Public Utilities Revenue Bond Oversight Committee

MINUTES

Monday, May 12, 2008
   9:30 a.m. – 11:30 a.m.
San Francisco Public Utilities Commission
1155 Market Street (between 7 & 8th Streets) 4h Floor Conference Rm.
San Francisco, CA 94103

1. Call to Order and Roll Call
 
Chair Aimee Brown called the meeting to order at 9:35 a.m. and roll call was taken. Present: Ms. Brown, Patrick Sweetland, Kyle Rhorer and Brian Browne; David Sutter, Stan Jones and Lisbet Sunshine were not present. There was a quorum.

The Chair requested and the Committee agreed to take Item 4 out of order.

4. Chairs Report:
          a.) Update form staff on future administrative support for RBOC

Joseph Yew, SFPUC Finance Director, stated that the PUC is working with the Clerk of the Board and her staff to move the staffing and location of the meeting to City Hall; it is estimated that the change will take place in August, pending approvals for additional support staff at the Board.

           b.) Update from staff on the capital financing plan for the remainder of the calendar year

For background, Mr. Yew stated that the most recent Water bonds were $507.8 million in 2006 and the most recent Wastewater bonds were $396 million in 2003.

The Water Enterprise will issue commercial paper in the next month or so (the program is currently dormant) based on WSIP spending requirements. Mr. Yew added that he anticipates the 2009 WSIP spending needs to be in the $500-600m range. In response to a question asked by Mr. Browne, Mr. Yew explained that the next bond will be sized to repay the outstanding commercial paper, approximately $250m plus amount needed to fund WSIP for 2009, probably at least an additional $350m.

The Wastewater Enterprise has $50 million in outstanding commercial paper with no immediate plans to issue more debt.

There is no current outstanding Power Enterprise debt however later the year, Mr. Yew stated that there will be an issue of $6.3 million in Clean Renewable Energy Bonds (CREBS).  The CREBS will be used by the Power Enterprise to finance renewable energy installation projects. The bonds will be repaid over 15 years with annual debt service of $450K.

Michael Brown, from SFPUC Capital Finance, offered to provide a table describing the PUC’s capital plans to RBOC
members at the next meeting.

             c.) Report from staff on questions raised regarding possible bond expenditure on certain projects, including recreation at Lake Merced,  Pacifica, and Daly City plants and irrigation for Harding

Mr. Yew addressed an email sent by Mr. Lawrence, a member of the public. He stated that the expenditures to date are legal and allowable per IRS and other guidelines as it relates to Proposition A. Mr. Yew stated that the legality of specific projects would depend on the opinion of the City Attorney. In response to Mr. Lawrence’s question, Mr. Yew confirmed that there are no current expenditures on the recycled water program.

            d.) Update from staff on remaining RBOC funds

Mr. Brown, SFPUC Finance staff, stated that there is $101,000 in the RBOC account after the previous two completed consultant reports. He added that the next report has a maximum budget of $28,500, which would leave approximately $73,000 remaining.

           e.) Update from staff on time and itinerary of May 16 site visits

Mr. Brown confirmed that the tour meeting place is 1155 Market Street and asked members to arrive at 8 a.m. He added that staff would send a tour package to Committee members prior to the tour.

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.

Steve Lawrence stated that he needed additional clarification regarding Mr. Yew’s comments during agenda item 4c. He stated that RBOC is to supply oversight on WSIP revenue bonds and to determine whether certain projects meet criteria of being bond fundable. He reviewed his email with the committee noting the three criteria that must be satisfied for proposed expenditure listed in the September 2006 memo by City Attorney, Michael Martin. He stated that RBOC should ask for legal opinions from the City Attorney relating to whether the three criteria are met for a list of projects he provided to the committee. He also asked that RBOC request for staff to provide memos clarifying the bond fundability of the listed projects.
Mr. Lawrence stated that if there is a partnership agreement that applies in any of the listed projects, he would like to look at the agreement to verify SFPUC jurisdiction. He states that although the Water Enterprise must have jurisdiction over the financed facility, any other jurisdictional relationship (such as holding a lease or fractional ownership interest) would require further legal analysis before an expenditure on such a project could be considered bond-eligible.

3. Report from SFPUC staff on WSIP Risk Assessment Report and related SFPUC Actions Risk Mitigation Action Plan.

Mr. Jeet Bajwa, Project Manager SFPUC, gave a recap of the Risk Mitigation plan report by Parsons and CH2M Hill. He started by giving a brief history of how the mitigation plan was created. He stated that PUC asked Parsons and CH2M hill to create a risk analysis of WSIP. The risk analysis report completed in July and September 2007 identified 24 individual risks within the program which were then put into 11 categories. The risk analysis report was given to the Commission for review. At that point a one day session with all of program management was held to develop mitigation plans which resulted in 130 mitigation action plans. Over a period of time, Julie Labonte, her team and Parson revised the 130 mitigation action item list and reduced the list to 70 mitigation action plans which were then categorized into 16 different areas. The plan is detailed and includes every step included in each action plan which identifies who is responsible and the expected time line for completion. Timelines are tracked and agendized as discussion items even if there is no movement on a particular action item. The plan is being monitored and tracked by Parsons and they report to Ms. Labonte. The risk mitigation measures that are assigned to Parsons are monitored and tracked by PUC project management. The progress is noted in the quarterly reports and sent to the Commission.

There was no public comment

5. Discussion and possible action to approve the minutes from the meeting held in April 14, 2008.

Mr. Sweetland moved to approve the minutes from the April 14, 2008 meeting. With Mr. Rhorer’s second, the minutes were approved unanimously.

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

Ms. Brown requested that staff be prepared to address Mr. Browne’s submitted questions for the next meeting.
Staff will prepare a table listing the current and future Capital requirements relating to RBOC.
Staff will send meeting dates and times to committee members regarding the date change of the June RBOC meeting.

7. Discussion and possible action regarding future agenda items

Request Mr. Bajwa to address Mr. Sutter’s list of questions relating to WSIP budgeting and how project scopes change; Discussion relating to Mr. Browne’s questions regarding CT/Peaker fundability; Discussion and possible approval of minutes from May 12th meeting; Presentation from Parsons CH2M hill in the future TBD; Review WSIP bidding climate during a future meeting TBD; Discussion and possible action relating to Lisbet Sunshine’s appointment for future meeting TBD.

8. Adjournment

Ms. Brown adjourned the meeting at 10:30 a.m.