dealing with the al leiter of the circumstance with the sensitivity analysis, if this comes to bear. -- we are dealing with the circumstances of the sensitivity analysis, if this comes to bear. overdoing this is going to determine how this is allocated. it has also been suggested that this is sending a variety of signals. and this establishes market incentives. or this creates a market opportunity for us to express favor for certain kinds of activity, for people to conserve, actively and aggressively, and how they will be affected by this process. i am very sensitive to the view

of palo alto and others that we should not superimpose this on the water management judgments, and these jurisdictions who happen to be contractual customers. i do not believe that this is what we should do and i did not believe that this is proper for us to do this. my first belief aztecs, and we had some discussions on this, my first topol -- my first opened -- my first hope is that we could honor their process and recognize their jurisdiction, and adopt these recommendations. this is not something that we can do.

but i think that the fundamental and this is still very much there for me, anyway. i do not want to see us dictate with the customers should be doing. in -- as i look at these tables, the first one seems to be that we're all in this together. given what we are going to use, the chances that everyone will go over. this is the surcharge on any one party. and this is a certain logic to it. the second one of them, and appears to be a compromise between this and the third one that is not even on the table. and this, if the interim supply

was the same as the supply guarantee. this raises the question, if this is what we are trying to do to create a hybrid between the two of them, what is the thought process and what i these considerations that are driving us to this particular compromise. if this is between the extremes, and this is where we get the right answer. certainly, the supply guarantees create an incentive to try to fix the problem. i think that the supply guarantees, they are where they are for many different reasons. but they have the contracts that

have been established and honored. this is what we started with with the basis of the decisions that have been made. this does create an incentive and there are problems with them this. some people would seem to have more than other people and some people seem to have less than they need with this guarantee. all these other problems that we are going to continue to deal with. to the extent that we are creating incentives, what we -- i think that we would be doing is that if we do this number, is that we will create some american sentence that would be replaced in 2018 by a different set of incentives, and by that i mean the interim would be over,

and the contracts will continue to be enforced with the supply guarantee as the operative numbers. i have a question about the purpose of this with having different incentives in place before 2018, then would exist after 2018. the problems that we are trying to address our beyond 2018. as it makes sense that these incentives between now and then would be the same so we would have a consensus basis. and if we want to have this, we would have the interim supply, and the allocations would be the same with the supply guarantee.

there are obviously problems associated with this. that are associated before the current water supply agreement. this is after 2018. as far as the surcharge itself, we have a couple of options with these and this is one rationale for doing this. there is nothing that says that the surcharges -- this is the rationale. it is good to have a rationale. this is only one set of rationales. other cases that have been suggested, there graduated going over the allocations. and these may be worth considering. this is a lot of stuff and i

apologize for taking over the microphone. this places us within our obligations with the contract. we were responsible for creating this in the first place. this is a position that none of us for wanting to be in. this will directly affect policy making and what i hope is that we can get through this in a way with a minimum amount of violence to the relationship between certain customers and honoring the contractual agreements that we have to establish incentives and we will deal with these persistent problems. not just in the short term. >> i would like to clarify one thing. one of these conversations, one of the different options is

having the interim supply guarantee not equalling the supply guarantee and santa clara would have no allocation because they have no guarantee. >> this would not mean that they do not have any water. >> but should you be able to do this, all of these charges would go to them. because they have no guarantee. my recollection is that there is something in the water supply agreement and this is difficult to interpret. we did not know if this was even an option. >> they said sentences cope would deliver this and they would provide this in the interim supply allocations to reduce this. but there are limits and how we

will reduce this, because if you reduce that beyond these limits, if you put these at 0, this would trigger the other provisions of the contract, san francisco would cut them off. we need to make certain that you know about this. if we do not give them the allocation of a certain minimum amount, this is the process for these customers. we will make certain that we do not go down this pathway, and the way that the calculations are working, this is roughly six or seven -- there is an amount that would have to go to santa clara. otherwise we must drop them as customers. >> and there are differences of

