April 21, 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, April 21, 2011, at 11:35 a.m., Chair Stroeh presiding.

Committee Members Present (7): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Grosboll, Moylan and Sobel; President Reilly (Ex Officio)
Committee Members Absent (2): Directors Boro and Elsbernd
Other Directors Present (3): Directors Eddie, Renée and Snyder

Committee of the Whole Members Present (10): Directors Cochran, Moylan, Pahre, Renée, Snyder, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
Committee of the Whole Members Absent (8): Directors Boro, Brown, Campos, Chu, Elsbernd, Mar, Rabbitt and Theriault

[Note: On this date, there was one vacancy on the Board of Directors.]

Staff Present: General Manager Denis Mulligan; District Engineer Ewa Bauer; Auditor-Controller Joseph Wire; District Secretary Janet Tarantino; Attorney Kim Manolius; Deputy General Manager/Bridge Division Kary Witt; Deputy General Manager/Ferry Transit Division Jim Swindler; Planning Director Ron Downing; Public Affairs Director Mary Currie; Executive Assistant to the General Manager Amorette Ko; Assistant Clerk of the Board Lona Franklin

Visitors Present: None


 

     
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.

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 the following actions by the Auditor-Controller:

   


  a.
Ratify commitments and/or expenditures totaling$18,270.00 for the period March 1, 2011 through March 31, 2011;
  b.
Ratify investments made by the Auditor-Controller during the period March 15, 2011, through April 11, 2011, as follows:
     
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
Bank of Nova Scotia Commercial Paper
03/18/11
06/15/11
5,162,743.27
0.26
Bank of America Corp Commercial Paper
03/18/11
04/18/11
4,999,138.89
0.20
Credit Agricole NA Commercial Paper
03/24/11
06/22/11
6,355,071.00
0.31
FHLMC Notes
03/25/11
02/25/14
4,203,701.30
1.26
Caterpillar Financial SE Corp Note
04/01/11
04/01/14
2,499,700.00
1.65
Nordea North America Commercial Paper
04/01/11
05/24/11
2,324,281.19
0.21
Societe Generale NA Commercial Paper
04/01/11
05/24/11
4,998,086.11
0.26
     
  c.
Authorize the Auditor-Controller to reinvest, within the established policy of the Board, investments maturing between April 12, 2011, and May 16, 2011, 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 2011, as prepared by PFM.

Action by the Board at its meeting of May 13, 2011 – Resolution
CONSENT CALENDAR

     
  AYES (10): Directors Cochran, Moylan, Pahre, Renée, Snyder, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None
     
2.

Authorize Budget Adjustment(s) and/or Transfer(s)

     
  a.

Budget Increase in the FY 10/11 Ferry Transit Division Capital Budget Relative to Contract No. 2010-FT-1, Refurbishment of the M.V. Napa and the M.V. Chinook (M.V. Golden Gate) Ferries

 

In a memorandum to Committee, Marine Projects Manager Christian Stark, Deputy General Manager/Ferry Division James Swindler and General Manager Denis Mulligan reported on staff’s recommendation for Committee’s concurrence with a budget increase relative to Contract No. 2010-FT-1, Refurbishment of the M.V. Napa and the M.V. Chinook (M.V. Golden Gate) Ferries. The report provided details regarding the award of Contract No. 2010-FT-1 to Ice Floe, LLC, dba Nichols Brothers Boat Builders, as well as other related actions. It is recommended that a budget increase in the FY 10/11 Ferry Transit Division Capital Budget, in the amount of $725,000.00, be authorized, to be funded with Federal Transit Administration grant funds. 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 PAHRE/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 10/11 Ferry Transit Division Capital Budget in the amount of $725,000.00, relative to Contract No. 2010-FT-1, Refurbishment of the M.V. Napa and the M.V. Chinook (M.V. Golden Gate) Ferries.

Action by the Board
Refer to the Building and Operating Committee/Committee of the Whole Meeting of April 21, 2011

     
 
AYES (10): Directors Cochran, Moylan, Pahre, Renée, Snyder, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None
     
  b.

