Board of Directors Meeting   7/21/2022

I'm going to go in.

Okay.

This is the, um, this is the network.

I'm going to go ahead and call our July 2022 meeting to order.

Mary Stahl, why don't you

I just want to welcome everybody.

We have new board members with us today.

Very exciting.

I want to give them a chance to introduce themselves.

I'm Thelma Drake.

I live in Norfolk.

I'm a former director of the Department of Rail and Public Transportation.

Of course, you had already started passenger rail in Lynchburg and Richmond when Governor McDonald was elected and I was appointed.

But we were able to bring up train service from Norfolk, our first train.

We brought that up in two years' time.

We beat the city by an entire year building the station because the mayor didn't believe we could bring up train service in two years.

And now today, you pick up the third train, which was what that original contract was.

So thank you very much.

Nice to be here with you.

I also served in the Virginia

House of Delegates, Senator Watkins, and also representing the 2nd District of Virginia and the U.S. House of Representatives.

We're glad to have you with us.

Thanks.

Good morning, and my apologies for being on the phone.

I'm in the middle of a closing right now.

Everything was going smooth until last night, but I think we got it back on track.

My name is Charlie Payne.

I'm a partner with the law firm Bursar Fleischer.

I'm very excited to be on the board and thank you for the opportunity.

Great.

Thank you.

Delandro,

where we tossed about various ideas, no money behind it necessarily, but we talked about things like expanding of Staples Mill.

We brought up lots of discussions, so a lot of things that were in the notes, something that I was able to sort of smile about and see where the rubber meets the road and how we were able to execute for the state and make this the best rail board that we possibly can be.

Fantastic.

Thanks.

Yes.

Well, thank you.

I, too, want to appreciate the fact that joining this board, I've been involved in and always interested in rail activity, particularly passenger rail activity for my entire tenure in the House and Senate.

I was in the House of Delegates 16 years and the Senate for 18 years, and they decided it was time for me to leave.

So I left on my own accord.

and retired.

Subsequently, I'm in land development with Watkins Land and I'm a contract lobbyist for Dominion Energy.

I really appreciate the opportunity to serve on this board.

One of the things that I worked on in my tenure in the legislature was the passage of the development of the Virginia-North Carolina High Speed Rail Compact, which gave us access to some

Federal dollars that weren't originally fair.

I don't know how much of it has been used since we got it put together, but there were a lot of grand ideas as to what to do with it.

We spoke to my counterpart in North Carolina last week about our next compact meeting, so I'm very glad to have you with us.

It's been a great month for passenger rail in Virginia, so it's a good time for us to get together.

It's ours.

But we have a lot to celebrate, have a lot of opportunities to celebrate over the next several years as we advance this big rail program for the Commonwealth.

So I'm very excited to be here as the chair.

So with that, I'm going to ask Maricel to call the roll and establish that we have a quorum.

Ms. Bulova, Mr. Cardwell, Mr. Dalton, Mr. Delandro, Ms. Doersch, Ms. Drake, Mr. Fisette, Mr. Hall, Mr. Maestri, Mr. Moorman,

Next item on our agenda is public comment.

Do we have anyone here to address the authority today?

Moved by Ms. Bulova, seconded by Mr. Moorman.

All those in favor, we're going to do a roll call.

Mr. Cardwell?

Ms. Drake?

Aye.

Mr. Hall?

Mr. Moorman?

Aye.

Mr. Spore?

Aye.

Aye.

Great, thank you Madam Chair and good morning everybody.

It's good to see you folks here, both old board members and new.

Just some background on the Executive Director's Report.

We issue this report every month when we have board meetings with people over it in person, page by page, slide by slide.

sometimes in more painstaking detail than others, but we do send it out to the entire board each and every month.

So what we're looking for is a report that gives you all what you need to understand what we're doing and how we're doing it.

I strongly encourage you to provide us feedback and the current board members have, but we want this report to be what you are looking for.

So to the extent you see something missing or you see something that you never use, let us know because we're looking to make this as crisp as possible.

So, with that in mind, I will just give you additional background.

I usually give some high-level administrative updates, and then we turn it over to folks from the staff, Mike McLaughlin, Chief Operating Officer, Steve Pitter, the Chief Financial Officer, and then other folks from the senior team, as is appropriate, depending on the content, and we'll do that again today.

So, Jason, if you'll put the slideshow on the screen, please, and I have the clicker that I've been saying silent prayers that it works.

This is our first time in the new building.

It's very exciting.

Look at that.

I love technology.

I didn't choose these pictures, by the way.

Start with a picture of you.

Well, just wait for the next two slides.

At least I had my hair done that day.

I tried to get these pictures out, but it was too late.

It had already gone to editing.

This is just one of the celebrations we had.

As the chair said, it's been a great month for passenger rail here in the Commonwealth.

We have talked for months and months how we are held as a national model for state supported rail.

Our mission is to continue to grow, enhance and improve the service for citizens of the Commonwealth and beyond.

And last week we were blessed to announce three new trains, two new trains and then one being restored.

We had celebrations in Alexandria first thing in the morning, then we all went to Roanoke and had a big celebration there, and then finally the following day we were there for the first Norfolk train headed northbound from Norfolk up to DC and further on in the corridor as Ms. Drake mentioned earlier.

The next two slides are just pictures of those celebrations and discussion of how that worked.

We had big giant scissors cutting ribbons at every event.

We were thankful that no one got injured, although there were a couple close calls.

Many of the VPRA staff, I'm not fixing the blame, but it was really a great couple days to celebrate what we are doing as an authority and really as a state.

It's important to note that this couldn't be done without the partnership of the freight railroad.

CSX is a strong partner, Norfolk Southern is a strong partner.

Also important to note that this is the beginning of a number of enhancements that are scheduled and that we are really responsible for keeping on time and on track.

And then here is the Roanoke celebration.

This is the one where there were almost injuries.

Although the events were attended by folks, VRE was there.

There were folks from the local government.

We had board members there.

Thank you those that showed up.

Just really an exciting week for passenger rail.

Now we're all back to the grindstone to get ready for the next one to continue keeping everything on track.

No pun intended.

The secretary showed up at the one in Norfolk and this is just a picture there repeating myself, I apologize.

You can see CSX is there, Norfolk Southern is there.

This only works if we have collaborative partnerships with the freights and with the communities.

This is just a snapshot of the schedule, kind of the things that many of you have heard me say before, and unfortunately you'll hear me say many times in the future, is that when we add additional opportunities for riders, it increases the ridership exponentially.

So when you add a second train, you don't just plan to double ridership, you plan to even increase it more because folks have another option.

Previously in Roanoke, you see, if you didn't want to leave at 6.30 in the morning, you weren't leaving Roanoke.

Now with the new service, you have a morning and an afternoon option.

And as we move forward releasing this service, additional service in 2026 and then additional service in 2030, we will be emphasizing adding those options at good times throughout the day.

It's a challenge for us working with Amtrak because they're focused on their service as well.

They've got service.

Many of these trains start in Boston and come all the way down to Virginia, and the long distance trains go beyond.

The North Carolina train goes beyond.

As we look for adding trains between city pairs, for example, with North Carolina, they want a train that gets into Raleigh, comes through Virginia, gets into Raleigh, you know, eight o'clock at night prime time for them.

Well, that doesn't really give us the time that we need.

So those partnerships are going to be key.

There will be times when we have trains that start off emptier than we expect because when they get to the bigger cities, that's really the sweet spot.

Yes.

Yes, that's correct.

So yes.

Is 66 the last?

Yes, that hits Washington DC, yes, 66.

So this is the schedule, and you'll see more of this.

One of the good things, we've partnered with Amtrak as they look at their schedule up and down the Northeast Corridor between Washington, New York, and then to Boston.

As they're doing work, they're going to be shifting trains times here and there.

They have been very flexible with us to make sure that any decision they make, number one, we're in the loop, and we get some insight into, which is important.

This is a very exciting slide, monthly ridership.

The ridership in the month of June and

Originally we had posted just through May because we didn't get the Amtrak data until Monday or Tuesday of this week, so this is recently updated.

Some of you may only have the May numbers.

But June, we had ridership, total ridership of over 85,000 folks.

It was our highest June in history, so we eclipsed pre-COVID ridership for June, and it was our fifth highest month in history, which is really great news.

It shows that folks are getting back on the train.

We're going to be watching very closely the next few months because the five highest months in history were all into, well, the four higher months than we've experienced this month, all in 2019.

They were July, August, October, and December.

And we want to make sure that as we move forward we continue that trend of eclipsing those previous records.

It'll be a little easier because we just added the two trains back, so that gives them more opportunity.

But we'll talk in a little bit about on-time performance.

One of the things that we focus on is we have many first-time riders, and if the first time you get on a train, it's not on time or it's not clean or the staff doesn't treat you well, there's a much lesser chance that you'll get back on that train.

So adding trains is fantastic.

It's part of our mission, but making sure that it's safe

It's reliable and it's enjoyable.

Do we track ridership on long distance trains in our service course?

We do not.

We don't display it here, but we watch it closely.

Yes.

And Mr. Pittard will likely bring this up later.

If not directly, he'll surely allude to it.

One of the challenges we have with Amtrak is they are selling seats

from Boston or New York all the way to Miami.

And they work on pricing.

They would rather not have a seat sold between Richmond and Fredericksburg, for example, that prevents them from selling that seat the whole trip through because they make a lot more money.

So that balance is important.

We watch that closely with Amtrak because there's a sweet spot between record ridership is great, but if folks are paying a dollar a seat, the revenue goes way down and that's not what we're looking for.

So finding that balance is critical.

Knock on wood, Amtrak has been very open with us on how that pricing works.

There have been times, and I'll talk about this in a minute, have been times where you can't get a seat from Richmond to Alexandria on a certain train.

But on that same train, you can get a seat from Richmond to New York.

And we're not looking for that.

We want to make sure that all trains are open to folks who want to travel to Virginia.

We understand why that hurts Amtrak.

They then box out that long distance trip.

So working that balance is critical.

Yes, we track that ridership very closely.

So when I get on in Charlottesville on the Virginia train and I'm going to the tour, how does that, that shows up

It's, that shows up as a, I'm a rider on our train.

