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MarylandTmn.sportation

Authority

FINANCE COMMITTEE MEETING

Notes o f February 12,2009

Auilioriq Members:Louise P. Hoblitzell- Chair, Isaac Ma11c.sVln Phone:Jack Basso, Richard C. Miice Lewin

MdTA Attendees:Deborah Sharpless, David Chapin,Valerie Smith, Alison Williams, Christina Tl~ompson,Joyce Diepold, Allen Garman, Simela Triandos, William O'Reilly, DouglasHutcheson,ThomasGugel, Cheryl Sparhs, Randy Brown, Dennis Simpson, Greg Jones, Tina Dorn,Cindy Taylor

0thers:F e d Rappe -MDOT (via phone)Peter Kessenich - PFM (via phone)

MemberHoblitzellcalled the meeting to order at 9 am. No revisions were madeto the notes of J m . 5,2009,

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Briefbe on BWI Proiects/Financing~

"Alison Williams explained hat ibe MAA stff was called to a meetingwith the

Secretary and was unable to be here and will present their informationat the nextmeeting. Alisonstated that they will update the Committeeon improvementsto theRental Car Facility nearBWI. MAAwillrequeat an increase to their budget forcourtyard improvementsby $627,000 and will also request reimbursement frcm CFC .revenues for $250,000. The reimbursable expenves related to repairs to the HVACsystemat the bus maintenancefacility to comply with code requirements. MAAmet itsrate covenantfor FY 2008. The FY 2008 rate covenant was 129%and CFC evenueswere $11,7 million.

Pitch and Moody's downgradedState StreetBank, the 1etter.of redit provider,whichaffected the ratings for the Series2003 PFC Revenue Bonds. The downgradewasone level;however, theunderlying long-term ratingof the bonds did not changeand isstill favorable. Peter Kessenichstated that sincethe meltdownin the fall, letters of credithave become scarce,harder to get and mole expensive,with shorterterms. Thealternative wouldbe Co convertto a fixedrate, but debt servicewould be expensive.MAA is aware of this sitmationwith the lettero f credit expiring in December,2009 andunderstand that they need to work with us.

Fallow up: Comnilltcc recommeadtd that Alison W i I I i mmd Peter Kewertichrespnrch whether the Bonk of New Pork Melion would issue M e r of credit

,Traffic & RevenueUpdate

Dab Sharpless explainedthat in J~1uat.y evenueswere down 3.86%or $779,000compand to a year ago and year to date revenues are down $7.7 million or 4.7%.TornGugel statedthat monthly bnsactionsdeclined3.6%or 325,000 compared to lastJanuary and year to date transactionsare down 2.5 million. Comparedto Stanteo'sforecast,mon-kly evenuesare down $750,000 or 3.86% and year to date 2.12% or $3.4million. Transactions for the month are down 4.6%or $397,000and year to date down2.2% or 1.4million.

Follow up: CommiBeerecornrnentien that BCW revenue and iruf@ are comparedto pessimkfic#2 (2008-71) wd inse ease (2008 69) forecnrts next month. Also,apiuin why revenuewns up 2.15% md &nfJc wus down 2.5% at the Aulhorltymeeting.

Cash B lances/Spendinq

Allen Garman stated capitalspending cumulativelyfiscalyew to date t houghJanuary totaled $378million or 64% of the rnost recent CTP projections. For the monthof Jan~my, pending totaled $44 million or 52% o fmonthly spendingprojections.Net ofspending,*investnientnd operating incomesaggregate cash balances availablefor capitalexpendituresfell by $25 million.

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Allenexplainedthat duringthe first q u w r o fPY2010 the Authority willneed toraise additionalcapital throughthe issuanceof Toll RevenueBondsand potentially drawson theTIFIAloan,

Rate Covenanb

Allen walkedthe MembersthroughMdTA's estimatedFY 2009rate covenantcalculation.The calculationincorporatesannualizedrevenuesbased on fiscalyear todateperformance. Thiscalculation projectsa $20 millioncushion, indioatingthatrevenues couldfallby thatamountand we wouldstillmeet our rate coveaant. Anyrevenue3 from the cost recoveryinitiative will increase our cushion. The Davenportproforma modelwas reviewedfor FY20 0 through2014. The legalcaloulationrequiredby the trustagreementis performed oncea year based on audited fmmcial data, .