Budget Increase in the FY 10/11 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 Transit Division Christian Stark, Deputy General Manager/Ferry Transit Division James Swindler and General Manager Denis Mulligan reported on staff’s recommendation for Committee’s concurrence with a budget increase relative to Contract No. 2010-FT-10, Installation of New Propulsion System for Re-Powering and Dry-Docking of the M.V. Del Norte. The report provided details regarding the award of Contract No. No. 2010-FT-10 to Ice Floe, LLC, dba Nichols Brothers Boat Builders, as well as other related actions. It is recommended that a budget increase in the FY 10/11 Ferry Transit Division Capital Budget, in the amount of $290,100.00, be authorized, to be funded with Federal Transit Administration grant funds. 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 PAHRE/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 10/11 Ferry Transit Division Capital Budget in the amount of $290,100.00, relative to Contract No. 2010-FT-10, Installation of New Propulsion System for Re-Powering and Dry-Docking of the M.V. Del Norte.

Action by the Board
Refer to the Building and Operating Committee/Committee of the Whole Meeting of April 21, 2011

     
 
AYES (10): Directors Cochran, Moylan, Pahre, Renée, Snyder, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None
     
3.

Approve the Adoption of the FY 2012-2016 Five-Year Transit Fare Program

In a memorandum to Committee, Planning Director Ron Downing, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to approve actions relative to a five-year transit fare program, to be effective July 1, 2011, through June 30, 2016; and, to revise the farebox recovery goals for Golden Gate Transit (GGT) bus services downward from 25% to 20% to reflect actual operating experience.

The staff report stated that, under the Financial Plan for Achieving Long-Term Financial Stability (Plan) adopted by the Board of Directors on October 30, 2009, staff was directed to develop a new regional Transit Fare Program to become effective on July 1, 2011, as a successor to the Five-Year Transit Fare Program (Program) adopted in 2006. The recommended Program responds to Initiatives 12 and 25 of the Plan and was developed in the context of the District’s current fiscal situation, with a desire to avoid further major reductions in regional transit services, continue those services with an appropriate level of passenger support, and balance the District’s financial needs while minimizing a financial hardship for riders.

The staff report stated that GGT buses have not been meeting the recovery goal of 25% of its expenses from farebox revenues. Staff determined that fare increases of 15% to 20% during each year of the Program would be necessary for GGT buses to meet that 25% goal. Recognizing that fare increases of that magnitude would create financial hardship for bus riders and discourage usage, staff is recommending that the Board instead approve a 5% increase in GGT bus fares for each year of the Program, while adopting a new farebox recovery goal for GGT bus of 20%.

The staff report stated that, on February 24, 2011, the Board approved the setting of two public hearings for the staff proposal to establish a Program applied to regional bus, complementary ADA paratransit, and ferry services, effective July 1, 2011, through June 30, 2016. Public hearings were held on April 6, 2011, at 6:00 p.m., at Whistlestop in San Rafael; and, on April 7, 2011, at 9:30 a.m., in the Board Room, Administration Building, Golden Gate Bridge Toll Plaza. The public hearings were preceded by an extensive public outreach effort that included four informational Open Houses at: 1) the Sonoma-Marin Fairgrounds on March 15, 2011; 2) the Santa Rosa City Council Chambers on March 16, 2011; 3) Whistlestop on March 22, 2011; and, 4) the Golden Gate Bridge Toll Plaza on March 24, 2011, and two outreach sessions conducted with the public, as part of monthly Ferry Management sessions at the San Francisco Ferry Terminal on March 1 and 15, 2011.

The staff report stated that, in accordance with guidance from the Federal Transit Administration, staff has examined the proposed Program to determine whether the proposed changes would have a disproportionate adverse effect on minority and/or low-income communities. The proposed increases apply equally to all bus riders, whether they are travelling regionally or within Marin County, but those riders travelling locally within Marin County can use Marin Transit discounted fare media for local travel on regional GGT buses, under an agreement with Marin County Transit District (Marin Transit). This local service alternative helps to ensure that minority and low-income passengers, who tend to travel shorter distances within Marin County, and by bus rather than ferry, will not experience a disproportionate adverse effect from the proposed changes.