If you're not on the Crescent.

Not on the Crescent.

And from a revenue standpoint, are we capturing the same amount of revenue if I go from Charlottesville to Washington as we would if I go from Charlottesville to New York?

Yes.

That's the methodology, yes.

OK.

I'm being corrected.

From Washington north, we get

We also get a per mile charge.

So we get a little bit of revenue out of that.

Exactly.

Positive on the quarter.

Otherwise we would, that's how our contracts would, we would turn that down.

So again, the trend is good.

We're watching it closely.

Really, our vision is, and I'm glad you brought that up, Mr. Moorman, our vision is that if you're in Charlottesville, you should be able to get on a train, this is a bad example, and not care whether it's a long-distance train or a state-supported train, and not care where it's going.

Alexandria is a better example because you should be able to get on a train and go from Alexandria to someplace north, Alexandria, D.C., let's say, not caring whether it's a VRE train,

Here's the ridership comparison year over year.

As you can see, we're recovering from the pandemic well.

The couple places where you see anomalies, the Newport News train, we had the one train that was suspended and then the Richmond train we also had suspended.

So you can see the ridership is coming back and we expect this to continue.

Here's the same numbers just for the whole federal fiscal year.

The federal fiscal year is from October to September, shows the same story.

We continue to move forward.

However,

That depends on on-time performance and this is the on-time performance through May.

We talked at the last board meeting and you may have seen in the last executive director's report that our on-time performance is not as good as it was last year.

That's both on all stations and endpoints.

What all stations does is it measures the number of passengers that get to their station on time.

So for example, if the train ends in Richmond,

But a lot of people get off in Fredericksburg.

I keep on using Fredericksburg because I live there.

I apologize.

A lot of people get off in Fredericksburg.

If you're on time in Fredericksburg and those folks are on time, but then you hit a delay between Fredericksburg and Richmond, a smaller number of people getting off in Richmond were negatively impacted.

So the all stations will look better.

Endpoint is just when it gets to the end.

Does that make sense?

I don't think I explained that well.

Any questions on that?

The question is really, why has it been so poor?

And we had a number of weather events in May, we had a number of host railroad delays in May.

between work that they're doing and problems with freight trains, it's a big issue for us.

And in fact, later today, Jeremy Latimer and the team will be talking about performance committees that were set up in our agreements with CSX to meet on a very regular basis and go train by train and say, okay, why was this train late?

What could we have done differently?

Because as I said earlier, this is really the key to adding riders.

If we can't be safe and we can't be reliable, we're not gonna be successful.

Just a question on this.

I'm looking forward to hearing what Jeremy says on this later in terms of, you know, performance agreements we have with the freight.

Yes, they're not overly strong.

Look, Amtrak wants it to be reliable service too because they get a share of the revenue and their trains are running on the same network.

But we don't have the teeth that we have, let's say, in our new Norfolk Southern deal.

And it's been a big challenge for Amtrak, and we talked about this a little bit earlier on the side before the meeting started.

Amtrak has had huge challenges on the staffing side, and they just can't get

the staff where it needs to be as ridership is coming back not just for Virginia but across the country and what happens is is that they run trains that would normally run with one conductor and two assistant conductors with a shorter staff so you don't have people that can open the doors you don't have people that can serve the passengers if you only have two doors open on a 10-car train it takes a long time for folks to get off and folks to get back on and that dwell time adds up

Once you get out of slot as a train, if CSX, for example, says, all right, as soon as train 66 goes through, it goes through at 815, we're going to run our freight train out there at 820.

If your train's not there at 815, they're running at 820, whether you're there or not.

And you get behind that freight train, and you're just not going to catch up.

So that on-time performance, as I said earlier, is integral to the whole network working well.

If Amtrak can't staff the trains, if Amtrak can't reduce, we all can't reduce the dwell time, it's going to be a problem.

Now, Mr. Fisette's going to jump on me, I'm ready for this.

Once we have the dedicated passenger track, it's less of an issue because the freight train won't pan away.

Can I follow up though?

I think it's a really good question and a good answer, a good response.

The question I would have or pose is, and I'm looking forward to Jeremy's report, there are a lot of reasons, right?

and you wouldn't want to punish somebody if they're not responsible or penalize them, but are there opportunities with each of the potential sources of the issue to actually build in either penalties or incentives that they're responsible for?

Yes, absolutely.

I think the first piece of that is getting to the root cause of the problem because when we get delay information, it's delay information that the conductor's on the train

submit, and it's reviewed, every train gets reviewed, but getting the root cause is important, and I'll give you an example, and I'm going to throw Rich Dalton under the bus here.

If there's a train, an Amtrak train that is a state-supported train, and it's stopped, and they say, why are we stopped?

They say, well, there's a VRA train stopped in front of us.

They're going to write that down as commuter train interference, and Rich gets dinged.

Well, note, frequently we don't ask

That's not fair.

We asked.

Frequently, there's not additional research that says, well, why was the VRE train stopped?

And Rich's folks will say, well, there's a freight train that had engine trouble, and that's why we were stopped.

So the real problem was a freight train issue.

However, in the report, Rich is getting dinged.

And that's why, I'm sorry, not Rich, VRE, that's why these performance committees are so important.

It's train by train.

The team goes through and says, all right, what really happened here?

And you'll find a lot of times that you have something called passenger train interference or freight train interference, and it was a switch issue in Union Station that bogged everything down.

Getting to the root cause is the first step of that.

But to your point, yes, there's got to be accountability.

Fingers crossed.

So far in these meetings, folks have been very open and honest and said, yes, this was our fault.

We wanted to set it up in a no blame

situations.

So folks weren't afraid to come to the table and say, yeah, this was us.

Here's what we're doing to make it better.

Historically, between Amtrak and the freight, given my experience at Amtrak, it was always, how can we make this their fault and not our fault on both sides?

And that's why I mentioned penalties, but also incentives.

I can add a couple of things that, just from my form of perspective, both at Amtrak and at the end of the house.

My core issue right now, which DJ didn't mention, is the freight railroads performance these days is terrible.

All of them are having huge service issues.

I think Amtrak long distance performance on time percentage is about as low as it's ever been, and there are a host of reasons for that, but it's a very difficult time right now on freight.

And then the second thing that goes on, and DJ talked about this, is this kind of figuring out what's the ultimate root cause of this.

And that's a good thing, but it's extraordinarily difficult to figure out sometime because an Amtrak train may be a fourth level effect.

of some things that happened.

And going back and doing that kind of root cause analysis, which really involves then on the freights going into the dispatching system and looking at what happened usually days ago, if not last month, is just difficult.

And a lot of what we rely on for our delay reporting, as does Rich, right, is conductor reports, right?

And the conductors don't have

necessarily the visibility as to what's happening or what happened three hours ago a hundred miles away that has then transitioned into an Amtrak delay.

Can I ask a question?

Sure.

to me was the extreme heat that Europe is dealing with and the implications that had across a host of modes.

I'm sure everyone's metrics have been thrown off there.

Looking here domestically, obviously, is it safe to assume that we will continue to see adverse impacts to performance throughout the summer as a result of weather, which is beyond our control and how

Well, so the good news is, and I'll work backwards on that, the good news is that the passenger expectation

My experience just in the last couple months riding the trains I have is when there is extreme heat, there are slow orders.

And as soon as folks get on the train, Amtrak has done an exceptional job of making announcements.

Hey, there are slow orders because we've got heat.

What happens is when it's hot, the rail is more malleable and if you can't go as quickly, the speeds are reduced.

So the communication has been good with folks.

Answering the first question, yes.

If the heat continues as it has been, we're going to have slow orders and we're going to struggle being on time.

It's not something like construction.

When we do construction, we can go in and say, hey, passengers, for the next 60 days, instead of expecting to arrive at 1032, we're going to change the schedule so you arrive at 1052, at 20 minutes.

We do that, the railroads do that quite frequently.

You can't do that with heat kinks just because you don't know when it's going to be hot, when it's not.

The solution to that is you just have to upgrade the class of track.

So for example, if the class is rated for 110 miles an hour and there's a heat order in place, you can then go only 79, quote unquote.

We like to go 79.

We'd be fine with 79.

But the cost of upgrading all of our track to that level, you have to look at that and see what the benefit is.

I hope that answered your question.

amplifying this as the only track guy in the world.

I say that with all respect in the world.

It's very difficult to control the issues because it's not a question of quality of rail or anything like that.

It's just the fact that we weld all this rail up and when it gets very hot

The compressive forces are such that it's going to, if there is a weak spot, not in terms of construction, but just weak in terms of maybe the rock is a little loose or anything, it's going to kick out.

And there are reasonably good odds it'll kick out under a train, which is catastrophic.

And the railroads these days, and the corridor in particular, are very good in terms of managing the temperature at which the rail is laid.

doing all kinds of things to mitigate that.

But at the end of the day, it's a very, very difficult thing to control.

And it's not necessarily to do, if you don't mind me saying so, in terms of just the quality of the construction, the quality of the rail, the state of repair in that regard.

It's just hard.

They do it.

And what you don't want to do is choose to not slow train down.

So my question here, and thank you for bringing it up, in terms of the speed that we're trying to achieve for the lines overall, you know, heat notwithstanding, where do we fall?

For the most part we want to be at 79 miles an hour.

I mean that's the track rating that we're looking for.

We have places between DC and Richmond that the curvature is such that you'll never get faster than 79 and if you do it's only for a split second then you've got to drop it just because around curves you can't go that fast.

As we look at new

Service and new infrastructure.

For example, the S line we recently purchased that goes from south of Richmond to the North Carolina state line, like Petersburg to the state line.

That used to be rail that's now in a state of disrepair.

There are places there where you go straight for a long, long period of time, and North Carolina has

We partnered with us, in fact we just got a federal grant to do a survey there.

There are places where you can get above 79 for a pretty good period of time and if you chose to do that it would reduce the trip time even more than the hour and change that will be reduced if we take that line.

So we look at that as we go and put new infrastructure in.

The current infrastructure that we have and the infrastructure we're adding to, because of the curvature, 79 is really the target.

And at the end of the day, 79 between here and DC makes you very competitive with car travel, and that's what we're looking for.

