Boards of Directors

MEETINGS OF THE Boards of Directors

Valley Metro RPTA METRO Light Rail

MEETING DATE MEETING DATE Thursday, February 19, 2015 Thursday, February 19, 2015

TIME TIME 12:15 p.m. 1:15 p.m.

LOCATION Valley Metro RPTA Lake Powell Conference Room

101 N. 1st Avenue, 10th Floor Phoenix

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

February 12, 2015

Board of Directors Thursday, February 19, 2015 Lake Powell Conference Room 101 N. 1st Avenue, 10th Floor 12:15 p.m.

The Pledge of Allegiance will be recited.

Action Recommended

1. Public Comment 1. For information

A 15-minute opportunity will be provided to members of the public at the beginning of the meeting to address the Board on all agenda items. The Chair may recognize members of the public during the meeting at his/her discretion. Up to three minutes will be provided per speaker or a total of 15 minutes total for all speakers.

2. Minutes 2. For action

Minutes from the January 22, 2015 Board meeting are presented for approval.

3. Chief Executive Officer’s Report 3. For information

Steve Banta, Chief Executive Officer (CEO), will brief the Board on current issues.

CONSENT AGENDA 4A. Intergovernmental Agreement (IGA) with the Arizona 4A. For action Department of Transportation (ADOT)

Staff will request that the Board of Directors authorize the CEO to enter into an IGA with ADOT for Section 5311 (Rural Transit) pass-through funding for Rural Route 685 for Federal Fiscal Year 2016 (FFY16).

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

4B. Fuel and Fuel Card Services Agreement 4B. For action

Staff will request that the Board of Directors authorize the CEO to execute annual purchase orders with Chevron and Texaco Universal Card for fuel card services for purchasing fuel in an amount not to exceed $$1,811,913 for eight years for the operation of Route 685 (Ajo/Gila Bend) Rural Connector Service.

4C. Fiscal Year 2014 (FY14) Comprehensive Annual 4C. For action Financial Report (CAFR) and Single Audit Reporting Package

Staff will request that the Board of Directors accept the Comprehensive Annual Financial Report and Single Audit Act Reporting Package for the period ending June 30, 2014.

REGULAR AGENDA 5. 2015 Federal Public Transportation Agenda 5. For action

Steve Banta, CEO, will introduce John Farry, Government Relations Officer, who will request that the Board of Directors approve the Valley Metro Federal Public Transportation Agenda for 2015.

6. April 2015 Valley Metro Bus Service Changes 6. For action

Steve Banta, CEO, will introduce Wulf Grote, Director Planning & Development who will request that the Board of Directors authorize the CEO to amend service operator contracts and member agency IGAs as necessary to accommodate the proposed April 2015 service changes.

7. Future Agenda Items Request and Report on Current 7. For information Events and discussion

Chair McDonald will request future agenda items from members, and members may provide a report on current events.

8. Next Meeting 8. For information

The next meeting of the Board is scheduled for Thursday, April 16, 2015 at 12:15 p.m.

Qualified sign language interpreters are available with 72 hours notice. Materials in alternative formats (large print, audiocassette, or computer diskette) are available upon request. For further information, please call Valley Metro at 602-262-7433 or TTY at 602-251-2039. To attend this meeting via teleconference, contact the receptionist at 602-262-7433 for the dial-in-information. The supporting information for this agenda can be found on our web site at www.valleymetro.org.

DATE AGENDA ITEM 1 February 12, 2015

SUBJECT Public Comment

PURPOSE A 15-minute opportunity will be provided to members of the public at the beginning of the meeting to address the Board on all agenda items. The Chair may recognize members of the public during the meeting at his/her discretion.

BACKGROUND/DISCUSSION/CONSIDERATION None

COST AND BUDGET None

COMMITTEE PROCESS None

RECOMMENDATION This item is presented for information only.

CONTACT Steve Banta Chief Executive Officer 602-262-7433 [email protected]

ATTACHMENT None

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

DATE AGENDA ITEM 2 February 12, 2015 Minutes of the Valley Metro RPTA Board of Directors Thursday, January 22, 2015 12:15 p.m.

Meeting Participants Councilmember Jim McDonald, City of Avondale, Chair Councilmember Gary Sherwood, City of Glendale, Vice Chair Councilmember Thelda Williams, City of Phoenix, Treasurer Vice Mayor Eric Orsborn, City of Buckeye Vice Mayor Kevin Hartke, City of Chandler Councilmember Lynn Selby, City of El Mirage Councilmember Jenn Daniels, Town of Gilbert Supervisor Steve Gallardo, Maricopa County Vice Mayor Dennis Kavanaugh, City of Mesa Mayor Cathy Carlat, City of Peoria Councilmember Suzanne Klapp, City of Scottsdale Vice Mayor Skip Hall, City of Surprise Councilmember Lauren Kuby for Mayor Mark Mitchell, City of Tempe Councilmember Kathie Farr, City of Tolleson

Members Not Present Vice Mayor Joe Pizzillo, City of Goodyear Councilmember Sam Crissman, Town of Wickenburg

Chair McDonald called the meeting to order at 12:16 p.m. and welcomed everyone to the January meeting of the RPTA.

(The pledge is recited.)

1. Public Comment

Mr. Frederico said I'm currently a resident of Mesa. And I was at the management committee meetings and I was encouraged to come back to talk to the Board to give a little positive message about the customer service that I've been receiving from Valley Metro since I moved here in September.

I've had a number of occasions where I have called up the general phone number to ask information about certain bus lines, how to get to certain places, why a bus route was changed and helping find the information about the upcoming proposals for changes to the bus routes.

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

And I was blown away by the friendliness and responsiveness that I received. First of all, the calls were answered very quickly. Didn't have to be put on hold. I didn't have to push buttons. I didn't have to wait and wait and wait. There was somebody right there to talk to me.

And they were all very friendly. Every single one of the people that I've spoken to and there have been four, five, maybe six calls altogether. And every one of them was very friendly. And every one of them was very knowledgeable. And I was very, very impressed with the bus route information I was not intending on spending a lot of time on the phone and, you know, challenging anyone, but I had three places that I needed to go and the representative just immediately gave me the information.

And the best of all was on November 20th when you had the table with the information about the upcoming bus route proposal changes in Tempe. And I was having a little difficulty finding exactly where it was, so I called the customer service line and the gentleman was not exactly certain where I was or where it was, but he knew generally where it was.

But he stayed on the phone with me. And he made a phone call to someone in the office. He sent an e-mail. And he waited and waited and I eventually found the table myself and he was still with me. Apparently he was using GPS system of some sort. But he was on the phone with me for a very long time. He was very friendly and even though he wasn't able to get me right to where I was going, he was pretty close and he was very, very, helpful. So I want to say thank you to Valley Metro for the good customer service. You're doing something right with the hiring and training and keep up the great work.

Mr. May said good afternoon and Happy New Year to some of you that are new to the Board. I speak occasionally at these meetings and I am a blind person who likes to help you guys in advising what I see where you guys do not.

Most recently there was a change in the bus passes and I'm concerned that the color change may make it harder for low vision people to read the date stamps on those.

Second of all, I would really wish that among the region that wherever you have a major cross street and major activity centers where you have two buses connecting i.e., 67th and Bethany, that's just an example, that you would have shade structures on where you have a lot of bus riders at.

Currently there are spots in this city, including Glendale, where you do not have any shade structures, all you have is a sign on a pole. I'm referring to a stop in Phoenix on Camelback on that one. And then as far as bus stops go, because of the bus stops I feel that there should be a standard on the bus stops where there should be at least a curb riser on one side to keep blind people from falling into landscape when they're trying to get from a bus stop to the signal intersection. Thank you.

Mr. Crowley said today on public comment I'd like to point out that I did get the letter from Mr. Banta, about five minutes ago, defining and it really doesn't define what I asked, which was the term that they had market demand.

It says, well, we're going to be setting up standards and rules on this, and we're going to be looking at the census and that, but what I wanted to find was the term that they had in there "market demand."

Because when we put together what you people work with, the Prop 400, our ideal was the rural routes wasn't the first two, it was to expand totally throughout the county. And instead of that the City of Phoenix felt that the rural route wasn't making enough money for the system and it was disabled. But now you have that you're going to be -- oh, and it's from Wulf. Excellent. I didn't notice it. -- that you're going to be the ones that decide that 25 percent because we never put that in either that a route had to get 25 percent farebox recovery. Because I found a problem. You guys pay by the inch; right? And when it's an EXPRESS bus that isn't going according to the route and it adds eight to twelve miles, and the one I'm talking about is the one going from downtown Phoenix to the Surprise park-and-ride. And instead of going according to Grand Avenue, which is, I believe, eight to twelve miles shorter distance than going I-10 to the 101, they've continually gone the I-10 to the 101 saying originally that there had been work being done on Grand Avenue and it slowed them up too much. And that way they could get out there.

But since you pay by the inch, how is this? Because if you look in the book, the route that you have them going on is Grand Avenue. It isn't I-10 to the 101. And in the last 22 seconds, when are you going to stop being myopic and start being not as parochial as you are and look at this in the whole and get transit within your communities.

When we put together the plan, the part that went on I-8 was connector and circulator for towns like Wellton. Some of you may have never heard of it. It's by the Yuma border. Let's get this done right. You need to have buses in your communities and you need to have connectors to the METRO. When are you going to do that. Thank you for your time.

2. Minutes

Minutes from the December 18, 2014 Board meeting were presented for approval.

IT WAS MOVED BY COUNCILMEMBER WILLIAMS, SECONDED BY COUNCILMEMBER SHERWOOD AND UNANIMOUSLY CARRIED TO APPROVE THE MINUTES FROM THE DECEMBER 18, 2014 BOARD MEETING.

3. Chief Executive Officer’s Report

Mr. Banta said I'd like to first start off by welcoming some new Board officers. Chair Jim McDonald, Vice Chair Gary Sherwood, and Treasurer Thelda Williams. We have the pleasure of working with this team for the next eighteen months. So thank you for your

contribution to this Board. I would also like to welcome some new Board members this year: Vice Mayor Kevin Hartke from City of Chandler; Supervisor Steve Gallardo from Maricopa County; Mayor Cathy Carlat from the City of Peoria; Mayor Mark Mitchell from the City of Tempe, who today is represented by Councilmember Lauren Kuby. Welcome.

As you know, unless you had your head buried in the sand, a couple of weeks from now the Super Bowl is taking place here in the Valley. And we have, you know, a lot of things going on as it relates to transit. At your place is a commemorative Super Bowl transit pass and lanyard. We're also in the final stages to Super Bowl XLIX. The transit service plan really kicks into gear beginning on Wednesday the 28th through Super Bowl Sunday.

We're offering a lot of additional service on bus and light rail. And we've had a lot of positive response to our request for volunteers throughout the Valley to be transit ambassadors through the program.

I would like to mention some good news about the Super Bowl is that the recent potential of labor strife with First Transit in the West Valley and the ATU we believe has come to a resolution. The officers at the ATU and the leadership of First Transit, the service provider in the West Valley, with a lot of guidance from the City of Phoenix Public Transit Department has come to an agreement. ATU leadership has to take it back for a ratification vote on Sunday, which is why you probably haven't seen a lot in the newspaper about the details, but we hope that that will be forthcoming. We are very pleased that we've resolved this issue particularly with the national stage that we're going to be on here shortly.

Well, it was actually the City of Phoenix and First Transit, but we all worked together to make sure that we bring all of this together. If any one of the service providers are at odds with their operators and mechanics, it has a bearing on the complete system and we all work together to make sure that we move these items forward. So we appreciate that and we'll pass on those kind words to the City of Phoenix also.

We're also in the 15th year of the Valley Metro Design a Transit Wrap high school art contest. This is the winner from last year. The contest is open to any high school student in Maricopa County. The artwork must promote public transportation and its benefits. Entries are due February 13. And the winning artist gets their design on a bus and train wrap that runs for the entire year.

Shortly we will be holding the 13th Annual for Friends of Transit Conference. The conference will focus on the value of transit. Some of you have come to this conference in the past. You can register for the conference by going to the Friends of Transit Website or if available you can let Pat know and we can make arrangements for your opportunity to be there for the conference. Again, it's on Friday, February 20, typically runs about 8:00 a.m. in the morning until just after noon. They provide lunch and then everybody has an early exit about 1:00 p.m. in the afternoon.

Another "mark your calendar" is our congressional staff luncheon, which we have every year. It is in concert with the APTA Legislative Conference and the National League of Cities Conference that's held back in Washington D.C. The luncheon will be on March 9 at 12:00 p.m. It will be up on Capitol Hill in the Rayburn Office Building. And details will be e-mailed out here shortly.

Most every year we have a very good turnout from the Valley. I really do appreciate it. It's an opportunity for us in the Valley to show our support for what our federal partners do for us in terms of providing funding and resources for us to advance transit. It also let's our federal partners know back in D.C. how strong we do support it here in the Valley.

Most recently, this past Tuesday, I testified to the Arizona House and Senate Joint Transportation Committee on the value of transit and what we have moving forward. We had a number of interesting questions that I was able to respond to. We had a lot of nodding heads. And we had a lot of "so what" with our friends in the State House.

I do believe it's important for us at times to be in front of them communicating the value of what we do. Senator Worsley was very adept at pointing out the success of the light rail system, the success of ridership through our complete system with bus and light rail, and we actually very much appreciated the questions that he offered and the conversation that came about with those questions.

Ridership for the Valley continues to be a good story. December ridership -- total ridership boardings is 1 percent over last December for the total monthly boardings. Weekday boardings are down about .9 percent. The monthly boardings remain constant, but the difference in weekend service had to do with light rail ridership.

Last year, 2013, in December we had a lot of events. We had ASU football, Tempe festival of lights, and we had a concert at the U.S. Airways Center that really drove the ridership needle up that we didn't have this year. We believe that has a bearing on the overall ridership on light rail for weekends.

The legislative update is at your place.

Also at your place is a calendar or an identification of dates. We talked about a month and a half ago at this meeting about letting the Board members know of conferences that are available from a transit perspective. In case you are interested in attending, please check your calendars, look at those events. If there are opportunities or interest, let us know and we'll see how we can work with you and your staff to ensure your presence at one of those conferences.

As you can see, sometimes the legislative conference runs in concert with things that you're already doing back in D.C. So we're able to do two things at once when you're back there. So we look forward to your interest and if we can coordinate those things for you, please let us know.

Vice Mayor Orsborn said we talked before about the possibility of attending some of these conferences in trying to key on locations that have what we strive for as far as multimodal transportation here. Can you maybe provide some input as to which of these locations have that multimodal transportation that we can go and see while we're there.

Mr. Banta said absolutely. We'll put an addendum to that and send it back out to the Board.

4. Consent Agenda

Mr. Banta said the consent agenda today consists of two items.

Item No. 4A is the Workers' Compensation Employer's Liability Insurance Coverage Renewal. Every year we renew our insurance. This year it is for a one-year period with CopperPoint Mutual Insurance Company for the estimated annual premium of about $169,000. To note, it is about $8,000 less expensive this year than last. We have not been successful in getting a lot of competition for this contract.

One of the reasons is our business classification as a railroad operator prevents some insurance companies from being competitive in providing that insurance for us. CopperPoint Mutual Insurance Company, formerly SCF, works with a lot of your member cities in providing this type of insurance. We feel very good about this opportunity.

The split in premium is about 10 percent for the RPTA and 90 percent for rail. The difference is that we on the RPTA side require a service provider, i.e., First Transit, to provide this insurance themselves. We don't provide it for them. On the rail side we do not. We include this insurance as part of our responsibility with the rail operation. We also have the aspect of trains and we have a lot of heavy equipment on the rail side that we use and we have a employees internally. It covers about three hundred employees total for the insurance.

Item No. 4B is an Intergovernmental Agreement with Maricopa Association of Governments. This is for two studies. First study is kind of a continuation of the compass study, but it's the Grand Avenue Transit Feasibility Study. What we've done is we've identified the transportation improvements under the compass study for Grand Avenue. What we're doing now with the Grand Avenue Transit Feasibility Study is doing dives in terms of what transit solutions we can bring to bear on Grand Avenue.

Currently, we have express service running in the morning and in the afternoon. This study could recommend an additional trip in the morning or it could recommend opportunities for mid-day service, it could include more frequency. We are looking for short , mid-range, and long term transit solutions as we work with the stakeholders and member cities along the Grand Avenue corridor to increase transit service in that corridor.

We're also funding the origin and destination study. This study is done to ensure where our riders are engaging our system and where they want to go. A lot of our member cities use data from this study to determine how we provision transit service in the Valley. With that, Mr. Chairman, I'd be glad to answer any questions, but we seek your action on the consent agenda.

Councilmember Sherwood said on the IGA with MAG for the transit corridor feasibility study -- and again, we went over this in our pre-meetings, and really no difference to Surprise and El Mirage, but the compass study has been going on for some time and it just seems like that if we don't like what we get out of the results of that, we come up with another study and that's the old adage that we do for everything, not just this Board or not just this organization.

I do support what we're doing there, so don't take me wrong there, but I think, you know, we've determined that Grand Avenue is more of a transit corridor, I know we've taken a lot of the cutouts, I know there's still some discussion about the potential for passenger rail at some point.

I think that's been put on the back burner knowing that the funding for those kind of things are just so far away in priority, so I would just ask that on this that we, you know, when we do get those results, you know, that we use them and not try to come up with some other study.

Because again, I know that's been -- especially for the outlying areas that with Surprise that's really important for them, you know, more so than, say, for Peoria and Glendale and the communities that are closer into Phoenix. So I certainly don't want to make this sound like a rant, but we just continue with these studies and so hopefully this gives us what we want here and we can kind of conclude, at least for the next five years or so, so thank you.

Public Comment Mr. Crowley did any of y'all happen to see the news last night where it had the attack on the bus driver with the gentleman with the State Board?

Was it the one that had the follow-up with the president of the transit union pointing out that they requested the City of Phoenix maybe put in a plastic barricade in theirs. I would like to suggest the same be in yours since this is liability insurance for workers' comp and being attacked is one of the ways that they have to tap into this fund.

I think that that's also something that I don't see being addressed here. I know it's just something I've thrown down on the table, but I know it's twenty-two hundred apiece, is what they said was the cost, but if you have a whole fleet, you're buying a lot of them and the price comes down and there are ways to address this.

And as to that study on Grand Avenue, what mile post are we starting it at? Are we starting it at mile post 163 over here at 7th Avenue and Van Buren, is that where we've talked, say, Grand Avenue is and where do you stop? Do you stop at mile post 85 out

in Aguila, because all of that is Grand Avenue. And what are you going to be looking at? And, like I said, I'm trying to get you to start doing some of the rural connectors.

And when I hear what the man said about, well, that bus and it going down Grand Avenue, it doesn't, sir. I used it three weeks ago. It comes out of the Central Station, jumps on the freeway at 5th Avenue, goes out to the 101 and up. That's eight miles further than it is if you go on Grand Avenue as it's supposed to be doing. And as a route that for a while used to have people using it.

But then the deception that I've had to deal with when Mr. Grote and others was when we were building the 27th Avenue overpass at Thomas, and I asked where are the bus stops? His answer was we'll be showing them after we put the structure in. And they did. Because you took out the yellow, which was the route that went on Grand Avenue. So you're right, it showed them after the completion of the structure. You took the route out. And yes, Grand Avenue needs to be a part of the system. You have a grid. Use it. And get it done right. And, like I said, with that liability insurance, we put enough of those plastic things in to protect the drivers and maybe the rates will even go down.

IT WAS MOVED BY COUNCILMEMBER SHERWOOD, SECONDED BY COUNCILMEMBER WILLIAMS AND UNANIMOUSLY CARRIED TO APPROVE THE CONSENT AGENDA.

5. RPTA Fiscal Year 2015 (FY15) Mid-Year Budget Adjustment

Mr. Banta said Mr. Chairman, members of the Board, I'd like to introduce Mr. McCormack, our chief financial officer, who will give you the details on the mid-year budget adjustment.

Mr. McCormack said good afternoon, members of the Board. Agenda Item No. 5 is an action item today for the Board to approve changes to the Fiscal '15 budget.

I'm going to be moving through these slides quickly, since we have a big agenda this time, but there will be plenty of time to ask questions when I get to the end here.

One change to the operating budget. The Northwest Valley Dial-A-Ride is funded through a combination of federal member city contributions and PTF funds. Increases in demand, transit demand, out there for the services will be funded by an increase of federal funds primarily in Maricopa County and El Mirage Arizona Lottery funds. The total change is about $572,000 increase over the plan.

With respect to the capital program, changes to the capital budget include the postponement of FY15 bus fleet purchases into FY16. The graphic bars you see above in blue indicate the current budget plan for bus deliveries over the five-year period.

The red bars indicate the amended plan of bus deliveries. Overall bus fleet purchases are not changing over the five years, but the FY15 deliveries have been pushed into the next fiscal year.

Here's the summary of some of the details of those changes. The first three lines on this chart here show changes to the bus fleet.

Bus purchases are deferred pushing delivery into FY16. There's 43 buses for the City of Phoenix. Those are replacement. There's seventeen for the East Valley including for Scottsdale eight replacement and nine expansion buses.

We're also re-evaluating the timing of vanpool fleet replacement and expansion. We currently have sufficient fleet to operate the service today. We're looking at ways to extend the life of the current fleet. And we're going to re-address the timing of fleet purchases in the FY16 budget and the five-year plan subsequent to that.

I want to point to vehicle management communications here. That equipment which is really for bus fleet radio communications and location management communications is going to be purchased in FY16 versus FY15.

The most significant change to the capital budget overall is on this line here, which is a change of scope for the Scottsdale/Rural Road LINK project, which we are scaling back from a number of larger infrastructure changes to traffic signal priority and bus system improvements. We're planning more frequency improvements on local service versus what we had planned on the LINK service and those service frequency increases will be budgeted in FY16 including the bus fleet to accommodate that increased service. Those are all part of the FY16 bus fleet plan.

And lastly here, there's a small change to lead agency disbursements. The RPTA makes payments to Valley Metro Rail to support those systemwide improvements that are part of the rail capital program. Those are reduced by a $418,000.

So a summary of changes to uses of funds, number one, the Northwest Valley Dial-A- Ride program is increasing by $572,000. The capital program, which I discussed before, is reducing by $33.2 million.

On the sources of funds, sources of funds required for the year are down by $32.6 million overall. The public transportation funds are down by $2 million. Those are primarily for the local match for some of those bus purchases that I talked about. Transit service agreements, those are for the expanded service for the West Valley Dial-A-Ride Program.

Federal grants are related to the timing of bus fleet, which is next year and also the reduction of the capital infrastructure projects that are being scaled back and deferred. And finally the carryforward, so we have cash balances that we include as part of the annual budget and the consumption of those is going to be actually reduced by $6 million. So overall the total budget as was adopted $324.6 million is now at $292 million dollars.

On January 7, the Transit Management Committee recommended approval of the changes that have been included in this presentation. And the action today is for the

Board to approve the updates as presented.

Councilmember Sherwood said John, would you care to comment on the increase by almost 33 percent of the Northwest Valley Dial-A-Ride. I mean, that's substantial even though it's a low dollar amount compared to the rest of the budget, but is that something similar that we saw in Mesa about a year or two ago?

I mean, it's a good use of service and that's what we want to see, but I think Mesa had - - I think their service was growing by -- too fast and their portion of it was, you know, I mean, they hadn't planned for their part of it, so.

Mr. McCormack said the increase to demand on Dial-A-Ride services is a function of fare revenue that's required of the passengers and then just demand. I mean, the demand is increasing as the population ages, and so we're going to continue to see demand rise over the years. But I think the specific spike out there is just greater awareness of the service and, you know, the taxi cab model is a popular way for those trips to be taken. And certainly the fare structure out there is very accommodating to those trips.

Councilmember Sherwood said so it wouldn't necessitate maybe in the future scaling down who can use that similar to what, I think, was done in Mesa?

Mr. McCormack said I would say that the major change would be to try to conform the fare structure to the ADA fare structure where passengers are paying, you know, four dollars per trip currently. Currently some of those rides are a dollar, you know, per trip, so, I mean, that's the first step to take is to try to have equity in the fare structure between the ADA services and the non-ADA services.

And these are really funded currently by locally designated dollars, so the unincorporated Maricopa County is using the Arizona Lottery funds and some of the member cities out in the West Valley are using some of their funding as well. So the program can be tailored back, but I would say that the first step is really to address the fare structure.

Public Comment Mr. Crowley said I notice that big red line in 2016 and I recall how it got there. Two years ago you bypassed $94 million worth of bus replacement and you pushed it forward. And that's the reason for 2015 and 2016’s blue lines looking like they are.

And instead we moved it again forward at once. When I look at the numbers that you want to end up with, I find it fascinating that you want to spend more on the van replacement than you do on bus replacement and, you know, when you don't have those buses out there, they're not in use. And I know when you say replacement, it doesn't happen that way as you do try all the time to extend the life of everything that's there. And I appreciate that. But when you don't put the new one there how is it.

And when it comes to the vanpools, I've pointed out that we subsidize each one of those people to the amount of a thousand dollars. What we're doing here is infrastructure. And if you look at that top line where it says Valley Metro Rail, that's a $909 million. It's supposed to be a balance between the rail and the bus for expenditures on capital.

I don't see you buying the buses. I don't see you building the bus stops. I don't see that in here. I don't see bus stops coming up to the level that the gentleman said bringing it to not necessarily ADA standards, but the standards of which there need to be so that the ADA aren't as imposed on as they have been.

And, like I said, you want to spend more on van replacement than you do on bus replacement. When are you going to start doing the job? All of you need to be buying buses not just this agency. And when the City of Phoenix doesn't do forty-three, this is the, what, fourth year in a row you've pushed that purchase out?

IT WAS MOVED BY MAYOR CARLAT, SECONDED BY VICE MAYOR KAVANAUGH AND UNANIMOUSLY CARRIED TO APPROVE THE MID-YEAR BUDGET ADMENDMENT.

6. Valley Metro Strategic Plan

Mr. Banta said Mr. Chairman, members of the Board, this is for action. It is our Valley Metro Strategic Plan. It has been approved by the Transit Management Committee to be brought before the Board for approval. A couple of comments I'd like to make before the presentation is, there was a suggestion by the City of Tempe in request that we reach out to stakeholders, i.e., ASU, in the development of the strategic plan. And the answer to that was no, we did not. Hindsight being 20/20 we probably should have.

Also, a member from Scottsdale said not only higher education, but you should incorporate K-12 in the stakeholder outreach. We agree with both of those suggestions. We were on a timeline to get this strategic plan approved. It is a dynamic document, we explained, and we will be able to incorporate those changes into the strategic plan as we move forward from here.

So we appreciate those comments from our member cities and with that, I'd like to turn it over to Linda Bohlinger who's been with us for about six months now putting the strategic plan together, facilitating the work with all the member cities, and she has a rousing presentation for you as it relates to the strategic plan.

MS. BOHLINGER: Well, those of you that have been on the other committees have heard this before, but I want to say that this strategic plan sets the direction for this agency over the next five years and we're asking for your approval today.

It's important for you as Board members of this agency to have a collective vision, mission, and goals. It's important for you to set the direction for staff to have that direction and for the community to know that direction.

So what we have is the -- this is also at your place as well. This is a snapshot of the entire plan. We start with the vision, the mission, the five goals, which you've seen before. And then we have a series of tactics under each goal that help implement that goal.

On the implementation side, once this plan's adopted, then it's about communicating the plan to your stakeholders and to your cities and to your riders to do an annual monitoring of the plan to see how this plan's going. It's a living document, so you may want to adjust the plan in the next update. And then finally, there's some staffing work to be done to actually do implementation plans and cost out the resources and the budget for those.

We're suggesting that perhaps this plan gets adopted every two years, you do a report annually to see how you're going, and then adjust as you go along. But this is a great first start for setting the direction of the agency.

So what I'd like to do is go through a short presentation to give you an idea of what this plan is all about.

We wanted to have this plan address, you know, why is it important to even have a strategic plan. Well, it certainly sets the direction of the agency and defines the purpose. It communicates those goals to stakeholders. It's showing the most effective use of resources, because hopefully with your budgeting process, you will link it back to the plan: Is this in your strategic plan? It's a base against which progress can be measured. And it also brings together staff so they are very clear from direction from you of what's important to this agency.

What does it not do? It doesn't commit you to budget expenditures. That's done through the budget process. This is more of a high-level strategic look at the direction of this agency.

This is really a flow chart of how this strategic plan drives departmental or staffing implementation plans. It drives the budget. And then there's an annual performance review to see how you're doing. And then that feeds back into the strategic plan that then leads to an adjustment to the plan.

We had a whole variety of stakeholder interviews, mainly agency stakeholders, the member city workshops presentations to the various committees and the Board over the past couple of months.

The plan itself is also in your packet. And this is just a snapshot of the chapters in the plan and I just want to point out that in the TMC/RMC meetings the performance measurements, it's a to-date view of what the staff have been doing with the technical advisory group on service performance measurements. And those will be refined over time in the Valley Metro Website as well as reports to the Board will give you that final look. But we wanted to -- we felt it was important to at least list it in the plan to show where you were going with service standards in addition to monitoring the plan itself.

The other thing I wanted to point out, in the back of the plan is a whole series of charts that is part of the assessment we did at the beginning of this effort to assess where is Valley Metro now, how does it relate to its peers, because it's important to know where you are now before you could assess where you're going in the next five years.

You've seen this before, but I want to point out the vision is where you aspire to be. The mission is what you do day to day. So the vision is that Valley Metro is a leader in connecting communities and building a vibrant, sustainable region.

The mission is Valley Metro provides our customers with efficient and reliable total transit network. So whereas the vision is more about connecting communities and economic sustainability; the mission is more about customers and the total transit network, which is a mantra here about how all these services connect for the rider for the communities.

The five goals, you've seen, they build on each other starting with the customer, then performance measurements, growing transit ridership, economic development and financial resources, and finally advancing the value of transit. And these are goals that will drive the budget process this year as well as future years. This plan's first year is 2016.

The objectives of the goals were to be over-arching, high-level, and quantifiable, and provide direction to and guidance to the management of the agency.

I'll go over it briefly. Feel free to ask questions on each of those goals. But we want to go over each goal and the various tactics that are included in those goals.

We start with customer focus. The key thing is to improve customer satisfaction. And there's a variety of ways that are listed in the plan for doing that.

Safety and security is a big priority everywhere for transit agencies as it is here. Through the outreach effort we also added a very important tactic: Customer service to member cities -- because you're also a stakeholder.

High-level and timely assistance to the business community, when you build your rail lines get out there early and work with the businesses and make sure they're still in business when you finish. And then finally enhancing services to persons, seniors and persons with disabilities. An important mission of this agency.

