Audit and Finance Subcommittee

Transcription

1 MEETING OF THE Audit and Finance Subcommittee MEETING DATE January 12, 2017 TIME LOCATION 12:00 p.m. Valley Metro 101 N. 1st Ave., 10th Floor Lake Mead Conference Room (10B) Phoenix, AZ VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

2 January 6, 2017 Audit and Finance Subcommittee Thursday, January 12, th 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 1. For information A 15-minute opportunity will be provided to members of the public at the beginning of the meeting to address the AFS on all agenda items. The Chair may recognize members of the public during the meeting at his/her discretion. Up to three minutes will be provided per speaker or a total of 15 minutes total for all speakers. 2. Minutes 2. For action Minutes from the November 28, 2016 AFS meeting are presented for approval. 3. RPTA Fiscal Year 2017 (FY17) Mid-Year Budget Adjustment 3. For action Paul Hodgins, Chief Financial Officer, request that the AFS forward to the Board of Directors authorization for the Mid- Year Budget Adjustment update to the Valley Metro RPTA Operating and Capital Budget for FY VMR Fiscal Year 2017 (FY17) Mid-Year Budget Adjustment 4. For action Paul Hodgins, Chief Financial Officer, request that the AFS forward to the Board of Directors authorization for the Mid- Year Budget Adjustment update to the Valley Metro Rail Operating and Capital Budget for FY17. 1

3 5. Valley Metro Fiscal Year 2018 (FY18) Preliminary Operating and Capital Budgets 5. For information Paul Hodgins, Chief Financial Officer, will provide information update on the development of the FY18 Preliminary Operating and Capital Budgets and key assumptions. 6. Future AFS Agenda Items 6. For information Chair Klapp will request future AFS agenda items from members and Paul Hodgins will review the proposed future AFS agenda items. 7. Next Meeting 7. For information The next meeting of the AFS is February 9, 2017 at 12:00 p.m. 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 Valley Metro at or TTY at To attend this meeting via teleconference, contact the receptionist at for the dial-in-information. The supporting information for this agenda can be found on our web site at

4 DATE AGENDA ITEM 1 January 6, 2017 SUBJECT Public Comment on Agenda Action Items PURPOSE The public will be provided with an opportunity at this time to address the AFS on all action agenda items. Up to three minutes will be provided per speaker to address all agenda items unless the Chair allows more at his/her discretion. A total of 15 minutes for all speakers will be provided. BACKGROUND/DISCUSSION/CONSIDERATION None COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT Paul Hodgins Chief Financial Officer phodgins@valleymetro.org ATTACHMENT None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

5 DATE AGENDA ITEM 2 January 6, 2016 Summary Minutes Valley Metro RPTA Budget and Finance Subcommittee Monday, November 28, 2016 Lake Mead Conference Room 101 N. 1 st Avenue, 10 th Floor Phoenix, AZ 12:00 p.m. Members Present Councilmember Suzanne Klapp, City of Scottsdale Councilmember Thelda Williams, City of Phoenix Councilmember Eric Orsborn, City of Buckeye Councilmember Rick Heumann, City of Chandler Councilmember Skip Hall, City of Surprise Chair Kalpp called the meeting to order at 12:05 p.m. 1. Minutes Minutes from the November 7, 2016 AFS meeting were presented for approval. IT WAS MOVED BY COUNCILMEMBER WILLIAMS, SECONDED BY COUNCILMEMBER HALL AND UNANIMOUSLY CARRIED TO APPROVE THE NOVEMBER 7, 2016 AFS MINUTES. 2. Executive Session Pursuant to A.R.S (A)(1) to discuss applications for employment or appointment of the Chief Financial Officer and Internal Audit Manager. IT WAS MOVED BY COUNCILMEMBER HEUMANN, SECONDED BY COUNCILMEMBER WILLIAMS AND UNANIMOUSLY CARRIED TO ENTER INTO EXECUTIVE SESSION. The regular meeting adjourned to Executive Session at 12:07 p.m. The regular meeting reconvened at 1:45 p.m. 3. Executive Session Action Items The AFS held a discussion regarding the hiring of the Chief Financial Officer. Mr. Smith noted that the position being left vacant would be filled with a Comptroller. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

