issues. one, what is the feedback? two, how much revenue are you getting? especially if there is revenue from other sources. those of the two items. to the extent that we were not getting additional revenues, we would not continue this program. amending the agreement on an annual review basis helps with the budget deficit so that we do not have to do things like cut service, avoiding the service issues of the past couple of years. we understand that there are concerns about this not being with merit. unfortunately, we will not be

getting incremental revenue because there is so much over for the fiscal year already. we are open to answering any questions you have. supervisor chu: just a quick question for me. in terms of the annual increase that occurs, 65% of revenue overall, the committee had asked the mta to go back to estimate the value of wrapping around the windows, half of a million dollars. >> that was the request, yes. >> -- supervisor chu: logically, what was the rationale around not providing any? >> this would be a question for the mta to address in the

deficit. they do not know what the market looks like at this point. the advertising market has not been stable for the past couple of years. in attempting to get incremental revenues, they were not willing to revisit the underlying agreement. supervisor kimsupervisor chu: wo the projected deficit, how have they been progressing at the board? >> this estimate was presented several months ago before the budget started. now i think, a supervisor, everyone is aware that almost

every year the mta has similar deficits. we do things informally, like not buying parts or materials. making the formal revenue increases and cuts to the budget, there has always been a deficit. adding to the random service revenue that we have, which frustrates others. i am hoping that we do not do this again this year. supervisor chu: when we do get passed the budget, what was the change that occurred that led to

the deficit? , >> one of the items was a garage ordinance to enforce pricing. unfortunately, and additionally, revenues in the reduction as budgeted, $500,000, something that you will not get it is not improved. the third area is the service to the system. more costly than we thought it would. services adding back to the incremental costs.

supervisor chu: i do look forward to the update on the balancing plans for the coming year. >> this states that tighten did not request this. it seemed that tightened its this both ways. on the one hand they are independently stating that there will be an additional $500,000. but they do not want to put it in the minimum annual guaranteed because they say the economy is on certain. so, there is no certainty. by approving this piece of legislation, they would pay no guaranteed consideration for being able to wrap the windows, even though the mta shows -- i see this as a win-win for a

tight upon. there is no certainty that we would get the additional revenues. as you know, there are all kinds of revenues. when you take that much on each facility, there is absolutely no tie in that they will keep track of this. they could wind up with more money. absolutely minimal revenue from this. we are stating that it should be in the minimum. or, at least, some portion of that $500,000. that is why the community did go back with this item. as mr. ford's memo states in the report on page 12, they refuse

to put that in the guarantee. the characterization was that titan did not really what this. that it was the mta that wanted this. on the bottom of page 8, under the proposed cut, the m.t.a. would receive no guarantee of any additional revenues from the titan outdoor. i am specifically talking about the $5,000 in the minimum annual guaranteed. supervisor chu: thank you. supervisor mirkarimi: to the chair, to mr. roh's, you mentioned -- i am trying to qualify this a bit more -- they resist the annual minimum

guaranteed because of the uncertainty of the economy. providing more uncertainty to that the economy. >> right now, under this existing agreement, they are paying 65% of gross revenues. it is a five-year contract. they had been exceeding, but in this particular case you would be providing the titan outdoor

with wrap the windows and they would guarantee no additional compensation to me. i do not think that that is a fair compensation for the city. supervisor chu: thank you. i am wondering if you can follow up. i do not know that the statement that they will not be providing revenue is accurate. kenny you explain that a bit? -- can you explain that a bit? >> i believe that this is the case, they will proceed as they have through fiscal year 2012 because of how they have in 2011. this, we believe, will be incremental and automatically increasing to 65%. what the budget analyst is increased -- indicating is that the dollar will get to 65%.

as we have demonstrated this past fiscal year. we believe that the mag will be reached. the budget analyst was indicating that in a situation where we do not hit it, internal revenue in that case would be correct, but we do not believe that to be the case. supervisor chu: with regards to the history and track record of payment to the mta, in recent years has been trending that we are receiving just a mag? or are we getting more? >> as you know, this is a new contract. they have exceeded it every two years. titan has been very aggressive.

we are actually now getting more than a mag. we are pretty happy with their performance. given that it -- supervisor chu: given that we have seen two years of revenue data, we saw the calculation of what was owed to us as not being a minimal guarantee. >> correct. they have hit the plus. supervisor chu: thank you. are there members of the public that wish to speak on this item? item number five? seeing no one, public comment this flows. colleagues, do we have a motion on this item? thoughts?

