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FINANCE COMMITTEE MEETINGNotes of August 9,2007

AttendeesLouise P. Hoblitzell, Chair (via phone)Carolyn Y. PeoplesIsaac H. MarksBeverley Swaiin-StaleyRonald L. FreelandSteven WelkosAlison W illiamsChristina ThompsonJoyce DiepoldAllen GarmeilJay AydPaul Sl~elton McKennon S11elton& HennPatrick Flem ingDeborah DonohueCurtis EspositoJaclyn SeneschalDoug HutchesonSnin TriandosDavid ChapinGeo ff IColbergDaniel McMullenJake RoyerJamie Traudt -DavenportRick Gobielle - StantecMike Cohen - StantecCindy Taylor

The meeting was called to order by Member Hoblitzell at 9:30 a.m. Minorchanges were recommeuded to the note s of July 12 , 2007.Traffic and Revenue Proiection Update

Rick G obielle presented historical traffic data for the Authority and growth trendsfo r FY 2008 through FY 20 13. Increase in traffic growth projections have been loweredby 1.2% at dl facilities based o n current trends.Based on this information, M r. Esposito and Ms Seneschal presented proposedscenarios on the toll rate increases. After much discussion, consellsus was expressed bythe Com mittee to support the following to the full mem bership: adjusting the toll rate

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schedule to standardize the rate structure at all facilities, eliminating tickets, and reducingthe term of validity of commu ter tickets to a 35-day plan. Mr. Freeland advised that staffis preparing for the toll increase to be effective January 1,2 00 8, but because of the needto coordinate with the timing o f other possible transportation revenue enhancem ents, forthe rating agencies v isit, the o utside date of July 1,2008 will be used. Ms. Donohueadvised that statutory requirements state that the Authority notify the legislature of a tollincrease. Me mb er Hoblitzell suggested that the presentation be abbreviated and revisedto be presented to the Authority on August 29,2 007 .Bridge Safetv

Mr. Freeland asked Mr . Kolberg to discuss the safety of Authority-owned bridgesas an item for the Authority meeting on August 29. Mr. Kolberg stated that following theMinneapo lis bridge failure, the specific causes are unknown , i.e., design, repair ordeterioration. The federa l Transportation Se cretary issued a letter to all bridge owne rs.The Authority is implementing a follow-up inspection which will bcgin this month an dwill include a more detailed and hands-on inspections of the Authority's seven bridgestructures, such as ultra-sonic testing, canopies, sign structures, elevated roadways, etc.This will take several months to complete. The Authority is working closely with SHA.The current Authority structure inspection contract is for a 5-year period and structuresare inspected once e very year, w ith ~uiclerwater nspectioils every 5 years. Ms. Williamsstated that for the bond sa le, the an nual inspection report has to be disclosed. Mr.Kolberg said that the executive sum mary could be distributed.Contract Award Approval -CATS

Mr. A yd p resented Contract #JO1 P72000 07 - Consulting and Technical Services(CATS) Task Order -Help Desk and Field Tec lmician Support for recommend ation fo rapproval. This is a task order reque st for proposals und er a State-wide contract issued byDBM. Contract amount will be $3,750,000 for 3 years and a 30% M BE goal. Mr. Aydtold m embers that he will have the final award information for the Authority meeting.Consensus was to recoinmend approval of the contract to the full m embership.Toll Revenue Bond Issuance

Ms. Williams discussed the upcoming toll revenue bond sale of up to$325,000,000 with a new sale date of September 1 2,2 00 7. Documents su ch as the TrustAgreement and Preliminary Official Statement are still works in progress. Jainie Traud tpresented the draft credit presentation. The most significant change is the "do o~ ns da yscenario," Case 5, Accelerated T oll Increase, wherein the Au thority is able to maintain itscash ratio at 1 . 0 0 ~oll revenues and maintain debt service coverage.

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Resolution 07-08Ms. Donoh ue presented Resolution 07-08 in connection with the toll revenuebond issuance. This is the second resolution for Authority approval, consisting of

approval of the draft docum ents w ith delegation to staff and consultants to finalize.Consensus w as to recommend approval of the resolution to the fidl membership.

