specialty contractors and ensuring that those contractors are working with a subset of folks that they've identified and trained up really sort of taught and shown the effort of bidding some of the effort that they would need around paperwork and tracking in order to successfully deliver the project. and what they did in that case was they sort of identified specific scopes of work that they could separate out that would really allow contractors to sort of like be on their own two feet. but they also did it within the context of a like a trade contractor relationship and then the workers was really just about working with all of the different partners within the bayview and in the city, right? there's office economic workforce development, there's city build, there's the unions, there's the puc, there's the cbos that help and identify folks that are available and then ensuring that those folks in coordination with the unions are being then dispatched to the project

commissioner rc thanks president stacey and and thanks ben when the hello and to the general manager for for bringing this presentation thanks especially because i came in about five minutes late and for your willingness potentially even to hold for for for just a little bit for for me to join because this is of particular interest to myself and i think because it's really impressive to see what you and the team have done with with these policies over the last ten years at this point and in change for folks that may not be aware and in fact jim robinson and i were having this conversation during our tour of mountain town the last week that a lot of the the origin of these policies ben ben knows and folks like jim or to carney because he was there this was really having these

policies was part of a conversation i mean going back decades but really when the work of the agency was beginning to shift from the kind of home stretch to the water system improvement project and looking into the city around the sewer system improvement project really trying to align the opportunities that these important investments were going to make in terms of not just addressing the needs around the digesters in the wastewater treatment plan and the city beneath the city and in the upgrades around the sewer system. but the concentration of a lot of these jobs in contract know opportunities in the southeast you're really seeing a lot of deliberate work by the staff of this agency working with community partners, working with building trade unions, working with contractors both large and small other government agencies. i mean it's really a success story. i'm hoping that we are really able to to tell. i imagine your your your your

kind of expertise and that of the agency is set by other water agencies. how you've been able to do more than just make these important investments we create these economic opportunities the multiplier effect the over $100 million of additional wages into the hands of local workers has a multiplier effect especially at a time like this that helps the local businesses, helps families. the fact is having been one of the advocates that was there back in the day, we found that without a mandatory local hiring policy you you don't see the outcomes like what we saw there with respect to 30 to 40% local participation the ranging of apprentices from 50 to 60% plus there what you actually saw without a local hiring policy before the city adopted a mandatory local hiring framework at the end of 2010 to

get things going in 2011 was more like 20% on average and as much as no more than 3,536% local apprentices. so you really see what the difference means in terms of delivering those opportunities to local workers and again the fact that we have a project labor agreement is really, really important because that brings everyone to the table. we've got our building trade partners the puc, the the community partners, all the contractors. i did want to just say to commissioner leave aroney one thing that ben's absolutely right and again in a past life are working with city bill director ken nym i was the city's director workforce development for five and a half years and the last most recent report of the six different agencies that put out contract subject to the city is local hire ordinance. it also now includes affordable housing developments and even private sector developments that are on city land and those

as well as those who opt into this framework as a way to deliver guaranteed job opportunities that communities out of 4.2 million hours covered in the most recent report issued in 2024 which covered calendar year 2020 34. 2,000,000 hours total 1.5 were puc projects and while the city averaged 33 local 33% local participation across all those projects the puc averaged 41% on our projects and out of 49% local apprentices citywide the puc averaged 60%. so the agency really continues to lead the way in that regard and i think what we're seeing too is the same holds true with respect to local business enterprise the fact that you're working with wendy in the in the in the h.r. team to also create opportunities for our permanent positions at the agency is even more special and thoughtful. >> i just am really excited to

hear all this and see all the great progress. the only thing i would maybe ask is as the age as a commissions ratepayer advocate just want to say something i've said before which is i feel that this success in investing our resources the puc fun fact the puc is the largest investor in the city build program over at the office of economic and workforce development apart from all the other great programs that you help administer, i think these are ratepayer advocacy tools i think these are things to point back when we talk about rates. these are ways to talk about additive benefits of entrusting your rates and your services with us because we're creating these opportunities that have positive impact for the rate payers and particularly business owners who are looking for opportunities with us. the only question i have is just if if any of us should hear from folks looking for work or local business enterprises looking to contract

