PLANNING AND FINANCE COMMITTEE MEETING

Transcription

1 PLANNING AND FINANCE COMMITTEE MEETING M A R C H 2 3,

2 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY ROSTER PLANNING & FINANCE COMMITTEE COUNTY MEMBER Riverside: Daryl Busch (Chair) 1 Vote Mayor City of Perris Karen Spiegel Council Member City of Corona Ventura: Keith Millhouse (Vice-Chair) 1 Vote Mayor Pro Tem City of Moorpark Los Angeles: Michael Antonovich 1 Vote Supervisor, 5 th District County of Los Angeles Richard Katz City of Los Angeles Mayor Appointee Beatrice Proo Appointed by Metro Maureen Micheline Appointed by Metro San Bernardino: Patrick Morris 1 Vote Mayor City of San Bernardino Alan D. Wapner Council Member City of Ontario Orange: Carolyn Cavecche 1 Vote Mayor City of Orange One Gateway Plaza, 12 th Floor Los Angeles, CA 90012

3 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY PLANNING AND FINANCE COMMITTEE FRIDAY, MARCH 23, 2012, 10:00 A.M. LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY BOARD ROOM ONE GATEWAY PLAZA, 3 rd FLOOR LOS ANGELES, CALIFORNIA AGENDA DESCRIPTIONS The agenda descriptions are intended to give notice to members of the public of a brief general description of items of business to be transacted or discussed. The posting of the recommended actions does not indicate what action will be taken. The Committee may take any action that it deems to be appropriate on the agenda item and is not limited in any way by the notice of the recommended action. The Chair reserves the right to discuss the items listed on the agenda in any order. A person with a disability may contact the Committee Secretary's office at (213) or via batesc@scrra.net at least 72-hours before the scheduled meeting to request receipt of an agenda in an alternative format or to request disability-related accommodations, including auxiliary aids or services, in order to participate in the public meeting. Later requests will be accommodated to the extent feasible. SUPPORTING DOCUMENTATION The agenda, staff reports and supporting documentation are available from the Committee Secretary, located at One Gateway Plaza, 12 th Floor, Los Angeles, CA 90013, and on the Metrolink website at under the Committee Agenda link. PUBLIC COMMENTS ON AGENDA ITEMS Members of the public wishing to address the Committee members regarding any item appearing on the agenda, may do so by completing a Speaker s Form and submitting it to the Committee Secretary. Speakers will be recognized by the Chair at the time the agenda item is to be considered. When addressing the Committee, please state your name for the record. Please address the Committee as a whole through the Chair. Please note comments to individual Committee members or staff are not permitted when addressing the Committee. A speaker s comments shall be limited to three (3) minutes. PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA Members of the public wishing to address the Committee members regarding any item not on the agenda, but within the subject matter jurisdiction of the Committee, will be taken under Item 8 (Public Comment), and will be subject to the same guidelines as noted above. One Gateway Plaza, 12 Floor, Los Angeles, CA 90012

4 Planning and Finance Committee Agenda Transmittal Date: March 19, 2012 Meeting Date: March 23, 2012 Page 2 1. Call to Order 2. Pledge of Allegiance REGULAR CALENDAR 3. Approval of Minutes January 27, 2012 Staff recommends the Planning and Finance Committee approve the minutes of the January 27, 2012 Committee meeting. Page 1 4. Preliminary Fiscal Year (FY13) SCRRA Budget The Chief Financial Officer will report on the Preliminary Fiscal Year (FY13) SCRRA Budget. The Southern California Regional Rail Authority (SCRRA) is required, as directed under the terms of the Joint Exercise of Powers Agreement (JPA), to provide to its Member Agencies, on or before May 1 of each year, a Preliminary Budget, effective July 1 of the succeeding fiscal year, for individual agency consideration and approval. This report represents a summary of the Preliminary FY Budget. As such there is no current budget impact. Staff recommends the Planning and Finance Committee approve and recommend the Board of Directors to authorize the transmittal of the Preliminary Fiscal Year (FY13) Budget of the SCRRA to its Member Agencies for their consideration and adoption. Page 8 5. Federal Transit Administration (FTA) Financial Management Oversight Review In March 2011, the Federal Transit Administration (FTA) retained contractors, Brooks & Associates, LLC and their subcontractor Deva & Associates, PC to perform a Fiscal Year 2011 Financial Management Oversight (FMO) Review of the Southern California Regional Rail Authority (SCRRA). Although not an audit, the purpose of this review was to assess the adequacy of SCRRA s financial management system used to process federal funds and activities. The subcontractors evaluated SCRRA s financial management system and internal controls. The Chief Financial Officer will update the Committee on the findings of the final report, dated February 8, 2012 and issued to SCRRA on February 28, 2012, in addition to SCRRA s responses in the final report and status on corrective action plans. There is no financial impact as a result of the FTA Management Oversight Review. The Planning and Finance Committee may receive and file this report. Page 26

5 Planning and Finance Committee Agenda Transmittal Date: March 19, 2012 Meeting Date: March 23, 2012 Page 3 6. Chief Executive Officer s Report Agency Update Fuel Price Update 7. Chief Financial Officer s Report Audits Overview Cash Flow Aging Report 8. Public Comment 9. Chair s Comments 10. Committee Member Comments (i.e., Announcements, Requests to Staff, Direction for Future Agenda Items) 11. Adjournment