6 IT WAS MOVED BY COUNCILMEMBER WILLIAMS, SECONDED BY COUNCILMEMBER ORSBORN AND CARRIED TO FORWARD TO THE BOARD OF DIRECTORS THE NAMING OF PAUL HODGINS AS THE CHIEF FINANCIAL OFFICER. COUNICLMEMBER HALL VOTED NO. 4. Future AFS Agenda Items None. Chair Klapp said the next meeting of the AFS is scheduled for January 12, 2017 at 12:00 p.m. at Valley Metro. With no further discussion the meeting adjourned at 1:55 p.m. 2

7 DATE AGENDA ITEM 3 January 6, 2017 SUBJECT RPTA Fiscal Year 2017 (FY17) Mid-Year Budget Adjustment PURPOSE To request authorization for the Mid-Year Budget Adjustment update to the Valley Metro RPTA Operating and Capital Budget for FY17. BACKGROUND/DISCUSSION/CONSIDERATION In May 2016, the TMC recommended and the Board approved the FY17 Operating and Capital Budget. The cost factors used to develop the budget have changed and adjustments are warranted to update the expenditures planned for the remainder of the fiscal year. The major changes include: Operating Activities: Budget Description Increase (Decrease) Amt Funding Source Operations Administration Apply contingency for use in Fixed Route Bus and Dial-a-Ride service. $ (1,150,000) RPTA Fixed Route Service (East Valley) October 2016 and April 2017 service increases. Ridership and fare revenue below plan. $ 1,328,000 Federal PM City of Phoenix East Valley Dial-a-Ride Trips higher than plan $ 572,000 Northwest Valley Dial-a-Ride Trips higher than plan $ 872,000 Regional Dial-a-Ride Trips higher than plan $ 2,985,000 Regional Call Center Customer Service Expansion to enhance the quality of service provided to our customers. $ 330,000 Operations Total $ 4,937,000 The decrease in contingency is for use in offsetting some of the increases for Fixed Route Bus and Dial-a-Ride services. The increase for East Valley RPTA Fixed Route Service is needed to support the two service changes in FY17, resulting in an increase of 197,000 revenue miles over plan. As reported in November, increases in the Dial-a- Ride services are due to a higher number or trips than originally planned, in particular the new Regional Dial-a-Ride program has been very successful. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

8 Changes to the funding for Operating Activities are as follows: Operating Sources Operations Contingency RPTA Fixed Route Service (East Valley) East Valley Dial-a-Ride Northwest Valley Dial-a- Ride Regional Dial-a- Ride Regional Call Center Total Fixed Route Fare Revenues $ (1,652,000) $ (1,652,000) Public Transportation Funds (1,150,000) 403, , ,000 2,985, ,000 4,012,000 FTA - section 5307 PM 1,200,000 1,200,000 TSR - Gila River Indian Community 5,000 5,000 TSR - Chandler 25,000 25,000 TSR - Mesa 105, ,000 TSR - Phoenix 1,142,000 1,142,000 TSR - Scottsdale 31,000 31,000 TSR - Tempe 69,000 69,000 Total $ (1,150,000) $ 1,328,000 $ 572,000 $ 872,000 $ 2,985,000 $ 330,000 $ 4,937,000 2

9 Revised Total Uses of Funds for Operating Activities total $171.4 million as shown below: Comparative Operating Budget by Project Uses of Funds by Project for Operating Activities Proj. FY17 FY17 No. Project Description Adopted Revised Change Operating Projects 2010 Phoenix Fixed Route $ 10,573,000 $ 10,573,000 $ RPTA Fixed Route Service (East Valley) 69,959,000 71,287,000 1,328, RPTA Fixed Route Service (West Valley) 4,763,000 4,763, Ajo / Gila Bend Connector 839, , East Valley Dial-a-Ride 8,696,000 9,268, , Other ADA 18,115,000 18,115, Alternative Transportation Program 891, , Northwest Valley Dial-a-Ride 1,943,000 2,815, , Regional Dial-a-Ride 2,272,000 5,257,000 2,985, Regional Vanpool Service 968, , Regional Rideshare 572, , Trip Reduction Program/Clean Air Campaign 260, , Trip Reduction Program/Expansion 351, , Operations Administration 1,750, ,000 (1,150,000) 2012 Fare Vending Machine Service and Maint. 159, , Regional Services Administration 380, , Regional Ridership Reporting 91,000 91, Community Outreach 502, , Regional Marketing 2,596,000 2,596, Regional Call Center 4,508,000 4,838, , Mobility Service Center 2,288,000 2,288, Finance and Administration Support 844, , Administrative Capital Outlay 529, , Safety and Security 380, , Planning Administration 294, , Corridor & Facility Development 761, , System and Services Development 1,040,000 1,040, Transit Life Cycle Program 135, , Chief Executive Officer's Division 1,121,000 1,121, Valley Metro Rail 17,637,000 17,637, Arizona Lottery Fund 11,200,000 11,200,000 - Total Operating Projects $ 166,417,000 $ 171,354,000 $ 4,937,000 3

