supervisor mar? supervisor mar: i want to thank everyone for coming out and speaking passionately. i want to thank the general manager for their hard work on the effort. and i want to thank the budget analyst's office that i totally agree with. i also want to thank supervisor mirkarimi. i feel like this is a strong leaves and it has been strengthened over the last couple of days. really listening and being sensitive to the recommendations of the budget analyst as well. i would like to move the recommendation of the amended lease.

there is a finding language change that the state attorney's office is going to recommend to address the ceqa analysis issue. >> questions, an environmental review will happen once the vendor comes forward with their plans for breaking ground and conducting their proposal for the improvement. since this least contemplates -- lease contemplates approval, it is legally prudent to acknowledge that they are not improving the -- approving the improvements. including approvals under ceqa.

i have language of will forward to the clerk. just so that it is abundantly clear to anyone that has a question about it. supervisor chu: is their language and you can read into the record? >> it is not approving any of the improvement at this time. the board finds that the city, including the general manager, retains absolute discretion to approve or disapprove. and they will be subject to all applicable laws and regulations including review under the california environmental quality act. supervisor mirkarimi: madame deputy city attorney, i thought

that might be coming. it is where they get to make those -- doesn't get reported back to the commission? >> i believe they go through the general manager. but i don't want to speak on his behalf. whatever nature of review is required he will make that determination, and it is always available to the board of supervisors. -- appealable to the board of supervisors. supervisor mirkarimi: and there is no confusion or

misunderstanding that that process will come back to us through planning? >> the board will not be the one to sign off on the blueprint. the only way that you will see it is if there is a determination. it is under the determination of the general manager and his commission. >> it includes the change on page 3. and there is -- >> excuse me. we are going to have -- if we can't have members of the public cannot interrupt as people are making motions,

unfortunately, when the amendments come from members of the board. i am positive that members of the board are willing to speak to members of the public. supervisor mar: the base rent on page 15, the new rental boats shall be required to spend not less than $100,000 a year. the third amendment is on page 21 under proposed improvements. it will be not less than $233,000 of initial capital improvement. i will move those amendments along with the language that the deputy city attorney has just

read into the record. >> my understanding is that we are approving a resolution, but the contract is something that we cannot amend. is there something that we need to do to carry forward the changes reflected in the amended contract? >> the board cannot amend a contract, but the department can. they come forward with a new agreement signed by the new vendor, and you are able to acknowledge that it has been replaced. >> is there any part of the resolution that we need to amend to reflect that there is a new replacement? >> those are the changes that supervisor mar just went

through. describing the changes that are included in the new document. >> i understand all of supervisor mar's amendments. does that include the annual guaranteed? supervisor mirkarimi: you have had the opportunity to review the complete amended contract, correct? >> no, we have not. but based ont he -- on the amendments, the only changes that have been forwarded are based on the budget analyst recommendations in addition to the 140,000 --

supervisor mirkarimi: through the chair, is that true? is that the only change? >> that is its. hood is going from 140 to 160. -- that is yet. -- that is it. it's going from 140 to 160. supervisor chu: we have a motion to amend the resolution to include the language regarding ceqa. can we take the roll? supervisor mirkarimi: to qualify, if we are going to roll

call, i will vote against this. i have left open the door to questions i want answered. i think this has been a useful conversation, but a conversation that is not complete. if i get the information, i will feel more secure about this. at this stage where we are at, i will be voting against. supervisor chu: we have not taken a vote on the legislation, just the amendment. the vote is to include the ceqa requirements. and then we will reflect a change in the underlying contract. and finally, the minimum annual

guarantee has been increased. on the amendment, without objection? now on the entire piece of legislation as amended. i appreciate the conmentments made by committee members. we have read it very intensely. i think a lot of the questions and issues were raised. overall, taking a look at the financial aspect of this, i think the components are solid. we will be seeing contributions. and we would be potentially avoiding a $1.7 million replacement cost. i think it is a very important

goal to speak to. the recreation and parks department has had a long struggle with making sure that the capital improvements are maintained. the other departments that have been maintained over time, i am thankful that the emphasis on capital is there in the contract negotiation. the other thing in regard to the process, the issue about the annual guaranteed given the fact that there was an objection that was provided for in the public. when we first set out the process, the bid protests -- it was not submitted in a timely fashion. unfortunately, that is something that i believe the process spoke

well too. i will be supporting this resolution. the concerns that the committee laid out on the unknown risks. i will be supporting this. supervisor mar: aye. supervisor mirkarimi: no. supervisor chu: aye. >> this will be forwarded to the board of supervisors. supervisor chu: are we ready to barrel through the rest of the agenda? item number two.

