April 22, 2010

 

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 was held in the Board Room, Administration Building, Toll Plaza, San Francisco, CA, on Friday, April 22, 2010, at 10:20 a.m., Chair Stroeh presiding.

Committee Members Present (8): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Grosboll, Moylan and Sobel; President Boro (Ex Officio)
Committee Members Absent (1): Director Elsbernd
Other Directors Present (1): Directors Kerns, Newhouse Segal and Reilly

Committee of the Whole Members Present (11): Directors Cochran, Grosboll, Kerns, Moylan, Newhouse Segal, Pahre, Sobel and Stroeh; Second Vice President Eddie; First Vice President Reilly; President Boro
Committee of the Whole Members Absent (8): Directors Brown, Campos, Chu, Dufty, Elsbernd, McGlashan, Sanders and Snyder

Staff Present: Deputy General Manager/Bridge Division and Acting General Manager Kary Witt; Auditor-Controller Joseph M. Wire; Secretary of the District Janet S. Tarantino; Attorney David J. Miller; Deputy General Manager/Bus Transit Division Teri W. Mantony; Deputy General Manager/Ferry Transit Division James P. Swindler; Deputy General Manager/Administration and Development Z. Wayne Johnson; Executive Assistant to the General Manager Amorette Ko; Assistant Clerk of the Board Lona Franklin

Visitors Present: Nancy Jones, PFM Asset Management, LLC

     
1.

Ratify Actions by the Auditor-Controller

In a memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith outlined commitments, disbursements and investments made on behalf of the Golden Gate Bridge, Highway and Transportation District (District). The report also included a copy of the District’s Investment Report from PFM Asset Management, LLC. 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, PFM Asset Management, LLC, stated that the District’s portfolio is earning 3.5%, a better than average return. She stated that the American economy is recovering quickly, except in the housing and consumer spending categories. Some consumer spending is by those for whom foreclosure is imminent and who have, therefore, ceased paying their mortgages. She noted that Census workers are figured into employment statistics, which is misleading due to the short-term, temporary nature of these jobs. Also, many government workers, both state and local, are furloughed on a regular basis. She stated that interest rates are unlikely to increase substantially in the near term. She added that the yield curve remains steep, with short-term rates anchored by the Federal Funds target rate of 0.00% to 0.25%. Longer term U.S. Treasuries are somewhat higher. She noted that over 50% of the District’s portfolio is invested in securities that mature in two to five years, with the balance in securities that mature in less than two years. This maturity distribution will allow additional investments to be made.

Discussion ensued, including the following comments and inquiries:

  • Director Grosboll inquired as to the reason the District has invested 1.8% in San Diego County. In response, Ms. Jones stated that municipal bonds purchased by PFM on behalf of the District are all taxable, as was the case with San Diego County. These bonds were considered a safe, long-term investment where liquidity was not required.
  • Director Newhouse Segal commented that providing color copies of the investment report has improved the readability of the report significantly, and thanked both PFM and the District Secretary’s Office for providing this report in color.

Staff recommended and the Committee concurred by motion made and seconded by Directors KERNS/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. The Board of Directors has no commitments and/or expenditures to ratify for the period March 1, 2010, through March 31, 2010.
     
  b. Ratify investments made by the Auditor-Controller during the period March 16, 2010, through April 12, 2010, as follows:
     
Security

Purchase

Date

Maturity

Date

Original

Cost

Percent

Yield

Barclays US Funding, LLC Commercial Paper
03/29/10
06/28/10
6,350,180.79
0.30
     
  c. Authorize the Auditor-Controller to re-invest, within the established policy of the Board of Directors, investments maturing between April 13, 2010, and May 17, 2010, 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 2010, as prepared by PFM.

Action by the Board at its meeting of April 23, 2010
CONSENT CALENDAR

     
  AYES (11): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Grosboll, Kerns, Moylan, Newhouse Segal, Reilly and Sobel; President Boro (Ex Officio)
NOES (0): None
     
2.

Budget Increase in the FY 09/10 Ferry Transit Division Capital Budget Relative to Contract No. 2010-FT-10, Installation of New Propulsion System for Re-Powering and Dry-Docking of the M.V. Del Norte

In a memorandum to Committee, Marine Projects Manager/Ferry Division Christian Stark, Deputy General Manager/Ferry Division James Swindler, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation for Committee’s concurrence with a budget transfer relative to Change Orders Nos. 1, 25 and 26 to Contract No. 2010-FT-10, Installation of New Propulsion System for Re-Powering and Dry-Docking of the M.V. Del Norte, and establish a total project budget of $5,825,000.00 to be funded with a transfer from the Ferry Transit Division Capital Equipment project budget to the FY 09/10 Ferry Transit Division Capital Budget for the M.V. Del Norte Repower Project. The report provided the details regarding the proposed change orders for the overhaul of waterjets and the installation of new radar equipment. The M.V. Del Norte Repower Project is included in the FY 09/10 Ferry Transit Division Capital budget costing the amount of $5,793,000.00, and is 100% grant funded (with $3,162,142.00 Carl Moyer Program grant funds and with $2,630,858.00 Federal Transit Administration grant funds. A copy of the 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 SOBEL/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 approve actions relative to Contract No. 2010-FT-10, Installation of New Propulsion System for Re-Powering and Dry-Docking of the M.V. Del Norte, as follows:

