of mission bay, there is probably several hundred million dollars of work to be done there still. commissioner torres: you envision a city being approachable on creating its own funding? >> yes, part of what your looking at is -- part of what you are looking at is the city's response to moving forward without redevelopment. i think it is highly unlikely he would see a scenario with the city would not elect to be the successor entity for previous redevelopment activities. i think it is highly likely that you will see some type of phoenix rise from the ashes even if we are eliminated. >> the phoenix can only rise if the voters vote to approve it. what do you think that revenue stream would come from? >> there are a few. a couple of things on that. one is we spend half of our tax

increment in san francisco, and we are unique in this way, on affordable housing production. as you all probably know, the city, on a couple of occasions, has gone to the voters for general obligation bonds for the production of affordable housing. on both of those occasions, they did not get to the 2/3 that was necessary, but they were well over the 55% threshold that the governor is suggesting. there are those that believe that at least for affordable housing, the voters would be amenable to some type of bond issuance that would allow for affordable housing production. on the kind of infrastructure development side, again, infrastructure finance districts are emerging and people are talking about that as a more blunt tool, but one that could be used for the kinds of infrastructure investments that we have made in places like mission bay and hope to make at treasure island. that wouldcommissioner torres: .

>> commissioners? >> thank you. that is very informative. i guess there is the development we will be losing now because of the affordable housing units that were envisioned. do you foresee that happening at this point in this and scenario? >> no. we've already signed that this position and development agreement already and it would be under the affordable housing obligation. the first thing that is happening in the shipyard is the development of housing, which will represent the most significant affordable housing in the project. president vietor: but overall, that would be one of the greater losses among others?

>> yes. president vietor: thank you so much. we really appreciate the update. public comment on the general manager's report? hearing none, next item, please. >> the next item is the bay area water conservation project. >> because you have a long agenda, i will keep my remarks brief. in response to commissioner caen's question earlier, you asked for a response from the staff on implementing the agreement. i will have comments and some recommendations for consideration little on with the other items. i will keep my presentation sure this afternoon -- short this

afternoon. president vietor: questions, comments? hearing none, next item, please. >> the next item is the consent calendar. and approve months -- for upgrade services for the east bay and delta electric. the proven awards contracts for upgrade services to san francisco and east bay area's 42nd lowest qualified responsible and responsive bidder -- in light energy- efficient lighting. this is the second of three mining efficiency contracts issued under one bid opening. approved amendment 1 to infrastructure division, to

capture and maintain evidence of an information about the business activities in transactions to run the environmental, planning, design, construction of capital programs and projects, including the water system improvement program projects for a total agreement duration of four years in six months. approved amendment 1 to waste water enterprise -- our water our world program administration to maintain and expand san fran -- san francisco public utilities to execute this amendment, increasing the agreement by $10,000 for a total not to exceed agreement amount of $24,000 with a time extension of one year.

approve modification one to waste water in prize for payment renovation with precision engineering to replace the existing sewer and street pavement on hayes street and two other streets. the existing sewer was inspected and found to have numerous critical deficiencies which could result in failure of the sioux were. this modification is being added to this contract in order to courtney with the mta service change. the sewer replacement will correspond with the replacement of the 120-year-old sewer line. approve these plans and specifications and award winner with water enterprise, capital improvement program for the

lowest, qualified, response o-- responsive bidder. approve modification one to power enterprise, with emcor services/mesa energy systems, increasing the contract with the time extension. this contract modification will allow for continued energy efficiency repair and renovation of mechanical systems at city- owned facilities. madam president, staff has requested by m -- item 455 the removed from the consent calendar if there are no other objections, we did make the changes to ww455.

president vietor: i would like to move the item. >> second. president vietor: all those in favor, signify by saying aye. thank you. now, we will take 9e, please. >> in the general manager for waste water. for reasons related to environmental review, the paving of the utility's streets will be deferred until the categorical exemption has been approved. we would appreciate moving the sign and forward -- moving this item for word.

