Here.

Vice President Leveroni.

Here.

Commissioner Jamzar.

Here.

Commissioner Stacey.

Here.

Commissioner Thurlow is excused.

You have a quorum.

Thank you, Ms. Lanier.

Can you please call the next item?

The next item is approval of the minutes.

Actually, would you like to?

I would, in fact.

I was going by feel, and that means

that I feel we must read the following text.

Before calling our first item,

I'd like to announce

that the San Francisco Public Utilities Commission

acknowledges that it owns and are stewards

of the unceded lands located within

the ethno-historic territory of the Muekma Ohlone tribe,

as well as other familiar descendants

of the historic federally recognized

Mission San Jose Verona Band of Alameda County.

The SFPC also recognizes that every citizen

residing within the Greater Bay Area has and continues to benefit from the use and occupation of the Mwekma Ohlone's tribes' Aboriginal lands

since before and after the San Francisco Public Utilities Commission's founding in 1932.

It is vitally important that we not only recognize the history of the tribal lands on which we reside,

but also we acknowledge and honor the fact that the Mwekma Ohlone people have established a working partnership with the SFPUC

and are productive and flourishing members within the many greater San Francisco Bay Area communities today.

And with that, can we call the first item of today's business, Ms. Lanier?

Thank you. Approval of the minutes of November 10, 2025.

Colleagues, is there any comments, questions, discussion on the minutes?

Can we take public comment, Ms. Lanier?

Remote call, please raise your hand if you wish to provide comment on item number three.

Are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any callers who have their hand raised?

Ms. Lanier, there are no callers that wish to be recognized.

Thank you.

Okay, unless there's any proposed changes to the minutes, can we get a motion to approve?

Motion to approve.

Second.

from Commissioner Stacey, second from Vice President Leverroni. Ms. Lanier, can we have

roll call? President Arce? Aye. Vice President Leverroni? Aye. Commissioner Jamdar? Aye. Commissioner

Stacey? Aye. Commissioner Thurlow is excused. Item three passes. Item four, general public

comment. Members of the public may address the commission on matters that are within the

commission's jurisdiction and are not on today's agenda. Thank you, Ms. Lanier. Is there any

members of the public who would like to speak on item four general public comment.

President Arce, would you like to? With this in mind that members of the public

may address the Commission on matters that are within the Commission's

jurisdiction and not on today's agenda. The Commission values civic engagement

and encourages respectful communication at the public meeting. We ask that all

public comment be made in a civil and courteous manner and that you refrain

from the use of profanity. Thank you. Remote callers please raise your hand if

you wish to provide comment on this item. In person we have Steven Reinaldi.

Today on behalf of Millbrae residents and ratepayers to raise serious concerns

about SFPUC's Millbrae campus improvements projects on El Camino Real.

First, the process itself has been deeply flawed. The RFP began back in 2023,

yet Millbrae is only now, two years later, being brought into the conversation with

a presentation scheduled for January 13th. Throughout this time, the RFP was

withheld from our city under the claim of confidentiality. That lack of

transparency undermines trust and excludes the very community most

directly impacted. Second, the timing could not be worse. Millbrae Residence just absorbed

wholesale water rate increases of roughly 7% per year for the next five years, and now SFPUC

proposes to demolish a profitable business, outdoor supply hardware, one of your paying

tenants, which provides 50 jobs, sales tax revenue, and rent income, simply to use the

land as a staging area to expand office space. Ratepayers should not be asked to subsidize

unnecessary office construction while losing a vital commercial enterprise. Third, the need for

new office space is questionable. San Francisco currently has about 33% vacancy and the peninsula

around 20%. SFPUC said it wanted to relocate employees from Burlingame's Rollins Road closer

to Millbrae, yet Millbrae already offered brand new office space on Millbrae Avenue and North

Rollins Road, locations closer than your Burlingame site. These options would meet your needs without

displacing workers or burdening ratepayers and make the site more friendly for employees that

commute on public transportation. Commissioners, this project is not too far along. Milbury deserves

a seat at the table. Preserving jobs, revenue streams, and community trust while exploring

existing vacant office space is the true win-win. Like our great Assemblymember Pappin's letter says,

I urge you to pause, reconsider, and work collaboratively with Milbrae before moving forward.

You now all have a copy of this letter and my contact info.

There's no excuse not to meet with us ASAP before you vote to move this project forward.

Thank you for your time.

Next we have Anne Schneider.

Good afternoon and happy holidays.

Ann Schneider, former mayor, city of Millbrae.

Millbrae is representative to the Bay Area Water Supply and Conservation Agency.

As you know, Bosca is 26 member agencies, and we pay 67% of the infrastructure costs of the Hetch Hetchy system on that.

A year and a half ago, our work plan started showing that you all were thinking of taking away the outdoor hardware supply, the Kentucky Fried Chicken and the A&W.

I protested then that that's a hard hit for a little city of Millbury, 3.26 square miles, greatly owned by SFPUC.

You're our major landowner, as is SFO, as is BART.

That doesn't leave us much land for commercial development, which is what funds our general fund.

So by taking the outdoor hardware supply, you're taking away property tax, you're taking away sales tax.

And most critically, we are the city with the largest number of people in San Mateo County without cars.

So the ability to walk to retail is critically important, and Osh is critically important for disaster preparedness, et cetera, right down to clothing on that.

As a Bosco board member, and I'm assuming that you all have, if not, you really do need to do that, have a tour of the Harry Tracy water treatment plant.

Now, I grew up across the street from that plant thinking it was always Millbrae.

I grew up at the top of Helen Drive, so it was surprising to know that it's unincorporated San Bruno.

But having toured that location, you have other alternatives there, as you have alternatives down on El Camino Real.

Our business community is only El Camino Real.

We really do need that property.

I would love to invite you all down to Millbrae.

I'm sure the councilman would help you with that.

Come and look at what we're having to deal with in there and extend the leases with the current businesses.

Let's take a step back.

