>> public comment? public comment is closed. without objection, so moved. please read items 3 and 4. item three, chairs report. item four, directors' report. >> vercommissioner mirkarimi: very good. my comments are a breeze. there's never a dull moment in transportation. especially here in san francisco. the main focus of activity this month was the sustainable communities process, which is being led by the metropolitan transportation commission. this is essentially the local implementation of the legislative mandate. it is very important to demonstrate that local jurisdictions working in concert with regional agencies can turn that into real actions on the

ground. there are many dimensions to this challenge, such as land use policy, transportation, and other infrastructure policy, and other key policies related to schools. these work together to determine where people are located. we are moving in the direction more closely integrating all those areas. it is a daunting task that is only the first go round. we can expect they will be far from perfect, but it's a great opportunity to look at things from a multi varied perspectives. the congestion management agencies around the region have taken the lead in coordinating county level meetings to ensure people are aware of the process.

the authority has been very involved in actively fulfilling the role of these last several months. we have already had several meetings with the department meetings of mtc. i attended one of those meetings last week to emphasize that san francisco department heads, the importance of this process of having san francisco taking a leading role in the region in this regard. i expect the process to intensify. it will have to. as the region debates alternative visions of how we move forward. finally, serious discussions about the funding plan for the central subway. interesting coverage lately in the press, and, of course, with in committee hearings. i'm delighted we've worked out what i believe will be with a

feasible funding plan to close the $137 million funding gap before us in the mta. the way to get there is through a collaborative process. what we have is exactly that. i want to thank staff for taking the initiative, and thank you to the mta for coming to the table. it will be a huge benefit for san francisco and almost $1 billion in federal funds secured, which she to happen in short time. i know that the solution we have at hand will have creative funding swaps including proposition k money. i hope the director will help us navigate through the steps. this is not the first time we're doing something like this with state and federal dollars. i'm looking forward to making a great case to securing the funds. with that, i will conclude my remarks. mr. executive director.

>> good morning, mr. chairman and commissioners. i have a report on your desk that will highlight a few things. i think that the price this week goes to the high-speed rail picture, where we have now had official guidance from washington to the fact that california must spend its high- speed rail allocation of over $3.2 billion. related investments totaling $4.3 billion. this is in one of two central valley sections. it will either be fresno or fresno to bakersfield. we're having trouble getting excited about the prospect of

high-speed rail that is that far away from us. that has been the guidance so far to we are forced committed to working to continue to coordinate the segment that we have the most significant interest in. it has of course had its share of challenges, particularly the mid peninsula section. it requires continued partnership. at the local level, the authority of staff continue to coordinate the city families and put into the high-speed process. we have been successful so far in getting the high-speed rail

authority to accept a set of three alternatives that are the result of a consensus building process among the agencies. you're sure that will be included in the report. given the news that i'm sure you have all seen in the last 24 hours -- the incoming republican leadership in the house looking at high speed rail and california's allocation of money as a target of deficit reduction. we have at least a reason to be worried. come the beginning of the year, we will most likely be involved in a vigorous advocacy process to help the state retained the funds that are already at the state level to keep moving this project forward.

of course, there are implications for projects within san francisco that we need to be worried about. it seems as though this topic will require continued education and continued attention. we will continue to do that. i'm sure there will be some demands for your time as the advocacy in d.c. demands that we all be there in demonstrating support for these local projects. we had a mixed bag in terms of transportation as it regards to the november election. we have proposition 22, which went long way toward securing transportation funds. i hesitate to say dedicated transportation funds, because they turned out to not be dedicated in years past when the legislature has seen fit to

borrow those funds to balance the budget. now we have a proposition that says the transportation funds can only be used for transportation and cannot be used to balance the budget. that is good news. unfortunately, the election coupled that good news with proposition 26, which has now turned every user fee into potentially a tax, and raised the bar to a supermajority for getting those things passed. without boring you with the details, i think there are some implications you need to be aware of, especially in regards to the funding deal that was approved as part of the initial budget approval, the one that happened 100 days after the deadline. that budget included a swap where the sales tax oreplaced an excise tax.

