facility, we still want access to a side stream to be able to run new technologies as there are developed to test and see if we can find better ways to do business in the future. >> it helps us to figure out the life cycle cost, waste water, the nature of the grit. i really need to jump into collections. todd is coming up, which is exciting. one last section before lunch on service and goals. i am going to speak briefly about the collection system odor

control, which is something that we did not have time to get to. this represents the odor complaints received in 2009. what is interesting is they represent the entire city, there are there aredots in new -- are no disproportionate dots in any city. typically how we do this over control in the system is through maintenance effort. grease traps, keeping sources clear, keeping grease collection out of it. removal of sand and debris.

a lot of material but cumulates in the system but needs to be removed so that the system can run as smoothly as possible. certainly, cleaning of the system is included. however, there would be a capital effort including installation and construction of new vent systems, treatment systems. this is focused on some areas where we have had odor complaints coming issues, and can address them through the vent program. this would enable venting of gases from the sewer system. >> you had made a comment the

other day that the -- the number of complaints or dispersion of complaint areas was getting worse over time because of efforts to reduce the inflow? >> water conservation has been a wonderful but also difficult for us on the waste water side. less water is going through the system. the system is designed with a certain flow in mind to keep things moving. now everyone is using less water and we are not always getting the momentum to move solids to the plant. if they sit, gases can form.

we will look at some ways to flush dead ends and move things faster. with the hot weather, low water usage, that can accentuate our challenges. >> now we are in section 4 and i have two questions that i wanted to go through from the last meeting. we hope to go through this fairly quickly so that we can get to the first goal. the first area was the -- what is shown is the boundary of the sunnyvale area in red.

you have a little bit bigger figure in your hand down. sunnydale is in green. that area has been flooding for about 20 years at least. what we are backing up has been in service -- michael r. shaughnessy was still around. 20 years of flooding. but we also have some green projects that are occurring in the area, too. that includes the schellege lock site. this is a redevelopment project

that is looking to have some green storm water controls. we just completed construction on leeland st. and these are just some of the preliminary plants for the schlege lock redevelopment program. this is weekend avenue --leeland avenue. better storm water runoff, and enhances the neighborhood is is the type of enhancements we will be doing, street by street, focusing on challenged areas. collection system replacement cycle. as we talk about the collection system, it was built, starting

in 1970, over 70 miles of collection pipes. the replacement cycle we are recommending based on how long the system is expected to last is 110 years. within the system, 100 miles is a very high risk. that risk of failure. we are concerned we will have to replace this quickly. so we have analyzed several catch up periods and we have analyzed the annual cost to come up with an aunt -- often mom catch up -- optimum catch up period. the trick is, everything keeps getting older. if you take a longer amount of

time, more of your system fall into a high risk category. it involves a lot of changing variables. the great thing is, within the budget that we have moved forward with, we have jumped up to 10 miles this year, compared to 6 miles last year. we will be stepping up to up to 15. the way we are moving, we are on a 15-year replacement cycle. we could go back to the prior cycle to speed that up, about what we're looking for this the knee of the curve. that would be the optimum catch up period. so if approved, we could catch

up in 15 years and stabilize at 18.5. if we were to do that faster, we would see a steeper slope and have a higher r&r annual appropriation. >> i do not know how we can jump so greatly this year in 2010? >> they have things that are ready to go. we have an exceptional team of product managers on the r&r and they have a full project list. we have a hydraulics team that just put this work out and they have it done down to a science. we have a package where we can have a template that is all routine check lists.

they have already got these projects designed and ready to go. stepping up to the next level represents getting additional staff to sustain that. i were routine was 6 miles a year, depending on what occurred. sometimes, the priority gets the needed because of another construction, and then ask, delores. -- van ness, delores. in this case, we have one full year. to sustain that, i agree, it will be challenging. we are going to need some additional tools to keep them going. i have requested a senior product manager that would be

overseeing the r&r program and would be collaborating with the waterprise so maybe we can find a street where both need to repair replaced and we can have the optimization of cost. paving, excavation costs, closures, can really bring the price of a project of. and we are pretty proud of them. that is a credit to johnny wong. >> there is another graph where you show increase in the inspections, but not replacement, which i found curious.

>> unfortunately, what that first line refers to, total must be inspected, those are responses when we have a problem. this is the chart that tummy passed out to the commission. -- tommy passed out to the commission. that first wrote is response to a simple, -- sinkhole, other

calls. in the condition, the second row, that is mileage that will be used to identify what will be replaced. not just this is facing all, this is what needs to be replaced. that will be what goes into the risk model to determine the source for the next several years. that aim is to be able to assess the entire 952 miles of sewers. it will be ongoing. we will have a tv truck logging and review with the tapes and updating our condition

assessment. we can program which miles we are doing each year. does that adequately cover your point? the first number is bigger because it is individual spots that have failed in the collection system. >> how many years is the rotation of an inspection? >> the manager of collection systems is here. he is the best to answer. >> the initial pass through of the system will take six years. the reason you do not see a corresponding increase in the repair and replacement it is we are sending inspection teams to our estimated worst locations, based on the estimates we have seen over the past 16 years.

