tv [untitled] January 16, 2011 1:30pm-2:00pm PST
striking the richardson trial at the parking street lockup. supervisor mar: we have not heard public comment. that is the motion on the table. anything else before we open this up for public comment? >> note. supervisor mar: anyone else from the public that would like to speak? seeing no one, public comment is closed. colleagues, without objection approving them motion -- the motion? approved. could you call the next item? >> item #4. recommend award of a three-year contract to knn public finance, in an amount not to exceed $250,000, for financial advisory services, with two additional one-year extension options, and authorization for the executive director to negotiate contract terms and conditions. this is an action item. i would like to remind the commissioners to speak the commissioners to speak directly into the microphone so that the audio can be captured for those
listening in. supervisor mar: good morning. >> before i jump into the process of this action item, i would like to go over the authority commercial paper program. back in 2004 the authority board authorize the short-term financing for the authority, not authorized to issue 200 in commercial paper. by the end of the year in 2004 we issued $100 million in commissions -- commercial paper. this helped to reimburse the prop k sponsors for projects that were working on. in this current fiscal year, 2010-2011, we have included a $340 million debt financing on the budget. we have also reached our fifth year of our contract with current financial advisers and added the best practice of authority to rebid the contract
at five years. we have issued a request for proposal on october 24 of last year. by november 24 we received five bids from five different firms. by december 10 we shortened this to three different firms and conducted interviews on december 15. staff authority and from the comptroller's office of public finance, the recommendation is to extend a contract with k and m public finance. they were selected because of their excellent combination of transportation and finance related work. staff is well qualified and they offered competitive prices. they will assist the authority in developing financial strategies and updating the model. reviewing that investment and
fiscal policy, of course working with us on the upcoming following financial transaction. within this contract, 25% of the work will be going to independent financial advisory firms. they were named municipal capital management inc.. with that we are seeking a recommendation to extend the contract with public finance for financial services to the amount of $250,000 with two one-year options and allowed the executive director to negotiate contract terms. also, i have staff here available to answer any questions. i am here to answer any questions as well. >> quick question. this is general advisory financial-services. i am assuming that this is a firm that would also potentially participate in bond
underwriting? >> knowno, that was secured last year in october. supervisor farrell: out of curiosity, the current commercial paper is that $150 million. do you know the general terms on those compared to what you think? i know that $340 million is optional. is that something that you were planning to go ahead with? >> we have budgeted for an issuance of a bond since fiscal year 2005-2006. there has been no need to issue the bonds to project sponsors that have not had the need to continue their project further. creating savings for the authority. there is no need to pay interest costs for money that is not needed for the project just yet. we have been budgeting for it
each year. we have a budget amendment coming up before the finance committee in march. at this junction we are in the middle of determining whether or not we will be issuing the bonds this year or if it will go into the next fiscal year. the later that we can postpone it, the better. >> the issue of the issuance at the authority is one that we have taken seriously. we have taken a very conservative approach to it. the board authorize $200 million in commercial paper. we never issued the last 50 million. the program, because of its size and ambitious scope, can no longer really function as a pay- as-you-go where the sales tax that comes in is what is laid out, we are not rushing headlong
into money to pay interest on it that we do not need to pay. it is all related to the ability of the various recipients of the money to put the money into a timeline that truly requires the bombs. that is why the commercial figure was deemed as the best instrument for us. it is very flexible. the only issue that you need is the line of credit, essentially. however, we do have several big projects hinting at the park waste space. so, we are getting to the point where borrowing larger amounts seems fairly inevitable. there are major benefits to borrowing, getting things done. one being that we do not have to pay for the cost escalation of the project. the other important point is that we are looking at possibly retiring that $150 million in commercial paper to reduce the
overall cost of the program. these are overall issues the issue will certainly begin to see informed in discussions as we get closer to that moment. it will be informed by a fairly in-depth analysis that has been done as a part of the strategic plan for sales tax. so, you can see not just what the funding situation is for revenue, but also the likely timing of expenditures. so that when we go into issuing a bond, we do it clearly would risk and benefit. that will come to you in the next few months. the point is of course that we do not want to be doing this as an adventure. we need the best people in the field advising us on the conditions of the market's so that when we do issue, we do
issue under the most favorable conditions possible for the program. >> thank supervisor mar: -- thank you. we are joined by supervisor mirkarimi. other questions? supervisor cohen: questions i have about the criteria that you used to determine k and m as the suggested public finance awardee, is there a opportunity for subcontracting? >> there is a requirement for 5% on the contract. supervisor cohen: 25% goes to municipal capital management? >> yes. supervisor cohen: had you worked with them before? >> no, but we have had no reason not to after checking their preferences. supervisor cohen: k and m,
municipal capital management, do they have many women in positions of power? >> k and m is a minority run firm. david might be able to let us know if there is anyone on the contract we answer your question. david? >> thank you. good morning. yes, cynthia is correct. our partner is a 100% woman owned firm. we have worked with her on another engagement. she will be a full partner with us in the engagement. she has experience with the transportation authority and with a forward to working with her. supervisor mar: any other questions, colleagues? let's open this for public comment. would anyone from the public like to speak seeing no one,
public comment is closed. colleagues, any other further questions? seeing no one, can this be move forward without objection? so moved. next item? >> item #5. recommend acceptance of the audit report for the fiscal year ended june 30, 2010. this is an action item. supervisor mar: thank you. >> i know that the fiscal fought -- fiscal policy authority financial authorizations need to be audited on an annual basis. they have audited our books basically for fiscal year 2009- 2010. i have cindy, the audit partner here to present the report and what you through the results of the audit. supervisor mar: thank you. >> good morning.
