up, sir. number one. seeing none, public comment is closed. again want to thank my colleagues the people that came to speak and the people that spoke in the public comment it's encouraging within our veteran population of the things that are happening but certainly from my prospective with seniors and conditioning angling population in san francisco that's going to present an increase in problems over the years we have to do all we can especially with veterans you are have a soft spot for i appreciate the va and your efforts and bobby and for the advocacy but we need to stay at this in a big way. with that, i will propose ending did hearing colleagues a motion

to file number one. there's a second can we take that without objection? madam clerk items it through 4 >> appropriating the estimate expenditures for a selected departments of the city for may 2014 item 3 the salary for the positions in the proposed appropriation for the departments in fiscal years 2015- 2016 and number 4 the mayors proposed budget for the international airport and the transportations agency port public library and public utilities commission for the fiscal year 2014-2015 and 2015- 2016. >> okay. thanks so we have 3

of our commissions i'm sorry different departments up. is the director here >> okay. if not we'll skip on director reiskin i don't see him either. do you want to wait a minute for the director. okay. why don't we wait we have mr. kelly here why not start with the puc. >> so thank you and good morning, chair farrell and supervisor avalos, supervisor breed and supervisor wiener. take the opportunity to provide you with an in debt information for 2016- 2017 and 2015- 2016. we appreciate the opportunity to give you an high-level information but thank you for

meeting with us individually about the questions and concerns. today, our cfo and assistant manager will be making a detailed presentation we have included a number of silenced that address questions you've asked us to address. as you hear today's presentation there's been a lot of great things we've been doing at the puc while we continue to provide twenty-four hour 7 days a week for pour services we have a great track record with the water system program that's over 80 percent complement. we're planning the sewer system improvement program it's well underway. we've reached a major milestone in the planning design of rebuilding our southeast treatment facility.

also we're doing an excellent job of rover and restoring our facilities after the rim fire but not out of the woods yet we continue to permanently restore that area per we're responding and managing our water supply during the worst flood in california history also overseeing the alleging infrastructure is both is a challenge for me and as you the city leaders and policymakers. as i talk about as i talk about in april 30th meeting the biggest challenge the puc is facing is a fiscal sole vinsz of the hetch hetchy power you've heard me talk about the wastewater improvement needs but now a you're increasing hearing the country at our house/senate

water and supply and water and power facilities those facilities have served the city well by they're not 60 to 80 years old and in need of significant investments we've worked with the mayor's office to balance our situation in this two year budget and over the long term. they're a lot of hard choices to make but working on multiple front i'm going to turn it over to todd to go over more detailed presentation i'm hereafter the presentation to answer questions >> thank you mr. kelly. >> so hello todd here. i'd like to walk through some slides as well as the public and echo what mr. kelly our general manager has said. the number of our slides addresses the specific questions

on the april 30th hearing from our department. we for the public and the television viewing audience we care about the infrastructure the water, the sewer, and the electricity largely inevitable because most of the facilities are underneath the street. what it means i'll briefing walk you through the key contribute of our budget on slide 2 our operating budget our capital budget and what it means for san franciscans for the power and sewer needs as well as the select programs and so commissioner dooley's. excuse me. todd i need before you start i need to express great concerns i have about the puc budget and thank you for coming to my office the other day and talking about the

policies we could have around our reserve and avoid a train wreck i communicated with the mayor of this city trying to avoid a train wreck i'm not ready to approve the puc budget we don't have conversation back from the mayor's office about providing statement that we can't be made and options that's not been provided i feel like we're heading towards the cliff we want the puc to deliver its power and water to customers all over 0 the bay area but if we not working out in a consensus way this administration is known for a way to create a pathway

where we can all meet our objectives i'm ready to table this budget today. so maybe we need time to figure out how to pause today or have this budget come back later today and hear the leadership of the mayor's office there was no communication for the $1.5 million was going to be appropriated and that is not how city hall works and not the way city hall has been working over the past 3 years and this is a critical program. one that has 8 votes on the board of supervisors that's serving we'll have renewable energy and provide residents of san francisco with the option to

stay in a program and not be on the pg&e operating with dirty energy and we've been stone walls by this administration by the commission additional also i believe by the staff of the puc if we're not dlooishl trying to resolve that those the other thing is to table your budget. >> thank you, thank you supervisor we've heard our comments and concerns. >> so we can have the public comment i want to make a motion to table our budget. >> understood. >> supervisor mar. >> yeah. i want to photocopy with supervisor avalos point. i i am really sensitive to mr. kelly but i won't support any

