supervisor chu: welcome to the expanded budget and finance committee meeting. do we have any announcements today? >> yes, please turn off all cell phones. if you wish to speak during public comment, please fill out a speaker card and an them in to myself. if you submit documents to the committee, please provide a copy to the clerk for inclusion into the file. items acted upon today will appear on the border supervisors' agenda on june 2,

2011, unless otherwise stated -- the board of supervisors' agenda. item one, resolution authorizing the office of contract administration to enter into the first amendment between the city and en pointe technology sales in which the amendment shall increase the contract amount from $24 million to $28 million an update certain standard contractual clauses. >> we are requesting to increase the contract from $24 million $28 million for information technology products. i am here to answer any questions. supervisor chu: would you speak more about the proposal for the benefits of members of the public who may be watching? >> the resolution is for a product-only contract with en pointe. expenditures average $775,000 per month since january 2009

when the contract was entered into. the contract is capped at $24 million. expenditures are projected through the end of the contract in december to reach nearly $27.9 million. this contract is part of the technology store, which is made up of four vendors for services, three vendors for products, and a pilot program consisting of seven micro lbe set aside contracts for small local businesses set aside by hrc. there's no set scope of work, and city orders work on an as- needed basis. funding provided by individual department budgets, which are approved by the board of supervisors in annual budget process. the correct contract term ends december 31, 2011, and it also has options to extend up to two years. supervisor chu: thank you very much.

we have a budget analyst report on this item. >> madam chair, and members of the committee, based on our review and analysis, this requested $4 million increase of expenditure authorization is justified based on the actual and projected expenditures in order to keep the contract in place through its ending term of december 31, 2011. as the department indicated, all expenditures would be subject to separate appropriation approval by the board of supervisors. we recommend that you approve this resolution. supervisor chu: thank you very much. why don't we open up for public comment? are there and it -- any members of the public who wish to speak on this item? seeing none, public comment is closed. can we move this forward without objection? thank you. i know that supervisor mirkarimi is interested in participating in the conversation, so why don't we skipped over to item 3 first? >> item 3, resolution

determining and declaring that the public interest and necessity demand repaving and reconstruction of roads, the rehabilitation and seismic approve of st. structures, the replacement sidewalks, the installation and innovation occurred rams, the redesign of street kids to look for a pedestrian and bicycle safety improvements, and the construction, rehabilitation, and renovation of traffic infrastructure and the payment of related costs necessary or convenient for the foregoing purposes -- finding that the estimated cost of 2400 million dollars for such improvements is and will be too great to be paid out of the ordinary annual income and revenue of the city and county of san francisco and will require incurring bonded indebtedness. supervisor chu: thank you very much. i believe the director of dpw wanted to be here to present for this, but unfortunately, he had a conflict. however, we do have someone

stepping in in his stead. i believe he is at gao and is heading over, so we will give him a bit of time. >> fortunately, it was not a long trip. i am the manager of finance, the budget, and performance at the department of public works. we have a power point presentation today.

all right, i am ready to go. we are here today to talk about the proposed $248 million general obligation bond. before you today is the resolution of public interest and necessity, which is necessary before this bond can go forward to the voters. in a few weeks will be the actual ordinance calling for the bond election, and that is where the final decisions about what the bond will consist of will be made. i want to talk through a little bit about why we're here and why we are talking about bond financing for the streets. early in my tenure at public works, before 2006-2007, we were having a crisis in our funding of streets and right of way programs and all the spending

about $17 million a year. since that year, our funding has gone up to about $40 million a year on average from all sources, and that has been enough funding to stave off the decline in the condition of our streets. we have been pretty much holding steady in the condition of streets for the last four years. before that, we were seeing a steady decline over the previous years. since 2006-2007, we have had funding that has come in to us from a large general fund supplemental appropriation in 2006. we have gotten state bond money, state general obligation bond money, which provided an influx, and we got quite a bit of arra money, the federal stimulus money. in addition, as those forces

were running out, and they were really one-time kinds of sources in many cases, the city's capital plan recommended general fund or gas tax-supported debt. we have done two rounds of cop issuances, and those absurd to maintain the quality of streets in san francisco and prevent us from what we say is kind of falling off the cliff where the streets begin to deteriorate much more quickly and they become much more expensive. this is a chart that shows -- you can see pretty dramatically in the early years how we were falling below the line that we needed to be back in order to improve the condition of our streets, and then we have seen funding kind of increase. this bond, if you look back fiscal years 2011-2012, 2012-

