meeting of the budget and finance subcommittee · proposed fy16 budget and five year plan budget...

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 602-262-7433

MEETING OF THE

Budget and Finance Subcommittee

MEETING DATE

October 15, 2015

TIME 12:00 p.m.

LOCATION Valley Metro 101 N. 1st Ave., 10th Floor Lake Mead Conference Room Phoenix, AZ 85003


October 8, 2015

Budget and Finance Subcommittee Agenda

Thursday, October 15, 2015 10th Floor, Lake Mead Conference Room

101 N. 1st Avenue, 10th Floor 12:00 p.m.

For those participating by telephone, please mute your phone when not speaking. Action Recommended

1. Public Comment

An opportunity for general public comment on issues related to Valley Metro. Up to three (3) minutes will be provided for each speaker.

For information

2. Minutes Minutes from the May 14, 2015 BFS meeting are presented for approval.

For action

3. FY15 Year–End Review

John McCormack will present the FY15 Year-End Review.

For information

4. FY16 First Quarter Reports John McCormack will present the FY16 First Quarter Reports.

For information

5. Advance Bond Proceeds 2014 Note Payable

John McCormack will review the advance bond proceeds 2014 note payable.

For action

2

6. Policy Review of Operating and Capital Fund Balance Reserve Minimums

John McCormack will present options to the BFS to establish a policy for operating and capital fund balance reserve minimums.

For information

7. Investment Policy Update

Allison Kaune of PFM will present a review of current market conditions and best practices for optimization of investment safety, liquidity and yield.

John McCormack will provide a review and recommended update to the Valley Metro RPTA Investment Policy.

For information

8. Review of Health Plan Costs

John McCormack will present a review of health plan costs, program design controls and funding.

For information

9. Future BFS Agenda Items

Chair Williams will request future BFS agenda items from members.

For information

10. Next Meeting The next meeting of the BFS is January 14, 2016.

For information

Qualified sign language interpreters are available with 72 hours notice. Materials in alternative formats (large print, audiocassette, or computer diskette) are available upon request. For further information, please call Rosalia Castro, Valley Metro at 602-495-8211 or TTY at 602-251-2039. To attend this meeting via teleconference, contact the receptionist at 602-262-7433 for the dial-in-information. The supporting information for this agenda can be found on our web site at www.valleymetro.org


DATE AGENDA ITEM 1 October 8, 2015 SUBJECT Public Comment PURPOSE A 15-minute opportunity will be provided to members of the public at the beginning of the meeting to address the BFS on all agenda items. The Chair may recognize members of the public during the meeting at his/her discretion. BACKGROUND/DISCUSSION/CONSIDERATION None COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENT None


DATE AGENDA ITEM 2 October 8, 2015

Summary Minutes of the Budget and Finance Subcommittee

May 14, 2015 Lake Mead Conference Room

Phoenix, AZ 12:00 p.m.

Meeting Participants Councilmember, Gary Sherwood, City of Glendale Councilmember, Jenn Daniels, Town of Gilbert (via phone) Councilmember, Suzanne Klapp, City of Scottsdale (via phone) Vice Mayor, Joe Pizzillo, City of Goodyear Councilmember, Thelda Williams, City of Phoenix Councilmember Sherwood called the meeting to order at 12:05 p.m.

1. Public Comment

None

2. Summary Minutes IT WAS MOTIONED BY COUNCILMEMBER SHERWOOD, MOVED BY COUNCILMEMBER WILLIAMS, SECONDED BY COUNCILMEMBER DANIELS AND UNANIMOUSLY CARRIED TO APPROVE THE APRIL 2, 2015 BUDGET AND FINANCE SUBCOMMITTEE (BFS) SUMMARY MEETING MINUTES.

2

3. FY 2016 Operating and Capital Budget and Five Year

1

Valley Metro RPTA

Proposed FY16

Budget and Five Year Plan


May 14, 2015

Councilmember Sherwood introduced John McCormack to present. Agenda Item 3 is an action item seeking the Budget and Finance Subcommittee’s recommendation to the Board to approve the FY16 Proposed Budget and Five Year Plan The budget has been developed with the cooperation of member cities.

3

Budget Schedule FY16

2

Jan 14 - Board approves Agency goals

Feb 19 - Board approves service changes effective April 2015

Feb 27 - Executive Summary / 5 year Plan posted to website

Feb 27 - Preliminary Budget / 5 year Plan delivered to Members

March and April - Review and comment by Members

Apr 1 - Budget presented for information to TMC/RMC

Apr 2 - Budget presented for information to BFS

Apr 16 - Budget presented to Board of Directors for information

May 6 - TMC recommended approval of FY16 Budget & 5yr Plan

May 14 - Budget presented to BFS for recommendation

May 21 - Budget presented to Board for adoption

The budget process has moved through the preliminary budget and member city comment phases to the final steps in adoption. On May 6, the Transit Management Committee (TMC) reviewed the Budget and Five Year Plan with changes that have been incorporated since the April Presentation. The TMC voted unanimously to recommend the Board approve the budget. Next Thursday, May 21 we will present the final budget to the RPTA Board for adoption.

4

Changes from Preliminary to Final Budget

3

$ Millions

RPTA Description of Change Change Change

Operations Expenditures 2.2 10.2

ADA Lead Agency Disbursements 1.8 9.8

Fixed Route Services 0.4 0.4

Operations Revenues 2.2 0.1

PTF Operations Funding - -

Fare Revenues 0.1 0.1

Transit Service Reimbursements* 0.1

(see below detail)

PTF Reserves Funding 2.0 10.1

Capital Expenditures - -

Capital Revenues - -

FY16 FY16-20

Changes from the preliminary budget presented to this committee in April are as follows:

On the expenditure side, the City of Phoenix provided increased costs for ADA paratransit service levels of $1.8 Million (M) and fixed route service cost increases of $400,000. The total increase is $2.2 M.

The cost increases are funded primarily by: Fare Revenues $100,000 Transit Service Reimbursements of $100,000 PTF Reserves $2.0 M

The five year impacts of these changes are $9.8 M for ADA Lead Agency Disbursements and $.4 M for Fixed Route Services.

On the revenue side, there are $100,000 of additional fare revenues and a PTF fund reserve requirement of $10.1 M.

There are no changes to the capital expenditures or revenues from the preliminary budget.

Questions and Answers Vice Mayor Pizzillo asked if there will be any changes to fixing the long term funding. Has there been any movement at the federal level?

Ms. McLaren said nothing recent.

Vice Mayor Pizzillo asked when funding runs out.

Ms. McClaren said end of May.

5

Changes from Preliminary to Final Budget (cont’d)

4

Transit Service Reimbursements* Detail of changes by Member

Dollars $

Operations Revenues

Changes to Transit Service Reimbursements Change

TSR - Avondale (66,247)$

TSR - Goodyear 66,248$

TSR - Surprise (14,354)$

TSR - Tolleson 87,834$

73,481

FY16

Mr. McCormack reviewed changes to the transit service reimbursements for each city. Questions and Answers Councilmember Williams asked why those changes were made. Mr. Olson said the Goodyear - Avondale switch was due to Goodyear agreeing to fund existing service that Avondale was paying for in the City of Goodyear. A slight misallocation of preventative maintenance money which affected Surprise and Tolleson, we have corrected that.

6

FY16 Revenues $286.9M

6

Funding Sources FY16 FY15 Change $

Public Transportation Funds $133.9 $127.7 $6.2

Transit Service Agreements $30.2 $29.4 $0.8

Federal Grants $33.6 $38.4 -$4.7

METRO Rail Reimbursement $16.9 $15.3 $1.6

Fixed Route Fare Revenues $16.3 $16.1 $0.1

AZ Lottery Proceeds $11.3 $11.5 -$0.2

Regional Area Road Funds $4.8 $4.7 $0.1

Other Revenues $2.0 $1.6 $0.4

Bond Proceeds $0.0 $0.0 $0.0

Carry forwards and Reserves $38.0 $80.0 -$42.0

Total $286.9 $324.6 -$37.7

Mr. McCormack reviewed the FY16 Revenues. Total revenues are $286.9 M; down by $37.7 M from last year’s budget.

FY16 Expenditures $286.9M

5

Uses of Funds FY16 FY15 Change $

Lead agency disbursements $69.5 $77.0 -$7.5

Transit service contracts & fuel 89.1 84.3 4.9

Capital 25.9 30.5 -4.6

RPTA & METRO Personnel Costs 26.3 24.9 1.4

Bond Principal & Interest 24.2 24.2 0.0

Contractual Agreements 4.0 5.6 -1.6

AZ Lottery Disbursements 11.2 11.2 0.0

Lead Agency Bond Disbursements 25.0 56.0 -31.0

Other Costs 11.2 10.8 0.4

Carry forwards to Reserves 0.4 0.1 0.3

Total $286.9 $324.6 -$37.7

Mr. McCormack reviewed FY16 Expenditures. Total Expenses are $286.9 M, a decrease of $37.7 M from last year.

