>> thank you, mr. vice- president. brief report today. first of all, we are going through our budgeting process for the coming fiscal year, trying to address in our own small way the financial stresses that our city has been under and the the others have been under as well. that is probably not news to you, but i want you to know that none of us are alone in this. the are all suffering together. we continue to pursue water supply of projects and water conservation programs we have initiated. that includes one we have just will -- we had just rolled out, paying people to remove their lawns and the landscape with something else. the landscaping community supports it. they get to do more work, which is a good thing, so we have had broad support, and a number of agencies already participating in it. beyond that, i think i will

conclude my remarks. i did take with interest your comments on a local hiring program. we did receive the letter theed harrington -- a letter from ed harrington. where are so looking at some of the issues to make sure we are well informed as well and can confirm the things that are in the letter. thank you. >> thank you. >> mr. president, we have no speaker cards on this item. >> thank you. next item. >> next item would be the san francisco public utilities commission citizens advisory committee that date. mr. kane and midwest will present in mr. landsbergis absence. -- mr. kane and ms. west will

present. >> i expected someone else to join me to give this report. i was just going to not accordingly. i do not know how much some of you members are acquainted with the cac. we generally try to make a contribution that has some substance to the commission. frankly, we could not do it without the support of the very able puc staff. but over the last few years, we have come up with a number of resolutions, which have filtered over to the commission, and i know it has been of some interest to the commission, the kind of work that we have done. i will try to be concise. the cac is made up of citizens chosen by a variety of ways. the mayor, the president of the board of supervisors, and

supervisors in their districts. they come from all walks of life, but there is a general professional expertise on the cac, and when they come up with a resolution, it is fairly well thought out, and with some degree of professional competence in behind it, so i would hope that in the future, when these kinds of resolutions come from the cac that you would consider them as having some substance. thank you very much for your time. i'm certainly available for any questions. >> thank you for doing what you do. >> indeed. i believe there is a reception this evening for the cac, and i would see you there. ok, mr. secretary, could you call the consent calendar? >> the next item would be the consent calendar. if you would allow me to briefly read the items, and if any

commissioner wishes to remove an item, they can do so. all matters listed hereunder constitute a consent calendar considered to be retained by the sentences the public utilities commission and will be acted upon by a single vote of the commission. b, accept work performed by cmc construction for water fund racked -- replacement contract. approve modification #1, or reconciling the final contract amount for materials is increasing the contract amount by $90 and of the rise final

payment. >> does any commissioner was to remove any item from the consent calendar? >> move it. >> second. >> all those in favor? >> opposed? >ok, the item passes. i do have to say that is probably the record for the lowest cost of contract amendment that we have ever process. >> [inaudible] >> but you have to do something to close it out anyway. thank you. >> the next item is to provide feedback during the presentation and discussion of some system improvement program proposed 10- year capital request and associated rate impacts. >> commissioners, if you recall, last meeting, we continued the item to adopt the 10-year sewer system master plan part of the

10-year capital program. we wanted to have this discussion that was a more robust discussion today, and karen is here to have that discussion. >> good afternoon, commissioners. today, we will be discussing the sewer system improvement program. i have some replacement slides. i've been struggling with going paperless. i'm sorry. we were able to make the single digit street impact slides come together. history is such that the last major capitals programs for the waste water system started back in the 1970's, and that involves building our oceanside treatment plants and completing the transport boxes. since that program, we really have not had major upgrade programs to improve our existing facilities. originally, it was supposed to be part of towsip, but it was sacrificed -- part of wsip, but

it had to be sacrificed so the water program could move forward, and has been in limbo for some time now. today, i will be talking about the sewer system improvement program background and we will go over the 10-year capital improvement program that has been proposed for waste water. we will not be talking about are not today because that was talked about quite a bit during budget hearings, but the outcome we're seeking is to cover program for waste water so we can move forward, and to get your agreement that we can move forward with a program management contract for a 15- year duration, $150 million to support us as we develop the sewer system improvement program, validate the program, optimize, and have the expertise from around the world to support us in this program that really only comes around about every 40 or 50 years. with that, i'm going to go over