2013, and 2013-2014, will provide with other resources that are available to us to keep us on track to improve the condition of our streets. after the three years that this bond provides, the capital plan calls for a long term dedicated funding source, and i will talk a little bit about that later. the former mayor and the president of this board of supervisors convened a street resurfacing finance working group as a subcommittee of the capital planning committee, which included members outside the city family, the chamber of commerce, spur, and a number of other organizations that work along with city staff from public works, the mta, capital planning, to come up with a number of alternatives for a long-term source, but we are not there yet. in order to insure that we're

continuing to do the work we need to do on the streets, we believe and the capital plan believes that a general obligation bond is necessary. so i'm going to talk a little bit about why we are proposing go bond for streets at this time. we believe >> -- we believe -- supervisor wiener: just a question. to be clear, without this bond, what is the anticipated annual spending in the next couple of years? about $20 million? >> it is in the range of about $25 million. >> that is cutting it basically almost in half what we have been spending. and that it is in half of what we have been spending and less than half of what we are proposing to spend. supervisor wiener: so the roads will start to deteriorate again?

>> yes, we anticipate -- right now, and i do not know if you are all familiar with -- we have a pavement condition index, and we actually go and measure the condition of every street in the city. we have nearly 12,000 street segments, and we score it on a scale of 0 to 100, and we have a pavement conditions for right now of 63, which is considered fair. in just three years, it's the bond -- of the bond is not approved, the average score will go down to 61, so we are actually going to start seeing deterioration of the streets. as i'm going to mention, frequently, if we do not intervene now and prevent that kind of deterioration, bringing them back up, doing a repaving job is much more expensive. >> i think our score in the early 1980's was somewhere in the 80's. is that right?

>> that is right. supervisor wiener: so we have seen a dramatic deterioration in the last 30 years. >> we have. honestly, it is a problem across the state of california, but san francisco has been doing a very good job in maintaining the conditions of streets. we just stop prioritizing it as a city in the last 15 or 20 years. supervisor chu: on the graph, it shows a pretty significant decline, i think, in sales tax going toward the funding of street resurfacing. i imagine that is just the changing of the programmatic details about what can be spent in the new prop k. >> it is two things that happen. under prop b, we were getting

between $13,000,000.13000000 dollars a year, but when the sales tax was weak -- reauthorize as prop k, the annual amount dropped to $4.8 million -- we were getting between $13 million and $15 million a year. to prevent us from falling off a cliff then, we actually accelerated some of the money for three years from prop k, and it means that going forward, we only have about $3 million a year from the sales tax because of that acceleration. supervisor chu: with the recent passage of the $10 per vehicle fee, we have integrated into these projections about available funding? >> that is $2.5 million a year, and that is included here.

street resurfacing is receiving -- is slated to receive half of the. vehicle registration fee funds, only about $2.5 million a year. so we believe that the proposed general obligation bond is a short-term, fiscally responsible solution, which will spread the cost of fixing our infrastructure over the life of the assets. in san francisco, street maintenance -- and when we say maintenance, we need packaging and bottling -- reached -- we mean patching and potholing -- street repaving is a capital improvement and our streets have a useful life of between 20 years and 30 years, said debt financing for street repaving is, we believe, a very sensible fiscal policy because of the

fact that if we fail to make investments now, the costs are going to be much higher. not in the long term, but in the near term. supervisor wiener: i really would like some more explanation. i agree with you. i think it is completely appropriate to do this capital work using bonding, but there is a notion out there shared by at least some people in the electorate and some of my colleagues, that it is -- that everything relating to streets -- everything -- has to be paid for from the general fund. it is just an ordinary, ongoing expense, and it is completely inappropriate to pay for it by avon. no matter what kind of street work is, it has to be only paid for through general fund. i am seeing a little extreme,