to trade-off regional traffic priority, local traffic priority, et cetera. >> do we get better car through-put when cars are traveling on a street with no parking lane? i know in san francisco we seem to have parking on every street, even arterials, even sort of van ness and geary, that i would think in other cities would be arterials with no parking. do we get better car through-put when cars are traveling on a street without parking lanes? >> i think we'll see that in the analysis, what that looks like. but general observations from other places is that when you have less weaving of anything, whether it's transit, bicycles, parking, through-put tends to be more effective. >> so we could end up with the same through-put with fewer peak hour traffic lanes? >> potentially. we'll know more when we look

into that. >> 3rd and townsend all the way up to market and onto kerney? >> correct. >> i know it's a work in progress, but it can barely work now. >> i share that concern and i go back to the reason why we're doing this in the first place, which is there will be a tunneled subway under that, serving that and whether that our planning will be there will be fewer bus lines or greater headway there. no? no. >> the demand in that corridor is almost insatiable. >> i will come back to my original point that i hope you are considering that. i think through my head, all of those streets that can handle it, the traffic can go elsewhere and that is good and then you get to 3rd street and

i question that. >> all the staff are in agreement. we have been trying to figure out how to deal with 3rd and 4th streets, because that is the area with the most needs for all users. so it's going to be eventually a trade-off. >> i know when moscone has a major convention, you will see like five tractor-trailers. >> the point i was going to suggest is as we learn -- or as you all learned from the forest hill discussion, i think there is actually wisdom to the fact that vibrant arterials will make the nearby streets more accommodating to the neighborhood and pedestrians and all of that, because you have threw through car traffic. whereas i'm worried if you bottle 3rd street, you will defeat the whole purpose of the

neighborhood plan: >> because it's a lattice grid, we're prioritizing certain corridors for multi-modal movement and one challenge in and to try and test these outcomes, which is also why one of the reasons we're looking at that folsom street pilot right now. maybe howell or 3rd or 4th. we don't know yet, but rather than going to the full phrase and starting construction, to see how it works. >> going back to director heinicke's point, the bikes and pedestrians go have options, because it's flat for the most part. so i think as along as you were saying, you provide for the different modes on

streets in a reasonable distance that i think it could. >> directors? director rubke? >> i know this is still in the concept phase and we're still going -- there is a lot of work to be done, but the timing of this versus the 2nd street project. because this is kind of my neighborhood and a lot of people have expressed concerns about through-put? >> we can jump to that now or? >> soon. thank you. next steps. >> so folsom and howard, as noted earlier, this was identified in en trips. en trips provided a few promising alternatives, a few

keeping them one way and a few changing them to two way. so we developed a one way and two-way option, both working through environment and the folsom street pilot project will provide a lot of critical data to inform the final concept. so the one-way offers a -- this is folsom -- a two-way cycle track. on the north side of the street. and the two-way and a transit-only lane during peak hours. and then the two-way has a separated cycle track on both sides. and again to do these things and widen sidewalks, it's the trade-off again, where we have to take parking or take a traffic lane and it's not to

penalize anything, but to accommodate the different kind of trips that are there, but also the new land uses will be hopefully such that someone can walk and bike and take transit to home to the store to their job. so we're hoping that the length and nature of the trips will be different. as far as funding is concerned, to-date it's been accommodated or excuse me, funded by a few grants, and agreements or work orders between the two agencies. moving forward, and right now through environmental, again, a few grants, mtc, the mayor's general fund, and also through moscone. it is a plan that we're also working on to make sure these things are compatible, but moscone is chiping in some money. and then finally for design and

construction, much of that will depend on development impact fees and it's expected that impact fees will generate that. >> we could actually have money for this one. >> if the development comes, we will build it. so the transportation impact study, the draft is coming out within the next month. the first draft. then there is the second draft. then there is the screen shot, and soon we will -- we have been planning the outreach process specifically for transportation, but planning department can speak to that part and more general environmental review.

the draft eir is coming out mid-september of next year and so we are continuing to work together to make sure that things continue to move forward. >> thank you very much. good to see the cooperation of the two departments working so well together on this. >> we need an answer to the 2nd street question timing if you know off the top of your head? >> i don't know off the top of my head. i believe it's beginning environmental review now. >> it's like slightly ahead of this thing? >> i think they are doing a focused eir. so it could be that the timing somewhat coincides. >> would you step up to the microphone, please. thank you. >> i think it's on a parallel process, but everything that is being worked on the 2nd street is incorporated into this. so there is no difference.

