January 27, 2011

 

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/Committee of the Whole was held in the Board Room, Administration Building, Toll Plaza, San Francisco, CA, on Thursday, January 27, 2011, at 10:40 a.m., Chair Stroeh presiding.

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

Committee Members Absent (1): Director Elsbernd

Other Directors Present (3): Directors Boro, McGlashan and Newhouse Segal

Committee of the Whole Members Present (11): Directors Boro, Cochran, Grosboll, McGlashan, Moylan, Pahre, Sobel and Stroeh; Second Vice President Newhouse Segal; First Vice President Eddie; President Reilly (Ex Officio)
Committee of the Whole Members Absent (6): Directors Brown, Campos, Chu, Elsbernd, Sanders and Snyder

[Note: On this date, there were two vacancies on the Board of Directors.]

Staff Present: General Manager Denis Mulligan; District Engineer Ewa Bauer; Auditor-Controller Joseph Wire; District Secretary Janet Tarantino; Attorney David Miller; Attorney Madeline Chun; Deputy General Manager/Bridge Division Kary Witt; Deputy General Manager/Bus Transit Division Teri Mantony; Deputy General Manager/Ferry Transit Division Jim Swindler; Deputy General Manager/Administration and Development Z. Wayne Johnson; Electronic Revenue Collection Program Manager David Dick; Public Affairs Director Mary Currie; Executive Assistant to the General Manager Amorette Ko; Assistant Clerk of the Board Lona Franklin

Visitors Present: Nancy Jones, PFM Asset Management, LLC; Marina Secchitano, Inlandboatmen’s Union of the Pacific

     
1.

Ratify Actions by the Auditor-Controller

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan 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 (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.

At the meeting, Nancy Jones, PFM, reported that leading economic indicators are beginning a positive turn. However, the unemployment rate remains persistently high at over 9%. She noted that the number of new unemployment claims is the same at this time as it was in 2007 when the unemployment rate approximated 5%. She observed that the current rate of growth in the economy is approximately 2.5% and that, as long as the growth rate does not change, unemployment figures can be expected to remain high.

She reported that PFM placed maturing funds in two-month investments in anticipation of higher yields in 2011. She stated that the District’s portfolio is well diversified between U.S. Treasuries, Federal Agencies, and high-quality corporate issuers. The yield, as of December 31, 2010, is 2.65%.

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. The Board of Directors ratify commitments and/or expenditures totaling $31,021.81 for the period December 1, 2010, through December 31, 2010;
  b. Ratify investments made by the Auditor-Controller during the period December 7, 2010, through January 17, 2011, as follows:
     
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
Deutsche Bank Sec Commercial Paper
12/22/10
02/22/11
5,503,534.53
0.26
Societe Generale NA Commercial Paper
12/20/10
02/04/11
1,599,284.44
0.35
Wal Mart Stores Inc. Corp Notes
01/07/11
02/03/14
4,158,760.00
1.67
Wal Mart Stores Inc. Corp Notes
01/07/11
05/15/14
3,136,020.00
1.80
     
  c. Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between January 18, 2011, and February 14, 2011, as well as the investment of all other funds not required to cover expenditures that may become available; and,
 

d.

Accept the Investment Reports for December 2010, as prepared by PFM.

Action by the Board at its meeting of February 11, 2011 – Resolution
CONSENT CALENDAR

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

Authorize a Budget Increase in the FY 10/11 Bus Transit Division Capital Budget for the San Rafael Data Center Project

In a memorandum to Committee, Deputy General Manager/Administration and Development Z. Wayne Johnson, District Engineer Ewa Bauer, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to authorize a budget increase in the FY 10/11 Bus Transit Division Capital Budget, in the amount of $64,000.00, for the San Rafael Data Center Project, Capital Project 0810 (Capital Project 0810).