Follow up: C~mmilfeeecommended fhat thf itern be reporred on month&,

Adequacy of Capltnl Program Reserve Levels

DennisSimpsonstated thatreserve levels aresufficient o dealwith the needsthatthe Authodty has coming forward over the next six years. Discussion followedas to howwe calculate the reserve amount. Dennis eplieda combinationof items,includingowlong-range capitalneeds,are analyzed. Until a few yearsago the Authoritydid not havea capitalprogram. Inthe final CTPwe have$260 millionin reserves.

Follow up: Committee recommendedthat St(~fldefermiPreppr~~priateeasures toCLssert the reicsoncrblenessofthe reservesand rqor t Back to the Committee ~ I I une.

Investment Report

Allenrep~rteclhat investmmtholdings declinedabout$47 millionwith totalinvestments at $1.2 billion. GARVEEbalance was $325millionand the Capital2008was $369million. Capital accounts aremanagedon a matchedfundingbauis,withmaturities precedingprojectedmonthly spending. Yieldson moneymarket fundsarelikelylo continueto decline,favoring lockingin returns via short-term agencies.Generally,we are out-performingrelevant benchmarkindices,but have laggedin longerduration portfolios(General,OperatingReserve)due to agencyspread widening. Recentperfo~mancen longer duration accountshas improvedwith narrowingspreads. Allenhighlighteda Jan. 26 purohase of FDICguaranteed GECC commercialpaper, picking up20 basispointsover a comparable m aturityagea'cy. Allen statedthat we will continuetoloolcfor opportcdties in FDICguaranteed CP. All of ourportfolios andinvestments

were inlinewith investmentpolicylimitationsas ofDecember31,2008.Discussion followedregarding providingmoneymanagerst h e oppo~tmityo

present their services to management. Explanationsfollowedas o feasibility ofcomplying withthis request Someconcern were expressed over the potentialimpacton

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future procurements. Deb Sharpless will work with Legal and Procurementto determinea means to comply with this request. .

Follow up: Committee recommended to research the &sue on ~Zlowingmoneymanager fvm to CUSS their bwiness with management and to report back nextmonth,

F&w rrp: MemberLewh asIced about fke high yields shownfor two ngencysecu~it ies~ llen will report back fh ough d b

FoNow up: Cornmiitlee rewmmendedthoi PFMprepare in o n n n t h on previousmonih even U th h does n d mnke the mnil out ~ n dns io be e n d e d

Travel PIaza Status Update

Sam Triandos gave a brief updateexplaining that this item was to go before theAuthority and Board of Public Works thls monthbut nRer meeting with the Secretary theschedule will have to be revised. Greg Jones gave a slide presentation on the travelplazas. The current RFP tructure has a requirement for 50-year design life structures.The design/build/ope1ate/6uurnce is under legal review, and an outside accountingfirm, SC&H looked at the cash flow analysis. SC&H determined that the model prepaxedby the Authority resulted in a positive net present value. However, recommendedthat theassumed expenses be subject to additional analysis.

Tlie currentsolicitationstructure is a revenue-*rodwing lease and thereforeexempt fiam portions of COMAR. MBE continues to be an issue because of theforcibilityof an MBE program with established goals and does not appear to beaddressed in C O W Discussion followed on he MBE issue. Membersstressed theimportance of compliance o f MBE laws and egulations.

Follow up: Committeewould like to be briefd by Legal on history, such RP who'sbeen involved, whatthe h u e s we, he work-around f h t we're trying to come up ~vith,h i ~ f o ~ yf MBE, etc sad would like a rccommencJniion at the meetingnext month.Committee irlso recommended that we bring t lmfianelal adv i ,~n~ ,FM on board forthe P3 prucess.

The meeting adjourned at 10:45 am, The next Finance Conunittee is scheduledfor Thursday, M a c h 12 at 9:OQm .

