Public Utilities Revenue Bond Oversight Committee

MINUTES

Monday, February 11, 2008
9:30 a.m. – 11:30 a.m.
San Francisco Public Utilities Commission
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 9:31 a.m. and roll call was taken. Present: Ms. Brown, Patrick Sweetland, Brian Browne, David Sutter and Stan Jones; Lisbet Sunshine and Kyle Rhorer 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. Report from SFPUC Management on Wastewater Masterplan

John Loiacono presented the Sewer System Master Plan Project Update which was submitted to the Commission in November 2007. Mr. Loiacono outlined the Master Plan’s four major drivers: 1.) Aging Infrastructure 2.) Planned Growth 3.) Regulations and 4.) Community Values. He stated that community values are particularly important considering the southeast plant in the Bay View / Hunter’s Point area with its odor impact. Currently, there are no regulatory drivers as the plants are in compliance. The planned growth driver will be geared towards how solids will be handled with an estimated population growth of 100,000 in the next 30 years (per the Assoc. of Bay Area Government and SF Planning Dept). The aging infrastructure driver deals with the sewer system which has an average age of 70 years old. The Southeast plant’s digesters are over 50 years old; typical structures in wastewater plants have a 50 year life expectancy; equipment (pumps) 15-30 year life expectancy, electrical equipment a 15-20 year life expectancy. Mr. Loiacono also reviewed the technical alternatives and levels of service developed to maximize existing assets and to address plant and community problems. Mr. Loiacono reviewed the Master Plans objectives and levels of service along with the coinciding recommended projects. He reviewed the recommended policy changes and showed comparisons between the current system and the recommended programs. He stated that the goals are to ensure operating reliability and flexibility while minimizing neighborhood impacts, protecting the environment and minimizing consumption of natural resources. The recommended programs include treatment facility improvements and new digester (biosolids) facilities. Mr. Loiacono briefly discussed the renewable power program noting that they are looking into ways to recover energy from biosolids, food waste, solar panels and a new biodiesel plant. Their goal of protecting the environment by minimizing the consumption of natural resources includes co-generation with the digester gas (reusable gas),  generating electricity, pasteurizing bio-solids for land application and using reclaimed water (not potable) for irrigation and golf courses. He continued with an overall review of the presentation.

Mr. Loiacono stated that his main goal is to get Commission approval to proceed to the environmental review process, which will take at least two years to complete. He noted that the original engineering team, including Metcalf and Corollo, prepared the first set of cost estimates. Mr. Loiacono was asked by the General Manager to have the estimates checked by another engineering team (Montgomery Watson Harza) which is in process now. Mr. Loiacono proposes to begin the detail planning for digesters as the next step.

In response to a question asked by Mr. Browne, Mr. Loiacono confirmed that the total Master Plan’s estimated cost is $3.5 billion

In response to a question asked by Mr. Sutter, Mr. Loiacono stated that the expected schedule for the Master Plan includes presenting to the Commission, which happened in November 2007, returning to the Commission in March with the complete draft Master Plan , and a request for approval to proceed with the EIR, (the environmental review will take at least two years to complete). Presuming there are no hold ups in the environmental review the program should be completed around June of 2010. He noted that there is a gap between the funding level of the 5-year CIP and the beginning of the bond funded Master Plan.  There will have to be further discussions regarding the plug between the two. Mr. Joseph Yew, Finance Director SFPUC, confirmed that there is commercial paper available until long term debt is issued. 

Mr. Browne stated that he was concerned about the retirements and possible resignations of experienced senior management in the Wastewater Enterprise. Mr. Loiacono confirmed that he is staying with the Wastewater Enterprise, but that Mr. Browne’s concern is valid as changes in executive management can cause minor delays.

In response to a question asked by Mr. Jones, Mr. Loiacono stated that sewer design and repair is handled through DPW because, as he understands it, sewer repair and design are source of funds outside of the general fund and maintain overhead for that agency. He added that ultimately that decision is made at the Mayor’s office.  Mr. Sutter added that DPW manages the streets and most sewer lines are under the streets.

