>> good afternoon i'd like to call the order of regular meeting of united states constitution today is tuesday, september 8, 2015, roll call please. commissioner president caen pr commissioner moran commissioner kwon and commissioner courtney is excused today. >> thank you. >> third item is the approval of the minutes of august 11,

2015, are there any corrects or additions to the minutes? >> roll call second. >> any public comment on the minutes of august 11th? seeing none, i'll call for the vote >> all in favor, say i. >> i. >> opposed the motion carries item 4. >> which is general public comment from the public and i have mr. decostco first to speak. >> i'd like to talk about a number of issues in general during the general public comment i'm very interested in really what is going to happen to mountain tunnel especially in light of el nino

and how that is going to an impact so i really don't know any experts that know too much about el 99 having said that, we need to have some deliberations meaningful deliberations on mountain tunnel i read somewhere that now you're ready to expand over $200 million $212 million i read it somewhere so i'll start with the marginal amount and then you know any way you look at it it is the money that has to be accounted for the full transparency before the constituents of san francisco the second issue i have is about the covington tunnel we have to

revisit it that so that we get a meaningful update i'm glad you know they have a project manager or maybe he's a higher title in wealthy i call him wade but i'm glad we have small business like him on calaveres i'm very interested to know who's our comboeft there how many studies linked to ohio dramatical have you done over in calaveres i know. >> a i'll talk about the arching loft and found skeletons you must remember we've found human remains along our area the sfpuc and i represent the first

people some point under the free speech of information act i have to go to a few meetings i'll ask for the reports because it is important we remember that hetch hetchy the real area of hetch hetchy was stolen from the first people the folks we can't take it for granted we know in the 2015 it is still flush our toilets with clean drinking water that's a no no thank you very much. >> thank you the next speaker is ann clark. >> good afternoon, everyone i'm ann clark vice president of the friends of camp mather i'm here to invite you to our september

family tent it is going to be on september 22nd saturday that's a saturday at lake merced boathouse from one to 5 activities free a climbing wall and bouncing house and kayak in the lake there's lots of activities we really appreciate all the help and for the support from the commission and staff we've had to later than a lot about the events and truthfully you've been wonderful guidance for us we really appreciate they're listening to us and helping us so don't forget us come on september 26th try to be there we'll look forward to seeing you on a personal note harlan kelly was a volunteer others camp mather and he and his family was there it was wonderful i i have to tell you truthfully when you know the

boss is in town we have to behave my family said i by a preponderance of the evidence the best that week so harlan kelly you thank you and looking at to seeing. >> and my appreciation for the board for all you've done for us. >> thank you very much. >> i want to extend our appreciation to you and the friends of camp mather now that harlan is a big fan we're arguing who the bigger fan is of camp mather it wouldn't there without our help and support thank you pub. >> thank you. >> do we have any other speakers for public comment? seeing none, next item, please >> item 5 communications. >> commissioners any comments? i do have one

buried under the annual electrical resource plan i see that under recollection number ten that our units are now qualified as green power i'm sure you want to say something i've been so anxious about this for years is this really true >> barb hale we of the through a process that certified the 3 kicker wood power hours for the eligible resources and the meeting will come to order. is an unit those units are regarded by the sfavks as clean and green

if any, that doesn't make all of mucosin. >> so mucosin is a low unit that janitors when we're in a high water time of year. >> oh, okay. >> so, yes, the kirkwood are the big units that qualify okay. so what percentage of our units now qualify. >> it is about thirty percent the power we janitor in an average water year as california compliant about 4 hundred and 50 thousand megawatt hours a year. >> so what did he say what's the possibility for the other 70 percent. >> under california's current rules they don't qualify if we improve their performance they're out put it is possible to have any incremental

improvement qualify but not the units themselves. >> okay. >> okay. thank you. >> how do you improve the out put for more water or efficiency. >> with changes to the turbine improvements to the efficiency of the units it is not the amount of water but rather the amount of power they are generate. >> have we done any kind of cost benefit analysis of that. >> we haven't done it strictly from an rp s on my team i everything it is a factor that is included in the capital improvement program assessments on an credentialal basis worth $15 a meg hour to be qualified as a california compliance renewable so you get about a 15,

12 to 15 megawatt when you take that killing water and have it california compliant. >> we've been putting together our business plan for hetch hetchy it would be interesting to include this as a component and see if there is some savings or some cost benefit. >> yeah. i think we'll definitely do that the challenge if we continue to have a dry year and investing the money and benefiting we need to be careful this is something we'll take into consideration the cost of rewidening versus the cost of additional output and the cost of receiving the hour. >> well, i also think as we move into next year's budget to look at all of those i imagine

there is issues related to the water issues and the business plan as well maybe a few scenarios to look at it and this is a case of one of them. >> one of the things i mean the business plan calls for selling less and less energy on the market to whatever benefit will that diminish over time it has focused the language we use so we don't talk about the rp s power like 9 green house gas free that is a physical fact of it so we can do claim credit for it as we market a green product it qualifies as green not just qualifying as rp s under the subtly. >> or the benefits. >> except that and which is the key. >> right.

>> okay commissioner any other comments i do have a call i think you wanted to speak to 5 c. >> good afternoon commissioner courtney nicole cu for bosco i want to speak on the annual report a significant document 3 deserves pause for comment i applaud puck to complete the overall wissop on 88.7 that is expressive i've watched it number slowly creep up over time and now for the time schedule is on schedule may 2018 for the budget $65 billion and i hope that that continues to be the case as we move through the last couple of years we certainly have challenged with the

calaveres damn it is not yet through the construction phases but my hope is that we will make solid progress and courage the commission to focus on that is certainly helpful to your staff and help to the overall progress of the project thank you very much. >> we appreciate that thank you. >> the next item is other commission business. >> no? okay next item, please. >> item 7 is the bio annual budget development.

>> okay. there's a little we'll role with that commissioner courtney and commissioners eric sandler assistant general manager and cfo i have a brief presentation here foyer you to kickoff the bio annual budget process so i have the agenda here the first 3 items to provide context for understanding how our venue budget fits in the planning activity and next item relatives to the considerations that are

important for this particular bio annual budget period when i have here is the puc has a very integrated framework driven by commission policy the first to items as a capital doesn't even agency cpa capital planning is sdament involved with the planning so we have the first two items are planning efforts that are long term in nature the 10 year capital plan and financial plan they provide the long term visibility for the capital investment rates and charges trends so those plans to look into the long term future the next two items the operating budget and capital budget those really based on the long term plan they set the stage for the next two years are that finally a number of rates and charts activities we have we those

occur at different frequency i siding so we have rates and charges for sewer service that are on a multi year basis this last resetting process was a 4 years we're in year 2 we have 3 more years of fixed ralth rates and charges the whole rates are set annually set by contract we have wholesale customers that represent the sales and revenue are responsible for the tracking of the amount of the costs to the stent that in any year actual collections different it is mixed up this is the nature the wholesale and prigs and retailed electrical rates are set annually

so this next slide highlights the budget development calendar and what i pointed out we're here in september kicking off the presentation of the commission the general manager are issue the instructions we'll vet the proposals to present to the commission during this time as well from now through december we're going to be continuing the process that we started earlier in the year to review with you the key commission policies and receive from you any input changes you want to make to the policies the one is the debt management policy and the assurance policy and the communities benefits and the environmental justice we have a few more policies to cover and ear getting this on the forward agenda between now and december and then finally once the budget

has been presented considered and individual through you it goes into the greater city process that is presented to the board for consideration and action so we have a budget policy framework this is what is used in discussing and communicating about the two year budget previously and on the left in blue are the focus areas the strategy sustainability plan on top of it is not in blue okay on and on on top of we have the various policy initiatives twenty-four hour utilities and asset management and capital investment and redevelopment one of the more specific to the current investments dealing with the city and the workforce

development and perhaps in the section you'll let me know when consider the budget to make any changes you'd like. >> i wasn't following redevelopment it wasn't. >> how we develop with the development within the city. >> you can actually - >> so like treasure island development authority board and hypocritical. >> hunters point and i guess i don't understand maybe now is not the right time of the policy definition then. >> i think this is and that's a good question i'm trying to get our arms around what this indicates. >> i have the same question in my recollection when i came on

the commission there already been a fair amount of work the commission did to begin those areas and whatever the logic was was lost to me i don't know what it was i wasn't here contaminate. >> we had a spreadsheet. >> that's something we can work on to try to come up and explain that a little bit and get our input. >> the purpose is to give this more time going over each policy as it relates to the budget framework so maybe if we put that in the parking lot and come back and talk about each one of them to see if their relevant. >> there is actually, one of the items we'll be talking about is the mission driven budget that's one the commission policies that would be an opportune time to talk about the

framework. >> can we have the slides please. >> so the next slide relates to the considerations for the upcoming budget we're inteven capital driven organization capital investments the way we finance it one of the largest components of the future expenditures and rates and charges so consideration of the capital budget is vital to frngd open understanding our long term and short term financial picture some go that more topic is understanding what are the continued drought conditions mean for us as we manage in the short term and long term and medium term this is not a unique situation to the puc every water district in california and the

west is facing this on the plus side we're well positions on the plus side unlike other agencies not to purchase extremely expensive supplies that components the challenges we're facing reduced demand and potentially hard end demand in addition, we have retail water rates and harasses that you are set for 3 more years including that year and set on average demand a normal year demand what we're seeing a level significantly blow that rates and charges the commission adopted for the 4 years work period so this next slide relates to capital investment and it is

fairly busy i'll try to unpack it what we have and this data is from the most relevance adopted capital plan on the excess the 10 year period if fiscal ye2025 capital spending relates to the colored bar the green bar is the wastewater capital program the blue the water program and the yellow is the hetch hetchy power program so we're talking about if you add those bars together as you can see if p that represents $8..70 percent of the lawyers relates to the watermelon investment about $5.7 billion and the remaining

bid is split between water and hetch hetchy so this is the bars now if you look at the right act excess that relates to the red line that represents debt service 85 percent of the capital is for long term debt that debt the way we finance it and manage interest during construction that debt service on that debt lags because of the boring and the capital investments as you can see the growth in the debt service over the 10 year period will grow from $312 million a year on the right action excess to $250 million to 2025 that's a large increase so the expenses in the future relates to debt

services with the capital investment a comprehensive review and vetting and the capital plan is key to the managing the long term rates and charges. >> is that ssi p and capital that's everything. >> yes. that's all capital investments of the puc. >> that we've currently budgeted for not mountain tunnel. >> it don't include $50 million from the capital that was approved in february this is all in one place we have a very big organization and investing a lot. >> and one of the interesting things can we have the virtual again? is that right now the debt serviced are heal i didn't relate to the water but in 2025,

2026 equal between water and wastewater >> all right. sorry >> all those questions. >> i do i'm trying to understand understand the math the finances but the bar didn't show the same kind of you know the blue bar is relating small and the debt service would be about equal. >> the debt services because of debt issue associated with the water system that debt goes on for thirty years it is a changing net as this number gets larger we we suspend $4.4 billion that fell off the bar if you look at the previous 10 years the blue will be much

hearier than the green now moving forward you'll see the green. >> the green is smaller. >> i guess i should have classified i was talking about the mix in the red line which you don't - >> that's what you don't see. >> right. >> so we've talked about how important to manage capital expenditures how do we incorporate the impacts associated with this drought and the hydrologic long term and the next few slides focus on that one thing we know we don't know how this is going to progress so we we attempted to develop a number of scenarios to provide a boundary level of understanding what is happening over the next several years and constructed

scenarios with the drought worsens and we looked at the demand profile that correspond and evaluated the reduced can understand of water and power production and taken inadvertent in a short-term and medium to mitigate or do you want to this impact. >> so the first scenario here we have here is the drought end scenario i'll orient us around the slide the access we have historical and projected fiscal years from 2003 to 2019 and on the y access the retailer water saddles expressed in millions of gallons day on the chart the

first one is the blue line which starts at 74 m g d in 2003 and goes to 62 to 2015 as you can see that there has been a steady decrease in demand for essentially over the period of one percent compound annually so over that 12 year period demand has disinterested about one percent impounded annually so the ground floor line represents the level of demand or sales we've used with we set rates and charges for last year, this year, the subsequent year and 2018 so we've set rates based on sales at 67 m g d and as you can see that in network 2015 we sold 62 m g d the

drought end somewhere essentially assumes that 2016 will look 2015 and 2015 but will return to the predemand this is probably if you want to vault this scenario optimistic we've seen some demand hardening the demand will be slower than that but again trying to create a boundary is this space past history from when we were coming out of the drought. >> it is consistent i'll say it is consistent what we've experienced in the past but the degree depended on the degree this has been a statewide effort to reduce demand behaviors may not return quite so quickly. >> and what you notice here

there is about an 8 percent reductions in fiscal year 2015 sales versus what rates and charges were set based on and any questions any more questions about drought end? may i have the slides? >> so the next scenario is drought continues what this is essentially largely the same as the prior slides as you can see those that this scenario seems there is an additional 3 percent reduction versus fiscal year 2013 so a total difference of the levels rates and charges set on and 11 percent if drought worsens an additional

3 percent reduction and at this point we think this is a pretty good boundary at this point, we're nearing minimum health and safety levels set by the united nations we think the drought worsens is a lower bound. >> so, now we've reviewed the demand profiles of the different scenarios i said to quantifiably about the financial impacts and qualifyly let's look at the water the reduction in water demand the reduction in sales and revenue again 2/3rd's of the sales from wholesale customers to our wholesale customers their rates are volume and talking about the recovery of a certain 340u78 in one year not the case recovered in the northern california year or if we've over

recovered take them back in the following year if so a self-balancing contract and this is for the prospective of the puck so your real exposure with sales within our service area retail water retails and charges are 15 percent of the revenues recovered through a fixed service charge and the remaining 85 is volume metric those are the portions of the revenue that will decrease versus what we expect in rates and charges. >> let's turn to the wastewater enterprise and we've got for wastewater services based on the water volume around 90 percent and all out of wastewater charges are volume metric so it is a one for one reduction and

no volume so more exposed to the water sales than our water enterprise then we have the power enterprise the impacts the power entrepreneurs are different no changes in the electricity demands but the wastewater to generate the electrical whether it is less precipitation we produce less electric and have lower sales on the market and have to purchase power to mockup for the time of time match there's a reduction in the hydro power and increase in power purposes unlike the wastewater and water enterprise we expect to see some stickyness in terms of demand when it

starts the rain the power recoveries we'll generate electricity and it will be reversible so any questions about those kind of quality active impact okay. i'll move to the next slide that tries to summarize the financial impacts in an transient way we've ran a lot of scenarios for over a 10 year period what we tried to do was to characterize the financial impact let me back up as or as i mentioned rates and charges for retail services are set there 20183 more years of set rates and recharges the impact is smaller in the first year and larger in the last because rates and charges are

going up we chose fiscal year 2015 in the middle the period representative active of an average rather than showing a huge matrix so we have a have here by the 3 enterprises drought continues and drought worsens and in the first line for each enterprise let's look at water drought ends the financial impact is negative $16 million and that's in line a and line b is that number expressed as a percentage of total retail revenue so one way of thinking of that if you wanted to that were a permanent reduction in demand and follow it through the rate increases that is what it would be on the wastewater enterprise as

you can see that the retailed revenue impact is $19 million about 7 percent of total retail wastewater revenue as you can see the drought end scenario so for the drought recoveries quite rapidly and no financial impact and easily read the drought continues and drought wolgz and see what those more serious conditions so in reviewing eric those are disembodied numbers put those in total budget this is what you know graphic attempts to do looks at the 2015 projected budget of $976 million the operating budget not the capital budget so the revenue impact when combined with the drought end scenario for the 4 percent

of total uses drought continues another 4 percent and then the drought worsens another 2 percent a range from the 4 to 10 percent of total uses so it is significant but not the end of the world. >> so let's now we have a sense of the challenges what are the tools to mitigate those challenges well when our talking about financial impact 3 options cut costs, revenues or increase revenues this is the response is a balancing act all of those strategies have inventions 0 short term and long-term if you're looking at cutting the operation and maintenance which is the twenty-four hour operations of the business and

debt services one is unhave been able use it and restructure it in a different situation but repay and the kip investment a trade off is in all of those reduce the expenses but quakes to service level if you get into a chronic cycle you'll have to deliver on the 24 so the cost cutting make sure your striking the right balance similarly you can utility resources draw resources commission has healthy resource levels the watermelon power enterprise but again an extend spend down to a structural problem is not will fuvent ruin

