okay. so the sfpuc commission is called to order for the for the, um, budget hearings that we are starting here today at 9:00. so can we have a roll call, please? president paulson, president, vice president rivera here. commissioner jaime, she'll be here shortly. commissioner maxwell. commissioner stacy here. and you have a quorum. so before we call the first item, i'd like to announce that the san francisco public utilities

commission acknowledges that its . excuse me, that its own owns and are stewards of the unseated lands located with the in the ethnohistoric territory of the ohlone tribe and other familiar descendants of the federally historic recognized mission san jose. verona band of alameda county. the sfpuc also recognizes that every citizen residing within the greater bay area has and continues to benefit from, from. excuse me, the use and occupation of the ohlone tribes aboriginal lands since before and after the san francisco public utility commission's founding in 1932. it is vitally important that we are not only recognize the history of the tribal landsicwee acknowledge and honor the fact that the ohlone people have established a working partnership with the sfp, auc and are productive and flourishing members within the greater san francisco bay area community today. so as i said,

we are here for, um, the, uh, budget hearings. and so, um, can we have the first item item number three, public hearing and discussion of the proposed budget, proposed budget, priority, his administrative code section 3.3 b fiscal year 2425, and fiscal year 2526 sfpuc operating budget ten year capital plan overview and ten year financial plan overview. good morning, commissioners. we're very pleased to be with you this morning to present our proposed budget for the next two fiscal years, fiscal year 20 2425 and fiscal year 2526. i'm joined this morning by nancy hamm, our chief financial officer and assistant general manager for business services, laura bush, deputy chief financial officer. and eric cordova, financial planning director. we're going to walk you through our proposed two year operating budget. two year capital budget, ten year capital

plan, and our ten year financial plan. as part of that, we'll lay out the priority is that guided our decision making and help to shape these budget proposals. next slide please. here's a quick overview of today's agenda. i'll be going over our budget priorities in just a few moments, but i'd like to note that this is a public hearing under administrative code section 3.3 b, and it provides the public an opportunity to hear about our proposed budget and weigh in on priorities. we'll then discuss our budget approach before going into more specifics about our operating budget. capital budget, ten year financial plan, and debt outlook. this will be followed by operating budget presentations for our different bureaus. for reference, its business services, external affairs, human resources services, my office and infrastructure. um uh, will present their proposed budgets as well. next slide please. first, while i know you're familiar for the public, i think

it's important to highlight what we do. the sfpuc is a not for private, not for profit public utility that delivers high quality drinking water to 2.7 million people in the bay area. our sewers and wastewater treatment plants serve san francisco, and they are on the front line protecting public health and the health of the bay and the pacific ocean. and we generate clean power and serve electricity to over 385,000 residential, business and municipal customers in san francisco in fact, through our own power generation and the electricity procured through clean power sf, we currently provide about 75% of the electricity that's used in san francisco today. next slide please. i also want to highlight the scope of our operations and the diverse expertise involved in delivering those services. here. you see a high level overview map of our facilities that i know many of you have had the opportunity to visit. as you know, our operations span nearly the width of the entire state.

we have more than 2300 employees operating from the pacific ocean to the high sierra. they are as diverse in their backgrounds and life stories as they are in their skills. sfpuc workers are testing water quality, keeping branches away from power lines and upgrading wastewater treatment plants. they're answering questions from customers in their preferred language. they're providing rebates for water efficient washing machines, helping to train the utility workers of tomorrow and protecting the environment to benefit native species and their habitats. next slide please. we're determined and committed to continue our work building the utility of the future. and that is reflected in our commitment to protecting the environment, serving as an economic engine and lifting up the diverse communities that we serve. you'll see that throughout this proposed budget in our consulting sessions, we're guided in our work by three overarching priority is affordability, responsible management, and investing. where

it matters. as for affordability , the choices we made in putting together this budget were done with a keen eye toward how they would affect our customers. we prioritize keeping our rates competitive. part of that meant improving how we plan for and fund our capital projects, which is our biggest cost driver. another critical component was the affordability policy that you adopted in november, which established metrics to assist in evaluating the impact of operating and capital budget increases on future rates, particularly for our most vulnerable residents. we also must be responsible stewards of the tremendous assets entrusted to our care. that means leading with integrity and transparency in our business decision means meeting all of our regulatory requirements, maintaining our solid financial standing, completing smart and timely system maintenance to assure maximum benefits for ratepayers, and investing in our workforce.

who are the ones who make it all happen. we also undertook a top to bottom review of our capital plan. the proposed plan that we put before you today ensures that we continue to meet legal requirements and achieve our affordability goals while building a public utility that is resilient economically vibrant and equitable. this is the largest ten year capital plan. the sfpuc has proposed. it represents a visionary investment in san francisco, san francisco's economy, infrastructure and resiliency. the ten year capital plan includes accelerating economic impacts by investing in critical upgrades and modernization. this plan creates fertile ground for businesses to flourish and attract investments, creates jobs while developing and delivering important infrastructure upgrades. and more specifically, it provides for improved energy grids, reliable water systems and robust wastewater treatment to

ensure smooth operation for existing companies and entices new ones to set up shop injecting lifeblood into the city's economic veins. the multiplier effect of investment translate into more jobs, higher wages and a strengthened economic base for all, while at the same time, we want to show our continuing commitment to labor, the capital improvement plan champions the well-being of our workforce. the construction and maintenance projects it generates offer high paying, fair wage opportunities with comprehensive benefits. these jobs prioritize union labor, ensuring workers receive fair compensation and safe working conditions and a secure future by investing in skilled labor. the plan not only empowers individuals, but also strengthens the backbone of san francisco and the surrounding bay area's middle class, creating a ripple effect that benefits the entire community. we also want to correct historic

wrongs, recognizing the historical inequities and infrastructure investment. our capital plan actively seeks to bridge the gap by prioritizing projects and historically disadvantaged communities. these investments go beyond infrastructure upgrades. they represent our commitment to correcting past injustices and ensuring equal access to vital services and equitable placement of infrastructure for all residents. finally, we want to tackle the climate crisis, head on. the capital plan doesn't shy away from the pressing challenge of climate change. it champions our proactive approach to prioritize projects that reduce carbon emissions, lessen the impacts of sea level rise, control route to a healthy bay ecosystem, increasing energy efficiency and foster resilience in the face of extreme weather events. by prioritizing sustainable city and climate action, our capital plan protects the environment and paves the way for a clean and

healthy future. for generations to come. next slide please. that's not to say that we didn't face challenges putting this budget proposal together. we did. and you see them outlined here on this slide. and we'll go into them in more detail throughout the presentation. one of our central challenges was keeping our rates affordable. while meeting the large investment needs that our systems demand for seismic safety, climate resiliency and regulatory requirements. we feel that we have accomplished that with this budget. other factors include cost increases in multiple areas from construction to power supplies. we're also focused on our long terme financial health, including adding to reserves where needed, covering our debt service and maintaining our robust financial ratings. and all of this comes against a backdrop of economic uncertainty for post-pandemic san francisco and a challenging budget situation for the city as

a whole. we took into account all of these factors when presenting. when preparing this budget. next slide please. finally i want to underscore how racial equity is now a formal and institutionalized part of the budget process, not only are our budget proposals shaped by staff with racial equity in mind, but this budget cycle is the first time we've had a chief diversity, equity and inclusion officer, doctor christine bijou, as part of the process, he served on our budget steering committee and reviewed the budget proposals from our enterprises and bureaus. his team created a budget tool that we use to analyze all budget requests with a lens of fostering racial equity and a thoughtful and reflective process process. in addition, we asked ourselves how to focus on issues of hiring and

recruitment, retention and promotion, discipline and separation decisions, equity, leadership and management, mobility and professional development, and organizational and organizational culture of inclusion and belonging. we're proud to present a budget that aligns with our racial equity plan that this is, at its core, a budget about people with a with a focus on serving, engaging, partnering with, and employing our most vulnerable communities. i want to thank all the staff who did a tremendous who did tremendous work putting this budget proposal together, including teams across our business, our bureaus and enterprises, but particularly our business services division. and with that, i'll hand the presentation over to nancy hom, our chief financial officer and assistant general manager for business services, who is going to talk more about our budget development process, the upcoming timeline and details about our proposed financial plans. and i'll hand it over to nancy. thank you very much. thank you.

thank you. dennis good morning, commissioners. my name is nancy hom. i'm chief financial officer and assistant general manager for business services. thank you for spending your morning with us. i'd like to first go over the biannual budget process and extensive work that we've done together as an agency to bring forward this two year budget for these special hearings, this workflow here that you see on this chart is how our budget process, which began over six months ago, in may last year when we opened up our capital planning process to perform a review of current projects. we also did a baseline review of the operating budget, reviewed historic savings, identified key challenges and potential areas for new investment budget instructions were issued in august and the process began to ramp up quickly. each enterprise

and bureau made their operating and capital proposals, and then these were then rigorously reviewed in by the finances budget team. the budget proposal continued to weekly steering committee meetings, at which the executive team deliberated on the proposals and discussed operating and rate impacts. in december, we held multiple meetings with our general manager to walk him through the final proposals and financial plan implications, and this was before we finalized the operating and capital budget proposals. at the staff level, it was a lot of work by many teams and individuals, and i want to emphasize that this budget process was extremely thorough and it was quite rigorous. and i commend and thank my colleagues on the executive team and their senior leaders for their focus in fiscal responsibility and prudence in developing this budget. so here we are today in january. we have four special meetings starting this week with you over the next two weeks. uh, and we will end with the budget adoption at the regular meeting

on february 13th. from there, the budget will continue and be proposed to the mayor's office on february 21st. and that will begin the mayor's phase. that is where their budget office may make some changes. and during that phase, labor negotiations will also take place concurrently. and that that will determine our final salary and benefit costs for the future budget years on may first, the mayor's budget will be proposed to the board of supervisors and will be analyzed by the budget and legislative analyst. and at that time again, we will face potential cuts or changes during that process. and then finally, the budget will be adopted in july. and as always, we will return to this commission in the late summer to go over the final budget and any changes. now, as mentioned, we have a lot of hearings over the next couple of weeks and as you can see on this timeline here, we will review the overall operating and capital budgets today as well as the bureau budgets to discuss priorities. we will meet with wastewater this friday, and then

we will be followed by water enterprise on monday. the 20 on january 29th and the power enterprise on friday, february 2nd. the goal of these hearings is to walk through all of this information with you to ensure you understand and all the budget proposals, and we hope to adopt the budget on february 13th. we want to make sure that all your questions are answered and that your concerns are addressed before that time, and that's to avoid any delays and that we can also meet our charter deadline to get the adopted budget to the mayor's office on february 21st. and again, i do want to note that the numbers you'll see here today represent our best estimates. there may be minor changes as we move towards submission to the mayor's office for their budget phase, and this is especially true for the labor costs that may fluctuate based on underlying assumptions that we cannot determine, such as cost of living adjustments, pension and health costs. so on february 13th, what will we be adopting? the commission will be adopting. excuse me. there will be four separate agenda items.

they're all going to be called together. they are highlighted here and include the two year operating budget. two year capital budgets and those two will be submitted to the mayor's office. there will also be the ten year capital plans and ten year financial plans, which are important tools for this agency that help us inform our long time financial sustainability. and the first two years of the ten year capital plan are part of the two year capital budget. there are. sorry. excuse me. the financial plan includes information on debt issuances and rate forecasts associated with projected revenues, expenditures and metrics. so let's begin. the first portion, which is the two year operating budget. and as you know, the sfpuc adopts fixed biannual operating budgets with minimal changes expected at the midpoint, which is budget year two. so it's very important we put our best foot forward as we are essentially locked in with

this budget for two fiscal years. the pie chart here represents our $2 billion operating budget for next fiscal year. and the second budget year through 2425. and that number is correct. pwcs budget will be at 1.99 billion next. by the end by next year, and will exceed 2 billion the following year. 20 2526. the budget has grown a lot and this has been driven by two main cost drivers that account for over 60% of our operating budget. these are capital costs and then power purchase and distribution costs. capital is pwcs largest cost driver, comprised of 36% of our operating operating budget, and is comprised of debt service and revenue funded capital, each at 24% and 12. the represented here in the dark and light blue on the pie chart, power purchase and distribution costs is the next largest category at 26, represented in orange. and this is part of our operating budget.

these two main cost drivers are followed by personnel and non personnel costs that support our daily operations at 14 and 19, respectively. so how much has our operating budget grown? this chart details the budget growth from fiscal year 2324 over the next two proposed budget years. as you can see, the operating budget will grow by 18% or $323 million over the next two years to 2.1 billion in 2526. again this is driven by the two main cost drivers capital and power purchase and distribution. in both years, and those grow by 306 million. that's 83% of the total growth they are represented here in blue and orange in the bar chart. and the importance of these two factors in our finances cannot be understated. operating budget, new proposals, which we will spend a lot of time talking with you over the next couple of weeks, are not a significant driver of the overall growth in

this operating budget. they net about roughly 33 million, or 9% of the overall total growth figure. essentially the proposed increase increases in the overall operating budget for new proposals is about 1.8% over two years. this list highlights the growth drivers in our operating and budget again by fiscal year. and again, you'll notice within the first five rows for each fiscal year, the main drivers are the same as previously discussed again at the bottom line, over two years, you see that the net growth is $323 million over two years. this is the same list as the operating budget growth drivers, but laid out in a bar chart, which i feel is a little bit easier to understand and visualize. again, this especially highlights that capital the top gray and blue lines, as well as the increasing costs of purchase and distribution of power are what is really driving this agency's budget growth. they are the first three bars that you see there. we'll also provide a lot

of detail to you on our proposed capital plans. and what is driving that increase. however for power purchases and distribution costs, they're not something that we can fully control. they're driven by energy market prices and pga. and that puts a lot of pressure on the power enterprise's budget. and we will get into that later. next week with agm hill new proposals are shown in yellow, but we are proposing offsetting salary savings represented in the dark red to reduce that cost. and again, as you can see, they're not a significant factor in our overall budget growth. our cost increases do include anticipated cost of living adjustments and operation and maintenance, which is all other changes, including inflation, inflation and non-labor costs and equipment. the green bar at the very bottom depicts a reduction in our general reserve contribution as compared with the current year's adopted budget, and this is in accordance with our financial plan. so we'll now continue with

an overview of the new budget proposals and new full time equivalents that we are proposing in our operating budget and on the blue table to the right that this is detailed by enterprise and bureau, new operating proposals. total 47.3 million in new costs through fiscal year 2526. however again, we've been able to offset a portion of these costs by rightsizing our budgeted salary savings. and i will explain salary savings or attrition later in this presentation. the net impact when combining our new proposals of 47.3 and the attrition savings, gives us a net operating budget for new proposals of 33 million. and again, i will walk everyone through that later. infrastructure is listed separately although their budget is growing. their funding comes from the capital budget. and as you can see, the biggest growth driver of the total new proposals is from hetchy water

at 20. wastewater representing 19% and then business services 15. and those are in the pie chart to the left. so this slide details the summary of our overall staffing request. a portion of the $33 billion net operating budget increase is due to for new proposals is due to adjustments we've made to our staffing detailed on this pie chart and in the table to the right, we are requesting a total of 171 new permanent positions and 175 substitutes. however for most of the new 171, new position requests are converted of existing temporary staff to permanent positions. and again, i will explain that as well. later in this presentation, as seen on the pie chart to the left, business services has 33 new position requests, followed by power at 26, water at 21 and

wastewater with 20. one one way of looking at how our headcount growth, um, our staffing changes are here on this table and i'll, i will walk you through this, um, showing you the total change in headcount from current fiscal year. over the left top begins with 2748 budgeted ftes or full time equivalents, and we will segment the new position growth into subcategories there on the left. so continuing on the left side for budget year one, one 155 of the 171 new positions are requested. of those positions. um, the 155 are further category subcategory added and i will i'll just take you through it. 57 of them. 57 of these positions are new requests. so these are new positions that do not exist for roles that we feel that are required. and these are proposed positions. the next

batch is 67 temporary to permanent conversion means these are existing filled temporary positions. we want to bring on budget as permanent civil service roles. these are further offset by 86 full time equivalents due to increases in salaries, salary and savings or attrition, and lastly, there are 31 off budget positions as well that we want to add that will charge to the capital budget. when you total these numbers together, we end the first fiscal year 2425 proposals with. 2870 on budgeted full time equivalents, um, for the budget and as you can see over the two years, there is a net growth of 73 new staff added to pwcs headcount. that's the difference between your ending headcount in fiscal 2526, 2821, less your starting headcount from current year 2748. so that's 73 net new

positions inclusive of salary savings. the total growth when adding just looking at positions that we're adding to the budget, excluding attrition, is 171. so what are these new staffing changes and what do they represent and why? the first group of 171 substitutions is both to repurpose positions for changing operational needs and to align job duties with classifications. these are existing budgeted positions where we are requesting to change job classifications and roles. the next group consists of 171 new positions requested. i just that i just detailed and again these include temporary to permanent conversions of staff. we are in need of new staff here for uh for those positions to be in permanent roles in permanent civil service roles to support retention and recruitment and we

are addressing staffing shortages in key operational areas such as water quality, natural resources and green infrastructure, and maintenance and risk management. we're also shoring up our human resources team to ensure proper capacity to increase hiring performance, and we want to support the city's housing for all initiative and also increase our lead inspection for schools and meeting regulatory requirements. so i'd like to spend more time talking about temporary to permanent conversions in our operating budget and why they are a priority. the majority of our new position requests 87 of the 171 are budget and headcount neutral. um, and i'll explain that. why. so currently the majority of these are temporary exempt category 18 positions that are um that are temporary for three years. they are filled and there are actual individuals in these roles. we would like to convert them to permanent civil service positions to be on our budget as they serve in core long terme operating positions

as staff. that we already have on board and are already paying for out from our existing temporary budget. um, but are in temporary positions. they should be put in permanent role staffed , are performing core operational duties, should be in permanent operating positions. and as we've experienced temporary staff are much more likely to leave employment with the sfpd. turnover is a significant operational challenge for our agency and is a cost to ratepayers. retention of staff is a core priority for our agency and in fact, according to the recent employee voice survey, not having a permanent civil service position is among the top two reasons that temporary employees consider leaving the sfpd and being in a temporary position is more likely to make an employee consider leaving. and that's more than not having adequate pay, meaning full work or even having a poor relationship with their supervisor or coworkers and more importantly, lack of

career advancement and opportunities is the main reason employees consider leaving us employees can advance into is thus a very key recruitment and a retention strategy, and this is proven in our data and through actual individual experience by our hiring managers who have direct reports to our temporary staff. we have lost many talented individuals in this organization due to offers from internal and external for permanent roles and positions, and as these temporary positions are all currently filled at this time of the budget proposal, there is no new headcount for these substitutions. labor costs for these conversions are offset with reductions in temporary salaries that we're using currently, or attrition or attrition. salary savings. and as we're already paying for them with existing budget dollars. another point i don't want to shy away from is that we have a large number of existing vacancies, and the question is, how can we ask for so many new positions when we already have

hundreds of positions we can't fill? and the explanation is that management has already thought this through very carefully, and we accept the reality that that we must fill these vacancies and we need new positions. and we also took further steps to ensure we were being extremely prudent and responsible. finance first went through the sfp vacancy report in detail with each enterprise and bureau agm and their managers, and we identified positions together that were no longer needed or had been vacant for too long and opted for substituting these positions instead of asking for new positions. and as a result, we are now doing 175 substitute ins in this budget budget, many of which are to repurpose old positions for new roles and needs. this significantly, significantly reduced the number of those requests from the original 203 to the 171 that we speak of today. next, we have a story for every vacancy to ensure that no fte is sitting

vacant without an active recruitment plan. for each vacancy we have is justified and we know what the recruitment plans are. we have this information to share with the mayor's office and the board of supervisors when they question or ask for clarification about our existing vacancies, and additionally, we've made significant changes in our budgeted attrition to more appropriately reflect salary savings, as this helps to offset both dollars and full time equivalent requests in our budget. and again, i'll explain this on the next slide. and lastly, we have ensured to strengthen and augment our human resources services team to support the increase in hiring activities and have more successful recruitments. wendy macy, chief people officer, will explain this later today. so you're you may ask again what does this mean when they keep saying we increased our attrition, our salary savings. so attrition is a budget concept whereby we assume that not all our budgeted positions are filled through the entire fiscal

year. and as there will be vacancies due to a number of reasons, we place a negative number or savings into the budget to account for this. an attrition is not just a dollar amount, it is also has an fte value and together this brings down our department fte headcount as well as our budget dollars and as of current our budgeted attrition in the current year represents about 11% of our salary budget. and you can see this in the chart here that the dark blue is all of our operating funded positions. the light blue are our off budget positions funded by capital. and that top portion outlined in red in the hatched blue represent our budgeted attrition or salary savings. and for those positions, we cannot fill, there could be a number of reasons perhaps we are holding the positions for savings, or we are not having successful recruitments, but those represent our savings. and don't be too concerned as we will. we do not intend to fill that that

portion. we always have vacancies for a number of reasons, but what about the growth of our staff? 171 new permanent. positions represents 6% growth in the total budgeted positions, but as previously mentioned, the majority of the 87 within that 171 positions are temporary to permanent conversions. and don't truly represent new headcount because they are being paid from our temporary salary budget. in fact, we're already paying for these staff again with existing dollars, and we are able to increase our salary savings to offset the permanent salary dollars that we are adding. in addition, we've historically seen quite large salary savings over and above our budgeted attrition. ian and laura tells this to you every quarter in her quarterly budget update. so to properly write size and align our salary budget to reflect our true vacancy rate, we increased our overall budgeted salary savings attrition from the current 11% to 15% of our salary

budget, and in sum, that total is our increased attrition is by $14 million, an amount equivalent to 98 fte to account for temporary to permanent conversions, and then the right sizing for our vacancies, and therefore that net fte goes from 171 to 100 to 73 positions, and of which the 7334 are actually off budget and paid through capital and bottom line, the net number is actually 39. when you're doing that calculation of net new on budget positions or a 2% increase. another useful analysis is to visit our full time equivalent position growth in the context of the last four years, our aau, fte number and this is a figure that appears in the annual appropriation ordinance of the city, also known as the aau, is shown in the slide here for each fiscal

