Northern Virginia Transportation Authority FY2024 Financial Summary

NORTHERN VIRGINIA TRANSPORTATION AUTHORITY FY2024 Financial Statements and MDA Highlights

Focus on Project Perspectives The narrative aspects of the report highlight that as the region s leader in multimodal transportation planning, the Authority is focused on reducing congestion through various initiatives that stretch far into the future. One example is the FY2024 development of a Preliminary Deployment Plan for a Regional Bus Rapid Transit (PDP-BRT) system in Northern Virginia. Launched in October 2023, this plan builds on the BRT framework established in TransAction. The PDP-BRT aims to safeguard NVTA's current investment of over $500 million across all five BRT lines in Northern Virginia. The PDP-BRT includes a comprehensive analysis of ridership, congestion mitigation, operational efficiency, capital and operating costs, funding strategies, and governance to create a cohesive BRT network for the metropolitan Washington region. 1

Use of Funds The FY2024 Statement of Net Position (commonly referred to as a Balance Sheet in corporate accounting), shows an amount of $1.8B of $1.9B in assets as restricted exclusively for regional transportation projects and debt service already approved by the Authority. For FY2024 project reimbursements were $138M up $20M from last year but $10M below the FY2020 peak of $148M. 2

Revenues The Authority ended the Fiscal Year with a positive revenue variance. Ending with a reasonable positive budget variance is a stated objective of the Finance Committee and Authority. Any revenue not yet assigned to an adopted project at the end of each fiscal year is automatically rolled over into the next PayGo calculation to be programmed in the next funding cycle. The next cycle will be the FY2030/31 Six Year Program update. A new schedule of the Authority s approved funding pending future appropriations can be found in the Supplementary Information section found on pages 77 through 78 in the Financial and Compliance Reports. The new schedule combined with the appropriated project schedule found on pages 73 through 76 provides a comprehensive view of the Authority s long term financial commitments to funding regional transportation solutions. 3

Schedule of Changes in Restricted Funding For Appropriated Projects Regional Revenue Fund (pp. 73-76) 4

New for FY2024 Schedule of Restricted Approved Funding For FY2025-FY2029 Adopted Programs For The Regional Revenue Fund (pp 77-78) 5

Revenue Outlook For FY2024, the Authority had a $4.4M increase in sales tax receipts compared to FY2023 and a combined $1.7M decrease in the Regional Congestion Relief Fee (Grantor s) and the Interstate Operation and Enhancement Program (IOEP) transfer. Investment earnings increased $34M year over year. The increased investment earnings helped to backstop the decreases in Grantors fees and the IOEP transfer over the last year as seen in the chart below. 6

Investment Portfolio Recap Investment portfolio earnings for FY2024 were projected at $35M. Actual earnings are $66M, exceeding projections by $31M. Strong portfolio earnings help offset the uncertainty of the Grantor s Tax (estimated by NVTA) and the Interstate Operations and Enhancement Program (estimated by VDOT) weighing negatively on future revenue projections. There was an additional unrealized gain of $24.3 million. This is generated by audit standard requirements called Mark to Market . This standard aims to present a market comparison of security values as of June 30, 2024, in the Financial Statements. As has been noted in past Financial Statement recaps, the unrealized gain is a valuation, it is not spendable. Likewise, when the portfolio incurs a Mark to Market unrealized loss, that is also a valuation which will negate itself as the lower market value instrument mature off the portfolio. Neither the unrealized gain nor an unrealized loss enters the PayGo calculations. 7

Lease The new lease required significant statement disclosures for FY2024, especially considering the numerous transactions related to leaving 3040 Williams Drive and moving to the no cost temporary location at 2600 Park Tower that fiscal year. The final move to the 6th floor suite occurred in FY2025, so these transactions are occurring over two fiscal years. Of note for the lease are declared subsequent events such as the application in FY2025 of $38,500 from the advance rent deposit made in FY2024 for the first rent obligation paid in FY2025. Additionally, in FY2025 the Authority received the final rent concession through receipt of $892,008 in a cash transfer from the landlord. The landlord provided $1,068,000 in separate funding for tenant improvements. Those funds have been largely expended. NVTA staff are reviewing those expenditure records as they are received. As planned under the Authority approved lease term sheet, remaining costs to outfit the new office will be drawn from the $892,008 rent concession. A final wrap up of the lease transactions will be presented to the Finance Committee in the upcoming months and will be part of the FY2025 audit. 8