Allen Garman requested two changes to the current Investment Policy. The firstchange wou ld be to clarify the language used regarding the Commercial Paper Section to"at time of purchase" so the Investment Manager has the discretioli regarding the timingof sale/hold decisions of a downg raded security. The second change would be to removethe wording MLGIP (Maryland Local Government Investment Pool) from the policysince State agencies are not authorized to invest in the MLGIP.Invcstmcnt Rcport

Allen Garmen discussed the investment report as of July3 1,2007 . The AuthorityTrust Fund had a market value o f $240,122,425; the ICC Fund had a market value of$3 14;88 1,607; the GARVEE Construction Fund held $227,372,919; and the DepositoryFund held $87,42 1,251 .Authority Police Pension Costs

Mr. Welkos explained that for FY 2008 the Authority's share of the pension costsfor MdTA Police under the Law Enforcemeilt Officers Pensioil System (LE OPS) is $1 1.4million and represents almost 80% of the total pension costs budgeted for all Autllorityemployees. The Authority also budgets $ 2.7 million as the emplo yer share of SocialSecurity payments in the police budget. Mr. Welkos stated that there are fiv e policeorganizations, including MSP that are not in the Social Security system. There has beendiscussiotl in the recent past regarding the removal of the Auth ority Police from theSocial Security system. Ms. Swaim-Staley offered to discuss this matter with EloiseFoster, Secretary of DBM, to take a closer look at h i s .FY 2008 Operating B udget Status

Mr. Welkos presented B udget Amendment 2008-0 1 for recommendation forappi~ovalo reduce the operating budget by $5,524,26 1 to $206,5 17,621. The amendmentreflects a $500,000 reduction in overtime; $4,892,786 eliinination of retiree healthinsurance costs; and a reduction of $7,063 in the Po1-t Police costs. Consensus was torecommended approval of the budget amendment to the full membership.

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The meeting adjourned at 12:10 pm. The next meeting is scheduled for Thm sday,September 13,20 07 at 9:30 a.m.At this time, the Senior Financial Advisor Evaluation Pancl mct to discuss therecornmelldatio~lor award of this contract and will recoinmend approval of a fin11 to thefull membership at the August 29, 20 07 Authority meeting.


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FINANCE COMMITTEEMEETINGNotes of August 14,2008

Authority Members:Louise P . Hoblitzell (via phone), Chair; Isaac Marks - Acting Chair, Jack Basso, Richard C.Mike Lewin (via phone)MdTA Attendees:Ronald L. Freeland, Joyce Diepold, Deborah Donohue, Angela Fleck, Allen Garman, TomGugel, Doug Hutcheson, Bob Jordan, JodyMcCurley, Bob M ichael, TerryNiswonger, W illiamO'Reilly, Cindy Taylor, Chris Thompson, Simela T riandos, A lison WilliamsMdTA Advisors:Peter Icessenich - PFM (via phone)Joe Mason -DavenportMdTA Bond Counsel:Paul Shelton-McKennon Shelton & Henn LLP0th rs:Fred Rappe - MDOTISurt Krauss - PB ConsultantsTom Heseltine- Clifton G~~nderson,LPJackie Seneschal- CCI


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.Notesof July 10,2008Member Marks -Acting Chair called the meeting to order at 9:00 a.m. No revisions

were made to the notes of July 10 ,2008 meeting.

TerryNiswonger submitted for approval the arm ored transport services contract in theamount of $1,087,352 for five years. Only one bid was received from Dunbar Armored, Inc.who previously had the contract, although 15vendors had been solicited.A CTION: Member Hoblitiell moved to recommend approval to the full Authoriv, withMember Lewin seconding.InvestmentAudit Report (CliftonGundersonLLP)

TomHeseltine presented preliminary findings of the investment process audit. There wereno compliance issues, although there w ere underlying recomm endations. The auditors will meetwith management to discuss the findings at an exit conference. T he final report will be issuedafter management submits its responses to the findings.Segregation of dutieswas a lower finding. As a failsafe, perso n initiating trades,investments, or transactions should not approve . A second person should verify andapprove any and all transactions performed with a third party outside of Treasury &Debt section to be notified the same day to prevent any erroneous or fraudulent actions.Develop a comprehensive compliance report.Purchase of software from Trustee Bank of New York M ellon to be kept up-to-date andcurrent with alerts before any violations have occurred.Investment Policy Money M arket diversification by institution within 30% not incompliance in themonths Feb. thru June 2008 although this was corrected in FY09,July 2008.No written process for non-compliance issues should they occur with regards to ratings.Example: moving from AAA to junk ratings (Mike sl~ggestedhat securitiesbe soldwith first no tification of downgrade.)Securities in monthly Perfor~ nanc eReport to include credit ratings.

