Agenda and Meeting Notice

Board Members

Jack Dale, Chair Councilmember, City of Santee (Representing East County)

Jim Janney, First Vice Chair Mayor, City of Imperial Beach EXECUTIVE (Representing South County)

COMMITTEE Don Higginson, Second Vice Chair Mayor, City of Poway (Representing North County Inland) AGENDA

Matt Hall Mayor, City of Carlsbad Friday, February 14, 2014 (Representing North County Coastal)    9 to 10:30 a.m.   

Todd Gloria SANDAG, 7th Floor Conference Room Interim Mayor, City of San Diego 401 B Street San Diego Dianne Jacob Chairwoman, County of San Diego

Board Alternates

Terry Sinnott Councilmember, City of Del Mar (Representing North County Coastal) AGENDA HIGHLIGHTS

Bill Wells Mayor, City of El Cajon • PROPOSED FY 2014 STRATEGIC GROWTH (Representing East County) COUNCIL GRANT PROGRAM SUBMITTALS

Ron Morrison • FY 2015 PRELIMINARY PROGRAM BUDGET Mayor, City of National City (Representing South County)

• FY 2013 AUDITED COMPREHENSIVE ANNUAL Chris Orlando FINANCIAL REPORT Councilmember, City of San Marcos (Representing North County Inland)

Sherri Lightner Councilmember, City of San Diego

Marti Emerald Councilmember, City of San Diego

PLEASE TURN OFF CELL PHONES DURING THE MEETING Ron Roberts Supervisor, County of San Diego MISSION STATEMENT

The 18 cities and county government are SANDAG serving as the forum for regional Gary L. Gallegos decision-making. SANDAG builds consensus, makes strategic plans, obtains and allocates resources, Executive Director, SANDAG plans, engineers, and builds public transit, and provides information on a broad range of topics pertinent to the region's quality of life.

San Diego Association of Governments ⋅ 401 B Street, Suite 800, San Diego, CA 92101-4231 (619) 699-1900 ⋅ Fax (619) 699-1905 ⋅ www.sandag.org

Welcome to SANDAG. Members of the public may speak to the Executive Committee on any item at the time the Committee is considering the item. Please complete a Speaker’s Slip, which is located in the rear of the room, and then present the slip to the Clerk of the Committee seated at the front table. Members of the public may address the Committee on any issue under the agenda item entitled Public Comments/Communications/Member Comments. Public speakers are limited to three minutes or less per person. The Executive Committee may take action on any item appearing on the agenda.

Public comments regarding the agenda can be sent to SANDAG via [email protected]. Please include the agenda item, your name, and your organization. Email comments should be received no later than 12 noon, two working days prior to the Executive Committee meeting. Any handouts, presentations, or other materials from the public intended for distribution at the Executive Committee meeting should be received by the Committee Clerk no later than 12 noon, two working days prior to the meeting.

In order to keep the public informed in an efficient manner and facilitate public participation, SANDAG also provides access to all agenda and meeting materials online at www.sandag.org/meetings. Additionally, interested persons can sign up for e-notifications via our e-distribution list at either the SANDAG website or by sending an email request to [email protected].

SANDAG operates its programs without regard to race, color, and national origin in compliance with Title VI of the Civil Rights Act. SANDAG has developed procedures for investigating and tracking Title VI complaints and the procedures for filing a complaint are available to the public upon request. Questions concerning SANDAG nondiscrimination obligations or complaint procedures should be directed to SANDAG General Counsel, John Kirk, at (619) 699-1997 or [email protected]. Any person who believes himself or herself or any specific class of persons to be subjected to discrimination prohibited by Title VI also may file a written complaint with the Federal Transit Administration.

In compliance with the Americans with Disabilities Act (ADA), SANDAG will accommodate persons who require assistance in order to participate in SANDAG meetings. If such assistance is required, please contact SANDAG at (619) 699-1900 at least 72 hours in advance of the meeting. To request this document or related reports in an alternative format, please call (619) 699-1900, (619) 699-1904 (TTY), or fax (619) 699-1905.

SANDAG agenda materials can be made available in alternative languages. To make a request call (619) 699-1900 at least 72 hours in advance of the meeting. Los materiales de la agenda de SANDAG están disponibles en otros idiomas. Para hacer una solicitud, llame al (619) 699-1900 al menos 72 horas antes de la reunión. 如有需要, 我们可以把SANDAG议程材料翻译成其他語言.

请在会议前至少 72 小时打电话 (619) 699-1900 提出请求.

SANDAG offices are accessible by public transit. Phone 511 or see 511sd.com for route information. Bicycle parking is available in the parking garage of the SANDAG offices.

2 Rev. 012914 EXECUTIVE COMMITTEE Friday, February 14, 2014

ITEM # RECOMMENDATION +1. APPROVAL OF THE JANUARY 10, 2014, MEETING MINUTES APPROVE

2. PUBLIC COMMENTS/COMMUNICATIONS/MEMBER COMMENTS

Public comments under this agenda item will be limited to five public speakers. Members of the public shall have the opportunity to address the Executive Committee on any issue within the jurisdiction of the Committee that is not on this agenda. Other public comments will be heard during the items under the heading “Reports.” Anyone desiring to speak shall reserve time by completing a “Request to Speak” form and giving it to the Clerk prior to speaking. Public speakers should notify the Clerk if they have a handout for distribution to Committee members. Public speakers are limited to three minutes or less per person. Committee members also may provide information and announcements under this agenda item.

CONSENT (3)

+3. STATE LEGISLATIVE STATUS REPORT (Jaymie Bradford) INFORMATION

Periodic status reports on legislative activities are reported to the Executive Committee throughout the year. This report provides a summary of the various state activities.

CHAIR’S REPORT (4)

4. DISCUSSION OF NOMINATING COMMITTEE RECOMMENDATIONS DISCUSSION/ POSSIBLE ACTION During the annual nominations process for 2014 Board Officers, the SANDAG Nominating Committee raised two issues for consideration: (1) whether to retain the Second Vice Chair position; and (2) whether Policy Advisory Committee chairs should be appointed from Board members outside of the Board leadership. The Executive Committee is asked to discuss these two issues and provide direction to staff.

REPORTS (5 through 10)

+5. PROPOSED FY 2014 STRATEGIC GROWTH COUNCIL GRANT PROGRAM RECOMMEND SUBMITTALS (Carolina Gregor)

The Strategic Growth Council has issued a call for applications for the Sustainable Communities Planning Grant Program for projects that implement provisions of Senate Bill 375 (Steinberg, 2008) and reduce greenhouse gas emissions. The Executive Committee is asked to recommend that the Board of Directors approve: (1) the proposed SANDAG submittal and associated Resolution of Support for the FY 2014 Strategic Growth Council Grant Program; and (2) the partnership requests by the cities of San Diego and El Cajon.

3 +6. REVIEW OF DRAFT BOARD AGENDAS (Kim Kawada) APPROVE

+6A. Draft Board Business Agenda - February 28, 2014 +6B. Draft Board Policy Agenda - March 14, 2014

+7. REGIONAL SUPPORT FOR THE 2024 SAN DIEGO OLYMPIC AND DISCUSSION/ PARALYMPIC SUMMER GAMES (Muggs Stoll) POSSIBLE ACTION

The Executive Committee is asked to discuss the proposed proclamation supporting the 2024 San Diego Olympic and Paralympic Summer Games.

+8. FY 2015 PRELIMINARY PROGRAM BUDGET (Tim Watson and DISCUSSION André Douzdjian)

The process of developing the FY 2015 Program Budget is under way. This report provides a summary of the current funding environment and highlights of the Overall Work Program component of the FY 2015 Program Budget. The Executive Committee is asked to review and provide comments on the proposed work elements for Planning and Operations.

+9. FY 2013 AUDITED COMPREHENSIVE ANNUAL FINANCIAL REPORT INFORMATION (Jennifer Farr, Mayer Hoffman McCann PC; André Douzdjian)

In accordance with SANDAG Bylaws, the FY 2013 Comprehensive Annual Financial Report (CAFR) audit has been completed and is presented for informational purposes. Additionally, in compliance with the Statement of Auditing Standards 114, the independent auditor should communicate certain matters to the governing body. Copies of the CAFR will be distributed to each member agency.

+10. FEDERAL LEGISLATIVE STATUS REPORT (Peter Peyser, Peyser Associates INFORMATION LLC; Victoria Stackwick)

Periodic status reports on legislative activities are reported to the Executive Committee throughout the year. This report provides a summary of the various federal activities.

11. CONTINUED PUBLIC COMMENTS

If the five speaker limit for public comments was exceeded at the beginning of this agenda, other public comments will be taken at this time. Subjects of previous agenda items may not again be addressed under public comment.

12. UPCOMING MEETINGS INFORMATION

The next meeting of the Executive Committee is scheduled for Friday, March 14, 2014, at 9 a.m.

13. ADJOURNMENT

+ next to an agenda item indicates an attachment

AGENDA ITEM NO. 14-02-1 EXECUTIVE COMMITTEE

FEBRUARY 14, 2014 ACTION REQUESTED – APPROVE

EXECUTIVE COMMITTEE DISCUSSION AND ACTIONS

JANUARY 10, 2014

Chairman Jack Dale (East County) called the meeting of the SANDAG Executive Committee to order at 9 a.m. The attendance sheet for the meeting is attached.

1. APPROVAL OF THE DECEMBER 6, 2013, MEETING MINUTES

Action: Upon a motion by Mayor Matt Hall (North County Coastal) and a second by Second Vice Chair Don Higginson (North County Inland), the minutes of the December 6, 2013, Executive Committee meeting were approved. Yes – Chairman Dale, First Vice Chair Jim Janney (South County), Second Vice Chair Higginson, Mayor Hall, and Interim Mayor Todd Gloria (City of San Diego). No – None. Abstain – Supervisor Dianne Jacob (Chairwoman, County of San Diego). Absent – None.

2. PUBLIC COMMENTS/COMMUNICATIONS/MEMBER COMMENTS

Mike Werner, a member of the public, spoke regarding various transit issues.

CONSENT (3)

3. LEGISLATIVE STATUS REPORT (INFORMATION)

Periodic status reports on legislative activities are reported to the Executive Committee throughout the year. This report provided a summary of the various state and federal activities.

Action: This item was presented for information.

REPORTS (4 through 5)

4. PROPOSED 2014 LEGISLATIVE PROGRAM (RECOMMEND)

Each year, the Executive Committee recommends a legislative program to the Board of Directors for the next calendar year. The Executive Committee was asked to discuss the potential amendments to the 2014 Legislative Program and make a recommendation to the Board of Directors.

Jaymie Bradford, Senior Legislative Analyst, presented the item.

Action: Upon a motion by Interim Mayor Gloria and a second by First Vice Chair Janney, the Executive Committee recommended that the Board of Directors approve the proposed 2014 Legislative Program. Yes – Chairman Dale, First Vice Chair Janney, Second Vice Chair Higginson, Supervisor Jacob, Mayor Hall, and Interim Mayor Gloria. No – None. Abstain – None. Absent – None.

5. REVIEW OF DRAFT BOARD AGENDAS (APPROVE)

Kim Kawada, Chief Deputy Executive Director, presented the draft agenda for the January 24, 2014, Board Business meeting. She noted that there were no items for the February 14, 2014, Board Policy meeting agenda and recommended cancelling the meeting.

Action: Upon a motion by Second Vice Chair Higginson and a second by Interim Mayor Gloria, the Executive Committee approved the draft agenda for the January 24, 2014, Board Business meeting and approved canceling the February 14, 2014, Board Policy meeting. Yes – Chairman Dale, First Vice Chair Janney, Second Vice Chair Higginson, Supervisor Jacob, Mayor Hall, and Interim Mayor Gloria. No – None. Abstain – None. Absent – None.

6. CONTINUED PUBLIC COMMENTS

There were no continued public comments.

7. UPCOMING MEETINGS

The next meeting of the Executive Committee is scheduled for Friday, February 14, 2014, at 9 a.m.

8. ADJOURNMENT

Chairman Dale adjourned the meeting at 9:18 a.m.

Attachment: Attendance sheet

CONFIRMED ATTENDANCE SANDAG EXECUTIVE COMMITTEE MEETING JANUARY 10, 2014

PRIMARY/ GEOGRAPHICAL AREA JURISDICTION NAME ATTENDING ALTERNATE

Don Higginson, City of Poway Primary Yes 2nd Vice Chair North County Inland City of San Marcos Chris Orlando Alternate Yes

City of Carlsbad Matt Hall Primary Yes North County Coastal City of Del Mar Terry Sinnott Alternate Yes

Jim Janney, 1st City of Imperial Beach Primary Yes Vice Chair South County City of National City Ron Morrison Alternate Yes

City of Santee Jack Dale, Chair Primary Yes East County City of La Mesa Art Madrid Alternate Yes

___ Todd Gloria Primary Yes

City of San Diego ___ Sherri Lightner Alternate No

___ Marti Emerald Alternate No

___ Dianne Jacob Primary Yes County of San Diego ___ Ron Roberts Alternate Yes

3 AGENDA ITEM NO. 14-02-3 EXECUTIVE COMMITTEE FEBRUARY 14, 2014 ACTION REQUESTED – INFORMATION

STATE LEGISLATIVE STATUS REPORT File Number 7300400

Introduction

Periodic status reports on legislative activities are provided to the Executive Committee during the year. This status provides a summary of key provisions related to SANDAG in the Governor’s FY 2014-15 budget proposal.

Discussion

State Budget Update

On January 9, 2014, Governor Jerry Brown released the proposed FY 2014-15 budget package, which projects General Fund revenues of $108.7 billion in FY 2014-15 and assumes $106.8 billion in General Fund expenditures, $9 billion more than the current year’s $98 billion budget. As the economy continues to improve, the Governor proposes a balanced, multi-year budget that includes a $1.6 billion rainy day fund, including a proposed constitutional amendment to strengthen it. In addition, the $25 billion “wall of debt” is proposed to shrink by more than $11 billion this year.

Transportation and Infrastructure

Key components in the transportation budget include investments from Cap and Trade proceeds, early loan repayments from the General Fund, and the remaining allocation of Proposition 1B funds.

Cap and Trade Proceeds

A total of $850 million is proposed to be invested for transportation and environmental purposes. This includes the repayment of $100 million that was loaned to the General Fund in last year’s budget, with the remaining $400 million to be repaid in future years:

• High-Speed Rail: $250 million for the High-Speed Rail Authority for initial construction of the Central Valley segment and environmental and design work on the statewide system

• Integration of Rail Systems: $50 million for Caltrans to administer a competitive grant program for existing rail operators for capital improvements to integrate rail systems and provide connectivity to the high-speed rail system

• Sustainable Communities Strategies: $100 million for the Strategic Growth Council for implementation of Sustainable Communities Strategies under Senate Bill 375 (Steinberg, 2008) (SB 375) through a competitive grant program. Priorities include transit ridership, active transportation, affordable housing near transit stations, and local planning that promotes infill development

• Low Carbon Transportation: $200 million for the Air Resources Board to accelerate the transition to low carbon freight and passenger transportation, with priority for disadvantaged communities

• Energy Efficiency and Clean Energy: $250 million in energy efficiency proposals relating to weatherization upgrades, green state buildings, agricultural energy, water infrastructure and water action plans, urban forests, and waste management infrastructure

Repayment of General Fund Loans

The total $351 million in early General Fund loan repayments include $337 million to be used for preservation and maintenance projects on state highways and local roads that would otherwise be funded in FY 2015-16 or later.

Appropriation of Proposition 1B Bond Funds

A total of $1.1 billion of bond funds and administrative costs savings from the bond program are proposed to be spent on projects in the following areas:

• $793 million to support local transit operators

• $160 million for intercity rail

• $113 million for state highway projects

Debt Service and Infrastructure

General Fund debt service increases by $416.5 million over current year expenditures to a total of $6 billion due to recent bond sales and the planned issuance of additional bonds over the next year. The Governor also released the 2014 Five-Year Infrastructure Plan outlining infrastructure priorities for major state infrastructure programs, including natural resources, transportation, and high-speed rail. Additionally, $815 million of one-time investments in maintenance and infrastructure are proposed to be allocated to the following:

• Highway Users Tax Account Loan Repayment: $337 million

• K-12 Schools Emergency Repair Program: $188 million

• California Community Colleges: $175 million

• Department of Parks and Recreation: $40 million

• Department of Corrections and Rehabilitation: $20 million

• Judicial Branch: $15 million

• Department of Developmental Services: $10 million

• Department of State Hospitals: $10 million

• Department of General Services: $7 million

• State Special Schools: $5 million

• Department of Forestry and Fire Protection: $3 million

• California Military Department: $3 million

• Department of Food and Agriculture: $2 million

Next Steps

Staff will continue to monitor and update the Executive Committee as the budget process continues to develop.

JAYMIE BRADFORD Principal Legislative Analyst

Attachment: 1. Report from Ellison Wilson Advocacy

Key Staff Contact: Jaymie Bradford, (619) 699-1994, [email protected]

3 Attachment 1

TO: SANDAG BOARD OF DIRECTORS FROM: ELLISON WILSON ADVOCACY, LLC SUBJECT: SANDAG LEGISLATIVE ACTIVITY REPORT – JANUARY 2014

CAPITOL UPDATE

The Legislature is back in session to commence the second year of the 2013-14 Legislative Session, and as expected, several hundred bills were already introduced or amended. January 31 was the deadline for all bills introduced in 2013 to be passed out of their House of Origin, so January began with a quick start. The deadline to introduce new legislation for 2014 is February 21, so we expect the bulk of new legislation to be introduced the week before the deadline.

Legislators are gearing up for a pivotal election-year session, which will inevitably impact everything this year. There will be leadership changes in both parties, in both houses. Governor Jerry Brown is up for re- election in 2014 as well. The freshman lawmakers elected under California's newly extended term limits in November 2012 will not be termed out until 2024 – which means that newly elected party leadership and committee chairs could remain in power for up to 10 years with much less turnover. However, three out of the four caucus leaders are set to leave office after this year due to term limits, including both the Senate President Pro Tem and Assembly Speaker.

The Democrats will retain a supermajority – 55 seats in the Assembly, 28 in the Senate – having won a number of special elections this Fall, including: Democrat Matt Dababneh in the 45th Assembly District (West San Fernando Valley); Democrat Freddie Rodriguez in the 52nd Assembly District (Inland Southern California including Ontario); and Democrat Sebastian Ridley-Thomas in the 54th Assembly District (Los Angeles). The Legislature will still be one seat short of full capacity after months of special elections, as Republican Senator Bill Emmerson made the surprise announcement that he would step down; current Republican Assembly Member Mike Morrell is ultimately expected to fill Emmerson’s Senate seat, which will leave another opening in the Assembly.

As for the leadership, current Senate Pro Tem Darrell Steinberg has announced that one of the known frontrunners among possible successors, Senator Kevin de Leon, will be the next leader of the state Senate. While Steinberg has previously said that he intends to continue serving as Pro Tem until his term ends in November, Steinberg will now likely call for a formal vote on de Leon's leadership after the budget is passed in June. Previously, Senator Mark DeSaulnier was in the running for the position as well, but pulled out of the race after announcing that he intends to run for Congress this year. No other candidates have emerged so far, and typically the Pro Tem’s announcement is intended to make it clear to any other interested parties that the leader of the Senate has already been informally chosen.

4 As for the Assembly, the race to succeed current speaker John Perez (who is running for State Controller since he is termed out of the Assembly this year) has apparently been decided. Although there were a number of “freshmen” candidates (those elected in 2012 under the new term limit law), the Democratic Caucus has elected Asm. Toni Atkins from San Diego as the next speaker. Details on the timing of the transition have not been announced. Interestingly, she only has two years left to serve in the Assembly, so the race to succeed her will begin almost as soon as she ascends to the position.

In early January the Governor formally released his budget proposal (after a leak forced him to announce it a day early). The proposal includes a $106.8 billion general fund and a $2.3 billion reserve at the end of 2014-15, and seems to focus on debt repayment, building up a budget reserve, and restoring funding to some previously cut programs. Many consultants, including the Legislative Analyst, an independent and nonpartisan arm of state government, have advised against new spending on anything other than education. The budget will continue to be discussed heavily over the next six months and is expected to be revised considerably by the Legislature. Lawmakers have until June 15 to send the governor a balanced budget.

ACTIVITY REPORT

1/2: Reviewed the Legislative Analyst Office analysis of the California Road Repairs Act of 2014; provided subsequent update to SANDAG staff. 1/3: Reviewed Caltrans Report on projects funded through Proposition 1B’s Public Transportation Modernization, Improvement, and Service Enhancement Account; provided subsequent update to SANDAG staff. 1/6: Weekly teleconference with SANDAG staff. 1/10: Reviewed Governor’s January Budget Proposal, including participating in a teleconference with Brian Kelly from the California State Transportation Agency to discuss budget-related transportation matters; reviewed amendments to Assembly Bill 1179 (Bocanegra), which would limit the bill to adding the Superintendent of Public Instruction or his or her designee to the Strategic Growth Council; provided subsequent update to SANDAG staff. 1/13: Weekly teleconference with SANDAG staff. 1/15: Participated in numerous discussions with the California Highway Patrol (CHP) and SANDAG staff concerning potential bus-on-shoulder (BOS) program legislation. 1/16: Participated in numerous discussions with CHP and SANDAG staff concerning potential BOS program legislation; reviewed draft BOS language for potential legislation. 1/21: Researched and drafted revisions to BOS language consistent with discussions with CHP; had follow up discussions with SANDAG staff on language. 1/27: Weekly teleconference with SANDAG staff. 1/28: Reviewed approved SANDAG Legislative Program. 1/29: Met with rail lobbyists concerning Select Committee on Passenger Rail; Monitored California Transportation Committee meeting; provided subsequent updates to SANDAG staff. 1/30: Reviewed developments to pull California Road Repairs Act of 2014; provided subsequent update to SANDAG staff. 1/31: Reviewed the California State Transportation Agency report on Caltrans (“SSTI Assessment and Recommendations”); provided subsequent update to SANDAG staff.

5 AGENDA ITEM NO. 14-02-5 EXECUTIVE COMMITTEE FEBRUARY 14, 2014 ACTION REQUESTED – RECOMMEND

PROPOSED FY 2014 STRATEGIC GROWTH File Number 3102000 COUNCIL GRANT PROGRAM SUBMITTALS

Introduction Recommendation

The Strategic Growth Council (SGC) has The Executive Committee is asked to recommend issued a call for applications for the that the Board of Directors approve: (1) the “Sustainable Communities Planning Grant proposed SANDAG submittal and associated and Incentives Program” for projects that Resolution of Support for the FY 2014 Strategic support sustainable communities and reduce Growth Council Grant Program; and (2) the greenhouse gas (GHG) emissions. This report partnership requests by the cities of San Diego and describes the SANDAG grant application, El Cajon, as described in this report. proposed partnership requests for joint proposals, and solicitations for letters of support.

Discussion

Sustainable Communities Planning Grant and Incentives Program

The Sustainable Communities Planning Grant and Incentives Program is funded by Proposition 84, the Safe Drinking Water, Water Quality and Supply, Flood Control, River, and Coastal Protection Bond Act of 2006. The grant program is managed by the SGC, a cabinet-level committee that advises the Governor and Legislature on sustainable community development. A focus area of the grant program is to fund collaborative efforts by metropolitan planning organizations (MPOs) and local governments that foster the development of sustainable communities and implement Senate Bill 375 (Steinberg, 2008) and Assembly Bill 32 (Nunez, 2006).

Previous Grant Funding Allocations for SANDAG

Since its formation in 2008, the SGC has funded two statewide grant cycles; SANDAG applied successfully in both cycles. In 2011, SANDAG received a $750,000 grant to begin implementation of the 2050 Regional Transportation Plan and its Sustainable Communities Strategy (2050 RTP/SCS) and support initial work to update the Regional Comprehensive Plan, including greater involvement of low-income and minority communities through community based organizations (CBOs). In 2012, SANDAG received $886,000 to continue statewide MPO collaboration and to undertake various initiatives, including development of alternative land use scenarios to reduce GHG emissions, a safe routes to transit program, a regional transit oriented development strategy, and an active transportation implementation strategy.

Current SGC Grant Cycle

The current SGC grant cycle makes $16 million available for local and regional planning projects that lead to GHG emission reductions and foster sustainable communities throughout California. Individual applications are limited to $500,000; joint submittals can apply for up to $1 million. Eligible applicants can be included in a maximum of three proposals (two local/regional planning applications and one application in an “Environmental Justice” set-aside category).

Proposed SANDAG FY 2014 Grant Program Submittal

For this cycle, it is proposed that a $500,000 SANDAG grant application be submitted with a focus on furthering the 2050 RTP/SCS and completing the next SCS through incentives and innovation. SANDAG is in the process of updating the plan and completing the next SCS through the development of San Diego Forward: The Regional Plan. SGC grant funding would contribute to two critical activities:

• Providing resources to continue to build upon and sustain CBO engagement in low-income and minority communities

• Developing modeling enhancements specific to the San Diego region to more accurately quantify the benefits of SANDAG active transportation projects.

The activities for which funding is requested are included in the proposed SANDAG FY 2015 Program Budget and Overall Work Program as multiyear projects. The SGC guidelines require a minimum 10 percent cash and in-kind match, and do not allow funds to be used for indirect costs. Therefore, a portion of funding already allocated in the proposed FY 2015 Program Budget would be used as the match and would cover anticipated indirect costs.

The SGC guidelines also require a signed Resolution of Support from the governing board of the lead agency submitting the proposal. The Executive Committee is asked to recommend Board approval of Resolution No. 2014-10 (Attachment 1), which approves the filing of the grant application and certifies that SANDAG will have sufficient funds to develop the proposal.

Proposed SANDAG Partnership Requests

City of San Diego – Balboa Transit Station Planning Grant

The City of San Diego has requested that SANDAG serve as a co-applicant on a joint grant proposal of approximately $700,000 supporting a specific planning effort for the Balboa transit station for the Mid-Coast Corridor Transit Project, which is a key priority for SANDAG. As shown in the 2050 RTP/SCS, the Balboa station will function as a key multi-modal transit station connecting the north/south Mid-Coast Trolley line that will link downtown San Diego and Old Town to University City and UC San Diego, and the planned east/west Trolley line that will link Pacific Beach to Kearny Mesa. As a result, coordinated land use and transportation planning at the station and in the surrounding area will be critical to the success of two future light-rail lines, active transportation projects, and smart growth/transit oriented development opportunities.

The City of San Diego has committed to providing all required matching funds for the joint proposal. The role of SANDAG would consist of allocating staff time to support the Balboa transit

station planning process to ensure coordination of the regional and local transportation plans and programs, and to support the ongoing Mid-Coast Corridor work.

City of El Cajon – Environmental Justice Set-Aside Grant

The SGC identifies specific geographic areas that are eligible to compete for Environmental Justice set-aside grants. These grants are intended to target and directly benefit certain communities identified by the State.1 The four areas eligible to apply for the set-aside grants in the San Diego region include portions of Southeast San Diego in the City of San Diego as well as parts of National City, El Cajon, and Escondido. SANDAG only can partner on one Environmental Justice grant application.

Staff reached out to the four eligible cities to inquire whether they would be submitting applications, and if so, whether there was a desire for SANDAG to serve as a co-applicant. SANDAG received requests to serve as a co-applicant from the City of San Diego (through Civic San Diego) on a specific plan to pursue infrastructure investments at the Euclid and Market transit station area in the Encanto Community Planning Area; the City of National City on a master plan to coordinate land use and transportation planning efforts along Harbor Drive; and the City of El Cajon to prepare a General Plan update and associated documents. The City of Escondido has indicated that it will submit its own individual application for less than $500,000, and is requesting a support letter from SANDAG (see below).

Based on discussions with staff members from each jurisdiction, SANDAG staff proposes to partner with the City of El Cajon on a $1 million Environmental Justice Set-Aside Grant application for a comprehensive update to its General Plan, land use regulations, and infrastructure plans. A General Plan update and related program environmental impact report would allow the City of El Cajon to align its vision for community investment with SANDAG regional plans and use the various California Environmental Quality Act streamlining provisions adopted by the Legislature in recent years to accelerate transit oriented development investment in transit project priority areas, maximize its potential for economic development and sustainability, particularly in its environmental justice areas, and strengthen the community’s ability to compete for future capital grant programs. The City of El Cajon has committed to providing all required matching funds for the joint proposal. The role of SANDAG would consist of allocating staff time to support this comprehensive effort and ensure coordination of the regional and local transportation plans and programs, as included in the 2050 RTP/SCS.

Letters of Support for other Local Proposals

Working in coordination with the Regional Planning Technical Working Group, staff has received notification from the following jurisdictions requesting support letters from SANDAG: the cities of

1 The California Communities Environmental Health Screening Tool, also known as “CalEnviroScreen,” has been developed by the California Environmental Protection Agency and the Office of Environmental Health Hazard Assessment as a screening methodology to identify California communities that are disproportionately burdened by multiple sources of pollution. The 5 and 10 percent highest scoring statewide zip codes are used to determine eligibility for the SGC Environmental Justice set-aside grant.

Santee, Escondido, Chula Vista, and La Mesa. Staff will provide support letters for each of the proposals.

Next Steps

Pending action by the Executive Committee and Board of Directors, the proposals described in this report will be submitted to the SGC by the February 28, 2014, deadline. Awards are anticipated to be announced this summer and agreements to begin work are expected this fall. Pending grant application outcomes, any necessary budget amendments will be brought forward for consideration this fall.

CHARLES “MUGGS” STOLL Director of Land Use and Transportation Planning

Attachment: 1. Resolution No. 2014-10

Key Staff Contact: Carolina Gregor, (619) 699-1989, [email protected]

4 Attachment 1

RESOLUTION

401 B Street, Suite 800 NO. 2014-10 San Diego, CA 92101 Phone (619) 699-1900 • Fax (619) 699-1905 www.sandag.org

APPROVING THE APPLICATION FOR GRANT FUNDS FOR THE SUSTAINABLE COMMUNITIES PLANNING GRANT AND INCENTIVES PROGRAM UNDER THE SAFE DRINKING WATER, WATER QUALITY AND SUPPLY, FLOOD CONTROL, RIVER, AND COASTAL PROTECTION BOND ACT OF 2006 (PROPOSITION 84)

WHEREAS, the Legislature and Governor of the State of California have provided funds for the program shown above; and

WHEREAS, the Strategic Growth Council has been delegated the responsibility for the administration of this grant program, establishing necessary procedures; and

WHEREAS, said procedures established by the Strategic Growth Council require a resolution certifying the approval of application(s) by the Applicants governing board before submission of said application(s) to the State; and

WHEREAS, the applicant, if selected, will enter into an agreement with the State of California to carry out the development of the proposal.

NOW, THEREFORE, BE IT RESOLVED that the Board of Directors of the San Diego Association of Governments, acting as its Governing Body:

1. Approves the filing of an application entitled “Furthering SANDAG’s 2050 Regional Transportation Plan and its Sustainable Communities Strategy (SCS) and Completing the next SCS through Incentives and Innovations” for the Strategic Growth Council FY 2014 grant proposal in order to become a sustainable community;

2. Certifies that applicant understands the assurances and certification in the application;

3. Certifies that applicant or title holder will have sufficient funds to develop the Proposal or will secure the resources to do so;

4. Certifies that the Proposal will comply with any applicable laws and regulations; and

5. Appoints the Director of Land Use and Transportation Planning, or designee, as agent to conduct all negotiations, and execute and submit all documents including but not limited to applications, agreements, payment requests, and so on, which may be necessary for the completion of the aforementioned project(s).

5 Resolution No. 2014-10 Page 6

APPROVED AND ADOPTED this 28th day of February, 2014. I, the undersigned, hereby certify that the foregoing Resolution Number 2014-10 was duly adopted by the Board of Directors of the San Diego Association of Governments.

AYES:

NOES:

ABSTENTIONS:

ABSENT:

______ATTEST: ______CHAIRPERSON SECRETARY

MEMBER AGENCIES: Cities of Carlsbad, Chula Vista, Coronado, Del Mar, El Cajon, Encinitas, Escondido, Imperial Beach, La Mesa, Lemon Grove, National City, Oceanside, Poway, San Diego, San Marcos, Santee, Solana Beach, Vista, and County of San Diego. ADVISORY MEMBERS: California Department of Transportation, Metropolitan Transit System, North County Transit District, Imperial County, U.S. Department of Defense, San Diego Unified Port District, San Diego County Water Authority, Southern California Tribal Chairmen’s Association, and Mexico.

6 AGENDA ITEM NO. 14-02-6A EXECUTIVE COMMITTEE FEBRUARY 14, 2014 ACTION REQUESTED – APPROVE

REVIEW OF THE FEBRUARY 28, 2014, DRAFT BOARD BUSINESS AGENDA

ITEM # RECOMMENDATION

+1. APPROVAL OF THE JANUARY 24, 2014, MEETING MINUTES APPROVE

2. PUBLIC COMMENTS/COMMUNICATIONS/MEMBER COMMENTS

Public comments under this agenda item will be limited to five public speakers. Members of the public shall have the opportunity to address the Board on any issue within the jurisdiction of SANDAG that is not on this agenda. Other public comments will be heard during the items under the heading “Reports.” Anyone desiring to speak shall reserve time by completing a “Request to Speak” form and giving it to the Clerk of the Board prior to speaking. Public speakers should notify the Clerk of the Board if they have a handout for distribution to Board members. Public speakers are limited to three minutes or less per person. Board members also may provide information and announcements under this agenda item.

3. ACTIONS FROM POLICY ADVISORY COMMITTEES (Jaymie Bradford) APPROVE

This item summarizes the actions taken by the Borders Committee on January 24, the Regional Planning Committee on February 7, the Executive Committee on February 14, and the Transportation and Public Safety Committees on February 21, 2014. The Board of Directors is asked to ratify the actions of the Policy Advisory Committees.

CONSENT (4 through xx)

+4. FY 2015 TO FY 2019 TransNet AND TRANSPORTATION DEVELOPMENT ACT APPROVE REVENUE ESTIMATES (Sookyung Kim and Marney Cox)*

By March 1 of each year, SANDAG provides revenue estimates for the upcoming fiscal year as well as a projection for the next four fiscal years to assist transit operators and local agencies in their capital and operational planning. The Transportation Committee recommends that the Board of Directors: (1) approve the FY 2015 allocation of TransNet revenues and the apportionments for Transit Development Act (TDA), State Transit Assistance, and Federal Transit Administration (FTA) funds; and (2) approve the FY 2016 to FY 2019 estimates for TransNet, TDA, and FTA revenues. +5. PROPOSED FY 2014 STRATEGIC GROWTH COUNCIL GRANT PROGRAM RECOMMEND SUBMITTALS (Carolina Gregor)

The Strategic Growth Council has issued a call for applications for the Sustainable Communities Planning Grant Program for projects that implement provisions of Senate Bill 375 (Steinberg, 2008) and reduce greenhouse gas emissions. The Executive Committee recommends that the Board of Directors approve: (1) the proposed SANDAG submittal and associated Resolution of Support for the FY 2014 Strategic Growth Council Grant Program; and (2) the partnership requests by the cities of San Diego and El Cajon, as described in this report.

+6. PROPOSED FY 2014 PROGRAM BUDGET AMENDMENT: STATE ROUTES APPROVE 905, 125, AND 11 CONNECTORS (Mario Orso, Caltrans; Tina Casgar, SANDAG)*

The Transportation Committee recommends that the Board of Directors approve: (1) the proposed amendment to the FY 2014 Program Budget to add $800,000 for the right-of-way phase of the State Routes 905, 125, and 11 Connectors Project (CIP 1390504); and (2) Amendment No. 13 to the 2012 Regional Transportation Improvement Program.

+7. TransNet REGIONAL TRANSPORTATION CONGESTION IMPROVEMENT APPROVE PROGRAM FEE ADJUSTMENT (Marney Cox and Ariana zur Nieden)*

The TransNet Extension Ordinance requires that the Regional Transportation Congestion Improvement Program (RTCIP) fee charged by local jurisdictions be adjusted every year on July 1 in order to maintain the purchasing power of the program for improvements to the Regional Arterial System. The Board of Directors is asked to approve a 2 percent adjustment to the RTCIP, raising the minimum fee from $2,209 to $2,254, beginning July 1, 2014.

+8. APPROVAL OF PROPOSED SOLICITATIONS AND CONTRACTS (Laura Coté)* APPROVE

The Board of Directors is asked to review and approve the proposed solicitations and contract awards summarized in the attached reports: A. Solicitations B. Contract Awards

+9. TransNet ENVIRONMENTAL MITIGATION PROGRAM ANNUAL STATUS INFORMATION REPORT (Keith Greer)*

This report provides the annual status update on the implementation of the TransNet Environmental Mitigation Program.

+10. MID-COAST CORRIDOR TRANSIT PROJECT: CONSTRUCTION MANAGER/ INFORMATION GENERAL CONTRACTOR PROPOSALS (John Haggerty)*

This report provides a summary of the Construction Manager/General Contractor proposals submitted for the Mid-Coast Corridor Transit Project.

2 +11. OVERVIEW OF DEVELOPMENTS IN THE FINANCIAL MARKETS AND INFORMATION QUARTERLY FINANCE REPORT FOR THE PERIOD ENDING DECEMBER 31, 2013 (André Douzdjian, Marney Cox, and Lisa Kondrat-Dauphin)* This quarterly report provides various finance-related items to the Board of Directors, including: (1) a quarterly report of investments, including all money under the direction or care of SANDAG; (2) an update on the SANDAG debt portfolio; and (3) information about the latest developments in the financial markets, the economy, and sales tax revenues.

+12. REPORT SUMMARIZING DELEGATED ACTIONS TAKEN BY THE EXECUTIVE INFORMATION DIRECTOR (André Douzdjian)*

In accordance with various SANDAG Board Policies, this report summarizes certain delegated actions taken by the Executive Director since the last Board of Directors meeting.

+13. REPORT ON MEETINGS AND EVENTS ATTENDED ON BEHALF OF SANDAG INFORMATION (Jaymie Bradford)

Board members will provide brief reports orally or in writing on external meetings and events attended on behalf of SANDAG since the last Board of Directors meeting.

+14. APPOINTMENT OF POLICY ADVISORY COMMITTEE MEMBERS INFORMATION (Kim Kawada)

This item summarizes the voting and advisory members appointed to the Executive, Transportation, Regional Planning, Borders, and Public Safety Committees as well as the Committee Chairs and Vice Chairs appointed by the SANDAG Chair.

15.

CHAIR’S REPORT (16)

+16. SUMMARY OF THE ANNUAL SANDAG BOARD OF DIRECTORS RETREAT INFORMATION (Colleen Windsor)*

This report provides a summary of the discussion at the annual SANDAG Board of Directors Retreat held on January 29 to 31, 2014.

REPORTS (17 through xx)

+17. TransNet PLAN OF FINANCE UPDATE (San Diego Interim Mayor Todd APPROVE Gloria, Transportation Committee Chair; Ariana zur Nieden, Marney Cox, and Richard Chavez)*

The TransNet Plan of Finance is updated on an annual basis, or more frequently as circumstances arise. This item summarizes the major revenue, project budget, and cash flow assumptions used in this year's Plan of Finance, which continues to advance the TransNet Early Action Program. The Transportation Committee recommends that the Board of Directors approve the TransNet Plan of Finance update.

3 +18. QUARTERLY PROGRESS REPORT ON TRANSPORTATION PROJECTS - INFORMATION OCTOBER THROUGH DECEMBER 2013 (Michelle Merino)*

This quarterly report summarizes the current status of major highway, transit, arterial, traffic management, and Transportation Demand Management projects in the SANDAG five-year Regional Transportation Improvement Program for the period October through December 2013.

+19. CLOSED SESSION: CONFERENCE WITH REAL PROPERTY NEGOTIATORS PURSUANT TO GOVERNMENT CODE SECTION 54956.8 – INLAND RAIL TRAIL PROJECT (John Kirk)

SANDAG staff seeks direction from the Board of Directors concerning negotiations with property owners along the Inland Rail Trail Project. Negotiators on behalf of SANDAG are John Kirk, Emilio Rodriguez, Brad Kuhn, and Rick Rayl. SANDAG staff seeks direction from the Board of Directors concerning price and payment terms. (Detailed property list will be provided in the final agenda.)

+20. CLOSED SESSION: CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION PURSUANT TO GOVERNMENT CODE SECTION 54956.9(d)(1) – GEORGE ARGOUD, ET AL. V. SAN DIEGO ASSOCIATION OF GOVERNMENTS (SAN DIEGO SUPERIOR COURT CASE NO. 37-2013-00081555-CU-EI-CTL) (John Kirk)

The Board of Directors will be briefed on the status of the referenced litigation, regarding claims stemming from the Regional Beach Sand Project.

21. CONTINUED PUBLIC COMMENTS

22. UPCOMING MEETINGS INFORMATION

The next Board Policy meeting is scheduled for Friday, March 14, 2014, at 10 a.m. The next Board Business meeting is scheduled for Friday, March 28, 2014, at 9 a.m.

23. ADJOURNMENT

+ next to an agenda item indicates an attachment * next to an agenda item indicates a San Diego County Regional Transportation Commission item

4 AGENDA ITEM NO. 14-02-6B EXECUTIVE COMMITTEE FEBRUARY 14, 2014 ACTION REQUESTED – APPROVE

REVIEW OF THE MARCH 14, 2014, DRAFT BOARD POLICY AGENDA

ITEM # RECOMMENDATION 1. PUBLIC COMMENTS/COMMUNICATIONS/MEMBER COMMENTS

REPORTS (2 through xx)

+2. SAN DIEGO FORWARD: THE REGIONAL PLAN: DRAFT PERFORMANCE DISCUSSION/ MEASURES (San Diego Council President Todd Gloria, Transportation POSSIBLE ACTION Committee Chair; Rachel Kennedy) Performance measures are used to compare different multimodal transportation network scenarios and help the Board of Directors select a preferred network for the Regional Plan. The Board of Directors is asked to discuss and consider approval of the draft performance measures for use in the development of San Diego Forward: The Regional Plan.

4. CONTINUED PUBLIC COMMENTS

5. UPCOMING MEETINGS INFORMATION

The next Board Business meeting is scheduled for Friday, March 28, 2014, at 9 a.m.

6. ADJOURNMENT

+ next to an agenda item indicates an attachment

AGENDA ITEM NO. 14-02-7 EXECUTIVE COMMITTEE FEBRUARY 14, 2014 ACTION REQUESTED –DISCUSSION/POSSIBLE ACTION

REGIONAL SUPPORT FOR THE 2024 SAN DIEGO File Number 7300500 OLYMPIC AND PARALYMPIC SUMMER GAMES

Introduction

Representatives of the San Diego 2024 Exploratory Committee, known as SD24EC, will summarize their pursuit to submit a bid to host the 2024 Olympic and Paralympic Summer Games. The Executive Committee is asked to discuss the proposed proclamation supporting the 2024 San Diego Olympic and Paralympic Summer Games (Attachment 1).

CHARLES “MUGGS” STOLL Director of Land Use and Transportation Planning

Attachment: 1. Draft Proclamation of Support for the 2024 San Diego Olympic and Paralympic Summer Games

Key Staff Contact: Charles “Muggs” Stoll, (619) 699-6945, [email protected] Attachment 1

401 B Street, Suite 800 San Diego, CA 92101 Phone (619) 699-1900 • Fax (619) 699-1905 www.sandag.org

PROCLAMATION SUPPORTING THE SAN DIEGO REGION AS THE HOST FOR THE 2024 OLYMPIC AND PARALYMPIC GAMES

WHEREAS, the International Olympic Committee (IOC) will solicit interest from its member National Olympic Committees in hosting the 2024 Olympic and Paralympic Games (2024 Games); and

WHEREAS, the United States Olympic Committee (USOC) is in discussions with several interested U.S. cities to determine their interest in and capability to host the 2024 Games; and

WHEREAS, the USOC will determine whether it will submit a bid to the IOC as a result of these discussions; and

WHEREAS, the San Diego 2024 Exploratory Committee (SD24EC) is pursuing submission of a bid on behalf of the City of San Diego, as the officially recognized entity and the San Diego region to host the 2024 Olympic and Paralympic Games; and

WHEREAS, the concurrent celebration of our region’s multi-national, multi-cultural, and multi-ethnic heritage is an important part of the Olympic and Paralympic Movement; and

WHEREAS, the bid being prepared incorporates a more focused approach to furthering our new economy that benefits neighborhoods, beautifies communities, modernizes the region, and accelerates project approvals for critical infrastructure, transportation, and venue construction that will support and sustain a vibrant and fiscally-responsible legacy to the 2024 Games and region; and

WHEREAS, SD24EC will work with the City of San Diego, County of San Diego, the other 17 cities in the region, the other regional governmental entities, including our local sovereign Tribal Nations, the State of California, and applicable United States governmental entities to bring this bid to fruition; and

WHEREAS, San Diego’s bid will support the IOC’s mission of promoting sport, sustainability, innovation, peace, cultural awareness and understanding, collaboration, and leaving a positive legacy upon which to build the future of the Olympic and Paralympic Movement; and

WHEREAS, the San Diego region is the ideal location to host the 2024 Summer Olympic and Paralympic Games;

2 NOW THEREFORE, the San Diego Association of Governments recognizes and endorses the bid being prepared by the SD24EC on behalf of the City of San Diego; and

SANDAG supports the efforts of the City of San Diego through the SD24EC and encourages the citizens of the San Diego region to work in harmony in support of the bid to bring the 2024 Olympic and Paralympic Games to our region.

I, the undersigned, hereby certify that the foregoing Proclamation is hereby duly approved this 28th day of February, 2014.

Chairman, SANDAG Board of Directors

3 AGENDA ITEM NO. 14-02-8 EXECUTIVE COMMITTEE

FEBRUARY 14, 2014 ACTION REQUESTED – DISCUSSION

FY 2015 PRELIMINARY PROGRAM BUDGET File Number 1500400

Introduction

The process of developing the FY 2015 Program Budget is under way. This report provides a summary of the current funding environment and highlights of the Overall Work Program (OWP) component of the FY 2015 Program Budget. The Executive Committee is asked to review and provide comments on the proposed FY 2015 Program Budget work elements for Planning and Operations.

Discussion

The SANDAG Program Budget includes a summary of the agency’s overall authority and mandates, detailed work element descriptions, the Administration and Board budgets, the TransNet Program, the Capital Program, and a summary of the agency’s personnel and organizational structure. Included in the Program Budget is the OWP, which is a federally-required document describing regional planning activities relating to the funding of transportation infrastructure.