The staff report stated that a construction contract was awarded, and the work completed in October 2010 and that Capital Project 0810 is included in the FY 10/11 Bus Transit Division Capital Budget at a total cost of $2,451,850.00. A budget increase of $64,000.00 is required to cover the costs associated with additional engineering and equipment to provide electric power to the servers, and to fully fund Capital Project 0810 for a total amount of $2,515,850.00. The staff report stated that Capital Project 0810 will be funded as follows: $1,600,000.00 State I-Bond grant funds (64%), $744,000.00 Federal Transit Administration (FTA) grant funds (29%), and $171,850.00 District funds (7%). 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/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 authorize a budget increase in the FY 10/11 Bus Transit Division Capital Budget, in the amount of $64,000.00, relative to the San Rafael Data Center Project, Capital Project No. 0810, to be funded with Federal Transit Administration grant funds; and, establish a total project budget of $2,515,850.00.

Action by the Board at its meeting of January 28, 2011 – Resolution
NON-CONSENT CALENDAR

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

     
3.

Authorize a Budget Increase in the FY 10/11 Ferry Transit Division Capital Budget Relative to Contract No. 2010-FT-13, San Francisco Ferry Terminal Restrooms Accessibility Modifications, with Integra Construction Services, Inc.

In a memorandum to Committee, Deputy District Engineer John Eberle, District Engineer Ewa Z. Bauer, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation that the Board of Directors authorize a budget increase in the FY 10/11 Ferry Transit Division Capital Budget relative to Contract No. 2011-FT-13, San Francisco Ferry Terminal Restrooms Accessibility Modifications, in the amount of $155,000.00.

The staff report stated that the Board of Directors, at its June 11, 2010, meeting, authorized the award of Contract No. 2010-FT-13 to Integra Construction Services, Inc., Livermore, CA, in the amount of $124,352.00, authorized a contingency fund in the amount of $12,435.00, and established a total project budget in the amount of $232,300.00.

The staff report stated that, during construction, after removal of stucco from the existing walls and removal of partition walls, it was discovered that the existing conditions within the restroom areas are substantially different from the conditions shown on the record drawings. Thereupon, staff performed a detailed investigation and measurement of the uncovered existing conditions and developed revised restroom modification plans. The staff report stated that a budget increase in the amount of $155,000.00 is required to fund the above described changes. 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 $155,000.00, relative to the Contract No. 2010-FT-13, San Francisco Ferry Terminal Restrooms Accessibility Modifications, to be funded with $114,586.00 Federal Transit Administration (FTA) grant funds and $40,414.00 State I-Bond grant funds; and, establish a total project budget of $387,300.00.

Action by the Board at its meeting of January 28, 2011
Refer to Building and Operating Committee Meeting of January 27, 2011

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

     
4. Discussion and Possible Action Relative to the Strategic Development Plan for All Electronic Toll Collection on the Golden Gate Bridge
     
  a.

Staff Report

In a memorandum to Committee, Electronic Revenue Collection Program Manager David Dick, Deputy General Manager/Bridge Division Kary Witt, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to authorize commencement of implementation activities for all electronic tolling (AET) on the Golden Gate Bridge (Bridge), including a budget increase for the AET project, meet and confer discussions with unions and filing of Notices of Exemption in the Counties of Marin and San Francisco.

This item was continued from the January 13, 2011, meeting of the Finance-Auditing Committee. A detailed synopsis of the staff report is presented in the Minutes of that meeting, which are available in the Office of the District Secretary and on the District’s web site. A copy of the staff report is available in the Office of the District Secretary and on the District’s web site.

At the meeting, Mr. Mulligan stated that the District currently has a hybrid toll collection system, but with the proposed all electronic system, vehicles would no longer stop at the toll plaza. He noted that copies of correspondence received since the January 13, 2011, meeting of the Finance-Auditing Committee are included with the documents for this meeting. He stated that a San Francisco Chronicle survey was conducted, and that 55% of respondents were in favor of AET at the Bridge.

     
  b.

PowerPoint Presentation

Mr. Dick made the PowerPoint presentation, stating that, with AET, cash patrons could switch to FasTrak®, prepay to their video tolling account, or pay after incurring a toll charge. Alternatively, they could receive a hard copy statement by U. S. Mail. They would be able to pay by check, money order, credit card or debit card. They could pay their statements at outlets, or return their payments by U. S. Mail. In addition, customers could link their credit or debit cards to the video tolling accounts and have charges posted with each use. He noted that the networks that currently serve people who depend on cash would be the same, for example, transponders are presently available at Safeway stores in the area. He stated that other toll agencies use such networks to disseminate their electronic tolling.

