PLANNING AND FINANCE COMMITTEE

Transcription

1 PLANNING AND FINANCE COMMITTEE J A N U A R Y 2 4,

2 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY ROSTER PLANNING & FINANCE COMMITTEE COUNTY MEMBER RCTC: Daryl Busch (Chair) 1 Vote Mayor City of Perris Adam Rush Mayor Pro-Tem City of Eastvale VCTC: Keith Millhouse (Vice-Chair) 1 Vote Council Member City of Moorpark METRO: Michael Antonovich 1 Vote Metro Board of Directors Supervisor, 5 th District County of Los Angeles Ara Najarian Council Member City of Glendale Jaime de la Vega Metro Appointee Richard Katz Metro Appointee SANBAG: Patrick Morris 1 Vote Chair, Metrolink Board of Directors Mayor City of San Bernardino Alan D. Wapner Mayor Pro Tem City of Ontario OCTA: Carolyn Cavecche 1 Vote OCTA Appointee One Gateway Plaza, 12 th Floor Los Angeles, CA 90012

3 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY PLANNING AND FINANCE COMMITTEE FRIDAY, JANUARY 24, :00 A.M. LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY BOARD ROOM ONE GATEWAY PLAZA, 3 rd FLOOR LOS ANGELES, CALIFORNIA AGENDA DESCRIPTIONS The agenda descriptions are intended to give notice to members of the public of a brief general description of items of business to be transacted or discussed. The posting of the recommended actions does not indicate what action will be taken. The Committee may take any action that it deems to be appropriate on the agenda item and is not limited in any way by the notice of the recommended action. The Chair reserves the right to discuss the items listed on the agenda in any order. A person with a disability may contact the Committee Secretary's office at (213) or via batesc@scrra.net at least 72-hours before the scheduled meeting to request receipt of an agenda in an alternative format or to request disability-related accommodations, including auxiliary aids or services, in order to participate in the public meeting. Later requests will be accommodated to the extent feasible. SUPPORTING DOCUMENTATION The agenda, staff reports and supporting documentation are available from the Committee Secretary, located at One Gateway Plaza, 12 th Floor, Los Angeles, CA 90013, and on the Metrolink website at under the Committee Agenda link. PUBLIC COMMENTS ON AGENDA ITEMS Members of the public wishing to address the Committee members regarding any item appearing on the agenda, may do so by completing a Speaker s Form and submitting it to the Committee Secretary. Speakers will be recognized by the Chair at the time the agenda item is to be considered. When addressing the Committee, please state your name for the record. Please address the Committee as a whole through the Chair. Please note comments to individual Committee members or staff are not permitted when addressing the Committee. A speaker s comments shall be limited to three (3) minutes. PUBLIC COMMENTS ON ITEMS NOT ON THE AGENDA Members of the public wishing to address the Committee members regarding any item not on the agenda, but within the subject matter jurisdiction of the Committee, will be taken under Item 3 (Public Comment), and will be subject to the same guidelines as noted above. One Gateway Plaza, 12 Floor, Los Angeles, CA 90012

4 Planning and Finance Committee Agenda Transmittal Date: January 17, 2014 Meeting Date: January 24, 2014 Page 2 1. Call to Order 2. Pledge of Allegiance 3. Public Comment REGULAR CALENDAR 4. Approval of Minutes October 25, 2013 Planning and Finance Committee Meeting Minutes. Staff recommends the Planning and Finance Committee approve the minutes of the October 25, 2013 Committee meeting. Page 1 5. Contract No. SP Information Technology (IT) Technical Support Services Exercise Second Year Option and Increase Contract Funding Authorization Intratek Computer, Inc. Information technology support services are required to service and maintain the Authority s internal computing systems, technologies, and information infrastructure. On August 10, 2012, following a competitive procurement, the Board awarded Contract No. SP for IT technical support services to Intratek Computer, Inc. The term of the contract was one year with two one-year options. The total not-to-exceed amount was $740,000 for the first year. As a result of the Financial Information System (FIS) and Positive Train Control (PTC) systems changes and to maintain IT support capabilities the Board approved exercising the first contract option to extend the contract for FY and increase the contract funding authorization by $900,000 for a new total contract funding authorization of $1,640,000. Staff recommends the Planning and Finance Committee approve and recommend the Board authorize the Chief Executive Officer to exercise the second year option and increase contract funding authorization for Contract No. SP with Intratek Computer, Inc., in an amount not-to-exceed $950,000 for a new total contract funding authorization not-to-exceed amount of $2,590,000. This is the final one-year option for this contract. Funding for the IT technical support services and for incremental temporary IT resources is included in the FY Operating Budget. Funding for subsequent years will be requested in future budgets. Page 8 6. Reinstatement of the 2014 Holiday Toy Express A decision is needed to determine the future of the Holiday Toy Express and whether to continue the holiday tradition or modify the community outreach program for future years. The Holiday Toy Express was the Southern California Regional Rail Authority s (Authority) extensive community outreach program which, due to budget limitations, was

