MINUTES REGULAR MEETING Tuesday, May 13, 2008 1:30 P.M. City Hall, Room 400 1 Dr. Carlton B. Goodlett Place COMMISSIONERS The Honorable Ann Moller Caen President The Honorable E. Dennis Normandy Vice President The Honorable Richard Sklar The Honorable David Hochschild The Honorable F. X. Crowley

DEPARTMENTS AND ENTERPRISES Water Enterprise Wastewater Enterprise Power Enterprise Infrastructure Business Services External Affairs Gavin Newsom MAYOR   Ed Harrington GENERAL MANAGER Michael Housh SECRETARY

ORDER OF BUSINESS:

1. Call to Order: 1:40 P.M.

2. Roll Call: Present – President Ann Moller Caen, Commissioner Richard Sklar, Commissioner David Hochschild, Commissioner F.X. Crowley

Vice President E. Dennis Normandy was excused attendance.

3. Approval of Minutes

Moved by Commissioner Sklar, seconded by Commissioner Hochschild, to adopt the Minutes of the April 29, 2008, Regular Meeting; passed (Caen, Sklar, Hochschild and Crowley 4-0) unanimously.

4. Public Comments

Mr. Peter Vaernet asked why there have been delays in implementing the solar and wind power bond programs authorized by the voters’ approval of Proposition B and cited upcoming housing developments such as those planned for Park Merced as an excellent place for siting such a wind power facility.

Ms. Ruth Gravanis applauded the excellent work being done on the Lake Merced Planning Process, calling attention to the good work provided by David Behar and Suzanne Gautier in facilitating a truly collaborative and inclusive community process to plan for the future restoration and improvement of the Lake.

Mr. Peter Drekmeier, Tuolumne Trust, urged that the Commission encourage staff to continue to expand efforts to recycle water, and in response to a question by Commissioner Sklar indicated that his organization was actively considering the potential impacts on the Tuolumne of global warming and proposed to introduce to SFPUC staff a University of California student researcher who was studying this question.

Mr. Peter Brasher, Nature in the City, asked that the Commissioners include consideration of protection and active management of the City’s existing natural areas located on SFPUC properties including Lake Merced, Laguna Honda, various reservoir sites, and maintain a focus on sustaining the remaining natural areas while addressing invasive species management and encouraging biodiversity as is done in the Peninsula watershed areas. Mr. Brasher lauded the Lake Merced Planning process as a model of this kind of effort.

5. Communications

There was no discussion.

6. Commission Business

Commissioner Hochschild asked and President Caen directed that staff bring a report to the Commission at an upcoming meeting on the ongoing efforts to evaluate wind and geothermal energy resources with a view toward expanding the SFPUC’s options and availability of renewable energy resources.

In addition, Commissioner Hochschild asked about meetings between SFPUC staff and Mirant concerning potential option to retrofit that site that the Commission was not briefed about and asked that in future when such information has been made available as a matter of process that the Commission be kept apprised. Commissioner Sklar agreed as a matter of good process this should be done.

Commissioner Crowley expressed his appreciation for the information and insight into its operation provided by staff during a recent tour of the Moccasin and Hetch Hechy facilities upcountry in which he had participated.

7. Report of the General Manager

a) General Manager Ed Harrington recognized three retirees: Arlene Giordano (37 years), Steve Medbery (37 years) and John Lee (36 years).

General Manager Harrington then outlined the highlights of each of these honorees decades of leadership, and exemplary and outstanding public service to the Public Utilities Commission and the people of the City and County of San Francisco. Ms. Giordano and Mr. Medbery then joined the Commissioners on the dais for presentation of Certificates of Honor from the Commission and a commemorative photograph. President Caen noted their combined total of years of service represented 110 years of public service.

