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NORTH COUNTY TRANSIT DISTRICT

COMPREHENSIVE ANNUAL FINANCIAL

REPORT

For the Fiscal Years Ended June 30, 2014 and 2013

810 Mission Avenue | Oceanside, CA 92054 | Office (760)966-6500 | Fax (760)967-2001| www.gonctd.com

http://www.gonctd.com/

Comprehensive Annual Financial Report

Page 1

Who we are…

North County Transit District’s services are a vital part of San Diego’s regional tranportation

network. NCTD moves more than 12 million passengers annually by providing public

transportation for North San Diego County. The family of transit services includes:

The BREEZE bus system

The COASTER commuter rail service

FLEX rural and demand service

LIFT paratransit, and

The SPRINTER light rail line

MISSION…

North County Transit District’s mission is to deliver safe, convenient, reliable and user friendly

public transportation services.

VISION…

Our vision is to build an integrated transit system that enables our customers to travel easily

and efficiently throughout our growing region.

We will achieve our Mission and Vision by:

Placing service to our customers first

Ensuring safety and security of our employees and customers

Delivering high quality transit services

Developing and maintaining facilities that sustain and promote current

and future transportation services

Securing adequate revenue, protecting our assets and getting the

maximum return on the public investment

Working in partnership with our communities and other stakeholders

Encouraging innovation, creativity and leadership


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COMPREHENSIVE ANNUAL FINANCIAL

REPORT

For the Fiscal Years Ended June 30, 2014 and 2013

Prepared by: The Finance Staff of North County Transit District

810 Mission Avenue | Oceanside, CA 92054 | Office (760)966-6500 | Fax (760)967-2001| www.gonctd.com

http://www.gonctd.com/


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Table of Contents Introductory Section (Unaudited)................................................................................................................ 5

Letter of Transmittal ........................................................................................................................ 6

Board of Directors .......................................................................................................................... 10

Organizational Chart ...................................................................................................................... 11

Certificate of Achievement ............................................................................................................ 12

Service Area Map ........................................................................................................................... 13

Service and Activities ..................................................................................................................... 14

Background ....................................................................................................................... 14

Services ............................................................................................................................. 14

Activities ............................................................................................................................ 19

Financial Section ......................................................................................................................................... 22

Independent Auditor’s Report ....................................................................................................... 23

Management’s Discussion and Analysis (Unaudited) .................................................................... 25

Introduction ...................................................................................................................... 25

The Financial Statements .................................................................................................. 26

Statements of Net Position ............................................................................................... 27

Net Capital Assets ............................................................................................................ .29

Statements of Revenue, Expenses, and Changes in Net Position .................................... 32

Operating Revenue ........................................................................................................... 34

Operating Expenses .......................................................................................................... 36

Restrictions and Commitments…………………………………………………………………………………….39

Long-Term Debt ................................................................................................................ 39

Contacting NCTD’s Financial Management ...................................................................... 39

Basic Financial Statements............................................................................................................. 40

Statements of Net Position .............................................................................................. .40

Statements of Revenues, Expenses and Changes in Net Position………………………………....41

Statements of Cash Flows ................................................................................................ .42

Notes to Basic Financial Statements ................................................................................. 44

Required Supplementary Information .......................................................................................... .68

Public Employee Retirement System Schedule of Funding Progress…………………….……...68


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Other Postemployment Health Care Benefits Plan Schedule of Funding Progress….….…68

Statistical Section (Unaudited) .................................................................................................................. 69

Net Position by Component (Last Ten Fiscal Years) ........................................................ 711

Changes in Net Position (Last Ten Fiscal Years) ................................................................ 72

Revenue Capacity ........................................................................................................................... 73

Operating Revenues by Source (Last Ten Fiscal Years) ..................................................... 73

Public Funding Sources (Last Ten Fiscal Years) ................................................................. 74

Fare Revenue (Last Ten Fiscal Years) ................................................................................ 77

Passenger Boardings (Last Ten Fiscal Years) ..................................................................... 78

Fare Rate Tables ................................................................................................................ 79

Principal Fare Revenue (Fiscal Years 2014, 2009 and 2004) ............................................. 83

Debt Capacity ................................................................................................................................. 84

Ratios of Outstanding Debt (Last Ten Fiscal Years) .......................................................... 84

Demographic and Economic Information ...................................................................................... 84

Demographic and Economic Statistics (Last Ten Calendar Years) .................................... 85

Principal Employers (Current, Five and Ten Years Ago).................................................... 86

Employees by Function (Last Ten Fiscal Years) ................................................................. 87

Operating Information ................................................................................................................... 87

Operating Indicators By Transportation Mode (Last Ten Years) ...................................... 88

Operational Statistics - Revenue Hours, Operating Costs and Operating Costs per

Revenue Hour .................................................................................................................. .91

Average Fare, Subsidy per Passenger and Farebox Recovery Ratio ................................ .92

Capital Asset Statistics By Transportation Mode (Last Ten Fiscal Years) ......................... .93

Industry Comparative Statistics ....................................................................................... .94

71

85

88


Page 5

Introductory Section


Page 6

Letter of Transmittal

December 30, 2014

To the Board Chairman, Members of the Board, and Citizens of North San Diego County:

On behalf of the North County Transit District (NCTD), we are pleased to present you with the

Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2014. The basic

financial statements have been prepared in accordance with generally accepted accounting principles

(GAAP) and have been audited in accordance with generally accepted auditing standards in the United

States of America by Macias Gini & O’Connell LLP. This letter of transmittal highlights significant

factors affecting the financial and operating results of NCTD. Further detail is presented in the

management's discussion and analysis (MD&A) and the audited basic financial statements and

accompanying footnotes.

NCTD management is solely responsible for the accuracy, completeness and fairness of the information

presented in this CAFR. Management has established a comprehensive system of internal controls to

prevent the loss, theft, or misuse of NCTD assets and to ensure that adequate financial information is

compiled to allow for the presentation of the financial statements in conformity with GAAP. Due to

inherent limitations of internal control systems, such controls are designed to provide reasonable,

rather than absolute, assurance that the financial statements are free from material misstatement. To

the best of our knowledge the basic financial statements, as presented, are accurate and complete in

all material respects and present fairly NCTD's financial position and the results of NCTD operations for

fiscal year 2014 and 2013.

NCTD Governance

The North San Diego County Transit Development Board was created by California Senate Bill No. 802

on September 20, 1975 to plan, construct, and operate, directly, or through a contractor, public transit

systems in its area of jurisdiction. In September 2002, Senate Bill 1703 modified the responsibilities of

the Board by transferring responsibility for planning, programming, project development, and

construction to the San Diego Association of Governments (SANDAG). In January 2006, the North San

Diego County Transit Development Board was renamed to North County Transit District (NCTD). NCTD

provides bus, van and train service for people in the northern half of San Diego County-from the rural

areas of Fallbrook and Ramona and the Camp Pendleton Marine Corps Base, to the cities of Oceanside,

Vista, Carlsbad, Encinitas, San Marcos, Del Mar, Solana Beach, and Escondido, plus the unincorporated

areas of North San Diego County. A nine member Board of Directors consisting of eight city council

representatives (one from each of the eight cities in North San Diego County) and one representative

from the San Diego County Board of Supervisors governs the operations of NCTD. The Board of

Supervisors’ member is appointed by their Board and represents the largest portion of the county under

jurisdiction of NCTD.


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Operations, Services and Activities

NCTD contracts with private operators for the provision of all modes of public transit service. Through

these contracts, NCTD provides the following transit services: commuter rail (COASTER); light rail

(SPRINTER); bus fixed-route (BREEZE); demand response fixed route and route deviation (FLEX); and

ADA complementary paratransit (LIFT). The COASTER commuter rail service is operated by

TransitAmerica Services, Inc. The SPRINTER light rail service is operated by TransDev (formerly Veolia

Transportation). The BREEZE bus fixed-route is operated by First Transit. The FLEX demand response

fixed route and route deviation services and LIFT ADA complementary paratransit was administered by

American Logistics Company (ALC) through March, 2014. First Transit began operating FLEX and LIFT

services in April, 2014. ALC coordinated FLEX and LIFT services using subcontractors and human

service transportation providers, while First Transit coordinates FLEX and LIFT services primarily

through use of a dedicated fleet and staff resources. NCTD directly employs 126.5 positions that

support safety and security, customer service and operations, engineering, operations systems,

technology and other support functions.

Economic Outlook

In recent decades, San Diego County (County) has maintained a relatively stable economy based on its

diversified foundation of industries in manufacturing, military activities, and tourism. Over the last 20

years, technology industries ranging from biotechnology and pharmaceuticals to telecommunication

and computer software have slowly replaced manufacturing. Along with the national and state

economies, San Diego’s economy had declined since the global economic downturn in 2008, but

indications of economic recovery began in 2012, and continued into 2013 and 2014. Unemployment in

San Diego County decreased from 10.5% at the end of fiscal year 2011 to roughly 7.8% and again to 6.1%

at the end of fiscal years 2013 and 2014, and local sales tax revenues have increased approximately

5.5% over the same period. However, the current levels of local sales tax revenues remain lower than

the projections forecasted for fiscal year 2013 prior to the recession. This recovery is significant as the

economic environment within the County directly impacts the operations and performance of the NCTD

transit system.

The state of the economy influences a number of factors such as unemployment rates, traffic

congestion, fuel prices, marketing efforts, fare prices, and service levels which impact system ridership

and revenue. NCTD has experienced increased ridership in fiscal year 2014 as a result of marketing

efforts, lower unemployment, and average fuel prices of over $3.50 per gallon, as well as improved

sales tax revenues which allow for stable fare prices, and increased service levels. In total, ridership

increased 3.7% from fiscal year 2013 to 2014 surpassing 12 million boardings for the third consecutive

year, and resulted in the highest annual system-wide ridership in NCTD history.

Local assistance, Transportation Development Act (TDA) and TransNet funding appears to have

stabilized and are trending upward as a result of improved economic conditions, albeit well below

funding levels anticipated in the fiscal year 2007 projections.

Financial Health

In fiscal year 2009, NCTD projected annual operating deficits as funding streams diminished and

operating costs projections were on the rise. At that time, BREEZE operating cost per revenue mile

was projected to escalate to $10.36 by fiscal year 2014. In response, NCTD made proactive changes to


Page 8

maintain transit services and related jobs, including reducing staff, renegotiating and restructuring

contracts, and signing innovative bus and paratransit contracts. These changes helped close a

significant budget shortfall and lowered the future operating costs for delivering service. Actual

BREEZE operating cost per revenue mile for fiscal year 2014 was $7.63. This represents a level of cost

containment below the fiscal year 2009 projections as a result of improved operational efficiencies

from contracting for operations and maintenance of the BREEZE bus system.

Long-Term Financial Planning

Forecasting is challenging and is difficult due to continued economic uncertainty; as a result, history

and previous experiences may not be good indicators for the future. There are multiple factors

affecting the economy such as:

Change in consumer consumption trends as debt is paid off

Savings of personal income

Reduction of spending equity

Tight credit markets

Economic uncertainty due to global debt and insolvent countries

NCTD’s Grant Revenue Forecasts are primarily based on SANDAG’s estimates for TDA and, TransNet

revenues. The Federal Register provides the apportionments for the federal programs and is subject to

legislation. The State Controller’s Office is responsible for providing the estimates in January for each

year. Operating Grant Revenues account for 66% and 64% of the Operating Revenues plus Operating

Grants total for fiscal year 2014 and fiscal year 2013 respectively; therefore, NCTD’s financial health is

dependent on economic and political conditions that affect these revenue sources.

Our Long-Term Financial Planning is based on Mid-Range Grant Revenue Forecasts. The Transnet

forecast is based on the San Diego Association of Government’s (SANDAG) forecast procedure providing

a midpoint estimate with a ninety five percent (95%) confidence level. The TDA forecast is based on

the Transnet forecast because TDA is about one-half the Transnet funding. The high and low ranges are

determined by beginning with the prior year midpoint, applying the estimated growth rate for the

current year, and then adding and subtracting the confidence interval range from the midpoint. For

State Transportation Act, Federal and other State and Local funding, mid-point ranges are used. In

addition to evaluating the Mid-Range and High-Range Grant Revenue Forecasts, NCTD performs

sensitivity analysis using Low-Range Grant Revenue Forecasts in order to have contingency plans to

address expense structure and service levels should these conditions occur. NCTD is now on solid

financial ground with balanced budget forecasts for the next five years.

Major Initiatives

In fiscal year 2014, NCTD worked to increase efficiency and revenues to continue to mitigate the

effects of a relatively weak economy. NCTD focused on increasing ridership through additional

marketing, college ridership programs, and other activities. NCTD completed the rollout of the

Mobility Plan which began in fiscal year 2012 that targets improved efficiencies on the fixed route

system, and enhanced connectivity between bus and rail services. NCTD’s near-term strategy is to

improve BREEZE service on the most heavily traveled routes through faster and more frequent service,

resulting in less customer travel and waiting time.


Page 9

In fiscal year 2014, NCTD continued implementation of positive train control (PTC) initiatives in its

service area on the Los Angeles-San Diego-San Luis Obispo (LOSSAN) corridor. PTC is a proactive,

automated system for preventing train collisions and other hazards. NCTD is on track to finish project

implementation and submission to the Federal Railroad Administration (FRA) prior to December 2015,

the legally mandated deadline.

Also in fiscal year 2014, NCTD and SANDAG continued joint work on numerous projects on the LOSSAN

corridor, including replacing railroad bridges, installing new track, realigning track, and making other

improvements. One specific project that was completed during fiscal year 2014 was the San Luis Rey

Transit Center adding connectivity to bus and rail services. All of these projects will help to expand

and integrate service, enhance connections, and improve the customer experience.

Management’s Discussion and Analysis

The Financial Section includes the independent auditor’s report, management's discussion and analysis,

audited basic financial statements and accompanying notes, and required supplementary information.

We express our appreciation to the dedicated NCTD employees who assisted in the preparation of this

report as well as our independent auditors who helped prepare and reviewed this report. We extend

special appreciation to the Board of Directors for its support of our efforts to provide excellent

operational and financial management of NCTD.

Respectfully submitted,

Matthew O. Tucker Ryan Bailey

Executive Director Chief Financial Officer


Page 10

Board of Directors

Supervisor Bill Horn

County of San Diego

1600 Pacific Hwy

San Diego, CA 92101

[email protected]

(619) 531-5555

Mayor Pro Tem Mark Packard

City of Carlsbad

1200 Carlsbad Village Drive

Carlsbad, CA 92008

[email protected]

(760) 434-2830

Council Member Don Mosier

City of Del Mar

1050 Camino Del Mar

Del Mar, CA 92014

[email protected]

(858) 755-9313

Council Member Tony Kranz

City of Encinitas

505 So. Vulcan Ave.

Encinitas, CA 92024

[email protected]

(760) 633-2618

Council Member Ed Gallo

City of Escondido

201 N. Broadway

Escondido, CA 92025

[email protected]

(760) 839-4638

Deputy Mayor Chuck Lowery

City of Oceanside

300 N. Coast Highway

Oceanside, CA 92054

[email protected]

(760) 435-3085

Vice Mayor Rebecca Jones

City of San Marcos

1 Civic Center Drive

San Marcos, CA 92069

[email protected]

(760) 744-1050 ext. 3105

Council Member Mike Nichols

City of Solana Beach

635 South Highway 101

Solana Beach, CA 92075

[email protected]

(858) 720-2431

Deputy Mayor John Aguilera

City of Vista

200 Civic Center Drive

Vista, CA 92084

[email protected]

(760) 639-6130

mailto:[email protected]









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Organizational Chart-


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Certificate of Achievement

The Government Finance Officers Association

of the United States and Canada (GFOA)

awarded a Certificate of Achievement for

Excellence in Financial Reporting to the North

County Transit District for its comprehensive

annual financial report for the fiscal year

ended June 30, 2013. In order to be awarded

a Certificate of Achievement, a government

must publish an easily readable and

efficiently organized comprehensive annual

financial report. This report must satisfy

both generally accepted accounting principles

and applicable legal requirements.

A Certificate of Achievement is valid for a

period of one year only. We believe that our

current comprehensive annual financial

report continues to meet the Certificate of

Achievement Program’s requirements, and we

are submitting it to the GFOA to determine its

eligibility for another certificate.

Acknowledgements

Special thanks to the team of NCTD employees who have assisted in preparing this Comprehensive

Annual Financial Report. We thank them for their hard work, and commend them for their

professionalism.

Sincerely,

Ryan Bailey

Chief Financial Officer


Page 13

Service Area Map

NCTD provides public transit in North San Diego County, from the Pacific Ocean east to Ramona, and

from the Orange County border south to Del Mar, with connections extending to downtown San Diego.

The approximate Service Area for the cities and areas served is about 595 square miles.


Page 14

Service and Activities

Background The North San Diego County Transit Development Board (NSDCTDB)

was created by California Senate Bill 802 on September 20, 1975

and was renamed the North County Transit District (NCTD) in

January 2006. NCTD was created to plan, construct, and operate,

directly, or through a contractor, public transit systems in its area

of jurisdiction. On January 1, 2003, a state law was enacted (SB

1703) that essentially transferred future transit planning,

programming, development and construction to the San Diego

Association of Governments (SANDAG), San Diego County’s Regional

Planning Agency. NCTD operates the BREEZE, FLEX, LIFT, the

COASTER commuter rail service and the SPRINTER light rail service.

In its current role, NCTD provides integrated public transit service

within the North San Diego County region.

Services NCTD provides bus, van and train service for people in the northern half of San Diego County – from the

rural areas of Fallbrook and Ramona and the Camp Pendleton Marine Corps Base, to the cities of

Carlsbad, Del Mar, Encinitas, Escondido, Oceanside, San Marcos, Solana Beach, and Vista, as well as

unincorporated parts of the county. The total population of NCTD’s 595 square mile service area is

estimated to be 849,000.

BREEZE bus service operates throughout the area, as does ADA paratransit service known as LIFT. The

COASTER commuter rail service operates along the coastal rail line serving the coastal communities

between Oceanside and San Diego. The SPRINTER light rail service operates between Escondido and

Oceanside with stops in San Marcos and Vista.

NCTD provides BREEZE bus service to many shopping malls, beaches, major attractions and employment

centers throughout North County, such as Legoland in Carlsbad, the San Diego Wild Animal Park near

Escondido, and the Marine Corps Base at Camp Pendleton.

NCTD provides connecting service to other transit agencies including: Orange County Transportation

Authority in San Clemente; Metropolitan Transit Service (MTS) in San Diego via the Trolley and MTS’

Rapid Transit Bus in Escondido; Riverside Transit Association (RTA) buses; Metrolink commuter rail

service and Amtrak trains connect at Oceanside Transit Center; Amtrak also connects in Solana Beach

and San Diego; Greyhound buses connect at Oceanside as well as the Escondido Transit Center. NCTD

BREEZE buses, COASTER and SPRINTER trains, and LIFT paratransit vehicles also connect at transit

centers throughout the region.


Page 15

Fixed Route Bus Service – BREEZE

Since 1976, NCTD has provided safe and efficient bus service to nearly 349 million passengers. The

BREEZE currently operates 33 routes in the North County service area, from early morning to late at

night – seven days a week. Of the current fleet of 164 buses, 120 of the newest vehicles are cost-

efficient environmentally friendly Compressed Natural Gas (CNG) models. CNG buses require more

maintenance checks than diesel buses, but the environmental benefits are significant.

