Valley Metro RPTA. Lake Powell Conference Room 101 N. 1 st Avenue, 10 th Floor Phoenix

Transcription

1 MEETINGS OF THE Board of Directors Valley Metro RPTA METRO Light Rail MEETING DATE Thursday, May 22, 2014 TIME 12:15 p.m. MEETING DATE Thursday, May 22, 2014 TIME 1:30 p.m. LOCATION Valley Metro RPTA Lake Powell Conference Room 101 N. 1 st Avenue, 10 th Floor Phoenix VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

2 May 14, 2014 TO: FROM: RE: Members of the Valley Metro RPTA and METRO Light Rail Boards of Directors Steve Banta Chief Executive Officer May 22, 2014 Packet Notes Attached is the May 22, 2014 agendas and supporting information for the Valley Metro RPTA and METRO Light Rail Boards of Directors meetings. These meetings can be attended via teleconference. Please contact the receptionist at for the call-in information. If you have any questions regarding the information in this packet, please let me know. Parking is available onsite and parking can be accessed via the entrance on Adams Street. Parking validation will be available at the meeting. Transit tickets are also available to those who attend the meeting using transit. If you need detailed directions, please contact the receptionist at VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

3 May 14, 2014 Board of Directors Thursday, May 22, 2014 Lake Powell Conference Room 101 N. 1 st Avenue, 10 th Floor 12:15 p.m. For those participating by telephone, please mute your phone when not speaking. Members please make sure your microphone is turned on when speaking and turned off when you are not speaking. The Pledge of Allegiance will be said at the beginning of the meeting. 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 Board 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 April 17, 2014 Board meeting are presented for approval. 3. Chief Executive Officer s Report 3. For information Steve Banta, Chief Executive Officer (CEO), will brief the Board on current issues. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

4 CONSENT AGENDA 4A. Authorization to Issue a Contract to Arthur J. Gallagher & Company for Property and Casualty Insurance Brokerage, Claims Management, and Risk Management Consulting Services 4A. For action Staff will request that the Board of Directors authorize the CEO to issue a five-year joint RPTA/METRO contract for property and casualty insurance brokerage, claims management, and risk management consulting services for Valley Metro to Arthur J. Gallagher & Company for the period July 1, 2014 to June 30, 2019 in an amount not to exceed $556,100. 4B. Zonar Software Maintenance and Hosting Agreement 4B. For action Staff will request that the Board of Directors authorize the CEO to execute a contract with Zonar Systems, Inc. for a five year software support and maintenance agreement for an amount not to exceed $590,650. 4C. Authorization to Issue a Request for Proposals (RFP) for Contracted Transportation Services to Operate Route 685 (Ajo/Gila Bend) Rural Connector Service 4C. For action Staff will request that the Board of Directors authorize the CEO to issue a RFP under a joint procurement process with the Regional Transportation Authority (RTA) of Pima County for contracted transportation services to operate Route 685 (Ajo/Gila Bend) Rural Connector Service. 4D. Authorization to Issue an Invitation for Bid (IFB) for Contracted Services to Install and Maintain the Nextride Program Signs 4D. For action Staff will request that the Board of Directors authorize the CEO to issue an IFB for contracted services to install and maintain NextRide signs and Kiosk posters at regional bus and train stops. 2

5 REGULAR AGENDA 5. Valley Metro Fiscal Year 2015 (FY15) Operating and Capital Budget and Five-Year Operating Forecast Capital Program (FY15 thru FY19) 5. For action Steve Banta, CEO, will introduce John McCormack, Chief Financial Officer, who will request that the Board of Directors approve the FY15 Budget and acceptance of the Five-Year Plan and Five-Year Operating Forecast Capital Program (FY15 thru FY19). Approval of the budget provides funding for Boardapproved TLCP projects and allows RPTA to implement capital and operating projects approved by voters in Proposition 400. Arizona State statutes require annual Board adoption of the budget. 6. Transit Life Cycle Program Update 6. For information Steve Banta, CEO, will introduce Paul Hodgins, Manager of Revenue Generation and Financial Planning, who will provide information to member cities concerning the draft 2014 TLCP Update. The item will cover both the bus and rail programs within the TLCP. 7. Mayor Scruggs Internship Program Update 7. For information Steve Banta, CEO, will introduce Sam Stevenson, the FY14 Mayor Scruggs Intern, who will provide an informational update on his experience in the internship program. 8. Future Agenda Items Request and Report on Current Events 8. For information and discussion Chair Somers will request future agenda items from members, and members may provide a report on current events. 9. Next Meeting 9. For information The next meeting of the Board is scheduled for Thursday, June 19, 2014 at 12:15 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

6 To attend this meeting via teleconference, contact the receptionist at for the dial-ininformation. The supporting information for this agenda can be found on our web site at 4

7 DATE AGENDA ITEM 1 May 14, 2014 SUBJECT Public Comment PURPOSE A 15-minute opportunity will be provided to members of the public at the beginning of the meeting to address the Board on all agenda items. The Chair may recognize members of the public during the meeting at his/her discretion. BACKGROUND/DISCUSSION/CONSIDERATION None COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT Steve Banta Chief Executive Officer sbanta@valleymetro.org ATTACHMENTS None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

8 DATE AGENDA ITEM 2 May 14, 2014 Minutes of the Valley Metro RPTA Board of Directors Thursday, April 17, :15 p.m. Meeting Participants Councilmember Trinity Donovan, City of Chandler, Vice Chair (via phone) Councilmember Jim McDonald, City of Avondale, Treasurer (Chaired the meeting) Vice Mayor Eric Orsborn, City of Buckeye Mayor Lana Mook, City of El Mirage Councilmember Jenn Daniels, Town of Gilbert Councilmember Gary Sherwood, City of Glendale Vice Mayor Joe Pizzillo, City of Goodyear Vice Mayor Ron Aames, City of Peoria Councilmember Thelda Williams, City of Phoenix Councilmember Shana Ellis, City of Tempe Councilmember Suzanne Klapp, City of Scottsdale Councilmember Kathie Farr, City of Tolleson Members Not Present Councilmember Scott Somers, City of Mesa, Chair Supervisor Clint Hickman, Maricopa County Vice Mayor Skip Hall, City of Surprise Councilmember Sam Crissman, Town of Wickenburg Chair McDonald called the April meeting to order at 12:15 p.m. (The pledge of allegiance is recited.) 1. Minutes Chair McDonald said the next item on the agenda is the minutes. Are there any items that anyone would like to pull or discuss from the minutes? Hearing none, minutes are approved. IT WAS MOVED BY COUNCILMEMBER WILLIAMS, SECONDED BY COUCILMEMBER AAMES AND UNANIMOUSLY CARRIED TO APPROVE THE MARCH BOARD MEETING MINUTES. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

9 2. Public Comment Chair McDonald said I have one card from Mr. Crowley. Mr. Crowley, if you would like to step forward, you have three minutes. Mr. Crowley said good afternoon and I will try to stick as much to the procedures as possible by discussing the agenda items, non-action, that I need to address. One of them is when he does the Legislative Update the Senate Bill 1062 or is it -- not 1062, the I know that ride share has been a big part of the RPTA and now it doesn't cut it that doesn't need to be what is the part of the equation. What it is one of the jobs of government is transportation and y'all aren't coming up to the plate with enough of your general funds to do it correctly. And all this does is push that away from the responsibility of taking a third of the population, which is your mandate, and getting it into mass transit and moving it from spot A to spot B. The next is your proposed transit service changes. Well, Glendale, it was the West Valley that got the first meeting and it was only two days later that I was told that we were going to get the announcement on the buses. So I find that abhorrent, but then it gets worse because for the last week I've been listening for it on the buses, I've been listening for it on the light rail, it ain't there. And then when I look at the parts of this that you have, I'm glad for the expansions, but then I see okay we are going to the res on 17, but then the expansion of 75th and 83rd Avenue stops at Camelback. You want me to bust out the document that says what you're supposed to be doing on the expansion right now of those two roadways is not from lower Buckeye, and thank God you did expand it, but on the north end it's to go into Glendale and Peoria to Arrowhead mall. Now I know that they may say that it's because of funding we weren't doing that, so Glendale and Peoria, step up to the plate and pay your part of it because those Prop 400 funds aren't to cover the whole, it's to cover part. And I do appreciate that, Avondale, you are starting to get some of them, but as Mr. Drake and Ms. Rogers have pointed out in the past, it was heavily tilted with towards the East Valley and what they're getting, because come from the freeways on down, but 83rd Avenue, as you know, is not the edge of the world. And with Goodyear and Buckeye and the rest of them, where is it from the plan that said circulators within your community to hook up to regional. You're not doing that and we need to get that done better. I'll see you on the other parts. 2

10 Chair McDonald said thank you. Do we have any other cards or are we good to go? Okay. Then we've already covered Item 2, so let's move to Item 3. Mr. Banta. 3. Chief Executive Officer s Report Mr. Banta said thank you, Mr. Chairman, members of the board. I'd like to acknowledge the ribbon cutting ceremony for Loop 100 Maryland Avenue HOV Ramps. There was a ribbon cutting out there in Glendale. The group here in front of you is Route 573 bus with several elected Glendale officials: Mayor Weiers, former Mayor Scruggs, RPTA and METRO Board representative Councilmember Sherwood, Councilmember Knaack, and Councilmember Chavira. The Route 573 started using this ramp this past couple weeks ago and it's been saving operating time and provide a safer operating environment due to the lack of merging needing for this to express route to get to and from the frontage road to the HOV lane. We want to thank Teri Collins for her help in setting this up. She is from our operating department and Adele from Total Transit who assisted in making this event a very much a success. We've have a photo of a LINK bus here which was featured in the April METRO magazine on a BRT story analyzing Bus Rapid Transit projects in North America. Included in the article there was a photo of our Valley Metro LINK bus at a downtown Mesa LINK stop. Previously this week, Monday, Tuesday, we had the Arizona Transit Association's Annual Conference that was held in Tucson. Also a bus rodeo was there. Took place from April 13 through the 15. This year's conference was titled: "Transit at Work: Enriching Our Communities- Defining Our Future." as we always talk about the work we do here we connect people to life. The conference included highlighted discussions regarding technology, millennials, industry professionals, OEMs. We actually had a session that talked about the partnership and hopefully the improvement of the partnership between health care and public transit. We do think we should advocate on each other's behalf. We think we're good partners and we need to look forward to continuing that discussion. We at Valley Metro also on behalf of the Discovery Triangle was awarded the Outstanding Transit Innovation award for the Fresh Express, the food desert bus, that we put together in concert with Discovery Triangle. So we're very proud to accept that on Discovery Triangle's behalf and I'll be giving that to them later this week. Ridership is beginning to turn back in the right direction. Average weekday boardings on light rail is up 5.7 percent. Weekday bus is about minus 1.4 percent, but we do think, again, that stabilizing and starting to move back in the right direction. 3

11 The legislative update is at your seat. That concludes my comments unless you have any questions. Chair McDonald said are there any questions for Mr. Banta. Councilmember Sherwood said thanks for beautifying the room a little bit with those folders in the back. They look very nice. Mr. Banta said I was remiss. I should have mentioned that in my comments. On your way out, if you care to take a look at the wall, we've tried to capture our member cities as it relates to serving on this Board and also this region and the work that we do here every day. So thank you very much for your contribution. Chair McDonald said are there any other questions? Okay. This item is for information only, so we will go ahead and move on to Item Intergovernmental Agreements (IGA) with the City of Scottsdale for Insurance Funds Mr. Banta said item No. 4 is for action. It is an Intergovernmental Agreement with the City of Scottsdale. We are in the process of replacing thirteen buses in the City of Scottsdale. All 13 of those buses at this point in time have reached the end of their useful life. Prior to one of the buses reaching the end of their useful life, it was in an accident. And this IGA is to be able to allow Scottsdale to transfer what the value of that bus, it was a total, back to us so we could offset the use of PTF funds to purchase an additional 13 buses. We are looking for the vehicle to be able to do that. This IGA will allow us to do that. This is for action so we need to vote. Chair McDonald said are there any questions? IT WAS MOVED BY COUNCILMEMBER SHERWOOD, SECONDED BY VICE MAYOR AAMES AND UNANMIOUSLY CARRIED TO AUTHORIZE THE CEO TO EXECUTE AN IGA WITH THE CITY OF SCOTTSDALE TO RECEIVE INSURANCE FUNDS TO BE APPLIED TOWARD A REPLACEMENT VEHICLE PURCHASE. 5. Exercise Contract Options for East Valley Dial-a-Ride Chair McDonald said the next item is Item No. 5. Steve, could you give us the background on that, please. Mr. Banta said Mr. Chairman, members of the board, this is for action. This is to exercise the contract option for East Valley Dial-A-Ride. 4

12 Some of you probably remember when we originally went into this contract, it was an original two-year pilot project, and then there was one three-year option. We are at the point now where staff is recommending the adoption of the option for a not-to-exceed value of just under $26 million. In addition to the request for the three years of contract extension, we are also asking for an approval of $182,953 separate from that that is in concert with the mid-year budget review. We are now truing up the budget to the end of the year. We ran over what our forecasted budget was this past year for East Valley Dial-A-Ride services. The mid-year adjustment approved this. We're now making the cash correction to the budget. So with that I'd like to have Mr. Brooks give you a brief presentation and then we'll came back to you for comment and question. Mr. Brooks said good afternoon, Councilman McDonald, Board. I'm just going to actually skip through here. Steve just presented the recommendation, so just a little bit of background. Of course, as you all probably are aware, the East Valley Dial-A-Ride serves the communities of Chandler, Gilbert, Mesa, Scottsdale, and Tempe. And we've operated this with a taxi brokerage model with Total Transit. I know they are represented today in the audience. They've been a good partner. We've worked hard over the last two years to really kind of get this model going. We've spent the last several months doing an assessment. Of the model, and of course now we're looking to go forward for the next three years under this option to continue to refine and improve the model. As we presented in February, and as we've talked, the service is less expensive under the taxi brokerage model and service quality is comparable. We've not seen any degradation. In fact in some areas service is stronger. On time performance is very strong. Customer satisfaction is pretty high. But the demand for service has really forced us to really look at how we deliver service and what can we do to make service more efficient and more cost-effective. And as we presented in February, we've taken several steps kind of outside of the contract to improve service cost: We've refined our eligibility process and we're continuing to do that. We're continuing to tighten access to non-ada mandated services provided by some of our cities. We have increases to non-ada fares that will bring them in line with ADA fares starting in July. And we're really promoting our lower cost services such as our Platinum Pass program and our RideChoice taxi subsidy program offered by several of our East Valley communities. The rest of the steps that's we need to take now really are tied to this contact and to this extension. And the focus here is going to be on trip sharing and on really integrating the use of paratransit with our accessible fixed-route bus and rail service. 5

13 So in terms of really managing the approach we're going to take to managing costs under this new contract, these are items that we have already kind of negotiated and worked out with Total Transit. They are a willing partner. First, we want to modify the subcontracting requirement from 50 percent down to 25 percent. What that really allows us to do is to improve the amount and percentage of trips that get shared because Total Transit will have direct control over more of the service so they can group it better. That also gave them a strong incentive to really relook at the pricing on this contract. And that's advantageous for us. We have implemented requirements for trip sharing. Those will go into effect with this extension. And we think that's going to do two things: It's going to create savings in terms of the number of miles that we operate. And it's also going to help encourage our customers to really think about this service as paratransit service as something that if they can use fixed route, it's going to help us to really motivate them to do that. We have implemented performance-based incentives, or we will, incentives and disincentives that are tied to service, quality, safety, on time performance. The reason for that is as we focus on trip sharing, we want to keep the focus on having timely good service. We have implemented requirements for enhanced technology. And again we've really focused and gotten a better price as well. With regard to subcontracting what we want to do is really focus on trip -- getting the contractor to trip share. And so by having the subcontract be having them operating more service directly that will allow them to have more control of more service, and I think it will also really help manage service quality and have stronger control with their subs. And again, that is the basis for the price decreases. The pricing for this contract are three components: There's a fixed fee that we pay monthly. There's a wheelchair boarding fee for each person who uses a wheelchair, because that requires a more expensive vehicle so there's an extra fee that goes to the drivers who operate that service. And then there are per-mile charges as well. The fixed fees aren't changing because the fixed cost really haven't changed. But we have significant decreases in wheelchair boarding fees and also in the mileage rate that we pay on a per-mile basis. Those rates are going down significantly for each year of the contract and the combined savings based on current trip volumes and kind of our projections going forward is about $1.4 million. So we think this is a good deal not only for obviously for the service, which is running well, but it's going to be a good deal for us financially. Again, just to restate the recommendation $27 million that covers the extension, years three through five and it covers the portion of service that we covered in the mid-year 6

14 adjustment for this year. So those complete my remarks unless you have questions. Vice Mayor Aames said this additional amount is because there was more ridership than initially anticipated; is that correct? Mr. Brooks said we had pretty significant growth for the past few years and this year we experienced about a 17, 18 percent growth clip for this year. When we did our presentation in February, we projected some of those numbers and they are holding about where we projected. Vice Mayor Aames said this additional amount this is basically paid for by the cities in that East Valley program; right? And is there some additional federal reimbursement because of the additional amount, or is there some of that included in the additional amount? Mr. Brooks said I'll let someone else speak to that. I don't believe we get federal funding for this service. Mr. McCormack said Vice Mayor Aames and members of the board, this is a 100 percent locally funded project program for us. Under the traditional model where there's vehicles that are purchased, those vehicles are funded with the combination of federal and regional funds. With this program the cost of the vehicles are embedded in the cost of the service and it's funded by a combination of public transportation funds and member city funds. Councilmember Aames said and we're in our second year right now; is that right? So to do a third year this needs to pass. Mr. Brooks said correct. Councilmember Sherwood said my concern is still that the non-ada ridership is going to be taken advantage of. So I appreciate all the stuff you've taken thus far that we took before the fiscal year and what we're doing now on the adjustments that you pointed out earlier. I would just ask that we, you know, that the Board gets a look at this, you know, in six months again, and then possibly comparing them to the numbers that you're presenting to us today just so we can see that -- but the stuff that you implemented earlier in the year and the ones that you're implementing now have had some effect on it. So again, just concerned that this isn't going to run away, as we've kind of seen over the last couple years. I think it's working well for the East Valley. It's just that we really -- it's really primarily meant for ADA, although we're allowing non-ada use, and I know by increasing the fare cost and offering those other options hopefully we'll steer them towards those lower cost. 7

15 Chair McDonald said any other questions or concerns? I do have a card for this item from Mr. Crowley. Step to the podium. You have three minutes. Public Comment Mr. Crowley said back in '92 when Glendale asked: How come our Dial-A-Ride isn't seamless? I've watched over these years and it still isn't getting that way. And I appreciate the East Valley does have some control in that. And if Glendale is really worried about the abuse of that system, we can really fix it that fast. And what you do is you make your Dial-A-Ride within the realm of the mandate which means that it would only be within a quarter mile of any fixed route. And then just take all the rest of it out. But then, Chandler, you'd have a great big hole in the middle of your Dial-A-Ride service and so would Gilbert and so would Mesa for that matter. So I understand our point. But if you look at the bus map and see how they're doing things, one of the answers is, like I said, to get rid of it. But the overall answer is, is this the East Valley regional transit authority. No. It's the regional transit authority. It's the region. And when are you going to get Dial-A-Ride regional. Is this going to stop that north valley part from blending within the next three years if you could get the job done right, or is it because of the sleeping giant Phoenix that we don't do it as the community. Because I see the East Valley population is about what, two-thirds of what Phoenix is. And then at the north valley you get another third, so we got two times that amount of population and we're doing this regionally. Well, 26 million for East Valley. How much are we spending for the rest. Why aren't we making it more coordinated and getting it done effectively. And like I said, if you want to save that money and make sure that those people aren't using it the non-ada acceptable, just take it out of all the places that doesn't have to be and you save all kinds of money. But then are you doing what was mandated of you and that is to get transit out there for the population and get one-third of them moving not in their single-occupant vehicles. You got thirty seconds back. IT WAS MOVED BY VICE MAYOR AAMES, SECONDED BY COUNCILMEMBER SHERWOOD AND UNANIMOUSLY CARRIED TO MOTION TO AUTHORIZE THE CEO TO EXERCISE THE OPTIONS FOR YEARS THREE THROUGH FIVE OF THE FIVE-YEAR CONTRACT BETWEEN RPTA AND TOTAL TRANSIT. 6. Regional Transit-Oriented Development Strategy Mr. Banta said Mr. Chairman, members of the board, I'd like to introduce Wulf Grote, director of planning and development, who will give the Board of Directors a 8

16 presentation and then for action approval of the regional transit-oriented development strategy. Mr. Grote said Mr. Chairman, members of the board, as Steve mentioned the purpose of this item is to seek your approval for a Transit-Oriented Development (TOD) strategy. Just to note here, you know, we feel it's very important how our communities develop around our regional transit system, because this can affect -- significantly affect the transit system's success. Through the development of this strategy, it's our intent to elevate the discussion about transit-oriented development and to also make sure people understand the importance of transit-oriented development to the community as well as to public transportation. Just as an example, I'll use our light rail system we have seen a significant success story around light rail. I think many of you have probably seen this slide, but we have seen close to $7 billion of investment made around our light rail system since we started construction of that several years ago. And that's both on the public side as well as on the private side that we've seen a lot of investment made within walking distance of our transit system and that was for a $1.4 billion investment. Obviously, we have seen a good rate of return on our investment on that project. But what I wanted to say here it's not just important to develop around transit, it's also important to have the right kind of development around the transit system, you know, there's certain things you might want to have around transit and other things you may not want to have around transit. So having the right kind of development is key. And what we're talking about here, and I'm sure many of you are familiar with the concept, but I'll just repeat it anyway is the transit-oriented development or TOD, as we all like to call it, really does several things for us. One, it assures that we have compatible land uses near our transit stations and our transit stops. It also assures that we have good access to, first, transit stations by creating attractive pedestrian environments and also good environments for bicyclists to access our stations. And really what we're looking at when we're looking at TOD is providing an environment that is more human scaled as opposed to auto oriented. In other words, you don't want to put a gas station or a car wash next to a transit station. That's not probably a good investment of your dollars. So why is transit-oriented development important? There are several things: We believe that it creates economic activity for various sectors of our community that provides good access to transit options. We know that by having the right development around the transit system it will increase transit ridership because it brings people to the system. 9

17 We also know that it will improve the environment because you have less reliability on the automobile. Personal and community health is also a plus because these kinds of developments usually cater to pedestrians, so people walk more and that of course affects they're health. We also recognize that there's a mind shift away from the automobile particularly amongst the younger millennial generation. You're probably hearing a lot about that in conferences around. We just heard about it, as Steve said, at the Arizona Transit Association Conference earlier this week. And they're looking for more of this kind of a development environment. And also we recognize what we've seen is that if you do the right kind of investment it really can improve property values around these station areas. Just to give you some examples of what TOD has done around our light rail system. The first one on the left is a condo complex that was developed during the time that light rail was implemented. It's called Tapestry on Central. It's up at Encanto. Was also an example of an apartment complex in Tempe in east Tempe called the Domain on Apache Boulevard. CityScape, of course, right downtown here is a tremendous example of retail office and hotel space that is also very pedestrian oriented. And then just to show that not everything has to be of grand scale, we're also showing here Roosevelt Row, which is on Roosevelt between Third Street and Seventh Street in Phoenix, which is really more of a mixed-use kind of development that involves groundlevel retail with housing above, but very pedestrian oriented, pedestrian friendly in a transit-oriented environment. So I just wanted to give you a little bit of flavor so you know what I'm talking about here. But specific to transit-oriented development and what we as an agency have been doing over time, back in 2006, METRO created a TOD policy at a staff level. And it really identified METRO as having a supporting role to our member agencies in promoting TOD and furthering the cause of developing TOD projects. Since that time we also created a TOD working group through METRO actually at the request of our member agencies. We started meeting with all of our member agencies and MAG back in early March As we combined our two organizations, we expanded that membership and we now invite all of the Valley Metro cities to be part of that TOD working group and we recognize that while a lot of the focus to date has been more on the rail system that TOD also has an opportunity to also enhance our bus system as well. So I think that's the reason we wanted to make sure that we included all the agencies around that are members of our organization. The TOD working group does a number of different things. It's been helpful for us to educate some of our member cities. It's been a collaboration effort amongst the various agencies involved. We talk about land development opportunities, we address issues with remnant parcels left over from transit development projects, we talk about revenue- 10

