MEETING OF THE Budget and Finance SubcommitteeWeb)1.pdf · Questions and Answers Councilmember Sherwood asked what Arizona Lottery Funds are. Mr. McCormack said Arizona Lottery Fundthe

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 602-262-7433

MEETING OF THE

Budget and Finance Subcommittee

MEETING DATE

March 5, 2015

TIME 12:00 p.m.

LOCATION Valley Metro 101 N. 1st Ave., 10th Floor Lake Mead Conference Room Phoenix, AZ 85003


February 27, 2015

Budget and Finance Subcommittee Agenda

Thursday, March 5, 2015 10th Floor, Lake Mead Conference Room

101 N. 1st Avenue, 10th Floor 12:00 p.m.

For those participating by telephone, please mute your phone when not speaking. Action Recommended

1. Public Comment

An opportunity for general public comment on issues related to Valley Metro. Up to three (3) minutes will be provided for each speaker.

For information

2. Minutes Minutes from the October 9, 2014 BFS meeting are presented for approval.

For action

3. Preliminary FY16 Budget (Budget process and baseline assumptions)

John McCormack will present the FY16 Budget process and baseline assumptions.

For information

4. Renewal and Restatement of the LRT Program Agreement

John McCormack will present information concerning the renewal and restatement of the LRT Program Agreement.

For information

5. Cash Investment Management Services Update John McCormack will provide information regarding issuance of a Request for Proposal (RFP) for Investment Management Services.

For information

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6. Future BFS Agenda Items

Chair Sherwood will request future BFS agenda items from members.

For information

7. Next Meeting The next meeting of the BFS is tentatively scheduled for Thursday, April 2, 2015 at 12:00 p.m.

For information

Qualified sign language interpreters are available with 72 hours notice. Materials in alternative formats (large print, audiocassette, or computer diskette) are available upon request. For further information, please call Rosalia Castro, Valley Metro at 602-495-8211 or TTY at 602-251-2039. To attend this meeting via teleconference, contact the receptionist at 602-262-7433 for the dial-in-information. The supporting information for this agenda can be found on our web site at www.valleymetro.org

http://www.valleymetro.org/


DATE AGENDA ITEM 1 February 27, 2015 SUBJECT Public Comment PURPOSE For information BACKGROUND/DISCUSSION/CONSIDERATION An opportunity for general public comment on issues related to Valley Metro. Up to three (3) minutes will be provided to each speaker. COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION For information only CONTACT John P. McCormack Chief Financial Officer 602-495-7433 [email protected] ATTACHMENTS None

mailto:[email protected]


DATE AGENDA ITEM 2 January 5, 2015

Summary Minutes of the Budget and Finance Subcommittee

October 9, 2014 Lake Mead Conference Room

Phoenix, AZ 12:00 p.m.

Meeting Participants Councilmember, Gary Sherwood, City of Glendale Councilmember, Jenn Daniels, Town of Gilbert (via phone) Vice Mayor, Joe Pizzillo, City of Goodyear Chair McDonald called the meeting to order at 12:14 p.m. 1. Public Comment

None 2. Summary Minutes IT WAS MOTIONED BY COUNCILMEMBER SHERWOOD, MOVED BY COUNCILMEMBER DANIELS, SECONDED BY VICE MAYOR PIZZILLO, AND UNANIMOUSLY CARRIED TO APPROVE THE MAY 15, 2014 BUDGET AND FINANCE SUBCOMMITTEE (BFS) SUMMARY MEETING MINUTES.

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3. FY14 Year-End Update

Valley MetroFiscal Year 2014Financial Results

Budget and Finance SubcommitteeOctober 9, 2014

Councilmember Sherwood introduced John McCormack to present a brief review of the financial highlights of the fiscal year ended June 30, 2013.

Regional Fixed Route Bus Ridership 3-Year Comparison

Regional Fixed Route Ridership was up by 1.3 million passenger rides; a 2.2% decrease over last year.

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Regional Fixed Route BusAverage Daily Ridership

Average weekday ridership was 195,742, down by 8,278 from FY13, or -4.1%. Saturday average ridership was 93,554, down by 3,230 or -3.3%. Sunday average ridership was 64,526, down by 1,088 or -1.7%.

Light Rail Ridership3-Year Comparison

Light rail ridership grew slightly over FY13 to 45,395 additional riders, or 0.3%. Ridership was up 5% the prior year.

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Light Rail – Average Daily Ridership

Average weekday ridership was 43,827, down by 202 from FY13, or -.5%. Saturday average ridership grew by 1,613 rides, to total 34,982, 4.8%. Sunday average ridership also grew slightly to 24,386, up by 0.8%.

Valley Metro Operated Paratransit3-Year Comparison

Valley Metro operated Paratransit ridership grew by 11% (approximately 44,000 rides).

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Valley Metro RPTA Operating Results

RtTA Budget vs. Actual Report $ aillionsFor the Year ending June 30, 2014

Year to Date

Operations Expenditures Budget ActualVariance (Unfav.)

Fixed Route Bus 75.7 69.9 5.8taratransit 29.0 25.5 3.5Vanpool 0.9 0.9 0.0Regional Services 10.1 10.0 0.1tlanning 2.3 1.4 0.9Administration 2.4 2.2 0.2aETRO Rail (Salary, Fringe, OH) 15.9 14.5 1.4AZ Lottery Fund Disbursements 11.2 10.3 0.9

Total Operations Expenditures 147.5 134.7 12.8

Overall operating expenditures for the year were $134.7 million. Fixed route bus operations were favorable by $5.8 million due to:

• Unspent contingency – $900,000 • East Valley – Contract underrun $2.3 million • Fuel Underrun $1.5 million • Strike Savings – Approximately $400,000

Paratransit costs were lower than plan due to decreased demand. RPTA received $11.2 million in AZ Lottery Funds (ALF) and disbursed $10.3 million. Questions and Answers Councilmember Sherwood asked what Arizona Lottery Funds are. Mr. McCormack said the Arizona Lottery Funds are funds we receive from the state lottery. They come to RPTA as the custodian. The majority of the costs are sent back to the member cities to support their transit operations. These are pass – through funds.

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Valley Metro RPTA Capital Results

RtTA Budget vs. Actual Report $ aillionsFor the Year ending June 30, 2014

Year to Date

Capital Expenditures Budget ActualVariance (Unfav.)

Bus turchasesValley aetro 23.0 23.6 (0.6)Lead Agency 10.7 10.8 (0.1)

taratransit VehiclesLead Agency 0.6 0.5 0.1

Vanpool Vehicles 2.6 2.7 (0.1)Other Capital 4.2 1.4 2.8aETRO Rail 140.4 94.4 46.0

Total Capital Expenditures 181.5 133.4 48.1

Overall capital expenditures for the year were $133.4 million vs. $181.5 million budgeted. Bus purchases were slightly over plan due to greater costs than specified. Lead agency disbursements are the local share (PTF funds) of the costs. Paratransit vehicles were purchased with lead agency disbursements. Vanpool vehicles, Valley Metro purchased 80 vehicles rather than the budgeted 70 due to Ford discontinuing the Econoline van. Extra vans were purchased in anticipation of delays until new products are available. METRO Rail was under budget due to the two capital projects (CME and NWE) that were budgeted higher. The majority of expenses will occur in 2015. Questions and Answers Councilmember Sherwood asked if we purchased 80 vans instead of the 70 that were budgeted. Mr. McCormack said yes, the average cost was $34,000 each. Mr. Banta asked if that includes the conversion. Mr. McCormack said yes.