He stated that, with AET, less congestion and better environmental conditions are expected to result. In addition, the anticipated net reduction in operating costs for toll collection over the period covered by the FY 2009/2010 Financial Plan for Achieving Long-Term Financial Stability (Plan) is projected to be $19.2 million. He stated that staff recommends complete conversion to AET, adding that the benefits of reduced congestion may not accrue with a hybrid system using one or two toll collectors.

Mr. Mulligan stated that the contemplated staff impact is expected to be similar to the impact from implementation of FasTrak®. He added that the District’s employees are excellent and are valued by management and the Board. Plans will be formulated that are expected to include a skills assessment and placement assistance for affected employees. District staff has already met informally with unions and employees, and with union negotiators. A formal meet and confer process will be undertaken to agree on upcoming steps. Mr. Mulligan stated that the District hires 60 to 80 new employees annually, so there is a high likelihood that some toll collectors can be placed in other District positions. In addition, enhanced severance packages can be offered to affected employees where appropriate.

Mr. Dick stated that the anticipated elimination of manual toll collection is planned to be approximately September 2012.

A detailed synopsis of the PowerPoint presentation can be found in the Minutes of the January 13, 2011, meeting of the Finance-Auditing Committee. Copies of the January 13, 2011 Finance-Auditing Committee Minutes and the PowerPoint presentation, as well as the Supplemental Report and the Summary of Comments, are available in the Office of the District Secretary and on the District’s web site.

     
  c.

Public Comment on All Electronic Tolling Proposal

Cesar Castillo, Bridge Toll Officer. Mr. Castillo stated his opposition to laying off toll collectors. He stated that he has lived in Vallejo for 24 years, commuting to San Francisco daily. He noted that none of the bridges in the PowerPoint slides are more famous than the Golden Gate. He stated that visitors do not know about FasTrak®, and will find no one in the toll booths. He added that FasTrak® customers sometimes pay cash so that they can speak with toll collectors. He stated that, if employees were laid off, they would lose their medical insurance. He added that his children are legally blind and require frequent medical care. He stated that long-term toll collectors would have difficulty finding other jobs because they are aging. He requested that the Board vote against a recommendation that includes laying off toll collectors. He further requested that affected employees receive written communication of the District’s commitment to assist them in preparing for a new future. He thanked the Board and members of the public for their support.

Phillip Hines, Bay Area resident and daily commuter across Bridge. He stated his opposition to eliminating toll collector positions. He stated he does not want to go to a store to pay his tolls. He stated that if a driver notices something wrong while crossing the Bridge he can tell a toll collector. Without that ability, drivers would have to use their cell phones and calls often do not go through. He added that the Bridge is world famous. He stated that it is important to keep people in the toll booths for safety reasons.

Marsha Bradhorst, Bridge Toll Officer. She stated her opposition to eliminating toll collector positions. She stated that she has proudly worked as a Bridge Toll Officer for 17 years, noting that the Bridge is an international icon. She stated that her duties include being the friendly face that greets drivers as they cross the Bridge. She stated she is often asked for directions. In addition, the eyes of toll collectors are crucial to notify traffic officers of stalled vehicles, bicycles, needs for medical attention, or possible suicides. She concluded by requesting that Committee members vote to retain toll collectors.

Ben Ramirez, Bridge Toll Officer. He stated his opposition to fully automatic toll collection, and noted that he had spoken to the Committee at its meeting of January 13, 2011. He added that many long-time commuters still do not know about FasTrak® or reduced carpool tolls. He stated that AET is one of 29 different toll collection systems and indicated that other systems should be evaluated. He stated that, based on past research, it is unlikely that more than a small percentage of customers will change to FasTrak®. He stated that environmental problems would simply be relocated to San Francisco. In addition, unexpected costs may be incurred. He gave the example of renovating ferry terminal restrooms, the cost of which has escalated from a few thousand dollars when first proposed, to many thousands today. He concluded by stating that toll collectors are very valuable to the City of San Francisco and this Bridge.