year, the number represents the budgeted and funded ftes and excludes off budget positions and any attrition. and as you can see, our full time equivalent figure in the city's aau has grown by 4.3, or 73 positions over the last seven years. meanwhile our operating budget has grown by 50. a larger operating budget budget isn't just a matter of extra zeros on reports or checks. i can personally attest to you on that. we all know how much more complex the work of our agency has grown over the last years, and this is to responding to and remaining in compliance with new regulations has increased audits and transparency requirements. it's addressing emergent events, massive capital investments and strengthening and supporting our workforce and engaging in investing into our communities and this list continues the

point that i want to highlight here is that our staffing request this year is reasonable and appropriate, given how the scope of our work has grown significantly, we remain fiscally prudent, leveraging what resources we have and only requesting what we need to successfully accomplish accomplish our organizational objectives. and so thank you. and with that, i'd like to hand over the presentation for the next portion to laura bush, who i'd like to congratulate as our newly appointed deputy chief financial officer. thank you, nancy, please can i get the slides? uh, good morning everyone. thank you for braving the rain this morning to get here. um, as nancy mentioned, my name is laura bush. i'm sfpuc newly appointed deputy chief financial officer, and i'll be walking you through the following slides about the two year capital budget and the ten year capital improvement plan,

which we often refer to as the cip. uh, before we get started, it's important to refresh you on the components that make up the overall ten year cip. firstly, the cip is a long range forecast of hundreds of capital projects broken down by enterprise size that is required for us to do by city charter, but more importantly, let's the sfpuc transparently reflect on what our capital budget priorities are over the next ten years. second, there is a lot of information with individual project data sheets describing project scope, schedule, and costs that roll up to the ten year cip. thirdly the first two years of the capital plan is the appropriate in that you are authorizing for the puc to dedicate to these projects over the next two years. finally the ten year cip is complemented by a detailed capital plan report that lays out the agency's capital strategy, priorities and further details by enterprise over the ten year horizon. this

is only the second time that we have developed this report, and it forms an important part of our efforts to better communicate what our capital plans. this year, there were many notable changes and improvements to our capital planning and process due to the inception of the capital planning and delivery program in may of 2023, ten year cip guidelines were issued to each enterprise with a goal of unifying approaches across the sfpuc and refocusing on deliverability to the extent possible. subsequently internal budget instructions were issued to provide financial guidance to enterprises when developing their capital proposals. this fall, a series of steering committee meetings considered the initially proposed $14.5 billion plan, and were able to reduce the proposal before you today by 2.7 billion to $11.8 billion. this was done in a collaborative manner, focusing on prioritization and deliverability. this year's capital planning process started

much earlier than in previous years. in may. rather than the late summer. as you'll see, the result is a more mature and transparent capital plan that further aligns the sfpuc mission of providing our ratepayers with a high quality, efficient and reliable water power and sewer services in a manner that is inclusive of environmental and community community interests and that sustains the resources entrusted to our care. as i mentioned on the last slide this year, the capital planning process was different because of the capital planning and delivery program. the goal of this slide is just to provide a quick overview and reminder as to what the capital planning and delivery program is. the program is aimed at maturing our overall budget management methodology by unifying approaches where possible and improving the ability of the puc to assess how we deliver projects and to develop solutions where there are issues that make deliverability more challenging than it should be. this program is responsible for this iteration of the sfpuc capital

improvement plan. being more mature and transparent than any before agm, robinson and executive sponsor of this program will provide you with more information on the outputs and successes of this program. during his presentation later this morning. so, as such, the balanced capital plan before you today is $11.8 billion. over the next ten years. before we get into the details of this year's plan, i'll outline some key points of this year's ten year cip. this is a comprehensive plan across three enterprise phases that ensures that the puc will continue to provide some of the cleanest drinking water in the us, protect public health and the environment with the only combined stormwater and sewer system in coastal california, and provide affordable, clean energy through the public power system and clean power. f this ten year cip is a catalyst for sustained economic growth, creating tens of thousands of jobs, many of them union jobs. over the next

ten years. this plan supports small business and business development broadly in the city. in turn supporting the city's general fund through business taxes. this plan ensures that san francisco adheres to our values by seriously investing in projects that will make meaningful difference towards fighting the climate crisis, and becoming more resilient to it. and finally, this plan is in full alignment with the mayor's budget priorities. projects in this plan will ensure that san francisco is safer, cleaner, more prosperous, and, more importantly, more resilient. as we think about the many important investments we are proposing ing, let's pause to look back and review some of the critical investments and successes we've already seen as a result of the previous ten year sips. this slide illustrates the billions of dollars of investment and tens of tens of thousands of jobs poured into the regional economy as a result of the investments that the puc has already made. but there is more to do to restate what is quite obvious from this chart. this will be the largest ten year cip that

puc has ever adopted. and now let's look forward. this slide illustrates the historic investments by enterprise that will be made over the next ten years. as you can see, overall, this year's ten year cip is growing by 34. i'm going to get into what is driving this growth in the next few slides. i also wanted to point out that the shape of this year's cip is different than in past years. instead of high spending in the first few years leveling off in the out years, we see a double hump plan. that's an official tum. um, this explains a lot of the growth. what are you seeing here in that second hump is a major new project. entering the plan. the approximately $1.5 billion nutrients project in wastewater, which will begin ramping up in the second half of the plan, is what's causing that . finally, it's important to note that this year we made a much needed change to the way we define capital projects by

removing ongoing programmatic projects from our capital plan and instead designating them as operating budget projects. this change is entirely responsible for the decrease in clean power assessed capital plan. it's just projects moving from the capital plan to the operating budget. but to be clear, these revenue funded projects, um, have always been an operating budget costs. we're just redesigned, putting them. yes yeah, absolutely. that's a bit confusing. do we have to wait? uh, let's let's take notes and go through the whole, um, do the whole presentation again so that we can, because everything will be in context. thank you. but you wanted a clarification, commissioner. i can quickly clarify. it's no problem. the pro programmatic projects are ongoing. projects um, such as? um uh, in natural resources to support ongoing stuff going on at sunol, for instance. um, those were previously designated

as capital projects, but it didn't really make sense because they were ongoing. not one time in nature. so there were always revenue funded. so it was still an operating budget expense. we just decided this year, let's call them operating expenses rather than capital projects. there's a lot of those in cleanpowersf, and that's why you see the decrease in the capital budget there for clean power. it's not an actual decrease in spending, it's just how a designated the projects. absolutely thank you. okay. so um, that's a big increase at the $3 billion increase. so i want to talk about what's driving that. uh, this slide illustrates the roughly $3 billion increase to our ten year cip by projects. wastewater projects are responsible for 38% of the growth, with the remainder split pretty evenly between water, hetchy water and hetchy power. some of the key projects that are driving the increase are listed on this slide, but i'll just point out a couple. of course, there's the $1.5 billion nutrients project, which of

which 1.2 billion was going to be spent in the next ten years. there's a portion that's spent after the end of the ten year period. the moccasin penstock replacement project increased to water main replacement and the millbrae campus project as well as projects in power that will bring on new customers such as the steam loop electrification project. you'll hear a lot more about these projects over the coming weeks. during the enterprise budget hearings. since this was such a significant increase in our capital plan, we really dove into what was driving it, and i want to make sure that's really clear. um, so here is another way of looking at what's driving the growth. we've categorized the projects, driving the increase. i wanted to make clear that it's just a few key types of projects that are driving the overall growth in the capital plan. these include regulatory and environmental projects that must be completed to maintain ecosystems or meet regulatory requirements, repair and replacement of critical infrastructure. for example, projects that must be completed

to keep our systems reliable and operable. and finally, clean energy projects that ensure we do our part to reduce carbon emissions and fight the climate change crisis. the regulatory and environmental category includes projects like nutrient reduction and alternative water supply, clean energy category includes projects like the moccasin penstocks, grid connection and the steam loop project, and finally the repair and replacement of critical infrastructure category includes projects like moccasin dam, pelocetus, the millbrae campus and oceanside plant improvements . while these increase, these are very eye opening. they are critical to the sfpuc meeting regulatory and environmental compliance, maintaining an operable system, and ensuring and ensuring we do our part to fight the climate crisis and be resilient to it. okay, so now that we've talked about what's driving the growth, let's zoom out and look at the whole capital plan. $11.8 billion.

again roughly half of the funding in this ten year cip is made up of wastewater projects. this is followed by water hetchy water, hetchy power and cleanpowersf, respectively. and on the slide you can see some of the projects that are included in this ten year plan. i'm not going to go over those today because you're going to hear all about those from the enterprise agm's over the coming weeks. and then zooming into the first two years of the plan is our two year capital budget. it's important to note here that the large changes to the ten year plan have just been talking about do not have a significant impact on the two year budget, which is the money that we're actually appropriating as part of this process. both years of the budget are just under $1.6 billion, and as shown in the slide in the chart, the two year budget we're proposing is actually very, very similar to what we thought it would be in the last year, ten year, in last year's ten year cip that reflects the increased certainty we have over near ten years. the

small changes you're seeing that's the difference between the blue and the yellow bars are the result of shifting project schedules, ensuring ensure we're using already appropriated funds before requesting new ones and better estimates for project costs. we also wanted to address that we are continuing to focus on deliverability of our capital projects. that is, ensuring our budget aligns with our ability to deliver, seeing significant growth in this year's capital plan may cause concern on how we can actually deliver it. this has been a huge focus of this year's planning process. each enterprise thoroughly assessed deliverability of the final proposed plans includes using up existing appropriations, project scheduling and staffing resources is at a high level through the capital planning process, enterprises have shifted resource allocation plans, staggered project phases and planned for some of the work

to be delivered by other entities. to ensure that this iteration of the ten year cip is deliverable. so given the very large figure of this year's capital plan, puc's largest ever , we wanted to understand how the capital plan might impact three important areas not only for our ratepayers, but our community at large. the next three slides provide a high level illustration of the analysis. we undertook to understand how our ten year cip proposal will impact the regional economy, organized labor, the climate and benefiting historic disadvantaged communities. when it comes to the economy. based on established metrics that the city uses, we calculate that the $11.8 billion capital plan will generate and sustain over 50,000 jobs, two thirds of these jobs will be good paying, construction related jobs, while the remaining third will be a result of the multiplier effect. these are the jobs generated as

a result of the ripple effect on our economy. for example, restaurants, retailers and service providers will be supported by the downstream impacts of this capital improvement plan. this increased economic activity ripples through the community, generating valuable sales and business tax revenue that ultimately returns to the city, fueling the funds for vital, vital services like homelessness , public safety and street cleanliness. we also recognize the critical role that strong unions play in supporting a vibrant regional economy. me, i wanted to highlight how this cip prioritizes partnerships with unionized workers. these partnerships offer numerous benefits. union jobs offer competitive wages, ensuring a stable income for workers and their families. they also provide valuable, valuable benefits like health insurance, retirement plans and training opportunities. contract beating to long tum financial security and career development. much of the puc's capital projects

projects must must adhere to the city's local hiring policy, which mandates local residents perform a minimum of 30% of the work hours on capital projects over 400,000, most of the direct jobs funded by this ten year cip will benefit unions like local 21 laborers, local 261 and seiu 1021, just to name a few. we know that historically, sfpuc cip have benefited the local workforce. for example, so far, 37% of all cip construction work has been performed by san francisco residents and 77% of all apprentice hours have been performed by san francisco residents. this cip continues to support a strong workforce, ensuring that sfpuc is doing our part to invest in the future of the region's utility workforce. this. the cip also continues our commitment to benefiting historically disadvantaged communities and being a local solution to the climate crisis

at a high level, this cip addresses the following. the ten year cip benefits historic early disadvantaged communities. think of the number of projects now focused in the southeast district. district ten. the plan promotes system resiliency in water and wastewater lasting generations. these projects not only allow our system to remain resilient, but protect san franciscans from potential catastrophic effects of flooding . this plan includes climate resiliency projects like the ocean beach climate adaptation adaptation project, which is shown in the top left this plan provides funding for nutrient reduction, a key environmental project. clean steam continued investment in the hetchy power system and other green energy projects like the moccasin penstocks project that are included in the plan. and finally, this plan makes a series of investments in alternative water systems to prepare for the impacts of future droughts. to close out this brief overview, i want, um

and introduction of this year's iteration of the ten year cip proposal. i just wanted to leave you with some high level takeaways. the plan is the largest ever proposed in terms of dollars that will allow the puc to continue to provide clean and reliable drinking water, protect public health and the environment, and provide affordable, clean energy. this plan was developed balancing our ability to deliver these projects with affordability and the need to transparently respond to external cost pressures. this plan is a catalyst for sustained economic growth, creating tens of thousands of jobs over the next ten years. this plan supports small business and business development broadly in the city, in turn supporting the city's general fund tax base. this plan ensures that san francisco adheres to our values by seriously investing in projects that will make a meaningful difference towards fighting the climate crisis and becoming more resilient to it. the development of this plan was the sfc's most rigorous to date, given our focus on unifying approaches where feasible and increasingly

focusing on deliverability. and finally, this plan is in alignment with the mayor's budget priorities. projects in this plan will ensure that san francisco is safer, cleaner, more prosperous, and ultimately more resilient. this is my last slide. so that concludes the overview of our proposed operating budget. capital budget and ten year capital plan. but before we move over to the financial plan and aaron khovanova, i just wanted to make sure i circled back on our priorities and tick through how we've aligned our proposed budgets, both operating and capital, with these values and priorities. since budgets are fundamentally a value statement by organizations, i'm going to go through each area and provide an example. so we adopted an affordability policy in november 2023. this budget and ten year cip is affordable by these established metrics. we've put several tools in place through the capital planning and delivery program that have made

and will continue to make our capital planning effort more efficient. we are addressing regulatory requirements by transparently planning for projects like nutrient reduction in the bay. we have undertaken rigorous financial planning to ensure our budget proposal and cip are financially sustainable. this includes making sure that we do adhere to all of our financial policies on workforce. a huge part of our staffing request is to convert temps to permanent positions and to encourage retention. we've also bolstered our his team on racial equity continues to be a formal part of our budget process, and we are strengthening our racial equity team through this budget. we will continue to responsibly manage our system through increased investments such as main repairs, cybersecurity and others. we are facing climate threats head on by specifically planning for projects that will address the impacts of sea level rise and reduce our carbon emissions. we continue to aim to be responsible stewards of the environment around us by prioritizing projects that contribute to a healthier region

. the nutrients project is a prime example. while we have developed a cip that uses capital investment to support the economic vitality of san francisco and the counties that are impacted by our investments, we have developed a plan that prioritizes the replacement of aging infrastructure to ensure continued reliability. and finally, we're continuing the expansion of our systems where necessary to ensure that we can meet new and existing customer demands. and with that, i will hand over to aaron kabanova to present the financial plan. but you haven't seen the last of me today. i'll be back after aaron is done to present the debt outlook before we close out. thank you very much. clarifying question please. commissioner maxwell has a has a i apologize. yes. um, could you clarify you said that this has been more rigorous than ever. um, so what do you base that on? and could you clarify more rigorous than ever since we've been here for 100 and some odd years, i truly

believe that statement. um, this was all because of the inception of the capital planning and delivery program, and this is something we've talked a lot about over the last year, um, which has been an amazing agency wide effort involving hundreds of staff to, to, um, improve the way we do capital planning in a way that's more unified in our approach and more rigorous in our analysis. so just to provide some examples and agm, robinson is actually going to present more on this in his presentation , too. he's an executive sponsor of the program. we started the process at least three months earlier, and we started with a review of all of our existing projects, kind of like a baseline review of the projects we have, ensuring the project costs and estimates and what we were projecting was accurate before we even started talking about new projects. and there was things like unit wide templates and data collection and information gathering. there was specific meetings and timelines dedicated to assessing

priority ization and deliverability. um, so i can really say that, um, i haven't been at the puc for very long, just 4 or 5 years, but just in my time, just seeing how we came together as a team throughout the agency, from every enterprise and infrastructure to put together this plan, knowing it was going to be big, knowing we wanted to be transparent about all of the projects we knew about. i can really say that it's the most rigorous process i've seen. i appreciate that that you've seen because when we're public and you're saying something like that, then people can say, what the heck have they been doing all the time? so it's very you have to be very careful in how you say it. but i do understand that, and i really appreciate that. thank you. great. thank you. continue with our thank you so much. i'll see you in a presentation. thank you. thank you. good morning. commissioners and members of the public. so again i'm aaron cordova. i'm the financial planning director. and i'm here today to talk about our

ten year financial plan. the financial plan is where all the pieces come together. the operating and capital budget. it's where we look at our financial metrics such as our debt service coverage and our reserve targets, and where it's where we ask the critical question of what do these proposals mean for our customers? rates we'll have a more detailed presentation about the financial plan accompanying the february 13th adoption. in addition, that proposal includes a 50 page report that goes into a deep dive on all the assumptions we used in our modeling. so today, i really want to go through the highlights of what this proposal means to you. and so you have those in mind as each of the enterprises goes through their proposals over the next few budget hearings, we'll begin with the water enterprise, the graph on the left shows the water volumes, both historically and projected over the next ten years in water. we're just starting to come out of the dip in usage that we saw due to the pandemic here in san francisco and due to the drought in both our regional service area, our wholesale customers and our

retail customers, we planned that we would continue to have low water sales volumes. when we last adopted our retail water rates. however this is an area of uncertainty in our forecasts. if recovery is slower than expected, if we continue to see drought conditions or they reoccur, that is something that we'll have to manage around. add in water. you can also see on the right and you'll see this similar graph for every enterprise. our historic and forecasted composite of our total expenditures for the enterprise, the blue bar represents our operation maintenance costs. green is our debt service on the bonds and loans that we have taken out. and our orange wedge there at the top is revenue funded capital or cash? cash funded capital that we pay for in the year without issuing debt. as you can see, water is growing moderately over the ten year forecast. it's for percent compounded over that ten year period. this is not small, but it's not huge. and one important thing to note in water is that because we do share these costs between both our retail and wholesale customers, it's easier

to manage cost growth than it is necessarily in the other enterprises, like, for instance, wastewater, where all our costs are have to be borne by us here in san francisco, businesses and residents. i'm going to take a moment to talk through these two graphs and wastewater, because it's, i think in many ways, the biggest story of this ten year financial plan. on the left, you've got the projected capital appropriations for wastewater. for one thing i want to point out is that graph goes out 20 years. now. what we're proposing to adopt is, of course, a ten year cip. but one of the things that's notable about that cip is there's a number of very large capital projects that are just beginning near the end of the plan, in order to not lose the impact of those projects on our rates, we have included in our financial modeling the full 20 year forecast of what those would be. you can see those in the big orange and green wedges that jump up in that latter half of that first graph. we waters capital plan over the next 20

years is extremely large. in the full 20 year picture, we are forecasting that the wastewater enterprise alone will issue $13 billion worth of revenue bonds in order to afford this capital plan. you can see the impact of that in the total expenses graph on the right, where that green wedge of debt service is growing quite a lot over the next ten years. at the end of the ten year, we're forecasting that wastewater operating expenses will be over $1 billion annually. we laura, will come back and talk more about what that debt forecast looks like and how it impacts our enterprise. but i will just leave it here to say that the sip in wastewater is one of the most challenging financial issues that our agency is grappling with right now. bringing those two together, we're looking at the affordable of our utility bills as compared to the targets we set out in our affordability policy that you guys adopted back in november. over the ten year period, the combined single family

residential customer bill will rise by approximately 8.1% annually. and that's really being driven by the wastewater portion of the bill. in ten years. our average single family customer will be paying $308 a month for their combined water and sewer bill. that's up from $142 today. and in the 20 years we forecast that the average bill will be $436 a month. now this estimate does come in under the affordability targets that we approved. that's not magic. that was a lot of work. laura mentioned the rigorous process we've gone through. i can say from my experience, having been here ten years, that it's definitely been a lot of effort for our enterprises and our infrastructure bureau to take a critical look at their sips and see what can we move out, what can we cut, what can we delay? there's been a lot of effort and a lot of thinking to try and bring that in under the target. however, we are realistic about the fact that there's not a lot of room there. we could have

unforeseen expenses, new regulatory requirements, cost overruns, emergencies that we need to respond to. and so even though we are coming in under, we are taking action now to see what we can do to bring those rate increases down while we have time. most of the big projects are not occurring this year or next year. they're further out. and so luckily that gives us the ability to figure out what we can do. a particularly highlight the nutrients project that laura mentioned, which is the biggest new project in our capital plans. this is a regional issue. it's about discharge of nutrients into the san francisco bay, which impacts every wastewater provider around our region. we're going to work very closely with our regulators, with our partners at other agencies, in order to figure out how we can have regional solutions that would help share the costs over the whole area. we're actively seeking external funding from the state, federal level, from our partners around the cities to see what we can do so that those dollars don't have

to be borne by san francisco sewer ratepayers. and like i said, we have time. we're in the early stages now of identifying what this project is and how it will impact us. so you will hear a lot more. i am quite certain, on nutrients over the next few years as. turning now to the power enterprise in hetch hetchy power. unlike in our other enterprises, is we're actually forecasting customer growth. this is being driven by two things. one is that hetch hetchy power is becoming the default power provider for many of the new redevelopment areas along the waterfront, treasure island throughout the city. the second is that some of our municipal customers are planning for large electrification projects. for example, the san francisco international airport is expecting huge increases in their power usage, driven by a complete electrification of all the vehicles that service airplanes, cars, as well as large investments in electric vehicle charging for customers of the airport. as well as workers. we are forecasting that

we're going to have these increases in load. however, we don't want to plan on growth when you expect that you're going to have additional revenues coming in because of additional sales, you could therefore be caught out because we know in san francisco, construction falls behind schedule. things don't always happen. so one of the things we've worked very closely with our power enterprise coworkers to do is to make assumptions that are a bit more conservative to push out. when we think that growth is going to come online to account for what we think are likely construction delays, we know this happens. so although you see that growth in the ten year plan, we believe that we've done this in a way that is responsible and conservative and is not banking on that growth. in fact, if we things come in ahead of schedule, we'll end up with lower rate increases than we would need otherwise because we'll have more customers. we don't need to raise rates quite as much. the other feature i want to point out about that growth is that it's also driving our costs in the power enterprise. we are exposed to

more market prices in order to buy the power. when we're not generating enough hetch-hetchy power to serve these customers. as market prices have gone up tremendously over the last few years, driven by the war in ukraine, supply chain issues as well as continued delays in the california market for being able to get new renewable projects online. as a result, when we have more customers, we have more costs in order to serve them. what that means is that if there are delays in these customers, our cost graph there on the right would be lower because we don't need to procure quite as much power in order to serve them. i guess the last thing i'll say when i'm closing out is i mentioned the energy markets in hetch-hetchy power. that is a big thing. one of the other big parts of that orange wedge, which is their power supply and delivery for hetch hetchy, is fees that we pay either to the california independent system operator, caiso for transmission of power across the grid or to pge through the wholesale distribution shift in order to

