NORTHEAST OHIO AREAWIDE COORDINATING AGENCY

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1 TO: NORTHEAST OHIO AREAWIDE COORDINATING AGENCY M E M O R A N D U M Finance and Audit Committee Members William Cervenik, Mayor, City of Euclid Julius Ciaccia, Executive Director, Northeast Ohio Regional Sewer District Susan Infeld, Mayor, City of University Heights John Hunter, Mayor, Sheffield Village FROM: William Cervenik, Chair DATE: June 6, 2014 RE: Finance and Audit Committee Friday, June 13, 2014 from 8:30 a.m. to 10:00 a.m. NOACA Offices 1299 Superior Avenue, Cleveland, Ohio I look forward to seeing you on Friday, June 13 th at 8:30 a.m. at the NOACA offices.

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3 Notice of Changes to NOACA s Parking Facilities Please be advised that the surface lot located between E. 13 th Street and Superior has closed. Also the surface lot on Rockwell and E. 13 th Street is no longer taking daily customers. As a result of these changes, NOACA staff encourages Board of Directors and Committee members to consider the options presented in the table below. A map is available on the following page. Garage/Lot Name Location Cost Capacity Attendant/Box ABM/Ampco Rockwell at E. 9 th $ Levels No attendant (Cathedral garage) ABM/Ampco Rockwell between E. 9 th & $ Box (Cathedral lot) E. 12 th ABM/Ampco Chester at E. 13 th $ vehicles Attendant (Chester lot) One Cleveland Ctr St. Clair between E. 9 th & $ Levels No attendant E. 12 th Shaia s Parking Superior (south side) at E. $ vehicles Attendant 15 th Standard (Reserve Chester between E. 12 th $ levels Box Square) and E. 13 th Standard Rockwell & E. 12 th $ vehicles Attendant * (Rockwell) (stacked parking) St. Clair Lot St. Clair & E. 13 th $ vehicles Box Please ask the receptionist to be reimbursed for parking. If you park in the Cathedral or Reserve Square garages, present your ticket to the receptionist for validation. *This lot has stacked parking and may ask you to leave your keys.

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5 NORTHEAST OHIO AREAWIDE COORDINATING AGENCY Friday, June 13, 2014, 8:30 a.m. 10:00 a.m. NOACA Offices 1299 Superior Avenue, Cleveland, Ohio FINANCE and AUDIT COMMITTEE AGENDA Page 1. Minutes of March 14, 2014 Meeting Public Involvement 3. President s/executive Director s Report 4. Action Items a. Provisional Transportation Asset Management Innovative Funding Strategies Presentations/Discussion Items: a. Future Action Items i. Financial Investment Policy 5-1 b. Information Items i. Adjustments to Estimated NOACA Capital Budgets 5-15 ii. Financial Report Old Business a. Building Lease Payoff New Business 8. Adjourn Next Regular Meeting: Friday, September 12, 2014 at 8:30 a.m. NOACA Offices, 1299 Superior Avenue in Cleveland, Ohio

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7 Agenda Item No. 1 MINUTES

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9 Finance and Audit Committee Meeting March 14, 2014 NOACA Offices, 1299 Superior Avenue, Cleveland, Ohio Present: Please see the attached attendance sheet. Mayor William Cervenik, Chair of the Finance and Audit Committee, convened the meeting at 9:50 a.m., with a quorum having been established. He noted that public notice of the meeting and its agenda were issued. Mayor Cervenik made a request to excuse Mr. Julius Ciaccia from the meeting. Mayor Susan Infeld moved to accept the absence of Mr. Ciaccia from the meeting. Mayor John Hunter seconded the motion. The motion was approved. Public Involvement Mayor Cervenik announced no one signed up for public involvement. ACTION ITEMS: Minutes Mayor Infeld made a motion to approve the minutes of the February 13, 2014 Finance and Audit Committee meeting. The motion was seconded by Mayor Hunter. The motion passed. Committee Charter Ms. Gallucci reminded members that the Board established the five standing committees as a result of changes made to the Code of Regulations in She went on to review the purpose of the Finance and Audit Committee. The committee will ensure that NOACA follows sound financial planning, accounting and administrative practices. The charter defines the purpose, goals, activities, organizational structure and staffing of the agency. Mayor Cervenik suggested that the membership of the Finance and Audit Committee be revised to include three additional members. Ms. Gallucci commented that the Governance Committee will meet following the Finance and Audit Committee and agreed to discuss the membership issue at that time. Mayor John Hunter made a motion to endorse the Committee Charter. Mayor Susan Infeld seconded the motion. The motion passed Committee Focus Areas Ms. Gallucci reviewed the following focus areas for the Finance and Audit Committee:! Development of the Audit Program and Plan! Development of the Transportation Asset Management Program! Development of the Regional Transportation Investment Policy 1-1