Jacqueline S. Dean, Bridge Toll Officer. She stated her opposition to elimination of toll collector positions. She stated that she has had the honor and privilege of working as a toll collector for 16 years. She stated that toll collectors are the District’s first line of defense. Without toll collectors, life-saving minutes and seconds could be lost. They report accidents, bicycles in the roadway, suspicious packages, and possible suicides. She stated that she has personally provided such information to emergency personnel. She concluded by noting that eliminating toll collectors just prior to the 75th Anniversary Celebration of the Bridge would be poor timing.

Dennis Silva, Bridge Toll Officer (Retired). He stated his opposition to eliminating toll collector positions. He stated that he retired as Bridge Toll Officer after 22 years. He noted that toll collectors are a vital part of the District. He stated that it would not be easier to close lanes once AET is operational, because it is very easy right now. He noted that there will be only 7% difference in cash collections over 10 years and wondered whether the change would be worth all that would be lost. He stated that the District plans to refuse cash payment in favor of waiting 30 to 90 days for payment by other means. He concluded by stating that a hybrid system is preferred.

Angelica Araya, Bridge Toll Officer. She stated her opposition to elimination of toll collector positions. She stated she has worked for the District for 3 years as a temporary, on-call toll collector, and performs the same duties as full-time, permanent toll collectors. She stated that toll collectors have been employed since the Bridge was built, and are the friendly people customers see every day. She stated that many customers do not want to use FasTrak®. Paying cash is simpler for them. Toll collectors are there in case of emergency, and can assist people who are lost. With AET, customers would receive an invoice by mail rather than simply paying a cash toll. She suggested that a fee be charged for parking at ferry terminals. She concluded by requesting that the Committee reconsider its intention to recommend AET to the Board.

Linda Green, Bridge Toll Officer. She stated her opposition to elimination of toll collector positions. She stated she has been employed by the District for almost 18 years. She stated that toll collectors love their jobs, and want to make sure that all alternatives have been considered. She added that toll collectors are not responsible for the deficit, but will bear the burden. She noted that toll collectors are ambassadors, and concluded by requesting that other ways be found to save money.

Tracy Sorrell, Bridge Toll Officer. She stated her opposition to elimination of toll collector positions. She stated that she has worked for the District for 20 years, and has received a service award. She added that without toll collectors, the Bridge would look like a ghost town. She questioned the statistics that revealed that 67% of customers use FasTrak®, noting that she wonders if the data were collected statewide. She requested that Board members come to the toll booths and observe exactly what toll collectors do. She stated that, with full automation, emergencies would not be dealt with immediately, as they can be now. She stated her desire to continue working for the District, and thanked Directors for the opportunity to speak. She noted that many toll collectors wanted to speak before this Committee but could not be present due to their work responsibilities.

David Lim, Vault Officer. He spoke in opposition to AET. He stated that the Vault processes money collected from toll lanes, bus and ferry. He stated that, at one point, the Vault Department had 12 employees, and now they have only two. With AET, both positions would be eliminated. He stated that he has worked for the District for over 26 years and will soon be 54 years old. He stated by the time of AET implementation, he would be 9 months short of retirement, and that he has a medical condition that would make it difficult for him to get insurance. He stated his love for his job and requested that the Board not take action to implement AET.

Matthew Waldman, San Francisco resident. He spoke in opposition to implementation of AET. He stated that, after spending $2.9 million to install the system, the District would have operating costs of $8 million per year. He noted that Traffic Technologies Incorporated (TTI) prepared the AET strategic development plan, and that it is a private business with its home in New York. He read excerpts from TTI’s website, noting that the company not only prepares strategic plans for AET, but also provides hardware, software, maintenance, follow-up and other services throughout the life of the AET system. He noted that it is not unusual for a private company to recommend that a prospective customer purchase their systems and services.

Rafael Cabrera, Transport Workers Union of America, Local 250-A. He stated his opposition to elimination of toll collector positions. He stated his opinion that doing so would be inappropriate, and stated that, paying attention to their needs is an indication that the District is concerned about their future welfare. He read the following quote from a news article about the AET system being used on Colorado toll ways: “The toll system has been hampered by major problems . . .” He added that cameras cannot pick up license plate images and that Colorado will spend an additional $10 million above the purchase price of their system to resolve the problems. He stated that the Bridge is unique and concluded by stating that there are many faults with this program already.