Especially adding to that, when you have frequent stops, you get fast and then you slow down, it's inefficient.

Sure.

If I could just toss in something personal.

Throughout June and most of July, I had my two little grandsons visiting from Seattle.

One of the things that we did was to visit my sister in Myrtle Beach.

and both kids get carsick.

And so we decided, well, let's do the train.

That'll be exciting.

So we got on in Alexandria, got off at Dillon, which was an experience.

Has anybody been to Dillon, South Carolina or the station there?

I think it hasn't been open forever.

But we experienced all those things.

So we had a freight train get in front of us and we had to let them go.

We had a car broken down on the tracks that they managed to get out of the way.

And the communication was excellent because we were hearing throughout the trip what was happening.

And then it was the heat, the high heat issues.

And so the conductor was very nice about, well, let's find you another seat, you know, until they'll be getting off wherever.

It's sort of like musical chairs.

I don't know how, you know, how over a long distance, you know, trying to maximize, you know, your seating, that can't be easy.

But I guess it was managed well.

Thanks to conductors who are helpful, and they didn't know who I was, but they were great.

So anyway, I just wanted to share all of the stuff we're talking about.

That's good to hear because the communication, to your point, is really the most important part of the trip.

They can deal with pretty much anything as long as it's shared with them.

VRE is like that.

You know, it's a family.

When you're riding on the VRE, the communication

Not just the ride that you're on, but also what's happening.

You know, larger picture is shared with the customer.

And so they feel like they're on the end.

They're part of the family.

They're part of a system.

No, agree.

Totally agree.

And you're right, the seating on those, it's not like an airplane where everybody gets on and then you get someplace where everybody gets off.

It's like a chick salt parlor.

Organizational updates.

I'll just be brief here.

Our current employee count is 35 full-time employees, three part-time employees, including two interns.

I stress the interns because we felt very strongly we had to have an intern program.

We just started.

We have two folks.

Hey, the summer's gone fast.

They give their end-of-term presentation in a couple weeks, and they've both been working on two different things.

Torian's here.

One, I don't know.

Daniel's not here, I don't think.

Daniel's busy on his presentation.

He's under a lot of pressure.

But look, it's been great having them because we have got to have a pipeline for talent and bringing interns in not only exposes Jordan and Daniel to the VPRA, but they talk to their friends and say, boy, I work at this great place.

It's got a great executive director.

I mean, that really helps us build talent.

You said that right.

So there we are.

We currently have four openings.

There's one offer accepted.

We have someone who starts in a couple weeks.

Our three newest hires are Christian Peterson, who works in our RLR department, Zachary Collier, who is going to be doing board support and working with Ashwini and Jeremy on the operations side of it, the interaction with Amtrak and the stats, and then Naomi Klein is a planning manager.

So welcome to all of them.

We are doing well on the gender diversity.

As you can see from the upper left-hand chart, we still struggle with our race and ethnicity diversity, but we work on that really in every hire.

And then our bell curve of employees by age continues to be pretty standard, so we feel good about that next.

And that ends the administrative part of our report.

Before I turn it over to Mike to talk about the capital projects, do you have any questions?

Yeah, I should have said that earlier.

Thank you.

Great.

Thanks.

If I can, last week was a great week.

If you want to point it out, there's some other people.

They've been working on this for a long time.

Michael Lester, then, worked through the agreements with CSX, North and Southern.

I even fit the pieces of written trains.

are going to be, especially on the theory territory, it's not easy.

And I don't say it's misleading, but I wouldn't even miss without Michael and Karen especially.

It goes without saying that without her knowledge of the funding and all the benefits,

All of you, I think, have been briefed.

I know I had a crash course last week with a couple of new board members.

I'm not going to spend too much time on these projects, but I do want to point out a couple of important things on the project.

The Long Bridge, some of you might have read some news in the Washington Post about an issue with regard to the Pettis Pike Bridge.

It was designed by TDOT at 14 feet, and keep in mind, as I point out to some of these briefings last week and others along the way,

We're building two new bridges between the current railroad bridge, La Motta Bridge, and 395, and the fourth bridge.

So it's a very tight window.

So we will take into account the bike community's concerns of widening to 16 feet or 20 feet, but we also have to consider constructability and scope, schedule, and budget.

So our engineering team is taking a look at that.

They're working on that almost daily and trying to figure out what is the best fit.

I know our chair and executive director have been very keen on making sure that we get these projects done on time because we talked about when the projects are complete, then we get more service.

So we're trying to work through these issues.

In case some are wondering what King and Commonwealth are, I know Mr. Dalton does know.

King Street Metro has a metro station, also VRE and Amtrak station.

If you were to be at the northern end of the platform

The King Street VRE Station, you would see a bridge.

That's the King Street Bridge.

There's also a Commonwealth Bridge.

Those are old bridges that are often struck by vehicles.

The town of Algiers has been asking CSX and others to fix those for years.

We have a four-track project coming through.

We believe it might be beneficial to rehab or replace.

We're trying to figure out the best method.

While that four-track project is happening, rather than five years later, have to come over two years later, three years later, come back and repair or replace those bridges.

So if you hear us talk about King and Commonwealth, those are two rail bridges that go over very busy streets at King and Commonwealth and very narrow areas at King and Commonwealth.

So we're working with VRE as well.

They have a station project there.

They're adding ADA on both platforms.

So we'll have to work with them because that's going to impact, it's going to actually widen the berth underneath as well.

That'll impact and benefit the passenger egress to and from the station.

and also getting to Old Town and also getting to the metro station.

I'm not going to stop at every project.

Frank, from the third main line, I want to point out, as we've talked about at past meetings, that we are looking for federal funds that we're relaying third tracks.

We're going to try to lay a fourth track.

I just mentioned about King Commonwealth.

If we can get in there and do surgery,

On the fourth track, let's get in there and do King Commonwealth, very similar for when you lay third track.

If we can lay fourth track next to third track as our ultimate goal, then fourth track quarter in the Beery territory down to Spotsylvania.

So places like, according to Lorton, we're laying a third main line.

We're gonna try to seek federal funds to lay the fourth main line.

We have a very good efficiency of scale.

Can I just interrupt for a moment?

I guess I can because I just did.

I apologize.

That's a great point that you bring up.

I think what you just talked about for the next, for the last three minutes is critical because we talk about DC DOT and they want to widen the span of the bike path.

And you talk about folks from Virginia put out a report that said, hey, New River Valley is great.

You should add this, this, this and this.

We are going to be delivering these projects between now and 2030 and additional projects beyond.

As we deliver the projects, we have got to look at every single option and say, hey, does it make sense to light the bridge?

What does it add for cost?

What does it add for schedule?

Does it make sense to put a fourth track in?

What does it add for cost?

What does it add for schedule?

There'll be places where it makes sense to delay a schedule because, as Mike just pointed out, you've got the crews out there.

You can leverage the track outages.

Let's put that in now.

And there are other places where it doesn't make sense.

And we're going to have to look at each one of those options

Yeah, just to follow up, I completely agree with everything you just said, DJ, both of you guys.

The one thing, and I've done enough planning processes to know what can come back to haunt you.

Sometimes people begin paying attention that hadn't paid attention and you can't listen to them because they are the whole way through when they could have been.

That said, be careful when you're in a process.

If you say up front, oh, this isn't decided yet, we'll deal with it later, and then call it

a time issue or a budget issue because if that's the case, and I don't know here, but if that's what you hear, if that's the case that people

are told in a planning process, don't focus on this yet, we'll deal with it later, then it becomes harder to argue that you're gonna hold up the process because it was told to somebody that it'll be dealt with later.

I strongly agree, and I'll add to that.

Also, never forget that what we're replacing or what we're enhancing is 100 years old, and what we're building for is 100 years.

So we can't be shortsighted and say, eh, this will be fine for a decade, because we shouldn't be looking at a decade as we make these decisions.

All right, Mike.

So going on down the line, similarly, Newington Road and Route 1 Railroad Bridge, I think people like Ms. Bulova, I'm familiar with, and also where these are very narrow areas in Fairfax County.

that we're looking to work with VDOT and Fairfax County to wind the cars under those because they want B or T. There's some bus facilities right near.

They're very narrow for anyone who's been through Newington.

It is literally one lane each way.

One lane and the cars have to stop.

So there's a bus facility right near by.

So we're working with VDOT and Fairfax.

We're putting in funds.

We had a briefing, I think, this last fall.

Also similarly, we're traveling to four tracks here, because again, so in areas where we're building bridges, for instance, we're going to lay a four track, because rather than have to go back later, if you're already laying two two-track bridges, rather lay a two-track bridge and a one-track bridge, and a two-track bridge and a two-track bridge.

That's what we're going to do when we move on.

So eventually, through the four-track, through the rest area, those bridges will already be built.

They're being incorporated as part of the front code alert.

We also have sidings up and down the corridor that eventually will become a third track,

to Spotsylvania.

And these are ongoing.

Mr. Westermann and others are working with us on project authorization notices that we have templates for and other agreements.

So the Western Mail Initiative, the Norfolk Southern Agreement, there are two projects that are being done by Norfolk Southern.

And now that the agreement is done, they can start yielding us for their design work that is ongoing.

They had a letter from Prejudice to do that work, but they couldn't bill us until we actually came through the agreement.

will be receiving those bills soon.

The New River Valley improvements, we've had a lot of public meetings.

We had a public meeting after we got the train in Roanoke, we went down to New River Valley.

We had a public meeting with stakeholders there.

And the issue there, people want to talk about is where the station location is going to be and the amenities that go along with it.

But other projects, as I mentioned, Long Front and Fort Track being led by VRE, but there is 22 million in Virginia money in Long Front.

Long Bridge doesn't get us all the way to Union Station.

There's another mile or so that we're, the VRE's adding an island platform there like they are at Crystal City, and also adding a port check up here that the VPRA will own.

Arkansas Paws Creek is a legacy project.

Those of you who take the train through the VRE or Amtrak territory, you'll see track being laid.

And that's also part of the clinical stations in the middle of that.

That work's ongoing.

VRE has some neat camera work there.

You can actually see the pedestrian overpass being built for those who take Amtrak and VRA, which is exciting.

