test test test captions. test captions. tay be that the controller's office could speak to that. >>speaker: perhaps it is controller's office can. how are we going to pay for this? are you part of theion e we paying through revenue's tax or general fund, you heard estimated price tag is $1.9 billion. >>ke we haveeen thinking through different models about how to pay for this.

a lot of exercises the city is going throug fundamentally here you have a large infrastructure component typically the city would seek au to borrow foro stretch over the life of the asset and then there is another component of the cost that is likely to be going annual operating expense, where we couldn't borrow money and would want to have a pay as you go source available. >.as linda has noted, there is a number of unknowns that are intended to become clear through the procurement process. >>speaker: is that the$44 on og ker:ea yes, $44 million operating cost will become clearer as the process prosodass

based on estimated work. the other is what is buildout cost going to be like. that is nottiest the result o na hard, and that is a tgn financial unknown regarding what we are looking at. using the numbers from today there is lots of different ways to think about how to pay for it, but probably two p dominant way. one would be general obligation bond that could be used to pay for the infrastructure. that would be an assessment on all property owners in the city and you could pay that with a smaller utility user tax and we do have one in the city ently, sul be an increase to that to pay for property tax. one would be a large geo bond.

>> how large are you talking? sounds like the t ut to owners. >> 1.5 billion. >> do you remember when supervisor kim proposed a $1 billion bond and she was laughed at. do you remember. [laughter] >>speaker: the largest bond pursued was just under $1 billion. the other model would be to use a utility user tax only model where you have a larger utility tax increase that would generate annual revenue stream and you could use part of that to pay for the operating cost of the network and then issue a revenue bond secured against that for the remainder. those are the two pre dominant

model. >>speaker: how long have you been looking at these models? >>speaker: the project team has been working on this for a number of years, and we have had much more focused attention through the rfp process. >> that seems the squishy part working bef iou g here but working on it in the dark. >> we are drafting an rfp to be released to possibly go to voters in november. do you see what i'm s >>speaker: i understand what you are saying and the more clarity we have regardin lot of these questions regarding components of cost and the more certain we can be about managing our risks and we know a lot more today than we did sixhs ago or three months ago as a result of the rfp process and we will know much more at the end of

this rfp process both about the business model and about the assets that one of the providers ave you read the draftear.>> language for the rfp. >>speake i ve been involved. >> do you have a copy of the language of the rfp process and rfq? >>speaker: i the rfq, the rfp process is in draft mode. >> ben have you seen the rfp process language? >>speaker: yes, we have been involved in reviewing the rfp process draft. linda has been good at including us. >>speaker: i think you are correct we will know more about the cost of the project and the illrating model a how be shared between the city and the collected provider based on this question and based on answers it sounds like the rfp to try contract with the

vendor to help us think this through. >> i think, well and linda can speak better to it than i. an now we want it to bedo know constructed. we know that we have our construction specif specificatid how it needs to be dug into the ground or on the poles, so all of that helps inform what will be bid, so then it becomes a question of how the model wil play o and weow will share those costs and what we will nues will be.hat weeliere isathere wetart to talk to them about what expectations are and what ours are, and it will be a nitio bring that there is lots forward and have more decision makers in that process. >> linda, i know you just got to the team on this.

thank you mr. ben. what's been your personal involvement with the municipal broadband fiber measure? i mean you are the boss, granted so, people are reporting up to you. >> right. i am intimat involved and attendhe weekly meetings and we have the city attorney on there, two attorneys, outside col contract, under contract. >> what is ctc? >>speaker: columbia >>hat is a vendor, contractor? >>speaker: they are neutral and not trying to push one product. >> how much have we already spent in this dream? i want thera bbe