18 generating opportunities, joint-use partnerships, and most importantly for this discussion today, we also talked about -- for the last year we've been talking about a development of a regional TOD strategy. And this working group, by the way, is made up of two member agencies from -- two members of each agency. Can be from economic development, from the planning department or from their transit or from the transit organization. The TOD strategy really has kind of -- I'm listing three purposes here. First, to promote the integration of land use and transportation by leveraging the regional transit system. It identifies -- it's to identify regional TOD goals to be implemented through collaborative partnerships amongst public and private sector participants. And it also identifies roles and responsibilities for agencies at the regional level, at the local level, as well as for the development community. Now you have in your packets you had more details about -- actually a three-page document that defines the strategy. And I'm not going to go into all of that, but it does cover four main topics. It talks about purpose, the definition of what TOD is, general goals, as well as the roles and responsibilities. And by the way, MAG is also taking this same document forward. MAG has been very important part of our process. They're going to be taking this same process -- the same document forward in their May time frame, so you'll be seeing this again at MAG as well. Just one thing I just wanted to highlight from that policy or from that strategy document is the lead roles and responsibilities of the different agencies. There are several roles. I'm not going to talk about all of them. But these are just the lead roles. So from a MAG perspective, their role is to promote and educate the region regarding TOD, and they also need to consider TOD as part of any regional planning that they do, regional studies that they do. This should be a consideration as they develop their plans. At a local jurisdiction level, I think we're looking to you all to do a couple of things. One is to include TOD principles in your land-use plans, in your regulations, in your zoning, community goals, your general plans. And really, you know, it becomes a part of the way of thinking within your communities. And then also as we are involved in major transit projects, the role of the communities is also to acquire land and to develop that land potentially for TOD purposes as well. And then for Valley Metro our role is as we develop transit corridors, whether it's bus or rail corridors, our role is to assess the potential for TOD for various route options that we're looking at and also to overall for the project. Our role is also to develop an agency strategic plan and policies just for our agency and that's something also we're encouraging the cities to do as well. And then to research and monitor regional trends 11

19 and see how we're doing over time with TOD, really more of a pulse check on how we're doing over time and that's something that we would do. So with that, again, I didn't go into all the details, but it is our recommendation to the Board that you will adopt this strategy on TOD. Vice Mayor Aames said transit-oriented development is probably a good thing, but I'd like to know how you measured and got that $6 billion, because I don't think, you know, it happens in a vacuum. If you gain along the corridors, I think you lose in other places. Businesses may be moved from one place to another place, so is there another side that we can measure to see what the real development is in a larger area as opposed to moving -- the businesses move because, you know, people are taking the light rail along that corridor and they can stop and go to those places. But I'm wondering if there's another side to the picture that we should look at too. And transit-oriented development in Peoria already has that in their plans. And we are looking at that. And the goals that we're voting on is that -- that last side that you showed us, is that really what we're voting on? Mr. Grote said Mr. Chairman, Vice Mayor Aames, what you're voting on is the threepage document that's part of your packet that lays out the specifics. Again, I didn't cover it all here, but I touched on some of the highlights, but the document there identifies those four areas -- what the goals are for TOD, what the roles and responsibilities are. It's really a high-level document. Vice Mayor Aames said it's a strategic, okay. I didn't know we necessarily voted on things at that strategic level, but, I guess, we're voting so that there are personnel involved in this and that Valley Metro does move forward as a goal to do that, I guess. Is that what we're voting? Mr. Grote said what I think we're trying to do here is we're trying to create some focus around our transit system. And part of this is to elevate the awareness among the cities and to start to make some commitment as a region that we're going to develop around our transit system. We're making a huge investment in public transportation and we want to make sure that that investment is well leveraged by the kind of development that goes around it. Vice Mayor Aames said as you know some of the cities that are further out aren't really served by the light rail and we look at things like commuter rail. Is that going to be part of what's going to be looked at an overall regional picture and what mode best serves the different areas? 12

20 Mr. Grote said Mr. Chairman, Vice Mayor Aames, this strategy is really intended while, as I mentioned before, while the initial focus was light rail, we really believe that this can also go to commuter rail, it can go to our bus corridors that we're looking at and wherever we're making significant investment in transit -- and even some of our fixedroute bus services and our local service could benefit by this kind of development and this kind of thinking making our environments more pedestrian friendly, making it more conducive to wanting to use public transportation. Vice Mayor Aames said I'm going to go back a little bit to my original comment. How did you measure to get that $6 billion? Mr. Grote said the $6.9 billion-dollar figure is within walking distance within a half mile we say of our light rail stations. And that's how we -- so we looked at all development that's either occurring or has occurred since we started the construction of our rail system. And that's how that's measured. Do we have a measure that goes beyond to see what the effect has been on other parts of the community? You know, I don't -- we haven't measured that. You know, I think our objective is to make the transit system successful and to encourage people to use alternate modes. Vice Mayor Aames said so that $6.9 is new business development and the revenue is coming in to those businesses, I assume. Mr. Grote said it is the amount spent on the development itself. You know, if it's the construction cost. Vice Mayor Aames said okay, not the retail, but additional construction. Mr. Grote said yes. That's exactly what it is, yes. Councilmember Sherwood said thank you, sir. Really just to point out a couple things. Again, that $6.9 billion, I mean, that's just a start. I think you'll see that number grow. I think the other thing that you were trying to get across was that you want more of Valley Metro's and RPTA's input into this when the cities are planning. We're talking about TOD and what the cities are doing, what the region is doing, but you want to ability to know what that is as well so that we're not planning something that would really interfere with the transit operation, you know, put something in an area that just doesn't make sense and would really curtail some of that service, whether it's light rail or express bus. So I think that was a point that I think needed to be made. And then even though this is mostly centered around light rail, but for this Board, I mean, it is for when we talk about the RAPID transit especially, and even to some degree the fixed-bus routes, I don't know that we look at that, quite honestly, enough when we're looking at those modes of transportation. 13

21 And a final question, I think, would be: Are we doing a better job when we go out to the public are we talking about TOD more? Because when you explain it to them in two minutes or less they get it. You know, they're scared of it. And then when you talk about it, they say, yeah, that really makes sense. I mean, it does. And so these are people I know they've had presentations made to them by other people, outsiders, I don't know necessarily your group. So is this being talked more and more because I mean, to me this is what sells this program, and I think we've seen it, you know, after the 20-miles were put in. And it sounds like I'm be laboring it, but I really do believe that once you get that out there, it's just an easy system to sell. Mr. Grote said Mr. Chairman, Councilmember Sherwood, just to your first comment about this being more rail focused and really it should be more, which is what I'm also saying. The reason that we're here in front of the RPTA Board is because we do believe that this affects a lot more than the existing rail system. Some of your communities are thinking about rail in the future. Some of your communities are thinking about bus corridors or making significant investments in bus. And if you really want to make the bus system work, you need the right kind of land uses and the right kind of orientation of those land uses around whatever transit line it is be it local bus, express bus, light rail the whole desire is to create that more pedestrian environment that really encourages people to want to use transit. Regarding the presentations, yes, we do speak all the time. We go out to various community groups. We go to business groups. We speak to various organizations. And we bring up this message as often as we can. It's not just in our little circle here that we talk about transit-oriented development. We bring it up every chance that we get. And if there's more that we can do, if there's groups that we need to talk to, tell us about them and we'll go talk to them. Vice Mayor Aames transit-oriented development, we do need to focus on that, but let's not forget also focus on mobility and we have transit so people can move and move faster. So I think you need to include that, it's not necessarily just obvious to everyone. Councilmember Williams said under the very first point it says: Promote a transit system that promotes jobs and equitable housing. And I know what you're describing gets more into planning new projects. My concern is I would like to make sure that you are including strategy where we already have large active players so that we not only retain them, but they expand their business and stay where they are. And I don't see anything in here that's even headed in that direction. Could you address that, please. Mr. Grote said I maybe we didn't have the words of that specifically in there, but yes, that is a focus for us to not only to attract new development but also to encourage expansion of existing development along the corridor. And it's also not for -- and also 14

22 part of the equity thing is also we're trying also to make sure that we're considering all different income levels as well. It's not just the people who can afford expensive housing, but also the people who can't afford higher cost housing. We want to address that as well as part of what we're doing. Mr. Banta said Councilmember Williams, also if you look at Bullet No. 4, we understand exactly what you said. We didn't state it as clearly as you wanted, but we recognize the importance of enhancing the transit assets that we currently do have. Vice Mayor Orsborn said I was trying to find the link to it, I can't remember what the article was, but they were talking about rail and the success of rail over the last twenty years or from basically the inception of the light rail movement anyway in the eighties or nineties. I can't remember the dates on it. So now I'm reading transit articles in my spare time. This is different. But it talked about the success of those based on what the communities did to put this sort of development around it. And in some cases, I mean, a real ridiculous example is Buckeye eventually getting rail. And you don't want to run rail through a bunch of acre lots from one location six miles to another because you don't have the density to support it. So the whole idea is that you, not just rail, we need to really make sure that we harp on the multimodal aspect of it because the walkability of our communities to get you to the bus, which eventually will lead you to a rail or however that all ties together, is very important. And the way we design and plan all that is very important to make that flow as easy as possible. But the article was very specific and in the communities that embraced it really got the most bang for their buck. And the investment they put into rail or bus service or whatever it may be. And then with respect to the infrastructure or the development that happens next to specifically rail and you're training me well on this, the one dollar gives you seven back. I'll get there. The most glaring example is the ASU campus located downtown. You know, I think I continue to hear that. In fact I hear it from ASU specifically that they would not have located downtown had it not been for the rail. They probably would have ended up in Tempe or someplace like that. And then in the case of a growing community like ours, if we can use these strategies now to create these corridors where this happens, we can incentivize developers to maybe share in some of that infrastructure costs for, one, giving up a little bit of land that may be used for rail or park and rides or whatever the case may be. And in turn, they can build denser product which makes that land more valuable. 15

23 And then finally, we, as a city, don't have to figure out a way to spend extra hundreds of millions of dollars moving utilities because we've already got that corridor lease that really takes into account the infrastructure we want in the future for this. Mr. Grote said Mr. Chairman, if I could make just one note on that. I neglected to say this but that $6.9 billion worth of development didn't just happen. When we started planning for our light rail line, our initial light rail, long before we started construction, we worked with the cities that were involved in this project to develop the right kind of general plan statements, the right kind of zoning, we did stationary planning, we educated the development community. There were a lot of things that went on to make this happen. So you don't just plop down light rail or a major investment in any kind of transit and expect the development just to occur. It has to occur through careful planning. And with the right kinds of things in place. And the kinds of things that Vice Mayor Orsborn is talking about here are exactly the kind of things that we need to all be doing. We need to be thinking ahead if there are future corridors, not just on private development, but on utilities and moving those utilities and keeping -- building new roads, don't put them where you're going to have a future transit line and those kinds of things. Councilmember Klapp said I just want us to support the concept that you have of trying to reframe the conversation about transit-oriented development. We don't have it, obviously, we don't have light rail in Scottsdale, but we do have a bus system that we are working hard to make sure that it serves the citizens of Scottsdale and talking about where development should occur particularly in the southern part of our city along McDowell Road. And so if you can re-educate or explain to more people that transit-oriented development does not have to just be linked to light rail all the better. It's about time you've expanded it to include buses, trails, paths, all the other things that are involved in a transit system because for too long the word "TOD," transit-oriented development, has been a bad word linked to light rail the conversation has to be changed. It has to become a good concept. It needs to be communicated to the as was mentioned by the last gentleman to the community that transit-oriented development can occur with the bus system as well as with light rail. So I would encourage you to continue that conversation. I think it's a good move on your part. Public Comment Mr. Crowley said when I think of transit-oriented development I think about how long I've been doing this and the anniversary will come up on May 29 that it will be -- that I've been doing this since 1986 when I first got to deal with the famous trio Grote, Manske and Thomas. And what that meeting was for the development of the Central Avenue bridge and a really huge $28 million transit bus facility. That was your planning. It's still sitting there, right. Is there any others? 16

24 Oh, yeah, the airport. The transit facility in Terminal 4. We didn't hook up to that and that's what you put it, you know. And then when I'm hearing about the development and that, well, Glendale, you know that it's going to be through established neighborhoods all the way in your planning and that. And then the other half going to the stadium. The development of those areas are consequential. And when you say success for the system, I go, well, success for the system would be regional, twenty-four hours and seven days a week. Not what we're building along it. And when I look at like Chandler where your link is, you're planning those to be transitoriented because you're saying this is where we're going to be putting the rail, so any development along there, there are already seeing that. So when I look at it as past as in the magnificent facility you have there at Central and I-10 that still sits and when are we going to be developing it. Or the facility that is in express -- well, it would have cost us a billion dollars to put that facility and the rail in there, so instead of doing that, we spent a billion and a half for your toy the Sky Train. I think that you are already on the pages to get it done. And when it comes to Buckeye and the rail, you just like Glendale and Phoenix have rail stations already from when the heavy rail was used and based from there and go from that and that's the rail that we should be concentrating because it is also communicating to the area and eventually, yes, Scottsdale may even get some rail transit there, even though you did vote not to ever do it, but with the success of other areas and the branching between Tempe and Scottsdale, you might get to it. But, Wulf, with your history, I wouldn't trust him with a nickel. IT WAS MOVED BY COUNCILMEMBER SHERWOOD, SECONDED BY VICE MAYOR AAMES AND UNANIMOUSLY CARRIED TO APPROVE THE TRANSIT ORIENTED DESIGN STRATEGY. 7. Budget and Finance Subcommittee Appointments Chair McDonald said as announced at the last meeting there is a vacancy on the Budget and Finance Subcommittee. A letter went out to the Board requesting letters of interest. We received one letter of interest from Councilmember Suzanne Klapp from Scottsdale. Seeing how we have only one, I'd like to request a motion to appoint IT WAS MOVED BY VICE MAYOR AAMES, SECONDED BY VICE MAYOR JOE PIZZILLO AND UNANIMOUSLY CARRIED TO ELECT COUNCILMEMBER SUZANNE KLAPP TO THE BUDGET AND FINANCE SUBCOMMITTEE FOR THE TERM EXPIRING JUNE 2015 Chair McDonald said we will be electing committee members for the June board meeting to serve in Fiscal Year Pat will distribute a memo. She's going to distribute a memo from Chairman Somers in the next day or two describing that process. There are two subcommittees that are available for appointments: The Budget and Finance Subcommittee. I'm currently on, but I am term limited at the end of this term. Councilmember Jenn Daniels term also expires, but you are eligible to re- 17

25 apply. And then there's also the RPTA METRO Subcommittee. That's the committee that we put together to come together and iron out issues that may arise or if additional conversations need to occur. Currently RPTA members are Councilmember Thelda Williams and Vice Mayor Joe Pizzillo. The terms of the subcommittee members are for one year and members can re-apply to that board. So if you're interested in that as well please let us know. A memo from Pat will request board members to submit letters of interest to serve on one or both of these subcommittees. Both of these requests will need to be in writing. You can return them to Pat. Expressive interest to serve on Budget and Finance Subcommittee and or the RPTA METRO Board will be due by May 9. The subcommittee appointments will take place at our June board members with new members taking their positions on the first of July. 8. Valley Metro Information Technology Strategy Plan Mr. Banta Mr. Chairman, members of the board, I introduce Carol Ketcherside who will in the interest of time do a brief presentation on our strategic plan. And if we miss things of importance, we'd be glad to send it out to you for review. Ms. Ketcherside said thank you, Mr. Chairman, members of the Board. Last spring we engaged an IT consultant to perform an overall assessment of the Valley Metro computer system and to make recommendations for things that we needed to address immediately as well as things that we needed to consider in our path going forward. The exercise was as a result of the integration of the two agencies into one agency and also the maturing of our IT function in a very, very fast growing IT world where the expectations of IT are constantly growing greater. The objectives of the process that we embarked upon, first, we wanted to have an infrastructure that is resilient, agile, and secure. Resilient means we have a failover system for our more important applications and hardware. Agile means that we can quickly respond to your customer's needs. And secure means that we are safe from penetration. Secondly, we wanted to improve collaboration and information sharing by deploying enterprise systems with reporting analytical capabilities. And I'll get to that one later. Third, we wanted to align our workforce to support the plan. Fourth, we wanted to improve the overall management of IT by providing enterprise solutions and through effective governance. As you may remember, in January of this year, this Board approved an update to our IT policies, so that is what is supporting that 18

26 work going forward. And fifth, we wanted to ultimately increase customer satisfaction for the department which would be a natural outcome of the four objectives that I previously talked about. Enterprise solution for those of you who may not be familiar, the technical definition is first, I'll skip over that one into the simple term definition. It provides the right information at the right place at the right time to the right people. It enables communication, cooperation, and coordination between people, machines, and computers. And you're going to see me refer to that a couple times before we're done today. The approach going forward is best illustrated by this pyramid. There are three tiers to the pyramid. And we start working on the bottom tier. And that provides the foundation for building up to the top tier and that enterprise solution there that you see at the top. Infrastructure on that bottom tier pertains to working on the hardware and the equipment that's on the network and getting those into optimal conditions for supporting everything else that we do. We've been addressing challenges in this area which were a natural outcome of the bringing together of the two agencies. That's the kind of thing that happens when you bring two agencies together. We've looked at firmware and operating system upgrades. We are going to be going forward keeping those -- working very hard to keep those current. And again, the challenges we addressed there were a natural outcome of the bringing of the two agencies together. Staff is also in the process of standardizing desktops, laptops, printers, and mobile devices and I think the benefits of that are pretty obvious just standardization is always good. We have made quite a bit of progress on that. Those are all the bottom tier things. We've made quite a bit of progress on that. We're starting to work on those second tier boxes that you see. All the major applications will be upgraded to the current lease product versions and that will also serve to get all of our employees onto the same versions of software. Again, something that resulted from the integration of the two agencies. Going forward, we'll also be looking at what software provides the best support and solutions for this agency and whether or not that software is best housed in our own system versus located in the Cloud. That's a growing area as well. And ultimately we worked toward that top tier which supports the development. All of the bottom work just supports the development of that enterprise solution for the agency going forward. Focusing for a minute on the infrastructure, this is a diagram of the Valley Metro network that was. It's a result of the two distinct agencies coming together at a time 19

27 when we were growing incrementally in a technology that was changing very, very quickly. As we melded these two agencies together, this is the downtown the 101 building here. We had two agencies located in here. RPTA had a router, VMR actually had two routers. They were connected but not really integrated. Six different satellite locations, the mobility center, the operating facilities and the construction offices out across the valley. We had five different Internet connections connecting all of this together. And I need to say that everything you see here made sense at the time it was done, but it obviously no longer makes sense for this agency. I just want to take you quickly through the way this network works. If a communication is going from the Mobility Center to the Tempe bus facility, it has to go from here to the Internet to another Internet connection down to the RPTA router over to the Rail router through this Metropolitan Optical Ethernet connection to the OMC to the Internet to Tempe. That's how it goes. We're in the process of fixing that. This is the network toward which we are working. The single most outstanding feature of this network is this central little cloud here. That is, we call that the MOE. That's the Metropolitan Optical Ethernet connection. And you can see that everything kind of goes through it. The advantages of doing this, other than it's a lot easier to understand, it's cheaper, it's more secure, it's more reliable, and it's also more scalable as we grow and shrink and add different sites and things. This diagram also still shows two Internet connections. We've reduced the Internet connections but we don't want to go all the way down to one because it does provide us with load balancing and failover capabilities by having two. So again, that path of that communication now from the Mobility Center to Tempe simply goes here to the MOE and back out to Tempe, it's that simple. This is a look at our current software environment. Today, although we have some very robust software systems, they are not really integrated as well as they might be. Data in one system is reentered into another system and it results in the same data sometimes being re-entered several times and then that data is only available to the department that has access to the particular system in which it resides. These blue boxes the important part of this diagram, everywhere that you see one, it represents human intervention in the data. Human employees are taking the data out of one system and perhaps performing some functions on it but then re-entering it into another system. And it's just not very efficient and also offers opportunity for error. The goal for the system is to be fully integrated. The data in one system will flow 20

28 electronically into the next. And the information will be readily available for anyone who needs the data for management purposes. We have developed a capital plan for IT. And it is based on the following objectives. We employ best practice replacement schedule for network and equipment. The capital plan provides centralized management of hardware. We will be able to manage phone systems, wireless access points, and network equipment centrally, which will create big efficiencies for the staff. The plan helps with business continuity and includes a centralized system for backups. And I just want to point out the capital plan is a tool for our annual budgeting process and recommendations that come from it will be submitted each year through the normal budgeting process and brought before the Board. I want to talk briefly about some of the specific projects that have been recommended to us. This list here is the projects that we've already completed. As I said, we asked the consultant to go ahead and fix things that could be readily fixed and that really needed to be fixed as soon as possible. Just to highlight, we have already upgraded our exchange and blade server firmware environments and another highlight on this list you may remember last summer that we replaced on SAN, which is the storage area network, that was a piece of failing equipment that we really needed to get taken care of right away and you helped us with that. We, the modifications to the server room that you see listed, we haven't actually started that work, but I wanted to point that out to you the funding for doing the major portion of that work was included in the lease renewal that you all approved last month. As a part of that lease negotiation we included funding for the landlord to actually pay for those improvements, so I call it in progress because we have the funding in place now and we'll get going on that in July when that lease actually takes effect. We're also working on replacing the customer service call manager system and this will improve service for our customers and will help make the agency overall more secure as well. Future projects are shown on the next two slides. These are items that will be considered by the IT Steering Committee in the context of available resources and staff for the agency going forward. You see we've recommended some upgrades to the system including things like bringing our exchange server all the way up to the most recent 2013 version. And also rolling out SharePoint software to everyone in the agency which will help a lot with collaboration and sharing of data that I talked about in the software slide. 21

