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FINANCE COMMITTEE MEETING

Notes of August 9,2007


Attendees Louise P. Hoblitzell, Chair (via phone) Carolyn Y. Peoples Isaac H. Marks Beverley Swaiin-Staley Ronald L. Freeland Steven Welkos Alison Williams Christina Thompson Joyce Diepold Allen Garmeil Jay Ayd Paul Sl~elton McKennon S11elton & Henn Patrick Fleming Deborah Donohue Curtis Esposito Jaclyn Seneschal Doug Hutcheson Snin Triandos David Chapin Geoff IColberg Daniel McMullen Jake Royer Jamie Traudt - Davenport Rick Gobielle - Stantec Mike Cohen - Stantec Cindy Taylor The meeting was called to order by Member Hoblitzell at 9:30 a.m. Minor changes were recommeuded to the notes of July 12, 2007. Traffic and Revenue Proiection Update Rick Gobielle presented historical traffic data for the Authority and growth trends for FY 2008 through FY 20 13. Increase in traffic growth projections have been lowered by 1.2% at dl facilities based on current trends.

Based on this information, Mr. Esposito and Ms Seneschal presented proposed scenarios on the toll rate increases. After much discussion, consellsus was expressed by the Committee to support the following to the full membership: adjusting the toll rate

schedule to standardize the rate structure at all facilities, eliminating tickets, and reducing the term of validity of commuter tickets to a 35-day plan. Mr. Freeland advised that staff is preparing for the toll increase to be effective January 1,2008, but because of the need to coordinate with the timing of other possible transportation revenue enhancements, for the rating agencies visit, the outside date of July 1, 2008 will be used. Ms. Donohue advised that statutory requirements state that the Authority notify the legislature of a toll increase. Member Hoblitzell suggested that the presentation be abbreviated and revised to be presented to the Authority on August 29,2007.
Bridge Safetv

Mr. Freeland asked Mr. Kolberg to discuss the safety of Authority-owned bridges as an item for the Authority meeting on August 29. Mr. Kolberg stated that following the Minneapolis bridge failure, the specific causes are unknown, i.e., design, repair or deterioration. The federal Transportation Secretary issued a letter to all bridge owners. The Authority is implementing a follow-up inspection which will bcgin this month and will include a more detailed and hands-on inspections of the Authority's seven bridge structures, such as ultra-sonic testing, canopies, sign structures, elevated roadways, etc. This will take several months to complete. The Authority is working closely with SHA. The current Authority structure inspection contract is for a 5-year period and structures are inspected once every year, with ~uiclerwater inspectioils every 5 years. Ms. Williams stated that for the bond sale, the annual inspection report has to be disclosed. Mr. Kolberg said that the executive summary could be distributed.
Contract Award Approval - CATS

Mr. Ayd presented Contract #JO1P7200007 - Consulting and Technical Services (CATS) Task Order - Help Desk and Field Teclmician Support for recommendation for approval. This is a task order request for proposals under a State-wide contract issued by DBM. Contract amount will be $3,750,000 for 3 years and a 30% MBE goal. Mr. Ayd told members that he will have the final award information for the Authority meeting. Consensus was to recoinmend approval of the contract to the full membership.

Toll Revenue Bond Issuance


Ms. Williams discussed the upcoming toll revenue bond sale of up to $325,000,000 with a new sale date of September 12,2007. Documents such as the Trust Agreement and Preliminary Official Statement are still works in progress. Jainie Traudt presented the draft credit presentation. The most significant change is the "doo~nsday scenario," Case 5, Accelerated Toll Increase, wherein the Authority is able to maintain its ~ cash ratio at 1 . 0 0 toll revenues and maintain debt service coverage. Finance Committee Notes August 9,2007 Page 2

Resolution 07-08 Ms. Donohue presented Resolution 07-08 in connection with the toll revenue bond issuance. This is the second resolution for Authority approval, consisting of approval of the draft documents with delegation to staff and consultants to finalize. Consensus was to recommend approval of the resolution to the fidl membership.

