MINUTES OF REGULAR BOARD MEETING OF SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY MARCH 27, 2014 The Regular Meeting of the Board of the Southeastern Pennsylvania Transportation Authority was held on Thursday, March 27, 2014 at 3:06 PM, in the Board Room of the Authority, with the Chairman in the Chair. Present Attending the meeting were the following Board members: Pasquale T. Deon, Sr., Chairman Thomas E. Babcock, Vice Chairman Beverly Coleman Rina Cutler Thomas Jay Ellis, Esquire Honorable Stewart J. Greenleaf Kevin L. Johnson, P.E. John I. Kane Daniel J. Kubik Kenneth E. Lawrence, Jr. Honorable Charles H. Martin Honorable Leslie S. Richards James C. Schwartzman, Esquire Cuyler H. Walker, Esquire (via telephone) Present from the staff: Joseph M. Casey, General Manager James B. Jordan, Esquire, General Counsel Richard G. Burnfield, Chief Financial Officer/Treasurer Jeffrey D. Knueppel, Deputy General Manager Stephen A. Jobs, Controller Carol R. Looby, Secretary Kim Scott Heinle, AGM, Customer Service Ronald G. Hopkins, AGM, Operations Francis E. Kelly, AGM, Government & Public Affairs Susan Van Buren, AGM, Human Resources Mr. Deon called the Regular Meeting of the Board to order. Mr. Deon said the Special Meeting, which was noticed, was cancelled. Mr. Deon announced that Cuyler Walker would be participating by phone. Mr. Walker acknowledged his presence. Pledge of Allegiance was observed. Mr. Deon announced that the Board met in Executive Session just prior to the meeting to discuss legal matters. Minutes of Regular Board Meeting March 27, 2014 Mr. Deon stated that if there were speakers who wished to address agenda items they would be called before the Board voted on the i tern and asked that they limit their remarks to three minutes. He said speakers wishing to address i terns not on the agenda would be called after the regular business of the Board was completed. Approval of Minutes Mr. Deon entertained a motion regarding the Minutes of the February 27 Regular Board meeting, which had been circulated. Mr. Ellis moved, Ms. Cutler seconded, and the Minutes were unanimously approved. Financial Report Mr. Burnfield reported that the extreme winter weather conditions continued to negatively impact the Authority's finances in February. He noted that numerous days of snow and ice closed Philadelphia schools for four days. He reported that for the month ridership was down 8 percent, revenue was $1. 4 million under budget, and year-to-date ridership was down 1. 8 percent, which was approximately 4 million trips. Mr. Burnfield said the weather conditions also negatively impacted expenses with labor, materials and power costs above budget. Mr. Burnf ield reported for the month there was a budget deficit of $2. 9 million and year-to-date there was a budget deficit of $4. 9 million. He commented that staff was taking steps to carefully control expenses without impacting service quality for the balance of the fiscal year with the goal of ending the year with a balanced budget. Mr. Deon entertained a motion to adopt the Financial Report. Mr. Ellis moved, Ms. Coleman seconded and it was unanimously adopted. The December Financial Report is received and filed and is attached to these Minutes as Exhibit "A." Mr. Deon then called for speakers wishing to address agenda items. There was no response. Consent Calendar Mr. Deon then presented the Consent Calendar, which consisted of: "Termination of Investment Management Agreement with Cubic Asset Management"; "Authorization to Execute Consultant Amendments"; 2 Minutes of Regular Board Meeting March 27, 2014 "Lease to the City of Philadelphia of Parts of the Floor, 19th Floor and Rear Plaza of 1234 Market Street"; "Authorization to Complete Real Estate Transactions Associated with Completion of the Darby Transportation Center Project"; "Lease to Rodin Market Partners L.P. of Approximately 46,000 Square Feet of Property Located on the City Branch Right-of­ Way"; "Authorization of Nominal Perpetual Reciprocal Stormwater Easement with Enrico Partners, L.P. in Properties that are Situated in the Township of Radnor, Delaware County"; "Authorization to Award Contracts for Various Procurements;" "Award of Various Contracts for Sole Source Procurements;" and "Authorization to Execute a Change Order." Mr. Deon stated that all of the items on the Consent Calendar were reviewed by the appropriate Board Committees in public session. Mr. Deon entertained a motion to adopt the resolutions. Mr. Ellis moved, Ms. Cutler seconded and the following resolutions were unanimously adopted with Mr. Kubik abstaining on Item III.C.2. and Mr. Johnson abstaining on Item III.A.4. Mr. Johnson requested to comment on Item II.A.1. He noted that this project, Bucks County Intermodal Improvements Project-Levittown was being funded from the new Transportation Funding Bill. In response to Chairman Deon, Mr. Burnfield added that the Levittown construction project, along with the Elwyn to Wawa Service Restoration Project, are the first projects being advanced with the additional resources of Act 89. I.A. TERMINATION OF