The staff report stated that actions to establish, modify or restructure rates, tolls or fares, necessary to meet operating expenses, are exempt from the California Environmental Quality Act. As a result, the District will file an appropriate Notice of Exemption if the Board approves the proposed Program.

The staff report stated that implementation of the suggested Program could generate additional passenger revenue of approximately $2.6 million over the five-year period. 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. Downing stated that, in developing this Program, staff examined previously adopted goals, as directed by the Board. He indicated that 21 comments were received, compared to the 2006 fare increase, when 28 comments were received. He stated that a recapitulation of comments appears at the end of the staff report, as requested by the Board. He noted that the proposed fare increase is not tied to the Consumer Price Index, but is being recommended to meet expenses. He indicated that Marin Transit requested that the District not increase the local fare on regional buses. However, staff’s recommendation is for an increase in local fares on regional buses to take effect during 2012. He added that higher fares are not expected to be a disincentive because the average savings per day by using transit rather than a motor vehicle is $20.00.

Discussion ensued, including the following comments and inquiries:

  • Director Stroeh inquired as to whether staff is working with Marin Transit regarding local fares on regional buses. Mr. Downing responded affirmatively.
  • Director Pahre commented that a reduction of the recovery goal could create a challenging situation in the future, should the District wish to raise it again.
  • President Reilly commented that a reduction of the recovery goal from 25% to 20% is significant. She stated that it is unnecessary to lower the goal in increments of 5% and suggested lowering the recovery goal to 23%. In response, Mr. Mulligan stated that, alternatively, the recovery goal could remain as it is, with the understanding that it would likely not be met.
  • Director Sobel made the following comments and inquiries:
    • He commented that he is in favor of leaving the fare recovery goal at 25%, with the understanding that it would likely not be met.
    • He inquired as to the frequency with which passengers are surveyed. In response, Mr. Mulligan stated that passengers are surveyed periodically. He stated that a slight increase in ridership was realized last month.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/GROSBOLL to revise the staff recommendation to not revise the farebox recovery goals for Golden Gate Transit (GGT) bus services downward from 25% to 20%, and retain the farebox recovery at 25% and 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 adoption of a five-year transit fare program applied to Golden Gate Transit regional bus, complementary Americans with Disabilities Act paratransit, single ride (formerly referred to as “cash”) fares on Golden Gate Ferry, and special event fares on Golden Gate Ferry, effective July 1, 2011, through June 30, 2016, as set forth in Attachment A; and, retain the 25% farebox recovery goal for Golden Gate Transit bus services with the understanding that this goal may not be attained.

Action by the Board – Ordinance
NON-CONSENT CALENDAR

AYES (10): Directors Cochran, Moylan, Pahre, Renée, Snyder, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None


     
4.

Approve Actions Relative to Contract No. 2009-BT-1, Forty-Five Foot Diesel Inter- City Configuration Coaches, with Motor Coach Industries, Inc.

In a memorandum to Committee, Director of Bus Maintenance Steve Miller, Deputy General Manager/Bus Transit Division Teri Mantony and General Manager Denis Mulligan reported on staff’s recommendation to authorize award of a contract to Motor Coach Industries (MCI), Schaumburg, IL., in the amount of $18,272,695.00, for 32 coaches, including new California Air Resources Board (CARB) compliant engines; and, approve all other actions.

The staff report stated that, on September 11, 2009, the Board of Directors awarded a contract to MCI for the purchase of 23 forty-five foot coaches, with an option to purchase up to 65 additional coaches by 2015. The base order called for coaches with Cummins engines that now do not meet recently implemented CARB emissions requirements. The staff report stated that the option coaches must, therefore, include a different engine to meet current CARB requirements. The additional cost for the compliant engine is $21,720.00 per engine ($18,200.00 for the engine itself and $3,520.00 for the warranty). Staff has established that the increased price charged by MCI for the Cummins ISX engine is due to increases in cost for the engine manufacturer for the new technology. The staff report stated that staff has determined that the increased cost of the new engine type is fair and reasonable. The difference in the per coach price between the base price and the option price is $27,577.46, which includes the engine and alterations cited above, as well as the taxes and delivery charges. The total incremental cost for all 32 coaches is $571,021.69.

