bart staff will be recommending to bart board, we would want to negotiate an extension out to 2020. so, we would get them on par that way. in terms of the question, would it be better to have both of them short term, both of them long term, as i said before for purposes of the staff time that's involved and the process even in securing approval for these agreements, and also for budget certainty for the next few budget cycles, it would be my strong preference that we have longer term agreements that have a framework that can account for changes and conditions that keeps things i think on a fair footing. in terms of the idea that things bump up when bart increases the fare, arguably what the fast pass does, if you buy that fast pass, you're paying us to be able to ride on bart system.

bart's fare increases ostensibly represent the cost of bart providing the service. so, as bart's costs go up, i don't think it's unreasonable that that cost may go up. it's true, we don't control bart's fare increase, but i think it's also fair to say that bart's not making its fare policy decisions based on, you know, what it's going to get out of this agreement. i know you weren't suggesting this, butedth fact that we don't control it i guess my point is i don't think is inherently a bad thing. and then finally, the final point on the cap, i said before supervisor campos arrived, we in bart are willing to accept the budget analyst recommendation to bring that cap down to be closer aligned for the two years that the agreement is in place. if we extend it, we would come back with perhaps an adjusted cap. >> so, mr. rifkin, supervisor campos, sorry, do you have any follow-up? >> no, go ahead. >> so, a few comments on that.

one, in terms of our payment to bart is based upon their fare increases. their pitv to us is based on a cpi growth. * payment that to me seems bizarre. i understand they're paying for their service, but they could do -- i'm not saying they do, but they could do a lousy job of curtailing costs or working to drive efficiencies in our own organization and we bear the brunt of that now. we do the same, we could work hard, but they don't -- it's not reciprocal on both ends and we have our own constituencies to deal with. whether it be political or working with your own staff. and to have ours -- their payment to us based upon cpi growth and ours based on whatever they decide to charge their riders, i'm not to say it's whimsical, not making light of that, but it seems unbalanced at best. >> and that's one of the reasons why we didn't want to extend beyond until we saw that they had a fare policy in place that was maybe kind of like ours. that is just an inflation

adjusted fare to give ourselves some of that protection. it's just they are different agreements. you know, one of them you're taking a muni ound fare product and riding on bart. fact you've taken muni to get onto bart using a muni fare product. * they're not exactly aligned in terms of the agreement because what the agreements -- the underlying kind of mechanisms that we're trying to bring to the two systems and trying to improve integration of the transit system, they're just different things that the agreements are for which is maybe why there's two different agreements in the first place. >> understand. to the points about the terms of the contract, i guess long term contracts are better for saving staff time, i fully understand that. the other part that i'm still uncomfortable with, and i just don't understand why we wouldn't be bargaining for this. we have a -- they have negotiated to us a maximum of

5% cap annually. depending upon how our federal debt situation, cpi could erupt past that. right now we're not hitting that at all. and we have no cap on their increases. so, how do we think about that? >> there is a cap -- there is a dollar amount cap right now, but there is also a percentage cap in terms of what they can -- they pay us. that seems to be a lot -- a lot of lower threshold here that we don't have. >> then again, we in bart are willing to accept that lower cap. maybe bart can speak better to why from their standpoint the dollar cap makes more sense. their thing is it can be much more variable in terms of the one agreement, things they see they don't control. but bringing it down to 10-1/2 million as the budget analyst recommend i think would bring it closer in parity to the other agreement.

>> okay, thanks. supervisor campos. >> thank you very much, mr. chairman. and i think that i share your concerns in term of the parity. and i appreciate that you're willing to go to 10.5 and 14% over the next two years. you know, i don't know that it should be 5%, but they're basically capping it at 5% and, you know, why shouldn't ours be at that level. i'm not saying that it should, but it's just a question that's there. but let me ask you a question. to the extent that we're tying the feeder agreement -- that we're focusing on the fareses at bart. where is bart in terms of its fare discussions right now? >> my understanding is that they will be bringing to their board i think maybe in march or so a proposed fare policy.

