state funds being available as to when we thought they would originally be. we are going to have to start discussions of about a replacement of sources. on the bottom of slide 5, we talk about some of the measures that colleagues brought up. we expect to see some of the gap be closed by cost savings from some of the bids coming in. we're also talking to the fta to see what we can negotiate with them, in terms of doing another innovative thing to address the issue. we are also looking at our remaining funds that are uncommitted. $140 million that we were to use for other funds. we may be putting those funds into the central subway and looking at alternative backup funding for those projects. we are also looking at financing. we have possibly grant

participation for the $88 million. we are also exploring new funding sources. as we mentioned, some of the new funding sources are unlikely, given the economic environment. we are really looking to our key partners, continued regional support, for the project. in closing, i want to end by saying, it is important to remember most of the major projects in the city, whether it is the central subway, doyle drive, all these projects over time, have had local, regional funding partners. we are looking for that same level of partnership to help us address this project. i want to thank the transportation authority staff. they have been helpful. i also want to thank the

commissioners. i think everybody has been supportive of making sure this project moves forward. with that, i will close. i am happy to answer questions. supervisor campos: any questions? if i may, -- before i do that -- commissioner carmen chu? supervisor chu: just a question about the timing. you talked about the fact that we created a group of individuals to come together to talk about how to close the gap for the $137 million, look at the $180 million, in terms of the timing. given that this is a long-term project that will happen over many, many years, is there a particular time frame under which we would have to come up with the $137 million? >> we have to identify that by

february 2011 when we submit the ffga. we have to be able to show -- it cannot be a projection or estimate, at that point. it has to be with the fda considers a committed source of funding. -- fta considers a committed source of funding. supervisor chu: given that we are coming up on that deadline, are there any on the list that are more important than others? >> many of them are funds in hand. if we are able to find alternative funds, we will offer them up with the idea that we would be able to back fill the other projects. as i mentioned, $120 million in prop 1a, 1b funds. then we can work together to find alternatives for all of our

other needs in the agency. it translates to about $27 million a year that we would have to back fill if we were to give up the money for the central subway project from those remaining 1a, 1b funds. we look forward to working with the mta to come up with funding, or hopefully the federal government will be able to provide us with some transportation funding. supervisor campos: thank you. these kinds of challenges are challenges that happen with any project of this magnitude. it is probably exacerbated because of the economic climate we are working in. i am just wondering if there is anything that this body, whether it transportation authority, board of supervisors, can do to help advocate for these funds.

many of us have made clear that we are committed to the project, so what can be done to help us get to that end result? we are talking about $137 million, potentially $225 million. that is a lot of money. >> we would love to have the board of supervisors help us with the mtc, helping them come up with a loan type of arrangement or an alternative funding source. for example, in the state budget this time, there is a question of where the high speed rail was pentagon by the governor. we would ask for a movement to pencil that back in. -- penciled in by the governor. we would also be working with you and the ta body to come up

with an additional financing structure, whether through a loan mechanism or brand participation note. those are three concrete areas that we would love to have your support on. supervisor campos: thank you very much. mr. executive director, did you want to add anything to that? >> i have a couple of reactions to this last slide that i would like to share with you. it is certainly critical that we get to a resolution on this. we do not have the luxury of time. february is around the corner. we are talking about a significant amount of federal money. as i have said to you before, what has spelled success for us over the past decade is we have been prepared. we have gone to d.c. to

demonstrate that our products are competitive, they have their act together, and that is how we get both sides to vote, and that is how we can get representatives in washington to help us. this is not in great shape. it is true, we are close to the finish line, only 9%, but we have to do something about that. the fact that we are having this lack of provision on where the solution is coming from in november is alarming to me, quite frankly. i wish i could say that we had a tremendous partnership in the discussion with this, but i'm not sure that we have. from here on, we have to work as an integrated team with mta to get the issue resolved. let me point out a couple of things that i do not feel comfortable about that you need to be aware of. we are not likely to do a grant participation note because we

have already had a discussion with our auditors in the past when we tried to do this. in fact, we did it, but we got our wrist slapped. we cannot commit future funds. we do not have the authority to do that. when we do engage in something like that, we run the risk of having others come in and say that you made an uncollateralized payment. we need to be careful with that. i certainly do not believe that my staff has agreed to that as an option on the table. we could do a loan, but it will have to be collateralized. you know from your work in the board of supervisors in dealing with the budget how difficult it is to collateralize something that passes budget time lines.