Newport News Station being led by Newport News, Vidal also has a commitment there too.

We're tracking this because it's going to help us get more trains to Newport News and it's a new station.

It's involved in all the center buses that are going to be coming out of there as well.

And actually, there's some pictures of Newport News.

Robert Safris, who's assigned to help track this, took some pictures.

The station and platform down below and then some of the other work going on.

For those of us who are out there, hard to believe, it's been two years now, like groundbreaking.

It's exciting to see that work happening.

This station is being moved from the current station a couple miles to the new station, closer to the airport, closer to the list.

And contracting updates, I know John is here, but we do like to notify the board of things over certain dollar amounts.

and the Western Rail Initiative, closing costs, legal costs, and a similar survey and other costs, as you can see, at 394,000.

That's it from me.

I just had one come in.

We'll look for feedback on the reports.

The only thing I would ask, because I see these every board meeting, I am not always clear what's new information.

I think it'd be helpful to put the new information in italics.

I don't think it all is.

Some of it talks about decisions that were made in January, for example.

So it just helps me a little bit.

Sometimes we leave things in there such as the Franconia.

The contract went out in March.

People might be like, oh, where are you at with?

And that's why that's good.

I like it.

It's just I need to know what to do.

So we set out for other documents.

That's a great idea.

Could I just add, and maybe timing wise, I just wanted to let the board know that the VRE Operations Board last Friday

approved a construction contract for the rehabilitation of the Fredericksburg Station and that's an asset that the rail authority owns and VRE leases that and through our lease and maintenance obligations we're able to leverage our VRE's federal formula funds to go and

and provide some rehabilitation work at that station.

So something that we have all been working collaboratively, our teams, over the past couple of years and we're pretty excited about that.

We'll get that rehabilitation project started this fall.

and with about a 14 to 18 month duration.

One thing that that rehabilitation project does do is it restores part of the platforms on the east and west side of that station, which essentially gives us the opportunity to have a longer platform and the ability to open more doors on that station.

and I felt compelled to say something because DJ, of course, already pointed out that the Fredericksburg Station is often his reference point.

So we're really excited about that.

Stations like Fredericksburg and Alginger are also big winners.

When you expand to places like Norfolk and Newport News, they're going to have expansion in 2026, another third train added there, because they serve both the arena and there's also opportunities for burst commuting.

Some of the time DJ showed earlier actually allows people to reverse commute to DC or other places with early morning time and early afternoon time.

So that's important I know the people in that area.

So before I jump in, I just had a couple of items I wanted to talk about.

In general, I want to address Mr. Stadler's comment earlier about the partnership with Amtrak and the relationship to revenue.

And really, I guess the main point, I think, is Amtrak changed their pricing model to getting people to leave.

The ridership has done tremendous, as you all have seen.

The revenue, we're starting to see some concern, revenue that, not that it's trending up, it's actually trending down from where we were.

And so, we need to see a few more months of that data, but we're also, as Mr. Statter and again, working closely with Amtrak to see if some sort of tweak to the model, their price model needs to be done.

In fact, one of the entire jobs goes up to

That's what their paper is about, actually.

So I was talking to this gentleman, Daniel, and I was like, oh, what's the solution?

And he actually had a solution that he's going to pre-propose.

So anyway, I did want to take that off the to-do list for today because Mr. Stadler mentioned it.

So the other things I want to bring up are we're in the middle of your close, and I'm not going to have the customary data

that you see that's showing you the actual expenditures today.

We are working on doing final pulls this week.

And then we also have some work we're doing on asset classifications.

If you recall, when we did the purchase, the CSX, we essentially got an easement and then we had two to three years to work through all of the titling and underlining recording of deeds where that would actually become our property.

So last year, we recorded it as an intangible asset.

This year, we have some of those assets now are actually ours.

And so we need to go through and make a determination of how much land did we get, how much track, how many stations, and what the value of the total purchase price is assigned to those classifications.

The next thing, and this will help to, in future years, get a quicker close.

We're progressing with our enterprise resource planning system.

We're currently using a very antiquated model, our system for financial accounting, and we are very close in the middle of contracts and negotiations and hope that early August we will kick that process off to implement.

And then right now, I'd say tentatively, May,

Next year, we should have this system in place, and it's really, I've stressed this throughout the process, it's not just the financial system, it's really to help bring structure to our whole agency.

It helps with purchasing, HR is a coordination, and even on project management, that's a big part of this, right?

Actually the biggest part of that.

And the last thing I do wanna bring before I jump into these slides, and I'll be brief with the slides,

You know, it has been mentioned that VRE, we're in great partnership with them, and we've been working towards a financing, if you recall, there were three financing in our financial plan.

The VRE financing was scheduled for this spring, early summer.

They just announced that it's closed.

And I'm hoping that I will be getting funds soon from them.

Just to add up, and I believe if you check your account, it's in there right now.

I think this got transferred over last morning.

Anyway, just wanted to, this is really the staff wanted to do something, and so I do have some pictures of the staff last night huddled around this, but yeah, just wanted to mark this occasion and give you guys something to hang on your wall or whatever.

This is a big deal for VRE, obviously.

This is part of

Our funding commitment, we still have some other funding commitments, but I do want, I think it's important as we went through this process to be able to issue this debt, particularly in the last couple of months.

What we had to do was go to each one of our jurisdictions at the Board of County Supervisor level and get their endorsement for the bond issuance.

And it had to be unanimous, okay?

So that's an element

of this process that I don't, you know, I want everybody to understand.

So in the last couple of months, the nine jurisdictions that make up VRE at each Board of County Supervisors meeting, it was unanimous to move forward, obviously, with this debt issuance and support Transforming Rail in Virginia.

So that's a pretty big deal.

I'll add it's been a really good partnership through that process.

Very, very pleased.

And we did not, honestly, we did not know the funds were going to be in our account this morning.

So we were very surprised.

Good drama, Rich.

Good drama.

I don't know what time that wire went through yesterday, but anyway.

I really appreciate it.

So moving on to the actual, this is just so you know that why you're not going to see the budget actual.

One, I don't want to put out data that in a month I'm going to come back and adjust.

That's the reason I don't want to share your project after this one.

The next slide is there was, and this is reporting that's required.

gave us direction as far as budget changes, and that there was one budget modification for $46,000 with the same human hours purchased.

We did, we're doing some due diligence out there, decided we needed to have some further soil testing done to make sure we knew what we were going to be purchasing.

So a very small increase, but it did meet the thresholds that were established and the bylaws that we report to you.

The rest of the report is really the revenue side of the report, and I think here we do know the final revenue for the year, and we actually, the last bullet, we actually did exceed the forecast, so good news there, just slightly, but pretty much right on there, so we've made the 172.6 million we had forecast.

Going further, this is our monthly cash and investments, and you see these ups and downs,

That relates to the payments going out the door to CSX, the 200 million, the 200 million, and then we have another $125 million this November 30th.

So we started with a lot of funds that came over from DRPT, and we've been adding the paid out funds, and we've been adding revenue, made another payment, and then here we are building back up again, and then we'll make a third payment, third and final payment to CSX for November 30th.

This slide really shows you at a macro level what's happened with interest rates the last 18 months.

So when we first sort of kicked this off, rates weren't great, but they were around 0.6%.

And last summer, the rates declined for all intents and purposes, nothing.

As you know, in the last couple of months, there's been a lot of interest rate volatility to the positive direction.

If it did impact the BRE debt issuance a little bit to the negative from what we've planned.

The flip side, as you see here, is the balance of funding we have.

We are beginning to earn some actual real return that will help us offset costs in the future.

Then the last thing I really want to talk about is working through the investment management relationship.

So in a way we were fortunate that it took a while to get that relationship going because rates did have this significant change.

So we're actually in a good spot.

We weren't already in the market, so to speak, three, four, five months ago.

But I am pleased to announce all the agreements have been signed.

Our investment manager now is just doing the final system tweaks to get us set up.

We've got a custodian set up.

Also, we're hopeful either today or tomorrow that we can actually take some of the funds that are sitting in the local government investment pool in the state and move $100 million eventually to the investment manager.

And I believe everybody I've talked to,

Mr. Delandro, you can jump in if you want, but none of the experts are willing to go out on a limb and predict where interest rates are going to be in the next two years, and so we're talking with them.

We're probably, we're allowed to have up to a two-year average maturity, but we're probably going to stay relatively short on that maturity for a while because of that uncertainty with rates.

We don't want to

I don't want to go in, and then rates keep going up, and then we're kicking ourselves.

With that, one more slide.

Mr. McLaughlin mentioned federal funds.

This is a slide on the various federal funds that we've actually made application for, and we've gotten a couple of awards.

There are a few earmarks that were put in by our representatives in Congress, and then

What's not on here is we're also doing a lot of work with the Federal Transit Administration through their Capital Investment Grant program.

And that's a partnership with VRE for core capacity.

And so, and that's, we're working towards, we haven't decided the exact amount, but we're looking at somewhere between three and $600 million request.

Mike always gives the up sign.

And in addition to that,

With the IIJA money that's out there, we're also working through possibly, you know, we put in one, the MPDG request, but we're also looking at maybe some other requests there.

And then once again, a large dollar amount.

So this was an information you all had said you wanted to see like what efforts we were being undertaken to get federal funds.

So with regard to the investment philosophy, I know that you and I have briefly talked about the corporate notes.

And the duration on it, I would suggest we go out a little bit longer because they do have to meet a standard of quality in order to be in our book.

But I think that's where we could possibly see the best interest rate increase over time versus localities and debt issuance and things like that.

Any word on the rate increases?

We have an investment policy update amendment request and one of those is related to corporate notes over bonds and I guess I just will say the policy does allow us to have individual investments up to five years.

Steve, one more question that you touched on in the beginning.

It's something Wick spoke about, and maybe you could touch on it either in our finance committee or if the whole board is interested in the future.

What's our revenue model with Amtrak?

I don't know it well.

I was having trouble even following what you were saying.

What I'm open with is that, I guess, plain language, so ignoring the ticket price model for a second.

We get the revenue of all trips within Virginia.

So if you book a trip from Norfolk to New York, the revenue associated with those miles from Norfolk to Washington, DC, we get.