6 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY MINUTES OF THE SCRRA PLANNING AND FINANCE COMMITTEE JANUARY 27, 2012 COMMITTEE MEMBERS IN ATTENDANCE: ITEM 3 RCTC: (1 Vote) DARYL BUSCH (Chair) VENTURA: KEITH MILLHOUSE (Vice-Chair) (1 Vote) METRO: MICHAEL ANTONOVICH 1 (1 Vote) RICHARD KATZ 2 BEATRICE PROO SANBAG: PATRICK MORRIS (1 Vote) ALAN WAPNER ORANGE: CAROLYN CAVECCHE COMMITTEE MEMBERS ABSENT: METRO: OCTA: RCTC: MAUREEN MICHELINE DON BANKHEAD KAREN SPIEGEL STAFF: JOHN FENTON, Chief Executive Officer GRAY CRARY, Chief Strategic Officer BRUCE HARTWELL, Chief Information Officer BRYAN PAYNE, Assistant Director, Contracts ANNE LOUISE RICE, Strategic Programming and Development Manager CHERYL TAYLOR, Chief Financial Officer BOB TURNAUCKAS, Chief Administrative Officer HELEN PARKER, SCRRA Legal Counsel Meeting minutes are presented in a format that corresponds with the Planning and Finance Committee Agenda, which is incorporated by reference with these minutes. SCRRA Planning and Finance Committee Agendas are available from the Metrolink website ( or by calling the Committee Secretary at Director Antonovich joined the meeting at 10:36 a.m. during Item #7 2 Director Katz left the meeting at 10:20 a.m. during Item #6 and rejoined at 10:30 a.m. during Item #7 1

7 Planning and Finance Committee Agenda Transmittal Date: March 19, 2012 Meeting Date: January 27, 2012 Page 2 1. Call to Order The January 27, 2012, Planning and Finance Committee Meeting was called to order by Chair Busch at 10:04 a.m. at the Los Angeles County Metropolitan Transportation Authority Board Room, One Gateway Plaza, 3 rd Floor, Los Angeles, California, Pledge of Allegiance Director Wapner led the group in the Pledge of Allegiance. REGULAR CALENDAR 3. Approval of Minutes October 28, 2011 Upon a motion by Director Morris, seconded by Director Millhouse, the Planning and Finance Committee approved the minutes of the October 28, 2011, Committee meeting. There was no opposition to the motion and the motion passed unanimously. ACTION: The Planning and Finance Committee approved the minutes of the October 28, 2011 Committee meeting. 4. Quarterly Investment Report Second Quarter Ended December 31, 2011 Ms. Cheryl Taylor, Chief Financial Officer, provided a background on the Quarterly Investment Report ended December 31, 2011, as detailed in the staff report. Ms. Taylor noted the portfolio continued to be out of Investment Policy compliance during the second quarter for Medium-Term Corporate Securities and that $1.6M was needed to transfer from Money Market Funds to manage cash flow; this would further increase the Investment Policy limit of 30% to approximately 75%. Ms. Taylor noted the situation with SCRRA s investment fund and current cash position are two components of a larger fiscal management strategy that must be addressed by SCRRA and member agencies. John Fenton noted we could have a liquidity crisis facing Metrolink. Two years ago Metrolink had cash reserves and as of December 31, 2011 Metrolink was down to $16M. Large capital investments for PTC and Rotem have put Metrolink in an unprecedented situation. The way Metrolink structures payments into the organization from member agencies is one example of serious challenges that we face. Director Katz requested an AdHoc Committee consisting of Carolyn Cavecche, Jaime de la Vega, John Fenton and himself to make recommendations and report back to the Committee and the Board. Director Morris concurred as a solution for timely payments to Metrolink within member agencies need to be addressed to assist Metrolink. Director Proo inquired about the status of the questioned Amtrak trackage fee of $500,000 that was addressed at the last committee meeting. John Fenton noted Amtrak has not responded to date as Amtrak has gone through a resent restructuring. Based on available information, staff is reviewing legal options. 2

8 Planning and Finance Committee Agenda Transmittal Date: March 19, 2012 Meeting Date: January 27, 2012 Page 3 Chair Busch inquired if cash flow issues within member agencies are resolved, would it solve the cash flow and billing problems. Ms. Taylor stated it would help but would not solve the issues. Metrolink is looking at $35M in payments over-due by over 90 days from member agencies. Director Cavecche inquired if Metrolink and staff have a Compliance Policy and procedures in place if investments are out of compliance? Ms. Taylor replied yes, there is an Investment Compliance Policy in place that SCRRA adheres to. ACTION: The Planning and Finance Committee received and filed this report.. 5. FY 2013 Budget Development Process and Calendar Cheryl Taylor, Chief Financial Officer, reported on the FY 2013 Budget Development Process and Calendar as outlined in her report and presentation. Ms. Taylor noted that staff is working with member agencies and requesting their budget requirements. Staff is using a robust cash flow process going forward. Director Katz noted staff is working with member agency CEOs and CFOs for their input in the budget. Mr. Fenton stated staff has reached out to member agency CFOs on the fuel and budget status, operating expenses and potential growth. Chair Bush suggested Metrolink staff should review the member agencies budgets through their CEOs. Ms. Taylor noted staff has had budget dialogue with member agencies staff. A copy of the PowerPoint is available from the Committee Secretary upon request. ACTION: The Planning and Finance Committee received and filed this report. 6. Contract No. QM External Audit Services Increase in Contract Authorization McGladrey & Pullen, LLC Bryan Payne, Assistant Director, Contracts, provided a brief background on SCRRA s requirements for external audit services as detailed in the staff report and requested approval of staff s recommendation. Upon a motion by Director Morris, seconded by Vice Chair Millhouse, the Planning and Finance Committee approved the recommendation. There being no opposition the motion passed unanimously. ACTION: The Planning and Finance Committee approved and recommends the Board of Directors approve and authorize the Chief Executive Officer (CEO) to amend Contract QM with McGladrey & Pullen, LLC to increase the contract funding authorization by $10,000 for a new total contract authorization not-to-exceed amount of $109, Approval of Evaluation Criteria Request for Proposal No. SP Data Warehousing and KPI Reporting Implementation Services 3