FOLLOW-UR Management Responses will be presented at the next Finance CommitteeMeeting on September 11, 2008.FOUOW-UP: A plan for implementation of the audit recommendntionr will be presentedto the Finance Committee at n irture meeting.

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Compilation and Review RFPJody McCurley presented this item. At this time, staff was asked to leave the room to go

into a confidential discussion. Because of som e concems regard ing the process, this item wasdeferred for consideration at this time.- -FOLLOW-UP: Terry Niswonge'rwill develop a swmmnryif he procurementprocessfor this solicitation or the Deputy Secretary,

Resolution08-09 Approval of FinalDocuments & Sale GARVEE BondsDeb Donohue presented final documents for approval at the time of Bond Sale scheduledfor September 10,2008. This Resolution was presented for informational purposes only.

Resolution 08-10 Designation of Investments and SaIesDeb Donohue presented this resolution to update the designation of authorized employeeswho are authorized to approve trades and investments, with updated titles to stay current. Thisaction was requested by so me of the investment institutions.

ACTION: Member Hoblibell moved to recommend approval to thefull Authorio, withMember Lew h seconding.DraftFinance Committee Charteq

Deb D onohue stated that this resolution is to combine three previous procurementapproval delegation resolutions into one document, and to establish the purview of the FinanceCommittee.Follow-Up: Review, propose and bring bnclc comments and changes at the nextFinance CommitteeMeeting on September 11,2008.Traffic& Revenue Update

Tom Gugel stated that for themonth of July, traffic declined 3.5% from the previousyear, and January through July transactions were down abou t 1.6 percent from the previous year.Joyce Diepold stated that revenue for the month of June was down 6%, but for the whole year itwas only down 1percent. Total revenue for FY 2007 was $278 million and in FY 2008 was$274 million. Ron Freeland noted that he and staff are reviewing the revenue numbers weekly, ifnot daily.

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Toll Rate AdjustmentRon Freeland stated that the mem bers directed the s taff to develop a recommended tollpolicy to implement adjustments and to guide future decisions. Jackie, Sam, David and others

have been working on this policy. Jackie Seneschal made a presentation sta ting that an increasein toll revenue was essential to con tinue work on current projects scheduled for completion.~ . R 7 2 e f R ~ e ~ ~ a f i ~ ~ o ~ - 1 ~ ~ A w ~ ~ . ~ & ~ ~ & 8 ~ ~ a ~ 8 ~ e r ; l. - -. - . . . .. . . . , - . - . . . . - ,- . . . , . .for cominents. A bi-iinnual shdy was suggested to measure t-ore-evaluate the toll rates. it wassuggested that necessary revisions to COMAR go to the Authority for approval to begin therulemaking process.

ACTION: Member Lewin recommended approval o the full AuthoriQ, with MemberHoblitzell seconding.FOLLOW-UP: Member Ho blitzell requested that the toll policy mater ials be forwarded toaN members and to the Financial Adv isorsfor review. Committee comments will be discussed atthe next Finance Comm ittee Mee ting on September 11,2008. Thefill Authority will disczrss thematerials in September.ICC Cash Flow/DraftFY 009 -FY 2014 CTP Update

Sam Triandos discussecl the main po ints of revenue vs. cash flow for ETL Projectcompletion in 2014 with regard to scheduled increases in IT09 and FY12. K ~ u tGa ~iss tatedthat next month there would be a better understanding of the cash flows. The ICC projected cash, flows are $2.41 billion if done in a 6-year period vs. $2.5 billion cash flows if beyond the 6-yearprogram period. It was suggested to defer Con tract "D" (7-mile stretch of 1-95 improvements)indefuitely because the scope of work is not necessary to open the ICC and begin collectingrevenues. Thebudgeted cost of Contract "D" s $86million.Debt & Investment Policies-Annual Review

Alison Williams and Allen Garman discu~ssedechnica l changes to both Policies to keepthem current. Delivery instructions are not in the Investment Policy, which is given to brokers asa guideline. Instructions should be added to Policy. Th e recomm ended technical changes to theexisting Debt Policy include: updating the definition of "Trust Agreement," the debt ceilingincrease from $1.9 billion to $3 billion, adding P ~ ~ b l i cinancial Management (PFM) to the list ofFinancial Advisors.Xnvestment Report