distribute that power in san francisco. both of those areas have gone up quite a lot, and that's part of the big increase in the last few years of that orange wedge. we pay those fees regardless of whether we're generating our own power or procuring it on the market. that's something most of our customers pay and i think i'll just put in a plug here for that, trying to get away from at least those wholesale distribution tariffs is one of the core goals of our power enterprise in their capital plans and in thinking about the future of that program. so what does this mean for customers? we have two views of the average residential bill for hetch hetchy on this slide on the left, you've got the ten year forecast. and on the right we've got the comparison to pg and e in the table. at the bottom, we've got our forecasted retail rate increase on the top line. and then we have our general use rate increase. i'll start with retail because that's what a new customer would pay. and it's what most of our customers will pay. we are forecasting some significant percentage wise

increase in our power rates over the next few years. unlike in water and wastewater, we do not have approved rates for next year for our power enterprise, as we will be back before you later in the spring in order to adopt the fiscal year ending 25 rates. right now, we're expecting a 14% rate increase. and again, that's really to keep up with a lot of the big increases we've seen in the cost of supplying power to our customers. even with those increase. and it's a 10% we're currently forecasting for the next year. we are still an incredible deal. looking at the comparison to pg and e in two years, we are forecasting that we will still be 30% cheaper on average for an average monthly residential bill compared to that customer. if they were with pg and e public power provides great value on the bottom row of the table, you see the rate increase for the general use. municipal customers. as a reminder, these are customers who, in our last rate study, we

identified as having rates that were below the cost of service, and we are accelerating their increases in order to catch them up to everybody else. they're bigger percentages as a result, but they're still getting an even better deal. if you put those customers bills on a graph, they would be even lower than the orange wedges for our retail rates. so those, although those are large percentage wise increases because they're coming off of a small base, they really are still getting very affordable power for what they're getting. finally, i'll turn to our last power enterprise program, clean power sf. you can see on their power sales volumes graph the big jump up. as the program rolled out to the entire city of san francisco . after that jump, we're forecasting relatively moderate growth throughout the city, again driven by electrification, new evs charging, things like that, looking at their total expenses. it's also a more level forecast over the ten years. clean power sf does not have a

significant capital plan, so there's only a very small wedge of their revenue funded projects out there in the later years. they're costs. the vast, vast majority of them are driven by power supply, computing contracts or when we don't have contracts, markets. in order to purchase the power, we need in order to supply it and also meet regulatory requirements. these are very complicated power markets that are folks in clean power. s.f. have to deal with. one of the things i'll note is that much like in hetch hetchy, we've seen very large and volatile power markets over the last few years included in our forecast is an increase in our budgeted contingency in order to account for this, what this is, is that we forecast what we think are needed expenses will be and then we add a buffer on top of that, and we bake that into our budget and assume in our financial planning that that will be spent. so it's an added buffer above and beyond what we think we are going to need if we come in under our budget and we don't need that contingency, that's great. that falls to our fund balance. that means we can

have lower rate increases in the future. but this is one of the ways that clean power sf has. a program is making sure that we are not going to be caught off guard, that we're not going to be unable to procure the power we need. and finally, looking at what that means for clean power sf customer bills as a reminder, our clean power sf only controls about a third of the average customer bill. the other two thirds are either pg and e rates for delivery of that power, or fees that are charged to us that are unavoidable for our customers. so looking at these graphs, the green wedge is the clean power sf generation portion of the bill. that's all we have. control over looking at the table. that rate increase that we're forecasting is shown on the top row. again, clean power sf does not have approved rates for next year. will be back here to adopt those later in the spring at this time we are estimating that we will propose a 12% increase in the clean power sf generation rates over a total bill, factoring in

the pg and e portion that gray bar and the fees that they pay. that means that these customers bills would go up by 5% after that 12% increase, you can see that the rate increases for clean power sf level off and in fact are flat. no rate increases through the ten years. what's going on there is if you think back to the expenses graph on the prior slide, we aren't forecasting a huge uptick in their costs. one of the other big reasons for that 12% in this year is that in our last power rate study, we adopted a new reserves policy for clean power sf. your reserves policy says what is the amount of savings you need to have in order to manage through operational considerations, any expense fluctuations, emergencies, things like that? because clean power sf at the time was a new program, the target we set for them for their reserves need to grow in order to get there. and we save ourselves a three year time frame to get to that target. next year is our three years. and so a big driver of that 12% rate increase is getting ourselves to 150 days

cash on hand, which was the minimum that we established in our reserves policy. we think it's an important financial, prudent step in order to maintain that ability for us to have the reserves, we need to have strong coverage ratings to be able to enter into credit agreements with our power. power contract providers and make sure we have the money to manage through those emergencies. and with that, i will turn it back to laura, who will talk more about our debt, as you've heard, and i'm sure as being drilled into you, the capital is really what's driving our entire financial plan. and so how we fund that, which is primarily through our bonds, is a critical piece of our agency's financial health. thank you. aaron um, hi again, laura bush deputy cfo. so this is a new part of the presentation and we haven't done before. we really wanted to

bring this to you, um, and include a debt overview as part of this overview presentation, because debt is such an important piece of the financial picture and overall financial sustainability that we felt it was really important to shine a light on this and make sure everyone understands it. so this is a summary of spacex debt by type and by enterprise. as of today, the total debt is 12.1 billion, and that includes outstanding debt and undrawn facilities such as our $1.5 billion commercial paper program . so of this 12.1, we have $8.5 billion outstanding that we owe. this is before we embark on a new ten year cip. why do we issue debt? well, put simply, it's our main source for capital spending. debt will fund approximately 78% of our proposed $11.8 billion, ten year capital plan. we use debt to

spread the costs of capital investments over many years. debt decades paying for it with future revenue rather than paying for it all up front. debt allows the puc to build and update the infrastructure needed now and spread the costs across future generations. who will also benefit from these assets? distributing the rate burden we have access to advantage financing as a municipal issuer and through the ten year. and although the ten year financial plan assumes long terme tax exempt revenue, bonds for its projected debt issuance, the sfpc continuously looks to lower cost alternatives when available and, if appropriate, for the project's funded. the pc enjoys high long terme credit ratings across its enterprises and programs, as shown in this table, which allows us to borrow at relatively low rates. we are required by charter to set rates to maintain our credit ratings and also other certain requirements, including maintaining our debt service coverage ratios, as well as

providing sufficient resources for continued financial health, consistent with good utility practice. all these things help us maintain our good ratings, and this is really important. the ten year financial plan presented just now by aaron outlines how we are doing this, especially in the face of such large projected capital expenses . we've made an important change in our long terme interest rate assumption. our new financial plan assumes a 6% rate over the next ten years, and a 5% rate thereafter. on the debt we take out. this is an increase from the 5% assumed in the last cycle . this is probably no surprise as this is due to federal reserve actions to raise the interest rate. in response to inflation, and i note that while they have indicated that rates are coming down and rates are still elevated and are expected to remain so, rates will not fall as fast as they rose. in addition, this more conservative interest rate assumption better

aligns us with peer agencies and making similar assumptions. so what will debt issuance look like based on our new ten year cip? well it results in an additional 11.1 billion of debt in new debt issuance over the next ten years. this is a lot more debt this is all incorporated into our financial planning assumptions as laid out in the ten year financial plan. so we are going into this with our eyes wide open and making assumptions to ensure our financial sustainability in the long terme. the next three slides will show you what our debt service obligation will look like towards the future. for each of our three enterprises, starting with water blue and orange bars represent existing debt service. that's for the debt that we already have. the gray represents the debt service required for the ten year cip based on the assumed borrowing rate of 6% and debt amortized over 30 years, and the green line reflects the

net revenues available to pay that debt service. so this is water. as you can see, the gray will be the new debt. we issue to pay for the capital plan. hold your breath. this is wastewater. um the green um, the green here at the bottom represents the substantial wifia borrowing secured by sfpuc, the bulk of which bears a lower rate of 1.45% based on when the loans were locked in and rates were lower. um, but it goes without saying. this is a pretty stark chart. um, it's really, um, quite obvious and important to note that wastewater will be taking on a lot more new debt in order to pay for its ten year cip. and lastly, this is for the power enterprise. it actually looks quite similar to wastewater, but the numbers on the y axis, the vertical axis, are much smaller still. power is forecast to significantly increase as debt burden to pay for its capital spending. we're

almost done. this this concludes our presentation. but before we take questions, which i'm very much looking forward to, i just really wanted to take the time to thank the folks at the puc who have worked so, so hard to pull this budget capital plan and financial plan together. um, pc is so lucky to have such talented and dedicated staff on board, and i wanted to give a shout out to a few key team members and in no particular order, the budget team eric wong, trey hunter, frank mcpartland, sue ton, elaine daniels, and jasmine flores. the financial planning team aaron khovanova, matt friberg, maggie yap, christina venice, john chen and clarissa wan. the capital finance team, nikolai sklaroff, edward kwong, dan fuchs, eric quark, the strategy and innovation team, trisha, trisha yang and luke fuller, and of course, the hundreds more staff

from throughout the puc and surprises and bureaus who have played a part in developing this budget. i can't think of a more significant way that the puc comes together and works together on a big project. this has really been a truly agency wide effort, and i'm so grateful for everyone that's worked so hard on this over the past year. thank you. thank you lauren. laura and uh, congratulations. now you were officially, um, in the position that you've been doing so well, in my opinion. um, thank you dennis. thank you. nancy and aaron. the whole team, um, for, you know, for the thorough presentation, i mean, this pretty much summarizes, you know, all the stuff that we've been looking at that you've been giving reports on every year. and it's pretty amazing that, um, um, the budget process, the mandated budget process, not just here but throughout the city is like the grand organizer of democracy. it seems here in city, because people are forced to sit down and let us know what

we're going to do and what we're going to move forward and look at it. and again, without belaboring it, i mean, we're going to be doing this for four more meetings, but the foundation that you just set, you know, pretty much summarizes it. so thank you. i know there are a lot of questions and, and comments that are probably going to be had both by the commissioners and by the general public. and, um, but just thank you for that. a couple of comments that i, that i might say and the only thing i'm going to say before we open it up is, is that the thing that really stuck out, for me, at least on the financial side, is, is that, you know, one, we are a city that you know, that really cares about about the health of not not just us in san francisco, but the entire region. and and the fact that the capital project, even though it's, you know, a ten year plan, the fact that, you know, we're looking at things that are talking about 20 years out and planning 20 years out and looking at that not just from an infrastructure point of view, but you know, what's going on in environmental issues, what's new in technology, what

is, you know, what does this city and what does this region need? i mean, it's laid out here in the foundation of what we're looking at. and of course, we're going to get into enterprise by enterprise. the different departments, you know, over the next three hearings, besides the one that we're talking about right here. so i want to thank you for presenting that. i think i'm my main, um, comment. probably not even any questions in there that i'm going to highlight is, is that i note that, you know, despite these billions of dollars that we're doing because we're not going to be flint, michigan, as i've said before, and we're not going to be, you know, montgomery, you know, we're not going to be, you know, jackson, mississippi, you know, we're going to have, you know, good infrastructure and drinking water and things because we care about that. that's what san francisco is about. and the san franciscans have voted for hundreds of years now, it seems, you know, to invest in that type of infrastructure for our water and, and power and sewer and what have you. that is that are the values that we have, and we're moving forward and when it

comes to personnel, which is i think, where i'm going to start my, my, my comments among among the others that we're going to hear today is, is that, you know, it's just barely more than 10% of our budget, 14, as you said, is for personnel and the personnel is not just all you you know, you know, smart guys that are actually sitting here, right now, but, you know, everybody else, the thousands of people that make this area work, it's only a little over 10% of the entire budget. that's doing it. and i guess what i really appreciated that both you that nancy in particular, i guess is part of her presentation put down was is that you are going to be very much, you know, when you're talking about that entire puzzle of vacancies and attrition and, and tough to hire people. and, you know, what are we going to do to move things together is that you have a very specific pick. it sounds like intelligent plan to go from temporary to permanent. that is always been a huge contention

for workers in the city. why are you hiring me? you know, temporary. i mean, i want to make a career of this in san francisco and without getting into all the details, because you've said enough right now that you're thinking about it, is that there is very much going to be, um, an emphasis on going from temporary to permanent, because i know that and i'm sure that's going to be on the bargaining table. um it's not it's not just by this department, but it's all citywide bargaining. it's a it's a major issue in, in all over the city and all the different departments and all, all, all employees. so it's just the fact that you've mentioned that, you know, is, is extremely important to us. and i assume even though, yes, these are, you know, good paying jobs and, you know, whether or not it's, you know, in particular, you know, the in-house employees, the folks that are on staff here, and those are the folks that are going to be in bargaining. um also, um, it should be noted that, you know, in all of the outside projects, you know, under project labor agreements

or whatever else, all this stuff that's being built, whether or not it's city employees or whether or not it's, you know, people working with the contractors that are, you know, doing moccasin tunnel or the digester or whatever else that these are well trained, good paying union jobs with apprenticeship. and even though this isn't the focus of this particular meeting, you did notice that we are exceeding all of the goals that we have in the city for local hire and for apprenticeship jobs and these are all exceeding local hire, um, goals that the city has mandated and that so many people in the community are fighting for. so i just wanted to note that, um, but that being said, and, um, i think that i think that again, thank you, you know, for putting this all together. and i'm looking forward to, you know, all the other details as to by enterprise, by enterprise as that's as this is going on. so that being said, um, commissioner jamie, you are in the queue. thank you so much for

your presentations. that was excellent. um, i always look forward to this conversation since its foundation to what we can potentially accomplish over the years. right. so um, and i hope we will never become full in michigan or, um, or, uh, jackson, mississippi, but obviously a lot of those issues where foundation, you know, founded on the financial issues those cities had and the decisions that they had to make to bring down cost. so every decision we make right now has a lot to do with what will happen in ten years, 15 years, 20 years. um, so it's important to kind of keep that in mind. um, i am actually close early talking and working with the gentleman who is actually turning jackson, mississippi, around right now, and also the flint team. um, so i know a lot of details about what's going on there and what decisions they are making and

what has happened before and what is going to happen later. so just, you know, i want to make sure when we are looking at these numbers, we keep that in mind very closely. um, and i know we do, but i just want to make sure, you know, we can become that if we don't strategically think about this. so, um, i think i'm going to go. i have a number of slides written here and i, you know, obviously i'm open to any of you answering them. so um, one of the comments i have is about, um, uh, going to the slides that was about, uh, slides 23 and 24. oh, actually, first slide 15 and miss tom, you mentioned that, um , we have to reduce general, uh, reserve to meet some of our needs. right. and i'm assuming that was, uh, because we have to bring down costs for some of the customers. i'm wondering, um, we

are on a sort of a normal year. uh, i mean, who knows what normal means anymore at this point? um, but, um, i'm just worried. for example, if god forbid, in two years, we end up having another disastrous situation like covid. um, what is the right number to have in our general reserve to make sure that we can capture beyond people who, um, permanently struggling to pay their bills. right. because what happened during covid was people who were able before to pay their bills ended up losing their jobs or not being able to pay because of other, um, stress that was on them. so the question is, if we have to pull from our general reserve to meet part parts of our goals, which is being, um,

um, you know, bringing down the cost of the bills, what happens if something like that happens? so that's that's my first comment. so maybe, maybe should we go from slide to slide or do you want me to. okay. can i take them one at a time okay. yeah. that sounds good. go ahead okay. so yes, you're right. uh, the there is a reduction in our general reserve contribution versus the current year that we're in right now. um, so we actually have an established commission policy on fund balance or the savings account that we have. um, so while there's no right answer on exactly how much we should have in reserves, we do have a minimum and a maximum we have a range. and for water power and sewer that is 25 to 68, 25 to 68. so i think aaron talked about clean power reserve. quick question 25 to 68% of what operating expenses, annual operating expenses. um so that would be like saying i need to

have 25% of my income in a savings account. got it. a minimum of what the baseline is. yeah. so we established that policy. we for multiple reasons. um, it's good prudent fiscal responsibility and helps with our credit rating ratings. it also obviously helps us deal with uncertain 80. um covid is a great example of that. um, so but we do have a maximum. right? so we don't want to have too much in our savings account and overcharge our customers. so that reduction in the general reserve contribution you're seeing is fully in line with our financial planning and our financial plans to keep and maintain in alignment with our reserve policy. um, so, so, um, you will see the, um, financial plan in detail. it's going to be before you at the february 13th meeting. and as a whole, report that will go into that. and what we thought about when we made those assumptions. um, so then the second part of your question was about the arrearages and people struggling. i think during the covid crisis, we

obviously saw an increase in the ability, a decrease in the ability of people to pay their bills, which played out in, um, arrearages increasing. um, i think we've got to be careful when we talk about, um, assisting customers because of prop 218. we have of legal issues around that, but we do have customer assistance programs in place to try and help the most vulnerable customers, which all, all are things that have been before this commission. so um, really, what's driving our reserves is our reserve policy that's well established by this commission and keeping our reserves to between 25 and 68. aaron what do you think the average kind of reserve amount will have over the next ten years? is um, it varies by enterprise, but we're really seeing, for example, hetch-hetchy power was able to in the time of high market prices last year, sell a lot of power on the wholesale markets and bring in extra revenue. as a

result, their currently over their 68% of annual operating expenses target. and so we're using those reserves to mitigate the need for larger rate increases. hetch-hetchy and wastewater. and i want to say, um, clean power. well clean power is building up hetch-hetchy and wastewater are definitely drawing down because they're currently over their targets. and so that's the point of the policy is to say that we're not going to have too much cash. we're not going to raise rates just so we can hold on to your money. we understand that that's important. thank you. um, then so going to slide 23 and 24. um. sorry. actually i yes that was the one. um, it's a general comment about the, um, about the, uh, workforce base that we need. um for this position for, for running this

organization and you mentioned, um, that we need to, um, we are going to be more aggressive in recruiting for these positions. you're trying to replace all these people which or turn them from a temporary to permanent, or bring in more people. and i'm wondering what will change. i mean, this is obviously there are so many different challenges we all facing in recruiting people to come and work for us, right? we have talked about this in ex, you know, excess like who do we need. do we need to bring recruiters. how do we need to like make sure to shorten the process? how do we pay people more like there are different conversations that have happened . i'm wondering, do we have a solid strategy in place that would help us to recruit people? and i think at some point also, i brought this up and i'm highlighting this one more time, which is somehow beyond the reunion jobs that potentially

have a very specific job title attached to them. many of the jobs that today, in this day and age, we need to hire for, need to have different job titles. again, i've said this before when i when i see sfp, sees a job postings, i always repost them on linkedin. but i always wonder who would relate to this job title. right? so the question is, can we really go back and rethink job titles and see if we can repackage some of these positions that would attract different kind of talent, or at least make sure people apply for them. and as part of that, i would like to know how many people apply to every position that we that we put out there to the multiple layers to hiring. right. one is like, do we get enough applicants? then or is the applicant pool? is a good enough or solid enough applicant pool? then the third piece is how long

does it take to bring them on board? do we have a competitive salary for them? do we have do we not even salary? do we provide a proper compensation for them to be excited about this? there are so many different pieces into this, right? the first two are important and i'm not sure where we are there to make sure that we would get that. um coverage that we need for the positions we are posting, or we can hire more people to those positions. so i'm not sure if there's an answer for this, but i think, you know, i want to make sure we go beyond, um, saying words, actually getting into action in in those topics. thank you for the question. so i'll just make some quick points on what we've included in the budget to help us with this. and then i'll hand it over to wendy macy, our chief people officer, to give a more well-rounded answer. but through this budget, we are significantly bolstering our hra team. both just bringing on more people to deal with, more hiring

as well as some innovations to strengthen our hiring process. and wendy is going to go into this during her presentation, but i just wanted to make clear that we are investing in hr through this budget. um good morning, commissioners. chief people officer wendy macy. um i think you've hit on some, you know, all of the key metrics that we are all tracking very, very detailed. i will say we do have our update, that, uh, presentation scheduled for our regular commission meeting tomorrow. we're we're happy to go into a lot more details on recruiting. i will say that i've spoken many times to our new two new recruiters who will be here tomorrow, and one of the things that they said was that job title, the job title is the most important thing because it has to attract the people's attention. and so that is something that we are definitely actively working on. we do have statistics, uh, which we can provide you on, uh, the numbers

of applicant s. we aren't able to get that now through smart recruiters. um, and how they make it through the process. there are some city wide dashboards that we are one of the sort of pilots who are providing feedback on, um, it's not fully, widely disseminated right now, but we are one of, again, one of the pilot groups that is giving the actual, uh, input as to how to improve that data. so it's more usable for all of us. um, but i will say, you know, some of the focus that we've been talking on, um, importantly, not just, uh, impacts recruitment, it's retention, it's retention because we can spin our wheels as much as we can to try to bring new people. it's never as effective as keeping the excellent staff that we currently have. absolutely. and so the strategy, the strategy of creating a lot more permanent positions, which, as miss hamm said, is the number two reason that our temporary employees have said that they are leaving the agency. um, and particularly in our hrs team, um, keeping

them to bolster that team. i mean, it adds to the morale people see that things are moving in the right direction. and so we're very confident in that retention strategy as well. okay, that sounds good. i look forward to your presentation tomorrow. um, so these are all obviously a lot of these questions. i do realize we are going to have more extensive conversations about them, but i want to just bring them up because for us to be able to get to february 13 and approve this budget, there are there are items that need a little bit more attention, or at least more details beyond what potentially we'll see. since i went through some of the slides and the document that were shared. slide 32 3132. um, new treatment plan. everywhere i go, people are talking about nutrients like it is an issue, right? but also i would say, um, there's also a lot of discussion around other things that we need to do beyond just putting tools and technologies in place to deal with nutrients. there are things

that we potentially can do, um, upstream in the city in the process to minimize our nutrient, uh, nutrient outfall rather than, uh, or output. and minimize. i really appreciate you talked about regional solutions. i think we definitely, as a region, need to work on this. um, i do understand our east, um, uh, east side plant is a little bit more limited with land and capacity to do the, um, i don't know, all sort of other things that we are talking about from, um, um, wetlands to other kind of nature based solutions. but maybe we should look into that. um, but also, i want to say, because we have this time before this money gets invested in nutrients, i really do want us to do some thing beyond just hiring consultants to tell us what to do and maybe have a little bit more detailed research on what is out there.