All of the buses in the fleet are equipped with bicycle racks giving passengers the ability to bike and

ride to their destinations. All NCTD BREEZE buses are accessible with low floors, ramps, or wheelchair

lifts to assist the elderly and those passengers with disabilities to board and ride with ease.

NCTD introduced various Day Passes in 2004, 2007, and 2009 which allow unlimited rides and eliminate

confusing transfers. Additionally, new fareboxes were installed on all buses which allow passengers to

use a regional “smartcard” known as the Compass card for seamless travel throughout San Diego

County on all public transportation.

As of June 30, 2010, NCTD operated and maintained the bus operations. Effective July 1, 2010, NCTD

executed a contract with First Transit to assume responsibility for bus operations and maintenance.


Page 16

ADA Paratransit Service – LIFT

All NCTD vehicles - the buses, the vans, and the trains - are equipped with ramps, low floors, or lifts to

make boarding and riding the vehicles easy for everyone. Passengers, who because of their disability

are unable to access fixed route service, can travel on LIFT throughout NCTD’s service area and

connect with neighboring transit services. Throughout NCTD’s service area, paratransit service operates

using lift-equipped vans. The lifts can be used to assist standing passengers who need assistance

boarding, as well as those using wheelchairs and other mobility aids.

Passengers who receive an ADA certification may call and schedule a ride from the curbside nearest

their home, to the curbside nearest to their destination. This service also connects with bus or train

service at the transit centers.


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Commuter Rail Service – COASTER

The COASTER provides commuter rail service seven days a week, north and south along the San Diego

County coast between Oceanside and San Diego. Added in April 2011, regular Sunday service was highly

received and became permanent in fiscal year 2012. COASTER trains, including special trains for

Sunday events, also run for every Padres and select Chargers home games. Trip time is about one

hour. Eight stations provide service points along the route, and connections can be made to the MTS

trolley and buses at San Diego’s Old Town and Santa Fe stations. Passengers can connect with

Metrolink and Amtrak train service north to Orange County and Los Angeles at NCTD’s northernmost

stop on the railroad, the Oceanside Transit Center. Currently, the COASTER service is provided by

seven locomotives and 28 bi-level passenger coaches. TransitAmerica Services, Inc. is the contract

operator responsible for maintaining and operating the trains. During fiscal year 2014, NCTD entered

into an agreement with Amtrak to allow COASTER-ticketed passengers to ride six select Amtrak trains

at no additional charge. This agreement increased the number of trains available to riders throughout

the day and accounted for over 56,000 passenger rides on Amtrak trains during the year. The COASTER

carried a total of 1.7 million passengers in fiscal year 2014 comprised primarily of workers, tourists,

and baseball and football fans commuting along the 41 miles of track.


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Light Rail Service – SPRINTER

The SPRINTER light rail line is NCTD’s newest transit mode with operations beginning in March 2008.

The European-style light rail vehicles run on 22 miles of rail that provides an east-west mobility link

between Escondido, San Marcos, Vista and Oceanside. The SPRINTER features short convenient trips to

15 stations, averaging 3-5 minutes between stations, and a 53 minute travel time from end to end.

Each train has a maximum capacity of 226 passengers and two can be linked together to offer a

capacity of more than 450 passengers. Passenger service runs seven days a week from approximately

4:00am to 9:30pm with weekend service extended to 12:30am. Weekday service runs every 30 minutes

and weekend trains run 30 minute frequencies during peak travel times from 10:00am to 6:00pm.

The SPRINTER offers easy connections to the COASTER commuter rail, BREEZE bus service, Amtrak,

Metrolink, Greyhound and a future Bus Rapid Transit project planned in Escondido. The operations and

maintenance of the trains is contracted out to Veolia Transportation.

The SPRINTER carried a total of 2.5 million passengers in fiscal year 2014 comprised primarily of

workers, students and tourists.


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Activities

Coach Operators and Vehicle Maintenance Personnel NCTD’s BREEZE bus service has more than 300 coach operators under the First Transit contract. They

receive their initial training and licensing, renewal licensing, specialty training, and continuous

dispatch assistance while operating the buses. The 32 mechanics that work for First Transit also are

licensed to drive the buses. Beginning July 1, 2010, NCTD contracted out the responsibility for bus

operations and maintenance to First Transit. Beginning July 1, 2011, NCTD transitioned the facility and

vehicle maintenance to First Transit.

Vehicle Maintenance - Trains NCTD contracts with TransitAmerica Services, Inc. for maintaining and operating seven locomotives and

28 coach cars. TransitAmerica Services, Inc. maintains COASTER rail equipment at NCTD’s Stuart Mesa

facility located on Camp Pendleton Marine Corps Base. This facility houses massive and specialized

equipment, primarily booms, cranes and lifts to assist with replacement of heavy parts. Dedicated

contract mechanics and service workers perform daily train-washing and exterior and interior

maintenance and repair. Specialty equipment is used to maintain the railroad right of way including,

but not limited to clearing vegetation away from the tracks, and replacing rail ties.

The 40,000 square foot SPRINTER operations facility is located in Escondido and was constructed

specifically to house the operations center and to maintain the 12 SPRINTER trains. The operations area

is home of the train control center and security monitoring center for the entire SPRINTER line as well

as storage, training rooms, lockers, and office areas for SPRINTER employees. The maintenance area

can house up to four train sets. Two structurally supported tracks allow maintenance crews access

underneath and on top of trains to fully service the vehicles via pits, suspended platforms and

overhead bridge cranes. The pits are fully functional with integrated electrical service, compressed air

and lube oil systems.

Rail Maintenance of Way NCTD owns the main north-

south line between the Orange

County border and the northern

border of the City of San Diego,

which is 41 miles of track. San

Diego Metropolitan Transit

System (SDMTS) owns the north-

south line from the northern

border of the City of San Diego

to downtown San Diego, which

is 21 miles of track. NCTD also

owns the east-west line

between Escondido and

Oceanside, which is 22 miles of

track. Collectively, these lines

are known as the San Diego

Northern Railway.


Page 20

The COASTER operates on the north-south line, and the SPRINTER operates on the east-west line.

NCTD maintains both lines including the SDMTS portion.

In addition to maintaining the track, NCTD is responsible for numerous railroad bridges along the coast,

the railroad bed, sidings, grade crossings, turnouts, culverts and signals, land alongside the track as

well as commercial property located within the right-of-way. Track maintenance equipment and

personnel are housed in a facility located in Eastern Oceanside.

Vehicle Maintenance - Buses NCTD contracts with First Transit to operate and maintain its 164 buses and numerous other transit

support vehicles. To maintain this fleet, mechanics work 24 hours a day, seven days a week at two

locations. These bus yards include CNG (Compressed Natural Gas) fueling, maintenance and

administration buildings, and parking areas for buses, service vehicles, and bus operators’ vehicles.

Inside the maintenance buildings there are bus repair bays, pits for general servicing, bus lifts, hoists,

fork lifts, engine repair benches, a body shop, a parts inventory storeroom, and a paint shop.

Maintenance continues around the clock to keep the

buses in excellent condition and keep road calls and

service interruptions to a minimum. In addition to

servicing and repairing the bus fleet, the maintenance

crews also maintain a fleet of service vehicles,

administrative automobiles, fork lifts, ride-on

sweepers, and special vehicles that can operate on

the railroad.

Facilities Maintenance NCTD has contracted facility maintenance direction

and supervision to First Transit, with oversight

provided by NCTD staff. NCTD has two main administration buildings in Oceanside, two bus

maintenance buildings located in Oceanside and Escondido, three bus transit centers, eight multi-

modal train stations along the coastal railroad, 15 train stations along the inland railroad, two train

maintenance facilities, two CNG fill stations, two bus washers, and all the adjacent land and parking

lots. Facilities maintenance crews maintain, clean and repair most of the facilities using specialized

equipment like ride-on sweepers and portable boom trucks. These crews keep the maintenance

buildings in excellent condition, considering that buses and trains regularly arrive for repairs and

routine maintenance and are subject to substantial amounts of dirt, dust and salt air, in addition to

weather changes, during a single day. Facility maintenance crews contract and supervise major

maintenance projects such as roof replacements, parking lot paving and striping, bus shelter

replacements and repairs, heating and air-conditioning repair and replacement, as well as painting and

repair of the administration buildings.


Page 21

Security

Security at the train stations, the parking lots, and the bus transfer

centers is provided by a security patrol under contract. Video security

cameras at the COASTER and SPRINTER stations are monitored by

NCTD’s Transit Enforcement and Emergency Oversight staff who contact

the security patrol or the Sheriff in case of incidents.

Management and Oversight The management of NCTD is comprised of the Chief Executive Officer

supported by the nine divisional chiefs that oversee each of the

functional divisions. These divisions include Operations, Safety,

Development Services, Transit Enforcement, Finance, Procurement and

Contracts Administration, Planning, Information Technology and

Administrative Services.

The CEO supports the Board of Directors’ policies and manages the

inter-governmental affairs and manages the office of the General Counsel.

General Counsel reports directly to the Board of Directors. Day to day functions are under the

direction of the CEO. The office of the General Counsel also oversees civil rights, compliance risk

management functions.

Operations manage all the modes’ operational services and contractors that provide services including

purchased transportation.

Safety oversees preparedness, including safety policy and investigating incidents.

Development Services manages the engineering, facilities and maintenance of the rail as well as PTC

(positive train control) construction.

Transit Enforcement is responsible for providing security services for customers, operators and staff.

Finance manages the accounting, budget and fare collections and grants for NCTD that includes various

internal and compliance reporting in addition to audits.

Information Technology supports the various computer technology demands for NCTD that includes not

only the administration, but the operational equipment required to operate the transportation

services.

Procurement and Contracts Administration supports the agency in obtaining goods and services in

accordance with federal, state, local and internal compliance standards.

Planning is responsible for the planning, design, scheduling and monitoring of NCTD’s transit service. Planning is also responsible for coordination with SANDAG and other local governments to promote transit service, determine locations for bus stops, design transit oriented development (TOD), and facilitate capital project planning and permitting. The Planning Division supports the Operations and

Development Services Divisions.

Administrative Services include communications, marketing, customer service and administration.


Page 22

Financial Section


Page 23

Independent Auditors’ Report-


Page 24


Page 25

Management’s Discussion and Analysis

June 30, 2014 and 2013

Introduction

The following discussion and analysis of the financial performance and activity of the North County

Transit District (NCTD) provides an introduction and understanding of the basic financial statements of

NCTD. This discussion has been prepared by management and should be read in conjunction with the

basic financial statements and the notes thereto, which follow this section.

The North San Diego County Transit Development Board (NSDCTDB) was established by an act of the

California State Legislature (Senate Bill 802) on September 20, 1975 to plan, construct and operate

public transit systems in the northern region of San Diego County. The NSDCTDB acquired the municipal

transit systems operated by the cities of Escondido and Oceanside. NSDCTDB was renamed as the NCTD

in January 2006 and commenced operations in July 1976 by providing bus services to the region.

In 1992, NCTD was designated by the San Diego Association of Governments (SANDAG) as the lead

agency for providing commuter rail service in San Diego County. NCTD receives funding from various

state sources to construct and improve the coastal rail corridor from Oceanside to San Diego as part of

the Los Angeles – San Diego – San Luis Obispo Rail Corridor (LOSSAN) joint powers agreement. Rail

services between Oceanside and San Diego (called the COASTER) began in February 1995.

On January 1, 2003, Senate Bill 1703 essentially transferred future transit planning, programming,

development, and construction to the SANDAG, San Diego County’s regional planning agency.

In 2003, NCTD began the construction of a light rail system between Escondido and Oceanside (called

the SPRINTER). The SPRINTER project consisted of reconstructing 22 miles of railroad in the existing

east-west corridor. The SPRINTER light rail service commenced operations in March 2008 and serves 15

transit stations with interconnecting bus stops.


Page 26

The Financial Statements

NCTD’s basic financial statements include the following:

1. The Statements of Net Position report NCTD’s assets, deferred outflows of resources,

liabilities, and deferred inflows of resources, with the difference reported as net position.

Total net position is displayed in three components – (a) net investment in capital assets; (b)

restricted; and (c) unrestricted.

2. The Statements of Revenues, Expenses, and Changes in Net Position present information to

show changes in NCTD’s net position during the fiscal year. The Statements categorize

revenues and expenses as either operating or nonoperating, based upon the definitions

provided by GASB Statements No. 33 and No. 34.

3. The Statements of Cash Flows are presented using the direct method and include a

reconciliation of operating cash flows to operating income.


Page 27

Statements of Net Position

Below is a comparison of NCTD’s Statements of Net Position as of June 30, 2014 and June 30, 2013:

In fiscal year 2014, current assets increased $3.9 million or 4% and current liabilities increased $1.3

million or 2% as compared to FY 2013. The primary increase in current assets was due to Cash and

Investments increasing $17.7 million and grants receivable decreasing $12.6 million. The increase in

cash of was primarily due to the collection of grants receivable from fiscal year 2013 and an increase in

accounts payable during fiscal year 2014. The decrease in grants receivable was primarily due to the

collection of fiscal year 2013 amounts as well as lower grant billings during fiscal year 2013 as

compared to fiscal year 2014.

Capital assets decreased $35.4 million primarily as a result of the annual depreciation of $61.7 million

and asset additions of $26.8 million. The annual depreciation is $396,162 higher than 2013 ($61.3

million) due to new assets placed into service. (Refer to Note 5 of the audited financial statements for

additional information on capital assets).

Current liabilities increased $1.3 million or 2% due to an increase in accounts payable and accrued

liabilities of $4.7 million and a decrease in unearned grant revenue of $3.0 million. Other noncurrent

liabilities decreased $631,924 or 7% due mostly to a decrease in claims payable. The increase in

accounts payable and accrued liabilities was due to receiving more invoices toward the end of the

fiscal year that remained unpaid as of June 30, 2014. The decrease in unearned grant revenue was due

Increase/(Decrease)

2014 2013* Amount %

Current assets 114,057,360$ 110,180,194$ 3,877,166$ 4%

Capital assets 557,184,591 592,571,245 (35,386,654) (6%)

Total assets 671,241,951 702,751,439 (31,509,488) (4%)

4,584,903 4,648,880 (63,977) (1%)

Current liabilities 65,137,993 63,844,549 1,293,444 2%

Long-term debt 29,350,000 30,575,000 (1,225,000) (4%)

Other noncurrent liabilities 8,596,042 9,227,966 (631,924) (7%)

Total liablilities 103,084,035 103,647,515 (563,480) (1%)

Net position:

Net investment in capital assets 529,424,444 563,577,429 (34,152,985) (6%)

Restricted 50,495 50,495 - 0%

Unrestricted 43,267,880 40,124,880 3,143,000 8%

Total net position 572,742,819$ 603,752,804$ (31,009,985)$ (5%)

Deferred outflows of resources

*Total assets and total net position have been restated from amounts previously reported due to the implementation of

GASB Statement No. 65.


Page 28

Statements of Net Position (Continued)

to recognizing as income during fiscal year 2014 a portion of the prior years’ unearned operating grant

revenue.

Below is a comparison of NCTD’s Statements of Net Position as of June 30, 2013 and June 30, 2012:

In fiscal year 2013, current assets increased $9.3 million or 9% and current liabilities increased $5.0

million or 9% as compared to FY 2012. The primary increase in current assets was due to grants

receivable increasing $17.2 million and cash and investments decreasing $10.4 million. Grants

receivable increased as a result of the Federal Transit Administration grant receivable increasing $3.1

million, Unbilled Grants Receivable increasing $9.4 million and the California Transportation

Commission funds and other grants receivable increasing $4.7 million.

Capital assets decreased $19.1 million as a result of the annual depreciation of $61.3 million and asset

additions of $42.2 million. The annual depreciation is $2.4 million higher than 2012 ($58.9 million) due

to new assets placed into service. (Refer to Note 5 of the audited financial statements for additional

information on capital assets).

Deferred outflows of resources decreased $2.5 million or 35% during the fiscal year due to the fair

value decrease of the interest rate swap from fiscal year 2012 to 2013.

Increase/(Decrease)

2013* 2012* Amount %

Current assets 110,180,194$ 100,865,084$ 9,315,110$ 9%

Capital assets 592,571,245 611,675,011 (19,103,766) (3%)

Total assets 702,751,439 712,540,095 (9,788,656) (1%)

4,648,880 7,191,602 (2,542,722) (35%)

Current liabilities 63,844,549 58,811,896 5,032,653 9%

Long-term debt 30,575,000 31,775,000 (1,200,000) (4%)

Other noncurrent liabilities 9,227,966 12,089,581 (2,861,615) (24%)

Total liablilities 103,647,515 102,676,477 971,038 1%

Net position:

Net investment in capital assets 563,577,429 581,520,592 (17,943,163) (3%)

Restricted 50,495 50,495 - 0%

Unrestricted 40,124,880 35,484,133 4,640,747 13%

Total net position 603,752,804$ 617,055,220$ (13,302,416)$ (2%)

Deferred outflows of resources

*Total assets and total net position have been restated from amounts previously reported due to the

implementation of GASB Statement No. 65.


Page 29

Statements of Net Position (Continued)

Current liabilities increased $5.0 million or 9% due to an increase in accounts payable and accrued

liabilities of $3.8 million and an increase in unearned grant revenue of $1.6 million. Noncurrent

liabilities decreased $2.9 million or 24% due to a decrease in long-term claims payable.

Net Capital Assets

During fiscal year 2014, the amount of net capital assets decreased $35.4 million. Below is a more

detailed analysis of the changes in NCTD’s capital assets and accumulated depreciation during the year

ended June 30, 2014:

Additional information on NCTD’s capital assets can be found in Note 5 of the notes to basic financial

statements.

Below are some of the significant items affecting the decrease in Net Capital Assets during fiscal year

2014:

Land increased $1 million due to purchase of land in Escondido adjacent to the current bus yard.

Right-of-way and improvements increased $1.1 million due to bridge and signal replacements occurring

on the LOSSAN corridor.

Revenue and service vehicles increased $2.5 million primarily due to the acquisition of 43 new

vans/buses for LIFT and FLEX services ($2.3 million).

Equipment increased $2.7 million due to the purchase of data processing equipment for $4.3 million

and disposals of old data processing equipment for $2.2 million.

Construction in progress increased $13.3 million due to the ongoing work for the Positive Train Control

(PTC) project.

Depreciation of $61.7 million is primarily due to the SPRINTER light rail project depreciation. There

was a reduction in total accumulated depreciation of $6.5 million due to the disposals of capital assets.