Mr. Harrington then noted that Lewis Harrison, Manager of Water Pollution Prevention had been recognized at the “Breathe California” Annual Clean Air Awards Luncheon with a Public Achievement Award for his leadership with the San Francisco Greasecycle Program.

b) Water System Improvement Program Director (WSIP) Ms. Julie Labonte

Ms. Labonte informed the Commissioners that the new programmatic contracting strategy presented at the last meeting had been documented and posted on the website to encourage, assist, and inform potential contractors concerning upcoming projects that may be of interest to them. Ms. Labonte next noted that the $7 million San Francisco Regional Construction Management Contract (CM) would be heard later in the agenda and reported a construction management contractor had been selected for the $9 million New Crystal Springs Bypass Tunnel CM contract. Ms. Labonte next reported that oral interviews for CM contract for the Bay Division Tunnel Construction Management Contract would be held later that afternoon, and a $25 Million Request for Proposals (RFP) for construction management services had been issued in April and will close in June. Ms. Labonte then reported that CM contracts for the Sunol and San Joaquin Regions would be advertised before the end the month.

Ms. Labonte next turned to ongoing projects reporting that the new Crystal Springs Bypass Tunnel environmental impact report would be before the Planning Commission on June 5th and, should it get certification, staff would ask the Commission for its authorization to go forward with the project shortly thereafter.

Ms. Labonte announced that due to extensive outreach efforts the SFPUC had identified eight pre-qualified tunneling contractors. Next, Ms. Labonte announced that the next morning would be the Third Annual Construction Contractor’s Breakfast and that a June 3rd outreach event cosponsored by the Basic Crafts Alliance would be held to inform and attract interest of large pipeline contractors.

In response to questions by Commissioner Sklar, Ms. Labonte described the progress in insuring continuation of the Program Management contract, that scope and size of the contracts had been determined and that everything was in place to go forward in a seamless manner.

c) Ms. Rosey Jencks presented a PowerPoint on Low Impact Development (LID) Update, (see attached presentation).

Ms. Jencks’ presentation in response to a request by Commissioner Hochschild concerning how to create incentives to encourage recycling of storm water and reduce flow into the wastewater system began with a general overview of how impervious surfaces impact storm water flow and various ways to address this issue. Ms. Jencks discussed how the development of the City changed its natural hydrology and what could be done through storm water management to restore or approximate the original natural hydrologic processes.

Ms. Jencks then described various ways this could be done, what laws and regulations governed the local low impact development program, and what benefits derived from using a storm water management program at various levels of investment to reduce run off. In response to a question by Commissioner Sklar concerning the need to focus effort on those areas that produced the larger results, Ms. Jencks suggested that an entire menu of various options needed to be made available in order to meet all of the expected regulatory goals the program might be called upon to address.

Ms. Jencks then outlined several ongoing plans under the “Better Streets” Plan, described the Storm Water Guide Book for developers, the Mayor’s “Green Building” Ordinance, and the role of the new Sewer System Master Plan, concluding with views of the ongoing projects like the Sunset Circle Swales. In answer to Commissioner Hochschild’s request for options to create incentives, Ms. Jencks next listed a number of ways to encourage storm water management and discussed challenges to successfully managing this resource including needed changes in building regulations. Ms. Jencks noted that rate based incentives were not easy to identify and discussed options, such as impervious surfaces fees, as employed by other cities that could provide a useful model to base our regulations and fees system to sustain San Francisco’s storm water management.

Ms. Jencks outlined several specific programs and projects to promote storm water management. Ms. Jencks showed model rainwater barrel as one of the options to both reduce flow and provide a usable source for irrigation. Ms. Jencks confirmed that the rain barrels were so configured to avoid mosquito or other pest access and demonstrated how the usable water could be easily drawn off, noting that instructions were being developed in cooperation with the Department of Public Health.

In answer to a follow-up question concerning who was responsible for various street side areas, Ms. Jencks reported that some areas were the responsibility of the adjoining property owners and some were the responsibility of the City. Responding to a comment by Commissioner Sklar concerning how useful rain barrels might be given our weather patterns, Ms. Jencks agreed each of these were small steps in responding to this larger problem reporting, for example, that the Department of Urban Forestry had identified such barrels as a water resource for watering street trees.

d) Assistant General Manager of Infrastructure Harlan Kelly did not have anything to report at this time.