10 Mayor Infeld made a motion to endorse the 2014 Committee Focus Areas. Mayor Hunter seconded the motion. The motion passed. NOACA Building Lease Payoff Proposal Ms. Gallucci reviewed NOACA s building lease. She stated the agency is in the 16 th year of a 20-year lease with the Cleveland-Cuyahoga County Port Authority. She noted the lease has a provision to pay off the loan, with May 15 being the next date we can notify the Port Authority if we wanted to pay it off. NOACA currently owes a little over $1 million. She advised members NOACA would save $132,593 in interest, which would be used for building maintenance. For the next four years, NOACA would replenish the reserve fund by making principal payments to itself. Ms. Gallucci stated NOACA receives approximately $150,000 a year from the Ohio Department of Transportation (ODOT) for depreciation of the building, which would also be added to the reserve fund. Mayor Hunter asked what the balance would be in the reserve fund after the $1 million payment. Ms. Gallucci stated $1 million; however, $200,000 would be added to the fund in July Mayor Cervenik asked if there is a chance NOACA would need more than $1.2 million for anything. Ms. Cheryl Kurkowski stated she didn t recall the agency ever having a need for a large some of money. Commissioner Mary Samide gave her endorsement for paying off the loan and asked how the payoff would affect the Regional Benefit Account (RBA) policy for the five counties. Ms. Gallucci stated the policy wouldn t be affected and that there would still be about $8,000 available in the account. Mayor Hunter moved to endorse the building lease payoff proposal. Mayor Infeld seconded the motion. The motion passed. Fiscal Year 2015 OWP and Budget Mr. Jonathan Giblin reviewed the draft FY 2015 Overall Work Program (OWP). He provided detailed information on the elements of the program, including work activities, initiatives and administrative requirements. Ms. Gallucci discussed the staffing positions and the revenue sources. Mayor Hunter moved to endorse the FY 2015 OWP and budget. Mayor Infeld seconded the motion. The motion passed. Provisional Transportation Asset Management Program Ms. Gallucci stated NOACA s Transportation Asset Management Policy would not go into effect for 12 to 18 months. In the meantime, NOACA would like to implement a two-year provisional program that would address critical road repairs in the region. She advised that every community in the NOACA region that has road projects with a pavement condition rating (PCR) of less than 75 would be eligible to participate in the program. Ms. Gallucci discussed the process of selecting and reviewing projects. She stated innovative strategies would be used to fund the program. Ms. Gallucci also reviewed a chart that showed the cost disadvantages of doing road repairs later rather than now. She advised sponsors would be responsible for handling the preliminary development, detailed design phase activities, development plans, and 1-2

11 obtaining the 20% local match. Lastly, projects must be ready for construction prior to the end of SFY Mayor Hunter moved to endorse the Provisional Transportation Asset Management Program. Mayor Infeld seconded the motion. The motion passed. INFORMATION ITEM: Performance Audit Ms. Gallucci reminded members that the state auditor s report was presented to the Finance and Audit Committee in February. At that time, it was suggested that a performance audit be done in addition to the financial audits. Staff discussed the opportunity and agreed to proceed with the initiative. The state auditors estimate that the effort would cost between $25,000 and $50,000 depending on the agreed upon scope of work. Old Business There was no old business. New Business There was no new business. Financial Report Mayor Cervenik informed the committee the financial report was included in their packet. Next Meeting Mayor Cervenik announced the next meeting will be held on Friday, June 13 at 8:30 a.m. There being no further business, the meeting was adjourned at 10:20 a.m. Respectfully submitted, Mayor William Cervenik Chair of the Finance and Audit Committee Brenda Walker, Recorder 1-3

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13 2014 Finance and Audit Committee Attendance Record MEETING DATES / / / / /12 CERVENIK, William X X CIACCIA, Julius X HUNTER, John X X INFELD, Susan X X TOTAL MEMBERS PRESENT: 4 3 X=Member present A=Alternate 1-5

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15 Agenda Item No. 2 PUBLIC INVOLVEMENT

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17 Agenda Item No. 3 PRESIDENT S / EXECUTIVE DIRECTOR S REPORT

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19 Agenda Item No. ACTION ITEMS

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21 NORTHEAST OHIO AREAWIDE COORDINATING AGENCY MEMORANDUM TO: FROM: NOACA Finance and Audit Committee Grace Gallucci, Executive Director DATE: June 6, 2014 RE: Provisional Transportation Asset Management Innovative Funding Strategies ACTION REQUESTED The Finance and Audit Committee is asked to review and discuss various innovative funding strategies for the Provisional Transportation Asset Management Program, and make recommendations to the Executive Committee for placement on the Board of Directors agenda for the advancement of the proposals. BACKGROUND/JUSTIFICATION FOR CURRENT ACTION The Provisional Transportation Asset Management Policy was approved by the Board of Directors on April 11, 2014 through resolution number to address the region s immediate critical needs relative to the region s transportation network. The Policy authorizes a list of projects to be developed, and innovative funding strategies to be explored to allow projects to be implemented through the Provisional Transportation Asset Management Policy over the course of the next two years. The attached project list was developed using NOACA s Regional Pavement Management System, which prioritizes projects using a cost benefit analysis based on pavement condition, traffic data, functional classification and connectivity factors, but is unable to consider other criteria (e.g. adjacent land use, employment, etc.). To enhance and supplement missing criteria from the RPMS, NOACA has partnered with the affected communities to establish a final list of projects using the RPMS generated prioritized data as a baseline, while taking into consideration factors such as project readiness, multimodal use, economic development, and improved access to community destinations and job centers. Based on comments from Board and Committee members, the project list has been adjusted to allow for nearly 25% of the funding going towards preventative maintenance projects. This will attack the backlog of the worst roads in the region while, at the same time, ensuring that the existing system is maintained. This balance of projects will guarantee a good foundation for success in bringing the region s road network into a state of good repair. FINANCIAL IMPACT Recognizing the benefits of addressing our pavement issues, NOACA has explored the following five innovative funding strategies to advance the projects identified: 4-1

