with skills to do the right thing when the right time comes. thank you very much. president moran: and you. any additional public comment? -- thank you. seeing none, communications. we have a fairly rich set of communications that have been provided to the commission with this agenda. faugh foon item three, a quartey report on the waste water improvement projects, i know it does combine the interim cip and anticipated ssip. that is something we requested, and i appreciate you doing that. that is something we were asked to develop under recent. that is something very positive. i appreciate that. >> on the same topic, page 10 of

that report, ongoing construction. i wanted to ask about the cost variants, which is almost 11 percent signed. -- 11%. that would be the figures on page 11. >> page 11 is blank. >> let's see. capital improvement programs.

that is quite a bit. why is it so much? >> do you have this report? item 14, 3c and under tab 2, page 10 and 11. i think i can answer it. and there are two big things. the single biggest thing is $7 million. originally we were going to do

this in two different phases. we record to do an underground portion, and then we were going to do a trench on another portion of it, and this came to the commission two or three meetings ago where we said this micro tunneling went so well that by continuing to continue to do micra tunneling and bringing in a new contract would save us time and money, so we amended the old contract, which is the reason for $7 million. but we figured it would probably cost us 8 million or $9 million to have an outside contractor do that, and we would have to stop the entire process. that is the major portion. >> see, we do look at these things. [laughter] president moran: it is a format that point out things like that. where things are happening, and makes it clear they are happening. >> for that one change, the real

variants stake here is more along the lines of 2%, right? -- the real variant figure at stake here is more along the lines of 2%, right? president moran: any other comment on the communications? >> thank you for catching that item. this is a really comprehensive projects under way. it is very helpful. i assume it is on the website. perhaps people

>> any other public comment? commissioners, is there any other commission business? >> without any, the report of the general manager. >> good afternoon. we have two items today. first is a short update of where we are. >> as part of today's agenda, we're going to seek your approval for the clothes out of two regional project. i would like to give you a progress update on the challenges that have been encountered in the last two weeks, starting with that eastern segment of the pipeline

currently on my radar screen. there are two issues that could lead to potential schedule delays. one is the potential delay of fabrications -- fabrication of the pipes and the other is the need to secure a missing environmental permit from fish and game. we have a project tracking these issues and i am confident we will be able to mitigate these issues and the overall project schedule will not be delayed, but i wanted you to be aware. i want to keep you apprised of two of the most challenging progress issues. it continues to average 40 feet a day, which is projected in our schedule. we are not falling back schedule-wise, but we are not able to make up with those

rates, leaving us what about six months behind schedule. the good news is that in the last two weeks, we have had to use less ground water and this is a good sign we may be able to start making up time. at the dam site, the deep soil mixing work that was needed to stabilize one of the areas where we will be disposing some of our soil, that work is going well and will be done the first week of february. the actual excavation of the dam will begin in earnest the second week of february, and this is what we will start blasting. for your information, we could be blasting several times a week for a couple of years. bade division pipeline no. 5 --

they were continuing to make good progress on all remaining change east bay segments so that we can declare a final completion in march. on the peninsula segment contract, we are 85% complete. welding repair work is progressing as planned. on monday, we will issue an order for the tunnel under a large archeologist -- archaeological site. this will proceed in the next few months and it is projected to be completed at the end of april. we had a record day last week and we were able to make 160 feet advanced and one day. we had to go through a curve and we have the entire trailing year, we are very optimistic in our ability to achieve great

production rates. yesterday was the first major day of the shutdown. while it is not operational, we wanted to use the opportunity to show you the photos that show the extent of work taking place. it's hard to see -- we want to actually go the other way. that doesn't count for my five minutes, does it? maybe we will forget about this. it's better for us. this whole area is where the wall is built and where we will be building the treated water reservoir.

in this area here is where we are going to be building new filters. this does not do it justice, but these are like little bulldozers and they look like ants on these photographs. this is another photo of the basins which are now totally demolished and getting ready to add new filters installed. watts of work taking place. i wanted to close by giving you an update on the project -- we're going to finish the design of the connection that failed in november by the end of this week. we have yet to schedule the work in the field but a new connection should be installed by the end of june.

all lot of efforts have been spent trying to clean up the area in south san francisco. that work will be completed by the end of this week. that's all i have. >> commissioners, any questions? >> the second item the public utilities commission gets involved -- we are talking about getting more involved in an event for water for people coming up this may. we wanted to make sure the commission was aware of that. julie has been very involved in water for people. she is going to rwanda again to work on water issues. we wanted to do a brief update so you understand what the water for people group is.

