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~~~~VREVISED

BUDGET WORKSHOP AND PUBLIC HEARINGMay 16, 2012

SUBJECT: FY13 BUDGET

ACTION: ADOPT THE PROPOSED FISCAL YEAR 2013 BUDGET

RECOMMENDATION

A. Adopt the proposed FY13 Budget as presented in the budget document (provided as

a separate transmittal);

B. Approve the life-of-project budget for all new capital projects as presented in the

proposed budget document including 11 new projects with alife-of-project budget

over $5.0 million (Attachment A)

C. Amend the proposed budget to add 51 non-contract and 3 represented full time

equivalents (FTE's) and $10.8 million in additional wages and benefits. The FTE's

are needed to maintain critical infrastructure, maintain ticket vending machines on

Expo Line and Orange Line extension, support Measure R and deferred

maintenance capital projects, implement Express Lanes, comply with civil rights

regulations, enhance safety and fulfill public art requirement for Measure R Transit

projects. (Attachment B)

D. Amend the proposed budget to increase expenditures by $36.7 million for projects

and programs described in Attachment C. These projects were previously approved

by the board but were submitted for inclusion in the budget after the budget request

submission deadline.

E. Amend the proposed budget to add $1 million in Communications to promote

ridership to the new services for Expo Light Rail, Orange Line Canoga extension and

improved Metro Rail services in headway reduction and extended late night service.

Inter-agency transfer sales are expected to grow due to the added services and the

Title VI translation and communication contract is also anticipated to increase.

F. Approve the Reimbursement Resolution declaring Metro intention to issue debt in

FY13 for capital projects. Debt issuance will require separate Board approval

(Attachment D).

G. Authorize the Chief Executive Officer (CEO) to negotiate a salary within the pay

range for the Chief Operations Officer position, pay grade CC ($190,621-$234,708-

$278,793).

ISSUE

Approval of an annual budget is required by State law and is necessary to manage therevenues and expenses of the agency's projects and programs. Copies of theproposed budget have been made available to the public in the Board Secretary's officeand on the Internet at www.metro.net. A public hearing is scheduled for May 16, 2012.

POLICY IMPLICATIONS

The proposed budget is an important step towards delivering the agency-wide goal ofimproving transportation in Los Angeles County. Specifically, the budget moves theorganization in a fiscally responsible manner to Improve Bus and Rail Transit Service;Renew Focus on Customer Service; Increase Emphasis on Safety and Security; CivilRights Compliance; Advance MTA's Bus and Rail Projects, and Advance the Highwayand Freeway Projects.

ALTERNATIVES CONSIDERED

There is no alternative to adopting a budget as State Law requires that a budget beadopted annually.

FINANCIAL IMPACT

The FY13 Proposed Budget totals $4.5 Billion in expenditures ($337 million higher thanthe FY12 Budget) and appropriates the resources necessary to fund them. The FY13Proposed Budget demonstrates our capacity to meet capital and operating obligations,a requirement necessary to receive subsidies from the state and federal governments.

DISCUSSION

Excluding the additions listed in Attachment B the budget includes expenses of $4.5billion, which is $337 million higher than FY12. This is mainly due to increased projectexpenditures in the Measure R Program. Major categories of these expenditures are asfollowed:

The Budget includes 8,957 FTE's which is an increase of 158 contract FTE's forExpo, Orange Line to Canoga, and improved rail service. This excludes 3contract and 51 non-contract FTE's, for a total of 9,011 FTE's for FY13.(Attachment B)Bus and Rail Operating expenses are at $1.3 billion, an increase of $74 millionover FY12. This is primarily due to extended service on Metro Rail, the openingof the Express Lanes and increases in bus operations which include the OrangeLine Extension to Canoga and reflects the latest UTU Union agreements.

• Capital program, including Measure R funded Transit and Highway Projects areat $1.7 billion; which is an increase of $290.2 million.

