SAN FRANCISCO MUNICIPAL RAILWAY
MINUTES OF THE MEETING
BOARD OF DIRECTORS
May 29, 2002
A meeting of the Board of Directors of the San Francisco Municipal Railway Improvement Corporation was held on May 29, 2002, at 1:30 p.m. The meeting was held at 401 Van Ness Avenue, Suite 334, San Francisco, California.
The following Directors were present at the meeting:
Director Michael J. Moylan was not present.
Also present at the meeting were the following individuals:
1. Call to Order
Board President James J. Ludwig, having determined that a quorum was present, called the meeting to order at approximately 1:40 p.m.
Other attendees of the meeting identified themselves and their affiliation. Mr. Ludwig then opened the meeting to public comment. Mr. Nothenberg noted that public comment was not a time for dialogue, but is intended to provide an opportunity for the public to comment on items not on the meeting agenda. Mr. Ludwig agreed that future agendas would include an explicit item for public comment.
David Pilpel asked what SFMRIC information is subject to public review. He indicated that he had a number of specific questions and that he would submit them to the Board in writing.
Norman Rolfe introduced himself and thanked the Board for the opportunity to address the Board, and noted that he had no specific comments at this time.
3. Approval of the Minutes of the Board Meeting of June 29, 2001
The minutes were approved unanimously by the Board.
4. Approval of the Minutes of the Board Meeting of March 19, 2002
The minutes were approved unanimously by the Board.
5. SFMRIC By-Laws and Articles of Incorporation
Michael Cohen, Deputy City Attorney for the City and County of San Francisco, presented a draft of the revised Articles of Incorporation and By-Laws for the San Francisco Municipal Railway Improvement Corporation. He noted that the documents were structured in the form of an amendment and restatement for convenience and ease of drafting. Mr. Cohen then guided the Board through the documents and noted specific changes to the Articles and By-Laws, which were also enumerated in a memorandum from the City Attorney's Office.
Scott Emblidge, SFMRIC general counsel, advised the members that the changes were, for the most part, of a housekeeping nature and were consistent with the past practices of the Board. He noted that even the relatively substantive changes were not particularly significant.
The members of the Board then discussed the proposed changes. Mr. Ludwig indicated that he was uncomfortable with what could be perceived as an expansion of SFMRIC's functions ("and to otherwise assist the Municipal Transportation Agency in fulfilling its lawful goals and objectives"). Other members indicated they shared his concern.
Mr. Ludwig stated that he would like to bring new and younger members onto the Board, and questioned whether the change in the number of Board members would preclude that. Mr. Cohen pointed out that the Articles of Incorporation still allow for up to seven (7) directors, whereas the By-Laws authorize five (5) directors. He suggested that as potential new members are identified, the By-Laws could be amended to expand the authorized number, up to seven (7). He noted that non-profit corporation law requires a majority of all directors, not just a majority of those present at a board meeting, to approve taking any action. With two vacancies (as currently exist), it may be difficult to achieve a majority necessary to take an action. As such, he advised leaving the By-Laws set at five (5) directors for now, and amending them at a future date as additional members are identified.
The Board discussed the matter of reducing the number of Board members from seven (7) to five (5). Mr. Nothenberg questioned the importance of reducing the number, and other Board members expressed satisfaction with the current number of seven (7) members. Mr. Ludwig also suggested that nominations for new Board members should be able to come from current Board members, but that the Director of Transportation would be welcome to provide recommendations and advice.
Mr. Nothenberg questioned whether all expenditures greater than $10,000 should be subject to the approval of the Director of Transportation. Mr. Cohen pointed out that SFMRIC funds are, essentially, the Municipal Railway's money and that the proposed approval would merely bring funds more clearly under the purview of the Municipal Railway. Mr. Nothenberg suggested that perhaps there could be some carve-outs for those expenditures that are strictly for the Corporation's business, such as expenditures for corporate counsel. Mr. Ludwig indicated that he did not think any expenditure limit was needed, as SFMRIC has not in the past, and will not in the future, expend any funds without the request and recommendation of the Municipal Railway.
