase II), South Approach Structures. In response, Denis Mulligan explained that the 29 Change Orders for Contract No. 99-B-5 were issued over a period of time, but that it took a while for the Contractor, Shimmick/Obayashi, Joint Venture, to receive Federal Highway Administration approval and to fully execute all of the Change Orders. Mr. Mulligan noted that earlier this week, the District filed Notices of Completion for Contract No. 99-B-5 and that project was closed out in a business-like fashion, with no claims resulting from the work. He commended the Engineering Department staff led by Deputy District Engineer Ewa Z. Bauer and the consultants for the excellent work on the Phase II Seismic Retrofit project. He further noted that staff was extremely pleased with the high quality of the construction work performed by the Contractor.

Action by the Board – None Required

       
7.

FY 07/08 Fourth Quarterly Report on Authorized Budget Adjustments and Budget Transfers

The staff report for the above-referenced item was not available at this time and has been postponed until the Finance-Auditing Committee meeting of August 21, 2008.

       
8.

Public Comment

There was no public comment.

       
9.

Adjournment

All business having been concluded, the meeting was adjourned at 9:55 a.m.

       

 

Respectfully submitted,

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