9 Planning and Finance Committee Agenda Transmittal Date: March 19, 2012 Meeting Date: January 27, 2012 Page 4 Mr. Bruce Hartwell, Chief Information Officer, provided a brief background on this item as detailed in the staff report and presentation and requested approval of staff s recommendation. Director Cavecche noted Mr. Hartwell s estimate seems high. Mr. Hartwell noted the committee is being asked to approve the evaluation criteria only as the first step; the next step is to do a Request for Proposal (RFP) which will include a Scope of Work. Director Cavecche requested the Board of Directors receive the RFP with the scope of work when it goes out to potential vendors for the Data Warehouse / KPI contract. Mr. Hartwell noted the Scope of Work is available now and will forward it to the full Board of Directors. He noted the RFP is not available at this time, but will include the Board in the distribution list. Director Proo noted her concerns regarding hands-on access and security while dealing with evaluation criteria and other stages of the bid process. How is the security handled by staff? Mr. Hartwell stated he will do a progress report as to where in the process it is and who has access to the information. Director Morris suggested to use this as an opportunity to update the Board on this new technology; i.e., a Data Warehouse examples and benefits overview. Chair Busch inquired if the data warehouse will be intergraded with the accounting program. Mr. Hartwell answered no, as one precludes the other. The accounting system will provide an operational report for a certain date range. The Data Warehouse would be used to make a projection over a period of time by pulling information together from multiple angles and prospective. Mr. Fenton noted we will be able to eliminate 30-40% of manual labor tasks with the Data Warehouse. Upon a motion by Vice Chair Millhouse, seconded by Director Morris, the Planning and Finance Committee approved the recommendation. There being no opposition the motion passed unanimously. A copy of the PowerPoint is available from the Committee Secretary upon request. ACTION: The Planning and Finance Committee approved and recommends the Board of Directors approve the proposed evaluation criteria, detailed in Attachment 1, for Request for Proposal No. SP394-12, Data Warehousing & KPI Reporting Implementation Services. 8. Delegate Authority to the Chief Executive Officer for the Purpose of Obtaining Financial Assistance Provided by the California Emergency Management Agency Anne Louise Rice, Strategic Programming and Development Manager, provided a brief report on this item as detailed in the staff report and requested approval of staff s recommendation. Upon a motion by Director Cavecche, seconded by Vice Chair Millhouse, the Planning and Finance Committee approved the recommendation. There being no opposition the motion passed unanimously. 4

10 Planning and Finance Committee Agenda Transmittal Date: March 19, 2012 Meeting Date: January 27, 2012 Page 5 ACTION: The Planning and Finance Committee approved and recommends the Board of Directors approve Resolution of the SCRRA, Appendix D, Governing Body Resolution, FY Transit System Safety, Security and Disaster Response Account Program. 9. Chief Executive Officer s Report John Fenton, Chief Executive Officer: Reported on the Wednesday, January 25 th CMF Community Meeting with almost 150 residents in attendance, including representatives of Supervisor Molina, Congressman Becerra, Councilman Reyes and Councilman Eric Garcetti, neighborhood council members and representatives from the Friends of the LA River and the AQMD. Mr. Fenton discussed measures Metrolink has taken to cut emissions and noise (saving 860,000 gallons of fuel annually), the adoption of the fleet plan which commits to Tier 4 locomotives and usage of the reduction of bell usage by 85%. Another Community Meeting is set for the summer of 2012, which staff will continue to look at operations, policies and fuel consumption for cost savings. Director Morris inquired if the proposed Data Warehouse will have the ability to pull up data on an individual locomotive; as opposed to other locomotives in the fleet and compare the data to locomotives of other commuter rail systems to view how we are doing as to burn rates of our diesel fuel and potential rehab needs. Mr. Fenton noted that is part of the plan to be able to measure an individual run and multi-car consist for fuel consumption. We are doing studies line-by-line and various sizes consists sets. As we understand our fuel consumption, staff will continue to improve projections. Director Katz recommended that the Community Meeting presentation be sent to the full Board. 10. Chief Financial Officer s Report, Cheryl Taylor, CFO reviewed: Audits Overview Ms. Taylor reported on various audits and their status noting the auditors completed the Single Audit, as required, for recipients of Federal Grant Funds. They also audited the basic financial statements, the management discussion and analysis, and the supporting footnotes to the financial statements, all part of the Comprehensive Annual Financial Report (CAFR). Jeff Altshuler, from McGladrey and Pullen, LLP, presented his draft report on the Single Audit results at the Executive Management and Audit Committee meeting. The Final CAFR and Single Audit results will be presented at the March 9, 2012 Board meeting. Mr. Fenton noted staff is working on nine active audits. Director Katz reviewed the idea of a master audit for the member agencies as a basic platform. Cash Flow Ms. Taylor noted managing our cash flow has been a challenge in recent months. Metrolink does not have a working cash fund, and is reliant upon our member agencies to provide the funding for projects such as PTC and the purchase of the Rotem cars. Consequently, making payments is difficult if 5