opinion about how you actually interpret that section. it did appear that simply saying this is violated did not work. >> this is very complex and there is a lot going on. i have a couple of questions to star with and then a couple of comments. i guess i want to have one comment first. this is similar to what the commissioner was saying, where it seems like there is another way. there is a third path that will need to be considered. people are not happy with this proposed second draft. and we need to move beyond the first. it seems that between now and december, and again in march,

there is a third draft to consider. and how this is considered and what makes up all of these numbers, and the relationship between these, this is open right now and i appreciate that we're having this dialogue and receiving this information from the wholesale customers. it is curious that we are in this position because i do not see san francisco and illegal partners sharing water. i would welcome any creative ideas in what the third draft will be looking like. and a couple of things that have been resonating from my perspective is the conservation perspective. how we will be dealing with the incentives per-capita.

and i think you bring up an interesting idea, about 2018 and what the implications will the for dealing with these incentives right now and what this will mean for the long term. i do not think that this should prohibit the incentives and i think that there is general agreement about the conservation, from a better perspective. from global water and climate change issues that we are facing. that we are going to need all of us together for the conservation and water programs. i would hope that we could look at this, as part of the proposed option. these per-capita issues and what the issue really is. we see this with the resident,

for the complex formula. there would be an undue burden with a capital uses low and another with this is much higher. this may play into the formula in some way. this is a challenge to the staff, for this to be part of the equation. i think that this is a transfer market. i do not know who would be the arbiter, for the agency with the entity, and they did the staff could respond to this. if there was some kind of a transfer market, i did not believe in san francisco -- who is actually going to do this, but this is the question i am asking. >> there are certain requirements written into the water supply agreement.

and this will literally be between the parties. >> this may have its challenges and it may work? it would be interesting to hear about your view on how they would conceive of this. and this seems like an interesting option. it seems like an interesting way to proceed as a possibility to handle the bigger use against the less serious. i think that this is the question around the rate structure. this is something that we will need to grapple with. and this will be a direction from the commission. and again, from the conservation perspective i like the idea of being able to reward not through penalizing

people, but through conservation. we should agree with this, if this is some way that we are saying, thank you, when you have put in $200 million into recycling programs, or something that will factor into the equation. this may be another potential part of the formula. the demand, this is a question i have. the demand in certain communities, the projected demand is much higher in the communities. what are the factors for these higher demands? does that play into these drafts of these communities, and this would be more adversely penalized, because they are more dependent on san francisco

water? they use a larger percentage of the water in san francisco? or because they have projected development that will be greater. >> let me speak about what i am aware of. they're going to replace a few family developments with multiple family developments for the growth of population. i do not know anything else about what they're perspectives are. if you read the, letter, this indicates that the demand projections are actually part of the 2010 version that was used. the demand is somewhat lower than that. one of the things that we know about with these projections,

they are always wrong. and there is a discussion about how they were generated. and are easily the best numbers? this -- this is gary hart actually take them apart, for the individual communities. some of these, we really did not know. >> some of them may have been generated in different times, and the real growth may not in fact be happening. and so simply saying that this is the number that they gave us, history doubtful that this will happen just like these projections. you cannot say that this is right. i think that the discussion at the end has been the conditional supply guarantee. who was there when this was started? you read palo alto.

you were not there when this started. the fact that you went there 30 years ago, this is part of history more than if there is a certain amount that you left. would you rather have east palo alto? who is the biggest loser? if they have done very well to stay underneath this, and you give them a credit for that, and the individual supply means nothing. they did not get any historical accidents and they are simply trying to do great things for the community. do they bear a burden? is there any right thing that is here? that is when you get into this discussion of the transfer market. i am not certain that i am convinced of this. this is what is most telling to me. >> this is more helpful and this

is more complicated rather than a less complicated. the fact is -- what these projections are based on, there is the historic all economic development. >> we have the water use projections, how they arrived at those. the contract supply guarantee -- these are creatures of history. and testifies that particular rationale. >> i guess the one thing that i would like to say is just, the question of per-capita. i think that this is interesting from the conservation perspective. using more is using less and made this factor into the formula in a way to make an incentive for these allocation

questions, and the guarantee question. that is all i have to say for this time being. >> we will come back to the with the individual supply allocation in september. the discussion about the surcharge is going to be next march. they are separated by some amount of time. the allocation discussion is very difficult and this will be coming up. >> and what will happen between now and december to try to make some sense of this agreement? >> we will adjust everything that has been discussed here, and we're looking at the proposed allocations from alex. it would be nice to see what this has. and we will bring this back again on december 14.

