MEETING OF THE Budget and Finance Subcommittee › sites › default › files › ...Councilmember Daniels said I just wanted to make a statement. I'm not against necessarily what's

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

MEETING OF THE

Budget and Finance Subcommittee

MEETING DATE

February 11, 2016

TIME 12:00 p.m.

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

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February 4, 2016

Budget and Finance Subcommittee Thursday, February 11, 2016

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

A 15-minute opportunity will be provided to members of the public at the beginning of the meeting to address the Board on all agenda items. The Chair may recognize members of the public during the meeting at his/her discretion. Up to three minutes will be provided per speaker or a total of 15 minutes total for all speakers.

1. For information

2. Minutes Minutes from the January 11, 2016 BFS meeting are presented for approval.

2. For action

3. Request for Proposal (RFP) for Financial Audit Services

John McCormack, Chief Financial Officer, will seek the committee’s recommendation to forward to the Board of Directors authorization for the Interim CEO to issue a RFP under a joint procurement process with Valley Metro Rail, Inc. for contracted Financial Audit Services.

3. For action

4. Valley Metro RPTA and Valley Metro Rail Budget and Finance Subcommittee Structure Modification

John McCormack, Chief Financial Officer, will seek the committee’s recommendation to forward to the RPTA and VMR Boards of Directors an expanded oversight role of the BFS to include VMR by requiring that two members of the BFS represent both RPTA and VMR beginning July 1, 2016.

4. For action

5. Draft Budget Contingency Policy John McCormack, Chief Financial Officer, will present a proposed policy for the development of contingency amounts to be incorporated into the annual budget process.

5. For information

6. Fiscal Year 2015 (FY15) Transit Performance Review John McCormack, Chief Financial Officer, will present an overview of the FY2015 regional transit operating performance results versus transit peer agencies.

6. For information

7. Guidelines for Installation of Remote Ticket Vending Machines (TVM)

John McCormack, Chief Financial Officer, will present cost and sales data regarding remotely located TVMs, cost estimates to install and operate additional units and guidelines for the process of adding new units to the existing fare collection system.

7. For information

8. Future BFS Agenda Items

Chair Williams will request future BFS agenda items from members and John McCormack will review the proposed future BFS agenda items.

8. For information

9. Next Meeting The next meeting of the BFS is April 14, 2016 at 12:00 p.m. with an option to meet on March 10 at 12:00 p.m. pending requests for future agenda items.

9. 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 Valley Metro at 602-262-7433 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 February 4, 2016 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

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

DATE AGENDA ITEM 2 February 4, 2016

Summary Minutes

Valley Metro RPTA Budget and Finance Subcommittee Thursday, January 11, 2016

Lake Mead Conference Room 101 N. 1st Avenue, 10th Floor

Phoenix, AZ 12:00 p.m.

Members Present Councilmember Thelda Williams, City of Phoenix (Chair) Councilmember Jenn Daniels, Town of Gilbert (via phone) Councilmember Suzanne Klapp, City of Scottsdale Councilmember Skip Hall, City of Surprise Chair Williams called the meeting to order at 12:05 p.m. 1. Public Comment None. 2. Minutes Minutes from the October 15, 2015 BFS meeting were presented for approval. IT WAS MOVED BY COUNCILMEMBER HALL, SECONDED BY COUNCILMEMBER KLAPP AND UNANIMOUSLY CARRIED TO APPROVE THE OCTOBER 15, 2015 BFS MINUTES. 3. Updated Investment Policy Mr. McCormack said this was an item that we had brought before the Budget and Finance Subcommittee at our last meeting. We made some changes to it and took it to the Transit Management Committee recently, at which they had recommended approval. And really the only change with respect to this policy from what you had seen prior is the definition of the brokers and dealers and how the brokers and dealers would be authorized. But I'm just going to go through the PowerPoint here quickly to just overview where we are. The presentation included the following:

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Councilmember Daniels said I have some concerns about three and four only because-- not necessarily the contents of them, but our timing right now. We, you know, undergoing audits and other types of changes that are going to be made, how mission criminal are these changes in agenda Items 3 and 4, John and Ken, should we, can we be waiting on these things until we get a full analysis of some of our policies? Mr. McCormack said yes, Councilmember Daniels, certainly they could be delayed. I think that with respect to the investment policy, we have PFM in place. I think that there's been due diligence with respect to PFM and Board approved PFM as an investment advisor. The impact of waiting, we have some fixed costs that we've committed to PFM. It's not a substantial amount of money, but we're really-- Councilmember Daniels said I don't think any of us are in a position to define substantial amounts of money right now to the taxpayers, so what something that we may seem to be insignificant, you know, isn't necessarily insignificant to the people that we're representing right now. And my concern is that here we are, you know, making changes to policy when I'm not sure we have all of the correct policies in place. And I don't know that I'll feel comfortable with that until we get a full analysis of that. Mr. McCormack said okay. From my interest, I'll just say the impact of delaying this will reduce the potential to earn more on the investments that we have, and, we do have some fixed costs that we're investing with PFM that, we would not be recovering greater investment yield to offset those. Councilmember Daniels said but we're still making more than we were a year ago before we had any of these investment pieces in place; right? Mr. McCormack said well, with the current limits to the RPTA policy, we are able to invest now in the government securities, which we were before, and with PFM we already have made investments in U.S. Treasuries, so we are enjoying right now with $30 million dollars of the pool, we're enjoying a benefit of we're getting about 45 to 47 basis points versus our current 15 basis points with the Wells Fargo, so, yeah, there is an improvement that we've already realized--. Councilmember Hall said to three-tenths of a percent over $30 million, so that's about $90,000. Mr. McCormack said so the potential to generate greater revenue by diversifying into the corporates and others is-- it's really what we would be foregoing if we don't pass the change here-- approve the change to the policy. Councilmember Hall said I'm comfortable with it. And I think Item No. 4 is more conservative. Chair Williams said and we're reviewing it today to take it to the full Board; correct?

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Mr. McCormack said yes. That's correct. Councilmember Hall said yes, recommend it to the Board they can vote on it. Councilmember Klapp said and that's my thought is that I'm okay with sending this forward. If the Board wants to make a change, it can do so.

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Chair Williams said when you talk about municipal, does that include any of our member cities? Mr. McCormack said it could. We don't have any today, but, you know, cities may issue bonds, do issue bonds, and they're sold on the market so. Chair Williams said right. It wouldn't be a conflict of interest in any way to do that? Mr. McCormack said I'm not aware of any. There could be. Chair Williams said I was thinking that members voting on it somewhere down the line, does that looking, pointing at you. Councilmember Hall said if we bought Phoenix, you're going to have to recuse yourself. Mr. McCormack said may I ask Allison Kaune here representing PFM have you seen any limitations on municipal purchases in any of the policies of your clients? Ms. Kaune (PFM): No. And I'll be honest, this is the first time I've been with an agency who has member agencies. Recently we did buy city of Mesa bonds for some of our clients in Arizona, but, again, it's a little different you all. So if there isn't any legal, there's also, right, the headline. Yeah, so that could be something if you decide. And municipal obligations would be preapproved by John, so if we did recommend it, you could decide to say no. Mr. McCormack said I think if there's a broad enough array here that we could agree that there will be no purchases of those, because there's plenty of other investments. And, frankly, there's not that much that needs to be invested into those levels. Chair Williams said I assume that would be a very small number, if at all, but I just wanted to ask.

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Mr. McCormack said today's recommendation or request is before you here that the Budget and Finance Subcommittee forward this for approval, an amendment to the RPTA policy of. And I'm happy to answer any further questions you may have.

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IT WAS MOVED BY COUNCILMEMBER HALL, SECONDED BY COUNCILMEMBER KLAPP AND CARRIED TO FORWARD TO THE BOARD OF DIRECTORS AN AMENDMENT TO THE RPTA INVESTMENT POLICY PER ATTACHMENT INVESTMENT POLICY 5.6A THAT WILL OPTIMIZE INVESTMENT EARNINGS BY ALLOWING RPTA TO HOLD INVESTMENT INSTRUMENTS WHICH ARE CONSISTENT WITH BEST INDUSTRY PRACTICES AND IN COMPLIANCE WITH ARS TITLE 35. COUNCILMEMBER DANIELS VOTED NO. Councilmember Daniels said I just wanted to make a statement. I'm not against necessarily what's in the policy, just the timing of it all this isn't sitting right with me. Thank you.