Then when you hit the Northeast quarter, there's a model where we get a revenue per mile, and we also get a charge.

And each year, it's an annual contract, and each year,

We can not accept that northeast corner charge and revenue.

12 years, 14 years we've been doing this, that has always been a positive amount.

So we always accept that charge and the revenue.

So at a high level, that's how the revenue works.

But the concern right now is they changed their pricing model.

I think it's supposed to mimic like airlines

And I think it's so early, so I hesitate to say anything, but I think the concern is if someone goes to look for a trip today from Richmond to Washington, these are two o'clock.

I can't remember the schedule.

These are two o'clock.

If I'm looking at a trip to go today from Richmond to Washington, if the price is $9 or $21,

I'm going to take the train.

But your point, it would be good, I think, to have a more detailed dive into the revenue model, not just the Amtrak revenue, but also all of our revenue, just so the board and the finance committee in particular have a good sense for where the money is coming from.

But what I hear you saying is that, which seems like it's the only logical

Outcome is that the new Amtrak pricing model may in fact be resulting in overall in an average decreased fare for our trains, right?

What I would say is it's not just that it's an average

It's a decrease.

It's the net ridership is up 30% we'll say in the lab from four months ago.

Yeah.

I'm just averaging here.

You would think revenue would at least be neutral or up 10% or 15%.

Like I said, it's very preliminary, but the first two months, it looks like revenue actually declined from where it was.

And it's concerning, but

Also, I think we all know COVID had a significant impact on ridership.

We needed to get people back on the train to see it safe and see it's convenient.

So there's a trade-off involved here, but we're on the very front end of looking at it with Amtrak to figure out, you know, one of the things that stealing Daniel's thunder here was, you know, we were just talking for a good hour one day or 30 minutes and

I said, I started just, I didn't explain it very well.

He explained it with a fancy modeling term, but I was like, yeah, that's what I mean.

And that's sort of the example I'm giving that, you know, if somebody, a $15 fare or a $9 fare, the person's going to take, and they're looking today to ride the train, they'll take the $15.

Yeah, I will say two things.

One is that you mentioned the way that works north of DC on the corridor, and the reason we have been taking that deal, for those of you who are interested in Amtrak, is unlike the long distance network, the northeast corridor makes money, generates positive cash flow in operations.

Now, if you look at the billion dollars in capital it requires every year,

The equation changes completely, but that's the way Amtrak accounts for their costs, too, is the corridor generates revenue above the top of the rails.

It surprises me that it's been a good deal for the past two years with COVID, because ridership on the corridor went to zero, and I would have thought you would have declined that, or is there some ketchup involved, or is there

I know, but I thought they still were net cash flow negative, maybe.

I think it relates to they got CARES, they got

One is, you mentioned the right of way and taking ownership easements in the interim.

Is there any of this right-of-way that we've encountered?

We're going to preserve to our general counsel the rest of it.

So there are some places you may remember we saw a fellow in the district where

There were portions where CSS only ever had an easement.

So they can only pay to us.

Right.

I remember that.

And I can convey a greater interest in what they had in the first instance.

There's some place in there that needs to be by and large everywhere.

We are going through the efforts of surveying between Richmond and East.

Yeah.

And working the boundaries between that which is theirs and that which is ours.

The reason I ask that is there's a lot of railroad built on piecements all across the country.

Keep it a little bit close for the day.

I still need to send one more regret.

I haven't talked to one firm yet.

John Kosnick, Director of Procurement.

So if you don't mind, I might keep it closed today.

I still got one more firm I need to talk to.

Well, that's a great segue.

So the last part of the Executive Director Report is John Kostinuk, our Director of Procurement.

Last month, last four meetings, we approved, you all approved the procurement manual.

And as part of that, we are tasked with creating diversity goals for our procurement each and every year.

And John is here to talk about our proposed goals for this upcoming year.

Good morning, everybody.

Once again, John Kostinuk, Director of Procurement.

Anybody that knows me,

knows I can talk supplier diversity, business development, perhaps.

Davis, I do want to open it up.

If you have any questions, any brainstorming, any strategies, please call me.

Over the past couple of years with COVID, we've all been here and we're all in this together.

In my travels with supplier diversity and business development, that's been the mindset forever.

We're all in this together.

We do need to talk, work, partners, and that's what I've done.

It's like what I plan to do here at VPRA.

And DJ was saying we're 21 days into fiscal year 23.

This is our first year with our supplier, you know, with our own procurement rules.

And part of those rules where we are going to ask the board to adopt yearly SWAM and DBE goals.

I just wanted to start off, I am super excited.

With what we're going to be able to do is we're transforming rail into Commonwealth.

We're going to have a huge opportunity to support the diverse businesses in our daily activities and procurements.

And these opportunities can transform communities.

and just my whole life, supplier diversity, business development, has been about transforming communities.

There's a lot of swam businesses in the neighborhood where you lived, in the Commonwealth of Virginia, and as we can inject capital to these communities, it just provides an uplift to everywhere where we are.

So we are gonna work to promote equity in business and support a diverse local economy, fostering community and business relationships.

We're gonna be committed

to increasing the participation of small and diverse businesses owned and controlled by socially and economically disadvantaged individuals in our daily activities and maturements.

There's so many certifications out there, I just wanted to wrap up today what we're going to be chasing this first year.

That's going to be SWAM businesses, the acronym, it's SPSD, Virginia Department of Small Business, Biodiversity SWAM Business.

If you don't know, I think you guys all do, but it includes small, it includes women-owned businesses, it includes minority-owned businesses.

Outside of that acronym, it also includes micro businesses, service disabled veterans, but the SWAM acronym is what I throw around a lot and what's been seen in several of the papers and documents we've been working on.

We're also going to have a Disadvantaged Business Enterprise Program, DBE, and this is defined by the Department of Transportation.

Our commitment to increasing the participation of these small and diverse businesses, the first step we had to do was to form a supplier diversity program.

That program is the first step into setting these goals.

So it's going to be an evolving program, but we also wanted to have yearly goals.

So you can see on the slide here, I'm just keeping it simple for today.

These are the goals that we're going to have for our first year, but it will be an evolving program.

Establishing the supplier diversity program

has to have it.

Like DJ said, we had to have it.

We've now formed it.

But now it's time to evolve it, get it in motion.

So there's going to be a lot of activities that we have to do this year and beyond.

And basically what we're going to be trying to do is level the playing field for small minority and women-owned businesses in our daily activities.

And part of the program is going to be assessing the market.

And that's going to be everything from what is our market,

What are the DBEs in our market?

What are the businesses in our market?

Can they provide what we need when we need it?

So we do need to do an analysis of the market to help evolve our goals year over year.

While assessing that market, we're going to need and seek input from internal and external stakeholders.

It's VRE, it's DRPT.

I was just talking the other day to our peer of mine at Dominion Energy, you know, talking with PDOT next week, their supplier diversity director.

We are going to be seeking help and partnerships with internal and external stakeholders.

And while evolving this program in fiscal year 23, the other goals that we have is to provide small and diverse suppliers an opportunity on small purchases.

For our procurement rules, we can be more direct on the small purchases with the SWAM community.

We have to be successful there.

And part of the fiscal year 23 goals will be to advertise SWAM businesses on our small purchases when applicable.

Now with large competitive purchases,

We also need to prioritize SWAM participation.

Part of that, we're going to need all of our primes and our subcontractors.

We're going to require vendors to have a SWAM and diverse participation plan on all competitive procurements.

We need the supplier community to look for subcontractors, have significant participation, use diverse businesses, do joint ventures, subcontracts, mentorship, protege-type relationships.

Another part that we're going to have for this fiscal year 23 and beyond is going to be expanding our supplier diversity network.

And that's going to be what I'm just calling grassroots

Networking and Marketing.

We're going to have to go out and educate businesses on what we're doing, how we're doing business, our procurement rules.

Hopefully they'll educate us on what they're doing, how they're doing and how they can help us.

We're also going to educate businesses about SWAM and DBE certification and the value behind it.

If anybody's not certified, we can educate them on how to become certified and help provide just a general push on the value of certification.

and then also in the Network and Outreach, it's going to be attending events, business league memberships.

A lot of great organizations out there that are already inviting us to come to a Wednesday night membership event just to educate their community on what we're doing.

VPRA will do that.

With everything that we have on these goals, we also wanted to have a number for our fiscal year 23 goals and that's what we're going to ask the board to adopt today and that is to spend 10%

about discretionary spend with small and diverse businesses.

Now this includes direct, first-tier primes and indirect, which will be our second-tier subcontractors.

Any questions on our proposed goal?

I'll move that we adopt John's goal of the 10% of discretionary spend going to small and diverse entities.

All right.

Motion by Mr. Moorman, second by Mr. Delandro.

Well, thank you.

Just on behalf of VPRA, I am excited about this.

Let's vote for it.

We know you're excited.

Yes.

Ms. Bulova?

Aye.

Mr. Delandro?

Aye.

Ms. Drake?

Aye.

Mr. Fisette?

Aye.

Mr. Moorman?

Aye.

Mr. Watkins.

All right, Tom.

Thank you.

I am excited.

Always been excited about this.

It's been a passion.

It's just been part of every procurement division I've ever been with.

It's been part of my life.

So thank you.

I'm excited for how we can transform the communities that we're serving.

I can strongly assure you that all 37 employees of VPRA can tell you that John's not just saying that for today's meeting, he is passionate about SWAM and EBE.

We don't spend a nickel without John saying, well, couldn't that be a SWAM purchase so that we've got the right person in the job for this goal for sure.

So thank you, John, for that.

I appreciate it.

And I have the fun stuff to talk about, so let's open our OTP and see what I can do.

At the May board meeting, there was some conversation around risk management, and we talked about risk as it related to talent and people.

And so we pulled together a presentation to address that.

So I'm going to talk a little bit about the external market, and then going to bring it back to where we are with the PRA.

There has been an ongoing war for talent which was completely exacerbated by the pandemic.

The start of the pandemic really created what I'll describe as an unprecedented market.

There were really two things that this all happened at the very start of the pandemic and that was it became much harder to attract candidates and it became much more difficult to retain candidates and it had a lot to do with

with the opportunities that were created.

