I

March 5,2012
VIA EMAIL - delegatemikesmigiel@,gn~ail.cnm

Maryland Transportation Authority

Martin O'Malley Governor
Anthony Brown Lt. Governor Beverley K. Swaim-Staley Chairman Peter J. Basso Rev. Dr. William C. Calhoun, Sr. Mary Beyer Halsey Arthur Hock A. Bradley Mims Michael J. Whitson Walter E. Woodford, Jr., P.E. Harold M. Bartlett Executive Secretary 2310 Broening Highway Suite 150 Baltimore MD 21224 410-537-1000 410-537-1090 (fax) 711 (MD Relay) 1-866-713-1596 e-mail: mdta@ mdta.maryland.gov

The Honorable Michael D. Smigiel, Sr. The Maryland House of Delegates 6 ~ l a d eStreet, Room 323 i Annapolis, MD 21401
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Dear Delegate Smigiel: On February 29, 20 12, the Maryland Transportation Authority ("MDTA") received a request from you for copies of the 2006, 2007 and 2008 Finance Committee minutes. Accordingly, we are providing a response in accordance with the Public Information Act, Annotated Code of Maryland, State Government ("SG") Article, $ 10-61 1 et seq. ("PIA").

MDTA staff has collected those existing documents in our custody that are responsive to your request, and they are attached. Please be advised that Finance Committee minutes for all of 2006 and January through March, 2007 do not exist. Additionally, these meeting minutes are maintained in storage, and MDTA does not have copies of pages 2 and 3 of the October 9, 2008 minutes or page 4 of the December 11, 2008 minutes. Finally, the first full paragraph on page 1 of the February 14, 2008 minutes has been redacted under the PIA. Specifically, the discussion was redacted pursuant to SG $10615 (1) whereby, "[a] custodian shall deny inspection of a public record or any part of a public record if: (1) by law, the public record is privileged or confidential.. .." The redacted portion pertains to a pre-decisional and deliberative discussion of a personnel matter and is shielded from disclosure per the executive privilege. The title of the topic discussed identifies the specific personnel matter discussed, and thus, it had to be redacted.
Pursuant to Public Information Act, Annotated Code of Maryland, State Government Article C'SG") $10-622, you are entitled to an administrative review of a decision to deny access to any public record. If requested, such review will be conducted in accordance with SG $$lo-205 through 221 and the hearing regulations of the Maryland Department of Transportation C'MDOT") published at COMAR 11.01.13.11. You may also seek judicial review under SG 8 10-623.

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Harold M. Bartlett Executive Secretary

~ ~ : V a l e rJ. eSmith, Principal Counsel i Maryland Transportation Authority Kimberly Millender, Deputy Counsel Maryland Transportation A~tthorit y Sherita D. Harrison, Assistant Attorney General Maryland Transportation Authority

Finance Committee Meeting

Notes of April 12,2007
Attendees:
Louise Hoblitzell Carol Rieg Carolyn Peoples Beverley Swaim-Staley - Deputy Secretary Fred Rappe - Special Assistant to the Secretary Kurt Krauss - PB Melinda Peters - SHA Betty Connors - SHA Joe Mason - Davenport Ron Marino - Citigroup Paul Shelton - McKennon, Shelton & Henn Peter Kessenich - PFM Ronald Frecland Steven Welltos Jay Ayd Deborah Donohue David Chapin Alison Williams Joyce Diepold Kathleen Mork Cindy Taylor Geoff Kolberg

Finance Committee Notes

The minutes of the March 8,2007 Finance Committee Meeting were recommended for approval by Carol Rieg and seconded by Carolyn Peoples.

Intercounty Connector
Kurt Krauss gave a presentation 011 cash flows. Current cash flows reflect contract A bid and revised estimates on B and E. Cash flows seem to be on schedule. Members would like to be kept aware of and know ahead of time of when cash flows will be getting tight. A report will be given out on a quarterly basis and reviews will be conducted on a monthly basis. The $29 million in FY 2008 and the $1 52 million in FY 2009 need to tie to bond issues.

A question was raised as to whether the Authority h s a toll policy. To date, the Authority does not have anything specific, but development 's in progress. Discussion followed as to the timing of toll increases and suggested different sce arios be developed by Vollmer. The Authority will have to closely monitor its financial position and consider the timing of future toll increases as the debt coverage ratio and total cash to toll revenues ratio approach minimum policy standards over the next several years.