>>speaker: my understanding from work with the departmen of technology to understand expenditures to date 1.2 million of the 2.5 million of the project all beeed expeed and $1 million to the fiber consultant. te thank you. any other allocations out there? >>speaker: the actually uses to date is $1 million for the fiber consund 200,000. >> how is the outside legal counsel collect? >>speaker: the city attorney and league council hasperienit3r okay. all right. t i want to go back to the

revenue tax measure that is going to be on the ballot. so we don't really know what the project costs are exactly. we have a round figure. do you have any idea of an estimated figure of what the exact cost may be to customers to the rate ps? this poin be the revenues are still unknown. >> will there be tiered costs? >>speaker: that is an opportunity. deaf thatldefinitely a lower coe lower income. >>speaker: a subsidy for lower income. >>speaker:es if you don't md, i would like to call up connor to ask him questiout the r measure. hello mr. kennedy. i think you have been working on this project for the last year-and-a-half. >> yes, i am project-specific

staff. >> what does that mean? >>speaker: it means my task 201 to help to do the basicust block and tackle and helping whoever is in charge of this grnd. to get it off >> okay, so you have heard my line of questioning and linda has done a good job. i am looking for specificity wherhere i some gray areas. why don't you start at th top. i think when we started, dt ran an rfp process to come as ns help to guide us and ctc run by joanne hovis who is nationally recognized the senate on this issue and have been intimately involved in a number of municipal fiber

project. her firm along with img rebel, who are falci experts i th to put together a lowest b seriesf reports. at thatunctut was part of the project wre certainly at the tane and watched as they helped the city over time to consider the difficult and complexh financial trade-offs in assessing some of these l question. i think there was a really great powerpoint that synthesized a lot of work that's been done over the past two year. i think an important part of that has been getting a handle on what the problem is i francisco. what is the problem >>speaker: california

emerging technology fund identifies that cost statewide is the biggest barrier to access. in mywner experience living in bay view, i think you do see folks outside of the library before and after closed hours, and that is true across the entire city who have their backs up against the wall and accessing the internet which tells me that home access to the internet is theblem and it's not just concentrated in one district, it's across the entire city. sort of getting to what ctc also identified, we out liked a number of important policy goals for the city. this started a few years ago well before the trump administration took over and before the trump designated fcc -- barred states from enforcing

their own rules locally that almost underscores an entire different rationale which the municipal broadband proje is almost the only game in town. this is really about closing the digital divide. >>speaker: connor, let me interject here. are you working on a revenue tax measure for the ballot? >>speaker: i am not but i am in the room with professionals who are. i think th from conversations that i have sat in. >> who is in the room? >>speaker: the city attorney. >> because they are drafting the language that makes sense. >> to be frank the city attorney can't even e-mail my sfgov

account. even if i was sent a copy i 'tdn get it. >>speaker: i don't understand why they couldn't e-mail it? >>speaker: just from the beginning of my te here there is certain technical issues with e-mail.. i know that your staff left me a voice mail and my pin i keep trying to pct it >>speaker: i wil tell that to my constituents that my technology for the city. >> we have to fight the good fight despite the limitation. these are tiny hiccups worth the energy spent. >> you may not have had a chance to look at the language so you can confirm there are plans to put a revenue measure on the

ballot,. >>speaker: i can confirm what ben laid out as the lay of the land that it was essential as this initiative became real the city's all-star team of financial experts were consulted about what the the issues were, looking at net neutry and privacy and these important issues, i only have a visiof that whereas the city financial leaders have a vision of everything. ben summed it up almost in a way that i wouldn't want to correct or add specificity to because that is the mo accurate state of play right now. >> my understanding is that you are in charge of the entire city's tech policy. >> oh, i would love that. as acting project director i

have limited authority and at the same time o a lot of influee and on wednesday's at 3:00 the ability to sit in the room. most responsibilities thoverseethe contract. >>speaker: ctc put out a report in october 2017 does specify a timeline but a long and thorough procurement process to make sure that as many details on cost a process can bentified and of course negotiated before work actually begins given the,p pioneering ad singular nature of this effort. >> i think that adds to your

point about clarein clare clearp what the role is in june. the public entity is going to primarily be acting as auditor of a contracthere w a private company is going to be running everything. >> what aspect of this process will come to the board of supervisor. >>speaker: i don't know that. i will rely on the cityey. >> deputy city attorney anything you want to say. >> on revenue measures if the city put as geo bond that requires approval by the board with eight votes and the deadline for november 2018 has pa, so the earliest aeo bo placed on the bat lot by the board would be november 2019.

