the error that was impacted, for all practical purposes, was rebuilt. on the gas transmission side we do look at all potential earth movement issues, whether it is looked -- look of vacation, earthquakes, and we can build facilities and trenches to deal with the pipe. supervisor mirkarimi: in any of the question that i ask you, is that proprietary information, information that you will be able to share with us? >> i believe most of what you asked for is public information. we can share with you what has been done with the 1980's in the pipe replacement program. in terms of the mileage, we will get back to you on that. we will try to give you a good

indication of how many miles we believe is steel, how many is plastic in the city. supervisor mirkarimi: thank you. i look forward to those answers. could i ask one more question to elector? back to the question of staffing that i was asking earlier. based on what we know, it is my understanding that some electrical overhead crews, there would be 15 to 20 crews stationed at those yards. those numbers have dwindled considerably to several, if not one. when that not be an indication that staffing was significantly reduced? >> i do not have the levels of staffing in front of me so i

cannot comment on those questions. supervisor mirkarimi: thank you for trying. supervisor maxwell? >> everything has a shelf life, including plastic. something new comes in and plastic is not new, but maybe the application is, and maybe everyone thinks it is the best thing since sliced bread. could you talk about that? how long has plastic pipes been used, what is the shelf life? it has been used long enough for us to know something about it. >> plastic has been used in general from the 1970's, where plastic was first installed. we use that term liberally but the ability of plastic to withstand certain environments has gotten better and better. the plastic we are installing today is not the same plastic pipes that we installed in the

1970's. plastic pipes are designed to be in around a long time. i do not think it is realistic to say 50 years to 100 years. the problem with plastic will be if it is exposed to sunlight. that will impact it. there are rules on how you treat plastic pipes, how long it can be in the sunlight. if it is built and protected properly, plastic and last for a very long time. >> thank you. thank you very much for coming in and answering questions. supervisor chiu: any additional comments or questions? supervisor mirkarimi: we appreciate it. i have a question for mr. ed lee. i think that was an interesting conversation, useful. what is the say process in order

to take this information, solidified it to the best defense of the city and people 7 cisco so that we are safeguarded in the most preventive way possible to make sure we can expect nothing but best practices of pg&e? is this in terms of a mou, legislation, in terms of our franchise agreement? what is it in terms of to ensure there is complete understanding that there will be a certain level of response and that level of response will not be compromised? >> that is a good question. i would say my initial thoughts are that we do live with pg&e as

our main power supplier. i think they are probably -- there are probably mechanisms in the agreement with pg&e for their level of service that we could use as an underlying foundation for producing a more specific mou, constant reporting mechanism, and that we staff it appropriately so that we go beyond just our own leadership individually, that we make it a part of the city's review of our infrastructure. i have a number of ideas right now but i think it could be part of our capital infrastructure plan. i think the foundation is, as you suggest, that it begins with the agreement we have with pg&e to provide service for our city, to work off of that. supervisor mirkarimi: ok.

i am sure some of my colleagues would love to participate in any conversation that looks at the inn has been of policy instruments, legal instruments that get us to a level playing field of expectations by utility so that we are all clear as to what our expectations are. >> i think the chief and i and other department heads that we rely on to work with us can provide this border with recommendations on how to best solidify that effort. supervisor mirkarimi: until there is that a briton level of reciprocity and expectation, our interests will continue to be supportive for pg&e, not that that is what they want, not that i am saying that, but the reality is that could very well

be a byproduct of this relationship. >> we have several franchise agreements with the city. certainly, this one is no different than even our franchise with our garbage company. we've always need additional mechanisms to make sure the utilities are doing what we need to make sure we can lift up the standard of safety for our citizens. supervisor mirkarimi: pg&e has not been amended since 1940. supervisor chiu: colleagues, any final comments? i want to thank all of the city department representatives, a pg&e, for being a part of this important conversation. this is obviously something that we are concerned about, something that we will want to ensure the city is moving in the right direction on.

we have a number of public speaker cards. i want to invite up douglas yep and cindy. each speaker will have two minutes. >> my name is douglas yep. i think holding today's hearing on items three and four are very enlightening. i have one suggestion in regards to this hearing. from my experience in the last five years at city hall, i feel that the audit and oversight committee has done little productive work. i really think these two items should have been assigned to that committee. in my opinion, the chairman is

more concerned about happy meals, and items 3 and 4 are a heck of a lot more demanding. i think the audit and oversight committee should be doing a heck of a lot more for the citizens of san francisco in regards to safety and dangerous conditions. i think that that suggestion should be seriously considered by the full board. i think this committee for having items 3 and 4 today. supervisor chiu: thank you. next speaker? >> thank you, supervisors. we have been representing california consumers for over 35 years. i have been a pg&e customers for 27 years. i just want to commend the board of supervisors for taking this issue on. our lives are literally in

