bond program and the second for bond sale up to $48 million as a reminder all the cost in the enterprise including the debt services out of the future bonds are paid from rate pay revenues so what we have today is a lot of work that has gunning gone both looking at the creation of a new credit in the marketplace we have the ability to issue the revenue bond for the water and sewer combra enterprise so our hetch hetchy is what we're talking about we have a temple year plan that was approved and will be focused on our long term financial planning and that financial and capital plan about seven hundred and 60 employed includes $500 million plus

future debt services out of bond future bond sales has been incorporated into our long term planning and into our rate setting process the electric rates for the departments have been exhausted and we'll be starting to determine those rates this summer and had this includes the assumptions out of that bond rating as well this is the power bond owners that establishes the procedures for the occurrence of revenue bonds for our power scombris it creates definitions and commit the city to repair bonds and allows for the refund of bonds now to that point i want to say

we agree with the budget analysts recommendations to add to the ordinance a 3 percent minimum threshold meaning we're morning happy to abide with already our existing policies and procedures we want to make sure we're having a minimum amount of savings we have a bonding happening today will 4 hundred and 50 million bonds we aim for itch much higher than this threshold we're happy to agree to providing a sales tax report to the board second item is the 2015 bond transactions it's it is not to

exceed $48 million of power revenue bonds the majority will fund our power house and general projects with additional money towards transition and substation work we're estimating the rate will be over 4 percent so still fairly favorable and the debt service we're apartment is $200 million plus we've incorporated this both our budget as well as the long term plans just a couple of slides on work with hetch hetchy it is far away from the city of chicago of san francisco we want to bring home the need with a couple of photos the first one is the largest project the generator to raping replace and upgrade the

generators in the marketplace and power how is it generates 25 powers of our system capacity and the asterisk should in place by a few years we want to make sure that power generation continues unabated another large project we have to move forward with chang the regulatory environmentalist the changing of the towers and consultationors we have to rise the clearance above our 24 hours that is what this is about. >> one other point i want to bring forward to issue a portion of green bonds a new bond in the marketplace i believe will be the first green bond issuance

for the city and county of san francisco to troikz attract a broader investment community that may not look at those bonds especially for the sfpuc so we're designating those to make sure we have an viable e vinyl benefit so the generation benefits we'll have marketing those portion of those bonds as prebond we don't anticipate there are being a favorable pricing difference but if it does this is great you understand there are a lot of documents and pages so one of the more important things in front of you is the master trust venture is something that an agency like ours presents one for approval we have one for

water and sewer and as we come forward we'll come back with a supplemental venture speaks of the transaction itself how we're going to and when to sell the bonds quickly back to the map venture the the rules of road how we'll be issuing those bonds and make sure that the venture was similar to what was in place for the water and sewer so the definitions what's called a net and operations expense and the rates on the study all of those things are the same as what exists with our water and wastewater the difference is the venture we're planning on issuing a debt service reserve

for the power bonds the reason the investors we've spoken with advise us to be prudent to fund a reserve and the next one to determine if it is needed clearly not having a reserve is cheaper so we are going to fund the reserve with the sale and repudiate that down the road funds the context we're talking about here is that we're putting in place prioritization of how we're going to utilities money this is boiled down to the promise to the investors that buy the bonds we're especially having a way to talk about the bonds that are played in the revenue bonds each of those in order receives a prioritization

to a twenty-four hour operation and expense is the next one and the next our debt order service bonds for the folks that buy the bonds and the supportive enterprise has a couple of prior debt issuances they were not debt bonds but their subordinate to the senior bonds we'll be issuing soon and the other discretionary work we do in power so i wanted to point out that everything we're doing about continue as always we can do all the current work but the venture creates the conflict of a different system and want to brought to your attention because this is the discussions

with the board of supervisors as it relates to clean power and the concept of a program what this definition requires us should we step into the business line down the road we will have a separate set of books speaks for itself so it is related to a future integration separate from the rest of the enterprises we're going to set up the program make sure under is some sort of loan agreement or more than a gentleman handshake and that's our plan all along when we were talking about this anyway so no change again, i mentioned the master venture you have several maps i want to list or review them this is the rolls of the road for the

promise to the bond holder the supplemental around this transaction to having in the next couple of months did preliminary is the large disclosure document we create at the out sit down this is the bond verifies that are interested in bond buying this is who we are as an agency and our expenses and that sort of thing the continuing disclosure is what we report out to the them on an annual basis once this certificate is in place we'll create a report hosted on line for all investors to review and this is wells fargo their selected as our underwriter for the sale i think that's it i'll be happy to answer any questions. >> thank you very much colleagues if no questions