>> my vision is not that they are going to see the minimal guarantee at all. my position is that they are so confident, they are exceeding the minimum guarantee, why would they say they could generate $500,000 from muni without providing it in the minimum guarantee. it is not that they will not get additional revenues. i would be glad to respond to any questions. supervisor kim: this is a

question for [unintelligible] to get better understanding of the incentives for titan, if they were able to get the win, would they be charging additional amounts? or is it possible that they would not charge more, but they would have access to the windows? >> the market values covering the whole vehicle. basically, you have a moving advertisement on the streets that brings a lot of interest. we actually get incremental revenue above. the premium for that is incrementally much more. it is a much more prized advertising venue.

a couple of years ago we had apple, movie cameras, giving almost $200,000 for wrapping just one. because the premium market is so much higher. supervisor kim: is the concern that companies may not want to do the entire rap? or is the concern that they would charge more to wrap the windows? i guess i am trying to figure out if there is any way that tighten would sell the entire rap at the same price that they do without the windows.

>> we do not know how they sell the ads or the price that they charge. we are clear that advertisements the cover the entire vehicle have a much higher value. so, what titan is saying to us is that we know we have more money for you, we just do not know how much. because the market is rebounding now. because there is an annual review process, they do not want to put the number in. they would much rather continue under the current contract. we are trying to get this in place so that we can get the premium for 65%. supervisor kim: companies that

want to advertise, the concern is that they will not want the full wrath of? or that they will pay less? >> they wanted advertising budget that will support it. if there is an interest. the market is rebounding, but at this point they cannot identify market demand. the financial market, the movies, whoever they are reaching out to. that is the uncertainty. this amendment will be annually reviewed. the $500,000 estimate was our estimate so that we could address the budget issue. if they get $100,000, they get a significant number of complaints.

so, that trigger is available. saying look, we are not happy with the revenue that we got and we will love do this anymore. supervisor chu: supervisor kim: jig -- supervisor kim: is this amendment for one year? >> we were initially told that they would have to pull the system from this amendment on an annual basis. that is what the amendment would be. anywhere from one year to three years. supervisor chu: to clarify, it would last for the duration and every year of that provision? in one year the board has the ability to say -- never mind?

>> correct. supervisor chu: we opened and closed public comment already on this item. lots, colleagues? -- fox, colleagues? -- thoughts, colleagues? supervisor kim: i am not thrilled with this amendment, but i am willing to move forward. we have had a series of agreements and contracts come to the budget committee. really, they have been getting more challenging each time. we have tried to support the next one, and the next one. i would somewhat hesitantly support this again. if we are not reaching additional revenue, that it would then consider not

continuing for the last two years, moving forward with this today. we want to keep pushing on the mta to be a stronger negotiator for the city and the budget. supervisor chu: thank you. on this item i would echo the comments from supervisor cam. my first reaction was -- another one of these contracts. we have to evaluate it to see if we want to renegotiate. understanding that the budget already anticipated half of a million dollars for this, i would not be thrilled to add more to the budget item without knowing more. but i can pass this along with the knowledge that it is a

three-year agreement with one- year options to exit from it. i hope that the mta will reevaluate and if there is an opportunity to renegotiate, knowing that we will do so aggressively. on a larger message about bringing contracts forward to the board, as the supervisor said, it becomes harder and harder to agree to contracts that do not seem to be as advantageous. i know that there are changes occurring at the mta, but we want to make note of that as i do not know that this board and committee can continue to approve contracts. fat >> thank you, supervisors. we hear you loud and clear. supervisor chu: we have a motion to send it forward with recommendation. supervisor mirkarimi: what about without recommendation? supervisor kim: i can do that. supervisor chu: we have a motion

to send this forward without recommendation and we will do that without objection. thank you. item number six, please. >> item #6. resolution approving and authorizing the general manager of the san francisco public utilities commission to execute sewer system improvement program-funded agreement no. cs-165, program management services, with aecom-parsons joint venture, for an amount not to exceed $150,000,000 with a term of up to 15 years, under charter section 9.118. supervisor chu: thank you. for this item we have the public utilities commission. >> good morning, supervisors. as you may know, the puc is embarking on a water system improvement program, $4.6 million.