7

FIVE YEAR PLAN OVERVIEW

FY 2016 THROUGH FY 2020

Valley Metro RPTA

6

Five Year Operating Forecast -

Revenues

7

(thousands)

5-Year

Total

Revenues

Public Transportation Fund (ADOT) 733,932$

PTF Bond Proceeds 61,257

Less: Debt Service Bus & Rail (149,124)

Less: Rail Capital Funding (current) (253,861)

Net PTF for Operations 392,204$

Other Regional Funds 25,749$

Federal Funds 41,023

Transit service reimbursements 165,559

Fare Revenues 96,651

Interest and other revenue 160

Total revenues 721,347$

There are no changes to the PTF sales tax revenue, bonds, debt service, or rail capital fund requirements.

There were minor increase adjustments to federal funds, transit service reimbursements, and fare revenues. Questions and Answers Councilmember Williams asked if we are anticipating the increase because of additional service for fare revenues, the ridership numbers haven’t changed. Mr. McCormack said the fare revenue increase from the prior presentation is due to increased service levels received from City of Phoenix.

8

Five Year Operating Forecast -

Expenditures

8

(thousands)

5-Year

Expenditures Total

Operations

Fixed Route 447,655$

Paratransit - EVDAR 51,398

Alternative Trans. Ridechoice, NWDAR, MS 20,217

Vanpool Service 5,545

ADA 110,801

Total operations expenditures 635,616$

Transportation Demand Management 7,140$

Planning & Administration 24,594

Regional Services 41,731

Safety & Security 1,835

Operations Contingency 1,150

Total expenditures 712,066$

Total Five Year Operating Expenditures is $712.1 M up $10 M from $702 M. Questions and Answers Councilmember Sherwood asked if there is a contingency fund. Mr. McCormack said we have $1.2 M in the operating budget as a contingency. Councilmember Sherwood asked if we have a contingency in the non – operating budget. Mr. McCormack said we do not. On the capital side, all of the capital projects contain a contingency element. Councilmember Sherwood asked if the contingency has been at that level for the past 5 years. Does it fluctuate a lot? Mr. McCormack said we have had little need to utilize contingency funds over the years. With respect to service changes, we plan to bring to the board any service changes during the mid – year budget adjustment.

Mr. Hodgins said we have used the RPTA operating contingency sporadically over the years. Historically there have not been major cost impacts to operating contingency.

9

Five Year Capital Program- Revenues

9

(thousands)

5-Year

Total

Revenues

Public transportation funds 45,158$

FTA - Section 5307 101,542

FTA - Section 5311 1,347



FHWA - CMAQ 1,741

FHWA - STP 18,322

Vehicle/parts proceeds 1,884

Capital assets reserve applied 570

Vanpool reserve applied 695

Undesig. Fund Balance Applied (PTF) 16,542

Total Revenues 201,726$

Five Year Capital Program- Expenditures

10

(thousands)

5-Year

Total

Expenditures by Project

IT Infrastructure 1,548$

Standard Bus - Replacement 132,399

Standard Bus - Expansion 9,715

Express/BRT - Replacement 7,408

Rural Fleet - Replacement 1,584

Paratransit Fleet - Replacement 1,843

Vanpool Fleet - Replacement 13,707

Vanpool Fleet - Expansion 5,310

Fleet - Other 1,934

Bus/Paratransit O/M Facilities 285

Transit Centers (4-Bay) 2,471

Bus Stop Passenger Amenities 1,073

Park & Rides 9,732

Vehicle Management/Communications Systems 7,702

Fare Collection Systems 2,166

State of Good Repair - Fleet Rebuild 2,850

Total Expenditures 201,726$

There were no changes from the April presentations. Questions and Answers

Councilmember Sherwood asked if we are purchasing extra light rail cars to accommodate the expansion. Mr. McCormack said we are looking to purchase 8 additional vehicles to accommodate special events. Currently, we use the entire 50-car fleet for special events. Councilmember Sherwood asked if the costs for additional cars has been programmed into the current projects.

10

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

11

11

PTF Fund Balance Projection

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Fund Balance Forecast

Bus Program Rail Program Bus Program Policy Minimum

In 2020 the fund balance is $25 M (green bar). The red bar is the current policy minimum which is $14.5 M. The rail side (purple bar) varies as the capital funds build up based on bond issue and expenses incurred. Questions and Answers Councilmember Sherwood asked if there is a policy for rail. Mr. McCormack said the policy is the funding has to be balanced each year and positive at the end of the program. We will present concepts to establish a fund balance for rail capital at our October meeting.

12

Today’s Action

12

It is recommended that the BFS forward to the

Board of Directors approval of the Valley Metro

RPTA Proposed Fiscal Year 2016 Budget

(July 1, 2015 thru June 30, 2016)

and acceptance of the Five-Year Operating

Forecast Capital Program

(FY 2016 thru 2020).

COUNCILMEMBER WILLIAMS MOTIONED, VICE MAYOR PIZZILLO SECONDED AND IT WAS UNANIMOUSLY CARRIED TO FORWARD TO THE BOARD OF DIRECTORS APPROVAL OF THE VALLEY METRO RPTA PROPOSED FISCAL YEAR 2016 BUDGET (JULY 1, 2015 THRU JUNE 30, 2016).

13

4. Transit Life Cycle Program

Transit Life Cycle Program

2015 Model Update


May 14, 2015

Councilmember Sherwood introduced Paul Hodgins to present.

Overview

• Financial models are balanced

• Bus surplus $35.2 million

• Rail surplus $23.1 million

• Bus operating program changes based on

SRTP

• Rail capital program updated alignments

for 2 projects2

Mr. Hodgins gave an overview of the program.

14

Revenues

• PTF – down $38.8 million (-1.35%)

– $22.0 million bus, $16.8 million rail

• Fare increase

– Assumed in FY2017 then every 3 years

• New local funding for rail program

– Tempe Streetcar

– Northwest Extension Phase II

3

Mr. Hodgins reviewed revenues. Questions and Answers Councilmember Williams asked how much the fare increase assumption is. Mr. Hodgins said the assumption is .25 cents on the base fare.

Transportation Excise tax

4

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2006 2007 2008 2009 2010 2011 2012 2013 2014

20 Y

ear

Tota

l (b

illio

ns)

Forecast Year

15

Bus Program Summary

5

Program Changes

• Operating program changes

– Improved service

– Increased funding for current service

• Fleet plan changes

• Facilities changes

6

Mr. Hodgins reviewed the program changes.

16

Operating Program

• Service changes

– Increased frequency on Route 50 Weekdays,

Scottsdale

– Increased frequency on Route 61 Sunday,

Mesa

– Increased frequency on Route 72 Weekdays,

Scottsdale and Tempe

– Extend two morning trips on Route 156,

Gilbert7

Questions and Answers Councilmember Sherwood asked when these changes go into effect. Mr. Hodgins said October 2015 except Route 72 which is effective April 2016. Councilmember Sherwood asked when do changes for April 2016 have to be presented. Mr. Hodgins said October or November of 2015.

Operating Program

• Service changes

– One additional round trip on Route 542

– Eliminate LINK service between Sycamore

and Country Club when Central Mesa Light

Rail opens

– Defer Scottsdale/Rural LINK beyond 2026

8

17

Operating Program

• Funding changes

– Fund existing service on Route 81, Scottsdale

and Tempe

– Fund existing service on Route 562, Avondale

– Fund existing service on Route 563, Avondale

– Fund existing service on Route 30, Tempe

(FY2020)

9

Capital Program

• Fleet changes

– Updated fleet replacement plan

• Tempe Orbit fleet

• Vanpool useful life

– Updated fleet expansion plan

• Based on SRTP improvements

• Communications upgrade

– Increased costs to upgrade radio/VMS

systems10

Questions and Answers Councilmember Sherwood asked if there has been any progress in getting Wi-Fi on rail.

Mr. McCormack said it would be an operating cost increase. It is still under evaluation, we do not know what the cost is at this time. Ms. McLaren said she would get an update for Councilmember Sherwood.