The staff report stated that the 32 new coaches will require fareboxes compatible with the District’s current fleet. Twenty-two GFI Genfare, a unit of SPX Corporation (GFI), fareboxes can be supplied by removing existing fareboxes from the 32 MCI coaches that are being removed from service. Ten of these 32 MCI coaches will be retained in the contingency fleet and must remain equipped with their fareboxes. Therefore, 10 new fareboxes are needed. The purchase of the 10 new fareboxes is considered a new sole source procurement. The District’s Attorney has confirmed that under Federal Transit Administration (FTA) regulations, and the District’s procurement policy, such a procurement meets the requirement of a sole source purchase.

At the meeting, Mr. Mulligan briefly summarized the staff report, stating that approval of staff’s proposal is recommended.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/GROSBOLL 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 the award of Contract No. 2009-BT-1, Forty-Five Foot Diesel Inter-City Configuration Coaches, as follows:

  a.
Authorize execution of an option to purchase 32 additional coaches, including new California Air Resources Board (CARB) compliant engines, from Motor Coach Industries (MCI), Schaumburg, IL, in the amount of $18,272,695.00, subject to completion of a Federal Transit Administration (FTA)-required Buy America Rule pre-award audit;
  b.
Establish a Contingency Fund in the amount of $913,605.00, equal to approximately 5% of the option price;
  c.
Authorize the sole-source purchase of 10 fareboxes for the MCI coaches from GFI Genfare, a unit of SPX Corporation, Elk Grove Village, IL, in the amount of $142,153.00;
 

d.

Authorize a budget increase in the FY 10/11 Bus Transit Division Capital Budget in the amount of $226,300.00, to be funded with Federal Transit Administration (FTA) grant funds; and,
  e.

Establish a total project budget of $19,186,300.00, to be 100% grant funded ($5,847,392.00 FTA funds and $13,338,908.00 State I-Bond grant funds).

Action by the Board – Resolution
NON-CONSENT CALENDAR

     
  AYES (10): Directors Cochran, Moylan, Pahre, Renée, Snyder, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None
     
5.

Receive the Independent Auditor’s Engagement Letter for the Annual Financial Audit for the Year Ending June 30, 2011, as Submitted by Vavrinek, Trine, Day & Co., LLP

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to receive the independent auditor’s engagement letter for the annual financial audit for the year ending June 30 2011, as submitted by Vavrinek, Trine, Day & Co., LLP (VTD).

The staff report stated that the auditors are reconfirming their understanding of services with the District to ensure compliance in accordance with Government Auditing Standards. VTD is in the process of completing their fourth year of a five-year contract with the District. The Engagement Letter describes the scope of their audit, audit objectives, responsibilities of management and audit procedures pertaining to the audit. A peer review report is included.

At the meeting, Mr. Wire stated that the Engagement Letter is the independent auditor’s disclaimer report, and is provided annually. The final report will be submitted in November 2011.

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 receive the Independent Auditor’s Engagement Letter for the Annual Financial Audit for the Year Ending June 30, 2011, as submitted by Vavrinek, Trine, Day & Co., LLP.

Action by the Board – Resolution
NON-CONSENT CALENDAR

AYES (10): Directors Cochran, Moylan, Pahre, Renée, Snyder, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

     
6.

Monthly Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares (for Eight Months Ending February 2011)

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 nine months ending March 2011. 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.
Monthly Review of Financial Statements for Eight Months Ending February 2011
     
  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

     
8.

Review of Auditor-Controller’s FY 10/11 Third 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 Third 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

     
9.

Review of the Auditor-Controller’s FY 10/11 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 Denis Mulligan provided a report entitled, FY 10/11 Third 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

     
10.

Public Comment

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

 


11.

Adjournment

All business having been concluded, the meeting was adjourned at 11:50 a.m.

   
   

 

Respectfully submitted,

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

Attachment