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May 18, 2011, 2:00 p.m.

One South Van Ness Avenue, 8th Floor
Twin Peaks Conference Room, Room 8203
San Francisco, California

Mr. Nothenberg stated that a quorum was present and the meeting was called to order.

Present:                 Mr. Rudy Nothenberg, President

                              Mr. James Ludwig, Vice President

                              Ms. Nancy Lenvin, Secretary

                              Mr. Thomas Escher, Treasurer

                              Mr. Wil Din

Dr. James McCray Jr.

Mr. Robert P. Morrow III


Also Present:         Ms. Sonali Bose, Director of Finance and Information

Technology/CFO, SFMTA

Ms. Gail Stein, Finance and Information Technology, SFMTA

Ms. Joanne Carr, Finance and Information Technology, SFMTA

                              Mr. Scott Emblidge, Partner, Moscone Emblidge & Sater

                              Mr. Mark Blake, Deputy City Attorney

                                    Ms. Michelle Sexton, Partner, Rosales Law Partnership

                                    Mr. Vincent McCarley, Backstrom McCarley Berry & Co.

                                    Mr. Erwin Tam, Backstrom McCarley Berry & Co.

                                    Mr. John Haley, Director of Transit, SFMTA

Roll taken, Mr. Ludwig and Dr. McCray were absent.

  1. Public comment – none.
  2. Minutes of the Board meeting of March 4, 2011 were adopted as submitted without objection.
  3. Update of information insurance for directors and officers
    • President Rudy Nothenberg said that he had been told that Matt Hansen, City Risk Manager, would not be making a presentation as expected.  Sonali Bose explained that Mr. Hansen did not have all of the information that has been requested.  Robert Morrow asked why he did not have all of the information, and Ms. Bose responded that some of the information requested was not requested until late in the week and that Mr. Hansen did not have enough time to put it all together.  The report will be presented at the next meeting. 
    • Scott Emblidge stated that he went to the private market for a quote for a basis for comparison.  The total annual cost to obtain $1 million in liability insurance would be $19,948.  Mr. Emblidge stated that it was difficult to get a quote because of the somewhat hybrid nature of the SFMRIC Board.  There are policies written for public boards and there are policies written for private boards.  He could therefore only obtain this one quote.
    • Mr. Nothenberg stated that the Board needs to have a policy in effect before it takes any significant action, but that there is no real liability issue before then.  He requested that Mr. Emblidge continue to work to obtain an offer, while Mr. Hansen also works on providing one.
    • Mark Blake suggested, and the Board agreed, that Mr. Hansen should send information and a quote prior to the next Board meeting so that the Board members are prepared to make a decision at that meeting.
  4. Reimbursement resolution
    • Mark Blake reviewed the reimbursement resolution.  He stated, in response to questions, that the reimbursement resolution is an IRS requirement and related to capital expenses, not soft costs; no resolution is needed to reimburse soft costs as long as they do not exceed 20% of the total.  Nancy Lenvin had provided edits subsequent to the prior meeting.  The edits were incorporated and Ms. Lenvin stated that, as amended, she would move to adopt the resolution.  Mr. Nothenberg seconded the motion.  Resolution adopted unanimously.  (Director Ludwig was not present for this vote.)
  5. Report from Financial Advisors
    • Erwin Tam presented a market update, with additional input from Vincent McCarley.  They noted that municipal debt is currently viewed unfavorably in the market, given the constraints related to governmental budgets, but that well-structured transactions will receive favorable market feedback.
    • Mr. McCarley further stated that he would anticipate that a SFMRIC bond would likely be in a high A category and would be well-received by certain investors, such as institutional buyers and high net worth individuals.  He also recommended obtaining a bond rating (from at least two agencies) since that would likely lead to a better price.
    • Ms. Bose stated that the SFMTA would be introducing two possible bond transactions at the same time to the rating agencies,  a revenue bond backed by garage revenues and SFMRIC bond.  Therefore, based on available SFMTA debt capacity, the SFMRIC issuance cannot exceed $35-$40 million.
  6. Financial report on SFMRIC Funded Projects and
  7. Project Status Update
    • Both reports were presented and discussed.
    • Mr. Nothenberg noted that the Carl/Cole project, which was approved by the SFMRIC Board in November 2010, was not on the lists.  Ms. Bose stated that it should have been and that this would be corrected and revised, with corrected documents sent to the Board.
    • Ms. Lenvin stated that the true balance would therefore be less than $500,000 with the addition of the Carl/Cole project, to which SFMRIC committed $1 million at the November 2010 meeting.
  8. Presentation on the Transit Effectiveness Project (TEP)
    • Ms. Bose introduced John Haley, who provided the Board with his background in transit.
    • Mr. Haley then gave some background about the recent CPUC findings.  Mr. Haley addressed some of the specific items that were included in the CPUC report.
    • Mr. Nothenberg asked if the California Highway Patrol still did inspections of the wheel fleet.  Mr. Haley responded they do some inspections and the State does some inspections.  MTC and the FTA also do inspections as part of their funding policies.
    • Mr. Haley then gave his presentation about the TEP, and the TEP has identified to improve Muni service and system reliability.
  9. Policy Statement on Project Funding
    • The Board then engaged in a discussion about establishing a guiding policy for funding projects in the upcoming bond issuance.  Board members noted a preference for addressing critical Muni projects identified by the SFMTA, particularly those with funding gaps ideally of at least $3 million.  Board members also said that they would consider projects with smaller gaps if they are important to, and will have a significant positive effect on, Muni operations.  They also discussed whether SFMRIC should fund full projects or fund remaining gaps on projects.
    • Ms. Bose mentioned that the SFMTA prefers SFMRIC funding be tailored to remaining funding gaps in projects, e.g. local match.
    • The Board then requested that Mr. Emblidge and SFMTA staff work with Mr. Nothenberg to draft a resolution for consideration at the next meeting.
  10. The next meeting is scheduled for June 29, 2011 at 1:00 p.m.
  11. Adjournment

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