In response to a question asked by Mr. Jones, Mr. Loiacono confirmed that the North East wet weather plant’s toxicity violation was the last recorded violation of all of the plants. He clarified that the PUC self monitors and reports to the Regional Water Quality Control Board.

Public Comment: Steve Lawrence asked Mr. Loiacono if there was a cost estimate for disposing of sludge if the digester treatment could no longer meet requirements. He also asked how many gallons of dry weather flow are treated per year. Mr. Loiacono stated that the current operating costs are $30 per ton for disposal, which could double if the digesters don’t dispose of it. He estimates that there is a daily flow rate of 84 million gallons of dry weather treatment while wet weather treatment avg at 465 million gallons per day.

4. Report from Contracting Working Group Subcommittee regarding updates to future work scope on PUC indirect cost calculations.

Mr. Sweetland gave an overview of the latest work scope draft which was discussed at the February 8, 2008 Subcommittee meeting. Mr. Jones stated that they are anticipating an informal RFP process under $50K, with a 60 day schedule; 30 days to shop RFP and 30 days to negotiate the process and cost. Mr. Jones confirmed that the purpose is to determine that WSIP indirect costs are appropriate, allowable, allocable and that WSIP is not being charged in excess of what it should be charged in indirect costs.

In response to a question asked by Ms. Brown, Mr. Sweetland stated that it was possible that the audit and resulting recommendations could be used as a guideline or checklist for future audits.

In response to a question asked by Mr. Sutter, Mr. Jones stated that “indirect cost pool” is an accounting term and clarified that the term “Infrastructure Division” refers to Harlan Kelley’s group which manages R&R, Wastewater, Power and Water capital projects.

Mr. Sutter then submitted changes and edits to the draft of the work scope.

Mr. Browne noted that he was unable to attend the Subcommittee meeting held on February 8, 2008 and asked if the Subcommittee Chair could set more advance notice for the meetings in future. Mr. Sweetland asked Mr. Browne to submit dates of availability to staff, in order to streamline the scheduling of the next meeting.

In response to a question asked by Mr. Browne, Ken Roux stated that an illegal expenditure process could be utilized if the audit finds the PUC’s indirect costs not to be allowable. Ms. Brown stated that discussions would be raised to a higher level as well as utilizing the reporting provisions through Prop P. She added that the ultimate consequence could be to stop bond issuance if the costs are extremely questionable.

Mr. Sweetland concluded the overview by stating that the Subcommittee will continue to draft the final work scope using the edits from today’s meeting, take formal action at the next meeting, shop the RFP to qualified consultant pool, then report to full committee with anticipated timeframes, deadlines and expectations.
Ms. Brown requested that existing members remain on the Subcommittee in order to keep continuity and progress with the current work scope.

5. Discussion and possible action to approve the minutes from the meetings held on December 10, 2007 and January 14, 2008.

Mr. Browne stated the minutes from the December 10, 2007 may be inaccurate He noted that lines 45-50 show that he said the word “hooks”. He continued that he feels he only said “process” and not “hooks” as that word is not part of his lexicon. He requested an audio recording of the December 10, 2007 meeting to confirm his word usage.  He stated that he would submit edits to staff after receiving the audio recording.
Mr. Sweetland suggested and the Committee agreed to continue the December 10, 2007 minutes to the next RBOC meeting.

Mr. Sutter submitted edits to line 42 and line 77 from the January 14, 2008 meeting minutes. Mr. Sweetland moved to approve with minutes as amended by Mr. Sutter. Mr. Sutter seconded, and the meeting minutes passed unanimously.

6. Discussion and possible action relating to RBOC member requests for information from SFPUC staff

There were no requests for information.

7. Discussion and possible action for future agenda items

Presentation on WSIP status by Julie Labonte; Presentation on 5-year CIP by Manfred Wong; Discussion and possible action relating to direction of future RBOC activities during the 2008 term; Discussion and possible action to approve the minutes from the 12/10/07 and 2/11/08 meetings; Discussion and possible action relating to the Contracting Working Group work scope; Discussion and possible action to reschedule WSIP project site visits.

8. Adjournment

Ms. Brown adjourned the meeting at 11: 05 a.m.