we are going there to see if our conclusions are correct. those will be taken care of first. the object is to use this new accord and we are getting and then to come up with a 10-year plan. once the sewers are replaced, they do not require a six-year cycle. it is more likely that you will do a 10-year cycle. perhaps more frequent with others. >> getting back to your charts on 56, 57 --

those dollars are animal dollars, they are not inflated, not present value? >> currently, right now, $1 million on mile. >> so when you look at [no

audio] k annual cost come if we were planning on a 15-year cycle. then on the next page you show the 15 years. after you break the hump, you step down to an 8-year. has that been subject either to present value analysis or the lowest life cycle costs that was in the asset management section of the report? >> this takes into account the risk assessment, and that is how we ended up with these categories. 160 miles that needs to be replaced to then have been in a manageable level of risk. you have a system in some places that is older, getting

close to 110, but we are getting the highest risk first. you have these in variable that are changing at the same time. i did not throw in cost escalation. we had looked previously at other charts which had the total cost. you have different lengths of time and you are escalating in a flat line. this analysis has built in everything. same with that asset management approach for selection. it is the $3 million a mile. >> if you could get this information to todd, and say, given a financing structure, what we want rates to look out

over time, the answer might be different. >> that will be the next section. >> these match what we discussed in the 10-year budget program. how long can we wait to catch up? >> the thing that i have been wrestling with is we did have discussions as part of the budget process. there was a recommendation that we do with the 15-year cycle. so if that is answered, what is the question, what are we trying to do here? if this information is given to todd, and the direction is how do we finance it, that will give

you one answer. here is a risk profile, here is what it takes to do with that risk over time. here is how it will play out. you tell us the financially most important thing to do. that may get a different enter. if we say we want to have the rates change in some other way, basically we want to have blocks of actions that are tied to something that people can understand, then we could conceivably come up with a third enter. a --nswer. >> the discussion we will be having about rates, if you put this thing together, it feels like to much. there are ways to decrease in the ssip or do less per year.

>> i really want to move on but i want to make another point. we built all of those factors into the chart. all of those variables are changing, risk, variable assessment. todd will talk about how this profile plays out when we get to the rate. all the projects that we have been discussing over the past two workshops have been laid out in a scandal over time. we have biosolids facilities beginning right away. treatment scattered over 30 years. treasure island is at the midpoint of this decade. low impact design run the

entire 30 years. that is an annual program would also has capital projects for creek daylighting. downspouts program would also be an annually funded project. we have channel tunnels. what i wanted to share you in the next slide is the location of those projects. this is a nice graphic that looks at what is what is in the ssip. we have a localized flood protection project that would handle storm water flows within those neighborhoods. be able to capture and manage the storm water. what is not in the ssip. we do not have a southeast outfall replacement for upsizing. we do not have the diversion

tunnel that we have discussed previously to bring flows east to west. we cannot anticipate the regulatory requirements in the future, but the list goes over everything that we have been discussing. so with that, todd. >> first of all, good morning. the general manager. i had the fun task with my staff -- i want to recognize our administrator and others -- who have put this into the household budget perspective. many of the numbers will be impacted based on the level of

goals you want to see achieved. when we have taken here is everything that karen explained as far as the sewer system improvement plan, the ramping up of the collection system to a 15-year target, and then put that into how that would affect the average waste water bill. the chart before you is the total server system program. -- sewer system program. you see that the budgetary authorizations would have to be on track to tee up as part of

our 10-year plan, would grow from under $100 million today, to afford to of $650 million by 2016. that would be as the budgetary authorizations for the planned cost digesters would be needed. additionally, we would see a spike in 2021 for later portions of the source improvement program coming online. that is a fairly large program but i want to put that in the context of what we're doing now. we have taken much of this in anticipation as we look at the 10-year budget plan. the rest of the plan included two additional bars.

the first one is the green bar, which represents the cash-funded programs which you have already built into your rates. that cash-funded program is a program that is of the $40 million a year over the next 10 years, growing at a pace of 30% every year. we also need additional ramping up for r&r. there is not enough cash to pay for that. you will see a red bar stocked on top, what are repair and replacement needs, that are on top of bond fund it. we have a lot of bond and state revolving loan that will be paid off over the next 10, 15 years. that will free up debt capacities and that can be used

for new system improvements. lastly, the same blue bars, we stacked on top of that the need for the sewer improvement program. the cash-funded agreement portion, every year we are depreciating about $40 million of capital assets. on average, if you are cash funding what we are depreciating, we are neck-and- neck. depending on the goal, the most critical needs, at least you can see that over the next several years we are matching the annual depreciation with annual cash spending. the cash program over the next 10 years is projected to be able to fund at about $430 million. a significant number but much

smaller than the $6 billion program that karen described earlier. what this means to the average water and waste water bill, if i could draw your attention to the bottom part of the screen, the dark blue portion. that is the average water bill. we ramped those rates up to pay for the upcoming cost. the lighter blue portion is if we stacked on top of the residential, business bill, the sewer program. $83 would be the total combined bill for water and waste water. if that were to grow through

2030, the projected completion time of the ssip, you would see a projected average, total sales, would grow from $83 to write around $53. that seems like a lot of money. i would like to take a moment to see what inflation looks like. the red line that we have marked, if we do nothing, and the world on average has a 3% inflation, which has been the post-war average, every cost will double. so between now and and 2024, and everything will cost twice as much. and the other metric used, in terms of capital