29 Under processes to be automated, we are looking at things like providing better access to the HASTAS scheduling system for Valley Metro employees, which is something that we're already working on with the City of Phoenix. They're being very helpful in that regard. More future projects are listed on here. Some of the highlights include the expanded use of the Mincom software system which we have. We use out at the OMC the rail operations and maintenance center. That is the old bus software package that we have that could potentially to provide some expanded support for the agency. Ultimately these projects will all work towards developing the enterprise resource plan which supports that enterprise solution that I talked about earlier. As a practical matter, we have to look at our staffing levels and how we're going to support the achievement of all of these things. This slide shows the currently approved positions in the IT department. The manager position that you see right here is actually vacant. We're currently recruiting to fill that position. Essential functions of that position have been filled by our consultant during all this process. The server administrator we actually had someone start in that position on Monday of this week, so that position is now filled. But you can see that the staff is pretty small especially given the size and breadth of our organization. This is the recommended staffing of our organization as given to us by the consultant. The solid green boxes are existing positions that came from the chart you just saw. The dotted green one here is a position that is proposed in the FY15 budget that you're going to hear about today. And the blue boxes are additional staff recommended by the consultant for a fully built out IT department. So we will be evaluating these recommendations with the bigger picture in mind and you will see all these things again going forward. As we move through this process one thing we'll look at is whether or not some of these functions are either completely or partially already being done in other departments. And then we can make a decision about recognizing that and leaving them there or perhaps reorganizing and moving folks around. So the IT steering committee will be assessing the recommendations and identifying very specific steps to move forward and I won't go through these. You can read them. I think they're in your packet. But these are the objectives that we will be working to achieve as we go through that process. I hope that was fast enough. And I would be happy to answer any questions you may have. Vice Mayor Aames said how secure is the system going to be? Ms. Ketcherside said Vice Mayor Aames. We are working very hard -- you're referring to PCI compliance, payment card industry compliance. And we do have to be compliant 22

30 with those rules and regulations. We have been doing assessments for that. We've been doing penetration testing. We are in very good shape on that regard. There are a few things that we need to clean up and take care of and we are actively working on those as well. Vice Mayor Aames said yes, particularly the personal information of users of the system. Ms. Ketcherside said yes, sir. That is all included in the items that I just mentioned. We actually have a consultant helping us with that go through a self-assessment program where we -- and we actually try to break in to our system. If we have these consultants, if they're able to break in to our system then they point out things that we need to fix. And we've done that assessment a couple times. We did it once and they were able to get in. We fixed things. And then they did it again and they were not able to get in. Vice Mayor Pizzillo said I appreciate the fact that you got equipment replacement schedule, especially with IT, things get expensive if you don't set that up. But I guess my question is: Are you going to be putting money aside so that the money is there, you know, when you come up with a new replacement schedule? Okay. I like that. Second thing is as far as redundancy, you might have went through it as you were going through there, so redundancy into the system is well if a server fails because you're centralizing everything into that one central hub now in case something goes down you have redundancy to pick up and continue on. Ms. Ketcherside said Mr. Chairman, Vice Mayor Pizzillo, as you may recall last summer when we bought the SAN, the storage area network, we actually got your permission to purchase two of them. And that didn't show in the diagram that I showed you for simplification purposes. But the storage area network is redundant. The one that we have here in this building is redundant to the one that we have out at the operations and maintenance center. Chair McDonald said I just want to make a quick comment on this. This is one of the areas that a lot of people have difficulty with software and things like that it doesn't seem that there's anything tangible there. Sometimes it's difficult to put money towards it. But I'm glad that we're doing this. I'm glad we're spending this money instead of adding duct tape and bailing wire to what we had. We're going to be so much better off in the future. Just want to be cautious in the future as we do upgrades. I know licensing costs money, upgrades cost money, contractors cost money and evaluate the contract versus a in-house professional. I think that saves a lot of money in the future also. Vice Mayor Orsborn said one question related to that, the additional positions in the green boxes, are those contracted out positions right now or is that just something that we need to add in for additional service. 23

31 Ms. Ketcherside said that's a very complex question. Some of this work is being performed by consultants on an as-needed basis right now. Some of it is happening with employees that are located in other departments and they are stepping in and filling in some of these needs just because they can and there's nobody else to do it. And some of these needs are really -- we really need to come up with ways to meet some of these needs because we're really not meeting them today. Vice Mayor Aames said I do want you to be careful. You're not an IT company so you don't want to build beyond what is really required here. And if you have some people already doing these things, then you need to have them either move here or do something else or however you're going to do it, because this can really add to your budget. Councilmember Sherwood said do you know when the last time you had you brought in outside consultants to take an overview of this? You use them in this process since early last year; correct? How long ago had it been when you had to really take an external look, used somebody from the outside to look at the system? Do you know? Ms. Ketcherside said I would venture to say that it may have never been done. We had two very small IT departments and prior to -- I think maybe four or five years ago they were completely outsourced. The two separate agencies were both outsourcing all of their IT work. One thing to keep in mind though is that IT was not so much a part of everyday operations and helping us with so many different facets of what we do. And that's something that has grown just astronomically in the last few years and why we need a more robust IT department in order to support the agency properly. Councilmember Sherwood said a suggestion/recommendation might be since you're -- we are doing most of this in-house, I mean, your operations are going to be in-house, is to budget for, you know, sometime forward, three years from now, four years, whatever you think is appropriate, because technology is changing so quickly, to bring in an outside consultant, you know, for a fee, they're not cheap, I know, but to see that to check on our current system see what else is out there. I think it would behoove us to do that on a periodic basis. I don't know what that time would be, whether it's three or five years, but I would suggest kind of looking at that and even speaking with the consultants that you use to see what they would recommend. So appreciate it. Thank you. Chair McDonald said this item was for information only. So no Board action is required. 9. Valley Metro's Fiscal Year Preliminary Operating and Capital Budget Mr. Banta said Mr. Chairman, members of the Board, this will be your first look here publicly of our preliminary operating and capital budget. Mr. John McCormack will give you a presentation. This item is for information. 24

32 Mr. McCormack said good afternoon members of the Board. This agenda Item No. 9 is for information providing review of our Fiscal '15 preliminary budget and five-year plan. And as I go through the slides, please don't hesitate to ask questions. There's a lot of information here. This budget was prepared in a collaborative effort with our member city staff, members of the financial working group, and regional transportation group members. And I wish to also thank Board members, especially the Budget and Finance Subcommittee members for their comments and suggestions. As we move forward, we'll continue to improve our budget process. One of our primary goals is to achieve effective coordination with the schedule and development of member city budgets. We began this process back in October. In February we delivered the first preliminary draft budgets. And during the month of March, we have had an exchange of information, questions and answers, with member cities. After today's presentation, we're going to address any follow-up questions and we'll make final adjustments to the budget. And we plan to request Board to adopt the budget in the May cycle. Our funding sources for Fiscal '15 total $340 million. And as you can see regional sales tax regional funds and carry forwards from Fiscal '14 total 67 percent of the revenue. Federal funds are 11 percent and local funds are 9 percent of the overall budget. In terms of the uses of funds, $340 million in total. The five top categories of expense are lead agency disbursements of 27 percent. Transit service contracts and fuel are at 25 percent. PTF bond disbursements, which are for light rail construction, are at 17 percent. Capital expenditures are 9 percent of the budget. And personnel costs are at 7 percent. The Fiscal '15 budget is based on a baseline of services. For fixed-route bus services there are no significant changes in Fiscal '14 service levels. We'll be delivering 11.7 million vehicle revenue miles, 18.5 million passenger trips with a fleet of 347 vehicles. Our Dial-A-Ride and paratransit services in the east and west valley, we use a taxi cab based operations. Service demand is estimated at 530,000 passenger trips. And we also support Phoenix and West Valley cities with lead agency funding of 16.4 million dollars for Dial-A-Ride and paratransit. Our vanpool services, we operate over 40 vehicles providing 1.2 million trips. Regional services includes the customer service call center which is currently staffed to handle 1.8 million calls in the coming year. In the Mobility Center, persons with disabilities are certified for ADA transit services and training is provided to utilize the bus and rail systems to compliment Dial-A-Ride 25

33 services. We anticipate continuing at our current level of 4,800 certification reviews in the coming year. On the capital side, there are 52 standard bus replacements, 44 for City of Phoenix and 8 for Scottsdale. There are 6 service expansion buses for the Scottsdale Rural Road LINK. And 29 paratransit fleet replacements: 27 for Phoenix and 2 for the City of surprise. In addition we're expanding the vanpool. There's 73 replacements and 46 expansion vehicles for vanpool. We're participating in the regional communications upgrade by funding $1.9 million. That project is being managed by the City of Phoenix. And there's a $14.1 million capital improvement for the Scottsdale Rural Road LINK. In addition there are a number of initiatives that are impacting this year's budget. This is the second year of unification of our East Valley bus services. Our contractor cost in Fiscal '15 is $65.9 million, which compares to $71.4 million under the old model. This is the third year of East Valley Dial-A-Ride taxi cab service model and we'll be providing 330,000 trips at a cost of $8.7 million. In Fiscal '15 this compares to 203,000 trips costing $8.8 million in Fiscal Year '12. We are continuing to develop way-finding maps and signage to promote complete, multimodal transit network providing and building ridership for the future. We have Web site renovations which include improvements to our online trip planner. We're developing marketing programs to communicate the value of transit. We have an advertising program to create a positive experience for visitors and residents during Super Bowl And as Carol just presented, we're implementing our long-range information technology plan which requires investments in network equipment, staff improvements and application development to ensure that the network is safe, secure, and meets the future needs of the agency. Total funding sources are $340 million for Fiscal '14 down from 364 in last year's adopted budget. PTF sales tax funds are forecasted to grow by 6 percent this year to $127 million. Transit Service Agreements are down this year primarily due to increased federal funding in the west valley which supplants member city contributions. And also the elimination of the mileage reimbursement program in the City of Mesa. Federal grants are up by $10 million primarily due to CMAQ funding for the Scottsdale Rural Road LINK capital project. Fare revenues are generally will be level with last year up $200,000 as ridership has leveled. However, this year we're recording $1.7 million of fare revenue generated by service purchase from the City of Phoenix. This is an accounting change which enables fare revenues to be stated at full value and contracted cost of service to be stated at full 26

34 value. There are no new bond issues this year. Last year we had $114 million. Our bond proceeds from this year actually generated $134 million and approximately $95 million of those funds are carried forward to Fiscal '15 for two capital projects: the Northwest Extension and Central Mesa Extension. Total uses of funds for the year $340 million. About $24 million lower than last year. Lead agency disbursements are up by $10 million primarily due to increased capital activity on the light rail projects. Transit service contracts and fuel are up by $3.8 million due to a combination of factors: First, our scheduled contracted rates for East Valley bus services are up by about 4.7 percent. In addition $1.7 million of this increase is due to the accounting change I spoke of earlier where bus service purchase from Phoenix is now stated at full value in the budget. Capital expenditures are up by about $7 million primarily due to the Scottsdale Rural Road LINK project. RPTA and METRO personnel costs are up by 2 percent. Debt service is up with the recent 2014 bond issue. Bond disbursements are up to fund the northwest extension and central Mesa construction activity. And the consumption of carry forwards is down by $71 million. During our presentation to the Transit Management Committee, we were asked to provide a breakdown of Arizona lottery fund revenues and distributions planned for Fiscal '15. There's $11.2 million of lottery funding which is going to be received and distributed in Fiscal '15. In addition there's $275,000 of prior year lottery fund reserves which are going to be used for the Grand Avenue BRT feasibility study, Buckeye planning studies, and transit standard and performance measures. Vice Mayor Aames said this is primarily driven by population? Mr. McCormack said yes, the distribution is by population. That's correct. Staff costs for Fiscal '15 are $24.9 million up $400,000 or 2 percent from last year. This year we've budgeted an allowance for unfilled positions which will effectively reduce the salary budget by $600,000. We have a base increase for salary and fringe costs not to exceed 3 percent of FY14 cost levels. Salary increases are awarded based on merit increases. Our FY14 actual health care costs came in lower than planned last year and we're actually truing up our fringe benefit costs in Fiscal '15 to those actuals. 27

35 We've identified eight new positions required to meet our agency needs. We'll be at 296 authorized FTEs. Next year 161 of those FTEs are allocated to rail activities and 127 to bus and other transit activities. Bottom line is a $400,000 increase over last year's budget which is 1/10 of 1 percent of our annual budget of $340 million. This is a detail of some of the new positions or the eight new positions. They include a service analyst who will work in support of the service planning working group. This group is tasked with optimizing regional service with more productive routes to build ridership. An administrative assistant which will be replacing a contracted staff for a cost savings. A network administrator to address a growing IT security requirements. Three light rail vehicle technicians to meet increased preventive maintenance requirements on the fleet that's now reached over five years old. A transit program coordinator for our East Valley bus operation which is replacing staff formerly provided by the City of Tempe. And finally a field safety and security manager who will work closely with police staff to optimize resource deployments in response to incidents and create a more secure environment for our passengers. Vice Mayor Aames said only one of these relates to IT not 15, but I saw that longer list before. Mr. McCormack said yes. That's correct. We'll be working through the process of identifying amongst the resources that we have available, you know, what we will bring next year if they're going to be any requirements for next year. Here's an overview of our five-year operating forecast. The five-year operating revenue forecast, this is our revenues. We have an increase in sales tax revenues. Our current year growth is about 5.6 percent and that tapers off to about 4.6 percent growth out in Fiscal '19. The forecast for these revenues is developed by an ADOT economic counsel. We are anticipating a bond issue out in Fiscal '16. Currently forecasted at $112 million. Our debt service requirements will increase in Fiscal '17 with those new bonds that we issue in Fiscal '16. Rail capital funding will total about $270 million over the next five years. RARF funding is stable. Beyond Fiscal '15 federal preventive maintenance levels are forecasted at $3.8 million, which is based upon the MAG forecast at that time. Transit service revenues, down here, increased slightly about 2 percent per year. Our fixed route revenues shown down here on the bottom we have an increase in Fiscal '17. We're planning -- in the plan there is an anticipated fare increase of $.25 cents on base fare that would take place on July 1 of Total operating revenues in the fiveyear plan are $686 million. 28

36 Our five-year expenditure forecast costs are forecasted for the five years at $682 million, which is $4 million less than the revenues during the period. Fixed route bus operating costs, one of the major components here, are forecasted to increase by 3 percent per year. Our East Valley Dial-A-Ride, ridership is forecasted to grow at 5 percent and contractor rates are expected to increase about 3 percent per year. ADA requirements are expected to grow slightly over the years from $18 to $20 million. With respect to the administrative costs down below, they're trending at an increase of about 2 percent per year. Again, as I mentioned, the total cost for the five-year period for operations there's $682 million and that's about $4 million lower than the anticipated revenues. Councilmember Daniels said what percentage of our total expenditures is our debt service payments? Mr. McCormack said of our total revenues? Councilmember Daniels said of our total expenditures. Mr. McCormack said of our total expenditures is debt service. Currently? Councilmember Daniels said and projected for FY15. Mr. McCormack said we're looking at about 8, 9 percent of the number of Fiscal '15 and that number is going to grow, you know, out to probably 15 percent of the revenue out in or of the costs out in Fiscal '19. Councilmember Daniels said I'm curious what percentage it is of our expenditures rather than our revenue? And the reason I say that is because as that proportionately grows and takes up a larger chunk of our annual expenses, it prohibits our ability to expand service and while we cannot predict financial outcomes for years to come, and we hope that we don't have any economic downturns, those bills still come due and our ability to continue and provide service customers changes based on that debt service. So I don't know if we have an adopted policy right now that we won't allow our debt service to grow above a certain percentage of our total expenditures, but I'd like to see us, I guess, keep an eye on that recognizing that we have to operate within a --. Councilmember Sherwood said Chair, let me add, just if I can, add on to Councilmember Daniels is that that also doesn't have effect on our bond rating when that rate gets into the double digits especially in the mid, you know, 15 percent range. Mr. McCormack said let me try to address the concern starting with the way that we manage the Public Transportation Fund which funds all of the debt service that we're 29

37 talking about here. First, the public transportation fund receipts when they come in are divided between rail capital activities and bus operating and capital activities. So we maintain a policy firewall between those two. All of the debt service increases here are funded by the rail capital side of this program. So this is forecasted into the total available revenues for public transportation funds for rail and it does in fact limit -- it limits what you can do down the road, but it also enables us to build today with the bond proceeds. So there's no negative impact of the additional bonding on bus operations or rail operations for that nature because rail operations are not funded with public transportation funds. So I hope that answers your question. The policy really is that we divide the revenue when it comes in and we maintain that integrity of the bus funding side as opposed to the rail funding side. Councilmember Daniels said if we were unable to pay back a bond from PTF funds or capital funds and continue to pay those down, then isn't the backup fund essentially your O&M? Or from your other bucket of money, I mean, you always have to have a backup source. You guarantee those dollars by other funds. We do that in municipal government all the time. Mr. McCormack said our master resolution for bond issuance requires that we come to the Board, you know, for any new bond issues. We maintain a 2:1 minimum debt service coverage ratio as part of our master resolution. Currently our debt service ratio is about 5:1 now, that is, we generate five times more revenues than our debt service requirements. As we move forward to Fiscal '16 and borrow more money, that debt service coverage ratio is forecasted to go down. We will fully disclose what that is to the Board. We do not anticipate there will be a change in our bond ratings once we go down to the debt service coverage ratio of about 3:1 we're still anticipating we'll have a double A bond rating through that process. But as we move forward with each bond issue we're going to fully brief you and get your approval on any of the new debt that we issue. Vice Mayor Aames said actually 3:1 is high, right? Mr. McCormack said it's better than our minimums and there are many agencies that are running well below that debt that's correct. Our bond issue that we just sold in January of this year was oversubscribed by about 10:1 because the market felt that it was a very safe and secure purchase for the bond holders out at that time. As we move forward, each one is new and we'll be sure that we bring you along with all the information before we issue any more debt. 30

38 Any other questions on the operating forecast? I'm going to move on to the capital program revenues. The capital program over the next five years is $41 million. Public Transportation Funding provides the local share to match federal revenues for fleet and facilities purchases. That's totaling $34.5 million over the five years. FTA 5307 funds bus and paratransit fleet $50.7 million with some little heavier increases out here in Fiscal '18 and '19. CMAQ funds the Scottsdale Rural Road LINK in Fiscal '15, $12.4 million. The line here that I'm showing FWHASTP that funding line funds the vanpool replacements, but also included in this line are Section 5339, which is also funding bus replacements. For the final budget presentation I'm going to break that out separately because it really should have been broken out separately. And finally we're going to consume $12.4 million of undesignated fund balance over the next five years. Our five-year capital program expenditures will total $141 million: $2 million are programmed for IT infrastructure as presented in Carol's presentation a few moments ago; $83 million are for standard bus replacements; $13 million are for express bus replacements. And about $5.1 million for express expansion. There's $2 million forecasted for paratransit fleet and $9.2 million dollars for vanpool replacements over the five-year period. Again total expenditures $141 million over the five years. Vice Mayor Aames said I have a question on the IT infrastructure. That's just hardware, it doesn't include software, right? Mr. McCormack said it includes any capitalized items which include any major software that we would purchase that would have a life greater than three years would qualify in that. This graph tracks the history and planned balances of the public transportation fund by year starting back in 2006 going forward out to You see a couple very large spikes here in 2014 and '16 in purple. These are the bond issues that are supporting rail capital construction. The rail balance, again, shown here in purple, these dollars are expended as the projects move forward and the rail balance bottoms out down here in Fiscal '22 when we really maximize the development of some of the capital projects out in the City of Phoenix and then it grows back up toward the end of the program. 31

39 The bus program is shown here in green and currently our bus balance is about $55 million and that's going to be down to about $38 million over the next five-year period. And then the fund balance grows out in future years as planned. Tax receipts will exceed the planned expenditures. The red line here is our minimum cash reserve target which is our policy target that says 12 percent of our PTF funded operations must be 12 percent of the annual amount. To give a little better view of how the operating balance looks, we've broken out here our bus operation program -- bus operating fund balance is shown here in the yellow line. And so as you can see, the operating balance is currently at about $19 million versus the $9 million minimum requirement. And that continues to stay relatively flat. Out in 2018 and 2019 onward, the fund balance continues to grow on the operating side as the sales tax revenues grow faster than our planned expenditures. Any questions on the forecasted fund balance? This concludes the presentation today. This is for information. We presented the same bits of information to the Transit Management Committee and the Budget and Finance Subcommittee. We plan to make final adjustments to the budget and bring these to you all in May of this next month. Councilmember Sherwood said relating to current staff vacancies, I know us municipal cities like to play with this number, it's called salary savings and the higher turnover probably the more you have, so I won't go into that with Glendale, but again, I think we need to ask you, though, to look at those positions. I know we discussed in some of the pre-meetings. And it was staffed -- and it was talked about at some of the other meetings you had prior to the Board presentation. So, again, when you look at those and they continue to be vacant-- we carried it in the city for a number of years and we finally just wrote them off because we realized we just didn't need them or at least we couldn't afford them. I would ask that you look at those before you look at the additional eight staff positions that you're adding on. I'm not saying that they're not needed, but, again, it's kind of a float number depending on what your turnover rate is, but, you know, some of these positions, you know, if they've been vacated for some time, well, then, you know, in all due respect to staff in those position, you know, having to carry that extra load, maybe the efficiencies have paid off and you just don't really need them. And again, the efficiencies that we expected to get when we merged the two organizations, so I'll just add that for consideration. Mr. McCormack said just to bring you a brief update because the last time we presented the number of open positions was in December and at that time we had 34 open positions. Currently at the end of March, at the end of the third quarter we were at 23 open positions of the 288. Of those 23, 15 are in operations and maintenance. And there are a number of those that are positions that have regular turnover. We just don't 32

40 get to full employment with a number of those. There are four open positions or there were four open positions as of March 31 in administration and organizational development. One of those was recently filled on the IT, so we're down to three of those. So we do look very carefully. We made a change this year and reduced the salary budget in recognition of the fact that we're always going to have some level of unfilled positions, the $600,000 that I mentioned. And we're going to make an assessment every year of the staffing needs versus the number of FTEs and come back and keep you appraised of that. Councilmember Daniels said one of the things that we briefly discussed in the Budget and Finance Subcommittee was just the concept of coming up with some policy level decision about perhaps what percentage our total expenditures we would want to use as far as salary or employee benefits and that we sort of package it for a policy level or if we determine that it's quantity of staff per mile served or some type of calculation that would allow us to for our policy level without delving into the actual merits of positions that we have that type of policy level discussion. And so I know based on our conversation yesterday that hopefully is getting examined and that will come back to us. But that seems to be a safer place for us as a Board to operate rather than trying to understand the intricacies and allowing management to have that latitude to move people where it best serves the population. Mr. McCormack said yes, we're going to be working on what those benchmarks should be and come back and working through the Budget and Finance Subcommittee, make a recommendation before we bring it back to the full Board for consideration. Chair McDonald said all right again, this is for information only, so no action is required. 10. Proposed October 2014 Valley Metro Transit Service Changes Mr. Banta said Mr. Chairman, members of the board, I would like to try to take this one on myself and forego the presentation because of the interest of time. We can go into a presentation if need be. These are our normal biannual service changes. They are scheduled for October. We are currently out publicly in workshops talking to the community about the proposed changes. I might say that the majority of them are in the City of Phoenix and then the City of Scottsdale right after that there's a few changes in Glendale, Gilbert, and also Chandler, and Tempe. We are going to, as I said before, have a public hearing on April 29 to talk in detail about these. We have open houses throughout the region. We have Webinars, Tweet Chats, and through an address we've established also for input for public outreach. 33

