good afternoon, i would like to call the meeting of puc to order. secretary, can you call the roll? [roll call vote] commissioners you have

copies of the minutes minutes from the january 12 meeting. the 1st time that i can remember was 20 years ago, when the puc began the program and she was always there to remind us of that. and she was always

able to do that and not in a forceful but in an effective way. that was essentially positive and her spirit came through on that. she will definitely be someone that is remembered i will also ask that we adjourned the meeting today in her remembrance. we will take this moment for public comment. good afternoon commissioners, my name is ted knollenberg and i am representing district number 5. last year i brought before the

board of supervisors legislation to require the city of san francisco to have individual water meters so that it would be easier and more efficient for people to be able to understand their water use. primarily the fact that if they are responsible for the bill they will pay more attention to the fact of how much water they use. the mayor wants 30,000 new housing units by 2020..in affordable nature. another 30 to 40,000 market rate units will be built. almost all of them will be multiunit buildings. having water meters for each of those units means that there would literally be hundreds of millions of gallons of water saved by doing this.

this would also provide a basic level of service metering and this could also help on the revenue side. i ask you to consult with the board of supervisors because this meeting is already in the process. thank you. any public comment? we will move on to public comment. we will move on to communications.

commissioners, any comment on communications? >> i would like a memo from staff to develop what the plan is to execute these market activities and make it available and distribute that for the people that want to use it. >>commissioners, anything else? moving on. any public comment? any commission business? seeing none. we will have our report from the commissioner.

>>before the general manager is mr. richie with the drought update. we have lots of interesting news. in december, the numbers started to improve the reservoir is at 75% capacity . and this is a reflection of how we manage during the drought to conserve as much water as possible. this year we will look at the other side of this claim as we try to figure out these excess flows of this year and how we manage this in the

water bank at a robust way. the water bank is at a 32% capacity. normally at this time-year-old be about 100% so we want to make sure we get that back as soon as possible. our storage is about 49%, we are below on our total system store is right we are working on that already. we are still well below average. our precipitation has continued to decline, we have started to get close to the 1993 curved. with this phenomenon we are staying above the average level on a continuous basis for this year.

water available to the city, this year we already have 65,000 available and we we have about 50,000 for the entire year. we will be looking at these public storage levels that we have achieved over the past year. the graph shows that the puc has been above in on

precipitation on the accumulative level.i may stop using this one because this is not all the time but again we have bright colors in our watershed and in the bay area. these go hand-in-hand. the curve of the current year for the 1st 2 weeks were below 2015 level so people saved more than they did last year or so people have done very very good with conservation with our customers.so it is not just san francisco.

the waterborne proposal on january 15 to adjust the conservation standards. there are 3 potential adjustments to these standards there would be a climate adjustment and a growth adjustment and new local drought resilient supply credit which they are starting to use now. i think that is very appropriate to use. in consideration of their standards we will consider this on february 2. we will submit

a comment on february 2 and keep you involved throughout this process. the regulations for water division measuring more instated on january 17. when will we consider our drought this year is over. we are hoping that this year might be the year. we need to be

perpetually pessimistic.right now we can take any questions? >> thank you. any public comment? next up is clean power update. >> thank you barbara hale with clean power. we have locked in our supply pricing with the general manager having signed a confirmation with the general financial agreement at the last meeting we had our proposed projections show improvement on the 12th. anarchy milestone sure that we are on track for service to customers beginning may 1.

i'm going to pull out a familiar source and use this slide.you can see here we are now funding our operating reserve and are conservation reserve we now project our reserve to be determined overall we have a modest margin of 16% as of january 12. this is a culmination of the final supply the came and at the review at the last meeting this would have beenthe 1st portion of the commercial implementation. are contract negotiations as i mentioned our complete.

our signed contract are in their final steps. we are maintaining the controller funds and that will complete our negotiations for these. after that we are on track. we are on schedule with our key milestones and we should be able to serve customers by may 1. if you would like to know more you can find out more about each step on cleanwater.org to learn

about her next phase. i am optimistic that we will get very close to that. thank you. >> next up is mr. sandler with the quarterly budget. >> hello jason sandler with the san francisco lasco. if you have not signed up i really encourage you to do so. if you haven't signed up i encourage you to do so for green. i could not find up because i am

and implore the and it's only for customers. if i could sign up for a live i would. thank you. >> mr. carlin. back on track. >> man have the slides please? thank you. >> commissioners, eric sandler, cfo for our financial services. this is our annual budget report. we have been a little off track this year. as

commissioner richie pointed out this would show up in our budget financial. our water sale revenues are a little lower than when we did our drought scenarios. the good news is that we've been able to offset a significant amount of those revenue reductions. as we mentioned before the power enterprise is more resilient and our financial results meet policy targetsfor coverage and reserves.

