Budget and Finance Subcommittee

Transcription

1 MEETING OF THE Budget and Finance Subcommittee MEETING DATE October 15, 2015 TIME LOCATION 12:00 p.m. Valley Metro 101 N. 1st Ave., 10th Floor Lake Mead Conference Room Phoenix, AZ VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

2 October 8, 2015 Budget and Finance Subcommittee Agenda Thursday, October 15, th Floor, Lake Mead Conference Room 101 N. 1st Avenue, 10th Floor 12:00 p.m. For those participating by telephone, please mute your phone when not speaking. Action Recommended 1. Public Comment For information An opportunity for general public comment on issues related to Valley Metro. Up to three (3) minutes will be provided for each speaker. 2. Minutes For action Minutes from the May 14, 2015 BFS meeting are presented for approval. 3. FY15 Year End Review For information John McCormack will present the FY15 Year-End Review. 4. FY16 First Quarter Reports For information John McCormack will present the FY16 First Quarter Reports. 5. Advance Bond Proceeds 2014 Note Payable For action John McCormack will review the advance bond proceeds 2014 note payable. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

3 6. Policy Review of Operating and Capital Fund Balance Reserve Minimums For information John McCormack will present options to the BFS to establish a policy for operating and capital fund balance reserve minimums. 7. Investment Policy Update For information Allison Kaune of PFM will present a review of current market conditions and best practices for optimization of investment safety, liquidity and yield. John McCormack will provide a review and recommended update to the Valley Metro RPTA Investment Policy. 8. Review of Health Plan Costs For information John McCormack will present a review of health plan costs, program design controls and funding. 9. Future BFS Agenda Items For information Chair Williams will request future BFS agenda items from members. 10. Next Meeting For information The next meeting of the BFS is January 14, Qualified sign language interpreters are available with 72 hours notice. Materials in alternative formats (large print, audiocassette, or computer diskette) are available upon request. For further information, please call Rosalia Castro, Valley Metro at or TTY at To attend this meeting via teleconference, contact the receptionist at for the dialin-information. The supporting information for this agenda can be found on our web site at 2

4 DATE AGENDA ITEM 1 October 8, 2015 SUBJECT Public Comment PURPOSE A 15-minute opportunity will be provided to members of the public at the beginning of the meeting to address the BFS on all agenda items. The Chair may recognize members of the public during the meeting at his/her discretion. BACKGROUND/DISCUSSION/CONSIDERATION None COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT John P. McCormack Chief Financial Officer jmccormack@valleymetro.org ATTACHMENT None VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

5 DATE AGENDA ITEM 2 October 8, 2015 Summary Minutes of the Budget and Finance Subcommittee May 14, 2015 Lake Mead Conference Room Phoenix, AZ 12:00 p.m. Meeting Participants Councilmember, Gary Sherwood, City of Glendale Councilmember, Jenn Daniels, Town of Gilbert (via phone) Councilmember, Suzanne Klapp, City of Scottsdale (via phone) Vice Mayor, Joe Pizzillo, City of Goodyear Councilmember, Thelda Williams, City of Phoenix Councilmember Sherwood called the meeting to order at 12:05 p.m. 1. Public Comment None 2. Summary Minutes IT WAS MOTIONED BY COUNCILMEMBER SHERWOOD, MOVED BY COUNCILMEMBER WILLIAMS, SECONDED BY COUNCILMEMBER DANIELS AND UNANIMOUSLY CARRIED TO APPROVE THE APRIL 2, 2015 BUDGET AND FINANCE SUBCOMMITTEE (BFS) SUMMARY MEETING MINUTES. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

6 3. FY 2016 Operating and Capital Budget and Five Year Valley Metro RPTA Proposed FY16 Budget and Five Year Plan Budget and Finance Subcommittee May 14, Councilmember Sherwood introduced John McCormack to present. Agenda Item 3 is an action item seeking the Budget and Finance Subcommittee s recommendation to the Board to approve the FY16 Proposed Budget and Five Year Plan The budget has been developed with the cooperation of member cities. 2

7 Budget Schedule FY16 Jan 14 - Board approves Agency goals Feb 19 - Board approves service changes effective April 2015 Feb 27 - Executive Summary / 5 year Plan posted to website Feb 27 - Preliminary Budget / 5 year Plan delivered to Members March and April - Review and comment by Members Apr 1 - Budget presented for information to TMC/RMC Apr 2 - Budget presented for information to BFS Apr 16 - Budget presented to Board of Directors for information May 6 - TMC recommended approval of FY16 Budget & 5yr Plan May 14 - Budget presented to BFS for recommendation May 21 - Budget presented to Board for adoption 2 The budget process has moved through the preliminary budget and member city comment phases to the final steps in adoption. On May 6, the Transit Management Committee (TMC) reviewed the Budget and Five Year Plan with changes that have been incorporated since the April Presentation. The TMC voted unanimously to recommend the Board approve the budget. Next Thursday, May 21 we will present the final budget to the RPTA Board for adoption. 3

8 Changes from Preliminary to Final Budget $ Millions FY16 FY16-20 RPTA Description of Change Change Change Operations Expenditures ADA Lead Agency Disbursements Fixed Route Services Operations Revenues PTF Operations Funding - - Fare Revenues Transit Service Reimbursements* 0.1 (see below detail) PTF Reserves Funding Capital Expenditures - - Capital Revenues Changes from the preliminary budget presented to this committee in April are as follows: On the expenditure side, the City of Phoenix provided increased costs for ADA paratransit service levels of $1.8 Million (M) and fixed route service cost increases of $400,000. The total increase is $2.2 M. The cost increases are funded primarily by: Fare Revenues $100,000 Transit Service Reimbursements of $100,000 PTF Reserves $2.0 M The five year impacts of these changes are $9.8 M for ADA Lead Agency Disbursements and $.4 M for Fixed Route Services. On the revenue side, there are $100,000 of additional fare revenues and a PTF fund reserve requirement of $10.1 M. There are no changes to the capital expenditures or revenues from the preliminary budget. Questions and Answers Vice Mayor Pizzillo asked if there will be any changes to fixing the long term funding. Has there been any movement at the federal level? Ms. McLaren said nothing recent. Vice Mayor Pizzillo asked when funding runs out. Ms. McClaren said end of May. 4