thank you for inviting me to discuss the results of the 2010 financial statements. as discussed on one of the financial statements in your packet, it includes a governmental activities in the full approved combined financial statements. [lists programs] the remaining fund information for the owner controlled insurance program shifted deposits. the possibility of the statements rests with the authority. our responsibility is to express opinions based on the audit. we performed the audit in the course with generally accepted auditing standards.
all without qualifications are exceptions, these financial statements represent the generally accepted accounting gap. the best type of report has received by the external auditor. in terms of financial statements of would like to highlight some items. pages 31 and 33 of your package, the equity position is negative. meaning that liabilities are greater to assets. in terms of the whole sales tax program, due primarily to the issues of commercial paper. the authority had $150 million in notes outstanding on june 30 of 2010 to pay for capital projects of other departments and other organizations. the authority does not hold or retain title to the projects.
these capital assets are recorded in the organization's financial statements, who are ultimately responsible. so, the debt is on the books, but not the assets. the other item that i wanted to highlight in the financial statements is found on page 47 through 49. we understand that there has been a lot of discussion in employment benefits to discuss the authorities plan. unlike a lot of governmental organizations but we have audited it has been funding its annual required contribution. as a result it does not have a liability required to be recorded in this financial statement, paying down its actual unfunded liability similar to paying down a mortgage.
you can see this trend on page 56 of your packet. you can see that the authority approved the implementation to require the additional information. the authorities set aside 173,000 in assets to pay for the obligation. the other item is on page 65, showing a summary of financial statements and federal compliance audits. in a nutshell we did not make note of any significant material weaknesses required to be reported to the oversight body. in addition to these financial statements we prepared according to the finance committee, found on page 68 and 69 of your packet, summarizing the audit
and discussing quantitative aspects of the authorities accounting practices. whether or not there were any difficulties in performing the audit or disagreements with management. there were no changes in accounting practices and we had no difficulty performing this audit over the past year. with that i would like to turn it back over. supervisor mar: any questions for the auditor? >> witho that the authority recommends excepting the audit for 2009-2010. supervisor mirkarimi: first, let me take this opportunity to welcome our three new commissioners to the
transportation authority. you hit the ground running. you are wearing multiple hats already and doing a bang up job from the get go. this question is for you, but it will probably have to be underscored by the director. during this past year, the commission as said that we would like to see two of its. one of them is under way, and audit commission by the transportation authority because of our larger concerns municipal transportation authority. i want to make sure that the audit before us now is not the same one that we are talking about. >> good morning, mr. chairman.
this is a fiscal audit, a requirement of the property rules in the administrative code. it covers the financials of the past year. from what i understand, you have requested at this time the board acting on funding for the management performance audit, putting on the calendar the management performance audit of the authority. working on that, at this point but believe that the schedule for procuring that is in march or april. supervisor mirkarimi: very good. >> is intended to have the mta audit completed and then initiate the one from the authority. supervisor mirkarimi: for all of our recollection, have any of these annual audits ever yielded any particular savings? >> not that i can recall.
they are both a requirement of the organic statutes of the authority and the condition of code. to have an independent third- party view of how the authority handles its finances, it is not intended to yield sufficiency. management performance audit could have that affect of identifying -- i am not sure in terms of the budget. definitely more bang for the buck. the idea that you could streamline processes with the budget that we had. always a goal of many management firm, to look at how we operate. that is for sure something will be looking at. erika chensupervisor mirkarimi:e anything we have learned in the
audits that might be worthy of us considering a smut -- slight modification to the scope? >> over the years we have had audits for a number of years. close to a decade. the overall learning curve has been procedures. over the years we have had recommendations and suggestions from the auditors for streamlining the treatment of our own books. over the last few years we have had to incorporate certain procedures that were put into place with what is referred to, in terms of how we show it in our books, the asset liabilities, making a grant to another agency it becomes an asset for the other agency.
