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11 November 25, 2013 Budget & implementation• TIME: DATE: LOCATION: • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE MEETING AGENDA 9:30 a.m. Monday, November 25, 2013 BOARD ROOM County of Riverside Administrative Center 4080 Lemon Street, First Floor, Riverside 'P-COMMITTEE MEMBERS <tqJ Ella Zanowic, Chair I Jeff Hewitt, City of Calimesa Douglas Hanson, Vice Chair/ Patrick Mullany, City of Indian Wells Roger Berg/ David Castaldo, City of Beaumont Mary Craton/ Randy Bonner, City of Canyon Lake Greg Pettis I Kathleen DeRosa, City of Cathedral City Steven Hernandez/ Eduardo Garcia, City of Coachella Scott Matas I Yvonne Parks, City of Desert Hot Springs Larry Smith I Robert Youssef, City of Hemet Bob Magee I Natasha Johnson, City of Lake Elsinore Rick Gibbs/ Kelly Bennett, City of Murrieta Steve Adams/ Andy Melendrez, City of Riverside Ron Roberts/ Jeff Comerchero, City of Temecula John F. Tavaglione, County of Riverside, District II Jeff Stone, County of Riverside, District Ill 'P-STAFF <tq/ Anne Mayer, Executive Director Theresia Trevino, Chief Financial Officer 'P-AREAS OF RESPONSIBILITY <tq/ Annual Budget Development and Oversight Competitive Federal and State Grant Programs Countywide Communications and Outreach Programs Countywide Strategic Plan Legislation Public Communications and Outreach Programs Short Range Transit Plans RECORDS Comments are welcomed by the Committee. If you wish to provide comments to the Committee, please complete and submit a Speaker Card to the Clerk of the Board. COMM-BI-00016 Tara Byerly From: Tara Byerly Sent: To: Tuesday, November 19, 2013 2:06 PM Tara Byerly Cc: Jennifer Harmon Subject: RCTC: Budget and Implementation Committee Agenda -11.25.2013 Importance: High Good afternoon Members of the Budget and Implementation Committee: Attached below is the link to the Budget and Implementation Committee agenda for the meeting scheduled @ 9:30 a.m. on Monday, November 25. http://www.rctc.org/uploads/media items/budget-and-implementation-committee-november-25-2013.original.pdf Please let me know if you have any questions or concerns. Thank you. Respectfully, Tara S. Byerly Senior Administrative Assistant RCTC 4080 Lemon Street, 3rd Floor Riverside, CA 92501 (951) 787-7141 1 • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE www.rctc.org AGENDA* *Actions may be taken on any item listed on the agenda 9:30 a.m. Monday, November 25, 2013 BOARDROOM County Administrative Center 4080 Lemon Street, First Floor Riverside, California In compliance with the Brown Act and Government Code Section 54957.5, agenda materials distributed 72 hours prior to the meeting, which are public records relating to open session agenda items, will be available for inspection by members of the public prior to the meeting at the Commission office, 4080 Lemon Street, Third Floor, Riverside, CA, and on the Commission's website, www.rctc.org. In compliance with the Americans with Disabilities Act and Government Code Section 54954.2, if you need special assistance to participate in a Committee meeting, please contact the Clerk of the Board at (951) 787-7141. Notification of at least 48 hours prior to meeting time will assist staff in assuring that reasonable arrangements can be made to provide accessibility at the meeting. 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. PUBLIC COMMENTS -Each individual speaker is limited to speak three (3) continuous minutes or less. The Committee may, either at the direction of the Chair or by majority vote of the Committee, waive this three minute time limitation. Depending on the number of items on the Agenda and the number of speakers, the Chair may, at his/her discretion, reduce the time of each speaker to two (2) continuous minutes. Also, the Committee may terminate public comments if such comments become repetitious. In addition, the maximum time for public comment for any individual item or topic is thirty (30) minutes. Speakers may not yield their time to others without the consent of the Chair. Any written documents to be distributed or presented to the Committee shall be submitted to the Clerk of the Board. This policy applies to Public Comments and comments on Agenda Items. Under the Brown Act, the Board should not take action on or discuss matters raised during public comment portion of the agenda which are not listed on the agenda. Board members may refer such matters to staff for factual information or to be placed on the subsequent agenda for consideration. Budget and Implementation Committee November 25, 2013 Page 2 5. APPROVAL OF MINUTES -OCTOBER 28, 2013 6. ADDITIONS/REVISIONS (The Committee may add an item to the Agenda after making a finding that there is a need to take immediate action on the item and that the item came to the attention of the Committee subsequent to the posting of the agenda. An action adding an item to the agenda requires 2/3 vote of the Committee. If there are less than 2/3 of the Committee members present, adding an item to the agenda requires a unanimous vote. Added items will be placed for discussion at the end of the agenda.) 7. CONSENT CALENDAR -All matters on the Consent Calendar will be approved in a single motion unless a Commissioner(s) requests separate action on specific item(s). Items pulled from the Consent Calendar will be placed for discussion at the end of the agenda. 7A. QUARTERLY FINANCIAL STATEMENTS Pagel Overview This item is for the Committee to: • 1) Receive and file the Quarterly Financial Statements for the period ending • September 30, 2013; and 2) Forward to the Commission for final action. 78. QUARTERLY SALES TAX ANALYSIS Pagel Overview This item is for the Committee to: 1) Receive and file the sales tax analysis for Quarter 2 (Q2) 2013; and 2) Forward to the Commission for final action. 8. QUARTERLY INVESTMENT REPORT Page 15 Overview This item is for the Committee to: 1) Receive and file the Quarterly Investment Report for the quarter ended September 30, 2013; and 2) Forward to the Commission for final action. • • • • Budget and Implementation Committee November 25, 2013 Page 3 9. FEDERAL SURFACE TRANSPORTATION PROGRAM 2013 CALL FOR REHABILITATION PROJECTS-PROJECT PROGRAMMING FOR THE CITIES OF INDIAN WELLS AND BLYTHE Page 72 Overview This item is for the Committee to: 1) Approve programming federal Surface Transportation Program (STP) funds for pavement rehabilitation projects in the amount of $192,714 for the cities of Blythe (Blythe) and Indian Wells (Indian Wells); and 2) Forward to the Commission for final action. 10. SPECIAL PANEL ON 215r CENTURY FREIGHT TRANSPORTATION Page 75 Overview This item is for the Committee to: 1) Receive and file the report on Improving the Nation's Freight Transportation System; and 2) Forward to the Commission for final action . 11. COMMISSIONERS/ STAFF REPORT Overview This item provides the opportunity for the Commissioners and staff to report on attended and upcoming meeting/conferences and issues related to Commission activities. 12. ADJOURNMENT RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE SIGN-IN SHEET NOVEMBER 25, 2013 NAME AGENCY E MAIL ADDRESS f ; ,Atf..~<-1 $ f\1 "-hi. ;J~ M L~!J a· c;· i e.-. I j::A-vv 6)/A / j .::.. 6c4 ;<'h"L. i ~-s ;1. DotA.°'' ~ H-~ Y1 ( tj V""\ T.,.., ,..J,·OIV'I \i\.f~ I \r 5:-o'if fi'7!1-7~ ~~41-1;3··-lfvr ~·,,~-' ( ~k.eb Vi 7/7 s ~~£J!Uh.._G~ / !?. 0 £.:[Ji_ I'> ~ }2.,_j_, r36~v m <::11~ I R!CJA G!-665 k I c/ J2 A--?Er/? n 4. f{J /h_ / (7 ~-I 11;ic-11v,;a,,...:1Jt,, /~ 0 fAli.ull. '1 .. RIVERSIDE COUNTY TRANSPORTATION COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE ROLL CALL NOVEMBER 25, 2013 County of Riverside, District II County of Riverside, District Ill City of Beaumont City of Calimesa City of Canyon Lake City of Cathed ra I City City of Coachella City of Desert Hot Springs City of Hemet City of Indian Wells City of Lake Elsinore City of Murrieta City of Riverside City of Temecula Present D D ------ ------ ~ D Absent -- ~ D D D <.A.t\AL. C\ •• '1 '2. "' . "" • D D <t.u.. q ~ 3'\ "· rn. D D D D D • • !. AGENDA ITEM 5 MINUTES • • • RIVERSIDE COUNTY TRANSPORTA T/ON COMMISSION BUDGET AND IMPLEMENTATION COMMITTEE Monday, October 28, 2013 MINUTES 1. CALL TO ORDER The meeting of the Budget and Implementation Committee was called to order by Chair Ella Zanowic at 9:30 a.m., in the Board Room at the County of Riverside Administrative Center, 4080 Lemon Street, First Floor, Riverside, California, 92501. 2. PLEDGE OF ALLEGIANCE At this time, Commissioner Mary Craton led the Budget and Implementation Committee in a flag salute. 3. ROLL CALL Members/ Alternates Present Steve Adams Roger Berg Mary Craton Rick Gibbs Steven Hernandez Bob Magee Scott Matas Greg Pettis Ron Roberts Jeff Stone* Ella Zanowic *Arrived after the meeting was called to order 4. PUBLIC COMMENTS Members Absent Douglas Hanson Larry Smith John Tavaglione There were no requests to speak from the public . RCTC Budget and Implementation Committee Minutes October 28, 2013 Page 2 5. APPROVAL OF MINUTES -AUGUST 26, 2013 M/S/C (Adams/Matas) to approve the minutes of August 26, 2013 meeting as submitted. Abstain: Gibbs At this time, Commissioner Jeff Stone joined the meeting. 6. ADDITIONS/ REVISIONS There were no additions or revisions to the agenda. 7. CONSENT CALENDAR -All matters on the Consent Calendar will be approved in a single motion unless a Commissioner(s) requests separate action on specific item(s). Items pulled from the Consent Calendar will be placed for discussion at the end of the agenda. M/S/C (Adams/Matas) to approve the following Consent Calendar item(s): 7A. SINGLE SIGNATURE AUTHORITY REPORT 1) Receive and file the Single Signature Authority report for the first quarter ended September 30, 2013; and 2) Forward to the Commission for final action. 8. 2014 STATE TRANSPORTATION IMPROVEMENT PROGRAM RECOMMENDATIONS Shirley Medina, Planning and Programming Director, presented the 2014 State Transportation Improvement Program (STIP) recommendations, highlighting the following areas: • STIP background; • 2014 STIP programming approach and intra-county formula; • STIP programming recommendations for Western County and Coachella Valley; and • Next steps and recommended actions. M/S/C {Stone/Gibbs) to: 1) Approve 2014 State Transportation Improvement Program (STIP) programming for Western Riverside County (Western County); • • • • • • RCTC Budget and Implementation Committee Minutes October 28, 2013 Page 3 2) Approve the use of Palo Verde Valley STIP funds in accordance with the adopted Memorandum of Understanding {MOU} No. 07-71-028-00 with the city of Blythe (Blythe) for trading Palo Verde Valley STIP funds with 2009 Measure A Western Riverside County Highway funds; 3} Submit Western County projects and Coachella Valley Association of Governments {CVAG} project recommendations to the California Transportation Commission {CTC} by the December 15, 2013 deadline; and 4) Forward to the Commission for final action. 9. AGREEMENT FOR INTEGRATION OF CALTRANS DATA INTO IE511 Robert Yates, Multimodal Services Director, presented the proposed integration of Caltrans data into IE511, which would offer cell phone probe data as an additional detection for the freeway system. In response to Commissioner Steve Adams question if IE511 offered two way communications to allow commuters to report road hazards or accidents, Robert Yates stated this system is not in a mode to be able to respond live and the incident feature available on IE511 is provided by the California Highway Patrol's real time incidents feed. He explained if a caller needed to report an incident, the caller would contact 911. M/S/C (Adams/Craton) to: 1} Approve Agreement No. 14-45-049-00 with Knowledge Systems Design {KSD} for integration of Caltrans' data into IE511 through December 31, 2014, in an amount of $88,000 plus a 10 percent contingency, for a total amount not to exceed $96,800; 2} Authorize the Chair or Executive Director, pursuant to legal counsel review, to execute the agreement on behalf of the Commission; and 3} Forward to the Commission for final action. 10. FISCAL YEAR 2013/14 SB 821 BICYCLE AND PEDESTRIAN FACILITIES PROGRAM - ADDITIONAL PROJECT Jillian Guizado, Staff Analyst, presented the FY 2013/14 SB 821 Bicycle and Pedestrian Facilities reprogramming request and additional project funding. In response to Commissioner Ron Roberts' request for clarification regarding the remaining funding, Jillian Guizado replied the next project on the list is the city of India's project. She explained once the $98,500 was allocated to the city of Indio, there is only RCTC Budget and Implementation Committee Minutes October 28, 2013 Page 4 $46,353 remaining, which is not enough to fully fund the city of Temecula (Temecula) project. Therefore, staff recommends applying the remaining funds to next year's call for projects. Temecula can resubmit its project at that time. Commissioner Roberts' expressed concern for Temecula to lose those funds, even for a year. He explained Temecula has serious sidewalks issues with pedestrian/auto accidents increasing. Jillian Guizado replied she can discuss it with the city staff that submitted the proposal and see if the $46,353 would help if Temecula could come up with the funding shortfall and change staff's recommendation going to the Commission to allocate it to Temecula. Ron Roberts replied he would recommend Jillian's suggestion and said he would go back to Temecula and look for more funding to be able to complete this project as it is important to Temecula. Commissioner Stone concurred with Commissioner Roberts' comments and explained he supports all the projects in line for this funding. He then discussed the issues on Pauba Road for pedestrians. He recommended, assuming this sidewalk project is not • designed yet, to bifurcate this allocation and grant Temecula the $46,353 this year to • get the design of the project underway and apply next year for additional funding for this project. Anne Mayer replied staff can explore the Commission's opportunities with this project but expressed there are 12 other projects below the line when the evaluation was completed. She expressed concern if the Temecula project were to be split apart, if a $46,353 project would score Temecula in the number 20 position or does it change its ranking amongst all the other projects. She explained if the Commission allowed Temecula to adjust its project to be able to use the $46,353, then in fairness all of the other agencies should be able to adjust their projects for that amount and staff would have to re-score the projects. Anne Mayer stated staff can go back to look to see what a re-scoping of the Temecula project would do in terms of rankings as it could impact other local agency's rankings as well. Commissioner Stone expressed appreciation for Ms. Mayer's explanation and expressed concern that this is a health and safety issue and the Commission should maintain the priority of the rankings in place understanding the Commission does not have the funds to fully fund the Temecula project, but at least $46,353 could be advanced and keep those rankings. He recommended the first proceeds that come into the program next year should be allocated to complete the Temecula project and the other jurisdictions that have applications behind Temecula's should be fully funded as well, depending on the amount of funding available. Temecula may be able to help supplement the project • funding, which may enable other funding to be freed up for other jurisdictions. • • • RCTC Budget and Implementation Committee Minutes October 28, 2013 Page 5 Jillian Guizado clarified if the recommendation is also to place Temecula at the top of the list for next year to fully fund Temecula's project after the $46,353, it would take a fourth of the allocation available for next year. Commissioner Stone reiterated Temecula is a well to do city and not looking to take over the allocation to the demise of other jurisdictions. However, Temecula would like to have a fair allocation and can likely identify additional funds to contribute to the Pauba Road project. Commissioner Roberts asked if this item could be postponed. Commissioner Scott Matas stated there are multiple projects on the list under $46,353. He stated he understands and respects Temecula's request and asked why not fund the next project on the list that can be fully funded by the remaining funds. Jillian Guizado explained traditionally the Commission never skips over projects going down the list and if there is funding left over, staff will reprogram the remaining funds so it is available for next year's call for projects. Commissioner Matas replied to benefit the program, there should be a process to prioritize the remaining projects to fit the left over funding amount so funding could be used and programmed in the current fiscal year. Commissioner Roger Berg concurred with Anne Mayer comments and suggested not changing the policy at will as there are other projects that will be impacted going forward. He suggested applying the remaining funds to the FY 2014/15 SB 821 Call for Projects. M/S/C (Stone/Adams) to: 1) Approve the partial reallocation of the city of Eastvale's (Eastvale) Scholar Way Sidewalk Accessibility Improvements (Scholar Way) project funding of $144,853 to the city of India's (Indio) Jefferson Street Sidewalk (Jefferson Street) project in the amount of $98,500 in the FY 2013/14 SB 821 Bicycle and Pedestrian Facilities Program Call for Projects list; 2) Allocate the remaining returned funds of $46,353 to the city of Temecula; and 3) Forward to the Commission for final action. No: Berg, Hernandez, Gibbs, Magee, Pettis RCTC Budget and Implementation Committee Minutes October 28, 2013 Page 6 Anne Mayer explained at the July 2013 Budget and Implementation Committee, there was discussion that this program's criteria have not been reviewed in a number of years. A subcommittee is being formed of the Technical Advisory Committee members to put together a new set of criteria and evaluation packages for the next round. 11. STATE AND FEDERAL LEGISLATIVE UPDATE Aaron Hake, Government Relations Manager, presented an overview of federal and state legislative activities. Commissioner Steven Hernandez suggested working with potential candidates running for state, assembly, or senate seats to acquaint them with the Commission's projects. Aaron Hake replied staff treads carefully there, however, staff is open to those who approach the Commission as it maintains an open door policy for community stakeholders interested in learning about transportation. Anne Mayer stated design-build AB 401 also allows the Commission to use design-build off the state highway system so it could be used for the Mid County Parkway project. She stated the only Caltrans involvement would be right at the point where the project connects with 1-215. She expressed it is a very broad authority and really quite a success, however, it does not allow the Commission to do this on behalf of a local agency. In response to Commissioner Stone's question about the status of the federal transportation bill, Aaron Hake replied MAP-21 expires in September 2014 and Committee staff is beginning to draft and hold hearings for the next reauthorization. He explained MAP-21 is still being implemented as it has only been about 14-15 months since it was passed by Congress. Aaron Hake stated the conversation for the next bill is all about money and he discussed the conversations in Congress. M/S/Cto: 1) Receive and file the state and federal legislative update; and 2) Forward to the Commission for final action. 12. COMMISSIONERS/ EXECUTIVE DIRECTOR REPORT 12A. Anne Mayer announced the 1ih Annual Mobility 21 Summit -Connecting the Dots will be held on October 29 in Los Angeles. Chair Karen Spiegel will receive the Mobility 21 Elected Official of the Year award at this event. • • • • • • RCTC Budget and Implementation Committee Minutes October 28, 2013 Page 7 12B. Commissioner Stone expressed appreciation for the Perris Valley Line project. He stated the Commission owns the rail line that travels from the city of Perris into the city of San Jacinto and his staff has been working with these two cities. He suggested looking for a federal grant to further train service into the city of San Jacinto and prioritize this very important expansion. Anne Mayer replied she expects the discussion of rail expansion into the city of San Jacinto as well as into the Coachella Valley and other transit needs to be a primary topic at the 2014 Commission Workshop. She stated she also expects the discussion to include funding. 13. ADJOURNMENT AND NEXT MEETING There being no further business for consideration by the Budget and Implementation Committee, the meeting was adjourned at 10:15 a.m. The next meeting of the Budget and Implementation Committee is scheduled for November 25, 2013, at 9:30 a.m. Respectfully submitted, Jennifer Harmon Clerk of the Board • AGENDA ITEM 7 A • • • • • RIVERSIDE COUNTY TRANSPORTA T/ON COMMISSION DATE: November 25, 2013 TO: Budget and Implementation Committee FROM: Michele Cisneros, Finance Manager/Controller THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Quarterly Financial Statements STAFF RECOMMENDATION: This item is for the Committee to: 1) Receive and file the Quarterly Financial Statements for the period ending September 30, 2013; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: During the first three months of the fiscal year, staff monitored the revenues and expenditures of the Commission. The first quarter of the year is primarily directed toward completing fiscal year-end closing activities. Staff expects most of the categories to present a more realistic outlook beginning in the second quarter. The operating statement shows the sales tax revenues for the first quarter at 7 percent of the budget. This is a result of Governmental Accounting Standards Board (GASB) Statement No. 33. GASB 33 requires sales tax revenues to be accrued for the period in which it is collected at the point of sale. The State Board of Equalization collects the Measure A funds and remits these funds to the Commission after the reporting period for the businesses. This creates a two- month lag in the receipt of revenues by the Commission. Accordingly, these financial statements reflect the revenues related to collections for July 2013. On a cash basis, the Measure A and Local Transportation Fund (LTF) sales tax revenues are 11.11 percent and 7.61 percent higher, respectively, than the same period last fiscal year. State Transit Assistance Fund initial receipts for FY 2013/14 occurred in November 2013. Staff will continue to monitor the trends in the sales tax receipts and report to the Commission any necessary adjustments. Federal, state, and local revenues are on a reimbursement basis. The Commission will receive these revenues as eligible project costs are incurred and invoiced to the respective agencies . Agenda Item 7 A 1 The negative revenue amounts for federal and state reimbursements reflect the reversal of FY 2012/13 accrued revenues at the beginning of FY 2013/14 in excess of amounts billed during the first quarter. Reimbursement invoices related to first quarter expenditures will be prepared and submitted in the second quarter. During the FY 2013/14 budget process, the Commission took a conservative approach in estimating the Transportation Uniform Mitigation Fee (TUMF) revenues of $6.3 million passed through from Western Riverside Council of Governments (WRCOG). There were no TUMF receipts until the second quarter. The budgeted balance of $423,400 relates to TUMF zone reimbursements from WRCOG for the 74/215 interchange project. Staff will invoice WRCOG for TUMF zone reimbursements as eligible expenditures are incurred in the second quarter. Other revenues include property management revenues generated from properties acquired in connection with the State Route 91 Corridor Improvement Project (SR-91 CIP). The Commission took a conservative approach in estimating investment income for FY 2013/14 as a result of flat interest yields on investment balances. The investment losses reflected in the first quarter are related primarily to accrued interest due to sellers of investment securities that were purchased with SR-91 CIP financing proceeds. These amounts will be offset in future quarters when interest coupon payments are received. A portion of investment income related to the first quarter will be recorded in the second quarter. The expenditure categories are in line overall with the expectations of the budget with the following exceptions: • Salaries and benefits are slightly over as a result of the prepayment for the FY 2013/14 employer retirement contribution, which provides a discount of one-half of the year's interest; • Operating transfers are slightly higher in the first quarter as a result of the completion of the 2013 financing for the SR-91 CIP and the transfer of 2013 sales tax revenue bond proceeds to retire commercial paper notes and fund capitalized interest and 2013 toll revenue bond proceeds to establish a debt service reserve fund and fund capitalized interest; and • In July 2013 the Commission completed the financing for the design and construction of the SR-91 CIP. The financing included the issuance of sales tax revenue bonds and toll revenue bonds, execution of a federal Transportation Infrastructure Finance and Innovation Act (TIFIA) loan with the U.S. Department of Transportation (USDOT), and contribution of $136,451,515 from the Commission during construction. • • The Commission issued 2013 sales tax revenue bonds (2013 Sales Tax Bonds) consisting of $286,065,000 serial bonds and $176,135,000 term bonds, for a total issuance of $462.2 million. A portion of the 2013 Sales Tax Bonds was used to retire $60 million of outstanding commercial • Agenda Item 7 A 2 • • • paper notes with the remaining proceeds used to pay a portion of the costs of the SR-91 CIP; capitalized interest on the 2013 Sales Tax Bonds through December 1, 2017; and $4,131,685 costs of issuance for the 2013 Sales Tax Bonds. The Commission issued 2013 toll revenue bonds (2013 Toll Bonds) consisting of $123,825,000 Series A current interest obligations and $52,829,602 Series B capital appreciation obligations, for a total issuance of $176,654,602. The proceeds of the 2013 Toll Bonds were used to pay a portion of the costs of the SR-91 CIP; capitalized interest on the 2013 Toll Bonds through December 1, 2017; and $ 2,828,373 costs of issuance for the 2013 Toll Bonds in addition to funding a debt service of $17,665,460. The Commission entered into a loan agreement with the USDOT for a $421,054,409 TIFIA loan to pay eligible SR-91 CIP costs. The loan is a toll revenue bond (TIFIA Bond) that is subordinate to the 2013 Toll Bonds. Proceeds of the TIFIA Bond may be drawn upon after certain conditions have been met. The TIFIA Bond matures on the earlier of June 1, 2051, and the date that is 35 years after the substantial completion date of the SR-91 CIP. The following list discusses the significant capital projects (i.e., total budgeted costs in excess of $5 million) and related status. Capital project expenditures are generally affected by lags in invoices submitted by contractors and consultants, as well as issues encountered during certain phases of the projects. The capital projects budgets tend to be based on aggressive project schedules . Highway Engineering/Construction/Design-Build/Right of Way/Land SR-91 High Occupancy Vehicle Lanes Project -Caltrans completed design work and expenditures remain within the budget authority. Utility relocation continues and the submittal of invoices for expenditures incurred to date continues to lag. Staff oversees right of way acquisition, which has been certified; one acquisition is still pending settlement. Construction began in April 2012 and is managed by Caltrans. 71/91 Interchange Project -The availability of federal earmark funds allowed the final design phase of work to move forward. A contract for the final design consultant was awarded at the February 2012 Commission meeting. Notice to proceed (NTP) was issued in March 2012 starting the final design phase. Final design was delayed in FY 2012/13 due to the Army Corps of Engineers (ACOE) environmental process on pot holing, which has been resolved. An additional environmental assessment to cover project impacts on the ACOE property will delay completion of final design. Final design is expected to be completed in the fourth quarter of FY 2013/14. Right of way requirements have been established and acquisition is expected to start in the third quarter FY 2013/14. SR-91 CIP (design-build) -The Commission completed financing activities for this project including the issuance of sales tax and toll revenue bonds and execution of a TIFIA loan in July 2013. With the environmental document approved, full right of way acquisition work is Agenda Item 7A 3 underway including eminent domain proceedings and is expected to peak in FY 2013/14. Agency, utility, and railroad agreement work continues with several agreements remaining to be completed. A design-build contract was awarded in May 2013, and a limited NTP was issued concurrent with the contract award and included early deliverables and mobilization. Full NTP has been given and the contractor is proceeding. 1-15 CIP -Staff is working with the consultant to finalize an updated schedule and budget for the revised project scope the Commission approved in January 2013. Staff is proceeding to develop a project report and environmental document. This project is expected to remain under budget as a result of the revised project scope. An amendment is the subject of a staff report included in this agenda for Commission approval. 1-215 Central Widening Project from Scott Road to Nuevo Road -The NTP for construction was issued December 10, 2012, with the first working day to start in January 2013. The critical path of the project runs through the replacement of Perris Boulevard overcrossing (two stages) and the D Street on-ramp overcrossing. Delays have occurred for component procurement, completion of the west abutment backfill, and a traffic incident that disabled the false work for four days. These delays will require a change order, but are unlikely to impact the project completion. Rail Engineering/Construction/Right of Way/Land Perris Valley Line Project -Final design is complete. The Federal Transit Administration (FTA) continues work to finalize the Small Starts grant agreement. Major outstanding right of way acquisition activity continues for the station and layover facility at south Perris. A lawsuit brought by the Friends of Riverside Hills challenging elements of the California Environmental Quality Act document was settled in July 2013, and recorded in the FY 2012/13 financial statements. The construction contract has been given a limited NTP based on a letter of no prejudice received from the FTA. Attachment: Quarterly Financial Statements -September 2013 Agenda Item 7A 4 • • • .-----------------------------------~--·-·--·· RIVERSIDE COUNTY TRAN PORTA TION COMMISSION QUARTERLY BUDGET VS ACTUAL 1ST QUARTER • FOR THREE MONTHS ENDED 9/30/2013 FY 2013/14 1STQUARTER REMAINING PERCENT BUDGET ACTUAL BALANCE UTILIZATION Revenues Sales tax $ 232,798,000 $ 15,547,200 $ (217 ,250,800) 7% Federal reimbursements 94,389,000 (659,365) (95,048,365) -1% State reimbursements 133,496,300 (2,044,205) (135,540,505) -2% Local reimbursements 2,954,400 25,606 (2,928,794) 1% Transportation Uniform Mitigation Fee 6,723,400 (6,723,400) N/A Other revenues 500,000 185,175 (314,825) 37% Investment income (losses) 4,026,500 (864,406) (4,890,906) -21% Total revenues 474,887,600 12,190,005 (462,697,595) 3% Expenditures Salaries and benefits 7,949,400 2,302,053 5,647,347 29% Professional and support Professional services 31,285,500 1, 123,612 30,161,888 4% Support costs 5,595,300 1, 153,296 4,442,004 21% Total Professional and support costs 36,880,800 2,276,908 34,603,892 6% Projects and operations Program operations -general 20, 107,100 938,805 19,168,295 5% Engineering 21,860,000 1,392,803 20,467,197 6% Construction 235,262,265 1,605,905 233,656,360 1% Design Build 217,750,000 2,381,975 215,368,025 1% Right of way/land 164,707,800 21,923,776 142,784,024 13% Operating and capital disbursements 122,610,800 25,116,209 97,494,591 20% Special studies 969,000 26,965 942,035 3% • Local streets and roads 43,825,900 3,097,655 40,728,245 7% Regional arterials 25,490,000 2, 154,485 23,335,515 8% Total projects and operations 852,582,865 58,638,578 793,944,287 7% Debt service Principal 87,100,000 60,000,000 27,100,000 69% Interest 41,112,300 1,362,057 39,750,243 3% Cost of issuance 7,500,000 6,960,058 539,942 93% Total debt service 135,712,300 68,322,115 67,390,185 50% Capital outlay 796,200 6,880 789,320 1% Total Expenditures 1,033,921,565 131,546,534 902,375,031 13% Excess revenues over (under) expenditures (559,033,965) (119,356,529) 923,382, 170 21% Other financing sources/(uses) Operating transfer in 636,561,665 257,207,329 (379,354,336) 40% Operating transfer out (636,561,665) (257 ,207 ,329) 379,354,336 40% TIFIA loan proceeds 110,000,000 (110,000,000) NIA Debt proceeds 700,774,000 638,854,602 (61,919,398) 91% Bond premium 38,328,774 38,328,774 N/A Bond discount (2,433,315) (2,433,315) N/A Total financing sources/(uses) 810,774,000 674,750,061 136,023,939 83% Net change in fund balances 251,740,035 555,393,532 1,059,406, 109 221% Fund balance July 1, 2013 590,821,600 622, 186,895 31,365,295 105% Fund balance September 30, 2013 $ 842,561,635 $ 1, 177 ,580,427 $ 1,090,771,404 140% • 5 • Revenues Sales tax Federal reimbursements State reimbursements Local reimbursements Transportation Uniform Mitigation Fee Other revenues Investment income (losses) Total revenues Expenditures Salaries and benefits Professional and support Professional services Support costs Total Professional and support costs Projects and operations Program operations -general Engineering Construction Design Build Right of way/land Operating and capital disbursements Special studies local streets and roads Regional arterials Total projects and operations Debt service Principal Interest Cost of issuance Total debt service Capital outlay Total Expenditures Excess revenues over (under) expenditures Other financing sourcesl(uses) Operating transfer in Operating transfer out TIFIA loan proceeds Debt proceeds Bond premium Bond discount Total financing sources/(uses) Net change in fund balances Fund balance July 1, 2013 Fund balance September 30, 2013 GENERAL FUND 280,000 4,572 FSP/ SAFE 158,482 MEASURE A SALES TAX WESTERN COUNTY 7,694,252 (659,365) (2,202,687) 21,034 COACHELLA VALLEY 2,420,372 • RIVERSIDE COUNTY TRANSPORTATION COMMISSION QUARTERLY BUDGET VS ACTUALS BY FUND 1ST QUARTER FOR THREE MONTHS ENDED 9/30/2013 PALO LOCAL VERDE TRANSPORTATION VALLEY FUND TRANSPORTATION ST ATE TRANSIT UNIFORM ASSISTANCE MITIGATION FEE (TUMF) 75,876 5,076,700 COMMERCIAL PAPER SALES TAX BONDS TOLL REVENUE BONDS • DEBT SERVICE COMBINED TOTAL 15,547,200 (659,365) (2,044,205) 25,606 2,335 237 182,603 185,175 1,188 435,694 (1,744,276) (130,949) 573 937 (864,406) 286,907 158,719 5,037,025 2,420,372 75,876 5,076,700 435,694 (1,744,276) (130,949) 573,937 12,190,005 1,601,932 28,182 620,970 30 (161,201) 11,765 917,974 1 018 503 44 203 90 303 857,302 55,968 1,008,277 209,443 415,879 291,968 1,249,705 1,191,410 2,381,975 21,852,722 5,751,505 1,074,923 1,304,250 26,965 2,174,649 847,130 75,876 2 154 485 5,960,948 415,879 30,244,317 4,305,865 75,876 6,880 50,939 55,074 287 55,361 21,515 143,098 414,495 71,054 16,954,022 31,509 16,954,022 31,509 650,162 300,000 300,000 60,000,000 789 60,000,789 1,361,268 4, 131,685 2,828,373 4, 131,685 2,828,373 1,361,268 2,302,053 1,123,612 1,153,296 2,276,908 938,805 1,392,803 1,605,905 2,381,975 21,923,776 25,116,209 26,965 3,097,655 2,154,485 58,638,578 60,000,000 1,362,057 6,960,058 68,322,115 6,880 8 427 062 500 029 31873564 4 305,895 75 876 _ _16,954,022 31,509 756,462 60,300,789 4,131,685 2,828,373 1,361,268 131,546,534 (8,140,155) (341,310) 5,917,296 (26,836,539) 36,297,276 (2,271,714) (1,885,523) (11,877,322) (31,509) (756,462) 414,495 (5,917,296) (59,865,095) 60,001,951 (5,928,271) (5,875,961) (2,959,322) (184,365,952) (58,724,096) (787,331) (119,356,529) 154,576,311 257,207,329 (257,207,329) 462,200,000 176,654,602 638,854,602 38,328,774 38,328,774 (2,433,315) (2,433,315) 5_.fil_U~tL-34,025,562 (5,917 ,296) 414,495 54,073,680 316,162,822 115,497, 191 154;516,311-674,750,061 (2,222,859) (341,310) 7, 189,023 (1,885,523) (17,794,618) (31,509) (341,967) (5,791,415) 310,286,861 112,537,869 153,788,980 555,393,532 12~ _ 7,482,97JL 294,46~4,723 27,356,273 556 105,242,957 55,693,488 67,306,789 36,097,201 4,477, 116 11,225,363 622, 186,895 $ 10617492 $ 7140768 $ 301653746 $ 25470750 $ 556 s 87448339 $ 55661979 $ 66964822 $ 30305786 $ 314763977 $ 112537869 $ 165014343 $1,177,580,427 6 • AGENDA ITEM 78 • • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: November 25, 2013 TO: Budget and Implementation Committee FROM: Theresia Trevino, Chief Financial Officer THROUGH: John Standiford, Deputy Executive Director SUBJECT: Quarterly Sales Tax Analysis STAFF RECOMMENDATION: This item is for the Committee to: 1) Receive and file the sales tax analysis for Quarter 2 (Q2) 2013; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: At its December 2007 meeting, the Commission awarded