environmental review, project control. that would not be a possibility. it would eliminate a lot of the problems and unable consultants to be able to get that decision. it is all of the difference, the process working with a lot of the city attorney's to make it s accurate as we can. it is through one of the town hall forums where we had a contractor meeting to walk through and explain it and go through the upcoming contract in opportunities. we have a specific city attorney that just be conflict of interest issues. and in our discussions, we start to look at what can possibly happen. how can we make this as clear as possible for everyone.

green being an ok thing to go forward with and read being that we can't. back to the slide. we will have a lot of future discussion, namely the facilities siting discussion where we talk about how we move the product forward, and if we can streamline some decisions to select one site. we will be coming back in january to talk about the urban watershed framework and possible prioritization that we can perhaps focus our direction on one and run it through the whole framework and analysis. the outcome is the flood control project that would have gone through triple bottom-line consideration. we will also be coming back with

levels of service. i of the commission has expressed an interest in having the technology discussion. several of our staff of just made a journey to look at some of the advanced treatments, and i would be interested in having a debrief with the commission. we need to be on the leading edge. we like to see someone else in america do it first, then kick the tires and really see. but we have this huge opportunity in front of us to make things better, sustainable, greener. a good policy discussion would be something that had been requested in this out like that might be something that would be a little bit higher level. >> if i can summarize, we are

saying that we would expect to have a mix of outside contractors staff working together, and we like to hear if that is a problem for anybody. we are going to do a mix from our point of view from some projects where that seems appropriate. and we really want to come forward in much larger, longer- term project management programs along with some other good size contracts. just to be clear, the amount we are talking about are up to that amount. if we come back and have a discussion about the rate, it cannot absorb a furlough over the next 30 years. we wanted to give you the outer limits of what the contract might be. the general percentages, those kind of soft things will cost.

if you have a question, if we don't come back to you, it doesn't follow what you would like us to be doing. >> i think it might make sense to take public comment on each of the items as it relates to each item. why don't we start first with any comments or questions with commissioners on this presentation. very informative. >> the $7 billion over 30 years, are we planning to do the whole planning of the $7 billion at the beginning? or is this something that is going to emerge? record. -- no, we would be starting projects one by one and get in

the planning phase going. each of the projects is listed here and we have planning, design, environmental review, and construction. we are laying the projects out over time and it is an 80-year time frame. no, we and i doing all the planning at once. -- we will not be doing all of the planning at once. >> when we look at the projection of rates and also the schedule, we are both at the beginning of the process but also we need to have a pretty

decent sense of broad categories of work that need to be done and how that might schedule out over time and the result of that is a pretty big number. that is almost twice of what we have submitted. my guess is that most people in san francisco don't really know that. my question is how are we thinking about getting the public mind that we need to sustain that and how soon can we start that process? >> we are always doing public presentations and the hope is that through the program, management will get additional help on out region and get an outreach director through the

communications department and then hit the city with public meetings like we have done. we have a lot of meetings. we have occasional meetings we -- an occasional meetings. we need focus meetings and focus groups and maybe have baseline information established and see what the general understanding is of what the committee concerns are. during the planning process, we did that. we did the surveys and that is how we did a lot of these

projects. that is how we got into this meat and potatoes list of fixing what we have. on going, this week it up over the summer -- we take it up over the summer. the star within program look and then we began focusing on the outreach that focuses on each progress. >> we are in the third year of the five-year rate increases and there is the planning money that is in here. as we talk about 2013, 14, that is when we would see a lot of rate impact and a lot of work has to be done before that. >> in getting to a point of public except dance, there was a fairly uncomfortable process of

getting here and it did result in the end that there was a vote and we said this was something that we wanted to do. at that point, it really legitimizes the rates that followed. it is a question that i don't need answered at the moment but what i want to think about is if we get a general level of understanding of acceptance, all of the surveys that you have talked about, putting together the program and people who basically had a stake in the answer. >> even one survey with the general public -- >> my guess is that most cannot understand this. we need to get to a point where the rate payers will understand why this is a good idea. >> it would be very handy to go

out and say that you have voted for this and we are on hand to get you the rates that we promised you. >> one of the things that gets up there is the rate policy and that was something that we discussed when we were sending the levels of service. what i have in mind for that is not a policy that says that this is what our rates will be. i am more interested in setting up a process which is just incredibly transparent so that if someone is faced with rate increases, they can know exactly what. there was a decision made when we would spend some money to do something and that is in the increment of rates. if this is part of the progress, this is what we're doing.