when you to the next. the low interest loan program, it is not a funding source. that should not be here as a revenue source. it needs to be repaid. you have to put it in with a sense of how you are going to pay it back. they have the toughest rating committee that i know, so they will be looking for answers about long-term revenue source to pay for the loan. we have an opportunity to gain from the low bid environment. we are fully expecting that there will be $30 million worth of savings in the various contracts. we should be accounting for that because there is enough of a record of bids. fda should be able to recognize that. -- fta should be able to recognize that. one thing that i am alarmed

enough to see on the list, what maria was referring to, in terms of positions and trade-offs. within the muni capital program , if experience is any indication, there should be things that are not moving at a pace that they should be. some of that money should be moveable to this project so we can capture it and leverage $900 million worth of federal money and then worry about funding those things which are delayed with our dp money. that is something that should be on the table. -- rdp money. been integrated team looking at the capital program -- an integrated team looking at the capital program could earmark some of those things for a one- year delay, and that could work. if these things are not on a time line anyway, there is no

harm done. supervisor campos: commissioner david chiu has a comment. supervisor chiu: have you raised this with mta staff before? >> no, i did not know this was going to be a part of the presentation. i know that staff has raised these issues with the mta. these are significant issues. this is not a damning assessment of whether we will get there or not. we all want to get there, but many the right items on the table to get there. there is no option to lose our full funding grant agreement, it is a lot of money. supervisor chiu: first of all, i appreciate the issues you have raised, and these are things that need to be discussed, but from my vantage point as a commissioner and board of

supervisors member, i am hearing a lot from each body. it is the left and not talking to the right hand. what i would like is to have the staff work together. we're all in agreement that we need to make this happen. for it to take a hearing request from one of my colleagues to bring up these issues is troublesome from my standpoint. i would like to know that this feedback is going to be dealt with professionally, in face-to- face meetings. we do not have a lot of time, i agree with you with that, but for you to be raising these issues when we have all of for many months that this is to get done, at this time, indicates the issues of the problematic relationship between our two agencies. >> i fully expected these issues to be addressed in today's presentation. the mta has the lead on this. we have been supportive from day

one. we have sent key staff members to the mind the gap committees. it is not because of an unwillingness to participate in the process, but it is really mta's lead. i would have expected these issues to be fleshed out by this meeting. we are more than committed to working at the staff, management level to get this resolved. when i am telling you is it does not look to me like a road map that will get us there. the commitment is there. we want to make sure that we have the ability to work in an integrated fashion with the mta to get there. supervisor chiu: and i would like to hear a response from mt s.a.. >> i was one of the members on the committee.

-- from mta. all of these issues have been put on the table. there is a sense of frustration. maybe we are not moving as fast at the mta as we have hoped, but now this meeting is helping to provide the catalyst to move us forward. all these issues have been brought up before with mta staff. supervisor chiu: i was confused from the director's staff. it seemed to these issues have not been discussed. >> they had been discussed. we would like a bit further to go to supervise the financial plans. now we are all under the gun to get this done. supervisor campos: commissioner dufty, did you want to add anything? supervisor dufty: as a cfo, in

my humble opinion, ms. boze does a spectacular job, but awe havea capital planning staff that looks more deeply at the federal options. i know there are some of you here today, the project manager, ms. green, who does the legislative work for us. the most important thing that i took from the testimony is we have the potential to impact decisions at the mtc as well as state legislative representatives to create the imperative around this project. it is not unusual to have a gap, particularly in this type of

economic environment. expectations around government funding are not being realized. i agree with you. it is not constructive to have us working this out for a particle here. there ought to be more real conversations. -- cathartically here. i think that we do face the situation where i feel the mta, along with the transportation of our day, needs to be making a more compelling case for this project. let's just to recognize the fact that no major transportation projects has been built without major criticism. that is the democratic process. but in addition to closing this gap, we have to make a transit justice case as to why this is important for the neighborhoods that will be served, an economic

case, ridership case. some of the issue being laid out here are easily rebuttable. i agree, there is a two pronged approach that we need to take. we commissioners need to step up and connect with our federal and state and regional representatives to make sure that they feel the pressure that we do from today's presentation, but i would also like to see the leadership of our capital planning effort come forward and discuss meaningfully what the building blocks are for a solution, as well as stating, in an effective manner, why this is an important project. but i know people who do not support this project. they believe we should be using money in different ways. i think we all recognize the reality that the federal government will support us to

build things, not operating things. we have to look at improving our system and making a meaningful connection to chinatown which can then be extended to other parts of the city. i sort of take this as a call to action, and i am fine with that, but we could be more on page than we are this morning. >> let me make a couple of comments. on behalf of the mta, we are comfortable we will be able to submit a ffga by closing the gap. i am not overly concerned about cementing an acceptable ffga, as ta staff appears to be. secondly, some of the trade-off conversations are having every day. because of the nature of what we do, the dollars available to our business, those discussions happen every day.

all dollars are going to the central subway and would not be available for operations. for those in the public that are concerned that we are taking money away from operations, it is not correct. we would not be able to have these funds for operation, irregardless. i just wanted to clarify that. as far as i am concerned, i am comfortable we will have a viable ffga in february 2011. supervisor campos: thank you. commissioner avalos? supervisor avalos: just from the discussion that is happening between the ta, mta, i would like to see if we can have this discussion continued and have both parties come together to vett the list, look at other

options before us, and maybe we can have a special meeting in the near future to do that. obviously, time is on the essence with the february deadline looming. i am actually nervous about this project. i would like to feel somewhat placated by supervisor dufty who have probably seen more of these before us, but i am nervous about our ability to close the gap. i would like to motion that we continue -- in two weeks -- i think it would be great next week. supervisor campos: before we do that, i want to complete the remainder of the presentation, items 5 and 6, and then give an opportunity for public comment. i do think the suggestion is a good one, to make sure that we come back as soon as possible.

