situation? >> we would be asking for a multi-year rate package. on the water rates, 3.5 years ago, we can with a five-year increase. we set those rates in place for five years. we will be asking you for setting those rates for a period of two to four years, enough time to stabilize. it will not get to the cost of service, but would be substantially closer and would allow us to go out and say to the bond rating agencies, these rates are set in the normal fashion, goes to the puc, board of supervisors, and we can expect to receive the money that those would generate. supervisor chu: thank you. >> good morning. habra reads from, cfo, assistant general manager. tahrir charged with his stewardship of this most number of resources for the city and county, we have two options for your consideration and the

liberation. those both satisfy the edge of sustainability and would allow the water and power program and project to borrow affordable bond proceeds. importantly, the two pennies over two years, as mentioned in the budget director's briefing as well, would mean, over the next two years, we would go from a 3.75 cent kilowatt-hour, up to 4.75, 5.7 5 cents, remain at that low thereafter. why this is important, it sends a strong signal to the bond markets and allows us to borrow power revenue bond proceeds. it balances the 10-year financial plan. also brings in the additional revenues of about $4.5 million. annualize that to $9.1 million thereafter.

this would also allow you consideration of another policy decision, the committee choice aggregation. it would also facilitate the ability to say yes and keep financially solvent hetch hetchy. showing what the next 10 years of rate index are to ensure full transparency for all our ratepayers. this allows us to satisfy and meet those requirements. in addition, and as mr. harrington mentioned, it does facilitate capital financing for facilities and transmission. before this, we have not been able to correlate with you on our strong water and waste water credits. however, what this does not do is allow for any restoration of

the city-owned renewables, they go sf programs, approximately $90 million in programs that we have to make as part of the capital process. supervisor chu: what is the current rate being charged to general fund department? >> 3.75 pennies. that is the top of slide 8. supervisor chu: if we look at the price, think about what the cost is, all told, $16.3 million cost to the city at the moment at the -- >> 3.70 5 cents for almost all general fund department. however, which charges zero for city hall and street lights. supervisor chu: if protect the current roster of the apartment as is, just as a starting point of conversation, if we increased by two since, currently pay

3.75%, we should expect that impacted the ground $12 million? >> 9 per $1 million if we raise everyone from the current rate one penny. the two-percent option is not to vote from zero to 3.754 city hall lights. it is just a rate of one penny across the board. that is the value in that slide. to show that graphically for you and for the television audience, but that does is allows us to go from correcting this shortfall situation, which would be our status quo, and ability to buy low-cost bonds for the repairs, allows us to achieve that red line. that satisfies the green line, which is the long term reserve policy. that has been adopted by our

city and commission. the next option would be a four-cent option. as mr. harrington said, that takes us closer to cost of service. the cost of service assumption assumes adding back or restoring the city-loan renewals, coastal are sf, city efficiencies. your key bookends are two-sent status quo that allows us to be financially sustainable, or 4 cents, to allow us to have all of those same things, as well as add that the public our program to its previous level for city renewables, energy efficiencies. again, a similar graphic or the satisfying of the reserve policy, not falling off of the

financial cleiff. the overarching impact of the summary, the same departments that were highlighted earlier. what it would mean for the municipal railway. one additional penny in their costs would be $1.3 million. that is on a billion dollar-size but it, so it is a far the small%. only about a fraction of a percent. two pennies the following year would be $2.6 million, only a third of a percent of their budget. similarly, i know that you are reviewing public health budget as well. $600,000 of cost. is such a small portion of their 1 $20 billion budget, it does not even register, as far as a percentage of the budget. less than a fraction of 1%. supervisor chu: with regards to

the change in the budget amounts, i understand they are small portions compared to each of these large entities, and help me understand in terms of the cuts that we have made, it has been awfully hard to get $1 million in cuts from the department of public health because of the things that we do, leveraging state funding sources. even though it is a small portion, it is a significant impact, right? >> certainly. it will make it harder for the departments to meet the targets that i was -- i will present. >> with regards to the mta, we received an allocation based on trends and revenue. we expect they will probably get a bump up in revenue as a result of that. is that enough to cover this? >> generally it is more than enough. however, they have other expenditure increases that are