and this gives us the tools to talk about tools. i'm thinking about how we structure this so this is very transparent. this is not so much from the engineering side but this is for the general management to be talking about as well. that is something that i look forward to getting into. when we get into the budget, we will have a program which has a whole lot of to the first part of this program. we should think about these rates. >> the rate repairs position which i was pointing to, i take this very seriously.

hopefully, i will be around but don't think that will be able to afford to pay those rates in 2039. are you taking into account any productive or preventive measures which might impact that such as solar or other approaches that we might not have today but might be projected. >> we are not level of discussion, we are at a very broad level. >> what we will do as part of the discussion is to come back and show you what sensitivity there is to changes in inflation.

what we have been able to do because of our strong credit rating in particular is to get ahead of the curve on the water assistance program and the construction cost inflation. this is over 5% a year over the planning horizon. also our borrowing costs, we had a cost of about 3.7 to 3.8%. because we are double credit and so strong, we are able to capture what is a very positive environment. we will come back to you and show you changing the debt- funded program to sit here and this will be put into the pocketbooks of each of the ratepayers. we also do what i don't think any other utility does, we

provide 10-year illustrations of what the rates are based upon the capital plan. in addition, we break down those 10-years of projected rates into what specifically in terms of capital and what is because of operating costs. we will continue to do that as part of our update. as part of our 10-year plan, we did factor in all of these things. 85%-80% needs are part of the capital program. our operating budget is relatively flat. >> the individual rate-payer has to assume some responsibility for access. will these be reflected in these rates at some point? >> they sure will. we've also done an average bill

comparison to the monthly cable bill, landline bill, pg&e bill. as currently envisioned over 30 years, this is still projected to be less than your pg&e bill. >> the central bank announcement this afternoon which i have to follow very carefully, is paid at the municipal bond rates will continue to be beneficial for us? >> we are doing long-term planning at about 5% but we know that our borrowing costs regeneration a los -- our a-- are at generational lows. when we are doing the single

improvement program, we set out the bill to our customers. we can give very low rates on a very large improvement program and we're doing with six straight -- fixed rates and we don't have to worry about the volunteer the -- will not have to worry about the volatility index. when you look at our rates compared to average bills, we have benefited from a very very low-cost average bill comparison. we are the envy of many utilities. >> and the envy of the state as well. thank you. >> do you recall in the projections, was this a general inflationary rate plus the usage difference? >> yes, we have a santa that our

program will grow at 5%. the general inflation rate will be 3%. construction costs are at about 5%. we also assume the cost of borrowing at 5%. >> are there any that can be offset with a cheaper rates? >> on climate change design criteria, how far up as the model and go with climate change? >> right now, we don't have the details the. this is not at the level that we need for hydraulic design. this is speculative. our engineers look at how this

changes on a minute by minute interval, we have more like yearly anticipated sea level information, we don't have a great storm information. what we would need to do is to track the intensity during a storm and then possibly update or hydraulic criteria based on changes to rainstorm density. our information right now is not great. in the past couple we never had salt water coming into the system. there has been an average of 7 inches increase. we have had water doesn't half a dozen or 8 times into our collection system. we don't have the type of detailed information that our engineers can use, that is a problem. each of the basin's so that we

can have adaptation. >> i did see anything -- we talked a lot about that a marginal innovation -- we talked a lot of doubt to technological innovation. at this project from start to finish, there should be opportunity to have lessons learned. we have been able to incorporate this into the system. this is whether it is related to climate change. this might be an increase in rates. does that play into the design at risk model? i did not quite understand what

would happen. what happens when an innovative project comes along? does it just it plugged in? >> if something was very favorable, we are lucky that we have the experts to be will to prove this on our turf. then you would get the is designed risks and maybe they're a be a change to the process and then that would get put into the environmental document. i think that we are lucky enough and we have a great enterprise come all the people in the clearwater and the recycle water.