Allen Garman requested two changes to the current Investment Policy. The first change would be to clarify the language used regarding the Commercial Paper Section to "at time of purchase" so the Investment Manager has the discretioli regarding the timing of sale/hold decisions of a downgraded security. The second change would be to remove the wording MLGIP (Maryland Local Government Investment Pool) from the policy since State agencies are not authorized to invest in the MLGIP.
Invcstmcnt Rcport

Allen Garmen discussed the investment report as of July3 1,2007. The Authority Trust Fund had a market value of $240,122,425; the ICC Fund had a market value of $3 14;88 1,607; the GARVEE Construction Fund held $227,372,919; and the Depository Fund held $87,42 1,251. Authority Police Pension Costs Mr. Welkos explained that for FY 2008 the Authority's share of the pension costs for MdTA Police under the Law Enforcemeilt Officers Pensioil System (LEOPS) is $1 1.4 million and represents almost 80% of the total pension costs budgeted for all Autllority employees. The Authority also budgets $2.7 million as the employer share of Social Security payments in the police budget. Mr. Welkos stated that there are five police organizations, including MSP that are not in the Social Security system. There has been discussiotl in the recent past regarding the removal of the Authority Police from the Social Security system. Ms. Swaim-Staley offered to discuss this matter with Eloise Foster, Secretary of DBM, to take a closer look at his.

FY 2008 Operating Budget Status


Mr. Welkos presented Budget Amendment 2008-0 1 for recommendation for appi~oval reduce the operating budget by $5,524,26 1 to $206,5 17,621. The amendment to reflects a $500,000 reduction in overtime; $4,892,786 eliinination of retiree health insurance costs; and a reduction of $7,063 in the Po1-t Police costs. Consensus was to recommended approval of the budget amendment to the full membership. Finance Colnlnittec Notes August 9,2007 Page 3

The meeting adjourned at 12: 10 pm. The next meeting is scheduled for Thmsday, September 13,2007 at 9:30 a.m.

At this time, the Senior Financial Advisor Evaluation Pancl mct to discuss the recornmelldatio~l award of this contract and will recoinmend approval of a fin11 to the for full membership at the August 29,2007 Authority meeting.

Finance Committee Notes August 9,2007 Page 4

FINANCE COMMITTEE MEETING


Notes of August 14,2008
Authority Members: Louise P . Hoblitzell (via phone), Chair; Isaac Marks - Acting Chair, Jack Basso, Richard C. Mike Lewin (via phone) MdTA Attendees: Ronald L. Freeland, Joyce Diepold, Deborah Donohue, Angela Fleck, Allen Garman, Tom Gugel, Doug Hutcheson, Bob Jordan, Jody McCurley, Bob Michael, Terry Niswonger, William O'Reilly, Cindy Taylor, Chris Thompson, Simela Triandos, Alison Williams
MdTA Advisors: Peter Icessenich - PFM (via phone) Joe Mason - Davenport

MdTA Bond Counsel: Paul Shelton - McKennon Shelton & Henn LLP 0hers: t Fred Rappe - MDOT ISurt Krauss - PB Consultants Tom Heseltine - Clifton G~~nderson, LLP Jackie Seneschal - ICCI
Finance Committee Notes August 14,2008 Page 1

.Notes of July 10,2008

Member Marks - Acting Chair called the meeting to order at 9:00 a.m. No revisions were made to the notes of July 10,2008 meeting.

Terry Niswonger submitted for approval the armored transport services contract in the amount of $1,087,352 for five years. Only one bid was received from Dunbar Armored, Inc. who previously had the contract, although 15 vendors had been solicited.

Member Hobli tiell moved to recommend approval to the full Authoriv, with A CTION: Member Lewin seconding.
Investment Audit Report (Clifton Gunderson LLP)

Tom Heseltine presented preliminary findings of the investment process audit. There were no compliance issues, although there were underlying recommendations. The auditors will meet with management to discuss the findings at an exit conference. The final report will be issued after management submits its responses to the findings.
Segregation of duties was a lower finding. As a failsafe, person initiating trades, investments, or transactions should not approve. A second person should verify and approve any and all transactions performed with a third party outside of Treasury & Debt section to be notified the same day to prevent any erroneous or fraudulent actions. Develop a comprehensive compliance report. Purchase of software from Trustee Bank of New York Mellon to be kept up-to-date and current with alerts before any violations have occurred. Investment Policy Money Market diversification by institution within 30% not in compliance in the months Feb. thru June 2008 although this was corrected in FY09, July 2008. No written process for non-compliance issues should they occur with regards to ratings. Example: moving from AAA to junk ratings (Mike sl~ggested securities be sold that with first notification of downgrade.) Securities in monthly Perfor~nance Report to include credit ratings.