that's worth trying, worth trying, and as part of that, then is there something innovative we can invest in that potentially can reduce the cost, help us in the long run? i just do not want us to get, you know, into debt and investing in solutions that are off the shelf from another time, from another, you know, uh, era to deal with the problem you're facing today. right? one of the biggest problems you're having with, for example, algal blooms that are keep coming back, there have been multiple studies that have been done that it's not just due to nutrient, but the temperature . the right temperature is high obviously there. and also another discussion i was having with my colleagues is like, it's not just, um, the output from the wastewater treatment plants, but also other things that need to happen in the bay. so so, um, is there something else we can

do? right. so that's really important. um, i want to make sure that we actually invest in research and work. that is that brings us ideas that are beyond what the consultant would give us, not no offense to consultants, of course, are great, commissioner. just we're doing exactly that. yeah, which is great. i'm sure. but i just want to i want you to. i'm doing this to inspire confidence in you that we are looking at, at the exact same way that you are and we are. we have done robust into colonel, and we're doing robust internal reviews of this. and engaging with the water board and very detailed discussions, not just about what we're doing, but how we are prepared to go regionally and to be a leader on this. so that san francisco leads and doesn't follow, and to be as cutting edge as possible. and these are very since it's wrapped up with some other legal discussions, i can't disclose it here, but we are doing exactly what you're

saying or or encouraging us to do. uh, and at the same point, why that number is in there or why we're talking about the number is because we have all known then that this was coming down the pike, and that if we didn't, it was going to be imposed. they're going to be requirements that are imposed on us anyway. right. and that we and you don't want to know what the number in the budget was for zero. right. and that wasn't being transparent and fair with the public or giving, um, city leadership, uh, including this commission confidence that we were going to be out there as an agency, be out on this issue. um, uh, and be a leader. and that we took it seriously. i know commissioner maxwell has had this. you've been on board. supervisor peskin had hearings on this issue. uh, and we are going to be a leader on this. and we're. and rest assured that we are not just relying on consultants. we are doing it robustly internally and consulting with our partners in

the region. and the water board. and i would anticipate you'll see some movement on this fairly shortly. fantastic. and i just want to say, not because i was on the regional board for seven years, but this regional board is very willing to permit innovative solutions. not every regional board is interested in that, but they have actually permitted a lot of innovative solutions. just because they wanted to test different things that can happen beyond our 20th century model. so thank you, dennis. and this is a budget hearing now. and we've talked about, uh, nutrient stuff. so i know you are. but i just want to remind the commissioners that this is a budget meeting. thank you. so i think it's important for us to make sure we'll have these conversations regionally and also to implement solutions means that doesn't end up ballooning our budget. and then costing us even more to operate and maintain over time. so i

appreciate you looking into that. there then, um, the next slide. is 43. okay. so. rates, rates, rates. you have heard me talk about rates like forever. um, i still want to know if we have you and i have had this conversation. uh, mr. herrera, we had meetings. we really do need to get a handle of this rate issue. we can't really continue rate setting the way we do it. we need to have some innovative ways of doing rates. and also, and this is specific slide i would say i would i wish i could be this hopeful that even by a slight margin, our consumption will go up. but i don't see. and i asked this last year too, i would like to see a, uh, sort of an uncertainty bound about, um, top a margin that says if our consumption goes

down by 20, what does this mean to water? what does this mean to wastewater? because it can happen. i mean, look at the trend. there's no i don't see anything going up right now. and if you look even beyond this, if you go from 2002, 2001, before that water use have not gone up. so it is important for us to be very mindful how we do demand forecasting. and i know it is. we sort of need to have this perception, okay, population is growing. we need to bring, but i can't really accept this from my personal knowledge on this topic to approve something that tells me we are not going to potentially have a potential trend of demand going down because that's going to impact how we pay our debt, that's

going to impact how much our revenue is our operating costs. a lot of different things. and that doesn't show up here. so, um, so that's yes, i do see the i do see the shades, but i don't see an analysis that tells me the bottom. what's the bottom line? what's the top line? i see an average number. an average number means nothing. so somehow we need i need to see that somewhere in here. um so i will note that in our financial plan report that would accompany the adoption, we have like six pages talking about our demand forecasts and all the things we put into that. and i'm definitely happy to go through that with you at the february 13th meeting. we'll make sure to have discussion on that. thank you. um, one thing i will say generally is that we do assume declining per capita usage throughout our entire service area in this plan. um, the fairly level, the levels in san

francisco. i'll note that in ten years, we're currently forecasting that we will just barely be up to where we were in 2018. and in fact, below where we were before the 2015 drought. so we're not really forecasting a huge amount of growth. and, uh , one thing when that ties back to rates, that's really important to note is that as a customer, if my usage declines, i pay less because our rates are highly volumetric. what that means, from the agency perspective is that every customer, if their usage declines, we have to adopt higher rates to compensate it. but it's really important and i focus a lot on affordability. it's something very important to me. we're important to our agency is that as a customer, if my usage goes up and the rates go up at the same time, my bill stays the same. and so that's why we really like to look at the bill forecast, because that's where everything comes together. it's both the rate impact over time, but also the per capita usage. and that lower per capita usage is incorporated

, as is the higher rates that we need accordingly. so we'll have a lot more discussion on this because i know it's a very high level of interest for you, for our other commissioners, for members of the public. but we know it's important, and that's something we're really trying to do rigorously and not just draw an average line. so one other thing i would say is, and maybe, maybe this will come down to the discussion we are going to have on rates a little bit more. but we talked about decoupling these rates, talking about how we can, um, maximize the amount of, uh, fixed costs that we have in the rates versus the operational cost, and being able to decouple those. i think at some point we i mean, i don't want to say i actually think we should start doing this. and again, we did have this conversation that if we have to bring a power rate consultant to come and help us to decouple, maybe that's what we should do. um, but but i do want at least in this year, budget year, to have some solid proposals around what does it

mean for us to decouple our rates? how does it work? how can we what are the different ways we can capture? because does exactly what you said. if i'm a customer who reduces my water use and my bill is constant, or goes up, there's nothing but discouragement for me to save, right? but the reality is we as an agency need to have a specific amount of revenue to be able to operate and maintain our system to the highest quality. then we don't become flint, michigan, and jackson, mississippi, right? so that is why we actually need to focus on the rate setting process. and actually that goes back to while i have you here. also, the wastewater for, uh, it really worries me. it is a worrisome situation. it is a it's very much tied to water use. the way we build for wastewater. right

so if people are using their water use is reducing their water use, they're they are in a way indirectly reducing their wastewater bill. right so and we are actually going to have this huge, uh, debt in our wastewater side, which has to be repaid. so so somehow somewhere people have to pay for this, right? so if we are more strategic about how we do this, we potentially can do it in a better way and cost, make sure we are recovering the cost, but also keeping people on the right plan rather than just you know, uh, changing things abruptly or not being able to manage it in a few years. so again, i do want to have a solid and innovative proposal on rate setting. um, as we are working on this, and i think you have heard me say this for the past two years, another comment i will note that we are required by the san francisco charter to

do a rate study at least every five years for each of our enterprises. typically in the rate study with which we have to get an independent consultant to come in and do that is where we would focus on issues around rate design, not necessarily in our financial plan. in we know, again, that's very important. we don't want to gloss over that in our financial planning. and i will make sure that we include more information about that in future presentations. but we are have definitely noted the interest in decoupling in thinking about the fixed versus variable portion of our bills. and that's going to be a key component of our next water and sewer rate study. in particular. and we might not really i mean, five years is the minimum, right. but we can actually do faster, right? we don't need to wait five years to do a rate study. isn't that correct? it's at least every five years. however, i'll note we only have so many staff and we have power and water sewer that need to alternate and we don't want to short short shrift our power enterprise by trying to do two rate studies at once. so we have a schedule for that. i can go into that in more detail. so i think last year when we had the

conversation on one of the reasons i, you know, we talked about the rate of the water rates and storm water rates. we did have this conversation that this year we will look into how to revisit the rate setting process and i think i you were on that meeting. you the three of us were in that meeting. i think maybe a few other people. we talked about potentially looking into this after where we approved the with storm water rates. so i would like somehow that to happen this year. okay. i think the point i think the point has been made repeatedly, and i know personally that the decoupling recent history of that particular policy has been complicated and is explored not just by, you know, cities that absolutely need it, but those that are trying to figure out the same type of ideas. i am guessing that you guys have thought about that. also so i guess that place marker has been put there by commissioner ajami. and i'm, you know, reiterating

that that we hopefully that will be incorporated in some type of a report in the future. so let's, let's move on. next question or general manager you would like to you your your comment is noted. commissioner jamie. and we will make sure that we look at it and i will be in touch with you to see how we can at least there is a rate study. but that doesn't mean that we can't have conversations about it. and we will have that conversation during this next year. thank you. i appreciate that. next question. um okay. so now going to um, power for uh. obviously pg and e transmission cost is a big part of our rates. right. and um, and in big uncertainty because they can do whatever they want. right they can raise that rate and, and put us in a situation that no matter how we shrink our, the cost of power, they can overpower the amount like the total rate. right? so so, um, so that is,

that's a big concern. um, and you know, especially in these recent months that they have raised their rates significantly. the, uh, i've had i've spoken to friends who are always complaining about this. obviously, we have an alternative to them. so we have had that conversation. but the reality is, again, that uncertainty really worries me. so something we have to have a strategy around how how, um, we can deal with that uncertainty in one way or another. um and then on the power procurement. um, oh, and then there was a comment mentioned about cal iso um, uh, the cost that we have to pay to cal iso to secure power. and i want to make sure this is clear because as, um, obvious early the cal iso piece has nothing to do with the i mean, we pay for whatever we procure through cal iso, right? which is

different from pg and e, which is based on whatever we sell. we have to pay a transmission fee. so and those two are very different because cal. cal iso cost is set by the state. and we are it's very much regulated. the transmission line piece might be a little bit less, um, i mean, i probably cal the california puc does some regulations over that, but it's a little bit different. so it's just like those are two different pieces that the uncertainty associated with them is very different. right? i just want to make sure. so the cal iso fees are for transmission usage of the grid. so we have our own transmission lines and hetch hetchy. but it doesn't get the power. all the way to the bay area. so we do rely on the california grid and we pay fees associated with that. you're right. those are regulated by the cpuc and then are in city district. solution is where we pay the wholesale distribution tariff to pg and e um. those

tariffs are also regulated by the cpuc. however, you know, our agency has a lot of concerns about the way those are calculated. and, um, we've included in hetch hetchy power, who is the one who's the most subject to these influences as a power supply contingency? that's meant to cover those cost increases? we've also and if you could pull up the slides, please , um, increased our budget overall. if i could get the slides really quick on the screen here, i just want to show this graph because i think it's helpful. okay maybe not. it's on 46. um, and you can see that orange wedge has gone up pretty significantly in hetch hetchy. a big driver of that is those witit the wholesale distribution tariff as well as those caiso fees, as on top of that. so we've increased our budget for those. we're not assuming that's going to drop down. we're not assuming that's going to get cheaper. and we've added a larger contingency. that's some of the ways we're hoping to mitigate against that risk. but just again, on that, i was

exactly on that slide. but the cal iso thing is not as uncertain as the as the pg and e citywide transmission piece. is that, is that a correct assessment or you you looking to see if any of my power colleagues are here. i see barb hale coming up. i think it's probably less uncertain. it's still uncertain. and it has increased significantly in the last few years because transmission costs across the state are going up pretty significantly due to wildfire issues. um, the grid is busy. see if barb has anything to add. thank you. barbara hale, assistant general manager for power. just a couple points. the regulator on these issues that you're talking about is the federal energy regulatory commission, not the california puc. for both the wholesale distribution tariff rates that we pay pg and e, and for cal iso, they are federally regulated uh services us. so that's so the uh, california puc only does their internal rate setting their california retail

rate setting for pg and e, right. okay. and the california puc does not have any authority over the california iso. okay, okay. uh, with respect to the costs that we incur from the cal iso, we you're right. with respect to the transmission rates that we pay federally regulated, we understand them. that goes through a rate making process. it kind of gets broader cast easier for us to forecast and to factor into our planning. we also, though, engage in the cal isos markets. so their their power sales right to help balance. that's the part that's less stable. and we get that same cycle that you that you're talking about with respect to supply costs. right. that's also part of the cal iso fees we pay when we're using their market to close our gaps on a and those are spot markets that we are spot spot market. okay. um, the they also influence what we pay.

you know people's projections of what the cal iso market prices are influence what we pay when we make commitments that are like of a three month or a month nature. okay. right. okay thank you. i appreciate the clarification. um, so i guess the just the thing about the energy piece is some how, um, i want to make sure we have a very successful utility regardless of all the different pathways that this can work out. so we have to sort of think, um, are the different kind of generations that we can generate around the city that can help us to be less dependent on the spot market. i know we can't be super independent from that just because of the uncertainties that exist. for example, even if you put solar panel on everyone's roofs, um, you know, you might not have enough, um, but there might be some other strategies that we can put in

place. so i think it would be good to kind of think about that. um, and this is my last comment again, the, the wastewater piece is really, really i mean, the whole that financing process is worrying me very much. i can't, um, hide it, to be honest with you. uh, and not just and it's not in vacuum because as i also see on the other side, how the how uncertain the rates are and our revenue is. so this, these two are sort of coming to head with another. and i think we really need to be a little bit, um, i know we are trying very hard, but we do need to be a little bit more innovative in a way. we do things. i've mentioned this before, trying to think about synergies between our departments within our enterprise and how we can use ones, uh, waste as another one's resource, how we can use i mean, i know we have a project to

cover some of our, um, uh, water system aims with solar panels to be able to generate. so, like, that's just the tip of the iceberg. there are a lot more that needs to happen. um, so it's just trying to be a little bit more innovative to take advantage of our resources, us and reduce our cost is going to be extremely important. so so, um, i'm looking forward to this conversation, but i, you you are going to hear me to talk about rates, rates, rates, rates. and then that, that, that, that for the past next couple of meetings and um, and i can't avoid that just because it keeps me up at night. thank you so much. really appreciate your engagement, commissioner maxwell. thank you. um, and thank you. those um, very interesting. when you say cost savings, i'm going to try to make mine quick. but when you say cost savings, where does it go? and salary savings. where does it go? if we if we're saving and can we use it for

just anything or is it only for salaries. um, okay. so take this year, um, we haven't adjusted our salary savings budget. we're going through the year. we're seeing significant salary savings. at the end of the year, we'll spend less than our budget. um that just goes into our fund balance because we've appropriated the revenues. so that difference just goes into our savings account, just as if you made savings in your own spending during the year. okay so that you can use it for anything. yeah. but through the next budget, we're looking to rightsize the budget to what we actually think we're going to spend on salaries. so we're not going to appropriate as much salary dollars as we did in the current year, because we know that we're going to we have historically seen salary savings. we want to make sure we're prudent in budgeting and don't ask the ratepayer to pay for, um, salad is that we likely aren't going to spend because we have high vacancy rates. so we're adjusting the budgeted salary savings. that's the budget tool concept that nancy hom went over to make sure we're rightsizing our salary budget to only ask for as many salary

dollars as we think we can spend , so that budget will never exist, so it won't go anywhere at the end of the year. we just won't have it and we won't spend it. okay. all right. well thank you, thank you. um and then i think this probably is for a general manager because you mentioned about racial equity and the budget. and we talked about a lens. so what are the what's the lens? what are you using? um thank you. um, commissioner maxwell, uh, as i said, for the very first time, we, um, you alluded to it looking, making sure that on on issues of equity, we look at it as part of the budgetary lens, environmental issues. yeah, but we're talking about dei at this point. um, but yes. environment. we always look at uh, so a big part of it was i wanted to make sure that we had, um, uh, uh, chris bijou, part of our budget executive team, and that he was looking at all our budget proposals in the context of issues of equity. and you're

right, i did allude to a budgetary tool. and essentially there were five questions that it, uh, chris and his team asked on every budget proposal that we have. and i know he's here today. i'm happy to bring him up. if you'd like to speak. but in summary, uh, you know, what activities are being funded by this budget? uh uh uh, to enhance equity and inclusion in one's enterprise, his bureau's workforce. and we want to details and associated costs on that. how are professional development and advancement of opportunities used to foster equity within the within the enterprise or bureau? um, how will the effectiveness of the strategies be assessed and measured and monitored to ensure progress towards the bureau's or um or enterprises equity and inclusion objectives and those kind of questions that we had all asked and him and his team as part of it. but i'm in summary but i'm happy to have him talk about some more details. and i think there was 1

or 2 others that we had there for how what measures will the department take to address the unintended consequences that might impact communities based on proposals? so there's a series of five questions that we that him and his team asked as part of the budgetary process. and we put that's the lens that's. thank you so much. and so in chris bijou, deputy chief diversity officer, um, in conjunction with laura and her team, we created these five questions. and these these five questions were also centralized around a scoring rubric. so going from 0 to 5, we ask everyone who was submitting a budget to rate your your budgetary needs within that scale. and so what we try to do is get a comprehensive assessment. if you rated it a two in terms of impact, right. what are the unintentional and intentional impacts of this particular position on the budget? if you rated it a three, you were more intentional in the questions that you were asking. if it was a rated of 4 or 5. and so we went on a scale to try to standardize how people were thinking about it, asking

uniform questions across the board. what are the unintentional impacts of the community? what's the intentional impact to the organization? what is the added value of this position to the team? and so we wanted to make sure that we were asking similar questions so that racial equity wasn't as sort of outlier, that it was central to the process throughout the entire budgetary component. and so could that be then, uh, turned in or used as a template so that that is correct . what we did is we created a template. this is the first go round that we are using this template. we've already started making preliminary modifications for the next go around that it's even more advanced. okay. so that that template could go into any number of things, not just finances, not just the budget, but it could that that is correct. so the original template that this was modified from was not for budget but for budgetary purposes to begin with. right. it was just a framework to evaluate racial equity, uh, policies, racial equity programs. my team and i made the modifications to fit it to the budgetary needs. and so

we can actually take this template and look at elements across the board beyond race. we can look at how we would score policies from a racial equity framework. we can look at programing and community impact from a racial equity framework. so this is to standardize the racial equity evaluation metrics within the agency. and then could we also use something like that on the environment? absolutely it's designed to it's designed to be adaptable to any need. yes. because those things are basically one. and the same. yes. correct. environment okay. great. thank you. thank you thank you thank you. finish. commissioner uh, commissioner stacy, uh, thank you. and thank you for the very detailed report. i i have a couple of sort of general comments. i really want to emphasize this, uh, commissioner ajami's concern about, uh, debt service and the and the rates and how those two interact. i especially, um, uh, thought, i think that our wastewater program is a going to

be a huge driver working on the bay. it's a complicated issue issue. i really appreciate the work that the department is already doing. um, it's got to be a collaborative effort with with the entire region. and of course, a creative and evolving effort as we as we look really closely and i know the department's already doing that, but it really is um, it i worry about it too, because i, i think that the budget will only increase sort of the more we know. and i have some concern and i also share commissioner ajami's concern about a decreasing use and possibly a lower population growth. and i know we've heard a lot about this from mr. warner. he's given us a lot of correspondence over the last year that we are going to need to think about. if use goes down, whether it's because

of lower population growth or lower use, and how that affects our rates and how we stay within that affordability, uh, within the affordability line, which you've shown us, we are so far, uh, staying under that line, which i really appreciate, but i really just want to emphasize those two concerns. just the wastewater and working on all of the issues with the bay and also staying within that affordability, um, line for our ratepayers and i know you are looking carefully at population growth statistics and use statistic six and thinking hard about that. but i think it's an important focus for the department to continue to. i have a couple of just tiny details questions. i'll try to go more quickly. there was a slide early on. i think it was

page 19 where we talked about the sfpuc support for the housing for all. is the puc's role something besides, uh, provide guiding services, whether it's wastewater or water or power in the housing for all program. um, this investments in powers budget. so i just ask bob hale to quickly she'll go into this more on a week on friday, but she can provide a brief overview. um, barbara hale, assistant general manager for power. so, yes, this was, uh, one of our proposals that showed up on the slide. uh, we are the power provider for new developments and redevelopment areas under the charter. uh, so what we are doing is including proposals that will staff us adequately to meet the growing needs and the emphasis, the faster pace that the city is looking for in the housing for all initiative. got it. thank you. i also so on your slide 54,

we have an assumption on on interest rates being at 6% for ten years. i am hopeful that that's a conservative assumption . i know it's incredibly hard to predict, but i, i thought i heard you say that you're trying to sort of be conservative on that interest rate, just so that we don't underestimate our costs on our debt service. is that right? that's right. we're trying to be conservative. and this is a number that we thought about really deeply. we sought counsel from our municipal advisors through our debt team. nikolai sklaroff, who's the capsule finance director. um, was integral to this decision. um although the effects of this decision is will make all future borrowing more expensive and therefore all future projects more expensive, we felt that it was a conservative, fiscally prudent move to um, better align with the reality of the federal reserve rate as well as our peer agencies, who are also increasing their long time

interest rate assumptions. okay. thank you. i think that's it for now. thank you. thanks. thank you. commissioner johnson. i just wanted to actually say something quickly to the, uh, demand piece. uh, not necessarily to you, but also to my fellow commissioners. actually we my team for many years have looked into water demand and how demand changes and actually, we have seen over the years popular asian growth has no relationship with demand growth literally we they're decoupled and they don't really reflect each neither economic growth actually often the conventional model is as popular asian grows as we are becoming more prosperous, we use more water. and we have seen that's not true in the bay area. greater bay area. our population actually has increased by 40% and our water demand hasn't changed. overall, los angeles population doubled has has their

water use hasn't changed overall. again and there's that connection doesn't really um, reflect um, water demand. so it's really important for everybody to keep that in mind because you will hear that in conversations. but it is something that has been demonstrated. that's not true. so, um, i know it's important. thank you. commissioner um, commissioner stacy, i just i that's really been reflected in some of the latest water supply assessments that the commission has looked at, that the amount of sort of on site conservation ation and the methods within each project that we've looked at have been really remarkable at, at how little, uh, water use there is good to keep in mind. thanks. thank you. commissioners. anything else before we go to general comments , just want to say that we have time, right? i mean, we're supposed to be out at one. we

