SAN FRANCISCO MUNICIPAL RAILWAY
MINUTES OF THE
BOARD OF DIRECTORS MEETING
March 19, 2002
A meeting of the Board of Directors of the San Francisco Municipal Railway Improvement Corporation was held on March 19, 2002, at 10:30 a.m. The meeting was held at 400 Van Ness Avenue, Suite 334, San Francisco, California.
The following Directors were present at the meeting:
James J. Ludwig, President
Joseph C. Ozan
Michael J. Moylan
Also present at the meeting were the following:
Michael Burns, General Manager, SF Municipal Railway
Gigi Harrington, Deputy General Manager-Finance, SF Municipal Railway
Ann Carey, Financial Manager, SF Municipal Railway
Laura Spanjian, Assistant to the General Manager, SF Municipal Railway
Douglas Wright, Principal, Douglas Wright Consulting
Scott Emblidge, Partner, Moscone Emblidge and Quadra
Andrew K Fung, Assistant Vice President, US Bank
Board President James J. Ludwig, having determined that a quorum was present, called the meeting to order at approximately 10:40 a.m.
Mr. Ludwig indicated that this meeting of the Board of Directors had been called in order to address a number of matters left outstanding by the January death of Alfred J. Arnaud, who had served for many years as the Corporation Legal Counsel and Assistant Secretary. Mr. Ludwig provided a brief summary of actions which he had undertaken in the time since Mr. Arnaud's passing. Mr. Ludwig noted that he had sent condolences on behalf of the Board of Directors to Ms. Sally Arnaud. Mr. Ludwig indicated that following Mr. Arnaud's death, he had contacted Douglas Wright and asked him to look after a number of matters, including scheduling the (March 19) Board meeting. Mr. Ludwig then asked Mr. Wright to summarize what he had done in the weeks since Mr. Arnaud's death.
Mr. Wright indicated that he had spent time visiting with Ms. Sally Arnaud in regard to current Corporation matters, as well as in regard to the considerable volume of files which were maintained by Mr. Arnaud at his law office. Mr. Wright explained that he had examined those files, and determined that they should be retained, intact, until such time that the Corporation Board engages a new Legal Counsel, who would then be responsible for determining their disposition. Mr. Wright noted that Ms. Arnaud had accomplished an initial organization of the files, and had attempted to identify those materials which are "current" with respect to the Corporation's business.
Mr. Ludwig indicated that it was his view that Ms. Arnaud should be compensated for her time in these efforts. He recommended that she be compensated at the same rate at which Mr. Arnaud was engaged. A motion was made by Mr. Nothenberg, and seconded by Mrs. Cuneo, and the following resolution was passed unanimously by the Board:
WHEREAS, With the passing of Mr. Alfred Arnaud in January, 2002, Ms. Sally Arnaud has undertaken various responsibilities pertaining to the Corporation files and current business records which were maintained by Mr. Arnaud; and
WHEREAS, Ms. Arnaud is willing to continue to work with the Corporation Board and its representatives in properly transitioning those files and records to a new Legal Counsel and Assistant Secretary; now therefore be it
RESOLVED that the San Francisco Municipal Railway Improvement Corporation does hereby commit to reimbursing Ms. Arnaud for her efforts to assist the Corporation, and to do so at the same hourly rate of compensation which was provided to Mr. Arnaud.
The next matter of business was a summary presentation of the Corporation's finances, provided by Mr. Andrew Fung, of U.S. Bank, who had been requested to attend the meeting by Mr. Ludwig. Mr. Fung provided a summary of the finances. Importantly, he noted that all funds had been in a "cash account", or non-interest bearing, for the past three weeks. Mr. Fung explained that in the absence of Mr. Arnaud, US Bank had not received any instructions regarding the reinvestment of these funds once the previous investment in Treasury Bills had expired.