an agreement to MuniServices, LLC (MuniServices) for quarterly sales tax reporting services plus additional fees contingent on additional sales tax revenue generated from the transactions and use tax (sales tax) audit services. As part of the recurring contracts process, the Commission approved a five-year extension through June 30, 2018. The services performed under this agreement pertain to only the Measure A sales tax revenues. Since the commencement of these services, MuniServices submitted an audit update, which reported findings that were generated and submitted to the State Board of Equalization (SBOE) for review and determination of errors in sales tax reporting related to 269 businesses. For January through March 2013 (Ql 2013), the SBOE approved corrections for 193 of these accounts for a total sales tax revenue recovery of $3,309,459. Updated amounts through Q2 2013 will be provided once received from MuniServices. If the SBOE concurs with the error(s) for the remaining claims, the Commission will receive additional revenues; however, the magnitude of the value of the remaining findings was not available. It is important to note that while the recoveries of additional revenues will be tangible, it will not be sufficient to alter the overall trend of sales tax revenues. Additionally, MuniServices provided the Commission with the quarterly sales tax summary report for the second quarter of calendar year 2013 (Q2 2013). Most of the Q2 2013 Measure A sales tax revenues were received by the Commission in the third quarter of calendar 2013, during July through September 2013, due to a lag in the sales tax calendar. The summary section of the Q2 2013 report is attached and includes an overview of California sales tax receipts, local results, historical cash collections analysis, summary of the top 25 sales tax Agenda Item 7B 7 contributors, historical sales tax amounts, sales tax by business category, economic trends for significant business category (business to business), and results. The following observations were noted in the Q2 2013 report: • Sales tax receipts for Riverside County were 8.6 percent higher as compared to the Q2 2012. Staff noted in recent quarters significant receipts from energy-related companies, which may be attributable to solar developments in Riverside County. These receipts are reflected in the construction and business to business economic categories, as noted in the Economic Category Analysis table below. • Taxable transactions for the top 25 tax contributors in Riverside County, which generated 24 percent of the taxable sales for the year ended Q2 2013, were comparable to the year ended Q2 2012. The top 100 tax contributors generated 38 percent of the taxable sales for the year ended Q2 2013, which was comparable to the year ended Q2 2012. • Five of the six economic categories experienced increases in the Q2 2013 benchmark year comparison to Q2 2012, and there was no change in the miscellaneous category. Construction and business to business had the largest increases at 18.8 and 12.7 percent, respectively; these two categories have experienced significant increases for several recent quarters. The construction increase was primarily related to the building materials wholesale segment. The business to business category increase was attributable primarily to the electronic equipment segment as well as the leasing, heavy industry, and light industry segments. As noted earlier, these increases may be partially attributable to user taxes from energy-related companies. The other top three economic categories had increases ranging from 5.8 percent to 6.7 percent. General Retail 28.7 I 6.7 28.9 I 4 28.1 I 4.4 29 I 3.8 30.6 I 3 29.3 I 3.6 26.8 I 6.4 28.7 I 3.8 Food Products 16.l I 5.8 19.3 I 5.4 20.i I 6.6 16.5/3.1 16.l I 2.9 20 I 5.2 16.4 /7.6 18/ 3 Transportation 26.7 I 6.5 24.7 I 6.5 22.3I10.6 28.3/7.8 26.9 /7.8 24.6 I 4.1 21.8 I 8.7 31.3 I 6.2 Construction 11.s I 18.8 8.9 I 8.4 8.8 /9 10.4I10.s 10.8 I 5.2 8 I 5.6 11.8 I 25 12.3/7.8 Business to Business 15.2 I 12.7 11I1.6 19.4 I -3 14.2 I 5.2 14.4 I 5.9 17.1/1.8 15.s I 16.l 8.9 I -2.7 Miscellaneous 1.9 I o.o 1.2 I o.6 1.2 I 8.2 1.6 I 6.1 1.2 I 4.3 1 /-2.6 1.7 /-7.3 0.9 /-12 Total 100.0 I s.5 100 I 4.8 100 I 5 100 I 5.7 100 I 4.9 100 I 3.8 100I10.3 100 I 4.1 General Retail: Apparel Stores, Department Stores, Furniture/Appliances, Drug Stores, Recreation Products, Florist/Nursery, and Misc. Retail Food Products: Restaurants, Food Markets, Liquor Stores, and Food Processing Equipment Construction: Building Materials Retail and Building Materials Wholesale Transportation: Auto Parts/Repair, Auto Sales-New, Auto Sales -Used, Service Stations, and Misc. Vehicle Sales Business to Business: Office Equip., Electronic Equip., Business Services, Energy Sales, Chemical Products, Heavy Industry, Light Industry, and Leasing Miscellaneous: Health & Government, Miscellaneous Other, and Closed Account Adjustments Agenda Item 7B 8 32.4 I 4.4 31.4 I 3.1 20.7 I o.6 9.1I10.7 5.3 I -2.3 1.i I -0.7 100 I 3.3 • • • • • • • For six of the top ten segments (department stores, auto sales-new, restaurants, miscellaneous retail, building materials-wholesale, and food markets), sales taxes reached a new high point during Q2 2013. These six segments represent 50.1 percent of the total sales tax receipts. The other four top ten segments (service stations, apparel stores, light industry, and building materials-retail) were slightly under the high point, which occurred in one of the two prior quarters; these four segments represent 26 percent of the total sales tax receipts. • Service stations, department stores, and auto sales-new represent the three largest economic segments for Riverside County, or 33 percent of total sales taxes. This is the third consecutive quarter since Q3 2008 that auto sales-new has been in the top three economic segments, as the restaurants segment held that position since the recession. It should also be noted that the growth seen in previous quarters for the service stations segment has been declining as shown by the 0.4 percent decrease for the year ended Q2 2013 due to lower gas prices. Largest Segment Service Department Department Auto Sales· Department Restaurants Restaurants Restaurants Restaurants Stations Stores Stores New Stores % of Total I% Change 11.4 I -0.4 13.3 I 5.3 14.1I6.5 11.9 I 3.o 14.3 I 3.6 14.2 I 5.1 11.6I15.2 13.6 I u 20.s I 2.3 2nd Largest Segment Department Department Auto Sales· Auto Sales· Service Department Service Service Department Stores Stores New New Stations Stores Stations Stations Stores % ofTotal I% Change 1u I 5.3 10.s I 3.6 9.5 I 20.8 11.4 I 18.9 11.9 I 0.2 10.2 I 3.6 1i.2 I -1.s 13.3 I -1.9 9.7 I 15.1 3rd Largest Segment Auto Sales· Auto Sales· Department Auto Sales-Department Restaurants Misc. Retail Restaurants Restaurants New New Stores New Stores % of Total I% Change 10.2 I 15.5 10.i I 14.7 9.3 I 3.9 10.4 I 4.5 9.6 I 4.2 10.2I11.8 10.4 I 2.7 9.6 I 4.6 9.6 I -0.3 During the review of the Q2 2013 detailed report with MuniServices, information regarding sales tax comparisons by city and change by economic category from Q2 2012 to Q2 2013 was provided. Jurupa Valley, as a newly incorporated city, will be listed when sufficient comparative information is available, which is expected in Q3 2013 or Q4 2013. Staff continues to monitor monthly sales tax receipts and other available economic data to determine the need for any adjustment to the revenue projections. Staff will utilize the forecast scenarios included with the complete report and recent trends in assessing such projections. Attachments: 1) Sales Tax Analysis Q2 2013 2) Sales Tax Comparison by City for Q2 2012 to Q2 2013 Agenda Item 78 9 • • • ATTACHMENT 1 Riverside County Transportation Commission Sales Tax Digest Summary Collections through September 2013 Sales through June 2013 (2013Q2) CALIFORNIA'S ECONOMIC OUTLOOK California sales tax receipts increased by 6.6% over the same quarter from the previous year, with Northern California reporting a 4.9% increase compared to 7.9% for Southern California. Receipts for the Riverside County Transportation Commission changed by 8.6% over the same periods. California's economy is on the right track. Of the largest metropolitan areas in the country, the Bay Area has the fastest Real GDP growth. Nationally, Real Gross Domestic Product was up 2.5% for 201302 over 201301. It was up 1.1% for 201301 over 201204. Personal Consumption Expenditures, (PCE), which contribute directly to Sales Tax Revenue, were a primary factor. Prices remain stable. The price index for Gross Domestic Purchases was up only 0.2% for 201302 over 201301. It was up 1.2% in 201301. According to the Chicago-based research firm ShopperTrak, "Retail revenue in November and December should rise by 2.4 % nationally during the biggest shopping period of this year." That compares with a 3% increase in 2012 from 2011. "Consumers remain cautious about spending and are not ready to splurge. Improvements have not been enough to sustain higher levels of spending for most Americans, who continue to juggle tepid wage gains with a higher cost of living." LOCAL RESULTS Net Cash Receipts Analysis Local Collections Share of County Pool 0.0% Share of State Pool 0.0% SBE Net Collections Less: Amount Due County 0.0% Less: Cost of Administration Net 202013 Receipts Net 202012 Receipts Actual Percentage Change Business Activity Performance Analysis Local Collections Less: Payments for Prior Periods Preliminary 202013 Collections Projected 202013 Late Payments Projected 202013 Final Results Actual 202012 Results Projected Percentage Change www.MuniServices.com (800) 800-8181 10 $39,205,028 0 0 39,205,028 .00 (447,720) 38,757,308 35,678,215 8.6% $39,205,028 (3,098,827) 36,106,201 1,490,840 37,597,041 35,574,094 5.7% Pagel Riverside County Transportation Commission HISTORICAL CASH COLLECTIONS ANALYSIS BY QUARTER (in thousands of$) $45,000 ~-----------------------------~ $500 $40,000 -+-----------------------------~---r $450 $35,000 +-----------$400 $350 = $30,000 ~ .,_ ·-$300 ... ... ~ $25,000 "'"' ... $250 = ~ $20,000 ·-e ! ... I I z ::::::: $5,000 I i $0 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 _.,_SBOE Admin Fees Due $200 "'O < $150 $100 $50 $0 -Net Receipts L_~----------=~~~~~~~~~~~~~~~~~~~='---------___J TOP 25 SALES/USE TAX CONTRIBUTORS The following list identifies RCTC's Top 25 Sales/Use Tax contributors. The list is in alphabetical order and represents sales from July 2012 to June 2013. The Top 25 Sales/Use Tax contributors generate 23.6% of RCTC's total sales and use tax revenue. BEST BUY STORES CARMAX THE AUTO SUPERSTORE CHEVRON SERVICE STATIONS CIRCLE K FOOD STORES COSTCO WHOLESALE DEPT OF MOTOR VEHICLES DESERT SUNLIGHT GE PACKAGED POWER GENESIS SOLAR HOME DEPOT K MART STORES KOHL'S DEPARTMENT STORES LOWE'S HOME IMPROVEMENT www.MuniServices.com MACY'S DEPARTMENT STORE RALPH'S GROCERY COMPANY RITE AID DRUG STORES ROSS STORES SAM'S CLUB SHELL SERVICE STATIONS STATER BROS MARKETS TARGET STORES VERIZON WIRELESS VONS SERVICE STATIONS WAL MART STORES WALGREEN'S DRUG STORES (800) 800-8181 11 Page2 • • • • • • Riverside County Transportation Commission HISTORICAL SALES TAX AMOUNTS The following chart shows the sales tax level from sales through June 2013, the highs, and the lows for each segment over the last two years. $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 (in thousands of$) ANNUAL SALES TAX BY BUSINESS CATEGORY (in 1:housands of$) 2Q2013 1Q2013 ............................ 2 4Q2012 .............................8 3Q2012 2Q2012 ......................... 7 1Q2012 ......................... 8 4Q2011 ........................9 3Q2011 ..........................5 2Q2011 .........................8 1Q2011 7 •2Q2013 +High •Low $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 1111111 General Retail m Food Products ml Transportation m Construction m Business To Business •Miscellaneous I www.MuniServices.com (800) 800-8181 Page3 12 Riverside County Transportation Commission FIVE-YEAR ECONOMIC TREND: Business To Business (in thousands of"$) $7,000 -.------------------------------------, $0 "" "" "" "" "" "" "" = = = = = = = = = = = = = = s .... s § .... .... .... O' O' O' O' .... ..... .... .... ..... .... FINAL RESULTS: January-March 2013 Sales Local Net Cash Collections Less: Pool Amounts Less: Prior Quarter Payments Add: Late Payments :::: :::: :::: :::: = = = = = .... .... .... .... .... S' O' O' O' S' .... ..... ..... Local Net Economic Collections after Adjustments Percent Change from October-December 2011 Sales MUNISERVICES' ON-GOING AUDIT RESULTS This Quarter $296,146 Total to Date $2,979,127 www.MuniServices.com (800) 800-8181 13 -;:; = = s .... .... O' O' .... ..... ..... $36,575,783 ($-338,200) ($2,027,346) $1,890,905 $36,777,542 UP BY 8.3% ::::l = .... S' ::::l ::::l ::::l :::i :::i = = = = = .... .... .... .... s O' O' O' S' .... ..... .... .... Page4 • • • Banning 8.3% 0.4% Beaumont 3.2% 5.7% Blythe -1.7% 9.6% Calimesa 19.3% 4.1% Canyon Lake -10.9% -10.0% Cathedral City 6.8% -1.6% Coachella 6.6% 3.1% Corona S.1% 3.5% Desert Hot Springs -2.0% 5.2% Eastvale -3.5% 1.7% Hemet 0.2% 6.8% Indian Wells 1.3% 0.4% Indio -1.2% 0.0% 9.4% 3.0% 10.4% 0.7% 32.5% 14.5% 6.9% -1.8% -0.8% 4.2% 1.6% 72.0% 15.4% ATTACHMENT. ~ 14.0% 21.4% -18.2% 442,029 411,879 7.3% Auto Sales -New Misc. Vehicle Sales Food Processing Eqp Miscellaneous Other 17.5% -1.2% -7.9% 865,141 825,606 4.8% Bldg.Matis-Retail Misc. Vehicle Sales Service Stations Light Industry -46.4% -1.5% -10.9% 411,533 425,294 -3.2% Service Stations Restaurants Bldg.Matls-Whsle Energy Sales 37.3% 13.9% -30.2% 160,919 155,364 3.6% Miscellaneous Retail Restaurants Miscellaneous Other Misc. Vehicle Sales -18.7% 14.1% 238.8% 40,777 43,402 -6.0% Auto Sales-Used Restaurants Food Markets Miscellaneous Retail 10.6% 21.4% -6.4% 1,820,075 1,641,510 10.9% Auto Sales -New Heavy Industry Service Stations Business Services -5.3% 18.8% -9.1% 784,694 742,117 5.7% Service Stations Restaurants Auto Sales -Used Bldg.Matls-Whsle 23.7% 5.6% 3.7% 7,688,054 7,134,804 7.8% Bldg.Matls-Whsle Bldg.Matis-Retail Service Stations Electronic Equipment -2.1% 23.0% -10.3% 331,926 328,437 1.1% Restaurants Heavy Industry Apparel Stores Auto Parts/Repair 13.9% -0.5% 6.7% 1,285,146 1,267,548 1.4% Bldg.Matls-Whsle furniture/Appliance Miscellaneous Retail food Processing Eqp -0.8% 12.1% 5.1% 2,280,551 2,221,674 2.7% Auto Parts/Repair Restaurants Service Stations Bldg.Matis-Retail 212.9% 13. 7% -28.3% 200,056 196,676 1. 7% Misc. Vehicle Sales Apparel Stores Furniture/Appliance Drug Stores 20.3% 11.5% 33.7% 2,070,103 1,908,722 8.5% Auto Sales -New Service Stations Miscellaneous Retail Misc. Vehicle Sales La Qu_i_~~---------.. ·-------~% __ ___:.!,~~ -1.8% 9.4% -14.7% 1,736,487 1,716,807 1.1% Auto Sales -New Miscellaneous Retail Department Stores Service Stations Lake Elsinore 1.6% 7.2% 3.8% 5.2% -11.5% -11.2% 1,724,165 1,672,078 3.1% Auto Sales -New food Markets Service Stations Apparel Stores Menifee 4.7% 9.1% -4.7% -8.9% 13.0% -23.3% 1,162,400 1,138,068 2.1% Restaurants Misc. Vehicle Sales Service Stations Bldg.Matis-Retail Moreno Valley 0.8% 3.7% 1.7% -5.2% 15.3% 30.4% 3,269,180 3,199,291 2.2% Auto Sales -New Restaurants Service Stations Miscellaneous Retail Murrieta 4.0% 8.5% 13.6% -0.9% 11.4% 28.7% 2,783,580 2,589,927 7.5% Auto Sales -New food Markets Bldg .. Matls-Retail Business Services Norco 7.1% 1.4% 7.7% 25.7% 7.9% 14.6% 1,151,161 1,072,302 7.4% Auto Sales-New Auto Sales -Used Service Stations food Markets Palm Desert -1.2% 4.9% -3.3% 9.5% 0.1% -22.0% 3,589,334 3,564,117 0. 7% Restaurants Miscellaneous Retail Department Stores furniture/Appliance Palm Springs 3.4% 5.0% -2.8% -4.9% 0.9% -16. 7% 2,431,480 2,407,297 1.0% Restaurants Miscellaneous Retail Auto Sales -New Energy Sales Perris 1.3% 7.2% 15.8% 16.2% 70.5% 20.1% 1,864,709 1,552,132 20.1% Electronic Equipment Auto Sales -New Bldg .. Matls-Retail Health & Government Rancho Mirage 4.0% -3.2% -7.0% 2.8% 14.3% 2.9% 930,095 937,420 -0.8% Apparel Stores Auto Sales -New Misc. Vehicle Sales Restaurants Riverside 0.7% 7.6% 8.0% 17.0% 4.1% -3.5% 11,383,720 10,701,415 6.4% Auto Sales -New Leasing Service Stations Light Industry Riverside County 1.1% 2.5% -4.4% 97.1% 5.9% -14.3% 7,420,418 6,236,510 19.0% Bldg.Matls-Whsle Electronic Equipment Apparel Stores Service Stations San Jacinto 4.2% 2.6% 3.3% 51.6% -4.1% -12.3% 532,954 510,219 4.5% Bldg.Matls-Whsle Service Stations Auto Parts/Repair Light Industry Temecula -0.5% 4.9% 2.3% -9.1% -10.6% 1.3% 6,349,018 6,380,688 -0.5% Auto Sales-New Energy Sales Light Industry Bldg.Matis-Retail Wildomar 16.0% -1.3% -6.9% -18.3% 10.8% -1.9% 317,140 326,053 -2.7% Miscellaneous Retail Florist/Nursery Service Stations Bldg.Matls-Whsle 14 MuniServices, LLC • AGENDA ITEM 8 • • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: November 25, 2013 TO: Budget and Implementation Committee FROM: Megan Kavand, Accounting Technician Anne Hallberg, Accounting Supervisor THROUGH: Theresia Trevino, Chief Financial Officer SUBJECT: Quarterly Investment Report STAFF RECOMMENDATION: This item is for the Commission to: 1) Receive and file the Quarterly Investment Report for the quarter ended September 30, 2013; and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: For the past few years and as a result of a low interest rate environment, the Commission's quarterly investment reports have reflected investments primarily concentrated in the Riverside County Pooled Investment Fund (RCPIF). Other investments included the state Local Agency Investment Fund and mutual funds. In connection with the issuance of sales tax revenue bonds and toll revenue bonds and the execution of Transportation Infrastructure Finance and Innovation Act (TIFIA) loan for the State Route 91 Corridor Improvement Project (SR-91 CIP), the Commission anticipated the need to engage an investment manager for the bond proceeds and other required funds. Additionally, the Commission desired to engage an investment manager to provide investment advisory and management services related to the Commission's operating funds. Accordingly, at its May 2013 meeting, the Commission awarded two investment management services agreements to Logan Circle Partners, LP. (Logan) for SR-91 CIP funds and to Payden & Rygel Investment Management (Payden & Rygel) for Commission operating funds. At the beginning of this first quarter of FY 2013/14, the SR-91 CIP financing was completed and the bond proceeds received and available for investment were as follows: Agenda Item 8 15 Funds Sales Tax Bonds Toll Bonds Total Project $ 332, 701, 733 $ 122,120,947 $ 454,822,680 Capitalized Interest 103,695,356 31,406,835 135,102,191 Debt Service Reserve 17,665,460 17,665,460 Total $ 436,397,089 $ 171, 193 ,242 $ 607,590,331 Logan invested these SR-91 CIP debt proceeds in the Short-Term Actively Managed Program (STAMP). Since most of the first quarter activity concentrated in the investment and accounting for the SR-91 CIP financing, Payden & Pygel has not yet been authorized to make specific investments for the Commission's operating funds. The quarterly investment report for the first quarter of FY 2013/14 as required by state law and Commission policy reflects the increased investment activities resulting from the SR-91 CIP. The quarterly investment report includes the following information: • Investment Portfolio Report (in a format similar to previous quarters) • STAMP Portfolio by Investment Category (new) • STAMP Portfolio by Account (new) • STAMP Portfolio Transaction Report by Account (new) • STAMP Portfolio Summary of investment by credit rating, industry group, asset class, security type and market sector (new) • STAMP Portfolio Toll Revenue Project Senior Lien Fund Summary of investment by credit rating, industry group, asset class, security type and market sector (new) • STAMP Portfolio Toll Revenue Project Sales Tax Revenue Fund Summary of investment by credit rating, industry group, asset class, security type and market sector (new) • STAMP Portfolio Toll Revenue Series A & Series B Reserve Fund Summary of investment by credit rating, industry group, asset class, security type and market sector (new) • STAMP Portfolio Toll Revenue Project Capitalized Interest Fund Summary of investment by credit rating, industry group, asset class, security type and market sector (new) • STAMP Portfolio Sales Tax Revenue Capitalized Interest Fund Summary of investment by credit rating, industry group, asset class, security type and market sector (new) • County of Riverside Investment Report for the Quarter Ended September 30, 2013 The Commission's investments were in full compliance with the Commission's investment policy adopted on June 7, 2012. Additionally, the Commission has adequate cash flows for the next six months. Attachments: 1) Investment Portfolio Report 2) STAMP Portfolio by Investment Category 3) STAMP Portfolio by Account 4) STAMP Portfolio Transaction Report by Account 5) STAMP Portfolio Summary of Investments Agenda Item 8 16 • • • • • • 6) 7) 8) STAMP Portfolio Toll Revenue Project Senior Lien Fund Summary of Investments STAMP Portfolio Toll Revenue Project Sales Tax Revenue Fund Summary of Investments STAMP Portfolio Toll Revenue Series A & Series B Reserve Fund Summary of Investments 9) STAMP Portfolio Toll Revenue Project Capitalized Interest Fund Summary of Investments 10) STAMP Portfolio Sales Tax Revenue Capitalized Interest Fund Summary of Investments 11) County of Riverside Investment Report Agenda Item 8 17 • Riverside County Transportation Commission Investment Portfolio Report Period Ended: September 30, 2013 OPERATING FUNDS City National Bank Deposits County Treasurers Pooled Investment Fund Local Agency Investment Fund (LAIF) Subtotal Operating Funds FUNDS HELD IN TRUST County Treasurers Pooled Investment Fund: Local Transportation Fund Subtotal Funds Held In Trust COMMISSION MANAGED PORTFOLIO US Bank Money Market First American Government Obligation Fund Cost of Issuance Fund US Bank Money Market Subtotal Commission Managed Portfolio STAMP PORTFOLIO for 91 CIP Toll Revenue Project Senior Lien Fund Toll Revenue Project Sales Tax Revenue Fund Series A & Series B Reserve Fund Toll Revenue Project Capitalized Interest Fund Sales Tax Revenue Capitalized Interest Fund Subtotal STAMP Portfolio TOTAL Ali Cash and Investment< 450,000,000 400,000,000 350,000,000 250,000,000 200,000,000 100,000,000 50,000,000 FAIR VALUE 23,543,925 416,489,403 3,620,517 443,653,846 87,700,567 87,700,567 6,107,064 199,671 6,306,737 112,338,198 310,243,406 17,727,614 31,540,374 104' 073,465 575,923,058 1, 113,584,207 • RATING COUPON MOODYS/FITCH/S&P RATE A3/BBB+ Aaa-bf/AAAN1 Not Rated Aaa-bf/AAAN1 AaalAAAm AaalAAAm N/A NIA N/A N/A N/A N/A PAR VALUE See attached report for details See attached report for details See attached report for details See attached report for details See attached report for details Nature of Investments •STAMP Portfolio for 91 CIP Reserve 8STAMP Portfolio for 91 CIP Project Fund •STAMP Portfolio for 91 CIP Capitalized Interest •91 CIP COi US Bank Money Market •Commission Managed Portfolio Debt Reserve •TrustFunds 1ll Operating Funds 18 • ATTACHMENT 1 PURCHASE MATURITY YIELD TO PURCHASE MARKET UNREALIZED DATE DATE MATURITY COST VALUE GAIN (LOSS) N/A 0.38% N/A 0.38% N/A Portfolio Investment Type 0.02%Cash 0,33% LAIF • • ATTACHMENT 2 • STAMP Portfolio by Category for quarter ending September 30, 2013 20 Page 2 of 32 41111 11' ; 1 ; I 4 .1- 3 16 4.1 1 -vitt I 11'141 inajl ,41 1.1 rp it IA! 4 14 r glArtt111.1-1 rptimdomiur Tiro4rtin • • • ST AMP Portfolio by Category for quarter ending September 30, 2013 22 Page 4 of 32 • • • • • ATTACHMENT 3 STAMP Portfolio by Account for quarter ending September 30, 2013 24 Page 6 of 32 STAMP Portfolio by Account for quarter ending September 30, 2013 • • • STAMP Portfolio by Account for quarter ending September 30, 2013 26 Page 8 of 32 • 0. • • • • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 28 ATTACHMENT 4 • Page 10 of 32 Rivrile County TralllpOl'lation Cammil5ion STAMP Portfolio Transaction Report Quarter ending September 30, 2013 Page 11 of32 • • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 30 • Page 12 of 32 STAMP Portfolio Transaction Report Quarter ending September 30, 2013 Page 13 of 32 • liMido County lmmportallon Contrnmlcn • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 32 • Page 14 of 32 • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 • • Page 15 of 32 • • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 03741NV87 Anache Comoration 0.500.000.00l Maturitv 08/08/2013 34 • Page 16 of 32 • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 • • Page 17 of32 • le; •i.~!'t«2sillU~TaiiJtevenlie!lonlf, LC-PF-2 Sales Tax Revenue Bond • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 ';l(Q~~g;~bl GOLDMAN SACHS GROUP INC 36 • Page 18 of 32 • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 ··-··---··----·---~-A.,~..<::_!10,,()!:~3.!!~.----------------------2:.Cl.9-.~~!1_~!2.,..!l._,ux___, _____________ , __ .. ,, ___ 08/15/2016 __ , __ .].:!!?~!l_tJ.9-..._._._.,, ............ _ .. ,_ ... :_ •.... • • Page 19 of 32 • • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 • ~~.7..6..2..~---·---·---------·--L.~:!'F-23ale~.!.~.~:'.~~~c:"-~--'.2.6..~.<:~S.S------·__f2· HSG ~ FIN-B-TXBJ:._ __________________________ _1,_880,6..~-50 BuL ____ ··----·---·---~!.!.?_l~_!)~---·-·-----9,880,_6_lL~~----········-···-··--·-···-·--·-·-38 Page 20 of 32 • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 • • Page 21 of 32 • • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 40 • Page 22 of 32 • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 • • Page 23 of 32 • • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 42 • Page 24 of 32 STAMP Portfolio Transaction Report Quarter ending September 30, 2013 Page 25 of32 • • STAMP Portfolio Transaction Report Quarter ending September 30, 2013 44 • Page 26 of 32 • • • 45 • l. ~~5,000,(}(i(J 1)1) l5CT,00<J,0rJl).Ql1 1l b 17.'.U)O..l,OCi.l.OO ;;. 11 ;i! ~ :l i 1<10,0\lU.00(1.00 7a.,o;:m,ooo Nl 50,IX)f;,QfUJ.M .<!'!.\00-U.Ut'IJ.{)U t}.\10 C-.h {0 (IOCN) l Mon.ey M•ric:•'I: P"unds (0.23<4%! -·· ..... _--j •• AA l FIXMI tncom• (99. 766%) • • ATTACHMENT 5 STAMP Portfolio for quarter ending September 30, 2013 •••••••·1·.············l.•mm1•••••••••••••·············· . . .. . ' l\·l+ GMMA CMO (D:fl9l'Mi) -VANKl;lf. {0.8.ZO'N) -· •HMA 10.986%) -;:: f'tU.MC CMO !1.6W'ff>~ IFNMAC.MO (l.867%~, ~~:· (:~;~~:/./ US GOY (9.616%) ----..,, A·> 46 Otff,. !31..<ISO'tC>I-.-.., Comsmr~al M9$ {2. 948'6) ~ Med ... (l.~)-' Mort,age lll•dted (6.;Ul'M:ioJ ·-.. •• ~¥...--CORP !40.6.U~• lhn::Ud (8,Yl!M!o) --·· Govef'n"'*"'" (9,6i6~) -' ••nks. f19,~l%) _ ... -so-Nlgn 00Ji81%) '-Ohr•ni:lfkid fll,..n SUv C9.0&: T•tM:6m~ tfi.llfl'H.1 / Ftn.m:t.I Ul.114%1 • • • • 47 • Rmdt Counly TIOllSjlOlll!lla Commission OC.000.0(;1}.'Jtl "/~).mlo.m~o.oo i to,000,000 oo ~ ~H>,IN1t),(XJ0 6~) + ~ " ,WOOf.tJjQO.QO > ~ ,, :~tf.\KlU,CCQ.OfJ l ! ?l},000.000 co lG,Of)0,000.-;)U 1,.(.l.1 CHfl {0.000%) l Mo~ M•rit•t f'unda (0.0:'!.6%1 ·-···---~--· • ATTACHMENT 6 STAMP Portfolio Toll Revenue Project Senior Lien Fund for quarter ending September 30, 2013 AM M A · #Ix~ lneome {99. 961 %} f.,bfi<f-t ',,',;i;r. ~ A,1·• MMflUHD f0.0'?'l$'\11.) -··· ABS (l.076%} -::::~=·---' MUNI (l.h'iS6'%) ...-;,, VRON (2.568%) ....,...,,./ COAJO {1::1.Ua.~) .. / .. , A~:l. ~ C.1" (8l..~3'M c~n. <.;);.:o;;nNi 'fry-: r,y~ n"'"'<'.r\-«'>f.;c ~ •'<<'ri:t-'1 48 othM (33-9&~) OtlCsGff U.S54%t "°"ost ~a&.,..per lJ.5'54%) _.,.,, CHh i0-.0.~~"1t ·1 ..:::-;;~~s;~:.~~~:·:::::==r···-··· lltlll:tv (lO.~) ~-• .., rtnandal (21.l.l2%} -• ,,,,,.,.-Dl_,.islftM Flmln Serv fU.002'1>l ... _ l!ht<tric f1.l°""') "-··.t.uw "•""'~,,., .. .,. {7.107%1 "'-·--Jlldustrl*" jSS.A36%l • • • ATTACHMENT 7 STAMP Portfolio Toll Revenue Project Sales Tax Revenue Fund for quarter ending September 30, 2013 UC•c\100,QOO DO 70.(J{)f;,OUJ !.l(J ~ 6G.00V,OCO.OO li ~n.O()l),()l\(,l,00 + ~ ~ i ."HJ.V(J1;,G'Jt)O{) "' s : ::!0.00<1.000.M 10.C{l{l,l'OIJ.!.lU 0.00 <!-" (0.00()'%} l Money Marlurt P-unds f0.072%) --··---AAA \.. Flx!MI lnco-{9'l.92B"") AA· Other' CMO {0.Mi'.1%) -·· MIMl'UND (0.072'%. ~~ FHLMC CMO t0.'20S%) --::::: YAN!KU u .. ~18%) _ _..-_;:/ MUNI {(i..334%) ··~' .A9S (U.104°""} ./ CP (l8.l7S~'J .,, .. , -.... .. co•P 1!Se.s2s.%> ('hart (.,1r..,;li'.(~ ~ ll.:t'!,1, l'+IMkr-~ '-'~l<>I) •· A::-Ut.:~~1 50 OU,er fll .2M%l ., ""-dla 1:.ui~) -·-···· AutornobUe US (l.6;1'~,-.1 --··" Food (J,646%) / OS Muntctpals (6.'.l.34"4) ./ Gdh (0.072%) ··1 ~av··•ack.ed (O.l6f:l"'l ~--1 Mvntd,,.t (6.134%) __...-UUHty ·(7.n4%\ sotllackH (lS.104%)--Sanks 125.1.00%) -.... --.._. T11t.contmunle«tfon. (~.Ul29%) .. Dlvenff'Jed Pin.an Set'Y (8.0:;'t!>) ,.. ........ '1nand .. (49.l63%) • RR-rile Coon!'( Transpo!lo1ion Crunmissitn ~(),{,1{)0,1)00.00 il 15.00<J.Of.irJ.()l) 2 ~ + g ii J.f>,C!PC,;)00.00 't ~ ;! ~ 5.00<1.000 00 " 0 00 <;'i~Mt • ATTACHMENT 8 STAMP Portfolio Series A & Series B Reserve Fund for quarter ending September 30, 2013 Vti•<J•?·'·~t1'1*-i AAA FNMA ~ft.~'!~)· iNMA <:MO f1.2J1W.) -~ M<:: CNO U Lt\81%) --·-· 52 Agency COlhlt CMO tl0-!>06%) --...._ c.-m-crat MBS 113.\94%)·---' -·-US GOV (.$6.225%11 U,t•,i·MMi<.<'.t • f....l:(!l:<{~I • 56\l'~ifin {U.99.'Ht) -G-•rl!Mftent (46,225%-) -g 5 ;;( 8 ~ ! "' J • i.:C.Ll{>',<.fJt)Q.9<J l l,')(,lf),0(10.~)(1 13,0~)0.Coo .JD 12.':l:)l\(Jn(l {){) }O.rn:m.rn:io.o<:! 1,~.-m).two.~~u ':3.00<l.000.00 2.~00.(UJ(J.00 f,l . .;.)(! ey M•~ PU:J°KSG (;1!.l'l74~$.~.,~~~ l • • ATTACHMENT 9 ST AMP Portfolio Toll Revenue Project Capitalized Interest Fund for quarter ending September 30, 2013 -i AA "ho:ed ln<:OttMt 197.326.~I -A<· MMPUHD 12.67 .. %) ::::~· f'NMA CMO (.'l.Ba5%) -:::.-,../ HLMC CMO (S.9'91%} _,,, .. Al!JS(l'>.51.fl'll>)·~ MUNI (7,tM8%) ···-..__ US GOV (34.869%) -' I -A .---COR.P l38.J4l'Mtl 54 Auto Ma-nufw<ti.n·e.-• 13.S~) ·-et-nlfl•d Fln•n Serv f3.6J2'Mi) -..., ,..__.-S-t•fOn (34.669'W.} T•lee~munk•t1ott• (4.304%) -~ oth9r Aas 16.s.t0%J ---M-VS MUttidJNihl P.CMI),.._) ..// C~I MSS t&.0-41%) Mtmldpal r, .D.40%~ Gov•Mm•nt l !114.Bf.9'k) MOrtgage B•(;k9d 110.549%} ----··-Industrial U2.974:%) _,. .......... \_ Fln•nc'-1 (24.421'lto) • Rivellide Counly Tnmsportatton Commission ·?o,u,)!:t.cm.:~.<J<J !}(>,IJl)f).0(!{~.<.l<J l ':.tJ.OUP.t<OO.;,,H', ;;; ~ !; 4V.OOo.C00.0;) ~ z }(l,000.00() ()0 ~ "' i :~(i,o:)~.<Uw.on l0,(i00.m'll'/.(i(1 O.J') AAA Money Ma-rk.e-t Furtds f0.0!il%• i L f'b.Bd tnc:om• (9-9.947<>,(,~ • • ATTACHMENT 10 STAMP Portfolio Sales Tax Revenue Capitalized Interest Fund for quarter ending September 30, 2013 ., • ... GNMA CMO 12.60'1%) FGLMC(7..716~ FNMA (4.148'%} // LMC CMO {4.5:1.5%) . ./ MUN! (6.004%1 _ ... ,,,. CMO (8.320%1 ---~ Cf'" (10.056~) ..... / 111········· A·l+ • .....-US GOV (34JJ67%J I l CORP !2'4AJ7~) 56 0th.,. (5.59()%} \ Apney Coh.t CMO \.l.'318%) . f'GLMCC:oll~I f2.1UMl.)--C~ l3.l37~)·-·­f'NMA CoUMentl ~4.148%) ·--...._ ~nee {4.3<1!.l"I -· US MwsklfN!IS CG.004%> ---_./ Banks U0.95'.)%> ~ I>~""""' $•rv 01 16)%.J .... -SO'H~rll (3}.HC\'%1 \ GomMet'Cl•l MS-S ll l.659%) ca.sh (0.0$)%) . UtUfty CO,!J8?1fi.~~--· .,\g'lrt<V (Z,87)'K>)..::-~· lndustn.f (4.5.f~~l--... Munlc:lpal (6.004%) _ _,...··"" Mortgage hdc•d (24.S43%) -·· ,....,.,...,,.-Gov•rnM•ht {~4.At.7%.) \_ Fl-ndal ti~.485%1 • • • ATTACHMENT 11 County of Riverside Treasurer's Pooled Investment Fund "Same Great Taste, Just Less Filling" For all of our regular readers of the Treasurer's Com- mentary, you will note a difference in format going forward as we conclude the first quarter of the new fiscal year. We will now produce the commentary por- tion on the front page every three months beginning in September and following up with December, March and June. We understand that many eagerly await our epi- grammatic writings on economics, and we will continue that in the same vein, but just four times a year. The regular monthly content and financial reporting will remain the same. It's hard to believe that this month marks the fifth anni- versary of the Lehman Brothers tumble into bankruptcy and subsequent stock market crash as investors lost confidence in the equity markets and questioned the viability of America's financial system. Lehman was one of the oldest, largest and most respected investment banks in the world but wasn't the only financial institu- tion drowning in bad bets on toxic, mortgage-backed securities. Unlike other firms, namely banks, Lehman wasn't covered by the FDIC, therefore despite the ef- forts of the U.S. Treasury and the Federal Reserve, there was no way to save them through the methods deployed to sell Bear Steams to JPMorgan Chase earlier that year which protected bond and equity holders. Until Lehman's bankruptcy, the federal government had intervened when other large financial institutions were in fiscal danger. In addition to the Fed engineered sale of Bear Steams, mortgage giants Fannie Mae and Fred- die Mac were placed into conservatorship under the Federal Housing Finance Agency (FHFA) after they sustained billions of dollars in loan losses from defaults by homeowners. The Lehman bankruptcy, however, was the turning point that really sparked the global financial crisis, triggered by the collapse of the housing bubble. The rest of the story plays out like a made for Holly- wood movie with market meltdowns and a full-blown liquidity crisis once thought unconscionable in the U.S. Near unrestrained financial panic, the Fed and the Treas- ury fought desperately to avoid a total collapse of the American financial system. Contrary to criticism of Wall Street cronyism, they overwhelmingly did it out of a sincere belief that ending the panic would be critical to rebuilding the full faith and credit in the U.S.A., and abroad. To their acknowledgement they succeeded at stemming potentially the worst financial disaster in history, although we continue to bear the side effects to this day. To no surprise, the FOMC chose not to begin tapering its open market purchases at their regularly scheduled meeting of September 17-18 stating, "Taking into ac- count the extent of federal fiscal retrenchment, the Com- mittee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underly- ing strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its pur- chases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securi- ties at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month." In other words, the Fed sees the same mixed messages the rest of us see and with the debt ceiling debate just around the comer, we're sure they don't want to rock the boat. Stay tuned for an interesting ride over the next month as the mudslinging in Washington will surely make headline news. Don Kent Treasurer-Tax Collector I I I I Capital Markets Team Don Kent Treasurer-Tax Collector Jon Christensen Asst. Treasurer-Tax Collector Giovane Pizano Investment Manager Erika Clark Asst. Investment Manager Investment Objectives The primary objective of the treasurer shall be to safeguard tlze principal of the funds under the treasurer's control, meet the liqttidi- hJ needs of the depositor, and achieve a rehzm on the funds under his or her control. RIVERSIDE COUNTY TREASURER'S POOLED INVESTMENT FUND IS CURRENTLY RATED: Aaa-bf BY MOODY'S INVESTOR'S SERVICE AND AAA/Vl BY FITCH RATINGS 1.28 1'.30 1.41 1.39 1.31 1.29 April 5,582,276,144.63 5,577,075,042.55 5,201,102.08 0.09 0.37 1.20 1.18 ------·~------------.. ----·---.---··-"'~·-··-·-·-·~· ··-·~--··~---------------·~---------·-- The Treasurer's Pooled Investment Fund is comprised of the County, Schools, Special Districts, and other Discretionary Depositors. 57 Current Market Data Economic Indicators 10/4/2013 10/4/2013 9/25/2013 Nim-Farm f~Yt~1Js~!~E?f~!9oPuts ~e number of p\lid employees. working part: [ (;:;:·';a::$:~;Q007;t~'1Ji;~ . ... . tiple or ftql~tjJ!le iuJh~ ni~2~'~.l>,~E!~ .. ~1lg goverJlJ!lE!nt E!~l>,li~ents: ... · ''· ·. ···. ; :•· ·· Employment Situation: Measures the number of unemployed as a percentage of the labor force. 7.3% n.a. • Durable Goods Ord~s ~ .• ~~f.l#g~: Refle&$-fue new o~ders placed ynthdon:teSl:i~ mantifacturers"for in:tntedmfec~dtmturedelivery of factory hard goods. . 1<: h-ii-'_ ::,~t':'*i; :Ctt'>;' , ...... , ,,,,,.-~--...------'-------- 9/26/2013 9/24/2013 10/3/2013 9/17/2013 Stock Indices Commodities Nymex Grude. Gold (USD/OZ) Real Gross Domestic Product-Q/Q change: The broadest measure of aggregate economic activity and encompasses every sector of the economy. GDP is the country's most comprehensive economic scorecard. Consumer•Confiderice:»MeaSbreslfunsumer·attitudes on present ecoriomic conditions • ,f," :;yjj:J;,E,~:' :Q,-;,,,_ij ~"~~I ;"' '',: and expectations of futilie conditions. Factory Orders MjM change: Represents the dollar level of new orders for both durable and nondurable goods. Fed Funds Target Rate Increase to 0.25% 42.0% .$ .• 102.33 $ ~5.32) Increase to o.50 % $ 1,328.94 $ (66.21) Increase to 0.75% 0.0% Increase to 1 % 0.0% US Treasury Curve (M/M) RIVERSIDE COUNTY TREASURER-TAX COLLECTOR 59 2.7% 2.5% 0.3% n.a. 42.0% 0.0% 0.0% 2 • TIMMI The Treasurer's Institutional Money Market Index (TIMMI) is compiled and reported by the Riverside County Treasurer's Capital Markets division. It is a composite index derived from five AAA rated prime institutional money market funds. Similar to the Treas- urer's Office, prime money market funds invest in a diversified portfolio of U.S. dollar denominated money market instruments in- cluding U.S. Treasuries, government agencies, commercial paper, certificates of deposits, repurchase agreements, etc. TIMMI is cur- rently comprised of the five multi billion dollar funds listed below. Fidelity Prime Institutional MMF --~~---Federated Prime Obligations Fund POIXX 0.03% Wells Fargo Advantage Heritage WFJXX. 