budget that activates a reserve i'm not sure the puc a has been working hard enough i know you've identified $4 million in savings i want to know if the budget analysis can take a color look at how the puc could provide other options other than raiding fund >> supervisor breed. >> thank you. i also in agreement with supervisor avalos i'm prepared to table the puc's budget i don't think it was done in a collaborative spirit and to use the program let's go solar and to play two programs against one another is not the way i prefer we do business so i think that's

important we send a strong message and table this budget until it comes back with the appropriate funding for our clean power program. we're making incredible steps and i think that we need to push forward and we have the court to do an incredible program and working with agencies those are the things we've talked about and we're not prepared to back down from making sure the possibility of a real clean program in san francisco is a real possibility. thank you >> okay. so let me significant this why don't we go through our presentation i think you've heard strong comments and we'll have our budget analyst talk and we'll entertainment the discussions. >> thank you. i appreciate the supervisors frankness harassing

as was requested we provided to our office as well as the controller's office all the scenarios over the 10 year process we've considered and the choices went from difficult to hard and not an easy solution so we want as well as staff we've worked claifb with the mayor's office and we'll work with you bus those are policy choices their between hard and - >> todd i really appreciate our showing me the different scenarios what i asked for was written down options there's not been a strong effort to make that communication i made that request of controller and that's not been done saw i'll cover the

written down portion on slide 19. the presentation that is broken down or broke down into 4 parts the core priorities on slide 3 and on the video monitor for our viewing audience much of our budget is staying the same and it was known by mr. rose for the budget analyst for round one. the operating budget is growing over the next 2 years approximately $140 million and it recommended to capital on slide 6 you'll see that $53 million is related to capital investment and in each case water, power and sewer it's one hundred-year-old facility that we have the stewardship responsibility that includes the

general reserve to curb on the facilities like the rim fire we're actually recovering from the third largest wide fire no california and doing the lower cherry aqueduct and thank you for looking at those recovery projects. the budget is going up because of capital regulatory electrical costs in particular the subsection agreement and pg&e has proposed to do very significant rate increases for transition distribution as well as the street lights of all san francisco. personnel covets and other costs are largely increasing the majority of our budget is in

capital related. the next couple of charts summarize the important things like 90 percent plus gets paid for by service charges and property rentals as well. the use society is capital costs about half of our budget is through debt service e.r. capital that continues to be the course over the next several years. on the water department on slide 9 you'll see the changes are largely capital on the wastewater department slide 10 the changes are capital and general reserves and those will be used to curb on the impact over the years. the house/senate water and power which is the part of the discussion on april 30th shows

you here that with large increases of electrical power costs and also the impact of the drought i should mention the cost of the drought meant there was another shortfall of $13 million because of lower power generation and sales that again on top of the rover of the rim fire has created a significant burden on house/senate. the house/senate balanced options were discussed on april 30th but again for the viewing audience that was a combination of very difficult choices and that included higher rules of evidence revenues from the general funds our need to issue bonds and one of the last times what the cherry damn

improvements and the capital cuts deferrals and we hear the supervisors concerns on the funds program. what that meant with the reprogramming of those funds that the general rates didn't center to go up to that's one of the difficult tradeoffs now, it's not paying it's natural gas bill that's an improvement as well as moving closer to cost of service obviously, the budget is $15 million lower with an than what the city would be paying or the unified school district or the city college would be paying to pg&e if we didn't have the house/senate system. so even with the rate increases proposed a one penny over the next two years it's $45 million

cheaper next year and $40 million cheaper in budget two. this is important as a city family to keep house/senate healthy in particular and how we moved open cca. the power revenue boundz bonds are needed the first time and the capital cuts because the rate increases were not as much ever with the programming of cca and another millions plus was cut the general manager and i shadow here last year we're still cutting a large number of critical capital we go through every project and they score antonio's across four regulatory and financial and the

implications we know we had to take two off hype with the rim fire it's impersonal potentially he million dollars of dollars of potential revenue lost because of the providing critical electricity to the muni sf entertainment commission system and the stoplights in san francisco. that's the difficult balancing we do. there's over $2 billion of capital needs over the next 20 years what you see in the capital plan and we've required to update that every year and bring that back to the commission and discuss the finding $1.2 billion in house/senate over the next 2 years and that's the cuts and deferrals so the cuts that mr. kelly mentioned will be sixth