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Mr. Hodgins said we budgeted a slightly higher per unit cost. The vans came in at a lower cost than budgeted, which allowed Valley Metro to purchase 10 more. Vice Mayor Pizzillo asked if the projects are on target. It is just the timing of expenses? Mr. McCormack said that is correct, the Metro Rail overall project costs are not changing, the amounts expended within each fiscal year changed versus plan. Councilmember Sherwood asked if there is a waiting list for the vanpools. Mr. Banta said we have two contractors. We purchase through Creative Bus Design. They buy and convert the vehicles to our specification. V-Ride operates the service and along with Valley Metro performs outreach to the business community.

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Valley Metro RPTA Cash and Investments

FY13 vs. FY14

Account Description Type of Funds Balance at 6.30.2013

Balance at 6.30.2014 Change

Wells Fargo Checking General Fund 5,439,673 2,908,276 (2,531,397)

Wells Fargo Savings Capital Projects/Operating Reserves 103,127,288 99,180,546 (3,946,742)

Wells Fargo Trust- 2009 Bond Funds Capital Projects 14,688,406 - (14,688,406)

Wells Fargo Certificates of Deposit Capital Projects - 2,979,157 2,979,157

US Bank - 2014 Revenue Bonds Proceeds Capital Projects - 98,671,228 98,671,228

US Bank - 2014 Revenue Bonds - Debt Service Reserve Debt service fund - 2,453,186 2,453,186 Local Government Investment Pool - Debt Service Reserve - 2009 Bond Issuance Debt service fund 144,768 32,265 (112,503)

Wells Fargo Cash with Escrow Agent Debt service fund - 7,872,787 7,872,787

Local Government Investment Pool - Other Investments Fiduciary/General Fund 7,359,298 13,196,694 5,837,396 Total Cash and Investments 130,759,433 227,294,139 96,534,706

Summary of Bond Funds 14,833,174 109,029,466 94,196,292

All Other Cash Reserves 115,926,259 118,264,673 2,338,414

The bond issues are separated and summarized last year versus current year. Questions and Answers Councilmember Daniels asked if the capital budget refers to what we budgeted for capital and operations. Mr. McCormack said yes.

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4. FY15 First Quarter

Finance FY15 Q1 Report


Valley Metro RPTA Operating Results – Q1

12

RtTA Budget vs. Actual Report $ aillionsFor the quarter ending September 30, 2014

1st Quarter Year to Date

Operations Expenditures Budget ActualVariance (Unfav.) Budget Actual

Variance (Unfav.)

Fixed Route Bus 20.3 20.0 0.3 20.3 20.0 0.3taratransit 6.9 6.5 0.4 6.9 6.5 0.4Vanpool 0.2 0.2 0.0 0.2 0.2 0.0Regional Services 2.8 2.3 0.5 2.8 2.3 0.5tlanning 0.9 0.8 0.1 0.9 0.8 0.1Administration 0.6 0.6 0.0 0.6 0.6 0.0aETRO Rail (Salary, Fringe, OH) 3.9 3.7 0.2 3.9 3.7 0.2

Total Operations Expenditures 35.6 34.1 1.5 35.6 34.1 1.5

Agency FTE's Budget vs. ActualFor the quarter ending September 30, 2014

1st Quarter

Valley aetro Integrated Budget ActualVariance (Unfav.)

Staff (Full Time Equivalents) 296 266 30

Operations budget for the quarter is $35.6 million versus actual expenses of $34.1 million. The first quarter is shown on the left side of the table, with the Year to date (first 3 months) on the right side. Full time equivalents as of September 30 are 266 versus budgeted FTE’s of 296. There are 30 open positions.

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Open Positions Status

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Valley aetro Integrated AgencyFY 2015 Adopted tositions - Status Update

FY14 - Q4 FY15 - Q1

DivisionJune Open

Septempber Open

Operations and aaintenance 15 20Administrative & Organizational Development 2 1tlanning & Development 2 3Safety & Security 2 3Communication & aarketing 1 1Design & Construction 0 1Finance 1 1

Total Open tositions 23 308% 10%

Total Authorized tositions 288 296

This slide shows a snapshot of the open positions by Division. The majority of open positions are in Operations and Maintenance, where we have 20 open of 30 total positions. We have a number of entry level positions that experience routine turnover. Questions and Answers Vice Mayor Pizzillo asked if we intend to recruit all authorized positions. Mr. McCormack said yes. Councilmember Sherwood asked why we have listed on one slide 296 authorized positions and 288 on the second slide. Mr. McCormack said the side with 296 authorized positions is the end of the FY15 first quarter and the slide listed 288 authorized positions is the end of the FY14 fourth quarter.

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Valley Metro RPTA Capital Results – Q1

14

RtTA Budget vs. Actual Report $ aillionsFor the quarter ending September 30, 2014

1st Quarter Year to Date

Capital Expenditures Budget ActualVariance (Unfav.) Budget Actual

Variance (Unfav.)

Bus turchasesValley aetro 2.6 0.0 2.6 2.6 0.0 2.6Lead Agency 1.3 0.0 1.3 1.3 0.0 1.3

taratransit VehiclesLead Agency 0.1 0.0 0.1 0.1 0.0 0.1

Vanpool Vehicles 1.1 0.0 1.1 1.1 0.0 1.1Other Capital 4.3 0.0 4.3 4.3 0.0 4.3aETRO Rail 27.3 32.3 (5.0) 27.3 32.3 (5.0)

Total Capital Expenditures 36.7 32.3 4.4 36.7 32.3 4.4

Capital Expenditures for the quarter were $32.3 million versus $36.7 million budgeted. There have been no significant capital expenditures so far this year other than METRO Rail, in support of capital project construction for the Central Mesa and Northwest extensions. Questions and Answers Councilmember Sherwood asked where we show the carryover from underruns. Mr. McCormack said our appropriations cease with the end of the fiscal year. Valley Metro will come to the board with a mid-year budget adjustment. Councilmember Pizzillo asked if we have an appropriations placeholder for any carryforwards. Mr. McCormack said we have an account where we track cash carryforwards. Councilmember Daniels inquired about the open positions for Safety and Security. Mr. Banta said we have a new Director of Safety and Security. She will start on October 20. Once she has started she will be involved in the hiring of the other open positions. Councilmember Daniels asked why the other 28 positions are not posted on the website. Mr. Banta said many of these positions are filled in groups, i.e., customer service to avoid one-at-a-time recruitments. Since September 30th, some of these positions have been filled.

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Councilmember Sherwood asked what percentage is normally in flux. Mr. McCormack said 8%. Councilmember Daniels requests a quarterly update on open positions.

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5. Staffing Benchmarks

Staffing LevelComparative Metrics


Councilmember Sherwood introduced John McCormack.

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National Transit DatabaseSummary Information

17

Staffing Level data for comparison derives from annual bTD Reports:• bTD submissions are audited by independent accountants• Differing service delivery methods render precise comparisons to range from

difficult to impossible• aost recent reported data is 2012• teer trofiles are provided in your packet

Questions and Answers Councilmember Sherwood asked if the Fare Revenues listed as 10% is fare recovery for the total operation of Dallas Area Rapid Transit (DART). Mr. Banta said 10% of DART’s operating funds. Mr. McCormack said it’s the total operating funds expended. Councilmember Sherwood asked if this is similar to Fare Recovery. Mr. McCormack said fare recovery is defined as the direct costs of operations. The DART updated costs could include general and administrative planning.