our credit rating given the size of our capital plan going forward not something you'll really want to kind of push the envelope on and finally there's the option of increasing revenues this is what we're thinking about what happens in 2019 when we reset the retail rates and charges again are we're going to have to make up for you know permanently hard demand so what did this mean for us in the short term this fiscal year we're putting in pursuant manufacture or measures to preservers similarly how we managed last year in the meantime we have an opportunity to develop the budgets we've think updating the financial plan through a comprehensive

review the operating capital budget and in the long term it really what are the strategies around one rebalancing against potential long term hardening of demand but mitigating the rates some of the exposure to volume metric charges particularly the wastewater system so i know we've spoke to you when we presented the last could have of services about the opportunities to change the revenue mix of the wastewater enterprise and increase the level of fixed charges that is something we're working on currently and be part of any like part of the proposal for the f 19 and 20 budget so the next step in our process we'll be continuing our scenario planning and monitoring the

drought conditions we'll be issuing budget reductions instructions to the organizations that focus on containing costs and dealing with potential you know ongoing decreases in revenue and striking a billion, of course, between you know cost-efficientcy and service level impacts we'll be implicating as part of the process a comprehensive review the capital and operating budget and continue to look look for one time opportunities we'll continue the use of resources there maybe opportunities for land sales to take advantage of the market and take advantage of the attractive interest rate market and reduce the debt we'll continue to look for those opportunities throughout the year. >> that concludes my presentation. and i'll be happy to answer any

questions or take input, feedback? >stormwater that wouldn't be constitute without our next rate infrastructure; right? >> right. >> you can't do a restructuring of the rates or anything like that if drought gets bad that's the chart; is that right. >> if things got bad the process we go through working with the rate service board have a policy for prop 218 way and have to officially dairy a drought that triggers the agreement so it has its own life of its own it is a possibility. >> right. >> sort of trying to understand the universe of options and you know there's all this talk about

el nino in winter we don't know what that means reminded us but is there any opportunity in there may be a question for steve richie around the el nino an opportunity it capture more water i know we've talked about this and brings to mind the strment fee and it's a shame we don't have that if we have t rainfall to think about the options if we possibly could get into a rainy season and use it to our vantage. >> the most important thing about a water system to have the ability to store it; right? and we pretty much our system is surviving because of storage how do we get more storage that helps the waterside on the

wastewater does it based on you know collecting the stroerm so how do we capture the stormwater in a way to use that is a longer discussion we're trying to recycle treatment anothers oceanside and utility that that is something we're going to the process i think the drought worsens that he has us to move projects faster and have us evaluate other options but those things take time and we've been looking at the diverse water supply for some time now. >> i mean one last question on the financial piece you talk about that as an operational shortfall but it looks we have capital shortfall issues as well; correct? and you can't mix those it

together. >> their segregated so the reduction in revenues that impact all of your spend. >> uh-huh. >> in that year. >> we need to think about two revenue strategies, if you will; correct? >> in terms of that is if we increase the revenue on the capital side like cost cutting for example, of ssi that that goes through the capital side; is that right. >> all the money comes from rates and charges whether it goes to cash fund capital or pay debt service or pay operating expenses it comes in the same revenue source. >> so what the plan is that we want to identify what had we can

cut operational and what the impacts of those cuts will be and then on top of we will look at you know short term capital maybe dir certainly projects or re-evaluate projects we have to do i think that is more of a short-term and when we go into the new rates we'll look at the long term because i don't know that we want to be in a position where our systems is in a sate of disrepair we start dir a lot of the maintenance that causes us problems it more of a short-term solution so we can live within the rate structure but if we get into a situation where we need to evaluate and we'll come back and look maybe the rates but what we're trying to do is stay within our means right now and the most prudent

thing to everybody to rice reduce the amount of expenditures right now so we're looking operating and capital and looking at all those different options right now. >> yeah. i'm trying to get a handle as we move into january pretty well quickly our options as far as the cost cutting for the next 2 year budget cycle and help us prioritize those hard decisions but on both sides or the on the expense side. >> yes. >> couple of comments first is on the fixed cost versus variable cost this is primarily on the wastewater see of things it does strike me that the difficulty that presents is

self-i think inflicted wound and it makes no sense to have a hundred percent of the wastewater revenues based on water consumption it is the least consumption related cost we have so if we come up with other ways of addressing that you can count on my support for doing that that make sense to balance that more appropriately. >> there are other water agencies you how does that work so the agency i was at has 60 percent of the charges are fixed for wastewater. >> i mean in some agencies the department the agency that runs the water system is a different system that runs the sewer system some sewer systems are on the general fund and you know we're obviously different by the practice around the industry is all over the

board. >> another thing key we're unique in not only you know having water and sewer but part of the sewer we have a combined sewer not only stormwater so we're by and large that on the amount of water people use assuming their flushing 90 percent of it down the sewer. >> right second comment on the strategy of reducing costs and managing the capital program to balance the budget i think make sense in the short term with some caveats but as a short-term matter being under fiscal year pressure from time to time is a good thing it forces you to make decisions you should probably make anyway will

that are hard to make as a short term strategy this is not bad a key caveat is that for projects that are fund through our wholesale rates because essentially those revenues are fixed but no reason financially to cut back on this at all even though you have to debt finance the cash flow you you know you're going to get the money not a reason to spend that. >> soy think you know looking a 2019 decision intersection for the middle eastern restructuring make sense for the austerity is a good thing my third comment i think the most important one that is i mean, if we stand eric and steve up to each other they have

different scenarios one is success and problem a water strategy supply success i think that i would like to see this as an opportunity to try to institutionalize some of the sxhefrment games we've achieved through the drought not a hundred percent some or are liability hardship but to plan on that being did new normal and working hard to make sure it is the normal and not happen by accident that will take a little bit of money as we do our long-term planing and water supply planning i think we should be firmly to establish the drought savings as permanent and that has financing issues

associated with that it the kind of thing to looked forward to in 2019 i'd like to dovetail on that i was going to make a remark about your slide 16 which is the of him planning complmgz we which we look at medium term and long-term as you mentioned are we're going to look at that with drought in mind continuing drought or back to a normal water supply. >> i think what we're going to be one the keep going things we're looking at in developing the updated financial plans what will demand look like and probably provide i haven't talked about with my colleagues but adding to the productivity.

>> will we see one document or continuing scenarios. >> i think that will probably be in the context of the long term financial plan we'll look at sensitivities with the long term impacts if sales were going to be shifted down 5 percent or you know show you grow i think that will be what we're looking at more the the long term impact question than a next two year question. >> so the first thing i guess we are recognizing that in the future we're not going to sell as much water so revenue will not come in given the fact the budget is based on selling more water what do we need to had to

live within the revenue we've look at the 10 year capital plan and our operating and when the actual opportunity to look at rates we'll look at that and come back to you and you know talk about what the rate increases will be based on all three of those. >> yeah. i would hope that conversation is pretty much hand in hand with the budget rates even though they've not be looked for alisa miller three or four years to understand we could be seeing significant rate increases and those will have budget implications. >> yeah. the first thing we're looking at the short term which is doing what we can to reduce our expenditures and maybe using some of the reserve and then look at the 10 year capital plan

as we mentioned here we've been planning and looking at different rate structures for the wastewater we've been you know involved in that on the waterside on the retail opportunity and in 3 more years to address that but also look at the projects and given to our point re-evaluate what's in our 10 year capital plan assuming we may have to diversity our project supply and i think about moving up projects faster. >> my two takeaways number one conservatism costs money and you have the same costs the rate has to go up so i think we need to know that and tell people that and as we go through the future selling less water be prepared to do it that's non-and two needs to be that we can't

succumb to financial nervingness that led us to cut back on the capital program in important ways i say room to fine-tune and maybe things that are less important and could be delayed without impact but we need not to go back to the battle if we spend a lot of time in get to this point the system was better maintained we need to stay there we've already sold bonds we'll be spend that for key infrastructure like the amount we should be preying in an aggressive way and not let the financial tail wag that dog.

>> i agree. >> any other comments i've mentioned on the phone i found this i really thank you and your staff for putting this together it is very, very important and we're living in this and have to look at this so thank you for that thank you. >> i know we have some public comment nicole or - >> okay. >> i'd like to make some very practical suggestion commissioners i've said it many, many times and i'm going to say it for the final time you all

need to make an assessments on our clean water pipes and sewer pipe that are leaking to find out right off the what the how much clean drinking water and how much of the surge is seeping and containment our ground water having said that, we've not made a single assessment if it rains if we get one inch of rain how much of it is run off? there are experts that have captured the figure and say we can save such as 80 million gallons of water you need to ask our experts to

call other agencies or if they can 1st district to bring this report to us now, when we have presentations like this having worked in the military those have conceptual console plan is like a dream you wake up and it could be a worse nightmare now let's be realistic in today's economic world what's happening with some all of a sudden super powers we really have to be prudent with our monies i heard a figure outside $600 million has been satisfied for mountain tunnel and we think like we're going to spend e.r. keep aside of a hundred million

dollars taxpayers money and think nothing of it i don't know what type of prudencecy or for the record or fortitude that is so commissioners, i think you have to look at it in a total different way when it comes to conservatism and everybody agrees why water water we're told not to waste water i'm in a habit of not waiting water and from the presentation i saw you don't need to be a rocket scientists and that debt shouldn't fall on the taxpayer thank you very much >> thank you nicole. >> good afternoon, commissioners nicole ceo i had 3 comments i wanted to

make on this particular item first, i have found that budget to be the most helpful in present the independence differences your struggling with i applaud the cfo this is helpful you're not alone certainly my agencies are struggling with that as well and this is to my second point i've talked with them about handling financial difficulties they especially\say go to the puc and ask them to stop spends they wanted the projects you supported commissioner president caen and a strong continuance to maintain with the progress and reiterating we've making sure that you don't go to that corvettes cutting measure if you

need to will be something of concern and lastly in the budget of what happens from the drought continues i'll add to the things i think you need to consider is where did that next increment of water come from go not only the financial sales but the financial investment and other alternative supplies to be thinking about i've been having conversations with richie and your wholesale customers supports this this is a system they rely on and look for the investments can we make mississippi if any and this should be thought of in the bucket as well. >> thank you are there any other public speakers. >> sierra club the next item,

please. >> item 8 the climatic change workshop. >> so as part of the drought and the situation that we're in really falls under climatic and frankie's can wants us to talk about how it relates to climatic change i asked david to come up and talk about all the efforts we're involved in and as an agency we're facing but also have each one the enterprises to talk about how climatic change is impacting their enterprises so - >> thank you harlan david the climate program director good to be back the commission knows that catalytic is real and happen today and continue to accelerate in the future more

quickly or slowly depends upon on the green house gas emissions over the decades so while there's no real dispute about whether climatic change is happening the nature of climatic change is uncertain therefore as we embark on the adaptation and other enterprises we need to think carefully how to do that and the pace the best approach is the adaptation we're involved in studying and being part of organizations nationwide that the members have been providing flexibility a sense of adapt adoptive management and the ability to stay current as harlan said while summarize about the conditions related to complifks are true and we're going to have representatives from each enterprise come up and talk about what is happening in each enterprise to deal with those issues most of my slides are labeled

observations or projections with the actual daylight information in hand and projections from climatic science tools that tells you something about the future temperature gets a lot of press there are a number of factors that are important to our operations i'll highlight some of them temperature and precipitation and snow impact, compliment extremes and sea level those are the phenomena i'll focus on it is called global warming and this is observations of global temperature over the last hundred and 65 years as you can see a fairly instead upward trend in recent decades it is gotten warmer by a degree centigrade fahrenheit

2015 was the hottest year we saw a number of record warm that didn't come out but labor record growth and much warmer and warmer in average more locally at hetch hetchy we have this year's temperature data observations since 1975 the best qualify this is the daily the trend warmed up it is not sharp by definitely there and then on minimum temperatures that are extremely important for dem the pace of snow metal a trend up at helpfully it is warmer at night as well and that is an important role in telling what is going to happen with snow pack one the key storages place. >> looking at the future on temperature global warming

there's projection federal reserve the entering good morning challenges on 2013-2014 roughly similar upward based on the scenario the red line in both graphs the highest levels the managers and basically bus as usual if we continue with green house gas emissions in intuitively the icc report the range between 5 d.c. that is wupdz of 9 decrees e degrees that is called the business as usual we only go get warmer with r.c. that stands for representative pathways that is basically a measure in a volume of air that results from global warming and if we get to the 2.6 the temperatures level out this

is by far the most optimistic scenario and not one that people hope in right now the temperature has a great impact on snow and on the far left the historic snow pack on april one and then the middle graphic shows what happens under a moderate to snow pack on the rights is what will happen to snow pack on april one in florida a business as usual scenario under moderate 48 percent of reduction in by the end of the last 3 decades of the high emissions down 65 percent as you can see in the circles that appeared our watershed up at hetch hetchy centered in the

hetch hetchy positive we have some of the best snow impact and on the negative what the projections are showing towards the end of the century on precipitation the picture is laboratory indicative of our area california observations here basically no real trends with the precipitation on the screen the orange resign up and down an 1111 year basically no real trend in the last hundred years and precipitation is not changing statewide as a total measure and that is being seen that's the data that's what's happening in terms of the projections this is a busy table but shows a few things the observations on the left hand in green with a trendline in black same result

as the previous slide no real change in precipitation on the right-hand side a number of blue and red lines each of those are a global compliment looking at the year 200 hundred and again, the trendline for total precipitation in northern california is go basically flat so we're not seeing a big signal in our area in terms of the precipitation global warming precipitation goes up because the water cycle spends up but depending on where you are in your unique climate. >> however, looking at extremes precipitation extremes in this case that is one the things in the climate community that is something will be increase over the future extreme events and precipitation and climate on the left-hand side you have a table showing climatic change tables

out through this is actually through the period 2016 and days without rain b will go up and heavy rain will go up? extremes will get more extreme this is the kind of thing that as implementation for the water entry in hetch hetchy and the stormwater management system in the city and county of san francisco. >> another extreme we care of is drought it is data it is observations on sand yawning river this is the extreme flows for the san quantum and this is over the last number of years up thoroughgoing back to 1901 the blue straight line the trend

as you can see the stream flows are going down in this trend in the data it is important to remember that stream flows are not only precipitation but of e evaporation and soil moisture and temperature and highlights the focus precipitation trends are not evidence in the projections are we still seeing an impact on drought this we may be seeing this even more in the future. >> those are on air flows. >> i'm sorry. >> those are unpaired airflows the river that combines for the transcribe try forces the van adjoin i don't want to say.

