pending a sale of the 2012 series a parking garage revenue bonds. finally, item 8 provide the preparation of 446 transit projects and one parking garage project. that has a comptroller reserve pending the sale of the bond. -- comptroller reserve pending the sale of the bond. -- controller reserve pending the sale of the board. we have ed reiskin and director of mta. >> good morning. happy to be here today to begin implementation of something that the voters saw as a need when they passed proposition a back in 2007. i have a brief presentation, but i am sure we will have plenty of questions. also here is nadia from office

of public finance, mark lake, as well of are soas our public fine department. i will walk through a brief presentation, and i look forward to the discussion. if we could go to the oslides. one of the things i think everyone knows, particularly those who ride the transportation system is we have a significant amount of assets and need. we estimated the 20-year need to bring all of our assets into a state of good repair to beat on round the order of $10 billion. when i am talking about assets, but these are the buses, trains, reels come overhead wire and stations. the parking meters, signs, traffic signals. it is a pretty broad and almost

daunting array of assets that we have that have a pretty significant price tag that have not been invested in the past. i think that is one of the reasons this provision was included in prop a to empower the mta to incur debt to make these investments. so what we are proposing come and you made reference to this, is the debt issuance. this is focused on state of good repair needs for the most part. there is reaail vehicle and restoration, track signal upgrades come overhead wire restoration come and a parking garage items. the revenue control equipment for all of them, as well as addressing a wide range of long- standing capital means that they have it.

we are structuring this in three series. the first two issuance would be this year, and the third would be next year. the first issuance is to refinance existing garage debt. this would save us money shown at the bottom of the chart. the sec issuance this year, and these other ones we are asking for procreation today, would be to start the design and construction of the balance of the projects. then we would come back next year for the third series that would fund the balance of the design, mostly the construction of the parking and transit projects. we are structuring these as revenue bonds based on mta only. they do get revenue in the general fund, one set aside in

one in blue payment. those revenues are not pledged again services. this chart shows up more specifically what the projects are, and what other funding makes up the balance. in a lot cases we are using this to fill gaps in projects. there are complementing or leveraging other funds with a total amount of other sources with nearly $160 million that has been leverage by the sponsor of the total project cost is 276

million. it is largely a federal funds that we are leveraging, but we also have state and federal funds. all of the other sources are secure. these bond funds are the last puzzle for each of these projects. the projects are in different stages and different statuses. some are ready to go. this money would plug the gap. some are much earlier on in terms of being designed. they will mostly be delivered through competitive chapter 6 process. we have secured ceqa clearance for all of these. for this week a parking garage

improvements, we are working with dpw to take a preliminary assessment that we got from a third party consultant to work in a more specific work program and to help manage the delivery of that work. here is a high level overview of the schedule. these are in different stages of the planning design and construction. we are structuring all of this so that the bond funds will be extended within three years of their issuance. retiring to a number of budget analyst recommendations come i want to thank mr. rose and his newman for a lot of work and a very comprehensive report. there was a lot of reiteration between agency and a financial advisor team and the budget

analysts office. i want to thank them for the good work and recommendations, all of which we think are good ones and recommend for your incorporation into the final legislation. so finally, you have already laid out what the pieces of legislation are. one is a general authorization for us to issue the bonds. one is a resolution that authorizes the overall issuance come and then there are of the appropriations, one for the refunding and one of for the new funds we are seeking. we do of course request your recommendation to the full board for approval. so we are stepping through the process. we have already been through the capital planning committee and on the projects and bonds developed at this point we would

go to the rating agencies to secure credit rating. we are also starting the validation period, and we have already gone mta board approval for the issuance. we would go back to them to approve the official statement aiming to sell the bonds in june of this year. with that, i will stop there. the team and i would be happy to answer any questions you may have. supervisor chu: thank you for the presentation. supervisor avalos: thank you for the great presentation. just a couple of questions. first off, we currently have revenue bonds that have been issued to do some of the capital work in the parking garages, so how does this -- could you go a little bit deeper in explaining how this issue winds will relate to the current revenue bonds and

why the need to replace them is. >> there were these corporations established historically non- profit corporations established that had bonding authority, and some of them did issue debt to do various work in the garages. the debt is outstanding at a higher rate of interest than we can get today. all we're doing is a pure refinancing of the debt to save money. the initial debt was 5.6%, and we estimate we can refinance at 3.4%, which will to save us money. we're going to take over that debt. we are restructuring of the leases with the garages. we are taking pieces of debt that were out there and cleaning them up and putting them into a

new structure with a better rate that will save us money. supervisor avalos: has there been any conflict between of the operators of the parking garage and the debt with last a certain number of years in the contract did not last quite as long, is that also a factor? where we want to be able to line up financing with leases. >> we're standardizing all of the leases. everyone had been different. a lot of things were done differently, so we are moving everyone to a new standard lease that we think has terms that better protect the city, but we will be delivering -- we're going to pay off old debt and do it in a more cost-effective way . for the new debt we will manage and deliver the projects. supervisor avalos: ok.