22 Financing Options to Secure Funding for PTAMP Projects Cleveland Port Authority Infrastructure Financing Program State Infrastructure Bank Loan TRAC Toll Revenue Credit Rightsizing Existing SIB Debt in TIP Interest Rate Fixed interest rates that are based upon the tax-exempt bond rates, which are set when the bonds are sold, currently 2.3% 3.00% N/A N/A N/A Repayment Up to 30 Years Up to 10 Years N/A N/A N/A Available Funds Up to 100% of project costs Up to $20 million Up to $120 million Up to 20% of local share Estimated at up to $20 million Distinct Element Sales tax exemptions on construction materials 12 months interest free; 1st payment due 19th month after closing Grant Program; 20% match required Request to and authorization from ODOT Reduces loan amount required for PTAMP Debt Service Borrowing $26M: $2.9M/year for 10 years Borrowing $26M: $3.4M/year for 10 years; first payment 2017 N/A N/A Reduces debt service requirements based on the amount leveraged (up to $2 million annually) CONCLUSION/NEXT STEPS The recommended innovative strategy or strategies from the Finance and Audit Committee will be presented to the Executive Committee on June 13, With Executive Committee concurrence, the Board of Directors will be asked to take action on the recommendations at its July 11, 2014 meeting, thus allowing staff to take the next steps in advancing the proposals. Some of the strategies, particularly those involving the issuance of debt instruments, may still require further Board action to finalize the terms. Quick implementation of the provisional program will address the vital needs of the region while continuing to work on the comprehensive Transportation Asset Management Program. GG/ks 4-2

23 Draft Provisional Transportation Asset Management Projects Backlog Maintenance Projects Pavement Name Community From Log Point To Log Point Length Average Width PCR Range Average Volume Type of Repair Total Cost PTAMP Cost (80% of Total) SR Elyria Minor Rehabilitation $716,580 $573,264 SR Mentor Minor Rehabilitation $3,757,717 $3,006,174 SR Willoughby, Willoughby Hills Minor Rehabilitation $1,482,823 $1,186,258 US Parma, Parma Heights, Middleburg Heights, Cleveland Minor Rehabilitation $4,130,765 $3,304,612 SR Maple Heights, Bedford Heights Minor Rehabilitation $1,734,474 $1,387,579 RIDGE Parma, Brooklyn Minor Rehabilitation $437,516 $350,013 WEST BLVD. Cleveland Minor Rehabilitation $2,500,000 $2,000,000 US Mayfield Heights Minor Rehabilitation $205,751 $164,601 HARVARD Cleveland Minor Rehabilitation $1,600,000 $1,280,000 US Strongsville Minor Rehabilitation $853,681 $682,945 W.130TH Brook Park, Parma, Parma Heights, Middleburg Heights Minor Rehabilitation $966,739 $773,391 BROADVIEW AVE. Cleveland Minor Rehabilitation $2,000,000 $1,600,000 SNOW Brook Park Minor Rehabilitation $1,008,257 $806,606 EAST BLVD./FORD DR. Cleveland Minor Rehabilitation $2,300,000 $1,840,000 PROSPECT Cleveland Minor Rehabilitation $1,200,000 $960,000 COMMUNITY COLLEGE Cleveland Minor Rehabilitation $1,200,000 $960,000 PLEASANT VALLEY Parma Minor Rehabilitation $570,478 $456,383 WARRENSVILLE CENTER Shaker Heights Minor Rehabilitation $573,894 $459,115 SR 175 Euclid Minor Rehabilitation $523,000 $418,400 Elyria Ave Lorain Minor Rehabilitation $2,000,000 $1,600,000 SR Avon Minor Rehabilitation $1,620,402 $1,296,322 W 117th STREET Cleveland Minor Rehabilitation $720,000 $576,000 Total $32,102,076 $25,681,661 Preventive Maintenance Projects Reserved for Preventive Maintenance Projects (working to develop program) $9,000,000 $7,200,000 Total Program $41,102,076 $32,881,

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25 Agenda Item No. 5 PRESENTATION/DISCUSSION ITEMS

