Finance Committee Meeting

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Finance Committee Meeting Finance Committee Meeting November 2016 Committee Members L. Schwartz, Chair F. Ferrer, Vice Chair D. Jones C. Moerdler J. Molloy M. Pally J. Samuelson P. Trottenberg V. Vanterpool J. Vitiello P. Ward C. Wortendyke N. Zuckerman Finance Committee Meeting 2 Broadway, 20th Floor Board Room New York, NY 10004 Monday, 11/14/2016 12:30 - 1:45 PM ET 1. PUBLIC COMMENTS PERIOD 2. APPROVAL OF MINUTES – OCTOBER 26, 2016 Finance Committee Minutes - Page 4 3. 2016 COMMITTEE WORK PLAN 2016 Work Plan - Page 14 4. BUDGETS/CAPITAL CYCLE Finance Watch - Page 22 5. MTA HEADQUARTERS & ALL-AGENCY ITEMS Action Item Law Firm Panel Addition - Page 32 Report and Information Items Station Maintenance Billing Update - Page 34 Review and Assessment of the Finance Committee Charter - Page 37 Procurements MTAHQ Procurement Report - Page 40 MTAHQ Competitive Procurement - Page 42 6. METRO-NORTH RAILROAD MNR Action Item - Page 44 MNR Procurements - Page 46 7. LONG ISLAND RAIL ROAD (No Items) 8. NEW YORK CITY TRANSIT, and MTA BUS OPERATIONS NYCT & MTACC Procurements - Page 54 9. BRIDGES AND TUNNELS (No Items) 10. FIRST MUTUAL TRANSPORTATION ASSURANCE COMPANY (No Items) 11. MTA CONSOLIDATED REPORTS Statement of Operations - Page 64 Overtime - Page 72 Subsidy, Interagency Loans and Stabilization Fund Transactions - Page 77 Debt Service - Page 85 Positions - Page 87 Farebox Recovery Ratios - Page 90 MTA Ridership - Page 91 Fuel Hedge Program - Page 115 12. REAL ESTATE AGENDA Real Estate Action Items - Page 118 Real Estate Info Items - Page 131 Minutes of the MTA Finance Committee Meeting October 26, 2016 2 Broadway, 20th Floor Board Room New York, NY 10004 12:00 PM The following Finance Committee members attended: Hon. Fernando Ferrer, Vice Chair Hon. David R. Jones Hon. Charles G. Moerdler Hon. John J. Molloy Hon. Mitchell H. Pally Hon. Polly Trottenberg Hon. Veronica Vanterpool Hon. James E. Vitiello Hon. Carl V. Wortendyke Hon. Neal Zuckerman The following Finance Committee members did not attend: Hon. Lawrence Schwartz, Chair Hon. John Samuelsen Hon. Peter Ward The following Board Members were also present: Hon. Thomas F. Prendergast, Chairman, Chief Executive Officer Hon. Andrew Albert Hon. Ira Greenberg Hon. Susan G. Metzger The following MTA staff attended: Robert Foran Douglas Johnson Patrick McCoy Jeffrey Rosen Angel Barbosa Chairman Prendergast called the October 26, 2016 meeting of the Finance Committee to order at 1:05 PM. I. Public Comments There was one public speaker. Mr. Murray Bodin discussed issues related to fiscal impacts of decisions regarding railroad crossings and rail cars, specifically Mr. Bodin discussed the railroad crossing near the Mount Kisco Station on the Metro-North Harlem line. ________________________________________________________________________________ Master Page # 4 of 139 - Finance Committee Meeting 11/14/2016 II. Approval of Minutes The Committee approved the minutes to its prior meeting held on September 26, 2016. Mr. Zuckerman noted the incorrect spelling of his name. III. Committee Work Plan There were no changes to the Committee Work Plan. IV. Budgets/Capital Cycle A. BudgetWatch Mr. Johnson presented BudgetWatch (see the MTA website for the entire BudgetWatch: http://web.mta.info/mta/ind-finance/budgetwatch.pdf). This month’s BudgetWatch focused on operating results through September and subsidy results through October. Results are compared with the mid-year forecast that was captured within the July Financial Plan. Revenues: Mr. Johnson reported that passenger revenues were $3.7 million above Forecast in September, with YTD results on target. Overall, YTD results reflect favorable ridership at MTA Bus and Long Island Rail Road (LIRR), as well as favorable quarterly average fare adjustment for NYCT MetroCard unlimited ride passes. These favorable results were offset by the impact on Metro-North ridership from the Park Avenue Viaduct fire and lower non-commutation ridership. Mr. Johnson further noted that toll revenue continues to perform well, as positive results in September increased the favorable YTD variance to $5.6 million, or 0.4%. Expenses: Mr. Johnson reported that expenses in September were mainly on target as were YTD results, which were $13.3 million favorable, or 0.2%, primarily from lower costs for labor and electric power as well as the timing of costs for contractual services. These were offset by a non- cash accrual update of NYCT’s Worker’s Compensation liability. Debt Service: Mr. Johnson reported debt service costs were favorable for the month and YTD due to lower rates, the timing of debt service deposits, refunding savings and savings due to the issuance of the Hudson Rail Yards Trust Obligations. Subsidies: Mr. Johnson reported that combined subsidies