my other question is related to the budget analyst report. i will hold off on that. supervisor chu: with regard to the second series of bond, the refunding bonds are pretty straightforward. in terms of the second series, which are the new projects, there were a couple of items i wanted to get clarity on about what the intention would be in terms of spending it. there was $5 million in the second series that would go towards new parking garage projects, and then i noted in the appendix is showed $33 million worth of potential repairs and work to be done 18 garages. it adds up to be 51 million. the 5 million is far short of the $51 million in identified needs. i am wondering what with a $5 million before? is it for a specific project you have already identified or is it to do planning work? what is the intention? >> if you see we have 5 million

in the first series -- the way we're doing this is more of the planning and design work through their first series for the work remains to be done in using the second series to fund the construction, just as we do often with go bonds. the $5 million is largely for planning and design. we never preliminary assessment that was done by a subcontractor and financial adviser. i think i'll put of that was included in the budget analyst report. that kind of sketched out the general needs, safety needs and other things that were primarily addressing. they have not been fully laid out. i think once we engage with dpw we will refine that number. we probably will not be able to complete the full scope of every

deficiency identified in them, but we will use the first series to get planning and design work started, as well as to start work on the revenue controller equipment replacement. supervisor chu: with regards to the refunding bonds, i noticed the interest rate definitely will go down based on the average of the outstanding debt that is out there, which is a positive for us. on the other hand, it said the average length of time or duration of the debt is outstanding. we are issuing debt that those 20 years out. i am wondering why we would not match that back up. that might be a question for the financial adviser. >> thank you for the question. the refunded that we determined not changing. it is a new penmoney piece that will go longer. supervisor chu: i might have

just misread it. in terms of refunding bonds, the average was 6.9 years for the bonds that are being refunded and the intention is not to drag out that? ok. thank you. why don't we go to the budget analyst report? >> madam chair, and supervisor avalos, on the bottom of page 11 of the report we report that it is shown on tables one and three on pages 6 and 11 of our report. the sfmta currently has five outstanding parking meter bonds that totals $44.3 million. these are five of revenue bonds currently have an average of 5.6%. regarding the point just brought out, an average 6.9 years left. if the board of supervisors

proposed -- approved the legislation, they plan to issue one refunding bond. the interest rate would be estimated 3.41 pe cent% for 20 it is estimated there would be a savings to the mta $5,000,936. that is on a net basis. on page 12 we point out towards the bottom of the page that regarding final 120243, total debt services cost is estimated at 67.3 million that would include 28.3 million of principles, plus 39 million of interest. over the 30-year term of the proposed 28.3 million new revenue bonds would result in an

average annual debt service cost of about $2.2 million. on page 13 of our report, we point out the ordinance 111354 states the revenue bonds of mta would be obligations and secured by the mta with the principal and interest payable by the gross revenue, and that would exclude any general fund transfers. such that the city general fund will not be liable a payment of such revenue bonds. it is shown itfou on attachment for a page we anticipate pledging an estimated 480.5 million of their total annual revenues of 796.8 million for fiscal year 200012- 2013. on page 14 of the report total,

not to exceed 6 million that the mta has authorized to be extended for five years for financial of pfizer's, according advisers, the city has exceeded 1.7 million from the time 2006- 2011 for all city general obligation bonds and certificates of participation and revenue bond issuances. on page 18 of our report we states on page 24 of our report in response to one of our questions regarding why attachment to on page 24 indicate the fda plans to expand 17.9 million or 53.6% of the 33.3 million sub total parking garage revenue and

renovation cost for other costs, that is project management, construction management, design and legal contingency. hubei's is because there are so many unknowns regarding the repair in renovations, all of these soft project management construction management and contingency costs are higher than would normally be expected. -- he advises. on page 19 shown in attachment one in three, the sfmta spend 150 million on a replacement project, and we pointed out mr. walton has advised the department of technology department of emergency management and as the mta have all recently agreed to hire a consultant to the store to evaluate the three major voice and data communication systems

currently being proposed to be improved and upgraded, and that includes the recently-approved motorola interoperable communications system. the city's existing 800 mhz voice radio system, and the proposed sfmta data and communication system. the purpose would be to determine which city system is justified and whether significant deficiencies can be achieved. we also point out on the bottom of page 19 of the report that currently the city itself, rather than sfmta, may issue debt, and based on march 15, 2012 analysis completed by baxter and carly llc, one of the financial advisers, if the finaf the city would issue approximately $75 million in certificates on behalf of the mta instead of the mta issuing its own $75 million in revenue

bonds, the sfmta would realize debt service savings of approximately $860,000 over 30 years, about $28,000 in savings per year. our recommendations are listed on page 20, our recommendation is to propose the various changes submitted by the sfmta. and that you replace the ceqa language on pay five -- page 52 instead state and all the proposed projects have now received categorical exemptions, in accordance with ceqa requirements, that you amend the proposed requirement 11.3 0.31 to require the comptroller's office work with the sfmta to report back to the board of supervisors within six months. after the series 2012 issuance of costs and benefits of using

outside financial advisers using in hass city debt management staff and sfmta's initial bonn references, you amend the 11.3 0.41 resolution to reduce to request of $160 million to issue revenue bonds by $80 million. that would be $80 million left, which would allow the mta to launch the initial a and b revenue bonds, sufficient time for deep debbie to to complete its parking garage assessment to determine the amount and party for improvements and for the controller's office to report the to the board of supervisors on the costs and benefits of the initial sfmta bond issuance and that you amend the proposed ordinance of 0.24032 place $1.6 million designated for the muni system ready replacement system project on budget finance committee reserve, pending conditions from quite -- coit.