Let's look at these projects a little bit longer with that.

And I forgot to start by saying I so much appreciate that in my time on Bosco, you're the first person from SFPUC Commission to come down to Millbrae to attend a policy meeting.

It's very grateful for that.

So thank you all.

Happy holidays.

Please do the right thing.

Thank you.

Thank you.

Mr. Francisco DaCosta.

Commissioners, let me bring this to your attention.

We the people, the taxpayers, we pay the salaries of the SFPUC,

for which we get nothing at all in transparency and accountability.

The last person to give us some information about what is happening with the treatment

plant was Karen Kubik.

After that, nothing whatsoever.

We have managers who think that they can do whatever they want to.

We have one manager at the water department who was caught watching porno and gambling.

years ago a report in the newspapers, he's working there. Another manager, when he was

a cadet with the police, beat up a gay person, ate his sandwich and the other guys also jumped

and beat him up. He's working there. He was hired by the general manager Harlan Kelly.

Now, we have these three innocent, hardworking SFPUC workers.

How many times have we to come here and plead with you that what you all did is wrong?

When anybody works in confined spaces, they have to be experienced.

You don't go 40, 50 feet underground without no training and no certification, without

no equipment, and then when the workers come bring it to the manager, they fabricate things

about overtime and somebody bringing a gun.

If they brought a gun, then where is the police report?

This audacity of these managers who think that they can do whatever they want to, and

And we taxpayers pay their salaries, including the top people at the SFPUC who get over 500,000

a year.

Thank you, Mr. DeCosta.

Thank you for your comment.

Mr. Ken Smith.

Good afternoon.

Thank you for your work to keep our power and our fresh water in our community.

My name is Ken Smith.

I'm from Millbrae, California.

And I'm going to talk about the property on SFPUC on El Camino.

My understanding is that you want to tear down the OSH to expand your laboratories and

offices.

After reviewing the aerial photos of the lot in question, it seems to have plenty of wasted

space on the water department side of the fence.

So OSH is on one side of the fence and the water department is on the other side on that

property.

Our cities up and down the peninsula are building four

and six story residential buildings.

It's like crazy, right?

And so I don't see why OSH can't re-imagine,

I mean, SFPUC can't re-imagine their side of the fence.

The buildings over there are antiquated and old

and take up a lot of space.

Why can't we do multiple stories and accommodate everybody

and keep our anchor store, Osh.

I walk a lot with my dog

and we go to the hardware store a lot

because it has a lot of different,

you know, hardware stores have everything in it.

And so to have to get in your car and drive to the next city

or drive down to San Mateo, whatever the case may be,

it's a real loss for us citizens in Millbrae.

And again, we don't have a lot of industry.

San Bruno has a whole industrial

and Burlingame has, but we don't.

We have very few, and so it's a loss of revenue

is very important, it's gonna hurt us a lot.

Thank you very much for our time.

I heard the thing beep on me.

You have 18 seconds.

Huh?

You still have 18 seconds, 16.

Well, that's okay.

Thank you very much for your time, and again,

I really, you know, if you wanna come down to Millbrae

and take a tour of the spaces that you guys have down there,

I think we have a crew that would be more than happy

to escort you around, and you know,

it would be really helpful for your decision making.

Thank you very much for your time.

I appreciate it. Thank you. Thank you. Mr. Bob Hall.

Hello and happy holidays to all. I'm here to ask SFPUC to pause rec parks proposal to add

20 more acres of artificial turf on SFPUC-owned land at Crocker Amazon Park.

Artificial turf is not just a recreational surface.

It's a climate change accelerant from the moment the fossil fuel feedstocks are fracked

to produce it until the material is eventually landfilled or incinerated.

And during its short 8- to 10-year lifespan, it continually sheds microplastic.

Microplastics are now recognized as one of the most urgent environmental health threats facing San Francisco today.

The San Francisco Estuary Institute's Contaminants of Emerging Concern study found microplastics throughout our bay

and urban watersheds, including particles from plastic materials like those proposed for our Crocker Amazon.

These particles don't stay put.

They move through the air, the soil, and the water, and they become part of our food supply, our water supply,

and eventually our bodies.

Yet Rec Park is proposing to install 20 acres,

20 additional acres, there's already 10,

roughly 200,000 pounds of plastic turf

in part of San Francisco that already experiences

the city's highest asthma rates

and some of the greatest environmental burdens.

The California Department of Toxic Substance Control

estimates that each turf field sheds 2,000 to 3,000 pounds

of plastic grass blades like this every year.

And the California Coastal Commission reported that up to 300 million plastic fibers can be lost annually from a single full-sized field.

This proposal would place a massive new source of microplastic pollution directly on SFPUC land,

and you must do everything you can to stop it for our water, for our health, and for the community.

Thank you. Have a good holiday.

Thank you.

Ms. Susan Mullaney.

Hi.

I came here last month and I didn't talk fast enough and I didn't get to make my full comment.

I started by telling you guys that my dad and grandfather were both city engineers and that they each worked on the water supply transport from Hatchatchee down to the city.

And that I kind of learned from an early age that the water system is not hostage to city politics and that the integrity of the water comes first.

I'm here to explain why I believe the PUC has the obligation to block Reckon Park from installing artificial turf on your guys' land at Crocker Amazon Park

and instead install the obvious cheaper alternative, which is natural grass.

I am going to refer to the PUC's 2022 report on contaminants of emerging concern in San Francisco's drinking water.

I printed out the cover so that if you look it up online, you'll recognize it.

It's very easy to find.

10% of this report is devoted to microplastics and nanoplastics.

It's chapter 9.

It's 61 pages of facts that nano and microplastics are problematic.

In this document, the PUC concedes that microplastics are toxic in and of themselves for being physical

particles that can get into our bodies and into the environment, and also because of

the petrochemicals they release and because they can harbor bacteria on them.

I'm going to try to be fast.

The document says that our water coming from the Sierras is not exposed to sources of microplastic.