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Peer Agencies2012 National Transit Database

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Effective service delivery denominators :tassenger TripsVehicle Revenue ailes delivered

2012 NTD Dallas Denver Houston Sacramento Salt Lake

CitySan Diego

Full Time Employees 3,542 2,529 2,866 923 2,153 1,216

Passenger Trips (millions) 70.5 98.5 80.9 26.3 42.4 85.2

Total Annual Budget $765.2 $1118.7 $895.2 $166.3 $509.9 $406.5

Vehicle Revenue Miles (millions) 48.5 52.3 67.9 9.4 33.7 27.0

Comparative MetricsAverage of six peers vs. Valley Metro

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CitySan Diego

Peer Average

Valley Metro2015

BudgetFull Time Employees 3,542 2,529 2,866 923 2,153 1,216 2,205 296

Passenger Trips (millions) 70.5 98.5 80.9 26.3 42.4 85.2 67.3 31.2

Total Annual Budget (millions) $765.2 $1118.7 $895.2 $166.3 $509.9 $406.5 $643.6 $357.1

Vehicle Revenue Miles (millions) 48.5 52.3 67.9 9.4 33.7 27.0 39.8 24.9

Valley aetro Staffing level below peers:teers use more internal staff for major bus and rail operationsValley aetro uses contracted staff for bus transportation & maintenanceValley aetro Rail uses contracted staff for transportationValley aetro Rail uses internal staff for vehicle and systems maintenance

Drill down of labor to look for higher level of comparability

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Breaking down laborAverage of six peers vs. Valley Metro

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CitySan Diego

Peer Average

Valley Metro2015

Budget

Regional Services

FTE

Full Time Employees 3,542 2,529 2,866 923 2,153 1,216 2,205 296

Operations Employees 2,990 2,056 2,379 718 1,774 1,188 1,851 131

Capital Employees 85 124 59 30 108 - 68 21

Gen Administration Employees 467 349 428 175 271 28 286 144 66.70

Part Time Employees 94 163 350 - 464 53 187 -

Valley aetro Operations employees just 7% of peer average Valley aetro Capital employees 31% of peer average Valley aetro has about half as many Den Administration Employees as peers

Of the 144 Den Admin, 67 are serving region-wide customer service/marketing• Valley aetro Den& Admin staff serves greater passengers and revenue mile

services than our denominators indicate

Number of Employees to serve passengers

21

Valley aetro tracks significantly below peer average for total employees and operations employees due to varying service delivery methodsValley aetro tracks close to peer average for Deneral Admin employees per passenger ride• We are actually better than peer average: General Admin FTE per ride should be adjusted for

Regional Services which serve over 75aillion passenger trips – adjustment would reduce FTEs per trip


CitySan Diego

Peer Average

Valley Metro2015

Budget

Regional Services

FTE

Full Time Employees 3,542 2,529 2,866 923 2,153 1,216 2,205 296



Gen Administration Employees 467 349 428 175 271 28 286 144 66.70

Passenger Trips (millions) 70.5 98.5 80.9 26.3 42.4 85.2 67.3 31.2

Full Time EE per 100,000 Passenger trips 5.027 2.567 3.542 3.504 5.082 1.427 3.276 0.950

Operations EE per 100,000 Passenger trips 4.244 2.087 2.940 2.726 4.188 1.394 2.750 0.419

Gen Admin EE per 100,000 Passenger trips 0.663 0.354 0.529 0.664 0.640 0.033 0.425 0.463

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Number of Employees per Vehicle Miles

22

Valley aetro employee counts per vehicle miles delivered compare well below peers primarily due to variations in service delivery methods.

Vehicle revenue miles include all modes that we serve: Bus, Rail , taratransit, Vanpool


CitySan Diego

Peer Average

Valley Metro2015

BudgetFull Time Employees 3,542 2,529 2,866 923 2,153 1,216 2,205 296



Gen Administration Employees 467 349 428 175 271 28 286 144

Vehicle Revenue Miles (millions) 48.5 52.3 67.9 9.4 33.7 27.0 39.8 24.9

Operations EE per 100,000 Revenue Miles 6.159 3.934 3.505 7.606 5.272 4.403 4.651 0.525

Gen Admin EE per 100,000 Revenue Miles 0.962 0.668 0.631 1.854 0.805 0.104 0.720 0.581

Full Time EE per 100,000 Revenue Miles 7.296 4.839 4.223 9.777 6.398 4.507 5.541 1.190

Recommendations

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• Keep the benchmark simple • Understand the metric is not a perfect measure

of efficiency• Keep perspective:

– Employee salary and fringe benefit costs are less than 8% of annual budget

• Track total FTE per 100,000 passenger rides• Track total FTE per 100,000 vehicle revenue

miles

Questions and Answers Councilmember Daniels asked if we could receive costs less capital per employee, per mile (including consultants), the number of employees, and find a way to benchmark against ourselves. — Discussion followed concerning the complexities of delivering meaningful benchmarks.— Vice Mayor Pizzillo also asked if we could do internal benchmarking to compare numbers over time. Mr. McCormack said yes. Councilmember Sherwood suggested we can get these numbers for rail. The value of getting the numbers for bus would not add much value or make sense.

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6. Investment Policy Review

RPTA Cash InvestmentPolicy

Follow-up DiscussionBudget and Finance Subcommittee

October 9, 2014

Cash and InvestmentsJune 30, 2014

26

It is the policy of the RPTA to invest public funds in a manner which will provide for the maximum security and preservation of principal and meet liquidity demands while achieving the highest rate of return possible.

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FY14 Investment Results

27

• FY14 earned $281,000• Up from FY13 earnings $251,000• FY14 Average cash balance $158 million• FY14 Average Yield 0.17%• FY14 Average 6 month T Bill Yield 0.07%

Increasing yields in FY15

28

• Investments with longer maturities– cash requirement limitations

• 2014 Capital Bond Trust Funds (Rail Projects)

– Policy limitations• Investment management

– City of Phoenix, Avondale, Gilbert experience• Initiatives underway

– Bond Trust Funds – High Liquidity to 20bps– Explore Investment Management Contract – Explore policy changes

• Broaden investment choices available under Az Title 35

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Cash and InvestmentsThree Year ForecastAllocations by Fund Type

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Fund type FY14 v4 FY15 v1 FY15 v2 FY15 v3 FY15 v4 FY16 v1 FY16 v2 FY16 v3 FY16 v4 FY17 v1 FY17 v2 FY17 v3 FY17 v4

$ aillions

Working Cash 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0

Operating Fund 8.3 7.6 7.6 7.6 7.6 7.0 7.0 7.0 7.0 6.7 6.7 6.7 6.7

Reserve 9.8 10.5 10.5 10.5 10.5 11.2 11.2 11.2 11.2 11.5 11.5 11.5 11.5

Capital Fund - RtTA 23.3 19.8 16.3 12.8 9.4 7.4 5.5 3.6 1.7 1.3 0.9 0.5 0.2

Reserve 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0

Capital Fund - VaR 45.9 46.9 47.9 48.9 49.9 47.2 44.6 41.9 39.3 49.3 59.3 69.3 10.1

Capital Bond Funds 100.0 63.9 49.4 34.9 20.4 5.4 0.0 0.0 0.0 45.9 28.2 10.5 0.0

Totals 227.3 188.7 171.7 154.7 137.8 118.2 108.2 103.7 99.1 154.6 146.6 138.5 68.3

Cash and InvestmentsBuilding an Investment Maturity Profile

Work in Progress

30

Fund type FY14 v4 FY15 v1 Avg aat FY15 v2 FY15 v3 FY15 v4 FY16 v1 FY16 v2 FY16 v3 FY16 v4 FY17 v1 FY17 v1 FY17 v1 FY17 v1

$ aillions Yrs

Working Cash 25.0 25.0 0.0 25.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Operating Fund 8.3 7.6 0.75 1.3 1.3 1.3 1.3 1.3 1.3 0.0 0.0 0.0 0.0 0.0

Reserve 9.8 10.5 0.75 1.8 1.8 1.8 1.8 1.8 1.8 0.0 0.0 0.0 0.0 0.0

Capital Fund - RtTA 23.3 19.8 1.50 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8

Reserve 15.0 15.0 1.50 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4

Capital Fund - VaR 45.9 46.9 1.50 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3

Capital Bond Funds 100.0 63.9 0.33 21.3 21.3 21.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Totals 227.3 188.7 56.7 31.7 31.7 10.4 10.4 10.4 7.4 7.4 7.4 7.4 7.4

tercent of tortfolio 30% 17% 17% 6% 6% 6% 4% 4% 4% 4% 4%

aaturity in Years zero to .25 0.5 0.75 1 1.25 1.5 1.75 2 2.25 2.5 2.5

Recap

FY15 aaturities 120.2 64%



Total tortfolio 188.7 100%

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Next Steps

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• Refine Cash Flow forecasts– Further modeling with sensitivity analysis– Extend maturities to improve yields

• Analyze new investment opportunities– Potential Investment Management Contract

• Possible recommendations to amend Investment Policy

• Report back to BFS at next meeting

7. Impacts of Federal Funding Delays or Restrictions

Federal Funds Review


Paul Hodgins presented Federal Funds Review.

