Subject: Houston Metro Transcript
From: "Nell McGarity" <[email-masked]>
To: <[email-masked]>, <[email-masked]>, <[email-masked]>, <[email-masked]>, "Hilary Rosen" <[email-masked]>, "Alex Slater" <[email-masked]>, "Jacob Maccoby" <[email-masked]>, <[email-masked]>
Date: Thu, 16 Sep 2010 18:38:53 -0400

All-Please find below a partial transcript of the Houston Metro board meeting from today. The selection below are the sections where the FTA was referred to.

Please let me know if you have any questions.

Thanks,
Nell

Board meeting transcript

Paul Magaziner

Corridors United

Regardless of what I'm about to read and say, we think the mayor chose wisely with the two men in the center... this is America, we can agree to disagree, which we do, but ultimately I think you'll come around to our way of thinking.

The FTA report was damning... every footnote report in this report is damning as to the widespread conspiracy.  This board has chosen to make the easy decisions. This board should be ashamed of its may 14th 2010 answer to the FTA regarding a Metrorail contract that said on the basis of a voicemail.  This is an indictment of the entire metro team.  Metro is defined by the FTA has become another Enron. As I told Mr. Garcia a month ago, the worst thing that can happen to you is that the FTA gives you the 900 million.  Can this board guarantee taxpayers that the FTA will give metro a full funding grant in the future? Since the FTA will reevaluate the current dismal financial picture, no. Both the old and the new metro seem to be afraid to go back to seek voter approval for bonding measures.  The last metro board threw the dice.  As a result the new metro board will crap pout.  Either stop pretending now, or the end results belong to this board.

Board Chair Gilbert Garcia

You know that you're about double the time.

Paul Magaziner

One little paragraph.

Gilbert Garcia

You have it.

Paul Magaziner

The mayor, while a candidate for mayor, had a good idea-lower transit fares.  Bring back the special day passes and monthly fair promotions and work with Houston charities.  I'd be happy to answer any questions.

Gilbert Garcia

I'm not even sure where to begin the response, but I'm gonna respond to many of these.  Let me just mention a couple of things.  I was part of the FTA response.  We submitted that voicemail.  It was part of the record-he asked us, give us everything, and that's what we did.  It was part of the record in the decision process.  It was part of the record...these are challenging times.  We're happy to show the cash flows.  The challenging times reflect the challenging times we're all in because we're in a recession. You're going to see a budget today that is approx 30percent lower

I want to say that I agree with everything Gilbert just said.  We're not trying to hide any of this but it is a realty tough time we're in right now, and we're committed to that, and we're committed to going back to the voters, and I would point out that these light rail lines are one of the few significant pieces of transportation infrastructure in the Houston area that the people of Houston voted on.  We're committed to voters and committed to transparency

Judge Jefferson

Forward looking, not backward, getting metro to where we want it to be.

(Another colleague)

This city has for far too long not had the vision that it needed to build the light rail that we desperately needed.  It's incumbent on the board and this organization to administer the plan as we said we would.  This idea is a good idea.  We need mass transit, we need more of it, and we need it very, very fast.

Gilbert Garcia

Were gonna give you one more minute.

Paul Magaziner

Voters approved five new alignments, and when you look at new start you're suppose to be able to put together a twenty year cash flow analysis with correct numbers.  Where is it? This isn't it. This is off by 8 or nine billion dollars. It's not about the 2011 budget.  Where's the financial plan.  Voters didn't approve three alignments in minority neighborhoods.  The timeline was 4 of them substantially completed in 2012.  It's not your fault, but you should stop now and go back to the voters and get the proper bonding authority because you don't have it.

Judge Jefferson

Am I correct then in understanding the need for an addition vote, that in your opinion the original bonding authority 640 million, was insufficient in order to complete the five lines that were completed for in the 2003 referendum?