41 A lot of information is included in your packet along with the route service changes by designation and also the PowerPoint presentation. We will be bringing this back for adoption in June. Chair McDonald said are there questions or comments for Mr. Banta? Okay, hearing none again, this is just an information item, so no action is required. 11. Future Board Agenda Items Request and Report on Current Events Vice Mayor Aames said this is the time of year we're going to be electing new board officers to serve for And we always get back to Pat here, she's going to issue a memo on this in the next couple of days. And there are two parts to this process. One of them is having some of us serve on the nominating committee, because I'm the immediate past chair, I will serve as the chair of that committee. But we can have a committee of up to three board members. So that's one request. The other request is for board members to submit letters of interest to be a board officer. Both of these requests will need to be in writing. You can send those to Pat. And as I mentioned, the information will be in the memo you're going to receive from her. If you are planning on submitting your name to be an officer, please do not submit your name to serve on the nominating committee because we don't want you to have to abstain from selecting the officers. Expression of the interest to serve on the nominating committee is due May 2nd. The Board officer's letters of interest are due May 9. The nominating committee will likely have one meeting that could be held just prior to the Board meeting of May 22nd. That is unless we have one letter for each officer position. So it won't be a big commitment for you to serve on the nominating committee. And they'll probably have one meeting. We may even be able to do that by telephone. The board officer elections will take place at the June Board meeting with new officers taking their positions on the first of July. So are there any questions about that, or we're all going to wait for the memo? Okay. Thank you. Chair McDonald said our next meeting is May 22 at 12:15. And with that we are adjourned. With no further discussion the meeting adjourned at 2:08 p.m. 34

42 DATE AGENDA ITEM 3 May 14, 2014 SUBJECT Chief Executive Officer s Report PURPOSE Steve Banta, Chief Executive Officer, will brief the Board on current issues. BACKGROUND/DISCUSSION/CONSIDERATION None COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT Steve Banta Chief Executive Officer sbanta@valleymetro.org ATTACHMENTS None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

43 DATE May 14, 2014 AGENDA ITEM 4A SUBJECT Authorization to issue a contract to Arthur J. Gallagher & Company for property and casualty insurance brokerage, claims management, and risk management consulting services PURPOSE To request Board authorization for the Chief Executive Officer (CEO) to issue a fiveyear joint RPTA/METRO contract for property and casualty insurance brokerage, claims management, and risk management consulting services to Arthur J. Gallagher & Company for the period July 1, 2014 to June 30, 2019 in an amount not to exceed $556,100. BACKGROUND/DISCUSSION/CONSIDERATION Historically, RPTA and METRO insurance brokerage, claims management and risk management consulting have been provided through three distinct contracts: Property and casualty insurance brokerage service for RPTA and METRO through a joint contract Claims management and risk management consulting for RPTA Claims management for METRO On February 13, 2014 Valley Metro issued a RFP for Property and Casualty Insurance Brokerage and Risk Management Consulting Services. The RFP consisted of three categories of services: Insurance Broker, Claims Management and Risk Management consulting. At the pre-proposal conference it was explained that three services were being sought for either a single or multiple contract award. Proposers were invited to submit proposals on one, two, or all three categories. On March 13, 2014 the following proposals were received: Property and casualty insurance brokerage services proposals Alliant Arthur J. Gallagher & Company Marsh Claims management proposals Ashton Tiffany, LLC Arthur J. Gallagher & Company Risk management consulting proposals Ashton Tiffany, LLC Arthur J. Gallagher & Company Marsh VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

44 The evaluation committee, made up of members of Valley Metro senior management, met on March 27, Each category was evaluated separately, first for technical qualifications, and then for price. The committee unanimously agreed that Arthur J. Gallagher & Company provided the highest rated technical proposals and best value for all three services. COST AND BUDGET The Property and Casualty Insurance Brokerage, Claims Management, and Risk Management Consulting Contract for approval has a total term of five years. For the total term of the contract, the award cost is not to exceed $556,100, with the RPTA portion totaling $77,500 and the METRO portion totaling $478,600. The estimated costs associated with this contract and the breakouts between RPTA and METRO are shown on the table below. Estimated Five-year Cost of Contract RPTA METRO Total Property and casualty insurance brokerage services $ 50,000 $ 200,000 $ 250,000 Claims management $ 22,500 $ 273,600 $ 296,100 Risk management consulting $ 5,000 $ 5,000 $ 10,000 Total $ 77,500 $ 478,600 $ 556,100 The five-year future projected cost for these services under the old (three contract) model is $616,165. The combined approach saves an estimated $60,065 for the combined agencies. For Fiscal Year 2015 (FY15), the estimated RPTA contract obligation is $14,910, which is fully funded within the Valley Metro RPTA FY15 Preliminary Operating and Capital Budget. Contract Obligations beyond FY15 are incorporated into the RPTA Five-Year Operating Forecast and Capital Program (FY15 FY19). For FY15 the estimated METRO contract obligation is $87,800 which is fully funded within the METRO Preliminary FY15 Budget. Contract Obligations beyond FY15 are incorporated into the METRO Five-Year Operating Forecast and Capital Program (FY15 FY19). 2

45 The projected FY15 RPTA/METRO combined expenditures on these three services total $102,710. The source of funding is a combination of federal, regional and local funding sources as allocated for projects served by the insurance services. COMMITTEE PROCESS RTAG: April 22, 2014 for information TMC: May 7, 2014 approved Board of Directors: May 22, 2014 for action RECOMMENDATION It is recommended that the Board of Directors authorize for the CEO to issue a five-year contract for property and casualty insurance brokerage, claims management, and risk management consulting services to Arthur J. Gallagher & Company in an amount not to exceed $556,100, with an RPTA obligation not to exceed $77,500. CONTACT Carol L. Ketcherside Director of Administration & Organizational Development cketcherside@valleymetro.org ATTACHMENTS None 3

46 DATE May 14, 2014 AGENDA ITEM 4B SUBJECT Contract Award for Zonar Software Maintenance and Support PURPOSE To request Board authorization for the Chief Executive Officer (CEO) to execute a contract with Zonar Systems, Inc. for a five-year software support and maintenance agreement for an amount not to exceed $590,650. BACKGROUND/DISCUSSION/CONSIDERATION The Zonar System is a web-based electronic system used for vehicle pre/post safety inspections, vehicle tracking, vehicle defect notification, and maintenance work order initiation. The system was purchased in The Zonar System provides a process to accomplish signature steps necessary for complete management of vehicle inspection and repair records under the requirements of the Federal Motor Carrier Safety Administration (FMCSA) regulations. The contract amount includes all costs associated with air time and offsite data hosting. Currently, the Zonar System is installed on fixed route buses and supervisor vehicles. The award of a five-year contract is for the period of July 1, 2014 through June 30, The software being supported is proprietary to Zonar Systems. This procurement is not federally funded. Staff negotiated a five-year fixed fee agreement with no annual escalation fees. COST AND BUDGET The total contract amount for the five-year software support and maintenance agreement is an amount not to exceed $590,650. Cost for first year of the contract is $117,311 which is a decrease from this current year s cost of $117,737 and is included in the RPTA Proposed FY15 Operating and Capital Budget. Contract obligations beyond FY15 are incorporated into the RPTA Five-Year Operating Forecast and Capital Program (FY2015 thru FY2019). COMMITTEE PROCESS RTAG: April 22, 2014 for information TMC: May 7, 2014 approved Board of Directors: May 22, 2014 for action RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to execute a contract with Zonar Systems, Inc. for a five-year software support and maintenance agreement for an amount not to exceed $590,650. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

47 CONTACT Ray Abraham Chief Operations Officer ATTACHMENTS None 2

48 DATE May 14, 2014 AGENDA ITEM 4C SUBJECT Authorization to Issue a Request for Proposals (RFP) for Contracted Transportation Services to Operate Route 685 (Ajo/Gila Bend) Rural Connector Service PURPOSE To request Board authorization for the Chief Executive Officer (CEO) to Issue a RFP under a joint procurement process with the Regional Transportation Authority (RTA) of Pima County for contracted transportation services to operate Route 685 (Ajo/Gila Bend) Rural Connector Service. BACKGROUND/DISCUSSION/CONSIDERATION The Route 685 Ajo/Gila Bend Regional Connector operates along State Highway 85 and provides bus service to the communities of Ajo, Gila Bend, Buckeye, Goodyear, Avondale, Tolleson and Phoenix. Route 685 offers five round-trips each weekday and two round trips on Saturdays. AJO Transportation is the third-party contractor operating the service on behalf of Valley Metro. RTA of Pima County also contracts for connecting service between Tucson and Ajo using the same contractor. The AJO Transportation (aka Second Generation Inc.) contract with Valley Metro for Route 685 will end on October 31, 2014, as will its contract with the RTA of Pima County. Both Valley Metro and the RTA of Pima County seek the economies of scale and competition that a joint procurement between the two agencies can provide. Valley Metro staff is seeking permission to participate in and to issue a federally compliant RFP with the RTA of Pima County for rural connector services between Ajo, Gila Bend, Phoenix and Tucson for both Valley Metro and RTA of Pima County under a five-year contract term with one three-year extension option. The resulting contract is expected to take effect November 1, The award to a contractor will consist of two separate contracts, one with Valley Metro and the other with RTA of Pima County. Valley Metro will oversee and manage its contract and portion of the service. COST AND BUDGET A five-year cost estimate for Valley Metro s portion of the service is $4,040,000. For the current federal fiscal year the funding is as follows: Federal Transit Administration (FTA) Section 5311 (Rural Transit) funding administered by ADOT provides approximately 51 percent FTA Section 5307 Job Access/Reverse Commute funding provides 8 percent The remaining 41 percent is funded from Public Transportation Funds (PTF) allocated to Maricopa County, Arizona Lottery Funds and RTA funding. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

49 Future funding is anticipated to approximate current year allocation. COMMITTEE PROCESS RTAG: April 22, 2014 for information TMC: May 7, 2014 approved Board of Directors: May 22, 2014 for action RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to issue a RFP under a joint procurement process with the RTA of Pima County for contracted transportation services to Operate Route 685 (Ajo/Gila Bend) Rural Connector Service. CONTACT Ray Abraham Chief Operations Officer rabraham@valleymetro.org ATTACHMENTS None 2

50 DATE May 14, 2014 AGENDA ITEM 4D SUBJECT Authorization to Issue an Invitation for Bid (IFB) for contracted services to install and maintain the NextRide program signs PURPOSE To request Board authorization for the Chief Executive Officer (CEO) to issue an IFB for contracted services to install and maintain NextRide signs and Kiosk posters at regional bus and train stops. BACKGROUND/DISCUSSION/CONSIDERATION In June 2011, ShelterClean of Arizona was awarded a contract to install and maintain NextRide signs for the NextRide project. The contract to maintain or install additional NextRide signs expires June 30, Valley Metro staff is seeking authorization to issue an IFB for contracted services to install and maintain NextRide signs under a fiveyear contract term. It is planned that the IFB would be released in May 2014 and contract award recommendation would be brought back for Board approval in August COST AND BUDGET Based on the installation and maintenance cost for the past two fiscal years, the fiveyear cost estimate is $220,000. Costs for the first year of the contract are included within the RPTA Proposed Fiscal Year 2015 (FY15) Operating and Capital Budget. Contract obligations beyond FY15 are incorporated into the RPTA Five-Year Operating Forecast and Capital Program (FY2015 thru FY2019). COMMITTEE PROCESS RTAG: April 22, 2014 for information TMC: May 7, 2014 approved Board of Directors: May 22, 2014 for action RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to issue an IFB for contracted services to install and maintain NextRide signs for a 5-year term. CONTACT Ray Abraham Chief Operating Officer rabraham@valleymetro.org ATTACHMENTS None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

51 DATE AGENDA ITEM 5 May 14, 2014 SUBJECT Valley Metro Fiscal Year 2015 (FY15) Operating and Capital Budget and Five-Year Operating Forecast and Capital Program (FY15 thru FY19) PURPOSE To request Board approval of the FY15 Budget and Five-Year Operating Forecast and Capital Program (FY15 thru FY19). Approval of the budget provides funding for Boardapproved TLCP projects and allows RPTA to implement capital and operating projects approved by voters in Proposition 400. Arizona State statutes require annual Board adoption of the budget. BACKGROUND/DISCUSSION/CONSIDERATION The Valley Metro Regional Public Transportation Authority (RPTA) FY15 combined operating and capital budget (the budget) is $324.6 million (M) and includes $127.7M in projects funded with Proposition 400 Public Transportation Fund (PTF) revenues. Of the $127.7M PTF revenues, $72.5M is for bus operating and bus capital and $55.2M is for light rail/high capacity transit capital. The preliminary FY15 operating and capital budget has been prepared with the goal of delivering a fiscally prudent, balanced budget using carry forwards, reserves and bond proceeds. The budget was developed in compliance with Board of Directors adopted budget, financial and Transit Life Cycle Program (TLCP) policies. The total operating budget of $153.6M represents a $7.6M (5%) increase from the previous year s operating budget of $146.0M. The total capital budget of $171.1M represents a $46.5M (21%) decrease from the previous year s capital budget of $217.6M. The major factors for the decrease in the capital budget are that no bonds are planned for issuance in FY15, ($114 M reduction) offset by $67.6 M in usage of carryforward balance to fund rail construction and other PTF funded activities. With the agency integration, the RPTA and Valley Metro Rail (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 FY15 there are 296 employees budgeted in the integrated agency, with 131 FTE s budgeted to RPTA activities and 165 budgeted to VMR activities. Details and explanations of the major budget changes are discussed in the attached Budget Analysis and Overview document. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

52 COMMITTEE PROCESS Preliminary Budget Review: Financial Working Group: February 24, 2014 for information RTAG: March 18, 2014 for information TMC: April 2, 2014 for information Budget and Finance Subcommittee: April 10, 2014 for information Board of Directors: April 17, 2014 for information Proposed Budget Adoption: TMC: May 7, 2014 approved Budget and Finance Subcommittee: May 15, 2014 for action Board of Directors: May 22, 2014 for action RECOMMENDATION It is recommended that the Board of Directors approve the Valley Metro Proposed Fiscal Year 2015 Operating and Capital Budget (July 1, 2014 thru June 30, 2015) and acceptance of the Five-Year Operating Forecast and Capital Program (FY 2015 thru 2019). CONTACT John P. McCormack Chief Financial Officer ATTACHMENT Valley Metro Fiscal Year 2015 (FY15) Operating and Capital Budget and Five-Year Operating Forecast and Capital Program (FY15 thru FY19) Overview A complete copy of the Valley Metro Fiscal Year 2015 (FY15) Operating and Capital Budget and Five-Year Operating Forecast and Capital Program (FY15 thru FY19) is available on our website. 2

53 Valley Metro Regional Public Transportation Authority (RPTA) FY 2015 Preliminary Operating & Capital Budget Overview FY 2015 Total Financial Program The Valley Metro Regional Public Transportation Authority (RPTA) FY 15 combined operating and capital budget (the budget) is $324.6 million (M) and includes $127.7 M in projects funded with Proposition 400 Public Transportation Fund (PTF) revenues. Of the $127.7 M PTF revenues, $72.5 M is for bus operating and bus capital and $55.2 M is for light rail/high capacity transit capital. Valley Metro Regional Public Transportation Authority FY 2015 Preliminary Operating & Capital Budget Sources of Funds: (in thousand) Regional Funds $ 132,383 41% Carryforwards and reserves 79,993 25% Federal Funds 38,377 12% Local Funds State Lottery Funds 11,475 4% 9% Local Funds 29,358 9% Fare Revenues 5% Other revenues 5% Regional Funds 41% Fare Revenues 16,139 State Lottery Other revenues 16,917 Funds 5% Total $ 324,642 3% Federal Funds 12% Carryforwards and reserves 25% Uses of Funds: (in thousands) Lead agency disbursements (PTF and RARF) $ 77,031 Transit service contracts & fuel 84,257 Capital 30,476 Personnel costs (METRO Rail & RPTA) 24,873 Bond Principal & Interest 24,239 Contractual agreements 5,631 AZ Lottery disbursements 11,200 Lead agency bond disbursement 56,016 Other costs 10,807 Subtotal $ 324,530 Carryforwards and reserves (CF and Res.) 112 Total $ 324,642 Bond P & I 8% Bond Disbursements 17% Capital Expenditures 9% AZ Lottery 3% Other 3% Personnel 8% Contracts 2% Carry Forward & Reserves 0% Lead Agency Disbursements 24% Transit Service Contracts & Fuel 26% 1

54 Valley Metro Regional Public Transportation Authority (RPTA) FY 2015 Preliminary Operating & Capital Budget Overview Sources of Funds Funding Sources FY15 FY14 Change $ Change % Public Transportation Funds $ 127,672 $ 120,246 $ 7,426 6% Transit Service Agreements 29,358 30,573 (1,215) -4% Federal Grants 38,377 28,396 9,981 35% METRO Rail Reimbursement 15,274 15,389 (115) -1% Fixed Route Fare Revenues 16,139 14,167 1,972 14% AZ Lottery Proceeds 11,475 11, % Regional Area Road Funds 4,711 4, % Other Revenues 1,643 3,104 (1,461) -47% Bond Proceeds - 114,150 (114,150) -100% Carry forwards and Reserves 79,993 21,810 58, % Total $ 324,642 $ 363,619 $ (38,977) -11% Uses of Funds Uses of Funds FY15 FY14 Change $ Change % Lead agency disbursements $ 77,031 $ 81,914 $ (4,883) -6% Transit service contracts & fuel 84,257 80,416 3,841 5% Capital 30,476 23,457 7,019 30% RPTA & METRO Personnel Costs 24,873 24, % Bond Principal & Interest 24,239 13,042 11,197 86% Contractual Agreements 5,631 4,280 1,351 32% AZ Lottery Disbursements 11,200 11,200-0% Lead Agency Bond Disbursements 56,016 42,585 13,431 32% Other Costs 10,807 10, % Sub Total 324, ,131 32,399 11% Carry forwards to Reserves ,488 (71,376) -100% Total $ 324,642 $ 363,619 $ (38,977) -11% 2

55 Valley Metro Regional Public Transportation Authority (RPTA) FY 2015 Preliminary Operating & Capital Budget Overview FY15 FY14 FY14 Amount Percent*** Preliminary Adopted Revised Increase/ Increase/ ** Budget Budget Budget Decrease (Decrease) Note Sources of funds Revenues: Public transportation funds (PTF) $ 127,672 $ 120,246 $ 120,546 $ 7,426 6% (1) Transit service agreements 29,358 30,573 30,773 (1,215) -4% (2) Federal grants 38,377 28,396 30,404 9,981 35% (3) VMR staff & administration reimbursement 15,274 15,389 15,389 (115) -1% (4) Regional area road funds (RARF) 4,711 4,584 4, % Interest & other revenues 852 2,356 2,356 (1,504) -64% (5) Local participation (8) -3% State & local grants % Fixed Route Fare Revenues 16,139 14,167 14,167 1,972 14% (6) AZ Lottery Proceeds 11,475 11,200 11, % Total revenues 244, , ,289 16,990 7% Bond proceeds - 114, ,150 (114,150) -100% (7) Carryforwards & reserves 79,993 21,810 23,210 58, % Total revenues & other sources of funds $ 324,642 $ 363,619 $ 367,649 $ (38,977) -11% Uses of funds by category Expenses: Lead agency PTF disbursements $ 77,031 $ 81,914 $ 84,457 $ (4,883) -6% (8) Transit service contracts 84,257 80,416 81,877 3,841 5% (9) Capital outlay 30,476 23,457 26,870 7,019 30% (10) Salary & fringe benefits 24,873 24,471 24, % (11) Bond principal & interest expense 24,239 13,042 13,042 11,197 86% (12) Consultants & Maintenance contracts 5,631 4,280 4,298 1,351 32% (13) Contingency 1,601 4,163 1,365 (2,562) -62% (14) Rent & facility costs 4,854 2,714 2,714 2,140 79% (15) Advertising % (16) Transit book, outreach mat. & online serv % Insurance & risk management (34) -12% Safety & security (257) -93% (17) Lead agency RARF disbursements % Other administrative costs 2,088 1,822 1, % AZ lottery Disbursements 11,200 11,200 11,200-0% Lead agency bond disbursement 56,016 42,585 87,789 13,431 32% (18) Total expenses 324, , ,947 32,399 11% Carryforwards & contributions to reserves ,488 25,702 (71,376) -100% Total expenses & other uses of funds $ 324,642 $ 363,619 $ 367,649 $ (38,977) -11% Uses of funds by department Operating: Operations $ 115,623 $ 109,957 $ 111,417 $ 5,665 5% (19) Communications & Marketing 4,831 4,351 4, % (20) Finance, Administration & Org. Dev. 1,366 1,421 1,588 (55) -4% Planning & Development 3,654 2,206 2,206 1,448 66% (21) Chief Executive Officer's Department 1, % Non-Departmental 26,974 27,089 27,089 (115) 0% Total Operating Budget 153, , ,633 7,562 5% Capital: Design & Construction 101 1, (1,849) -95% (22) Valley Metro Rail 109,206 89, ,428 19,991 22% (23) Bus and other transit 61, ,448 78,801 (64,681) -51% (24) Total Capital Budget 171, , ,016 (46,539) -21% Total Operating & Capital Budget $ 324,642 $ 363,619 $ 367,649 $ (38,977) -11% *** Percentage change is compared to the FY14 Adopted Budget 3

56 Valley Metro Regional Public Transportation Authority (RPTA) FY 2015 Preliminary Operating & Capital Budget Overview Budget Analysis The following is an analysis of the major changes in the FY 15 Preliminary Budget versus the FY 14 Adopted Budget. The number in the Note column corresponds to the Note column of the FY 15 Preliminary Operating & Capital Budget (page 3). Sources of Funds: Note 1 Explanation Public Transportation Funds from the Maricopa County Transportation Excise Tax are forecasted to grow by 6%. Forecast is provided by ADOT. Adequate reserves are in place should collections fall short of ADOT forecast projections Service levels operated by Valley Metro have remained stable since the unification of fixed route bus services in the east valley commencing operation July 1, Transit service agreements are down, mainly due to additional 5307 Operations Funding applied to West Valley (ValuTrans) bus operations ($639K ) and the discontinuation of the mileage reimbursement program in Mesa (appx $700K). Federal Grants overall are up by $10.0M from $28.4M to $38.4M. Primary cause for change is CMAQ capital funding for LINK development along Scottsdale/Rural Road $8.8M, adding $8.3M over FY14. Contributions from Valley Metro Rail for staff are higher in FY 14 due to new positions to support increased safety, security and preventative maintenance activities. Base salary and fringe costs include a 3% increase for merit increases which are evaluated based on employee performance. Other revenues are down due to IRS Fuel Tax Credits program, which has not yet notified renewal levels in In FY 14 and going forward, VM collects and deposits fares collected with the City of Phoenix regional fare depository, which is credited back to members as well as to the PTF. The increase in FY15 is the addition of City of Phoenix collected fares which pertain to the services purchased by Valley Metro. (See Project 2010 ) The PTF Revenue Bond program in FY 14 issued $115M for the light rail capital program. The bonds generated $134M in proceeds at a true interest cost of 2.4%. No new bond issues are anticipated until Decrease in PTF Lead Agency Disbursements is primarily due to increased CMAQ funding applied to the Central Mesa Extension, which reduces PTF funding levels vs. FY14. PTF Lead Agency Disbursements also fund the Northwest Extension in Phoenix and the Tempe Streetcar Project. Transit service contracts are up $3.8M, or 5% primarily due scheduled rate increases in the Unified East Valley Fixed Route Bus contract. Capital Outlays are up in FY 15 primarily due to increasing expenditures programmed for the Scottsdale/Rural Road LINK. See Project

