chairperson chu: good morning, and welcome to the regular meeting of the budget and finance committee. we have two clerks today. mr. young or mr. derrick, do you have any announcements today. >> files should be submitted to the clerk. items will be on their board of supervisors agenda unless otherwise stated. >> also, we have jennifer low and bill dillon. would you read item one, please? rex -- >> ordinance no. 7712, an ordinance recognizing revenue losses of 30 four million 177,330 two dollars -- $34

million for the department of public health. for the department of public revenues, $25 million in surplus general hospital revenues. and $655,000 in general fund reserves for state revenue losses for expenditures at the department of public health. chairperson chu: this item is a correction to action we have seen previously. this should be correction to the legislation. if i can, i can ask kate from the mayor's office to speak to this item cracks -- >> good morning. as you mentioned, this is a correction to the supplemental appropriation that the board of supervisors approved for the department of public health. there was an error in the delineation of the source. this just correct the source.

it does not change the total amount of the appropriation. >> thank you -- chairperson chu: thank you very much. is there anything you would add to this appropriation? rex and no, madam chair. there is not. chairperson chu: what we open this up to the public? are there members of the public who wish to speak on item 1? >> good morning, supervisors. i would like to thank this committee for hearing items one, two, three, and four. i think having these items on the agenda at least gives a little bit of transparency as to what is happening inside the department of public health. i would like to thank this committee for sponsoring item number one, because i think all items need to be corrected when necessary and since the big man

is in town for lunch today i will not be able to stick around for items two, three, and four. >> -- chairperson chu: are there other members of the public that wish to speak? see none, public comment is closed. we have a motion and a second to send this forward without objection. item two. >> the department of public works to execute a design for the the glenna hospital program by increasing the contract amount from $50 million to $53 million. chairperson chu: i believe we have a representative from dpw. >> good morning, supervisors. you have before you a modification that provides funds

for additional service requests for addressing required repair work and additional administration. this is for the design and oversight of the repair work. with the demolition now completed, the full extent of the repair work necessary is apparent and we're forecasting completion of construction of the remodeled by the end of this year. i will be happy to answer any questions about the amendment itself if you have any. chairperson chu: thank you very much. mr. rose? brecht's madam chair and supervisor avalos -- >> madam chair and supervisor avalos, at the bottom of page 3 we point out that the total design agreement is for $53 million and that represents 9.2% of the

total budgeted 580 four million dollars laguna honda hospital replacement project. our recommendation is shown on page 5. we recommend that you amend the resolution to increase the existing amount not to exceed an amount of $50.8 million up to $51 million. the reason for that recommendation is as you know, there was another modification inadvertently being requested being approved. since it was less than $500,000, it was not subject to board approval. our recommendation simply reflects the fact that the four hundred $77,000 has previously been approved. -- $four hundred 77,000 has been previously approved. chairperson chu: are we in

agreement with this recommendation? rex we are. chairperson chu: why don't we open this up to public comment? are there members of the public that wish to speak seeing none, public comment is closed. spirit >> announcement for approval. chairperson chu: we can do that without objection. thank you. can we call item three and four? >> item 3, a resolution directing the sale not to exceed $261,000 aggregate principal amount of san francisco general obligation bonds and describing the said terms of the bonds. item number for complete general obligation bond proceeds approved by voters under proposition 8 in november, 2008 elections obligating bonds for

the rebuilding and improving of buildings affected by the earthquake at the trauma center. chairperson chu: do we have a department representative on these items? >> good morning, supervisors. i am here to speak to the authorization for the issuance not to exceed the amount of two hundred $65.2 million of general obligation bonds. -- $265.2 million of general obligation bonds. it would require us to find the project cost of issuance as well as the controller's fund and the general obligation bonds. we have assumed our 20-year term

as well as a conservative interest rate assumption of 6%. we currently have $7.6 billion of general obligation bonds. under the charter, the authority to issue general obligation bonds is 3% of the assessed valuation. we are currently at 1.4 -- 1.04%. if this is approved, it will get as to 1.2%. the june, 2012 payments could be substantially reduced as well. there's also a policy that requires issued debt as it pays down debt. this would bring us to the 2006 level. the issuance of these bonds would allow that. in addition, you are also delegating authority to the city

comptroller to make amendments and changes to the prospectus or official statement which covers appendix a, which has the city organization -- handles the city organization as well as finances. the report has been issued by the comptroller and the board of supervisors' budget analyst through may. it does not include the budget that was proposed by the mayor on may 31st. it does not include the revenue letter that would come as a result of the budget adoption when that happens. your delegating authority to the comptroller to make such amendments to that statement. i have the project management -- manager hear from the hospital. he is here to speak to the project if you have any questions. chairperson chu: thank you very much. you have in this authorization a maximum interest rate of 6%. where are we generally coming in? rex we have fortunately been --

