MINUTES OF THE SCRRA BOARD OF DIRECTORS MEETINGS JANUARY 8, 2010 ITEM 5 BOARD MEMBERS/ALTERNATES PRESENT: VCTC: KEITH MILLHOUSE (CHAIR) 1 (1 vote)

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1 MINUTES OF THE SCRRA BOARD OF DIRECTORS MEETINGS JANUARY 8, 2010 ITEM 5 BOARD MEMBERS/ALTERNATES PRESENT: VOTES VCTC: KEITH MILLHOUSE (CHAIR) 1 (1 vote) METRO: RICHARD KATZ (VICE-CHAIR) 1 (4 votes) MICHAEL ANTONOVICH 1 1 ARA NAJARIAN 1 DON KNABE 1 1 BEATRICE PROO BOB BARTLETT SANBAG: PAUL EATON 1 (2 votes) PATRICK MORRIS 1 1 PATRICIA GILBREATH OCTA: ART BROWN 1 (2 votes) RICHARD DIXON 1 RCTC: RON ROBERTS 1 (2 votes) DARYL BUSCH 1 GREG PETTIS EX-OFFICIO MEMBERS PRESENT: SCAG: PAUL GLAAB STAFF PRESENT: ERIC HALEY, Chief Executive Officer STEVE WYLIE, Assistant Executive Officer, Finance & Administration GRAY CRARY, Assistant Executive Officer, Operating Services HELEN PARKER, SCRRA Counsel OLGA YERO, Board Secretary Meeting minutes are presented in a format that corresponds with the Board Meeting Agenda, which is incorporated by reference with these minutes. SCRRA Board Agendas are available online at under the Board Agenda link, or from the Board Secretary at Director Knabe joined the meeting during discussion of Item 7; Director Antonovich joined the meeting during discussion of Item 8. Directors Morris and Knabe left following Board Member Comments. HOA

2 Transmittal Date: January 20, 2010 Page 2 1. Call to Order The regular meeting of the Southern California Regional Rail Authority Board of Directors was called to order at 10:06 a.m. at the Southern California Association of Governments (SCAG) offices, located at 818 W. Seventh St., 12 th Floor San Bernardino Conference Room, Los Angeles, California. Chairman Millhouse presided over the meeting. 2. Pledge of Allegiance Director Eaton led the assembly on the pledge of allegiance. 3. Public Comment Mr. Daniel Garcia, from the East Los Angeles/San Gabriel Valley area, voiced his concern on the lack of guidance feature at the train stations for the blind and young children, as he believes it is a safety hazard and the blind may fall onto the tracks thinking it s a doorway or step down. He also asked the Board to take into consideration the financial restraints the disabled are already enduring when considering a fare increase. 4. Election of Officers Vice-Chair Katz made a motion to nominate current Chairman Keith Millhouse, from Ventura County, to the position of Chair. The motion was seconded by Director Morris. There was no opposition and the motion passed unanimously. Director Morris made a motion to nominate current Vice-Chairman Richard Katz to the position of Vice-Chair. The motion was seconded by Director Roberts. There was no opposition and the motion passed unanimously. Director Brown made a motion to close nominations, seconded by Director Eaton. There was no opposition and the motion passed unanimously. Director Dixon asked which counties were next in turn for the Chairmanship and Vice Chairmanship and it was clarified that Los Angeles County was next in turn for the Chairmanship, and San Bernardino County for the Vice-Chairmanship. Chairman Millhouse noted that although this has been a very challenging year and thanked the Board for their leadership and support, with special thanks to Director Roberts and Vice-Chair Katz. CONSENT CALENDAR Chairman Millhouse stated that all matters on the Consent Calendar would be approved in one motion unless a Board member or member of the public requested separate action on a specific item. Upon a motion made by Director Eaton, seconded by Director Bartlett, the Board approved the Consent Calendar (Items 5 and 6). There was no opposition and the motion passed unanimously. 4. Approval of Minutes December 11, 2009 Board meeting ACTION: The Board approved the minutes of the December 11, 2009 Board meeting.