P h c e CommitteeNotesFebruary 12,2009

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MarylandTmnspo.rmtion

authority

FINANCE COMMITTEE MEETING

Notes of M a d 19,2009

Au ho* Mmbsrs :. . Louise P, oblitzell - Chair, RichclrdC. Mike Lewin,Isaac Marks

Vw Phone;Jack Basso

MdTA Attendees:Ronald LoFrealand,Deborah Sharpless, David Chapin, Valerie Smith, Alison Williams,

Christina Thompson, Joyce Diepold, Allen Garman, Simela Tri andos, Cheryl Sparks,Geoffrey Kolberg,Randolph Brown,ThomasOugel, Dennis Simpson,William O'Reilly,Cindy Taylor

Others:Fred Rappe - MDOT (via phone)MerrilynWilliams - MAAJim Walsh - MAAMelinda Peten - CCBetty Conners- SHAKurt SCraufis - PB (vin phone)

Alison Williams introduced JimWdsh and M~rriIynWilliame. Jim gave abackground summation on he rental car facility stating that it is the third largest source

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of revenues for the airport generating about $15 million net. Jim explained that there aretwo projects for which they are requesting permission to spend additional customerfacility charge revenues. One project is in the courtyard and the other in the busmaintenancefacility for the rental car bas fleet totaling approximately $850,000. At thistiine, Jim introduced MerrilynWilliams,Directorof the Capital Programs to explain thetw o projects. Marilyn explained that the bus maintenance facility is a small project inthe amount of $250,000 or improvementsto the W A C system. The balance in amountof $627,000 s requested for courtyard improvements that were previously approved.Alison stipulated that the coverage ratios are being maintained.

Follow Up: Cornniltee recommendsdreceivingcomplhnce reports on covenantson, (I quapterly baris for all conduit debt.

Action; Member kwh recornmsndsd upprov~~!lo the full Aufhorify w i t hMember Basso seconding.

--Variable Rate PFC Revenue Bonds

Alison explained that coverage ratios are being maintained. Since this is avariable rate bond issue, which has the State Street letter of credit, an externion h mState Street will need to be requested within 90 to 120 days ahead o f the December 2009expiration. The bank would then respond back to us within 30 daya as to a decision. Thepal-ties (MAA and State Street)are aware of the expiration of the letter of credit. As anaItemative, Alison poke with Brmlc of New York Mollon and Bank of America. They ,both ivsue letters of credit which may be anotheroptlon. An announcementwas justmade that DEPFA First Albany (successor remarketing agent to U B S ) s merging withJefferies & Company at the end of March. Peter Kessenich informed &on thatJefferies has a BBB rating and viewed this w ot being a problem. We are satisfied with

the service being provided. This change in remarketing agent must be approved by theMembers so that the Executive Secretarymay gign consent docwnents,which arcrequired by the remarketing agreement.

Action: Member Lowin recommcmdad approval o the gull Author@ w lfhMember Basso seeondlng.

--Parking Gnrage Revenue Bonds

Alison stated that this item is being pi~sented or th e Committee's information.The primary purpose was to build the Elm Road parking garage and relatedinfrastructure. This issue h very secure in that all of the BWI parking revenues come inmd go through the waterfall of trust accounta each month to provide for debt service.~ x c e kevenues go back to the airport. This is an Ambac insured fii~aticing.

Follow up: Conrlui$Bond lsvuss- nformlrfi'on on WMATAdi the StateJ$ CaEvsrtStreet Parking Garugs wUI be prmentsd at the next rneetinga in AydUMay,

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Contracts D/E- CC

MelindaPeters gave a presentation an the ICC. No ecommendationsor actionswere taken. Ron indicated to the Committeethat the February 22" Authority Meedngwillbe held at the ICC Project Offices,

Geoff updated the Committeeon the schedule ofthe TSm, roject assuminga2014 and 2016 completiondates. Looldngat the 2014completion datescenario, thedeferral of contract KH 1402 to an advertisementdate of Mwc112010 nstead of 2009.would still result in a 2014 completion. Additionally,it willprovide time to reassess ourfinancinl condition. One lane of ETLs would'beopen to traffic in each direction, but therewouldbe no connectionto 1-695. With a 2016 completion date, only one ETL lanesouthbound would be opened in 2012 and both directionswouldbe openedin 2014.Next,Deb discussedthe financial impactof a 2014 vs. 2016 compIetion.