>> i was looking for changes that regrets the reservoirs coming online i did not see anything there. >> it is probably unpaired because of that but i'll get the answer we got this data from the college office and this is what they calculate whether or not we're in a drought but don't want to say. >> we're seeing the same thing on the sacramento side as well this is a plot of the temperature and precipitation records from 1895 to 2014 the temperature on the yshgsz axis each dot represents a 3 year running from 2014 what's the 3 year combination of precipitation that we're seeing in california as a whole and of course the most interesting thing about this graphic there

recent 2014 inadequate adequately 2012 and 2014 this is is the hottest and driest in the records going back to the beginning of this table when is 1895 but a lot by a lot what isn't clear whether we contribute this fact to clooifk or not what is also not clear the degree to which we should see those super dry and hot years under climatic change we know that will get hotter whether it gets drierer and hotter is this an anomaly. >> so if you have a super wet year because of the extremes wouldn't that throw off the draft. >> a super hot if you have

super hot and wet that dot would be on the upper right hand. >> each dot is 3 years so one is silth less. >> i don't understand the question so 77 was the drive it year but not a drought the - i guess i'm trying to think this up with this notion we're going to be seeing some extremes that we haven't seep should change the composition the graph. >> that's exactly one the questions droughtness is a measure not precisely didn't understand we know how to refine

it what will we see in terms of of the drought in the future and that asks the question what are the sequences of the years different from the sequences we've seen in the past. >> so turning now to sea level rise a manifestation that matters to the environment we've down a deep dive and come up with those projections for actionable information for planning we did this in conjunction with a year of mergers that occurred with the city and county committee that was organized at the direction of mayor ed lee and chaired by you, yourself truly with significant participation from a number of city departments and had a tremendous amateur the participation from the waters enterprise from the consultants and staff and you'll hear more about this from bryan when we say up here talking about the programs for

the sewer improvements programs that contribute to creating the sea level rise and helped to- which is a document we've worked on that was adopted by the capital committee september of last year and this document will governs the way we think about the 10 year capital plan citywide for the vulnerability of any capital program to sea level it is one the first guidance of its kind in the implementation right now that concludes my comments i'm available to answer any questions or hand to mr. richie. >> one short question i heard that jim hanson has come out with a new project from sea levels that not been used. >> hanson is in a very special

role i'll say in public significance he's reassigned at nasa in order to create advocacy climatic change issues we're should be grateful his science work is sea levels by the end of the the century we're constantly looking at the science there is alarming about the ann can the hanson article was not reviewed i think from our research on it was intent to provoke thought it is pretty much higher by a significant margin than the consensus that what is physically possible if everything going wrong if a land

ice metal or another thing that contribute to sea level and because it is much worse the worse case scenario i don't think that for used by decision-makers. >> for our planning purposes go back do the slide. >> 11 inches no. >> yeah. this article was talking about 21 hundred 3 feet we consider likely 66 inches 5 and a half feet is unlikely but possible >> for planning purchase 46 inches what we're using right now internally. >> well both there's no one number to assign to a particular year you're over simplifying it we're providing a range and then in the guidance a lot of detail how to deal with the range the

uncertainty like 85 years the way you deal that that think there the option to do you want to the year 21 hundred or do you want what is likely in 21 hundred and 2060 or 70 when you know more about what is happening the worse case scenarios and where we stand in 21 hundred and get another bite of alisa miller and hunters point shipyard think about what we know best and plan for that and be prepared to plan for worse case scenarios if it looks in a few decades like they'll come true. >> thank you. >> any other comments okay. >> mr. richie thank you very much. >> thank you steve assistant jerold for water i'll be brief a

number of effects on the water enterprise but i'll put this think the single slide here shows what is most likely to be effected the utilization of hetch hetchy 81 percent of our supply is important what the biggest question the snow pack and run offices the potential for more rain with greater extreme periods on the extremes i was thinking about the 3 year period if we had one wet year out of 3 the water enterprise we'll be happy this is 3 years we've not seen the chart for the 4 year i'm by the time there 2015 will be the hot i did drive it 4 year period that would be a problem and that is limited change through 2025 not enough chapping to make a difference

we're experiencing the drought we're looking at the impacts on the regional waters system and take the climate model and down scale those to the water shed and plug that go the operation system and our exceptions like on sea level is that we'll end up with a range of not one answer to provide it just possibility and have to basically hope for the best but plan for the worst so it is a factor we expect to develop a protocol of no investments maybe conservatism programs we'll continue on doing and to diversity our water supplies as we've talked about previously and you're doing right now we're diversifying our supplies we don't know if we'll have anything available given the climatic change we've

recycled the water this is something we'll telegraph hill enclosure and implement we're starting on the grand theft and in construction and others ground water projects and the brandish ground water or surface water brackish causes less energy to get salt out of we'll looking using those and copyrighted to replace the loss of snowpack the calaveres damn a new calaveres dam i had to include one with a hole in the ground constructing that with a larger baso increase the size of calaveres dam if we get more precipitation as rain than snow

the possibility of additional transport from helpfully to store water down here i'm sure going to say helpfully is something we'll get into those are the kinds of things to look at going forward where we store our rainwater that's a quick summary how we looked this i'll be happy to answer any questions. >> questions. >> i only have a comment as we get more into the recycled water another item on we'll need to keep our eyes on what we use. >> absolutely. >> that's where a lot of folks are moving and in the future as well. >> yeah. >> has there been anything for the eco system health projections i don't know when the states and feds had been looking at this and climate related i'm looking at the eco system as it relates to water and supplies.

>> certainly on the eco system on the climatic change side there's been a lot of work done that that the temperatures rising and they have to mitigate higher than and higher they may congratulate but in terms of drought we're losing a lot of trees we'll have a lot of dead trees that increases the fire danger we're seeing this because of the drought not a lot we can do about it on ride it out to get to the odds other side. >> we'll have to track that and the loss of forest land and more problems on the keep because of the vicious cycle and also the

finish supply i'll be curious to here peter's thoughts and tracking the impacts of the catalytic in our water sheds and what we can do and we'll indefinite as part of the dam calaveres and low springs for the first time we're having under flow requirements that is something we're move forward with regardless. >> okay. thank you. >> i'm going to turn it over to barb hale. >> i have to say something first back in the year i think 2000 with when we were planning calaveres i said let's go high so i'm glad to see it is come back. >> coming back. >> and thank you. >> thank you, ann. >> (laughter). >> ca as i recall you insisted the foundations be high not no to have to redo that thank you

for you're good deed is being regarded. >> so leading on to what publish described power enterprise follows the studies that the water enterprise engages if looking at the modeling of hetch hetchy system at the hetch hetchy water shed from the modeling will have a better sense of the generation profile is as you may know depending on the water year take into account the slides we'll have generation in a dryerer year not to much if we see the kinds of changes in density of the storms and changes in the speed of thaw we can expect to see steeper peaks the megawatt hours produces over

a years steeper peaks and lower valleys we'll be behind the enterprise when we complete hair modeling work that describes the water and turn that into generation profiles and so that looks like for us in the meantime in the years we've been spend dollars to mitigate the impacts of climatic change we talked about earlier today the fact we're a g h g free producer we're not contributing to the amount of green house gas in the environmentalist but just the same mitigating the impacts our customer usage can have on the communities the overall community 72 point millions over the past f 10 to 15 over the past 5 years have been spent on

reconfigure active energy efficient program for example, as a result of that seeing quite a bit of reduction in tons of carbon being omitted 35 meow thousand cars taken off the road the equivalent is a great positive impact our revenue investments repair investments have produced as we look forward we'll only be spending under our 10 year capital plan about $31 million for climatic change mitigations, 10 miles millions for energy and 12 and renewable and the go solar rooftop installations and here as you can see what we project to see as the impacts of

our growth in our customer based through the communities sf clean power there the gross in our sales to customer here in san francisco we bring more of our hetch hetchy power to retail customers and make less sales on the wholesale market for the tying this together with the business plan predictions over the last couple of commission egg meetings bring more green house gas emissions generation into san francisco could what do we see as the totals emission for those tilts 77, hundred and 93 carbon reductions are associated with those investment with the full royal out of the sf clean power program that super sized it 2 hundred thousand ton reduction per year in green house gas emissions and

5 hundred and 40 house plus passenger vehicles off the road a quiet a positive impact i'll be happy to answer any questions or i'm going to turn it over to bryan from wastewater. >> so i have a couple of questions one you know i'm the money that we're spends on mitigation is go down i understand the decisions with their that's our decision but one thing that happens more and more we're purchase as we don't generate waters we're got more o more dirty power now is not the time i really want to have that conversation if and when we look at those policies we have on the books and if we could start you know counting that if we're going to pay less with the infrastructure what have you have purchasing renewables and

create some at least you know bottom line baseline around the kind of power we're purchasing not just the cheapest low bid power i don't know the best times for that meeting but through the trade offs i know it didn't fit well, to go to h-3 we're going purchasing around the market. >> so what you know, i think it is a longer conversation by the way, everything thinks that you know having renewable your hundred percent but a theme if you have solar sometimes during the day your buying system power but averaging the solar is all good a longer than conversation we're putting more into the system and when we take it back out we're assuming we're taking out what we put if we have to have a longer conversation not

as simple. >> and maybe offline but trying to be straechg and then the other question around which came up around the rim fire the question of power redundancy and lost kirk wood had to buy you know bad power and just you know what the thinking is especially from the compliment prospective to build more redundancy in our system as we see more wildfires and losses service. >> one the things we were able to address parts ever our powerful is to are redundancy with the ability we're purchasing power for cac and so we're looking at different ways of diversitying which we outlined in our plan. >> so part of it is

communications too like what are we doing as a city and as a utility to build in climate residentscy to be a great pieces of work. >> part of what we need to do as a staff is look at an integrated resource planning where we're able to take the issues take into consideration definition or different indication and the resiliency another but looked at the in a more integrated resource modeling where we look at the energy and as well as generation together and make those horror holistic decisions and more decisions. >> definitely look at introduce a climate lens what we're seeing and being able to say we need to be ahead of the game will be great, thank you.

>> thank you. >> mr. apprehend son. >> thank you brandishing bryan the wastewater manager i'd like to actually take this moment to introduce our wastewaters climatic change manager who will be leading the way for wastewater enterprise regarding climatic change yeah, the effects of climatic change have already effecting our system preliminary through rain intensity and rain and drought in addition the e revision is effecting the key infrastructure along the beach trends and precipitation indicates that with the warming climate we'll continue to experience for tremendous wleefrp with more intense storms those are photos you may have seen from the storm in february of 2004. >> when i starred with the city

a while back high tides never entered our system last year, we had 78 different high tide events that come into our system that significantly impacted the read circle this problem will only get worse as sea level continues you've seen this slides before. >> this is the creek out fall at low tide and high tide on a clear day we have flow come into the system we're also concerned the effects of drought drought and corresponding water conservatism we rely on water to flush materials through the sewers continuing drought coupled with a rapidly growing

population will diversity this a shot of the e revision with the sea level storm sunday morning and wave patterns that threaten the infrastructure along the ocean beach this photo was taken across from the treatment plan during the 2014 illustrates the effects of e revision and my colleague will present that information in this area. >> coming up so what have we done to prepare for catalytic we've added dedicated staff collaborated with other city departments which will become very important as the city develops comprehensive climatic change strategies we've hired containments to help us develop the adaptation lane plan and

implementing the prongs we've developed policies and programs to help us have a more resilient system and talking about the climatic change at meetings and educating the public essentially what we see here as part of our comprehensive the complifks adaptation plan underdevelopment through the ssi p it computed steps to complete before we determine appropriate adaptation strategies we are assessing the risk and beginning the development of the adaptation extreme e streaming that is expected in 2016 a living document that requires periodic updates as we learn more about the project. >> for the mapping was - those

are the integral ssi p guidance that was mentioned earlier as a result of that work all the city departments are using the maps for the planning purposes that particular map illustrates the 66 inches at 21 hundred we'll be underwater. >> can i ask you a question on this map was there also some mapping on the backflow issues occur as part of the sea level rise maybe you're getting to that. >> that's the issues. >> the flooding issues the sewer system incidence. >> we have maps unfortunately not in the presentation right now but glad to you know - >> it is important to have an understanding we've dealt with a lot of flooding issues not squarely related to sea levels or climatic change and if there

is someway before casting and looking at those neighborhoods and issues - and we definitely already seen many of this and have sensitive mapping. >> there's two different thanks one a sea level rise indicted and the density of rain and we have maps that show if we have increased density of rain over the short term what areas will be impacted and so we model a lot of that so we plan to give a presentation about the flooding and about the impacts of concern neighborhoods. >> yeah. there is - >> just to be sure to integrate those maps to look at the hot spots and seeing what strategizing we can do.

>> sure thing we'll should where we have problems not a gravity solution to flooding problems during those high tide events. >> there we go as i mentioned earlier we're experiencing the effects of sea levels this is one of the years we've piloted a backflow devices this was installed in may of 2014 and it has proven effective great storms sin e shins then we've not put those on all the systems lastly to present you with an overview on the efforts to address the e revision on the beach climatic change reflects the ocean beach from sea level storm sunday morning and wave patterns as you can see the e

revision has been chronic the goal to develop and long term strategy to both protect wastewater center structure and promotes the shipyard the long terms strategy is underdevelopment we're working with the coastal go commission to implement short term measures they include sandbags and the long terms strategy will be ready to construct in late 2019 and here's a picture those photos show the measures with the sandbags and sand nutrient those measures should be sufficient nelsie nonetheless we experience extreme large storms. >> again, this is kind of where we are now and this is a rendering of the final concept for that the management retreat to protect

the lavished tunnel under the highway this project will protect an estimated $2 billion of wastewater entries infrastructure in addition to the san francisco zoo. >> isn't our out flow pipe threatened as well. >> that's the south west ocean out fall you're referring to. >> uh-huh. >> the pumping is effected the force makes sense from west side to oceanside are effected. >> i thought that was an exposure issue. >> we're not having an exposure issue that is endangering your right there are portions of the structural members that are visible. >> oh. >> that concludes my presentation.

i'm available to answer any questions. >> how much of the anticipated sea levels rise work is currently in the capital plan? every project within the capital plan take into consideration sea levels so whether or not effected it is considered >> i'm thinking more particularly of the doing something about the ware valuation of the boxes whether this is a pump solution or physically. >> you saw the black hoe preventiveer the more immediate but when we have those high tides in storm emission the only solution is the pump solution but have sorj storage to the

extent we have the central tunnel that has storage there will be events that beat our system. >> are there elements in the 10 year plan or those a projects beyond the 10 year horizon. >> thorough planning efforts within the 10 in central bayer side no solutions to the pumps. >> the way we're going about it one we're looking at what we feel are prongs that bring our systems in a state of good rape and make sure we really looked at climatic change and see how to impacts there are projects that addresses catalytic for example, we're now looking at flooding and so this is something we're going to address how we can deal with flooding and i think you know we're

looking at projects maybe adding more scope to the project to address or take advantage of the opportunity to address certain impacts that climatic change will have and think from a city stand point the city as pretty much adopted a lot of the science the maps and stuff and so the city as part of their capital improvement we go to the capital committee you have to make sure you take catalytic take into consideration so the ports for example, has a lot of issues the airport has a lot of issues when you talk about their challenges they're very a lot of challenges abused you you know they're talking about building a wall but for the airport it going comes from the backside from the south and so you've got to build a wall all the way around with the communities to build the

wall it is challenging we're all looking at how we can look at projects to try to help address climatic change. >> one other thing i was open of was the in hetch hetchy one of the ways we brought the 10 year capital program into balance we moved long term transmission projects it's important to know that one way of asking the question if there are things like that in the wastewater program that are large and beyond our normal planning horizon we should identify those to know they're out there. >> and knowing their change and the planning will change what that looks like but if we know there is something big that's important to know. >> i would like to be looking

at what we're talking about what are the projects that would be impacted by whatever sea levels or changing climate. >> what will it cost to really build in re since in the next 10 years. >> building and operating those facilities becomes a significant effort especially with the revenue impacts; right? >> yeah. i mean for example, the wastewater we talked about high treatments or what is it? rapid treatment >> high rate treatment. >> high rate treatment more the flow treat is it more of intense rains we have those options and we've identified those could be out 20 years so we can bring that forward some of the thoughts we've been looking at. >> the possibility of capturing

and reusing the stormwater thank you. >> thank you. >> i'll call for public comment now nicole did you - >> good afternoon, commissioners bill of health can i appreciate the update on this time low topic especially in the advisory committee of wear we're experiencing two things i want to comment on and looking at the idea that mr. richie was talking about how the water enterprise might respond to reduced water supply availability through climatic change certainly your wholesale customers have an interest every single is relying on that perpetuity hundred g d in the contract with you like you they're looking to diverse their local supplies but doing that to meet the needs you've

indicated you've not provide any more water to do so so your supply is only thing they have available they're concerned about that i'm also interested in the idea of raising calaveres dam the new dam it is interesting to show up on the list and we were a supporters of that as well in 2000, 20091 and 2 so thank you. >> hello yield for bosco first of all, it was an interesting prediction i was listening to what was ignoring i'm glad the sf clean power is a part of that one part it missing i get did we're looking at doing the renewables and that's not port part of 10 year plan i get did

we know know how much we're go to spending and the knowledge how much it will cost we'll get more updates the public will know and keep in mind as commissioner moran there's those projects that are further out this is kind of in the same educate it is something in the near term more access to help to do the climatic change initiatives you need to do and cac can help to get that down i don't want to lose that in the escape let's not forget where we live have the money coming up next year to launch to do things not in the capital plan but added to it in the not two distant future thank you. >> thank you. >> good afternoon peter first of all, i want to dwrags the puc and bosco for a

tremendous efforts around sxhefrment you'll recall in 2008, when did phased was approved a cap on water sales and even before the drought we were way below the cap available this summer the hot most with the low eir domination we didn't exceed that we're in much better shape than most places and helps us as we prepare for adoption i'm glad that commissioner moran brought up the reuse that is happening in a lot of places as you may know in orange county their producing hundred million dollars e millions gallons and filtering down and recharging one set of pipes to debt to all uses and the waters district came online with their production ever 8 mc d and

having treated water to use it for irrigation but educating the exultant trying to overcome the yuck factor and hopefully putting it into the pipes i think that the west side basin is a good use of injections and a lot of opportunities and wanted to take a moment to respond to temperatures and finish there's a very, very direct correlation the most important the puc did a great things a few years ago on pedro a concern we were seeing dead field head and the puc approached missouri deft and convinced them to go in on a 50/50 split of more water so summary flows up to 90 and it's all based on how hot that day is

projected to be so keep the temperatures low enough the fish won't die and the kirk agreement puc has embarked on an eco system program for six or seven years great process bringing together the stakeholders of the hetch hetchy stretch between hetch hetchy and the early intact and last april of 2014 erased a draft management plan for them and focusing on nature species and releasing water in a way that mimics the ohio graph and the proposal to shifts blocks of water for the sum in part for brown trout a non-native to the springtime and there's it's about temperature