However, groundwater from under our West Side Basin in San Francisco is blended into our

drinking water and it is exposed to nano and microplastics because four wreck and park

artificial turf fields drain into it. Each field is 40,000 pounds of microplastic.

For your comments. I ask you to follow your own advice. This is going to...

Thank you. Thank you. We're here every two weeks as well. You're welcome to come back any

any and every time that we meet.

Thank you.

Thank you for your comments.

Is Santana here?

Santana?

Good afternoon.

My name is Santana Thiamfrivet.

I live in Millbrae, and this is about the OSH situation.

I just want to invite you all to go to OSH

and how much the community loves the one-stop shop for all of us

where we can also build community.

We had lots of different events there as well as workshop for kids.

By losing this OSH and the KFC,

we're going to be losing our local workers, local customers

that will bring revenue to our city.

I just want to, again, invite you before any major decisions are made and have Millbrae to be a seat at this table.

Thank you.

Thank you.

Moderator, are there any members of the public present who wish to comment on this item?

Ms. Linnier, there are six callers that wish to be recognized.

Okay, one moment, please.

We have another person who would like to speak.

Yeah, Steve Zeltzer, United Front Committee for a Labor Party.

I've been here previously around the issue of the discharge of three laborers who were harassed, bullied, and terrorized on the job.

There's been no reaction.

No reaction from the director.

Not a word.

Why is that?

Why the silence?

Now, we had an incident two days ago where a social worker was murdered at General Hospital.

People are aware of that.

And one of the issues behind that was health and safety.

Complaints were made to OSHA about health and safety.

They were ignored.

In fact, OSHA fined the city of San Francisco $26,000.

Now, the fact of the matter is OSHA has less than 200 inspectors for 18 million workers in California.

But the fact is the city not only was fined for that, but they retaliated against the whistleblowers who said there was a health and safety problem.

In other words, city workers were retaliated against for saying there's serious health and safety problems.

Who's going to be held accountable?

Now, we have a situation in the PUC where three laborers were discharged, and one of the issues around their discharge was they made health and safety complaints about not being properly trained and not having the proper equipment to do their job.

This is a serious violation, and OSHA complaints at this agency, PUC, has to be investigated.

On top of that, there was a complaint filed that a worker had a gun.

Joe King brought a gun to work, and that's one of the reasons he was retaliated against.

No police complaint.

Where's the district attorney?

Where's the city attorney about the illegal discharge of these workers?

You're not going to be able to cover it up, and it's not going to go away,

and they have to be returned to their jobs,

and people have to be held accountable who have been involved in this cover-up activity.

Last point, the chair, Joshua, is a member of the Laborers Union.

Thank you for your comments, Mr. Zeltzer.

Thank you for your comments.

Any other members of the public who'd like to present a public comment before we turn to remote?

Moderator?

There are six callers that wish to be recognized.

Thank you.

Caller, I've unmuted your line.

You have two minutes.

Hello, my name is Laura Smith, a resident of Millbrae, and I've come today to talk about

the potential closure of businesses in Millbrae Outdoor Supply and others in that piece of

property that is owned by the Water Department and leased to those businesses.

It would be a terrible shame to close any of the businesses in that location.

These are important retail locations for Millbrae.

It's been a hardware store there for decades, both orchard supply and now outdoor supply.

I live about three-quarters of a mile away from this retail location and when I need

plants or odds and ends, I do walk my dog over there.

It's a nice walk.

Today I'm speaking for myself as a walker and all the other walkers that are out there

and are going to be out there in the future.

is major developments being undertaken in the blocks surrounding that location. So there will

potentially be hundreds and hundreds of new residents there within the coming years, and not

too many distant years from now. And they will be able to walk to those retail locations as well.

The new housing developments in particular have limited parking spaces. Some residents won't be

able to have cars at all. So urban planning is now geared towards having fewer cars and more walkability.

But of course if there's nowhere to walk to then we are put into an impossible situation.

If outdoor supply is gone, for example, I won't be walking there anymore. I'll have to drive

five to 25 miles to get what I need. There'll be more congestion, frustration, and environmental harm.

This is not what the people of Milbrae or, I dare say, the people of California want.

We strongly urge the California PUC and Water Department to be part of the solution to creating

a walkable future for Milbrae and to further the environmental goals for all of Californians.

I urge you to work with Milbrae representatives.

Thank you, caller, for your comments.

Your time has expired.

If you can hear me on the online, are we able, Ms. Neera and Jenny, within the room to increase the volume just a little bit to hear our callers a little bit louder?

Okay, thank you.

Caller, I'm going to mute your line. You have two minutes.

Eileen Bogan, Coalition for San Francisco Neighborhoods, this time speaking on behalf of the CSFN.

Following up on my PUC commission written submission and my oral comments at the Capital Planning Committee on December 1st.

At its November 18th meeting, the coalition unanimously passed a resolution urging the mayor to transfer AWOS from the PUC back to the fire department where it belongs with design and engineering by DPW.

Momentum for this transfer at this point of time is from the following.

A new mayor who ran as an outsider to break through the inertia of past administrations, the statewide insurance crisis, the massive fires in Altadena and Pacific Palisades.

The AWOS issue has come full circle. Fires and insurance are the same issues now as they were in 1906.

Fires are not the core mission of the PUC, but are the core mission of the fire department.

And finally, the PUC has a fundamental lack of understanding on how AWOS works.

On page 32 of the Capital Planning Committee document from November 17th on Easter 2026, it states that, and I quote,

reliability upgrades at the system's primary water sources, Twin Peaks Reservoir, Ashbury Heights Tank, and Jones Street Tank, end quote.

These are the initial water sources, not the primary water sources, which are used until the AWAS diesel pumps come online. Thank you.

Thank you, caller, for your comments.

Caller, I have a mute. You're online. You have two minutes.

Yes, hello. Can you hear me?

Yes, we can hear you.