it would hard -- it would be hard for me to believe that we have missed something that is why we have the project manager coming on so we have additional expertise. we have done a pretty good job of keeping our finger on the polls. we have participated in various technology conferences and we are paying attention to the new list of things that come out. if everyone would like their new idea to work in san francisco. >> i want to make sure that there is a flexibility. >> it was modeled to integrate any new technologies. this would make sure that there is the capacity to integrate with that model. >> we want to make sure that that is how the the it is written so it is clear.

>> some lend themselves more to that at others. at some point, the system will be set and we will be beginning. this will give us a lot of opportunity as we learn and there will not be that much happening at one time. the next week and get better, the next week and get better there is a lot of that ability to continue to react. five or six years from now, we can probably start building and the stops and lot of innovation. >> this was exactly part of the discussions said that we can get through this pilot project up front and measured the performance and then implement. you go through people's property and how we implement that will

be really challenging. we need a very good public program at that point to work with everyone. >> i also wanted to echo the to indications peace. i'll help that person would come to an agreement. i want to echo the importance of the communications strategy up front and maybe this is the purview of the communications director. does this include a treatment facility? >> yes, it does aachen. -- yes it does. >> i know that we have talked a

little bit about this and this is still a conversation that we should have. >> this is a wonderful treatment facility on treasure island. one of the other questions that had come up all the projects said that we can note what the most critical projects are. how we will lippi able to make a major rate increase that to the public will not easily absorbed. -- how will we be able to make a major rate increase. we will look at that and maybe you are saying that these are critical projects that we need from next year and these are the ones that we can decide. >> that would be a great

discussion for january when i come back to talk about the watershed. i apologize about hunters point. >> sometimes you do this or you don't. you have lots to talk about. >> i would like to keep that conversation. >> anything else? >> going on the technology common and there is a traditional way that we deal with this is if you have a project design and survey. with the kind of schedule that we are talking about, the need for that will be really more continuous we need to be watching and in some places

contributing to technology and development. there's a good reason why there are pilot projects. this is something that we can do actively to keep ourselves up to speed and be ready for those decisions when they come. there is a need for continuing functions and tracks that will look over the technology. >> every week we have the minimum of one brown bag that one of the teams is attending and they are talking about new technology, savings, public outrage. some weeks we have two and people get upset with me and basically we are learning and is trying to be educated themselves. we do have a stellar group.

we bring in an extra piece internationally. we had some people coming in from the u.k. to talk to us about the treatment. there are options for use and how things are handled. people will not have to travel that conference, it will be here every week. thank you. >> i am mindful of the time. if there's any public comment on this item. please keep it brief. >> >> good afternoon

commissioners. i am the director of external affairs. we are here today because we are excited about the -- program. we like to introduce herself to the commission. we are a local and small firm based in san francisco. we have over 20 years of construction management. we are involved in the clean water program and we here because we are looking at director kelly making comments about the need to fund local small firms to do this work. we are confident that we have the text -- the technical expertise to do this. we understand the needs of the kennedy as well as the needs of the program. we are also competing with this work. we partnered with another local

firm and we are looking for to be able to continue to do good work in the city of san francisco. >> thank you. >> good afternoon, commissioners. very exciting to have you here and here experience on this. -- and your experience with this. we are working to help vulnerable communities. i wanted to speak to the slide about what we learned on this project in a very informative presentation. i want to talk about this with respect to local workers. everyone