11 Planning and Finance Committee Agenda Transmittal Date: March 19, 2012 Meeting Date: January 27, 2012 Page 6 we do not receive member contributions for these projects until after payments to the vendors/contractors are made. Between now and the end of the fiscal year, we estimate requiring almost $150 million in reimbursements to cover all payments capital, recollectables and operating expenses. Aging Report Accounts Receivable Status - As of January 10, 2012, outstanding Accounts Receivables totaled $112M, with over 65% due within 60 days ($75.5M). Over $35M is between 90 and 360 days outstanding. Staff will work with member agencies to ensure they have necessary information required to make prompt payments. 11. Public Comment Chair Busch inquired if any members of the public wished to address the Committee. With there being no requests to speak, the Public Comment period was formally closed. 12. Chair s Comments None. 13. Committee Member Comments Director Wapner commented on the lack of quiet in the quiet car; conductors do not want to enforce compliance. Director Wapner inquired as to any special signage such as a magnetic sign that would assist compliance. Mr. Fenton noted there are electronic display signs on the cars announcing the quiet car; stating Metrolink is limited on the amount of enforcement. The quiet car is a popular car, though it has been a challenge to enforce. Bob Turnauckas, Chief Administrative Officer noted we are in the process of adding additional signs that will be throughout Metrolink trains in the next 60 days. Director Wapner noted the Southern California Association of Governments (SCAG) subcommittee on the RTP will be meeting to discuss the High Speed Rail (HSR) proposal later today. SCAG approved the HSR subject on the condition that a Memorandum of Understanding (MOU) is approved between the Boards of HSR, Metrolink and LOSSAN offering to contribute $1B. Director Katz replied that the Metropolitan Transit Authority (MTA) approved the MOU. Director Katz noted the member agencies first priority (as to fixing a rail line) is the Antelope Valley line and grade separation and improvements as they are needed for HSR. Gray Crary stated SCRRA s Board reviewed the Guiding Principles of HSR recently. The Executive Management and Audit Committee (EMAC) will review the SCAG MOU concept today, which is not a referendum to support or not support the HSR Program but to be in line for any potential funding to come. Depending upon what EMAC decides today, staff would be in the position for the SCAG MOU to be taken to the full SCRRA Board in February. SCAG has asked Metrolink to show our support by March 1 st. 6

12 Planning and Finance Committee Agenda Transmittal Date: March 19, 2012 Meeting Date: January 27, 2012 Page 7 Director Wapner noted it presents a logistical problem as the RTP specifically states the MOU needs to be in place by February 1 st. Vice Chair Millhouse stated the shrink wraps look great for the bike cars. He also noted he had problems navigating the new website and will talk to Bob Turnauckas for assistance. 14. Adjournment There being no further business for consideration, the meeting was adjourned at 11:25 a.m. Respectfully submitted, Carrie M. Bates Planning and Finance Committee Secretary 7

13 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY TRANSMITTAL DATE: March 1623, 2012 MEETING DATE: March 23, 2012 ITEM 4 TO: FROM: SUBJECT: Planning and Finance Committee Chief Financial Officer Preliminary Fiscal Year (FY13) SCRRA Budget Issue The Southern California Regional Rail Authority (SCRRA) is required, as directed under the terms of the Joint Exercise of Powers Agreement (JPA), to provide to its Member Agencies, on or before May 1 of each year, a Preliminary Budget, effective July 1 of the succeeding fiscal year, for individual agency consideration and approval. Recommendation Staff recommends the Planning and Finance Committee approve and recommend the Board of Directors to authorize the transmittal of the Preliminary Fiscal Year (FY13) Budget of the SCRRA to its Member Agencies for their consideration and adoption. Alternatives The Planning and Finance Committee may choose to: 1. Take no action on any recommendation listed above; or 2. Recommend that changes be made to the Preliminary FY13 Budget prior to its transmittal to the Member Agencies. Background Attachment A is a tabular file that provides a summary of the proposed Preliminary FY13 Budget. Subsequent to the review and adoption by the Member Agencies, the Proposed FY13 Budget will be presented to, reviewed by, and considered for adoption by the SCRRA Board of Directors at its June 2012 meeting. The Preliminary FY13 Budget has been presented to and discussed with members of the SCRRA Technical Advisory Committee (TAC) at a special meeting on March 13, Further, staff expects to continue this Member Agency engagement through submittal to the Board in June 2012 to ensure all issues have been addressed and any required revisions are incorporated. One Gateway Plaza, Floor 12, Los Angeles, CA

14 Transmittal of the Preliminary Fiscal Year (FY13) SCRRA Budget Transmittal Date: March 1623, 2012 Meeting Date: March 23, 2012 Page 2 As a guide to its development, the following priorities were established for the upcoming fiscal year: SCRRA Budget Priorities for FY Continue the implementation of ongoing safety improvements and other organizational improvements; 2. Continue the agency s pursuit as a world class service provider; 3. Strive for cost reductions and efficiencies to offset portions of major outsourced contractual increases; 4. Include non-operational liabilities, such as Other Post Employee Benefit funding, in the current year budget; and 5. Seek out and offer service expansion alternatives from Member Agencies as opportunities to increase ridership and drive revenue. Overall Summary The Preliminary FY13 Budget represents the continuation of the transformation of the SCRRA into the provider of Southern California s commute of choice. The Preliminary FY13 is Budget is currently estimating a request of new budgetary authority of $226.2 million. This Budget consists of Operating Budget authority of $195.4 million, an increase of 8.8% over the FY12 Budget, and new Capital Program authority of $30.8 million in rehabilitation projects. For those projects authorized during FY12 or earlier, staff continues to estimate the outstanding project balances and will include these figures in the final presentation to the Board in June. Operating Budget Train Operations and Maintenance of Way The Train Operations component of the budget consists of those costs necessary to provide Metrolink commuter rail services across the six-county service area, including the direct costs of railroad operations, equipment maintenance, required support costs, and other administrative and operating costs. Ordinary MOW expenditures are those costs necessary to perform the inspections and repairs needed to assure the reliable, safe operation of trains and safety of the public. The currently estimated value of Train Operations is $167.5 million and MOW is $27.9 million, as referenced above, an increase of $15.8 million, or 8.8% from the approved FY12 Budget. The Preliminary FY13 Budget assumes the operation of a total of 2.6 million revenue service miles through the operation of 163 weekday trains. Weekend services will consist 9