9 Changes from Preliminary to Final Budget (cont d) Transit Service Reimbursements* Detail of changes by Member Dollars $ Operations Revenues Changes to Transit Service Reimbursements FY16 Change TSR - Avondale $ (66,247) TSR - Goodyear $ 66,248 TSR - Surprise $ (14,354) TSR - Tolleson $ 87,834 73,481 4 Mr. McCormack reviewed changes to the transit service reimbursements for each city. Questions and Answers Councilmember Williams asked why those changes were made. Mr. Olson said the Goodyear - Avondale switch was due to Goodyear agreeing to fund existing service that Avondale was paying for in the City of Goodyear. A slight misallocation of preventative maintenance money which affected Surprise and Tolleson, we have corrected that. 5

10 FY16 Revenues $286.9M Funding Sources FY16 FY15 Change $ Public Transportation Funds $133.9 $127.7 $6.2 Transit Service Agreements $30.2 $29.4 $0.8 Federal Grants $33.6 $38.4 -$4.7 METRO Rail Reimbursement $16.9 $15.3 $1.6 Fixed Route Fare Revenues $16.3 $16.1 $0.1 AZ Lottery Proceeds $11.3 $11.5 -$0.2 Regional Area Road Funds $4.8 $4.7 $0.1 Other Revenues $2.0 $1.6 $0.4 Bond Proceeds $0.0 $0.0 $0.0 Carry forwards and Reserves $38.0 $80.0 -$42.0 Total $286.9 $ $ Mr. McCormack reviewed the FY16 Revenues. Total revenues are $286.9 M; down by $37.7 M from last year s budget. FY16 Expenditures $286.9M Uses of Funds FY16 FY15 Change $ Lead agency disbursements $69.5 $77.0 -$7.5 Transit service contracts & fuel Capital RPTA & METRO Personnel Costs Bond Principal & Interest Contractual Agreements AZ Lottery Disbursements Lead Agency Bond Disbursements Other Costs Carry forwards to Reserves Total $286.9 $ $ Mr. McCormack reviewed FY16 Expenditures. Total Expenses are $286.9 M, a decrease of $37.7 M from last year. 6

11 Valley Metro RPTA FIVE YEAR PLAN OVERVIEW FY 2016 THROUGH FY Five Year Operating Forecast - Revenues (thousands) 5-Year Total Revenues Public Transportation Fund (ADOT) $ 733,932 PTF Bond Proceeds 61,257 Less: Debt Service Bus & Rail (149,124) Less: Rail Capital Funding (current) (253,861) Net PTF for Operations $ 392,204 Other Regional Funds $ 25,749 Federal Funds 41,023 Transit service reimbursements 165,559 Fare Revenues 96,651 Interest and other revenue 160 Total revenues $ 721,347 7 There are no changes to the PTF sales tax revenue, bonds, debt service, or rail capital fund requirements. There were minor increase adjustments to federal funds, transit service reimbursements, and fare revenues. Questions and Answers Councilmember Williams asked if we are anticipating the increase because of additional service for fare revenues, the ridership numbers haven t changed. Mr. McCormack said the fare revenue increase from the prior presentation is due to increased service levels received from City of Phoenix. 7

12 Five Year Operating Forecast - Expenditures (thousands) 5-Year Expenditures Total Operations Fixed Route $ 447,655 Paratransit - EVDAR 51,398 Alternative Trans. Ridechoice, NWDAR, MS 20,217 Vanpool Service 5,545 ADA 110,801 Total operations expenditures $ 635,616 Transportation Demand Management $ 7,140 Planning & Administration 24,594 Regional Services 41,731 Safety & Security 1,835 Operations Contingency 1,150 Total expenditures $ 712,066 8 Total Five Year Operating Expenditures is $712.1 M up $10 M from $702 M. Questions and Answers Councilmember Sherwood asked if there is a contingency fund. Mr. McCormack said we have $1.2 M in the operating budget as a contingency. Councilmember Sherwood asked if we have a contingency in the non operating budget. Mr. McCormack said we do not. On the capital side, all of the capital projects contain a contingency element. Councilmember Sherwood asked if the contingency has been at that level for the past 5 years. Does it fluctuate a lot? Mr. McCormack said we have had little need to utilize contingency funds over the years. With respect to service changes, we plan to bring to the board any service changes during the mid year budget adjustment. Mr. Hodgins said we have used the RPTA operating contingency sporadically over the years. Historically there have not been major cost impacts to operating contingency. 8

13 Five Year Capital Program- Revenues (thousands) 5-Year Total Revenues Public transportation funds $ 45,158 FTA - Section ,542 FTA - Section ,347 FTA - Section ,681 FTA - Section ,245 FHWA - CMAQ 1,741 FHWA - STP 18,322 Vehicle/parts proceeds 1,884 Capital assets reserve applied 570 Vanpool reserve applied 695 Undesig. Fund Balance Applied (PTF) 16,542 Total Revenues $ 201,726 9 Five Year Capital Program- Expenditures (thousands) 5-Year Total Expenditures by Project IT Infrastructure $ 1,548 Standard Bus - Replacement 132,399 Standard Bus - Expansion 9,715 Express/BRT - Replacement 7,408 Rural Fleet - Replacement 1,584 Paratransit Fleet - Replacement 1,843 Vanpool Fleet - Replacement 13,707 Vanpool Fleet - Expansion 5,310 Fleet - Other 1,934 Bus/Paratransit O/M Facilities 285 Transit Centers (4-Bay) 2,471 Bus Stop Passenger Amenities 1,073 Park & Rides 9,732 Vehicle Management/Communications Systems 7,702 Fare Collection Systems 2,166 State of Good Repair - Fleet Rebuild 2,850 Total Expenditures $ 201, There were no changes from the April presentations. Questions and Answers Councilmember Sherwood asked if we are purchasing extra light rail cars to accommodate the expansion. Mr. McCormack said we are looking to purchase 8 additional vehicles to accommodate special events. Currently, we use the entire 50-car fleet for special events. Councilmember Sherwood asked if the costs for additional cars has been programmed into the current projects. 9