The first step in the development of the annual Program Budget is to update the Strategic Goals and the Areas of Emphasis (Attachment 1). The Strategic Goals are long-term areas of achievement that change minimally on an annual basis. The Areas of Emphasis – designed to support the Strategic Goals – are updated each year to highlight structural changes or particular areas of focus for the coming year. The Areas of Emphasis updates for FY 2015 are relatively minor; they continue to emphasize Sustainable Development and Sustainable Mobility as key planning areas and support the agency’s Regional Operations and Services initiatives.

Attachment 2 provides a summary description of the objectives for each of the proposed work elements, categorized by Area of Emphasis. The TransNet Program and Capital Program components will be addressed in more detail in the March 2014 Draft Program Budget document.

Current Funding Environment

Local Sales Tax Revenue – More than half of the recurring planning revenue that funds the OWP comes from sales tax-based sources (Transportation Development Act and TransNet). Through the first two quarters of the current fiscal year (FY 2014), sales tax revenue received from the State Board of Equalization was approximately 4 percent higher than revenue received during the same period last year. SANDAG, working cooperatively with staff from the County of San Diego and the two transit agencies, continues to project 5 percent growth over FY 2013 actual receipts, with preliminary projections of 4 percent growth in FY 2015. More details regarding revenue estimates will be brought to the Board of Directors later this month.

The positive growth in sales tax receipts is consistent with the SANDAG expectation that revenue increases will occur as the economy begins to experience job growth, which has gradually occurred nationwide and locally during the past three fiscal years. Although the economic turnaround has been slow and sporadic, most economists expect the national economy to continue to expand between 2 and 3 percent during calendar year 2014, consistent with the trend established since the end of the Great Recession. The expected slow growth shows that the economy is likely to continue to face challenges during the next couple of years.

Federal and State Revenue – Federal and state recurring revenues comprise the remainder of the flexible annual funding for the OWP. The revenue projections are essentially flat based on preliminary estimates received from the state and federal governments, and are subject to both the state and federal governments approving their annual budgets. These projections are consistent with the recent passage of the spending bill by Congress, and are subject to more specific allocations expected to appear in the Federal Register.

Contingency Reserve – The ending balance of the uncommitted Contingency Reserve as of June 30, 2013, was approximately $7.1 million. The uncommitted balance represents approximately 14 percent of the FY 2014 OWP Budget, which exceeds the minimum target of 5 percent, as required by SANDAG Board Policy.

Highlights of the Proposed FY 2015 OWP

The proposed FY 2015 OWP includes the continuation or completion of several significant work efforts and the start of several new activities, summarized below and in more detail in Attachment 2 (work element numbers are shown in parentheses):

• Continue with the second full year of the development of San Diego Forward: The Regional Plan (31020), including the preferred revenue constrained transportation network, air quality analysis (31006), social equity analyses, and preparation of the draft Regional Plan and draft environmental impact report; continue to implement public outreach strategies; and finalize prior planning initiatives related to the 2050 Regional Transportation Plan and its Sustainable Communities Strategy (2050 RTP/SCS).

• Support the development of the Regional Plan, publish the 2014 regional population estimates, further expanding active transportation sensitivity in the activity-based model (ABM), update the regional forecasting model, continue the integration of the land use and transportation modeling frameworks, and improve model documentation (23000 and 23004).

• Continue implementation of the 2050 RTP/SCS, including detailed advanced planning for the new rail segments and advancing active transportation implementation strategies, including the Regional Bike Early Action Plan, active transportation education programs, and Safe Routes to Transit (33002, 33007, and 33210).

• Initiate the preparation of an Alternative Fuels Readiness Plan (32009) with grant funds from the California Energy Commission. The Alternative Fuels Readiness Plan will supplement the

2 Plug-In Electric Vehicle Readiness Plan completed by SANDAG in FY 2014 and will outline obstacles and opportunities for alternative fuel vehicle types beyond plug-in electric vehicles.

• Advance the integration of Geographic Information Services (GIS) data, model output, and capital/operational project information into visualization products and services to support information sharing, improved storytelling capabilities, agency outreach, and transparency (23006).

• Continue Criminal Justice research efforts, such as evaluation of the county’s implementation of the state’s Public Safety Realignment Program, and tracking outcome measures for projects related to reducing juvenile delinquency, victimization, and support of at-risk youth populations (23450, 23500).

• Advance regional Transportation Demand Management strategies, including deployment of an updated iCommute Program Management Tool; expansion of the Regional Vanpool Program; completion of a parking management toolbox; targeted employer outreach; and conducting a telework demonstration project (33107).

• Deploy significant enhancements to the existing 511 Automated Traveler Information System for the region, including the transition to a new vendor to provide an updated website, release of a mobile application, and evaluation of system performance (33105).

• Complete the transition of back office Compass Card systems and maintenance to the transit agencies (33106).

• Completion of the Intermodal Transportation Center strategy for the San Ysidro area (33305) and final recommendations for improving transportation alternatives in the Interstate 8 Corridor (33306).

• Completion of the transit oriented development policy/strategy (33004), and continued implementation of a Tribal Consultation Plan (34005) to involve tribal nations in the development of the Regional Plan.

• Implement a significant upgrade to the SANDAG financial system, along with an integrated contract management system.

• Initiate work on new grant-funded projects, including an analysis of methods for improving access to transportation services in Environmental Justice communities, focusing on City Heights (33212); development of an active transportation and demand management strategy for the Interstate 805 South Express Lanes Project (33107.10); and collaborating with San Diego International Airport to develop an Airport Transit Plan (31014).

• Continue operations of the State Route 125 toll road, including implementing plans for a centralized tolling system.

• Deploy additional Automated Regional Justice Information System mobile applications to increase information sharing and enhance GIS services, including GPS-enabled alerts and a mapping dashboard; collaborate on parole and probation information sharing throughout the region, and expand use of the graffiti tracking program.

3 Next Steps

SANDAG staff will meet with regional and federal funding agencies in early February to review priorities for the use of key federal planning funds for the FY 2015 Program Budget/OWP. In March, the Executive Committee will be asked to accept the Draft FY 2015 Program Budget (reflecting comments and direction received at the February 14, 2014, meeting), authorize distribution of the document to the funding agencies for review, and recommend that the Board of Directors accept the Draft FY 2015 Program Budget on March 28 for distribution to member agencies and other interested parties for review.

In April and May staff will provide additional reviews, as needed, to the Executive Committee. Board approval of the Final FY 2015 Budget is currently scheduled for May 23, 2014.

ANDRÉ DOUZDJIAN Director of Finance

Attachments: 1. FY 2015 SANDAG Strategic Goals and Areas of Emphasis 2. FY 2015 Preliminary Planning and Operations Work Element Objectives

Key Staff Contact: Tim Watson, (619) 699-1966, [email protected]

4 Attachment 1

SANDAG MISSION

The 18 cities and county government are SANDAG serving as the forum for regional decision- making. SANDAG builds consensus; plans, engineers, and builds public transit; makes strategic plans; obtains and allocates resources; and provides information on a broad range of topics pertinent to the region’s quality of life.

FY 2015 STRATEGIC GOALS AND AREAS OF EMPHASIS

To guide the development of the annual Program Budget and Overall Work Program (OWP), the SANDAG Board of Directors established the following agencywide Strategic Goals, which are long- term areas of achievement that remain relatively unchanged on an annual basis. Supporting these Strategic Goals are the Areas of Emphasis, which are updated each year to highlight particular areas of focus for the coming year.

Strategic Goals

1. Implement the regional vision and guiding principles through development of San Diego Forward: The Regional Plan and by providing constructive input into the next federal surface transportation act and other key federal and state legislation.

2. Improve mobility by providing more transportation choices through implementation of TransNet, public transportation, goods movement, Transportation Demand Management (TDM), Intelligent Transportation Systems (ITS), and Active Transportation.

3. Develop and implement strategies to improve the quality of life in the region as characterized by a sustainable economy, healthy environment, public safety, and more housing choices, consistent with the components of the Regional Plan and the SANDAG mission. Take advantage of regional resources and partnerships to advance strategic initiatives.

4. Enhance organizational effectiveness both internally and externally through continuous improvements and fiscal discipline.

5. Facilitate and leverage emerging technologies and pursue innovative solutions to fiscal, economic, and environmental challenges and opportunities.

Areas of Emphasis

The highest priorities for SANDAG during FY 2015 are the following Areas of Emphasis:

. Modeling, Research, Estimates, and Forecasts. Employ new technologies, methodologies, and models, including the activity-based transportation model and the Production, Exchange, and Consumption Allocation System (PECAS) land-use model to enhance and expand research and analysis capabilities, equipping SANDAG to effectively meet the needs of internal and external customers through comprehensive assessment of complex policy and operational issues, today, and into the future.

. Sustainable Development: Planning and Strategies. Formulate integrated planning, funding, and implementation strategies for investment with key partner agencies and

stakeholders that result in the advancement of the region’s sustainability goals and policies. Incudes a coordinated planning process that will lead to the implementation of the Regional Plan. Other key focus areas are smart growth, integrated multi-modal transportation planning, habitat conservation, shoreline preservation, water quality, and emerging technologies. Participate in discussions and encourage sustainable strategies in other areas such as energy and water supply.

. Sustainable Mobility Programs and Services. Collaborate advanced planning and implementation efforts between SANDAG, Caltrans, transit operators, and other partner agencies to reduce congestion, deliver mobility programs and projects, improve reliability, enhance customer service, and address air quality and climate change goals. Deliver other projects and programs that are sustainable from financial, environmental, and community health perspectives, including transportation demand, systems management, transit/social services, and Active Transportation.

. Intermodal Planning and Implementation. Prepare plans and investment strategies for evolving high-level concepts for intermodal transportation hubs and corridors, including border crossings; highway/rail improvements; regional integration of toll road and managed lanes systems; an Intermodal Transit Center (ITC) at the San Diego International Airport; and high-speed, intercity, and freight rail services, which will support the San Diego region’s connectivity to the global economy.

. Internal and External Coordination and Partnership. Coordinate within the agency to enhance organizational effectiveness as well partnering with federal, state, and local agencies to ensure rapid delivery of projects; strategic efforts to increase communications with member and partner agencies, committees, and the public.

. Regional Operations and Services. Manage and optimize operational programs and customer services to deliver enhanced mobility and public safety services for the region. Provide maintenance and support of intelligent transportation and regional law enforcement data systems for travelers and public safety agencies in the San Diego region.

6 Attachment 2

Project Objective Statements for Planning and Regional Operations by Area of Emphasis

AREA OF EMPHASIS: MODELING AND RESEARCH

23000.00 - Travel Demand Modeling

Objective - A critical function of the regional models group is to ensure that the transportation model is up-to-date and reflects the current and future needs of SANDAG. Objectives of this work element are to: (1) maintain the transportation model transit and highway networks; (2) provide continuous quality control of the modeling process, input data, and output results; (3) integrate new travel information; (4) allow flexibility to address policy issues that may arise; (5) develop new procedures to address new or modified laws, regulations, and guidelines for conducting transportation forecasting; and (6) change procedures to remain compatible with state air quality programs or federal user benefit programs; and (7) prepare for the needs of the next Regional Transportation Plan.

23004.00 - Land Use, Demographic, and Econometric Modeling

Objective - A critical function of the Regional Models Group is to ensure that the land use, demographic, and econometric models are up-to-date and reflect the current and future needs of SANDAG. The objective of this work element is to maintain a small-area land-use simulation model and maintain the current suite of tools, including the regional Demographic and Economic Forecast Model. These models, combined with the activity-based transportation model, provide the basis for almost every planning activity at SANDAG. They also provide SANDAG a sophisticated suite of policy analysis and simulation tools.

23005.00 - Regional Demographic and Economic Estimates

Objective - The objective of this work element is to produce up-to-date population, housing, income, and jobs estimates that serve a wide variety of planning and analytical uses, both at SANDAG and other agencies across the region. The annual demographic and economic estimates (e.g., housing, population, and income) support state and federal requirements, including the Regional Transportation Plan, Regional Housing Needs Assessment, and other SANDAG programs.

23006.00 - Geographic Information Systems (GIS) to Support Modeling, Forecasting, and Planning Efforts

Objective - The objectives of this work element are to: (1) create, update, document, and disseminate GIS databases, imagery, applications, and services for staff and member agency use, and to guide and support SANDAG work program area GIS activities; (2) provide technical support for desktop software, web-based mapping applications, and data services; and (3) provide data and project management support for SANDAG's regional models, including the Production, Exchange, and Consumption Allocation System (PECAS) and Activity-Based Model (ABM). Emphasis in FY 2015 will be to: (1) collaborate with the regional modeling team to support the spatial data needs for ABM, PECAS, and other models used for regional analysis and decision-making; (2) develop and maintain GIS data and applications in support of initiatives such as San Diego Forward: The Regional Plan, TransNet Environmental Mitigation Program, and the Smart Growth Incentive Program; and

7 (3) develop solutions to support the integration of GIS data, model output, and capital/operational project information into visualization products and services to support information sharing, improved storytelling capabilities, and agency marketing and transparency.

23007.00 - Data Visualization, Dissemination, and Analysis Methods

Objective - The objective of this work element is to provide analysis and visualization tools for policymakers, stakeholders, and staff to better understand issues and to help them make informed decisions. Emphasis in FY 2015 will be to: (1) develop geographic information system (GIS) models, procedures, and analysis in support of SANDAG programs; (2) develop visualizations, including maps, graphics, charts, and animations for SANDAG plans, including the Series 13 Forecasts and San Diego Forward: The Regional Plan; (3) develop visualizations for outputs from the Activity- Based Model and the Production, Exchange, and Consumption Allocation System models; (4) enhance SANDAG web application interface design, including San Diego Forward: The Regional Plan public website, Keep San Diego Forward, and all GIS web mapping applications; (5) research and implement the newest 3D visualization and modeling technology; and (6) implement SANDAG cartographic standards and strategies.

23009.00 - Data Acquisition and Maintenance

Objective - The objective of this work element is to acquire, maintain, and document data to support population, land use, and transportation model development and performance monitoring indicators for the region's transportation network. This data and information supports regional plans, the State of the Commute, and the Sustainable Competitiveness Index. Emphasis in FY 2015 will be to increase the frequency of reporting from annual to quarterly and expand the level of detail in the data, particularly as related to Moving Ahead for Progress in the 21st Century.

23011.00 - Transportation Studies

Objective - The objective of this work element is to conduct transportation studies and surveys that are used for transportation and transit planning purposes and for transportation modeling. Emphasis in FY 2015 will be starting the 2014 Onboard Transit Passenger Survey and preparing for the 2015 Household Travel Survey as well as conducting the 2014 Transit Public Opinion Survey.

23012.00 - Regional Economic and Municipal Finance Services

Objective - The objectives of this work element are to: (1) provide economic and fiscal analysis to support SANDAG projects and programs, including implementation of the Regional Comprehensive Plan, Regional Transportation Plan, and TransNet; (2) periodically update the San Diego Regional Economic Prosperity Strategy, the San Diego Regional Indicators of Sustainable Competitiveness, the San Diego Regional Employment and Residential Lands Inventory, and the San Diego Regional Employment Clusters; and (3) provide technical assistance and support to local jurisdictions, economic development organizations, and other agencies to address issues that affect the regional and local economies and that affect municipal budgets and financial conditions. Emphasis in FY 2015 will be on San Diego Forward: the Regional Plan.

8 23014.00 - Regional Census Data Center Operations

Objective - SANDAG is the Regional Census Data Center (RCDC) for San Diego County. As the RCDC, SANDAG coordinates with the state data center network and the U.S. Census Bureau to collect and disseminate data. Coordinating these activities helps to ensure that the region has the best data available for population and housing estimate and forecast models, transportation models, and other regional data needs. Emphasis in FY 2015 will be to help SANDAG staff, member agencies, and the public understand the annual census data releases. INFO publications and web-based information will be prepared to ensure wide access to relevant census data, as well as workshops held regarding data use.

23015.00 - Multimodal TSM and TDM Assessment Modeling Tool

Objective - Transportation System Management (TSM) and Transportation Demand Management (TDM) transportation strategies have been identified in the 2050 Regional Transportation Plan as key emphasis areas for improving mobility and efficiency. The objective of this work element is to develop an integrated Activity-Based Model (ABM) component to measure and calculate the benefits of TSM and certain TDM strategies. The work effort will incorporate TSM and TDM strategies into the SANDAG ABM to measure and calculate multimodal regional, corridor, and project-specific benefits or costs resulting from TSM and TDM strategies in the San Diego region. Emphasis in FY 2015 will be on development of a dynamic traffic assignment model kicked off in FY 2014 and on Activity-Based Model enhancements for TDM.

23400.00 - CJ - Criminal Justice Clearinghouse

Objective - The objectives of this work element are to: (1) support local criminal justice planning and policy-making by providing analysis of crime and other public safety statistics; (2) maintain current and historical information about crime and public safety strategies; (3) serve as the infrastructure for developing research designs to evaluate the effectiveness of crime prevention and reduction strategies; and (4) support the Public Safety Committee. Emphasis in FY 2015 will be to produce timely and relevant publications that provide useful information to the community, practitioners, and elected officials regarding effective and cost-efficient public safety strategies.

23401.00 - CJ - Substance Abuse Monitoring (SAM)

Objective - The SAM Project is one of the only indicators in the San Diego region that monitors drug-use trends among juvenile and adult offenders over time. The objective of this work element is to support practitioners and policymakers in assessing the effectiveness of prevention activities and changes in drug trends. Emphasis in FY 2015 will be to continue to measure drug use and other behavior trends among arrested adults and juveniles; and to conduct interviews with adults booked into three San Diego County detention facilities and juveniles booked into San Diego County Juvenile Hall on a biannual basis about their alcohol and other drug use history.

23450.00 - CJ - Adult Criminal Justice Projects (Group Program)

Objective - The Criminal Justice Research Unit has long established itself as a reliable entity to provide quality research and evaluation in support of local law enforcement and public safety agencies. Emphasis in FY 2015 will be to work closely with law enforcement partners, compiling valid and reliable statistics, conduct rigorous process and impact evaluations of other efforts aimed

9 at maintaining public safety, and reducing the risk of recidivism for adult offenders. Of particular emphasis this year will the evaluation of the county's implementation of the Assembly Bill 109 (Blumenfield, 2011) realignment plan by providing support in documenting and monitoring the potential regional impacts of this unprecedented restructuring of the California's justice system.

23500.00 - CJ - Youth Evaluation Projects (Group Program)

Objective - For a number of years, the Applied Research (AR) division has partnered with the San Diego County Probation Department to evaluate many of its programs, ranging from prevention to graduated sanctions for adjudicated youth. The AR division also has developed partnerships with other youth-serving entities in the region to provide quality evaluations that support its funding and mission to provide innovative juvenile justice prevention and intervention services to youth. Emphasis in FY 2015 will be to effectively track outcome measures for ongoing projects related to reducing juvenile delinquency and victimization as well as to evaluate programs directed at supporting at-risk youth populations.

31009.00 - Series 13 Regional Growth Forecast - Objective

The objective of this work element is to prepare the next growth forecast for use in San Diego Forward: The Regional Plan and other regional and local planning efforts. Emphasis in FY 2015 will be finalizing all land use inputs for inclusion in the Series 13 Regional Growth Forecast and Sustainable Communities Strategy.

75000.00 - SANDAG Service Bureau

Objective - The SANDAG Service Bureau is a fee-based operation that provides customized data and reports to member agencies, nonmember government agencies, tribal governments, private organizations, and individuals. It includes work conducted through SourcePoint, the nonprofit public benefit corporation chartered by SANDAG in 1982. Emphasis in FY 2015 will be to provide professional products and services in the areas of strategic planning, GIS mapping, demographic data and analysis, economic services, transportation modeling and analysis, and survey design and analysis to established and new clients. Activities also could include providing construction management services and access to engineering on-call contractors to interested member agencies and/or providing other supportive services to member agencies. The FY 2015 budget reflects the anticipated labor costs of providing products and services for both the Service Bureau and SourcePoint.

AREA OF EMPHASIS: SUSTAINABLE DEVELOPMENT

31004.00 - Regional Transportation Planning and Implementation

Objective - The objective of this work element is to continue the implementation and monitoring of the 2050 Regional Transportation Plan and its Sustainable Communities Strategy (RTP/SCS), which was adopted in FY 2012. Emphasis in FY 2015 will be to coordinate with the U.S. Department of Transportation and Caltrans in the implementation of metropolitan planning provisions of Moving Ahead for Progress in the 21st Century, including performance management.

31006.00 - Air Quality Planning and Transportation Conformity

Objective - The objective of this work element is to comply with federal requirements for air quality conformity analysis. Emphasis in FY 2015 will be: (1) interagency consultation for amendments to the 2012 Regional Transportation Improvement Program (RTIP); (2) preparation of transportation conformity determinations and regional emissions analysis for San Diego Forward: The Regional Plan and the 2014 RTIP and its amendments; (3) implementation of the federal standard for 8-Hour Ozone; and (4) compliance with updates to transportation conformity rules and procedures. This work element will be prepared in accordance with state and federal guidelines.

31007.00 - Goods Movement Planning

Objective - The objectives of this work element are to: (1) collaborate with interregional, state and federal agencies, and goods movement organizations to coordinate the development, operations, funding, and legislative and regulatory changes for a goods movement transportation system; and (2) coordinate with the region’s freight agencies to continue development and implementation of the regional freight strategy as outlined in the 2050 Regional Transportation Plan. Emphasis in FY 2015 will be to support the development of San Diego Forward: The Regional Plan through the refinement of the Goods Movement Strategy.

31008.00 - Comprehensive Freight Gateway Study

Objective - The objective of the freight gateway study update will be to adjust the baseline freight forecast from 2007-2050 to 2011-2050. The updated study will be used to inform San Diego Forward: The Regional Plan, and to keep the regional freight stakeholders informed of freight trends. Emphasis in FY 2015 will be to complete the updated Freight Gateway Study.

31018.00 - CV Light Rail Trolley Improvement Study

Objective - Grade separations at E, H, and Palomar Streets in the City of Chula Vista are highly- ranked projects in the regional rail grade separation priority list. The purpose of this project is to develop geometric alternatives for constructing the grade separations as well as relocating the Trolley station platform at each location. The report shall include considerations for at grade, aerial, and depressed Trolley platform locations. An alternative to grade separate E, F, and H Streets as one project also will be studied and considered. Visual simulations will be prepared for each of the various alternatives. Alternative rail and street profiles, station location alternatives, preliminary station layout plans, and detailed cost estimates also will be developed. The report will be prepared with input from and in cooperation with the Metropolitan Transit System, Caltrans, the City of

11 Chula Vista, and SANDAG. The emphasis in FY 2015 will be to complete a Project Report/Environmental Document for the Palomar Street Grade Separation Project.

31020.00 - San Diego Forward: The Regional Plan

Objective - The objective for this element is to continue work on the development of San Diego Forward: The Regional Plan, which will lead to plan adoption in 2015. San Diego Forward: The Regional Plan merges the update of the Regional Transportation Plan and Sustainable Communities Strategy (RTP/SCS) with an update of the Regional Comprehensive Plan in order to provide an easily accessible document that includes an overall vision for the San Diego region. This work element will be prepared in accordance with state and federal guidelines. Emphasis in FY 2015 will be to finalize the preferred revenue constrained transportation network, develop the draft plan, including air quality analysis, perform social equity analyses, prepare the draft Environmental Impact Report, finalize prior planning commitments included in the 2050 RTP/SCS, and continue to implement public outreach strategies.

32000.00 - Regional Quality of Life Funding Strategies

Objective - The objective of this work element is to develop and implement a Quality of Life funding strategy to meet regional needs for habitat conservation plans, shoreline preservation activities, water quality improvements, and transit service enhancements (beyond what is funded already), or the funding priorities directed by the Board. Emphasis in FY 2015 will be to conduct comprehensive surveying and public-outreach activities, and develop an expenditure plan for use in a potential funding measure.

32001.00 - Regional Habitat Conservation Planning

Objective - The objectives of this work element are to: (1) conduct advance planning and implementation of the region’s habitat preservation system by assisting in the development and implementation of the regional habitat conservation plans; (2) strategic application of the TransNet Environmental Mitigation Program funding to assist regional open-space acquisitions, management, and monitoring efforts; and (3) pursue funding through federal, state, and/or regional sources to meet the long-term requirements for various environmental programs. Emphasis in FY 2015 will be to support transportation project mitigation needs and regional open space conservation through land acquisition, habitat restoration, and identification of best management practices.

32002.00 - Regional Shoreline Management Planning

Objective - The objectives of this work element are to: (1) implement or facilitate the implementation of regional beach restoration through large-scale and opportunistic replenishment activities; and (2) continue the Regional Shoreline Monitoring Program. Emphasis in FY 2015 will be to monitor the results of the 2012 Regional Beach Sand Project, continuing the baseline Regional Shoreline Monitoring Program, and coordinating with local coastal jurisdictions on the Sand Compatibility Opportunistic Use Program and the U.S. Army Corps of Engineers Encinitas-Solana Beach Coastal Storm Damage Reduction Project.

12 32003.00 - Regional Energy/Climate Change Planning

Objective - The objective of this work element is to save energy and reduce greenhouse gas emissions related to transportation fuels, electricity, and natural gas, as well as address climate change mitigation and adaptation. This is done by implementing measures identified in the Sustainable Communities Strategy, Regional Energy Strategy, Climate Action Strategy, and other regional plans. Emphasis in FY 2015 will be climate mitigation and adaptation for San Diego Forward: The Regional Plan; support for plug-in electric vehicle chargers and clean transportation options in regional infrastructure projects; and review of climate change adaptation policies in relation to SANDAG projects.

32007.00 - San Diego Gas and Electric (SDG&E) Local Government Partnership

Objective - The SDG&E Partnership enables SANDAG, in partnership with SDG&E, to make energy efficiency outreach, planning, and engineering assistance available to local governments under the Energy Roadmap Program. Member agencies are offered energy management plans, or "Energy Roadmaps," that can help jurisdictions save money, use less energy, and reduce greenhouse gas emissions in local government operations and their communities. Emphasis in FY 2015 will be to expand region-wide energy reduction efforts, support implementation of the Energy Roadmaps, and support energy-related aspects of climate action planning.

33001.00 - TransNet Smart Growth Incentive Program

Objective - The objective of this work element is to administer and implement the TransNet Smart Growth Incentive Program (SGIP). The SGIP is a strategic initiative of the Regional Comprehensive Plan that provides a direct incentive for the coordination of local land use plans with regional transportation plans. Emphasis in FY 2015 will be to monitor the progress of previously awarded grants as well as to prepare the next call for projects.

33004.00 - Regional Transit-Oriented Development Strategies

Objective - The objective of this project is to develop a Transit-Oriented Development (TOD) policy/strategy for the San Diego region, an action called for in the 2050 Regional Transportation Plan and its Sustainable Communities Strategy. This project will continue and build upon the TOD and smart growth work in which SANDAG has been involved. Emphasis in FY 2015 will be on working with a consultant, local jurisdictions, and the transit agencies to complete the Regional TOD Strategy.

33008.00 - Community Transformation Grant

Objective - This grant-funded project continues work on public health and regional planning that began under the Healthy Works II collaboration with County Health and Human Services, starting in FY 2012. Assuming continued funding from the U.S. Center for Disease Control in Federal Fiscal Year 2015, the emphasis for FY 2015 is to continue work to institutionalize some of the programs and principles developed under the Healthy Works Program, within SANDAG, and to provide technical assistance to local agencies as requested. This will improve public health as the region begins to plan and develop the built environment in a way that better supports healthy communities, physical activity, and access to healthy food.

13 33303.00 - Intergovernmental Review (IGR) Objective - The objective of the IGR Program is to oversee the review of local environmental documents and monitor current and future development plans for potential impacts on the regional transportation network. This work is done in coordination with other work elements to facilitate implementation of the Regional Comprehensive Plan and Regional Transportation Plan. This work also is done in collaboration with Caltrans, the Metropolitan Transit System, and the North County Transit District. Emphasis in FY 2015 will be to continue to improve coordination with partner agencies, to enhance intra-agency project tracking and circulation, and to provide comments on projects with regional impacts. 34001.00 - Interregional Planning: Imperial, Orange, and Riverside Counties Objective - The objective of this work element is to oversee and coordinate the planning activities that impact the border of the San Diego region with Imperial, Orange, and Riverside counties. Imperial County: Emphasis in FY 2015 will be for SANDAG to continue to collaborate with Imperial County Transportation Commission, the Southern California Association of Governments (SCAG), and Caltrans on areas of mutual planning interest, including active transportation on the border. Orange County: Emphasis in FY 2015 will be for SANDAG to continue to meet with Orange County Transportation Authority, SCAG, and Caltrans to exchange information on long-range planning activities. Riverside County: Emphasis in FY 2015 will be for SANDAG to continue to meet with Riverside planning agencies to discuss planning efforts within the context of Interstate 15 Interregional Partnership strategic initiatives, and to identify further interregional collaboration opportunities. 34002.00 - Interregional Planning: Binational Planning and Coordination Objective - The objective of this work element is to oversee and coordinate binational planning activities. This includes support of the Borders Committee and the Committee on Binational Regional Opportunities (COBRO), as well as collaboration with the City of Tijuana, the Metropolitan Planning Institute, the State of Baja California, and tribal governments. Emphasis in FY 2015 will be to work with the Consulate General of Mexico in San Diego as well as the municipalities and the State of Baja California to jointly address and promote relevant border issues and to implement the recommendations from the 2013 binational seminar. 34005.00 - Interregional Planning: Tribal Liaison Program Objective - The objectives of this work element are to: (1) continue the government-to- government framework for engaging the 17 federally-recognized sovereign tribal nations in the region in the regional transportation planning process as mandated by federal and state regulations; (2) coordinate and consult with tribal governments on major transportation, land use, and other regional planning initiatives to ensure their timely and meaningful input into the decision-making process; (3) facilitate the substantive involvement of the Southern California Tribal Chairmen's Association in the SANDAG policy-making structure; (4) provide a technical forum for discussing tribal transportation issues on an ongoing basis through the Interagency Technical Working Group on Tribal Transportation Issues; and (5) collaborate with intertribal organizations working in policy areas within its purview such as Native American Environmental Protection Coalition, Kumeyaay Diegueno Land Conservancy, and the Reservation Transportation Authority. The emphasis in FY 2015 will be to implement the Tribal Consultation Plan to involve tribal nations in the development of San Diego Forward: The Regional Plan.

14 AREA OF EMPHASIS: SUSTAINABLE MOBILITY

33000.00 - Smart Mobility Services to Member Agencies (Group Program)

Group Objective - The objective of this group program is to provide the most valuable set of smart mobility services and projects as identified by partnering with member agencies.

33002.00 - Active Transportation Planning and Programs

Objective - The objective of this work element is to support the agency efforts to improve mobility and access through coordinated, active transportation planning and project development activities. The Regional Bicycle Plan and the Active Transportation Program support the goals and principles of the Regional Comprehensive Plan and the Regional Transportation Plan to improve mobility, provide travel choices, improve public health, and reduce greenhouse gas emissions by increasing the mode share for walking and bicycling trips. Emphasis in FY 2015 will be on implementation of the Bike Plan Early Action Program.

33003.00 - TDA/TransNet Bicycle, Pedestrian, & Neighborhood Safety Traffic-Calming Program

Objective - The objective of this work element is the administration of the Active Transportation Grant Program. Transportation Development Act/TransNet Bicycle, Pedestrian, and Neighborhood Safety Traffic-Calming funding provides support for local and regional bicycle and pedestrian projects and programs. Emphasis in FY 2015 will be to monitor the progress of previously awarded grants as well as to prepare the next call for projects.

33007.00 - Active Transportation Implementation Strategy

Objective - The 2050 Regional Transportation Plan included an action to develop an Active Transportation Implementation Strategy. Emphasis in FY 2015 will be on continued integration of active transportation into San Diego Forward: The Regional Plan, development of active transportation project plans in transit station and highway project areas, and coordination with transit planning and Mobility Management and Project Implementation staff on incorporating active transportation into their projects.

33009.00 - San Diego River Trail

Objective - This multiyear project will continue development of the San Diego River Trail on-going coordination with local jurisdictions and the San Diego River Conservancy, and by beginning to develop small scale trail improvement projects. Emphasis in FY 2015 will be to complete conceptual design for one or two high-priority projects in the corridor, based on the outcome of a corridor gaps analysis to be completed in FY 2014.

33010.00 - Border Health Equity Transportation Study

Objective - The Border Health Equity Transportation Study will develop a model that brings together existing studies under the umbrella of public health to provide an analysis and recommendations that will impact regional decision-making. The project will assess the health impacts and benefits of providing active transportation facilities and access to public transit to and

15 from the San Ysidro border. It also will serve as a model for other border analysis and for jurisdictions with similar border-related issues. Emphasis in FY 2015 will be to complete the Final Report and Monitoring and Evaluation Plan.

33100.00 - Smart Mobility Services to the Public (Group Program)

Group Objective - The objective of this group program is to implement services to the public that reduce traffic congestion and improve mobility throughout our region. The services provided for this group of projects are described below.

33104.00 - Interstate 15 (I-15) Violation Enforcement System (VES) Study

Objective - The objective of this work element is to deploy and test state-of-the-art VES strategies for the FasTrak® value pricing and High Occupancy Vehicle lanes. This project is a systems- engineering effort and builds upon the I-15 Managed Lanes Toll Collection System that is being deployed on the I-15 Express Lanes between State Route 163 and State Route 78. Emphasis in FY 2015 will be on: (1) concluding vehicle occupancy enforcement research and stakeholder outreach and marketing research; (2) conducting a field testing of viable toll enforcement technologies, pending availability of viable equipment; and (3) implementing a toll enforcement plan and policy development to be used for continued consideration of toll/vehicle occupancy enforcement on the I-15 and future high occupancy toll facilities planned for the region.

33105.00 - 511 Advanced Traveler Information Service (511 ATIS)

Objective - The objective of this work element is to enhance the existing 511 ATIS for the region. Emphasis in FY 2015 will be to transition the environment to a new vendor for the next generation of 511, promote enhanced services to the region, and monitoring system performance of the new system.

33107.00 - Transportation Demand Management (TDM) Program

Objective - The objective of this work element is to manage demand on the regional transportation system by providing commuter and employer programs and services aimed at promoting use of alternatives to driving alone. Emphasis in FY 2015 will be implementing, monitoring, and measuring program goals established in the 2050 Regional Transportation Plan; and enhancing the iCommute Program Management Tool.

33107.01 - TDM - Planning Studies/Pilot Projects

Objective - The objective of this work element is to conduct Transportation Demand Management (TDM) studies/plans and to develop pilot projects aimed at reducing vehicle miles traveled. Emphasis in FY 2015 includes completing the Economics of TDM Study and developing a parking management toolbox in support of San Diego Forward: The Regional Plan.

33107.02 - TDM - Employer Services

Objective - The objective of this work element is to work directly with employers and local jurisdictions to assist them with the development of Transportation Demand Management programs for their employees. Emphasis in FY 2015 is to provide focused outreach to medium and

16 large-sized employers in major job centers throughout the region, including the Interstate 15 Corridor, and to conduct a telework demonstration project with up to ten employers.

33107.03 - TDM - Program and Service Delivery

Objective - The objective of this work element is to assist with management of demand on the regional transportation system by providing commuter programs and services aimed at promoting use of alternatives to driving alone. Emphasis in FY 2015 is to deliver commuter services, including Guaranteed Ride Home, Regional Bicycle Locker Program, SchoolPool, and other incentives.

33107.04 - TDM - Regional Vanpool Program

Objective - The objective of this work element is to administer the Regional Vanpool Program and complete the annual National Transit Database report to the Federal Transit Administration. Emphasis in FY 2015 will be to increase participation in the Vanpool Program, particularly among military and federal employers, and employers along the Interstate 15 Corridor.

33107.08 - TDM - North Coast Corridor Transportation Demand Management Plan

Objective - The Interstate 5 North Coast Corridor (NCC) Transportation Demand Management (TDM) Program provides geographically focused and context specific TDM solutions to manage congestion before, during and after construction in the NCC. Emphasis in FY 2015 is on implementing the Golden Triangle consolidated TDM and construction outreach pilot project aimed at increasing employer participation in the iCommute Program in that area.

33107.10 - TDM - Active Traffic & Demand Management Strategy for I-805 South

Objective - The project will develop an Active Transportation and Demand Management (ATDM) Plan for the southern portion of Interstate 805 (I-805) in the San Diego region. Emphasis in FY 2015 will be to evaluate the full range of available demand management and traffic management strategies and integrate select strategies into a holistic framework for managing the corridor. The ATDM strategy will be integrated into the I-805 South Project to support the investment in Express Lanes and bus rapid transit.

33107.11 - TDM - Outreach Program

Objective - The objective of this work element is to manage the public outreach, communications, and marketing of Transportation Demand Management programs and services. Emphasis in FY 2015 includes planning and coordinating campaigns and events designed to engage and encourage employer, school, and public participation in programs that reduce vehicle miles traveled.

33117.00 - State of the Commute - Performance Monitoring Report

Objective - The objective of this effort is to provide annual performance monitoring reports on the State of the Commute for the San Diego region in accordance with the TransNet Extension Ordinance. Emphasis in FY 2015 will be to: (1) coordinate transportation data collection, assessment, and analysis activities; (2) work with local agency partners to gain consensus on ongoing transportation performance reporting indicators; and (3) oversee and coordinate development of the State of the Commute report.

17 33118.00 - Connected Vehicle Development Program

Objective - The objective of this work element is to prepare the San Diego region for an expected 2014 Federal ruling that will mandate all vehicles be connected to an intelligent communications infrastructure. This infrastructure will be used to greatly enhance the safety and mobility of the national transportation system. The major work for this element will be to establish a Connected Vehicle Plan for the San Diego region, develop criteria for a pilot demonstration, and position SANDAG and the region for the expected federal rule making for Connected Vehicle deployments. The emphasis in FY 2015 is to complete a Connected Vehicle Concept of Operations, High-level Requirements, and Deployment Strategy for the San Diego region.

33306.00 - Interstate 8 (I-8) Corridor Analysis

Objective - The I-8 Corridor Study will examine multimodal transportation alternatives to address future regional and local travel demand within this regionally significant corridor. The study area includes a 10-mile stretch of the I-8 corridor from Sunset Cliffs Boulevard through College Avenue, in the City of San Diego, and involves SANDAG, Caltrans, City of San Diego, Metropolitan Transit System, and other key stakeholders. Emphasis in FY 2015 will be on completing technical studies, developing an implementation strategy, and finalizing document findings and recommendations.

332000 .0 - Transit Service Planning (Group Program)

Group Objective - This group program of transit planning projects relates to various monitoring, planning, and development efforts aimed at assisting the transit agencies (Metropolitan Transit System [MTS] and North County Transit District [NCTD]). Some of the following activities are mandated as part of the consolidated agency responsibility, others involve active partnering with MTS and NCTD, improving regional services in an environment of constrained funding.

33201.00 - Short-Range Transit Service Activities

Objective - The objectives of this work element are to: (1) fulfill the short-range transit planning functions of SANDAG, including preparation of the Regional Short-Range Transit Plan, Transportation Development Act performance monitoring, federal Title VI monitoring and reporting, fare policy development, and fare setting; (2) support the Compass Card Program; (3) manage the competitive process for TransNet Senior Services Program and monitoring grant recipients; (4) prepare transit area studies, operations plans, and planning input for TransNet projects; (5) provide assistance to transit operators; and (6) oversee the Consolidated Transportation Services Agency. Emphasis in FY 2015 will be to effectively manage the TransNet project work and merge the near term projects from the Regional Transportation Plan into the Short-Range Transit Plan component of the Coordinated Plan.

33202.00 - Coordinated Plan and Job Access and Reverse Commute (JARC)/New Freedom (NF) Programs

Objective - The objective of this work element is to fulfill the legislative requirements of SAFETEA- LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users) and Moving Ahead for Progress in the 21st Century (MAP-21) to prepare, update, and maintain a Coordinated Human Services and Public Transportation Plan for San Diego County and to award and administer grants for the JARC and New Freedom (and under MAP-21 5310) Programs. The grant award and

18 administrative process includes holding a competitive process for JARC/NF and monitoring performance of the grant subrecipients, including the collection of data to meet federal requirements, and reporting on progress to the Transportation Committee. Emphasis in FY 2015 will be to implement the new requirements under MAP-21 into the competitive process and grant administration.

33203.00 - Passenger Counting Program (PCP)

Objective - The objective of this work element is to undertake the regional PCP that fulfills a Federal Transit Administration (FTA) requirement for the transit operators and provides data required for local transit planning and performance monitoring. This project also manages the Trolley and SPRINTER ridership estimation counts, which are required by the FTA and are used to manage local revenue-sharing requirements between Metropolitan Transit System (MTS) and North County Transit District (NCTD). Also, it includes funds to cover other minor surveys required to manage the revenue-sharing agreements, including COASTER, BREEZE, and Day Pass counts, in addition to conducting the annual counts. Emphasis in FY 2015 will be to continue to work with MTS and NCTD to incorporate Automatic Passenger Counter technology into MTS contract and NCTD COASTER vehicles, moving toward fully automating the PCP. Additionally, SANDAG will work with MTS and NCTD to use Compass Data to generate transfer data of riders. This data will be used to enhance the service planning that all three agencies conduct.

33206.00 - Transit Planning Internship

Objective - The objective of this work element is to manage the Transit Planning Internship Program that provides professional development opportunities for interns in the Masters in City Planning Graduate Program at San Diego State University. Emphasis in FY 2015 will be on continuing the program of training and mentoring interns in transit planning activities.

33208.00 - New Freedom Pass-Through

Objective - The objective of this work element is to facilitate pass-through funding for Federal Transit Administration Section 5317 New Freedom grants. The administration and oversight of these grants is funded separately in work element 33202. Emphasis in FY 2015 will be the transition to administering Section 5310 projects under Moving Ahead for Progress in the 21st Century.

33209.00 - Job Access and Reverse Commute (JARC) Pass-Through

Objective - The objective of this work element is to provide pass-through funding for Federal Transit Administration Section 5317 JARC grants. The administration and oversight of these grants is funded separately in work element 33202. Emphasis in FY 2015 will be procuring vehicles.

33210.00 - 2050 Regional Transportation Plan (RTP) Transit Plan - Advance Planning

Objective - The 2050 RTP contains a number of new transit projects that have no project-level planning work to detail alignments and station locations. Initial advanced planning studies will be conducted to start to frame the scope project details, identify opportunities and constraints, and refine capital budgets. Coordinating these studies with local jurisdictions could result in right-of- way reservations/dedications being set aside for these future transit projects. Emphasis in FY 2015

19 will be to begin advanced planning studies on alignments/stations for the three to four priority segments identified in the FY 2014 work effort.

33210.01 - I-805 North UTC Sorrento Valley Transit Study

Objective - The North Interstate 805 Transit Study will evaluate how bus rapid transit (BRT) will connect residential communities in the south county with the University Towne Center/Sorrento Mesa key regional center. Additionally, the study will evaluate the placement of BRT stations, the need for park-and-ride lots, first and last mile needs, and the use of direct access ramps in the corridor. Emphasis in FY 2015 will be to conduct advanced planning studies to refine recommended concepts from the FY 2014 Study.

33211.00 - Veterans Transportation and Community Living Initiative Grant

Objective - The objective of this work element is to administer pass through funding for the Federal Transit Administration (FTA) Veterans Transportation and Community Initiative grant to 211 San Diego and its subcontractors to complete the San Diego County One Call/One Click Partnership Project proposal as approved by the FTA. The project includes the enhancement of the directory of transportation resources, the creation of a one-click transportation website, the provision of a 24/7 live telephone service, the development of a free mobile transportation application for smart phones, and the procurement and installation of at least 20 interactive transportation kiosks at military facilities, workforce one-stops, and other veteran sites. Emphasis in FY 2015 will be completing the resource inventory, mobility assessment, and mobility forums.

33212.00 - Mobility Solutions for Environmental Justice Communities

Objective - The project will focus on identifying key barriers to transportation (including transit, active transportation, and Transportation Demand Management programs) for the City Heights Community, where there has been a long history of challenges to accessing transportation. A Mobility Solutions Toolkit will be developed for City Heights that can then serve as a model for how the Toolkit can be used in other Environmental Justice communities within the San Diego region and statewide.

33300.00 - Subregional Transportation and Land Use Planning

Objective - The objective of this work element is to coordinate the Regional Comprehensive Plan and the 2050 Regional Transportation Plan and its Sustainable Communities Strategy with the local land use and transportation planning processes in the 18 cities and the County of San Diego, Caltrans, transit agencies, tribal governments, and others to improve mobility. This work element includes staff resources to prepare scopes of work and budgets for future subregional and corridor studies and to oversee these studies. Emphasis in FY 2015 will be coordination of transportation planning with local agency plans, and collaborating with partner agencies on the development of the Virginia Avenue Intermodal Transit Center.

AREA OF EMPHASIS: INTERMODAL PLANNING

31011.00 - Destination Lindbergh

Objective - The objective of this work element is to further evaluate the need for an Intermodal Transportation Center (ITC) along the north side of the airport. The basis for the ITC facility is the Long-Range Master Plan that was completed in 2009 to improve ground access while maximizing transit mode share potential, and addressing arterial level of service impacts in the area. The proposed ITC also would improve connectivity for the regional transit system (including the southern terminus for the California High-Speed Rail System). Emphasis in FY 2015 will be assessing the scope of an ITC and completing the Interstate 5 Direct Connector Ramp Project Study Report in light of the Airport Master Plan developed in 2014.

31014.00 - Airport Transit Plan - Phase II

Objective - Overall project objectives are to: increase Airport transit ridership from 1.2 to 5 percent; enhance Airport and regional mobility; and reduce Airport, City of San Diego, and San Diego region vehicular traffic congestion by providing remote terminal bus service to and from the Airport that will offer an alternative to using a single occupant vehicle. Emphasis in FY 2015 is to administer the pass through grant and monitor progress on the Airport Authority’s development of recommendations to increase transit ridership.

33305.00 - San Ysidro ITC Financial Phasing & Strategy

Objective - The objective of this project is to prepare an implementation plan and funding strategy for the preferred San Ysidro Intermodal Transportation Center (ITC) alternative. This project will identify potential public/private partnerships and roles and develop an implementation funding strategy to enable the realization of the ITC and off-street parking resources. Emphasis in FY 2015 will be on completion of the study final report.