Increase/(Decrease)

2014 2013 Amount %

Land 92,851,021$ 91,849,014$ 1,002,007$ 1%

Land improvements 56,124,900 56,703,266 (578,366) (1%)

Buildings, structures and improvements 151,272,248 151,490,297 (218,049) (0%)

Right-of-way and improvements 373,650,452 372,571,109 1,079,343 0%

Revenue and service vehicles 182,605,375 180,139,853 2,465,522 1%

Equipment 137,500,835 134,798,231 2,702,604 2%

Construction-in-progress 75,975,176 62,674,204 13,300,972 21%

Total 1,069,980,007 1,050,225,974 19,754,033 2%

Less: accumulated depreciation 512,799,416 457,654,729 55,144,687 12%

Net Capital Assets 557,180,591$ 592,571,245$ (35,390,654)$ (6%)


Page 30

Net Capital Assets (Continued)

During fiscal year 2013, the amount of net capital assets decreased $19.1 million. Below is a more

detailed analysis of the changes in NCTD’s capital assets and accumulated depreciation during the year

ended June 30, 2013:

Increase/(Decrease)

2013 2012 Amount %

Land 91,849,014$ 91,849,014$ -$ 0%

Land improvements 56,703,266 56,703,266 - 0%

Buildings, structures and improvements 151,490,297 150,760,853 729,444 0%

Right-of-way and improvements 372,571,109 370,661,946 1,909,163 1%

Revenue and service vehicles 180,139,853 168,559,855 11,579,998 7%

Equipment 134,798,231 131,021,797 3,776,434 3%

Construction-in-progress 62,674,204 42,788,494 19,885,710 46%

Total 1,050,225,974 1,012,345,225 37,880,749 4%

Less: accumulated depreciation 457,654,729 400,670,214 56,984,515 14%

Net Capital Assets 592,571,245$ 611,675,011$ (19,103,766)$ (3%)


Page 31

Net Capital Assets (Continued)

Additional information on NCTD’s capital assets can be found in Note 5 of the notes to basic financial

statements.

Below are some of the significant items affecting the decrease in Net Capital Assets during fiscal year

2013:

Depreciation of $61.3 million is primarily due to the SPRINTER light rail project depreciation. There

was a reduction in total accumulated depreciation of $4.3 million due to the disposals of capital assets.

Right-of-way and improvements increased $1.9 million primarily due to the new bridge located South of

San Clemente known as, “Trestles” ($1.2 million) and track work at South Santa Fe Crossing ($0.5

million).

Revenue and service vehicles increased $11.6 million primarily due to the acquisition of 30 new 40 foot

buses ($13.8 million), 18 new service vehicles ($0.5 million), new SPRINTER brakes ($0.3 million) and

new air conditioning units for SPRINTER ($0.9 million). A total of 17 buses were disposed of for a credit

of $4.1 million.

Equipment increased $3.8 million primarily due to the purchase of signals at South Santa Fe Crossing

($2 million and server and software upgrades ($1.4 million).

Construction in progress increased $19.8 million due to the ongoing work for the Positive Train Control

(PTC) project ($19.8 million).


Page 32

Statements of Revenue, Expenses, and Change in Net Position

Below is a summary of NCTD’s Statements of Revenues, Expenses, and Changes in Net Position for the

fiscal years 2014 and 2013:

The fiscal year 2014 decrease in net position was $17.7 million more than the decrease in net position

for fiscal year 2013. This decrease is due to the recognition of $15.6 million less in Capital Grants

(capital contributions) in fiscal year 2014 as compared to fiscal year 2013. The change in net position

for fiscal year 2014 was $31.0 million compared to a decrease of $13.3 million for fiscal year 2013. The

decrease in net position for fiscal years 2014 and 2013 are primarily due to a reduction in capital assets

as a result of depreciation primarily associated with the SPRINTER rail project.

Change-Favorable/(Unfavorable)

2014 2013* Amount %

Operating revenues 31,820,874$ 32,483,870$ (662,996)$ (2%)

Operating expenses (149,466,935) (144,480,406) (4,986,529) 3%

Operating loss (117,646,061) (111,996,536) (5,649,525) 5%

Nonoperating revenues/expenses net 60,058,623 56,531,272 3,527,351 6%

Capital grants 26,577,453 42,162,848 (15,585,395) (37%)

Change in net position (31,009,985) (13,302,416) (17,707,569) 133%

Net position

Beginning of Year 603,752,804 617,055,220 (13,302,416) (2%)

End of Year 572,742,819$ 603,752,804$ (31,009,985)$ (5%)

*Total operating expenses and decrease in net position have been restated from amounts previously reported due to the implementation of GASB

Statement No. 65.


Page 33

Statements of Revenue, Expenses, and Change in Net Position (Continued)

Below is a summary of NCTD’s Statements of Revenues, Expenses, and Changes in Net Position for the

fiscal years 2013 and 2012:

The fiscal year 2013 decrease in net position was comparable to the decrease in net position for fiscal

year 2012. The decrease for fiscal year 2012 was $18.1 million compared to a decrease of $13.3 million

for fiscal year 2013. The decrease in net position for fiscal years 2013 and 2012 are primarily due to a

reduction in capital assets as a result of depreciation primarily associated with the SPRINTER rail

project.

Change-Favorable/(Unfavorable)

2013* 2012* Amount %

Operating revenues 32,483,870$ 31,299,824$ 1,184,046$ 4%

Operating expenses (144,480,406) (138,496,762) (5,983,644) 4%

Operating loss (111,996,536) (107,196,938) (4,799,598) 4%

Nonoperating revenues/expenses net 56,531,272 56,256,088 275,184 0%

Capital grants 42,162,848 32,833,405 9,329,443 28%

Change in net position (13,302,416) (18,107,445) 4,805,029 (27%)

Net position

Beginning of Year 598,947,775 617,055,220 (18,107,445) (3%)

End of Year 585,645,359$ 598,947,775$ (13,302,416)$ (2%)

*Total operating expenses and decrease in net position have been restated from amounts previously reported due to the implementation of GASB

Statement No. 65.


Page 34

Operating Revenue

As shown in the fiscal year 2014 Statements of Revenue, Expenses, and Change in Net Position, NCTD’s

operating revenues were comparable from fiscal year 2013 to 2014. Below is a more detailed

breakdown of NCTD’s operating revenues:

Fare revenues have increased $364,108 or 2% primarily due to a 3.7% increase in boardings.

Advertising and right-of-way revenues decreased $454,032 or 5% primarily due to the expiration of

commuter rail advertising contracts that were not replaced.

Other revenues decreased $460,564 or 21% primarily due to a one-time payment received in fiscal year

2013 related to the light rail operations, offset by an increase in alternative fuels tax credits in fiscal

year 2014.

Increase/(Decrease)

2014 2013 Amount %

Fare revenue 19,274,834$ 18,910,726$ 364,108$ 2%

Advertising and right-of-way 9,347,259 9,801,291 (454,032) (5%)

Lease and sublease revenue 1,476,319 1,588,827 (112,508) (7%)

Other revenue 1,722,462 2,183,026 (460,564) (21%)

Total operating revenues 31,820,874$ 32,483,870$ (662,996)$ (2%)


Page 35

Operating Revenue (Continued)

As shown in the fiscal year 2013 Statements of Revenue, Expenses, and Change in Net Position, NCTD’s

operating revenues were comparable from fiscal year 2012 to 2013. Below is a more detailed

breakdown of the District’s operating revenues:

Fare revenues have increased $740,968 or 4% primarily due to a 3.6% increase in boardings.

Increase/(Decrease)

2013 2012 Amount %

Fare revenue 18,910,726$ 18,169,758$ 740,968$ 4%

Advertising and right-of-way 9,801,291 9,158,236 643,055 7%

Lease and sublease revenue 1,588,827 1,483,540 105,287 7%

Other revenue 2,183,026 2,488,290 (305,264) (12%)

Total operating revenues 32,483,870$ 31,299,824$ 1,184,046$ 4%


Page 36

Operating Expenses

During fiscal year 2014 NCTD’s operating expenses increased to $149.5 million from $144.5 million in

fiscal year 2013. Below is a breakdown of NCTD’s operating expenses:

As shown in the table above, operating expenses increased by $5.0 million during fiscal year 2014.

Among the significant issues affecting operating expenses were:

Vehicle operations decreased $1.5 million or 4% primarily due to a decrease in purchased

transportation of $1.5 million as related to vehicle operations for BREEZE due to an increased

allocation for vehicle maintenance from the purchased transportation provider.

Vehicle maintenance increased by $3.0 million or 32% primarily due to an increase in the

allocation of maintenance cost for BREEZE from the purchased transportation provider.

Non-vehicle maintenance increased $1.2 million or 15% primarily due to an increase in

maintenance of facilities and the equipment used to collect fares such as ticket vending

machines and ticket office terminals.

Right-of-way operations increased $1.4 million or 33% due primarily to an increase in

professional services for security on the right of way ($0.5 million) and for dispatching services

($0.4 million).

Depreciation increased $396,162 as a result of the addition of new buses, bridge and signal

equipment and data processing equipment.

Increase/(Decrease)

2014 2013 Amount %

Vehicle operations 39,313,456$ 40,811,588$ (1,498,132)$ (4%)

Vehicle maintenance 12,458,342 9,446,107 3,012,235 32%

Non-vehicle maintenance 9,471,138 8,219,859 1,251,279 15%

Administration 20,961,917 20,530,599 431,318 2%

Right-of-way operations 5,599,239 4,205,572 1,393,667 33%

Depreciation 61,662,843 61,266,681 396,162 1%

Total operating expenses 149,466,935$ 144,480,406$ 4,986,529$ 3%


Page 37

Operating Expenses (Continued)

During fiscal year 2013 NCTD’s operating expenses increased to $144.5 million from $138.5 million in

fiscal year 2012. Below is a breakdown of NCTD’s operating expenses:

As shown in the table above, operating expenses increased by $6.0 million during fiscal year 2013.

Among the significant issues affecting operating expenses were:

Vehicle operations increased $3.6 million or 10% primarily due to an increase in purchased

transportation of $3.6 million as related to vehicle operations. This increase in purchased

transportation was due primarily to the increase in revenue miles (service level) of 8%.

Vehicle maintenance decreased by $0.7 million or 7% primarily due to a decrease in purchased

transportation as related to vehicle maintenance.

Non-vehicle maintenance increased $0.4 million or 5% primarily due to an increase in

maintenance of facilities.

Increase/(Decrease)

2013 2012 Amount %

Vehicle operations 40,811,588$ 37,190,774$ 3,620,814$ 10%

Vehicle maintenance 9,446,107 10,152,117 (706,010) (7%)

Non-vehicle maintenance 8,219,859 7,812,517 407,342 5%

Administration 20,530,599 21,038,055 (507,456) (2%)

Right-of-way operations 4,205,572 3,333,768 871,804 26%

Depreciation 61,266,681 58,969,531 2,297,150 4%

Total operating expenses 144,480,406$ 138,496,762$ 5,983,644$ 4%


Page 38

Operating Expenses (Continued)

Right-of-way operations increased $0.8 million or 26% due primarily to an increase in

professional services for security on the right-of-way ($0.2 million) and for dispatching

services ($0.6 million).

Depreciation increased $2.3 million as a result of the addition of new buses and other service

vehicles, signal equipment and server and software upgrades.


Page 39

Restrictions and Commitments

Restrictions on net position were $50,495 as of June 30, 2014 and 2013. As of June 30, 2014, NCTD has

commitments of $36,689,500 for capital and operating projects, which are funded by eligible grant

revenues. Refer to Note 10 to the financial statements for additional information.

Long-Term Debt

NCTD entered into a long-term debt arrangement in 2004 for $114 million which has since been

reduced to $30.6 million. This debt is structured to be paid over the next 21 years. Refer to Note 7 to

the financial statements for additional information.

Contacting NCTD’s Financial Management

NCTD’s financial report is designed to provide NCTD’s Board of Directors, management, legislative and

oversight agencies, citizens, customers and other stakeholders with an overview of the North County

Transit District’s finances and to demonstrate its accountability for funds received.

For additional information about this report, please contact Ryan Bailey, Chief Financial Officer, at 810

Mission Avenue, Oceanside, CA 92054.


Page 40

Basic Financial Statements

The accompanying notes are an integral part of these financial statements

2014 2013

ASSETS

Current assets

Cash and investments 82,831,559$ 65,123,615$

Investments with fiscal agent 2,814,853 2,781,184

Accounts receivable 4,859,923 5,895,779

Grants receivable 19,076,061 31,736,323

Parts and supplies inventory 3,276,721 3,584,444

Prepaid expenses 1,198,243 1,058,849

Total current assets 114,057,360 110,180,194

Noncurrent assets

Capital assets:

Nondepreciable capital assets 168,830,197 154,523,218

Depreciable capital assets, net of accumulated depreciation 388,354,394 438,048,027 Total capital assets 557,184,591 592,571,245

Total assets 671,241,951 702,751,439

Deferred Outflows of Resources

Accumulated decrease in fair value of interest rate swap 4,584,903 4,648,880

LIABILITIES

Current liabilities payable from current assets

Accounts payable 19,601,998 15,325,562

Accrued liabilities 3,162,125 2,755,149

Deposits payable 629,065 733,811

Unearned grant revenue 38,962,667 41,997,341

Certificates of participation - due within one year 1,225,000 1,200,000

Claims payable - due within one year 1,016,276 1,248,919

Compensated absences - due within one year 540,862 583,767

Total current liabilities payable from current assets 65,137,993 63,844,549

Noncurrent liabilities

Certificates of participation - due in more than one year 29,350,000 30,575,000

Claims payable - due in more than one year 2,285,405 2,940,730

Compensated absences - due in more than one year 135,215 145,942

Net other postemployment benefits obligation 1,590,519 1,492,414

Negative fair value of interest rate swap 4,584,903 4,648,880

Total noncurrent liabilities 37,946,042 39,802,966

Total liabilities 103,084,035 103,647,515

NET POSITION

Net investment in capital assets 529,424,444 563,577,429

Restricted for:

Capital projects 50,495 50,495

Unrestricted 43,267,880 40,124,880

Total net position 572,742,819$ 603,752,804$


STATEMENTS OF NET POSITION

JUNE 30, 2014 and 2013


Page 41


2014 2013

OPERATING REVENUES

Fare revenue 19,274,834$ 18,910,726$

Advertising and right-of-way 9,347,259 9,801,291

Lease and sublease revenue 1,476,319 1,588,827

Other revenue 1,722,462 2,183,026

Total operating revenues 31,820,874 32,483,870

OPERATING EXPENSES

Vehicle operations 39,313,456 40,811,588

Vehicle maintenance 12,458,342 9,446,107

Non-vehicle maintenance 9,471,138 8,219,859

Administration 20,961,917 20,530,599

Right-of-way operations 5,599,239 4,205,572

Depreciation 61,662,843 61,266,681

Total operating expenses 149,466,935 144,480,406

Operating loss (117,646,061) (111,996,536)

NONOPERATING REVENUES (EXPENSES)

Operating grants 61,436,279 57,435,201

Investment income 172,035 140,875

Debt related expense (1,071,555) (1,131,984)

Gain/(loss) on disposal of capital assets (478,136) 87,180

Total nonoperating revenues (expenses) 60,058,623 56,531,272

Loss before capital contributions (57,587,438) (55,465,264)

CAPITAL CONTRIBUTIONS

Capital grants 26,577,453 42,162,848

Change in net position (31,009,985) (13,302,416)

NET POSITION

Beginning of year 603,752,804 617,055,220

End of year 572,742,819$ 603,752,804$


STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION

FOR THE YEARS ENDED JUNE 30, 2014 AND 2013


Page 42


2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers and users 32,737,679$ 29,334,859$

Payments to suppliers (70,478,614) (68,385,828)

Payments to employees (13,302,927) (11,086,642)

Net cash (used) by operating activities (51,043,862) (50,137,611)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES

Operating grants received 75,900,381 56,048,331

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Capital grants received 21,536,008 27,928,873

Purchase of capital assets (26,609,519) (42,162,915)

Proceeds from disposal of capital assets 58,123 87,180

Payments on certificates of participation (1,200,000) (1,125,000)

Payment of interest and fees (1,071,555) (1,131,984)

Net cash (used) by capital and related financing activities (7,286,943) (16,403,846)

CASH FLOWS FROM INVESTING ACTIVITIES

Investment income 172,037 140,875

Net increase (decrease) in cash and cash equivalents 17,741,613 (10,352,251)

Cash and cash equivalents

Beginning of year 65,160,049 75,512,300

End of year 82,901,662$ 65,160,049$

RECONCILIATION OF CASH AND CASH EQUIVALENTS

TO THE STATEMENTS OF NET POSITION

Cash and investments 82,831,559 65,123,615


Less investments not meeting the definition of cash and cash equivalents (2,744,750) (2,744,750)

Cash and cash equivalents 82,901,662$ 65,160,049$


STATEMENTS OF CASH FLOWS



Page 43


2014 2013

RECONCILIATION OF OPERATING LOSS TO NET CASH

(USED) BY OPERATING ACTIVITIES

Operating loss (117,646,061)$ (111,996,536)$

Adjustments to reconcile operating loss to net cash

(used) by operating activities:

Depreciation 61,662,843 61,266,681

(Increase) decrease in accounts receivable 1,035,856 (2,718,807)

Decrease in parts and supplies inventory 307,723 40,808

(Increase) decrease in prepaid expenses (139,394) 292,129

Increase in accounts payable 4,276,436 2,342,476

Increase in accrued liabilities 406,976 1,543,561

Decrease in deposits payable (104,746) (430,080)

Decrease in claims payable (887,968) (557,051)

Decrease in compensated absences (53,632) (12,894)

Increase in net other postemployment benefits obligation 98,105 92,102

Total adjustments 66,602,199 61,858,925

Net cash (used) by operating activities (51,043,862)$ (50,137,611)$



STATEMENTS OF CASH FLOWS, CONTINUED


Page 44

Notes to Basic Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying basic financial statements of the North County Transit District (NCTD) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting standards. The more significant of NCTD’s accounting policies are described

below.

Reporting Entity The North San Diego County Transit Development Board was created by an act of the California State Legislature in 1975 and commenced operations during 1976 as a special district to plan, construct, and operate, directly or indirectly, public transit systems in the northern part of San Diego County. Under California Assembly Bill 1238, the North San Diego County Transit Development Board’s name was changed to North County Transit District (NCTD). The NCTD governing board (Board) consists of nine members, including one member from each of the city councils of Carlsbad, Del Mar, Encinitas, Escondido, Oceanside, San Marcos, Solana Beach and Vista and one

member from the San Diego County Board of Supervisors.

On January 1, 2003, California Senate Bill 1703 (SB 1703) became effective. SB 1703 required the consolidation of the planning and programming functions of the North County Transit District and San Diego Metropolitan Transit System (MTS) into the San Diego Association of Governments (SANDAG) in an initial transfer to take place prior to July 1, 2003. SB 1703 also required the consolidation of the project development and construction functions of NCTD and MTS into SANDAG in a subsequent transfer to take place prior to January 30, 2004. The initial transfer occurred on July 1, 2003, and the subsequent transfer occurred on October 13, 2003. With these actions, employees were transferred from NCTD and MTS to SANDAG, and certain planning, development, and construction functions were also transferred. As a result, NCTD’s activities subsequent to the

transfers are focused on operating public transit systems in the area identified above.

NCTD commenced operations by providing bus services to the region. In 1992, NCTD was designated by SANDAG as the lead agency for providing commuter rail service in San Diego County. NCTD receives funding from various state sources to construct and improve the coastal rail corridor from Oceanside to San Diego as part of the Los Angeles – San Diego Rail Corridor (LOSSAN) joint powers agreement. NCTD began commuter rail service between Oceanside and San Diego (known as the COASTER) in February 1995. In March 2008, light rail service (known as the SPRINTER) commenced operations servicing the northern east-west corridor of San Diego County between Oceanside and Escondido. The SPRINTER’s 22 miles of light rail system comprises 15 transit stations

with interconnecting bus routes that also service the cities of San Marcos and Vista.


