with lafco commission to see their availability. >> is there anybody here -- >> is that a tuesday? >> yes, that's a tuesday. >> before the puc hearing. >> that's fine with me. >> why don't you let the lafco people know we have an agreement here. the only thing i have is 11 o'clock if we can call by our general manager. i'm sure he would appreciate me not calling him that day. >> i will check with lafco and get back to you. >> all right, thank you. [laughter] >> you're the best. other commission business? >> i have some business. >> please. >> in fact, i have quite a bit of business. first of all, i would like to request that we put the security assessment on the next agenda in closed session as we used to have it. i think it's time to revisit that in light of recent occurrences. so, i'd like to do that. and secondly, i would like to

talk about what i see is a breakdown between the communication of the commission and the staff. there seems to be, in my mind, a feeling that staff is just going on doing what they choose to do without any answers to directions that we give. one point was yesterday i received an e-mail about the various questions that had been asked and the question was had they been answered. well, i don't know the answer to that. but my guess would be that probably most of them have not. and it's lack of concern about what the commission is saying. i personally have had situations happen. and as you all know, for easily four years, i might say, i have

been talking about real estate and the surplus that we have and what to do about it. and all i would get would be reports. nothing was ever actively done. i have -- i was going to ask secretary to see when this started, but records don't go back that far. that's how long it's been and it's a huge disregard for me personally and for the whole commission because we've been asking about this. furthermore, it's a disregard for our rate payers, because some of those lands do have value which could be passed along to our rate payers. some of the lands would make wonderful gardens. some of the lands would make wonderful parks, and we are denying our rate payers that. now, a very specific point was in the chronicle on april 12th,

which was a friday, there was a two-page piece on the francisco reservoir, which i know we're going to discuss later. but i want to make this point. it goes on and on about the different groups banding together. they want the reservoir, they want the [speaker not understood] as a free church, they want it as a park. why weren't they told years ago that this is impossible, we cannot give them this land? that land belongs to bayview hunters point. it belongs to pacific heights. it belongs to everyone, not just telegraph hill -- excuse me, russian hill. so, i really feel there was a huge lapse of proper -- of discipline in term of what our properties are. furthermore, this was answered from us 10 days after the fact, after this was in.

there is no excuse for that. that's very poor. management of dealing with problems, dealing with public concern. and i must say -- and this is directed to you, michael kern, i really feel insulted personally that this has happened. that after all these years that you're showing a disrespect for me as a commissioner. and everybody in this room knows how many times i've asked to have this solved. so, i want you to know that i'm very, very displeased and i'm also very sad that it has to come to this. so, in closing, i would like, mr. president, if you could get together with the general manager to clearly define the role of the commission

vis-a-vis staff, general manager, because somehow the momentum has been lost. >> thank you, commissioner caen. and that will be communicated to the general manager at the appropriate time. and obviously sooner than later. >> thank you. >> i appreciate your comments and i appreciate your concerns, and i think that whenever a commissioner feels that they have been not given the due respect, we need to be very, very vigilant about making sure that they are because at the end of the day, we're appointed by the mayor who is elected by the people of the city and county of san francisco and who are here to represent the people of the city and county of san francisco. and, so, i think the lines are pretty well drawn. it's a matter of reigniting the lights on democracy and how it works. commissioner, i think you have an introduction to make. >> i do. i'm very pleased to welcome the second grade class from the san francisco day school who are here with their teachers and here with several parents.

and we're so pleased to have you here at the san francisco public utilities commission meeting so that you can get a sense of some of the meetings and how they work and also with the hopes that maybe some day in the future, you all will be -- one of you will be sitting up here if not all of you and helping to set policy for san francisco. would you like to stand up for a minute, second graders? (applause) >> now, where is kiera sitting? >> here's kiera. >> welcome to the commission. it's nice to have you back again, the students of san francisco day school and the teachers who i'm sure are underpaid and work very, very hard. [laughter] >> welcome to the commission. thank you, commissioner. >> thank you. >> and proud mama. >> proud mama. >> report of the general manager.