• Subsidies budget of $974 million decreases $42 million from fiscal year 2012.

• Debt expenditures of $339.5 million, which is a decrease of $5 million due toscheduled bond retirement.

• All other expenditures are at $180.9 million, an increase of $20.7 million.

In regards to Recommendation G, the Chief Operations Officer (COO) is responsible forestablishing the goals, major priorities, and developing strategies and resolution to themajor bus and rail transportation issues. This key executive management positionmanages all aspects of transit operations including implementing changes forimprovement while integrating new service and technology into the bus and rail system.The position is responsible for the supervision of over 7,300 employees and deliveringservice to over 1 million hoardings per day. The COO must have at least 8 years ofsenior-level experience in public transit operations and have a proven record of successin managing and delivering public transportation.

NEXT STEPS

Implement and monitor the FY13 Budget, identify areas for improvement, develop amulti-year financial forecast and keep the Board updated on a regular basis.

Attachments: A. Description of New Capital Requiring Board ApprovalB. Full Time Equivalent Additions (B.1) and FY13 FTE Amendments by

Department/Title (B.2)C. Budget Requests Submitted After DeadlineD. Reimbursement Resolution

Prepared by: Office of Management &Budget

Paul TaylorDeputy Chief Executive Officer

rthur . LeChief Executive Officer

Attachment A

Capital Projects Requiring Board Approval for Proposed Life-of-Project

This project will provide improvements at the 11 bus divisions.

The scope of the project entails renovation and upgrade activitiestypically required of facilities that are over twenty years old andfunctioning at operational levels beyond their initial designs, including,

but not limited to, the capital improvements listed below.• Replacement of 600,000 square feet of roof material greater than20 years old at Maintenance, Transportation, and Fuel buildings• Replacement and retrofitting of outdated bus washing equipment• Installation of drier systems for bus washers

Bus Facility•Relocation of vaulting equipment to fuel islands

Improvements•Installation of Emergency Storage Containers

1 202320 Phase II - $ 20,896 ~ Awnings for Roll-Off Scrap Metals Bins (compliance issue)

Deferred•Brake Inspection Pits at Fuel Island (select divisions)

Maintenance•Replacement of yard surfacing and paving• Exterior/Interior Lighting Upgrades• Security: Yard Entrance Gating and CCTV Cameras• Modernization/e~ension of service pits for std & 60-foot buses• Purchase of catwalks for CNG tank maintenance• Renovation and modernization of transp. &maintenance bldgs• Expansion of Employee parking• MSSC Improvements including new vehicle washer & non-

revenue shop, new radiator shop, shop equipment procurement,storeroom expansion /improvements• Other items identified during design work and site evaluations

Escalator This project will replace or modernize 5 escalator units at the

Replacement / Metro Red Line Pershing Square Station located at the 3 street level

2 204133 Modernization $ 12,500 station portals. This project may also include installation of a canopy

at MRL Pershing at the portal locations where none was previously installed. California

Square Stn State code requires canopy installation for all NEW escalator unitinstallations.

••. - iii .-

This project will replace the aging Supervisory Control and DataAcquisition (SCADA) System and Remote Terminal Unit (RTU)equipment used by Rail Operations for remote supervision and control

of the Metro heavy rail Red/Purple line train operations, tractionpower and facilities.

Heavy Rail The Red /Purple Line SCADA system is a mission critical system

Subway SCADA Which allows Metro to monitor and control train operations, traction

205038 System ~

15,883 power and facilities from the Central Control Facility. The existing

Replacement SCADA system has been running in service 24 hrs a day, 7 days aweek since 1995; the system components are at the end of their

expected life. The computer workstations and servers are no longer inproduction and the original vendor ARINC has very limited capabilityof providing the level of support required by Metro. Parts are scarceand only available as used items. This project will allow for

procurement of new hardware and software.

This project will provide funding for hardware, software, and labor

Metro Rail Line to fulfill the PUC's General Order 172.

