the presentation, i don't believe that we can over state the significance of the action that we are asking to you take today in terms of its import on improving service, both long term and short term and including the process, to addressing all of the you are gant needs that we have now for crowding and the reliability and we are particularly pleased with the process that we followed, over the last, 13 months, and in this procurement that we believed that we have ended up with the right vehicle, and it is important to know that we have a aggressive schedule, it will be delivered in 2016 and if we move forward on the schedule, and we have worked on, and we will step up in terms of standard of performance and for example, we currently in our lrv fleet operate between 4,000 to 5,000

a month, and in this distance for the breakdowns and we set in the requirement, 25,000, and the car, that we are being offered is set for 59,000, or as i said yesterday, that is twice around the equator. and some 59,000 miles compared to where we are right now, and this is a number of components that are simply we talked about a lot about the failures up there, and one of the reasons that we want to highlight the friend, the bear and the state flag, up there, is this as you will see as you move forward, this project from planning, to engineering, to manufacturing, and to warranty support will all be done in sacramento. and this is 90 miles away from us. and we will raep the benefits of that as well as reaping the

benefits of a long term partnership. and someone who is an industry leader in the manufacture of the rail cars. and one of the things that we talked to you about before that is critical in the way that we designed our process was to try to look back 50 years ago and say okay, what lessons did we learn from the previous procurement? not to be critical but to say, how do we do better? and that i think that there is really four lessons that we should point out number one, some time ago, we, when this particular series of cars was purchased, and the cars, and we as a agency prescribed a lot of features of the car, including the doors, and what we did this time, was to take an approach that said, we are going to reach out to the major players in the industry, and we are going to talk to them and they are the ones that build cars. and so, we are going to step back and we are going to say, as much as we can, we are going

to give you a performance, but you tell us how you are doing. >> and number two, when we bought the cars we did not focus at all on the, now know the white cycle cost or the maintainbility or the reliability of the cause. and so, what we did this time, was focus on the things like how many, on the modularity of the systems and where are the parts and because we have talked about some of the things that are causing failures and the doors and the parade of cars that have over 200 parts and now this particular door has less than 20 parts. and different kind of motor requires a lot less maintenance and so we did number two, we looked at the maintainbility, and number three, we wanted to look to a company that is an industry leader, at building cars, and some 1300, vehicles,

throughout north america, and established the plant, in sacramento, since the 80s and a permanent workforce, strong relationships with the subsuppliesers and all of which are important to moving the vehicle, and the procurement forward. and so wi looked to dry to learn it there. >> these were always problematic. and this is extremely reliable and that will give you more flexibility than making and breaking trains and that will allow us to make more capacity that is needed and more effectively uncouple. and so, what we tried to do was going forward and all of this, was lefage what we learned. and the schedule, we are asking

for an action today. we have received an aggressive schedule from the builder to have a car here in two years, and 2016, in the summer and there is design issues to work out and other issues including suppliers and parts and so in order for them to say on the schedule we have to stay on our schedule, and we want to move this forward, and so, we are asking for your approval on that, today. and we went through a two-step process and you may remember, first was prequalification and we started with an industry review and we talked to nine firms and we then prequalified for, and we received two, and responsive bids and one stood out. it stood out in the areas that we highlighted number one is a

very strong and consistent track record of meeting the delivery schedules and in other words, if you look back at the history and they say that it is here in december of 2016, based on the previous performance it is going to be here. and secondly, as we will talk more about in a minute, they have a parent company that has 22 billion, and just like we have 1.22 b, with a b, and some 60,000 employees in the u.s. including in all 50 states, and there is a close relationship and they have been supportive of this and their role has already saved us money and as we will talk about in a minute they are prepared to work with us and i think that it is again, an ideal long term partnership. for us to begin the process to improve this to be the best light rail system in the country, and the other point,

again, is everything is local. and as opposed to why you could say, yes, it is a german company and there are in fact no rail manufacturers entirely based in the united states but this is as close as you are ever going to get. 90 miles away, again, planning, designing and engineering, and manufacturing, warrantty support, and all in sacramento, and the other thing that we have highlight is the price. and we got a very competitive price when you look at the price that we have compared to any high floor car purchase in the u.s. and in the last three to five years and, we did very well in that regard. so, in terms of the two proposals that we received, one really stood out. and there is a sampling of one of the cars. by the way it was not our intention to confuse you in either of the presentation or