FOLLOW- U R Management Responses will be presented at the next Finance Committee Meeting on September 11, 2008.
F O U O W-UP: A plan for implementation of the audit recommendntionr w l be presented il to the Finance Committee at nfirture meeting.

Finance Committee Notes August 14,2008 Page 2

Compilation and Review RFP Jody McCurley presented this item. At this time, staff was asked to leave the room to go into a confidential discussion. Because of some concems regarding the process, this item was deferred for consideration at this time.
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Terry Nis wonge'rwill develop a swmmnry i the procurement f FOLLOW-UP: process for this solicitationfor the Deputy Secretary,
Resolution 08-09 Approval of Final Documents & Sale GARVEE Bonds

Deb Donohue presented final documents for approval at the time of Bond Sale scheduled for September 10,2008. This Resolution was presented for informational purposes only.
Resolution 08-10 Designation of Investments and SaIes Deb Donohue presented this resolution to update the designation of authorized employees who are authorized to approve trades and investments, with updated titles to stay current. This action was requested by some of the investment institutions.
ACTION: Member Hoblibell moved to recommend approval to the full Authorio, with Member Lewh seconding. Draft Finance Committee Charteq

Deb Donohue stated that this resolution is to combine three previous procurement approval delegation resolutions into one document, and to establish the purview of the Finance Committee.

Review, propose and bring bnclc comments and changes at the next Follow-Up: Finance Committee Meeting on September 11,2008.
Traffic & Revenue Update Tom Gugel stated that for the month of July, traffic declined 3.5% from the previous year, and January through July transactions were down about 1.6 percent from the previous year. Joyce Diepold stated that revenue for the month of June was down 6%, but for the whole year it was only down 1 percent. Total revenue for FY 2007 was $278 million and in FY 2008 was $274 million. Ron Freeland noted that he and staff are reviewing the revenue numbers weekly, if not daily.

Finance Committee Notes August 14,2008 Page 3

Toll Rate Adjustment Ron Freeland stated that the members directed the staff to develop a recommended toll policy to implement adjustments and to guide future decisions. Jackie, Sam, David and others have been working on this policy. Jackie Seneschal made a presentation stating that an increase in toll revenue was essential to continue work on current projects scheduled for completion.
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~ . R 7 2 e f R ~ e ~ ~ a f i ~ ~ o ~ - 1 ~ ~ A w ~ ~ . ~ & ~ ~ & 8 ~ ~ a ~ 8 ~ e r ; l ; ~ O I -. . .. . . .. .- . . . - . ... . . . - - .. . .. for cominents. A bi-iinnual shdy was suggested to measure t-o re-evaluate the toll rates. it was suggested that necessary revisions to COMAR go to the Authority for approval to begin the
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rulemaking process.

ACTION: Member Lewin recommended approval to the full AuthoriQ, with Member Hoblitzell seconding.
FOLLOW-UP: Member Ho blitzell requested that the toll policy materials beforwarded to aN members and to the Financial Advisorsfor review. Committee comments will be discussed at the next Finance Committee Meeting on September 11,2008. Thefill Authority will disczrss the materials in September.

ICC Cash Flow/Draft FY 2009 - F 2014 CTP Update Y Sam Triandos discussecl the main points of revenue vs. cash flow for ETL Project t stated completion in 2014 with regard to scheduled increases in I T 0 9 and FY12. K ~ uIGa~iss that next month there would be a better understanding of the cash flows. The ICC projected cash flows are $2.41 billion if done in a 6-year period vs. $2.5 billion cash flows if beyond the 6-year program period. It was suggested to defer Contract "D" (7-mile stretch of 1-95 improvements) indefuitely because the scope of work is not necessary to open the ICC and begin collecting revenues. The budgeted cost of Contract "D"is $86 million.
Debt & Investment Policies - Annual Review
Alison Williams and Allen Garman discu~ssed technical changes to both Policies to keep them current. Delivery instructions are not in the Investment Policy, which is given to brokers as a guideline. Instructions should be added to Policy. The recommended technical changes to the existing Debt Policy include: updating the definition of "Trust Agreement," the debt ceiling ic increase from $1.9 billion to $3 billion, adding P ~ ~ b lFinancial Management (PFM) to the list of Financial Advisors.
Xnvestment Report

