January 12, 2012

 

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, January 12, 2012, at 10:47 a.m., Chair Stroeh presiding.

Committee Members Present (7): Chair Stroeh; Directors Cochran, Eddie, Grosboll, Moylan and Sobel; Vice Chair Pahre
Committee Members Absent (2): Director Elsbernd; President Reilly (Ex Officio)
Other Directors Present (5): Directors Arnold, Renée, Sears, Snyder and Theriault

Committee of the Whole Members Present (12): Directors Arnold, Cochran, Moylan, Pahre, Renée, Sears, Snyder, Sobel, Stroeh and Theriault; Second Vice President Grosboll; First Vice President Eddie
Committee of the Whole Members Absent (6): Directors Campos, Chu, Elsbernd, Mar and Rabbitt; President Reilly (Ex Officio)

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

Staff Present: General Manager Denis Mulligan; Auditor-Controller Joseph Wire; Secretary of the District Janet Tarantino; Attorney David Miller; Deputy General Manager/Bridge Division Kary Witt; Deputy General Manager/Bus Transit Division Teri Mantony; Deputy General Manager/Ferry Transit Division James Swindler; Deputy General Manager/Administration and Development Kellee Hopper; Director of Planning Ron Downing; Director of Risk Management and Safety William Stafford; Public Affairs Director Mary Currie; Assistant Clerk of the Board Lona Franklin

Visitors Present: David Rzepinski, General Manager, Marin County Transit District; Rex Clack, Sterling & Clack; David Schonbrunn, Transportation Solutions Defense and Education Fund (TRANSDEF)


1. Report by Attorney David Miller

Attorney David Miller reported that, in the matter of Thomson v. Golden Gate Bridge, Highway and Transportation District, which was heard during Closed Session at the December 16, 2011, meeting of the Finance-Auditing Committee/Committee of the Whole, the District’s Marine Attorney, Special Counsel Rex Clack, reported that, after the Agenda for today’s Finance-Auditing Committee meeting was published, he received a counter-offer from the plaintiff. Attorney Miller stated that the Brown Act allows additions to an Agenda if there is a need for immediate action, and if the matter arose subsequent to the posting of the Agenda. He stated that making the addition would require a motion and a 2/3 vote in favor of the addition. Should the Committee vote to add this item to the Agenda, it would be considered in Closed Session today.

Directors COCHRAN/MOYLAN moved and seconded to add Thomson v. Golden Gate Bridge, Highway and Transportation District to the Agenda for the Finance-Auditing Committee Meeting of January 12, 2012, to be heard during Closed Session.

AYES (12): Directors Arnold, Cochran, Moylan, Pahre, Renée, Sears, Snyder, Sobel, Stroeh and Theriault; Second Vice President Grosboll; First Vice President Eddie
NOES (0): None

Action by the Board at its Meeting of January 13, 2012 – None Required

     
2. Authorize Budget Adjustment(s) and/or Transfer(s)
  There were no "Budget Adjustment(s) and/or Transfer(s)" to discuss.
     
3. Authorize Actions Related to Grant Programs
  There were no “Actions Related to Grant Programs” to discuss.
   
4. Authorize the Setting of a Public Hearing Relative to a Proposal to Increase Ferry “Stored Value” Clipper® Fares
       
  a. Staff Report and Presentation

In a memorandum to Committee, Director of Planning Ron Downing, Deputy General Manager/Administration and Development Kellee Hopper, Deputy General Manager/Ferry Transit Division James Swindler, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to authorize the setting of a public hearing on Thursday, March 22, 2012, at 9:30 a.m., in the Board Room, Administration Building, Golden Gate Bridge Toll Plaza, San Francisco, CA, for the purpose of discussing a proposal to increase ferry “stored-value” Clipper® fares.

The Board of Directors (Board), by Resolution No. 2009-090 at its meeting of October 30, 2009, adopted the FY 09/10 Financial Plan for Achieving Long-Term Financial Stability (Plan), containing 33 different cost reduction and revenue generating initiatives, intended to address the District’s $132 million five-year projected deficit.

The staff report stated that Phase II of the Plan includes Initiative No. 25, which calls for renewing the 5% annual transit fare increase plan for bus and ferry transit fares. Phase I of the Plan includes Initiative No. 14, which calls for further reduction of ferry fare discounts from 30% to 20% for Translink® (now referred to as Clipper®) riders. The staff report also stated that action to increase ferry “stored-value” Clipper® fares will conclude analysis on Initiative No. 14 and contribute to Initiative No. 25. Conclusion of analysis on Initiative 14, coupled with the proposed changes to Golden Gate Ferry “stored-value” Clipper® fares, will help restore the District to stable financial footing.

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. Downing briefly summarized the staff report, stating that the proposed action will bring Larkspur “stored-value” Clipper® fares in line with the “stored-value” Clipper® fares adopted by the Board in 2011. He stated that Ferry Clipper® “stored-value” fares were last adjusted on January 1, 2011. With that action, cash (or single ride) fares and “stored-value” fares were separated into two distinct fare categories and the previous practice of linking “discounted” fares to full cash fares was ended. The proposal would increase ferry “stored-value” Clipper® fares by 5% on July 1, 2012, and each July 1, through July 1, 2015, and return ferry Clipper® fare increases to the same date as other fare increases within the Golden Gate Transit bus and ferry systems. He reported that, with the proposed action, the District will have a one fare structure for Clipper® fares and a separate one for cash fares. He concluded by stating that staff would bring results of the proposed public hearing before the Board on April 27, 2012, and thus, be able to meet the programming change deadline.

       
  b.