and we've been talking in the billion dollars for heft and this is what mr. kelly mentioned on the voters told us to do this largely there budget a few has come in over the supplemental more money for the damn replacement and the power infrastructure we've been discussing that and i'll share about the street lights needed additional money for this is needed so our 8 point plus million dollars capital plan the largest will be the sewer system over the next 10 years about $5.5 billion of the 8.1. in water we're seeing smaller

numbers and thank you to the board for previously passing more water places being built. larger pooimdz is providing millions of glances of reliable water to the bay area. we've completed 3 to my left $.4 billion has been that issued in bonds we're averaging 4.3 percent we'll need additional money if the supplementals their 89, 10 and 11 items before you today >> mark call 9 through 11. >> yes. mr. chair. item 9 the appropriating approximately $360 million for

the prepayment bond and water depositing for the capital improvement from 2014-2015 to 2015- 2016 and item 10 the ordinance prostrate approximately 2 hundred and 15 million house/senate cap and trade for the house/senate power improvements for the fiscal year 2013-2014 and 2014-2015 and 2015- 2016 and ordinance amendmen amendments. item 11 ordinance prostrate 9 hundred and 61 million of revenue bonds for wastewater improvements for 2014-2015 and to 067 and amending ordinances >> and finally on the water system improvement the proposal

is 15 miles a year of water main replacement interest so the key water projects that are still under law part of the 19 percent of that's not done the placement to be on track by 2018 and 2019 as well as the bay tunnel under the bay. >> todd sorry. what was the actual date that was programmed for the cal berries damn i know we have the conditions on the hillside do you recall >> it was 2018 from about a year ago so this is a few more months that's been detailed with the mitigations we've dealt

with. the sewer system improvement program the average utility the biggest cost the digest rebuild in operation since 1952 so it's $7 billion over 20 years and $2.7 billion has been endorsed by the commission and that's included as well as many our 10 year capital plan as well as the supplemental being requested. the largest supplemental being sewer related that's $951 million in our agenda today and other key work is in the 15 miles of sewer remnant you'll see several sections of road we're cooperating with other you'll see activities for the

next several years making sure we replace what needs to be retained. the sewer mains includes over one hundred miles a year for condition assessment we're targeting those surgeries that are month at risk for collapse and we've spending and stretching the dollar. the house/senate program that includes the programming of 19 and and a half million dollars assumes $1.2 million i've seen over $2 billion over the next few years the numbers will be large every year. we've we've tried to stretch out by issuing power revenue and water revenue bonds for water and where it's warptd and looking at whatever cash funding

and that will be inclusive of the cca money being reprogrammed. the financial solvency item this is to supervisor avalos point in addition to the details numbers we've provided your respective offices they summarize into this slide as well as the key alternatives what they could have been without the cca programming they have higher generated increases faster and the revenue bonds that is a higher general fund district rates over the next 10 to 20 years. or one other item is the general obligation bonds as recently as the 1970s some of the equipment needs and facilities meets for

example, the street lights used to be funded by the geobonds there's a lot of needs for the geoprogram and the needs to out strip the property taxed affordable so it means higher property tax that's a trade off. the capital deferrals every time we look at this we're trying to balance and minimize the risks so we've made one hundred and 55 million cuts on top of that that's the best if we have more cuts in capital deferrals i have to responsibly tell you and the mayor's office it comes with risks and that's the operational failures. otherwise program cuts would happen we have energy efficient spending we think it is

important there's the good solar sf funding and the multiple build out spending those programs are important for us as the public programs and those are a difficult choice and lastly the operating costs the house/senate budget that's related to power a good part is people. and then the portion that's not people is the transition the distribution and electrical costs as well as the street light maintenance. so this budget comes down to difficult choices besides that it's the energy efficient programs that are important to us. so those are the key areas we've summarized as we heard requested along with the detailed binder in each of our offices.

planning for the future we think all the difficulty i want to mention and i know the supervisors know that for the television audience our budget is largely only inflationary costs except for the staffing and low cost bond funding we have a good run business and the water and sewer improvements are kept down in costs and the affordable power everyone should be proud we have power for the general honda hospital and others hospital that's 63 percent less than expensive than pg&e. it allows you and policymakers

at that stretch the dollars dollars further it's savings over the next two years in the budget. this is to give you a couple of pictures on slide 22 the mountain you tunnel did single most expensive tunnel that's been it operation for the last 80 years we've done reinforcements but we've been able to photograph and track a bio segment of the tunnel where we have a cat traffic collapse or under arrest that's why you see the significant hetch hetchy balancing request. the solvency over the next 10 years comes down to a message