4. Proposed Valley Metro Reserve Fund Policy Mr. McCormack said this is a policy that we brought to this committee and the first draft of it at our last meeting. And we've made a couple changes to try to highlight the ways that we will work with the Board and provide Board approval of the limits and provide update to the Board. So I'm going to ask Paul Hodgins to walk through that for you all. Mr. Hodgins said thank you. The policy we developed is to formalize reserves. It's puts in policy some practices that we've been doing, creates a couple of new reserves, sets some target levels to promote, and we believe it's sounds fiscal management, ensures that our long-term financial goals can be met, and helps to protect the agency's credit ratings. I do want to say this is Valley Metro RPTA only. This does not affect VMR, the rail, it's a different type of agency. It has different types of requirements. The presentation included:

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Councilmember Hall said Paul, so the bus refurbishment reserve goes away and it's incorporated into the capital reserve? Mr. Hodgins said it gets incorporated into the capital reserve.

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With respect to vanpool fleet purchases, Chair Williams said Isn't this what we discussed yesterday that there's such a large number that aren't being utilized at this moment? Is that something they need to delay? Mr. Hodgins said certainly if they were expansions program, we would not order those if we have existing vehicles that are not being utilized fully. And if they are scheduled to be replaced and not being used, we might defer those replacements, but I think that is probably a short-term problem. The vanpool program goes in cycles, and especially with the low gas prices, perhaps people aren't joining the way they did. Chair Williams said but they're predicting that to last a while longer. Mr. Hodgins said yes. But at some point the demand will start growing again. Those vehicles will get used. But we just want to make sure we have the funds set aside so that when the time comes we can keep the program moving.

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Councilmember Hall said now speaking of that, on page 2 in my book it says, "Debt service fund is projected to increase in Fiscal Year '18 in anticipation of an additional bond issuance." Do we have the authority to issue the bonds, or how does that work? Mr. Hodgins said any new bond issue we bring before the Board.

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Councilmember Hall said so we don't have to go out to the public? Mr. Hodgins said no. Unlike the cities that have to have a vote to issue it, we don't have that requirement. It really-- it's through the Board of Directors can make that determination. Councilmember Hall said I see based on our financial situation. Mr. McCormack said right. I think the charter of RPTA allows for it. The Board passed a master resolution a master bond resolution back in 2009 which really established the policies for the initial bond issue and future bond issue. So under that master resolution we would bring before the Board any new requests to issue bonds. And there's a process Board review. Mr. Hodgins added, so then each new bond issuance would have a supplemental resolution. So right now we have two supplementals where the two issuance has been done. And then in that supplemental we do an analysis of the debt service and whether we need to fund the debt service reserve in addition to the just regular debt service. So that's all done at the time of bond issuance. At this point we're anticipating sometime in Fiscal '17 issuing another series of bonds for rail. Councilmember Klapp said who's our bond counsel?

Mr. Hodgins said Squire Sanders.

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Councilmember Hall said I'm just curious, the reserve requirements ranges between $13- and $21-million increase in reserve. In those five years, increasing the reserve substantially, but I'm just curious about the working capital reserve, why is it swing so much from Fiscal Year '19 to Fiscal Year '20. Mr. Hodgins said the working capital reserve is based on the major projects we're doing. And so it really reflects the fact that the Tempe streetcar project is right now programmed to be completed by Fiscal '19, but then we don't have any new major-- really major expenditures until Fiscal '20 when the capital I-10 west project kicks in. So that one fluctuates a lot based on the major projects we're doing at the time. And of course that could change. Chair Williams said I believe that's going to change. That was my question on, as we bring forth a new project this does not include how we modified our priorities and which projects, does it. Mr. Hodgins said no. And this would only include the major projects that are supported through Prop 400 with the PTF. Chair Williams said okay. So this doesn't include Phoenix projects. Mr. Hodgins said we're not setting aside reserves to fund Phoenix's cash flow, for instance, that would be negotiated with Phoenix as part of the IGA for each project. Chair Williams said you exclude those? Mr. McCormack said let me just try to clarify this. On the onset, Paul said that this is an RPTA policy and not a Valley Metro Rail policy. However, since the RPTA passes public transportation funds to Valley Metro Rail, those that passage of funds are impacting that working capital reserve, because that's PTF and PTF bond funded lead agency disbursements that go from RPTA to rail to support those capital projects. So there is some impact to this policy of what's going on at Valley Metro Rail. Its impact is limited to the public transportation funding amount that's sent from RPTA to VMR. Councilmember Hall said I'm wondering if there's a way to note that in the presentation that shows how working capital reserve is based on project. Mr. McCormack said we can certainly put some narrative in the memo. Chair Williams said when does Prop 400 expire? Mr. McCormack said December 2025. As we've said before the major risk to the long-range capital program is the available federal funds and our ability to win those federal funds competing against all the other projects that are out there.

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Councilmember Hall said now the bill that just passed in Washington, the FAST Act, How does that affect? Does that affect us? Mr. McCormack said well, whatever Congress finally appropriates for section 5309 discretionary funding that funds these large capital projects for rail and the level of general federal funds out of 5307 both of those impact, our ability to build these projects because the CMAQ funding, correct me if I'm wrong, Paul, isn't the CMAQ funding a portion of the 5307? Mr. Hodgins said it comes through the federal highway program. But it's all part of the same bill. I think it's a five-year bill. It gives us some assurance that there's authorization for five years for FTA and FHWA to pass through the funds that we need to build these projects. Mr. Hodgins said of course it's dependent on the appropriations every year, but the authority is there for five years.

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IT WAS MOVED BY COUNCILMEMBER KLAPP, SECONDED BY COUNCILMEMBER HALL AND CARRIED TO FORWARD TO THE BOARD OF DIRECTORS AUTHORIZATION FOR THE ACTING CEO TO EXECUTE THE PROPOSED VALLEY METRO RESERVE FUND POLICY. COUNCILMEMBER DANIELS VOTED NO. 5. RPTA Fiscal Year 2016 (FY16) Mid-Year Budget Adjustment Mr. McCormack said thank you. Agenda Item 5 is the Mid-Year Budget Adjustment for RPTA for Fiscal '16. As we adopt our budgets in April and May, the budgets are actually prepared in the wintertime three or four months really before that. And so there are changes that occur to operating conditions. This mid-year budget adjustment is to bring forward-- to notify the Board of what's going on and to bring any significant changes for approval to the budget. Mr. McCormack provided a presentation which included:

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With respect to the E Valley fixed-route bus budget item, Ms. McLaren said so the board memo that you'll see in the board packet will reflect the E-session item should the Board choose to move forward with that option. So you will convene E-session. You'll come out of E-session and review the mid-year budget adjustment. And you'll have the option to approve this one or to approve it to include the element for which you discuss in E-session. Councilmember Hall said I just have a comment. I, you know, I hate seeing a million-dollar surprise, so how do we make sure that doesn't happen again. Mr. McCormack said on the operating? I think that from my perspective we need to have better coordination between our service planning working group and our finance team, because the service planning working group was aware of these changes when the city sends the budget information to Valley Metro, we should be looking at that against the service planning working group plan. We need better coordination of that integration because we didn't catch the error in finance. Had we done that review with the service planning working group, we probably would have caught that. Councilmember Hall said you would have seen the service out there unfunded. Mr. McCormack said yes. It was something that, didn't hit our radar because we were not as directly connected with the working group as we should have. And that's really

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the fix from my perspective is just better coordination. Chair Williams said so how are you setting that up? Mr. McCormack said we will have a review. Once we get the cities’ request and plan essentially for services that RPTA is buying from the city, we will review those route by route with the service planning working group. Chair Williams said are the any other questions? So do you want to make a motion to move this forward with the exceptions? IT WAS MOVED BY COUNCILMEMBER HALL, SECONDED BY COUNCILMEMBER KLAPP AND UNANIMOUSLY CARRIED TO FORWARD TO THE BOARD OF DIRECTORS APPROVAL OF THE MID-YEAR BUDGET ADJUSTMENT UPDATE TO THE VALLEY METRO RPTA OPERATING AND CAPITAL BUDGET FOR FISCAL YEAR '16 TO INCLUDE THE APPROVAL OF THE MID-YEAR BUDGET ADJUSTMENT WITH THE FOLLOWING CHANGES: DEFER THE RPTA FIXED ROUTE SERVICE CONTRACT ADJUSTMENT, ONE, AND TWO, RECOMMEND THE ITEM BE ADVANCED TO THE BOARD AT THE JANUARY BOARD MEETING FOR CONSIDERATION IN E-SESSION AND POSSIBLE ACTION TO DISCUSS LEGAL MATTERS PERTAINING TO THE CONTRACT CHANGE ORDER. 6. Future BFS Agenda Item Requests Chair Williams said our future agenda items. Do you think the audit will be done before our next meeting, the Phoenix audit? Mr. McCormack said our next our BFS meeting? No. I think the-- when I first met with the auditors, they thought that mid-February late February. They were saying forty-five to sixty days from the date they started, which was December 9th, I believe, so it's looking like, mid-February is where they would be finishing at the earliest. So I can certainly check back with the auditor to see where they're at and what their projection is. Chair Williams said okay. If not, then next meeting I would anticipate that there's going to be some recommendations that could have an impact on what we just discussed potentially. So I would like to have you bring back that information so that we can compare them, and we might have to suggest some modifications, for the modifications somewhere. Mr. Minnaugh said Chair Williams, I agree that it is highly unlikely this would be completed any preclusions or suggestions in the time before that February 11th date. Chair Williams said any other items you would like to have at our next meeting? Mr. McCormack said Madam Chair, I have a list here on agenda Item 6 that I think would be maybe worthwhile to go through. This is what is tentatively scheduled for next