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27 NORTHEAST OHIO AREAWIDE COORDINATING AGENCY MEMORANDUM TO: FROM: NOACA Finance and Audit Committee Grace Gallucci, Executive Director DATE: June 6, 2014 RE: Investment Policy ACTION REQUESTED No action is requested at this time. BACKGROUND/JUSTIFICATION At the March Executive Committee meeting while discussing paying off the agency s building lease, Nate Kelly asked if the Finance and Audit Committee would be reviewing the agency s investment policy. Thus, staff is bringing this item for your information and potential future action. The NOACA Governing Board created an Investment Task Force on December 12, 1997 to develop an Agency Investment Policy. The Task Force developed an investment policy which was certified by the Municipal Treasurers Association and adopted by the Board on September 11, 1998 (Resolution ). The policy was revised periodically based on either committee review and/or agency investment advisor advice. It was last revised in The current policy is attached. FINANCIAL IMPACT NOACA s investment policy results in the continued maintenance and growth of the agency s financial assets. CONCLUSION/NEXT STEPS Since the policy has not been reevaluated in almost a decade, it may be a good time to review it and determine if any adjustments to it should be made, particularly in light of the changes in the financial industry post recession. If the committee concurs, staff will prepare an evaluation exercise for the next committee meeting. GG/ck/bd 5-1

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29 INVESTMENT POLICY June 10,2005 Northeast Ohio Areawide Coordinating Agency I. POLICY The purpose of this investment policy is to establish investment and cash management guidelines for the officials of the Northeast Ohio Areawide Coordinating Agency (NOACA) who are responsible for management of the Agency's funds. It is the policy of NOACA to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the entity and conforming to all state and local statutes governing the investment of public funds. II. SCOPE This investment policy applies to all financial assets of the Agency. These funds are accounted for in the Agency's Annual Financial Audit Report and include: 1. General Fund 2. Special Revenue Funds III. RESPONSIBILITY Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the possible income to be derived. The standard of prudence to be used by investment officials shall be the prudent person standard and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price charges, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. IV. INVESTMENT OBJECTIVES The financial objectives for the investment of the agency's funds shall be as follows: 1. Safety. Investments should preserve the capital of the Agency. Safety of the principal is the foremost objective of the investment program. Investments of the Agency shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. 06/10/ k 1 5-3

30 To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. The objective will be to minimize credit, concentration and interest rate risks. A. Custodial Credit Risk The risk that, in the event of a failure of a counter party, the agency will not be able to recover the value of its investments or collateral securities that is in the possession of an outside party. The Agency employs the use of safekeeping accounts to hold and maintain custody of its investments as identified within this policy and as a means of mitigating this risk. B. Concentration Risk The Agency may invest in any investment that is not specifically guaranteed by the U.S. Government or considered a money market mutual fund up to fifty percent of total available investable cash at the end of each month during the fiscal year. The Agency will disclose investments in non-u.s. securities or money market mutual funds if exceeding five percent by issuer of total cash and investments. C. Interest Rate Risk The risk that the Agency will incur fair value losses arising from rising interest rates. Such risk is mitigated by the investment policy, by limiting investments to certain maximum maturities. As a rule, unless specified otherwise within the policy, Agency investments are to have a maximum maturity of five years unless the investment is matched to a specific expenditure. The context of a specific investment purchase must be weighed in proportion to the remainder of the existing investment portfolio and the prudent investor rule to attempt to limit such risk. D. Foreign Currency Risk The Agency is not authorized to invest in investments, which have this type of risk. 2. Liquidity. Investments should be sufficiently flexible so that the organization may readily meet its anticipated operating cash requirements. 3. Yield. Investment returns should be optimized within the constraints of the objectives of safety and liquidity. a. Short Term. The objective of this portfolio component is to allow timely payment of obligations while earning a rate equal to or greater than STAR Ohio or equivalent eligible money market mutual fund. b. Long Term. The objective of this portfolio component is to earn a rate of return equal to a benchmark selected that approximates the desired maturity characteristics of these funds. 06/10/ k 2 5-4

31 V. DELEGATION OF AUTHORITY Authority to manage the Agency's investment program is derived from O.R.C and Management responsibility for the investment program is hereby delegated to the Investment Officers (Governing Board Treasurer, Executive Director, Finance Director and Agency Legal Counsel). The Finance Director shall establish written procedures for operation of the investment program consistent with this investment policy. Procedures should include reference to: safekeeping, repurchase agreements, wire transfer agreements, collateral/depository agreements and banking service contracts. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Finance Director. The Finance Director shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. VI. ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the Executive Director any material financial interests in financial institutions that conduct business within this jurisdiction, and they shall further disclose any large personal financial/investment positions that could be related to performance of the Agency's portfolio. Employees and officers shall subordinate their personal investment transactions to those of the Agency, particularly with regard to the time of purchases and sales. 06/10/ k 3 5-5

