the take away is what we've already noted. the short term maturity, that first bullet category in that right hand table, has a maximum maturity of 270 days. and upon maturity it's up to a commercial paper dealer and investment bank, bank of america, a morgan stanley, that type of institution to roll that over to new investors. and they can do that for years. and typically they do. but staying so short with each maturity is what gives you the benefit of the low rate. so, you're going to have -- really here's the two take aways for the commercial paper program. it gives you flexibility to draw down on it as needed and only pay as you draw. and you could repay it a soon and as often as you'd like. here are some details of how sort of going beyond how it's

yesctionv used, how it's expected to be used here in your case. * generally again, the program requests the authorization -- the request will be the full 250 million. with commercial paper programs you typically don't initiate the full authorization on day 1. so, on day 1 the idea is of that 250 million, 100 million will be established. so, you'll be paying on the full 100 from day one, not the 250. so, that's a mechanism of to put authorization in place but reduce costs. the estimated cost for the 100 million, assuming it were all drawn for an entire year is about 2.2 million dollars in interest costs. and i'm going to show you the full work up of costs for these three transactions. the commercial paper program currently is expected to stay outstanding until 2019, okay, at which point approximately 100 million will be converted to long-term debt.

and, so, much of this would be repaid through to the director's point with cash on hand. if federal dollars come in, you'd pay a draw on cp. if [speaker not understood] you'd pay your draw on cp, et cetera. and then back to the third grant anticipation notes. the sole purpose is to better align your federal dollar receipts with your construction expenditures. and as noted, the credit quality is a little weaker, but the final maturity is only 5 to 7 years. so, your all-in interest costs will still be fairly competitive at 2-1/2, 3% rate. i'm going to reemphasize that last bullet on page 6. this will not currently as contemplated involve the agency's revenues. investors will simply look to the federal government for repayment. and you're not alone in doing this. here's a list of other grant anticipation note issuers. i'll note that with math 21

being limited to a two-year horizon and we're in the midst of sequestration discussions and the federal government is in the midst of challenges, securitization of federal dollars is a challenge these days. that said, many agencies have the need similar to you. bart has done it. portland tri met continues to do it to this date. los angeles county mta. there's a list. new jersey, chicago, you're not alone in the transportation space accelerating federal dollars. summary comparison on page 8 gives you a sense across the three issuances of expected costs, and that's the first line that comes across. the revenue bonds, your 2013 revenue bonds will have an expected cost of somewhere between 4 and 4-1/2%, which is excellent historically

speaking. you'll look back over the last 30 years, we have rarely been at rates lower than we are today. you're going to act a the market at a very low rate. that said, of the three it's the highest cost simply because it's the longest maturity. here you're going out 30 years for that [speaker not understood]. commercial paper he is within one year. and once we factor in all the costs of the commercial paper program, the costs will be somewhere approximately today about 1-1/2%. okay. stand alone, your grant anticipation notes as noted some where in that 2-1/2, 3-1/2% range depending on the market at the time. okay. i'm going to focus on mode as well. revenue bonds will be traditional, simple fixed rate bonds. nothing fancy about the primary vehicle which you used to access the capital market street, cap rate fixed rate bonds. the commercial paper is

variable because it resets every 270 days. and the garvey, the gan structure will also be fixed rate for a very short period of time. so, not only points outrightly she will need to focus on the commercial paper program and her staff a little bit more than the other two programs. it's a continual ongoing sort of needs management tool. * so, that will require senior staff following and drawing as needed and tracking. talking to the remarketing agencies, telling them when to reissue, when to market. page 9, here's the good news. you are an established issuer. as of 2012 you went out to the market and had great response from investors. and frankly, you had a very good response from the rating agencies. so, we just pull out a couple of points. when we go back to standard & poor's and moody's in two or three months, we're going to pick up on the positive themes that they themselves have put forward. and this is in the rating

agency report. i'm just going to read moody's. the double a3 long term rating, this is the quote from moody's, reflects the agency's diversified revenue base, sound financial management, with strong revenue raising flexibility, strong demand for central services and provides to san francisco. again, i'm going to pick up on that standard & poor's. even though we read a lot in the press, the revenues from a broad range of sources, that last sentence from standard & poor's and management strong track record of maintaining fiscally prudent operations while investing in a system. and that's sort of the theme. you're managing your operations and you're investing right back into the system. so, we're going to pair back some positives to the rating agencies and take that to the investor community. here's the the cost. currently you pay a peak of about $6.2 million in annual debt service with the 2013 bonds outstanding. that will increase to 13.3 million. so, about double. with the issuance of the 2013

bonds. and assuming with the commercial paper program, we eventually or you eventually refund 100 million and convert that to long-term debt. you will end up with total debt service of 19.5 million. by 2019. so, that's -- to put that in perspective, that is 2.3% of your current o & m budget. * so, debt service of 19.5 million without building in any increase would be 2.3% of your current o & m budget. you adopted a policy last year that restricts that to 5%. so, we'll row it in your policy. and that's the expected increase from debt service. page 11 and 12 just put that out in table form and i'll