Required Communications under Government Auditing Standards Required Communications Auditing standards generally accepted in the United States of America (AU-C 260, The Auditor's Communication with Those Charged with Governance) require the auditor to promote effective two-way communication between the auditor and those charged with governance. Consistent with this requirement, the following summarizes our responsibilities regarding the basic financial statement audit and compliance reporting process, as well as observations arising from our audit that are significant and relevant to your responsibility to oversee the financial and compliance reporting process. Our Responsibilities with Regard to the Financial Statement and Compliance Audit Our responsibilities under auditing standards generally accepted in the United States of America; Government Auditing Standards issued by the Comptroller General of the United States; and Specifications for Authorities, Boards and Commissions provided by the Auditor of Public Accounts of the Commonwealth of Virginia, have been described to you in our engagement letter dated April 15, 2024. Our audit of the financial statements does not relieve management or those charged with governance of their responsibilities, which are also described in that letter. Overview of the Planned Scope and Timing of the Financial Statement and Compliance Audit We have issued a separate communication dated April 15, 2024 regarding the planned scope and timing of our audit and identified risks. 9

Required Communications under Government Auditing Standards..Contd Accounting Policies and Practices Preferability of Accounting Policies and Practices Under accounting principles generally accepted in the United States of America, in certain circumstances, management may select among alternative accounting practices. In our view, in such circumstances, management has selected the preferable accounting practice. Adoption of, or Change in, Accounting Policies Management has the ultimate responsibility for the appropriateness of the accounting policies used by the Authority. The Authority adopted Governmental Accounting Standards Board (GASB) Statement No. 99, Omnibus 2022, and GASB Statement 100, Accounting Changes and Error Corrections an amendment to GASB Statement No. 62, during the current period. Significant or Unusual Transactions We did not identify any significant or unusual transactions. Management s Judgments and Accounting Estimates Summary information about the process used by management in formulating particularly sensitive accounting estimates and about our conclusions regarding the reasonableness of those estimates is included in Exhibit A. Audit Adjustments There were no audit adjustments made to the original trial balances presented to us to begin our audit. Uncorrected Misstatements We are not aware of any uncorrected misstatements other than misstatements that are clearly trivial. 10

Required Communications under Government Auditing Standards..Contd Disagreements with Management We encountered no disagreements with management over the application of significant accounting principles, the basis for management s judgments on significant matters, the scope of the audit or significant disclosures to be included in the financial statements. Consultations with Other Accountants We are not aware of any consultations management had with other accountants about accounting or auditing matters. Significant Issues Discussed with Management No significant issues arising from the audit were discussed with or were the subject of correspondence with management. Significant Difficulties Encountered in Performing the Audit We did not encounter any significant difficulties in dealing with management during the audit. Difficult or Contentious Matters that Required Consultation We did not encounter any significant and difficult or contentious matters that required consultation outside the engagement team. Shared Responsibilities for Independence Independence is a joint responsibility and is managed most effectively when management, audit committees (or their equivalents), and audit firms work together in considering compliance with American Institute of Certified Public Accountants (AICPA) and Government Accountability Office (GAO) independence rules. For PBMares, LLP to fulfill its professional responsibility to maintain and monitor independence, management, the Authority and PBMares, LLP each play an important role. 11

Required Communications under Government Auditing Standards..Contd PBMares Responsibilities AICPA and GAO rules require independence both of mind and in appearance when providing audit and other attestation services. PBMares is to ensure that the AICPA and GAO s General Requirements for performing non-attest services are adhered to and included in all letters of engagement. Maintain a system of quality management over compliance with independence rules and firm policies. The Authority s Responsibilities Timely inform PBMares, before the effective date of transactions or other business changes, of the following: -New affiliates, directors, or officers. -Changes in the reporting entity impacting affiliates such as subsidiaries, partnerships, related entities, investments, joint ventures, component units, jointly governed organizations. Provide necessary affiliate information such as new or updated structure charts, as well as financial information required to perform materiality calculations needed for making affiliate determinations. Understand and conclude on the permissibility, prior to the Authority and its affiliates, officers, directors, or persons in a decision-making capacity, engaging in business relationships with PBMares. Not entering into arrangements of nonaudit services resulting in PBMares being involved in making management decisions on behalf of the Authority. Not entering into relationships resulting in close family members of PBMares covered persons, temporarily or permanently acting as an officer, director, or person in an accounting, financial reporting or compliance oversight role at the Authority. 12

Required Communications under Government Auditing Standards..Contd Internal Control and Compliance Matters We have separately communicated on internal control and compliance over financial reporting identified during our audit of the financial statements of the Authority, as required by Government Auditing Standards. This communication is attached as Exhibit B. Significant Written Communications between Management and Our Firm Copies of significant written communications between our firm and management of the Authority, including the representation letter provided to us by management is attached as Exhibits C. 13

Exhibit A Summary of Significant Accounting Estimates Accounting estimates are an integral part of the preparation of financial statements and are based upon management s current judgment. The process used by management encompasses their knowledge and experience about past and current events and certain assumptions about future events. You may wish to monitor throughout the year the process used to determine and record these accounting estimates. The following describes the significant accounting estimates reflected in the Authority s June 30, 2024 financial statements: 14

FY2024 Management Letter 15