it does not mean that we have a deficit or are operating by an improper way is. we have essentially come up to speed on how to show the books in a way that is consistent with current practice but the national level. really, it is limited to that, so that they're perfectly clear not just to auditors and finance people, but the public. the other thing that is absolutely fundamental, dovetailing with questions that the commissioner was asking earlier, books are needed for having really good deed -- good dealings with ratings agencies, leading to better rates for borrowing money. supervisor mar: thank you. anything else on this item? >> one more comment to be added
to the executive director's. the structure of the financial statement, for the debt compliance telescope -- kept within scope for the money. supervisor mar: commissioner? >>supervisor farrell: is this an annual endeavor? >> it is annual. on a quarterly basis with the present to the finance committee. supervisor mar: colleagues, we are joined by supervisor elsbernd:. . congratulations on another clean audit. i wanted to thank you for your great work.
thank you, congratulations. anyone from the public that would like to speak? seeing no one, public comment is closed. can we move this forward without objection? i do know that we have public comment for the minutes. we did? great. are there any other items before us? >> the federal update, and information by them. supervisor mar: great. >> mr. chairman, commissioners, we welcome the vice chair to the meeting. just a very quick thing. first of all, this item is an update on state and federal legislation. [unintelligible] is here to talk to you about
this. no one is better qualified. i will let him handle that. i did want in consideration of the changes that taken place, to give you just a quick sense, my quick sense of where things seem to be going as far as transportation of pictures and legislation. of course, you know that the transportation infrastructure committee is one of the largest committees in the house of congress. that committee is now chaired by congressman john michael from florida. the membership of the committee as available currently, three republican representatives from southern california.
we have yet to see on the other side of the elbow of the members will be. the bottom line is that it will be an interesting year in washington, d.c.. likely a very difficult year between the new congress focus on reducing the deficit and spending and also the apparent lack of any consensus so far that one can in any way see on the issue of raising revenues for transportation. what we are likely to see, if we are lucky, is hanging on to the amounts of money available currently, authorized currently within the budget for transportation purposes, they are in the vast majority for highway projects. but ithe prospect for the
reauthorization of the surface projects act on the six year bill, already very late -- it is several years delayed by the outgoing congress -- because of lack of consensus on revenue sources. it is probably going to have a tough time getting to a final vote this year as well. we are certainly hoping so. the new chairman of the committee has said that he would make this reauthorization a major priority for his committee. i do not doubt that he believes that. the question is that there would be consensus in congress. i am talking about a situation where congress has failed to come to agreement on even a 5 cent increase in a gas tax.
so, not an encouraging picture. we will continue our advocacy to try to maintain support for the projects we have in the pipeline. we have major projects to meet support commitment. the one that comes to mind as increasing significantly in the central subway, and almost $1 billion grant agreement from congress and the federal transit administration to move forward. that would clearly be a centerpiece of advocacy with a number of other projects and a panoply of projects that meet federal support that need to be the focus of our activity this year. we will also try to be as active as possible in terms of reauthorization discussions. i think that i would be remiss if i did not say that we should not expect too much.
we certainly should not expect new revenue above what we are getting in the formula and so on for the next couple of years. that would be a prudent course of action. i think that local sales taxes and probably in user fees, at some point, would be the larger chunk of money for future transportation initiatives. we will not try to make that lott the case, but the policy in washington is very diverse. that is my summary of federal. thank you. >> chairman, commissioners, thank you for having me here again. since i was here in december the legislature was convened for two years. we have seen the introduction of about 100 bills in each house. that trend will increase quickly
now that we have moved back into active sessions with the budget having been announced. the deadline for bill reduction is the third week of february. we will see the vast majority of legislation the two will take a look gaps coming on line shortly after february, most likely to march. today we have identified six bills or seven bills to take a look at. by the way, the matrix is on page 71 of your package. there are three bills suggested that you might consider supporting. two of the measures deal with high-speed rail. conflict of interest issues during the last year. there were a number of issues that the high speed rail authority that dealt with conflict of office issues with certain members being members of their local transportation agencies in their home towns and counties, questions about whether that was appropriate.
in addition there were questions about whether or not the work proposed was worth it. two of the bills would attempt to address that. there was a bill caught at the end of the session that contained the same language but failed to pass. two members, one in each house, attempting to impose conflict we are suggesting a support position for the. that is an import statement to make. the other bill we are making specific recommendations, support and concept is mr. bell's bill, ab 57, which deals with contracts with caltrans. the reason we did not recommend a full launch support,