that was on a simple majority vote for the simple reason that there was a net no change in the amount of revenue generated, but there is a reid already that prop. 26 might change that. it is retroactive for certain measures back to january 1, 2010. it may be necessary for the legislature to reopen that deal and do it on a super majority basis. if it is not able to achieve that, that would mean a significant reduction in transportation money available around the state. and of course, we are talking about a reduction of budget that is already in the works. we're worried about it and we're watching this very closely. i will keep you posted about this as we begin to see it in the next month. there's an item on my report

about the central subway, but you already heard from the chair. i'm delighted to say that we did come to a what we believe is a workable plan. i'm looking forward to continuing to work with the mta to make it happen. there are some of the sea items that will involve this board. there are some action items that will involve the sport in regard to swaps of prop k money. you also need to do some advocacy with the california transportation division to make sure it is approved and timely manner. i will skip this item because the chair has recovered it. you should not be surprised to see some of the authority planners in your neighborhoods talking about the san francisco transportation plan. this is a 30-year look at

transportation that it gets done every 30 years. we are in the middle of analysis in raising analysis around the neighborhoods on the importance of having this road map that will bury much navigate the sustainable community's strategy to we've had many meetings, including the district 11 council, and we have a very long roster of other community divisions we will be in touch with. of course, we are delighted to take your suggestions for organizations we should be connected with in your district. finally, we want to rejoice in the fact that the bay area clinton program has awarded a total of $14 million for various projects that provide opportunities for innovative pilots in the area of regional

like sharibike sharing, san frao city car share, and most notably, an electric vehicle battery swap program that mta will be doing. they are all exciting projects. the one that the authority is leading is management partnership project that i think will be the colonel for some very interesting and innovative ways in mobility in alternative ways around town. it will involve employers and agencies around the city. that is a summarized version of my report. i'm glad to answer any questions. that concludes my report. commissioner mirkarimi: any comments or questions? any public comment on items

three or item four? public comment is closed. >> we could go back to item one. i know that commissioner avalos is not here today. he has a sick child. he asked that he be excused for this meeting. commissioner mirkarimi: let me just finish on this item, but absolutely. item three and four is closed. we will continue these items at the call of the chair. so moved. returning back, i'm hearing a motion to excuse commissioner of avalos. commissioner mirkarimi: very good. so moved. please read and item five. >> progress report on limited scope performance audit. commissioner mirkarimi: it was earlier this year, colleagues,

that we recommended and then we pursued an audit of the municipal transportation authority. with the guidance of commissioner campos, we initiated a two phase process of the mta transportatiotransporta. the first was by our own budget analyst and focused on compliance with state and federal regulation in identifying areas where there could be potential savings to the operating budget. that effort did identify some welcome opportunities, i think it would be fair to characterize those as marginal in terms of how much they could help with the structural deficit in our long-term concerns. when the phase was completed, we

discussed the next steps. i proposed to move with a second phase, funded with proposition k dollars. there are opportunities to ensure through the capital program that the mta investment projects that result in better service for the people who take transit -- so we procured a second audit process with a firm, cgr. the auditors are here today. it's still very early in the process. we are not expecting findings. a number of board members, commissioners, have been interviewed. this is an opportunity to further understand the scope of the audit and how it is proceeding and relevant to our ongoing concerns about budget matters and efficiency matters

regarding the mta. commissioner campos and the staff have been working with cgr, as has my office. i want to ask commissioner campos if he has any comments before the presentation. commissioner campos: thank you very much, mr. chairman. i think you have essentially summarize how we got here and where the work is. i just look forward to hearing from cgr in terms of the status and in terms of the process. i think it is good for the rest of the transportation authority to hear that. i do not have anything to add at this point. commissioner mirkarimi: thank you. cgr, will you please join us? >> mr. chairman, commissioners, my name is jim ayers.