As commissioners, you have to do a duty to protect ratepayers, not unnecessarily ban office space, eliminate revenue, or impose affordable economic harm on one community.

The proposal in Millbrae would destroy 50 jobs, eliminate a hardwood store and tax revenue for the city, and terminate a lease that currently generates income, while contributing nothing to water reliability.

At the same time, office vacancies remain high, and it's not a prudent move.

I would request that before you move forward with this, to actually engage city officials in Melbury who have the best interest of citizens.

And again, I'll remind you of your fiduciary responsibility, not just to move forward with some plans that really wasn't well thought out.

Thank you for your time.

Thank you caller for your comments.

Caller I have a minute you're lying.

You have two minutes.

Thank you.

This is Peter Treckmeyer, policy director for Yosemite Rivers Alliance.

I want to thank President Arce for paying attention to the people who call in and asking

for the volume to go up.

This system is very challenging.

When I hear other people commenting it's very choppy and when I'm speaking it's very

It's in and out and it's hard to concentrate.

So I would encourage you to invest some funds into a better system.

Thanks for acknowledging that there was an issue there.

I sent you a letter.

It's in your packet.

It's about the Tuolumne River Voluntary Agreement, scientific basis report.

I asked you to organize a workshop and invite us to present.

I hope you will consider that.

A few years ago, the National Marine Fisheries Service commissioned a peer review of the

fish model that went into the Toilmese River Voluntary Agreement.

They found major flaws that were never addressed.

And you see in Bosca positions, we just want the Voluntary Agreement to get a fair chance.

So for two years, the Water Board was working on the scientific basis report.

It was released.

There was a workshop.

And it's very clear that volunteer agreement is not what it's claimed to be, which is it's not a reasonable alternative to the Bay Delta plan.

And I think if you hear all the evidence, you'll agree with that.

I'm going to reach out to each of you individually to see if we can just set up a little opportunity to talk about some of these issues, the volunteer agreement, the design drought, the demand projections.

It used to be that we had opportunities to have workshops where we could present with the PUC.

It hasn't been the case for very, very many years.

There's so much information out there that would be valuable to you.

I think the cumulative time on the board is about seven years and we lost a lot of institutional

memory.

I'd like to help bring that back.

So I will be reaching out to you.

Thank you.

Thank you, caller for your comments.

Caller, I'm a mute at your line.

You have two minutes.

Good afternoon, Commissioners. My name is Albert Yam. I am a Millbrae resident and serve on the board of the Chamber of Commerce. With all due respect, I need to say this plainly. You may see this project as numbers on the spreadsheet of a Millbrae and it's directed on every day's life.

OSH is the last hardware store in our city and people depend on it.

See these walks there, families rely on it for repairs,

small contractors buy supplies there every day, every single morning.

Removing it isn't a theoretical impact, it's ripping out a real service that residents use every day.

And for what purpose? To build new office and administrative space at a time when there are many vacant office space all around.

There are empty square footage in San Francisco and across the peninsula. So why locate offices to Millbrae?

Is it to so that you can convert the existing space into something that benefits?

As a PC internally, while Millbrae pays the parts externally.

And this is where the imbalance becomes impossible to ignore.

The simple way to understand is.

We're no bridge like a tenant who is required to buy all the electricity from the landlord.

at the highest price in town.

And then the same landlord announces construction

inside our living room without even knocking on the door.

Millbrae residents are your customers.

We buy your water.

We have no alternative supplier.

It's a monopoly relationship by definition.

We just add salt water rate increases

driven by SFPUC operations,

including the cost of retrofits, upgrades,

and facility work.

And now the same agency wants to develop land

inside the city without partnering with us.

Commissioner, you have a moment here

to demonstrate real stewardship,

to act as true custodians of a public agency

that exists to serve people.

Respect the residents who pay the bills,

respect the businesses that keep our community alive.

Please respect the city.

Thank you, Collar, for your comments.

Your time has expired.

Collar, I'm in mute at your line.

You have two minutes.

Thank you very much. My name is Gina Pappin. I'm a former mayor of Millbrae and a regional

transportation representative here. San Francisco PUC process for development in Millbrae was

terminally flawed because there was a total lack of transparency and community input.

The San Francisco PUC's RFP is confidential and the scope of the project is unknown and

extreme. Information has been withheld from the city and ratepayers. I do hope the Bosco

representative notes that assembly member Diane Pappin has sent a letter to the PUC and to Boscoa

to address this matter. The PUC has significant room to grow without removing or destroying an

extremely valuable commercial enterprise, outdoor supply hardware, which provides valuable rent

to the San Francisco PUC, improved sales tax for Millbrae, and employs 50 workers. The water

rate payers cannot be expected to pay for expanded office space when San Francisco and San Mateo

County have high vacancy rates. This is a valuable commercial enterprise which provides significant

revenue stream to both the PUC and Millbrae. Do not cover up an extreme proposal by believing

that it's too far along to do nothing. Nothing moves forward without your board's approval.

Collaboration and scale back proposal will provide a win-win for everyone. This board must correct

the flawed process to obtain a win-win and avoid the critical wrath of ratepayers and the community.

Please I hope you get to discuss this and comment on it further during the Bosco presentation. Thank you.

Thank you caller for your comments. Caller I'm immune at your line you have two minutes.

Hi my name is Dave Warner I'm not from Millbrae and I'm not sure if you've received my last minute

letter regarding the Millbrae yard project. This project to me seems like an affordability

opportunity. It's a 428 million dollar project of which only 16 million or 4 percent has been spent.

I don't think this project is critical to water system reliability and to help with affordability,

please consider scaling back this project and delaying it for some length of time,

which would, of course, reduce the need for debt and help with affordability.

Thanks a lot.

Thank you, caller, for your comments.

Ms. Lanier, there are no more callers that wish to be recognized.

Thank you.

Item number five, report of the general manager.

Thank you, Ms. Lanier.

Item 5A is a quarterly audit and performance review report.

Nancy Hahn will be presenting.