this would be a recommendation that is going to incorporate those things, and i have heard here is that there is an interest in seeing how the per capita usage is working into this. and this is part of the story as to why not. and it will be clearly responsive there. we have met with the customers twice that we may be meeting with them again. we would like to send out a revised version, before the commission meeting on the 14th, so that there is no surprise coming forward as to what the recommendations would be if there were more options available. >> the transfer market question, is this also for the customers and is this something of interest? or do we need to play a part in this?

>> if there is a decision that includes the use of this in some way, and there are people who have a need, they are not penalized outside of the gate. this would set up the potential for a market and this would be the end of the role of san francisco. these parameters would be set, and this would be part of the rest the decision. there is nothing that says the transfer has to result in the exchange of money. there are no rules about this, and this is entirely between the two parties. >> and these decisions will encourage or discourage this. >> the encouraging news is that we may not have to face these

questions by 2018 because we are doing a good job of conservation and water usage. this is the ultimate goal. to stay below 265. and is there any other further public comment or questions? commissioners? i would like to thank all the customers and everybody for their comments. it has been very helpful to hear from all of you. we are going to try to incorporate all of this into the next generation. and the next item? >> item number 11, presentation to amend amendment no. 1 between the public utilities commission and the north coast water district for the operation of the recycled water project, authorize new general manager of the commission to negotiate and execute this amendment, modify the agreement to reflect the sccuc to have 80%

of the capacity rights, rather than the ownership of the project's facilities. >> if there is no objection, i would like to take item 11 with item number 12. >> this is the discussion of possible action for the general manager of the public utilities commission for items dealing with the san francisco recreation and parks department, for the application of recycled water to the charlotte park golf course. >> thank you. i am the general manager for water. the first is from the public utilities commission and we are looking forward to going through this change, which is going to affect these facilities rather

than part of the capacity of the project. and this is a way to deal with the condition that the state water control board -- these conditions to the north coast water district. we are the owners of the facilities. we are giving up ownership of these facilities, and changing this to the ownership of the capacity. and the water will be delivered to charlotte parke. and this is within the parameters that are here, to negotiate and execute those conditions. that is part of the agreement amendment. the second item is authorizing the memorandum of understanding with the parks department, for this project with the agreement with northwest water and we have

various responsibilities relative to the implementation of the project. and this item with basically the providing for certain portions of those responsibilities to the recreation and parks department operating charlotte park. this is a side of the responsibility that we already have. this was approved in 2008, and the project has been moving forward. and just let the other projects, these can and $5 million. meeting the estimates like the other projects. that is a piece of the funding

that can come into place. >> when we left it, i believe this was going to go to the rec and parks commission for a rehearing. >> the afternoon, commissioners. -- good afternoon, commissioners. i was asked to provide an update on what has been going on for several years, specifically around the golf course. this has not yet gone to the recreation and parks commission, but i can update another conversation >> face which the responsibility to you. -- face which the responsibility to you. >> -- they switched the

responsibility to you. >> i have been working on this for three years now. we have initiated significant management and eir as well as a working group that is still going on with various stakeholders. in each of these settings, the recreation and parks department has either taken no action or confirmed its commitment. most recently last summer the department had an analysis of three options -- 18 hole, 9 hole, and no golf, and the commission confirmed their commitment to an 18-hole golf

course. we do have to complete the eir before initiating any capital projects, and we are in the midst of the environmental review. we expect a drive to be out in september. the commission does not need an eir to commit to an existing park view, and that is what we have done, reaffirm our commitment. there will continue to be an 18- hole golf course, so i am happy to answer any questions. >> my understanding is this is supposed to go to the commission again.