18

Capital Program

• Project changes

– North Glendale Park-and-Ride, Transit Center• Updated to current project location and estimate

– Baseline/24th Street Park-and-Ride• Updated costs

– Desert Sky Transit Center• Updated costs

– Scottsdale/Rural LINK• Scope reduced to include Traffic Signal Priority

and Bus Stop improvements for Route 7211

Expenditures

12

Bus Program 2015 Update 2014 Update Change % Change

Operations Expenditure

Fixed Route Operations $1,007.2 $972.9 $34.3 3.5%

ADA & Alternatives $482.9 $482.8 $0.1 0.0%

Regional Expenditures $246.1 $240.0 $6.1 2.6%

Sub-Total Operations Expenditures $1,736.3 $1,695.7 $40.6 2.4%

Capital Expenditure

Debt Service $72.1 $72.1 ($0.0) 0.0%

Fleet $938.3 $938.9 ($0.6) -0.1%

Facilities $258.2 $274.4 ($16.2) -5.9%

Sub-Total Capital Expenditures $1,268.6 $1,285.4 ($16.8) -1.3%

Total Expenditures $3,004.9 $2,981.1 $23.8 0.8%

19

Revenues

13

Bus Program 2015 Update 2014 Update Change % ChangeRevenue Operations

PTF $1,613.4 $1,635.4 ($22.0) -1.35%

RARF $86.5 $86.5 ($0.0) 0.00%

Fares $243.6 $233.8 $9.7 4.17%

Federal $71.3 $67.4 $3.9 5.76%

Other revenues $20.5 $20.3 $0.3 1.24%

Sub-Total Operations Revenue $2,035.2 $2,043.4 ($8.1) -0.40%

Revenue Capital

Federal - ARRA $35.8 $35.8 ($0.0) 0.00%

Federal - Capital $889.9 $902.0 ($12.1) -1.35%

Financed Revenue $58.3 $58.3 $0.0 0.00%

Other revenues $20.9 $22.7 ($1.8) -7.95%

Sub-Total Capital Revenue $1,004.9 $1,018.8 ($13.9) -1.37%

Total Revenue $3,040.1 $3,062.2 ($22.1) -0.72%

Cash Flow Summary

14

Bus Program TLCP Totals

Funding Surplus / Shortfall

Total Program Revenues $2,990.1

Total Operating Costs ($1,736.3)

Funding surplus before capital and financing $1,253.9

Total Capital Costs ($1,195.6)

Financing Needs anticipated: Proceeds Debt Service

Series 2009 $50.0 ($73.0)

Total Financing $50.0 ($73.0) ($23.0)

Total Program Cost 2026 ($2,954.9)

Net Fund Balance $35.2

20

Available PTF for Jurisdictional Equity

15

Revenue Forecast $1,613.4

Less:

Customer service ($147.0)

ADA certification ($29.8)

Planning and administration ($8.5)

ITS ($8.4)

Vanpool ($2.6)

Debt service interest ($22.2)

Minimum cash balance ($14.4)

Net PTF available $1,380.5

JE Summary

16

Sub-regionCalculated Allocation

Policy

DifferencePercent

DifferenceAllocation

Central $435.0 $438.1 $3.1 0.72%

East $763.6 $782.5 $18.8 2.41%

West $161.3 $159.9 ($1.4) -0.86%

$1,359.9 $1,380.5 $20.6 1.49%

21

Rail Program Summary

17

High Capacity Transit – 2014 TLCP

18

Mr. Hodgins highlighted the South Central Corridor (green area) has been added into the Lifecycle Program. The study has been completed.

Questions and Answers

Councilmember Sherwood asked if the South Central Corridor is in lieu of another extension.

Mr. Hodgins said no, it is being added to the plan for completion in 2034.

Councilmember Sherwood asked if it could switch with another extension that is scheduled for completion in 2023.

Mr. Hodgins said it could happen if priorities change.

22

Capital Projects

• Tempe Streetcar updated alignment and cost

estimate

• Northwest Phase II updated alignment and

cost estimate

• South Central added with completion in 2034

• LRV Acquisition: addition of 8 regional

expansion vehicles

• OMC expansion: reduction in cost estimate

19

Capital Revenues Assumptions

• Tempe Streetcar – Additional $17 million FTA Small Starts

– Tempe to provide $23 million

• Northwest Phase II– Additional $43 million FTA New Starts

– Phoenix to provide $35 million for regional costs

– Phoenix to fund additional $41 million of local costs

• LRV Acquisition: minimum 50% federal participation before ordering

20

Questions and Answers Councilmember Williams asked why Northwest Phase II is not a regional cost.

Mr. Hodgins said it is considered a regional cost, but we do not have an extra $35M in the PTF. We are asking for the cost to be locally funded. Councilmember Sherwood asked if construction will physically go over I-17 versus under. Mr. Hodgins said they will build over I-17.

23

2015 Proposed Update

Corridor Costs

21* Local costs for these projects continue beyond the life of the TLCP, all regional funds included in TLCP

Base Utilities Total

2015 TLCP

Open Year

2014 TLCP

Open Year

Northwest Phase I $298.5 $23.9 $322.3 2016 2016

Central Mesa $190.8 $8.1 $198.9 2015 2015

Tempe Streetcar $163.0 $13.7 $176.7 2018 2018

Gilbert Road $147.1 $0.0 $147.1 2018 2018

Capitol/I-10 West $926.9 $57.7 $984.6 2023 2023

West Phoenix/Central Glendale * $479.9 $28.7 $508.6 2026 2026

Northwest Phase II * $265.5 $12.0 $277.5 2026 2026

Northeast Phoenix $16.5 $0.0 $16.5 2034 2034

South Central $0.0 $0.0 $0.0 2034 NA

Sub-Total Corridor Extensions $2,488.0 $144.2 $2,632.2

The projects in blue are the changes to corridor costs. Questions and Answers Councilmember Sherwood noted concern about City of Tempe asking Valley Metro to provide the shortfall of $15 - 17 M. Tempe is currently short $10 M. Tempe is looking for a decision by Friday, May 15 to stop this project from being scheduled out further. Ms. McLaren said MAG had originally given City of Tempe a deadline of Friday, May 15. MAG has extended the deadline to next Thursday in order to present the information to our board. We are waiting for City of Tempe’s confirmation that they have their portion of the funds available.

24


Other Capital Costs

22

Base Utilities Total

2015 TLCP

Open Year

2014 TLCP

Open Year

LRV Acquisition $96.1 $0.0 $96.1 NA NA

OMC Expansion $31.1 $0.0 $31.1 2020 2020

CP/EV Regional Reimbursements $198.8 $74.3 $273.1

System-wide Support

Infrastructure $83.0 $0.0 $83.0

Alternatives Analyses $53.3 $0.0 $53.3

Design Standards & System

Planning $56.6 $0.0 $56.6

Capital Project Development

Administration $25.6 $0.0 $25.6

Sub-Total Other Capital $544.4 $74.3 $618.7

Total Capital Expenditures $3,032.4 $218.5 $3,250.9

Cost of Financing $60.4

Total Capital Project Costs $3,311.2


Capital Revenues

23

2015 Update 2014 Update Change % Change

PTF $1,265.7 $1,283.5 ($17.8) -1.4%

FTA 5309 $971.0 $995.9 ($25.0) -2.5%

CMAQ $263.7 $263.7 $0.0 0.0%

Other federal $61.0 $40.7 $20.2 49.6%

Phoenix T2000 $446.7 $385.5 $61.2 15.9%

Mesa $147.6 $153.2 ($5.6) -3.6%

Glendale $100.1 $92.0 $8.1 8.8%

New local $57.0 $0.0 $57.0 NA

MAG / RPTA $21.5 $20.3 $1.2 6.1%

Sub-Total Capital Revenue $3,334.4 $3,235.0 $99.4 3.1%

25


Cash Flow Summary

24

Rail program TLCP Totals

Funding Surplus / Shortfall

Total Program Revenues $3,334.4

Total Base Program Cost ($3,032.4)

Funding surplus before PTF utility expenses and financing $302.0

Non Prior Right Utility Relocations ($218.5) ($218.5)

Financing Needs anticipated: Proceeds Debt Service

Series 2009 $55.5 ($77.9)

Series 2014 $135.4 ($156.9)

Series 2017 $61.6 ($72.9)

Term 2021 $0.0 $0.0

Term 2023 $25.0 ($28.7)

Advance Funds by Phoenix $60.0 ($61.5)

Total Financing $337.5 ($397.9) ($60.4)

Total Program Cost 2026 ($3,311.2)

Net Fund Balance $23.1

Questions and Answers Councilmember Sherwood asked if we are looking to refinance in 2017. Mr. Hodgins said we will review the 2009 bonds (call date of 2019) in 2017. If the rates are still low, it would make sense to refinance.

