Good morning. We're going to go ahead and call the Metrolink Audit and Finance Committee meeting of Friday, March 10th, 2023 at 10 a.m., calling the meeting to order at 1001.
May we please have the safety briefing.
Good morning, board members. So for this morning's safety briefing, just a reminder, if we have a fire alarm that is activated, we're going to exit out of the building, stage in Pat's Forest Plaza, do a headcount, so we notify the emergency responders if anyone's missing.
In the event of an earthquake, we're going to shelter in place under a large object,
preferably do an assessment, and if necessary, we'll exit the building to a headcount.
In the event of an active attacker, we use the phrase run, hide, fight.
And if there's a situation requiring medical intervention, I will conduct first aid.
I'll ask Jerry to contact 9-1-1 or the front desk.
And just a reminder, I think everyone is aware, wet weather this weekend,
so please plan accordingly, give yourself more time, and be safe.
Thank you very much for the safety briefing I'm going to turn it back to the board clerk to give us house
Thank you
Because there are committee members participating via teleconference all votes must be done by roll call and each county receives one vote
Although all directors are encouraged to participate only voting members can make a motion or second the motion on action items
For those joining us via zoom
Please use the hand raise feature if you have any questions so that we here in the boardroom can see
That you have a question you can call on you as a reminder to those in person
Please speak into the microphone so that the audience and the teleconferencing board members can hear you. Thank you chair. That concludes housekeeping
Director Middleton vice chair McCallan here director do tray
Director Nguyen. Here. Director Murphy. Here. Director Chavez.
Director Krekorian.
Director Najarian.
Director O'Connor.
Director Martinez.
Chair Burksen.
Present. We do have a quorum.
Item number five, which is public comments. Do we have any requests to speak?
We have not received any requests to speak or any written public comment.
Anybody in the audience requesting to speak on an on agenda is item
Seeing none. We will move on to our regular calendar item 6 a
approval of many meeting minutes from February 10th
2023
This is an action item and looking for
comments by any colleagues or revisions
I'll move the item. Mr. Chair
Certainly. Vice Chair McCallum. Yes. Director Nguyen. Yes. Yes. Director Najarian. Yes. Chair
Burksen. Yes. That motion carried. He's on the TV. Okay. Now that we are off to item
6B financial results for seven months ending January 2023,
ridership and revenue recovery and operating statements.
This is a receive and file report being presented today
by Christine Wilson, the Senior Finance Manager.
Good morning Chairman Bergson and members of the committee.
I am presenting this receive and file report
covering ridership and revenue recovery results
through January 2023 and operating statements
through that same period.
This report covers both Metro Link
and separately Arrow Service.
Next slide please.
This slide, which I know you're familiar with,
shows quarterly ridership recovery
as compared to the forecast used by the FY23 budget.
The black line is the forecast
and the green boxes are actual.
This slide has a new element.
We are now showing the forecast
which we received from Sperry Capital KPMG
and which we will be proposing to use for the FY 24 budget.
As you can see, it is significantly lower
than the November 21 projection,
which was used for the 23 budget.
The next slide shows more clearly the probable validity
of the new forecast.
Next slide, please.
As you can see on this monthly slide,
ridership seems to have leveled off.
The new forecast shows this pattern much more closely
than our November 21 forecast.
Next slide, please.
This slide shows the progress we made in each month
and year since the beginning of the pandemic.
Once again, you can see the leveling off of recovery.
Next slide, please.
This slide shows revenue recovery through January of 23.
We budgeted $26.1 million for a recovery of 58%,
whereas the actual revenue is $17.8 million or 40%,
creating a revenue shortfall through January of $8.3 million.
Next slide.
This slide shows the ridership for the same period.
We forecasted ridership recovery of 57%
or four million boardings, while actual ridership was 2.9 million or 42% recovery.
I might mention that the in-year packet was included at this information by line.
Next slide.
This slide shows revenue information for aero service through January,
representing three months of revenue service.