not releasing too much water in the winter it might have a rainbow trout available we need to continue that how is climatic change going to effect that and have an dog patch management plan for that. >> thank you fascinating. >> any more speakers. >> seeing none, next item, please. >> item 9 a report of general manager. >> first topic is cac update hill. >> good afternoon barbara hale assistant manager for - since august 11th our revised prelims plan submitted to the public works was certified so we've

achieved that milling and issued on that data request for over to provide supply to the sf clean power program and on september 3rd received responses we have multiple responses and the two primary bid 0 offers that we had published the first being if i remembered and shaped energy and the second being renewable energy products we've gotten multiply bids and also offers for the resource capacity we need to procure for the program we're busy evaluating those bids we're hoping to be able to short list and innovative the bid option one biefrdz of our interest in interviewing them on september 14th and then co-sponsored to you with the

proposed counter parties and terms first of all, went to our schedule on august 1, '30 so o so when you look at the screens you'll see the schedule the highlighted in reds the activities that have occurred since our last conversation on august 11th with the target activities now being evaluation of those for the offices of development for the agendas for the september 25th joint meeting with lass could i'll be working with executive director freed and the commission secretaries to publish that we're hoping to bring to you the enrollment and community outreach plans we did

present our i preliminaries thoughts on the citizens advisory committee last week and as i say hope to presents that to the joint body that week september 22nd for the not only our meeting but the joint meeting on the 25 we've been engaged with the legislative session enlarge we've seen some major piece of legislation that effect both our community aggregation and puc program there's a lot of activities open those fronts with that, i'll be happy to answer any questions you may have thank you. >> thank you very much. >> would you like to speak

jason. >> you haven't called for public comment. >> jason fried executive director for bosco she didn't give the staff enough credit there's a lot of work for the b r a large project i've been trying to limit might have to the questions for the staff to focus on that because it is so important for the program i look forward to the september 25th meeting we're working on to or the joint meeting between the two commissions to get. >> full discussion of the outreach plan and that's the next thing generally speaking prereviews one or two small things to have discussions but overall the staff put-down everything together for the planning market and the state legislation big items that are come up your staff and as well

as other in the cac world working to make sure the cac programs don't get negatively impacted how to deal with green house gas emissions or climatic change look forward to talking about with you on september 25th thank you. >> so we'll - help me remember what was on the screen. >> i have the same question. >> what's scheduled for the meeting of the 25 on cac? >> so the meeting the 25 a joint meeting with lafco two primary tops with enrollment plan and our outreach plan. >> education and outreach plan. >> so describing the plans for how we're going to market the program both geographically and visually full describe to the

customers the offersing and targeting our initial efforts and moderating with the up to 60 megawatts of customer load. >> okay my concern is that because it is not a standard time i'm not going to be here for the 25 i go to a fair amount of work go but less likely to be in town the other times so when we shift a meeting like that it as consequences as far as availability i don't know about the other commissioners two tops that are pretty important i'm sorry to be missing them. >> can you be conference called. >> no, that is not legal.

>> one of the things we could do is near the meeting we can give you you know productive pretuff u view so any comments we'll reflect your comments were as we give the presentation. >> let's plan on some version of that. >> i'm with having a hard time to so the selection of the r f o contact will be in time for the lafco meeting. >> no. we'll be interviewing the bid option one for the short lifted parties on the 21st we won't the process won't have matured by the 25th to talk about the outcomes i mean, i'm just anticipating that some of the lafco members might time to know the results

of that i suppose we can schedule another meeting in response to commissioner moran implementing i don't know there might be questions and issues over those years of many r f o and rfp a lot of questions from the other commissioners. >> what i would say looking it looks pro tem so we have to due our due diligence and so difficult to schedule a joint meeting if we push it out future you know it is so - >> at any up to this time we'll give an update of where we are he's been involved along the way. >> perhaps a preview.

>> i hear you we'll see what we can do. >> to commissioner moran those meetings are really difficult to schedule. >> i know. >> we're sorry about that. >> okay we need the drought. >> the next update the drought. >> steve the general manager for water i'll try to make that brief the slides please again, the reservoir storage is performing as expected and hetch hetchy is dropping down full at 83 percent and the increased storage of 24 percent the storage will peak at hundred and 70 or hundred and 73 feet the precipitation remains

unchanged flattened and some cliefrz i hate to disappoint the director we've creeped above the yellow a little bit and still you'll see this is quite low demand compared to the prior times and lower than the other target actually, if you look at the rate of achievement we're at 95 percent of the achievement it is clear that san francisco customers continue to do an outstanding job of sxhefrment we'll well steady that target i did mention a while back we launched a pilot program send out notifications to customers we see those tungsz consumption you've got a leak we sent out 15 hundred and good response the leaks went away and contacted 40 percent and gotten the on the

long telephone number but simple fixes like toilet flapers and the climatic change presentation that matters what climatic change is doing how the driest period in california i wanted to get to those two slides those are the ones that hopefully answer a little bit of the questions b what about el nino what this shows a measure the density of el nino the higher the reds spike the stronger the density of el nino and the blue spikes passenger seat downwards are the non-el nino so enrichment of variability and the gray area is normal i guess the best way to describe it so you see the

important thing the next slide it precipitation at hetch hetchy overlayed on that and what you see is not much of a correlation for us in our water shed with el nino 1983 when we lucked out it came out exactly the same but 1997 was astrology el nino we have good all of a sudden at the beginning of the year it tarpd off and see wet jars that are el nino's and dry years that are el nino's we don't know what to expect we need to hopefully for the best but plan for the worst. >> and lastly on the states water board they have gotten pentsz for the irrigation district we actually have filed

to testify in that matter and decide whether we're going to go provide the testimony that raise a number of issues such pre1914 water rights and how they circulate the water availability in the system those issues we'll follow closely whether or not we ultimate testify in that are matter i'll be happy to answer any questions. >> i have a question on your slide 9. >> uh-huh. >> your spike up is that anticipation or for 2015. >> oh, that was that's a good question i did not prepare that chris one of our huh-uh drafts that might be what occurred that

was a weak el nino that was this past year not problg forwards into the coming year. >> is there a forward year slide. >> we don't have a projection obtain here. >> on here. >> no. >> it disappeared. >> those are observations this is the past water year. >> okay. >> any other questions. >> i think i have a question about el nino still wasn't quite following it is is the rains going to be as severe as projected are we prepared i am not i think i know the answer it is like we've got our reservoirs that are ready but beyond that we could are be facing on the one side of things pretty serious flood issues we're not prepared to capture the way we

could. >> you want to address the issues. >> the first issue. >> water bank is entry any water we can put in water bank that would be great if we get a great one this year that would be fabulous weeping we'll end up with a full overflowing water bank in don pedro. >> an el nino they happen at higher elevation as well. >> it's an ocean events it has to do with with the temperature of the ocean water the effects overland they tend to be more printed out in southern california and oregon in the central coast a lack of correlation. >> i thought it was at lower elevations. >> they can be dry. >> they can be dry. >> okay.

>> that was the point they can be dry or wet like i said, we have to assume the worst from a water supply prospective and doing the hard work on flooding. >> so we could a have clear projections. >> no way. >> so our great modeling. >> it depends on who you ask it is all about you know the whoever a high pressure you can warm front and the north and what that could do is move a lot of the precipitations more south so i've heard about that in northern california we probably have above normal year but in southern california a major you know it's been different depended on who you ask but we're hoping for more rain just not all at the same time. >> i do remember we invested in

that high tech rain modeling thing for the wastewater program. >> yeah. that's a project that the city underway and realtime factoring forecasting it is not like weeks in advance but give us time to move our water around the systems and be better present thank you. >> okay. >> so you want to stay there and do the mountain tunnel. >> i can do that. >> okay give us a quick update on mountain tunnel as it relates to our ability to supply water during the hetch hetchy shut down periods i think this slide pretty much the events of any hetch hetchy description whether prandz or not we shift the local water

resources to basically our local reservoirs through the valencia treatment plant to supply water throughout the system and have the santa contractor that santa clara we're trying to research the number they've used for an extend period of time when they have a treatment problem those are important functionss we have and also the possibility of our customers using alternative supplies and rationing and agreement with other agencies to provide water we elevated our ability to have the shut down these planned and unplanned and shut down are scheduled in january and only last 60 days it's not a

completely analyzed number but that was a good rule of thumb through the period we didn't want to stretch the system too much but have lots of shut downs going this is using the criteria of having 90 days of supply at the end of the shut down and hundred 80 days in supply available locally by the following june 1st to make sure we have the size available for the future we don't want to run ourselves out of water but have some to go forward we've elevated the range of demands from 6 millions gallons to $20 million gallons and average demand as the analytical number that assumes a little bit of rebound from drought not a lot but some utility our spices we can

accomplish the hetch hetchy up to hundred and 20 days from october to early november that gives us twice the length of the shut down that we've had before and that is something that i think is very, very important to us we've also elevated the ability to 90 and hundred and 80 and hundred and - this is the storage conditions at the time of the shut down you don't know where you'll be but taking the worst percent we see the 90 day shut down or 3 months as an emergency shutsd is manageable with our resources we can handle that any time of the year hundred and 80 days of months requires achievable demand

management or use of interties not doing anything extreme to survivor 90 days but do thing different for 2 hundred and 70 days that requires significant effort going to a degree of arbitraryig or alternative water supplies or hope for the ties for an extended period of time so, so me that is that pretty good newspapers we'll manages up to those six that applies to mountain tunnel and hetch hetchy other things could go broken this is the first time we've analyzed the possibilities. >> so the next steps on this we're meeting with bosco staff technique to review the results from the analysis we've done you know what they think and feel

about that how to communicate this to our customers and want to extend our analyze particle the shuts down in following years what if we did this 3 years in a row the results about show we can do that but we have to do our homework to be sure and we'll need to rely on the two flirtation plants for the local supplies to be available we've looked at this but make sure that those filtration plans are i'll be asked to pass the proposals the support went out in june we expect it have a consultant to inspection that on

board in early 2016 i didn't include it on the slide but it should be going out to bid and for the long term solution the reelevation yourselves in early 2015 after the major schedule so the schedule you'll be asked to adapt if include a hundred and 80 day shut down this is hot off the press 0 alternate the schedule to take into account the possibility on a technical front to half-hour make sure that the right thing to do we want to be sure and i'll be happy to answer any questions. >> is something wrong with the there somebody's phone near the microphone? >> well.

>> that did that whatever it was. >> okay. that's done (laughter) pursue just like the tunnel right. >> do i do have nick you wanted to say something it this. >> commissioners nicole with bosco i appreciate gridlock the analysis done by st. joseph's and his team it was a significant task and but i believe that document hopeful information about the state of the system and can provide in the event of the planned and unplanted outage and look forward to reviewing that as you may know bosco looks at this with the reliability they expect and plan to expect into the future and to me the question

comes down to if it were to fail tomorrow before the action for the interviews that was taken for the repair work into the tunnel will 3 months be enough six months enough? i don't have the answer but steve and it's team i appreciate that very much. >> thank you. >> okay. the last item in your report. >> kathy how given an update on the hefts pour quarterly review. >> kathy for infrastructure you know the report is self-explanatory i wanted to point out that the last two projects for the emergency rock fall mitigation due to the rim fire is those projects are complete so pretty much most of

the projects for in response to the rim fire are at completion and so we're starting to close out a lot of the projects. >> good i wanted to say that the highlights that was in the very front of report were very helpful i appreciate the way it was done. >> are interest any questions. >> yucca comment you've permitted daily on the multi projects i appreciate you do that that helps what they did in the r and r later on in the report it got less narrative and specific to the sub projects but. >> we're trying to put a little bit more explanation that is consistent with the reporting and the ss mp reporting.

>> what was good about the r and r this project has citizen sub projects and the general codes and got into the level that you could form judgment it was helpful thank you. >> thank you very much calling for public comment. >> sorry once again i was pleased to see the process as defined ♪ report certainly the 95 percent for the mother-in-law and the and improvement and commissioner moran the r and r information i think i know that's been a struggle to try to find things that is coming a long way and looking forward to working with our staff the clarification of one the projects in the document

awe duck is the subject of a dispute between puc and bosco this project is a historic joint with the waters as shown in the report i thought that was important to comment to you thank you >> that concludes my report. >> okay we're going to take an 8 minute recess. >> as i say recess is over. >> okay we are now at the calendars. >> item 10 the consent calendar

are considered to be routine and may be acted upon by a single roll call vote of the commission. there will be no separate discussion of these items unless a member of the commission, the public, or staff so requests in which event the matter shall be removed from the consent calendar paragraph modification to contract increasing the amount by 6 hundred plus of 9 and b accept the contracts number prove the modification decreases is memorandum by 7 hundred and of 8 thousand plus with a time of 60 consecutive days. >> would anybody want any of the items remove. >> to the public any items changed i have a motion. >> so

>> i. >> > opposed? that motion carries next item, please. >> the 11 for the helpfully proposed psychologically and schedule for reduce the for fiscal year 2030, 2024, 2020 a i'll ask a question i was trying to figure out what this was about and it was really hard until i got deep both it we're only changing 3 projects of the appropriation level just a minute you don't have a microphone. >> we're trying to match it up with the 10 year capital plan in terms of funding as well on the projects so some of the projects have not received full funding so we've shown projects as their

opportunity up to a particular phase up to planning phase or funded up to planning and design phase so this is what we're trying to show to go back and clean it up and match that with the 10 year capital plan and also show and have you approve the schedule for mountain tunnel and the interim projects. >> the mother-in-law is the big part the rest we'll normally do that as part of project. >> yes. >> okay. >> the other thing i want to point out steve talked about mounting but i'll touch open is to sub projections one the added assess improvements and we do plan on going out to bid this month for the addressed assess improvements and we are also

looking at to hire an component with an existing contract with the inspection and repairs this will be happening this month as well one other project i want to point out it is called tesla valves replacement it is looking at surge analysis within the ability to some reason automatic shut to we may not have considered all the scenarios when the project criteria were for the test la review facilities we're looking at the potential operating scenarios if there were a threat to the facility and the valves would automatically shut so we're looking at the kind of surge to go to the valves out of the test la facility and into the san

juan system. >> that's more stakeholder i'll move approval. >> second. >> ladies first. >> future >> all in favor, say i. >> i. >> opposed? that motion carries. >> next item, please. >> item 11 adapt the resolution for the xejs the oversight committee inform january one, 2019. >> commissioners do you have any questions on this? take a members of congress >> i'll make a motion. >> discussion on this. >> >> all in favor, say i. >> i. >> public comment. >> i called for public comment a little bit late any any public comment on this item?

>> okay. seeing none i'll call for the >> all in favor, say i. >> i. >> opposed? that motion carries well didn't call for public comment on 11. >> nicole sorry. >> nicole bosco i want to express my supports for the action and looking forward to doing that it is proven that having an adapted schedule that staff what follow and everyone tracks is an effective tool for this staff to get a project done i appreciate our efforts to do that so thank you. >> thank you. >> item 13. >> item 13 authorize the establishment of a new commercial notes program not to exceed $90 million approval the credits in the principle

unanimous not to exceed 90 millions and separate waekts with bank of america and saks fifth avenue and market for the agreements. >> okay. >> again i'll ask do we need a presentation on this. >> i don't. >> no. >> i'd like to move the item and second. >> public comment on this >> all in favor, say i. >> i. >> opposed? that motion carries. >> next item, please. >> item 14 authorize equipment lease purchase agreement with bank of america leasing not to exceed $4 million plus in new clean renewable energy bonds. >> commissioners. >> i'd like to move this item. >> i'd like to second it. >> do i have any public comment on item 14

>> all in favor, say i. >> i. >> opposed? that motion carries next item, please. >> item 15 authorize the memorandum of understanding with the north san mateo sanction district not to exceed 4 hundred thousand plus with a duration of 4 months with an additional amount not to exceed $200,000. >> i'd like to move the item. >> i'll second. >> (laughter). >> somebody is laughing okay. now we have public comment on this item. >> very brief. >> nicole with the bosco it clearly brings office the potential for the water to the system so for that i appreciate that. >> good. >> okay. any further discussion i'll call vote. >> all in favor, say i. >> i. >> opposed? that motion carries next item,

please. >> the contracts number increasing the contract by one million dollars plus with the time extension of 365 consecutive calendar days. >> who's making the presentation. >> do i have public comment on this item. >> if you stand up again (laughter). >> oh, okay. >> all in favor, say i. >> i. >> opposed? that motion carries and the last item 17. >> item 17 approve project infrastructure west side recycling project adapt the california environmental quality act including a statement of overriding and mitigation and reporting program.