0.073 Morgan Stanley Institutional Prime Liquidity Fund MPFXX 0.06% ~~~~~~~~~~-~~~~~--~~- 1.00% 0.80% 0.60% 0.42% 0.43% 0.40% • • 0.17% 0.16% 0.20% • • 0.37% 0.38% 0.38% 0.32% o.'4% • • • 0.11% 0.12% 0.11% • • • • 0.00% Sep-12 Nov-12 Jan-13 Mar-13 0.37% 0.38% 0.39% • • • 0.10% 0.08% 0.07% • • • May-13 _._Pool Yield -TIMMI 0.37% 0.38% 0.38% • • • 0.06% 0.06% 0.05% • • • Jul-13 Sep-13 • CashFlows • 157.14 309.68 69.60 1,035.38 95.10 417.98 340.00 157.98 130.00 177.23 65.00 759.17 82.11 119.13 412.35 462.86 287.00 50.00 121.70 600.00 75.41 175.00 9/2014 7.00.00 (130.00) 130.00 0.00 65.00 TOTALS 9,855.75 10,817.42 (831.67) 462.86 3,477.09 3,007.86 4,213.64 9.90% 64.32% 90.10% * All values reported in millions ($) . The Pooled Investment Fund cash flow requirements are based upon a 12 month historical cash flow model. Based upon projected cash receipts and maturing investments, there are sufficient funds to meet future cash flow disbursements over the next 12 months. RIVERSIDE COUNTY TREASURER-TAX COLLECTOR 3 60 Asset Allocation 54,000,00 54;001lo0 54,000,()0 100.00% 0,41% .003 .o03 310,000.00 310,000,00 310,000,00 100,00% 0,15% ,003 .003 165,000,00 165,01250 14;aa7;86 FHLMC BONDS 327,725.00 327,613.51 327,75121 100,04% 0.58% .980 1.418 FNMA BONDS;t' 981,779.0Q~ 982,0SS,56 975,000,89 l~? ~;t4~ FHLB DISC NOTES 27,000.00 26,95181 26,986.40 100.13% 018% ,712 ,712 lli!LB:BONDS: ,c ~lll,325.71. llll,3SSAS l,l081195A9 .99.77%' o.44%. 1007 1670 ': FFCB BONDS 381,345 00 381,238.29 381,559.40 100.08% 029% .825 .852 FMAC DISC NOTES 75,000.00 74,911!.98 74,976,45 100.08% 0,)4% .611 .611 FARMER MAC 187,568.00 187,546.99 187 ,582.76 100.02% 0.28% ,827 1068 Ml!llfl B ON.DS :. c't:f 58,515,00 58,515.00 58,515.00 !OMO% 0,46% 1302 .. 1302 COMM PAPER 447,000.00 446,904.58 100.00% 010% .no .110 500,000.00 - L Jl II. .. 11 J l. •I I. 11. • -Sdleduletl Book -Mvlc:et SCHEDULED PAR% -fMl.BDISC:NODS· t'l4t -FHLIHIOl!IDS·:liNI -l'FGll!OfDS • 8"" -RGClml!CNODS·R -f'MMUMM:·4'MI -MUJCIJIOllDl·1 .. -O'l!NMJINIER· ~ c::;JICS•N • RIVERSIDE COUNTY TREASURER-TAX COLLECTOR 4 61 Maturity Distribution • MMKT 380,000.00 FARMER MAC -"<"<'>m-.-·""'""'-''"'~--~- MUNI BONDS COMM PAPER 300,000.00 • i I • 3,595.00 47,000.00 120,000.00 52,568.00 """""'"° H0< '" ""' '""""''"l<''*'~-~ -~ "'"" ==-~--' e ·" ,,, 22,105.00 11,355.00 100,000.00 RIVERSIDE COUNTY TREASURER-TAX COLLECTOR 62 380,000.00 381,345.00 "'"'·~~"''''-''~-··'""'~·~75:000.00~· 5,000.00 21,460.00 10,000.00 _., __ _ -C&TllUSl'ffll>·-- -lllM/lflllil!lllllMllllMdilldM -l.OCN-AllCYOllJG __ ,. _us,_ __ ..........,..,. __ m.sc ___ ,_ _____ ...,. -------MIUIOUC-·--MIUI-----ff'Cll-·-,., --OJSC-·-l'llt -·-MIC·-----·---COMIC-----14(J)S·--- 187,568.00 58,515.00 447,000.00 5 Credit Quality Aa Aal AA+ AA- 50,000.00 70,745.00 MOODY'S ••·11¥> ·M1·2"' ·AO·• .Aa-1¥> ."2 .... •MR•mli 2,926,619.71 295,000.00 49,998.50 70,145:00 49,954.95 70,745.00 99.91 % 100.00% S&P •MA·ft •M-·WI •AA+·mlt ···~ •M·e\fit 294,930.30 294,960.89 100.01 % ··~---~~""'"-=----~-· 573,044.21 RIVERSIDE COUNTY TREASURER-TAX COLLECTOR 63 • 0.22% ·0.2(,% • 0.14% • 6 Month End Portfolio Holdings Maturity !\taturity Par Book Market Market Unrealized l\1od1fied YNrs To CUSIP Description Dale Coupon To Mat Value Value Price Value Gain/Loss Duration ~latunty Fund: 1 POOL FUND MPFXX CALTRUSf HERITAGE FIDELITY PRIME FEDERATED PRIME MORGAN STANLEY CALTRUSTFND CLTR CALTRUSTSHTTERM DDA/PASSBK CASH UB MANAGED RA TE MMDA BANK OF THE WEST LOCAL AGCY OBLIG 10/01/2013 10/01/2013 10/01/2013 10/01/2013 10/01/2013 10/01/2013 10/01/2013 LAO US DIST COURTHOUSE 06/15/2020 US TREAS BONDS 912828SW1 912828TA8 912828SW1 912828TA8 912828TA8 912828SW1 912828TF7 313397RU7 313397XA4 3134G1SGO 3137EACR8 3137EACR8 3134G2CL4 3137EACZO 3134G3BF6 3134G3EB2 3134G3EN6 3134G3LA6 3134G3NLO •~~: 3QW3 3QW3 3134G3RP7 3134G3QW3 3134G3SB7 3134G3SB7 3134G3JX9 3134G3TL4 3134G3SB7 3134G3SB7 3134G3SB7 3134G3SB7 3134G3NS5 3134G3LA6 3134G3BF6 3134G3550 3134G3W71 3134G3W71 3134G3Y20 3134G3Y20 3134G32E9 3134G33X6 3134G34B3 3134G34B3 3134G34B3 3134G34B3 3134G34B3 3134G34B3 3134G34B3 3134G33R9 3134G3550 3134G36A3 3134G36)4 3134G36M7 3134G36)4 3134G36J4 3137EADQ9 3137EADQ9 3137EADQ9 U.S. TREASURY BOND U.S. TREASURY BOND U.S. TREASURY BOND U.S. TREASURY BOND U.S. TREASURY BOND U.S. TREASURY BOND U.S. TREASURY BOND FHLMC DISC NOTE FHLMC DISC NOTE FHLMC 3.5YrNc6MoE FHLMC3Yr FHLMC3Yr FHLMC3Yr FHLMC2Yr FHLMC2Yr FHLMC 3.5YrNc2YrE FHLMC 3.5YrNc2YrE FHLMC2Yr FHLMC 3YrNc2YrE FHLMC 3YrNc2YrE FHLMC2Yr FHLMC 3YrNc2YrE FHLMC 3YrNc2YrE FHLMC 3YrNc2YrE FHLMC 3YrNc2YrE FHLMC2Yr FHLMC 2.16Yr FHLMC3Yr FHLMC 3.5YrNc2YrB FHLMC2Yr FHLMC2Yr FHLMC2Yr FHLMC2Yr FHLMC2Yr FHLMC2Yr FHLMC14Mo FHLMC4Yr FHLMC 2YrNc1YrE FHLMC 2YrNc1YrE FHLMC 3YrNc1YrE FHLMC 3YrNc1YrE FHLMC2Yr FHLMC 3YrNc1YrB FHLMC 3YrNc2YrB FHLMC 3YrNc2YrB FHLMC 3YrNc2YrE FHLMC 3YrNc2YrB FHLMC 3YrNc2YrB FHLMC 3YrNc2YrB FHLMC 3YrNc2YrE FHLMC 3YrNc1YrE FHLMC4Yr FHLMC 3YrNc6MoB FHLMC 3.5YrNc3MoB FHLMC 2.5YrNc3MoB FHLMC 3YrNc3MoB FHLMC 3.5YrNc3MoB FHLMC3Yr FHLMC3Yr FHLMC3Yr BONDS FNMA 3.25YrNc6MoE FNMA 3.5YrNc6MoE 05/31/2014 06/30/2014 05/31/2014 06/30/2014 06/30/2014 05/31/2014 07 /31/2014 01/14/2014 05/20/2014 03/03/2014 02/25/2014 02/25/2014 04/29/2014 11/27 /2013 12/23/2013 06/30/2015 06/30/2015 02/27/2014 02/24/2015 02/27 /2015 03/21/2014 03/06/2015 03/06/2015 03/12/2015 03/06/2015 04/28/2014 04/28/2014 01/30/2015 09/28/2015 04/28/2014 04/28/2014 04/28/2014 04/28/2014 03/21/2014 02/27/2014 12/23/2013 11/01/2016 11/26/2014 11/26/2014 11/27 /2015 11/27 /2015 12/03/2014 01/15/2016 01/28/2016 01/28/2016 01/28/2016 01/28/2016 01/28/2016 01/28/2016 01/28/2016 01/15/2016 11/01/2016 03/28/2016 09/14/2016 09/14/2015 09/14/2016 09/14/2016 05/13/2016 05/13/2016 05/13/2016 12/17/2013 03/21/2014 .073 .054 .032 .057 .408 .080 .277 .890 .250 .250 .250 .250 .250 .250 .125 .160 .170 1.250 1.375 1.375 1.350 .375 .625 1.000 1.000 .375 .500 .550 .300 .625 .625 .650 .625 .375 .375 .650 .900 .375 .375 .375 .375 .300 .375 .625 .625 .350 .350 .500 .500 .320 .500 .500 .500 .500 .500 .500 .500 .500 .450 .625 .600 .650 .500 .650 .650 .500 .500 .500 1.125 1.350 RIVERISIDE COUNTY TREASURER-TAX COLLECTOR .073 .054 .032 .057 .408 .080 .277 .890 .255 .243 .229 .235 .237 .230 .172 .160 .170 1.250 1.375 1.465 1.160 .580 .626 1.000 1.000 .394 .581 .594 .378 .625 .625 .650 .628 .427 .460 .662 .900 .509 .440 .452 .437 .345 .303 .233 .647 .350 .350 .500 .500 .320 .500 .500 .500 .500 .500 .500 .507 .507 .450 .600 .600 .650 .500 .656 .650 .500 .500 .500 1.141 1.350 150,000,000.00 150,000,000.00 5,000,000.00 75,000,000.00 54,000,000.00 200,000,000.00 110,000,000.00 485,000.00 20,000,000.00 20,000,000.00 25,000,000.00 25,000,000.00 25,000,000.00 25,000,000.00 25,000,000.00 25,000,000.00 50,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 12,000,000.00 10,000,000.00 10,000,000.00 10,100,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 6,000,000.00 5,000,000.00 4,625,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 65 150,000,000.00 150,000,000.00 5,000,000.00 75,000,000.00 54,000,000.00 200,000,000.00 110,000,000.00 485,000.00 19,998,437.50 20,002,343.75 25,007,812.50 25,005,859.38 25,004,882.81 25,006,835. 94 24,986,328.13 24,965,777.78 49,922,083.33 5,000,000.00 5,000,000.00 9,973,100.00 5,027,800.00 9,958,700.00 9,999,800.00 5,000,000.00 5,000,000.00 9,996,000.00 4,988,000.00 4,993,500.00 9,984,000.00 5,000,000.00 5,000,000.00 10,000,000.00 4,999,500.00 4,994,400.00 4,991,050.00 4,998,250.00 5,000,000.00 9,972,500.00 4,993,250.00 4,992,015.05 11,984,880.00 9,992,000.00 10,011,600.00 10,146,965.00 9,991,200.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 9,998,000.00 5,998,800.00 5,000,000.00 4,629,301.25 5,000,000.00 5,000,000.00 5,000,000.00 4,999,000.00 5,000,000.00 9,999,900.00 5,000,000.00 5,000,000.00 4,997,500.00 5,000,000.00 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.109000 100.113000 100.109000 100.113000 100.113000 100.109000 100.023000 99.994000 99.%8000 100.430000 100.518000 100.518000 100.717000 100.046000 100.117000 100.216000 100.194000 100.120000 100.108000 100.029000 100.120000 100.216000 100.216000 100.235000 100.216000 100.153000 100.153000 100.170000 100.363000 100.153000 100.153000 100.153000 100.153000 100.120000 100.120000 100.117000 99.516000 100.030000 100.030000 99.907000 99.907000 100.122000 99.790000 99.697000 99.697000 99.697000 99.697000 99.697000 99.697000 99.697000 99.728000 99.516000 99.586000 99.526000 100.076000 99.526000 99.526000 99.741000 99.741000 99.741000 100.220000 100.596000 150,000,000.00 150,000,000.00 5,000,000.00 75,000,000.00 54,000,000.00 200,000,000.00 110,000,000.00 485,000.00 20,021,800.00 20,022,600.00 25,027,250.00 25,028,250.00 25,028,250.00 25,027,250.00 25,005,750.00 24,998,500.00 49,984,000.00 5,021,500.00 5,025,900.00 10,051,800.00 5,035,850.00 10,004,600.00 10,011,700.00 5,010,800.00 5,009,700.00 10,012,000.00 5,005,400.00 5,001,450.00 10,012,000.00 5,010,800.00 5,010,800.00 10,023,500.00 5,010,800.00 5,007,650.00 5,007,650.00 5,008,500.00 5,018,150.00 10,015,300.00 5,007,650.00 5,007,650.00 12,018,360.00 10,012,000.00 10,012,000.00 10,111,817.00 9,951,600.00 5,001,500.00 5,001,500.00 4,995,350.00 4,995,350.00 5,006,100.00 4,989,500.00 4,984,850.00 4,984,850.00 4,984,850.00 4,984,850.00 4,984,850.00 9,%9,700.00 5,981,820.00 4,986,400.00 4,602,615.00 4,979,300.00 4,976,300.00 5,003,800.00 4,976,300.00 4,976,300.00 9,974,100.00 4,987,050.00 4,987,050.00 5,011,000.00 5,029,800.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 23,362.50 20,256.25 19,437.50 22,390.62 23,367.19 20,414.06 19,421.87 32,722.22 61,916.67 21,500.00 25,900.00 78,700.00 8,050.00 45,900.00 11,900.00 10,800.00 9,700.00 16,000.00 17,400.00 7,950.00 28,000.00 10,800.00 10,800.00 23,500.00 11,300.00 13,250.00 16,600.00 10,250.00 18,150.00 42,800.00 14,400.00 15,634.95 33,480.00 20,000.00 400.00 -35,148.00 -39,600.00 1,500.00 1,500.00 -4,650.00 -4,650.00 6,100.00 -10,500.00 -15,150.00 -15,150.00 -15,150.00 -15,150.00 -15,150.00 -28,300.00 -16,980.00 -13,600.00 -26,686.25 -20,700.00 -23,700.00 3,800.00 -22,700.00 -23,700.00 -25,800.00 -12,950.00 -12,950.00 13,500.00 29,800.00 .003 .003 .003 .003 .003 .003 .003 3.392 .665 .748 .665 .748 .748 .665 .832 .290 .634 .419 .402 .402 .574 .158 .229 1.726 1.726 .410 1.392 1.400 .470 1.424 1.424 1.440 1.424 .576 .576 1.324 1.972 .575 .576 .576 .576 .470 .410 .230 3.044 1.151 1.151 2.141 2.141 1.171 2.274 2.310 2.310 2.310 2.310 2.310 2.309 2.309 2.275 3.044 2.472 2.922 1.943 2.922 2.922 2.594 2.594 2.594 .212 .468 .003 .003 .003 .003 .003 .003 .003 6.712 .666 .748 .666 .748 .748 .666 .833 .290 .636 .422 .405 .405 .578 .159 .230 1.748 1.748 .411 1.403 1.411 .471 1.430 1.430 1.447 1.430 .575 .575 1.334 1.995 .575 .575 .575 .575 .471 .411 .230 3.090 1.156 1.156 2.159 2.159 1.175 2.293 2.329 2.329 2.329 2.329 2.329 2.329 2.329 2.293 3.090 2.493 2.959 1.956 2.959 2.959 2.619 2.619 2.619 .214 .471 7 Month End Portfolio Holdings CU SIP ·:· 31398A5Zl 3136FP6XO 31398A3K6 31398A5W8 31398AVZ2 31398A5Zl 31398A5W8 3135GOGC1 3135GOGM9 3135GOGM9 3136GOMZ1 3136GORP8 3136GOPU9 3136GORTO 3136GORW3 3136GORP8 3136GORP8 3136GOTZ4 3136GOVZ1 3136GOUX7 3136GOVA6 3136GOYU9 3136GOA27 3136GOA27 3136GOB59 3136GOE64 3136GOE64 3136GOB59 3136GOW49 3135GOQB2 3135GORS4 3135GORY1 3135GORX3 3135GORZ8 3136GOY21 3136G0385 3135GORX3 3136G12F5 3135GORS4 3136G1356 3136Gl2F5 3136G12DO 3135GOSL8 3135GOS11 313SGOS11 3135GOS11 3135GOS11 3136G14Q9 313SGOSTI 3135GOSQ7 3135GOS11 3135GOS11 3135GOS11 3136G16)3 3136G1356 3136G17E3 3136G17Al 3136G1A66 3135GOS11 3136G1B40 3136G1B32 3136G1AQ2 3135GOTH6 3135GOTS2 3136G1C56 3135GOITO 3136G1AJ8 3136G1AY5 3136G1BF5 3135GOUB7 3135GOUB7 3136G1D97 3136G1DA4 3136G1DA4 3136G1DB2 3136G1CW7 3135GOUSO 3136G1DB2 3136G1EX3 3136G1ET2 3136G1FW4 3136G1FW4 3136G1FF1 3136G1FW4 3136GlGS2 3136GlGN3 Description FNMA 3YrNc6MoE FNMA5Yr FNMA4Yr FNMA3Yr FNMA5Yr FNMA3Yr FNMA3Yr FNMA 3YrNc2YrE FNMA 3YrNc2YrE FNMA 3YrNc2YrE FNMA 5YrNcl YrB FNMA 5YrNcl YrB FNMA 5YrNcl YrB FNMA 5YrNc1YrB FNMA 5YrNc2YrB FNMA 5YrNcl YrB FNMA 5YrNc1YrB FNMA 5YrNclYrB FNMA 5YrNc1YrB FNMA 5YrNc1YrB FNMA 5YrNcl YrB FNMA 5YrNc1YrB FNMA 5YrNclYrB FNMA 5YrNc1YrB FNMA 5YrNc1YrB FNMA 5YrNcl YrB FNMA SYrNclYrB FNMA 5YrNclYrB FNMA 5YrNc1YrB FNMA 3YrNc1YrE FNMA 3YrNc2YrE FNMA 3YrNc2YrE FNMA 3YrNcl YrE FNMA 3.5YrNc2YrE FNMA 4YrNclYrB FNMA 5YrNc6MoB FNMA 3YrNcl YrE FNMA 5YrNclYrB FNMA 3YrNc1YrE FNMA 5YrNcl YrB FNMA 5YrNc1YrB FNMA 5YrNc1YrB FNMA 3YrNc1YrB FNMA 3YrNc1YrB FNMA 3YrNcl YrB FNMA 3YrNcl YrB FNMA 3YrNcl YrB FNMA 5YrNcl YrB FNMA 3YrNclYrB FNMA 2.5YrNc1YrB FNMA 3YrNc1 YrB FNMA 3YrNcl YrB FNMA 3YrNcl YrB FNMA 5YrNcl YrB FNMA 5YrNc1YrB FNMA 5YrNc1YrB FNMA 3YrNc1YrB FNMA 5YrNcl YrB FNMA 3YrNcl YrB FNMA 5YrNcl YrB FNMA 5YrNc1YrB FNMA 5YrNc6MoB FNMA 3YrNc1YrB FNMA 3YrNc6MoB FNMA 5YrNc1 YrB FNMA 3YrNc1YrB FNMA 5YrNc1YrB FNMA 5YrNc1YrB FNMA 5YrNc1 YrB FNMA 3YrNc6MoB FNMA 3YrNc6MoB FNMA 5YrNc1YrB FNMA 5YrNclYrB FNMA 5YrNc1YrB FNMA 5YrNc6MoB FNMA SYrNcl YrB FNMA 3YrNc1YrE FNMA 5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 5YrNc6MoB FNMA 5YrNc6MoB FNMA 5YrNc6MoB FNMA 3.25YrNc6MoB FNMA 5YrNc6MoB FNMA 5YrNc6MoB FNMA 5YrNclYrB !\laturity Date 11/19/2013 11/19/2013 02/04/2016 03/14/2014 12/18/2013 03/13/2014 11/19/2013 12/18/2013 12/05/2014 12/23/2014 12/23/2014 06/28/2017 07 /26/2017 07 /10/2017 07 /26/2017 07 /25/2017 07/26/2017 07 /26/2017 08/15/2017 08/14/2017 08/16/2017 08/14/2017 08/28/2017 09/20/2017 09/20/2017 09/20/2017 09/27/2017 09/27 /2017 09/20/2017 11/08/2017 10/22/2015 11/06/2015 11/25/2015 11/27/2015 05/26/2016 11/07/2016 11/07/2017 11/27/2015 12/18/2017 11/06/2015 12/13/2017 12/18/2017 12/13/2017 12/24/2015 12/24/2015 12/24/2015 12/24/2015 12/24/2015 12/26/2017 12/24/2015 06/24/2015 12/24/2015 12/24/2015 12/24/2015 12/27/2017 12/13/2017 12/26/2017 12/30/2015 12/26/2017 12/24/2015 01/30/2018 01/30/2018 01/30/2018 01/29/2016 01/15/2016 01/29/2018 01/29/2016 01/30/2018 01/30/2018 01/30/2018 02/22/2016 02/22/2016 02/28/2018 02/28/2018 02/28/2018 02/28/2018 02/20/2018 02/26/2016 02/28/2018 08/26/2016 03/06/2018 03/19/2018 03/19/2018 06/13/2016 03/19/2018 03/27/2018 03/27 /2018 l\fo.turity Coupon To l\fat :11 .800 .2% 1.250 .750 2.750 .800 .750 .850 .825 .825 .750 .875 .850 1.150 .750 .875 .875 .750 .625 .750 .625 .880 .750 .750 .700 .700 .700 .700 .700 .500 .500 .480 .500 .550 .400 .600 .500 .750 .500 .800 .750 .650 .520 .450 .450 .450 .450 .750 .450 .400 .450 .450 .450 .625 .800 .650 .450 .700 .450 .750 .700 .700 .480 .500 .800 .500 .700 .750 .700 .520 .520 .800 1.000 1.000 1.000 .800 .550 1.000 .700 1.000 1.000 1.000 .625 1.000 .500 .800 ;11 .800 .336 1.278 1.194 1.128 .870 .480 .850 .825 .825 .750 .875 .850 1.150 .750 .875 .875 .750 .625 .750 .635 .880 .750 .750 .700 .700 .700 .700 .700 .489 .500 .480 .500 .550 .400 .600 .500 .750 .500 .800 .750 .650 .520 .450 .450 .457 .450 .750 .450 .404 .450 .450 .450 .625 .800 .650 .450 .700 .450 .750 .700 .700 .487 .502 .800 .500 .700 .750 .700 .544 .554 .800 1.000 1.006 1.000 .826 .550 1.000 .700 1.000 1.005 1.000 .625 1.000 .500 .800 RIVERISIDE COUNTY TREASURER-TAX COLLECTOR Par Va.Jue I Ill UI II 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 4,980,000.00 5,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,250,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 8,752,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 11,850,000.00 5,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 8,750,000.00 10,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 7,200,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 10,000,000.00 4,500,000.00 10,000,000.00 5,000,000.00 5,000,000.00 15,000,000.00 10,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 10,000,000.00 6,250,000.00 5,000,000.00 5,000,000.00 5,000,000.00 66 Book \'alue I Ill ltl It 5,000,000.00 9,990,000.00 4,9%,000.00 4,941,950.00 10,454,500.00 4,991,250.00 10,063,305.58 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 4,980,000.00 5,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 9,995,000.00 10,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,001,562.50 10,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,250,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 8,752,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 9,998,000.00 10,000,000.00 10,000,000.00 5,000,000.00 11,848,815.00 5,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 8,750,000.00 10,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 7,200,000.00 4,999,000.00 4,999,750.00 10,000,000.00 5,000,000.00 10,000,000.00 4,500,000.00 10,000,000.00 4,996,500.00 4,995,000.00 15,000,000.00 10,000,000.00 4,998,500.00 10,000,000.00 4,993,750.00 5,000,000.00 10,000,000.00 10,000,000.00 10,000,000.00 4,998,750.00 10,000,000.00 6,250,000.00 5,000,000.00 5,000,000.00 5,000,000.00 l\larket Price 111:1111 100.080000 100.195000 100.528000 100.150000 101.199000 100.080000 100.150000 100.099000 100.121000 100.121000 99.037000 99.414000 99.188000 99.333000 100.304000 99.414000 99.414000 99.305000 99.542000 99.379000 98.812000 98.774000 98.358000 98.358000 99.464000 99.575000 99.575000 99.464000 99.208000 100.021000 99.979000 99.939000 99.957000 99.573000 99.770000 98.871000 99.957000 99.022000 99.979000 99.086000 99.022000 98.619000 99.860000 99.778000 99.778000 99.778000 99.778000 98.319000 99.778000 100.038000 99.778000 99.778000 99.778000 98.455000 99.086000 98.997000 99.867000 99.228000 99.778000 99.233000 98.471000 99.310000 99.730000 99.787000 99.170000 99.773000 98.811000 99.395000 99.272000 99.710000 99.710000 97.743000 99.099000 99.099000 98.859000 99.190000 99.836000 98.859000 99.665000 98.784000 98.747000 98.747000 99.727000 98.747000 98.970000 98.821000 Market Value • 11; ... It II• Ill II 10,019,500.00 5,026,400.00 5,007,500.00 10,119,900.00 5,004,000.00 10,015,000.00 5,004,950.00 5,006,050.00 5,006,050.00 4,951,850.00 4,970,700.00 4,939,562.40 4,%6,650.00 10,030,400.00 9,941,400.00 4,970,700.00 4,965,250.00 4,977,100.00 4,%8,950.00 9,881,200.00 9,877,400.00 4,917,900.00 9,835,800.00 4,973,200.00 4,978,750.00 4,978,750.00 4,973,200.00 9,920,800.00 5,001,050.00 9,997,900.00 9,993,900.00 4,997,850.00 4,978,650.00 4,988,500.00 5,190,727.50 4,997,850.00 9,902,200.00 4,998,950.00 4,954,300.00 8,666,405.44 4,930,950.00 4,993,000.00 4,988,900.00 9,977,800.00 9,977,800.00 9,977,800.00 9,831,900.00 4,988,900.00 11,854,503.00 4,988,900.00 9,977,800.00 9,977,800.00 4,922,750.00 4,954,300.00 8,662,237.50 9,986,700.00 9,922,800.00 9,977,800.00 4,961,650.00 4,923,550.00 7,150,320.00 4,986,500.00 4,989,350.00 9,917,000.00 4,988,650.00 9,881,100.00 4,472,775.00 9,927,200.00 4,985,500.00 4,985,500.00 14,661,450.00 9,909,900.00 4,954,950.00 9,885,900.00 4,959,500.00 4,991,800.00 9,885,900.00 9,966,500.00 9,878,400.00 4,937,350.00 9,874,700.00 6,232,937.50 4,937,350.00 4,948,500.00 4,941,050.00 Unrealized Gain/Loss ; ltl II ' ... It 29,500.00 30,400.00 65,550.00 -334,600.00 12,750.00 -48,305.58 4,950.00 6,050.00 6,050.00 -48,150.00 -29,300.00 -40,437.60 -33,350.00 30,400.00 -58,600.00 -29,300.00 -34,750.00 -22,900.00 -31,050.00 -113,800.00 -122,600.00 -82,100.00 -164,200.00 -26,800.00 -21,250.00 -21,250.00 -26,800.00 -79,200.00 -512.50 -2,100.00 -6,100.00 -2,150.00 -21,350.00 -11,500.00 -59,272.50 -2,150.00 -97,800.00 -1,050.00 -45,700.00 -85,594.56 -69,050.00 -7,000.00 -11,100.00 -22,200.00 -20,200.00 -22,200.00 -168,l 00.00 -11,100.00 5,688.00 -11,100.00 -22,200.00 -22,200.00 -77,250.00 -45,700.00 -87,762.50 -13,300.00 -77,200.00 -22,200.00 -38,350.00 -76,450.00 -49,680.00 -12,500.00 -10,400.00 -83,000.00 -11,350.00 -118,900.00 -27,225.00 -72,800.00 -11,000.00 -9,500.00 -338,550.00 -90,100.00 -43,550.00 -114,100.00 -34,250.00 -8,200.00 -114,100.00 -33,500.00 -121,600.00 -61,400.00 -125,300.00 -17,062.50 -62,650.00 -51,500.00 -58,950.00 l\fodified Duration 2.333 .449 .215 .446 .136 .216 1.169 1.219 1.219 3.679 3.745 3.707 3.722 3.753 3.745 3.745 3.809 3.817 3.812 3.817 3.848 3.906 3.906 3.910 3.929 3.929 3.910 4.029 2.044 2.082 2.136 2.141 2.628 3.076 4.037 2.141 4.134 2.082 4.115 4.134 4.131 2.215 2.217 2.217 2.217 2.217 4.157 2.217 1.724 2.217 2.217 2.217 4.173 4.115 4.167 2.234 4.162 2.217 4.251 4.256 4.256 2.313 2.274 4.243 2.312 4.256 4.251 4.256 2.375 2.375 4.328 4.307 4.306 4.307 4.300 2.385 4.307 2.869 4.323 4.359 4.359 2.671 4.359 4.436 4.403 Years To M•turity .452 .216 .449 .137 .216 1.181 1.230 1.230 3.745 3.822 3.778 3.822 3.819 3.822 3.822 3.877 3.874 3.879 3.874 3.912 3.975 3.975 3.975 3.995 3.995 3.975 4.110 2.060 2.101 2.153 2.159 2.655 3.107 4.107 2.159 4219 2.101 : .• 205 2. 2.233 2.233 2.233 2.233 4.241 2.233 1.732 2.233 2.233 2.233 4.244 4.205 4.241 2.249 4.241 2.233 4.337 4.337 4.337 2.332 2.293 4.334 2.332 4.337 4.337 4.337 2.397 2.397 4.416 4.416 4.416 4.416 4.395 2.408 4.416 2.907 4.433 ::4. 2. 4.4 4.490 4.490 8 Month End Portfolio Holdings Maturity Maturity Par Book M;irket Market Unrealized Modified Years To CUSIP Description Date Coupon To Mat Value. Value l'ric~ Value Gain/Loss Duration Maturity 3136G1GR4 •3136G~~! 1HB8 3136G1HE2 3136G1HP7 3135GOVQ3 3135GOWE9 3135GOWE9 3135GOWE9 3135GOWE9 3135GOWE9 3135GOWE9 3135GOWE9 3136Gl)Y6 3135GOWC3 3135GOWC3 3135GOWE9 3136G1KB4 3136G1K)7 3135GOWL3 3135GOWL3 3135GOWL3 3136G1KB4 3135GOWL3 3135GOWS8 3136G1JWO 3135GOW58 FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 5YrNc6MoB FNMA 5YrNc1YrB FNMA 5YrNc1YrB FNMA 5YrNc6MoB FNMA 5YrNc1YrB FNMA 3YrNc6MoB FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 5YrNc6MoC FNMA 3YrNc6MoB FNMA 3YrNc6MoB FNMA 3.5YrNc6MoB FNMA 5YrNc6MoC FNMA 5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 5YrNc1YrB FNMA 3.5YrNc6MoB FNMA 3.5YrNc6MoB FNMA 5YrNc6MoB FNMA 3.5YrNc1YrB 09/27/2fJ16 .625 .634 5,500,000.00 5,498,350.00 99.451000 5,469,805.00 -28,545.00 09/27 /2016 .625 .625 5,000,000.00 5,000,000.00 99.451000 4,972,550.00 -27,450.00 03/19/2018 1.000 1.000 10,000,000.00 10,000,000.00 98.747000 9,874,700.00 -125,300.00 03/28/2018 .850 .850 5,000,000.00 5,000,000.00 98.676000 4,933,800.00 -66,200.00 03/28/2018 .800 .800 5,000,000.00 5,000,000.00 98.689000 4,934,450.00 -65,550.00 03/20/2018 .750 .765 5,000,000.00 4,996,250.00 99.000000 4,950,000.00 -46,250.00 03/28/2018 .800 .800 5,000,000.00 5,000,000.00 98.970000 4,948,500.00 -51,500.00 09/26/2016 .650 .650 5,000,000.00 5,000,000.00 99.628000 4,981,400.00 -18,600.00 10/25/2016 .700 .700 5,000,000.00 5,000,000.00 99.373000 4,968,650.00 -31,350.00 10/25/2016 .700 .700 5,000,000.00 5,000,000.00 99.373000 4,968,650.00 -31,350.00 10/25/2016 .700 .700 5,000,000.00 5,000,000.00 99.373000 4,%8,650.00 -31,350.00 10/25/2016 .700 .700 10,000,000.00 10,000,000.00 99.373000 9,937,300.00 -62,700.00 10/25/2016 .700 .700 5,000,000.00 5,000,000.00 99.373000 4,%8,650.00 -31,350.00 10/25/2016 .700 .700 10,000,000.00 10,000,000.00 99.373000 9,937,300.00 -62,700.00 10/25/2016 .700 .700 10,000,000.00 10,000,000.00 99.373000 9,937,300.00 -62,700.00 04/24/2018 .800 .800 10,000,000.00 10,000,000.00 98.334000 9,833,400.00 -166,600.00 04/18/2016 .570 .570 5,000,000.00 5,000,000.00 99.673000 4,983,650.00 -16,350.00 04/18/2016 .570 .573 5,000,000.00 4,999,500.00 99.673000 4,983,650.00 -15,850.00 10/25/2016 .700 .700 5,000,000.00 5,000,000.00 99.373000 4,%8,650.00 -31,350.00 04/16/2018 .750 .750 10,000,000.00 10,000,000.00 98.290000 9,829,000.00 -171,000.00 04/30/2018 ,750 .750 10,000,000.00 10,000,000.00 98.393000 9,839,300.00 -160,700.00 10/25/2016 .625 .625 5,000,000.00 5,000,000.00 99.300000 4,%5,000.00 -35,000.00 10/25/2016 .625 .625 10,000,000.00 10,000,000.00 99.300000 9,930,000.00 -70,000,00 10/25/2016 .625 .625 10,000,000,00 10,000,000.00 99.300000 9,930,000.00 -70,000.00 04/16/2018 .750 .750 5,000,000.00 5,000,000.00 98.290000 4,914,500.00 -85,500.00 10/25/2016 .625 .625 20,000,000.00 20,000,000.00 99.300000 19,860,000.00 -140,000.00 11/15/2016 .600 .600 10,000,000.00 10,000,000.00 99.125000 9,912,500.00 -87,500.00 04/18/2018 .750 .750 5,610,000.00 5,610,000.00 98.336000 5,516,649.60 -93,350.40 11/15/2016 .600 .600 10,000,000.00 10,000,000.00 99.125000 9,912,500.00 -87,500.00 3135GOWW9 FNMA 3YrNc6MoB 05/20/2016 ,520 .520 10,000,000.00 10,000,000.00 99.460000 9,946,000.00 -54,000.00 3136G1KW8 FNMA 5YrNc6MoB 05/08/2018 .800 .800 5,000,000.00 5,000,000.00 98.537000 4,926,850.00 -73,150.00 3136Gl4F3 FNMA 3.5YrNc6MoB 12/27 /2016 .680 .665 12,000,000.00 12,006,600.00 99.099000 11,891,880.00 -114,720.00 3135GOW58 FNMA 3.5YrNc1YrE 11/15/2016 .600 .600 5,000,000.00 5,000,000.00 99.125000 4,956,250.00 -43,750.00 3135GOWS8 FNMA 3.5YrNc1YrE 11/15/2016 .600 .600 5,000,000.00 5,000,000.00 99.125000 4,956,250.00 -43,750.00 3135GOWS8 FNMA 3.5YrNc1YrE 11/15/2fJ16 .600 .600 5,000,000.00 5,000,000.00 99.125000 4,956,250.00 -43,750,00 3135GOW58 FNMA 3.5YrNc1YrE 11/15/2016 .600 .600 10,000,000.00 10,000,000.00 99.125000 9,912,500.00 -87,500.00 3135GOW58 FNMA 3.5YrNc1YrE 11/15/2016 .600 .600 5,000,000.00 5,000,000.00 99.125000 4,956,250.00 -43,750.00 3136G1K)7 FNMA 5YrNc6MoB 04/30/2018 .750 ,750 5,000,000.00 5,000,000.00 98.393000 4,919,650.00 -80,350.00 3136G1KW8 FNMA 5YrNc6MoB 05/08/2018 .800 .800 21,750,000.00 21,750,000.00 98.537000 21,431,797.50 -318,202.50 3136G1LT4 FNMA 3.5YrNc1YrB 11/28/2016 .500 .512 10,000,000.00 9,996,000.00 98.937000 9,893,700.00 -102,300.00 3135GOW58 FNMA 3.5YrNc1YrB 11/15/2016 .600 .600 3,635,000.00 3,635,000.00 99.125000 3,603,193.75 -31,806.25 3135GOWS8 FNMA 3.5YrNc1YrB 11/15/2016 .600 .604 10,000,000.00 9,998,500,00 99.125000 9,912,500.00 -86,000.00 3135GOW58 FNMA 3.5YrNc1YrB 11/15/2016 .600 .600 10,000,000.00 10,000,000.00 99.125000 9,912,500.00 -87,500.00 • 1LT4 FNMA3.5YrNc1YrB 11/28/2016 .500 1.009 752,000.00 739,216.00 98.937000 744,006.24 4,790.24 1QU6 FNMA 3YrNc6MoB 07 /29/2016 1.000 1.000 10,000,000.00 10,000,000.00 100.202000 10,020,200.00 20,200.00 OX)7 FNMA 4.5YrNc6MoB 11/22/2017 .500 .893 5,000,000,00 4,916,850.00 98.907000 4,945,350.00 28,500.00 3135GOY)6 FNMA 3YrNc6MoB 09/06/2016 1.000 1.000 3,775,000.00 3,775,000.00 100.175000 3,781,606.25 6,606.25 2.959 2.959 4.359 4.400 4.406 4.389 4.406 2.955 3.022 3.022 3.022 3.022 3.022 3.022 3.022 4.460 2.522 2.522 3.022 4.445 4.483 3.027 3.027 3.027 4.445 3.027 3.084 4.450 3.084 2.613 4,512 3.196 3.084 3.084 3.084 3.084 3.084 4.483 4.499 3.127 3.084 3,084 3.084 3.119 2.780 4.081 2.882 3.093 2.995 2.995 4,468 4.493 4.493 4.471 4.493 2.992 3.071 3.071 3.071 3,071 3.071 3.071 3.071 4.567 2.551 2.551 3.071 4.545 4.584 3,071 3.071 3.071 4.545 3.071 3.129 4.551 3.129 2.638 4.605 3244 3.129 3.129 3.129 3.129 3.129 4.584 4.605 3.164 3.129 3.129 3.129 3.164 2.830 4.148 2,937 3,164 3136G1559 FNMA 3.25YrNc6MoB 11/28/2016 1.000 1.047 1,225,000.00 1,223,162.50 100.060000 1,225,735.00 2,572.50 .......................................... 313385YEO FHLB DISC NOTE s 313371 UC8 FHLB 3.2Yr 313372KE3 FHLB 4Yr 3133XWKVO FHLB 3Yr 313373CZ3 FHLB 3Yr 313374FU9 FHLB 3Yr 313376A47 FHLB 2Yr 313376UFO FHLB 2Yr 313378ACS FHLB 3Yr 313378301 FHLB 2YrNc 313378FY2 FHLB 2.25Yr 313378U58 FHLB 3Yr 313378YL9 FHLB 1.5Yr 313378YX3 FHLB 1.5Yr 313378XS5 FHLB 3YrNc2YrE 313379AK5 FHLB 2Yr 3133796L8 FHLB l.5Yr 31337%L8 FHLB 18Mo 313379FL8 FHLB 2Yr 313379FKO FHLB 18Mo 313379FL8 FHLB 2Yr 3133803M7 FHLB 1.5Yr 313380UF2 FHLB 5YrNc3MoB 313379N54 FHLB 1 Yr 3133762C8 FHLB 1 Yr 313381H24 FHLB 3Yr 3133805TO FHLB 1 Yr 313380W52 FHLB lOMo 313380506 FHLB 1.5 Yr 3133803M7 FHLB l.5Yr 313380506 FHLB l.5Yr 313381SV8 FHLB 3YrNc6MoB • 1YP4 FHLB2Yr 1VK8 FHLB 3.5YrNc6MoB 23V3 FHLB lYr 313381XU4 FHLB 5YrNc3MoB 06/17 /2014 12/27 /2013 02/04/2015 03/14/2014 05/27 /2014 07/07/2014 11/29/2013 01/29/2014 05/22/2015 02/13/2014 05/30/2014 05/04/2015 10/11/2013 10/15/2013 04/30/2015 04/30/2014 12/03/2013 12/03/2013 05/19/2014 11/15/2013 05/19/2014 01/23/2014 10/10/2017 11/25/2013 11/27 /2013 01/16/2015 01/23/2014 10/01/2013 01/23/2014 01/23/2014 01/23/2014 01/29/2016 02/20/2015 07/29/2016 02/07 /2014 02/13/2018 .180 ,875 .206 2.375 1.500 .910 .450 .375 .500 .300 .375 .700 .350 .350 .650 .340 .290 .290 .350 .300 .350 .300 .625 .300 .375 .250 .270 .125 .260 .300 .260 .500 .250 .575 .125 .500 RIVERISIDE COUNTY TREASURER-TAX COLLECTOR .180 .934 .206 1.404 1.500 .910 .470 .375 .500 ,379 .468 .700 .350 .350 .650 .340 .290 .300 .350 .302 .350 .316 .625 .228 .213 .307 .233 .177 .193 .193 .203 .500 .293 .636 .177 .500 27,000,000.00 10,000,000.00 15,000,000,00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 15,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 25,000,000.00 10,000,000.00 5,000,000.00 11,000,000.00 5,000,000.00 1,000,000.00 9,000,000.00 20,000,000.00 15,000,000.00 25,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 15,000,000.00 7,350,000.00 67 26,951,805.00 9,982,000.00 15,000,000.00 5,140,200.00 5,000,000.00 10,000,000.00 4,997,944.55 5,000,000.00 5,000,000,00 4,992,300.00 4,990,014.15 15,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 4,999,250.00 5,000,000.00 4,999,850.00 5,000,000.00 24,994,000.00 10,000,000.00 5,003,885.00 11,018,106.00 4,994,000.00 1,000,410.00 8,996,202.00 20,014,720.00 15,017,550.00 25,015,200.00 5,000,000.00 4,995,550.00 4,989,500.00 14,992,155.00 7,350,000.00 99.949639 100.190000 100.057000 101.037000 100.899000 100.588000 100.060000 100.097000 100.258000 100.081000 100.163000 100.591000 100.008000 100.010000 100.292000 100.134000 100.036000 100.036000 100.144000 100.027000 100.144000 100.062000 98.960000 100.033000 100.046000 100.043000 100.059000 100.000000 100.056000 100.062000 100.056000 99.737000 99.970000 99.586000 100.033000 99.146000 26,986,402.50 10,019,000.00 15,008,550.00 5,051,850.00 5,044,950.00 10,058,800.00 5,003,000.00 5,004,850.00 5,012,900.00 5,004,050.00 5,008,150.00 15,088,650.00 5,000,400.00 5,000,500.00 5,014,600.00 5,006,700.00 10,003,600.00 5,001,800.00 5,007,200.00 5,001,350.00 5,007,200.00 25,015,500.00 9,896,000.00 5,001,650.00 11,005,060.00 5,002,150.00 1,000,590.00 9,000,000.00 20,011,200.00 15,009,300.00 25,014,000.00 4,986,850.00 4,998,500.00 4,979,300.00 15,004,950.00 7,287,231.00 34,597,50 37,000.00 8,550.00 -88,350.00 44,950.00 58,800.00 5,055.45 4,850.00 12,900.00 11,750.00 18,135.85 88,650.00 400.00 500.00 14,600.00 6,700.00 3,600.00 2,550.00 7,200.00 1,500.00 7,200.00 21,500.00 -104,000.00 -2,235.00 -13,046.00 8,150.00 180.00 3,798.00 -3,520.00 -8,250.00 -1,200.00 -13,150.00 2,950.00 -10,200.00 12,795.00 -62,769.00 .711 .240 1.341 .449 .650 .764 .164 .331 1.633 .372 .664 1.578 .030 .041 1.569 .581 .175 .175 .634 .126 .634 .314 3.960 .153 .159 1.291 .314 .003 .315 .315 .315 2.312 1.385 2.800 .356 4.317 .712 .241 1.348 ,452 .655 ,767 .164 .332 1.641 .373 .663 1.592 .030 .041 1.581 .581 .175 .175 .633 .126 .633 .315 4.030 .153 .159 1.296 .315 .003 .315 .315 .315 2.332 1.392 2.830 .356 4.375 9 Month End Portfolio Holdings Mdtunty Mahmty Par Book Market Market Unrealized Modified Years To CUSIP Description Date Coupon To Mat Value Y dlue Price Value Gain/Loss Duration Maturity 313382BT9 FHLB lYr 02/14/2014 .125 .187 10,000,000.00 9,993,760.00 100.017000 10,001,700.00 313381PS8 FHLB 1Yr 01/07 /2014 .180 .182 18,000,000.00 17,999,640.00 100.027000 18,004,860.00 313382BT9 FHLB 1Yr 02/14/2014 .125 .187 15,000,000.00 14,990,820.00 100.017000 15,002,550.00 7,940.00 5,220.00 11,730.00 7,600.00 4,275.00 2,500.00 5,450.00 .375 .271 .375 .375 .405 .429 .427 .197 .405 • 313382BT9 FHLB 1Yr 02/14/2014 .125 .185 10,000,000.00 9,994,100.00 100.017000 10,001,700.00 313382DF7 FHLB 1Yr 02/25/2014 .125 .194 5,000,000.00 4,996,625.00 100.018000 5,000,900.00 313382EC3 FHLB 1Yr 03/06/2014 .180 .188 5,000,000.00 4,999,600.00 100.042000 5,002,100.00 313382EG4 FHLB lYr 03/05/2014 .180 .193 10,000,000.00 9,998,750.00 100.042000 10,004,200.00 313382FU2 FHLB 9Mo 12/11/2013 .160 .163 5,000,000.00 4,999,890.00 100.015000 5,000,750.00 313382DF7 FHLB 1Yr 02/25/2014 .125 .179 25,000,000.00 24,987,000.00 100.018000 25,004,500.00 313382PHO FHLB 5YrNc6MoB 04/25/2018 .800 .800 10,000,000.00 10,000,000.00 98.801000 9,880,100.00 313382PP2 FHLB 5YrNc3MoB 04/25/2018 .850 .850 8,350,000.00 8,350,000.00 98.481000 8,223,163.50 313382NP4 FHLB 13Mo 05/16/2014 .205 .205 25,000,000.00 25,000,000.00 100.053000 25,013,250.00 313382LE1 FHLB 3.5YrNc3MoB 10/11/2016 .625 .625 9,400,000.00 9,400,000.00 99.502000 9.353,188.00 31338251.8 FHLB 3.5YrNc3MoB 10/24/2016 .550 .550 10,000,000.00 10,000,000.00 99.230000 9,923,000.00 313380557 FHLB 4YrNc3MoA 10/11/2016 .700 .700 4,285,714.00 4,285,714.00 99.510000 4,264,714.00 313382Y31 FHLB 5YrNc6MoB 05/21/2018 .750 .750 12,000,000.00 12,000,000.00 97.953000 11,754,360.00 3133833Ml FHLB 5YrNC3MoB 05/23/2018 .750 .750 10,000,000.00 10,000,000.00 97.668000 9,766,800.00 3133833)8 FHLB 5YrNc6MoB 05/25/2018 .750 .750 10,000,000.00 10,000,000.00 98.009000 9,800,900.00 3133834MO FHLB 5YrNc6MoB 05/29/2018 .750 .750 5,000,000.00 5,000,000.00 98.062000 4,903,100.00 3133836N6 FHLB 5YrNc1YrB 06/12/2018 .800 .800 10,000,000.00 10,000,000.00 98.113000 9,811,300.00 3133836N6 FHLB 5YrNc1YrB 06/12/2018 .800 .800 10,000,000.00 10,000,000.00 98.113000 9,811,300.00 313383CP4 FHLB 5YrNc3MoB 06/19/2018 .875 .875 5,000,000.00 5,000,000.00 97.831000 4,891,550.00 313383CP4 FHLB 5YrNc3MoB 06/19/2018 .875 .875 5,000,000.00 5,000,000.00 97.831000 4,891,550.00 313383CP4 FHLB 5YrNc3MoB 06/19/2018 .875 .875 5,000,000.00 5,000,000.00 97.831000 4,891,550.00 313383CP4 FHLB 5YrNc3MoB 06/19/2018 .875 .875 10,000,000.00 10,000,000.00 97.831000 9,783,100.00 313383EM9 FHLB 5YrNc6MoB 06/20/2018 .900 .908 5,000,000.00 4,998,000.00 98.356000 4,917,800.00 313383EN7 FHLB 5YrNc3MoB 06/20/2018 1.000 1.000 13,000,000.00 13,000,000.00 98.022000 12,742,860.00 313383EP2 FHLB 5YrNc3MoB 06/20/2018 1.250 1.250 10,000,000.00 10,000,000.00 98.219000 9,821,900.00 313383G62 FHLB 3.5YrNc1MoB 12/19/2016 .750 .750 5,000,000.00 5,000,000.00 99.316000 4,965,800.00 313383G62 FHLB 3.5YrNc1MoB 12/19/2016 .750 .750 10,000,000.00 10,000,000.00 99.316000 9,931,600.00 313383HH7 FHLB 3.5YrNc!YrB 12/27 /2016 .700 .700 10,000,000.00 10,000,000.00 99.465000 9,946,500.00 313383BX8 FHLB lYr 05/20/2014 .125 .167 25,000,000.00 24,989,950.00 100.002000 25,000,500.00 313383Kj9 FHLB 5YrNc3MoB 06/27 /2018 1.250 1.250 5,000,000.00 5,000,000.00 99.004000 4,950,200.00 313383Kj9 FHLB 5YrNc3MoB 06/27 /2018 1.250 1.250 5,000,000.00 5,000,000.00 99.004000 4,950,200.00 313383KPS FHLB lYr 06/30/2014 .160 .172 25,000,000.00 24,996,750.00 100.015000 25,003,750.00 313383KJ9 FHLB 5YrNc3MoB 06/27 /2018 1.250 1.250 5,000,000.00 5,000,000.00 99.004000 4,950,200.00 313383MMO FHLB lYr 06/20/2014 .125 .175 25,000,000.00 24,987,775.00 99.992000 24,998,000.00 313383NV9 FHLB lYr 06/26/2014 .190 .205 50,000,000.00 49,992,500.00 100.038000 50,019,000.00 313383NR8 FHLB 11Mo 05/01/2014 .150 .182 25,000,000.00 24,993,150.00 100.023000 25,005,750.00 313383P88 FHLB lYr 06/19/2014 .200 .213 10,000,000.00 9,998,700.00 100.046000 10,004,600.00 313383PZ8 FHLB !Yr 07/10/2014 .190 .202 25,000,000.00 24,996,925.00 100.036000 25,009,000.00 313383PY1 FHLB 1Yr 07/17 /2014 .190 .193 26,700,000.00 26,699,332.50 100.035000 26,709,345.00 313383Q79 FHLB lYr 07 /25/2014 .190 .177 25,000,000.00 25,003,150.00 100.034000 25,008,500.00 313383TA9 FHLB 1YrNc6MoE 08/22/2014 200 200 25,000,000.00 25,000,000.00 100.019000 25,004,750.00 313383TT8 FHLB 1YrNc6MoE 07/29/2014 .200 .200 10,000,000.00 10,000,000.00 100.034000 10,003,400.00 313383UB5 FHLB 1YrNC6MoE 08/29/2014 .200 .200 25,000,000.00 25,000,000.00 100.035000 25,008,750.00 313383UP4 FHLB5YrNc3MoB 08/27/2018 1.250 1.250 10,000,000.00 10,000,000.00 99.669000 9,966,900.00 313383UQ2 FHLB 5YrNc3MoB 08/27 /2018 1.250 1.250 10,000,000.00 10,000,000.00 100.107000 10,010,700.00 313383UE9 FHLB lYr 08/12/2014 .170 .177 15,000,000.00 14,998,892.55 100.014000 15,002,100.00 313383WL1 FHLB 5YrNc3MoB 09/12/2018 1.000 1.000 10,000,000.00 10,000,000.00 100.012000 10,001,200.00 313383W64 FHLB !Yr 08/20/2014 .170 .170 10,000,000.00 10,000,000.00 100.012000 10,001,200.00 313383WR8 FHLB 1YrNc6MoB 09/15/2014 .200 .200 10,000,000.00 10,000,000.00 100.032000 10,003,200.00 313383X22 FHLB !Yr 08/22/2014 .125 .182 25,000,000.00 24,985,700.00 99.971000 24,992,750.00 313383Y70 FHLB 5YrNc3MoB 09/17/2018 1.500 1.500 15,000,000.00 15,000,000.00 100.157000 15,023,550.00 313382LT8 FHLB 1.5Yr 09/22/2014 .220 .188 15,000,000.00 15,005,250.00 100.051000 15,007,650.00 313383XP1 FHLB lYr 09/03/2014 .125 .187 15,000,000.00 14,990,640.00 99.967000 14,995,050.00 313383YC9 FHLB 1YrNc6MoE 09/24/2014 .220 .220 25,000,000.00 25,000,000.00 100.001000 25,000,250.00 313383YA3 FHLB 5YrNc3MoB 09/20/2018 1.500 1.500 5,000,000.00 5,000,000.00 100.221000 5,011,050.00 313383253 FHLB 5YrNc3MoB 09/26/2018 1.050 1.050 10,000,000.00 10,000,000.00 100.007000 10,000,700.00 313383XR7 FHLB 5YrNc3MoB 09/20/2018 1.375 1.375 10,000,000.00 10,000,000.00 100.135000 10,013,500.00 31338321.8 FHLB 5YrNc3MoB 09/27/2018 1.500 1.500 10,000,000.00 10,000,000.00 100.258000 10,025,800.00 860.00 17,500.00 -119,900.00 -126,836.50 13,250.00 -46,812.00 -77,000.00 -21,000.00 -245,640.00 -233,200.00 -199,100.00 -96,900.00 -188,700.00 -188,700.00 -108,450.00 -108,450.00 -108,450.00 -216,900.00 -80,200.00 -257,140.00 -178,100.00 -34,200.00 -68,400.00 -53,500.00 10,550.00 -49,800.00 -49,800.00 7,000.00 -49,800.00 10,225.00 26,500.00 12,600.00 5,900.00 12,075.00 10,012.50 5,350.00 4,750.00 3,400.00 8,750.00 -33,100.00 10,700.00 3,207.45 1,200.00 1,200.00 3,200.00 7,050.00 23,550.00 2,400.00 4,410.00 250.00 11,050.00 700.00 13,500.00 25,800.00 917.60 4.463 4.456 .627 2.989 3.030 2.984 4.541 4.547 4.553 4.564 4.593 4.593 4.602 4.602 4.602 4.602 4.602 4.589 4.556 3.169 3.169 3.194 .638 4.576 4.576 .749 4.576 .721 .738 .585 .718 .777 .796 .818 .893 .829 .915 4.741 4.741 .865 4.815 .888 .957 .893 4.764 .976 .924 .982 4.772 4.848 4.788 4.792 4.775 .375 .405 .430 .427 .197 .405 4.570 4.570 .625 3.033 3.068 3.033 4.641 4.647 4.652 4.663 4.701 4.701 4.721 4.721 4.721 4.721 4.723 4.723 4.723 3.222 3.222 3.244 .636 4.742 4.742 .748 4.742 .721 .737 .584 .718 .827 .912 4.910 4.910 .866 4.953 .888 .959 .893 4.967 .978 .926 .984 4.975 4.992 4.975 4.995 4.995 3130A03G3 FHLB 5YrNc3MoB 09/27 /2018 1.625 1.625 1,240,000.00 1,240,000.00 100.074000 1,240,917.60 ............................................ 