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FY15 Funding Sources

42

$324.6 Million

Funding Sources for FY15 total $324.6M

Federal Funds Overview

43

• Highway Trust Fund– Mass Transit Account

• Urban Area Formula Funds• State of Good Repair• Bus and Bus Facilities

– Highway Account• Surface Transportation Program• Congestion Mitigation/Air Quality (CMAQ)• TIGER program (discretionary)

• General Fund– Capital Investment Program (New Starts)– Supplements HTF Shortfalls

Questions and Answers Councilmember Sherwood asked what the percentage difference is between mass transit and highway. Mr. Hodgins said 80% highway and 20% mass transit.

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HTF Balance – FY14

44

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0$

Billi

ons

Highway Account aass Transit Account

The blue line is the highway account. The red line is the mass transit account.

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45

Questions and Answers Councilmember Pizzillo asked if there are any federal discussions that are promising. John Farry, Valley Metro’s Government Relations Officer, said Speaker Boehner commented about a long-term fix for transportation reauthorization. This may not happen because it is an election year.

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Formula Funds

46

• Projects funded 5-Year Budget

– Operations $39 million• Preventive maintenance support• Fixed route service (JARC)• Paratransit service (New Freedom)• Commute Solutions

– Capital $206 million• Fleet purchases (bus, paratransit, vanpool)• Passenger facilities• Light rail construction

Discretionary Funds

47

• Projects funded 5-Year Budget

– Capital $189 million• Light rail construction• Solar panels• South Central planning

26

Impacts from HTF Shortfall

48

• Short term– Delays in reimbursements– Reimbursements less than full request

• Long term– Reduction in future funding

Formula ProjectsPotential Delays Scenario 1

49

• 6 month delay in reimbursements– Operating projects

• Additional cash float required $4 million

– Capital projects• Additional cash float required $20 million

– Mitigation Strategies• Additional bonding, short term financing• Delay project implementation, short term• Reduce operating costs

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Formula ProjectsPotential Delays Scenario 2

50

• 18 month delay in reimbursements– Operating projects

• Additional cash float required $12 million

– Capital projects• Additional cash float required $60 million

– Mitigation Strategies• Delay projects• Additional bonding• Reduce operating costs

Formula ProjectsFunding Level Scenario 1

51

• Zero growth in funding– No impact to current budget– Regional Transportation Improvement Program

assumes zero growth

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Formula ProjectsFunding Level Scenario 2

52

• 5% reduction in funding• $3 million annual reduction for region

– Operations $900,000• Increase local funding• Increase fares• Reduce service

– Capital $2,100,000• Increase local funding• Delay projects• Reduce scope of projects

Discretionary ProjectsFunding Level Scenario 3

53

• 5% reduction in funding – National Impact

– Increase competition nationally for limited funds• FY14 national funding level $2.1 billion

– 5% reduction would be $105 million

• FY15 recommended national funding level $2.5 billion– $9.3 billion remaining commitments in existing grants– $27.1 billion projects in process

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Discretionary ProjectsFunding Level Scenario 3

54

• 5% reduction in funding – Local Impact

– Reduce funding for future rail construction• TLCP assumes 50% federal participation

– $910 million federal funding for future projects– 5% reduction would be $45 million

– Mitigation strategies• Increase local funding

– Additional local funds could prevent delays

• Delay projects – One project possibly delayed beyond Prop 400 sunset– Additional bonding/finance costs

Moving Forward

55

• HTF currently funded through May 2015• Continue to monitor status

– HTF fund balances– Congressional action– DOT cash management policies

• Develop mitigation strategies and procedures• Ensure adequate cash reserves

8. Future BFS Agenda Items

Chair Sherwood called for any future agenda items. There were none. 9. Next Meeting The next meeting is scheduled for Thursday, January 15, 2015 at 12:00 p.m. CHAIR SHERWOOD ADJOURNED THE MEETING. The meeting concluded at 1:54 p.m.

DATE AGENDA ITEM 3 February 27, 2015 SUBJECT Preliminary FY16 Budget (Budget process and baseline assumptions) PURPOSE This information summary describes the integrated agency approach to the FY 2016 budget process and schedule. The goal of this process is to achieve delivery of the consolidated annual budget and corresponding five-year plan by the third week of February. The budget will be developed in close cooperation with the member cities. BACKGROUND The Budget Process Valley Metro’s budget process serves two principal purposes. Within the agency, development of the budget provides a forum for joint planning of objectives and tasks, with managerial and board review of programs. It sets the expectations for performance in the coming year. For the agency’s member cities and partner agencies, the budget reports on the status of projects and services, detailing the agency’s operational objectives, capital improvements, and funding plans. The annual budget is prepared on an accrual basis and adopted by the Board of Directors each fiscal year. The budget establishes the Board-approved services, operating activities, capital programs and costs for the coming year. Unspent budgeted appropriations lapse at the end of each fiscal year to ensure the Board has positive control of expenditure limits each fiscal year. With respect to capital budgets, project contingency accounting is used to control expenditures within available project funding limits. Prior to final adoption, a proposed budget is presented to the Board of Directors for review and public comment is received. Final adoption of the budget must be on or before June 30 of each year. Valley Metro also develops a Five-Year Operating Forecast and Capital Program as part of the annual budget process. The five-year plan projects operating activities managed by the agency and capital program improvements that are planned to occur in the five-year period commencing with the annual budget year. The plan identifies revenue projections including PTF sales tax and bond proceeds as well as federal, local government and private sources of funding. The internal process is collaborative and iterative, with the agency’s senior management providing strategic direction, budget assumptions and critical review. Agency and project managers prepare resource proposals, and financial staff (Including the member city Financial Working Group) provide feedback and technical support for the process.

2

Reviews by the member city Regional Transit Advisory Group (RTAG) and Rail Staff Working Group (RSWG), will precede drafting of the proposed budget. Once the proposed annual budget and five-year plans have been published, the Transit Management Committee (TMC), Rail Transit Committee (RMC) and RPTA Budget and Finance Subcommittee provide final review and comment prior to submittal to the respective RPTA and METRO Boards for adoption. Integrated Agency The Regional Public Transportation Authority (RPTA) and Valley Metro Rail, Inc. (METRO) are two separate financial entities which have discrete funding sources. Staff resources and contracted services are budgeted based on level-of-effort estimates and actual expense will be allocated on actual time worked for each mode. The planning and utilization of human resources will be managed with the goal of continuing to optimize administrative efficiencies. Valley Metro will present a budget with unified goals and programs to address planning, capital program delivery and operation of fixed route bus, rail and demand response services for the region and the member cities that we serve. Budget Timeline: The 2015/2016 process is outlined below, with preliminary planning beginning in September 2014 and with budget adoption scheduled for May 2015. Major milestones of the process are outlined below: Budget Timelines: The FY 2016 process is outlined below, with Proposed planning beginning in February and with budget adoption scheduled for May 2015. Major phases of this process are outlined below:

• Jan 14th -- Board approves Agency goals • Feb 19th -- Board approves service changes effective April 2015 • Feb 20th -- Prelim FY16 Operating Budget delivered to Financial Working Group • Feb 24th -- Budget presented to Financial Working Group for information • Feb 27th -- Draft Budget to Financial Working Group and RTAG for review • Mar 17th – Budget presented to RTAG for information • Mar 20th -- Comments due to Budget Group • Mar 25th -- Draft Budget delivered to BFS, TMC • Apr 1st -- Budget presented for information to TMC • Apr 2nd -- Budget presented for information to BFS • Apr 16th -- Budget presented to Board of Directors for information • May 6th -- TMC for approval • May 21st -- Board Meeting – Budget Adopted by Board

3

Budget Group Directors Advisory Groups Board of Directors

Jan Respond to Questions and Issues Raised and

Provide Direction

Review and Approve of Agency Goals

Approve of Agency Goals

Feb Respond to Questions and Issues Raised and

Provide Direction

Review and Approve of Service Changes

Approve of Service Changes

Jan – Feb 24th Compile Budget

Information and Prepare Draft Budget

Respond to Questions and Issues Raised and

Provide Direction

Feb 27th thru Mar 20th

Respond to Questions and Issues Raised

Review Draft Budget Package and Provide Feedback to Budget

Group

Mar 14th – Mar 31st

Compile Revisions and Prepare Budget

April Respond to Questions and Issues Raised Review Budget

May 6th thru May 15th Approve Budget for

Submission to the Board Review

May Board Meeting Budget Formally

Adopted

COST AND BUDGET Preparation of the FY 2016 Budget is conducted by Valley Metro staff and is incorporated into the FY 2015 Annual Budget. COMMITTEE ACTION RTAG March 17, 2015 – for information TMC April 1, 2015 – for information BFS April 2, 2015 – for information Board of Directors April 16, 2015 – for information RECOMMENDATION For information only. CONTACT John P. McCormack Chief Financial Officer 602-495-7433 [email protected] ATTACHMENTS None



DATE AGENDA ITEM 4 February 27, 2015 *For Information Only* SUBJECT Renewal and restatement of the LRT Program Agreement (LRPA) between the Regional Public Transportation Authority (RPTA) and Valley Metro Rail, Inc. (VMR). (Agreement # 0940015 S 03) PURPOSE To inform the Subcommittee about the upcoming extension and restatement of the interagency LRT Program Agreement designating VMR as the Lead Agency to manage the light rail portion of the TLCP. The restated agreement establishes a security interest for bond disbursements which RPTA advances to VMR to advance light rail projects. BACKGROUND/DISCUSSION/CONSIDERATION In June 2006, RPTA and VMR entered into an Intergovernmental Agreement whereby RPTA designated VMR as the Lead Agency to plan, design, and construct the light rail transit (“LRT”) program as defined by the Maricopa Association of Governments (“MAG”) Regional Transportation Plan (“RTP”). Under the agreement, RPTA will reimburse VMR, for eligible incurred expenses from the Public Transportation Fund (“PTF”), upon properly documented expenditure expense requisition. VMR will be the record owner of all LRT capital assets purchased or constructed with RPTA funding. Participating cities, within their jurisdiction, will become the owner of real estate purchased and occupied by LRT projects. The agreement was extended and restated in June 2009 (Agreement # 0940015-S) and was subsequently amended in March 2010 (Agreement # 0940015-S 02) The proposed renewal and restatement extends the term of the agreement to June 30, 2020 and establishes a security interest for lead agency disbursements from bond funding. Bond funding is obtained by the RPTA and bond proceeds are disbursed to VMR to advance light rail projects. The requirement for the security interest is to ensure the equitable treatment of each agency’s balance sheet net position with respect to the bond-related proceeds and debt. Commencing July 1, 2014, ownership in Light Rail Project Assets funded by Lead Agency Bond Disbursements will transfer from RPTA to VMR on a schedule commensurate with collection of sales taxes which secure the bonds and with the payment of scheduled debt service for the bond funds utilized. The security interest will be recorded as inter-agency receivable and payable and will not impact agency operational budgets or funding. The proposed restated LRT Program Agreement is attached. COST AND BUDGET

2

There is no impact to RPTA or VMR budgets. COMMITTEE ACTION Financial Working Group: February 24, 2015 BFS: March 5, 2015 for information RTAG: March 24, 2015 for information TMC: April 1, 2015 for action BFS: April 2, 2015 for action Board of Directors: April 16, 2015 for action RECOMMENDATION For information only CONTACT John P. McCormack Chief Financial Officer 602-495-7433 [email protected] ATTACHMENT LRT Program Intergovernmental Agreement (LRT- IGA) Agreement # 0940015 S 03


Valley Metro RPTA Budget and Finance Subcommittee

March 5, 2015LRT Program Agreement

2

PURPOSETo inform the subcommittee about the upcoming extension and restatement of the interagency LRT Program Agreement designating VMR as the Lead Agency to manage the light rail portion of the TLCP.

The restated agreement establishes a security interest for bond disbursements which RPTA advances to VMR to advance light rail projects.

2

LRT Program AgreementRenewal and Restatement

General Terms of the Agreement:

1. First executed, June 2006

2. RPTA designates VMR as Lead Agency to plan, designand construct the LRT component of the RTP.

3. 43.24% of total PTF is allocated for LRT; RPTAreimburses VMR for eligible expenses incurred.

4. VMR becomes owner of record of capital assetsconstructed with RPTA funding; participating citiesbecome the owner of real estate purchased and occupiedby LRT assets.

5. VMR Annual Budget and Five Year Plan demonstratesfiscally-constrained plan of projected project expenses.

6. Five Year term; Last renewed March 2010

LRT Program Agreementwenewal and westatement

Outline of Changes Proposed:

1. Extends the term of the agreement to June 30, 2020

2. The requirement for the security interest is to ensure theequitable treatment of each agency’s balance sheet netposition with respect to the bond-related proceeds anddebt.

3. Commencing July 1, 2014, ownership in Light Rail ProjectAssets funded by Lead Agency Bond Disbursements willtransfer from RPTA to VMR on a schedule commensuratewith collection of sales taxes which secure the bonds andwith the payment of scheduled debt service for the bondfunds utilized.

4. The security interest will be recorded as inter-agencyreceivable and payable and will not impact agencyoperational budgets or funding.


55


RPTA-VMR LRT Program Agreement – Third Amendment and Restated Page 1

Third Amended and Restated lntergovernmental Agreement

Between The Regional Public Transportation Authority

And Valley Metro Rail, Inc.

LRT Program Agreement

AGREEMENT # 0940015 S 03

THIS THIRD AMENDED AND RESTATED INTERGOVERNMENTAL AGREEMENT # 0940015-S-03 (“Agreement”) is made and entered to this xxth day of xx, 2015 by and between the Regional Public Transportation Authority, a public agency duly organized and existing under the laws of the State of Arizona (hereinafter referred to as “RPTA”) and Valley Metro Rail, Inc. a public non-profit corporation duly organized and existing under the laws of the State of Arizona (hereinafter referred to as “VMR”).

RECITALS:

A. WHEREAS, the parties entered into an Intergovernmental Agreement for the Light Rail Project dated on or about June 1, 2006 (the “Prior Agreement”) and,

B. WHEREAS, the parties entered into the first Amended and Restated Intergovernmental Agreement # 0940015-S on or about June 19, 2009 and,

C. WHEREAS, the parties entered into the second Amended and Restated Intergovernmental Agreement # 0940015-S 02 on or about March 30, 2010 and,

D. WHEREAS, the parties now desire to replace the Prior Agreements with this Agreement.

NOW, THEREFORE,

IT IS HEREBY AGREED, by and between the parties, as follows:

SECTION 1: RPTA RESPONSIBILITIES

1. RPTA designates VMR as the Lead Agency to plan, design, and construct the light rail transit (“LRT”) program as defined by the Maricopa Association of Governments (“MAG”) Regional Transportation Plan (“RTP”).