Allen Garman presented totals of all funds held in Tn lst at The Bank of New YorkMellon. Continued capital spending will exhaust the GARVEE 2007 and Capital 2007 bondproceeds accounts in the next two (2 ) months. The Capital 2008 fbnd investment is structuredwith maturities matching expected spending. It is immunized against interest rate risk. It wasFinance Coinlnittee NotesAugust 14,2008Page 4

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suggested to move investments from the Morgan Stanley mon ey market accounts to a greaterpercentage of investments in U.S. Treasuries backed by the government.There was great concern about Freddie Mac and Fannie Mae. A question was posed:

does C ongressional action support Federal Home Loan Brmk? A suggestion is to invest at 30%by agency. TheColnmittee requested a 10~20%llocation to Treasuries in the Capital 2008

FOLLOW-UP: Member Lewin requested a summary of the recent Congressional actionregarding the home loan situation at the next Finance Committee Meeting on September 11,2008.Nom-DiscretionaryInvestmentAdvisor RFP

Allen Garman discussed the request for proposals for an outside party to advise onsecurity-specific purchases. It is anticipated to be a five-year contract. The advisor willstructure the Authority's investmen t portfolio and recoinmend purchases.ACTION: Member Huhli&eZl moved approval to issue the RFP, with Member Lewinseconding.

At 11 20 a.m., Member Hoblitzell left the meeting by tenninating her telephoneconnection.Other Business -Information Items 1

Alison Williams presented the financial report and reviewed the highlights. The currentremarketing fee for the PFC bonds (variab le mate) is 6 basis points and they arebacked by StateStree t's Letter of Credit. The SIFMA Index tracks variable rate programs. Allen Garmancommented that the fee is coinpetitive vs. current market rates. UBS has recommended that theremarketing agreement be assigned to D EPFA, which will provide the services at the same rate.ACTION: General consensus was given, without objectecfion, o accept the assignment toDEPFA and to track theperformance o f t hs investments for 30 to 60 days.FOLLOFV-UR Ron Freeland will seelc consenstisfor the assignmentfromMembersHoblitzell and Basso.Underwriters RFP

Mike Lewin disclosed that he has a close relative who works at M &T Banlc, and recusedhimself from consideration of the solic itation for underwriters. At 11 30 a.m., Member Lewinlefr the meeting.


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Acting Chair Marks recommended that consideration of the award of the contract forunderwritersbe taken directly to the fillAuthority for consideration at the next Authoritymeeting.Themeeting adjourned at 11 40 a.m. The next Finance Comm ittee Meeting is scheduledfor 9:00 a.m., Thursday, September 11,2008.

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FINANCE COMMITTEE MEETINGNotes of September 13,2007

Louise P. Hoblitzell - Chair (via phone)Isaac MarlcsJack BassoBeverley Swaim -StaleyRonald L. FreelandJoe Mason - DavenportJamie Traudt - DavenportGeoff Kol bergAllen GarmanAlison WilliamsDavid W. ChapinKurt Kraus - PBBetty Connors - SHAGreg JonesSimela TriandosDeborah DonohueCindy Taylor

Member Hoblitzell called themeeting to order at 9:36 am.Notes

Ms. Hoblitzell made a correction to the notes of the meeting of August 9,2007.These notes should include the formal comm ittee recomme ndi~tiono award the SeniorFiriancial Advisor contract to PFM as the primary F.A., with Davenport & Co. as thesecondary F.A.Status ReportonRating;Agencies

Jamie Traudt gave an update on the credit rating results. Fitch Ratings: AA-Concern is managing growing capital and operating costs while undertaking the ICC.Moody's: Aa3 Concern is opera ting cost will be outpacing revenue growth and how theICC litigation may impact cost. Standard & Poor's: M- upgrade) Concern isAuthority needs to meet standards to retain ratings, take necessary actions to sustain debtservice coverage above 1 . 5 0 ~ .Member Hoblitzell requested that n summary of the ratingagencies recomm endations would be useful especially in dealing with the legislature.Discussion followed in connection with operating cost containment. Mr. Freeland