Allen Garman presented totals of all funds held in Tnlst at The Bank of New York Mellon. Continued capital spending will exhaust the GARVEE 2007 and Capital 2007 bond proceeds accounts in the next two (2) months. The Capital 2008 fbnd investment is structured with maturities matching expected spending. It is immunized against interest rate risk. It was
Finance Coinlnittee Notes August 14,2008 Page 4

suggested to move investments from the Morgan Stanley money market accounts to a greater percentage of investments in U.S. Treasuries backed by the government.

There was great concern about Freddie Mac and Fannie Mae. A question was posed: does Congressional action support Federal Home Loan Brmk? A suggestion is to invest at 30% by agency. The Colnmittee requested a 10~20% allocation to Treasuries in the Capital 2008
FOLLOW-UP: Member Lewin requested a summary of the recent Congressional action regarding the home loan situation at the next Finance Committee Meeting on September 11,
2008.

Nom-DiscretionaryInvestment Advisor RFP Allen Garman discussed the request for proposals for an outside party to advise on security-specific purchases. It is anticipated to be a five-year contract. The advisor will structure the Authority's investment portfolio and recoinmend purchases. ACTION: seconding.

Member Huhli&eZl moved approval to issue the RFP, with Member Lewin

At 11:20 a.m., Member Hoblitzell left the meeting by tenninating her telephone connection.
Other Business -Information Items
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Alison Williams presented the financial report and reviewed the highlights. The current remarketing fee for the PFC bonds (variable mate) is 6 basis points and they are backed by State Street's Letter of Credit. The SIFMA Index tracks variable rate programs. Allen Garman commented that the fee is coinpetitive vs. current market rates. UBS has recommended that the remarketing agreement be assigned to DEPFA, which will provide the services at the same rate.

ACTION: General consensus was given, without objectecfion,to accept the assignment to DEPFA and to track the performance ofths investmentsfor 30 to 60 days.
FOLLO FV-UR Ron Freeland will seelc consenstisfor the assignmentfrom Members Hoblitzell and Basso. Underwriters RFP

Mike Lewin disclosed that he has a close relative who works at M&T Banlc, and recused himself from consideration of the solicitation for underwriters. At 11:30 a.m., Member Lewin lefr the meeting.

Finance Committee Notes August 14,2008 Page 5

Acting Chair Marks recommended that consideration of the award of the contract for underwriters be taken directly to the fill Authority for consideration at the next Authority meeting. The meeting adjourned at 11:40 a.m. The next Finance Committee Meeting is scheduled for 9:00 a.m., Thursday, September 11,2008.

Finance Committee Notes August 14,2008 Page 6

FINANCE COMMITTEE MEETING Notes of September 13,2007

Louise P. Hoblitzell - Chair (via phone) Isaac Marlcs Jack Basso Beverley Swaim-Staley Ronald L. Freeland Joe Mason - Davenport Jamie Traudt - Davenport Geoff Kolberg Allen Garman Alison Williams David W. Chapin Kurt Kraus - PB Betty Connors - SHA Greg Jones Simela Triandos Deborah Donohue Cindy Taylor
Member Hoblitzell called the meeting to order at 9:36 am.

Notes Ms. Hoblitzell made a correction to the notes of the meeting of August 9,2007. These notes should include the formal committee recommendi~tion award the Senior to Firiancial Advisor contract to PFM asthe primary F.A., with Davenport & Co. as the secondary F.A.

