Budget and Finance Subcommittee

Transcription

1 MEETING OF THE Budget and Finance Subcommittee MEETING DATE March 5, 2015 TIME LOCATION 12:00 p.m. Valley Metro 101 N. 1st Ave., 10th Floor Lake Mead Conference Room Phoenix, AZ VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

2 February 27, 2015 Budget and Finance Subcommittee Agenda Thursday, March 5, 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 For information An opportunity for general public comment on issues related to Valley Metro. Up to three (3) minutes will be provided for each speaker. 2. Minutes For action Minutes from the October 9, 2014 BFS meeting are presented for approval. 3. Preliminary FY16 Budget (Budget process and baseline assumptions) For information John McCormack will present the FY16 Budget process and baseline assumptions. 4. Renewal and Restatement of the LRT Program Agreement For information John McCormack will present information concerning the renewal and restatement of the LRT Program Agreement. 5. Cash Investment Management Services Update For information John McCormack will provide information regarding issuance of a Request for Proposal (RFP) for Investment Management Services. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

3 6. Future BFS Agenda Items For information Chair Sherwood will request future BFS agenda items from members. 7. Next Meeting For information The next meeting of the BFS is tentatively scheduled for Thursday, April 2, 2015 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 Rosalia Castro, Valley Metro at or TTY at To attend this meeting via teleconference, contact the receptionist at for the dialin-information. The supporting information for this agenda can be found on our web site at 2

4 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 jmccormack@valleymetro.org ATTACHMENTS None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

5 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. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

6 3. FY14 Year-End Update Valley Metro Fiscal Year 2014 Financial Results Budget and Finance Subcommittee October 9, 2014 Councilmember Sherwood introduced John McCormack to present a brief review of the financial highlights of the fiscal year ended June 30, 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. 2

7 Regional Fixed Route Bus Average 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 Ridership 3-Year Comparison Light rail ridership grew slightly over FY13 to 45,395 additional riders, or 0.3%. Ridership was up 5% the prior year. 3

8 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 Paratransit 3-Year Comparison Valley Metro operated Paratransit ridership grew by 11% (approximately 44,000 rides). 4

9 Valley Metro RPTA Operating Results RtTA Budget vs. Actual Report $ aillions For the Year ending June 30, 2014 Year to Date Operations Expenditures Budget Actual Variance (Unfav.) Fixed Route Bus taratransit Vanpool Regional Services tlanning Administration aetro Rail (Salary, Fringe, OH) AZ Lottery Fund Disbursements Total Operations Expenditures 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. 5

10 Valley Metro RPTA Capital Results RtTA Budget vs. Actual Report Cor the Year ending June 30, 2014 Year to Date Capital Expenditures Budget Actual $ aillions Variance (Unfav.) Bus turchases Valley aetro (0.6) Lead Agency (0.1) taratransit Vehicles Lead Agency Vanpool Vehicles (0.1) Other Capital aetro Rail Total Capital Expenditures 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 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. 6

11 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. 7

12 Valley Metro RPTA Cash and Investments FY13 vs. FY14 Account Description Type of Funds Balance at Balance at 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 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 Revenue Bonds Proceeds Capital Projects - 98,671,228 98,671,228 US Bank Revenue Bonds - Debt Service Reserve Debt service fund - 2,453,186 2,453,186 Local Government Investment Pool - Debt Service Reserve 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, ,294,139 96,534,706 Summary of Bond Funds 14,833, ,029,466 94,196,292 All Other Cash Reserves 115,926, ,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. 8

13 4. FY15 First Quarter Finance FY15 Q1 Report Budget and Finance Subcommittee October 9, 2014 Valley Metro RPTA Operating Results Q1 RtTA Budget vs. Actual Report For the quarter ending September 30, st Quarter $ aillions Year to Date Operations Expenditures Budget Actual Variance (Unfav.) Budget Actual Fixed Route Bus taratransit Vanpool Regional Services tlanning Administration aetro Rail (Salary, Fringe, OH) Total Operations Expenditures Variance (Unfav.) Agency FTE's Budget vs. Actual For the quarter ending September 30, st Quarter Valley aetro Integrated Budget Actual Variance (Unfav.) Staff (Full Time Equivalents) 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. 9

14 Open Positions Status Valley aetro Integrated Agency FY 2015 Adopted tositions - Status Update Division FY14 - Q4 June Open FY15 - Q1 Septempber Open Operations and aaintenance Administrative & Organizational Development 2 1 tlanning & Development 2 3 Safety & Security 2 3 Communication & aarketing 1 1 Design & Construction 0 1 Finance 1 1 Total Open tositions % 10% Total Authorized tositions 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. 10