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time. First, we know through the direction of the Board is to move to an integrated Budget and Finance Subcommittee with VMR and RPTA in a single group. We heard that. And so we could, talk about how that could be accomplished. I have a handout here that describes some of the background of this committee, how it's formed, the expiration dates of the members and so forth. So this is just background information for the way the committee is established in membership. So I'll circulate that here. Councilmember Daniels, we can e-mail that to you. Councilmember Daniels said she has the handout. Councilmember Klapp said is there a similar list for the Valley Metro Rail Board? Do they have a budget and finance committee? They don't. Mr. McCormack said they do not. Councilmember Hall said so they're going to have to appoint people to join this group. Mr. McCormack said they would have to appoint people to join. Whether this is a joint entity subcommittee, is really the question, and how we would expand this to accommodate the Valley Metro Rail members as part of this committee -- subcommittee. Ms. McLaren said John, if I could just add to that based on a conversation that we will be having with the Board next Thursday on the creation of an ad hoc committee to serve as an oversight committee for potentially reporting to the Budget and Finance Subcommittee. That issue is going to be discussed next week or however they report to. Chair Williams said this is my suggestion based on some conversations with Washington, D.C., that they would like to see an annual audit with an outside ad hoc committee made up of high-level executives-- that's blue ribbon committee. And this the committee would serve meet probably once, maybe twice and that's it. So it wouldn't report on a regular basis back to anything, but it would substantially vet the audit, their report back to the full Board. But it would be based on an outside audit. Councilmember Hall said and what is the-- I'm just curious about this, because I gave a couple of names of people, because I was asked to give a couple of names if I thought, but then I got to thinking, gee, maybe this doesn't fit the criteria. I don't know what the criteria is for this panel. We want people that are politically connected. Or a finance background or management background, operations people, okay. Chair Williams said somebody that we know that's well respected in the community that has administrative financial CEO type experience and be able to review and make series of recommendations back to us.

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Councilmember Hall said they just want another set of eyes looking at it; right? Chair Williams said we want it outside. Councilmember Klapp said the audit itself would not change. Councilmember Hall said no. Councilmember Klapp said it's just the oversight would change. Chair Williams said yes. But I think we're anticipating that current ongoing audit will probably make some recommendations for change. And when the outside audit is then done later that they would be ensuring us that hopefully the changes have been made in here are following our policies and procedures that have been changed and prescribed by the Board. Councilmember Klapp said and then we'll probably be asking the full Board to give names of people to serve on this committee. Ms. McLaren said I think that's the purpose of the discussion at next week's Board meeting to really introduce the concept of the creation of this committee, what their purpose is, how they might be comprised, how we would took names for. Councilmember Klapp said well, if we're going to have an integrated budget committee-- subcommittee, will you be looking at an integrated blue ribbon committee would the integrated people suggested by both Boards. Chair Williams said and I talked to Mary Peters at length and she is willing to serve on this is willing to make some recommendations that she knows that-- Councilmember Daniels said we are not within the purview of our agenda right now. Chair Williams said I understand. Mr. McCormack said these are the things that are that we have planned at this point for the next meeting in addition to that Budget and Finance Subcommittee, the structure a review of our policy for installing the remote fare vending machines. This is the one that Councilmember Williams requested. Blue tells us it was six or seven or eight months ago. And I apologize that hasn't come forward any quicker than this, but we will be bringing this forward. It has had a lot of review amongst the member cities, the staff members and so forth. And this is just we're putting out ticket vending machines in remote locations. When I say remote they may be at transit centers far away from the current light rail line and structures to serve as vending machines. So we'll review that. The FY15 transit performance review at your table, there's the draft copy of the transit performance report, which is this document right here. So annually we review where

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we're at looking at our operating metrics and how we compare to other transits. So we'll be providing those details to you. Two of the other things that had been requested as open items by this committee were looking at budget contingency levels establishing policies for contingency, so we'll be making a presentation to you of recommendations for that. And then the review of health plans we had at the last discussion we presented some information about our health care and where do we compare with our health plan to some of the competing employers for a skilled labor such as SRP, the utility companies, the sky train operator, which is Bombardier. So we'll be bringing that. And I failed to list another item is going back to audits and that is the financial services audit, which is the routine audits that we do every year to provide an opinion about our financial statements and compliance with federal regulations. The current auditor has finished its five-year limit. We have a mandatory rotation. So we will be preparing an RFP for the next five year's scope of work asking the Board for approval to approve the scope of work for the next five years of those audit services. And I've been working with some of the auditors and we can add some scope to provide more robust reviews of internal controls such as travel, credit card expenditures, contracts and procurement. I'll present next time what that proposed scope of work would be for the next five years. Councilmember Hall said I'm not real clear what an audit of the financial services is. How does that differ from an accounting audit? Mr. McCormack said it is the accounting audit. It's the routine audit which looks at our financial statements, reviews our financial statements for conformance to generally accepted accounting principles, it's a review of internal controls. However, it's a high-level review of internal controls that doesn't really in terms of their level of testing doesn't get down into very small transactions. It's looked for materiality of the financial statements. The auditors also review our compliance with federal regulations and they issue a report under the single act requirements, which look for that compliance, and they report on any material weaknesses or significant deficiencies in the internal control system, they report on that, as they have reported for every year. They also audit of our data that we submit to the National Transit Database. So that's been the routine audit that we've been purchasing and doing every year. And what I'm suggesting is that we can add greater scope to that audit if the Board would like that to review internal controls in greater detail. Councilmember Klapp said how closely do they look at cash handling? Since I assume we have a lot of cash that goes through our bus operations.

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Mr. McCormack said not greatly. Because the actual cash that's handled by the agency is minimal. We have contractors that handle cash, but, under our auditors they do not look at cash handling in great detail. Councilmember Klapp said I know from the city perspective that's an area we always find problems when we do audits. The credit cards being different than cash, so usually rises to a higher level of concern. I don't know if it's been a concern among this agency. It certainly is at the city level. Mr. McCormack said well, certainly anytime you're dealing with currency, there's a lot of controls that are necessary and we work with our contractor and have reports that monitor what the farebox says is collected and what's actually deposited. Councilmember Klapp said but there's very little testing done you're saying of that. Mr. McCormack said correct. We do periodic audits, spot audits of what the actual cash in the farebox is versus the report that we get and we track that. Not a great deal, just to answer the question, not a lot of emphasis at all on cash. They're looking at higher level-- higher dollar level of expenditures. Councilmember Hall said do they test for on procurement? Mr. McCormack said they review transactions to confirm that if the purchase was made that there was sufficient contract documentation for that purchase. So in their sample they would look at some of that information. They would look at the policies and procedures related to procurement. And in their tests they would see whether or not the-- for example, if we made a payment whether there was a purchase order issued for it under a contract and review that. But they are high-level tests, you know, at this point they're looking at a high limit. Councilmember Hall said they're looking at big amounts. Mr. McCormack said they are. They're looking for material, you know, they're looking to determine whether the control system is going to ensure that there are no significant deficiencies or material weaknesses. Chair Williams said any other items that we need? I think we have an agenda for next time. Look forward to. Chair Williams said anything else? Councilmember Klapp said do we have a budget meeting in March as well? Or we're skipping a month. I'm just trying to figure out based on the list I saw. Mr. McCormack said yes. We haven't scheduled a meeting for March, but I'm glad you

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brought it up, because of the large number of issues that are underway right now, we probably be wise to schedule a meeting in March if that would be-- Councilmember Klapp said well, we feel that there might be an audit done by March, so that would be a good reason to have a March budget meeting. Ms. McLaren said we will check the meeting dates for March. With no further discussion the meeting adjourned at 1:21 p.m.