have a 1:00, we have 1:00. so we do and we have another presentation. so any more um, comments or questions from the commissioners? uh, could we open this again? thank you very much for the incredibly thorough work that you guys have presented to us today. it's really teed up a lot of stuff. so thank you very much. thank you. um, let us open this up to public comment for public comment and item number three specifically. and i have cards for mr. drekmeier, mr. warner and anybody else who's interested can line up against the wall, please. thank you. peter drekmeier, tuolumne river trust. i wish we could go back to the three minute comment period that we had pre-covid. so in your december meeting, you received a water resources division annual report. did liveries in fiscal year 2223 were 172 mgd, second lowest on record for nine years. demand has been under 200 million gallons per day. slide 43 shows that if you combine retail and

wholesale projection for 2034 is 202 mgd and sales last year, the same report looked out ten years to 2033 and projected 188 mgd in sales. so that's increased by 14 mgd and you need to ask why that might be one of the reasons why you're able to stay within the affordability level. because if it's less than 14 mgd, you pop above that and my assumption is that last year's numbers were probably more accurate. um so what happens when you over project water sales? what we found out on december 12th when you received your fiscal year 2324 first quarter budget report, where the projection is that water sales will come in $25 million, less than projected. and. sewer 26 million

less than projected. so i'll leave it at that. i think a lot of questions need to be asked of staff. thank you. thank you. next speaker. hi i'm dave warner. is there any chance we could put up slide 45? and first i would just say thank you all for your service. um, second, i would say thank you to the finance team for just a phenomenal job. it's this is a huge amount of work and are a bunch of advances. um, i do think key stuff is missing. i really appreciate commissioner jaimes and commissioner stacy's comments. um, our situation, as you know, is declining sales and increasing spending. and the thing i would really ask is because it seems like you get this, uh, that hopefully you can get a chart including the presentation that says, hey, if demand comes in at these lower levels, here's what affordability is going to look like. and if we have the chart up, you know, it would pop up above that 440 or whatever the number is. and i think if you

had it in the presentation, it makes it something you really have to think about. and i think you have to look at both the margin between the 440 and what it actually is and having some kind of cushion there. and then, you know, i'm afraid it means you probably have to reduce capital spending or at a minimum , you have to know you're taking this risk. and i worry without that information, you don't know that you're taking this risk. and so i'd really ask if you can add that slide, and i'd recommend it sooner than later so that if you do want to make a change, people aren't scrambling at the last minute. so anyway, thank you so much for your service. great. thank you. say something. thank you, mr. excuse me comment. mr. warner, i just wanted to say how nice it was to see you in person. i've been appreciating your correspondence . i think it's a pleasure to see you guys. thank you. we read it all. thank you. um, is there any more public? oh, yes. i'm sorry. my apologies for not putting in a speaker card. uh, good morning, commissioners. nicole bosca, ceo. i have just two specific remarks about the discussion you had today. um, i

look forward to the presentation. you're going to get on the staffing. um, i think this is a significant issue. i've talked about this with you before, and i guess as you receive that presentation and think about what was presented today, um, to me, the questions are, are, you know, what is the progress in addressing the known staffing issues? has is the progress over just this year, as you focused on it? does that make a significant change in are you confident in that? is this process, uh, progress sufficient to ensure the necessary resources to implement the program you're talking about today? i think that's an important question for you. second, on the ten year capital plan, one of the things we know is that these projects that are in the plan do not end in ten years. and so how do we understand what the remaining costs for those projects are at the end of the capital plan? again again, just as a part of the information to know what we're funding. right. you're not going to fund half of a new water supply and not continue to

fund it after the ten year plan. so i think we need to understand that. and then i'll just say one last thing, and i wrote this down, is this, you know, 25 years ago i was involved in this process. and your predecessor struggled with recognizing the need to develop and adopt and implement a capital p the reliae regional water system for the customers it serves. so i applaud your efforts. today. i applaud the staff's efforts and i just wanted to recognize that as well. thank you. is there any more public comment seeing none, let us go to item number four, which is the budgets. and we have much paypal presentations as we did in the former one. so we will do public comment at the end of the entire presentation just for sgtv. this is item number four. the proposed bureau operating budgets. thank you. donna hello again. uh, nancy hom , cfo and agm for business services. may i have the slides, please. thank you again. and i

will be presenting business services as proposed. operating two year budget for fiscal year 24, 25 and 2526. so before i begin, i wanted to go over this slide. and i feel it's important that we understand each of the different bureaus within business services. um, we are comprised of six additional bureaus that support pwcs enterprises and bureaus and efficient in their efficient and reliable delivery of municipal utility services and programs. the six bureaus are highlighted here, and i will provide a brief summary of each. and i'll also introduce each of the directors who lead the areas in the next slide. when we look at the organization chart. so the first i want to highlight is the customer services bureau. they support our customers through an array of services and programs, field visits and inspections, and assist our customers with payment programs when they need assistance. the customer contact

center ensures customers questions are answered online, in person and on the phone. the call center answered over 293,000 calls last year. deirdre andrus is our customer services director and she leads a 107 staff information technology services provides 24 hour, seven days a week governance, management and administration of our technology applications and the infrastructure for our agency staff and operations. the technical technology support is critical in this agency as it includes our scada systems that support our utility operations administration of business apps and our 525 golden gate headquarters. they also administer sfp cybersecurity program, protecting our business data and systems from external and internal threats. it's the staff by 90 employees led by jennifer hopkins, our chief information officer. next is financial services. they support pwcs current $1.8 billion

operating and $1.4 billion capital budget for the current year by providing accounting services and financial reporting, reporting, handling over 75,000 transact ins each year. the financial strategy team provides services for budget, capital, finance, financial planning and rates, and fleet management. they ensure our financials are transparent, accurate and they champion financial stewardship and sustainability to maintain our strong credit ratings that support our access to low cost financing for our capital programs. finance has 74 staff, led by two deputy chief financial officers, vivian chen for accounting services and financial reporting, and laura bush for financial strategy. the strategy, innovation and change bureau is our transformation leader for key initiatives, organizational maturity and change. they are currently leading the capital planning improvement initiative, or the capital planning and delivery program, supporting infrastructure and providing strategic planning for business services and other divisions.

their risk management team supports our agency in identifying, profiling and mitigating risk. this mighty team of eight is led by tricia yang, director of strategy, innovation and change. the audit bureau provides independent oversight and facilitation for audits, governance and compliance, working with puc stakeholders and visiting auditors to ensure that audits are completed timely. scope they remain on scope and that recommendations are addressed by internal management. they partner closely with counterparts internally and also with city wide governance organizations such as. the city serves as auditor, the budget and legislative analyst, and other oversight committees may monitoring over 35 audits each year. erella blackwood is our audit director and she leads this team of five. lastly the loans and grants bureau is our newest bureau and leads the agency in identifying opportunities for grants and low interest financing through local, state and federal loans to support our capital programs. the sfpc has benefited from the state revolving fund program and

epa's water infrastructure finance and innovation act, known as wifia, totaling nearly $2.4 billion of low cost financing. and that will save our customers over $1.5 billion through the life of those loans, the team works closely with capital finance and key leaders in our enterprises and bureaus that this team is led by alexandra janelle, director of loans and grants. all of our teams strive for quality product and services by focusing on missions and values and focusing on financial stewardship. our customers process and technology . we this is our business services organization highlighting each of our six bureaus and their leaders. i just want to take a quick moment to introduce and acknowledge each of the directors for business services and for thank them for their commitment to our agency. so the first is jennifer hopkins, our chief information officer. next is vivian chen, deputy cfo for accounting and financial reporting. laura bush,

deputy cfo for financial strategy. deirdre andrus, customer service director. tricia yang, strategy, innovation and change director. tricia alexandra, janelle loans and grants director. and ariella blackwood, audit director. i really appreciate this team. i don't think we can. i can do it all. anything with any of them on the team, and they have an amazing, uh, teams for each of their areas. thank you. um, so now i'd like to begin with business services, um, budget. and so this slides hide highlights the budget growth, um, that we are experiencing over the two years. our are $98.4 million budget proposal is largely driven by labor costs. and that's represented in the dark blue at the bottom of the

bar chart to the left. non-labor costs are largely related to information technology, and these will increase slightly in our proposed budget. services of other departments represented in the light green on the bar chart, there, our service services we request from other city departments, inclusive of the comptroller's office for accounting and finance, system services, audit services and also procurement and support services from the office of contract administration. the pie chart to the right details each bureau's budget size in comparison to its to their peers information technology has the largest budget size at 42, followed by finance and customer services. each at 24.5 and 20. so you've seen these budget priorities here. um, earlier today, a few times now. um, and i really want to say that business services leadership,

when i tasked them to do this in this budget preparation that, you know, they develop their proposed operating budgets to align and contribute to our agencies endeavor to becoming a utility of the future. and how are we doing that? um, as shared earlier, finance led the development of pwcs first affordability policy adopted by this commission in november 2023. in addition, we've developed and utilized multiple robust tools to facilitate a more efficient financial and capital planning process, and we're really fortunate to immediately benefit in the first year of the capital planning. um, the capital planning improvement initiative led by strategy, innovation and change bureau, who is now supporting infrastructure in this endeavor, we uphold responsible management and we do that as supported, and that is as supported by our strong double a credit ratings that we have earned through strength in our financial management and sustainability. we ensure we have transparency, strong internal controls, and we demonstrate fiscal prudence.

we're investing in our workforce to increase retention in business services by repurposing vacant and underutilized roles, creating career paths, and supporting this through training , we must support our employees in order to manage a more complex business environment. in. in addition, we hold ourselves accountable to address racial equity and inclusivity as we make these investments in our people and as an agency, we're doing our part to invest where it matters by facilitating financing, budgeting, and governance tools to help the agency prioritize projects that align with environmental stewardship and replacing our aging infrastructure to ensure continuity of our life sustaining utility services and expanding our services to new and existing customers to meet new demands and requirements. and that in turn, support economic vitality and growth. this section begins the overview of our new proposals. summary. we're requesting a total of $3.7 million in year one and 3.1 in

year two. this is 12 new positions, of which two are off budget, 21 temporary to permanent position conversions and 19 substitutions. our non-labor requests include supports for our capital finance team as well as information technology to support cyber cybersecurity software and technology hardware improvements , including upgrades and disaster recovery improvements. i also want to note that our information technology team is also has $1.4 million in our capital project request this year, as part of our agency's focus to invest in our technology infrastructure. this next section, um, i'll try not to take too long, but these are the actual individual bureaus and their new proposal requests. so the first that you're seeing here is for accounting and financial reporting. the team is requesting five temporary to permanent conversions of temporary staff to promote retention in critical roles that support accounting operations and invoice processing. we are

asking for three new positions there to strengthen our accounting support for state and federal grant programs, as well as to strengthen procurement support for processing to support our enterprise and bureau divisions. this has been due to the increased complexity and scope and scope. as a result of the sfc's capital plan. we also have nine substitutions in accounting of position to align existing roles, um, where their roles have expanded and become more complex. we found that in that team, that basic accounting experience no longer suffices in this business environment, and that staff need to have deeper analytical skills and a knowledge of the business to be able to be effective in their jobs. and to support their peers. we're offsetting these increases with attrition, savings totaling one, uh, about 96,000 96,096,000. i'm sorry. and resulting in a $1.2 million request. the financial strategy team is converting two positions to permanent roles in the

capital finance team. again, to promote retention. the team is also adding two positions in the financial planning division. each to lead and support data analysis and forecasting, as well as rate setting for each of our enterprises. there are six substitutions to align existing job classes, with duties performed. we are also increasing um non personnel costs by $325,000. for the increased scope for our municipal finance advisors, and then also for the purchase of dbc software, which was used by our capital finance team and is an industry standard used by bond analysts. these increases are offset by $312,000 in salary attrition savings, resulting in a $716,000 request. the loans and grants team is adding two fte to support the development of an in-house bureau to manage existing work in this area that is currently performed by contractor, staff. our intent again, is to bring this work

in-house and have the existing consultants transfer their knowledge through the life of their contract to our personnel. next is the strategy, innovation and change bureau. they're requesting one substitution to probably reflect and align the level of experience and duties provided by the senior director to, and reflect this level of significant impacts. this group has been making in the organization. the bureau has also rightsized the attrition contributing actually $97,000 to the savings for the entirety of business services. the last two the audit bureau is requesting two new senior analyst positions to support the expanded scope of the audit bureau and the need to support increased workload and deliverables. the requests include two substitutions of existing staff to accurately reflect the level of responsible and experience required to support the bureau, and they're offsetting these increases with $147,000 of salary savings with a net request of 237,000. the

customer service bureau is requesting one new position to support the hydrant meter rules and regulations program, and one substitution to repurpose and align a vacant position to better provide technical business analysis and support. the bureau. it's unfortunate that this bureau has experienced high turnover, and we expect a significant salary savings of 1.7 million as a result. they are contributing an astonishing $1.6 million in savings to businesses, services. overall budget. and then lastly, information technology is converting 14 existing temporary positions to permanent roles. again, to promote retention and remain competitive. competitive in the current technology recruitment space. two positions are to support technology infrastructure projects such as scada and radio. the radio project and other systems. these positions provide technical and analytical support. the information technology team did do a deep analysis of their

salary costs and found that they needed to also significantly rightsize their attrition with an adjustment of $2.6 million in savings as at the bottom of this slide, you'll see non personnel costs. um, they the these are listed here in the table for your reference. and they include a number of software and equipment upgrades that must be completed to ensure this agency maintains its technology infrastructure to properly serve its customers. and ensure continuity in the delivery of our utility services. you'll note that the largest, um, the biggest changes there are for maxim. so our asset management and requisitioning software, cyber security. and i think i don't need to explain why. um, and also network our building at five, two, five golden gate. i believe it opened in 2012. we haven't done a whole lot there. and with the pandemic recently, you know, it's time for us to reinvest in our building to think about what efficiencies we can put there. and then lastly, our data networks as well. so these are the systems that run our enterprise utility operations as. these are the

list of highlights for our growth drivers for business services. and as you can see labor and benefit adjustments and new proposals support the information supporting information technology are the biggest drivers. however much of the new labor costs have been offset by salary savings shown there at the bottom for each of the fiscal years. at $4.8 million in budget year one and $1.5 million in budget year two, our budget at our total budget new proposals is 4.4 million. total inclusive, inclusive of technology investments or 5% in the first year. and 2.3 in the second year at 2. for position changes, we're requesting 33 new positions, 21 which are temporary to permanent conversions and two off budget. and again, similar to that calculation i had done earlier when looking at the bottom line, when we're factoring attrition savings, the net position changes are closer to nine fte

across business services. and again, the majority of our total position changes are in it. and in finance. that concludes my presentation. i'm glad to answer any questions. thank you. um, let's go to external affairs. okay. um, i thought we have. okay. let's. okay let's, um let's commissioner questions? commissioner. jamie. um, so, nancy, please stay at the microphone. commissioner. jamie. miss holmes, thank you so much for your presentation. that was excellent. um, you know, i want to go back to slide five. um because this also came up in our earlier discussion. um i have a feeling like if i pull a climate change out of the last column and then take that lens and look at every one of the boxes you

have here, like individual boxes , it will be impacted by climate change and resilience. like literally every single one of them. and i'm wondering if it's a good strategy to have it as a sub box in a sub box, rather than actually being an overarching issue. and i would say it like when i look at climate change, it impacts affordability. it's going to impact our regulatory action. it's going to impact our environmental stewardship, accountability, workforce. a lot of these literally every single one of them. and i know you didn't even i mean, i, i think it should be part of the priorities for the business services. and it should be a lens that every enterprise and every sub enterprise uses is to look at things. and i also think it's in a way connects enterprises. right. because because a solution that can help us to deal with climate change and build resilience can be

something that sits between wastewater and water or energy and water. right and we have a chance to do it because we're all under the same umbrella. so somehow i think this came up last year to somehow we need to take the time and pull that that specific item out and use it as a lens. um, so i want to put that as, as a, uh, put it on a board. the second thing i want to ask you is i was very interested in the strategy, innovation and change director. um, uh, miss yang, um, i the your job sounds really exciting. um, so i wonder, you know, and i think it's a very, um, great title for what we need for this day and age in many ways. and so as the every one of the other boxes that you have. but i would love to have more detail on what

that job entails. and how it would evolve. i don't know if this is something that will come later, or you can highlight it now, but that's just something that i have a very keen interest in. commissioner jamie. yes, i, i think when i get to the general manager's report, you're going to hear about another innovations. okay. um, proposal, which i think is more in line with what i think. i know you're focused on, okay, that that job and what i'm, what i'm going to describe. okay. uh, is, is something that we should talk about then. okay fantastic. and that will that will that will coordinate with what we have. so okay, something i think you'll be interested in sounds good i think, but it would not be a bad idea for miss home to elaborate on this, but i'm very looking forward to that very much. sure, you're asking for a comment from nancy though, right? i can add also, thank you. the strategy, innovation and change bureau offers a an array of services.

right now. they're primary and most important project that they're working on is the capital planning and improvement initiative. and you know, i will leave this to kkae-geum robinson later in his presentation to get into that. but they have been working in that supporting that project, leading it. um, and it's been very, very much well integrated into the all areas of this organization. and i think they're i believe how many work streams tricia. it's about eight, eight very complex, detailed work streams that involve the different components of the capital planning process. and so, um, you know, it, it's a multi year project. i was a little bit surprised when i signed on to this job that it would be multi-year like, i want more of trish's time, but i'm not going to get that for a little bit. but that's totally okay. um you know, in just the first year for this particular project, you know, i think last year at the mid cycle budget process, we talked about reducing the ten year capital plan by a billion. and this year, coming forward with the

next ten year capital plan, you know, we talked about a lot of the work that we have done, having a more transparent process, having a unified process and having it being very much more robust that we've seen in previous years. and i think i have been a hero at the puc for 15 years, not involved in this process the whole time. but i can say that with wide open eyes and looking at this, now that i'm just really amazed at the level of work and commitment that this organization has done, and a lot of it has been through this program that the city team has been working on. in addition , um, they are expert. it's with strategic planning. and so they're helping me with my business services team, looking at strategic planning and how we can implement a lot of some of the goals, like for example, for racial equity, diversity and inclusion. having those into into business services. they've worked with a.g.m. robinson on his team. again, i don't want to steal his thunder. but you know, they they have worked very closely with him. and so there's a lot more to come from this particular team. but right now the existing work by the strategy innovation and change team is very much encompassed over in supporting

infrastructure and the capital capital planning program. thank you. um, on my first comment, i would love for you to think about it. and maybe, um, in this process, we'll have another discussion on how we can pull climate change out as a more of a an element that's important to everybody, including the business services. thank you. i will thank you, commissioners maxwell. thank you. you know, i had strategy and innovation and change as well because i wanted to know what does that mean? and and i think it's in more than one i think, um, maybe external affairs. i may have seen, um, innovation and i think that's extremely important. i'm glad to see that. um also, the lens, that's why i mentioned, um, to gm bijou about the template that we could use this to look at the environment. and i agree with, um, commissioner ajami, it should be the lens that we look

through everything with the questions that we ask, the five questions that you asked about racial and equity, it should be looked at through that so that we know, um, that that is considered in everything without asking, without it being a separate because if it's separate, it means, oh, well, maybe they didn't look at it in this. so i think, you know, um, my colleague, you know, agm ardekani, you know, he in external affairs, you know, he has a group too, with strategy and innovation. and i have one as well. i think innovation is across the organization. you can't really put it in one place and say, this group does all the all the innovation for the organization, right. and so you may see that in our presentations each group has very unique, specific specific objectives and goals. you know, business services we provide your general administration services. you know, from a different type of lens. and so for trisha's team right now, again, looking at bringing bringing together the full organization from the different areas, not just enterprise, but also looking at bureaus, you know, how can how can bureaus support enterprises more and how

can enterprises work more with bureaus? right. so again, different lenses, but again, innovation across the organization. i think that's excellent. i do i'd like to see the same thing with the environment. and um, you know that it's as, as well. but i'm really happy about the innovation. i was surprised to see it and glad to see it. so that's good. thank you. commissioner stacy. uh thank you. i will just emphasize again, i how important the strategy, innovation and change is. and i know we've heard about it from, uh, many of the staff as they present, um, whether it's a contract manager issue or the way that you are trying to collaborate. and i also recognize i think you just said it, miss home, that it's not not just a standalone bureau, that it's part and parcel of what everybody does and that you've got staff now really focused on it. that's a great addition. and

i also wanted to emphasize how important the loans and grants addition is, as well. i think it's a really important tool, a financing tool for us to explore, especially in the future with some of these really big, most definitely. i think with. yeah, with the cost of borrowing increasing, you know, we found that, you know, these programs with the state and federal programs have just been more important. and we've been leaning on them more. yeah, we're very fortunate to have alexandra work with us for loans and grants. again, great relationships across the organization and with her counterparts at the state and federal level. um, i have to throw in another bone for the sick team. you know, this is before alexandra joined our team. strategy, innovation and change as part of the work with the organization, helped the previous chief financial officer in kkae-geum of business services, eric sandler, pulled together what a loans and grants might look like. and so a lot of that pulling together. also the um, the request for proposals for the contract of services was also led by trisha's team. thank you. thank you. and i i've

worked with enough nonprofits to know how absolutely important it. um, good, good. grant writer. someone who who keeps track of what's out there with the loans and the grants that are available. it's just really critical. it really requires a lot of working with colleagues across the organization. so it's a team effort. yeah. thank you. and it's go ahead. uh, commissioner, i just want to say i really appreciate that the staff that you have, it's like a group of very strong and dedicated and committed warrior women. i really appreciate that. thank you. thank you. ladies thank you. commissioner jamie. you stole my thunder. i wanted to say that. now, is there something else? um, yes. that's absolutely fantastic. i mean, we value everybody's service. obviously. it's, like, super important. one quick comment. i also had was, um, you had under the new proposal, financial strategy, we, um, a data senior

data analyst. for sorry, it was under financial reporting. senior data analyst for forecasting. right am i missing something here? uh yes. yes, yes . yeah. um and again, made me think, you know, i'm sure you have somebody who does this, and then we have somebody in the water side. does this, and then we have someone probably in the wastewater side does this too. and i think these people need to be somehow so together and talk to each other more often than less because it's important for them to coordinate their knowledge, their learning, their strategies. um, in order to make sure we have a very, um, you know, to have a strategy across the board around how we forecast, use and demand and everything and financial health. yes, most definitely. i you know, again, analysis is not

similar to innovation. it's not confined to one place in the organization. you know, every enterprise has its, you know, teams of experts. right. and so we work we all work together as part of the capital planning process is also a part of putting together this financial plan. um, i also want to emphasize that in our information technology team, we're looking at tools to potentially bring teams together. i don't want to spoil the surprise, but, you know, we're looking at project management tools, organizations side that may help, uh, transparency across the teams of what's on our plates, as well as planning and working closer together. our, um, and so, again, you know, i, you know, that's the intent here, but this this particular team, you know, there's a lot of responsibility between each of the enterprises, you know, and we want to make sure that we have that continuity and in place to have that deep bench of analysts to support the financial strategy team, because, again, they work very closely with capital finance as well as well as the county. it all comes together at the end of the day. fantastic.

