[meeting adjourned] . . . .

supervisor chu: hello, and welcome to the board of supervisors city and county meeting. we have any announcements? >> please violence also bone and an electronic devices. -- silence all cell phones and electronic devices. items after upon will appear on the may 1 agenda. supervisor chu: there are a couple of items on the agenda that we intend to continue to next week, so i wanted to let you know. you will have an opportunity to speak today, but you will also have an opportunity to speak on it next week. those items are likely item #5, as well as no. 8, the except and extend for the community block

grant program. we will speak more about that when items are called. he did not want to stay because we will be continuing its bid offering public comment opportunities next week, you can leave or to public comment, your choice. item number one, please. >> item #one motion adopting finding supporting the board's decision for the board of supervisors. >> great wagner, item of public health. the item before you is supplemental appropriation that is the last bit of budget cleanup that we have to do following the supplemental that was the bulk of the operating supplemental you approved last week and the full board approved on first reading last night.

and i realize i did not bring copies of this with me, but i will have them delivered so that you have it for the record. all of this is $2.7 million supplemental appropriation. the reason for the appropriation is in the current year budget the budget had assumed that certain schedule the week increases would be deferred, the salary for the wage increases were not appropriated in the budget, and we are now at the point that we have, although the city is in negotiations with the labor unions, we have passed the point at which they become objective. and the department of public health budget, we have a shortage in the salary items for a 4% increase for staff and per diem nurses and staff increase

for supervising nurses that went into effect on march 31. the total value of those increases is a barely readable on this slide, but this gives you a sense of where those fall off by a division. this cost was assumed in the six-month report, and will allow us to finish the year within the salary budget without making a program modifications. i am happy to answer any questions. >supervisor chu: this would allow the department to pay for a 4 percent signed for per diem and 5% for contracts? the budget assumed the labor unions would defer the rates, but ended up not deferring the

rate, so we are still obligated to pay it because it was a previous contractual agreement? >> that is exactly correct. the budget assumed a modification that did not occur, and because that is the existing contract that the city was found by and we are asking for appropriation of these funds. supervisor chu: with regards to the noosing -- nursing union, winter the opening again? -- when are they opening again? >> the contracts i believe end june the 30 this fiscal year, and we have ended negotiations with them. supervisor chu: were there comparable did so were others deferred wages in past years? >> it should be noted that the

scheduled wage increase that went into effect on march 31 is a deferred wage increase. it was a originally scheduled for april 3, 2010, so this has been deferred several times already. the budget assumption was for police and fire to not assume any scheduled wage increases. the police and fire union did agree -- it took the wage increase, but started contributing to the pension fund earlier. those departments were able to stay within the budget that we approved last year for them. the nurses have not been able to reach the same concession, but they are in negotiations. supervisor chu: thank you. the budget analyst report. >> the calculation of the 2,694,000 cost of this legislation has been made by the comptroller and shown on

page 2 of the report in table one. we consider approval to be a policy matter for the board of supervisors. supervisor chu: any members of the public that wish to speak on item number one? >> supervisors, i was here some time ago when various union members were here talking about how they were treated by the city. i happen to go to the san francisco general hospital often, not so that the doctors can see me, but so that i can have people who has followed by director of environmental justice advocacy. one of the classifications that you are discussing today and reviewing today are nurses and why they deserve what has been

stated in the appropriations and funding. i am bringing to your attention that when we go to the hospital, we see the registered nurses having a work load of twice the amount of work they have to do. i know the board of supervisors and the mayor is talking about a 5 percent signed cut across the board, but when it comes to nurses, i think we have to literally go to the hospitals and see what is happening over there. again the, i think san franciscans approved giving a raise to our nurses, but i would ask you and representatives to physically go to the hospitals

and received a long queues and see for yourself how hard our nurses work. that is also true at laguna hospital and other places, even prisons where the nurses work very hard. thank you very much. >> are there other members of the public that wish to comment on item number one? cnn, public comment is closed. supervisor camp. supervisor kim: - i am curious to how often we take into account concessions from labor that have not been agreed upon prior to the budget? >> good morning, supervisors. monique from the comptroller's

office. as you know, the recent charter providing budget reforms in the city made a change to the city practices in terms of negotiations where now, starting this year, the completion of the labor negotiation needs to be in place prior to the board approval of the budget. in the past there were different schedules for the various labor unions, so police and fire typically lag behind local 21. this is the last time you will see are retroactive, if you will, agreed upon contract once the budget is approved. what we had done procedurally is

set aside funds in the city, and once those labor agreements were approved by the mayor and the board, then the comptroller's office would administratively transfer those to the departments in accordance to provisions, but now we will know the value and need to budget for it during the planning stages. supervisor chu: thank you. supervisor avalos: motion to approve. supervisor chu: i believe we can do that without objection. and >> item #2, or did authorize an increase of the waste water enterprise commercial paper programs to an amount not to exceed $300 million to be issued from time to time by the san francisco public utilities commission to finance various capt. projects benefiting the waste water enterprise.