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Ron Marino discussed the GARVEE Bond program, and specifically, the documents that were presented. He also explained what to expect when visiting the bond rating agencies. The goal is to achieve AA ratings from all the agencies.

Resolution 07-02
Carolyn Peoples recommended approval of Resolution 07-02 (approval of draft Financing Agreement, draft Project Implementation Agreement, Term Sheet, draft Trust Agreement, and Preliminary Official Statement for GARVEE Bonds) with Carol Rieg seconding the motion. Resolution to be brought before Authority on April 25,2007.

Resolution 07-03
Carol Rieg recommended approval of Resolution 07-03 (Intent to reimburse eligible expenditures regarding toll revenue bonds) with Carolyn Peoples seconding the motion. Resolution to be brought before the Authority on April 25,2007.

IT Project Approvals
Jay Ayd presented for approval the Asset Management System - IBM/MRO. This is a sole source contract and requires BPW approval. This added hours to the MAXIM0 implementation effort. Carol Rieg recommended approval and was seconded by Carolyn Peoples. Jay also presented for approval the Towson/RESI contract for services for staff augmentation. The Authority is delegated approval of inter-agency agreements. Carol Rieg recommended approval and was seconded by Carolyn Peoples. Jay presented a task order for consulting services for 5 Business Analysts. The Authority received 15 proposals from approved contractors under the DBM state-wide contract. Because this task order is under the DBM contract, it does not require BPW approval. Carolyn Peoples recommended approval and was seconded by Carol Rieg. Lastly, Jay presented a contract for consulting services for 2 Project Managers. The Authority received 16 proposals from approved contractors under the DBM state-wide contract. Because this task order is under the DBM contract, it does not require BPW approval. Carol Rieg recommended approval and was seconded by Carolyn Peoples.

Senior Financial Advisor

Ron discussed the upcoming procurement for financial advisor s rvices to the Autllority, which is for 2 times the amount of the current contract held by Co. LLC. The idea is to have 2 advisors on board. Qualificatio~~s stipulate that the as a Senior FA to a goveinmental unit with outstanding debt of at least $500 m i l l i o w dfnimum of 5 years experience with the municipal bond market, specifically revenue bonds be r a k e d among the top ten financial advisors as ranked by the Bond Buyer.

Financial Auditing Services

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Ron presented the Invitation for Bids for the financial auditing services contract. Periods to be audited are FY 2007 through FY 2009 and with 2 one-year renewal options. The IFB is on a fast pace timeline with formal presentation of contract recommendation to Authority on May 30 with a BPW award recommendation date of June 20,2007. The provision of a management letter is pai-t of the required services. The IFB has already been sent to DBM for review.

Investment Management

- Outsourcing Analysis

Steve Welkos explained that the Authority members would like to evaluate whether we should manage the Authority's investment portfolio in-house with our employees, or using outside experts. The Senior Financial Advisors to the Authority and to MDOT, Davenport and PFM, respectively, are to review current investment practices and make recommendations. Davenport will review the option of keeping investment management in-house and PFM will review the option of outsourcing the investment manageinent to a professional firm. Both firms will complete this work by June 1, 2007.

Informational Iterns
Steve Welkos stated that Finance is moving right along with filling the vacancies. Chris Thompson has come back to the divisio~l the budget manager; the cash & debt manager is just as about co~nplete.Steve introduced Kathy Mork, the Manager of Financial Reporting.

The meeting adjourned at noon. Next meeting is scheduled for May 10 at 9:30 am.

Finance Committee Meeting

Notes of May 10,2007
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Attendees: Louise Hoblitzell Chair Carol Rieg Ronald Freeland Beverley Swaim-Staley John Magness, CRR Valerie Kohan, CRR Steve Welltos Alison Williams Joyce Diepold Deborah Donohue Peter Kessenich, PFM Joe Mason, Davenport Kurt ICrauss, PB Betty Connors, SHA David Chapin Christina Thompson
Joe Waggoner