34006.00 - LOSSAN Rail Corridor Planning

Objective - The objective of this work element is to coordinate planning and project development along the San Diego segment of the Los Angeles-San Diego-San Luis Obispo (LOSSAN) Rail Corridor. Emphasis in FY 2015 will be on continued coordination between rail planning and project-specific engineering activities within SANDAG as well as with our regional rail partnering agencies through participation in the LOSSAN Joint Powers Authority.

34009.00 - High-Speed Rail Corridor Planning

Objective - The objective of this work element is to coordinate planning, environmental, and conceptual design work for planning purposes along the Los Angeles to San Diego via Inland Empire High-Speed Train section with the California High-Speed Rail Authority, Federal Railroad Administration, and fellow corridor planning agencies, which together make up the Southern California High-Speed Rail Inland Corridor Group. Emphasis in FY 2015 will be to continue environmental planning work for the alignment alternatives in the San Diego region.

34200.00 - New Border Crossing and State Route 11 (SR 11)

Objective - The objective of this work element is to conclude the Intelligent Transportation System (ITS) Pre-Deployment Study and the related Task Order 2 southbound wait time pilot. The ITS project will be used to advance a binational toll collection system, plan of finance for the State Route 11/Otay Mesa East Project, and develop partnership agreements.

21 AREA OF EMPHASIS: INTERNAL AND EXTERNAL COORDINATION

15000.00 - Project Monitoring and Oversight

Objective - The objective of this work element is to provide ongoing coordination and liaison activities with sponsors of regional projects funded by the following programs: State Transportation Improvement Program (STIP); Proposition 1B, including Trade Corridors Improvement Fund (TCIF) and State-Local Partnership Program; Federal Surface Transportation Program; Congestion Mitigation and Air Quality programs; the TransNet Program; and other federal, state, and local programs. This will include ongoing tracking and monitoring of expenditures of San Diego- Coronado Bridge toll revenues. General oversight will be exercised to ensure that the projects stay on schedule, keep within scope and budget, and meet all relevant federal, state, and local requirements regarding the timely use of funds. Emphasis in FY 2015 will be in closing out Proposition 1B TCIF projects to generate savings for additional project programming; programming of the new Active Transportation Program in coordination with Active Transportation staff and California Transportation Commission; implementation of 2014 STIP projects.

15001.00 - TransNet Financial Management

Objective - The objective of this work element is to manage and administer the TransNet local sales tax funding consistent with the TransNet Extension Ordinance and Expenditure Plan. Activities include revenue forecasting, cash-flow analysis, financial planning, evaluation of debt strategies and instruments, fund investments, disbursements, and meeting accounting, auditing, and other reporting requirements. Emphasis in FY 2015 will be on updating the TransNet Plan of Finance and continuing implementation of the TransNet Early Action Program.

15002.00 - Independent Taxpayer Oversight Committee (ITOC) Program

Objective - The objective of this project is to fulfill the requirements of the TransNet Extension Ordinance, which authorizes the ITOC to perform a number of functions relating to independent oversight of the TransNet Program. Emphasis in FY 2015 includes continued oversight of the program and management of the TransNet fiscal and compliance audits for FY 2014, conducting the FY 2015 TransNet Triennial Performance Audit, and continued implementation of the FY 2012 Triennial Performance Audit recommendations.

15003.00 - Funds Management and Oversight

Objective - The objective of this work element is to provide funding oversight that sustains regional transportation systems and facilities by: (1) estimating, administering, and allocating local, state, and federal funds; (2) preparing, adopting, and amending the Regional Transportation Improvement Plan (RTIP); and (3) ensuring compliance and consistency with local, state, and federal laws and regulations related to the administration of these various funding sources, including conducting audits and submitting required federal and state reports. Emphasis in FY 2015 will be the Board adoption of the 2014 RTIP.

15004.00 - Overall Work Program (OWP) and Budget Programs Management

Objective - The objective of this work element is to provide the overall development, management, coordination, and direction for creating and implementing the annual SANDAG

22 Program Budget, including the OWP. The OWP is a required component of the budget and encompasses all of the regional planning activities related to transportation, including supporting infrastructure. Development and monitoring of the OWP ensures that approved planning efforts are completed effectively and efficiently, both within SANDAG and with other agencies (including tribal governments) as guided by the SANDAG Board of Directors. Emphasis in FY 2015 will be to: (1) use a zero-based budget approach to develop and define planning and operational efforts with the goal of balancing agency priorities with expected funding; (2) continue to enhance software tools and other technologies to provide a dynamic foundation for managing the performance of the diverse set of projects and project teams that comprise the SANDAG budget; and (3) ensure effective coordination and compliance with local, state, and federal funding agencies.

23008.00 - Regional Geographic Information Systems (GIS) Data Warehouse

Objective - The objectives of this work element are to: (1) continue initiatives to develop a regional GIS data infrastructure; (2) continue ongoing collaboration with the San Diego Geographic Information Source (SanGIS), a joint powers agreement between the City of San Diego and the County of San Diego to maintain and enhance the existing regional GIS data warehouse; and (3) collaborate with SanGIS to provide web hosting for its online mapping application and web services. In addition, SANDAG will monitor and implement new products, initiatives, and data sources to enhance the regional GIS infrastructure. Emphasis in FY 2015 will be to: (1) develop and maintain applications, databases, and GIS services to support regional collaboration and data sharing with member agencies; (2) maintain and enhance the regional GIS data warehouse to improve accessibility, ease of use, and improved data download monitoring; and (3) identify and implement strategies and technology solutions to facilitate the publishing of public facing GIS data and services.

33111.00 - Regional Intelligent Transportation Systems (ITS) Program Management

Objective - The objectives of this work element are to: (1) provide ongoing management support and strategic planning for the region's ITS Program; (2) conduct liaison activities and explore development opportunities with federal, state, tribal, and local agencies, such as the Federal Transit Administration and Federal Highway Administration, Caltrans, SANDAG member agencies, and other peer agencies; and (3) provide oversight of the region's various ITS deployments, ensuring consistency and compliance with regional ITS architecture and federal mandates. Strategic planning, project management, and regional integration and collaboration are core to the SANDAG mission in fulfilling the region's vision. Emphasis in FY 2015 will be to continue developing ITS strategies, implementation plans, and monitoring of existing strategic goals.

73000.00 - TransNet Public Information Program

Objective - The objectives of this work element are to: (1) implement a public information program to update the public, elected officials, and other stakeholders on TransNet Program activities; and (2) conduct public information activities to obtain input and feedback on TransNet projects. SANDAG endeavors to ensure meaningful involvement of traditionally underrepresented and underserved populations, such as the elderly, disabled, low-income, and minority community groups and leaders. The emphasis for FY 2015 will be on increasing public awareness of the implementation of the Bus Rapid Transit Program, the double-tracking of the Los Angeles- San Diego-San Luis Obispo Rail Corridor, and continuing efforts to implement a multimodal plan

23 that offers travelers more choices, improves the environment, and responsibly invests taxpayer resources.

73001.00 - Public Involvement Program

Objective - The overall objectives of the public involvement program are to inform and involve citizens in the agency’s various programs, projects, and work activities. The agency actively seeks involvement and input from interested citizens and stakeholders in SANDAG work through public meetings and workshops, fully noticed public hearings, and ongoing broad citizen/organization involvement in the planning and decision-making process. This effort also includes regular interaction with the media as well as production and distribution of fact sheets, newsletters, and other publications in printed or online format. The comprehensive SANDAG website also is maintained to provide easy access to meeting notices and agendas, reports, and other information. SANDAG endeavors to ensure meaningful involvement of traditionally underrepresented and underserved populations such as the elderly, disabled, low-income, and minority community groups and leaders. During FY 2015, emphasis will be on collaborating with Caltrans, Metropolitan Transit System, and North County Transit District as well as with federal and state agencies on regional transportation and transit events and projects and providing ongoing support of Transportation Demand Management programs, 511, FasTrak®, SD Safe, and other regional Intelligent Transportation Systems initiatives, as well as the development of San Diego Forward: The Regional Plan and other quality of life initiatives. Emphasis also will be placed on meeting federal standards for social equity and environmental justice programs.

73002.00 - Marketing Coordination and Implementation

Objective - The objectives of this work element are to implement a marketing program to support major work efforts such as Rapid transit, motorist aid programs (callbox and Freeway Service Patrol), FasTrak®, San Diego Forward: The Regional Plan, Mid-Coast Transit Project, and to coordinate marketing efforts among Caltrans and SANDAG corridor directors, the agency’s Service Bureau, and other projects. Emphasis in FY 2015 will be to transition and execute task orders with new on-call marketing/communications firms to support SANDAG projects/programs, implement a social media pilot program for SANDAG programs/projects, and coordinate with partner agencies to share project and service messages.

73003.00 - PC, Internet, and Database Applications

Objective - The objectives of this work element are to: (1) improve work and productivity through the application of database and programming technologies; (2) increase the accessibility of the Regional Information Systems by developing, enhancing, and documenting custom software and database solutions for the Overall Work Program, Finance, and Administrative functions; and (3) provide direct, comprehensive technical support to transit, iCommute, FasTrak®, SANDAG websites, and the SANDAG Intranet. Emphasis in FY 2015 is to update various internal applications, provide support to the Finance Department for budget development and the agency's financial software application (IFAS) reporting, and to provide support to the Public Information Office and Transportation Demand Management team in the maintenance of the current SANDAG website and its ancillary sites, and begin the development of mobile friendly websites and applications.

24 73004.00 - Government Relations

Objective - The objective of this ongoing work element is to manage federal and state legislative activities in accordance with the SANDAG Legislative Program. Emphasis in FY 2015 will be on pursuing additional funding and resources at the federal, state, and local levels to implement SANDAG plans and programs; and efforts to address border transportation infrastructure needs.

73005.00 - Interagency Coordination

Objective - The objective of this work element is to continue to support the SANDAG Board of Directors and Policy Advisory Committees by developing and communicating interagency solutions concerning regional transportation systems, implementation of transportation projects, optimal funding solutions, conflict resolution, and other coordination needs. Emphasis in FY 2015 includes active staff participation and support of existing interagency committees and working groups, including the SANDAG Board of Directors and Policy Advisory Committees, Social Services Transportation Advisory Council, Cities/County Transportation Advisory Committee, San Diego Regional Traffic Engineers Council as well as coordination efforts with Metropolitan Transit System, North County Transit District, tribal governments, and Intergovernmental Review processing.

73006.00 - Social Equity Program

Objective - The concepts of environmental justice and social equity involve analysis of the burdens of plans, policies, and actions to ensure they do not disproportionately affect low-income and minority communities and that these communities share equally in the benefits of the plans, policies, and actions (and are not denied access to federally-funded programs). The emphasis in FY 2015 will be to continue to integrate Title VI agencywide as well as to prepare the Quadrennial Title VI Metropolitan Planning Organization Compliance Report.

AREA OF EMPHASIS: REGIONAL OPERATIONS AND SERVICES

33102.00 - Freeway Service Patrol (FSP)

Objective - The objective of this ongoing program is to reduce freeway congestion and enhance safety by providing a roving motorist-assistance service that patrols designated urban freeways and assists/removes stranded or disabled vehicles. The FSP is an ongoing effort administered by SANDAG in coordination with Caltrans and the California Highway Patrol. Emphasis in FY 2015 will be placed on continued support of ongoing FSP motorist aid services, including monitoring and assessment of the restructured FSP services program initiated in FY 2011. Other efforts will include: (1) continued monitoring of cost benefit of the weekend pilot program; (2) monitoring of the newly added mid- day service; and (3) completed implementation of the new fleet management system.

33103.00 - Interstate 15 (I-15) FasTrak Value Pricing Program

Objective - The objectives of this work element are to: (1) maximize utilization of the Express Lanes by allowing FasTrak® customers to pay a toll/fee to use the excess capacity of the facility; (2) leverage agency resources to cost effectively manage the program and collect toll revenue and fees from customers; and (3) utilize price controls to maintain service levels in the lanes to ensure reliable commute times. Emphasis in FY 2015 will be leveraging agency assets and resources in conjunction with the State Route 125 Program and increasing marketing efforts and operational tactics to increase usage of the facility.

33106.00 - Compass Card Program

Objective - The objective of this work element is to support the final transition of the Compass Card Program to Metropolitan Transit System (MTS). Emphasis in FY 2015 will be to utilize technical and program management staff time to assist both MTS and North County Transit District as MTS assumes full responsibility for this program.

33110.00 - Intelligent Transportation Systems (ITS) Operation

Objective - The objective of this work element is to address the ongoing operations, system administration, network communications, and maintenance needs of regional ITS deployments. SANDAG has deployed several modal programs, systems and regional communications networks that transition from implementation into normal or pilot operations. These systems require ongoing support for operations, administration, and maintenance to ensure that the systems perform as expected and deliver mobility services to the public. Emphasis in FY 2015 will be to transition Compass administration to the transit operators, develop full administration practices for support of the Integrated Corridor Management System, and provide technical staffing support of other SANDAG operated systems, including 511 Advanced Traveler Information Service, Intermodal Transportation Management System, and the Regional Arterial Management System.

33121.00 - SR 125 Facility Operations

Objective - The objective of this work element is to maintain and operate the State Route 125 facility, collecting tolls and project revenue to pay for operations, maintenance, and the debt incurred in the purchase of the Development Franchise Agreement. The emphasis in FY 2015 will be to: (1) continue growing traffic to meet revenue needs, covering all financial commitments and

26 debt obligations; (2) develop and implement long-term plans for a centralized tolling system; and (3) provide accountability and transparency of the program's financial performance to the Board of Directors and TIFIA.

33122.00 - SAFE Operations

Objective - The objective of this program is to improve the safety of the public and the highway system by providing assistance to stranded motorists. The program provides roadside callboxes, mobile phone access, call center services, and transfers to highway patrol so that motorists can get the assistance needed in the San Diego region. Emphasis in FY 2015 will be to continue uninterrupted service while focusing on competitive procurements of new call center and maintenance services contracts.

33123.00 - Centralized Trolley Control Maintenance

Objective - The Objective of this project is to provide software and hardware maintenance for the Metropolitan Transit System Centralized Train Control System, which is delivered and operational in phases, while future phases (implementation) are still being delivered. Emphasis in FY 2015 will be to effectively manage existing maintenance contracts while introducing additional phases as needed.

73500.00 - ARJIS Services to Member Agencies (Group Program)

Group Objective - The objective of this Group Program is to provide Automated Regional Justice Information Systems services to member agencies and other law enforcement jurisdictions in the region. The projects in this group describe a variety of automated services and programs in support of this overall objective.

73501.00 - ARJIS: Maintenance and Support

Objective - The objective of this work element is to provide ongoing support and maintenance for Enterprise Automated Regional Justice Information Systems (ARJIS) and all applications used by ARJIS agencies. Included is customer support for these initiatives via help desk services, troubleshooting, problem tracking, and minor system and program modifications. Emphasis in FY 2015 will be on stabilization and optimization of the hardware and software infrastructure, system documentation, and seeking cost savings through hardware consolidation efforts. Customer outreach will be a high priority, including application enhancements, application documentation and user guides, user training, and installing new interfaces to agency records management systems. Note that the network infrastructure that was previously included in this Overall Work Program (OWP) has been moved to new OWP 73520 - ARJIS Network Infrastructure.

73502.00 - ARJIS: Project Management and Administration

Objective - The objective of this work element is managing operations for the Automated Regional Justice Information Systems (ARJIS) Program and enhancing ARJIS systems according to priorities set by the Public Safety Committee and Chief's/Sheriff's Management Committee. Emphasis in FY 2015 will be supporting those committees, invoicing ARJIS member agencies, training and outreach to customers, and researching available grant opportunities.

27 73503.00 - ARJIS: Enterprise System

Objective - The objective of this work element is to continue development of the Automated Regional Justice Information Systems Enterprise System. Emphasis in FY 2015 will be to upgrade the Enterprise hardware to include new filers, servers, and VPN services. Further system enhancements will be deployed, including adding new data sources to SRFERS, the ARJIS 'Super Query' system. The Cognos reporting system will be enhanced to provide real-time data updates and to deploy the new UCR process.

73512.00 - ARJIS: Regional Information Sharing & Collaboration (RISC)

Objective - In a continued partnership with the U.S. Department of Homeland Security, Automated Regional Justice Information Systems (ARJIS) will initiate four information-sharing capabilities that will improve criminal justice operations and create standards and models for best practices. The emphasis in FY 2015 will be on: (1) deploying new applications via the ARJIS mobile app store; (2) developing an interface to an agency for SMT data; and (3) continuing the expansion of the ARJIS BOLO email distribution initiative to the Southwest region of the United States.

73513.00 - ARJIS: Tactical Automated Response using GPS Enabled Technology (TARGET)

Objective - TARGET will enhance situational awareness by providing law enforcement officers in the field with real-time, geo-spatial data. Data will be accurately captured and retrieved using handheld global positioning system-enabled devices. TARGET will provide comprehensive and easily interpreted maps integrating police incidents and field interviews, parolee addresses, locations associated with warrants, gang locations, sex offender addresses, and critical infrastructure locations. Emphasis in FY 2015 will be to: (1) complete the development of the TARGET application; (2) deploy the application to mobile users; (3) train users and obtain metrics; and (4) provide quarterly status reports.

73514.00 - ARJIS: South West Offender Real-time Notification (SWORN)

Objective - ARJIS, San Diego and Arizona Fusion Centers, and agencies in New Mexico and Texas will collaborate to advance cross-boundary information exchange pilot projects. The aim is to develop interstate sharing of corrections, probation, parole, law enforcement, and homeland security data along the Southwest border. Tangible results will be realized through secure, wireless mobile devices to enable real-time field access to data, alerts, and photographs not currently shared. Emphasis in FY 2015 will be to: (1) develop an interface to Arizona Adult Probation; (2) produce ONASAS metrics reports; (3) deploy mobile devices to Arizona public safety personnel; and (4) produce quarterly status reports for National Institute of Justice.

73516.00 - ARJIS: Graffiti Tracker

Objective - The objective of this work element is to provide regional support to the Graffiti Tracker program, capture metrics on system usage and produce reports for participating agencies, identify trends and patterns, and provide customer outreach and training to encourage system usage. Emphasis in FY 2015 will be to expand the use of Graffiti Tracker to other agencies where graffiti is a problem, such as school and university police departments; leverage existing infrastructure to include expanded citizen reporting of graffiti; and collaborate with the Defense Attorney’s office to

28 obtain statistics on restitution funds resulting from the use of Graffiti Tracker as part of a cost/benefit analysis.

73517.00 - ARJIS: Regional Data Sharing II

Objective - The cross-jurisdictional sharing of critically needed justice data enhances both officer and public safety. The Department of Homeland Security's Urban Area Security Initiative addresses this need by funding agencies to implement projects that target information sharing in San Diego County and bordering regions. The emphasis in FY 2015 will be to: (1) Continue supporting the COPLINK nodes; (2) develop an analytical application to help disseminate License Plate Reader and other data sources; and (3) continue the development of the interface to the Sheriffs Records Management System (NetRMS).

73518.00 - NEW - ARJIS: NIJ RAND Collaboration

Objective - The objective of this work element is to collaborate with the RAND Corporation on a research effort for the National Institute of Justice (NIJ) to evaluate information sharing systems. Staff will serve as the liaison between ARJIS users and the RAND Project Manager and will provide data extractions, metrics, and usage reports. Emphasis in FY 2015 will be on: (1) establishing a project plan and project team; (2) identify, meet with, and interview users from member agencies; (3) produce data extractions from various ARJIS databases for analysis; and (4) provide status reports for NIJ.

73519.00 - NEW - ARJIS: Regional Data Sharing III

Objective - The objective of this work element is to coordinate, develop, and implement applications that enhance public safety throughout the San Diego region. The Department of Homeland Security's Urban Area Security Initiative (UASI) addresses this need by funding agencies to implement projects that target information sharing in San Diego County and bordering regions. The emphasis in FY 2015 is to: (1) collaborate with the Sheriffs' Department to bring new NetRMS agencies on board; (2) partner the Law Enforcement Coordination Center on information sharing projects; (3) produce reports for UASI; and (4) serve as a liaison between UASI and San Diego County public safety agencies.

73520.00 - NEW – ARJIS: ARJISnet Infrastructure and Mobile

Objective - The objective of this work element is to provide ongoing support and maintenance for ARJIS network infrastructure, including all wired and wireless connectivity between ARJIS, the data center(s), member agencies, and the ARJIS Wireless Mobile environment. Emphasis in FY 2015 will be on stabilization and optimization of the network circuits (wired and wireless), network documentation, and seeking cost savings through hardware and circuit consolidation efforts.

EXECUTIVE COMMITTEE AGENDA ITEM NO. 14-02-9 FEBURARY 14, 2014 ACTION REQUESTED – INFORMATION

FY 2013 AUDITED COMPREHENSIVE ANNUAL File Number 8000180 FINANCIAL REPORT

Introduction

The independent certified public accounting audit firm of Mayer Hoffman McCann P.C. has concluded the annual audit of SANDAG for the fiscal year ended June 30, 2013. The Comprehensive Annual Financial Report (CAFR) is attached as information (Attachment 2).

Discussion

The CAFR presents the financial position and activity of SANDAG and the three component units, which include the San Diego County Regional Transportation Commission, SourcePoint, and the Automated Regional Justice Information System. The auditors have expressed an unqualified (clean) opinion on these basic financial statements.

In compliance with Statement of Auditing Standards (SAS) No. 114, the auditor is required to communicate certain matters to the governing body (Attachment 1). These matters include significant audit findings related to qualitative aspects of accounting practices, difficulties encountered in performing the audit, corrected and uncorrected misstatements, disagreements with management, management representations, management consultations with other independent accountants, and other audit findings or issues.

In summary, the required communications letter states that no difficulties or disagreements were encountered by the auditors in dealing with management. Regarding corrected and uncorrected misstatements, there was one uncorrected misstatement, which was deemed immaterial to the financial statements, and therefore, acceptable to the auditors:

• Adjustment to record accrued payroll for approximately $876,500, which would have increased expenditures and payables – consistent with past practice, this amount was recorded in the next fiscal year (FY 2014).

The Government Finance Officers Association (GFOA) of the United States and Canada awarded a Certificate of Achievement for Excellence in Financial Reporting to SANDAG for its CAFR for the fiscal year ended June 30, 2012. This was the sixth consecutive year that SANDAG has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement only is valid for a period of one year. We believe that the FY 2013 CAFR will continue to meet the Certificate of Achievement Program requirements and have therefore submitted it to the GFOA to determine its eligibility for another certificate.

ANDRÉ DOUZDJIAN Director of Finance

Attachments: 1. SAS No. 114 Required Audit Communications Letter 2. SANDAG Comprehensive Annual Financial Report for the fiscal year ended June 30, 2013

Key Staff Contacts: André Douzdjian, (619) 699-6931, [email protected] Leeanne Wallace, (619) 699-0728, [email protected]

2 Attachment 1

3 4 5 2228 2 Attachment Attachment San Diego Association of Governments Diego San Annual Comprehensive Financial Report ended the scal year for 2013 30, June CA San Diego,

2013

San Diego Association of Governments

San Diego, California

Comprehensive Annual Financial Report

For the year ended June 30, 2013

PREPARED BY THE SAN DIEGO ASSOCIATION OF GOVERNMENTS

FINANCE DEPARTMENT

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San Diego Association of Governments

Table of Contents

Pages

INTRODUCTORY SECTION

Letter of Transmittal ...... i SANDAG Board of Directors ...... xvii SANDAG Executive Staff ...... xviii SANDAG Organization Chart ...... xix Certificate of Achievement for Excellence in Financial Reporting - GFOA ...... xx

FINANCIAL SECTION

Independent Auditors’ Report...... 3

Management’s Discussion and Analysis ...... 7

Basic Financial Statements:

Government-Wide Financial Statements: Statement of Net Position...... 25 Statement of Activities ...... 26

Fund Financial Statements: Balance Sheet - Governmental Funds ...... 32 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position ...... 35 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ...... 36 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities ...... 39 Statement of Net Position - Proprietary Funds...... 43 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds ...... 44 Statement of Cash Flows – Proprietary Funds ...... 45

Notes to the Basic Financial Statements ...... 47

Required Supplementary Information:

Schedule of Funding Progress for PERS Retirement Plan ...... 95 Schedule of Funding Progress for PERS OPEB Plan ...... 95

San Diego Association of Governments

Table of Contents, Continued

Pages

FINANCIAL SECTION, Continued

Required Supplementary Information, Continued: Notes to Required Supplementary Information ...... 96 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: General Fund ...... 98 TransNet Special Revenue Fund ...... 99 San Diego County Regional Transportation Commission Sales Tax Projects Special Revenue Fund ...... 100

Supplementary Information: Combining and individual fund statements and schedules: Combining Balance Sheet – Nonmajor Governmental Funds ...... 102 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds ...... 103 Combining Statement of Net Position – Nonmajor Proprietary Funds ...... 104 Combining Statement of Revenues, Expenses and Changes in Net Position – Nonmajor Proprietary Funds ...... 105 Combing Statement of Cash Flows – Nonmajor Proprietary Funds ...... 106 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: Capital Projects Fund ...... 107 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: San Diego County Regional Transportation Commission Debt Service Fund ...... 108 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: General Services Special Revenue Fund ...... 109 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: Prepaid Fare Media Sales Special Revenue Fund ...... 110 Schedule of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual: SAFE Program Fund ...... 111

STATISTICAL SECTION

Financial Trends: Net Position by Component – Last Ten Fiscal Years ...... 114 Change in Net Position – Last Ten Fiscal Years ...... 115 Fund Balances of Governmental Funds – Last Ten Fiscal Years ...... 117 Change in Fund Balances of Governmental Funds – Last Ten Fiscal Years ...... 118

Revenue Capacity: Tax Revenues by Source, Governmental Funds – Last Ten Fiscal Years...... 120 Direct and Overlapping Sales Tax Rates – Last Ten Fiscal Years ...... 121 San Diego Region Taxable Retail Sales by Jurisdiction – Fiscal Year 2002 and 2012 ...... 122

San Diego Association of Governments

Table of Contents, Continued

Debt Capacity: Ratios of Outstanding Debt by Type – Last Ten Fiscal Years ...... 123 Pledged-Revenue Coverage – Last Ten Fiscal Years ...... 124 Pledged-Revenue Coverage – SR 125 Toll Road – Last Two Fiscal Years ...... 125

Demographic and Economic Information: Demographic and Economic Statistics – Last Ten Available Calendar Years ...... 126 San Diego Region Employment by Industry – Calendar Year 2002 and 2012 ...... 127

Operating Information: Operating Indicators: Employees by Functional Department – Last Ten Fiscal Years ...... 128 Capital Asset Statistics by Program – Last Ten Fiscal Years ...... 129

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December 16, 2013 File Number 8000180

Honorable Chair and Members of the Board of Directors San Diego Association of Governments

We are pleased to present the basic financial statements of the San Diego Association of Governments (SANDAG), for the Fiscal Year (FY) ended June 30, 2013. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with SANDAG. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of SANDAG. Also included herein is other supplementary information. All disclosures necessary to enable the reader to gain an understanding of the SANDAG financial activities have been included.

The comprehensive annual financial report is presented in three sections: introductory, financial, and statistical. The introductory section includes this letter of transmittal, a list of the SANDAG Board of Directors, a list of the SANDAG executive staff, and SANDAG organization chart. The financial section consists of the independent auditors’ report, the management’s discussion and analysis, basic financial statements, notes to the basic financial statements, the required supplementary information, and supplementary information.

Mayer Hoffman McCann P.C. has issued an unqualified (“clean”) opinion on the SANDAG financial statements for the fiscal year ended June 30, 2013.

Reporting Entity

SANDAG is the region’s Council of Governments (COG). Local elected officials throughout the United States have joined together to form similar COGs to deal cooperatively with issues which go beyond jurisdictional boundaries, such as transportation, growth management, environmental quality, and public facility needs. SANDAG is a statutorily created agency, codified in California state law. Voting among the agency’s 18 cities and county government is based upon both membership and the population of each jurisdiction, providing for an equitable representation of the region’s residents. Caltrans, the United States Department of Defense, the San Diego Unified Port District, San Diego Metropolitan Transit System (MTS), North County Transit District (NCTD), San Diego County Water Authority, Imperial County, the Southern California Tribal Chairmen’s Association,

i and Mexico (Consulate General of Mexico) are nonvoting advisory members of SANDAG.

Comprehensive Planning Organization to the San Diego Association of Governments, to better reflect the agency’s purpose. In 2003, Senate Bill 1703 (Peace, 2002), as amended by Assembly Bill 361 (Huffman, 2011), called for the consolidation of certain MTS and NCTD transit functions into SANDAG. SANDAG is now responsible for long-range transit planning, programming, project development, and construction of transportation projects in the region. This structure is intended to streamline regional decision making to improve the transportation system, protect open space and habitat, bolster our infrastructure, and sustain our quality of life.

The San Diego County Regional Transportation Commission is a blended component unit of SANDAG and therefore, is considered part of the SANDAG primary government. The SANDAG Board of Directors also serves as the Commission’s Board of Directors. The Commission is responsible for the implementation and administration of transportation improvement programs funded by the San Diego countywide half-percent sales tax. This tax became effective on April 1, 1988, as a result of the passage of Proposition A – The San Diego County Transportation Improvement Program, known as TransNet. The sales tax funds were used for highway, public transit, local street and road improvements, bicycle and pedestrian facilities, and administration. In November 2004, the voters of San Diego County extended the half-cent sales tax another 40 years to 2048. The extension of TransNet will help SANDAG continue to implement the region’s transportation program, as well as provide funding for bicycle, pedestrian, and neighborhood safety projects; major corridor capital projects; environmental mitigation projects; smart growth projects; local street and road projects; transit system projects; and provide the funding to operate the new transit systems. The 2004, ordinance includes a mandate that an Independent Taxpayer Oversight Committee (ITOC) for TransNet be formed to provide an enhanced level of accountability for the expenditure of funds under the TransNet expenditure plan. The ITOC also will help ensure that all voter mandates are carried out as required and will develop recommendations for improvements to the financial integrity and performance of the program. The Commission is authorized to issue limited tax bonds payable from the sales tax receipts, the proceeds of which can be used to finance approved TransNet projects. The Commission has created a Plan of Finance (POF) for the TransNet program, which is updated at least annually. A summary of the most recent POF is provided near the end of this letter.

SANDAG bylaws require the Board of Directors to approve a preliminary budget no later than April 1 of each year, with final approval by June 30. The preliminary budget is distributed to the funding agencies in March of each year to acquire their formal comments and approval. The annual budget serves as the foundation for the SANDAG financial planning and control. The budget is prepared by function, including the Capital program, the Administration and Board budgets, the Overall Work Program (including all regional planning activities), and the TransNet program. Costs and funding are strictly appropriated between these four major components and carefully monitored and amended as necessary. Once the budget is formally approved, SANDAG Board Policy authorizes the Executive Director to enter into agreements not currently incorporated in the budget and make other modifications to the budget in an amount up to $100,000 cumulatively per project per fiscal year, so long as the overall budget remains in balance. The Executive Director has further delegated budget transfers with no budgetary impact or significant project delay to an Executive Team member and the Director of Finance within the same project and up to $50,000 between projects. Board Policy requires the Executive Director to report to the Board these actions taken by the Executive Director or his or her designee. The budget is monitored on an ongoing basis and

ii quarterly progress reports are generated at all levels, variances are analyzed, and corrective action is taken to align actual expenses and the budget as closely as possible. Budget to actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted.

Geography

The San Diego region is nestled in the most southwest corner of the United States. It is a region filled with beautiful landscapes, a diversified economy, and an unmatched quality of life for its three million residents. About the size of the State of Connecticut, the region encompasses 4,255 square miles, extending 70 miles along the Pacific Coast from the international border to Orange County, and inland 75 miles to Imperial County. Riverside and Orange Counties form our region’s northern boundary.

The topography of the region varies from broad coastal plains to fertile inland valleys and mountain ranges to the east, rising to an elevation of 6,500 feet. The eastern slopes of these mountains form the rim of the Anza-Borrego Desert and the Imperial Valley. The Cleveland National Forest occupies much of the interior portion of the region. The climate is Mediterranean in the coastal and valley areas, where most of the population and resources are located. Average annual rainfall on the coastal plain is approximately ten inches. The San Diego region also is one of the most biologically diverse areas in the nation.

Cultural and Educational Attractiveness

The San Diego region has matured as a center for culture and education. San Diegans now boast about its two Tony Award-winning theaters, The Globe Theatre and La Jolla Playhouse. In addition, with the San Diego Opera, the San Diego Symphony, and more than 90 museums for the enjoyment of both locals and visitors, the region has an abundance of cultural activities. Higher education is provided through numerous colleges and universities. The University of California, San Diego is internationally recognized for excellence in higher education and scientific research.

San Diego State University is the region’s oldest and largest higher education institution. The University of San Diego, a private institution, has a highly respected law school; and California State University, San Marcos is the region’s fastest-growing college both in students and curricula.

The San Diego region continues to be a premier destination for visitors from all over the world. The region’s warm climate, proximity to Mexico, and abundant facilities and attractions power the visitor industry. The region has hosted the 1988, 1998, and 2004, Super Bowls, and the 1998, World Series. The San Diego Convention Center’s size, bayside location, and proximity to the popular Gaslamp district in Downtown San Diego enable the region to compete with Los Angeles and San Francisco in attracting the nation’s largest conventions and trade shows. In addition, San Diego now has a baseball-only ballpark located in downtown San Diego, which is serving as another visitor magnet and is stimulating a billion-dollar renaissance in the surrounding area.

iii Economic Summary and Outlook

Continued Uncertainty and Slow Growth

Monitoring the economy’s rebound since the end of the Great Recession (July 2009) has been like watching a movie you have seen many times before only in slow motion; the rebound, during past recessions, could be measured in months, not years. In other words, the United States and local economy are moving in the correct direction only in painfully slow motion, unfortunately as expected.

The United States economy approaches 2014, with a poor showing during the third quarter (2013); Gross Domestic Product (GDP) rising 1.4 percent compared with the same quarter last year. The long-run rate of growth for GDP is about 3.2 percent annually. Again, the consensus short-term outlook over the next few quarters is for GDP growth above 2.0 percent, and for all of 2014, to rise above 2.5 percent. These consensus outlooks are below forecasts provided over the past three years, which had GDP growth at or above 3.0 percent. The consensus forecast has become progressively less optimistic.

To achieve a GDP growth rate of 2.5 percent or higher requires more jobs and jobs of a higher quality than has been produced over this past year. Nationwide, payroll job growth for 2013, is expected to average about 175,000 jobs per month, slightly below last year’s 183,000 jobs per month. The continued decline in the unemployment rate over the past few years has been a pleasant surprise, both nationwide and locally, given that job growth has continued to be weak. The nation’s unemployment rate has declined to 7.2 percent in September 2013, from 7.9 percent one year ago, reflecting the job gains as well as a shrinking labor force. Since the start of the Great Recession (December 2007) the labor force participation rate has declined nearly four percentage points, reducing the labor force by nearly six million people; meaning that job growth and leaving the labor force contributed equally to the decline in the unemployment rate. In addition, the median length of time people remain unemployed continued at seven months. More than 30 percent of the people without jobs have been unemployed for one year or longer, leading to growing concerns about their ability to reenter the labor force.

Additional concerns about the recovery include weakness in wage rate growth and the average number of hours worked; these trends, combined with the types of jobs (part-time, temporary with low pay) that have been created since the end of the recession have contributed to keeping real per-capita disposable income stagnant for the past three years, which in turn has led to weak growth in consumer spending, which makes up more than 70 percent of the economy. Additional economic headwinds are expected from the temporary fix to the federal government shutdown and raising the debt ceiling to allow for more borrowing. Lastly, although the European recession appears over, helping to stabilize international trade, it is not clear how robust the turnaround will be.

Locally, the San Diego economy has followed much the same path as the national economy during and after the Great Recession, although direct comparisons are not possible for the current year because the local job numbers are not adjusted to reflect seasonal variations. However, there have been some important differences. The local labor market shed 107,300 payroll jobs between December 2007, and July 2009. At the trough, the local economy had lost 7.8 percent of its total jobs since the start of the recession, whereas the national economy shed 6.1 percent over the same

iv time period. Locally, at the trough of the recession the aggregate number of local jobs was at about the same level as recorded in January 2001. The most recent local employment data that has been adjusted to remove reporting errors is through the end of 2012. On a year-over-year comparison basis, as of December 2012, local employment has increased by 25,400 payroll jobs, a rise of 2.1 percent, higher than the 1.6 percent pace recorded nationwide.

Although the recession may be behind us technically, a majority of economists are forecasting a modest recovery over the next few years followed by a relatively slow expansion through 2017. In the near-term, GDP is expected to expand in the two to three percent range; levels that are historically low for a recovery from a deep recession. For example, following the deep 1981 to 1982 recession in which GDP shrunk by 2.9 percent from peak to trough, the economy bounced right back – growing 4.5 percent in 1983, and 7.2 percent in 1984. The 2007 to 2009 Great Recession has been twice as deep and the rebound about half as robust as the 1981 to 1982 downturn. If the nation’s GDP increases at the expected 2 to 3 percent per year, it would likely be 2017, or beyond before the unemployment rate falls to the prerecession level of about 5.5 percent.

California Budget Outlook

One of the most talked about and written about problems in California over the past decade has been the state’s budget deficit. The performance of regional economies in the state, including San Diego’s, is linked directly to the State of California’s fiscal health. Consequently, the state’s past budget crisis has likely contributed to the slower rates of economic growth San Diego has recorded over the past few years, but this trend seems to be improving.

Since 2003, the state has faced budget shortfalls. Various steps have been taken to reduce the deficit, including refinancing the accumulated debt, taking advantage of lower interest rates, reforming the workers’ compensation program, and raising the sales tax rate one percentage point. More recently, in November 2012, the California voters approved the Education Protection Account, or Proposition 30, that temporarily increases the state sales and use tax, and personal income tax rates for upper-income taxpayers. These actions, combined with holding the line or reducing expenditures, have allowed the state to reach a point where its underlying expenditures and revenues are roughly in balance.

As a result, the State Legislative Analyst’s Office forecast now is $3.2 billion higher than the administration's (Governor’s) May 2013 revision for 2011, to 2012; 2012, to 2013; and 2013, to 2014; combined. After years of "boom and bust" budgeting, California's leaders now have the opportunity to build a budget for future years that gives the state more choices about how to build reserves in times of healthy revenue growth, prioritize future state spending, and pay off past debts. This outlook, if it proves to be accurate, would also help stabilize local government budgets.

San Diego’s Economy and Economic Outlook

Historically, the San Diego region has enjoyed strong economic growth, keeping up with, and at times, outpacing the State of California and the nation, as shown in Figure 1. According to the Department of Commerce’s Bureau of Economic Analysis, the San Diego region’s Gross Regional Product (GRP), an estimate of the total value of goods and services produced in a region for 2012, the latest year available, was $177.4 billion measured in current dollars. After adjusting for the effects of inflation, the local GRP rose 2.7 percent during 2012, the third year of increases after

v declining during 2009. Although the local economy did not contract as much as the state and nation during 2009, its GRP growth rate over the past three years has been about equal (2011) or below (2010 and 2012) both the state and nation.

Figure 1: Rates of Change in Gross Products (2005 $)

Rates of Change -5

SD CA US

Over the longer term, the strength of the local economy is due, in part, to significant changes that took place during the second-half of the decade in the 1990s. The San Diego region underwent a fundamental restructuring process after a period of recession in the early 1990s, which increased economic diversity and strengthened local industry. A restructured local economy emerged from the recession, one better able to adapt and compete in the global marketplace. The economy is now centered on nationally and internationally competitive industries, and a growing recognition that our region must supply the linkages and infrastructure that support these industries.

Today’s leading sectors are no longer located solely in the defense and other traditional manufacturing industries, as they were in the past. As a result, local economic policies have adapted and now focus on a broader range of sectors that drive the local economy – known as traded employment clusters. Traded employment clusters are the engines of economic activity, capable of setting the pace of economic growth, producing high-paying jobs, and producing a rising standard of living for the region. Traded employment clusters are groups of complementary, competing, and interrelated industries that drive wealth creation in a region, primarily through the export of goods and services. These traded clusters have led the local economic resurgence, and some of them contain many of our highest paying job opportunities that are part of the region’s emerging growth technology businesses, including biotechnology, medical instruments, telecommunications, software, semiconductors and computer networks, defense manufacturing, and clean technology (previously labeled environmental technology).

The San Diego region has become a prominent example of an emerging “high-tech” economy in the nation. San Diego now exhibits characteristics which include decreased reliance on traditional durable goods manufacturing and increased reliance on knowledge-based and other wealth-generating activities. Because of the changing and volatile nature of both the state and national economies, traded clusters are likely to continue to be the leaders in economic growth. The region has many of the characteristics and opportunities necessary for these important clusters to succeed: excellent education and training facilities, world class research institutes, mild climate,

vi coastal location, innovative culture, and an increasingly skilled labor force. All of these factors help create synergy between companies and provide the labor and skills necessary for traded clusters to prosper.

Today, business services, skilled trades, research and development, and highly technical sectors (all embodied in the region’s traded employment clusters) have become the driving forces behind economic development and provide an opportunity to increase our standard of living, as measured by real per capita income. Figure 2 shows the trend for real per capita income since 1991, and compares San Diego against both the State of California and the nation. As Figure 2 shows, the local standard of living grew quickly following the end of the local downturn in 1994, fueled by the surge in high-tech employment growth and began to level off in 2000, as growth in technology companies and jobs slowed. Job growth since 2000, has been sufficient to keep the region’s unemployment rate low (through 2007); however, the growth has not been well balanced between high- and low-paying jobs, and far more jobs are being created that are low-paying, resulting in a much different trend for the standard of living since 2000. Between 1994 and 2000, the local standard of living, measured by the growth in real per capita income, increased nearly 23.0 percent, out pacing both the state and nation. Between 2000 and 2007, the growth rate slowed to 6.0 percent before falling during 2009, and growing slowly through 2011. Real per capita income is about the same in 2011, as it was in early 2000. Over the last 20 years, 1991 and 2011, real per capita income increased more than 25.0 percent, from $37,300 in 1991, to $46,800 in 2011, with nearly all of increase occurring during the late 1990s.

Figure 2 Real per Capita Income 1991 – 2011 (2011 $)

$60,000 San Diego Per Capita Personal Income (2011$) California Per Capita Personal Income (2011$) US Per Capita Personal Income (2011$) $50,000

$40,000

$30,000

$20,000

$10,000

$0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Source: Bureau of Economic Analysis, United States Census Bureau 1991 to 2011; compiled by SANDAG.

Employment and Wages

The latest employment data available from the state’s Employment Development Department is for August 2013, and shows that there are 1.277 million payroll jobs in the San Diego region, down 44,300 jobs, since the start of the recession in December 2007. So, about 40 percent of the payroll jobs lost during the Great Recession have not been recovered.

vii

Over this past year (August 2012 thru August 2013), according to the preliminary data from the state’s Employment Development Department, the region has added 14,800 payroll jobs, an increase that is 37 percent below the rise recorded during a similar period last year. The job gains have been broad based with most sectors increasing. Over the year, the largest job increases were reported in Education and Health Services (up 5,300 jobs); Leisure and Hospitality Services (up 4,700 jobs); Professional and Business Services (up 4,400 jobs); trade, transportation, and utilities (up 3,400 jobs); and construction (up 700 jobs). This data is preliminary and will be subjected to the Employment Development Department’s annual adjustments in about March 2014. At times in the past, including last year, these adjustments have been large.

Figure 3 shows what has happened with job growth over a longer period, comparing the average annual employment levels during 2002 and 2012. Due to the effects of the Great Recession, total industry employment in the San Diego region during 2012, is 2.3 percent higher than it was during 2002. Due to the effects of the Great Recession, San Diego’s growth over the past 10 years is about equal to the level the region experienced on an annual basis before the recession.

Figure 3 Total Industry Employment, 2002-2012 San Diego Region

Major Industry 2002 2012 Change 2002-2012 Construction 76,400 56,300 -26.3% Manufacturing 112,300 93,400 -16.8% Trade, Transportation, Utilities 208,600 206,800 -0.9% Information 34,400 24,600 -28.5% Financial Activities 75,000 69,500 -7.3% Professional Business Services 205,100 215,500 5.1% Education and Health Services 119,700 154,500 29.1% Leisure and Hospitality 133,800 161,000 20.3% Other Services 45,600 49,300 8.1% Government 219,700 227,600 3.6% Total Industry Employment 1,230,600 1,258,500 2.3%

Source: State of California, Employment Development Department, Industry Employment and Labor Force, March 2013 benchmark; industry employment totals exclude self-employed, farm, and mining jobs representing approximately 15 percent of total employment.

viii Figure 4: Average Wage per Industry Worker San Diego Region (2012 $)

$55,000

$50,000

$45,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

The latest wage data for industry workers in the San Diego region is 2012. As shown in Figure 4, the average wage per industry employee in current 2012 dollars for the San Diego region is $54,000. After declines between 2001 through 2003, the real average wage per industry worker in the region began to increase, rising 6.0 percent between 2003 and 2007. Wages fell during the worst years of the Great Recession 2008 and 2009, but have increased since 2010. Over the entire period, 2000 through 2012, the real average wage per industry worker has increased about 4.2 percent. The lack of growth in real wages is due to a combination of inflation, slow job growth as a result of the Great Recession, and a change in the mix of jobs generated by the local economy.