TraPf"xc & Revenue Update

Deb stated that revenuesfor the month of February were $18.5 million (down$1million from the previous year). Revenuesfor fiscalyear-to-date were $176.2million(down$8.8 millionfrom previousyear). Fiscal year-to-daterevenues were $3.6 millionbelow the Stantecforecast and $0.4W o n abovethe Passilnistic #2 revenue forecast,Transactions far the month of February were 8.4 million,down 0.3 millionfrom theprevious year. Fiscal year-to-datetransactions were 76.7million, down 2.8 million fromthe previous year. Fiscal yewto-datetransactions were 1.5 rnillion belowthe Stantecforecast and 380,000 above th e Pessimistic#2 forecast.

Allenexplained that in FY09 evenuescoulddeclineby $33.29 million fromFY08 evels and the Authoritywouldstillmeel:its rate covenantrequirement. Ifexpensesremain as projected, FY09 oll revenues could decline as much as 5 1 %throughoutthe fiscal year and wouldstill result in a coverageof 1.25 imes, which is avery solidcoveigee.Incorporrlting the costrecovery initiativebenefitsus even more.

Cash BalancosiSpending

Allen stated that cumulativecapital spendingfor the fiscal year-to-datethiuughFebruary totaled $43 1 million and capital spending for the month of February totaled$53.7 million. The Authority's aggregatecash bala~~cesor capital expenditures fell by$42.2 million in February. Curmntbond proceeds should support expendituresinto thefirst qumter of FY 010.

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Deb pointed out that Finance and CapitalPlanning are worldng together on ong-term financial plans and preservationprojects to be able to identifythe fundingsource(bond proceeds or cash). A chart was included showingthe major capital projects,

spendingvs. forecast.RecommendaHm: Committeewmld like to sa e Mqjor CupW P r o j e d Cash FlowVariance Report on a quarterly bask

Investment Re-

Allenreported that investmentholdings declinedby $46.8 million in January andspending from various capital accounts totaled $44million. Performancehas beenholdingup very well and generally is out-performingrelevant t reasury benchmarkindices. As of Februaiy 28Ih1 ll investmentsandportfolioswere inline with inveatmeopolicyijmitations.

EYnanchUInvestment Firms

Beverlydiscussedthe draft letter whereinunsolicitedpmentations from financialfim wouldpresent their fbm's product informationto representatives of the Authority.Revisionswere made to the letter and it was decidedthat if firms were interested inpresenting,they wouldcontact Deb's office,the letter and State Ethics memo would besent and if the firm agreed to the guidelinesthen they wouldcontact Deb's office toschedulea pi~sentatiol~.

The meeting adjourned at 11 45 pm. The nextFinance Committee meetingissched~dedor Thureday, Api*l9 at 9:OQ am,

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FrnANCE COMMITTEE lMEETING

Notes of April 9 ,2009

A n fhorify~Vfen~bepls:Louise P. Hobtitzell- Chair, Richard C , blike LewitlVJn Plt orzc:Jack Basso, Isaac Marks

&IdTA

Aff ertdecs:

Ronald L.Freeland, Deborah Sharpless, Valerie Smith, Alison LVilliams, Allen G a m a n ,Cluistil~a hompson,Joyce Diepold, Sirnela Triandos, Geoffrey Kolberg, RanclolphBrown, Tl~omss ugel, Dennis Simpson, Teri Moss, William 0' Reilly, Porter Wheeler,Cindy Taylor

0 t h ids:Fred Rnppe - MDOTKurt K t . n ~ ~ s s PBJackie Senescl-la1- KC1Chung C. u, Ph.D., P.E. -University o PMarylai~d

Member Hoblitzell called the meeting to order at 9 a.m. So revisions orcol~ect ions ere made to the notes o f March 19, 2009.

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c o n d u i t Debt - Calvert Street Parking Gqrnge BondsAlison Williams providedthe committeewith a backgroundsummary on he

fii~ancingf the parkinggarage for state employees in Annapolis whereinthe Authorityissued $23,760,000 n tax exempt bonds on July 6,2005. Bonddocumentsrequire thatthe Departmentof GeneralServices (DGS) annuallycertify that its appropriationissufficientto meetall rental obligations,which includedebt serviceon he bonds andanyrelatedadminisnativefees.The DGS certificationletter forfiscal year 2009 is dated July10,2008. n the eventtl~at GS wouldfail to obtaina sufficient appropriation,theAuthoritymay terminate the lease and take overthe operationo f the parkinggarage. Thefacility is selcinsuredunder the State's progranl.