thank you. thanks again for that presentation. um and i think we will move on now to, um, external affairs. thank you. thank you very much. and i might comment as masood comes to the microphone, we have four more presentations. i know we were under a time constraint, which i hate to say, there's never enough time for anything, but, you know, as this committee and, you know, major department of the city, we have four of these. so let's hopefully i will be and hopefully everybody else will be as efficient as they can in these incredibly important presentations. and and, and dialog that the commissioners are going to continue to have with you. so thank you. next, let's go. masood, welcome. thank you. commissioner. i'll try to be succinct and mindful of time. good morning, commissioners. i'm masood ardakani, assistant general manager of external affairs. um, i will be presenting external affairs, uh, two year budget through fiscal year 26 with you. first, i wanted to just take the opportunity to quickly reorient

us with external affairs, organization structure, and our four major divisions, which are communications, community benefits, strategy, planning and innovation, and policy and government affairs. as i'll quickly share a little bit about what each group does for you, um, the policy and governmental affairs manages the agency's legislative activities at the local, regional, state, and federal levels. we track and advocate for legislation at all levels of government. the community benefits team manages all of our environmental justice and community programs, including our education programs with students and in the schools, arts programs at the southeast community center and add our programs to give our youth and young adults internships and exposure to careers at the puc. next, our communications team, which includes the teams that support our water, wastewater, and power operations, our digital content and social media teams, our

community engagement team, our internal communications, our staff that supports communication for all of our capital projects, as well as our media and executive communications. and finally, our strategy, planning and innovation team. and i'll take some time to include the many scopes that they do that includes the work for managing all of the agencies public records management for the entire agency. we staff the sfpuc, see citizen advisory committee. we manage our core systems strategy and operations functions, including our budget. that's before you today and special projects like the low income customer assistance program that you adopted last year and that we presented to you. so all in all, a wonderful list of colleagues that i'm proud to learn from, some of whom are sitting behind me here today. and that really is for external affairs. our priority for this budget cycle. we are looking to retain and provide stability for our current employees. so that we can communicate to all of our

ratepayers and communities and manage policy and governmental affairs for the agency. in this budget cycle, we're not adding any additional positions, but we are converting the existing temporary positions in external affairs so that we can retain our wonderful existing employees and provide them with security and stability. we are also substituting and reassigning multiple positions in our budget, so that the positions in our budget accurately reflect the actual positions that are existing staff are in. and finally, we've worked with our finance team to rightsize our attrition savings for each division on the next slide, you'll see our budget overview as you can see, our budget is almost completely driven by the labor costs for our current staff. in addition, we have a little bit of professional services support for our staff to do things like translations for non-english speakers to satisfy the city's language access ordinance, for example, and really to ensure that all of our customers and communities have access to the critical

information we communicate, the next slide details the cost increases for funding our current staff in the next year. the cost will increase as you can see, by $2.6 million to fund our existing staff, and then another $300,000 the following year, for a total of $11.5 million for. finally, i wanted to provide the details for all of the positions changes that i've described. we are converting 14 temporary positions for our existing staff to permanent, and we're converting for off budget unfunded positions to operating. and then there's a corollary offset in salary savings. we've also detailed exactly which classifications will be converted from temp to permanent on our digital communications graphic. six local policy and government affairs team public records staff, our data operations and systems analysts, our youth programs analysts, our social impact partnerships, data and systems analysts. college hill learning garden staff and

environmental justice analyst. and finally, we've noted all of the positions substitutions we are making in the budget so that our budget reflects the actual positions that our current staff are in on our digital comms teams, graphics teams, equity and community engagement. our press secretary and internal communications teams, our community benefits teams, our public records team, and our local policy and government affairs manager. and with that, um, i'm happy to dive into any additional details to answer any questions you might have. thank you for that. very succinct presentation. thank you, commissioner. mayor. recommendation. seriously yeah. so that was great. thank you so much. um, i just want to say, um , the value and importance of external affairs and communication is becoming more and more obvious, and it's super important. so i want to acknowledge how much i personally appreciate the work that your team is doing to try to stay involved and engage with

the customers. and if there is something we need to do to help you guys connect more with the customer and have a sort of like a back and forth conversation that can inform our processes as well. i want to open that door and say we are happy to kind of consider, i mean, at least i personally am happy to consider that, partly because for our customers, it's important to know why we are here, what we are doing, what's the value of a service we are providing to them? if they're paying for their rates, they need to know what they're paying for and also we need to be able to communicate to them, what is that? what are our priorities? value systems and everything along that line. so, um, just wanted to highlight that and appreciate all your efforts. thank you to you and your team for all the work that you're doing. thank you. commissioner commissioner maxwell, thank you. i've heard, um, so substitutions , um, you just happen to be the one that i'm going to ask the

question to. okay but i've heard what does that mean? yes, ma'am. you said substitutions to 9251. what what does that mean? yes, ma'am. i'm happy to answer the question. it's a good question. we have classifications where our staff during the fiscal year will get moved into positions for critical functions. so let's say public records or our communications teams. and then the budget cycle, then the positions that are in the operating budget don't match those classifications. so what this does, especially for ours, it substitutes the existing position that you have and it changes it so that it matches and correlates directly with the position that the staff person is actually in. so it substitutes the classification that they're in for the position that they're actually going to be in. and we're recruiting for okay. and so that's what they mean i've heard this. that's what everybody means the same thing when they say substitution . yes okay. um thank you. just i just wanted to add that in some cases, substitutions are for vacant positions. and we're repurposing a vacant position that is a low priority for a new high priority initiative. um,

rather than let that position sit vacant. so it's a way in which we're being really responsive with our existing positions and repurposing them for new needs. essentially, a substitution is changing one classification in the budget to another classification. great. thank you. yeah. thank you. great thank you. and i'll i'll say, um, seeing no other commissioners, i just want to finish. i'm sorry. i just want to thank you and your team. um for the work that you do. because i see them, you know, and hear about them in the community. so thank you all for all that you do. thank you. all right. thank you, commissioner maxwell. and that's actually what i was going to say is my final remark. i've probably seen masood and his team, um, you know, in my day job, more than i have as a as a commissioner. so it just shows that, you know, external affairs, you know, has that name for a reason. um, and, and i should say that i'll say that globally, too. i mean, i just, you know, the staff, not just in external affairs, but in, in other departments, you know, however, the city family, uh, speaks is really out there

in the community. um so anyway, thank you. okay, commissioners, any other comments? okay. let's go now to, um, uh, wendy macy with human resources. thank you again. good morning. um, commissioner, uh, wendy macy, chief people officer, may i please have the slides? um, i'm most stressed about clicking the slides, to be honest about anything. all at all. but, um, thank you very much. and i thank you for your attention so far this morning. i'll try to go, um, relatively quickly through our slides. uh, in the interest of time, uh, this is the basic outline of what we're going to be covering today. again, i'm going to go relatively quickly. um, first, i

do want to thank the staff for really they have done a yeoman's job, accomplished a lot over the past fiscal year, um, including completing over 80 civil service recruitments and filling over 600 positions. so that is not not a inconsequence. well, it's a lot. um, 381 of those have been permanent civil service positions, which is something that we've discussed all morning , is a priority of our agency because it provides people with the longevity and the certainty of having, uh, some job permanency within the agency. um, it shouldn't be a surprise that his, as a people committed organization in our budget is almost exclusively staff or labor costs. um this slide is a quick summary of a proposed small increase in our in our his

budget. so like many of our colleagues, we are requesting a conversion of positions from temporary to permanent, which we do think is particularly critical for his analysts. um, because it is such a high demand job and we have seen many of the analysts leave for other city departments or other places, um, because we were only able to offer them a temporary position. so the most important thing is to sort of, uh, help ourselves so that we can help the rest of the agency. um, we also are requesting substitute ones, um, and then with the exception of a caveat of some additional positions that we're we are requesting specific in response to some of the increased demand, and that is going to be placed upon some of these other proposed positions. everything that we're asking for nets out. it's balanced with a with a offset in our attrition savings. this is a very high level organization chart. i apologize,

i'm sure it's very small to see. uh, but in general, um, this green, uh, group is our talent acquisition team. and many times we come before the commission, we focus almost exclusively upon our talent acquisition team. they are the ones who are responsible for our recruitments, our hirings. uh, but they do much more than that. they support our labor negotiations team. they do classification work. they work on special projects. they provide a lot of the high level data that that your commission and our budget team relies upon. um, again, it is our large our largest team, and it is the one probably that the most public focus is on. but i did also want to take this opportunity, as many of my colleagues have. um, i brought many of our team leaders here who are in many of the other functions beyond talent acquisition, who support much of the important work that hr does. as a full service organization. so this next slide with all the other colors, i can kind of go left to right or some

of the very important functions that hrs also takes care of on a day to day basis. um, our eeo program, they, uh, uphold our commitment to fostering a culture of inclusion, respect and equity. um they handle our, uh, external, uh uh, stakeholders such as eeo as well as our, um, our learning and development team, uh, partners to create opportunities for employees to develop themselves through in both in-person and remote training. and they facilitate organizational change process and provide self-learning resources for our employees. uh our people, science and strategy and human resources business partner team uses innovative consulting and people analytics to enhance the employee experience. um, and cultivate strategic partnerships. so most recently, their work has been highlighted through our employee voice

survey. um, that provided us the important data that we've talked about all morning about reasons why temporary employees choose to leave the agency. uh, our employee labor relations team works to cultivate positive and productive relationships in the workplace with our labor partners that adhere to our union contracts, and they are currently involved in the very important and time consuming, uh, endeavor, which is our citywide bargaining process, um, health and safety, which is also here, um, provides technical advice and support to the entire sfpuc. they're always out in the field preventing workplace injuries and illnesses in compliance with regulatory requirements. um, our hr tech solutions provides the important data that we all rely upon. and finally, last but not least, very importantly, payroll ensures that payroll is processed timely and reliably and works on helping employees with their individual inquiries.

so again, we do much more than just talent acquisition. we are all committed to many of these efforts are what supports retention within the agency. so this depicts where our requests lie in terms of our attempt to perme and our request for positions. each of these positions would fill a critical role and assist in meeting our agency demands. um as you can see, the some of the new requests is relatively modest. it works out to an additional four when you balance out the offsetting attrition savings. um, but we do think that they are going to be money well spent because they are going to support all of our agency wide initiatives to focus on the bottom half of the slide, which are the new positions each of those fills a critical need in meeting demand, which has been requested by many of our hiring managers and customers. focusing on those positions in the bottom

. uh, we're requesting an hts innovation team. uh the citywide da has managed to actually make some a lot of progress in hiring, both in terms of reducing vacancy rates and, and, um, reducing time to hire. and we are, of course, a part of that and a partner of that. and, and our, our statistics go into their citywide statistics which show, uh, good success in all of these measures. um, one of the reasons i believe they've been successful is they have had a specific team that does hr modernization, which does not have the additional burden of having to conduct exams as well. so we would like to model that out, uh, requesting positions for that effort. we're also requesting uh, two additional trainers that doubles our capacity. again, one of the things that helps our employees is, uh, want to stay and grow within the puc is to be able to position themselves well for promotional opportunities by by fostering their learning and

development journey. um, we also feel it's very important to give our managers and supervisors training so that they can foster culture of inclusivity and acceptance and be more effective in their roles. and so these trainers will be very critical for that. um, we also have a dedicated staff person who will work on apprenticeships and other pipelines. uh, that's something that's been very important is really going out into the community, working with some of the educational institutions, liaisoning with our labor partners and dr. to create these pipeline programs so that work is very very much in alignment with everything we're doing. finally, we're requesting an additional team of uh, analysts to focus on hiring again, to focus on the additional workload, which is being requested as a result of these positions, we feel this is a prudent thing to do. otherwise, the goalpost keeps moving further down the field, and we're not going to be able to catch up. so we think, uh,

investing in some critical additional resources within hrs to be able to keep pace with these new demands. every time someone mentions a substitution or mentions a temporary to permanent mentions a new position many times because of our city processes that actually does necessitate conducting a recruitment effort. and so we just want to be mindful and transparent that because we know that that will be an attendant workload, we want to make sure that we're prepared for that. uh again, our work is in alignment as you've seen with this chart, with some of our key, uh, priorities in creating a utility of the future, specifically on the workforce reducing vacancy and increasing retention as well as our accountability, racial equity and transparency. so so, um, we thank you. we thank you for your attention. we thank you for helping us in supporting us. um, and i thank all of my staff who work really hard again, to really support those goals of retention, recruit payment, um,

and making us the best, uh, agency that we can. so thank you again for your attention. great thank you. um, miss macy, i just want to say, for this presentation and for the other presentations, um, as we've moved into this particular process since you came on board, um, i have seen, um, you know, so much reorganization to, to deal with, with the priorities and especially for recruitment and, um, recruitment and retain passion. and that's extremely important. and i think that the sfpuc has, has become somewhat of a model as i've looked around other agencies around the city. um, and, you know, when you're talking about the mothership and caroline mason and all the stuff that starts at the top, the fact that you're innovating and making priorities, as i see in this budget, to make sure that in particular the hiring and the retention stuff is done, is, is, has been pretty exemplary, i think. i think it's important

that you mention that this isn't just a, a global issue about getting people hired and retained in a city agency. there's also that bumping process where, you know, if somebody quite often somebody will say, hey, i think i have another priority and i'm going to go to mta or i want to go to the port or somewhere else, or it's not just, you know, i get a better job or something, you know, by working for, you know, for an outside, uh, private contractor that actually happens somewhat in the city because people are always trying to advance and, and in a civil service service agency, you know, there are those types of opportunities that are not just leaving the city. it's like moving around. and so i'm glad that you mentioned that and put that on the table, because that's one of the so many different things that takes to make sure that, you know, people are looking at ideas that are especially around retaining. so thanks for all the work that you're that you're doing around that. and as since you did mention, because we're talking about budget process citywide

negotiations are going on and i know that your team is i'm sure, involved with the labor partners in this particular department. i hope that you're seeing not as just doing a wonderful job in terms of getting people and retaining them and moving them from temp three to permanent. but as negotiations come on, i'm going to say it subtly. i just hope you're seeing being the boss. i'm hopefully you're being seen as a nice person. not not the boss. so that being said, thank you for your presentation and really for all the work that you're doing. as you know this, i mean, we had a this is a flow chart here. i was looking at them. what's this one that has no colors in it and stuff? it was your presentation was actually i thought it was going to be the skinniest one. but actually, as it was presented in real time, we saw, oh, and this is this and the blue team and the green team and the temporary team that was um, uh, a bit of a surprise when i actually saw it in, in real time. so anyway, thank you for the work that you're doing moving forward. and there's a lot to do. and i know we're going to keep pushing you

to say, hey, how come this didn't happen? but thank you. thank you. um, commissioner jaime, um, thank you for your presentation. um, quick question. this came up multiple times, this whole temporary to permanent. and i'm wondering, um, why now? like, why have we haven't done this before or or is there something right now is happening that's making us to make this transition? um, i'm just curious because every one of these presentations includes. and we are trying to turn people who are temporary employees to permanent at i think a lot of it is also part of the. yeah, yeah. and i mean, some some of these positions, i think were created in a temporary basis. sorry, dennis. yeah, a lot of these positions were created during covid and they were temporary hires at the time. and enabled you to hire people quickly. and so things have changed over the last. and so now we're trying to

make a lot of those people permanent so that they have a permanent civil service. um uh, position a large part of it. was that okay? but then also, quite frankly, especially with massoud's team, i think there was previously and i can't speak to why there were a lot of there was a lot of rigging of positions. and so we're trying to rationalize, uh, the process and make it, um, uh, more transparent. uh more honest. uh and more reflective of what is actually going on, on the ground. so it's a combination of covid and then just things that had accumulated over time in the budget process. and we're now just trying to sort of clean it up, make it transparent, make it comport more with what is actually going on in the agency. and the quick question on that is, um, when we are talking about covid, giving us a chance to hire people faster, so we had to put them in a temporary

position. was there something in that process that was good and working that we can potentially say, look, we tested this and it worked, and i'm going to let some basically it was a waiver, okay. it was it was a correct. it was the mayor's office just allowing that to occur. is that fair? somebody answer that. it was it was it was like an emergency process. it was. and tell me what the waiving what the, uh, you know, the application process. i mean, just trying to figure i know it's a very complex thing to hire somebody in this city. so i'm trying to figure out what what which part of it we can cut . so how do we streamline? since everybody talks about streamlining? ron flynn, deputy general manager during the covid emergency, the city had emergency powers. um which allowed us to, um, hire people without going through, for instance, the full civil service process and not having a full

test, not having go through all of the process. so all of that came to and also would take temporary positions and make them permanent without going through the budget cycle. you could go through and you could ask to have that happen. now so all of that is over and we are left with a lot of people who came on board with that process, who are temporary and who have no incentive to stay with us unless we are going to make a commitment to make them permanent. so that means that we have to go through and make their position. i got that part of it. i absolutely got that part of it. but i'm just trying to figure out. so the civil service, um, test that people had to take, are these people now taking it to become permanent? that's that is why. so we can't skip that. that needs to happen. that's right. that is why we have more, um, um , wendy macy said a substitute ation still involves a recruitment. we still have to say thank you very much. you've been with us for three years. we're committed to you, to take

you here. you have to go through and go through this process to become permanent. and do we know is there a risk that some of these people would not be able to pass that test? we hope not. they're doing their jobs. we're hoping that the test would reflect actual skills rather than false barriers. and that's a lot of the work that is being done. removing those. but there is always that risk that someone does, um, can't take. so that is part of the process of really the innovation team that, um, miss macy has asked for to really get in. what are we asking for? how can we speed up requiring those things going together? okay. and then is there a way we can have this, um, the waiver, uh, somehow in the back pocket. then we can bring people in. they can work. we know they have the skill set, and then they take the test later, rather than just putting that hurdle in front of them. like, since everybody is thinking about this themselves, i'm assuming that's why they're laughing. so yeah, i mean, there are many processes you know, we

some people do this tpa temp, you know, temporary like if there isn't a list. and so you know, we are we are committed to employing all tools readily available to us. but again, our emphasis is really to try to be, uh, you know, rightsizing our attrition and committing to people in the long terme. okay. thank you. so before i, um, raise the next commissioner, i just want to say that this commissioner right here wasn't laughing like everybody else was because i think any suspension of civil service rules and going through processes that are going to expedite hiring people is something that is not good government. and that's why there is a civil service commission. and emergency powers was the was the answer, because sometimes certain things just had to happen. and that should not be the regular way of hiring that ever happens. and from a commission standpoint, that should not be anything that we're weighing in on in terms of getting rid of civil service stuff and so, commissioner stacy , i, i'm probably just going to

repeat everything that has been said. i wanted to endorse the temporary to permanent process. i think it's a really important tool for retention. i understand that getting people in on a temporary basis is a is a way of getting people in faster and maybe a way of testing what the department needs and, and what works and what doesn't. but i think throughout the department, going from temporary to permanent is an important way of rationalizing, making transparent and also retaining people. and but i also recognize as you've said, it's not a it's not a easy lift that all of those employees to become permanent have to go through a process and hr has to help get them through the process. but i, i think it's a really it's a good trend. i was pleased to see it in the budget that we are going to the more permanent status. so thanks. okay. any

other commission comments? okay. well thank you. um wendy macy, um, general manager herrera item d thank you. uh, commissioners. um, as we've mentioned throughout these presentations, um, uh, this morning and this afternoon, we've identified three major pillars to prioritize as an agency and utility of the future affordability, responsible management, and investing where it matters. and these pillars stand as a guide for our discussions today and throughout our upcoming budget presentation . all the bureaus that you have heard from today comprise are comprised of dedicated individuals who go above and beyond each and every day, getting the job done to deliver critical services to our customers. and i couldn't be more proud to be a part of the puc and the important work that all of them are, um, do here. they do a fabulous job, and i know that you all recognize that this afternoon i'd like to

introduce the general managers division, which includes the following teams. racial equity, real estate, executive team development, facilities management, hrs and emergency planning and security. most of these teams are in the in the room today, and they support the work of the entire sfpd, either operationally administer natively or through policy leadership and implementation. and they are the ultimate problem solvers. and we're very proud of all the work that they do. next slide please. this slide shows the gm budget from the current fiscal year and projects out the next two years. our current budget is $16.9 million. and increases to 18.5 million at the end of fiscal year 2526. and as you can see, all the increases in our budget are largely driven by labor costs. our non-labor costs are expected to remain flat and predominantly involved services to other city departments, such as 311 services and the city attorney's office. next slide.