item number three, resolution approving the issuance of water revenue bonds to be issued by the public utilities commission of the city and county of san francisco not to exceed $675 million to finance various projects under the water system improvement program pursuant to amendments to the charter of the city and county of san francisco enacted by voters on a member 5, 2002. >> good morning. todd greece fr reastrom. these are financing authorizations that support things you have already given his authorization to move forward with. the waste water commercial program is an opportunity for us to further save it ratepayer money is to borrowing short cost. that is averaging a% per year. that compares to bar when long- term money that is about 4

percent signed right now. that can save ratepayers a good deal of money. right now we have $150 million program in place that was approved back in 2006. this would double that and provide the low-cost short-term financing. what you previously authorized was average borrowing cost of 1.5 percent signed, half of what inflation has been. very low costs and good for the ratepayers. the increase will assist us with already existing appropriations. i mentioned the $271 million to told us to implement. the current borrowing rate we think would hover around 1%. the long-term capital needs you previously adopted a capital plan including our department,

and that shows $5 billion worth of need over the next 10 years. we would be able to use this program to the degree we make a multi-year program to assist us in future years as well if it is the best deal for the ratepayers. on average we have $500 million annually with the need over the next 10 years, the large and a portion of which would be the upgrade that the waste water digesters and the waste water system for the source system. this could benefit both existing appropriations and future appropriation at what we believe is the low was costs to ratepayers. >> just be clear, the component of it to increase capacity of the commercial paper program, really what that is is allowing the puc to have short-term borrowing? those rates are generally more favorable, correct? >> that is correct. supervisor chu: wind up projects

come to be, when they are completed come at it will issue a bond to take up the short-term debt, correct? >> we would. one thing that is interesting for the enterprise, many of the assets are actually assets that last 80 + years. the long is borrowing we can do right now is 30-40 years when the bond market. >> think supervisor chu: thank you. >> that is item number two quick concur with the budget analysts report. would you like the to do item number three? supervisor chu: yes. >> the next up is the water revenue bonds, as well as

refunding issues and reimbursement for a settlement. and the order of magnitude is quite large. to put this in perspective, the water system upgrade and rebuild was $4.6 billion. we have sold 3.3 billion of that. this would be the next cell we would need to the tune of $600 million. the pricing is estimated for may 22 at this point with a close in early june. because interest rates have been what is the lowest they have ever been since the 1960's, we continue to have what is a great environment for our ratepayers. bids we recently received by way of comparison for the upgrade show the seven bidders, so still very aggressive market.

the cayman significantly under engineers estimates again. when we previously reported to you, that is a trend we have seen since 2008. we have seen very good bids in very low interest rates, and that has been very helpful for ratepayers. the issue before you includes three parts for main pricing. reimbursement bonds of $17 million for reimbursement of expenses reoccur for the mitchell's case and the refunding of bonds that were previously issued about 10 years ago. wheat -- the only refund bonds are issued when there is a savings for ratepayers and are required under policy to make sure there is at least a 3% savings for those. the estimated borrowing costs are between 4.5% to 5 percent signed, but i would not be surprised if we did better than that. authorizations are the same they

have been in the past. the majority of the proceeds going for project construction. we have either completed or have under construction right now over $3.3 billion worth of the 4.6 billion, so we are only borrowing money when we need it to refund water commercial paper and to pay for water capital project investment. the funding with debt service cost at $600 million, and 17 million for settlement reimbursement for a total of $653 million. some forms of agreement are numerous, as is always the case when we come before you, but they are in standard form, and are what you look at each time for the due diligence of the bonds. other related items we would like to brief you on is the

financing resolution asks you to give us additional authorization to do refunding with the approval of the stanford cisco public utilities commission without coming back to you. -- san francisco public utilities commission without coming back to you. that would be no. i know you recently revisited this topic. -- that would be new to you. the goal is to be able to do this as timely as possible refunding to capture as much savings as possible. the debt savings reserve, we still have the absence of bond programs in the marketplace. we have solved that problem because of being blessed with a great deal of bond premiums, and they are when investors pay more than expected because of our coupons structure and credit quality. we have allowed ourselves to

have enough sources to fund those with the reserve. that is a great rate for dues payers. because 15% of our water is used by two private entities, we continue to have a sliver of exposure to taxable debt and have been borrowing with the lowest cost short-term commercial paper about 1 percent signed. we have also gone to the state and asked for permission for volume capacity award, and it does look like we will have a favorable award. we are currently being recommended to issue what would have otherwise been taxable debt to the tune of 59 million to cover the exposure to private expertactivity.