pg&e's hands, and that is a scary thought. we do not believe pg&e can police itself, the matter how many nonprofits it forms to look into these issues. they cannot police themselves. we do not believe the public utilities commission is adequately policing pg&e. we do not believe the ntsb is adequately policing pg&e. one of the biggest concerns about the san bruno explosion is the fact that after a smaller explosion resulted in a fatality in rancho cordova, it is unclear if anything was done with the ntsb recommendations at that time. where is the follow-through? it is not coming from pg&e and is not coming from the public utilities commission, so it is incumbent on the board supervisors to step up and take this issue on. we want to stress safety should

be a priority here. we agree it is not necessarily an issue of aging pipelines pier while shut off valves are an important thing, we only need them after we have got a problem, not before. maintenance and safety should come first. this investigation possibly should include checking pg&e's phone lines as well. we have heard from numerous customers that there were calls about a gas leak. it is incomprehensible as they fled their burning houses they got together to lie about having phone calls. we wonder what happened to the wac -- record of those phone calls. we also look forward to the board of supervisors helping us to follow up on the issue of deferred maintenance. we know that we are spending a fortune on our pg&e bills. as supervisor mirkarimi has pointed out, we do not know what they do with the money. we know they claim they need money for safety and reliability and then spend it elsewhere.

i want to applaud the border supervisors for taking this issue on and we would like to help you in any way that we can. supervisor chiu: are there any members of the public that would like to comment on this item? seeing none, public comment is closed. any final comments? supervisor chu? supervisor chu: thank you to the department for all of your work. to the extent there is relevant information and safety issues that the district supervisor should know about, let me know about those suggestions. supervisor chiu: supervisor mirkarimi? seeing none, public comment is closed. unless we have anything else, i will motion this for a call to the chair. i will look to our department leaders to help update us based helping to update us based on the work they have been doing off line, which we commend you for, but online to answer

questions that we could not get to the bottom of that this hearing. supervisor chiu: unless there is objection, we will continue these items at the call of the chair. madam clerk, is there any more business before this committee? >> no, mr. chairman. supervisor chiu: at this time, the committee is adjourned. thank you for being here. supervisor avalos: good morning.

welcome to a budget and finance committee. my name is john ablow. we are joined -- avalos. we are joined by ross mirkarimi and sean elsbernd. mr. kirk, please go ahead with the announcements. >> [clerk announcements] supervisor avalos: item #one please. -- 1 please. >> item 1. resolution fixing prevailing wage rates for: (1) workers performing work under city contracts for public work and improvement; (2) workers performing work under city contracts for janitorial services; (3) workers performing

work in public off-street parking lots, garages, or storage facilities for automobiles on property owned or leased by the city; (4) workers engaged in theatrical or technical services for shows on property owned by the city; (5) workers performing moving services under city contracts at facilities owned or leased by the city; and (6) workers engaged in the hauling of solid waste generated by the city in the course of city operations, pursuant to a contract with the city. supervisor avalos: thank you. representative from the department? >> good morning, supervisors. this is the annual setting of the prevailing wages for the crafts of labour that will be done -- performed for the city. this is in accordance of charter section 80.7, and various administrative sections -- code

sections. supervisor avalos: thank you. i recognize there are a number of contracts that were referred to which included prevailing wages. my main question is, the wages become different as those contracts changed here every year -- year after year. that is what we provide the prevailing wage as? >> we provide them as mou's, the kind of labor, as well as the labor determinations as given by the department of industrial regulations. supervisor avalos: thank you. mr. rose, if you could share your report. >> the prevailing wage rates are set forward in our report. our recommendation is a policy matter for the board of supervisors. supervisor avalos: thank you for

your presentation. we can go on to public comment. is there anyone from the public that would like to comment on this item? seeing none, public comment is closed. okay, without objection. to the full board with recommendations. mr. young, please call item no. 2. >> item 2. resolution approving the issuance of water revenue bonds and water revenue refunding bonds in an aggregate principal amount not to exceed $600,000,000 to be issued by the public utilities commission of the city and county of san francisco; affirming covenants contained in the indenture pursuant to which the water revenue bonds are issued; authorizing the taking of appropriate actions in connection therewith; and related matters. supervisor avalos: thank you. we have various representatives from the puc. >> tottery strong, general manager, cfo.