>> good morning -- well, good afternoon. first of all, i just wanted to say that i had the opportunity to talk to commissioner caen and she voiced her concern and i take definitely full responsibility for the agency not adequately responding to her request. and we will right the ship and we'll take the steps necessary to make sure that we prioritize any wishes of the commission. and i'm willing to work with the president of the commission to do so. so, i truly apologize for that. with that being said, you indicated that francisco reservoir was in the paper. and what we would like to do is kind of give you an update of the conversations that we've had with rec and park and the supervisors.

but i want to ensure you that we never said that we will give this property away for free. and, so, we've been in conversations of var market value which is, i think, pretty much everything we've talked to them about. so, i've asked michael to come up and talk about the conversations that we've had. >> michael [speaker not understood], deputy general manager. first off, i apologize to commissioner caen for any disrespect i might have shown her on the francisco reservoir, any real estate item. they are very difficult items in some respects, but we need to communicate better and make sure that we're moving things forward. francisco reservoir is an interesting site in that we have been very adamant about obtaining fair market value for the site. if we due to surplus put it on the market and there's been a lot of conversation with supervisor farrell's office, with some of the community members and some of the beliefs

that they have that we can just turn the property over to another city department for free, and we've made it very clear that's not the case. we also are very much aware that now rec and park has francisco reservoir on their acquisition list for open space to be converted into a park. and we are actually trying to research more the recent acquisition in the noe valley town square property which they paid $4.2 million for for a park on 24th street within noe valley. we want to look at that appraisal and see how it pencils out against their purchase price. so, we are in discussions with rec and park and others that are -- keep coming forward and are interested in the site. if we can enter into some sort of exclusive negotiating agreement with somebody about that, then we can actually talk about the terms and conditions for that site and what the future use might be of that site. the things that we've done at

francisco, we've taken the roof off as you know, that cost us about $300,000. so, we don't have the safety issue any more, but we haven't done anything else to that site except secure it at this time. we have a number of other properties that are in various stages of sort of development or sale. the kmj property down at sunnydale that we've hearkened to the commission, is at the board of supervisors. it will be introduced at the board of supervisors very soon. we have a couple properties we're moving forward with potentially identifying as surplus that we can actually put out for bid. and once we have it out for bid and we've identified a party, then we can talk about what the disposition of those properties would be. so, we have various things, but this is listed as francisco and i want to make sure you understand we have been very forthcoming and transparent in the public realm that we want fair market value for francisco reservoir. >> well, one problem we have, the last i heard, was that we don't even know the value of the property. >> that's true.

we have had appraisals. and again, appraisals are confidential. we don't release them. they are there for our use in negotiating. and we are doing an updated appraisal at this point in time to make sure that we understand the value in today's current market. >> well, this has been my point. i mean, there has been no reason after all these years that we don't have some valuation of that property. and my discussions with you earlier -- you know, clearly there isn't, and that's what i don't understand. i do not understand why we're not moving faster. it's been years. i'm really adamant about this, truly. and another point, the people of russian hill thought that they could get it for free. i'm not saying that we ever said they could, but they were under that assumption. and what i'm saying is that should have been stopped years ago. they never should have thought that because it's impossible.

so, you know, i'm angry and i've been talking about this for years now and i'm not -- i'm not going to let up this time. i want to see these properties brought forward. there's no reason why they can't be. you've been sitting on them for years. >> and we will bring forward -- the problem we have is we can talk about the properties in open session, but unless we have a buyer, we can't talk about it in terms and conditions and right now we don't have a buyer for francisco. we can put it out for bid. i'd be glad to take direction from the commission. we can get an appraisal, fair market value and put it out nor bid. >> i think the commissioner is referencing we need an inventory of all the properties. >> we have that. we have some indication of what our surplus properties -- >> and i'm sure commissioner caen and i also know how real estate works. we've been around for at least 29 years. and i think that we know

exactly how these things are run and we know you can't put out an appraisal unless you have an offer. but at least give us a ballpark figure that i think you're asking for as to what the inventory is, and we can make a determination of what to sell or not to sell that can go back into the coffers. isn't that your intent? >> i received a report two months ago, three months ago with the properties and some did have values, and that's where it sat. i have stacks of reports and nothing ever happens. >> all right. >> question perhaps to the city attorney. the process for disposing surplus property that's in the charter, could you outline that for us? >> briefly, nor even [speaker not understood], city attorney's office. ~

when the charter was amended in 2002 giving the commission exclusive jurisdiction over your real estate, that it also provided that you could dispose of real estate but was surplused to the needs of any utility. and, so, although, for example, the francisco reservoir is historically an asset of the water enterprise, under the charter amendment in 2002, you need to make a commission determination before you could transfer it to another city department or outside of city ownership, that you do not need that property for any water, wastewater, power purposes. so, that would be the first step, would be for the commission to make that determination. in comparison, you'll recall a couple years ago you made the decision to dispose of the property at 17th and folsom street. did you sell that to the park