maybe i'll let bart directly answer the question. >> and if that's the case, the question that i have is, you know, why not wait until we actually have a better understanding of what the fares are going to look like at bart? that's sort of a question that i -- >> well, i guess the answer to that is we could wait. we don't have any kind of real hard deadline here. as i said at the beginning, we started working on this a year and a half ago when grace and i first came into office. we're withholding payments from each other pending resolution of this. it's something that we've spent now a lot of time getting to this point. it took awhile getting through this process get tog this meeting. we're eager to get this done so we can close this and move forward. that's the reason. it's not a hard deadline. we're already long past that. and then i can let bart speak to the timing. >> please. thank you. >> good afternoon, my name is pamela [speaker not understood] and i'm here to speak on behalf

of bart. so, first, to answer one of the most recent questions, we anticipate taking to our board sometime in this calendar year a renewal of our inflation based fare increase program. and this program raises fares every two years at the rate of national and local inflation less one half percentage point. so, there is some well crafted -- i can't speak to the board for our board as to whether they would approve that, but that is what we plan to take forward to the board. in the fast pass agreement there is a well crafted clause that when we get to the summer of 2014, two years into a year and a half from now, and we have not reached agreement going forward on a reimbursement rate, the reimbursement rate will continue at this inflation-based fare increase level. this is inflation less a one

half percentage point. so, that is, that is what sfmta would look at going forward should we not reach some other type of reimbursement rate. so, and again, we anticipate taking a renewal of the fare increase program to our board, but as of yet we haven't taken it and they haven't acted on it. >> thank you very much. i was wondering if i could ask mr. rifkin just a follow-up question. and, again, i really appreciate all the work that's gone into this. i think it's great that we are where we are. i just think that, you know, there's some questions that remain. maybe you said this already and i apologize. but for the benefit of people who are here watching, where is the mta's payment with respect to the fast pass agreement? is that coming out of operating budget? >> these are all operating budget item. >> and how much more would --

or last, you know, would the mta be paying annually under the term of this agreement? >> i believe -- is it the fy '12? yeah. on the summary sheet, it's the information we provided, we'd be going on the fast pass from 7-8 to 9-1 for the last fiscal year. from about 2.6 to 2.7 on the feeder agreement. >> so -- i guess i do have a question on it, this is fiscal 12. we should talk about the future, what we project on the 13-14. i think they got the better of

us right now on the negotiating to be perfectly blunt. we have a retroactive contract value where they're getting an additional 15% off of what the old value was and an increase of looks like 1.3, 1.3, $1.4 million, and we're getting an additional $75,000 and an increase of about 2.9%. it seems to be very inequitable. this is retroactivity, right? this seems to me like a gift. this is an agreement to be good natured together. that's a lot of money. that's a big difference. >> well, we're retroactive buzz the agreement we broth forth a year and a half ago was rejected. so, we didn't -- we're kind of further in arrears now. what we're -- what we're trying to do, the two agreements are different there. they represent different passenger activity. so, that's a little apples to oranges. that's why there are two different agreements. that's why the terms are different. we believe that this is fair

and equitable what we assumed in our budget. so, this is an additional cost beyond what we've assumed. what we negotiated we believe is fair for muni and bart and to encourage and facilitate regional transit coordination. >> okay. >> if i may. i mean, i think i understand exactly what you're saying, mr. rifkin and i think your team has done a great job with this. i do -- the question for me, right, is if i, if i were to vote on these two agreements and a muni rider asks me, you know, whether or not we are protecting them as much as we can in terms of what comes out

of the system, what is paid by the mta and in turn what the mta has to pay bart, i'm not sure, to be completely honest, how i would answer that question. and i understand that there is a negotiation in good faith and that you have two parties that each has their own financial challenges and constraints and you have two agencies that are trying to work together. but i do worry that we're kind of getting the short end of the stick to an extent, you know. if i can be honest, and that's the concern that i have. again, i appreciate the work that you have done and i understand and respect where you're coming from. >> i'd echo that as well. i respect the work [speaker not understood] put in on this. if we want to get to an

agreement, although i fully concur with the sentiment here. question for you. what happens if we don't agree to this? what happens to payments for the terms of the existing contract? do we go month to month? where do we go? >> we would -- i believe we're both withholding payments from both right now. at some point we're going to have to reconcile because we're kind of screwing up each other's budgets and that's not in anybody's best interest. so, maybe we would make some sort of tentative agreement on to try to clear out retroactivity. although both sides are going to be hesitant to make any kind of agreements not knowing what the ultimate agreement is. so, it just leaves us in this less than ideal state of being years beyond previously expired agreement after spending all the intervening time negotiating what we believe is a mutually agreeable, acceptable, fair and equitable solution.