10 Capital Activities: Budget Description Increase (Decrease) Amt Funding Source Rail Bus Replacement Bus-Expansion Vanpool Fleet - Replacement Transit Centers Passenger Facilities - Bus Stop Passenger Amenities Increase lead agency PT disbursements to Valley Metro Rail to fund capital expenditures. Deferral of 6 circulator buses to later years; added 1 pilot artic bus for FY17; deferral of 4 Scottsdale buses to FY18 and later. Deferral of 13 planned standard bus purchases for SRTP expansion to later years. Deferral of 13 planned vanpool vehicles to FY18; additional cost savings due to purchases of smaller vehicles currently in greater demand. Peoria transit center land acquisition is being deferred to later years. Bus stop Improvement project being deferred to FY18. $ 2,408,000 $ (1,695,000) FTA $ (6,905,000) FTA $ (917,000) FHWA $ (783,000) FTA $ (500,000) FTA Park and Rides Vehicle Management/Communicatio n Systems Reduced FY17 park and ride expenses delayed in FY17 for Peoria, 59th Ave/Laveen, and North Glendale. Apollo camera installation project is now included in the regional communications system upgrade. $ (2,377,000) FTA $ (678,000) State of Good Repair - Fleet Rebuild Fare Collection System Fewer Mid-Life engine and transmission rebuilds than planned. Refurbish all fareboxes for EV First Transit buses and spares fareboxes. $ (564,000) FTA $ 3,191,000 Capital Total $ (8,820,000) Total Capital Activity expenditures are being reduced by $8.8M. Rail disbursements are increased due to the increased construction activity during FY17. Some of the bus purchases have been deferred, pushing the delivery of most buses to FY18 and some in later years. Vanpool purchases have been reduced from plan due to the deferral of 13 planned vanpool purchases and some savings due to purchases of 4

11 smaller vans which are currently needed. The budget for Transit Centers is being deferred to later years while the passenger facilities are being deferred to FY18. We will expend less on Park and Rides this year due to delays in the schedules Changes to the funding for Capital Activities are as follows: FY17 FY17 Funding Source Adopted Revised Change Public transportation funds $ 68,712,000 $ 64,699,000 $ (4,013,000) FTA - Section ,751,000 16,033,000 (9,718,000) FHWA - STP 3,073,000 2,056,000 (1,017,000) Member local match 100,000 - (100,000) Vehicle/parts proceeds 574, ,000 - Bond Proceeds 60,000,000 60,000,000 - Bond premium 1,257,000 1,257,000 - Capital assets reserve applied 553, ,000 (296,000) Vanpool reserve applied - 100, ,000 Undesig. fund bal applied () 17,694,000 23,919,000 6,225,000 Undesig. fund bal applied (RARF) 126, ,000 - Total Capital Revenues $ 177,840,000 $ 169,021,000 $ (8,820,000) Revised Total Uses of Funds for Capital Activities total $169.0 million as shown below: Uses of Funds for Capital Projects Comparative Operating Budget by Project Proj. FY17 FY17 No. Project Description Adopted Revised Change Capital Projects 4000 Valley Metro Rail $ 83,628,000 $ 86,036,000 $ 2,408, Public Transportation Debt Service 43,592,000 43,592, IT Infrastructure 1,430,000 1,430, Standard Bus - Replacement 17,318,000 15,623,000 (1,695,000) 9011 Standard Bus - Expansion 15,133,000 8,228,000 (6,905,000) 9030 Rural Fleet - Replacement 636, , Paratransit Fleet - Replacement 259, , Vanpool Fleet - Replacement 3,073,000 2,156,000 (917,000) 9090 Fleet - Other 602, , Transit Centers (4-Bay) 816,000 33,000 (783,000) 9213 Pass. Facilities - Bus Stop Pass. Amenities 535,000 35,000 (500,000) 9220 Pass. Facilities - Park & Rides 5,319,000 2,942,000 (2,377,000) 9390 Vehicle Management/Communications 3,278,000 2,600,000 (678,000) 9391 Fare Collection Systems 405,000 3,596,000 3,191, State of Good Repair - Fleet Rebuild 1,816,000 1,252,000 (564,000) Total Capital Projects $ 177,840,000 $ 169,020,000 $ (8,820,000) 5