president vietor: is there a motion to approve it? >> so moved. president vietor: second? this was a last-minute change. i want to see if there are public comments on this item. seeing none, all in favor? >> i have a question. president vietor: yes? >> what neighborhood are these wonderful streets in? russian avenue. president vietor: thank you. next item, please. >> the next item is the beginning of regular business. presentation and discussion of the revenue bond oversight committee annual report and audit program. >> commissioners, ms. brown has been the chair of the oversight

committee for 10 years and we thought it appropriate for her to give her report today. a lot of items will relate to how will we spend our money, particularly. thank you for being here. president vietor: before you start, and want to thank you for all the work your oversight committee does. we appreciate you. >> hello to all those who know me and for the commissioners to do not -- i am amy brown. i will go through it quickly, because i have been informed you have a full agenda today. i am mainly going to bring you up-to-date on our recent activities. just in case there is someone in our audience who does not know, we are a committee mandated under prop p, and our goal is to

ensure revenue funds are spent appropriately and provide oversight for water, waste water, and power. we are focused on the wsip program because not a lot of other bonds have been issued for the other programs yet. there are seven members on the committee. we have a variety of experience, based on our backgrounds. mainly economics, environment, construction management, auditing and come up finance experience. this is the first time since 2004 we have had a full committee membership. there has always been one or two spots vacant. so, it has been very helpful to of a full committee. the new members have jumped in and helped propel our activity for word.

-- forward. the first manager is kevin chang. he is a former management consultant. he has been with us for one year. second, ian hart. he joined us in december of last year. he was a senior analyst at the budget office and he has conducted reviews of your budget in the past, as well as related legislation. about two months ago -- many of you might know him. he has held a number of positions in the city last 25 years, including the former finance director at san francisco airport. for a time he worked at the puc itself.

our final new member is john, the bawsca representative and the senior analyst for them. everyone else on this committee has been there since the beginning. as such, we are turned out at the end of the year. so these new members are the faces you will be seeing in the future. just as a reminder, the key charge is that we are to make sure you are spending your funds legally and to make sure the bond proceeds -- be primarily due this through our independent reviews which are financed by a small percentage of the bond proceeds. we currently have about $1.2 million in the bank to do this. that seems like a lot of money,

but just like your work, on the trajectory that is done, we have done a lot of prep work, but now we are going to have to really follow a dynamic path in a construction program. just as a reminder, we have done three previous independent reviews. the first one in 2006 when we were just doing your commercial paper program. this was followed by a report in 2006 which builds upon that and included the wider range of projects and the noted the changes from the 2006 projected budget to the 2005 adopted budget, and the third review was of the sunset reservoir. we mainly focused on one major

project to go through a lot of the project schedule budget and other compliance measures. our committee and your staff have worked collaborative lee with the main focus on the bond funds spent according to your authorization. we of also endeavored to provide value-added input to puc. this is based on the first report. it was difficult for our consultant to go from the first budgets to be adopted budget. staff is taking much more detailed reports of any changes that occurred during each specific projects, each specific product from planning to completion so that other independent bodies will be able

to follow those changes. our second, another example is recommended on our last report, key indicators which have been incorporated into your quarterly report. i would like to compliment you and your staff on the new format of the quarterly report because it is much easier to follow for people who were not doing it on a day-to-day basis. so, last year, we held committee meetings about every month, and we now have our rotation between julie labonte reports on the quarterly report and then we have a construction and construction management report the following month and we just keep going. we obviously have regular updates on your financing

program, but we also have a number of topics for education. for instance, the hydrological model. we tried to do a site tour of the different projects every year. the major focus of last year has been on our objectives and 40's, our task assignments -- our objectives and priorities, our task assignments. as you are aware, contract thing in the city is always complex, and never more so than for an independent committee with minor staffing support. i am not going to bore you with the challenges we have faced. i am just going to quickly go through the next page. but we have several options to go through in order to actually get it out. we are working with csa in order

to produce -- to facilitate our hiring of independent consultants. >> the comptroller -- controller city services auditor. >> we have been meeting twice a month. we have been meeting between these meetings so our views can match your level of increased activity. in order to maximize the benefit, and want to summarize our audit objectives. -- i want to summarize our audit objectives. to provide the oversight/ prop p, that bond proceeds are expended efficiently and effectively, and lessons learned

can be applied to other puc projects. i also want to point out working with julie labonte, we have been working with her and her staff to prevent duplicative the work with other panels. just yesterday, we formally voted to start an examination of project expenditures and program managing costs. we are going to be looking among regional, local, and smaller, larger projects. to get started. once we are completing those, based on what is happening with different projects, we will be picking another representative in an ongoing process once we get those consultants on board.