205078Camera

~ 6 380

Per PUC General Order 172, Metro is required to install videoInstallation in cameras and microphones in Rail Vehicles Operator Cab area,. In

Operator's Cab addition, the General Order requires periodic review of a sample of

these recordings made by the in-cab cameras and microphones.

This project will provide for the replacement of the equipment onthe Pasadena segment of the Gold Line so as to be compatible withthe Foothill E~ension.

The equipment on the PGL Union Station to Pasadena Segmentwas designed and installed to support Track Signaling, SCADA,

Pasadena MetroMetro's Video System, Intrusion Detection, and Transit Passenger

Gold LineInformation System/Variable Message Signage information. The

205097 FY13-16 SONET $ g~22~critical support equipment are the Fiber Optical Terminals &

Replacementassociated equipment suite which provide the essential high speed

Programbackbone to transfer information back &forth between the RailOperations Center and each of the MGL stations and Transit PowerSubstations. Currently, the fiber optic cable strands are at capacityand can only partially supply the fiber /communications needs of thePGL Foothill Extension. New Fiber Terminals are required to allow theFoothill Extension to accomodate the additional capacity requirementsof the future project.

This project will repair and/or replace key components for the

Light RailP2000 Truck System Component overhaul for 52 light rail vehicles.

206006 Vehicle $ 26,360~e P2000 fleet overhaul is required to maintain a safe, and

Maintenancereliable service to our passengers. The Truck System ComponentOverhaul is recommended by the Original Equipment Manufacturer toaddress components subject to wear and tear through regular use.

10

~•- ~i~ ~-

This project will commences front end activities for the

procurement of 108 heavy rail vehicles to support the Westside

Metro Red LineE~ension project and to replace the 30 base buy fleet reaching end

206037 Heavy Rail $ 10,901of service life in approximately 7 years.

ProcurementThe procurement is required in order to have heavy rail vehicles

available to support new openings for the Westside and to replace

existing vehicles as required to minimize service delays and safety

risk.

This project will replace the current rail grinder equipment which

is beyond its planned service life and requires excessive maintenance.Repairs for this equipment occur once every eight hours of

operation. The reliability of this equipment has dropped considerably

as a result of its extensive use. These repairs require dedicated labor

to perform the repairs and replace various failed parts. It is

Rail Grinding anticipated that new replacement equipment will require one tenth of

208091 Equipment $ 7,648 the current maintenance repair schedule. Rail grinding equipment is

Replacement essential to maintaining the rail system. It extends the rail life,

reduce wear on the rail cars, and increases passenger comfort. The

function of the grinder is to smooth out the rails from wear and tear.

The smoothing benefits both the rails and the vehicle components(smoother ride, less wear on the wheels and less vibration/fatigue to

the vehicle components).

This project will procure a rail bound multi car train for cleaning

the tunnel and station walls.

Rail TunnelExcessive amounts of water, mold and calcium buildup have

208092Steamer ~

7,019 accumulated on the walls over time which need to be removed in

order to minimize spreading and further damage. This vehicle will

perform the cleaning through high pressure water and steam that is

controlled by the vehicles pre-programmed system.

This project will procure new and replacement non-revenue

Non Revenuevehicles to support rail operations.

Vehicleme current Non Revenue Vehicle fleet for Rail Ops exceeds

208096procurement - ~

5,643 Metro's vehicle replacement requirements and milestones. Many

Rail Systemvehicles are well beyond their age and mileage limitations.

Replacement of these vehicles will increase the fleet reliability, reduce

downtime and reduce maintenance cost.

111 211030

The project will continue the train control system upgrade for the

Metro Green Line.Metro Green The existing train control equipment for Green line is obsolete

Line Signal which requires cost prohibitive solutions in order to maintain the

System $ 7,800 system in operational status. The Green Line Rehab project was

Rehabilitation created in order to bring the system into current standards replacing

Phase II the obsolete system with more readily accessible market replacement

components and technology. Phase I is ongoing and continuationinto Phase II is required.