57 Valley Metro Regional Public Transportation Authority (RPTA) FY 2015 Preliminary Operating & Capital Budget Overview Uses of Funds by Category: Note Explanation Overall Salary and Fringe increase $0.4M, broken down as follows: Allowance for unfilled positions (-$0.7M), base salary and fringe increase $0.7M, fringe benefit adjustment (-$0.3M), new positions $0.7M. Bond principal and interest expense is up $11.2M, due to new debt service requirements of FY 14 Bond issue to fund LRT Capital construction. Overall consulting contracts and maintenance expense are up $1.3M, primarily due to increased service planning activities including the Regional Origins and Destinations Survey program ($0.8M). Contingency expense is down due to reduced number of bus replacement purchases in FY15 versus FY14. Contingency covers unanticipated changes to the cost of bus fleet versus TLCP programmed expenses. Rent and Facility costs are up primarily due to adjustments to Tempe Bus Facility costs. FY14 Budget understated the facility and utility costs. See Project 2015 for more details, overall FY15 Unified East Valley Fixed Route Bus program costs are up by 3.5% versus FY14. One-time investment for Super Bowl 2015 ($205K) to create a positive experience for residents and visitors attending the special events associated with Super Bowl. Vanpool marketing campaign ($25K) to occur as part of Rideshare Month (October) to increase ridership. Accounting change for FY15. Allied Barton security costs for the Greenfield Operations Facility moved to project 2015 RPTA Fixed Route Bus Service from project 2006 Regional Safety & Security. 18 Lead Agency Bond Disbursements are up by $13.4M to $56.0M due to increased LRT capital construction activity on the Northwest Extension in Phoenix and Central Mesa Extension. Uses of Funds by Department: Note Explanation Operations Dept up $5.7M primarily due to programmed contractual increases for the East Valley Fixed Route bus service $2.2M ( see project 2015), plus increases in contract payments to City of Phoenix ($2.8M) which are now funded by $1.8M in fare revenues. In prior years, fares were deducted from the billed charges for services. ( See Project 2010 ) Communication & Marketing initiatives to take place in FY15 include renovation of the Valley Metro website ($290K) and advertising for Super Bowl 2015 ($205K) to create a positive experience for residents and visitors attending the special events associated with Super Bowl. Planning and Development Department increases are due to cyclical requirement to perform regional Origins and Destinations Survey, $0.8M as well as continuing development of service standards and performance measures. The service standards and measures enable full compliance with MAP 21 and Prop 400 funding requirements as well as serve as basis for route service re-configuration for optimization of passenger services. A Grand Ave. corridor study added $0.2M this year. Design and Construction department costs are down due to the reclassification of Scottsdale/Rural Rd. LINK preconstruction and real estate activities to the Bus and Other Transit Capital line. (see Note 24 below and Project 9420) Valley Metro Rail activities up $20.0M due to increased level of LRT capital project construction. Bus and Other Transit Capital down $64.7M primarily due to reduction of Bus Capital purchases and decrease of Bond Cash Carryforwards. With increasing level of LRT construction in FY15, the remaining bond funds at the close of the Fiscal year will be significantly reduced. 5

58 Valley Metro Regional Public Transportation Authority (RPTA) FY 2015 Preliminary Operating & Capital Budget Overview Budget Development The preliminary FY 15 operating and capital budget has been prepared with the goal of delivering a fiscally prudent, balanced budget using carry forwards, reserves and bond proceeds. The budget was developed in compliance with Board of Directors adopted budget, financial and Transit Life Cycle Program (TLCP) policies. The total operating budget of $153.6 M represents a $7.6 M (5%) increase from the previous year s operating budget of $146.0 M. The total capital budget of $171.1 M represents a $46.5 M (21%) decrease over the previous year s capital budget of $217.6 M. The major factors for the decrease in the capital budget are that no bonds are planned for issuance in FY15, ($114 M reduction) offset by $67.6 M in useage of carryforward balance to fund rail construction and other PTF funded activities. Organizational Staffing With the agency integration, 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 FY 15 there are 296 employees budgeted in the integrated agency, with 131 FTE s budgeted to RPTA activities and 165 budgeted to VMR activities. Compensation and fringe benefit assumptions for FY 15 include: Compensation budget based on 3% increase. For staff salary changes, merit increases are evaluated based on employee performance; departmental level control to manage total costs within budget. The Arizona State Retirement System (ASRS) contribution will increase 0.06 percent on July 1, Agency health care costs will increase. Program design is anticipated to hold total agency fringe benefit cost increases to within 3% of FY 14 levels. All VMR staff related costs are reimbursed in full by Valley METRO Rail, Inc. Staffing cost analysis FY 15 FY 14 change pct change $ million FTE % Salaries $ 17.8 $ 17.4 $ 0.4 2% Fringe Benefits $ 7.1 $ 7.1 $ 0.0 1% Total Salary and Fringe Benefits $ 24.9 $ 24.5 $ 0.4 2% Analysis of changes Salary Fringe Total Base Compensation FY14 $ 17.4 $ 7.1 $ 24.5 Less Allowance for Unfilled $ (0.6) $ (0.1) $ (0.7) Base increase $ 0.5 $ 0.2 $ 0.7 Fringe Benefit Adjustment $ (0.3) $ (0.3) New Positions $ 0.5 $ 0.2 $ 0.7 New Base Compensation FY15 $ 17.8 $ 7.1 $ 24.9 FY15 Preliminary Budget vs. FY14 Adopted Budget $ 0.4 6

59 Valley Metro Regional Public Transportation Authority (RPTA) FY 2015 Preliminary Operating & Capital Budget Overview The FTE Count by Pay Grades and Ranges can be found on page 121 of the preliminary budget document. Pay Ranges are currently under review for adjustment. Valley Metro is conducting a comprehensive survey of positions and pay grades with regional governmental agencies as well as transit peer cities located in the Western US. It is anticipated that pay grades may increase in response to inflation trends which have occurred since last changes to agency-wide pay grades made effective in July of Transit Life Cycle Program (TLCP) In 2005, the RPTA initiated the development of the 20-year TLCP to provide management and oversight for the implementation of the transit component of the Regional Transportation Plan, including bus operating and bus capital projects, and rail capital projects. The Board of Directors adopted the TLCP financial model and TLCP guiding principles in June 2005 and adopted the TLCP policies in October The TLCP guiding principles and policies were revised in This budget includes all the projects that are in the adopted TLCP for FY 15. Major TLCP projects included in the preliminary FY 15 budget include the following: TLCP Rail Capital Program The FY 15 TLCP Rail Capital Program includes utility relocation reimbursements and construction for the Central Mesa Extension and Northwest Extension, phase 1. The program also includes planning funds for the Tempe Streetcar, Phoenix West Extension and Glendale. PTF and bond proceeds are passed through as a lead agency disbursements to Valley METRO Rail, Inc., the designated lead agency on the rail project, to carry out the FY 15 TLCP rail capital program. Major Projects and Studies RPTA will undertake a number of key projects during FY 15, as the agency continues the implementation of the TLCP operating and capital projects. Funding for these projects and studies comes from a combination of sales tax revenues (PTF and Regional Area Road Funds [RARF]) and federal grants. The major projects and studies included in the FY 15 budget include the following: Corridor and Facility Development The Corridor and Facility Development Section is responsible for transit corridor planning, facility development, environmental studies and monitoring, sustainability planning, Environmental Justice/Title VI compliance, Transit Oriented Development facilitation and support of member agencies. The regional origins and destinations survey will be conducted to gather passenger data critical to regional system planning. Examples of projects for FY15 include development of regional transit facility standards, Scottsdale/Rural Rd LINK project development, Peoria transit facility project development, Grand Ave BRT feasibility study, and continued development of a regional bus stop data base in coordination with the City of Phoenix. [RARF $525,000, PTF $509,851, MAG-Planning Program $100,000, AZ Lottery Proceeds $100,000]. System and Services Development The System and Service Development Section is responsible for transit system planning in support of MAG, transit planning studies, service planning, fleet planning, grant applications, GIS administration, preparation of programming documents such as the Short Range Transit Plan, transit surveys and research. Examples of projects for FY15 include continued development of service standards and performance measures, establishment of process for transit service changes, planning studies for Buckeye, partnership with MAG on a Southeast 7

60 Valley Metro Regional Public Transportation Authority (RPTA) FY 2015 Preliminary Operating & Capital Budget Overview Valley Transit Study, an update of the Regional Para-Transit Study, and the Origin & Destination Survey. Beginning in FY14, planning projects were consolidated and budgeted to projects 3306 Corridor & Facility Development and 3307 System & Services Development. [RARF $401791, PTF $650,078, MAG-Planning Program $400,000, 5307 Funding $600,000, AZ Lottery Proceeds $175,000]. Valley METRO Rail RTP Planning Funds RPTA is providing Valley METRO Rail, Inc. with $500,000 to be used for rail specific Regional Transportation Plan (RTP) planning needs. This money is restricted for the planning and administration of projects in the RTP and cannot be used for any other purpose. [RARF $500,000]. Regional Marketing Program Transit Book Development and Printing: The Transit Book is the primary route and schedule communications vehicle in conjunction with online information for Valley Metro transit riders. It is developed and distributed twice a year. Associated with the Transit Book are schedule kiosk posters, guide-a-ride bus stop signage and system maps. Evolution of the Transit Book is being considered in FY15 as mobile and online tools improve. [PTF $298,000] Wayfinding Signage (Portion of Project 7200 Consultants): The wayfinding signage program is an effort to provide improved, more custom passenger information at the point(s) of boarding and multi-modal connections. Phase I includes enhanced signage at light rail station platforms. In FY15, Valley Metro plans to update/maintain the light rail station signage and build improved signage at regional transit centers. Future phases will include enhanced signage at park-andrides and guide-a-ride bus stops. [PTF $153,000] Printed Communications: Various forms of printed materials continue to be essential for providing transit related information to transit users, non-users, key stakeholders, and partners. This budget includes the printing of brochures, passenger notices, car cards, newsletters, ride guides and additional kiosk signage. Printed materials support all regional services, including paratransit options, rural route(s) and fixed route operations. [PTF $102,500] Website Design and Navigation: The mission of valleymetro.org is to provide up-to-date information needed to use Valley Metro services, educate the public about the services and their benefits and promote alternative modes of transportation. This budget supports ongoing website maintenance and upgrades. It also includes significant improvements to the online trip planner function and support for the new trip-planning mobile application in FY15. Improvements and new technology are essential to creating effective online communications, particularly important as Valley Metro considers transition of the Transit Book. [PTF $465,988]. Advertising Campaigns: Valley Metro and its ad agency, Moses, plan to implement programs in FY15 that promote safety, discretionary ridership and build awareness for the value of regional transit. The campaigns will include creative concepting, print and social media executions and media buys. In addition, and also included in this budget, are efforts to support and capitalize on Super Bowl 2015 and limited ridership appreciation efforts. [PTF $486,800] Regional Transportation Demand Management (TDM) Program The Regional TDM Program, administered by Valley Metro Commute Solutions, provides commute options to the general public and Valley employers. Services include a computerized matching system for carpooling, vanpooling, transit and bicycle partner opportunities; marketing of alternative transportation modes and schedules; and technical assistance and training to participants in the Maricopa County Trip Reduction Program. Commute Solutions also oversees 8

61 Valley Metro Regional Public Transportation Authority (RPTA) FY 2015 Preliminary Operating & Capital Budget Overview and manages regional vanpool services and the Clean Air Campaign. This Clean Air Campaign is a private/public partnership that aspires to increase awareness of air quality and transportation issues and to increase the use of alternative modes of transportation and work schedule options. A Clean Air Campaign Awards and Luncheon is held annually. Regional bicycle and pedestrian safety and education programs are also part of the Commute Solutions group. [Federal and State $1.5 million, Other $832,104] 9

62 Valley Metro Regional Public Transportation Authority (RPTA) Five-Year Operating Forecast and Capital Program FY 2015 FY 2019 The Regional Public Transportation Authority (RPTA) has the primary responsibility of implementing the operating and capital components of the transit element identified in the 20- year Regional Transportation Plan (RTP). The operating component includes the expansion of regional fixed route services, high-capacity transit alternatives, vanpools and paratransit services throughout the region. The capital component of the transit element of the RTP includes fleet replacement and expansion as well as the development of new park-and-rides, transit centers, passenger facilities, and maintenance and operations facilities over the life of the plan. Construction of the light rail RTP components has been designated to METRO Rail by the RPTA. The primary funding component of the operating and capital programs identified in the transit element is made possible by a dedicated funding source approved by voters with the passage of Proposition 400 in November This funding source is referred to as the Public Transportation Fund (PTF). In addition to the public transportation fund, local and federal resources contribute to financing the 20-year plan. For the Five-Year Operating Forecast, the Operations revenues and expenditures are based on current costs, as used for the development of the adopted FY2014/15 Operating budget, with an annual inflation escalation of three percent (3%) for the remaining four years. Other assumptions in the Five-Year Operating Forecast are as follows: The Regional Area road Fund has been inflated by 1.2% annually Fares are inflated by 2% annually with a ten-percent (10%) increase assumed in FY17 Federal grant funds were reduced in FY16 due to the lapsing of the one-time CMAQ close-out infusion. Planning, Administration, and Regional Services costs has been inflated two percent (2%) for the last four (4) years of the forecast The proposed service changes within the five-year time period that have been incorporated into the plan as proposed by the Transit Life Cycle Program are as follows: For FY 2015: Extension of Route 138 in Peoria For FY 2016: Addition of the Scottsdale/Rural Rd LINK Reduced service on the Main Street LINK due to the LRT extension For FY 2017: No service changes For FY 2018: Begin Route 104 Saturday service in Chandler 10

63 Valley Metro Regional Public Transportation Authority (RPTA) Five-Year Operating Forecast and Capital Program FY 2015 FY 2019 For FY 2019: Begin PTF funding of Route 50 in Scottsdale 11

64 Valley Metro RPTA Five-Year Operating Forecast FY15-FY19 Preliminary (thousands) Budget Projected Projected Projected Projected Total FY15 FY16 FY17 FY18 FY19 5 Years Revenues Public Transportation Fund (ADOT) $ 127,672 $ 134,901 $ 142,087 $ 149,234 $ 156,267 $ 710,161 PTF Bond Proceeds - 112, ,000 Less: Debt Service Bus & Rail (24,239) (26,735) (40,793) (40,964) (41,094) (173,825) Less: Rail Capital Funding (35,844) (148,471) (25,520) (28,440) (31,352) (269,627) Net PTF for Operations $ 67,589 $ 71,695 $ 75,774 $ 79,830 $ 83,821 $ 378,709 Regional Area Road Fund (RARF) $ 3,847 $ 3,893 $ 3,940 $ 3,987 $ 4,035 $ 19,702 Federal Funds -- Preventive Maintenance 7,020 3,751 3,751 3,751 3,751 22,023 Other Federal Funds 1,166 1,201 1,225 1,250 1,275 6,117 State grants ,845 MAG planning grants ,630 Transit service reimbursements: TSR - RPTA Fixed Route $ 24,015 $ 24,864 $ 25,017 $ 25,142 $ 26,039 $ 125,077 TSR - VTI - Fixed Route 1,825 2,606 2,660 2,746 2,834 12,671 Paratransit - EVDAR 1,528 1,580 1,890 2,409 3,045 10,451 TSR - Alt. Trans. Ridechoice, NWDAR, M 1,954 2,013 2,073 2,135 2,199 10,374 Subtotal $ 29,322 $ 31,063 $ 31,640 $ 32,432 $ 34,117 $ 158,573 Fixed Route Fare Revenue $ 16,139 $ 16,462 $ 18,108 $ 19,919 $ 20,317 $ 90,945 Vanpool farebox revenue ,417 Interest and other revenue Total revenues $ 127,040 $ 130,047 $ 136,448 $ 143,206 $ 149,381 $ 686,122 Expenditures Operations Fixed Route $ 79,680 $ 85,195 $ 87,813 $ 90,396 $ 92,944 $ 436,028 Paratransit - EVDAR 8,735 9,145 9,886 10,497 11,355 49,618 Alternative Trans. Ridechoice, NWDAR, MS 2,395 2,467 2,541 2,617 2,696 12,716 Vanpool Service ,417 ADA 18,166 18,711 19,272 19,850 20,446 96,445 Total operations expenditures $ 109,808 $ 116,375 $ 120,396 $ 124,268 $ 128,377 $ 599,224 Transportation Demand Management $ 1,552 $ 1,552 $ 1,552 $ 1,552 $ 1,552 $ 7,760 Planning & Administration 6,141 6,264 6,389 6,517 6,647 31,958 Regional Services 7,731 7,886 8,044 8,205 8,369 40,235 Safety & Security ,730 Operations Contingency 1, ,030 Total expenditures $ 126,594 $ 132,416 $ 136,727 $ 140,895 $ 145,305 $ 681,937 Excess/(deficiency) of revenues over expenditures - operations $ 446 $ (2,369) $ (278) $ 2,310 $ 4,076 $ 4,185 Less: Bus Capital Funding $ (9,831) $ (13,453) $ (6,871) $ (8,812) $ (7,899) $ (46,866) Undesignated fund balance, July 1 $ 104,803 $ 95,418 $ 79,596 $ 72,447 $ 65,945 $ 104,803 Excess/(deficiency) (9,385) (15,822) (7,149) (6,502) (3,823) (42,681) Undesignated fund balance, June 30 $ 95,418 $ 79,596 $ 72,447 $ 65,945 $ 62,122 $ 62,122 Reconciliation to Annual Operating Budget: Operations Expenditures (Above) $ 126,594 $ 132,416 $ 136,727 $ 140,895 $ 145,305 $ 681,937 VMR Staffing 15,274 16,169 17,088 17,430 17,779 83,740 VMR RARF Distribution ,500 AZ Lottery Disbursements 11,200 11,200 11,200 11,200 11,200 56,000 Total Operating Expenditures $ 153,568 $ 160,286 $ 165,515 $ 170,025 $ 174,783 $ 824,177 12

65 Five-Year Capital Program/All Projects FY 2015 through FY 2019 (thousands) 5-Year FY15 FY16 FY17 FY18 FY19 Total Revenues 4000 Regional area road funds $365 $647 $638 $142 $213 $2, Public transportation funds $3,195 $7,687 $6,871 $8,812 $7,899 $34, FTA - Section 5307 $6,881 $4,451 $7,097 $18,464 $13,777 $50, FTA - Section 5307 ARRA $3, $3, FTA - Section $237 $ $ FHWA - CMAQ $12, $12, FHWA - STP $4,339 $2,525 $2,608 $7,126 $8,416 $25, Vehicle/parts proceeds - $20 - $155 $70 $ Undesig. Fund Balance Applied (PTF) $6,636 $5, $12,402 $37,629 $21,333 $17,352 $34,699 $30,374 $141,387 Expenditures 5000 Salaries, Fringe & Overhead $ $ Fleet inspections $48 $51 $55 $99 $90 $ Consultants (direct) $ $ Consultant-D&C Support $ $ Real Estate/ROW Acq $1, $1, Printing $ $ Postage & delivery $ $ Other direct expenditures $ $ Preparation costs for sales of vehicle/parts - $20 - $155 $70 $ Local meetings & mileage $ $ Lead agency PTF disbursements $5,603 $5,253 $5,139 $4,070 $3,835 $23, Regional fleet $16,346 $14,914 $11,076 $29,539 $25,541 $97, Equipment $ $ Computers & Software $365 $647 $638 $142 $213 $2, Site Improvements $11,772 $250 $250 $150 $100 $12, Capital contingency (PTF) $171 $199 $195 $545 $525 $1,635 $37,629 $21,333 $17,352 $34,699 $30,374 $141,387 Expenditures by Department and Project IT Infrastructure $365 $647 $638 $142 $213 $2,003 Standard Bus - Replacement $8,705 $10,171 $9,929 $27,775 $26,792 $83,372 Standard Bus - Expansion $1, $1,813 Express/BRT - Replacement - $6,906 $3,184 $3,315 - $13,404 Express/BRT - Expansion $5, $5,121 Rural Fleet - Replacement - $297 $ $469 Paratransit Fleet - Replacement $280 $330 $259 $505 $490 $1,864 Vanpool Fleet - Replacement $2,639 $1,575 $1,630 $1,650 $1,672 $9,166 Vanpool Fleet - Expansion $1,700 $950 $978 $1,008 $1,038 $5,674 Fleet - Other - $20 - $155 $70 $245 Bus/Paratransit O/M Facilities $435 $250 $250 $150 $100 $1,185 Transit Centers (4-Bay) $10 $188 $ $510 Vehicle Management/Communications Systems $2, $2,485 Dedicated LINK Right-of-Way and Improvements $14, $14,076 $37,629 $21,333 $17,352 $34,699 $30,374 $141,387 Other Capital Expenditures Debt Service Bus & Rail $24,239 $26,735 $40,793 $40,964 $41,094 $173,824 Rail Capital Funding $109,206 $58,628 $110,489 $27,744 $17,062 $323,130 Total Capital Expenditures $171,074 $106,696 $168,634 $103,407 $88,530 $638,341 13

66 5/14/2014 Fiscal Year 2015 Valley Metro RPTA Preliminary Operating and Capital Budget Five Year Operating Forecast and Capital Plan Board of Directors May 22, 2014 Budget Process October Preliminary Operating Assumptions Budget developed using zero-based budgeting techniques February 18, 2014 Draft Operating and Capital budgets delivered to RTAG and Financial Working Group for review and incorporation into Member City Budgets February 28, 2014 Executive Summary posted to Website Member City Reviews Financial Working Group and RTAG April 2014 Presentations of proposed budget to TMC, BFS and Boards for information May 2014 Presentations of final budget to TMC, BFS and Boards for adoption 2 1

67 5/14/2014 FY15 Uses of Funds $324.6 Million 3 FY15 Funding Sources $324.6 Million 4 2

68 5/14/2014 Changes to Budget vs. April Preliminary Budget $15M Reduction in Overall Budget to $325M Operating Budget remains same $154M Capital Budget reduced to $171M (down from $186M) Capital Budget Changes due to Rail Capital funding reduction Lead Agency Disbursements to fund Rail Capital reduced Consumption of Carryforwards and Reserves reduced No impact to overall Five Year Operating and Capital Program 5 FY15 Uses of Funds $ in thousands Uses of Funds FY15 FY14 Change $ Lead agency disbursements $ 77,031 $ 81,914 $ (4,883) Transit service contracts & fuel 84,257 80,416 3,841 Capital 30,476 23,457 7,019 RPTA & METRO Personnel Costs 24,873 24, Bond Principal & Interest 24,239 13,042 11,197 Contractual Agreements 5,631 4,280 1,351 AZ Lottery Disbursements 11,200 11,200 - Lead Agency Bond Disbursements 56,016 42,585 13,431 Other Costs 10,807 10, Sub Total 324, ,131 32,399 Carry forwards to Reserves ,488 (71,376) Total $ 324,642 $ 363,619 $ (38,977) 6 3

69 5/14/2014 FY15 Funding Sources $ in thousands Funding Sources FY15 FY14 Change $ Public Transportation Funds $ 127,672 $ 120,246 $ 7,426 Transit Service Agreements 29,358 30,573 (1,215) Federal Grants 38,377 28,396 9,981 METRO Rail Reimbursement 15,274 15,389 (115) Fixed Route Fare Revenues 16,139 14,167 1,972 AZ Lottery Proceeds 11,475 11, Regional Area Road Funds 4,711 4, Other Revenues 1,643 3,104 (1,461) Bond Proceeds - 114,150 (114,150) Carry forwards and Reserves 79,993 21,810 58,183 Total $ 324,642 $ 363,619 $ (38,977) 7 FY15-19 Operating Forecast Uses of Funds : $682M Fixed Route Bus 436 VM Operated Paratransit 62 ADA Lead Agency Disbursements 96 Regional Services 40 All Other Services 48 Sources of Funds $686M Public Transportation Funds 379 Member Transit Service Agreements 159 Fare Revenue 91 All Other