32 VII. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The Finance Director will maintain a list of financial institutions authorized to provide investment services. In addition, a list will also be maintained of approved security brokers/dealers selected by credit worthiness who are authorized to provide investment services in the State of Ohio. These may include primary dealers or regional dealers that qualify under Securities & Exchange Commission Rule 15C3-1. No public deposits shall be made except in a qualified public depository as established by state laws. All financial institutions and broker/dealers who desire to become qualified suppliers of investment securities will be required to furnish the Finance Director with current audited financial statements and certification that they have received, read and understand the investment policy of NOACA. A file will be maintained by NOACA. VIII. AUTHORIZED AND SUITABLE INVESTMENTS/MAXIMUM MATURITIES Investment officers are empowered by statute to invest funds of the agency in the instruments listed below. The maximum final maturity of any investment will be five years from the date of purchase. No derivative securities or investment pools, with the exception of STAR Ohio, will be permitted. Due diligence is required prior to investing in pools. 1. Short-term a. Negotiable Order of Withdrawal (NOW) accounts in federally-insured financial institutions and collateral at 105% of deposited amount. b. No load money market mutual funds consisting exclusively of obligations described in division B (1) o (2) of Section and repurchase agreements secured by such obligations. c. Certificates of Deposit in eligible institutions as provided in of the Revised Code. d. Repurchase agreements (not to exceed 30 days) as permitted under Section (E) of the Revised Code. e. STAR Ohio (Local government investment pool) f. Guaranteed Investment Contracts (GIC s) and Banker s Investment Contracts (BIC s) g. Commercial Paper rated in the highest category by two nationally recognized rating agencies and with maturities not to exceed 180 days. 06/10/ k 4 5-6

33 2. Long-term a. Direct obligations of the U.S. Treasury, its agencies, instrumentalities and Government Sponsored Enterprises (GSEs). b. Certificates of Deposit in eligible institutions as provided in of the Revised code. c. STAR Ohio (Local government investment pool) d. Negotiable Order of Withdrawal (NOW) accounts in federally-insured financial institutions and collateral at 105% of deposited amount. IX. MAXIMUM MATURITIES To the extent possible, the Agency will attempt to match its investment maturities to anticipated cash flow requirements. If not matched to a specific cash flow, the Agency may purchase investments with a stated final maturity not greater than two years from the settlement date. Reserve Funds may be invested in instruments with a final stated maturity not to exceed five years from the settlement date. X. COLLATERALIZATION Collateral for certificates of deposit and repurchase agreements will be provided as required by the Ohio Revised Code, Sections and and deposited with a qualified trustee. Collateral statements will be provided by the depositories as required by the ORC. XI. SAFEKEEPING AND CUSTODY All security transactions, including collateral for repurchase agreements, entered into by the Agency shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by a third party custodian designated by the Finance Director and evidenced by safekeeping receipts. XII. DIVERSIFICATION The Agency will diversify its investments by security type and institution. With the exception of U.S. Treasury securities and authorized pools, no more than 50% of the Agency's total investment portfolio will be invested in a single security type or with a single financial institution. XIII. INVESTMENT PRACTICES AND REPORTING The Finance Director shall establish an annual process of independent review by the Agency s auditors in conjunction with their periodic review of the Agency s financial statements. This review will provide internal control by assuring compliance with policies and procedures. The Finance Director shall prepare and submit periodic reports on investment activity to the board of directors at its regularly scheduled monthly meetings. These reports will provide investment account listings, account balances and interest rates. 06/10/ k 5 5-7

34 Financial Statement Disclosure 1. The Agency will disclose credit quality ratings of external investment pools, money market funds, bond mutual funds and other pooled investments of fixed-income securities. The Agency will disclose if the investment is not rated. XIV. PERFORMANCE STANDARDS The investment portfolio will be designed to obtain market average rate of return during budgetary and economic cycles, taking into account the Agency's investment risk constraints and cash flow needs. The basis used by the Finance Director to determine whether the portfolio is achieving a market return shall be a commonly available and acceptable benchmark that approximates the portfolio s configuration. XV. CASH MANAGEMENT Cash balances are required in the operating account for biweekly payroll, monthly accounts payable processing and other manual checks required throughout the month. Cash balances are monitored daily to ensure there are sufficient funds to cover these expenditures. The Finance Director will transfer funds to/from the operating account to maintain adequate balances for monthly operating expenses. Any excess funds will be invested through authorized investment instruments. XVI. INVESTMENT POLICY ADOPTION The Agency's investment policy shall be adopted by resolution of the Agency's Governing Board. The policy shall be reviewed on an annual basis by the Investment Committee and any modifications made thereto must be approved by the Governing Board. XVII. DEFINITIONS AGENCIES: Federal agency securities. ASKED: The price at which securities are offered. BANKERS' ACCEPTANCE (BA): A draft or bill of exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as does the issuer. BID: The price offered for securities. 06/10/ k 6 5-8