Marina Secchitano, Inlandboatmen’s Union of the Pacific/Golden Gate Bridge Labor Coalition. She stated her opposition to elimination of toll collector positions. She noted that the comments made by the toll collectors were heartfelt. She stated her hope that Committee and Board members would consider these comments prior to making a decision. She stated that the history of the Bridge has involved many people in many counties, adding that the Board has a moral obligation to provide programs and jobs. She noted that the Board has an opportunity to help the community by keeping people working. She stated there are many reasons that toll collectors are important. She noted that the impending deficit has not resulted from toll collectors so they should not bear the burden. She stated she appreciates the work done to improve the assistance package, but there should be a firm commitment if this change is to be made. She requested that the Board keep all people working as long as possible.

     
  d.

Discussion by the Committee

Discussion ensued, including the following comments and inquiries:

  • Director Grosboll made the following comments and inquiries:
    • He inquired as to the length of time an individual would have to pay the $6 toll once AET is in place. In response, Mr. Mulligan stated that, although FasTrak® currently handles violations, the District would be able to establish its own AET business rules and handle its own violations.
    • He inquired as to the amount the District is expected to save year by year. In response, Mr. Dick stated that, at the end of today’s meeting, the consultant will provide information on the amount of year by year savings over the next five years.
    • He inquired as to whether the AET system would be expected to show a net loss for the first few years. In response, Mr. Dick stated that operating savings could be expected every year. The first year is expected to show $2.3 million in savings.
    • He inquired as to staff’s assumptions regarding the level of penalties. In response, Mr. Dick stated that a violation will have a $25 penalty added to the toll amount. Should the violation remain unpaid and a second notice be required, the penalty would increase by an additional $45, so that a total of $70 would be added to the toll amount. He added that, for California residents, the violation information will be noted on the owner’s Department of Motor Vehicles (DMV) record.
    • He commented that, despite efforts by the District, many customers who receive invoices by mail are likely to not have received the necessary information about the change to AET. He expressed concern about immigrants and non-English-speaking customers. He further expressed his opinion that the District is not yet ready to make a switch to AET. He stated that 18 months is not a long enough period for the affected employees to find other employment. He noted that many are not trained to do other jobs and 18 months is not long enough to prepare for a new career. In addition, he stated that making a change to AET at the same time as the 75th Anniversary Celebration is not desirable. He stated he wishes more information about the issues surrounding cash customers, and wishes to provide more time for the affected employees to readjust.
    • He inquired as to the reason FasTrak® has not been expanded, noting that the District’s Gift Shop does not distribute FasTrak® transponders. He stated that FasTrak® is located on the Embarcadero in San Francisco and that transponders are distributed there and online. He agreed that having cash customers purchase transponders at retail outlets, as suggested by staff, might be practical; however, investigation of expanded FasTrak® use should be done prior to implementing AET. He noted that the District has not promoted FasTrak® usage, especially for individuals who wish to remain anonymous or who do not use credit cards. He conceded that AET would likely be used by other bridges. In response, Mr. Mulligan stated that transponders are less difficult to obtain now than in the past. He agreed that it is difficult for a person who wishes to remain anonymous to obtain a FasTrak® account, but noted that it is expected to become easier to obtain FasTrak® transponders anonymously once AET is implemented. He noted that individuals who currently pay their bills in cash do so using the same locations proposed for AET payments. Mr. Wire added that staff’s recommendation is for the AET system to be set up in stages. The recommendation before the Board presupposes a “soft launch” period of approximately six to seven months, during which the new system would run in tandem with the current system. Once the testing period has passed, the District would advertise the availability of the increased capacity to vend transponders and accept toll payments. He indicated that the target date for final launch is September 2012, but pointed out that, similar to the original institution of FasTrak®, the Board and staff would evaluate the project together. If the system is not operating as desired, the date could be extended.
  • Director Boro made the following comments and inquiries:
    • He inquired as to the hardware and its life expectancy. In response, Mr. Dick stated that the toll collection system currently in place can support AET as it is. It would require upgrade to make it more robust, but beyond that, the District has planned for replacement in the capital budget. He noted that running a hybrid system is more costly than using a single method. Mr. Wire added that the District’s capital plan includes renovation of toll collection equipment. He stated that the cost of renovation would be similar whether the system were partly or wholly FasTrak®.
    • He commented that the District must look at a long term plan to preserve financial stability. The Board has a responsibility to run the entire District, not just one piece. Difficult decisions must be made in order to save money. He expressed his belief that most of the affected employees will find new positions within the District. He added that the Board must have courage to go forward. He stated that it may be possible to postpone the implementation date, but the District has a responsibility to the community so that it will not be necessary to raise tolls and fares or reduce service.