14 Mr. McCormack said yes, when the initial 20 miles of light rail was constructed, the requirement was for 36 vehicles to operate those miles. We anticipated that special events would require greater numbers. We exercised an option with the car manufacturer to buy 14 additional vehicles bringing the fleet total to 50 cars. The purchase of the 14 additional vehicles has allowed us to add the 3 miles in Mesa and Phoenix serving the 26 mile alignment. Our ability to serve special events is limited with the additional extensions. We are asking for 8 extra cars to meet demand for special events. Councilmember Sherwood asked why we did not program the 14 cars into our 20 mile budget. Why didn t we program car cost into the new extensions? Mr. McCormack said we did not program cars into CME and NWX because we purchased the 14 units. We have built the cost of any vehicles needed into future projects. We have been evaluating the needs in the Fleet Management Plan. We are working to get funding to purchase additional vehicles. Councilmember Daniels requested we show the board a slide of the breakdown of the increase in the FY16 Operating Budget. Mr. McCormack said he will create a slide for his presentation to the Board of Directors. 10

15 PTF Fund Balance Projection $120.0 Fund Balance Forecast $100.0 $80.0 $60.0 $40.0 $20.0 $ Bus Program Rail Program Bus Program Policy Minimum 11 In 2020 the fund balance is $25 M (green bar). The red bar is the current policy minimum which is $14.5 M. The rail side (purple bar) varies as the capital funds build up based on bond issue and expenses incurred. Questions and Answers Councilmember Sherwood asked if there is a policy for rail. Mr. McCormack said the policy is the funding has to be balanced each year and positive at the end of the program. We will present concepts to establish a fund balance for rail capital at our October meeting. 11

16 Today s Action It is recommended that the BFS forward to the Board of Directors approval of the Valley Metro RPTA Proposed Fiscal Year 2016 Budget (July 1, 2015 thru June 30, 2016) and acceptance of the Five-Year Operating Forecast Capital Program (FY 2016 thru 2020). 12 COUNCILMEMBER WILLIAMS MOTIONED, VICE MAYOR PIZZILLO SECONDED AND IT WAS UNANIMOUSLY CARRIED TO FORWARD TO THE BOARD OF DIRECTORS APPROVAL OF THE VALLEY METRO RPTA PROPOSED FISCAL YEAR 2016 BUDGET (JULY 1, 2015 THRU JUNE 30, 2016). 12

17 4. Transit Life Cycle Program Transit Life Cycle Program 2015 Model Update Budget and Finance Subcommittee May 14, 2015 Councilmember Sherwood introduced Paul Hodgins to present. Overview Financial models are balanced Bus surplus $35.2 million Rail surplus $23.1 million Bus operating program changes based on SRTP Rail capital program updated alignments for 2 projects 2 Mr. Hodgins gave an overview of the program. 13

18 20 Year Total (billions) Revenues PTF down $38.8 million (-1.35%) $22.0 million bus, $16.8 million rail Fare increase Assumed in FY2017 then every 3 years New local funding for rail program Tempe Streetcar Northwest Extension Phase II 3 Mr. Hodgins reviewed revenues. Questions and Answers Councilmember Williams asked how much the fare increase assumption is. Mr. Hodgins said the assumption is.25 cents on the base fare. Transportation Excise tax $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $ Forecast Year 4 14

19 Bus Program Summary 5 Program Changes Operating program changes Improved service Increased funding for current service Fleet plan changes Facilities changes 6 Mr. Hodgins reviewed the program changes. 15

20 Operating Program Service changes Increased frequency on Route 50 Weekdays, Scottsdale Increased frequency on Route 61 Sunday, Mesa Increased frequency on Route 72 Weekdays, Scottsdale and Tempe Extend two morning trips on Route 156, Gilbert 7 Questions and Answers Councilmember Sherwood asked when these changes go into effect. Mr. Hodgins said October 2015 except Route 72 which is effective April Councilmember Sherwood asked when do changes for April 2016 have to be presented. Mr. Hodgins said October or November of Operating Program Service changes One additional round trip on Route 542 Eliminate LINK service between Sycamore and Country Club when Central Mesa Light Rail opens Defer Scottsdale/Rural LINK beyond

21 Operating Program Funding changes Fund existing service on Route 81, Scottsdale and Tempe Fund existing service on Route 562, Avondale Fund existing service on Route 563, Avondale Fund existing service on Route 30, Tempe (FY2020) 9 Capital Program Fleet changes Updated fleet replacement plan Tempe Orbit fleet Vanpool useful life Updated fleet expansion plan Based on SRTP improvements Communications upgrade Increased costs to upgrade radio/vms systems 10 Questions and Answers Councilmember Sherwood asked if there has been any progress in getting Wi-Fi on rail. Mr. McCormack said it would be an operating cost increase. It is still under evaluation, we do not know what the cost is at this time. Ms. McLaren said she would get an update for Councilmember Sherwood. 17

22 Capital Program Project changes North Glendale Park-and-Ride, Transit Center Updated to current project location and estimate Baseline/24 th Street Park-and-Ride Updated costs Desert Sky Transit Center Updated costs Scottsdale/Rural LINK Scope reduced to include Traffic Signal Priority and Bus Stop improvements for Route Expenditures Bus Program 2015 Update 2014 Update Change % Change Operations Expenditure Fixed Route Operations $1,007.2 $972.9 $ % ADA & Alternatives $482.9 $482.8 $ % Regional Expenditures $246.1 $240.0 $ % Sub-Total Operations Expenditures $1,736.3 $1,695.7 $ % Capital Expenditure Debt Service $72.1 $72.1 ($0.0) 0.0% Fleet $938.3 $938.9 ($0.6) -0.1% Facilities $258.2 $274.4 ($16.2) -5.9% Sub-Total Capital Expenditures $1,268.6 $1,285.4 ($16.8) -1.3% Total Expenditures $3,004.9 $2,981.1 $ % 12 18