Page 45

BASIS OF ACCOUNTING AND PRESENTATION

These basic financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of NCTD’s assets, deferred outflows of resource, liabilities, and deferred inflows of resources, including capital assets, are included in the accompanying Statements of Net Position with the difference reported as net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Grants are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Grants received in advance of revenue recognition by NCTD are shown in the accompanying Statements of Net Position as unearned grant revenue. The Statement of Revenues, Expenses and Changes in Net

Position present increases (revenues) and decreases (expenses), in total net position.

Enterprise funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services in connection with the entity’s principal ongoing operational activities. Charges to customers represent NCTD’s principal operating revenues and include passenger fares and revenues from use of its capital assets for advertising, right-of-way and other leasing activities. Operating expenses include the cost of operating, maintaining, and supporting transit services and related capital assets, administrative expenses, and depreciation. All revenues and expenses not meeting this definition are reported as nonoperating or other revenues and expenses.

CAPITAL GRANTS

NCTD receives grants from the Federal Transit Administration (FTA) and other agencies of the U.S. Department of Transportation, state, and local transportation funds for the acquisition of transit-related equipment and improvements. Capital grants are included in the determination of changes in net position as capital contributions resulting in an increase of $26,577,453 and $42,162,848 for

the fiscal years 2014 and 2013, respectively.

INCOME TAXES

NCTD is a governmental agency exempt from federal income taxes under Section 115 of the

Internal Revenue Code (IRC) and from California franchise taxes under similar California law.

CASH, CASH EQUIVALENTS AND INVESTMENTS

For purposes of the Statements of Cash Flows, NCTD considers all short-term investments purchased with an original maturity of three months or less to be cash equivalents, including cash and cash equivalents restricted for capital projects and future maintenance, and NCTD’s investment in the Local Agency Investment Fund. At June 30, 2014 and 2013, NCTD considered all

of its cash and investments to be cash and cash equivalents.

Highly liquid market investments with maturities of one year or less at time of purchase are stated at amortized cost. NCTD’s guaranteed investment contract is reported at cost, and all other investments are stated at fair value. Fair value is used for those securities for which market quotations are readily available. Substantially all investment income, including changes in the fair value of investments, is reported as nonoperating revenue in the accompanying Statements of

Revenues, Expenses, and Changes in Net Position.


Page 46

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NCTD participates in an investment pool managed by the State of California titled Local Agency Investment Fund (LAIF) which has invested a portion of the pooled funds in structured notes and asset-backed securities. These structured notes and asset-backed securities are subject to market risk as to change in interest rates.

PARTS AND SUPPLIES INVENTORY

Inventories of maintenance parts and supplies are stated at the lower of cost or market, with cost

being determined using the weighted average cost method. The cost of inventory is recorded as an

expense at the time the inventory is consumed.

CAPITAL ASSETS

Capital assets, which include land, construction in progress, land improvements, buildings, right-of-way property, improvements, vehicles, and equipment and furniture, are defined as assets with an initial cost of more than $5,000 and an estimated useful life in excess of one year. Capital assets are recorded at historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the time of donation. Major outlays for capital assets and improvements are

capitalized as assets are purchased or projects are constructed.

Land and construction in progress are not depreciated. Other capital assets are depreciated using

the straight-line method over the following estimated useful lives:

ASSET TYPE USEFUL LIFE

Land improvements 10 years

Buildings, structures and improvements 5 - 30 years

Right of way and improvements 10 - 20 years

Revenue and service vehicles 3 - 25 years

Equipment and furniture 2 - 60 years

UNEARNED GRANT REVENUE

NCTD reports unearned grant revenue in its financial statements. Unearned grant revenue arises

when resources are received by NCTD before its legal claim to them.

SELF-INSURANCE LIABILITIES

NCTD self-insures claims on a per-occurrence basis. Claims expenses and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. These losses include management’s estimate of claims that have been incurred but not reported. These losses also include, where available, estimates of recoveries on unsettled claims and incremental claim adjustment expenses, such as legal expenses. Refer to Note 15 for further details.


Page 47


COMPENSATED ABSENCES

Vested or accumulated vacation leave was recorded as an expense and a liability quarterly as the benefits accrue to employees until January 7, 2012. No liability was recorded for non-vested accumulating rights to receive sick pay benefits. However, a liability was recognized for that portion of accumulating sick leave benefits that are anticipated to be paid upon retirement. Beginning January 8, 2012, NCTD replaced vacation and sick leave benefits with a Paid Time Off

benefit plan. Refer to Note 6 for further details.

CLAIMS AND JUDGMENTS

When it is probable that a claim liability has been incurred, and the amount of the loss can be reasonably estimated, NCTD records the estimated loss, net of any insurance coverage. Small

dollar claims and judgments are recorded as expenses when paid.

OTHER POSTEMPLOYMENT BENEFITS

NCTD makes certain benefits available to retired employees. These include medical insurance coverage provided through the California Public Employees’ Retirement System (CalPERS). Beginning January 1, 2014, all but $119 per month per participant of the cost is paid by the participants. Prior to that date, the participant cost was $115 per month. Total payments for the years ended June 30, 2014 and 2013 were $136,350 for 98 retirees and $136,252 for 105 retirees, respectively. Refer to Note 14 for further details.

NET POSITION

Net position is classified in the following categories:

Net Investment in Capital Assets – This amount consists of capital assets net of accumulated depreciation and reduced by outstanding debt that attributed to the acquisition, construction,

or improvement of the assets.

Restricted Net Position – This amount represents restricted assets reduced by liabilities and deferred inflows of resources related to those assets.

Unrestricted Net Position – This amount represents all net position that does not meet the definition of “net investment in capital assets” or “restricted net position.” Unrestricted net

position includes a Board established reserve fund of $15,000,000 as of June 30, 2014 and 2013.

USE OF RESTRICTED/UNRESTRICTED NET POSITION

When both restricted and unrestricted resources are available for use, it is NCTD’s policy to use

restricted resources first and then unrestricted resources as they are needed.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.


Page 48


New Accounting Pronouncement

In fiscal year 2014, the District adopted the GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. The provisions of this statement establish accounting and financial reporting standards that reclassify, as deferred outflows or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognize certain items that were previously reported as assets and liabilities as outflows of resources (expenses) or inflows of resources

(revenues).

For fiscal year 2014, the District restated its beginning net position as of July 1, 2012, the earliest year presented, to write off the unamortized balance of bond issuance costs due to the adoption of

GASB Statement No. 65, which require the restatement of the June 30, 2012 net position.

Upcoming Governmental Accounting Standards The following governmental accounting standards have been issued, but are not yet effective: GASB Statement No. 68, Accounting and Financial Reporting for Pensions - An Amendment of GASB Statement No. 27, is intended to improve the decision-usefulness of information in employer and governmental non-employer contributing entity financial reports and will enhance its value for assessing accountability and interperiod equity by requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense. Decision-usefulness and accountability will also be enhanced through new note disclosures and required supplementary information. This statement will be effective for NCTD beginning in fiscal year 2015. GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - An Amendment of GASB Statement No. 68. This statement requires that, at transition, a government should recognize a beginning deferred outflow of resources for its pension contributions made after the measurement date of the beginning net pension liability. Statement No. 68, as amended, continues to require that beginning balances for other deferred outflows of resources and deferred inflows of resources related to pensions be reported at transition only if it is practical to determine all such amounts. The provisions of this Statement are required to be applied simultaneously with the provisions of Statement No. 68. Management has not currently determined what the impact will be as a result of the implementation of GASB Statement No. 68 and No. 71.

Net Position, July 1, 2012, as previously reported 618,429,927$

Adjustment to write-off balance of unamortized debt issuance costs (1,374,707)

Net Position, July 1, 2012 as restated 617,055,220$


Page 49

2. CASH AND INVESTMENTS

Reconciliation of cash and investments to the Statements of Net Position at June 30, 2014 and 2013:

Cash and investments consist of the following at June 30, 2014 and 2013:

2014 2013

Cash and investments 82,831,559$ 65,123,615$


Total 85,646,412$ 67,904,799$

2014 2013

Cash:

Cash on hand 219,104$ 127,325$

Demand deposits 32,809,784 15,066,611

Total cash 33,028,888 15,193,936

Investments:

Deposits in Local Agency Investment Fund (LAIF) 49,802,671 49,929,679


Total investments 52,617,524 52,710,863

Total cash and investments 85,646,412$ 67,904,799$


Page 50

2. CASH AND INVESTMENTS (CONTINUED)

Investments Authorized by the California Government Code and NCTD’s Investment Policy

The table below identifies the investment types that are authorized for NCTD by the California Government Code (or NCTD’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or NCTD’s investment policy, where more

restrictive) that address interest rate risk and concentration of credit risk.

Maximum Maximum

Authorized Maximum Percentage Investment

Investment Type Maturity of Portfolio in One Issuer

U.S. Treasury Obligations 5 years None None

U.S. Agency Securities 5 years None None

Banker's Acceptances 180 days 40% 10%

Commercial Paper 180 days 15% 10%

Negotiable Certificates of Deposit 5 years 30% None

Repurchase Agreements 90 days 40% None

Medium-Term Notes 5 years 30% 10%

Savings Accounts N/A None None

Mortgage and Asset-Backed Obligations 5 years 20% None

County Pooled Investment Funds N/A None None

Local Agency Investment Fund (LAIF) N/A None $50 million


Page 51


INVESTMENTS AUTHORIZED BY DEBT AGREEMENTS

Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or NCTD’s investment policy. The table below identifies the investment types that are authorized for investments held by the bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk and concentration of credit risk.

Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater its

sensitivity is to fair value changes in market interest rates.

Information about the sensitivity of the fair value of NCTD’s investments to market interest rate fluctuations is provided by the following tables that show the distribution of NCTD’s investments by maturity as of June 30, 2014 and 2013:

Maximum Maximum

Authorized Maximum Percentage Investment

Investment Type Maturity of Portfolio in One Issuer

U.S. Treasury Obligations None None None

U.S. Agency Securities None None None

Banker's Acceptances 180 days None None

Commercial Paper 270 days None None

Money Market Mutual Funds N/A None None

Investment Contracts 30 years None None

Amount 12 Months 13 to 24 25 to 60 More than

Investment Type at June 30, 2014 or Less Months Months 60 Months

Local Agency Investment Fund 49,802,671$ 49,802,671$ -$ -$ -$

Held by fiscal agent - Money Market mutual fund 70,103 70,103 - - -

Held by fiscal agent - Guaranteed Investment Contract 2,744,750 - - 2,744,750 -

52,617,524$ 49,872,774$ -$ 2,744,750$ -$

Remaining Maturity (in Months)


Page 52


DISCLOSURES RELATING TO CREDIT RISK

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, or NCTD’s investment policy, and the actual rating as of year-end for each investment type.

Amount 12 Months 13 to 24 25 to 60 More than

Investment Type at June 30, 2013 or Less Months Months 60 Months

Local Agency Investment Fund 49,929,679$ 49,929,679$ -$ -$ -$

Held by fiscal agent - Money Market mutual fund 36,434 36,434 - - -

Held by fiscal agent - Guaranteed Investment Contract 2,744,750 - - 2,744,750 -

52,710,863$ 49,966,113$ -$ 2,744,750$ -$

Remaining Maturity (in Months)

Minimum

Amount Legal

Investment Type at June 30, 2014 Rating Not Rated

Local Agency Investment Fund 49,802,671$ N/A 49,802,671$

Held by fiscal agent - Money Market mutual fund 70,103 N/A 70,103

Held by fiscal agent - Guaranteed Investment Contract 2,744,750 N/A 2,744,750

52,617,524$ N/A 52,617,524$

Rating as of Year End

Minimum

Amount Legal

Investment Type at June 30, 2013 Rating Not Rated

Local Agency Investment Fund 49,929,679$ N/A 49,929,679$

Held by fiscal agent - Money Market mutual fund 36,434 N/A 36,434

Held by fiscal agent - Guaranteed Investment Contract 2,744,750 N/A 2,744,750

52,710,863$ N/A 52,710,863$

Rating as of Year End


Page 53


DISCLOSURES RELATING TO CONCENTRATION OF CREDIT RISK

Concentration of credit risk is the risk of loss attributed to the relative size of an investment in a single issuer. The investment policy of NCTD contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments issued or explicitly guaranteed by the U.S. government and investments in mutual funds, external investment pools and other pooled investments are exempt from concentration of credit risk. NCTD has investments with LAIF (an external investment pool) and with a fiscal agent (guaranteed investment contract) that each represented more than 5% of NCTD’s investments at June 30, 2014

and 2013.

Disclosures Relating to Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and NCTD’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provisions for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. Also, a financial institution may, in accordance with California Government Code, secure the public agency deposits using first trust deed mortgages; however, the market value of the first trust deed mortgages collateral must be at least 150% of the total

amount deposited.

None of NCTD’s deposits with financial institutions in excess of federal depository insurance limits

were held in uncollateralized accounts.

Investment in State Investment Pool

NCTD’s investment in the Local Agency Investment Funds (LAIF) included a portion of the pooled funds invested in structured notes and asset-backed securities. These investments included the following:

Structured Notes are debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options.

Asset-Backed Securities, the bulk of which are mortgage-backed securities, entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables.

As of June 30, 2014 and 2013, NCTD had $49,802,671 and $49,929,679, respectively, invested in LAIF, which had invested 1.86% and 1.96% , respectively, of the pooled investment funds in medium-term and short-term structured notes and asset-backed securities.


Page 54

3. ACCOUNTS RECEIVABLE

NCTD’s accounts receivable consisted of the following at June 30:

Management has evaluated the receivables as of June 30, 2014 and 2013, and determined that an

allowance for doubtful accounts is unnecessary.

4. GRANTS AND GRANTS RECEIVABLE

Grants receivable consisted of the following at June 30:

These receivables represent reimbursement requests on projects being funded by grants that may be subject to program compliance and financial audits by the granting agencies. Although the outcome of any such audits cannot be predicted, it is management’s opinion that these audits would not have a material effect on NCTD’s financial position or change in financial position.

NCTD receives public support funding from various federal, California, local and other agencies in the form of operating grants and capital grants.

NCTD earned the following operating grants during the years ended June 30:

2014 2013

Trade accounts receivable 803,998$ 1,500,028$

Other receivables 4,055,925 4,395,751

4,859,923$ 5,895,779$

2014 2013

TDA Article 4 26,386,204$ 21,496,111$

TDA Article 4.5 1,715,249 1,667,415

TransNet 11,673,090 11,012,259

STA 5,771,888 6,202,916

FTA 15,606,958 16,716,608

Other Operating Grants 282,890 339,892

61,436,279$ 57,435,201$


Page 55

4. GRANTS AND GRANTS RECEIVABLE (CONTINUED)

Pursuant to the California Transportation Development Act of 1971 (TDA), a portion of sales tax proceeds is made available to NCTD through the local transportation fund for the development and operation of public transportation systems and related research and development projects. Operating grants received pursuant to an approved request are recorded as revenue by NCTD when

earned.

The San Diego Transportation Improvement Program (TransNet) is administered by the San Diego Association of Governments (SANDAG) and is funded by the San Diego countywide one-half cent local transportation sales tax that was effective April 1, 1988. For the years ended June 30, 2014 and 2013, SANDAG granted NCTD $11,673,090 and $11,012,259, respectively, in operating funds from this program.

During the years ended June 30, 2014 and 2013, NCTD earned $15,606,958 and $16,716,608, respectively, as federal operating revenue under the Federal Transit Administration (FTA) which provides federal assistance for local mass transportation systems, including capital maintenance and planning activities.

NCTD earned $6,054,778 and $6,542,807 for the years ended June 30, 2014 and 2013, respectively, as other state and local operating grants.

NCTD expended $26,577,453 and $42,162,848 of federal, California, local and other capital grants to fund various construction projects and for the purchase of various capital assets in the years ended June 30, 2014 and 2013, respectively.

5. CAPITAL ASSETS

The following is a summary of changes in capital assets for the years ended June 30, 2014 and 2013:

Balance Balance

June 30, 2013 Additions Deletions Transfers June 30, 2014

Nondepreciable assets

Land 91,849,014$ -$ -$ 1,002,007$ 92,851,021$

Construction-in-progress 62,674,204 26,609,519 (301,896) (13,002,651) 75,979,176

Total nondepreciable assets 154,523,218 26,609,519 (301,896) (12,000,644) 168,830,197

Depreciable assets

Land improvements 56,703,266 13,714 (592,080) - 56,124,900

Buildings, structures and improvements 151,490,297 8,471 (549,055) 322,535 151,272,248

Right-of-way and improvements 372,571,109 32,838 (2,085,944) 3,132,449 373,650,452

Revenue and service vehicles 180,139,853 - (1,165,772) 3,631,294 182,605,375

Equipment and furniture 134,798,231 147,907 (2,359,669) 4,914,366 137,500,835

Total depreciable assets, at cost 895,702,756 202,930 (6,752,520) 12,000,644 901,153,810

Less accumulated depreciation

Land improvements (32,996,001) (4,981,394) 592,080 - (37,385,315)

Buildings, structures and improvements (56,104,181) (5,669,945) 549,055 - (61,225,071)

Right-of-way and improvements (216,472,403) (29,251,386) 2,085,944 - (243,637,844)

Revenue and service vehicles (93,432,379) (10,615,558) 931,408 - (103,116,529)

Equipment and furniture (58,649,765) (11,144,560) 2,359,669 - (67,434,657)

Total accumulated depreciation (457,654,729) (61,662,843) 6,518,156 - (512,799,416)

Total depreciable assets, net 438,048,027 (61,459,913) (234,364) 12,000,644 388,354,394

Total capital assets 592,571,245$ (34,850,394)$ (536,260)$ -$ 557,184,591$


Page 56

5. CAPITAL ASSETS (CONTINUED)

Depreciation expense for the years ended June 30, 2014 and 2013 was $61,662,843 and $61,266,681, respectively.

6. COMPENSATED ABSENCES

Compensated absences activity for the years ended June 30, 2014 and 2013 was as follows:

Balance Balance

June 30, 2012 Additions Deletions Transfers June 30, 2013

Nondepreciable assets

Land 91,849,014$ -$ -$ -$ 91,849,014$

Construction-in-progress 42,788,494 42,162,915 - (22,277,205) 62,674,204

Total nondepreciable assets 134,637,508 42,162,915 - (22,277,205) 154,523,218

Depreciable assets

Land improvements 56,703,266 - - - 56,703,266

Buildings, structures and improvements 150,760,853 - - 729,444 151,490,297

Right-of-way and improvements 370,661,946 - - 1,909,163 372,571,109

Revenue and service vehicles 168,559,855 - (4,259,729) 15,839,727 180,139,853

Equipment and furniture 131,021,797 - (22,437) 3,798,871 134,798,231

Total depreciable assets, at cost 877,707,717 - (4,282,166) 22,277,205 895,702,756

Less accumulated depreciation

Land improvements (27,938,685) (5,057,316) - - (32,996,001)

Buildings, structures and improvements (50,377,914) (5,726,267) - - (56,104,181)

Right-of-way and improvements (186,889,219) (29,583,184) - - (216,472,403)

Revenue and service vehicles (86,858,429) (10,833,679) 4,259,729 - (93,432,379)

Equipment and furniture (48,605,967) (10,066,235) 22,437 - (58,649,765)

Total accumulated depreciation (400,670,214) (61,266,681) 4,282,166 - (457,654,729)

Total depreciable assets, net 477,037,503 (61,266,681) - 22,277,205 438,048,027

Total capital assets 611,675,011$ (19,103,766)$ -$ -$ 592,571,245$

Balance Balance Due in Due in more

July 1, 2013 Additions Deletions June 30, 2014 One Year than One Year

729,709$ 815,341$ (868,973)$ 676,077$ 540,862$ 135,215$

Classification

Balance Balance Due in Due in more

July 1, 2012 Additions Deletions June 30, 2013 One Year than One Year

742,603$ 803,055$ (815,949)$ 729,709$ 583,767$ 145,942$

Classification


Page 57

7. LONG-TERM DEBT

Long-term debt activity for the years ended June 30, 2014 and 2013 was as follows:

In July 2004, NCTD completed a financing transaction in which debt in the principal amount of $114 million was issued through the California Transit Finance Corporation (CTFC) to finance a portion of the design, acquisition and construction of the SPRINTER light rail project. This financing was done to address the delay in the receipt of $80 million of Traffic Congestion Relief Program (TCRP) funds

to be provided by the State of California for the SPRINTER project.