supervisor mar. >> mr. pearl you mentioned the green bond i'm curious about that that is the first san francisco green bonds how are projects like hydro bonds what is the green bond. >> it is a involving part of the marketplace we're being open in our disclosure documents the generation of clean giving me 0 energy that definition meets the international standards so the conflict of green bonds what about broader you can apply those to the water and sir as well we're going to look at the the definition and refinancing it as we look at other bond saddles but this particular one

it is about green house gas generators. >> marrying go to our report please. yes mr. chairman on page 15 there is table one the estimated cost of 37 point plus million dollars for the non capital projects on page 16 of the report the estimated annual interest rate for the bond will be 4.2 percent over the debt of thirty years is $87.39 in interest and the estimated debt payment $2 million plus on page 18 of our report supervisors we note under the promoted ordinance that is file 150078 the sfpuc authors the refunding bonds approved by the

sfpuc without further approval of the board of supervisors provide the debt service is provided in the city's administration code supervisors i'm sure you're aware of the sfpuc preservation can't authorize can't issue refunding bonds for their water and wastewater revenue bonds without the approval the board of supervisors so this particular request is in conflict that the existing policies that's why we say this is a policy matter for the board of supervisors the subject as the department indicated is self-specify the net services savings must be achieved buyouts the sfpuc our recommendations on the bottom of page 18 equip for the provisions refunding bond without the approval of the board of

supervisors which the budget and budget analyst considers to be a policy decision we recommend you approve the proposed owners we consider that and file 0078 to allow the sfpuc to authorize bond to be refunded without the board of supervisors as i state it be a policy decision in the board of supervisors want to delete such authority we recommend you amend the ordinance to specify the they recalled of 3 percent of refunded bonds with the debt service policy. >> colleagues, any questions that's a great idea as we've talked about okay. if no one thanks open up for public comment on items four or five seeing none, public comment is closed.

supervisor tang. >> thank you for a good recommendations i'm glad to hear the puc likes it i'm happy to amend did ordinance for the services of 3 percent must be achieved consistent with our city's debt policy and make a motion to forward those recommendations to the full board. >> we'll take that without objection. >> no further business before the commission. >> thank you ladies and gentlemen, we're adjourned

>> good afternoon, everyone. welcome to the to the first meeting of san francisco budget & finance sub-committee meeting for march 11, 2015, with our full 5 person budget combhe i'm mark farrell and joined by supervisor katie tang as well as commissioner eric mar supervisor scott wiener and supervisor norman yee i want to thank jennifer lowe and charles kremenak madam clerk, any announcements? >> yes. electronic devices. completed speaker cards and documents to be included should be submitted to the clerk. items acted upon today will appear on the march 17 board of supervisors agenda unless

otherwise stated okay. thank you madam clerk colleagues two agenda items one substantive a 5 year budget plan want to thank everyone for this and looking at looking forward to a fruitful next month. >> number one the finalized plan for 2015 through 2020 and requesting a mayor's office. >> and to speak on item number one. >> good afternoon, supervisors it's a pleasure to you here with you, we kickoff the budget season i'm here to talk to you about the city's proposed 5 year financial plan not an action item in front of you by will be in the next several weeks once we complete on update to the plan

would also want to point out i have the gentleman from the controller's office that answer revenue questions and want to thank thank you to harvey rose and mr. campbell if the boards budget and analyst office in the shared budget plan 0 produced to show the shared trends over the next 5 years so i thought today i would talk about the key assumptions workplace the 5 year explain and go over the general fund case essential the cost to operate our government the government we have today over the next 5 years and share fiscal strategies how to bridge the gaps between revenues and expenditures and thinking about what might happy in a recession scenario with our 5 year financial plan against to help us think through 0 the

impact of on economic downturn should that occur and finally i'll talk about the mayors budget that was issued at the same time with the 5 year financial plan all our offices should have a copy you if don't feel you've seen the yellow document we'll be sure to get you one i'm sure you're aware of the city over the last several years has worked out diligently to strengthen our long term financial management and to try to reduce volatility in our budgeting process 2 year budget is part of that reserve policies are part of that codifying the debt lemgsz and debt policies and some of the alleged policies that the board has adopted like the reserve policies and the limitations on use of one time