conclude on page 13 with respect to timing. the 2013 revenue bonds are the first -- we're going to come back. let me take a step back. there is a lot of information, thanks again, for absorbing this in the dialogue. we will be back to you for approval and detailed discussion for each individual issuance. so, this is purely introductory. this is just to give you a sense of how this hangs together. we will be back first with the 2013 bonds to you in april. with the eventual issuance in june, according to the schedule. the commercial paper program back to you in july. hopefully establishing that program by the end of the year. and the federal structure a similar timeline, back to you by july and hopefully closing by the end of the year and with a caveat that that may take a little more time. i'll stop there, see if you have any further questions and turn it back over to sonali.

>> thank you. >> i just have a couple comments. on the commercial paper we're doing, we're going to be partnering with the city because they also have to have a commercial paper at the same time. we're talking about issuing one rfp along with the city so we get the benefit of the two credits together. we're talking with the office of public financing and controller's office. that's the plan to issue jointly. and we'll go to the board of supervisors together on that deal. so, the commercial paper program, that's what we're envisioning. >> thank you very much. >> when we talked about originally issuing the bonds, the ones we issued last year in 2012, was that through what our anticipated spending was? have we started spending that money already, are we already working on projects from the bond issuance? >> we have. and when we bring this back first to the capital planning committee and to you in the next few months, and i would consider those timelines to be tentative.

but we'll have a full accounting of where we are so far. the first issuance that was $50 million that was refinancing old garage debt, so, that's been done. it was i think $5 million in planning money for the new garage projects -- not new garage, new projects in the garages. and then the balance was mostly design money or some gap money for a series of projects that we walked through. so, when we come back to you, we'll take you project by project through where we are for each of those and maybe one or two things that we're adding or proposing to be added to the 2013 issuance that we didn't propose in 2012 that we can afford in part because of the good low interest rate that we achieved. >> good, that's good. i just want to -- director lee pointed out to me while we were going through this, remind everybody our diversified revenue stream really is important to us [speaker not understood].

we are unique in a lot of agencies and i think the fact that we do have that diverse revenue stream, we're able to get these revenue bonds and we're able to go ahead and start spending that money to better our whole system is really important to us. that's all. >> thank you. >> quick question. >> [speaker not understood]. >> ms. bose, you mentioned the city will be issuing, looking at commercial paper as well. that's why i was going to ask is it going to any port or any other office? i know the port was going to issue some cp at some point. i was president sure if that was part of the plan. >> actually, the city already has a commercial paper with a letter of credit is expiring going back to market to look at the letter of credit extension. the airport currently has a cp, rfp out there right now. i haven't heard anything about the port. have you? >> [inaudible]. >> oh, the city is doing the financing for the port. all of the agencies on a regular basis talk about our financing programs.

and, so, we're collaborating on timing and seeing the benefit of all of us doing something together or separately or whatever. but we met last friday, all of the city agencies issued debt to talk about the commercial paper program in particular. so, we're working collaboratively. >> i would like to say on this recommendation it's a great recommendation based on what you've come forward with the bonds first, which i think -- and to get a great credit rating in this environment when so many agencies are being downgraded throughout the country is great. this is probably one of the strongest ratings i've seen in a long time as you and i talked about. and secondly, draw for commercial paper and the san mateo financing, i think they're great tools and i think we should embrace the recommendation and wait for you to come back with more details. the other thing i was going to ask, i know with commercial paper, it takes a lot of reporting and day to day reporting working with credit agencies. are you staffed appropriately for that type of reporting? >> director reiskin, i need two more staff members. [laughter] >> what i would say is that the

city has a reasonably mature program at this time. the puc has a very robust program. so, we're going to -- we don't have to develop our program from scratch. we can take a lot of the practices that they've developed ways of automating or streamlining the process so that we'll be able to do so in the existing budget that we have. [laughter] >> but, i mean, it was important to raise the point as we did in the presentation that the cp in particular does require more resources. but through the efficiencies that ms. bose has achieved and will continue to, we have every confidence that we'll be able to manage [speaker not understood]. >> well done. >> thank you, director, for your support. >> okay. anybody else? any member of the public wish to address the board on this? >> nobody is rushing forward, mr. chairman. >> thank you very much. appreciate your support. >> thank you. >> thank you. >> ms. miller?

>> aye tim 14, discussion and vote pursuant to administrative code section 67.10(d) as to whether to conduct a closed session. >> is there a motion? second? all in favor say aye. >> aye. >> opposed? we are going into closed session. thank you all. >>please stand by - meeting in closed session

>> $30,000. there was no discussion of anticipated litigation in closed session. directors, it would be appropriate for either motion to disclose or not disclose the information discussed. >> is there such a motion? no motion, i guess. >> second. >> any further discussion? all in favor say aye. >> aye. >> opposed? that's it. >> that concludes the buzzness before you today. >> thank you. * business [adjourned]