1 2 3 4 5 6 7 8 9 10

11 12

13

14

15 16

17 18 1~ 2C 21

2c 2~

FY13 Proposed FTE Summary

Atta

chme

nt B.1

Proposed

FY13

FY13

FY12

Budget

Amendment

Budget

Non Contract FTE

Bud et

Addition ~'~

Re uest

Re uest

Descri t

ion

ADMINISTRATIVE SERVICES

244

8252

1 Building Def

erre

d Ma

inte

nanc

e, 4 ITS, 3 Pro

cure

ment

BOARD OF DIRECTORS

38

38

2 fo

r Ti

tle IV Com

plia

nce and Oversight, 2 Positions (1

FTE eqv) for

Safe

ty, 4 fo

r Community Relations, 3 fo

r Re

gion

al Rail, 4 fo

r Program

CHIEF EXECUTIVE OFFICE

160

16

176

Control/Oversight, 1 for CRDP Tol

l Operation

COMMUNICATIONS

69

372

3 Creative Svc fo

r Measure R Tra

nsit

Pro

ject

s1 Di

rect

or fo

r LRTP and Fun

ding

; 2 JARC Gra

nt and

Fed

eral

Gra

nt Adm,

COUNTYWIDE PLANNING

95

398

2-€os-1A~ay-Finding-System

ECONOMIC DEVELOPMENT

25

25

FINANCIAL SERVICES

112

112

1 TPM V for

dep

t Financial and Adm Sup

port

, 2 Sr

. Engineer Man

ager

for

HIGHWAY PROJECT DELIVERY

26

329

High

way pr

ojec

t pr

ogre

ss upd

ate an

d database tracking

MANAGEMENT AUDIT SERVICES

21

21

OPERATIONS

272

2274

2 fo

r Metro Ra

il Deferred Ma

inte

nanc

e9 in Co

nstr

ucti

on, 4 in

Engineering, 2 in

Qua

lity

inspection, 1 for Dept

TRANSIT PROJECT DELIVERY

111

16

127

Support

NC Subtotal

1,173

51

1,224

Contract Em to ee

ADMINISTRATIVE SERVICES

276

276

CHIEF EXECUTIVE OFFICE

105

105

COMMUNICATIONS

127

127

FINANCIAL SERVICES

64

367

3 Revenue Clerk fo

r new services on

lyNew ser

vice

s on

ly for Ora

nge Li

ne, Ex

po, Ra

il Late Night Services and

OPERATIONS

7,053

158

7,211

Headway reduction

TRANSIT PROJECT DELIVERY

11

Contract Em to ee Subtotal

7,626

158

37,787

A enc FTE Total

8,799

158

54

9,011

~'~ Onl

y 15

8 Union FTE add

itio

ns in

Ope

rati

ons are currently in

Gude

d in the

FY13 Pro

pose

d Budget Book. The other 51 NC and

3 TCU Cle

rk additions proposed are ye

t to be included in th

e ex

pend

itur

e pl

an.

10

5-11-2012

t Y 3 a 6

FY13 NC FTE Amendment Requests By Department/Job Title

.~

Building Services

Project En

gine

erin

g Manager

1

Info

rmat

ion Te

chno

logy

Services

Seni

or Software En

gine

er

2

Info

rmat

ion Te

chno

logy

Services

Supervising En

gine

er

2

;Contract Administrefion

Prin

cipa

l Co

ntra

ct Administrator

3

Administrative Services FTE Total: 8

,Countywide Planning

S

Regional Progremming

Olre

ctor

, Goumywitle Planning

~I

9

Regional Program Management

TranspoAation Planning Mgr IV

~~~

2

J4

,~ Countywide Pl

anni

ng FTE Tot

al: 3

35 35

`h

~~~ Positions were amended in FY12 for

JARC &Federal Gra

nt Administration. Board asked to re

view

the amendment Development.

