March 22, 2012

 

REPORT OF THE FINANCE-AUDITING COMMITTEE

 

Honorable Board of Directors
Golden Gate Bridge, Highway
  and Transportation District

Honorable Members:

A meeting of the Finance-Auditing Committee (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, March 22, 2012, at 10:46 a.m., Chair Stroeh presiding.

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

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/Ferry Transit Division James Swindler; Acting Deputy General Manager/Administration and Development Downing; Director of Budget and Program Analysis Jennifer Mennucci; 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 in November 2011, PFM had purchased a $3.085 million 4.5-year City and County of San Francisco Municipal Bonds (SF bonds) at 1.34%, which was .56% higher than comparable-maturity United States (U.S.) Treasury notes. Since November, the price of the bonds has risen significantly. On February 28, 2012, PFM sold the SF bonds at a yield of 0.65%, realizing a gain for the District, and reinvested the proceeds in similar-maturity U.S. Treasury notes with a yield of 0.74%.

She stated that, in early March, PFM purchased a National Australia Bank security on the District’s behalf, with a two-year floating rate. This is a good investment in a high quality bank with no exposure to Europe. She indicated that every three months the rate will increase by 40 basis points. It is a two-year investment in the District’s portfolio.

Ms. Jones reported that the U.S. economy is improving. Interest rates and gas prices are higher. The uncertainty of the past several months has forced investors to choose different investments. She stated that the long-term refinancing operation supplying cash to European banks has settled down, so prices are expected to decrease somewhat, while interest rates are expected to rise.

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 has no commitments and/or expenditures to ratify for the period February 1, 2012 through February 29, 2012;
  b. Ratify investments made by the Auditor-Controller during the period February 14, 2012, through March 12, 2012, as follows:
 
Security
Purchase Date
Maturity Date
Original Cost
Percent Yield
Barclays US Funding Commercial Paper 02/21/2012 05/23/2012 7,336,923.66 0.26
US Treasury Note 02/28/2012 06/30/2016 3,681,001.76 0.74
Toyota Motor Credit Commercial Paper 03/09/2012 09/07/2012 3,453,003.11 0.40
US Bancorp Notes 03/09/2012 05/15/2014 1,608,450.00 0.85
  c. Authorize the Auditor-Controller to re-invest, within the established policy of the Board, investments maturing between March 13, 2012, and April 16, 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 February 2012, as prepared by PFM.

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

AYES (7): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, and Sobel; President Reilly (Ex Officio)
NOES (0): None
ABSENT (2): Directors Grosboll and Moylan

       
2. Authorize Budget Adjustment(s) and/or Transfer(s)
   
  a. Budget Transfer from the FY 11/12 Bridge Division Operating Budget to the FY 11/12 Ferry Transit Division Operating Budget Relative to the Ratification of the Award of an Emergency Contract to Bay Ship & Yacht Co., for Dry-Docking and Repair of the M.S. Sonoma

In a memorandum to Committee, Director of Engineering and Maintenance/Ferry Transit Division Christian Stark, Deputy General Manager/Ferry Transit Division James Swindler and General Manager Denis Mulligan reported on staff’s recommendation for the Committee’s concurrence to approve a budget transfer in the amount of $199,000.00 from the FY 11/12 Bridge Division Operating Budget to the FY 11/12 Ferry Transit Division Operating Budget, relative to the ratification of the award of an emergency contract to Bay Ship & Yacht Co., for dry-docking and repair of the M.S. Sonoma.

The staff report provided details regarding the catastrophic failure of the M.S. Sonoma’s starboard propeller strut which required the General Manager to award an emergency contract to Bay Ship & Yacht Co. (BSY) in the amount of $198,921.13, for dry docking and repair. The invoice from BSY was submitted in February in the amount of $198,921.13, including dry docking, labor, and sales tax. The invoice was analyzed in relation to previous work performed by BSY and the time and materials data sheets provided by the shipyard. Staff determined that the level of effort was appropriate and that the price invoiced by BSY is fair and reasonable. The amount will be charged against the vessel’s maintenance budget in the FY11/12 Ferry Transit Division Operating Budget.

Pursuant to Public Contract Code Section 22050, the General Manager has been granted the authority to waive the competitive bidding process and to approve procurement of necessary equipment, services and supplies, and to repair or replace District facilities in the event of an emergency. The General Manager is to report back to the Board of Directors when such an emergency action is taken. Board approval is required for any contracted work in excess of $100,000.00.