>> this is an informational session this afternoon, there is no action required by the board? >> there is no action. >> thank you. we can look forward to a robust gold standard community outreach as we have had with two other things that have come to the board recently, where our community members are quite pleased with notification, with meetings and timing and things like that. >> candace from communications is drafting this new public outreach process, which sounds really promising and very robust and we'll be drawing from that for this process. >> good. and we'll of course, i'm sure, we'll be shared a loop in the supervisors, the appropriate supervisors. >> yes. >> thank you very much. >> if i could just add one comment, chairman nolan, just to provide balance to the comments made by director heinicke with yes we'll have a

central subway in the future, which will probably reduce a lot of the need for too much travel outside of a car. i do want to make sure just to provide a balance, that often times new transit systems or a new transit station from my perspective is going to generate more pedestrian and more bicycle trips to those stations. right now, it's just an absolute nightmare to get around on a bicycle or as a pedestrian. i'm actually looking very forward to doing whatever we can to prioritize the transit or the bicycling in that part of the city, specifically as access to getting to those future stations. so looking forward to the analyses in the future and seeing that it doesn't create an absolute disaster or what have you, but really looking forward to looking at the through-put and how it's going balance out the project. >> thank you very much. thank you all. next item, miss boomer. >> mr. chairman, i don't see any member of the public.

>> i don't either. >> item 15, presentation and discussion regarding sfmta's fiscal year 2012-2013 year-end financial audit. directors no members of the public have expressed an interest in addressing you on this matter. >> we also have a member who has to leave at 5:00. >> it will only take a minute. sorry, directors. cfo, we're required to come

before you every year to present the audit. this is the third year we're coming in front of you. i also want to present the partner from kpmg, who is going to present after me, nancy rose. just quickly we were able to complete the audit by the 1st, the earliest we have ever done it. we have no findings for the third year and so that is a good process. in terms of our revenues, we were $103 million over '11-12, the majority in the operating side, as well as significant contributions from our capital projects, mostly the central subway. our expenses were also higher by $67 million and the difference from prior year, we added $36 million to change in net assets. in terms of balance sheet, our

cash position is better and we had $76 million in capital assets that we put in the ground and total assets increase the $132 million, liabilities increased mostly in state grant prop b that we receiveded in advance of the actual work and then we had about $53 million increase in post employment benefits. so the overall picture is positive. let's me turn it over to miss rose. >> good afternoon. thank you for being with us. >> good afternoon and thank you for having me here today. my name is nancy rose and i'm an audit partner with kpmg and we were engaged for the financial statement audit for the municipal transportation agency. we have completed that audit. as was mention we had did it earlier -- completed it earlier than we have in the past.

the presentation i have, we just have some formal required communications to you to let you know that we did conduct the audit in accordance with auditing standards generally accepted in the united states. we did not do an audit of internal controls, but helped us plan our process. in addition, we have not completed yet, but we're in the process of doing the single auditor a-133 audit that does involve us getting an understanding of internal controls. for the financial statement audit we did get an understanding of internal controls to understand the process and as was mentioned we did not identity any deficiencies in internal control. we also performed task work compliance with rules and regulations and did not note any instances of non-compliance.

the objective of the audit is to issue an opinion on the financial statements to let you know that we have performed the audit; that there were no material misstatements and we get reasonable assurance, not absence assurance that the numbers were not misstated. we did not identify any audit adjustments. and so if we had, that would have led us to evaluating internal controls for that to be presented and we would have misstatement for that, too. we do look at the agency's significant accounting polices. there were some that were new for this year that are required for all governmental agencis this year. and they primarily dealt with presentation and none that changed the method for how accounting was determined. so when you look at the financials, we do a risk-based approach, where we look at

where are the significant accounting estimates and numbers that make up your financial statements? and probably the most significant one for you is the management's estimate of the accrued workers comp and accrued general liability with regard to any lawsuits or claims that might be out there. we looked at the -- with regard to those two items we did look at the analysiss that was prepared by your expert. we had our experts review it as well, to ensure that we felt comfortable with the amount that had been recorded in your financials and as again mentioned no adjustments. i think the other is that we have to go through and have the responsibility to let you know, if i had any difficulties that i encountered while performing the audit, whether management had complied with providing us with the documentation, books

and records and things of that sort; that we needed. we had no difficulty performing the audit and there were no issues where we went through and -- we always have healthy discussions over the proper way to do accounting, but we didn't have anything -- like kpmg, if don't agree with us, you are fired. [ laughter ] imnothing of that nature. if there was i would have a requirement to let you know, the only material written communications we have a contract with the city to engage us and at the conclusion of the audit, management presents a representation letter that says we provided you the books and records and told you about any contracts significant to the financial statements and made this available to us and have told

us about any non-compliance with laws, rules and regulations, et cetera. with that, that is my report. as we said, we conducted a successful, clean audit. and any questions that you may have on our process, findings, et cetera? >> thank you very much, miss rose, appreciate it. this is not an action item, this is informational, is that right? >> yes. >> thank you very much. >> great work. >> item 16, discussion and vote as to whether to conduct a closed session. >> motion. >> second. >> all those in favor, signify by saying aye? >> aye. >> director lee has to leave in about 15 minutes,