5 Planning and Finance Committee Agenda Transmittal Date: January 17, 2014 Meeting Date: January 24, 2014 Page 3 suspended in FY At the Special Board meeting on June 28, 2013, the Board of Directors elected to eliminate the Holiday Toy Express from the FY14 Budget. The Holiday Toy Express did not operate during the holiday season in 2013 and was placed on hiatus until further notice. Staff recommends the Planning and Finance Committee approve and recommend the Board approve one of the three options presented for operating the Holiday Toy Express: Option #1) Operate the Holiday Toy Express as was done for sixteen years from 1996 through A show and performance would be developed and operation could begin in November The estimated cost for the option is $280,000. Option #2) Decorate a train with lights, a train wrap or other items and operate the train on regular revenue service. Cities and organizations could charter this train for local events. Operation for this option could begin in November 2015, following a procurement process schedule. The estimated cost for this option ranges from $100,000 to $200,000. Option #3) Decorate the interior of a Metrolink train and a location at Los Angeles Union Station (LAUS). Tickets would be sold for families to board the train and ride to meet Santa at LAUS. Operation for this option could begin as early as November 2015, following a procurement process schedule. The estimated cost for this option ranges from $115,000 to $195,000. Option #4) Not reinstates the 2014 Holiday Toy Express. There is no immediate budget impact as a result of this report. However, any funding for the program would need to be included in the FY or FY (depending on the option selected) budget process. Page Adoption of the Annual Investment Policy Local agencies are required by state law to annually review and approve their investment policy, and to delegate investing authority for one-year periods. Due to the current vacancy of the Chief Finance Officer position, staff recommends that the Board continue to assume the duties until the current Chief Finance Officer vacancy is filled. Staff recommends the Planning and Finance Committee approve and recommend the Board approve the annual adoption of the Southern California Regional Rail Authority (Authority) Investment Policy (Attachment A) and continue to assume the duties until the Chief Finance Officer position is filled and at that time approve the delegation of investing authority of Treasurer. There is no budget impact as a result of this status report. Page Quarterly Investment Report as of December 31, 2013 Section VII of the Southern California Regional Rail Authority s (the Authority) Annual Investment Policy requires that the Treasurer make a quarterly investment report to the Board of Directors, and Section of the California Government Code encourages local agencies to file this report. This report covers the quarter ended December 31,

6 Planning and Finance Committee Agenda Transmittal Date: January 17, 2014 Meeting Date: January 24, 2014 Page The Authority is currently managing a portfolio of $80.3 million in cash, cash equivalents, and investment funds. The Planning and Finance Committee may receive and file this report. There is no budget impact as a result of this status report. Page FY Quarterly Accounts Receivable Status Report Quarter Ended December 31, 2013 This report presents a preliminary status update on the accounts receivable for the second quarter ended December 31, 2013 for Southern California Regional Rail Authority (Authority). The Authority s main sources of funds include passenger fares, dispatching and maintenance of way revenues, member agency operating and capital subsidies, and state and federal grant programs. As of December 31, 2013, total outstanding accounts receivable balance is $58.5 million. Of the total accounts receivable, $22.0 million is current (30 days or less), and $36.5 million are past due. Additionally, approximately $15.2 million of the accounts receivable are over 90 days. 1 The Planning and Finance Committee may receive and file this report. There is no immediate budget impact as a result of this status report. Page Passenger Fare Revenue and Ridership Report Period Ended December 31, 2013 This item presents a preliminary analysis on passenger fare revenues and boardings for the six months ended December 31, 2013, and a comparison of prior year results and FY budget as detailed in Attachment A of the staff report. Line segments are further delineated by weekday and weekend statistics and results. Included in this report are comparisons of operating line fare revenues, ridership, and revenue per rider. The Planning and Finance Committee may receive and file this report. The Authority is $2.2 million under budget for fare revenue for FY Page FY (FY15) Budget Development Process and Calendar The Joint Exercise of Powers Agreement (JPA) requires that the Southern California Regional Rail Authority (the Authority) provide its member agencies a proposed budget on or before May 1 for the succeeding fiscal year. The calendar in Attachment A of the staff report is provided to highlight significant steps in the process of developing and adopting the FY Budget. Staff will discuss the budget development process at the meeting. 1 The accounts receivable data is obtained from Oracle r12.