Status Report on Rating; Agencies


Jamie Traudt gave an update on the credit rating results. Fitch Ratings: AAConcern is managing growing capital and operating costs while undertaking the ICC. Moody's: Aa3 Concern is operating cost will be outpacing revenue growth and how the ICC litigation may impact cost. Standard & Poor's: M- (upgrade) Concern is Authority needs to meet standards to retain ratings, take necessary actions to sustain debt service coverage above 1.50~. Member Hoblitzell requested that n summary of the rating agencies recommendations would be useful especially in dealing with the legislature. Discussion followed in connection with operating cost containment. Mr. Freeland

explained that position control is being implemented concerning vacancies. Recruitment should start within 3 months or the PIN will go to the "PIN pool". He also noted that staff is to be added only in growth areas.

Resolution 07-09
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submitted the lowest responsible bid, for a true interest cost of 4.567%. Goldman Sachs did not bid as a syndicate.

Draft 2007 ICC Financial Plan Annual Update

Kurt Krauss explained that the ICC cost estimate remains at $2,445 billion and no change relative to the Initial Financial Plan (IFP). Scope adjustments were made to Contracts C and D, with an increase in the scope of work for Contract C and a decrease in the scope of work for Contract D. Design of Contract A is almost complete; approximately 30% of the design on the remaining contracts is complete to date. A meeting will be held on September 20 with theFederal Highway Administration to review the IFP Update and formal submission of the revised document by SHA and the Authority is planned for the week of September 24" with formal FHWA approval expected soon thereafter. ICC Cash Flow & Schedule Update
David Chapin presented the monthly budget and cash flow report for the month ending June 30, 2007. Expenditures for the month were $24,170,938 with a year-to-date expenditure of $220,458,012. In March of 2008, the Authority will have to borrow approximately $140 million for the ICC. Two lawsuits are pending, one hearing have scheduled for October 1 and the other scheduled for October 29 which c ~ u l d negative consequences. The limited notice to proceed for construction is currently October 16. If there is a delay due to the litigation schedule, the contract includes a preset formula to pay the contractor. There is $12 million in the contingency fund for any such delay.

Nice Brid~e Fiber Optic Cabling Partnership


Greg Jones presented this item to the committee for recommendation for approval to the full Authority. This i tern is a proposed agreement that would provide for the installation of a fiber crossing to be installed and managed by the Maryland Broadband Cooperative (MDB C), a non-profit cooperative, on the Nice Bridge, similar to the Finance Committee Meeting September 13,2007 Page 2

agreement approved in February 2007 for both spans of the Bay Bridge. Bay Bridge revenues are $17 million for 15 years and Nice Bridge revenues will be $9 million over 15 years. Member Basso recommended approval with Member Marks seconding.
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Allen Garman stated that the economic market has deteriorated recently. The Fed is expected to cut interest rates at the September lgrnmeeting. The market is anticipating 50 bp of price accommodation by year-end. The market value of the investments for the Authority's Trust Funds at August 3 1,2007 was $236.6 million, a $4 million decline from last month. The ICC Funds, composed of GARVEE bond proceeds and the Depository Fund, had a market value of investments at August 31 of $337.8 million. The GARVEE Construction Fund held $220 million and the Depository Fund held $117 million.
Outsourcing of Investment Portfolio

Allen Garman explained that the Finance Division is investigating the feasibility of having the financial advisors and/or third party managers be considered to manage a portion of the Authority's investments, specifically with the $300 million toll revenue bond issue being identif ed. The Finance Division must address some ley issues before implementing, i.e., legal issues and fiduciary responsibiljty; conflicts of interest; net of fees performance; interaction of 3" party manager; added Authority risks and oversight responsibilities; forced selling and market losses. Discussion followed as to how much to invest of the bond proceeds, put PFM on retainer, management fee, etc. The meeting adjourned at 11:10 a.m. The next meeting is scheduled for Thursday, October 11, 2007 at 9:30 a.m.
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Finance Committee Meeting September 13,2007 Page 3

FINANCE COMMITTEE MEETING

Notes of October 15,2007


Louiss P, Hoblitzell - Cl~ail: Carolyn Peoples Sack Basso I~aac Mnrks Ronald Freeland . Jim Wdsh - MAA Jeff Williams MAA Davld Chapin Chrls Thompson GeoR Icolberg Sam 'Triandos Cecili n FIdlrung Allen Garman Joyce Diepold Alison Williams Cindy Taylor

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Member Roblitzell called the meeting to order at 9:28 am,

2007, .