70 5/14/2014 FY15-19 Capital Program Uses of Funds: Bus Fleet $103 Vanpool Fleet 15 Bus Facilities 16 Rail Capital 323 Debt Service 174 All Other 7 Total Uses $638M Sources of Funds: PTF $432 PTF Bonds 112 Federal 92 All Other 2 Total Sources $638M 9 Action RECOMMENDATION It is recommended that the Board of Directors approve the Valley Metro RPTA Fiscal Year 2015 Operating and Capital Budget (July 1, 2014 thru June 30, 2015) and accept the Five-Year Operating Forecast and Capital Program (FY 2015 thru 2019). 10 5

71 DATE AGENDA ITEM 6 May 14, 2014 SUBJECT Transit Life Cycle Program (TLCP) Update PURPOSE To provide information to member cities concerning the draft 2014 TLCP Update. The item will cover both the bus and rail programs within the TLCP. BACKGROUND/DISCUSSION/CONSIDERATION The TLCP was developed in 2005 to provide guidance for the implementation of the transit component of the Regional Transportation Plan. The TLCP includes Guiding Principles, policies, procedures and financial forecasts to ensure that the program can be balanced. The most recent update to the TLCP was in June Since that time, the official forecast has projected a slight increase in revenues for the Transportation Excise Tax. MAP-21 continues to be implemented and MAG has recently approved a new Transportation Improvement Program (TIP) through FY2019 using MAP-21 programs and rules. Bus Program Capital Program The new TIP resulted in some changes to the bus capital program. The key change was a direct result of MAP-21 program changes, which now allows for all fleet vehicles to be purchased with 85 percent federal funds. The vehicles must meet low emission and/or ADA compliance requirements. Previously, alternatively fueled vehicles could be purchased with 83 percent federal participation and all other vehicles were purchased with 80 percent federal participation. The VM Fleet Management Plan specifies low emission vehicles in compliance with this requirement. This change has resulted in greater federal aid and less PTF being required for local match for fleet, which is a major segment of the bus capital program. Since the 2013 TLCP update, there have been only minor adjustments to the fleet and facilities programs, all related to timing. The transit center at Main Street and Mesa Drive in Mesa has been scaled back and the remaining funds shifted to a second site at Main Street and Gilbert Road. The transit center at Mesa Drive was originally larger in scope, as that was the end of line for the light rail. With the adoption of the Gilbert Road Extension into the RTP, Gilbert Road is the new end of line. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

72 Operating Program Since the 2013 TLCP update, costs for operations, including ADA reimbursements are up just over one percent and are offset by some increases in fare and preventive maintenance revenues. The fund balance at the end of the program is anticipated to be about $81 million, up from $49.1 million in the 2013 update. (Primarily the result of changes to the capital fleet plan and higher federal participation rate) The resulting increase in fund balance provides availability to increase service levels in future years. The TLCP Policies require that jurisdictional equity be maintained for the bus program. The policy allows that each sub-region can be within 2.5 percent above or below their policy allocation. In the current model, one of three sub-regions is outside this allowance. The East Valley is currently below its policy JE by 6.9 percent. Additionally, the policy allows that regardless of percentages, no jurisdiction can be under-allocated by $7.5 million or more. In the current model, four jurisdictions meet that condition. Jurisdiction Equity Summary Blended Rate beginning in 2017 (millions of dollars) April 23, 2014 Jurisdiction Total Calculated PTF Total Policy PTF Allocation JE Under (JE Over) Percent of JE Calculated Central $435.6 $446.6 $ % East $742.2 $797.2 $ % West $160.9 $162.9 $ % $1,338.8 $1,406.5 $ % 2

73 Jurisdiction Equity Summary Blended Rate beginning in 2017 (millions of dollars) April 23, 2014 Jurisdiction Total Calculated PTF Total Policy PTF Allocation JE Under (JE Over) JE Calculated Percent JE Policy Percent Avondale $20.7 $21.6 $ % 1.54% Buckeye $4.6 $1.0 ($3.6) 0.35% 0.07% Chandler $127.2 $133.1 $ % 9.46% County $16.4 $9.2 ($7.2) 1.22% 0.65% El Mirage $1.4 $3.2 $ % 0.23% Fountain $0.7 $1.2 $ % 0.09% Hills Gila Bend $0.0 $1.9 $ % 0.14% Gilbert $79.8 $86.0 $ % 6.12% Glendale $76.8 $79.9 $ % 5.68% Goodyear $3.6 $3.6 $ % 0.26% Guadalupe $3.7 $0.1 ($3.6) 0.28% 0.01% Litchfield $0.0 $3.2 $ % 0.23% Park Mesa $256.4 $273.4 $ % 19.44% Paradise $4.7 $7.5 $ % 0.54% Valley Peoria $26.2 $31.2 $ % 2.22% Phoenix $435.6 $446.4 $ % 31.74% Queen Creek $0.0 $0.9 $ % 0.06% Salt River $2.7 $0.0 ($2.7) 0.20% 0.00% Res. Scottsdale $131.2 $146.4 $ % 10.41% Surprise $5.1 $3.3 ($1.8) 0.38% 0.23% Tempe $135.9 $148.6 $ % 10.56% Tolleson $5.1 $4.3 ($1.2) 0.41% 0.31% Wickenburg $0.0 $0.3 $ % 0.02% Youngtown $0.6 $0.2 ($0.4) 0.05% 0.02% $1,341.9 $1,406.5 $ % % At this time, no immediate service changes to the bus program are programmed. One of the agency goals is to expand services through effective planning, design, and construction of rail and bus projects through the Regional Transportation Plan. To that end, Valley Metro is working through Phase II of the Service Standards and Measures, 3

74 which when adopted will allow for services to be added back into the TLCP in a manner that meets this goal while adhering to JE policies. Concurrent with Phase II of the Service Standards and Measures, Valley Metro staff have begun discussions with member cities about potential priorities for utilizing the funds to meet adopted service standards. That discussion will continue to take place through the Service Planning Working Group and final recommendations may be made in conjunction with the 2015 TLCP Update next spring. Rail/High Capacity Transit Program The baseline rail model has only minor changes from the adopted 2013 TLCP Update. Two changes to completion dates are included: Central Mesa Extension completion is advanced to 2015 from 2016; and Tempe Streetcar is delayed from 2017 to TLCP Open Year 2013 TLCP Open Year Northwest Phase I Central Mesa Tempe Streetcar Gilbert Road Capitol/I-10 West West Phoenix/Central Glendale Northwest Phase II Northeast Phoenix The base costs per mile for future extensions have been refined with little change to the overall cost per mile. The assumed costs for vehicles have been identified separately within each project to provide input to the rail fleet management plan under development. Alternatively, fleet costs could be removed from the extensions and included as a separate LRV Acquisition project if that were to be desired. Inflation rates assumed in the ADOT Forecast are in the range of 2.2% to 2.4% for the remainder of the program. Year of expenditure costs calculated in the rail model assume a slightly higher rate of 2.7% to 2.9% over the long term. Currently, the rail program baseline financial model is balanced, with a small surplus of $31 million remaining. However, additional work needs to be completed which may impact that final surplus and cash flow needs during the program. 4

75 Planning work on Tempe Streetcar reconfiguration continues on the project. Reconfiguration of the route could impact timing of expenses and the overall cost which could impact cash flow needs Planning work to develop a fleet acquisition plan to meet the expanded fleet needs for the future extensions could result in earlier cash needs, putting greater pressure on PTF and bond proceeds Planning work to redefine the expansion needs at the Operations and Maintenance Center to meet the requirements of the expanded fleet assumed in the current TLCP The rail program currently anticipates additional financings. In January 2014, taxexempt serial bonds were issued and generated approximately $135 million. An additional issue in late FY16 was anticipated and expected to generate up to $125 million. As a result of the successful 2014 issuance, the 2016 issue may be delayed until 2017 and likely will be smaller than anticipated; and in FY21 and FY23 short term financing is needed to cover cash flow. The final financing is driven by the construction of three projects simultaneously. Valley Metro will work cooperatively with the METRO member cities to finalize alternative scenarios and develop a new baseline scenario for adoption in the next fiscal year. COST AND BUDGET There is no impact to the budget. COMMITTEE PROCESS RTAG: April 22, 2014 for information TMC: May 7, 2014 for information and discussion Board of Directors: May 22, 2014 for information and discussion RECOMMENDATION This item is for information and discussion only. CONTACT Paul Hodgins Manager, Revenue Generation and Financial Planning phodgins@valleymetro.org ATTACHMENTS None 5

76 5/14/2014 Transit Life Cycle Program 2014 Model Update May 22, 2014 Overview Financial models are balanced Bus surplus $81.1 million Rail surplus $40.9 million No significant program changes 2 1

77 5/14/2014 Revenues PTF up $7.8 million (+0.3%) $4.4 million bus, $3.4 million rail Federal MAP-21 share of fleet increased to 85% All fleet that meets ADA and/or CAA Fare increase Assumed in FY2017 then every 3 years 3 Transportation Excise tax 4 2

78 5/14/2014 Bus Program Summary 5 Program Changes Updated operating plan to current HASTUS numbers No additions to service plan Scottsdale/Rural LINK moved to FY 2016 Refined fleet plan Reduced expenditures Higher federal participation beginning FY 2016 Mesa transit center Project split into 2 sites Centennial Way, smaller bus facility Gilbert Road, end of line bus/rail interface No change in total costs 6 3

79 5/14/2014 Expenditures 2014 Update 2013 Update Change % Change Operations Expenditure Fixed Route Operations $972.9 $960.3 $ % ADA & Alternatives $482.8 $484.2 ($1.4) 0.3% Regional Expenditures $240.0 $254.3 ($14.3) 5.6% Sub Total Operations Expenditures $1,695.7 $1,698.8 ($3.1) 0.2% Capital Expenditure Debt Service $72.1 $72.1 $ % Fleet $938.9 $961.7 ($22.8) 2.4% Facilities $274.4 $267.3 $ % Sub Total Capital Expenditures $1,285.4 $1,301.1 ($15.7) 1.2% Total Expenditures $2,981.1 $2,999.9 ($18.8) 0.6% 7 Revenues 2014 Update 2013 Update Change % Change Revenue Operations PTF $1,635.4 $1,631.0 $ % RARF $86.5 $88.3 ($1.8) 1.99% Fares $233.8 $233.1 $ % Federal $67.4 $59.6 $ % Other revenues $20.3 $20.4 ($0.2) 0.75% Sub Total Operations Revenue $2,043.4 $2,032.4 $ % Revenue Capital Federal ARRA $35.8 $35.8 $ % Federal Capital $902.0 $901.6 $ % Financed Revenue $58.3 $58.3 $ % Other revenues $22.7 $20.9 $ % Sub Total Capital Revenue $1,018.8 $1,016.6 $ % Total Revenue $3,062.2 $3,049.0 $ % Net Revenues less Expenditures $81.1 $49.1 $ % 8 4

80 5/14/2014 Cash Flow Summary Bus Program TLCP Totals Funding Surplus / Shortfall Total Program Revenues $3,012.2 Total Operating Costs ($1,695.7) Funding surplus before capital and financing $1,316.6 Total Capital Costs ($1,212.4) Financing Needs anticipated: Proceeds Debt Service Series 2009 $50.0 ($73.0) Total Financing $50.0 ($73.0) ($23.0) Total Program Cost 2026 ($2,931.1) Net Fund Balance $ JE Summary Calculated Policy Percent Sub region Allocation Allocation Difference Difference Central $435.6 $446.4 $ % East $742.2 $797.2 $ % West $160.9 $162.9 $ % $1,338.8 $1,406.5 $ % 10 5

81 5/14/2014 Rail Program Summary 11 High Capacity Transit 2013 TLCP 12 6

82 5/14/2014 Capital Projects Central Mesa complete Nov Northwest complete Jul Tempe Streetcar moves to Jul No changes to other projects LRV Acquisition: developing procurement plan OMC expansion: analyzing timing, costs 13 Capital Costs Base Utilities Total 2014 TLCP Open Year 2013 TLCP Open Year Northwest Phase I $300.0 $23.9 $ Central Mesa $190.8 $8.1 $ Tempe Streetcar $126.8 $8.7 $ Gilbert Road $152.6 $0.0 $ Capitol/I-10 West $936.3 $58.1 $ West Phoenix/Central Glendale $495.6 $28.5 $ Northwest Phase II $157.0 $8.7 $ Northeast Phoenix $17.0 $0.0 $ Sub-Total Corridor Extensions $2,376.1 $135.9 $2,

83 5/14/2014 Capital Costs Base Utilities Total 2014 TLCP Open Year 2013 TLCP Open Year LRV Acquisition (14) $56.1 $0.0 $56.1 NA NA OMC Expansion $61.0 $0.0 $ CP/EV Regional Reimbursements $198.8 $74.3 $273.1 System-wide Support Infrastructure $83.2 $0.0 $83.2 Alternatives Analyses $48.7 $0.0 $48.7 Design Standards & System Planning $57.3 $0.0 $57.3 Capital Project Development Administration $28.4 $0.0 $28.4 Sub-Total Other Capital $533.4 $74.3 $607.7 Total Capital Expenditures $2,909.5 $210.2 $3,119.7 Cost of Financing $74.4 Total Capital Project Costs $3, Capital Revenues 2014 Update 2013 Update Change % Change Revenue Capital PTF $1,283.5 $1,280.3 $ % FTA 5309 / TIGER $995.9 $1,037.9 ($42.0) 4.0% CMAQ $263.7 $263.7 $ % Mesa TPANs $152.6 $135.2 $17.4 NA Other federal $40.7 $80.8 ($40.0) 49.6% Phoenix T2000 $385.5 $380.6 $ % Glendale $92.0 $93.3 ($1.3) 1.4% Mesa $0.6 $8.7 ($8.2) NA MAG / RPTA $20.3 $13.8 $ % Sub Total Capital Revenue $3,235.0 $3,294.3 ($59.3) 1.8% 16 8

84 5/14/2014 Cash Flow Summary Rail program TLCP Totals Funding Surplus / Shortfall Total Program Revenues $3,235.0 Total Base Program Cost ($2,909.5) Funding surplus before PTF utility expenses and financing $325.5 Non Prior Right Utility Relocations ($210.2) ($210.2) Financing Needs anticipated: Proceeds Debt Service Series 2009 $55.5 ($77.9) Series 2014 $135.4 ($156.9) Series 2017 $46.2 ($54.6) Term 2021 $30.0 ($36.2) Term 2023 $105.0 ($119.3) Advance Funds by Phoenix $60.0 ($61.5) Total Financing $432.1 ($506.5) ($74.4) Total Program Cost 2026 ($3,194.1) Net Fund Balance $ Operating Expenditures 2014 Update 2013 Update Change % Change CPEV $658.0 $726.0 ($68.0) 9.4% NW Extension Phase I $47.0 $45.0 $ % Central Mesa $49.8 $43.0 $ % Tempe Streetcar $30.3 $31.0 ($0.7) 2.3% Gilbert Road $32.1 $33.6 ($1.5) NA Capitol/I 10 West $60.1 $46.0 $ % West Phoenix/Central Glendale $0.0 $0.0 $0.0 NA NW Extension Phase II $0.0 $0.0 $0.0 NA NE Phoenix $0.0 $0.0 $0.0 NA Total Operations Expenditures $877.3 $924.6 ($47.3) 5.1% 18 9

85 5/14/2014 Operating Revenues 2014 Update 2013 Update Change % Change Revenue Operations Phoenix $342.1 $387.8 ($45.7) 11.8% Tempe $131.7 $143.2 ($11.5) 8.0% Mesa $85.3 $98.6 ($13.3) 13.5% Glendale $0.0 $0.0 $0.0 NA Federal $29.0 $23.1 $ % Advertising $14.1 $4.9 $ % Fare revenues $273.9 $270.5 $ % Sub Total Operations Revenue $876.1 $928.1 ($52.0) 5.6% 19 Next Steps Bus Program Plan for enhancements to service or new capital projects Changes determined through performance based approach Rail Program LRV Procurement OMC expansion needs Scenario planning 20 10

86 5/14/2014 Timeline Discuss Rail Scenarios April 29, 2014 Management Committees information May 7, 2014 BFS information May 15, 2014 Board information May 22, 2014 RTAG May 20, 2014 Management Committees action June 4, 2014 BFS action June 12, 2014 Board action June 19,

87 DATE AGENDA ITEM 7 May 14, 2014 SUBJECT Mayor Scruggs Internship Program Update PURPOSE To provide the Board with an informational update on Mayor Scruggs Internship program. BACKGROUND/DISCUSSION/CONSIDERATION None COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT Steve Banta Chief Executive Officer sbanta@valleymetro.org ATTACHMENTS None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

88 DATE AGENDA ITEM 8 May 14, 2014 SUBJECT Future Agenda Items Request and Report on Current Events PURPOSE Chair Somers will request future agenda items from members, and members may provide a report on current events. BACKGROUND/DISCUSSION/CONSIDERATION None COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT Steve Banta Chief Executive Officer sbanta@valleymetro.org ATTACHMENTS Pending Items Request VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

89 Pending Items Request Item Requested Date Requested Planned Follow-up Date 2

90 May 14, 2014 Board of Directors Thursday, May 22, 2014 Lake Powell Conference Room 101 N. 1 st Avenue, 10 th Floor 1:30 p.m. For those participating by telephone, please mute your phone when not speaking. Members please make sure your microphone is turned on when speaking and turned off when you are 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 Board 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 Minutes from the April 17, 2014 Board meeting are presented for approval. 3. Chief Executive Officer s Report 2. For action 3. For information Steve Banta, Chief Executive Officer (CEO), will brief the Board on current issues. 4. Authorization to Issue a Contract to Arthur J. Gallagher & Company for Property and Casualty Insurance Brokerage, Claims Management, and Risk Management Consulting Services 4. For action Staff will request that the Board of Directors authorize the CEO to issue a five-year joint RPTA/METRO contract for property and casualty insurance brokerage, claims management, and risk management consulting services for Valley Metro to Arthur J. Gallagher & Company for the period July 1, 2014 to June 30, 2019 in an amount not to exceed $556,100. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

91 5. Valley Metro Rail Inc., Fiscal Year 2015 (FY15) Operating and Capital Budget and Five-Year Operating Forecast Capital Program (FY 2015 thru 2019) 5. For action Steve Banta, CEO, will introduce John McCormack, Chief Financial Officer, who will request that the Board of Directors approve the FY15 Budget (July 1, 2014 thru June 30, 2015) and acceptance of the Five-Year Operating Forecast Capital Program (FY 2015 thru 2019). 6. Amendment No. 2 to the Gilbert Road Light Rail Transit Extension Environmental Assessment Funding Agreement No For action Steve Banta CEO, will introduce Wulf Grote, P.E. Director, Planning and Development, who will request the Board of Directors approve Amendment No. 2 to Funding Agreement No with the City of Mesa for the Gilbert Road Extension. This amendment is for the City of Mesa to provide up to $235,738 matching funds for a federal grant to continue the project s design and real estate acquisition activities and to extend the term of the agreement to December 31, Transit Life Cycle Program Update 7. For information Steve Banta, CEO, will introduce Paul Hodgins, Manager of Revenue Generation and Financial Planning, who will provide information to member cities concerning the draft 2014 TLCP Update. The item will cover both the bus and rail programs within the TLCP. 8. Future Agenda Items Request and Report on Current Events 8. For information Chair Ellis will request future Board agenda items from members and members may provide a report on current events. 9. Next Meeting 9. For information The next meeting of the Board is scheduled for Thursday, June 19, 2014 at 1:30 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

92 To attend this meeting via teleconference, contact the receptionist at for the dial-ininformation. The supporting information for this agenda can be found on our web site at 3

93 DATE AGENDA ITEM 1 May 14, 2014 SUBJECT Public Comment PURPOSE A 15-minute opportunity will be provided to members of the public at the beginning of the meeting to address the Board on all agenda items. The Chair may recognize members of the public during the meeting at his/her discretion. BACKGROUND/DISCUSSION/CONSIDERATION None COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT Steve Banta Chief Executive Officer sbanta@valleymetro.org ATTACHMENTS None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

94 DATE AGENDA ITEM 2 May 14, 2014 Minutes of the METRO Board of Directors Thursday, April 17, :30 p.m. Meeting Participants Councilmember Shana Ellis, City of Tempe, Chair Councilmember Dennis Kavanaugh, City of Mesa, Vice Chair (via phone) Vice Mayor Rick Heumann, City of Chandler Councilmember Gary Sherwood, City of Glendale Councilmember Thelda Williams, City of Phoenix Chair Ellis called the meeting to order 2:21 p.m. Today is Thursday, April 17, This is the METRO Board of Directors. And, Councilman Kavanaugh, you've joined us on the phone? Councilmember Kavanaugh said yes, I have. Thank you. 1. Public Comment Chair Ellis said the first item on the agenda is public comment. We do have one public comment card from Blue. Mr. Crowley said good afternoon. I hope that you all are having a very pleasant day. I'd like to start on two things on your agenda that are for information rather than action. And I have some problems with what you're doing. And that is with the capital budget and also your outreach for the hearings that are being held. Well, I know that we're not going to be changing the scheduling on the rail, but if you look at all of those schedule changes, if you include the express, all of them except for four are cross the rail. So since they are connectors to it, which is also a part of what the outreach should be. Now as I said to Glendale two days after your hearing is when staff said that they would be getting that information out on the buses. It is still not on the buses. Now we've had the Glendale meeting. We've had the Chandler meeting. We've had the Scottsdale meeting. And I like that Scottsdale and Chandler were done on the same day. So if you are somebody that were affected by both of those communities -- and when I look at the improvements, I look at like the Chandler where we have great big open spaces like VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

95 Ray Road and such that aren't being addressed and those aren't in the process of being done. I also look at one of 75th Avenue and 83rd that in your original document said we will take these bus routes to Arrowhead mall. Now, Phoenix, I know you're expanding all the way from lower Buckeye to Camelback, but it isn't just open fields and that above there. It needs to be addressed and done right and well and that way also hooking up with the rail. The other thing that you have in here was on the budget and I see a couple things on it where I saw the numbers that Mr. McCormack was putting out and it shows those big lines for the capital expenditures for the rail. And it says that, well, at the same time for the past four years or two years that we've done these amount of capital expenditures for the bus. Well, you didn't. You took $191 million and didn't do capital expenditures on the bus and I don't believe that that thing reflects it as such. The split is to be 60:40. That's 60 percent for the bus, 40 percent for y'all. I also don't see that where with Valley Metro the TOD -- that's going to be an action item. I'll speak on that when it comes up. I'll see you in a bit. 2. Minutes Chair Ellis said you have the minutes from March 20, Are there any additions or changes? If not, I'll entertain a motion. IT WAS MOVED BY COUNCILMEMBER SHERWOOD, SECONDED BY COUNCILMEMBER WILLIAMS AND UNANIMOUSLY CARRIED TO APRPOVE THE MARCH 20, 2014 BOARD MEETING MINUTES. 3. Chief Executive Officer s Report Chair Ellis said Item No. 3, Chief Executive Officer s Report. I will turn it over to Mr. Banta. Mr. Banta said Madam Chair, members of the board, good afternoon. I'd like to bring attention to our northwest outreach team. The "Lamp of Learning Award" for northwest extension outreach efforts was received by our team up in the northwest. Washington Elementary School District has awarded the Lamp of Learning Award to our team. This is the district's highest honor. And it recognizes the extraordinary efforts undertaken by the team in reaching out to the community during the challenges with light rail construction along 19th Avenue in Phoenix. 2