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 COCHRAN/EDDIE to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors approve a budget transfer from the FY 11/12 Bridge Division Operating Budget to the FY 11/12 Ferry Transit Division Operating Budget, in the amount of $199,000.00, relative to the ratification of the award of an emergency contract to Bay Ship & Yacht Co., for dry-docking and repair of the M.S. Sonoma.

Action by the Board at its meeting of March 23, 2012
Refer to Building and Operating Committee/Committee of the Whole
Meeting of March 22, 2012

AYES (9): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, Fredericks, Renée and Sobel; President Reilly (Ex Officio)
NOES (0): None
ABSENT (2): Directors Grosboll and Moylan

     
  b. Budget Increase and Budget Transfer Relative to the Award of Contract No. 2012-FT-9, M.V. Del Norte Ferry Accessibility Improvements, to Bay Ship & Yacht Co.

In a memorandum to Committee, Director of Engineering and Maintenance/Ferry Transit Division Christian Stark, Deputy General Manager/Ferry Transit Division James Swindler and General Manager Denis Mulligan reported on staff’s recommendation for the Committee’s concurrence to authorize a budget increase and a budget transfer to the Ferry Transit Division Operating Budget, to fully fund items associated with inspections and regularly scheduled maintenance of the M.V. Del Norte.

The staff report provided details regarding the award of Contract No. 2012-FT-9 to Bay Ship & Yacht Co., stating that this Project is included in the FY 11/12 Ferry Transit Division Capital Budget at a total cost of $103,500.00. A capital budget increase in the amount of $200,000.00 from District Reserves is required, in the amount of $303,500.00; the project will be 100% District funded.

The staff report also stated that the vessel maintenance operating funds will be transferred from the FY 11/12 Bridge Division Operating Budget to the FY 11/12 Ferry Transit Division Operating Budget in the amount of $120,000.00 to cover routine maintenance.

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/EDDIE to forward the following recommendation to the Board of Directors for its consideration:

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors authorize a budget transfer from the Bridge Division Operating Budget to the Ferry Transit Division Operating Budget, in the amount of $120,000.00, to fully fund items associated with inspections and regularly scheduled maintenance; and, authorize a budget increase in the FY 11/12 Ferry Transit Division Capital budget in the amount of $200,000.00, to be funded from District reserves; relative to Contract No. 2012-FT-9, M.V. Del Norte ADA Modifications.

Action by the Board at its meeting of March 23, 2012
Refer to Building and Operating Committee/Committee of the Whole
Meeting of March 22, 2012

AYES (9): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, Fredericks, Renée and Sobel; President Reilly (Ex Officio)
NOES (0): None
ABSENT (2): Directors Grosboll and Moylan

   
3.

Authorize Actions Related to Grant Programs

There were no “Actions Related to Grant Programs” to discuss.

     
4. Authorize Execution of an Agreement between the San Francisco Municipal Transportation Agency and the Golden Gate Bridge, Highway and Transportation District for Ticket Vending Machines Support Services

In a memorandum to Committee, Director of Budget and Program Analysis Jennifer Mennucci, Auditor-Controller Joseph Wire, Deputy General Manager/Ferry Transit Division James Swindler and General Manager Denis Mulligan reported on staff’s recommendation to authorize an Agreement with San Francisco Municipal Transportation Agency (SFMTA) to provide data platform support services for the District’s ticket vending machines.

The Board, by Resolution No. 2010-017 at its meeting of February 26, 2010, approved actions relative to the procurement of equipment and services for the Ferry Electronic Fare System Project, including authorizing the General Manager to enter into a Cooperative Agreement (Agreement) with the Metropolitan Transportation Commission (MTC) for procurement of electronic ticket vending machines (TVM) and related hardware and software enhancements, with Cubic Corporation, dba Cubic Transportation Systems (Cubic). Under the terms of the Agreement, the MTC would procure from Cubic, on the District’s behalf, electronic ferry TVMs and associated hardware and software for use as part of the regional Clipper® program.

The staff report stated that the District was able to take advantage of a favorable hardware price for the electronic ticket vending machines via a joint partnership with the SFMTA, which required the same type of electronic ticket vending machines from Cubic as did the District.

The staff report further stated that the SFMTA has already purchased the Cubic NextFare Central System (NCS), a necessary component for managing TVM maintenance and sales data, including notification of the need for maintenance or service, financial accounting of TVM sales and monitoring the overall operation of the devices.

The staff report also stated that the cost to the District of procuring an NCS separately is estimated at $1 million. The SFMTA has offered the District access to its NCS through a proportional Cost Sharing Agreement, which has been negotiated at $47,735.00 annually, not to exceed $450,000.00 for the term of the Agreement, January 1, 2011, through March 31, 2018, based upon the number of District TVMs and faregates utilizing the NCS system.