the in the slide show, and just to cause our different is not an optical illusion and the front and obviously the colors are different but that is part of what we will talk about in a minute in terms of alternative approaches, that has been offered and so just in case you thought that your eyes were playing tricks with you, they were not. and this is interesting. and here is the final score and evaluation committee and the only point that i would make on this is generally when you have a very high-tech cal score, and a high quality car and you end up with a high price, and this process for us reversed that. and you had a high, technical score and a comparive price and the other thing to go back to highlight is the alternate approach and what we did in addition to saying that this is the car that we want, and we in this spirit of following the process, where we partnered

with the industry, we said, look, we may not have thought of everything. and you build the cars for a living and you may have a better approach on the technical side and you may have a better approach on the business side, tell us what they are. and for example, on the technical side, semans presented 35 or so potential enhancements and one of the things, for example, something called a mary pia. which was fairly common in railroads but we never tried it and what we will do is basically take and right now we reverse the ends and there is an a and a b end and there is power in each end and what it will do, is you will take the full controller out, of one of the ends the b, end and couple the b, end together and put more seats in there and

increase your capacity immediately, but still give you the flexibility to operate in both directions. and so, that is something that that is a kind of creative thinking in responsiveness, that we got in the proposal. and the evaluation committee just a summary, they really and technically and from a price perspective, thought that siemens stood out. and one of the things that we did weatherize a little bit and say wait a minute and let's go back and check the on procurements across country, this price is very competitive and how do they do it? and so we discussed it with them, and basically, we are confident that we are getting both the high caliber, and a high quality vehicle as well as a competitive price and for those reasons, the manufacturing plant, they save a huge amount of shipping, and testing costs that we will have to incur, because they are so

close, proven technology, and what does that mean, exactly? 1300 similar rail cars, there is, in the plant right now, they are making cars for edmonton and cal vary and we have a similar car and what we get the benefit of helps us is the proven, technology and design, and this car is a step up of a generation from what we had before. and for example, we will get a finally we will get a black box. and one of the issues that we have in trying to and uncover what happens in the incidents or accidents is having to pull information from the three or four sources. now, with these vehicles, we will have a black box which will provide us state of the art information as well as customer amenities and some of those kinds of things and so, again, this was says, and it was one of the things that we wanted to check closely on.

and there is a shot, that what is might look like if you were to choose, that color or mme. and if you go down and you will not see that by the way. >> purposes, and again, the important point, i just say here, that to wait, and it has been an ongoing issue for us and this car is 78,000 pounds which is difficult, when you put together when you have a san francisco environment, and why is the weight important? the noise, the vibration, the pounding to the infrastructure. and that is part of that is the weight itself, and part of what enables them to get within our weight limits which we were never able to do before, is to design of the trucks and they have a permanent truck and they have a truck that is being used all across the country, and different kinds of design than what we have much lighter and

important, and we think from a quality and a technical standpoint, this car is a major step up. and the door we will talk about more in a minute, and the parts on the door, and i think that the braking system is a major safety upgrade in terms of the brakes engaging much quicker. and in terms of the diagnositics you will see the tools that we have to diagnose a problem and if there is a service interruption as to where it is and again, the trucks are really important. and in terms of our ability to improve service and reduce our maintenance costs. and the maintenance cost reduction is something that we will focus on a lot and another version of the car. the doors, and we focused a lot in the discussion, and said, look, we on the doors, they are in our current cars are the

bane of our existence and we want to see a new door and so when we see, i did try to get one in here, but the security at the plant was very good last week. and i was unable to carry the mechanism, but, it really is, much simpler and it is a series of motors and it just requires greasing one a week as opposed to some of the pneumatic stuff movement and all of the latches and switches that are inside of a braided door and so this is one, and the other thing that i will point out on this is that it really has got an enhanced safety feature, and it is considered not as sensitive, and if we would like them to be and so, this kind, and this is both the step off, and the reliability and the performance, and the reduction and maintenance costs as well as an upgrade in safety. and part of what seems good,