DATE AGENDA ITEM 3 February 4, 2016 SUBJECT Request for Proposal (RFP) for Financial Audit Services PURPOSE To request Board authorization for the Interim Chief Executive Officer (CEO) to issue a Request for Proposal (RFP) for Financial Audit Services. The RFP will be conducted as a joint procurement process with Valley Metro Rail, Inc. (VMR). BACKGROUND/DISCUSSION/CONSIDERATION The Regional Public Transportation Authority (RPTA) and (VMR), collectively (the AGENCIES), are jointly seeking permission to solicit proposals from qualified firms of certified public accountants to audit the AGENCIES financial statements for the fiscal years ending June 30, 2016, 2017, 2018 with the option of auditing the AGENCIES financial statements for the two subsequent fiscal years. These audits are to be performed in accordance with generally accepted auditing standards, the standards set forth for financial audits in the General Accounting Office’s (GAO) Government Accounting Standards, the provisions of the federal Single Audit of 1996 and the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Scope of the audits include:

Express opinion on Financial Statements in conformance with GAAP o Document and test account balances and internal controls to confirm

statements are free from material error. o Review the Comprehensive Annual Financial Report (CAFR) required

elements including Management Discussion and Analysis (MD&A) and Required Supplemental Information (RSI)

Tests internal controls for federal programs (Single Audit Act)

o Internal controls related to major programs and an opinion (or disclaimer of opinion) on compliance with laws, regulations, contracts which could have a direct and material effect on each major program in accordance with the Single Act Audit Amendments of 1996 and OMB Circular A-133

NTD-review of data submitted to the National Transit Database

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Supplemental internal control review procedures o Internal control testing to include review of compliance with policy and

procedures in the following areas: Travel Expense Credit Card expenditures Contracts and procurement

o Auditor will provide report of findings in conformance with best practices

The award to a certified public accounting firm will consist of one (1) joint contract with RPTA and VMR. VMR will fund and manage its portion of the contract of the services.

COST AND BUDGET A three-year cost estimate for Regional Public Transportation Authority’s portion of the service is $150,000. The award estimate is based on historical level of effort with a three percent growth factor for auditor rates. Approximately $15,000 of the estimate is for the supplemental review procedures. RPTA’s portion is funded through a variety of funding sources through RPTA’s overhead allocation. 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 PROCESS RTAG: January 19, 2016 for information TMC: February 3, 2016 approved BFS: February 11, 2016 for action Board of Directors: February 18, 2016 for action RECOMMENDATION It is recommended that the BFS forward to the Board of Directors authorization for the Interim CEO to issue a RFP under a joint procurement process with Valley Metro Rail, Inc. for contracted Financial Audit Services. The procurement process to be using State of Arizona Statewide Financial Auditing Services RFP. CONTACT John P. McCormack Chief Financial Officer 602-495-5054 [email protected] ATTACHMENT PowerPoint Presentation

2/4/2016

1

Request for Proposal (RFP) for Financial Audit Services

February 2016

Baseline Services

2

Scope of the audits include:

• Express opinion on Financial Statements in conformance with GAAP

• Tests internal controls for federal programs (Single Audit Act)

• NTD-review of data submitted to the National Transit Database

Five-Year mandatory rotation to new Auditor

2/4/2016

2

Financial Statements Review

3

Express opinion on Financial Statements in conformance with GAAP• Document and test account balances and internal

controls to confirm statements are free from material error

• Review the Comprehensive Annual Financial Report (CAFR) required elements including Management Discussion and Analysis (MD&A) and Required Supplemental Information (RSI)

Single Act Audit Review

4

• Tests internal controls for federal programs (Single Audit Act)– Internal controls related to major programs and an

opinion (or disclaimer of opinion) on compliance with laws, regulations, contracts which could have a direct and material effect on each major program in accordance with the Single Act Audit Amendments of 1996 and OMB Circular A-133

2/4/2016

3

NTD-review of data submitted to the National Transit Database

5

Review of passenger operations ridership, vehicle miles operated, operations costs

• Data becomes part of Federal funding allocation process

• Data is used by transit providers to gauge effectiveness and efficiency of transit services– Valley Metro Annual Transit Performance Report

Supplemental Services

6

Scope of the audits include:

• Review of Travel, Credit Card and Procurement financial controls

• Internal control testing to include review of compliance with policy and procedures

• Auditor will provide report of findings in conformance with best practices

2/4/2016

4

Recommendation

• It is recommended that the BFS forward to the Board of Directors authorization for the Interim CEO to issue a RFP under a joint procurement process with Valley Metro Rail, Inc. for contracted Financial Audit Services.

• Procurement process to be using State of Arizona Statewide Financial Auditing Services RFP.

7


DATE AGENDA ITEM 4 February 4, 2016 SUBJECT Valley Metro RPTA and Valley Metro Rail Budget and Finance Subcommittee Structure Modification PURPOSE To expand the role of the Valley Metro RPTA BFS to include oversight of Valley Metro Rail (VMR) financial issues. BACKGROUND/DISCUSSION/CONSIDERATION The BFS was established by RPTA in November 2006. With the passage of Proposition 400 in 2004, the RPTA grew from an agency with a $5 million annual budget to a $250 million annual budget at that time. It became imperative that a greater focus be placed on fiscal responsibilities.

The RPTA and VMR Boards of Directors have discussed the desire to expand the role of the BFS to oversee VMR financial issues in addition to RPTA. Consistent with the responsibilities outlined in the formation of the BFS in 2004, policy oversight of both RPTA and VMR would include:

1. Annual operating and capital budget process of the agency 2. Reviewing budget inputs and assumptions 3. Oversight of the compilation of financial reports for the Boards and member agency

review 4. Review of the annual Transit Life Cycle Program and its financial model 5. Review of the five-year capital plan 6. Providing recommendations to the Board of Directors

Over the first two years of existence of the BFS, membership and representation evolved into what exists today. At the February 2008 RPTA Board meeting, guidelines were adopted that stated the terms of membership shall be two years, with the ability to be reappointed by the Board. No members shall serve more than four years as a BFS member. The guidelines also state that one of the five subcommittee members will always be the elected official representing the City of Phoenix on the Valley Metro RPTA Board.

2

Currently, the BFS is made up of the following members identified in the following table.

At the February 2008 meeting the Board also established that a member’s financial background will be considered, along with geographic representation, when making BFS appointments. It is currently estimated that a commitment to serve on the BFS will require two to three hours per meeting for approximately five to eight meetings per year. Expansion of the BFS financial oversight to include VMR could be attained by maintaining the existing structure for membership, but adding a provision that in addition to the City of Phoenix permanent position, one the remaining four positions must also be a VMR Board member. More than two members of the BFS being members of the VMR Board would violate quorum requirements according to the VMR By-Laws. 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 PROCESS BFS: February 11, 2016 for action TMC/RMC: March 2, 2016 for action RPTA and VMR Boards: March 17, 2016 for action RECOMMENDATION It is recommended that the BFS forward to the RPTA and VMR Boards of Directors an expanded oversight role of the BFS to include VMR by requiring that two members of the BFS represent both RPTA and VMR beginning July 1, 2016.

BFS Member Sub-Region BFS Term Expiration

Councilmember Eric Orsborn West Valley June 2016* Councilmember Jenn Daniels East Valley June 2016 Councilmember Skip Hall West Valley June 2017* Councilmember Suzanne Klapp East Valley June 2017 Councilmember Thelda Williams City of Phoenix Permanent Seat *Eligible for reelection at end of current term.

3

CONTACT Scott Smith Interim CEO 602-495-8205 [email protected] John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENT None


DATE AGENDA ITEM 5 February 4, 2016 SUBJECT Draft Budget Contingency Policy PURPOSE To establish principles and procedures to deliver budgets that are resilient to impacts of unplanned costs or revenue reductions. This policy will work in conjunction with the Valley Metro Fund Reserve Policy to ensure financial resources are available to fulfill the agency’s mission. BACKGROUND/DISCUSSION/CONSIDERATION Contingency amounts have historically been included in the RPTA and Valley Metro Rail, Inc. (VMR) annual operating and capital budgets. The RPTA established a new Fund Reserve Policy which relies on budgetary estimates of potential unplanned loss of revenue or unplanned expenditures. The attached Draft Budget Contingency Policy proposes the methodology for development of the contingency to be incorporated into the annual budget. COST AND BUDGET The proposed contingency methodology is being incorporated into the FY17 RPTA and VMR Annual Operating and Capital Budgets STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY 2016 – 2020:


term sustainability. COMMITTEE PROCESS BFS: February 11, 2016 for information RECOMMENDATION This item is presented for information only.