Paul Magaziner

That money as never enough.  It was enough to build 20 miles at cost at that time. This board has the ability to go back to voters.  This board needs to go forward with 2.6 billion, 3 billion, cause that's what you need.  You want to keep it, let votes decide. It's not y'all's fault.  It's kinda sad, truthfully.  You can't hand me a table 17 and show me that we can afford...

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Mark Hoag

Why do y'all have to start all over with these rail cars just because they came from, what country was it? Spain? Why do y'all have to start all over?

George Greanias

I kinda want to say like my parents used to say-"because." The federal transit administration procurement process that metro process followed in buying from CAF was that metro systematically failed to follow practices, and that the procurement process was fatally flawed.  And they said that if you're going o be eligible for that money you're going to have to agree to 1. Re-procure the cars and 2. Agree to submit a procurement process a plan that we feel comfortable will give you a complete and fair competition.  That's why we're ending up doing this. Now we have the option if we don't want the 900 million dollars we can continue with this car contract but I don't think that'd be the best use of taxpayer dollars.

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Gilbert Garcia

There are 2 things I wanted to comment on. 1 FTA update, 2, budget overview. I want to make sure everybody is aware of all the hard work that is going into securing the full funding agreement.  In that meeting was FTA administrator, deputy, me, George, members of our congressional delegation including Sheila Jackson Lee, Al Green, Mayor Parker, senior staff members for our two senators, and we are all unified in trying to solve the mobility problems of Houston and we are all unified in completing the three light rail lines.  The earmarks are there still in the president's budget, they confirmed that, that lets us know we are on the right path.  2. There is no doubt it's a difficult budget.  I'm letting everyone know, people have worked very hard, we're gonna be great stewards of taxpayer dollars.  We are presenting a difficult budget with significant sacrifice, not in service, but sacrifice by a lot of employees, that's.  I'm gonna turn to George Grenias.

George Greanias

I do want to add some additional detail.  I see the budget as an evolving process because we have a lot of challenges.  My proposal is that we lay out the major architecture of the budget and then we will review the budget over the course of the year.  We've already had discussions of our strategic priorities.  Rail is only one part of a strategic transit system.  We cannot afford to avoid looking at other ways to deliver that infrastructure.

---

What the FTA told us on September 8 is that we must re-procure the rail cars if we want to be eligible for the 900 mil.  They said once you have made the decision to re-procure and you have a process that we are comfortable with, we will work with you on the full agreement.  But even as that is going on, the 150 mil that is the current federal budget stays put. And the 150 million in 2011 fed budget stays put.  Recovery funds of up to 64 million remain committed.  In addition, we will get you these letters of no prejudice this is a situation where we wan tot spend our local money, we need these letters as the blessing of the federal government that we can spend this money. They've indicated that if we agree to re-procure and agree to move forward, those items will move forward as well.  So with that background, we had a series of assumptions we built into the budget.  We're using a pragmatic conservative scenario.  We want to act quickly but think long term.  We don't want to cut into the muscle of the organization.  We want to make sure we keep transit services paramount. We want to commit to a clearer disclosure of operating costs.  We want to be very clear on federal fund processes.  We're not counting on the $900 million coming in-we believe it will come in, but we're not counting on it as a stream of revenue in 2011.  No fare increase in 2011.  You do the math on it, if you compare the current fiscal year to fiscal 2011, it's a drop of 31%.  It depends on how things develop. It's about putting the organization on a sound financial footing.  It's about catching up as best we can on the rail project.  We have a lot of catching up to do.

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I want to close with this.  The FTA had a choice, they could have said your procurement is flawed, and we're going to deny you a grant.  What they said instead was your procurement was flawed because of the previous board's mistakes, but we do not think that is a reason to penalize the commuters and the people of Houston, and so we're going to work with you on this grant. We should not penalize the transit users for the mistakes of the past.  We need to face forward and say we are where we are, we know what we have to do and we're committed to doing it because it's in the best interest of the people we're here to serve.