Good afternoon, President Arce, Vice President Leveroni,

and Commissioners. I'm Nancy Hom, Chief Financial Officer and agent for Business Services. I'm here

on behalf of Irela Blackwood today, Audit Director, to present the Audit Bureau's quarterly audit

performance review report for first quarter ending September 30th. May I have the slides, please?

At the end of Q1, the PUC completed a total of seven audits, with the majority of these being

financial-related. There are currently 13 in progress, inclusive of seven for performance,

four for financial, and one for each of revenue leases and revenue bonds.

There are five audits upcoming in the current quarter, too,

again, primarily related to our agency's audited financial statements at fiscal year-end.

Seven audits were completed this past quarter and listed here on this table for you.

Five of those, again, five of those are related to the fiscal year-end 24-25 warehouse inventory counts.

Other audits included the calendar year 2024 post audit by the controller's office to review financial transaction compliance to their policies and procedures.

And then lastly, fiscal year 24-25 cybersecurity maturity assessment also performed by the controller's office city services auditor.

Our audit spotlight for this quarter in Q1 are the recently completed annual warehouse inventory counts.

Each fiscal year end, all city departments are required by the controller to perform a 100% full inventory count.

Finance complies with this each year and contracts an external audit firm to visit all our agency's warehouses.

We worked with Crow LLP this past fiscal year.

The auditor will ensure that all inventory data in our management system is matched to their on-site physical counts.

They assess the effectiveness of inventory warehouse management practices as well.

The PUC currently has eight main warehouses listed here on this slide.

They're located across the city on Treasure Island and as far as moccasin upcountry.

Observations in the inventory count were considered minor based on results.

Total variances were about 1.5% of inventory units and represented under half a percent of inventory values.

The general industry standard for high performance in accuracy levels is 97 to 99%.

Using that metric, the PUC's warehouses are performing at or above industry benchmark levels.

Areas of further improvement focus on three areas, which include accuracy and timeliness of data entry,

operations with consideration to obsolete items, increased perpetual cycle inventory counts and documentation,

and three, resolving continued struggles with the legacy fuel management system.

Management concurred with the auditor's recommendations to continued further improvement of internal controls.

I do want to highlight a success here for the wastewater enterprise who accomplished a never-before 100% perfect count with no findings in units or dollars.

Their operation teams deserve recognition for their commitment to industry best practices in this area.

The last slide here highlights how we've significantly and continue to improve internal control over warehouse inventory management over the past five years.

In fiscal year 2023-24, the Audit Bureau performed a special assessment of inventory management practices, partnering with each enterprise to better understand operations.

That special project resulted in a deeper understanding of where the most impactful improvements could be made in operations.

We can now see the benefits of everyone's hard work this past year, and the variances

have significantly decreased.

I do want to extend my appreciation to each of the teams in water, wastewater, HECI water,

and power for their good work managing the PUC's inventory assets that do total $14 million

in fiscal year 24-25.

This slide details PUC's current open audits and recommendations.

As of September 30th, we have 16 open recommendations across two audits.

These two audits are a little different from our usual performance audits, as the CSA's follow-up schedule for public integrity audits and also the BLA's analyst's follow-up schedule is per their discretion.

As such, these two audits will remain on our list until formal notices from their offices, despite our management successfully implementing many of the recommendations.

In Q2, we anticipate the completion of these nine audits listed here.

They are a combination of various compliance and performance audits as well as financial audits.

They also include the recently started and completed fiscal year 24-25 audit financial statements.

We will return back in February to present those to you.

This concludes my presentation today.

I'm glad to answer any questions.

Thank you, CFO.

Questions, colleagues?

Commissioner Stacey.

Thank you, President Arce, and thank you, Ms.

Holm, for the presentation.

I just really wanted to appreciate the attention that the department pays to the audits and

the reporting to the commission.

I think it's good for us and for the public to hear what we're doing, what the recommendations

AND HOW WE'RE RESPONDING.

AND KUDOS FOR THE GOOD STANDARDS AND TO WASTE WATER FOR THEIR HARD

WORK IN ACHIEVING BETTER OUTCOMES.

THANK YOU.

THANK YOU.

COMMISSIONERS?

ALL RIGHT.

THANK YOU, CFO HOM.

IS THERE A PUBLIC COMMENT ON THIS ITEM?

I APOLOGIZE.

WE'RE GOING TO WAIT TO THE END.

COMMISSION DISCUSSION.

OH, NO.

I'VE GOT US ON PUBLIC COMMENT.

I've got some public comment, yeah?

Can we take some public comment if anyone has comments, Ms. Lanier?

Absolutely.

Remote callers, please raise your hand if you wish to provide comment on this item.

Are there any members of the public present who wish to comment?

Seeing none, moderator.

Ms. Lanier, there are no callers that wish to be recognized.

Thank you.

Okay.

Oh, yes.

Can we please call the next one?

What was happening there, members of the public, was I personally thought it was just a little

bit too loud.

So we're making a little bit of adjustment on the volume.

We want to get it right.

We want to make sure everyone is heard but cause no damage to anyone's eardrums.

Ms. Lanier, can we call item 5B?

Item 5B is a budget and capital plan progress update and this is on one of the items, Mr.

President, that was on that commission request list.

Thank you, General Manager Herrera, and I'm grateful in advance having read through materials.

This is exactly what I was really hoping we would have in front of us at this meeting.

So thank you.

Looking forward to the presentation.

ANNA DOENING, GOOD AFTERNOON, COMMISSIONERS.

I'm Anna Doening, the Budget Director at SFPUC.

So today I'm going to share an update on the budget and capital planning process.

And the goal of this presentation is really to provide more context ahead of the January

budget hearings when we'll be presenting all the details of the budget and the capital

plan and then requesting your formal approval in February.

So here's what I'll go over.

I'll try to keep it somewhat brief so I may not read every single word on every slide.

I'll certainly take questions at the end.

So our financial policies are the foundation of the budget process.