above what the baseline impact will be for next year. >> they might see increases to existing labor contracts and other thing that will exceed? >> they have already built in the power increase. projection that they have presented to their board have assumed this as well. you will see they are predicting multimillion on texas for the next few years. supervisor chu: thank you. >> in summary, it is approximately two pennies for the $4.5 million for the affected departments who have been able to have a discount in the past. that would be enough to bring the hetch hetchy from the back into structural long-term balance. that and be the most affordable option. the full restoration would be four since. we have reviewed this in detail with the return the sport, as we are required to do under the charter. we have also had to make full

rate making transparency contrasting with independent outside rate analysts to review the materials to ensure all costs are reviewed. we are happy to answer any questions. supervisor chu: with regards to the time line, does your commission plan to act on these rates at any time? what does that mean for the cost of the board to reject or let it stand? >> commissioners, the way the charter reads, the board has 30 days after our commission submits the rate increases to the board to veto the rate increases. the plan is to have at our commission next week on december 13. if we send it over on the same day, but would only give you your first meeting in january. what we planned to do is to hold that for a week and submit later on in december, so that would give you a chance to come back in january and have a hearing, if you wanted to, further discussion. we would expect the rates would

be set by the middle to end of january so that we can prepare our budgets based on those. because of that, now, or at the end of -- whenever we go to the process today, should you have thoughts about how you would like to see us bring forward a rate increase, we will look to hear them. we would hope not to bring a rate increase for that would be vetoed by the board. supervisor chu: i know that we want to move on the agenda, but i just want to comment, with regards to be able to increase the rates, i think a rate increase that is being proposed, whether it is two since, four since, it is substantial for us and the general fund, given that we pay the 3.7 cent per kilowatt hour rate. we understand it is a lower rate than the cost is. i think the general sentiment that i have is we probably need to start picking up more of the cost to allow for hetch hetchy

and the power program to be more successful. i am very concerned. i would like to make sure we are not to believe impacting our budget. we know we have a budget deficit in next couple of years, so we want to be conscientious of that. in terms of what we're paying for for that rate increase, in terms of being able to pay for infrastructure and the general operations and maintenance of our facilities, i think that will be a necessary thing. anything above and beyond that, i would have questions about. the two-cent increase will be more than a 50% increase on our current rates at the moment, so it is significant, even though it sounds very low. i would hope, and i pressure you for speaking to the commission so that we have the opportunity to potentially act accordingly with the rates. >> we share your concern, supervisor. when you freeze rates for 10 years, when you move, you had a

bigger move, rather than a gradual movement. supervisor chu: supervisor kim? supervisor kim: i just want to reiterate some of the point you made. i understand where this is coming from. i have begun to talk to the other entities that will be affected by this, including the school district. i know everyone in acknowledges the need to potentially raise rates but has concerns about being able to absorb this in their budget. i would want to look for ways that we can look with the work with everyone to make this happen, even if it meant having smaller increases over time. january, i think, is early. i know you want to be able to take this into account when you present the budget for us. i would rather see the overall budgeting and see how these increases will impact your budget. preferably, i would rather see this in march or april.

i think i would be more ready to make a decision at that time. january might be fast because of the holidays. everyone from the school district and city college will have a hard time try to grasp what this means for the budget and how they can allocate those funds. those are just bought some of my thoughts. >> i appreciate that, supervisor. the reason we did choose this time frame is that, we owe the mayor a budget by march 1. if this is not going to happen, we will be having layoffs. we need to have much more intensive conversations in our commission meetings in january and february as we prepare the budget, if it is not going to happen. supervisor chu: through the mayor's budget office, you are requesting departments to submit their budget. >> february 21 is the charter deadline for departments to submit budget requests to the

controller. then the controller for them to our office. supervisor chu: in terms of when the puc will go to the commission, it will go with a full budget sometime in early january? >> our first series are january 12. supervisor chu: since this is just a hearing, informational, i appreciate the information presented. if i could ask the puc to follow up with the committee members with regard to the rates and conversations you are having with the mayor's office in terms of was is comfortable. if there is an agreement about the what the rates may be, you may have to go to the commission as early, if you have a good assumption heading into your budget. that might be an option, rather than taking into your commission for approval. let's have a conversation off line and see what we can do if there is an agreement in terms of what we can absorb in the budget.

