Public Utilities Revenue Bond Oversight Committee

MINUTES

Monday, July 16, 2007
9:30 a.m. – 11:30 a.m.
1155 Market Street (between 7 & 8th Streets) 4th Floor
San Francisco, CA 94103
 

1. Call to Order and Roll Call
 
Chair Aimee Brown called the meeting to order at 9:34 a.m. and roll call was taken. Present: Aimee Brown, Patrick Sweetland, Stan Jones, Kyle Rhorer and David Sutter; Lisbet Sunshine and Brian Browne were not present. There was a quorum.

2. Public Comment - Members of the public may address the RBOC on matters that are within the RBOC’s jurisdiction and are not on today’s agenda.

There were no comments from the public.

3. Discussion and possible action regarding update on RBOC Audit by Robert Kuo

Bob Kuo gave a brief overview of the RBOC audit report, deliverable/draft 2. The draft includes the additions of a discussion of change control procedures, projects removed from WSIP, and an audit of 15 projects performed by Larry Doyle. Mr. Kuo introduced Mr. Doyle to give a summary of his portion of the report. Mr. Doyle explained how he divided the financial aspects of audit into three components: 1) Appropriation, 2) Vouching/invoicing review and 3) Reconciliation between FAMIS and Primavera. Mr. Doyle noted that there were discrepancies between the two systems, FAMIS and Primavera, and that they should be trued up and he was told that would be the case. Mr. Doyle also stated that staff was noting needed corrections but those corrections were not being made as far as he could tell. Mr. Doyle suggested the SFPUC find a point person with knowledge of both FAMIS and Primavera to coordinate the reconciliation and system corrections. He stated that reconciliation may not be completed by the August 4, 2007 due date. The Controller’s office will reconcile/close the books on June 30, 2007, and the published report should be out by the end of September or early October, 2007. Mr. Doyle stated that the variance parameter was set at 1% and the highest he has come across was at .72%, and he does not foresee any systemic problems. The Committee stated that they are comfortable with the variance set at 1%. Mr. Doyle also looked into overhead costs, comparing the current year with last year, and he found that PUC was in line. Last year’s was set at 175% with 25% fringe and this year the rate is 175% and 30%, appropriate according to Mr. Doyle. Mr. Doyle stated he could incorporate the overhead information in the final draft of the report.

Mr. Kuo and his colleague Shannon Gaffney then discussed Chapter 5 of the draft report with the Committee.  Ms. Gaffney explained to the Committee that requirements stemming from AB1823 have proved to an invaluable source of WSIP information. Chapter 5 of the audit has a great deal of information pulled from AB1823, and identifies projects removed, added and significantly changed. Ms. Gaffney stated that there are questions/answers pending to project managers about the R&R program. She stated that she would like to know what the implications would be if the projects were financed through current rates versus bonds.   

Mr. Sweetland suggested Mr. Kuo’s report focus on the expanded overview in the early portion of the report in order for it to read cohesively and linearly.

Mr. Sutter asked if the RBOC Subcommittee had discussed reassigning the hours allocated for Tasks 1-A and B as the consultants will not perform further analysis on the remaining 12 projects. Chair Brown clarified that the current contract states that if the hours are not used by the consultants that it is not necessary to reallocate as it would result in a cost savings instead of a financial loss. Mr. Sweetland stated that the Subcommittee has not addressed this concept yet, but will discuss the possibility of reallocating the unexpended hours to focus on other types of analyses if needed. 

Chair Brown would like Mr. Kuo to give feedback on the WSIP quarterly reports that are published in order to ensure that project information, including changes and reasons for changes, are clear and easy to track and maintain public transparency.

Public comment: Steve Lawrence addressed the general matter of changes to WSIP. He stated that the cost of the programs have increased by 20%, while approximately $1 billion worth of work has been eliminated from the program. Mr. Lawrence stated that moving projects to R&R seems like an obvious way to change the funding from bonds. Mr. Lawrence asked the Committee and staff to find out what money would be used to pay for the projects removed from the list. He stated that the bond program does not expand to the Recycled Water Program and the overall planning is behind. As it stands now, Mr. Lawrence stated, through WSIP the city is slated to get almost half of the recycled water then originally planned at almost double the cost, and the projects have been constantly delayed. He said that his understanding is that the first $1.6 billion has been funded and the rest is yet to be funded.
 
PUC staff confirmed that under Prop A the maximum limit of funding is $1.6 billion. The Committee will request SFPUC Deputy General Manager Tony Irons to address this topic when he updates the Committee at a future meeting.

Joan Girardot from the Coalition for San Francisco Neighborhoods asked the Committee and the City Attorney whether it was appropriate for recycled water projects to be paid for by WSIP bonds under Prop 218. She stated her understanding is that the purpose of the recycled water program is to free up potable water from being used for the irrigation of parks and golf courses and she does not want to pay for that.

4. Chair’s Report

a. Update on RBOC contracting

Mr. Mike Brown from the SFPUC confirmed that Esther Reyes of the controller’s office, who helped administer the current consulting contract, will no longer be providing contracting assistance in the future, as these responsibilities will no longer be hers. Contract administration assistance will either be done with the help of another person in the Controller’s Office, another City Department, or the SFPUC’s Contract Department; this will be determined in the coming months. Since Mr. Kuo’s contract will expire December 2008, Chair Brown would like to look into the contacting process and how best to reconsider the various options. Chair Brown stated that she would like to refer the issue of the pre-qualification process, issuing RFP’s, and renewing contracts to the Contracting Subcommittee. Mr. Jones stated that he would be willing to serve on the Contracting Subcommittee, which included Mr. Sweetland and Ms. Brown.

5. Update on WSIP program – Tony Irons, Deputy General Manager

Mr. Irons was unable to attend the meeting but will give an update at a future meeting, date to be determined.

6. Discussion and possible action to approve the minutes of the meeting held on June 11, 2007

Mr. Sutter submitted an edit for lines 142-143 of the DRAFT minutes. With the submitted changes, the Committee voted unanimously to approve the June 11, 2007 minutes.

7. Discussion and possible action relating to RBOC members requests for information from SFPUC staff

Committee members requested information regarding Mr. Lawrence’s comments that WSIP costs have increased 20%.

8. Discussion and possible action for future agenda items

Tony Irons will be rescheduled to update the Committee on WSIP. Discussion regarding update of Mr. Kuo’s RBOC Audit report.  Possible site visits to local WSIP projects in the construction stage.

9. Adjournment

With Mr. Jones’ motion and Mr. Rhorer’s second, Chair Brown adjourned the meeting at 10:45 am.