12 COST AND BUDGET Changes proposed are incorporated into overall agency sources and uses of funds below: FY17 Revised Operating & Capital Budget Comparison to FY17 Adopted Budget (In thousands) FY17 FY17 Amount Adopted Revised Increase/ Budget Budget Decrease Sources of funds Revenues: Public transportation funds () $ 141,162 $ 141,162 $ - Transit service agreements 30,868 32,244 1,376 Federal grants 39,773 30,238 (9,535) VMR staff & administration reimbursement 17,137 17,137 - Regional area road funds (RARF) 4,864 4,864 - Interest & other revenues 3,020 3,020 - Local participation (100) State & local grants Fixed Route Fare Revenues 15,664 14,012 (1,652) AZ Lottery Proceeds 11,250 11,250 - Total revenues 264, ,385 (9,911) Bond proceeds 61,257 61,257 - Carryforwards & reserves 18,705 24,732 6,027 Total revenues & other sources of funds 344, ,374 (3,883) Uses of funds by category Expenses: Lead agency disbursements $ 72,365 $ 73,576 $ 1,211 Transit service contracts and fuel 94, ,379 5,757 Capital outlay 36,858 26,827 (10,031) Salary & fringe benefits 27,231 27, Bond principal & interest expense 25,433 25,433 - Consultants & Maintenance contracts 3,771 3,771 - Contingency 1, (1,150) Rent & facility costs 4,988 4,994 6 Advertising Transit book, outreach mat. & online serv Insurance & risk management Lead agency RARF disbursements Other administrative costs 1,915 1,915 - AZ lottery Disbursements 11,200 11,200 - Lead agency bond disbursement 43,098 43,098 - Total expenses 325, ,670 (3,883) Carryforwards & contributions to reserves 18,704 18,704 - Total expenses & other uses of funds $ 344,257 $ 340,374 $ (3,883) Operating Budget $ 166,417 $ 171,354 $ 4,937 Capital Budget 177, ,020 (8,820) Total Operating & Capital Budget $ 344,257 $ 340,374 $ (3,883) 6

13 STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY : Goal 2: Advance performance based operation o o Tactic A: Operate an effective, reliable, high performing transit system. Tactic E: Maintain strong fiscal controls to support Valley Metro s long-term sustainability. COMMITTEE PROCESS RTAG: December 20, 2016 for information Financial Working Group: December 20, 2016 for information TMC: January 4, 2017 for action AFS: January 12, 2017 for action Board: January 19, 2017 for action RECOMMENDATION Staff recommends that the TMC forward to the Board of Directors authorization for the Mid-Year Budget Adjustment update to the Valley Metro Rail Operating and Capital Budget for FY17. CONTACT Paul Hodgins Interim Chief Financial Officer phodgins@valleymetro.org ATTACHMENT None 7

14 1/9/2017 Valley Metro RPTA FY17 Mid-Year Budget Adjustment January 2017 Changes Operations Activities Budget Operations Administration Description Apply contingency for use in Fixed Route Bus and Dial-a-Ride service. Increase (Decrease) Amt Funding Source $ (1,150,000) RPTA Fixed Route Service (East Valley) October 2016 and April 2017 service increases. Ridership and fare revenue below plan. $ 1,328,000 Federal PM City of Phoenix East Valley Dial-a-Ride Trips higher than plan $ 572,000 Northwest Valley Dial-a-Ride Trips higher than plan $ 872,000 Regional Dial-a-Ride Trips higher than plan $ 2,985,000 Regional Call Center Customer Service Expansion to enhance the quality of service provided to our customers. $ 330,000 Operations Total $ 4,937,