15 Transmittal of the Preliminary Fiscal Year (FY13) SCRRA Budget Transmittal Date: March 1623, 2012 Meeting Date: March 23, 2012 Page 3 of 76 trains operating on the Antelope Valley, San Bernardino, Orange County and Inland Empire/Orange County (IEOC) lines. The proposed budget does not include any incremental services pending review of several alternative services by the Member Agencies. These potential services include expansion on the Inland Empire/Orange County (IEOC) line, a Newhall bypass, 91 Line/Orange County and trains #681/682 reconfiguration, and expanded weekend service on the IEOC and OC lines. The Preliminary FY13 Budget was developed on a zero-based methodology that attempted to examine each expenditure request in the context of safety, efficiency, and its relationship to the core values of the organization. The single largest dollar increase within the operating budget is the increased cost of fuel, $4.7 million, or % over the FY12 Budget. This assumes a price per gallon for diesel fuel of $3.75, up from $3.40 in FY12, and $2.40 in FY 11. The price per gallon increase represents $2.6 million, while the balance, $2.1 million, results from the transition to a greater number of six car consists and the continued introduction of heavier Rotem cars to the daily fleet. Amtrak contracted labor settlements added 8.5%, along with associated overhead costs of 13%, and general and administrative costs of 1.6% over FY 12, resulting in the addition of $3.2 million to the operating budget. An additional increase within the Train Operations portion of the budget, $1.8 $1.3 million, is primarily the incremental cost of Metrolink riders transitioning to and from the Los Angeles County Metropolitan Authority transit operations for a rate increase of $.21 per rider, or a 23.6% increase over FY 12. Equipment maintenance contracted with Bombardier includes the addition of three positions to support quality and supervision, as well as increased car cleaning costs to support additional cars in service, adding $1.0 million over FY 12. Estimated insurance premiums rose $1.0 million due to a restructuring of the participant pricing pool as key members have exited. The cost increases in these primary cost components represent % of the $15.8 million increase over the FY 12 operating budget. The remaining increase of $4.1 $4.6 million, or % increase over FY 12, is associated with additional parts and equipment required for MP 36 and Rotem maintenance; a CPI of 3% on inventory parts usage in repair and maintenance, start up of Positive Train Control (PTC) preparations for go-live in FY 14; and, to a lesser extent, increases in agency fringe benefits and training. Total Operating Revenues and Member Agency Contributions Operating revenues include farebox, dispatching, maintenance-of-way revenues, interest, other minor miscellaneous revenues, and are currently estimated to equal $99.8 million, an increase of $1.3 million, or % over the FY12 budget. Fare Revenues, the largest operating revenue of the budget, are estimated to increase $1.0 million, or 1.2%, over the FY12 budget to a total of $82.7 million. The budgeted 10

16 Transmittal of the Preliminary Fiscal Year (FY13) SCRRA Budget Transmittal Date: March 1623, 2012 Meeting Date: March 23, 2012 Page 4 increase in revenues is expected to be generated from the agency s focus on the Corporate Pass Program and increased targeted marketing efforts. Maintenance-of-way revenues from the freight railroads and Amtrak are estimated from prior agreements based on estimates of current usage. The Preliminary FY13 Budget estimates an increase of 1.8% over the FY12 budget to a total of $17.1 million. FY12 is currently experiencing revenue slightly above budget and FY13 assumes a continuation of this trend to offset loss of dispatching revenue from North County Transit District. Member Agency contributions represent the difference between the total costs of operations and all available revenues. The Preliminary FY13 Budget estimates total Member Agency contributions to equal $95.6 million, an increase of $14.4 million or % from the current budget. These subsidies are expected to equal 48.5% of the total costs of the SCRRA operating budget. Capital Budget Capital Rehabilitation projects replace worn out assets with like or improved assets and thus preserve and extend the useful life of these capital assets. New funding Capital Rehabilitation authorization requests, as part of a comprehensive five year capital rehab plan, represent a capital program total of $79.3 million for year one. The projects designated for FY 13 were identified as necessary for the efficient and safe operation of the railroad. These projects are represented on Attachment C, and include $39.7 million in rolling stock and $17.8 million in system wide mechanical rehabilitation. Member agencies requested a revised list of projects to reflect a $30.8 million capital rehabilitation budget. These projects are represented on Attachment B. The total rehabilitation program includes Track and Structures upgrades totaling $11.7 million; Locomotive and Rolling Stock upgrades of $5.6 million; Signal system improvements of $3.2 million; Information Technology solutions to improve data management and integrity for $2.9 million; Communications upgrades of $2.8 million; facilities improvements at the Central Maintenance Facility (CMF), including fuel management of $1.6 million; and other system-wide asset investments of $3.0 million. There are no new capital requests for FY13. Other Considerations There are no incremental positions in the Preliminary FY13 Budget. All increases in new departments, such as legal and audit, have been derived from reductions in other departments across the agency. The total number of positions in the agency remains 246. Budget Impact 11

17 Transmittal of the Preliminary Fiscal Year (FY13) SCRRA Budget Transmittal Date: March 1623, 2012 Meeting Date: March 23, 2012 Page 5 This report represents a summary of the Preliminary FY Budget. As such there is no current budget impact. Prepared by: Cheryl Taylor, Chief Financial Officer John E. Fenton Chief Executive Officer 12