7 Planning and Finance Committee Agenda Transmittal Date: January 17, 2014 Meeting Date: January 24, 2014 Page 5 The Planning and Finance Committee may receive and file this report. There is no budget impact, as this report represents a summarized schedule of the FY Budget development process. Page Contract No. SP Update on Strategic Plan - Parsons Brinckerhoff, Inc. This report presents a brief progress update regarding the development of the Southern California Regional Rail Authority (Authority) Strategic Plan, Phase I. The Strategic Plan effort kicked off on December 4, During the first six weeks of the effort, the Authorities Strategic Planning consultant Parsons Brinckerhoff, has initiated obtaining historical costs, reviewed Working Group deliverables, developed performance metrics and issued Board member and Chief Executive Officer (CEO) surveys - and distributed the survey to the Technical Advisory Committee (TAC) at its meeting on January 14, Of the 21 Board members or alternates, 14 have responded to the survey as of January 10, These surveys have been followed up by one-on-one discussions with nine of the 21 Board members or alternates and three CEO s. The Planning and Finance Committee may receive and file this report. There is no budget impact as a result of this status report. Page Tier 4 Locomotive Program Project Update and Funding Status Staff is presenting an update of the Authority s Tier 4 Locomotive Program and funding status for Contract No. EP with ElectroMotive Diesel, Inc. (EMD). At the December 14, 2012 meeting the Board awarded Contract No. EP to EMD in an amount of $129,400,000 to procure 17 Tier 4 new locomotives, with an option for three additional locomotives. The Authority intends to exercise the option for the three additional locomotives in spring of Relative to the funding of the Tier 4 locomotive program, $150 million is programmed to the Authority covering both the procurement and support costs for the entire order of 20 locomotives. The funding will be received at different times throughout the duration of the contract. Currently, the Authority has $121 million and anticipates it will have sufficient funds by the spring to exercise the option on the remaining three locomotives. The Planning and Finance Committee may receive and file this status report. There is no budget impact as a result of this status report. Page 66

8 Planning and Finance Committee Agenda Transmittal Date: January 17, 2014 Meeting Date: January 24, 2014 Page Finance Department Update 15. Chief Executive Officer s Report 16. Chair s Comments 17. Committee Member Comments 18. Adjournment

9 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHOR ITY MINUTES OF THE SCRRA PLANNING AND FINANCE COMMITTEE OCTOBER 25, 2013 ITEM 4 COMMITTEE MEMBERS IN ATTENDANCE: VOTES RCTC: METRO: SANBAG: OCTA: STAFF: DARYL BUSCH (Chair) Adam Rush MICHAEL ANTONOVICH 1 ARA NAJARIAN Jaime de la Vega Richard Katz PATRICK MORRIS Alan Wapner Carolyn Cavecche MICHAEL P. DePALLO, Chief Executive Officer 2 ALBERT SCALA, Chief Project & Contract Compliance e Officer ROBERT TURNAUCKAS, Chief Administrat tive Officer DON DEL RIO, General Counsel OLGA YERO, Chief of Staff CARRIE BATES, Committee Secretary Meeting minutes are presented in a format that corresponds with the Planning and Finance Committee Agenda, which is incorporated by reference with these minutes. SCRRA Planning and Finance Committee Agendas are available from the Metrolink website ( or by calling the Committeee Secretary at Call to Order The October 25, 2013, Planning and Finance Committee Meeting was called to order by Chair Busch at 10: 03 a.m. at the Los Angeles County Metropolitan Transportation Authority Board Room, One Gateway Plaza, 3 rd Floor, Los Angeles, California, Pledge of Allegiance Directorr Najarian led the group in the Pledge of Allegiance. 1 Director Antonovich joined the meeting during the discussion of Item No Director Morris and Michael DePallo joined the meeting during the discussion of Item No. 5. 1

10 Planning and Finance Committee Meeting Minutes October 25, 2013 Transmittal Date: January 17, 2014 Page 2 3. Public Comment Chair Busch inquired if any members of the public wished to address the Committee. With there being no requests to speak, the Public Comment period was formally closed. REGULAR CALENDAR 4. Approval of Minutes July 26, 2013 Planning and Finance Committee Meetings Upon a motion by Director Najarian, seconded by Director Katz, the Planning and Finance Committee approved the minutes of the July 26, 2013 Committee meeting. There was no opposition and the motion passed unanimously. ACTION: The Planning and Finance Committee approved the July 26, 2013 Committee minutes. 5. Contract No. SP Consulting Services for Development of Strategic Plan Recommendation for Award Parsons Brinckerhoff, Inc. Albert Scala, Chief Project & Contract Compliance Officer, provided a brief background on this item as detailed in the staff report and presentation. He explained that it was important for the Authority to have a Strategic Plan that was supported by the five member agencies. He reviewed the timeline and costs associated with the two phases of the project. Director Rush inquired about the staffing needs as it related to the budget to complete the strategic plan. Angie Starr, Strategic Communications Manager explained that currently one full-time staff person was designated to the Strategic Plan, along with various working groups which is comprised of Technical Advisory Committee (TAC) members, member agency staff and other transportation agencies subject matter experts. Director Rush requested staff provide a breakdown of staffing needs and associated costs. 3 Upon a motion by Director Morris, seconded by Director Katz, the Planning and Finance Committee approved staff s recommendation. There was no opposition and the motion passed unanimously. ACTION: The Planning and Finance Committee approved and recommends the Board of Directors authorize the Chief Executive Officer to award Contract No. SP to Parsons Brinckerhoff, Inc. in an amount of $584,576 with a $50,000 contingency for a total not-toexceed contract funding authorization of $634,576, for a contract term of fifteen (15) months from the Notice to Proceed (NTP). 3 Staff sent out letters to SCRRA TAC members in November