15 1/9/2017 Operating Funding Changes Operating Sources Operations Contingency RPTA Fixed Route Service (East Valley) East Valley Dial-a-Ride Northwest Valley Dial-a- Ride Regional Dial-a- Ride Regional Call Center Total Fixed Route Fare Revenues $ (1,652,000) $ (1,652,000) Public Transportation Funds (1,150,000) 403, , ,000 2,985, ,000 4,012,000 FTA - section 5307 PM 1,200,000 1,200,000 TSR - Gila River Indian Community 5,000 5,000 TSR - Chandler 25,000 25,000 TSR - Mesa 105, ,000 TSR - Phoenix 1,142,000 1,142,000 TSR - Scottsdale 31,000 31,000 TSR - Tempe 69,000 69,000 Total $ (1,150,000) $ 1,328,000 $ 572,000 $ 872,000 $ 2,985,000 $ 330,000 $ 4,937,000 3 Changes Capital Activities Budget Rail Bus Replacement Description Increase lead agency PT disbursements to Valley Metro Rail to fund capital expenditures. Deferral of 6 circulator buses to later years; added 1 pilot artic bus for FY17; deferral of 4 Scottsdale buses to FY18 and later. Increase (Decrease) Amt Funding Source $ 2,408,000 $ (1,695,000) FTA Bus-Expansion Deferral of 13 planned standard bus purchases for SRTP expansion to later years. Vanpool Fleet - Replacement Deferral of 13 planned vanpool vehicles to FY18; additional cost savings due to purchases of smaller vehicles currently in greater demand. $ (6,905,000) FTA $ (917,000) FHWA Transit Centers Peoria transit center land acquisition is being deferred to later years. $ (783,000) FTA 4 2

16 1/9/2017 Changes Capital Activities (contd.) Budget Passenger Facilities - Bus Stop Passenger Amenities Description Bus stop Improvement project being deferred to FY18. Increase (Decrease) Amt Funding Source $ (500,000) FTA Park and Rides Vehicle Management/Communication Systems State of Good Repair - Fleet Rebuild Reduced FY17 park and ride expenses delayed in FY17 for Peoria, 59th Ave/Laveen, and North Glendale. Apollo camera installation project is now included in the regional communications system upgrade. Fewer Mid-Life engine and transmission rebuilds than planned. $ (2,377,000) FTA $ (678,000) $ (564,000) FTA Fare Collection System Refurbish all fareboxes for EV First Transit buses and spares fareboxes. $ 3,191,000 Capital Total $ (8,820,000) 5 Summary of Changes Uses of Funds Proj. FY17 FY17 No. Project Description Adopted Revised Change Operating Projects 2015 RPTA Fixed Route Service (East Valley) 69,959,000 71,287,000 1,328, East Valley Dial-a-Ride 8,696,000 9,268, , Northwest Valley Dial-a-Ride 1,943,000 2,815, , Regional Dial-a-Ride 2,272,000 5,257,000 2,985, Operations Administration 1,750, ,000 (1,150,000) 6035 Regional Call Center 4,508,000 4,838, ,000 Total Operating Projects $ 166,417,000 $ 171,354,000 $ 4,937,

17 1/9/2017 Summary of Changes Uses of Funds (Contd.) Proj. FY17 FY17 No. Project Description Adopted Revised Change Capital Projects 4000 Valley Metro Rail $ 83,628,000 $ 86,036,000 $ 2,408, Standard Bus - Replacement 17,318,000 15,623,000 (1,695,000) 9011 Standard Bus - Expansion 15,133,000 8,228,000 (6,905,000) 9050 Vanpool Fleet - Replacement 3,073,000 2,156,000 (917,000) 9210 Transit Centers (4-Bay) 816,000 33,000 (783,000) 9213 Pass. Facilities - Bus Stop Pass. Amenities 535,000 35,000 (500,000) 9220 Pass. Facilities - Park & Rides 5,319,000 2,942,000 (2,377,000) 9390 Vehicle Management/Communications 3,278,000 2,600,000 (678,000) 9391 Fare Collection Systems 405,000 3,596,000 3,191, State of Good Repair - Fleet Rebuild 1,816,000 1,252,000 (564,000) Total Capital Projects $ 177,840,000 $ 169,020,000 $ (8,820,000) Total Operating & Capital Projects $ 344,257,000 $ 340,374,000 $ (3,883,000) 7 Summary of Changes Sources of Funds Sources of funds Revenues: Public transportation funds () 141,162 FY17 FY17 Amount Adopted Revised Increase/ Budget Budget Decrease $ $ 141,162 $ - Transit service agreements 30,868 32,244 1,376 Federal grants 39,773 30,238 (9,535) VMR staff & administration reimbursement 17,137 17,137 - Regional area road funds (RARF) 4,864 4,864 - Interest & other revenues 3,020 3,020 - Local participation (100) State & local grants Fixed Route Fare Revenues 15,664 14,012 (1,652) AZ Lottery Proceeds 11,250 11,250 - Total revenues 264, ,385 (9,911) Bond proceeds 61,257 61,257 - Carryforwards & reserves 18,705 24,732 6,027 Total revenues & other sources of funds 344, ,374 (3,883) 8 4