Greg Derwart Jay Ayd Cindy Taylor Carolyn Peoples - Absent

Canton Railroad

Mr. Freeland presented to the committee a briefing on the Canton Railroad. Mr. Magness is interested in obtaining short-term assistance from the Authority, approximately $1 million, to fund upcoming and some current projects. As it stands now, a recent cash flow analysis indicates that currei~t reserves will not be sufficient for cash Canton Railroad to continue to fund projects such as new track for switching services in hCecil County and expanded storage tracks for Seagirt and Dundalk Port services. T e ~ ~ g ~ ~ ' e z s b ~ l ~ l e n . Ms. Hoblitzell suggested that the Authority dZeY&piaen+=~ymkd-beget a group together to review the matter, and to have Mr. Woodford chair the group. Ms. Rieg recoinmended approval to have the matter go before the Authority.
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Finance Committee Meeting Notes

The notes of the April 12 meeting were approved by Ms. Hoblitzell with minor corrections.
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Bond Rating Agency Visits - GARVEE Bond Issue

Joe Mason stated that the rating agency visits went well and that they will be revisiting the agencies again in July for an update on the toll revenue bonds. Ratings on the GARVEE Bonds are due to come out today and Ms. Hoblitzell asked for the Finance Committee to lmow the outcome via e-mail,
Intercounty Connector Monthly Cash Plow
1 b - tKrauss explained that the ICC cash flows have remained the same since last month with no significant changes. Ms. Hoblitzell requested a comparison between the budgeted numbers and the approved expenditures.

IT Project Approvals Jay Ayd presented 2 consulting service contracts for approval: Microsoft Database Administrator and an Oracle Database Adininisbator. Both contracts will provide consulting services Authority-wide, are for 3-year terms and shall not exceed $2 million and $800,000, respectively. These procurements were processed under task order requests for proposals under a State-wide contract under the Department of Budget and Management and do not require the Board of Public Works approval.
Discussion of Toll Policy

Peter Kessenich distributed a Toll Policy handout. The Authority is unique in that not only does it operate and maintain bridges and tunnels, but that it also is responsible for highways. Questions were raised such as can there be a toll increase that would last a certain amount of years, can the Authority remove the various discounts. It was suggested that the main reason for a toll increase could be due to the 1-95 sections 200, 300 and 400. Ron stated that discounts should be phased out and a cost analysis of ACS and staff should be undertaken. Carol pointed out that maybe the Authority should survey customers. Ms. Hoblitzell would like Joe Waggoner's toll policy study group to get together with Vollmer and Peter. Peter also stated that he will work with the model created by Davenport. Members decided that the toll policy should be on the agenda each month and that it should be brought to the attention of the full Autl~ority.

FY 2008 Preliminary Operating Budget

Steve Welltos presented the proposed preliminary operating budget in the amount $212,042,114, an increase of 11.6% over the adjusted FY 2007 budget. The increase of 2% COLA for is due to an increase in costs of existing personnel] additional employees, additional EZ Pass contract and fee costs and equipment. Discussion followed as to the past budgets, and the average 8% budget growth over the past 5 years. . - ... .- .- .- . --- -D~e-to-up-~m~ngp~~j-e~~;-Ron-exp-~a.ine~-~at-th-eA~~th-~rity-~am-ot-~ont~n~~~ to-gru W-asssit---- - -.. has. Much discussion followed in regards to the police pension system- LEOPS. It was suggested that staff look into other pension plans for the police. Ron stated that at this time next year that there will be a joint Capital and Finance Committee Meeting to review the Operating and Capital budgets. Ms. Reig made a motion, and the Committee recommended approval to the Authority members of the FY 2008 Preliminary Operating Budget.
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,Update - Senior Financial Advisor RFP & Auditing Services IPB Alison reported that staff is working to ensure that the financial advisor RFP process will be completed by September and that the last option year of the Reznick auditing services contract is approved.

Investment Report
Joyce stated that investments are doing well and there are no significant changes from last month. The meeting adjourned at 12:30 pm. Next meeting is scheduled for June 14 at 9:30 an,

Finance Committee Meeting

Notes of June 14,2007

Louise P. Hoblitzell - Chair (via conference call) Carol Rieg Carolyn Peoples Beverley Swaim-Staley Peter Kessenich, PFM Jamie Traudt, Davenport Kurt ICrauss, .PB Paul Shelton, McKennon Shelton & Henn LLP Mary Sheppard, McKennon Shelton & Henn LLP Ronald L, Freeland Deborah Donohue Steven E. Welkos Alison Williams Allen Garman Christina Thompson Joyce Diepold Allen Gorman Geoffrey Icolberg Shnela Triandos Dennis Simpson Melissa Williams Richard Jmnillo Suhair Allchatib W alid Saffouri Bruce Gartner Greg Jones Jody McCurley George Fish Cindy Taylor
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The meeting was called to order at 10:OO a.m.