out with the agency or looking to participate in our different programs that we have to support. how how are those services marketed that we could point to either job seekers or local contractors? >> where would they point them to for these opportunities? sure that's an excellent question. >> thank you for asking that question. so there's a couple of different resources that we have like printed or online always though for small businesses and i'll be is there's the contract marketing division obviously it's the agency that runs that program and i would always encourage people to do that. we also have the contractors assistance center right which is expressly called out in our presentation and i would encourage people to go down and meet with the staff there for small business for offsite ,for workers generally we refer folks to the city build one stops as a way of finding and sort of clearing them into and making sure that they get like their sort of assessed for the resources that they need and then potentially either submitted to like city build to be a pre apprentice or an entry

into the unions and i can if if you allow me i will follow up with like the printed material we have that have those phone numbers and websites and i'll share that for the whole commission. so if you get questions you have those resources. great, thanks. thank you commissioners and thank you to all staff. this is really important work and it's not easy work all the time either. should we take public comment on these topics? >> remote callers please raise your hand if you wish to provide comment on item five a are there any members of the public present who wish to comment on this item? >> seeing none. moderator are there any callers who have their hand raised? >> millionaire there are no callers who wish to be recognized. thank you. >> thank you general manager. item five b is fiscal year 2024 2025 second quarter budget status report and adjoining will be presenting.

>> all right and if you could bring this slides up. good afternoon commissioners. it's good to see you again. we met two weeks ago. this is i'm now into my second month here at the sfa so i am taking over the quarterly budget status reports and so this is looking back at q2. this is based on actuals from december. so these numbers will continue to shift throughout the year. >> all right. so there's going to be a lot of ups and downs and numbers in these slides ahead. the main takeaway here is that despite these ups and downs they largely balance out. >> we are on track and importantly we're continuing to meet our financial targets i should say our financial policy targets so so first what's happening in the water division overall on the revenue side, this represents an improvement from q1 but we are still seeing that retail volumes are down

compared to budget and that is the primary cause of the revenue shortfall here. >> this is offset on the usage side by lower non personnel and debt service costs and based on the dry ish january we had some of that sales volume retail sales may improve in the next month. one other note i'll make is that the water enterprise is running over budget specifically in the overtime line and that requires board of supervisors approval to overspend and over time we have a way to address that by moving other funds around. but we may be back to you in the next month or so to talk about that. moving on to wastewater, it's similar picture to water overall revenues are down compared to budget just due to lower volumes. some certain stormwater only parcels are still not collecting because they have no service agreements yet and this is offset by a handful of things including lower labor and debt service costs.

moving on to power the revenues here are lower than they were in q1 and that's also because of lower volumes in retail sales. this is offset by some higher wholesale sales. >> and then on the users side you'll see some very large savings and that's both because of lower power purchase costs also from higher generation and a few other changes in the budget. and then finally on clean power as jeff retail sales here are also lower than budget and that's largely because of the rates were set lower than budget and also there has been lower demand like we're seeing in some of the other enterprises. this is offset by slightly higher wholesale sales revenues and then savings from power purchase costs and then this is just a snapshot of our key financial policy targets and so we are meeting all those targets which just means that overall we're in good financial

health despite some of the ups and downs you see. and with that i can answer any questions. thank you commissioner our say just want to say thank you to ed durning for the report i had one quick question was out of curiosity with respect to the clean power srf general reserve plan to go ahead and spent what what then happens to that $40.5 million general reserve that we plan to go unspent? i believe that will just then carry over to the next year to save as a reserve. is that right, laura it just full stop savings account essentially we planned so we budgeted that as a deposit into our fund balance so it will go unspent and just deposit into our fund balance at year end and that as part of our long term plan to meet reserve policy targets in claim paris

for fund balance laura bush deputy cfo thank you. thank you commissioner leave aroney thank you. budgets are budgets we all try to start off and try to make them all match and make it work. >> do you see any trends coming on and going forward with lower retail sales and the lower energy that or wastewater that we see here? is that something that you might or do we think that's going to be corrected quarter two, 3 or 4? >> sure. so compared to budget there are a few assumptions that are made in budget planning. one is sales volume based on population growth and so our assumptions in the past few years and going forward is pretty conservative assumption in terms of population growth and the number of people buying