sources this year for the first time we had 7, 620 two year budgets these budgets will remain fixed for the 2014-2015 and 2015-2016 budget years including mta and the board retirement and support services and the library we've also done a configured for the long term and developing those plans and regularly updating them the six year financial plan you see before you today but includes our ic plan and the 10 year capital plan both the ic t plan will be coming before the committee for

your review and adaptation the 5 year financial plan is a shared frontals made by the 3 financial offices this required under prop a passes by the voter in 2009 a couple of key purposes to highlight major financial issues that the city is facing on the revenue and expenditure side to monitor how we're doing on the structural deficit in every year i've worked in this office we projected a gap between revenues and the expenditures and try to close that gap and finally the prop a required that the plan make recommendations or proposals how the city can reduce the gap between revenues and expenditures

as i mentioned that was in early december at the same time the mayor issued his budget instructions so this next slide is really providing a high-level 0 overview of what's happening in or revenue and expenditure the top section is the revenue our projections over the next 5 years those revenues are growing every year and the second half the table it showing you what's going on the use does the salaries and benefits being a large portion portion of our citywide expenditure and show you the costs in the other xuchlz while the revenue will growth is strong our expenditures growth is prolonged to out pace that revenue growth leading to the shortfalls you'll see at the

bottom of the page $60 million growing to 4 hundred and 18 over the 5 year period. >> looking at it a different way you can - another way to think about that the top line our expenditures are expected to grow 23 percent over the next 5 years and the bottom line growing 13 percent over the next 5 years and the difference between those expenditures is really the problem statement that the challenge we're trying to solve through the budget process i want to make sure that i highlight kind of some of the key assumptions in the five hundred year base case i

mentioned the 5 year base case scenarios is really looking at was it - how much money would we need to be able to cover the costs of government based on our plans and no cost increases over the next 5 years and what will happy with revenue so this plan assumptions on the revenue side the economy continues to recover there's no economic recession to the pace is slower in the last 3 years of the plan than the first 2 the recovery depended on the national economic as well as local destroy and no major changes to the service levels or the number of employees unless we specifically call that out

examples where we would, huh? our projecting increases in the employees the opening of the new san francisco general hospital or the staff increases associated with our public safety hiring plan plan also assumes the package from november of the increases in the mta baseline the city's minimum wage and the renewal of the children's fund so those restraining order incorporated into the projections and finally we assume that in the first year of the budget which was the second year of last year's budget the funding for capital and it are based on what was actually opportunity by i did mayor and the board so i'm going to go into revenues and talk about expenditures.

>> ms. howard just so our community is clear and members of the public those numbers were compiled a few moose good this is to get an action item on the full 5 year plan in the next few weeks. >> that's correct three weeks is what we're talking about i expect updated numbers in the next week this is the because of the 5 year financial plan and we'll talk about the update in a couple of weeks on the revenue does the revenue growth is strong throughout the 5 year frontals assuming there is no economic downturn 13 percent growth over the next 5 years as i mentioned the higher growth rates are higher in the 3 years of the plan

because we want to make sure that we're accounting for potential sk of economic changes over the last years of the plan the top like that t is what we're projecting with our revenue fined resources to $210 million in growth compared to the first years and another one hundred a strong revenue growth i think we're looking across you know all our major tax revenue growth 4 5 and 6 percent and slower in the last part of the plan i'll highlight the second line is noting changes in growths

this is regretting the use of one 7, 8, 9 fund balance to balance the budget over the first years and the expiation of that one time source in the third year that is $10 million in each of of the two years of 2015-2016 and 2016-2017 that's a significant contributor to the gap in the third year on the expenditure side we category them into baseline and reserve and the departmental costs on the salary and benefit side this numbers you see here assume the negotiated labor agreements we've agreed to those

are in effect for most employees there 2016-2017 and for public safety through 17 18 we assume what we've negotiated in the first 3 years and the remaining years the dp i. >> we're also seeing in those numbers the increases being offset by savings from our pension fund our returned are improving and climbed - we've recovered the losses after the economic downturn on the letters you'll see them growing particularly really all years but particularly in the first year that is largely due to the

package of the ballot measures this is continuing to deposit into our citywide reserve citywide operating costs are equipment and other tools and departmental costs is a summary category for various changes in the department like opening the new public safety building and the 19 new san francisco general hospital and funding for the mta as the new central subway comes online and our public safety hiring so we're in a very strong economic time but we are continuing