23 Revenues Bus Program 2015 Update 2014 Update Change % Change Revenue Operations PTF $1,613.4 $1,635.4 ($22.0) -1.35% RARF $86.5 $86.5 ($0.0) 0.00% Fares $243.6 $233.8 $ % Federal $71.3 $67.4 $ % Other revenues $20.5 $20.3 $ % Sub-Total Operations Revenue $2,035.2 $2,043.4 ($8.1) -0.40% Revenue Capital Federal - ARRA $35.8 $35.8 ($0.0) 0.00% Federal - Capital $889.9 $902.0 ($12.1) -1.35% Financed Revenue $58.3 $58.3 $ % Other revenues $20.9 $22.7 ($1.8) -7.95% Sub-Total Capital Revenue $1,004.9 $1,018.8 ($13.9) -1.37% Total Revenue $3,040.1 $3,062.2 ($22.1) -0.72% 13 Cash Flow Summary Bus Program TLCP Totals Funding Surplus / Shortfall Total Program Revenues $2,990.1 Total Operating Costs ($1,736.3) Funding surplus before capital and financing $1,253.9 Total Capital Costs ($1,195.6) Financing Needs anticipated: Proceeds Debt Service Series 2009 $50.0 ($73.0) Total Financing $50.0 ($73.0) ($23.0) Total Program Cost 2026 ($2,954.9) Net Fund Balance $

24 Available PTF for Jurisdictional Equity Revenue Forecast $1,613.4 Less: Customer service ($147.0) ADA certification ($29.8) Planning and administration ($8.5) ITS ($8.4) Vanpool ($2.6) Debt service interest ($22.2) Minimum cash balance ($14.4) Net PTF available $1, JE Summary Calculated Policy Percent Sub-region Allocation Allocation Difference Difference Central $435.0 $438.1 $ % East $763.6 $782.5 $ % West $161.3 $159.9 ($1.4) -0.86% $1,359.9 $1,380.5 $ % 16 20

25 Rail Program Summary 17 High Capacity Transit 2014 TLCP 18 Mr. Hodgins highlighted the South Central Corridor (green area) has been added into the Lifecycle Program. The study has been completed. Questions and Answers Councilmember Sherwood asked if the South Central Corridor is in lieu of another extension. Mr. Hodgins said no, it is being added to the plan for completion in Councilmember Sherwood asked if it could switch with another extension that is scheduled for completion in Mr. Hodgins said it could happen if priorities change. 21

26 Capital Projects Tempe Streetcar updated alignment and cost estimate Northwest Phase II updated alignment and cost estimate South Central added with completion in 2034 LRV Acquisition: addition of 8 regional expansion vehicles OMC expansion: reduction in cost estimate 19 Capital Revenues Assumptions Tempe Streetcar Additional $17 million FTA Small Starts Tempe to provide $23 million Northwest Phase II Additional $43 million FTA New Starts Phoenix to provide $35 million for regional costs Phoenix to fund additional $41 million of local costs LRV Acquisition: minimum 50% federal participation before ordering 20 Questions and Answers Councilmember Williams asked why Northwest Phase II is not a regional cost. Mr. Hodgins said it is considered a regional cost, but we do not have an extra $35M in the PTF. We are asking for the cost to be locally funded. Councilmember Sherwood asked if construction will physically go over I-17 versus under. Mr. Hodgins said they will build over I

27 2015 Proposed Update Corridor Costs Base Utilities Total 2015 TLCP Open Year 2014 TLCP Open Year Northwest Phase I $298.5 $23.9 $ Central Mesa $190.8 $8.1 $ Tempe Streetcar $163.0 $13.7 $ Gilbert Road $147.1 $0.0 $ Capitol/I-10 West $926.9 $57.7 $ West Phoenix/Central Glendale * $479.9 $28.7 $ Northwest Phase II * $265.5 $12.0 $ Northeast Phoenix $16.5 $0.0 $ South Central $0.0 $0.0 $ NA Sub-Total Corridor Extensions $2,488.0 $144.2 $2,632.2 * Local costs for these projects continue beyond the life of the TLCP, all regional funds included in TLCP 21 The projects in blue are the changes to corridor costs. Questions and Answers Councilmember Sherwood noted concern about City of Tempe asking Valley Metro to provide the shortfall of $15-17 M. Tempe is currently short $10 M. Tempe is looking for a decision by Friday, May 15 to stop this project from being scheduled out further. Ms. McLaren said MAG had originally given City of Tempe a deadline of Friday, May 15. MAG has extended the deadline to next Thursday in order to present the information to our board. We are waiting for City of Tempe s confirmation that they have their portion of the funds available. 23

28 2015 Proposed Update Other Capital Costs Base Utilities Total 2015 TLCP Open Year 2014 TLCP Open Year LRV Acquisition $96.1 $0.0 $96.1 NA NA OMC Expansion $31.1 $0.0 $ CP/EV Regional Reimbursements $198.8 $74.3 $273.1 System-wide Support Infrastructure $83.0 $0.0 $83.0 Alternatives Analyses $53.3 $0.0 $53.3 Design Standards & System Planning $56.6 $0.0 $56.6 Capital Project Development Administration $25.6 $0.0 $25.6 Sub-Total Other Capital $544.4 $74.3 $618.7 Total Capital Expenditures $3,032.4 $218.5 $3,250.9 Cost of Financing $60.4 Total Capital Project Costs $3, Proposed Update Capital Revenues 2015 Update 2014 Update Change % Change PTF $1,265.7 $1,283.5 ($17.8) -1.4% FTA 5309 $971.0 $995.9 ($25.0) -2.5% CMAQ $263.7 $263.7 $ % Other federal $61.0 $40.7 $ % Phoenix T2000 $446.7 $385.5 $ % Mesa $147.6 $153.2 ($5.6) -3.6% Glendale $100.1 $92.0 $ % New local $57.0 $0.0 $57.0 NA MAG / RPTA $21.5 $20.3 $ % Sub-Total Capital Revenue $3,334.4 $3,235.0 $ % 23 24