a tax measure could be placed by the board or mayor for supervisor. >>speaker: june 19. >> deadline for submission by the mayor is june 19. suggested deadline for a tax measure to come through the board by six supervisors by motion is june the. >> the mayor has the authority to bring a tax measure to voters simply by bringing a tax measure to voter. >>speaker: most tax measures, there are a couple exceptions but the utility user's tax the mayor can place on the ballot by submitting by june 19. >> do you know if major farrell

is planning to do that? >>speaker: as mr. kennedy said we are working with the mayor's office but i don't know what their plans are. >> i would imagine there is some attorney client privilege but that is okay i am a smart woman and i have the power of deduction and i can deduce on my own. >> you mentioned that in the report the city authored. as an overlay of course with any rfp, your don't just award the contract after someon one of the downturned companies win. what dt is trying to identify during a negotiation in a p3 you

negotiate for the allocation of different risks, so that 1.9 number if we are serious about sharing funding with another bidding team that number comes down. >> if t. even it dide down it's not going to come down that much. still going to be very pricey. >>speaker: they mentioned how important 5g is going to b-- >> i represent a constituency that benefits from internet, from wi-fi, but also represent a constituency that's never once articulated to me that this is a priority of theirs, so if we are going toe spending

$1.9 billion why not build some housing or a shelter. it's hard for me to rationalize that this is a true priority, .ut that is my own personal i wo g t bac to understanding the number. we basically deduce it will be a utility tax and linda admitted that the piece that she does consider to be a utility and we know the pc that houses and ges ad deals with utilities and we don't know exactly where this infrastructure is going to live,. >>speaker: different definitions of utility. >> tell me, what are they. >> the internet is a social amenity. if you talk about at the federal level. >>speaker: let's talk about the local level in san

francisco. >> deciding that it'so important as a social resource that everybody has access to it. i would say that the board unanimously endorsed in february of this year to make sure that the internet at a federal left is. a regulator like utility, there is different ways in which you can talk about what a utility mean. on the one hand making sure there is a subsidy for low-income folks and on the otherand consumer protections and there is questions around privacy. if we want to make sure that all of our residents have access to the internet. i want to move on away from philosophical theories. i want to talk about more tangible stuff. will this board have opportunity

to weigh in on the language of the rfp? >>speaker: i think the same answer as before. that's probably not within my authority on the projects a member who influences the general direction as a member of the project can imagine that conversation coming up but i don't know the answer to it and not going to be able to determine it. >>speaker: >>speaker: while the board typically doesn't have a right over rfp process the board does afford prove rights any contract other $1 million. you would expect if the project moves forward the final p3 contract would end up in front of the board for your approval. >> okay. why don't you remain stand

access i have more questions about the utility tax from a controller perspective. have we ever carried utility tax to voters before? >>speaker: yeah, there is a long tortured history that you probably don't want the full details on, but we do have a 5% utility user tax across a whole suite of utility, water, telecome, steam, commercial and telephone. that doesn't apply to residential utility use in the city because the voters repealed it many years ago, so the utility tax structure is common in california and almost every government in california has a residential and commercial user tax. it is typically about 7.5%.

there are some where it's higher, la for example, has a 10% commercial utility user tax, so a little bit higher. >>speaker: do you have any idea what this utility tax is being floatedun wha level that wile at? >>speaker: would depend on the size of the project, but using the numbers we talked about here today and there is a lot of choices in the design of any tax even if you decide, if that is ultimately the chowe,uco fall on the tax base or the residential. linda eluded to the fact you would wa to have low income exception work. you could have tiered rate. you could have a higher rate on commercial than residential. >> do you know if it's a

one-time tax or will it have a sunset? >>speaker: if this is model that the city is pursuing would have to continue because you are borrowing against tor f the infrastructure, so that is something that would have to be the determined by if it's 25-30 years youdld the tax to be extended. >> connor is this a one term tax. >> i do want to mention what ben mentioned around a scope letter. depend on what the scope of the project is exactly and what detailed decisions are made out of the rfp process. >>speaker: i h i have to move beyond that not sure if i anyl m getting the full truth or if

full picture. doesn't make sense to float an rfp process out to v gedon't bel tha i'm all the middle. >> i would say in the same way, i gake the point. i don h any substantive response as someone who has authority over the project. >> is gng to be additional connection cost or monthly cost to end users? >>speaker: yeah, i gain the structure between the dedicated revenue sources and actually cost is likely going to be determined through the rfp process process. yeah. i think that most of the base case assumptions are there there is going to be some point of a residential sptiori fee. >> who can i call to get my

