Good morning. We will call today's Metrolink Audit and Finance Committee meeting to order today
June 9th, 2023 at 903 a.m.
May we please have housekeeping?
Certainly because there are committee members participating by a 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 our
our chair has requested that those joining us on zoom use the hand raise feature to indicate
that you would like to speak and as a reminder please speak into the microphone so that the
audience and teleconferencing board members can hear you thank you chair that concludes
housekeeping thank you very much appreciate that uh next is the safety brief briefing by
frank castellan chief safety security and compliance officer chair berkson committee
members so as a reminder safety briefing in the event of a fire alarm
activation we're all going to orderly exit the building we're going to stage
near Metro customer service and wait for further instruction and they all clear
to return in the building the event of an earthquake we're going to drop and
cover wait for the shaking to stop and do an assessment whether or not connects
the building at that point the event of a first aid situation I'm going to be
your first aid provider and I will ask Michelle Pena to contact 911 and
Metra security. And finally, in the event of an active attacker, we always tell people
to run hide fight. Please be aware of your surroundings and that concludes this morning's
safety briefing.
Thank you very much. Appreciate that. Item three is Pledge of Allegiance. Please, Pam
O'Connor will be leading us today. Thank you very much. Next is going to be roll call.
Director Middleton. Vice Chair McCallan.
here
Director do tray
Sorry do trays here. Thanks
director Nguyen
director Murphy
here
director Chavez
Here, thank you director Corcoran
director Najarian
director O'Connor
director Hughes Leslie present
chair Burksen here. We do have a quorum present
Just as a reminder everything that we do for a public comment period
Do we have any members of the public wishing to speak on items not on the agenda?
We have not received any requests to speak
Calendar item 6a approval of minute me meeting minutes from May 12 2023s audit and finance committee
This is an action item any of my colleagues have any comments requests for corrections or modifications?
seeing none
of approval. McAllen moves and Chavez seconds we do have a motion and a second maybe please have
a roll call vote. Vice Chair McAllen. Yes. Director Murphy. Aye. Director Chavez. Aye. Director O'Connor.
Yes. Chair Burksen. Yes. The motion carried. Thank you very much. Item 6b is the adoption of
of fiscal year 2023-2024 budget and approval of budget forecast for the four years of fiscal
years 24-25 and through 27-28.
This will be presented by Christine Wilson, the Senior Manager of Finance.
Good morning Chairman Bergson and members of the committee.
I'm here presenting the proposed FY24 budget.
Staff recommends that the committee recommend to the board that the proposed FY24 budget
adopted and that the four-year forecast be approved. Next slide please. This slide
is a proud reminder that Metrolink has served the people of Southern California
for 30 years. Over six counties with 547 route miles and 66 stations. Next slide
please. Next slide. Now the assumptions used in the producing the FY 24 budget
include the following. Service level is at the current level. It includes full
co-chair pending rail-to-rail agreement with Losanne. Arrow service as a separate
budget. As to revenue, revenue and ridership are based on the most
conservative Sperry Capital KBMG forecast. There are no fare increases but
many new fare promotions. For expenses, contractor increases only as mandated by
agreements, no new FTE headcount, and a 5 percent merit pool, no COLA.
As for reporting, reporting will be monthly, there will be a formal mid-year budget review,
and an Aero service monthly budget review along with MetroLink.
Next slide, please.
In a continuing effort to create efficiencies and grow ridership, several studies are in
progress with results due in spring 2023 to achieve the following.
crew and train equipment usages intended to optimize service of current station pairs
and identify potential for new stations and to create models to review peak, off-peak
and reverse peak service to allow evaluation of performance to inform ongoing service.
A study in collaboration with Losan to optimize distribution of trains across travel hours
and a study of potential riders, including noncommuters.
Finally, a fuel efficiency study funded by a TERSA grant.
Next slide, please.
This slide displays the significant difference
between the forecast used for the FY23 budget as compared
to that which we will be using for the FY24 budget.
We are making every effort
to avoid a budgetary revenue shortfall in FY24.
Next slide please.
Details of the proposed FY24 operating budget are,
operating revenue is 52.8 million,
which is a decrease of 13.7 million from FY23.
Total operating expenses are 303.4 million,
an increase of 7.1 million or 2.4%.
member agency support, 250.7 million,
which is an increase of 20.9 million or 9.1%.
And there is a request for working capital of 50 million
to address cash flow challenges.
Next slide.
This slide depicts the amount of support requested
for member agencies for the FY 24 operating budget.
Next slide, please.
Here, we display the top drivers
of our operating budget expense.
The largest are maintenance away,
train operations, and equipment maintenance.