some of the background on the system, review a little bit about how the wastewater system works, and later on, we will be going over some of the programs we have analyzed to be responsive to the commission's request that we look at the cost of financing and project the rates into the future. we would like to get your input in terms of the size, rate impacts, and how we want to take this program as we move forward. the first slide -- just some background. this map shows the location of our treatment plants, and the major transport boxes that ring the city. we treat dry and wet weather flows at our ocean treatment plants, down on the west, and it is going to show up, and on the east side, the central east side, we have our southeast plants, where we also treat what weather and dry weather flows. to the north, we have the north point plant, and we treat

exclusively wet weather flows there. additionally, we are responsible for treatment and management of our treatment plants on washington island. in total, our system can treat 575 million gallons when we have a wet weather event. transport boxes provide additional storage for 200 million gallons worth of combined sewer and storm water so we can hold flows and convey them so they can be treated then at our waste water treatment plants. when we do treat waste water, it is treated at our treatment plants and discharged from no. 1 plant and southeast, it goes 800 feet out to the bay. on the west side, we discharge four miles offshore to the pacific ocean. the transport box is designed so that it also provides a basic level of treatment, so if the system is overwhelmed, we have permitted discharge.

top of a lot about our struggles and challenges, and we wanted to make sure that we stay on course today to really express the priority issues for the sewer system improvement program, and they are numerous. seismic reliability, eating infrastructure, maintaining permit compliance is a big one -- eating infrastructure. we have to make sure all our facilities can run at maximum during a wet weather even. -- e. jane -- aging infrastructure. we're already having issues with climate change. we are seeing salt water entering into our system now. there was some storm surge about five days ago, i guess that was. we had waves breaking over the embarcaderos sea wall. it is going to get more is prone

to failure, too. it can be age. it can be corrosion, and it can also fail in performance due to size. our treatment plants are really were courses. they are working, working, working. we have mechanical processes that have to run 24/7, and then have to be reliable. we have equipment that has excessive wear and corrosion and facilities reaching the end of their useful life. we talk a lot about the digesters. the digesters are a 1940's design, but we also have issues with our treatment plants.

you can see the collapsing ceiling. most of you have seen the situation and conditions, and it is dire. we are living on effectively borrowed time. over the last 18 months, we went through hearings and workshops and public workshops and hours and hours of discussion and came up with goals and levels of service for the waste water system. i'm going to run through these five, and then we will start drilling into what the project are in a sewer system improvement program, what size we want to look for in the future, and getting started.

the first goal is provide reliable, resilience, and flexible systems that can respond to catastrophic events. that is to do with compliance with state and federal regulatory requirements, really making sure that all of our equipment is up and running during the wet weather events and making sure that our collection system is utilizing capacity. our combined sewer system is unique in that we are holding everything, capturing everything and trying to treat it. we want to make sure that our critical functions have 100% redundant. the force mains i showed you, we are concerned because we want to be able to have two ways to be able to convey that much flow, or a rupture could cause waste water into the bay or damage people's homes. we want to make sure we have facilities on line after an earthquake within 72 hours. because we do have our trends for storage boxes, those can act as reservoirs to hold things so

we can stabilize the system and get things back online. minimizing flooding is, of course, an issue and a public concern. and being able to control and manage flows from a storm and a typical design but we are looking for our scissor system to be able to handle is 1.3 inches of rain. providing benefits to impacted communities, limiting voters to the defense line, and being a good neighbor. looking at the question that commissioner torres asked, the sea level rise, our staff for his debates in regional and national forums, and we have to make sure that anything we build in the future is going to be there in the future, and as we are planning, we have to look at what the change will mean for rainfall intensity, and what it

will mean for sea level rise and what it will mean for the future. >> can i interrupt in the future -- can i interrupt you real quick? >> we have to chase the palms that pump flows out on the bayside. we're looking at ways to block the system so we are not getting as much salt water in, but in some cases, that can cause an upstream problem by blocking the outflow that might cause flooding on land. it is going to affect how we cite things. where we can build the digestive facility.