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explained that position control is being implemented concerning vacancies. Recruitmentshould start within 3 months or the PIN will go to the "PIN pool". He also noted thatstaff is to be added only in growth areas.Resolution 07-09

. .- - . - - -- s. Dono huepresented Resolution 07-09, which has been,updated from the Bond-- . .- .- .- . -- - - - ~ a l ef September42;-2007, to-include.he winning,bid amount; Goldrnan-Saclrs,.& o-, -..submitted the lowest responsible bid, for a true interest cost of 4.567%. Goldman Sachsdid not bid as a syndicate.Draft 2007 IC C Financial Plan AnnualUpdate

Kurt K rauss explained that the ICC cost estimate remains at $2,445 billion and nochange relative to the Initial Financial Plan (IFP). Scope adjustments were made toContracts C and D, with an increase in the scop e of work fo r Contract C and a decrease inthe scope of work for Contract D. Design of Contract A is almost complete;approximately 30% of the design on the remaining contracts is complete to date. Ameeting w ill be held on September 20 with theFederal Highway Administration toreview the IFP Update and formal submission of the revised document by SHA and theAuthority is planned for the week of September 24" with formal FHWA approvalexpected soon thereafter.ICC Cash Flow & ScheduleUpdate

David Chapin presented the monthly budget and cash flow report for the m onthending June 30,2007. Expend itures for the month were $24,170,938with a year-to-dateexpenditure of $220,458,012. In March of 2008, the Authority will have to borrowapproximately $140 million for the ICC. Two lawsuits are pending, one hearingscheduled for October 1 and the other scheduled for O ctober 29 which c ~ u l davenegative consequences. The limited notice to proceed for construction is currentlyOctober 16. If there is a delay due to the litigation schedule, the contract includes a pre-set formula to pay the contractor. There is $12million in the contingency fund fo r an ysuch delay.Nice Brid~e iber Optic Cabling Partnership

Greg Jones presented this item to the committee for recommendation for approvalto the full Authority. This itern is a proposed agreement that would provide for theinstallation of a fiber crossing to be installed and managed by the Maryland BroadbandCooperative (MDB C), a non-profi cooperative, on the Nice Bridge, similar to the

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agreement approved in February 2007 for both spans of the Bay Bridge. Bay Bridgerevenues are $17 m illion for 15years and Nice Bridge revenues will be $9 million over15 years. Mem ber Basso recommended approval with Member Marks seconding.

--Investment .Report. . . . .-- . . - - --- - - - . - - . . .-- - . -. . --. .. . .... , - . -- - - -- -. . .. . .. .. . . . . - . . . . .. , . . - . .. . . . .. . , . ...

Allen Garman stated that the economic market has deteriorated recently. The Fedis expected to cut interest rates at the September l g rnmeeting. The market is anticipating50 bp of price accommodation by year-end. The market value of the investments for theAuthority's Trust Funds at August 31,200 7 was $236.6 million, a $4 million dec linefrom last month. The ICC Funds, composed of GARVEE bond proceeds and theDepository Fun d, had a market value of investments at August 31 of $337.8 million. TheGARVEE Construction Fund held $220million and the Depository Fund held $117million.Outsourcing of Investment Portfolio

Allen Garman exp lained that the Finance Division i s investigating the feasibilityof having the financial advisors and/or third party managers be considered to manage aportion of the Authority's inv estments, specifically with the $300 million toll revenuebond issue being identif ed. The Finance Division m ust address some l e y issues beforeimplementing, i.e., legal issues and fiduciary responsib ilj y; conflicts of interest; net offees performance; interaction of 3" party manager; added Authority risks and oversightresponsibilities; forced selling and market losses. Discu ssion followed as to how much toinvest of th e bond proceeds, put PFMon retainer, managem ent fee, etc.The meeting adjourned at 11 10 a.m. The next m eeting is scheduled forThursday, October 11,2007 at 9:30 a.m. '

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FINANCE COMMITTEE MEETINGNotes of October 15,2007

Louiss P, Hoblitzell - Cl~ail:Carolyn PeoplesSack BassoI~ aacMnrksRonald Freeland .Jim Wdsh - MA AJeff Williams --MAADavld ChapinChrls Thompson

, GeoR IcolbergSam 'TriandosCecilin FIdlrungAllen GarmanJoyceDiepoldAlison WilliamsCindy TaylorMember Roblitzell called the meeting to order at 9:28 am,

