July 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 (Committee) of the Golden Gate Bridge, Highway and Transportation District (District) was held in the Board Room, Administration Building, Toll Plaza, San Francisco, CA, on Thursday, July 21, 2011, at 10:35 a.m., Chair Stroeh presiding.

Committee Members Present (9): Chair Stroeh; Directors Boro, Cochran, Elsbernd, Grosboll, Moylan and Sobel; Vice Chair Pahre; President Reilly (Ex Officio)
Committee Members Absent (0): None
Other Directors Present (3): Directors Arnold, Eddie and Renée

Committee of the Whole Members Present (12): Directors Arnold, Boro, Cochran, Elsbernd, Moylan, Pahre, Renée, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
Committee of the Whole Members Absent (7): Directors Brown, Campos, Chu, Mar, Rabbitt, Snyder and Theriault

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; 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

 

     
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 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, of PFM, reported that, regarding the nation’s debt ceiling, it is unknown what will take place should the impasse not end. In regard to the current market, she directed the Board’s attention to United States (U. S.) Treasury auction bid data, which was prepared on July 20, 2011. The bid coverage ratio shows that more people are trying to buy U. S. Treasury Notes (Treasuries) than there are available Treasuries to sell. The numbers are holding steady, which means people still trust.

She further stated that the second most often asked question concerns the Chinese government’s purchase of U. S. Treasuries. She stated that auction bid data shows there has been no fall off in foreign demand for U. S. Treasuries. She stated that the U. S. Treasury is paying 2.94% today. In comparison, Greece and Portugal are paying 16.9% and 17%, respectively, indicating that investors fear their creditworthiness.

She further stated that the U. S. Treasury has reached its debt ceiling. The forecast for the Gross Domestic Product is slightly higher for June 2011 than for April 2011. She indicated that unemployment was higher in May 2011 than in April 2011, and that inflation has not become a problem.

She reported that no investments were purchased by PFM on behalf of the District in June 2011.

Discussion ensued, including the following inquiries:

  • Director Boro made the following inquiries:
    • He inquired as to whether the U. S. Treasury would be unable to pay its obligations if the debt ceiling is not raised. In response, Ms. Jones stated that, should an agreement not be reached, ability to pay obligations would be compromised, but the choices that might be made are unknown.
    • He inquired as to the reason demand appears unaffected. In response, Ms. Jones stated that the market continues to view Treasuries as the most secure investment.

Staff recommended and the Committee concurred by motion made and seconded by Directors MOYLAN/REILLY to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee/Committee of the Whole recommends that the Board of Directors authorize the following actions by the Auditor-Controller:

   


  a.
The Board of Directors ratifies commitments and/or expenditures totaling $38,000.00 for the period June 1, 2011 through June 30, 2011;
  b.
Ratify investments made by the Auditor-Controller during the period June 14, 2011, through July 11, 2011, as follows:
     
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
Nordea North America Commercial Paper
06/22/11
10/24/11
5,565,875.11
0.22
Credit Suisse NY Commercial Paper
06/28/11
09/27/11
5,137,661.30
0.18
     
  c.
Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between July 12, 2011, and August 2, 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 June 2011, as prepared by PFM.

Action by the Board at its meeting of September 9, 2011 – Resolution
CONSENT CALENDAR

     
 
AYES (12): Directors Arnold, Boro, Cochran, Elsbernd, Moylan, Pahre, Renée, 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 Relative to the Award of Contract No. 2012-FT-1, Larkspur Ferry Terminal Security Improvements, to KCK Builders, Inc.

In a memorandum to Committee, Deputy District Engineer John Eberle, District Engineer Ewa Bauer and General Manager Denis Mulligan reported on staff’s recommendation for Committee concurrence with a budget increase in the FY 11/12 Ferry Transit Division Capital Budget relative to Contract No. 2012-FT-1, Larkspur Ferry Terminal Security Improvements, in the amount of $194,047.00, to be funded from District Reserves.

The staff report provided details regarding the award of Contract No. 2012-FT-1 to KCK Builders, Inc., San Francisco, CA, in the amount of $275,000.00, 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 MOYLAN/COCHRAN to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee/Committee of the Whole recommends that the Board of Directors authorize a budget increase in the FY 11/12 Ferry Transit Division Capital Budget, in the amount of $194,047.00, to be funded from District reserves, relative to Contract No. 2012-FT-1, Larkspur Ferry Terminal Security Improvements.

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

       
3. Authorize Actions Related to Grant Programs
       
  a. There were no “Actions Related to Grant Programs” to authorize.
     
4.

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

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided a schedule comparing categories of Golden Gate Bridge (Bridge) traffic, as well as a monthly review of Bridge traffic, tolls, transit patronage and fares, for twelve months ending June 2011. Copies of the reports are available in the Office of the District Secretary and on the District’s web site.

At the meeting, Mr. Wire stated that the numbers shown are preliminary for the twelve months ending June 30, 2011. He directed the Board’s attention to Bridge Tolls, stating that the District had expected approximately $1 million more than the amount actually collected. He stated that the number of carpools crossing the Bridge declined more than expected when the District began charging a toll. In addition, it appears that non-carpool vehicles did not increase in number during the same period. He speculated that some carpoolers may have opted to travel by bus or ferry, and noted that bus and ferry revenues have increased. He observed that the nation’s economy has not recovered as quickly as hoped and that unemployment remains problematic. He concluded by stating that a small increase is expected in the upcoming year for both bus and ferry ridership.

Discussion ensued, including the following inquiries:

  • Director Cochran made the following inquiries:
    • He inquired as to the reduction in toll collections expected to be experienced by the District when the weekend closure of Doyle Drive takes place. In response, Mr. Mulligan stated that the amount is unknown at this time. He stated that the Bridge will remain open on that weekend. He added that, in response to the closure, travelers may change the time of day they travel. However, staff expects a reduction in toll collections during that weekend.
    • He inquired as to whether the District will be indemnified by the California Department of Transportation (Caltrans) for the revenue losses that result from fewer vehicles crossing the Bridge as a result of the weekend closure of Doyle Drive. Mr. Mulligan responded in the negative. He added that a rise in the use of ferries and buses is expected, and that Caltrans is to indemnify the District for the costs associated with the extra bus and ferry trips.
  • Director Renée inquired as to job expectations, stating that she understood that one change expected by forecasters is that new jobs will be created locally. In response, Mr. Wire stated that local job creation has been a trend for several decades and is expected to continue.

Action by the Board – None Required

     
5. Monthly Review of Financial Statements for Twelve Months Ending June 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.

At the meeting, Mr. Mulligan reported that the 80% of the District’s capital expenditures during the period were funded by grants.

Action by the Board – None Required

       
6.

Review of the Auditor-Controller’s FY 10/11 Fourth Quarterly Report on Authorized Budget Adjustments and Budget Transfers 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 Fourth 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

   
7.

Review of the Auditor-Controller’s FY 10/11 Fourth Quarterly Report on Contracts and Change Orders/Contract Amendments Executed Under the General Manager’s Authority

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan provided a report entitled, “FY 10/11 Fourth 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

       
8.

Public Comment

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

 


9.

Adjournment

All business having been concluded, the meeting was adjourned at 11:20 a.m.

   
   

 

Respectfully submitted,

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