on the water sales revenues we project about 20 mgd. you can see how this breaks down in terms of retail sales and wholesale than in terms of revenue. our uses have come in about $51 million offsetting our revenue reduction . 38 million the lions share had been cumulated over the last fiscal year. we essentially have impounded account with that service. forcing us to pay next year's principal way in advance. now

that we have that amendment sprung in no longer exists and that was $38 million and that is the lions share which you see. wastewater had a budget of reduced revenues of about $13 million. we had a savings for one time close outlook $8 million. on the planning side we had about $17 million in reduced revenues. we generated more water than we had anticipated on the water banks

and we generated more power. we had around $12 million in the transmission and distribution savings. some of that is a refund. and then the bulk of it is as of last friday we took the opportunity to generate revenue in bidding in a number of markets thcan participate in. finally, we meet all of our policy targets for reserves.i would be happy to answer any questions. >> i have a question about the

system a. 1.15. that is service coverage under water and abroad? >> that is a very good question. that is a venture in our service coverage to include these ventures. with the drought and the decline in this water efficiency, the current coverage that does not include fund balances are not a topic of conversation and discussions with rating agencies. so we provide this expeditionally.

>> we are currently under the current at 1.5. in your slide you show 1.25 which is under what our requirement is. >> that is what our policy is based on. that is a very good question. >> commissioners, anything else? any public comment? thank you. >> i just wanted to say one more thing, you have probably been reading in the news about

flint michigan and their lack of water supply and the primary issue for flint michiganis there contaminated water supply because of lack of corrison we have a lot of discussion about this about a decade or so ago but we do not have to worry about this currently but we did find lead in our weren control. if anybody is concerned about it they can go to our website which is cleanwater.org and you can see that our levels are

well below what is the limit and i didn't want you to see this in the news and worry about it. thank you. >> that concludes the general managers report.the next item is the performance review report. nancy holmes. >> good afternoon commissioners this is nancy hom i am the director of puc commission

control. are based senior management are done internally. the agency values these activity and takes into consideration all recommendation that is made by visiting auditors. are highlighted executive summary report had a total of 42% of individual cooperation. as we continue throughout this year this may continue to increase as we continue with our plan and with individual audits. we had completed audits this past quarter of a total of 17% in total. this present quarter shifted more towards a national audit, this is a result of recent conditions in our financial statement and are financial

market. again of the 8 projects that were completed in order and in addition to the financial audits the following were completed. the data processing for the trade year. as previously reported in the previous commission meeting those evaluation of lessons learned in the wsip and applied by ssip i kevin shenk. and finally the citywide procurement assessment and no recommendations were made regarding this.

there were 19 audits upcoming and reviews. there will be 3 in the next quarter. there is for cash receipts and 4 revenues and one is for theinternal controls evaluation we also have the state coastal conservation grant administration and for the performance audit the city will continue to plan a citywide fleet management under the

framework of the ssic so that commission has planned to review their audit in the 3q4 we will continue to keep you posted on the progress and the results of the annual plan. thank you. >> i have a couple of questions. in prior quarters we received a table of all of the audits completed and what the status were. >>there is a dashboard that shows the completion of these

audits. >> the audits, whether it is performance or financial whatever the findings were-- >> it is in the report. i can clarify the report a little bit. we updated a report to make it easier for reading. we have an executive summary as well as a dashboard. in the back of the report there is a detailed summary that has all of the details which are asking for. are separate findings and the type of audits. >> thank you. i cannot find it. if it is they are, i am fine. i'm sure i can find it . i just did not. on the lessons learned audit, that was done on the revenue bond oversight