3 Transmittal Date: January 20, 2010 Page 3 5. Contract No. C Eastern Maintenance Facility Change Order Approval Brutoco Engineering & Construction, Inc. ACTION: The Board authorized the Chief Executive Officer to amend Contract No. C , Eastern Maintenance Facility, with Brutoco Engineering & Construction Inc., to issue a Change Notice in the amount of $499,946 and authorize execution of a subsequent Change Order with Brutoco Engineering & Construction, Inc. The value of this Change Order is in excess of the $150,000 limit delegated to the Director, Engineering and Construction in SCRRA s Contract Procurement and Policies Manual (CON-21) and therefore must be authorized by the Board. This Change Order combined with all others will not exceed the total contract funding authorization of $35,333,925. REGULAR CALENDAR 6. Fiscal Year Comprehensive Annual Financial Report and Single Audit Report Mr. Edward Enriquez, Manager, Accounting, thanked staff agency-wide for their cooperation in this effort, and the Finance Department staff for their tremendous effort in getting this report completed timely. He noted that the firm of Mayer Hoffman McCann, P.C. has audited and issued an unqualified opinion concluding that the CAFR presents fairly, in all material aspects, the financial position of the Agency and that the basic financial statements have been compiled in accordance with generally accepted accounting principles. As part of the audit engagement, Mayer Hoffman McCann P.C. also conducted the federally required Single audit. Mr. Enriquez noted that the Fiscal Year audit report concluded that SCRRA complied in all material aspects with federal requirements for the year ending June 30, At the conclusion of the audit, there were no reportable significant deficiencies, and as a result, the auditors did not issue a Management Letter (SAS 112) for Fiscal Year The auditors have indicated that a housekeeping letter addressing best practice recommendations will be issued. Once the housekeeping letter is available, the auditors will meet with Management to discuss. Staff will present and discuss the best practice recommendations with the Safety and Operational Oversight Committee. Mr. Mark Davis, with the firm of Mayer Hoffman McCann, P.C., provided a brief review of the audit, processes and findings, as required. There was no staff recommendation. The Board received and filed this report. 7. Current Year Budget Reduction Actions; Amendment to the FY (FY10) Budget Mr. Eric Haley, Chief Executive Officer, noted he is honored to be here and thanked the Board for allowing him the opportunity to serve in this capacity. Mr. Haley noted that Mr. Steve Wylie will briefly highlight a recommended set of actions that will allow the Board flexibility in the current fiscal year as well as make a substantial down payment on meeting the upcoming challenges for FY He clarified that staff is not recommending a fare increase in this fiscal year, however, in order to close the revenue gap staff is proposing a series of service suspensions and service cuts which will save $1.15 million this fiscal year and expand to nearly $3.3 million in savings for FY He added that staff s assessment of the effect on our passengers is that 98.5% of the riders will feel no impact from these actions. Mr. Haley further noted that should finances improve and ridership increase, lines can be selectively reinstated; and should a member agency wish to