29 2015 Proposed Update Cash Flow Summary Rail program TLCP Totals Funding Surplus / Shortfall Total Program Revenues $3,334.4 Total Base Program Cost ($3,032.4) Funding surplus before PTF utility expenses and financing $302.0 Non Prior Right Utility Relocations ($218.5) ($218.5) Financing Needs anticipated: Proceeds Debt Service Series 2009 $55.5 ($77.9) Series 2014 $135.4 ($156.9) Series 2017 $61.6 ($72.9) Term 2021 $0.0 $0.0 Term 2023 $25.0 ($28.7) Advance Funds by Phoenix $60.0 ($61.5) Total Financing $337.5 ($397.9) ($60.4) Total Program Cost 2026 ($3,311.2) Net Fund Balance $ Questions and Answers Councilmember Sherwood asked if we are looking to refinance in Mr. Hodgins said we will review the 2009 bonds (call date of 2019) in If the rates are still low, it would make sense to refinance. 25

30 $120.0 Fund Balance Forecast $100.0 $80.0 $60.0 $40.0 $20.0 $ Bus Program Rail Program Policy Minimum 25 $120.0 Fund Balance Forecast $100.0 $80.0 $60.0 $40.0 $20.0 $ Bus Operating Program Bus Capital Program Rail Capital Program Policy Minimum 26 26

31 Timeline TMC - information May 6, 2015 Board - information May 21, 2015 RTAG May 19, 2015 TMC - action June 3, 2015 Board - action June 18, 2015 Note: METRO Board of Directors will take action on the light rail/high capacity program in May 27 The Rail TLCP will go to the Board for action in May and the RPTA TLCP will go to the Board for action in June. Next Steps Bus Program Work with Mesa to identify service and/or capital improvements through SRTP process Rail Program Complete funding arrangement with Tempe for Streetcar project Develop Small Starts application for Tempe Streetcar for fall submittal to FTA LRV Procurement Secure federal funds for LRVs Develop procurement documents 28 27

32 5. Future BFS Agenda Items Councilmember Sherwood called for any future agenda items. There were none. Valley Metro RPTA Follow up to April 2015 meeting Budget and Finance Subcommittee May 14, Bus Fleet Forecast Conversion to APC 2 Mr. McCormack provided an update of the conversion on the bus fleet to be APC equipped. Questions and Answers Councilmember Sherwood asked what the cost per unit is. Mr. Hodgins and Mr. Olson said between $2-5 thousand. We will find out and get back to the committee. 28

33 6. Next Meeting The next meeting is scheduled for Thursday, October 15, 2015 at 12:00 p.m. COUNCILMEMBER SHERWOOD MOTIONED TO DISMISS, VICE MAYOR PIZZILLO SECONDED AND COUNCILMEMBER SHERWOOD ADJOURNED THE MEETING. The meeting concluded at 1:25 p.m. 29

34 DATE AGENDA ITEM 3 October 8, 2015 SUBJECT FY15 Year-End Review PURPOSE To provide an informational update to the BFS of the FY15 Year-End Review. BACKGROUND/DISCUSSION/CONSIDERATION John McCormack will present. COST AND BUDGET None COMMITTEE PROCESS Financial Working Group: September 29, 2015 for information Budget and Finance Subcommittee: October 15, 2015 for information STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY : Goal 2: Advance performance based operation Tactic E: Maintain strong fiscal controls to support Valley Metro s long-term sustainability. RECOMMENDATION This item is presented for information only. CONTACT John P. McCormack Chief Financial Officer jmccormack@valleymetro.org ATTACHMENT FY15 Year-End Review PowerPoint VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

35 10/8/2015 Valley Metro Fiscal Year 2015 Financial Results Budget and Finance Subcommittee October 15, 2015 Public Transportation Fund Revenues from Maricopa Transportation Excise Tax Actual versus Budget Fiscal Year Month FY 2013/2014 Actuals FY 2014/2015 Budget FY 2014/2015 Actuals Cumulative Budget Variance YTD Cumulative % Variance to Budget Comparison to Prior Year Cumulative Comparison to Prior Year Cumulative Percent Change July $9,937,200 $10,460,135 $10,137,850 ($322,285) -3.08% $200,651 $200, % August 9,594,205 9,863,474 10,053,027 (132,731) -0.65% 458, , % September 9,680,076 10,142,966 10,093,521 (182,176) -0.60% 413,445 1,072, % October 9,640,229 10,242,675 10,190,528 (234,323) -0.58% 550,299 1,623, % November 9,715,097 10,097,179 10,010,211 (321,291) -0.63% 295,115 1,918, % December 9,945,390 10,325,784 10,447,517 (199,558) -0.33% 502,126 2,420, % January 12,521,255 12,569,497 12,312,867 (456,188) -0.62% (208,389) 2,212, % February 9,463,436 10,149,823 9,987,593 (618,418) -0.74% 524,158 2,736, % March 9,906,083 10,407,403 10,756,386 (269,435) -0.29% 850,303 3,586, % April 10,970,909 11,729,341 11,743,214 (255,562) -0.24% 772,305 4,358, % May 10,117,868 10,725,384 10,668,933 (312,013) -0.27% 551,065 4,909, % June 10,282,512 10,958,339 10,916,034 (354,318) -0.28% 633,522 5,543, % Totals $121,774,260 $127,672,000 $127,317,682 $5,543,422 PTF Revenue To Date Summary: Original RTP Estimated Excise Tax Revenues Jan to June 2015 Actual Excise Tax Revenues from Jan to June 2015 $1,514,344,000 $1,089,475,064 ($424,868,936) % 1