35 BROKER: A broker brings buyers and sellers together for a commission paid by the initiator of the transaction or by both sides; he does not position. In the money market, brokers are active in markets in which banks buy and sell money and in interdealer markets. COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large-denomination CD's are typically negotiable. COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt (also called free). Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DEBENTURE: A bond secured only by the general credit of the issuer. DISCOUNT: The difference between the cost price of a security and its value at maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at a discount and redeemed at maturity for full face value, e.g., U.S. Treasury bills. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. EXECUTIVE DIRECTOR: Person in charge of overall operations of the Agency. FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L's, small business firms, students, farmers, farm cooperatives, and exporters. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations. 06/10/ k 7 5-9

36 FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $100,000 per deposit. FEDERAL HOME LOAN BANKS (FHLB): Institutions that regulate and lend to savings and loan associations. Federal Home Loan Banks play a role analogous to that played by the Federal Reserve Banks vis-a-vis member commercial banks. FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development, H.U.D. It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation's purchases include a variety of adjustable mortgages and second loans in addition to fixed-rate mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FINANCE DIRECTOR: Person in charge of accounting functions of the Agency. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by FHA, VA or FMHM mortgages. The term pass-throughs is often used to describe Ginnie Mae's. GUARANTEED INVESTMENTS CONTRACTS (GIC's): Guaranteed Investment Contracts ( GIC's ) are investment vehicles offered by insurance companies, banks (often referred to as BIC's ) and other entities for the investment of proceeds from tax exempt and taxable bond issues. GIC's provide high yields and allow withdrawals to be made on an as needed basis. A GIC pays a guaranteed rate of interest for the term of the GIC. This rate can be either fixed or floating. 06/10/ k

37 LEGAL COUNSEL: Person responsible for overseeing all legal aspects of the Agency. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase--reverse repurchase agreements that establishes each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers' acceptances) are issued and traded. OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool. PORTFOLIO: Collection of securities held by an investor. PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the state, the so-called legal list. In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. PRIMARY DEALER: A group of government securities dealers that submit daily reports of 06/10/ k

38 market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SSEC) registered securities broker-dealers, banks, and a few unregulated firms. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond or the current income return. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security buyer in effect lends the seller money for the period of the agreement, and the terms of the agreement are structured to compensate for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money, that is, increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. SEC RULE 15C3-1: See uniform net capital rule. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. TREASURER: Person appointed by the Governing Board to represent the board's interest in financial matters. TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months or one year. TREASURY BOND: Long-term U.S. Treasury securities having initial maturities of more than 10 years. 06/10/ k

39 TREASURY NOTES: Intermediate term coupon bearing U.S. Treasury securities having initial maturities of from one to 10 years. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. 06/10/ k

40 5-14

41 NORTHEAST OHIO AREAWIDE COORDINATING AGENCY MEMORANDUM TO: FROM: NOACA Finance and Audit Committee Grace Gallucci, Executive Director DATE: June 6, 2014 RE: Adjustments to Estimated NOACA Capital Budgets ACTION REQUESTED No action is requested at this time. BACKGROUND/JUSTIFICATION FOR CURRENT ACTION The Ohio Department of Transportation distributes Federal Highway Administration funds to NOACA for regional planning and infrastructure improvement programs. Funding is sub allocated by formula based on directly to NOACA for the Surface Transportation Program (STP) and Transportation Alternatives Program (TAP) and to the eight large urban areas for the statewide Congestion Mitigation and Air Quality Program (CMAQ). ODOT estimates annual program budgets based on anticipated federal apportionment and obligation limitation figures. Budgets are then adjusted each year to reflect actual apportionment and obligation limitation for the past Federal Fiscal Year and estimates for future annual budgets allocations are recalculated. ODOT has completed the adjustments of actual SFY 2014 and estimated SFY budgets based on final FFY 2014 federal apportionment and obligation limitation figures. The result is a reduction of actual SFY 2014 and estimated program budgets. Since these adjustments are being announced late in the SFY, the adjustment for SFY 2014 will be made to SFY 2015 budgets. A table of adjustments for NOACA capital program budgets along with a historical summary is attached to this memorandum (Table 1). This is the third straight year NOACA has seen a reduction in total program balances based on federal fund apportionment and obligation limit. FINANCIAL IMPACT The adjustments will result in a total reduction of $959,556 between the NOACA STP ($587,210), TAP ($58,722) and Statewide CMAQ ($313,624) for actual SFY 2014 and estimated SFY program budgets. The impact is that there will be fewer funds available for implementation of new projects in SFY 2015 and projects planned for the SFY NOACA TIP based on estimated budgets. CONCLUSION/NEXT STEPS Staff will keep the Committee apprised of future budget adjustments and impacts. GG/rl 5-15