4 Transmittal Date: January 20, 2010 Page 4 increase their financial share to preserve a train and take action by January 22, operations can continue uninterrupted. He mentioned other additional changes since the Board last met in December, which include a hard freeze on both new hiring and filling non-safety positions that are currently vacant; SCRRA employees will forego time off with pay benefits during four pay periods; and the Rail2Rail program will be funded through June 30, 2010, while the affected agencies negotiate a new agreement. Mr. Haley noted that after this combination of recommended actions is taken, the shortfall will be approximately $2.4 million. Therefore, in order to meet this obligation, staff is proposing that the Board balance the current budget through the partial use of $9.4 million in reserve funds held in trust by SCRRA. A commitment of approximately one quarter of these funds in tandem with targeted service cuts and budget austerity will cover the immediate challenge. He concluded by noting that staff will be accelerating the budget process, as suggested by several Board members a few weeks ago, and staff will coordinate a Budget Workshop to take place during the next Board meeting, January 22, Mr. Steve Wylie, Assistant Executive Officer, Finance & Administration, explained the objectives for this meeting, which include completing the necessary steps to comply with CEQA and adopt findings, respond to Board direction by placing FY budget challenge in the context of FY and beyond, and making recommendations and provide options for remainder of FY , as well as outlining the plan for FY budget process. Mr. Wylie presented a PowerPoint which included detailed information on non-service related expense reductions, costs of staffing, six packages of service reductions, member agencies balances vs. shortfall, options available for FY and anticipated challenges for FY and beyond. A copy of the PowerPoint has been incorporated with these minutes for reference (Attachment 1). Mr. Wylie also briefly reviewed some of the responses to suggestions from the public and the Board during the last two meetings, as detailed in Attachments A and B of the staff report. Mr. Haley stated that there is a $15 million challenge in FY11 and more sacrifices will need to be made; however, it is crucial that the Board act today on the FY10 budget. He further commented that staff has spent the last three weeks or so working diligently to develop this set of recommendations to close the gap 100%, and noted that the staff report contains enormous levels of detail. He thanked Mr. Drew Phillips, Manager, Budgets, for all his efforts and a terrific job in gathering all the data, and Mr. Wylie for his diligence. Mr. Haley clarified that the six service-reduction packages proposed are independent of one another, and the driving point beyond operational cost are the train crews and the size of the labor force that s maintained today and that will move forward with the Amtrak contract, and explained they are packaged in this fashion to get the maximum benefit from an operational cost standpoint. Mr. Haley clarified that each member agency may act individually to continue routes of critical importance by using surplus funds. Director Antonovich commented that, relative to the development of the FY budget, he suggests that staff work with the Antelope Valley Transit Authority on a potential partnership to contract the municipal buses during non-peak hours as this may not only be cheaper but would also provide transit for commuters in Antelope Valley and Ventura County. Chairman Millhouse agreed noting that it is important to also work on better

5 Transmittal Date: January 20, 2010 Page 5 coordination of schedules, and suggested this may be something to vet through the Safety and Operational Oversight Committee. Director Najarian asked for clarification on the savings from the proposed service cuts and asked whether the number presented represents a net savings, and Mr. Wylie confirmed that amount represents a net savings (revenue less expenses). Chairman Millhouse called upon members of the public who had requested to speak on this item. Mr. Justin Nelson, stated he favors a fare increase in lieu of service cuts, noting that he lives in Riverside and service is already very limited. He commented that 5 of the 6 service cut packages proposed by staff impact the Inland Empire, which already has limited inter-county bus service especially on the weekends. He noted these cuts would disproportionally impact transit dependent riders and encouraged the Board to reconsider cuts to the Inland Empire. He also asked the Board to consider extending the San Bernardino Line to the Riverside Downtown station on the weekends, as the trains are already stored there. Ms. Charlie McDaniel thanked staff and the Board for their efforts and the decision to not raise the fares, and suggested that the Board consider coffee kiosks at the stations, since a lounge car is not a beneficial option for the Agency. Mr. Daniel Garcia asked the Board to consider vending machines and/or food trucks at the stations which he believes would help generate revenue. Director Dixon asked staff to clarify station ownership, for the benefit of the public, as it relates to having vending machines and food vendors. Chairman Millhouse explained that Metrolink does not own the stations, and Mr. Haley added that of the 54 stations, only five in Riverside County are owned by RCTC and the others are owned, secured, and maintained by the individual communities and cities. Therefore, Metrolink as an entity does not have the ability to mandate concession services on other people s properties. Director Morris made a motion to approve staff s recommendations, except recommendation 3, on potential service reductions, and suggested each recommendation under 3 be discussed and voted on separately. Director Dixon seconded. There was no opposition and the motion passed unanimously. ACTION: The Board unanimously approved staff s recommendations 1, 2, 4, 5, 6, 7 and 8 as noted below. 1) Responded to the suggestions from the public and others on service changes to accomplish proposed budget reductions received orally and in writing in the noticed public hearing concluded on December 11, 2009 as summarized in Attachments A & B of the staff report (suggestions to avoid either service reductions and/or fare increases); and 2) Found that service reductions, as proposed, are exempt from CEQA because these reductions do not constitute a project for CEQA as defined, and in the alternative, made