Next slide.
Next is the capital budget.
Next slide, please.
The request for state of good repair is 129.8 million,
an increase of 35.4 million or 37%.
The request for new capital is 20.3 million,
an increase of 8.2 million or 67.4%.
Next slide.
This displays the amount requested from each member agency
for state of good repair and new capital.
Next slide.
Propose working capital.
Next slide.
The agency is experiencing cash flow challenges
as a result of the fact that the majority of funding
for capital projects is on a reimbursable basis,
Meaning that the agency must pay for work, in other words,
front the funds before submitting a claim for reimbursement.
In an environment with very little other income sources,
supporting the level of cash requirement is a great difficulty.
Funding is further restricted by the board requirement
that we maintain a cash threshold of $50 million
to ensure solvency.
Next slide.
This slide displays the allocation
of the requested 50 million in working capital
which is on the basis of Track Miles owned.
It is the plan to create a board policy,
a standard operating procedure which we will share
with the committee and the MAC
and to provide quarterly reporting to the MAC and the board.
Next slide please.
Next slide please.
This slide shows the amount of the request
from each member agency,
including the proposed 24 operating budget,
capital program budget, and working capital.
Next slide, please.
This slide shows the same information in detail
by member agency and comparisons to FY23.
The packet which you received includes detailed
comparative operating statements by member,
by line and historical amounts.
You have also received details of the projects proposed
in the FY24 capital program, including cash flow.
We have also provided the operating forecast
for the years FY25 through FY28.
We are requesting your recommendation for adoption
of this budget and approval of the four-year forecast.
That concludes my report.
May I answer any questions?
thank you very much for report
opening it up to my colleagues questions
i'm not seeing any questions
okay well before we have a motion may just verify if there's any uh... members
from the public who wish to speak on this item
seeing none
now uh... miss o'connor
motion do we have a second
uh...
i think
McCallum was was first in on that
So we're going to give it to you
We have a motion a second we please have a roll call vote
nice chair McCallum
Yeah, director Murphy
Director O'Connor
chair Bergson
director Chavez, sorry skip to hi
That motion carried
Excellent. Thank you so much. Okay now we're moving on to item 6c adoption of a four month
continuing appropriations resolution for Aeroservice,
also being presented by Christine Wilson,
the Senior Manager of Finance.
Thank you.
Good morning again.
This is item 6C, which requests action by the committee.
This item requests approval of the deferral
of an approved FY24 budget covering Aeroservice
and a continuing resolution to provide for funding
until that budget is brought back to the board for approval.
Next slide, please.
As you are aware, Arrow services budgeted completely
separately from the standard Metrolink budget.
In explanation, at the time of budgeting for FY24,
Arrow was in revenue service only a few months.
Thus, few actual expenses were available.
We are recommending to take this action
at the request of SBCTA.
The deferral will allow time for us to review
many months of actuals and to collaborate
with SBCTA on an FY24 budget.
Staff is recommending a deferral not to exceed four months.
The SBCTA Transit Committee has already approved
an amount of 6.2 million
to cover the continuing appropriations resolution
for that four-month period.
Staff requested the committee recommended the board
the approval of this item.
That concludes my report.
May I answer any questions?
Thank you for the report.
Go ahead and open it up to my colleagues here.
I don't see anybody with questions.
How about anybody from the public?
Do we have any members of the public wishing to speak on this item?
Larry, anything you want to add?
Okay.
If he's approving it.
No.
Do we have a second?
Murphy, second.
Murphy, second.
Roll call vote, please.
Vice Chair McCallum.
Yes.
Director Murphy.
Aye.
Director Chavez?
If Larry said it was thumbs up, then that's a no-brainer.
Item 6d, the financial results for the 10 months ended April 30, 2023, ridership and revenue and operating results presented by Christine Wilson, Senior Manager of Finance.
of Finance. Thank you I gotta figure different voices pretty soon. Okay this is the budget versus
actual through April of 2023 this is a receiving file item. Next slide please. This slide shows
our ridership recovery the actual are the green bars it compares the current ridership to that
which was in place before the COVID pandemic.
And you see the gray line is the FY23 budget forecast
that we use to create the FY23 budget.
While the black line is the FY24 budget forecast,
which we received from the Sperry Capital KPMG forecast.
Next slide, please.
This slide shows the FY23 recovery information by month.
Our FY23 budgeted revenue is based on this forecast,
and as you can see, May and June increased to 67%
and 70% respectively.
This will create an escalating revenue shortfall.
Next slide.
Over the course of the past three years,
we have recovered from 14% of pre-pandemic ridership
to 42% through the month of April of FY23.
Next slide.