96 The letter from the superintendent was addressed to Karla Kahn of Valley Metro, Albert Santana of City of Phoenix, and Mike Howard and Eric Yingling of the Sundt Stacy Witbeck team. These people and others on the team will receive this award from the district on May 26. I'd like to ask those team members to stand up. They're here in the audience today and give them a round of applause. I think they do a fantastic job up there. Thank you so much for what you do. Moving on, we held our quarterly meeting with the FTA. Recently with the PMOC and FTA to discuss the status of our central Mesa and the Gilbert Road extension. We had a comprehensive review of scope, schedule, and budget adherence for the project. The CME project team, central Mesa extension project team, remains in good status with the FTA. The FTA is also conducted a preliminary review of the Gilbert Road extension project. The review included key aspects of the project at this early stage and everything seems to be okay with them as it relates to moving forward with that. We also recently participated in the Arizona Transit Association Annual Conference and bus rodeo in Tucson. The theme was "TRANSIT AT WORK: Enriching Our Communities-Defining Our Future." we had a very packed agenda from millennials to technology to original equipment manufacturers, a lot of sponsorships and with a key session on the partnership between health care and transit. And also, I'd like to make mention that Valley Metro and Discovery Triangle were awarded the Outstanding Transit Innovation award for the Fresh Express project. Our ridership on light rail and bus, average daily boardings in the month light rail up 5.7 percent. Bus was down 1.4 percent. Legislative update is at your seat. I'd be glad to answer any questions you might have. 4. Amendment No. 2 to the Gilbert Road Light Rail Transit Extension Environment Assessment Funding Agreement No Chair Ellis said Item No. 4, which I understand has been pulled and, Mr. Banta, if you'd like to explain. Mr. Banta said Madam Chair, members of the board yes, I would, thank you. We are diligently working together -- and if you look at the memo that's in your packet at the bottom of it it says a copy of the agreement is available upon request. The agreement is what we are continuing to work on diligently with the City of Mesa. We have not come to a complete agreement on that yet. Therefore, I thought it was premature to bring this to Board for approval. 3

97 We will table it, if we can, pull it from this agenda, and then we'll add it in the future when we come to agreement with Mesa with the terms and conditions of the IGA. 5. Regional Transit-Oriented Development Strategy Chair Ellis said I know we had a presentation at the last meeting, so Mr. Banta, maybe if you want to summarize. Mr. Banta said yes, if I could summarize that would be fantastic. Madam Chair, members of the Board, we had been working for probably eighteen months now on trying to develop a regional transit-oriented development strategy to partner with our member cities on. It was actually suggested originally by the City of Phoenix to come to some agreement on how we think about real estate in and around any of our infrastructure projects, whether it be transit centers, bus rapid transit, or light rail, or park and ride lots. We worked for a long time with our member cities. I think there were two people from every city talking about the importance of real estate and the importance of taking advantage of the infrastructure investment from a development perspective. One of the things that we wanted to make sure we defined was specific roles and responsibilities. We were in the process of bringing this to both Boards last month when we had a couple of concerns, I think originated from the City of Phoenix, as its relates to how we disposition real estate in and around our infrastructure. What we're able to do is recognize those sensitivities from our member cities and we carved out the disposition of real estate from the TOD policy. We're bringing this back with concurrence from the Transit Management Committee and the Rail Management Committee to the Board for adoption. The RPTA Board did adopt for action this regional strategy. And what we believe is that it provides a regional perspective and particularly with Valley Metro working with all of your member cities a concurrence from you, the policy directors here, that TOD is important and we need to coordinate that moving forward. So with that I would ask for your adoption and approval of that strategy. Vice Mayor Heumann said Steve, in terms of the TOD as light rail expands out whether it's out I-10 or down the road in Chandler or wherever, are you working -- is this plan to work with or are we using people giving like an overlay ahead of time for some of these routes or what's your thoughts? Mr. Banta said one of the things that we're trying to do is really bring the opportunity for economic development to the forefront and talk early enough with the member cities that this infrastructure will go through to think about that as we do our permitting, our 4

98 land-use policies, and building codes as it relates to our individual municipalities. We look at our overall regional transportation plan. There is a road map to where we're going to expand and we want to provide a document to allow us to sit down with your economic development people in your individual cities to talk about the importance of this. So as the I-10 project moves forward, we've got ADOT involved, we've got MAG involved with the overall approval of the regional plan. And then we look at all the individual municipalities out the I-10 project and think about ways in which to maximize that investment. Vice Mayor Heumann said I think as we go forward with whatever the next prop is, 500 or whatever, as it expands on, I know we recognize it as a city and are looking to do that, so any expertise or added assistance would be great as we look at Arizona Avenue as a potential. It's important now to start planning even though the agreement was fifteen years out as that undeveloped land gets developed how it should be. Public Comment Mr. Crowley said hi, Wulf. I won't go through it again. Your carcass is already laying there. Y'all heard it from the last one. And listening to Mr. Banta and him discussing ADOT and MAG and the multimodals, you know, MAG and ADOT are more multimodal than what you talked about a moment ago, because they even look at heavy rail. And you didn't and you're not. And I know that, Glendale, you got a heavy rail station. Phoenix, we got one. Tempe, you got one. Chandler, I believe there's one on Rittenhouse, isn't there? But we aren't looking at the multimodal of light rail, heavy rail, and bus in that development. So when I hear what you're saying, but then like I pointed out before with Mr. Grote's history and the way that we do multimodal transit planning that facility there at Central and Moreland has set for twenty-eight years. And the one in the middle of the airport has been there how long and will be there for how long, because we didn't build it, you know, the multimodal is we'll put this billion-dollar project in the bottom of the thing and then we won't do it because Mr. Grote said we need to go along this route. Because every time I've had to deal with Mr. Grote and that transit planning as in why the Central Station is where it is instead of in that parking lot next door to the City of Phoenix in that parking garage, there were many areas within downtown we could have done, but for some reason that's where he wanted it and, like I said, with him, Mr. Manske, and Mr. Thomas wanted to have that bridge built and they had to get the reinforcement so that the rail could go because you were transit planning because that bridge had to be able to withstand the weight of those things. 5

99 But when we build a transit center inside, when's it going to get done, Wulf? You've only been here, oh, all that amount of time, too, and it was your project, yours and Mr. Thomas and Mr. Manske's that got that done, so when you say, hey, this is what we're going to be doing, I look at your history and past and, like I said, I don't trust you at all. IT WAS MOVED BY COUNCILMEMBER WILLIAMS, SECONDED BY COUNCILMEMBER SHERWOOD AND UNANIMOUSLY CARRIED TO APPROVE THE TRANSIT ORIENTED DESIGN STRATEGY. 6. Valley Metro Information Technology Strategic Plan Update Chair Ellis said we received this presentation at the RPTA meeting. I will turn it over to Mr. Banta to summarize. Mr. Banta said Madam Chair, members of the Board, over the last year we've made an in-depth review of our IT system. If you remember prior to the integration of Valley Metro Rail and the RPTA we had two separate independent IT systems. The overall purpose of this strategic plan is to integrate the two to provide better resources and tools for us to move forward. It is a multi-phased plan, has been developed for staffing technologies and equipment moving forward. The complete presentation is in your packet. But the overall goal is to create an enterprise solution that provides a modernized technical infrastructure that is resilient and secure. All associated costs will be brought through the budget process and incorporated in the overall five-year operating forecast and capital plan. With that, I'd be glad to answer any questions you might have. Chair Ellis said this item was for information only. 7. Valley Metro Fiscal Year 2015 Preliminary Operating and Capital Budget This item is for information only. We received it at the last meeting, but I know that it's quite an extensive item and it's one of the most important things we do, so I'll turn it over to the Board to see if there are any questions. Vice Mayor Heumann said I do have a question and in between the meetings I think John is getting me some information. On page 1 of the informational summary it talks about ratio of fares at the bottom, it talks about the average fare per ride forecasted 94 cents with the F15 ridership forecasted 8.1 percent higher. Can you, before the next meeting, get clarification on exactly what you're talking about. You were talking about base budget and things like that. So if you could just get before the next meeting skip through it the information either on a chart or something so I can 6

100 see where that 80 percent is a big number. Mr. McCormack said Vice Mayor Heumann, members of the board, the question is: The assumption for ridership in Fiscal '15 as mentioned in the board memo is an 8 percent increase above the Fiscal '14 base, which was a budget number. And so I will be providing a report back to the board members to show what our actual and budget -- I'll give you a history of it going back through Fiscal '12 and all the way into the future to show what our actuals have been versus our budget. And then you'll be able to see the difference that the 8 percent growth that we're talking about in the memo and what the actual growth ridership is in this year's plan versus what we actually achieved in Fiscal '14. Councilmember Sherwood said with that could you note when those other -- you know the lines are coming on, the other extensions, maybe that would be a footnote there. Mr. McCormack said yes. We can highlight that as well. It's part of the presentation and maybe we can add it at the appropriate part of the presentation where we have like broken out the start times of each of the light rail extensions. So we'll do. Chair Ellis said are there any other questions for Mr. Banta or Mr. McCormack on this item? Okay. It will be on the May agenda for action. 8. Future Agenda Items Request and Report on Current Events Chair Ellis said as was stated earlier, Item No. 4, which is the Gilbert Road Light Rail Environmental Assessment Funding Amendment will be on the May agenda along with the budget. Are there any other items from the Board? Any current events? The next meeting will be held on Thursday, May 22, at 1:30 p.m. or after depending on the RPTA meeting. So we are adjourned. With no further discussion the meeting adjourned at 2:43 p.m. 7

101 DATE AGENDA ITEM 3 May 14, 2014 SUBJECT Chief Executive Officer s Report PURPOSE Steve Banta, Chief Executive Officer, will brief the Board on current issues. BACKGROUND/DISCUSSION/CONSIDERATION None COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT Steve Banta Chief Executive Officer sbanta@valleymetro.org ATTACHMENTS None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

102 DATE AGENDA ITEM 4 May 14, 2014 SUBJECT Authorization to Issue a Contract to Arthur J. Gallagher & Company for Property and Casualty Insurance Brokerage, Claims Management, and Risk Management Consulting Services PURPOSE To request Board authorization for the CEO to issue a five-year joint RPTA/METRO contract for property and casualty insurance brokerage, claims management, and risk management consulting services for Valley Metro to Arthur J. Gallagher & Company for the period July 1, 2014 to June 30, 2019 in an amount not to exceed $556,100. BACKGROUND/DISCUSSION/CONSIDERATION Historically, RPTA and METRO insurance brokerage, claims management and risk management consulting have been provided through three distinct contracts: Property and casualty insurance brokerage service for RPTA and METRO through a joint contract Claims management and risk management consulting for RPTA Claims management for METRO On February 13, 2014 Valley Metro issued a RFP for Property and Casualty Insurance Brokerage and Risk Management Consulting Services. The RFP consisted of three categories of services: Insurance Broker, Claims Management and Risk Management consulting. At the pre-proposal conference it was explained that three services were being sought for either a single or multiple contract award. Proposers were invited to submit proposals on one, two, or all three categories. On March 13, 2014 the following proposals were received: Property and casualty insurance brokerage services proposals Alliant Arthur J. Gallagher & Company Marsh Claims management proposals Ashton Tiffany, LLC Arthur J. Gallagher & Company Risk management consulting proposals Ashton Tiffany, LLC Arthur J. Gallagher & Company Marsh VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

103 The evaluation committee, made up of members of Valley Metro senior management, met on March 27, Each category was evaluated separately, first for technical qualifications, and then for price. The committee unanimously agreed that Arthur J. Gallagher & Company provided the highest rated technical proposals and best value for all three services. COST AND BUDGET The Property and Casualty Insurance Brokerage, Claims Management, and Risk Management Consulting Contract for approval has a total term of five years. For the total term of the contract, the award cost is not to exceed $556,100, with the RPTA portion totaling $77,500 and the METRO portion totaling $478,600. The estimated costs associated with this contract and the breakouts between RPTA and METRO are shown on the table below. Estimated Five-year Cost of Contract RPTA METRO Total Property and casualty insurance brokerage services $ 50,000 $ 200,000 $ 250,000 Claims management $ 22,500 $ 273,600 $ 296,100 Risk management consulting $ 5,000 $ 5,000 $ 10,000 Total $ 77,500 $ 478,600 $ 556,100 The five-year future projected cost for these services under the old (three contract) model is $616,165. The combined approach saves an estimated $60,065 for the combined agencies. For Fiscal Year 2015 (FY15), the estimated RPTA contract obligation is $14,910, which is fully funded within the Valley Metro RPTA FY15 Preliminary Operating and Capital Budget. Contract Obligations beyond FY15 are incorporated into the RPTA Five-Year Operating Forecast and Capital Program (FY15 FY19). For FY15 the estimated METRO contract obligation is $87,800 which is fully funded within the METRO Preliminary FY15 Budget. Contract Obligations beyond FY15 are incorporated into the METRO Five-Year Operating Forecast and Capital Program (FY15 FY19). 2

104 The projected FY15 RPTA/METRO combined expenditures on these three services total $102,710. The source of funding is a combination of federal, regional and local funding sources as allocated for projects served by the insurance services. COMMITTEE PROCESS RTAG: April 22, 2014 for information TMC: May 7, 2014 for action Board of Directors: May 22, 2014 for action RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to issue a five-year contract for property and casualty insurance brokerage, claims management, and risk management consulting services to Arthur J. Gallagher & Company in an amount not to exceed $556,100, with a METRO obligation not to exceed $478,600. CONTACT Carol L. Ketcherside Director of Administration & Organizational Development cketcherside@valleymetro.org ATTACHMENTS None 3

105 DATE AGENDA ITEM 5 May 14, 2014 SUBJECT Valley Metro Rail, Inc. Fiscal Year 2015 (FY15) Operating and Capital Budget and Five- Year Operating Forecast and Capital Program (FY 2015 thru 2019) PURPOSE To request Board approval of the Fiscal Year 2015 Budget (July 1, 2014 thru June 30, 2015) and acceptance of the Five-Year Operating Forecast and Capital Program (FY 2015 thru 2019). BACKGROUND/DISCUSSION/CONSIDERATION METRO s continuing goal is to provide the highest quality services to our customers and member communities in the most cost effective manner. The METRO budget process is a key piece of the strategy to achieve these results in a coordinated manner and to make fiscally responsible decisions. 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(s). For the agency s members 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 the modified accrual basis and adopted by the Board each fiscal year. With respect to Capital Budgets, project contingency accounting is used to control expenditures within available project funding limits. With respect to Operating Budgets, encumbrance accounting is not used and all appropriations lapse at the end of the year. Prior to final adoption, a proposed budget is presented to the Board for review. Final adoption of the budget must be on or before June 30 of each year. The FY15 budget has been prepared in a collaborative effort with input from member city representatives of the Regional Transit Advisory Group (RTAG) and the Financial Working Group. FY15 Budget Highlights and Assumptions: Service: No changes to planned service Ridership and Fares: Total Ridership is forecasted at 14.2 million passengers for the year with fare revenues generating $13.4 million. Average fare per ride is forecasted at $0.94 cents per ride. The FY15 ridership forecast is level with current ridership and 8.1% higher than the FY14 plan. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

106 Operating Activities: FY15 rail operating costs increase by 2% over FY14 levels. Base service levels will remain constant; however additional LRV 3 car trains may be deployed to accommodate peak service loads. Preventative maintenance activities continue to increase as the system components mature. Safety & Security level of effort and ridership advertising campaigns are increasing over FY14. Future Project Development costs are down by $1.7 million. Reduction in planning activities as capital projects move from environmental analysis to design and construction phase. Consulting costs have been reduced. Capital Projects: Northwest Extension Phase I base project costs down $2.3M while CNPA related activities are up by $2.5M. Overall project costs are not changed. Changes are due to flow of construction work between fiscal year periods. Central Mesa Extension base project costs down $18.9M while CNPA related activities are down by $1.1M. Overall project costs are not changed. Changes are due to flow of construction work between fiscal year periods. Gilbert Road LRT Extension design and real estate acquisition commences. Annual expenditures forecasted at $10.1M. Tempe Streetcar design and pre-construction activities commence in 2015, pending federal grant approval. Annual expenditures forecasted at $5.3M. System-wide Improvements include $3.6M OMC Solar Project, Station railing & TVM improvements $0.8M, IT systems life cycle replacements $.9M, Rail Switch improvements $0.3M, OMC backup generator $0.3M, and Maintenance platform truck $0.4M. Organizational Staffing: With the agency integration, 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 FY15 there are 296 employees budgeted in the integrated agency, with 131 FTE s budgeted to RPTA activities and 165 budgeted to VMR activities. Details and explanations of the major budget changes are discussed in the attached METRO Budget Overview. 2

107 COMMITTEE PROCESS Preliminary Budget Review: Financial Working Group: February 24, 2014 for information RTAG: March 18, 2014 for information RMC: April 2, 2014 for information Board of Directors: April 17, 2014 for information Proposed Budget Adoption: RMC: May 7, 2014 approved Board of Directors: May 22, 2014 for action RECOMMENDATION It is recommended that the Board of Directors approve the FY15 Operating and Capital Budget (July 1, 2014 thru June 30, 2015) and accept the Five-Year Operating Forecast and Capital Program (FY 2015 thru 2019). CONTACT John P. McCormack Chief Financial Officer ATTACHMENT Valley Metro Rail, Inc. Fiscal Year 2015 (FY15) Operating and Capital Budget and Five- Year Operating Forecast and Capital Program (FY 2015 thru 2019) Overview A complete copy of the Valley Metro Rail, Inc. Fiscal Year 2015 (FY15) Operating and Capital Budget and Five-Year Operating Forecast and Capital Program (FY 2015 thru 2019) is available on our website. 3

108 Valley Metro Rail, Inc. FY 2015 Preliminary Operating and Capital Budget Overview TOTAL FINANCIAL PROGRAM The FY 2015 Operating and Capital Budget has been prepared with the goal of delivering a fiscally prudent, balanced budget. Last year, the Board approved a total of $248.8 million (*) for the Amended FY 2014 Budget. Total expenditures for FY 2015 are estimated to be $219.0 million. The unexpended balance for FY 2014 capital expenditures has been reprogrammed into the project cash flows for expenditure in FY15 and future years. Uses of Funds - The FY 2015 Budget includes anticipated operating and capital expenditures in the amount of approximately $219.0 million to support program elements during the period of July 1, 2014 through June 30, 2015, as follows: Uses of Funds ($,000) FY15 Proposed FY14 Amended Change Budget Analysis Note # Operating Activities: Revenue Operations 33,155 32, Future Project Development 8,444 10,152 (1,708) 2 Agency Operating Budget ,527 43,554 (1,027) Capital Projects: Northwest Extension 75,493 77,789 (2,296) 3 Central Mesa Extension 58,448 77,390 (18,942) 4 Gilbert Road Capital Project 10,131 1,800 8,331 5 Tempe Streetcar Extension 5, ,746 6 Phoenix West Extension Non-Prior Rights Utilities Relocations 13,755 13,982 (226) CNPAs - Mesa Extension 2,045 3,165 (1,120) 4 CNPAs - Northwest Extension 4,011 1,500 2,511 3 Systemwide Improvements 6,898 5,699 1, LRV's Interest - 15,897 (15,897) 8 Subtotal Capital before Debt Service 176, ,733 (21,280) Total Uses of Funds 218, ,287 (22,307) Capital Project Debt Service: Debt Service - Interest 8,120 4,508 3,612 Debt Service - Principal 11,241 2,980 8,261 19,361 7,488 11,873 Total Uses with Debt Service 238, ,775 (10,434) Note: See pages 3 and 4 for budget analysis notes. (*) In FY15, the agency has changed budgetary reporting of Debt Service. Any Debt Service related to PTF bonds are reported on the VM RPTA CAFR and budget documents. Obligations of VM RPTA and VMR related to debt service will be reported on a memorandum basis in FY15 and future rail budgets. 1

109 Sources of Funds - The FY 2015 Operating and Capital Budget will be funded with a combination of Fare Revenues, Member City contributions, Public Transportation Funds, Federal 5309 New Starts, 5307 and Fixed Guideway Preventative Maintenance, Congestion Mitigation and Air Quality funds (CMAQ), and other local funding. The FY 2015 Budget includes anticipated capital and operating sources of funds in the amount of approximately $218.9 million (*), as follows: Sources of Funds ($,000) FY15 Proposed FY14 Amended Change Budget Analysis Note # Operating Activities: Fare Revenue 13,363 12, Advertising Revenue Federal 5307 PM 2,147 4,270 (2,123) 11 Federal FG PM - 1,830 (1,830) 12 Federal 5339 AA (547) 13 Federal CMAQ (240) Member Cities 17,726 14,726 2, MAG / RPTA (RARF) 1,000 1,150 (150) PTF Sales Tax Revenue 7,428 7,557 (129) 42,527 43,554 (1,027) Capital Projects: FTA - Section ,168 32,189 (4,021) 15 Federal CMAQ 29,321 15,221 14, Federal 5337 SOGR TPAN 8,000-8, TIGGER Federal Grant 2,555 2,715 (160) Member Cities 6,291 14,668 (8,377) 19 PTF Bond Revenue 53,190 87,789 (34,599) 20 PTF Sales Tax Revenue 48,589 45,152 3, , ,733 (21,280) Total Sources of Funds 218, ,287 (22,307) Capital Project Debt Service: PTF Sales Tax Revenue 19,361 7,488 11,873 19,361 7,488 11,873 Total Sources with Debt Service 238, ,775 (10,434) Note: See pages 3 and 4 for budget analysis notes. (*) In FY15, the agency has changed budgetary reporting of Debt Service. Any Debt Service related to PTF bonds are reported on the VM RPTA CAFR and budget documents. Obligations of VM RPTA and VMR related to debt service will be reported on a memorandum basis in FY15 and future rail budgets. 2

110 BUDGET ANALYSIS The following is an analysis of the major changes in the FY 2015 Proposed Budget versus the FY 2014 Amended Budget. The number in the "Note" column corresponds to the "Note" column in the "Uses of Funds" and "Sources of Funds" tables located in the Total Financial Program. See Pages 1 and 2. Note Budget Analysis 1 FY 15 rail operating costs increase by 2% over FY14 levels. Base service levels will remain constant, however additional LRV 3 car trains may be deployed to accommodate peak service loads. Preventative maintenance activities continue to increase as the system components mature. Safety & Security level of effort and ridership advertising campaigns are increasing over FY14. 2 Project Development costs are down by $1.7 million. Reduction in planning activities as capital projects move from environmental analysis to design and construction phase. Consulting costs have been reduced. 3 Northwest Extension Phase I base project costs down $2.3M while CNPA related activities are up by $2.5M. Overall project costs are not changed. Changes are due to flow of construction work between fiscal year periods. 4 Central Mesa Extension base project costs down $18.9M while CNPA related activities are down by $1.1M. Overall project costs are not changed. Changes are due to flow of construction work between fiscal year periods. 5 Gilbert Road LRT Extension design and real estate acquisition commences. Annual expenditures forecasted at $10.1M. 6 Tempe Streetcar design and pre-construction activities commence in early 2014, pending federal grant approval. Annual expenditures forecasted at $5.3M. 7 System-wide Improvements include $3.6M OMC Solar Project, Station railing & TVM improvements $0.8M, IT systems life cycle replacements $.9M, Rail Switch improvements $0.3M, OMC backup generator $0.3M, and Maintenance platform truck $0.4M. 8 In FY14, Interest of $15.9M was the finance cost portion of final payment to City of Phoenix for 14 light rail vehicles due in June of Original Capital Lease principal was $42M, with annual principal payments of $10.0 M each paid in FY11, FY12 and FY13. Final principal payment in FY14 was $12.2M. All financing costs related to the 14 LRVs were fully paid in FY14. 9 Fare revenue increases from $12.6 million to $13.4 million; assumes 14.2 million rides at $.94 cents per ride generating a fare recovery ratio of 39.3%. This increase is forecasted based on actual experience of the recent March 1, 2013 Fare Increase. 10 Advertising revenue increases based on additional train wraps. 3

