since you have approved the revised budget, we have had few variances. the largest one is the still valley treatment plant, improving the contingency for that project. i explained it to you at the time that we added additional costs associated through different cost categories. the biggest one was the differing site conditions. whenever you prove -- build improvements in a facility, that is a typical challenge. there is a small cost variance for the number for projects in which you have improved contingencies for. cost increases also refer to site conditions. mostly the need to build additional erosion protection in a quarry. discharged to the quarry, we

have an agreement with the corey operator. on the positive side, we reported significant cost savings in the project. things are being moved to management reserve. we also realize cost savings on to projects that are being completed. the university will moderate the project. it goes without saying that you will encounter your fair share of challenges. we are looking at minimizing the schedule impact as well as cost. the issues we have encountered in the field funnel into four different categories and that is

typical of any large infrastructure project. the issue of unforeseen conditions. whenever you have a project that has a lot of underground work, you have risks associated with the fact that you might encounter conditions that were not expected. you cannot perform these every two feet. you have a water treatment plant, the geology turned out to be different. there is also assumptions you need to make based on contamination, based on available data and preliminary assessments. whenever you work in a very urban industrialized tight area, you will run into contamination that was contaminated. the other situation that happens

is when protected species find their way to our project sites, that is not always easy to control. finally, whenever you do improvements on facilities that were built in the late 1800's, early 1900's, you don't always have the best records. we build our improvements based on what we believe the infrastructure is to be. the low or foundation of the dam was shown in the drawings. on the environmental side, the environmental requirements may change during the multiple year of the project. a good example is that you use storm management requirements that were imposed by the regional board last year which has impacted some of our

contracts. then, the documents and the missions. when you have the documents that total may be 1000 shrines, thousands of specifications, it is challenging to make sure that you cross check everything. there are references back-and- forth between those drawings and specifications. if there is a slight amount of issues with clarity and specificity, when there is issues like that, they always rule against the owner. it is always that the contractor is right. if the contract is not perfect,

that can be an issue. when we uncover existing utilities, we realize that some of the hour improvements might not be as good of a shape as they are. we should fix what needs to be fixed right away and the challenge is if you try to bring a different contractor, it might not be possible. there is times wynn additional work is minimal. those issues are coming up now more and more and we have a good management reserve and we still fall well within the original estimates. we need to stay on our toes in the larger projects which are starting to roll in and we will definitely see more of those

types of challenges. some of the more challenging projects are now well on their way. with that said, the dam will not be an easy project. to counterbalance that, there is a lot of great achievements. after a year of field work, as i mentioned last time, i started excavation of the bay tunnel. i attended a meeting which show the progress which had been performing as planned. we made the crossing under the pipeline which was a sensitive type of operation. i felt good about that. some workers safety issues regarding two of our tunnels, we took that feedback very seriously. we undertook a full assessment

of the situation and took immediate corrective action. the feedback is that they are very satisfied with how we have been responding. despite a number of field challenges. we have reached important milestones. we are starting the testing of the eastern segment and we also are well on our way to restore the right of way both on the east bay and the peninsula. we are doing extremely well on the systems shut down. we are up to 75 successful shutdowns without any major hiccups. also noteworthy is that we have a number of facilities where we

have full use and that does increase our systems reliability and operational systems. last week, we received an award for the 2011 civil engineering project of the year from the american society of civil engineers. i was extremely proud to receive the award. we had city staff who were supported by great consultants. today, we will be seeking your approval for the clothes out of

the new crystal springs bypassed tunnel. at the first meeting in october, we will ask your approval for increase contingency on the east bay's to segment. we encountered a number of unforeseen side conditions and we underestimated some of the work requirements. the bad news is that this contract, it is 95% complete and this is pretty much on schedule. the overall cost even when you count the change orders, this would be under the estimate for this work. for we will seek your approval for the clothes out of another project in the san joaquin region. that is all i have for you today. >> any questions?

>> it very impressive. it amazes me that we have all of these shutdowns without any problems. >> believe me, this is the highest risk on the program and i think the water and a price deserves all of the credit. >> thank you very much. "thank you. >> that concludes the general managers' report. >> any further comments? >> we have no speaker cards. >> the next item is the bay area ãsupply and conservation agency report. >> good afternoon. i do have comments on the

general managers' report. first of all, let me follow up on something that came up. the commissioner asked for copies of documents that i have referred to. you might have received those. i have those here and i should have given them to michael before. it is always a pleasure to see -- i find his reports informative and sobering. he spoke about the federal budget process. i learned how little discretion actually has. today was even more so in terms of the financial status and the challenges that people faced. i think that from our perspective, it is important

that you don't rely on federal funds and you are able to proceed. you have gotten all of the permits out of the way. we can only wish you good luck. with respect to the water system it improvement program, our board met last week. david briggs was there and had some comments about the shutdown schedule which is very encouraging. also the work he has done and his staff has done looking at the crossings of the pipeline in your system. his report was encouraging that. we are very encouraged with the risk. we are very encouraged with the containment.

we had comments about the commission and your actions in incorporating some of the recommendations. compliments to julie, ed, your entire staff. the member was quite pessimistic and did not quite think we would see this much under control. we have met with julie and i've talked about some refinements to the report. these are minor and they pale in comparison to the great work you are doing. thank you very much. >> are there any questions. >> i am attending the millbrae's city council meeting tonight and we are giving an update. >> are there any public comments? >> we have no speaker cards.

>> next item. >> this will be the consent calendar. all items listed are considered to be retained and will be acted upon by a single book. host -- by a single vote, a, approved the plan specifications and award wastewater enterprise, renewable replacement contracts. b, approved amendment number 22 water emprise, water system improvement program to execute this amendment and to extend the duration by six months with no change to the body of the agreement. does any commissioner wish to remove any item?