Altogether they are how we define and measure financial sustainability.

These financial policy targets feed directly into our financial models.

We combined these targets with other SFPUC and enterprise-specific financial data to

then build the forecast that ultimately drives our budget instructions.

Those instructions were issued to all enterprises and teams in July.

Finance instructed everyone to limit any operating budget growth and further to reduce the overall

CIP, particularly in water and wastewater, by nearly $1 billion.

On to the capital process.

As a reminder, we have an operating budget, a capital budget, and a 10-year capital plan.

The first two years of that capital plan are part of the budget.

And as part of the biannual capital planning process this year, we've also had the Capital

Planning Improvement Initiative, or CPII, which aims to bring greater consistency and

rigor to capital project planning and prioritization.

With the CPII this year, we started planning earlier and confirming resource capacity,

and the teams then produced more realistic cost estimates.

This included increases that were driven by true project needs as well as cost escalation.

So another important part of the budget and capital planning process is, of course, the

priorities that we are setting as an agency.

Sustainability is one key pillar, but that's in addition to meeting high operational and

safety standards, continuing to be leaders on the climate and environmental issues, and

investing in our workforce and the communities that we serve.

So with all that, I also want to highlight some of the major challenges that we're facing

in developing budgets and meeting all of our financial targets, particularly keeping down

rate increases.

That includes paying debt on projects that are already in the ground.

For example, the debt service on the biosolids project, which is near completion, that debt

service comes online next year.

There are a slew of complex and demanding regulatory requirements, the fact that we

were updating infrastructure built decades ago when there used to be much more federal

funding available, something that utilities are facing nationwide, and then of course

here in San Francisco, the challenging cost to just get things done and build things.

So that's all some context for the initial budget proposals that were submitted to finance

in September. What happens next is that those proposals go through a series of internal meetings

listed here with AGMs as well as finance, where we talk through options and trade-offs.

Between each of these meetings, we ask teams to revise, reprioritize, or provide more detail so

we can continuously reiterate and ultimately shape a budget that's both realistic and align

with our goals and priorities.

So here is a snapshot of the initial total request

above and beyond our baseline operating budget.

You don't need to pay too much attention

to the numbers on this slide.

It's just to give you a sense

of some of the increases that we're weighing.

And so that's about 2.5%

on a $2 billion operating budget.

These are just some examples of specific costs

that teams proposed.

This was staff to operate in new facilities, increasing in permitting costs, a focus on

customer programs and power, to name a few.

So when it comes to our operating budget, here are some of the considerations we're

weighing to determine if we should indeed include it in the final budget proposal.

And that includes asking whether teams first reallocated existing budget to cover critical

needs.

Moving on to capital.

So after the capital planning process, which started back in the spring, but before major

budget constraints were applied, capital proposals totaled nearly $16 billion over 10 years.

The makeup of projects reflected the unique and varied needs of each enterprise.

We saw previously uncertain projects with more refined cost estimates, emerging projects

driven by regulatory requirements that were added, as well as new projects for new customers

and power.

But this is just a starting point.

We know that $16 billion is not financially sustainable.

So since then, our teams have been focused on further refining the capital improvement

plan with particular attention to enterprises where capital costs have the biggest impact

on rates.

So that's mostly water and wastewater.

Project teams have had to defer projects, revisit construction timelines, reduce scopes,

and continuously reprioritize.

how those decisions are made vary within each enterprise and within each program.

This is just an example of one prioritization framework in wastewater.

You can see here on this chart, wastewater places critical process operations, safety,

and regulatory compliance as the highest priority level.

But going down this list, I'll note that these tradeoffs are not easy.

The bottom of the list, called low priority, is still a capital priority.

These are projects we would pursue if not for very real financial constraints.

So where are we now?

We are modeling scenarios.

We are weighing tradeoffs.

We are incorporating additional instructions, including from the mayor's office.

Their budget instructions will come this Friday, as well as feedback.

And we are preparing for many more upcoming meetings and hearings.

So this is a look ahead.

Like I said, we'll be back here in January with lots more detail than requesting your

approval in February and in addition to those hearings and meetings we're

meeting with many other stakeholders throughout 2026 and with that I can

answer questions I also invite your feedback on some of our budget

priorities or any comments in the process thank you thank you director

Dunning and thank you again general manager Herrera if I can colleagues just

as a moment of personal privilege as the person,

certainly not the only one who really cares so deeply

about rates and what we saw and have seen

throughout past presentations with respect

to the projected increases.

I know that I may have been maybe one of,

if not the most vocal about it.

And maybe that's because I'm on the rate payer advocate seat

on this commission.

And I was, General Manager Herrera and I

were talking yesterday and I shared that

in two different events last week,

I heard Mayor Lurie speak to his number one priority.

And I appreciate because you have it in the top left

of one of your slides, which is where they say

the eye naturally starts to read.

You have keeping rates affordable.

And it was very clear from listening to Mayor Lurie,

his top priority for our agency is affordability.

And so just this to me opens up what my hope is

through this process, which is that we're very transparent

with the public, with stakeholders.

We've got in this room, not just San Francisco stakeholders,

we've got with Tom and Bosca here,

we've got the agency that represents two thirds

of our water rate payers, and we've got elected leaders

and other leaders here who are in the room.

So I think every time that we can talk about

what we're facing, and just to reiterate the challenges

in front of us such as existing debt obligations,

regulatory requirements, in some cases,

an increase in regulatory requirements.

I can't even read my own handwriting.

The decades of dealing with declining federal investment,

declining federal investment and then in construction costs,

it all goes into it.

So I think what I'm hearing and seeing in this calendar

is multiple opportunities for the public to engage

at the commission to come out to the Rate Fairness Board

to be able to say, I wanna weigh in

on what's presented in the proposal.

And I think I know anytime that I'm personally

in a conversation, I bet colleagues,

I'm gonna keep asking, what are the other options?

What are the other trade-offs?