>> and i understand that. i appreciate that sentiment. i think from i guess what i don't share is the sense right now that this is a fair and equitable agreement. while we're basing them, again -- we have a difference of opinion. we're basing them on bart fare increases which have been, again, they're increasing -- they're getting a retroactive increase of 1.3, $1.4 million. we're getting retroactive increase of $75,000. that to me doesn't seem equitable. similar to what supervisor campos said, i don't feel comfortable saying this is a good deal for us and this is something we should be doing retroactively increasing their values. aside from the go forward stuff that i think we focus on quite a bit as well. >> i guess i'll adi hear what you're saying. * many [speaker not understood]. that's what these agreements are about. and i think we don't look at this as we'll see what we can squeeze out of bart or bart is

looking at what can we skis out of mta. we're really looking at what makes the most sense. especially to facilitate the connections between the two systems. so, i don't look at it as the muni riders are subsidizing the bart riders somehow. this is really about the riders that are moving between the two systems. and it's something we want to encourage because our transit system in the region, it's a regional system and many people move between the systems and that's what these agreements are meant to facilitate. i realize if you stand one next to the other they're looking equitable. again, they're different agreements achieving different goals or facilitating different movement of passengers. >> again, i appreciate that and that perspective. i think from my seat -- the longer term thing we're going to have to improve budget this year and that affects our budgets. if we focus on the free muni debate last year and the dollar amounts involved with that, the small dollar amounts involved

in that $1.4 million goes a long way right now, sunday parking and things we've been very contentious about. so, question to the city attorney. we today -- there has been -- the bla has recommended a number of items here, but we are not -- am i correct to assume prior comments we're not actually allowed to amend them ourselves? we can send them back with instructions to amend, but we're not allowed to amend all of these item? >> deputy city attorney john givener. you -- because the parties have indicated that they are, they are willing to make the changes, you can make the amendment to the resolution today. you would have to hold another hearing because these are -- these amendments would require renoticing of this resolution. so, if the committee says you could adopt the amendment and

then continue these matters to a future meeting. >> okay. colleagues, any questions or further comments? okay. mr. rifkin, thank you. thanks very much. at this time i'd like to open up to public comment if there are any members -- i'm sorry about that. before public comment, mr. rose. legislative analyst report. >> mr. chairman and members of the committee, i would point out on page 5 of our report that the, that the proposed feeder agreement wherein part is paying the sfmta, mr. chairman, that is a totaly voluntary agreement so that bart does not have to enter

into the agreement the feeder agreement or where the sfmta is getting a payment. it's totally voluntary. * that is in contrast to the fast pass agreement. on page 7 of our report regarding the -- regarding that feeder agreement as shown in table 1 on page 7 of our report, that without the 5% annual cap on the payment increases, the payments would increase approximately 6 percent annually, and would result in a total of $33.3 million in payments in bart through sfmta. that is an increase of about 1.2 million in payments over the term of the proposed feeder agreement with the 5% cap in place. and while we believe that the 5% cap is reasonable, we note

that there is currently no floor limiting how much the annual payments by bart and sfmta would decrease over the ten-year term. so, that's why we've made a recommendation regarding that issue. on page 8 of our report, we point out that as shown in table 3, the -- based on the estimated payments for both the proposed fast pass and feeder agreements, that the sfmta would pay an estimated 26.4 million in total net payments to bart from fiscal year 10-11 through 13-14 which represents the overlapping time period of the proposed fast pass and feeder agreements. and then on page -- at the bottom of page 9 of our report, we point out that because the sfmta's 11-12-inch correctthval revenues of 3.6 million from the proposed $10 additional fee for purchasing the fast pass with the bart option are 5.6

million less than the sfmta's 11-12 payments to bart of 9.2 million under the fast pass agreement, for that reason we consider approval of the proposed resolution to be a policy matter for the board of supervisors. that is regarding the fast pass agreement. so, to recap, our recommendations on page 10, we recommend that you amend the proposed resolution. this is file 11 86, to amend the proposed resolution as specified that the proposed feeder agreement would be revised. this is simply to correct the formula for the bart payment increases from 12-13 through 19-20. we also recommend that you amend the proposed resolution required that the proposed feeder agreement be revised to include the floor, as i mentioned, but no more than 5% on decreases in payments. these would be annual payments

from bart to sfmta and then we recommend that you approve that resolution as amended. regarding the fast pass agreement, 12 11 87, we recommend you amend the resolution to impose to reduce the cap from 14 million to 10.5 million for a reduction of 3.5 million. and then i would also point out that we did not recommend approval of that agreement. we say that approval is a policy matter as amended. >> thank you, mr. rose. and a few questions the clerk and city attorney understand that the file has already reflected the revised formula for corrected payment so we do not need to make that amendment ; is that correct? >> that's correct. >> okay. and, mr. rose, just in thinking about this, putting a 5% floor since the contract is based upon a cpi, assuming a 5% deflationary annual number, is that correct? this would be protective of deflation of 5% or more every

year? >> that is [speaker not understood] for changes in rider ship. formula includes rider ship. >> thanks, okay. >> colleagues, any questions of the budget legislative analyst? thank you very much. appreciate your report. and i know bart actually would like to come up and speak again. so, thank you again for being here. >> thank you. i just want to reiterate that we fully support the comments from mr. rifkin and mr. lee. and i appreciate mr. rose's summarization there. so, we do agree to the amendments that have been proposed. and thank you also for the clarification. the feeder agreement, as it is set up, is not only tied to increases or decreases in inflation, but also rider ship. so, it's not just adjusting by inflation, but also by the number of riders connecting from muni to bart. and then going back to the fast pass agreement, before our time, the fast pass was initially accepted on bart in 1983 to help alleviate capacity