and i mentioned this 35 technical alternates that they provided, one of the things that they did was provide a couple of options for the interior of the car. and obviously, sensitive to the environment of the stake holders that we have here in san francisco. and that one is really radically different from what we have now to provide a more traditional longitudinal side by side seating one as well. but, that has all of the enhanced ada features. and really reconfigures the car in which as you all know is very hot, topic, and we are committed to a very open, and processed to hit the ground listening to as what works for everyone in terms of the interior. and the way to look at the

interior. >> and the operator's cab i know how important it is to you as a board, on pedestrians and visions zero, and this is this is exceptional, and all the way around and it is completely transparent and i showed it to a couple of operators today who were here and just to get their reaction to it, and because there is a lot of even from a maintenance perspective we have a difficult time replacing the windows because of the frames and this is transparent all the way around and it will provide the enhanced visibility and therefore, the safety for everyone. and this is another alternative that they provided in the operator's cab and what is interesting about this one is that you slide the doors as opposed to open it into the passengers when you are crowded and especially in the emergency, and this will be very helpful. and from a summary standpoint,

in the technical side, we exceeded all of our. it requires the reliability standards as far above the systems and what we asked for and as we talked about competitive price, and as we, are going to in a moment, and because of the strength of the parent company, and the procurement and they are a shot of the three trains. and the subway and the initial expansion along the mission bay and the 151 replacement of the existing fleet and that is programmed, and so that leaves

us with 85 cars, which we need. and we need it right now, and for crowding, expansion more service. and i think that sometimes it is, and in an odd sort of a way it is very flattering, to have everybody complain but at the same time say that what we need is more. and we need more. we need more service, we need more cars. >> and so, i think i don't know that we need to go into the need, but what the situation is right now, is that as i mentioned 175 will have the first 24 cars be here, by 2018, and the last one will be delivered in 2018 and then, because of 2 things, our funding and our funding stream, and then, the fta, requirement, that on the vehicles, or the vehicles being serviced for 25 years, if they are supported by the federal money leaves us a

gap between 2018 and 2021, and what they have done is come forward with a financial proposal, backed by the guarantee of the parent company, to provide basically a bridge loan, for us, to and for them to build the cars. and for them, it means an ininterrupted flow of production and they don't have to demobilize and remobilize which is substantial cost and for us, it also means that we get the cars here faster, and we will get the competitive price and in fact we get a break on the price if we continue uninterrupted through there and we do begin to turn the system around, and so, this is something that we have been working with to take a look at all aspects of this and this is exciting and under this

arrangement we have a year to get a supplemental financing in place, and the seimens has really offered, their assistance in that regard. and again, just to plug on the alternatives, we talked about, and i think that the main thing to say about this at this point, is that to the credit of this particular of this vendor, they heard, us over a 13-month period, loud and clear, and they heard, that we need the cars as soon as possible and we need an aggressive schedule and they heard that we needed cars that helped us from an operations and maintainbility standpoint. and they offered to do it locally, and they offered to work with us on all of the features and finally to the parent company stepped up and said that we will help you finance it and so i think, that they, it is clear that to us, and certainly to the evaluation committee that this is a firm

that paid attention, and that wanted which bid and was prepared to put the resources in there to put the best foot forward. and that is simply, that what i just mentioned in terms of the issues on the financial side of it and of bridging the gap. and so, what we are asking for you today is to move the contract forward. and execute for up to 260 and of course, recommend to the board of supervisors who gets the next crack at this, to move forward. and they are talk about that, and we also, will continue to look at, the best way to finance this, for the series of operations to come back to you with that. and again, the reason that we are asking you to move on this today, is the aggressive delivery schedule. and the need for the cars is acute, and we want to move forward as fast as we can. and so, finally, from our

standpoint, this is the culmination of several months process, and we feel that we have come out in the right place, and we have got and hit all of our key objective and looked forward to moving this forward. >> very exciting indeed and look forward to it, and members of the board, questions and comments? >> i had a question for you and i know that the amount that you are talking about includes escalation for costs and for years and this loan, and this loan, and the million dollar loan for $5 million if that, included in this over all cost? >> and in the financing for that? >> well, yeah, it would be, and there is part of that is structuring the specific details or the elements of the deal. and i think that some of the cost that you have like for example, we have saved some money from the fact that we and they did not have to buy the performance bonds at the corporate guarantee that is a