31331)6A6 31331j6A6 31331)6A6 31331KHV5 31331KPD6 31331KB82 31331K5K2 3133EAHP6 3133EALT3 3133EAKT4 3133EANJ3 3133EA2K3 3133EC4P6 3133ECBA1 3133ECAV6 3133ECAV6 3133ECCE2 3133ECD35 3133ECFD1 3133ECFD1 3133ECFD1 3133ECFD1 3133ECFD1 FFCB3Yr FFCB 3Yr FFCB3Yr FFCB5Yr FFCB 2.5Yr FFCB2Yr FFCB2Yr FFCB 3Yr FFCB1.5Yr FFCB l.75Yr FFCB 3Yr FFCB 3YrNc3MoA FFCB !Yr FFCB 2.5Yr FFCB2Yr FFCB2Yr FFCB 2Yr FFCB !Yr FFCB 1.25Yr FFCB 1.25Yr FFCB 1.25Yr FFCB 1.25Yr FFCB 1.25Yr 12/23/2013 12/23/2013 12/23/2013 04/20/2016 11/20/2013 10/03/2013 01/03/2014 03/16/2015 11/18/2013 12/23/2013 05/01/2015 09/28/2015 02/26/2014 07 /24/2015 12/24/2014 12/24/2014 01/07 /2015 01/17 /2014 05/13/2014 05/13/2014 05/13/2014 05/13/2014 05/13/2014 1.300 1.300 1.300 .250 .625 .350 .400 .520 .300 .300 .500 .450 .200 .220 .250 .250 .250 .150 .200 .200 .200 .200 .200 RIVERISIDE COUNTY TREASURER-TAX COLLECTOR 1.300 1.300 1.184 .269 .700 .400 .420 .598 .300 .302 .520 .484 .208 .234 .307 .300 .306 .172 .200 .200 .200 .200 .200 5,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 6,000,000.00 5,000,000.00 5,000,000.00 10,000,000.00 5,000,000.00 5,000,000.00 4,995,000.00 15,000,000.00 25,000,000.00 10,000,000.00 10,000,000.00 20,000,000.00 25,000,000.00 25,000,000.00 25,000,000.00 25,000,000.00 25,000,000.00 68 5,000,000.00 5,000,000.00 5,015,550.00 9,995,000.00 4,991,100.00 4,995,050.00 5,997,600.00 4,988,430.00 5,000,000.00 9,999,600.00 4,997,000.00 4,995,000.00 4,994,500.50 14,996,061.75 24,971,750.00 9,990,170.00 9,988,850.00 19,995,860.00 25,000,000.00 25,000,000.00 25,000,000.00 25,000,000.00 25,000,000.00 100.278000 100.278000 100.278000 100.174000 100.074000 100.001000 100.082000 100.363000 100.029000 100.050000 100.313000 100.004000 100.048000 100.124000 100.035000 100.035000 100.026000 100.021000 100.053000 100.053000 100.053000 100.053000 100.053000 5,013,900.00 5,013,900.00 5,013,900.00 10,017,400.00 5,003,700.00 5,000,050.00 6,004,920.00 5,018,150.00 5,001,450.00 10,005 ,000.00 5,015,650.00 5,000,200.00 4,997,397.60 15,018,600.00 25,008,750.00 10,003,500.00 10,002,600.00 20,004,200.00 25,013,250.00 25,013,250.00 25,013,250.00 25,013,250.00 25,013,250.00 13,900.00 13,900.00 -1,650.00 22,400.00 12,600.00 5,000.00 7,320.00 29,720.00 1,450.00 5,400.00 18,650.00 5,200.00 2,897.10 22,538.25 37,000.00 13,330.00 13,750.00 8,340.00 13,250.00 13,250.00 13,250.00 13,250.00 13,250.00 .228 .228 .229 2.546 .139 .008 .260 1.453 .134 .230 1.575 1.983 .408 1.812 1.230 1.230 1.266 .298 .618 .618 .618 .618 .618 .230 .230 .230 2.556 .140 .008 .260 1.458 .134 .230 1.584 1.995 .408 1.814 1.233 1.233 1271 :.299 .6 .616 .616 10 Month End Portfolio Holdings Maturity Maturity Par Book Market Market Unrealized l\1od1ffod Years To CUSIP Description Date Coupon To Mat Value Value Price Va1ue Gain/Loss Duration M.tturity 3133ECCE2 •~~o CNWO CSV7 3133ECFD1 FFCB 2Yr 01/07 /2015 .250 .281 15,000,000.00 14,991,750.00 100.026000 15,003,900.00 12,150.00 FFCB 3YrNc1YrC 04/11/2016 .430 .469 5,000,000.00 4,994,250.00 99.523000 4,976,150.00 -18,100.00 FFCB 1.25 Yr 08/08/2014 .170 .170 10,000,000.00 10,000,000.00 100.023000 10,002,300.00 2,300.00 FFCB l.25Yr 08/08/2014 .170 .193 15,000,000.00 14,995,907.55 100.023000 15,003,450.00 7,542.45 FFCB 1Yr 06/24/2014 .150 .172 25,000,000.00 24,994,500.00 100.016000 25,004,000.00 9,500.00 FFCB 1.25Yr 05/13/2014 .200 .192 5,350,000.00 5,350,358.45 100.053000 5,352,835.50 2,477.05 1.266 2.509 .854 .854 .732 .618 .902 1.271 2.532 .855 .855 .732 .616 .901 3133ECVH4 FFCB lYr 08/25/2014 .180 .180 25,000,000.00 25,000,000.00 100.029000 25,007,250.00 7,250.00 ...................... a111._ ................. . 31315LWV6 31315LWF1 31315LXX1 FAMCA DISC NOTE FAMCA DISC NOTE FAMCA DISC NOTE ARMER MAC 31315PQI<8 FAMCA 3Yr 31315PVR7 31315PVR7 31315PYX1 31315PWS4 31315PXL8 31315PYL7 31315PYE3 31315PYY9 31315PRT8 31315PTM1 31315PTZ2 31315PA74 31315PX20 FAMCA 3YrNc1YrB FAMCA 3YrNc1YrB FAMCA 1.25Yr FAMCA2Yr FAMCA 1Yr FAMCA 15Mo FAMCA1Yr FAMCA3Yr FAMCA 5YrNc6MoB FAMCA 1.25Yr FAMCA 1.25Yr FAMCA15Mo FAMCA lYr MUNI BONDS 677521LH7 OHIOSTATEGO 68608UNXO OREGON STATE 20772JEDO CONNECTICUT ST 20772JEE8 CONNECTICUT ST 8827226W6 TEXAS ST GO 546415L73 LOUISIANA STATE 677521207 OHIOSTATE 6775212E5 OHIO STATE OMMPAPER 89233GX92 89233GXF8 •~~: EXW2 AXU8 30229AXU8 30229AXF1 19121BA90 TOYOTA MOTOR CORP TOYOTA MOTOR CORP COCA COLA CO COCA-COLA CO WAL-MART STORES INC EXXON MOBIL EXXON MOBIL EXXON MOBIL COCA-COLA CO 19121BAQ2 COCA COLA CO 89233HAQ7 TOYOTA MOTOR CORP 30229AXW4 EXXON MOBIL NCDS 89112TCH5 TORONTO DOMINION • 05/15/2014 05/01/2014 06/10/2014 07/02/2015 09/25/2015 09/25/2015 02/19/2014 01/23/2015 01/25/2014 04/25/2014 01/24/2014 01/28/2016 04/03/2018 06/10/2014 06/10/2014 08/11/2014 11/03/2014 05/01/2014 11/01/2013 04/15/2014 04/15/2015 04/01/2014 05/15/2016 11/01/2014 11/01/2015 10/09/2013 10/15/2013 10/10/2013 10/25/2013 10/30/2013 10/28/2013 10/28/2013 10/15/2013 01/09/2014 01/24/2014 01/24/2014 10/30/2013 .180 .120 .120 .550 .470 .470 .250 .320 .190 .220 .200 .425 .750 .220 .220 .200 .230 1.190 .480 .448 .672 .300 .540 .280 .630 .160 .160 .110 .090 .080 .070 .070 .060 .110 .120 .150 .050 .150 RIVERISIDE COUNTY TREASURER-TAX COLLECTOR .180 .120 .120 .587 .495 .487 .265 .320 .190 .220 .200 .425 .750 .220 .220 .213 .230 1.190 .480 .448 .672 .300 .540 .280 .630 .160 .160 .110 .090 .080 .070 .070 .060 .110 .120 .150 .050 .150 25,000,000.00 40,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 2,568,000.00 5,000,000.00 5,000,000.00 25,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 10,000,000.00 25,000,000.00 20,000,000.00 25,000,000.00 30,000,000.00 2,000,000.00 3,595,000.00 2,000,000.00 2,000,000.00 18,105,000.00 12,070,000.00 9,355,000.00 9,390,000.00 50,000,000.00 50,000,000.00 25,000,000.00 25,000,000.00 2,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00 25,000,000.00 25,000,000.00 45,000,000.00 50,000,000.00 69 24,959,750.00 39,968,266.67 9,990,966.67 9,989,000.00 4,996,250.00 2,566,716.00 4,999,050.00 5,000,000.00 25,000,000.00 10,000,000.00 10,000,000.00 5,000,000.00 10,000,000.00 25,000,000.00 20,000,000.00 24,995,975.00 30,000,000.00 2,000,000.00 3,595,000.00 2,000,000.00 2,000,000.00 18,105,000.00 12,070,000.00 9,355,000.00 9,390,000.00 49,980,000.00 49,979,555.56 24,993,354.17 24,994,500.00 1,999,604.44 49,995,527.78 49,995,625.00 49,997,333.33 49,982,888.89 24,990,000.00 24,987,500.00 44,997,875.00 50,000,000.00 99.969000 99.971000 99.958000 100.182000 100.086000 100.086000 100.065000 100.106000 100.035000 100.064000 100.038000 99.789000 99.178000 100.067000 100.067000 100.049000 100.043000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 100.000000 99.9%444 99.993778 99.996000 99.989333 99.987111 99.988000 99.988000 99.993778 99.938889 99.929722 99.929722 99.987111 100.000000 24,992,250.00 39,988,400.00 9,995,800.00 10,018,200.00 5,004,300.00 2,570,208.48 5,003,250.00 5,005,300.00 25,008,750.00 10,006,400.00 10,003,800.00 4,989,450.00 9,917,800.00 25,016,750.00 20,013,400.00 25,012,250.00 30,012,900.00 2,000,000.00 3,595,000.00 2,000,000.00 2,000,000.00 18,105,000.00 12,070,000.00 9,355,000.00 9,390,000.00 49,998,222.22 49,9%,888.89 24,999,000.00 24,997,333.33 1,999,742.22 49,994,000.00 49,994,000.00 49,996,888.89 49,%9,444.44 24,982,430.56 24,982,430.56 44,994,200.00 50,000,000.00 32,500.00 20,133.33 4,833.33 29,200.00 8,050.00 3,492.48 4,200.00 5,300.00 8,750.00 6,400.00 3,800.00 -10,550.00 -82,200.00 16,750.00 13,400.00 16,275.00 12,900.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 18,222.22 17,333.33 5,645.83 2,833.33 137.78 -1,527.78 -1,625.00 -444.44 -13,444.45 -7,569.44 -5,069.44 -3,675.00 0.00 0.00 .620 .582 .692 1.742 1.974 1.974 .388 1.309 .320 .568 .317 2.312 4.409 .693 .693 .862 1.089 .580 .087 .539 1.527 .501 2.598 1.082 2.064 .025 .041 .027 .068 .082 .077 .077 .041 .276 .317 .317 .082 .046 .268 . 622 .584 .693 1.753 1.986 1.986 .389 1.315 .321 .567 .318 2.329 4.510 .693 .693 .863 1.093 .584 .088 .540 1.540 .501 2.625 1.088 2.088 .025 .041 .027 .068 .082 .077 .077 .041 .277 .318 .318 .082 .047 .268 11 Full Compliance ~~~~~~~~~~~· The Treasurer's Pooled Investment Fund was in FULL COMPLIANCE with the Treasurer's Statement of Investment Poli- cy. The County's Investment Policy is more restrictive than the California Government Code. This policy is reviewed annually by the County's Investment Oversight Committee and approved by the County Board of Supervisors. I FEDERAL AGENCIES I 5 YEARS NO LIMIT COM?ylERC1AL P~ (C . 40% Al/Pl ! 270DAYS I 100% 40% 1 CERTIFICATE & TIME DEPOSITS (NCD & TCD) REPURCHASE. 30% !·~~~-~~-~-~~-~~~ 1 1 YEAR 25% Combined Al/Pl/Fl I , , ', ' ' '~ ' ' AGREEMENTS1(REPO) 45 DAYS 40% max, 25% in term'. 1A1/Pl/F1 ··· ,;;'4( J'"' ,_}x repo over '7 days 10% NA NA AILY MONEY MARKET MUTUAL ;LIQUIDITY ~~~~-2:"'::0c:c%:-----:-AAA/ Aaa . I DAILY 20% ~DS(MMF) l:OCALAGENCY ~ IN~STMENT FUND (LAIF) ~' --~·--~~-~·~··-· CASH/DEPOSIT ACCOUNT ~---------~--------~--·· -~········· (2J ! LIQUIDITY NA NA NA 1 Mutual Funds maturity may be interpreted as weighted average maturity not exceeding 60 days. 2 Or must have an investment advisor with not less than 5 years experience and with assets under management of $500,000,000. THIS COMPLETES THE REPORT REQUIREMENTS OF CALIFORNIA GOVERNMENT CODE 53646 RIVERSIDE COUNTY TREASURER-TAX COLLECTOR 71 13 Quarterly Investment Report For the Quarter Ended September 30, 2013 Presentation to the Budget and Implementation Committee November 25, 2013 Cash & Investments ~ Internally Managed •Operating • LTF held in trust • Debt service -$500+ million 11/26/2013 1 Cash & Investments ~ Internally Managed ($538 Million) •Operating ($444 million) • LTF held in trust ($88 million) • Debt service ($6 million) 91 CIP Funds/STAMP ($576 Million) • Project ($422 million) • Capitalized interest ($136 million) • Debt service reserve ($18 million) Portfolio as of 9/30/13 ~ Nature of Investments 450,000,000 400,000,000 •STAMP Portfolio for 91 CIP Reserve 350,000,000 300,000,000 •STAMP Portfolio for 91 CIP Project Fund 250,000,000 •STAMP Portfolio for 91 CIP Capitalized Interest 200,000,000 •Commission Managed Portfolio Debt Reserve 150,000,000 100,000,000 •Trust Funds 50,000,CXXJ Operating Funds 11/26/2013 2 Investment Types as of 9/30/13 ~ Portfolio Investment Type Income By Security Category By STAMP Account Transactions by Type & Account 0.02%Cash 0.33% LAIF •Issuer and security information 47,39%County Pool/Cash •Acquisition and maturity dates as well as call dates •Par, cost and market values •Unrealized gains (losses) •Coupon and yield rates •Credit rating •Issuer and security information •Acquisition and maturity dates as well as call dates •Par, cost and market values •Unrealized gains (losses) •Coupon and yield rates •Credit rating •Security information •Values •Maturity date •Realized (gains) losses 11/26/2013 3 ..... C:MO(<l69f::a3'1lol_-:~:---;i-.,: TAllJCH f(l.&101'o) ---~. PllMAIO'llll6%)-· ::;'' l'H&.MC:C:MOU6.20'll.l-_'/; llMACMO U.8'67%1 "'"/,,.._ """"115.1~)</ MS1tl.718%1../ Yield to Maturity Duration Average Quality (Moody's) C..hi01,,..'l\.ll "99'""1" i:oo;~"'"' --~11 Actual Portfolio RCTC Custom Benchmark 0.48% 0.43 Years Al 0.05% 0.52 Years TSY 11/26/2013 4 •111-CMO tl ail~' -, I.MC CMO t~ 'nl<lt.J - Yield to Maturity Duration Average Quality (Moody's) Yield to Maturity Duration Average Quality (Moody's) -(Oll'H'll.t~ _... 12.~M""! ---,, -\ 1 j G-...CMO \ Actual Portfolio 0.93% 2.32 Years Aal 1.82% 4.72 Years Aaa RCTC Custom Benchmark 0.475% 2.16 Years TSY 11/26/2013 5 11/26/2013 Primary Investment Objectives ~ Safety of Principal - - -.. -.. - --. -.. - -. - -.... -..... --....... -. ----········· -·----·····--·-.. -:::::::::::::::::::::::::::::::::::::::::::::::::::gr~s~r.~a~~n.:~t::sap:ita1::::::::::::::::::::::::::::::::::::::::::::::::::: • Liquidity Return on Investment . -... - -. -... --. -- - --.. -... -.:::M~#ifi~)n~:r~h~r.~::M.t.Y::~tt~(i1J~~~fos:s~f~t¥::~fi~::1~qw~~ty:::: 6 • AGENDA ITEM 9 • • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: November 25, 2013 TO: Budget and Implementation Committee FROM: Grace Alvarez, Planning and Programming Manager THROUGH: Shirley Medina, Planning and Programming Director SUBJECT: Federal Surface Transportation Program 2013 Call for Rehabilitation Projects -Project Programming for the Cities of Indian Wells and Blythe STAFF RECOMMENDATION: This item is for the Committee to: 1) Approve programming federal Surface Transportation Program (STP) funds for pavement rehabilitation projects in the amount of $192, 714 for the cities of Blythe (Blythe) and Indian Wells (Indian Wells); and 2) Forward to the Commission for final action. BACKGROUND INFORMATION: At its March 2013 meeting, the Commission approved a 2013 Call for Rehabilitation Projects to be funded with federal STP funds in the amount of $13.8 million. The amount available is a set aside of 20 percent of the annual apportionment of STP funds over three years for pavement rehabilitation type work, resulting in approximately $13.8 million of funding based on Riverside County's FFY 2012/13 STP apportionment estimate provided by Caltrans. Criterion used for establishing allocation targets for each city and the county of Riverside were 2010 Census population and Federal Functional Classification System lane miles, which were weighted 50/50. STP funds are required to be matched at a minimum of 11.47 percent. Staff received applications to fund 21 projects by the April 1, 2013, deadline and an additional 7 projects were received after the April 1 deadline, which were brought forward for action at the May, June, and September Commission meetings. Some of the smaller local agencies requested additional time to submit projects, which staff agreed to extend the deadline. Blythe submitted the North Broadway from Juniper Trail to 10th Avenue grant application on November 13. Indian Wells submitted the Cook Street Rubberized Overlay from Fred Waring Drive south to Highway 111 grant application on October 16. Staff reviewed the project submittals from Blythe and Indian Wells for completeness and recommends the Committee approve the STP funds requested in the amount of $150,011 and $42, 703 respectively. Blythe local funds committed for the construction phase total $98,989. The funding requested for the Indian Wells in the amount of $42, 703 will be combined with a previous STP grant in the amount of $92,294; local funds committed for the construction phase total $392,500. Staff expects the projects to be obligated by the end of FFY 2013/14. The Commission will be updated on the status of delayed projects, if any. Agenda Item 9 72 Upon Commission approval, staff will program the projects in the Federal Transportation Improvement Program (FTIP). Once the projects are in an approved FTIP, Blythe and Indian Wells will work with Caltrans District 8 Office of Local Assistance to complete the federal requirements for obligating the funds. With approval of these requests, the Commission has fully authorized the programming of the $13.8 million of STP funds made available to its member agencies for pavement rehabilitation projects. Federal STP funds are administered through Caltrans; therefore there is no financial impact to the Commission. Attachment: Additional Project Programming for the STP 2013 Call for Rehabilitation Projects Agenda Item 9 73 • • • • 2013 SURFACE TRANSPORTAT.PROGRAM CALL FOR PROJECTS • Blythe IN. Broadway Grind and Overlay Juniper Trail to 1 Oth Ave. $ 150.00 $ 99.00 $ 249.00 Indian Wells I Cook Street Rubberized Overlay ** Fred Waring Dr south to Hwy 111 $ 43.00 $ 382.50 $ 425.50 Totals -November 2013 $ 193.00 $ 481.50 $ 674.50 Projects approved May 2013 $12,119 $4,340 $16,459 Project approved June 2013 $1,268 $989 $2,257 Project approved September 2013 $ 220.00 $ 171.00 $ 391.00 Total projects approved as of November 2013 $ 13,800.00 Total STP funds available I $ 13,800.00 ** Indian Wells' Cook Street Rubberized Overlay has $92,294.00 available from a previous STP Call for Projects that was programmed but not obligated and that will now be combined with this new arant to make a better oroiect. 74 • AGENDA ITEM 10 • • • • • RIVERSIDE COUNTY TRANSPORTATION COMMISSION DATE: November 25, 2013 TO: Budget and Implementation Committee FROM: Aaron Hake, Government Relations Manager THROUGH: John Standiford, Deputy Executive Director SUBJECT: Special Panel on 21st Century Freight Transportation STAFF RECOMMENDATION: This item is for the Committee to: 1} Receive and file the report on Improving the Nation's Freight Transportation System; and 2} Forward to the Commission for final action. BACKGROUND INFORMATION: Congressional Panel Releases Bi-Partisan Freight Peport The House of Representative's Special Panel on 21st Century Freight Transportation (Panel} released its final report in October after spending six months touring the nation and hearing from goods movement stakeholders, including a visit to San Bernardino and the Ports of Long Beach and Los Angeles. Southern California Members of Congress Representative Gary Miller and Representative Janice Hahn served on the Panel. The Commission submitted written testimony to the Panel over the summer, and provided additional information via the Commission's D.C.-based lobbyist, Cliff Madison. The Panel's unanimous report is remarkable given the ongoing partisan rancor that has characterized Washington. Unsurprisingly, "the Panel found that the current state of highway infrastructure does not adequately serve the needs of those moving goods across the Nation." Thus, the Panel put forth the following overall recommendations to Congress: • Direct the Secretary of Transportation, in coordination with the Secretary of the Army and the Commandant of the United States Coast Guard, to establish a comprehensive national freight transportation policy and designate a national, multimodal freight network; Agenda Item 10 75 • Ensure robust public investment in all modes of transportation on which freight movement relies, and incentivize additional private investment in freight transportation facilities, to maintain and improve the condition and performance of the freight transportation network; • Promote and expedite the development and delivery of projects and activities that improve and facilitate the efficient movement of goods; • Authorize dedicated, sustainable funding for multimodal freight Projects of National and Regional Significance through a grant process and establish clear benchmarks for project selection. Projects eligible for such funding would have a regional or national impact on the overall performance of the multimodal freight network identified by the Secretary of Transportation; • Direct the Secretary of Transportation, in coordination with the Secretary of the Treasury and the Secretary of the Army, to identify and recommend sustainable sources of revenue across all modes of transportation that would provide the necessary investment in the Nation's multimodal freight network and align contributions with use of, and expected benefit of increased investment in, such network; and • .Review, working through the Committee on Transportation and Infrastructure and the Committee on Ways and Means, the Secretary's freight funding and revenue recommendations and develop specific funding and revenue options for freight transportation projects prior to Congress' consideration of the surface transportation reauthorization bill in 2014. Commission staff concurs with these recommendations. Of great interest is how Members of the Panel will persuade Congress to adopt specific policies that support these recommendations. Crafting private sector incentives, expediting project delivery, creating sustainable funding sources, and establishing merit-based project selection are each a challenging political tasks, let alone when these are combined together into one comprehensive policy. The report cites numerous statistics about the severity of the nation's freight infrastructure deficit and the centrality of goods movement to the national economy, yet addressing the challenges identified in the report will require a tremendous order of political will from Members of both political parties and the White House. The report analyzed the following specific freight-based financing options for goods movement projects: • Customs Duties and Fees: Capturing a portion of revenue from existing customs duties and fees, or adding a transportation surcharge to existing customs duties and fees. However, such a mechanism would fail to capture U.S. exporters and could run afoul of international trade law. Agenda Item 10 76 • • • • • • • • • Freight Waybill Tax: A sales tax on shipping costs, similar to how taxes are assessed to taxes assessed for air freight and passengers who use the aviation system. Administering this type of tax could prove costly and complicated. Weight-Distance Tax: Paid by trucks based on the number of miles traveled with a certain load, closely tying the tax to the user's impact on roads. Several states (Kentucky, New Mexico, New York, and Oregon) currently have a similar system. Administration costs could be high and could have a negative impact on high-weight, low-value freight. Container Tax: A concept familiar to Southern California debates about goods movement. Such a tax was imposed to finance the Alameda Corridor. While most of the traffic through Southern California is container-based, many other ports and waterways move goods that are not in containers. The report did not endorse any of these options, nor does Commission staff at this time. The analysis identified options and potential benefits and downfalls of each revenue option. None of the options appear to be able to fund the entire need of the national goods movement system on their own. In terms of project delivery streamlining, the report examines the planning and environmental approval process for projects. The report acknowledges most freight projects take place in urban, congested settings where there are likely to be many environmental, land use, and jurisdictional issues in play. Furthermore, freight projects often do not compete well in traditional federal funding programs and are more complex than a routine highway project. Finally, there is a lack of national performance measures for the freight system by which to measure projects. All of the above create barriers to effectively improving the freight system. To this end, the Panel recommends, in excerpt: • Cut red tape and encourage the Secretary of Transportation to streamline project delivery across all modes of transportation; • Require the Secretary of Transportation to identify corridor-based solutions to freight mobility, taking into account the Nation's entire transportation network; • Direct the Secretary of Transportation to identify performance goals and performance measures by which states can assess the quality of freight movement across all modes of transportation; and • Establish policies and set benchmarks to accelerate the transition from project development to construction for freight projects. Additionally, the report delves into port issues, inland waterways, air cargo, and rail. The Commission's concerns remain consistently focused on: 1) A sustainable, dedicated funding source for freight projects; 2) Establishment of a national freight policy and strategic plan (portions of this are underway, per requirements of MAP-21); Agenda Item 10 77 3) 4) 5) 6) Policy that links mitigation projects to capacity improvements; Eligibility of grade separations for any freight funding program; Corridor-based approaches to goods movement funding and planning; and Federal recognition of Southern California, including the Inland Empire as the most important region in the United States for national goods movement and international trade. The expiration of MAP-21 within the next 11 months is accelerating conversations about goods movement policy. Senator Boxer, Chair of the Environment & Public Works Committee, made great strides in prioritizing goods movement and creating the framework for a National Freight Strategic Plan and inclusion of key stakeholders on a National Freight Advisory Committee. The Commission, in concert with Southern California partner agencies and businesses, will see.k to fine-tune these MAP-21 policies, seek funding options, and push for Congress to follow through on the Panel's recommendations. Attachment: Agenda Item 10 Improving the Nation's Freight Transportation System -Findings and Recommendations of the Special Panel on 21st Century Freight Transportation Dated October 2013 78 • • • • • • 79 • • • 80 • • • ACKNOWLEDGEMENTS Chairman Duncan, Ranking Member Nadler, and the Members of the Panel on 2l8t Century Freight Transportation would like to thank the hard-work- ing staff members for all they did to support the Panel's mission. This effort would not have been possible without each individual below. Shant Boyajian Jim Kolb Ward McCarragher Erin Sulla Jim Tymon David Wegner Dennis Wirtz Helena Zyblikewycz Tarunpal Dhillon Andrew Mertens Don Walker Lisette Morton Garrett Bess Matt Colvin Bobby Fraser Nick Martinelli Jacob Melcher Brian Oszakiewski Brittnee Preston Randy Ross Laurie Saroff Highways and Transit Counsel, T &I Committee Minority Highways and Transit Staff Director, T&I Committee Minority Chief Counsel, T &I Committee Legislative Staff Assistant, T &I Committee Senior Advisor to the Chairman, T &I Committee Minority Water Resources Professional Staff, T &I Committee Legislative Assistant, T &I Committee Minority Highways and Transit Counsel, T &I Committee Legal Intern, T &I Committee Intern, T &I Committee Staff, Congressman Duncan Staff, Congressman Nadler Staff, Congressman Webster Staff, Congressman Sires Staff, Congressman Hanna Staff, Congresswoman Brown Staff, Congressman Crawford Staff, Congressman Lipinski Staff, Congressman Mullin Staff, Congressman Gary Miller Staff, Congresswoman Hahn Improving the Nation's Freight Transportation System 81 3 • • • 82 • • • CONTENTS Preface ............................................................................................................................................................................ Page 7 Executive Summary ....................................................................................................................................................... Page 9 The Nation's Freight System ....................................................................................................................................... Page 11 Highways and Trucking Freight Rail Shipping and Ports Inland Waterways Air Cargo Warehouses, Distribution Centers, and the Logistics Industry Pipelines Recommendations ....................................................................................................................................................... Page 45 Funding and Financing Investments Planning and Project Delivery Highways and Trucking Freight Rail Shipping and Ports Inland Waterways Air Cargo Appendices .................................................................................................................................................................. Page 69 A-Panel Scope of Work B -Panel Activities C -Summary of Hearing-"Overview of the United States' Freight Transportation System" D -Summary of Hearing -"How Southern California Freight Transportation Challenges Impact the Nation" E-Summary of Hearing -"How Logistics Facilitate an Efficient Freight Transportation System" F -Summary of Hearing -"How Freight Transportation Challenges in Urban Areas Impact the Nation" G -Summary of Hearing -"Perspectives from Users of the Nation's Freight System" H -Summary of Hearing-"Funding the Nation's Freight System" I -Summary of Site Visit -Southern California J -Summary of Site Visit -Memphis Region K-Summary of Site Visit-New York City Region L-Summary of Site Visit -Norfolk, Virginia M-Summary ofRoundtable Discussion -"Coordinating Federal Efforts to Improve Freight Transportation" N -Summary of Roundtable Discussion -"Navigating the Complexities of America's Largest Port Facilities" 0 -Summary of Roundtable Discussion -"Effectively Coordinating Freight Planning Activities" P -Acronym List Q -Signature Page Improving the Nation's Freight Transportation System 5 83 • • • 84 • • • ·pREFACE Chairman Bill Shuster and Ranking Member Nick J. Rahall, II, of the Committee on Transportation and Infra- structure of the House of Representatives created the Panel on 21'1 Century Freight Transportation in April 2013, to examine the current state of freight transportation in the United States and how improving freight transporta- tion can strengthen the United States economy. The Panel was constituted under Rule XVIII of the Rules of the Committee on Transportation and Infrastructure to examine issues related to freight mobility across all aspects of the Committee's jurisdiction. The Panel was led by Chairman John J. Duncan, Jr. and Ranking Member Jerrold Nadler. Also appointed to the Panel were Congressman Gary Miller, Congresswoman Corrine Brown, Congressman Rick Crawford, Congressman Daniel Lipinski, Congressman Richard Hanna, Congressman Albia Sires, Congressman Daniel Webster, Congress- woman Janice Hahn, and Congressman Markwayne Mullin. The Panel examined the current state of freight transportation in the United States to identify (1) the role freight transportation plays in the United States economy; (2) ways to increase the efficiency, safety, and overall con- dition and performance of the Nation's freight network; (3) how technology assists in the movement of freight; and (4) financing options for transportation projects that improve freight mobility. To carry out this ambitious work plan, the Panel held six public hearings, three roundtable discussions, traveled to Southern California, the Memphis region, the New York City/Northern New Jersey region, and Norfolk, Vir- ginia, and held numerous briefings with freight industry professionals and other interested parties. This report reflects the Panel's findings and the recommendations it reached as a result. Improving the Nation's Freight Transportation System 7 85 • • • 86 • • • EXECUTIVE SUMMARY The Panel on 21st Century Freight Transportation conducted hearings, held roundtable discussions, and traveled to key freight corridors across the United States to gain insight into the current state of freight transportation and how improving freight transportation can strengthen the economy. The Panel identified many challenges and impediments to the efficient and safe movement of goods into, out of, and through the United States. The Panel found that the current state of highway infrastructure does not adequately serve the needs of those moving goods across the Nation. Not every community is located adjacent to a railroad, airport, waterway, or port, but a consumer good is almost invariably transported along the Nation's four million miles of highways and roads for at least part of its journey. However, the Highway Trust Fund, from which federal investment in highway infrastructure is disbursed, will soon be insolvent. This fact is especially problematic when one considers that maintenance of the Nation's existing highway facilities alone would cost hundreds of billions of dollars, and that one of every four bridges in the United States is structurally deficient or functionally obsolete. Furthermore, a recent study found that congestion cost the United States economy $121 billion in 2011. While most consumer goods are transported on a truck for at least part of the journey, freight rail provides efficient long-haul and short-haul service and integrates closely with the trucking industry. There are approxi- mately 565 freight railroads in the country employing nearly 180,000 workers. These are privately owned com- panies that operate more than 200,000 miles of track throughout the Nation. Because the freight railroads are private entities, they own the infrastructure over which they operate, meaning they also invest heavily in those networks. In 2011, the freight railroads invested over $23 billion in capital expenditures to improve and expand their networks . Before goods can be transported on trucks or railroads, the goods must be produced, and many of these goods are produced overseas. Over 75 percent of all United States international freight moves by water. Unlike the Highway Trust Fund, the federal fund dedicated for harbor maintenance has a positive balance. Unfortunately, a lack of appropriated funding has resulted in deferred maintenance of federal channels that serve coastal ports. Currently, the constructed depths and widths of entrance channels at 59 major ports are available only 35 per- cent of the time. Given the current expansion of the Panama Canal and the larger ships that will service Ameri- can ports as a result, maintaining authorized channel depths and widths is critical to the stability of the Nation's import and export market. United States waterways carried an equivalent of over 100 million truckloads of goods last year. It is estimat- ed that without the barges and towboats operating on the inland waterways, the Nation would need 6.3 million railroad cars or 25 million trucks to haul the difference. However, much of the critical infrastructure for water- borne transportation is in dire need of repair. More than one-half of the locks and dams in the United States are over 50 years old. Air cargo is the fastest way to ship goods over long distances, and air freight is high-value cargo. Less than three percent of total freight by weight ships by air, but this represents over $6.4 trillion worth of goods per year, which is nearly 35 percent of all freight value. All aspects of the supply chain rely on the warehousing, distribution center, and logistics industry. Logistics is the planning, execution, and control of a complex organization involving many different moving pieces and interests, all within a system designed to achieve specific objectives. By optimizing the movement of freight Improving the Nation's Freight Transportation System 9 87 across all modes of transportation, this industry helps ensure the health of the United States economy and the future of the Nation's global competitiveness. The Panel found that ten percent of the Nation's freight movement, by tonnage, travels through pipelines. Pipelines, by their very nature, specialize in the transmission of energy commodities. In that regard, pipelines carry nearly two-thirds of the Nation's energy supply. Today, there are over 2,600,000 miles of pipelines in the United States-enough to circle the globe about 100 times. As a result of these findings, the Panel makes the following key recommendations. To safely and efficiently meet the needs of freight movements in the 21st Century, Congress should: D Direct the Secretary of Transportation, in coordination with the Secretary of the Army and the Com- mandant of the United States Coast Guard, to establish a comprehensive national freight transportation policy and designate a national, multimodal freight network; D Ensure robust public investment in all modes of transportation on which freight movement relies, and incentivize additional private investment in freight transportation facilities, to maintain and improve the condition and performance of the freight transportation network; D Promote and expedite the development and delivery of projects and activities that improve and facilitate the efficient movement of goods; • 0 Authorize dedicated, sustainable funding for multimodal freight Projects of National and Regional Sig- nificance through a grant process and establish clear benchmarks for project selection. Projects eligible for such funding would have a regional or national impact on the overall performance of the multimodal • freight network identified by the Secretary of Transportation; O Direct the Secretary of Transportation, in coordination with the Secretary of the Treasury and the Secre- tary of the Army, to identify and recommend sustainable sources of revenue across all modes of trans- portation that would provide the necessary investment in the Nation's multimodal freight network and align contributions with use of, and expected benefit of increased investment in, such network; and D Review, working through the Committee on Transportation and Infrastructure and the Committee on Ways and Means, the Secretary's freight funding and revenue recommendations and develop specific funding and revenue options for freight transportation projects prior to Congress' consideration of the surface transportation reauthorization bill in 2014. This report includes a detailed discussion of the Nation's freight network and makes recommendations that will improve the safety, efficiency, and performance of the nation's freight transportation system. Improving the Nation's Freight Transportation System 10 88 • • • • THE NATION'S FREIGHT SYSTEM INTRODUCTION Transportation is important. It is about people and how they live their lives, how they get to work, how they get their children to school, how they buy food, clothes, and other necessities, and how families visit one another around the country. It is also about business. Transportation is critical to how the supply chain functions, how raw materials get to factories, how goods get to market, how food gets from farmers to kitchen tables, and how energy products move from areas of production to areas of consumption. An efficient national transportation network allows business to lower transportation costs, which lowers production costs and enhances productivity and profits. It allows American business to be competitive in the global marketplace and for the Nation's econ- omy to prosper and grow. One need only look at the Interstate Highway System to see how that investment in the transportation network has benefited the Nation and encouraged tremendous economic growth over the past two generations. The federal government has historically played a strong role in transportation. In fact, one of the events that precipitated the Constitutional Convention was a longstanding dispute between Virginia and Maryland regard- ing navigation rights on the Potomac River impacted by transportation improvements proposed by President George Washington. President Washington determined that the new Nation must have the transportation infrastructure in place to facilitate effective trade and communications. However, Washington's efforts to extend navigation required a formal treaty between Maryland and Virginia, as well as elaborate approvals from other states in the Continental Congress. To settle that dispute he called for a convention to be held in Annapolis in 1786 to address problems with the Articles of Confederation and how the young Nation would move forward on this issue of navigation rights. That summit failed, but it demonstrated to the participants the need to improve the Articles of Confeder- ation. It was in this context that the Constitutional Convention was called and the Constitution itself drafted. The framers of the Constitution recognized that the Articles of Confederation were not meeting the transportation and commerce needs of a young Nation. The Constitution addressed this issue primarily in the Commerce Clause, which gives the Congress the power to regulate interstate commerce and create, in the words of the Preamble, "a more perfect Union" .1 Furthermore, Article I, Section 8, clause 7 of the Constitution requires the Congress to establish post offices and post roads.2 The post roads of thel 780s and 1790s became the highway and byway system that the Nation enjoys today. Over the years, the Nation has continued to invest in critical transportation infrastructure, from the Transconti- nental Railroad to the Panama Canal to the Interstate Highway System. The reason for this continued invest- ment in the transportation network is to ensure that the Nation is connected, supporting the needs of the Nation's economy and the American people. As President Dwight D. Eisenhower observed, without the unifying force of commerce and transportation, the United States would be a mere alliance of many separate parts. President Washington recognized this truth in the earliest days of the union, and the Congress must renew its commitment to providing a robust physical plat- form upon which the American people and American businesses can prosper. U.S. CoNST. pmbl. 2 U.S. CoNST. art. I,§ 8, cl. 7 . Improving the Nation's Freight Transportation System 11 89 In 2011, the United States transportation system moved 17.6 billion tons of goods, valued at more than $16.8 trillion.3 The Federal Highway Administration estimates that in the next 30 years, there will be 60 percent more. freight that must be moved across the Nation.4 To keep up with such demand, it is critical that Congress seek ways to increase the efficiency, safety, and overall condition and performance of the Nation's freight network. Given the multi-modal nature of freight movement, it is important to examine the system as a whole. Goods frequently move back and forth between ocean vessels, highways, railroads, air carriers, inland waterways, ports, and pipelines. Bottlenecks arising at any point on the system can seriously impede freight mobility and drive up the cost of the goods impacted. For this reason, improving the efficient and safe flow of freight across all modes of transportation is critical to the health of the United States economy and the future of the Nation's global competitiveness. To illustrate this point, in testimony before the Panel on June 26, 2013, United Parcel Service Chief Operating Officer David Abney outlined the movement of a package from New York to Germany. For the manufacturer to receive supplies from California, assemble the good, and send it to its final destination involves 10 distinct freight movements involving three modes of transportation -rail, truck, and air. In testimony before the Senate Committee on Commerce, Science, and Transportation on June 18, 2009, Rick Gabrielson, Senior Director oflntemational Transportation of the Target Corporation, provided another telling example that demonstrates the intermodal nature of goods movement.5 A simple tee-shirt manufactured over- 3 U.S. DEP'T OF TRANSP., FED. HIGHWAY ADMIN. (FHWA), FREIGHT FACTS AND FIGURES REPORT 10 (2012); U.S. DEP'T OF TRANSP., RESEARCH AND lNNOVATNE TECH. ADMIN. (RITA), TRANSP. STATISTICS ANNUAL REPORT 1 (2012). 