37

during FY13 Budget rev

iew process

ra 29

~3~ TCU positions

Atta

chme

nt B.2

31

72

53

74

15 t5

t7

78

19

20

21 22

23 ze 25 z~

. ~

Congestion Red

ucti

onDi

rect

or, Operations 8 Ser

vice

Delivery

1

Civi

l Ri

ghts

Programs Compliance

Administrelive Analyst

1

Civil Rights Programs Compliance

Civil Ri

ghts

Compliance Administrator

1

Corp

orat

e Safety

Cons

truc

tion

Safety Manager ~~

0.5

Corporate Safety

Senior Safety Specialist m

0.5

Regi

onal

Rai

lTrenspoAafion Pl

anni

ng Manager IV

2

Regi

onal

Rai

lTransportation Pla

nnin

g Manager II

I1

Project Management Oversight

Senior Project Control Manager

1

Project Management Ove

rsig

htSenior CosVSchedule Analyst

1

Project Management Oversight

Principal Te

chno

logy

Estimator

1

Project Management Oversight

Senior Cost Estimator

1

Regi

onal

Com

muni

cati

ons Progrems

Administrative Analyst

1

Regi

onal

Com

muni

cati

ons Programs

Senior Community Rel

atio

ns Off

icer

t

Regi

onal

Com

muni

cati

ons Programs

Comm

unic

atio

ns Coo

rdin

ator

2

Chie

f Executive Office FTE Total: 15" (16 Positions)

38

39

46

41 42

43

44

45 48

47

48

49

50

51 52

Z7 ~

Z~ One FTE add

itio

n (f

or Cor

pora

te Safety) is

in face two separefe po

siti

ons.

The two 'U2-year positions account for

a full FTE in FY13.

53

The two positions added wil

l bring CEO Office's to

tal re

ques

t to 16.

FTE TOTAL for

the

above ~4

~: 51 Non Contract, 3 TCU Revenue Cle

rk~4~

Based on Revenue Ser

vice

Hour For

mula and

Vehicle Miles assumed in FY13 Proposed Budget, Op

erat

ions

propose 158

wntrad emp

loye

e ad

diti

ons to

operate new ser

vice

for

Orange Lin

e, Eupo fu

ll yea

r op

erat

ions

, Me

tro Rail headway red

ucti

on

and e~Aended late nig

ht ser

vice

hour. This wi

ll bring total proposed FY13 FTE add

itio

ns to 21

2.

•

i'

6cecutive OKce, Construction

Administrative Analyst

1

Qual

ity Assurance/ Compliance

Senior Construction Inspector

2

Major Capital Pro

ject

Engineering

Supe

rvis

ing Engineer

1

Major Cap

ital

Pro

ject

Engineering

Senior Engineering Manager

1

Construction Management

Senior Con

stru

ctio

n Manager

3

Cons

truc

tion

Management

Director, Construction Management

2

Environment Compliance/ Services

Prin

cipa

l Environment Specialist

2

Thir

d Pa

rty Ad

mini

stra

tion

Third Pa

rty Administrative Supervisor

1

Third Pa

rty Ad

mini

stra

tion

Senior Third PaAy Adm

inis

trat

or1

Systems Engineering

Supe

rvis

ing Engineer

2

Tran

sit Project Delivery FTE Tot

al: 16

Updated May 9, 2012

Attachment C

Budget Requests Submitted After Deadline

1. Division 13: Amend FY13 Budget to increase expenditures by $35.2 million for

Division 13 to be funded with 80% Federal Grants and 20% Local Funds. This projectwas previously approved by the Board.

2. Rider Relief Transportation Program (RRTP): Amend the FY13 Budget to increase

expenditures by $1.5 million from $3.5 million to $5 million to be funded from Prop C

Funds. The increase is necessary to accommodate the increasing number ofparticipants and demand in the program. This was previously approved by the board at

$5 million.

