January 26, 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 26, 2012, at 10:15 a.m., Chair Stroeh presiding.

Committee Members Present (8): Chair Stroeh; Directors Cochran, Eddie, Elsbernd, Grosboll, Moylan and Sobel; President Reilly (Ex Officio)
Committee Members Absent (1): Vice Chair Pahre
Other Directors Present (4): Directors Arnold, Fredericks, Rabbitt and Renée

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

Staff Present: General Manager Denis Mulligan; Auditor-Controller Joseph Wire; Acting District Engineer John Eberle; Secretary of the District Janet Tarantino; Attorney David Miller; Deputy General Manager/Bridge Division Kary Witt; Deputy General Manager/Ferry Transit Division James Swindler; Deputy General Manager/Administration and Development Kellee Hopper; Assistant Clerk of the Board Lona Franklin

Visitors Present: Nancy Jones, PFM Asset Management, LLC

1. Ratification of Previous 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 the investment report, written one week ago, shows changes from November to December 2011. She indicated that the Federal Reserve Board (Fed) had previously reported that target interest rates would remain low through 2015. However, they have now revised their projection and reported that rates will remain low through 2014. She observed that the low interest rates will limit earnings.

She also reported that the District’s portfolio contains General Electric (GE) notes which, at the time of purchase, showed a 1.70% yield. These were sold and produced a $17,000.00 gain for the District. Additional GE notes were purchased on behalf of the District, with a higher yield of 2.19%. She stated that earnings on these notes are expected to be higher. She stated that PFM follows the market on a daily basis to find such opportunities for the District.

Ms. Jones commented that the United States economy remains sluggish. She noted that the job market is improving and that December 2011, unemployment figures were relatively lower than the previous months. The current jobless rate stands at 377,000 and, as long as that figure remains below 400,000, positive changes can be expected.

Discussion ensued, including the following inquiries:

  • Director Sobel made the following inquiries:
    • He inquired as to PFM’s opinion regarding the forecast by the Fed. In response, Ms. Jones stated that, from the standpoint of additional clarity, it is seen as a positive indication.
    • He inquired as to whether the Fed governors had announced the change, and not the Fed staff. Ms. Jones responded affirmatively.
    • He inquired as to the difference one would see if Fed staff had made the announcement. In response, Ms. Jones stated that PFM follows the pronouncements of the Fed governors and uses those predictions. She indicated that it is helpful to decision-making to know that rates will not rise for two years. She concluded by stating that the information regarding the Fed’s forecast is new, having been made public just yesterday.
    • He inquired as to whether changes are expected in 2013. In response, Ms. Jones stated that the position of the governors will become clearer by 2013 and that past experience with specific statements of individual Fed governors is helpful in determining expected outcomes based on those statements. She concluded by stating that PFM economists are writing an opinion that is expected to become public next week.

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/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 the following actions by the Auditor-Controller:

  a. The Board of Directors ratifies commitments and/or expenditures totaling $22,418.00 for the period December 1, 2011 through December 31, 2011;
  b. Ratify investments made by the Auditor-Controller during the period December 6, 2011, through January 16, 2012, as follows:
       
 
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
General Electric Cap Corporate Notes
01/09/12
01/09/15
3,496,360.00
2.19
HSBC USA, Inc., Commercial Paper
01/12/12
04/11/12
5,516,412.00
0.26
  c. Authorize the Auditor-Controller to re-invest, within the established policy of the
Board, investments maturing between January 17, 2012, and February 13, 2012, 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 December 2011, as prepared by PFM.

Action by the Board at its meeting of February 10, 2012 – Resolution
CONSENT CALENDAR

AYES (12): Directors Arnold, Cochran, Elsbernd, Fredericks, Moylan, Rabbitt, 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 in the FY 11/12 Bus Transit Division Capital Budget Relative to the Award of Contract No. 2012-BT-6, Novato Bus Facility Security Improvements, to Massa Construction Co., 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 the Committee’s concurrence to authorize a budget increase in the FY 11/12 Bus Transit Division Capital Budget, in the amount of $333,300.00, relative to Contract No. 2012-BT-6, Novato Bus Facility Security Improvements.