6 Transmittal Date: January 20, 2010 Page 6 the finding that there exists a fiscal emergency, as defined in California Public Resources Code (PRC) , as illustrated in Attachments D & E of the staff report, caused by the failure of agency revenues to adequately fund agency programs and facilities, as detailed in Attachment G, which are adopted; 4) Directed the Chief Executive Officer to further review all unfilled positions, excluding safety related positions, on a case by case basis from the perspective of a hard freeze on new hiring. 5) Authorized the elimination of staff Time-Off-With-Pay (TOWP) accruals for up to four (4) pay-periods, approximately 15% of employee accruals, during the year ended June 30, 2010 for all employees of any status receiving TOWP benefits or its calculated equivalent. The elimination of four pay-period equivalent accruals is estimated to save the agency s operating budget a minimum of $0.211 million; and 6) Authorized the allocation of $500 thousand in additional funding authority to support the Rail-2-Rail partnership of the SCRRA, CALTRANS, and AMTRAK for the balance of the fiscal year to be funded by additional subsidies provided from affected Member Agencies (LA Metro, OCTA, VCTC); and 7) After consideration and/or authorization of each, all, or any combination of the recommended actions listed, requested any additional subsidy necessary to balance the FY 10 budget from each Member Agency, whether from Member Agency s existing prior year authorizations (previous period operating surplus funds totaling, in the aggregate an estimated $9.4 million and distributed per Member Agency as shown on Attachment F), if any, or from equivalent other eligible non-federal funding as necessary. 8) Set the Board meeting of January 22, 2010 as an early planning session for the FY 11 budget. Director Brown made a motion to approve staff s recommendation 3a and 3b, seconded by Director Busch. There was no opposition and the motion passed unanimously. ACTION: The Board unanimously approved staff s recommendation 3a and 3b as detailed below. 3a)Reduce services on the Inland Empire/Orange County (IEOC) line through the elimination of 4 Saturday trains and 2 Sunday trains, leaving 1 round trip each Saturday and Sunday. Reduce services on the Orange County line through the elimination of 4 trains each Saturday and Sunday leaving 4 trains each Saturday and Sunday. This action is estimated to produce a net subsidy savings of $0.310 million in FY 10 and up to $0.745 million in FY 11, as detailed on Attachment F. The specific trains to be eliminated will be determined upon a re-evaluation of the remaining schedule; and 3b)Reduce service on the IEOC line through the cancellation of 2 week day off-peak trains 852 and 853. This action is estimated to produce a net subsidy savings of $0.219 million in FY 10 and up to $0.604 million in FY 11, as detailed on Attachment F;

7 Transmittal Date: January 20, 2010 Page 7 The Board ensued in a lengthy discussion relating to the remaining recommendations (3c, d, e, f) and the proposed service reductions. Regarding recommendations 3c and 3f, Director Morris proposed that Metro consider sharing the cost to retain these services as these trains service both LA County and San Bernardino County and it goes through 6 stations in Los Angeles County before it reaches San Bernardino. He noted that SANBAG is currently carrying the entire burden of the cost, and proposed a 60/40 split (60% Metro / 40% SANBAG). Chairman Millhouse added that, as it relates to elimination of service noted under 3e on the Ventura County Line, he explained that these trains provide service to Los Angeles County as many of these trains do not operate all the way into Ventura County. He asked that Metro consider assuming the cost to operate these trains if it would like this service to remain in place. Director Najarian and Knabe commented that it is important to look at trains with very poor performance that may not warrant consideration. Mr. Haley explained that the trains outlined in these recommendations are all poorly performing trains with fewer than 100 passengers, and in some instances considerably fewer. He noted that staff went through a sifting process from the most productive lines/trains to the least productive, and these were the trains identified and proposed for service cuts. There was some debate about the amount that Metro would have to assume to retain these services through the end of this fiscal year (June 30, 2010). After some discussion between board members, the Metro delegation agreed to the 60/40 split. Director Najarian noted Metro supports transit use along the east-west corridor to San Bernardino, and he will support the 60/40 assumption of costs; however, he noted that Metro s good will should be remembered in the future should San Bernardino obtain extra funds. Vice-Chairman Katz concurred and noted it is important to keep the system operating. He also noted that, Metro would like to be remembered, in terms of bookkeeping, as giving more than its share in terms to keep the system running and asked that if in the future extra funds are available. ACTION: Upon a motion introduced by Director Morris, seconded by Director Najarian and unanimously approved by the Board, the Board voted against staff s recommendations 3c, d, e, f as detailed in the staff report. Instead, the Board agreed to retain these trains in service through June 30, 2010, and Metro and SANBAG agreed to assume a 60%/40% split (respectively) to cover train service as detailed in c, d, and f below; Metro also agreed to assume 100% of VCTC s cost to cover train service as detailed in e below. 3c)Retain San Bernardino line Saturday services - 4 trains, numbers 372, 373, 378 and 379. (60% Metro / 40% SANBAG) 3d)Retain Antelope Valley/San Bernardino lines services - 4 Saturday trains on the Antelope Valley line, trains 266, 267, 270 and 271, and 2 Sunday trains on both the Antelope Valley and San Bernardino lines train numbers 260, 265, 356 and 361.