committee, right? at some future time i would like to have a discussion from our staff as to what we think about that report and what that tells us. there are a bunch of suggestions made, and when a report-- when we get an audit, we respond to the audit. i guess with the revenue on we didn't give a response in the summer. but typically we give a discussion about the recommendations of the audit. so much will lean toward cultural changes that will help improve as an organization. i would like to see the commission discussed this at some future time on that audit report and i hope that we are doing this in a response to it. >> that is fine. then, on the

citywide puke procurement assessment.that is basically what we call the processors and this was a specific need for improvement. when reading the clause of the audit it was not clear if there was a plan for improvement or not. a lot of this it seems like we are already doing it, or that it could be a possibility. it wasn't clear if there is a plan in place to address what appeared to be deficiencies in the process. i would like to see our commission responding to that. if that is what our

plan is, but whether there is a plan or a legislature being pursued it would be useful for the commission to weigh in on that. when i speak of my knowledge is quite old. to my knowledge i hope there is improvement that we are making to do that. >> we will work with the city commissioner to do that. >> anything else?do we have any public comment? the next item is bond disclosure responsibility. >> this next item is a bit of

a team effort. i am going to introduce our city attorney steve smith and he will provide you the details. you are all are familiar with the fact that we have very large capital programs and these are specifically for debt we currently have 177 million for wastewater and about 77 million for the power enterprise. on we bring bonds before you to be issued, one of the things that we bring forward is something called the official statement which is essentially an offering document that the entire investor community can set forth not just the terms and conditions of offering but also all of the developing

characteristics related to the puc enterprise as far as money said that the investor can make an informed decision and that is called primary market disclosure of the preliminary official statement. this and the commission all have responsibilities to make sure that preliminary disclosure is accurate. we have developments and also we have obligations to keep that updated and that we will continue in our obligations. we will practice on a periodic basis to educate staff and educate the commissioners and responsibilities related to disclosure. i believe the last time that we did that with the commission was 4 years ago. we

have mr. smith from the city attorney's office which will present to you information regarding commissioner responsibility. mark? >> my name is mark blake i am the deputy city attorney. i have been with the city now for about 10 years, i have about 20 years experience in finance, and working with the bond offering process. working with steve smith in san francisco we employee and outside law firm

in preparing our offering document aand the 3rd thing is we need to give you our insight in terms of where the department is headed and in terms of the disclosure and in terms of the fcc and we discharge your legal responsibilities under the federal procurerment laws.laws with me today i have brought a very good offering document as to what your responsibilities

are. the city officials and our staff is available anytime you have questions to answer any concerns you have about the disclosure process. what we're going to do today is basically touch on the official statement is and what the legal statements are attached to one the official statement and then i will touch on. the team is and before an offering document comes before your board for approval i will go into what goes into its development and its review. 1st of all, when the puc creates the bond they create a financial statement. this is

including bond terms, regulatory findings outstanding litigations and it covers risk associated with that particular bond issue. in our text here the biggest in respect to issues is the plasma covenant and the drought. those are the factors that we talk about. we lay all that out in a respect that you're used to seeing in the cardinal rule that the fcc is that there are not regulation requirements in the document. that is how they

would ultimately enforce the disclosure against the puc. i like to talk about who our team is. before the offering document comes to you it will be critically reviewed by sfpuc officers and staff. so if they are the secures of disclosure. at initiation we would like to finance the facility and in that process we would like disclosure in bond counsel and in the disclosure offerings we

will have disclosure counsel. we will provide all the necessary litigation expertise regarding disclosure counsel and bond counsel and offer all of our expertise on these documents. we will provide a third-party review on these statements and a testament of these documents and we will test these for consistency. as well we provide a comfort letter at the end of our process and this indicates that they have disclosed everything within the document. this gives us comfort that we can move forward with our finding.