Notes of May 10.2007

Member Hoblitzell suggested one change to the notes. The sentence . ."The recoupment of the stock investinnent by the Authority via dividends paid by the Canton Development Finance Committee Notes June 14,2007 Page 1

Company would be expected." was deleted by consensus. No other changes were made to the notes of May 10,2007.

ICC Cash Flow - Status Report

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Kurt Krauss presented the monthly ICC budget and cash flow report for the month ending April 30y.2007; $4-,7million has been spent-for-the month of April-which is-$7-million. below-the forecast due to ROW acquisition timing. Environmental mitigation cash flows accelerated with minor increases to the overall cash flow over the next year. A total of $1 87 million has been expended on the project to date. The required regular update to the annual financial plan will be done in August, for review in September.

FY 2008 Operating Budget - FINAL

Steve Welkos explained that the proposed FY 2008 Final Operating Budget of $212,041,883 is slightly less than the preliminary budget approved in May 2007. The slight decrease is due to offset of the police and operations budget increase for reclassifications of some positions and additional finds in the Internal Audits Office to procure professional auditing services for invoices by the 2 positions being deleted in the Division of Communications and a downward salary calculation adjustment in the BWI Police budget. Member Peoples suggested that before the preliminary budget is approved next year that the Finance Committee meet to go over the justification in personnel increases, division by division. After discussing the matter, Mr. Freeland recommended that the HR Committee meet to review the preliminary budget next year. Mi. Freeland also recommended joint meetings between the Finance and Capital Committees two to three times per fiscal year. Dates for these joint meetings are to be set.

Mr. Welkos gave an overview of the Authority's financial forecast. Capital program projections based on the FY 2008- - FY 2013 Draft CTP have been incorporated in the forecast that accompanies the proposed final FY 2008 Operating Budget. The Authority does meet and or exceed the standards of debt service coverage, but a toll increase will be necessary no later
thanFY 2011,

Member Hoblitzell moved that the proposed FY 2008 Operating Budget be recommended by the Committee for approval by the Authority members in the amotu~t of $212,04 1,883 and was seconded by Member Rieg. Operational Costs of Proposed New 1-95 Maintenance Facilitv George Fish presented this item for informational purposes to give the Cormnittee insight as to what operational costs and needs would be for the addition of a new maintenance facility in the White Marsh area, With the opening of 1-95 Section 100 in 2010, a new facility will be needed to service the additional 10-mile stretch of highway. The Capital Plmi~ing Division will Finance Coinrnittee Notes June 14,2007 Page 2

be working on the acquisition of the land, design and construction of the new facility. Anticipated operating expenses of personnel, equipment, etc, is expected to be 40 to 49 new positions, eventually having additional MSP for patrol, an E-ZPassstop-in center, courtesy patrol, etc. Estimated operating expenses for FY 2009 would be $1.2 million; FY 2010 - $2.6 million; FY 201 1 - $6.1 million; and FY 2012 $6.7 million. Mr. Freeland explained that the Maintenance 1 facility eventually will need to be relocated and renovations will be needed to the Maintenance 2 facility to correspond with the openings of 1-95 Sections 200,300 and 400.

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Toll Policy/7'oll Increase

Peter ICessenich presented the Committee with a joint study which evaluated the issues and steps that he and Jamie Traudt will be undertaking to create a matrix of the impacts of various types of cash, debt, and toll policies. Discussion followed about the proposed toll increase schedule and reinforced the Committee's desire to have preliminary decisions made prior to September 2007, when it is conceivable that there will be discussions in Annapolis. Ms. Swaim-Staley indicated that the Chairman has not heard officially from Annapolis on timing of proposals for revenue enhancements, but they would like to be ready as early as September. The Committee stated that these issues should be on the Authority agenda by August.