11 Planning and Finance Committee Meeting Minutes October 25, 2013 Transmittal Date: January 17, 2014 Page 3 6. Quarterly Investment Report First Quarter Ended September 30, 2013 Doug Farrow, Partner, KPMG, provided a brief background on this item as detailed in the staff report for the first quarter ended September 30, He noted that the Authority s cash position as of September 30, 2013, was $61.7 million with approximately $19.4 million of operating cash on hand which represented about 31.5% of total funds. The remaining balance is comprised of restricted funds in the amount of $40.4 million and unrestricted funding in the amount of $1.9 million totaling $42.3 million which earned $25,000. Director Morris asked if the larger restricted funds would cause any issue as far as cash flow, Doug Farrows responded that no anticipated issues were expected. Director Cavecche noted that although KPMG was working diligently, she did not have confidence in the dollar amounts given to the Committee last year relating to restricted funds and requested KPMG provide a report between now and the Board meeting to show how much the Authority is supposed to have in restricted funds and under what headings and categories. She expressed the immediate need to implement policies and internal controls relating to the Authority s finances. Doug Farrow noted that he would provide the requested information within two weeks to the Board. Director Katz noted restricted or segregated (restricted or separated) funds are different in some ways and inquired as to the current status of those funds. Doug Farrow stated that the operational accounts are segregated. Director Katz questioned if that included all federal and state monies as well. Doug Farrow again stated that the $42 million was segregated, but he would need to return to the Committee to confirm if the federal and state monies were part of that segregation 4. Director Katz stated that he remembered a few years back requesting staff to segregate those funds and he believed that the Board was recently informed that these funds still had not been segregated. Barbara Manning, Chief Auditor, mentioned that currently an audit was being conducted on restricted (segregated or separated) funds partly in response to the Board questions and concerns expressed at the October Board meeting. She noted that staff had gained access to the accounts and noted some transfers between accounts occurred which could have been legitimate transfers, but additional detail work needed to be completed in order to determine the reason for the movement. Director Katz recalled the February 2013 Finance Ad Hoc Report regarding the need to segregate funds and inquired if the accounts had been segregated at this point. Director Katz expressed his frustration over the length of time it has taken staff to set up these accounts stating that this is something that people should be held responsible for. The consequences of this, as we all know, are significant; he stated he does not know why this is taking two years. 4 Following the Committee meeting, it was confirmed that Proposition 1B funds are state funds only, and are invested in the Local Agency Investment Fund (LAIF) account which is restricted and segregated from the operational accounts. 3

12 Planning and Finance Committee Meeting Minutes October 25, 2013 Transmittal Date: January 17, 2014 Page 4 Director de la Vega noted that the $42.3 million balance was less than the amount of funds identified in the June 2012 Comprehensive Annual Financial Report (CAFR) and that reconciliation still needed to occur as the account was underfunded. Doug Farrow confirmed that staff was currently in the process of setting up the accounts and noted that it would be completed within the next few weeks. Director Cavecche expressed her concerns relating to several items outlined in the Finance Ad Hoc report issued in February 2013 that were still unresolved. She also addressed invoicing issues with member agencies, the need for segregated fund accounts to be set up and stressed the importance of obtaining the necessary accounting staff to provide assistance to get the department caught up. She expressed her frustration and was concerned about the amount of time needed to correct all the system issues. She felt that all departments have been affected and there is a need to ensure staff receives proper training. Director Cavecche stated that she and Director de la Vega have discussed the need for each of the member agency s finance staff to meet with the Authority s finance staff in an attempt to determine what is really owed. Director Antonovich requested staff provide a monthly report to update the Board on member agency payments delinquent versus current. Doug Farrow confirmed that staff would provide that information on the agenda on a monthly basis. Director Cavecche reiterated that the Authority has yet to provide the necessary documentation for the member agencies to process payments. Director Morris noted that KPMG has been focused on collecting receivables and will soon focus on collecting aging receivables noting that the five biggest outstanding accounts are the member agencies and Caltrans. Doug Farrow assured the Committee that both KPMG and staff will be working to reconcile with the member agencies and Caltrans to resolve these receivables. Director de la Vega noted that between June and September 2013, the Authority continued its practice of borrowing money from the restricted funds, and that those funds have not been repaid to date. He stressed the need to confirm with the Board if this practice is acceptable or should be discontinued, noting however, that if the practice would be discontinued the potential for a cash flow problem on the Operating side could be an issue. Director Morris stated that the law allows for monies to be borrowed and repaid within the same fiscal year. Chair Busch asked if there is a policy in place and if not this should be a matter to bring back to the Committee to discuss. Director Cavecche stated that she believed the Member Agency Advisory Committee (MAAC) was drafting a cash flow policy which should be reviewed by the Member Agency Chief Executive Officers (CEOs). Michael DePallo suggested asking the MAAC to make a cash flow policy recommendation and have this for discussion at a future Board meeting. Director Cavecche stated that she felt restricted funds should not be addressed in a cash flow policy as these funds had a 4