2

CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENT Draft Budget Contingency Policy Exhibit A: RPTA Risk Register Sample Exhibit B: VMR Risk Register Sample

3

Valley Metro

Budget Contingency Policy DRAFT Jan 16, 2016

Purpose To establish principles and procedures to deliver budgets that are resilient to impacts of unplanned costs or revenue reductions. This policy will work in conjunction with the Valley Metro Fund Reserve Policy to ensure financial resources are available to fulfill the agency’s mission. Contingency budget accounts will be established for unplanned reductions of budgeted revenues and unplanned increases to expense accounts. The contingency budgeting process is based on development of a risk register to evaluate potential threats to decreases or delays to revenues and potential unplanned cost elements, cost inflation and acceleration of the timing of expenditures. The risk register will be developed on an annual basis and will result in the valuation, review and approval of contingency budget accounts which will be incorporated into the Valley Metro Annual Operating and Capital Budget. Risk Register Development Operating Revenues Risks to Operating Revenues include the following:

Sales Tax Revenue reductions due to economic conditions o Sales Tax revenues are forecasted annually by ADOT economists six to

nine months in advance of the fiscal year. Federal Grant Program reductions or delays in availability of grant draws Reductions to planned passenger fares

o Ridership impacts o Average Fare per ride changes

Evaluation of risks to operating revenues will be reflected in level of Operating Fund Reserve set during the annual budget process. Significant changes to operating revenues may be addressed with mid-fiscal year budget expenditure adjustments. Capital Revenues Risks to Capital Revenues include the following:

Sales Tax Revenue reductions due to economic conditions

Federal Grant Program reductions or delays in availability of grant draws Evaluation of risks to capital revenues will be reflected in level of Capital Fund Reserves (Capital Fund Reserve, Working Capital Fund Reserve, Vanpool Fund Reserve) set during the annual budget process. Significant changes to operating revenues may be addressed with mid-fiscal year budget expenditure adjustments; including immediate reduction or deferrals of capital equipment purchases.

4

Operating Expenditures Risks to Operating Expenditures include the following:

Fixed Route Bus service cost risks o Price of fuel o Fixed route contract service rates

Impacts of collective bargaining agreements to contract rates Impacts of new procurements for contracted service rates

Paratransit passenger service demand (quantity of trips) Paratransit contract service rates

o Impacts of new procurements for contracted service rates Impacts of damage to equipment and facilities:

o Weather related damages o Accidents and other damage

Evaluation of risks to operations expenditures will determine the level of the Operations Contingency expense account to be set during the annual budget process. Significant changes to operating expenditures may be addressed with mid-fiscal year adjustments including allocation of contingency budget to address increases in operating expense line items. Capital Expenditures Risks to Capital Expenditures include the following:

Construction cost risks o Design change risk o Real estate procurement

Cost of parcels Impacts to contractor costs for delayed access to work sites

o Site conditions Soils, existing structures, archeological and environmental differing

site conditions o Third-Party Utility relocations

Cost of relocations Schedule risk - Impacts to prime contractor costs for delayed

access to work sites Capital equipment cost risk

Evaluation of risks to capital project costs will commence during preliminary engineering with the engineer’s baseline cost estimate. A project contingency budget will be established for the overall project costs to completion. Contingency budgets will be allocated to specific construction cost elements to address changes as the project progresses from design through procurement and delivery. A project reserve (unallocated contingency) will be established in accordance with best practices and evaluation of project specific cost risks. Contract obligations and construction contractor notice to proceed will not occur until the project has secured full funding to complete the project. Routine quarterly reports to the Board of Directors will provide project status with respect to cost versus budget, schedule progress and balance of remaining project contingency.

5

Annual project budgets will be developed based on best estimate of project progress during each fiscal year. Significant changes to capital expenditures to be expended in the current year may be addressed with mid-fiscal year adjustments. Exhibits Exhibit A: RPTA Risk Register Sample Exhibit B: VMR Risk Register Sample

2/3/2016 FY17 Budget Contingency Risk Register Exhibit A

FY17 Budget Risk Register RPTA

$ millions

Budget Project Risk Element Risk Amount Factor

Contingency

Amount

Reserve

Amount Reserve Fund Notes

Operating Revenues Various PTF revenue below forecast 75.00 2% 1.50 RPTA Operating Reserve

Various PTF revenue DOR assessment 0.50 100% 0.50 RPTA Operating Reserve

Various Federal revenue below Forecast 7.40 5% 0.37 RPTA Operating Reserve

Various Federal Grant Program delays 7.40 20% 1.48 RPTA Operating Reserve

Fixed Route Bus Reductions to planned passenger fares

o Ridership impacts 18.20 2% 0.36 RPTA Operating Reserve

o Average Fare per ride changes 18.20 2% 0.36 RPTA Operating Reserve

o Delay in Fare increase 18.20 4% 0.73 RPTA Operating Reserve

Capital Revenues Bus Capital PTF revenue below forecast 25.00 2% 0.50 RPTA Capital Reserve

Rail Capital PTF revenue below forecast 50.00 2% 1.00 RPTA Working Capital Reserve Does not Include FY17 Bond revenue

Various PTF revenue DOR assessment - 100% -

Various Federal revenue below Forecast 30.00 5% 1.50 RPTA Capital Reserve

Various Federal Grant Program delays 30.00 20% 6.00 RPTA Capital Reserve

Rail Capital Federal Grant Program delays 16.00 20% 3.20 RPTA Working Capital Reserve

Operating Expenditures

Fixed Route Bus 2015 Price of Fuel (CNG) 5.00 5% 0.25

2015 Fixed route contract service rates 57.50 4% 2.30

Impacts of collective bargaining agreements to

contract rates

Impacts of new procurements for contracted

service rates

2017 Price of Fuel (Diesel) 0.50 33% 0.17 26 Vehicles all Diesel

2017 Fixed route contract service rates 3.40 0% -

Value Trans Contract rates thru June 2019

No CBA, non-union shop

Paratransit

(Accessible Transit) 2030

Paratransit passenger service demand

(quantity of trips - Baseline) 9.00 2% 0.18 Trip Demand over 5% growth

2030 Paratransit contract service rates 9.00 0% -


service rates

2048


(quantity of trips - Baseline) 2.50 2% 0.05 Potential Growth Regional Trips

2048


(quantity of trips - Regional Trips) 1.30 25% 0.33 Potential Growth Regional Trips

2048 Paratransit contract service rates 2.50 0% -


service rates

2046


(quantity of trips) 20.50 2% 0.41

Facilities and Equipment Various Impacts of damage to equipment and facilities 1.00 100% 1.00 RPTA Emergency Reserve

Weather related damages

Accidents and other damage

SUBTOTAL RPTA OPERATING CONTINGENCY 3.68

G:\ADMIN\BUDGET\BUD2017\FY17 Budget Contingency Risk Register

2/3/2016 FY17 Budget Contingency Risk Register Exhibit B

FY17 Budget Risk Register VMR

$ millions

Budget Project Risk Element Risk Amount Factor

Contingency

Amount

Reserve

Amount Reserve Fund Notes

Operating Revenues Rail Operations Reductions to planned passenger fares

o Ridership impacts 16.00 2% 0.32 VMR Member City CDL

o Average Fare per ride changes 16.00 1% 0.16 VMR Member City CDL

o Delay in Fare increase 16.00 4% 0.64 VMR Member City CDL

Rail Operations Federal Grant Program delays 1.10 20% 0.22 VMR Member City CDL

Rail Operations Federal revenue below Forecast 1.10 5% 0.06 VMR Member City CDL

Capital Revenues

Rail Capital PTF revenue below forecast 50.00 2% 1.00 RPTA Working Capital Reserve Does not Include FY17 Bond revenue

Rail Capital PTF revenue DOR assessment 0.40 100% No reserve/ reduced expenses

Rail Capital Federal Grant Program delays 16.00 20% 3.20 RPTA Working Capital Reserve

TPAN Funding covers GRE project;

Tempe Streetcar covered by PTF Reserve

Operating Expenditures

Rail Operations Transp contractor service rates 10.00 5% 0.50

ACI Contract rates thru Dec 2016

potential CBA impact

Rail Operations Price of Electric Power 2.80 3% 0.08 26 Vehicles all Diesel

Rail Operations

Impacts of damage to LRV's , equipment and

facilities 1.00 15% 0.15

Weather /Accidents and other damage

Insurance program protects above 250K

Rail Operations Maintenance Estimates 17.60 2% 0.26

SUBTOTAL RAIL OPERATIONS CONTINGENCY 1.00

Capital Expenditures Corridor projects Construction cost risks 100.00 15% 15.00 Capital Project Reserves

Design Change / ROW cost /Site Conditions /

Schedule Risk

NPR Utilities Construction cost risks 22.00 15% 3.30 Capital Project Reserves Third Party cost of relocation

Systemwide Imp. Capital equipment cost risk 12.00 5% 0.60 - RPTA PTF Rail Fund balance Timing and scope of projects

SUBTOTAL RAIL CAPITAL CONTINGENCY 18.90

G:\ADMIN\BUDGET\BUD2017\FY17 Budget Contingency Risk Register


DATE AGENDA ITEM 6 February 4, 2016 SUBJECT Fiscal Year 2015 (FY15) Transit Performance Report (TPR) PURPOSE To provide information regarding system ridership, operating costs, fare revenue, and performance indicators contained in the FY15 Transit Performance Report. BACKGROUND/DISCUSSION/CONSIDERATION The TPR is updated annually using data provided by our member agencies and the Valley Metro Regional Ridership Report. The report includes information by each mode within the region:

Fixed Route Bus Light Rail Paratransit Vanpool

COST AND BUDGET None COMMITTEE PROCESS Financial Working Group: December 28, 2015 for information RTAG: January 19, 2016 for information TMC: February 3, 2016 for information Budget and Finance Subcommittee: February 11, 2016 for information Board of Directors: February 18, 2016 for information RECOMMENDATION This item is being presented for information only. CONTACT John P. McCormack Chief Financial Officer 602-495-8239 [email protected] ATTACHMENT FY15 TPR Report PowerPoint Presentation

V A L L E Y M E T R O

Transit Performance ReportF Y 2015 (JULY 1, 2014 - JUNE 30, 2015 )

valleymetro.org

2

COST EFFICIENCY & SERVICE EFFECTIVENESS | PERFORMANCE RESULTS

Transit Performance Report (TPR) | FY 2015 (July 1, 2014 - June 30, 2015)

System Summary FY 2015Performance Indicator Bus Light Rail Paratransit Vanpool System Total

% Change from FY14

Total Boardings 56,482,963 14,276,884 1,059,300 1,081,464 72,900,611 -1.8%

Percent of Total Boardings

77.5% 19.6% 1.4% 1.5% --- ---

Vehicle Revenue Miles

29,089,942 2,482,556 7,816,147 5,817,546 45,206,191 1.0%

Operating Cost Per Revenue Mile

$7.90 $12.60 $4.58 $0.58 $6.64 1.3%

Boardings Per Revenue Mile

1.94 5.75 0.14 0.19 1.61 -2.8%

Average Fare $0.83 $0.90 $2.62 $3.44 $0.91 0.3%

Farebox Recovery 20.5% 41.0% 7.7% 109.8% 22.1% -3.8%

Operating Cost Per Boarding

$4.07 $2.19 $33.78 $3.13 $4.12 4.3%

Subsidy Per Boarding

$3.24 $1.29 $31.17 ($0.31) $3.21 5.4%

3



Red Indicates the trend is negative (Greater than 5% decline from prior year)

Yellow Indicates the trend is negative (Between 3-5% decline from prior year)

White Indicates the trend is neutral (Within ±2.99% of prior year)

Blue Indicates the trend is positive (Between 3-5% improvement from prior year)

Green Indicates the trend is positive (Greater than 5% improvement from prior year)

FY 2015 Transit Performance Report (TPR)

The annual Transit Performance Report (TPR) provides information to the Boards of Directors and member cities concerning ridership, operating costs, fare revenue and performance indicators for region-wide transit services, including the following transportation modes:• Fixed Route Bus• Light Rail• Paratransit (Demand Response)• Vanpool

Dashboard Indicators:

4

COST EFFIC IENCY & SERV ICE EFFECTIVENESS | PERFORMANCE RESULTS


Farebox Recovery Ratio

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%


$5.00

$4.50

$4.00

$3.50

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00

Operating Subsidy Per Boarding

$4.00

$3.50

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00


$10.00

$9.00

$8.00

$7.00

$6.00

$5.00

$4.00

$3.00

$2.00

$1.00

$0.00

21.6%

$3.85

$3.02 $8.09

2013 20152014

21.9%

$3.83

$3.00$7.90

2013 20152014

2013 20152014

2013 20152014

BusFIXED ROUTE (SYSTEM-WIDE)

Service Expansion• Local Route – 138

Service Reductions• Local Routes – 13, 48, 77, 106, 108

Service Modifications• Local Routes – 1, 3, 10, 15, 96• Express Routes – 563, 573, 575

Service Increases• Local Routes – 10, 17, 29, 35, 41, 60, 70,

80, 81• Express Route – 562• Rural Route – 685

Route Eliminations• Express Route – 511• Circulator Route – Hospitality Trolley

New Routes• Local Routes – 28, 75. 83• Rapid Route – 452

20.5%

$4.07

$3.24

$7.65

18.9%

PEER2013

$3.73

PEER2013

$4.59

PEER2013

$8.98

PEER2013

5



Average Fare

$0.83

$1.00

$0.90

$0.80

$0.70

$0.60

$0.50

$0.40

$0.30

$0.20

$0.10

$0.00

Annual Increase / Decrease in Total Boardings

15%

12%

9%

6%

3%

0%

-3%

-6%

-9%

-12%

-15%

Annual Increase / Decrease in Weekday Average Boardings

15%

12%

9%

6%

3%

0%

-3%

-6%

-9%

-12%

-15%

Annual Increase / Decrease in Saturday Average Boardings

15%

12%

9%

6%

3%

0%

-3%

-6%

-9%

-12%

-15%

$0.84

-2.29%

3.78%

-2.46%

2013 20152014 201520142013

2013 20152014 201520142013

$0.83

2.84%

4.34%5.12%


Includes:• Local• Circulator• Express• RAPID• LINK• Rural Connector

-2.23%

-4.16% -3.59%

$0.86

PEER2013

6




5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

Annual Increase / Decrease in Sunday Average Boardings

15%

12%

9%

6%

3%

0%

-3%

-6%

-9%

-12%

-15%

1.37%

2.10

201520142013

1.94

2013 20152014

6.50%Includes:• Local• Circulator• Express• RAPID• LINK• Rural Connector


-2.17%

2.00

On-Time Performance

This data includes Local, Express and RAPID service.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

93.7%

2013 20152014

95.0%92.7%

1.95

PEER2013

7



8




100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

40%


$2.01

$5.00

$4.50

$4.00

$3.50

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00


$50.00

$40.00

$30.00

$20.00

$15.00

$10.00

$5.00

$0.00


$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00

$1.31

$2.18

$1.11 $11.81

45%$2.19

$1.29 $12.60

PEER2013

20142013

2013 20152014 2013 20152014

2013 20152014

Light Rail

34%

$12.60

41%

2015

PEER2013

$2.17

PEER2013

$3.30

$10.84

PEER2013

9




6.0

5.5

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

5.75

Total Boardings (in millions)

15

14

13

12

11

10

8

7

6

5

4

3

14.29

On-Time Performance

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

14.33

5.88

14.28

93.5%

5.77

2013 20152014

2013 20152014

2013 20152014

Light Rail

94.7 %

92.1%

3.29

PEER2013

10



11



• Phoenix Dial-a-Ride includes the cities of Phoenix, Avondale, Goodyear, Tolleson and Paradise Valley

• East Valley Dial-a-Ride (EVDAR) includes the cities of Chandler, Gilbert, Mesa, Scottsdale and Tempe

• Northwest Valley Dial-a-Ride (NWDAR) serves the communities of El Mirage, Surprise and Youngtown as well as unincorporated areas of Maricopa County including Sun City and Sun City West. Northwest Valley Dial-a-Ride also provides overflow service for the Glendale and Peoria Dial-a-Ride services as well as trips which applicants for ADA paratransit take to and from Valley Metro’s Mobility Center, located in Phoenix.

This data represents Proposition 400 funding used to fund service for ADA-certified passengers only. Each operating system may include more than one jurisdiction. The values in the “Proposition 400” column represents the amount reimbursed or credited to each jurisdiction in FY 2015 and may not correlate to the amount of Proposition 400 funding a jurisdiction spent that year. System Operating Cost is the total operating cost for each operating system.

PROPOSIT ION 400

Paratransit

Information

Paratransit Operating System Proposition 400 System Operating Cost Prop 400 as %

of Total Ops Cost

Glendale DAR $691,111 $2,344,055 29.48%

Peoria DAR $216,300 $777,579 27.82%

Phoenix DAR $14,776,048 $16,947,935 87.18%

Phoenix Taxi $0 $665,592 0.00%

Scottsdale Taxi $230,567 $472,515 48.80%

Valley Metro EVDAR $6,758,848 $10,802,255 62.57%

Valley Metro NWDAR $172,733 $2,671,905 6.46%

Valley Metro RideChoice $0 $1,104,528 0.00%

Total $22,845,607 $35,786,364 63.84%

12




$50.00

$45.00

$40.00

$35.00

$30.00

$25.00

$20.00

$15.00

$10.00

$5.00

$0.00

$36.90

$33.78

$37.29

2013 20152014


10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

5.7%

7.0%7.7%

2013 20152014


$40.00

$35.00

$30.00

$25.00

$20.00

$15.00

$10.00

$5.00

$0.00

$34.69

$31.17

$34.81

2013 20152014

Operating Cost Per Revenue Hour

$88.99$100.00

$90.00

$80.00

$70.00

$60.00

$50.00

$40.00

$30.00

$20.00

$10.00

$0.00

$84.70

$97.17

2013 20152014

ADA On-Time Performance

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

95.8% 95.5%96.8%

2013 20152014

ParatransitThe Americans with Disabilities Act (ADA) of 1990 is federal law which prohibits discrimination against persons with disabilities in public accommodations, including public transportation. On-time performance measures how many ADA boardings occurred within 30 minutes of the pick-up time given to the passenger at the time of their reservation.