18 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY FISCAL YEAR BUDGET OPERATING SUBSIDY ALLOCATION BY COUNTY ($000s) ATTACHMENT A Total LACMTA OCTA RCTC SANBAG VCTC FY Share Share Share Share Share Expenses Train Operations & Services $121,635.4 $63,138.6 $28,092.7 $9,103.8 $15,906.6 $5,393.7 Maintenance-of-Way 27, , , , ,708.0 Administration & Services 27, , , , , ,872.3 Insurance 18, , , , , Total Expenses Incl. MOW $195,400.2 $102,966.7 $42,781.6 $13,997.5 $24,978.0 $10,676.4 Revenues Gross Farebox 82, , , , , ,539.4 Dispatching 2, , Other Operating Maintenance-of-Way 13, , , , Total Revenues $99,874.2 $54,435.2 $22,423.8 $5,996.4 $13,467.5 $3,551.3 Total County Allocation $95,526.0 $48,531.5 $20,357.8 $8,001.2 $11,510.5 $7,125.1 FY Budget 81, , , , , ,160.7 Increase/(Decrease) 14, , , , Percentage Change 17.71% 21.14% 11.67% 11.99% 20.50% 15.65% INCREASE/(DECREASE) FROM FY11-12 BUDGET Total LACMTA OCTA RCTC SANBAG VCTC Variance Share Share Share Share Share Expenses Train Operations & Services $9,446.8 $4,375.3 $2,971.4 $558.2 $1,301.0 $240.8 Maintenance-of-Way 1, ,335.1 (64.6) (70.8) Administration & Services 4, , Insurance (33.5) Total Expenses Incl. MOW $15,724.5 $8,339.6 $3,626.5 $1,013.1 $1,983.8 $761.5 Revenues Gross Farebox 1,009.6 (370.2) 1, (141.6) Dispatching (172.5) (41.8) (30.7) (15.8) (26.5) (57.7) Other Operating (202.0) (158.0) (22.4) (6.1) (10.1) (5.3) Maintenance-of-Way Total Revenues $1,349.8 ($128.1) $1,498.7 $156.6 $25.5 ($202.9) Total County Allocation $14,374.7 $8,467.7 $2,127.7 $856.5 $1,958.3 $ /16/2012 3:02 PM

19 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY FISCAL YEAR BUDGET ANNUAL DISTRIBUTION BY COST COMPONENTS ($000s) ATTACHMENT A Proposed FY12-13 Budget vs. FY FY FY FY11-12 Budget Actual Budget Budget Increase % EXPENSES 168, , , , % REVENUES 91, , , , % NET LOCAL SUBSIDY 76, , , , % OPERATIONS Revenues Farebox Revenue 74, , , , % Dispatching 3, , ,762.9 (172.5) (5.9%) Other Revenues 1, (202.0) (23.2%) MOW Revenues 12, , , % Member Agency Revenues 60, , , , % Total Revenues 151, , , , % Operations & Services Train Operations 29, , , , % Equipment Maintenance 22, , , % Contingency (Train Ops) (0.9) % Fuel 17, , , , % Non-Scheduled Rolling Stock Repairs % Operating Facilities Maintenance , % Other Operating Train Services % Rolling Stock Lease (225.0) (100.0%) Security - Sheriff 5, , , % Security - Guards , , % Supplemental Additional Security % Public Safety Program (163.8) (45.6%) Passenger Relations 1, , , % Holiday Trains % TVM Maintenance/Revenue Collection 3, , , % Marketing , , % Media & External Communications % Utilities/Leases 3, , ,553.0 (612.6) (14.7%) Transfers to Other Operators 4, , , , % Amtrak Transfers 1, , , % Station Maintenance % Rail Agreements 3, , ,414.8 (156.7) (3.4%) Subtotal Operations & Services 98, , , , % Maintenance-of-Way MoW - Line Segments 28, , , , % MoW - Extraordinary Maintenance 1, , , % Subtotal Maintenance-of-Way 30, , , , % Administration & Services Salaries & Fringe Benefits 9, , , % Non-Labor Expenses 1, , , % Indirect Administrative Expenses 11, , , , % Professional Services , , % Subtotal Administration & Services 22, , , , % Contingency (Non-Train Ops) % Total Expenses Including MoW 151, , , , % RISK MANAGEMENT Revenues Member Agency Revenues 16, , , % PL/PD Revenues % Total Revenues 16, , , % Insurance Liability/Property/Auto 14, , , , % Claims , ,000.0 (750.0) (42.9%) Claims Administration 1, , , % Subtotal Insurance 16, , , % Total Expenses 16, , , % 14 3/16/2012 3:02 PM