The next goal is performance measurement. The number one service tactic is to operate in an effective, reliable, and high-performing system. We also have a tactic on sustainability in the environment. On time/on budget for not only capital projects, but operating projects and services as well. There's also an aspect of performance management that has to do with staff. We want a high quality -- really develop a culture to recruit and retain a high-quality and diverse workforce.

Then finally, not last, certainly not least, but fiscal controls, maintaining good fiscal controls of the agency so that the agency can be sustainable as well.

Our transit ridership goals focus primarily on growing markets and Steve Banta mentioned earlier about the education community and there's aspects of that market that could really help grow ridership.

The other key point is increasing connectivity. Communicating the availability and attractiveness of transit to non-riders. And then partnering with the business community in conjunction with the efforts you do as member cities to support their economic growth.

Economic development and financial resources is the fourth goal. And number one is to secure a sustainable and long term funding sources. This could be through extension of Prop 400 or some of the other efforts that are going on, both in Phoenix and regionally.

The other aspect is to make sure you can leverage our local funds with as many state and federal and regional grants as you can. So beefing up that effort for grants.

Increasing revenue generation through not only your farebox but there's other ways to increase through advertising and other aspects, naming rights, that sort of thing.

Public-private partnerships are talked a lot about. We're really starting with making sure that you know about the opportunities and that the private sector can tell you what might be an opportunity here and connecting in with the industry, which the transit industry doing a lot of work on how do you make transit attractive, what's appropriate to be privatized or have capital investment from the private sector.

And finally, working through the cities and the communities on transit oriented development. METRO, Valley Metro, isn't always the lead because they don't own the property, member cities and communities do, but there's a lot of synergy there for increasing economic development as well as ridership through transit oriented development.

The last goal advancing the value of transit. One of the ideas is to develop and implement a communications plan that not only Valley Metro would do, but also member agencies to communicate that value to your elected officials is where it is to your communities. And then also, of course, to maintain sound relationships with those agencies that do fund you through grants: your regional, state, and federal agencies.

So with that, the next steps are to communicate this plan, once adopted, to your stakeholders and your cities and to our riders and have that direction for staff as they move forward to do implementation plans and really detail out these tactics that are included in the plan. And then getting some feedback on the plan at the end of one year: How are these tactics doing? Are they really accomplishing the goal? And then feeding that back in to updating the plan in the next go around.

Vice Mayor Hall said I have one. Have we looked at a community like Denver because they really stand out to me in terms of performance measures. What did they do? And how did they develop ridership? I mean, how did they reduce costs per passenger, et cetera, and maybe learn from that and use that as somewhat of a go-by in our plan. Can we do that?

Ms. Bohlinger said as a matter of fact, Denver was one of the strategic plans we looked at, because they are well known for performance measurements and really quantifying those and holding to those, so they were a model for the strategic plan. And in fact, the performance measurements that are in the matrix in the plan, really, we drew on the format from them and looked at the performance measurements they used and try to see if there are ones that we could use as well.

They looked at markets of ridership opportunities such as the education market and have also really done a lot of private investment outreach. Their Eagle P3 that combines highway and transit as a corridor, so they, as well as probably a half dozen other like, I guess, you would call them sister agencies that are doing really good stuff.

So in the implementation phase, we want to take a harder look at the performance measurements we have for each of these tactics and make sure we can measure them that we have a base against which to show progress and to look again at what others are doing including Denver to see if can fine-tune those.

Mr. Banta said Mr. Chairman, Mr. Vice Mayor, that's a really good point. And one thing I wanted to point out is when Mr. Grote put together transit standards and performance measures that he brought back to this Board for approval last fall, Denver was one of the cities that actually came here and reviewed what we were doing and provided input to our overall structure of our performance measures.

So that's a very good point. There were four other transit properties that came here, too, but we are constantly working with our peer cities to ensure that we learn from their mistakes and they learn from ours and we advance transit in the West the way we can.

Supervisor Gallardo said I have one brief question. And I'm relatively new, so I'm trying to get my hands around a lot of this stuff. So what -- I thought, and I may be mistaken, but what role do our school districts play in terms of their input? I know they utilize the services as well quite a bit and do we have them as a -- I would assume a partner as well -- and having their input, their discussion, any of the students that utilize it on a day- to-day basis just to get from school to home and vice versa, so I'm just more curious. I don't see anything that will bring the actual school district part of this discussion and part of the evaluation.

Ms. Bohlinger said in fact, and Steve can amplify that, at the TMC/RMC meeting that was also highlighted. And although we didn't invite the educational community to our member city workshop in the implementation plan, we are definitely going to do that as

well as other stakeholders, expand the group a little bit more to get more input.

We do have a tactic on market sectors where we -- a sub-tactic that Wulf is working on is working with ASU, for example, on increasing ridership for students.

Mr. Banta said Mr. Chairman, Supervisor Gallardo, this is a fantastic point, and quite frankly, we missed it; we dropped the ball. We didn't include them as a stakeholder; we should have. We were working very, very quickly to bring this to the Board for approval. We were working with all of our sixteen member agencies.

There was a cast of characters that was involved in bringing this together. It is something that we've learned from and we are going to go back to them and see if there's ways in which we can modify this to incorporate their needs and concerns into it.

Councilmember Sherwood said I would like to say something very positive on this. I think it was a great -- and Ms. Bohlinger, you did an excellent job of leading us through this. And at the subcommittee we had a chance to look at this as well. Our member cities at the various levels had talked about something like this for years. I guess, once upon a time we had something that resembled a strategic plan, but nobody seemed to could find it or couldn't find it underneath the dust.

This is a real nice template to move forward on and probably assist us in some discussions that are going to come up with performance goals for our CEO, all that can be tied together. So I, you know, great, you know, it's a working document, I think you mentioned that, to be updated, at least to be reviewed on a biannual basis. But, you know, really a nice start, a nice package, I think, for this organization to keep in front of us. And I just want to compliment the process, so thank you for that.

Councilmember Farr said I just want to echo what Councilmember Sherwood said. I see that it was a lot of work. And during your presentation here, I kept hearing communication, communication. We need that communication. And it's obvious that if we're going to learn from other cities and organizations mistakes, and they're going to learn from us, let's take those mistakes and do something with them, not just, as Gary said, you know, it got lost in the past. Let's not let this get lost, and let's keep the communication going. Thank you for all your hard work.

Councilmember Kuby said I just wanted to echo Supervisor Gallardo's suggestion. And seeing the increased customer focus, you could add university, community colleges, and down to K -12, but also define advance value of transit when you say to maintain sound relationships with federal, state, regional, local agencies -- that's a natural place - - and our higher education system.

Ms. Bohlinger said they really weave throughout this plan as well as other stakeholders.

Public Comment Mr. Crowley said where it says improve customer satisfaction that would be to all of the citizens of Maricopa County since that's who your customers should be. And I look at it

with what you have at the moment and if you work second or third shift, it doesn't work for you. Either you can get there and not get home or you can get home but not get there. When I see that it said when on tactics you recommended a tax for the next 10 years. We do have a long term secured funding. What are you asking for now? Is it that you don't feel that the system is progressing and we need to get that, and do you want it bifurcated where instead of a hundred and nine million dollars going to rail, we have it that both of them are getting the same amount, and are you recommending that tax for capital projects or operating?

And like I said, right now, we have a long-term secured tax for 10 years. When it went into advance the values of transit -- and you're the ones that are going to do it; right? And how many of you used transit to get here today? Yeah. And you're going to be the ones banging the drum, because you don't use it, because it doesn't work for you, because your time is more valuable.

When it says "maintain sound relationship with the feds, the state, and the region," what the feds do is we want as much money from them as possible and we try to work with the delegations. Then when it goes to the State, what is it, 509, which is the rural routes, we get that money from them and other than that if the legislature starts dabbling, you're dancing on fire and pins, so I look at that. And then when it says regional, I believe the supervisor is the county which would be the region, and do you represent the region itself. And then it says local agencies. This body is made up of that.

So when it says "advance the value of transit" and you're asking for a tax, I need to have more explanations on this, ma'am, because you threw that out there. Boom. Let's get long term.

We have long term funding right now for the next 10 years. It's totally inadequate. Because if you look at the grid and the way the system should be, all of your communities should have twenty-four hours/seven-day-a-week bus service connecting to the rail. And then when you touched on that -- I love it -- that you're supposed to be planning and looking forward. Has anybody heard of the California bullet train they're putting together?

Or let's go even further back. How many of you know about the California -- or the Arizona California railroad built in 1891 goes from Wickenburg all the way to central California. Now I know that the California part of that railroad is possibly going to be used for that bullet train.

Get on board with your thinking. Get to know that each one of your communities already has that ancient form of transportation running through its communities. Every one of you has a railroad touching it, so let's get the job done right and plan correctly. And tactics, maintain a sound relationship, they're already sitting here.

IT WAS MOVED BY COUNCILMEMBER FARR, SECONDED BY VICE MAYOR ORSBORN AND UNANIMOUSLY CARRIED TO APPROVE THE VALLEY METRO STRATEGIC PLAN.

7. Fiscal Year 2014 (FY14) Transit Performance Report

Mr. Banta said Mr. Chairman, members of the Board, Mr. McCormack, our Chief Financial Officer, is going to give you the FY14 Transit Performance Report. This is for information only.

Mr. McCormack said the Transit Performance Report, TPR, is a regional report which is developed using performance data gathered from operating agencies and service providers throughout the region. The performance period is the twelve months of July '13 through June '14. The report is in your packet and is also available on the Valley Metro Website, so I hope you'll take an opportunity to look through this. It's got some very nice graphics in it and I'm very appreciative of the support of the marketing communications department for putting this together.

Some highlights, operating costs for the region are down by $4.4 million. The majority of those are bus related. $6.1 million dollars of reductions from the prior year. The East Valley unification contract represented about $4.8 million of those savings, and City of Phoenix cost improvements about another $1 million. Paratransit was also down by about $700,000, and vanpool costs were down by $200,000. Valley Metro Rail costs were up by $2.6 million, offsetting some of those other cost savings.

Second point, although the cost of operations was down substantially, the region delivered more service miles in the year. Bus service was up by 2.9 percent, that is, vehicle revenue miles delivered up by 2.9 percent, paratransit up by 11.7 percent. And although systemwide boardings are down, I'm going to show you that in a little bit, by 1.9 percent, our operating cost per boarding has remained flat growing only by three- tenths of a percent.

This table provides an overview of transit modes operating in the region. The data includes operations managed by Phoenix, Glendale, Peoria, Scottsdale, and Valley Metro.

I want to just point out fixed route bus represents about 78 percent of the total boardings. Light rail about 19 percent. Paratransit 1.3. And vanpool one and a half percent of the total system boardings.

Total boardings for the year $74.2 million. That's the number of annual rides for all modes. And that represents a 1.9 percent decrease over last year. That equates to about 1.4 million rides. Fixed route bus was down about 2.2 percent, 1.3 million of those rides. Vanpool was down about 108,000. Light rail was actually up by 44,000, just slightly up over the prior year.

Vehicle revenue miles operated, as I mentioned before, 45 million is up by 2.2 percent. Our operating costs per revenue mile decreased by 3.6 percent. And the major contributor to that was fixed route bus, which was down by 5.1 percent.

Boardings per revenue mile, right here, with the boardings down by 2 percent and revenue miles up by 2 percent, overall boardings per revenue mile decreased by about 4 percent.

Average fare per boarding improved slightly to $.91 per ride versus $.90 in the prior year, a change of about eight-tenths of a percent.

Our overall farebox recovery improved by 1 percent: ending up with fixed route bus at about 22 percent, paratransit 7 percent, vanpool 106 percent, and light rail 40 percent.

Our operating cost and subsidy per boarding increased slightly by three-tenths of one percent and 1/10 of one percent respectively.

This is a peer comparison on our bus system, fixed route bus system. And for those comparisons we have NTD, National Transit Database, information. And the most recent report from the NTD is 2012 data, so all this information is from the 2012 NTD data.

We do expect that there would be some changes in their 2014 data, but they do represent a reasonable basis for judging how our operating performance is doing.

If we look across the left, passenger trips, we see some very large bus systems in Denver. In Denver here, in Dallas, and Houston. The average -- the peer average for annual passenger trips is 43 million. The Valley Metro region, a little greater than that, 57.8 million.

I want to come down here to some of these metrics. The peer average operating cost per boarding is $4.43. Valley Metro region is $3.83. The average fare for the peers is about 90 cents per boarding. Valley Metro, a little lower than that, at 84 cents. The average subsidy per boarding for the peers is $3.53. The Valley Metro region is lower at $3.00.

And in terms of boardings per revenue mile, the regional average -- or the peer average, excuse me, is $1.99. And Valley Metro region performs very similarly to the peers in that area.

Councilmember Kuby said can I ask about San Diego? It's such an outlier there at 37 percent fare recovery, can you explain why they have such a high fare recovery?

Mr. McCormack said there are a couple of things. They have a higher fare structure. They have a higher fare structure in San Diego. They have more dense, more dense population demographic there, which is more conducive to boardings per revenue mile. Those are the major differences. Any other questions on the bus?

I’ll touch briefly on light rail, our light rail system here, if you look at our peer cities, we

have some very large systems: In Dallas in terms of annual trips 27.7, Denver and San Diego; the larger systems, in total passenger boardings, the peer average is 20.5 million trips per year. Valley Metro's system is currently generating 14.3 million boardings per year.

Kind of moving down here to the operating costs, the peer average for operating costs is $3.04 per boarding. Valley Metro it's $2.18. The average fare of the peers is $.95 where we're at $.87. The subsidy per boarding for the peers is $2.08. Valley Metro much lower at $1.31. And the fare recovery for the peer average is 31 percent. We were at 40 percent last year. Finally, boardings per revenue mile the peer average 3.6 and Valley Metro rail 5.7.

The operating costs for our rail system is significantly lower than the peers due to it being a relatively young system. And as the system matures, the preventive maintenance costs will increase.

And so as you see in our budgets from year to year, our operating costs are going to be increasing to maintain that state of good repair, as these other systems have been incurring for a number of years.

In terms of our fare recovery, too, it's significantly better to the peers. And there's two factors that are driving that: Number one, our operating costs are low relative to the peers, but also the boardings per revenue mile are very high. And so we have this very dense 20-mile system that's generating a lot of passenger ridership.

And with these other systems, the lines are spread out and you don't get the same kind of productivity as time moves on.

In terms of the paratransit, looking at our peers, the annual passenger trips are about a million trips a year. Both for the peer average, and Valley Metro we compare very favorably or in a similar way.

The fare revenue for the peers is $1.8 million. We generate $2.6 million. Operating costs are relatively similar. We generate or we have greater vehicle revenue miles with part of that's due to the taxi-based system that we've implemented.

Our operating costs per boarding is very similar to the region. We do generate greater average fare than the peers. And so our subsidy per boarding is below the peers.

At the Management Committee we received a request to add some safety and security metrics to our TPR, and so we're going to look at those benchmarks for next year so that when we bring you this report we'll look to doing that. And we were also asked to look at the impact of gas prices on our ridership. And you're going to see a presentation here coming up which is going to show you some relationship between gas prices and ridership coming forward. We'll continue to monitor that as it's been very volatile, as you know, recently with gas prices and the impact is beginning to be felt on ridership as we move forward.

Councilmember Sherwood said just for the record, and we discussed it yesterday, to come up with a few of those metrics and kind of start, you know, as far back as feasible to show, you know, 10, 15 years. And you said you’d do that. Just, and again, not always, but on the key ones like the the farebox, and the ridership, and those types of things, so. So I just wanted to make that for the record. Thank you.

Mr. McCormack said will do.

Vice Mayor Orsborn said I had a question, not on fuel prices and ridership, but fuel prices and our costs. And I know that we've changed over quite a bit of the fleet to -- from diesel to natural gas, so it may not have as big effect on our cost as what we might think.

Mr. McCormack said that's correct. The majority is 80, 90 percent of the fleet is natural gas. And those have not decreased to the same level as the diesel fuel has. So there really -- our fuel prices are lower than we planned this year. And we're forecasting them to be relatively flat going into Fiscal '16, so we're not as impacted by those fuel prices on our operating costs.

8. Transit Ridership Trends Analysis

Mr. Banta said Mr. Chairman, members of the Board, for the interest of time we are going to do the Transit Trends Analysis, but the quarterly staff reports are in your packet. If you have any questions, let us know. We recognize your time is valuable and we would like to try to expedite the close of the meeting, if that's okay with you.

We believe the Transit Trends Analysis that will be done by Mr. Grote and potentially Holly Hassett will provide you some very good information to think about over the last decade of trending here.

Mr. Grote said Mr. Chairman, members of the Board, this presentation today is really a result of requests that we received from Board members last fall.

It's an information piece to look back over time and understand how transit has changed and some of the reasons why it has changed in the last -- we tried to go back as far as possible. Most of the information goes back at least ten years.

In some cases we were able to go back further than that. But when you go much further back it's challenging getting some of the data that we would like to be able to get.

We're going to do this in really four pieces, four components. The first thing we want to do is look at national trends and how we compare at a national level.

We want to spend a little bit of time looking at Valley Metro boardings and revenue miles and how that's changed over time. I know there was a little question about that in

the last presentation. And we're going to look at that as it compares to population and employment and vehicle miles traveled, gas prices, you know, various things like that that we'll be looking at.

We also have some slides that focus specifically on light rail and the trends that have been around with light rail, we're comparing to some of our peers. And also, we're also addressing ASU. Because ASU has been a big factor in light rail.

And then finally, we've, over the last several years, we do routinely we do origin and destination studies every three or four years or so. And we've gone back a few years, back to 2001, and we're comparing our trip -- what the trip purposes have been and also the mode of access to transit over those different time periods. And so that will also be presented.

But I'm not going to do any of this. I'm going to turn it all over to Holly Hassett. Holly is one of our senior planners. She focuses on travel forecasting and she can do a lot better of a job at this than I can, so I'm going to turn this over to her. And then I'll come back and make a few concluding remarks at the end.

Ms. Hassett said good afternoon. This analysis looked at transit trends from a regional and national on a peer-region perspective. When we say region we mean all transit operators in the Valley, and we labeled that Valley Metro. We look at fixed route transit operations that included our EXPRESS and circulator services, but did not include demand response of the vanpool services. The analysis uses -- as Wulf mentioned, were basically from 2001 to 2013, but depending upon data availability that did change.

So first, some background. This table is showing you the growth between 2003 and 2012 in population, employment, annual transit boardings, and revenue miles. And it's showing that for the national average change, our peer-region's average change, and our change here at Maricopa County Valley Metro. The peer regions are places like Dallas, San Diego, Denver, Houston. And what we're seeing on this table is in terms of growth in population and employment, indeed Maricopa County grew at about the same rate as our peer regions.

What you'll notice that is different, however, is that Maricopa or Valley Metro here our boardings -- growth in boardings and revenue miles was greater than either of the peer regions or the national level. In fact, our transit boardings were at 35 percent during this time period. Where at the national level it was 17 percent.

Now we're going to be looking at a percent change in revenue miles, a year-to-year change in the provision of revenue miles of transit. And we're comparing our system here, Valley Metro in purple, to the national average change in green.

What we're seeing here is, in the early years Valley Metro grew at about the same rate as the national average. But then with the introduction of our Prop 400 services and then light rail, we grew at a much greater rate than the national average in terms of provision of revenue miles. However, when our recession hit in 2010 we actually

contracted service at a greater rate as well.

Now this is the companion piece to revenue miles, and this is looking at boardings during the same time period, 2003 to 2012. Again we're comparing our national average, green bars, to Valley Metro in the purple bars.

In this time in the early years what we're seeing is that Valley Metro is actually growing faster in boardings than the national average. Again, we see the Prop 400 services, the introduction of light rail. But then some interesting things happen after 2009.

In 2010 -- I consider that really the height of the recession here for transit and for transportation. We see that we have a single year of boarding reductions, but if you recall in our revenue slide, we had consecutive years of service reduction. So we had service reductions over several years but only one year of significant boarding loss. This is a really interesting time frame for Valley Metro. And we're going to be looking at that in more detail in this next section.

Now we're going to focus on Valley Metro boardings and revenue miles. In this first slide is showing you from 2001 -- we're going all the way back to 2001 now, not 2003 -- to 2013. The increase in population in the region, employment, revenue miles, and boardings. You'll notice there are two vertical axes on this chart. The axis on the right is for population/employment. So, for example, in 2013 the employment in the region was about four million.

The axis on the left is for boardings and revenue miles. So again in 2013 there was about 73 million annual boardings. And what this chart is really trying to show, based on the steepness of the line or the slope of the line, is that our boardings here in purple who had a much greater rate during this time period than our population, our employment, and even our revenue miles.

Now this next chart is looking at annual passenger boardings versus daily roadway vehicle miles of travel. And what we're seeing here is that over time, from 2001 to 2003, our daily vehicle miles of travel in this region grew about 35 percent; whereas our boardings during this time period grew by 87 percent.

Now you may recall the first table I said boardings grew by 35 percent. And now I'm saying 87 percent. But that was because the first table did not include the early years of transit from 2001 to 2003 where we had significant gains in transit boardings and provision of revenue miles. And here on this chart you're going to see that. This chart is another percent change. But this time we're looking at just Valley Metro and we're looking at revenue miles and boardings on the same chart.

The revenue miles are the green bars. The boardings are the purple bars. And what we're seeing here in this early year is now you can clearly see the impact of some -- that you couldn't see on the national chart -- of things like our city taxes, Transit 2000, the Tempe Transit Tax, for our increase in revenue miles and boardings.

Then we have the same years as we did on the national chart. And then we have our Prop 400 introduction to light rail. And here we can see what is going on where we had this single year -- the recession hits, we have a single year of boarding reductions, consecutive years of service reductions, but our boardings actually level out when we start to gain again.

So what is happening during this time frame? Well, it seems that there's a couple different things happening. One thing that's occurring is 2010, I think, was the height of recession from transportation perspective here. We lost roadway VMT as well. We had 2.5 million less roadway VMT on an average day, meaning we lost trips overall in the region, including trips on transit.

But the other thing that's occurring is we introduced light rail in 2009, partial year of rail service, 2010 rail ridership really starts to gain, and it gains year after year, even with some slight service reductions on rail. This was helping to offset some of the losses on the local bus side.

Another thing that was occurring is 2011, the VMT in the region is picking back up where more trips are occurring in the region including trips on transit. And so I think that explains, partially explains at least, why we had several years of service reductions but our boardings did not respond in kind.

Now we're going to be looking at two more slides with boardings, revenue miles, employees, but this is just a slightly different look at the same data, if you will. Now instead of looking at percent change, we're looking at total change over time. Again we're going from 2001 to 2013. The blue bars represent our local bus; the purple portion of the blue bars are the bars that represent rail.

This first slide is showing you revenue miles. We can clearly see the early buildup of our revenue miles, the relatively stable years. And then 2009 the height of our service is here, we introduce light rail, and then we can see our service reductions, until finally we stabilize in about 2014.

Our companion piece is our boardings. And again, it's just a slightly different look at the same data, but again we see the buildup and we notice the first year of light rail, you notice this portion of the purple bar is not as great as the next year's. That's because this was the partial year of light rail services. And then we see the one year of boarding reduction. It stabilizes. And then increases. But as we go into 2004 we notice a slight decrease.

Now on this chart we're looking at boardings by time of day. And this is for a typical weekday in October of 2013. And this is a typical pattern you would see on the streets as well where you have the early morning peak, the afternoon dropoff, the evening peak, and the dropoff again in the evening. There are some differences however. You see this early peaking from 2:00 to 3:00 p.m. That is indicating the importance of our school trips.

The other thing to note is the green bars on here represent our local fixed route bus. And the purple portion represents our rail. We see this fairly significant dropoff in the midday for our local buses, but we do not see the corresponding dropoff as much for our rail system. There's possibly two reasons for that. Our fixed route system, we do cut back in frequency as in much of our fixed route system during the midday, whereas rail we maintain the frequencies. But the other possibility is we are serving slightly different markets on the two different systems.

So we have boardings by time of day. Now we're going to look at boardings by time of year. This, again, is for 2013 and it's boardings by month. But this time we've combined rail and local bus into the green bars. And our EXPRESS services have been combined into the purple bars. What we're showing you here is what's important is for our local bus and rail system, we significantly dropoff in the summer.

Once again, indicating the importance of our school trip markets on that transit system. Where for our commuter system, our dropoff really occurs during the holiday months of November and December.

Now we're going to look at two charts that talk about service productivity. This first chart is looking at boardings per revenue mile. And we have our services separated out here. Our EXPRESS and RAPID services are in the green and they have about one boarding per revenue mile and have done that consistently over time. It dropped below that in 2010 at the height of our recession, and then has since picked back up again.

The local bus shows a very similar pattern, except it's about two boardings per revenue mile. It started out at just under two boardings per revenue mile, went below that in 2010, and has since picked back up again.

The clear star of the show is our light rail system. It opened at just under four boardings per revenue mile, quickly climbed to almost six boardings per revenue mile, and as we move into 2013 to 2014, we can see that leveling off and even a slight decline. In fact, on all our services we're seeing a slight decline.

And this chart even shows it better. This chart is now looking at service productivity from a boardings per trip perspective. The green bars represent our EXPRESS service and our RAPID service has been separated out in the red bars.

What we're seeing here is our RAPID service has actually carried more boardings per trip with the exception of the first year it's opened. And one of the things we can note here, too, though, is if you notice in terms of boardings per trip, our service productivity we definitely see this trending downward as we move from thirteen to fourteen. Can't call it a total trend yet because it's brand-new data, so it's really just an observation point at this point in time.

Mr. Banta said I'd like to make a point on that last slide. If you see the RAPID service and the productivity of the RAPID service run by the City of Phoenix, it's really park-and- ride lot to destination downtown. And sometimes we work with the member cities on

EXPRESS routes to have the EXPRESS routes go from a park-and-ride lot through a member city service area, then back on the highway, then back to downtown as we look to work with our life cycle program to spread the equity amongst transit service.

So when we're working with our member cities to try to focus more park-and-ride lot to downtown, we can't eliminate that local service that we do through the cities, but we can over time and we're working on that to bring those bars more in comparison to our EXPRESS and RAPID service.

Ms. Hassett said this last chart in this section is looking at our EXPRESS bus ridership, which includes our RAPID and EXPRESS combined, with the average price per gallon of gasoline in the State of Arizona. This is over time. It goes from 2004 to 2014. And what we're seeing here is a bit of a lag trend. You'll note when gas prices peak, there's a bit of a lag in our EXPRESS ridership peaks, and then when gas prices dips significantly there's a lag and then there's a dropoff in our EXPRESS bus ridership.

Now one thing to note here is our gas prices in 2014 at $3.47 a gallon. And that was because we took it from the summer of 2014. It does not include this most recent drop, significant drop, in gas prices. So come March and April, given this lag period, it will be interesting to see what is going on with our transit boarding.

So some highlights from our boardings and revenue miles analysis is that our ridership has increased significantly over time. In fact, to put this in perspective, between 2001 and 2013 population in the region increased 24 percent; employment in the region increased by 12 percent; ASU enrollment increased 46 percent; and our boardings, they increased 87 percent.

Our transit productivity has also increased during this time period. We started out at 1.85 boardings per revenue mile and have since gone up to 2.39 boardings per revenue mile.

Our boardings per revenue vehicle hour has also increased. And rail has been a significant contributor to transit ridership in this region. In fact, on a systemwide basis rail revenue miles represent 8 percent of total revenue miles. But rail boardings, as you see here, represent about 20 percent of our total boardings. So since rail was a significant contributor to our transit ridership, we thought we would look at specifically how our rail is doing compared to some of our peer cities.

We selected 10 peer cities and you can see there they're listed here on the bottom. Our system is colored in green. And this first chart is looking at boardings per track mile. And it is in rank order.

You'll notice here Houston is a bit of an outlier at over 5,000 boardings per track mile. Now Houston is a very short system. It's less than eight miles, 7.5 miles. It's anchored on two ends by two very big activity centers: one being Houston downtown and a very dense corridor. So that explains partially why they have a higher boardings per track mile.

However, all the cities on this end with the exception -- on the higher end of the scale with the exception of Portland are new start cities. Conversely, all the cities down on the lower end of the scale are older established systems with the exception of Charlotte, which is also new starts. So, for example, Dallas has 85 miles of rail. St. Louis 46.

The lesson learned here is we expand our system outside the core, we can probably expect our boardings per track mile to decrease.

Now we also looked at boardings per revenue mile, and this time we looked at a subset of the peer cities, but we did look at both rail and bus boardings per revenue mile. Again this chart is in rank order. And, again, you'll notice Houston stands out. But also please note Houston in terms of bus boardings per revenue mile is actually at the lower end of the scale. It's off the chart in terms of rail boardings per revenue mile. But we'll see what happens when they expand again.

Phoenix is doing well in terms of rail boardings per revenue mile -- about 5.6. And we're right in the middle of the path of this scale, at least, of bus boardings per revenue mile.

There's a couple other cities that are interesting to me on this chart. One is color blue. It seems that they do well in terms of rail boardings per track mile, rail boardings per bus mile, and local bus boardings per revenue mile.

The other interesting city, and I think we've mentioned it a couple times already here today, is Denver. They have almost the same amount of rail boardings per revenue mile as local bus boardings.

This third and final slide in this segment -- and we're looking at our rail boardings over time compared to the growth in ASU enrollment. And, generally speaking, there's been a direct relationship between growth in ASU enrollment and growth in our rail boardings.

Now you see as we go to 2013, however, that relationship appears to be ending. We think there are a couple things going on now. It appears that our year-after-year increases on rail ridership have come to an end.

We see that rail ridership is stabilizing; yet, ASU enrollment is continuing to grow, but part of the growth in ASU enrollment is at the satellite campuses; two of which are not served by rail.

In terms of our peer city analysis, we do rank high in terms of boardings, rail boardings per revenue mile, and track mile. We do know that ASU is a significant contributor to our rail boardings.

And we also know that compared to local bus, there are fewer work trips on rail. We have a higher number of park-and-ride users, and a higher number of choice riders.

The reason we know that is because we looked at three transit origin and destination surveys. We looked at one from 2001, one from 2007 before rail opened, and one from 2010 right after rail opened. And we wanted to know is why people are riding transit? Do they have a car available to them? And how do people access our transit system?

This first chart we're looking at why people ride transit. And the setup of this chart is -- or the next few charts is the same -- why we have -- the 2001 on-board survey in the first set of slides; the 2007 on-board survey in the second; the 2010 on-board survey for total system, the third set of bars; and then for 2010 we also separated out LRT. And that is separated in the 2010 with the black boxes. It's outlined in black boxes.