13 Planning and Finance Committee Meeting Minutes October 25, 2013 Transmittal Date: January 17, 2014 Page 5 purpose for being considered restricted. It was confirmed that this would be a discussion to be handled at the Board level. Barbara Manning noted that staff had located a cash flow policy and staff was looking into the reasons why transfers were made out of the restricted accounts. Director Cavecche noted that what Director de la Vega is referring to is the practice of what staff has been doing with cash flow without the benefit of a policy. We need to have a policy in place. Staff needs to look into what the restricted funds were transferred for, what it correlates to, how much do we owe and how are we going to pay back the restricted funds. Doug Farrow noted that this report was as of September 30, 2013, and that the cash flow was currently at $39 million, and added that staff was focused on processing accounts receivables as many of the invoices are over 180 days old. He too agreed that it would be in the best interest of the Authority to not borrow against restricted funds. ACTION: The Planning and Finance Committee received and filed this report. 7. FY Quarterly Accounts Receivable Status Report Twelve Months Ended June 30, 2013 Doug Farrow, Partner KPMG, LLC, provided a brief background on this item as detailed in the staff report for the twelve months ended June 30, He reported that as of June 30, 2013, the total outstanding accounts receivable balance was $84.3 million, of which $46.6 million was current (less than 30 days) and $37.7 million were past due. Additionally, approximately $11.7 million of the accounts receivable were over 180 days and that staff has addressed these receivables. Third Party Agreements had expenditures that are unbilled and were not included in the accounts receivable balance dating back 5 to 10 years. Staff is in the process of reconciling the Third Party Agreements and also generating billings for outstanding expenditures to offset prepaid balances (upfront fees). Director Rush asked what percentage of invoices ($1.5 million past due) are in that type of situation and how staff was going to handle the situation with member agencies. Doug Farrow noted that staff was currently working on reviewing the records to obtain proper supporting documentation. ACTION: The Planning and Finance Committee received and filed this report. 8. FY Quarterly Accounts Receivable Status Report Quarter Ended September 30, 2013 Doug Farrow, Partner KPMG, LLC, provided a brief background on this item as detailed in the staff report for the first quarter ended September 30, He reported that as of September 30, 2013, the total outstanding accounts receivable balance was $64.3 million, of which $26.6 million was current (less than 30 days) and $41.6 million were past due. 5

14 Planning and Finance Committee Meeting Minutes October 25, 2013 Transmittal Date: January 17, 2014 Page 6 Additionally he reported that approximately $12.9 million of the accounts receivable were over 180 days. ACTION: The Planning and Finance Committee received and filed this report. 9. Passenger Fare Revenue and Ridership Report Twelve Months Ended June 30, 2013 Robert Turnauckas, Chief Administrative Officer, provided a brief background on this item as detailed in the staff report and delivered a presentation which highlighted preliminary fare revenue and ridership data for the first quarter of FY which ended September 30, Robert Turnauckas stated that the FY budget assumed $88.3 million of fare revenue for 12.3 million passenger boardings with 92% on weekday trains and 8% for weekends. Fare revenue and ridership were lower than expected for twelve months ending June 30, 2013, at 12.1 million passengers with a negative variance to budget of 2% due in part by a weakening demand for commute trips to Los Angeles. He noted that approximately 63% of riders arrive into Los Angeles Union Station. System-wide passenger boardings increased over the prior fiscal period by 1%. He also reported on several marketing initiatives that have been implemented to improve passenger revenue and ridership with the overall redemption rate at 6.65% and the return on investment was 420%. Based on the results of fiscal 2013, the Authority is $3.6 million under budget for fare revenue for FY Director Morris asked how the decrease in gas prices has affected ridership. Robert Turnauckas noted that due to the increase in hybrid vehicles people have opted to drive their cars primarily due to the lower gas prices and connectivity factors. He added that another factor that has affected a decline in ridership is the loss of employment in the government sector and government furloughs. Director Morris asked if staff is able to track employment and residential trends. Robert Turnauckas replied that staff is able to track that information and they do, and added that the trains need to be available in those areas. Director Morris asked about the ridership during weekends and Robert Turnauckas noted that growth has been seen over the weekend market for recreational purposes and travel to destinations that have established connectivity. Director Morris stated that the Metrolink matters had a great article on directions for weekend events such as the Rose Bowl and included clear instructions for destination sites and attractions along with the connectivity to get to those destinations. A copy of the presentation is available upon request from the Committee Secretary. ACTION: The Planning and Finance Committee received and filed this report. 6

15 Planning and Finance Committee Meeting Minutes October 25, 2013 Transmittal Date: January 17, 2014 Page Chief Executive Officer s Report There were no additional comments from the Chief Executive Officer at this time. 11. Chair s Comments There were no additional comments from the Chair at this time. 12. Committee Member Comments Director Antonovich requested that Board members receive closed session documentation at least twenty-four hours in advance in perhaps a sealed envelope which would allow them to have sufficient time for review. Don Del Rio, General Counsel responded that use of a confidential hand-to-hand envelope and or confidential specifically addressed only to the Board members could be used to provide closed session materials to Boards members in advance. Director Katz recommended closed session materials be sent via as it is a more efficient method and suggested that the include a disclosure of the Brown Act Law or legal wording reminding the Board members of the seriousness of confidential information that is intended for closed session would constitute a crime. 13. Adjournment There being no further business for consideration the meeting was adjourned at 10:56 a.m. Respectfully submitted, Carrie M. Bates Planning and Finance Committee Secretary 7