Hjqh~ygy Allocation Cost S h d v

JackieSeneschal presented R studyconductedby the Universityof Maryland,College Park wl~erereinhe researchteam compared revenuescollectedby vehicleto1classes(measured by numberof axles) to the costs of construction,operation andmaintenance of the facilities to meetsafety and perfo~manceequirements foieachvehicleclass. Cost shares for vehicleclasses dependon: umber of vehicles,vehiclesize, numberof axles auld axle loads. Dr.Fu, Directorand Professorfrom the Universityof Maryland,presenteda power pbintpresentationon the lcey fii~dings.The study wasconducted for the period of 2005 to 2007. A draft reportwas issued in 2007 slid the finalreport willbe presented at the May Authority Meeting.

The study consisted oftwo phases. Phase Istartedas a pilot studyfor JFK nortll.

During Phase I,the methodologyfor collectingand reportingdata was established.DuringPhase 11, the agreedulmn metl~odologywas applied to the otherAuthorityfacilities. Oilceall facilitieswere completed,a sys tern-wideanalysis was perfomled. Asa resultof the new truck tollsbecomingeffectiveM a y 1, the CapitalProgralnhavingchanged co~.side rablyince 2006,and the mix of vehicleson ourfacilitieschanging,itwas n c o m m e ~ ~ d e dhat this study be updated over the next year to 15 rnontl~sndi~zcorporateiscalyear 20 10 data.

Deb stated that revenues forthe month of M a c h were 62 1.3 \nillioi~down $ 1 . 8million fromthe previoris year). R e v e l ~ ~ ~ e sor fiscal year-to-date were $1973m i l l i o ~ ~(do~~71$10.5illion fro~n reviousyea) . Fiscal year-to-daterevelnleswere $5.1 lnilliol~below the Stantec forecastand $0.6 nill lion above the Pessin~istic2 revellue lbrecast.Tn~nsactians or the monthof Marchwere 9, 3 million,stow110.6 miILion fhm thepreviousyear. Fiscalyear-to-date trmsnctionswere 86 million, down3.4 millioilfroomt l~r revious year. Fiscalyear-to-datetra~~snctiomere 2.1 nill lionbelow the StaiitecForecastand 30,000 above the Pessin~isric2 forecnst.

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Allen explainedthat cumulative capital spendingfor the fiscal year-to-date

though Marchtotaled$486.4mi'llionand capital spendingfor the monthof Marchtotaled$55.3 million. The Authority'saggregatecash balallces for capital expendih~resdeclinedby 849.3 millionin March. Bondproceedss l~o~i ldonservativelysupportcapital expendituresinto the fist quarterof fiscal year 2010.

Rate Covenants

Allen stated that if expenses hold as projected,fiscal year 2009 revenuescoulddeclineby $33.19 millionor 12.21% from FY08 evels and theAuthority would still meetits rate covenant requirement. Incorporating the cost recovery initintivein FY 0 willcause the Authority's cushion t o grow by the incretnentalrevenue.

Investment Report

Allenreported thatinvestmentholdingsdeclinedby $78.6 million in March.Irlvcstrnentper fmanceis inline withour reasury benchnarkindices. Performanceinthe operatingreserve and generalaccount has improvedfor this quarter as agencyspreadshave compressedand tli s trend is expected to continue. As of March3 1,2009, allinvestmentsand portfolioswece inli~lewith investmentpolicy limitations.

The meetingadjournedat 10:15 am. he nextFinance Committeemeetingisscheduled forThursday,May 14 at 9:00 a.m.

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MarylandTransportation

Authority

W C E OMMITTEE MEETING

Notes of May 14,2009

ArrrhoPity M;em&emLouise P, Hoblitzell- Chair, Richard C. Mike LewinVia Pbon c:Jack Basso, Isaac Marks

MilTA Attendees:Ronald L. Freeland, Deborah SharpIess, Valerie Smith, David Chapin,Alison Williams,Joyce Dicpold, C h i i s t i -Thompson,Simela Triandos, Geoffirey Kolberg,RandolphBrown, Cheryl Sparks, William O'ReilIy, Cindy Taylor

Others:Paul D. Shelton- McKennon Shelton& Henn, LLPPeter Kessenioh - ublio Financial Management(via phone)K . rauss - PI3Jacquelyn Seneschal -KC1

Member Hoblitzellcalled the meeting to order at 9 a n . No revisionsorcarrcctionzwa e made to the notes of May 14,2009, At th i s time, a closed session washeld to discuss the Audit Report Status and Seagirt Marine Terminal. Open sessionbegan at 10: 15 a.m.