This first chart we're looking at is why do people ride transit. And over time you can see there's been some changes. The green boxes here, the green boxes or bars, represent home-based/university; the purple is for work; and the blue is for home-based/other.

You can see over time our university trips have increased significantly on transit. We've gone from 5 percent share to a 20 percent share. And it's really a third of our light rail ridership. Conversely, our work trips over time have decreased. We were at about 50 percent or over in 2001, and now we've dropped down to 30 percent in 2010. It's only 22 percent on our light rail system.

We wondered if this was just a local time out or if it was a national trend on this. And according to the National Household Transportation Survey, between 2001 and 2009, transit trips in the country increased by 30 percent, but the share of who took the transit dropped by 9 percent during that same time period. So there is a national trend in terms of losing to, you know, work trips.

However, another interesting thing to note, and this is that magic year again, 2010, is that we actually lost the -- work trips on transit between 2007 and 2010. In 2007 on an average weekday, we had just over 58,000 people saying: I ride transit to go to work. In 2010 that number had dropped to 52,000.

Now remember, 2010 was the height of the transit recession here. And there's also a couple of other things going on, we said there were less trips being made. Well, interesting to note, in 2007 the unemployment rate was 3.1 percent. In 2010 the unemployment rate was 9.5 percent, so there's obviously fewer work trips going on, too. And also between 2007 and 2010, it is possible people were working differently, perhaps more telecommuting, more flexible jobs, and part-time jobs.

This is showing us the percent of transit trips by whether or not our transit riders had a car available in their household. And the general trend is downwards in terms of captive riders. We have more people -- there's fewer people riding transit that do not have a car available at all. We're about 44 percent in 2001 down to 35 percent. And on light rail it's only a quarter of our ridership. The people riding our transit system that said they had at least one car in the household has increased over time. And on our light rail system it's 75 percent.

The last chart in the presentation is looking at how people access our transit system. And again, we're looking at the three survey years. And I think there's two things that stand out on this chart. One is the people walking to transit is represented by the purple bars. And it is obviously the dominant mode and has been and continues to be.

The other thing that's interesting on this chart is that our light rail shows again a slightly different pattern. We have a much higher park-and-ride use, represented by the green bars on light rail, and other access to transit. And what other access to transit is people biking to transit or being dropped off at a transit stop. And again light rail is showing a much higher use of the other access to transit.

If you look at the on-board bus surveys, our home-to-work trips are decreasing. There's a national trend for this, but it seems to be -- we have some more significant decrease than at the national level.

University trips are increasing. In fact, you know, on an average weekday, university travel is probably about 4 percent of total travel: On our transit system it's 20 percent, and on our light rail it's 30 percent. So I thought that was a fairly interesting statistic.

The number of people riding transit that have an auto available appears to be increasing. And walking to transit is very -- you know, being able to walk to and from our transit system is very important to the majority of our riders. Now I'm going to turn it back over to Wulf again, and he's going to make some concluding remarks.

Mr. Grote said just a couple remarks here towards the end here. Of course, as Holly pointed out, and since about 2001 we have really seen a significant amount of growth in transit services and boardings on our transit system.

I think the really important thing to note in summary here is that more -- we have seen more people coming to the system proportionately than the amount of service that we've been adding to the system, meaning that you add service, people are responding to transit; people are using it in a greater percentage.

We are also recognizing that over time, especially even going back more than ten years, that we've really progressed over the last twenty, thirty years a lot in terms of our metropolitan area going from a -- providing a minimal transit service to now becoming more transit progressive.

I'm not going to say we're at transit progressive, because we're not, but we are becoming more transit progressive, because we have a lot of room for growth in this area. And you heard numerous times today in the presentation that ASU, we have found, is a key market for us, as are other school purposes as well.

The other thing that's been concerning to us is the fact that work trips, as a share of the overall transit market, are decreasing even at a time when transit ridership is increasing. And the other thing that's also of important note to us, is that over the last year or so, as Holly and also John pointed out before, our transit ridership has been leveling off, and

that's something of note.

So with all of this information, you know, this was actually a good exercise for us. There's a lot of good information that we got out of this. But we recognize that, really, we need to do more that there's other things that we need to do. We're beginning to see this leveling off of ridership that I just mentioned a moment ago, and we think we need to spend more time doing more research, specifically on understanding why we're leveling off right now and why we're no longer seeing the growth that we have before.

The other thing that we also have coming in the next year, we have two light rail extensions that are going to be added. And they're going to have additional impact on our system. So we need to spend some time looking at that.

This is our first extensions of our light rail system, so we need to see how that affects not just light rail, but our overall transit ridership in the region as well.

We also did spend a lot of time here, but we think it's important to spend more time looking at time-of-day analysis and how our riders are using our services by time of day, and if we should be doing things differently by time of day. And also we want to spend more time looking at what further investment in transit -- what impacts that's going to have in ridership.

But I think we want to go beyond research, you know, the last bullets here, what we're saying here is that we need to go beyond research. We really need to look at actively trying to make some improvements in different areas.

We think that we need to focus our effort on increasing ridership and productivity given the limited additional funding that we really have coming our way. If you look at the Prop 400 program, we're basically on the bus side, we're at build-out. There's really very little additional service being added. We still have a couple of rail corridors being added in the future but not on the bus side.

So we need to look inside now what we have and look at our existing routes, look at our different service types that we have, and look at ways to improve -- increase the productivity.

And as a tool for that, you'll all remember, and some of you don't, because you're new to the board, but last fall we went through quite a bit of discussion on our transit standards and performance measures. And that really is an opportunity for us by looking at more performance to increase our productivity and also to increase our ridership on our system. So we have to get better at doing what we do with what we have, is basically what we're saying.

We think there's opportunity to increase our school markets. I mean, it's been a big topic of discussion on several cases today. ASU specifically, we're working with ASU right now to increase some of the services -- actually to increase some of the usage that we would have on our system because they're looking at possibly doing something with

their shuttle operation and maybe moving people into our system.

The work trip I really think that that's, you know, to me that's alarming to see the numbers going down as much as they have in the last decade, and I think we need to find ways to reverse that trend, and we need to be looking actively at bringing people, the commuters, back to our system again.

I hope that this was informative to you. I think we'll -- we're probably going to have to come back again in some future date and give you an update on what we're seeing and see if we can improve our ridership over time.

Councilmember Sherwood said two things, one, in terms of Prop 400 versus 500, I know we're all hoping that the majority of funding with Prop 500 or whatever the legislators want to call it, I think they are trying to change the scheme there, will be more mass transit in terms of moving people and in terms of the alarm of ridership on the employment side running down.

I think employers are looking more and more towards mass transit to locate -- you know, I do a lot with GPEC and I see that's, you know, that's when we entertain relocates, they're looking at that type of a system. So as we mature there I think that will improve.

On a lighter note, and I know Holly took the bulk of this, but I made a note, I know we cut you out last December, but you did wear your same presentation suit for doing ridership trends analysis, appreciate that. Again, even though Holly did your heavy lifting today, but it's nice that you stayed with the scheme so, appreciate it. Thanks.

Vice Mayor Orsborn said that's very helpful in slicing that several different ways in determining what exactly is happening -- or trying to determine anyway what's happening in our ridership. I really like what you're getting at, at the end of this, which is, and I'm hearing the words actively looking for -- I'm calling it tweaks -- that we can make to make the system more efficient and productive.

You talked about the Houston example and how you have one heavily populated or one destination center and its heavy population all along the route and then another destination center, and so it's a no-brainer that that's going to be a successful part of that for a successful system.

But if we can, maybe, tweak not only bus, but the light rail to hit those major destination locations instead of just a corridor, and then tie the buses into it and making those tweaks that you're talking about to make it more efficient, I think long term we're going to be better off.

The other thing I think we're missing in this is painting the picture for the guy that drives to work every day from, say, Surprise or Goodyear or Mesa or whatever and is driving downtown and thinks that taking the bus is, you know, takes too long, and it's inefficient and there's not enough routes or whatever, but maybe going to specific locations, those

hubs, the city hubs and saying you could grab this line from here to get to this line, take light rail into your work location or into this other hub and define it, and put a dollar value to it so that whoever it is as they're driving along can see on a billboard or can see by some sort of social media, you know, what, I'm wasting an hour driving in traffic. I could spend an hour and fifteen minutes and six bucks and I would be at work and I could do work all the way towards work. And really making it easily understandable, essentially marketing our product out to the public to get the riders back or to gain increased ridership.

Councilmember Williams said I think one of the things that you have to also include are the changing demographics in downtown Phoenix, the number of residents moving down here, the number of condos, apartments. I mean, I could think of probably six instantly, thousands of units, that are going up, and we've had more than that already built and people move in. And the attitude of many of the young people, not just college students, but, you know, I'd say twenty to thirty-five to forty, they don't want a car. They want mass transit.

And I don't know what category you'd put them in. They wouldn't be home to work probably, because they live where they work. You know, a trip to the airport, yeah, that's what they plan. And a lot of seniors are doing that now. So I think you need to also work with probably our economic development or dominant services and talk about some of these developments and the potential changes and the impact it could have on building ridership in the future.

Councilmember Sherwood said I think the revolutions that we've been through the last couple of years and the presentations made, the millenniums they talk about for sure, but, you know, they are taking over transit, I mean, that's what they want, they want to work and play in an area that they have mass transit, too, and it may have to possibly have an effect on multi-housing industries. And you see as we saw some of the examples of trips that the multi-housings are being built including park-and-rides right along the route systems. A good example of that is there on Rural and Mill in downtown Tempe, so, anyway, good points.

Chair McDonald said thank you. Item 9 has been moved, so if you do have any questions on the individual department's write-ups, please let Mr. Banta know.

Are there any future agenda items from anyone that they would like to see? Okay. Seeing none, the next meeting is Thursday, February 19 at 12:15 p.m.

With no further discussion the meeting adjourned at 2:08 p.m.

DATE AGENDA ITEM 3 February 12, 2015

SUBJECT Chief Executive Officer’s Report

PURPOSE Steve Banta, Chief Executive Officer, will brief the Board on current issues.

BACKGROUND/DISCUSSION/CONSIDERATION None

COST AND BUDGET None

COMMITTEE PROCESS None

RECOMMENDATION This item is presented for information only.

CONTACT Steve Banta Chief Executive Officer 602-262-7433 [email protected]

ATTACHMENT None

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

DATE AGENDA ITEM 4A February 12, 2015

SUBJECT Intergovernmental Agreement (IGA) with the Arizona Department of Transportation (ADOT)

PURPOSE To request Board authorization for the Chief Executive Officer (CEO) to enter into an IGA with ADOT for Section 5311 (Rural Transit) pass-through funding for Rural Route 685 for Federal Fiscal Year 2016 (FFY16).

BACKGROUND/DISCUSSION/CONSIDERATION Valley Metro staff intends to apply for up to $494,000 of FTA Formula Grants for Other than Urbanized Areas (Section 5311) funds for the FFY starting October 2015 through September 2016. The application will include administrative and operating assistance for Route 685 Gila Bend and continued operating assistance for four shortened round trips between the Buckeye Community Center and the Maricopa County White Tank Justice Court commencing in April 2015 in conjunction with the next scheduled Valley Metro transit service changes. Regional PTF funds will not be used for the short trips within Buckeye. Also, no FTA Section 5307 Job Access/Reverse Commute (JARC) program funds were awarded to the route from last year’s application, so additional 5311 funding for the first trip each weekday is being requested with this application.

ADOT is the designated recipient for FTA 5311 rural formula grant funds for the state and Valley Metro must submit an application annually to receive this funding for the service identified above. ADOT’s application process requires submittal of an IGA for funding and it must be signed by Valley Metro for the application to be accepted. Upon award, ADOT finalizes the IGA with the awarded amount.

FTA requires a public hearing be held and public input be received for all FTA grant funded assistance programs and projects. ADOT, as the designated recipient of FTA 5311 funds, is requiring each applicant for 5311 funds to hold a public hearing related to the activities for which the applicant is requesting federal funds to satisfy this FTA requirement.

COST AND BUDGET The maximum reimbursement from FTA funds for FFY16 is expected to be up to $494,000. The following table summarizes funding sources and amounts applicable to this Board action.

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

Funding Source Amount FTA Section 5311 (ADOT) $494,000 PTF (Local Match) $248,000 Maricopa County - Arizona Lottery Funds (Local Match) $28,000 City of Buckeye (Local Match) $33,000 Total IGA Amount $803,000

Operation of Route 685 is in the Valley Metro budget and is programmed in the Transit Life Cycle Program (TLCP) with Public Transportation Funds (PTF) and Maricopa County Arizona Lottery Funds, which serve as the required sources of local match funds. Local match funds for the four shortened round trips are provided by the City of Buckeye.

COMMITTEE ACTION RTAG: January 20, 2015 for information TMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to enter into an IGA with ADOT for FTA Section 5311 (Rural Transit) pass-through funding for Rural Route 685 for FFY16.

CONTACT Wulf Grote, P.E. Director, Planning and Development 602-322-4420 [email protected]

ATTACHMENT None

A copy of the IGA is available upon request.

DATE AGENDA ITEM 4B February 12, 2015

SUBJECT Fuel and Fuel Card Services Agreement

PURPOSE To request Board authorization for the Chief Executive Officer (CEO) to execute annual purchase orders with Chevron and Texaco Universal Card for fuel card services for purchasing fuel in an amount not to exceed $1,811,913 for eight years for the operation of Route 685 (Ajo/Gila Bend) Rural Connector Service.

BACKGROUND/DISCUSSION/CONSIDERATION The Route 685 Ajo/Gila Bend Regional Connector operates along State Highway 85 and provides bus service to the communities of Ajo, Gila Bend, Buckeye, Goodyear, Avondale, Tolleson and Phoenix. In November 2014, a new five-year contract with one three-year renewal option was awarded to Ajo Transportation/Second Generation to operate the service on behalf of Valley Metro. The new contract did not include the cost of fuel to operate this service. Valley Metro elected to purchase fuel separately because, as a governmental agency, federal excise taxes are exempt which lowers the cost of fuel by 24.4 cents per gallon. In addition, all other Valley Metro bus contracted services are structured in this manner.

Valley Metro issued an Invitation for Bid in December 2014 for the supply of diesel fuel and fuel card services in the Town of Gila Bend and the City of Buckeye. No qualified bids were received and after analyzing the current market conditions, it was determined that there are no qualified bidders that can provide both fuel and fuel card services in the two cities where these services are required. As a result, staff recommends the current arrangement that is in place with Chevron and Texaco Universal Card be extended on an annual basis to provide fuel card services for the remaining eight years of the service contract. Valley Metro has the option to cancel this agreement without any penalties or negative consequences provided outstanding balances are paid in full to the vendor.

This recommendation is being made based on the following criteria:

• The fuel card will be accepted at participating gas stations in Gila Bend and Buckeye (currently there is a Texaco and Chevron in Gila Bend and a Chevron in Buckeye) • The fuel card company must have security measures in place to include fuel card purchase restrictions, driver ID numbers, and comprehensive online reporting services to enable transactions to be verified by Valley Metro before payment is made • The fuel card company will have the ability to process appropriate Federal excise tax exemptions. The Federal excise tax exemption is currently 24.4 cents per gallon.

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

• Valley Metro receives a 10 cent-per-gallon discount off the pump price for all transactions made using a Chevron-Texaco fuel card at the Bill Henry’s Texaco location, which is the current rest stop location for this route. Additionally, Valley Metro will receive a 2 to 3 cents-per-gallon discount through the established fuel card rewards program, based on projected monthly purchase volume (offered through Chevron and Texaco Universal Card)

COST AND BUDGET The projected eight-year cost for fuel services is $1,811,913 as detailed below:

Route 685 Ajo/Gila Bend Including Buckeye Short Trips 3/1/15 - 7/1/22 - FY16 FY17 FY18 FY19 FY20 FY21 FY22 Total 6/30/15 10/31/22

4 12 12 12 12 12 12 12 4 Months Fuel Cost $ 69,840 $ 215,806 $ 222,279 $ 228,948 $ 235,816 $ 242,891 $ 250,178 $ 257,683 $ 88,471 $ 1,811,913

Fuel for Route 685 is funded in the Adopted FY15 Operating and Capital Budget with a combination of Public Transportation Funds (PTF), Federal Section 5311 (Rural Assistance) funds, Federal JARC funds, and local funds from Maricopa County and Buckeye. Fuel for the additional short-trip service for the City of Buckeye will be funded by Federal Section 5311 (Rural Assistance), and by the City of Buckeye. Should funding from any of these sources be eliminated or reduced, service levels may need to be adjusted to minimize the impact on PTF.

COMMITTEE PROCESS RTAG: January 20, 2015 for information TMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to execute annual purchase orders with Chevron and Texaco Universal Card for fuel card services for the supply of fuel in an amount not to exceed $1,811,913 for eight years for the operation of Route 685 (Ajo/Gila Bend) Rural Connector Service.

CONTACT Ray Abraham Chief Operations Officer 602-652-5054 [email protected]

ATTACHMENT None

DATE AGENDA ITEM 4C February 12, 2015

SUBJECT Fiscal Year 2014 (FY14) Comprehensive Annual Financial Report (CAFR) and Single Audit Reporting Package

PURPOSE To request that the Valley Metro Board of Directors accept the Comprehensive Annual Financial Report and Single Audit Reporting Package for the period ending June 30, 2014.

BACKGROUND/DISCUSSION/CONSIDERATION Heinfeld, Meech & Co., P.C., Certified Public Accountants, has completed the FY14 RPTA audits. Completion of the June 30, 2014 financial statement and Single Audit Act audits indicates Valley Metro’s compliance with both state and federal statutory audit requirements as well as adherence to Generally Accepted Accounting Principles in financial reporting. Preparation of a Comprehensive Annual Financial Report demonstrates Valley Metro’s commitment to the highest standard of financial reporting for a governmental entity. The accompanying report is submitted for review and acceptance.

In planning and performing the audit of the financial statements, Heinfeld, Meech & Co., P.C. considered RPTA’s internal controls in order to determine auditing procedures for the purpose of expressing opinions on the financial statements and not to provide an opinion on internal controls.

During the course of the audit there were no findings. Valley Metro’s Comprehensive Annual Financial Report for FY14 received an unmodified opinion and the receipt of the GFOA Certificate of Excellence for the FY13 CAFR demonstrates the commitment to the highest standard of financial reporting for a government entity. Attached you will find a copy of the Auditor’s reports and Management Discussion and Analysis section of the CAFR.

The complete reports are available on the Valley Metro website at the following URL: http://www.valleymetro.org/publications_reports/annual_reports

COST AND BUDGET None

COMMITTEE ACTION RTAG: January 20, 2015 for information Financial Working Group: January 15, 2015 for information TMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors accept the FY14 Comprehensive Annual Financial Report and Single Audit Reporting Package.

CONTACT John McCormack Chief Financial Officer [email protected] 602-262-7433

ATTACHMENTS Auditors Opinion – CAFR FY14 2014 Management Discussion and Analysis – CAFR FY14 Audit Standards Disclosure Auditors Opinion – Single Audit Reporting Package FY14

2 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718

INDEPENDENT AUDITOR’S REPORT

Board of Directors Valley Metro Regional Public Transportation Authority

Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of Valley Metro Regional Public Transportation Authority (the Authority), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, and each major fund of the Valley Metro Regional Public Transportation Authority, as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparisons for the General Fund and major special revenue funds for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Change in Accounting Principle As described in Note 1, the Authority implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities, for the year ended June 30, 2014, which represents a change in accounting principle. Our opinion is not modified with respect to this matter.

1 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 3 through 15 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Authority’s basic financial statements. The accompanying supplementary information such as the Introductory Section, Other Supplementary Information – Combining and Individual Fund Financial Statements and Schedules, and Statistical Section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The Other Supplementary Information – Combining and Individual Fund Financial Statements and Schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Other Supplementary Information – Combining and Individual Fund Financial Statements and Schedules information is fairly stated in all material respects in relation to the basic financial statements as a whole.

The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2014, on our consideration of Valley Metro Regional Public Transportation Authority’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Valley Metro Regional Public Transportation Authority’s internal control over financial reporting and compliance.

HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants

December 22, 2014

2 FISCAL YEAR 2014 VALLEY METRO CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis

As management of Valley Metro Regional Public Transportation Authority (the Authority), we offer this narrative overview and analysis of the financial activities of the Authority for the fiscal year ended June 30, 2014. This discussion and analysis is designed to (1) assist the reader in focusing on significant financial issues, (2) provide an overview of the Authority’s financial activity, (3) identify changes in the Authority’s financial position, (4) identify any material deviations from the financial plan (adopted annual budget) and (5) identify individual fund issues or concerns.

Financial Highlights

• The Authority’s total net position decreased ($51.1) million in FY 2014, comprised of an increase of $3.2 million in governmental activities and a decrease of ($54.3) million in business-type activities. Total net position of the Authority is $77.4 million, of which $15.4 million is unrestricted.

• The governmental activities revenues increased by approximately $8.7 million (6.6%) over the previous year.

• The business-type activities revenues increased by approximately $34.4 million (61.1%) from the previous year.

• At June 30, 2014, the Authority’s governmental fund balance sheet reported a combined ending fund balance of $52.2 million, an increase of $2.5 million (5.0%) compared to the previous fiscal year.

OVERVIEW OF THE FINANCIAL STATEMENTS

The financial statements are presented as follows:

• Government-wide reporting – presents financial statements on a government-wide basis.

• Fund financial statements – presents governmental and proprietary fund financial statements, with the focus on major funds within each fund type.

• Measurement focus for governmental activities – in the government-wide financial statements all activities, including the governmental activities, are reported using the economic resources measurement focus and accrual basis of accounting. The current financial resources focus and modified accrual basis of accounting are followed for the governmental fund financial statements.

• Budgetary reporting – the display of both the original adopted budget and the revised budget in the budgetary comparison schedules is required by GAAP. These schedules are only required for the General Fund and major special revenue funds; these statements are presented as part of the basic financial statements. The Authority has presented this information for the proprietary funds in Other Supplementary Information.

• Required narrative analysis – the financial statements are required to be accompanied by narrative introduction and analytical overview of the government’s financial activities in the form of “Management’s Discussion and Analysis” (MD&A).

3 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

As presented below, the financial section of the Comprehensive Annual Financial Report (CAFR) for the Authority consists of this discussion and analysis, the basic financial statements and required supplementary information (other than MD&A). There are also additional non-required supplementary schedules presented after the basic financial statements. The basic financial statements include the government-wide financial statements, fund financial statements, including the budgetary statements for the general fund and major special revenue funds, and notes to the financial statements.

Government-wide Financial Statements The government-wide financial statements (see pages 16 – 18) are designed to provide a broad overview of the Authority’s finances in a manner similar to those used by private businesses. All of the activities of the Authority, except those of a fiduciary nature, are included in these statements.

The activities of the Authority are broken down into two columns on these statements – governmental activities and business-type activities. A total column for the Authority is also provided.

• The governmental activities include the basic services of the Authority including general government (administration), regional planning, transportation demand management and regional customer services. Grants and general revenues generally support these activities.

• The business-type activities include the private sector type activities which are transit service operations and light rail transit. These activities are partially supported by user charges and provide substantial benefits, both direct and indirect, to the public at large.

The Statement of Net Position presents information on all of the Authority’s assets and liabilities, both current and noncurrent, with the difference between the two reported as net position. The focus on net position is designed to be similar to the emphasis for businesses. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Authority is improving or deteriorating. To assess the overall health of the

4 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

Authority, other indicators, including non-financial indicators like the Authority’s tax base and the condition of its capital assets, should also be considered.

The Statement of Activities presents information showing how the Authority’s net position changed over the most recent fiscal year. Since full accrual accounting is used for the government-wide financial statements, all changes to net position are reported at the time that the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. This statement also focuses on both the gross and net costs of the various functions of the Authority, based only on direct functional revenues and expenses. This is designed to show the extent to which the various functions depend on general taxes and revenues for support.

Fund Financial Statements Also presented are more traditional fund financial statements for governmental funds and proprietary funds. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or conditions. Funds are used to ensure and demonstrate compliance with finance-related legal requirements as well as for managerial control to demonstrate fiduciary responsibility over the assets of the Authority.

Governmental funds – Governmental funds are used to account for most of the Authority’s basic services. Unlike the governmental activities column on the government-wide financial statement, these fund financial statements (pages 19 - 24) focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information is useful in looking at the Authority’s near-term financial requirements. Since the governmental activities on the statements focus on near-term spendable resources, while the governmental activities on the government-wide financial statements have a longer term focus, a reconciliation of the differences between the two statements is provided following the fund financial statements and is also provided in Note 3 (page 37).

Proprietary funds – Proprietary funds are used to account for business-type activities of the Authority. Enterprise funds are used for activities that primarily serve customers outside the governmental unit. The proprietary fund financial statements (pages 25 - 27) are prepared using the same long-term focus as the government-wide financial statements. The enterprise funds generally provide information similar to the business-type activities column of the government- wide financial statements, but provide more detail and additional information (i.e., cash flows).

Notes to the Financial Statements – The notes to the financial statements (pages 28 – 51) provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements and should be read with the financial statements.

Required supplementary information other than MD&A – Governments have an option of including the budgetary comparison statements of the general fund and major special revenue funds as either part of the fund financial statements within the basic financial statements or as required supplementary information after the footnotes. The Authority has chosen to present these budgetary statements as part of the basic financial statements.

5 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

GOVERNMENT-WIDE FINANCIAL ANALYSIS

The following tables and analysis discuss the financial position and changes to the financial position for the Authority as a whole as of and for the year ended June 30, 2014, with comparative information for the previous year.

Net Position Net position may serve over time as a useful indicator of a government’s financial position. The following table reflects the condensed Statement of Net Position as of June 30, 2014 compared to the prior year:

Condensed Statement of Net Position As of June 30 (in thousands of dollars)

Governmental Business-type Total Activities Activities Primary Government Percent 2014 2013 2014 2013 2014 2013 Change

Current and other assets $ 53,150.0 $ 51,642.3 $ 109,936.6 $ 106,992.2 $ 163,086.6 $ 158,634.5 2.8% Noncurrent assets Cash and investments - - 101,147.0 14,833.2 101,147.0 14,833.2 581.9% Deferred charges - - - 635.7 - 635.7 -100.0% Capital assets 1,970.2 1,308.7 83,972.3 90,619.2 85,942.5 91,927.9 -6.5% Total assets $ 55,120.2 $ 52,951.0 $ 295,055.9 $ 213,080.3 $ 350,176.1 $ 266,031.3 31.6%

Other liabilities $ 1,460.7 $ 2,531.4 $ 49,591.4 $ 42,750.3 $ 51,052.1 $ 45,281.7 12.7% Long-term liabilities 195.4 164.9 221,479.1 91,988.1 221,674.5 92,153.0 140.6% Total liabilities $ 1,656.1 $ 2,696.3 $ 271,070.5 $ 134,738.4 $ 272,726.6 $ 137,434.7 98.4%

Net position: Net Investment in capital assets, $ 1,970.2 $ 1,308.7 $ 43,205.6 $ 8,437.7 $ 45,175.8 $ 9,746.4 363.5% Restricted 2,790.9 2,117.8 14,100.5 8,286.5 16,891.4 10,404.3 62.4% Unrestricted 48,703.1 46,828.2 (33,320.7) 61,617.7 15,382.4 108,445.9 -85.8% Total net position $ 53,464.2 $ 50,254.7 $ 23,985.4 $ 78,341.9 $ 77,449.6 $ 128,596.6 -39.8%

The Authority’s total net position decreased ($51.1) million in FY 2014, comprised of an increase of $3.2 million in governmental activities, a decrease of $53.7 million in business-type activities, and a restatement of ($0.6) million in beginning net position, business-type activities. As a result of the restatement, the Authority’s total net position change is a decrease of $51.1 million as presented in the basic financial statements. Total net position of the Authority is $77.4 million, of which $15.4 million is unrestricted.

Of the $77.4 million total net position, $45.2 million are the Authority’s net investment in capital assets used to acquire those assets. The Authority uses these capital assets to provide services to the region’s citizens; consequently, it is not the Authority’s intention to sell these assets, and they are therefore not available for future spending. The capital assets are reported net of related debt; as discussed in the Capital Assets and Debt Administration section (pages 11 - 12), the Authority has pledged future transportation excise tax revenues to repay the outstanding debt obligations. The capital assets themselves are not intended to be used to liquidate these liabilities.

6 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

Approximately $15.4 million of the Authority’s net position (19.9% of the total) represents unrestricted resources that may be used to meet the Authority’s ongoing obligations to citizens, member agencies, contractors and creditors within the respective governmental and business- type activities. In fiscal year 2014 Business-type restricted assets include $10.6 million for cash escrowed for debt service. The remaining $3.5 million reflects resources that are subject to other external restrictions. The governmental activities reported an increase of $1.9 million (4.0%) of unrestricted net position over the prior year largely attributed to sales tax collection increases which were in excess of increases to expense activities of the Authority. The significant decrease of ($94.9) million of unrestricted net position over the prior year in business-type activities is primarily due to Lead Agency Disbursements to the Valley Metro Rail (VMR) Fund for the construction of capital projects. To fund the capital construction, the Authority issued bonds from its Transit Service Operations (TSO) Fund. With the debt issue, the TSO overall net position is (-$14.8) million at year end while the VMR fund holds $38.8 million. The combined funds net position equal $24.0 million for the Business Type Activities.

As previously stated, the net position of the Business-type activities was restated as of July 1, 2013. In accordance with GASB 65, debt issuance costs formerly reported as a deferred charge are now restated to recognize the expense in the period incurred. As a result, net position as stated in the June 30, 2013 CAFR, $78.3 million has been restated to $77.7 million. Refer to Note 2 on page 37 for more information concerning the accounting change.