111 Note Budget Analysis 11 Federal 5307 Preventive Maintenance Funding forecasted to be $2.1M, returning to normal levels. Last year, an unusually large amount of Federal PM Funding became available after the 2012 CMAQ close-out process. 12 Last Year, Federal Fixed Guideway Preventive Maintenance Funding became available after the 2012 CMAQ close-out process. No funds are currently planned for FY A reduction in 5339 Funding in FY15 to $13K, due to completion of federally funded portion of Glendale and Phoenix West alternatives analysis projects. 14 Member City contributions are up by $3.0 M from FY 14 primarily due reductions in Federal Preventive Maintenance funding this year. See notes 11 and 12 above. 15 Federal 5309 funds are reduced from $32.2 M to $28.2 M due to forecasted reductions in grant draws required for the Central Mesa Extension project during the coming year. Overall the CME project 5309 funding remains at $75.0M. 16 Federal CMAQ Capital funds are increased from $15.2M to $29.3M due to increasing activities for Central Mesa, Gilbert Road, and Tempe Streetcar Projects. 17 Federal State of Good Repair funding is available in FY15 and is a new program under MAP The Gilbert Road Extension Light Rail Project is to be funded mostly using Transportation Project Advancement Notes (TPANS). The anticipated expenditures in FY15 are $10.1 million as the project moves into Design and Pre-construction activities. 19 Member City contributions are down from $14.7M in FY14 to $6.3 M in FY 15 primarily due to reductions in City of Phoenix contributions required for the Northwest Extension Phase I Capital Project. 20 PTF Bonds to fund $43.8M of Northwest Extension construction and $9.4M to continue construction on the Central Mesa LRT Extension. 21 PTF Sales Tax to fund $31.7M of Northwest Extension construction, $1.1M for Tempe Streetcar, $83K for Phoenix West, $11.8 million for Non Prior Rights Utilities relocations, $4.0M Systemwide Improvements 4

112 Organizational Staffing With the agency integration, 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 FY 15 there are 296 employees budgeted in the integrated agency, with 131 FTE s budgeted to RPTA activities and 165 budgeted to VMR activities. Compensation and fringe benefit assumptions for FY 15 include: Compensation budget based on 3% increase. For staff salary changes, merit increases are evaluated based on employee performance; departmental level control to manage total costs within budget. The Arizona State Retirement System (ASRS) contribution will increase 0.06 percent on July 1, Agency health care costs will increase. Program design is anticipated to hold total agency fringe benefit cost increases to within 3% of FY 14 levels. All VMR staff related costs are reimbursed in full by Valley METRO Rail, Inc. Staffing cost analysis FY 15 FY 14 change pct change $ million FTE % Salaries $ 17.8 $ 17.4 $ 0.4 2% Fringe Benefits $ 7.1 $ 7.1 $ 0.0 1% Total Salary and Fringe Benefits $ 24.9 $ 24.5 $ 0.4 2% Analysis of changes Salary Fringe Total Base Compensation FY14 $ 17.4 $ 7.1 $ 24.5 Less Allowance for Unfilled $ (0.6) $ (0.1) $ (0.7) Base increase $ 0.5 $ 0.2 $ 0.7 Fringe Benefit Adjustment $ (0.3) $ (0.3) New Positions $ 0.5 $ 0.2 $ 0.7 New Base Compensation FY15 $ 17.8 $ 7.1 $ 24.9 FY15 Preliminary Budget vs. FY14 Adopted Budget $ 0.4 The FTE Count by Pay Grades and Ranges can be found on Page 52 of the FY15 Preliminary Operating and Capital Budget document. Pay ranges are currently under review for adjustment. Valley Metro is conducting a comprehensive survey of positions and pay grades with regional governmental agencies as well as transit peer cities located in the Western US. It is anticipated that pay grades may increase in response to inflation trends which have occurred since last changes to agency-wide pay grades made effective in July of

113 Five-Year Capital Program and Operating Forecast Summary ($000) Cumulative USES OF FUNDS LRT Operations & Maintenance $ 33,155 $ 36,287 $ 41,495 $ 43,153 $ 49,194 $ 203,283 Project Development Planning 8,444 7,690 5,758 6,687 6,134 34,712 Agency Operating Budget ,011 1,041 4,916 Subtotal - Operations and Proj Dev 42,527 44,931 48,235 50,851 56, ,911 Northwest Extension Phase 1 75,493 24,067 2, ,667 Central Mesa 58,448 6, ,685 Gilbert Rd 10,131 49,611 40,939 39, ,856 Tempe Streetcar 5,257 40,117 63,482 17, ,194 Phx West 415 8,708 33,985 43,240 84, ,626 CNPA Projects 6,056 2, ,794 Non-Prior Rights Utilities 13,755 10,368 2,616 12,622 17,309 56,670 Systemwide Improvements 6,898 5,467 3,725 4,144 3,478 23,711 Subtotal - Capital 176, , , , , ,204 Total Uses $ 218,980 $ 192,244 $ 195,089 $ 167,370 $ 161,434 $ 935,115 SOURCES OF FUNDS Phoenix $ 16,007 $ 15,077 $ (45,744) $ 15,429 $ 14,771 $ 15,540 Tempe 5,205 5,210 4,888 5,288 7,864 28,455 Mesa 2,749 3,003 3,547 3,837 6,836 19,972 Glendale Chandler MAG / RPTA 1,000 1,000 1,000 1,000 1,000 5,000 Subtotal 25,017 24,348 (36,250) 25,615 30,513 69,242 PTF Sales Tax Revenue 43,458 43,590 32,282 36,165 38, ,963 PTF (Reserve) / Borrowing 65,749 15,038 78,207 (8,422) (21,405) 129,168 TPAN Funds 8,000 54,899 41,580 39, ,654 LRT Fares 13,363 14,624 17,714 17,509 18,667 81,877 Advertising ,513 FTA Section ,168 20,677 27,230 35,768 73, ,276 FTA Section 5339 AA CMAQ 29,321 16,675 31,821 19,036 16, ,553 Federal 5307 PM 2,147 1,143 1,143 1,143 1,143 6,718 Federal 5337 SOGR ,782 4,112 Other Federal 2, ,555 Subtotal 62,543 38,869 60,653 56,399 94, ,699 Total Sources $ 218,980 $ 192,244 $ 195,089 $ 167,370 $ 161,434 $ 935,115 Note: Negative sources of funds reflect reimbursements to City of Phoenix for the Northwest Extension Advance (source of funding is Public Transportation Fund). 6

114 5/14/2014 Fiscal Year 2015 Valley Metro Rail, Inc. Preliminary Operating and Capital Budget Five Year Operating Forecast and Capital Plan Board of Directors May 22, 2014 Budget Process October Preliminary Operating Assumptions Budget developed using zero-based budgeting techniques February 18, 2014 Draft Operating and Capital budgets delivered to RTAG and Financial Working Group for review and incorporation into Member City Budgets February 28, 2014 Executive Summary posted to Website Member City Reviews Financial Working Group and RTAG April 2014 Presentations of proposed budget to RMC and Boards for information May 2014 Presentations of final budget to RMC and Boards for adoption 2 1

115 5/14/2014 FY15 Funding Uses Uses of Funds ($,000) FY15 Proposed FY14 Amended Change Operating Activities: Revenue Operations 33,155 32, Future Project Development 8,444 10,152 (1,708) Agency Operating Budget ,527 43,554 (1,027) Capital Projects: Northwest Extension 75,493 77,789 (2,296) Central Mesa Extension 58,448 77,390 (18,942) Gilbert Road Capital Project 10,131 1,800 8,331 Tempe Streetcar Extension 5, ,746 Phoenix West Extension Non-Prior Rights Utilities Relocations 13,755 13,982 (226) CNPAs - Mesa Extension 2,045 3,165 (1,120) CNPAs - Northwest Extension 4,011 1,500 2,511 Systemwide Improvements 6,898 5,699 1, LRV's Interest - 15,897 (15,897) Subtotal Capital before Debt Service 176, ,733 (21,280) Total Uses of Funds 218, ,287 (22,307) 3 Changes to Budget vs. April Preliminary Budget Operating Budget remains same $43M Capital Budget remains same $176M Capital Budget Changes to funding for Central Mesa Extension Increase CMAQ funding by $11M Increase FTA 5309 funding by $4M Decrease PTF Bond and Sales Tax by $15M No impact to overall CME Project Budget 4 2

116 5/14/2014 FY15 Funding Sources Sources of Funds ($,000) FY15 Proposed FY14 Amended Change Operating Activities: Fare Revenue 13,363 12, Advertising Revenue Federal 5307 PM 2,147 4,270 (2,123) Federal FG PM - 1,830 (1,830) Federal 5339 AA (547) Federal CMAQ (240) Member Cities 17,726 14,726 2,999 MAG / RPTA (RARF) 1,000 1,150 (150) PTF Sales Tax Revenue 7,428 7,557 (129) 42,527 43,554 (1,027) Capital Projects: FTA - Section ,168 32,189 (4,021) Federal CMAQ 29,321 15,221 14,100 Federal 5337 SOGR TPAN 8,000-8,000 TIGGER Federal Grant 2,555 2,715 (160) Member Cities 6,291 14,668 (8,377) PTF Bond Revenue 53,190 87,789 (34,599) PTF Sales Tax Revenue 48,589 45,152 3, , ,733 (21,280) Total Sources of Funds 218, ,287 (22,307) 5 FY15 Ridership Forecast FY15 Ridership forecast is level versus recent history; However, is up 8.1% versus FY14 Budget forecast 6 3

117 5/14/2014 Five Year Operating Forecast $ in thousands TOTAL USES OF FUNDS Operations and Maintenance 33,155 36,287 41,495 43,153 49, ,283 Project Development Planning Support 8,444 7,690 5,758 6,687 6,134 34,712 Agency Operating Budget ,011 1,041 4,916 Total Uses 42,527 44,931 48,235 50,851 56, ,911 SOURCES OF FUNDS LRT Fares 13,363 14,625 17,714 17,509 18,667 81,877 Other Revenues: Phoenix 11,996 12,339 14,256 15,429 14,771 68,791 Tempe 5,205 5,210 4,888 5,288 7,864 28,455 Mesa 469 3,003 3,547 3,837 6,836 17,692 Glendale Chandler Advertising ,513 Subtotal Local Revenues 18,576 21,485 23,652 25,543 30, ,725 Capital Planning Funds - PTF 7,428 6,635 4,597 5,534 4,912 29,105 MAG ,500 RPTA ,500 Federal 5307 PM 2,147 1,143 1,143 1,142 1,142 6,718 FTA 5339 AA Total Sources 42,527 44,931 48,235 50,851 56, ,911 7 Five Year Capital Forecast $ in millions FY USES OF FUNDS Northwest Extension Phase 1 $75.5 $24.1 $ $101.7 Central Mesa $58.4 $ $64.7 Gilbert Rd $10.1 $49.6 $40.9 $ $139.9 Tempe Streetcar $5.3 $40.1 $63.5 $ $126.2 Phx West $0.4 $8.7 $34.0 $43.2 $84.3 $170.6 CNPA Projects $6.1 $ $8.8 Non-Prior Rights Utilities $13.8 $10.4 $2.6 $12.6 $17.3 $56.7 Systemwide Improvements $6.9 $5.5 $3.7 $4.1 $3.5 $23.7 Total Capital Costs $176.5 $147.3 $146.9 $116.5 $105.1 $692.2 SOURCES OF FUNDS Member Cities $6.3 $2.7 ($60.0) - - ($51.0) Public Transportation Funds $101.8 $52.0 $105.9 $22.2 $12.1 $294.0 TPAN $8.0 $54.9 $41.6 $ $143.7 FTA $28.5 $21.0 $27.6 $36.1 $76.2 $189.4 CMAQ $29.3 $16.7 $31.8 $19.0 $16.7 $113.5 Other Federal $ $2.6 Total Revenues $176.5 $147.3 $146.9 $116.5 $105.1 $

118 5/14/2014 Action It is recommended that the Board of Directors approv the Valley Metro Rail Proposed Fiscal Year 2015 Budget (July 1, 2014 thru June 30, 2015) and acceptance of the Five-Year Operating Forecast Capital Program (FY 2015 thru 2019). 9 5

119 DATE AGENDA ITEM 6 May 14, 2014 SUBJECT Amendment No. 2 to the Gilbert Road Light Rail Transit Extension Environmental Assessment Funding Agreement No PURPOSE To request Board approval of Amendment No. 2 to Funding Agreement No with the City of Mesa for the Gilbert Road Extension. This amendment is for the City of Mesa to provide up to $235,738 matching funds for a federal grant to continue the project s design and real estate acquisition activities and to extend the term of the agreement to December 31, BACKGROUND/DISCUSSION/CONSIDERATION In July 2012, Valley Metro Rail, Inc. and the City of Mesa entered into Funding Agreement No for an amount not to exceed $750,000 for the preparation of an Environmental Assessment (EA) for the Gilbert Road Extension. With approval from the Maricopa Association of Governments (MAG) to include the project in the Regional Transportation Plan (RTP), it was necessary to complete preliminary engineering work prior to contracting for final design and construction of the project. To complete the environmental and preliminary engineering work, the Funding Agreement was amended (Amendment No. 1) and approved by the Board in May 2013 to extend the agreement s duration to June 30, 2014 and to add an additional $943,000 of federal Congestion Mitigation and Air Quality Improvement Program (CMAQ) funds and $57,000 of City of Mesa matching funds. The total authorized funding to date is $1.75 million. With the recent issuance of a Finding of No Significance Impact from the Federal Transit Administration (FTA) and preliminary engineering work to be completed in spring 2014, staff proposes to expand the agreement to procure the services of a design consultant and Construction Manager At Risk contractor, commence final design and pre-construction services, prepare design for utility relocations, and initiate real estate acquisition. The expanded agreement also includes City of Mesa and Valley Metro staff efforts to support these activities. The agreement s term would be extended through December 31, 2015 to allow adequate time to complete the additional work. MAG has advanced $3.9 million in federal CMAQ funds within the region s Transportation Improvement Program for this purpose and this will require $235,738 of matching funds from the City of Mesa. COST AND BUDGET The total cost to complete this additional work is up to $4,135,738. This includes a contingency of $689,290 to cover unforeseen work and will only be utilized upon mutual agreement between the City of Mesa and Valley Metro staff. The source of funds includes $3,900,000 (94.3%) in federal CMAQ funds and $235,738 (5.7%) in matching VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

120 funds from the City of Mesa. Cost and funding are included in the adopted Fiscal Year 2014 Operating and Capital Budget and FY14-18 Five-Year Capital Program. COMMITTEE ACTION RTAG: March 18, 2014 for information RMC: April 2, 2014 approved Board of Directors: May 22, 2014 for action RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to execute Amendment No. 2 to the Gilbert Road Extension Agreement No for the City of Mesa to provide up to $235,738 in matching funds and to extend the term of the agreement through December 31, 2015, contingent upon funding approval by the Mesa City Council. CONTACT Wulf Grote, P.E. Director, Planning and Development wgrote@valleymetro.org ATTACHMENT None A copy of the agreement is available upon request. 2

121 DATE AGENDA ITEM 7 May 14, 2014 SUBJECT Transit Life Cycle Program (TLCP) Update PURPOSE To provide information to member cities concerning the draft 2014 TLCP Update. The item will cover both the bus and rail programs within the TLCP. BACKGROUND/DISCUSSION/CONSIDERATION The TLCP was developed in 2005 to provide guidance for the implementation of the transit component of the Regional Transportation Plan. The TLCP includes Guiding Principles, policies, procedures and financial forecasts to ensure that the program can be balanced. The most recent update to the TLCP was in June Since that time, the official forecast has projected a slight increase in revenues for the Transportation Excise Tax. MAP-21 continues to be implemented and MAG has recently approved a new Transportation Improvement Program (TIP) through FY2019 using MAP-21 programs and rules. Bus Program Capital Program The new TIP resulted in some changes to the bus capital program. The key change was a direct result of MAP-21 program changes, which now allows for all fleet vehicles to be purchased with 85 percent federal funds. The vehicles must meet low emission and/or ADA compliance requirements. Previously, alternatively fueled vehicles could be purchased with 83 percent federal participation and all other vehicles were purchased with 80 percent federal participation. The VM Fleet Management Plan specifies low emission vehicles in compliance with this requirement. This change has resulted in greater federal aid and less PTF being required for local match for fleet, which is a major segment of the bus capital program. Since the 2013 TLCP update, there have been only minor adjustments to the fleet and facilities programs, all related to timing. The transit center at Main Street and Mesa Drive in Mesa has been scaled back and the remaining funds shifted to a second site at Main Street and Gilbert Road. The transit center at Mesa Drive was originally larger in scope, as that was the end of line for the light rail. With the adoption of the Gilbert Road Extension into the RTP, Gilbert Road is the new end of line. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

122 Operating Program Since the 2013 TLCP update, costs for operations, including ADA reimbursements are up just over one percent and are offset by some increases in fare and preventive maintenance revenues. The fund balance at the end of the program is anticipated to be about $81 million, up from $49.1 million in the 2013 update. (Primarily the result of changes to the capital fleet plan and higher federal participation rate) The resulting increase in fund balance provides availability to increase service levels in future years. The TLCP Policies require that jurisdictional equity be maintained for the bus program. The policy allows that each sub-region can be within 2.5 percent above or below their policy allocation. In the current model, one of three sub-regions is outside this allowance. The East Valley is currently below its policy JE by 6.9 percent. Additionally, the policy allows that regardless of percentages, no jurisdiction can be under-allocated by $7.5 million or more. In the current model, four jurisdictions meet that condition. Jurisdiction Equity Summary Blended Rate beginning in 2017 (millions of dollars) April 23, 2014 Jurisdiction Total Calculated PTF Total Policy PTF Allocation JE Under (JE Over) Percent of JE Calculated Central $435.6 $446.6 $ % East $742.2 $797.2 $ % West $160.9 $162.9 $ % $1,338.8 $1,406.5 $ % 2

123 Jurisdiction Equity Summary Blended Rate beginning in 2017 (millions of dollars) April 23, 2014 Jurisdiction Total Calculated PTF Total Policy PTF Allocation JE Under (JE Over) JE Calculated Percent JE Policy Percent Avondale $20.7 $21.6 $ % 1.54% Buckeye $4.6 $1.0 ($3.6) 0.35% 0.07% Chandler $127.2 $133.1 $ % 9.46% County $16.4 $9.2 ($7.2) 1.22% 0.65% El Mirage $1.4 $3.2 $ % 0.23% Fountain $0.7 $1.2 $ % 0.09% Hills Gila Bend $0.0 $1.9 $ % 0.14% Gilbert $79.8 $86.0 $ % 6.12% Glendale $76.8 $79.9 $ % 5.68% Goodyear $3.6 $3.6 $ % 0.26% Guadalupe $3.7 $0.1 ($3.6) 0.28% 0.01% Litchfield $0.0 $3.2 $ % 0.23% Park Mesa $256.4 $273.4 $ % 19.44% Paradise $4.7 $7.5 $ % 0.54% Valley Peoria $26.2 $31.2 $ % 2.22% Phoenix $435.6 $446.4 $ % 31.74% Queen Creek $0.0 $0.9 $ % 0.06% Salt River $2.7 $0.0 ($2.7) 0.20% 0.00% Res. Scottsdale $131.2 $146.4 $ % 10.41% Surprise $5.1 $3.3 ($1.8) 0.38% 0.23% Tempe $135.9 $148.6 $ % 10.56% Tolleson $5.1 $4.3 ($1.2) 0.41% 0.31% Wickenburg $0.0 $0.3 $ % 0.02% Youngtown $0.6 $0.2 ($0.4) 0.05% 0.02% $1,341.9 $1,406.5 $ % % At this time, no immediate service changes to the bus program are programmed. One of the agency goals is to expand services through effective planning, design, and 3

124 construction of rail and bus projects through the Regional Transportation Plan. To that end, Valley Metro is working through Phase II of the Service Standards and Measures, which when adopted will allow for services to be added back into the TLCP in a manner that meets this goal while adhering to JE policies. Concurrent with Phase II of the Service Standards and Measures, Valley Metro staff have begun discussions with member cities about potential priorities for utilizing the funds to meet adopted service standards. That discussion will continue to take place through the Service Planning Working Group and final recommendations may be made in conjunction with the 2015 TLCP Update next spring. Rail/High Capacity Transit Program The baseline rail model has only minor changes from the adopted 2013 TLCP Update. Two changes to completion dates are included: Central Mesa Extension completion is advanced to 2015 from 2016; and Tempe Streetcar is delayed from 2017 to TLCP Open Year 2013 TLCP Open Year Northwest Phase I Central Mesa Tempe Streetcar Gilbert Road Capitol/I-10 West West Phoenix/Central Glendale Northwest Phase II Northeast Phoenix The base costs per mile for future extensions have been refined with little change to the overall cost per mile. The assumed costs for vehicles have been identified separately within each project to provide input to the rail fleet management plan under development. Alternatively, fleet costs could be removed from the extensions and included as a separate LRV Acquisition project if that were to be desired. Inflation rates assumed in the ADOT Forecast are in the range of 2.2% to 2.4% for the remainder of the program. Year of expenditure costs calculated in the rail model assume a slightly higher rate of 2.7% to 2.9% over the long term. 4

125 Currently, the rail program baseline financial model is balanced, with a small surplus of $31 million remaining. However, additional work needs to be completed which may impact that final surplus and cash flow needs during the program. Planning work on Tempe Streetcar reconfiguration continues on the project. Reconfiguration of the route could impact timing of expenses and the overall cost which could impact cash flow needs Planning work to develop a fleet acquisition plan to meet the expanded fleet needs for the future extensions could result in earlier cash needs, putting greater pressure on PTF and bond proceeds Planning work to redefine the expansion needs at the Operations and Maintenance Center to meet the requirements of the expanded fleet assumed in the current TLCP The rail program currently anticipates additional financings. In January 2014, taxexempt serial bonds were issued and generated approximately $135 million. An additional issue in late FY16 was anticipated and expected to generate up to $125 million. As a result of the successful 2014 issuance, the 2016 issue may be delayed until 2017 and likely will be smaller than anticipated; and in FY21 and FY23 short term financing is needed to cover cash flow. The final financing is driven by the construction of three projects simultaneously. Valley Metro will work cooperatively with the METRO member cities to finalize alternative scenarios and develop a new baseline scenario for adoption in the next fiscal year. COST AND BUDGET There is no impact to the budget. COMMITTEE PROCESS RTAG: April 22, 2014 for information TMC: May 7, 2014 for information and discussion Board of Directors: May 22, 2014 for information and discussion RECOMMENDATION This item is for information and discussion only. CONTACT Paul Hodgins Manager, Revenue Generation and Financial Planning phodgins@valleymetro.org ATTACHMENTS None 5

126 5/14/2014 Transit Life Cycle Program 2014 Model Update May 22, 2014 Overview Financial models are balanced Bus surplus $81.1 million Rail surplus $40.9 million No significant program changes 2 1

127 5/14/2014 Revenues PTF up $7.8 million (+0.3%) $4.4 million bus, $3.4 million rail Federal MAP-21 share of fleet increased to 85% All fleet that meets ADA and/or CAA Fare increase Assumed in FY2017 then every 3 years 3 Transportation Excise tax 4 2