  a.
Authorize execution of Change Orders Nos. 1, 25 and 26, relative to Contract No. 2010-FT-10, in the total amount of $312,939.60, with Ice Floe, LLC, dba Nichols Brothers Boat Builders, for the overhaul of waterjets and the installation of new radar equipment; and,
  b.
Establish a Project Budget in the amount of $5,825,000.00; and,
  c.

Authorize a transfer from the FY 09/10 Ferry Transit Division Capital Equipment Project Budget to the FY 09/10 Ferry Transit Division Capital Budget for the M.V. Del Norte Repower Project, in the amount of $32,000.00.

Action by the Board at its meeting of April 23, 2010
Refer to the Building and Operating Committee Meeting of April 22, 2010

     
  AYES (11): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Grosboll, Kerns, Moylan, Newhouse Segal, Reilly and Sobel; President Boro (Ex Officio)
NOES (0): None
     
3.

Authorize Filing an Application with the Metropolitan Transportation Commission for FY 10/11 Transportation Development Act, State Transit Assistance and Regional Measure 2 Operating Funds to Support Bus, Ferry and Paratransit Services

In a memorandum to Committee, Director of Capital and Grant Programs Gayle S. Prior, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to authorize the General Manager to file an application with the Metropolitan Transportation Commission (MTC), in the amount of $19,581,210.00, for FY 10/11 Transportation Development Act, State Transit Assistance and Regional Measure 2 funds to support bus, ferry and paratransit services.

The staff report stated that Transportation Development Act (TDA) funds (statewide sales tax revenues) are made available annually to the District for operating purposes through MTC and that the District is eligible to claim $11,519,161.00 in TDA funds for FY 10/11 from the Marin and Sonoma apportionment areas to subsidize Golden Gate Transit (GGT) services provided in these counties. The District is eligible to receive 100% of the Marin County TDA apportionment, or $7,764,422.00, of which 36%, or $2,795,192, will be credited back to the Marin County Transit District (MCTD) to support local transit services consistent with the District/MCTD Local Services Agreement. The staff report also stated that the District is eligible to receive 25% of the Sonoma County TDA apportionment, or $3,754,739.00.

The staff report stated that the District is eligible to claim STA funds in the amount of $5,489,151.00 to support GGT bus, ferry and paratransit operations in FY 10/11, a portion of which will be credited back to MCTD; and that the District is eligible to claim a total of $2,492,528.00 in RM2 funds to support ongoing GGT operations in FY 10/11 for bus transit services for Route Nos. 40/42, 72X and 101. A copy of the 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 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 its General Manager to execute and file an application with MTC in the amount of $19,581,210.00 for FY 10/11 Transportation Development Act, State Transit Assistance, and Regional Measure 2 funds to support bus, ferry and paratransit services and that a copy of the Board’s resolution be transmitted to MTC in conjunction with the filing of the application referenced herein.

Action by the Board at its meeting of April 23, 2010 – Resolution
NON-CONSENT CALENDAR

AYES (11): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Grosboll, Kerns, Moylan, Newhouse Segal, Reilly and Sobel; President Boro (Ex Officio)
NOES (0): None

     
4.

Authorize Execution of the Third Amendment to Contract No. 2005-D-6, Revenue Collection, with Securitas Security, Inc., to Provide a Three-Month Extension of the Contract

In a memorandum to Committee, Director of Procurement and Retail Operations Lori Murray, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to authorize execution of a Third Amendment to Contract No. 2005-D-6, Revenue Collection, with Securitas Security Services, USA, Inc., Sacramento, CA, in the amount of $16,400.00, for a contract term extension of three months, from May 1, 2010 to July 31, 2010, with the understanding that requisite funds are available in the FY 09/10 Bus Transit and Ferry Transit Divisions’ Operating Budgets and that requisite funds will be included in the FY 10/11 Bus Transit and Ferry Transit Divisions’ Operating Budgets, if necessary.

The staff report stated that the District entered into Contract No. 2005-D-6 in May, 2005, with Securitas Security Services USA, Inc. (Securitas) for revenue collection services for a two-year term ending on May 1, 2008. On February 19, 2008, the District issued Request for Proposals (RFP) No. 2008-MD-4, Revenue Collection, and no proposals were received. Thereafter, on April 10, 2008, the Board authorized execution of the First Amendment to Contract No. 2005-D-6 for a contract term extension for six months, from May 1, 2008 to October 31, 2008, under which Securitas agreed to continue to provide its services at the then current rate. Staff evaluated alternative procurement options for said services during the term of the First Amendment, and found costs for alternative services prohibitive. On October 24, 2008, the Board authorized execution of the Second Amendment to Contract No. 2005-D-6 for a contract term extension of 18 months, from November 1, 2008 to April 30, 2010.