The staff report provided details regarding the award of Contract No. 2012-BT-6 to Massa Construction Co., Inc., stating that this Project is included in the FY 11/12 Bus Transit Division Capital Budget at a total cost of $866,700.00 and is funded with $650,000.00 in Federal Transit Security Grant Program funds (TSGP) and $216,700.00 in District funds. A capital budget increase in the amount of $333,300.00 is required to fully fund this project at the estimated total cost of $1,200,000.00. The staff report stated that, recently, Federal Transit Administration (FTA) grant funds were identified to support this Project. The total estimated Project cost of $1,200,000.00 will be funded as follows: $650,000.00 Federal TSGP funds (54%), $440,000.00 FTA funds (37%), and $110,000.00 District funds (9%). The report concluded by stating that, since this Project originally included $216,700.00 in District funds, $106,700.00 will be returned to District reserves.

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/MOYLAN 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 $333,300.00, relative to Contract No. 2012-BT-6, Novato Bus Facility Security Improvements.

Action by the Board at its meeting of January 27, 2012
Refer to Building and Operating Committee/Committee of the Whole
Meeting of January 26, 2012

AYES (12): Directors Arnold, Cochran, Elsbernd, Fredericks, Moylan, Rabbitt, Renée, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

       
3. Authorize Actions Related to Grant Programs
   
  a. Authorize Actions Relative to the Application and Award of FY 11/12 California Transit Security Grant Program Funds

In a memorandum to Committee, Director of Capital and Grant Programs Gayle Prior, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to authorize the General Manager or his designees to execute for and on behalf of the District any actions necessary, including executing and submitting related certifications and assurances, grant applications and agreements, relative to the FY 11/12 California Transit Security Grant Program administered by the California Emergency Management Agency (Cal EMA).

The staff report stated that, in November 2006, California voters approved Proposition 1B, the Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act of 2006, which provides almost $20 billion in State general obligation bonds for approximately 14 different categories of transportation projects including the Transit Security Grant Program (TSGP), administered by the Cal EMA.

The staff report stated that funds from the TSGP are available to State Transit Assistance eligible agencies, including the District. As a part of the FY 11/12 California Transit Security Grant Program, California Transit Assistance Fund, Program Guidelines and Application Kit, issued by the Cal EMA, project applicants are required to adopt a resolution appointing individuals or positions to act on behalf of the applicant and its governing body and to provide related certifications and assurances.

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 SOBEL/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 the General Manager or his designee to execute for and on behalf of the District any actions necessary, including executing and submitting related certifications and assurances, grant applications and agreements relative to the FY 11/12 California Transit Security Grant Program administered by the California Emergency Management Agency.

Action by the Board at its meeting of January 27, 2012 – Resolution
NON-CONSENT CALENDAR

AYES (12): Directors Arnold, Cochran, Elsbernd, Fredericks, Moylan, Rabbitt, Renée, Sobel and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

       
4.

Monthly Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares (for Six Months Ending December 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 six months ending December 31, 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 reported that the schedules within the staff report show that Bridge tolls, as well as bus transit and ferry transit fares, have increased over the past six months. He indicated that the sluggish United States economy has likely affected these figures. While unemployment remains high, improvement continues. He reported that the unemployment rate in the City and County of San Francisco has an effect upon the methods of travel chosen by the public.

Discussion ensued, including the following inquiries:

  • Director Elsbernd inquired as to whether the increase in Bridge traffic could be the result of increased use of FasTrak®. In response, Mr. Wire stated that the increase in traffic across the Bridge has not been greater than in the past.
  • Director Grosboll inquired as to whether the reduction in expenses seen in this report may be due to the timing of payments made by the District. In response, Mr. Wire indicated that timing of payments is partly responsible for the lower expense figures. He stated that health insurance and Workers’ Compensation
    expenses are somewhat lower than in the recent past, but cautioned that these two categories of expenses are subject to quick increases if employees become ill or injured.

Action by the Board – None Required

         
5. Monthly Review of Financial Statements (for Six Months Ending December 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

         
6. Review of the Auditor-Controller’s FY 11/12 Second 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, Review of Auditor-Controller’s FY 11/12 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

         
7. Review of the Auditor-Controller’s FY 11/12 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, Review of Auditor-Controller’s FY 11/12 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

         
8.

Public Comment

There was no public comment.

       
9.

Adjournment

All business having been concluded, the meeting was adjourned at 10:31 a.m.

       

 

Respectfully submitted,

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