in a principal with cgr management consultants. my team members here are jim kennedy and keith kennedy. commissioner mirkarimi: i'm going to ask you to speak directly into the microphone. thank you. >> sorry. just to refresh your memory is about the three functional areas that you chartered in the audit, these are the three. they are important for a couple of reasons. one, we want to focus very much on the questions and issues that you presented to us. we have also had some differences with mta in terms of setting up meetings and perhaps

trying to limit the scope of the meetings and the coverage we can do with any individual to a preselected items on this list. we do not consider these three areas -- they are interlinked. they're not stand alone. that is an artificial kind of separation. one of the first tasks that we had was to focus the audit on particular areas of interest. that cost us to make these items in scope. when we had our entrancts conference, we wanted to make

sure we had but central subway project included. one of the other themes that we heard in the meeting is getting value for money. finding other ways to be more efficient, other than cutting budget costs. here is our task structure. we've provided our first deliverable, which i believe came to you electronically. it was an initial assessment. that was deliverable on october 29. we are probably going to be late because of noise we had including access to mta staff. commissioner mirkarimi: what was

the reason? >> because of problems in getting access to the staffs at mta. we had a window of interviews. and the reason has to do with conditions that i mentioned before about which topics we would be limited to, and also to have questions in advance that we would be asking during those interviews. we escalated this issue to supervisor campos' office and we are in the process of getting resolution.

anyway, we think this will probably have an impact on our schedule of up to four weeks. we will try to keep the process moving as quickly as we can, of course, but we have lots of time. moving on into some of the components of the audit, one key feature is what we call referenced projects. a reference project is a way to go back and look at specific projects, how they were initiated, and what the budget was at the point, and what happened during the execution of the process. it is like an auditor might

sample accounts. one of the three criteria here -- only one of the criteria has to be met. our analysis and documentation has three fundamental components. the first component is how mta defines a process now. that is something that can be gleaned from written procedures. in the absence of a written procedure, there may be a presentation, so how they say they do it. the second component is best practice. best practice is our opinion.

it comes from sources like the institute for asset management and other sources. the third one, and this is where the referenced project comes in, this is what the current practice is. is there evidence that the written procedure is being followed? the audit report organization will be in this format. we will have three sections. the first is called enablers and controls. we do not call it that. it is the infrastructure or the environment in which the

products are carried out. it would be like what a road is to an automobile. a road enables an automobile to travel from place to place. the second component is porfolio and program management. that means selecting the right projects, the process you go through all the time. setting priorities, how that is done, and how it compares with the best practices. the third component is the project itself, and that is during the construction, and during the purchase, or during the rehab and how that is

carried out. are there any questions? commissioner mirkarimi: just one, and i think commissioner campos might want to underscore this as well. i take it that this audit will only be as effective as we hope based on the collaboration of mta to provide you access to information. in your experience, if you have not received that kind of access, what has generally been your standard practice in dealing with these type of situations? >> well, the value of the whole effort will be enhanced by their efforts. your spot on with that observation. some adversarial audits will be

paper based. you do not have the insight that you get from these people. they may not review the preliminary findings and documentation that you want to provide to them. that makes it richer. that makes it less susceptible to criticism later by the agency after you have published your findings. they have a sense, perhaps, of participation in it. and no surprises. no surprises. unfettered access is vital. commissioner mirkarimi: commissioner campos. commissioner campos: thank you, mr. chairman. i'm confident that we will be able to work collaborative with the mta.

i have a meeting with the executive director to talk about issues with respect to access to the information. i'm confident we will be able to do that. the second thing, a quick question for the auditors. i just want to make sure, in terms of the budget, if you see yourselves staying within the budget that has been allocated. we want to make sure we are as close to the budget as possible. commissioner mirkarimi: it is the holidays. be careful. >> we respect that concern. the flow chart showed everything in a sequence. we are doing things in parallel. there's a lot of behind-the- scenes work. we dial thback our billing rates

to do everything we can to stay within the budget. we take pride, in general, and not going back for additional funds, unless there is mutually agreed to changes. commissioner mirkarimi: thank you. thank you, commissioner campos , for your focus on this. i want to emphasize one point that i think will be helpful for all of us. that is some sort of early warning system that provides us a heads up. especially with the holiday schedules in the next few months and the fluctuations in government, that we are provided as much early notice so that if access to information is not a fluid that we know. the last thing we want is to eat

up the clock or the contract of cgr and then discover at the end of the contract that we did not intervene when we needed to. >> we would appreciate that. we would like to thank commissioner campos for his rapid interventionç. commissioner mirkarimi: good. appreciate that. good work. colleagues, any comments or questions for our consultants? seeing none, thank you. you may have a seat. we appreciate the introduction. any public comment on this item? seeing none, public comment is closed. this is an information item. madam clark, please read item 6. >> authorized the executive director to execute all master agreements, program supplemental