Mfi, Hoblitzellmade no changes o i comctions to the notes of September 13,2007, .BWI - Customer Pocility C h a r g ~

Jim Walsh explained h a t the Marylat~dAviation Administrotion (MAA) seeltsopp1;oval to spend $1.6 million of CEY:Improvement funds for two capital projecb. Thefirst project i s to replace. th e H-frames on all 25 rental cm shuttle b~ise8 t $10,000 perbuu. It was discovered that during routine maintenance and inspection that cracksappeared in the frames of the buses, therefore taking 7 of the 25 buses outof service. Theoriginal manufacturer,Neoplaa, ir bankrupt, and therefote, MAA cannot go to them forthe cost o f repairing th o FI-frames. MAA ha s found another manufach~rero replace theI-I-~fstirnesor all twen ty-five (25) busoe a8 a p r e c ~ u t i ~ nuc to tbe fact that the I-1-frameshave bem found to be defective. There are sev er~ l ther agencies, ncluding MTA,which have issues with Neoplnn busses. The total cost of this project is $250,000.

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The second project is for Couayllrd Improvementr fo r the existing public parkingarea at a cost of $1.34million, The existing parking area is inadequate to serve the pubIicdul.lng peak periods, such as s~miner eekends ond Friday afternoons throughout theyear. The expansion of the parking area would increase from 22 spaces to approximately48-52 spaces, depending on parking apace width. Two spaces would be dedicated to atmi stand, allowing for public space between 46-50 paces. The improvemei~ts ouldalso a1 low fo r a dedicatedbus lane which will inc~easo ehicle safety along the ourbside.

As of June 30,2007 the CPC ImprovementFund had a balance of $10.3million.MAA stated that $1million would be reserved for future bus replacements. In addition topreviously approved projects, the spe~~clingn the f i ~ n dotals $6.4 million, resulting in 8net balance of $3.9 million. The money requested would come out of the $3.9 million.Member Basso questioned whether the passenger facility charges will be raised Therewill be an increase from $4.50 to $6.00 sometime in the future, the last increase being in2000 going froin $3.00 to $4.50,Member Mmlcs recommended ~pprov1 with Member I3asso seconding.

ICC Mon@ly_UpdateDavid Chapill presentecl the monthly budget and cash flow report for the monthending August 31,2007. Compared to theprevious month% mdysis, there hns beenminimal change in projected cash flow; PY 08 expendituresare projected to be $648,000less thhan projected i n the previous month; PY 09 expenditures are comrnensur~telyhigher,Mr. hapin also provided information concerning the status of the notice tolmoeed for construct,ion of Contract A. The SHA and contractor have negotiatad anagreement under which Hmited activities having no significant environmentaleffect will

. . be allowed to begin. A payment of approximately $3 million wlll be made to theco~ihnctor; id prices will remaln in effect even though the full NTP is not being gral~ted.The i~suanceof the complete notice to proccod is delayed until mid November, Plaintiffshave agreed to t111luw the limited worlc to begjn.Budget Amcndlnent Process

Chris Thompson presentecl a budget amendment process, Any budget transfer canbe approved by executlvo management, but any increase or decretlse to the total budgdmust ha approved by the Members. Discussimi followed 8s to Mcmbcrs receivingnmoll thly report 017 actual expendl tures vs, budgeted. Member Basso requested th e tMembcrs bc advised of over~unslundenunu bove a certain percentage be set. Mr.Frerccland explained that he will bc meeting with each Division Director, individually, nt

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the end of the month to discuss their actual and projected budgets. Members recluested areport on the outcome of those mwtings.InvestmentReper t

Allen Garman stated the economic outlook continues to be negrtive, with thehousing market still deteriorating, The mwlcet value.of the investments for theAuthori ty 's Trust Pmds asQI'eptember 50,2007 was'$520 million. Bxcltiding the $300 .million in bond proceeds, investments fell by $17million an heavy capital lspending. TheICC Funds, comprised o f the GARWE bond proceeds.and theDcpoaitory Fund, had amarket value of investments us of August 31,2007 at $335.7 million, The GARVEBConstruction Pund hcld $218 million and the Depository Fund held $117million. TheFinance Division is procuring a RFP to outsource the $300million to a 31d party manager,with an estimated on-board time of 6 months. The total of the Authority's investments asof September30,2007 was $855.6 million.