given the hearing on the power rates is done, i want to open up for public comment. is there anyone from the public that would like to comment on this item? item 10 or 9? >> eric brooks, standards as a green party, local grassroots organization. on item 10, at times, you have seen us at odds with the puc on various issues. at this time. we need to back them up on this request. i want to remind folks that climate scientists came out one week ago saying that we no longer have 10 or 20 years to get our global act together on the climate crisis. we have about five years to get our act together. when electricity -- when what we're charting for electricity is a lot less than what it

actually costs, it is the same situation with gasoline in the u.s., where we have been subsidizing it for decades and people waste it. this may not be an easy step, but it is a necessary step for saving the planet. the other thing that stopped brought up that i want to highlight, this is key to the bond rating of the power enterprise of the sfpuc. as you know, i have been working extensively with the organizers on getting clean power sf, our community choice program, off the ground. that will require a big revenue bond issuance to get it off the ground. the beauty of it is, raising the rates up to something normal will give us the opportunity to have sfpuc have the bond rating to be aggressive on building renewals and efficiencies in the city and a clean power sf, and other programs.

especially the efficiency in wind will bring in revenues with which we can go to departments, like the schools, muni, hospitals, and mitigate their increase, so it is not as bad. they are bringing in revenues and efficiency measures are bringing in revenues. please support with the sfpuc is asking for. thanks. supervisor chu: any other speakers? >> i also want to speak in support of the puc's plan with respect to the electricity rate. in light of the shortfall that is going to occur, it is occurring, has occurred, without eliminating these subsidies to where the cost is not being paid, we have a situation that is not sustainable. the work needs to be done on hetch hetchy.

renewable energy programs -- since we are talking -- supervisor mirkarimi and his work. there is a legacy of a lot of the program to have worked all these years that i think we will need some of this to continue. that is important that you have done all these years and i think this will help to move forward with respect to the solar program, clean power sf. as to the cost, there is a possibility this will is advised energy efficiencies within departments to mitigate the potential cost to where we may see cost neutrality. any energy efficiency work, we have identified $100 million in opportunities to be more efficient with electricity being used. the department may have to make some of these tough questions and they ought to -- may opt to invest in these efficiencies. this could actually end up, what we're after in this, a

sustainable system. strongly support the puc. thanks. >> thank you, mr. harrington your work at puc really shines supervisor mirkarimi, your work on the budget committee has been just fine i think it is time we looked ahead, we looked ahead and not behind you are riding on the back rows of the river of my puc memory and it is ever gentle on my mind i am so glad that you gave it the time i know that budget money is money that is awfully hard to find and i know i am glad you made it all through the city budget grind

you are riding on the back roads, the rivers of my memory and your budget puc is gentle on my mind i know it is not just another line i know that you are going to look ahead and not behind and it is time we looked ahead and we are going to find more money this time and we are riding on the back roads to the rivers of my memory and your budgets ever gentle puc on my mind on my mind supervisor chu: thank you. are there other members of the public that would like to speak on item 9 or 10? seeing none, public comment is closed. colleagues, on item 10, can we filed this item?

we will file this item. item nine, let us not act on this yet. we have a secondary item coming later on to hear the board of supervisors clerk's budget by -- guidelines. add that time, i would like to bring the mayor's budget office to come back to talk about the instructions at that time. thank you for your presentations. now, colleague, we have never item still before us. i believe there is a time constraint we have with surprise and mirkarimi, who needs to leave early. i would like to call out of order, item eight. >> item 8. resolution authorizing: 1) the sale of city property at the northeast corner of fulton street and gough street to the boys and girls clubs of san francisco for $2,500,000 subject to a declaration of economic covenants and a project use restriction; 2) adopting environmental findings and other findings that the actions set forth in this resolution are consistent with the city's general plan and eight priority policies of city planning code section 101.1; and 3) authorizing other actions in furtherance of this resolution. supervisor chu: this item is

buttressed by a number of individuals. the key sponsor is supervisor mirkarimi. would you like to make a few comments? the supervisor would like to move directly into presentations. we have a number of votes presenting this item. john updike from the real-estate department as well as kelly pressure from the office of economic workforce development. >> acting director of real estate. my section will be brief. i will give you the highlights of what it before you and then i will follow with some details. this is the possible purchase of parcel f at fulton and gough street pier this is a portion of the parcels obtained by the city by caltrans as a part of per agreement from the year 2000.