Mr. Nothenberg questioned who was in the best position to review contracts for services provided to the Board. He suggested that the Controller could perform this function.
Mr. Ludwig summarized the discussion by suggesting that the following items should be explored in more detail:
(a) The mission of the Corporation
(b) Approval of the Corporation's expenditures
(c) Nomination of new members
He instructed Mr. Emblidge, as Corporation counsel, to work with the City Attorney's Office to revise the draft Articles and By-Laws to reflect the Board's concerns.
Mr. Cohen then clarified the validation process for the use of the remaining SFMRIC bond authorization. He indicated that if the City filed a validation action, it would do so prior to the sale of the bonds, but all of the work that needs to be undertaken leading up to issuance would be conducted prior to filing a validation action.
Mr. Pilpel questioned what degree of control the MTA Board has over SFMRIC. He also asked whether the MTA Board had approved the appointment of Mr. Nothenberg as a director.
Mr. Rolfe indicated that he thought that the Director of Transportation should not be involved in the appointment of directors.
6. Approval of Contract with Mr. Douglas Wright as Interim Assistant Secretary
Mr. Ozan stated that he had reviewed the proposed contract with Douglas Wright and had found no problems with the contract. Mr. Ludwig asked how the rate of compensation under this contract compares to previous contract rates for Mr. Wright, and was informed that the rate is the same.
IT WAS MOVED TO ADOPT THE CONTRACT WITH MR. DOUGLAS WRIGHT TO SERVE AS COPORATION INTERIM ASSISTANT SECRETARY.
Mr. Rolfe asked whether it presented a conflict of interest to have Mr. Wright serve as both an employee of the Corporation and as a consultant on specific projects.
Mr. Pilpel asked how the Corporation's consultants are paid, what the source of funds for those payments is, and whether this is an appropriate use of those funds.
The motion was adopted.
7. Approval of Contract with Mr. Scott Emblidge as Interim Legal Counsel
IT WAS MOVED TO ADOPT THE CONTRACT WITH MR. SCOTT EMBLIDGE TO SERVE AS CORPORATION INTERIM LEGAL COUNSEL.
The motion was adopted.
MR. DESMOND WILL CONTINUE AS ACCOUNTANT FOR THE BOARD AT $55/HR ON A TRIAL BASIS FOR THE NEXT SIX MONTHS.
Mr. Emblidge advised the Board that SFMRIC may need to engage an independent accountant or auditor to prepare the financial statements for the Corporation. The Board authorized Mr. Emblidge to retain an accountant or auditor to prepare SFMRIC's financial statements, if necessary.
9. Kirkland Yard Study
Mr. Wright gave a presentation on the current study, undertaken by Douglas Wright Consulting, of the possible reuse of the Kirkland Yard property. Mr. Wright indicated that a housing re-use has been identified as the most promising opportunity given the market analysis completed, and in light of the City's planning guidelines for the area. He also suggested that the study is examining a possible continued use by the Municipal Railway for a portion of the site, in the form of a storage facility for the E-Line trolley vehicles. The final report will be completed soon and may be available for presentation to the Board at the next meeting.
Mr. Nothenberg asked a number of questions about the study, including whether the study was considering an outright sale of property. Mr. Wright replied that the study is looking at a number of disposition strategies, including outright sale. Mr. Nothenberg suggested that if the proposed E-Line does not occur, the property might still be used for vehicle storage of the F-Line. Mr. Nothenberg also suggested that there might be cheaper land available elsewhere for a vehicle storage facility, and that the Municipal Railway might realize greater value if the entire Kirkland property is re-used for housing development, the property sold, and property for vehicle storage acquired at a lesser cost elsewhere. Mr. Wright responded by saying that he understood the question and that the study would examine that option.
10. Other Business
Mr. Ludwig would like to have a short financial statement for the Board. Mr. Emblidge will distribute the monthly trustee report to the Board
11. Next Board Meeting
The next meeting is scheduled for July 10, 2002 at 1:30 p.m. Mr. Desmond will be invited to the next meeting.
The meeting was adjourned at 3:56 p.m.
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Information last updated July 11, 2002.