4 Id., at 9. • 5 Freight Transportation in America: Options for Improving the Nations Network Before the S. Comm. on Commerce, Science, and Transp., 111 th Cong. 1 (2009) (statement of Rick Gabrielson, Senior Dir. oflnt'l Transp., Target). • Improving the Nation's Freight Transportation System 12 90 • • • seas moves by truck and ocean vessel before entering the United States at a United States port. It is processed at a nearby sorting facility, where it is combined with similar items arriving from other foreign points of origin. These items are then loaded onto trucks or trains and delivered to a distribution facility, at which point the shirt is combined with other items designated for the same destination. These items are then transported via truck or train, depending on the distance between the distribution facility and the destination. If a customer wants a product shipped directly to their residence or business, Target may utilize cargo aircraft to transport the goods, in addition to trucks, trains, and vessels. Due to the complexity of the supply chain, even the smallest delay at any point can cause massive ripples throughout the system, resulting in significant economic loss . Improving the Nation's Freight Transportation System 13 91 • • • HIGHWAYS AND TRUCKING The Nation's highway system is an essential part of the freight network. Not every community is located ad- jacent to a railroad, airport, waterway, or port, but a consumer good is almost invariably transported along the Nation's four million miles of highways and roads for at least part of its journey. History of the Highway System and the Highway Trust Fund Federal assistance for highway construction began in the early 20th Century when Congress provided $500,000 for highway construction in the Postal Service Appropriations Act of 1912. 6 In 1944, Congress authorized sig- nificant expanded federal assistance for construction of a "National System oflnterstate Highways".7 Without a dedicated source of revenue, however, construction of the Interstate System stalled. The landmark Federal-Aid Highway Act of 1956 and Highway Revenue Act of 1956 authorized significant funding for a 41,000-mile National System oflnterstate and Defense Highways and established the Highway Trust Fund (HTF) as the mechanism for financing the accelerated highway investment.8 To finance the in- creased authorizations, the Revenue Act increased federal excise taxes paid by highway users and provided that these revenues should be credited to the Highway Trust Fund. This dedicated funding mechanism provided financial certainty for the highway program, including the Interstate Program. The 13-year authorization of the 1956 Act gave the states and highway construction industry the continuity needed to develop and build highway projects. 6 Postal Service Appropriations Act of 1912, Pub. L. No. 336, 37 Stat. 539 (1912). 7 Federal Aid Highway Act of 1944, Pub. L. No. 78-521, 58 Stat. 838 (1944). 8 Federal-Aid Highway Act of 1956, Pub. L. No. 84-627, 70 Stat. 374 (1956) . Improving the Nation's Freight Transportation System 15 93 At its inception, the excise rates for highway use of motor fuels, also known as the gas tax, were 3 cents per gallon. Over the years, however, the tax rate and structure have been revised numerous times, most recently in • 1993. Current rates set the gas tax at 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel.9 Until major revisions in 1982, all receipts from motor fuel taxes were deposited into the HTF. The Surface Transportation Assistance Act of 1982 increased the tax rates from 4 cents per gallon to 9 cents per gallon, established separate Highway and Mass Transit accounts within the HTF, and deposited 1 cent out of the 9 cents per gallon into the Mass Transit Account. 10 Currently, of the 18.4 cents per gallon federal excise tax on gaso- line, 15.44 cents is deposited into the Highway Account, 2.86 cents is deposited into the Mass Transit Account, and 0.1 cent is deposited into the Leaking Underground Storage Tank Trust Fund. Of the 24.4 cents per gallon federal excise tax on diesel, 21.44 cents is deposited into the Highway Account, 2.86 cents is deposited into the Mass Transit Account, and 0.1 cent is deposited into the Leaking Underground Storage Tank Trust Fund. The latest Federal Highway Administration data show that HTF net receipts (excluding General Fund transfers) totaled $40.l billion in fiscal year 2012, with $35.1 billion deposited into the Highway Account, and $5.0 billion into the Mass TransitAccount.11 Without an increase in receipts, the cash balance in the Highway Account of the HTF has fallen dramatically. 12 Congress addressed this need for more investment by significantly increasing authorization levels for high- way programs in the Transportation Equity Act for the 21s1 Century (TEA-21), the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), and most recently in the Moving Ahead for Progress in the 21s 1 Century Act (MAP-21).13 When SAFETEA-LU expired at the end of fiscal year 2009, the Federal Highway Administration (FHWA) reported that the balance in the Highway Account was $8.8 billion. However, steps were not taken to increase receipts into the HTF, and the cash balance in the HTF has fallen dramatically. To maintain the solvency of the HTF, between fiscal year 2008 and fiscal year 2014, Con- gress transferred approximately $54 billion from the General Fund to the HTF. • Unfortunately, current Congressional Budget Office (CBO) projections show that the cash balance in the High- way Account will be depleted sometime in fiscal year 2015. According to CBO, in fiscal year 2015, the High- way Trust Fund revenue will be less than $39 billion, while expenditures will total more than $53 billion.14 These figures do not capture the full extent of the Trust Fund shortfall because FHWA will also have to outlay funds for projects for which funding was obligated in previous fiscal years. This cash shortfall is projected to continue in subsequent years if left unaddressed, with CBO estimating that the HTF will face a cash deficit of $132 billion over fiscal year 2012 to fiscal year 2023.15 The Interstate System was established as a cost-to-complete system. As a general rule, each route was required to meet certain design specifications. Every state was provided federal funding to cover 90 percent of the cost of constructing its route segments. 16 The states were responsible for the remaining 10 percent of the construc- tion cost, as well as for all costs associated with the operation and maintenance of the system.17 Through the 9 FINANCING FEDERAL-AID HIGHWAYS. 10 Surface Transportation Assistance Act of 1982, Pub. L. No. 97-424, 96 Stat. 2097 (1982). 11 FINANCING FEDERAL-AID HIGHWAYS. 12 Id. 13 Transportation Equity Act for the 21" Century, Pub. L. No. 105-178; Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, Pub. L. No. 109-59; Moving Ahead for Progress in the 21" Century Act, Pub. L. No. 112-141. 14 How the Financial Status of the Highway Trust Fund Impacts Surface Transportation Programs Before the H. Comm. on Transp. & Infrastructure Subcomm. on Highways & Transit, I 13th Cong. 1 (2013) (statement of Kim P. Cawley, Chief, Natural & Physical Resources Cost Estimates Unit, Congressional Budget Office). 15 Id. 16 Pub. L. No. 84-627, § 108(c). 17 Id. Improving the Nation's Freight Transportation System 16 94 • creation of the Highway Trust Fund and the financing of construction of the Interstate System, the Federal-Aid Highway Act and Highway Revenue Act gave birth to the modem era of federal involvement in highway infra- • structure, known as the Federal-aid Highway Program.18 • • The Federal-aid Highway Program is a federally assisted, state-managed and -operated program in which the states are responsible for the planning, design, and construction of highway projects, as well as operating and maintaining major roads. The federal government provides financial resources and technical assistance to state and local governments for constructing, preserving, and improving the National Highway System (including the Interstate System) and other urban and rural roads that are eligible for federal aid. With the enactment oflntermodal Surface Transportation Efficiency Act (!STEA), the Interstate System was de- clared complete with only a few short segments remaining to be constructed.19 The final !STEA funds for these segments were apportioned to the states in fiscal year 1995.20 Governments at all levels invested $182 billion in 2008 for highways and bridges in the form of capital outlay, maintenance, highway and traffic services, administration, highway safety enforcement, and debt service.21 In fiscal year 2012, the federal capital investment in highways totaled $39.9 billion.22 However, this level of investment continues to fall far short of the needs of our surface transportation system. According to the United States Department of Transportation (DOT), to maintain the Nation's highway system at a state of good repair and improve it to meet future demand, all levels of government need to increase outlays specifically for capital investment from $91 billion to $170 billion annually over a 20-year period. This esti- mate does not include operations and maintenance costs. 23 Bridges on the Nation's highway system are also in serious need of increased investment. According to DOT, one of every four bridges in the United States is structurally deficient or functionally obsolete. Of the 607,380 bridges in the United States, 151,497 are deficient, including 66,749 structurally deficient bridges and 84,748 functionally obsolete bridges. The backlog of cost-beneficial bridge investment is $121.2 billion.24 To eliminate the backlog of deficient bridges over the next 20 years, DOT estimates that annual investment in bridge repair and replacement must increase from $12.8 billion in 2008 to $20.5 billion annually.25 Economic Impact of the Highway System Approximately 50 percent of all freight tonnage moved in the United States travels less than 100 miles between origin and destination. 26 At this distance, trucks carry almost 8 5 percent of all of the freight that is moved. 27 More than 250 million vehicles traverse the highway system each year, and commercial trucking requires a reliable highway system on which to operate.28 However, each day approximately 12,000 miles of the highway 18 19 20 21 22 23 24 25 26 27 28 Pub. L. No. 84-627, § 108(a). Intermodal Surface Transportation Efficiency Act of 1991, Pub. L. No. 102-240, 105 Stat. 1914 (1991). Id. FHWA & FED. TRANSIT ADMIN. (FTA), CONDITIONS AND PERFORMANCE REPORT TO CONGRESS (2010). Moving Ahead for Progress in the 21" Century Act, Pub. L. No. 112-141 § llOl(a) (1). CONDITIONS AND PERFORMANCE REPORT. Id., at 7-17. Id., at 7-27. FREIGHT FACTS AND FIGURES REPORT, at 10. Id., at 11. Id., at 20. Improving the Nation's Freight Transportation System 1 7 95 system slow below posted speed limits and an additional 7,000 miles experience stop-and-go conditions.29 Such congestion negatively impacts the efficiency of the highway system as a reliable mode of transportation. • Moreover, America's reliance on the highway system is growing faster than the system itself. National public highway mileage increased at an average rate of0.2 percent between 1997 and 2010, while total vehicle miles travelled grew to an average annual rate of 1.3 percent during the same period.3° Congestion has increased as a result of this disparity. The Texas Transportation Institute's (TTI) Urban Mobility Report found that congestion in 498 of the Nation's cities cost the economy $121 billion in 2011, or nearly $750 for every commuter in the country.31 This figure is up from an inflation-adjusted $24 billion in 1982.32 Of the $121 billion, $27 billion of the delay cost is the effect of congestion on truck operations.33 Furthermore, congestion is becoming a problem that transcends "rush hour," with about 40 percent of the Nation's delay occurring in the mid-day and overnight hours, creating an increasingly serious problem for businesses that rely on efficient production and delivery.34 TTI estimates that in 2011, the amount of fuel wasted in congestion nearly reached 2.9 billion gallons-enough to fill the New Orleans Superdome four times.35 In its recent Traffic Scorecard, INRIX made a startling discovery. It found that in 2013, 61 of the Nation's 100 most congested cities have experienced increased traffic congestion over the prior year.36 This is a dramatic shift from 2012, where only 6 cities experienced increased congestion and 94 saw decreases in congestion lev- els.37 The congestion challenges in Southern California provide a sobering example of the tangible harm that con- gestion inflicts on the Nation's economy. More than 43 percent of the Nation's containerized imports enter the country through Southern California.38 The import and export traffic of the Southern California ports benefit the residents of every region of the United States. Goods imported and exported through Southern California make. their way to and from each state, supporting billions of dollars of local economic activity and millions of jobs.39 When congestion, bottlenecks, and other inefficiencies hinder the Southern California region's ability to import goods through its maritime ports and international border crossings or its ability to move these goods through the region, costs rise and transit times increase. These costs are often passed on to consumers. Consequently, the level at which the freight network functions in Southern California tangibly impacts the lives of consumers all across the Nation. 29 Id., at42. 30 CONDITIONS AND PERFORMANCE REPORT, at 2-8. 31 DAVID SCHRANK ET AL., TEXAS TRANSPORTATION INSTITUTE URBAN MOBILITY REPORT 5 (2012), available at http://tti.tamu.edu/ documents/mobility-report-2012-wappx.pdf. 32 Id., at 5. 33 Id. 34 Id., at 8. 35 Id., at 5. 36 INRIX, TRAFFIC SCORECARD ANNUAL REPORT (2012-13), available at http://scorecard.inrix.com/scorecard/summary.asp. 37 Id. 38 MoBILITY-21, FREIGHT MOVEMENT INFRASTRUCTURE KEEPS OUR ECONOMY COMPETITIVE, available at http://mobility21.com/ wp-content/uploads/2013/02/13dc _goodsmovementtrifold _FINAL _lr.pdf. 39 PORT OF Los ANGELES, PORT OF LONG BEACH & ALAMEDA CORRIDOR TRANSPORTATION AUTHORITY, SAN PEDRO BAY PORTS NATION- AL ECONOMIC TRADE IMPACT REPORT (2013), distributed to Panel in May, 2013. Improving the Nation's Freight Transportation System 18 96 • Furthermore, according to a recent study, more than 16 million jobs in the United States depend on imports.40 This study does not even take into consideration the millions of additional domestic manufacturing jobs that • rely on an efficient freight transportation network to export American-made goods . • • •••~•"~ .. ,.r110w,r.1tW!M!•.1111t1P1._•.•·'lll'1tM•liac1110a!Ulld.ip•»~ ..... !iiM._Milll ~-~~-~~~~~~~-alct- Comparing the costs of transporting soybeans to China from the United States and to China from Brazil illus- trates the critical role that the Nation's freight system plays in the global competitiveness of American industry. Currently, it costs $85 .19 to transport one metric ton of soybeans from Davenport, Iowa, to Shanghai, China. 41 It costs $141.73 to transport the same amount of soybeans approximately the same distance to Shanghai from North Mato Grosso, Brazil. The United States currently enjoys a competitive advantage because the Nation's freight system is more efficient and cost effective than Brazil's system. However, Brazil is planning to invest $26 billion to modernize its freight facilities. These advances will dramatically decrease the cost of moving Brazilian soybeans to market. Without an efficient, highly functioning freight network, American businesses will lose their competitive advantage in the global marketplace. 40 TRADE PARTNERSHIP WORLDWIDE, IMPORTS WoRK FOR AMERICA (2013), available at http://www.uschamber.com/sites/default/ files/reports/Imports Work_ FIN. pdf. 41 UNITED SOYBEAN BOARD ET AL., FARM TO MARKET: A SOYBEAN'S JoURNEY FROM FIELD TO CONSUMER (2012), available at http:// www.soytransportation.org/FarmToMarket/FarmToMarketStudy082012Study.pdf . Improving the Nation's Freight Transportation System 19 97 In 2011, the Nation's transportation system moved 17.6 billion tons of goods, valued at over $16.8 trillion.42 Given the connected nature of the Nation's supply chain, the issues that impact the freight systems in urban areas have a direct impact on the economic competitiveness of the entire Nation. In addition to congestion, a bridge collapse or closure brings significant and sudden economic impacts to the affected region. In the wake of the I-35W bridge collapse in Minnesota in 2007, the road user costs due to the unavailability of the river crossing averaged $400,000 per day. The Minnesota Department of Transportation further found that Minnesota's economy lost $17 million in economic output in 2007 and $43 million in 2008 as a direct result of the bridge collapse.43 Similarly, on May 23, 2013, the I-5 Bridge over the Skagit River in Mount Vernon, Washington, collapsed after it was struck by a truck. The Washington Department of Transpor- tation estimates that the total direct cost of the 26-day closure of the I-5 Skagit River Bridge was $8.3 million. 42 FREIGHT FACTS AND FIGURES REPORT, at 1 O; TRANSPORTATION STATISTICS ANNUAL REPORT, at 1. 43 MINNESOTA DEPARTMENT OF TRANSPORTATION, EcoNOMlC IMPACTS OF I-35W BRlDGE COLLAPSE, available at http://www.dot.state. mn.us/i35wbridge/rebuild/municipal-consent/economic-impact.pdf. Improving the Nation's Freight Transportation System 20 98 • • • • • • FREIGHT RAIL Freight railroads move large quantities of goods throughout the country. The railroads played a seminal role in the development of the United States and in the industrial revolution, and this mode continues in its vital impor- tance to the movement of goods into and across the Nation. Railroads are an integral part of North America's infrastructure network and, in tum, the Nation's economic competitiveness. History of the Freight Rail System Freight railroads have played a tremendously important role in the annals of United States history. Railroads have moved goods across the Nation before trucks or planes existed and to areas unreachable by ship. The abil- ity to move people and goods via rail directly aided the development of the Western states, and it contributed to the development of new products and markets that improved the Nation's economic vitality and competitive- ness. While the use of carts with metal wheels running on railed tracks dates back to the mid-1700s, the advent of the steam-powered locomotive revolutionized the cheap and efficient movement of goods. John Fitch, an American already famous for designing the first steam-powered boat, designed and built the first working steam-powered Improving the Nation's Freight Transportation System 21 99 locomotive in 1794. 44 The early-1800s saw numerous technological innovations to rail infrastructure as compa- nies sought ways to move goods to areas not served by the Nation's canal system. • President Abraham Lincoln recognized the benefits of a nationwide rail system and worked with Congress to pass the Pacific Railroad Act of 1862 (12 Stat. 489).45 This law authorized construction of the Transcontinental Railroad, which was completed in 1869, less than seven years after the law's enactment. In the 150 years since the passage of the Act, the railroad system has expanded to serve all areas of the Nation. Today, freight railroads are divided into three groups, called classes, based upon their annual revenues. While Class I railroads generally provide long-haul freight services, the Class II and III railroads often provide the first and last mile of rail freight movements. 44 45 BRIAN SOLOMON, AMERICAN STEAM LOCOMOTIVE 11 (1998). Pacific Railroad Act of 1862, 12 . ..u..i.w.....:=------------------------ 1 mprovi ng the Nation's Freight Transportation System 22 100 • • • • • Economic Impact of the Freight Rail System America's freight railroad network is the envy of the world. There are approximately 565 freight railroads in the country employing nearly 180,000 workers.46 These are privately owned companies that operate over more than 200,000 miles of track throughout the Nation.47 Freight railroads are divided into three groups, called classes, based upon their annual revenues. A Class I railroad is defined as having an annual carrier operating revenue of $250 million or more; a Class II railroad is defined as having an annual carrier operating revenue between $20 million and $250 million; and a Class III railroad is defined as having an annual carrier operating revenue of less than $20 million.48 In accordance with federal regulations, the annual carrier operating revenue is measured in 1991 dollars.49 There are seven Class I freight railroads that operate in the United States: BNSF Railway; CSX Transportation; Canadian National; Canadian Pacific; Kansas City Southern; Norfolk South- ern; and Union Pacific.50 The majority of railroads, however, are Class II and III railroads, known generally as regional or short-line railroads. 46 ASSOCIATION OF AMERICAN RAILROADS (AAR), OVERVIEW OF AMERICA'S FREIGHT RAILROADS 2 (2013), available at https://www. aar.org/keyissues/Documents/Background-Papers/Overview-US-Freight-RRs. pdf. 47 FEDERAL RAILROAD ADMINISTRATION, FREIGHT RAIL TODAY; AMERICAN SHORT LINE AND REGIONAL RAILROAD ASSOCIATION (ASLR- RA ), STRENGTHENING AMERICA' s ECONOMY, available at http://www.aslrra.org/images/ ASLRRA _ FS _PZ _ Strengthening.pdf. 48 49 C.F.R. § 1201 (2012). 49 Id. 50 AAR, CLASS I RAILROAD STATISTICS 1 (2013), available at https://www.aar.org/STATISTICSANDPUBLICATIONS/Docu- ments/ AAR-Stats-2013-04-17.pdf. Improving the Nation's Freight Transportation System 23 101 While Class I railroads generally provide long-haul services, the Class II and III railroads often provide the first and last mile of rail freight movements. The products moved by rail include everything from automobiles, • agricultural goods, and consumer products to chemicals, lumber, and energy resources. In all, freight rail carries 43 percent of intercity freight, which is more than any other mode, and for every one rail job, 4.5 other jobs are supported elsewhere in the economy.51 Furthermore, the Department of Commerce estimates that for every $1 invested in the Nation's rail system, the industry returns $3 to the economy.52 Unlike other modes, the freight railroads own the infrastructure over which they operate, meaning they also invest heavily in those networks. In 2011, the freight railroads invested over $23 billion in capital expenditures to improve and expand their networks.53 This investment is due in large part to the movement toward de-regu- lation of the freight railroads beginning in the 1970s through the Staggers Rail Act of 1980 (P.L. 96-448), and culminating in the Interstate Commerce Commission Termination Act of 1995 (P.L. 104-88). 54 Deregulation allowed the freight railroads to price competitively and respond to market forces, which has increased produc- tivity, enhanced safety, lowered average rates, and freed over $500 billion for private investment back into the freight network. 55 Furthermore, particular to the Class II and III railroads, deregulation has grown that industry from 8,000 miles of track in 1980 to over 51,000 miles today.56 Class II and III railroads are now the feeder and distribution lines for the network, reaching into small town, rural America to preserve those areas' connection to the national network. As noted above, the United States freight railroad industry employs nearly 180,000 workers. More than 160,000 are employed by the seven Class I freight railroads and another 20,000 are employed by the 558 short line and regional freight railroads. 57 The United States rail industry is heavily unionized. Approximately 85 percent of Class I employees and around 60 percent of non-Class I employees belong to a union and thus are subject to collective bargaining agreements.58 Collective bargaining agreements between railroads and their employees are governed by the Railway Labor Act, which was first passed in 1926.59 Collective bargaining for most other industries is gov- erned by the National Labor Relations Act.60 51 CORRIDORS OF COMMERCE, EcoNOMIC DEVELOPMENT, available at http://www.tradecorridors.com/benefits-of-rail/economic-de- velopment. 52 Id. 53 Freight and Passenger Rail in Americas Transportation System Before the H. Comm. On Transp. & Infrastructure Sub- comm. on Railroads, Pipelines & Hazardous Materials, I 13th Cong. 1 (2013) (statement of Edward R. Hamberger, Pres. & CEO, Ass'n of Am. Railroads). 54 Staggers Rail Act of 1980, Pub. L. No. 96-448, 94 Stat. 1895 (1980); Interstate Commerce Commission Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803 (1995). 55 Jean-Paul Rodrigue, et al., The Geography of Transport Systems, Hofstra University, Department of Global Studies & Geog- raphy (2013), available at http://people.hofstra.edu/geotrans; Brian Slack, Rail Deregulation in the United States, Hofstra University, Department of Global Studies & Geography (2013), available at http://people.hofstra.edu/geotrans/eng/ch9en/appl9en/ch9alen.html. 56 ANNE CANBY, AMERICA'S RAIL SYSTEM, available at http://onerail.org/sites/onerail.org/files/documents/rail-study/rail-info- bri efing-rail-system-overview-final-2-22-13. pdf. 57 AAR, CLASS I RAILROAD STATISTICS, at 1; ASLRRA, STRENGTHENING AMERICA'S ECONOMY, at 1. 58 AAR, COLLECTIVE BARGAINING IN THE RAIL INDUSTRY 1 (2013), available at https://www.aar.org/keyissues/Documents/Back- ground-Papers/Collective-Bargaining.pdf. 59 Railway Labor Act, 44 Stat. 577 (1926). 60 COLLECTIVE BARGAINING IN THE RAIL INDUSTRY, at 1. Improving the Nation's Freight Transportation System 24 102 • • • • • Most Class I railroads and a number of non-Class I railroads bargain on a "national handling" basis. National handling covers more than 90 percent of the Nation's unionized rail employees.61 Under national handling, a group of railroads acting as a unit negotiates with a union or group of unions for an agreement that applies to all those who participate in the bargaining. The members of each union, however, must ratify their contracts on an individual basis once a tentative agreement is in place. There are currently 13 major unions that represent rail workers.62 61 Id. 62 The 13 major rail unions are: the American Train Dispatchers Association, the Brotherhood of Railroad Signalmen, the International Association of Machinists and Aerospace Workers, the International Brotherhood of Boilermakers, Blacksmiths, Forgers and Helpers, the International Brotherhood of Electrical Workers, the National Conference of Firemen and Oilers -SEIU, the Sheet Metal Workers International Association, the Transportation Communications International Union, the Transport Workers Union of America, the United Transportation Union, UNITE-HERE, the Brotherhood of Locomotive Engineers and Trainmen Division of the International Brotherhood of Teamsters, and the Brotherhood of Maintenance of Way Employees Division of the International Broth- erhood of Teamsters . Improving the Nation's Freight Transportation System 25 103 • • • SHIPPING AND PORTS Moving people and goods over water is arguably the oldest form of transportation in human history. For mil- lennia, civilizations have depended upon ships to move goods to support nations and economies. Today, the shipping industry is one of the most sophisticated freight networks in the world, transporting the vast majority of goods in international trade and employing millions of people across the globe. The United States has essentially four coastlines that are responsible for importing and exporting commodi- ties from around the world: the East Coast, the West Coast, the Gulf Coast, and the Great Lakes. Commercial navigation through the Arctic Ocean along the north coast of Alaska looms as a potential fifth coast. From our coastal ports, goods move across the country, primarily by rail and truck. Getting products to market in an efficient and safe manner is critical to keeping the economy moving and requires extensive intermodal coordi- nation. History of the Shipping and Port System Shipping has had a prominent role in American history from the Nation's inception. Were it not for the impor- tance of shipping and trade, European explorers would not have discovered North America in search of a navi- gable route to Asia. Additionally, the maritime industry's ability to quickly and reliably transport raw materials and agricultural products from the colonies to Europe encouraged the development of North America in the 1600s. Ocean shipping provided a direct connection between the colonies and the rest of the world, facilitating trade and encouraging exploration and development of the continent's vast natural resources . Improving the Nation's Freight Transportation System 27 105 Over the years, in a continual effort to stay competitive, the shipping industry has evolved in recognition of changing commodities and emerging markets, global or regional armed conflict, challenges with shipping long • distances, integrated global trading partners, changing ocean shipping economic conditions, including the emer- gence of extremely large vessels, and demands for new products from international sources. While there have been many technological innovations to ships and ports that improved the efficiency, range, and capacity of the maritime industry, the invention of the intermodal container by Malcolm McLean in 1955 revolutionized the industry by allowing for standardization of cargo. 63 Intermodal containers are reusable steel boxes with standard sizes and connection points that allow for multiple uses on ocean-going cargo ships, trucks, and freight trains. Due to the superior efficiency of this shipping approach, global standardization resulted and containers became the unit of volume used to define the capacity of ships or ports. Today, the twenty-foot equivalent unit (TEU), referencing the size of the standard intermodal container, is now the standard industry metric. The freight industry generally, including ships, trucks, and trains, has been standardized to accommo- date the safe and efficient transfer of these containers between transportation modes. Prior to the use of containers to transport manufactured goods, maritime cargo was primarily loaded by hand in bulk pallets. Containerization allowed the shipping industry to gain efficiency in three main areas and, conse- quently, expand exponentially. First, the use of containers allowed for the quick movement of goods between ship and shore and between truck and train without having to break down and repackage the goods. Second, containers could be unloaded and loaded on various modes of transportation much more quickly than before through the use of larger, more efficient gantry cranes. Third, the use of containers greatly increased the freight volume capacity of the entire freight system. For example, ocean-going vessels could stack containers on a ship's deck and transport more goods than was previously possible by loading cargo only in a ship's holds. In addition to containerization, other types of ships have evolved over the years to meet special cargo and trans- port needs. Today, the world's oceans are plied by a wide assortment of ship types including dry bulk carriers • for coal, iron ore, and lumber; specialized ships for hauling agricultural products; fuel tankers for oil and natural gas; roll-on/roll-off car and vehicle carriers; and a variety of specialty ships designed to transport specific com- modities, such as wind turbines. The shipping industry is continually seeking ways to maximize its efficiency in transport, including fuel use, while taking into consideration the specific harbors that a ship services. Ships carrying cargo to or from Pacific Rim countries must continually balance ship design and size with the constraints of the Panama Canal and the logistical constraints of transiting the Mediterranean and Red Seas through the Suez Canal. The constant de- mands for reducing fuel consumption on the open sea and increasing safety in transiting the ingress and egress of straits, approaches, and harbors require a high level of training among licensed mariners and crew. The shift to ship designs that use more automation technologies has helped to improve efficiencies without sacrificing navigation safety. 