Mfi, Hoblitzel lmade no changes oi comctions to the notes of September 13,

BWI Customer Pocility C h a r g ~


Jim Walsh explained h a t the Marylat~d Aviation Administrotion (MAA) seelts opp1;oval to spend $1.6 million of CEY: Improvement funds for two capital projecb. The first project is to replace. the H-frames on all 25 rental cm shuttle b~ise8 $10,000 per nt buu. It was discovered that during routine maintenance and inspection that cracks appeared in the frames of the buses, therefore taking 7 of the 25 buses out of service. The original manufacturer, Neoplaa, ir bankrupt, and therefote, MAA cannot go to them for the cost of repairing tho FI-frames. MAA has found another manufach~rer replace the to I-I-~fstirnes all twen ty-five (25) busoe a8 a prec~uti~n to tbe fact that the I-1-frames for duc have bem found to be defective. There are sever~l other agencies, including MTA, which have issues with Neoplnn busses. The total cost of this project is $250,000.
Finance Committee Notes October 15,2007 Page 1

The second project is for Couayllrd Improvementr for the existing public parking area at a cost of $1.34million, The existing parking area is inadequate to serve the pubIic dul.lng peak periods, such as s~miner weekends ond Friday afternoons throughout the year. The expansion of the parking area would increase from 22 spaces to approximately 48-52 spaces, depending on parking apace width. Two spaces would be dedicated to a tmi stand, allowing for public space between 46-50spaces. The improvemei~ts would also a1low for a dedicated bus lane which will inc~easo vehicle safety along the ourbside.

As of June 30,2007 the CPC Improvement Fund had a balance of $10.3 million. MAA stated that $1 million would be reserved for future bus replacements. In addition to previously approved projects, the spe~~cling the f i ~ n d on totals $6.4 million, resulting in 8 net balance of $3.9 million. The money requested would come out of the $3.9 million. Member Basso questioned whether the passenger facility charges will be raised There will be an increase from $4.50 to $6.00 sometime in the future, the last increase being in 2000 going froin $3.00 to $4.50,

Member Mmlcs recommended ~pprov with Member I3asso seconding. a1


ICC Mon@ly_Update

David Chapill presentecl the monthly budget and cash flow report for the month ending August 31,2007. Compared to the previous month% mdysis, there hns been minimal change in projected cash flow; PY 08 expenditures are projected to be $648,000 less thhan projected in the previous month; PY 09 expenditures are comrnensur~tely higher,

M .Chapin also provided information concerning the status of the notice to r lmoeed for construct,ion of Contract A. The SHA and contractor have negotiatad an agreement under which Hmited activities having no significant environmental effect will be allowed to begin. A payment of approximately $3 million wlll be made to the co~ihnctor; prices will remaln in effect even though the full NTP is not being gral~ted. bid The i~suancef the complete notice to proccod is delayed until mid November, Plaintiffs o have agreed to t111luw the limited worlc to begjn.
Budget Amcndlnent Process
Chris Thompson presentecl a budget amendment process, Any budget transfer can be approved by executlvo management, but any increase or decretlse to the total budgd must ha approved by the Members. Discussimi followed 8s to Mcmbcrs receiving n moll thly report 017 actual expendl tures vs, budgeted. Member Basso requested th et Membcrs bc advised of over~unslundenunuabove a certain percentage be set. Mr. Frerccland explained that he will bc meeting with each Division Director, individually, nt

Finance Coinmittee Notes October 15,2007 Fuge 2

the end of the month to discuss their actual and projected budgets. Members recluested a report on the outcome of those mwtings. Investment Reper t
Allen Garman stated the economic outlook continues to be negrtive, with the housing market still deteriorating, The mwlcet value.of the investments for the Authority's Trust Pmds as QI' September 50,2007 was'$520 million. Bxcltiding the $300 million in bond proceeds, investments fell by $17 million an heavy capital lspending. The ICC Funds, comprised of the GARWE bond proceeds.and the Dcpoaitory Fund, had a market value of investments us of August 31,2007 at $335.7 million, The GARVEB Construction Pund hcld $218 million and the Depository Fund held $117 million. The Finance Division is procuring a RFP to outsource the $300 million to a 31d party manager, with an estimated on-board time of 6 months. The total of the Authority's investments as of September 30,2007 was $855.6 million.