and rec department for fair market value. you made the find thattion that property was not required for any of your utility purposes and then you entered into an agreement with rec/park for the fair market value of the property. and just so you know, commissioner, that fact of how you conducted this position of rate payer property was communicated to the community organizations. they've chosen to listen to a member who has some legal theories that are different than ours. so, it's not that they haven't heard that that was a requirement. it's just they've chosen not to accept that. so, in any event, once you go through that process, then it goes to the board of supervisors in either case. if you're transferring it to another city department, the board has to approve a

jurisdictional transfer from one city department to another f. you're selling it to a third-party, as in the case of the mountain view property that michael referenced, ~ the board has to approve the sale of title outside of the city's hands to a third-party. is that what you're asking? >> in part. there was also a provision -- i don't know if the law has changed on this, but it used to be that once the commission declared a piece of property surplus, it would then be transferred to the department of real estate for disposition. >> that is -- there is an administrative code set of provisions that allow that course of action that you could declare something surplus, and then the department of real estate would have the responsibility under the administrative code to put it up for public auction or at that point in time another city

department could seek to acquire it and then there's a state law that requires that it be offered to other governmental agencies or nonprofit organizations first before it goes to market, all at fair market value. i think that we haven't addressed this specifically, but given the charter amendment in your exclusive jurisdiction over your real assets, i would say you have the deciding voice in whether or not you hold onto a real estate asset or whether you transfer it to someone else. >> one of the things i'm curious about is what authority do we act under once we have figured out the property is surplus to our needs, to hold onto it for development of options? i know we did that.

what is our authority to seek development of properties that are surplus to our need? >> this will be a little more something that would require a confidential attorney/client advice here. but the question is can someone compel you to -- if you've decided that you don't have a specific need for it, can someone compel you to transfer it to someone else. and i think if you don't make the decision that it's surplus to the needs of your utility, that you want to hold it for future potential use, i think it's within your discretion to do that. but i think there are maybe some caveats to that and i won't go into that. >> i won't ask you for a legal brief on that in open session. i guess my question, at the

bernal property we were holding on to the property for maximizing value to return to the rate payer. and i can understand why we do that. i guess i would have question as to why we might hold onto property to do something other than maximize the return. so, if our intent was to develop a use that was best and highest and best use, i'm curious as to -- and i don't need an answer now, but i am curious as to what authority we'd have to do that. >> i think we have the authority. it would have to be on a case-by-case basis. would you agree, counsel? >> certainly case-by-case basis. this particular extreme example, i don't think it would be within the scope of your authority to retain property because along with retaining property comes liability and cost if it was for affordable housing or something that's completely outside of the scope

of your mission under the charter. so, but it would definitely be a case -by-case analysis. >> right. >> my only point on that is as we look at options, probably the simplest most direct option is if we determine that that property is surplus to our needs, we can say so ~ and then we can turn that over to department of real estate to obtain fair market value for us. in the process they will find out what fair market value is. >> i think the appropriate thing for us is to have a immediating that would incorporate the issues that we've raised because they are sensitive attorney/client privilege issues. and i would suggest that we check our schedules, secretary hood. by the very least i would like to join commissioner caen to have a meeting at our headquarters in private regarding this issue, of course, and any other member is welcome to come. >> we could only -- we could

brief you and commissioner caen, and we can actually have open session discussion of your policy with respect to this. so, maybe we can prepare for that and -- >> i think the first step needs to be for us to meet with our staff and determine just what -- where the issues are, where the problems are so the concerns raised by commissioner caen are dealt with and administered. so, that's why i say i'm willing to spend the time with her and report back to this commission if that's more appropriate. i know time is of the essence. people have a busy schedule. why don't we try to schedule something before our next hearing if that's okay with you. that way at that point we can have a further discussion on the issue. is that okay with everyone? >> yeah. >> well, i was going to say, ms. kern, you could give the material that you gave me the last time to president torres and he can review it. i mean, there being nothing

more to do, it's there. it's just we've never acted on any of it. >> and that's why i think we need to determine what our action would be, number one. number two, to describe the nature of each property, to see whether it fits within certain definitions for sale or not sale, or there is a reason to keep it irrespective of whether the value is going to increase. and i think those are very robust discussions. and you've raised some legitimate issues. and i think that we need to sit down and have a face to face chat about that that reflects our issues as well as yours so there is a meeting of the minds here. consensus is always a good thing, but you can't have consensus if one party is not speaking to the other. all right. we'll move on. >> so, that concludes my -- >> is that was it? >> yes. >> simple. ~ >> all right. any public comment on the general manager's report? all right. there being none, we'll move to item number 8.