also depending on the yellow or red light status of the quarterly report. the second area, priority we have is to evaluate change orders and contingencies and their effectiveness in risk- management programs. similar to the first example, our sampling, we will be doing a sampling project, and then sort of rotating through the program. as i said, these are our first priorities. there is a much longer list. we will be delivered -- developing much longer proposals. to ensure they are helpful to both the puc and the public.

the final focus in the upcoming year is going to be to work with the board of supervisors to extend our sunset date, which is currently january 1, 2013. it was initially meant to coincide with the completion of your program, and instead to an sods with the -- and instead coincides with the heavy construction in the wsip program. we will be asking for your support in this extension, because we continue to ensure the public of your compliance. secondly, we work with your staff to resolve challenges, and third, we do like to partner with the puc in developing the lessons learned so that future bonds are spent even more effectively.

that is my report for this year. i am happy to entertain any questions. president vietor: thank you. commissioners, questions? commissioner moran? vice president moran: i do not think i have any questions. i appreciate your comment about the quarterly reports, and i think that report has created a transparency to our process that i think is a standing, frankly. in the public sector. and i am very pleased to have done that. >> yes, i would like to echo that as well. please feel free to come back to us so we can consider extending your terms. it has been very useful having you. we would like to continue the relationship of possible. commissioners?

>> i would like to comment on page 11 of background material where you list all the different topics that you will be addressing in the future. it is overwhelming. i can come thank you. -- again, thank you. >> this was a wish list. that is why we developed the different criteria for prioritizing periods -- for prioritizing. we're trying to combine a lot of them together. you know, we are really scoping out the project. it is difficult. president vietor: thank you very much. are there any public comments on the presentation? next item, please.

>> item 11, discussion of possible action authorizing the planned issuance of a principal amount of $7 million in water revenue bonds under proposition e to fund the wsip and other water in a press capital projects in one -- in more -- in one or more series of bonds in subject of further approval of the board of supervisors periods delegating to the general manager authorization to award each series of bonds to the highest bidder, authorizing the general manager to submit a resolution to the board of supervisors authorizing the issuance not to accede $700 million aggregate principal amount of water revenue bonds, and with this resolution serving as an inducement resolution with the california

debt limit allocation committee, authorizing the general manager to submit an application requesting volume capacity to authorize the use of lower-cost on capacity for a portion of private use activity, and of rising general manager to request the board of supervisors to consider an ordinance approving the issuance and sale of additional water revenue bonds not to exceed $49,100,000 by the commission pursuant to proposition e and associated financing costs in adopting findings pursuant to the california environmental quality act. >> i feel more comfortable knowing the chair of the bond oversight revenue committee is here. would you like to go ahead? >> yes.

i of four slides. this is a very unique item. you look at half a million dollars in bonds every quarter or so. we are here requesting $700 million. so, four slides. the first one summarizes the program. we are asking for your approval today. this goes to the budget finance committee, as all our bonds due. -- do. it is a competitive sale. we would need the cash in early august furious -- in early august. our program sunsetted on

december 31. in the marketplace, tax exempt bonds are available. we will need $565 million for the equipment program. that will complement the already $2.7 billion for the water system improvement program. in addition to that, we need $31 million for the hetch hetchy water improvement project and $38 million, as you've seen in your annual budget, $38 million for local water mains. we project a bar when costs of 5% to 5.5%. we have requested a four-year term on the bonds. we will review the terms of the bonds and go through all the materials.

this is a very large packet which is familiar to you. this is consistent with the previously-approved ordnances by the board of supervisors, and we will be going back to them as we go before them for our budget, also authorizing resolutions for capital funding for that program. the use of proceeds is summarize for you on slide four, and this shows that on average, in the far right column, 74 cents of every dollar goes to pay for the project be our building. the remainder goes to interest costs, debt service reserve, and a small amount for ensured cost, and also a very small amount to the revenue bond oversight committee and their auditing of our bond program.

the forms of agreement are long, but they are very usual. the official statement goes through all the revenue projections, which you are familiar with. supplemental indentures -- the official notice of sale and bond purchase agreements, the company agreement, and the board request for additional bonds and authority. we also provided an updated report on events in the marketplace. what is new is after the spring amendments takes effect -- that is the one your proof of few months ago -- that is one you approved several months ago. that will improve our interest rates. we are expecting this to occur. in addition, i want