i mentioned the rates are similar to what we saw in the 1960's. it the fed has come out with the most recent statement that they expect to continue to keep real interest rates around 0% until 2014. we hope rates continue to go well, but we never know how long this rate environment will last. we want to come back into our refunding as well for july 4, 2002 bonds we issued 10 years ago. otherwise, i do not expect you to see me for new money until 2014. we are borrowing 3.3 billion, asking for another half a million for projects. 600 with financing costs, and the commercial paper program we would not need to sell around

2013 for the next. we are the steps through the 10- step program. we can really see the light of the end of the tunnel on this. supervisor chu: can you explain the volume capacity authorization. >> each state is authorized to issue up to a certain amount of tax-exempts borrowing under federal walls. while we have noticed in california with the resolution of public entities, there have not been as many folks are willing tax-exempt as you might expect. that is an opportunity for us, because the fed will still allow the states to benefit. so we filed this application as an the other public entities can do, and what would have otherwise been issued as taxable

debt, we may be able to issue it as tax exempt to get a better deal for rate payers. we were successful the last time, because there was still capacity in the state of california, and it looks like there is another $59 million we would be able to tap into. supervisor chu: that is great. you talked about the components of this item. the general fund i know has litigation reserve that is meant to really pay out or have money in place for anticipated payouts. does the puc per have one? the you intend to set one up -- do you intend to set one up? >> we do fund on a cash basis a small amount we expect for a normal or recurring items. those are very small numbers.

this is very unique. it had to deal with fiat capital projects and number of years ago that had been an open case. i would not recommend we budget anything close to this. since it was related to capital projects, we can go through tax- exempt financing to reverse operating fund. supervisor chu: i know the budget analysts will speak on the report. i did pass out a number of amendments i am proposing. one would allow them to move forward with refunding in the future, and i think that is a good thing. we want them to have more cheaper way than we currently have. that is good for ratepayers and us. also, we might want to set parameters on how it is they go out there. having and achieving a certain minimum level of senatsavings, e

as they can come back and ask for additional it they need it, authorizing or providing authorization that is a five- year term, allowing in making sure the assets in debt is a mind, and in making sure they are reporting back to us on the savings might be good, rather than having the blanket ability to do that kind of funding and having to check in with the board. i would like to make those amendments. i would like to wait for the budget analyst report first. >> madam chair and members of the committee, regarding item two, we report that 0.97% interest rate for commercial paper at the current rate compares very favorably as he has indicated with the long-term debt rates of between 4.5-5%.

we recommend you approve the ordinance to authorize additional commercial paper. regarding item 3 on page 6 of the report, we report the debt service numbers come out 1,335,000 and over 30 years, that includes the principal for the bonds, as well as interest of 375,000. regarding authorization that they are requesting to refund outstanding bonds, their plan is to refund at this time about $139.2 million that would result in the savings of about $9 million on a present value basis over the life of the bonds.

our recommendation for item 3 is shown on page 7. we recommend you amend the resolution by reducing the total request total ever in it -- total revenue bonds by 25 million. that would be from 692 million to 676 million. and that would be to meet the anticipated needs. by replacing the 675 million with 650 million on page one, line five. page three, line 25. we recommend you approve the resolution as amended. supervisor chu: thank you. with regards to the budget analyst recommendation to reduce by 25 million. >> we would agree. i would also like to agree and point out that there really are to write answers to the number authorization. -- two right answers to the

number of authorizations. we typically reserve the ability to upsize and events in the events the rates are so low. so we can live with the 25 million. we will need to sell another group of bonds in the future, and there really are two right answers in this case, so we will respect the budget analyst recommendation. supervisor chu: members of the public that wish to speak on items #two and three? >> supervisors, i have met with mr. todd reistrom from time

to time where he has given me what ever document i need to review them so they can better understand what is happening in this city and county of san francisco. what i am really interested in is the sewer system improvement project, where for those that are listening at home, 80% of the sewage comes to the bayview at this point. 20 percent signed goes to the ocean view. -- 20% goes to the ocean view. the san francisco utility commission is talking about dealing with the digesters, an important component, 50-70 years from now. i was paying attention and wondering why is this? if you address