Ms, unoi~uedvised that sha rasourched t h e l ~ s u eegarding the Authorlty seliglbUiry to invest in theMaryland Lucal Government Inveshnent Pool (MU;IP).According to the statute, the MLOIP applies to local governments, both county andmunicipal. The ~tatutepecifically excludes entities of the State. In addition, Ma.Donohue presented an Attorney General's Opinion, dated February 13, 1985, whichconcluded t h ~ t uthority funds were not monies of theState. TheAuthority's PinnnceDivision contacted Counsel to the Trewurer'sOffice and he concurred with Ms. Donol~uethat the Treasurer could not invest Authority fund8 into theMtGIP.Financial Revart

Alison Williams presented the Finuncial report as of September 30,2007.Preliminary operating expenditures for FY 08 as of September30ue ~ppraximat.ely 31million or 15% of the totrll budget, Discussion followed as to the Capital Budget Status.Costs as of September 30 totalecl approximately $75 million. Members wo~ildike areport on a monthly busis of capital costs to date vs . projections. Ms. 'Qiandos stated that8 report will be available for theNovember meeting. Membcr I-Ioblitzell ~uggestedhat atohl of outstnnding debt be ~ d d e dn the report an d that tm asterisk (*) fo r AAA ratingsbe also added to show t h ~ they are hsured.

The meeting adjourned at 10:45 am at which time the Executive Session was hcld.Tho next meeting 1s scheduled for November 8,2007. .

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FINANCE COMMITTEE MEETINGNotes of November 16,2007

Attendees._ _ _ _. _ _ _ . _ . _ __ _ _ _ _ .._ _. __ _ _ . ._ . _ . _ . .- . -- -. -.- .- . - . - .- -. . .. . - ... . .- . .- - - ...

Louise P, Hoblitzell, ChairCarolyn PeoplesJaclcBassoIsaac MarksBeverley Swaim-S taleyRonald FreelandAlison WilliamsJoyce DiepoldAllen GarmenChristinaThompsonDavidChapin .Geoff KolbergSam TriandosDennis SimpsonBruce GartnerSuhair AlkhatibJim PeifferPeter KessenichJoeMasonJamie TraudtCindy Taylor

Member Hoblitzell culled themeeting to order at 9:37 am .Notes

Member Hoblitzell made no changes or corrections to the Notes of October 15,2007.Member Peoples requested that the action items be highlighted.IC C Update and Contract C

Regarding the federal court challenges to the ICC,David Chapin stated that JudgeWilliams found in favor of the defendants on November 8, upholding the determinations onthe environmental decisions by the federal agencies. Plaintiffs have up to 60 days to appeal.Settlement discussions may also be a possibility. As of the evening of November 15,nothinghas been filed.

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FOLLOW-UP TEM: Member Hoblitzell requested that a revenue analysis beconducted, especially for the May 2008 budget review.ACTION: General consensus without objection to recommend approval of the FY 2009Operating Budget to the full Authority.

Chris Thompson presented a summary of cos t containmen t items for FY 008, andstated that there would not need to be a budget amendment for this. Ron Freeland explainedthat he is having quarterly meetings with m anagement relative to their respective budgets.Final FY 2008 -FY 2013 CTP

Dennis S impson presented the final CT P for approval and stated that it is $4.4 millionless than projected. Suhair Alkhatib stated the capital program consists of 260 other projectsand that there is a 90% reduction in non-ICC projects. Discussion followed as to whetherlolls should be increased sooner than later. If tolls were increased sooner then the Authoritycould consider reducing the amount of debt issued, or reducing the amount of futu re tollincreases required.FOLLOW-UP ITEM: Member Hoblitzell requested a forecast to determine whether o rnot,he program is afSordable.ACTION: Member Marks recommended approval, subject to quarterly adjrcshnent ifnecessary, with Meinber Peoples seconding.Financial Report

Alison Williams presented this report as of October 31,2007 stating that 23.2%of theFY 2008 operating budget has been spent with a budget spending guideline of 29.3% (this i s aguideline to be used as an internal model). Mem ber I.Ioblitzel1 requested that expendituresconcerning the PIZ roject be tracked on a seasonal basis and that the ICC projections beexcluded and shown separately. Also instead of the column stating authorizatioi~s nderConsultant & Construction contracts that i t should be worded, "awarded contracts". Inaddition, we should show earned interest,IBT*llA- Finance Summit