18 1/9/2017 Recommendation Staff recommends that the AFS forward to the Board of Directors authorization for the Mid-Year Budget Adjustment update to the Valley Metro RPTA Operating and Capital Budget for FY

19 DATE AGENDA ITEM 4 January 6, 2017 SUBJECT Valley Metro Rail Fiscal Year 2017 (FY17) Mid-Year Budget Adjustment PURPOSE To request authorization for the Mid-Year Budget Adjustment update to the Valley Metro Rail Operating and Capital Budget for FY17. BACKGROUND/DISCUSSION/CONSIDERATION In May 2016, the RMC recommended and the Board approved the FY17 Operating and Capital Budget. The cost factors used to develop the budget have changed and adjustments are warranted to update the expenditures planned for the remainder of the fiscal year. Future project development activities are greater than plan ($900K) due to an increase for Northwest Phase II which will be funded by Public Transportation Funds, as illustrated in the table. Operating Activities: Budget Future Project Development Description Increase (Decrease) Amt Funding Source Increased activity for Northwest $ 900,000 Phase II Operations Total: $ 900,000 Annual expenditures will increase for several capital projects in FY16 due to timing of scheduled work. For each capital project, total project costs remain within budget. Project increases include CNPA work for Central Mesa ($0.2M), Gilbert Road ($1.5M), Tempe Streetcar ($5.1M), System wide improvements ($0.6M), and Non-Prior Rights utilities for Tempe Streetcar ($1.2M). We will expend less than planned for the Gilbert Road project ($14.6M) due to the design phase taking longer than planned in the budget. South Central Extension will not enter the capital phase until late in the year so we ve reduced the project accordingly ($36.3M). VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

20 Capital Activities: Budget CNPA-Central Mesa Capital Project Gilbert Road Capital Project CNPA-Gilbert Road Capital Project Tempe Streetcar NPR-Tempe Streetcar Capital Project 50th Street Station Increase Description Funding Source (Decrease) Amt Lesueur Pedestrian Crossing $ 158,000 City of Mesa Design phase later than assumed $ (14,334,000) City of Mesa in budget CMAQ Sewer Design Work and Lining $ 1,484,000 City of Mesa Additional funding for vehicle progress payment, PMCM, and Planning support Design schedule to start earlier, in FY17 Accelerate first phase of construction $ 5,854,000 CMAQ South Central Capital Project Engineering phase later than assumed in budget Systemwide Improvements Mobile Ticketing project accelerated vs. plan. Capital Total: $ (41,099,000) $ 1,189,000 CMAQ $ 285,000 City of Phoenix $ (36,335,000) City of Phoenix $ 600,000 Federal COST AND BUDGET Changes proposed are incorporated into overall agency sources and uses of funds below: 2

21 FY17 Adopted FY17 Amended Change Operating Activities: Revenue Operations 44,890 44,890 - Future Project Development 10,967 11, Agency Operating Budget 1,081 1,081-56,938 57, Capital Projects: Northwest Extension 3,203 3,203 - Central Mesa Extension 4,673 4,673 - Gilbert Road Extension 57,984 43,650 (14,334) Tempe Streetcar Extension 9,476 15,330 5,854 50th Street LRT Station 5,780 6, South Central Extension 39,417 3,082 (36,335) Non-Prior Rights Utilities Relocations 3,185 4,374 1,189 CNPAs - Mesa Extension CNPAs - Gilbert Road - 1,484 1,484 Systemwide Improvements 16,305 16, Subtotal Capital before Debt Service 140,023 98,924 (41,099) Total Uses of Funds 196, ,762 (40,199) Sources of Funds ($,000) FY17 Adopted FY17 Amended Change Operating Activities: Fare Revenue 15,909 15,909 - Advertising Revenue 1,100 1,100 - Federal 5307 PM 1,197 1,197 - TIGER Member Cities 31,139 31,139 - MAG / RPTA (RARF) 1,000 1,000 - Sales Tax Revenue 6,419 7, ,938 57, Capital Projects: Federal CMAQ 73,232 65,349 (7,883) Federal 5337 SOGR Federal 5312 MOD Member Cities 49,237 14,013 (35,224) Less Repayment Phoenix NW Advance (60,000) (60,000) - Bond Revenue 43,099 43,099 - Sales Tax Revenue 34,113 35,622 1, ,023 98,924 (41,099) Total Sources of Funds 196, ,762 (40,199) 3