>> i am really thrilled about the opportunity to introduce you to water for people. the organization's mission to build a world where everyone has access to safe drinking water is something i'm very passionate about. so much so that i will be returning to africa as a volunteer this coming month and i will be leading a team that will be designing a system for part of rwanda that only has 30% water coverage. what is most compelling to me is that capacity building model and overall approach. their focus is to divide up local and long lasting a sustainable solutions through education, technology, and partnership with local governments and communities.

what i am really excited about is the puc wanting to raise awareness about water for people in san francisco and the bay area. as one of the leading water utilities in the country, we are uniquely positioned to bring attention to the water crisis in the world. the puc will be hosting an event to take place at the california academy of science on may 7 with the goal of expanding support for the organization in the bay area. we will be launching what we call the of orlando challenge with the goal of providing 100% coverage in rwanda by the end of 2015. the event will take place the first day of national drinking water week.

our participation here in this event will further solidify the leadership role to raise awareness about critical water in our everyday life. the mayor of the district to port -- who reports directly to the president of rwanda will be at the event as one of our main speakers and our packet has more information about the work by water for people as well as the events taking place on may 7. we would ask for your support in partnering with us and water for people in making this event a successful one. i would love the opportunity to meet with some of you in the next couple of weeks to tell you more about the event and how you may be able to contribute to make this a successful event.

>> are you familiar with president carter's effort in this arena? >> i am not sure what the name of the organization is -- >> it is the carter foundation and i know the president has been very supportive of this effort and has created 26,000 new wells to avoid contact with a specific warm -- specific worm. >> at the gates foundation is also involved. sometimes the problem is we are all stepping over each other to try to do the right thing but not coordinate very well. >> another group is called blue planet that you might want to

look into. >> i have heard of them. of money for the same issue. >> water is very popular in that part of the world. >> thank you very much. >> did you see what time the event is on the seventh? >> i think we have a time. i want to say 6:00 or 6:30. >> that includes the general managers' report. moving on to item 17, -- >> a very brief report today because i know you are anxious to discuss the budget. i wanted to share with you a

couple of things about our board meeting last week. mr. harrington was there and one of the things the board recognizes is the working relationship we have with the commission and there were not a lot of nice things ash said in both directions but i wanted to share with you. the second thing i wanted to note is that i gave the board a long-range view of what will face us between now and 2035. in the near term, an issue we have started taking on his an item your staff proposed to us to consider which is refinancing some debt that in the current water supply agreement the agencies have to repay san francisco 4 old capitol that made. we have taken a look at that and

i will share some of the remarks -- the first was that we are not in the bond issuing segment yet and this probably doesn't make any sense. we had our financial advisers take calls from numerous bankers who were calling us and sift through that and said this could actually work and would be worthwhile to both san francisco and the group. we are looking at that and will be working with your staff closely on this. there are a lot of questions and concerns to look at before we will know if it is feasible. we appreciate the suggestion by your staff and the board was very interested and it could save a lot of money. any questions? thank you. >> during the discussion this afternoon, we will be talking

about this as part of the budget. >> that brings us to the consent calendar. mr. secretary, would you call that? >> all items under the consent calendar is considered by the utilities commission and will be acted on by single vote of the commission. except work and construction for water enterprise improvement program funded contract. approved modifications and the final increasing the contract amount and increasing the contract erasion an opera's final payment to the contractor. except work performed by madam -- by mountain cascade for water enterprise improvement program, san antonio pump station upgrade. increasing the contract with a time extension of 29 it

consecutive calendar days and outcries final payment to the contractor. >> commissioners, does anyone want to remove either of the items from the consent calendar? if not, can i have a motion to approve? moved and seconded. public comment? those in favor? those opposed? the motion carries. >> the next item is regular business item 19, a discussion of possible action to authorize the manager of the san francisco public utilities commission to enter an agreement to provide a liquidity facility authorized for wastewater enterprise commercial paper program with j.p. morgan and u.s. bank.