There was a surge in demand, tremendous opportunity, significant increase in job openings, which just, there were jobs galore out there in the external market.

There was what folks described as pent up attrition.

Companies were unprepared for the pandemic and so they

inherently put more pressure on the people that they did have and that was both personal and professional pressure on the employees.

And then there was what is described as a candidate revolution that candidates in the market, again exacerbated by the pandemic,

It was already happening with the different generations but the pandemic really exacerbated this as well where the candidate expectations, the employee expectations have evolved over time.

They've changed significantly and because so they're behaving differently in the market.

Once someone enters the market, once they dust off their resume and they say, I'm interested in seeing what's out there for me, this is a fascinating statistic.

There are opportunities for people who decide they want to compete for them.

And what we're finding in the market, and it's still true today, is that by the time you as a hiring organization extend an offer,

The folks who are looking for these jobs, they have multiple offers in hand.

And that creates a very interesting, again, very unprecedented market.

They've got real choices.

So I want to talk a little bit about how the candidate expectations have changed.

Flexibility is here to stay.

The expectations around either a full-time remote or a hyper-saddle, if I could look into my crystal ball, I'd bet 10 bucks.

I bet more than that actually, but the flexibility is in demand.

And again, it was one of those things that was in the market because of the different generations that were coming in.

We had already started seeing pre-pandemic trends that people weren't joining an organization and working for 30, 40, 50 years like their parents had.

There was a lot of job hopping and a lot of, what about this?

Well, maybe the grass is greener over here.

Maybe I like this company better.

So there was already a lot of movement

and it just got, there were more opportunities in the market after that.

The flexibility becomes very key.

Well-being is an interesting shift as well.

Folks are looking for support tools, resources, time off as it relates to their emotional and mental well-being.

And culture really matters.

The folks in the market are looking to be seen as individuals.

They don't want to be seen as a cog in the wheel.

They want to be, they want to be seen and killed, of course, as an individual, which is where culture matters, which is why I was very excited to share with you via VPRA or be very different with the culture and the values, the mission, the mission that we talked about at our last meeting.

One of the statistics that I wanted to highlight here simply for reference, when you think about VPRA and as we continue to grow, operations is at the heart of our organization and operations is hot in the market and we need to be aware of that and sensitive to that along the way.

To make this easier, we have to make sure we're avoiding bottlenecks in the process.

The hiring managers are busy doing their day jobs, so we have an obligation to make the hiring easy for them.

There's one concept in this total market, total skills market that I would highlight that's different and that is hiring for potential.

So a lot of times folks are looking to hire for a year's experience, right?

I want someone with 20 years experience, but what we're finding in the market is we've got to be flexible and look for folks who have the potential, demonstrated potential, the ability to rise to the position that you're looking for.

And then that human component comes into place as well.

We talked at the last meeting about our employee value proposition as being a part of our culture work, and that would matter very much.

Expectations have changed.

We talked about that.

We talked about flexibility as well.

So for the sake of time, I'll move on.

I will highlight again the culture work that we've done.

It sets the foundation, and we think that's very important.

We are working on an action plan now that we've come up with.

Right now, they're words on a page.

We talk about them, but we're really looking to develop over the next few weeks and months an action plan where we start to embed the values in particular

into our vernacular and how we behave with each other.

That meaningful integration will be important.

We've had organizationally impressive growth.

We had three people in April of 2021, and as DJ mentioned in the report earlier, we'll be at 38 people.

We're extraordinarily proud of the talent that we have been able to find in, again, this unprecedented market.

It's been really, really

It's very much a pride point.

I do think, though, we are experiencing a bit of beginner's grace.

It's a new organization.

It's very exciting.

We're building.

It's cool.

We need to be very certain that we are holding up our end of the bargain and we're making sure that we're investing in culture and we're following through on the commitments that we as an organization have made to the folks that we've hired.

We're going to establish the compensation structure.

Pam's going to come up in a minute and walk through that piece of it for you so you're aware.

We've made promises, we're going to find our own space.

And here we are sitting in our new building for our board meeting, right?

So we've got to follow through on the commitments as we set the foundation, we get further along in the life cycle of the VPRA.

From a currency perspective, again, you saw the mission, vision, employee value, profit and values at the last meeting.

The early engagement drivers, for those folks who have joined the organization, the conversations that we've had really center around the fact that they're mission-driven.

They like what we're doing.

They like the idea of leaving a legacy.

They like the idea of public service.

And they like that filled aspect that I just mentioned.

And the compensation is fair.

What we're doing going forward matters as well.

We've talked about setting the foundation, the employee manual and the policies that we've established as well will matter, but we need to continue those efforts.

So as we move into FY23,

We will look to do more around employee engagement.

That includes that action plan to implement the values very consistently.

We will need to pivot and spend some time on learning and development.

Folks do not want to get into a job and remain stagnant.

They want to be developed in a variety of different ways.

And so we've got policies in the manual that we just approved at the last board meeting that support that investment in our employees.

And we've got plans to do some internal components to develop

And there's also opportunities for a talent risk assessment.

I'll spare you the details again for the sake of time, but from the onset, we have talked repeatedly about making sure VPRA is set up.

We don't accept mediocrity.

We want the best that we can get.

And this sort of foundation will matter as we hold true to that.

The other point that I will highlight that is important to recognize as it relates to VPRA

We're not the only people who appreciate that we've built a great team.

We've already talked through the executive director support and we're partnering with Amtrak and with VRE and with folks throughout the Commonwealth who see the good people and the good work.

And they see how we're getting things done in a very positive and diplomatic way.

There are other people who appreciate our talent too.

And so we need to make sure we invest in those that we have so they don't get

from other organizations, right?

It's something to be very proud of and it's something to be aware of and conscious as well because our team is filled with people with transferable and marketable skills.

Happy to field any questions if you have them.

Just very briefly, this slide, it shows the mission, the vision, and the employee value proposition.

And I just think that's exemplary.

and it really shows the beginnings of a really strong and positive culture among the workforce.

Thank you, we appreciate this.

Another question that I had was, I saw in a previous report that we had three interns that we had brought in and I would like to know if we've ever captured why

They've been able to come here or would look to come here or would even look to foster a career here.

When they first came on board, I personally spent time with them to understand where they were in their journey and where they wanted to go.

So we've had those conversations, but I think you're spot on.

That's a program that we need to grow and we need to and we'll do this as they exit.

What did you like?

What didn't you like?

What should we have done differently?

I would say we have a sample of one here.

I just wanted to add

As you can see, Joan and her team and the entire VPRA team has been busy the last year recruiting and everything but Joan did actually take time here a couple of months ago and I think it was right after the last meeting and spent the day with VRE and spent the day with our staff and had a lot of good dialogue and were able to introduce Joan to

You know, a lot of our team and stuff like that.

So as that, we just continue that partnership.

More specifically, Joan taking a day out of her busy schedule to come up and visit us gives you some indication or should give you some indication of what she's doing out there.

Thank you.

Thank you.

So we want to talk about what our current compensation philosophy is and what we're trying to accomplish

Let me start by saying we put this conversation together working with Mercer to do a study to look at the information we have online and with it's philosophy we're going to be putting forward it is designed to help us achieve our goals.

Sustain, promote this community experience,

in the availability of community rail and economy volume.

This will also, our philosophy will also help us to attract, develop, reward, and retain top talent.

We're going to be able to do that by focusing on four key things.

One, align with the market.

Two, calibrate the business needs.

Three, be performance oriented.

And four,

become very driven, as Joanette alluded to, our new employees, they're not looking to come there and be stationary and not develop and grow.

So our philosophy is focused on achieving those problems.

So I'm going to talk to you a little bit about our structure.

The composition structure has thin, clear strings with multiple cleaner bottles in the string.

The full strings are executive,

which typically includes top executives and function heads providing strategic vision and tactical and strategic direction.

The next level in CareerStream is management.

Management and supervisory professionals who focus on tactical operations and activities and typically have people that report to them to help execute the operational and tactical

We have our fourth to be on third stream, which is professional.

These are individual contributors with responsibility in a professional or technical discipline or specialty, and they may have one or two people that might report to them.

Our fourth career stream is that of the support.

Individual contributors, again, who provide organizational and related support and service

as well as roles operating in support of daily business activity.

So if you're thinking about administrative support there, you're thinking about technical and production in our craft trucks.

And as I said, there are career levels in each one of these career streams that progress to as people's experience progress, as their development progresses, that gives them that ability to grow in their path

as well as being able to promote across.

So, in working with Mercer, we have developed this band and marker reference zones that cover those four career streams and the career paths across them.

You'll see that there are two zones specifically, one for the Richmond area, one for Alexandria, given Northern Virginia is significantly

more expensive than the Richmond area.

So there's a structure for each.

Review the market data, review the market and internal equity and ensure both levels and salaries fit into the designated structure.

So someone identifies with salary level, it's a peak and S3 is that position.

We're determined by location and then look at the band.

as to where they should be based off of those factors I just mentioned in regards to internal equity, experience, performance, et cetera.

These fans demonstrate best practice and will be reviewed at least every two years to make sure that we are staying on trend for the market as well as keeping up with what is going on

And we want to emphasize that our Alexandria citizens, which have 50% in the pay scale there, those positions are not determined by the employee, but rather by the business need as to where they're situated.

Each position determines by that.

So an employee can't just say, I want to move to Alexandria because I know I can get out.

No, it's weird if you need that role.

and that determines what band you're in and what you may feel you have.

Let's talk about fiscal year 22.

So we just closed out fiscal year 22 and we need to make decisions about how we're going to reward our current employees.

We have, as they've stipulated,

38 employees, three of which are not full-time FTEs.

As we make decisions on how to reward these people, we're looking at this whole past year.

We have determined that we will offer salary adjustments to regular full-time employees with a solid performance rating or higher of 5%.

Those folks need to have been hired before April 25th.

and this 5% is actually in line with what the General Assembly approved for state employees currently.

And given that 18 out of our 35 employees currently came to us from other state agencies, we feel like that'll also align with their expectations.

The other, there is also opportunity for employees who are newer to our organization, who are hired between April 25th and July 25th,

to also get a salary adjustment of 2.5%.