Budgeted revenue through January totaled 31.6 thousand,
While actual was 315,000, sorry, 316,000.
While the actual was 58,000, short by 258,000.
Next slide, please.
This slide shows the ridership forecast compared to actual.
And as you can see the forecast for ridership was 112,000.
Whereas the actual was 25,000.
Next slide.
Oh, I also wanted to explain to you that we have developed a new forecast for ARRO to
be used in FY24, and that we will be meeting with SBCTA to review this new forecast within
the next several weeks.
Operating statements for both Metrolink and ARRO were included with the packet.
For Metrolink, operating revenue through January is $28.6 million under budget by $8.8 million.
Expenses are $150.7 million under budget by $21 million.
Support required is $122.2 million, which is less than budgeted by $12.2 million.
or aero service, revenue totals $58,000 under budget by $25,000, expenses are $5.6 million
under budget by $3.2 million, and the support required is under budget by $2.9 million.
That concludes my report. May I answer any questions?
Well, thank you very much. First of all, I want to say this, that I've been writing
Metrolink since October, November for these meetings
and then it's gone to twice a month.
And I used to be able to get on certain seats
on the Metrolink, you know, they're available,
always available, table seats or seats in the corner
I like to sit at.
And this month, March twice, last week in course today,
those seats are now occupied.
So it tells me more and more people
are now riding the Metrolink,
which is not that great for me
because I can't find my favorite seats anymore.
So it's a good problem to have.
But of course, since we have one item,
I actually printed out the agenda
and I actually looked at it today
when you have a hard copy versus electronic copy.
But on the attachment C real fast that you just spoke of,
the train of operations, there's a savings of $6.5 million.
And I assume that's because we haven't gone back
to full service based on the budget.
And that savings will continue to grow, I'm assuming.
Yes, and a big part of that is when we're ramping to go back
to full service we have to pay for the recruitment
of new engineers.
Right.
Yes.
But that's the savings now and that'll continue to grow
and I'll set the deficit from the Fairbox revenue.
And then under maintenance of work there's a savings
of 2.7 million dollars for line segments.
Is that also a savings that continues to grow
or that will go away, that will eat up later?
It will only because that underage was a reflection of our having over budgeted for the amount
of indirect expense that is going to be charged to that segment of the operating statement.
It turns out that the change between capital, maintenance away and operations, they moved.
So the proportion of indirect expenses being charged, there is a lot less than we actually
budgeted.
Okay.
And under M and services, again, you have savings of the atomol up close to $6 million
for salaries, non-labor expense, et cetera.
Again, are those true savings growing?
Or eventually those savings will go away?
I would say that most of those are real.
Real savings too.
Okay, so moving forward to the end of the fiscal year,
even though our revenues are dropped,
that sounds like we're in pretty good shape
at the end of the year, where things are going.
I think we'll live up to the requirement of our CEO
that we cover the shortfall of the revenue.
Director do tray we are we are working very very hard to make sure that we do not have to at the end of this fiscal
year go back to our member agencies
To make up for any gaps between the revenue and our expenses as well as well as covering
the from last year where we had a bit of a Delta, so the team is
Fully committed to that and Christine and certainly our CFO
are
watching this. They are absolute budget hawks. And you can ask any of the other chiefs at
Metrolink and they will agree with that statement. So if you look around you'll see Don Felipe
nodding his head and Scott Johnson nodding his head. Good. And Frank Castellan, they're
all nodding their heads. So that is the nature of what we're doing. So yes, we hope to be in a
place where we're- Oh, the first seven months proves it. So far, so good. Yes, sir. Thank you.
Okay, Director Middleton. All right, thank you. Just a quick question. Could you remind us when
you speak of 42 percent recovery of ridership, what is that percentage against? It's numbers
or projected or just what? It's measured against FY19, which was the last full year of ridership
and revenue that was unaffected by the COVID pandemic.