2. RPTA will reimburse VMR, for eligible incurred expenses from the Public Transportation Fund (“PTF”), 43.24% of PTF revenues received over the life of the tax. PTF reimbursements will be


requested from RPTA by completing a PTF Expenditure Reimbursement Request. RPTA will electronically transfer the reimbursement funds to VMR within five (5) business days of the request. Such reimbursements of eligible expenses are recorded as Lead Agency Disbursements.

3. RPTA may issue debt for the purpose of advancing LRT capital projects, pledging future PTF revenues as security. In such case, RPTA will transfer PTF debt-funded cash advances to VMR as eligible expenses are incurred. Effective July 1, 2014, RPTA shall retain a security interest in such transfers until such time as the related debt service is liquidated. Refer to the attached Exhibit A: Lead Agency Security Agreement for Advance Bond Proceeds.

4. Debt service payments made by RPTA for any such debt will reduce the PTF revenues available for LRT Lead Agency Disbursements to VMR over the life of the tax.RPTA will annually provide for funding for the planning and administration of the RTP to VMR from the Regional Area Road Fund (“RARF”) Prior to the annual budget process, proposed planning and administration related to the RTP will be evaluated by the affected regional agencies to determine funding priorities for the following fiscal year. The amount of RPTA funds available to VMR for planning and administering the RTP will be determined as a result of this evaluation, with a minimum of $500,000 allocated to VMR each year, subject to budget limitations reasonably acceptable to both parties.

SECTION 2: VMR RESPONSIBILITIES

1. VMR will serve as the lead agency for all LRT projects. VMR may also serve as lead agency for other major fixed guideway projects as the parties subsequently agree.

2. VMR will be the record owner of all LRT capital assets purchased or constructed with RPTA funding. Participating cities, within their jurisdiction, will become the owner of real estate purchased and occupied by LRT projects.

3. In cooperation with RPTA, VMR will develop and regularly update at least annually the LRT portion of the Transit Life Cycle Program, as amended, (“TLCP”) maintained by RPTA.

4. If Federal Transit Administration (“FTA”) funding is provided, VMR will follow the FTA project development process, as and if required, for all LRT corridors.

5. The VMR Board of Directors will provide final approval of the specific project definition of each LRT corridor project, unless the


cost, schedule, or scope of such project involves a Major Amendment to the RTP, a material change to the specific LRT corridor project or a TIP amendment.

6. VMR will work with RPTA to update the LRT portion of the RTP annually. These updates will be coordinated with affected member cities and may result in the addition of new projects or other RTP modifications.

7. VMR’s allocation and use of PTF funds will be separately set forth in the annual VMR budget approved by the VMR Board of Directors. A copy of the approved budget will be provided to RPTA. Reimbursements from RPTA will be requested by VMR by completing a “PTF Expenditure Reimbursement Request” form.

a. Payment must either have been made by VMR or else due from VMR within thirty (30) days in order to be eligible for reimbursement from RPTA.

b. Requests must be certified as to eligibility and authenticity by VMR’s Chief Financial Officer (CFO) or the CFO’s designee.

c. Certified requests may be made electronically with an electronic signature.

8. VMR will coordinate with RPTA to reimburse utility companies for eligible utility relocation costs as set forth in A.R.S. § 48-5107.

9. VMR will work cooperatively with the auditor selected by the State Auditor General to conduct performance audits every five years, beginning in 2010 or more frequently if required by the State Auditor General (Performance Audit of the Maricopa County Regional Transportation Plan). VMR shall also cooperate with audits that may be required by the FTA, the Citizens Transportation Oversight Committee and with PTF compliance audits conducted by or for RPTA. VMR will maintain records of service levels, capital costs, operation and maintenance costs, transit ridership, and farebox revenues.

10. VMR will adopt a budget process that ensures the estimated costs of LRT projects do not exceed the total amount of revenue available from PTF funds, city operating funds, and other sources.

11. VMR will order an annual financial statement audit and an audit of all federal financial assistance revenue from an independent public accounting firm. A copy of the completed audits will be submitted to RPTA no later than December 31 each year.


12. VMR will regularly submit a report to RPTA which provides a status update on each project, including a description of work accomplished, schedule status, contract commitments, and a comparison of expenditures to budget. VMR will work cooperatively with RPTA to develop an effective reporting structure and timetable.

13. VMR will comply with the TLCP policies adopted by the RPTA Board of Directors, as such policies may be amended from time to time. VMR may submit recommendations on TLCP Policy amendments to the RPTA Board for consideration.

14. VMR shall, to the best of its ability, provide credit to Proposition 400 and/or the RPTA, for any route or regional asset funded in whole or in part, by RPTA. This credit shall be referenced as appropriate in any and all publications, passenger notices, media correspondence or advertising.

15. RPTA and VMR shall cooperate to place and permit distribution of customer educational, promotional and collateral material developed by RPTA. RPTA shall ensure such information does not conflict with the VMR’s advertising policy.

16. VMR shall give RPTA reasonable notice of operations incidents so that RPTA may potentially notify its elected officials, and be informed prior to media inquiries. Incidents include, but are not limited to, major accidents, deaths, serious crimes, bomb threats, indecent exposure, etc.

SECTION 3: LRT PROGRAM MANAGEMENT

1. PTF monies may not be used for LRT operations.

2. Performance and cost control measures/indicators established by the RPTA Board of Directors shall be reported by VMR to RPTA for the LRT portion of the TLCP. Performance and cost control measures/indicators will be reported to RPTA at least annually.

3. LRT performance audits will be based upon criteria established by:

a. VMR and RPTA Board Adopted Transit Standards and Performance Measures

b. FTA for federally funded rail capital projects

c. Recommendations or findings of the State Auditor General Performance Audits.

VMR shall support RPTA in any audit that RPTA requests such assistance.


4. A five (5) year Capital Program and Operating forecast will be prepared and updated annually by VMR. It will examine VMR’s ability to fund future operating costs and capital improvements and to assess the impact of changes in the economy and changing service demands.

5. With regard to balancing project development priorities within finite funding sources, the primary goal will be to implement the entire LRT program as set forth in the RTP. If there is a surplus of PTF funds, they may be utilized for rail equipment, facility modernization and system upgrades as determined by the VMR Board.

SECTION 4: TERM

Notwithstanding anything herein to the contrary, this Agreement shall be effective from and after July 1, 2014. Unless terminated sooner by the parties this Agreement shall conclude on June 30, 2020. Provided that the parties hereto mutually agree, the Term of this Agreement may be extended for one (1) additional five (5) year period.

SECTION 5: MISCELLANEOUS

1. Records

The Federal Transit Administration (FTA), the Arizona Department of Transportation, the Comptroller General of the United States, RPTA, or any designee shall have access to any books, documents, papers and records which are pertinent to this Agreement for the purpose of making audit, examination, excerpts and transcriptions. All required records shall be maintained for a minimum of five (5) years after all pending matters are closed.

2. Covenant Against Contingent Fees

Both parties warrant that no person has been employed or retained to solicit or secure this Agreement upon an agreement or understanding for a commission, percentage, brokerage or contingent fee; and that no member of Congress, VMR Board, the RPTA Board or any employee of VMR or RPTA, has any interest, financially or otherwise, in this Agreement.

3. Alteration in Character of Work

Minor alterations in the character of work shall be authorized in writing and subject to approval by RPTA and approved by VMR by letter prior to any alteration. Any alteration implemented without prior approval by the RPTA will not be reimbursed by the RPTA.

4. Termination


RPTA and VMR hereby agree to full performance of the covenants and obligations contained herein, except that each reserves the right, at its option and sole discretion, to terminate or abandon the service provided for in this Agreement, or any portion thereof.