16 SOUTHERN CALIFORNIAA REGIONAL RAIL AUTHORITY TRANSMITTAL DATE: MEETING DATE: TO: January 17, 2014 January 24, 2014 Planning & Finance Committee Item 5 FROM: SUBJECT: Lia McNeil-Kakaris, Assistant Director, Contracts and Procurement Contract No. SP Information Technology (IT) Technical Support Services Exercise Second Year Option and Increase Contractt Funding Authorization Intratek Computer, Inc. Issue Information technology support services are requiredd to servicee and maintain the Authority s internal computing systems, technologies, and information infrastructure. Recommendation Staff recommends the Planning and Finance Committee approve and recommend the Board authorize the Chief Executive Officer to exercise the second year option and increase contract funding authorization for Contract No. SP with Intratek Computer, Inc., in an amount not-to-exceed $950,000 for a new total contract funding authorization not-to-exceed and period of amount of $2,590,000. This is the final one-year option for this contract. Alternatives The Committee may: 1) Modify the amount of the contractt funding authorization increase performance extension; or 2) Reject the request to exercise the option and direct staff to issue a request for proposal (RFP). Background Information technologies, systems, and tools are central to the Authority s ability to operate efficiently and effectively; communicate with customers; manage, track and forecast costs; and operate our trains. The Information Technology department is responsible for the efficient and cost effective management and support of these informationn technology tools and the computing environmen t in which they operate. One Gateway Plaza, 12 th Floor, Loss Angeles, CA

17 Contract No. SP IT Technical Support Services Exercise Second Year Option and Increase Contract Authority Transmittal Date: January 17, 2014 Meeting Date: January 24, 2014 Page 2 An internal assessment of the Information Technology (IT) department completed by the Chief Information Officer in February 2011 highlighted the growing and changing IT needs of the Authority and a requirement to expand the capacity of the department in certain key technology support areas. The assessment also highlighted the need for flexible and adaptable staffing that could be adjusted as Authority and technology needs change. To provide for this capacity and for the flexibility required, staff recommended that a third party information technology services company be utilized to provide the needed IT technical support services. On May 13, 2011, the Board approved evaluation criteria for the procurement of IT technical support services. On August 10, 2012, following a competitive procurement, the Board awarded Contract No. SP for IT technical support services to Intratek Computer, Inc. The term of the contract was one year with two one-year options. The total not-to-exceed amount was $740,000 for the first year. The contract provides for the following IT resources in support of the Authority: (3) Help Desk Support Technicians (1) Network Engineer (2) Database Administrators (1) Telecommunications Administrator Included in the Authority s Operating Budget in FY , and with the newly introduced Financial Information System (FIS) and Positive Train Control (PTC) systems coming online, the IT department was tasked with supporting these implementation projects and other efforts to enhance and increase the capabilities of the Authority and improve the productivity of staff. As a result of these changes and to maintain IT support capabilities the Board approved exercising the first contract option to extend the contract for FY and increase the contract funding authorization by $900,000 for a new total contract funding authorization of $1,640,000. During this period incremental resources were brought on to support these various projects. These resources included: (1) Senior Oracle Support Consultant (2) Oracle Support Consultants (1) Web Developer The extension of the stabilization and post production support period for the FIS effort, extensions to the PTC effort, and ongoing support of the Authority s efforts to streamline and improve its administrative processes has increased IT support resource requirements. To provide continued support to these efforts and to maintain IT support capabilities, staff recommends that the Planning and Finance Committee approve and recommend the Board authorize the Chief Executive Officer to exercise the second year option and increase the contract funding for Contract No. SP with Intratek Computer, Inc. by $950,000 for a new total not-to-exceed contract funding authorization of $2,590,000. 9

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19 SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY TRANSMITTAL DATE: January 17, 2014 MEETING DATE: January 24, 2014 ITEM 6 TO: FROM: SUBJECT: Planning and Finance Committee Robert Turnauckas, Chief Administrative Officer Reinstatement of the 2014 Holiday Toy Express Issue A decision is needed to determine the future of the Holiday Toy Express and whether to continue the holiday tradition or modify the community outreach program for future years. Recommendation Staff recommends the Planning and Finance Committee approve and recommend the Board approve one of the four options presented for operating the Holiday Toy Express. Option #1) Operate the Holiday Toy Express as was done for sixteen years from 1996 through A show and performance would be developed and operation could begin in November The estimated cost for this option is $280,000. Option #2) Decorate a train with lights, a train wrap or other items and operate the train on regular revenue service. Cities and organizations could charter this train for local events. Operation for this option could begin in November 2015, following a procurement process schedule. The estimated cost for this option ranges from $100,000 to $200,000. Option #3) Decorate the interior of a Metrolink train and a location at Los Angeles Union Station (LAUS). Tickets would be sold for families to board the train and ride to meet Santa at LAUS. Operation for this option could begin as early as November 2015, following a procurement process schedule. The estimated cost for this option ranges from $115,000 to $195,000. Option #4) Not reinstate the 2014 Holiday Toy Express. Alternatives The Committee may reject all options or suggest alternative direction for staff to consider. Background The Holiday Toy Express was the Southern California Regional Rail Authority s (the Authority) extensive community outreach program which, due to budget limitations, was suspended in FY The Holiday Toy Express has been a tradition that provided an One Gateway Plaza, 12 th Floor, Los Angeles, CA