20 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY FISCAL YEAR BUDGET ANNUAL DISTRIBUTION BY COST COMPONENTS ($000s) ATTACHMENT A Proposed FY Budget LACMTA OCTA RCTC SANBAG VCTC EXPENSES 195, , , , , ,676.4 REVENUES 99, , , , , ,551.3 NET LOCAL SUBSIDY 95, , , , , ,125.1 OPERATIONS Revenues Farebox Revenue 82, , , , , ,539.4 Dispatching 2, , Other Revenues MOW Revenues 13, , , , Member Agency Revenues 76, , , , , ,422.8 Total Revenues 176, , , , , ,974.0 Operations & Services Train Operations 36, , , , , ,353.9 Equipment Maintenance 23, , , , , ,162.6 Contingency (Train Ops) Fuel 27, , , , , Non-Scheduled Rolling Stock Repairs Operating Facilities Maintenance 1, Other Operating Train Services Rolling Stock Lease Security - Sheriff 5, , , Security - Guards 1, Supplemental Additional Security Public Safety Program Passenger Relations 1, Holiday Trains TVM Maintenance/Revenue Collection 4, , Marketing 1, Media & External Communications Utilities/Leases 3, , Transfers to Other Operators 7, , , Amtrak Transfers 1, Station Maintenance Rail Agreements 4, , , Subtotal Operations & Services 121, , , , , ,393.7 Maintenance-of-Way MoW - Line Segments 26, , , , ,637.5 MoW - Extraordinary Maintenance 1, Subtotal Maintenance-of-Way 27, , , , ,708.0 Administration & Services Salaries & Fringe Benefits 11, , , , , ,190.8 Non-Labor Expenses 1, Indirect Administrative Expenses 11, , , , , ,252.0 Professional Services 1, Subtotal Administration & Services 26, , , , , ,819.5 Contingency (Non-Train Ops) Total Expenses Including MoW 176, , , , , ,974.0 RISK MANAGEMENT Revenues Member Agency Revenues 18, , , , , PL/PD Revenues Total Revenues 18, , , , , Insurance Liability/Property/Auto 16, , , , , Claims 1, Claims Administration 1, Subtotal Insurance 18, , , , , Total Expenses 18, , , , , /16/2012 3:02 PM

21 ATTACHMENT A FISCAL YEAR RIDERSHIP/FARE REVENUE FORECAST Average Daily Ridership Revenue/Rider ($'s) Fare Revenues ($000's) FY11-12 FY12-13 % FY11-12 FY12-13 FY11-12 FY12-13 % Operating Line Budget Budget Change Budget Budget Budget Budget Change San Bernardino Weekday 12,443 12, % , , % Weekend 5,907 7, % , , % Ventura County 4,033 4, % , , % Antelope Valley Weekday 7,070 6, % , , % Weekend 3,330 4, % , , % Riverside 5,279 5, % , , % Orange County Weekday 8,802 9, % , , % Weekend 2,020 3, % % OC MSEP N/A IEOC Weekday 4,142 4, % , , % Weekend 921 1, % % 91 2,254 2, % , , % Totals Weekday 44,023 44, % 78, , % Weekend 12,178 16, % 3, , % Total 81, , % 16

22 FISCAL YEAR MAINTENANCE-OF-WAY EXPENDITURES ($000's) ATTACHMENT A Revenue Forecast Allocation FY Line Segment/Territory Budget LACMTA OCTA RCTC SANBAG VCTC Operating Lines 12, , , , LA - San Bernardino 1, , LA - Ventura (Burbank Jct to Moorpark) 1, , LA - Lancaster 4, , Fullerton - San Diego County Line 2, , Olive Subdivision Riverside Layover Facility River Corridor 1, , Extraordinary Maintenance (Derailments, Storm Damage) Non-Operating Lines 1, , Sierra Madre - Claremont (Pasadena Sub) 1, , Baldwin Park Branch (San Bernardino Co.) Total 13, , , , Net Subsidy Allocation FY Line Segment/Territory Budget LACMTA OCTA RCTC SANBAG VCTC Operating Lines 14, , , , ,051.7 LA - San Bernardino (1) 4, , , LA - Ventura (Burbank Jct to Moorpark) (2) 2, , LA - Lancaster 1, , Fullerton - San Diego County Line 2, , Olive Subdivision Riverside Layover Facility (3) River Corridor (4) 2, , Extraordinary Maintenance (5) 1, (Derailments, Storm Damage) Non-Operating Lines Sierra Madre - Claremont (Pasadena Sub) Baldwin Park Branch (San Bernardino Co.) Total 14, , , , ,051.7 Total Expenditure Forecast FY Line Segment/Territory Budget LACMTA OCTA RCTC SANBAG VCTC Operating Lines 26, , , , ,708.0 LA - San Bernardino 5, , , LA - Ventura (Burbank Jct to Moorpark) 3, , ,452.9 LA - Lancaster 5, , Fullerton - San Diego County Line 5, , Olive Subdivision Riverside Layover Facility River Corridor 4, , Extraordinary Maintenance 1, (Derailments, Storm Damage) Non-Operating Lines 1, , Sierra Madre - Claremont (Pasadena Sub) 1, , Baldwin Park Branch (San Bernardino Co.) Total 27, , , , ,708.0 (1) MoW net subsidy split by route miles (59.82% LACMTA and 40.18% SANBAG). (2) MoW net subsidy split by train miles (62.08% LACMTA and 37.92% VCTC). (3) Net subsidy split by train miles of trains using the Riverside Layover, excluding San Diego County (46.98% LACMTA, 17.93% OCTA, 25.72% RCTC, and 9.36% SANBAG). (4) Split is assumed All Share (47.5% LACMTA, 19.8% OCTA, 14.4% SANBAG, 7.2% VCTC, and 11.1% RCTC) of cost in excess of revenues. (5) Split is assumed All Share for derailments ($20,000) and percent of route miles owned (57.55% LACMTA, 24.27% OCTA, 1.07% RCTC, 10.69% SANBAG, and 6.41% VCTC) for storm damage, gate knockdowns, and vandalism ($480,000). 17