questions answered? don't tell me you don't kw. >> i won't. when you are asking whose drafting the rfp process. >> the city attorney is taketh direction by one, who is that? >>speaker: linda, you want to come on up and help connor. >>speaker: i think we are saying the rfpcess process will help usnderstd the costs and what will be driverred from each of the teams and we have three teamsov an they womei a different approach a diffent financing and then we willnow. as far as what will be on a revenue initiative, as the policy decisiony b the mayor's office. >> okay, thank you. well, folks, i am tired. i don't know about the rest of

you. why don't you have a seat we are going to mover on. move on. don't leave linda. don't leave. i want to call up -- first i recognize we have dpw here. patrick doesn't have a presentation he onlor question. mr. rivera, why don't you come on up. we want to know the impacts of what it will have on th on the s of san francisco and the inconve yses it will cost to san franciscan. >>speaker: with regards to building out the infrastructure

and installing the fiber in the grounds and in the streets and in the sidewalk, there is a couple of methods that can be used to install the fiber into the ground. one that most like to use is micro trenching where a circular saw is used to cut 1.5-inch wi depth and that little slot is used to place the fiber and then after it is installed it's covered with cement material or epoxy. there challenges with using micro trenching in san francis

francisco, one being that there are a lot of utilities in the street and in the sidewalk. if you can think about a sewer main or electric line or water linene middle of the street and the laterals that services theuildin and properties off to the side, the micro trench would run perpendicular to those lines but because of the mess ofroic trenching, it cuts that little trench a whater it, if there happens to be an existing utility there, tight would hit that utility, is o of the challenge. that would be in the sidewalk and the trench would run through the intersection as it goes from one side to the other side, it would run through the roadway and you still have the utilities e roadway, and there would

be potential tol hit those existing utilities currently in the ground. >> how much does that usu cost? it can i don't know how much it cost.>> varieon the size and scope of theroje. >> i have heard that it's cheaper than the open cut trench, so i think it is cheaper but there are cenithin a built city like sanrancisco. >> does it make sense for our city for this particular project related to fiber? >>speaker: i do not think it does because of the challenges that i explained and that is just the initial challenge of the initial construction. because it would be installed at a shallow depth and later on another utility company would be

to come in and trench for their utility because the fiber is at a shallow depth, there is potential to hit theibeas well. >> supervisor fewer: i was going to ask about we have electrical lines underground already, so are those the lines that you are talking about utility lines that could be underground thad the micro trenches could interrupt? >>speaker: yes. >> for those districts that don't have wires underground could that be an option? >>speaker: it could but you have the sewer, the gas and the water that are also in the ground that pretty much run the same path as the electrical line. >>speaker: they are all at the same depth? >>speaker: in a sidewalk supposed to be installed the 18 inches below the top of the sidewalk and in the roadway

21 inches minimumover. >> would they contract this work out or complete work orders to get this done? >>speaker: depenn the rfp. my understanding is that the rfp winner would be responsible f the actually construction. it wouldn't be performed by public works or i don't think we have a contractor to do it. i think that would be part and linda is nodding her head in agreement. >> have you read the rfp draft language? >>speaker: i have not. >> wondering because it's this mythical language that's out there. >> supervisor fewer: , so you

are saying with the rfp process we would contract out this work with a private company? >>speaker: oh hmm, okay thank. >>speaker: don't yate it when people go hmm. makes you w wrt they are thinking. thank you, i know you have been here probably since 1:00. i appreciate you being with us here today. i don't have any other questions, i'm going to move on. let's go to budget legislative analyst. fred, are you with us? good to see you sir. th is fred ruoso. he is the bla that conducted the study of the municipal fiber a few years ago that had slightly different cost estimates than whis most recent report. don't you share your thoughts with us.