our water and then it's just usage based on a bunch of different factors including the weather which is very hard to predict. we have a very smart financial planning team that does their best but that's going to vary to budget throughout the year. >> we can probably give you a more sophisticated answer than that but that's what i've seen so far. >> thank you. that sophisticated answer would not be needed. >> thank you. thank you. i had a question about the water over time i. i assume that's because we are we're still quite short staffed in the water enterprise among other enterprises. >> is that correct? i think a number of different things. one, yes, some staffing challenges although i understand that water has been doing better on hiring than they have in years past so maybe less short staffed than they have been and then it's you know, work and maintenance

and what happens in weather events sometimes also i'm learning what happens in dry when there's periods of dry weather they get out and they do more maintenance upcountry because they have the ability to. so it's a number of different factors in addition to staffing . i see maybe mr. richie has something to yeah, he can probably add a lot more detail and clarity that steve ritchie assistant general manager for water one particular aspect this year is that we have a roughly 100 day shutdown of the hatch system so we are running excuse me we're running our water plant in the bay area here the two filtration plants to make up for the supply so they're running 24 seven all that time and so we're building up a lot of overtime as a result of that particular operational aspect. >> so it's kind of a one time

event because of that. >> yeah, that's that's one particular thing we're still looking into other possibilities but we know for sure that we're spending a lot of money on overtime right there. >> yeah. okay. thank you so much. >> should we take public comment remote callers please raise your hand if you wish to provide comment on item five b are there any members of the public present who wish to comment on this item? >> seeing none. moderator are there any college who have their hand raised? >> so then there are there are no callers with their hands raised. >> thank you. thank you. >> general manager the next item item five c is an introduction to capital finance in bonds presented by nicholai sklaroff good.

good afternoon commissioners nicholas sklaroff capital finance director one of the more awesome powers you have as a commission is your ability to enter into bonds both to create equity and to manage the impact of our capital costs on our rate payers. thank you. go to our slides please. over the coming weeks we have two transactions that we'll be bringing to you at your march 11th meeting. we'll be bringing a refinance hansing for our water enterprise and at your april 9th meeting we'll be bringing another transaction which will include new money and some more refinancing and we recognize that for several of you this will be your first time as commissioners approving bond transactions. and so today we want to provide you with a brief overview of

bonds. now when the state's commission of that helps to educate issuers provides education on the fundamentals of bonds, they do it over three days. so i can't possibly give you everything you need to know in ten minutes here but i do want to provide you with an overview . we have some resources in our deck. i particularly highlight the on the last page the california debt and investment advisory commission provides valuable tools for commissioners and elected officials to provide you with some of the tools that you need for understanding bonds and your obligations. but if i can turn to the next page please will discuss how our bonds are authorized. thank you.

>> we'll discuss. >> there we go. how our bonds are authorized, our debt program and then how we go about issuing bonds. so let me begin with talking about our debt program overall i think sometimes as we think about bonds we associate them with credit cards and i'd like to suggest that's not the correct frame for you. >> our bonds are an important tool that this commission uses both to create equity as well as to manage the impact on our rate payers first in terms of equity, the facilities that steve robinson and the infrastructure team are building today will be used by businesses by residents for the next 20, 30, 40 years. by using bonds we allow those

users some of which haven't moved to the city yet haven't even been formed yet as businesses over time will all have an opportunity to contribute to paying for those facilities. that's how we create intergenerational equity. we also use our bonds to manage the impact of these costs. some of our facilities are billion dollar projects and we wouldn't want to have rate payers today bear those full costs. even more importantly the tools that we use to borrow include advantaged financing. you as commissioners have the opportunity to approve tax exempt bonds, tax exempt bonds are bonds where the investors typically don't have to pay federal income tax on those and as a result they accept the lower interest costs for that

debt. so you get a much lower cost than for example, corporate borrowers. we also take advantage of low interest loans from the federal government including the with your loans that you've approved in the past and also our state revolving fund loans. so we are able to borrow at much lower costs. >> the third piece the second piece of this is that we are repaying over time most of our debt is repaid over 35 years an important concept in our world and for our capital finance team and the financial partners we work with is the time value of money. a dollar today is worth much more than a dollar tomorrow because of inflation and certainly much more than a dollar in 30 years. that is why we pay interest is