Public Comment

Ms. Ruth Gravanis, Sustainable Watershed’s Alliance, advocated for development of a model that views storm water as a resource. Ms. Gravanis lauded Ms. Jencks’ work and called attention to several ongoing interdepartmental collaborative projects across the City, including several at the Port and on Treasure Island, and urged that this approach be included in the development of the Wastewater Master Plan.

In answer to a query by Commissioner Hochschild, Ms. Jencks agreed to provide details of the program’s budget.

CONSENT CALENDAR

8. All matters listed hereunder constitute a Consent Calendar, are considered to be routine by the 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 so requests, in which event the matter will be removed from the Consent Calendar and considered as a separate item.

Moved by Commissioner Sklar, seconded by Commissioner Crowley, to adopt items (a-b) listed under the Consent Calendar; passed (4-0 Caen, Sklar, Hochschild and Crowley) unanimously.

a) Approve the plans and specifications and award Wastewater Enterprise, Repair and Replacement (R&R) Program-funded Contract No. WW 427, Dartmouth/Gates/Murray Streets and Richland/Wilde Avenues Sewer Replacement, in the amount of $799,505, to the lowest, qualified, responsible and responsive bidder, Shaw Pipeline, Inc.      Resolution 08-0076

b) Approve the plans and specifications and award Wastewater Enterprise, Repair and Replacement (R&R) Program-funded Contract No. WW 429, Claremont Blvd./Edna St./Naglee and Oneida Aves. Sewer Replacement, in the amount of $493,859, to the lowest, qualified, responsible and responsive bidder, Harty Pipelines.     Resolution No. 08-0077

REGULAR BUSINESS

9. Approve and authorize the General Manager of the San Francisco Public Utilities Commission (SFPUC) to enter into exclusive negotiations with Recurrent Energy, or in the event negotiations are not successful or City requirements are not satisfied, enter into exclusive negotiations with the next highest ranked proposer to finance, construct, operate, and maintain two (2) solar photovoltaic (PV) power plants on sites leased from the City and County of San Francisco (City), and authorize the General Manager seek the Board of Supervisors approval for a 25 year agreement.

Ms. Hale presented an overview of the background of the SFPUC’s first power purchase agreement model projects for solar installations to be developed at Pier 96 on Port property and at the Sunset Reservoir. In response to questions by Commissioner Sklar concerning the per kilowatt hour costs anticipated to be 23.65 cents per hour which is lower that the 30 to 35 cents range for our own facilities.

Commissioner Sklar suggested as this was a new venture for the SFPUC that this matter be brought back to the Commission after negotiation and before going to the Board. Ms. Hale discussed the qualifications of Recurrent Energy in response to a question from a Commissioner.

Deputy City Attorney Noreen Ambrose proposed the following revision of the resolved clause of the proposed resolution in response to Commissioner Sklar’s request to amend the resolution to read:

RESOLVED, that this Commission hereby approves the selection of Recurrent Energy; awards Agreement No. CS-921, Power Purchase & Site Lease Agreement for Solar Photovoltaic Power Production, authorizes the General Manager to negotiate leases and power purchase agreements with Recurrent Energy for an amount not to exceed $2,000,000 per year over the life of the 25-year contract with an escalation rate not to exceed 3% per year, or, in the event negotiations are not successful or City requirements are not satisfied, to negotiate similar agreements with the next highest ranked proposer; and present the negotiated agreement to the Commission for approval and authorization to seek Board of Supervisors approval for a 25 year agreement.

Moved by Commissioner Sklar, seconded by Commissioner Crowley, to adopt the following resolution as amended; passed (4-0 Caen, Sklar, Hochschild and Crowley) unanimously.

