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NORTH COUNTY TRANSIT DISTRICT - MEMO Date: May 20, 2015 To: NCTD Board of Directors Q�f� 810 Mission Avenue From: Matthew O. Tucker, Executive Director216Z ( O Oceanside,(A 92054 CC: Lori A. Winfree, General Counsel www.gonctd.com Karen Tucholski, Chief Administrative Officer Ryan Bailey, Chief Financial Officer Bridget Hennessey, Intergovernmental Affairs Officer Re: Federal Transit Administration 2015 Triennial Review Supplemental Summary As you are aware, the North County Transit District (NCTD) recently completed the 2015 Federal Transit Administration (FTA) Triennial Review conducted by Milligan & Co, LLC (Milligan). NCTD has received a Summary of Findings which identifies that 14 of the 17 areas reviewed by the FTA were deemed "non-deficient," meaning that those 14 areas were found to be in full compliance with applicable regulations, and highlighting corrective actions required in three areas: Technical Capacity, Procurement, and Satisfactory Continuing Control. The purpose of this memo is to address the noted deficiencies and related corrective actions identified by the FTA. TECHNICAL CAPACITY: In general, the findings in this area reflect: • NCTD's business approach has always been to maximize the use of federal funding by attempting to exhaust all federal funds of a grant even when the primary project has been completed or purchased and savings are generated. For example, NCTD received a grant to purchase buses and that procurement activity represented the primary purpose of the grant. There was a small balance remaining from the purchase, and NCTD chose to not close out the grant and return the federal funding, but instead looked to use the funds to support small project needs to include the purchase of parts. Prior to privatizing BREEZE bus service, NCTD would engage in more of these types of activities. Now, the cost for the purchase of parts and smaller activities are already included in the base cost per mile payment made to the contractor. • NCTD had insufficient federal funding to complete the Solana Beach Parking Project and the San Onofre Bridge Replacement Project and was working to fully fund the projects over a number of years and/or seek grants. The lack of funding resulted in lags in project completion/grant activity/untimely grant close-outs. • As required under SB 1703, NCTD transferred project implementation/engineering for major projects to SANDAG. As a result, all project management/engineering was eliminated from the District as of 2008. Since that time, NCTD has re- established project management (Development Services Division and Planning