Public Utilities Revenue Bond Oversight Committee

MINUTES

Monday, December 5, 2005
9:30 a.m. – 12:00 p.m.
1155 Market Street (between 7 & 8th Streets) 4th Floor
San Francisco, CA 94103

1. Call To Order and Roll Call

Chair Patrick Sweetland called the meeting to order at 9:35 a.m. and roll call was taken. RBOC members present were Patrick Sweetland, Aimee Brown, Severin Campbell and David Sutter. Lisbet Sunshine and Brian Browne arrived at 9:45 a.m.

Mr. Sweetland asked that agenda Item 5. be taken out of order to accommodate Ms. Bogert’s schedule. There were no objections.

5. SFPUC Staff Presentation on Owner Controlled Insurance Program (OCIP). This item was continued from October 3, 2005.

Ms. Bogert provided an overview of SFPUC’s Owner Controlled Insurance Program (OCIP). OCIP is a program in which the project owner contracts with an insurance broker to obtain a suite of project specific insurance policies that will insure some or all of the project participants. The two main benefits of this program are reduced cost, or improved coverage due to the enhanced buying power, and the improved coordination and management of loss control, safety, and claim resolution.

Ms. Bogert stated that the OCIP program was established in 2001 when AON Risk Services was selected through an RFP process. A 48-month pilot program began February 2002 and will expire February 2006. A consultant has been hired to analyze the cost effectiveness and administration of the program and will release a report in January 2006. At that time, SFPUC will determine how to proceed with the OCIP program. The report may be made available to committee members, for their review.

2. Report from the Chair

a. Reappointments to the RBOC - Mr. Sweetland stated that the Mayor reappointed Lizbet Sunshine to the committee, and BAWUA reappointed him. The Rules Committee of the Board of Supervisors will hold a hearing on the reappointment of David Sutter and other applicants on December 7. Mr. Sweetland stated the Controller has not yet made an appointment to fill Colleen Adams vacated seat.

b. Wastewater Working Group - The wastewater working sub-committee group, Patrick Sweetland, David Sutter, and Lisbet Sunshine, held their first meeting on October 31st. He stated that the PUC has established a 5-year interim Wastewater CIP. The PUC replaced a cash funded reserve fund with a surety bond that freed up $32 million to fund FY2005-06 capital projects related to this interim CIP. Tom Franza, Assistant General Manager for the Wastewater Enterprise, reviewed the 5-year plan with the working group. The group plans to meet again in February 2006 to follow-up on the status and progress of the interim plan.

c. Update on the Audit RFP - Mr. Sweetland reported that the RFP was posted on November 30th, and the deadline for any questions from potential bidders is December 12th. The proposals are due on January 4, 2006, and interviews will be conducted the following week. The Controller’s office anticipates contract start date of February 1, 2006. Mr. Sweetland stated that the full RBOC would be meeting the end of January for concurrence of the contract selection before contract start date. The RFP selection panel will consist of two members from the RBOC, one representative from the Controller’s office, and two PUC representatives. Mr. Sweetland and Ms. Brown will represent the RBOC on the RFP selection panel. Mr. Sweetland asked for comments or feedback from the committee.

Mr. Browne stated he wanted to state his feelings about the RFP process for the record. He recalled that the working group voted to bring up for discussion purposes only to the total committee the progress made by the working group sub-committee and a vote approving the RFP was taken after he left early from the October 3rd RBOC meeting. He felt that the process was subverted and he requested that the City Attorney review of the matter.

Mr. Sweetland suggested that Mr. Browne review the minutes from the meeting and asked Aimee Brown what her recollection of the events that lead up to the vote were. Ms. Brown’s recollections of the events leading up to the vote did not indicate that the process was subverted or changed in any way. Mr. Sutter also stated that he felt the proper process had been followed in this area.

Mr. Browne said that the above statements were right up to a point. He added, “We did not agree at the meeting that we were authorized to do that till we have an RFP. That was an exceptional format, in fact, at the last meeting we discussed the fact that we were looking at expenditures through the 9th month of 2005, but we knew the RFP should look at expenditures through the twelfth month. I raised that issue. We did not as a subcommittee vote to approve this RFP. I didn’t vote for it. If Ms. Brown voted for it and we have different recollection, those things happen all the time, and I accept that. I’m just adding a point of view – yes we did go back – but we did not agree at the next meeting it would be approved, we had to have another sub-committee meeting I believe.”

Mr. Sweetland stated that he appreciated the differing viewpoints and all the hard work that has been done thus far, but at this point it was best to move forward with the process.

d. Annual Report - The RBOC Annual Report is due by January 30, 2006, and the draft will be reviewed at the January 9th RBOC meeting. Chair, Mr. Sweetland, and Vice Chair Lisbet Sunshine will draft the annual report. Mr. Sweetland asked the committee members for their input regarding what should be included in the report. The following suggestions were made:

• Progress regarding contracting RFP process
  
• Outcome of committee reappointment process
  
• Update on the commercial paper program
  
• Review of RBOC’s oversight of the Wastewater Enterprise interim CIP

Committee members that will be contributing information to be included in the annual report should forward that to the Chair and Vice Chair by December 24th. The draft will be issued to committee members to review prior to the January 9, 2006 RBOC meeting.

e. Meetings to be held in 2006 - A bi-monthly RBOC meeting schedule for the first Monday of the month was suggested and meetings for calendar year 2006 will be as follows: 1/09/06 08/07/06 1/30/06 10/02/06 3/06/06 12/04/06 5/01/06

3. Update and discussion on WSIP

a. Commission action - Scott MacDonald reported that the Commission adopted a new $4.3 billion Water System Improvement Program (WSIP) at the November 29, 2005 Commission meeting with some changes. Those changes are currently being incorporated. There was positive consensus among stakeholders to the WSIP, as adopted.

