September 22, 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, September 22, 2011, at 10:54 a.m., Chair Stroeh presiding.

Committee Members Present (8): Chair Stroeh; Directors Boro, Cochran, Elsbernd, Moylan and Sobel; Vice Chair Pahre; President Reilly (Ex Officio)
Committee Members Absent (1): Director Grosboll
Other Directors Present (2): Directors Eddie and Renée

Committee of the Whole Members Present (10): Directors Boro, Cochran, Elsbernd, Moylan, Pahre, Renée, Sobel and Stroeh; First Vice President Eddie; President Reilly (Ex Officio)
Committee of the Whole Members Absent (9): Directors Arnold, Brown, Campos, Chu, Mar, Rabbitt, Snyder and Theriault; Second Vice President Grosboll

Staff Present: General Manager Denis Mulligan; District Engineer Ewa Bauer; Auditor-Controller Joseph Wire; District Secretary Janet Tarantino; Attorney David Miller; Deputy General Manager/Bridge Division Kary Witt; 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 downgrade of the United States (U.S.) long-term credit rating by Standard & Poor’s (S & P) in early August, this did not cause U.S. Treasury rates to spike. Events overseas continue to drive the purchase of U.S. securities as investors seek safe investments. Operation Twist, by the Federal Reserve Board (Fed), is designed to lower long-term rates by driving prices up. The yield curve will flatten, meaning that new investment strategies will need to be developed. The difference in yield between U.S. Treasury Notes and Corporate Notes is expected to change.

She also reported that the District’s portfolio is extremely well diversified, and is earning 2.14%. She indicated that PFM has begun purchasing Caterpillar Financial, ConocoPhillips and Wal-Mart Corporate Notes, in order to diversify away from the financial services sector.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/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 $85,000.00 for the period July 1, 2011 through August 31, 2011;
  b.
Ratify investments made by the Auditor-Controller during the period July 12, 2011, through September 12, 2011, as follows:
     
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
FNMA Notes
7/29/11
12/18/13
1,993,761.10
0.67
Deutsche Bank LLC, Commercial Paper
08/03/11
12/01/11
880,060.27
0.32
Bank of Nova Scotia Commercial Paper
08/23/11
11/21/11
5,512,552.50
0.25
Toyota Motor Credit Commercial Paper
08/23/11
11/21/11
7,328,233.55
0.26
     
  c.
Authorize the Auditor-Controller to re-invest, within the established policy of the
Board, investments maturing between August 3, 2011, and October 17, 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 July and August 2011, as prepared by PFM.

Action by the Board at its meeting of October 14, 2011 – Resolution
CONSENT CALENDAR

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

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

     
  a.

Budget Transfer from the FY 11/12 District Division Operating Budget to the Bus Transit Division Operating Budget Relative to Contract No. 97-BT-8, Purchase, Delivery, Installation and Support of Software Program for Golden Gate Transit Fixed Route Scheduling System, with GIRO, Inc., for Payment of HASTUS Program Modifications and Training

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to approve a Budget Transfer, in the amount of $108,803.00, relative to Contract No. 97-BT-8, Purchase, Delivery, Installation and Support of Software Program for Golden Gate Transit Fixed Route Bus Scheduling System, with GIRO, Inc. for additional training and payroll interface modifications.

The staff report stated that the Board, by Resolution 2010-070 at its meeting of August 13, 2010, authorized execution of the Fifth Amendment to Contract No. 97-BT-8, Purchase, Delivery, Installation and Support of Software Program for Golden Gate Transit Fixed Route Bus Scheduling System (Project), in the amount of $96,480.00, for HASTUS program modifications and training. Due to labor availability issues, the Project was not completed until after the close of FY 10/11, with the result that, of the funds budgeted in FY 10/11 for the Fifth Amendment, $87,235.00 was invoiced after the conclusion of FY 10/11 and must now be budgeted for FY 11/12.

The staff report also stated that the Board, by Resolution 2011-051 at its meeting of June 10, 2011, approved Professional Services Agreement No. 2011-BT-4, Maintenance and Support Services for the HASTUS Software Program for Golden Gate Transit Fixed Route Scheduling System, for a three-year term of maintenance and support for the HASTUS system in the amount of $288,925.00, including a $30,000.00 contingency fund for periodic training and software support services by the vendor. The staff report indicates that staff training and payroll interface modifications, in the amount of $21,568.00, are needed during FY 11/12.

A copy of the staff report is available from 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/ELSBERND 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 transfer in the amount of $108,803.00 from the FY 11/12 District Division Operating Budget to the FY 11/12 Bus Transit Division Operating Budget, relative to Contract No. 97-BT-8, Purchase, Delivery, Installation and Support of Software Program for Golden Gate Transit Fixed Route Bus Scheduling System, with GIRO, Inc.; with the understanding that $87,235.00 will be allocated for HASTUS program modifications and initial training related to the implementation of the new software program, and $21,568.00 will be allocated for additional training and payroll interface modifications.