15 Valley Metro RPTA Capital Results Q1 RtTA Budget vs. Actual Report Cor the quarter ending September 30, st Quarter Capital Expenditures Budget Actual Year to Date Variance (Unfav.) Budget Actual $ aillions Variance (Unfav.) Bus turchases Valley aetro Lead Agency taratransit Vehicles Lead Agency Vanpool Vehicles Other Capital aetro Rail (5.0) (5.0) Total Capital Expenditures 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 oneat-a-time recruitments. Since September 30th, some of these positions have been filled. 11

16 Councilmember Sherwood asked what percentage is normally in flux. Mr. McCormack said 8%. Councilmember Daniels requests a quarterly update on open positions. 12

17 5. Staffing Benchmarks Staffing Level Comparative Metrics Budget and Finance Subcommittee October 9, 2014 Councilmember Sherwood introduced John McCormack. 13

18 National Transit Database Summary Information 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 17 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. 14

19 Peer Agencies 2012 National Transit Database 2012 NTD Dallas Denver Houston Sacramento Salt Lake City San Diego Full Time Employees 3,542 2,52E 2,866 E23 2,153 1,216 Passenger Trips (millions) 70.5 E E Total Annual Budget $765.2 $ $8E5.2 $166.3 $50E.E $406.5 Vehicle Revenue Miles (millions) E E Effective service delivery denominators : tassenger Trips Vehicle Revenue ailes delivered 18 Comparative Metrics Average of six peers vs. Valley Metro Dallas Denver Houston Sacramento Valley Salt Lake Peer Metro San Diego City Average NTD Budget Full Time Employees 3,542 2,529 2, ,153 1,216 2, Passenger Trips (millions) Total Annual Budget (millions) $765.2 $ $895.2 $166.3 $509.9 $406.5 $643.6 $357.1 Vehicle Revenue Miles (millions) Valley aetro Staffing level below peers: teers use more internal staff for major bus and rail operations Valley aetro uses contracted staff for bus transportation & maintenance Valley aetro Rail uses contracted staff for transportation Valley aetro Rail uses internal staff for vehicle and systems maintenance 5rill down of labor to look for higher level of comparability 19 15

20 Breaking down labor Average of six peers vs. Valley Metro 2012 NTD Dallas Denver Houston Sacramento Salt Lake City San Diego Peer Average Valley Metro 2015 Budget Full Time Employees 3,542 2,529 2, ,153 1,216 2, Operations Employees 2,990 2,056 2, ,774 1,188 1, Capital Employees Regional Services FTE Gen Administration Employees Part Time Employees 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 9mployees 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 20 services than our denominators indicate Number of Employees to serve passengers 2012 NTG Gallas Genver Houston Sacramento Salt Lake Fity San Giego Peer Average Valley Metro 2015 Budget Full Time Employees 3,542 2,52E 2,866 E23 2,153 1,216 2,205 2E6 Operations Employees 2,EE0 2,056 2,37E 718 1,774 1,188 1, Fapital Employees E Regional Services FTE Gen Administration Employees E Passenger Trips (millions) 70.5 E E Full Time EE per 100,000 Passenger trips E50 Operations EE per 100,000 Passenger trips E E E Gen Admin EE per 100,000 Passenger trips E Valley aetro tracks significantly below peer average for total employees and operations employees due to varying service delivery methods Valley aetro tracks close to peer average for General 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 21 trip 16

21 Number of Employees per Vehicle Miles 2012 NTD DMllMs Denver HousPon SMcrMmenPo SMlP LMke CiPy SMn Diego Peer AverMge VMlley MePro 2015 BudgeP Full Time Employees 3,542 2,529 2, ,153 1,216 2, OperMPions Employees 2,990 2,056 2, ,774 1,188 1, CMpiPMl Employees Gen AdminisPrMPion Employees Vehicle Revenue Miles (millions) 48B5 52B3 67B9 9B4 33B7 27B0 39B8 24B9 OperMPions EE per 100,000 Revenue Miles 6B159 3B934 3B505 7B606 5B272 4B403 4B651 0B525 Gen Admin EE per 100,000 Revenue Miles 0B962 0B668 0B631 1B854 0B805 0B104 0B720 0B581 Full Time EE per 100,000 Revenue Miles 7B296 4B839 4B223 9B777 6B398 4B507 5B541 1B190 Valley Metro 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, Paratransit, Vanpool 22 Recommendations 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 23 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. 17

22 6. Investment Policy Review RPTA Cash Investment Policy Follow-up Discussion Budget and Finance Subcommittee October 9, 2014 Cash and Investments June 30, 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. 18

23 FY14 Investment Results 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% 27 Increasing yields in FY15 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