it could actually be less expensive for the city itself to issue debt, rather than for the sfmta -- rather than the mta issuing debt itself pit we urge this to be a policy decision for the boot -- board of supervisors. supervisor avalos: just a follow up on the last point. it seems like it is pretty close between if the city were to issue debt versus the mta. what are the advantages to doing it with the we are seeking to do so today? >> it is close, less than $30,000 a year difference. we feel it would be different -- important for us to establish our own credit rating and get into the credit markets, given the size of our capital needs,

given the uncertain feature of federal and state funding. we foresee needing to enter the markets again. our long-term capital markets plan, we anticipate issuing debt on a periodic basis in order to bring our system into a state of repair. it is not just this one time. it is something you want to establish, the ability to do, and again, i think it is in line with the authorization of the prop a. it also keeps us out of the city's cop pool, identify an asset to pledge. given it is a small amount, it would get us on course to having the independent ability with the board of supervisors approval to issue debt. we think it is worth in the small differential.

supervisor avalos: what is the issue which you are seeking today? how does that compare to the overall debt capacity for mta? >> in terms of oour operating budget, this is less than 2%. we did establish -- and it is referenced in the budget analyst report. we did establish debt policy, and that is something we have reviewed by the comptroller's office and public finance office. i do not know offhand but the capacity is, but we will not be anywhere near any kind of policy debt capacity with this issuance. the long-term debt service is on the order of $10 million a year, relative to hit hundred million dollars a year budget. it is a modest step for the issuance. supervisor chu: thank you.

why don't we open this up for public comment. is there anyone on the public that wants to speak on these items, 5, 6, 7, 8? >> good morning, supervisors, my name is douglas yeyepp. i have lived in san francisco for 50 years. i would like to limit my comments and rivers to items 5 and 6. item five, i am opposed to the mta having the ability to issue revenue bonds. i think it is common knowledge, especially among long-term residents of san francisco, that the mta has been deficient in doing its basic functions, so if you are deficient and cannot do the basics, why are we giving you new authority? in regards to $170 million, it

is pretty obvious, given the current economic conditions, public agencies are supposed to be downsizing. $170 million seems like an awful lot of money in regards to so- called downsizing. the city can finance the debt in other ways. in my opinion, if a project is worth financing, it should be done privately, and if you cannot privately finance it, it usually brings up red flags that may be the project has certain problems, so you have to go through other means, like those participation certificates, which i consider to be a bit of a wall street construction. anyway, in regards to the parking garage, what ever happened to those operational scandals reported by "the chronicle" and "examiner?

"? perhaps you should be more focused on that. i also believe the mta needs to focus on the basics, rather than trying to expand its so-called scope of operations. thank you. supervisor chu: is there any other members of the public of wish to speak on these items? seeing none, public comment is closed. colleagues, are there any other questions? supervisor kim. supervisor kim: i know i missed a presentation, so i do not want to bring up something that may have been addressed, but one of my questions is something in our budget and legislative analyst report, questions around the cost of using outside financial advisers versus using in-house city debt management staff. i am interested in pursuing that recommendation.

hoping that you could speak to that. i know the city has spent $1.6 million for outside financial advisers in the past five years. the mta is requesting $6 million. there seems to be a big price differential. i wonder if you have any thoughts about this? >> if there is a way we can secure services more cost effectively, we would be happy to. we established a while back the as needed contract and a larger amount because at that time there was any anticipation -- and anticipation that we would be doing more than we are currently doing my understanding is the rate it in our contract is comparable, if not lower, than the city's fa rate. we have been using them for a broader range of things. we use a contractor is close to secure -- contract vehicles to

maintain the condition of the parking garages. we have only spent a fraction of that money. we do not expect to extend the full 600. we do is accept the budget analysts recommendation and would be happy to work with the comptroller's office to the money but how we are using its financial advisers, and if there is a better way to do so. supervisor chu: thank you, supervisor kim. we have heard from the part and budget analyst. we have a number of items in terms of amendments. first, i want to thank our city staff for coming together on this. this is a big deal at the mta is going forward with its own debt. for many reasons, this is something that makes sense to go forward with. not only in terms of the savings we would see on the parking garages, in terms of new projects outlined. i think they do make sense. i am a little bit less sure about theon