ATTACHMENT DREIMBURSEMENT RESOLUTION

OF THELOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY

FOR FISCAL YEAR 2013

WHEREAS, the Los Angeles County Metropolitan Transportation Authority (the "Metro")desires and intends to finance certain costs relating to (i) the design, engineering,construction, equipage and acquisition of light rail lines including the Exposition LinePhase II Project, the Crenshaw/LAX Transit Corridor Project and Gold Line FoothillExtension Project (ii) the design, engineering, construction, equipage and acquisitions

for the Southwestern Yard (iii) the design, engineering, construction, equipage andacquisitions for the Rail Deferred Maintenance Project (iv) the design, engineering,construction, equipage and acquisitions for the HOV Lanes and Alameda Corridor East(v) the design, engineering, construction, equipage and acquisition of various segmentsof the Metro Red Line and Purple Line subways (vi) the design, engineering andconstruction of certain highway, busway and/or related projects (vii) the engineering,construction and/or acquisition of various capital facilities and equipment, includingbuses and rail cars, related to service operation and (viii) to other transit related projects(each a "Project");

WHEREAS, the extent that federal and/or state grant funding budgeted to be receivedduring FY13 is delayed or reduced, the Los Angeles County Metropolitan Transportation

Authority desires and intends to finance certain costs relating to the Projects.

WHEREAS, Metro expects to issue debt through the issuance of tax-exempt bondissues to pay for these expenditures ,which bond issues will have three separatesecurity sources, Proposition A, Proposition C and Measure R sales tax revenues,respectively, or grant revenues to finance the costs of the Project on a permanent basis

(the "Debt");

WHEREAS, Metro expects to expend moneys of Enterprise Fund (other than moneysderived from the issuance of bonds) on expenditures relating to the costs of the capital

Projects prior to the issuance of the Debt, which expenditures will be properlychargeable to a capital account under general federal income tax principles;

WHEREAS, Metro reasonably expects to reimburse certain of such capital expenditureswith the proceeds of the Debt;

WHEREAS, Metro expects that the maximum principal amount of Debt which will beissued to pay for the costs of the Projects (and related issuance costs) will not exceed$40 million for proposition A, $180 million for Proposition C, and $280 million forMeasure R;

WHEREAS, at the time of each reimbursement, Metro will evidence the reimbursementin a writing, which identifies the allocation of the proceeds of the Debt to Metro, for thepurpose of reimbursing Metro for the capital expenditures made prior to the issuance ofthe Debt;

WHEREAS, Metro expects to make reimbursement allocations no later than eighteen

(18) months after the later of (i) the date on which the earliest original expenditure for the

project is paid or (ii) the date on which the Project is placed in service (or abandoned),

but in no event later than three (3) years after the date on which the earliest original

expenditure for the project is paid;

WHEREAS, the Metro will not, within one (1) year of the reimbursement allocation, use

the proceeds of the Debt received by way of a reimbursement allocation in a manner

that will result in the creation of replacement proceeds of the Debt or another issue (e.g.,

Metro will not pledge or use the proceeds received as reimbursement for the payment of

debt service on the Debt or another issue, except that the proceeds of the Debt can be

deposited in a bona fide debt service fund); and

WHEREAS, this Resolution is intended to be a "declaration of official intent" in

accordance with Section 1.150-2 of the Treasury Regulations.

NOW THEREFORE, BE IT RESOLVED, that (i) all of the foregoing recitals are true and

correct and (ii) in accordance with Section 1.150-2 of the Treasury Regulations, Metro

declares its intention to issue Debt in a principal amount not to exceed $40 million for

proposition A, $180 million for Proposition C, and $280 million for Measure R; the

proceeds of which will be used to pay for the costs of the Projects (and related issuance

costs), including the reimbursement to Metro for certain capital expenditures relating to

the Projects made prior to the issuance of the Debt.