Demographics

According to California State Department of Finance’s Population and Housing Estimates for January 1, 2013, the San Diego region is home to more than 3.15 million people, the second largest county in California. The latest race and ethnicity data available from the state, displayed in Figure 5, show the largest majority of the population is non-Hispanic White (47.5%). However, the Hispanic population has been growing rapidly, increasing by nearly 285,000 people from 2000 to 2012, and currently represents 32.9 percent of the total population in 2012. Of the 2012 total population, 4.4 percent identify themselves as non-Hispanic Black, and the remaining 15.2 percent of the population identify themselves as non-Hispanic Asian, Native Hawaiian and Pacific Islander, American Indian, or multi-race. The 2012 median household income in the region is estimated to be nearly $70,000; with the median age at 34.8 years old.

ix Figure 5 2012 Population by Race and Ethnicity

3.5% 0.80%

10.4%

0.5% 32.9% 4.4%

Hispanic White Black American Indian Asian Hawaiian and Pacific Islander 2 or more races

47.5%

Venture Capital

The high-tech sectors driving the region’s economic prosperity rely, in part, on venture capital funds to help them perform research to produce leading edge technologies. San Diego continues to be a favored area for venture capital investment, according to PricewaterhouseCoopers quarterly MoneyTree survey. In comparison with multicounty and multistate regions, San Diego County posted the eighth highest dollar volume of venture capital investments during the first three quarters of 2013, receiving nearly $0.587 billion. The amount received during the first three quarters of 2013 is nearly 40 percent less than the region received during the same three quarter period during 2012. Since 1995, the first year PricewaterhouseCoopers began publishing the MoneyTree report, the region has received more than $20.0 billion in venture capital investments, with about half going to fund biotechnology companies and research.

International Trade

The total dollar value of international trade moving through the San Diego customs district reached $56.5 billion during 2012, up 7.2 percent from 2011. Imports represent nearly 65.0 percent of the total, with exports accounting for the remaining 35.0 percent. The value of traded goods moving through the customs district expanded rapidly after the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico passed, rising 134.0 percent between 1994 and 2000. The rate of growth slowed after September 11, 2001, due to a significant increase in security at all ports of entry. Trade activity picked up between 2003 and 2007, rising nearly 52.0 percent. More recently, trade slowed during 2008 and 2009, impacted by the Great Recession

x and has increased 27.0 percent between 2009 and 2012, the last year for which data is available. The rise in the value of trade during 2012, pushed it above its previous peak reached during 2007 (trade values not adjusted for inflation).

Expanding trade under the NAFTA and the Maquiladora industry in the San Diego/Baja California border region largely account for the San Diego region’s success in international trade. By providing for a freer exchange of goods with Mexico (and Canada), NAFTA has had significant beneficial impacts on the local economy.

Following the passage of NAFTA, the value of San Diego’s international trade shifted into a higher gear and began to expand more rapidly. Mexico continues to be, by far, San Diego’s largest international trading partner, accounting for more than 85 percent of the value of two-way trade. While exports to countries other than Mexico have increased 12 fold since 1993, exports to Mexico have also increased rapidly from pre-NAFTA $4.4 billion in 1993, to $18.9 billion in 2012; exports through the customs district to Mexico account for nearly 95 percent of total exports. A similar trend for imports has also occurred, imports from Mexico through the customs district increased $29.8 billion in 2012, from a pre-NAFTA $5.3 billion in 1993, while imports from other countries increased from $946 million to $6.8 billion over the same time period. The United States Department of Commerce reports that the top four export categories in 2012 account for more than 50 percent of total exports, including computer and electronic products (19.1%); fabricated metal products (11.8%); transportation equipment (11.2%); and machinery, except electrical (10.8%). Imports, on the other hand, are dominated by two categories making up nearly 60 percent, including computer and electronic products (36.3%); and transportation equipment (22.5%).

Real Estate

The slowdown in the housing market has dominated the economic news in San Diego since early 2006. After more than doubling to nearly $520,000 between January 2000, and April 2006, the median price for a single-family home in San Diego fell nearly 42.0 percent by May 2009, and has since begun to show signs of stabilizing. According to the S&P Case–Shiller Home Price Index, the median priced home in San Diego rose nearly 30 percent from May 2009, through July 2012, much of the increase has been in the past year, with index rising 20 percent since July 2012. There are signs that this pace is beginning to slow, due in part to the rise in mortgage rates over the past year.

The number of new housing unit permits authorized in the region declined steadily from a peak of 18,314 units in 2003, to 2,946 units in 2009, a decline of nearly 85.0 percent. Since 2009, the number of permits authorized has been rising. During 2012, the last full year for which data is available, there were 5,666 housing units authorized. During the first eight months of 2013, 5,203 units have been authorized, exhibiting a pace slightly ahead of last year’s. Over the past decade there has been a shift in the type of units authorized, away from single-family units towards multifamily units. During 2002, nearly 36 percent of the units authorized were attached units and the remainder was single-family or detached units. The attached unit proportion has been above 50 percent since 2004. During the first nine months of 2013, about 22 percent of the housing units authorized have been for single-family units and 88 percent have been permits for attached units.

xi Retail Sales

Consumer expenditures nationwide contracted significantly during 2008 and 2009, as consumers moved away from consumption, paid down debt, increased their savings, and reduced spending supported by equity in their assets. It is normal for consumers to spend less during a recession, but the size of the contraction this time was unusually large, causing some economists to speculate that consumers may hesitate or not return to their past spending habits once the recession ends. There are three reasons cited for this abrupt change: first is the amount of consumer debt outstanding, second is the loss in wealth from falling home and stock prices (which during this past year has begun to correct itself), and third is the expectation that the recovery from the recession will be slow by historical standards keeping the unemployment rate high for a protracted period of time.

These concerns seem to be playing out, for example the rate of growth in GDP has been averaging about two percent during most of the recovery period; a rate too slow to repair all the economic damage caused by the Great Recession. To help address this slow growth, the Federal Reserve has once again stepped up its monetary policy actions, initiating Quantitative Easing 3, a plan to put more liquidity (funds) in the marketplace each month until the unemployment is below seven percent or inflation rises above three percent. As of September 2013, the unemployment rate has declined to 7.2 percent, but at least half of the cause of the decline since its peak above 10 percent has been frustrated job seekers leaving the labor force. The consensus forecast is for the economy to pick up momentum during the final quarter of 2013, coming off an unexpected sluggish third quarter that ushered in a decline in job growth from nearly 200,000 jobs created each month nationwide, to about 150,000 jobs created on average each month during the third quarter of the 2013. There is concern that the economy is again staling, for example, the Federal Reserve recently postponed any tapering of its monetary and fiscal simulative actions that have been in place over the past year, despite announcing earlier this year that they would begin to unwind the stimulus program during September 2013. Additional uncertainty in the economy was caused by the 16-day government shutdown and the last minute deal forged to increase the federal government debt ceiling so it could continue to pay its bills and other obligations. Congress will revisit these issues in early 2014, creating additional uncertainty for the economic outlook.

Locally, the SANDAG sales tax receipts have increased during each of the last three fiscal years, rising 8.4 percent in FY 2011, 7.1 percent in FY 2012, and 4.3 percent during FY 2013. These increases come after suffering declines in each of the previous three Fiscal Years (2008 to 2010) falling 17.6 percent over the three-year period. Although perhaps not all of the problems brought on by the Great Recession are behind us, there are some recent encouraging signs locally. The San Diego region has now logged year over year growth in each quarter since the end of the Great Recession in July 2009. One of the sectors hit hardest during the recession, new auto sales, has been one of the best performers during the recent turnaround. Mindful of the headwinds and uncertainty facing the national and local economy; however, we are projecting a 5.0 percent growth in sales tax receipts during FY 2014.

xii Major Budget Initiatives and TransNet Plan of Finance Update

The proposed FY 2014 Program Budget will see the continuation or completion of several significant work efforts and the start of several new activities, as summarized below:

• Increase implementation efforts resulting from commitments of the approved 2050 Regional Transportation Plan (RTP) and its Sustainable Communities Strategy (SCS), including advanced planning for the new rail segments and advancing Active Transportation implementation strategies (33002, 33007, and 33210). Completion of the final transit-oriented development policy/strategy (33004) and implementation of a Tribal Consultation Plan (34005) to involve tribal nations in the development of San Diego Forward: The Regional Plan is also proposed.

• Conduct a comprehensive public engagement process for the development of San Diego Forward: The Regional Plan. Development of the Regional Plan (31020) also includes the update of project evaluation criteria and plan performance measures to develop land use/ transportation scenarios.

• Further model development, including the automated integration of the Activity-Based Model and Production, Exchange, and Consumption Allocation System Model; completion of the Commercial Vehicle Model; and developing a Dynamic Traffic Assignment Model for use in the development of San Diego Forward: The Regional Plan (23000 and 23004).

• With the completion of preliminary planning and design of the Intermodal Transportation Center at Lindbergh Field (31011), the Destination Lindbergh Project will move on to advanced planning work for a 2015 first-phase connection between the Washington Street or Palm Street Trolley station, with the planned on-airport shuttle and completion of the conceptual design for the Interstate 5 (I-5) ramp connectors.

• Advance Regional Transportation Demand Management (TDM) strategies, including commitments contained in the 2050 RTP/SCS; deployment of an updated iCommute Program Management tool; identifying the economic benefits of TDM; implementation of a regional telework pilot; development of a deployment plan for a commuter loyalty program; targeted outreach to employers; completing the Vanpool and Carpool Program Analysis and Expansion Plan; and continued investments in electronic bicycle parking facilities (33107.00 to 33107.09).

• Deploy significant enhancements to the existing 511 Automated Traveler Information System for the region, including an updated website, release of a mobile application, and the evaluation of a new business model (33105).

• Continue to assist the transit agencies with planning, funding, passenger counting, updating the Coordinated Plan, Transportation Development Act performance monitoring, transition and technical support of the Compass Card Program, and implementing transit planning recommendations from the 2050 RTP/SCS (33201 – 33211).

• With the expected completion of the Traffic and Revenue analysis for the new State Route 11 (SR 11)/Otay Mesa East border crossing, a plan of finance will be advanced, including the development of partnership agreements, a federal loan application, and the port of entry design (34200).

xiii • Complete the best practices report and develop a coordinated SANDAG approach to analyze and address social equity and environmental justice concepts (73006).

Regional Operations and Services

• This new chapter and area of emphasis includes the continued operations and maintenance of the State Route 125 (SR 125) toll road, focusing on achieving the Board of Director’s goals of increasing utilization and meeting financial obligations (33121). Proposed work elements include the continuation of marketing efforts to promote the SR 125 toll facility, including co-marketing of FasTrak® for Interstate 15 (I-15) (33103) and SR 125; the first full year of operations for the SAFE (33122); and continued operations of the Freeway Service Patrol (33102) and I-15 Managed Lanes (33103).

• The Automated Regional Justice Information System (ARJIS) Program also is included as part of Regional Operations and Services, which provides essential, 24/7 support for regional law enforcement agencies. ARJIS activities include: development of new interfaces for partner agency justice systems; enhancing the ARJIS eReporting System to include mapping, graphics, and collaboration capabilities; and completing the ARJIS Strategic Plan (73503).

• The San Diego County Multi-Discipline Graffiti Abatement Program pilot project is scheduled to end June 30, 2013. With the Public Safety Committee recommendation at its April 19, 2013, meeting, ARJIS is planning to take over ongoing management of the regionwide Graffiti Tracker Program (73516).

• Continue support for Department of Homeland Security and Department of Justice efforts by enhancing mobile applications on handheld devices for police officers in the field with advanced Global Positioning Satellite technology, facial recognition, and alerting capabilities to improve situation awareness, critical infrastructure, and officer notifications (34008 and 73505).

Capital Program

The Capital Program will continue to implement the Board’s TransNet Early Action Program, along with the Regional Bikeway Program, major, and minor regional capital improvements:

• Additional phases of the Blue and Orange Trolley Modernization Project will be completed, including retrofitting existing stations along the Blue Line for Low-Floor Vehicle service and modernizing existing stations (1210010 to 1210080).

• In early FY 2014, construction is scheduled to begin on the Mid-City Rapid Transit, a ten-mile project between San Diego State University and Downtown San Diego along El Cajon and Park Boulevards. The line will provide North Park, City Heights, and College area residents, students, and workers with a limited-stop, high-speed service in one of the key transit corridors in the region (1240001).

• The Sorrento Valley Double Track Improvements Project will provide an additional 1.1 miles of double track just north of the Sorrento Valley COASTER Station. This project will allow for longer freight trains to travel along the corridor, helping to reduce truck traffic along the North Coast Corridor (1239807).

xiv • The final Environmental Impact Report for the South Bay Bus Rapid Transit Project is scheduled to be completed in mid-2013. When constructed, this project will include 11 stations along a 21-mile long corridor from the Otay Mesa border area, through Chula Vista and along the Interstate 805 (I-805) corridor, to Downtown San Diego (1280504).

• Progress and completion of the Mid-Coast Corridor Transit Project environmental process is anticipated for 2014. This TransNet lockbox project will extend Trolley service to University of California, San Diego (UC San Diego), the Veterans Affairs Hospital, University City, and Westfield University Towne Centre shopping mall. The final Supplemental Environmental Impact Statement/Environmental Impact Report for the Mid-Coast Project is anticipated to be available for public review in early 2014. The Federal Transit Administration is anticipated to issue a Record of Decision in mid-2014 (1257001).

• Construction of the East County Bus Maintenance Facility is scheduled to begin in 2014. This project will provide for an operations and maintenance facility for up to 120 vehicles used by MTS (1049600).

• Continued construction of two High Occupancy Vehicle (HOV) lanes on I-805 North from State Route 52 to Carroll Canyon Road, including a south-facing direct access ramp at Carroll Canyon Road (1280511).

• Continued construction of the two HOV lanes in the median of I-805 South from Palomar Street to State Route 94, including a north-facing direct access ramp at Palomar Street (1280510).

• Completion of the South Bay Bus Maintenance Facility is scheduled for 2014. This facility will accommodate maintenance of Bus Rapid Transit vehicles along the I-805 corridor (1201513).

• Completion of the I-15 Bus Rapid Transit Sabre Springs Parking Structure is scheduled for 2014. This structure will accommodate up to 500 cars. The station improvements also include 150 surface parking spaces and 8 bus staging areas (1201505).

• Construction of the State Route 76 East Project is scheduled to begin during fall 2013. The project will widen the conventional highway to four lanes, from Mission Road to I-15 (1207606).

• Construction of the I-5/Genesee Avenue Project is scheduled to begin during fall 2013. The project will widen the Genesee Avenue Bridge across I-5 and add an auxiliary lane on southbound I-5 between Sorrento Valley Road and Genesee Avenue (1200506).

• Construction of SR 11 from State Route 905 to Enrico Fermi Road will complete the first phase of this planned toll road and provide a more direct access route to the state highway system from the California Highway Patrol Truck Inspection Facility near the Otay Mesa Port of Entry (1201101).

The TransNet POF is updated as necessary, but at least on an annual basis as part of the overall SANDAG budgeting process. The updated POF is reviewed by ITOC and the SANDAG Transportation Committee, and approved by the Board of Directors. The most recent POF was approved by the Board of Directors on November 16, 2012. This update of the POF focused on the major changes in the last year and emphasized the adjustments in recent costs and revenues and their effects on the long-term financial projections for the program. The POF update confirmed that the action taken in

xv the past three years to keep all of the active TransNet projects on their current schedules can be maintained with very similar results. The POF approved by the Board of Directors allows for continued progress on the TransNet EAP. The next POF update is scheduled during the first half of FY 2014.

Policy Update

SANDAG has been issuing debt in order expedite Board identified TransNet Early Action Program projects. At its October 25, 2013, Board of Directors meeting, a new Debt Policy was approved. The purpose of the Policy is to establish guidelines for the issuance and management of current and future SANDAG debt. The Debt Policy is designed to inform decision making and provide transparency to SANDAG financial market participants and the general public. The Debt Policy confirms the commitment of the Board of Directors, management, staff, and other decision makers to adhere to sound financial management practices.

Acknowledgments

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to SANDAG for its comprehensive annual financial report for the fiscal year ended June 30, 2012. This was the sixth consecutive year that SANDAG has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

The preparation of this report was accomplished with the cooperation of SANDAG management, financial staff, and the SANDAG independent auditors, Mayer Hoffman McCann P.C. We express our appreciation to the staff members and the auditors who contributed to the preparation of this report.

Respectfully submitted,

ANDRÉ DOUZDJIAN MARNEY COX Director of Finance Chief Economist

xvi BOARD OF DIRECTORS

The 18 cities and county government are SANDAG serving as the forum for regional decision-making. SANDAG builds consensus; plans, engineers, and builds public transit; makes strategic plans; obtains and allocates resources; and provides information on a broad range of topics pertinent to the region’s quality of life.

CHAIR FIRST VICE CHAIR SECOND VICE CHAIR EXECUTIVE DIRECTOR Hon. Jack Dale Hon. Jim Janney Hon. Dan Higginson Gary L. Gallegos

CITY OF CARLSBAD CITY OF SANTEE Hon. Matt Hall, Mayor Hon. Jack Dale, Councilmember (A) Hon. Farrah Douglas, Councilmember (A) Hon. John Minto, Vice Mayor (A) Hon. Lorraine Wood, Councilmember (A) Hon. Rob McNelis, Councilmember CITY OF CHULA VISTA CITY OF SOLANA BEACH Hon. Cheryl Cox, Mayor Hon. Lesa Heebner, Councilmember (A) Hon. Pamela Bensoussan, Councilmember (A) Hon. Mike Nichols, Mayor (A) Hon. Rudy Ramirez, Deputy Mayor (A) Hon. David A. Zito, Councilmember CITY OF CORONADO CITY OF VISTA Hon. Michael Woiwode, Councilmember Hon. Judy Ritter, Mayor (A) Hon. Al Ovrom, Councilmember (A) Hon. David Cowles, Deputy Mayor (A) Hon. Casey Tanaka, Mayor (A) Hon. John Aguilera, Councilmember CITY OF DEL MAR COUNTY OF SAN DIEGO Hon. Terry Sinnott , Mayor Hon. Greg Cox, Chairman (A) Hon. Lee Haydu, Deputy Mayor (A) Hon. Ron Roberts, Supervisor (A) Hon. Al Corti, Councilmember (A) Hon. Dave Roberts, Supervisor Hon. Bill Horn, Supervisor CITY OF EL CAJON (A) Hon. Dianne Jacob, Vice Chair Hon. Mark Lewis, Mayor (A) Hon. Bill Wells, Councilmember ADVISORY MEMBERS CITY OF ENCINITAS Hon. Lisa Shaffer, Deputy Mayor IMPERIAL COUNTY (A) Hon. Teresa Barth , Mayor Hon. John Renison, Supervisor, District 1 (A) Hon. Tony Kranz, Councilmember (A) Hon. Bill Hodge, Mayor, City of Calexico CITY OF ESCONDIDO CALIFORNIA DEPARTMENT OF TRANSPORTATION Hon. Sam Abed, Mayor Malcolm Dougherty, Director (A) Hon. Ed Gallo, Councilmember (A) Laurie Berman, District 11 Director (A) Hon. John Masson, Councilmember METROPOLITAN TRANSIT SYSTEM CITY OF IMPERIAL BEACH Harry Mathis, Chairman Hon. Jim Janney, Mayor (A) Hon. Ron Roberts (A) Hon. Robert Patton, Councilmember (A) Hon. Brian Bilbray, Councilmember NORTH COUNTY TRANSIT DISTRICT Hon. Mark Packard, Vice Chair CITY OF LA MESA (A) Hon. Ed Gallo Hon. Art Madrid, Mayor (A) Hon. Mike Nichols (A) Hon. Ruth Sterling, Councilmember

(A) Hon. Kristine Alessio, Councilmember U.S. DEPARTMENT OF DEFENSE CAPT Clifford Maurer, USN, CEC, CITY OF LEMON GROVE Southwest Division Naval Facilities Engineering Command Hon. Mary Teresa Sessom, Mayor (A) CAPT Allan Stratman, USN, CEC, (A) Hon. Jerry Jones, Councilmember Southwest Division Naval Facilities Engineering Command (A) Hon. George Gastil, Councilmember SAN DIEGO UNIFIED PORT DISTRICT CITY OF NATIONAL CITY Hon. Ann Moore, Chair Hon. Ron Morrison, Mayor (A) Hon. Bob Nelson (A) Hon. Luis Natividad, Vice Mayor (A) Hon. Alejandra Sotelo-Solis, Councilmember SAN DIEGO COUNTY WATER AUTHORITY Tom Wornham, Chairman CITY OF OCEANSIDE (A) David Barnum, Director Hon. Jack Feller, Councilmember (A) Hon. Gary Felien , Councilmember SOUTHERN CALIFORNIA TRIBAL (A) Hon. Jerry Kern, Councilmember CHAIRMEN’S ASSOCIATION Hon. Allen Lawson, Chairman, CITY OF POWAY San Pasqual Band of Diegueño Indians Hon. Don Higginson, Mayor Hon. Robert Smith, Chairman, (A) Hon. Jim Cunningham, Councilmember (Pala Band of Mission Indians (A) Hon. John Mullin, Deputy Mayor MEXICO Hon. Remedios Gómez-Arnau CITY OF SAN DIEGO Cónsul General of Mexico Hon. Bob Filner, Mayor (A) Hon. Francisco J. Olivarria (A) Hon. Marti Emerald, Councilmember Deputy Cónsul General of Mexico (A) Hon. Myrtle Cole, Councilmember Hon. Alberto Diaz Hon. Todd Gloria, Council President (A) Hon. David Alvarez, Councilmember (A) Hon. Sherri Lightner, Councilmember CITY OF SAN MARCOS Hon. Chris Orlando, Councilmember (A) Hon. Jim Desmond, Mayor (A) Hon. Rebecca Jones, Vice Mayor

SAN DIEGO ASSOCIATION OF GOVERNMENTS

SANDAG Executive Staff As of June 30, 2013

Executive Director Gary L. Gallegos

Chief Deputy Executive Director Renée Wasmund

General Counsel John Kirk

Director of Administration Laura Coté

Director of Finance André Douzdjian

Director of Land Use and Transportation Planning Charles “Muggs” Stoll

Director of Operations Samuel Johnson

Director of Mobility Management and Project Implementation Jim Linthicum

Director of Technical Services Kurt Kroninger

Director of Communications Colleen Windsor

Director of TransNet and Legislative Affairs Program Kim Kawada

Chief Economist Marney Cox

TDM Program Manager Ray Traynor

San Diego Association of Governments Organization Chart

BOARD OF DIRECTORS

Borders Committee

Executive Committee Executive Office

Public Saf et y Committee

Regional Planning Committee

Transportation Committee

Department of Department of Department of Department of Department of Land Use and Mobility Mgmt Department of Technical Administration Finance Transportation and Project Operations Services Planning Implementation

FINANCIAL SECTION

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6 Management's Discussion and Analysis

As management of the San Diego Association of Governments (SANDAG), we provide this narrative overview and analysis of the financial activities of SANDAG for the fiscal year ended June 30, 2013. The intent of this analysis is to assist the readers of the SANDAG financial statements in better understanding the overall financial condition of the agency. The information presented here should be considered in conjunction with the information provided in the letter of transmittal.

Financial Highlights

. SANDAG reported net position of $299,255,807. Of this amount, net position (deficit) of ($234,734,298) is considered unrestricted. A significant factor related to the net position balance is the issuance of $1,370,585,000 in bonds issued in fiscal years 2008, 2011, and 2012 as part of the Early Action Program to expedite congestion relief projects focusing on jump starting construction of the region’s top priority transportation infrastructure projects.

. The SANDAG total net position decreased by $28,922,344 in fiscal year 2013. This decrease is primarily due to higher TransNet program expenses utilizing proceeds from the bond issuances and debt service payments, offset by an increase in capital assets.

. As of the close of the current fiscal year, the SANDAG governmental funds reported combined ending fund balances of $718,578,426. Of this total amount, $713,393,281 is restricted for debt service and project spending, $8,797,092 as non-spendable prepaid items, and $3,611,947 as an offsetting unassigned fund deficit.

. The SANDAG total debt balance at the close of the current fiscal year remains approximately the same comparing to that of fiscal year 2012. This is primarily due to the reclassification of the loss on refunding of $20,083,124 from long-term debt to deferred outflow of resources as part of the GASB 65 implementation in fiscal year 2013 offset by bond principal repayments of $18,640,000 and the $1,620,000 principal pay-down of commercial paper. At the end of the current fiscal year, San Diego County Regional Transportation Commission (the Commission) had a total debt outstanding of $1,241,932,472, and State Route 125 toll road fund (SR 125 fund) had a debt balance of $100,572,989 TIFIA Notes with $58,162,792 of unamortized fair value debt adjustment.

Overview of the Financial Statements

The SANDAG annual financial report consists of five parts: management’s discussion and analysis; basic financial statements; required supplementary information; an optional section that presents combining statements and additional supplementary information; and a statistical section which furnishes relevant statistical data of the agency.

Management’s discussion and analysis provided here are intended to serve as an introduction to the SANDAG basic financial statements. The SANDAG basic financial statements consist of three components: 1) government-wide financial statements; 2) fund financial statements; and 3) the notes to financial statements.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the SANDAG finances, in a manner similar to a private sector business.

The statement of net position presents financial information on all of the SANDAG assets and liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of SANDAG is improving or deteriorating.

The statement of activities presents information showing changes in the SANDAG net position during the most recent fiscal year. All changes in net position are reported when the underlying events giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported for some items that will only result in cash flows in future fiscal periods.

Both of the government-wide financial statements distinguish functions of SANDAG that are principally supported by sales taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of SANDAG include general government, net of cost recovery, modeling and research, criminal justice, planning and forecasting, sustainable development, smart mobility programs and services, intermodal planning and implementation, internal and external coordination, bicycle facilities, Independent Taxpayer Oversight Committee, major corridor capital projects, major corridor environmental mitigation, local project environmental mitigation, local street improvements, smart growth, new major corridor transit operations, transit system improvements, transit capital contributions, and interest on long-term debt.

The business-type activities of SANDAG include the Service Bureau, which provides informational and technical services to member agencies, nonmember government agencies, private organizations, and individuals to enhance the quality and extent of demographic, economic, transportation, land use, criminal justice, and other information maintained in the Regional Information System; the Interstate 15 FasTrak® program, which allows solo drivers to pay a toll to use the express lanes on Interstate 15; and the State Route 125 (SR 125) toll road operations, an 11.2 mile limited access highway in the County of San Diego.

The government-wide financial statements include not only SANDAG itself (known as the primary government), but also a legally separate nonprofit corporation (SourcePoint), which provides regional information services and technical assistance to private clients and public agencies; and a legally separate Joint Powers Agency Automated Regional Justice Information System (ARJIS), which provides a regional complex criminal justice enterprise information system utilized by more than 50 local, state, and federal agencies in the San Diego region. Financial information for these component units is reported separately from the financial information presented for the primary government itself. The Commission, although also legally separate, functions for all practical purposes as a program of SANDAG, and therefore, has been reported as a blended component unit and included as an integral part of the primary government.

The government-wide financial statements can be found on pages 25 to 26 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. SANDAG, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of SANDAG are either governmental-type funds or proprietary funds.

8 Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the fiscal year. Such information may be useful in assessing a government's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

SANDAG maintains eight individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund; the TransNet fund and the San Diego County Regional Transportation Commission sales tax projects fund; the capital projects fund; and the San Diego County Regional Transportation Commission debt service fund, which are considered to be major funds. Data from the three non-major funds which are general services fund, the fare media sales fund and Service Authority for Freeway Emergency Operations (SAFE) program fund, is combined into a single aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements in the combining and individual fund statements and schedules section of this report.

Proprietary funds. SANDAG maintains three proprietary funds. Proprietary funds can either be enterprise funds or internal service funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. SANDAG uses enterprise funds to account for its Interstate 15 FasTrak program, Service Bureau program, and the State Route 125 toll road operations.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the SR 125 fund, which is considered to be a major fund. Data from the other two nonmajor proprietary funds are combined into a single aggregated presentation. Individual fund data for each of these nonmajor proprietary funds is provided in the form of combining statements in the combining and individual fund statements and schedules of this report.

The basic proprietary fund financial statements can be found on pages 43 to 45 of this report.

Notes to the basic financial statements. The notes provide additional information that is necessary to acquire a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 47 to 92 of this report.

Other Information. In addition to the basic financial statements, required supplementary information can be found on pages 95 to 100 of this report.

The combining statements referred to earlier in connection with nonmajor governmental funds and proprietary funds are presented immediately following the required supplementary information on pensions and OPEB. Combining and individual fund statements and schedules can be found on pages 102 to 106 of this report.

Government-Wide Overall Financial Analysis

As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of SANDAG, assets and deferred outflows of resources exceeded liabilities by $299,255,807 at the close of the most recent fiscal year.

San Diego Association of Governments’ Net Position

Governmental activities Business-type activities Total 2013 2012 2013 2012 2013 2012

Interfund balances $ 56,373,690 $ 58,006,641 $ (56,373,690) $ (58,006,641) $ - $ - Capital assets 532,238,513 452,030,371 399,169,289 412,652,222 931,407,802 864,682,593 Other assets 823,300,731 1,041,222,379 23,981,209 14,880,592 847,281,940 1,056,102,971 Total assets 1,411,912,934 1,551,259,391 366,776,808 369,526,173 1,778,689,742 1,920,785,564

Deferred outflows of resources 85,461,494 - - - 85,461,494 -

Current liabilities 153,175,687 180,334,733 5,069,702 8,689,436 158,245,389 189,024,169 Restricted liabilities 35,681,078 35,446,775 - - 35,681,078 35,446,775

Noncurrent liabilities 1,212,233,181 1,208,657,457 158,735,781 155,721,837 1,370,968,962 1,364,379,294 Total liabilities 1,401,089,946 1,424,438,965 163,805,483 164,411,273 1,564,895,429 1,588,850,238

Net Position:

Net investment in capital assets 212,369,791 144,582,596 240,433,508 255,259,406 452,803,299 399,842,002 Restricted for debt service 64,135,550 10,314,653 448 1,866,486 64,135,998 12,181,139 Restricted for environmental mitigation 1,210,668 1,208,689 - - 1,210,668 1,208,689 Restricted for major maintenance post-acquisition - - 15,761,136 4,540,504 15,761,136 4,540,504 Restricted for other - - 79,004 142,000 79,004 142,000

Unrestricted (deficit) (181,431,527) (29,285,512) (53,302,771) (56,693,496) (234,734,298) (85,979,008) Total net position $ 96,284,482 $ 126,820,426 $ 202,971,325 $ 205,114,900 $ 299,255,807 $ 331,935,326

The majority of the SANDAG net position includes $452,803,299 net investment in capital assets. These capital assets are used or, in the case of the construction-in-progress, will be contributed to other governmental agencies, which will then be used to provide services to citizens and, therefore, are not available for future spending. A total of $64,135,998 is restricted for debt service, $1,210,668 for environmental mitigation, $15,761,136 for major maintenance, and $79,004 for project revenue. The remaining offsetting balance of net position is the unrestricted net deficit of $234,734,298.

Factors contributing to the unrestricted net deficit of $234,734,298 include debt activities of the Commission and the SR 125 fund. In fiscal year 2013, there is a total of $100,572,989 TIFIA notes payable with a fair value debt balance, net of amortization of $58,162,792 for the SR 125 fund. In fiscal year 2013, there is $1,241,932,472 of outstanding long-term debt of the Commission included in the statement of net position, which is offset by related balances of cash and investments from the debt proceeds of approximately $436,000,000 at June 30, 2013, due from other governments for debt proceeds passed through to another government, net of principal retirement for a balance of $43,611,447 and approximately $375,000,000 of cash and investments related to TransNet balances not yet requested by recipient agencies. The restricted liabilities are not available for spending as the long-term debt payable will be used to pay down outstanding commercial paper notes, which were issued to buy the North County Transit District (NCTD) Certificates of Participation (COP) investment. The restricted deposit payable is a NCTD deposit for commercial paper interest payments related to the COPs. Restricted net position includes $64,135,550 of resources restricted by the TransNet Ordinance that must be used for upcoming debt service payments on the outstanding sales tax revenue bonds and $1,210,668 of resources subject to externally imposed restrictions that must be used for environmental mitigation projects (EMP), $15,761,136 set aside for major maintenance of the SR 125 fund, and $79,004 restricted for project revenues.

Additional information on SANDAG long-term debt can be found in Note III.F and additional information on SANDAG capital assets can be found in Note III.C in the notes to the basic financial statements of this report.

San Diego Association of Governments’ Change in Net Position Governmental activities Business-type activities Total 2013 2012 2013 2012 2013 2012 Revenues: Program Revenues: Charges for services $ 3,564,036 $ 1,956,262 $ 32,823,234 $ 20,455,657 $ 36,387,270 $ 22,411,919 Operating grants and contributions 78,195,117 65,142,256 - - 78,195,117 65,142,256 Capital grants and contributions 112,147,740 114,897,279 - - 112,147,740 114,897,279 General Revenues: Local TransNet sales tax funds 249,520,133 239,071,064 - - 249,520,133 239,071,064 Local Transportation Development Act Fund 8,135,581 7,488,972 - - 8,135,581 7,488,972 Investment earnings 12,212,398 (6,984,702) 37,142 1,366,589 12,249,540 (5,618,113) Other revenues 64,454 32,336 11,400 - 75,854 32,336 Total revenues 463,839,459 421,603,467 32,871,776 21,822,246 496,711,235 443,425,713 Expenses: General government, net of cost recovery (75,055) (50,395) - - (75,055) (50,395) Modeling and research 4,458,732 3,906,142 - - 4,458,732 3,906,142 Criminal justice 1,521,582 1,635,255 - - 1,521,582 1,635,255 Planning and forecasting 4,212,706 4,708,816 - - 4,212,706 4,708,816 Sustainable development 1,304,160 1,269,411 - - 1,304,160 1,269,411 Smart mobility programs and services 47,366,426 46,418,002 - - 47,366,426 46,418,002 Intermodal planning and implementation 2,114,127 2,602,205 - - 2,114,127 2,602,205 Internal and external coordination 5,773,179 7,078,166 - - 5,773,179 7,078,166 SAFE program 11,216,566 - - - 11,216,566 - Bicycle facilities 71,080 192,495 - - 71,080 192,495 Independent Taxpayer Oversight Committee 83,071 356,159 - - 83,071 356,159 Major corridor capital projects 126,155 542,364 - - 126,155 542,364 Major corridor environmental mitigation - 4,264 - - - 4,264 Local project environmental mitigation 34,019 1,744 - - 34,019 1,744 Local street improvements 66,153,631 86,880,721 - - 66,153,631 86,880,721 Smart growth 1,783,732 1,821,384 - - 1,783,732 1,821,384 New major corridor transit operations 606,497 1,912,773 - - 606,497 1,912,773 Transit system improvement 39,679,702 37,632,167 - - 39,679,702 37,632,167 Transit capital contributions (Note III.G) 244,093,156 246,284,582 - - 244,093,156 246,284,582 Interest on long-term debt 58,602,402 46,908,631 7,692,606 4,953,495 66,295,008 51,862,126 Service Bureau - - 504,167 490,289 504,167 490,289 Interstate 15 FasTrak - - 6,092,062 5,094,168 6,092,062 5,094,168 State Route 125 Toll Road - - 22,218,876 18,927,612 22,218,876 18,927,612 Total expenses 489,125,868 490,104,886 36,507,711 29,465,564 525,633,579 519,570,450

Change in net position before transfers (25,286,409) (68,501,419) (3,635,935) (7,643,318) (28,922,344) (76,144,737)

Transfers in (out) (1,492,360) (210,146,639) 1,492,360 210,146,639 - - Change in net position (26,778,769) (278,648,058) (2,143,575) 202,503,321 (28,922,344) (76,144,737) Net position, beginning of year (restated) 123,063,251 405,468,484 205,114,900 2,611,579 328,178,151 408,080,063

Net position, end of year $ 96,284,482 $ 126,820,426 $ 202,971,325 $ 205,114,900 $ 299,255,807 $ 331,935,326

11 Governmental activities. Governmental activities decreased the SANDAG net position by $26,778,769 which is due to total expenses of $489,125,868 exceeding total revenue of $463,839,459 by $25,286,409 combined with a transfer out of $1,492,360.

Key elements of the revenue and expense differences between fiscal year 2013 and fiscal year 2012 for governmental activities are as follows:

Total revenues increased by 10 percent or $42,235,992. Key factors in this increase are as follows:

. Charges for services revenue increased by $1,607,774, or 82 percent. This increase is primarily due to the SAFE program revenue incurred in fiscal year 2013. The SAFE program is responsible for purchasing, installing, operating, and maintaining a motorist aid system of call boxes. The SAFE program operation was transferred from the County of San Diego to SANDAG as of January 1, 2013, by the adoption of Assembly Bill No. 1572 (AB 1572) (Fletcher, 2012).

. Operating grants and contributions increased by $13,052,861. This increase is primarily due to the SAFE program fund cash balance of $14,507,396 transferred from the previous management entity to SANDAG in January 2013.

. Sales tax revenue increased by $11,095,678 or 4 percent, which is the result of an increase in TransNet and Transportation Development Act sales tax revenues received in fiscal year 2013 over fiscal year 2012.

. Investment earnings increased by $19,197,100 in fiscal year 2013, which is primarily the result of the annual derivative interest adjustment on the 2018 basis rate swaps.

Total expenses decreased by $979,018, or 0.2 percent, over the prior year. Key factors in this net decrease are as follows:

. TransNet program expenses decreased $20,806,184, or 16 percent which is primarily due to local streets improvements expense decrease of $20,727,090. This expense was based on recipient requests of TransNet funds for eligible costs, which were lower in fiscal year 2013 in relation to fiscal year 2012.

. Transit capital contributions decreased $2,191,426, or 0.8 percent, to $244,093,156. During the current fiscal year, $238,429,780 of completed construction projects were contributed to other government agencies responsible for public transportation and highway operations as follows: $66,117,692 to Caltrans, $139,721,280 to San Diego Metropolitan Transit System, $9,946,813 to California State Parks, $202,930 to NCTD, $44,956 to the Port of San Diego, $10,419,148 to the City of Encinitas, $576,528 to the City of San Diego, $457,357 to the City of Escondido, $590,108 to the City of San Marcos, $449,000 to the City of La Mesa, $169,429 to the City of Chula Vista, $4,003,387 to the City of Oceanside, and $5,731,152 to the City of Imperial Beach.

. Interest on long-term debt increased by $11,693,771, or 24 percent, which is primarily the result of interest expense incurred on the $420,585,000 sales tax revenue bonds issued in June 2012.

. A net increase of $10,324,821, or 15 percent, in other SANDAG governmental activities is the main result of the following:

12 o Internal and external coordination project expenses decreased by $1,304,987, or 18.4 percent, primarily as a result of expenses for a major effort of SR 125 acquisition planning completed in fiscal year 2012. There was no similar expense incurred in fiscal year 2013.

o SAFE program expenses of $11,216,566 were added in the current fiscal year when SANDAG began managing the SAFE program operations in January 2013. Of the total expenses, $9,847,407 was distributed to the various local cities that are members of the SAFE program as required by AB 1572.

o Modeling and Research project expenses increased by $552,590, or 14 percent, which is primarily due to the increased expenses for both the Activity-Based Model (ABM) Development project completed in fiscal year 2013 and the transportation studies project with increased project activities for data collection as a key component of the new ABM.

Business-type activities. Business-type activities decreased the SANDAG net position by $2,143,575, which is a result of total expenses of $36,507,711, exceeding total revenue of $32,871,776 by $3,635,935 offset by a transfer in of $1,492,360.

Key elements of the revenue and expense differences between fiscal year 2013 and fiscal year 2012 for business-type activities are as follows:

Total revenue for business-type activities increased $11,049,530, or 50 percent, in fiscal year 2013. Charges for services increased $12,367,577, or 60 percent, which is primarily the result of operations for six months of the SR 125 toll road in fiscal year 2012 comparing to operations for twelve months in fiscal year 2013. Utilization of the toll road increased substantially with the announcement of the SANDAG acquisition and with the lowering of toll rates by up to 40 percent, with the goal of easing congestion on Interstate 805 and local streets.

Total expenses for business-type activities increased $7,042,147, or 23 percent, in fiscal year 2013, which is primarily the result of operations for six months of the SR 125 toll road in fiscal year 2012 versus 12 months of operations in fiscal year 2013, operations of the I-15 FasTrak, and interest expenses.

13 Expenses and Program Revenues - Governmental Activities

FY13 Expenses FY12 Expenses

$280,000,000 $260,000,000 $240,000,000 $220,000,000 $200,000,000 $180,000,000 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 TransNet activities Transit capital contributions Interest on long-term debt All other

Revenues By Source - Governmental Activities

Capital grants and contributions Local TransNet sales tax 24% funds 55%

Operating grants and contributions 17% All other sources 5%

14 Financial Analysis of the Government’s Funds

As noted earlier, SANDAG uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the SANDAG governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the SANDAG financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

As of the end of the fiscal year, the SANDAG governmental funds reported combined ending fund balances of $718,578,426. Of this total amount, $3,611,947 constitutes unassigned fund deficit. The remainder of the fund balance is either nonspendable or restricted.

The general fund is the chief general government operating fund of SANDAG. At the end of the current fiscal year, fund balance of the general fund was $11,601,914, and of this amount $59,670 is nonspendable prepaid items. The fund balance of the general fund during the current fiscal year increased $1,811,233. The key factor contributing to this increase is that actual revenue received was greater than expenses, resulting in an increase in flexible funding revenues deposited to the SANDAG contingency reserve, in accordance with the Board of Director’s (Board) Policy.

The TransNet fund is the recipient fund from the Commission (blended component unit); and the funds are subsequently transferred out to projects and general and administrative expenditures in the general fund, general services fund, and capital projects fund. At the end of the current fiscal year, the fund balance of the TransNet fund was $0. Revenues increased by $65,306,015, or 45 percent, which is due to a surge of Early Action Program (EAP) projects under the TransNet Extension Ordinance which was funded with use of the 2008, 2010, and 2012 bonds. Transfers out increased by $65,306,015, or 45 percent, which is also due to the EAP projects.

The general services fund had a fund balance of ($1,074,554). The fund balance of the general services fund decreased by $2,957,638, or 150 percent, during the current fiscal year primarily due to revenue recognition timing between fiscal year 2012 and fiscal year 2013 and therefore the revenue was unavailable.

The San Diego County Regional Transportation Commission sales tax projects special revenue fund had a fund balance of $416,962,635, all of which was restricted. This fund balance during the current fiscal year decreased by $30,235,516. Key factors contributing to this decrease are as follows:

. Total fund expenditures exceeded fund revenue by $69,091,244 in fiscal year 2013 due to increased EAP project costs offset by net interfund transfers in of $38,855,728, which is primarily due to transfers with the Commission’s debt service fund for the use of debt proceeds toward major corridor and major corridor environmental mitigation programs and for principal and interest payments. The bond proceeds transfers in of $116,197,279 are reduced by sales tax receipts transfers out of $77,341,551 that are transferred to the debt service fund for payment of debt principal and interest.

The capital projects fund had a fund balance of ($5,342,215). The fund balance of the capital projects fund decreased by $20,680,290, or 135 percent, during the current fiscal year primarily due to revenue recognition timing between fiscal year 2012 and fiscal year 2013 and $14,182,183 revenue was considered unavailable.

The Commission commercial paper and sales tax revenue bonds debt service fund (debt service fund) had a fund balance of $291,362,816, all of which was restricted. The fund balance of the debt service fund during the current fiscal year decreased by $101,996,439, or 26 percent, and key factors for this decrease are as follows:

. Expenditures in the current year exceeded revenues by $64,719,711 due to principal retirement of bonds and commercial paper and interest and other charges for the fiscal years 2008, 2011, and 2012 bonds, offset with the receipt of federal subsidy revenue for the 2010 Build America Bonds (BABs) net interest payment.

. Interfund transfers of $38,855,728 occurred, which is primarily due to transfers with the Commission’s special revenue fund as noted in the San Diego County Regional Transportation Commission sales tax projects special revenue fund above.

The prepaid fare media sales special revenue fund had a fund balance of $152,245. The fund balance of the prepaid fare media sales fund decreased during the current fiscal year by $2,699,945, primarily due to the timing difference between when revenue is recognized and when payments are made to the operators, as distributions are made on a cash basis.

The SAFE special revenue fund had a fund balance of $4,915,585. This special revenue fund was established in January 2013 by adoption of AB 1572. The fund balance constitutes the current fiscal year operating revenue of $1,614,190, $14,507,396 contributed from the previous SAFE program management entity and investment income of $10,565 offset by operating expense of $1,369,158 and distributions to program member cities of $9,847,407.

General Fund Budgetary Highlights

The general fund is the SANDAG primary operating fund and accounts for all financial resources of the general government, except those required to be accounted for in another fund. During the fiscal year there was an increase between the original and final amended budget.

. Local Transportation Development Act (TDA) sales tax actual revenues were equivalent to the actual TDA receipts for 2013. Actual revenues represent the full SANDAG TDA claim received, which is the SANDAG portion of the total apportionment of available TDA sales tax revenues. SANDAG budgets TDA revenues to fund TDA-eligible project expenditures as a transfer to other funds, which is not always equal to the claim. In accordance with Board of Director Policy, any excess is considered savings and was deposited into the contingency reserve. General government actual expenditures, net of cost recovery were lower than the budgeted amount by $636,397. This is primarily related to the salary savings created by employee turnover and the resulting vacancies in those staff positions while recruiting efforts were underway.

. Actual transfers in were higher than the budget by $7,430. The budget of $148,500 is comprised of one-half of the Board of Directors budget and one-half of the general and administrative contingency budget. Actual Board of Directors expenditures coming in slightly above the budget comprises the variance.

. Actual transfers out were lower than the budget by $1,149,446, or 16 percent. The budget is

16 comprised of TDA funding expected to be transferred to other funds to pay for TDA-eligible project expenditures. Project expenditures in the general services fund, some of which are funded with TDA funds, were approximately 26 percent under budget. Some projects experienced delayed work efforts. Projects are initially funded using dedicated funds before TDA funding is applied, allowing TDA to be carried over for work efforts in 2014.

. Some of the more significant projects with this delay were the Regional Comprehensive Plan and Sustainable Communities Strategy Planning, Destination Lindbergh, Environmental Justice Analysis, 2050 RTP Transit Plan – Planning Studies, and the Series 13 Regional Growth Forecast.

Capital Asset and Debt Administration

Capital assets. The SANDAG investment in capital assets for its governmental activities as of June 30, 2013, amounts to $532,238,513 (net of accumulated depreciation). This investment in capital assets includes primarily Construction-in-Progress (CIP) on projects for the benefit of the transit agencies, Caltrans, or other governmental agencies. Once completed, these projects are contributed to the other governmental agencies to reflect the other government’s custodial accountability for the operation and maintenance of the assets. Major projects under construction as of June 30, 2013, include:

. TransNet EAP Projects. These included major corridor projects for Interstate 5, Interstate 15, Interstate 805, State Route 76, the Mid-Coast Corridor, Blue and Orange Line Trolley Improvements, and the Transportation Project Biological Mitigation Fund. The CIP balance for EAP projects is $526.3 million and the overall cumulative fiscal year 2013 approved budget for EAP projects through fiscal year 2018 is $5.3 billion.