Changes in Net Position The following table compares the revenues and expenses of the Authority for the current and previous fiscal year. The increase (decrease) in net position for each year represents the extent to which revenues were over (under) expenses during the year. Changes in Net Position Fiscal year ended June 30 (in thousands of dollars)

Governmental Business-type Total Activities Activities Primary Government Percent 2014 2013 2014 2013 2014 2013 Change

REVENUES Program revenues: Charges for services $ 167.9 $ 176.0 $ 55,326.4 $ 25,865.9 $ 55,494.3 $ 26,041.9 113.1% Operating grants and contributions 13,147.3 13,102.6 9,867.7 10,717.0 23,015.0 23,819.6 -3.4% Capital grants and contributions - - 22,996.1 19,661.1 22,996.1 19,661.1 17.0% General revenues: Sales taxes 126,415.6 118,336.0 - - 126,415.6 118,336.0 6.8% Interest earnings 146.1 114.1 139.1 137.0 285.2 251.1 13.6% Other 632.7 127.0 2,498.2 9.3 3,130.9 136.3 2197.1% Total revenues 140,509.6 131,855.7 90,827.5 56,390.3 231,337.1 188,246.0 22.9%

EXPENSES Governmental activities: Regional planning 1,351.1 1,245.0 - - 1,351.1 1,245.0 8.5% Transportation demand management 1,471.5 1,587.1 - - 1,471.5 1,587.1 -7.3% Regional customer services 8,473.1 8,200.1 - - 8,473.1 8,200.1 3.3% Administration 1,934.4 1,988.9 - - 1,934.4 1,988.9 -2.7% AZ Lottery fund disbursements 10,795.3 10,200.1 - - 10,795.3 10,200.1 5.8% Business-type activities: Transit service operations - - 148,884.7 91,327.3 148,884.7 91,327.3 63.0% Light rail transit - - 108,938.3 50,687.2 108,938.3 50,687.2 114.9% Total expenses 24,025.4 23,221.2 257,823.0 142,014.5 281,848.4 165,235.7 70.6%

Excess (deficit) before transfers 116,484.2 108,634.5 (166,995.5) (85,624.2) (50,511.3) 23,010.3 -319.5% Transfers in (out) (113,274.7) (106,156.2) 113,274.7 106,156.2 - - N/A Increase (decrease) in net position $ 3,209.5 $ 2,478.3 $ (53,720.8) $ 20,532.0 $ (50,511.3) $ 23,010.3 -319.5%

7 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

The largest sources of revenue for the Authority are sales taxes (54.6%). The major funding sources of governmental activities are sales taxes (90.0%) and federal and state grants (9.5%). The major funding sources for business-type activities are charges for services to member cities (60.9%), capital grants and contributions (25.3%). The Authority’s overall revenues increased by $43.1 million, or 22.9%, compared to last fiscal year. Total revenues of governmental activities increased by $8.7 million, (6.6%) over the previous year primarily due to increased sales tax revenues, ($8.1 million). Program revenues of business-type activities increased by $31.9 million or 56.8%, compared to last fiscal year. Charges for Services increased by $29.5 million primarily due to the East Valley Bus Unification service additions. Capital grants and contributions increased by $3.3 million.

Spending of the Authority’s sales tax revenues is limited to funding those activities necessary to implement the Proposition 400 Transit Life Cycle Program (TLCP). The Public Transportation Fund (PTF) revenues are restricted to the implementation of the transit element of the Regional Transportation Plan (RTP). Regional Area Road Fund (RARF) revenue is limited to fund planning and administration activities of the RTP.

Business-type activities are the largest users of resources for the Authority with $257.8 million of expenses (91.5%) which include Transit Service operations and Light Rail Transit lead agency disbursements. Governmental activities expended $24.0 million, with the largest being AZ Lottery Fund Disbursements of $10.8 million and Regional Customer Services of $8.5 million. Administration, Regional Planning, and Transportation Demand Management activities totaled $4.8 million for the year.

Total Primary Government expenses increased by $116.6 million, or 70.6% compared to last fiscal year. The governmental expenses increased by $0.8 million, or 3.5%, over the prior year. AZ Lottery Fund Disbursements were $10.8 million for the year, up $0.6 million or 5.8%. Business- type activity expenses were increased by $115.8 million, or 81.5%, compared to the prior year. The increases in business-type activity expenses were $57.6 million for Transit Service Operations (TSO) and $58.3 million for Light Rail Transit (VMR).

TSO expense activities increased by $57.6 million. Bus service delivery costs increased by $28.3 million primarily due to the East Valley bus service unification. Capital conveyances of bus fleet to Member Cities increased by $13.3 million. The amounts of capital conveyances fluctuate from year to year based on cyclical needs to replace bus fleet. Lead Agency disbursements increased by $10.1 million due to increased levels of regional bus fleet purchases for which the Authority provides local funding match to federal grant funds. With the Series 2014 bond issue, debt service interest expense increased by $2.2 million and the cost of issuance increased by $0.5 million, with full costs of the Series 2014 bond being recognized in the current year as required by GASB 65.

VMR expense activities increased by $58.3 million primarily due to Lead Agency Disbursements for light rail construction project activities (Central Mesa Extension and Northwest Extension located in Phoenix). In addition, PTF sales tax funding was disbursed to VMR for the settlement of final capital lease payments to the City of Phoenix for 14 Light Rail Vehicles.

8 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

FINANCIAL ANALYSIS OF THE AUTHORITY’S FUNDS

As previously mentioned, the Authority maintains fund accounting to demonstrate compliance with budgetary and legal requirements. The following is a brief discussion of financial highlights from the fund financial statements.

Governmental Funds The focus of the governmental funds financial statements (pages 19 – 24) is to provide information on near-term inflows, outflows and balances of spendable resources. The fund balance of the governmental funds is $52.2 million, an increase of $2.5 million, or 5.0%, from the previous year. Of the $52.2 million total fund balance, the Authority has designated $2.8 million restricted for special purpose activities. The remainder is in unrestricted fund balance in the General Fund (see Note 8 - page 43). Unrestricted fund balance may serve as a useful indicator of a government’s net resources available for spending at the end of the year. Of the $52.2 million fund balance, $49.4 million is unrestricted.

The General Fund accounts for activities that include regional customer service, financial management and agency administration. General Fund revenues increased $8.6 million (6.6%) over the previous year. Public Transportation Fund (PTF) sales tax revenue increased by $8.0 million (7.0%) in FY14 to $121.8 million. Regional Area Road Funds (RARF) sales tax revenues increased slightly by $0.1 million (1.8%) in FY14 to $4.6 million. The sales tax revenue increase was due to the improving economy in the region. The remaining General Fund revenues increased by $0.5 million, General Fund expenditures increased by $1.3 million (6.5%) from $20.6 to $21.9 million. Excess General Fund revenues over expenditures were $116.8 million for the year versus $109.5 million in the prior year, up $7.3 million or 6.6%.

The Transit Planning Fund accounts for activities related to the development of strategies to promote social and economic well-being of the community through the provision of an efficient and effective regional transit system. Revenues increased slightly from $0.2 million to $0.3 million. Expenditures increased slightly from $1.2 million to $1.4 million due to increased planning activities during the year. Prior to 2006, sales taxes allocated to the Transit Planning Fund were shown as revenues. Total transfers into the Transit Planning Fund from the General Fund were $1.0 million, with no significant change versus the prior year.

The Transportation Demand Management Fund accounts for activities related to the county-wide ridesharing program, trip reduction program and clean air campaign. From the prior year revenues from federal CMAQ and state and county grants decreased ($0.1) million (-4.3%) to $1.5 million. Expenditures decreased ($0.1) million (-7.3%) to $1.5 million from the prior year due to decreases in the ridesharing program and other activities.

Proprietary Funds The proprietary fund financial statements (pages 25 – 27) are prepared on the same accounting basis and measurement focus as the government-wide financial statements, but provide additional detail since each enterprise fund is a major fund and is shown discretely on the fund statements.

The Transit Service Operations (TSO) Fund accounts for the activities related to the operations of local and express bus, paratransit and vanpool services for the region. In addition, the TSO Fund contains PTF bond financing activities to support the Transit Life Cycle Program (TLCP).

9 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

The TSO Fund net position decreased by ($43.4) million versus the prior year from $28.6 million to ($14.8) million. The primary cause of the reduction in net position is the issuance of Series 2014 bond debt in support of LRT capital expenditures which are funded by the Authority as Lead Agency Disbursements to Valley Metro Rail, Inc. During the fiscal year, the TSO received $135.4 million in bond proceeds and disbursed $36.2 of the proceeds to the VMR Fund. In addition to the ($36.2) million decrease related to the bond funding, depreciation expense for transit fleet and equipment exceeded new capital asset additions by ($6.5) million to further reduce the TSO net position.

• TSO operating revenues of $50.6 million were increased by $30.2 million primarily due to increased charges ($11.9 million) to member cities for unified East Valley bus services operated for the first time by the Authority and Fare revenues increase of $15.8 million. • TSO Operating expenses of $92.8 million increased by $31.4 million. Increases in local and express bus service costs ($28.3 million), and increased depreciation costs ($2.4 million) were the primary causes. • Non-operating expenses of $55.0 million increased by $28.7 million. Increases in capital conveyance of bus fleet and facilities to member cities were $13.3 million. Lead Agency Disbursements for regional bus fleet and paratransit funding were up $10.1. Debt service costs were up $2.7 million including the costs of bond issuance. • Capital Contributions ($23.0 million) were up by $3.1 million due to increased bus fleet and facility purchases during the year. • Net transfers into the TSO from the General Fund of $31.4 million were down by (-$18.6) million.

The Valley Metro Rail Fund accounts for staffing and administrative services that are contractually provided by the Authority to Valley Metro Rail, Inc. (VMR) and the PTF sales tax revenues and expenses of such funds related to the Regional Transportation Plan approved light rail projects. Valley Metro Rail, Inc. is a nonprofit corporation organized for the purpose of planning, designing, constructing, and operating the light rail transit project in metropolitan Phoenix (see Note 1(a) on page 28).

The VMR Fund has net position of $38.8 million as of June 30, 2014 as compared to net position of $49.8 million at the end of the previous year. In fiscal year 2014 the Valley Metro Rail Fund received 37.1% of the total PTF sales tax revenues distributed to the Authority from the Arizona Department of Revenue, totaling $45.2 million and received 10.8% of the $4.6 million RARF sales tax revenue received by the Authority, totaling $0.5 million. Additionally, the Valley Metro Rail Fund received $36.2 million of transfers in of Series 2014 Bond proceeds from the Transit Service Operations Fund for VMR capital expenditure reimbursements.

GENERAL FUND BUDGETARY HIGHLIGHTS

The Authority revised the adopted budget up $4.0 million during the fiscal year, increasing the overall budget from $363.6 million to $367.6 million. The primary changes were an increase to the operating budget of $1.6 million from $146.0 million to $147.6 million for anticipated demand in the East Valley Dial-a-Ride service. The capital budget change was $2.4 million for anticipated increases in Lead Agency Disbursements for LRT construction.

10 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets As of June 30, 2014, the Authority had $85.9 million invested in various capital assets, net of accumulated depreciation, for its governmental and business-type activities. The overall net decrease in the Authority’s capital assets for the current fiscal year was $6.0 million, an increase of $0.7 million for governmental activities and a decrease of $6.6 million for business-type activities for the current year. Major capital asset events in the current year attributing to the increase included the following:

• New capital assets added for Governmental Activities were $1.142 million, offset by depreciation charges of ($0.480) million. Primary additions were computer system upgrades. • New capital assets added for Business Activities were $5.278 million, offset by depreciation charges of ($11.820) million. Primary additions were transit fleet $4.928 million. • Capital asset retirements for Business Activities were $4.6 million for transit fleet.

The following table provides a breakdown of capital assets of the Authority at June 30, 2014 with comparative information for the previous year. Additional information on the Authority’s capital assets may be found in Note 9 on pages 44 – 45.

Capital Assets, Net of Accumulated Depreciation As of June 30 (in thousands of dollars)

Governmental Business-type Total Activities Activities Primary Government Percent 2014 2013 2014 2013 2014 2013 Change

Non-depreciable assets: Land $ - $ - $ 5,292.0 $ 5,292.0 $ 5,292.0 $ 5,292.0 0.0% Work-in-progress 844.1 - 449.8 1,957.5 1,293.9 1,957.5 -33.9% Depreciable assets: Transit fleet - - 54,896.6 60,354.6 54,896.6 60,354.6 -9.0% Vehicles 55.0 75.6 77.7 20.7 132.7 96.3 37.8% Building - - 11,644.1 11,935.2 11,644.1 11,935.2 -2.4% Site improvements 254.5 369.8 5,635.3 6,201.7 5,889.8 6,571.5 -10.4% Computers & software 401.4 221.9 - - 401.4 221.9 80.9% Ticket Vending Machines - - 1,150.2 1,208.2 1,150.2 1,208.2 -4.8% Equipment 341.0 541.8 4,799.3 3,620.0 5,140.3 4,161.8 23.5% Furniture & fixtures 74.2 99.6 - - 74.2 99.6 -25.5% Infrastructure - - 27.3 29.3 27.3 29.3 -6.8% Total assets $ 1,970.2 $ 1,308.7 $ 83,972.3 $ 90,619.2 $ 85,942.5 $ 91,927.9 -6.5%

11 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

Debt Administration At June 30, 2014, the Authority had total bonded debt outstanding (including unamortized premium) of $226.6 million related to business-type activities. The Authority has pledged future transportation excise tax revenues to repay this outstanding debt. The Authority’s current bond ratings on transportation excise revenue tax bonds are AA+ from Standard & Poor’s and AA from Fitch.

Business-type Activities

(in millions of dollars) 2014 2013

Revenue bonds payable: 2009 Bond Series $ 87.5 $ 92.7 2014 Bond Series 115.0 - Plus unamortized premium: 2009 Bond Series premium payable 3.7 4.1 2014 Bond Series premium payable 20.4 -

Total $ 226.6 $ 96.8

The Authority issued its second series of revenue bonds in January 2014 to fund light rail capital projects. The $115.0 million issue sold at a premium to generate $135.4 million in proceeds. The bonds mature over a ten year period at a true interest cost of 2.43%.

Additional information on the Authority’s bonded debt and other long-term liabilities can be found in Note 12 on pages 46 - 48.

ECONOMIC FACTORS and NEXT YEAR’s BUDGET

RPTA undertook a number of key initiatives during FY13 and FY14, as the agency continues the implementation of the TLCP operating and capital projects. Funding for these initiatives comes from a combination of regional sales tax revenues member city service payments and federal grants.

East Valley Bus Service Unification On January 24, 2013, the Authority’s Board of Directors unanimously approved an action to authorize the CEO to execute a contract with First Transit, Inc. for unified East Valley fixed route bus operations and maintenance. This action unifies the RPTA- managed bus operations in Mesa with bus operations in Tempe, which were managed under a City of Tempe contract. With the unified bus operations contract, management staffing will be streamlined and economies of scale will be realized for purchasing, training and administrative functions. In addition, it will equate to lower operating costs as route scheduling is optimized using the two existing Mesa and Tempe bus operations facilities. The new service delivery contract took effect July 1, 2013 and expenditures in fiscal year 2014 for the program totaled $59.3 million versus $63.6 million budgeted.

12 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

Fare increase On March 1, 2013, the Authority implemented a region-wide fare increase to maintain the cost sharing relationship between passenger fares and transportation tax subsidies. The $.25 increase to the passenger cost of a single ride was the first fare increase since 2009 and raised the fare from $1.75 to $2.00. (up 14.3%) Paratransit fares for ADA certified persons increased from $3.50 to $4.00. (up 14.3%). In July, 2014 Member Cities increased Paratransit fares for non-ADA certified persons in the East Valley service area to $4.00 base plus mileage charges for trips greater than five miles. The non-ADA fare increase established greater parity with the regional ADA and fixed route fare structure.

East Valley Dial-a-Ride Program (EVDAR) On July 1, 2012, the Authority commenced a pilot Paratransit service program to serve persons with disabilities and eligible seniors with a new service delivery model. The new taxi cab delivery model incorporates greater efficiency utilizing resources from the private sector, while allowing the custom, door-to-door service that passengers need in their daily travels. In its first year, the program was favorably accepted by the passengers and reduced the cost per trip from $43 under the former program to $27 per trip under the new program. Program cost of operation was $6.8 million in FY13 versus $8.8 million in FY12, a $2.0 million savings.

Fiscal Year FY12 FY13 FY14 Paratransit Trips Delivered 202,812 251,830 283,484 Program Cost ($ millions) 8.80 6.80 7.70 Net cost per trip $ 43.39 $ 27.00 $ 27.16 (after fares)

In FY14 EVDAR trips delivered increased by 13% over FY13 levels. Despite the significant increase in service delivered, overall program costs remain $1.1 million below FY12 levels.

13 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Continued)

Next Year’s Budget

Funding Sources The adopted FY15 combined operating and capital budget is $324.6 million (down approximately 11% from fiscal year 2014). Public Transportation Funds are projected to increase by 6% to $127.7 million with continuing improvement to region’s economy. Federal grants are up by $10.0 million from $28.4 to $38.4 million, primary increase is CMAQ capital funding planned for the Scottsdale/ Rural road bus corridor improvements. Fare revenues are increasing by $2.0 million due to the recognition of fare revenues to be collected for transit service purchased from the City of Phoenix. This accounting change allows for the full disclosure of fixed route operating costs and fare revenues which fund the services. In the FY14 budget the Authority planned to issue $114.2 million in bonds, with no series 2015 bond issues planned. The actual series 2014 bond issue was $115.0 million, sold at a premium with proceeds generating $135.0 million. Finally, to fund the rail capital projects, $80.0 million of the series 2014 bond proceeds were planned to be expended during fiscal year 2015.

RPTA Operating and Capital Budgets Fiscal Years 2015 and 2014 Sources of Funds

14 Valley Metro Regional Public Transportation Authority Management’s Discussion and Analysis (Concluded)

Next Year’s Budget

Funding Uses Decreases to Uses of Funds in fiscal year 2015 versus 2014 total $39.0 million. Lead Agency Disbursements are down $4.9 million primarily due to reduced PTF sales tax transfers to VMR. Transit service contracts and fuel costs are up $3.8 million due to the scheduled contract rate increases for East Valley bus services. Capital purchases are planned to increase in FY 2015 by $7.0 million to support the Scottsdale/Rural Road LINK bus service expansion. Bond Debt service costs increase by $11.2 million due to the commencement of Series 2014 bond payments. Lead Agency Bond Disbursements are up by $13.4 million due to increased construction activities for light rail in Phoenix and Mesa. Carry forwards to Reserves are down by ($71.4) million due to depletion of series 2014 bond proceeds during FY15.

RPTA Operating and Capital Budgets Fiscal Years 2015 and 2014 Uses of Funds

The increases in capital expenses correspond to projects programmed in the Transit Life Cycle Program (TLCP) for fiscal year 2014. The budget is balanced and cash reserves are in place to cover the continuing light rail expansion activities. Net position in the Government Funds is anticipated to remain stable. Net position in the Transit Services Funds will decline as bond fund proceeds are expended for light rail construction.

FINANCIAL CONTACT

The financial report is designed to provide a general overview of the Authority’s finances and to demonstrate accountability for the use of public funds. Questions about any of the information provided in this report, or requests for additional financial information should be addressed to the Authority’s Chief Financial Officer, Valley Metro RPTA, 101 N. 1st Avenue, Suite 1300, Phoenix, AZ 85003.

15 FISCAL YEAR 2014 VALLEY METRO AUDIT STANDARDS DISCLOSURE 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718

January 12, 2015

To the Board of Directors Valley Metro Regional Public Transportation Authority

We have audited the financial statements of the governmental activities, the business-type activities, each major fund of Valley Metro Regional Public Transportation Authority (the Authority) for the year ended June 30, 2014. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards, and OMB Circular A-133, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter provided to you during the planning phase of the audit. Professional standards also require that we communicate to you the following information related to our audit.

Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Valley Metro Regional Public Transportation Authority are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the Valley Metro Regional Public Transportation Authority during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period and the financial statement disclosures are neutral, consistent, and clear.

As described in Note 1 of the financial statements, the Authority implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities, for the year ended June 30, 2014. GASB Statement No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities.

Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected.

The most sensitive estimates affecting the financial statements were:

 Management’s estimate of the useful lives of depreciable capital assets is based on the length of time management estimates those assets will provide some economic benefit in the future.  Management’s estimate of the allowance for uncollectible receivable balances is based on past experience and future expectation for collection of various account balances.

Page 1 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole.

Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit.

Audit Adjustments Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. During the course of the audit we did not identify any misstatements which require communication.

Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Representations We have requested certain representations from management that are included in the management representation letter provided to us at the conclusion of the audit.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Valley Metro Regional Public Transportation Authority’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Discussions with Management We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management throughout the course of the year. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention as the Authority’s auditors.

Responsibility for Fraud It is important for both management and the members of the governing body to recognize their role in preventing, deterring, and detecting fraud. One common misconception is that the auditors are responsible for detecting fraud. Auditors are required to plan and perform an audit to obtain reasonable assurance that the financial statements do not include material misstatements caused by fraud. Unfortunately most frauds which occur in an organization do not meet this threshold.

Page 2 The attached document prepared by the Association of Certified Fraud Examiners (ACFE) is provided as a courtesy to test the effectiveness of the fraud prevention measures of your organization. Some of these steps may already be in place, others may not. Not even the most well-designed internal controls or procedures can prevent and detect all forms of fraud. However, an awareness of fraud related factors, as well as the active involvement by management and the members of the governing body in setting the proper “tone at the top”, increases the likelihood that fraud will be prevented, deterred and detected.

Restriction on Use This information is intended solely for the use of the members of the Board of Directors and management of Valley Metro Regional Public Transportation Authority and is not intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,

HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants

Page 3

Fraud Prevention Checklist

The most cost-effective way to limit fraud losses is to prevent fraud from occurring. This checklist is designed to help organizations test the effectiveness of their fraud prevention measures.

1. Is ongoing anti-fraud training provided to all employees of the organization?  Do employees understand what constitutes fraud?  Have the costs of fraud to the company and everyone in it — including lost profits, adverse publicity, job loss and decreased morale and productivity — been made clear to employees?  Do employees know where to seek advice when faced with uncertain ethical decisions, and do they believe that they can speak freely?  Has a policy of zero-tolerance for fraud been communicated to employees through words and actions?

2. Is an effective fraud reporting mechanism in place?  Have employees been taught how to communicate concerns about known or potential wrongdoing?  Is there an anonymous reporting channel available to employees, such as a third-party hotline?  Do employees trust that they can report suspicious activity anonymously and/or confidentially and without fear of reprisal?  Has it been made clear to employees that reports of suspicious activity will be promptly and thoroughly evaluated?  Do reporting policies and mechanisms extend to vendors, customers and other outside parties?

3. To increase employees’ perception of detection, are the following proactive measures taken and publicized to employees?  Is possible fraudulent conduct aggressively sought out, rather than dealt with passively?  Does the organization send the message that it actively seeks out fraudulent conduct through fraud assessment questioning by auditors?  Are surprise fraud audits performed in addition to regularly scheduled audits?  Is continuous auditing software used to detect fraud and, if so, has the use of such software been made known throughout the organization?

4. Is the management climate/tone at the top one of honesty and integrity?  Are employees surveyed to determine the extent to which they believe management acts with honesty and integrity?  Are performance goals realistic?  Have fraud prevention goals been incorporated into the performance measures against which managers are evaluated and which are used to determine performance-related compensation?  Has the organization established, implemented and tested a process for oversight of fraud risks by the board of directors or others charged with governance (e.g., the audit committee)?

5. Are fraud risk assessments performed to proactively identify and mitigate the company’s vulnerabilities to internal and external fraud?

6. Are strong anti-fraud controls in place and operating effectively, including the following?  Proper separation of duties  Use of authorizations  Physical safeguards  Job rotations  Mandatory vacations

7. Does the internal audit department, if one exists, have adequate resources and authority to operate effectively and without undue influence from senior management?

8. Does the hiring policy include the following (where permitted by law)?  Past employment verification  Criminal and civil background checks  Credit checks  Drug screening  Education verification  References check

9. Are employee support programs in place to assist employees struggling with addictions, mental/ emotional health, family or financial problems?

10. Is an open-door policy in place that allows employees to speak freely about pressures, providing management the opportunity to alleviate such pressures before they become acute?

11. Are anonymous surveys conducted to assess employee morale?

VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SINGLE AUDIT REPORTING PACKAGE FOR THE YEAR ENDED JUNE 30, 2014 VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SINGLE AUDIT REPORTING PACKAGE FOR THE YEAR ENDED JUNE 30, 2014

CONTENTS Page

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 1

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 3

Schedule of Expenditures of Federal Awards 6

Notes to Schedule of Expenditures of Federal Awards 7

Schedule of Findings and Questioned Costs 8

Summary Schedule of Prior Audit Findings 10

3033 N. Central Ave., Suite 300 Phoenix, Arizona 85012 Tel (602) 277-9449 Fax (602) 277-9297

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Independent Auditor’s Report

Board of Directors Valley Metro Regional Public Transportation Authority

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, business-type activities, and each major fund of Valley Metro Regional Public Transportation Authority, as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Valley Metro Regional Public Transportation Authority’s basic financial statements, and have issued our report thereon dated December 22, 2014. Our report included an emphasis of matter paragraph as to comparability because of the implementation of Governmental Accounting Standards Board Statement No. 65.

Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Valley Metro Regional Public Transportation Authority’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Valley Metro Regional Public Transportation Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of Valley Metro Regional Public Transportation Authority’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Page 1 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com

Compliance and Other Matters As part of obtaining reasonable assurance about whether Valley Metro Regional Public Transportation Authority’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Authority’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants

December 22, 2014

Page 2 3033 N. Central Ave., Suite 300 Phoenix, Arizona 85012 Tel (602) 277-9449 Fax (602) 277-9297

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133

Independent Auditor’s Report

Board of Directors Valley Metro Regional Public Transportation Authority

Report on Compliance for Each Major Federal Program We have audited Valley Metro Regional Public Transportation Authority’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Valley Metro Regional Public Transportation Authority’s major federal programs for the year ended June 30, 2014. Valley Metro Regional Public Transportation Authority’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of Valley Metro Regional Public Transportation Authority’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Valley Metro Regional Public Transportation Authority’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Valley Metro Regional Public Transportation Authority’s compliance.

Page 3 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com

Opinion on Each Major Federal Program In our opinion, Valley Metro Regional Public Transportation Authority complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014.

Report on Internal Control Over Compliance Management of Valley Metro Regional Public Transportation Authority is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Valley Metro Regional Public Transportation Authority’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Valley Metro Regional Public Transportation Authority’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 We have audited the financial statements of the governmental activities, business-type activities, and each major fund of Valley Metro Regional Public Transportation Authority as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Valley Metro Regional Public Transportation Authority’s basic financial statements. We issued our report thereon dated December 22, 2014, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements.

Page 4

The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants

December 22, 2014

Page 5 VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS JUNE 30, 2014

CFDA Pass-Through Pass-Through Awards Federal Grantor Agency and Program Title Number Grantor Identifying Number Expended

U.S. Department of Transportation

Federal Transit Administration Federal Transit Cluster: Federal Transit - Capital Investment Grants 20.500 City of Phoenix AZ-05-0203 $ 20,345 Federal Transit - Capital Investment Grants 20.500 City of Phoenix AZ-88-0001 1,349,715 Subtotal CFDA No. 20.500 1,370,060

Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-90-X080 306,707 Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-90-X096 786,760 Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-90-X103 6,177,804 Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-90-X109 13,488,029 Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-90-X114 3,877,101 Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-90-X124 524,402 Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-90-X133 434,800 Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-95-X015 1,534,012 Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-95-X023 782,669 Federal Transit - Formula Grants (Urbanized Area Formula Program) 20.507 City of Phoenix AZ-95-X009 90,697 Subtotal CFDA No. 20.507 28,002,981

Total Federal Transit Cluster 29,373,041

Transit Services Programs Cluster: Enhanced Mobility for Seniors and Individuals with Disabilities 20.513 City of Phoenix AZ-16-X002 384,193

Job Access and Reverse Commute Program 20.516 City of Phoenix AZ-37-X011 438,561 Job Access and Reverse Commute Program 20.516 City of Phoenix AZ-37-X014 54,000 Job Access and Reverse Commute Program 20.516 City of Phoenix AZ-37-X017 163,972 Job Access and Reverse Commute Program 20.516 City of Phoenix AZ-37-X018 156,552 Subtotal CFDA No. 20.516 813,085

New Freedom Program 20.521 City of Phoenix AZ-57-X008 82,101 New Freedom Program 20.521 City of Phoenix AZ-57-X012 248,670 New Freedom Program 20.521 City of Phoenix AZ-57-X013 21,302 New Freedom Program 20.521 City of Phoenix AZ-57-X016 80,091 Subtotal CFDA No. 20.521 432,164

Total Transit Services Programs Cluster 1,629,442

Clean Fuels 20.519 City of Phoenix AZ-58-0003 1,170,896

Formula Grants for Rural Areas 20.509 ADOT AZ-18-0054 103,117 Formula Grants for Rural Areas 20.509 ADOT AZ-18-0060 252,205 Subtotal CFDA No. 20.509 355,322

Total Federal Transit Administration 32,528,701

Federal Highway Administration Highway Research and Development Program 20.200 ADOT JPA 10-0421 43,945 Highway Research and Development Program 20.200 ADOT JPA 11-0051 161,923 Subtotal CFDA No. 20.200 205,868

Highway Planning and Construction(Federal-Aid Highway Program) 20.205 MAG 413 117,756 Highway Planning and Construction(Federal-Aid Highway Program) 20.205 MAG 413 471,170 Highway Planning and Construction(Federal-Aid Highway Program) 20.205 Maricopa County C-85-10-021-3-01 100,449 Highway Planning and Construction(Federal-Aid Highway Program) 20.205 Maricopa County C-85-10-021-3-01 284,997 Highway Planning and Construction(Federal-Aid Highway Program) 20.205 Maricopa County C85-11-004-6-00 250,000 Subtotal CFDA No. 20.205 1,224,372

Total Federal Highway Administration 1,430,240

Total Expenditures of Federal Awards $ 33,958,941

See accompanying notes to the Schedule of Expenditures of Federal Awards. Page 6 VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2014

1. General The Schedule of Expenditures of Federal Awards presents the activity of all federal award programs of the Regional Public Transportation Authority (the “Authority”). All federal awards received are passed through the City of Phoenix, Arizona Department of Transportation, Maricopa County and Maricopa Association of Governments. Federal financial award activities are reported in the general, special revenue and enterprise funds in the Authority’s fund financial statements.

2. Basis of Accounting and Reporting Entity The accompanying Schedule of Expenditures of Federal Awards is presented using a basis of accounting that is consistent with the basic financial statements, as is described in Note 1 of the Authority’s basic financial statements.

The Authority, for purposes of the Schedule of Expenditures of Federal Awards, includes all funds of the primary government as defined by Governmental Accounting Standards Board Statement.

3. Catalog of Federal Domestic Assistance (CFDA) Numbers The program titles and CFDA numbers were obtained from the 2014 Catalog of Federal Domestic Assistance.

