Report by Finance and Administration Committee (A) Washington Metropolitan Area Transit Authority Board Action/Information Summary

Transcription

1 Report by Finance and Administration Committee (A) Washington Metropolitan Area Transit Authority Board Action/Information Summary Action Information MEAD Number: Resolution: Yes No TITLE: Amendment to FY2015 Capital Budget PRESENTATION SUMMARY: Following guidance provided by FTA regarding the eligibility of costs, staff is requesting approval of an FY2015 capital budget amendment to transfer existing capital budget authority to the Railcar Rehabilitation project(cip0063) in order to seek FTA reimbursement of additional eligible labor and parts costs for railcar component rehabilitation. PURPOSE: To request Board adoption of an FY2015 capital budget amendment to transfer existing capital budget authority to the Railcar Rehabilitation Program (CIP0063). DESCRIPTION: Key Highlights: Metro has received favorable guidance from FTA regarding eligibility of certain FY2015 railcar rehabilitation costs for capital grant reimbursement. An FY2015 Capital Budget amendment to transfer budget authority to the Railcar Rehabilitation project is required to maximize FTA reimbursements. No additional jurisdictional capital funding is required to accommodate this budget change and the transfer of these eligible costs to the capital program will provide relief to the FY2015 operating budget and year-end net subsidy position. Background and History: Metro s Railcar Rehabilitation Program provides the labor and parts necessary to rebuild and replace railcar components that are utilized in heavy overhauls of Metro s railcar fleet. These overhauls are necessary to maintain the vehicles in a state of good repair, improve reliability, ensure safe operations, and maximize the useful life of the asset. Approximately one-fifth of the fleet, or about 225 cars, are subject to heavy overhaul annually. Components replaced during a major heavy overhaul include, but are not limited to, wheels, brake systems, traction motors, and truck overhauls. Discussion: Metro is working closely with the Federal Transit Administration (FTA) to confirm the eligibility of costs for FTA grant reimbursement, and substantial progress has been

2 made in recent months. During the fourth quarter of FY2015, FTA approved $224 million in reimbursements, including several reimbursements for force account labor costs totaling $130 million. FTA has also reviewed parts that are used for the repair and rehabilitation of vehicles and equipment and has determined that certain parts are eligible for grant reimbursement. FTA s Financial Management Oversight (FMO) review and subsequent internal reviews performed by Metro had identified potential concerns regarding the eligibility of certain Metro costs for FTA grant reimbursement. The principal areas of concern included 1) force account labor costs, due to timekeeping methodology and record keeping weaknesses, and 2) parts acquired for use in the repair and rehabilitation of vehicles and equipment, due to the methodologies used to procure the parts. In light of the concerns and to avoid putting grant funds at risk, most of Metro s FY2015 railcar rehabilitation labor and parts costs were initially charged to the FY2015 operating budget rather than the FTA program, until such time as FTA eligibility could be established. Based on guidance from FTA, Metro has identified approximately $45.7 million of FY2015 railcar rehabilitation costs that are expected to be eligible for FTA capital grant funding, which is $14.0 million more than previous estimates. To accommodate the additional eligible costs in the Railcar Rehabilitation capital project (CIP0063), staff recommends Board adoption of an amendment to the FY2015 capital budget to transfer budget authority to this project from existing projects with reduced costs and/or projects that are behind schedule. The FY2015 budget for the Railcar Rehabilitation project budget would increase from $31.7 million to $45.7 million. While there will be no change to the amount of railcar rehabilitation work performed, this action is necessary in order to maximize federal reimbursements for eligible railcar rehabilitation costs. To accommodate the budget increase for CIP0063, the FY2015 budgets for Bus Rehabilitation (CIP0005) and Bus Repairables (CIP0008) would be reduced by $8.0 and $6.0 million, respectively. These projects underspent in FY2015. Following Board adoption of the amendment, staff will work with FTA to revise grant agreements as needed, transfer the eligible capital costs to the Railcar Rehabilitation project, and submit the required supporting documentation to FTA for reimbursement. No additional jurisdictional capital funding is required to accommodate this budget change; existing capital funding sources will be reallocated among projects to support the amendment. The transfer of these eligible capital costs to the capital program will provide relief to the FY2015 operating budget and will improve the year-end net subsidy position. FUNDING IMPACT: No additional jurisdictional capital funding is required to accommodate this change as existing capital funding sources will be reallocated among projects to support this amendment. Project Manager: Thomas Webster Project

3 Department/Office: OMBS TIMELINE: Previous Actions Anticipated actions after presentation May Board adoption of FY2015 Capital Budget. July/August Revision of FTA grants, transfer of eligible expenses, and request for FTA reimbursement. RECOMMENDATION: Recommend Board adoption of an FY2015 capital budget amendment to transfer existing capital budget authority to the Railcar Rehabilitation Program (CIP0063) to accommodate FTA grant eligible railcar rehabilitation costs.

4 PRESENTED AND ADOPTED: July 23, 2015 SUBJECT: AMENDMENT TO FISCAL YEAR (FY) 2015 CAPITAL BUDGET RESOLUTION OF THE BOARD OF DIRECTORS OF THE WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY WHEREAS, As a result of the findings in the Federal Transit Administration's (FTA) 2014 Financial Management Oversight (FMO) report, as well as internal compliance reviews and feedback received during the manual grant reimbursement process, the Washington Metropolitan Area Transit Authority (WMATA) has been working closely with FTA over the past year to ensure that only grant-eligible costs are charged to FTA grants; and WHEREAS, Following FTA guidance, WMATA has identified grant-eligible FY2015 costs for railcar component rehabilitation totaling $14.0 million that were charged to the FY2015 operating budget to ensure that they would not be inappropriately charged to an FTA grant; and WHEREAS, An amendment to increase the FY2015 project budget for the Railcar Rehabilitation project (CIP0063) is required in order for WMATA to seek FTA reimbursement of these additional grant-eligible costs; and WHEREAS, To accommodate the budget increase to CIP0063 while keeping the total FY2015 capital budget unchanged, budget reductions must be made to other projects that have available FY2015 budget authority; and WHEREAS, The FY2015 budget for CIPOOOS (Bus Rehabilitation) can be reduced by $8.0 million and the FY2015 budget for CIP0008 (Bus Repairables) can be reduced by $6.0 million to offset the additional grant-eligible costs in CIP0063; and WHEREAS, The transfer of these grant-eligible costs from the operating budget to the capital budget is made in order to advance the reimbursement of costs identified by WMATA as grant-eligible costs in accordance with guidance received from FTA; now, therefore be it RESOLVED, That the FY2015 capital budget is amended and revised to increase the budgeted expenditures in CIP0063 by $14.0 million and to decrease the budgeted expenditures for CIPOOOS by $8.0 million and for CIP0008 by $6.0 million, such that the total capital budget for FY2015 is unchanged; and be it finally Motioned by Mr. Euille, seconded by Ms. Tregoning Ayes: 8 - Mr. Downey, Mr. Goldman, Mr. Euille, Mr. Bulger, Ms. Tregoning, Ms. Harley, Mr. Corcoran and Mr. Dormsjo

5 RESOLVED, That this Resolution shall be effective immediately in order for staff to timely prepare FY2015 year-end close out actions. Reviewed as to form and legal sufficiency, ~ Mark R. Pohl Acting General Counsel r WMATA File Structure No Fiscal Year Budgets 2