Capital Assets (net of accumulated depreciation)

Governmental activities 2013 2012 Governmental activities: Office equipment $ 25,351 $ 25,829 Computer equipment 273,117 259,209 Other equipment 20,842 55,234 Vehicles 8,933 13,400 Buses 332,439 239,729 Construction-in-progress 526,336,392 446,195,531 Land 5,241,439 5,241,439 Governmental activities capital assets, net $ 532,238,513 $ 452,030,371

Additional information on the SANDAG capital assets can be found in Note III.C in the notes to the basic financial statements of this report.

Debt Administration

Long-term debt. At the end of the current fiscal year, SANDAG had total debt outstanding of $1,402,113,662, which is comprised of $814,265,000 of tax-exempt sales tax revenue bonds, $338,960,000 of Build America Bonds (BABs) (sales tax revenue bonds), net of the premium on the

17 2010 tax-exempt bonds of $735,874 and 2012 tax-exempt bonds of $54,191,598, loss on refunding the Series 2008 Bonds of $21,623,139, $33,780,000 of outstanding commercial paper notes, compensated absences payable of $12,075,709, and $158,735,781 of TIFIA notes net of unamortized fair value adjustment.

Governmental activities Business-type activities Total 2013 2012 2013 2012 2013 2012 Sales tax bonds $ 1,208,152,472 $ 1,205,895,343 $ - $ - $ 1,208,152,472 $ 1,205,895,343 Commercial paper 33,780,000 33,821,000 - - 33,780,000 33,821,000 Pension related debt 2,075,709 1,841,114 - - 2,075,709 1,841,114 TIFIA notes - - 100,572,989 97,300,348 100,572,989 97,300,348 Unamortized FV Adjustment 58,162,792 60,092,478 58,162,792 60,092,478

Total $ 1,244,008,181 $ 1,241,557,457 $ 158,735,781 $ 157,392,826 $ 1,402,743,962 $ 1,398,950,283

The SANDAG total debt increased by $2,450,724, which is primarily due to the reclassification of $21 million of loss on refunding offset by debt repayment of 18.6 million.

Additional information on the SANDAG long-term debt can be found in Note III.F in the notes to the basic financial statements of this report.

Economic Factors and Next Year’s Budgets

. In the Overall Work Program (OWP), which is the non-capital portion of the Board approved budget document, federal consolidated planning grant sources are expected to remain flat in fiscal year 2014. The Board approved total fiscal year 2014 OWP budget was split into two major components, with the new regional operations section approved for $46.7 million, and remaining projects in the OWP approved at $43.6 million. For the OWP, notable shifts in programs are the addition of San Diego Forward: The Regional Plan, which initiates a new cycle of the Regional Transportation Plan (RTP) and is consolidating previous planning efforts of the RTP, the Regional Comprehensive Plan, and the Sustainable Communities Plan into one comprehensive document. This $4.5 million planning initiative is a $1.1 million increase over comparable efforts in fiscal year 2013, and will continue into fiscal year 2015. Supporting this major planning initiative is an increase in travel demand and land use modeling efforts, which are budgeted to increase $1.3 million in fiscal year 2014. Funding and activities relating to Criminal Justice Research are planned to increase $1.1 million, and Transportation Demand Management program continues to expand, expecting an increase in activity of $1.5 million.

. Regional Operations groups together programs which require 24 hour monitoring, including the SR 125 Facilities Operations, SAFE, I-15 FasTrak, Freeway Service Patrol, and ARJIS. Fiscal year 2014 will mark the base year for this group of programs.

. In the Capital Budget, cumulative capital project funding through fiscal year 2022 as approved in the fiscal year 2014 budget is reduced slightly from $7.3 billion to $7.2 billion for the TransNet EAP projects. This program is made up of projects relating to the 40-year TransNet Extension sales tax program, approved by the voters of San Diego County in November 2004.

. SANDAG continues to strive for continuous improvement by implementing cost effective measures to maximize the efficiency of the general fund expenditures. The SANDAG budget and contract management programs continue to use new technology to develop more effective fiscal discipline,

18 flexibility, and responsiveness. Emphasis is being placed on scrutinizing all travel requests, re-evaluating each vacant position before authorizing replacement, expanding the ability to respond to legal issues, and optimizing the risk management portfolio. While administrative staffing is staying nearly flat at 1.3 percent, increases in legal services, Disadvantaged Business Enterprise consultation and outreach, insurance, and data storage capacity are leading to a 10 percent increase in general and administrative expenses for the next fiscal year.

. Actual cash basis sales tax collections have increased in 16 of the last 19 years of collections, with decreases occurring in fiscal years 2008, 2009, and 2010. An increase of 4.5 percent over the fiscal year 2012 estimate was originally projected for fiscal year 2013. Actual receipts during the year were 4.3 and 4.6 percent over fiscal year 2012 actual receipts for TransNet and TDA, respectively. The projected increase in the TDA apportionment for fiscal year 2014 is 5.0 percent over the revised fiscal year 2013 estimate.

. For the fiscal year 2014 budget, $262.5 million in TransNet sales tax receipts was budgeted, which represents a 5.0 percent increase over the revised estimate for fiscal year 2013. The sales tax revenue budget will fund general government administration, bicycle, pedestrian, and neighborhood safety projects, the Independent Taxpayer Oversight Committee, major corridor capital projects, major corridor environmental mitigation, local project environmental mitigation, local street improvements, smart growth, new major corridor transit operations, and transit system improvements.

Requests for Information

This financial report was designed to provide a general overview of the SANDAG finances for all those interested. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Finance, San Diego Association of Governments, 401 B Street, Suite 800, San Diego, California 92101, or emailed to the Director of Finance at [email protected].

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20 BASIC FINANCIAL STATEMENTS

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22 GOVERNMENT-WIDE FINANCIAL STATEMENTS

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San Diego Association of Governments Statement of Net Position June 30, 2013

Primary Government Component Units Governmental Business-Type Total Activities Activities 2013 SourcePoint ARJIS ASSETS Cash and investments $ 602,826,156 $ 5,648,385 $ 608,474,541 $ 598,506 $ 3,634,935 Accounts receivable 1,439,949 1,575,384 3,015,333 - 64,875 Prepaid items and other assets 8,797,092 506,888 9,303,980 - 2,904 Interest receivable 1,511,898 - 1,511,898 399 1,917 Due from other governments 139,422,962 409,964 139,832,926 436,220 1,386,856 Due from component units 4,867 - 4,867 - - Internal balances 56,373,690 (56,373,690) - - - Other post-employment benefit asset 523,078 - 523,078 - - Restricted assets: Cash restricted for capital project retentions 3,428,511 69,000 3,497,511 - - Cash and investments restricted for debt service 64,135,550 364,790 64,500,340 - - Cash and investments restricted for environmental mitigation 1,210,668 - 1,210,668 - - Cash and investments restricted for major maintenance & project - 15,406,798 15,406,798 - - Capital assets: Non-depreciable 531,577,831 1,980,000 533,557,831 - 794,456 Depreciable, net of accumulated depreciation 660,682 397,189,289 397,849,971 - 7,255,392 Total assets 1,411,912,934 366,776,808 1,778,689,742 1,035,125 13,141,335

DEFERRED OUTFLOWS OF RESOURCES Accumulated decrease in fair value of hedging swap agreement 65,378,370 - 65,378,370 - - Deferred loss on refunding 20,083,124 - 20,083,124 - -

Total Deferred outflows of resources 85,461,494 - 85,461,494 - -

LIABILITIES Accounts payable 43,753,643 1,991,712 45,745,355 302,235 343,340 Retentions payable 4,775,279 2,984 4,778,263 - - Due to other governments 36,101,022 864,721 36,965,743 - 174,679 Due to primary government - - - 730 4,137 Accrued interest payable 11,091,174 - 11,091,174 - - Transponder deposits payable - 16,215 16,215 - - Advance due within one year - - - 503,630 - Unearned revenue 10,383,329 2,194,070 12,577,399 - - Derivative instrument - swap liability 47,071,240 - 47,071,240 - - Liabilities payable from restricted assets: Deposits payable 239,018 - 239,018 - - Retentions payable 3,667,060 - 3,667,060 - - Long-term debt payable - due within one year 31,775,000 - 31,775,000 - - Noncurrent liabilities: Due within one year 19,160,709 656,988 19,817,697 - - Due in more than one year 1,193,072,472 99,916,001 1,292,988,473 - - Fair value debt, net of amortization - 58,162,792 58,162,792 - - Total liabilities 1,401,089,946 163,805,483 1,564,895,429 806,595 522,156

NET POSITION Net investment in capital assets 212,369,791 240,433,508 452,803,299 - 8,049,848 Restricted for: Special program - commute - - - - - Debt service 64,135,550 448 64,135,998 - - Environmental mitigation 1,210,668 - 1,210,668 - - Major maintenance post-acquisition - 15,761,136 15,761,136 - - Project revenue - 79,004 79,004 10,120 - Unrestricted (deficit) (Note I.E.7) (181,431,527) (53,302,771) (234,734,298) 218,410 4,569,331 Total net position $ 96,284,482 $ 202,971,325 $ 299,255,807 $ 228,530 $ 12,619,179

See accompanying Notes to the Basic Financial Statements.

25 San Diego Association of Governments Statement of Activities For the year ended June 30, 2013

Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary government: Governmental activities: General government, net of cost recovery $ (75,055) $ 565,386 $ - $ - Modeling and research 4,458,732 - 3,115,617 - Criminal justice 1,521,582 200,001 1,301,869 - Planning and forecasting 4,212,706 - 3,061,486 - Sustainable development 1,304,160 - 1,059,144 - Smart mobility programs and services 47,366,426 1,184,459 39,661,498 - Intermodal planning and implementation 2,114,127 - 1,723,851 - Internal and external coordination 5,773,179 - 2,275,146 - Bicycle facilities 71,080 - - - Independent Taxpayer Oversight Committee 83,071 - - - Major corridor projects 126,155 - 4,476,536 - Local project environmental mitigation 34,019 - - - Local street and road projects 66,153,631 - - - Smart growth 1,783,732 - - - New major corridor transit operations 606,497 - - - Transit system projects 39,679,702 - - - SAFE program 11,216,566 1,614,190 14,507,396 - Transit capital contributions (Note III.G) 244,093,156 - - 112,147,740 Interest on long-term debt 58,602,402 - 7,012,574 -

Total governmental activities 489,125,868 3,564,036 78,195,117 112,147,740

Business-type activities: Service Bureau 504,167 547,760 - - Interstate 15 FasTrak 6,092,062 6,141,283 - - State Route 125 Toll Road 29,911,481 26,134,191 - - Total business-type activities 36,507,710 32,823,234 - - Total primary government $ 525,633,578 $ 36,387,270 $ 78,195,117 $ 112,147,740

Component units: SourcePoint $ 1,240,060 $ 1,245,644 $ - $ - ARJIS 6,547,578 4,086,905 1,938,328 - Total component units $ 7,787,638 $ 5,332,549 $ 1,938,328 $ -

General revenues: Local TransNet sales tax funds Local Transportation Development Act sales tax funds Investment earnings Other revenues Transfers in (out) Total general revenues and transfers Change in net position Net position - beginning of year, restated Net position - end of year See accompanying Notes to the Basic Financial Statements.

26 Net (Expense) Revenue and Changes in Net Position Primary Government Component Units Governmental Business-Type Total Totals Activities Activities 2013 SourcePoint ARJIS

$ 565,386 $ 640,441 $ - $ 640,441 $ - $ - 3,115,617 (1,343,115) - (1,343,115) - - 1,501,870 (19,712) - (19,712) - - 3,061,486 (1,151,220) - (1,151,220) - - 1,059,144 (245,016) - (245,016) - - 40,845,957 (6,520,469) - (6,520,469) - - 1,723,851 (390,276) - (390,276) - - 2,275,146 (3,498,033) - (3,498,033) - - - (71,080) - (71,080) - - - (83,071) - (83,071) - - 4,476,536 4,350,381 - 4,350,381 - - - (34,019) - (34,019) - - - (66,153,631) - (66,153,631) - - - (1,783,732) - (1,783,732) - - - (606,497) - (606,497) - - - (39,679,702) - (39,679,702) - - 16,121,586 4,905,020 - 4,905,020 - - 112,147,740 (131,945,416) - (131,945,416) - - 7,012,574 (51,589,828) - (51,589,828) - -

193,906,893 (295,218,975) - (295,218,975) - -

547,760 - 43,593 43,593 - - 6,141,283 - 49,221 49,221 - - 26,134,191 - (3,777,290) (3,777,290) - - 32,823,234 - (3,684,476) (3,684,476) - - $ 226,730,127 (295,218,975) (3,684,476) (298,903,451) - -

$ 1,245,644 - - - $ 5,584 $ - 6,025, 233 - - - - (522,345) $ 7,270,877 - - - 5,584 (522,345)

249,520,133 - 249,520,133 - - 8,135,581 - 8,135,581 - - 12,212,398 37,141 12,249,539 (1,753) 1,922 64,454 11,400 75,854 - - (1,492,360) 1,492,360 - - - 268,440,206 1,540,901 269,981,107 (1,753) 1,922 (26,778,769) (2,143,575) (28,922,344) 3,831 (520,423) 123,063,251 205,114,900 328,178,151 224,699 13,139,602 $ 96,284,482 $ 202,971,325 $ 299,255,807 $ 228,530 $ 12,619,179

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28 FUND FINANCIAL STATEMENTS

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GOVERNMENTAL FUND FINANCIAL STATEMENTS

31 San Diego Association of Governments Balance Sheet Governmental Funds June 30, 2013

Major Funds San Diego County Regional Transportation General TransNet Commission Sales Fund Fund Tax Projects Fund

ASSETS

Cash and investments $ 1,581,656 $ - $ 366,822,697 Accounts receivable 7,600 - - Prepaid items and other assets 59,670 - - Interest receivable 2,980 - 5,094,544 Due from other funds 10,568,984 - 6,704,531 Due from other governments 144,432 - 47,008,332 Due from component units 4,867 - - Advances to other funds - - 59,214,571 Cash and investments - restricted 62,594 - 1,210,668

Total assets $ 12,432,783 $ - $ 486,055,343

LIABILITIES AND FUND BALANCES

Liabilities: Accounts payable $ 338,518 $ - $ 170,268 Accrued liabilities 200,710 - - Retentions payable - - - Due to other funds - - 68,375,949 Due to other governments 291,641 - 546,491 Unearned revenue - - - Liabilities payable from restricted assets - - -

Total liabilities 830,869 - 69,092,708

Deferred inflows of resources: Unavailable revenue - - -

Total deferred inflows of resources - - -

Fund Balances: Nonspendable: Prepaid Items 59,670 - -

Total nonspendable 59,670 - -

Restricted for: Environmental mitigation - - 1,210,668 Debt service - - - TransNet -eligible projects - - 415,751,967 Transit operations - - -

Freeway emergency service - - -

Total restricted - - 416,962,635

Unassigned 11,542,244 - -

Total fund balances 11,601,914 - 416,962,635

Total liabilities, deferred outflows of resources and fund balances $ 12,432,783 $ - $ 486,055,343

See accompanying Notes to the Basic Financial Statements. 32 Totals San Diego County Regional Capital Transportation Other Projects Commission Governmental Fund Debt Service Fund Funds 2013

$ - $ 227,452,041 $ 6,969,762 $ 602,826,156 100,000 - 1,332,349 1,439,949 8,737,107 - 315 8,797,092 - 76,837 3,556 5,177,917 63,440,306 - 6,615,139 87,328,960 39,010,004 43,611,447 9,637,359 139,411,574 - - - 4,867 - - - 59,214,571 3,428,511 64,072,956 - 68,774,729

$ 114,715,928 $ 335,213,281 $ 24,558,480 $ 972,975,815

$ 40,060,272 $ - $ 2,969,810 $ 43,538,868 - - 14,065 214,775 4,230,127 - 545,152 4,775,279 20,971,073 - 4,488,838 93,835,860 28,828,583 - 6,434,307 36,101,022 8,118,845 - 2,264,484 10,383,329 3,667,060 239,018 - 3,906,078

105,875,960 239,018 16,716,656 192,755,211

14,182,183 43,611,447 3,848, 548 61,642,178

14,182,183 43,611,447 3,848,548 61,642,178

8,737,107 - 315 8,797,092

- - - 1,210,668 - 64,072,956 - 64,072,956 - 227,289,860 - 643,041,827 - - 152,245 152,245

- - 4,915,585 4,915,585

- 291,362,816 5,067,830 713,393,281

(14,079,322) - (1,074,869) (3,611,947)

(5,342,215) 291,362,816 3,993,276 718,578,426

$ 114,715,928 $ 335,213,281 $ 20,709,932 $ 911,333,637

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San Diego Association of Governments Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Position June 30, 2013

Total Fund Balances - Total Governmental Funds $ 718,578,426

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds. 532,238,513

Other long-term assets are not available to pay for current-period expenditures and, therefore, are not reported in the governmental funds. 534,466

Some revenues will be collected after year-end, but are not available soon enough to pay for the current period's expenditures, and therefore are not reported in the governmental funds. 61,642,178

Long-term liabilities, including debt payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds. (1,235,016,231)

Derivative instruments are not reported in the funds but must be reported in the statement of net position. 18,307,130

Net Position of Governmental Activities $ 96,284,482

See accompanying Notes to the Basic Financial Statements.

35 San Diego Association of Governments Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the year ended June 30, 2013

Major Funds San Diego County Regional Transportation General TransNet Commission Sales Fund Fund Tax Projects Fund REVENUES: Federal funds $ - $ - $ - State funds 25 - - Local TransNet sales tax funds - 209,607,289 249,520,133 Local Transportation Development Act sales tax funds 7,055,315 - - Other local governmental funding 17,935 - - Prepaid fare media sales revenue - - - SAFE program revenue - - - Member agency assessments 547,426 - - Investment earnings - - 3,515,163 Debt repayments from other governments - - - Other revenues - - 4,476,536 Total revenues 7,620,701 209,607,289 257,511,832

EXPENDITURES: Current: General government 36,081,584 - 2,428,258 Cost recovery (36,320,981) - - Modeling and research - - - Criminal justice - - - Planning and forecasting - - - Sustainable development - - - Smart mobility programs and services - - - Intermodal planning and implementation - - - Internal and external coordination - - - Bicycle facilities - - 1,790,439 Independent Taxpayer Oversight Committee - - 83,071 Major corridor capital projects - - 189,116,968 Major corridor environmental mitigation - - 1,999,891 Local project environmental mitigation - - 7,917,042 Local street improvements - - 78,188,231 Smart growth - - 2,372,485 New major corridor transit operations - - 2,972,076 Transit system improvements - - 39,734,615 SAFE program - - - Capital outlay - - - Debt service: Principal retirement - - - Interest and other charges - - - Total expenditures (239,397) - 326,603,076

REVENUES OVER (UNDER) EXPENDITURES 7,860,098 209,607,289 (69,091,2 44)

OTHER FINANCING SOURCES (USES): Transfers in 155,930 - 116,197,279 Transfers out (6,204,795) (209,607,289) (77,341,5 51) Commercial paper issued - - - Total other financing sources (uses) (6,048,865) (209,607,289) 38,855,728

Net change in fund balances 1,811,233 - (30,235,5 16)

FUND BALANCES: Beginning of year, restated 9,790,681 - 447,198,151 End of year $ 11,601,914 $ - $ 416,962,635

See accompanying Notes to the Basic Financial Statements.

San Diego County Regional Capital Transportation Other Totals Projects Commission Governmental Fund Debt Service Fund Funds Eliminations 2013

$ 39,417,923 $ 7,012,574 $ 15,773,299 $ - $ 62,203,796 54,498,770 - 19,686,937 - 74,185,732 - - - (209,607 ,289) 249,520,133 1,080,266 - - - 8,135,581 8,226,229 - 2,273,225 - 10,517,389 - - 27,178,362 - 27,178,362 - - 1,614,190 - 1,614,190 - - 200,001 - 747,427 (353) 812,860 10,565 - 4,338,235 - 1,624,727 - - 1,624,727 - - 231,964 - 4,708,500 103,222,835 9,450,161 66,968,543 (209,607 ,289) 444,774,072

- - - (2,428,258) 36,081,584 - - - - (36,320, 981) - - 4,404,320 - 4,404,320 - - 1,521,582 - 1,521,582 - - 4,212,706 - 4,212,706 - - 1,304,160 - 1,304,160 - - 47,420,104 - 47,420,104 - - 2,114,127 - 2,114,127 - - 5,773,179 - 5,773,179 - - 127,939 (1,847,2 98) 71,080 - - - - 83,071 - - - (188,990 ,813) 126,155 - - - (1,999,8 91) - - - - (7,883,0 23) 34,019 - - - - 78,188,231 - - 2,345,580 (2,934,3 33) 1,783,732 - - - (2,365,5 79) 606,497 - - 1,103,181 (1,158,0 94) 39,679,702 - - 11,216,566 - 11,216,566 325,735,127 - - - 325,735,127

- 20,260,000 - - 20,260,000 - 53,909,872 - - 53,909,872 325,735,127 74,169,872 81,543,444 (209,607 ,289) 598,204,833

(222,512,292) (64,719,711) (14,574,901) - (153,430 ,761)

201,832,002 77,341,551 13,832,903 - 409,359,665 - (116,197,279) - - (409,350 ,914) - 1,579,000 - - 1,579,000 201,832,002 (37,276,728) 13,832,903 - 1,587,751

(20,680,290) (101,996,439) (741,998) - (151,843 ,010)

15,338,075 393,359,255 4,735,274 - 870,421,436 $ (5,342,215) $ 291,362,816 $ 3,993,276 $ - $ 718,578,426

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San Diego Association of Governments Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the year ended June 30, 2013

Net Change in Fund Balances - Total Governmental Funds $ (151,843,010)

Amounts reported for governmental activities in the statement of activities are different because:

Interest earnings (expense) in the government-wide statement of activities that do not provide current financial resources are not reported as interest revenues in the funds. 7,874,163

Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their useful lives and reported as depreciation expense. 80,208,142

The issuance of long-term debt (e.g., bonds, commercial paper) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of bond issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the government-wide statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. 28,276,868

Some revenues do not provide current financial resources, and therefore, are deferred in governmental funds. 12,815,951

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds (4,110,883)

Change in Net Position of Governmental Activities $ (26,778,769)

See accompanying Notes to the Basic Financial Statements. 39

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PROPRIETARY FUND FINANCIAL STATEMENTS

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42 San Diego Association of Governments Statement of Net Position Proprietary Funds June 30, 2013

Business-Type Activities-Enterprise Funds Totals Major Fund Nonmajor SR 125 Toll Road Funds 2013

ASSETS

Current assets: Cash and investments $ 4,519,643 $ 1,128,742 $ 5,648,385 Restricted cash 15,840,588 - 15,840,588 Accounts receivable 1,438,498 136,886 1,575,384 Prepaid items and other assets 506,888 - 506,888 Due from other funds 13,194 6,800,219 6,813,413 Due from other governments - 409,964 409,964

Total current assets 22,318,811 8,475,811 30,794,622

Noncurrent assets: Land 1,980,000 - 1,980,000 Depreciable assets, net of accumulated depreciation 380,831,905 16,357,384 397,189,289

Total noncurrent assets 382,811,905 16,357,384 399,169,289

Total assets 405,130,716 24,833,195 429,963,911

LIABILITIES AND NET POSITION

Current liabilities: Accounts payable 1,044,190 881,995 1,926,185 Accrued liabilities 65,527 - 65,527 Retentions payable - 2,984 2,984 Due to other funds 293,319 13,194 306,513 Due to other governments 21,386 843,335 864,721 Transponder deposits payable 16,015 200 16,215 Unearned revenue 1,215,175 978,895 2,194,070 Advances due within one year 528,080 - 528,080 Long term debt due within one year 656,988 - 656,988

Total current liabilities 3,840,680 2,720,603 6,561,283

Noncurrent liabilities Notes payable 99,916,001 - 99,916,001 Advances from other funds 62,352,510 - 62,352,510 Fair value debt, net of amortization due in more than one year 58,162,792 - 58,162,792 Total noncurrent liabilities 220,431,303 - 220,431,303

Total liabilities 224,271,983 2,720,603 226,992,586

Net position: Net investment in capital assets 224,076,124 16,357,384 240,433,508 Restricted for: Debt service 448 - 448 Major maintenance and capital expenditure 15,761,136 - 15,761,136 Project revenue 79,004 - 79,004 Unrestricted (59,057,979) 5,755,208 (53,302,771)

Total net position $ 180,858,733 $ 22,112,592 $ 202,971,325

See accompanying Notes to the Basic Financial Statements.

43 San Diego Association of Governments Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the year ended June 30, 2013

Business-type Activities-Enterprise Funds Totals Major Fund Nonmajor SR 125 Toll Road Funds 2013

OPERATING REVENUES:

Operating revenue $ 26,134,191 $ 6,689,043 $ 32,823,234 Total operating revenues 26,134,191 6,689,043 26,134,191

OPERATING EXPENSES:

Operating expenses 8,879,912 4,744,037 13,623,949 Depreciation 13,338,964 1,852,192 15,191,156

Total operating expenses 22,218,876 6,596,229 28,815,105

Operating income (loss) 3,915,315 92,814 4,008,129

NONOPERATING REVENUES (EXPENSES): Other income 11,400 - 11,400

Interest income 19,398 17,743 37,141 Interest (expense) (7,692,605) - (7,692,605)

Total nonoperating revenues (expenses) (7,661,807) 17,743 (7,644,064)

INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS (3,746,492) 110,557 (3,635,935)

Capital contributions - 1,501,111 1,501,111 Transfers out - (8,751) (8,751)

Total capital contributions and transfers - 1,492,360 1,492,360

CHANGE IN NET POSITION (3,746,492) 1,602,917 (2,143,575)

NET POSITION:

Beginning of year 184,605,225 20,509,675 205,114,900

End of year $ 180,858,733 $ 22,112,592 $ 202,971,325

See accompanying Notes to the Basic Financial Statements.

44 San Diego Association of Governments Statement of Cash Flows Proprietary Funds For the year ended June 30, 2013

Business-type Activities-Enterprise Funds Totals SR 125 Toll Road Nonmajor Funds 2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users $ 25,938,431 $ 3,571,673 $ 29,510,104 Payments for employee salaries and benefits (4,064,851) (480,483) (4,545,334)

Payments for operations (4,341,853) (3,517,991) (7,859,844)

Net cash provided by (used for) operating activities 17,531,727 (426,801) 17,104,926

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Repayment of advance from other funds (2,471,920) - (2,471,920)

Net cash provided by (used for) noncapital financing activities (2,471,920) - (2,471,920)

CASH FLOWS FROM CAPITAL FINANCING AND RELATED ACTIVITIES: Acquisition and construction of capital assets (207,112) - (207,112) Principal payment on debt (135,018) - (135,018) Interest payment on debt (5,718,536) - (5,718,536) Net cash provided by (used for) capital financing and related activities (6,060,666) - (6,060,666)

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received on investment 19,398 17,743 37,141 Rental and miscellaneous income 11,400 - 11,400 Net cash provided by (used for) investing activities 30,798 17,743 48,541

Net increase (decrease) in cash and investments 9,029,939 (409,058) 8,620,881

Cash and investments, beginning of year 11,330,292 1,537,800 12,868,092

Cash and investments, end of year $ 20,360,231 $ 1,128,742 $ 21,488,973 (15,840,588) (15,169,872) RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:

Operating income (loss) $ 3,915,315 $ 92,814 $ 4,008,129

Adjustments to reconcile net cash provided by (used for) operating activities:

Depreciation 13,338,964 1,852,192 15,191,156 (Increase) decrease in: Accounts receivable (692,014) (36,415) (728,429) Due from other funds 17,361 (2,951,907) (2,934,546) Due from other governments - (185,959) (185,959) Prepaid expenses 54,621 - 54,621 Increase (decrease) in: Accounts payable 593,825 478,687 1,072,512 Retentions payable - 1,718 1,718 Due to other funds 120,458 (12,961) 107,497 Due to other governments 21,228 278,718 299,946 Transponder deposits payable 1,012 (600) 412 Accrued liabilities 63,579 - 63,579 Unearned revenue 97,378 56,912 154,290

Total adjustments 13,616,412 (519,615) 13,096,797

Net cash provided by (used for) operating activities $ 17,531,727 $ (426,801) $ 17,104,926

NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Contributions of capital asset from governmental activities - 1,501,111 1,501,111 Amortization of fair value debt (1,929,686) - (1,929,686)

See accompanying Notes to the Basic Financial Statements.

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46 NOTES TO THE BASIC FINANCIAL STATEMENTS

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San Diego Association of Governments Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2013

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The basic financial statements of the San Diego Association of Governments (SANDAG) have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body of establishing governmental accounting and financial reporting principles. The more significant of the SANDAG accounting policies are described below.

A. Reporting entity

SANDAG was formed as the comprehensive planning organization under a Joint Powers Agreement dated September 10, 1972. The Joint Powers Agreement was amended on November 5, 1980, to change the agency’s name to the SANDAG. The member agencies include 18 incorporated cities from the San Diego region and the County of San Diego, California.

On January 1, 2003, state legislation (Senate Bill 1703 [Peace, 2003]) was enacted that changed the structure of SANDAG from a Joint Powers Authority to a state-created regional government agency. The effect of this legislation was to make SANDAG a permanent rather than voluntary association of local governments and to increase SANDAG responsibilities and powers. Senate Bill 1703 also required the consolidation of the planning, programming, project development, and construction functions of the San Diego Metropolitan Transit Development Board, currently known as the San Diego Metropolitan Transit System (MTS) and the North San Diego County Transit Development Board, currently known as the North County Transit District (NCTD), into SANDAG. This consolidation was completed in October 2003.

As required by GAAP, these financial statements present SANDAG and its component units, entities for which SANDAG is considered to be financially accountable. Blended component units, although legally separate units, are, in substance, part of an agency’s operations, and so data from these units are combined with data of the agency. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize they are legally separate from the agency. SANDAG has one blended component unit and two discretely presented component units. All component units have a June 30 year end.

Included within the reporting entity as a blended component unit:

San Diego County Regional Transportation Commission (Commission) – The Commission is the agency established for the purpose of, and is responsible for, the implementation and administration of transportation improvement programs funded by the San Diego countywide one-half percent sales tax effective April 1, 1988, through 2008, as a result of the passage of Proposition A – The San Diego County Transportation Improvement Program. On November 2, 2004, the voters of San Diego County voted to extend the current one-half percent sales tax for 40 more years to 2048. The Commission’s governing board is the same as the SANDAG governing board. The Commission exclusively benefits SANDAG and the SANDAG member agencies. The Commission is presented as two funds: a special revenue fund type and a debt service fund type.

49 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

Included within the reporting entity as discretely presented component units:

SourcePoint – On April 15, 1982, SANDAG formed a nonprofit 501(c)(3) corporation, SourcePoint, for the purpose of providing fee-based products and services that meet the needs of decision makers in the public and private sectors, while enhancing the quality and extent of demographic, economic, transportation, land use, criminal justice, and other information maintained in the Regional Information System (RIS). The SourcePoint governing board is the SANDAG Executive Committee, which is made up of six voting members of the 21 elected officials of the SANDAG governing board. The SourcePoint governing board is not substantively the same as the entire SANDAG governing board; however, the SANDAG governing body can appoint a voting majority to the SourcePoint board and can impose its will on SourcePoint activities. SourcePoint provides services directly to the public. SourcePoint is presented as a proprietary fund type.

Automated Regional Justice Information System (ARJIS) – ARJIS is a Joint Powers Agency established in December 1980, under a joint powers agreement (JPA) with the County of San Diego and all municipalities in the County, including the City of San Diego (the “City”). In January 2004, the JPA was amended, as public agencies of the San Diego region recognized the need for continued operation, maintenance, enhancement, and implementation of ARJIS, in order to provide improved law enforcement capabilities within the San Diego region and designated SANDAG as the administrator, effective July 1, 2004. ARJIS provides a regional complex criminal justice enterprise information system utilized by more than 50 local, state, and federal agencies in the San Diego region. The ARJIS governing board is the SANDAG Public Safety Committee, which is made up of six members of the 21 elected officials of the SANDAG governing board, nine public safety representatives, and five advisory members. The ARJIS governing board is not substantively the same as the entire SANDAG governing board; however, the SANDAG governing body can appoint a voting majority to the ARJIS board and can impose its will on ARJIS activities. ARJIS provides services directly to the public. ARJIS is presented as a proprietary fund type.

Complete audited individual financial statements for the Commission, SourcePoint, and ARJIS component units may be obtained from SANDAG, 401 B Street, Suite 800, San Diego, California 92101, (619) 699-1900, www.sandag.org.

B. Government-wide and fund financial statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government and its two discretely presented component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The primary government is reported separately from the legally separate, discretely presented component units for which the primary government is financially accountable.

50 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and the proprietary funds.

C. Measurement focus, basis of accounting, and financial statement presentation

The government-wide financial statements are reported using the “economic resources” measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Sales tax is recognized as revenue in the year in which it is earned. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the “current financial resources” measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter (generally 180 days after year end) to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting; however, debt service expenditures, as well as expenditures related to compensated absences, workers’ compensation obligations, and claims and judgments, are recorded only when payment is due.

Revenues which are considered susceptible to accrual include sales tax, interest, and state and federal grants. In applying the subject to accrual concept to state and federal revenues, the legal and contractual requirements of the numerous individual programs are used as guidance.

Other revenues are recorded as revenues when received in cash because they are generally not measurable until actually received.

SANDAG reports the following major governmental funds:

The general fund is the SANDAG primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Revenues are primarily derived from local Transportation Development Act (TDA) funds, member agency assessments, and cost recovery related to labor and overhead costs which are recovered through operating and capital grants. Expenditures are primarily expended for general government overhead, net of cost recovery.

The special revenue TransNet fund accounts for the activities and resources received for TransNet sales tax revenue received and then transferred out for SANDAG capital and overall work program projects and one-half of the general fund Board of Director expenses.

51 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

The special revenue San Diego County Regional Transportation Commission sales tax projects fund (Commission sales tax projects fund) accounts for the activities and resources of the Commission, a blended component unit, received pursuant to the countywide one-half percent local sales tax. These revenues are transferred to SANDAG or passed through to other governmental agencies to be spent in accordance with the TransNet ordinances, or transferred to the Commission’s debt service fund to make principal and interest payments on the long-term debt sales tax revenue bonds and commercial paper.

The capital projects fund accounts for the resources and activities of SANDAG to provide for highway improvements, and rail and bus capital improvements, and replacements and other capital implementation projects. Revenues are primarily derived from federal and state capital grants, TDA, and TransNet funds.

The San Diego County Regional Transportation Commission debt service fund (Commission debt service fund) accounts for the activities and resources accumulated for principal and interest payments on the long-term debt sales tax revenue bonds and commercial paper of the Commission, a blended component unit. Revenues are derived from interest earned on the investments accumulated for the payment of principal and interest on the revenue bonds, debt repayments from other governmental agencies, and the federal subsidy related to the fiscal year 2011 Build America Bonds (BABs) issuance.

SANDAG reports the following other governmental fund types:

The special revenue general services fund accounts for the activities and resources of SANDAG to provide primarily for modeling and research, criminal justice, planning and forecasting, sustainable development, smart mobility programs and services, intermodal planning and implementation, and internal and external coordination. Revenues are primarily derived from federal, state, and local operating grants and contributions.

The special revenue prepaid fare media sales fund accounts for the activities and resources received for prepaid fare media. The revenues are primarily distributed to outside agency transit operators.

The special revenue SAFE fund accounts for the activities of the San Diego Service Authority for Freeway Emergencies program, which is responsible for purchasing, installing, operating, and maintaining a motorist aid system of call boxes in San Diego County. The SAFE program operation was transferred from the County of San Diego to SANDAG as of January 1, 2013, by the adoption of Assembly Bill 1572 (Fletcher, 2012).

SANDAG reports the following major proprietary funds:

The State Route 125 fund (SR 125 fund) accounts for the activities of the SANDAG State Route 125 (SR 125) toll road, an 11.2 mile limited access highway in the County of San Diego. On December 21, 2011, SANDAG acquired the rights and interest in a Franchise Agreement between South Bay Expressway, LLC and Caltrans. Under the Agreement, SANDAG

52 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

has contractual rights to develop and operate SR 125 toll road. The SR 125 fund was established in December 2011 as a proprietary fund under the oversight of SANDAG to operate the toll road.

SANDAG reports the following other proprietary fund types:

The Service Bureau fund accounts for the activities of the SANDAG Service Bureau, which offers fee-based products and services that meet the needs of decision makers in the public and private sectors, while enhancing the quality and extent of demographic, economic, transportation, land use, criminal justice, and other information maintained in the RIS. The discretely presented component unit 501(c)(3) nonprofit agency SourcePoint offers the same services. Projects for clients with a requirement to conduct business with a nonprofit agency will be performed by SourcePoint, with all other projects performed under the SANDAG Service Bureau.

The Interstate 15 FasTrak fund accounts for the activities of the Interstate 15 (I-15) FasTrak® program, which allows solo drivers to pay a toll to use the 16 miles of express lanes on I-15.

Interfund balances and transfers have been eliminated from the government-wide financial statements.

Amounts reported as program revenues include: (1) charges to customers or other governmental agencies for services, or privileges provided; (2) operating grants and contributions; and (3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include sales tax and other general revenues not restricted to specific programs.

Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables, and receivables. All internal balances in the statement of net position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the statement of activities, those transactions between governmental and business-type activities have not been eliminated.

An eliminations column is presented for the fund financial statements in order to eliminate the allocation of revenues and expenditures. Sales tax revenues are recorded in the Commission sales tax projects fund and in the TransNet fund upon transfer of cash from the Commission to SANDAG. TransNet expenditures are recorded in the Commission sales tax projects fund and in the general fund, general services fund, or capital projects fund upon expending TransNet funds for the administration of the TransNet program and TransNet funded projects administered and implemented by SANDAG. At June 30, 2013, the total amount of eliminations was $209,607,289.

53 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

D. Budgetary information

1. Budgetary basis of accounting

An annual budget is adopted on a basis consistent with generally accepted accounting principles for the general fund, special revenue funds, the debt service fund, and the capital project fund.

2. Expenditures in excess of appropriations

The sales tax projects special revenue fund ended the year with $76,623,873 of expenditures in excess of appropriations, which is primarily the result of bond proceeds use for major corridor capital projects.

The commercial paper and sales tax revenue bonds debt service fund had an excess of $4,612,269 expenditures over appropriations at June 30, 2013, which was primarily the result of approximately $3.1 million in bond costs of the debt program and $1.6 million of commercial paper principal payments, both of which are not budgeted.

The prepaid fare media sales special revenue fund had an excess of $1,054,338 expenditures over appropriations, which is primarily the result of transitioning the program to MTS at year-end.

E. Assets, liabilities, deferred outflows/inflows of resources, and net position/fund balance

1. Cash and investments

SANDAG cash and cash equivalents are considered to be cash on hand, demand deposits, money market accounts and funds, and short-term investments with original maturities of three months or less from the date of acquisition.

The SANDAG investment policy is in accordance with California Government Code Section 53600. SANDAG is authorized to invest in the following: • Treasury obligations • State of California’s Local Agency Investment Fund (LAIF) • San Diego County Treasurer’s pooled investment fund • Savings/money market accounts • California asset management program • Mortgage and asset-backed obligations • Negotiable and nonnegotiable certificates of deposit • State obligations • Repurchase Agreements • Commercial paper • Medium-term notes • Money market funds • Bankers’ acceptances • Local agency obligations

54 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, investments were stated at fair value.

SANDAG participates in an investment pool managed by the State of California, titled LAIF, which has invested 1.96 percent of the pool funds in medium-term and short-term structured notes and asset-backed securities. LAIF’s investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition, these structured notes and asset-backed securities are subject to market risk and to change in interest rates. The reported value of the pool is the same as the fair value of the pool shares. The fair value of LAIF was calculated by applying a factor of 1.000273207 to total investments held by LAIF. LAIF is classified under investments and is not rated.

SANDAG is a voluntary participant in the California Asset Management Program (CAMP), which is an investment pool offered by the California Asset Management Trust (the Trust). The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act (California Government Code Sections 6500 et seq., or the "Act") for the purpose of exercising the common power of its Participants to invest certain proceeds of debt issues and surplus funds. In accordance with Section 53601(p) of the California Government Code, CAMP's investments are limited to investments permitted by subdivisions (a) to (n), inclusive, of Section 53601. SANDAG reports its investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the pool share. At June 30, 2013, fair value approximated cost and had an average maturity of 37 days.

SANDAG also participates in the San Diego County Treasurer’s Pooled Money Fund, which is administered by the Treasurer-Tax Collector’s Office. The fair value of the SANDAG investment in the pool is reported at amounts based upon the SANDAG pro‐rata share of the fair value provided by the County Treasurer for the entire portfolio (in relation to the amortized cost of that portfolio). Earnings realized on investments based on amortized cost are distributed to Investment Pool participants. Section 27013 of the California Government Code authorizes the Treasurer’s Office to deduct administrative fees related to investments. The net realized earnings on investments are apportioned to the Investment Pool participants quarterly, based on the participants’ average daily balances. The County of San Diego’s annual financial report for the Pool can be obtained from the Treasurer-Tax Collector at 1600 Pacific Highway, Room 162, San Diego, California, 92101 and can also be accessed at www.sdtreastax.com.

In accordance with GASB Statement No. 40, Deposit and Investment Risk Disclosures (an amendment of GASB Statement No. 3), SANDAG adheres to certain disclosure requirements, if applicable for deposit and investment risk; these requirements are specified for the following areas:

55 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

. Interest rate risk

. Credit risk  Overall  Custodial credit risk  Concentration of credit risk

. Foreign currency risk

2. Receivables and payables

Activities between funds that are representative of short-term lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds” and “internal balances” for long-term lending/borrowing arrangements.

3. Prepaid items

Payments made to vendors for services that will benefit periods beyond June 30, 2013, are recorded as prepaid items in both government-wide and fund financial statements. The cost of prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.

4. Restricted assets

Certain resources set aside for repayment of revenue bonds are classified as restricted assets. Their use is limited by applicable bond covenants and therefore are maintained in a separate bank account. The accounts are used to segregate resources accumulated for debt service principal and interest payments.

Other resources set aside for NCTD Certificates of Participation are classified as restricted assets because they are maintained in separate bank accounts held by a trustee and their use is limited to paying down the equivalent amount of commercial paper.

In addition, certain environmental mitigation funds are classified as restricted assets because they are maintained in separate bank accounts held by a trustee and the endowment set aside portion may not be used and any interest earnings may only be used for certain project costs.

Other resources set aside for TransNet-eligible projects are classified as restricted assets. Their use is limited by specific purposes stipulated in the Proposition A - San Diego County Transportation Improvement Program (TransNet Ordinance).

Lastly, certain resources set aside for the payment of future capital contract retention liabilities are classified as restricted assets because they are maintained in separate bank accounts, which will be paid to contractors as work is completed. The accounts are used to segregate resources accumulated for withheld retention payments.

56 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

5. Capital assets

Capital assets, which include land, building, toll road, office equipment, computer equipment, other equipment, vehicles, leasehold improvements, internally generated computer software, buses, electronic toll collection system, and construction-in-progress, are reported in the government-wide financial statements net of accumulated depreciation, except for construction-in-progress and land which are not depreciated. To meet the criteria for capitalization, an asset must have a useful life in excess of one year and an initial, individual cost equal to or greater than $5,000. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. The purchase of the toll road and related assets were valued on the acquisition date at fair value. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset’s life are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Construction-in-Progress (CIP) remains capitalized in the government-wide financial statements, until such time as the capital projects are complete and operational. Upon completion, the entire amount of the CIP, as well as the legal title of the property and equipment, if applicable, are transferred as contributed capital to other governmental agencies to reflect the other government’s custodial accountability for the operation and maintenance of the assets.

Depreciation of capital assets is computed using the straight-line method over the estimated useful life of the asset as follows:

Assets Years Computer equipment 3 Office equipment 5 Other equipment 5 Vehicles 5 Leasehold improvements 5 Internally generated computer software 5 Electronic toll collection system 10 Buses 12 Toll road 31 Building 50

6. Deferred outflows/inflows of resources

In addition to assets, the statement of financial position reports a separate section for deferred outflows of resources, which represents a consumption of assets that applies to a future period and so, will not be recognized as an outflow of resources (expense/expenditure) until then. SANDAG has two items that qualify for reporting in this category; the accumulated decrease in

57 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

fair value of the hedging swap agreement and the deferred charge on refunding loss reported in the government-wide statement of net position. See Note III.F for more information on the SANDAG long-term liabilities.

In addition to liabilities, the statement of financial position reports a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. SANDAG has one type of this item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues in the capital projects fund, Commission debt service fund, and general services fund. These amounts are deferred and recognized as an inflow of resources in the period the amounts become available.

7. Net Position

The difference between fund assets and deferred outflows of resources, and liabilities and deferred inflow of resources is “Net Position” on government-wide and proprietary fund financial statements.

Net position is reported as restricted when constraints are placed on net position use by creditors or by law or enabling legislation. The following terms are used in the reporting of net position:

Net Investment in Capital Assets - Net investment in capital assets consists of capital assets, net of accumulated depreciation, and reduced by the outstanding debt balances that are attributable to the acquisition, construction, or improvement of those assets.

Debt Service - Net position restricted for the payments of future debt service.

Restricted for Environmental Mitigation - Net position restricted for funding of various environmental mitigation projects.

Major Maintenance - Net position restricted for funding the SR 125 toll road major maintenance projects.

Project Revenue - Net position restricted for other legally restricted funds.

Unrestricted Net Position - Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that is not included in the above restricted categories of net position.

The governmental activities unrestricted net deficit of $181,431,527 results primarily from the issuance of the $1,370,585,000 sales tax revenue bonds in fiscal years 2008, 2011, and 2012 for transportation related projects, primarily major corridor, and environmental mitigation. SANDAG

58 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

plans to repay the bonds with future sales tax revenue, which is dedicated for transportation projects. See Note III.F on long-term debt for further information.