4. Pass-Through Grantors Reference The Authority receives all federal awards as pass-through from other governmental and nonprofit agencies. Abbreviations are as follows:

ADOT Arizona Department of Transportation MAG Maricopa Association of Governments

5. Period of Award There is no specified time period in which the grant award must be spent.

6. Federal Assistance not included Expenditures related to assistance not considered federal awards in accordance with OMB Circular A-133 have not been presented in this schedule as follows:

Build America Bond Subsidies $ 547,448 Federal Grant Interest Subsidy 1,923,683

Page 7 VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

SUMMARY OF AUDITOR’S RESULTS

Financial Statements

Type of auditor’s report issued: Unmodified

Internal control over financial reporting:  Material weakness(es) identified? yes X no  Significant deficiency(ies) identified? yes X none reported

Noncompliance material to financial statements noted? yes X no

Federal Awards

Internal control over major programs:  Material weakness(es) identified? yes X no  Significant deficiency(ies) identified? yes X none reported

Type of auditor’s report issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A-133? yes X no

Identification of major programs:

CFDA Numbers Name of Federal Program or Cluster 20.500, 20.507 Federal Transit Cluster 20.513, 20.516, 20.521 Transit Services Programs Cluster

Dollar threshold used to distinguish between Type A and Type B programs: $1,018,769

Auditee qualified as low-risk auditee? X yes no

Page 8 VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

FINDINGS RELATED TO FINANCIAL STATEMENTS REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

None reported.

FINDINGS AND QUESTIONED COSTS RELATED TO FEDERAL AWARDS

None reported.

Page 9 VALLEY METRO REGIONAL PUBLIC TRANSPORTATION AUTHORITY SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2014

Status of Federal Award Findings and Questioned Costs

The Valley Metro Regional Public Transportation Authority had no findings or questioned costs related to federal awards noted in prior audits that require a status.

Page 10

DATE AGENDA ITEM 5 February 12, 2015

SUBJECT 2015 Federal Public Transportation Agenda

PURPOSE To request Board approval of the Valley Metro Federal Public Transportation Agenda for 2015.

BACKGROUND/DISCUSSION/CONSIDERATION Each year, Valley Metro works with member city intergovernmental staff to develop a federal public transportation legislative agenda. The agenda provides information to member cities to bring attention to the importance of federal involvement in public transportation in the Phoenix metropolitan region.

Transportation policy and funding are directed by the Moving Ahead for Progress in the 21st Century (MAP-21). The legislation was signed into law in July 2012 and has been extended to May 2015. As in previous years, efforts to renew this legislation revolve around the revenues needed to fund transportation infrastructure. The Highway Trust Fund will also run out of money around the time the legislation expires.

As the deadline approaches, transit systems will be forced to curtail project planning and consider how to address potential federal funding short falls. Short-term extensions will have similar effects. A long-term reauthorization with maximum transit funding levels will help create thousands of construction jobs, expand transit options, encourage good planning, and make this region more competitive.

Staff has developed the attached federal agenda for 2015 with goals to:

• Establish a long-term reauthorization of MAP-21 that maximizes transit funding levels at the national level; • Continue to monitor and have input on the implementation of MAP-21 by the Federal Transit Administration (FTA); • Pursue grant opportunities through the limited discretionary programs authorized as part of MAP-21; and • Support the restoration of tax benefits related to public transit.

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

COST AND BUDGET None

COMMITTEE ACTION RTAG: January 20, 2015 for information TMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors approve the 2015 Federal Public Transportation Agenda.

CONTACT John Farry Government Relations Officer 602-744-5550 [email protected]

ATTACHMENT 2015 Federal Public Transportation Agenda Federal Funding Priorities

2/9/2015

2015 Federal Agenda February 2015

Big Picture “It’s like déjà vu, all over again.” – Yogi Berra

• MAP-21 expires May 31, 2015 • Highway Trust Fund (HTF) will be depleted in the same time frame • President’s budget released on February 2nd – $478 billion six-year highway and transit bill – Funded with HTF revenues ($240M) and new taxes on foreign profits of U.S. businesses ($238M)

1 2/9/2015

FY 2016 President’s Transit Budget

Major FTA Program 2015 Approved 2016

Formula Grants $8.6B $14.0B Capital Investment Grants $2.1B $3.25B (New Starts/Small Starts)

• Capital Investment Grant Breakdown – Existing FFGA/PCGA’s $1.4B – New FFGA’s $792 million – Core Capacity $351 million – Small Starts $353 million

Importance of Federal Investment

FY 2016 FEDERALLY FUNDED BUS FLEET AND FACILITIES Total FY16 Cost FY 2016 Project (in millions) Federal Funding Phoenix Buses – 41 need $33.3 $28.8 replacement Valley Metro Buses – 5 $3.3 $2.8 need replacement Regional Communication/ $10.0 $8.0 VMS Peoria Transit Center – $1.5 $1.2 Construction Peoria Transit Center – $2.5 $2.0 Land/Design

2 2/9/2015

Importance of Federal Investments FIXED GUIDEWAY CAPITAL INVESTMENT PROGRAM (NEW STARTS/SMALL STARTS) 2015 Project Cost Estimate Federal Scheduled Project Activity (in millions) Funding Completion Central Mesa Construction $199 5309, CMAQ 2015 Northwest Phase I Construction $300 None 2016 Tempe Streetcar Environmental $137 5309, CMAQ 2018 Gilbert Road Engineering $153 FHWA-Flex 2018 Capitol / I-10 West Environmental $936 5309, CMAQ 2023 Northwest Phase Environmental $157 5309, CMAQ 2026 II West Phoenix / Central Glendale AA $496 5309, CMAQ 2026 South Central Environmental $612 5309 2034

Source: 2014 TLCP Update 5

Federal Agenda • Long-term reauthorization of MAP-21 – Support maximum transit funding levels • Monitor MAP-21 implementation • Pursue discretionary grant opportunities – New Starts/Small Starts –TIGER – Core Capacity • Support permanent tax law changes – Parking and transit commuter equity – Alternative fuels tax credit

3 2/9/2015

Communication Strategy

We are on the move

• To a brighter future • To a revitalized economy • To a total transit network • To a sustainable workforce • To diminishing the brown cloud • 4 million people in metropolitan Phoenix need you to help us move

4 2/9/2015

Next Steps

• NLC Congressional Cities Conference in Washington, DC • Valley Metro Congressional Staff Meeting Luncheon • National Transportation Infrastructure Day, April 9, 2015

Valley Metro Congressional Staff Luncheon

Monday, March 9, 2015 Noon – 1:30 pm Capitol Hill, B-338 Rayburn HOB

5 2/9/2015

Recommendation

Recommend that the Board of Directors approve the 2015 Federal Public Transportation Agenda.

John Farry Government Relations Officer 602-744-5550 [email protected]

6 FEDERAL FUNDING PRIORITIES

SPRING 2015

FY 16 FEDERALLY FUNDED BUS AND BUS FACILITIES FY16 FEDERALLY FUNDED BUS FLEET AND FACILITIES Federal funding will be used to replace buses that have or will have reached the end of their useful life. Buses purchased are used for Project Total Cost Federal Funds Federal Funding Scheduled the regional and local system (Total Project Cost = $36.6M). (in millions) (in millions) Completion

Phoenix Buses – 41 need The regional transit communications system and vehicle $33.3 $28.8 5307, 5337, 5339 2017 management system (VMS) have reached the end of their replacement Valley Metro – 5 need useful life and need to be replaced (Total Project Cost = $28.0M/ $3.3 $2.8 5307 2017 FY16 = $10.0M). replacement Regional $10.0 $8.0 5307 2017 New facilities are programmed in the northwest valley to support Communications/VMS the existing local and regional bus system. Peoria Transit $1.5 $1.2 5037 2017 • Peoria Transit Center (Total Project Cost = $2.5M/FY16 = $1.5M) Center – Construct • Peoria Park-and-Ride (Total Project Cost = $6.4M/FY16 = $2.5M) Peoria Park-and-Ride $2.5 $2.0 5307 2018 – Land/Design

FIXED GUIDEWAY CAPITAL INVESTMENTS FIXED GUIDEWAY CAPITAL INVESTMENT PROGRAM (NEW STARTS/SMALL STARTS) (NEW STARTS/SMALL STARTS)

Valley Metro is working to implement a high capacity transit 2015 Cost Estimate Federal Scheduled Project system included in the Regional Transportation Plan (RTP). The Project Activity (in millions) Funding Completion projects are illustrated in the High-Capacity Transit Corridors map Central Mesa Construction $199 5309, CMAQ 2015 on the reverse side. The table includes a list of projects currently in construction or in various phases of development during 2015. Northwest Phase I Construction $300 None 2016 Funding sources assume the regional one-half cent sales tax, Capital Tempe Streetcar Environmental $137 5309, CMAQ 2018 Investment Grants (Section 5309), FHWA Flex [(Congestion Mitigation Air Quality (CMAQ), Surface Transportation Program Gilbert Road Engineering $153 FHWA-Flex 2018

(STP)], and contributions from Capitol/1-10 West Environmental $936 5309, CMAQ 2023 local cities. Northwest Phase II Environmental $157 5309, CMAQ 2026

Under MAP-21, the project development process is a local West Phoenix/ Alternatives Analysis $496 5309, CMAQ 2026 responsibility. The process includes completion of the Alternatives Central Glendale Analysis (AA), environmental documentation and preliminary South Central Environmental $612 5309 2034 engineering.

Central Mesa Light Rail Extension - A 3.1 mile extension is being Tempe Streetcar – The Environmental Assessment is underway and added to the existing 20-mile system from Sycamore east to project development is expected to continue in 2015. Valley Metro is downtown Mesa. The project is currently under construction and seeking $75 million through the FTA Section 5309 Small Starts funding was awarded a Project Construction Grant Agreement (PCGA) in program for design and construction of the streetcar project. the amount of $75 million by the FTA in October 2012. The final installment of that grant was received in 2014. Gilbert Road Light Rail Extension - A 1.9 mile extension is being added to the Central Mesa Light Rail Extension from Mesa Drive east to Northwest Light Rail Extension Phase I – A 3.2 mile extension is Gilbert Road. The project is currently in the design phase. The project being added north from Montebello to Dunlap Avenue in Phoenix. is funded entirely by FHWA-Flex funds and local City of Mesa funds. Construction of the project began in January 2013 and is funded There is no federal discretionary funding (Section 5309) associated entirely by regional sales tax and the local City of Phoenix transit with the project. sales tax. There is no federal funding associated with the project. (continued on back side) Capitol/I-10 West Light Rail Extension – An 11-mile extension West Phoenix/Central Glendale – Valley Metro, working with from downtown Phoenix through the State Capitol complex and the cities of Glendale and Phoenix, is evaluating alternative route along I-10 to an existing park-and-ride at 79th Avenue. The alignments and modes. A recommendation is anticipated in fall Environmental Assessment is currently under review by FTA. of 2015. Valley Metro will be requesting to enter project development in FY16 and seeking FTA Section 5309 New Starts funding. South Central Light Rail Extension – A 5-mile extension from downtown Phoenix on Central Avenue to Baseline Road. The Northwest Light Rail Extension Phase II - A 1.5-mile extension City of Phoenix was awarded a TIGER grant to prepare an from Dunlap Avenue to 25th Avenue, north to Mountain View Environmental Assessment and conceptual engineering. and west across I-17 to the Metrocenter Mall. The Environmental This work will be initiated in early 2015. Assessment and conceptual engineering will begin in spring of 2015.

HIGH-CAPACITY TRANSIT CORRIDORS

LEGEND Bell Rd Central Mesa Light Rail Extension Northwest Light Rail Extension Phase I 17 Phoenix Thunderbird Rd Gilbert Rd Light Rail Extension Peoria Tempe Streetcar 2034 Peoria Ave 101 Capitol/I-10 West Light Rail Extension 101 2026 51 Northwest Light Rail Extension Phase II Paradise South Central Light Rail Extension Northern Ave 2016 Valley West Phoenix/Central Glendale Glendale 2026 Future High-Capacity Transit Corridor Bethany Home Rd Light Rail Extension For Further Study Valley Metro Rail Indian School Rd Avondale Scottsdale Note: Dates indicate anticipated calendar year openings McDowell Rd 10 202 McKellips Rd Tolleson 2023 202 Mesa Buckeye Rd 17 143 University Dr Broadway Rd Phoenix 2018 2015 2018 Southern Ave Baseline Rd Tempe Guadalupe Rd 2034 Gilbert

101 10 Warner Rd Chandler 202 e e e e e e e d d d d v v v v v v v R A A t R e R al R d A 4th St al ista Dr ri c 1st 2 56th St 40th St 7th A P Ru r 5 Mesa D r 19th A 35th A 6 83 r 99th A Gilbe r ent r al V C V Alma School

MKQ2409 FEDERAL PUBLIC TRANSPORTATION AGENDA

SPRING 2015

The federal government is a critical partner supporting local • Encourage local sponsors to advance multiple projects and regional public transportation systems in metropolitan simultaneously within a reasonable time frame. In doing so, allow Phoenix. With the implementation and reauthorization of Moving the sponsors to use locally-funded projects currently in design or Ahead for Progress in the 21st Century (MAP-21) and the annual construction as local match for those projects built with federal transportation appropriations bill, it will help maintain and expand funds. This proposal should be included with any comments to a transit system that serves nearly four million residents and over FTA’s Program of Inter-Related Projects guidance. 16 million visitors annually. Pursue grant opportunities – Although MAP-21 limits discretionary As a region, our strategies in 2015 are to: funding, the region will seek opportunities related to TIGER and other grants as they become available. We will also pursue Support maximum transit funding levels – Investing in additional federal funding through programs as announced. transportation infrastructure results in higher economic growth • Ensure the solvency of the Highway Trust Fund. Support tax law changes • Both the highway and transit accounts in the Highway Trust • The package of tax extenders was extended to cover 2014. Two Fund will be depleted in Fiscal Year 2015 unless additional of those extenders have a direct impact on public transportation. revenues are deposited. • Parity between the parking and transit benefits at $250 • Addressing this funding crisis will reduce the threat of per month. service reductions and help transit systems, as well as local • The tax credit for use of alternative fuels. and state agencies, with future planning. • Pursue the permanent extension of the tax benefit parity for • Maximize federal transit funding to all programs to help meet parking and public transportation and the alternative fuels growing public demand. tax credit. • Maximize the financial commitment to the New Starts program confirming the completion of the 66-mile light rail system in Secure reauthorization of MAP-21 the region. • Monitor Congressional oversight hearings and markups and participate in reauthorization efforts with the American Public Monitor and provide input on the implementation of MAP-21 Transportation Association (APTA), New Starts Working Group, • Continue close monitoring of MAP-21 provisions being Community Streetcar Coalition and other affiliated organizations. implemented by the Federal Transit Administration (FTA), • Encourage federal policymakers to consider the reauthorization especially the New Starts Program to promote fair evaluation policy recommendations of these organizations. of our light rail and streetcar projects that are eligible for federal funding.

FOR ADDITIONAL INFORMATION, PLEASE CONTACT: John Farry, Government Relations Officer 602.744.5550 | [email protected] Valley Metro 101 N. 1st Ave., Suite 1300, Phoenix, AZ 85003 602.262.7433 | valleymetro.org

MKQ2409

DATE AGENDA ITEM 6 February 12, 2015

SUBJECT April 2015 Valley Metro Bus Service Changes

PURPOSE To request Board approval to authorize the Valley Metro Chief Executive Officer (CEO) to amend service operator contracts and member agency Intergovernmental Agreements (IGAs) as necessary to accommodate recommended April 2015 service changes.

BACKGROUND/DISCUSSION/CONSIDERATION Beginning April 27, 2015, two Valley Metro bus service changes are proposed. One is a service reduction in southeast Phoenix and the other is a service expansion in Buckeye. These changes and several others were proposed and reviewed in coordination with the Valley Metro Service Planning Working Group comprised of member agencies. Valley Metro worked with each affected agency to identify funding and to conduct public outreach. Given local funding constraints and public input received, several of the proposed changes were removed from consideration at this time.

This summary only includes bus service changes for Valley Metro operated routes and routes funded through the regional Public Transportation Fund (PTF). Changes that would specifically affect other locally funded service from different operating agencies (e.g. Phoenix) are not addressed herein.

Recommended Route & Schedule Changes:

• Route108 – Elliot/48th St.: In Phoenix, eliminate trips traveling on Frye Rd. The segment south of Chandler Boulevard has shown low ridership and has also generated numerous complaints from residents in the neighborhood due to bus traffic.

• Route 685 – Ajo/Gila Bend: Add four weekday trips within the City of Buckeye. This recommended service enhancement is in response to growing demand for transit in this corridor since the change in route to serve Downtown Buckeye and other activity centers in January 2014.

Appendix A depicts recommended changes to the existing routes. Changes resulting in schedule adjustments are not included. Valley Metro has prepared a Title VI Evaluation Report, which is available upon request.

Public Outreach Valley Metro conducted community outreach from November 3 through December 5 to notify the public and solicit input on the recommended service changes. Transit users have submitted feedback through a variety of methods provided by the Agency.

Input opportunities: • Four public information sessions were hosted in Chandler, Scottsdale and Tempe (2) • Public hearing was conducted on December 2, 2014 • Webinar conducted on November 19, 2014 • Online comment card • Via email at [email protected] • Social Media

Communication channels: • Six advertisements were placed through the Arizona Republic (2), East Valley Tribune, La Prensa Hispana, La Voz & the Arizona Informant that included information regarding the proposed route changes, open comment period and public hearing. • Transit vehicle announcements (Route Scout) • A-frame signage at key transit locations • Email notices to riders and Trip Reduction Program employers • Press release resulting in news coverage • Social media posts • Website (valleymetro.org/servicechanges) • Internal communication to staff and contractors

Total comments received by Valley Metro: 112 (Comments on Valley Metro recommended changes: 7) . In favor of recommended changes 1 . Not in favor 3 . Not sure 3 . Other comments 105

The complete list of comments received through the public outreach process was provided to the Service Planning Working Group. Valley Metro in coordination with affected agencies reviewed the public comments and as a result modified or eliminated several of the proposed changes.

COST AND BUDGET The following table provides a summary of the estimated annual costs of the recommended service changes and adjustments necessary to Valley Metro’s operating contracts and member agency Intergovernmental Agreements (IGAs). The category of “Other Costs” includes primarily fuel and insurance. Costs associated with providing complementary Americans with Disability Act (ADA) paratransit service to new fixed route service areas are not shown below. Costs for changes that do not impact Valley

Metro operated routes and routes not funded through PTF are also excluded from this table.

Estimated Annual Costs of Service Changes (dollars in thousands) Route Contractor (base) Other Funding Agency (net) First Second Costs ADOT Transit Generation, Buckeye Phoenix (FTA 5311) (VM) Inc. 108 -$42 -$23 -$65 685 $59 $11 $29 $41 Total -$42 $59 -$12 $29 -$65 $41

Note: Service adjustments to Routes 17, 50, 77, 81, 96, 136, 156, Trolleys and FLASH circulators originally presented during the community outreach process, were removed from consideration for April 2015.

Contract adjustments for minor bus service changes that do not require an amendment to the IGAs will be made through the year-end reconciliation process.

COMMITTEE PROCESS Service Planning Working Group: August 5, 2014 Service Planning Working Group: September 2, 2014 Service Planning Working Group: October 7, 2014 Service Planning Working Group: November 4, 2014 Service Planning Working Group: December 9, 2014 RTAG: January 20, 2015 for information TMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to amend service operator contracts and member agency intergovernmental agreements (IGAs), as necessary, to accommodate the recommended April 2015 service changes described herein.

CONTACT Wulf Grote, P.E. Director, Planning and Development 602-322-4420 [email protected]

ATTACHMENT Appendix A – Figures depicting recommended bus route changes

Appendix A

2/9/2015

April 2015 Transit Service Changes

February 19, 2015

Overview • Service changes to be implemented April 27 – Includes only Valley Metro operated and/or funded routes • Coordinated effort through the Service Planning Working Group • Board action requested: – Operating contract changes – IGA amendments

1 2/9/2015

Recommended Service Changes • Added trips on Route 685 – Four short trips within City of Buckeye – Between Buckeye Community Center and White Tank Justice Court • Route modification on Route 108 – Eliminate trips south of Chandler Boulevard

Recommended Service Changes

2 2/9/2015

Cost Summary

Matrix of Costs and Funding for April Service Changes (dollars in thousands) Contractor Costs (Base) Agency Funding (Net) First Second Other ADOT Buckeye Phoenix Route Transit Generation Inc. Costs (FTA 5311) 108 -$42 -$23 -$65 685 $59 $11 $29 $41 Total -$42 $59 -$12 $29 -$65 $41

Costs shown above are estimates

Public Inputs • Community outreach from early November through December • Comments accepted through December 5th • Customer feedback accepted through: – Public hearing (December 2nd) – Information sessions region-wide – Webinar – Social Media – Via email at [email protected]

3 2/9/2015

Public Input

• Comments received through regional outreach: 112 (Recommended changes: 7)

Route Number of Comments In Favor of proposed changes 1 Not in favor of proposed changes 3 Not sure 3

Recommended Action It is recommended that the Board of Directors authorize the CEO to amend service operator contracts and member agency IGAs as necessary to accommodate proposed April 2015 service changes.

DATE AGENDA ITEM 7 February 12, 2015

SUBJECT Future Agenda Items Request and Report on Current Events

PURPOSE Chair McDonald will request future agenda items from members, and members may provide a report on current events.

BACKGROUND/DISCUSSION/CONSIDERATION None

COST AND BUDGET None

COMMITTEE PROCESS None

RECOMMENDATION This item is presented for information only.

CONTACT Steve Banta Chief Executive Officer 602-262-7433 [email protected]

ATTACHMENT Pending Items Request

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

Pending Items Request

Item Requested Date Requested Planned Follow-up Date

February 12, 2015

Board of Directors Thursday, February 19, 2015 Lake Powell Conference Room 101 N. 1st Avenue, 10th Floor 1:15 p.m.

For those participating by telephone, please mute your phone when not speaking.

Members please make sure your microphone is turned on when speaking and turned off when you are not speaking.

Action Recommended

1. Public Comment 1. For information

2. Minutes 2. For action

Minutes from the January 22, 2015 Board meeting are presented for approval.

3. Chief Executive Officer’s Report 3. For information

Steve Banta, Chief Executive Officer (CEO), will brief the Board on current issues.

CONSENT AGENDA 4A. Contract Award for Consulting Services for the Ellipse 4A. For action Software Upgrade Staff will request that the Board of Directors authorize the CEO to execute a contract with AddOns, Inc. for an amount of $607,000 and a $20,000 contingency for the provision of professional implementation services for the Ellipse software upgrade.

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 602-262-7433

4B. Gilbert Road Light Rail Extension: City of Mesa Agreements 4B. For action

Staff will request that the Board of Directors authorize the CEO to execute four agreements with the City of Mesa necessary for development of the Gilbert Road Light Rail Transit (LRT) Extension project. Included are:

A. Amending the existing Funding Agreement No. 12-175 B. Executing the Transportation Project Advancement Agreement (TPAA) C. Executing the Design and Construction Agreement D. Amending the Public Way Use Agreement

4C. Fiscal Year 2014 Valley Metro Rail, Inc. Comprehensive 4C. For action Annual Financial Report (CAFR) and Single Audit Reporting Package (SARP).

Staff will request that the Board of Directors accepte the Comprehensive Annual Financial Report (CAFR) and Single Audit Act Reporting Package (SARP) for the period ending June 30, 2014.

REGULAR AGENDA 5. 2015 Federal Public Transportation Agenda 5. For action Steve Banta, CEO, will introduce John Farry, Government Relations Officer, who will request that the Board of Directors approve the Valley Metro Federal Public Transportation Agenda for 2015.

6. Contract Award for Event Planning Services 6. For action

Steve Banta, CEO, will introduce Hillary Foose, Director, Communication and Marketing, who will request that the Board of Directors authorize the CEO to execute a five-year agreement with Entertainment Solutions, Inc. for Event Planning Services for an amount not to exceed $1 million.

7. Transit Life Cycle Program Update 7. For information

Steve Banta, CEO, will introduce Paul Hodgins, Manager, Revenue Generation and Financial Planning, who will provide information regarding potential changes to the light rail/high capacity transit element of the TLCP.

8. Tempe Streetcar Project: Modified Locally Preferred 8. For action Alternative (LPA)

Steve Banta, CEO, will request that the Board of Directors approve the following recommendations for the Tempe Streetcar project:

1. Amend the LPA for the Tempe Streetcar project to include a 3- mile alignment from Rio Salado Parkway at Marina Heights, including the Mill/Ash downtown loop, south along Mill Avenue and east on Apache Boulevard to the Dorsey LRT station. 2. Recommend to MAG to initiate the required air quality conformity analysis in support of updating the RTP to include the revised LPA.

9. Northwest Phase II Light Rail Extension: Modified Locally 9. For action Preferred Alternative (LPA)

Steve Banta, CEO, will request that the Board of Directors approve the following recommendations for the Northwest Phase II Light Rail Extension:

1. Amend the Locally Preferred Alternative for the Northwest Phase II Light Rail Extension to extend the alignment across I-17 along Mountain View Road to end at a station immediately west of I-17. 2. Recommend to MAG to initiate the required air quality conformity analysis in support of updating the RTP to include the revised LPA.

10. Future Agenda Items Request and Report on Current 10. For information Events

Chair Kavanaugh will request future agenda items from members and members may provide a report on current events.

11. Next Meeting 11. For information

The next meeting of the Board is scheduled for Thursday, April 16, 2015 at 1:15 p.m.

To attend this meeting via teleconference, contact the receptionist at 602-262-7433 for the dial-in- information. The supporting information for this agenda can be found on our web site at www.valleymetro.org

DATE AGENDA ITEM 1 February 12, 2015

SUBJECT Public Comment

BACKGROUND/DISCUSSION/CONSIDERATION None

COST AND BUDGET None

COMMITTEE PROCESS None

RECOMMENDATION This item is presented for information only.

CONTACT Steve Banta Chief Executive Officer 602-262-7433 [email protected]

ATTACHMENT None

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

DATE AGENDA ITEM 2 February 12, 2015

Minutes of the METRO Board of Directors Thursday, January 22, 2015 1:15 p.m.

Meeting Participants Councilmember Dennis Kavanaugh, City of Mesa, Chair Thelda Williams, City of Phoenix, Vice Chair Councilmember Gary Sherwood, City of Glendale Councilmember Lauren Kuby for Mayor Mark Mitchell, City of Tempe

Not Present Councilmember Rick Heumann, City of Chandler

Chair Kavanaugh called the meeting to order at 2:19 p.m.

1. Public Comment

Mr. May said good afternoon, Rail Board. I spoke at the bus meeting about a few things. And Happy New Year to those of you that are joining us.

I submitted an e-mail to Ms. Dillon about a few things and it got forwarded to somebody already. But I just wanted it to be on the record stating that you guys changed the size of the height of your fare vending machines. And something similar should be done on your information boards on your rail platforms that tell you the NextRide number for the bus station and whatnot. And I know a few of them have it twice, way up high and then in the middle. So that was just one thing.

We are continuing to have a safety issue with bikes and people standing in doorways. I had a wheelchair and a stroller that kept me from going out one door and a bike in the doorway, so that's something.

And then I know you guys are talking about Wi-Fi in your packet later on. Before you do that, you got to figure out who's getting on the bus and not paying the ride -- riding for free that ain't paying. Thank you.

Mr. Frederico said good afternoon, thank you again. I just wanted to reiterate my comments that I made at the bus committee and at the management committee about the excellent customer service that I have been getting when calling up the line at Valley Metro.

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 602-262-7433

The representatives have been very responsive, friendly, and extremely knowledgeable, and I appreciate their efforts greatly and I hope that others are noticing the same thing. I've not heard from other people, but my experience has been very, very positive.

I've been coming to these meetings since October and I know that there's only a couple of voices that are being heard in the public, but hopefully that, you know, some of the positive remarks that I'm making will be echoed through the community.

If there's anything that I can do in terms of information or feedback, please feel free to let me know. The meeting coordinators have my e-mail address and I will be attending the meetings as much as I can going forward, so just let me know. I'm glad to help out any way I can. Thank you very much for listening this month.

Mr. Crowley said Mr. Chairman, members of the Board, I hope you're having a pleasant afternoon. Sorry it's been taking so long to get these things done and about. I'll start off with the extension that we're proposing for the northern part of the light rail. As I stated before, the north-south -- or the southbound lane of the freeway is not an origin or destination. We don't need it to be going there.

What you pointed out during the last meeting was that we haven't included the education community in a lot of our planning and such. Well, yes, we did, back in -- when I was a member of the Prop 400, we made it so that that rail went across the freeway and touched the educational institutions in Glendale. When are you going to get on board and understand that.

You're also doing a study of Grand Avenue and that, which I see is also a part of the rail. But as long as you look at the rail as just two lines going north and south, when are you going to also understand that sometimes you can go on a diagonal and work the system into what it's supposed to be.

I'd like to point out again that in 1991 there was a railroad built between Wickenburg and central California. It was called the California -- or the Arizona-California railroad. Oh, yeah, that was 1891. Why aren't we using the rail that exists in all of your communities and get it to the point that it should be? It was pointed out that you need to be doing what better planning and seeing the future, but then when you look at rail, heavy rail, you say we don't understand.

Two parts of it that you need to get on board with this is: One, if we use MAG as a part of our system for both the light and the heavy rail, it will save in the amounts of money we have put and it will save in wear and tear.

With the rail the way it is in California, them going for the bullet train, would you think that since there is an Arizona-California railroad they would be able to get it across that river and start looking at it the way it is coming to here.

And lastly, with the documents that you have that are on for information, one of them is discussing peer cities. Peer cities. Mesa, do you know that you're bigger than one of our peer cities and that's supposed to be comparable for the region because Mesa is larger than Salt Lake.

So how is it a peer-city analysis when not even our largest community is the size of it. When you go with size and region, wouldn't Los Angeles, New York, Chicago, and Philadelphia the other four of the five major cities in this country since we are the fifth largest when you're talking about peer cities, let's do it in the top ten. Let's do it as a region and really show that we aren't getting the job done. What you need to be looking forward to and get it done right as in expanding the bus fleets and getting the rail going across that freeway.

2. Minutes

Chair Kavanaugh said the next item is minutes from our December 18, 2014 Board meeting presented for approval.

IT WAS MOVED BY COUNCILMEMBER SHERWOOD, SECONDED BY COUNCILMEMBER WILLIAMS AND UNANIMOUSLY CARRIED TO APRPOVE THE DECEMBER 18, 2014 BAORD MEETING MINTUES.

3. Chief Executive Officer’s Report

Mr. Banta said Mr. Chairman, members of the Board, I'll keep my comments very brief.

