The Regular Meeting Pennsylvania Transportation 27, 2017 At
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MINUTES OF REGULAR BOARD MEETING OF SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY JULY 27, 2017 The Regular Meeting of the Board of the Southeastern Pennsylvania Transportation Authority was held on Thursday, July 27, 2017 at 3:00 PM, in the Board Room of the Authority, with the Chairman in the Chair. Attending the meeting were the following Board Members: Pasquale T. Deon, Sr., Chairman Thomas E. Babcock, Vice Chairman Michael A. Carroll, P.E. Beverly Coleman Robert D. Fox, Esquire Honorable Stewart J. Greenleaf (via telephone) Kevin L. Johnson, P.E. (via telephone) John I. Kane Obra S. Kernodle, IV Daniel J. Kubik Honorable Kenneth Lawrence William J. Leonard, Esquire (via telephone) Honorable Charles H. Martin William M. Mcswain (via telephone) Michael A. Vereb Present from the staff: Jeffrey D. Knueppel, General Manager Richard G. Burnfield, Deputy General Manager/Treasurer Stephen A. Jobs, Controller Carol R. Looby, Secretary Kim Scott Heinle, AGM, Customer Service Ronald G. Hopkins, AGM, Operations Francis E. Kelly, AGM, Government & Public Affairs Robert E. Lund, AGM, Engineering, Maintenance & Construction Stephanie Deiger, AGM, Employee Development Relations C. Neil Petersen, Esquire, Deputy General Counsel Mr. Deon called the Regular Meeting of the Board to order. He said the Special Meeting, which was noticed, was cancelled. Mr. Deon announced that Senator Stewart Greenleaf, Kevin Johnson, William Leonard and William Mcswain would be participating by phone. Pledge of Allegiance was observed. Mr. Deon then welcomed Michael Carroll, Deputy Managing Director for the City of Philadelphia, to the SEPTA Board. He announced that the Board met in Executive Session just prior to the meeting to discuss legal matters. Minutes of Regular Board Meeting July 27, 2017 Mr. Deon stated that if there were speakers who wished to address agenda items they would be called before the Board voted on the i tern and asked that they limit their remarks to two minutes. He said speakers wishing to address i terns not on the agenda would be called after the regular business of the Board was completed. Approval of Minutes Mr. Deon entertained a Motion regarding the Minutes of the June 22nct Regular Board meeting, which had been circulated. Mr. Babcock moved, Mr. Martin seconded, and the Minutes were unanimously approved. Financial Report Mr. Burnfield stated that with the end of the fiscal year, his report would focus on year-end results. He reported that in Fiscal Year 2017, revenue fell below budget due to the Silverliner V fleet defect, the six-day transit strike and the increased competition from ridesharing. Mr. Burnfield reported that with revenue falling below budget, staff carefully managed operating expenses throughout the year. He stated expenses were under budget for the year primarily driven by reductions in medical, propulsion power and fuel. Mr. Burnfield reported that the Authority ended the year with a surplus of $207, 000. He said this was the eighteenth consecutive year of balanced budgets. Mr. Deon entertained a Motion to adopt the Financial Report. Mr. Lawrence moved, Ms. Coleman seconded and it was unanimously adopted. The June Financial Report is received and filed and is attached to these Minutes as Exhibit "A." Mr. Deon then called for speakers wishing to address agenda items. There was no response. Mr. Deon then entertained a Motion regarding the cancellation of the August Regular and Special Board meetings. Mr. Babcock moved, Mr. Kubik seconded and the following Resolution was unanimously adopted. I . ELECTION NOT TO HOLD A REGULAR MEETING OF THE BOARD IN THE MONTH OF AUGUST 2017 AND CANCELLATION OF THE REGULAR AND SPECIAL MEETINGS OF THE BOARD SCHEDULED FOR AUGUST 24, 2017 "WHEREAS, under Section 3. 02 of the By-Laws the Board by resolution may elect not to hold a regular meeting in the month 2 Minutes of Regular Board Meeting July 27, 2017 of July or August; and WHEREAS, the Board desires not to hold a regular meeting in the month of August 2017. NOW, THEREFORE, BE IT RESOLVED, that the Board will not hold a regular meeting in the month of August 2017. FURTHER RESOLVED, that the Board hereby cancels the regular and special meetings that are scheduled to be held on August 24, 2017." Consent Calendar Mr. Deon then presented the Consent Calendar, which consisted of: "Termination of Sterling Advisors and Appointment of Prudential Trust Company Collective Trust as Investment Manager;" "Amendment of the Fiscal Year 2017 Operating Budget and Allocation of Funds to the Service Stabilization Fund;" "Authorization to Renew Purchase of Stop Loss Insurance for Medical and Prescription Drug Benefits with AGI/National Union Fire Insurance Company of