42 5-16

43 !!!!!! Summary of Historic Final NOACA Budgets SFY Final SFY 2010 Final SFY 2011 Final SFY 2012 Final SFY 2013 Final SFY 2014 Total Budget $49,656, $50,209, $46,850, $45,505, $45,060, Difference Compared to PFY - $552, ($3,359,232) ($1,344,623) ($445,032) Adjustments to SFY15-SFY19 Estimated NOACA Budgets for FFY14 Actual FHWA Apportionment and Obligation Limit Previous SFY15-SFY19 ESTIMATED Annual Budget Allocations Adjustments to SFY for Final FFY2014 FHWA Apportionment & Obligation Limit Revised SFY15-SFY19 ESTIMATED Annual Budget Allocations Surface Transportation Program Transportation Alternatives Program Congestion Mitigation & Air Quality Program Total Surface Transportation Program Transportation Alternatives Program Congestion Mitigation & Air Quality Program Total Surface Transportation Program Transportation Alternatives Program Congestion Mitigation and Air Quality Program Total $28,162,430 $2,816,243 $15,041,388 $46,020,061 ($587,210) ($58,722) ($313,624) ($959,556) $27,575,220 $2,757,521 $14,727,764 $45,060,

44 5-18

45 Agenda Item No. 5bii FINANCIAL REPORT 5-19

46 5-20

47 NORTHEAST OHIO AREAWIDE COORDINATING AGENCY CASH POSITION AS OF MAY 31, 2014 DESCRIPTION RECEIPTS DISBURSEMENTS BALANCE BEGINNING BALANCE $ 414, JARC/NEW FREEDOM 222, BRUNSWICK 2, ANNUAL MEETING 0.00 NOACA DUES 0.00 ODOT/FHWA 264, ENVIRONMENTAL PROGRAMS 40, HUD/NEOSCC MISCELLANEOUS 1, INTEREST ON ACCOUNTS 0.00 MATURED CDARS - HUNTINGTON 251, TRANSFER FROM TRISTATE - MMDA 417, TRANSFER FROM CHARTER - HUD 0.00 TRANSFER FROM CHARTER MRA 0.00 VENDORS $ 820, PAYROLL 218, TRANSFER TO TRISTATE CAPITAL - MMDA 0.00 TRANSFER TO CHARTER ONE MRA 0.00 PURCHASE HUNTINGTON CDARS 0.00 HUD FUNDS TO NEOSCC 0.00 ENDING BALANCE $ 577, TOTAL $ 1,201, $ 1,038, ADDITIONAL CASH BALANCES: INVESTMENTS: Return STAR OHIO % CHARTER ONE BANK MRA % TRISTATE CAPITAL MMDA 49, % TRISTATE CAPITAL CDARS ( ) 253, % TOTAL $ 303, Interest Earned in FY 2014 = $4, GRAND TOTAL 880,

48 NORTHEAST OHIO AREAWIDE COORDINATING AGENCY FISCAL YEAR FINANCIAL INFORMATION C FISCAL EXPENDED TARGET PERCENTAGE PERCENTAGE 2014 THROUGH BUDGET BUDGET OF TARGET OF TARGET (92%) BUDGET 05/31/14 REMAINING (YTD) (YTD) (ANNUAL) SALARIES & FRINGES (A) (B) (A-B) (A/12)*11 mo. (B/C) (B/A) SALARIES $ 3,484,343 $ 2,785,761 $ 698,582 $ 2,903,619 96% 80% FRINGE BENEFITS 1,069, , , ,506 90% 75% OCCUPANCY & EQUIPMENT $ 4,554,150 $ 3,590,805 $ 963,345 $ 3,795,125 95% 79% LEASE - OFFICE $ 285,176 $ 261,319 $ 23,857 $ 237, % 92% * UTILITIES 52,000 46,191 5,809 43, % 89% TELEPHONE 16,500 13,355 3,145 13,750 97% 81% BUILDING MAINTENANCE 43,000 24,265 18,735 35,833 68% 56% PARKING 3,300 1,313 1,987 2,750 48% 40% EQUIPMENT LEASING 2,750 2, ,292 87% 73% * EQUIPMENT MAINTENANCE 66,427 44,853 21,574 55,356 81% 68% ** FURNITURE/EQUIPMENT 89,000 57,598 31,402 74,167 78% 65% 3RD FLOOR BUILD-OUT 350, ,143 29, , % 91% ** HARDWARE/SOFTWARE 69,504 67,758 1,746 57, % 97% CONSULTING SERVICES $ 977,657 $ 838,800 $ 138,857 $ 814, % 86% LEGISLATIVE LIAISON $ 55,000 $ 39,840 $ 15,160 $ 45,833 87% 72% PRIVATE CONSULTANTS 1,569, , ,615 1,308,000 61% 51% TLCI - COMMUNITY SHARE 200,000 68, , ,667 41% 34% AGENCY AUDIT 17,000 15,990 1,010 14, % 94% OTHER OPERATING EXPENSES $ 1,841,600 $ 920,567 $ 921,033 $ 1,534,667 60% 50% NARC/MEMBERSHIP DUES $ 24,500 $ 24,376 $ 124 $ 20, % 99% *** SUPPLIES 41,100 39,043 2,057 34, % 95% POSTAGE 5,000 4, , % 85% ADVERTISING/RECRUIT/MEETINGS/LEGAL 52,050 29,560 22,490 43,375 68% 57% OUTSIDE REPRODUCTION 6,000 1,602 4,398 5,000 32% 27% MEETING EXPENSE 36,000 13,658 22,342 30,000 46% 38% TRAINING 38,000 15,806 22,194 31,667 50% 42% *** TRAVEL 38,300 20,007 18,293 31,917 63% 52% INSURANCE 22,500 21, , % 97% PUBLICATIONS 2,500 1, ,083 93% 78% ACCOUNTING SERVICES 1, ,042 56% 47% OTHER MISCELLANEOUS 1, ,085 1,250 33% 28% $ 268,700 $ 173,070 $ 95,630 $ 223,917 77% 64% TOTAL $ 7,642,107 $ 5,523,242 $ 2,118,865 $ 6,368,423 87% 72% **** * Transferred $8,000 to Utilities from Equipment Maintenance. ** Transferred $7,000 to Hardware/Software from Furniture/Equipment. *** Transferred $8,000 to Supplies from Travel. **** The Agency has expended approximately seventy-two percent of the fiscal year 2014 budget. 5-22