The only difference between the last year report and this one is I want to touch on the trip that Mayor Mitchell and I made back to the FTA. We went back last week to meet with Federal Transit Administration Acting Administrator, Therese McMillan, advancing the concept and hopefully the partnership with the FTA on the Tempe Streetcar project.

Mayor Mitchell was very forceful with the FTA showing evidence and signs of all the economic development that's happened around the waterfront. We've been talking to the FTA for probably the last four years in trying to garner a partnership with them on Small Starts. We talked about what was planned. We were able to now show them what we're actually building. We felt the meeting was very good. We are looking for a preliminary rating of the streetcar project by the end of this month.

4. Morris Plaza License Agreement

Mr. Banta said Mr. Chairman, members of the Board, this is an opportunity to partner with the City of Mesa for a license agreement for the Morris Plaza. As part of the design, several sights were considered for the traction power substation. We've also worked with the City of Mesa to work with them to develop a plaza at this same location. The term of this license agreement is for fifty years. The total cost is $95,000.

Mr. Chairman, it's recommended from the Transit Management Committee that the Board of Directors authorize the CEO to execute the agreement for the Morris Plaza alignment.

IT WAS MOVED BY COUNCILMEMBER WILLIAMS, SECONDED BY COUNCILMEMBER SHERWOOD AND UNANIMOUSLY CARRIED TO APPROVE THE MORRIS PLAZA LICENSE AGREEMENT.

5. Mid-Year Budget Adjustment

Chair Kavanaugh said I know that we had presentation at our earlier meeting, but our budget adjustment is slightly different.

Mr. Banta said thank you. And Mr. McCormack will be brief in going over the budget adjustment for action.

Mr. McCormack said this is an action item seeking the Board approval of adjustments to the Fiscal '15 budget.

On the operating side, our current year costs are running, trending, below plan in terms of materials, insurance, and staff cost. We're forecasting $1 million lower in cost to $32.2 million. I'll discuss the funding on an upcoming slide.

With respect to capital, there are two changes for systemwide improvements. A relatively small increase of $300,000. Some projects are being deferred into FY16 and we're also adding another project into sixteen. Reduction of $300,000.

The timing of the Gilbert Road extension, as you may know, that there was a lawsuit which held up the issuance of the TPAN notes, Transportation Project Advance Notes. That lawsuit has been addressed at this point and we're going to be moving forward, but it does transfer some of these costs into FY16 that were planned for this year. Just a deferment.

Summary of uses, reduction of operating costs by a $1 million. The Gilbert Road extension $4.7 million. Systemwide improvements, total changes or reduction of $6.1 million to $213 million on the uses of funds.

With respect to sources of funds, first fare revenue on rail operations, it's being reduced by $927,000. Ridership is pretty much running on plan. However, we have a greater utilization of discount fares and so our average fare is below plan and this adjustment is recognizing that.

Offsetting that we have an addition to advertising revenue, we're trending up, as you've seen the number of train wraps out there, about $400,000 increase.

Member city contributions for the year will be reduced by $480,000.

On the capital project side, the TPAN notes will not be expended this year. That will be expended in the next year. And some PTF sales tax revenue of $418,000. So total sources of funds are $213 million versus the budget of $219 million.

This is the action approved on January 7, the Rail Management Committee recommended approval of this changes. I'm happy to answer any questions.

Councilmember Williams said staff explained it pretty well to me, but the good news is the advertising revenue is increasing and I think there's even more potential there, so hopefully it will offset some more of the revenue losses.

IT WAS MOVED BY COUNCILMEMBER SHERWOOD, SECONDED BY COUNCILMEMBER WILLIAMS AND UNANIMOUSLY CARRIED TO APPROVE THE MID-YEAR BUDGET ADJUSTMENT.

6. Valley Metro Strategic Plan

Chair Kavanaugh said Item 6 is the Valley Metro Strategic Plan which all of us heard at our last meeting, but Mr. Blue -- Mr. Crowley's indicated a desire or filled out a speaker card on this one for us.

Public Comment Mr. Crowley said figuring she's not going to go through the presentation again, I'll go through those bullet points again.

Improve customer service on the rail. Let's get it to where they are. And make it more twenty-four seven. And you are as close to it as any of the systems are. And thank you for that. But it needs to be twenty-four seven.

I'd like to also point out it's an approved -- secured dedicated and long term funding was one of the things she's pointing out which is going to a tax. What for? You've got your assignment. You know what you got to do. You've got the money to get it done. You need to get it across the freeway and into Glendale.

But you already have that dedicated funding, so when it says secure long term dedicated funding and the woman said that we need to go to a tax, what for? Is it to build more of you? Well, that's fine. Let's have a plan that we're going to be going to. Is it to be operating cost? Well, I thought that those were covered already.

As I've stated, you already have funding for the next ten years. And when it's compared to what you're doing with the bus, please, I need you to get some of that money over there.

And then when it says that we're going to develop and implement a communications plan to inform and educate the public on the value of transit, like I said, you guys are the ones that are going to do it.

Now, Thelda, I do know that you do use transit. I do know that you have not always driven from City Hall to here. I know that you, sir, also, but let's be honest about it. What are you trying to say there, because if you don't use it, how are you going to educate somebody about how it's working and how it's supposed to be done.

And if you are going to then use it, build it right. That's all it's trying -- I'm trying to say there. Don't tell me you're going to have an advertising campaign and that's going to convince everybody to get on it, because they look at themselves as you. They don't care about the air until they can't breathe. They don't care about the congestion until they're in it.

And what you need to do is start looking forward, get that bus fleet out there and maximize it to the extent of making it five times the size that it is now. Get your rail going the way it's supposed to be. And also, start seeing the heavy rail as a part of it. It's a multimodal plan, from pedestrian to heavy rail, and it should work together not in competition with each other.

Right now light rail always gets the bonus rather than working with the system. As that document that you showed us last time, it said Central Avenue on the south part. This is what it's going to look like, right, Grote? No bus, no bike, no pedestrian. That's what you showed as the picture. That's not the way you do it or do it right. Thank you for your time.

IT WAS MOVED BY COUNCILMEMBER WILLIAMS, SECONDED BY COUNCILMEMBER KUBY AND UNANIMOUSLY CARRIED TO APPOVE THE VALLEY METRO STRATEGIC PLAN.

7. Fiscal Year 2014 (FY14) Transit Performance Report

Mr. Banta said this is the same presentation we gave you last time. If we could move forward. It's information only, if that's okay.

Chair Kavanaugh said with the pleasure of the Board we can waive that since we've all heard it.

8. Wi-Fi Exploration On Board Light Rail System

Mr. Banta said Mr. Chairman, members of the Board, I just want to give you a brief update on Wi-Fi for light rail. We are in an exploratory phase with a regional Internet provider. Our goals are really to provide the right band width. We want to be complimentary to the riders. We want to make sure that we restrict it to the use of the

riders. We want to make sure that we manage the capital outlay for the infrastructure.

Quite frankly, we want to be on the cutting edge; we don't want to be on the bleeding edge of the introduction of Wi-Fi. This could be accomplished through a partnership with the benefit of an in-kind trade potentially for the publicity. We are talking about a potential pilot program recognizing if we were going to implement a complete project, we would have to federally compete it.

So we are in the process. We wanted to give you an update. And we wanted to make sure that you were kept abreast of what we were doing as it related to Wi-Fi. This is for information.

Chair Kavanaugh said we very much appreciate it. It's a priority of the Board and we appreciate your responsiveness to that.

Councilmember Sherwood said just to add a note that we talked about yesterday is, I know you have gone to Salt Lake City and I think we suggested Seattle, some of those cities that have mature systems, see where they've been able to combat the piracy and all that.

Mr. Banta said we are. We are working with all of our member cities -- and our peer cities.

9. Transit Ridership Trends Analysis

Chair Kavanaugh said with respect to Item 9, if it's, again, the pleasure of the Board, I think we've heard that report, so we can move on to Item 10.

10. Fiscal Year 2015 Second Quarter Report

Mr. Banta said it is our second quarter reports. I would forego all of the departments with the exception of safety and security. I would like to have our director of safety and security give you a brief update on what's going on in that department.

Ms. Ruiz said Mr. Chairman, members of the Board. I believe I'm going to, first, talk about very quickly on the bus side. What I wanted to report on this specifically, just going through here, on our reportable accidents, we are up slightly in comparison to last year. In addition, our Dial-A-Ride we have no NTD reportable. We have eight in comparison to last quarter.

What I wanted to mention on this, too, is just that this morning -- we had a significant bus accident last week. It was an empty bus. We did have an operator that was injured.

What I wanted to do is foster -- be an organization that fosters a culture of safety and security support for our work force. So when we have bus operators, just like we do in concern about our passengers with incidents of safety of security, our operators also, I want to make sure we have a circle back where Valley Metro, the organization, my department, the CEO, are updated routinely and very quickly on our condition of our operators.

So when they're involved in accidents or incidents, critical incidents, we want to make sure that we have that information timely and we're taking care of our operators. I'm going to work with Mike and Total and First Transit on that for the bus side as well as ACI also. So, again, I see a little bit of gap there in being here a few months. I want to make sure we close that gap.

On bus security incidents, another change here that you will also see probably next quarter is I'm going to classify this now as police reportable bus. For the purpose of when I came on and I saw I had nine bus security incidents, security in a police world means a little bit different to maybe someone else. And coming from a police background, security incidents mean there was something significant. It could be even terrorism related. I don't know. I need to ask.

So I asked for what the incidents were in those nine that were reported and I found several that were, to me, unknown and others that I didn't see as significant incidents: I didn't have a victim; I had maybe a verbal disagreement and parties were separated.

So what I'm going to do, also in cooperation with Mike and with the contractor staff, is we're going to look at what information I deem as viable and quantifiable meaning that when we have a police reportable incident, if police are making a report, we have evidence of a crime, we have a victim, we have prosecution, we even have possibly an arrest made. I'm going to also request that damage over $500 or more be a police reportable incident.

So if we have damage to a bus, we need to get a good quote, we need to have a police report generated. I find that some police reports are not being generated, police are not being called, so I want to know that also.

What that does for me, in addition to that, is if I have criminal trends, for example, Route 56. If I have a route in a particular area that I have evidence of having BB strikes, I can work with the local police to address that if it's a criminal trend, if we have repeated events.

So I need to know that criteria and I also want it to match NTD reporting. We have that on the safety side. We do not have it on the security side. Those are personal security events and systemwide security events. And there's criteria for those.

This will look a little bit different. It will be police reportable bus. It will also have NTD reportable in addition to just how safety does.

That concludes the bus portion. I'm going to move right into the security for the rail side. Does anyone have any questions first on the RPTA bus side?

Councilmember Kuby said once you have it in the reporting system will you back date it?

Ms. Ruiz said Mike and I need to sit down with the contractors and look and see how far the data goes and how much is reasonable to report back on. Because the information Mike got from me, there's a lot of – there are about 12 unknowns that I didn't have, and about five that I would quantify and classify as true security incidents. We had nine here. I would look at more of the ones I read, probably five. But 12 are unknown. Twelve I wasn't sure because I need more information.

So we'll have -- we'll work on that and I think by next quarter we'll have a better idea of what I'm reporting to you and I'll be able to give you a basically a table of what you're getting. Here's what you're getting on these incidents, but police reportable and an NTD along with it.

Going into the rail side, just like with the RPTA and contractors on the bus side, same for the rail with that building a culture of work force support for any rail incidents, if we have operators involved, any traumatic incidents and so on.

I also have my safety analyst, Sam, working on a causation report for rail accidents. For last quarter, we had three, no NTD reportable. For this quarter we had two. A total of three, but one was NTD reportable, meaning we had someone that was transported. There were two people transported, non-life threatening injuries, but we did have NTD reportable in that accident.

For this, the causation data that I'll probably have in the next few months, Sam and I will be prepared to report information on that. I can tell you now based on the information Sam has collected from 2012 to 2014, left turns are our primary focus. I think everybody acknowledges that.

Time of day also is going home. So when you look at 3:00 p.m. to 7:00 p.m. In the police world, too, our calls for service go up as people are getting tired after work. They want to get home. They want to get out of here. We have more accidents during that peak time. Also intersections.

So when I take that data, I want to be able to do something with it. And primarily it's going to be education, it's going to be working with local PD at those problem intersections, seeing if we have signaling we can correct or modify, but also working in education-enforcement program to make sure people are not violating left-turn signals.

The fares inspected were about 16 percent down just slightly from last quarter, but up significantly from last year this time. Fare compliance we're hovering right about 95 percent. And when you compare that to our peer cities, we're right in line with our peer cities.

Citations issued, you do see a significant change. We did have some transition in our account management and oversight with Allied Barton. It improved dramatically once we had that transition change and you see citations increased tremendously.

We go to accidents with passengers not cited. This is another one I'd like to change. This is something the Board for asked for about last August, so the data here is from August on.

We compared the last quarter to this quarter. You do see a little bit of a change, a little fluctuation. On this last reportable criteria, the passenger assist, I'd like to change that to revenue recovery.

When I asked what was being reported in this last table here, it was basically when people or individuals are not cited, what are we doing with them. Well, we're attempting to possibly cite them and they leave prior. We're warning them which that data is collected, or we're assisting them with fare.

But I said, well, how are we assisting them? Well, on the train if we come across someone who hasn't tapped their card, who hasn't possibly bought a fare, who doesn't register as maybe someone we've had familiarity with who hasn't paid fare before we're advising them at their end of trip to buy a fare and make sure they have it next time.

That to me does not quantify as reliable, reporting data when you're talking about true passenger assistance. If I want to report this, I want to change it to revenue recovery, so I've directed the contract staff to make sure our fare inspectors work with that person at their end of line to actively tap the card, purchase the media, activate the pass, whatever they need to do, but it is actually witnessed.

I will then take that as a revenue recovery. I want it basically to be something that we can say we did this, not that we assumed they did when they got off the train. We hope they did, but they actually did this.

Councilmember Sherwood said I was going to bring this up actually as an item of future requests, but a good place here. We had a little discussion yesterday reviewing the packet on this matter in particular, and I know Vice Mayor Heumann from Chandler, this is one of his favorite subjects, so I'm really not replacing him on this, but we had the handhelds. I'm sure the technology exists, but, you know, when you have -- when you catch someone like that that hasn't paid and, let's say, it's a two-dollar fare, maybe they get charged a ten-dollar fare and they get -- they get charged right away. You get their

card and you run it just like we have the things with iPhones where you can -- the square -- and whether that could be adapted to the handhelds that we have today.

But, I mean, there you have instant, I mean, they know they're getting hit, I mean, because quite often, and I know you're trying to quantify it as you're explaining it, but, you know, we make them do it often and say: Make sure you have it next time. Well, you know, do they really do that.

I know we keep bringing this up, but I -- and the gentleman, one of the speakers, talked about enforcement. I still -- I don't -- I know we do good at -- we're doing well against our peer cities for farebox recovery, but there's still a lot of frustrated people out there.

And I ride it to events, I mean, it's not reaching my area yet, but I use it for going down to Phoenix events. And, you know, there's some people and they talk. It's like, you know, I mean, they know there's people not using it and they're a little frustrated by it because they're the honest ones.

So I was going to bring it up as an item for future conversation, but, you know, I like the way you're going on this and I hope there could be some dialogues from -- I think I made some discussion with some other cities that are, maybe had a better control on this to see if we might do that.

Ms. Ruiz said I have a couple other slides that may address that. But just to tie into that, fare sweeps and even reversals, we used to do with those when I was with transit enforcement. I think you know what a reversal is.

We do have people when they see a fare inspector you have this mass exodus as they board. Well, we do reversals where we actually wait for them to come onto the platform, which is a paid zone, and we actually do the fare inspection as they alight the platform, because they do need to have their pass in a paid zone.

That in conjunction with the next couple of slides I'm going to show you is a "no free ride violator" project that I'd like to work on. And something I like to refer to, I'm sure Hillary's shop and Ray's also has called after Super Bowl ASB, have that on my board, so it's one of the projects, it's ASB. ASB give me a couple more weeks.

But it's something I'm already working on right now and have had conversations on this with my local law enforcement partners. And they're very interested. They see the issues, issues you addressed. I'm going to cover that here in just a second on the next couple of slides.

In addressing your issues and everything you mentioned, on the E-tickets, which I think you're familiar, we're going to be getting E-tickets this spring. February, I've done another ASB. I wanted to wait to roll that out until after Super Bowl. But on the E-tickets, which will be deployed systemwide, I will have this criteria as a

dropdown menu and ensure that we capture the data on any warnings we do, any voids we do on citations that are not going to go to courts, but it's audible data that I can pull from, I don't have to ask the courts per se for the data, I can pull from it and find my chronic fare violators.

I'm hoping that that will make it more efficient. We can shorten the gap of time that it takes, especially in Phoenix, with a handwritten citation that they have to use right now. I can get the fare inspector back on the train to do more inspection. I would hope to see those numbers creep up where we have more that reaching that 20 percent inspection report to get that 3 percent or less compliance -- fare avoidance.

Councilmember Sherwood said but do you see the possibility, I mean, does that even exist, you think today, where you can actually get people -- I mean, there's probably some violation there of human rights .

Ms. Ruiz said theft of service is criminal that is part of the "no free ride violator" project. But I think it's getting more of people's attention and I don't know how it would work in the fare structure with the punitive part of the fine imposed, if I'm charging them ten dollars now to ride versus the $2.75 or $3.50 or $4.00 they would have paid if they had the correct fare. So that may be something that when I address it in the slide it may work and meet your expectations.

Let's talk, first, also about citations. That's a favorite of mine, because working on the ordinances back in 2006 with the legal teams that have been developing these ordinances, the end user is where you're going to see how effective your citations are. That's something that since I've been with Phoenix P.D., went to transit. In the seven years I was there, I always asked the courts, not the cops writing the tickets, not the contractor but the courts, what's my success rate on the citations.

Looking at why they're civil and not criminal, I think it speaks for itself. It's cost. These citations are civil because the cost associated with following a person through the judicial system criminally costs a lot. And you look at the cost of the citation -- of the ticket.

Five hundred dollars max fine to keep it civil. If it goes over $500 it becomes criminal, so a person who receives a ticket today it will not go to warrant if they don't pay. But what happens is if it affects your recipient is anytime they want to get a student loan, a car loan, a mortgage, anytime they're going to get a tax refund from the State, the courts will never stop attempting to collect.

They've collected on citations, civil citations, that are over 20 years old. They will eventually find you some way somehow. But it's how good is the data, and the demographics, and the biographical information that I have on the citation as to how I can find you.

So when we're looking at that how the courts will never stop attempting to collect, we also look at the language of the ordinances. They do vary by city, and that's something that I want to revisit with -- Mike and I were talking about revisiting the language of the ordinances, because they do vary just slightly in how they're worded.

I do ask the contractors as well as the law enforcement and the courts, also, how many dismissals do we have. If we're losing citations, losing cases in court, do we have a testimony issue, or do we have an interpretation of the ordinance issue? Is there something we can clean up as far as how the ordinance is written that the judges are interpreting the way we didn't intend them to.

If we can clean that up, we can win the cases. If we have issues with default, that's where you get into the "no free ride violator" project, which I'll talk about in a second.

So again, following the STOP program, which I started in 2011 when I was with transit enforcement, the STOP program is designed to address the gateway crimes like littering, defecating, urinating, and drinking.

All those wonderful things that we see that then bring the criminal element of robbery, prostitution, and so on to possibly a transit system, to a private business, to anything.

When we address those gateway crimes in the beginning we can get a better handle on our chronic violators who possibly also are not paying fare most of the time.

We attach them to social service providers and we make it a part of their plea agreement. So in order for them to not go to jail, not go to tent city, not spend any time incarcerated, they have to meet the plea agreement and the conditions of probation. With that also comes restriction, travel restrictions. They cannot get on the train. They cannot use the train. They also cannot use the bus stop, if it's a bus stop offender.

So that program when I started that there's just over four hundred people now as of December of 2014. You see the majority are bus. This is City of Phoenix only -- this by the way. About 69 percent of the folks in the STOP program for City of Phoenix are bus related. About another 32 percent are light rail. We do have a total of about maybe almost 20 percent that are multimodal. They have both bus and rail restrictions.

If individuals in green, that's an individual, both the same person, one bus one rail, he actually has PC to arrest if he returns to the area within sixty days because he's received a trespass warning from the local law enforcement given to him through authority signature on file by either by Jesus Sapien for bus or myself from rail.

Once he has that signature authority from me to trespass the person, law enforcement coming across the individual back in the system can trespass them.

If they refuse to leave, they can be arrested. So once they're warned, if they return they can be arrested. The individual below in yellow, Mr. Douglas, he actually has a court order.

What I found works best is to have a judge implement the court order, not just have the local law enforcement tell someone they can't come back. So if they return and they're booked, we work with the local prosecutors to ensure a judgment sentence order.

Once they have the court order, which could be up to three years, I've seen individuals restricted from light rail or from an intersection for bus stops. If they return for any reason, fare in hand does not matter, they go to jail and are charged with two misdemeanors: violation of a court order and criminal trespass.

The individual in white is an individual who's a candidate of the program who has yet to be contacted again to be warned. But he's eligible to be warned if his behavior continues. And, again, this is connected to social services. We have a lot of mental health and possibly substance abuse issues with our individuals in the STOP program, so part of their plea agreement also is to get help and change the behavior to become productive and use the system eventually.

With the "no free ride violator" project, it's going to follow that methodology and this is designed to address top fare violators through criminal charge of theft of services along with travel restrictions.

We do have exclusion ordinances in the transit ordinances; however, they are also civil. You can see the problem if I write a person another civil citation that also excludes them from it, it's, again, still civil. I cannot arrest them for it.

So what this does is, and this is another thing that Mike and I will work on to possibly modify, is running through the court system asking them for the last three years of individuals who have come up with the two citations in Phoenix and the two in Mesa and Tempe that are consistent with fare violation, how many of those individuals are repeat offenders, received two or more. Of those individuals who received two or more fare violations, they become possible candidates in the "no free ride violator" program.

And if they're in part of that program, it will work much like STOP. That person then working with our local law enforcement and courts can then be arrested for a criminal charge of theft of services, because we have evidence already in the court that they have failed to comply with paying fare.

Does anyone have any questions on that before I move on? I only have a couple more, because that may answer your question.

Councilmember Sherwood said but that would only be if you saw them again. I mean, you wouldn't go after them.

Ms. Ruiz said we couldn't go after them, no. But most likely if they've received two or more fare violations, they're probably routine or regular users of some kind, maybe seasonal if they're students.

But the bottom line is the messaging. And there will be messaging also that we're rolling this program out, is that there are no free rides. That we do take this -- the revenue recovery of the system -- seriously. And if you've received citations already for this and you continue -- because I have different people citing -- you know, I have cops citing and I have Allied Barton citing and so on.

And when I have a lot of people in the system, we want to make sure we, if we see the same person more than once or twice -- that they become a candidate of this program we address it. And if we have social services that we need to address as well, we will do that in addition.

Councilmember Sherwood said what is the typical fine for someone that actually gets fined?

Ms. Ruiz said with administration, court fees, it's about $75. It can go up to approximately $75. So, now, Tempe just raised theirs. It's a $100 dollars. So if you get a citation in Tempe, the average fine will increase to $100. They just increased that last quarter.

Councilmember Sherwood said any thought if we made it really crazy like $250 or something, kind of like they've done on some HOV programs?

Ms. Ruiz said you could up to $500. So with the late fees, so if, you know, if a person defaults, it maxes at that $500. So if we increase with cooperation of the courts and the cities, if we wanted to increase the fine structure to elevate it to, say, across the board, it's a $100 ticket. I would like to make it consistent.

That's the problem, too, is jurisdiction-wise, we have some variances. I'd like to make it a systemwide approach. It needs to be a systemwide approach, a regional approach, not a piecemealed city approach. So that the language, the fine structure, needs to be the same. The trespassing, the judgment sentence orders, all need to be consistent with each other. So that's a good point. We can always raise that.

Councilmember Sherwood said that should be doable amongst the member cities.

Ms. Ruiz said I think -- and no cities would argue, we can raise the fine. I don't think they would argue that. And primarily addressing fare, I think is the biggest one, people are most interested in.

So this is the program. And again, it's an ASB type of program. And the social services side, I've been very active in the social services side, doing a lot of programs and

projects with our social service providers, giving recommendations on certain things -- oops, I just shut my PowerPoint off. That's okay. It's my last slide. -- working with Veteran's Affairs, especially doing outreach programs for social services.

The STOP program, I had an individual, Teddy Thompson, who was my pilot project individual, he has since been successful, has recovered housing, is getting his connection to services he needs, and is no longer an issue for the rail. He's welcome to come and use the rail and bus because he's proven he could be successful. But as part of the STOP program it made him that way.

Community Bridges our alcohol rehabilitation clinic, Southwest Behavior for Mental Health, Project Rose. I do have about 15 percent of the STOP candidates in Phoenix are women. So if there's opportunities to work Project Rose with those individuals, that's also an opportunity. And then Arizona Commission of Indian Affairs as well with our Native American community. That was something I started just before I left transit and it was transferred and then retired. So I'd like to start that back up again. And that's all I have if you have any questions.

In addition, I wanted to mention as well, is that for the CME project, I mentioned this to the FTA quarterly, the Fire Life Safety Subcommittee is part of the CME project, is a requirement. But I have a branch off of that.

I'm going to mirror what I did with Phoenix, if we have an incident, an accident, and special event focus group, to assist Mesa PD and Mesa Fire with their revenue miles that they will have quite an extension. And we're gearing that up now and working with their SWAT team, working with their patrol, working with their division chiefs, and Mesa fire to get them successful and ready for revenue miles.

Training is a big component of that and also working special events. So I just wanted to mention that as well.

Councilmember Williams said excellent presentation. Seeing Project Rose, do you have people soliciting prostitutes on the train?

Ms. Ruiz said thank you. I don't have -- and working back in my history with TE, when I was with transit enforcement with PD, we did not have an incident that I'm aware of with people soliciting, per se, but I believe with some of our clientele and City of Phoenix that we definitely do, because I've spoken to them myself, so I can speak from experience, that the women that are on the system that do have a history of either substance or mental -- mental health issues, have also, when I've asked them as a peace officer, have prostituted themselves.

So if they're using the platform to do that, it could be. I did not have any arrests to that level when I did the seven years I had with transit. Bus stops, quite possibly, yes, I did have that along Van Buren and 12th Street.

On the bus side I did have that. We did have a problem area we work from 9th to 12th Street. On the rail side I did not have direct evidence of that, but I did have some of the women who were using the train system to maybe go to and from locations, but that was how they made their main form of money, yes.

Councilmember Williams said because, you know, as of today “johns” go directly to jail. Mandatory booking. So I want to encourage if you find that from the bus stops or whatever, you're giving them a free ride. Not necessarily on the bus.

Ms. Ruiz said absolutely, yes ma'am.

Chair Kavanaugh said thank you very much for the presentation. I wanted to pass along some feedback, very positive feedback, from the Mesa public safety personnel. In working with you they're extremely pleased with the height of your cooperation and look forward to working with you.

11. Future Agenda Items Request and Report on Current Events

Chair Kavanaugh said the next item, future agenda items, reports on current events.

Councilmember Williams said I would like to have a report back on Super Bowl, everything we did extra, what it cost us, and results.

Mr. Banta said Mr. Chairman, Councilmember Williams, yes, we are planning to do that. We wanted to wait until ASB. And we will compile all the costs, all the efforts that we went through, the revenue that we've collected from either extra tickets or advertising, and put it all in a complete presentation back to you. Absolutely.

Chair Kavanaugh said our next meeting will be Thursday, February 19th at 1:15 p.m. And if nothing further, we'll declare this meeting adjourned.

With no further discussion the meeting adjourned at 3:06 p.m.

DATE AGENDA ITEM 3 February 12, 2015

SUBJECT Chief Executive Officer’s Report

PURPOSE Steve Banta, Chief Executive Officer, will brief the Board on current issues.

BACKGROUND/DISCUSSION/CONSIDERATION None

COST AND BUDGET None

COMMITTEE PROCESS None

RECOMMENDATION This item is presented for information only.

CONTACT Steve Banta Chief Executive Officer 602-262-7433 [email protected]

ATTACHMENT None

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

DATE AGENDA ITEM 4A February 12, 2015

SUBJECT Contract Award for Consulting Services for the Ellipse Software Upgrade

PURPOSE To request Board authorization for the Chief Executive Officer (CEO) to execute a contract with AddOns, Inc. for an amount of $607,000 and a $20,000 contingency for the provision of professional implementation services for the Ellipse software upgrade.

BACKGROUND/DISCUSSION/CONSIDERATION Valley Metro currently uses a fully integrated software solution that was purchased and installed in 2007 that manages assets such as light rail vehicles, maintenance equipment, facilities, and parts inventory. The current version of the software is Mincom Ellipse 5.4. Valley Metro is in need of consultanting services to assist in the upgrade of the Ellipse software to the more current 8.4 windows based version.

On December 8, 2014, Valley Metro issued a Request for Proposals (RFP) for the provision of professional implementation services for the Ellipse software upgrade.Two proposals were received:

• AddOns, Inc. • Ventyx, Inc.

Proposals were evaluated on firm qualifications & experience, understanding/approach to the scope of services, and price. After review and scoring of the proposals, the evaluation committee identified AddOns, Inc. as the best offer and value for Valley Metro.

Contractor will provide services to successfully upgrade the current version of Ellipse to version 8.4. The services will include the preparation, validation and confirmation of the new virtual infrastructure ensuring the final technical platform is in synch with the new software requirements. Services will also include some programmatic data cleanup and full data migrations of the current Ellipse data from the existing servers to new servers. The business solution documentation will be the basis for user training. The work will be completed by June 30, 2015.

COST AND BUDGET The contract amount for implementation services is an amount not to exceed $607,000. A contract contingency of $20,000 is also requested to be used to fund contract changes which are not anticipated, but may become necessary. Costs for the

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

contracted services is included in the METRO Adopted FY15 Operating and Capital Budget.

COMMITTEE PROCESS RTAG: January 20, 2015 for information RMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to:

• To execute a contract with AddOns, Inc. for a not to exceed amount of $607,000 for the award of consulting services for the Ellipse software upgrade;and • Authorize a contract contingency of $20,000 to be used at the CEO’s discretion for unanticipated contract changes that may become necessary.