we currently have. 36 ftes and this in this budget. you'll see we're requesting four new positions and two conversions, constituting an 11% increase in our in our headcount. the four new positions are for new roles, which i will talk about in a moment. the other two positions are currently filled and exist within emergency planning and security services. these currently are billed to off judge it off budget, and our request is to bring them over to the operating budget next slide please. as i just mentioned, you'll see the growth drivers here and this proposed budget. we're requesting for new positions and two conversions. the total cost of these positions between this year and the next will be $1.6 million. and this includes increases the following year for cost of living adjustments. next slide please. looking at these figures in another way, here's a breakdown of the $1.6 million spread over the two years,

broken down by the four new positions. uh the two new operating positions and the two substitutions. next position please. this is the organization chart for the general managers teams. you'll note that there are more than 40 ftes on this chart. some of these ■individuas are funded by off budget funding. the new positions we are requesting are highlighted in red. the first two new positions we request are for the racial equity diversity and inclusion team, commission. as you know, we have worked diligently to lay out an ambitious plan to meaningfully address racial injustice. es we take this important work very seriously and are committed to advancing racial equity. our racial equity plan, prioritize employee engagement, expand diversity based recruitment, building an inclusive culture, developing diverse and inclusive leaders. provide resources for sustainable success and developing systems for racial equity. leading these efforts is

doctor christian bijou, who i know that you heard from earlier, who has spent his first seven months here training his team presents the results of our racial equity survey to each team across the agency and developing an implementation plan for the ongoing work that we need to do to foster equity and justice. this commission awarded contracts to help us collect and analyze large amounts of data that will enable us to get an accurate look at historical trends is and measure future progress. as doctor bijou and his core three member racial equity team currently support all enterprises and bureaus, a big part of their work involves analyzing data and transforming it into an actionable, into actionable steps by examining and analyzing historical patterns within our agency, we can develop strategic frameworks to advance racial equity and proactively address, uh, systemic issues. the two positions we still need to do this important work are a data analyst and management's assistant and management

assistant, who will liaise with doctor bijou and the three racial equity analysts that support the enterprises and bureaus. this proposed structure will provide accountability, consistency and will enhance transparency with clear, measurable metrics to assess progress toward an agency wide implementation of dei goals. the next position request is for an innovations program director. as you heard, we want innovation to be throughout the agency and you've talked you've heard about it in several different constructs. but this is another thing which would be a new position within in the office of the general manager, the innovations program director will be responsible for launching a new innovations program. the purpose of the program is to identify programmatic challenges facing the water power and wastewater enterprises and to work with the enterprises and bureaus along with other city departments, to develop real solutions that facilitate and streamline the

adoption of new technologies. utility practices, environmental strategies, and partnerships that enhance operations and efficiently deliver and efficient delivery of utility services. the goal of the program is to establish the puc's leadership in innovation by building and expanding the great work we're already doing, such as our one water initiative leak detection initiative, and our biogas project. the executive level manager will work with agency leadership to identify my top priorities and challenges and pursue pathways to solve these challenges. establish out of an innovations program will establish a culture of innovation and embrace partnerships, pilots, trials and new technologies and enhance the exchange of thoughts and ideas and with most importantly, our outside experts and our puc employees, is to establish us as the heart of innovation in the utility of the future. we believe that this will lead to

significant accomplishments that hopefully, um, prioritize the puc's need to create action plans and ensure that investments in innovation align with utility goals that will be able to advocate for technology, innovation and speed to delivery of proven technology edges to our customer base. all to enhance what it is that we do. specific examples of work we'd like to pursue a couple of examples include our related to purified water. how can we enable membranes to be operated? intermittent and discharge of reverse osmosis concentrate things that our folks are already starting to look at. we think it would be a fabulous opportunity for san francisco to build a pathway by which we can test alternatives to find the right solutions, not just for san francisco, but for water utilities. um, more generally, we've done a little bit of research, and there are other agencies with thoughtful innovation programs, both domestically and international.

dc water metro, water district, clean water services in oregon in addition to what i've talked with you about previously, what they are doing in singapore through the public utilities board, this coordination and collaboration will enable us to increase efficiency and deliver better services by advancing innovative technologies, new policies and processes. now we have you might ask why we have one person dedicated to it. we've done a little bit of research, uh, of other utilities and concluded that our best path forward would be to have one person sort of kicking off the effort and team who would work with all the enterprises and teams that we have to better coordinate and break down the silos that might already exist within the agency, and to look for a seasoned, high level person, uh, who understands complex issues and can work with both within the agency and other city departments and the mayor's office, as well. finally, we're requesting a records retention manager. the sfpuc has been

without a records retention manager, uh, for three years, since the last one retired during the pandemic. in the in the wake of the emergency, that position was repurposed and filled. so we need to request a new permanent position. this is a critical role that will overhaul and modernize our records retention practices and ensure that our policies and systems are legally compliant, transparent, clear and consistent. next slide please. this slide just gives you a little bit more detail about the specifics of the positions that we request. at the bottom, you'll note we're also requesting requesting two substitutions, one in real estate and one in emergency planning and security. both requests are to substitute in 1822 for an 1823, which reflects the increase in job duties for these positions. other than the new positions other than the new position requests and position substitutions, we're not requesting, um, any additional funds for this budget, and these

requests come as a result of a months long deliberative process of planning for the future. while factoring in our ratepayer affordability, but also recognize that we have a significant role to play, to coordinate and advocate within the agency at a very, very high level. so with that, commissioners happy to take any questions. thank you. commissioner maxwell. thank you. so this is in addition to the innovations we innovation officers and we already have. yes and because if you if you listened to what what the other innovation is a culture throughout the agency. right. well each innovation piece that you heard about today in other offices is um add our innovators within their particular disciplines. this is an innovation officer at the general manager level to focus on programmatic and

technological. um, uh, coordination between the things that we do that are focused on issues of climate change, that are focused on new technologies, whether it be in the water enterprise or in the wastewater enterprise, or her power can work together different, more. i would say this substantively more, more connected to the core enterprise size, uh, work, work on the issues that we are focusing on in the future, whether it be climate change or or or, um, technological innovation. so. yes, commissioner, but this we have it throughout the agency, but i think that there's no greater statement to our commitment to innovation, to have it to have an innovation officer in the office of the general manager, who then at a high level, who is coordinating amongst all the other assistant general managers to make sure that we are challenging ourselves and working with outside entities, whether they be, um, um, uh, uh, other enterprises or academic experts to make sure that we're

staying on the cutting edge of things that we should be aware of within our enterprises. i think that's great. i just want to make sure that what we have does not get bogged down with. now they got another supervisor or somebody else. no, no. so that's not good. okay. and then and then the other one was um, the. yeah. so we're having a records person. so what have we been doing for the last three years without one? a lot of that work has been handled by, um, uh , we haven't been quite frankly, we haven't been doing a great job of it. we've been we have been doing stretching resources to get the work done. and with the explosion that you've seen in public records act requests and the like and makes life really difficult and external affairs has been handling handled a lot of it, which is outside their bailiwick and putting a lot of stress on their team and their resources. so this and that's externally and then internally in terms of, you know, how we handle records

retention, whether it be in litigation and the like, we've actually just been juggling without having a dedicated person to handle it. so this this will enable us to be make sure we have a dedicated person to deal with what is critically important, both externally and internally. okay. great. thank you. thank you, commissioner jaime. so, you know, i'm very happy to hear that. that's wonderful. i figured you would. yeah i you know, i see this person's role as sort of like an advisor to you to like your, your ears and eyes in an outside to see what are the innovative things that are happening in addition to everybody else. obviously people are constantly going to meetings and conferences and hear things, but you this this gives another for, um, representation for us to have that voice and i really am glad you're you highlighted other agencies that have that that has those positions have been instrumental to every one of those agencies. you mentioned since i've watched them sort of

have these position to help them to kind of identify things that they have to do. one thing i want to say is it is very natural for people to focus on technology because technology, right, it if we just need to find the next technology that does x or y and z. but i want to say there is so much to be done in policy innovation, in public policy, in, um, you know, governance rates. i mean, just name it. right. and a lot of those can happen in, uh, you know, can be included as part of this effort to be be to go beyond just engineering and technological solutions, which i'm a big fan of. and as an engineer, uh, excited to watch and see. and but i would hope that this person go beyond that. and i am glad you are thinking as this as a sort of like a connector. yeah, absolutely. um, because we do need, um, as i've mentioned, to think about synergies between our different enterprises and how we can make our money to go a long way. or

you mentioned the biogas is a great example, right? how can we sort of find other revenue sources? how can we collaborate with other, um, external partners, partners? so, um, so i'm hoping this person will bring innovation in finance in, um, in technology, in governance. you know, rates everything that we are doing and be able to help, help us to kind of spread that word. so i'm excited to see that. thank you. thank you, commissioner, why don't you apply for the job? i have many other jobs, so but i'm happy to watch that we are having it. yes um, any other questions or comments? thank you, thank you. commissioner. manager all right. um, stephen robinson, if you can come up, item c, infrastructure budget. thank you. stephen robinson assistant general manager for infrastructure i do have the privilege of going at the end. um, and if you look ahead on the deck, you might notice that i do have 30 slides and was intended

to spend about 20 minutes, i think, with the size of the capital plan, it's important for infrastructure to explain who we are and what we do and why we do it. don't skimp so i'm not going to rush. uh, but i also just curious about time for public comment today. if we have a hard stop at one, or i can just proceed and try to be efficient. i think, first of all, don't skimp. we want to hear everything. okay? so that's that's a given. um, as i said before, let's be efficient. what is our time configuration? we need to know out loud, right now. we've been working to try to extend it. donna, where are we? we have to adjourn by 2 p.m. or at 2 p.m. no. later than 2 p.m. so we have now till 2 p.m, not 1 p.m. so and that is that is a hard stop. and that is. yes. we heard her. i will not take that long. so we've got more time than we thought. and again we like like all of all of the professionals who have come to we want to hear all the work and all the all the all your budget issues, please. thank you. we do have a number of our infrastructure team with us here today, so we're expecting them as well. and if anyone needs to go for lunch, uh, you might just

need to wait for a little moment. um, yes. so uh. yeah. thank you. so let's let's begin then. um, we wanted to take some time, um, to align our agenda with the themes you've already heard about so many times today. and we'll start with our mission , our vision, our our functions of what we do. we want to talk a little bit about some accomplishments, but then you've heard several times this morning already about this capital planning and delivery, about how we do our work and how we support the enterprises. and that directly addresses the theme of affordability and investing where it matters. but also then our business model, how we work, our overhead and cost recovery. there's no change to this process, but it really is important to provide an update on how we're doing. and that ties very clearly to the theme of responsible management. and then of course, our actual budget request itself. so we spent some time on an infrastructure retreat late in 2022, just after i took the position as agm. and this was facilitated by the strategy, innovation and change group that you've heard so much about this morning. now that we're into the afternoon. so i wanted to think about why we're here and who we

are and where we're going. it helped refine our mission statement. i'll not read it all out here, but it's to provide high quality services to all three of the enterprises. excuse me, that values environmental and community interests and sustains the natural resources entrusted to our care. so again, there's been a theme, i think, of some of the words that we've heard this morning, and they weave directly into our mission statement. we're not here to wordsmith it, but happy to take suggestions. and we also wanted to flesh out our roles and responsibilities for how we do our work. i then crafted some language to align our vision to meet that mission, and because things have changed and we need to be prepared and ready to adapt, the infrastructure team is evolving then to rightsize our support to the capital plan, which has grown and will continue to grow over the next few years before leveling off. this growth is in terms of number, size and the complexity of these projects across all three of the enterprises, including the increased use and more innovations, especially around things like integrated delivery. on that retreat, we

spent some time setting ourselves some objectives. we wanted to have results, then to measure and track the performance in towards meeting those objectives. the first one you see here is really about retention. putting our staff first to become the employer of choice in the utility space. the second is about recruitment. as we build those high performing teams and the third ultimately about our partnership with the enterprises as we serve them to both develop and deliver these. this ten year capital plan. you've heard also this morning about the lens, as we think about this doing in environmental work and our equity space. so we struggled with how to put this in an org chart. but we do provide all services to all three enterprises. so we're structured and historically have been structured in a matrix organization. it means the services that we provide are centralized which promotes consistency, standardization, flexibility, but also learning opportunities and growth within our own staff. ultimately, we are one team. the numbers here that you see represent permanent positions. they're not all

filled. we'll get back to that later. but there are 375 in total. so it introduce our team. we'll just ask them perhaps to stand or wave a little bit. if you're in the room. i've shown the agm's office in blue, including the program directors katie miller and katie miller and bessie tam and our personnel team, angie and lisa. thank you, bessie and others. thank you lisa, angie and the green at the bottom are the bulk of our staff in the bureaus for engineering management, with johanna wong, project management for howard fung, and controls mutchkin yusuf khan, and construction management with algae collimore. thank you. the yellow in between the other groups provides services both internally to infrastructure, but also to the broader base of puc contract management. i've fine budget and finance for rosy angel engineering, management for karen frye and our workforce and economic programs with ben poole . so thanks everyone for being here. there we go. so looking a little bit more at each of our functions that i've described, the agm's office includes all my

direct reports, but also includes the directors and personnel liaison. there are 36 staff in total, 12 of those positions are actually loaned out and seven of them are vacant . the project management bureau provides project management and controls for all capital projects and similarly, our engineering management bureau and construction management bureau provides engineering and construction management for all capital projects. emb is the largest group with insight infrastructure, our environmental management group supports capital projects, infrastructure is responsible for, but also work undertaken by the enterprises and similarly cab our contracts group handles all contracting for sfpuc, our workforce and economic program. services group provides labor relations, workforce development and contractor outreach for all capital projects. we channel a lot of their support directly through the contractor's assistance center. our budget and finance team handles all budget and finance related matters for delivery of capital projects. they interface heavily with business services. you've heard about this morning and our

finance teams. they build up and manage our own operating budget that we're presenting today. they work with the low interest loan department and through invoicing and reporting etc. so an external on our agenda. let's look at some accomplished points to put our work in perspective. this table shows the totality of all work infrastructure is responsible for delivering in partnership with the enterprises. it's a summary from the most recent quarterly reports. if you add together all the capital plans in those quarterly reports, it totals nearly $16 billion worth of investment over 34 years. that's from 2003. all the way through to 2037. um, so it's not looking at our future capital plan that's on the table. it's what's currently authorized. and we're reporting on i know averages are just one perspective, but that is about $460 million per year. it's an interesting number. so keep that in mind. it will come back to it later. at this point i would say thank you and kudos to mutchkin and our control team. um, for generating these

reports in such a transparent and high quality way and how they partner and work with the project teams. also say thank you to the directors for directing and leading these programs, but also the engineers and construction and project management and environmental folks behind the scenes who are actually delivering all this work. so thank you to our staff. there are a few projects that are worth highlighting, and you'll definitely hear more about these from the enterprise cap presentations over the rest of these budget hearings. we're all collectively very proud of our southeast community center at 1550, evans, a $115 million facility built by and for the residents of the bayview. this is one of the first cmg contracts implemented by puc recently winning both sf partnering for san francisco and international partnering awards. it's a great achievement and so good to see it now in use. it's a reminder of the work that we do. headworks is also a really significant endeavor, not just because of its size and complexity, but we've always talked about building well, maintaining 2024 seven flow

through that plant and working under some very congested conditions in a really limited space is not easy. looking back at how i personally have had the privilege to update the commission on this project on behalf of the whole team from when it started construction to what it looks like now, and this photo is really amazing. it's a feat of modern engineering. this is testimony to our work in infrastructure, but together with the enterprises as they operate the facility and the contractor who have helped design and build it, biosolids, of course, is worth a mention very much. moving forward. and it's had a troubled past. but when we're now in a very good place, it's a very different type of project being built offline, not only because of its scale, but this photo is proof turning that dream into reality. we have a successful successfully achieved the significant milestone of bidding out the majority of packages as planned by the end of 2023, mountain tunnel is another significant investment in some challenging conditions, with crews working in the tunnel through another shutdown as we speak and many other projects

taking advantage of that opportunity to complete the work up and down the system. at the same time, a project like this demands all of us to work together as a team. since this is a system wide effort. while water is not flowing through that tunnel again, it's evidence of the importance of working in partnership with the enterprise. i'd like to share some appreciation for the project team's working with our contractors and the communities. under the guidance of our weps team, puc has consistently exceeded our workforce and business goals, and the cip and the sewer system improvement program. and also worth mentioning to the extent for which we have exceeded those goals on projects of this size, is really impactful. it's an order of magnitude higher than other work or other departments that we would normally see. again, this is testimony to what's possible when we really diligently work together with real focus. the puc can really proud that we are actually a leader in this space. the significance of the sewer system improvement program investment demanded a different approach to fund it. we have been successful

in securing and drawing on low interest loans from the state and the epa, which have been a big help with the volatility that we've seen in the market in recent years. thanks to our budget and finance team working with the project teams, our loans and grants team that you've heard about today and our finance and this work has real benefits, saving us all some money now, next on our agenda, we turn to what we have already talked a little bit about this morning and this afternoon. the capital planning improvement initiative. thank you for some of the questions. earlier, we wanted to touch on this because we started a year or so ago to imagine what it would look like. it was really a result of our unbalanced cip at that time. if you recall, at that time, our uses were more than our sources. we had an unbalanced cip, so we needed to think differently. we wanted to look under the hood at our cip process and ultimately find ways to adapt. it was time to change, so there was an increasing awareness of affordability and deliverability challenges. and as we overlap with these growing programs, for now, water, power and sewer simultaneously, we needed to

mature and streamline our processes. we set ourselves some goals to build a unified approach for capital program and project planning. prioritization we wanted to improve how we assess deliverables, and we also wanted them to develop some solutions for those deliverability challenges. as and as we come to this point in the cip process, this before you today, we can say that we have learned a lot and we've already made some of that enhancements. we standardized the cip development roles and responsibilities across enterprise, so we had some consistency. we streamlined the templates. we've heard about today to forecast scope and schedules and budget. we enhanced our own engineering review of project schedules and budgets, making those as realistic as we can. we had a more robust financial scenario modeling process, which we've never had before, but collaboration is a strong theme for me. and from what i think you've heard about this morning already, and not just through some of the tools that we use to help us collaborate, but what we've heard is probably a more in-depth and stronger crossing of the divide across all parts

of puc. working together in this really critical part, we can only do so much though, and as a few people have mentioned, we've seen this as an ongoing effort. so we're going to continue to build on this in the next budget cycle. and so we will always be striving for continuous improvement at. now to look at infrastructure's position, as earlier, i showed an org chart with 375 positions, 259 of those are filled. so that means we have a vacancy of about 30% on the table that agm home showed earlier. this does put infrastructure as the highest vacancy rate within puc by percentage of our staff, not the highest number, perhaps of actual positions, but by percentage. so when we look at pending hires and substitutions in the process, the remaining is about 11% vacant. those are ones we're not actively working on right now because we are working on a significant number of others based on experience, though, we do like to have about 10 to 15% vacancy to remain

flexible in how we deliver. we want to hire the right person at the right time for the right job. it does mean that we're running at about two thirds of our strength, though. we're about 30% down of where we should be to be able to deliver. so with these vacancies from a budget request perspective, simply adding to our number is not necessary. and it's also really not the right solution. we wanted to think really carefully about the types of skill sets that we need to address the challenges that we now face as we adapt. so a little bit more on staffing in 2023. we welcomed doctor chris bijou to puc and it's great to see our work really. the racial equity space as he provides leadership and direction for us as an agency. we've continued our own efforts within infrastructure and these have direct correlation to the broader staffing needs which have laid out from an internal perspective. these have been our three areas of focus with subcommittees. continue to meet on a regular basis. we've initiated a very small mentorship program within infrastructure, and then we ultimately partnered with the water enterprise. and that grew into something much bigger and

we're now looking to a rotation program where staff can move around and experience different roles. and we want to be looking at a competency based promotional pathway so people can see avenues of how they can progress and where they can go. an continue to work on our recruitment outreach, making sure we broaden and expand what we have been doing. when i say thank you to our department personnel liaisons, angie and lisa for leading us with work, and especially to alicia for leading our racial equity work, we also started looking externally since we in infrastructure have this more unique perspective as we interface with the contracting world. so again, thank you for some questions on this this morning. two we've been developing what we've been calling this equity framework in our professional service contracts. it's a lens so to speak, that we've been talking about through which we look at our capital plans. if you think about the value curve when decisions are made that have the highest impact on delivery and ultimate outcomes, they happen at the beginning of a project life cycle. and so by folding this lens into our two large capital programmatic consultant

contracts for both wastewater and water, we essentially cover the vast majority of our cip. and we can apply this lens to help set a tone of the direction of the capital work. and so it has a really high impact. it also lets us look, of course, as we've talked about today, from an environmental lens as well. we're planning to restart the contract breakfast. that was an in-person event that was paused during the pandemic, provides an opportunity for networking and for us to share information on upcoming opportunities to the contracting community so that we can be an owner of choice. it's just a selection of some of the things we're starting to look at externally. at the january ninth commission meeting, i reported out on our contract delivery pulling a data set for the last five years, and we use this same period to look at the volume of work we're doing. and this chart summarizes the new construction contract awards. so there's no rebids or no amendments in this. these are new awards. the headline is that we've contracted nearly $4 billion over the last five years. the blue bars show the number of

construction awards with y axis on the left and the black lines are by value with the y axis on the right. the dotted lines show the invoices that we've actually paid. there are 173 professional service contract s, equating to $1.7 billion over that five year period. it's worth a note that in one of those years, there was a $1 billion power purchase agreement, which makes up quite a significant chunk of that professional service contract. there were 169 construction contracts, equating to 2.2 billion. this is obviously a trend upwards in these construction contracts. you can see that quite clearly from this chart over the last five years. i consulted with the team and an average contract size about ten years ago was about $10 million. that's similar type of contract is now about $20 million. what we see here represents about one contract a week for both professional service and construction. and it's a team effort. when you think about what it takes to draft requests for proposals or contract documents, assembling panels to evaluate those and how we go through a process. it is a lot

of work, and if we face this growing cap, how do we do the contracting to make that happen? from an invoicing perspective, over the last five years, we've invoiced an average of $624 million annually. that's 3.1 billion over five years. the construction, an component of that, was almost $500 million per year. note that last year, though, we did peak at over $800 million. invoices paid in one year. that's our peak and has been our record. so all of this work happens thanks to our construction and contracting staff and the rest of our professional service contract staff, but also our budget and finance team. i use this slide a few weeks ago, so we'll keep it brief, but it was as an opportunity to look at performance. we compared final contract amount with original contract award over a five year period, and the headline was the two thirds of our construction contracts completed within 10% of original award. i mentioned industry standard, one of which i find that said, about 10% come within. um, sorry, one third

comes within 10% of that. and we at the moment are double of that. but i recognize it's only one standard. so we'll continue to look and see how others compare with that particular benchmark. i also shared this slide as a selection of some of our more well known integrated or alternative delivery projects. they're all at varying stages of project lifecycle, from planning to construction. but we're expanding our services. that's our point here, so that we can keep pace with industry for where it makes sense to innovate and to lead. so next on the agenda is our business model for how we do overhead and cost recovery. we are unique within puc. so i want to make sure we take a moment to make sure we understand this. we charge direct labor and mandatory fringes directly to all of our projects. infrastructure recovers our own internal overhead expenditures through a monthly recovery process. and that all goes back to the cip. our overhead is the indirect cost related to performing the direct labor services on projects. it includes indirect labor, mandatory fringe benefits, indirect materials or operating expenses, and work orders with other departments. the formula

for overhead rate or multiplier has not changed. it is the sum of all these indirect costs divided by the direct cost. so how does that calculation work? in practice, we work to deliver the capital program and charged directly to it to the cip. we provide a service to puc. so therefore we don't generate any revenue. we are completely off the annual operating budget. we're shown in blue while on the budget. sorry, the on budget is in gray. costs are incurred in three ways. so if you look at those three blue bubbles, the top at the top left, the total of our direct labor, then direct monetary fringe benefits and our overhead all equate to a number of 2.79. this is an important number. the components of our infrastructure overhead is shown then in the table broken down for some detail, the total comes to $36.68 million. for fiscal 2223. again, remember that number because we'll come back to it. it's about half of that

is indirect labor and mandatory fringe benefits. most of that comes from our budget and finance team and our contracts team. our operating expenses or rent for our building. for example, and work orders as we work alongside and with other departments. the composition of the overhead is important and needs to be compatible with industry standards. it's in alignment with low interest loan programs for wifia and srf and other interested parties. while we undertake, we do undertake an indirect cost study every five years. the last was in 2018, so we're wrapping up the latest study as we speak. the chart shows our historical overhead rate. and you can see for the last four years we've hovered around 2.79. there's that number again, it's exactly where we should be. so we really want to maintain this by comparison. other departments are a little higher. consultant rates do vary, all because of the nature and type of services they're providing. for example, the airport contracts out the majority of their work, whereas puc self performs construction management and engineering were different. so it's not easy to

make direct comparisons to these . for puc, though, the report helps us benchmark us to an industry standard, shows that we are competitive at 2.79. we're in a good place. and so now to the last part of our presentation. thank you for your patience and to look at our actual budget request itself. anticipated time would be short. so i'm not intending to go into every single detail, but i'll give you the overview. we wanted to start though, with the fiscal 2223, and to see our budget was just over $100 million. remember there's no revenue generated here, 100% of this goes back to the cip. our overhead gets reallocated during a monthly overhead recovery allocation model that i've described. we allocate all those expenses directly to capital. so you see that 36.68 number from the previous slide. it's now shown here in red. that's calculator overhead rate charged to the cip in the next column. so that column shows direct labor. and it's mandatory fringe benefits. getting charged directly to capital projects together with that overhead recovery which totals $71 million at the bottom, the remaining budget of