were on target for October and YTD receipts exceeded Forecast, with favorable MTA Aid, PMT, and PBT receipts offsetting unfavorable Real Estate Transaction Tax revenues from lower activity. Overall: Mr. Johnson summarized that overall preliminary net results were favorable for the month and YTD. These trends are being further analyzed and conclusions will be captured in a revised 2016 Forecast that will be presented next month with the November Financial Plan. Discussion: Mr. Ferrer inquired whether the City of New York had reimbursed MTA for the damage done by the fire underneath the Park Avenue Viaduct. Mr. Joseph Giulietti, President, Metro-North Railroad, responded that the reimbursement process was underway, but payment has not yet been received. ________________________________________________________________________________ Master Page # 5 of 139 - Finance Committee Meeting 11/14/2016 B. FinanceWatch Mr. Patrick McCoy presented FinanceWatch (see pages 20 through 30 of the Committee book for the complete FinanceWatch report). Dedicated Tax Fund Refunding Bonds, Subseries 2008B-3b: Mr. McCoy noted the results of the DTF remarketing is highlighted in FinanceWatch and was reported on during the September meeting (see page 20 of the Committee book for transaction statistics). Transportation Revenue Refunding Bonds, Series 2016D: Mr. McCoy reported on the $645.7 million Transportation Revenue Refunding Bonds (TRBs) Series 2016D transaction that closed October 26, 2016, and refunded various TRB outstanding bonds as well as the outstanding Certificates of Participation. Mr. McCoy highlighted that the all-in True Interest Cost (TIC) was 2.87%, and that the transaction provided a net present value savings of 14.15% or $112.7 million of refunded bonds. He further commented that the transaction refunded the last of the viable refunding candidates in the portfolio, with successful results. Jefferies served as book-running senior manager (slated from prior underwriter rotation). Mr. McCoy noted that through this refunding transaction all remaining auction rate securities have been eliminated from the portfolio. Remarketings: Mr. McCoy reported on two competitively bid remarketings that priced earlier in October. The first, $131.9 million Transportation Revenue Variable Rate Refunding Bonds, which includes $75 million for Subseries 2012G-3 and $56.9 million for Subseries 2002G-1h, showed successful results remarketed again as floating rate tender notes (FRNs). The $75 million tranche was remarketed until February 1, 2020, at 67% of LIBOR plus a spread of 0.70%, and the $56.9 million tranche was remarketed until February 1, 2022, at 67% of LIBOR plus 0.82%. Additionally, a $108.8 million TBTA General Revenue Variable Rate Refunding Bonds transaction, Subseries 2005B-4a, 4b, and 4e, was competitively remarketed. The subseries were combined into one, Subseries 2005B-4a, and remarketed until February 1, 2021 at 67% of LIBOR with a spread of 0.70%. Mr. McCoy noted both remarketings successfully utilized the short end of the yield curve, and received strong response during the competitive bidding process, with approximately nine bids in each case. He further commented that these remarketings help keep the variable rate portfolio intact and healthy. Fuel Hedge: Mr. McCoy reported on one fuel hedge that was executed on September 22, 2016, in which MTA executed a hedge for ultra-low sulfur diesel (ULSD) fuel, for approximately 2.92 million gallons, with Goldman, Sachs & Co./ J Aron at all-in price of $1.598/gallon. Three of MTA’s eligible commodity counterparties participated in competitive bidding: Goldman, Sachs & Co./ J Aron, J.P. Morgan Ventures Energy Corporation and Macquarie Group. The hedge covers the period from September 2017 through August 2018. Mr. McCoy commented that the October fuel hedge had just been completed this morning (October 26, 2016) and the winning bid with an all-in price of $1.62/gallon was submitted by Macquarie Group. Discussion: Mr. Moerdler inquired regarding the length of the fuel hedge. Mr. McCoy confirmed that no more than 50% of the ULSD fuel is hedged, and the hedges are for 24 months, with 50% hedged for the first 12 months, then hedged amounts decline through the 24th month. Mr. Robert Foran indicated there had been a question at the earlier Metro-North/LIRR Committee regarding the final maturity and amortization of the Railroad Rehabilitation and Improvement ________________________________________________________________________________ Master Page # 6 of 139 - Finance Committee Meeting 11/14/2016 Financing Program loan (RRIF Loan)/TRB Series 2015X and asked Mr. McCoy to provide additional information. Mr. McCoy responded the rate on the loan is 2.38%, and it is a 20 year loan. He further noted the first successful
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