Termination of this Agreement may be at any time and for any reason, with or without cause, upon providing ninety (90) calendar days prior written notice. Termination shall be effected by delivery of a Notice of Termination specifying the extent to which performance of work under this Agreement is terminated, and the date upon which such termination becomes effective.

Upon termination of this Agreement, all property used in connection with this Agreement will be promptly returned to the party that funded the purchase of the property, not considering any state or federal funding.

5. Successors and Assigns

Except as provided in Section 12, this Agreement shall not be assignable, except at the written consent of the parties hereto; and it shall extend to and be binding upon the heirs, executors, administrators, successors, and assigns of the parties hereto.

6. Title VI Assurances

The parties hereby agree that they will comply with Title VI of the Civil Rights Act of 1964, and all requirements imposed by or pursuant to Title 49, Code of Federal Regulations, Department of Transportation, to the end that no person in the United States shall, on the grounds of race, color, sex or national origin be subjected to discrimination under any program or activity that receives federal assistance from the Department of Transportation, including the Federal Transit Administration.

SECTION 6: INDEMNIFICATION

Each party to this Agreement agrees to defend, indemnify, save and hold harmless the other (and each of their respective directors, officers, agents and employees) from and against all liabilities, suits, obligations, claims, demands, damages, fines, costs and expenses (including reasonable attorney's fees) arising under this Agreement to the extent that such are attributable, directly or indirectly, to the indemnifying party's negligence, error, omission or intentional act. An indemnifying party's negligence, error, omission or intentional act, as that phrase is used herein, includes the negligence, error, omission or intentional act of its officers, agents and employees. This provision shall survive the termination of this Agreement.

SECTION 7: AMENDMENT


This Agreement may be amended in whole or in part by advance written agreement of the parties.

SECTION 8: RELATIONSHIP OF PARTIES

Each party to this Agreement shall act in its individual capacity and not as an agent, employee, partner, joint venturer, associate, or any other representative capacity of the other. Each party shall be solely and entirely responsible for its acts or the acts of its agents and employees (if any) during the performance of this Agreement.

SECTION 9: INTEGRATION

This Agreement represents the entire agreement of the parties with respect to the subject matter hereof, and all agreements entered into prior hereto with respect to the subject matter hereof (including without limitation, the Prior Agreements) are revoked and superseded by this Agreement, and no representations, warranties, inducements or oral agreements have been made by any of the parties except as expressly set forth herein, or in other contemporaneous written agreements. This Agreement may not be changed, modified or rescinded except in writing, signed by all parties hereto, and any attempt at oral modification of this Agreement shall be void and of no effect.

SECTION 10: ATTORNEYS' FEES

In the event suit is brought or an attorney is retained by any party to this Agreement to enforce the terms of this Agreement or to collect any moneys due hereunder, or to collect money damages for breach hereof, the prevailing party shall be entitled to recover, in addition to any other remedy, reimbursement for reasonable attorneys' fees, court costs, costs of investigation and other related expenses incurred in connection therewith.

SECTION 11: SEVERABILITY

If any provision of this Agreement is declared void or unenforceable, such provision shall be deemed severed from this Agreement, which shall otherwise remain in full force and effect.

SECTION 12: NO ASSIGNMENT

This Agreement is personal to each of the parties hereto, and neither party may assign or delegate any of its rights or obligations hereunder without first obtaining the written consent of the other; provided, however, that RPTA may assign its rights and delegate its obligations hereunder to a successor in interest without obtaining such consent.


SECTION 13: WAIVER

Failure of any party to exercise any right or option arising out of a breach of this Agreement shall not be deemed a waiver of any right or option with respect to any subsequent or different breach, or the continuance of any existing breach.

SECTION 14: COUNTERPARTS

This Agreement may be executed in any number of counterparts, all such counterparts shall be deemed to constitute one and the same instrument, and each of said counterparts shall be deemed an original hereof.

SECTION 15: CAPTIONS

Captions and section heading used herein are for convenience only and are not a part of this Agreement and shall not be deemed to limit or alter any provisions hereof and shall not be deemed relevant in construing this Agreement.

SECTION 16: CONFLICT OF INTEREST

This Agreement is subject to cancellation pursuant to A.R.S. Section 38-511.

This Agreement shall be in full force and effect after it has been approved by the Boards of Directors for VMR and RPTA and has been executed by the Chief Executive Officer for the agencies.

SECTION 17: INSURANCE

Each party is primarily responsible for the risk management of its work under this Agreement. Insurance coverage should be purchased naming both parties as insureds as follows:

Commercial General Liability and/or Excess insurance with limits of at least $10,000,000 per occurrence Business Auto Liability and/or Excess insurance with limits of at least $10,000,000 Combined Single Limit Property Insurance to cover the real property of each Agency

The premiums of these coverages shall be shared according to policy rating schedules.


SECTION 18: NOTICES

Any notice, consent or other communication ("Notice") required or permitted under this Agreement shall be in writing and either delivered in person, sent by facsimile transmission, deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested, or deposited with any commercial air courier or express service addressed as follows:

If to RPTA:

Regional Public Transportation Authority 101 N.1st Ave. Suite 1300

Phoenix, AZ 85003 Attn: Board Chair

If to VMR:

Valley VMR Rail, Inc. 101 N.1st Ave. Suite 1300

Phoenix, AZ 85003 Attn: Board Chair

Notices shall be deemed received at the time it is personally served, on the day it is sent by facsimile transmission, on the second day after its deposit with any commercial air courier or express service or, if mailed, ten (10) days after the Notice is deposited in the United States mail as above provided. Any time period stated in a Notice shall be computed from the time the Notice is deemed received. Either party may change its mailing address or the person to receive Notice by notifying the other Party as provided in this paragraph. Notices sent by facsimile transmission shall also be sent by regular mail to the recipient at the above address. This requirement for duplicate notice is not intended to change the effective date of the notice sent by facsimile transmission.


IN WITNESS WHEREOF the parties have executed this Agreement to on the day and year first above written.

VALLEY METRO RAIL, INC.: RPTA: Dennis Kavanaugh Jim McDonald Board Chair Board Chair ATTEST: Stephen R. Banta Chief Executive Officer APPROVED AS TO FORM: Michael J. Ladino General Counsel


Exhibit A

LEAD AGENCY SECURITY AGREEMENT FOR ADVANCE BOND PROCEEDS

Valley Metro Rail, Inc. ("VMR"), for valuable consideration, receipt of

which is acknowledged, grants to the Regional Public Transportation Authority ("RPTA") a security interest in the following property of VMR (the "Collateral")

Public Transportation Fund Advance Bond Proceeds defined as follows: Commencing July 1, 2014, Light Rail Design and Construction-in-Progress Assets and completed Light Rail Project Assets which have been funded by Lead Agency Disbursements from the RPTA to VMR when the source of such disbursements are derived from Public Transportation Fund (PTF) Bond Proceeds in advance of the debt service payments due for bond proceeds advanced.

• The RPTA will issue PTF Bonds to fund those Light Rail Capital Projects as identified in the Regional Transportation Plan and Transit Life Cycle Plans as approved by the RPTA and VMR Boards’ of Directors.

• The PTF Bonds are issued by RPTA and fully collateralized by future Maricopa County Transportation Excise Tax collections, for which the transit portion (33 1/3%) is received by the RPTA to advance the transit portion of the Regional Transportation Plan as approved by the voters of Maricopa County in November 2003 under ballot Proposition 400.

• RPTA will advance to VMR PTF Bond proceeds prior to the collection of sales tax proceeds necessary to fund the debt service payments.

• Bond advances made from RPTA to VMR in advance of the debt service payments shall be known as PTF Advance Bond Proceeds. Schedule A (attached herein) depicts the proforma schedule of Bond Proceeds to be disbursed by RPTA to VMR and the concurrent debt service schedule by fiscal year.