Mr. Browne questioned an editorial article in the Examiner written about the Tuolumne River by Jenna Olson of the Tuolumne River Trust. who had addressed the committee at a previous RBOC meeting. He asked why there is opposition to any additional outtakes from the Tuolumne River. Mr. MacDonald responded that he would look into it, but at this time there is no anticipated change by the PUC to adjust the water rights.

Ms. Sunshine asked how the revised WSIP would impact the PEIR. Mr. MacDonald answered that it will not delay the PEIR. Rather the PEIR was continuing to move forward and design of projects was taking place so when the PEIR is complete, the projects can go into the construction phase if design phase is complete.

Mr. Browne made reference to a concern voiced at the November 29th Commission meeting regarding the possibility of the PEIR being inconsistent with the parallel design path and how that might affect the schedules and water rights. Mr. MacDonald responded that concern was particular to the project specific EIRs that will take place. The PEIR is a programmatic environmental review; it is not a project specific environmental review, and project specific reviews will continue as well. Mr. Browne asked if there are any mathematical techniques applied to design plans moving forward before the PEIR is completed. Mr. MacDonald replied that there are not.

b. Data requests (materials to be provided) - A summary of the RFP data requirements were included in the agenda packet distributed to committee members.

4. Discussion and possible action in connection with 2006 WSIP Bond documents, including Board of Supervisors resolution.

Mr. Sweetland stated that the Commission directed staff to return to the December 13, 2005 Commission meeting for the adoption of the $525 million first installment of the Proposition A bond authority. Ms. Ostberg explained and reviewed the 2006 Series A Bonds information with the committee members. Information included: Summary of Source and Use of Funds; Prop A Spending; and Regional Projects – Quarterly Spending. Ms. Ostberg stated that all numbers were subject to change.

Ms. Ostberg said that the current schedule called for getting Commission approval of the bond sale on December 13 and Board of Supervisor final approval on January 17th. Competitive bids for the bonds will be accepted on January 31, 2006.

Mr. Sweetland asked for comments from the committee and from the public. Ms. Brown questioned whether the RBOC had to submit anything in writing regarding comments they may have on the bond issuance to the Board. Mr. Sweetland indicated that there is no requirement to make any comments but the RBOC does have an opportunity if they choose to do so.

There was no public comment.

5. SFPUC Staff Presentation on Owner Controlled Insurance Program (OCIP) –

This item was previously taken out of order.

6. Discussion and possible action in connection with scheduling more frequent RBOC meetings.

This item was discussed as part of Item 2e.

7. Discussion and possible action establishing term limits for the Chair and Vice Chair of the RBOC.

Mr. Browne motioned to continue this item to the January 9, 2006 meeting. Mr. Sutter seconded the motion.

8. Discussion and possible action to approve the minutes of the June 6, 2005 (original draft minutes and Mr. Browne’s draft marked to show his recommended amendments) This item was continued from October 3, 2005.

After discussion, it was agreed that Mr. Browne’s amended minutes would be further amended to include Mr. Sweetland’s suggested changes to agenda items 2.b. lines 38 through 43.

Mr. Sweetland asked for public comment. Mr. Kalman made reference to his reported statement from the June 6, 2005 minutes in item 2.b. lines 45 through 47 in which he stated that he did not approve of the selection of O’Ryan given his prior experience with the firm. The minutes will be amended to include that he did not approve of the selection of O’Ryan given his prior experience with the firm on a project that they had done for the Parks & Recreation Department because of the negative declaration that subsequently became of full-blown EIR.

Mr. Sutter made the motioned to accept the minutes as amended. Mr. Browne seconded the motion. Motion passed with one abstention by Ms. Campbell, as she was not present at the June 6, 2005 RBOC meeting.

9. Discussion and possible action to approve the minutes of the October 3, 2005 meeting.

Mr. Sutter motioned to accept the minutes of October 3, 2005. Mr. Browne seconded the motion. Motion passed with two abstentions by Ms. Campbell and Ms. Sunshine who were not present at the October 3, 2005 RBOC meeting.

There were no public comments.

10. Discussion and possible action regarding proposed agenda(s) for next meeting(s)

Next meeting will be held January 9, 2006.

• Draft Annual Report
  
• RBOC comments on presentation to the PUC on the sale of bonds for the first issuance of the WSIP
  
• Election under the by-laws for Chair and Vice Chair
  
• Formal approval of RBOC 2006 meeting schedule
  
• Update on firms responding to RFP
  
• Approve minutes of 12/5/05 RBOC minutes

There were no public comments.

11. General Public Comment

Mr. Sweetland asked for public comment. Mr. Kalman suggested that every project should account for every dollar spent starting with staff hours. He also questioned the cost of recycled water compared to drinking water and indicated that it didn’t provide any savings incentive.

12. Adjournment

Ms. Brown’s motion to adjourn was seconded by Mr. Sutter. Mr. Sweetland adjourned the meeting at 11:30 a.m