26

25

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026


Bus Program Rail Program Policy Minimum

26

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026


Bus Operating Program Bus Capital Program Rail Capital Program Policy Minimum

27

Timeline

TMC - information May 6, 2015

Board - information May 21, 2015

RTAG May 19, 2015

TMC - action June 3, 2015

Board - action June 18, 2015

27

Note: METRO Board of Directors will take action on the light rail/high capacity program in May

The Rail TLCP will go to the Board for action in May and the RPTA TLCP will go to the Board for action in June.

Next Steps• Bus Program

– Work with Mesa to identify service and/or capital improvements through SRTP process

• Rail Program– Complete funding arrangement with Tempe for

Streetcar project

– Develop Small Starts application for Tempe Streetcar for fall submittal to FTA

– LRV Procurement• Secure federal funds for LRVs

• Develop procurement documents

28

28

5. Future BFS Agenda Items

Councilmember Sherwood called for any future agenda items. There were none.

1

Valley Metro RPTA

Follow up to April 2015 meeting


May 14, 2015

Bus Fleet Forecast – Conversion to APC

2

Mr. McCormack provided an update of the conversion on the bus fleet to be APC equipped. Questions and Answers Councilmember Sherwood asked what the cost per unit is. Mr. Hodgins and Mr. Olson said between $2-5 thousand. We will find out and get back to the committee.

29

6. Next Meeting

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

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

DATE AGENDA ITEM 3 October 8, 2015 SUBJECT FY15 Year-End Review PURPOSE To provide an informational update to the BFS of the FY15 Year-End Review. BACKGROUND/DISCUSSION/CONSIDERATION John McCormack will present. COST AND BUDGET None COMMITTEE PROCESS Financial Working Group: September 29, 2015 for information Budget and Finance Subcommittee: October 15, 2015 for information STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY 2016 – 2020: Goal 2: Advance performance based operation

Tactic E: Maintain strong fiscal controls to support Valley Metro’s long-term sustainability.

RECOMMENDATION This item is presented for information only. CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENT FY15 Year-End Review PowerPoint

10/8/2015

1

Valley Metro

Fiscal Year 2015

Financial Results


October 15, 2015

Public Transportation Fund Revenues

from Maricopa Transportation Excise TaxActual versus Budget

Fiscal Year 2014-2015

Month

FY 2013/2014

Actuals

FY 2014/2015

Budget

FY 2014/2015

Actuals

Cumulative

Budget

Variance YTD

Cumulative %

Variance to

Budget

Comparison to

Prior Year

Cumulative

Comparison to

Prior Year

Cumulative

Percent

Change

July $9,937,200 $10,460,135 $10,137,850 ($322,285) -3.08% $200,651 $200,651 2.02%

August 9,594,205 9,863,474 10,053,027 (132,731) -0.65% 458,823 659,473 3.38%

September 9,680,076 10,142,966 10,093,521 (182,176) -0.60% 413,445 1,072,919 3.67%

October 9,640,229 10,242,675 10,190,528 (234,323) -0.58% 550,299 1,623,218 4.18%

November 9,715,097 10,097,179 10,010,211 (321,291) -0.63% 295,115 1,918,332 3.95%

December 9,945,390 10,325,784 10,447,517 (199,558) -0.33% 502,126 2,420,459 4.14%

January 12,521,255 12,569,497 12,312,867 (456,188) -0.62% (208,389) 2,212,070 3.11%

February 9,463,436 10,149,823 9,987,593 (618,418) -0.74% 524,158 2,736,227 3.40%

March 9,906,083 10,407,403 10,756,386 (269,435) -0.29% 850,303 3,586,531 3.97%

April 10,970,909 11,729,341 11,743,214 (255,562) -0.24% 772,305 4,358,836 4.30%

May 10,117,868 10,725,384 10,668,933 (312,013) -0.27% 551,065 4,909,900 4.40%

June 10,282,512 10,958,339 10,916,034 (354,318) -0.28% 633,522 5,543,422 4.55%

Totals * $121,774,260 $127,672,000 $127,317,682 $5,543,422

PTF Revenue To Date Summary:

Original RTP Estimated Excise Tax Revenues Jan. 2006 to June 2015

Actual Excise Tax Revenues from Jan. 2006 to June 2015

-28.06%

$1,514,344,000

$1,089,475,064

($424,868,936)

10/8/2015

2

10/8/2015

3

Valley Metro RPTA

Operating Results

RPTA Budget vs. Actual Report $ Millions

For the quarter ending June 30, 2015

Year to Date

Operations Expenditures Budget Actual

Variance

(Unfav.)

Fixed Route Bus 81.0 76.9 4.1

Paratransit 28.1 26.8 1.3

Vanpool 0.8 0.7 0.1

Regional Services 11.0 9.9 1.1

Planning 3.8 2.7 1.1

Administration 2.4 2.1 0.3

METRO Rail (Salary, Fringe, OH) 15.8 15.4 0.3

AZ Lottery Fund Disbursements 11.2 10.5 0.7

Total Operations Expenditures 154.1 145.2 8.9

Valley Metro RPTA

Capital Results


For the quarter ending June 30, 2015Year to Date

Capital Expenditures Budget Actual

Variance

(Unfav.)

Bus Purchases

Valley Metro 0.9 0.0 0.9

Lead Agency 0.1 0.0 0.1

Paratransit Vehicles

Lead Agency 0.3 0.1 0.2

Vanpool Vehicles 2.1 0.0 2.1

Other Capital 1.5 1.4 0.1

METRO Rail 108.8 100.0 8.8

Total Capital Expenditures 113.6 101.5 12.1

10/8/2015

4

Valley Metro RPTA

Cash and Investments

FY15 vs. FY14

Current Status of Investments

Account Description Type of Funds

Balance at

6.30.2015

Balance at

6.30.2014 Change

Wells Fargo Checking General Fund $ 17,009,103 $ 2,908,276 $ 14,100,827

Wells Fargo Savings Capital Projects/Operating 137,987,094 99,180,546 38,806,548

Various Bank FDIC Certificates of Deposit Capital Projects 6,707,543 2,979,157 3,728,386

US Bank - 2014 Revenue Bonds Proceeds Capital Projects 4,586 98,671,228 (98,666,642)

US Bank - 2014 Revenue Bonds - Debt Service Reserve Debt service fund 11,090,335 2,453,186 8,637,149

LGIP - Debt Service Reserve - 2009 Bond Issuance Debt service fund 149,898 32,265 117,633

Wells Fargo Cash with Escrow Agent Debt service fund 8,039,534 7,872,787 166,747

Local Government Investment Pool - Other Investments Fiduciary/General Fund 9,373,122 13,196,694 (3,823,572)

Total Cash and Investments $ 190,361,215 $ 227,294,139 $ (36,932,924)

-

Summary of Bond Funds 19,284,353 109,029,466 (89,745,113)

-

All Other Cash Reserves $ 171,076,862 $ 118,264,673 $ 52,812,189

Investment Earnings $ 347,785 $ 285,145 $ 62,640

FY15 FY14 Change


DATE AGENDA ITEM 4 October 8, 2015 SUBJECT FY16 First Quarter Reports PURPOSE To provide an informational update to the BFS of the FY16 First Quarter Reports. BACKGROUND/DISCUSSION/CONSIDERATION John McCormack will present. COST AND BUDGET None COMMITTEE PROCESS Financial Working Group: September 29, 2015 for information Budget and Finance Subcommittee: October 15 for information Board of Directors: October 22, 2015 for information STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY 2016 – 2020: Goal 2: Advance performance based operation


RECOMMENDATION This item is for information only. CONTACT John McCormack Chief Financial Officer 602-262-8239 [email protected] ATTACHMENT FY16 Q1 Report PowerPoint

10/8/2015

1

Finance

FY16 Q1 Report


October 15, 2015

Valley Metro RPTA

Operating Results – Q1

2


For the quarter ending September 30, 20141st Quarter Year to Date

Operations Expenditures Budget Actual

Variance

(Unfav.) Budget Actual

Variance

(Unfav.)

Fixed Route Bus 20.3 20.0 0.3 20.3 20.0 0.3

Paratransit 6.9 6.5 0.4 6.9 6.5 0.4

Vanpool 0.2 0.2 0.0 0.2 0.2 0.0

Regional Services 2.8 2.3 0.5 2.8 2.3 0.5

Planning 0.9 0.8 0.1 0.9 0.8 0.1

Administration 0.6 0.6 0.0 0.6 0.6 0.0

METRO Rail (Salary, Fringe, OH) 3.9 3.7 0.2 3.9 3.7 0.2

Total Operations Expenditures 35.6 34.1 1.5 35.6 34.1 1.5

10/8/2015

2

Valley Metro RPTA

Capital Results – Q1

3


For the quarter ending September 30, 20141st Quarter Year to Date

Capital Expenditures Budget Actual

Variance

(Unfav.) Budget Actual

Variance

(Unfav.)