problems that sfmta was incurring along the market and mission corridor. so, bart provides a valuable service to the riders of san francisco and to sfmta in providing a direct service along mission and along market bringing passengers from balboa park all the way up to as far as embarcadaro. this is the fast pass was not available to be used on bart. sfmta would no doubt incur additional expenses to carry those riders on their buses. so, we are providing a service. sfmta does set the price of the fast pass. not only the original price, but also the differential pricing that was put in place a couple of years ago. they control the price of the fast pass and level of service that they offer connecting to bart stations. so, we provide supplemental capacity in those corridors and i believe it is a valuable service.

so, and then lastly just to note, before the $10 price differential was put in place, muni still collected all the fast pass sales revenue and a abortion of that fast pass price supported the payments to bart for the service. so, that gets to the point from mr. rose's office that the subsidy from sfmta to bart is $5.6 million. so, there is a portion of the original fast pass price that also goes into the subsidy. and that $5.6 million is approximately the level of revenue loss that bart incurs by offering the discounted reimbursement rate to sfmta. so, we agree it is a regional contribution that both agencies are making to this program, and we support moving forward. >> thank you, i appreciate that. >> thank you. >> just to be clear, you're saying that based upon the fast pass agreement, the kind of revenue loss and gain for you, you kind of wash out; is that correct?

>> we -- by offering the discounted reimbursement rate at did $1.19compared to base rate of $1.75, the annual revenue loss is on the order of about $5 million for us. * >> okay. and -- >> and that is the deepest discount in the bart system. >> okay, okay. >> thank you. >> supervisor avalos? >> just a quick question. just a quick question. mr. rose touched upon it, that the feeder agreement, he described i think he said voluntary. and historically how does that agreement come about? no one really describes anything where there is a payment made as voluntary. so, i'm a little bit surprised by that wording and how did this agreement first come about, what was the rationale behind it and policy objective? >> it predates me. back in 1987 there was a decision made regionally that

bart should contribute to sfmta for the bringing the riders to the bart system. and, so, it has continued to that date. and as mr. lee said, it was to be raised on the number of connecting riders. but there was i guess the available -- the data was not able to be collected. so, the metropolitan transportation commission changed the formula to be linked to sales tax. which is somewhat reflective of the economy and the level of rider ship and the health of the bay area as the economy does better sales tax goes up, ridership goes up. and as it goes down, so does ridership follows along accordingly. so sales tax was a proxy i would summarize from what mta changed, how they changed it back in the 1989. but going forward, bart has just -- we viewed this as a contribution that we're willing to make and we have done that. so, we're willing to continue to make the contribution. >> okay.

seeing no other questions, thank you very much. like to open up to public comment if there are any members of the public that wish to comment on items 7 and 8, please step forward. mr. paulson. ♪ looks like a lovely feeder bart feeder money made. you're going to take my money away when you come and take the money away standing by a feeder meter and you're going to get a glimpse of a money reader and you take my money away and how am i supposed to, if i don't have the money, give back give back give back to where my bart belongs get back, get back and they help bring the budget along budget left his home in [speaker not understood] zone and you have to have it back right knack get back, bart get back to the fast pass track

get back get back you're gonna have a fast pass last ♪ i want to lastly say... ♪ you've got to have bart miles of bart and a fast pass on track and i hope your budget lasts the first [speaker not understood] bart ♪ thank you. >> thank you. any other speakers or singers? all right. seeing none, public comment is closed. colleagues, items number -- items 8 and 9 are in front of us. i think based upon the bla's recommendation regardless, we're going to have to continue this item to make those amendments. so, i'd like to make a motion we'll continue to the call of the chair. i will also just comment, mr.

rifkin, i don't feel comfortable right now moving this forward even with these recommendations. so, i'd like to speak with you or your staff about how you view these agreements and the parity. i appreciate that a lot of hard work has gone into it. seems like to me, though, we're getting the raw end of the stick and would like to understand that more. so, colleagues, do you have any other comments? okay. >> i'd like to think that even where the cap for the feeder agreement is at 5%, the cap for bart -- the fast pass agreement is what looks like under the budget analyst recommendation, about 14%. that to me is still pretty high and i'd like to take that back to being rediscussed. >> thank you, colleagues. if we can do that, take that motion to the call of the chair without opposition. so moved. >> mr. chairman, if there are any actions on the proposed amendments