After discussion and consideration, upon a motion made by Mr. Ozan, and seconded by Mr. Nothenberg, the following resolution was unanimously adopted:
WHEREAS, The Corporation's trustee, US Bank, has notified that the Board that it's funds are not currently being invested in an interest-bearing account; and
WHEREAS, US Bank has indicated that in order to properly invest the funds, direction is needed from the Board or its representative; now therefore be it
RESOLVED That the San Francisco Municipal Railway Improvement Corporation does hereby instruct Mr. Andrew Fung, US Bank, to take those steps necessary as soon as possible to retain $200,000 in a "cash account" and to invest the balance of the Corporation's funds in Treasury Bills.
The next matter of business was introduced by Mr. Ludwig, who expressed concern about the future of the Corporation and further suggested that he thought it was important for the Board to understand whether or not the Municipal Railway intends to take steps to secure the future of the Corporation. Mr. Michael Burns, General Manager of the Municipal Railway, responded to Mr. Ludwig's concerns, indicating that the Railway is very interested in moving forward with those steps necessary to allow a new issuance of bonds by the Corporation.
Mr. Burns reminded the Board that at the Board's June, 2001 meeting, a resolution approving a "validation action" by the City Attorney's Office had been passed by the Board, which represented the first step in the process of issuing additional bonds under the 1969 and 1971 indentures. Mr. Burns indicated that Railway staff responsible for implementing that resolution had unfortunately been sidetracked by other important matters, but they now intend to move forward with the effort. Mr. Burns suggested that he would have more to say about the important role that he sees for the Corporation at the next Board meeting.
The next matter of business, the consideration of a new Legal Counsel to the Corporation, was introduced by Mr. Ludwig, who noted that Mr. Nothenberg had contacted him with a recommendation that the Board consider engaging Mr. Scott Emblidge, a partner in the San Francisco firm of Moscone, Emblidge, & Quadra. Mr. Ludwig requested that Mr. Nothenberg introduce Mr. Emblidge to the Board.
Mr. Nothenberg provided an introduction of Mr. Emblidge, noting that he had worked closely with Mr. Emblidge when the latter was with the San Francisco City Attorney's Office and Mr. Nothenberg was serving on the San Francisco Public Transportation Commission. Mr. Nothenberg noted that Mr. Emblidge has considerable experience with the San Francisco Municipal Railway, has excellent relations with members of the City Attorney's Office, and has some familiarity with the Corporation, itself. Mr. Nothenberg noted that Mr. Wright worked with Mr. Emblidge in the past, when Mr. Emblidge was with the City government.
Mr. Wright indicated that he had spoken several times with Mr. Emblidge in the previous weeks in an attempt to provide Mr. Emblidge with a general sense of the Corporation's purpose, and with some specification of the range of responsibilities associated with the Corporation's Legal Counsel. Mr. Wright noted that a full understanding of these responsibilities would not be realized until the Corporation materials in Mr. Arnaud's office could be carefully examined.
Mr. Emblidge provided a summary of his relevant experience with the City Attorney's Office and indicated his interest in being engaged as the Corporation's Legal Counsel. However, he also noted that he was not fully informed on the full range of responsibilities, and agreed that a better definition of his potential role would follow a review of the records in Mr. Arnaud's office and further discussions with Mr. Wright, Ms. Arnaud, and members of the Board.
The Corporation Board undertook a discussion of the position of Legal Counsel and Mr. Emblidge's qualifications, and concluded that this decision should best be approached on an interim basis, thus allowing both the Board and Mr. Emblidge a period of time to consider the responsibilities involved. Following the discussion, during which time Mr. Emblidge excused himself from the meeting room, the following motion was made by Mr. Nothenberg, seconded by Mr. Moylan, and passed unanimously:
WHEREAS, The Corporation Board recognizes, due to the death of Mr. Arnaud, the importance of expeditiously engaging legal assistance in order that its on-going business is properly addressed; and
WHEREAS, The Board is impressed with the credentials of Mr. Scott Emblidge to provide such legal assistance, Mr. Emblidge having been highly recommended by Board Member Nothenberg; now therefore be it
RESOLVED That the San Francisco Municipal Railway Improvement Corporation does hereby engage Mr. Scott Emblidge as Corporation Legal Counsel for a period commencing immediately but not exceeding six months; and be it further
RESOLVED That the Corporation does hereby establish its intention to meet in Executive Session at its next Board meeting in order to discuss long-term considerations of the position of Corporation Legal Counsel.