What are the other abilities we can get to?

Because when I was talking to the general manager,

I said, I keep this presentation from February.

It's the 10-year financial plan.

I keep it in this little folder to reference all the time because I feel like I know that work was done to soften this curve before it even got to February earlier this year.

I'm guessing if we were going to look at this curve again, it's even more.

Because of your hard work and the general manager and the entire team following this kind of rubric and getting even further directions from the mayor's office,

I'm guessing some of the projections are even softened for the future.

If we were to take another look at this graph, I reference it quite a bit if I'm sharing thoughts or in conversation with stakeholders or anyone because it's a public record.

Starting next year begins the first of four years based on the February projection.

I'm thinking we're probably in a better place now, and I know we're going to be even in a better place when we approve rates in the spring.

But I think we've already talked about it.

But the alarm for me was seeing the first of four years of projected double-digit rate hikes,

and by the time we get to 2035, getting just really, really close to our affordability targets.

With the time we've had between February and now, I know that your hard work and everyone in this agency's hard work

to be attentive to the importance of keeping rates affordable while navigating all our other commitments.

I know, I'm confident that if we were to rerun this graph, positive change has already happened.

Positive meaning lower rate projections.

And I know we're going to do even more.

The only thing I would throw out there, and then I'll shut my mouth and turn it over to the colleagues

because I know they're going to have feedback to and again and likely express the same gratitude that I am to you and the team.

I did double check on the website for earlier today for the folks over at the community advisory group, the PUC's community advisory group.

They're meeting on December 16th and January 20th.

And I don't know about December 16th, but certainly maybe January 20th, to the extent that's not already in the horizon as a place to present.

It is?

Okay, nice.

because that's also a great, it's almost a little bit more informal.

You know, I had conversations with some folks from the Sierra Club earlier,

and they were suggesting, what about an affordability workshop?

I think there's a lot of hunger for advocates to get in there and kind of engage and be part of this.

And if we're all in it together, no one could ever say they were surprised.

If they get a rate increase, we're all very clear about this is what's happening.

This is we're doing everything we can.

These are the tradeoffs available.

these are trade-offs we may want to make and those we can never go to because of

the flip side and the importance of doing it. I just feel that if we with this

process here we're gonna look back and and have done everything we could to

prevent any ratepayer in town or in the region from saying wait what happened

here oh I heard about this I know why this is happening and I know that

everyone who has the ability to influence these decisions is doing

everything they can to avoid any unnecessary increases. So thank you.

Colleagues. Vice President Leveroni. Thank you very much. Thank you, President

Arce, and thank you very much for your report. This being my first time going

through the two-year budget, a lot of my questions are just maybe hopefully just

basic, but like one just saying incorporating mayor's budget

instructions. Is that something that we will receive? Is there a document that says this is

what the mayor is asking the commission or the rate payers or the SFPUC to try to implement?

Sure. Yeah, the mayor issues budget instructions usually every December to all city departments.

And generally, the instructions that apply to departments like ours and enterprise that

generates its own revenue are more policy instructions.

These are the priorities of the mayor's office.

President Arce also already mentioned affordability

was one of them.

I'm sure we will hear other themes

that we think will be aligned with our own priorities,

because we've been tracking what's

been coming from the mayor's office

and other public stakeholders for a while.

So we feel pretty confident that we

will be in line with their strategic priorities.

But more targeted financial instructions

tend to be given to general fund departments

who the mayor's office need to change their budgets

in order to balance the general fund deficit.

So some instructions will apply to us,

but not every single one.

And those are typically publicly,

they will be published somewhere.

So we can make sure that you all see a copy of those.

Great, thank you.

And then, so huge system,

and we're doing a lot of work.

we see a lot of different contracts.

Is there a, say, as you go through,

you have to make priorities, understood,

but is there an end game to having looked at our entire system

and whether it's five, 10, or 20 years,

is there a game that says,

this is all that needs to be done

and then you start prioritizing five, 10, 20, next year?

Is that?

That's a great question.

We are working towards that.

In the past, we've adopted and planned around a 10-year capital plan.

As we get further along and we get more sophisticated in our capital planning and our financial projections,

we've actually realized that we really need a 20, in some cases, even 30-year plan.

Because our system is so big, there are so many components, and some of this infrastructure was built decades ago.

Or even new infrastructure we're building now, we know, okay, 20 years from now,

this is going to need an update. So we have the most confidence in the first 10 years of that

plan, but we are already looking ahead to 20 years and beyond. Okay. So really, some of the things

that we're doing now, maybe they haven't been done for 100 years or thereabouts. So obviously,

a real task at hand looking at that. Does the, like, if we finish a project, does that project

then get pushed out to 30, 40, 50 years to say the next time we have to deal with this

is going to be maybe not obviously in my lifetime, but is out there so that going forward,

there's always some type of, say, record how accurate it is. Obviously, it depends.

Yes. We take inventory of all of our assets and try to sort of check on that, the health of those

assets on a regular basis.

I would say that part of our capital plan also includes R&R,

so repair and renewal costs, that

is meant to take care of existing assets

so we can extend their lives as much as possible.

So that's also part of the plan.

It's not always just completely replacing

certain infrastructure.

It's making sure that we're taking care of it while it's

in use so that we don't need to update it as frequently.

So that's part of the capital planning as well.

Okay.

And then, you know, we see throughout the year things happen.

Pipes break.

And we have to get in there and repair.

Is there a budget line for, that we've looked at, say, over the last five years that says,

okay, unexpected, but this is going to happen because this has been our average

and we budget a number for that?

Yeah, that's also built into our capital planning process, yes.

Okay.

And I think the last question would be is obviously affordability, transparency, you know, obviously used words that we use a lot.

But on the affordability, do we break down the, let's say for a $50 million job, if we said let's put that off for another year or two years,

Do we know what that increment would be in rate to our rate payers?

We can do that, and that's part of the work that we're doing now to continuously take new inputs, model that scenario, and then look at the impact on rates.