FY 2008 to FY 2013 Draft CTP & Long-Range Capital Needs Study

Sam Triandos provided a briefing on two items. The first item was the Draft FY 2008 to FY 2013 CTP which must be submitted to MDOT by the end of the month for inclusion in the MDOT CTP that will be presented to the public during the Secretary's Fall CTP tours around the State. The second item was the Draft Long-Range Capital Needs Report.
A summary sheet of the changes to the CTP Draft since last year's final was distributed for discussion. This summary indicated a $0 change in the preservation portion and a $1 57 million increase in the enhancement portion of the six-year program. It was reported that to stay within the affordability level, three projects would be removed from the proposed Draft, i.e., Authority Office Capacity Improvements, Travel Plaza Redevelopment and a Temporary Travel Plaza. This action was also discussed at the Capital Coininittee and recommended for Authority approval. The action reduced the increase in the Draft from the Final to a more manageable level of $16 million. Bruce Gartner and Greg Jones discussed with the Committee the possibility of having the travel plazas considered as a P3 project candidate. After much discussion, Member Hoblitzell agreed with the concept, provided that additional financial inforination is given. The Draft as presented, removing the three projects, was recommended for approval by the Authority by a motion by Carolyn Peoples and seconded by Carol Rieg.

The briefing on the Draft Long-Range Capital Needs Study was presented with a bottomline amount of $24 billion froin FY 2008 to FY 2026. A summary sheet provided a breakdown for the amount in the financially-constrained six-year Draft, the ainount in the six-year program period that the Authority would need to fund the projects that are curreirtly not affordable, and the amount needed to fund the projects fioin FY 2014 to FY 2026. The detailed report of the entire period to PY 2026 was also distributed to the Committee for their review and comment. Finance Corninittee Notes June 14,2007 Page 3

Annual Audit - Reznick

Alison Williams presented the Committee with an update on the Reznick auditing contract. The Authority.approvedexercising the one final renewal option with Reznick in order for them to perform auditing services for FY 2007. An extra work authorization in the amount of $sQ000 has been approved which brings the total contract to an amount not to exceed $92.892 'fo~ FY2007;--$35;0007~f the~a'ddItiona:111$50,00~-ha~s b-e-enrequested-by-Rezni-ckto-p-erform-a -. . SAS 70 type audit of ACS, which will require significant, additional audit test work on the electronic toll collection process. Reznick provided a copy of the time budget for the testing work,

Review Schedule for August Toll Revenue Bond Issuance

Alison Williams provided a schedule of the upcoming schedule for the August toll revenue bond issuance. In the fall, approximately $300 million Transportation Revenue Bonds are to be issued in a competitive bond sale. More details and an update will be provided at the July meeting.

Investment Report
Joyce Diepold summ,arizedthe report stating that as of May 3 I", the market value of investments was $262 million, compared to $432 million at the same time last year. The Capital Fund continues to decrease with a balance of $25 million on May 31,2007. The final $43 million transfer to MDOT has been completed. There. is a $143 million balance in the General Account.
Information Items

Bruce Garher and Geoff IColberg gave a short summary of the toll cost allocation study being conducted by the University of Maryland. Bruce Gartner discussed the Draft Business Plan for FY 2007 - FY 2008, Ms, Hoblitzell was concerned about the change in the strategic goal of Safety and Security. Bruce explained that the Authority has a performance measurement team consisting of employees from various divisions who is responsible for the development of the plan. After some discussion, the Coininittee decided that it would like to have time devoted to each of the focus areas on a periodic basis (quarterly) to discuss progress toward meeting various performance measures. Also, the Committee would like to have a portion of each meeting devoted to some type of report on one ltey focus area. Alison Williams explained that as of May 3 1 Authority spending is under budget and approxiinately 77 percent of the total budget for FY 2007 has been spent.

Finance Committee Notes June 14,2007 Page 4

Ms. Williams also gave an update on the current status of staffing in the Finance Division. Finance is hiring 5 temporary employees to handle accounting and special projects; there were 4 new recent hires; 2 vacancies are pending for accountant positions; 3 vacancies need to be filled in FY 2007; and 3 vacancies need to be filled in FY 2008,
Meeting adjourned at 1:00 pm. The next meeting is scheduled for Thursday, July 12,
2007 at 9:30 a.m,
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Finance Committee Notes June 14,2007 Page 5