Authorize a Budget Increase in the FY 2010-2011 Ferry Transit Division Capital Budget Relative to the Award of Contract No. 2011-FT-5, Improvements to Berths at the Larkspur Ferry Terminal to Bay Ship & Yacht Co.

In a memorandum to Committee, Marine Projects Manager/Ferry Transit Division Christian Stark, Deputy General Manager/Ferry Transit Division James Swindler, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation for Committee’s concurrence with a budget increase in the FY 2010-2011 Ferry Transit Division Capital Budget in the amount of $180,900.00, relative to the award Contract No. 2011-FT-5, Improvements to Berths at the Larkspur Ferry Terminal, to Bay Ship & Yacht Co. of Alameda, CA (BSY), as outlined in the staff report. The report provided details regarding the award of Contract No. 2011-FT-5 to BSY, as well as other related actions. 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 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 a budget increase in the FY 10/11 Ferry Transit Division Capital Budget, in the amount of $180,900.00, relative to the award of Contract No. 2011-FT-5, Improvements to Berths at the Larkspur Ferry Terminal, to be funded with District reserves, establishing a total project budget of $450,000.00.

Action by the Board at its meeting of September 10, 2010 - Resolution
Refer to the Transportation Committee Meeting of September 9, 2010

AYES (10): Directors Cochran, Elsbernd, Grosboll, Moylan, Pahre, Snyder, Sobel and Stroeh; Second Vice President Eddie; President Boro
NOES (0): None

Receive the Updated Five- and Ten-Year Financial Projection

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to receive the updated Five- and Ten-Year Financial Projection. The report provided a ten-year projection of the potential fiscal impact of current policy.

The staff report contained the following:

Introduction

• What is a Projection?
• Why is a Financial Projection Essential?

Fiscal Strength of the District.

• Summary
• Reserve Level
• Use of Reserves to Fund Capital Projects
• How the Reserves are Funded

Projection Findings

• Capital Contribution

Assumptions

• Capital Project Revenue and Expense Assumptions
• Alternative Capital Revenue Assumption Scenarios

A copy of the staff report is available from the Office of the District Secretary and on the District’s web site.

At the meeting, Mr. Wire briefly summarized the staff report, stating that a deficit remains, but a positive change from last year is evident. He stated that the report covers the period from 2012 through 2021 and represents what would happen if the policies currently in place were maintained. He noted that a financial projection allows managers, the Board and the public to see the challenges being faced by the District and provides a baseline by which to measure outcomes.

Mr. Wire indicated that the District presently has strong financial reserves, but also has a significant capital plan and a need for resources. He noted that the effects of projected future spending on reserves are discussed on pages 3 and 4 of the staff report. He stated that the projected deficit is approximately $89 million for the next five years, or two-thirds of that projected last year. He noted the importance of understanding that the assumptions used for the District’s financial projection come from a number of sources, such as the federal government. Key components are salaries and inflation, medical costs and the Consumer Price Index.

Mr. Wire referred to page 6 of the staff report, noting that capital projects are listed with the assumption that grant funding (80%) will be received. He stated that the deficit would increase concomitantly without receipt of grant funds. He concluded by stating that the FY 09/10 Financial Plan for Achieving Long-Term Financial Stability will come before the Board for review before December 31, 2010.

Discussion ensued, including the following comments and inquiries:

• Director Stroeh inquired as to funding for seismic retrofitting and the expected completion date of the project. In response, Mr. Mulligan stated that the assumption is for 80% grant funding. Mr. Wire added that the projected completion date is prior to 2017.

• Director Grosboll made the following inquiries:
  • Referring to Director Stroeh’s inquiry, he inquired as to the item entitled “Seismic Facilities – Bridge & Building Ops Center” shown on page 6 of the staff report. In response, Mr. Wire stated that the Seismic Facilities shown on page 6 is not a Bridge project, but is connected to roadway and administrative facilities and included within the ten-year plan.
  • He inquired as to whether the “Seismic Facilities” item could be postponed. In response, Mr. Mulligan stated that the District’s capital plan is reviewed annually for projects that can be postponed, and that reassessment is done when that project is closer to beginning.

• Director Sobel commented that District staff has done an excellent job on the financial projections, and offered his congratulations. He added that, through austerity and tough decision-making, the deficit has been reduced.

• Director Elsbernd made the following inquiries:
  • He inquired as to whether the staff report’s projected increase in medical insurance rates is realistic, given that the increase last year was eleven percent. In response, Mr. Wire stated that national figures were used to prepare the projection. He stated that the District’s actual amount of increase has varied.
  • He inquired as to when the California Public Employees Retirement System issued its figures. In response, Mr. Wire stated that the figures were issued in October 2009, and that the actuary predicts at most a .1% to .2% variance.
  • He inquired as to whether salary expense for union employees is expected to remain constant. In response, Mr. Wire stated that, where there is no contract in place, Consumer Price Index data is used to inflate salaries.

• President Boro commented that there may be a need to hold a Board workshop to discuss the FY 09/10 Financial Plan for Achieving Long-Term Financial Stability. Also, he stated that employees should be thanked and provided with information about the financial condition of the District. He requested that staff provide the Board with a report comparing this five- and ten-year projection to last year’s five- and ten-year projection.

• Director Snyder inquired as to the reason for capital costs dropping dramatically in 2020. In response, Mr. Wire stated that the end of the current projection period has fewer capital projects.

• Director Pahre commented that the District has some control over medical expenses through its ability to engage in the collective bargaining process.

Staff recommended and the Committee concurred by motion made and seconded by Directors ELSBERND/SOBEL 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 updated Five- and Ten-Year Financial Projection from FY 11/12 through FY 20/21 (Projection), including the following Sections and Appendices of the Projection, attached to the official Resolution:

Action by the Board at its meeting of September 10, 2010 - Resolution
NON-CONSENT CALENDAR

AYES (10): Directors Cochran, Elsbernd, Grosboll, Moylan, Pahre, Snyder, Sobel and Stroeh; Second Vice President Eddie; President Boro
NOES (0): None

Closed Session

Attorney Madeline Chun, at the request of Chair Stroeh, stated that the Finance-Auditing Committee would convene in closed session, as permitted by the Brown Act, for purposes of discussing three matters of pending litigation, listed on the Committee Agenda under Item No. 4., Closed Session, Conference with Legal Counsel – Pending Litigation, Pursuant to Government Code Section 54956.9(a), as follows: 4.a. Report of John Glenn Administrators & Adjusters, Inc., 4.a.1. Arthur Seebach and Carol Seebach vs. Golden Gate Bridge, Highway and Transportation District; 4.a.2. Michael Sanford vs. Golden Gate Bridge, Highway and Transportation District; and, 4.b. Report of Athens Administrators, Inc., 4.b.1. Clarence Block vs. Golden Gate Bridge, Highway and Transportation District.

After closed session, Chair Stroeh called the meeting to order in open session with a quorum present. Attorney Chun reported that, as noted on the agenda, the Committee met in closed session, as permitted by the Brown Act, for purposes of reviewing three matters of pending litigation. She reported that the Committee provided direction to the General Manager for the disposition of these matters for amounts within the settlement authority of the Committee.

Discussion ensued, including the following comment:

• Director Grosboll requested that a status report be provided to the Board regarding Workers’ Compensation claims. In response, Mr. Mulligan stated that a status report will be prepared and presented.

Public Comment

There was no public comment.

Adjournment

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