The staff report stated that on January 26, 2010, the District issued RFP No. 2010-D-6, Revenue Collection, with a revised scope of work to include an option to provide armed personnel and armored transportation, and a sole proposal was received from Loomis Armored US, LLC, by the deadline date of March 30, 2010, which was determined to be cost prohibitive. The staff report noted that it is necessary to extend the contract with Securitas to ensure that there is no interruption in the provision of security services, while staff evaluates other procurement options to provide these services on a long-term basis. A copy of the 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 COCHRAN/MOYLAN 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 execution of the Third Amendment to Contract No. 2005-D-6, Revenue Collection, with Securitas Security Services, USA, Inc., Sacramento, CA, in the amount of $16,400.00, for a contract term extension of three months, from May 1, 2010, to July 31, 2010, with the understanding that funds are available in the FY 09/10 Bus Transit and Ferry Transit Divisions’ Operating Budgets and that requisite funds will be included in the FY 10/11 Bus Transit and Ferry Transit Divisions’ Operating Budgets, if necessary.

Action by the Board at its meeting of April 23, 2010 – Resolution
NON-CONSENT CALENDAR

AYES (11): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Grosboll, Kerns, Moylan, Newhouse Segal, Reilly and Sobel; President Boro (Ex Officio)
NOES (0): None

     
5.

Receive the Independent Auditor’s Engagement Letter for the Annual Financial Audit for the Year Ending June 30, 2010, as Submitted by Vavrinek, Trine, Day & Co., LLP

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to receive the Independent Auditor’s Engagement Letter for the Annual Financial Audit for the Year Ending June 30, 2010, as Submitted by Vavrinek, Trine, Day & Co., LLP (VTD).

The staff report stated that external financial audit services are performed by VTD, and VTD has submitted its “Letter of Engagement for the District’s FY 09/10 Financial Audit" (Letter of Engagement). The purpose of the Letter of Engagement is to reconfirm VTD’s understanding of services with the District to ensure compliance in accordance with the Government Auditing Standards, and to describe the scope of VTD’s audit, audit objectives, management responsibilities and audit procedures. A copy of the 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 MOYLAN/KERNS to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors receive the Independent Auditor’s Engagement Letter for the Annual Financial Audit for the year ending June 30, 2010, as submitted by Vavrinek, Trine, Day & Co., LLP.

Action by the Board at its meeting of April 23, 2010 – Resolution

NON-CONSENT CALENDAR

AYES (11): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Grosboll, Kerns, Moylan, Newhouse Segal, Reilly and Sobel; President Boro (Ex Officio)
NOES (0): None

   
6.

Monthly Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares (for Nine Months Ending March 2010)

In a memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith provided a schedule comparing categories of Bridge traffic, as well as a monthly review of Bridge traffic, tolls, transit patronage and fares, for nine months ending March 31, 2010. 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. Monthly Review of Financial Statements for Nine Months Ending March 2010
     
  a. Statement of Revenue and Expenses

In a memorandum to Committee, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith provided a financial statement entitled, Statement of Operating Revenues and Expenses. 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, Director of Capital and Grant Programs Gayle S. Prior, Auditor-Controller Joseph M. Wire and General Manager Celia G. Kupersmith provided a financial statement entitled, Statement of Capital Programs and Expenditures. 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

     
8.

FY 09/10 Third 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, 2010, through March 31, 2010. A copy of the report, including attached charts outlining applicable budget adjustments and transfers, is available in the Office of the District Secretary and on the District’s web site.

   
9.

FY 09/10 Third 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, 2010, through March 31, 2010. A copy of the report, including attached charts outlining applicable contracts and change orders, is available in the Office of the District Secretary and on the District’s web site.

   
10.

Closed Session

Attorney David Miller, at the request of Chairman Stroeh, stated that the Finance-Auditing Committee would convene in closed session as permitted by the Brown Act for purposes of discussing a matter of pending litigation, listed on the Committee agenda under the Attorney’s Report as Item No. 9., Conference with Legal Counsel – Pending Litigation, Government Code Section 54956.9(a), Report of Athens Administrators, Laverna Griffin vs. Golden Gate Bridge, Highway and Transportation District.

After closed session, Chairman Stroeh called the meeting to order in open session with a quorum present. Attorney Miller reported that, as noted on the agenda, the Committee met in closed session, as permitted by the Brown Act, for purposes of reviewing a matter of pending litigation. He further reported that this matter will not be referred to the Board of Directors as it is under the jurisdiction of the Finance-Auditing Committee, which has given appropriate guidance to staff.

   
11.

Public Comment

There was no public comment.

   
12.

Adjournment

All business having been concluded, the meeting was adjourned at 10:45 a.m.

   

 

Respectfully submitted,

s/ J Dietrich Stroeh, Chair
Finance-Auditing Committee