The reason we want to do that is we want to, one, reward people for the performance that they've been doing since they joined us.

We don't want them to have to wait another whole 18 months before they're able to get a salary adjustment.

And two, we also need to stay competitive with the market because, as Joe says, people are getting to the offers

When they joined here, we know we've had employees that have been solicited by other organizations at this point, but we want to make sure they are rewarded, they understand we are understanding their value, and continue to remain committed to us and the work that we do.

So, that said, we still have a significant amount of work that we need to do in order to make all of this come alive.

First thing, we need to finalize our fiscal year 23 approach, how we're going to handle rewards and the process for that.

We also need to develop compensation manual that highlights our policies and philosophy.

Are there any questions from Ms. Fudge or Urban?

I do have a question.

How does your pay scale relate to, if you were staying in port?

Is it a big difference?

No, it is not similar.

Being that we are not covered under the Personnel Act, we have the ability to be more competitive in the market.

So our pay scale for our positions, one, is a broader scale.

I thought maybe you were getting a lot of state employees.

Well, we didn't inherit.

We were lucky enough to be able to get some talent from DRPT when we were first getting started.

Okay, thank you.

One of the

Eligibilities with regard to personnel and current VRS health insurance.

Yes, so we do participate in the state's benefits program.

That's medical, all the medical.

We have similar, well, we have medical, the retirement, all those major categories.

We do participate in the state plan as they are currently written.

You know, so that is part of what we have as a part of our public station package.

In addition to a bit of higher level, we do have a difference in our leave policies.

Since we do not fall under the Personnel Act, our leave policies are very generous.

Our folks start out running eight hours per pay period if they have under five years of service to the state.

And that is double what it's offered for employees of that tenure under the state system.

You put it all in one bucket.

I think it'd be helpful to see a comparison.

And there's some nuances with BRS because they're individuals that were in BRS prior to like

2015-2016 have different benefits derived from VRS.

So when we participate fully in this, so the voice employees that transfer to us from the state, that they can be in Plan 1, depending on when they will hide, they can be in Plan 2, and then

Our newest employees that are joining us today are from the Highway Patrol.

We've got three parts-time, I'm sorry, you got three part-time, 35 full-time.

You've got 15, 18 people that are new to the

Well, it's a part of their total compensation package.

So you have your base salary, you have your benefits, and then we'll have other types of awards that people will be eligible for.

So within that benefits package, there's the VRS, the retirement plan that we follow.

There's all the health and care benefits.

There is the life insurance benefits.

All of that whole package that the state offers, we also offer it because we fully participate in all of those basic things.

When I first got here, I just did an audit.

I was just going to add, Mr.

Walk, it's actually in our enabling legislation and the code that

So I would suggest that the benefits are comparable.

The time out of office is comparable.

As DJ mentioned, there's a pool of PTO that we operate, but state employees have different buckets.

So that's comparable as well.

One difference that I will highlight is the state has a very long grievance process and our employees are at will.

And so that there's slightly more risk with that, right?

You come in, you perform to the best of your ability.

And if you don't, then there's a shorter runway.

And so that's an important factor as well.

And that's actually just not to drive this even further, but that's a big part of what we're doing here is that we've said that repeatedly, we can't settle for mediocrity.

We don't have the time.

We've got way too much to do.

And we can't have people that are just coming to tread water.

I'm just trying to get the relative comparison when you don't understand salaries, the benefits are a part, not in that number.

Absolutely.

We have a grievance process.

As I sit in my role, I would want to make sure there's a legitimate business reason, but we've got a much shorter grievance process.

For you, what kind of vacancy rate do you have?

At this point, I do not have a vacancy rate, but I will be very honest.

The last year has been incredibly difficult for DRPT because we did essentially lose 18 employees or us in the AT's office lost a total of 18 employees to VPRA.

We have a great partnership.

I feel like Rich, you know, we've got this great partnership.

We're intrinsically tied forever.

So seeing them get off the ground and do well,

We wanted to see that happen.

So we have back-filled our positions at this point.

We're fully staffed, DRPT.

So do freight.

So it's here, rail there.

And we share responsibilities.

I mean, DRPT retains long-term strategic planning.

We work very closely with VPRA.

I mean, we will be linked forever.

And we work that way.

We have a very close relationship between the two entities.

And we were located on the same floor until recently in the same building.

So I think that's part of it.

It's going to be difficult for us to steal folks back from VPRA.

But certainly, we've gone through that.

We've gone through the same recruiting challenges.

that both Joan and Pam mentioned, and we've come out on the other side, okay.

Thank you.

Excellent.

So for the new board members who I have another pleasure to meet in person, I'm Michael Westerman,

General Counsel to Virginia Passenger Rail Authority.

So the board is being asked today to adopt a new remote participation in all virtual VPRA policies.

Some of y'all might remember last September, you were asked to adopt similar policies.

So why are we here and getting less than a year later adopting a new policy?

The reason is because the law changed in 2022.

that in HB 444, effective September 1, 2022, there is a new policy that permits public boards like ours to conduct remote participation for individual members of all virtual meetings.

So, and those are two distinct things.

The law also requires the board, each board or each public body, to adopt a written policy by a public vote before it can utilize these new procedures.

So, this being the last meeting before the law gets into effect, it's time to adopt a policy that allows us to introduce the law.

And the law has become more streamlined, I would say, and a little bit more flexible.

So the two concepts here are all virtual meetings and room participation.

All virtual meetings are when a physically formed meeting...

In contrast to that, remote participation is when an individual member requests a particular related by reason to participate in a meeting that's happening with a physical form present for that person to participate remotely by using electronic communication meetings.

I will note that when remote participation is used for an individual, we still need a physical quorum present for the meeting to account.

So, I just thought it was helpful to do a little bit of a comparison here.

What changed prior to the meeting?

Can I make it to a meeting?

Prior to the law, there were kind of these four reasons for which you were allowed to

asked and get granted permission to participate remotely.

The new law has a reason, and that new reason is if your principal resident is 60 plus miles from a meeting location, that gives you a legal basis to request to participate remotely under the law and under the new policy.

Many of you may live more than 60 miles away from where our meetings happen, and so you would have an unlimited basis to

to participate remotely.

I say that with a little bit of hesitation because not everybody can take advantage of that each meeting, right?

Because when we're doing remote participation, we need a physical form present in the room for the meeting to be effective.

I will also note that there is a cap for personal matter reasons, so you can have a personal matter that prevents you from participating in a board meeting.

You ask to participate remotely.

Let's disclose the nature of the personal matter.

You can do that either two times per year or 25% of meetings that happen within a given calendar year for all intents and purposes.

The effective cap will be two for our board.

So there is a limitation on the last little point.

If you have a personal matter, you can only use that two times per year as a basis to participate remotely with everybody else or most of the other folks are congregated in a physical

All virtual meetings are different.

Again, this is when the chairperson decides we're not going to meet physically at all.

We're all just going to, from a public location, we're going to participate.

So this is a newly committed thing that is allowed even when there is no declared state of emergency.

Under the prior law, you needed the state of emergency in order to have the state of emergency.

All virtual meetings.

No physical form is required.

It has to be engaged.

We do it either two times per year or up to 25% of the meetings that occur in a year.

Again, for our purposes effectively, two times per year.

We do not have consecutive meetings, we all reverse meetings.

So if we have four meetings per year, we do one in three, we do one in four.

If we do four, we do not have back-to-back meetings.

We all work together.

And then no more than two members can gather in one.

Five of y'all can't go to Rich Dalton's house and participate in an all virtual meeting.

Two can kind of congregate together in one remote place, otherwise everybody has to essentially be in their own space participating remotely.

All right, so what would our proposed policy do?

I think the board received a draft policy that reflected this new law.

Let's see.

It has maximum flexibility.

So if an individual member requests for vote participation, we'll do that through a form that will create a short and simple form.

The chairperson will have to be compelled to grant a remote participation request as long as there's a legally sufficient basis for the request that viewers are prior policy, which is the exact same.

As long as you have a valid legal basis, the chairperson must grab the request

for an individual to participate remotely.

All virtual meetings will happen when the chairperson names the necessary or convenient.

Again, we can't do that more than twice in a year.

We can't do cashback on all virtual meetings.

The law requires that these rules apply to each committee.

Each committee and subcommittee of the rail authority will be subject to the same rules.

So the finance audit committee, if they meet three times per year, they could do all virtual meetings, but could only do that for

I hope that was sufficiently clear.

Motion by Ms. Bulova?

Second.

Second by Ms. Drake.

Any further discussion?

Ms. Bulova?

Ms. Doersch?

Aye.

Ms. Drake?

Aye.

Mr. Moorman.

Aye.

Mr. Payne.

Aye.

Aye.

All right, committee assignments.

I'm going to give a little history, two minutes of history.

We've done so far this year for the benefit of our old board members to express memory, but also for our new board

On February 1st, so first of all, our bylaws require this board to elect officers annually.

That happens one time per year.

On February 1st, this board did that.

They elected three officers, Ms. Bulova as Vice Chair, Butler Painter as Treasurer, Mr. Spore as Secretary.

Those can happen.

Those elections are valid for a year and for previous those later this year.

aside from Ms. Butler-Painter who is now, her term has expired and so we need to elect a new treasurer.

Along with that, some folks may remember that last board meeting we did not have, we didn't have appointments made for all of our board members so we had some vacancies so one action that this board took on May 23rd is to dissolve the executive director's search

and in place of that committee to establish performance and compensation with identical membership from the executive director search committee rolling on to the performance and compensation committee.

So we'll end up today with two committees, recommended committee appointments.

In each case, I'll go through those in a moment.

And we'll also note that when I talk about the finance and audit

The chairperson of that committee has served as the de facto treasurer of the board from its inception.

And so, as we talked about, the Finance and Audit Committee mentioned the chair position.

We should also note that that position recommended election as treasurer and the place of Mr. Payne's term has expired and is held off the board.

So, again, that is sufficiently clear.

I will also note that there was no draft resolution decision-free provided for this action item.

The reason for that is simply that as we learned who the new members were, there was some internal discussion about what the committee assignments might be, and then Mr. Stadler had to pay the time to reach out to each member to identify them, identify interests for potential committee slots, etc.