Bus Purchases

Valley Metro 2.6 0.0 2.6 2.6 0.0 2.6

Lead Agency 1.3 0.0 1.3 1.3 0.0 1.3

Paratransit Vehicles

Lead Agency 0.1 0.0 0.1 0.1 0.0 0.1

Vanpool Vehicles 1.1 0.0 1.1 1.1 0.0 1.1

Other Capital 4.3 0.0 4.3 4.3 0.0 4.3

METRO Rail 27.3 32.3 (5.0) 27.3 32.3 (5.0)

Total Capital Expenditures 36.7 32.3 4.4 36.7 32.3 4.4

END OF PRESENTATION

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DATE AGENDA ITEM 5 October 8, 2015 SUBJECT Series 2014 Advance Bond Proceeds PURPOSE To request approval of the Series 2014 Advance Bond Proceeds Note Payable.

BACKGROUND/DISCUSSION/CONSIDERATION On April 16, 2015, the RPTA and VMR Boards amended the LRT Program Agreement establishing a Security Agreement whereby RPTA will hold an interagency receivable due from Valley Metro Rail (VMR) for bond proceeds advanced prior to the collection of sales taxes which fund the bonds. The Series 2014 Advance Bond Proceeds Note Payable establishes the amount and repayment schedule for financial statement reporting purposes. As of June 30, 2015, the Series 2014 Advance payable from VMR to RPTA totaled $69,583,715. Series 2014 Advance Principal and Interest Repayment Schedule

As sales taxes are received from the State Treasurer, RPTA segregates 43.24% of the PTF into the Valley Metro Rail Fund for VMR capital projects. PTF sales tax revenues allocated to VMR are to be used to pay debt service principal and interest first. The principal and interest payments will be paid from the 43% allocation; any funds remaining after payment of the annual principal and interest debt service on the outstanding bonds are available to be drawn by VMR for design and construction related costs.


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COST AND BUDGET There is no impact to RPTA or VMR budgets. All costs of PTF Bond program are included in the Adopted FY16 Operating and Capital Budget and FY2016-2020 Five-Year Operating Forecast and Capital Program. The Note Payable articulates the existing funding program for financial statement purposes. STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY 2016 – 2020:

Goal 2: Advance performance based operation o Tactic E: Maintain strong fiscal controls to support Valley Metro’s

long-term sustainability. COMMITTEE ACTION Financial Working Group: September 29, 2015 for information RTAG: September 15, 2015 for information TMC: October 8, 2015 for action BFS: October 15, 2015 for action Board of Directors: October 22, 2015 for action RECOMMENDATION In accordance with the LRT Program Agreement, it is recommended that the BFS forward to the Board of Directors authorization for the Series 2014 Advance Bond Proceeds Note Payable due from VMR to RPTA in the amount of $69,583,715. The Note will be fully paid by PTF sales tax proceeds allocated to the LRT Program under Prop 400. CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected]

ATTACHMENT None LRT Program Agreement #0940015 S 03 is available upon request.


DATE AGENDA ITEM 6 October 8, 2015 SUBJECT Policy Review of Operating and Capital Fund Balance Reserve Minimums PURPOSE To provide to the Budget and Finance Subcommittee a draft reserve fund policy for consideration and discussion. BACKGROUND/DISCUSSION/CONSIDERATION Written adopted financial policies relative to designated reserves and reserve funds have many benefits, and represents a critical element of sound fiscal management. Reserves and reserve funds are prudent fiscal management tools, which are a cornerstone of long-term financial planning. A written and adopted policy provides for and facilitates attainment of program and financial goals relative to the prudent accumulation and management of designated reserves and reserve funds. It is the intent of this policy to clearly identify both reserve fund categories and purposes, and set target levels for reserves that are consistent with the Agency’s mission and vision statements and the Agency’s Strategic Plan. This Reserve Fund Policy has been developed to consider and appropriately provide for the following:

1. To ensure continued operation and solvency of the Agency to carry out its mission and strategic plan.

2. To maintain a financially viable Agency that can maintain stable levels of service. 3. To maintain and enhance the sound fiscal condition of the Agency. 4. To maintain financial flexibility in order to be able to continually adapt to change,

and permit an orderly adjustment to unanticipated events. 5. To maintain a diversified and stable long-term financial plan. 6. The accumulation and maintenance of an amount equal to the stated target fund

level for each specific reserve fund. 7. The review of this policy on an annual basis in order to determine appropriate

changes, additions and/or deletions. The attached draft Valley Metro Reserve Fund Policy provides details of the scope, computation of target fund levels and annual reviews of six (6) specific reserve funds. The table below summarizes the reserve funds:

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SUMMARY OF RESERVE FUND TARGET FUND LEVELS

RESERVE FUND TARGET LEVEL

General Fund Operating Reserve 17% of operating expenditures

Capital Reserve Fund 17% of capital expenditures

Working Capital Reserve Fund 17% of major infrastructure project costs

Vanpool Reserve Fund 20% of vanpool fleet replacement costs

Emergency Reserve Fund $1,000,000

Debt Service Reserve Fund As prescribed in Bond Resolution(s)

COST AND BUDGET The draft Reserve Fund Policy has not been integrated into the budget process. Current cash and investment fund balances are adequate to meet the requirements of the draft policy. COMMITTEE PROCESS Budget and Finance Subcommittee: October 15, 2015 for information STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY 2016 – 2020: Goal 2: Advance performance based operation


RECOMMENDATION This item is presented for information only. CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENT Valley Metro Reserve Fund Policy

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VALLEY METRO RESERVE FUND POLICY

Draft September 22, 2015 Introduction:

Written adopted financial policies relative to designated reserves and reserve funds have many benefits, and represents a critical element of sound fiscal management. Reserves and reserve funds are prudent fiscal management tools, which are a cornerstone of long-term financial planning. A written and adopted policy provides for and facilitates attainment of program and financial goals relative to the prudent accumulation and management of designated reserves and reserve funds. It is the intent of this policy to clearly identify both reserve fund categories and purposes, and set target levels for reserves that are consistent with the Agency’s mission and vision statements and the Agency’s Strategic Plan. This policy shall be known and may be cited as the Valley Metro Reserve Fund Policy.

Objectives:

This Reserve Fund Policy has been developed to consider and appropriately provide for the following:

8. To ensure continued operation and solvency of the Agency to carry out its mission and

strategic plan. 9. To maintain a financially viable Agency that can maintain stable levels of service. 10. To maintain and enhance the sound fiscal condition of the Agency. 11. To maintain financial flexibility in order to be able to continually adapt to change, and

permit an orderly adjustment to unanticipated events. 12. To maintain a diversified and stable long-term financial plan. 13. The accumulation and maintenance of an amount equal to the stated target fund level for

each specific reserve fund. 14. The review of this policy on an annual basis in order to determine appropriate

changes, additions and/or deletions.

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Reserve Fund Policy: In order to achieve the objectives of this Policy, the Chief Financial Officer shall adhere to the following guidelines:

1. Reserve funds may be established from time to time by the Board of Directors as an

important component of sound financial management to meet both short and long- term financial objectives, and to ensure prudent financial management practices.

2. Reserve funds may be designated by the Board of Directors as a “restricted reserve fund” or “non-restricted reserve fund”.

3. Restricted reserve funds shall be segregated, and limited in use to specific and designated purpose(s) as defined and established by the Board of Directors.

4. Assets of a restricted reserve fund shall be held separately from the General Fund, and shall only be used for the stated purpose(s) of the specific reserve fund.

5. Non-restricted reserve funds shall have no reference to specific accounting assets. 6. Non-restricted reserve funds do not require the physical segregation of funds. 7. The reserve funds may be invested in financial institutions and instruments in accordance

with the Agency’s Investment Policy. 8. All investment earnings from restricted and non-restricted reserve funds shall be

credited to the Agency’s General Fund, unless otherwise stated herein. 9. Board of Directors approval shall be required prior to the expenditure of restricted

reserve funds, unless otherwise stated herein. 10. The Chief Financial Officer shall maintain a written Reserve Fund Policy approved by the

Board of Directors. 11. The Chief Financial Officer shall annually review the Reserve Fund Policy with the Board

of Directors at a public meeting in order to determine appropriate changes, additions, and/or deletions.