CONTACT Ray Abraham Operations and Maintenance Director 602-262-7433 [email protected]

ATTACHMENT None

DATE AGENDA ITEM 4B February 12, 2015

SUBJECT Gilbert Road Light Rail Extension: City of Mesa Agreements

PURPOSE To request Board authorization for the Chief Executive Officer (CEO) to execute four agreements with the City of Mesa necessary for development of the Gilbert Road Light Rail Transit (LRT) Extension project. Included are:

BACKGROUND/DISCUSSION/CONSIDERATION Valley Metro has completed the Environmental Assessment and Preliminary Engineering for the Gilbert Road LRT Extension and will soon begin the process to procure the services of a design consultant and a Construction Manager at Risk contractor. However, prior to initiating this next phase of project development, it is necessary for Valley Metro and Mesa to formalize four critical agreements, including:

• Amendment No. 3 to Funding Agreement No. 12-175. In July 2014, MAG advanced an additional $571,500 in federal Congestion Mitigation/Air Quality (CMAQ) funds and $34,545 in matching funds from Mesa to continue engineering activities for the project. This will bring the total authorized funding to date under this agreement to $5.74 million.

• Transportation Project Advancement Agreement (TPAA) – The TPAA sets forth project reimbursement provisions and award of future federal grants. The City of Mesa, City of Phoenix, Maricopa Association of Governments (MAG), and Valley Metro are signatories to the TPAA. The TPAA will allow Mesa to initiate activities and expenses related to the issuance of Transportation Project Advancement Notes (TPANs) eventually funding the total cost of the project. Mesa and its debt will be reimbursed with federal Surface Transportation Program (STP) and CMAQ funds. The first series of TPAN would be issued in Fall 2015 and the second series in Summer 2016.

• Design and Construction Agreement – This agreement outlines the relationship between Valley Metro and Mesa during the design and construction phases of the project. The agreement also identifies the roles and responsibilities of project staff related to design, real estate, and construction support.

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

• Public Way Use Agreement – This amends the existing agreement with Mesa for previous light rail projects and permits Valley Metro to use public right-of-way to construct and operate the light rail tracks, stations, traction power substations, utility relocation, and park-and-ride facility on Main Street in Mesa.

The Mesa and Phoenix City Councils approved the TPAA in December 2014 and January 2015, respectively. It is anticipated that the Mesa City Council will approve the other three agreements in February 2015. The Board actions requested in this memo will be contingent upon the City Council’s approval of all four agreements.

COST AND BUDGET The total cost for all work identified in the Amended Funding Agreement No. 12-175 with Mesa is $5,741,782. This includes $5,414,500 (94.3%) in federal CMAQ funds and $327,282 (5.7%) in matching funds from Mesa. Amendment #3 is included in these costs and provides $571,500 in CMAQ funds and $34,545 in matching funds from Mesa. Funding is identified in the adopted Fiscal Year 2015 Operating and Capital Budget and the Five-Year Capital Program.

The capital cost estimate for the Gilbert Road Light Rail Extension project is $161,744,025 (in year of expenditure) and an annual operating cost of approximately $3.2 million (in 2018 dollars).

COMMITTEE ACTION RTAG: January 20, 2015 for information RMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to execute the following agreements for the Gilbert Road Light Rail Extension:

A. Amendment No. 3 to the Gilbert Road Extension Agreement No. 12-175 for Mesa to provide up to $34,545 in matching funds for a federal CMAQ grant B. The Transportation Project Advancement Agreement to allow Mesa to initiate activities and expenses related to the issuance of Transportation Project Advancement Notes (TPANs) eventually funding the total cost of the project C. The Design and Construction Agreement D. Amending the Public Way Use Agreement

CONTACT Wulf Grote, P.E. Director, Planning and Development [email protected] 602-322-4420

ATTACHMENT None

Copies of the agreements are available upon request.

DATE AGENDA ITEM 4C February 12, 2015

SUBJECT Fiscal Year 2014 Valley Metro Rail, Inc. Comprehensive Annual Financial Report (CAFR) and Single Audit Reporting Package (SARP).

PURPOSE To request that the Valley Metro Rail, Inc. Board of Directors accept the Comprehensive Annual Financial Report (CAFR) and Single Audit Reporting Package (SARP) for the period ended June 30, 2014.

BACKGROUND/DISCUSSION/CONSIDERATION In October 2002, the cities of Glendale, Mesa, Phoenix, and Tempe formed Valley Metro Rail, Inc. (METRO), an Arizona public nonprofit corporation. METRO is responsible for the planning, designing, construction, and operation of the Light Rail Transit (LRT) System in the region. The fiscal year ended June 30, 2014 is the eleventh full year of operation as a separate entity.

The By-Laws of the Corporation require an annual audit to be performed of the financial records by a certified public accountant. In addition, all recipients of federal grant funds are required to have an audit performed in compliance with the Single Audit Act provisions. The reports contained in the attached Comprehensive Annual Financial Report meet these requirements for the period ended June 30, 2014. All reports are prepared in conformity with generally accepted accounting principles.

METRO is required to have an independent audit of expenditures of federal awards received (Single Audit Act) directly from federal agencies or passed through by other governmental entities during the period. The standards governing Single Audit Act engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the internal control over compliance and other matters having a direct and material impact on major programs, with special emphasis on internal controls and compliance requirements involving the administration of major federal awards.

Heinfeld, Meech & Co., P.C. has completed the METRO audits for the period ended June 30, 2014. Completion of the June 30, 2014 financial statement and Single Audit Act audits produced no findings.

METRO’s Comprehensive Annual Financial Report for Fiscal Year 2014 received an unmodified opinion. Attached you will find a copy of the Independent Auditor’s Report, Management Discussion and Analysis section of the CAFR, Audit Standards Disclosure and Single Audit Reporting Package Reports.

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

The complete CAFR and SARP reports are available on our website at the following URL: http://www.valleymetro.org/publications_reports/annual_reports

COST AND BUDGET None

COMMITTEE PROCESS RTAG: January 20, 2015 for information Financial Working Group: January 15, 2015 for information RMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors accept the Comprehensive Annual Financial Report and Single Audit Reporting Package for the period ending June 30, 2014.

CONTACT John P. McCormack Chief Financial Officer 602-262-7433 [email protected]

ATTACHMENTS Auditors Opinion –CAFR Fiscal Year 2014 Management Discussion and Analysis –CAFR Fiscal Year 2014 Audit Standards Disclosure Auditors Opinion –Single Audit Reporting Package Fiscal Year 2014

2 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718

INDEPENDENT AUDITOR’S REPORT

Board of Directors Valley Metro Rail, Inc.

Report on the Financial Statements We have audited the accompanying financial statements of Valley Metro Rail, Inc. (METRO), as of and for the year ended June 30, 2014, and the related notes to the financial statements, as listed in the table of contents.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of Valley Metro Rail, Inc., as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Change in Accounting Principle As described in Note 1, the METRO implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities, for the year ended June 30, 2014, which represents a change in accounting principle. Our opinion is not modified with respect to this matter.

1 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 3 through 9 be presented to supplement the financial statements. Such information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the financial statements, and other knowledge we obtained during our audit of the financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the METRO’s financial statements. The Introductory Section, Schedule of Operations – Budget and Actual, listed as Other Supplementary Information in the table of contents, and Statistical Section are presented for purposes of additional analysis and are not a required part of the financial statements.

The Schedule of Operations – Budget and Actual is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Schedule of Operations – Budget and Actual is fairly stated in all material respects in relation to the financial statements as a whole.

The Introductory Section and Statistical Section have not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 25, 2014, on our consideration of Valley Metro Rail, Inc.’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Valley Metro Rail, Inc.’s internal control over financial reporting and compliance.

HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants

November 25, 2014

2 FISCAL YEAR 2014 VALLEY METRO RAIL, INC. CAFR MANAGEMENT'S DISCUSSION AND ANALYSIS Valley Metro Rail, Inc. Management’s Discussion and Analysis

As management of Valley Metro Rail, Inc. (METRO), we offer this narrative overview and analysis of the financial activities of METRO for the fiscal year ended June 30, 2014. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages iii – ix of this report. This discussion and analysis is designed to (1) assist the reader in focusing on significant financial issues, (2) provide an overview of METRO’s financial activity, (3) identify changes in METRO’s financial position, (4) identify any material deviations from the financial plan (adopted annual budget), and (5) identify other issues or concerns.

Financial Highlights

• METRO’s total net position increased $48.9 million in FY 2014. The increase was caused by new capital investments which exceeded scheduled depreciation charges. Total net position for METRO was $1.194 billion at June 30, 2014.

• METRO’s operating revenues for FY 2014 were $33.4 million compared to $31.0 million for the prior period. Operating revenues consisted of contributions from METRO member cities ($16.8 million), passenger fares ($12.5 million), FTA operating grants ($2.4 million) and other revenues ($1.7 million). Passenger operating costs increased by $2.5 million and federal grant funding decreased by $3.0 million. The combination of cost increases and reductions of federal grant funding are the primary causes of increased contributions from Member Cities of $5.2 million.

• Capital contributions totaled $113.8 million consisting of Public Transportation Funds of $86.2 million and Federal Transit Administration Capital Grants totaling $27.6 million. In addition, the City of Phoenix provided an advance capital loan for $22.1 million for the Northwest Extension capital project. Construction in progress for capital projects includes $41.4 million for the Central Mesa LRT extension and $44.1 million for the Northwest LRT extension. In addition, the capital funds provided for a $26.8 million capital lease payment for 14 light rail vehicles and for conveyance of $9.9 million in real estate to member cities.

OVERVIEW OF THE FINANCIAL STATEMENTS

METRO’s financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). GAAP requires that the financial statements be accompanied by a narrative introduction and analytical overview of the government’s financial activities in the form of “Management’s Discussion and Analysis” (MD&A). The financial section of the Comprehensive Annual Financial Report (CAFR) for METRO consists of this discussion and analysis and the basic financial statements. This report also contains other supplementary schedules presented after the basic financial statements. METRO’s basic financial statements include a statement of net position; a statement of revenues, expenses and changes in net position; a statement of cash flows; and the notes to the financial statements. METRO’s financial statements are prepared on an accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America promulgated by the Governmental Accounting Standards Board (GASB).

Fund Financial Statements – METRO is presented as an enterprise fund. Enterprise funds are used for activities that primarily serve customers outside the governmental unit. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or conditions. Funds are used to ensure and demonstrate

Valley Metro Rail, Inc. Management’s Discussion and Analysis (Continued)

compliance with finance-related legal requirements as well as for managerial control to demonstrate fiduciary responsibility over the assets of METRO.

The statement of net position presents information on all of METRO’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of METRO is improving or deteriorating.

The statement of revenues, expenses and changes in fund net position presents information showing how the agency’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected grant revenues).

Notes to the Financial Statements – The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the financial statements and should be read with the financial statements. The notes can be found beginning on page 13.

Enterprise Operations – METRO was formed in October 2002 by the cities of Glendale, Mesa, Phoenix and Tempe as a public nonprofit corporation to manage design, construction and operation of the Light Rail Transit (LRT) System within the Metropolitan Area. The city of Chandler became the fifth contributing member in April of 2007. The member cities pay for their share of METRO’s operating expenses based on expense allocation methods approved in the by-laws of METRO. See Note 1 for a summary of METRO’s significant accounting policies.

Light Rail Ridership Comparison 2010 / 2011 / 2012 / 2013/ 2014

Valley Metro Rail, Inc. Management’s Discussion and Analysis (Continued)

FINANCIAL ANALYSIS OF METRO

The following tables and analysis discuss the financial position and changes to the financial position for METRO as a whole as of and for the year ended June 30, 2014, with comparative information for the previous period.

Net Position – Net position may serve over time as a useful indicator of METRO’s financial position. The following table reflects the condensed Statement of Net Position as of June 30, 2014, compared to the prior period.

VMR's Condensed Statement of Net Position As of June 30, 2014 and 2013 Percent 2014 2013 Change Change Current assets $ 71,151,756 $ 77,300,100 $ (6,148,344) -8.0% Noncurrent assets 1,241,649,049 1,193,125,907 48,523,142 4.1% Total assets 1,312,800,805 1,270,426,007 42,374,798 3.3%

Current Liabilities 57,604,636 73,323,565 (15,718,929) -21.4% Noncurrent Liabilities 60,893,586 51,678,875 9,214,711 17.8% Total liabilities 118,498,222 125,002,440 (6,504,218) -5.2%

Net Investment in Capital Assets 1,181,649,049 1,143,025,388 38,623,661 3.4% Unrestricted 12,653,534 2,398,179 10,255,355 427.6%

Total Net Position $ 1,194,302,583 $ 1,145,423,567 $ 48,879,016 4.3%

Total net position represents the sum of METRO’s unrestricted net position plus net investment in capital assets. The largest portions of the investment are capital assets for the Central Phoenix/East Valley Light Rail Transit Project (CP/EV LRT). In December 2008, METRO placed these capital assets into service for operation of the light rail transit system and in day- to-day operations of METRO. It is not METRO’s intention to sell these assets and they are therefore not available for future spending. Net position increased $48.9 million largely due to the addition of the construction in progress for the Central Mesa Extension and the Northwest Extension capital projects. Funding sources for the new investments include Federal grants and Public Transportation Funds.

Valley Metro Rail, Inc. Management’s Discussion and Analysis (Continued)

CHANGES IN NET POSITION

Total operating revenues, which consist of Contributions from Member Cities, Passenger Fares, FTA grants, and Other Revenues (advertising and MAG planning funds), increased by $2.4 million. Member City contributions increased $5.2 million and were primarily impacted by increases in passenger operations service costs and reductions in federal operating grants.

Operating expenses increased by $3.0 million to $79.0 million: Administrative expenditures increased from $8.3 to $8.8 million. Passenger Operations Service expenses were up by $2.5 million from $28.712 to $31.260 million. As the system has now reached 5 years of age, increased preventive maintenance costs are the primary cause for the increase. Depreciation expense was $38.9 million, slightly down from $39.0 million in the prior year.

Non-Operating expenses: This year's non-operating revenue and expense activities report a net ($19.4) million decrease in net position. The decrease includes private utility relocation expense ($14.9 million) capital conveyance of real estate to member cities ($9.9 million), and interest on capital funding obligations ($1.6 million). The expenses were offset by Regional Public Transportation Funds revenue of $6.6 million.

Capital contributions totaling $113.8 million consist of FTA capital grants $27.6 million and Public Transportation Funds $86.2 million. Capital projects funded include the Central Mesa and Northwest Extension construction projects. The $54.0 million increase over prior year capital contributions were primarily related to a $58.4 million increase in PTF contributions for capital projects offset by a ($4.2) million decrease in Member City Capital Contributions.

The following table compares the revenues and expenses of METRO for the current fiscal year and the previous period. VMR's Changes in Net Position Fiscal year ended June 30, 2014 and 2013 Percent 2014 2013 Change Change Operating revenues: Contributions from Member Cities $ 16,803,600 $ 11,614,615 $ 5,188,985 44.7% Passenger Fares 12,505,116 12,791,801 (286,685) -2.2% FTA Operating Grants 2,400,132 5,382,997 (2,982,865) -55.4% Other Revenues 1,730,566 1,252,967 477,599 38.1% Operating revenues 33,439,414 31,042,380 2,397,034 7.7% Operating expenses: Administrative 8,840,445 8,287,393 553,052 6.7% Passenger Operations Service 31,260,365 28,711,628 2,548,737 8.9% Depreciation 38,911,674 38,978,409 (66,735) -0.2% Operating expenses 79,012,484 75,977,430 3,035,054 4.0%

Operating income (loss) (45,573,070) (44,935,050) (638,020) 1.4% Non-operating revenues (expense) (19,372,892) (8,283,802) (11,089,090) 133.9% Deficiency before Capital Contributions (64,945,961) (53,218,852) (11,727,109) 22.0% Capital Contributions 113,824,977 59,775,988 54,048,989 90.4% Increase (Decrease) in Net Position 48,879,016 6,557,136 42,321,880 645.4% Net Position, July 1 1,145,423,567 1,138,866,431 6,557,136 0.6% Net Position, June 30 $ 1,194,302,583 $ 1,145,423,567 $ 48,879,016 4.3%

Valley Metro Rail, Inc. Management’s Discussion and Analysis (Continued)

CAPITAL ASSETS AND LONG TERM DEBT

Capital Assets: The following table provides a breakdown of capital assets of METRO at June 30, 2014, with comparative information for the previous period. Additional information on METRO’s capital assets may be found in Note 5.

VMR's Capital Assets, Net of Depreciation As of June 30, 2014 and 2013 Percent 2014 2013 Change Change Buildings $ 84,794,636 $ 87,357,938 $ (2,563,302) -2.9% Guideway 503,336,746 514,647,312 (11,310,566) -2.2% Bridges 50,238,383 52,288,930 (2,050,547) -3.9% Operation Control Center 10,903,077 11,339,858 (436,781) -3.9% Passenger Stations and Facilities 83,259,135 86,657,467 (3,398,332) -3.9% Park and Ride Facilities 25,906,761 28,574,490 (2,667,729) -9.3% Electric Power Substations 69,210,351 72,759,869 (3,549,518) -4.9% Signal and Communication System 35,164,511 37,590,235 (2,425,724) -6.5% Computers and Software 130,578 168,000 (37,422) -22.3% Revenue Vehicles 170,655,251 179,490,100 (8,834,849) -4.9% Non-Revenue Vehicles 823,683 813,139 10,544 1.3% Site Improvements 11,329 12,611 (1,282) -10.2% Equipment 5,969,319 7,137,540 (1,168,221) -16.4% Construction in Progress 201,245,289 114,288,418 86,956,871 76.1%

Net Capital Assets $ 1,241,649,049 $ 1,193,125,907 $ 48,523,142 -13.8%

As of June 30, 2014, METRO had $1,242 million in capital assets, net of accumulated depreciation. There was a net increase in capital assets, of $48.5 million from June 30, 2013; primarily resulting from an increase to construction in progress of $87.0 million primarily for the Central Mesa $41.4 million and Northwest Extension $44.1 million LRT Projects. New construction increases were offset by the annual depreciation charge of $38.9 million for the Light Rail System infrastructure. Refer to Note 5 on page 19 for more information regarding the capital assets.

Long Term Debt: During fiscal year 2009, METRO (as Lessee) completed the process of formally accepting 14 Light Rail Vehicles (LRV’s) under the terms of a Master Lease/Purchase Financing Agreement dated March 3, 2006, with the City of Phoenix (as Lessor). Under the agreement, the City financed the purchase of the vehicles with the payments due from METRO commencing in 2011. In June of 2014, METRO made the final $12,186,000 of remaining principal and $14,566,504 final accrued interest payment for a total of $26,752,504. Refer to Note 8 on page 20 for more information regarding the capital lease, which is now paid in full.

METRO signed the Project Funding Agreement (Northwest Light Rail Extension) with the City of Phoenix on December 20, 2012. The agreement provides $60 million during fiscal years 2013 and 2014 to fund the expenses of the Northwest Light Rail Extension capital project. These funds will be repaid to City of Phoenix with Regional Public Transportation Funds on June 30, 2017. During fiscal year 2014, the City of Phoenix advanced $22,085,481 to cover the project expenses. Refer to Note 9 on page 21 for more information regarding the funding agreement.

Valley Metro Rail, Inc. Management’s Discussion and Analysis (Continued)

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

METRO’s adopted fiscal year 2015 total operating and capital budget is $238.3 million, down $10.4 million from fiscal year 2014’s amended Budget. The primary cause for the decrease is within the capital budget; with decreases to the construction activities for the Northwest Extension ($2.3M) and Central Mesa ($18.9M) LRT projects. A one-time Capital Lease interest payment ($15.9M) was paid in FY14 with no amount due in FY15. Offsetting the decreases are increases to budgets for the Gilbert Road Capital Project $8.3M and South Tempe Streetcar $4.7M. Background on the capital projects may be found in the Statistical Section commencing on page 31.

On the operating side, METRO’s FY15 budget is $42.5 million, down $1.0 million versus fiscal year 2014 primarily due to reductions in planning project work scope ($1.7M) offset by increases in revenue operations $0.6M and agency operations $0.1M.

Comparison of Annual Expenditure Budgets Fiscal Year 2015 vs. 2014 FY 2015 FY 2014 Adopted Amended Change Uses of Funds ($,000) ($,000) ($,000) Operating Activities: Revenue Operations 33,155 32,560 595 Future Project Development 8,444 10,152 (1,708) Agency Operating Budget 928 842 86 42,527 43,554 (1,027) Capital Projects: Northwest Extension 75,493 77,789 (2,296) Non-Prior Rights Utilities Relocations 13,755 13,982 (227) Other Capital Projects: - Central Mesa Extension 58,448 77,390 (18,942) Gilbert Road Capital Project 10,131 1,800 8,331 South Tempe Streetcar 5,257 511 4,746 Phoenix West Extension 415 - 415 CNPAs - Mesa Extension 2,045 3,165 (1,120) CNPAs - Northwest Extension 4,011 1,500 2,511 Systemwide Improvements 6,898 5,699 1,199 14 LRV's Interest - 15,897 (15,897) Subtotal Capital before Debt Service 176,453 197,733 (21,280) Capital Project Debt Service: Debt Service - Interest 8,120 4,508 3,612 Debt Service - Principal 11,241 2,980 8,261

Total Uses of Funds 238,341 248,775 (10,434)

In fiscal year 2015 METRO anticipates commencement of design and right of way acquisition on the Gilbert Road Extension. Expenses during the year are anticipated to reach $10.1 million pending necessary approvals from City of Mesa and federal funding sources.

Valley Metro Rail, Inc. Management’s Discussion and Analysis (Concluded)

FINANCIAL CONTACT

The financial report is designed to provide a general overview of METRO’s finances and to demonstrate accountability for the use of public funds. Questions about any of the information provided in this report, or requests for additional financial information should be addressed to METRO’s Chief Financial Officer, Valley Metro Rail, Inc., 101 North 1st Avenue, Suite 1300, Phoenix, Arizona 85003.

FISCAL YEAR 2014 VALLEY METRO RAIL, INC. AUDIT STANDARDS DISCLOSURE 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718

January 12, 2015

To the Board of Directors Valley Metro Rail, Inc.

We have audited the financial statements of the business-type activities of Valley Metro Rail, Inc. (METRO) for the year ended June 30, 2014. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards, and OMB Circular A-133, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter provided to you during the planning phase of the audit. Professional standards also require that we communicate to you the following information related to our audit.

Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by Valley Metro Rail, Inc. are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the Valley Metro Rail, Inc. during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period and the financial statement disclosures are neutral, consistent, and clear.

As described in Note 1 of the financial statements, METRO implemented the provisions of the Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as Assets and Liabilities, for the year ended June 30, 2014. GASB Statement No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities.

The most sensitive estimates affecting the financial statements were:

Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit.

Audit Adjustments Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. At the end of fiscal year 2013 METRO accrued anticipated expenses to fund under the Northwest Extension Advance Funding Obligation and recorded Capital Contributions revenue from Member Cities in the amount of approximately $3.1 million. For the year ended June 30, 2014 an adjustment of the accrued revenue for the Northwest Extension Advance contributions has been recorded in the Capital Contributions classification to reconcile the completed advance funding of $60.0 million.

Management Representations We have requested certain representations from management that are included in the management representation letter provided to us at the conclusion of the audit.

Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the Valley Metro Rail, Inc.’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

Restriction on Use This information is intended solely for the use of the members of the Board of Directors and management of Valley Metro Rail, Inc. and is not intended to be, and should not be, used by anyone other than these specified parties.

Very truly yours,

HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants

Page 3

Fraud Prevention Checklist

The most cost-effective way to limit fraud losses is to prevent fraud from occurring. This checklist is designed to help organizations test the effectiveness of their fraud prevention measures.

5. Are fraud risk assessments performed to proactively identify and mitigate the company’s vulnerabilities to internal and external fraud?

7. Does the internal audit department, if one exists, have adequate resources and authority to operate effectively and without undue influence from senior management?

9. Are employee support programs in place to assist employees struggling with addictions, mental/ emotional health, family or financial problems?

10. Is an open-door policy in place that allows employees to speak freely about pressures, providing management the opportunity to alleviate such pressures before they become acute?

11. Are anonymous surveys conducted to assess employee morale?

VALLEY METRO RAIL, INC. SINGLE AUDIT REPORTING PACKAGE FOR THE YEAR ENDED JUNE 30, 2014 VALLEY METRO RAIL, INC. SINGLE AUDIT REPORTING PACKAGE FOR THE YEAR ENDED JUNE 30, 2014

CONTENTS Page

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 1

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 3

Schedule of Expenditures of Federal Awards 6

Notes to Schedule of Expenditures of Federal Awards 7

Schedule of Findings and Questioned Costs 8

Summary Schedule of Prior Audit Findings 10

10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718

Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Independent Auditor’s Report

Board of Directors Valley Metro Rail, Inc.

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Valley Metro Rail, Inc. (METRO), as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Valley Metro Rail, Inc.’s basic financial statements, and have issued our report thereon dated November 25, 2014. Our report included an emphasis of matter paragraph as to comparability because of the implementation of Governmental Accounting Standards Board Statement No. 65.

Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered Valley Metro Rail, Inc.’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Valley Metro Rail, Inc.’s internal control. Accordingly, we do not express an opinion on the effectiveness of Valley Metro Rail, Inc.’s internal control.

Page 1 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com

Compliance and Other Matters As part of obtaining reasonable assurance about whether Valley Metro Rail, Inc.’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants

November 25, 2014

Page 2 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133

Independent Auditor’s Report

Board of Directors Valley Metro Rail, Inc.

Report on Compliance for Each Major Federal Program We have audited Valley Metro Rail, Inc.’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of Valley Metro Rail, Inc.’s major federal programs for the year ended June 30, 2014. Valley Metro Rail, Inc.’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.

Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of Valley Metro Rail, Inc.’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Valley Metro Rail, Inc.’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

Page 3 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com

Opinion on Each Major Federal Program In our opinion, Valley Metro Rail, Inc. complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2014.

Report on Internal Control Over Compliance Management of Valley Metro Rail, Inc. is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Valley Metro Rail, Inc.’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Valley Metro Rail, Inc.’s internal control over compliance.

Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 We have audited the financial statements of Valley Metro Rail, Inc. as of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprise Valley Metro Rail, Inc.’s basic financial statements. We issued our report thereon dated November 25, 2014, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements.

Page 4

HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants

November 25, 2014

Page 5 VALLEY METRO RAIL, INC. SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS JUNE 30, 2014

CFDA Pass-Through Identifying Federal Grantor Agency and Program Title Pass-Through Grantor Awards Expended Number Number U.S. Department of Transportation

Federal Transit Administratrion

Federal Transit Cluster:

Federal Transit-Capital Investment Grants 20.500 City of Phoenix AZ-03-0066$ 20,710,657 $

Federal Transit-Capital Investment Grants 20.500 City of Phoenix AZ-05-0205 1,133,341

Federal Transit- Formula Grants 20.507 City of Phoenix AZ-90-X114 379,281

Federal Transit- Formula Grants 20.507 City of Phoenix AZ-90-X124 686,331

Federal Transit- Formula Grants 20.507 City of Phoenix AZ-90-X124 36,122

Federal Transit- Formula Grants 20.507 City of Phoenix AZ-95-X006-01 111,756

Federal Transit- Formula Grants 20.507 City of Phoenix AZ-95-X009 3,247,567

Federal Transit- Formula Grants 20.507 City of Phoenix AZ-95-X013 2,726,000

Federal Transit- Formula Grants 20.507 City of Phoenix AZ-95-X023 847,640

State of Good Repair Grants 20.525 City of Phoenix AZ-54-0002 165,057

Total Federal Transit Cluster 30,043,752

Alternative Analysis 20.522 City of Phoenix AZ-39-0001 41,605

Alternative Analysis 20.522 City of Phoenix AZ-39-0005 300,367

Total Alternative Analysis 341,972

Transit Investments for Greenhouse Gas and Energy Reduction (TIGGER) 20.523 City of Phoenix AZ-88-0001 32,502

Total Federal Transit Administration 30,418,226

Total Expenditures of Federal Awards $ 30,418,226

See accompanying notes to the Schedule of Exenditures of Federal Awards. Page 6 VALLEY METRO RAIL, INC. NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2014

NOTE 1 – BASIS OF PRESENTATION

The accompanying Schedule of Expenditures of Federal Awards (Schedule) includes the federal grant activity of Valley Metro Rail, Inc. under programs of the federal government for the year ended June 30, 2014. The information in the Schedule is presented in accordance with the requirements of the Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Because the Schedule presents only a selected portion of the operations of the METRO, it is not intended to and does not present the financial position, changes in net position or cash flows of the METRO.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the applicable OMB cost principles circular, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Any negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass-through entity identifying numbers are presented where available.

NOTE 3 – CATALOG OF FEDERAL DOMESTIC ASSISTANCE (CFDA) NUMBERS

The program titles and CFDA numbers were obtained from the federal or pass-through grantor or the 2014 Catalog of Federal Domestic Assistance. When no CFDA number had been assigned to a program, the two-digit federal agency identifier, a period, and the federal contract number were used. When there was no federal contract number, the two-digit federal agency identifier, a period, and the word “unknown” were used.

Page 7 VALLEY METRO RAIL, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

SUMMARY OF AUDITOR’S RESULTS

Financial Statements

Type of auditor’s report issued: Unmodified

Internal control over financial reporting:  Material weakness(es) identified? yes X no  Significant deficiency(ies) identified? yes X none reported

Noncompliance material to financial statements noted? yes X no

Federal Awards

Internal control over major programs:  Material weakness(es) identified? yes X no  Significant deficiency(ies) identified? yes X none reported

Type of auditor’s report issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A-133? yes X no

Identification of major programs:

CFDA Numbers Name of Federal Program or Cluster 20.500, 20.507, 20.525 Federal Transit Cluster

Dollar threshold used to distinguish between Type A and Type B programs: $912,547

Auditee qualified as low-risk auditee? X yes no

Page 8 VALLEY METRO RAIL, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2014

FINDINGS RELATED TO FINANCIAL STATEMENTS REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

None reported.

FINDINGS AND QUESTIONED COSTS RELATED TO FEDERAL AWARDS

None reported.

Page 9 VALLEY METRO RAIL, INC. SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2014

Status of Federal Award Findings and Questioned Costs

The METRO had no findings or questioned costs related to federal awards noted in prior audits that require a status.

Page 10

DATE AGENDA ITEM 5 February 12, 2015

SUBJECT 2015 Federal Public Transportation Agenda

PURPOSE To request Board approval of the Valley Metro Federal Public Transportation Agenda for 2015.

Staff has developed the attached federal agenda for 2015 with goals to:

COST AND BUDGET None

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

COMMITTEE ACTION RTAG: January 20, 2015 for information RMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors approve the 2015 Federal Public Transportation Agenda.