in february, where we went to the market the market $260 million for the streets as well as park bonds, we got about 6.9%. but we also went to the market a few months ago and it was lower. we expect to sell some time at the end of july. so far, interest rates have been the lowest that they have been in years. we are hopeful chairperson chu: and the department -- we are hopeful. chairperson chu: and the department of public works project manager, if you can speak to this project. please come forward. >> good morning. my name is ron allen the gap. -- ron alameda. i represent the department of public health. the project is advancing as

planned. we are moving through the topping off yesterday, as you mentioned, with the ceremony. we are progressing through the pouring of concrete slabs on the elevator? . -- the elevator decks. the last two remaining portions of the project are still going through authorization. the last portion is increment four, which is the buildout project, and the increment 5, which is the major medical project. it is planned to be the last one offered up for plan review so we could select latest technology and medical equipment. those two elements are still in plan review. the remainder of the building is

progressing. we have increment 6, which is the shale of the building, this -- the shell of the building, the skin of the building. we started production two months ago of the precast concrete, as well as the curtain wall for the building. knock on wood, we have navigated through a lot of obstacles in the last few years. but we are moving nicely forward. chairperson chu: you had mentioned that you expect the project to come in within budget and on time. what is the completion date that is expected? >> we are looking to be operational by the end of 2015. right now, we just pulled in a little bit -- saved a little bit of time and are tracking toward an april date for substantial

completion. that is the trigger point for when we begin the licensing time frame as well. been a hospital, we have two state agencies to answer to. one is the -- pride -- oshpod, which is essentially the state level building department. once we reach a state of completion, the state level department of health will be reviewing the operational plan for the new hospital to be and -- to ensure it is outlined with -- to ensure it is aligned with the new hospital being built. that is at the beginning of 2015. and once we get through licensing we will be able to face any challenge is going forward.

chairperson chu: do you anticipate complications with the budget? >> we expect to have the permit in hand by august of this year. increment 5, we're looking for a permit for next year. the most immediate risk right now is not achieving a timely permit from oshpod on increment four. we have some ways to work around on that permit. i was relieved to see that we were able to advance and get the increment 6 permit, which allows us the shell on the building. we have a couple of plan c's and d's, but d'sa is to -- but plan "a" is to get the normal permit by august. >> on page 5 of our report we point out that based on a 20-

year term, the bonds will show a debt service payment of $438.2 million and that includes a two hundred $56 million in principal. -- $256 million in principal. there is a homeowner's exemption of $7,000 to pay an average additional property tax to the city of $63 per year. we recommend you approve this legislation. chairperson chu: why don't we open these two comments up for public comment? are there members of the public that wish to speak on items three or four? >> good morning.

i have graphics. this is what it needs. another $1 million. [laughter] another $1 million. ♪ maybe you did not improve it quite as often ♪ as you could often ♪ maybe i should have helped its ♪ ♪ all those lonely broke days ♪ little things you should have said and done ♪ ♪ you just never took the time ♪ but it was always on general hospital -- on my mind ♪ ♪ general hospital was always on my mind ♪ ♪ won't you please give it some more time ♪ ♪ would you please give it some more time ♪ ♪ tell me, tell me, that is going to really shine ♪ ♪ and you are going to fix its fine ♪ ♪ fix it great and find ♪

chairperson chu: thank you. it are there other members of the public that wish to comment on items three and four? seeing none, public comment is closed.. do we have a recommendation to send this out? we have that motion and we will do it without objection. can we call the next two items? items five and six. >> item 5, a resolution authorizing the direction of sale not to exceed $4040,00 thousand dollars. item six, appropriating two hundred $10,000 of the earthquake emergency response to the public utilities commission in fiscal years 2011-12 for

necessary repairs in order to better prepare san francisco for a major earthquake or natural disaster, and placing these in the controller's reserves pending the sale of the bonds. chairperson chu: thank you. >> nadia from the comptroller's office of public finance. we are asking for $4.4 million for the issuance of the bonds for the emergency response system. the voters have approved this in an amount not to exceed $412.3 million in 2010. this will be in a series. amortized over 20 years it will be $3.4 million. it will get the capacity from

1.04 to 1.07. the goal is to issue visas at the same time because by consolidating, we are able to reduce the cost of issuance. that will result in items three and four not to exceed $305 million. it will also result in a 1.2% capacity, which is substantially lower than the 3% allowable in the charter. and it will allow us to maintain the 2006 level tax rate that we have adopted as policy. again, the documents also delegate to the comptroller the authority to offer statements included in the budget, as well as other financial reports that are in your now.