This amendment was moved without objection by Commissioner Crowley, seconded by Commissioner Sklar, then moving to adopt the following resolution as amended; passed (4-0) unanimously. (Caen, Crowley, Hochschild, Sklar)
Resolution No. 08-0079

PROFESSIONAL SERVICE CONTRACTS

10. Approve the selection of MWH Americas, Inc.; award Water System Improvement Program-funded Agreement No. CS-826, Conceptual Engineering Services, Groundwater Conjunctive Use Project, to assist the SFPUC with the alternatives analysis and conceptual engineering of the South Westside Groundwater Basin Conjunctive Use Project; and authorize the General Manager of the San Francisco Public Utilities Commission to negotiate and execute a professional services agreement with MWH Americas, Inc., for an amount not to exceed $580,000, and with a duration of 548 consecutive calendar days, or, in the event negotiations are not successful or City requirements are not satisfied, to re-advertise the request for proposals.

The Commissioner Secretary called attention to the substitution of an “amendment of the whole” of this item to more accurately reflect what staff had proposed.

Moved by Commissioner Sklar, seconded by Commissioner Crowley, to accept the substitute amendment of the whole and adopt the resolution; passed (4-0 Caen, Sklar, Hochschild and Crowley) unanimously.     Resolution No. 08-0080


11. Discussion and possible action to approve the selection of ARA Engineering; award Water System Improvement Program-funded Agreement No. CS-910, San Francisco Region/Local Construction Management Services for the Water System Improvement Program, to provide construction support; and authorize the General Manager of the San Francisco Public Utilities Commission to negotiate and execute a professional services agreement with ARA Engineering for an amount not to exceed $7,000,000, and with a duration of 60 months, or, in the event negotiations are not successful or City requirements are not satisfied, to negotiate and execute a professional services agreement with the next highest ranked proposer. (Continued from the Regular Meeting of April 22, 2008)

Assistant General Manager for Infrastructure Harlan Kelly presented an extensive and detailed overview of the process that had brought this item before the Commission for their consideration and approval. Mr. Kelly outlined specifics of the request for proposal, the firms involved in competition for this contract, and the rationale for the scoring that led to the proposed award of the contract to ARA Engineering.

Mr. Kelly then discussed the protests against this award and described how they were responded to and the lessons learned through this process. In response to questions by Commissioner Sklar, Mr. Kelly described how the scoring was done. Mr. Kelly then described the process and the various sub factors that determined points awarded which, in turn, determine which firm ranked first and was to be awarded the contract.

Mr. Kelly then discussed details of both of the two protests against the scoring and the process that ranked the competitors for this contract. Mr. Kelly next noted specific deficiencies that had reduced the point score of the protesting firms. Mr. Kelly noted that these particular scoring points had been specifically awarded on a pass/fail basis in this situation.

In answer to questions by Commissioner Sklar, Contract Manager Ivy Fine confirmed that the release of liability was a required standard in contracts but that in this contract, for the first time, compliance on this issue was structured on a pass/fail basis instead of the previously typically used sliding scale of points.

President Caen observed that the references issue would have better been done as a separate process. Commissioner Sklar agreed, noting as the reference process was inevitably cumbersome that process should be done later in any evaluation process and then be limited to the two highest scoring proposers before going to oral interviews. Commissioner Sklar recommended that this point needed to be boldly stated in every contract so that everyone knows failure to do so constitutes a fatal error. Mr. Kelly then explained that, in the future, such steps would be taken to avoid any repetition of any possible lack of clarity on this point.

Public Comment

Mr. Ismael Pugeda, representing one of the protesting firms expressed his dismay at the decision that staff had made as the 2nd ranked firm and asked that the Commissioners reconsider the facts of this case and as there were deficiencies in how the reference criteria were handled, how the release of liability form was to be done as it was described, noting that had they realized what was required they would have immediately remedied the deficient signature. Mr. Pugeda pointed to changed language in recent similar SFPUC requests for proposals that had not been done on this contract.

Ms. Myrta Xenaki, representing Mr. Pugeda’s partner, expressed dismay that the lack of clarity concerning who was required to sign which documents in a manner that was now clearly defined unlike in the request for proposals that they had responded to and that they had suffering as guinea pigs due to this lack of clarity.