Ron Freeland stated that he will be attending this conference. Member Basso isattending on behalf of AASHTO.The M eeting adjourned at 12:05 pin. The next scheduled meeting is D ecember 13,2007 at9:30 am,

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FINANCE COMMITTEE MEETING

Attendees:Louise P.Hoblitzell - ChairCarolyn Y. PeoplesJack BassoIsaac M arltsBeverley Sw aim-StaleyRonald L, PreelandAllen GarmenAlison WilliamsKathy FulcaJoyce D iepoldChristina ThompsonPeter Kessenich - PFMDavid ChapinJoe Mason -Davenport & Co. , Inc.Jamie Traudt - Davenport & Co, Inc.Betty Connors-State Highway AdministrationSamTriandosDeborah DonohueCindy Taylor

Member Hoblitzell called the meeting to order at 9:34 am. Minor revisions weresuggested to be made to the notes of November 1 6,2 007 .ICC Funding Options

David Chapin explained that the cu rrent financing plan is to designate the ICC asa Transportktion Fac ilities Project in order to fund the project with senior lien tollrevenue bond proceeds. After the,next Finance Comm ittee meeting on January 10,2008,a special meeting of Authority M embers would be needed to approve this plan in order toproceed. Litigation could affect this decision,but as of December 7" no appeal has beenfiled. Plaintiffs have until January 7,2008 to appeal. Discussion followed as to the threeoptions presented.

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Mr. Chapin stated that the test will be during the fifth year after completion andevery year after wherein revenues must exceed operating costs. Discussion followed ontoll rates. Beverley Sw aim-Staley suggested that the Authority use higher range toll rateswhen discussing before the legislatu re and the rating agencies. Member Hoblitzellemphasized the need fo r the Authority to raise rates sooner, rather than later.

d C T 1 0 N ~ G e nmkoasensu~-with~.~t0bJe~ti0.~2-to-rec~mmendtu-the-fulU-uth~~i,-- , . ,- -- - .A . .- .i i i i j i l r r n i i z f D~tio~ItodeSig~~ICCa~Transp~rtatzonaczlztzes Projectand to issue toll revenue bonds in the spring of 2008.

InvestmentReportAllen Gannen first presented the Investment Policy to recommend two minorchanges. Allow able investments - emove Student Loan Marketing Association (Sallie

Mne) as a permissible investment since it was fully privatized and lost its governm entsponsored enterprise status in 2004. Money market mutual funds - update wording inpolicy regarding the Authority operating in accordance with SECRule 2A-7. Discussionfollowed by the com mittee on the three alternatives in securing investment services.Mem ber Hoblitzell said that it can be kept internal, or use outside investors or use theState, but in the meantime, PFM has been advising. The comm ittee felt that until a finaldecision is made, the Authority's investment policy should be more restrictive and shouldshadow the State's policy.ACTION: Member Basso recommended adopting the changes, with MemberPeoples seconding.

Allen Garmen stated that the economic outlook con tinues to be n egative with thehousing market still deteriorating. As of November 30,2007 the market value ofAuthority Trust Funds and ICC related accounts was $760.5 million. Financial Advisor,PFM, is now on board to pull this report together.Revenue Analysis

Christina Thompson stated that the pie charts presented are based on the actualfinancial statements for FY 2006 and FY 2007. Projections fo rFY 008 and FY 2009were done by Stantec in August 2007. The main source of toll incom e is generated fromthe Kennedy Highway and Fort McHenry Tunnel.FOLLOW-UP ITEM: Expenses to be allocafedby facility; revisit in May 2008,along with the budget.

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Progress of FinanceDivision - UpdateJoyce Diepold, Chris Thompson, Alison Williams and Kathy Fuka gave a

Powerpoint presentation on the Finance Division's goal progress. Many new challengeshave been faced by this management team and the Committee commended Mr. Freelandn = D f o r ach i ev i . n e .g r ea t r e s u l t s in a short amount of time,- -- - -- ------ -- - - . - . ---- - --- - - ---- -- -- - - ---FOLLOW-UP TEM: Presentation on heprogress of the Finance Divisionshould be done on an annual basis.

The meeting adjourned at 11:32 am. The next scheduled meeting is Thursday,January 10,2008.

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