CONTACT John Farry Government Relations Officer 602-744-5550 [email protected]

ATTACHMENT See RPTA agenda item 5

DATE AGENDA ITEM 6 February 12, 2015

SUBJECT Contract Award for Event Planning Services

PURPOSE To request Board authorization for the Chief Executive Officer (CEO) to execute a five- year agreement with Entertainment Solutions, Inc. (ESI) for Event Planning Services for an amount not to exceed $1 million.

BACKGROUND/DISCUSSION/CONSIDERATION Valley Metro is currently under construction on two light rail extensions. The Central Mesa Extension (CME) adds 3.1 miles of light rail in the City of Mesa on Main Street from Sycamore to Mesa Drive, with four stations and one park-and-ride facility. CME is scheduled to open in fall 2015. The Northwest Extension (NWE) adds 3.2 miles of light rail in the City of Phoenix on 19th Avenue from Montebello to Dunlap Avenue, with three stations and one park-and-ride facility. NWE is scheduled to open in spring 2016. Grand openings will be executed for both projects and professional event support is required.

Valley Metro is seeking an experienced, highly-qualified event planning consultant for a five-year period. The contract will include planning and execution of a variety of large- scale events, including the CME and NWE grand openings and any future openings of high-capacity transit extensions within the next five years. Additionally, the consultant will assist with planning and execution of the American Public Transportation Association (APTA) Rail Conference and International Rail Rodeo in June 2016. This eight-day conference and rodeo will be held in Phoenix and hosted by Valley Metro.

Four main tasks will be required by the contractor during the life of the contract: • Opening celebrations for rail/high-capacity transit extensions • Sponsorship sales • APTA 2016 Rail Conference and International Rail Rodeo • Other events as needed

Internal Valley Metro staff will continue to support the execution of events celebrating milestones, new service/facility openings, news events, etc. The contractor will be reserved for events of significant magnitude.

Procurement Process In September 2014, a FTA-compliant Request for Proposals (RFP) was issued. A total of two proposals were received and evaluated based on the RFP-published criteria: • Qualifications & Experience of Firm and Assigned Personnel • Samples of Work and Creativity • Knowledge of Valley Metro’s Market VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

• Proposed Price Schedule • Oral Presentation

At the conclusion of the evaluation process, consisting of staff from Valley Metro and the cities of Phoenix and Mesa, ESI was the highest rated and best value selection. The contract will work on a task order basis.

COST AND BUDGET Staff is seeking a five-year agreement with ESI for an amount not to exceed $1 million.

CME and NWE grand openings and the APTA rail conference are allocated in the FY16 proposed Valley Metro Rail budget. Future tasks will be incorporated into the Valley Metro Rail Five-Year Operating Forecast and Capital Program (FY16 – FY19).

In the FY16 proposed budget, ESI’s tasks are estimated as follows:

Estimated Task FY16 Tasks Funding Sources Order Value Federal 5309 Central Mesa Extension $150,000 Regional PTF opening celebration Federal CMAQ Northwest Extension $150,000 Regional PTF opening celebration 2016 APTA Rail $150,000 VMR Operations Conference & Int’l Rodeo

Future tasks will include Gilbert Road Extension (federal and City of Mesa funds) and Tempe Streetcar (federal, regional and local funds).

Costs will be partially offset by sponsorship sales.

COMMITTEE PROCESS RTAG: January 20, 2015 for information RMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors authorize the CEO to execute a five-year agreement with Entertainment Solutions, Inc. for Event Planning Services for an amount not to exceed $1 million.

CONTACT Hillary Foose Director, Communication and Marketing 602-322-4468 [email protected]

ATTACHMENT Presentation

2/9/2015

Contract Award for Event Planning Services

Board of Directors February 19, 2015

Contract Specifics

• Five-year agreement with ESI – Task order-based contract – Not to exceed $1M • Scope includes – Event planning support – Sponsorship sales

1 2/9/2015

Events Supported by Contract

• Opening of rail/high-capacity transit projects – Central Mesa (fall 2015) – Northwest Phoenix (spring 2016) – Gilbert Road (2018) – Tempe Streetcar (2018) • 2016 APTA Rail Conference & International Rodeo • Other events TBD 3

About Entertainment Solutions, Inc.

• Highest rated, best value – Evaluated by VM and reps from Phoenix, Mesa • Strong experience – July 4 celebrations – NYE block parties – Rock n’ Roll marathons – VMR grand opening 4

2 2/9/2015

Recommendation

It is recommended that the Board of Directors authorize the CEO to execute a five-year agreement with Entertainment Solutions, Inc. for Event Planning Services for an amount not to exceed $1 million.

DATE AGENDA ITEM 7 February 12, 2015

SUBJECT Transit Life Cycle Program (TLCP) Update

PURPOSE To provide information regarding potential changes to the light rail/high capacity transit element of the TLCP.

BACKGROUND/DISCUSSION/CONSIDERATION During the approval process for the 2014 TLCP update, it was noted that several projects were still under study and the resulting design, cost and funding changes would be incorporated into the 2015 TLCP update. Advancing certain projects to stay on track with the regional transportation plan schedule and emerging fleet requirements now require Board action prior to the adoption of the 2015 update. Since the project changes impact the overall financial status of the program, it is appropriate to review the potential impacts and therefore ensure that any Board action is taken with an understanding of the financial consequences to the overall TLCP program.

ADOT Revenue Forecast The forecast released by ADOT in October 2014 showed an overall decrease in revenues of $120 million, of which $40 million is the transit share. The Valley Metro Board policy splits the transit allocation for bus and rail, resulting in a decrease to the rail program of roughly $18 million.

OMC Expansion The original plan in Prop 400 was to fully build out the OMC and construct an additional satellite facility for light maintenance, cleaning and storage. With fewer miles being constructed due to the recession, the need for the satellite facility is reduced. Such facility would likely be constructed along with the Northeast corridor assuming an extension of Prop 400.

The build out of the current facility is estimated to cost $32 million, which is a reduction of $28 million from the approved TLCP. Assuming a 50 percent PTF share for the project, the savings equal $14 million.

Tempe Streetcar The Streetcar project has been under review to ensure that the best possible project can be constructed to maximize ridership and economic development, and is most competitive within the FTA Small Starts program. The Tempe City Council, in June 2014, approved a new, longer alignment. The cost of the project increased by $40 million as a result.

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

To bridge the gap, the Small Starts request will be increased to the maximum allowable of $75 million. This leaves a gap in regional funding of $23 million. This funding need is tentatively shown as a new regional/local source.

The operating cost for the updated alignment will likely be higher, given that the route is longer. Assuming no change in operating headways, service span and operating days, the increase in annual operating costs will be approximately 15 percent based on the trip length. The operating cost will be funded by the City of Tempe.

Northwest Phase II In November 2014, the Phoenix City Council approved an extension of the alignment to cross Interstate 17 and terminate at Metrocenter. This extension results in the need for a new bridge over the freeway and additional right-of-way, track and utilities. The estimated cost for this new alignment is $295 million, which is an increase of $119 million. This project is primarily a local project, with the TLCP funding the regional elements of the project (vehicles, bridges, utilities).

The new cost estimate pushes the project out of the Small Starts program and into the New Starts program. Assuming that FTA will fund 40 percent of the project results in an additional $43 million in federal funds. The cost increase to the City of Phoenix for the local construction is $41 million. The cost increase for the regional elements is $35 million, which is tentatively shown as a new regional/local source.

The operating cost for the updated alignment will likely be higher, given that the route is longer. Assuming no change in operating headways, service span and operating days, the increase in annual operating costs will be approximately 10 percent based on the trip length. The operating cost will be funded by the City of Phoenix.

Light Rail Vehicle Expansion Demand modeling shows that in the peak hours of service, ridership will be more than double the seated capacity in the core of the rail system by 2025. It takes several years to procure, build, deliver and test vehicles for service. In anticipation of a future need, planning staff determined that 8 expansion vehicles would be needed to change the peak headways from 12 minutes to 10 minutes for the 28 mile corridor that will be complete by 2018.

It is estimated that the unit cost for the LRVs is $5 million. This is somewhat dependent on procuring a contract with enough guaranteed and optional vehicles to provide a competitive unit cost. For the TLCP model, federal participation is assumed at 50 percent of the project cost. The regional cost of purchasing 8 LRVs would be $20 million.

Valley Metro will work cooperatively with the METRO member cities to finalize the funding and present a new baseline scenario for adoption in FY 2015. The 2015 TLCP

update is currently scheduled to be presented for information in May and for action in June.

COST AND BUDGET

Refer to the attached presentation for program changes and summary of forecast revenues and expenditures. The adopted 2014 TLCP update showed a FY26 final program fund balance of $41 million. With the decrease in revenues and the impacts to the regional projects noted, the draft proposed update shows a final balance of $14 million. This final balance is dependent on obtaining additional local funding for the Tempe Streetcar and Northwest Extension Phase II extensions and securing additional federal funding for the expansion LRVs.

COMMITTEE PROCESS RTAG: January 20, 2015 for information Financial Working Group: January 20, 2015 for information RMC: February 4, 2015 for information Board of Directors: February 19, 2015 for information

RECOMMENDATION This item is presented for information only.

CONTACT Paul Hodgins Manager, Revenue Generation and Financial Planning 602-262-7433 [email protected]

ATTACHMENT Presentation

2/9/2015

Transit Life Cycle Program 2015 Model Update Discussion February 19, 2015

2014 Adopted Corridor Costs

Base Utilities Total Open Year

Central Mesa $191 $9 $199 2015

Northwest Phase I $300 $24 $324 2016

Tempe Streetcar $127 $10 $137 2018

Gilbert Road $153 $0 $153 2018

Capitol/I-10 West $936 $58 $994 2023

West Phoenix/Central Glendale * $496 $29 $525 2026

Northwest Phase II * $157 $9 $166 2026

Northeast Phoenix * $17 $0 $17 2034 Sub-Total Corridor Extensions $2,377 $139 $2,516

* Costs for these projects continue beyond the life of the TLCP

1 2/9/2015

2014 Adopted Cash Flow Summary Funding Surplus Rail program TLCP Totals / Shortfall Total Program Revenues $3,235.0 Total Base Program Cost ($2,909.5) Funding surplus before PTF utility expenses and financing $325.5 Non Prior Right Utility Relocations ($210.2) ($210.2) Financing Needs anticipated: Proceeds Debt Service Series 2009 $55.5 ($77.9) Series 2014 $135.4 ($156.9) Series 2017 $46.2 ($54.6) Term 2021 $30.0 ($36.2) Term 2023 $105.0 ($119.3) Advance Funds by Phoenix $60.0 ($61.5) Total Financing $432.1 ($506.5) ($74.4) Total Program Cost 2026 ($3,194.1) Net Fund Balance $40.9 3

ADOT Forecast Sept. 2014

2 2/9/2015

Maricopa County Excise Tax - 20 year total History of ADOT projections $6.0

$5.0

$4.0 (billions)

$3.0 Total

Year

20 $2.0

$1.0

$0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Forecast Year 5

Comparison of 2014 and 2013 Forecasts (millions of dollars) Annual Annual Forecast Fiscal Year 2014 Forecast Growth 2013 Forecast Growth Change 2006 $51.1 $51.1 2007 $130.2 6.06% $130.2 6.06% 2008 $126.3 -2.97% $126.3 -2.97% 2009 $109.0 -13.70% $109.0 -13.70% 2010 $99.4 -8.87% $99.4 -8.87% 2011 $102.7 3.36% $102.7 3.36% 2012 $107.9 5.06% $107.9 5.06% 2013 $113.8 5.46% $113.8 5.46% 2014 $121.8 7.03% $120.5 5.95% $1.2 2015 $126.0 3.48% $127.7 5.91% -$1.7 2016 $133.9 6.24% $134.9 5.66% -$1.0 2017 $140.2 4.73% $142.1 5.33% -$1.9 2018 $147.1 4.94% $149.2 5.03% -$2.1 2019 $153.2 4.14% $156.3 4.71% -$3.1 2020 $159.5 4.13% $162.8 4.16% -$3.2 2021 $165.9 4.01% $170.1 4.47% -$4.1 2022 $172.9 4.19% $177.7 4.47% -$4.8 2023 $180.0 4.08% $184.8 4.03% -$4.9 2024 $187.5 4.18% $192.5 4.15% -$5.0 2025 $195.3 4.19% $200.5 4.19% -$5.2 2026 $118.7 4.18% $121.8 4.12% -$3.1 Actuals 06-14 $962.2 0.2% $960.9 0.0% $1.2 Forecast 15-26 $1,880.3 4.4% $1,920.3 4.7% -$40.0 20 Year Total $2,842.4 2.7% $2,881.2 2.8% -$38.8 6

3 2/9/2015

Tempe Streetcar Project Design, Cost and Funding Changes

Tempe Streetcar Locally Preferred Alternative . November 2010 Valley Metro rail Board approved LPA . 2.6-mile streetcar on Mill Ave to Southern Ave – Mill-Ash downtown loop

4 2/9/2015

Change In Project Alignment . Original LPA did not meet FTA Small Starts criteria . March 2013 – Received Tempe City Council direction to reconfigure LPA . To more closely align with new federal criteria . April 2013 – FTA approved Tempe Streetcar to enter Project Development phase . Contingent upon reconfiguring the LPA . June 2014 – Tempe City Council approved revised LPA

Tempe Streetcar Revised LPA - 3 miles . Highest near and long-term ridership potential . Connects key residential, retail and commercial areas . Greatest potential for economic development . Most competitive in FTA Small Starts process

5 2/9/2015

Revised Tempe Streetcar LPA Estimated Capital Cost & Funding

Source FY14 TLCP* Current Estimate*

Small Starts $58 M $75 M

CMAQ $32 M $32 M

Regional $47 M $47 M New $0 M $23 M regional/local TOTAL $137 M $177 M

* All costs are in year of expenditure

Northwest Extension Phase II Project Design, Cost and Funding Changes

6 2/9/2015

Northwest LRT Extension Phase II – Revised LPA

Northwest LRT Extension Phase II Changes . 2007: Locally preferred alternative updated and route split into two phases – Phase I is under construction – completion in 2016 . Revised LPA: add crossing of I-17 near Mountain View Road to serve Metrocenter – Provides economic development opportunities – Improved LRT access for trips originating west of I-17 . Nov 2014: Phoenix City Council approved revised LPA

7 2/9/2015

Revised Northwest Phase II LPA Estimated Capital Cost & Funding

Source FY14 TLCP* Current Estimate* Small/New $75 M $118 M Starts Local $72 M $113 M

Regional $29 M $29 M New $0 M $35 M Regional/local TOTAL $176 M $295 M

* All costs are in year of expenditure 15

Regional Elements & Cost

• Regional Project Elements – Light Rail Vehicles (3) – Bridge Structures (3) – Park-and-Ride Structure (500 stalls) – Non-Prior Rights Utilities • Regional Elements Cost: $106M – FTA New Starts: 40% of project costs – Regional PTF: $64M • $29M programmed in FY14 TLCP

8 2/9/2015

Light Rail Vehicles System Expansion

LRT Average Hourly Weekday Boardings 4,500

4,000

3,500

3,000

2,500

Boardings 2,000

1,500

1,000

500

October 2013 12 Minute Headway12/20 Minute Transition 20 Minute Headway

9 2/9/2015

2013 LRT Average Peak Hour Trip Load: 12 Minute Headway LRT Route: Sycamore/Main to 19th/Montebello

Eastbound Westbound 350

300

Far Exceeding Passenger Comfort Level 250 Consist

Car Exceeding Passenger Comfort Level 200 2 per

150 Seating Capacity Passengers of 100 #

19 Source: 2014 MAG Travel Demand Model

2025 LRT Average Peak Hour Trip Load: 12 Minute Headway LRT Route: Gilbert Road to 19th/Dunlap

Eastbound Westbound 350

300

Far Exceeding Passenger Comfort Level 250 Consist

Car 200 Exceeding Passenger Comfort Level 2 per

150 Seating Capacity Passengers of 100 #

20 Source: 2014 MAG Travel Demand Model

10 2/9/2015

Expansion LRVs

• Recommend 11 expansion LRVs – 8 for system expansion (Regional) – 3 for Gilbert Road Extension (Mesa) – Options for additional LRVs to support future corridors • Cost Estimate – $5 million average per vehicle – Anticipate 50% federal participation – $20 million impact to PTF

Impacts to Model

11 2/9/2015

2015 Proposed Update Corridor Costs

2015 TLCP 2014 TLCP Base Utilities Total Open Year Open Year Central Mesa $190.8 $8.1 $198.9 2015 2015

Northwest Phase I $300.0 $23.9 $323.8 2016 2016

Tempe Streetcar $163.0 $13.7 $176.7 2018 2018

Gilbert Road $147.1 $0.0 $147.1 2018 2018 Capitol/I-10 West $926.9 $57.7 $984.6 2023 2023

West Phoenix/Central Glendale * $479.9 $28.7 $508.6 2026 2026

Northwest Phase II * $265.5 $12.0 $277.5 2026 2026

Northeast Phoenix $16.5 $0.0 $16.5 2034 2034 South Central $0.0 $0.0 $0.0 2034 NA Sub-Total Corridor Extensions $2,489.5 $144.2 $2,633.7

* Local costs for these projects continue beyond the life of the TLCP, all regional funds included in TLCP 23

2015 Proposed Update Other Capital Costs 2015 TLCP 2014 TLCP Base Utilities Total Open Year Open Year

LRV Acquisition (14 + 8) $96.1 $0.0 $96.1 NA NA OMC Expansion $31.1 $0.0 $31.1 2020 2020

CP/EV Regional Reimbursements $198.8 $74.3 $273.1 System-wide Support Infrastructure $89.4 $0.0 $89.4

Alternatives Analyses $53.3 $0.0 $53.3 Design Standards & System Planning $56.6 $0.0 $56.6 Capital Project Development Administration $25.6 $0.0 $25.6 Sub-Total Other Capital $550.8 $74.3 $625.1 Total Capital Expenditures $3,040.3 $218.5 $3,258.8 Cost of Financing $60.4 Total Capital Project Costs $3,319.2

12 2/9/2015

2015 Proposed Update Capital Revenues

2015 Update 2014 Update Change % Change PTF $1,265.7 $1,283.5 ($17.8) ‐1.4% FTA 5309 $971.0 $995.9 ($25.0) ‐2.5% CMAQ $263.7 $263.7 $0.0 0.0% Mesa $147.6 $153.2 ($5.6) NA Other federal $62.7 $40.7 $21.9 53.8% Phoenix T2000 $446.7 $385.5 $61.2 15.9% Glendale $100.1 $92.0 $8.1 8.8% New regional/local $57.0 $0.0 $57.0 NA MAG / RPTA $18.8 $20.3 ($1.5) ‐7.4% Sub‐Total Capital Revenue $3,333.4 $3,235.0 $98.4 3.0%

2015 Proposed Update Cash Flow Summary

Funding Surplus / Rail program TLCP Totals Shortfall Total Program Revenues $3,333.4 Total Base Program Cost ($3,040.3) Funding surplus before PTF utility expenses and financing $293.0 Non Prior Right Utility Relocations ($218.5) ($218.5) Financing Needs anticipated: Proceeds Debt Service Series 2009 $55.5 ($77.9) Series 2014 $135.4 ($156.9) Series 2017 $61.6 ($72.9) Term 2021 $0.0 $0.0 Term 2023 $25.0 ($28.7) Advance Funds by Phoenix $60.0 ($61.5) Total Financing $337.5 ($397.9) ($60.4) Total Program Cost 2026 ($3,319.2) Net Fund Balance $14.2

13 2/9/2015

Funding Commitments Required

• $23 million new regional/local for Streetcar funding gap • $35 million new regional/local for NW Phase 2 regional funding gap • $20 million in federal for LRV expansion –CMAQ – TIGER – Core Capacity

Agenda Item 8 – Tempe Streetcar Recommendation • It is recommended that the Board of Directors approve the following recommendations for the Tempe Streetcar project: 1. Amend the LPA for the Tempe Streetcar project to include a 3-mile alignment from Rio Salado Parkway at Marina Heights, including the Mill/Ash downtown loop, south along Mill Avenue and east on Apache Boulevard to the Dorsey LRT station. 2. Recommend to MAG to initiate the required air quality conformity analysis in support of updating the RTP to include the revised LPA. 28

14 2/9/2015

Agenda Item 9 – Northwest Phase II Recommendation

• It is recommended that the Board of Directors approve the following recommendations for the Northwest Phase II Light Rail Extension: 1. Amend the Locally Preferred Alternative for the Northwest Phase II Light Rail Extension to extend the alignment across I-17 along Mountain View Road to end at a station immediately west of I-17. 2. Recommend to MAG to initiate the required air quality conformity analysis in support of updating the RTP to include the revised LPA.

DATE AGENDA ITEM 8 February 12, 2015

SUBJECT Tempe Streetcar Project: Modified Locally Preferred Alternative (LPA)

PURPOSE To request Board approval to modify the LPA for the Tempe Streetcar project and forward the modified LPA to the Maricopa Association of Governments (MAG) to initiate the required air quality conformity analysis in support of updating the Regional Transportation Plan (RTP) to include the revised LPA.

BACKGROUND/DISCUSSION/CONSIDERATION The Tempe Streetcar Project was first identified as a transit corridor in the Regional Transportation Plan in 2004. The federal planning process, including alignment and transit technology preferences, began in 2007. A 2.6 mile streetcar on Mill Avenue south to Southern Avenue, including the Mill/Ash downtown loop, was approved as the LPA by the Tempe City Council in October 2010 (Figure 1). Subsequently, in November 2010 the LPA was accepted by the Valley Metro Rail Board and in December 2010 it was approved by the MAG Regional Council.

In April 2013, FTA notified Valley Metro that the Tempe Streetcar project was conditionally approved into “Project Development” of the Small Starts Program contingent upon modifying the LPA to rate more favorably against the federal evaluation criteria. Valley Metro recommended, and the Tempe City Council concurred, to analyze two reconfigured alignment alternatives of similar length to compete for funding through FTA’s Small Starts program (Figure 2). These two options include:

• The “L” Alignment: The Mill/Ash Avenue downtown loop, south along Mill Avenue and east along Apache Boulevard to the Dorsey LRT station. • The “C” Alignment: Rio Salado Parkway, starting at Marina Heights and heading west to the Mill/Ash downtown loop, south along Mill Avenue and east along Apache Boulevard to McAllister Drive.

Both options include the Mill/Ash downtown loop to achieve higher employment and residential densities as well as higher ridership numbers. Valley Metro and Tempe analyzed the reconfigured alignment options to balance the technical opportunities and constraints, to address input from stakeholders and the public, and to maximize the competitiveness of the project to compete for federal discretionary funding.

Following a comprehensive planning process, Valley Metro recommends a modified LPA combining the “C” and “L” options as one 3-mile project from Rio Salado Parkway at Marina Heights, including the Mill/Ash downtown loop, south along Mill Avenue and east on Apache Boulevard to the Dorsey LRT station (Figure 3). The reconfigured LPA VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 602-262-7433

offers the highest near and long-term ridership potential, greatest level of connection for residential, retail and commercial areas and maximizes the potential for economic development. The LPA will also be more competitive in the FTA Small Starts program. If FTA funding is approved, the project could commence revenue operations in 2018. The modified LPA was approved by the Tempe City Council in June 2014.

The project’s design continues to be defined. This includes streetcar stop locations, street configuration (e.g. number of traffic lanes, bike lanes, and how the streetcar fits into the street), and vehicle size and propulsion system. Project definition elements are being reviewed with the public and will be addressed by the Tempe City Council during the early months of 2015. Concurrently, an environmental assessment is underway and potential impacts will be reviewed with the community.

COST AND BUDGET The 2014 TLCP includes $137 million (year of expenditure dollars) for the initially approved 2.6-mile Tempe Streetcar project. The preliminary capital cost estimate for the modified LPA (3-mile) is approximately $177 million (year of expenditure dollars).

The following table identifies capital funding amount by source for the initial and modified LPA’s. The table shows an increase in FTA Small Starts funds from $58 million to $75 million, which is the maximum federal funding, allowed through this program. An additional $23 million in regional/local funding is needed to fully fund the project. The source of these funds is being addressed in conjunction with the 2015 TLCP update for Board action later in the spring of 2015.

FY14 TLCP Current Estimate Source (Original LPA)* (New LPA)* FTA Small Starts $58 million $75 million Federal CMAQ $32 million $32 million Regional PTF $47 million $47 million Regional/Local $0 million $23 million Total $137 million $177 million * All costs are in year of expenditure

In addition, annual operating costs are estimated at approximately $3-4 million per year and will be paid by the City of Tempe.

COMMITTEE PROCESS RTAG: January 20, 2015 for information RMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors approve the following recommendations for the Tempe Streetcar project:

1. Amend the LPA for the Tempe Streetcar project to include a 3-mile alignment from Rio Salado Parkway at Marina Heights, including the Mill/Ash downtown loop, south along Mill Avenue and east on Apache Boulevard to the Dorsey LRT station. 2. Recommend to MAG to initiate the required air quality conformity analysis in support of updating the RTP to include the revised LPA.

CONTACT Wulf Grote, P.E. Director, Planning and Development 602-322-4420 [email protected]

ATTACHMENT Figure 1: Locally Preferred Alternative - 2.6 miles (2010) Figure 2: Reconfigured Alternatives Considered Figure 3: Recommended Locally Preferred Alternative - 3 miles

Figure 1: Locally Preferred Alternative – 2.6 miles (2010)

Figure 2: Reconfigured Alternatives Considered

Figure 3: Recommended Locally Preferred Alternative - 3 miles

DATE AGENDA ITEM 9 February 12, 2015

SUBJECT Northwest Phase II Light Rail Extension: Modified Locally Preferred Alternative (LPA)

PURPOSE To request Board approval to modify the LPA for the Northwest Phase II Light Rail project and forward the modified LPA to the Maricopa Association of Governments (MAG) to initiate the required air quality conformity analysis in support of updating the Regional Transportation Plan (RTP) to include the revised LPA.

BACKGROUND/DISCUSSION/CONSIDERATION In March 2007 the Phoenix City Council approved a modification to the Locally Preferred Alternative and split the Northwest Extension LRT Project into two phases. Subsequently, in April 2007 the LPA was approved by Valley Metro Rail Board and in July 2007 it was approved by the MAG Regional Council.

Phase I, along 19th Avenue from Bethany Home Road to Dunlap Avenue, is now under construction. Phase II was deferred and begins at Dunlap Avenue\19th Avenue, and travels west to 25th Avenue, north to Mountain View Road, and then west on Mountain View Road to a terminus east of the I-17 freeway. The LPA included stations at Dunlap Avenue\25th Avenue and a station along Mountain View Road east of the I-17 freeway (Figure 1). It was envisioned that a pedestrian bridge would provide access across I-17 to the Metrocenter Mall area.

In 2013, Phoenix requested that the northern terminus of Phase II be reevaluated, given the importance of Metrocenter as a major regional activity center. Therefore, Valley Metro initiated a project definition study to evaluate options to extend the alignment across I-17. After a series of outreach efforts, including workshops with Phoenix staff in August and December 2013 and community outreach meetings in January and October 2014, a recommended alignment for crossing I-17 near Mountain View Road has been identified. Ending the alignment west of I-17 provides significant economic development opportunities and it allows improved access to the light rail system for trips originating west of the freeway.

The revised Phase II alignment follows Dunlap Avenue between 19th and 25th Avenues, heads north on 25th Avenue, turns west on Mountain View Road and crosses I-17 to end a short distance west of the I-17 freeway. Station locations are recommended at Dunlap Avenue\25th Avenue, 25th Avenue between the Arizona Canal and Mountain View Road, and the southbound I-17 access road near Cheryl Drive. This alignment was approved by the Phoenix City Council in November 2014 (Figure 2).

The recommended change for the Northwest Phase II Light Rail Extension will require an update to the RTP and the TLCP to extend the alignment west of I-17. The update

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

requires the demonstration of a reasonably assured financial plan. Therefore, in November 2014, when the Phoenix City Council approved the alignment modification, they also identified funding support for construction and operation of the Northwest Phase II Light Rail Extension through inclusion in any proposed extension of the City’s Transit 2000 sales tax, which expires in 2020.

COST AND BUDGET The current TLCP includes $176 million (year of expenditure dollars) for the previously approved Northwest Phase II Light Rail Extension project. The preliminary capital cost estimate for the modified LPA crossing I-17 to the Metrocenter Mall is approximately $295 million (year of expenditure dollars).

The following table identifies the capital funding amount by source for the current and modified LPA’s. The modified LPA no longer qualifies for FTA’s Small Starts funds, with the capital cost exceeding $250 million, and grant application to the FTA would be made under the New Starts program. Therefore, the FTA funding request would be increased from $75 million to $118 million, and reflects that 40% of the project would be funded through FTA New Starts. The additional $76 million needed to fully fund the project are identified partially as a Phoenix expense ($41 million) and the remaining $35 million is shown as potentially regional or local. The specific source of these funds is being addressed in conjunction with the 2015 TLCP update for Board action later in the spring of 2015.

FY14 TLCP Current Estimate Source 1 1 (Current LPA) (Modified LPA) FTA Grant $75 million2 $118 million3 Phoenix T2000 Tax $72 million $113 million Regional PTF $29 million $29 million Regional/Local $0 million $35 million Total $176 million $295 million 1 All costs are in year of expenditure and do not include financing 2 Small Starts 3 New Starts

Annual operating costs are estimated at approximately $2.3 million per year and will be paid by the City of Phoenix (year of expenditure).

COMMITTEE PROCESS RTAG: January 20, 2015 for information RMC: February 4, 2015 approved Board of Directors: February 19, 2015 for action

RECOMMENDATION It is recommended that the Board of Directors approve the following recommendations for the Northwest Phase II Light Rail Extension:

CONTACT Wulf Grote, P.E. Director of Planning and Development 602-322-4420 [email protected]

ATTACHMENT Figure 1 and 2 Maps

Figure 1: Locally Preferred Alternative – Phase II (2007)

Figure 2: Recommended Locally Preferred Alternative

DATE AGENDA ITEM 10 February 12, 2015

SUBJECT Future Agenda Items Request and Report on Current Events

PURPOSE Chair Kavanaugh will request future agenda items from members, and members may provide a report on current events.

BACKGROUND/DISCUSSION/CONSIDERATION None

COST AND BUDGET None

COMMITTEE PROCESS None

RECOMMENDATION This item is presented for information only.

CONTACT Steve Banta Chief Executive Officer 602-262-7433 [email protected]

ATTACHMENT Pending Items Request

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 602-262-7433

Pending Items Request

Item Requested Date Requested Planned Follow-up Date