12. The Chief Financial Officer shall ensure that the Reserve Fund targets are met, or forecast to be met, for each year of the five-year operating and capital budgets.

Reserve Funds:

The Board of Directors hereby establishes and designates the following reserve funds:

1. General Fund Operating Reserve. See Attachment A. 2. Capital Reserve Fund. See Attachment B. 3. Working Capital Reserve Fund. See Attachment C. 4. Vanpool Reserve Fund. See Attachment D. 5. Emergency Reserve Fund. See Attachment E. 6. Debt Service Reserve Fund. As prescribed in Bond Resolution(s).

Target Fund Levels: The Board of Directors shall establish a stated target fund level for each designated reserve fund. See Attachment F for a set of established target fund levels for designated reserve funds.

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Annual Evaluation: The Chief Financial Officer shall perform a review and analysis of each designated reserve funds for presentation to the Board of Directors at a public meeting upon the occurrence of the following:

1. Upon consideration by the Board of Directors of the annual budget. 2. Upon any significant change to and/or expenditure(s) from a designated reserve fund. 3. Upon determination that a fund balance is less than the established target fund level for

a designated reserve fund.

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ATTACHMENT A

GENERAL FUND OPERATING RESERVE

Fund Purpose: The purpose of the General Fund Operating Reserve is to accumulate sufficient reserve funds necessary to satisfy the general cash flow demands and requirements of the Agency’s general operations. This reserve fund will preserve credit worthiness, ensure adequate financial resources are available for timely payment of Agency obligations, and provide liquidity throughout the fiscal year.

Policy:

In order to achieve the objectives of this policy the Chief Financial Officer shall adhere to the following guidelines:

1. This reserve fund shall be known as the “General Fund Operating Reserve”. 2. The General Fund Operating Reserve shall be designated as a non-restricted reserve fund. 3. The Chief Financial Officer is authorized to approve the expenditure of General Fund

Operating Reserve, without prior approval of the Board of Directors, in response to day-to-day cash flow requirements.

4. This policy shall be reviewed on an annual basis for long-term adequacy and use restrictions.

Target Fund Level: The target fund level for the General Fund Operating Reserve is to maintain a balance in the General Fund, as of July 1st of each fiscal year, equal to a minimum of 17 percent of annual budgeted operating expenditures, unless otherwise directed by the Board of Directors at a public meeting. This target fund level was established based upon the following general guidelines:

1. The Agency shall maintain a balance in the General Fund equal to approximately

two (2) months budgeted expenditures for the fiscal year in the following funds: a. 1000 - Finance & Management Services b. 2000 - Transit Service Operations c. 3000 - Communications & Government Relations d. 3200 - TDM Division e. 3300 - Transit Planning Division f. 5000 - Office of the CEO g. 6200 - Regional Services

2. Undesignated fund balance for Bus PTF and RARF may be used to replenish this reserve fund.

2

ATTACHMENT B CAPITAL RESERVE FUND

Fund Purpose: The purpose of the Capital Reserve Fund is to accumulate sufficient reserve funds necessary to ensure timely acquisition, replacement and upgrade of the Agency’s capital assets, excluding major infrastructure construction projects.

Policy:

In order to achieve the objectives of this policy, the Chief Financial Officer shall adhere to the following guidelines:

1. This reserve fund shall be known as the “Capital Reserve Fund”. 2. The Capital Reserve Fund shall be designated as a restricted reserve fund. 3. Each adopted budget of the Agency shall contain a transfer from the General Fund to the

Capital Reserve Fund in an amount approved by the Board of Directors. 4. Monies transferred into the Capital Reserve Fund shall be expended solely for the

construction of new non-major system infrastructure and capital equipment. 5. The Chief Financial Officer is authorized to approve the expenditure of Capital Reserve

Funds, without prior approval of the Board of Directors, in accordance with approved budget authorizations.

6. All investment earnings from the Capital Reserve Fund shall be credited to the Agency’s General Fund.


Target Fund Level:

The target fund level for the Capital Reserve Fund is to maintain a balance, as of July 1st of each fiscal year, equal to a minimum of 20 percent of capital funds budgeted excluding major capital infrastructure construction projects, unless otherwise directed by the Board of Directors at a public meeting.

1. Undesignated fund balance in excess of the General Fund Operating Reserve for Bus PTF and LRT PTF may be used to replenish this reserve fund. Proceeds from the sale of capital assets, excluding any remaining federal interest, may also be used to replenish this reserve fund. No RARF may be used to replenish this reserve fund.

2

ATTACHMENT C

WORKING CAPITAL RESERVE FUND

Fund Purpose: The purpose of the Working Capital Reserve Fund is to accumulate sufficient reserve funds necessary to satisfy the general cash flow demands and requirements of the Agency’s major capital infrastructure programs. Major projects are defined as multi-year infrastructure construction projects that exceed $20 million in total project costs.

Policy:


1. This reserve fund shall be known as the “Working Capital Reserve Fund”. 2. The Working Capital Reserve Fund shall be designated as a non-restricted reserve fund. 3. The Chief Financial Officer is authorized to approve the expenditure of Working Capital

Reserve Fund, without prior approval of the Board of Directors, in response to day-to-day cash flow requirements.

a. Reserve funds for major light rail projects undertaken by Valley Metro Rail may be advanced to VMR to meet cash flow demands using available LRT PTF funds. Such advanced reserve funds may not be used by VMR for operating cash flow.

b. Bond proceeds funds may fulfill the Working Capital Fund reserve requirements. 4. All investment earnings from the Working Capital Reserve Fund shall be credited to the

appropriate capital revenue fund (e.g. LRT PTF or Bus PTF). 5. This policy shall be reviewed on an annual basis for long-term adequacy and use

restrictions. Target Fund Level:

The target fund level for the Working Capital Reserve Fund is to maintain a balance, as of July 1st of each fiscal year, equal to a minimum of 17 percent of the budgeted expenditures for the major capital infrastructure projects, unless otherwise directed by the Board of Directors at a public meeting.

1. The Agency shall maintain a balance in the Working Capital Reserve Fund equal

to approximately two (2) months budgeted expenditures for the fiscal year. 2. Undesignated fund balance in excess of the General Fund Operating Reserve for

Bus PTF and LRT PTF may be used to replenish this reserve fund. No RARF may be used to replenish this reserve fund.

3. Upon completion of each project any remaining working capital funds will be returned to the undesignated fund balance from which it originated.

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ATTACHMENT D VANPOOL RESERVE FUND

Fund Purpose: The purpose of the Vanpool Reserve Fund is to accumulate sufficient reserve funds necessary to ensure timely acquisition, replacement and upgrade of the Agency’s Vanpool fleet.

Policy:


1. This reserve fund shall be known as the “Vanpool Reserve Fund”. 2. The Vanpool Reserve Fund shall be designated as a restricted reserve fund. 3. Each adopted budget of the Agency shall identify Vanpool Fare Revenue in excess of

expected expenditures, which shall be transferred to the Vanpool Reserve Fund. 4. Monies transferred into the Vanpool Reserve Fund shall be expended solely for the

replacement and expansion of Vanpool fleet. 5. The Chief Financial Officer is authorized to approve the expenditure of Vanpool Reserve

Funds, without prior approval of the Board of Directors, in accordance with approved budget authorizations.

6. All investment earnings from the Vanpool Reserve Fund shall be credited to the Agency’s General Fund.


Target Fund Level:

The target fund level for the Vanpool Reserve Fund is to maintain a balance, as of July 1st of each fiscal year, equal to the cost of replacing a minimum of 20 percent of the current vanpool fleet, unless otherwise directed by the Board of Directors at a public meeting.

1. In addition to excess vanpool fare revenue, excess funds in the Capital Reserve Fund may be transferred to replenish this reserve fund. Undesignated fund balance in excess of the General Fund Operating Reserve for Bus PTF may be used to replenish this reserve fund if required and approved by the Board of Directors.

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ATTACHMENT E

EMERGENCY RESERVE FUND

Fund Purpose: The purpose of the Emergency Reserve Funds is to accumulate sufficient financial reserves necessary to ensure a timely response by the Agency to natural disasters and/or other emergencies. This reserve fund will provide for rapid response and continued operation of the Agency’s essential services during periods of natural disasters and/or other emergencies.

Policy:

In order to achieve the objectives of this policy the Chief Financial Officer shall adhere to the following guidelines:

1. This reserve fund shall be known as the “Emergency Reserve Fund”. 2. The Emergency Reserve Fund shall be designated as a restricted reserve fund. 3. The Emergency Reserve Fund shall be expended solely for the purpose of

responding to and maintaining Agency operations during a natural disaster and/or emergency.