we might not want to be building in the day lands where there would be issues with sea level rise and we could be affected by that. we want them to be able to have a 100-year life so we can have an asset that will be in place for some time. treatment plants, we're not planning on moving them to higher ground. they are at the perfect location to maximize our benefits of gravity. they are sited so that gravity can stay on our side. and, of course, how help me with this. achieving economic and environmental sustainability. it is a lot of things, beneficial to all the different things. the outcomes of wastewater treatment. it is also getting to the point where we have stabilized life cycle costs, so we have not just up and down. we did not have emergency

response types of things. we get a head so we extend the useful life of the office. we also talked about utilizing our methane, which is generated as a byproduct of the treatment either generating energy or developing a gap in the system. to my favorite topic, we will beginning into the project included in the sewer system improvement program. this map includes collection system odor control project, a lot of low and pack design projects, and these are actually rolled into one category -- a lot of low impact design projects. it will be looked at as a flood control collection system improvements and low impact design. sadly, we have not gotten to have our urban watershed framework discussion yet, but we will. [inaudible] we can methodically look at each base and in the city and analyze opportunities and challenges and

look at low impact design complex and system improvement, lots of different ways of managing storm water better so we can relieve some of the situations we have now. we have upgrades at each of our treatment plants, north point, oceanside, and southeast, and we have a full rebuild at treasure island. that addresses the issue we were talking about with salt water interested -- entering the system so water can go out, but saw water cannot come in. the channel tunnel is a critical improvement, and we have also included on your outfall rehabilitation, and i'm going to go over some of these projects briefly. i also want to highlight what is not included because we always have to highlight that. there was definitely a lot of great feedback we got during the workshop process. but we're not looking at relocating south -- se plants. at a cost of with a $5 billion. we are not looking at a crosstown,, which would be about

$2 billion. we are not looking at rebuilding. we are looking at taking care of what we have now. we are not looking at replacing or building new things out to debate. we are looking at improvements. nutrient removal would be something that possibly may hit in the future, but it is out well into the future. that will be something we would have to address. we have put all the projects on a pie chart. if you look at this, we are at $5 billion with that list. what we are going to do now is talk to some of those projects, and i will have the support of our finance group in a little bit to talk about what the

financing costs are and how the program could be fully funded and when we look at some of the alternative funding programs, we can see what the financing costs would be to support the program. in addition to the $2 billion to address the biggest threats, which is the digestive facility, we have other issues. this is a 40-acre site, built back in 1952, and we have issues with structural seismic treatments, odor control. we have to replace some of the major inflow points. this is where the flows into the treatment plants. we have upgrades to mechanical equipment as well as architectural landscaping, but there is an awful lot of work that has to be done. some basic structural and seismic improvements so we can make sure the plan is going to be functional after an earthquake. each of those little dotted lines highlights some of the it

improvements included in the $730 million. oceanside improvement projects, about $250 million. there is upgrades to the west side pump station, which is just north of the treatment plants, upgrades to electrical implementation. once again, you see improvements to grit removal. we have tremendous problems with sand coming into the system through the transport problems -- process an hitting the plant ready hardware it can cause some real problems. also, there's a lot of wear on the mechanical equipment. we have to have enhanced ways of removing the sand from the treatment process. seismic upgrades as well. the north point plant is a 6.5- acre facility, and it is really in a residential business area. it is a pretty densely populated residential area.

gore control is a major concern that if this facility as well send joh. we are now the operators of the treatment plant but in the near future we will be ones that are holding the permits responsible. this is just being held together barely. we will need to rebuild this with a brand new facility. we expect the life of these to be about -- >> what about the rate payers and treasure island?

>> redevelopment plans called for about 4000 to 6000 units. then there is a small amount of mixed use commercial including a smaller hotel. >> would that be impacted by the governor's proposal to do away with this? >> it could be negatively impacted. >> the number might be -- >> that could change significantly depending on the economy as well as three development and finance. >> we are projecting what we are receiving income from those protected residents prefe? >> we went out in the 10-year financial plan and then we went out 20 years following that. we have assumed based on what is

the guest at -- best guess at this point. >> thank you. >> the pictures of treasure island are the least alarming. if we hold a permit, almost in respect of of what the rate of built out is, we have an obligation that we have to meet. that certainly affects our financing. that is a clear and present need.

this involves having industrial diverse. we anticipate this to have lights at about 50 years. that crosses the creak so there is some vulnerability there. i did not go into flooding as much as i could have but basically in we have flooding issues that hit many different neighborhoods. they have to do with the tributary area on how much below is moving towards a certain area. in some cases, we have physical obstructions.

we can do some improvements to reduce localized flooding which is with impact design or other system improvements. this is the result of our modeling. we will look at how the system is performing in wet weather. the full project list treatment systems we have our dollars in 2010 as well as those in a time of construction. what we have to do is lay them out in a schedule and escalate the price to the midpoint of construction. the total sum would