another program that we would like to give you more details about, the improvement program for $7 billion. i would like to invite the program director to give me an overview and talk about the item before you. thank you. >> good morning, supervisors. firstly, i would like to commend the budget analysts for their thorough analysis of this contract. we appreciate the solid endorsement, recommending approval of the contract. it is very critical to us. it will be assisted by the program management contract when it is upgraded. i thought that i could take a few minutes to give you an overview m. some highlights. if the i.t. folks could bring up the slide.

before that, i want to remind you that the last capital improvement work was the clean water program, planned in the 1970's. that did not compensate for the challenges that we have today. 12 years ago, when we were planning the water supply improvement program, it was contemplated that waste water capital improvements would be included. many critical improvements are needed urgently. i will walk through some of the details with you. basically, our first improvement program was constructed in the 1800's, leaving assets that are over 120 years old, operating in the ground. two of our largest treatment

plants are located in residential neighborhoods. they are utilizing 1940's technology. on the west side of the city we have the ocean side that has been in service 24/7 for the last 10 years. recently we have taken over operation of the treasure island treatment plant build back in the 60's. on an average day there are 77 rain gallons. during wet weather we handle storm dowland's as well. there are numerous issues for the system. seismic, aging infrastructure, and new issues with green infrastructure. climate change is also presenting challenges for us. rising sea levels and infiltration.

flooding, odors, noise, and stabilization rates are a big issue for the public. we want to have opportunities to enhance things for the public. with a brief overview on the level of service endorsed by the commission last july, this will be the guiding principle for regulatory compliance. flooding provides benefits to impacted communities and modification of the system for climate change, including economic stability. briefly, i want to overview the technical improvements that have been identified. there are approximately 20. we have systems to improve flooding screening in san francisco, better managing the eight watersheds in the city. we have improvements at each of the city's treatment plants.

as well as infrastructure to meet disposal requirements. additionally, infrastructure has not been updated since the earthquake and it has failed since then. i want to highlight a few of the projects you will be seeing over the next six months. the first is the bay bridge improvement project surrounded by central shops and water department yards. we have neighbors directly across the street. one of our most key projects is the new bio-solid strategy facility. you can see tend circles. one does not have a roof. it collapsed and failed. recently we lost another. if that continues, we will no longer be able to meet

regulatory requirements. the facility is located 20 feet from homes and businesses. they complain of older issues and visual impacts. we will be replacing the facility with a brand new facility, placing things much further from the public. another contract that you will be seeing is the central bayside improvement project, taking a look at the channel bass and in the city, looking at ways to improve storm water in the city. currently it is subject to flooding and other challenges. to be able to capture storm water and use that for groundwater recharge. how we are going to do that throughout the city is we are going to look at each of the drainage basins inside of san

francisco, utilizing and urban water framework approach that will utilize values for alternatives for storm water management to maximize the amount of water that can be treated at the treatment plants, including sales and permanent pavement, as well as what we call great infrastructure, including storage. we want to take advantage of opportunities where it is going to work to recharge ground water basins for non-portable supplies. supervisor chu: going back, what is the distinction between the green area and a lighter green area? >> id is a ridge line separating the city from north to south. if it falls on the right of that line [no audio]

the ridge line is the dark line in the middle that separates typography. if it falls on the right, it will drain into the bay. on the left it will end up in the pacific ocean. we have three basins on the west side, five basins on the east side. you can also see on their the historic creep, which is historic. that is a lot of the reason why we have some opportunities for daylight increase. taking advantage of the currents of storm water moving out of the system. there are programs that have been developed by staff to respond to the levels of service selected by the commission.