>>speaker: our report was issued in march of 2016 and prior to that in 2014 we prepared a report for supervisor marr but the 2016 report the focus oft was on the different approaches that could fir network, a ubiquitousnl municipal fiber network including fully public municipal network, the private sector approach and then the public/private partnership. our conclusion was th every approach had advantages and disadvantages and risks but the public private partnership reduced some of the costs it might incu.we obtained cost infn

from aonsultant to dt. this was before the ctc work had been done. the cost estimateser lower. the highest was about $867 million to build the network and that was compld in to 15 and the ctc report came out two years later and had higher numbers as you have seen today. passage of time and they did a much more detailed analysis of utility polls and what is available and what would need to be done to make the polls accessiblable which ends up to be more costly than the original consultants assumed. they concluded that the street resurfacing standards were

higher than the original dt consultants had so those proved to increase the cost. much of what we covered i report hasn discussed today. in terms ofayment mechanisms and how the costs are covered, they are subscribers to the services, so if the network is built and internet service providers are leasing it and providing a service to customers that is generating revenue. the reason the utility fee has been discussed and proposed is because the assumptions made to date assume that the cusmer revenue would not be sufficient to cover the cost. there is ongoing operating costs and the assumptions that we work with at least with dt consultant

there would be 30% take rate or 30% the customer base would subscribe that. could increase over time and that may be conservative o but that affects the revenues available to meet the debt service and cover the operating cost. there has been a lot of discussion of the digital divide and that is a piece of the project. some of the goals we were vitality ensuringonom that san francisco is ready for the future in terms of business interest and household interest as well and the use of the internet is likely to increase substantially the number of devices per household will be increase canning anincreasing ae

greater than we anticipate now in terms of bandwidth needs for houses and individual. also on the utility fee you asked about that and that was based on the total costs that we had obtained from the consultant in 2015, so the fee, the utility fe average if it were a public model is about $43 a month and utility fee if using the public/private partnership where more of the costs are shifted to the private partners was about $25 average. that could be tiered as you had mentioned so residents could pay less andmercial cou pay more. i wod be happy to respond to any question. is acces>>speaker: thank you, . have you had a chance to read

the ctc report that came out in 2017 and familiar with what is going on here? >>speaker: i have read exerts of theeport. >> fair enough. what are your thoughts around the cost estimates for this 3p project? >>speaker: i think i have great respect for ctc and wor they have done. we had a number of conversations with them when we were doing our work and i know they did much more detailed analysis of factors that i mentionedike l the actually state of utility poles and what it takes to access them and put more devices on them. i should add on that, i think it's about 45% of the network would actually be on poles and wired instead of underground wires, so significant piece of the network and if there is a

cost differential that they identified associated with the poles, it has substantial impact. >> so what i'm interested in is precedent, exposure, and risk. what are we dealing with here? >>speaker: i think it's been stated already today there is no city the size of san francisco in the u.s. at least that has constructed anything like this. there are other public/private networks around the country like north kansas city, missouri has but a much smaller city. chattanooga also but their population is about 177,000.

>> is there any chan of awst? >>speaker: i am sure there is many in a project like this, it's a big expensive capital project so those kinds of projects are fraught with risk. i think the most important thing if the public/private partnership is pursued the protections that are built into the project to ensure that the city doesn't end up with some unforeseen cost. there could be delay. the private partners could go bankrupt and not be able to complete the project and unforeseen expenses can pop up in any capital project. i am sure the attorneys working on the project swel as well as e project team would work through those issues.

>>speaker: in your opinion, what other questions should i be asking? what are the details that i should be paying attention to? what h i >>speaker: i think you have asked a lot of good qi w hp today are a lot of important topic. if this network is built, here is a risk, what if no one wanted to lease from it, i think that is highly unlikely personally, but how manyld t be and is there a lot of interest from from private sector in getting on this network and paying fees for it and accessing customers that way. >>speaker: are you familiar with the rfq and rfp process

process. >> familiar with rfq, our office is not involved with it. i know there are bidder who is have bid and they now have a short list and they are interviewing them but we are not involved in the rfp process process. i thought the rfq was extremely well constructed and identified many of the issues that were important and digital divide. another point i want to make is that the rfq was explains it abouexplicitutbothis. there is still going to be a cost and a lot of houses don't have the hardware, so subsidies are going to need to be provided for equipment, computer equipment for low-income households and training and the

rfq includes that and asks every responder to identify how they are going to meet the subsidy requirement. >>speaker: i don't have any other question. any fast l words. >> on the unit issue, the broadband utility council, this was a presidential appoint counsel during obama administration. there have been official federal statements and the former fcc director also believes that. i think that is not true with the current one. >> all right, i really appreciate your expertise and advice. thank you very much. i have a capital planning question for you kelly