The business-type activities unrestricted net deficit of $53,302,771 results primarily from the assumption of the $95,629,359 Transportation Infrastructure Finance and Innovation Act (TIFIA) notes in fiscal year 2012 for the acquisition of the SR 125 toll road. SANDAG plans to repay the notes with future toll road revenue. See Note III.F on long-term debt for further information.

8. Net position flow assumption

Sometimes SANDAG will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and unrestricted – net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the SANDAG policy to consider restricted – net position to have been depleted before unrestricted – net position is applied.

9. Fund Balance

Fund balances are reported in the governmental fund financial statements in the following classifications:

Nonspendable Fund Balance

Nonspendable Fund Balance – this includes amounts that cannot be spent because they are either not spendable in form (such as inventory) or legally, or contractually required to be maintained intact (such as endowments).

Spendable Fund Balance

Restricted Fund Balance – this includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers, or through enabling legislation. If the Board action limiting the use of funds is included in the same action (legislation) that created (enables) the funding source, then it is restricted.

Committed Fund Balance – this includes amounts that can be used only for the specific purposes determined by a formal action of the Board. It includes legislation (Board action) that can only be overturned by new legislation requiring the same type of voting consensus that created the original action. Therefore, if the Board action limiting the use of the funds is separate from the action (legislation) that created (enables) the funding source, then it is committed, not restricted. SANDAG considers a resolution to constitute the formal action of the Board of Directors necessary to establish a commitment of fund balance.

59 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

Assigned Fund Balance – this includes amounts that are designated or expressed by the Board, but does not require a formal action like a resolution or ordinance. The Board has not delegated to any other persons or bodies the authority to assign fund balance to specific purposes.

Unassigned Fund Balance – this includes the remaining spendable amounts which are not included in one of the other classifications.

10. Fund balance flow assumptions

Sometimes SANDAG will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the SANDAG policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.

11. Long-term liabilities

The SANDAG long-term liabilities consist of debt obligations:

In the government-wide financial statements, long-term debt obligations are reported as liabilities in the governmental activities of the statement of net position. Debt premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Debt payable is reported net of the applicable bond premium or discount. Debt issuance costs are expensed as they incur.

See Note III.F for more information on the SANDAG long-term liabilities.

12. Compensated absences

It is the SANDAG policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All unused vacation leave and 25 percent of unused sick leave are accrued when incurred in the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Based on the reduction in the compensated absences payables balance of $2,733,148 during fiscal year 2013, it was determined that the entire balance of compensated absences reported at June 30, 2013, is expected to be exhausted in fiscal year 2014 since the current year portion amounts to about the same amount expected to be used in fiscal year 2014. Because the turnover each year nets to approximately $0, the entire balance is reported as current. Compensated absences are liquidated by the general fund.

60 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

13. Unearned revenue

In the government-wide and fund financial statements, unearned revenue is recognized in connection with a transaction before the earning process is completed.

14. Other financing sources and uses

In the fund financial statements, issuance of debt, including commercial paper, bonds, and premium on bonds issued, and transfers in are reported as other financing sources. Transfers out and discounts on bonds issued are reported as other financing uses.

15. Estimates

The preparation of basic financial statements in conformity with GAAP in the United States requires management to make estimates and assumptions that affect reported amounts of certain assets and liabilities and disclosure of contingent assets and liabilities at the date of the basic financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates.

II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net position

The governmental fund balance sheet includes a reconciliation between fund balances-total governmental funds and net position-governmental activities as reported in the government-wide statement of net position. One element of the reconciliation explains that “capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds.” The details of this $532,238,513 are as follows:

Construction-in-progress capital assets, not being depreciated $ 526,336,392 Land, not being depreciated 5,241,439 Capital assets, being depreciated 7,869,518 Accumulated depreciation (7,208,836) Net adjustment to increase fund balance - total governmental funds to arrive at net position - governmental activities $ 532,238,513

One element of the reconciliation explains that “other long-term assets are not available to pay for current-period expenditures and, therefore, are not reported in the governmental funds.” The details of this $534,466 are as follows:

OPEB asset $ 523,078 Accrued interest income - commercial paper 11,388 Net adjustment to increase net changes in fund balances - governmental funds to arrive at changes in net position - governmental activities $ 534,466

61 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

Another element of the reconciliation states that “some revenues will be collected after year-end, but are not available soon enough to pay for the current period's expenditures, and therefore are reported as unavailable revenue in the funds.” This difference is $61,642,178.

Another element of the reconciliation states that “long-term liabilities, including debt payable, are not due and payable in the current period and; therefore, are not reported in the governmental funds.” The details of this $(1,235,016,231) difference are as follows:

Accrued interest payable $ (11,091,174) Bond premium (54,927,472) Deferred loss on refunding 20,083,124 Commercial paper payable (33,780,000) Bonds payable (1,153,225,000) Compensated absences payable (2,075,709) Net adjustment to reduce net changes in fund balances - governmental funds to arrive at changes in net position - governmental activities $ (1,235,016,231)

Another element of the reconciliation states that “derivative instruments are not reported in the funds but must be reported in the statement of net position.” The details of this $18,307,130 difference are as follows:

Deferred outflows of resources $ 65,378,370 Derivative instrument - swap liability (47,071,240) Net adjustment to increase net changes in fund balances - governmental funds to arrive at changes in net position - governmental activities $ 18,307,130

B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government-wide statement of activities

The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances-total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. One element of the reconciliation explains that, “interest revenues in the statement of activities do not provide current financial resources and, therefore, are not reported as interest revenues in the governmental funds.” The details of this $7,874,163 difference are as follows:

Accrued interest revenue - commercial paper $ (5,840) Derivative instrument - investment revenue (loss) 7,880,003 Net adjustment to increase net changes in funds balances - governmental funds to arrive at changes in net position - governmental activities $ 7,874,163

62 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

Another element of the reconciliation states that, “governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their useful lives and reported as depreciation expense.” The details of this $80,208,142 are as follows:

Construction-in-progress additions-capital outlay $ 318,570,640 Contributed capital (238,429,780) Other capital assets adjustments 196,434 Other capital assets depreciation (129,152) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position - governmental activities $ 80,208,142

Another element of the reconciliation states that, “the issuance of long-term debt (e.g., bonds, commercial paper) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction; however, has any effect on net position. Also, governmental funds report the effect of bond premiums and discounts when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.” The details of this $28,276,868 difference are as follows:

Bond principal retirement $ 18,640,000 Commercial paper issued (1,579,000) Commercial paper pass-through payments to other governments 1,579,000 Bond pass-through payments to other governments 10,455,600 Debt repayments from other governments (1,624,727) Commercial paper paydown 1,620,000 Amortization expense on unamortized premium on bonds issued 1,599,672 Amortization expense on unamortized loss on refunding bonds issued (2,413,677)

Net adjustment to increase net changes in fund balances - governmental funds to arrive at changes in net position - governmental activities $ 28,276,868

Another element of the reconciliation states that, “some revenues do not provide current financial resources, and therefore, are deferred in governmental funds.” This amount of this difference is $12,815,951.

Another element of the reconciliation states that, “some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds.” The details of this $(4,110,883) difference are as follows:

Change in interest expense $ (3,878,525) Change in OPEB asset 2,237 Change in compensated absences (234,595) Net adjustment to increase net changes in fund balances - governmental funds to arrive at changes in net position - governmental activities $ (4,110,883)

63 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

III. DETAILED NOTES ON ALL FUNDS

A. Cash and investments

A summary of cash and investments at June 30, 2013, was as follows:

Primary Government Discretely Presented Component Units Governmental Business-type Activities Activities Total SourcePoint ARJIS Total Cash and investments $ 602,826,156 $ 5,648,385 $ 608,474,541 598,506$ $ 3,634,935 $ 4,233,441 Cash restricted for capital project retentions 3,428,511 69,000 3,497,511 - - - Cash and investments restricted for debt service 64,135,550 364,790 64,500,340 - - - Cash and investments restricted for major maintenance - 15,406,798 15,406,798 - - - Cash and investments restricted for environmental mitigation 1,210,668 - 1,210,668 - - - Total cash and investments $ 671,600,885 $ 21,488,973 $ 693,089,858 598,506$ $ 3,634,935 $ 4,233,441

Cash, cash equivalents, and investments consisted as follows on June 30, 2013: Weighted Average NRSRO Investment Type Fair Value Maturity (Days) Rating

Cash and cash equivalents: Cash - demand deposits $ 10,757,420 1 Not rated Cash equivalents - NCTD Certificates of Participation 31,775,000 32 A2,A1 Cash equivalents - money market accounts and funds 545,846 48 AAAm

Total Primary Government cash and cash equivalents 43,078,266 24

Investments: State of California Local Agency Investment Fund 48,710,033 278 Not rated California Asset Management Program 140,885,985 37 AAAm San Diego County Treasurer's Pooled Money Fund 103,451,738 393 AAAf/S1 U.S. Agencies 229,396,645 810 AA+ - Aaa Corporate Medium-Term Notes 56,965,831 748 A - AA- Commercial Paper 69,981,360 58 A-1+ Municipal Bond/Note 620,000 884 AAA

Total Primary Government investments 650,011,592 450

Total Primary Government cash, cash equivalents, and investments 693,089,858 423

SourcePoint: Cash - demand deposits 8,191 1 Not rated Cash equivalents - money market accounts and funds 87,684 1 Not rated Investments - San Diego County Treasurer's Pooled Money Fund 502,631 393 AAAf/S1

Total SourcePoint cash and cash equivalents 598,506 330

A RJIS: Cash - demand deposits 108,615 1 Not rated Investments - California Asset Management Program 1,106,145 37 AAAm Investments - San Diego County Treasurer's Pooled Money Fund 2,420,175 393 AAAf/S1

Total ARJIS cash, cash equivalents, and investments 3,634,935 273 Total cash, cash equivalents, and investments $ 697,323,299

64 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

At year end, the primary government’s carrying amount of deposits was $10,757,420 and the bank balance was $15,021,856. This balance was covered by federal depository insurance or by collateral held in the SANDAG name.

At year end, SourcePoint’s carrying amount of deposits was $8,191 and the bank balance was $142,476. This balance was covered by federal depository insurance.

At year end, ARJIS’s carrying amount of deposits was $108,615 and the bank balance was $527,056. This balance was covered by federal depository insurance or by collateral held in the SANDAG name.

1. Swap investments

SANDAG is invested in two forward contract pay-variable, receive-variable investment derivatives with notional amounts of $156,600,000 each. At the effective date of April 1, 2018, SANDAG will make monthly variable payments to the counterparty based on the current Securities Industry and Financial Markets Association (SIFMA) Swap Index and receive variable payments based on 107.4 percent of three-month LIBOR. At June 30, 2013, these investment derivatives had a fair value of $18,307,130, and are not rated.

Other applicable risks (credit risk, interest rate risk, basis risk, termination risk, roll-over risk, etc.) associated with the SANDAG derivative investments are described in Note III.E.

2. Interest rate risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. As a means of limiting its exposure to fair value losses arising from the rising interest rates, the SANDAG investment policy limits investments to a maximum maturity of five years or 1,825 days from purchase date. The total portfolio shall not exceed the SANDAG anticipated liquidity needs for operations for the next six months. SANDAG has $51,956,122 of callable step up United States Agency securities that are highly sensitive to interest rate changes. SANDAG is in compliance with all maturity provisions of the investment policy.

3. Credit risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by at least one of the nationally recognized statistical rating organizations (NRSRO). The SANDAG investment policy limits investments to the following: State and local agency obligations must be rated A-1/P-1, or equivalent or better short-term or Aa/AA or better long-term by at least one of the NRSROs; repurchase agreements must be with (1) primary dealers in United States Government securities, who are eligible to transact business with, and who report to, the Federal Reserve Bank of New York; and (2) California and non-California banking institutions having assets in excess of $1 billion and in the highest short-term rating category, as provided by one of the NRSROs; bankers’ acceptances, which are eligible for purchase by the Federal Reserve System, the

65 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

short-term paper of which is rated in the highest rating category by one of the NRSROs; commercial paper of “prime” quality of the highest rating or of the highest letter and number rating as provided for by a NRSRO; medium-term notes must be rated in a rating category of “A” or better by a NRSRO; negotiable certificates of deposit of which the senior debt obligations of the issuing institution are rated “AA” or better by one of the NRSROs; nonnegotiable certificates of deposit and savings/money market accounts of which the financial institution must have received a minimum overall satisfactory rating for meeting the credit needs of California Communities in its most recent evaluation, as provided in California Government Code Section 53635; California Asset Management Program of which the portfolio is rated among the top two rating categories by one of the NRSROs; money market funds must either (1) attain the highest ranking letter or numerical rating provided by not less than two of the three largest NRSROs; or (2) have an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of $500,000,000; and mortgage and asset-backed obligations must be rated Aa/AA or higher by two NRSROs and the issuer of such obligations must be rated Aa/AA or higher by two of the NRSROs as well.

The portfolio is diversified by security type and institution to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions. Credit requirements listed in the investment policy apply at the time of purchase. In the event a security held by SANDAG is subject to a credit rating change that brings it below the minimum credit ratings specified for purchase, the Director of Finance shall review the security. The course of action to be followed will then be decided by the Director of Finance and either the Executive Director or the Chief Deputy Executive Director on a case-by-case basis, considering such factors as the reason for the change, prognosis for recovery or further rate drops, and the market price of the security. Any credit rating changes below the minimum credit ratings specified for purchase will be reported to the Board of Directors along with the findings and any actions taken.

The SANDAG portfolio is in compliance with all minimum rating requirements of the investment policy and did not experience any credit rating changes that brought the security below the minimum credit ratings as specified.

4. Concentration of credit risk

Concentration of credit risk is the risk of loss attributed to the relative size of an investment in a single issuer. The SANDAG investment policy limits the percentage of the portfolio that can be invested by type of investment for certain types of investments to the following: purchases of bankers’ acceptances may not exceed 40 percent of the SANDAG investments; commercial paper may not exceed more than 10 percent of the outstanding paper of an issuing corporation, no more than 10 percent in any one corporation, or may not exceed 25 percent of the SANDAG investments; medium-term notes may not exceed 30 percent of the SANDAG investments or no more than 10 percent in any one corporation; certificates of deposit may not exceed 30 percent of the SANDAG investments; money markets fund shares may not exceed 20 percent of the SANDAG investments; and mortgage and asset-backed obligations may not exceed 20 percent of the SANDAG investments.

66 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

The SANDAG portfolio is in compliance with all the limit requirements on the percentage of the portfolio that can be invested by type of investment.

5. Custodial credit risk

The California Government Code requires California banks and savings and loan associations to secure the SANDAG cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus, collateral for cash deposits is considered to be held in the SANDAG name.

The market value of pledged securities must equal at least 110 percent of the SANDAG cash deposits. California law also allows institutions to secure SANDAG deposits by pledging first trust deed mortgage notes having a value of 150 percent of the SANDAG total cash deposits. SANDAG may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation. SANDAG; however, has not waived the collateralization requirements.

B. Receivables

Receivables as of June 30, 2013, for the primary government in the aggregate were as follows:

Governmental Funds Proprietary Funds Commission Commission Sales Tax Capital Debt SR 125 Total General Projects Projects Service Non-Major Toll Road Non-Major Primary Fund Fund Fund Fund Funds Fund Funds Government

Receivables: Sales tax $ - $ 46,947,644 $ - $ - $ - $ - $ - $ 46,947,644 Interest 2,980 5,094,544 - 76,837 3,556 - - 5,177,917 Advance to agencies for local street improvements - - - 43,611,447 - - - 43,611,447 Grants - - 39,010,004 - 8,925,367 - 409,964 48,345,335 Accounts and other 152,032 60,688 100,000 - 2,044,341 1,438,498 136,886 3,932,445

Total receivables $ 155,012 $ 52,102,876 $ 39,110,004 $ 43,688,284 $ 10,973,264 $ 1,438,498 $ 546,850 $ 148,014,788

Receivables as of June 30, 2013, for SourcePoint were $436,619, which is comprised of $436,220 due from other governments for services provided and $399 in interest receivable.

Receivables as of June 30, 2013, for ARJIS were $1,453,648, which is comprised of $1,386,856 due from other governments for grants or services provided, $1,917 in interest receivable, and $64,875 in other receivables.

67 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

C. Capital assets

1. Primary government – governmental activities

Capital asset activity for the primary government for the year ended June 30, 2013, was as follows:

Beginning Ending Balance Increases Decreases Balance Governmental activities: Capital assets, not being depreciated: Construction-in-progress $ 446,195,532 $ 318,570,640 $ (238,429,780) $ 526,336,392 Land 5,241,439 - - 5,241,439 Total capital assets, not being depreciated 451,436,971 318,570,640 (238,429,780) 531,577,831

Capital assets, being depreciated: Office equipment 248,960 9,198 - 258,158 Computer equipment 6,696,257 148,388 (71,012) 6,773,633 Other equipment 171,961 - - 171,961 Vehicles 93,151 - - 93,151 Buses 270,526 109,860 - 380,386 Leasehold improvements 192,229 - - 192,229 Total capital assets, being depreciated 7,673,084 267,446 (71,012) 7,869,518

Less accumulated depreciation for: Office equipment (223,131) (9,676) - (232,807) Computer equipment (6,437,048) (134,480) 71,012 (6,500,516) Other Equipment (116,727) (34,392) - (151,119) Vehicles (79,751) (4,467) - (84,218) Buses (30,798) (17,149) - (47,947) Leasehold improvements (192,229) - - (192,229) Total accumulated depreciation (7,079,684) (200,164) 71,012 (7,208,836) Total capital assets, being depreciated, net 593,400 67,282 - 660,682 Governmental activities capital assets, net $ 452,030,371 $ 318,637,922 $ (238,429,780) $ 532,238,513

Depreciation expense was charged to the functions/programs of the governmental activities of the primary government as follows:

Governmental activities: General government $ 89,570 Modeling and research 54,412 Smart Mobility program and services 56,182

$ 200,164

See Note III.G for more information regarding the decreases in construction-in-progress noted above.

SANDAG had active construction projects as of June 30, 2013. The projects primarily include rail, bus, and major corridor capital improvements. At year end, $375,705,565 was contractually committed to contractors.

68 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

2. Proprietary fund

Capital asset activity for the proprietary fund for the year ended June 30, 2013 was as follows:

Beginning Balance Increases Decreases Ending Balance Governmental activities: Capital assets, not being depreciated: Land $ 1,980,000 $ - $ - $ 1,980,000

Total capital assets, not being depreciated 1,980,000 - - 1,980,000

Capital assets, being depreciated: Office equipment 206,933 - - 206,933 Computer equipment 529,229 - - 529,229 Other equipment 149,057 - (149,057) - Vehicles 159,230 30,642 - 189,872 Fixed operating equipment 172,137 - - 172,137 Software 245,364 - - 245,364 Toll road 395,423,000 176,469 - 395,599,469 Building 4,020,000 - - 4,020,000 Electronic toll collection system 18,146,639 1,501,110 - 19,647,749

Total capital assets, being depreciated 419,051,589 1,708,221 (149,057) 420,610,753

Less accumulated depreciation for: Office equipment (21,711) (41,387) - (63,098) Computer equipment (92,543) (176,409) - (268,952) Other equipment (15,639) (22,297) 37,936 - Vehicles (16,706) (35,087) - (51,793) Fixed operating equipment (18,060) (34,427) - (52,487) Software (42,905) (81,788) - (124,693) Toll road (6,691,451) (12,756,047) - (19,447,498) Building (42,177) (80,400) - (122,577) Electronic toll collection system (1,438,174) (1,852,192) - (3,290,366)

Total accumulated depreciation (8,379,366) (15,080,034) 37,936 (23,421,464)

Total capital assets, being depreciated, net 410,672,223 (13,371,813) (111,121) 397,189,289

Proprietary activities capital assets, net $ 412,652,223 $ (13,371,813) $ (111,121) $ 399,169,289

Effective December 21, 2011, SANDAG entered into an Asset Purchase and Sale Agreement with South Bay Expressway, LLC to acquire the Seller’s rights and interest in a Franchise Agreement between the Seller and the State of California, Department of Transportation. The Franchise Agreement gives the holder the right to operate a toll road (SR 125) in San Diego, California.

3C Advisors & Associates, Inc., an independent valuation firm performed valuation of the acquired assets and liabilities. The fair value of the consideration paid was $341.5 million. The consideration consisted of a cash payment of $238.3 million, an additional cash component, held in escrow, in the amount of $7.5 million, a promissory note with a principal amount of

San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

$1.45 million and an assumption of the Seller’s indebtedness in the amount of $94.2 million. The fair value of the total invested capital, including equity and assumed debt was $402.9 million as of the valuation date and was allocated to each asset type shown in the above schedule. The fair value portion of the assumed long term debt was also determined as $61.4 million which is amortized through the term of the assumed debt. As of June 30, 2013, the unamortized fair value debt balance was $58,162,792.

3. Discretely presented component units

Capital asset activity for the year ended June 30, 2013, was as follows:

Beginning Ending Balance Increases Decreases Balance

Capital assets, not being depreciated: Work-in-progress $ 169,290 $ 625,166 $ - $ 794,456 Total capital assets, not being depreciated 169,290 625,166 - 794,456

Capital assets, being depreciated: Computer equipment 14,029 154,775 - 168,804 Internally generated computer software 10,168,879 - - 10,168,879

Total capital assets, being depreciated 10,182,908 154,775 - 10,337,683

Less accumulated depreciation for: Computer equipment (1,169) (30,459) - (31,628) Internally generated computer software (1,016,888) (2,033,775) - (3,050,663)

Total accumulated depreciation (1,018,057) (2,064,234) - (3,082,291)

Total capital assets, being depreciated, net 9,164,851 (1,909,459) - 7,255,392

Total capital assets, net $ 9,334,141 $ (1,284,293) $ - $ 8,049,848

ARJIS has $8,049,848 of capital assets that represent capital assets net of accumulated depreciation and work-in-progress related to the new Enterprise ARJIS System. The capitalized value of internally generated computer software includes the direct costs incurred during the application development stage. These direct costs include direct labor comprised of wages and benefits.

70 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

D. Interfund receivables, payables, and transfers

The composition of interfund balances within the primary government as of June 30, 2013, was as follows:

1. Due to/from other funds

Due to other funds

General Commission Capital Interstate 15 SR 125 Services Sales Tax Projects FasTrak© Toll Road SAFE Fund Projects Fund Fund Fund Fund Fund Total

General Fund $ 4,384,258 $ - $ 5,915,272 $ - $ 269,269 $ 185 $ 10,568,984 General Services Fund - 4,935,643 - - - 104,395 5,040,038 Commission Sales Tax Project Fund - - 6,704,531 - - - 6,704,531 Capital Projects Fund - 63,440,306 - - - - 63,440,306 Prepaid Fare Media Sales Fund - - 1,575,101 - - - 1,575,101

Due from other funds other from Due Service Bureau Fund - - 252,687 - - - 252,687 Interstate 15 FasTrak Fund - - 6,523,482 - 24,050 - 6,547,532 SR 125 Toll Road Fund - - - 13,194 - - 13,194 Total $ 4,384,258 $ 68,375,949 $ 20,971,073 $ 13,194 $ 293,319 $ 104,580 $ 94,142,373

2. Due to primary government and due from component unit

Due to Primary Government

SourcePoint ARJIS Total Primary government: Due from General Fund $ 730 $ 4,137 $ 4,867 component units component Total $ 730 $ 4,137 $ 4,867

3. Transfers in/out

Transfers Out

Commission Commission Interstate 15 General TransNet Sales Tax Debt Service FasTrak Fund Fund Projects Fund Fund Fund Total

General Fund $ - $ 155,930 $ - $ - $ - $ 155,930 General Services Fund 5,255,428 7,889,592 - - 8,751 13,153,771 Commission Sales Tax Project Fund - - - 116,197,279 - 116,197,279

Transfers In Transfers Capital Projects Fund 270,235 201,561,767 - - - 201,832,002 Commission Debt Service Fund - - 77,341,551 - - 77,341,551 Prepaid Fare Media Sales Fund 679,132 - - - - 679,132

Total $ 6,204,795 $ 209,607,289 $ 77,341,551 $ 116,197,279 $ 8,751 $ 409,359,665

71 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

Transfers from the general fund:

To the general services fund consists of the following items:

• $4,863,933 transferred for projects that were budgeted to receive TDA funds • $391,495 transferred for projects that were budgeted to receive member assessments

To the prepaid fare media sales fund consists of the following item:

• $679,132 transferred for a TDA contribution to MTS’ costs for the fare media program

To the capital projects fund consists of the following item:

• $270,235 for the financial systems upgrade project and building assessment project to receive TDA funds

Transfers from the TransNet fund consists of the following items that SANDAG received on behalf of its capital and operating programs:

To the general fund:

• $155,930 for one-half of the Board of Director expenses budgeted to receive TransNet funds • $7,889,592 to the general services fund for operating projects budgeted to receive TransNet funds • $201,561,767 for the capital projects fund for capital projects budgeted to receive TransNet funds

Transfers from the Commission sales tax projects fund:

To the Commission debt service fund consists of the following items:

• Transfer of $74,162,076 in TransNet sales tax revenue for bond and commercial paper principal and interest payments • Transfer of $3,179,475 for bond and commercial paper costs

Transfers from the Commission debt service fund totaling $116,197,279:

To the Commission sales tax projects fund consists of the following items:

• $1,624,727 of bond and commercial paper repayments for the County of San Diego and Cities of La Mesa, National City, and Santee • $95,454,169 transfer to Commission sales tax projects for use of bond proceeds to fund TransNet-eligible capital projects

72 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

• $7,012,574 return of TransNet sales tax funds that were advanced to the trustee for debt-service payments and returned upon receipt of the 2010 Series A BABs federal subsidy • $1,579,000 of commercial paper proceeds issued for reimbursement to the City of La Mesa for TransNet eligible projects • $2,680,065 of bond proceeds used for reimbursement to the City of Santee for TransNet eligible projects • $7,775,535 of bond proceeds used for reimbursement to the City of San Marcos for TransNet eligible projects • $80,957 of administrative transactions transferred for reporting purposes

Transfers from the I-15 FasTrak fund totaling $8,751 to the general services fund for a budgeted operating project.

4. Interfund balances

Interfund balances of $56,373,690 include advances from the Commission sales tax projects fund to the SR 125 toll road fund for the acquisition of the SR 125 franchise with the original $3 million used toward operations of the SR 125 toll road. The TransNet promissory note called for SANDAG to borrow the principal amount of $254,068,974 from the Commission. As required by the TransNet Ordinance, SANDAG will be required to ensure the TransNet revenues are made whole. Therefore, the interest rate SANDAG was charged was 4.25 percent based on recent TransNet borrowing history. The promissory note was a permitted subordinated debt under the bond transaction documents for TransNet. The promissory note requires that the proceeds of the promissory note only be used for costs associated with the toll road franchise.

On March 23, 2012, the TransNet Extension Ordinance was amended to modify the Expenditure Plan such that the improvements on Interstate 805 (I-805), valued at a remaining $134 million in 2002 dollars (or $192 million in 2010 dollars), would be removed from the Expenditure Plan. As a result, the initial amount borrowed from TransNet was reduced by $192 million. As of June 30, 2013, the outstanding principal of the TransNet advance was $59,214,571, with accrued interest of $3,666,019.

E. Derivative instruments

1. 2008 interest rate swaps

Objective of the interest rate swaps. In 2005, SANDAG entered into three forward interest rate swaps for $200 million each in order to hedge the interest rate risk associated with future variable-rate revenue bonds expected to be issued in 2008 by “locking in” a fixed interest rate. The intention of SANDAG in entering into the swaps was to lock in a relatively low cost of funds on a substantial portion of the TransNet Early Action Program. The variable rate bonds were issued in March 2008.

73 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

On May 23, 2012, SANDAG refunded $151.5 million of the outstanding variable rate bonds with fixed rate bonds and terminated the associated interest rate swaps. The low fixed municipal interest rates at that time provided the opportunity for SANDAG to refund the 2013 to 2022 maturities of the Series 2008 variable rate bonds ($151.5 million in par) and partially terminate the associated swaps (also equal to $151.5 million in notional amount) without increasing annual debt service. The purpose of this transaction was to reduce variable rate exposure and swap counterparty risk at no additional cost to SANDAG.

Fair values. The fair value balances and notional amounts of derivative instruments outstanding at June 30, 2013, classified by type, and the changes in fair value of such derivative instruments for the year ended are as follows:

Changes in Fair Value Fair Value at June 30, 2013 Classification Amount Classification Amount Notional Governmental activities Cash flow hedges: Pay-fixed interest rate Deferred swaps outflows $50,202,925 Debt (65,378,370) $402,300,000 Investment derivatives: Pay-floating Receive floating interest rate Investment swaps revenue $7,880,003 Investment $18,307,130 $313,200,000

Objective and Terms of Hedging Derivative Instruments

The following table displays the objective and terms of the the SANDAG hedging derivative instruments outstanding at June 30, 2013, along with the credit rating of the associated counterparty (amounts in thousands).

74 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

Counterparty Notional Effective Maturity Credit Rating Type Objective Amount Date Date Terms Moody's/S&P Pay Hedge of changes in 3.8165%; Pay-fixed cash flows on the received interest rate 2008 Series A and B 65% of USD- swap bonds $134,100,000 5/23/2012 4/1/2038 LIBOR A3/A Pay Hedge of changes in 3.8165%; Pay-fixed cash flows on the received interest rate 2008 Series B and C 65% of USD- swap bonds $134,100,000 5/23/2012 4/1/2038 LIBOR Aa2/AAA Hedge of changes in Pay 3.41%; Pay-fixed cash flows on the received interest rate 2008 Series C and D 65% of USD- swap bonds $134,100,000 5/23/2012 4/1/2038 LIBOR A3/A

Credit Risk. This is the risk that the counterparty will fail to perform under the terms of the agreement. As of June 30, 2013, SANDAG was not exposed to credit risk on these swaps because they had negative fair values. However, should interest rates change and the fair values of the swaps become positive, SANDAG would be exposed to credit risk in the amount of the swaps’ fair values. Favorable credit ratings of the counterparties (Bank of America and Goldman Sachs Mitsui Marine Derivative Products) mitigate this risk. As of June 30, 2013, Bank of America was rated A3 by Moody’s and A by Standard & Poor’s, and Goldman Sachs Mitsui Marine Derivative Products was rated Aa2 by Moody’s and AAA by Standard and Poor’s. The ratings are monitored by staff on a weekly basis. In addition, the fair value of the swaps will be fully collateralized by the counterparty with cash or United States government securities if the counterparty’s credit quality falls below a rating of Baa2 by Moody’s or BBB by Standard & Poor’s. Collateral would be posted with a third-party custodian.

Interest rate risk. This is the risk that changes in market interest rates will adversely affect the net payment on the swaps. SANDAG is exposed to interest rate risk on its swaps when LIBOR decreases causing SANDAG’s net payment on the swaps to increase.

Basis risk. This is the risk of a mismatch between the variable rate received from the counterparty and the variable rate paid on the variable-rate debt issued in 2008. SANDAG is exposed to basis risk should the floating rate that it receives on a swap be less than the actual variable rate SANDAG pays on the bonds. Depending on the magnitude and duration of any basis risk shortfall, the effective fixed rate on the debt will vary. Based on historical experience, the expectation is that the payments received under the agreements will approximate the expected bond payments over the 30-year term of the swaps. Due to the favorable market conditions during fiscal year 2013, SANDAG was not exposed to basis risk since the variable rate received from the counterparty, which is 65 percent of LIBOR, was more than the variable rate

75 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

SANDAG paid on the bonds. This savings for fiscal year 2013 was $18,252 as compared to a negative of $1,029,325 in fiscal year 2012.

Termination risk and termination payments. This is the risk that the transaction is terminated in a market dictating a termination payment by SANDAG. SANDAG can terminate the swap at the fair value by providing notice to the counterparty, while the counterparty may only terminate the swap upon certain termination events under the terms of the agreement. SANDAG or the counterparties may terminate the swap if the other party fails to perform under the terms of the contracts, such as the failure to make swap payments. If the swap is terminated, the variable-rate bonds would no longer be hedged. Given the negative fair value of June 30, 2013, SANDAG was not in a favorable termination position relative to the market. SANDAG effectively reduced the ongoing termination risk by refunding $151.5 million in variable-rate bonds and terminating the same amount of the outstanding interest rate swaps in June 2012, under favorable market conditions with low fixed rates. Refunding additional maturities and terminating more of the interest rate swaps would have led to a net increase in debt service under a fixed-rate structure, which was contrary to the SANDAG programmatic objectives. Consequently, the reduced amount of variable-rate bonds and interest rate swaps was left in place.

Rollover risk. This is the risk that maturity of the hedging derivative instruments is shorter than the maturity of the associated debt leaving SANDAG unprotected in the future. When these swaps terminate, or in the case of a termination option, if the counterparty exercises its option, SANDAG will be re-exposed to the risks being hedged by the swaps. SANDAG is exposed to rollover risk on the swaps only in the event of a failure to perform under the terms of the contracts by SANDAG or counterparty.

Reset rates paid and received by SANDAG. The weekly variable interest rates paid on the 2008 TransNet bonds by SANDAG to the bondholders for the period July 1, 2012, through June 30, 2013, ranged from 0.05 percent to 0.24 percent for Barclays Bank; 0.04 percent to 0.28 percent for Goldman, Sachs & Co.; 0.05 percent to 0.23 percent for J.P. Morgan Securities, Inc.; and 0.05 percent to 0.24 percent for EJ De La Rosa.

Fixed rates paid by SANDAG to the swap provider counterparties were 3.41 percent to Bank of America for one of the swaps, 3.8165 percent to Bank of America for another one of the swaps, and 3.8165 percent to Goldman Sachs Mitsui Marine Derivative Products. Sixty-five percent (65 percent) of LIBOR received by SANDAG from the swap provider counterparties ranged from 0.12596 percent to 0.15971 percent during the same time period.

Actual debt-service requirements versus the projected debt-service on the swap transaction. For the fiscal year ending June 30, 2013, Bank of America actual debt service was $4,558,757 versus projected debt service of $4,572,810 for one of the swaps, and was $5,118,069 versus projected debt service of $5,117,926 for the other Bank of America swap; and Goldman Sachs Mitsui Marine Derivative Products actual debt service was $5,113,585 versus projected debt service of $5,117,926 for its swap. In total, actual debt service was $14,791,411 versus projected debt service of $14,808,663, which resulted in a savings of variable rate payments received from the swap counterparties as compared to the variable rate payments

76 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

made on the bonds in the amount of $18,252 for fiscal year 2013. Over the life of the swaps from the issuance of the bonds through June 30, 2013, the cumulative excess of variable rate payments made on the bonds as compared to the variable rate payments received from the swap counterparties is $4,430,709. This means that the net variable rates SANDAG is paying on the 2008 TransNet bonds is more than the variable rate SANDAG is receiving, and these rates were originally intended to offset and net to zero.

The total net cost of the program includes liquidity facilities with JP Morgan (Series A and B), Mizuho Corporate Bank, Ltd (Series C), and State Street Bank and Trust Company and California State Teachers’ Retirement Fund (Series D). The Standby Bond Purchase Agreement (SBPA) cost for the Series A and B bonds is 56 basis points, the Series C bonds is 47.5 basis points, and the SBPA cost for the Series D bonds is 65 basis points. The JP Morgan SBPA originally carried a cost for the initial one-year term of 20 basis points, with annual renewals and adjusting costs with the latest renewal through March 2014. SANDAG continues to explore opportunities to lower the cost of the liquidity facility and will again pursue competitive options as we near the renewal term of March 2014.

2. 2018 basis rate swaps overlay to the 2008 interest rate swaps

Objective of the basis rate swaps. On March 19, 2009, SANDAG entered into a SIFMA versus LIBOR floating-to-floating or “basis” swap. The combination of the Basis Swaps and the existing 2008 Interest Rate Swaps effectively amended the existing swaps without having to change the existing floating-to-fixed interest rate swaps. This overlay allowed SANDAG to bid out the new transaction to a group of potential counterparties without changing the existing 2008 Interest Rate Swaps. SANDAG was able to enter into a new transaction with Barclays Bank PLC to overlay the terms under two of the 2008 Interest Rate Swaps, with an expected benefit to SANDAG of a substantial reduction in the cost of debt after 2018.

Terms. The initial notional amounts of the swaps are $156.6 million each. Under two of the 2008 Interest Rate Swaps, RTC pays the counterparties a fixed payment of 3.8165 percent and receives 65 percent of LIBOR (through April 2018), and thereafter receives the SIFMA index. The 2018 Basis Rate Swaps overlay these two 2008 Interest Rate Swaps with a payment of the SIFMA index and a receipt of 107.4 percent of LIBOR for the last 20 years of the swap (April 2018 to April 2038).

Fair values. The swaps had a total combined positive fair value of $18,307,130 as of June 30, 2013. The fair values of the derivatives were estimated by an independent third-party based on mid-market levels as of the close of business on June 30, 2013. The fair values take into consideration the prevailing interest rate environment and the specific terms and conditions of the swaps.

Credit risk. This is the risk that the counterparty will fail to perform under the terms of the agreements. As of June 30, 2013, SANDAG was exposed to credit risk on these swaps in the amount of $18,307,130, which is the fair value of the derivatives. However, should interest rates change and the fair value of the swaps become negative; SANDAG would not be exposed to any

77 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

credit risk. The favorable credit rating of the counterparty mitigates this risk. As of June 30, 2013, the swap counterparty, Barclays Bank PLC, was rated A2 by Moody’s and A+ by Standard & Poor’s.

Basis risk. This is the risk of a mismatch between the variable rate received from the counterparty and the variable rate paid on the variable rate debt issued in 2008. SANDAG is exposed to basis risk should the floating rate that it receives on a swap be less than the actual variable rate SANDAG pays on the bonds. Depending on the magnitude and duration of any basis risk shortfall, the effective fixed rate on the debt will vary. Based on current and historical experience, staff expects the overlay of the SIFMA to LIBOR Basis Rate Swaps to significantly reduce the costs of financing after 2018, assuming a return to normal, or even near to normal trading relationships.

Termination risk and termination payments. This is the risk that the transaction is terminated in a market dictating a termination payment by SANDAG. SANDAG can terminate a swap at the fair market value by providing notice to the counterparty, while the counterparty may only terminate the swap upon certain termination events under the terms of the agreement. Given the positive fair value at June 30, 2013, SANDAG was in a favorable termination position relative to the market.

SANDAG Board Policy No. 032: The Commission Interest Rate Swap Policy requires a contingency plan to either replace the swaps or fund the termination payments, if any, in the event one or more outstanding swaps are terminated. Should a swap be terminated, the excellent credit rating of SANDAG would allow it to assign the swap to another counterparty. Alternatively, if a swap is terminated and it has a negative fair value, SANDAG could use TransNet sales tax receipts to fund the termination payment.

F. Long-term debt

1. The 2008 Series ABCD bonds

In March 2008, SANDAG issued $600,000,000 of variable rate bonds to fund some of the major projects identified in the TransNet reauthorization (approved by voters in November 2004) under the TransNet Early Action Program. In June 2012, SANDAG refunded $151,500,000 of the Series 2008 Bonds and terminated a corresponding portion of the interest rate swaps relating to the Series 2008 Bonds through the issuance of the 2012 Series A tax-exempt bonds.

The principal requirements to maturity for the 2008 Series ABCD bonds are as follows:

78 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

Maturity Principal Interest Hedging Total (April 1) Amount on Debt Derivatives, Net Interest 2014 $ - $ 573,277 $ 14,301,938 $ 14,875,215 2015 - 573,277 14,301,938 14,875,215 2016 - 573,277 14,301,938 14,875,215 2017 - 573,277 14,301,938 14,875,215 2018 - 573,277 14,301,938 14,875,215 2019 - 2023 18,600,000 2,859,762 71,344,380 74,204,142 2024 - 2028 104,100,000 2,411,207 60,153,994 62,565,201 2029 - 2033 126,300,000 1,600,880 39,938,242 41,539,122 2034 - 2038 153,300,000 618,699 15,435,108 16,053,807

Total $ 402,300,000 $ 10,356,933 $ 258,381,414 $ 268,738,347

The bonds bear interest at a variable rate, which is reset weekly. See Note III.D.1 for reset rate ranges for each remarketing agent. The above table incorporates the net receipts/payments of the hedging derivative instruments that are associated with this debt. These amounts assume that current interest rates on variable rate bonds and the current reference rates of hedging derivative instruments will remain the same for their term. As these rates vary, interest payments on variable rate bonds and net receipts/payments on the hedging derivative instruments will vary. Refer to Note III.D for additional information regarding the derivative instruments associated with the debt of SANDAG.

2. The 2010 Series A and B bonds

On November 10, 2010, SANDAG issued $350,000,000 Series 2010 A and B fixed rate bonds to finance SANDAG’s continued implementation of the TransNet program, principally consisting of transportation facility and public infrastructure improvements within the County of San Diego, to retire $7,316,000 in outstanding commercial paper notes, and to pay the costs of issuing the Series 2010 Bonds. The Series A BABs totaled $338,960,000 and carry a fixed interest rate of 5.911 percent (net interest rate of 3.991 percent after deducting the BABs federal subsidy) with a maturity date of April 1, 2048. The Series B Tax-Exempt bonds totaled $11,040,000 with a fixed rate interest rate of 3.14 percent, based on an interest rate range of 2.00 – 5.00 percent and a maturity date of April 1, 2030.

79 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

The principal requirements to maturity for the 2010 Series A bonds, net of the federal subsidy, are as follows:

Maturity Principal Interest (April 1) Amount Amount 2014 $ - $ 13,556,307 2015 - 13,556,307 2016 - 13,556,307 2017 - 13,556,307 2018 - 13,556,307 2019 - 2023 - 67,781,536 2024 - 2028 - 67,781,536 2029 - 2033 - 67,781,536 2034 - 2038 - 67,781,536 2039 - 2043 153,555,000 55,961,761 2044 - 2048 185,405,000 22,803,480 Total $ 338,960,000 $ 417,672,920

The principal requirements to maturity for the 2010 Series B bonds are as follows:

Maturity Principal Interest (April 1) Amount Amount 2014 $ 590,000 $ 382,550 2015 620,000 358,950 2016 640,000 334,150 2017 665,000 308,550 2018 690,000 281,950 2019 - 2023 2,705,000 1,018,550 2024 - 2028 2,415,000 540,150 2029 - 2030 1,115,000 67,400 Total $ 9,440,000 $ 3,292,250

3. The 2012 Series A bonds

On June 14, 2012, SANDAG issued $420,585,000 of 2012 Series A fixed rate bonds to finance the SANDAG continued implementation of the TransNet program, principally consisting of transportation facility and public infrastructure improvements within the County of San Diego, to refund $151,500,000 of the Series 2008 ABCD Bonds and terminate a corresponding portion of the interest rate swaps relating to the Series 2008 ABCD Bonds, and to pay the costs of issuing the 2012 Series A Bonds. The 2012 Series A Sales Tax Revenue Bonds (Limited Tax Bonds) totaled $420,585,000 and carry a fixed interest rate of 3.703 percent with a maturity date of April 1, 2048.

80 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

The principal requirements to maturity for the 2012 Series A Bonds, are as follows:

Maturity Principal Interest (April 1, Oct 1) Amount Amount

2014 $ 14,490,000 $ 19,050,250 2015 14,870,000 18,665,550 2016 15,470,000 18,070,750

2017 16,240,000 17,297,250 2018 17,055,000 16,485,250 2019 - 2023 81,015,000 69,341,250 2024 - 2028 20,220,000 56,723,750 2029 - 2033 26,210,000 51,176,750 2034 - 2038 33,020,000 43,838,500 2039 - 2043 72,505,000 31,899,500 2044 - 2048 91,430,000 12,980,463

Total $ 402,525,000 $ 355,529,263

4. Commercial paper notes

At June 30, 2013, SANDAG had a $75,000,000 tax-exempt commercial paper program available (Series B), reduced from $100,000,000 and moved from a Line of Credit to a Direct-Pay Letter of Credit, based on anticipated financing needs and to reduce liquidity fees. Under the Reimbursement Agreement relating to the Series B Notes, dated September 1, 2012, the commercial paper would be available through September 18, 2015.

During the fiscal year, the maximum outstanding balance was $35,275,000. As of June 30, 2013, there was $33,780,000 outstanding. Interest rates during the current year have varied from 0.14 percent to .2992 percent, with maturities from 5 days to 97 days. Interest rates on outstanding amounts at June 30, 2013, are 0.19 percent, with maturities at 33 and 97 days. The higher rates experienced during the first quarter of the year are due to the liquidity facility provider, Bank of America, N.A., which received a downgrade from Moody’s of one notch from ‘P-1’ to ‘P-2’ in June 2012. While the downgrade did not immediately lead to a severe increase in interest rates for the commercial paper program, it precluded some investors from purchasing the SANDAG commercial paper based upon the lower short-term ratings of Bank of America, N.A. SANDAG replaced Bank of America with Union Bank, N.A. on September 19, 2012, through a competitive procurement process.

81 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

The scheduled principal requirements to maturity for the Series B commercial paper are as follows:

Scheduled Principal Interest Repayment Amount Amount 2014 $ 1,505,000 $ 320,418 2015 1,835,000 307,497 2016 1,885,000 290,238 2017 1,805,000 272,498 2018 1,200,000 256,795 2019 - 2023 6,450,000 1,100,619 2024 - 2028 7,250,000 770,385 2029 - 2033 8,300,000 391,192 2034 - 2035 3,550,000 38,009 Total $ 33,780,000 $ 3,747,651

5. Senior Debt - TIFIA Secured Loan

The TIFIA loans are divided into three separate notes or tranches, each of which have different principal amounts, interest rates, and payment commencement and due dates. The loans are secured by first liens on the SR 125 toll road project revenue, the contract rights related to the toll road, and a deed of trust on the leasehold interest in the toll road’s right of way. Tranches B-2 and C-2 had accrued interest of $4,639,578 and $439,070, respectively, added to the ending balances of their respective tranches. The following table shows the three tranches, initial principal amounts, and interest rates.

