February 23, 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, February 23, 2012, at 10:35 a.m., Chair Stroeh presiding.

Committee Members Present (8): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, Grosboll and Moylan; President Reilly (Ex Officio)
Committee Members Absent (1): Director Sobel
Other Directors Present (6): Directors Arnold, Chu, Fredericks, Rabbitt, Renée and Snyder

Committee of the Whole Members Present (14): Directors Arnold, Chu, Cochran, Elsbernd, Fredericks, Moylan, Pahre, Rabbitt, Renée, Snyder and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)

Committee of the Whole Members Absent (5): Directors Campos, Mar, Sears, Sobel and Theriault

Staff Present: General Manager Denis Mulligan; Auditor-Controller Joseph Wire; District Engineer Ewa Bauer; 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/Administration and Development Kellee Hopper; Director of Risk Management and Safety William Stafford; 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 two-year United States (U.S.) Treasury Notes hit 30 basis points this morning, which is an indicator that the U.S. economy continues to improve. Jobless claims have been fewer than 400,000 for the last fourteen weeks. U.S. workers have added one-tenth of an hour to the average work week, with the new average now at 34.5 hours.

She also reported that the Federal Open Market Committee (FOMC) released an announcement that interest rates will remain low through 2014. This is a change from prior releases, which had pointed to mid-2013 for a change in Federal Reserve Board policy.

With regard to the District’s portfolio, she indicated that, considering the interest rate information reported by FOMC, PFM plans to take the opportunity to purchase longer term notes on behalf of the District. She stated that PFM sold General Electric (GE) Corporate Notes on the District’s behalf, which had 1.5 years remaining until maturity. With the proceeds, three-year GE Notes were purchased, with a higher yield of 2.19% to maturity.

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 the following actions by the Auditor-Controller:

  a. The Board of Directors has no commitments and/or expenditures to ratify for the period January 1, 2012, through January 31, 2012;
  b. Ratify investments made by the Auditor-Controller during the period January 17, 2012, through February 13, 2012, as follows: During the reporting period, January 17, 2012, through February 13, 2012, $0.00 (zero dollars) matured;
  c. Authorize the Auditor-Controller to re-invest, within the established policy of the
Board, investments maturing between February 14, 2012, and March 12, 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 January 2012, as prepared by PFM.

Action by the Board at its meeting of April 27, 2012 – Resolution
CONSENT CALENDAR

AYES (14): Directors Arnold, Chu, Cochran, Elsbernd, Fredericks, Moylan, Pahre, Rabbitt, Renée, Snyder and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None


       
2. Approve Renewal of the Marine Insurance Program

In a memorandum to Committee, Director of Risk Management/Safety William Stafford, Deputy General Manager/Administration & Development Kellee Hopper, Auditor-Controller Joseph Wire and General Manager Denis Mulligan reported on staff’s recommendation to approve renewal of the District’s Marine Insurance Program.

The staff report stated that the Marine Insurance Program, which renews on February 28, 2012, is comprised of a Hull and Machinery/Protection and Indemnity Insurance policy, a Vessel Pollution Insurance policy and an Excess Marine Liability Insurance policy (including Terminal Operator’s Legal Liability and Excess Protection and Indemnity insurance), as well as the Terrorism Risk Insurance Act (TRIA) endorsements for the five layers of Excess Marine Liability insurance. The Hull and Machinery/Protection and Indemnity Insurance policy provides coverage in amounts equal to the approximate replacement costs of the ferry vessels, with primary Protection & Indemnity limits of $1 million, and current limits of liability for the Excess Protection and Indemnity Insurance and the Marine Liability Insurance of $100 million. There were no changes to the limits or the terms and conditions for the 2012 renewal of the Marine Insurance Program.

The staff report also stated that the District obtained competitive quotes from AGCS Marine Insurance Company (Fireman’s Fund), National Union, Starr Indemnity and Navigators Insurance Company. The renewal premium of $248,343.00 for one year for the Hull and Machinery/Protection and Indemnity Insurance policy is an increase of $29,334.00 over the one-year term ending February 27, 2012, due to the increase in hull values of the M.V. Napa and the M.V. Golden Gate. The renewal premium of $132,425.00 for one year for the Excess Marine Liability Insurance policy is the same as that for the one-year term ending February 27, 2012, and the renewal premium of $5,368.00 for one year for the Vessel Pollution Insurance policy with Great American is the same as that for the one-year term ending February 27, 2012.

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. Stafford briefly summarized the staff report, stating that the policies include machinery protection, and indemnity, as well as excess liability insurance and pollution liability insurance.

Staff recommended and the Committee concurred by motion made and seconded by Directors REILLY/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 approve renewal of the District’s Marine Insurance Program, as follows:

  a. Renew the Hull & Machinery/Protection and Indemnity Insurance policy with AGCS Marine Insurance Company (40%), National Union (25%), Starr Indemnity (25%) and Navigators Insurance Company (10%), with an aggregate deductible of $350,000.00 and a limit of liability of $1 million, including Terrorism Risk Insurance Act (TRIA) endorsements for the 2012 Policy Year, at a premium of $248,343.00, for a one-year term, effective February 28, 2012;
  b. Renew the Excess Marine Liability Insurance policy (including Terminal Operator’s Legal Liability and Excess Protection and Indemnity Insurance) with Starr Indemnity, National Union, AGCS Marine, Continental, Great American and Navigators, with a limit of liability of $100 million, including TRIA endorsements for the 2012 Policy Year, at a premium of $132,425.00, for a one-year term, effective February 28, 2012; and,
  c. Renew the Vessel Pollution Liability Insurance policy with Great American at an annual premium of $5,368.00, for a one-year term, effective February 28, 2012;
 

with the understanding that requisite funds are available in the FY 11/12 Ferry Transit Division Operating Budget and that requisite funds will be included in the FY 12/13 Ferry Transit Division Operating Budget.

Action by the Board at its meeting of February 23, 2012 – Resolution
NON-CONSENT CALENDAR

AYES (14): Directors Arnold, Chu, Cochran, Elsbernd, Fredericks, Moylan, Pahre, Rabbitt, Renée, Snyder and Stroeh; Second Vice President Grosboll; First Vice President Eddie; President Reilly (Ex Officio)
NOES (0): None

       
3. Monthly Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares (for Seven Months Ending January 2012)

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 seven months ending January 2012. 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

       
4. Monthly Review of Financial Statements (for Seven Months Ending January 2012)
         
  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

         
5.

Public Comment

There was no public comment.

       
6.

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