Discussion by the Committee

Discussion ensued, including the following inquiries:

     
   
  • Second Vice President Grosboll made the following inquiries:
    • He inquired as to whether the reason for the proposed action is to increase revenue. In response, Mr. Mulligan stated that, as a policy, the Board has increased fares 5% annually. This action is a continuation of that Board policy. In addition, it will allow fares to keep pace with inflation.
    • He inquired as to whether the increase in fares would impact ridership. In response, Mr. Mulligan stated that, historically, the District has not seen a drop in ridership due to increased fares.
       
  c. Public Comment

David Schonbrunn, Transportation Solutions Defense and Education Fund (TRANSDEF), stated he has been troubled by the program of annual 5% increases in fares. He stated that other jurisdictions have seen an increase in ridership with reductions in fares. He opined that District policy should align more closely with larger, regional transportation policy, rather than the District’s narrow financial needs. He noted that the proposed increases are higher than the inflation rate. He suggested that the District should, instead, eliminate the discount on FasTrak® tolls, and index that so it will increase annually.

       
  d. Action by the Committee

Staff recommended and the Committee concurred by motion made and seconded by Directors PAHRE/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 authorize the setting of a public hearing on Thursday, March 22, 2012, at 9:30 a.m., in the Board Room, Administration Building, Golden Gate Bridge Toll Plaza, San Francisco, CA, for the purpose of discussing a proposal to increase ferry “stored-value” Clipper® fares.

AYES (12): Directors Arnold, Cochran, Moylan, Pahre, Renée, Sears, Snyder, Sobel, Stroeh and Theriault; Second Vice President Grosboll; First Vice President Eddie
NOES (0): None

Action by the Board at its Meeting of January 13, 2012 -- Resolution

       
5. Ratify the Action of the General Manager to Approve Renewal of the Automobile Liability Policy Relative to the Doyle Drive Lane Diversion Program and Roadway Patrol/Tow Services Agreement with the California State Department of Transportation

In a memorandum to Committee, Director of Risk Management/Safety William Stafford, Deputy General Manager/Administration and Development Kellee Hopper, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to ratify the action of the General Manager to renew the Automobile Liability Policy relative to the Doyle Drive Lane Diversion Program and Roadway Patrol/Tow Services Agreement with the California State Department of Transportation, with a renewal for a six-month term effective January 8, 2012, with a pro-rata cancellation provision, with no penalty, for a premium of $81,302.00, with a liability limit of $2 million, underwritten by Argonaut-Midwest and Axis Surplus Insurance Companies.

The staff report stated that, in January 2010, the Doyle Drive Automobile Liability Policy (Policy) was purchased, to coincide with the initiation of the Doyle Drive Lane Diversion Program and Roadway Patrol/Tow Services Agreement (Agreement) with the California State Department of Transportation (Caltrans), and to insure that the District would assume virtually no automobile liability risk while performing services on Doyle Drive during the first phases of the construction of the Presidio Parkway. The Policy is specific for coverage of twenty-eight non-revenue District vehicles, including tow trucks, lane changing vehicles, patrol cars and the District fire engine.

The staff report also stated that the Agreement with Caltrans, expected to expire in November 2011, was extended due to unforeseen delays. In order to maintain automobile liability coverage for the twenty-eight non-revenue vehicles referenced above for the period of time during which services are performed on Doyle Drive during the first phases of the construction of the Presidio Parkway requires a short-term, six-month automobile liability policy with a pro-rata cancellation provision.

The staff report stated that obtaining a short term policy, as described above, was complex in that a new underwriter had to be found, and that underwriter required more information on the scope of the risk, including the number of vehicles potentially at risk. Negotiating a no-penalty provision in the pro-rata cancellation provision was also complex and, due to the complexities, the General Manager took action to renew the District’s Doyle Drive Automobile Liability Policy, and that action now requires ratification by the Board.

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/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 ratify the action of the General Manager to renew the Automobile Liability Policy relative to the “Doyle Drive Lane Diversion Program and Roadway Patrol/Tow Services Agreement” with the California State Department of Transportation, with a liability limit of $2 million underwritten by Argonaut-Midwest and Axis Surplus Insurance Companies, for a premium of $81,302.00, for a six-month term, effective January 8, 2012, with a pro-rata cancellation provision with no penalty, with the understanding that requisite funds are available in the FY 11/12 District Division Operating Budget.

AYES (12): Directors Arnold, Cochran, Moylan, Pahre, Renee, Sears, Snyder, Sobel, Stroeh and Theriault; Second Vice President Grosboll; First Vice President Eddie
NOES (0): None

Action by the Board at its Meeting of January 13, 2012 -- Resolution

       
6. Closed Session

Attorney David Miller, at the request of Chair Stroeh, stated that the Committee would convene in Closed Session to discuss the following matter, added to the Agenda for this meeting:

       
  “a. Conference with Legal Counsel – Existing Litigation
Pursuant to Government Code Section 54956.9(a)
Report Sterling & Clack
Susan Thomson v. Golden Gate Bridge, Highway and Transportation District”
       
  After Closed Session, Chair Stroeh called the meeting to order in Open Session with a quorum present. Attorney Miller reported that the Committee had met in Closed Session, as permitted by the Brown Act, to discuss the matter of pending litigation listed above. He reported that the Committee heard a report on the matter of Susan Thomson v. Golden Gate Bridge, Highway and Transportation District and that instructions have been given to Special Counsel Rex Clack, of the law firm of Sterling & Clack, for the disposition of this matter.
       
7.

Public Comment

There was no public comment.

     
8.

Adjournment

All business having been concluded, the meeting was adjourned at 11:00 a.m.

     

 

Respectfully submitted,

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