Initial Principal Tranche Amount Interest Rate A-2 $ 59,100,810 6.0% through December 31, 2015 7.0% from January 1, 2016 to December 31, 2020 8.0% from January 1, 2021 to December 31, 2025 9.0% from January 1, 2026 to June 30, 2026 (maturity date) B-2 $ 32,341,804 9.0% through June 30, 2035 (maturity date) C-2 $ 2,740,896 10.0% through December 31, 2035 (maturity date)

82 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

The principal requirements to maturity for the three tranches are as follows: a. Tranche A-2 Maturity (Jan Principal Interest 1, Jul 1) Amount Amount 2014 $ 656,988 $ 3,533,930 2015 1,468,175 3,482,998 2016 1,140,315 3,664,849 2017 637,212 3,886,914 2018 1,395,200 3,839,036 2019 - 2023 23,262,609 16,962,722 2024 - 2026 30,405,293 4,413,260 Total $ 58,965,792 $ 39,783,709 b. Tranche B-2 Maturity Principal Interest (Jan 1, Jul 1) Amount* Amount 2014 $ - $ - 2015 - - 2016 - - 2017 - - 2018 - - 2019 - 2023 - - 2024 - 2028 5,085,861 18,079,475 2029 - 2033 70,501,007 40,066,106 2034 - 2035 43,720,167 4,507,347 Total 119,307,035 $ 62,652,928 Accrued interest (FY 2014 - 2025) (82,325,653) $ 36,981,382

*The principal amount includes the initial principal balance of $36,981,382 and total deferred interest of $82,325,653 added to the principal balance over the life of the loan. c. Tranche C-2 Maturity Principal Interest (Jan 1, Jul 1) Amount** Amount 2014 $ - $ - 2015 - - 2016 - - 2017 - - 2018 - - 2019 - 2023 - - 2024 - 2028 - - 2029 - 2033 - - 2034 - 2036 25,925,727 1,939,095 Total 25,925,727 $ 1,939,095 Accrued interest (FY2014 - 2034) (22,745,762) $ 3,179,965

**The principal amount includes the initial principal balance of $3,179,965 and total deferred interest of $22,745,762 added to the principal balance over the life of the loan.

83 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

d. Series D Obligation

The Series D Agreement provides that SANDAG will pay TIFIA, to the extent of available project revenue, $1,445,850 plus interest at the rate of 14 percent per year compounded semi-annually. Payments are only due, and can only be made, after full payment of the existing TIFIA loan and full satisfaction of the TransNet loan (see Note III.C.4). Any amounts remaining unpaid as of December 31, 2042, are automatically forgiven. Prepayment of the Series D Note is possible, but only at the value the note will have on December 31, 2042. The Series D loan is secured by a third lien, behind the TIFIA and TransNet notes, on the project revenues, but no other project assets are pledged to Series D. The only event of default is SANDAG’s failure to maintain the Toll Covenant. The Series D Agreement further provides that the SANDAG obligations are non-recourse and that the holders of Series D can only look to the revenues of the toll road for repayment in the event of a default. As of June 30, 2013, the SR125 toll road did not accrue Series D interest due to the uncertain future events that may affect obligations under the Series D agreement.

6. Changes in long-term liabilities

Long-term liability activity for the year ended June 30, 2013, was as follows:

Beginning Ending balance Balance Due Within July 1, 2012 Additions Reductions June 30, 2013 One Year Governmental Activities: Sales tax revenue bonds and commercial paper notes 2008 Series ABCD tax-exempt $ 402,300,000 $ - $ - $ 402,300,000 $ - 2010 Series A Build America Bonds 338,960,000 - - 338,960,000 - 2010 Series B tax-exempt 10,020,000 - (580,000) 9,440,000 590,000 2012 Series A tax-exempt 420,585,000 - (18,060,000) 402,525,000 14,490,000 Premium 56,527,144 - (1,599,672) 54,927,472 - Commercial Paper Notes 33,821,000 1,579,000 (1,620,000) 33,780,000 33,780,000 Compensated absences payable 1,841,114 2,967,744 (2,733,149) 2,075,709 2,075,709 Total long-term liabilities $ 1,264,054,258 $ 4,546,744 $ (24,592,821) $ 1,244,008,181 $ 50,935,709

Business-type Activities: TIFIA Notes Tranche A $ 59,100,810 $ - $ (135,018) $ 58,965,792 $ 656,988 Tranche B 33,868,979 3,112,403 - 36,981,382 - Tranche C 2,884,701 295,264 - 3,179,965 - Series D 1,445,850 - - 1,445,850 - Total TIFIA notes 97,300,340 3,407,667 (135,018) 100,572,989 656,988 Unamortized FV Adjustment 60,092,478 - (1,929,686) 58,162,792 - Total TIFIA notes $ 157,392,818 $ 3,407,667 $ (2,064,704) $ 158,735,781 $ 656,988

On June 30, 2013, sales tax revenue bonds and commercial paper notes consists of 2008 variable rate tax-exempt revenue bonds, 2010 fixed rate BABs, 2010 fixed rate tax-exempt revenue bonds, and 2012 fixed rate tax-exempt bonds issued by SANDAG that are collateralized by a pledge of the revenues from a one-half percent sales tax imposed within the County of San Diego. Long-term debt also consists of commercial paper notes issued by SANDAG. The

84 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

notes are payable from and secured by a pledge of the retail transactions and use tax subordinate to the pledge of such retail transactions and use tax which secures limited tax bonds issued or to be issued. Proceeds from the bonds and commercial paper debt are to be used primarily to fund certain transportation projects in the San Diego County region.

As maturity of commercial paper notes is 270 days or less, the commercial paper notes are classified as due within one year. Also, obligations for workers’ compensation and compensated absences payable are liquidated by the general fund. See Note I.E.12 for further clarification.

7. Pledged revenue

SANDAG and its component units have a number of debt issuances outstanding that are collateralized by the pledging of certain revenues. The amount and term of the remainder of these commitments are indicated in the debt service to maturity table presented in the accompanying notes. The purpose for which the proceeds of the related debt service payments as a percentage of pledged gross revenue are indicated in the table on the following page. These percentages also approximate the relationship of debt service to pledged revenues for the remainder of the term of the commitment:

Debt Service as a Fiscal year 2013 amount Fiscal Year 2013 Debt Percentage of Pledged Description of Pledged Revenue of Pledged Revenue Service Payments Revenue

Sales Tax $ 249,520,133 $ 71,567,668 29% Toll Revenue - Senior Debt 17,961,916 3,676,182 20% Toll Revenue - Subordinate Debt 3,420,561 2,788,803 82%

G. Transit capital contributions

The fund financial statements report capital outlay, which are current year capital project expenditures. In the government-wide statement of activities, certain expenditures are eliminated and capitalized as construction-in-progress capital assets in the statement of net position. During the current year, transit capital funding program revenues are $112,147,741. The program revenues represent the federal funds, state funds, and other local governmental funding for the construction-in-progress projects in the capital projects fund.

During the current fiscal year, $244,093,156 is reported as transit capital contributions. Of this amount, $238,429,780 of completed construction-in-progress projects, as well as title to the assets, if applicable, was transferred to other governmental agencies responsible for public transportation operations, $139,721,280 to MTS, $202,930 to NCTD, $66,117,692 to Caltrans, $169,429 to the City of Chula Vista, $10,419,148 to the City of Encinitas, $457,357 to the City of Escondido, $449,000 to the City of La Mesa, $576,528 to the City of San Diego, $590,108 to the City of San Marcos, $4,003,387 to the City of Oceanside, and $5,731,152 to the City of Imperial Beach, $44,956 to the Port of San Diego, and $9,946,813 to the California State Parks, Division of Boating

85 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

and Waterways, to reflect the other government’s custodial accountability for the operations and maintenance of the assets. These capital contributions represent a reduction in capital assets and are not restricted to specific programs per the government-wide statement of activities.

H. Risk management

SANDAG has a self-insured retention (deductible) for Bodily Injury and Property Damage Liability (including General Liability and Automobile Liability) claims of $1,000,000 per occurrence. Amounts in excess of the self-insurance are covered by commercial excess insurance up to $50,000,000. SANDAG purchases “all-risk” insurance for damage to its property up to $16,696,518 for the SANDAG main location with a per occurrence subject to a deductible of $5,000; and up to $363,051,845 for the SR 125 toll road with a per occurrence subject to a deductible of $50,000. In addition, SANDAG has insurance policies for costs arising from employee Workers’ Compensation claims, Auto Property, Mexican Auto Liability, Foreign Liability and Cyber Liability. Employment Practices Liability and Public Official Errors and Omissions Liability insurance are also covered to a maximum of $1,000,000 per occurrence, with excess liability insurance up to $50,000,000.

Claims expenditures and liabilities in connection with these insurance programs are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Claim payments have not exceeded insurance coverage for each of the past three fiscal years.

There were no liability or property claims incurred, claims payments and claims payable as of and for the years ended June 30, 2012, and 2013.

I. Commitments and contingencies

SANDAG leases its office space and some of its copiers, and other miscellaneous office equipment, under various operating leases. Total lease expense for fiscal year 2013 was $2,713,086. Minimum annual lease payments under non-cancellable operating leases with terms in excess of one year were as follows:

Minimum Lease Fiscal Year Payment 2014 $ 2,629,920 2015 2,464,719 2016 2,540,775 Total $ 7,635,414

Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although SANDAG expects such amounts, if any, to be immaterial.

86 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

J. Other post-employment benefits (OPEB)

1. Plan description

In March 1986, pursuant to requirements of the state retirement system in which SANDAG participates, SANDAG adopted a policy to provide post-retirement health care benefits to retired employees through California Public Employees’ Retirement System (CalPERS), a single- employer benefit plan, that covers all of the SANDAG employees. The plan does not issue a separate annual financial report.

2. Funding policy

Contributions to retirees are a fixed dollar amount equal to a maximum of $250 per month per each eligible retiree. The exception to this contribution is for nine retirees who were grandfathered into their 2007 SANDAG contribution with an increase in each year thereafter, in order to maintain a comparable benefit level. The expenditure was recorded when the Annual Required Contribution (ARC) of the employer was paid. Total payments to retirees for the year ended June 30, 2013, were $160,494. There were 54 retiree participants receiving post-employment health care benefits as of June 30, 2013.

SANDAG is required to contribute the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The ARC rate for fiscal year 2013 is 1.00 percent of annual covered payroll.

Contributions from SANDAG have been transferred to an irrevocable trust administered by CalPERS on behalf of SANDAG in which the plan assets held by the trust have been dedicated solely to providing benefits to retirees and their beneficiaries in accordance with the terms of the plan and are legally protected from creditors of the employer or the plan administrator. Accordingly, SANDAG contributions to this trust have been accounted for as reductions of the SANDAG liability for its net OPEB obligation.

3. Annual OPEB cost and net OPEB asset

The SANDAG annual OPEB cost (expense) is calculated based on the ARC of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the SANDAG annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the SANDAG net OPEB asset for these benefits:

87 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

Annual required contribution $ 215,746 Interest on net OPEB obligation (36,771) Adjustment to annual required contribution 34,534 Annual OPEB cost (expense) $ 213,509 Contributions made (including premiums paid) (215,746) Increase in net OPEB asset $ (2,237) Net OPEB asset—beginning of year (520,841) Net OPEB asset—end of year $ (523,078)

4. Annual OPEB cost

The SANDAG annual OPEB cost, the percentage of annual OPEB cost to be contributed to the plan, and the net OPEB obligation are as follows:

Fiscal Annual Percentage of Net Year OPEB Annual OPEB OPEB Ended Cost Cost Contributed Asset 6/30/2011 $ 155,253 435.0%$ 520,113 6/30/2012 154,526 100.5% 520,841 6/30/2013 215,746 101.0% 523,078

5. Funded status and funding progress

The funded status of the plan as of June 30, 2011, which is the most recent actuarial study, was as follows:

Actuarial accrued liability (AAL) $ 3,173,833 Actuarial value of plan assets 2,333,013 Unfunded actuarial accrued liability (UAAL) $ 840,820 Funded ratio (actuarial value of plan assets/AAL) 73.5% Covered payroll (active plan members) $ 21,487,126 UAAL as a percentage of covered payroll 3.9%

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the basic financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

88 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

6. Actuarial methods and assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the June 30, 2011, actuarial valuation, the following actuarial methods and assumptions were as follows:

Description Method/Assumption Actuarial Method Entry Age Normal Cost Actuarial Assumptions: Discount Rate 7.61% Projected Salary Increases 3.25% per annum, in aggregate Inflation Rate 3.00%

The actuarial assumptions included an annual healthcare cost trend rate of 7.0 to 7.5 percent initially, reduced by decrements of 0.5 percent to 5.0 percent after five years. The unfunded actuarial accrued liability is being amortized over an initial 30 years using the level-percentage-of-pay method on a closed-basis. The remaining amortization period at June 30, 2011, is assumed to be 25 years. Any assets of the plan will be valued on a market value basis.

The retirement age for active employees was determined according to the retirement rates under the PERS pension plan. The pre-retirement turnover was determined according to the termination rates under the PERS pension plan. The pre-retirement and post-retirement mortality rates were determined under the PERS pension plan. It was assumed 95 percent of active employees meeting eligibility requirements will elect retiree health coverage at retirement. Since the retiree pays 100 percent of the cost for spouse coverage, spouse coverage during retiree’s lifetime is not explicitly valued. Fifty percent of covered retirees are assumed to have spouses continue coverage upon their death. Female spouses are assumed to be three years younger than male spouses. Future retirees are assumed to elect medical plan coverage based on similar (50 percent HMO and 50 percent PPO) elections of current retirees.

The valuation was based on the medical premiums paid by SANDAG for insurance coverage. The valuation assumes SANDAG is exempt from the valuation of any medical plan rate subsidy. The expected monthly medical costs at the valuation date for future retirees is as follows:

PPO HMO Non-Medicare Eligible $ 636 $ 513 Medicare Eligible 405 294

89 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

K. Retirement plan

1. Plan description

SANDAG contributes to the CalPERS, an agent multiple-employer public employees retirement system, defined benefit pension plan that acts as a common investment and administrative agent for participating public entities within the state of California. A menu of benefit provisions, as well as other requirements, are established by state statutes within the Public Employees’ Retirement Law. SANDAG selects optional benefit provisions from the benefit menu by contracting with PERS and adopts those benefits through local resolution. Copies of the PERS annual financial report may be obtained from the PERS Executive Office, 400 P Street, Sacramento, California 95814.

Employees in regular, limited term, or tolling operations personnel positions start participating in PERS upon employment. Temporary, intern, part-time, and seasonal (TIPS) employees may gain eligibility for PERS if they have worked 1,000 hours or more in a fiscal year. Membership becomes effective the first day of the following pay period once the eligibility requirement has been met. Employees are eligible to retire at age 50 with at least five years of credited service. Annual retirement benefits are determined based on age at retirement, the length of membership service, and the amount of earnings based on the highest 12 consecutive months’ full-time equivalent monthly pay. PERS also provides death and disability benefits.

2. Funding policy

The contribution requirements of the plan members are established by state statute, and the employer contribution rate is established and may be amended by PERS. Eligible SANDAG employees participate in one of three different retirement plans offered by PERS. The member contribution rate for each plan is described below:

PERS Retirement Plan Employee/Member Contribution 2.7% at 55 years The member contribution rate is 8.0 percent of gross salary. . For employees hired prior to July 1, 2009, SANDAG paid 6.0 percent of the member contribution in fiscal year 2013. Employees paid the remaining 2.0 percent contribution amount. . Employees hired after July 1, 2009 pay the full 8.0 percent member contribution. 2.0% at 60 years The member contribution rate is 7.0 percent of gross salary. Employees in this plan pay the full amount of the member contribution. 2.0% at 62 years The member contribution rate is 6.25 percent of gross salary. Employees in this plan pay the full amount of the member contribution.

SANDAG is required to contribute the actuarially-determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the PERS Board of Administration. The Annual Pension Cost (APC) rate for fiscal year 2013 was 18.157 percent of annual covered payroll.

90 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

Readers of this document are advised to refer directly to the full disclosure of actuarial and funding practices of the multi-employer CalPERS system, which this agency does not control. CalPERS may employ actuarial techniques such as extended smoothing and amortization periods that would result in future increases in required employer contributions which are not reflected in these financial statements, particularly in the event of any future changes in governmental financial reporting standards and systemwide funding practices. Further information on its financial practices should be requested from CalPERS.

Refer to the Required Supplementary Information for the schedule of funding progress for the post-employment defined benefits plan , which presents multi-year trend information regarding the actuarial value of plan assets increases/decreases relative to the actuarial accrued liability for benefits over time.

3. Annual pension costs

An employer reports an APC equal to the Annual Required Contribution (ARC) plus an adjustment for the cumulative difference between the APC and the employer’s actual plan contributions for the year. The cumulative difference is called the Net Pension Obligation (NPO).

THREE-YEAR TREND INFORMATION FOR PERS

Pension Cost APC Fiscal Year (APC) Contributed NPO 6/30/2011$ 2,634,468 100% - 6/30/2012 3,125,140 100% - 6/30/2013 3,845,918 100% -

A summary of principle assumptions and methods used to determine the ARC is shown below:

Average Remaining Period 30 Years as of the Valuation Date Asset Valuation Method 15 Year Smoothed Market Actuarial Assumptions: Investment Rate of Return 7.50% (net of administrative expenses) Projected Salary Increases 3.30% to 14.20% depending on age, service, and type of employment Inflation 2.75% Payroll Growth 3.00% Individual Salary Growth A merit scale varying by duration of employment coupled with an assumed annual inflation component of 2.75% and an annual production growth of 0.25%.

Initial unfunded liabilities are amortized over a closed period that depends on the plan’s date of entry into PERS. Subsequent plan amendments are amortized as a level percent of pay over a closed 20-year period. Gains and losses that occur in the operation of the plan are amortized over a 30-year rolling period, which results in an amortization of about 6 percent of unamortized gains and losses each year. If the plan’s accrued liability exceeds the actuarial value of plan assets,

91 San Diego Association of Governments Notes to the Basic Financial Statements, Continued For the Fiscal Year Ended June 30, 2013

then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30-year amortization period.

4. Funded status and funding progress for PERS plan

The funded status of the plan as of June 30, 2012, which is the most recent actuarial valuation, was as follows:

Actuarial accrued liability (AAL) $ 101,729,341 Actuarial value of plan assets 77,002,421 Unfunded actuarial accrued liability (UAAL) $ 24,726,920 Funded ratio (actuarial value of plan assets/AAL) 75.7% Covered payroll (active plan members) $ 17,892,856 UAAL as a percentage of covered payroll 138.2%

L. Prior period adjustments

SANDAG wrote off the remaining unamortized cost of debt issuance for the 2008 Series ABCD bonds, 2010 Series A & B bonds, and 2012 Series A bonds in accordance with the implementation of GASB No. 65. The effect of this change on the beginning net position is a reduction of $6,256,132.

SANDAG reclassified certain items previously classified as deferred revenue in accordance with the implementation of GASB No. 65. The effect of this change on the beginning net position is an increase of $2,498,957 to fund balance and net position.

The net changes are summarized below:

Governmental Fund Balance Net Position Balances at June 30, 2012 $ 867,922,479 $ 126,820,426 Unamortized cost of debt issuance - (6,256,132) Deferred revenue reclassification 2,498,957 2,498,957

Balances at June 30, 2012, restated $ 870,421,436 $ 123,063,251

M. Subsequent event

In an effort to streamline operations of the prepaid fare media sales program, a large portion of the program was transferred to MTS on July 1, 2013. This move transferred approximately 75 percent of the prepaid fare media sales special revenue fund with the remaining 25 percent being transferred in approximately two years. This move will allow MTS, the largest user and recipient of the prepaid fare media sales program, to manage the program in house, thereby eliminating certain external costs.

REQUIRED SUPPLEMENTARY INFORMATION

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San Diego Association of Governments Required Supplementary Information For the Fiscal Year Ended June 30, 2013

SCHEDULE OF FUNDING PROGRESS FOR PERS RETIREMENT PLAN

Accrued Value of Unfunded Funded Covered % of Valuation Liability Assets Liability (UL) Status Payroll Payroll Date (a) (b) (a)-(b) (b)/(a) (c) [(a-b)]/(c) 6/30/09 83,670,218 62,961,093 20,709,125 75.2% 15,607,224 132.7% 6/30/10 88,772,090 67,036,029 21,736,061 75.5% 16,184,001 134.3% 6/30/11 95,110,699 71,999,842 23,110,857 75.7% 17,131,413 134.9% 6/30/12 101,929,341 77,002,721 24,726,920 75.5% 17,892,856 138.2%

SCHEDULE OF FUNDING PROGRESS FOR PERS OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN

Actuarial Annual UL As a Accrued Value of Unfunded Funded Covered % of Valuation Liability Assets Liability (UL) Status Payroll Payroll Date (a) (b) (a)-(b) (b)/(a) (c) [(a-b)]/(c) 1/1/09 4,865,596 615,059 4,250,537 12.6% 15,607,224 27.2% 1/1/11 2,586,563 2,016,269 570,294 78.0% 16,397,782 3.5% 6/30/11 3,173,833 2,333,013 840,820 73.5% 21,487,126 3.9%

San Diego Association of Governments Notes to Required Supplementary Information For the Fiscal Year Ended June 30, 2013

A. Budgetary information

Formal budget integration is employed as a management control device for the general fund, special revenue funds, the debt service fund, and the capital project fund. Budgets are adopted on a basis consistent with GAAP. The general fund, special revenue funds, and capital project fund have legally adopted annual program budgets.

After the annual program budget is adopted, the Board of Directors can legally amend the budget at any time during the fiscal year to incorporate new grants or contracts which may become available during the year. Management can legally amend or transfer appropriations between programs or projects within the adopted or amended budget, once the budget has been approved, up to a maximum of $100,000 with monthly reporting of these delegated budget amendments to the Board of Directors. However, management may not exceed the authorization of any individual fund. The fund level is the legal level of control (the expenditure level on which expenditures may not legally exceed appropriations) for each budget for which data are presented in the annual financial report.

For the Commission sales tax projects special revenue fund, the annual program budget is based on expected sales tax revenue receipts. The expenditures budget reflects the appropriate program split in accordance the TransNet Extension Ordinance based on those expected sales tax revenue receipts. After the annual budget is adopted, the Board of Directors can legally amend the budget at any time during the fiscal year to incorporate changes in expected sales tax revenues.

Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation, is utilized in the governmental funds. For budgeting purposes, encumbrances lapse at year-end and may be reappropriated in the following year.

B. Additional appropriations or amendments

1. General fund

Amendments to the general fund were approved by the Board of Directors to increase costs and cost recovery for staffing of the new Department of Operations and additional staffing in various other departments.

2. TransNet fund

TransNet fund appropriations were increased to recognize revisions made to several large capital project budgets, primarily in Interstate 5 Corridor, I-805 Corridor, State Route 76 Corridor, Blue Line Improvement projects, and the Los Angeles-San Diego-San Luis Obispo Rail Corridor Agency (LOSSAN) project, as approved by the Board of Directors.

San Diego Association of Governments Notes to Required Supplementary Information, Continued For the Fiscal Year Ended June 30, 2013

3. Commission sales tax projects fund

Amendments were made to the Commission sales tax projects fund in fiscal year 2013 to reflect an increase in sales tax revenue projections, as approved by the Board of Directors.

San Diego Association of Governments Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the year ended June 30, 2013

Budgeted Amounts Actual Variance with Original Final Amounts Final Budget

REVENUES:

Local Transportation Development Act sales tax funds $ 7,055,315 $ 7,055,315 $ 7,055,315 $ - Member agency assessments 547,426 547,426 547,426 - Other government funding - - 17,960 17,960

Total revenues 7,602,741 7,602,741 7,620,701 17,960

EXPENDITURES:

Current: General government 34,576,321 39,251,184 36,081,584 3,169,600 Cost recovery (34,179,321) (38,854,184) (36,320,981) (2,533,203)

Total expenditures 397,000 397,000 (239,397) 636,397

REVENUES OVER (UNDER) EXPENDITURES 7,205,741 7,205,741 7,860,098 654,357

OTHER FINANCING SOURCES (USES):

Transfers in 148,500 148,500 155,930 7,430 Transfers out (7,354,241) (7,354,241) (6,204,795) 1,149,446

Total other financing sources (uses) (7,205,741) (7,205,741) (6,048,865) 1,156,876 Net change in fund balances $ - $ - 1,811,233 $ 1,811,233

FUND BALANCES:

Beginning of year 9,790,681 End of year $ 11,601,914

See accompaning Notes to Required Supplementary Information.

98 San Diego Association of Governments Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual TransNet Special Revenue Fund For the year ended June 30, 2013

Budgeted Amounts Actual Variance with Original Final Amounts Final Budget REVENUES: Local TransNet sales tax funds $ 499,100,502 $ 465,004,633 $ 209,607,289 $ (255,397,344) Total revenues 499,100,502 465,004,633 209,607,289 (255,397,344)

OTHER FINANCING SOURCES (USES): Transfers out (499,100,502) (465,004,633) (209,607,289) 255,397,344 Total other financing sources (uses) (499,100,502) (465,004,633) (209,607,289) 255,397,344

Net change in fund balances $ - $ - - $ -

FUND BALANCES: Beginning of year - End of year $ -

See accompaning Notes to Required Supplementary Information.

99 San Diego Association of Governments Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual San Diego County Regional Transportation Commission Sales Tax Projects Special Revenue Fund For the year ended June 30, 2013

Budgeted Amounts Actual Variance with Original Final Amounts Final Budget

REVENUES:

Local TransNet sales tax funds $ 242,825,829 $ 249,979,204 $ 249,520,133 $ (459,071) Investment earnings 4,280,000 3,893,150 3,515,163 (377,987) Other revenues - - 4,476,536 4,476,536

Total revenues 247,105,829 253,872,354 257,511,832 3,639,478

EXPENDITURES:

Current: General government 2,428,258 2,499,792 2,428,258 71,534 Bicycle facilities 4,856,517 4,999,584 1,790,439 3,209,145 Independent Taxpayer Oversight Committee - - 83,071 (83,071) Major corridor capital projects 89,505,601 92,142,335 189,116,968 (96,974,633) Major corridor environmental mitigation 10,363,806 10,669,112 1,999,891 8,669,221 Local project environmental mitigation 4,239,739 4,364,637 7,917,042 (3,552,405) Local street improvements 68,542,447 70,561,630 78,188,231 (7,626,601) Smart growth 4,946,362 5,092,076 2,372,485 2,719,591 New major corridor transit operations 19,078,825 19,640,866 2,972,076 16,668,790 Transit system improvements 38,864,274 40,009,171 39,734,615 274,556

Total expenditures 242,825,829 249,979,203 326,603,076 (76,623,873)

REVENUES OVER (UNDER) EXPENDITURES 4,280,000 3,893,151 (69,091,244) (72,984,395)

OTHER FINANCING SOURCES (USES):

Transfers in 99,869,407 102,811,447 116,197,279 13,385,832 Transfers out (55,632,762) (55,632,762) (77,341,551) (21,708,789)

Total other financing sources (uses) 44,236,645 47,178,685 38,855,728 (8,322,957)

Net change in fund balances $ 48,516,645 $ 51,071,836 (30,235,516) $ (81,307,352)

FUND BALANCES:

Beginning of year 447,198,151

End of year $ 416,962,635

See accompanying Notes to Required Supplementary Information.

100 SUPPLEMENTARY INFORMATION

101 San Diego Association of Governments Combining Balance Sheet Nonmajor Governmental Fund June 30, 2013

Special Revenue Funds Totals

General Prepaid Fare Services Media Sales SAFE Fund Fund Fund 2013

ASSETS

Cash and investments $ 1,697,050 $ - $ 5,272,712 $ 6,969,762 Accounts receivable 345,513 986,836 - 1,332,349 Prepaid items and other assets 315 - - 315 Due from other funds 5,040,038 1,575,101 - 6,615,139 Due from other governments 8,925,367 244,699 467,293 9,637,359

Total assets $ 16,008,283 $ 2,806,636 $ 5,743,561 $ 24,558,480

LIABILITIES AND FUND BALANCES

Liabilities: Accounts payable $ 2,832,076 $ 65,380 $ 72,354 $ 2,969,810 Accrued liabilities 14,065 - - 14,065 Retentions payable 545,152 - - 545,152 Due to other funds 4,384,258 - 104,580 4,488,838 Due to other governments 3,194,254 2,589,011 651,042 6,434,307 Unearned revenue 2,264,484 - - 2,264,484

Total liabilities 13,234,289 2,654,391 827,976 16,716,656

Deferred inflows of resources: Unavailable revenue 3,848,548 - - 3,848,548

Total deferred inflows of resources 3,848,548 - - 3,848,548

Fund Balances: Nonspendable: Prepaid Items 315 - - 315

Total nonspendable 315 - - 315

Restricted for: Transit operations - 152,245 - 152,245 Freeway emergency service - - 4,915,585 4,915,585

Total restricted - 152,245 4,915,585 5,067,830

Unassigned (1,074,869) - - (1,074,869)

Total fund balances (1,074,554) 152,245 4,915,585 3,993,276

Total liabilities, deferred inflows of resources and fund balances $ 12,159,735 $ 2,806,636 $ 5,743,561 $ 20,709,932

102 San Diego Association of Governments Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Fund For the year ended June 30, 2013

Special Revenue Funds Totals

General Prepaid Fare Services Media Sales SAFE Fund Fund Fund 2013 REVENUES: Federal funds $ 15,773,299 $ - $ - $ 15,773,299 State funds 5,179,541 - 14,507,396 19,686,937 Other local governmental funding 1,088,766 1,184,459 - 2,273,225 Prepaid fare media sales revenue - 27,178,362 - 27,178,362 Member agency assessments 200,001 - - 200,001 SAFE program revenue - - 1,614,190 1,614,190 Investment earnings - - 10,565 10,56 5 Other revenues 167,510 64,454 - 231,964

Total revenues 22,409,117 28,427,275 16,132,151 66,968,543

EXPENDITURES: Current: Modeling and research 4,404,320 - - 4,404,320 Criminal justice 1,521,582 - - 1,521,582 Planning and forecasting 4,212,706 - - 4,212,706 Sustainable development 1,304,160 - - 1,304,160 Smart mobility programs and services 15,613,752 31,806,352 - 47,420,104 Intermodal planning and implementation 2,114,127 - - 2,114,127 Internal and external coordination 5,773,179 - - 5,773,179 Bicycle facilities 127,939 - - 127,939 Independent Taxpayer Oversight Committee - - - - Major corridor capital projects - - - - Major corridor environmental mitigation - - - - Local project environmental mitigation - - - - Local street improvements - - - - Smart growth 2,345,580 - - 2,345,580 New major corridor transit operations - - - - Transit system improvements 1,103,181 - - 1,103,181 SAFE program expense - - 11,216,566 11,216,566 Debt service: Principal retirement - - - - Debt issuance costs - - - - Interest and other charges - - - -

Total expenditures 38,520,526 31,806,352 11,216,566 81,543,444

REVENUES OVER (UNDER) EXPENDITURES (16,111,409) (3,379,077) 4,915,585 (14,574, 901)

OTHER FINANCING SOURCES (USES): Transfers in 13,153,771 679,132 - 13,832,903 Total other financing sources (uses) 13,153,771 679,132 - 13,832,903

Net change in fund balances (2,957,638) (2,699,945) 4,915,585 (741,998)

FUND BALANCES: Beginning of year 1,883,084 2,852,190 - 4,735,274 End of year $ (1,074,554) $ 152,245 $ 4,915,585 $ 3,993,276

103 San Diego Association of Governments Combining Statement of Net Position Nonmajor Proprietary Funds June 30, 2013

Business-Type Activities-Enterprise Funds Totals Nonmajor Funds Service Bureau Interstate 15 FasTrak 2013

ASSETS

Current assets: Cash and investments $ - $ 1,128,742 $ 1,128,742 Accounts receivable 44,762 92,124 136,886 Due from other funds 252,687 6,547,532 6,800,219 Due from other governments 215,474 194,490 409,964

Total current assets 512,923 7,962,888 8,475,811

Noncurrent assets: Depreciable assets, net of accumulated depreciation - 16,357,384 16,357,384

Total noncurrent assets - 16,357,384 16,357,384

Total assets 512,923 24,320,272 24,833,195

LIABILITIES AND NET POSITION

Current liabilities: Accounts payable 116,362 765,633 881,995 Retentions payable - 2,984 2,984 Due to other funds - 13,194 13,194 Due to other governments 15,090 828,245 843,335 Transponder deposits payable - 200 200 Unearned revenue 256,812 722,083 978,895

Total current liabilities 388,264 2,332,339 2,720,603

Total liabilities 388,264 2,332,339 2,720,603

Net position: Net investment in capital assets - 16,357,384 16,357,384

Unrestricted 124,659 5,630,549 5,755,208

Total net position $ 124,659 $ 21,987,933 $ 22,112,592

104 San Diego Association of Governments Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Proprietary Funds For the year ended June 30, 2013

Business-type Activities-Enterprise Funds Totals Nonmajor Funds Service Bureau Interstate 15 FasTrak 2013

OPERATING REVENUES:

Service Bureau revenue $ 547,760 $ - $ 547,760 Interstate 15 FasTrak permit revenue - 6,124,849 6,124,849 Interstate 15 FasTrak fines and forfeitures revenue - 16,434 16,434

Total operating revenues 547,760 6,141,283 6,689,043

OPERATING EXPENSES:

Service Bureau operating expenses 504,167 - 504,167 Interstate 15 FasTrak operating expenses - 4,239,870 4,239,870 Depreciation - 1,852,192 1,852,192

Total operating expenses 504,167 6,092,062 6,596,229

Operating income (loss) 43,593 49,221 92,814

NONOPERATING REVENUES (EXPENSES):

Interest income - 17,743 17,743

Total nonoperating revenues (expenses) - 17,743 17,743

INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 43,593 66,964 110,557

Capital contributions - 1,501,111 1,501,111 Transfers out - (8,751) (8,751)

Total capital contributions and transfers - 1,492,360 1,492,360

CHANGE IN NET POSITION 43,593 1,559,324 1,602,917

NET POSITION:

Beginning of year 81,066 20,428,609 20,509,675

End of year $ 124,659 $ 21,987,933 $ 22,112,592

105 San Diego Association of Governments Combining Statement of Cash Flows Nonmajor Proprietary Funds For the year ended June 30, 2013

Business-type Activities-Enterprise Funds Totals Service Bureau Interstate 15 FasTrak 2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Receipts from customers and users $ 412,298 $ 3,159,375 $ 3,571,673 Payments for employee salaries and benefits (328,818) (151,665) (480,483) Payments for operations (83,480) (3,434,511) (3,517,991)

Net cash provided by (used for) operating activities - (426,801) (426,801)

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest received on investment - 17,743 17,743

Net cash provided by (used for) investing activities - 17,743 17,743

Net increase (decrease) in cash and investments - (409,058) (409,058)

Cash and investments, beginning of year - 1,537,800 1,537,800

Cash and investments, end of year $ - $ 1,128,742 $ 1,128,742

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:

Operating income (loss) $ 43,593 $ 49,221 $ 92,814

Adjustments to reconcile net cash provided by (used for) operating activities:

Depreciation - 1,852,192 1,852,192 (Increase) decrease in: Accounts receivable (25,212) (11,203) (36,415) Due from other funds 4,346 (2,956,253) (2,951,907) Due from other governments (107,207) (78,752) (185,959) Increase (decrease) in: Accounts payable 88,871 389,816 478,687 Retentions payable (451) 2,169 1,718 Due to other funds - (12,961) (12,961) Due to other governments 3,448 275,270 278,718 Transponder deposits payable - (600) (600) Unearned revenue (7,388) 64,300 56,912

Total adjustments (43,593) (476,022) (519,615)

Net cash provided by (used for) operating activities $ - $ (426,801) $ (426,801)

NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Contributions of capital asset from governmental activities - 1,501,111 1,501,111

106 San Diego Association of Governments Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Capital Projects Fund For the year ended June 30, 2013

Budgeted Amounts1 Actual Variance with Original Final Amounts Final Budget

REVENUES: Federal funds $ 213,503,302 $ 208,022,218 $ 39,417,923 $ (168,604,295) State funds 231,157,702 233,151,702 54,498,770 (178,652,932) Local Transportation Development Act sales tax funds 2,960,648 3,089,379 1,080,266 (2,009,113) Other local governmental funding 88,060,879 88,150,379 8,226,229 (79,924,150) Investment earnings - - (353) (353)

Total revenues 535,682,531 532,413,678 103,222,835 (429,190,843)

EXPENDITURES: Current: Capital outlay 1,034,783,033 997,418,311 325,735,127 671,683,184

Total expenditures 1,034,783,033 997,418,311 325,735,127 671,683,184

REVENUES OVER (UNDER) EXPENDITURES (499,100,502) (465,004,633) (222,512,292) 242,492,341

OTHER FINANCING SOURCES (USES): Transfers in 499,100,502 465,004,633 201,832,002 (263,172,631)

Total other financing sources (uses) 499,100,502 465,004,633 201,832,002 (263,172,631)

Net change in fund balances $ - $ - (20,680,290) $ (20,680,290)

FUND BALANCES: Beginning of year 15,338,075 End of year $ (5,342,215)

1 Several transportation projects are completed in partnership with other governmental agencies. The TransNet Early Action Program (EAP) portion of the SANDAG Capital Budget is prepared in collaboration with Caltrans, the Metropolitan Transit System, and other governmental agencies in an effort to report, track, and monitor EAP projects on a combined, entire project level and the budgets include all funds received and spent by SANDAG and the other agencies. However, actuals are recorded and presented for only funds directly received and spent by SANDAG and do not incorporate funds received and spent by others.

107 San Diego Association of Governments Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual San Diego County Regional Transportation Commission Debt Service Fund For the year ended June 30, 2013

Budgeted Amounts Actual Variance with Original Final Amounts Final Budget

REVENUES:

Investment earnings $ - $ - $ 812,860 $ 812,860 Debt repayments from other governments - - 1,624,727 1,624,727 Federal funds 7,012,574 7,012,574 7,012,574 -

Total revenues 7,012,574 7,012,574 9,450,161 2,437,587

EXPENDITURES:

Current: Debt service: Principal retirement 18,640,000 18,640,000 20,260,000 (1,620,000) Interest and other charges 43,707,204 50,917,603 53,909,872 (2,992,269)

Total expenditures 62,347,204 69,557,603 74,169,872 (4,612,269)

REVENUES OVER (UNDER) EXPENDITURES (55,334,630) (62,545,029) (64,719,711) (2,174,682)

OTHER FINANCING SOURCES (USES):

Transfers in 55,632,762 55,632,762 77,341,551 21,708,789 Transfers out (99,869,407) (102,811,447) (116,197,279) (13,385,832) Commercial Paper issued - - 1,579,000 1,579,000

Total other financing sources (uses) (44,236,645) (47,178,685) (37,276,728) 9,901,957

Net change in fund balances $ (99,571,275) $ (109,723,714) (101,996,439) $ 7,727,275

FUND BALANCES:

Beginning of year 393,359,255

End of year $ 291,362,816

108 San Diego Association of Governments Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Services Special Revenue Fund For the year ended June 30, 2013

Budgeted Amounts Actual Variance with Original Final Amounts Final Budget

REVENUES: Federal funds $ 19,982,222 $ 20,164,215 $ 15,773,299 $ (4,390,916) State funds 6,762,216 8,732,821 5,179,541 (3,553,280) Other local governmental funding 4,336,527 4,390,504 1,088,766 (3,301,738) Member agency assessments 200,000 200,000 200,001 1 Other revenues - - 167,510 167,510

Total revenues 31,280,965 33,487,540 22,409,117 (11,078,423)

EXPENDITURES: Current: Modeling and research 4,881,409 4,339,037 4,404,320 (65,283) Criminal justice 1,232,544 1,857,447 1,521,582 335,865 Planning and forecasting 6,240,609 6,129,528 4,212,706 1,916,822 Sustainable development 1,629,576 1,574,390 1,304,160 270,230 Smart mobility programs and services 22,404,248 22,670,864 15,613,752 7,057,112 Intermodal planning and implementation 1,286,858 3,002,364 2,114,127 888,237 Internal and external coordination 6,808,217 6,303,216 5,773,179 530,037 Bicycle facilities 1,301,975 1,301,975 127,939 1,174,036 Smart growth 3,679,164 3,679,164 2,345,580 1,333,584 Transit system improvements 1,191,394 1,191,394 1,103,181 88,213

Total expenditures 50,655,994 52,049,379 38,520,526 13,528,853

REVENUES OVER (UNDER) EXPENDITURES (19,375,029) (18,561,839) (16,111,409) 2,450,430

OTHER FINANCING SOURCES (USES): Transfers in 19,375,029 18,561,839 13,153,771 (5,408,068)

Total other financing sources (uses) 19,375,029 18,561,839 13,153,771 (5,408,068)

Net change in fund balances $ - $ - (2,957,638) $ (2,957,638)

FUND BALANCES: Beginning of year 1,883,084 End of year $ (1,074,554)

109 San Diego Association of Governments Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Prepaid Fare Media Sales Special Revenue Fund For the year ended June 30, 2013

Budgeted Amounts Actual Variance with Original Final Amounts Final Budget

REVENUES:

Other local governmental funding $ 1,253,835 $ 1,326,717 $ 1,184,459 $ (142,258) Prepaid fare media sales revenue 28,713,828 28,713,828 27,178,362 (1,535,466) Other revenues 32,337 32,337 64,454 32,117

Total revenues 30,000,000 30,072,882 28,427,275 (1,645,607)

EXPENDITURES:

Current: Smart mobility programs and services 30,679,132 30,752,014 31,806,352 (1,054,338)

Total expenditures 30,679,132 30,752,014 31,806,352 (1,054,338)

REVENUES OVER (UNDER) EXPENDITURES (679,132) (679,132) (3,379,077) (2,699,945)

OTHER FINANCING SOURCES (USES):

Transfers in 679,132 679,132 679,132 -

Total other financing sources (uses) 679,132 679,132 679,132 - Net change in fund balances $ - $ - (2,699,945) $ (2,699,945)

FUND BALANCES:

Beginning of year 2,852,190 End of year $ 152,245

110 San Diego Association of Governments Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual SAFE Program Fund For the year ended June 30, 2013

Budgeted Amounts Actual Variance with Original Final Amounts Final Budget

REVENUES:

State revenue $ - $ - $ 14,507,396 $ 14,507,396 SAFE program revenue 2,500,000 2,500,000 1,614,190 (885,810) Investment earnings - - 10,565 10,565

Total revenues 2,500,000 2,500,000 16,132,151 13,632,151

EXPENDITURES:

Current: SAFE program 2,160,537 2,160,537 11,216,566 (9,056,029)

Total expenditures 2,160,537 2,160,537 11,216,566 (9,056,029)

REVENUES OVER (UNDER) EXPENDITURES 339,463 339,463 4,915,585 4,576,122

Net change in fund balances $ 339,463 $ 339,463 4,915,585 $ 4,576,122

FUND BALANCES:

Beginning of year - End of year $ 4,915,585

111

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112 STATISTICAL SECTION

This part of the the SANDAG comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the the SANDAG overall financial health.

Contents Page

Financial Trends These schedules contain trend information to help the reader understand how the SANDAG financial 114 performance and well-being changed over time.

Revenue Capacity These schedules contain information to help the reader assess the SANDAG most significant local 120 revenue source, the sales tax.

Debt Capacity These schedules present information to help the reader assess the affordability of the SANDAG current 123 levels of outstanding debt and the SANDAG ability to issue additional debt in the future.

Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the 126 enviroment within which the SANDAG financial activities take place.