Ms,Dunoi~ue advised that sha rasourched the l ~ s u e regarding the A uthorlty 's eliglbUiry to invest in the Maryland Lucal Government Inveshnent Pool (MU;IP). According to the statute, the MLOIP applies to local governments, both county and municipal. The ~tatute specifically excludes entities of the State. In addition, Ma. Donohue presented an Attorney General's Opinion, dated February 13, 1985, which concluded t h ~Authority funds were not monies of the State. The Authority's Pinnnce t Division contacted Counsel to the Trewurer's Office and he concurred with Ms. Donol~ue that the Treasurer could not invest Authority fund8 into the MtGIP.
Financial Revart Alison Williams presented the Finuncial report as of September 30,2007. Preliminary operating expenditures for FY 08 as of September 30 ue ~ppraximat.ely $31 million or 15% of the totrll budget, Discussion followed as to the Capital Budget Status. Costs as of September 30 totalecl approximately $75 million. Members wo~ild a like report on a monthly busis o capital costs to date vs. projections. Ms. 'Qiandos stated that f 8 report will be available for the November meeting. Membcr I-Ioblitzell ~uggested that a tohl of outstnnding debt be ~ d d e d the report and that tm asterisk (*) for AAA ratings in be also added to show t h ~they are hsured. t
The meeting adjourned at 10:45 am at which time the Executive Session was hcld. Tho next meeting 1 scheduled for November 8,2007. . s

Finance Committee Notes


October 15,2007 Page 3
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FINANCE COMMITTEE MEETING


Notes of November 16,2007
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_ _ .._ _. Louise P, Hoblitzell, Chair Carolyn Peoples Jaclc Basso Isaac Marks Beverley Swaim-S taley Ronald Freeland Alison Williams Joyce Diepold Allen Garmen Christina Thompson David Chapin . Geoff Kolberg Sam Triandos Dennis Simpson Bruce Gartner Suhair Alkhatib Jim Pei ffer Peter Kessenich Joe Mason Jamie Trau dt Cindy Taylor
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Member Hoblitzell culled the meeting to order at 9:37 am.

Notes Member Hoblitzell made no changes or corrections to the Notes of October 15,2007. Member Peoples requested that the action items be highlighted.

ICC Update and Contract C


Regarding the federal court challenges to the ICC, David Chapin stated that Judge Williams found in favor of the defendants on November 8, upholding the determinations on the environmental decisions by the federal agencies. Plaintiffs have up to 60 days to appeal. Settlement discussions may also be a possibility. As of the evening of November 15, nothing has been filed.

FOLLOW- UP ITEM: Member Hoblitzell requested that a revenue analysis be conducted, especially for the May 2008 budget review. ACTION: General consensus without objection to recommend approval of the FY 2009 Operating Budget to the full Authority.

Chris Thompson presented a summary of cost containment items for FY 2008, and stated that there would not need to be a budget amendment for this. Ron Freeland explained that he is having quarterly meetings with management relative to their respective budgets.

Final FY 2008 - FY 2013 CTP


Dennis Simpson presented the final CTP for approval and stated that it is $4.4 million less than projected. Suhair Alkhatib stated the capital program consists of 260 other projects and that there is a 90% reduction in non-ICC projects. Discussion followed as to whether lolls should be increased sooner than later. If tolls were increased sooner then the Authority could consider reducing the amount of debt issued, or reducing the amount of future toll increases required.

FOLLOW-UP ITEM: Member Hoblitzell requested a forecast to determine whether or not, program is afSordable. the

ACTION: Member Marks recommended approval, subject to quarterly adjrcshnent if necessary, with Mein ber Peoples seconding.
Financial Report
Alison Williams presented this report as of October 31,2007 stating that 23.2%of the FY 2008 operating budget has been spent with a budget spending guideline of 29.3% (this i s a guideline to be used as an internal model). Member I.Ioblitzel1 requested that expenditures I concerning the P Zproject be tracked on a seasonal basis and that the ICC projections be excluded and shown separately. Also instead of the column stating authorizatioi~s under & Construction contracts that it should be worded, "awarded contracts". In Consultant addition, we should show earned interest,