20 Reinstatement of the 2014 Holiday Toy Express Transmittal Date: January 17, 2014 Meeting Date: January 24, 2014 Page 2 opportunity to showcase Metrolink s train service and bring awareness to local stations. It was the Authority s most extensive community outreach program and received significant media coverage. ABC7 and Southland Firefighters Spark of Love Toy Drive collected toys at station stops as a key part of their annual toy drive in the region. In addition to stops at Metrolink's stations in the five member agency counties, the Holiday Toy Express started a new tradition in 2006 with the addition of a special stop inside the Marine Corps Base at Camp Pendleton. In 2010, the Holiday Toy Express was reduced to a 15-station tour without a musical performance due to budget constraints. In 2011, staff expanded the program based on a 34-station tour and a 10-minute musical performance with all participating cities sponsoring their stop at $2,000 each. Then in 2012, staff produced a full program based on a 44- station tour and a 10-minute musical performance fully funded within the budget and costs $260,000. Staff was able to offset some of the cost through corporate sponsorships totaling $46,000. At the Special Board meeting on June 28, 2013, the Board of Directors elected to eliminate the Holiday Toy Express from the FY14 Budget. The Holiday Toy Express did not operate during the holiday season in 2013 and was placed on hiatus until further notice. The Holiday Toy Express can continue to operate as was previously presented or may evolve into a new holiday tradition for the Authority. Three opportunities have been developed by staff as being viable options for the upcoming years. Option #1: This option would allow the Authority to operate the Holiday Toy Express as was done from 1996 through A show and performance would be developed and operation could begin in November The estimated cost for this option is $280,000. Option #2: This option would allow the Authority to decorate a train with lights, a train wrap or other items and operate the train on regular revenue service. Cities and organizations could charter this train for local events. Following a procurement process schedule, operation could begin in November The estimated cost for this option ranges from $100,000 to $200,000. Option #3: This option would allow the Authority to decorate the interior of a Metrolink train and a location at LAUS. Tickets would be sold for families to board the train and ride to meet Santa at LAUS. Operation for this option could begin as early as November 2015, following a procurement process schedule. The estimated cost for this option ranges from $115,000 to $195,000. Option #4: Not reinstate the 2014 Holiday Toy Express. For all options, staff will work to offset the costs through corporate and city sponsorships. 12

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22 SOUTHERN CALIFORNC IA REGIONAL RAIL AUTHORITY TRANSMITTAL DATE: MEETING DATE: TO: FROM: SUBJECT: Issue January 17, 2014 January 24, 2014 Planning and Finance Committeee Finance and Accounting Adoption of Annual Investment Policy ITEM 7 Local agencies are required by state law to annually review and approve their investment policy, and to delegate investing authority for one-year periods. Recommendationn Staff recommends the Planning and Finance Committee approve and recommend the Board approve the annual adoption of the Southern California Regional Rail Authority (Authority) Investment Policy (Attachment A) and continue to assume the duties until the Chief Finance Officer position is filled and at that time approve the delegation of nvesting authority of Treasurer. Alternative The Planning and Finance Committee may renew the existing investment policy with no changes or request additional changes. Background The Joint Powers Authority Agreement between the Authority and its member agencies requires the Authority to provide for accountability and safekeeping of all funds provided to the Authority for the provision of commuter raill services. Additionally, the State of California requires all public agencies to have an investment policy that is initially approved and reviewed annually by their governing board. The Authority s Investment Policy is intended to conform to state requirements and provide assurance to member agencies that their funds are managed prudently in accordance with conservative guidelines defined by the investment policy. Attachment A is the Authority s Investment Policy. There are no changes to the current Board authorized Authority Investment Policy except the update of appropriate dates and delegation of investing authority of Treasurer. Pursuant to California Government Code Section 53607, investing authority resides with the governing body and may be delegated to the authority s treasurer for one-year periods. The delegate shall then assume the full responsibility for investment transactions until the delegation authority is revoked or expires. The Board approved the designationn of the One Gateway Plaza, Floor 12 Loss Angeles, CA

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24 ATTACHMENT A SOUTHERN CALIFORNIA REGIONAL RAIL AUTHORITY INVESTMENT POLICY PROPOSED January 24,