4. The Chief Financial Officer is authorized to approve the expenditure of Emergency Reserve Funds, without prior approval of the Board of Directors, for purposes of restoration and/or maintenance of essential services in response to a natural disaster or other emergency.

5. Upon expenditure of any Emergency Reserve Funds, the Chief Financial Officer shall notify the Board of Directors at the earliest possible opportunity.

6. Expenditures from this designated reserve fund which are subsequently recovered, either partially or fully, from FEMA, OES, insurance and/or any other sources, said revenue shall be utilized solely for the purpose of refunding the Emergency Reserve Fund.

7. All investment earnings from the Emergency Reserve Fund shall be credited to the Agency’s General Fund.


Target Fund Level:

The target fund level for the Emergency Reserve Fund is to maintain a balance, as of July 1st of each fiscal year, equal to a minimum of $1,000,000, unless otherwise directed by the Board of Directors at a public meeting.

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ATTACHMENT F SUMMARY OF RESERVE FUND TARGET FUND

LEVELS

RESERVE FUND TARGET LEVEL

General Fund Operating Reserve 17% of operating expenditures

Capital Reserve Fund 20% of capital project revenues

Working Capital Reserve Fund 17% of major infrastructure project costs

Vanpool Reserve Fund 20% of vanpool fleet replacement costs

Emergency Reserve Fund $1,000,000

Debt Service Reserve Fund As prescribed in Bond Resolution(s)

DATE AGENDA ITEM 7 October 8, 2015 SUBJECT Investment Policy Update PURPOSE To inform the Budget and Finance Subcommittee about proposed changes to the RPTA’s Investment Policy in order to integrate utilization of the Investment Advisor and optimize investment earnings by allowing RPTA to hold investment instruments which are consistent with best industry practices and in compliance with ARS Title 35. BACKGROUND/DISCUSSION/CONSIDERATION RPTA, with the assistance of its investment advisor, PFM Asset Management LLC (PFMAM), has performed the annual review of its Investment Policy. As noted in the attached document, there are several proposed changes to the document that reflect three main principles: (i) consistency with Arizona Revised Statutes (ARS), (ii) alignment with RPTA’s overall investment objectives, and (iii) industry best practices. RPTA hired PFMAM after undertaking a Board-approved procurement process. Several of the proposed changes to the Policy reflect this new relationship and are incorporated into the attached updated Investment Policy 5.6A. Below we have provided a summary of the material recommendations incorporated into the Policy update:

RPTA included three new accounts, known as the Valley Metro RPTA

Investment Funds, which were created to segregate funds that will be managed by the Investment Advisor. Securities will be held by a third party custodian, Wells Fargo. The updated Policy names these three accounts and describes their purpose in the Scope section. In addition, and as stated in the Maximum Maturities section, securities in the Investment Funds can have a maturity that exceeds two years (with a maximum of 5 years as required by ARS Title 35), as long as they can be attributed to a future cash flow need.

In the Delegation of Authority section, a paragraph was added to address the

Authority’s’ relationship with an Investment Advisor. A sentence was also added to the Authorized Brokers/Dealers and Financial Institutions stating the advisor is authorized to transact with its own approved list of brokers/dealers.

The Instruments section was edited to align the Policy language more

consistent with ARS language. New investment types include two additional liquidity vehicles—money market funds and demand deposits. In addition, the expanded list also includes municipal obligations, commercial paper,

2

corporate notes, and negotiable certificates of deposit. As the Policy indicates, RPTA will only invest in the expanded asset types when working with an Investment Advisor who will monitor these securities on a daily basis. In the updated Policy, RPTA has placed limits on the sector and issuer allocations and minimum credit ratings in order to mitigate risks associated with these investments.

A change was also made to the Risks section to expand the overnight

vehicles available to the Authority when measuring liquidity to include money market funds, savings accounts, demand deposit accounts, and checking accounts.

STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY 2016 – 2020: Goal 2: Advance performance based operation


COMMITTEE PROCESS Financial Working Group: September 29, 2015 for information Budget and Finance Subcommittee: October 15, 2015 for information TMC: November 4, 2015 for action Board of Directors: November 19, 2015 for action RECOMMENDATION This item is presented for information only. November action will request the Board of Directors authorize the CEO to amend the RPTA Investment Policy per attachment Investment Policy 5.6A. CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENTS Investment Policy 5.6A

3

Policies and Procedures Title: INVESTMENT POLICY NO: 5.6 A Page: Page 3 of 9 Issued: December 12, 2005 Revised: September 25, 2015 Investment Policy It is the policy of the Regional Public Transportation Authority (Authority) to invest public funds in a manner which will provide for the maximum security and preservation of principal and meet liquidity demands while achieving the highest rate of return possible. Additionally, it is the policy of the Authority to comply with all applicable State statutes governing the investment of public funds, including (without limitation) Title 35 of the Arizona Statutes (“Title 35”) and all provisions of this investment policy are subject to the requirements of Title 35.a Scope This investment policy applies to all financial assets of the Authority. Proceeds from certain bond issues will be governed by the provisions of relevant bond documents. These funds are accounted for in the Authority’s Comprehensive Annual Financial Report and include:

General Fund Special Revenue Funds Capital Project Funds Debt Service Fund Fiduciary Fund Any new funds created by the Authority

The Authority will consolidate cash balances to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. Valley Metro RPTA Investment Funds are the investment portfolio managed in conjunction with an Investment Advisor selected by the Authority with a Board-approved procurement, and held by an independent custodian. The Valley Metro RPTA Investment Funds are managed within three categories for the purpose of allocation of interest income as follows:

RPTA PTF Investment Funds Rail PTF Investment Funds RPTA RARF Investment Funds

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Investment Objectives The primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield:

1. Safety:

Safety is the foremost objective of the investment program. The idea of safety is to mitigate credit risk and interest rate risk.

Credit risk- diversify investments as to maturity, instruments and financial institutions where permitted by State law.

Interest rate risk – structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations.

2. Liquidity:

Maintain sufficient liquidity to provide adequate and timely availability of funds.

3. Yield: Attain the highest possible rate of return while providing necessary protection of principal

consistent with operating requirements for all specific investment funds.

The Authority recognizes that the investment portfolio is subject to public review and evaluation. The overall program shall be designed and managed with a degree of professionalism worthy of the public trust. The Authority, however, recognizes that in a diversified portfolio, occasional measured losses are inevitable and must be considered within the context of the overall portfolios investment return, provided adequate diversification has been implemented. Delegation of Authority The Chief Financial Officer is designated as “Investment Officer” of the Authority and is responsible for investment decisions and activities, under the direction of the Chief Executive Officer. The Chief Financial Officer shall develop and maintain written administrative procedures for the operation of the investment program, consistent with these policies. The Investment Officer, with approval from the Board, may engage the services of one or more external Investment Advisors to assist in the management of the Authority’s investment portfolio. The advisor shall follow state law, this policy, and such other written instructions as are provided. Such advisors must be registered under the Investment Advisers Act of 1940. Prudence The Investment Officer shall exercise the “prudent person” standard of care when managing the overall portfolio. Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.

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The Investment Officer, acting in accordance with written procedures, exercising due diligence and the prudent person standard of care, shall not be held personally responsible for a specific security’s credit risk or market price changes, provided that these deviations are reported in a timely manner and that appropriate action is taken to control adverse developments. Ethics Employees involved in the investment process shall not conduct personal business activity that could conflict with proper execution of the investment program, or which could impair, or appear to impair, their ability to make impartial investment decisions. In addition:

1. All persons authorized to place or approve investments shall not personally nor through a relative (as that term is defined in A.R.S. Section 38-502, as may be amended) maintain any accounts, interest, or private dealings with any firm with which the Authority places investments, except for regular checking accounts, savings accounts, money market accounts, or other similar transactions which are offered on a non-negotiable basis to the general public. Such accounts shall be disclosed upon request.

2. All persons authorized to place or approve investments shall report to the Board of Directors

any business or other relationships with employees of firms with which the Authority places investments.

3. All persons authorized to place or approve investments shall report, upon request, to the

Chairman of the Board of Directors any meals, entertainment, gifts, or other items of value received from any person employed by a firm with which the Authority places investments.

