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Financially troubled Metro seeks to borrow $220 million to cover loan


Metro officials want permission to borrow $220?million to cover a loan coming due in October, as the transit agency continues struggling under restrictions imposed last year after a federal audit found numerous instances of financial mismanagement.

At a time when some Washington-area officials have become increasingly skeptical of the way the Washington Metropolitan Area Transit Authority handles its money, the agency’s chief financial officer plans to ask Metro’s board of directors on Thursday to allow him to seek the short-term loan.

Metro already is juggling several large, short-term loans, borrowed largely to make up for federal grant money that has been slow in arriving. The Federal Transit Administration, which completed the audit in March 2014, has been limiting Metro’s access to grant money until the agency fixes the problems described in the scathing financial report.

Tuesday, D.C. Council Chairman Phil Mendelson (D) called a meeting between Metro board leaders and D.C. Council members in his office to relay concerns about how the transit agency’s financial troubles are being handled. And Wednesday, council member Elissa Silverman (I-At Large) hammered Metro leaders at a public oversight hearing, accusing the board of failing to hold individuals accountable for its financial lapses or to provide a “clear picture” of the agency’s financial state.

“It’s an incredible lack of management for such an important public agency. Yet no one seems to be held accountable for it,” said Silverman, a member of the council’s finance and revenue committee. She also described Metro as an agency “lurching from crisis to crisis.”

A Metro rider is seen through orange construction mesh near an escalator that was being repaired at the L’Enfant Plaza station on Wednesday. (Evelyn Hockstein/For The Washington Post) Metro, which has faced renewed criticism since a deadly smoke incident in a subway tunnel near the L’Enfant Plaza station Jan. 12, is already trying to persuade governments in the District, Maryland and Virginia to commit to providing the cash it needs over the long term to pay for new, safer railcars, as well as other badly needed improvements. If Metro obtains the $220?million loan, it would still need an additional $208?million to cover loans due later this year. It could tap cash reserves, obtain other financing or persuade some of its lenders to extend credit terms. In documents prepared ahead of the Metro board’s meeting Thursday, Metro staff said that despite cash-flow improvements, “pressures remain on the amount and availability of cash in the near term.” Metro’s total short-term debt amounts to $502?million, money that Metro Board Chairman Mortimer Downey said has been used primarily for building projects and improvements. Last month, Wells Fargo renewed an existing $75?million Metro line of credit through March 2016. Metro spokesman Dan Stessel said Wednesday that the transit agency expected to pay off “a significant part” of the remaining debt and was likely to seek credit extensions similar to what it obtained from Wells Fargo on only “a fraction” of the credit. Stessel did not provide specific details of the plan. Metro board leaders have said that they are seeking broad funding solutions within the jurisdictions that subsidize its operations and that it does not plan to increase fares or cut services to cover its costs.A Metro Silver Line train makes it way to Washington, passing another Metro train on a lower rail. (Evelyn Hockstein/For The Washington Post) D.C. Council member Jack Evans (D-Ward 2), who represents the city on the Metro board, said during Wednesday’s hearing that despite his concerns about Metro’s management, the agency needs the cash to expand. “If Metro just stays as it is, it will not fulfill the needs of our region,” said Evans, who led the hearing as chairman of the council’s finance and revenue committee. “We need a larger Metro. We need a Metro that goes more places, that has more cars to carry people.” Silverman, despite her criticism of Metro’s finances, espoused the same sentiments about the transit system’s future growth. But local government officials say they need reassurance that Metro is implementing the FTA’s recommendations to improve the agency’s financial practices before they authorize more funding. Metro’s own audit of its finances for the fiscal year that ended June 30, 2014, is still underway and four months overdue. Acting General Manager Jack Requa told the council hearing Wednesday that the audit was on track for completion in April. “Until there is comfort that the financial management systems and processes are in order, the [chief financial officer] cannot recommend long-term borrowing or additional capital requests beyond safety needs for WMATA,” David Umansky, a spokesman for D.C. Chief Financial Officer Jeffrey S. DeWitt, said later in an e-mail. Umansky said that DeWitt was at Tuesday’s closed meeting between council members and Metro board members, and that “he expressed his continuing concerns about the lack of audited financial statements and the need for WMATA to extend its lines of credit coming due in the upcoming months.” Last March, a federal review painted a troubling picture of the transit agency, questioning Metro’s management of billions of dollars in federal grant money. The review by the Federal Transit Administration found that Metro awarded millions in no-bid contracts, skirted contracting rules and overcharged the government. The problems led FTA to shut down the automatic flow of cash to Metro, instead requiring the agency to manually draw down grant money and comply with grant application procedures. The restrictions are likely to continue through fiscal 2015, according to Metro. Metro Board Chairman Mortimer Downey said Wednesday that even he had been surprised when he read the FTA report. “I take accountability for not knowing it was not done right,” Downey said in response to questions from Silverman. At the behest of members of Congress, the Government Accountability Office has begun its own audit of Metro. Silverman said in an interview after the hearing that Wednesday marked the first time she had heard “a sense of remorse or responsibility” when Downey spoke. But Metro board leaders during the hearing also painted a more positive picture of the agency’s financial recovery.