>> i would like to - good afternoon, commissioners kathy how i would like to add we probably want to slightly amend the second finding to follow what city plan as done they've amend to include language on page thirty of the finding that basically says the wissop needs the customer supply a needs by providing retail and wholesale purposes from the sfpuc water shed and need to offset the remaining 20 m g d interest the recycle and ground water and the wholesale service areas through 2018 and that's the added language through 2018 and that's because the wissop program program had talked about the

water supply planning through 2018 and so this would be in line with that. >> yeah. it is consistent with their prior action. >> yes. >> okay. >> furthers discussion? may i have a motion >> i'll enthusiastically make a motion i'm good to see this moderating moving forward. >> do i have on this item? >> >> all in favor, say i. >> i. >> opposed? that motion carries so mr. secretary if you could read the items for closed session for me. >> yes item 20 will not be heard today and 21 is existing litigation city and county of san francisco versus a son on and item 22 existing utilization

for the property caution it property and items 23, 24, 20th century, 26, 27 and 28 and 29 will not be heard today. >> very good may i have a motion whether or not to assert. >> move t we're going on we have returned from closed session and this is the name following closed session item 20 and items 23 there 29 were off the calendar item 21 no action and item 22 has been

settle may i have a motion regarding whether or not to disclosure and move not to >> all in favor, say i. >> i. >> opposed? that motion carries other new business? seeing none, this meeting is adjourned atpxyou.

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be successful at the end. >> that will give people the competitive edge e edge at receiving contracts with the city. >> we have krafshth services here that help you find out where you need to get the skills forbidding. >> i mean local businesses participation in city projects is a winning factor it helms help the business their local businesses they're paying savings and a property tax and payroll tax and normally adhere san franciscans so their bowing goods and services in san francisco it really helps the economy of san francisco grow so its not only a benefit to the project but to the city.

the contractors center is 5 thomas melon circle in the bayview area open 8:30 to 5 welcom >> i call this meeting of the transbay joint powers authority meeting to order for september 10, 2015. would you call the roll, please, madam secretary. >> director kim. kim present,

lee present. vice chair nuru, present. president and chair harper, present. mr. chairman, you do have a quorum. >> communications? any in particular? >> none that i am aware of. >> board of directors new and old business. we have a lot to conduct today so it's just as well. how about the executive director's report. >> good morning, everyone. so i did want to report that since may when we last reported on jobs across the united states, we've added 4 states. so now we have work going on at 25 states across the united states for quite a substantial number of jobs. so i did want to report that and i think you see that there, so we added 4, now we have 25. so 11,300 jobs to

date and we have copies here for you directors so we're halfway there before we hit the entire country. speaking of construction, i'd like to have steve give an update on where we have with our construction. >> good morning, director, steve rule with turner construction, construction manager oversight for the tgpa the last reported update was in july. since then we have had a lot of progress, a few milestones hit and one of the things over 120,000 craft hours in the last two months. you might recall that typically we run about 40,000 craft hours a month, so we're up in the numbers of workers on the job. this is an update picture of the site. you can see and we'll talk more about the light fallen and the progression. steel in a moment.

two milestones were met this period in july, one, we finished all the undergroundwork associated with the bus ramp and bridge project. the other is the trade package 6.0, the blow grade concrete was essentially finished. they have to pick-up work throughout the project filling some holes but they poured their last third lift wall on august 10 and that was ahead of where we were projecting them in september or later. that's that milestone there. the steel, we are doing better now with the steel. all the steel is available for erection in the west end and they are working 12 hour shifts as of this week to put that up. the light column was completed and more fabrication is occurring now for the east project so less than a third is in fabrication in the east end. the overall map there you can see the layout of the steel, all that solid blue line across the top there indicates the

third lift wall is being completed, we're well underway with the fourth lift wall so great progress is being made in that area. this is a contingency slide. just the major -- there was a couple spans, including the board awards at the last board meeting in july which show up on this as well as some various change orders. as far as safety, we did have a couple of recordable incidents in july and august. we had 4 actually those have been investigated and corrective measures have been put in place and web core has redoubled their efforts on safety. it's a matter of adjusting to the new trades that are coming on board and the size of the work force, the multiple shifts and we're watching that closely. as i said before, over 1.6 million craft hours have been completed to date, we're up 120,000 from last presentation. as far as in the western zone,

a lot of time was spent on structural steel welding, the first couple grid lines and lines 7 to 10, that welding and decking has been completed. also on the vehicle and bike ramps in the central zone mep is in the milds of rough in, a lot of concrete got placed, we placed our first 2 roof deck pours in the 17 section. in the eastern zone, the steel erection has been progressing but the big effort there was on the light column which now is fully err reted since you last saw the update and stands out quite notably in the project. and rebracing, we actually started in the central section, i apologize, we started removing the final braces from the project in several areas so we -- once the train box lid gets poured we can take out those internal braces. that was another milestone. we started removing these in the last period. and in the eastern zone we completed the third lift walls

and they are well underway with the fourth lift walls working from fremont to beal street. those lift walls are now 100 percent so we will remove those from cali in the future and we will start on other milestones including the fourth drek walls. picture the activity in the western zone, in the upper left that's the structure steel err rektsed on one line and we are now progressing from that period to the steel over to the right you can barely see in the pictures next to the remains of the tres he will. in the upper right and lower right are the bus and bicycle ramps prepour and now poured, just note the effort that gets put into making that all fit together. those vertical steel columns are the false work for the future cable stay bridge so it's an intricate dance at best to get all that in. stairs, central zone, concrete pour central zone and removing, some of the highlights in those

pictures show that. in the eastern zone of course the steel, you see that heavy strip there in the center of that picture in the upper left, that's the expansion joint that separates the central from the eastern. we had just hung that first piece of steel of that back in july. now we've progressed several bays and into the light column area, at the light call em. here's some shots of the light column going up the last couple months starting with the base on the train platform level and on up through the roof deck and up to its full height and that's what it looks like now, now that it's in place completely from an aerial view. again in the eastern zone, shots of the third lift wall getting prepared there, rebracing being done, foerlgt liflt wall under fremont street and that sort of progress we will see in the next couple months as we finish up that fourth lift wall concrete as

welcoming up. on the bus ramp, lots of false work in place. you can see the entire route so howard street has been fully decked and crossed with false work to support the construction of the cable stay bridge and further areas up all the way to 80 in the bay bridge off ramp area, just some shots of the work going up, the abuttments up at harrison street, the false work over howard street and a shot of the deck. as far as what's coming up, fourth lift walls in the east end is critical completing the steel erection in the west end will happen through september and early october with that being completely welded off with decking on it and stuff most likely by the end of october/early november, then we'll be able to turn over lines 1 all the way through 24, 25 line out of 33 to the follow on trades. continue be with mep, coordination and

installation, continue with stairs, start up some of the other trades, more and more getting closer and closer to the start of the exterior wall systems, we have embeds already in place and items like that. labor still looking great, i think we're over 64 percent local out of the counties that most affect the project. apprentices the same. and we have now had 3,000 craft people on the project, individual craft people on the project, since the start of the transit center. happy to answer any questions. >> one question, you mentioned that you are making good progress on the structural steel, still showing about 7 months behind --. >> it's been the fabrication issue. web core the joint venture has been working closely with scansa, they are meeting almost every day. they are working on bringing back that completion date but we are pretty solid within the second

quarter of next year, could be the end of the second quartder but we're hoping to move it back up to april and get back on track or closer to where we were. the fabrication is doing well. i would expect the fabrication to be completed by the end of the year and that would just be those remaining 5 or 8 bays on the other side of fremont street. >> and does a june finish versus an april finish impact the overall price? >> it would significantly help the overall schedule, obviously, and what they are doing right now is try to get ahead as much as they can with deck pours obviously and preping for follow on trades in the rest of the area. the slight adjustment in the logistics and the way it that they are proceeding in the project, if we can fill in the gap in the western zone which is the plan and that's why scansa has gone overtime to do

that, that's why we have done that to create more of a flow from west to east. as those areas get xwleted by the follow on trades the steel folks will be out there completing their portion. >> thanks. >> sure. >> anyone else? >> thank you, now sarah deboard p update us on the quarterly financials. >> good morning, director, sarah deboard, these are your standard quarterly financial reports. this is unaudited but this is the budget actual report for the full fiscal year. we spent approximately $305 1/2 million on the capital side and on the operations side spent about 3.6 million on operating expenses for the temporary terminal and contributed just over 400,000 to the operating reserve with the revenues from lease and

advertising at the temporary terminal. the second report is the contract status report and because it is timely to another item on your agenda i did just want to recognize mr. rule and turner. the construction management oversight contract had a 35 percent sbe goal, they are at 49 percent and 39 percent of that is disadvantaged business enterprise participation. the third report is the investment report. there is approximately 220 million in various trust accounts in land sales and bridge loan proceeds. the vast majority of it invested in u.s. treasuries and commercial paper. anything that you see that had a maturity date in july on the report has since been reinvested largely in treasuries or commercial paper as well. the fourth and fifth reports are the usual inception to date

showing funding sources and expenditures over the life of the program on the capital side, does not include operations, and the final report shows the contingency draw downs. it's a summary of the same report that you get from mr. rule each month and i'm happy to answer any questions. >> the transbay transit center cost review, who's going to cover that? >> that's a separate --. >> that's under the regular calendar. >> okay. >> well, thank you. that concludes my report. >> next item is item 6, advisery committee updates and i believe ted olson is here. >> ted olson, chair of cac thank you, directors, for allowing us to speak. we were very happy at our meeting this week to hear the construction progress that steve has just shared with you,

especially to see that oculus coming to completion. i also wanted to particularly thank supervisor kim for her advocacy and now the fact that the cvd has been achieved. this is great progress and i think something that we can all be proud of. i also commend the team for the outreach to the community that has been representative of the entire project, but he is sfetionly for the steel crossing of the streets, how we've done it with minimal disruption. i think that's very impressive. similarly as a result of the leadership of the project the cac is very impressed with how

central subway has come to us to see how we are proceeding. i think this is particularly relevant now that supervisor wiener is proposing a master subway plan so it's -- for the city. also happy to learn that dpw has also visited us to learn more about the, our means of working with the community. finally, following our october meeting -- following your october meeting we were very interested to resume contact with vision zero to see how the city and we can coordinate to make the project site a model for the city of safety for traffic, transit and transport. so i think there's great possibilities here and i hope that indeed we are a model and

if we can do it here, the city can do it elsewhere. thank you. >> thank you, ted. go ahead and move into your next item. >> yes, please. >> item 7 is public comment, opportunity for the member s of the public to address us on items. jim patrick. >> morning, board members, jim patrick, patrick and company, san francisco. i make reference to an article in the newspaper recently about scott wiener talking about, quote, a second line across the bay bridge or a second tunnel. and i believe we have been grossly negligent in not looking at phase iii. we know about phase ii, we decided to do nothing about phase iii as a bay strategy for this board. he's now making reference to what i call phase iii or you can call whatever you want, is this

something under the purview of this board or are we going to wash our hands of it? if we wash our hands of phase iii, we're building buildings in the way, we're making decisions that will affect how phase iii ultimately is implemented if the transbay terminal is to stay in its same place, which i believe it will. so i believe phase iii should be in our thinking and in our policy decisions as we make property deals and as we go out and market the product because if there is a tunnel to the bay bridge -- i'm sorry -- under the bay, it will clearly bring a higher value in rental, clearly bring a higher value in retail and for some reason we've chosen to do nothing and i think we should get on the train and get phase iii rolling as a conceptual study and take the lead. otherwise people will roll over us. thank you. >> that concludes members of the public that wanted to address you under that item. with that we can go ahead and

move on. >> next item, please. >> we are scheduled to go into closed session at this time pursuant to government code section 5495698 and i have not severd any indication that a member of the public wishes to address you on the items listed. they have an opportunity to do that now or we will go ahead and clear the room.

. >> the tjba board is now back in session. >> as to the item conference with real property negotiaters for the portion of state partial 75natoma, 568 howard and 7779natoma collectively parcel f to the price in terms of payment for that property there is no action to report. >> next item. >> your consent calendar, all matters listed are considered to be routine and there will be no single discussion of the items unless a member of the board requests and we have not received notifiation that anyone wishes an item severed. your items are federal advocacy

services with mnanatt, phelps and phillips and khail bers for 1 year year and additional compensation of $155 thous 500 each. >> we have a motion and second from director nuru, any objections? you want to call the roll? >> i will note no members of the public wanted to address that. with that, director kim, aye. director lee, aye. director riskin, aye. vice chair nuru, aye. chair harper aye. the consent calendar is approved. ready to move --. >> regular calendar item 13 is presentation of phase i program budget update. >> good morning, directors.

today's presentation includes an update on the phase i budget status, including the remaining work to be awarded and contingencies required. it also includes a draft, the results of a draft ntc cost review. on july 19th you made a request of mtc for partial release of quit claim deeds related to parcel f as a result of the quit claim we were asked to update the full commission on july 22 on the status of the budget. we did so at that meeting and attended a presentation. some mtc commissioners were concerned about the level of funding for our budget with 20 percent confidence and as a result they asked mtc staff to perform a cost analysis of our revised budget and get back to them. and so this presentation will include the draft results of that. the cost analysis was completed last friday and we

provided our input on monday and it was presented to the policy allocation commission yesterday. i have some slides from that meeting that i'll share with you and we'll go over it. we have not had a chance to dive into the details of it but i can give you an overview today. we also, this presentation also includes funding options for the revised budget as well as our next steps. the board awarded to date 1,141,000, 000 of direct costs. this is a package that the cmc identified as the most critical to keep construction on schedule. with that award, the total award will become

1,106,900,000. what's shown in yellow are changes in costs between what we presented to you in july and now. the very top one is the underrank, the top one is the most critical according to the cmgc you will see that the metal comp covers, the price went up approximately $80,000. in negotiations with the subcontractor they requested additional money to hire a quality control person. that was done after we completed our negotiation but we agreed to it because for this kind of work we do need a full-time quality control person. for the metal ceilings the price did not really change but we issued a change order for 1.9 million dollars in order to keep the metal ceiling on schedule. with the metal ceiling contractor needs to do, they need to put in the embeds before the concrete support in

order to hang the ceiling versus doing it after the concrete support they would have to drill on bond so we felt compelled this would be cheaper and much better construction if we issued a change order for 1.9 million dollars. they are putting in the embeds right now before they pour the concrete. the third one is the floors. we held the price for 10 million dollars in july, we will continue negotiating with the contractor on that. the initial request was $20 million, they brought it down to 18 and now they brought it down to 16.8 million dollars. i think we're very close to the final number here. for the roof top park we show the lowest was 33.28 million dollars, the lowest includes 1 million dollars for deduct alternate. we recommended to the board to accept that deduct alternate and that would bring the price to 32 million dollars for the roof top mechanical

electrical the initial price we received from the contractor was 27 million dollars. we continue to negotiate with them and the price we're at right now is 22 million dollars, the final price will be very close to it or a little bit less. for the signage there is no change and the ip network and the art work there is no change. so the total cost to complete is $sun 65 million dollars. we have remaining 11.6 million dollars in the budget so we would need an additional 153 million dollars to award the additional trade packages, that's direct cost, does not include cngc this is snapshot of the total budget. you will see that we need an additional $179 million dollars for total construction cost. that would include the direct fee, 3.9 million dollars for the bus storage and 29.86 dollars for the cngc cost. we

have the contingency 58.5 million dollars for a total (inaudible) risk model for 30 percent confidence level. the reason we recommended the 30 percent fta confidence level, this is an fda funded project, we use the fda model on that and we base our decisions on the fact construction is 50 percent complete. the foundation work, steel and foundation work and excavation has been completed, field work is on-going and the (inaudible) on that is quantified therefore a lot of our risk is behind us. the biggest risk is bidding risk. we don't see that as a major risk going forward and that's why the third percent was recommended. this is the result of the cost review by mtc again, these are draft results, we haven't had a chance to sit down and talk to

them. we will be doing that in the next, the remainder of this week and next week. again, the emphasis for the cost review was when we updated them on the budget at the july 22nd meeting and so forth. the cost review took two approaches. it was for phase i and phase ii. phase ii has not started yet but we have already given the information we have on phase ii to mtc, they will start the analysis soon. mtc took two approaches. one was to do a cost review looking at expenditures to date and based on that project what we need forward and the other one was to review our risk analysis. for the cost for the first approach, for the cost review their findings is that the engineer's estimate, that the cost increases were

attributable to several factors. they includedest matds as one of them, complex design was another part that they listed as contributing to the increase in cost, optimistic or low escalation rate used in our budget, lack of comparative s due to improving economy, higher margins due to large number of similar projects competing for the materials and labor in the same area and they also mentioned rv as one of the factors. we did remind them that the rva costs were incorporated in our budget. the recommendations based on the cost review itself, not the risk analysis, is that we need to augment our reserves by $48 million dollars. we arrived at that number by aprying 30 percent contingency for the remaining work we have not

awarded yet, assuming 180 percent increase in the ip network package and applying 5 percent contingency for the soft costs. additionally they recommended we implement the funding partner process to implement and review change orders and we definitely can do that, we can expand our existing meeting with sfcta, we meet with sfcta on a biweekly basis to share our cost reports as well as twepbd trends. we can include mtca with that or the city. the only recommendation we want to make sure if they are involved in approving the change orders that that process itself does not increase the amount of time that we need to approve change orders so we have to work with them to make sure that the process is streamlined. the other recommendation they came up with the cost approach again was for the tbpa to look

into the gmp option. peterson is here today and he can speak to his options thus far, i know they continue to work on it and after this presentation he is available to discuss that. the second approach was to look at our risk management practices and to review our risk models. their findings are that we are following best practices for risk management. however, they thought that the way we're not quantifying some of our cost risks and that's, according to them and again we haven't had a chance to sit down and talk to the risk manager, we are using the fda top down model to do our risk management, that's something that is used for all fta projects. their recommendation is to use a different approach

and different approach yields different results. we do both approaches but we do the bottom up approach as well as top down. we use the bottom up approach relative to top down approach that's required by fta, so their recommendation is that we use the bottom up approach and to increase the confidence level to 80 percent versus our recommended 30 percent. their recommendation also basically says we should not be relying on the fta model, we use more robust bottom up approach, consider a contingency of higher than 50 percent. according to their analysis, and we haven't had a chance to look at their analysis, their analysis shows we need additional reserve between 105 and 200 million.