63 Anthony J Mayo & Nitin Nohria, The Truck Driver Who Reinvented Shipping (2005) (excerpted from Jn Their Time: The Greatest Business Leaders of the Twentieth Century), available at http://hbswk.hbs.edu/item/5026.html. Improving the Nation's Freight Transportation System 28 106 • • • • Economic Impact of the Shipping and Port System Cargo ships move massive amounts of goods and commodities around the world every year. Over 75 percent of all United States international freight moves by water.64 The United States is the world's largest importer of containerized goods and the world's second-largest exporter of such cargo.65 For the Nation to continue import- ing and exporting such a large volume of goods and commodities, integrated port infrastructure and land-side connections are necessary. In addition, it is vital to invest in the navigation tools and technologies necessary to provide mariners with accurate real-time information to safely and efficiently access and egress the Nation's ports and waterways. Moreover, port security and maintaining security throughout the supply stream require an integrated and transferable way to track and maintain control over goods in transit. The majority of the Nation's bulk commodities and containerized goods are shipped through ports. Ports serve as points of entry for imported goods and egress for exports. After entering harbors, ships move to specific marine terminals that are often specialized to handle the type of ship and cargo being transported. These marine terminals often serve as end points of highway and rail freight movements and must be maintained and im- proved to support efficient and cost-effective trade . The Marine Transportation System in the United States serves nearly 8,200 separate commercial cargo-handling docks. These docks include public facilities (owned and managed by state, regional, and local port departments and authorities) and private facilities (common-user terminals and dedicated facilities). According to the Amer- ican Association of Port Authorities, there are 126 public seaport agencies with jurisdiction over 185 ports.66 64 FREIGHT FACTS AND FIGURES REPORT, at 15. 65 WORLD SHIPPING COUNCIL, TRADE STATISTICS, available at http://www.worldshipping.org/about-the-industry/global-trade/ trade-statistics. 66 AM. Ass'N OF PORT AUTHORITIES (AAPA), U.S. PUBLIC PORT FACTS (2008), available at http://www.aapa-ports.org/files/pdfs/ Improving the Nation's Freight Transportation System 29 107 Distribution of the cargo-handling docks and ports by region are as follows: Location Foreign Only Foreign and Domestic Domestic Only Total Atlantic 33 560 1,193 1,786 Pacific 24 571 1,101 1,696 Gulf 17 559 1,560 2,136 Great Lakes 3 246 402 651 Inland 0 0 1,928 1,928 Total 77 1,936 6,184 8,197 Source: United States Army Corps of Engineers67 While large ports dominate the international freight dynamic, smaller ports are critical to supporting and main- taining regional and local economies and sustaining the United States coastwise trade under the Jones Act. facts.pdf. 67 AM. Ass'N OF STATE HIGHWAY AND TRANSP. OFFICIALS (AASHTO), WATERBORNE FREIGHT TRANSPORTATION 2-2 (2013), available • • at http ://water. transportation. org/SiteCollectionDocuments/WFT-1. pdf. • Improving the Nation's Freight Transportation System 30 108 • Harbor Maintenance Trust Fund The Water Resources Development Act of 1986 established the Harbor Maintenance Trust Fund (HMTF) for the operation and maintenance (O&M) ofharbors.68 The Harbor Maintenance Tax (HMT), an ad valorem tax, is collected on maritime imports and is assessed at a rate of 0.125 percent of cargo value ($1.25 per $1,000 in cargo value).69 The tax revenues are deposited into the Harbor Maintenance Trust Fund from which Congress appropriates funds for dredging harbor channels to cover 100 percent of the United States Army Corps of Engi- neers O&M costs.70 In addition to the tax on imported goods, domestic cargo shippers-shipments from United States port to United States port-generate about five percent of the HMT revenues while cruise ships pas- sengers generate less than one percent.71 Cargo and passengers from Alaska, Hawaii, and other United States territories are exempt from the HMT. 72 Ports on inland rivers are also exempt from the HMT and are assessed fuel taxes that support the Inland Waterways Trust Fund.73 Currently HMT revenues pay for all the maintenance dredging costs at harbors up to 45 feet deep.74 For deeper harbors, the incremental maintenance cost is 50 percent from the HMTF and 50 percent from the local sponsor, usually the port authority.75 In fiscal year 2011, the HMTF collected $1.38 billion but estimated expenditures totaled only $790 million.76 As a result of collecting more revenue than expenditures year after year, the HMTF balance is more than $7 billion.77 As noted above, these funds may only be used for their statutorily-designat- ed purposes. However, because the HMTF is not an "off-budget" account within the federal budget, the large balance is used to make it appear that the Nation's budget deficit is less in a given year.78 A lack of appropriated funding has resulted in deferred maintenance of federal channels that serve coastal ports. Currently, the constructed depths and widths of entrance channels at 59 major ports are available only 35 per- cent of the time. • Global Shipping Challenges • Shipping operators select harbors to call based on a number of factors including reliability, speed, cost, safety, security, value-added service, availability of cargo, and contributions to overall profitability and other business objectives.79 Ocean carriers have a choice of routes around the globe-they can go around Cape Hom in Afri- ca, the Cape of Good Hope in South America, or through the Suez Canal or the Panama Canal. Over the last several years, two new routes are beginning to open up that could change the dynamics of global ship deliver- ies-the Northeast and the Northwest passages through the Arctic Ocean. In 2013, more than 400 ships applied 68 Water Resources Development Act of 1986, Pub. L. No. 99-662, 100 Stat. 4082 (1986). 69 AAPA, GOVERNMENT RELATIONS PRIORJTIES: WATER REsoURCES 1 (2013), available at http://www.aapa-ports.org/files/ Water%20Resources%202013_1363709492636 _ l .pdf. 70 Id. 71 John Frittelli, Harbor Maintenance Trust Fund Expenditures, CONGRESSIONAL RESEARCH SERVICE, Report No. R41042, January 10, 2011, at 5. 72 Id. 73 Id. 74 Id., at 7. 75 Id. 76 STAFF OF foINT COMM. ON TAXATION, l 12TH CONG., OVERVIEW OF SELECTED TAX PROVISIONS RELATING TO THE FINANCING OF INFRA- STRUCTURE 18 (JCX-29-11). 77 DEP'T OF THE TREASURY, HARBOR MAINTENANCE TRUST FUND, Rep. No. 96X8863. 78 Harbor Maintenance Trust Fund Expenditures, at 8-9. 79 AASHTO, WATERBORNE FREIGHT TRANSPORTATION, at 2-10 . Improving the Nation's Freight Transportation System 31 109 for permits to transit the Arctic Ocean for commercial transport. 80 Using the northern sea route along the Arctic Coast of Russia reduces the transit between East Asia and Western Europe by 21,000 kilometers and reduces the. time of transit by one-third. 81 The physical dimensions of the Panama Canal have historically limited the size of ships that can transit across the Pacific to the Atlantic, and reverse. The current size of the Panama Canal limits ships to a depth of 39 feet and a width of not more than 13 containers across. This is the defined "Panamax" dimension. As ships began to increase in width and depth to accommodate an increased number of containers, the Panama Canal Authority embarked on an expansion of the canal to adapt to "post-Panamax" sized vessels. The expansion of the Panama Canal is scheduled to be completed in 2015 and will allow the next generation of mega-containerships to move between China and the United States East Coast and Gulf Coast ports. Not all harbors in the United States will be able to handle these post-Panamax sized ships. On the West Coast, the harbors currently able to handle these ships include Los Angeles-Long Beach, California; Oakland, Califor- nia; and Seattle, Washington. On the East Coast, Norfolk, Virginia and Baltimore, Maryland are able to handle post-Panamax ships and New York/New Jersey and Miami, Florida are scheduled to be enlarged to accommo- date these ships over the next several years. On the Gulf Coast, Houston, Texas, is currently dredging to allow for post-Panamax sized ships. Of concern in the global shipping community is the continued support of key shipping hubs and connectivity to and from the rest of the United States. It is critical that the hub ports have adequate connections to distribution points throughout the country. Of equal concern is the ability at these ports to break down the loads from the mega-container ships and transfer container cargo to feeder vessels that can access and support smaller harbors along the East, West, and Gulf Coasts, and in the future, the Great Lakes, via short sea shipping. Bulk Commodities • The United States has multiple commodities that are desired on the global market, including coal, iron ore, tac- onite, wheat, soybeans, corn, fertilizers, timber, and finished wood products. These bulk commodities require specific loading and unloading facilities. As the commerce of these commodities has increased and become more competitive on a global scale, shippers have moved toward increased modernization and specialization on the products that they ship. The shifting dynamics of coal, in particular, exemplify this shift in demand and the response of the global bulk shipping community, particularly the increasing global demand for United States-mined coal in Asia and Eu- rope. In Norfolk, Virginia, specific mixes of West Virginia coal are increasingly shipped to Rotterdam, the Netherlands, or to the Black Sea for distribution to the rest of Europe. 80 SHIP AND BUNKER, NAVIGATING THE ARCTIC'S lcY WATERS (2013), available at http://shipandbunker.com/news/ world/4 7145 6-fathom-spotlight-navigating-the-arctics-icy-waters. 81 Jean-Paul Rodrigue, et al., The Geography of Transport Systems: Polar Shipping Routes, Hofstra University, Department of Global Studies & Geography (2013), available at http://people.hofstra.edu/geotrans/eng/chlen/conclen/polarroutes.html. Improving the Nation's Freight Transportation System 32 110 • • • • INLAND WATERWAYS Inland waterways provide an efficient means of transporting large quantities of goods from points inland to deepwater ports and from ports to inland markets. Many agricultural and manufacturing entities rely heavily on the inland waterway system to move their goods to market. History of the Inland Waterway System The inland waterway system in the United States is primarily concentrated in the Eastern, Midwestern, and Pacific Northwest areas of the Nation. The Mississippi River and its tributaries, the Hudson River and the Saint Lawrence Seaway, the Great Lakes, the Chesapeake Bay, the Delaware River, and the Columbia River are the largest components of the inland waterway system in the United States. The inland waterways of the Midwest- ern area of the United States connect the Gulf of Mexico ports of Mobile and Biloxi, Mississippi, and New Orleans, Louisiana, to the Mississippi River, which in turn connects to the Illinois, Ohio, and Tennessee rivers. The Great Lakes System; the steel production areas of Detroit, Michigan, Chicago, Illinois, and Cleveland, Ohio; and the taconite ore of Duluth, Minnesota are accessed through the Saint Lawrence Seaway. The Seaway allows access to the Atlantic Ocean and Europe. Lastly, the West Coast Sacramento and Columbia/Snake River systems allow direct access to the agricultural resources of the Central Valley of California and the wheat, hops, and other grain fields of eastern Oregon, Washington, and Idaho. The inland waterway system is the conduit that feeds the coastal ports and provides for integrated global transfer and trading of bulk commodities. From the earliest days of the Nation's history, American farmers, businessmen, and entrepreneurs used flatboats to float bulk commodities along the inland waterways of the United States. This mode of transportation provid- ed a low-cost, low-energy means of moving large quantities of goods around the Nation. Today, the method of transporting goods and persons on the Nation's inland waterway system is largely unchanged. Unlike the deep- draft vessels that are common in the international maritime industry, relatively shallow-draft barges pushed by towboats traverse the Nation's inland waterways. These barges are capable of carrying intermodal containers, Improving the Nation's Freight Transportation System 33 111 bulk agricultural goods, building aggregates, fertilizers, or liquid fuel. Modem barges typically range from 35 feet to 200 feet in length, based on the size and load of their cargo. These barges are typically put together in groups of tows that are then pushed through the inland waterway system by tugboats. They transit the system through a system of locks and dams that allow the barges to navigate both up and down our river systems . Economic Impact of the Inland Waterway System The Nation's approximately 12,000 miles of commercially-active, navigable waterways provide an efficient, cost-effective means of transporting goods to domestic and international markets.82 A tremendous amount of goods are transported on waterways each year, estimated at 2.3 billion tons in 2007.83 In fact, United States wa- terways carried an equivalent of over 100 million truckloads of goods last year.84 However, much of the critical infrastructure for waterborne transportation is in dire need of repair. More than one-half of the locks and dams in the United States are over 50 years old.85 Inland waterways transport more than 60 percent of the Nation's grain exports, about 22 percent of domes- tic petroleum products, and 20 percent of the coal used to generate electricity.86 In 2010, 566 million tons of 82 U.S. ARMY CORPS OF ENGINEERS, INLAND WATERWAY NAVIGATION: VALUE TO THE NATION, available at http://www.sas.usace. arrny.mil/Portals/61 I docs/lakes/thurrnond/navigate. pdf. 83 AASHTO, WATERBORNE FREIGHT TRANSPORTATION, at 3-1. 84 Id. • • 85 Budget Hearing -United States Army Corps of Engineers Before the H Comm. on Appropriations Subcomm. on Energy and Water Dev., & Related Agencies, 113th Cong. 1 (2013) (statement of Am. Society of Civil Engineers). 86 NAT'L WATERWAYS FOUND., WATERWAYS: WORKING FOR AMERICA 2 (2012), available at http://www.nationalwaterwaysfounda- tion.org/study/NWF _ 117900 _ 201 l WorkingForAmericaBrochure _FINAL _forWeb.pdf. Improving the Nation's Freight Transportation System 34 • 112 • • • waterborne cargo transited the inland waterways valued at more than $180 billion.87 Local public port districts are economic engines for the communities in which they are located and most are self-sufficient and receive no property or other tax revenue . It is estimated that without the barges and towboats operating on the inland waterways, the Nation would need 6.3 million railroad cars or 25 million trucks to haul the difference.88 The domestic maritime industry provides over $100 billion to the Nation's economy in economic output, annually, and provides more than 33,000 jobs aboard its boats and barges alone. 89 Transporting goods on the inland waterway system also has significant environmental benefits. According to the Tennessee Valley Authority, "Because one barge can transport as much cargo as 15 rail cars or 60 trac- tor-trailers, waterway transportation benefits the environment. It reduces fuel consumption and emissions, and makes the roads safer by keeping more trucks off of the highways. River transportation has a direct impact on the prices consumers pay for the things they buy. Soft drinks, ice cream, baked goods and pancake syrup, for example, are all sweetened with high-fructose com syrup made from grain grown in the Midwest."90 Inland Waterways Trust Fund The Inland Waterways Revenue Act of 1978 (26 United States C. 9506) and the Water Resources Development Act of 1986 (WRDA 1986; 26 United StatesC. 4042) created the inland waterway financing mechanism. These two Acts established a fuel tax on commercial barges, cost-sharing requirements for inland waterway projects, and the Inland Waterway Trust Fund (IWTF) to hold these revenues and fund these investments. The overall effect of these changes was a greater financial and decision-making responsibility for commercial operators on the inland waterways system . WRDA 1986 authorized additional increases to the 1978 Act's fuel tax and, pursuant to WRDA 1986, the fuel tax is $0.20 per gallon.91 The fuel tax has not been indexed for inflation.92 WRDA 1986 further stipulated th.at IWTF construction projects would be funded with 50 percent of the funds derived from the IWTF and the other 50 percent from the General Fund. Under WRDA 1986, expenditures from the IWTF must be authorized by Congress and funded through appro- priations acts.93 WRDA 1986 also established the Inland Waterways User Board, a federal advisory committee, to provide commercial users an opportunity to inform the priorities for United States Army Corps of Engineers decision-making. From 1986 to today, the balance in the IWTF has varied considerably. Beginning in 1992, balances increased, reaching their highest level in 2002 at $413 million. 94 Beginning in 2005, expenditures began to outpace collec- tions and, concurrently, several projects far exceeded their original cost estimates and balances dropped sharp- ly. Significant concerns have been raised as to the economic viability of the IWTF under the present fuel tax 87 Id. 88 INLAND WATERWAY NAVIGATION: VALUE TO THE NATION. 89 THE AMERICAN WATERWAYS OPERATORS, Joss & ECONOMY: INDUSTRY FACTS (2013), available at http://www.americanwater- ways.com/initiatives/jobs-economy/industry-facts. 90 TENNESSEE VALLEY AUTHORITY, ECONOMIC SIGNIFICANCE, available at http://www.tva.gov/river/navigation/economic.htm. 91 Water Resources Development Act of 1986, Pub. L. No. 99-662, 100 Stat. 4082 (1986). 92 Charles V. Stem, Inland Waterways: Recent Proposals and Issues for Congress, CONGRESSIONAL RESEARCH SERVICE, Report No. R41430, May 3, 2013, at 9. 93 Water Resources Development Act of 1986, Pub. L. No. 99-662, 100 Stat. 4082 (1986). 94 Inland Waterways: Recent Proposals and Issues for Congress, at 10. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Improving the Nation's Freight Transportation System 35 113 approach. Different solvency proposals have been raised by the Administration and the Inland Waterways User B~d • Case Study: Moving Soybeans from Illinois and Iowa to China To meet the demands of the soybean market in China, farmers in the Midwest have to coordinate their planting and harvest with the shipment of their crop across multiple modes of transportation. The story begins when the soybeans are harvested in the fields oflowa and Illinois, usually in September or early October. The soybeans are moved from the field to a barge loading facility on the Mississippi River by trucks or rail. This leg of the journey typically takes one to four days. The soybeans are subsequently loaded onto river barges within one or two days of arriving at the loading facility, and are organized into tows. The journey by barge tow to the New Orleans, Louisiana area typically takes two weeks. The soybeans are then off-loaded to either short-term stor- age bins or directly onto ocean-going bulk carriers. The transit to China begins after loading to the bulk carrier. Typically, the coordinated transit of the ship from loading at New Orleans, through transit of the Panama Canal to crossing of the Pacific takes approximately 30 days. After arriving in China, the bulk carrier ship is unloaded and the soybeans are transported via truck or rail to distribution points across China. The point of this case study is to illustrate the critical nature of coordination and communications in getting a product grown in the Midwest to a market in China. Due to the highly competitive market for soybeans, ifthe transport system in the United States breaks down or does not produce the desired transportation, the Chinese market will shift from buying Illinois and Iowa soybeans to buying Brazilian soybeans. A loss of two to four weeks in delivery to New Orleans could result in China making an economic decision that will inipact the local • farmers in the Midwest. An integrated process of moving bulk agricultural commodities is required to keep the economics of the system whole. Improving the Nation's Freight Transportation System 36 • 114 • • • AIR CARGO Air cargo carriers play a vital role in transporting goods both in domestic and international supply chains. Air carriers can move cargo quickly and often move goods of particularly high value. Furthermore, in some areas of the country, air freight is the only reliable means of delivering goods . History of the Air Cargo System and the Airport and Airway Trust Fund Aviation has played a key role in American transportation for more than 100 years. Aviation is often the fast- est way to move people and goods around the Nation and the world. Since the earliest days of commercial aviation, shippers have been moving goods via air. In World War II, the military needs of the American forces around the world encouraged many technological advances to the ability of aircraft to effectively move freight long distances. Today, companies like Federal Express and the United Parcel Service maintain extensive fleets of cargo aircraft to move millions of parcels and packages around the world every night. The Airport and Airway Trust Fund (AATF) was created by the Airport and Airway Development and Revenue Act of 1970 to provide dedicated funding for the Nation's aviation system.95 Revenues are derived from avia- tion-related excise taxes on passengers, cargo, and fuel and in tum provide funding for capital improvements to United States airports. The AATF also provides the majority of funding for the Federal Aviation Administration (FAA), estimated at 71.5 percent in fiscal year 2013.96 The FAA accounts funded include: Operations (fund- ed by the General Fund and AATF); Facilities and Equipment, Research, Engineering, and Development; and Grants-in-Aid for Airports. The AATF also funds the Essential Air Services (EAS) account for the Department of Transportation. 95 Airport and Airway Development and Revenue Act ofl970, Pub. L. No. 91-258 (1970). 96 FEDERAL AVIATION ADMINISTRATION, AIRPORT AND AIRWAY TRUST FUND FACT SHEET 2 (2013) . Improving the Nation's Freight Transportation System 37 115 As established by the Airport and Airway Improvement Act of 1982, funds obligated for the Airport Improve- ment Program (AIP) are drawn from the AATF, which is supported entirely by user fees, fuel taxes, and other • similar revenue sources.97 Some examples of these taxes and fees include: 7 .5 percent domestic air passenger ticket tax; $3.90 domestic flight segment tax (up from $3.70); 6.25 percent cargo waybill tax; $17.20 tax on both international arrivals and departures (up from $16.30); 7 .5 percent frequent flyer award tax; $8.60 Alaska and Hawaii international air facilities tax (up from $8.20); 19.3 cents per gallon fuel tax for aviation gasoline; 21.8 cents per gallon fuel tax on general aviation jet fuel; 14.1 cents per gallon surcharge on fuel for aircraft used in fractional ownership program (new); and 4.3 cents per gallon fuel tax on commercial airlines.98 Combined with the revenue generated from interest on the Airport and Airway Trust Fund's cash balance, these taxes and fees generated nearly $11.7 billion in fiscal year 2011 and $12.6 billion in fiscal year 2012.99 Economic Impact of the Air Cargo System Air freight is high value cargo. Less .. than three percent of total freight by weight ships by air, but this represents over $6.4 trillion worth of goods per year, which is nearly 35 percent of all freight value.100 Air cargo is trans- ported both in the bellies of passenger aircraft as well as in dedicated all-cargo aircraft on scheduled and non- scheduled service. Currently, there are 33 all-cargo carriers operating 840 cargo aircraft in the United States.101 In 2012, air cargo carriers flew over 36 billion revenue ton miles (RTMs ). 102 Of these 36 billion RTMs, all-car- go carriers comprised almost 80 percent of the total, with passenger carriers flying the remainder.103 There are four primary drivers to the air cargo industry-competition, connectivity, cost, and perishability.104 The competition between carriers keeps the profit margin and the ultimate cost to consumers low. The number of airports across the United States and the world ensure that shippers and consumers can move their goods via air freight. While more expensive than other modes of transportation, the cost of shipping a parcel via air is far • from prohibitive. Finally, shippers of perishable and time-sensitive products, such as pharmaceuticals, flowers, or fruits and vegetables, require the air cargo industry, which can reliably deliver goods to market in hours. Air cargo plays an important role in the quick delivery of goods domestically and internationally. Air cargo provides an efficient way to transfer goods or commodities from one place to another in a short period of time. Due to the volume and price constraints of the air cargo industry, air freight specializes primarily in smaller goods and personal parcels. 97 Airport and Airway Improvement Act of 1982, Pub. L. No. 97-248 (1982). 98 AIRPORT AND AIRWAY TRUST FUND FACT SHEET, at 5. 99 Id., at 6. 100 How Logistics Facilitate an Efficient Freight Transportation System Before the H Comm. on Transp. & Infrastructure Panel on 21" Century Freight Transp., 113th Cong. 1 (2013) (statement of Richard H. Fisher, Pres., Falcon Global Edge). 101 FEDERAL AVIATION ADMINISTRATION (FAA), AEROSPACE FORECAST FOR FISCAL YEARS 2013-2033 15 (2013), available at http:// www.faa.gov/about/office _ org/headquarters _ offices/apl/aviation _forecasts/aerospace_ forecasts/2013-2033/media/2013 _F orecast.pdf. 102 A revenue ton mile (RTM) is the movement of one ton of freight one mile for revenue. 103 AEROSPACE FORECAST FOR FISCAL YEARS 2013-2033, at 24. 104 Los ANGELES WORLD AIRPORTS, AIR FREIGHT AT Los ANGELES WoRLDAIRPORTS (2013), distributed to Panel in May, 2013. Improving the Nation's Freight Transportation System 38 116 • • • • WAREHOUSES, DISTRIBUTION CENTERS, AND THE LOGISTICS INDUSTRY Warehouse, distribution center, and logistics providers play a key role in alleviating inefficiencies and bottle- necks in the Nation's freight system, which can impede mobility and drive up the cost of the impacted goods. By optimizing the movement of freight across all modes of transportation, this industry helps ensure the health of the United States economy and the future of the Nation's global competitiveness. History of the Logistics Industry The warehouse, distribution center, and logistics industry adds value to the supply chain by improving the plan- ning, implementation, and control of the fl.ow of goods from point of origin to point of consumption. Today, nearly all of the Nation's top executives have some form oflogistics strategy. Every Fortune 100 company, and 80 percent of all Fortune 500 companies, employ at least one third-party logistics (3PL) provider to improve their operations. 105 In 2011, domestic spending in the logistics and transportation industry totaled nearly $1.3 trillion, roughly 8.5 percent of the Nation's gross domestic product.106 The growth of the logistics industry far outpaces that of the economy at large, further emphasizing the important value that logistics can have in facili- tating the efficient movement of goods.107 105 Joseph Bonney, 3PL Learning Curve, JoURNAL OF COMMERCE, Sept. 2011, at 4A. 106 DEP'T OF COMMERCE, THE LOGISTICS & TRANSP. INDUS. IN THE U.S., available at http://selectusa.commerce.gov/industry-snap- shots/logistics-and-transportation-industry-united-states. 107 RICHARD ARMSTRONG, u .S. 3PL MARKET GROWS 7%: OUTPACES ECONOMY, available at http://www.3plogistics.com/ Improving the Nation's Freight Transportation System 39 117 Third-party logistics providers are also known as freight forwarders or transportation intermediaries. Depend- ing on the industry in which a 3PL operates, the 3PL may also be known as a broker (if involved in the trucking • industry), a Non Vessel Operating Common Carrier (if involved in the maritime industry), or an indirect air carrier (if involved in the air freight industry). Despite all of these different names, the essential function is the same. At its most basic level, a 3PL is an entity that facilitates the movement of goods. One of the earliest 3PLs was the Company Limited of London, established in 1836 by Thomas Meadows.108 Meadows recognized the demand for these intermediary services as the rail transportation and steamship in- dustries expanded. As trade increased between Europe and North America, Company Limited arranged for the transportation of goods from manufacturers to the steamships. 109 The logistics provided by Company Limited, however, soon expanded beyond the mere carriage of goods. Meadows realized the value that additional infor- mation could off er, and soon began consulting with his clients on documentation and customs requirements in the country of destination.110 Since Company Limited, 3PLs have traditionally operated as non-asset based companies that arranged for the transportation of a shipper's goods with another company that owned and operated a common carrier.m Today, many 3PLs also operate their own trucks, aircraft, warehouses, and distribution centers, in addition to offering the traditional logistical advice and analysis that is the hallmark of the industry. 112 Economic Impact of the Logistics Industry Logistics is the planning, execution, and control of a complex organization involving many different moving pieces and interests, all within a system designed to achieve specific objectives. According to the Council of Supply Chain Management Professionals, logistics management is the part of supply chain management "that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements. "113 Put simply, the logistics industry is valuable to the Nation's freight system because logistics improve the effi- ciency of the supply chain. To name just a few real-world applications, the use oflogistics can ascertain the best mode, or combination of modes, to move a particular product to a particular location, give a small carrier access to a large shipper's freight, reduce the number of empty containers a trucking company has to carry, eliminate the need for operating distribution centers in-house, and maximize warehouse layout and productivity. Another key service of the warehouse, distribution center, and logistics industry are value-added services that improve received products before they are repackaged and shipped to a final destination. Product assembly, inspection, sequencing, re-packaging, and labeling are just some of the many services that the industry provides to add value to the products shipped throughout the world.114 By carefully collecting and analyzing data about PR _3PL %20Mkt%202002.htm. 108 Thomas Meadows & Company, Understanding the Freight Business (London: The Company, 1978). 109 Id. 110 Id. 111 TRANSP. INTERMEDIARJES Ass'N (TIA), ABOUT THE INDUS., available at http://www.tianet.org/AM/Template.cfm?Section=Edu- cation. 112 Id. 113 COUNCIL OF SUPPLY CHAIN MANAGEMENT PROFESSIONALS, SUPPLY CHAIN MANAGEMENT, available at http://cscmp.org/about-us/ supply-chain-management-definitions. 114 How Logistics Facilitate an Efficient Freight Transportation System Before the H. Comm. on Transp. & Iefrastructure Panel • on 21'' Century Freight Transp., 113th Cong. 1 (2013) (statement of Mark V. DeFabis, Pres. & CEO, Integrated Distribution Services, • Improving the Nation's Freight Transportation System 40 118 • • • the supply chain, logistics providers can identify areas of lost efficiency and develop strategies to move goods more intelligently . One of the ways that manufacturers and retailers can maximize the value of 3PLs is through the concept of Just-in-Time Delivery (JIT). The idea behind JIT is that business efficiency will be the greatest when carrying costs are minimized. In other words, by delivering goods at the precise moment when they will be consumed, businesses will not need to pay to store the goods before they are used. JIT relies intrinsically on the logistics industry to efficiently forecast and transport the goods at the moment when they are needed. By avoiding the unnecessary storage of inventory prior to its use, the logistics industry can greatly improve the operating effi- ciencies of the manufacturing and retail industries. Each year, shippers outsource more of their traffic, transportation, and logistics functions to 3PLs, as these companies can offer better purchasing economies, more sophisticated data analysis systems, and better market knowledge than the shipper can afford to develop internally. 115 Many 3PLs describe themselves as the "travel agents" of the freight system, as they are tasked with planning, overseeing, transporting, and storing their cli- ents' goods and products from one end of the supply chain to the other. There is one notable exception to the general trend toward outsourcing logistics functions, however. Many of the large big-box retailers have developed complex internal logistics operations. They have found that there are economies of scale in their own operations that increase the profitability of maintaining their own warehouses, distribution centers, and trucking fleets. Inc.). 115 JoHN G. LARKIN, ET AL., TRANSP. & LOGISTICS: INDUS. UPDATE (2012), available at http://www.tianet.org/staticcontent/stat- icpages/06-07-2012_ Robert_ Voltmann _Stifel Nicolaus Call.pdf. ~-=-~~-=~-=-~~~~~~~~~~~~~~~~~~~~~ Improving the Nation's Freight Transportation System 41 119 • • Improving the Nation's Freight Transportation System 42 • 120 • • • PIPELINES Pipelines provide a safe and efficient means of transporting large quantities of energy commodities from well- head to industry and consumers. Compared to other means of transportation, pipelines offer a capacity and volume advantage, emit few greenhouse gases, and offer an economical way to move energy products over long distances . Histoiy of the Pipeline System Pipelines have been used for thousands of years. The first application was to transmit drinking water and for irrigation, but 2,500 years ago in China, pipelines were adapted to transport natural gas. This is the first known instance whereby a pipeline transmitted hydrocarbons. In the United States, pipelines have been used since the late 1700s.116 Today, there are over 2,600,000 miles of pipelines in the United States-enough to circle the globe about 100 times. Most pipelines are owned by inde- pendent pipeline operators, not by oil and gas companies. 117 Pipelines are jointly regulated by the Pipelines and Hazardous Materials Safety Administration (PHMSA) and the Federal Energy Regulatory Commission (FERC). PHMSA is responsible for ensuring that pipelines are safe, reliable, and environmentally sound and oversees pipeline construction, maintenance, and operation.118 FERC regulates approval, permitting, and siting for inter- state pipelines and sets rates on a pipeline-by-pipeline basis.11 9 Today, the term "pipelines" generally refers to all aspects of the physical infrastructure related to the transmis- sion of energy products. These elements include the pipe and fittings, equipment attached to the pipes, such as valves, compressor units, pump stations, metering stations, and terminals or storage facilities, to name just a few.120 116 DNV GL, HAZARDOUS LIQUID AND NATURAL GAS TRANSMISSION PIPELINES (2013), distributed to Panel in October, 2013. 117 Id.,atl3. 118 Id.,atl2. 