Commissioner Sklar noted that he experienced discomfort with the apparent lack of specificity in explicitly stating exactly what was required, but approved that this situation had led to use of different language, in the future making the requirement crystal clear. Mr. Harrington then summarized the points at issue noting that other participating firms had followed the process as required and that a winner had been declared. In answer to follow-up questions by Commissioner Sklar and President Caen, Mr. Harrington noted that this was an occasion where a lesson was learned and greater specificity would definitely be employed in future. Deputy City Attorney Noreen Ambrose explained the legal point involved with the language in the Request for Proposals (RFP). Ms. Fine further explained actual deficiencies in the completeness of firms’ responses, in answer to questions on this point by President Caen and Commissioner Sklar. Mr. Harrington agreed that there could have been greater clarity and that staff would make sure that it was not done in this way again. Commissioner Sklar noted that this wasn’t a perfect situation but that the weight of the facts supported the staff recommendation. These sentiments were echoed by Commissioner Crowley who also voiced his strong sentiment that these requirements be spelled out very clearly in the future to avoid any more situations like this.

Moved by Commissioner Crowley, seconded by Commissioner Sklar to adopt the following resolution; passed (4-0 Caen, Sklar, Hochschild and Crowley) unanimously.     Resolution No. 08-0081


12. Discussion and possible action to approve the selection of SF Community Power (SF Power); award Professional Services Agreement No. CS-929, Marketing, Outreach, and Training Services, SFPUC High-Efficiency Toilet (HET) Low-Income Direct Install Program; and authorize the General Manager of the San Francisco Public Utilities Commission to negotiate and execute a professional services agreement with SF Power for an amount not to exceed $308,540, and with a duration of 42 months, or, in the event negotiations are not successful or City requirements are not satisfied, to negotiate and execute a professional services agreement with the next highest ranked proposer.

In response to a question by President Caen, Mr. Carlin noted that this proposal constituted use of the $900,000 in grant funds previously approved by the Commission and that the direct install portion of this program would come back to the Commission for action in a couple of months.

Moved by Commissioner Sklar, seconded by Commissioner Crowley, to adopt the following resolution; passed (4-0 Caen, Sklar, Hochschild and Crowley) unanimously.     Resolution No. 08-0082

CONSTRUCTION CONTRACTS

13. Discussion and possible action to accept work performed for Water System Improvement Program funded Contract No. WD-2468 Summit Pump Station Upgrade, approve Modification No. 5 (Final), for a time extension of 59 consecutive calendar days for a total contract amount of $4,306,486.80 and a total contract duration of 499 consecutive calendar days; and authorize final payment, in the amount of $75,716.97, and release of retention for $30,408.51 to the contractor, Power Engineering Contractors, Inc.

In response to questions by Commissioner Sklar, Ms. Labonte reported this to be a straightforward close out and that the reported change orders were the results of changed conditions as were frequently found in such situations.

Moved by Commissioner Sklar, seconded by Commissioner Crowley, to adopt the following resolution; passed (4-0 Caen, Sklar, Hochschild and Crowley) unanimously.     Resolution No. 08-0083


CLOSED SESSION

14. Public comments on matters to be discussed in Closed Session.

There were no public comments offered on the closed session items.

15. Motion on whether to assert the attorney-client privilege regarding the matters listed below as Conference with Legal Counsel.

Moved by Commissioner Sklar, seconded by Commissioner Crowley, to assert the attorney-client privilege; passed
(4-0) unanimously.

The Commission went into Closed Session at 3:20P.M.

(Agenda items 20 through 25 were continued from the regular meeting of April 22, 2008.)

Present were President Caen, Commissioner Sklar, Commissioner Hochschild, Commissioner Crowley, General Manager Ed Harrington, SFPUC Legal Counsel Noreen Ambrose, Assistant General Manager of Water Michael Carlin, Assistant General Manager of Infrastructure Harlan Kelly, Jon Loiacono, PUC Legal Counsel Teresa Tan, Deputy City Attorney David Norman, Manager of Special Projects Sharyn Saslafsky, and Commission Secretary Michael Housh.