in summary the preliminary recommendation is that the 30 percent is not sufficient and they are recommending to carry between 48 million dollars to 248 million dollars in additional reserves. what that does is our current kupb 10 jipbs si is $118 million dollars. with their recommendation our contingency will increase to between $166 million dollars to $322 million dollars. our remaining work to be performed is approximately $650 million dollars. the next step is they received something from the committee yesterday. our next step is to continue to work with them on finishing phase ii and most importantly to continue to work with them, sfcta as well as the city to fund the outcome of the cost review and our need to fully fund the project.

moving forward i will turn this over to sarah for the next couple slides to talk about the funding options. >> mark, i have one question. i presume that the $244 million was at the 80 percent level of confidence? 244 million extra contingency that they would recommend, additional exposure, is that at 80 percent or 50 percent? >> their 50 percent. if you look at the table it shows 50 percent level, 244 million for bottom up plus register, that's where the number came from. again, director harper, we haven't had a chance to sit down and touk to them in detail to see how these numbers are arrived at but they are using a different model than the fta model. >> so the $244 contingency is

at the 50 percent level. >> that's correct. >> are you planning to seek permission to go beyond this level? >> we plan to have additional discussions with mtc and possibly hold a joint risk management meeting, refresh our risk management. our risk management meetings currently are attended by fta as well as fra, we will bring in mtc and their consultants as well as their partners. maybe that would be best, to do a joint refresh, sit down and agree on what the range should be and then concurrently, more importantly is to work on funding whatever range we come up with. but again we just received this last friday. >> i understand. when do you think you would have a recommendation with regard to what the right level is? >> i'm hoping to do it before the october board meeting. i just need to rally up our consultants and have discussions with mtc >> and with respect to the

cost review recommendations, the recommendations seem on their face at least to be good recommendations. do you have an implementation schedule for when you would put those into place? >> for the gmp and for the (inaudible) control. >> funding partner oversight. >> we can start that any time. i need to talk to them. it's not -- we already have biweekly meeting with the san francisco contract transportation authority, we share with them our change order list, potential trends, as well as our budget. we can expand that to include mtc and other partners and we can expand and provide more details, we can go over every change order. the only concern i have if there's an approval process included, i want to make sure it's not slowing down the approval of change orders. that's all. >> gmp >> gmp will have peterson speak to it. we can do it now.

we will ask web core to look into it and they are exploring it. >> director riskin, having had a chance to talk with the entire tgpa team, there's been a request for an effort to go ahead and pursue the gmp route, so we were going to look to do that kind of start thinking about the strategies behind that and then try to develop those to come up with a process and ultimately a timeline. >> we have any sense what that timeline roughly might look like? >> yeah, i mean it's not normal to do this midstream, it's more often do it at the very beginning of a job or sometimes closer to the end. i would say probably something in the first quarter of next year would be a timeline that, you know, we'd be able to go ahead and have discussions regarding where we stood relative to

having that gmp >> okay. >> having that what? >> the gmp >> oh, the guaranteed maximum price, okay. >> why so long to -- we're getting ready to go through an extensive review of the rest of the budget has been quite a bit of negotiations and so can it be done sooner? >> the risk, the way we would analyze the risk is on a trade by trade basis. i think less in the way that has been done from kind of an owner's perspective because we want to be able to go through the trades to the design to date and then kind of look at the balance of what has yet to be done in their scope of work. some trades, you know, are fairly far along and almost complete. other trades haven't even started so there's going to be kind of a different analysis that we need to do,

director, nuru, relative to where they are and those that have the most work will take the most time the most time to review . >> directors, we need to approve the phase i budget by november so if director nuru needs it by then we need to approve it before then. >> i'm not sure of the likelihood of being able to get there, but knowing there is a desired deadline we can go back and look at that what efforts it would take to try to come up with something like that. >> i think it's important because, you know, with the type of escalations we are seeing we need to lock the prices down as much as we can now to get a firm budget. we really need to do that. the last few months have been very

rocky financially. >> i have a question for mark. to me, the $247 million dollar deficit was a number i associated with july 2015 costs and the chart you just gave indicates that there's another 13 million dollars or so beyond the july 15 cost. so is it now more like 260 deficit? >> which slide --. >> i'm looking on page 2 here, remaining construction work to be awarded, and then you had the july 15 coming up with total to complete 153 and then current costs, total to complete 165. >> yeah. the 247 includes the current costs. what we were negotiating in july so we accounted for the difference between like for the changes

between the, like for the glass ceiling and for the other packages. we accounted for the change in our program reserves. so the 247 is a 30 percent confidence level based on the current costs. >> okay, all right. >> i guess that -- just something to maybe consider going into the risk management workshop and i think it would be helpful to have all the various folks who seem to have opinions on the risk levels of the program in the room. it would be helpful to know to what extent having the maximum price guarantee in place, having additional of these contracts awarded, we're going to award one today, possibly, and i don't know if there's more planned for october, as well as having a strengthened change management process, if that would then impact the recommendation from mtc in terms of how much additional

contingency we need. >> i think once we have a joint risk management meeting to refresh i think mtc will see how the process works, they will be engaged in the process, they may have a better comfort level. i think the 244 on top of our 247 based on the remaining work that has to be completed is almost, you know, 362 is almost 50 percent of the remaining work to be completed. that's a very high level, obviously gives us a very high confidence level that we will get there but i'm not sure if that's --. >> i think director nuru's point if having the maximum price guarantee in place before we adopt the budget means it's less of a problem we have to solve for, that will be helpful. >> it also depends on what jess comes up with. if he comes up with a guaranteed maximum amount that's within these numbers, that's one

thing. you want to come up with a number right now, come up with a different number it will all be different. >> that's why it would be helpful to understand from the risk stand point how much does that help? if having that in place really knocks down the amount of contingency we need to recommend we have that's something that would be relevant for us to know and consider. >> that's a very point point, director riskin. also we have not accounted for in our risk management practices how the gmcc contingency is utilized. it also caps our exposure for omissions in design or additional scope, web core is responsible to resolve conflicts in the field that aren't a result of design changes and so forth and they are capped there and do we have to use their fee for things not related to design or scope. our risk analysis does not take

that into account. if it were to do that, it would reduce exposure and it does not take that into account. we will discuss it at the joint meeting, i haven't told them about the joint meeting, it was just something we were discussing this morning to move forward. >> for my knowledge, do you foresee any other major design changes as we go down to --. >> no, i know randy is here, we don't see any design changes right now at all. we don't see -- you know, a lot of the bic risks are behind us. structural steel erection is one risk that we're dealing with right now. the next biggest risk would be the plumbing map's but we're doing a lot of 3-d modeling already with the contractors so we expect minor issues. besides that, i don't see major risks.

let me ask again steve humphries to explore that. >> hi, steve humprhies, web core. i agree with mark, we are nearing the completion of the buy out where we've had the significant cost overruns and so the remaining risks on the project are really getting it built and there certainly will be change orders but i don't think the risk that we're looking at going forward are as significant as the cost increases we have seen here recently. >> i want to get on -- the 48 million additional contingency, what you seem to be saying is that that's also a 50 percent number but it's at a different methodology. >> they arrived at the 48

million by taking the trade packages we have and applying the contingency to that number and also applying the contingency to the it network. it just so happens that the 48 brings us to the, consistent with the 50 percent fta model. >> coincident that it's 50 percent --. >> yeah. >> i mean, when -- i mean at some point, i don't know how successful we're going to be job owning with mtc on this very long. i don't know that we're, they're going to change their mind very much this is the range it is. to me i think my sense is that something like accepting the 48 million additional contingency is something of a no-brainer for us because mtc is mtc >> yeah. >> fapbd that's the low end

of the range and it's something that the fta has already said, well, this would be our number if we had to do it, how much more guidance do you need from this board? maybe we should go with that low end of their range. >> i'd like the opportunity to sit down with mtc and go through a risk review and then come back to the board. the reason i want to do that, the mtc, it was a very short period of time for mtc to do their review so they arrived at their conclusions in a 4 to 6 week period. we gave them a lot of information, director harper, a lot of packages to go through to figure out what the award amount is, how much change orders for each trade package. it's a lot of information for them to digest and on top of that the risk manager has not seen or used or known about the fta model before so he needs time to review the model,

understand that -- and maybe through the joint cost risk management exercise they will be more comfortable and we can arrive at a range that is more rational, maybe, and then come to the board with whatever recommendation. >> my sense of this report from mtc is there's nothing in here that really changes our numbers from 247 except that one in terms of the program budget, a new program budget. >> what they came up with is the same information we have had all along, the same information that the report informed us is the reason we are having high s is for the following reasons so they came to the same conclusion, exempt they do have concerns about us choosing the 30 percent confidence level versus a higher confidence level and they need to understand the fta model, they don't have understanding how the fta risk model is done. >> what i don't understand is

why can't we then take the lower range of mtc, put together finally a program budget and have it ready for the october meeting as a new program budget? >> we can but i think it's more -- better for us to have another discussion with them with a joint, a risk management exercise so the whole region is comfortable with what we're doing, moving forward with the regions understanding versus just on our own. >> but aren't we running out of time? >> let me jump to the last slide and then i'll bring sarah back. >> right, we can't bring a budget without commensurate funding, director. we need to have committed funding before we bring your revised budget. sarah is going to talk about, let her talk about the funding slide. let's go to the first slide. okay. >> so this is the funding

table that you've seen many times before, it shows the identified funding for the 1899 current budget and shows what the potential sources are for a new budget. of course there would be proceeds from parcel f, at least 160 million we've talked about. transit center district plan, those are the mela russ funds along with our surplus tax increment, those would be repayment for some sort of financing to cover the additional budget and we are still looking at sponsorship opportunities. there are of course possibilities on the operation side as well as the capital side for sponsorship and i xektd that we would be able to report more to the board in the coming months about what those opportunities may be. >> one question about the tax increment. i know that is a contingency of the mela russ

that is pledged to the program. is the same the case for the tax increment? >> i may call our financial advisor up, but the overall tax increment from the state parcels is divided up in several ways and i don't want to misquote percentages but there are certain path that is go to the city, the school district, some goes district, some goes to ocii. the portion that goes to tbpa goes to it alone and is far in excess of what's needed for repayment. >> these are some of the ideas we've thrown out for potential financing options. could be an unsecured loan to be paid with

surplus net tax increment, it would be secured, it would be subordinate or on par with tifia, also repaid with net tax increment. it could be a secured loan from one of the funders, could be repaid with the melarusse funding, that might be a more attractive perspective because it is a much shorter repayment time. the net tax increment would really be considered long-term debt. in the past mtc has, it was a completely different project, completely different purpose, completely different scale, but mtc has purchased a privately placed security from another project that was going to be repaid with future grant funds. that particular project had a cash flow issue and mtc was able to work out a financing

solution with them. and then another option, and this is accounted for in our tifia loan, would be for any one of these funders, city, mtc, ti, somebody with strong credit rating and the ability to raise revenue to provide a credit guarantee so that tgpa could perhaps do a loan with private financing rather than a loan from the city or a loan from mtc, could perhaps go down the bridge loan type route again where we had another agreement with goldman saches and wells fargo. but we would be looking for some sort of credit guarantee from some of the funders. these are some of the ideas we have been sharing with the funders, we are of course looking for their feedback and their ideas as well but we did want to share those with you.

>> but my understanding is you have had those put out for months now, with the city at least and some of the others, and i don't know that they are that warm on any of them. and so we can continue beating our head against the wall there if that's what it is, but what happens if, you know, the city sticks to its position that, wait a minute, no, we're not prepared to do anything in the amounts that you are talking about? we have to start planing on that possibility, that the city just is not going to be there or mtc may not be there to a great extent. at some point we have to start planning for that and i'm afraid that we'll just continue this rolling in until it becomes for -- or that planning process gets really jep jep dietzd jeopardized because we have to plan on what we can build on the basis of committed funds. we need to do that. we

can't continue out there with a begging bowl thinking that somebody is going to fill it at some point because we've been out there and it hasn't happened and we don't even have a lot of warm ogt out there as far as i can tell. >> i think director riskin --. >> i did yesterday speak both to the city controller and to mtc and i don't think it's the right characterization that the city has a position that it's not willing or mtc to help try to find a solution. it seems that it's largely a financing challenge, not a funding challenge, which is obviously much easier. in other words it's really a matter of timing of the funds because we do have these funds that are pledged to the program, they just come in later than we need them. i'm not sure what planning for an alternative would look like because i don't know that there's much opportunity to

reduce costs at this point, unfortunately. i think we're, for all the reasons we discussed previously, i think we somewhat are where we are so i think we do need to continue working with all of the funding partners to try to figure out ways that we can bridge this. and it has to happen soon because we need to be able to increase the budget so that we can award the remaining contracts and to meet our tifia loan commitments. so i think it's the right path. i think it's probably not -- i think it's been complicated for the funding partners to try to understand exactly what the needs are, exactly what the future cash flows are because it's estimating on building development and housing development that has not yet happened and is not yet entitled. so i think that's what's been the challenge so i don't think there's been a lack of willingness from the funding

partners, they just haven't arrived at the solution yet. but in my skuptions with them they are aware of the time pressures that we have as a board to adopt an approved budget by november or at the november meeting. >> i mean at some point we have to have a decision tree. we have no know at this point in time we need to know this, at this point in time we need somewhere else because this is something that is closing in on us and we're playing with fire here when we talk about a construction project that we're in the midst of. it's all fine, i think, but we need to discipline ourselves and say, okay, we've got to know this. otherwise the question will come down to, okay, this is what we've got, what can we build? what can we do? how do we handle the amount of money that we actually have? and that's what i'm -- that's also a phase that we need to start toying with as well as just the other things, because i don't

know where it goes if our funding partners, you know, continue to be confused. and i think one of our big problems is that we don't have an up to date program budget. that was my sense, particularly the mtc meetings, they're not sure where the numbers are, particularly yesterday where it was okay, now we have a new kupb continue sdwrepbs si range that we haven't heard about before and the city said that's new information. so we kind of have to bring these numbers down to ground in a hurry and say these are the numbers that we need and i don't necessarily hear that as really definitively we're going to be doing that. >> the mtc risk review or cost review has definitely changed and complicated the picture. folks were working based on one set of numbers, the 247 number,

up until friday and now it's a larger number. the sooner that mark and company can get that risk workshop done and get the region consensus on what the right number is, then they can finish solving for it. and i agree with mark that it's important to get that consensus because the region is going to be part of, is going to be part of the solution for this, not to mention phase ii. so i think we want the region's confidence in whatever budget we adopt here at this board. >> mark, by what date or sarah does that consensus have to be reached? >> to that end we were going to talk about next steps. as we were saying we need to adopt -- i got it -- we need to adopt a program budget, an updated program budget, by november. if we are moving beyond november we are looking at schedule delays and commensurate cost increases on the back end of the project. so this month, today mark will be going over the details of