25 Southern California Regional Rail Authority Page 2 Investment Policy Proposed: January 24, 2014 I. PURPOSE This Investment Policy sets forth the investment guidelines for all funds (except retirement funds) of the Southern California Regional Rail Authority (SCRRA) invested on and after January 24, The objective of this Investment Policy is to ensure SCRRA s funds are prudently invested to preserve capital, provide necessary liquidity and achieve a market-average rate of return through economic cycles. Investments may only be made as authorized by this Investment Policy. The SCRRA Investment Policy conforms to the California Government Code (the Code), as well as customary standards of prudent investment management. Irrespective of these policy provisions, should the provisions of the Code be or become more restrictive than those contained herein, such provisions will be considered immediately incorporated into the Investment Policy and adhered to. II. OBJECTIVES Safety of Principal: Safety of principal is the foremost objective of SCRRA. Each investment transaction shall seek to ensure capital losses are avoided, whether from institutional default, broker-dealer default, or erosion of market value of securities. Liquidity: Liquidity is the second most important objective of SCRRA. It is important the portfolio contain investments for which there is an active secondary market and which offer the flexibility to be easily sold at any time with minimal risk of loss of either the principal or interest based upon then prevailing rates. Total Return: SCRRA s portfolio shall be designed to attain a market-average rate of return through economic cycles. In order to maximize return on investments, the SCRRA seeks an active rather than passive management of portfolio assets. The SCRRA may from time to time sell securities that it owns in order to better reposition its portfolio assets in accordance with updated cash flow schedules, yield opportunities existing between market sectors, or simply market timing. III. COMPLIANCE If SCRRA utilizes a portfolio manager, the Treasurer will provide a copy of its Investment Policy as part of any portfolio manager contract, and will expect its portfolio managers to invest each portfolio managed for SCRRA in accordance with the provisions of the Investment Policy. SCRRA Treasurer is responsible for verifying each portfolio manager s compliance as well as SCRRA s entire portfolio s compliance with the provisions of the Investment Policy. 17

26 Southern California Regional Rail Authority Page 3 Investment Policy Proposed: January 24, 2014 If SCRRA s Treasurer determines a portfolio manager has made an investment that does not comply with the provisions of the Investment Policy, the Treasurer shall immediately notify the portfolio manager of the compliance violation. At that point, the portfolio manager is on probation for a period of one year. The second time a violation occurs while the portfolio manager is on probation, the Treasurer shall request the portfolio manager responsible for the compliance violation meet with the Chair of the Planning and Finance Committee, the Chief Executive Officer, and the Treasurer as soon as practicable, at which time it will be decided whether the Board of Directors will be notified of the violation. If SCRRA s Treasurer finds the portfolio manager has made a third investment while on probation that does not comply with the provisions of the Investment Policy, the Treasurer shall notify the Board of Directors of the compliance violations, and shall recommend termination of the contract with the portfolio manager. The Board of Directors may terminate the contract if it feels such action is in the best interest of the agency. IV. PRUDENCE SCRRA s Board of Directors or persons authorized to make investment decisions on behalf of SCRRA are trustees and fiduciaries subject to the prudent investor standard. The standard of prudence to be used by investment officials shall be the prudent person standard as defined below and shall be applied in the context of managing an overall portfolio. SCRRA s investment professionals 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 changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control developments. The Prudent Person Standard: When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including but not limited to, the general economic conditions and the anticipated needs of SCRRA, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. V. DELEGATION OF AUTHORITY Pursuant to Government Code Section 53607, SCRRA Board of Directors may delegate the authority to manage SCRRA s investment program to SCRRA s Treasurer for a oneyear period. Under SCRRA s executive management structure, SCRRA s Chief Financial Officer effectively functions as a Treasurer, with the approved Board designation on 18

27 Southern California Regional Rail Authority Page 4 Investment Policy Proposed: January 24, 2014 February 8, Effective January 24, 2014, the Board of Directors will continue to assume these duties until the Chief Financial Officer position is filled. VI. ETHICS AND CONFLICTS OF INTEREST SCRRA s officers and employees involved in the investment process shall not participate in any personal business activity that conflicts with the proper execution of SCRRA s investment program, or which impairs their ability to make impartial investment decisions. SCRRA s investment professionals and the Finance Department employees are not permitted to have any material financial interests in financial institutions that conduct business with SCRRA, and they are not permitted to have any personal financial or investment holdings that have a material effect on the performance of SCRRA s investments. Furthermore, all aspects of SCRRA s Ethics Policy shall be followed. VII. RESPONSIBILITIES The Planning and Finance Committee of SCRRA Board of Directors, subject to the approval of SCRRA Board of Directors, is responsible for establishing the Investment Policy and ensuring investments are made in compliance with the Investment Policy. The Investment Policy shall be reviewed annually by the Planning and Finance Committee at a public meeting pursuant to Section 53646(a) of the Code. 1 The Treasurer is responsible for making investments and for compliance with this policy pursuant to the delegation of authority to invest funds or to sell or exchange securities and shall make a quarterly report to the Board of Directors. The Treasurer is responsible for establishing policies and procedures for the SCRRA s investment program that ensure compliance with the Investment Policy and for having an annual independent audit performed on the SCRRA s investments. VIII. FINANCIAL BENCHMARKS In order to establish a basis for evaluating portfolio manager investment results, SCRRA uses nationally recognized fixed income security performance benchmark to evaluate the investment income on its investments. The Merrill Lynch 1-3 year Government Corporate Index is used for intermediate duration portfolio and the three-month Treasury Bill is used for the SCRRA s short-term portfolios. 1 Section 53646(a) states that the treasurer may annually render to the board of supervisors and any oversight committee a statement of investment policy, which the board shall review and approve at a public meeting. Any change in the policy shall also be reviewed and approved by the board at a public meeting. 19