Perfect.
Thank you.
Okay.
Let me first ask if there are any public comments.
I don't see anybody speaking or requesting to speak.
Okay.
We'll close the public comment section and I'll bring it back up to my colleagues for
more discussion.
Thank you very much, Ryan.
Just an anecdotal, on the Aero service, one of the reasons that it's not meeting what
we thought it would is that the major employer in Redlands is still remote, everybody is
remote.
They're not, Esri has not got anybody working in the office.
As a result, you know, we're not having people traveling to Esri, so that's probably one
of the big reasons that we have such a deficit on the airline.
My question was going to be who created the estimates or the projections on Fairbox Recovery.
Was that under the same methodology that our 42 percent, you know, our existing model,
was it based on the same formulas to get to that arrow service?
It was done even further back than that.
the company was HCR, is that the initials?
And they would have been HD, was it HDR?
Maybe HDR, those were provided all the way back.
Okay, so yeah, so Mr. Chair,
when this project was handed over to Metrolink,
SBCTA had been the lead agency and through that,
they had developed some revenue and ridership numbers
dating back as far as like 2016, 2017.
So we were going off of very old information
and certainly way pre-pandemic.
So that was where the numbers were from back then.
And of course, we've all learned a lot
in the last couple of years.
So with Chris and Arnold, we are looking at
and in consultation with SBCTA, similar to ourselves,
we have to right size this revenue, the ridership forecast.
And on the same time,
Scott Johnson's team on customer experience,
we've been working with SBCTA on other promotions.
Right now there's a through the end, actually maybe the dollar fair is up, Scott, still going?
Okay, so we have a dollar a ride promotion for Arrow,
doing everything we can to try and encourage improved ridership.
But to Director McCallin's point, when you lose an employer of three or
four thousand and a giant campus of professionals, and they don't come to work,
Well, they don't come to an office anymore.
That is a huge loss to the system.
So eventually it'll write itself out, hopefully.
Just go for it.
But I mean, we've got our new projection, which I was,
you know, I very much appreciated
finally seeing it on a slide.
Now it looks more in line
with what we've truly experienced.
Yeah, right there.
That looks real.
It just doesn't look like what we've been going off of.
And so I was wondering if Aeroservice would,
obviously it's SBCPA and your neck of the woods
to decide how it gets forecast,
but it should at least be, I would presume,
analyzed and maybe whether it's Sperry Capital KPMG
or some other entity or however it needs to be done.
But it's skewed like this original one was skewed.
I just hope that at some point it can come back together any other questions on this receiving file item
Okay, all right off to you item seven. Thank you very much
Chief executor officers report mr. Chair I have for for the committees this week. I have nothing to report
With such a light agenda. I thought you'd be able to fill in at least 10 15 minutes
We were searching. I can say that generally, again, we survived the weather relatively
well, and over the course of the last couple of weeks, certainly the winter storms did
add some things. We did have to do one closure of the Antelope Valley line because we had
debris falling onto the tracks. It's a mountain railroad. It's a canyon railroad. So we did
have to do that because it was putting our cleanup crews in danger because debris was
coming down off the walls of the mountainside while we were cleaning so
we did have to do that I think on a Saturday but other than that the system
operated smoothly with just only minor minor issues throughout the network.
That's really good to know and with atmospheric river conditions throughout
California they say through the end of March in extended forecasts we're not
getting out of this in the near future so everybody you know stay off the roads
when it's raining and take Metrolink. With that we will move to committee
member comments. So I was able to attend the Kel-Coq regional leadership
conference earlier this week and the highlight was I got to meet Director
Middleton in person and we expect to see her I think at the full board meeting
here yes on the 24th I'm looking forward to it if I can find my parking space okay
very good any other members okay a chair's comments I just appreciate
everybody for making their trek out here in the rain and be safe driving back to
where you came from or with that we will call for the meetings adjournment at 10
21 thank you very much for attending meeting is adjourned