4.6%

PEER2013

$38.66

PEER2013

$36.89

PEER2013

13



14




104.8%


$3.13

$5.00

$4.50

$4.00

$3.50

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00

$3.22

Vanpool


$1.00

$0.80

$0.60

$0.40

$0.20

$0.00

$0.58

101.7%

$3.10

$0.58

2013 20152014

120%

110%

100%

90%

80%

70%

60%

50%

40%

2013 20152014

2013 20152014


$0.20

$0.10

$0.00

-$0.10

-$0.20

-$0.30

-$0.16

$-0.05

-$0.3120132015

2014

Total Vanpool Boardings (in millions)

1.5

1.4

1.3

1.2

1.1

1.0

0.5

0.0

1.12

1.23

2013 20152014

109.8%

$0.62

1.08

15Transit Performance Report (TPR) | FY 2014 (July 1, 2013 - June 30, 2014)

Average FareAverage fare is the average price a person pays for a transit trip. It is equal to total fare revenue collected divided by total boardings.

BoardingA boarding is known as an unlinked passenger trip. Every time a person boards a vehicle it is counted as a boarding. For example, if a person makes a trip involving one transfer, this trip is counted as two boardings.

CirculatorsCirculator routes typically serve small specific areas with short routes that are designed to provide connections between transportation systems and other area attractions, like employment centers or schools. Many circulator routes charge no fare.

Express/RAPIDExpress/RAPID routes provide higher speed service by operating with limited stops and other enhancements. Many Express/RAPID routes operate on regional freeways.

Farebox Recovery RatioThis is the percentage of total operating cost that is covered by fares collected. It is equal to total fare revenue collected divided by total operating costs.

Fixed RouteFixed route bus service typically operates along a designated or “fixed” route with no deviations. Characteristics of this service type include controlled vehicle frequencies and scheduled passenger stops. In this report, fixed route service comprises Local, Express, RAPID, LINK, Circulator and Rural Connector routes.

LINK ServiceLINK is a type of bus service operating on arterial streets that functions as an extension of Valley Metro Rail and features limited stops, signal priority and near level boarding.

Local Bus RouteLocal bus routes may operate on either arterial or local collector streets. These are designed to serve localized trip patterns with one or more cities.

National Transit Database (NTD)National Transit Database was established by Congress as a primary source for information and statistics on the transit system in the United States. Any recipients of Federal Transit Administration funding are required to submit data to the NTD.

Net Vanpool StartsCalculated by subtracting number of deleted vanpools from the number of new vanpools started.

On-Time PerformanceADAPercent of all ADA trips that are picked up within the 30 minute ready window.

BusPercent of all trips that operate no more than 0 minutes early and 5 minutes late, compared to scheduled arrival/departure times at published time points.

RailPercent of all trips that arrive at the opposite terminal within 0 minutes early and 5 minutes late of scheduled arrival times.

Operating CostTotal costs associated with the operation of revenue vehicles which includes maintenance and administrative costs. These are gross costs (fare revenue has not been subtracted).

Glossary

16Transit Performance Report (TPR) | FY 2014 (July 1, 2013 - June 30, 2014)

Paratransit ServiceThis service is a shared-ride origin to destination service where an individual can request transportation from one specific location to another specific location at a certain time. This service complements fixed route service. Some systems restrict service to those who are ADA certified, while other systems offer service to the general public.

Revenue HourA revenue hour is an hour that one vehicle in revenue service is available to pick up fare-paying passengers. If ten vehicles are in revenue service for two hours each, they collectively perform twenty revenue hours of service.

Revenue MileA revenue mile is a mile traveled by one vehicle in revenue service that is available to pick up revenue passengers. If ten vehicles are in service for two miles each, they collectively perform twenty revenue miles of service.

Revenue ServiceRevenue service occurs when a vehicle is available to the general public and there is an expectation of carrying passengers who pay the required fare. Vehicles operated in fare-free service are also considered in revenue service. Revenue service includes layover/ recovery time, but does not include deadhead (i.e. travel from garage to the start point of a route) or vehicle maintenance testing.

Rural RoutesRural routes typically provide connections between rural and urban communities.

Subsidy per BoardingAlso known as net operating cost per boarding, this is the operating cost per boarding minus the fare revenue per boarding. This number indicates the amount of public funding that is used to make up the difference between the cost of providing transportation service and the revenue generated by this service on a per boarding basis.

Weekday / Saturday / Sunday Average Daily BoardingsThis measures boardings on a typical weekday, Saturday or Sunday. This is calculated by dividing total boardings on a weekday, Saturday or Sunday by the number of weekdays, Saturdays or Sundays in the fiscal year.

RPT2802

Glossary

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Transit Performance Report Fiscal Year 2015

February 2016

System Wide Summary

3

Performance

Indicator Fixed‐Route Light Rail Paratransit Vanpool System Total

% Change

from FY14

Total Boardings 56,482,963 14,276,884 1,059,300 1,081,464 72,900,611 ‐1.8%

Percent of Total

Boardings77.5% 19.6% 1.4% 1.5% ‐‐‐ ‐‐‐

Vehicle Revenue

Miles29,089,942 2,482,556 7,816,147 5,817,546 45,206,191 1.0%

Operating Cost Per

Revenue Mile$7.90 $12.60 $4.58 $0.58 $6.64 1.3%

Boardings Per

Revenue Mile1.94 5.75 0.14 0.19 1.61 ‐2.8%

Average Fare $0.83 $0.90 $2.62 $3.44 $0.91 0.3%

Farebox Recovery 20.5% 41.0% 7.7% 109.8% 22.1% ‐3.8%

Operating Cost Per

Boarding$4.07 $2.19 $33.78 $3.13 $4.12 4.3%

Subsidy Per

Boarding$3.24 $1.29 $31.17 ‐$0.31 $3.21 5.4%

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Bus System Peer Comparison

4

FY15

2013 NTD Dallas Denver Houston Sacramento Salt Lake

CitySan Diego Peer Average

Valley Metro

Region

Passenger Trips (millions) 37.9 76.3 60.8 13.8 18.9 51.6 43.2 56.5

Fare Revenue (millions) $37.1 $66.2 $34.1 $15.0 $19.9 $51.8 $37.4 $47.0

Total Ops Cost (millions) $248.8 $313.1 $304.9 $73.8 $107.3 $143.0 $198.5 $229.8

Vehicle Revenue Miles (millions) 27.3 35.5 33.2 5.9 14.7 16.1 22.1 29.1

Operating Cost per Boarding $6.56 $4.10 $5.02 $5.35 $5.68 $2.77 $4.59 $4.07

Average Fare $0.98 $0.87 $0.56 $1.09 $1.05 $1.00 $0.86 $0.83

Average Subsidy per Boarding $5.58 $3.23 $4.46 $4.26 $4.63 $1.77 $3.73 $3.24

Fare Recovery 15% 21% 11% 20% 19% 36% 18.8% 20%

Boardings per VRM 1.39 2.15 1.83 2.34 1.28 3.21 1.95 1.94

Light Rail System Peer Comparison

Supplemental Information:Added System Route Miles for Peer systemsGenerally speaking, Directional Route Miles = bidirectional length of rail alignment.

5

FY15

2013 NTD Dallas Denver Houston Sacramento Salt Lake


Valley Metro

Rail

No. Directional Route Miles 171.4 94.2 16.5 76.1 97.1 108.4 94.0 39.2





Operating Cost per boarding 5.12 3.67 1.62 3.70 2.39 2.23 3.30 2.19

Average Fare $0.69 $2.08 $0.40 $1.09 $1.00 $1.20 $1.13 $0.90

Average Subsidy per boarding $4.43 $1.59 $1.23 $2.61 $1.39 $1.04 $2.17 $1.29

Fare Recovery 14% 57% 24% 29% 42% 54% 34% 41%

Boardings per VRM 3.23 2.33 11.44 3.45 2.87 3.83 3.29 5.68

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Paratransit System Peer Comparison

Supplemental Information:Added Average (Passenger) trip length stated in number of miles

6

FY15

2013 NTD Dallas Denver Houston Seattle

Salt Lake


Valley Metro

Region

Average trip length # miles 8.12 8.16 9.75 8.77 7.65 6.44 8.15 7.38





Total Ops Cost/VRMile $4.99 $4.68 $2.77 $6.35 $6.54 $4.41 $4.96 $4.58

Operating Cost per boarding $40.51 $38.15 $27.06 $55.67 $50.00 $28.38 $38.66 $33.78

Average Fare $2.59 $2.02 $0.86 $0.68 $3.85 $3.93 $1.77 $2.62

Average Subsidy per boarding $37.92 $36.13 $26.20 $54.99 $46.16 $24.45 $36.89 $31.17