Internal Controls The Chief Financial Officer shall establish a system of written internal controls, which shall be reviewed annually with the Chief Executive Officer and with the independent auditor. The controls shall be designed to prevent loss of public funds due to fraud, employee error, misrepresentation by third parties, unanticipated market changes or imprudent actions by employees of the Authority. Instruments The Authority is authorized to invest in those investment vehicles allowed by Title 35 of the Arizona Revised Statues that are specifically addressed below. Each numbered security type is considered a different sector for the purposes of this Policy. Credit criteria and maximum percentages listed in this section are calculated at the time of purchase.

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Security Types:

1. Obligations issued or guaranteed by the United States, or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities.

2. Deposits in one or more federally insured banks or savings and loan associations placed in

accordance with the procedures prescribed in section 35-323.01.

3. Interest bearing savings accounts in banks and savings and loan institutions doing business in this state whose accounts are insured by federal deposit insurance for their industry, but only if deposits in excess of the insured amount are secured by the eligible depository to the same extent and in the same manner as required in Title 35.

4. Repurchase agreements with a maximum maturity of 180 days whose underlying collateral

consists of the forgoing (provided a signed Master Repurchase Agreement exists with the bank or dealer).

5. Local Government Investment Pools (LGIP). The pooled investment funds established by

the state treasurer pursuant to Arizona State statutes.

6. Money market mutual funds whose underlying investments are invested in securities allowed by state law and are registered under the investment company act of 1940 (54 Stat. 789; 15 United States Code sections 80a-1 through 80a-64), as amended. To be eligible for investment the fund must attain the highest ranking letter or numerical rating provided by one Nationally Recognized Statistical Rating Organization (NRSRO). No greater than 30% of the Authority’s total cash and investment assets may be invested in this security type.

The security types listed below may be utilized if the Authority has engaged the services of one or more external Investment Advisors. The following additional restrictions apply: (i) the total combined investment in these security types may not exceed 40% of the Valley Metro RPTA Investment Funds and (ii) no greater than 5% may be invested in any one issuer.

7. Municipal Obligations as outlined in a. and b. as follows and rated “A” or better by a

NRSRO.

a. Bonds, notes or other evidences of indebtedness of this state or any of its counties, incorporated cities or towns, school districts or special taxing districts, including registered warrants that shall bear interest pursuant to section 11-635.

b. Bonds, notes or evidences of indebtedness of any county, municipal district,

municipal utility or special taxing district of any state that are payable from revenues, earnings or a special tax specifically pledged for the payment of the principal and interest on the obligations, and for the payment of which a lawful sinking fund or reserve fund has been established and is being maintained, but only if no default in payment on principal or interest on the obligations to be purchased has occurred within five years of the date of investment, or, if such obligations were issued less than five years before the date of investment, no default in payment of principal or interest has occurred on the obligations to be purchased nor any other obligations of the issuer within five years of the investment.

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8. Commercial paper of prime quality that is rated within the top two ratings by a NRSRO. All

commercial paper must be issued by corporations organized and doing business in the United States.

9. Medium-term corporate notes, which include bonds, debentures, notes or other evidences of indebtedness that are denominated in United States dollars and that carry at a minimum an "A" or better rating, at the time of purchase, from at least two NRSROs.

10. Negotiable or brokered certificates of deposit issued by a nationally or state chartered bank or savings and loan association that are rated A-1/P-1 or “A” or better by a NRSRO.

Authorized Brokers/Dealers and Financial Institutions The Authority shall maintain a listing of qualified brokers, dealers and financial institutions authorized to provide investment services. Securities dealers not affiliated with a bank shall be required to be classified as reporting dealers affiliated with the New York Federal Reserve Banks, as primary dealers or, meet certain other criteria as set forth by the Authority. At a minimum, all financial institutions and broker/dealers who desire to become qualified for investment transactions must supply the following as appropriate:

Audited financial statements Proof of National Association of Securities Dealers (NASD) certification Proof of state registration Completed broker/dealer questionnaire Evidence of adequate insurance coverage Certification of having read and understand and agreeing to comply with the Authority’s

investment policy If the Authority utilizes an Investment Advisor, the advisor may be granted discretion to execute transactions utilizing their own list of approved broker/dealers. Risks The Authority recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is employed as a way to control risk. The Investment Officer shall act prudently in the selection of securities as a way to minimize default risk. No individual investment transaction shall be undertaken that jeopardizes the total capital position of the overall portfolio. In the event of a default by a specific issuer, the Investment Officer shall review, and if appropriate, proceed to liquidate securities having comparable risks. To control market price risks, volatile investment instruments shall be avoided. The Authority will not invest in “derivative-type” instruments and will not engage in securities lending transactions. The Investment Officer shall ensure that all investment maturities will be matched to cash flow requirements. If not matched to a specific cash flow requirement, funds will be invested with an emphasis on liquidity.

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To control risks of illiquidity, a minimum of 25 percent of the total cash and investment portfolio shall be held in one or more of the following: highly marketable U.S. Treasury securities, LGIPs, money market funds, savings accounts, demand deposit accounts, and checking accounts. The Investment Officer shall periodically adjust the guidelines and strategies of the portfolio to control risks of default, market price changes and illiquidity. All investment reports shall specifically address whether current investment results have been affected by any of the foregoing risks, including an explanation of what actions have been taken to control or correct for such risks. Portfolio Diversification It is the policy of the Authority to diversify its investment portfolio by security type and institution. Investment funds shall be diversified to eliminate the risk of loss resulting from over concentration of assets in a specific maturity, a specific issuer, or a specific class of securities. Safekeeping and Collateralization All security transactions, including collateral for repurchase agreements, entered into by the Authority shall be conducted on a delivery versus payment basis. All securities shall be held by a third-party custodian designated by the Investment Officer, pursuant to the terms of a custodial agreement acceptable to the specific instrument, rate, maturity, and other pertinent information. Without limiting the requirements of Title 35, collateralization will be required on two types of investments: certificates of deposit and repurchase agreements. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be greater of (i) the requirements imposed by Title 35, or (ii) 102% of market value of principal and accrued interest. Collateral will always be held by a designated third-party with whom a custodial agreement exists and a safekeeping receipt must be issued to the Authority. Maximum Maturities The Investment Officer shall attempt to match investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the Authority will not directly invest in securities maturing more than two years from the date of purchase. VM RPTA Investment Funds may be invested in securities exceeding two years if the maturity of such investments are made to coincide as close as practicable with the expected use of the funds. Performance Evaluation At a minimum, the Investment Officer shall submit an annual report to the Chief Executive Officer and the Board of Directors. The report should include an analysis of the status of the current investment portfolio and transactions made during the year. Annually, the Authority’s independent auditor shall be provided copies of these reports and shall be given full access to all information regarding the investment program.

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Investment Policy Adoption The Authority’s investment policy shall be adopted by the Board of Directors. The policy shall be reviewed annually by the Chief Executive Officer and any significant modifications thereto must be approved by the Board of Directors.

___________________________ Chief Executive Officer ___________________________ Date


DATE AGENDA ITEM 8 October 8, 2015 SUBJECT Review of Health Plan Costs PURPOSE To review recent health plan costs, program design controls and funding. BACKGROUND/DISCUSSION/CONSIDERATION John McCormack will present. COST AND BUDGET None COMMITTEE PROCESS Budget and Finance Subcommittee: October 15, 2015 for information STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY 2016 – 2020: Goal 2: Advance performance based operation


RECOMMENDATION This item is presented for information only. CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENT None


DATE AGENDA ITEM 9 October 8, 2015 SUBJECT Future BFS Agenda Item Requests PURPOSE For information BACKGROUND/DISCUSSION/CONSIDERATION Councilmember Williams will request future BFS agenda items from members.

COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENT None


DATE AGENDA ITEM 10 October 8, 2015 SUBJECT Next Meeting PURPOSE For information and discussion. BACKGROUND/DISCUSSION/CONSIDERATION The next meeting of the BFS is scheduled for January 14, 2016. COST AND BUDGET None COMMITTEE PROCESS None RECOMMENDATION This item is presented for information only. CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENT 2016 Draft Budget and Finance Subcommittee Meeting Schedule



2016 Meeting Schedule

Thursday, January 14, 2016 12:00 PM

Cash Reserve Policy

FY16 Mid-year Budget Adjustment (If needed)

FY15 Transit Performance Review

Thursday, April 14, 2016 12:00 PM

Draft FY17 Preliminary Budget

FY16 Second Quarter Results

Thursday, May 12, 2016 12:00 PM

FY17 Budget & FY16 - 20 Five Year Plan Adoption

2016 Transit Life Cycle Plan Update

Thursday, October 16, 2016 12:00PM

FY15 Year-End Review

FY16 First Quarter Reports

meeting of the budget and finance subcommittee · proposed fy16 budget and five year plan budget...

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