    • He commented that his suggestion at the January 13, 2011 Finance-Auditing Committee meeting was to create an advisory committee made up of two or three Directors to work with staff, and those Directors would then report back to the Board.
  • Director Cochran made the following comments and inquiries:
    • He inquired as to the number of images that would require storage once AET is implemented compared to the number now stored. In response, Mr. Wire stated that, from a technical standpoint, the AET system would be upgraded to store more photographs.
    • He inquired as to whether the District would receive a reduced return on violations that are assumed by a collection agency. In response, Mr. Wire stated that the District would receive a percentage of the total due, as would the collection agency.
    • He inquired as to how many new employees would be required due to implementation of AET. In response, Mr. Wire stated that monitoring and revenue analysis would likely require two positions. A position would be required to ensure proper operation of the system. One or more positions may be required to handle the increase expected in the number of transactions. He noted that 5 new positions are included in the projected cost. He stated that the addition of new positions requires Board approval.
    • He inquired as to what is covered by the $1.5 million shown as personnel costs. In response, Mr. Wire stated that this figure includes costs for staff presently working on the AET Project.
    • He commented that his preference for the order of events would be for the skills assessment of toll collectors to be completed prior to a Board decision to implement AET. In response, Mr. Mulligan stated that individual assessment could not be done without a Board decision to implement AET. If the Committee today approves commencement of implementation activities by staff, then staff would return to the Board at a later time for approval of contracts. Subsequent to contract approval, the employee skills assessment could begin.
    • He inquired as to whether a later target date could be set, such as July 2013 instead of September 2012. In response, Mr. Mulligan stated that whether and/or when to implement AET is a matter for the Board to decide.
  • Director Moylan made the following comments and inquiries:
    • He inquired as to whether the California DMV charges a fee to provide information. In response, Mr. Wire stated that a fee would be charged, and those costs have been included in the projections made by staff. He added that, while an AET system will have costs associated with it, the net cost is lower than the cost of the current hybrid system. Mr. Dick added that the financial model developed by TTI, with whom the District has a Professional Services Agreement for the creation of the AET plan, is based on detailed discussions with the District and vendors.
    • He commented that many costs would increase, such as the cost of mailing statements to users and collecting from violators.
    • He commented that, while he personally likes using FasTrak®, only 67% of toll payers use it. The other 33% prefer to pay cash. He stated that the cash collected at toll booths is cash that has little cost of collection. It requires no letter or collection effort. If customers do not pay their tolls on time, collection agencies would pressure them to do so, which would reflect poorly on the District. He concluded by stating that he is not in favor of the recommendation.
  • Director Sobel made the following comments and inquiries:
    • He inquired as to the time line for implementation of AET in New York. In response, Mr. Mulligan stated there are two separate agencies in New York, the Port Authority and the Metropolitan Transportation Authority (MTA). Both are currently evaluating AET. The MTA has a pilot project set up on one of their bridges, which they plan to launch this year. They have removed gates from toll lanes as a first step in the process. He noted that the operation of AET would be easier on a bridge than on a toll road, due to the multiple points of entrance and exit on toll roads. Mr. Dick added that officials in New York anticipate moving forward and expanding AET to other facilities, although further investigation will be required to determine how long their pilot project is expected to remain in place.
    • He commented that he agrees with comments made by Director Boro regarding the District’s mission and the need to preserve financial stability and reduce expenses. He added that the bus and ferry systems must be preserved for the future. He also stated that staff and Directors must be remain fully focused on the District’s mission, to avoid “mission creep,” a situation wherein difficult decisions are avoided and, thus, lead to desperate conditions in the future. While people remain its most important asset, the long-term viability of the District must come before everything else. He noted that the District has a good track record in regard to the importance it places on its employees. He stated that, whether AET is implemented in 2012 or in 2014, the same problems must be faced.
  • Director McGlashan made the following comments and inquiries:
    • He inquired as to how valuable are the reports made by toll collectors regarding events they observe on the Bridge or surrounding it. In response, Mr. Mulligan stated that there is anecdotal evidence that some problems have been prevented or dealt with as a result of being observed and reported by toll collectors. Deputy General Manager/Bridge Administration Kary Witt added that it is not uncommon that something is reported daily to toll collectors, such as bicycles or pedestrians in the roadway. He noted that only 33% of southbound traffic stops at toll booths. In addition, because many people use cell phones, problems are commonly already known to District officials when they are reported by toll collectors.