Requa said the transit agency was “performing to budget with almost $300?million cash on hand, with the ability to make timely payments” to employees and contractors.

Requa described the agency’s success in securing the $75?million credit extension from Wells Fargo. “Financial institutions have confidence in WMATA’s financial capacity,” he said.

Lori Aratani and Robert McCartney contributed to this report.

Abigail Hauslohner covers transportation and development for The Washington Post. Previously, she served as the Post’s Cairo bureau chief.

Paul Duggan covers the Metro system and transportation issues for The Washington Post.


SUCCESS & SERVICE: Selfish act spurs a good deed by franchisee


This is one of those times when life imitated art.

Remember the scene in “It’s a Wonderful Life” when Uncle Billy lost the Bailey Building & Loan’s daily bank deposit?

Villainous Old Man Potter found the cash and kept it even as he watched Billy searching frantically for the money. It took acts of generosity by the citizenry to replace the cash and save the day.


A similar story line developed recently in Manteca, where, in April, customer John Estrella stopped at the El Pollo Loco restaurant on Yosemite Avenue on his way to make a bank deposit. While inside the restaurant, he said, he dropped $2,200 in cash.

Like greedy Old Man Potter, a customer picked it up and kept it, watching as Estrella searched for it in a panic. The customer left with the cash, leaving Estrella dumbfounded and heartbroken.

Police were unable to identify and locate the person who grabbed the wad.

So on Friday, El Pollo Loco franchise owner Rafael Armenta Jr. decided to make good on Estrella’s loss. He presented Estrella with a check for $2,200 and bought him lunch as well.

And somewhere, a bell rang and an angel got its wings ?

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Dan Burch, 47, of Turlock, has been appointed to the California Commission on Emergency Medical Services. Burch has been administrator at the San Joaquin County Emergency Medical Services Agency since 2005. He was a coordinator at Tuolumne County Emergency Medical Services Agency from 1997 to 2005 and a quality improvement coordinator at the Alpine, Mother Lode, San Joaquin Emergency Medical Services Agency from 1991 to 1997. He is president-elect of the Emergency Medical Services Administrators’ Association of California. Burch, a Republican, won’t be paid to serve on the state commission.

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Kalven Goreal of Modesto and two Bethany College (Kansas) business school teammates tied for first place in a global simulation game that included 2,340 teams from 166 colleges and universities worldwide.

Participants run simulated athletic footwear companies and make decisions about plant operations, distribution and warehouse operations, work force compensation, online sales at the company’s website, sales and marketing, and finance. Performance is measured by earnings per share, return on investment, stock price appreciation and credit rating.

Goreal, a 2008 Downey High graduate, ended the game with placements of a tie for first in overall score, second in earnings per share, third in stock price, and a tie for 100th in return on equity.

He earned degrees in economics and finance this spring. In high school, he was a member of Downey’s National Science Bowl team that went to Washington, D.C.

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The Riverbank Lions elected its leadership for 2013-14. Chip Langman is president, Leanne Jones-Cruz vice president. Robin Brown is secretary, Sharon Langman treasurer. Board members are Clint Peterson, Lucio Cruz and Laura Wilson.

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Steve Nascimento is the new executive director of the Portuguese American Citizenship Project, replacing Antonio Borba.

Nascimento most recently served as the district director for state Sen. Anthony Cannella, R-Ceres, and held a similar position for U.S. Rep. Dennis Cardoza, D-Merced. Nascimento also was recently elected to the Turlock City Council.

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