32 million does not roll over. our budget is an authority to spend, so this 30% remaining gives us some flexibility to hire as needed. in response to demand or as we adapt. this correlates directly to our vacancy rate that i showed earlier of about 30. so our request going forward equates to about a 5% increase for the two fiscal years. sorry for 2425 and 3% for 2526. as shown in this table, the growth is due to the living adjustment increases and new proposals for us to match the size and shape of the capital plan. remember, we're just not simply adding more staff here, but adding different types of staff and different positions that we really need to adjust. this is the same information and chart form showing steady growth and primarily cost of living adjustments, but also in response to the changing size and shape of the sips and those staffing increases are reflected here. we showed 375 permanent positions earlier, but when we add in some temporary budget

positions, it equates to about one fte, which shows 376. there are eight new positions in our request and 29 substitutions. those substitutions, as we've talked about and defined this morning, are primarily correcting the position to more appropriately align with the working class. it helps match the role for which it's actually being performed. and many of those people are actually already in positions and sitting in that role right now. so last slide a little more on those eight new positions. then that will focus on those. i do have more detail which we can go into, but to finish on this slide, um, the five new positions in contract administration bureau from what i've described today is our highest need. cab supports puc with all contracting, not just infrastructure capital projects. and we've noted that the size and volume and complexity of both our capital plans and the contracts have all changed. so i've tried to demonstrate that with some of the charts today, but some detail are for administrative analysts and one junior administrative analyst to

help support our online bidding process, we also have one new position in program controls. this is to help with data management and reporting. as again, our data systems are evolving and changing to keep pace with the work we also have two new positions in the agm's office. one of those is an hr analyst. we intend to embed an hr as our business partner, supporting our staffing needs and racial equity efforts. this is very similar to what some other enterprises have done. and but we as infrastructure have not. we had a question earlier about this too, and i see this as a tangible action that we're actually going to commit some dollars and put a person in to help us with our staffing challenges. there's also a public information officer for construction communication, again, raising the level of experience to a more senior person in response to the changing needs of how we communicate effectively. again, that was discussed earlier about the importance of how we communicate it. so that brings me to the end of this. thank you for your patience. we're just after noon. i do have multiple slides with more detail that were attached as an appendix to the packet. if you want to look at those where you have questions, happy to take them.

thank you. i have a one question which expands on something that commissioner maxwell had asked generally earlier. i noticed, you know, the 30% vacancy and that raises a red flag in a newspaper or even, you know, in internally. um, and maybe you can answer this with a with a example because i know that, you know, embedded in here, some of this is, you know, rearranging positions, some of it is, you know, we just can't find the person, some of it is, you know, um, just general, you know, just general vacancies. can you give me an example or tell me, you know, what are we missing in that 30? what is being a rearranged what is we still out there clawing away, trying to get somebody maybe just a general idea of what that. because you know, that's a red flag you issue when this department has a 30% whether or not it's, you know, the number you had or whatever is, is that, uh, can you do that succinctly? can. and the easiest way to do

that, that's why i was saying, is there an example of like, we're moving this thing doesn't exist, and we're making it a moon scientist or something. you know what i mean? yeah, i showed the breakdown on slide 20. i can go back to that helps. but just verbally of those 63, um, are pending hiring. so we have 63 positions making up a significant portion of that vacancy rate in the pipeline. is what you're saying that are already in the pipeline. so we're already in the process of identified candidates or hiring or interviewing. so the vast majority of it is already in the process, which is a significant change, perhaps from where we've come from. it's going to help us fill that vacancy 12. five of those even didn't, didn't, didn't i understand i'm not looking at that slide now. you had the 30% number. you said 60. some odd were in um that effectively you brought that vacancy rate down to like 10 or 11. correct? yeah. i have the slide up. if we want to pop it up for a moment. yeah. i was looking at the slide and i was wondering if something was embedded in there. instead i got lazy and asked you the question.

yeah. so it shows 116 staff position, which equates to that 30.9. 63 of those are hiring pending, meaning they're in process. we're actively working on them. 12 of those then are substitutions that we're changing and updating. we've described today. so it leaves 41 or about 11% out of our total allocation that we are currently do not have a active plan for. there's ideas of what we'd like to do with those, and we do need them. um but we have 63 in process and they're the priority ones that we need to work on. and as part of, if i might, commissioner and as part of that, if i recall when you discussed that slide, you said that you you like to actively keep a vacancy rate of between 10 and 15% for flexibility purposes. correct correct. so that was one of the benchmark. and calibrating things for me to assess what is an appropriate number for us to be flexible with. should we have 5% or ten or 15 or 20? how volatile is the capital plan and how ready do we need to adjust over the next two years before the budget cycle happens again? great. thank you. that answers the question. i knew it was embedded in there, but i wanted to hear it a little

more bluntly because that 30% is that's the only thing you put in bold. so anyway, thank you. uh, commissioner jamie, um. thank you. this was, uh, very informative. i really appreciated the reminder that, um, the way we finance capital projects, actually, um. really isn't. but, uh, because you were talking about the burdensome process of, um, sort of contracting these projects and reviewing bids. how do we identify people who would review this bids, like, do we have a, like a list, uh, that we go through? do we? i mean, it is really hard sometimes to find people or qualified people to review some of these bids. i'm assuming. and just to clarify, buy bids to remain on construction or professional service contracts or both. all of it. both all of them. i'm just curious because you have

external reviewers for every one of these, right? yes okay. um, so there's a process to identify people to help evaluate. but every contract is different or every contract method is different. so professional services under chapter 21 we do assemble um panels of a mixed diverse range of people, both capturing the right skill sets and perspectives from across other departments or other outside agencies. and internal for the city. um not easy to do. and that's one of my points. it takes time to gather that level of thinking, to put those people and then their schedules. of course, impact the process. our construction contracts are different depending on whether they're integrated delivery or low bid. as traditional design bid build. not the same formulation of a panel of people, so to speak. but our extensive work by our cab team, hence our request to support these folks as their highest priority, is really due to the nature and size of the capital plan and the amount of contracting we'll need to do so. um, does that mean then somebody i mean, i'm assuming somebody is involved or a group of people are involved to figure out who should be the right person to

put on that panel, right? so putting people on panels, let's say professional service contracts are the easiest example. um, the owner of the contract where perhaps a project manager who's moving a piece of work forward will work in close collaborations with our contracting team. um and look at the requirements for the makeup of that panel, who would be best and most suitable. and then it's an effort between the contracting team and our our contract owner or the project manager or whoever it may be, um, to identify potential panelists and reach out and confirm their timing to be part of a process to make sure they're suitably qualified and not, uh, make sure that their most appropriate people. right. i can imagine that's a very difficult process. yes. um, just identifying people and then convincing them to spend the time. i'm assuming this is a voluntary time that people are putting in. so so, um, and that's an opportunity to say thank you to all of our staff who volunteered to work on other agencies panels as they evaluate as well. and that's how we work together as a team, perhaps in

the bay area or around the country. yeah that's that's amazing. thank you. commissioner maxwell. thank you. um and thank you for this very good. um, summary. when you say increasing background capital planning improvement initiative, um, increasing awareness of ratepayer affordability. so you weren't that aware of it before. i hear the response we were aware, um, but i think now we're increasing the awareness. so we're doing that by having a better tool to be able to do it. having been able to build a model now from a financial perspective and putting the affordability policy in place allows us to generate some of the charts that you saw earlier this morning in the first presentation is the level of granularity and detail that we've gone to, and collaboration across the agency has been much more transparent and in depth. there has been always awareness, of course, but we've taken it to the next level. well, i think again, if a if a ratepayer were to see this, they'd say, i knew

it increasing awareness. i knew they weren't aware, i knew. so you have to be careful to me because my question is, well, what were you doing before? um, and then unspent capital project balances and deliverable. any challenges unspent? what have you been doing? i mean, it just i mean, i understand what you're trying to say, but for me, the question is. and then i wonder when you talk about, um, goals is build a unified approach for capital program. and project planning, prioritize and decision making. well, what happens if you don't meet that goal? i mean, to me, this makes a lot of sense and this is the way you should be doing it. so what happens? it's a goal that means you may or may not. what happens if you don't? i think we have learned over the last number of budget cycles, certainly, that i have been around, and there's an evolution happening and the adaptation to the covid pandemic and how the market has changed. we continue

to try and improve at each cycle as much as we can. i think making statements that we're setting ourselves goals to continue to do this is helpful. what happens if we don't do it is we fall back to where we were before. but allow at least an opportunity for us to reimagine on every budget cycle. opportunity to keep going with what the right thing to do is. um there are several examples of how we've tried to add more specificity to the process and templates and clarification of roles and responsibilities. we think of a number of different capital plans, and it is one agency for which we have one capital plan. so we're trying to bring some level of consistency across all the capital plans to help. well, why wouldn't this be a part of the process? yes, i mean it's a goal. it seems like you know, building a unified approach is a process that that should you all been talking about that all all afternoon, all morning and all afternoon, how you're collaborating and building this approach. um, and it's one of the best financial, uh, sessions you've had because

you were. so why would this be not a process but be a goal? i mean, because, you know, sometimes you reach a goal, sometimes you don't. so so i, i'm just concerned about that because it seems extremely important as what you've been talking about. i think, um, perhaps using the word goal is how we imagined it when we started the process a year or so ago. in response to that, on balance cap. and we needed to set ourselves some goals through this process. yes. and now it has become process. and a lot of the, um, achievements or accomplishments were enhancements that i described in that slide are now in place. so they're they're done from that perspective. but we don't want to just accept that it's complete or it's perfect. i think by setting ourselves a goal for the years to come, will mean we continue to go back and evaluate the effectiveness of those things that we've done and continue to adapt and improve. okay if there's some more in there, i know there's some

people here who can. it just seems like you've already had it's a process and so you want to improve the process all the time. um, and so like any other process you want it to be constantly getting better. yes. and i understand it's a goal, but a goal just, you know, it's like a making a new year's resolution to me. you know, it's something i want to reach. but this is already done. i mean, you're already in the this is a process already that you have, and you just want it to get better and better all the time. i mean, it just. yeah okay. thank you. we can we can follow. the question was quite answered enough. you want to take one more crack at it before we go to the next one? i think he answered it. okay he said, are you cool? well, no, i'm not. but i mean, that's i think it should be a, you know, a capital planning improvement initiative. and you're already doing that, you know, so you say it's a goal , but you're already in that goal. you're already doing this

and you just want to make it better. as you improve the process. but you said you already made it a process. yes, yes, maybe if and if i can't get to it, there will be more discussion about these in the following up hearings, with the capital plans coming from each of the enterprises. and if it helps, um, our strategy innovation change lead. tricia can come up. but i would say i use that slide to say goals because we set ourselves those goals at the beginning of the process almost a year ago, that was our goal for what we wanted to achieve, and some of that would have been process improvement, for which now much of that is already in place. yes okay. i mean, i'm going to be okay because, i mean, i don't want to keep going on, but i understand. okay. thank you. okay thank you, commissioner stacy. i have a couple of general comments and then some specific questions. i i really, um, and maybe i'm coming at what commissioner maxwell was getting at in a different way. i think it's those three slides. the

objectives for quality service, the capital planning improvement initiative, the cip development enhancements. those are incredibly important. um, goals and programs to strive for and even when we're not perfect, i think the commission has heard over and over again from mister robinson, miss miller, and miss tam. uh, sharing what you learn as you go. and so that as you go , you improve. and it's a constant evolution and i, i really appreciate that that the department has begun to look at more, um, enterprise collaboration that you learn from each other, you share strengths, successes and also weaknesses and the occasional failure together. and i think that's just a really important part of what you do. and an important part of the budget, because it the constant improvement means that we'll be managing contracts better, that

we'll be saving money. um, so i really want to emphasize the importance of those programs and the constant striving for those goals and those, um, uh, improvement initiatives and the enhancements. i just had a couple of, uh, well, one question on you mentioned a loaned employee, and one of the slides is that somebody that comes over from another city department or somebody that comes in from the private sector for a temporary period of time? we have a number of positions that are loaned out to other parts within sfpuc and typically on a temporary basis, allowing us to be flexible with their staff within the puc. within puc, yes, i see okay. thank you. and then i did have some questions about your appendix c. i was just looking at some of the positions. um and there are a lot of positions where i see a negative one and then a plus and then a plus one, things like going from a junior

administrative analyst to an administrative analyst. i assume those are the kinds of substitutions that you want for people to be able to progress. and and move forward in their careers and, and do the job that is actually required. i just see that throughout that chart. uh, pretty often a construction inspector goes to a senior construction, an inspector is that am i reading that correctly ? yeah. we have 29 substitutions in total. and many of which you're referring to are portrayed like that under appendix. the way we laid it out . right. um, i have learned and know that, um, it's not about the person, it's about the position. it's about the role and function that they perform. so if that function or that role has evolved over time, either by , again, the size or complexity of the task that's ahead of them, then the position should change to reflect it. so it may be that the person has matured professionally as well in that time frame, but that's not enough to say you're going to move up to the next level. it's about the position itself. what the job really is, what the job.

yeah yes. thank you. and then one thing i did see in the chart that there are maybe a loss of i wrote down six, but maybe it's only three. student design trainees. could could you explain a little bit about that? uh, i see a lot of losses, but no replacements. is that a program change? we hold a student design trainees on an ongoing, regular basis. every year we host a number of those that come in and work with us for a season, typically a summer, some of which will can stay a little bit longer. it's a it's a pipeline, really, to having access to a great talent pool as they move up through their careers and supporting us to do our work. i don't believe there's a fundamental change in our program, but there's a long list of those available positions within our budget, and they sit quietly for most of the year until we come around to that summer program, and then we reactivate them again. so i see and in the appendix c, i was just seeing i did see six negative ones. i didn't see any replacement numbers. and for

exactly the reason you've just articulated, it's really great to reach out to students and get into learns in the department, because it's a way of expanding the talent pool. uh if i'm thinking, is it under the project management appendix, construction management safety program? and then the next one is project management and project control. i think i not sure some of those are substitutions because we realize that those particular, um, positions were not being utilized because we've got classification and positions dedicated to our student trainee program. when we did a very thorough overhaul of position by position that we have within infrastructure, we learned that there were a couple of these set aside that had not been utilized fully for trainees because we use a different classification for that. so this substitution process allows us to take advantage of those. and turn them into something that can be useful. so that's an example of there's no one in the position

at the moment, but we want to substitute it for a better position, which we can use, for which we do need okay. i just didn't see that direct correlation in the chart the way that i did for the other positions. maybe it's the administrative analyst that may have taken the place of some of that student design trainee positions. we can we can follow up later if that. i'm really digging into the if there's some detail there. something that struck me about appendix c. thank you. okay. thanks commissioner jaime, i have one an other question for you. um maybe sort of lines up with the comment that commissioner maxwell made, but, you know, this was this is obvious. obviously, the process that we have have lend itself to what we see here right now. but i have a hard time not thinking about various force case scenarios that can happen in the process. the next pandemic, this, this

and that or oh, actually, before i go there, when we have an emergency, um, does that get contracted through you guys or is it a separate process? s uh, you know, flooding happens and we have a damage in this location or that location, for example, all contract outs from sfpc, whether normal or emergency, go through a contracting group which is inside infrastructure. yes. right so i'm assuming it would be very interesting to see if. the ratio of the regular contract that you have versus the emergency ones have changed, or at least track that and see, uh, have the size of the money we are spending has changed, has a number of requests. we are getting have changed. um, the reason i'm asking this is going back to what i started with, which is i think you know, based on what we are experiencing, the extreme events that we are experiencing are much more frequent. they're much more

intense. we potentially have some years that would be worst case scenarios versus other ones that might be normal. and that means that we may think we are in this trajectory, but the real trajectory might be very different, right? depending on how many more of these events may we may get during the year. so or over the years. so it would be good to have some form of a, i don't know, like um, a sensitivity analysis or something that can tell you that, okay, this is what we want to go. this is our goal. um, this is how we are operating or functioning or this is where wid this is where we would be if another covid happens in three years or we end up getting ten, um, in tense rain events that can overwhelm our entire system or if this stops functioning versus that, right, and versus

like, you know, a very, very, um, rosy outcome that everything goes well, everything is going to be working as we expected, just because that way we are prepared and to sort of deal with these vulnerabilities that we have in our system, potentially or even identify them and potentially adapt to some of these, um, if something happens, we can adapt to it because we anticipate it that, um, i think this might not sound like something that belongs here, but i actually think it very much belongs to this process because, um, the same way that covid really impacted our capital planning and budgets and everything, any other one of these emergencies or major, uh, event can really, really impact the wave function and the way we can operate. so um, so i think thinking about that would be important. thank you. um, a

couple comments for me. one thing has been illuminating that i might say, as we've had this discussion right here, and that is, is that and i say this in context because i know part of my life had been and has been, you know, in construction. so i know what flexibility means in some jobs and frankly, not even just construction, any jobs. there are people get a particular job and they think this is what they're going to do. and when something different comes up, there are folks that are willing to jump right in. like if somebody's a elevator constructor, you know, who's building everything in the history of the earth, and somebody needs to turn on the water and the elevator construction in order to make the job go. the elevator constructor says, that's not my job. and so the water doesn't get turned on and nobody works. so i mean, there's those types of environments that's not my job kind of thing. and then there are those who will just, you know, wander all over the place just to try things work. i guess what i am trying to say is, is that, um, being in both the private sector and in the public sector, seeing that stuff

happening, i am very when you answered the questions, i'm very impressed, not just with, you know, within the infrastructure department, but others. is that you guys are thinking about, you know, what's going on. i've got a guy here that all he or she does is, is turn the water on and off, and we don't need that anymore or we don't need five of them. so what else are we going to do and still take care of people? and you guys do have and i'm just hearing the fabric through this stuff now. the, you know, the means to start flexing. you know, being flexible and trying to, you know, figure out what is the technology that we need and moving forward. so in the context of hiring and firing and retention, i'm just seeing that fabric in here. so i'm definitely appreciative of it. and i happen to know, you know, just as one other quick comment, since we have a lot of time till 2:00 and we're coming under budget here, is that, you know, for example, on fillmore street, you know, when it blew up, you know, 300 year old pipe, you

know, blew up and there was craziness. i know for a fact, because i just know a lot of folks around town that it was the people at the puc. you know, the people down at the cd yard, they were down there within hours or hours. i mean, minutes. and they stopped that leaking from happening just like that. and because of emergency powers, you guys went out and found a contractor that knew how to fix everything. so we had our folks fixing it. we had an outside contractor there under emergency contractor that went in on it. and that's what's happened when we have a department that you know, knows what the heck they're doing, whether or not it's planned or the emergency stuff that's coming on. so i'm confident in and, you know, i'm going to be pushing probably just like all the commissioners for making sure that, you know, we're obviously in a position, you know, to react to any type of disaster that happens. but anyway, excuse me, i'm seeing, you know, a bit of the fabric of that moving. so anyway, thank you for that part of the way you guys are rearranging staffing. that's my last comment.

commissioner ajami. um oh, this is from before. that was from before. okay. but did you want to respond to that comment i made or you you got what i was trying to absorbing. thank you. okay great commissioners. any other questions comments. mr. robinson thank you very much for that presentation. so we are within time and off time. so now it is time for public comment on item four for all five of these, um, report reports. donna do you have any members of the public present to provide comment on items for a through e? seeing none. seeing none. well, we've had our first of four meetings. i want to thank everybody for, um, the great presentation and setting the tone. and before i adjourn, mr. general manager, are we good? mr. i'm sorry. thank you very much, commissioners. mr. president, we need a motion to continue the

meeting. are okay. so make a motion to continue the meeting. move to continue to move. seconded. um, roll call please. president paulsen. aye. vice president or president? commissioner maxwell, i commissioner. jeremy. i commissioner. stacy i yeah. four eyes. okay. we'll have a commission meeting tomorrow, but our next budget meeting will be on friday. thank you. we're adjourned

please stand by for the san francisco fire commission meeting of january 24, 2024. >> our webex is down on the main computer. i have it on the lap top. if there is public comment i will have to put my microphone up to the laptop. this is fire commission regular meeting january 24, 2024. the time is 511:00ism the meeting is held in person. members of the public may atepd the meeting to observe and provide public comment at