,Update on Conduit Debt:

WMATAAlison Williams provicled the c o d - with an update on he last of the conduit

debt - WMATA leasing financing. The A~~thorityssued tax exempt bonds back in JuneFinance Committee;Notes

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2004 for $40 millionto assistWMATA in additionalparking for tlvee of its metro railstations: College Park,LargoandNewCarrollton.The BondswillmatureJuly 1,2028and $36.8millionis outstanding. Histoticalrevenueshave bean in the $4 million rangep a year with leveldebtserviceof $2.8 million and an acceptable1.4coverageratio.

BWXRevenuesAlisonreported thatquarterly transactionsthroughMarch2009 comparedto

March 2008 showa declineof 9 percent. However, revenues have increased by 5.3percent, whichis dueto a CFChcreaae &om $3.25to $3.60 per transaction. Fiscalyearprojections are $1 .8 million. Also,we have a good coverageon debtserviceof $9million,with a projectedcoveraga ratio of 1.29 vs, legal covenantof 1.25. Alisonstatedthat shewillhave the.nextquarterly report in August.

Cost RecoveryInitiative

Jaclcie Seneschalprovided an update on the cost reoovery initiative statingthatthepublic reviewprocessendedMondaywithno commei~ts.The fmal noticewillbepublishedin the Maryland Registerin early June to takeeffectJuly 1 and the terms andconditionsfor E Z pass havebeen amendedand they will go out in early June to takeeffectJuly I.

Hearing and Rate Settiug ProcessJaclciepresented a secondset of COMAR arnendmeiifsthat addresses

requirements for toll changesin the fitwe. Theseregulations proviclofor a 60-daycommentperiod forchangmto f iw i c e charges, admini&ative feesand fixed-ratetolls.Also,the regulationsestablish a new processfor settingrateson variably-pricedtollfmilities. For variably-pricedtoll faoilities, the Authority would adopta mileagerate

range (minimumand maximum)and

aminimum tollper mile on a

quarterlybasis.

Finally,the regulations includean emergencytoll increaseprovisionthatwouldallowtolls to be increased immediatelyfor the lesser of 180days or until formal action is takenby the Authority.

FoIIow up: Cornmiltee recommended that tha #em be brought before th e fullAufkorifyat itP May 2 f r meeting.

Traffic & Revenue Update

Deb Sl~arplesstated that revenues for the monthof April were$23.7 million (up$1.1 millionfromprevious year dueto Easterfallingin April thisyear). Revenues forfiscalycar-to-datewere$221.3million(down$9.4 million frompreviousyear). Fiscalyear-todaterevenueswere$4.5million below the Stantec forecastand $0.5 millionabove the Pessimistic#2 1evenu.eforecast. Tramactions fo rthe month of April were 10.3million,up 0.4 million fkom the previous year. Fiscal year-to-date transactions were 96.4million,down 3 millionfromthe previousyear. Fiscal year-to-date transactions1.9million below the S.taTltecforecastand 0.5 millionabove the Pessimistic#2 foreoaut..

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Cash BalanceslSoendinq

Deb explained hat oumulativecapital spending for the fiscal year-to-date throughApril totaled $546.8 million and capitalspending for the month of April totaled $60.4million. The Authority's aggregate cash balances for capital expenditures declinedby$58.3 million in April. Bond proceeds should conservatively support capitalexpenditures into the first quarter of fiscal year 2010.

Rate Covenants

Deb stated that since revenues are down four percent through April, coverageratio is projected t ube 1.29 times and the rate covenant cushionis projected to be a . .sizeable $22.3 million Incorporatingtile cost recovery initiative in FY 201 0 will musethe Authority's cushion to grow by ths ncrementalrevenue.

Investment Report

Deb reported that the accounts are generally outperformingrelevant benchmarkindices and the agency spreads have narrowed. As of April 30,2009, all investments andportrolios were ialine with investmentpolicy limitations.

The meeting adjourned at 1050 am. The next Finance Committee meeting isscheduled for Thursday, June 11,2009 at 9:00 a.m.

Finance Committee NotesMay 14,2009

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