    • He commented that reducing costs by over $19 million represents a significant percentage of the District’s overall reduction goal under the Plan. He reported that Marin County must consider the expenses of the contract between the District and Marin County Transit District (MCTD) to operate the Marin Transit bus system. He noted that their actions will affect the District financially. He added that problems of this nature cannot be solved without serious intention to do so and a target date.
    • He commented that he is in favor of setting up a committee, as suggested by Director Boro. In response, Mr. Mulligan stated that, if the Finance-Auditing Committee so desires, the President could appoint an advisory committee that would report back to it.
    • He commented that he enjoys the experience of greeting toll collectors and being greeted by them. A voluntary separation incentive program such as has been used in Marin County could be helpful.
    • He commented that the notion of ambassadors on foot at strategic locations such as the south end visitor center, the gift shop, and the vista point, might be possible, especially should the District have to consider pedestrian tolling. Having people to engage with others would help redeploy the District’s ambassadors. He stated that the human element should not be lost at the Bridge, and that an increase in customer service would add to its value. He commented that it might be advisable to reduce somewhat the amount of savings from implementation of AET to be used to increase customer service at the Bridge.
  • Director Pahre made the following comments and inquiries:
    • She commented regarding the difficulty of the decision the Board will be asked to make. She stated that it is obvious the District wishes to help the affected employees, and requested a firmer time line than what has been presented thus far. She added that she is unclear about the actual process that will take place to provide placement assistance to affected employees and how long that process is expected to take. In response, Mr. Mulligan stated that Mr. Witt and Deputy General Manager/Administration and Development Z. Wayne Johnson had already met with unions, and that Mr. Witt had already met with employees. Attorney Miller added that today’s recommendation would begin formalization of the process that has been limited to discussion until now. The time line cannot be set in stone but would be intended to help in the decision-making process.
  • President Reilly made the following comments and inquiries:
    • She commented that she agrees with Directors Boro and Sobel in that making a decision that includes a reduction in positions is difficult because those affected are good employees with families and customers would miss their greetings. However, an $89 million deficit is predicted over the coming five years, and the projected savings from AET is significant. She noted that the District has a good history of providing adequately for its employees, but suggested that the District go beyond its usual procedures to assure this. She recommended that consultants could be hired to assist the District in providing necessary placement and counseling services. She added that a change to AET is part of the Plan and is necessary for the District’s continued financial viability.
    • She commented that, with the 75th Anniversary of the Golden Gate Bridge in 2012, some opportunities may exist for work as ambassadors.
  • First Vice President Eddie made the following comments:
    • He commented that, when government agencies must reduce their budgets, cuts are often made in personnel. He stated his agreement with Directors Boro and Sobel, and President Reilly, that the financial stability of the District is of paramount importance. He noted that, in the past, the District was able to assist displaced toll collectors and stated his expectation that the District would again be able to provide such assistance.
    • He commented that receiving cash remains the most expedient, although FasTrak® also provides quick payment. He indicated his uncertainty regarding receipt of toll payments from 30 to 90 days after incurring the charges.
  • Second Vice President Newhouse Segal made the following comments and inquiries:
    • She inquired as to what a vote in favor of staff’s recommendation would cover, given that the 2012 implementation date is not included in the recommendation. She added that, because today’s report by PFM regarding the District’s investments and the economic condition of the nation stressed the importance of job creation in the economic recovery, she would feel more comfortable were affected employees provided more time in which to make a change. She inquired as to whether the recommendation could be changed. In response, Mr. Mulligan stated that Board action would be required for a series of related decisions, such as contracts that would require approval. He stated that, if the Board takes action on January 28, 2011 to approve this recommendation, staff would be able to begin work on scheduling tasks and setting deadlines. He noted that, if necessary, changes could be made. Mr. Wire added that staff believes the target date to be solid. He noted that, in order to effectively work with employees, knowledge of the target date would be necessary.
    • She inquired as to whether implementation of AET would come before the Board for approval again in the future. In response, Mr. Miller stated that the recommendation of the Finance-Auditing Committee would come before the Board on January 28, 2011, for approval. Should an advisory committee be created, that committee would work with staff and then report back to the Finance-Auditing Committee, which would then make its report to the Board.
  • Director Stroeh made the following comments and inquiries:
    • He inquired as to whether the Board could take action to delay or stop work should unforeseen problems arise that would require such action. Mr. Wire responded affirmatively.
    • He commented that a target date is required and no steps can be taken without Board approval. He noted that, should the Board not take action at the present time, more serious financial problems would be likely to arise and that, given these circumstances, delay is inadvisable.
     