Trips per VRM 0.12 0.12 0.10 0.11 0.13 0.16 0.12 0.14


DATE AGENDA ITEM 7 February 4, 2016 SUBJECT Guidelines for Installation of Remote Ticket Vending Machines (TVMs) PURPOSE To provide cost information and preliminary guidelines for the installation and maintenance of remotely-located TVMs. BACKGROUND/DISCUSSION/CONSIDERATION TVMs are deployed to provide off-board fare payment and validation at high-volume transit locations. For Valley Metro Rail, they are available at each station entryway and many light rail park-and-rides and are the rail passenger’s only means of buying and validating fares on-site. In 2011, TVMs were first installed beyond the light rail alignment to serve LINK (Arizona Avenue and Main Street) bus passengers. LINK was a service created to connect and be an extension of light rail. It was designed to provide rail-like amenities, including off-board fare payment. The 20 machines along the LINK routes are the only remote TVMs available on the current transit system. These machines are being evaluated for their usage levels to determine future need. The LINK TVMs are connected via city fiber to the existing Valley Metro Rail TVM/SCADA network and fare collection back-end system. The units also have closed circuit TV (CCTV) surveillance and are connected to the network alarm system for security detection and response. Valley Metro Rail technical staff maintains all TVM equipment and an armored car service retrieves and replenishes cash. This combination of secure connections, CCTV monitoring and preventive maintenance activities has proven successful and would be the model staff would recommend continuing with for any future TVM needs. In addition, the fiber and CCTV connection to the existing network provides the utmost in data security and maintains the agency’s payment card industry (PCI) compliance. Requests have come forward from member agencies for Valley Metro Rail to install and maintain remote TVMs at other locations. The following outlines the proposed guidelines for Valley Metro Rail to undertake the installation and maintenance of remote TVMs:

Member agency submits application, identifying location and benefit to customer Full capital and operating costs are paid for by requesting agency

o Federal/regional/local sources identified and secured Location is determined to have secure fiber and CCTV connection to existing Valley

Metro Rail network Location provides CCTV surveillance of the TVMs 24/7

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Location is determined to have high daily sales potential o Baseline target monthly ridership = 6,000 o 2,000 monthly fare purchases / $12,000 monthly sales o Nearest retail fare outlet is greater than ¼ mile

Minimum of two TVMs installed for redundancy purposes Member agency and VMR execute Design and Construction Agreement and

Operations and Maintenance Agreements Capital costs for two TVMs can range from $150,000 - $200,000. Operations costs can range from $25,000 - $61,000 per year. Costs are based on 8 hour response time in normal weather conditions. Actual costs may vary depending on location conditions and data security environment. Lastly, as part of the Fare Policy Working Group, there are and will continue to be discussions on the region’s fare policy structure, which, today, delineates an on-board bus fare premium ($4 vs. $6 for an All-Day pass). The on-board premium compels the need to have off-board fare purchase solutions, including TVMs, retail fare outlets, online, etc. This element will be strongly evaluated in the next 6 – 12 months as part of the fare increase discussion. Also being evaluated in a similar timeframe is any fare media technology upgrades, which could alter the purpose and usage of TVMs. COST/BUDGET Funding for remote TVMs will be paid for by the agency requesting the service. There are currently no remote TVM units planned for installation in the FY16 adopted annual operating budget. Upon completing the application and funding process, the annual budget and five-year plans will be amended pending Board approval. COMMITTEE PROCESS Fare Policy Working Group for information Financial Working Group for information RTAG: December 15, 2015 for information TMC: February 3, 2016 for information BFS: February 11, 2016 for information Board of Directors: February 18, 2016 for information STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY 2016 – 2020:

Goal 1: Increase Customer Focus o Tactic 1: Implement Customer amenities and make use of newer

technologies.


term sustainability.

3

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

2/4/2016

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Guidelines for Installation of Remote Ticket Vending Machines

(TVMs)

February 2016

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Background

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Phoenix and Glendale request:• Locate new TVMs at Transit Centers

No Valley Metro Facilities Guidelines exist

Precedent set for Link TVMs • 20 Units on-line since 2011

• 100% ARRA federal grant funded

• Connected via city fiber lines

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Link TVM Sales – 20 TVMsTwo Years History

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Link TVM SalesSingle Month - March 2015

Station Name Qty Sold Cash Sales Credit/Debit Sales Total Sales

Super Springs Transi 768 $1,900.50 $4,481.00 $6,381.50

Super Springs Transi 665 $1,997.50 $3,621.00 $5,618.50

Southern and Country Club Dr NE 921 $3,304.00 $2,286.50 $5,590.50

Southern and Country Club Dr SW 820 $2,497.00 $2,312.50 $4,809.50

Chandler Blvd and Ariziona Ave NE 711 $2,332.00 $901.00 $3,233.00

Pecos Rd and Arizona Ave 628 $2,218.00 $901.50 $3,119.50

Ray Rd and Arizona Ave 584 $2,190.00 $570.00 $2,760.00

Tumbleweed Park & Ride. NORTH 148 $684.50 $1,958.00 $2,642.50

Warner Rd and Arizona Ave 490 $1,810.00 $829.00 $2,639.00

Center and Main St 398 $1,140.00 $1,447.00 $2,587.00

Chandler Fashion 300 $1,560.00 $950.00 $2,510.00

Broadway and Country Club Dr SW 464 $1,288.00 $1,065.00 $2,353.00

Juanita Park Ride 354 $1,085.50 $1,264.50 $2,350.00

Juanita Park Ride 172 $347.00 $1,785.50 $2,132.50

Elliot Rd and Arizona Ave 248 $1,162.00 $675.00 $1,837.00

Broadway and Country Club Dr SE 284 $927.00 $706.50 $1,633.50

Chandler Blvd and Ariziona Ave SW 178 $717.50 $558.50 $1,276.00

Tumbleweed Park & Ride. WEST 106 $484.00 $522.00 $1,006.00

SanAngelo and Country club Dr 115 $253.50 $369.50 $623.00

Germann Rd and Arizona Ave 144 $377.00 $190.00 $567.00

Total 8,498 $28,275.00 $27,394.00 $55,669.00

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Remote TVMSales and Cost Comparison

Total Rail Link

Number of TVM Units 117 97 20

Annual Sales $9,400,000 $8,800,000 $600,000

Annual Transactions 2,473,000 2,371,000 102,000

Average Sale 3.80$ 3.71$ 5.88$

TVM Annual Cost $1,298,000 $1,118,000 $180,000

Cost per transaction 0.52$ 0.47$ 1.76$

Cost per Sales $ generated 14% 13% 30%

TVM annual cost splits are approximated

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6

Rough Cost Estimate – Capital2 Remote TVM’s

$150 to 230 Thousand

6

Cost levels may vary based on location, site conditions and availability of secure fiber connections

Capital Costs may be reduced by deployment of TVM Spares

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7

Rough Cost Estimate – OperatingAnnual Cost $25-61K per year

7

Cost levels may vary based on location, security environment

Estimated Service Response Time is 8 Hours during normal weather conditions

Cost of CCTV monitoring and actual staff requirements are primary contingency costs.

Application Process

Member agency submits application, identifying location and benefit to customer VM will work with Member to review location

requested with construction and operating details Location Analysis Guidelines Secure Location

• Location must enable secure Fiber connection• Location provides CCTV surveillance of the TVMs 24/7

Location is determined to have high daily sales potential

• 6,000 monthly riders / $12,000 monthly sales

Distance from retail fare outlet (> 1/4 mile )

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Application Process

Location Analysis Guidelines:• Minimum 2 TVM units at remote location

Cost Considerations Will TVM offset / reduce fare distribution costs?

Intergovernmental Agreements• Full capital and operating costs are paid for by

requesting agency– Capital Construction Agreement

– Operations & Maintenance Agreement

9

Next Steps

10

TMC / Board Briefing

Develop Consensus • Policy Guidelines for qualifications criteria

• Application Process

Execute IGAs• Capital

• Operating

Procurement


DATE AGENDA ITEM 8 February 4, 2016 SUBJECT Future Agenda Item Requests PURPOSE For information BACKGROUND/DISCUSSION/CONSIDERATION Councilmember Williams will request future agenda items from members. John McCormack will review planned agenda items for April 14: Draft FY17 Preliminary Budget FY16 Third Quarter Results Health Insurance Review

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 Upcoming Meeting Dates for 2016


Budget and Finance Subcommittee

2016 Meeting Schedule

Thursday, March 10, 2016 (if needed) 12:00 PM

League of Cities – March 6-9 Thursday, April 14, 2016 12:00 PM

Draft FY17 Preliminary Budget

FY16 Third Quarter Results

Health Insurance Review

Thursday, May 12, 2016 12:00 PM

FY17 Budget & FY17 - 21 Five Year Plan Adoption

2016 Transit Life Cycle Plan Update

Thursday, October 13, 2016 12:00PM

FY16 Year-End Review

FY17 First Quarter Reports

Documents

MEETING OF THE Budget and Finance Subcommittee › sites › default › files › ...Councilmember Daniels said I just wanted to make a statement. I'm not against necessarily what's