8 Transmittal Date: January 20, 2010 Page 8 3e)Retain a total of 8 weekday trains on the Ventura County line - 103, 105, 107, 108, 112, 114, 900, and 901. (Metro pays VCTC s share) 3f) Retain 2 mid-day weekday trains on the San Bernardino line train numbers 306 and 323. (60% Metro / 40% SANBAG) There was no opposition and all motions passed unanimously as detailed above. Director Knabe commented that, as it relates to regional goods movement and collaborative purchases, at some point there was multiagency task force and suggested reassembling this task force to examine common areas as opportunities for potential savings on multiagency basis. Mr. Haley explained the forum still exists and is being expanded aimed at federal reauthorization, and noted that there are potentially valuable cooperation with our station cities as well. The concept has been expanded from previous discussions and it is important to reengage vendors and reemphasize the mutual benefit of collaboration where possible. Director Morris noted that, as it relates to the new partnership with Amtrak and our current structure, it is critical that the Board and staff examine our own organizational charts to identify overlaps and avoid any duplicate staff and services as these may represent potential savings. Vice-Chairman Katz concurred, noting that as it relates to High Speed Rail, he would like staff to also examine expedited ways to thin out that corridor and be more efficient, which may also represent a cost savings. Director Dixon requested an update on the progress with Amtrak and Mr. Gray Crary, Assistant Executive Officer, Operating Services, reported that at the last Board meeting the Board approved delegation of the execution of the contract to the Chief Executive Officer with the Ad Hoc Committee s concurrence. He noted staff has exchanged documents with the Ad Hoc Committee and there is a meeting scheduled on January 15 with the Committee and the CEO to review the documents and answer any questions. He anticipates being under contract shortly. 8. Purchase Order No Authorize CEO to Execute Asset Purchase Agreement for Radio Frequency Licenses Necessary for Positive Train Control from Maritime Communications/Land Mobile Upon a motion by Director Brown, seconded by Director Busch, the Board approved staff s recommendation. There was no opposition and the motion passed unanimously. ACTION: The Board authorized the Chief Executive Officer to (1) enter into an Asset Purchase Agreement with Maritime Communications/Land Mobile, LLC (MCLM), for the purchase of Federal Communications Commission (FCC) licenses in the working range of 220 MHz band (the AMTS band), subject to the fundamental business terms set forth in this report, and (2) make the payments called for in the APA, including a deposit into escrow upon execution of the APA of $717,800, representing 10% of the maximum purchase price,