>> good afternoon. i'm the assistant general manager and cfo. we visited in december about increasing our paper program in the waste water department from $150 million up to $300 million. we discuss that commercial paper has been a very effective, low-cost savings tool for our ratepayers. before you today is half of that program's renewal because our current program is up for exploration. the packet is a very large with the bond financing documents. it is specifically summarizing the -- summarized on the slide number one on the of overhead projector. the program was authorized in

2006 and a bit 2007 agreement which expires next month. the renewal is before you today. they did go through a competitive process as they do with these large refinancing items. what is before you today is a new program with j.p. morgan and u.s. bank for the $150 million. we are working with the board of supervisors and of that will be assuming the approval of that in the next few months. lots of agreements as part of your due diligence. they are standard and much like what you recently approved for the water program this fall. if i could reiterate why this is

a good deal for ratepayers, the rate is going up a bit compared to five years ago when the market was a very low cost. the alternate t -- alternatives before us today is that this is still the best deal in today's market. the alternative to not doing this would be to issue bonds earlier. if we were to have to issue $150 million of bonds, that would come with a total cost of anywhere between $9,000,000.9999999 dollars. -- between $9 million and $10 million. every single year by doing this type of diversified debt program, it is about $7 million

to $8 million in savings for our sewer ratepayers. i'm happy to answer any questions. >> one question i have is the rate has gone up quite a bit. what kind of implications does that have for the other commercial paper programs we have? >> of the renewal we did for the department last fall came in at 72.5 basis points. at that time, it was still very similar market conditions to where we are today. this is slightly better at 65 basis points per year. in the last two or three months, we have seen a tightening for our rate payers and we do monitor that and put these out to bid as we have as part of our

debt policy to make sure we get the best deal we can for ratepayers. we want to be able to reward contracts of up to $150 million a year without having to sell bonds immediately. it is a tool that has served the ratepayers well and we continue to monitor all of the trade and quarterly performance. >> what is our investment now in commercial paper? do we utilize that? >> we are the sellers of the commercial paper. >> are we ever in the purchaser's position? >> we are, as part of our pool contribution. we have money in the pool and

part of that is invested in commercial papers. >> that gives us an opportunity to wait on going back to the marketplace. we look at how much cash we have for internal purposes and if we do not have enough cash for that type of project, we would sell commercial paper under this program is it is sewer-related or under the water program. >> thank you. commissioners? >> we have a resolution in front of us to approve that program, can i get motion? >> so moved. >> moved and seconded. any discussion? any public comment? all those in favor? opposed? the motion carries. >> item 20. discussion and possible action to approve the terms and conditions and authorize the

general manager of the san francisco public utilities commission and/or the director of property to execute a purchase and sale agreement in the amount of $1.3 million and any related documents to facilitate the purchase of a fee interest in that certain to under 59.32 acres of agricultural land identified as assessor's parcel in the county of alameda. >> we had a little confusion appear, but i think we are straight now. >> and the division manager for natural resources and land management. we somehow neglected to include a map in your agenda packet. we have extra copies here for members of the public. this is the second acquisition we brought to you in the last

few months. this is above san antonio reservoir. we hope to wring a few more of these during the course of the year. this is one of those cases where we prefer to have it in fees. the ones coming in the near future will be a mixture but will not involve us in terms of the title or owner. i would be happy to answer any questions and want to acknowledge -- when i arrived almost six years ago, we did not have the capacity set up to it do this. it has taken a long time to get there but between the services and my staff and the city attorney's office, it has gotten to the point where we are running on all cylinders and are able to respond to all the

people responsible for this. i would be happy to answer questions. >> >> the appropriate supervisors have been informed? >> we have been very public about this. >> we have a joint agreement which the commission approved in the spring where we partner with the district and they are a key partner in our projects and the county keeps a close eye on things like this. >> what about the supervisors? >> i could contact them and i could talk to their staff but i have not talked to them in the last few weeks. >> what is the nature of this project?