22 STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY : Goal 2: Advance performance based operation o o Tactic A: Operate an effective, reliable, high performing transit system. Tactic E: Maintain strong fiscal controls to support Valley Metro s long-term sustainability. COMMITTEE ACTION RTAG: December 20, 2016 for information Financial Working Group: December 20, 2016 for information RMC: January 4, 2017 for action Audit and Finance Subcommittee: January 12, 2017 Board of Directors: January 19, 2017 for action RECOMMENDATION Staff recommends that the RMC forward to the Board of Directors authorization for the Mid- Year Budget Adjustment update to the Valley Metro Rail Operating and Capital Budget for FY17. CONTACT Paul Hodgins Interim Chief Financial Officer phodgins@valleymetro.org ATTACHMENT None 4

23 1/9/2017 Valley Metro Rail FY17 Mid-Year Budget Adjustment January 2017 Changes Operations Projects Budget Future Project Development Description Increase (Decrease) Amt Funding Source Increased activity for Northwest $ 900,000 Phase II Operations Total: $ 900,

24 1/9/2017 Changes Capital Projects Budget CNPA-Central Mesa Capital Project Gilbert Road Capital Project CNPA-Gilbert Road Capital Project Tempe Streetcar NPR-Tempe Streetcar Capital Project 50th Street Station Increase Description Funding Source (Decrease) Amt Lesueur Pedestrian Crossing $ 158,000 City of Mesa Design phase later than assumed $ (14,334,000) City of Mesa in budget CMAQ Sewer Design Work and Lining $ 1,484,000 City of Mesa Additional funding for vehicle progress payment, PMCM, and Planning support Design schedule to start earlier, in FY17 Accelerate first phase of construction $ 5,854,000 CMAQ South Central Capital Project Engineering phase later than assumed in budget Systemwide Improvements Mobile Ticketing project accelerated vs. plan. Capital Total: $ (41,099,000) $ 1,189,000 CMAQ $ 285,000 City of Phoenix $ (36,335,000) City of Phoenix $ 600,000 Federal 3 Changes - Uses of Funds ($,000) FY17 Adopted FY17 Amended Change Operating Activities: Revenue Operations 44,890 44,890 - Future Project Development 10,967 11, Agency Operating Budget 1,081 1,081-56,938 57, Capital Projects: Northwest Extension 3,203 3,203 - Central Mesa Extension 4,673 4,673 - Gilbert Road Extension 57,984 43,650 (14,334) Tempe Streetcar Extension 9,476 15,330 5,854 50th Street LRT Station 5,780 6, South Central Extension 39,417 3,082 (36,335) Non-Prior Rights Utilities Relocations 3,185 4,374 1,189 CNPAs - Mesa Extension CNPAs - Gilbert Road - 1,484 1,484 Systemwide Improvements 16,305 16, Subtotal Capital before Debt Service 140,023 98,924 (41,099) Total Uses of Funds 196, ,762 (40,199) 4 2

25 1/9/2017 Changes Sources of Funds ($,000) FY17 Adopted FY17 Amended Change Operating Activities: Fare Revenue 15,909 15,909 - Advertising Revenue 1,100 1,100 - Federal 5307 PM 1,197 1,197 - TIGER Member Cities 31,139 31,139 - MAG / RPTA (RARF) 1,000 1,000 - Sales Tax Revenue 6,419 7, ,938 57, Capital Projects: Federal CMAQ 73,232 65,349 (7,883) Federal 5337 SOGR Federal 5312 MOD Member Cities 49,237 14,013 (35,224) Less Repayment Phoenix NW Advance (60,000) (60,000) - Bond Revenue 43,099 43,099 - Sales Tax Revenue 34,113 35,622 1, ,023 98,924 (41,099) Total Sources of Funds 196, ,762 (40,199) 5 Recommendation Staff recommends that AFS forward to the Board of Directors authorization for the Mid-Year Budget Adjustment update to the Valley Metro Rail Operating and Capital Budget for FY