119 Id. 120 Id., at 6 . Improving the Nation's Freight Transportation System 43 121 Economic Impact of the Pipeline System • Ten percent of the Nation's freight movement, by tonnage, travels through pipelines.121 Natural gas provides almost 25 percent of the Nation's total energy consumption, and petroleum provides approximately an addition- al 40 percent of energy consumption. Taken together, pipelines carry nearly two-thirds of the energy used in the United States.122 These commodities need to be transported quickly and safely, and pipelines move these prod- ucts efficiently at a high volume. Pipelines play an important role in ensuring that the Nation's energy com- modities are moved quickly, safely, and efficiently, and in so doing, pipelines support the other modes of freight transportation, as well. 121 122 FREIGHT FACTS AND FIGURES REPORT, at 9. HAZARDOUS LIQUID AND NATURAL GAS TRANSMISSION PIPELINES, at 5. Improving the Nation's Freight Transportation System 122 • 44 • • • • RECOMMENDATIONS KEY RECOMMENDATIONS To safely and efficiently meet the needs of freight movements in the 21"1 Century, Congress should: D Direct the Secretary of Transportation, in coordination with the Secretary of the Army and the Com- mandant of the United States Coast Guard, to establish a comprehensive national freight transportation policy and designate a national, multimodal freight network; D Ensure robust public investment in all modes of transportation on which freight movement relies, and incentivize additional private investment in freight transportation facilities, to maintain and improve the condition and performance of the freight transportation network; D Promote and expedite the development and delivery of projects and activities that improve and facilitate the efficient movement of goods; D Authorize dedicated, sustainable funding for multimodal freight Projects of National and Regional Sig- nificance through a grant process and establish clear benchmarks for project selection. Projects eligible for such funding would have a regional or national impact on the overall performance of the multimodal freight network identified by the Secretary of Transportation; 0 Direct the Secretary of Transportation, in coordination with the Secretary of the Treasury and the Secre- tary of the Army, to identify and recommend sustainable sources of revenue across all modes of trans- portation that would provide the necessary investment in the Nation's multimodal freight network and align contributions with use of, and expected benefit of increased investment in, such network; and D Review, working through the Committee on Transportation and Infrastructure and the Committee on Ways and Means, the Secretary's freight funding and revenue recommendations and develop specific funding and revenue options for freight transportation projects prior to Congress' consideration of the surface transportation reauthorization bill in 2014 . Improving the Nation's Freight Transportation System 45 123 • • • FUNDING AND FINANCING INVESTMENTS The United States is at a crossroads. Study after study has indicated that the Nation's infrastructure is crum- bling. This deterioration in the condition of the Nation's roadway pavements and bridges can affect the efficien- cy of goods movement and increase costs associated with freight transportation. Without an increased public and private sector investment in the most critical freight infrastructure facilities, the Nation's long-term econom- ic and business competitiveness will suffer. While a strong freight transportation network is critical to the Nation's long-term competitiveness, it is well documented that infrastructure investment at all levels of government is insufficient to keep up with operation, maintenance, and capital needs of existing facilities, let alone make investments in critically needed new facili- ties. Moreover, there is no dedicated source of federal revenue for important multimodal freight projects. Despite this well documented need for additional infrastructure investment, the Congressional Budget Office projections show that the primary source of federal funding for surface transportation investment -the High- way Trust Fund -will run out of money early in fiscal year 2015. This will require additional revenue be identified to ensure that state and local partners have the resources necessary to maintain existing facilities. It is important to note that throughout the Panel's deliberations, many of the users of the transportation network -such as truckers, barge operators, manufacturers, and business owners -have expressed a willingness to contribute more to the system, as long as their investment will be used to maintain and upgrade the facilities on which their livelihoods rely . Surface Transportation Commissions Congress established the National Surface Transportation Policy and Revenue Study Commission (Policy Com- mission) in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFE- TEA-LU), and charged it with forecasting the surface transportation system necessary to support our economy 50 years in the future. The Policy Commission report was issued in January 2008. The Policy Commission report: 0 Identified a significant surface transportation investment gap and called for an annual investment level of between $225 billion and $340 billion-by all levels of government and the private sector-over the next 50 years to upgrade all modes of surface transportation (highways, bridges, public transit, freight rail and intercity passenger rail) to a state of good repair. The current annual capital investment from all government sources in road and bridge infrastructure is $182 billion. 0 Proposed that the federal fuel taxes be raised by between 25 cents and 40 cents per gallon to address the funding gap and the rate increase be indexed to the construction cost index and phased in over a period of years. 0 Found that the fuel tax would continue to be a viable revenue source for surface transportation at least through 2025. Thereafter, the most promising alternative user fee revenue measure appears to be a Improving the Nation's Freight Transportation System 47 125 vehicle miles traveled (VMT) fee, provided that substantial privacy and collection cost issues can be addressed. • 0 Called for other user-based fees to be utilized to assist in addressing the shortfall, such as container fees for freight projects and ticket taxes for passenger rail improvements. 0 Called for tax policy changes to incentivize expansion of intermodal networks. 0 Proposed the expanded use of "congestion pricing" on Federal-aid highways in major metropolitan areas be utilized under conditions that protect the public interest, and restricted the use of revenues generated through congestion pricing to transportation purposes in the travel corridors where the fees are imposed. D Stipulated that public-private partnerships should be encouraged to attract additional private investment to the surface transportation system, provided that conditions are included to protect the public interest and the movement of interstate commerce. SAFETEA-LU also created the National Surface Transportation Infrastructure Financing Commission (Financ- ing Commission). The Financing Commission was charged with analyzing future highway and transit needs and the finances of the Highway Trust Fund and making recommendations regarding alternative approaches to financing transportation infrastructure. The Financing Commission's report was issued in February 2009. The Financing Commission report: O Found an annual surface transportation investment gap of between $46 billion to $64 billion between • 2008 and 2035. 0 Concluded that, while there were concerns with the long-term viability of the gas tax, in the near term: o The gas tax should be increased by 10 cents per gallon, and indexed to inflation; o The diesel tax should be increased 15 cents per gallon, and indexed to inflation; o Heavy Vehicle Use Tax (HVUT), which has not been increased since 1983, should be doubled and indexed; and o Truck tires excise tax should be indexed to inflation. O Called for a switch to a more direct form of "user pay" charges over the long-term, specifically calling for the transition to a VMT fee system. Recognizing that the system is not viable in the near term, the report recommended that the transition to such a system be targeted for completion by 2020. O Recognized the important role innovative :financing approaches, such as public-private partnerships and government financial programs, can play as a supplementary source of financing. However, found that these types of financing instruments are heavily dependent on new revenue sources that can be leveraged to repay upfront capital investments. Improving the Nation's Freight Transportation System 48 126 • • • • The Financing Commission report also notes, with regard to proposed National Infrastructure Banks, that any such entity should be structured in a manner that addresses actual funding and credit market gaps and should target assistance to projects that are essential to the national network but that lack access to sufficient resources through existing programs. The report urges Congress to ensure that any such entity is appropriately integrated with or a logical extension of current programs, especially the Transportation Infrastructure Finance and Inno- vation Act (TIFIA) program. The Financing Commission warns that the potential role of a new infrastructure financing entity should be examined in the context of long-term funding needs and not only as an immediate response to the current disruption in the credit markets. Freight-Based Financing Options The reports from the Financing Commission and the Policy Commission discussed potential freight-related charges that could be instituted in the future. Below is a summary the findings on four options to generate reve- nue to pay for freight-related projects-customs duties and fees, a freight waybill tax, a weight-distance tax, and a container tax. The Financing Commission evaluated the advantages and disadvantages of each option based on its reve- nue-raising potential, sustainability, and flexibility; implementation and administration considerations; econom- ic efficiency and impact; equity; and applicability to other levels of government. Customs Duties and Fees-The Financing Commission found that a portion of the revenues from existing customs duties potentially could be dedicated to transportation infrastructure tied to the movement of those goods-effectively a transfer from the General Fund. While customs duties and fees would be reasonable for a small, dedicated intermodal fund, the large gaps in coverage make it a poor broad-based funding method. 0 Allocating a portion of existing customs duties would require no major administrative effort or ex- pansion of legal authority. Alternatively, a transportation use surcharge could be added to the existing customs duty and fee schedule and dedicated to freight transportation infrastructure. 0 The Financing Commission found that imposition of a 3.5 percent transportation surcharge would pro- vide approximately $1 billion annually. An increase in the Customs Merchandise Processing Fee by 70 percent would also yield $1 billion annually. 0 However, increasing revenues from customs duties and fees may not be consistent with international rules governing trade. Additionally, these fees do not reach the United States exporters who generate much of the local highway use around the port. 0 An infrastructure customs fee could be structured to relate to system use (e.g., fee revenues could be dedicated to infrastructure needs at the point they are collected) and could have the benefit of address- ing border infrastructure needs that arise from both homeland security and transportation infrastructure requirements that create chokepoints. Freight Waybill Tax-A freight waybill tax would serve as a sales tax on the shipping costs for freight. Such a tax could be modeled on the aviation system tax, in which passenger and freight users who rely on the same Improving the Nation's Freight Transportation System 49 127 infrastructure and carriers all contribute to fund the system. The air-freight waybill tax currently provides five percent of contributions to the federal Airport and Airway Trust Fund. • D A small percentage tax rate could raise significant revenues with strong sustainability. A 0.1 percent tax on all truck freight waybills would raise about $620 million annually; thus a 0.16 percent rate would raise $1 billion per year. D A freight way bill tax would be expensive to administer due to the high number of taxpayers and the as- sociated filing, auditing, and enforcement requirements. In addition, the waybill is typically paid by the receiver of goods; however, in some cases it is paid by the benefiting cargo owner outside of the United States Thus, determining how and from whom to collect the tax could be complex. D Private fleets (e.g., Wal-Mart and Georgia-Pacific) would not be assessed the fee unless waybill-like costs were estimated and imputed to the private company. D Such a tax would be an indirect user fee, but with less connection to use than the current motor fuel tax (a freight waybill tax generally reflects distance but more heavily equates to the value of the freight). D While a freight waybill tax would be reasonably equitable, the tax would be related to transportation costs and not system use. In addition, without the implementation of an imputed waybill on captive shippers, the tax would miss as much as one-half of the goods movement industry. D The Commission found that the process of resolving this gap creates significant implementation and administration costs and would be subject to evasion. • Weight-Distance Tax-Weight-distance taxes are fees imposed on the miles traveled by specific vehicle classes, which take into account the weight and load of a vehicle and essentially impose a premium on heavier vehicles to recover the added wear and tear they cause to the system. This tax can be based on a combination of the actual weight being carried for each trip and the number of miles traveled, on the weight of the truck and the number of axles, or on the average vehicle weight plus load weights. Currently, Oregon, Kentucky, New Mexi- co, and New York use state-based variations of the weight-mile tax in combination with a fuel tax (Oregon does not charge a fuel tax for commercial trucks). D The administrative costs of a weight-distance tax can be high. However, Oregon's tax rates are based on the average weight carried by a vehicle of each class, and, thus, trucking companies only need to keep track of mileage rather than mileage and weight. O Evasion has been an issue for states with weight-distance taxes (though if states moved to a high-tech system such as Oregon plans to implement, that would cut down on evasion). O Weight and weight-mile taxes closely correlate system use and costs, including the costs that freight trucks impose on highways. However, these taxes do little to promote targeted investment at key points of the system affecting efficiency (like bottlenecks). Therefore, the Commission found such a tax would be better suited as a funding source for system-wide maintenance. O Both a weight-only and a weight-distance tax would place a larger tax burden on low-value/high-weight commodities. Improving the Nation's Freight Transportation System 50 128 • • • • Container Tax-A per container fee could be collected at port gates or via a toll collection system in the imme- diate vicinity of a port and dedicated to an intermodal investment fund. The Port of Long Beach charged con- tainer fees to fund the Alameda Corridor project. D The complexity of actual collection of a national container tax would depend on how the fee is applied. The Commission cautions that duplicative container fees at individual ports coupled with a national fee would be administratively burdensome for shippers and pre-emption of states' ability to impose their own container charge would be problematic as local fees are used to help states fund relief of port con- gestion. D A container fee potentially could miss movements at inland waterways and at cross-border or other ports of entry, and it could possibly not account for non-containerized freight movements like bulk cargo. Such a tax could also disadvantage United States ports in competition with those in Mexico and Canada. D A container tax would be imposed generally on shippers and would not account for non-containerized movements suck as bulk shipments of commodities or large pieces of equipment like tractors or wind- mill blades. D The Commission found that while the container tax is a possibility for funding intermodal projects, its limited coverage makes it a weak option for large-scale funding needs. Trust Funds Congress has created four trust funds that collect user fees and disburse revenue for transportation infrastruc- ture, including projects key to freight mobility . Highway Trust Fund-The Federal-Aid Highway Act of 1956 established the Highway Trust Fund (HTF). The revenues capitalizing the Highway Trust Fund are collected primarily from users of the highway system through federal taxes on fuels and various taxes on trucks. Since enactment of this legislation, funding from the Highway Trust Fund has been provided to states via formula for the planning and construction of key highway projects that enable the movement of freight. Most highway-related freight projects, as well as some freight rail and freight intermodal projects, are currently eligi- ble to receive funding under one or more existing federal surface transportation programs. Many large freight projects, however, are multimodal in scope, and some aspects of these projects may be ineligible for funding from the HTF. This puts project sponsors in the position of having to cobble together funding for large multi- modal freight projects from a variety of different sources. The HTF is also facing a significant revenue shortfall, raising questions about the ability of the HTF to sus- tain current investment levels. In recent years, outlays from the HTF have been significantly greater than the amount of revenues collected in highway user fee revenues. As a result, between fiscal year 2008 and fiscal year 2014, Congress has transferred approximately $54 billion from the General Fund to maintain the solvency of the HTF. This HTF solvency issue is expected to continue, with the Congressional Budget Office projecting that the HTF will face a cash deficit of $132 billion over fiscal year 2012 to fiscal year 2023 . Improving the Nation's Freight Transportation System 51 129 Harbor Maintenance Trust Fund-The harbor maintenance tax (HMT) is an existing revenue mechanism that supports the federal Harbor Maintenance Trust Fund (HMTF) through an ad valorem tax on the value of pas-• senger tickets and declared commercial cargo loaded onto or unloaded from vessels using federally maintained harbors. The HMT is assessed at a rate of 0.125 percent of cargo value ($1.25 per $1,000 in cargo value). The HMT could be increased and dedicated to an intermodal investment fund (or existing revenues from the tax could be redirected to such a fund). In recent years, HMTF annual expenditures appropriated for harbor mainte- nance have remained relatively flat. 0 While increasing the HMT would not require major administrative effort or expansion oflegal authority, the portion of the tax imposed on imports could create issues with international rules governing trade (similar to issues associated with increasing customs duties and fees). Additionally, the HMT does not reach the United States exporters who generate much of the local highway use around ports. D An HMT increase could be structured to relate to system use ifthe proceeds were dedicated to infra- structure needs at or near ports of entry, particularly seaports. In this case, there would be relatively high geographic equity and a reasonable level of user equity if funding were spent on infrastructure to support ports. Inland Waterways Trust Fund-The Inland Waterways Trust Fund (IWTF) is capitalized by a fuel tax on commercial barges and cost-sharing requirements for inland waterway projects. From 1986 to today, the bal- ance in the IWTF has varied considerably. Beginning in 1992, balances increased reaching their highest level in 2002 at $413 million. Beginning in 2005, expenditures began to outpace collections and concurrently several projects far exceeded their original cost estimates and balances dropped sharply. Significant concerns have been raised as to the economic viability of the IWTF under the present fuel tax approach. • Airport and Airway Trust Fund-The Airport and Airway Trust Fund (AATF) provides dedicated funding for the Nation's aviation system, including air freight functions. Revenues are derived from aviation-related ex- cise taxes on passengers, cargo, and fuel and in tum provide funding for capital improvements to United States airports. Transportation Investment Generating Economic Recovery (TIGER) and Projects of National and Regional Significance (PNRS) The Transportation Investment Generating Economic Recovery (TIGER) discretionary grant program is funded through the General Fund of the Treasury and administered by the Department of Transportation (DOT). The TIGER program was originally created as part of the American Recovery and Reinvestment Act of 2009 and is a competitive grant program whereby DOT distributes appropriated funds for transportation infrastructure proj- ects around the Nation. The TIGER program has been funded every year since its inception in 2009. Under DOT's TIGER grants, many freight projects have successfully received funding. However, due to the demand and structural limitations of the TIGER program as well as the large expense of many key freight trans- portation facilities, the dollar amount of each grant under TIGER is generally insufficient to fund Improving the Nation's Freight Transportation System 52 130 • • • • individual freight projects in significant measure. As such, the TIGER program is helpful in bringing freight projects online, but without additional resources is insufficient as a means of funding for such facilities, in and of itself . Similar in many ways to the TIGER program is the Projects of National and Regional Significance (PNRS) pro- gram authorized by Congress in SAFETEA-L U and reauthorized in the Moving Ahead for Progress in the 21 •1 Century Act (MAP-21 ). This program provides competitive grant funding for high-cost surface transportation projects that provide significant national and regional economic benefits and increase global competitiveness. MAP-21 authorized $500 million for the PNRS program from the General Fund for fiscal year 2013. As such, the PNRS program is subject to annual appropriations and has not yet received funding. Transportation Infrastructure Finance and Innovation Act (TIFIA) Another tool that project sponsors have in funding large-scale infrastructure projects is the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which is capitalized at $1 billion in fiscal year 2014. The TIFIA program provides federal credit assistance to project sponsors through low interest-rate loans. Through participation in the TIFIA program, federal funds can be leveraged to provide greater purchasing pow- er for large transportation facilities. Railroad Rehabilitation & Improvement Financing (RRIF) The Railroad Rehabilitation & Improvement Financing (RRIF) program was originally established by the Trans- portation Equity Act for the 21st Century (TEA-21), and later amended by SAFETEA-LU. Under this program, the Federal Railroad Administration is authorized to provide direct loans and loan guarantees up to $35 billion to finance development ofrailroad infrastructure. The funding may be used to (1) acquire, improve, or rehabil- itate intermodal or rail equipment or facilities, including track, components of track, bridges, yards, buildings and shops; (2) refinance outstanding debt incurred for acquisition, improvement, or rehabilitation of rail equip- ment or facilities; and (3) develop or establish new intermodal or railroad facilities. Eligible applicants include railroads, state and local governments, government-sponsored authorities and corporations, joint ventures that include at least one railroad, and limited option freight shippers who intend to construct a new rail connection. Direct loans can fund up to 100 percent of a railroad project with repayment periods of up to 35 years and inter- est rates equal to the federal government's cost of borrowing. State Transportation Funding Packages Many states are also faced with inadequate funding to address their transportation needs. As a result, states such as Virginia, Maryland, Wyoming, Arkansas, and Vermont have recently passed measures to increase state reve- nue for transportation projects. For instance, in May 2013, Virginia Governor Bob McDonnell signed a statewide transportation funding plan that he had worked with the state legislature to develop. The proposal, HB 2313, "Virginia's Road to the Fu- ture", raises revenue through a variety of sources including: eliminating the excise taxes on gasoline and diesel and replacing them with sales taxes on gasoline and diesel; increasing the state sales tax; and imposing a fee on alternative fuel vehicles. The plan is expected to provide approximately $6 billion in additional transportation Improving the Nation's Freight Transportation System 53 131 funding (more than $3.4 billion in additional statewide transportation funding, more than $1.5 billion in addi- tional funding for Northern Virginia, and more than $1 billion in additional funding for Hampton Roads) over the next five years. Public-Private Partnerships (PPPs) In addition to the public grant funding, individual states have begun using public-private partnerships (PPPs) to stretch governmental contributions to large freight transportation projects. A recent PPP at the Port of Baltimore provides a prime example of a freight transportation facility that was brought online as a result of cooperative planning and development between private industry and governmental entities. • In January 2010, the Maryland Port Administration and a private port operator entered a 50-year lease and concession agreement for the Seagirt Marine Terminal at the Port of Baltimore. Under the agreement, the port operator is responsible for daily operations and the construction of a new 50-foot berth, including four ship-to- shore cranes. The port operator will also make hundreds of millions of dollars of capital improvements to the terminal. After making an annual payment to the Maryland Port Authority, the port operator will receive the net revenues from the business developed by the expanded terminal facility. To safely and efficiently meet the needs of freight movements in the 21st Century, Congress should: 0 Ensure robust public investment in all modes of transportation on which freight move- ment relies, and incentivize additional private investment in freight transportation facili- ties, to maintain and improve the condition and performance of the freight transportation network. O Direct the Secretary of Transportation, in coordination with the Secretary of the Treasury • and the Secretary of the Army, to identify and recommend sustainable sources of revenue across all modes of transportation that would provide the necessary investment in the Nation's multimodal freight network and align contributions with use of, and expected benefit of increased investment in, such network. O Review, working through the Committee on Transportation and Infrastructure and the Committee on Ways and Means, the Secretary's freight funding and revenue recommen- dations and develop specific funding and revenue options for freight transportation proj- ects prior to Congress' consideration of the surface transportation reauthorization bill in 2014. O Authorize dedicated, sustainable funding for multimodal freight Projects of National and Regional Significance through a grant process and establish clear benchmarks for project selection. Projects eligible for such funding would have a regional or national impact on the overall performance of the multimodal freight network identified by the Secretary of Transportation. D Encourage public-private partnerships and the use of innovative financing for freight proj- ects. Improving the Nation's Freight Transportation System 54 132 • • • • PLANNING AND PROJECT DELIVERY Planning and project delivery are key to any functioning transportation system. Many governmental and non-governmental entities are involved in this process. When it comes to the planning and delivery of large freight projects with regional or national importance, this process becomes more complicated and important because it can involve multiple jurisdictions and require significant coordination among various entities. Transportation Planning Process Generally, state departments of transportation, metropolitan planning organizations (MPOs), and rural planning commissions work together to create a statewide transportation improvement plan (STIP) listing all of the sur- face transportation projects that are eligible for funding. In addition to the STIP, these organizations may also work together to create a long-range transportation improvement plan with proposals for future consideration. The Moving Ahead for Progress in the 21st Century Act created a new apportionment for metropolitan plan- ning. Prior to MAP-21, metropolitan planning activities were funded as a set-aside from the formula programs. Under MAP-21, states are required to use funds under this program for statewide and nonmetropolitan trans- portation planning activities and are required to make funds available to MPOs for metropolitan transportation planning activities. The amount of funds allocated to each MPO within a state is determined by a number of factors, including population, air quality, status of transportation planning, and transportation needs of the met- ropolitan area . Planning lreight Projects While the general transportation planning process is the same for projects that directly impact freight movement and those that do not, freight projects often have difficulty competing with other projects. There are a number of possible reasons for this difficulty, including difficulty accounting for the public benefits of these projects and concerns over providing funding from one jurisdiction for projects that may primarily benefit another juris- diction. Large freight projects often add additional layers of complexity. Many freight projects are located in urban areas, and city governments or port authorities often take a leading role in developing plans for these proj- ects. Furthermore, freight projects often cross state boundaries, implicating multiple state departments of trans- portation and MPOs. Given that planning bodies are responsible for focusing on the needs and issues of their specific jurisdiction, planning for and advancing multi-jurisdictional projects requires significant coordination. Project Delivery The environmental review process required under the National Environmental Policy Act (NEPA) is designed to bring all the relevant interested parties into the process so that their concerns will be considered adequately throughout the review. The process applies to projects being advanced with environmental impact statements, and can be applied, at the discretion of the Secretary of Transportation, to projects being advanced with other environmental documents. As the lead agency, DOT is responsible for defining the project's purpose and need, Improving the Nation's Freight Transportation System 55 133 after public comments and interagency participation. DOT is also responsible for developing a range of alterna- tives to be considered for the project. • Completing a major highway project can take 15 years, but only a fraction of that time involves actual construc- tion. MAP-21 streamlined this review process for highway projects by requiring the Secretary to set deadlines to make sure all environmental approvals occur within four years, by providing categorical exclusions to the environmental review process for certain projects that meet specific criteria, and by requiring the Comptroller General to conduct a study on which state laws and procedures provide the same level of environmental protec- tion as Federal law. This process does not apply to other modes of transportation. Case Study: CREATE Project Chicago is the largest freight rail hub in North America. Today, six of the seven Class I railroads converge in the region, accounting for the movement of approximately one quarter of all United States freight rail traffic and one-half of all United States intermodal rail traffic. Chicago's antiquated rail infrastructure has led it to become the largest United States freight rail chokepoint. To help mitigate the rail-related congestion in the Chicago region and meet the future demand for freight rail service across the country, the Chicago Region Environmental and Transportation Efficiency Program (CRE- ATE) was created ten years ago as a public-private partnership between the Chicago Department of Transpor- tation, Illinois Department of Transportation, freight railroads, United States Department of Transportation, Metra, and Amtrak to help mitigate the rail-related congestion in the Chicago region. CREATE consists of 70 • individual projects including 25 highway-rail grade separations, six passenger-freight rail grade separations, rail infrastructure improvements, technology upgrades, viaduct improvements, grade crossing safety enhancements, and signalization. t As of May 2013, there were 17 projects completed, 11 projects under construction, 21 projects in design and environmental review, and 21 projects yet to begin. To date, over $1.2 billion has been committed to CREATE, but the total estimated cost for completion is $3.3 billion. When complete, CREATE will enhance passen- ger rail service, reduce motorist delays, increase public safety, improve air quality, create and retain jobs, and strengthen economic competitiveness. CREATE demonstrates how many organizations and interest groups can come together to effectively plan and fund a large freight project that will improve the efficiency, safety, and performance of the freight system in the region and across the Nation. Improving the Nation's Freight Transportation System 56 134 • • • • To safely and efficiently meet the needs of freight movements in the 21st Century, Congress should: D Direct the Secretary of Transportation, in coordination with the Secretary of the Army and the Commandant of the United States Coast Guard, to establish a comprehensive national freight transportation policy and designate a national, multimodal freight network. D Prioritize solutions to modernize infrastructure and utilize technology to reduce conges- tion to improve the flow of freight. D Require metropolitan and statewide planning agencies to consider the supply chain, freight movement, and regional and national freight priorities when setting short-and long-range goals and when developing transportation improvement plans. D Require metropolitan and statewide planning agencies to solicit the participation of freight industry professionals and affected communities when setting short-and long-range goals and when developing transportation improvement plans. D Require the Secretary of Transportation to identify corridor-based solutions to freight mo- bility, taking into account the Nation's entire transportation network. D Require critical freight infrastructure owners and operators to develop cyber vulnerability assessments and cyber incident response plans, as part of existing sector-specific security assessments and plans required by the Department of Homeland Security. For ports, these assessments should be done as part of the assessments required under 46 United StatesC . 70102, and these plans should be done as part of the plans required under 46 United State- sC. 70103. D Establish policies and set benchmarks to accelerate the transition from project develop- ment to construction for freight projects. D Identify and encourage the use of low-cost measures to alleviate highway congestion. D Direct the Secretary of Transportation to promulgate the rulemaking required under 23 United StatesC. 150( c ), establishing performance measures by which States can assess the quality of freight movement on the Interstate System. D Direct the Secretary of Transportation to identify performance goals and performance measures by which States can assess the quality of freight movement across all modes of transportation. D Cut red tape and encourage the Secretary of Transportation to streamline project delivery across all modes of transportation . Improving the Nation's Freight Transportation System 57 135 • • • 136 • • • HIGHWAYS AND TRUCKING As discussed above, the Highway Trust Fund faces pending insolvency. Without new revenue, the Trust Fund will be unable to provide states with necessary resources to maintain and improve the Federal-aid Highway System. The condition of roadway pavements and bridges can affect the efficiency of goods movement and increase costs associated with freight transportation. Highways are key to the Nation's freight network, because almost all consumer goods travel on the highway system for some portion of the journey. Section 1115 ofMAP-21 required the Secretary of Transportation to designate a primary highway freight net- work of27,000 centerline miles. The purpose of this network is to identify the infrastructure facilities that are most important to the movement of freight on the Nation's highways. Final designation of the primary freight network is due imminently. To safely and efficiently meet the needs of freight movements in the 21st Century, Congress should: 0 Ensure that states have the resources necessary to maintain and improve freight movement on Federal-aid Highways by addressing the looming shortfall in the Highway Trust Fund with sustainable revenue . D Encourage the Secretary of Transportation to complete the Comprehensive Truck Size and Weight Limits Study conducted in accordance with section 32801 of the Moving Ahead for Progress in the 21st Century Act as thoroughly and judiciously as possible. 