-- in here now. we are expecting to have a meeting in connection with these sales so that we will be able to access the market. we have a representative from the puc you can speak specifically to the project. if you have any questions, i will be happy to answer them. chairperson chu: thank you. >> good morning. the assistant general manager and cfo of the san francisco public utilities commission. i have a brief presentation and update to give you on our seismic upgrades as well as disaster preparedness as well as the of the three water supply system. on the city fraud, we have been making good progress with the comprehensive -- city front, we have been making good progress with the comprehensive review for the required repairs to the

existing in the structure. we have been coordinating and working with our fellow city departments over the last several months. chief white, our general manager, and their representative from the water department and mr. ritchie from dpw are all working to make sure that we deploy these assets as best as possible for the city. the auxiliary water bond authorization has been covered. we are back for our second series of what voters have approved some time ago now. we are making good progress, and i will briefly highlight some of that. for the work before us today, specifically we are asking for approximately $38 million of project funding. and to put that in the context of what voters approved, it is slightly more than $104 million.

we only need a portion of that because we are in the second phase of the design construction. the items before you today and the amounts are $38 million for project funding. this includes project design as well as construction of existing facilities as well as new facilities. and then issuance costs. the planning and design of the ashbury height the tank as well as the jones tank, as well as the peaks and tunnels, that is approximately $10 million. twin peaks reservoir is coming in at $12 million in the item before you. and in construction, about 38 potential cistern sites, potential cistern sites.

we are asking for $68 million to partially fund that. we're working closely with the fire department to be sure we have adequate coverage. i'm joined by the assistant deputy chief as well as our project manager if you have any detailed questions. the last chart in your packet is a very detailed construction chart showing that we want to get construction under way. the reason we're coming before you now is to ask for that funding so we can go through the bidding process. i will be happy to answer questions. chairperson chu: i do have a question about the cisterns. will that be for the repair of existing systems, or the construction of new ones? >> the majority is broken into two parts. there are some repairs, but the lion's share is board news cisterns. chairperson chu: and i have a question for the fire department. have you determined were those new cisterns will be located in

relation to existing ones? >> my name is phil stevens with the fire department. we have broken it down into two categories. the first category is most likely to succeed as far as eir and categorical exemptions. those will be strategic to us. the second are basically backup in case the first set does not work. we have a distributor threat throughout the city at different locations to basically get the beginning of coverage in all areas. chairperson chu: the use their pride or it -- prioritize based on the likelihood to pass an eir, or based on where we want to show up vulnerability? >> primary is vulnerability. and we have a second set that may not pass initial eir. chairperson chu: do you have an idea of where they are located at this moment? >> yes, i do. chairperson chu: can you explain

where they are located? >> we have them along sunset boulevard because that is where there is a break. we also of areas where there is low head pressure. chairperson chu: and in terms of where they would -- when they would be constructed, do we have a timeline for that? >> that is up to the project manager. >> my name is david myerson, project manager for the public utilities commission. the new cistern construction, the group one sisters, we hope to have under construction in april of 2013 and continue through august of 2014. chairperson chu: that includes

sister and one, two, three, and for that you have listed here? -- cistern one, two, three, and four that you have listed here? on budget page 5 it breaks out into cisterns one, two, three, and four. >> that only includes a couple of them. there are more in the project design as well. let me turn to the supervisor. -- the project supervisor. cistern number one, we have designated as the repair work that we have it intended to do. this is turns numbers 2, 3, and for our new construction -- cisterns numbers 2, 3, and

therefore you are barred new construction. and they have come out of -- numbers 2, 3, and four are under new construction. essentially, we will be taking some money out of what was originally budgeted for cisterns and will be constructing 16 new cisterns. chairperson chu: 16 new ones from 2013 through 2014. >> correct. chairperson chu: why do we go to the budget analyst report? >> madam chair, on page 7 our report we have determined that based on a 20-year term, the total bond will have an estimated debt service of $68

million. that is $28 million in debt service and the average payment is about $3.3 million. a single-family residence with an assessed value of $500,000 assuming a homeowner's exemption of $7,000 will pay an average annual additional property taxes of $10.37. we recommend you approve this legislation. chairperson chu: why don't we open these two items of to public comment? are there members of the public that wish to speak on items five or six? brecht's good morning, supervisors. my name is bryan brown. i was on the revenue oversight committee for six years -- nine years representing this board. it is unclear to me that propositions 6 and 7 provide a

seismic upgrade. and also proposition 8, to cover the broad, i'm not sure how a dichotomy is made between the general obligation bonds which come from a different part, and revenue bonds that come from utility rates. i would like more clarification. the other problem i have is that i could never find out how much money was actually spent on projects and how much money was yet to be amortized and put to the rate structure. at the last meeting, they said they had spent 20%. that means there is a lot of outstanding. my understanding is at one point they had nearly $2 billion in the controller's find at 1.5% when we were paying 4.5% average on that money. i am also concerned about the switch