awarding the toping slab trade package and the importance of that trade package in the overall scheme of things. we also this month would execute a change order for metal column covers. this is work that was out as part of a trade package but the particular subcontractor that was part of that is already under contract to us so we can execute a change order with that subcontractor and save the mark up that would have been included as part of the other package. also today i'll be presenting to you the adoption of a fiscal year budget. we had done interim one-month budgets for july, august and september, but we would go ahead and recommend that adopting a fiscal year budget today for the remainder of the fiscal year can always be maeblded -- amended in the future and this is what we did in 2015 for the fiscal year 14 budget when we were in the midst of updating the budged in 2013. also on your agenda today is

an amending to the construction management oversight contract to bring them through this fiscal year. then in october, as we've been talking about, this month as well as into october we would continue to work with the local and regional funding partners to come up with a funding plan, continue to work with mtc, have the joint risk management workshop, et cetera, and then in november we would be coming to you with the final program budget and any awards that needed to be done by the end of the year. there are of course two awards that would not occur until 2016 in any case and that would be bus storage and the ip network and mark can come up if i've missed anything that he wanted to cover on this slide. >> i just have one other question on this. one of the things mtc's cost review said was recent s have been 179 percent over estimates. that's -- my own mental thing was more

like 45 percent. really, is that accurate? it's 179 percent over? >> you know, i haven't checked their numbers. we gave them our numbers and they sliced and diced the way they did it. i don't know how they arrived at the 179 but the fact of the matter is, you know, we've had several packages that came in more than double our budget, especially recently. so it could be --. >> they are right. >> it could be. i have to see how they calculated the numbers. again, we didn't see this presentation until yesterday morning and we didn't see the cost review until friday, last friday, so we haven't had a chance to --. >> i guess i just -- one question that i want to ask is are we still on schedule for 2017? >> my understanding, i'll bring in jess and steve here, if we were to award all the

trade packages between now and november we should be able to hit the opening of december 2017 but we're running very close. yes? no? >> so as was mentioned earlier we have had some delays in structural steel manufacturing that have affected the schedule. we are currently looking for substantial completion of the bus portion of the facility at the end of 2017, very close to that right now on schedule and then the roof park is currently pushing out into early 2018. >> thank you. >> maybe you can educate me a little bit. is there a regular

pattern for the tjpa to get mtc cost reviews on is this like an annual thing or is this a new thing for tjpa >> this was a result, we had a parcel that mtc had interest in, had interest in 13 square feet of it. and when we went to the board to ask them to release that interest because it was associated with parts that were left, the board requested that we do a budget update to them. so we went and did a budget update to the full commission and as a result of the budget update they were concerned about us using a 30 percent confidence level for the risk contingency and they asked their staff to do a cost review. so it's not a regular occurrence and hopefully doesn't happen again, but it was a result of us asking them to release an interest of 13 square feet. >> so what sparked it was their concern about the contingency in the presentation. >> the 30 percent confidence level that risk management is

proposing. >> so you have a federal oversight agency that have their thoughts about contingency level so is that part of the discussion you will be having with both a federal agency as well as mtc >> yes, we have discussions with fta when we decided to recommend the 30 percent level. initially fta did want a 50 percent level. we talked to them about the rationale for using 30 percent at this stage of the project, given that we're 50 percent complete and so forth, and there is no objection to our approach. so we proceeded with the board at a 30 percent level. now mtc is looking at it differently we will have discussions with them and arrive at a mutual solution. >> who was the team at mtc that did the cost --. >> it was a combination of ty lynn and cal traup. ty lynn

about the cost review and cal traup did the risk review. >> you said they took approximately 4 to 6 months? >> no, no, no. it was july 22nd is when the commission asked staff for the cost review, the week after we provided them all the data that we have and they have been working on it ever since. last friday they provided us with a draft report so last friday was --. >> it's a few weeks. >> yeah, it was weeks, it was not months. i think it was like 4 weeks by the time the interim contract and so forth to the consultants. >> and then on the recommendation where there's approval of the change orders by the funding partners, what has sparked, what was the genesis for that recommendation? where does that come from? >> i don't know, we haven't had discussions with them to understand why they wanted -- i think it's just because they are going to be a funding partner, they are a funding

partner, they are going to be part of the solution and they wanted to see firsthand the change orders that we're issuing. >> but this is just seeing it, this is approving. >> and this is our concern. approving it means another step in the approval process that would delay the final approval so we would like them to be able to review and comment but not approve it. but we do share our change orders with the san francisco county already so it's not unusual for a cost funding partner to ask to look at change orders. >> my last question is at one of our board meetings ac transit did a presentation about the need for the bus storage site and i think we had concerns about their ability to pay for the lease if it was put into place. i wasn't clear as to how that issue was closed or not closed. >> my understanding is that

issue, they have agreed to fund the lease. that issue i think is closed. and we're, our budget assumes that the bus storage facility is included. proposed budget, i should say, (inaudible) budget. >> thank you. >> that's our informational item? >> yeah. >> it is but you do have a member of the public who wants to address you on it. >> good afternoon, directors. here's my two cents, it's not necessarily what you are going to want to hear but here it goes any way. i don't think we are in a position to argue with

mtc it's counter productive. we should not do that. basically go along with them, they are our partner, this is what they are telling us to do which is basically to toe the line. the second thing i want to say is that we have been in the habit of pointing a gun at someone else's head and telling them, you better cough up or else. that backfired in our faces big time. we should never ever do that again. so where does that leave us? well, basically we know the money is coming in from all sorts of sources so what we need is a line of credit or some kind of loan that's going to get us through this very difficult period we are going through. i think it's 171 million, no one wants to go there again. what i would say right now is you want to look at risk. belaruss, last time i checked they were 30 billion dollars.

you probably have the billion dollars in house there, you should be able to get half a billion out of that and i will basically leave that with you for now. thank you. >> thank you, roland. >> go ahead and call your next item. >> oh, another speaker? >> patrick? >> thank you, jim patrick with patrick and company. as i study that financial report and as i remember the high speed rail, the argument was what's the business plan? where is your business plan? how is it going to work? i don't see any reference to the projected income that we should make from our tenants from the bus operators, from the train operators, and that is an asset. presumably you have those leases in place, if i were to build a building i get a lease that enhances the value of that building. therefore you can certainly borrow on that future revenue. i think

we have discounted the revenue unless we are planning to give this structure to those tenants for nothing, i think we're planning to charge something. quite frankly i don't know what it is. i think that's an important asset we haven't considered in this calculation. >> thank you, mister patrick. >> i think that concludes member s of the public who wish to address on you that item. >> 14 is adoption of the fiscal year budget in an amount not to exceed $35 thundershower,341,200. >> the board will report on this. >> good morning again, directors. this is the proposed fiscal year budget for the remainder of the fiscal year through june 30th, 2016. it would in whole replace the interim budgets that were adopted for july, august and september. it would not be in addition to those interim budgets. you do have a budget policy in place that does state that you

will adopt a fiscal year budget. typically it's done before the beginning of the fiscal year. we had planned to update the program budget by september so we had consequently planned to do the fiscal year budget at the same time and base the fiscal year budget on the updated budget. however, as we've just been discussing, since the program budget will not be brought to you until the october-november time frame, we feel it's prudent to go ahead and adopt a fiscal year budget now exactly as we did in 2015. it's based on the budget that is in place now, the 1899, and would be amended as necessary. we did this in fiscal year 14 and in that particular year there were four amendments, subsequent amendments, to the fiscal year budget, all within the budget policy. this past year, fiscal year 15, we have had three amendments to the fiscal year budget all within the budget policy, so there would not be an issue with doing the same

for fiscal year 16. this proposed capital budget is just over 354 million. the vast majority of it is for construction, 98 percent of the budget is for what we call professional and specialized services and 302 million of that is for construction specifically. there are also, there's a very small amount budgeted for closing out the right of way acquisition process, a very small amount as well for administration but again the vast majority is for construction and i'd be happy to answer any questions but it is a balanced budget with revenue -- or funding sources, i should say, identified to cover the planned expenditures and it is just a slice, a one-year slice, of the overall program budget. >> questions? >> what is it that necessitates we do this? why is it that we have to do this?

>> we have a budged policy that states that you will do it and it's always best practice to follow your board-approved financial policies. >> and that's it? our own policy that we -- we haven't done this for the last few months, we've just done monthly budgets. >> we've done monthly budgets, yes. >> why aren't we doing another monthly budget. >> for one it takes staff time to do this every month along with preparing the item for the board. we are a liplgts short-staffed right now, we had a staff member move on to another agency so along with getting ready to produce financial statements and try to close the books for the year it would be one less thing to do to be adopting a monthly budget every month. also in addition to just being financial best practice and following your own policy, it does serve as appropriation control for the administrative items in the budget, those

items identified by italics. most of our authorization control comes when you authorize award of a contract and we issue notices to proceed with a contract but there are certain line items that are not approved by contract so that comes through adoption of this fiscal year budget. >> so that's the control in there. you can make payroll if we do not do this? >> we can make payroll if you do. >> but you can't pay people if you don't do this? >> if we don't have budget appropriated, no, we would not be able to legally pay people. >> legally pay people in september. >> we have a one-month budget for september but beyond september we do not have --. >> my problem with that is it's the 1.89 billion and we've been talking for 6 or 7 months about how that is not the number any more. you know,

we're depending on, you know, which week we're meeting it's anywhere from 250 to 400 million dollars short and i just don't like the idea of the board coming in and doing a document and setting a budget based upon something that there's so much of a record on is not accurate numbers. that's my problem and i'd like to do something that satisfies the need without putting the board on record for going back to a budget that's over two years old and saying, well, we're going to just kind of pretend that that's still a real budget when it's just a budget in the sense that, yeah, that's what we did back in july 2013 that seemed to be a balanced budget for us so it's still balanced. >> well, -- sorry, i lost my train of thought. i've really

lost my train of thought, i apologize. a budget is a planning tool and it's in the record of the staff report what this budget is based on and it does state in the staff report that it can be amended in the future if changes and circumstances warrant change. i was flipping through, we have what we call the blue book, it's sort of our bible for governmental accounting. it's the governmental accounting auditing and financial reporting book, it's about this thick and we look at it all the time. and i was flipping through it the other day and was struck by similarity in language they have about budgeting through what i had written in the staff report before i had read this, but it states in the blue book that in most cases the original budget will have to be amended during the period to make adjustments for changes in estimates and circumstances. and so that is exactly what we're proposing to do here. i don't think that adopting this

fiscal year budget is making a statement that the board thinks the project budget is going to remain at 1.899. i think all of the public discussion on the previous item is an accurate reflection of the board's understanding of our budget situation and of course i defer to the board and what you would like to do, but i would recommend adopting the fiscal year budget. >> you think there's no other way to do it but go on the record for adopting this as the next year's budget based on the 1.899 number? >> you can continue to do one month interim budgets which are based on last year's interim budget or you can adopt a budget for the entire fiscal year. it's the board's discretion to choose. >> it doesn't look like anyone else is bothered by the discrepancy but at least we're on the record that it is a discrepancy. i think that's important because i don't want it to look later on like the

board was not being cognizant of the changes we have had. >> i think the process is once we have a real budget with these negotiations then we would make the amendments that are needed. >> that's right. >> in november, if we get a program budget in november, then this would automatically change, right? >> we would take a look at what the updated cash flow for the remainder of the fiscal year was and if there were categories that needed to be increased we could go ahead and do that at that time. typically we would have done budget amendments throughout the year as the need arose but we certainly could prepare it in november. >> well, all right. is there a motion for approval? >> motion. >> motion and a second. roll call. >> first and second and no members of the public waiting to address you on that item,

key, aye. director riskin, aye. nuru, aye. five eyes and the budget is approved. >> authorizing web core/obayashi joint venture to execute a trade work subcontract with concrete north as the responsible bidder submitting the lowest responsive thereby increasing authorized direct costs. >> mark will report on this item. >> this trade package is concrete toping slabs, concrete on the bus deck and seismic joints for the transit center. pretty basic work. this is one of the most critical packages

at this point and that's why we're coming to be awarded at this time and we'll be using some of the contingencies in the reserves to award it because we don't have enough budget in the trade packages to award it. so we received a may 7th, we had 7 qualified bidders, we received 3 bidders ranging to 32 million dollars, all s were significantly above our budget and the gngc estimate. we did share with the board some of the reasons behind that at the july board meeting. we did ask the contractor to extend their to end of september. their bid expires 30 days after bid opening. it came in at 30

million dollars and uron came in at 32 million dollars. even though they are above our budget, they are come ted -- competitive and within 10 percent of each other. as we shared with you at the july board meeting, the difference between the estimate our budget and the bids was attributed to some of the scope in the trade packages and not accounted for, the estimate and market conditions and logistics. so we're recommending that this package be awarded to concrete north for 27,677,000, we believe the s are competitive and this is a schedule critical package. recommendation is to award it by utilizing 11 million dollars

from the budget for the remaining trade packages, the budget for the remaining trade packages is 11.6 million dollars, utilizing 6 million dollars of program reserves which are currently 8.45 million dollars and utilizing the current construction contingency which is 34 million dollars. after the award the remaining balances would be 614,000 in the funded budget for the remaining trade packages, 1.5 million dollars in the program reserves and 23.3 million dollars for the construction contingency. any questions? >> do we know why four of the 7 rr prequalified bidders did not snit a ?

-- submit a bid >> let plea ask steve humphries. >> yeah, i'm not sure i can tell you right at the moment exactly why they did not bid the project. they were all engaged earlier and the four bidders during the bid phrase we were aware well prior to bi d-day that they were not going to be bidding the project for a variety of reasons. we do extensive outreach efforts to keep the bidders engaged but it is not unusual to have several bidders drop out before the phase. i don't recall the exact reasons why they did drop. >> this issue has come up several times so i think you can expect to be asked why if not all bidders submitted a

bid, so i'm curious as to why we don't have the answer to that at this board meeting. it comes up every single time, we have asked every single time we have the rfp process reviewed how we can have as many of our qualified bidders so we get the best price. i feel like we're a broken record on this issue and we should be able to reach out when people aren't bidding during the rfp process and find out exactly what those reasons are. >> i think we have records for the reasons. i know there's communication between web core, we just don't have them with us right now, supervisor kim. i think we will have the details with us. >> i think we should always have that information at these meetings. >> one of the things that i notice over and over again, we see these overs are the other

factors included for them to be higher, a large project consumes much of the bidder's capacity and limiting its opportunity, inefficiencies and low productivity rates and perceived increased risk of large public works projects. this is a large project. i think we can start getting our estimators to realize it's a large project. and the same thing about the risk, it's a public project. that really shouldn't be, that's really not a reason to say that's why they -- it's something that was known to us long before it was known to the bidder, it's large and it's public. the question i have on the other one, inefficiency and low productivity rates assumed by bidder, does that have something to do with our job site or is that something that is just generic to --. >> it's lay down area, it's logistics. there's no place for where we're at is the middle of downtown, there's no

place to them for lay down area, there's no place to be able to work. it's not like any other project where you have a lot of work, you can park your trucks, you can bring in your concrete pumps anywhere you want to. so that difficulty was not accurately accounted for in our estimates. >> that would make --. >> i understand the part that we have 7 bidders, we did not expect to get 7 s but we should have gotten more than three bids but the fact we got three bids and they are close to each other, for what it's worth even though our budget is off and the estimate is off. if these bids were far off but they were close to each other. within 10 percent, that's a good result. granted way above estimate. i think we came up, rebidding them is not going to give us better results and the scope is

pretty simple. >> any further discussion? >> member s of the public? >> no. >> yes, mr. patrick. >> sorry, i made this comment before but this goes back to the joint labor agreement. i believe there are lots of companies that don't pay the highest labor rate by a matter of good policy. our wages, our company, we don't always pay the highest wages. therefore we wouldn't be eligible to on this because i don't want to pay the highest wages. this board has made a policy that they will pay always the highest wages regardless of who they hire on this joint labor agreement. therefore we should not be surprised at the results. >> thank you. >> that's it. >> is there a motion to approve on the award? all

right. okay, ed, our movers and seconders of the day. >> first and second, director kim, aye. director lee, yes. director riskin, aye. vice chair nuru, aye. harper aye, that's five ayes. >> 16 is authorizing the executive director to execute amendment 3 to the professional services agreement with turner construction company to provide construction management oversight services by increasing the maximum computation from 45,980,000 to $57,180,000. >> i am here to report on amendment 3, which is funded through the soft cost savings through other portions of the

program. the cmo contract scope has 11 specific items to it. it addressed that. they cover anywhere from any quality items to inspection, source inspections testing to technical support, source inspections are covered by isi mostly where we reference them and technical touch on waterproofing experts as we move forward. background on the contract itself, the contract was awarded in june, 2010, had a 6 year term and it started and goes through june of next year so we still have over, almost a year left with it. the original contract amount was 38.5 million and as part of the budget, july 2013 budget, had 35.8 million dollars and back in july we amended the contract up to the budgeted amount of 45.8 million. there have been many facilities that we have been

utilizing specifically for isi and the source inspection, mainly welding from fabricators throughout the west coast. originally scanska identified they were going to use 4 major facilities and they added had a minor one, added also additional facilities on top of those original ones to cover the workload which needed isi inspection and actually an a fund was added that also required some inspections. that added to the costs for the cmo contract. cmo contract had additional spending basically broken down in three areas, the isi code inspection, which is the major one, then other essential work that has been requested of turner such as an additional set of eyes and ears during the

second shift, waterproofing quality assurance and partnering and then also, which will come up as well is when the contract is amended, recommended for an additional two years through 2018 there would be those extra two years that also will be a source of additional spending by the cmo so at this time i recommend to amend the professional services agreement with the cmo for the 11.2 million dollars as an interim basis to cover the fiscal year so there's uninterrupted services from the cmo to cover source inspections and increasing their contract total to 57.18 million dollars. if there's any questions? >> so the contract currently goes through 16? >> it goes through the end of june of 2016 so this is an amendment only for dollars, not time yet.