0 Direct the Secretary ofTransp011ation to determine whether the definition of the primary highway freight network pursuant to 23 United StatesC. 167 is sufficient to address the national highway freight network. 0 Encourage states, localities, and the private sector to designate resources for commercial driver training to be made available to all organizations that provide such training . Improving the Nation's Freight Transportation System 59 137 • • • FREIGHT RAIL Freight rail provides efficient long-haul and short-haul service and integrates closely with the trucking indus- try. Because the freight railroads are private entities, they own the infrastructure over which they operate, meaning they also invest heavily in those networks. In 2011, the freight railroads invested over $23 billion in capital expenditures to improve and expand their networks. The RRIF loan program is a vehicle that the federal government can use to leverage this private investment and deliver projects that are key for intermodal freight mobility. Positive Train Control (PTC) refers to the technologies designed to stop or slow a train automatically before certain accidents that are caused by human error can occur. PTC is statutorily required to be installed by the end of 2015 for certain routes. For a variety of reasons, PTC is an unprecedented technology challenge. Freight railroads have already invested billions of dollars to meet this deadline, but there are many technological and non-technological barriers that remain. To safely and efficiently meet the needs of freight movements in the 21 '1 Century, Congress should: 0 Encourage adequate investment in rail corridor projects that facilitate freight movement. 0 Direct the Secretary of Transportation to conduct stronger outreach to freight railroads about the potential benefits of the Railroad Rehabilitation and Improvement Financing (RRIF) loan program, and improve the process for approving applications. D Work with the Secretary of Transportation, freight and passenger railroads, commuter rail- roads, railroad employee representatives, and other interested parties to evaluate proposals to extend the deadline for installation of Positive Train Control regulations, mandated pursuant to the Rail Safety Improvement Act of 2008 (P.L. 110-432) . Improving the Nation's Freight Transportation System 61 139 • • • SHIPPING AND PORTS As discussed above, the Harbor Maintenance Trust Fund maintains a positive balance, yet there is still a large backlog of maritime infrastructure projects that need to be completed. Wisely utilizing existing revenues is the first step toward improving the efficiency and reliability of this critical aspect of the Nation's freight system. To safely and efficiently meet the needs of freight movements in the 21st Century, Congress should: 0 Appropriate funds annually from the Harbor Maintenance Trust Fund in an amount equal to the revenue collected by the Trust Fund. 0 Draw down the $7 billion balance of the Harbor Maintenance Trust Fund, without ad- versely affecting appropriations for other programs, projects, and activities carried out by the Corps of Engineers for other authorized purposes. 0 Expand eligible uses of Harbor Maintenance Trust Fund expenditures to include other activities in the water that are adjacent to navigation channels . 0 Direct the Secretary of the Army, in consultation with the Secretary of Transportation and the Commandant of the United States Coast Guard, to prioritize maritime development projects, including port deepening projects, in the Corps of Engineer's annual budget submission. O Encourage the full utilization of marine highways to expand the capacity of the freight transportation network, alleviate surface transportation congestion, and ensure the reliable movement of freight via short sea shipping. 0 Direct the Secretary of Transportation, in coordination with the Secretary of the Treasury and the Secretary of the Army, to study the degree to which shippers, seeking to avoid payment of the Harbor Maintenance Tax, divert cargo bound for the United States from the Nation's ports. This study should expand upon the July 2012 study conducted by the Federal Maritime Commission. 0 Encourage ports and intermodal facilities to maximize efficiency through off-peak cargo movement. 0 Encourage, coordinate, and support navigation technology research, development, and investment to improve navigation safety and efficiency and reduce the risk of accidents and disruption of the freight network. Improving the Nation's Freight Transportation System 141 63 • • • 142 • • • INLAND WATERWAYS Inland waterways are vitally important to the health of the Nation's economy. It is estimated that without the barges and towboats operating on the inland waterways, the Nation would need 6.3 million railroad cars or 25 million trucks to haul the difference. However, much of the critical infrastructure for waterborne transportation is in dire need of repair. More than one-half of the locks and dams in the United States are over 50 years old. To safely and efficiently meet the needs of freight movements in the 21st Century, Congress should: 0 Authorize adequate funding for operations and maintenance of the Nation's inland water- ways system. 0 Direct the Secretary of the Army, in coordination with the Secretary of the Treasury, to assess financing options for the inland waterways system. 0 Work with the Inland Waterways User Board, states, and other interested parties to plan and prioritize federal investment in the inland waterways system . Improving the Nation's Freight Transportation System 143 65 • • • 144 • • • AIR CARGO Air cargo is the fastest way to ship goods over long distances, and air freight is high value cargo. Less than three percent of total freight by weight ships by air, but this represents over $6.4 trillion worth of goods per year, which is nearly 35 percent of all freight value. Today, the Federal Aviation Administration (FAA) is re- sponsible for ensuring the safe navigation of aircraft within the Nation's airspace. However, the basic elements of the FAA system have not changed significantly in over 60 years. The Next Generation Air Transportation System (NextGen) is FAA's solution, employing new technology, modernized procedures, and resulting in add- ed capacity, increased productivity, and greater safety. To safely and efficiently meet the needs of freight movements in the 21st Century, Congress should: D Authorize adequate funding and programmatic support to implement new air traffic con- trol technologies and operational capabilities to facilitate the transition to the Next Gener- ation Air Transportation System supporting the Nation's air freight system . Improving the Nation's Freight Transportation System 67 145 • • • 146 Appendix A-Panel Scope of Work • • • ~,. ._,.,_1111t11aatbJatta••••re ......... ., ... adlflilml ........ .._.-.~n .. tllt .... 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"'· •. -•• .-~ lr'1;: .•• · .... ·i···,, r...:·1..~ .r.I i·1 1 .1·.u:a·111•':,; il•'.I. l'•-..tr\· ii.a.·: 11:_. .•r .. -.·I::-. ··:·.1 :·1.• ... ·~1: .. ·i1: •ii ~:1,.·· :,:·· Improving the Nation's Freight Transportation System 148 • • 70 • • • • b,im:Bnit1•n~Ut1'& ~~ 1t111I tinpru\'C !~~ -~--llll:at1tid.d 11111: ft~t p~c:nt p~}' .lp.fimd9l8 rir HMinc:itH.l ~·thlt f.::Uitdc ihem~i.:rno1i oHrt:ighft . . . o Wb• ~ 1hlqvw11c morpla.1 he tbntJin,; \tr nmncm1 FoJ~ •• .taeiti1u tlle i~d arfrelcbt'I . . . • '9 Wl•iR.lbtO~cr~~ fw~~-~e~r;cm mu~~f~\ld~ ... of~tn1tionotiWi.rJw1l'f~~-1F Improving the Nation's Freight Transportation System 71 149 Appendix B -Panel Activities • DATE TITLE April 24, 2013 Hearing-"Overview of the United States' Freight Transportation System" May 15, 2013 Roundtable Policy Discussion-"Coordinating Federal Efforts to Improve Freight Transportation" May 28, 2013 to Site Visit -Southern California May 31, 2013 May 29, 2013 Roundtable Policy Discussion -"Navigating the Complexities of America's Largest Port Facilities" May 30, 2013 Hearing -"How Southern California Freight Transportation Challenges Impact the Nation" June 20, 2013 to Site Visit -Memphis Region June 21, 2013 June 26, 2013 Hearing -"How Logistics Facilitate an Efficient Freight Transportation System" July 17, 2013 Roundtable Policy Discussion -"Effectively Coordinating Freight Planning Activities" • July 25, 2013 to Site Visit-New York City Region July 27, 2013 July 26, 2013 Hearing-"How Freight Transportation Challenges in Urban Areas Impact the Nation" August 22, 2013 to Site Visit -Norfolk, Virginia August 23, 2013 October 1, 2013 Hearing -"Perspectives from Users of the Nation's Freight System" October 10, 2013 Hearing-"Funding the Nation's Freight System" • Improving the Nation's Freight Transportation System 73 151 • • • Appendix C -Summary of Hearing-"Overview of the United States' Freight Transporta- tion System" Overview The Panel on 21st Century Freight Transportation met on Wednesday, April 24, 2013, at 10:00 a.m., in 2167 Rayburn House Office Building to receive testimony related to the importance of freight transportation to the United States economy. At this hearing, the Panel received testimony on the current operation of the freight network, what challenges impact its performance, and what can be done to improve the efficiency and safety of freight transportation. Points of Discussion D The Nation's freight transportation network affects the day-to-day lives of every citizen, and given its multimodal nature, the system as a whole and how its parts work together need to be examined and im- proved for future capacity and demand. 0 As an essential part of the Nation's freight network, the highway system moves approximately 50 percent of all freight moved in the United States via trucking. Unfortunately, the negative impacts of congestion slow the efficiency of the highway system as a reliable freight mode. D Carrying more freight than any other mode of surface transportation over long distances, railroads carry 43 percent of intercity freight and are continually working to improve and expand their networks. D With respect to ports and maritime freight movement, cargo ships move 75 percent of international freight every year by water. To continue efficiently exporting such a large volume of goods, investment is necessary in port infrastructure and land-side connections. D Air cargo carriers play a large role in transporting goods in both domestic and international supply chains, moving cargo quickly and often moving goods of high value. D As the safest and most efficient way to transport hazardous materials, pipelines play an important role in delivering crucial products such as natural gas throughout the country . Improving the Nation's Freight Transportation System 75 153 Witnesses Fred Smith, Chairman, President, and Chief Executive Officer FedEx Corporation Charles W. Moorman, Chairman, President, and Chief Executive Officer Norfolk Southern Corporation James Newsome, President and Chief Executive Officer South Carolina Ports Authority Derek Leathers, President Werner Enterprises Edward Wytkind, President, Transportation Trades Department AFL-CIO Improving the Nation's Freight Transportation System 154 • • 76 • • • • Appendix D -Summary of Hearing -"How Southern California Freight Transportation Challenges Impact the Nation" Overview The Panel on 21st Century Freight Transportation met on Thursday, May 30, 2013 at the historic Santa Fe Depot located at 1170 West 3rct Street, San Bernardino, California, to receive testimony related to ways the freight chal- lenges of Southern California impact the Nation. During this hearing, the Panel received testimony on the cur- rent operation of the freight network in Southern California, the unique challenges that impact its performance, and how these issues resonate throughout the country and impact the freight system as a whole. Points of Discussion 0 The multimodal Southern California freight system is one of the most important gateways in the entire country, incorporating ports, international border crossings, highways, railways, and air cargo facilities. Creating 60,000 local jobs, the freight industry in Southern California brings in over $30 billion in local, state, and federal tax revenue yearly. D Southern California ranks as the third-largest manufacturing region in the Nation . 0 Congestion, bottlenecks, and other inefficiencies hinder the Southern California region's ability to im- port and move goods throughout the Nation, increasing costs and transit times. 0 Given the connected nature of the Nation's supply chain, the issues impacting this region's freight system have a direct and tangible impact on the economic competitiveness of states thousands of miles away. Witnesses Kome Ajise, Deputy Director for Planning and Modal Programs California Department of Transportation Improving the Nation's Freight Transportation System 77 155 Hasan Ikhrata, Executive Director Southern California Association of Governments Mamie O'Brien Primmer, Executive Director Mobility 21 Scott Moore, Vice President for Public Affairs Union Pacific Mike Fox, President and Chief Executive Officer Fox Transportation Rick Richmond, Former Chief Executive Officer Alameda Corridor-East Construction Authority Improving the Nation's Freight Transportation System 156 • • 78 • • • • Appendix E -Summary of Hearing -"How Logistics Facilitate an Efficient Freight Trans- portation System" Overview The Panel on 21st Century Freight Transportation met on Wednesday, June 26, 2013 at 1 :00 p.m. in 2167 Ray- burn House Office Building to receive testimony related to the impact of the logistics industry on the United States freight network. During the hearing, the Panel received testimony concerning the correlation between logistics and a productive, efficient, and safe national freight system and suggestions to strengthen this relation- ship. Points of Discussion O The logistics industry is one of the most valuable parts of the Nation's freight system because it im- proves the efficiency of the supply chain. O Logistics providers play a key role in alleviating inefficiencies and bottlenecks, which impede freight mobility and drive up the cost of goods . D Manufacturers and retailers can maximize the value of third-party logistics by using the concept of Just- in-Time Delivery, minimizing carrying costs and increasing business efficiency. Witnesses David Abney, Chief Operating Officer United Parcel Service Tracy Rosser, Senior Vice President, Transportation Walmart Corporation Improving the Nation's Freight Transportation System 79 157 Scott Satterlee, Senior Vice President, Transportation C.H. Robinson Mark DeFabis, President and Chief Executive Officer International Development Systems Richard Fisher, President Falcon Global Edge Ed Hamberger, President and Chief Executive Officer Association of American Railroads Improving the Nation's Freight Transportation System 158 • • 80 • • • • Appendix F -Summary of Hearing -"How Freight Transportation Challenges in Urban Areas Impact the Nation" Overview The Panel on 21st Century Freight Transportation met on Friday, July 26, 2013 at 1:30 p.m. at the Alexander Hamilton United States Custom House, located at One Bowling Green, New York, New York. The Panel received testimony related to the ways in which urban freight challenges impact the Nation. During this hear- ing, the Panel received testimony concerning the operation of the freight network in urban areas, the unique challenges that impact performance in these areas, and how these issues impact the rest of the Nation's freight system. Points of Discussion D Freight transportation in urban areas is complex and sensitive, and mitigated by several dueling factors. Given the interconnected nature of the Nation's freight transportation system, issues that impact one region of the country inevitably have a ripple effect throughout the entire network. D Congestion remains one of the most costly hurdles for urban area freight transportation. Congestion, by increasing transit times, increases the cost of goods for consumers. D State transportation departments and metropolitan planning organizations generally work together to cre- ate a long term strategy for urban freight planning. However, freight projects that cross state lines often have difficulty competing in a state-based formula program. Planning and advocating for multi-jurisdic- tional projects require significant coordination amongst several groups. D The New York City metropolitan area experiences some of the most critical freight challenges of any re- gion in the country, particularly the ability to move goods efficiently across the Hudson River. Without a viable alternative, trucking across ageing and congested infrastructure is the best option to move goods throughout the region. Witnesses Patrick Faye, Executive Director Port Authority of New York and New Jersey Improving the Nation's Freight Transportation System 81 159 William Flynn, President and Chief Executive Officer Atlas Air Worldwide Holdings Gerry Coyle, Vice President for Environmental & Sustainability Evans Network William Goetz, Resident Vice President for New York City, New Jersey, and Philadelphia CSX Transportation Improving the Nation's Freight Transportation System 160 • • 82 • • • • Appendix G -Summary of Hearing -"Perspectives from Users of the Nation's Freight System" Overview The Panel on 21st Century Freight Transportation met on Tuesday, October 1, 2013, at 2:00 p.m., in 2167 Ray- burn House Office Building to receive testimony related to the ways in which the agriculture and manufacturing industries rely on the Nation's freight transportation system to remain competitive. At this hearing, the Panel received testimony on the specific freight transportation needs of these industries and the impact that the level of performance of the freight system has on the ability of these industries to remain competitive. Points of Discussion D Depending on the particularities of the goods being produced, manufacturers often have unique freight transportation needs. The sophistication and efficiency of the Nation's freight system allow for man- ufacturers to deliver goods in a way that supports the competitiveness of the industry. However, more investment is needed to support growth. D The manufacturing and agriculture industries are concerned that the Nation's current failure to adequate- ly invest in infrastructure will cede past gains to global competitors, especially in the agriculture indus- try. D Aside from general issues related to the market for agricultural commodities, transportation costs are the most significant factor impacting the bottom line for farmers and other participants in the agriculture industry. Witnesses Tom Kadien, Senior Vice President, Consumer Packaging International Paper F. Edmond Johnston, III, Sustainability Manager DuPont Improving the Nation's Freight Transportation System 161 83 William Roberson, Materials & Logistics Manager Nucor Steel Berkeley Bill J. Reed, Vice President, Public Affairs Riceland Foods, Inc. Improving the Nation's Freight Transportation System 162 • • 84 • Appendix H-Summary of Hearing-"Funding the Nation's Freight System" • Overview The Panel on 21st Century Freight Transportation met on Thursday, October 10, 2013, at 1:00 p.m., in 2167 Rayburn House Office Building to receive testimony related to the ways in which freight projects can be fund- ed. At this hearing, the Panel received testimony on the various proposals on ways to raise new revenue and use existing revenue more wisely in the funding of freight infrastructure projects across the Nation. Points of Discussion D Most highway-related freight projects, as well as some freight rail and freight intermodal projects, are currently eligible to receive funding under one or more existing federal surface transportation programs. Many large freight projects, however, are multimodal in scope, and some aspects of these projects may be ineligible for funding from the Highway Trust Fund. Freight projects that cross state lines often have difficulty competing in a state-based highway formula program. Freight projects also receive federal assistance through the Harbor Maintenance Trust Fund, the Transportation Investment Generating Eco- nomic Recovery grants, and Transportation Infrastructure Finance and Innovation Act grants. • D Freight infrastructure facilities are in need of upgrading and current federal funding available for freight • projects still leaves states with unmet needs. Additional federal resources are needed to address the Na- tion's freight transportation needs. D Some states have recently passed measures to increase state revenue for transportation projects. States have also explored public-private partnerships to fund freight projects. Witnesses The Honorable Sean T. Connaughton, Secretary Virginia Department of Transportation Leif Dormsjo, Deputy Secretary Maryland Department of Transportation Improving the Nation's Freight Transportation System 85 163 Robert D. Atkinson, President Information Technology and Innovation Foundation Jack L. Schenendorf, Of Counsel Covington & Burling, LLP David Seltzer, Co-Founder Mercator Advisors Improving the Nation's Freight Transportation System 164 • • 86 • Appendix I -Summary of Site Visit -Southern California • Overview • • In order to gain a better understanding of freight movement in the region and to hear from local stakeholders, members and staff of the Panel on 21st Century Freight Transportation traveled to different areas of Southern California from Tuesday, May 28 to Friday, May 31, 2013. Sites Visited D On Tuesday, May 28, 2013, Members and staff received a briefing on the cargo operations at Los Ange- les International Airport, and then toured the cargo operations of the Mercury Air Group. Later in the day, they met with officials from the Los Angeles Metropolitan Transportation Authority. D On Wednesday, May 29, 2013, Members and staff received a briefing on port operations from officials of the Port of Los Angeles and Port of Long Beach; toured the International Transportation Services Ter- minal and the Middle Harbor Redevelopment Project at the Port of Long Beach; toured the Port of Los Angeles and the Port of Long Beach by boat, accompanied by officials from both ports and local freight stakeholders; and Members held a roundtable discussion with industry stakeholders on port operations at the APM Terminal. D On Thursday, May 30, 2013, Members and staff traveled on BNSF rail cars up the Alameda Corridor to the intermodal rail yard in Hobart, and out the Alameda Corridor East towards San Bernardino. Mem- bers and staff received briefings on the facilities en route by BNSF senior officers and local stakeholders. Upon arriving in San Bernardino, Members and staff visited the BNSF San Bernardino Rail Yard. Mem- bers held a field hearing entitled "How Southern California Freight Transportation Challenges Impact the Nation." Improving the Nation's Freight Transportation System 87 165 • • • 166 Appendix J -Summary of Site Visit -Memphis Region • Overview • • On Thursday, June 20 and Friday, June 21, 2013, Members and staff of the Panel on 21st Century Freight Trans- portation traveled to the Memphis region for a series of site visits, meetings, and a working lunch discussion. Sites Visited D On Thursday, June 20, 2013, Members and staff toured the FedEx facilities with senior officers from the FedEx Corporation. The tour included the flight simulators FedEx uses to train their pilots, a discussion of the 33-foot double trailer configuration, the box matrix sorting facility, and the small package sorting facility. D On Friday, June 21, 2013, Members and staff received a briefing on inland waterways issues and the Port of Memphis from the Executive Director of the port, a senior United States Army Corps of Engi- neers official, and a plant manager for Cargill; toured the port facilities; and met with freight stakehold- ers at the Mid-South Community College in West Memphis, Arkansas . Improving the Nation's Freight Transportation System 89 167 • • • 168 Appendix K -Summary of Site Visit -New York City Region • Overview • • In order to gain a better understanding of freight movement in the region and to hear from local stakeholders, members and staff of the Panel on 21 '1 Century Freight Transportation traveled to the New York City region from Thursday, July 25 to Saturday, July 27, 2013. Sites Visited 0 On Thursday, July 25, 2013, Members and staff departed Washington Union Station aboard a Norfolk Southern train. Senior Norfolk Southern officers briefed Members and staff on key freight facilities in the Northeast Corridor during the trip. Members and staff met officials from the Port Authority of New York and New Jersey upon arrival at the Oak Island Rail Yard. Members and staff then traveled to the Maher Terminal at the Port of Newark for a briefing on the Bayonne Bridge project and Port Authority operations. 0 On Friday, July 26, 2013, Members and staff departed for the Greenville Yard in Jersey City, NJ with senior Port Authority officials for a briefing regarding New York/New Jersey cross harbor freight move- ment. Members and staff observed the loading of the New York New Jersey Railroad rail car ferry at the Greenville Yard intermodal facility. Next, Members and staff boarded a United States Army Corps of Engineers vessel for a boat tour shadowing the rail car ferry across New York Harbor. Members and staff arrived in Brooklyn and observed the unloading of the rail car ferry and the connection with the New York and Atlantic Railway, a local short-line railroad. Members of the Freight Panel conducted a field hearing at the Alexander Hamilton Custom House in Manhattan on "How Freight Transportation Challenges in Urban Areas Impact the Nation." 0 On Saturday, July 27, 2013, staff toured the World Trade Center construction site with a Port Authority construction engineer. The tour included visits to the construction site for the Port Authority Trans-Hud- son (PATH) transit terminal at the World Transit Center . Improving the Nation's Freight Transportation System 91 169 • • • 170 Appendix L -Summary of Site Visit -Norfolk, Virginia • Overview • • In order to gain a better understanding of the operations at the Port of Virginia and at the Norfolk Southern Coal Pier 6, staff for the Panel on 21st Century Freight Transportation traveled to Norfolk, Virginia on Thursday, Au- gust 22 and Friday, August 23, 2013. Sites Visited 0 On Thursday, August 22, 2013, staff toured the Norfolk International Terminal and received a briefing on port operations. The chief of the port police force was also present to discuss port security issues. Next, staff departed for the APM terminal, a state of the art, privately-owned and constructed terminal that is operated by the Port of Virginia under a lease agreement with Maersk. Staff visited and were briefed at both a traditional container loading facility and an automated container facility. Security and coordination of vessels with both rail and truck land-side transport were reviewed. At the completion of the container review, staff boarded the vessel CMA CGM Samson for a tour and discussion on ship con- tainer loading and transport, and a working lunch with vessel crew. Later, staff departed for the United States Coast Guard Base Portsmouth for a briefing on Coast Guard operations with the Captain of the re- gion. Discussions focused on the management of the harbor, safety protocols and issues associated with coordinating vessel traffic in and out of the harbor facilities. Staff also toured the Craney Island facility, which is used by the Port of Virginia to store dredge material and is the future site of terminal expansion at the Port of Norfolk. 0 On Friday, August 23, 2013, staff received a briefing on the Norfolk Southern Coal Pier 6 and were giv- en a tour of operations at the pier . Improving the Nation's Freight Transportation System 93 171 • • • Appendix M -Summary of Roundtable Policy Discussion -"Coordinating Federal Efforts to Improve Freight Transportation" Overview The Panel on 21st Century Freight Transportation met on Wednesday, May 15, 2013, at 10:00 a.m., in 2253 Rayburn House Office Building to participate in a roundtable discussion on federal efforts to improve freight transportation. The Panel heard from participants from the United States Department of Transportation (DOT) and the United States Army Corps of Engineers. Points of Discussion D DOT has the primary responsibility in the Administration to develop freight transportation policy; the United States Army Corps of Engineers (Corps) also plays a role in transportation infrastructure. Spe- cific to freight transportation, the Corps carries out construction and maintenance of navigation channels and the inland waterways system which are critical pieces of the Nation's freight transportation system . 0 These two departments work together through a Memorandum of Understanding, establishing a collabo- rative relationship to improve the Nation's transportation system and infrastructure. D The Freight Policy Council, created by DOT in August 2012, has been working with states to develop state freight plans as required by Section 1118 of the Moving Ahead for Progress in the 21st Century Act. MAP-21 also requires the development of a National Freight Strategic Plan to assess the conditions and performance of the National Freight Network, identifying points of congestion, forecasting freight volumes, and identifying major trade gateways, among other objectives. 0 The National Freight Network is required by Section 1115 ofMAP-21 to be designated by October 1, 2013; DOT is currently in the process of meeting this requirement. This primary freight network will consist of 27 ,000 centerline miles of existing roadways, with the option of expanding this limitation by no more than 3,000 additional centerline miles. The purpose of this network is to identify the infrastruc- ture facilities that are most important to the movement of freight on the Nation's highways . Improving the Nation's Freight Transportation System 95 173 Participants The Honorable John Porcari, Deputy Secretary United States Department of Transportation The Honorable Jo-Ellen Darcy, Assistant Secretary (Civil Works) United States Department of the Army Improving the Nation's Freight Transportation System 174 • • 96 • • • • Appendix N -Summary of Roundtable Policy Discussion -"Navigating the Complexities of America's Largest Port Facilities" Overview The Panel on 21st Century Freight Transportation met on Wednesday, May 29, 2013, at 1:30 p.m., at the Port of Los Angeles Administration building, located at 425 South Palos Verdes Street, San Pedro, California to partic- ipate in a roundtable discussion on port facilities and freight transportation. The Panel heard from stakeholders in the Southern California freight transportation community. Points of Discussion D As one of the most important trade gateways in the country, the freight system in Southern California is multimodal, incorporating ports, international border crossings, interstate highways, railroads, air cargo facilities, refrigeration facilities, and distribution and warehouse clusters. D There are many infrastructure, capacity, and efficiency challenges facing the Ports of Los Angeles and Long Beach to maintain their competitiveness in the global economy. As the eighth largest port facility in the world, taken together, both Ports are undergoing major capital improvements to fight these chal- lenges and to strengthen the national freight system. D The Ports of Los Angeles and Long Beach handle more than 40 percent of all containers entering the United States and contribute an import tax to the Harbor Maintenance Trust Fund. The Ports of LA and Long Beach receive back less money than they pay into the Harbor Maintenance Trust Fund. D Improving the efficiency of moving cargo through the harbor complex requires coordination between the Department of Homeland Security and the United States Coast Guard to ensure safety in the transport of materials in and out of the harbor. Both ports are investing in expanding container facilities to accom- modate post-Panamax sized vessels. D Given the challenges affecting this region, the importance of sustainable, long-term funding for trans- portation infrastructure in delivering freight projects is the key to a successful economic future for the Nation's freight system . Improving the Nation's Freight Transportation System 97 175 Participants Chris Lytle, Executive Director Port of Long Beach Michael Christensen, Deputy Executive Director Port of Los Angeles Jeff Burgin, Senior Vice President and Chief Operating Officer Pasha Stevedoring & Terminals Alan Mccorkle, Senior Vice President APM Terminals Victor La Rosa, President and Chief Executive Officer Total Transportation Services, Inc. Michael Antonovich, Chairman Metropolitan Transportation Authority Michael Gasparo, Manager for Ship Assist Crowley Rav Familathe, International Vice President (Mainland) International Longshore and Warehouse Union Improving the Nation's Freight Transportation System 176 • • 98 • • • • Appendix 0 -Summary of Round table Policy Discussion -"Effectively Coordinating Freight Planning Activities" Overview The Panel on 21st Century Freight Transportation met on Wednesday, July 17, 2013, at 10:00 a.m., in 2253 Ray- burn House Office Building to participate in a roundtable discussion on effectively coordinating freight plan- ning activities. The Panel heard from planning officials at the federal, state, regional, and local levels. Points of Discussion D Planning is key to any functioning transportation system, and freight planning itself is complicated be- cause it involves multiple jurisdictions and require significant coordination among several parties. 0 State departments of transportation, metropolitan planning organizations (MPOs ), and rural planning commissions work together to create a statewide transportation improvement plan with proposals for fu- ture consideration. The Moving Ahead for Progress in the 21st Century Act created a new apportionment for metropolitan planning, requiring states to make more funds available for MPOs . D Since freight projects are usually complex and involve several different parties, planning for and ad- vancing these projects requires significant coordination. The Panel heard suggestions on how freight planning stakeholders can effectively coordinate efforts to ensure the timely and well planned delivery of freight transportation facilities and whether additional ways for these entities to cooperate on the plan- ning oflarge freight projects can be identified. 0 There are a number of challenges that may impede the effective coordination of the planning for large freight projects, especially since freight projects often cross state boundaries, implicating multiple state departments of transportation and MPOs. Participants The Honorable Polly Trottenberg, Undersecretary for Policy United States Department of Transportation Improving the Nation's Freight Transportation System 99 177 Richard Biter, Assistant Secretary for Intermodal Systems Development Florida Department of Transportation Don Kopec, Deputy Executive Director for Programming and Operations Chicago Metropolitan Agency for Planning Amy Kessler, Director of Community Development and Regional Planning North Central Pennsylvania Regional Planning and Development Commission Andrew Lynn, Director of Planning and Regional Development Port Authority of New York and New Jersey Improving the Nation's Freight Transportation System 178 • • 100• Appendix P -Acronym List • 3PL AATF AIP CREATE DOT EAS FAA FERC FHWA HMT HMTF HTF HVUT • I STEA IWTF JIT MAP-21 MPO NEPA NextGen O&M PHMSA PNRS PPP PTC RTM • Third-Party Logistics Airport and Airway Trust Fund Airport Improvement Program Chicago Region Environmental and Transportation Efficiency Program United States Department of Transportation Essential Air Services Federal Aviation Administration Federal Energy Regulatory Commission Federal Highway Administration Harbor Maintenance Tax Harbor Maintenance Trust Fund Highway Trust Fund Heavy Vehicle Use Tax Intermodal Surface Transportation Efficiency Act Inland Waterway Trust Fund Just-in-Time Delivery Moving Ahead for Progress in the 21st Century Act Metropolitan Planning Organization National Environmental Policy Act Next Generation Air Transportation System Operation and Maintenance Pipelines and Hazardous Materials Safety Administration Projects of National and Regional Significance Public-Private Partnership Positive Train Control Revenue Ton Mile Improving the Nation's Freight Transportation System 179 101 SAFETEA-LU STIP TEA-21 TEU TIFIA TIGER TTI VMT WRDA Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users Statewide Transportation Improvement Plan Transportation Equity Act for the 21st Century Twenty-foot Equivalent Unit Transportation Infrastructure Finance and Innovation Act Transportation Investment Generating Economic Recovery Texas Transportation Institute Vehicle Miles Traveled Water Resources Development Act • • Improving the Nation's Freight Transportation System 102• 180 • • • Appendix Q -Signature Page Ul'm1:D SfATISB$}0SZOF·JtausmtrATIVIS ~ (J~ 1'.ltLliiSPOR:f AllON 4l'G> ~STIUJCttJRt , ft~~m, llft"CilmJRY ~~TATIOff Improving the Nation's Freight Transportation System 103 181 • • • 182