49 FY 2014 NOACA DUES RECEIVED/RECEIVABLE MAY 2014 Total Total CUYAHOGA COUNTY Dues Received Receivable GEAUGA COUNTY Dues Received Receivable Cuyahoga County $165,637 $165,637 $0 Geauga County Commissioners $15,886 $15,886 $0 City of Bay Village 2,025 2,025 0 Geauga County Engineers 9,532 9,532 0 City of Beachwood 1,547 1,547 0 Geauga County Sanitary Eng 6,355 6,355 0 City of Bedford 1,692 1,692 0 City of Bedford Heights 1,391 1,391 0 Total Geauga County $31,773 $31,773 $0 Bentleyville Village City of Berea 2,470 2,470 0 Bratenahl Village LAKE COUNTY City of Brecksville 1,767 1,767 0 Lake County Commissioners $78,268 $78,268 $0 City of Broadview Heights 2,510 2,510 0 City of Brooklyn 1,445 1,445 0 Brooklyn Heights Village LORAIN COUNTY City of Brook Park 2,486 2,486 0 Lorain County Commissioners $41,624 $41,624 $0 Chagrin Falls Township Lorain County Engineers 13,720 13,720 0 Chagrin Falls Village City of Amherst City of Cleveland 51,345 51,345 0 Amherst Township City of Cleveland Heights 5,968 5,968 0 City of Avon 2,409 2,409 0 Cuyahoga Heights Village City of Avon Lake 3,354 3,354 0 City of East Cleveland 2, ,309 Brighton Township City of Euclid 6,330 6,330 0 Brownhelm Township City of Fairview Park 2,177 2,177 0 Camden Township City of Garfield Heights 3,733 3,733 0 Carlisle Township Gates Mills Village Columbia Township Glenwillow Village Eaton Township City of Highland Heights 1,080 1,080 0 City of Elyria 13,417 13,417 0 Highland Hills Village Elyria Township Hunting Valley Village Grafton Township City of Independence Grafton Village City of Lakewood 6,745 6,745 0 Henrietta Township Linndale Village Huntington Township City of Lyndhurst 1,812 1,812 0 Kipton Village City of Maple Heights 2,994 2,994 0 Lagrange Township City of Mayfield Heights 2,478 2,478 0 Lagrange Village Mayfield Village City of Lorain 19,073 19,073 0 City of Middleburg Heights 2,063 2,063 0 New Russia Township Moreland Hills Village City of North Ridgeville 3,298 3,298 0 Newburgh Heights Village City of Oberlin 1,821 1,821 0 City of North Olmsted 4,233 4,233 0 Penfield Township North Randall Village Pittsfield Township City of North Royalton 3,939 3,939 0 Rochester Township Oakwood Village Rochester Village City of Olmsted Falls 1,168 1,168 0 City of Sheffield Lake 1,498 1,498 0 Olmsted Township 1,748 1,748 0 Sheffield Township Orange Village Sheffield Village City of Parma 10,558 10,558 0 South Amherst Village City of Parma Heights 2,681 2,681 0 Wellington Township City of Pepper Pike Wellington Village City of Richmond Heights 1,365 1,365 0 City of Rocky River 2,615 2,615 0 Total Lorain County $102,532 $102,462 $70 City of Seven Hills 1,527 1,527 0 City of Shaker Heights 3,681 3,681 0 MEDINA COUNTY City of Solon 3,021 3,021 0 Medina County Commissioners $58,633 $58,633 $0 City of South Euclid 2,885 2,885 0 City of Strongsville 5,790 5,790 0 $706,748 $704,147 $2,601 City of University Heights 1,752 1,752 0 Valley View Village Walton Hills Village FY 2013 Dues Outstanding City of Warrensville Heights 1,752 1,752 0 City of Westlake 4,235 4,235 0 City of East Cleveland $3,403 $0 $3,403 Woodmere Village City of Maple Heights 3,270 3,270 NEORSD 52,134 52,134 0 $6,673 $0 $6,673 GCRTA 52,134 52,134 0 Total Cuyahoga County $435,542 $433,011 $2,531 Total Received/Receivable $713,421 $704,147 $9,