INVESTMENT MANAGEMENT AGREEMENT WITH CUBIC ASSET MANAGEMENT "WHEREAS, on February 24, 2011 the Pension Committee of the Board revised the Statement of Investment Policy and Objectives and Operating Guidelines ("Policy Statement") which governs the investment of the funds of the pension plans of SEPTA; and WHEREAS, the Policy Statement provides investment guidelines and investment return expectations for all investment managers; and 3 Minutes of Regular Board Meeting March 27, 2014 WHEREAS, the Policy Statement contains monitoring procedures for the Pension Committee to utilize in its review of the performance of each investment manager; and WHEREAS, at the Pension Committee meeting that was held on February 27, 2014, SEPTA's pension consultant, PFM Advisors, reviewed with the Pension Committee the performance results and other pertinent portfolio management information regarding Cubic Asset Management; and WHEREAS, based on this review and discussion, PFM Advisors recommended and the Pension Commit tee agreed to terminate the investment management agreement with Cubic Asset Management for its small-cap growth domestic equity product. NOW, THEREFORE, BE IT RESOLVED, that the Board hereby authorizes the proper officers of SEPTA to ( i) terminate the investment management agreement with Cubic Asset Management; (ii) take such action necessary to transfer the assets currently being managed by Cubic Asset Management to fund other investments as approved by the Pension Committee; and (iii) to do any and all other things that will be necessary in order to effectuate this Resolution." II.A. AUTHORIZATION TO EXECUTE CONSULTANT AMENDMENTS "WHEREAS, additional work is required to complete the projects identified below; and WHEREAS, staff reviewed the additional work and the General Manager recommended that the Board authorize SEPTA to enter into the amendments for the additional work. NOW, THEREFORE, BE IT RESOLVED, that the Board hereby authorizes SEPTA to award and the General Manager or his designee to execute the consultant amendments identified below in form approved by the Office of General Counsel, subject to the concurrence of the funding agencies, if required, and to any applicable Disadvantaged Business Enterprise requirements: 1. To Gannett Fleming, Inc., for Amendment No. 5, which provides for additional design work, repackaging of contract documents and construction-related services for the Bucks County Intermodal Improvements Project - Levittown, along with a 285 day no-cost time extension, thereby establishing a new contract completion date of October 13, 2014, at an increase in cost not to exceed $679,710, bringing the total contract price, including all amendments to date, to an amount not to exceed $3,679,548. 2. To URS Corporation, for Amendment No. 6, which provides additional construction-related services (via transfer from Phase A to Phase B) and various credits for the SEPTA - Elwyn to Wawa Service Restoration Project, for a net no increase in cost, with 4 Minutes of Regular Board Meeting March 27, 2014 the total contract price, including all amendments to date, remaining at an amount not to exceed $10,023,985." III.A.1. LEASE BY SEPTA TO THE CITY OF PHILADELPHIA OF PARTS OF THE lSTH FLOOR, 18TH FLOOR AND REAR PLAZA OF 1234 MARKET STREET "WHEREAS, in 1994 SEPTA and the City of Philadelphia ("City") entered into an agreement whereby the City leased a total of 42,532 rentable square feet of space in the 1234 Market Street headquarters building, consisting of part of the 15th Floor (33,503 square feet), 18th Floor (8,329 square feet) and rear plaza (700 square feet) (collectively, the "Demised Premises"); and WHEREAS, the City has continuously leased the Demised Premises under successive agreements with SEPTA, with the latest one expiring on October 30, 2014; and WHEREAS, the City has expressed to SEPTA an interest in continuing to occupy the Demised Premises for offices, which upon negotiation has resulted in a proposed new lease agreement; and WHEREAS, the base term of the proposed new lease is ten years commencing July 1, 2014, with one 5-year renewal option; and WHEREAS, the annual base rental for the Demised Premises will be $829,374 ($19.50 per square foot), with annual increases of $21,266 ($.50 per square foot) thereafter effective the second year, and rentals during the 5-year option to be determined via a fair market rental value appraisal process; and WHEREAS, the City shall also be responsible for a share of building operating expenses over the 2014 base year; and WHEREAS, the City will receive an allowance of $425, 320 ($10.00 per square foot) for improvements to the Demised Premises, with any unexpended balance being applied as a rent credit; and WHEREAS, the City will also receive a like allowance of $425, 320 towards SEPTA' s costs for building upgrades, including the heating, ventilation and air conditioning systems, as well as be responsible for any costs in excess of the allowance based on the City's per square foot share of the excess costs; and WHEREAS, SEPTA's broker-management contract with U.S.