We see here the revenue through April of FY23.
Budgeted revenue is 38.1 million or a 60% recovery,
whereas actual revenue is 25.7 million or a 40% recovery.
This produces a shortfall through April of $12.5 million.
Next slide.
This is ridership through April of FY23.
Forecast ridership is 5.9 million or a 59% recovery,
while actual ridership is 4.2 million or a 42% recovery,
producing a shortfall of 1.7 million riders.
Details by line for both revenue and ridership
were included in your packet.
Next slide, please.
As to the operating statement, total operating revenue
is under budget by 12.5 million dollars.
Total expenses are under by 32.9 million.
This is based on accruals, not actuals.
Next slide please.
Arrow, this is the arrow revenue through April.
As you can see, it was budgeted at 652,000
while the actual is 134,000, a shortfall of 517,000.
Next slide.
ridership for Arrow service follows the same pattern.
Next slide please.
So for the operating statement for Arrow,
revenue is budgeted as budget is under by 517,000,
while expenses are under by 5.2 million.
This means the support required is 4.6 million below plan.
That concludes my report, may I answer any questions?
Thank you for the report.
Do we have any questions from my colleagues?
I actually see a hand raised.
Larry McAllen, please go ahead.
Thank you.
Back to the first slide.
Can we go back to the first slide?
That one, yeah.
Any ideas on what quarter four looks like relative to the 24
budget forecast?
I would think that the last few months are
going to be in line with the FY 24 forecast.
It's gonna be down around between 40 and 42%.
Thank you.
You're welcome.
Any other questions from my colleagues?
Any members of the public wishing to speak on this item?
Okay, this is a receive and file item.
So without any objection, we'll go ahead
and receive and file this item and move to item 6E,
fiscal year 2022 through 2023 quarterly accounts receivable status report quarter ended March
31st, 2023 presented by Edison Abrienko. Close. Abrenica. Abrenica. I will try to get that nailed
down next time. Thank you. Good morning chair and members of the committee. The following
accounts receivable status has appeared ending March 31st, 2023. Next slide please.
The total outstanding accounts receivable balance equaled approximately $7.1 million
and of that amount, negative $11.7 million is current and $18.8 million is past due.
Next slide please.
The past due invoice were comprised of the following, $17.1 million in operating subsidies,
$1.1 million in shared use agreements, $300,000 in third party agreements,
$200,000 in capital contributions,
and $100,000 in due from other agencies.
I wanted to take this time to notify the board
that there is a slight error in page two in the board memo
in attachment A under the operating subsidies detail.
OCTA and VCTC names and values are shown incorrectly
and should be swapped, but is represented correctly
on the presentation before you.
That concludes my report.
I'm happy to answer any questions you may have.
Okay, thank you very much.
Any questions on the receivables?
Seeing none.
Any public wishing to comment on this item?
Seeing none.
This is a receive and file item.
So without objection, we will go ahead
and receive and file item 6E and move to item 6F.
This is the fiscal year 2022-2023 quarterly investment report.
Quarter ended March 31st, 2023.
This is also being presented
by Edison Abri Inca.
I, Inca?
Prenica.
Gosh darn it.
It's okay.
Prenica.
I butchered it even worse the second time
and I feel bad about that.
Please proceed.
No offense, Steve.
Prenica.
Yeah.
Get that.
Thank you, Chair, members of the committee.
This time, the status of investments
as of March 31st, 2023.
Next slide, please.
We manage a cash portfolio of approximately $175.9 million
that was comprised of restricted and unrestricted funds.
The restricted fund balance was approximately $57.1 million
and invested in LAFE and Bank of America.
The unrestricted funds that are used
for daily operation had a balance
of approximately $118.8 million.
That includes the $50 million minimum cash threshold
and were maintained in Union Bank.
Next slide, please.
The total interest earned for the quarter
was approximately $608,400 when that interest is compared
to the prior periods.
That is approximately $90,500 higher than last quarter,
and approximately $523,300 higher than last year.
In attachment B of the report, you
will find more details such as investment account balances
and average yields.
That concludes my report.
Happy to answer any questions you may have.