because we're paying back over time with dollars that have less purchasing power in an era where recently inflation has been seven 5% you can understand that are interest costs of 3 to 5% are actually quite low. finally an important concept is that by borrowing today we're able to allow steven and the infrastructure team to go ahead and build those projects and not wait for costs to go up especially here in the bay area where construction costs are going up more than 9% a year. so again our borrowing while we we know we've had lots of phone calls and speakers talking about our debt, it is a very important tool that you have

for managing our rates. our debt authority is provided by the board of supervisors. it really comes from proposition a and c that provide us with the opportunity to issue debt without voter approval based on first having that authorization from the board of supervisors as you saw at your last meeting on february 11th as part of the budget process we saw a increase in the authorization for the water enterprise for example. we have to provide certain certificates as part of that a an engineering certificate, a financial certificate and an environmental certificate. but that's the basis for our authorization and then we come back to you as a commission each time we do want to borrow.

>> it's an important distinction between the way we manage our debt program here at the s.f. p c and perhaps what you may have witnessed from other bodies where typically a project may be approved and finance at the same time by the time we are approving bonds you've you've been spending those funds based on your budget approvals and we're trying to issue our debt as late as possible to again mitigate the the need for interest costs. so that all comes from that comprehensive planning process that you heard about at your last meeting and and that's how we plan our debt. so today we have about $11 billion of debt outstanding as you can see on this chart, our debt is particularly

concentrated with our water enterprise where we just completed the with the program . our wastewater enterprise is catching up quickly with sister and we have a smaller amount of debt outstanding for our power enterprise. this chart provides you with the details of the different types of debt that we use. this one also includes the undrawn capacity we have from certain loans so we haven't yet drawn upon. so we have about $10 billion of debt that will be issuing over the next ten years. >> again, the debt the debt that will be coming to you with first will be for the water enterprise. it will be a refinancing which is not part of this new debt that is shown in this graph and then the new debt will be coming to you in in april.

one of the things that we will be presenting to each time we come to you with a debt transaction are our bond ratings under our city charter the sfp c has an obligation to set rate payer rates sufficiently high to maintain high ratings by maintaining high ratings we are able to borrow at low costs and so each time we do borrow we we go to the rating agencies. in fact our general manager or our cfo, our atms have all just completed presentations to both moody's investors service and s&p global ratings as part of the transaction that we will be presenting to you on march 11th that that will be an important step for us to as a p c enjoys high ratings today but

we there are pressures out there as you know, the city has recently lost its triple-a ratings and had downgrades. we are seeing concern about the water sector generally but we we have just completed very good presentations and will be coming back to you with that. >> the last thing i want to leave you with is that one of the most important documents that we'll be bringing to you is the official statement. there'll be a number of documents but the official statement will be the offering document that we present to investors. this will summarize the transaction will provide a lot of information about the sfp c and you as commissioners will have an obligation to ensure that staff and and you are comfortable that it doesn't contain material misstatements

or material omissions. and so again this is intended to be a brief introduction. again ten minutes is very very short for an introduction and to such a complex topic we will provide you more specific information about the bonds on march 11th. but with that i'm happy to answer any questions you have as you think about this topic. thank you so much. it's a it's a really important component of all that we do here and how we approach rates and keeping costs down. >> and i also really appreciate how much i've learned in the last two years of being on the commission with the matters that have come before us in the education that you and your team have provided and this is another very helpful piece of that. so thank you commissioners questions, comments.

>> commissioner levy aroney thank you very much very in the ten minutes very enlightening. >> going forward, you know bonds eventually have to be paid and you know usually early as you mentioned it's a lot is based on our future projections of businesses residents moving in are you confident thus far with the predict with the predictions that we're making going forward with those, you know, businesses moving into san francisco or residents and yes, for sure. i think one of the things that i would hope gives you comfort as a commissioner is that these bond transactions are the outcome of an intensive planning process. the ten year financial plan

that you proved at your last meeting lays the the map forward for how we would repay debt and not only that but how we would maintain debt service coverage. in other words, we don't simply set our rates in order to meet debt service but we maintain coverage of that debt service for the investors that coverage is then able to be used for for projects after that debt service is paid. >> thank you commissioners any other questions now i'll take public comment please. >> remote callers please raise your hand if you wish to provide comment on item five see are there any members of the public present who wish to comment on this item? seeing none. moderator are there any callers who have their hand raised this linear? >> there are no callers with their hands, right?