16. Threat to Public Services or Facilities – Pursuant to California Government Code Section 54957 and San Francisco Administrative Code Section 67.10(a). (Suhr)

Consultation with: Agency Chief of Security concerning security of SFPUC Water and Power Systems.

17. Conference with Legal Counsel – Pursuant to California Government Code Section 54956.9 (b) and (c) and San Francisco Administrative Code Section 67.10 (d) (2) (Ambrose)

Anticipated Litigation: As Defendant.

18. Conference with Legal Counsel – Pursuant to California Government Code Section 54956.9 (b) and (c) and San Francisco Administrative Code Section 67.10 (d) (2). (Tan)

Resolution No. 08-0083:
Schram Construction, Inc. v. City and County of San Francisco, San Francisco Superior Court Case No. CGC-06-453479, filed June 23, 2006.

19. Conference with Legal Counsel –Existing Litigation:
City and County of San Francisco v. Mitchell Engineering, Inc, et al, San Francisco Superior Court Case No. CGC-07-465520, filed July 26, 2007. (Ambrose)

20. Conference with Legal Counsel –Existing Litigation:
Mitchell Engineering, v. City and County of San Francisco, et al, and related cross-actions Alameda County Superior Court Case No. RG07339056, filed November 9, 2007. (Ambrose)

21. Conference with Legal Counsel –Existing Litigation:
Mitchell Engineering v. City and County of San Francisco, et al and City and County of San Francisco, v. Mitchell Engineering, et al, San Francisco Superior Court Case No. CGC-07-468361 filed October 18, 2007. (Ambrose)

22. Conference with Legal Counsel -Existing Litigation:
City and County of San Francisco v. Mitchell Engineering, Inc., et al, San Francisco Superior Court Case No. CGC-07-469176 filed November 14, 2007. (Ambrose)

23. Conference with Legal Counsel – Existing Litigation:
City and County of San Francisco v. Mitchell Engineering, Inc., et al, and related-cross-actions. San Francisco Superior Court Case No. CGC-07-465524 filed July 26, 2007. (Ambrose)

24. Conference with Legal Counsel – Existing Litigation:
City and County of San Francisco v. Mitchell Engineering, Inc., et al, and Mitchell Engineering v. City and County of San Francisco, et al, San Francisco Superior Court Case No. CGC-07-465522 filed July 26, 2007. (Ambrose)

25. Conference with Legal Counsel - Pursuant to California Government Code Section 54956.9(a) and San Francisco Administrative Code Section 67.10(d) (Rothschild)

Resolution No. 08-0084:
E.B. Parkell, City Attorney File 08-02289, Filed February 26, 2008

26. Conference with Legal Counsel - Pursuant to California Government Code Section 54956.9(a) and San Francisco Administrative Code Section 67.10(d) (Rothschild)

Resolution No. 08-0085:
Petco Properties I, City Attorney File No. 08-02102 Filed February 13, 2008

27. Conference with Legal Counsel - Pursuant to California Government Code Section 54956.9(a) and San Francisco Administrative Code Section 67.10(d) (Rothschild)

Resolution No. 08-0086:
San Francisco Unified School District (sewer repair), City Attorney File No. 08-02929, Filed April 23, 2008

The Public Utilities Commission reconvened at 4:10 P.M.

28. Following Closed Session, President Caen announced the actions taken during Closed Session as Items 16, and 17 were taken off calendar, Items 19 through 25 were discussed and Items 18, 25, 26, and 27 were settled.

29. Motion regarding whether to disclose the discussions during Closed Session.

Moved by Commissioner Sklar, seconded by Commissioner Hochschild, not to disclose the discussions during Closed Session; passed (4-0) unanimously.

There being no further business to discuss, the meeting was adjourned at 4:16 P.M.

Michael Housh
Secretary