36 10/8/2015 2

37 10/8/2015 Valley Metro RPTA Operating Results RPTA Budget vs. Actual Report $ Millions For the quarter ending June 30, 2015 Year to Date Operations Expenditures Budget Actual Variance (Unfav.) Fixed Route Bus Paratransit Vanpool Regional Services Planning Administration METRO Rail (Salary, Fringe, OH) AZ Lottery Fund Disbursements Total Operations Expenditures Valley Metro RPTA Capital Results RPTA Budget vs. Actual Report $ Millions For the quarter ending June 30, 2015 Year to Date Capital Expenditures Budget Actual Variance (Unfav.) Bus Purchases Valley Metro Lead Agency Paratransit Vehicles Lead Agency Vanpool Vehicles Other Capital METRO Rail Total Capital Expenditures

38 10/8/2015 Valley Metro RPTA Cash and Investments FY15 vs. FY14 Current Status of Investments Account Description Type of Funds Balance at Balance at Change Wells Fargo Checking General Fund $ 17,009,103 $ 2,908,276 $ 14,100,827 Wells Fargo Savings Capital Projects/Operating 137,987,094 99,180,546 38,806,548 Various Bank FDIC Certificates of Deposit Capital Projects 6,707,543 2,979,157 3,728,386 US Bank Revenue Bonds Proceeds Capital Projects 4,586 98,671,228 (98,666,642) US Bank Revenue Bonds - Debt Service Reserve Debt service fund 11,090,335 2,453,186 8,637,149 LGIP - Debt Service Reserve Bond Issuance Debt service fund 149,898 32, ,633 Wells Fargo Cash with Escrow Agent Debt service fund 8,039,534 7,872, ,747 Local Government Investment Pool - Other Investments Fiduciary/General Fund 9,373,122 13,196,694 (3,823,572) Total Cash and Investments $ 190,361,215 $ 227,294,139 $ (36,932,924) - Summary of Bond Funds 19,284, ,029,466 (89,745,113) - All Other Cash Reserves $ 171,076,862 $ 118,264,673 $ 52,812,189 Investment Earnings $ 347,785 $ 285,145 $ 62,640 FY15 FY14 Change 4

39 DATE AGENDA ITEM 4 October 8, 2015 SUBJECT FY16 First Quarter Reports PURPOSE To provide an informational update to the BFS of the FY16 First Quarter Reports. BACKGROUND/DISCUSSION/CONSIDERATION John McCormack will present. COST AND BUDGET None COMMITTEE PROCESS Financial Working Group: September 29, 2015 for information Budget and Finance Subcommittee: October 15 for information Board of Directors: October 22, 2015 for information STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY : Goal 2: Advance performance based operation Tactic E: Maintain strong fiscal controls to support Valley Metro s long-term sustainability. RECOMMENDATION This item is for information only. CONTACT John McCormack Chief Financial Officer jmccormack@valleymetro.org ATTACHMENT FY16 Q1 Report PowerPoint VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

40 10/8/2015 Finance FY16 Q1 Report Budget and Finance Subcommittee October 15, 2015 Valley Metro RPTA Operating Results Q1 RPTA Budget vs. Actual Report For the quarter ending September 30, st Quarter $ Millions Year to Date Operations Expenditures Budget Actual Variance (Unfav.) Budget Actual Fixed Route Bus Paratransit Vanpool Regional Services Planning Administration METRO Rail (Salary, Fringe, OH) Total Operations Expenditures Variance (Unfav.) 2 1

41 10/8/2015 Valley Metro RPTA Capital Results Q1 RPTA Budget vs. Actual Report For the quarter ending September 30, st Quarter Capital Expenditures Budget Actual Year to Date Variance (Unfav.) Budget Actual $ Millions Variance (Unfav.) Bus Purchases Valley Metro Lead Agency Paratransit Vehicles Lead Agency Vanpool Vehicles Other Capital METRO Rail (5.0) (5.0) Total Capital Expenditures END OF PRESENTATION 4 2

42 DATE AGENDA ITEM 5 October 8, 2015 SUBJECT Series 2014 Advance Bond Proceeds PURPOSE To request approval of the Series 2014 Advance Bond Proceeds Note Payable. BACKGROUND/DISCUSSION/CONSIDERATION On April 16, 2015, the RPTA and VMR Boards amended the LRT Program Agreement establishing a Security Agreement whereby RPTA will hold an interagency receivable due from Valley Metro Rail (VMR) for bond proceeds advanced prior to the collection of sales taxes which fund the bonds. The Series 2014 Advance Bond Proceeds Note Payable establishes the amount and repayment schedule for financial statement reporting purposes. As of June 30, 2015, the Series 2014 Advance payable from VMR to RPTA totaled $69,583,715. Series 2014 Advance Principal and Interest Repayment Schedule As sales taxes are received from the State Treasurer, RPTA segregates 43.24% of the PTF into the Valley Metro Rail Fund for VMR capital projects. PTF sales tax revenues allocated to VMR are to be used to pay debt service principal and interest first. The principal and interest payments will be paid from the 43% allocation; any funds remaining after payment of the annual principal and interest debt service on the outstanding bonds are available to be drawn by VMR for design and construction related costs. VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

43 COST AND BUDGET There is no impact to RPTA or VMR budgets. All costs of PTF Bond program are included in the Adopted FY16 Operating and Capital Budget and FY Five-Year Operating Forecast and Capital Program. The Note Payable articulates the existing funding program for financial statement purposes. STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY : Goal 2: Advance performance based operation o Tactic E: Maintain strong fiscal controls to support Valley Metro s long-term sustainability. COMMITTEE ACTION Financial Working Group: September 29, 2015 for information RTAG: September 15, 2015 for information TMC: October 8, 2015 for action BFS: October 15, 2015 for action Board of Directors: October 22, 2015 for action RECOMMENDATION In accordance with the LRT Program Agreement, it is recommended that the BFS forward to the Board of Directors authorization for the Series 2014 Advance Bond Proceeds Note Payable due from VMR to RPTA in the amount of $69,583,715. The Note will be fully paid by PTF sales tax proceeds allocated to the LRT Program under Prop 400. CONTACT John P. McCormack Chief Financial Officer jmccormack@valleymetro.org ATTACHMENT None LRT Program Agreement # S 03 is available upon request. 2