NCTD received the proceeds of $114 million of Certificates of Participation, 2004 Series A Auction Rate Certificates issued as Auction Rate Securities by CTFC. In conjunction with this financing, NCTD entered into a lease agreement with CTFC whereby NCTD agreed to make lease payments to CTFC to retire the Certificates. The Certificates represent the proportionate interest of the registered owners in the lease payments NCTD is obligated to make from all funds legally available to NCTD. NCTD has granted a security interest in such funds to CTFC. The Certificates mature in

2034.

In August 2005, the California Transportation Commission approved an allocation of $80 million from the TCRP for the SPRINTER project. NCTD used these funds as they became available to retire $69.2 million of the related debt, and retired an additional $10.8 million in September 2006.

The remaining principal balance is $30.575 million at June 30, 2014.

The debt was issued as auction rate securities with a variable interest rate determined weekly by the auction agent. In February 2006, NCTD entered into an interest rate swap agreement for $34.0 million of the SPRINTER-related debt. Essentially, per the synthetic fixed-rate swap agreement, NCTD pays the counterparty, UBS, a fixed interest rate, in exchange for UBS paying the variable

interest rate for the $34.0 million of outstanding debt.

During late 2007, subprime mortgage losses caused significant financial stress on bond insurers, who guaranteed the payment of municipal bonds in the event of default. NCTD has insurance from

the bond insurer MBIA for the $34.0 million of outstanding debt.

Stresses on the bond insurers, along with other aspects of the national “credit crunch,” generally created dislocations in the municipal bond market, and particularly in the market for auction rate securities. The market for auction rate securities was large, estimated to be between $325 and $350 billion. However, during February 2008, widespread failures were reported in the auction rate

market.

NCTD’s debt was affected by the disruptions in the overall market, and NCTD was notified in

February 2008 that there were failures in the auctions for NCTD’s debt. It is important to note that

Original Issue Balance at Balance at Due Within

Amount July 1, 2013 Additions Retirements June 30, 2014 One Year

Certificates of Participation,

2004 Series A 114,000,000$ 31,775,000$ -$ (1,200,000)$ 30,575,000$ 1,225,000$

Original Issue Balance at Balance at Due Within

Amount July 1, 2012 Additions Retirements June 30, 2013 One Year

Certif icates of Participation,

2004 Series A 114,000,000$ 32,900,000$ -$ (1,125,000)$ 31,775,000$ 1,200,000$


Page 58

7. LONG-TERM DEBT (CONTINUED)

the disruptions in the auction rate securities market generally had nothing to do with the creditworthiness of individual issuers. In fact, the rating on NCTD’s outstanding debt was upgraded by Moody’s from A-3 to A-2 on February 22, 2008 with an outlook of stable and again on March 13, 2012 to a rating of A1 with an outlook of stable.

In May 2008, the Boards of Directors for NCTD and for SANDAG (the San Diego Association of Governments) approved a restructure of NCTD’s outstanding debt, involving SANDAG’s commercial paper program. SANDAG issued $34 million of commercial paper, which was then used by SANDAG to purchase the NCTD auction rate securities, effectively making SANDAG the holder of NCTD’s outstanding debt. The interest rate that NCTD pays SANDAG (as the holder of the $34 million of debt) is equal to the actual interest rate that SANDAG pays on the commercial paper. This results in no net cost to SANDAG, but allowed NCTD to effectively reduce its current interest rate down to the commercial paper rate. NCTD also paid its share of administrative costs associated with the commercial paper program (including letter of credit fees, trustee fees, rating agency fees, etc.) as well as legal and financial advisor fees related to the transaction. However, these transaction costs were substantially lower than the costs that would have been associated with other

alternatives, such as a new issuance of fixed-rate debt or variable–rate demand notes.

This arrangement allowed NCTD to reduce its borrowing costs, to retain the current interest rate swap structure, and to preserve the existing bond insurance. As market conditions settle down in the future, NCTD can consider such alternatives as refinancing at a fixed rate, or move back into the auction rate security market. If this were to occur, NCTD would pay down the $34 million of

outstanding commercial paper, and the agreement with SANDAG would be terminated.

Estimated future debt payments for the $30.575 million of long-term debt are as follows:

Estimated

Interest

Year Ending and Support Total

June 30, Principal Costs (1) Payments

2015 1,225,000$ 1,112,930$ 2,337,930$

2016 1,275,000 1,068,340 2,343,340

2017 1,325,000 1,021,930 2,346,930

2018 1,200,000 973,700 2,173,700

2019 1,250,000 930,020 2,180,020

2020-2024 6,550,000 3,954,860 10,504,860

2025-2029 7,500,000 2,702,700 10,202,700

2030-2034 8,450,000 1,264,900 9,714,900

2035 1,800,000 65,520 1,865,520

Total 30,575,000$ 13,094,900$ 43,669,900$

(1) Based on a 3.64% fixed rate that includes interest and support costs


Page 59

7. LONG-TERM DEBT (CONTINUED)

2006 INTEREST RATE SWAP

Objective of the interest rate swap. In February 24, 2006, NCTD entered into two interest rate swaps for $17 million each in order to hedge the interest rate risk associated with variable-rate certificates of participation by “locking in” a fixed interest rate. The intention of NCTD in entering into the swaps was to lock in a relatively low cost of funds on the debt for the construction of the SPRINTER light rail project.

Terms. The initial notional amounts of the swaps were $17 million each. The current notional amounts of the swaps are $17 million each. Under the two swaps, NCTD pays the counterparty a fixed payment of 3.369 percent and receives a variable payment based on 65 percent of one-month London Interbank Offered Rate (LIBOR) until maturity at September 1, 2034. The notional amounts and maturity dates of the swaps match the notional amounts and the maturity dates of the certificates of participation that were issued in July 2004 and outstanding as of June 30, 2014.

Fair values. Because interest rates have declined since execution of the swaps, the UBS swaps had a total negative fair value of $4,584,903 and $4,648,880 as of June 30, 2014 and 2013, respectively. The fair values of the derivatives were estimated by an independent third-party based on mid-market levels as of the close of business on June 30, 2014 and 2013. The fair values take into consideration the prevailing interest rate environment and the specific terms and conditions of the swaps.

Credit risk. This is the risk that the counterparty will fail to perform under the terms of these agreements. As of June 30, 2014, NCTD was not exposed to credit risk on these swaps because they had negative fair values. However, should interest rates change and the fair values of the swaps become positive, NCTD would be exposed to credit risk in the amount of the swaps’ fair values. Favorable credit ratings of the counterparty (UBS) mitigate this risk. As of June 30, 2014, UBS long –term rating was rated A2 by Moody’s and A by Standard & Poor’s. The ratings are monitored on a weekly basis. In addition, the fair value of the swaps will be fully collateralized by the counterparty with cash or United States government securities if the counterparty’s credit quality falls below a rating of Baa2 by Moody’s or BBB by Standard & Poor’s. Collateral would be posted with a third-party custodian.

Termination risk and termination payments. This is the risk that the transaction is terminated in a market dictating a termination payment by NCTD. NCTD can terminate the swaps at the fair value by providing notice to the counterparty, while the counterparty may only terminate the swaps upon certain termination events under the terms of the agreements. NCTD or the counterparty may terminate the swaps if the other party fails to perform under the terms of the contracts, such as the failure to make swap payments. If the swaps are terminated, the expected variable-rate certificates of participation would no longer be hedged. Given the negative fair values of June 30, 2014, NCTD was not in a favorable termination position relative to the market. The fair values and changes in fair values at June 30, 2014 and 2013 are shown below.

Classification Amount Classification Amount Notional

Cash flow hedges:

Pay-fixed interest rate swap Deferred inflow 63,977$ Debt (4,584,903)$ 30,575,000$

Changes in Fair Value Fair Value at June 30, 2014

Classification Amount Classification Amount Notional

Cash flow hedges:

Pay-fixed interest rate swap Deferred inflow 2,542,722$ Debt (4,648,880)$ 31,775,000$

Changes in Fair Value Fair Value at June 30, 2013


Page 60

8. DEBT DEFEASANCE

During the year ended June 30, 1997, NCTD entered into two agreements to lease five locomotives and sixteen rail cars. It simultaneously entered into sublease agreements with the lessee to lease them back. During that same year NCTD received a prepayment from its lessee of NCTD’s lease receivable. It then used those proceeds to prepay the future lease payments on its sublease obligation, which were deposited into an irrevocable trust and invested in U.S. Government zero coupon treasury strips. In so doing, NCTD defeased that obligation. Accordingly, the trust account asset and the defeased sublease obligation are not included in the financial statements. As of June 30, 2014 and 2013, $43,958,265 and $43,539,412, respectively, of sublease obligations outstanding

is considered defeased.

During the term of the sublease, set to expire in 2016, the sublessor and its financing partners have a secured interest in the leased locomotives and rail cars. In addition, NCTD could be liable to the

sublessor for termination penalties if certain loss events occur.

NCTD has hedged against those possible penalties through its risk management programs and through contract provisions with the sublessor allowing it to replace that equipment with other like-kind equipment. Management believes that it is unlikely any of the loss events will occur or if they do that NCTD will incur any termination penalty that would be material to NCTD’s financial

statements.

9. ARBITRAGE REBATE LIABILITY

Arbitrage rebate applies to interest earned on the issuance of tax-exempt debt. The rebate is based on the difference between the interest actually earned from the investment of the debt proceeds and the interest expense on the debt issued. As of June 30, 2014 and 2013, there was no liability related to the NCTD’s Certificates of Participation 2004 Series A debt.

10. COMMITMENTS

CONTRACTUAL COMMITMENTS

As of June 30, 2014, NCTD had total contractual commitments in the amount of $36,689,500 for capital and operating projects. As of June 30, 2014, NCTD had available $1,208,210 in federal, $5,676,148 in state, and $32,078,309 in local and other funding for current and future capital and operating projects. NCTD’s federal funding for capital projects consists primarily of Federal Sections 5307 and 5339 formula funds, as well as discretionary federal awards. NCTD’s state and local funding for its capital program consists primarily of State Transit Assistance (STA) funds; Transportation Development Act (TDA) funds and TransNet funds, as well as other state funds.

LEASE COMMITMENTS

NCTD leases office equipment under various agreements which are classified as operating leases. These agreements expire at various dates through 2016. Total rental expense of $569,471 and $516,476 was recognized during the years ended June 30, 2014 and 2013, respectively.


Page 61

10. COMMITMENTS (CONTINUED)

Future aggregate minimum annual rentals under these lease agreements are as follows:

NCTD acts as the lessor on certain facilities under various agreements, which are classified as operating leases. These agreements expire on various dates through May 2100, some of which contain provisions for annual increases and options to renew. Total lease and sublease income was

$1,476,319 and $1,588,827 for the years ended June 30, 2014 and 2013, respectively.

Future aggregate minimum annual rental revenue under these agreements is as follows:

11. PUBLIC EMPLOYEE RETIREMENT SYSTEM

PLAN DESCRIPTION

NCTD has entered into separate individualized plan contracts with the California Public Employees’ Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, which acts as a common investment and administrative agent for participating public employers within the State of California. Through these independent contracts, NCTD offers defined benefit pension plans that provide retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. A menu of benefit provisions, as well as other requirements, is established by State statutes within the Public Employees’ Retirement Law. NCTD selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of the CalPERS’ annual financial report may be obtained from the CalPERS

Executive Office, 400 P Street, Sacramento, CA 95814.

Year Ending Annual Rental

June 30, Amounts

2015 174,855$

2016 177,674

2017 148,467

2018 145,035

2019 148,115

Total 794,146$

Year Ending Annual

June 30, Revenues

2015 735,187$

2016 572,994

2017 546,628

2018 546,628

2019 546,628

Thereafter 14,904,012

Total 17,852,076$


Page 62

11. PUBLIC EMPLOYEE RETIREMENT SYSTEM (CONTINUED)

FUNDING POLICY

Employee contribution obligations for the year are expressed as a percentage of covered payroll. These percentages are set by statute and generally remain unchanged from year to year. However, in December, 2012, a CalPERS amendment changed the rates as follows: the Local Miscellaneous formulas include a first tier formula, 2% at age 55, which requires a 7% contribution from NCTD employees. A second tier formula, 2% at 60, is applicable to employees hired after December 2012 who have previous CalPERS service. For both of these formulas, the employee is required to contribute 2.34% starting in January, 2013 with NCTD paying the remaining 4.66%. This employee contribution rate increased to 4.66% in calendar year 2014 and will ultimately reach the full 7% in calendar year 2015.

For employees hired after December, 2012, the new member formula, 2% at 62, requires a 6.25% contribution from the employee that will increase to 7% by 2015. NCTD is required to contribute the remaining amounts necessary to fund the benefits for its members using the actuarial basis

determined by the CalPERS Board of Administration.

The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The required employer contribution rate for the years ended June 30, 2014 and 2013 were 11.988% and 5.922%, respectively. The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be

amended by CalPERS.

ANNUAL PENSION COST

For the years ended June 30, 2014 and 2013, the NCTD’s annual pension cost and contributions were $1,329,761 and $945,510, respectively. The required contribution for the fiscal year 2014 was determined as part of the June 30, 2011 actuarial valuation using the entry age normal actuarial cost method with the contributions determined as a percentage of pay. The actuarial assumptions included (a) 7.5% investment rate of return (net of administrative expenses); (b) projected salary increases that vary by duration of service ranging from 3.3% to 14.2%; and (c) 3% payroll growth. Both (a) and (b) include an inflation component of 2.75%. The actuarial value of the plan’s assets was determined using a smoothing technique that spreads the effects of short-term volatility in the market value of investments. First, an expected value of assets is computed by bringing forward the previous year’s actuarial value of assets and contributions received and benefits paid during the year at the assumed actuarial rate of return. Second, the actuarial value of assets is then computed as the expected value of assets plus one-fifteenth of the difference between actual market value of assets and the expected value of assets as of the valuation date.

Three-year trend information for NCTD is summarized below:

Fiscal Year Annual Pension Actual Percentage of APC Net Pension

Ending Cost (APC) Contributions Made Contribution Obligation

6/30/2012 1,131,855$ 1,131,855$ 100% -$

6/30/2013 945,510 945,510 100% -

6/30/2014 1,329,761 1,329,761 100% -


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11. PUBLIC EMPLOYEE RETIREMENT SYSTEM (CONTINUED)

MOST RECENT ACTUARIAL REPORT – STATUS OF FUNDING PROGRESS

The schedule of funding progress is based on the June 30, 2013 actuarial valuation. The actuarial assumptions included (a) 7.50% investment rate of return (net of administrative expenses); (b)

projected salary increases that vary by duration of service ranging from 3.3% to 14.2%; and (c) 3%

payroll growth. Both (a) and (b) include an inflation component of 2.75%. The market value of the plan’s assets was determined employing an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate spread

directly over a 5-year period.

Current funding status is $27,243,332 underfunded due primarily due to changes in the present value as of the valuation date of all projected benefits which each active member is expected to receive, minus the present value of future annual Normal Cost payments expected to be made and the change from actuarial value of the assets in the plan to market value. This status is subject to change depending on multiple variables in the actuarial assumptions including, but not limited to interest rates, amortization factors, annual required contribution (ARC), market value corridor limits and actual contributions paid.

The schedule presented as required supplementary information following the notes to basic financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for

benefits.

The projection of benefits for financial reporting purposes does not explicitly incorporate the

potential effects of legal or contractual funding limitations.

12. DEFERRED COMPENSATION

NCTD offers its employees a deferred compensation plan (Plan) created in accordance with Internal Revenue Code Section (IRC) 457 and provisions of the Government Code of the State of California. The plan, available to all full-time employees, permits the employees to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, total disability, death or unforeseeable emergency.

The Plan is administered by NCTD and contracted to an unrelated financial institution. Under the terms of an IRC Section 457 deferred compensation plan, all deferred compensation and income attributed to the investment of the deferred compensation amounts held by the financial institution, until paid or made available to the employees or beneficiaries, are held in trust for employees. NCTD is not the fiduciary of that trust.

As such, employees’ assets held in IRC Section 457 plans are not the property of NCTD and are not subject to the claims of NCTD’s general creditors. In accordance with GASB Statement No. 32,

Actuarial

Accrued Overfunded UAAL

Market Liability (Unfunded) as a % of

Value of (AAL) AAL Funded Covered Covered

Valuation Date Assets* Entry Age (UAAL) Ratio Payroll Payroll

(A) (B) (A-B) (A/B) (C) [(A-B)/C]

6/30/2013 97,535,867$ 124,779,199$ (27,243,332)$ 78.2% 8,465,129$ (321.8%)

* Beginning with the 06/30/2013 valuation Actuarial Value of Assets equals Market Value of Assets per CalPERS Direct Rate Smoothing Policy.


Page 64

12. DEFERRED COMPENSATION (CONTINUED)

Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, employees’ assets are not reflected in NCTD’s financial statements.

NCTD also offers its employees a qualified defined contribution retirement plan under IRS Code Sections 401(a) and 411(d). Starting in December 2012 NCTD established that all full time employees were eligible to participate in this plan. NCTD provides a match of up to 4% of payroll for employee contributions to the 401(a) plan. The total cost paid by NCTD for its match was $191,793 and $93,449 for the years ended June 30, 2014 and 2013, respectively.

13. CONTINGENT LIABILITIES

NCTD is involved in various lawsuits in the ordinary course of business. Management cannot predict the outcome of the lawsuits or estimate the amount of any loss that may result. However, where the contingency of a liability is probable and the amount can be reasonably estimated, a claims liability is accrued. NCTD believes that losses resulting from these matters, if any, would be covered by its accrual for such contingent liabilities and/or covered under NCTD’s insurance

policies and would not have a material effect on the financial position of NCTD.

Compressed Natural Gas Tax Rebates

On January 14, 2011, the Internal Revenue Service (IRS) declined NCTD claims for compressed natural gas (CNG) tax rebates totaling $1,503,290. Management believed that NCTD was entitled to the CNG rebates claimed, and pursued an appeal with the IRS. In January, 2013, NCTD accepted a settlement with the IRS which resulted in NCTD owing $236,979 to the IRS. During the year

ended June 30, 2014, NCTD paid $274,927 to the IRS in settlement of this debt.

14. OTHER POSTEMPLOYMENT HEALTH CARE BENEFITS

Plan Description NCTD participates in a medical health plan provided by CalPERS for employees and retirees. Total NCTD payments for the years ended June 30, 2014 and 2013, were $136,350 for 98 retirees and $136,252 for 105 retirees, respectively, currently receiving postemployment health care benefits. Eligibility. All employees are eligible after the fifth year of service and attaining age 50.