  e.

Action by the Committee

Staff recommended and the Committee concurred by motion made and seconded by Directors BORO/REILLY 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 all electronic toll collection conversion on the Golden Gate Bridge as follows:

    a.
Authorize staff to commence implementation activities for all electronic toll collection conversion on the Golden Gate Bridge;
    b.
Authorize a budget increase to the All Electronic Toll Collection Project in the FY 10/11 Bridge Division Capital Budget in the amount of $2,900,000.00 to be funded from District reserves for a total project budget of $3,237,000.00;
    c.
Authorize initiation of formal meet and confer discussions with unions who represent potentially affected employees concerning the effects of the Board's decision to commence implementation activities for all electronic toll collection conversion; and,
    d.
Authorize the filing of Notices of Exemption in the counties of Marin and San Francisco;
   

with the understanding that the President of the Board of Directors will appoint an advisory committee consisting of members of the Board to monitor and oversee project planning and implementation in conjunction with staff.

Action by the Board at its meeting of January 28, 2011 – Resolution
NON-CONSENT CALENDAR

AYES (8): Directors Boro, McGlashan, Pahre, Sobel and Stroeh; Second Vice President Newhouse Segal; First Vice President Eddie; President Reilly (Ex Officio)
NOES (3): Directors Cochran, Grosboll and Moylan

     
5.

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

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided a schedule comparing categories of Bridge traffic, as well as a monthly review of Bridge traffic, tolls, transit patronage and fares, for six months ending December 2010. Copies of the reports are available in the Office of the District Secretary and on the District’s web site.

Action by the Board – None Required

     
6. Monthly Review of Financial Statements for Six Months Ending December 2010
     
  a.

Statement of Revenue and Expenses

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided financial statements entitled, Statement of Operating Revenues and Expenses. Copies of the reports are 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 Prior, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided financial statements entitled, Statement of Capital Programs and Expenditures. Copies of the reports are available in the Office of the District Secretary and on the District’s web site.

Action by the Board – None Required

     
7.

FY 10/11 Second Quarterly Report on Authorized Budget Adjustments and Budget Transfers

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided a report entitled, FY 10/11 Second Quarterly Report on Authorized Budget Adjustments and Budget Transfers Executed Under the General Manager’s Authority and Board Authority. 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 10/11 Second 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 Denis Mulligan provided a report entitled, FY 10/11 Second Quarterly Report on Contracts and Change Orders/Contract Amendments Executed Under the General Manager’s Authority. 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

     
9.

Public Comment

There was no public comment on items not on the agenda.

 


10.

Adjournment

All business having been concluded, the meeting was adjourned at 12:45 p.m.

   
   

 

Respectfully submitted,

s/ J Dietrich Stroeh, Chair
Finance-Auditing Committee