we are here as part of our quarterly bond sale. since we last visited you, we sold bonds in may for the sewer system, in may -- june for the water supply system, again in july for the water supply system. every time we come before you for the file and record as well as reviewed by the public utilities commission, is about 700 pages of bonding and funding documents. this is your high-level review in the brief, in addition to the documents that are on file with the clerk and commission. we have issued $2.2 billion worth of bonds over the past couple of years, specifically for the water improvement system plan. that, along with sorbonne sales, and sales for the new headquarters building, we have sales of $400 million of estimated debt service costs for ratepayers for the next 30 years. we have done that because we

have been fortunate beneficiaries of what has been record low borrowing rates in the u.s. economy for tax-exempt and build america bond financing. we come to you today because the american recovery and reinvestment act is scheduled to sunset the bill the american bonds. dependent upon how congress acts or does or does not renew the program, a window could potentially close for municipal issuers on december 31. we would like to be able to capture one more quarter's worth of savings in order to do that. for today, it is a similar size to our other quarterly sales, up boards of $600 million for the water system improvement program. we have gone to the sfpuc commission and got approval last week. we come before you this week.

the next week there is a resolution. we are continuing our plan of content -- competitive bond sales. bidders are allowed to bid on our bonds. if we sell a combination of tax- exempt and taxable bonds. they have to buy everything or nothing, so they have to put in their best and lowest bid from the outset. we do not do that on the electronic markets, so you can watch it in real-time bidding. the closing is slated for the middle of december. the hybrid structure includes tax exempt and build america bonds. we looked at the price of those together to make sure the combination of those two bonds are the lowest cost to ratepayers to lock in the cheapest cost and cheapest financing we can. funding for the water improve the system program, they are long-term assets that are part of the program. we are looking at 40-year debt.

to give you a flavor, we have been selling bonds recently, july and june, getting 3.7% total interest cost. that is 3.7% effectively over 30-year financing. this gives you a frame of reference for every percentage we are lower than the 5% model, which is a prudent planning model for a double a highly rated utility, such as the public utility commission, here in san francisco. for every% under 5, that is $23 million in savings for every $100 million for road. that savings occurs over 30 years. as much as we can sell now at the lowest rate, the better for ratepayers. the financing overview also included in your report and summarized in the budget analyst

report, financing authority is an under proposition e. this is consistent with your earlier ordinance reviewed in the past. the comptroller continues to keep any budgetary appropriations on controllers reserves until funding is actually in the treasury to spend. we will be capturing what we think might be the last bill the american bond that ms. paley's -- ms. allen is can claim through congress. -- municipalities can claim through congress. the documents were pretty lengthy, but in summary, about $0.83 of each dollar goes to construction costs and work. again, we fund capital interests for three years on average. we are also required to fund in-

cash debt reserves, and that is the case since 2008. our credit now is basically equal to or higher than most assuredly companies and bond insurers. when we offer bond buyers the potential to have the option to purchase insurance, they had not done that because of sfpuc's high credit rating. the forms of agreement are the usual ones. there are 10 of them primarily. the commission resolution, preliminary official statement. we would then make updates on that based on our financial statement. the 10th, 11th, and potentially 12th indenture, every time we have to issue bonds. the official notice of sale, intent to sail, bond purchase agreements in the event that the markets turned south and then we have to renegotiate a sale.

we do not anticipate that. company agreements. escrow agreements. that is the key highlights. with that, i am happy to answer any questions. i would like to thank the budget analyst for their report. >supervisor avalos: great. thank you. it is great to hear the work of the puc, especially on maintaining and achieving a high credit rating. it goes very far with so many projects, but with the others coming up as well. mr. rose, if you could share with us your report. >> mr. chairman, members of the committee, i would point out on page five of the report the estimated debt service for this issuance is $1.3 billion, that includes the $600 million of

subject principal and $720,000 -- $720 million of interest, average annual debt service over a 40-year period, $42.2 million. we recommend you approve this resolution. supervisor avalos: thank you. supervisor mirkarimi? supervisor mirkarimi: just to echo, a good job. supervisor avalos: let's go on to public comment. seeing none, public comment is closed. >> i believe there is an amendment that needs to be posed? supervisor avalos: on our desk we have an amendment on the whole. >> on page 3 row 10, there was a clarification to make a number, the digit 6 instead of five.

only wrote 10, page 3, change that digit to make it consistent. i think that is the only edit. i do see one additional edit provided by the city attorney's office. it is again to provide consistency with our other financing documents. on page 6, provided on rows 6 through 8, proposition p requirements to cover said cost with oversight committees,

nothing shall preclude the commission from paying the fees associated with oversight costs of the revenue bonds committee from any legally available funds other than the commission. this is consistent policy. we would plan to and would always plan to fully fund what is the least cost funding source for the oversight. but i should mention as well, every time we meet with the rating agencies as well as potential bond investors, they are very thrilled that the san francisco government has an independent comptroller's office that does their audits, and oversight committee that does their audits, the additional scrutiny of the budget analyst. they consider that a credit strength as well for the public utility as we sell bonds. thank you. supervisor avalos: ok. supervisor mirkarimi: continue the motion as amended. supervisor avalos: as amended. a very good.

>> this will be recommended to the full board next week. that completes our agenda. supervisor avalos: we are adjourned.