next week makes sense. in terms of mechanics, when a presentation is made to the committee, there should be sharing of information, discussion prior to the committee meeting between the staff and two agencies. i do not think that will be affected in terms of advocating for funding if we are not on the same page. i think we have to put our best foot forward, and that requires communication and collaboration to the maximum extent possible, and it should not take a committee hearing to make that happen. commissioner david chiu. supervisor chiu: thank you for the suggestion. it is a good one. i want to reiterate a couple of points that i think need to be emphasized. one, like commissioner dufty -- and i have asked this question

to the number of different projects. where we are now is not a place where we should be. there are always funding gaps with funds of this size, however. i have full faith city staff will be able to figure this out. the second thing i want to say is, my comments are what i view as the ongoing tensions, rivalries between the two major transportation agencies in san francisco. it has been a very frustrating experience for me in my few years here working with the city and county of san francisco to see the continued finger- pointing. i am not going to place blame in this instance as to who received information, who did not provide information. the fact is, we need everyone rowing in the right direction. that is what we're asking you to do. hopefully in a week, i would love to see a report where we have ironed these things out. i do not want to see what seems

like indications of a dysfunctional organization. supervisor campos: supervisor chu? supervisor ch supervisor chu: thank you. when the call this meeting, our intention was to get closer to where we needed to be to close the gap. we heard about the gap previously. today's presentation was saying, given the joint experiences of the two agencies and partners, where do we think we can realistically go with it? we had meetings with different organizations. today, what is problematic to me is not that we identify we have a gap. people have identified that it is not unusual for a project

this large. what is problematic is i hear two different perspectives. one that is very concerned about figure out how we are going to close the gap, and the other agency completely confident that we can make it. that, to me, is problematic, to hear that we have such diverse perspectives. i think we need to come together again. i would be supportive of having another meeting. it is important to keep this issue hot on our list. to the extent that the mta, ta supervisors can help with something, we need to be clear about what they are and exactly what it is we can do, whether it is telephone calls or something else that we can do. this project is important to many of us here on the board and in the city family. the other thing that would be helpful is, as we go through this last page, -- frankly, what

we should have focused on is what is that road map to getting to that $137 million gap, as well as this additional money that we may not get it because of the timing. the ideas we have here are simply have page presentations. we should have been flushed out. we need the numbers associated with what we can realistically expect from any of these ideas to see how big a gap really is. what is instructive for me is identifying the cost savings from a low bid environment for contracts could result in $40 million. that is helpful for me to understand. if we are only expecting a five million-dollar cap, i have a different perspective. i think when you come back from the presentation next week, if we could start putting numbers to it realistically about where we think the numbers are for any of these particular ideas, and what those trade-off decisions

are. that would be helpful for us in our decision making. i have had conversation before about the decisions of the mta whether you put the money toward the maintenance of your current fleet. there are equal things that are just as important. we need to make sure those things are on the table so we can consider them when we talk about closing the gap. if i could make a request, to the extent that there is anything our board can do to help with getting grants or other things to come in the door, let us know. when you come back with a presentation, let's put numbers to it. let's have a sense of what is realistic in terms of how we can close at $137 million gap. supervisor campos: commissioner dufty? i just wanted to -- supervisor dufty: i just wanted to bring up, you do not have a new start project that is championed by a

mayor pierre bois there is a transition, as mayor newsom takes a new position in state government, in the interim period, to bring that perspective into it. i would hope representatives from the mayor's office would come and participate in the ta hearing we have next week. i would also ask matt muni and the transportation authority combined to have a presentation on this project. i do not want to continue to have great division on this project and this project being besmirched because of the value long term. we need to put that on the record and stark abusively at the board commack as the mayor, as different transportation agencies, making that compelling

case. there is institutional tension between planning and programming and an operational agency. they exist in every locality where you have split agencies. in some localities, they have merged the functions. i do not know that that is better. to a certain extent, a bit of tension is a good thing. you do not get bureaucratic indifference. there might be an agency that is a chalk, yapping at the dalmatian, but to a certain extent, that creates a system of checks and balances that i think isn't valuable. that is what i appreciate about htthe ta. i can say that in past years, it has been more harmonious than in recent times, but that is just a personal opinion. but to a certain extent, there will always be tension when you have this dual agency function.

from the public's standpoint, it does serve them because there is a check and balance. there is not one had controlling the message, so to speak. then we come down the road and by that there are much more significant problems. i think those of us who are commissioners opposed the effort to have a new structure for the ta, have the mayor make appointments, have more control over that. i do not disagree but this is not the presentation that anyone of us would type. i think coming back next week, giving the mayor's office involved, having the ta get those involved organized, going to be of organizations, to create a clearer path, going forward. supervisor campos: let's complete the