IBT*llA - Finance Summit


Ron Freeland stated that he will be attending this conference. Member Basso is attending on behalf of AASHTO.
The Meeting adjourned at 12:05 pin. The next scheduled meeting is December 13,2007 at 9:30 am, Finance Committee Notes November 16,2007 Page 4

FINANCE COMMITTEE MEETING

Attendees:
Louise P. Hoblitzell - Chair Carolyn Y. Peoples Jack Basso Isaac Marlts Beverley Swaim-Staley Ronald L, Preeland Allen Garmen Alison Williams Kathy Fulca Joyce Diepold Christina Thompson Peter Kessenich - PFM David Chapin Joe Mason - Davenport & Co., Inc. Jamie Traudt - Davenport & Co, Inc. Betty Connors - State Highway Administration Sam Triandos Deborah Donohue Cindy Taylor
Member Hoblitzell called the meeting to order at 9:34 am. Minor revisions were suggested to be made to the notes of November 16,2007.

ICC Funding Options


David Chapin explained that the current financing plan is to designate the ICC as a Transportktion Facilities Project in order to fund the project with senior lien toll revenue bond proceeds. After the,next Finance Committee meeting on January 10,2008, a special meeting of Authority Members would be needed to approve this plan in order to proceed. Litigation could affect this decision, but as of December 7" no appeal has been filed. Plaintiffs have until January 7,2008 to appeal. Discussion followed as to the three options presented.

Mr. Chapin stated that the test will be during the fifth year after completion and every year after wherein revenues must exceed operating costs. Discussion followed on toll rates. Beverley Swaim-Staley suggested that the Authority use higher range toll rates when discussing before the legislature and the rating agencies. Member Hoblitzell emphasized the need for the Authority to raise rates sooner, rather than later.
d C T 1 0 N ~ G e emkoasensu~-with~.~t0bJe~ti0.~2-to-rec~mmendtu-the-fulU-uth~~i~ n , - , -, - - - - . .. - .... . - .. . . i i i i j i l r r n i i z f D ~ t i o ~ I t o d e S i g ~ ~ I C C a ~ T r a n s p ~ r t a t z o n Project Faczlztzes and to issue toll revenue bonds in the spring of 2008.
A

Investment Report
Allen Gannen first presented the Investment Policy to recommend two minor changes. Allow able investments - remove Student Loan Marketing Association (Sallie Mne) as a permissible investment since it was fully privatized and lost its government sponsored enterprise status in 2004. Money market mutual funds - update wording in policy regarding the Authority operating in accordance with SEC Rule 2A-7. Discussion followed by the committee on the three alternatives in securing investment services. Member Hoblitzell said that it can be kept internal, or use outside investors or use the State, but in the meantime, PFM has been advising. The committee felt that until a final decision is made, the Authority's investment policy should be more restrictive and should shadow the State's policy.

Member Basso recommended adopting the changes, with Member ACTION: Peoples seconding.
Allen Garmen stated that the economic outlook continues to be negative with the housing market still deteriorating. As of November 30,2007 the market value of Authority Trust Funds and ICC related accounts was $760.5 million. Financial Advisor, PFM, is now on board to pull this report together.

Revenue Analysis
Christina Thompson stated that the pie charts presented are based on the actual financial statements for FY 2006 and FY 2007. Projections for FY 2008 and FY 2009 were done by Stantec in August 2007. The main source of toll income is generated from the Kennedy Highway and Fort McHenry Tunnel.

FOLLOW-UP ITEM: along with the budget.

Expenses to be allocafed by facility; revisit in May 2008,

Finance Committee Notes December 13,2007 Page 2

Progress of Finance Division - Update

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Joyce Diepold, Chris Thompson, Alison Williams and Kathy Fuka gave a Powerpoint presentation on the Finance Division's goal progress. Many new challenges have been faced by this management team and the Committee commended Mr. Freeland n=Dforachievi.ne.great results in a short amount of time,
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FOLLOW- UP ITEM: Presentation on the progress of the Finance Division should be done on an annual basis.
The meeting adjourned at 11:32 am. The next scheduled meeting is Thursday, January 10,2008.

Finance Committee Notes December 13,2007 Page 3