The next matter of business was a discussion of the role of Mr. Wright, who had been requested by Mr. Ludwig to assume certain responsibilities following the passing of Mr. Arnaud. Mr. Wright indicated that although he is currently under contract to the Corporation for services pertaining to the "Kirkland Yard" property, it is appropriate that an alternative means of engaging his services be provided in regard to the administrative tasks which he has undertaken. Mr. Wright noted that the Corporation by-laws allow the Board to appoint an Assistant Secretary, and recommended that the Board consider appointing him as such.
The following motion was made by Mr. Nothenberg, seconded by Mr. Moylan, and passed unanimously:
WHEREAS, the Corporation Board has requested, due to the death of Mr. Arnaud, that Douglas Wright undertake various tasks having to do with both current administrative matters and assisting the Legal Counsel; and
WHEREAS, The Board may at its discretion appoint an Assistant Secretary to provide administrative services to the Corporation; now, therefore be it
RESOLVED That the San Francisco Municipal Railway Improvement Corporation does hereby appoint Mr. Douglas Wright as Corporation Assistant Secretary and engage his services on behalf of the Corporation for a period commencing with the death of Mr. Arnaud but not exceeding six months from the date of this action; and be it further
RESOLVED That this action is taken with the understanding and condition that Mr. Emblidge will confirm that no conflict of interest exists with respect to Mr. Wright's "Kirkland Yard" contract with the Corporation and these additional services.
Mr. Ludwig requested that Board members Ozan and Nothenberg be responsible for working out recommended compensation packages for both Mr. Emblidge and Mr. Wright, prior to the next Board meeting, in order that the Board would be in a position to take action on the resulting contracts at that time.
The next matter of business consisted of individual Board members bringing up a variety of considerations which they requested Mr. Emblidge and Mr. Wright to investigate and/or provide to the Board. Without dissent, and absent formal resolutions, these considerations were the following:
* Mr. Emblidge was requested, during the six-month period of his contract, to provide the Board with a twice-monthly report of actions and activities. Mr. Ludwig indicated that he felt that Mr. Arnaud had not been communicating frequently enough with the Board and with the Board President, and that he wished to see future communications between the Legal Counsel and the Board enhanced.
* Mr. Wright was requested to provide each Board member with a copy of the Corporation by-laws, prior to the next Board meeting.
* Mr. Wright and Mr. Emblidge were asked to look into what insurance coverage the Corporation carries, including Directors' liability insurance, and to report back on their findings.
* Mr. Wright was asked to contact Mr. Desmond, the Corporation's accountant, to provide him with a summary of the meeting, and to request his presence at the next Board meeting. Mr. Ludwig indicated that he believed it was unfortunate that Mr. Desmond was not present at this meeting, and suggested that the Board consider reviewing his performance.
* Mr. Wright was requested to assure that the matter of the two Board vacancies is on the agenda for the next Board meeting. Mr. Ludwig indicated that at previous Board meetings he had introduced the name of Mr. Tom Escher as a candidate for the Board, and would be interested in doing so again.
* Mr. Wright was requested to work with Mr. Fung in seeking to identify and locate all outstanding invoices and requisitions, and that a list of any such bills be provided to the Board. Mr. Ludwig expressed his interest in seeing that all bills of the Corporation are paid promptly. Mr. Fung indicated that he, himself, would act on behalf of the Trustee, US Bank, and make certain that any outstanding bills are paid in an expeditious manner.
* Mr. Wright was requested to assure that a status report on the "Kirkland Yard" study is on the agenda for the next Board meeting.
The Board next identified Tuesday, May 14, at 10:30 a.m. as the date and time of the next Corporation Board meeting, and requested Mr. Wright to try to secure the same meeting room, at 401 Van Ness Avenue, for that meeting.
There being no further business to come before the Board of Directors, upon motion duly made, seconded, and unanimously carried, the meeting was adjourned at approximately 11:50 a.m.
Dated: April 29, 2002
[to be filled in]
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Information last updated May 30, 2002.