9 Transmittal Date: January 20, 2010 Page 9 which funds shall be returned to Metrolink unless the license transfer is approved by the FCC within a specified period of time. 9. Chief Executive Officer s Report Agency Update: None. Operations Update: None. 10. Board Member Comments Director Busch invited Board members to the Grand Opening of the Perris Multimodal Transportation Center. The event will be held this coming Monday at 2:00p.m. Chairman Millhouse asked staff to discuss in the future a review of Metrolink s schedules and routes of trains to maximize ridership, as there may be some shifts since 1992 and the current routing system may not be the best in terms of crew efficiency, passenger potential and revenue. He suggests this is vetted through the Safety and Operational Committee. Director Dixon asked for clarification on detailed closed session items and whether it would be legally feasible to have OCTA legal staff make summarized presentations on these issues to their respective Board. Director Knabe noted that he has asked that their agency s counsel reviews every item. Ms. Parker clarified that Metrolink has made it as easy as possible for its member agencies to hold its own closed sessions if needed on any Metrolink item that could financially impact the member agency, and noted she would be able to work with OCTA s counsel on this. Director Proo acknowledged staff and volunteers involved in the coordination of this year s Holiday Toy Express and thanked them for their efforts and for another successful production. Chairman Millhouse thanked staff for all their efforts and sacrifices to balance the budget, and noted that riders should recognize the sacrifices made by staff, and the analysis that has gone into the actions and decisions made by the Board. CLOSED SESSION 11. Closed Session Counsel announced the Board would convene to Closed Session to discuss the items listed on the posted agenda. a. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION Pursuant to Subdivision (b) of Government Code Section (1 or more potential cases)

10 Transmittal Date: January 20, 2010 Page 10 b. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION Pursuant to Subdivision (a) of Government Code Section Anticipated litigation arising out of the December 23, 2009 collision between a Metrolink train and an automobile on the Antelope Valley Line, near Pacoima, CA c. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Pursuant to Government Code Section Property under Consideration: Properties: (1) One Gateway Plaza, Los Angeles, CA (2) 700 S. Flower, Suite 2600, Los Angeles, CA Agency Negotiator: Steve Wylie, Assistant Executive Officer, Finance & Administration SCRRA Negotiating Parties: (1) Velma Marshall, Deputy Executive Officer, Real Estate Metro (2) 1055 Seventh LLC Under Negotiation: Price and Terms of Payment d. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED and EXISTING LITIGATION Pursuant to Subdivision (a) and (b) of Government Code Section Anticipated and existing litigation arising out of the September 12, 2008 collision between a Metrolink train and a Union Pacific freight train on the Ventura County Line, near Chatsworth, CA, including but not limited to:fravola v. SCRRA, Veolia Transportation Inc., Connex Railroad LLC, MTA - PC043734; Magdaleno v. SCRRA, et al- PC043703; Jeremy Schneider v. SCRRA, a public entity also known as Metrolink, Connex Railroad LLC, Veolia Transportation, Inc.- BC405966; Carolyn Rambo v. SCRRA, a public entity also known as Metrolink, Connex Railroad LLC, Veolia Transportation, Inc. - BC405967; Albert Cox and Marianne Cox v. SCRRA dba Metrolink, Veolia Environment, SA, Veolia Transportation Services, Inc, a division of Veolia Environment, dba Connex, Connex Railroad LLC. - BC406161; Steven Lindell v. SCRRA, Veolia, Connex, and MTA - PC044349; Doug Smith v. SCRRA dba Metrolink - PC044535; Gracilda Tejero Tiu, Jay Tiu, Pomino D. Tejero, and Victoria R. Tejero v. SCRRA dba Metrolink, Veolia Transport Service Inc., Connex Railroad LLC, Estate of Robert M. Sanchez - BC407455; Kong Chao and Caryn Chao v. Veolia Transportation, Inc.; Connex Railroad, LLC; Estate of Robert M. Sanchez, deceased - BC400547; Michelle Baker, et al. v. SCRRA, MTA, Veolia, Connex, Mass, Herzog, Bombardier, UPRR - BC404544; Janice M. Kish, et al v. SCRRA, MTA, Veolia, Connex, Mass, Herzog, Bombardier, UPRR - BC404545; SCRRA v. Connex - CV The Board convened to Closed Session at 11:41a.m. and reconvened in open session at 12:10p.m. at which time Counsel indicated that the Brown Act did not require a report on the record for any of the items. 13. ADJOURNMENT There being no further business for consideration by the Board, the meeting was adjourned at 12:10 p.m.

11 Transmittal Date: January 20, 2010 Page 11 Respectfully submitted, Olga Yero, Board Secretary/Senior Executive Assistant