bond counsel renders an opinion of validity on the bond. that we have complied with state law on the issuance of the bond. instead of a bondholder or an outside investor with these obligations we enforce their right to be repaid. finally our financial advisors will work with the puc staff with timing on the market and pricing and staffing and construction of the issue. that is the team and the team works on this before this document is brought to you for your review.there are very few changes after the documents have been obtained for your

approval. i have gone over this already the official document is the official statement of the sfpuc. the reason we take this so seriously is because the consequences are severe. questions are raised about the competency of our disclosure. the adverse rating agency actions, if we were to lose access to these ratings we could lose our capital and not be able to finance. this could lead into sec investigation as

well as criminal investigation of employees and public officials. as well as investor lawsuits. that is all for me i will turn over the presentation, if you have any questions i'd be happy to answer them thank you. >> good afternoon my name is steve smith i am here on behalf of of the bond disclosure counsel i would like to address some points that mark made in terms of our stock offerings as to whether or not to buy your bonds are not. your document is your statement to investors in your statement to the market and therefore it is important, it is very important that this

document is correct and that it is complete.as mark mentioned the consequences of inadequate disclosure.the worst is fcc investigation and lawsuit and the other end of that would be a bad reputation in the market as far as your reputation of disclosure in that. as with any option in improving a bond issue is no

exceptions. it is important that you take the time to understand the bond transactions. you have to understand what is being authorize? what projects are being funded? are there any other financial impacts on the organization? from a disclosure standpoint your obligation is to ensure that the puc has a good debtissuance process. and has followed that process. with your obligation, this is to make sure that this is a followed process. specifically it is important to make sure that there is an officer

assisting with finance that has the responsibility in building you and offering document that is correct and complete. the responsible officer is empowered to have the attention and cooperation of everyone in the organization if necessary. and that there would be sufficient time allowed for the process to work these things through. for matters to be handled internally. so, the next slide that we go to is our due diligence. 1st, you should always feel free to ask questions best

staff and professionals. we have to make sure that the official statement is actually reflecting areas that you would have specific knowledge of. and you can rely on that staff but that reliance must be reasonable. particular things to look for are things that you know as a commissioner. that you are not sure that the responsible staff-- and if there are things that the staff is informed if you know what

particular things and if you have things that are particularly touchy or particularly sensitive or things that you have concerns about then you have lorraine and you have mark and you have your attorney and you have your city attorney's office and your deputy city attorney are excellent resources for discussing legal issues bearing on the side of things, if you are wondering if something should be mentioned or no there are great resourcei will bring mark backupbless you guys have questions. >> commissioners? thank you very much. we appreciate the

time.i do have 2 requests. 1st of all it is about the informationthe information that was provided to us seems to be very complete in terms of the standards of what is done and how it is done and what their responsibilities are. one thing that i would like to request is that the commissioners be provided with a searchable pdf of those materials. a searchable pdf of the materials that are part of the package. if you could supply that independently said that to be part of our library, then we can check up on items as they come through. basically, it was already presented to us but it can be separated out to make sure that

all parts of the document are searchable. the 2nd is, it appears from reading that the commission has a very particular responsibility to not be assumed by staff and not discharged simply by relying on staff. we need to make sure that questions are posed and answered. my request that comes from that is for the city attorney. that is because that is the relationship where the city and that commission staff meet in many places. this may already be going on but if you can make sure that when these items are presented to us that they are presented in such a way that they create not only the circumstance for the way it

is but also that there is an administrative record that reflects that. if that requires that there is a restricted dialogue with the commission and various advisors than so be it. if it is a matter of various representations then we can make sure we meet that requirement for that to happen. i want to make sure it is dealt with in a substantively different way than items that come to us and we don't have a particular area of expertise, but this is a higher level of responsibility and i'm one make sure that the city attorney is properly involved in presenting this information to us and that the commission can make an appropriate administrative record. >> any other comments from the commission? or the public?

thank you all. again, i do appreciate the materials you put together their. they were informative as a summary at this time which is probably what you were looking for. the next item is the report of the-- >> good afternoon commissioners i am the assistant commissioner ofbawsca. i think it is

important for you to have the most updated information. this chart shows updated numbers for the last 6 months for the period of june through november of 2015. this shows a picture of your wholesale customers with our agency in green. and you see the aggregate target has achieved 29% overall so there is a significant responsive customer base throughout the communities as well to put this a different way if you willtake the total volume over a 9 month savings, which is required over a nine-month saving total, 24 of

the agencies have already achieved 100% of their savings over the last 9 months of the fiscal year of 2016 and 40% more has achieved this further goals for october. another way to put this is the agencies have achieved 141% of their combined savings target. that is enough water to provide water to the valley for 8 years. i think that our communities and our agencies should take a lot prided that.