Funding Policy The contribution requirements of plan members and NCTD are established by management and may be amended. The required contribution is based on projected pay-as-you-go financing requirements. The schedule of funding progress for NCTD’s other postemployment health care benefits (OPEB) defined benefit plan contained in the Required Supplementary Information following these notes presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing relative to the actuarial accrued liability for benefits over time.

Participants as of June 30, 2014

Current retirees 98

142

Total 240

Other participants either currently eligible for or

earning service credits for eligibility


Page 65

14. OTHER POSTEMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)

Annual OPEB Cost and Net OPEB Obligation NCTD’s annual OPEB cost (expense) is calculated based on NCTD’s actuarially determined Annual Required Contribution (ARC). The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and any amortized unfunded actuarial liabilities (or funding excesses) over a period not to exceed thirty years. The following tables show the components of NCTD’s annual OPEB cost, the amount actually contributed, and the changes in NCTD’s net OPEB obligation to for fiscal years 2014 and 2013:

NCTD’s annual OPEB cost, the percentage of annual OPEB cost contributed to the OPEB plan and the net OPEB obligation for fiscal years 2012, 2013 and 2014 were as follows:

Funded Status and Funding Progress As of July 1, 2014, the most recent actuarial valuation date, the OPEB plan was not funded. The actuarial accrued liability for benefits was $3,448,765, and the actuarial value of assets was $0. The covered payroll (annual payroll of active employees covered by the plan) as of July 1, 2014, was $7,831,000 and the ratio of Unfunded Actuarial Accrued Liability (UAAL) to covered payroll was 44 percent.

As of June 30, 2014

Annual required contribution 259,747$

Adjustment to annual required contribution (92,451)

Interest on net OPEB obligation 67,159

Annual OPEB cost (expense) 234,455

Contributions made (136,350)

Increase in net OPEB obligation 98,105

Net OPEB obligation - beginning of year 1,492,414

Net OPEB obligation - end of year 1,590,519$

As of June 30, 2013

Annual required contribution 257,791$

Adjustment to annual required contribution (92,451)

Interest on net OPEB obligation 63,014

Annual OPEB cost (expense) 228,354

Contributions made (136,252)

Increase in net OPEB obligation 92,102

Net OPEB obligation - beginning of year 1,400,312

Net OPEB obligation - end of year 1,492,414$

Fiscal year ended

Annual OPEB

Cost

Contributions

Made

% of Annual

OPEB Cost

Contributed

Net OPEB

Obligation

6/30/2012 403,963$ 132,915$ 32.90% 1,400,312$

6/30/2013 228,354 136,252 59.67% 1,492,414

6/30/2014 234,455 136,350 58.16% 1,590,519


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14. OTHER POSTEMPLOYMENT HEALTH CARE BENEFITS (CONTINUED)

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as Required Supplementary Information following the notes to basic financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets consistent with the long-term perspective of the calculations.

In the July 1, 2014 actuarial valuation, the projected unit credit method was used with service prorate. The actuarial assumptions included (a) 4.5% investment rate of return (net of administrative expenses) which is a blended rate of the expected long-term investment returns on plan assets and on the employer’s own investments calculated based on the funded level of the plan at the valuation date; (b) projected salary increases of 3.0% per annum, in aggregate; (c) post-retirement benefit increases of 4% per year, and (d) healthcare cost trends generally grade down from between 7% and 6.5% to an ultimate of 5% by 2020. The UAAL is being amortized over an initial 30 years using a level-dollar amortization method. The remaining amortization period at July 1, 2014 was 24 years. The annual required contribution (ARC) is comprised of the present value of benefits accruing in the fiscal year (normal cost) plus a 24-year amortization (on a level-dollar basis) of the unfunded actuarial accrued liability (past service liability) at July 1, 2014.

15. RISK MANAGEMENT

NCTD is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. NCTD established self-insurance programs for workers’ compensation and property damage/public liability, as described in Note 1. Funding for the programs is derived from operating funds. Funds are used for the settlement of claims and for management services provided by two contracted insurance management firms. NCTD self-insures claims on a per-occurrence basis as follows: $500,000 for workers’ compensation claims, $2 million for public liability claims, $50,000 for non-rail property damage claims and $750,000 for rail property claims. Upon meeting these deductibles, NCTD’s insurance covers an additional $50 million for workers’ compensation claims, $130 million per occurrence for property damage, and $200 million for public liability using excess liability policies with commercial insurance companies.


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15. RISK MANAGEMENT (Continued)

The following is a summary of changes in claims payable for the fiscal years 2012, 2013 and 2014:

16. TRANSPORTATION DEVELOPMENT ACT/CALIFORNIA ADMINISTRATIVE CODE

NCTD is subject to compliance with the Transportation Development Act provisions, Sections 6634 and 6637 of the California Administrative Code and Sections 99267, 99268.1 and 99314.6 of the Public Utilities Code.

Section 6634

Pursuant to Section 6634, a transit claimant is precluded from receiving monies from the Local Transportation Fund and the State Transit Assistance Fund in an amount that exceeds the claimant’s capital and operating costs, less the required fares, and local support. NCTD did not receive Transportation Development Act or State Transit Assistance revenues in excess of the prescribed formula amounts.

Section 6637

Pursuant to Section 6637, a claimant must maintain its accounts and records in accordance with the Uniform System of Accounts and Records for Transit Operators adopted by the State Controller. NCTD did maintain its accounts and records in accordance with the Uniform System of Accounts and Records for Transit Operators.

Current Year

Beginning of Claims and Balance at

Fiscal Year Changes in Claim Fiscal Year Due in Due in more

Liability Estimates Payments End One Year than One Year

2011-2012 2,428,288$ 3,210,239$ (891,827)$ 4,746,700$ 1,397,554$ 3,349,146$

2012-2013 4,746,700 89,305 (646,356) 4,189,649 1,248,919 2,940,730

2013-2014 4,189,649 (74,479) (813,489) 3,301,681 1,016,276 2,285,405

Classification


Page 68

REQUIRED SUPPLEMENTARY INFORMATION

1. PUBLIC EMPLOYEE RETIREMENT SYSTEM SCHEDULE OF FUNDING PROGRESS

This Required Supplementary Information is intended to show the progress made towards funding benefit obligations. Required three year actuarial valuations, available to date, for NCTD are as follows:

2. OTHER POSTEMPLOYMENT HEALTH CARE BENEFITS PLAN SCHEDULE OF FUNDING PROGRESS

The following Schedule of Funding Progress shows the recent history of the actuarial value of assets, actuarial accrued liability, their relationship, and the relationship of the unfunded actuarial accrued liability to payroll.

Actuarial review and analysis of OPEB liability and funding status is performed every two years or annually if there are significant changes in the OPEB plan.

Actuarial

Accrued Overfunded UAAL

Acturial Liability (Unfunded) as a % of

Value of (AAL) AAL Funded Covered Covered

Valuation Date Assets* Entry Age (UAAL) Ratio Payroll Payroll

(A) (B) (A-B) (A/B) (C) [(A-B)/C]

6/30/2011 114,138,666$ 121,006,443$ (6,867,777)$ 94.3% 9,904,622$ (69.3%)

6/30/2012 111,605,979 121,415,619 (9,809,640) 91.9% 7,094,840 (138.3%)

6/30/2013 97,535,867 124,779,199 (27,243,332) 78.2% 8,465,129 (321.8%)

* Beginning with the 06/30/2013 valuation Actuarial Value of Assets equals Market Value of Assets per CalPERS Direct Rate Smoothing Policy.

(Unfunded)

Entry Age (Unfunded) Actuarial

Actuarial Actuarial Actuarial Actuarial Liabilities as

Valuation Asset Accrued Accrued Funded Covered Percentage of

Date Value Liabilities Liabilities Ratio Payroll Covered P/R

7/1/2010 - 4,495,074$ (4,495,074)$ 0.0% 21,981,286$ (20.45%)

7/1/2012 - 3,246,496 (3,246,496) 0.0% 5,882,000 (55.19%)

7/1/2014 - 3,448,765 (3,448,765) 0.0% 7,831,000 (44.00%)


Page 69

Statistical Section (Unaudited)


Page 70

Statistical Section Index

Section Content

Page

Number

Financial Trends These schedules contain trend information intended to assist the

reader in understanding and assessing NCTD’s financial

performance and well-being over time.

71

Revenue Capacity These schedules contain information to assist the reader in

understanding and assessing the factors that affect NCTD’s

funding sources and ability to generate passenger fare revenue.

73

Debt Capacity This schedule presents information intended to assist the reader

in understanding and assessing NCTD’s current level of

outstanding debt and its ability to issue additional debt in the

future.

84

Demographic and

Economic Information

These schedules provide demographic and economic indicators to

assist the reader in understanding the environment within which

NCTD operates and to facilitate comparisons of financial

statement information over time.

85

Operating Information These schedules contain information about NCTD’s operations

and resources to assist the reader in understanding how NCTD’s

financial information relates to the services it provides.

88


Page 71

Financial Trends

Net Position by Component (Last Ten Fiscal Years)

2005 2006 2007 2008 2009 2010 2011* 2012* 2013* 2014

Net investment in capital assets 374,380,872$ 498,459,372$ 625,395,671$ 674,373,465$ 663,558,117$ 636,190,236$ 606,619,098$ 581,520,592$ 563,577,429$ 529,424,444$

Restricted net position 1,335,484 1,565,897 15,702,930 3,002,355 50,495 816,475 50,495 50,495 50,495 50,495

Unrestricted net position 5,392,102 6,357,378 (5,024,529) 10,503,193 20,739,774 22,982,906 28,493,072 35,484,133 40,124,880 43,267,880

Total Net Position 381,108,458$ 506,382,647$ 636,074,072$ 687,879,013$ 684,348,386$ 659,989,617$ 635,162,665$ 617,055,220$ 603,752,804$ 572,742,819$

*Total net position has been restated from amounts previously reported due to the implementation of GASB Statement No. 65. Fiscal years prior to 2011 have not been restated.

Source: Comprehensive Annual Financial Report

Net Position by Component

Last Ten Fiscal Years(Accrual basis of accounting)


Page 72

Changes in Net Position (Last Ten Fiscal Years)

2005 2006 2007 2008 2009 2010 2011* 2012* 2013* 2014

OPERATING REVENUES

Fare revenue 15,164,744$ 15,901,984$ 16,527,926$ 17,402,899$ 18,258,384$ 17,092,486$ 17,034,369$ 18,169,758$ 18,910,726$ 19,274,834$

Advertising and right-of-way 6,605,738 6,999,001 7,039,714 7,309,818 7,714,995 8,269,214 8,431,886 9,158,236 9,801,291 9,347,259

Lease and sublease revenue 1,153,238 1,252,296 1,239,155 1,375,471 1,354,175 1,388,370 1,444,090 1,483,540 1,588,827 1,476,319

Other revenue 93,882 116,129 122,668 417,345 423,073 105,492 71,407 2,488,290 2,183,026 1,722,462

Total operating revenues 23,017,602 24,269,410 24,929,463 26,505,533 27,750,627 26,855,562 26,981,752 31,299,824 32,483,870 31,820,874

OPERATING EXPENSES

Vehicle operations 33,076,812 35,835,524 36,821,459 40,348,188 38,931,922 37,292,391 33,643,900 37,190,774 40,811,588 39,313,456

Vehicle maintenance 8,232,960 8,218,266 9,413,976 11,289,486 12,352,037 11,780,817 10,971,577 10,152,117 9,446,107 12,458,342

Non-vehicle maintenance 5,382,865 5,162,523 5,618,723 7,886,900 9,031,883 9,033,391 9,790,389 7,812,517 8,219,859 9,471,138

Administration 13,277,078 14,349,359 15,932,295 17,460,223 16,291,186 16,187,077 17,650,643 21,038,055 20,530,599 20,961,917

Right-of-way operations 5,182,271 4,997,232 4,923,695 3,557,679 3,024,073 2,921,588 3,207,377 3,333,768 4,205,572 5,599,239

Amortization 55,305 55,305 55,305 55,873 62,396 62,487 1,499,681 - - -

Depreciation 16,901,818 21,777,075 19,423,562 30,643,519 54,991,799 55,074,416 57,546,549 58,969,531 61,266,681 61,662,843

Total operating expenses 82,109,109 90,395,284 92,189,015 111,241,868 134,685,296 132,352,167 134,310,116 138,496,762 144,480,406 149,466,935

Operating loss (59,091,507) (66,125,874) (67,259,552) (84,736,335) (106,934,669) (105,496,605) (107,328,364) (107,196,938) (111,996,536) (117,646,061)

NONOPERATING REVENUES

Operating grants 42,114,927 44,136,764 50,860,914 55,120,879 58,518,819 53,832,627 55,431,646 57,457,701 57,435,201 61,436,279

Investment income (expense) 14,469 1,155 191,597 (522,098) (1,092,759) (1,182,850) (1,047,435) 157,015 140,875 172,035

Debt Related Expense - - - - - - - (1,338,777) (1,131,984) (1,071,555)

Gain (loss) on disposal of

capital assets 201,299 33,062 (109,559) 23,218 25,676 15,530 143,365 (19,851) 87,180 (478,136)

Total nonoperating revenues 42,330,695 44,170,981 50,942,952 54,621,999 57,451,736 52,665,307 54,527,576 56,256,088 56,531,272 60,058,623

Loss before capital contributions (16,760,812) (21,954,893) (16,316,600) (30,114,336) (49,482,933) (52,831,298) (52,800,788) (50,940,850) (55,465,264) (57,587,438)

CAPITAL CONTRIBUTIONS

Capital grants 76,235,475 147,229,082 146,008,025 80,554,695 47,316,889 28,472,529 27,973,836 32,833,405 42,162,848 26,577,453

Change in net position 59,474,663$ 125,274,189$ 129,691,425$ 50,440,359$ (2,166,044)$ (24,358,769)$ (24,826,952)$ (18,107,445)$ (13,302,416)$ (31,009,985)$

*Total expenses and change in net position has been restated from amounts previously reported due to the implementation of GASB Statement No. 65. Fiscal years prior to 2011 have not been restated.


Changes in Net Position

Last Ten Fiscal Years(Accrual basis of accounting)


Page 73

Revenue Capacity

Operating Revenues by Source (Last Ten Fiscal Years)

Fiscal

Year

Farebox

Revenue &

Pass Sales

Special

Transport Advertising Right-of-way

Lease and

Sublease

Other

Revenue

Operating

Revenue

2005 15,151,438$ 13,306$ 320,833$ 6,284,905$ 1,153,238$ 93,882$ 23,017,602$

2006 15,889,211 12,773 413,021 6,585,980 1,252,296 116,129 24,269,410

2007 16,512,012 15,914 378,644 6,661,070 1,239,155 122,668 24,929,463

2008 17,381,197 21,702 388,750 6,921,068 1,375,471 417,345 26,505,533

2009 18,255,347 3,037 407,487 7,307,508 1,354,175 423,073 27,750,627

2010 16,488,394 604,092 408,780 7,860,434 1,388,370 105,492 26,855,562

2011 16,604,204 430,165 435,765 7,996,121 1,444,090 71,407 26,981,752

2012 17,666,958 502,800 1,045,137 8,113,099 1,483,540 2,488,290 31,299,824

2013 18,333,650 577,076 1,341,798 8,459,493 1,588,827 2,183,026 32,483,870

2014 18,698,837 575,997 877,412 8,469,847 1,476,319 1,722,462 31,820,874

Source: Comprehensive Annual Financial Reports and NCTD Internal Financial Information

Operating Revenues by Source

Last Ten Fiscal Years


Page 74

Public Funding Sources (Last Ten Fiscal Years)

Fiscal

Year Capital Grants Capital Grants Capital Grants

Section 5307/5337 ACM Other STA Other TDA TransNet Other

2005 8,928,829$ 300,000$ 38,993$ 48,533,714$ -$ 99,470$ 11,395,525$ 28,382,796$ 4,276,078$ 88,761$ 16,306,236$

2006 8,751,071 (25,840) 29,279 56,423,222 2,982,667 242,746 84,936,886 27,486,515 4,604,464 65,862 5,868,974

2007 8,975,008 164,793 48,731 86,266,449 3,492,000 143,755 9,971,921 32,927,330 5,064,320 44,977 49,769,655

2008 15,819,874 162,550 1,018,552 21,510,742 - 211,737 15,337,409 32,574,696 5,333,470 - 43,706,544

2009 19,745,394 220,088 2,039,800 6,216,419 - 297,255 (6,142,555) 26,143,502 10,072,780 - 47,243,025

2010 11,121,230 242,762 5,798,056 11,264,117 2,972,551 64,807 (2,428,832) 23,121,725 10,511,496 - 19,637,244

2011 16,025,528 110,127 1,231,652 15,188,844 2,972,551 160,572 3,984,794 25,091,968 9,772,061 67,187 8,800,198

2012 11,088,028 155,511 1,231,485 8,128,838 5,833,788 39,486 7,705,391 28,423,797 10,443,123 242,483 16,999,176

2013 15,033,041 - 1,683,567 21,150,562 6,202,916 40,447 15,255,791 23,163,527 11,012,259 299,444 5,756,495

2014 14,084,931 - 1,522,027 10,290,419 5,771,888 41,161 10,013,493 28,101,453 11,673,090 241,729 6,273,541

Source: Comprehensive Annual Financial Report and NCTD Internal Financial Information

Public Funding Sources


FEDERAL FUNDS STATE FUNDS LOCAL FUNDS

Operating Grants Operating Grants Operating Grants


Page 75

Federal Funds

Federal Transit Administration (FTA) funding – Federal capital and operating assistance for transit purposes is subject to an annual appropriation by Congress and is administered by the FTA. The two primary sources of Federal aid are FTA 5307 and FTA 5337.

o FTA 5307 is a formula grant program which provides both capital and operating assistance for transit. The formula for determining each metropolitan area’s share of funds involves population, density, bus and rail vehicle miles and rail route miles. The FTA publishes annually the allocations for the recipients. SANDAG is the designated recipient and then allocates the funds between NCTD and San Diego Metropolitan Transit System (“MTS”). The current allocation is thirty percent (30%) for NCTD and seventy percent (70%) for MTS. In addition to using these funds to cover typical Construction in Process (CIP) costs, FTA 5307 funds can be used for preventive maintenance. The preventive maintenance program allows the use of capital funds to offset 80% of the costs of maintaining both vehicles and facilities.

o FTA 5337 is a formula based State of Good Repair program that is dedicated to repairing and upgrading rail transit systems. Eligible activities include capital projects to maintain a system in a state of good repair, including projects to replace and rehabilitate: rolling stock; track; line equipment and structures; signals and communications; power equipment and substations; passenger stations and terminals; security equipment and systems; maintenance facilities and equipment; and operational support equipment, including computer hardware and software, transit asset management plan development and implementation of preventative maintenance for rail. FTA 5337 funds are allocated using the same percentages as FTA 5307.

State Funds

State Transit Assistance (STA) funding – STA is part of the Transportation Development Act (TDA, see Local Funds) and is derived from the statewide one quarter cent ($0.0025) sales tax on diesel fuel. The State Board of Equalization collects the sales tax and returns it to each county’s Local Transportation Fund (LTF). The STA funds are appropriated by the Legislature to the State Controller’s Office (SCO). The SCO then allocates the tax revenue, by formula, to planning agencies and other selected agencies. Statute requires that fifty percent (50%) be allocated according to operator revenues from the prior fiscal year and fifty percent (50%) based on population. The STA budget provides funding for allocation to local transit agencies to fund a portion of the operations and capital costs associated with local mass transit programs. The provision in ABx8-9, which suspended the qualifying criteria requirement to use the funds for operations, expired with the FY 2012 apportionment; subsequently, SB 565 (Chapter 341) extends the suspension through FY 2015. The criteria prohibit the use of STA for operations if the operator did not meet certain operating efficiencies.