>> hearing to consider the release of reserve fund and the amount of $98,420,416 to fund the construction of the water system improvement program. supervisor chu: public utilities commission? >> good afternoon. i am director of the water system improvement program. i am looking forward to working with this new committee as well as keeping you appraised on the progress of the program. talking about updates, i am

scheduled to share with you the performance data at the beginning of february. i want to give you a brief overview of where the program stands. the wsip continues to benefit from a very positive environment. we anticipate to be able to deliver the program $129 million under the approved budget. we currently have 22 projects totaling $2.2 billion in construction. i can't wait to share with you the projects in early february. i am here today to request your

approval of the release of funds that were placed on reserve for the construction of the san joaquin pipeline. the original request was for $98 million. the improvements that will build under this project will facilitate system maintenance as well as provide additional operational flexibility. the project includes an distant components. the first three line items are construction contracts that will build improvements and the last element involved will repair the existing line. the construction of the

crossover contract was initiated in june of 2010. it will be completed later this year. the contracts for the western and eastern sections involve the greatest portions and will begin very shortly in the next few months to extend through early 2014. and finally, the work on the existing pipeline has been going on for quite some time. the items in front of you today pertain to the contract highlighted in green. the western section portion consists of a new pipeline that will extend all the way down to where we have a connection with the coast range tunnel. the low bid for the contract was

$49 million in submitted. it was 16 million or 25% lower. we are on track for that part of the work in february. the eastern section portion also involves the construction of an equally large pipeline. this is 6.5 miles and length. the contract also involves the construction of a number of other facilities as well as security improvements. this is a summary of our request. each element here is the early explained -- thoroughly

explained. we had requested an additional contingency because of the challenges associated with a western segment. right from the beginning administratively, we do not wish to pursue the release of any of the funds. however, i would like to take a few minutes to talk about the furnished line item. what we do on contracts that involve equipment, we tried to purchase them separately.

it has served us very well in the past. it helps us keep our project on schedule. the eastern section part of this project involves long lead items. we are about to advertise the remaining items. the equipment in question is really critical because it is needed during a shutdown. -- a shutdown period where we have to install pieces of equipment. it can only be shutdown once a year. we would like to thank the budget analyst for a really thorough review. we would respectfully like to suggest a minor change in the analyst recommendation.

in addition to recommending putting the $65 million for the construction of the eastern section, we would like you to consider also adding the $2.3 million. those funds could be released at the same time as the eastern segment. it will be required for the controllers to release the reserve. that concludes my presentation. >> the department is basically agreeing with our table 6 with one exception. the reason that we did not

recommend approval of that commitment, we were not provided with any documentation regarding that. if the committee is satisfied, the comptroller would release it upon submission of documentation and we would not object to that. our main concern on this request was having a double contingency reserve that the department now confers with us on. if you agree with the department, you would release on recommendation no. 1, $100 million, and secondly, instead of the second recommendation

where it places the $65 million on reserve, if the committee decides you can add more on reserve and authorize the controller to release it. supervisor chu: are there any members of the public that wish to speak on an island -- item two? city attorney. >> i hate to be the bearer of bad news, but this item is noticed at the 98 number. we are trying to think of a creative way to allow for the release of the entire amount. the best approach will be to release is now -- release it

now, and release the rest at a future date. supervisor mirkarimi: i would motion to do just what the city attorney recommended. supervisor chu: given the budget analyst recommendation, if we can back out the contingency that is there, the remaining balance will be on controller's office reserves. without objection. next item, please. >> item is files. item number three, resolution approving the amendment number

two. the acting body through the airport commission. supervisor chu: airport. >> chair to supervisor mirkarimi, the airport is seeking your approval to do a number of things. and reduce the minimum guarantee and put the tenant on checkpoint reconfiguration. the current lease was approved in 2000. the tenant extended which was available to them, which was designed to achieve the environment of airports after

september 11. airport staff originally initiated a new process for this lease, anticipating the expiration date. it became apparent that the configuration of the check point would impact the amount of space that would be available. rather than enter into a short- term lease with an unknown square footage, we would like to keep the current tenant in place. the budget analyst report recommends -- the airport has a few leases that will be coming

through this committee that were originally put out and approved in 2000. the economic reality of the airport is very different, particularly for bookstores. the airport staff did not feel that we would be able to command the same at minimum annual guaranteed that we were able to do 10 years ago. that is the basic outline. supervisor chu: thank you. >> madame chair and supervisor mirkarimi, we are not objecting to this. we set approvals of policy. there is a significant decrease in the annual guaranteed. as you know, the airport operates under a policy so

there'll be no impact to the budget because they will always balance their budget because of the required airline revenues. supervisor chu: are there any members of the public that wish to speak? public comment is closed. supervisor mirkarimi: motion to approve. supervisor chu: i would also see if we can amend the motion to include the budget analyst recommendations. without objection. item number 4. >> resolution approving the continuance of the international airport to refinance the airport bonds.

>> this item secure approval for additional refunding bond authorization. this is in order to take advantage of any bond opportunities that might arise. and also to use an index refund if it lowers the debt service to fixed rate bonds to protect against any further turmoil that may come up. the airport has had success in the past to take advantage of low interest rates to refund and restructure. since 2003, the airport has generated $72.4 million.

the current authorization before you does not increase the airport's ability to increase that. but it allows the airport to be in a position to refund bonds to achieve int [unintelligible] i am joined by kevin who is available to answer specific questions that you might have. >> we endorse this request. it is a refunding request where lower interest rates would be used if we can get a low interest rates to replace the existing bonds.