hanson did not comply with this lease. one out of four tested had misreported the royalty rates. potential recovery -- 479,000 plus and we are pending further information, such as supporting documentation from hanson and input from the city attorney. the majority of the potential recovery amount is based on the auditor's review of the tell a royalty payment, documentation during which it identified a number of issues with the methodology used to calculate royalties. in this particular area, we found that there were a lot of numbers that did not match. their methodology was not consistent.

we did a lot of in-depth review and it was very difficult to ascertain what they should be paying. the other significant portion of this amount $200,000 is based on a term that requires hanson to reimburse. hanson has potentially understated gross revenues under the lease by 2.25% and may need to reimburse the puc for audit costs. with regards to lost revenue recovery, there was $2 million that was identified by the auditors. in other words, the puc cannot collect this amount and this total is based on the following. two of the lease is technically required both brent and royalty. however, in the case of one of those cases, only some rent was

ever collected under that lease. the result was $1.78 million in lost revenue to the puc. the puc has raised concern that the intent of the original parties was never to collect both rents and royalties under this lease. this was evident early on. based on discussions with the deputy city attorney, it's the auditor's opinion that a technical reading of the lease includes both rent and royalty. further consideration would be needed in determining intent and is unlikely that the city could not collect any rent owed under the -- due to the puc's early interpretation of how it has handled the lease. the puc also put another one of its leases, which expired in 1998, in holdover status. however, because it only had a

royalty payment term and the mine was an active, the puc has not received any compensation for the land and over 10 years, even though the laiseasee continues to use the land as storage. from this business perspective, it is receiving a good royalty rate and the rent for mission valley route. according to the puc, this is an issue of needing to do a better job of amending and combining its lease is going forward. as the auditors, we looked at each of those separately. the audit also found that the puc real estate division did not properly managed its leases. it did not monitor compliance with all lease terms, tenant rent, deductions, and did not

have an adequate system. it had an unsort of will spread sheet and not all these provisions were included. the way in which they were managing the tools and did not allow for good management of its leases. our key recommendation was collect amounts owed and determine if hanson should reimburse the puc for audit costs. the impact -- the puc may collect $634,000 from hanson. it will ensure that all payments are received. the puc has proposed a staffing rework for real estate services.

our final audit with the puc in this time period is the construction of tesla. due to the audit shop personnel lack of experience, we chose to bring in a consultant to assist with this. according to audit standards, when we look at doing an audit, we look at collectively, do we have the expertise and experience to conduct the required audit? if not, then we bring in a consultant to assist with us and to be part of the team. in this team, we brought them in, this consulting team. along with them, we had two audit staff that worked with this organization. we selected one construction project that is a regional construction project and is currently in process.

it is using the system, the tesla waters treatment facility. one used the older or more manual system, which was the east-west transition name. the contract was awarded and is $81.4 billion design-build contract. the objectives of the audit were to determine if each of the contractors complied with their construction contracts and to evaluate the puc's management of the two construction contracts. in terms of findings, we had a positive finding. there were no exceptions found. in other words, we found that the contractor complied with their contracts and the puc did a good job managing the state of construction projects. the puc employed construction

management best practices on both projects. both with and without the new system. with the manual system and with the new system, they had great practices. the audit found that the project and contract oversight -- the puc staff and contractors identified a couple minor areas within the cmis system that could be improved. for example, there is some redundancy and duplicative efforts in the policy regarding records. reporting needs are not been addressed for all levels of management and staff. there is contracting processing backlogs. the need to designate one computer solely for cmis and the labor-intensive they that is slowing processing. there's no current link between progress payments made and rent

reported -- rent recorded. for example, are city-wide accounting system. cmis user groups do not occur consistently, which would increase the understanding and usability of cmis overall. our recommendations, not use a change orders in lieu of issuing rfp's. the puc paid 16% more than the original contract, which the original contract amount was $19.9 million. this was for phase two being added to the contract. although this is a high increase, the auditors found that all appropriate reviews occurred and contract modifications were approved. the decisions made were well

documented and reported on threw out the duration. the puc should determine if cmis rates applicable to the other water system improvement programs. the impact -- the puc employ good project management practices on these projects and the puc has reestablished its cmis users group. and just for note, for 11-12, we are already in the progress of planning our audit with the puc. a couple that have been noted is the asset management performance audit that we are considering and another audit of the water system improvement. we are completed. thank you very much. supervisor campos: thank you very much for your presentation.

colleagues, i do not know if you have any questions for the comptroller -- controller's office. why don't we let the puc provide additional comments. we know you are working with the comptroller -- controller's office. >> i would like to point out our gratitude to the office and the city services auditor. this speaks well for the city and county and our financial transparency and our willingness and ability to report things when they do not go so well, as well as when they are going well. that gives the public and our lot of fighters ability to see a great deal of confidence in the institution. the puc takes all the findings very seriously. we highlighted a great deal and discussed some areas of real estate that are not going well. we have put mitigation measures into place.