Action by the Board at its meeting of September 23, 2011

Resolution

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

       
  b.

Budget Increase in the FY 11/12 Bus Transit Division Operating Budget Relative to Contract No. 2012-BT-1, Wireless Internet Equipment Onboard Golden Gate Transit Buses, with Global Reach Corporation Limited

In a memorandum to Committee, Deputy General Manager/Bus Transit Division Teri Mantony, Deputy General Manager/Administration and Development Kellee Hopper and General Manager Denis Mulligan reported on staff’s recommendation to authorize award of Contract No. 2012-BT-1, Wireless Internet Equipment Onboard Golden Gate Transit Buses, to Global Reach Corporation, London, England, in the amount of $243,557.75, and to authorize a budget increase to fully fund this Project.

The staff report provided details regarding the award of Contract No. 2012-BT-1 to Global Reach Corporation Limited, stating that this Project is included in the FY 11/12 Bus Transit Division Capital Budget in the amount of $172,000.00 and is 100% District funded. A capital budget increase in the amount of $88,000.00 from District reserves ($72,000.00 equipment adjustment plus $16,000.00 contingency for miscellaneous parts) is required to fully fund this project at the proposed budget of $260,000.00. The staff report also stated that this increase can be funded from savings achieved due to the increase in federal participation rate in the procurement of the 32-45’ buses also in the FY 11/12 Bus Transit Division Capital Budget. The increased federal participation rate resulted in savings of over $560,000.00.

A copy of the staff report is available from 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 ELSBERND/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 a budget increase in the FY 11/12 Bus Transit Division Capital Budget, in the amount of $88,000.00, relative to Contract No. 2012-BT-1, Wireless Internet Equipment Onboard Golden Gate Transit Buses, to be funded from District Reserves; and, establish a revised total Project Budget in the amount of $260,000.00, to be 100% funded with District Reserves.

Action by the Board at its meeting of September 23, 2011
Refer to Building and Operating Committee/Committee of the Whole Meeting of September 22, 2011

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

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

Authorize Execution of a Funding Agreement Relative to the Doyle Drive Reconstruction Project

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to authorize the execution of a funding agreement with the San Francisco County Transportation Authority (SFCTA), consistent with the Board of Director’s November 2008 approval of a Memorandum of Understanding (MOU) among the District, the Metropolitan Transportation Commission (MTC) and the SFCTA, which committed the District to provide $75 million toward the reconstruction of Doyle Drive.

The staff report stated that, pursuant to the MOU, the District will contribute $75 million for the reconstruction of Doyle Drive with the understanding that, if the District receives funding from the Sonoma County Transportation Authority and the Transportation Authority of Marin for various District projects, the District will then increase its contribution to the Project at a level that matches the amount received from the Marin and Sonoma County Transportation Authorities, up to a maximum of $80 million in contribution to the Project.

The staff report also stated that, pursuant to the MOU, this contribution from the District is the maximum contribution that will be made by the District regardless of future changes in the Project’s costs for any reason. In addition, there will be no tolling of the Golden Gate Bridge or Doyle Drive to fund the Project unless it is done as part of a cordon tolling program that tolls all entrances to San Francisco in a similar manner and time frame, in which event, collection of the cordon toll at the Golden Gate Bridge Toll Plaza would only occur if approved by the District; otherwise, such a cordon toll would have to be collected elsewhere. If an act of the California State Legislature leads to imposition of a toll in the Doyle Drive corridor separate from a region-wide cordon toll, the District will be reimbursed for its entire contribution with interest. Pursuant to the MOU, the District’s contribution of $75 million will be payable no later than the final year of construction of the Doyle Drive project.

The staff report stated that the SFCTA has served as a lead agency for the Project and has entered into agreements with the State of California, acting by and through its Department of Transportation, whereby the SFCTA has agreed to perform services and provide funding for the Project, which is scheduled to be substantially complete by May 31, 2015. Pursuant to the proposed Funding Agreement with SFCTA, the District’s contribution of $75 million will be due no later than 75 days prior to the scheduled substantial completion date, with the understanding that the District will have the right to independently review and confirm that the scheduled substantial completion date reported by the State of California realistically will be attained.

The staff report concluded by stating that the District has set aside $7.5 million per year in additional capital reserves for the anticipated payment, and contemplates this additional capital contribution to take place for ten years. Because the contribution will be due prior to the conclusion of the ten-year period, it will be necessary that the District borrow from its other Capital Reserves to pay this contribution.