>> and the amendment is happening because we don't foresee having enough funds now? >> the current contract, the contract halves back in july, that was only financing through the end of september. that was at the time was assuming we would have a budget at the time. now the budget process has modified since then actually proposing to go through amending their contract for the whole fiscal year at this point, which can be covered by other soft costs. >> one. questions i asked steve, this is always modified contract as a fixed fee contract that has gone from 38 million to 45 million last july, now proposed to 57 million and we're being forewarned that it will soon go to 72 million. what's fixed about that? >> the source inspection is

the important one that, that is basically, it's time and material. the fixed fee is what we've covered up to a certain point, but it does change based on the workload that's been required of the cmo with the changes that's required for code and for contract for the cmo's subcontractor isa to cover. so the fixed fee is just what has been covered at that point. but it does change as we increase it. >> so when the staff report says that it is estimated that the current fixed fee amount will be expended approximately by the end of september, 2015, are they talking about the 45.9 that we did in july or are you talking about the 57.1? >> that would be the approved current under amendment 2 would be exhausted by the end of september. so we need to add

the additional 11.8 million ?oo ?roo so that takes us to june 2016. >> that takes up to contract time at this point. at that time we would anticipate coming back in june up to the 72.7 million dollars and the addition of two years of time through june of 2018. >> so the 72.7 takes us through what, the end of the current term? when that comes? >> it would be through june of 2018, basically the year of construction and the required support from turner. >> i mean i'm going to vote against this just because i think there needs to be more

back-up. there's not much back-up in terms of this thin and we have lots more coming in. i suppose i could vote for it and just say when the 72 comes to do that, but that's not for another year that we're going to see that, right? >> as part of the back-up, actually, and it's referenced in the staff report that to refer back to the previous staff report amendment 2 goes through a very strong back-up to where specifically isi's duration is in lieu of repeating about two to three pages of the isi support, which that's the majority of the dollars that are in this change. i just referenced it in the amendment 3 staff report to go back to amendment 2. >> it's just big jumps for just that one change. really big jumps. you are talking 38 million to 57 million, that change for isi >> the entire cmo contract, fortunately we have hit a peak.

last month was probably our peak at 1.6 million. all the fabricators such as oregon iron works is now off-line. herrick stockton is now off-line. so the substantial amount, we're past the hump on the isi inspection at this point and that's why you see a large jump now but the burn rate is going to dramatically reduce after the first of the year. >> you absolutely need an inspection service for a project of this side and magnitude. it would be irresponsible not to have these inspectors. >> oh, i agree with that. i'm just talking about the proportion that changes as compared to the original contract. turner has a lot to do. that wasn't the only thing and it seems like this has been

latched on in a way that i don't know, it may be justified, maybe not, but it would be good to at least when we see something like this in the future to get some real numerical documentation as to what those hours were and how it works. otherwise let's stop calling it a fixed fee contract because it's anything but. >> did you want to say anything, steve? you want to come to the microphone. >> i think the fixed fee contract is actually a misnomer. these are change orders to a fixed fee contract. it happens. it happens on the construction side as well as the oversight side. we have probably in addition to increased construction costs, the original budget or fixed fee of 38.5 had 8 million dollars for special inspection. we are now projecting through the full 8 year run that special inspections will top

out at about 26, i think. don't quote me on that. but through the end of 2016 it's close to 23 or 24, so three times an increase in that. but in addition to that we've added 5 fte's over the last 3 or 4 years. the original budget did not contemplate second and third shift superintendents. it did not contemplate a full-time claims manager. it did not contemplate a full-time change manager. each of those have been requested as a result of the increase in the volume of the workload. that's the increase. it's a change order, it's additional scope that was added that we were requested to perform at the request of the tjpa, so it's not saying -- it is a fixed fee contract when you establish that fee, but there's change orders to fixed fee contracts. i don't know if that helps. >> it does, it's just that -- i mean there's risk the

contractor undertakes as well. >> yes. >> and when something is this big it would be very nice if our legal department or somebody said, here's the risk analysis and this is why they didn't assume the risk and you did, or we did. because i just, when you see numbers like this, it's just -- mainly the thing i want to do is say, well, what risk did they bear? just assume that the tjpa bears all the risk of any possible change in the wind whatsoever and i just don't know, i haven't seen the analysis but they are big numbers. >> in a professional services agreement that's the type of risk that the client, the owner, typically takes. we can outline a scope of work but it's very difficult to define the exact number of hours that are going to be applied to that exact scope of work and then when the scope of work changes there are more hours applied to

that changed scope of work. >> so really it's not a fixed fee contract from the beginning. it's really time and materials from the beginning. >> yes, with a guaranteed maximum price at the time pending change orders, very similar to a gmp --. >> can't get a cap out of web core, maybe somewhere we can begin to get some caps out of these things. going up and saying you're going to be 60, wait a minute you're going to be 72 before you know it. >> 72 is the projection through 8 years is the two added years. >> you going to cap it there? >> are you asking me for a guaranteed maximum price? >> i don't know but i'm saying at some point people need to say -- we're coming to an end. >> given the scope we are seeing for the remaining whatever that is, three years, yes. the point is that i'm asked to do additional scope. if we -- i mean and that, as we

talked about gmp opportunities, changes are above the gmp, right? so changes guaranteing a scope for professional scope. >> is this typical that you see on large jobs that the contractor does? >> i would somewhat echo what steve says. if we ask in a professional services contract for additional scope we're going to expect to have to pay additionally. we have had building projects where we end up doing more inspection where we an advertise paitdd, that usually is a cost for -- it's hard to compare. we don't usually do a general

construction management oversight contract like this on our contracts but if you agree to a scope and a fixed fee and the fees often kind of applies to the amount of profit and i think in the last expansion turner might have even agreed to a smaller profit, but if you ask them to do more scope you have to compensate them. >> is it because we tend to do construction management in house? is that why we don't normally have the contracts on other city projects? >> typically for smaller projects we do the oversight, we do it with our own employees. >> so certain types of inspection services like the steel inspection we also would contract. >> but i also think there might have been oversight in terms of what the needs are, the inspection needs, so that's why we see the escalation. >> i assume it's related in large part to what was part of the conclusion of the cost and

risk analysis report that we got, which is that, you know, with inaccurate engineer estimates early on and really optimistic production rates that we then also had a smaller sense of what the construction management oversight services would look like. is that based on earliest -- early estimates that were optimistic and not realistic in terms of what the scope of this project would be? >> the assumption at the very beginning of the cmo contract with steel was thinking there would be two facilities, one shift and that's the kind of assumptions that were built into the original budget. and then as we actually got the design of the steel was actually come to fruition, it went out to and we got a contractor on board then we were able to see the full bredth of what the amount of fabrication that they were going to be doing.

>> often involved more sites and more shifts than we had estimates. >> in the original estimate. >> i think this is yet another outfall of the delay in getting the design complete. perhaps the complexity of the design which is now compressed our production and construction schedule. we've been holding that 2017 date while we've had many, many delays on the design side and so when you squeeze it down into a tighter window it's more facilities, it's second and third shifts and that's what we're now paying for. just another of many compounding increases hitting the market at a higher time, compressing the schedule, the complexity of design that are driving up the costs of this program, i think. >> do we have any member s of

the public? >> no members of the public want to address you on this item. >> i will move approval. >> i have a question. what happens if we don't approve it today? do you have enough to carry a month or what is --. >> if we don't approve this today the cmo will pretty much have to stop work at the end of september, which essentially stops all inspections on welding, which stops the project. >> there's not a stop work period that we have to go through there before that happens? >> there would probably be an additional cost because of that. that would not be helpful. >> notice. >> if i can just comment, the scope sounds, it's reasonable. it explains what it is by using -- i think we're in a position where we can't not approve it,

but i think there is valuable comment in that it is a big increase and so i think for the staff i think there needs to be a substantial attachment that explains the justification for the large increase beyond a general descriptor in the staff report. i really do think that's necessary because it's a big leap and the general story makes sense, the scope makes sense, i'm not questioning what work is to be done but i think for our records and to justify our action i think for future board items we do need a substantial attachment. >> so i definitely will add back everything when we do come for amendment 4 everything that was in amendment 2 so it's all in the same package. >> is there a second to my motion to approve? >> second. >> call roll. >> first and second and

director riskin, aye. lee, aye. director riskin, chair harper, 5 ayes and item 16 is approved. >> 17, authorizing the executive director to sign and execute the block 5 easement graepltd and declaration of covenants and the agreement retemporary license for use of parcel m3 in substantially the form as provided in the block 5 owner participation disposition and development agreement, ma west, the developer of the tjpa's block 5 property. >> bill white will report on this item. >> good morning, directors, bill white. i worked with tjpa staff on the negotiations between ocii and ma west, the developer on block 5, the dda,

the disposition and development agreement. that included two agreements that were needed between tjpa and the developer, the easement agreement and the license agreement which are before you today. these have to be executed by the tjpa before the parties can close on the sale of block 5, which is, which would bring $172 million to the tjpa for transit center construction. just by way of a little bit of background here, if you are not familiar with transpay block 5, it's on your screen. it's a little bit of an unusually configured parcel, in general it's the block between beal street and main street and then between mission and howard. as you can see, however, it's bisected by a private property called 201 mission street that's actually where the tjpa

has its offices. the portion that is to be sold to the developer is actually the portion in the bottom left corner marked the teller parcel. back in april of last year, ocii put out an rfp soliciting s for block 5. the winning bid came in, the d.b.a. provides for a 43 story office tower but it also requires open space to be provided, 15,000 square feet of open space, and it also requires the developer to make certain improvements to the future natoma street, which is also shown in the milds left on the diagram.

those properties are to be retained by the tjpa for various reasons, and so in order to give the developer access to those properties and to be able to provide the open space and to do the streetscape improvements the agreements before you are necessary. tjpa is actually currently using those properties for construction staging. there's trailers on the properties today and in the future if and when the tjpa moves forward with the train box expansion, which would be right in the middle of that block, it's going to need the open space properties and the natoma street property for construction staging as well. so it was important that the tjpa maintain control over those properties so the result was an easement agreement by

which the developer would have certain easement rights to build the open space and to allow the public to come on to the property, but subject to the tjpa's right to, for one, stay on the property now until the transit center is complete and then also to suspend the easements at such time that the tjpa will need the property to build the train box extension. and so i can, i think the agreements are summarized in your staff report and i think were provided in full in your terms. i'm happy to go over some of the details of the agreements if you'd like or if you have questions i'm happy to answer any questions. but the closing on block 5 is scheduled at this point to happen september 23, so -- and as i said these agreements must be executed prior to that time for

the sale to close. >> who maintains the easements? >> the developer will have sole maintenance responsibilities during the time, of course, of the open space where the streetscape construction. obviously that's just back to tjpa during staging, any staging period. >> okay, comments, whatever? any questions? >> you have one member -- two -- scott roland and looks like mr. patrick is following him. >> thank you, first of all i want to make my position very clear. i fully understand the significance of 175.5 million dollars. this was precisely earlier why i suggested you go for a line of credit for half a

billion, not 300 million. i also believe we should be building a beautiful tower there at the corner of beal and howard and i'm glad staff finally posted this easement, it wasn't posted last weekend for some reason so people could go through it, it was a hand full of pages, i haven't had time to go through it. i can tell you there is not a single mention of a tunnel anywhere in that easement. that's a problem because as far as i recall the tjpa has a legal mandate at some point in time to provide some kind of rail facility between the transbay terminal and the east bay. so i am asking that you defer this until mtc has had time to go through this and do some kind of engineering. trust me, this can be done but not the way it's specified in the easement. in closing i'm going to tell you exactly why i'm asking you to do this. i'm going to wind the clock back 15 years ago and

it's happened with the tower. when the mayor's office went to the planning department and said you know that building there, you will be okay, 80 foot piles, knowing fully well at some point we are going to be digging right next door to it, the end result of that is that we ended up so far with an 88 million dollar buttress inside the transbay terminal box. this will (inaudible) down the line because we have to rise over it as we rise out ftd tunnel instead of being half day down and start diving because we want to go under the bay. i'm just going to leave it at that. >> thank you. >> i apologize you are seeing so much of me but i guess i feel serious about that. we talk about phase iii. if there is a phase iii, and i think, base ds on the newspaper article and everything there

will be a phase iii, that phase iii will go through this property in some manner. we should have an easement in some manner under that property. i also read the easement instructions and they have nothing to do with anything under the property, they are only having to do with where this train box extension is. a big mistake. why not save lots of money now than spend it 4 years from now when we need to go underneath that property to get across the bay? this is the phase iii argument where we seem to refuse to talk about the gorilla in the room. phase iii needs to be dealt with, it needs to be planned for and it needs to be implemented. thank you. >> i believe that concludes members of the public that want to address you on that item. >> can we ask staff to speak to whatever extent this building, if built, would preclude an extension to the east?

>> certainly. >> the building which i should point out has been now approved by ocii, it's been approved by the board of supervisors, it's been in redevelopment plan for over 10 years. there's going to be a basement to the building so i can't speak, i'm not an engineer, i can't speak to whether it's even feasible to build something --. >> (inaudible). >> we're building, we're extending the train box in phase ii adjacent to the building. we're not going underneath it and we've worked out an easement with the developer to provide us with access to provide two locations so that we make sure that we're not disrupting their operations in the future when we extend the train box. but it does not go underneath the building, it

just extends to main street. >> my understanding is that this alignment is not being considered at all so it's just a hypothetical situation. we can't answer hypothetically what you could do but this office tower is part of the redevelopment plan so it's going to be -- move forward. >> the mention was just to make sure that in the future when we build the train box that there is no impact from this building to our train box. it's not making our construction more difficult than it needs to be, so we've got some rights and some easements from the developer through this agreement to ensure that. but we don't have any -- we are not going underneath the building, current alignment. >> marilyn murphy is on the dtx design team and she's an engineer that is not with us today but she had provided some insight that the team does have

feesible alternative designs that would be available and that wouldn't be impacted by the box 5 development. there are ideas in the works that would allow for extension and taking into consideration the extension of the train box and the box 5 development. >> that's good to know. now this is way down the road for us, way, way down the road just in terms of anything we can do about it now. i think that's everybody's point. go ahead, mary. >> can i just restate it? i got -- so there's always long-term planning. so what i heard you say coupled with what mark said is the way this agreement is written it's okay for the purposes of our train box and extension that it does not preclude some type of an underground tunnel over to the east bay because there's multiple --.

>> that's right. >> -- conceptual alignments, but it would preclude if there was one particular one going through this block beyond what's necessary for our train box. so the long-term concept is not, it doesn't die or it's not precluded because of how we've set up this agreement. >> i think all of that is correct, director lee. i think there is one alternative that may be precluded as a result of the box 5 development. >> there are other alignments that can get us over to the east bay in the future. >> that is correct. >> studied by mtc and the various partners or the city, i don't know who's studying what. >> the tjpa has certainly studied those. i don't know the expect that mtc has weighed in on those at this point. >> the conceptual alignments, who are they being proposed by?

>> i think there are a variety of folks who have proposed conceptual alignments but the tjpa team certainly has looked at them. >> i will move approval. >> second. >> i will go ahead and note that director kim is absent. with that, director lee, yes. director riskin, aye. vice chair nuru, aye. chair harper, aye. that's four ayes and item 17 is approved and directors that concludes your agenda for today. >> is that it? we are adjourned. >> thank you. (meeting adjourned).