Page 76

Local Funds

TDA Sales Tax – The Mills-Alquist-Deddeh Act (SB 325) or Transportation Development Act of 1971 was signed by the Governor on November 4, 1971 and became effective July 1, 1972. TDA was enacted by the California Legislature to improve existing public transportation services and encourage regional transportation coordination. TDA is the major subsidy source that supports NCTD’s operations and non-motorized transportation projects. These funds are generated by the one-quarter percent (1/4%) sales tax on taxable sales in the San Diego region and are collected by the State of California for transportation purposes. SANDAG, as the Regional Transportation Planning Agency, is responsible to release the apportionment of TDA funds each year in conformance with state statute.

TransNet – TransNet is a funding source created by Proposition Z, the one-half cent ($0.005) local countywide sales tax originally enacted in November 1987 to fund a 20-year transportation program that expired at the end of FY 2008. The voters of San Diego County approved Proposition A that extends this program until year 2048. Proposition A mandates the formation of an Independent Taxpayer Oversight Committee (ITOC) to provide oversight for the use of TransNet funds and ensure that voter mandates are carried out. In addition, the ITOC makes recommendations to improve the program’s financial integrity and performance. After deducting the costs associated with administrative expenses, the ITOC, and the bicycle/pedestrian program, the TransNet program is divided into Major Corridor Projects, New Bus Rapid Transit/Rail Operations, Local System Improvements and Transit System Improvements. Within the transit share, services provided pursuant to Americans with Disabilities Act (ADA) and subsidies for seniors have specific earmarks. The remaining revenues can be used by the transit agencies for operating or capital purposes.

Other

Other federal and state funding – NCTD also receives funding from other federal and state programs. These include New Freedom, Job Access Reverse Commute (JARC), 5311(f) for rural bus service, Medi-Cal Administration Activities (MAA), and various Caltrans grants. The ADA paratransit service receives substantial funding from the MAA.


Page 77

Fare Revenue (Last Ten Fiscal Years)

Fiscal Year

Ended

June 30

BREEZE Fixed

Route

Bus Service

FAST. FLEX

On Demand

ADA/

Paratransit

Commuter

Train Service

COASTER

Light Rail

Train Service

SPRINTER

Total Fare

Revenue

2005 9,037,177$ 76,636$ 276,799$ 5,774,132$ -$ 15,164,744$

2006 9,374,181 85,109 356,000 6,086,694 - 15,901,984

2007 9,654,712 84,088 421,079 6,368,047 - 16,527,926

2008 9,278,013 80,331 379,112 6,997,396 668,047 17,402,899

2009 8,518,097 7,928 484,516 6,975,640 2,272,203 18,258,384

2010 8,351,831 - 504,631 6,159,647 2,076,377 17,092,486

2011 7,896,229 - 492,102 6,257,840 2,388,198 17,034,369

2012 7,994,043 46,824 522,454 6,955,444 2,650,993 18,169,758

2013 8,771,339 76,342 554,330 7,222,779 2,285,936 18,910,726

2014 8,240,099 75,968 567,825 7,627,368 2,763,574 19,274,834

Change

2005-2014 (8.8)% (0.9)% 105.1% 32.1% 27.1%

SPRINTER Light Rail Service introduced in March, 2008

FAST on demand service discontinued in August, 2008. FLEX service began in June, 2012.


Fare Revenue



Page 78

Passenger Boardings (Last Ten Fiscal Years)

Fiscal Year

Ended

June 30

BREEZE

Fixed Route

Bus Service

FAST/FLEX

On Demand

ADA/

Paratransit

Commuter

Train Service

COASTER

Light Rail

Train Service

SPRINTER

Total

Boardings

2005 10,104,823 115,747 86,306 1,432,468 - 11,739,344

2006 10,161,475 105,739 88,342 1,554,450 - 11,910,006

2007 10,160,477 95,239 98,762 1,560,729 - 11,915,207

2008 9,744,558 87,818 101,161 1,686,015 717,960 12,337,512

2009 8,747,458 8,205 115,496 1,501,619 2,195,373 12,568,151

2010 7,825,176 - 119,150 1,271,620 2,117,920 11,333,866

2011 7,722,646 - 117,734 1,390,142 2,219,825 11,450,347

2012 7,904,516 3,786 130,384 1,624,211 2,417,640 12,080,537

2013 8,339,239 18,690 145,039 1,629,196 2,000,888 12,133,052

2014 8,124,839 24,557 154,162 1,730,090 2,551,106 12,584,754

Change

2005-2014 (19.6)% (78.8)% 78.6% 20.8% 7.2%


FAST on demand service discontinued in August, 2008.

FLEX on demand service began FY 2012


Passenger Boardings



Page 79

Fare Rate Tables

Bus Service Passenger Fare Rates (Last Ten Fiscal Years)

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Basic Fare

Regular $1.75 $1.75 $2.00 $2.00 $2.00 $2.00 $1.75 $1.75 $1.75 $1.75

Senior/Disabled/Medicare 0.75 0.75 1.00 1.00 1.00 1.00 0.75 0.75 0.75 0.75

Day Pass

Regular 3.50 3.75 4.00 4.00 4.50 4.50 4.50 4.50 4.50 4.50


Monthly Pass 50.00 54.00 54.00 54.00 59.00 59.00 59.00 59.00 59.00 59.00

Regional Day Pass

Day Pass 5.00 5.00 5.00 5.00 5.00 5.00 5.00

Premium Day Pass 11.00 11.00

Region Plus Day Pass 14.00 14.00 12.00 12.00 12.00

Regional Monthly Calendar or Rolling 30-Day Pass

Regular 58.00 60.00 60.00 64.00 68.00 72.00 72.00 72.00 72.00 72.00

Youth 29.00 30.00 30.00 32.00 34.00 36.00 36.00 36.00 36.00 36.00


Regional Premium Monthly Calendar or Rolling 30-Day Pass

Regular 90.00 100.00 100.00 100.00 100.00 100.00

Youth 45.00 50.00 50.00 50.00 50.00 50.00

Senior/Disabled/Medicare 22.50 25.00 25.00 25.00 25.00 25.00

Regional 14 Day Pass 43.00 43.00 43.00 43.00 43.00

Regional Premium 14 Day Pass 60.00 60.00 60.00 60.00 60.00

College Monthly Pass 40.00 44.00 44.00 44.00 49.00 49.00 49.00 49.00 49.00 49.00


Regular Fare 3.50 3.50 4.00 4.00 4.00 4.00 3.50 3.50 3.50 3.50

Note: Any fare changes to be determined by the Board following separate public hearing.

Bus Service Passenger Fare Rates


Fares - Fixed Route

Fares - ADA


Page 80

Light Rail Service Passenger Fare Rates (Last Ten Fiscal Years)


Basic Fare

Regular $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00

Senior/Disabled/Medicare 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Day Pass

Regular 4.00 4.50 4.50 4.50 4.50 4.50 4.50


Monthly Pass 54.00 59.00 59.00 59.00 59.00 59.00 59.00

Regional Day Pass

Day Pass 5.00 5.00 5.00 5.00 5.00 5.00 5.00

Premium Day Pass 11.00 11.00

Region Plus Day Pass 14.00 14.00 12.00 12.00 12.00

Regional Monthly Calendar or Rolling 30-Day Pass

Regular 64.00 68.00 72.00 72.00 72.00 72.00 72.00

Youth 32.00 34.00 36.00 36.00 36.00 36.00 36.00


Regional Premium Monthly Calendar or Rolling 30-Day Pass

Regular 90.00 100.00 100.00 100.00 100.00 100.00

Youth 45.00 50.00 50.00 50.00 50.00 50.00


Regional 14 Day Pass 43.00 43.00 43.00 43.00 43.00

Regional Premium 14 Day Pass 60.00 60.00 60.00 60.00 60.00

College Monthly Pass 44.00 49.00 49.00 49.00 49.00 49.00 49.00



Light Rail Service Passenger Fare Rates


Fares - Light Rail


Page 81

Commuter Rail Service Passenger Fare Rates (Last Ten Fiscal Years)


Sorrento Valley Coaster Connection *

Single Trip $1.00 $1.00 $1.00 $1.00 $1.00 $1.00

Single Trip Senior/Disabled/Medicare 0.50 0.50 0.50 0.50 0.50 0.50

Monthly Pass 40.00 40.00 40.00 40.00 40.00 40.00

Monthly Pass Youth 20.00 20.00 20.00 20.00 20.00 20.00

Monthly Pass Senior/Disabled/Medicare 10.00 10.00 10.00 10.00 10.00 10.00

ZONE 1

Basic Fare

Regular $3.75 $3.75 $4.00 $4.00 $5.00 $5.00 $4.00 $4.00 $4.00 $4.00


Ten Trip Ticket

Regular 34.00 34.00 36.00 36.00

Senior/Disabled/Medicare 15.75 15.75 18.00 18.00

Monthly Pass

Regular 105.00 105.00 115.00 115.00 144.00 144.00 120.00 120.00 120.00 120.00

Youth (all zones) 72.00 72.00 77.00 77.00 91.00 91.00 82.50 82.50 82.50 82.50

Senior/Disabled/Medicare

(all zones) 34.00 34.00 38.50 38.50 45.50 45.50 41.25 41.25 41.25 41.25

ZONE 2

Basic Fare

Regular 4.25 4.25 4.50 4.50 5.50 5.50 5.00 5.00 5.00 5.00


Ten Trip Ticket

Regular 38.00 38.00 40.50 40.50


Monthly Pass

Regular 116.00 116.00 126.00 126.00 154.00 154.00 150.00 150.00 150.00 150.00

ZONE 3

Basic Fare

Regular 4.75 4.75 5.00 5.00 6.00 6.00 5.50 5.50 5.50 5.50


Ten Trip Ticket

Regular 43.00 43.00 45.00 45.00


Monthly Pass

Regular 132.00 132.00 142.00 142.00 170.00 170.00 165.00 165.00 165.00 165.00

* Fare subsidized by NCTD beginning in 2009

Commuter Rail Service Passenger Fare Rates



Page 82

Commuter Rail Service Passenger Fare Rates (Last Ten Fiscal Years)-Continued


ZONE 4

Basic Fare

Regular 5.25 5.25 5.50 5.50 6.50 6.50


Ten Trip Ticket

Regular 48.00 48.00 50.00 50.00


Monthly Pass

Regular 144.00 144.00 154.00 154.00 182.00 182.00


NCTD consolidated the from 4 zones to 3 zones in 2011

Commuter Rail Service Passenger Fare Rates (Continued)



Page 83

Principal Fare Revenue (Fiscal Years 2014, 2009 and 2004)

Fare Revenue

% of Total Fare

Revenue Fare Revenue

% of Total Fare

Revenue Fare Revenue

% of Total Fare

Revenue

BREEZE 8,240,099$ 42.8% 8,518,097$ 46.7% 8,753,421$ 61.2%

FLEX/FAST 75,968 0.4% 7,928 0.0% 89,060 0.6%

ADA/Paratransit 567,825 2.9% 484,516 2.7% 232,856 1.6%

COASTER 7,627,368 39.6% 6,975,640 38.2% 5,239,389 36.6%

SPRINTER 2,763,574 14.3% 2,272,203 12.4% - 0.0%

Total Fare Revenue 19,274,834$ 100.0% 18,258,384$ 100.0% 14,314,726$ 100.0%


FLEX on demand service started 2012; FAST on demand service discontinued in August, 2008


Principal Fare Revenue

Current Year, Five Years Ago and Ten Years Ago

Fiscal Year 2009 Fiscal Year 2004Fiscal Year 2014

BREEZE

61.2%

FLEX/FAST

0.6%

ADA/Paratran

sit 1.6%

COASTER

36.6%

2004

BREEZE 46.7%

FLEX/FAST 0.0%

ADA/Paratransit

2.7%

COASTER 38.2%

SPRINTER 12.4%

2009

BREEZE

42.8%

FLEX/FAST

0.4%

ADA/Paratransi

t 2.9%COASTER

39.6%

SPRINTER

14.3%

2014


Page 84

Debt Capacity

Ratios of Outstanding Debt (Last Ten Fiscal Years)

Fiscal Year

Ended June 30

Certificates of

Participation

Percentage of Personal

Income (1)

Debt Per

Capita (1)

Debt Per

Passenger Boarding

(2)

2005 114,000,000$ 0.4% 150.92$ 9.71$

2006 44,800,000 0.1% 58.12 3.76

2007 34,000,000 0.1% 43.60 2.85

2008 34,000,000 0.1% 40.17 2.76

2009 34,000,000 0.1% 39.62 2.71

2010 34,000,000 0.1% 39.06 3.00

2011 34,000,000 0.1% 38.74 2.97

2012 32,900,000 0.1% 37.48 2.72

2013 31,775,000 0.1% 36.46 2.62

2014 30,575,000 0.1% 36.00 2.43


(1) These ratios are calculated using personal income and population for the prior calendar year.

(2) This ratio is calculated using ridership data for the current fiscal year.

Ratios of Outstanding Debt



Page 85

Demographic and Economic Information

Demographic and Economic Statistics (Last Ten Fiscal Years)

Note: Population includes certain areas outside NCTD’s Service Area that are part of North San Diego County.

Calendar

Year

Population

(1)

Personal Income

(in thousands)

Per Capita

Personal

Income (2)

San Diego

County

Unemployment

Rate (3)

State

Unemployment

Rate (3)

US

Unemployment

Rate (4)

2004 755,392 29,133,203$ 38,567$ 4.7% 6.2% 5.5%

2005 770,866 31,147,612 40,406 4.3% 5.4% 5.1%

2006 779,883 33,317,382 42,721 4.0% 4.9% 4.6%

2007 846,340 37,602,886 44,430 4.6% 5.4% 4.6%

2008 858,127 40,030,766 46,649 6.0% 7.2% 5.8%

2009 870,373 39,715,120 45,630 9.7% 11.4% 9.3%

2010 877,696 40,115,973 45,706 9.7% 11.2% 9.6%

2011 877,696 40,115,973 45,706 9.7% 11.2% 9.6%

2012 871,603 40,791,020 46,800 10.0% 11.7% 8.9%

2013 849,420 42,232,313 49,719 7.5% 8.9% 7.5%

Sources: (1) 2000 through 2009- California Dept. of Finance (includes member cities Carlsbad, Del Mar, Encinitas,

Escondido, Oceanside, San Marcos, Solana Beach, Vista) as of calendar year end.

Beginning 2012, data from SANDAG data warehouse for North and Inland Counties.

(2) U.S. Dept. of Commerce, Bureau of Economic Analysis, per capita personal income are the calendar

year averages for San Diego Metropolitan Statistical Area.

(3) State of California Employment Development Department calendar year averages.

(4) US Bureau of Labor Statistics calendar year averages.

Demographic and Economic Statistics

Last Ten Calendar Years'

Data for 2014 is not yet available, therefore, 2013 data is the most current year provided.


Page 86

Principal Employers (Current, Five and Ten Years Ago)

Employer So

urc

e

Number of

Employees

Percent of

Total

Employment Ran

k Number of

Employees

Percent of Total

Employment 9 Ran

k Number of

Employees

Percent of Total

Employment 9 Ran

k

Marine Corps Base, Camp Pendleton 1 70,000 4.4% 1 60,000 3.9% 1 60,000 4.0% 1

Palomar Pomerado Health 4 3,045 0.2% 2 3,000 0.2% 4 3,200 0.2% 2

Palomar College 2 2,665 0.2% 3 3,070 0.2% 3 2,954 0.2% 3

Tri City Medical Center 2 2,279 0.1% 4 2,216 0.1% 6 2,276 0.2% 6

Naval Hospital, Camp Pendleton 2 2,151 0.1% 5

Vista Unified School District 6 2,141 0.1% 6 2,570 0.2% 4

Pala Casino Resort and Spa 2 2,010 0.1% 7

Oceanside Unified School District 5 2,000 0.1% 8 3,076 0.2% 2 2,300 0.2% 5

Escondido Union School District 4 1,900 0.1% 9 2,000 0.1% 7

California State University San Marcos 2 1,900 0.1% 10

Callaway Golf Company 3 1,637 0.1% 11 2,500 0.2% 5 1,785 0.1% 7

ViaSat Inc. 3 1,510 0.1% 12 1,040 0.1% 11 450 0.0% 5

Life Technologies Corp (Thermo Fisher Scientific) 3 1,454 0.1% 13 960 0.1% 13

LEGOLAND California LLC 3 1,422 0.1% 14 1,100 0.1% 10 372 0.0% 12

City of Escondido 4 1,101 0.1% 15 1,220 0.1% 9

Welk Group Inc 4 1,000 0.1% 16

San Diego Wild Animal Park 4 967 0.1% 17

Taylor Made/Adidas Golf Company 3 954 0.1% 18 727 0.0% 14 645 0.0% 9

City of Oceanside 5 935 0.1% 19 979 0.1% 13

La Costa Resort and Spa 3 932 0.1% 20 1,000 0.1% 12 604 0.0% 10

Carlsbad Unified School District 3 903 0.1% 21 950 0.1% 8

GIA Laboratory 3 794 0.0% 22 600 0.0% 11

Hunter Industries 7 725 0.0% 23

City of Carlsbad 3 675 0.0% 24 1,207 0.1% 8

Genoptix 3 661 0.0% 25

Total San Diego County Labor Force 8 1,588,500 1,557,400 1,484,200

1 Pendleton.Marines.mil

2 San Diego Source Book, Largest Employers

3 City of Carlsbad, CAFR FY 2013

4 City of Escondido, CAFR FY 2013

5 Oceanside Unified School District Fast Facts

6 City of Vista, CAFR FY 2013

7 City of San Marcos, CAFR FY 2013

8 Bureau of Labor Statistics, U.S. Dept of Labor

9 Data prior to FY 2014 was obtained from the San Diego Source Book, Largest Employers,

SANDAG and employer websites, if available.

2014 2009 2004


Page 87

Employees by Function (Last Ten Fiscal Years)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Bus Operations 354.5 356.5 354.0 325.0 288.0 285.0 10.5 8.0 17.0 19.0

Vehicle Maintenance 95.0 95.0 95.0 91.0 83.0 84.0 54.0 0.0 0.0 0.0

Facility Maintenance 45.0 45.0 45.0 54.0 53.0 53.0 32.0 2.0 2.0 5.0

Security 11.0 14.0 14.0 22.0 19.0 19.0 17.0 16.5 22.0 30.0

Risk, Safety and Training 9.5 9.5 9.5 9.5 10.5 10.0 4.0 4.0 4.0 4.0

Human Resources 5.0 5.0 7.0 7.0 9.0 9.0 5.5 4.0 3.0 3.0

Information Technology 12.0 9.5 9.0 10.0 10.0 10.0 7.0 10.0 10.0 8.0

Finance and Accounting, Budget, Grants 20.0 20.0 20.0 22.0 18.0 18.0 18.0 15.0 13.0 15.0

Contracts and Procurement 5.0 5.0 5.0 5.0 5.0 5.0 5.0 6.0 5.0 16.0

Communications and Business Development 23.0 22.5 24.5 24.0 23.0 15.0 9.8 14.0 14.0 19.0

Real Estate 2.0 3.0 0.0 0.0 0.0 0.0 1.0 1.0 3.0 3.0

Rail Services 10.0 10.0 11.5 12.5 12.0 11.0 8.0 11.0 4.0 4.0

Capital Project Construction 9.0 11.0 14.0 12.0 0.0 0.0 0.0 0.0 9.0 11.0

General Management 5.0 5.0 5.0 5.0 3.0 4.0 5.0 8.0 13.0 14.0

Total 606.0 611.0 613.5 599.0 533.5 523.0 176.8 99.5 119.0 151.0

Source: NCTD Budget Documents

Note 1: As a result of several organizational structure changes, prior data has been restated to make it comparable to the

current year. Readers of this schedule should be aware that a comparison of the information contained above does not

lend itself to comparison with previously published budget documents.