44 DATE AGENDA ITEM 6 October 8, 2015 SUBJECT Policy Review of Operating and Capital Fund Balance Reserve Minimums PURPOSE To provide to the Budget and Finance Subcommittee a draft reserve fund policy for consideration and discussion. BACKGROUND/DISCUSSION/CONSIDERATION Written adopted financial policies relative to designated reserves and reserve funds have many benefits, and represents a critical element of sound fiscal management. Reserves and reserve funds are prudent fiscal management tools, which are a cornerstone of longterm financial planning. A written and adopted policy provides for and facilitates attainment of program and financial goals relative to the prudent accumulation and management of designated reserves and reserve funds. It is the intent of this policy to clearly identify both reserve fund categories and purposes, and set target levels for reserves that are consistent with the Agency s mission and vision statements and the Agency s Strategic Plan. This Reserve Fund Policy has been developed to consider and appropriately provide for the following: 1. To ensure continued operation and solvency of the Agency to carry out its mission and strategic plan. 2. To maintain a financially viable Agency that can maintain stable levels of service. 3. To maintain and enhance the sound fiscal condition of the Agency. 4. To maintain financial flexibility in order to be able to continually adapt to change, and permit an orderly adjustment to unanticipated events. 5. To maintain a diversified and stable long-term financial plan. 6. The accumulation and maintenance of an amount equal to the stated target fund level for each specific reserve fund. 7. The review of this policy on an annual basis in order to determine appropriate changes, additions and/or deletions. The attached draft Valley Metro Reserve Fund Policy provides details of the scope, computation of target fund levels and annual reviews of six (6) specific reserve funds. The table below summarizes the reserve funds: VALLEY METRO 101 N 1ST AVE STE 1300 PHOENIX AZ

45 SUMMARY OF RESERVE FUND TARGET FUND LEVELS RESERVE FUND General Fund Operating Reserve Capital Reserve Fund Working Capital Reserve Fund Vanpool Reserve Fund TARGET LEVEL 17% of operating expenditures 17% of capital expenditures 17% of major infrastructure project costs 20% of vanpool fleet replacement costs Emergency Reserve Fund $1,000,000 Debt Service Reserve Fund As prescribed in Bond Resolution(s) COST AND BUDGET The draft Reserve Fund Policy has not been integrated into the budget process. Current cash and investment fund balances are adequate to meet the requirements of the draft policy. COMMITTEE PROCESS Budget and Finance Subcommittee: October 15, 2015 for information STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY : Goal 2: Advance performance based operation Tactic E: Maintain strong fiscal controls to support Valley Metro s long-term sustainability. RECOMMENDATION This item is presented for information only. CONTACT John P. McCormack Chief Financial Officer jmccormack@valleymetro.org ATTACHMENT Valley Metro Reserve Fund Policy 2

46 VALLEY METRO RESERVE FUND POLICY Draft September 22, 2015 Introduction: Written adopted financial policies relative to designated reserves and reserve funds have many benefits, and represents a critical element of sound fiscal management. Reserves and reserve funds are prudent fiscal management tools, which are a cornerstone of long-term financial planning. A written and adopted policy provides for and facilitates attainment of program and financial goals relative to the prudent accumulation and management of designated reserves and reserve funds. It is the intent of this policy to clearly identify both reserve fund categories and purposes, and set target levels for reserves that are consistent with the Agency s mission and vision statements and the Agency s Strategic Plan. This policy shall be known and may be cited as the Valley Metro Reserve Fund Policy. Objectives: This Reserve Fund Policy has been developed to consider and appropriately provide for the following: 8. To ensure continued operation and solvency of the Agency to carry out its mission and strategic plan. 9. To maintain a financially viable Agency that can maintain stable levels of service. 10. To maintain and enhance the sound fiscal condition of the Agency. 11. To maintain financial flexibility in order to be able to continually adapt to change, and permit an orderly adjustment to unanticipated events. 12. To maintain a diversified and stable long-term financial plan. 13. The accumulation and maintenance of an amount equal to the stated target fund level for each specific reserve fund. 14. The review of this policy on an annual basis in order to determine appropriate changes, additions and/or deletions. 2

47 Reserve Fund Policy: In order to achieve the objectives of this Policy, the Chief Financial Officer shall adhere to the following guidelines: 1. Reserve funds may be established from time to time by the Board of Directors as an important component of sound financial management to meet both short and long- term financial objectives, and to ensure prudent financial management practices. 2. Reserve funds may be designated by the Board of Directors as a restricted reserve fund or non-restricted reserve fund. 3. Restricted reserve funds shall be segregated, and limited in use to specific and designated purpose(s) as defined and established by the Board of Directors. 4. Assets of a restricted reserve fund shall be held separately from the General Fund, and shall only be used for the stated purpose(s) of the specific reserve fund. 5. Non-restricted reserve funds shall have no reference to specific accounting assets. 6. Non-restricted reserve funds do not require the physical segregation of funds. 7. The reserve funds may be invested in financial institutions and instruments in accordance with the Agency s Investment Policy. 8. All investment earnings from restricted and non-restricted reserve funds shall be credited to the Agency s General Fund, unless otherwise stated herein. 9. Board of Directors approval shall be required prior to the expenditure of restricted reserve funds, unless otherwise stated herein. 10. The Chief Financial Officer shall maintain a written Reserve Fund Policy approved by the Board of Directors. 11. The Chief Financial Officer shall annually review the Reserve Fund Policy with the Board of Directors at a public meeting in order to determine appropriate changes, additions, and/or deletions. 12. The Chief Financial Officer shall ensure that the Reserve Fund targets are met, or forecast to be met, for each year of the five-year operating and capital budgets. Reserve Funds: The Board of Directors hereby establishes and designates the following reserve funds: 1. General Fund Operating Reserve. See Attachment A. 2. Capital Reserve Fund. See Attachment B. 3. Working Capital Reserve Fund. See Attachment C. 4. Vanpool Reserve Fund. See Attachment D. 5. Emergency Reserve Fund. See Attachment E. 6. Debt Service Reserve Fund. As prescribed in Bond Resolution(s). Target Fund Levels: The Board of Directors shall establish a stated target fund level for each designated reserve fund. See Attachment F for a set of established target fund levels for designated reserve funds. 2