we are also fully implementing our upgrades with the maximo. we went live on monday with 7.0 , as well as our peril system, the 311 system. that's good news to report. as i mentioned before, we are overseen, including this body, about 10 different entities and bodies, and we will continue to do our quarterly reporting to the commission showing where we are doing well, as well as where we need to do better. absent are real estate department, things are going very well at the puc. i'm pleased to report that things are on track. we are spending between $10 million to $40 million per week on the water system improvement system. we have borrowed money at record low rates. we have walked those in at fixed

rates. there's a lot to be proud of for the puc. supervisor campos: supervisors, any comments? supervisor chiu: just one question. i think it is very clear that the puc is already moving to address these issues. in terms of a time line, maybe it makes sense for the controller's office and the puc to come back to this committee in the future to talk about where things are in terms of responding to the concerns that have been identified. i do not know what would be a good time line in terms of making sure you have sufficient time to address all of the recommendations. >> we meet monthly and go through every one of those items internally with staff. then we were poured out quarterly, and in the till, to

our own commission. it is whatever the will of this body is, we will make sure we do that. >> maybe we can work with your office. your office and my office. we can bring you back in the next few months so not only the committee, but the public has the benefit of hearing about the steps that will have been taken by that point to address these issues. >> thank you. supervisor campos: thank you very much. thank you to the controller's office. yes? you wanted to add something. >> yes, traditionally, we do a six month, twelvemonth, and two- year follow up where the departments provide an action plan. we have a unique relationship with the puc. yes, we do meet once a month, but we do have this standard protocol. supervisor campos: maybe we can come back after six months and

see where it is. >> that would be fine. supervisor campos: we can coordinate in terms of the exact timing. i think it makes sense to do it after six months. that will have given them some time to implement some of the changes. >> thank you. supervisor campos: thank you very much. thank you, again, to the puc and to the controller's office for your good work and very thorough presentation. colleagues, any other questions? why don't we open it up to public comment? is there any member of the public who would like to speak? seeing none, public comment is closed three colleagues, why don't we continue this to the call of the chair so we can bring it back? we have a motion by supervisor farrell. without objection. madam clark, do we have any further business? >> no, mr. chairman. supervisor campos: great.

enjoy your weekend. have a good time. >> welcome to "culturewire." on this episode, the director of cultural affairs takes us on a field trip to the mission district to check out odc's new 36,000 square foot campus, the largest in the region.

>> for san franciscans, odc has a very significant significance. stands for a venerable performing arts organization celebrating its 40th anniversary of bringing fans and theaters to the bay area. standing with me today on "culturewire" is the theater director of odc. thank you for joining us. i mention that this is the 40th anniversary. >> it is indeed. >> i'm standing with you in a fabulous theater that was completed six months ago in time for this anniversary. tell me about how it has been going for the last six months. >> absolutely. in terms of the anniversary, the dance company, which is our founding body, is celebrating its 40th anniversary, and it is

the 30th anniversary, so it is historic for both sides, and the completion of the theater represents in some ways the completion of our entire campus that began in 2005. it has come to its fruition with the completion of the theater. the theater opening was remarkable. one of the things we wanted to do was to make sure that our community really truly -- our san francisco bay area community understood that this theater was for them. we invited 31 bay area companies to do a day-long performance marathon, so we really launched with a feeling of this is for everyone in this community. it was a tremendous thing to bring everyone together around the opening of this building. >> you are part of our creative troika, including the founder, brenda wey and k.t. nelson.

talk about what it is like to keep this campus going. >> it is a wonderful thing to be working with someone who is certainly your co-worker and also largely your mentor. i inherited the theater at a funny time in its life. it needed to make some decisions as an institution about what it wanted to be. whether it wanted to be exclusively a rental facility, it is needed to be a rehearsal space with a really high ceilings -- whatever it was, having that level of leadership that my founding director is also my boss really made that possible. i really felt like i had great stewardship and we were able to make really innovative decisions for how the theater could grow over the decade. >> living with -- living with someone who is both your immediate boss and also a working artist is also a huge asset.

that is one of the things that keeps the creativity flowing through odc. it is a campus about the creative process at all times. >> the theater was part of a second phase of capital fund raising and community support. the previous one had renovated the space where the rehearsal studios are and the school is, sell what does that sort of say about the importance of the odc in the community? >> i think it's spoke to the two very different tracks of our organization. part of what we do is education and outreach. part of what we do is performance on the part of our company, odc dance, and a third part of what we do is this presenting an incubation stage. when we came to people to talk about the theater as a second investment after having built the dance commons, the distinct purpose of the theater really came through. what we were going to do with our venue was invest deeply in

creativity, deeply in our regional artists, and we were going to do something that most mid-size san francisco venues have struggled to do. >> talk to me a little about the group other than odc that have used this space. >> one of the great pleasures in our opening season was to go back and invite two of our former resident artists to launch this space. arab laung was to invite two of the best known -- our launch was to invite two of the best known companies in the city to share in the event, and it was really exceptional. these are companies that i have worked with and the organization has worked with releases they were either newborn or just a few years old, and to go back to that roster and invite two of our really major home town honeys to open a theater and be able to treat them as the

professionals they have become with this opportunity, with this menu, and with the resources that were available was really a full circle experience for both of us. >> now that the theater has been fully renovated, where is it going? >> i believe that san francisco is in some ways to the nation what odc is to san francisco, which is to say that i believe the west coast is the hotbed for innovation. i think it is where major cultural innovations happen, where huge ideas are born and often raised up. it may not often be the marketplace that other major metropolitan areas are, but i do think is the center of where creativity sits. i think that what odc can do by becoming this level of institution is raise the platform of san francisco. i name -- in many ways, it is sort of a death process, but

putting an artist in contact with recording artists, with other major areas, with exchange companies around the country and the world will become a central part of what we do. >> it is clear that now there is a campus that has been built out and filled in, that odc is playing this fabulous supportive and incubated role, both for san francisco, the bay area, and the country. thank you so much for being part of "culturewire." >> my pleasure. >> and for contributing so much to the performing arts of our city. >> for more information, visit odc