Pittsburgh;" "Authorization to Enter into an Agreement with PNC Bank for a $100 Million Unsecured Line of Credit;" "Authorization to Enter into an Agreement with Middletown Township to Create a Transportation Revitalization Improvement District (TRIO) Adjacent to Wawa Passenger Station in Delaware County;" "Award of Contracts Pursuant to a Request for Proposals;" "Authorization to Execute Consultant Amendments;" "Amendment to Authorization to Enter into a Tri-Party Site Development Agreement and Operating and Maintenance Agreement with MC Roseland Washington Street, L.P. and the Borough of Conshohocken in Connection with the Relocation of Washington Street in Support of a Residential Development Project in Conshohocken, Montgomery County;" "Authorization to Award Contracts for Various Procurements;" "Award of Various Contracts for Sole Source Procurements;" and 3 Minutes of Regular Board Meeting July 27, 2017 "Authorization to Execute Change Orders and Amendment." Mr. Deon stated that all of the items on the Consent Calendar were reviewed by the appropriate Board Committees in public session. Mr. Deon entertained a Motion to adopt the Resolutions. Mr. Kernodle moved, Ms. Coleman seconded and the following Resolutions were unanimously adopted with Mr. Kubik abstaining on Items V.B.5. and V.D.1.; Mr. Johnson abstaining on Item IV.D.1.; and Mr. Deon abstaining on Item IV.D.1. Subsequent to the Board meeting, Mr. Leonard indicated to Ms. Looby that he had experienced technical difficulties in joining the Board meeting, and that he voted "No" to Agenda Item IV.D.2. II.A. TERMINATION OF STERLING ADVISORS AND APPOINTMENT OF PRUDENTIAL TRUST COMPANY COLLECTIVE TRUST AS INVESTMENT MANAGER "WHEREAS, on February 24, 2011 the Pension Committee of the Board revised the Statement of Investment Policy and Objectives and Operating Guidelines ("Policy Statement") which governs the investment of the funds of the pension plans of SEPTA; and WHEREAS, the Policy Statement provides investment guidelines and investment return expectations for all investment managers; and WHEREAS, the Policy Statement contains monitoring procedures for the Pension Committee to utilize in its review of the performance of each investment manager; and WHEREAS, Sterling Advisors ("Sterling"), a division of BB&T Securities, manages a portfolio of domestic fixed income securities for the SEPTA Pension Plan; and WHEREAS, on December 13, 2016, PFM Advisors, the SEPTA Pension Plan Consultant, issued a Money Manager Alert advising that the long-term portfolio manager at Sterling responsible for the investment of the SEPTA Plan assets at the firm had resigned to form his own investment management company; and WHEREAS, at the Pension Committee Meeting that was held on February 23, 2017, PFM Advisors discussed the change in portfolio managers at Sterling and reviewed the performance of the fund, and as a result thereof the Pension Committee voted to place Sterling on the Watch List pursuant to criteria outlined in the Plan's Policy Statement; and WHEREAS, at the May 25, 2017 Pension Committee meeting, PFM Advisors presented an evaluation of several potential fixed income managers including firm management, investment strategies, and historic performance; and 4 Minutes of Regular Board Meeting July 27, 2017 WHEREAS, after review and discussion, the Pension Committee decided to interview Sterling's portfolio management team, as well as the portfolio management team from Prudential Trust Company Collective Trust ("Prudential"); and WHEREAS, at the June 22, 2017 Pension Committee Meeting, representatives of both Sterling and Prudential were interviewed by the Pension Committee and PFM Advisors and answered questions related to their respective portfolio management teams, investment strategies, fund performance, and other relevant events at their respective firms; and WHEREAS, after committee discussions, and based on the interviews, portfolio management teams, and performance measures, PFM Advisors recommended and the Pension Committee agreed to terminate the investment management contract with Sterling and appoint Prudential as a domestic fixed income investment manager. NOW, THEREFORE, BE IT RESOLVED, that the Board hereby approves the termination of SEPTA's investment management agreement with Sterling Advisors, and designates and appoints Prudential Trust Company Collective Trust as an investment manager of domestic fixed income investments for the SEPTA Pension Plan. FURTHER RESOLVED, that the Board hereby authorizes the proper officers of SEPTA (i) to execute and deliver all documents that will enable SEPTA to terminate its investment contract with Sterling Advisors and enter into an investment management agreement with Prudential Trust Company Collective Trust as an investment manager of domestic fixed income investments