That didn't happen until very recently, so

We did not have a resolution in draft form to preview here, so I will simply note the two committees and note the appointment recommendations and then we will vote.

I will do this in two because I think it's cleaner.

I'll do this in two different votes if that's okay, Mr. Bulova?

Okay, so first the finance and audit committee.

The recommended appointments are Ms. Doersch as the chair, also for election as the officer of treasurer,

And then as members, Mr. Spore, Mr. Delandro, and Mr. Watkins.

All right, moved by Ms. Bulova.

Do I have a second?

Seconded by Mr. Moorman.

Any discussion?

Ms. Bulova?

Aye.

Ms. Doersch?

Aye.

Approve.

Ms. Drake?

Aye.

Mr. Fisette?

Aye.

Mr. Hall?

Aye.

Mr. Moorman?

Aye.

Mr. Watkins.

Aye.

Motion carries.

Personnel and Compensation Committee.

All right.

Moved by Ms. Bulova.

Seconded.

Seconded by Ms. Doersch.

Ms. Sell?

Yes.

Ms. Bulova?

Aye.

Ms. Doersch?

Aye.

Ms. Drake?

Aye.

Mr. Fisette?

Aye.

Mr. Hall?

Aye.

Mr. Moorman?

Aye.

Mr. Spore.

Aye.

Aye.

That motion carries as well.

I will add that while that's the slate of members for those committees, all of the board members will be notified of the committees and are welcome to attend at any time.

Thank you, Mr. Westerman.

Are you going to distribute a list of all the committees and the members?

Did you know, and I guess this wasn't the partnership VRE reality and I made these slides weeks ago, but anyway, we do need to

As a matter of formality, we have certain agreements.

We have a lot of grants that we all have approved in our budget with VRE.

And we do actually have, some of the parties need an agreement with respect to those grants.

But we both work on, operate on the same rail lines.

We both are looking to take cars off the road.

So our missions are truly intertwined.

That's really what this first slide is getting at.

It's really more of a strategic partnership than like a competitive negotiated agreement.

So I'm bringing some agreements to y'all that we developed standard templates to work through the VRE grants.

And they're mirrored after years of working at DRPT with VRE.

We had a master agreement, we called it for their grant agreements, and then we developed

This grant would come up, we'd do a sub called the private grant, which didn't go through the long list of terms and conditions that are in that master.

We basically have chosen to mirror that same process with some slight tweaks that both parties have made in the draft agreement.

And here, I think the main point is we're here asking for your approval for executive direction with the signature

The reason for that is you see there's been a lot of grants that are in the budget related to working with VRA and their projects.

I think we heard earlier Mr. Dahl talk about a project that's, you know, their projects help us and our projects are helping them.

So we need that contractual agreement process set up, looking for your approval

on that.

And then in addition, VRE, we provide rather necessarily operational funds, but it goes towards maintenance and track access.

And then also some fees for dispatch that the Class 1 Railroad, CSX, and Norfolk Southern, as well as Amtrak for access to the station charged in the area for using their lines.

And because it's a little bit different in nature, it's not that capital-type project theory.

And we agreed that we would create a separate agreement for those annual track access fees.

Also, in the FY 43 budget, there's $15.6 million that is set up for track access to the ferry throughout.

And that is, once again, a long-standing mission.

DRPT where we provide 84% of those fees.

The only other item I'll mention here is long-term.

We build out the corridor and we talked about having our own two tracks of passenger from Fredericksburg to be watching it and seeing.

When that happens, the hope will be that we get that clear.

At that point, the area will be operating on our tracks.

and we won't be paying CSX those fees, but that's a ways down the road, 2030.

So at that point, if the payment will be worked and decide, you know, is it worth the charge, the other direction, it must, because it's 60%.

Where we stand, as far as paying maintenance, is that true?

So the Class 1 railroads, to Amtrak for maintenance,

So with that said, I do have two resolutions.

One is for your approval for the master agreement and moving forward those project agreements.

So we have two actions.

We'll start with the approval resolution to approve the executive director to enter into the master agreement with VRE.

By Ms. Bulova, second by Mr. Hall.

Do we have any discussion?

All right, Mary Southland, call the vote.

Aye.

Mr. Delandro?

Aye.

Ms. Doersch?

Aye.

Ms. Drake?

Aye.

Mr. Fisette?

Aye.

Mr. Hall?

Aye.

Mr. Moorman?

So that motion carries.

The next action is action to approve the executive director to enter into an agreement with VRE board track access fees.

Move approval.

Second by Mr. Hall.

Any discussion on this agreement?

Mary Stealth.

Aye.

Ms. Doersch?

Aye.

Ms. Drake?

Aye.

Mr. Fisette?

Aye.

Mr. Hall?

Aye.

Mr. Moorman?

Aye.

Mr. Spore?

Aye.

Mr. Watkins?

Aye.

Thank you.

I do want to mention, I should have said this before, all the funding for these grants that you saw came over from DRPT.

The Historical Ballast, is that a good deal?

Yes.

Here, I remember last September, some of you do remember that we adopted an investment policy.

We had an investment manager at that point.

However, the investment manager that we had chosen was within

Wells Fargo and well they divested or I guess separated from Wells Fargo and that took them a little bit of time.

I'll also say at the time there was some discussion we'll get into in a moment of the investment policy itself and looking at putting a little more teeth into some of the aspects of it.

So before I jump into the three changes that we have here,

All the changes are within the Code of Virginia's Investment and Transportation Authority, Fairfax County, Arlington County, HR TAC, and the Port Authority, as well as looking at the state's Department of Treasury, how they do their investments.

So in proposing these items, we actually looked at our peer group to make sure we were within the bounds of where our peers were,

And then finally, the last thing before I jump in here is the Finance Committee was briefed on this on June 27th.

So that being said, we are making three different proposals.

First is on the environmental, social, and governance provision.

And I want to, before I jump too far here into the detail, I do want to thank Mr. Fisette, because when we first adopted this policy, we had a very broad

Brush statement to say that wherever practical we would implement ESG principles.

And he challenged me at the board meeting to say that that's too broad.

It's not detailed enough.

And so I did want to point that out.

It's taken us a little bit of time.

Some of that is actually getting the investment manager contract going.

So with that being said, what we're

What I would say is from our peer analysis, I do think what we're going to be losing here is the edge.

Because most of our peers, and we looked at a lot of policy, not just the peers I've mentioned, we looked at a lot of policies across the country.

And most of those policies are really vague when it comes to ESG.

They say you should incorporate this, and then they give a few sentences of what ESG is.

So we kind of are on the leading edge here where we're actually

implementing it within the way we'll do our investments.

That being said, the policy is written so that hopefully it can supersede if there isn't a change with our investment manager.

So we didn't want to make this too detailed.

And that's either a change with our investment manager or the investment manager changes the way they do their BSG for it.

tried to come up with a policy that was general enough that it could survive any sort of change.

And I'm not going to read this, but I'll get to what it's actually accomplishing in a moment.

This is just a little background on offspring, mobile investments and their ESG process and

I'm not going to read all the words here, but the main thing is they do have their own process within their company of how they do ESG scoring.

And it involves both, I guess there's actually in the industry, certain companies that do this sort of analysis as a matter of their business.

So Allspring is using both that type of industry generated data, but then they also do their own analysis within

and their own company.

And they take all that analysis and at a high level, they come up with a score for each investment of one, two, three, four, or five.

And by counting on the ESG principles, scoring very high, one being you're not doing too well.

And so that being said, we intend to use that scoring

And what we're proposing, if you go back and read the policy, what we're proposing is our average score, we would end up with an above average score on the ESG framework.

And so the one through five above average would be at least a 3.5.

So if we buy a corporate bond with a corporate note, and it's made it a three, then we're going to have to get

A corporate bond or some commercial paper that's rated a four or five.

So that's trying to keep it somewhat simple, but we're also trying to say we're not going to settle for just average.

The other parameter here you'll notice is we're not going to allow any investments in corporate notes, corporate bonds, or commercial paper.

That's what this applies to.

A score of one or two.

The firm, the investment vehicle will need to have a rating of three, four, or five for us to allow Allspring to make that investment.

The next change involves something, an investment vehicle that's really investments in foreign, I guess the title is Supernationals, but it's really foreign

Investments.

And this is all in the Code of Virginia, and it's very prescriptive.

If you read those words, there's four very specific items that allows us to invest in.

And the other key point here is it requires a AAA rating by the three main rating firms.

So

Very definitive what we're allowed to do within the Code of Virginia.

And it just, what this is really doing is allowing more diversification of our portfolio and hopefully a little bit better return.

And once again, as I said earlier, our peers, I can say all the peers I listed are doing supernationals, but Fairfax, for instance, had a policy that allowed up to 50% of their investments to be in supernationals.

The next item for change is corporate notes.

And in this item, this is really, once again, mirroring what's in the Investment Act.

It allows us, we originally were using a rating of double A, and we actually should or were allowed to have a rating for the Investment Act of single A.

And I think this, as I said about the supernationals, it's the same thing here.

One, to help improve return, but

Also, it's the diversification aspect that's probably the most important here in Monroe because in the AA field, it was not completely, but it was mostly related to financial institutions, whereas dropping down to single pay, which is allowed in the investment act, it broadens, you can see in the pie chart, it broadens the field of potential investments.

All right.

Yes.

So this is, I'm strictly, Mr. Watkins, just mending the existing policy.

So we have

I think it's 12 different categories of investments, and it's most heavily geared to municipals, U.S. government securities.

Okay.

Just one other question.

Do we know that?

OK, so Mr. Pittard, the action that you're requesting of the board is to adopt the revised investment policy that will replace the initial investment policy that the board adopted in September of last year, correct?

Then I'm happy to, let's see, move approval of the proposed investment strategy.

Is that what we're talking about?

Or amendments.

Seconded.

So moved by Ms. Bulova, seconded by Ms. Doersch.

Ms. Bulova?

Aye.

Mr. Delandro?

Ms. Doersch?

Aye.

Ms. Drake?

Aye.

Aye.

Aye.

Mr. Moorman?

Aye.

Mr. Payne?

Aye.