that is all i have. i'd be happy to answer any questions that you may have. >> thank you. that is a very impressive performance. >> 2 slides back we have the cities that have exceeded their nine-month goal. then is that cal water service, that is the district that provides for the woodside. they started off very slow in their service area but they are benching their way up quite significantly so they are pretty confident in their progressionthe other agency is the daly city which are over 100%. and they started out very very low when they started out and they're also highly residential as opposed to some of the other water using areas so they have just been bringing up their savings as their low

per capita as consuming water. they are meeting their target overall but they are just not knocking it out of the park like some of the other agencies. >> thank you. >> which brings us to the consent calendar.mdm. sec. >>item 11 is the consent calendar. items under the consent calendar are considered to be routine by san francisco public utilities commission and will be acted upon by a single vote of the commission. there will be no separate discussion of these items unless a member of the commission or the public server quest, in which event the matter will be removed from the calendar and considered as

a separate item. item a is the approved modification of number 1 to joc-48r. item b is the approval of the correction to the contract duration of the association to change the contract duration 1826 consecutive calendar days to 1095 consecutive calendar daisy's.item 3 is to approve that contract duration of increasing the contract

duration from 365 consecutive calendar days to 395 consecutive calendar days. >> all those in favor say, aye. opposed, nay. >> item 12. >> item 12 is to approve the plans and specifications of award contract number ww-613 2 approve the southeast water pollution control plant and disinfection upgrades in the amount of 25,750,00. >> we do approve this plan.

we at this time did not meet this goal but at the time this was a very tight space and we did speak to a management firm as to what we could anticipate but i guess the contractors came in higher than what we could anticipate. i think part of it is also that we have had a good bidding and a lot of the contractors are very busy and i think that the contractors are very busy because they already have a lot of work. i don't think all of the contractors are quite as interested but they don't want to not bid on it. >> also, could you comment on

the protest? >> the protest is from the number for bidder from moderate mechanical and that is basically having to do with a complaint that they did not-- that western water did not meet those requirements but there has been 2 responses from western water and those issues have been resolved. >> thank you. >> do we have a motion? both consecutive. any public comment? >> all those in favor say, aye. opposed, nay. >> the motion carried the

item 13. >> authorize the general manager to execute one half of the sfpuc a memorandum of understanding with san francisco municipal trip rotation agency 1st sewer and water system improvements on masonic avenue between geary boulevard and fell street in coordination with masonic avenue complete streets projects for the costs in the amount not to exceed--,

furthest sewer work and thefor that sewer and water work. >> we find that these have a longer lifespan for the application of the sewers. >> i am impress. do we have a motion? seconded. and we have a public comment with mr.

wallenberg. >> i am here because i live in the area and i will be affected by the work that is going on there. there are 2 things that concern me. one is that the expected duration of this project is 24 months. this has already been in effect for 18 months. which everyone finds outrageous to do a 1.6 mile of roadway which is about 12 city blocks and for 18 months that will be traffic moving n. to the ctr. part of the city and particularly masonic will be clocked for 18 months. i really question why does it take to years to do this work? it doesn't seem rational. the

other problem that bothers me here is that the mta will plant 200 trees, and the water and sewer lines will run it or imagine the middle of the street and to put free roots right above that that just seems like a bad thing to do. that may not want us in the short-term but in 20 years from now or 30 years from now we may see a problem with these trees. we need to rethink what is going on here and i think through the investment that is being made in preparing this

investigation. >> the sewer will be 2 separate sewers on either side of the median. >> given a comment about that 24 months? >> mtais really taking the lead on this but i do know that the government utilities are really taking a lead on this. >> these wwater and sewer lines are not being put in concurrently because you cannot close the street on both sides so that cat and not happen consecutively said these things take time to do. >> we have a motion on a second.

>> aye. motion carries, thank you. >> that brings us to close session. item 16 will be conference with by legal counsel for on litigating claims. item 17 is the conference with legal counsel and item 18 is the conference with legal counsel for existing litigation and items 19 and 20 will not be discussed today. >> can i have a motion? >> motion seconded. any

discussion any public comment? all those in favor say, aye. opposed, nay. m we are back in open session. in closed session the commissioners approved items 16 and 17. can i have a motion whether or not to close discussions on closed session. do we moved to not disclose? all those in favor say, aye. opposed, nay. is there other new business? seeing none, i

would like to injure in this meeting in memory of dr. jackson. [gavel]