Operating Information These schedules contain service and infrastructure data to help the reader understand how the 128 information in the SANDAG financial report relates to the services SANDAG provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

113 San Diego Association of Governments Net Position by Component Last Ten Fiscal Years (accrual basis of accounting)

Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Governmental activities Net investment in capital assets $ 94,146,501 $ 95,703,822 $ 131,050,654 $ 218,687,940 $ 317,645,268 $ 396,389,593 $ 401,218,096 $ 194,300,002 $ 144,582,596 $ 212,369,791 Restricted for: Debt service - - - - 18,201,939 21,523,955 21,324,637 26,892,891 10,314,653 64,135,550 Environmental mitigation ------1,203,086 1,208,689 1,210,668 Unrestricted (deficit) (194,599,679) (85,795,572) (21,485,552) (26,957,631) (50,041,224) (87,120,162) (100,267,719) 183,072,505 (35,541,644) (181,431,527)

Total governmental activities net position $ (100,453,178) $ 9,908,250 $ 109,565,102 $ 191,730,309 $ 285,805,983 $ 330,793,386 $ 322,275,014 $ 405,468,484 $ 120,564,294 $ 96,284,482

Business-type activities Net investment in capital assets $ - $ - $ - $ - $ - $ - $ - $ - $ 255,259,406 $ 240,433,508

Restricted for: Debt service ------1,866,486 448 Environmental mitigation ------Major maintenance post-acquisition ------4,540,504 15,761,136 Project revenue ------142,000 79,004 Unrestricted (deficit) - - 16,216 (19,182) 645,541 762,166 2,263,466 2,611,579 (56,693,496) (53,302,771)

Total business-type activities net position $ - $ - $ 16,216 $ (19,182) $ 645,541 $ 762,166 $ 2,263,466 $ 2,611,579 $ 205,114,900 $ 202,971,325

Primary government Net investment in capital assets $ 94,146,501 $ 95,703,822 $ 131,050,654 $ 218,687,940 $ 317,645,268 $ 396,389,593 $ 401,218,096 $ 194,300,002 $ 399,842,002 $ 452,803,299 Restricted for: Debt service - - - - 18,201,939 21,523,955 21,324,637 26,892,891 12,181,139 64,135,998 Environmental mitigation ------1,203,086 1,208,689 1,210,668 Major maintenance post-acquisition ------4,540,504 15,761,136 Project revenue ------142,000 79,004 Unrestricted (deficit) (194,599,679) (85,795,572) (21,469,336) (26,976,813) (49,395,683) (86,357,996) (98,004,253) 185,684,084 (92,235,140) (234,734,298)

Total primary government net position $ (100,453,178) $ 9,908,250 $ 109,581,318 $ 191,711,127 $ 286,451,524 $ 331,555,552 $ 324,538,480 $ 408,080,063 $ 325,679,194 $ 299,255,807

Source: Finance Department

114 San Diego Association of Governments Change in Net Position Last Ten Fiscal Years (accrual basis of accounting)

Fiscal Year

2004 2005 2006 2007 2008 2009 20101 2011 2012 2013

Expenses Governmental activities: General government, net of cost recovery $ 9,567,889 $ 3,751,062 $ 3,651,738 $ 4,226,675 $ 5,155,572 $ 3,490,679 $ 3,843,933 $ 4,340,560 $ (50,395) $ (75,055) Transit support activities 37,538,260 67,329,086 61,020,196 42,774,445 51,063,433 63,760,998 48,016,961 - - - Regional planning 3,117,476 2,612,265 2,277,187 2,483,597 2,832,945 4,123,055 3,326,106 - - - Transportation service and facility planning 1,271,961 1,509,487 1,264,772 1,530,219 1,799,546 1,969,902 2,225,251 - - - Transportation development projects 4,832,865 5,116,224 4,924,015 6,614,060 4,586,455 3,974,971 5,600,080 - - - Technical assistance to member agencies 626,845 377,564 ------Systems management 6,952,457 5,989,890 6,600,740 7,214,967 6,831,294 7,745,668 7,815,571 - - - Program management, project monitoring, and - external relations 4,717,871 5,450,563 2,940,238 2,741,834 3,674,813 4,605,874 5,489,182 - - - Regional information systems 3,893,471 4,463,923 4,507,030 5,495,871 5,513,475 5,278,079 4,275,893 - - - Modeling and research ------2,945,543 3,906,142 4,458,732 Criminal justice 1,096,441 1,088,667 1,219,117 1,379,305 1,470,916 1,442,777 1,342,462 1,322,882 1,635,255 1,521,582 Planning and forecasting ------5,626,008 4,708,816 4,212,706 Sustainable development ------1,640,795 1,269,411 1,304,160 Smart mobility programs and services ------46,513,217 46,418,002 47,366,426 Intermodal planning and implementation ------1,554,009 2,602,205 2,114,127 Internal and external coordination ------4,506,081 7,078,166 5,773,179 Bicycle facilities 2,264,080 307,053 2,028,225 1,233,516 2,314,739 4,238,080 1,044,430 1,108,513 192,495 71,080 Independent Taxpayer Oversight Committee - - - - - 260,757 126,063 85,510 356,159 83,071 Major corridor capital projects - - 624,091 2,157,385 8,431,949 5,333,453 7,294,773 16,217,358 542,364 126,155 Major corridor environmental mitigation - - - - - 9,243 439,616 3,239 4,264 - Local project environmental mitigation - - 438,629 - - 3,781 1,913 33,793 1,744 34,019 Local street improvements - - - - - 39,940,542 23,990,084 33,306,399 86,880,721 66,153,631 Smart growth - - - - - 4,412 95,554 934,701 1,821,384 1,783,732 New major corridor transit operations - - - - - 71,628 564 862,901 1,912,773 606,497 Transit system improvements - - - - - 35,474,000 54,883,491 34,556,716 37,632,167 39,679,702 SAFE program ------11,216,566 Transit capital contributions - - - - - 123,795,904 176,392,582 125,806,324 246,284,582 244,093,156 Interest on long-term debt 19,557,908 16,151,787 12,722,427 9,051,666 10,774,960 25,589,285 28,261,556 36,988,739 46,908,631 58,602,402 Cost of debt issuance ------6,256,132 -

Total governmental activities expenses 95,437,524 114,147,571 104,218,405 86,903,540 104,450,097 331,113,088 374,466,065 318,353,288 496,361,018 489,125,868

Business-type activities: Service Bureau - - 302,387 437,993 602,339 471,887 357,488 312,016 490,289 504,167 Interstate 15 FasTrak - 2,211,003 1,616,934 1,495,881 1,161,859 2,128,490 3,099,415 3,702,804 5,094,168 6,092,062 State Route 125 Toll Road ------12,013,407 29,911,481

Total business-type activities expenses - 2,211,003 1,919,321 1,933,874 1,764,198 2,600,377 3,456,903 4,014,820 17,597,864 36,507,710

Total primary government expenses $ 95,437,524 $ 116,358,574 $ 106,137,726 $ 88,837,414 $ 106,214,295 $ 333,713,465 $ 377,922,968 $ 322,368,108 $ 513,958,882 $ 525,633,578

Program Revenues Governmental activities:

Charges for services: General government $ 547,426 $ 547,426 $ 547,426 $ 547,426 $ 547,426 $ 547,425 $ 547,424 $ 547,426 $ 547,426 $ 565,386 Technical assistance to member agencies 32,846 92,065 ------Transit support activities - - - - - 888,532 1,431,222 1,106,349 1,208,837 1,184,459 Criminal justice 170,000 170,000 200,000 200,000 200,000 200,000 200,001 200,000 199,999 200,001 SAFE ------1,614,190 Operating grants and contributions 52,031,844 83,068,940 79,279,568 65,314,690 72,589,286 86,646,372 70,900,310 62,912,360 65,142,256 78,195,117 Capital grants and contributions 35,567,529 50,334,267 30,687,025 33,615,281 33,432,790 35,229,222 33,912,628 91,481,754 114,897,279 112,147,740 Total governmental activities program revenues 88,349,645 134,212,698 110,714,019 99,677,397 106,769,502 123,511,551 106,991,585 156,247,889 181,995,797 193,906,893

Business-type activities: Charges for services: Service Bureau - - 318,603 402,595 564,013 469,365 348,823 332,478 534,763 547,760 Interstate 15 FasTrak - 2,224,610 1,540,841 1,384,779 1,771,295 2,164,606 3,251,352 4,005,920 4,786,063 6,141,283 State Route 125 Toll Road ------15,134,831 26,134,191

Total business-type activities program revenues - 2,224,610 1,859,444 1,787,374 2,335,308 2,633,971 3,600,175 4,338,398 20,455,657 32,823,234

Total primary government program revenues $ 88,349,645 $ 136,437,308 $ 112,573,463 $ 101,464,771 $ 109,104,810 $ 126,145,522 $ 110,591,760 $ 160,586,287 $ 202,451,454 $ 226,730,127

Net (expense)/revenue Governmental activities $ (7,087,879) $ 20,065,127 $ 6,495,614 $ 12,773,857 $ (131,178,318) $ (207,601,537) $ (267,474,480) $ (162,105,399) $ (314,365,221) $ (295,218,975) Business-type activities - 13,607 (59,877) (146,500) 571,110 33,594 143,272 323,578 2,857,793 (3,684,476) Total primary government net expense $ (7,087,879) $ 20,078,734 $ 6,435,737 $ 12,627,357 $ (130,607,208) $ (207,567,943) $ (267,331,208) $ (161,781,821) $ (311,507,428) $ (298,903,451)

115 San Diego Association of Governments Change in Net Position Last Ten Fiscal Years (accrual basis of accounting)

Fiscal Year

2004 2005 2006 2007 2008 2009 20101 2011 2012 2013

General Revenues and Other Change in Net Position Governmental activities: Local TransNet sales tax funds $ 214,304,334 $ 229,576,284 $ 244,103,489 $ 248,467,503 $ 244,535,119 $ 219,173,861 $ 208,504,753 $ 223,939,663 $ 239,071,064 $ 249,520,133 Local Transportation Development Act sales tax funds 5,580,679 6,762,493 6,587,559 6,603,759 8,597,251 8,032,786 6,552,873 7,012,535 7,488,972 8,135,581 Contributions not restricted to specific programs 8,284,208 16,841,908 ------Investment earnings (loss) 4,016,659 3,540,867 6,209,416 5,805,048 (1,115,263) 24,947,560 9,785,173 14,321,473 (6,984,702) 12,212,398 Cost recovery 14,732,539 18,811,159 20,633,960 22,625,351 23,780,295 - - - - - Other revenues 820,313 1,582,039 2,781,344 631,889 91,165 466,059 677,295 35,625 32,336 64,454 Transfers in (out) - 13,607 - - - (31,326) (43,072) (10,427) (210,146,639) (1,492,360) Capital contributions not restricted to specific programs (3,760,346) (61,462,944) (35,150,111) (40,600,248) (50,634,575) - - - - - Extraordinary item: Equity (deficit) acquisition due to SB 1703 (7,372,642) ------Total governmental activities 236,605,744 215,665,413 245,165,657 243,533,302 225,253,992 252,588,940 225,477,022 245,298,869 29,461,031 268,440,206

Business-type activities: Investment earnings - - 76,093 111,102 93,613 51,705 8,488 14,108 (10,501,111) 37,141 Other revenues ------11,400 Transfers in (out) - (13,607) - - - 31,326 43,072 10,427 210,146,639 1,492,360 Total business-type activities - (13,607) 76,093 111,102 93,613 83,031 51,560 24,535 199,645,528 1,540,901 Total primary government $ 236,605,744 $ 215,651,806 $ 245,241,750 $ 243,644,404 $ 225,347,605 $ 252,671,971 $ 225,528,582 $ 245,323,404 $ 229,106,559 $ 269,981,107

Change in net position Governmental activities $ 229,517,865 $ 235,730,540 $ 251,661,271 $ 256,307,159 $ 94,075,674 $ 44,987,403 $ (41,997,458) $ 83,193,470 $ (284,904,190) $ (26,778,769) Business-type activities - - 16,216 (35,398) 664,723 116,625 194,832 348,113 202,503,321 (2,143,575) Total primary government $ 229,517,865 $ 235,730,540 $ 251,677,487 $ 256,271,761 $ 94,740,397 $ 45,104,028 $ (41,802,626) $ 83,541,583 $ (82,400,869) $ (28,922,344)

Source: Finance Department

1 Beginning in 2010, the methodology for accruing sales tax changed and the 2010 amount was restated. Prior years are not restated. The comparability impact between years is minimal since each year represents 12 months of sales tax. Note: Certain amounts from prior years have been reclassified in order to present comparable results.

116 San Diego Association of Governments Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting)

Fiscal Year

2004 2005 2006 2007 2008 2009 2010 20111 2012 2013

General fund Reserved $ 48,211 $ 39,704 $ 46,703 $ 48,521 $ 200,437 $ 68,342 $ 52,759 $ - $ - $ - Unreserved 235,514 810,052 1,970,106 3,151,595 2,767,664 4,252,570 5,599,803 - - - Nonspendable ------44,896 113,560 59,670 Restricted ------Committed ------Assigned ------263,449 376,736 - Unassigned ------6,204,099 9,132,124 11,542,244

Total general fund $ 283,725 $ 849,756 $ 2,016,809 $ 3,200,116 $ 2,968,101 $ 4,320,912 $ 5,652,562 $ 6,512,444 $ 9,622,420 $ 11,601,914

All other governmental funds Reserved $ 33,185,785 $ 34,528,258 $ 33,318,208 $ 55,596,655 $ 52,228,642 $ 55,536,856 $ 56,527,024 $ - $ - $ -

Unreserved, reported in: Special revenue funds 57,416,996 99,959,794 100,141,773 20,980,805 90,942,421 178,822,011 284,688,750 - - - Capital projects fund (2,434,250) (2,206,496) (1,732,962) (1,539,943) (1,571,738) (784,745) (4,156,878) - - - Debt service fund 11,967,224 200,215 2,289,435 - 436,251,098 298,173,715 157,891,614 - - - Nonspendable, reported in: Special revenue funds ------508 1,182,899 315 Capital projects fund ------25,832,151 19,451,327 8,737,107 Debt service fund ------Restricted, reported in: Special revenue funds ------380,945,586 447,198,151 422,030,465 Capital projects fund ------Debt service fund ------436,660,863 393,359,255 291,362,816 Committed, reported in: Special revenue funds ------Capital projects fund ------Debt service fund ------Assigned, reported in: Special revenue funds ------1,089,608 366,605 - Capital projects fund ------17,044,959 - - Debt service fund ------Unassigned, reported in: Special revenue funds ------1,738,947 (3,258,178) (1,074,869) Capital projects fund ------(14,079,322) Debt service fund ------

Total all other governmental funds $ 100,135,755 $ 132,481,771 $ 134,016,454 $ 75,037,517 $ 577,850,423 $ 531,747,837 $ 494,950,510 $ 863,312,622 $ 858,300,059 $ 706,976,512

Source: Finance Department

1 SANDAG adopted GASB Statement 54 in fiscal year 2011.

117 San Diego Association of Governments Change in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting)

Fiscal Year 2004 2005 2006 2007 2008 2009 20101 2011 2012 2013 Revenues Federal funds $ 23,889,031 $ 53,790,232 $ 45,638,791 $ 32,430,708 $ 33,237,437 $ 33, 735,151 $ 31, 995,005 $ 58,782,786 $ 65,491,578 $ 62,203,796 State funds 5,028,695 25,934,441 15,338,196 15,581,022 16,639,723 24, 041,976 29, 205,281 50,665,783 81,143,207 74,185,732 Local TransNet sales tax funds 214,304,334 229,576,284 244,103,489 248,467,503 244,535,119 219, 173,861 208, 504,753 223,939,663 239,071,064 249,520,133 Local Transportation Development Act sales tax funds 7,234,935 9,765,475 8,910,257 6,603,759 8,597,251 8, 032,786 6, 552,873 7,012,535 7,488,972 8,135,581 Other local governmental funding 28,397,831 11,942,966 8,492,531 12,402,311 5,101,979 5, 687,036 3, 241,951 6,451,622 5,982,868 10,517,389 Prepaid fare media sales revenue 31,876,640 33,551,222 36,624,690 37,403,564 48,961,243 56, 746,947 41, 534,073 31,954,282 28,764,525 27,178,362 SAFE program revenue ------1,614,190 Member agency assessments 717,426 717,426 747,426 747,426 747,426 747, 425 747, 425 747,426 747,425 747,427 Investment earnings 6,173,063 3,890,417 6,894,094 6,263,513 (382,454) 24, 947,560 9, 212,254 4,661,340 5,149,714 4,338,235 Debt repayments from other governments 3,227,732 33,283,478 36,030,848 7,831,626 15,026,316 514, 150 1,182, 228 1,430,353 943,177 1,624,727 Other revenues 2,575,896 6,855,468 3,741,756 1,338,461 344,460 3,019, 075 945,146 611,701 596,467 4,708,500

Total revenues 323,425,583 409,307,409 406,522,078 369,069,893 372,808,500 376, 645,967 333, 120,989 386,257,491 435,378,997 444,774,072

Expenditures Current: General government 23,514,336 22,643,046 24,098,415 26,279,551 28,799,495 28, 395,131 29, 538,756 31,551,416 29,908,171 36,081,584 Cost recovery (14,732,539) (18,811,159) (20,633,960) (22,625,351) (23,780,295) (26,015,616) (27,654,909) (28,897,881) (30,048,643) (36,320, 981) Modeling and research ------2,945,543 3,961,210 4,404,320 Criminal justice 1,096,441 1,088,667 1,219,117 1,379,305 1,470,916 1, 442,777 1, 342,462 1,322,882 1,635,255 1,521,582 Planning and forecasting ------5,626,008 4,708,816 4,212,706 Sustainable development ------1,640,795 1,269,411 1,304,160 Smart mobility programs and services ------46,561,518 45,016,226 47,420,104 Intermodal planning and implementation ------1,554,009 2,602,205 2,114,127 Internal and external coordination ------4,506,081 7,078,166 5,773,179 Transit support activities 37,538,260 61,829,086 61,020,196 42,774,445 51,063,433 63, 760,998 48, 016,961 - - - Regional planning 3,117,476 2,612,265 2,277,187 2,483,597 2,832,945 4, 123,055 3, 326,106 - - - Transportation service and facility planning 1,271,961 1,509,487 1,264,772 1,530,219 1,799,546 1, 969,902 2, 225,251 - - - Transportation development projects 4,673,950 4,432,711 4,924,015 6,614,060 4,586,455 3, 974,971 5, 600,080 - - - Technical assistance to member agencies 626,845 377,564 ------Systems management 6,952,457 5,989,890 6,600,740 7,214,967 6,831,294 7, 745,668 7, 815,571 - - - Program management, project monitoring, and - external relations 3,625,468 2,870,658 2,940,238 2,741,834 3,674,813 4, 605,874 5, 489,182 - - - Regional information systems 3,893,471 4,309,335 4,507,030 5,495,871 5,513,475 5, 278,079 4, 275,893 - - - Highway improvements 45,074,993 17,603,111 10,874,515 24,191,072 102,795,165 165, 343 - - - - Local street and road improvements 69,504,173 67,952,014 92,581,602 82,885,657 89,944,695 10, 228,989 - - - - Public transit improvements and operations 158,955,567 13,210,120 47,514,342 50,439,872 60,964,568 1, 114,806 - - - - Bicycle facilities 2,264,080 307,053 2,028,225 1,233,516 2,314,739 4, 238,080 1, 044,430 1,108,513 192,495 71,080 Independent Taxpayer Oversight Committee - - - - - 260,757 126,063 85,510 356,159 83,071 Major corridor capital projects - - - - - 5,168,110 7,294,773 16,217,358 542,364 126,155 Major corridor environmental mitigation - - 624,091 2,157,385 8,431,949 9, 243 439,616 3,239 4,264 - Local project environmental mitigation - - 438,629 - - 3,781 1, 913 33,793 1,744 34,019 Local street improvements - - - - - 32,711,553 29,440,084 33,306,399 94,061,810 78,188,231 Smart growth - - - - - 4,412 95,554 934,701 1,821,384 1,783,732 New major corridor transit operations - - - - - 71,628 564 862,901 1,912,773 606,497 Transit system improvements - - - - - 34,359,194 54,883,491 34,556,716 37,632,167 39,679,702 SAFE program ------11,216,566 Capital outlay 29,989,124 59,159,968 96,061,674 128,328,361 149,676,575 203, 674,807 183, 167,335 157,934,729 282,966,853 325,735,127 Debt service: Principal retirement 63,875,000 112,386,000 70,680,000 88,438,000 58,315,316 - - 20,048,000 165,460,000 20,260,000 Debt issuance costs - - 533,633 - 797,218 10,800, 000 11,962, 000 2,864,732 2,296,858 - Interest and other charges 20,088,071 16,939,153 14,136,581 9,303,162 10,359,957 26, 272,874 26, 678,486 33,107,476 69,284,878 53,909,872 Total expenditures 461,329,134 376,408,969 423,691,042 460,865,523 566,392,259 424, 364,416 395, 109,662 367,874,438 722,664,566 598,204,833

Excess of revenues over (under) expenditures (137,903,551) 32,898,440 (17,168,964) (91,795,630) (193,583,759) (47,718,449) (61,988,673) 18,383,053 (287,285,569) (153,430, 761)

118 San Diego Association of Governments Change in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting)

Fiscal Year 2004 2005 2006 2007 2008 2009 20101 2011 2012 2013 Other financing sources (uses) Transfers in 99,297,159 107,222,686 125,845,108 195,423,779 303,161,848 388, 388,597 357, 834,060 309,509,142 592,295,624 409,359,665 Transfers out (99,297,159) (107,209,079) (125,845,108) (195,423,779) (303,161,848) (388,419,923) (357,877,132) (309,519,569) (784,295,624) (409,350,914) Commercial paper issued 34,900,000 - 53,954,000 34,000,000 94,783,000 3, 000,000 5, 450,000 - 921,000 1,579,000 Bonds issued - - - - 600,000,000 - - 350,000,000 420,585,000 - Payment to refunded debt agent - - (33,415,000) ------Premium on bonds issued - - (668,300) - - - - 849,368 55,876,982 - Total other financing sources (uses) 34,900,000 13,607 19,870,700 34,000,000 694,783,000 2, 968,674 5, 406,928 350,838,941 285,382,982 1,587,751

Extraordinary Item Equity (deficit) acquisition due to Senate Bill 1703 (7,372,642) ------Total extraordinary item (7,372,642) ------

Net change in fund balances $ (110,376,193) $ 32,912,047 $ 2,701,736 $ (57,795,630) $ 501,199,241 $ (44,749,775) $ (56,581,745) $ 369,221,994 $ (1,902,587) $ (151,843,010)

Debt service as a percentage of noncapital expenditures 19.25% 34.50% 23.43% 29.38% 14.69% 7.60% 6.84% 15.79% 33.27% 14.32%

Source: Finance Department

Note: Certain amounts from prior years have been reclassified in order to present comparable results.

119 San Diego Association of Governments Tax Revenues by Source, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting)

Fiscal Sales

Year Tax Total

2004 214,304,334 214,304,334

2005 229,576,284 229,576,284

2006 244,103,489 244,103,489

2007 248,467,503 248,467,503

2008 244,535,119 244,535,119

2009 239,071,064 239,071,064

20101 208,504,753 208,504,753

2011 223,939,663 223,939,663

2012 239,071,064 239,071,064

2013 249,520,133 249,520,133

Source: Finance Department

120 San Diego Association of Governments Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years

Fiscal TransNet Sales Tax 1 Year Proposition A County of San Diego2

2004 0.50% 7.75%

2005 0.50% 7.75%

2006 0.50% 7.75%

2007 0.50% 7.75%

2008 0.50% 7.75%

2009 0.50% 8.75%

2010 0.50% 8.75%

2011 0.50% 8.75%

2012 0.50% 7.75%

2013 0.50% 8.00%

Source: California State Board of Equalization

1TransNet sales tax was extended another 40 years to 2048 in 2004 under Proposition A.

2The following four cities within the County of San Diego have a sales tax rate other than 8.00%: El Cajon 9.00%

La Mesa 8.75%

National City 9.00%

Vista 8.50%

121 San Diego Association of Governments San Diego Region Taxable Sales by Jurisdiction Fiscal Year 2002 and 2012

FY 20022 FY 20121 Taxable Sales Taxable Sales (thousands of (thousands of Percentage of dollars) Rank Percentage of Total dollars) Rank Total

San Diego $ 17,435,630 1 43.0% $ 19,998,370 1 42.9% Chula Vista 866,965 3 5.5% 2,563,318 3 5.5% Carlsbad 2,102,168 4 5.2% 2,475,973 4 5.3% Escondido 2,240,044 5 5.1% 2,468,883 5 5.3% El Cajon 122,911 6 4.0% 1,820,856 6 3.9% Oceanside 1,435,086 7 3.5% 1,595,966 7 3.4% San Marcos 1,152,643 8 2.8% 1,273,013 8 2.7% National City 1,078,820 9 2.7% 1,267,438 9 2.7% Vista 1,049,892 10 2.6% 1,219,225 10 2.6% La Mesa 892,433 11 2.2% 1,015,533 11 2.2% Poway 1,631,855 12 2.2% 994,072 12 2.1% Encinitas 892,827 13 2.1% 960,820 13 2.1% Santee 657,791 14 1.6% 707,506 14 1.5% Lemon Grove 307,400 15 0.8% 337,401 15 0.7% Solana Beach 240,620 16 0.6% 255,304 16 0.5% Coronado 196,353 17 0.5% 227,935 17 0.5% Del Mar 2,080,906 18 0.3% 145,757 18 0.3% Imperial Beach 66,434 19 0.2% 73,134 19 0.2% Incorporated 34,450,778 39,400,504 Unincorporated 6,098,055 2 15.0% 7,176,336 2 15.4%

San Diego Region Total $ 40,548,833 100.0% $ 46,576,840 100.0%

Source: California Board of Equalization

Annual data for 2013 is not yet available.

1 Sum of data for third and fourth quarters of 2011 and first and second quarters of 2012.

2 Sum of data for third and fourth quarters of 2001 and first and second quarters of 2002.

122 San Diego Association of Governments Ratios of Outstanding Debt by Type Last Ten Fiscal Years

Governmental Business-type

Activities Activities

Sales Tax Sales Tax Total Percentage Debt

Fiscal Revenue Commercial TIFIA Primary of Personal Per

Year Bonds Paper Total Notes Total Government Income1 Capita1

2004 290,970,000 101,100,000 392,070,000 - - 392,070,000 0.278% 133

2005 223,795,000 55,889,000 279,684,000 - - 279,684,000 0.197% 94

2006 119,700,000 75,707,000 195,407,000 - - 195,407,000 0.134% 66

2007 57,765,000 83,204,000 140,969,000 - - 140,969,000 0.094% 47

2008 600,000,000 34,000,000 634,000,000 - - 634,000,000 0.419% 209

2009 589,200,000 37,000,000 626,200,000 - - 626,200,000 0.437% 204

2010 577,800,000 41,888,000 619,688,000 - - 619,688,000 0.424% 200

2011 916,463,741 34,000,000 950,463,741 - - 950,463,741 0.637% 305

2012 1,228,392,144 33,821,000 1,262,213,144 95,629,359 95,629,359 1,357,842,503 0.893% 432

2013 1,208,152,472 33,989,000 1,242,141,472 100,572,988 100,572,988 1,342,714,460 0.883% 2 427

Source: Finance Department Note: Details regarding the outstanding debt can be found in the Notes to the Basic Financial Statements, Note III.F. 1See the Schedule of Demographic and Economic Statistics for personal income and population data. 2Used the most recent data available (2012).

123 San Diego Association of Governments Pledged-Revenue Coverage Last Ten Fiscal Years

Sales Tax Revenue Bonds Sales Tax Commercial Paper Total

Fiscal Sales Tax Debt Service Debt Service Debt Service

Year Revenue Principal Interest Principal Interest Principal Interest Coverage

2004 214,304,334 63,875,000 18,915,890 - 1,100,003 63,875,000 20,015,893 2.55

2005 229,576,284 67,175,000 15,408,362 - 1,489,252 67,175,000 16,897,614 2.73

2006 244,103,489 70,680,000 11,800,125 - 1,912,165 70,680,000 13,712,290 2.89

2007 248,467,503 61,935,000 6,124,476 26,503,000 1,961,803 88,438,000 8,086,279 2.57 2008 244,535,119 57,765,000 6,704,350 32,604,000 796,370 90,369,000 7,500,720 2.50 2009 219,173,861 10,800,000 23,664,091 - 497,799 10,800,000 24,161,890 6.27 2010 208,504,753 11,400,000 21,583,544 562,000 221,555 11,962,000 21,805,099 6.17 2011 223,939,663 12,160,000 29,792,943 572,000 381,768 12,732,000 30,174,711 5.22

20121 239,071,064 12,860,000 42,798,432 1,100,000 737,393 13, 960,000 43,535,825 4.16 2013 249,520,133 18,640,000 50,723,216 1,620,000 584,452 20,260,000 51,307,668 3.49

Source: Finance Department

Note: Details regarding the outstanding debt can be found in the Notes to the Basic Financial Statements, Note III.F.

1During fiscal year 2012, SANDAG refunded $151,500,000 of the 2008 ABCD bonds

124 San Diego Association of Governments Pledged-Revenue Coverage - SR 125 Toll Road Last Two Fiscal Years

Less: Operating Less: Major Adjusted Net SR 125 Project and Net SR 125 Less: TIFIA Maintenance Total Principal Fiscal Year SR 125 Principal Interest Revenues Maintenance Revenues Debt Service Reserve Fund and Interest Revenues Costs Deposits 2012 15,125,130 (5,196,570) 9,928,560 (1,860,488) (4,540,504) 3,527,568 - 1,860,488 1,860,488

2013 26,134,191 (8,172,275) 17,961,916 (3,676,182) (10,865,173) 3,420,561 135,018 3,541,164 3,676,182

First Subordinate Obligation Debt Service Total Debt Service Coverage Ratios First Principal Interest Total Principal Interest Total TIFIA Subordinated 2,044,204 112,585 2,156,789 2,044,204 1,973,073 4,017,277 5.34 1.64

1,044,422 316,883 1,361,305 1,179,440 3,858,047 5,037,487 4.89 1.23

Source: Finance Department

Note: Details regarding the outstanding debt can be found in the Notes to the Basic Financial Statements, Note III.F.

125 San Diego Association of Governments Demographic and Economic Statistics Last Ten Available Calendar Years1

Per

Personal Income Capita

Calendar (millions Personal Median Unemployment

Year Population2 of dollars) 4 Income4 Age2 Rate3

2003 2,927,216 $ 135,549 $ 46,310 34.0 5.2%

2004 2,953,703 140,851 47,690 34.3 4.7%

2005 2,966,783 142,144 47,910 34.6 4.3%

2006 2,976,492 145,980 49,040 34.6 4.0%

2007 2,998,477 149,993 50,020 34.6 4.6%

2008 3,032,689 151,256 49,880 34.6 6.0%

2009 3,064,436 143,209 46,730 34.6 9.6%

2010 3,095,313 146,116 47,210 34.6 10.5%

2011 3,115,810 149,310 47,920 34.8 10.0%

2012 3,143,429 151,993 48,350 34.8 8.9%

1 Data for 2013 is not yet available, therefore, 2012 data is the most current year provided. 2 Source: Data compiled by SANDAG. SANDAG, Current Estimates; 3 California Employment Development Department; 4 SANDAG estimates based on U.S. Census Bureau, Census 2000, Census 2010, American Community Survey, and U.S. Bureau of Economic Analysis

Notes: Year-to-year variation for socio-economic data (education, poverty, unemployment) are the result of both actual change and sampling error. Dollar values are inflation- adjusted to 2012 dollars. Personal Income was estimated by using BEA and SANDAG data. 2013 data for population and median age are based on regional forecasted totals.

126 San Diego Association of Governments San Diego Region Employment by Industry Calendar Year 2002 and 20121

2002 20121 Average Annual % of Total Average Annual % of Total Industry Type Employment Employment Employment Employment Agriculture 11,000 0.9% 9,800 0.8% Natural Resources and Mining 300 0.0% 400 0.0% Construction 76,400 6.2% 56,300 4.4% Manufacturing 112,400 9.1% 93,400 7.4% Wholesale Trade 41,300 3.3% 43,500 3.4% Retail Trade 138,200 11.1% 135,600 10.7% Transportation, Warehousing and Utilities 28,800 2.3% 27,600 2.2% Information 34,400 2.8% 24,600 1.9% Financial Activities 75,000 6.0% 69,500 5.5% Professional and Business Services 205,100 16.5% 215,500 17.0% Educational and Health Services 119,700 9.6% 154,500 12.2% Leisure and Hospitality 133,800 10.8% 161,000 12.7% Other Services 45,600 3.7% 49,300 3.9% Government (civilian) 219,700 17.7% 227,600 17.9% Total, All Industries 1,241,700 100.0% 1,268,600 100.0%

Source: California Employment Development Department Note: Employment figures may not add up to totals due to rounding.

1Data for 2013 is not yet available; therefore, 2012 data is provided.

127 San Diego Association of Governments Operating Indicators: Employees by Functional Department Last Ten Fiscal Years

Fiscal Year Functional Department 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Regular Full-Time Equivalent (FTE) Employees: 1 Administrative Services 28 31 34 34 35 35 38 33 32 33 Finance 17 18 19 19 19 19 18 17 16 17 Executive 17 16 15 16 16 16 16 21 30 32 Technical Services 36 41 42 44 47 47 49 49 49 53 Land Use and Transportation Planning 25 30 31 31 30 30 31 31 31 35 Mobility Management and Project Implementation 38 33 36 37 39 45 43 46 41 42

Total Regular FTE Employees 161 169 177 181 186 192 195 197 199 212

Limited Term FTE Employees: 2 Executive 0 0 0 0 1 1 1 5 9 7 Administrative Services 0 2 1 3 1 2 0 0 1 4 Finance 0 0 0 0 0 1 1 0 0 1 Technical Services 3 3 2 8 6 7 4 4 4 9 Land Use and Transportation Planning 2 1 1 3 3 3 4 8 7 9 Mobility Management and Project Implementation 3 2 0 8 17 12 7 6 6 4

Total Limited Term FTE Employees 8 8 4 22 28 26 17 23 27 34

Toll Operations Personnel (TOP) FTE Employees: Operations 0 0 0 0 0 0 0 0 52 51

Total Toll Operations Perspnnel (TOP) FTE Employees 0 0 0 0 0 0 0 0 52 51

Temporary, Interns, Part-time, or Seasonal (TIPS) Employees: 3 Executive 0 0 1 1 1 2 2 4 3 4 Administrative Services 0 0 0 0 1 2 2 0 4 3 Finance 0 0 0 0 1 0 0 0 0 0 Technical Services 0 0 18 14 13 9 13 11 9 9 Land Use and Transportation Planning 0 0 4 3 5 7 6 13 8 14 Mobility Management and Project Implementation 0 0 6 5 7 11 11 9 13 13

Total TIPS Employees 0 0 29 23 28 31 34 37 37 43

Total Employees 169 177 210 226 242 249 246 257 315 340

1 Regular positions make up the core Board of Director authorized positions. Most regular positions are full-time.

2 Limited Term positions are considered part of the contingent workforce, hired to fill a short-term need for additional staff. Most Limited Term positions are full-time positions authorized for a term of one year.

3 TIPS positions are determined by the number of authorized positions on the active payroll as of June 30 each year. TIPS employees are part of the contingent workforce, the majority of which are interns working on a part- time basis.

Note: The number of government employees is more appropriately represented by functional department than the functional levels used in the government-wide statement of activities due to the cross functional nature of SANDAG’s employees and activities. Individual employees generally work on several functions. Note: Operating indicators of demand or level of service by functions used in the government-wide statement of activities are not available due to the nature of functional services provided by SANDAG, a special-purpose government. Note: Indicators of the volume, usage, or nature of capital assets is not applicable since upon construction-in-progress (CIP) project completion, the project's entire amount of the CIP, as well as the legal title of the property and equipment, if applicable, is transferred as contributed capital to other governmental agencies to reflect the other government’s custodial accountability for the operations and maintenance of the assets. The remaining capital assets balance is for the general government function, for which indicators are not available.

128 San Diego Association of Governments Capital Asset Statistics by Program Last Ten Fiscal Years

Fiscal Year

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Functions/Programs Transit capital funding - construction-in-progress (CIP):

Major improvements - light rail transit $ 15,127,187 $ 9,120,854 $ 7,264,394 $ 2,490,567 $ 1,998,814 $ 3,538,273 $ 4,564,873 $ 18,549,163 $ - $ -

Major improvements - bus 47,712,611 59,200,404 61,823,550 73,330,339 63,808,075 14,924,821 1,828,961 3,053,173 6,596,210 19,889,933

Operations capital - Metropolitan Transit System 922,935 48,440 55,537 ------

Operations capital - light rail transit 20,463,590 15,700,838 2,253,421 2,162,969 2,920,025 5,803,140 5,573,754 6,524,570 1,933,123 3,299,086

Operations capital - bus 9,600,776 10,976,622 18,376,467 847,343 2,000,213 - - - - -

Major corridor projects - - 40,789,242 136,712,330 236,207,294 349,655,143 355,997,202 346,482,102 381,020,889 434,535,412

Operations capital - SANDAG - - - - 10,202,367 11,621,959 20,231,739 33,718,421 727,253 829,468

Major improvements - SANDAG - - - - 195,936 636,813 618,563 1,956,243 38,603,773 42,658,106

Goods movement projects - - - - - 1,484,923 5,624,733 10,874,326 17,314,284 25,124,387

Total transit capital contributions- CIP 93,827,099 95,047,158 130,562,611 215,543,548 317,332,724 387,665,072 394,439,825 421,157,998 446,195,532 526,336,392

Transit capital contributions - land - - - - - 2,932,171 2,932,171 5,241,439 5,241,439 5,241,439

General government 319,402 656,666 488,043 397,216 312,544 118,714 172,574 207,301 169,239 237,256

Modeling and research ------55,068 656

Smart mobility programs and services activities - - - - - 5,673,636 3,673,526 8,272,769 369,093 422,770 Total capital assets $ 94,146,501 $ 95,703,824 $ 131,050,654 $ 215,940,764 $ 317,645,268 $ 396,389,593 $ 401,218,096 $ 434,879,507 $ 452,030,371 $ 532,238,513

Source: Finance Department

Note: No capital asset indicators are available for the above functions.

129 AGENDA ITEM NO. 14-02-10 EXECUTIVE COMMITTEE FEBRUARY 14, 2014 ACTION REQUESTED – INFORMATION

FEDERAL LEGISLATIVE STATUS REPORT File Number 7300400

Introduction

Monthly status reports on legislative activities are provided to the Executive Committee. Attachment 1 provides a summary from Peyser and Associates on federal legislative activity related to SANDAG for the month of January.

JAYMIE BRADFORD Principal Legislative Analyst

Attachment: 1. Report from Peyser and Associates

Key Staff Contact: Victoria Stackwick, (619) 699-6926, [email protected] Attachment 1

PEYSERASSOCIATES LLC Peter A. Peyser Elizabeth Boehlert

January 16, 2014

Transportation Update from Peyser Associates

FY2014 Appropriations Omnibus

As we reported earlier this week, House and Senate negotiators reached agreement on a $1.1 trillion omnibus spending bill that will fund government agencies through the end of FY 2014. The House passed the measure on Wednesday, with a bipartisan vote of 359-67. The Senate will finish work on the bill before they depart for next week’s recess, with a vote likely occurring on Friday morning.

As we reported on January 14, the appropriations bill funds highway and transit programs at Moving Ahead for Progress in the 21st Century (MAP-21) authorized levels, which means an increase over FY 2013 funding. Here are some key details from the transportation section of the bill:

• Federal-Aid Highway funding comes in at $40.2 billion. This is the MAP-21 authorized level and over $550 million more than the FY 2013 figure ($39.6 billion). • Overall, the Federal Transit Administration (FTA) program level is $ 10.7 billion, with $2.1 billion from the general fund. The measure provides for the MAP-21 authorized level of $8.6 billion in transit formula funding from the Mass Transit Account, an increase from the $8.47 billion provided in FY 2013. • New Starts funding will increase to $ 2.1 billion in FY 2014, with a combination of $1.9 billion in FY 2014 dollars and the addition of unused funds from previous years. The conference report notes this is sufficient to fund all the Full Funding Grant Agreement projects at their projected levels for 2014. New Starts funding in FY 2013 was $1.86 billion. • National Infrastructure Investment (Transportation Investment Generating Economic Recovery or TIGER program), funded at $474 million in FY 2013, is provided with $600 million for FY 2014. • Like last year, high-speed rail receives no funding. • Operating grants from Amtrak are funded at $340 million, a decrease from the FY 2013 level of $472 million. However, Amtrak’s capital and debt service funding is increased from $909.9 million in FY 2013 to $1.05 billion in FY 2014; and they will have increased flexibility to cover operating losses from the capital account if needed. Amtrak-related policy riders include overtime limits on Amtrak employees and a prohibition of federal funding for routes where Amtrak offers a discount of 50 percent or more off normal peak fares. • Language throughout the transportation section stresses the importance of private-sector funding for infrastructure projects.

2 Funding for San Ysidro Port of Entry

One important funding consideration provided in the FY 2014 omnibus is $128.3 million for new construction at the San Ysidro Port of Entry from the General Services Administration (GSA). (Specifically, the money comes from GSA’s Federal Buildings Fund.) In addition, reprogramming language included in the omnibus gives the project $97.7 million of unused funding from previous years, meaning that Phase III of San Ysidro, the next part of the project being undertaken, is fully funded, at $226 million. Phase III (which is being funding before Phase II) involves creation of a new southbound connection to Mexico and 17 additional northbound inspection booths.

Reauthorization - House T&I Hearing/Foxx Speaks at the Transportation Research Board

Reauthorization was in the headlines of a few events this week, starting with a House T&I hearing on Tuesday looking at “Building the Foundation for Surface Transportation Reauthorization.” Committee Chairman Bill Shuster (R-PA) indicated during the hearing that he plans to hold a variety of hearings and roundtables during the next few months in preparation for putting a bill on the House floor before the August recess. All of the witnesses - Oklahoma Governor Mary Fallin (R), representing the National Governors Association; Stuart Levenick, group president for Caterpillar Inc.; Atlanta Mayor Kasim Reed, representing the U.S. Conference of Mayors; and Lawrence Hanley, international president of the Amalgamated Transit Union, stressed the importance of a long-term bill. However, there was no widespread consensus on what we all know to be the biggest problem – additional revenue.

And in fact, it now appears that the Highway Trust Fund (HTF) will run out of money in September, making it necessary for Congress to step in with general fund dollars or another solution before MAP-21 expires on September 30. A new HTF tracker is being provided to the public and will be updated at http://www.dot.gov/highway-trust-fund-ticker each month. Current numbers show that the Mass Transit Account, unlike the HTF, will maintain a positive balance at the end of FY 2014.

The HTF tracker was introduced during Department of Transportation Secretary Anthony Foxx’s speech at the Transportation Research Board’s annual meeting. Foxx spoke about the challenges facing infrastructure investment in the country and reiterated one funding idea that the Administration has floated before – that of using revenue from a corporate tax overhaul to add to the pot.

However, with corporate tax reform stalled in Congress, it appears unlikely this is an idea that can raise necessary revenue before MAP-21 expires. Foxx also indicated that he will be putting out an “integrated transportation plan” that incorporates all modes by the end of the year. He described it as “a fact-based plan that lays out where the country is and where we're likely to go from a demographic, population, and economic perspective so that we can shape transportation policy around that.”

3 Rogoff Leaving FTA for Trottenberg Post

The Department of Transportation announced on Wednesday that FTA Administrator Peter Rogoff is being named Acting Undersecretary for Policy. This is likely a precursor to his nomination for the job, which will require Senate confirmation. Deputy FTA Administrator Therese McMillan will step into the Acting FTA Administrator role.

Senate Banking MAP-21 Implementation Hearing

Mr. Rogoff testified this morning at Senate Banking hearing giving a “Progress Report on Public Transportation under MAP-21.” David Wise, Director of the Physical Infrastructure Team from the Government Accountability Office (GAO), also testified. Rogoff provided an update on individual programs and rulemakings. Wise discussed GAO’s view that tough funding challenges can be helped with “sound capital investment decisions and that it can help transit agencies use their funds more efficiently.” GAO used reports on transit asset management and bus rapid transit to illustrate these benefits. The hearing also included a discussion on coordinating transit services for the transportation-disadvantaged. Rogoff testified that he believes that the federal government is working on getting rid of the “stovepipes” between agencies that limit efficiency.

Many of the senators sitting on the Banking Committee hail from rural states, so were interested in assessing the FTA’s commitment to protecting rural transit agencies from some of the regulatory hurdles faced by the larger systems. Finally, Senator Joe Manchin (D-WV) asked Mr. Rogoff about delays in grant monies the agencies in his state are experiencing. Mr. Rogoff said that he was unaware of such delays but would further investigate.

California High-Speed Rail Hearing

The House Subcommittee on Railroads, Hazardous Materials, and Pipeline held a hearing on California’s High-Speed Rail Project on Wednesday. California is using federal American Recovery and Reinvestment Act dollars to fund the first phase of the project. However, Railroads Subcommittee Chair Jeff Denham (R-CA) indicated that, in light of two recent court decisions, he will be introducing legislation to prevent the Federal Railroad Administration from spending any more federal dollars on the project until California can show it has the matching funds.

January 23, 2014

Transportation Update from Peyser Associates

House T&I Forms P3 Special Panel

Following last year’s special panel on freight movement in the nation, House T&I Chairman Shuster announced that the Committee’s next special panel will focus on public-private partnerships (P3) across all forms of transportation. The panel, which will be chaired by Rep. John Duncan (R- TN) and Rep. Michael Capuano (D-MA) as Ranking Member, has been tasked with analyzing the current state of P3s in the United States in order to:

• Identify the role P3s play in development and delivery of transportation and infrastructure projects in the U.S., and on the U.S. economy;

4 • If/how P3s enhance delivery and management of transportation and infrastructure projects beyond the capabilities of government agencies or the private sector acting independently; and • How to balance the needs of the public and private sectors when considering, developing, and implementing P3 projects.

Remaining members of the special panel are:

Republicans Candice S. Miller (MI) Lou Barletta (PA) Tom Rice (SC) Mark Meadows (NC) Scott Perry (PA)

Democrats Peter A. DeFazio (OR) Eleanor Holmes Norton (DC) Rick Larsen (WA) Sean Patrick Maloney (NY)

Under the committee’s rules, the Chairman may appoint special panels to serve for a period of six months. The time limit means there is a prospect that the panel’s recommendations would come in time to be included in surface transportation legislation slated for action this year. This panel will be challenged to arrive at any sweeping recommendations on a bipartisan basis. Leading Democratic members of the panel have been strong opponents of P3 in years gone by. We will be in touch with Members of both parties on the panel and their staffs to get a sense of their direction.

Partnership to Build America Act Introduced in Senate

Senators Roy Blunt (R-MO) and Michael Bennet (D-CO) introduced a companion bill to a House bipartisan bill introduced last year and led by freshman Democrat John Delaney (MD). The legislation establishes a $50 billion “American Infrastructure Fund” to help finance high priority infrastructure projects in the areas of transportation, energy, communications, water, and education infrastructure. The fund would be built with bonds purchased by U.S. companies that would be allowed to repatriate a certain amount of their overseas earnings tax free for every $1.00 they invest in the bonds.

The House bill (H.R. 2084) has 25 Democrats and 25 Republicans signed on as cosponsors. The bipartisan mix cosponsoring the Senate bill (S. 1957) includes Senators Kelly Ayotte (R-NH), Mark Begich (D-AK), Dan Coats (R-IN), Lindsay Graham (R-SC), John Hoeven (R-ND) Angus King (I-ME), Mark Kirk (R-IL), Mary Landrieu (D-LA), and Mark Warner (D-VA).

President Obama to Release Budget on March 4

The White House today announced the President’s FY 2015 budget will be delivered to Congress on March 4. This is one month later than the statutory deadline, but the Administration contends the extra time is required because of the lateness of enactment of fiscal 2014 appropriations.

Activity Report for SANDAG January 2014 Peyser Associates LLC

Date Activity 1/7 Biweekly teleconference with SANDAG, Metropolitan Transit System (MTS), and North County Transit District (NCTD) 1/9 Prepare weekly transportation update and send to SANDAG, MTS, and NCTD

1/13 Emails regarding FTA Notice of Funding Availability and eligibility information 1/14 Email updates regarding FY 2014 omnibus 1/16 Prepare weekly transportation update and send to SANDAG, MTS, and NCTD

Monthly Mid-Coast Update Teleconference 1/21 Biweekly teleconference with SANDAG, MTS, and NCTD

Review State Route 11 (SR 11)/Otay Mesa East (OME) Project Timeline 1/23 Prepare weekly transportation update and send to SANDAG, MTS, and NCTD

Review SR 11/OME Project Timeline and fiscal 2014 Budget for Customs and Border Protection Agency

Teleconference with C. Casgar re: SR 11/OME timeline

1/24 Phone calls and emails with V. Stackwick regarding Centers for Disease Control (Prevention and Public Health Fund) funding in FY 2014 omnibus 1/27 Teleconference with C. Casgar on SR 11/OME process 1/28 SR 11 Coordination Meeting teleconference

1/30 Prepare weekly transportation update and send to SANDAG, MTS, and NCTD

Email exchange with V. Stackwick on Asset Management Policy from FTA

Email exchange with V. Stackwick re: DC Visit by SANDAG in March