Note 2: Prior to June 30, 2010, NCTD directly employed coach operators. Effective July 1, 2010, NCTD contracted with

First Transit to assume responsibility for staffing bus operations.

Note 3: Prior to June 30, 2011, NCTD directly employed vehicle and facility employees. Effective July 1, 2011, NCTD

contracted with First Transit to assume responsibility for staffing the Vehicle Maintenance and Facility Maintenance.

Full-time-Equivalent Employees

Employees by Function



Page 88

Operating Information

Operating Indicators by Transportation Mode (Last Ten Years)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

PASSENGERS (thousands)

BREEZE Fixed Route 10,105 10,162 10,160 9,745 8,747 7,825 7,723 7,905 8,339 8,125

FAST (2)/ FLEX (4) 116 106 95 88 8 4 19 25

ADA/Paratransit 86 88 99 101 116 119 117 130 145 154

COASTER (3) 1,432 1,554 1,561 1,686 1,502 1,272 1,390 1,624 1,629 1,730

SPRINTER 718 2,195 2,118 2,220 2,418 2,001 2,551

TOTAL 11,739 11,910 11,915 12,338 12,568 11,334 11,450 12,081 12,133 12,585

FARE REVENUES (thousands)

BREEZE Fixed Route $ 9,037 $ 9,374 $ 9,655 $ 9,278 $ 8,518 $ 8,352 $ 7,896 $ 7,994 $ 8,771 $ 8,240

FAST (2)/ FLEX (4) 77 85 84 80 8 47 76 76

ADA/Paratransit 277 356 421 379 484 504 492 523 554 568

COASTER (3) 5,774 6,087 6,368 6,998 6,976 6,160 6,258 6,955 7,223 7,627

SPRINTER 668 2,272 2,076 2,388 2,651 2,286 2,764

TOTAL $ 15,165 $ 15,902 $ 16,528 $ 17,403 $ 18,258 $ 17,092 $ 17,034 $ 18,170 $ 18,911 $ 19,275

OPERATING COSTS (thousands)

BREEZE Fixed Route 40,957$ 43,680$ 45,341$ 47,399$ 41,237$ 42,162$ 39,500$ 41,101$ 41,048$ 42,128$

FAST (2)/ FLEX (4) 932 963 1,012 998 102 324 510 617

ADA/Paratransit 2,661 2,748 3,624 3,515 3,751 3,934 3,644 3,335 3,932 4,789

COASTER 15,475 16,175 17,809 17,851 16,466 15,418 15,876 17,629 18,792 19,607

SPRINTER 7,221 15,051 12,780 13,036 13,805 14,725 15,064

TOTAL $ 60,025 $ 63,566 $ 67,786 $ 76,984 $ 76,607 $ 74,294 $ 72,056 $ 76,194 $ 79,007 $ 82,205

REVENUE VEHICLE MILES (thousands)

BREEZE Fixed Route (1) 6,827 6,916 7,062 6,650 5,746 5,339 5,245 5,198 5,672 5,522

FAST (2)/ FLEX (4) 240 227 230 225 22 36 81 100

ADA/Paratransit 902 859 993 976 1,138 1,122 1,096 1,026 1,176 1,400

COASTER (3) 257 260 254 256 257 259 263 278 277 277

SPRINTER 140 482 482 499 514 418 518

TOTAL 8,226 8,262 8,539 8,247 7,645 7,202 7,103 7,052 7,624 7,817

PASSENGER MILES (thousands)

BREEZE Fixed Route (1) 53,547 47,643 48,744 46,845 43,794 38,882 39,485 37,518 39,706 41,054

FAST (2)/ FLEX (4) 463 417 359 331 28 260 567 743

ADA/Paratransit 889 1,134 1,345 1,452 1,523 1,600 1,540 1,442 1,652 1,967

COASTER (3) 40,538 43,524 43,076 48,316 42,056 35,916 38,483 44,592 44,875 48,708

SPRINTER 7,467 19,575 18,400 19,602 21,210 18,103 22,178

TOTAL 95,437 92,718 93,524 104,411 106,976 94,798 99,110 105,021 104,903 114,650

Notes:

(1) Implemented Fast Forward route and schedule changes during FY 2002 which improved route efficiency by increasing revenue hours

and decreasing revenue miles.

(2) Added FAST service to Encinitas and San Marcos during FY 2003. FAST on demand service discontinued in August, 2008.

(3) Added mid-day COASTER service (2 round trips) in October 2001

(4) FLEX implemented during FY 2012 as a demand response to replace FAST

Operating Indicators By Transportation Mode

Last Ten Fiscal YearsFiscal Year


Page 89

Operating Indicators by Transportation Mode (Last Ten Years)-Continued

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

REVENUE HOURS (thousands)

BREEZE Fixed Route (1) 488.5 495.8 497.4 475.8 425.0 396.1 381.8 390.1 445.7 437.2

FAST (2)/ FLEX (4) 21.5 20.3 20.9 20.8 2.0 2.4 4.2 7.7

ADA/Paratransit 47.6 42.6 48.5 48.3 56.1 58.0 56.2 62.0 66.3 75.3

COASTER (3) 6.1 6.2 6.1 6.2 6.4 6.5 6.6 6.9 6.9 7.0

SPRINTER 6.2 21.8 21.9 22.6 23.3 18.9 23.5

TOTAL 563.7 564.9 572.9 557.3 511.3 482.5 467.2 484.7 542.0 550.7

REVENUE PER REVENUE HOUR

BREEZE Fixed Route 18.50$ 18.91$ 19.41$ 19.50$ 20.04$ 21.09$ 20.68$ 20.49$ 19.68$ 18.85$

FAST (2)/ FLEX (4) 3.58 4.19 4.02 3.85 4.00 19.58 18.18 9.93

ADA/Paratransit 5.82 8.36 8.68 7.85 8.63 8.69 8.75 8.44 8.36 7.54

COASTER 946.56 976.26 1,043.93 1,128.71 1,090.00 947.69 948.18 1,007.97 1,046.78 1,089.62

SPRINTER 107.74 104.22 94.79 105.66 113.78 120.95 117.60

SYSTEM 26.90 28.15 28.85 31.23 35.71 35.42 36.46 37.49 34.89 35.00

COST PER REVENUE HOUR


FAST (2)/ FLEX (4) 43.35 47.44 48.42 47.98 51.00 135.00 121.43 80.65

ADA/Paratransit 55.90 64.51 74.72 72.77 66.86 67.83 64.84 53.79 59.31 63.60

COASTER 2,536.89 2,594.23 2,919.51 2,879.19 2,572.81 2,372.00 2,405.45 2,554.93 2,723.48 2,801.00

SPRINTER 1,164.68 690.41 583.56 576.81 592.49 779.10 641.02

SYSTEM 106.48 112.52 118.32 138.14 149.83 153.98 154.23 157.20 145.77 149.29

REVENUE PER PASSENGER


FAST (2)/ FLEX (4) 0.66 0.80 0.88 0.91 1.00 11.75 4.02 3.04

ADA/Paratransit 3.22 4.05 4.25 3.75 4.17 4.24 4.21 4.02 3.82 3.69

COASTER 4.03 3.92 4.08 4.15 4.64 4.84 4.50 4.28 4.43 4.41

SPRINTER 0.93 1.04 0.98 1.08 1.10 1.14 1.08

SYSTEM 1.29 1.34 1.39 1.41 1.45 1.51 1.49 1.50 1.56 1.53

COST PER PASSENGER


FAST (2)/ FLEX (4) 8.03 9.08 10.65 11.34 12.75 81.00 26.84 24.68

ADA/Paratransit 30.94 31.23 36.61 34.80 32.34 33.06 31.15 25.65 27.12 31.10

COASTER 10.81 10.41 11.41 10.59 10.96 12.12 11.42 10.86 11.54 11.33

SPRINTER 10.06 6.86 6.03 5.87 5.71 7.36 5.91

SYSTEM 5.11 5.34 5.69 6.24 6.10 6.55 6.29 6.31 6.51 6.53

Notes:

(1) Implemented Fast Forward route and schedule changes during FY 2002 which improved route efficiency by increasing revenue hours

and decreasing revenue miles

(2) Added FAST service to Encinitas and San Marcos during FY 2003. FAST on demand service discontinued in August, 2008.

(3) Added mid-day COASTER service (2 round trips) in October 2001

(4) FLEX implemented during FY 2012 as a demand response to replace FAST

Operating Indicators By Transportation Mode (Continued)



Page 90

Operating Indicators by Transportation Mode (Last Ten Years)-Continued

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

PASSENGERS PER REVENUE MILE

BREEZE Fixed Route 1.48 1.47 1.44 1.47 1.52 1.47 1.47 1.52 1.47 1.47

FAST (2)/ FLEX (4) 0.48 0.47 0.41 0.39 0.36 0.11 0.23 0.25

ADA/Paratransit 0.10 0.10 0.10 0.10 0.10 0.11 0.11 0.13 0.12 0.11

COASTER 5.57 5.98 6.15 6.59 5.84 4.91 5.29 5.84 5.88 6.25

SPRINTER 5.13 4.55 4.39 4.45 4.70 4.79 4.92

SYSTEM 1.43 1.44 1.40 1.50 1.64 1.57 1.61 1.71 1.59 1.61

REVENUE PER REVENUE MILE


FAST (2)/ FLEX (4) 0.32 0.37 0.37 0.36 0.36 1.31 0.94 0.76

ADA/Paratransit 0.31 0.41 0.42 0.39 0.43 0.45 0.45 0.51 0.47 0.41

COASTER 22.47 23.41 25.07 27.34 27.14 23.78 23.79 25.02 26.08 27.54

SPRINTER 4.77 4.71 4.31 4.79 5.16 5.47 5.34

SYSTEM 1.84 1.92 1.94 2.11 2.39 2.37 2.40 2.58 2.48 2.47

COST PER REVENUE MILE


FAST (2)/ FLEX (4) 3.88 4.24 4.40 4.44 4.64 9.00 6.30 6.17

ADA/Paratransit 2.95 3.20 3.65 3.60 3.30 3.51 3.32 3.25 3.34 3.42

COASTER 60.21 62.21 70.11 69.73 64.07 59.53 60.37 63.41 67.84 70.78

SPRINTER 51.58 31.23 26.51 26.12 26.86 35.23 29.08

SYSTEM 7.30 7.69 7.94 9.33 10.02 10.32 10.14 10.80 10.36 10.52

FAREBOX RECOVERY RATIO

BREEZE Fixed Route 22.1% 21.5% 21.3% 19.6% 20.7% 19.8% 20.0% 19.4% 21.4% 19.6%

FAST (2)/ FLEX (4) 8.3% 8.8% 8.3% 8.0% 7.8% 14.5% 15.0% 12.3%

ADA/Paratransit 10.4% 13.0% 11.6% 10.8% 12.9% 12.8% 13.5% 15.7% 14.1% 11.9%

COASTER 37.3% 37.6% 35.8% 39.2% 42.4% 40.0% 39.4% 39.5% 38.4% 38.9%

SPRINTER 9.3% 15.1% 16.2% 18.3% 19.2% 15.5% 18.3%

SYSTEM 25.3% 25.0% 24.4% 22.6% 23.8% 23.0% 23.6% 23.8% 23.9% 23.4%

SUBSIDY PER PASSENGER


FAST (2)/ FLEX (4) 7.37 8.28 9.77 10.43 11.75 69.25 22.82 21.64

ADA/Paratransit 27.72 27.18 32.35 31.05 28.16 28.82 26.94 21.63 23.29 27.41

COASTER 6.77 6.49 7.33 6.44 6.32 7.28 6.92 6.57 7.10 6.92

SPRINTER 9.13 5.82 5.05 4.80 4.61 6.22 4.82

SYSTEM 3.82 4.00 4.30 4.83 4.64 5.05 4.81 4.80 4.95 5.00

Operating Indicators By Transportation Mode (Continued)



Page 91

Operational Statistics - Revenue Hours, Operating Costs and Operating Costs per Revenue Hour

563.7 564.9 572.9 557.3 511.3

482.5 467.2 484.7

542.0 550.7

0

100

200

300

400

500

600

700

800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Revenue Hours - System Wide (in thousands)

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Operating Costs By Mode (in thousands)

Breeze - Bus ADA/Paratransit Coaster - Commuter Rail Sprinter - Light Rail FAST/FLEX

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Operating Costs Per Revenue Hour - System Wide


Page 92

Average Fare, Subsidy per Passenger and Farebox Recovery Ratio


Page 93

Capital Asset Statistics By Transportation Mode (Last Ten Fiscal Years)


Revenue Vehicles:

Fixed Route

Number of Buses 165 165 165 159 156 154 144 146 158 164

Total Miles 7,406,212 6,907,783 7,558,778 7,200,043 6,317,053 5,803,083 5,755,243 5,842,776 6,355,769 6,181,031

Number of Trips 521,639 484,031 496,995 508,075 443,268 406,881 408,954 443,008 448,864 452,991

ADA/Paratransit

Number of Vehicles 34 34 34 34 34 34 34 136 88 44

Total Miles 994,526 942,244 1,130,361 1,148,355 1,352,620 1,372,856 1,339,913 1,339,913 1,175,839 1,571,406

Number of Trips 80,351 82,878 85,182 93,146 107,452 112,062 107,945 123,689 137,464 142,511

COASTER

Number of Vehicles 35 35 35 35 35 35 35 35 35 35

Total Miles 269,940 270,795 265,196 269,724 271,126 273,496 278,488 293,527 292,916 293,964

Number of Trips 6,410 6,337 6,181 6,239 6,267 6,316 6,420 6,775 6,746 6,761

SPRINTER

Number of Vehicles 12 12 12 12 12 12 12

Total Miles 142,990 490,401 490,150 504,209 515,196 419,440 519,618

Number of Trips 6,399 22,208 22,197 22,845 23,334 19,034 23,611

Facilities:

Administrative Offices 2 2 2 2 2 2 2 2 2 2

Maintenance Facilities 3 3 4 4 4 4 4 4 4 4

Transit Centers 7 7 7 7 7 7 7 7 7 7

Commuter Rail Stations 8 8 8 8 8 8 8 8 8 8

Light Rail Stations 15 15 15 15 15 15 15


Source: NCTD Internal Financial Information

Capital Asset Statistics

By Transportation Mode



Page 94

Industry Comparative Statistics

Vehicle

Revenue

Miles

(000's)

Vehicle

Revenue

Hours

(000's)

Total

Pass.

(000's)

Pass.

Miles

(000's)

Pass.

per

Revenue

Mile

Pass.

per

Revenue

Hour

Total

Operating

Expenses

(000's)

Oper.

Exp. per

Revenue

Mile

Oper.

Exp. per

Pass.

Total

Operating

Revenues

(000's)

Oper.

Rev. per

Pass.

Farebox

Ratio

BUS-FIXED ROUTE

Albuquerque Transit 5,326 392 12,821 45,940 2.41 32.71 35,147$ $6.60 $2.74 4,208$ $0.33 12.0%

Fort Worth Transportation Authority 4,214 353 7,439 38,768 1.77 21.07 32,568$ $7.73 $4.38 4,065$ $0.55 12.5%

Hillsborough Area Regional Transit 7,477 586 14,314 73,017 1.91 24.43 54,927$ $7.35 $3.84 12,230$ $0.85 22.3%

Riverside Transit 5,974 416 8,070 51,035 1.35 19.40 34,832$ $5.83 $4.32 8,106$ $1.00 23.3%

Santa Cruz Transit 2,376 180 5,032 22,418 2.12 27.96 29,495$ $12.41 $5.86 6,743$ $1.34 22.9%

Spokane Transit 5,313 381 11,031 47,498 2.08 28.95 43,292$ $8.15 $3.92 8,922$ $0.81 20.6%

North County Transit District 5,522 437 8,125 41,054 1.47 18.59 42,128$ $7.63 $5.18 8,240$ $1.01 19.6%

FAST,FLEX & ADA/PARATRANSIT

Albuquerque Transit 1,875 109 238 2,304 0.13 2.18 7,447$ $3.97 $31.29 349$ $1.47 4.7%

Central Contra Costa 1,246 77 152 1,504 0.12 1.97 5,170$ $4.15 $34.01 619$ $4.07 12.0%

Fresno Area Express 1,123 93 209 1,448 0.19 2.25 6,015$ $5.36 $28.78 267$ $1.28 4.4%

Hillsborough Area Regional Transit 1,226 78 128 984 0.10 1.64 4,371$ $3.57 $34.15 392$ $3.06 9.0%

Long Beach Transit 172 9 47 200 0.27 5.22 928$ $5.40 $19.74 81$ $1.72 8.7%

Santa Cruz Transit 448 46 92 572 0.21 2.00 5,254$ $11.73 $57.11 296$ $3.22 5.6%

North County Transit District 1,500 83 179 2,710 0.12 2.16 5,406$ $3.60 $30.20 643$ $3.59 11.9%

COMMUTER RAIL

No Indiana Commuter Transp District 3,679 102 3,668 106,008 1.00 35.96 39,686$ $10.79 $10.82 19,556$ $5.33 49.3%

South Florida Regional Transp Authority 2,944 97 4,005 115,414 1.36 41.29 55,588$ $18.88 $13.88 11,940$ $2.98 21.5%

Virginia Railway Express 2,032 64 4,702 151,270 2.31 73.47 61,552$ $30.29 $13.09 34,721$ $7.38 56.4%

North County Transit District 1,394 35 1,730 48,708 1.24 49.43 19,607$ $14.07 $11.33 7,627$ $4.41 38.9%

LIGHT RAIL

Greater Cleveland Regional Transit 699 46 2,856 16,938 4.09 62.09 12,339$ $17.65 $4.32 2,970$ $1.04 24.1%

Santa Clara Valley Transp Authority 3,084 194 10,372 56,050 3.36 53.46 61,685$ $20.00 $5.95 9,228$ $0.89 15.0%

Maryland Transit Administration 3,096 158 8,796 57,500 2.84 55.67 43,345$ $14.00 $4.93 6,952$ $0.79 16.0%

Port Authority of Allegheny County 1,928 148 7,130 33,971 3.70 48.18 52,043$ $26.99 $7.30 8,711$ $1.22 16.7%

North County Transit District 676 31 2,551 22,178 3.77 82.29 15,064$ $22.28 $5.91 2,764$ $1.08 18.3%

Source: Based on passengers carried, agencies were selected for comparison using the FTA Database, 2012 data. Subsequent years' data is not yet available.

INDUSTRY COMPARATIVE STATISTICS

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