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 you'll hear repeatedly from us keeping the healthy hetch hetchy that means we'll have to be back before you and the mayor's office and other policymakers every year asking for general fund rates to have the ability to have more fully paying customers or have more power revenue bonds or have to revisit which we do every year the problematic cuts or deferrals >> real quick it strikes me we're going to have a discussion around cca and the big deficit is because of house/senate and the mountain you tunnel can you

talk about that what that means deferring capital there's a reflex what's the risk level, you know, obviously there's been a policy decision i'd rather fund that rather than that people can draw conclusions here and there's a couple of i think straightforward for example, one the mountain tunnel an assessment was done we have more information as well as the reinforcement and the realigning in the that tunnel by sector this over a 10 or 12 mile distances that needs to be you upgraded and go around and mitigate the risks every bit of drinking water the 80 percent in san francisco that we serve is from house/senate so to the degree tracers a collapse weeping we'll have to bring down

that part of the system and get access to it and move out boulders of granite spectacular the fire we have facilities that house 7 generation power unit to the degree we lose one or two of them that's potentially millions of dollars and that's why for our department reis a reserve policy that water sewer and power has to be reserves because if we don't have that based on the risk assessment in the current and prior years of one or two powerhouses going off-line that's give us a temporary availability not to

come to you for more funds. >> back to the tunnel the cat tropic problem what happens you create a defying vera. >> we look to our local reservoirs the supply is 15 percent of our delivers depending on what time of the year it could cause more disruption because it will impact our electricity generation so we'll have to do emergency repair work to with get into the tunnel to find the damage and that typically requires additional excavation work. and we will have to go and libel

do emergency purposes of power to provide power to the mta as well as other city departments >> yeah. >> so over the next 10 years and several months it's a healthy hetch hetchy discussion i know a number of you have seen the facilities dollars they're old. the other management are leading the charge is aggressively negotiating savings the savings for pg&e proposed increases to the degree we can negotiate savings that will help the financial picture too. the program updates 1 the street lights $29 million has been approved by you over the last 5 years that's a significant

investment street light replacement for the business rapid transportation and the r r over the next few years includes a near tenfold increase on r and r alone going up and $89 million for further enhancements for pedestrian street lights as well as $6 million in budget year two our plan is $60 million over the next 10 years. here's how to break down the pole rehabilitation and street light rehabilitation and then critical work for our condition assessment so between now and the end of the month we're working on a savmg of one

hundred and 40 poles to see where we triage first and that's similar to work in the sewers seeing where the money needs to be spent for the help for san franciscans and follow-up that with a further sampling of another phrase and if approved and in the budget. our work as well is basically predicted upon we're a good neighbor but the way we operate daily so we try to keep the facility services available and work by opening the contractors center which lavender in december of last year that allows more bidders and more awareness of our work to help also long term covets to keep

them as low as possible. our youth employment program is succession demonstrate when we talked about our projected 50 percent retirement gibts in our department. we have now only having a risk of retirement eligible of 40 percent because only 10 percent of our staff retired we have a critical operating position that needs additional preparedness to bring on new hires and have a pipeline for new hires for public service. this is part of american people overarching umbrella how we're reaching people of the aware of the opportunities through youth employment and school programs

including the drink tap initiative we've worked on having 31 ucsf sites and the camp supporting 80 o'connell ninth graders to learn about our center from urban all and helping us to place the youth we're one of the departments in the city that touches people's lives in san francisco everyday many times a day whether turning on the tap or flushing the toilet or walking flaethd 80 is street light. this is i inspiring to see how the young people learn about this and it's almost one hundred

percent green house gas emissions. there's within $24 million to date and 19.4 has been paid out and megawatts been installed this is helped to have 24 new jobs for san franciscans and 19 of those folks are currently employed. the jobs are presented by zip code and also i'd like to mention that the general manager and myself as well as the leadership team are here to answer questions. i want to thank you as well for the work and also the advance thank you to the budget analysis we continue to work with them providing additional information as well as the controller's office in clauks collaboration with with your office

>> let me suggest this why not go to our budget analyst report then my guess is we're going to have a robust discussion after public comment stick around. >> mr. rose. >> mr. chair and members regarding the puc's deappropriation of $95 million for the clean power san francisco program we are reporting on that request in there will under the puc's request to issue and sell $100113. for hetch hetchy bond and my understanding is that mr. chair that specific appropriation and the sale of the issuance of the bonds will be considered by your committee next wednesday that's my understanding i'll report on that subject including the deappropriation will be issued

to the board of supervisors tomorrow i want the board to know it's not included in this specific budget. >> so for committee members we're going to continue the supplemental to next week's meeting so an budget analyst report then. supervisor farrell >> on item 10 is mentioned the appropriation for the clean power sf that's before us today. >> yes. my understanding. >> just our analysis. >> my understanding is supervisor avalos because of the issuance of the bond were not on the calendar that the clerk stated that the items could not be considered until you have the issuance as well as the appropriation