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

Discussion ensued, including the following comments and inquiries:

  • Director Pahre made the following inquiries:
    • She inquired as to whether the timing of this payment had been previously established. In response, Mr. Mulligan stated that a firm date had not been established, and the payee was not specified. The Board’s action on this item will establish a firm date and name the payee.
    • She inquired as to whether the original agreement remains in effect. Mr. Miller responded in the affirmative, stating that the agreement is limited in scope to this particular scope involving timing of the District’s payment.
  • Director Stroeh inquired as to whether the District has been putting funds aside to cover the payment. In response, Mr. Wire stated that the set-aside is 10% each year for ten years and that each year that amount is added to the District’s Reserves.
  • Director Cochran inquired as to under what circumstances the District would be required to pay an additional $5 million. In response, Mr. Mulligan stated that if the District receives funding from the Sonoma County Transportation Authority and the Transportation Authority of Marin for various District projects, the District will then increase its contribution to the Project at a level that matches the amount received from the Marin and Sonoma County Transportation Authorities, up to a maximum of $80 million in contribution to the Project.
  • Director Boro made the following inquiries and comment:
    • He inquired as to whether a toll will be imposed on Doyle Drive. In response, Mr. Mulligan stated that tolls could be imposed on Doyle Drive only if all other entrances to the City of San Francisco are also tolled.
    • He inquired as to who would collect a toll should it be imposed. In response, Mr. Mulligan stated that the Board did not wish tolling on Doyle Drive, because it would use up tolling capacity the District may need in the future. The MOU was structured to discourage tolling on Doyle Drive, and requires that it can be done only if tolls are imposed on all downtown entrances to San Francisco. Attorney Miller added that the MOU begins with the premise that no tolls will be imposed. However, if all other entrances to San Francisco are tolled, in which case Doyle Drive tolling could be imposed, the District would be reimbursed. He concluded by stating that this would come about only through an Act of the State Legislature.
    • He inquired as to the outcome should tolls be imposed. Mr. Mulligan stated that, if tolls were imposed, the Legislature would have passed a law to do so, but opportunities would exist for the District to object.
    • He commented that an individual from Caltrans had told him that the Doyle Drive Reconstruction would be completed in 2015. He noted that the District’s planning has been based on using 2014 as the approved completion date. He indicated he has received many complaints from members of the public who believe that the District is responsible for the reconstruction of Doyle Drive. In response, Mr. Mulligan stated that Caltrans will be invited to make a progress report to an upcoming Board meeting.

Staff recommended and the Committee concurred by motion made and seconded by Directors BORO/ELSBERND 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 execution of a Funding Agreement with the San Francisco County Transportation Authority (SFCTA), consistent with the Board’s November 2008 approval of a Memorandum of Understanding with the Metropolitan Transportation Commission and the SFCTA, that committed the District to providing $75 million toward the reconstruction of Doyle Drive.

Action by the Board at its meeting of September 23, 2011
Resolution

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

     
5.

Authorize Approval of a 13-Month Contract Extension to the Agreement between the Bay Area Toll Authority and ACS State and Local Solutions, Inc., for Operation of the Fastrak® Regional Customer Service Center

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to approve a 13-month contract extension to the agreement between the Bay Area Toll Authority (BATA) and ACS State and Local Solutions, Inc. (ACS), for operation of the FasTrak® Regional Customer Service Center (CSC).

The staff report stated that the District has been a partner with the BATA for the operation and management of the FasTrak® Regional Customer Service Center, which manages automated toll collection and processes all toll violations for Bay Area toll facilities, pursuant to the Cooperative Agreement between the District and BATA, whereby BATA is the Contracting Agency for all regional CSC contracts. The staff report also stated that the Board, at its meeting of April 10, 2009, authorized concurrence with a four-year extension of the contract between BATA and ACS for operation of the CSC, which expires in May 2013, and includes a cost reduction from the original price structure. BATA is currently in the process of replacing the toll collection systems for the seven state-owned bridges in the Bay Area and replacement is scheduled to be complete in June 2013. A 13-month contract extension through June 2014 will assist BATA in ensuring that their toll collection system replacement project is complete and all issues have been addressed prior to potentially cutting over to a new CSC. In addition, the 13-month contract extension will maintain both the contract pricing and the services offered under current business practices, with the estimated cost being $20,654,000.00 ($3,201,000.00 District funds and $17,453,000.00 BATA funds).

A copy of the staff report is available from 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/Committee of the Whole recommends that the Board of Directors approve a 13-month contract extension to the Agreement between the Bay Area Toll Authority and ACS State and Local Solutions, Inc., for operation of the FasTrak® Regional Customer Service Center; with the understanding that requisite funds will be included in the FY 12/13 and the FY 13/14 Bridge Division Operating Budgets.

Action by the Board at its meeting of September 23, 2011
Resolution

AYES (10): Directors Boro, Cochran, Elsbernd, Moylan, Pahre, Renée, Sobel and Stroeh; 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 Two Months Ending July and August 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 two months ending August 31, 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 One and Two Months Ending July and August 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.

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 11:14 a.m.

   
   

 

Respectfully submitted,

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