24 Cash and Investments Three Year Forecast Allocations by Fund Type Cund type CY14 v4 CY15 v1 CY15 v2 CY15 v3 CY15 v4 CY16 v1 CY16 v2 CY16 v3 CY16 v4 CY17 v1 CY17 v2 CY17 v3 CY17 v4 $ aillions Working Cash hperating Cund Reserve Capital Cund - RtTA Reserve Capital Cund - VaR Capital Bond Cunds Totals Cash and Investments Building an Investment Maturity Profile Work in Progress Cund type CY14 v4 CY15 v1 Avg aat CY15 v2 CY15 v3 CY15 v4 CY16 v1 CY16 v2 CY16 v3 CY16 v4 CY17 v1 CY17 v1 CY17 v1 CY17 v1 $ aillions Yrs Working Cash hperating Cund Reserve Capital Cund - RtTA Reserve Capital Cund - VaR Capital Bond Cunds Totals tercent of tortfolio 30% 17% 17% 6% 6% 6% 4% 4% 4% 4% 4% aaturity in Years zero to Recap CY15 aaturities % CY16 aaturities % CY17 aaturities % Total tortfolio % 30 20

25 Next Steps 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 Impacts of Federal Funding Delays or Restrictions Federal Funds Review Budget and Finance Subcommittee October 9, 2014 Paul Hodgins presented Federal Funds Review. 21

26 FY15 Funding Sources $324.6 Million 42 Funding Sources for FY15 total $324.6M Federal Funds Overview 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 43 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. 22

27 HTF Balance FY14 $12.0 $10.0 $8.0 $ Billions $6.0 $4.0 $2.0 $0.0 Highway Account aass Transit Account 44 The blue line is the highway account. The red line is the mass transit account. 23

28 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. 24

29 Formula Funds 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 46 Discretionary Funds Projects funded 5-Year Budget Capital $189 million Light rail construction Solar panels South Central planning 47 25

30 Impacts from HTF Shortfall Short term Delays in reimbursements Reimbursements less than full request Long term Reduction in future funding 48 Formula Projects Potential Delays Scenario 1 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 49 26

31 Formula Projects Potential Delays Scenario 2 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 50 Formula Projects Funding Level Scenario 1 Zero growth in funding No impact to current budget Regional Transportation Improvement Program assumes zero growth 51 27

32 Formula Projects Funding Level Scenario 2 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 52 Discretionary Projects Funding Level Scenario 3 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 53 28

33 Discretionary Projects Funding Level Scenario 3 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 54 Moving Forward 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 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. 29

34 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.

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

36 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 24 th Compile Budget Information and Prepare Draft Budget Respond to Questions and Issues Raised and Provide Direction Feb 27 th thru Mar 20 th Respond to Questions and Issues Raised Review Draft Budget Package and Provide Feedback to Budget Group Mar 14 th Mar Compile Revisions and 31 st Prepare Budget April Respond to Questions and Issues Raised Review Budget May 6 th thru May 15 th 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 jmccormack@valleymetro.org ATTACHMENTS None 3

37 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 # 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 # S) and was subsequently amended in March 2010 (Agreement # 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 VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

38 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 ATTACHMENT LRT Program Intergovernmental Agreement (LRT- IGA) Agreement # S 03 2

39 Valley Metro RPTA Budget and Finance Subcommittee March 5, 2015 LRT Program Agreement LRT Program Agreement Renewal and Restatement 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. 2

40 General Terms of the Agreement: 1. First executed, June 2006 LRT Program Agreement wenewal and westatement 2. RPTA designates VMR as Lead Agency to plan, design and construct the LRT component of the RTP % of total PTF is allocated for LRT; RPTA reimburses VMR for eligible expenses incurred. 4. VMR becomes owner of record of capital assets constructed with RPTA funding; participating cities become the owner of real estate purchased and occupied by LRT assets. 5. VMR Annual Budget and Five Year Plan demonstrates fiscally-constrained plan of projected project expenses. 6. Five Year term; Last renewed March 2010 Outline of Changes Proposed: LRT Program Agreement wenewal and westatement 1. Extends the term of the agreement to June 30, 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. 3. 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. 4. The security interest will be recorded as inter-agency receivable and payable and will not impact agency operational budgets or funding.

41 LRT Program Agreement Renewal and Restatement 5

42 Third Amended and Restated lntergovernmental Agreement Between The Regional Public Transportation Authority And Valley Metro Rail, Inc. LRT Program Agreement AGREEMENT # S 03 THIS THIRD AMENDED AND RESTATED INTERGOVERNMENTAL AGREEMENT # 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 # S on or about June 19, 2009 and, C. WHEREAS, the parties entered into the second Amended and Restated Intergovernmental Agreement # 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 RPTA-VMR LRT Program Agreement Third Amendment and Restated Page 1

43 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 RPTA-VMR LRT Program Agreement Third Amendment and Restated Page 2

44 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 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. RPTA-VMR LRT Program Agreement Third Amendment and Restated Page 3

45 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. RPTA-VMR LRT Program Agreement Third Amendment and Restated Page 4

46 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, Unless terminated sooner by the parties this Agreement shall conclude on June 30, 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-VMR LRT Program Agreement Third Amendment and Restated Page 5

47 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 RPTA-VMR LRT Program Agreement Third Amendment and Restated Page 6