26 DATE AGENDA ITEM 5 January 6, 2017 SUBJECT Valley Metro Fiscal Year 2018 (FY18) Preliminary Operating and Capital Budget PURPOSE To provide an informational update on the development of the FY18 Preliminary Operating and Capital Budgets and key assumptions. BACKGROUND AND DISCUSSION The Valley Metro Regional Public Transportation Authority (RPTA) and Valley Metro Rail, Inc. (VMR) FY18 operating and capital budgets are under development. Each division has provided requests and Executive Leadership Team is currently reviewing the requests relative to available resources. To better inform and solicit input from the Audit and Finance Subcommittee earlier in the budget process, several key assumptions are discussed which have significant impacts on the development of the budgets. The preliminary FY18 operating and capital budgets will be prepared with the goal of delivering fiscally prudent, balanced budgets that provides the resources necessary to meet the needs of the agencies and member cities. Valley Metro is expanding transit services and concurrently delivering on multiple capital construction projects that will put pressure on resources. One key assumption is a change in philosophy from a primarily consultant project delivery to more internal staff driven project delivery. This results in a significant increase in internal project delivery positions, along with a need for additional support staff, such as human resources and payroll staff. For key positions with a long term need, this may still result in overall savings to the agency versus having consultants provide the resources. The budget is being developed in compliance with Board of Directors adopted budget, financial and Transit Life Cycle Program (TLCP) policies. The Valley Metro Strategic Plan includes numerous initiatives that impact the budget process. Many of the initiatives began implementation in FY17 and will carry forward through FY18. However, a few new initiatives were added for FY18The four new initiatives are: Increase presence of safety and security to address passenger and employee safety Develop standards for system state of good repair in conjunction with asset management plan, incorporate into budget process Complete a zero-base review of staffing to ensure resources are allocated optimally Create, review, update all policies relating to fiscal controls VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

27 The RPTA and VMR budgets are developed with a unified staff plan, with department managers planning the level of effort required to meet the bus and rail activities. Salary and overhead charges to bus and rail projects are based on actual time worked on each project. For FY18 there are requests for 47 new positions in the integrated agency. Many of these requested positions are currently being provided by consultant staff through the various support services contracts. These requests were made after an initial review of the resources needed to meet the implementation schedules for the major capital projects undertaken in the next 6 years. During FY18, Finance staff will undertake a full review of the staffing resources needed agency wide. The last time this effort was undertaken was in 2012 after the staff integration and the focus was on creating efficiencies from that integration. The focus in FY18 will be to ensure that resources are available and allocated properly to deliver projects on time. Additionally, staff will review the space needs for the agency. As we implement projects, member city staffs will need to be embedded into the projects. Valley Metro may want to co-locate key member city staff in Valley Metro offices to maximize coordination. A placeholder amount of $500,000 has been added to the initial budget to account for additional space needs. Any final decision on leasing space would be brought to the Board for approval. The compensation budget request currently has a 3.0% increase. For staff salary changes, merit increases are evaluated based on employee performance; division level control to manage total costs within budget. Human Resource staff is currently completing surveys and peer reviews to develop a final recommendation for merit increases and potential cost-of-living changes to the salary ranges. STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY : Goal 2: Advance performance based operation o Tactic C: Deliver projects and services on-time/on-budget o Tactic D: Maintain a culture to recruit and retain a qualified and diverse workforce o Tactic E: Maintain strong fiscal controls to support Valley Metro s longterm sustainability. COMMITTEE PROCESS Initial Budget Assumptions Review: Audit and Finance Subcommittee: January 19, 2017 for information Preliminary Budget Review: TMC/RMC: April 5, 2017 Audit and Finance Subcommittee: April 13,

28 Board of Directors: April 20, 2017 Proposed Budget Adoption: TMC/RMC: May 3, 2017 for action Audit and Finance Subcommittee: May 11, 2017 for action Board of Directors: May 18, 2017 for action RECOMMENDATION This item is being presented for information only. CONTACT Paul Hodgins Chief Financial Officer ATTACHMENT None 3

29 DATE AGENDA ITEM 6 January 6, 2016 SUBJECT Future Agenda Item Requests PURPOSE For information BACKGROUND/DISCUSSION/CONSIDERATION Chair Klapp will request future agenda items from members. COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT Paul Hodgins Chief Financial Officer phodgins@valleymetro.org ATTACHMENT None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