RPTA shall retain a security interest in the PTF Advance Bond Proceeds as an inter-agency receivable due from VMR, which shall be relieved by the collection of PTF Sales Taxes which fully secure the Bond Proceeds. VMR shall record an inter-agency payable to RPTA in accordance with the PTF Advance Bond Proceeds which shall be satisfied by the collection by RPTA of PTF Sales Taxes which fully secure the Bond Proceeds.

1. Warranties and Covenants of VMR. VMR warrants and covenants that:

(a) No other creditor has a security interest in the Collateral.


(b) VMR is the owner of the Collateral free from any adverse lien or encumbrance.

(c) VMR will defend the Collateral against all claims of other persons. (d) VMR will not transfer or encumber the Collateral without the prior

written consent of RPTA. (e) VMR will keep the Collateral insured against risk of loss or damage

upon such terms as RPTA may reasonably require. (f) VMR will keep the Collateral free from any adverse lien and in

good repair, will not waste or destroy the Collateral, and will not use the Collateral in violation of any law or policy of insurance.


Schedule A

Schedule A UpdatedPTF Advance Bond ProceedsProforma Forecast

Fiscal Year EndProceeds Disbursed

Principal Debt Service

Payments

Advance Bond

Proceeds

2015 79,000,000$ -$ 79,000,000$ 2016 8,185,000 70,815,000 2017 8,430,000 62,385,000 2018 8,850,000 53,535,000 2019 9,295,000 44,240,000 2020 9,780,000 34,460,000 2021 10,295,000 24,165,000 2022 10,835,000 13,330,000 2023 11,405,000 1,925,000 2024 1,925,000 -

Totals 79,000,000$ 79,000,000$ -$

Series 2014

December 26, 2014

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

DATE AGENDA ITEM 5 February 27, 2015 *For Information Only* SUBJECT Investment Management Services (IMS) Request for Proposals (RFP) PURPOSE To inform the Subcommittee about upcoming request for the Chief Executive Officer (CEO) to issue an RFP for Investment Management Services. BACKGROUND/DISCUSSION/CONSIDERATION Valley Metro RPTA is seeking to maximize return on cash and investments in accordance with the RPTA Investment Policy and ARS Title 35 policies. The agency now wishes to issue a request for proposals for the delivery of Investment Management Services to be funded by a portion of the investment earnings to be generated by the RPTA investment pool. The Investment Policy (5.6) directs the investments in a manner which will provide for the maximum security and preservation of principal and meet liquidity demands while achieving the highest rate of return possible. Additionally, it is the policy of the Authority to comply with all applicable State statutes governing the investment of public funds, including (without limitation) Title 35 of the Arizona Statutes (“Title 35”). The agency has focused on security and liquidity as it has made investments in recent years. In the wake of the recession and more recently the potential for federal funding suspension, extending the maturity of investments to gain better yield has not been actively pursued. In the fall of 2014, a review of investment services was conducted to identify the potential to boost investment yields with the engagement of a third party investment management services (IMS) company. The below table summarizes the current status of investments at December 31, 2014.

Current Status of InvestmentsAccount Description Type of Funds Balance at 12.31.2014 Annual YieldWells Fargo Checking General Fund 8,529,736$ 0.00%Wells Fargo Savings - Bus Capital Projects/Operating 46,101,388$ 0.20%Wells Fargo Savings - Rail Capital Projects 56,172,535$ 0.20%Wells Fargo Certif icates of Deposit Capital Projects 6,688,244$ 0.78%US Bank - 2014 Revenue Bonds Proceeds Capital Projects 54,365,557$ 0.24%US Bank - 2014 Revenue Bonds - Debt Service Reserve Debt service fund 6,997,628$ 0.01%Local Government Investment Pool - Debt Service Reserve - 2009 Bond Issuance Debt service fund 3,065,395$ 0.06%Local Government Investment Pool - Other Investments Fiduciary/General Fund 22,546,544$ 0.09%

Total Cash and Investments 204,467,027$ -

2

An analysis of future cash flows was conducted to identify an investment pool base which would enable the creation of an investment portfolio which would be managed by the third party IMS. Valley Metro RPTA Preliminary Cash Flow Forecast

Based on the preliminary cash flow, the investment pool base will vary with the timing of large capital funding requirements. One of the primary tasks of the IMS contractor will be to optimize investment returns by extending maturity dates for investments which are permitted by RPTA policy. A second objective will be to make recommendations for new investment instruments which are permitted by Title 35 but may be currently excluded by RPTA policy. Prospective proposers will submit a detailed approach to the investment of the portfolio, relevant experience and pricing. Upon receipt of the proposals, the proposals would be delivered to a selection committee along with evaluation criteria. The selection committee will consist of three (3) member agency representatives and two Valley Metro staff representatives. Once the selection committee reviews all qualifications submitted, interviews may occur, and staff will then request approval from the Transit Management Committee and Board of Directors to negotiate and enter into a contract with the recommended firm at the Board’s June or July 2015 meeting. COST AND BUDGET Funding for the Investment Management Services contract will be a portion of the investment earnings generated by the RPTA investment pool. COMMITTEE ACTION Financial Working Group: March 2015 for information BFS: March 5, 2015 – for information TMC: April 1, 2015 – for action Board of Directors: April 16, 2015 for action

Fund type FY14 Q4 FY15 Q1 FY15 Q2 FY15 Q3 FY15 Q4 FY16 Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY17 Q1 FY17 Q2 FY17 Q3 FY17 Q4$ Millions

Working Cash 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0

Operating Fund 8.3 7.6 7.6 7.6 7.6 7.0 7.0 7.0 7.0 6.7 6.7 6.7 6.7Reserve 9.8 10.5 10.5 10.5 10.5 11.2 11.2 11.2 11.2 11.5 11.5 11.5 11.5

Capital Fund - RPTA 23.3 19.8 16.3 12.8 9.4 7.4 5.5 3.6 1.7 1.3 0.9 0.5 0.2Reserve 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0

Capital Fund - VMR 45.9 46.9 47.9 48.9 49.9 47.2 44.6 41.9 39.3 49.3 59.3 69.3 10.1Capital Bond Funds 100.0 63.9 49.4 34.9 20.4 5.4 0.0 0.0 0.0 45.9 28.2 10.5 0.0

Totals 227.3 188.7 171.7 154.7 137.8 118.2 108.2 103.7 99.1 154.6 146.6 138.5 68.3

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RECOMMENDATION For information only CONTACT John McCormack Chief Financial Officer (602) 262-7433 [email protected] ATTACHMENT None G:\ADMIN\FINANCE\Cash Investment\RFP for Investment Services.docx



DATE AGENDA ITEM 6 February 27, 2015 SUBJECT Future BFS Agenda Item Requests PURPOSE For information BACKGROUND/DISCUSSION/CONSIDERATION Chair Sherwood will request future BFS agenda items from members.

April 2015 Tentative Agenda

• Draft FY16 Budget & Five Year Plan • Draft Transit Life Cycle Program – 2015 Update • FY15 Third Quarter Reports

COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION For information only CONTACT John P. McCormack Chief Financial Officer 602-495-7433 [email protected] ATTACHMENTS None



DATE AGENDA ITEM 7 February 27, 2015 SUBJECT Next Meeting PURPOSE For information and discussion BACKGROUND/DISCUSSION/CONSIDERATION The next meeting of the BFS is tentatively scheduled for Thursday, April 2, 2015 at 12:00 p.m.

COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION For information only CONTACT John P. McCormack Chief Financial Officer 602-495-7433 [email protected] ATTACHMENTS None


Documents

MEETING OF THE Budget and Finance SubcommitteeWeb)1.pdf · Questions and Answers Councilmember Sherwood asked what Arizona Lottery Funds are. Mr. McCormack said Arizona Lottery Fundthe