48 Annual Evaluation: The Chief Financial Officer shall perform a review and analysis of each designated reserve funds for presentation to the Board of Directors at a public meeting upon the occurrence of the following: 1. Upon consideration by the Board of Directors of the annual budget. 2. Upon any significant change to and/or expenditure(s) from a designated reserve fund. 3. Upon determination that a fund balance is less than the established target fund level for a designated reserve fund. 2

49 Fund Purpose: ATTACHMENT A GENERAL FUND OPERATING RESERVE The purpose of the General Fund Operating Reserve is to accumulate sufficient reserve funds necessary to satisfy the general cash flow demands and requirements of the Agency s general operations. This reserve fund will preserve credit worthiness, ensure adequate financial resources are available for timely payment of Agency obligations, and provide liquidity throughout the fiscal year. Policy: In order to achieve the objectives of this policy the Chief Financial Officer shall adhere to the following guidelines: 1. This reserve fund shall be known as the General Fund Operating Reserve. 2. The General Fund Operating Reserve shall be designated as a non-restricted reserve fund. 3. The Chief Financial Officer is authorized to approve the expenditure of General Fund Operating Reserve, without prior approval of the Board of Directors, in response to dayto-day cash flow requirements. 4. This policy shall be reviewed on an annual basis for long-term adequacy and use restrictions. Target Fund Level: The target fund level for the General Fund Operating Reserve is to maintain a balance in the General Fund, as of July 1 st of each fiscal year, equal to a minimum of 17 percent of annual budgeted operating expenditures, unless otherwise directed by the Board of Directors at a public meeting. This target fund level was established based upon the following general guidelines: 1. The Agency shall maintain a balance in the General Fund equal to approximately two (2) months budgeted expenditures for the fiscal year in the following funds: a Finance & Management Services b Transit Service Operations c Communications & Government Relations d TDM Division e Transit Planning Division f Office of the CEO g Regional Services 2. Undesignated fund balance for Bus PTF and RARF may be used to replenish this reserve fund. 2

50 ATTACHMENT B CAPITAL RESERVE FUND Fund Purpose: The purpose of the Capital Reserve Fund is to accumulate sufficient reserve funds necessary to ensure timely acquisition, replacement and upgrade of the Agency s capital assets, excluding major infrastructure construction projects. Policy: In order to achieve the objectives of this policy, the Chief Financial Officer shall adhere to the following guidelines: 1. This reserve fund shall be known as the Capital Reserve Fund. 2. The Capital Reserve Fund shall be designated as a restricted reserve fund. 3. Each adopted budget of the Agency shall contain a transfer from the General Fund to the Capital Reserve Fund in an amount approved by the Board of Directors. 4. Monies transferred into the Capital Reserve Fund shall be expended solely for the construction of new non-major system infrastructure and capital equipment. 5. The Chief Financial Officer is authorized to approve the expenditure of Capital Reserve Funds, without prior approval of the Board of Directors, in accordance with approved budget authorizations. 6. All investment earnings from the Capital Reserve Fund shall be credited to the Agency s General Fund. 7. This policy shall be reviewed on an annual basis for long-term adequacy and use restrictions. Target Fund Level: The target fund level for the Capital Reserve Fund is to maintain a balance, as of July 1 st of each fiscal year, equal to a minimum of 20 percent of capital funds budgeted excluding major capital infrastructure construction projects, unless otherwise directed by the Board of Directors at a public meeting. 1. Undesignated fund balance in excess of the General Fund Operating Reserve for Bus PTF and LRT PTF may be used to replenish this reserve fund. Proceeds from the sale of capital assets, excluding any remaining federal interest, may also be used to replenish this reserve fund. No RARF may be used to replenish this reserve fund. 2

51 ATTACHMENT C WORKING CAPITAL RESERVE FUND Fund Purpose: The purpose of the Working Capital Reserve Fund is to accumulate sufficient reserve funds necessary to satisfy the general cash flow demands and requirements of the Agency s major capital infrastructure programs. Major projects are defined as multi-year infrastructure construction projects that exceed $20 million in total project costs. Policy: In order to achieve the objectives of this policy, the Chief Financial Officer shall adhere to the following guidelines: 1. This reserve fund shall be known as the Working Capital Reserve Fund. 2. The Working Capital Reserve Fund shall be designated as a non-restricted reserve fund. 3. The Chief Financial Officer is authorized to approve the expenditure of Working Capital Reserve Fund, without prior approval of the Board of Directors, in response to day-to-day cash flow requirements. a. Reserve funds for major light rail projects undertaken by Valley Metro Rail may be advanced to VMR to meet cash flow demands using available LRT PTF funds. Such advanced reserve funds may not be used by VMR for operating cash flow. b. Bond proceeds funds may fulfill the Working Capital Fund reserve requirements. 4. All investment earnings from the Working Capital Reserve Fund shall be credited to the appropriate capital revenue fund (e.g. LRT PTF or Bus PTF). 5. This policy shall be reviewed on an annual basis for long-term adequacy and use restrictions. Target Fund Level: The target fund level for the Working Capital Reserve Fund is to maintain a balance, as of July 1 st of each fiscal year, equal to a minimum of 17 percent of the budgeted expenditures for the major capital infrastructure projects, unless otherwise directed by the Board of Directors at a public meeting. 1. The Agency shall maintain a balance in the Working Capital Reserve Fund equal to approximately two (2) months budgeted expenditures for the fiscal year. 2. Undesignated fund balance in excess of the General Fund Operating Reserve for Bus PTF and LRT PTF may be used to replenish this reserve fund. No RARF may be used to replenish this reserve fund. 3. Upon completion of each project any remaining working capital funds will be returned to the undesignated fund balance from which it originated. 2