pass through that they give to us and in terms of how much that you save later they have made it clear that if we have the uninterrupted production schedule, that the prices of the car will be offset the additional cost of the loan site and until we went through the details of who is financing what and how much and we will not be able to say, yes, and it is in there. but, and i think that a billion and one, and along the elements that we described covers the deal. they will be lighter. and in terms of the delivery rate of the cars, i know that director riskin mentioned the

general obligation bond money that will not be spent, and if we do get the vlf passed in 2016 and is there a possibility to step up the delivery or are we kind of limited in delivery based on what the company can turn out or limited in the delivery based on how much we can afford at any given time? >> i think that the main goal would be for us to be able to exercise that option for those first 40 which will fill the gap in the pro-ducks line. and which enables them to keep producing at a regular pace, and it will get us more vehicles, sooner in line with our fleet plan. and it will enable us to keep the costs down. and so i don't know, you know, if there were more funds than we could accelerate the delivery more than that and we could possibly exercise more than the 40 option and we are seeking authorization, for the option up to 85 additional, but the near term goal, to meet the

current fleet plan, will be to figure out a means by which we can exercise the first option of the vehicle license fee and revenues or a sales. and but the mayor's transportation task force also recommended either or both of those, could enable us and could support the cost. at least some of the costs that the additional options will create. >> and i am sorry. >> and yeah, i think that the answer to your question, is both. that will explain it i think from the production standpoint, and the proposal has a certain numbers of cost per month. and however, siemens has indicated flexibility and because they have the very large plant and they have a lot of land. and they may have i hate to rat them out, but, i saw the

workers going home at 3:00, last week. and so, we could bring some other ones to come in at 3:00, and stay later, and so they have indicated that they would be flexible in that regard and so i think that if, as ed described the financing and the money and the fleet plan but certainly we could take a look with siemens at the production rate as well. >> i have no questions, but one observation that those cars look gorgeous and i am sure that the riding public rides on one they are going to want to see the entire fleet replaced which will take time and they are gorgeous that we might not let sanali put the advertisements on those. >> and i will agree. >> and yeah. >> that is all. >> okay. director? >> just, we support this, and we understand the need that we have out there. and the concern that i have is will your maintenance facility be able to handle the two types

of vehicles for maintenance and we will have to refit something or will that cause us delays? >> yeah, and so that is actually something that we thought about because there will be a transition period. and we would like to make the transition as fast as possible, that on the interest that when you talked a lot about, part of the deal is training. for the mechanics and frankly the approach and the demands on the mechanics will be less and when we talk about the systems and the car there is a lot more modular systems and so it is not having to pull the wires and twist knobs it is simpler set of functions and i believe that the mechanics are cap able but there will be part of what we will have to figure out is

an acceptance plan and the other thing worth mentioning we are looking at the numbers right now, and we have somewhere as many as 50 cars, for example, that are, we have put a lot of money in whose performances are coming up and, what we are doing, is analyzing to see what the cost, or what it will cost us to keep those cars in service between now and the time that they are eligible for the retirement and we may, want to sit down with the feds and show them what the numbers look like from an operating cost, but, i think that just like, we spent a lot of money training mechanics on the new buses because there is a lot more sense soars and electrons, and this requires, a retooling to some degree of our workforce, but it will be one that will be embraced and

enthusiastickly and the amount of maintenance time to actually do the work for the core functions like the inspeptions will drop dramatically. >> okay. >> and hypothetically let's say that you get the first 20, do you pull those out of service or do you leave the 20 here in addition to the fleet. >> well, you, probably you will, we will have, a mixed fleet, hypothetically, and i think that what you have is these cars, are. and they are able to couple, and so if there were was say it was broken down in front of them and they will be able to attach and push it or pull it out thereof and they will not be able to couple electronically so that all of the systems, you know such as the lights in the doors will go on. and so, we would look at, the other thing again, is the coupling is the size, and you know, this will give us the

ability to run up to four car trains, subject to some infrastructure limitations and so we want to look at that and i would think that we will have clearly the period of time when we will have the mixed fleets, but i try to do everything that we can to separate them. >> the central subway project is that we increase the fleet, by 24 vehicles, and by the subway open and so the first 24 will be an ad dish that will bring the fleet to 1, to 175 and then, we will be able to run the two fleets together and we will be able to for some period of time and although we will like to minimize that, but, we would, and we