At the meeting, Ms. Mennucci briefly summarized the staff report, stating that staff recommends entering into a formalized Agreement to use SFMTA’s servers. SFMTA already has its server in place.

Discussion ensued, including the following inquiries:

  • Director Renée made the following inquiries:
    • She inquired as to whether money, such as from a debit card, would be entered into the District’s terminals. Ms. Mennucci responded affirmatively.
    • She inquired as to whether staff has concerns about devices being attached to the server during night-time hours. In response, Mr. Mulligan stated that, if the Director is referring to concerns about stolen ATM personal identification numbers, the server for which staff is recommending approval does not operate in that fashion, nor does it serve individual customers.

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 recommends that the Board of Directors authorize execution of an Agreement with the San Francisco Municipal Transportation Agency, at a total cost not to exceed $450,000.00, to provide data platform support services for the District's ticket vending machines, for the period January 1, 2011, through March 31, 2018; with the understanding that requisite funds are available in the FY 11/12 Ferry Transit Division Operating Budget and that future years will be budgeted accordingly.

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

AYES (7): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, and Sobel; President Reilly (Ex Officio)
NOES (0): None
ABSENT (2): Directors Grosboll and Moylan

     
5. Approve Actions Relative to the Implementation of a Demonstration Project Relative to the Management of Passenger Reservations for Special Event Ferry Service to AT&T Park

In a memorandum to Committee, Director of Budget and Program Analysis Jennifer Mennucci, Auditor-Controller Joseph Wire, Deputy General Manager/Ferry Transit Division James Swindler and General Manager Denis Mulligan reported on staff’s recommendation to authorize a demonstration project that includes an online system to manage passenger reservations for Golden Gate Ferry service to AT&T Park and a charge of $1 per one-way reservation, for the 2012 baseball season.

The staff report stated that, since March 31, 2000, the Golden Gate Bridge, Highway and Transportation District (District) has offered special event Golden Gate Ferry service to and from the Larkspur Ferry Terminal and AT&T Park for customers attending San Francisco Giants games. Unlike regular commuter ferry service, special event service, such as that to and from major league baseball games, has the unique distinction of generating intense demand for ferry service on specific dates and at particular times, with a single outbound ferry and a single return ferry.

The staff report further stated that, for the 2011 baseball season, the District contracted with Tickets.com to manage the reservations system and to provide tickets for special event ferry service, at a cost to ticket purchasers of approximately $3.00 to $4.00 per one-way ticket. The District’s public website, through its existing online store, has the capacity to: 1) manage a ferry passenger reservation system; 2) provide tickets for special event ferry service; and, 3) securely collect customer fees.

The staff report provided staff’s recommendation for the implementation of a demonstration project for the use of an online system to manage passenger reservations for special event Golden Gate Ferry service to and from the Larkspur Ferry Terminal and AT&T Park during the 2012 San Francisco Giants baseball season. Staff recommends that the District charge a $1.00 fee for a one-way ticket reservation, and staff anticipates that this fee will generate approximately $60,000.00 in revenue, to cover the cost of website development, maintenance and administrative costs associated with the operation of the online reservation system.

At the meeting, Ms. Mennucci briefly summarized the staff report, stating that staff recommends that the District provide ticket reservation services through its existing online store, and charge $1.00 per one-way reservation to cover the costs of implementation, operation and maintenance of the system.

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 recommends that the Board of Directors authorize the implementation of a demonstration project for the use of an online system to manage passenger reservations for special event Golden Gate Ferry service to and from the Larkspur Ferry Terminal and AT&T Park during the 2012 San Francisco Giants baseball season, and a charge of $1.00 for a one-way ticket reservation, to cover the costs of implementation, maintenance and administrative costs associated with the operation of the online reservation system.

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

AYES (7): Chair Stroeh; Vice Chair Pahre; Directors Cochran, Eddie, Elsbernd, and Sobel; President Reilly (Ex Officio)
NOES (0): None
ABSENT (2): Directors Grosboll and Moylan

       
6. Monthly Review of Golden Gate Bridge Traffic/Tolls and Bus and Ferry Transit Patronage/Fares (for Eight Months Ending February 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 eight months ending February 29, 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

       
7. Monthly Review of Financial Statements (for Eight Months Ending February 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 for Eight Months Ending February 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

         
  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 for Eight Months Ending February 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

         
5.

Public Comment

There was no public comment.

       
9.

Adjournment

All business having been concluded, the meeting was adjourned at 10:54 a.m.

       

 

Respectfully submitted,

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