as indicated in the budget analyst report, approximately 22 parcels, 16 of which have been disposed of already, sold, generating approximate $31 million in revenue. this cooperative agreement calls for the city to create what is now octavia boulevard, to return funds received from disposal of properties back into transportation activities, specifically enumerated in that cooperative agreement and what are called ancillary projects. the citizen buys three committee was charged with working with city staff in developing those ancillary projects. so far, $31 million has been generated to date. this particular parcel, f, if we can look at the overhead -- it

is just over one-half of an acre. we did an evaluation and analysis of several properties. that was then reviewed again in 2009 and we saw run for a 44 disposal of parcels that no less than permited valley. we have affected some sales since then. particularly, placed out of auction, parcel h and j. here is a more detailed shot of the particular parcel before you today. this item come before you because this is a departure from that board authority. we are presenting to you a sales agreement which calls for a sales price of $2.5 million,

which -- knowledge is significantly under the market value, estimated at $4.4 million. that is our extrapolation of prior sales, activity in the area, relating back to the 3- year-old appraiser report which showed a more in-depth analysis of parcels of value. in addition to that sale price of the land -- and we must be committed to the particular details of the agreement, there is a participation as well related to the potential development of residential, 50/50 split of revenues generated from residential, should that occur. that helps both the buyer and the city in recovering as much revenue as we can from this use. it is a community serving use. we believed it was justified to bring before you this opportunity for a sale below

market in consideration for that committed to serving use. i would ask kelly from the office of work force economic development to go into the details from that use, and deferrals of costs to the city, both one-time and in perpetuity. then, we are happy to answer questions you have about the details of the real estate issues. >> thank you. supervisors, the boys and girls club of san francisco at fulton and got would propose to build a new facility with a high school- size jim, pool, are from, dedicated space 14th. at the center of the communities currently served by the earnest and gold club house located at page in stanyan street. boys and girls club provides a critical service to the neighborhood. they have a lot history of partnership with the city of tent and cisco. the target area for the

clubhouse is bounded by geary to the north, van ness to the east, haight street to the south, to visit tehran to the west. this contains more than 13 public housing facilities with more than 3005 of the units and more than half of those units are family units. the proposed facility at fulton and gough is expected to serve more than 200 youth per day during the school year and more than 252 per day for the summer for a total and a client base of nearly 3000 youths, ages 5 through 17. it is important to know, the boys and girls club house in the context of a larger market activity a plan, appendix c, the committee to prove it appendix to the plan, specifically highlights the need for child care facilities in the area. the 2008 estimate from the c. wyeth identified a need of 35,000 square feet per share recreation space. they estimate would that it would grow to 57,000 feet. the cost of construction of a

facility of this kind was at $70 million for the $57 a square foot facility. this was an unfunded estimate and him merely a projection of need. the facility of parcel f., of great benefits but at no additional cost to the city, other than oregon market retail. in many cases, the city owns these facilities. the city pays for this goes to the construction cost of the facility and also ongoing editorial, landscape, and made its costs associated with owning any building. a good analogy might be the hamilton recreation center which also contains a gym and pool facility. hamilton cost approximately $18 million to construct. the recreation and park apart and has estimated $300,000 annual cost for janitorial and landscaping maintenance, leaving aside any programming and associated cost. in this transaction, the city would to similar benefits.

it will facility, gymnasium, and community facility, but without the ongoing minutes or construction cost. the purchase and sale agreement before the board of supervisors provides protection for the city. while the sale price is at below market value, there are a number of safeguards included to insure expectations of the community are met. i would like to highlight a few of those. included is a performance benchmark similar to the mark about the transactions in the area. this ensures the product is built in a timely fashion. again, mirrors the market rate of projects. the limitations on successors. the boys and girls club may not assign the bretton obligations associated with this ring without the written consent of the city. city participation is a residential component of our list of the ship that that component were to