>> seeing no such request, do we have a motion? >> so moved. >> is any public comment? >> we have no speaker cards. >> ok, all those in favor. >> the next item is regular business. item 10, discussion and possible action to authorize the general manager of the san francisco public utilities commission to request approval from the board of supervisors to except and extend the public utilities commission share of the telephone department of public health grants funds. >> this is a pretty straightforward action to request the board of supervisors to except grant funds for a project already completed. >> moved and seconded.

is any public comment? >> we have no speaker cards. >> thank you. >> item 11, discussion and possible action to approve the terms and conditions to authorize the general manager to consent the existing right of way from sac, transferred a portion of san antonio centers leasehold rights to mgp ix properties. >> i am here to answer any questions you have. >> are there any questions? do we have a motion? >> so moved. >> second. >> moved and seconded.

any public comment? >> we have no speaker cards. >> did we have a discussion about the open space? this is the shopping area downtown. >> this is in the peninsula. >> is there a green space that is part of the development? >> this is a very narrow strip of land that will be used for access and landscaping? >> my concern is in general there will be a neat to have employees maintain the area unless each of the lease holders will parcel it out and

the individual leaseholders take up that responsibility. there will be a need to maintain the area. that is what i am getting at. >> these require maintenance of the area and the sublease has the most modern form of sublease in the city attorney's office and it requires all of the prevailing wage requirements under section 24.22. >> can you direct me to a number within the file that refers to that prevailing wage provision?

>> section 24.22, wages and working conditions. this was not in your packet because this is a different matter. >> we had a discussion about our desire to recognize that there is a particular wage rate for this type of work, landscaping, horticulture. my concern is that the

prevailing wage that is on file at the department of industrial relations might not cover the type of work we have covered here with specific wage rate. that goes outside of our city boundaries. my concern is that we kind of missed an opportunity to find the leaseholder to an appropriate wage for that work. i don't have the benefit of seeing the actual number, the actual rate of pay for the actual work that needs to be bid

out or completed. >> none of them have the actual number. >> is that the admin code? >> that is a section of the sublease. >> we would be happy to bring back that information at the next meeting. you will not see absolute dollar amounts but obviously they change all of the time.

>> there is a reference in the document to the prevailing wage rate. the problem is, is the work that will be done accurately reflected in that document? i know what the prevailing wage rate is. i have not had the opportunity to take a hard look at the plan. i am interested in figuring out what your language points to add the commission. >> this is crafted by the city attorney's office for ultimate flexibility for each lease and sublease. we're happy to supply this supporting detail that you will require but i cannot believe that any lease or sublease in

the city and county will draw down to the landscaping model. >> let's bring it back to you. >> this is absolutely appropriate for you to make every effort to provide language that gives you the greatest flexibility. i would not dispute that. that is appropriate for me to make every effort. >> without objections. we will continue that until the next meeting. >> thank you. >> we have no speaker cards and this item. shall we proceed to the next item? >> yes, please. >> item 12, discussion and possible action to except work for water enterprise, water system improvement contract, the

new crystal springs bypass tunnel, increase the contract and authorize final payment. >> commissioners, good afternoon. i don't have a formal presentation but i want to highlight the fact that this project has been incredibly successful and completed on time and with only 3.1% contingency for a pretty large tunnel project. i just wanted to highlight that fact. >> we are very pleased with that outcome. >> i have a motion. do i have a second? >> second. >> thank you, public comment. >> we have no speaker cards. >> thank you, next item. >> item 13, discussion and

possible action to authorize the general manager to execute a memorandum of agreement with the east bay municipal utility district, contra costa water district, santa clara valley water district, and alameda flood control and water conservation district, a four site analysis to further study the feasibility of a bay area regional desalinization project. >> if you could bring out the slides, please. we are here to talk about san francisco participation in the project. i want to go over why we are doing this. first, we talked about the strategic planning. this is a supply shortfall which includes our in streamflow requirements and this is the result of a couple of all listed projects.

we have a great degree of uncertainty about certain aspects of the water supply. will there be other projects that we are not able to complete? will there be a regulatory hit that we have to deal with. we can have an array of options before the commission decides what to do about the future supply. desalinization is one of those options. there is a limited number of supply options. none of them are cheap and none of them are ready to implement. we have a full array of information and hand. in this case, the regional partnership spreads the cost across several agencies. during any project, this will still require an environmental review. some questions remain to be answered. i will review a little bit of

the project history here and start by who are the partners and who could benefit. the participants are shown here on the map. the history of the project is back to 2003. there was a pilot study performed in 2010. we work with staff among the agencies to try to flesh out institutional issues that need to be dealt with. we are looking at a site

specific studies to help give us the information and make a decision on. each one of those stars represents when it was before the commission as an individual item. we have also identified this in broader manners. this has been going on since 2003. we would like to make a decision as to whether this is worth pursuing or not. there is a quick summary of the costs. the total costs have been about $2.3 million. half of which was from a grant from the department of water resources. our partners have contributed $183,000. this is roughly equivalent to

the amount of dollars that we have contributed. going back into the history, the feasibility study was to identify project objectives, goals, for each agency. we have identified among the agencies 22 potential sites and it goes down to 13th feasible sides and we ended up with three sites to be evaluated. one near the east and the bridge, one on the ocean side of san francisco. the feasibility studies, we identified conveyance options or how we can move water around. this is based on reliability, public this happens, and public acceptance of cost. we have shared about 50% of those costs.