Certainly like to see that number going up. That's great
The interest rates are coming up not not that that's helpful for for people with loans
But it's certainly helpful for the investment here, so that's that's nice to see any questions or comments from my colleagues
Okay
Members from the public wishing to comment on this item
This is a receive and file item so without objection. We will go ahead and receive and file this six F
And if there was a G which we don't have, I would probably have to say Edison a breneka
I'm working on it. I'm a work in progress
Item number seven our favorite thing in the entire day our chief executive officers report. Well, I hope
Disappoint. Mr. Chair. I have two items for the committee that I'll be sharing with all three committees today
And I wish they were we oftentimes get to share good news that these two items are
Not as good a news as we like to be able to present the first is is that yesterday we did hear word
through the California Transportation Commission
That unfortunately we did not receive the grant award from the solutions for congested corridors
That was the grant that was going to match the AQMD grant the Carl Moyer grant we had for the
uh... the new locomotive so uh... bit of disappointment in that news
uh... but
are uh... are are
grants team has two other
grant applications that are uh... that are in some form of process
uh... so i'm still optimistic we'll see the solution for congested corridors
program
we did it in partnership with scag
uh... it was a bit of a long shot in the first place but as we try to
pursue every grant opportunity
We gave it a shot.
But there were other awards granted in Southern California
to several of our member agencies.
So congratulations to those.
The other part, of course, is I had
to share with the board earlier this week
that we were required to have to shut down
the segment of track in San Clemente,
again, due to landslide risk that was,
when you see photographs, was probably the most serious
are significant we've seen even prior to the incidents from last year. We have opened the
tracks for freight purposes, but what we'll be doing and I've been working in quite close
coordination with Darrell Johnson, the CEO at Orange County Transportation Authority,
who has sent us a letter ensuring cooperation and support, financial support for us proceeding,
Metra-Link proceeding with an emergency declaration that I have the authority to do. I will have
to have it ratified by the board when we have a final action or what will effectively be
a design-build contract to build a barrier wall that should that landslide give way,
we have this barrier that protects our tracks. So we are right now through our program delivery
team and our procurement team working on contract documents and have identified two contractors
that are prepared to propose and bid on the project. I don't have specific time frames
just yet because this is all happening quite quickly, but it's our intent to move forward
with that. OCTA has endorsed our approach of us taking the lead on it and us having
with OCTA again providing the funding
to reimburse us for our costs.
So that's where things are.
I will provide more information as it becomes available.
My intent would be that at our board meeting
later this month that we will have a ratification action
that has to be taken by the board.
I can move forward with the action
but it has to be ratified by the board
if it exceeds half a million dollars, right, Council?
Which we fully expect this to be.
We have understood that estimate
somewhere in that $3 million range or so
to build this barrier wall
and an approximate one month time for construction.
So we are doing everything we can to move expeditiously.
Mr. Chair, that concludes my report.
We can't always have good news,
but at least you're on top of it.
So, unfortunately for the grants,
but hopefully the other ones pan out for us.
With that, we'll move on to item number.
You have a hand raised, Mr. Chair.
Larry McElin, please speak.
Thank you very much.
Darren, have OCT, OCE, or whatever,
Orange County and Metrolinx
looked at whatever recourse we have against the city.
In my conversations with Darryl Johnson, OCTA's CEO,
they are having internal conversations on that literally
as we speak.
I think it's too early to tell what the plan will be,
but there are conversations taking place.
Thank you.
All right, good question.
And off to item number eight, committee member comments.
Any members of the committee have any comments?
OK, Pam O'Connor.
A week from today LA County Metro is opening the regional connector which is a line that
will connect the two light rail lines that come from Long Beach and on the south side
to connect, they come into the south side of Los Angeles and Metro Station, one from
Santa Monica and one from Long Beach.
It will connect them to the light rail lines that go out of the north side of downtown
out of Union Station, to pass to Azusa through Pasadena and to East Los Angeles.
So when that opens, three fabulous stations, by the way, one really great one at the Grand
Avenue Bunker Hill, a great one at Little Tokyo right across from the Japanese American
Museum.
And that's an underground, and we'll connect the lines.
So you'll be able to do a one-seat ride from Long Beach all the way to Azusa, and a one-seat
line from Santa Monica to Atlantic and East LA.
And if you need to transfer to one of the other light rail lines, it will be on the
same platform and just an easy transfer, one-seat transfer, so it's a very exciting project
that's going to, while it's relatively small and it's a mile, it's going to be one of probably
the most impactful projects and it won't change my commute. I take Expo and then I get on
the subway because that drops me right at Union Station and by the way, I've had very
safe rides the whole time I've been going to the meetings this year and comfortable
rides I'm getting here so but an exciting project and I hope you know
folks will try out the light rail and check out the regional connector and celebrate downtown Los Angeles.
Good, thank you for sharing that. That's great news, extra connectivity. Any other comments from committee members? Seeing none.
Chair's comments, just want to say I appreciate everybody's attendance today.
It's great to see everybody in person, and several of you on Zoom.
Glad to see you all here.
Thank you for being here.
With that, we will go ahead and adjourn the meeting at 9.34am.
Thank you.
Thank you.