23 DRAFT 3/15/2012 ATTACHMENT B FY 12/13 Rehab-Renovation Budget Worksheet - Including Inflation Round 3 Project Total Subdivision Type Project Description Budget LACMTA OCTA (2) RCTC (3) SANBAG (4) VCTC (5) Lease Amtrak UPRR Ventura (Ven Co) Track Rehab Strathern $207,000 $207,000 Ventura (Ven Co) Structures Capacity ratings on bridges/culverts (5) $19,904 $19,904 Ventura (Ven Co) Signal Rehab/replace crossing gates, gate savers, predictors, batteries and other equipment (2 crossings/yr) $77,625 $77,625 Ventura (Ven Co) Comm Upgrade/replace wayside communications sites and remote monitors $94,900 $94,900 Ventura (LA Co) Track Rehab Woodman, Bernson & Raymer. Rehab transition rails and insulated joints. $646,875 $646,875 Ventura (LA Co) Structures ROW grading and tunnel vacuuming. Capacity ratings on bridges/culverts (8) $197,032 $197,032 Ventura (LA Co) Signal Cable renewal, switch machine conversion and renewals, rehab EC4 to EC5 at high priority locations (2/yr). Rehab/replace crossing gates, gate savers, predictors, batteries and other equipment (5 crossings/yr) $592,538 $592,538 Ventura (LA Co) Comm Upgrade/replace wayside communications sites and remote monitors $400,193 $400,193 Valley Track Rehab turnout CP Saugus $72,450 $72,450 Valley Structures Replace wood box culverts (4), capacity ratings on bridges/culverts, vacuum tunnels, ROW grading, hydrology design. $1,200,600 $1,200,600 Valley Signal Rehab 4 M23A switches at CP Taylor. Replace electrologic CP Fletcher & CP Roxford. Cable renewal, battery replacement, EC4 to EC 5 1 location. Rehab xing gates, savers, predictors at 12 crossings. $1,570,095 $1,570,095 San Gabriel Track Transition Rails & Insulated Joints. Rehab Irwin, CP Bassett, CP Barranca $496,800 $298,080 $198,720 San Gabriel Signal Upgrade wayside comm equipment incl MOC to TCOSF. Rehab electrologic CP Marengo & CP Vista. Cable renewal, batteries, EC4 to EC5 1 location. Rehab xing gates/savers/predictors at 17 crossings. $1,536,458 $921,875 $614,583 San Gabriel Comm Upgrade/replace comm equipment and wayside comm sites, including MOC to TCOSF $776,250 $465,750 $310,500 Pasadena Signal Rehab xing gates, savers, predictors at 8 crossings. $310,500 $310,500 Rialto Signal Rehab xing gates, savers, predictors at 2 crossings. $77,625 $77,625 Transition Rails & Insulated Joints. Rehab Crossties. Rehab CP Serra & CP Orange Track Capistrano $3,245,916 $3,245,916 Orange Structures Rehab design analysis - San Juan Creek Bridge $207,000 $207,000 Orange Structures Replace wood box culverts (4), capacity ratings on bridges/culverts, ROW grading, hydrology design, study/design MP $1,035,000 $1,035,000 Orange Signal Rehab electrologic CP Capistrano. Cable renewal, EC4 to EC5 at 1 location. Rehab xing gates/savers/predictors at 10 crossings $1,424,160 $1,424,160 Orange/Olive Signage Rehab signage at 13 stations in Orange County (including Oceanside) $831,761 $831,761 River Track Transition Rails & Insulated Joints. Rehab CP Taylor $310,500 $147,487 $61,479 $34,466 $44,712 $22,356 River Structures Capacity ratings on bridges/culverts, ROW grading $155,250 $73,743 $30,740 $17,233 $22,356 $11,178 River Signal Establish comm path diversity CP locations. Battery replacement CP Terminal & CP Mission. Install new comm shelter. Rehab electrologic CP Tayor. Upgrade 1 signal EC4 to EC5. Rehab xing gates/savers/predictors at 1 crossing. $539,751 $256,381 $106,871 $59,913 $77,724 $38,862 River Comm Establish comm path diversity at CP locations. $455,400 $216,315 $90,169 $50,549 $65,578 $32,789 System Facilities Upgrade ground power at CMF. Upgrade sanding system at CMF. Upgrade CMF progressive/car shop lighting. Upgrade Teletrol fuel management system. $1,552,500 $737,437 $307,395 $172,328 $223,560 $111,780 System Track Geometry Track measurement and testing (geometry car, rail detector, GPR, IT) $517,500 $245,812 $102,465 $57,443 $74,520 $37,260 System IT IT Solutions for Customer Relationship Mgmt, Order Mgmt (Oracle), Inventory Mgmt, Disaster Recovery Syst, Financial Planning & Forecasting Syst, Project Management Soln, Statistical Data Warehouse $2,923,875 $1,388,841 $578,927 $324,550 $421,038 $210,519 System Sig/Veh F550 Hyrail bucket trucks (2), renew bruch truck generators (2) $310,500 $147,488 $61,479 $34,466 $44,712 $22,355 System Signal LED dwarf signal heads $227,700 $108,158 $45,085 $25,275 $32,789 $16,393 System Comm Renew UPS batteries & Upgrade standy Pwr. Centralize CCTV camera Install comm shelter alarms and integrate with MOC. Upgrade wayside det, VHF radios. Upgrade wayside comm sites. $1,802,972 $856,412 $356,988 $200,130 $259,628 $129,814 System Vehicles Ongoing replacement of rubber-tire vehicles for field operations $207,000 $98,325 $40,986 $22,977 $29,808 $14,904 System Vehicles Replace rail car mover $454,365 $215,823 $89,964 $50,435 $65,429 $32,714 System TVM TVM - upgrade user interface $714,150 $339,221 $141,402 $79,271 $102,838 $51,418 System Mech Locomotive Tier-4 (member share) $4,913,057 $2,333,705 $972,784 $545,346 $707,479 $353,743 System Mech Locomotive Traction Motors $372,600 $142,093 $59,230 $33,205 $43,077 $21,538 $73,457 DRAFT Page Yr Rehab Projects by Year & County rev 11 ( ).xls