bawsca. >> good afternoon, mr. president and members of the commission. >> good afternoon. >> art chancing with bawsca. i wanted to start by addressing something commissioner moran raised regarding the water supply agreement update. it references the june presentation of this commission about our working on water supply management -- future water supply management issues. i look forward to that discussion with you. it doesn't necessarily relate to provisions of the agreement, although there are some that relate to that. steve ritchie and i have begun working on how we might choreograph a presentation to you. that will go on in the next several weeks once he gets back to japan. we are working on it and look forward to it.

the second item commissioner moran referenced was rate structure. todd and i discussed that yesterday. we had hoped to do some work, preliminary work on that this fiscal year. our time was consumed with the preparation issuance of the bonds so we did not make headway we had hoped. and it is something that did appear on the list of item that we presented to our board last month, as we presented our preliminary budget, work plan and budget to them. and we said -- we had some financial constraints. and we said, this is an issue that would be of great benefit to the wholesale customers to coordinate with san francisco on the assessment of what rate structures might be, what alternatives might make sense for both parties. however, it is not as vital to the success of our agency as a number of other issues that are very critical and very time intensive. so, we have not budgeted time to work on that this coming

year. were i to be staying on, we would try to fit something in in some manner, but i suspect there is going to be a period of delay in our own work plan as we budget. we'll have to accommodate as we go through our mid-year budget review. so, i don't think we're going to get to this in time for a product that would affect rate structures next year. i will leave behind the proverbial envelope in the desk drawer for the next victim and say, this is one of those things that you should attend to, because it is important. for example, when mr. harrington addressed our board before, just before he left, he said rate structure issue is an important one. from the wholesaler's perspective, he said maybe volume metric charges are wrong. maybe it should be based on the individual supply guarantee, which would make it entirely fixed, a fixed charge, not billing metric at all. in other words, each agency, almost every agency has some

contractual capacity that they have contracted with you for, it would be based upon that. that doesn't change from year to year, and that would be a fixed charge. that would put a tremendous burden on the wholesale customers to either absorb changes in revenue based upon their volumetric charges or go to a fixed charge themselves. ~ and that's the issue. i think intellectually it's one of the most challenging things we could get together and grapple with, but done separately it's a disaster. it needs to be thought through. so, i wish that we could deliver something before the commission for the customers within the next year. i just don't know that that's realistic, so, that's my comment on that. i do want to share with you a comment on an item that's coming up later in the agenda. i want to get the drop on it, so to speak. that is in our comments on the wsfp update, we suggested that the commission look at

alternative ways to manage a cash flow problem. one of the ways we cited was to change the method of funding for the watershed environmental group and program. bad idea. i reached out to one of of our environmental colleagues and discussed it with them. they were open. maybe they had concerns. what i've heard back is there is a great deal of concertificate nation. we do not want to see that program gutted, thrown out of the water, destroyed, verbs, that is not our intent or desire. forget we mentioned it. ~ we do think that it's important to look at other alternatives for management to look at, but it doesn't have to be that one. finally, you've all received an invitation to our may board meeting where we will among budgets and contracts among other thing, celebrating our 10 years of existence as an agency. some of you said you won't be able to attend. we would be grateful to any of

you that can afford to spend the beginning of that evening with us down there. and i look forward to your presence if you're able to. thank you very much. >> any comments? any public comments? there being none, we'll move to item number 9, revenue bond oversight committee annual report and audit findings. >> commissioners, joe [speaker not understood]. my name is kevin chang. i'm the chair of the revenue bond oversight committee. and this is probably one of the 11th or 12th presentation that we've done before this body as part of our annual report for planning and oversight committee. and it is my first. so, i want to thank you for the opportunity to speak today. our committee meets monthly in a public setting.

we take public input. we review in detail all the capital programs [speaker not understood] program, and eventually other bond funded programs such as [speaker not understood] may be power generated related. in our meetings we've heard from a number of interested bodies and also members of the public and be able to take that feedback in our evaluation of all these projects. what i'd like to do today is review in a little more detail the most updated information we have on the status of whatctionv the wsip program will be on time and on budget which is a primary concern for all bodies concerned, as well as whether or not there is any anticipated additional charges that may not have been accounted for within the [speaker not understood] budgetary process. we engaged a [speaker not understood] firm as part of our purview as an oversight committee to take