There are a number of things that go into that.

For instance, depending on the project and the size of it, deferring it could mean that costs are going to go up because we know that costs escalate.

So the longer we defer, actually the more expensive a project can get.

So in some cases, it might be better to do that project sooner

so that it's less expensive now, we can get it done,

and we're not planning to pay debt on a higher-cost project later on.

That's not always the case, but that's what we're constantly looking at

to understand how we can keep rates as affordable as possible

while seeing to critical things we need to upgrade.

Okay. I keep thinking about this.

Yeah.

We did, I thought, a very remarkable job this year in bond refinancing.

I know the bond markets are always somewhere out there,

but is that something that we then look at each year to see if there would be an opportunity to do what we did this year,

which was you guys did a remarkable job in saving the amount of money that you did by refinancing?

Yes, absolutely.

We try to be somewhat conservative in those projections so that we're not surprised and that we're planning towards potentially higher costs, but we are always looking for opportunities to refinance and bring costs down.

Okay. And this is the last question. I really appreciate your time on this. Do we use AI at all in determining potential breaks in, you know, what might be the next break in a pipe or what might be the next? Is that at all? I don't even know if it's possible, but now hearing AI all doing all these wonderful things.

I'm turning to Steve Ritchie here.

I think by AI, Vice President by AI, do you mean Ana Intelligence?

We already have that right here.

Yes, I was going to say absolutely.

I don't believe we are yet using AI-powered technology to do that, but it sounds promising.

I don't even know if it's out there.

Steve Ritchie, Assistant General Manager.

The answer is no.

Okay.

You know, we're always looking at, you know, kind of predictors, and then we evaluate that from time to time, you know, probably coming up on another longer-term analysis.

But right now, AI is not good enough to predict main breaks.

Thank you, because I didn't know the answer to that question.

I didn't think it was there yet, but why not ask?

So thank you very much.

And thank you, Mr. G.

I have the next item, so I'm going to stand here.

We got one more question.

Great.

And if we can before, Commissioner Gemdar, I did want to clarify just because when I was saying referencing projected rate increase, I saw a couple like this look from the audience kind of thing.

Just to be really clear, for San Francisco rate payers who have a combined bill, our proposed, and I say this because this is February 2025, I'm confident that the work to date means that the numbers are even more favorable today to our rate payers,

and they're going to be further more favorable to rate payers when approved.

Uh-oh.

When the city attorney grabs the microphone, I want to pause.

Oh, okay.

Isn't it the calendar to talk about our rate setting process?

Okay.

All right.

Hold on.

Can we go back to the item with the calendar?

Director Dooning? One of the slides has a calendar.

I pulled it up, if you can bring it up on the screen.

So, like for example, when we have public outreach about rates, when I think about public outreach about rates,

I think public outreach about rates is the ability to say, this is where we were in February of 2025,

and this is now February to April, public outreach about rates, February 2026.

I got the city attorney looking at me, so I'm talking about public outreach about rates.

And what I think is great is we're able to say, and I just wanted, the whole point I was trying

to make was a clarification, that when it comes to the February 2025, on the water side, we weren't

projecting any more than 7% to 8% over the next four years. But on the sewer system, that's where

the wastewater rates reflect into a combined bill that I think that's where a big part of our

challenge is going to be. Yeah, and I just want, so when we come back to you in January, we will

have a more refined outlook based on all the budget and capital planning that has happened

between March of this year, following that financial projection, and what will be January

of next year. And what I just want to be candid about is that a lot has changed between now and

then. So we are doing everything we can to keep affordability as one of the top priorities. But

what you're going to hear about is all the trade-offs we've had to make along the way.

And I want to make sure this agency and leadership and that across the staff gets recognized for that

hard work to achieve those benefits. That's all I'm doing. Mr. General Manager.

No, I think that Ms. Dooning stated that well, there's been a lot that has occurred

since February, increased conversations about regulatory requirements and the like, so I

certainly wouldn't be wedded to something that happened earlier because there are a

lot of budgetary things that occur, but I take your message seriously, and I think that

what you have seen from what Ms. Dooning laid out earlier is affordability is at the top

of our list in how we're crafting this.

I think she did an excellent job at showing all the tradeoffs and considerations that

we're doing to make sure that we fulfill our requirements to regulatory requirements,

capital upgrades, but all within the rubric of trying to keep this as constrained from

affordability perspective as we can, understanding the debt considerations that we have as well.

So we are focused on that.

But things certainly have changed since February.

Thank you, Mr. General Manager.

Thank you for your patience.

Deputy City Attorney Brickman.

Commissioner Jamdar had a question.

Thank you.

This is most helpful.

Also my first budget cycle.

So thank you for your questions because that clarified some of mine.

I also have a clarifying question.

On one of the slides you say that there's a projected 10-year capital budget of nearly

16 billion, and then there's a lowered estimate of nearly 10 billion. And when you say you're

reducing that by a billion, is it one less from that 9.6 billion, or that is after the reduction?

The initial set of proposals, when we said pencils down, we need to understand what was the outcome

of that initial capital planning process, where every single project team is looking at the needs

for their enterprise, their program, what are the costs, what resources do we have,

that number ended up being $16 billion.

The financially constrained number, it's actually not a fixed number

because it really depends which projects, when you're financing them,

where in that 10-year cycle.

So, you know, about when we initially put out budget instructions,

we thought you need to produce about a billion from last year's adopted plan,

which would bring us closer to $10 billion, but that's not a magic number because it really depends on a number of variables that go into that process.

I can say $16 billion we know does not meet our financial policies.

So we're working to bring that down as much as possible.

Understood. Thank you. That's the most helpful.

Thanks, Commissioner. Commissioner Stacey.

Thank you. I really appreciate the slides where you list the priorities for the budget process,

and then also the slide on how you prioritize the work and projects and what moves forward when.

We hear a lot about those priorities, not only in the budget process, but also when we hear from Ms. Tam

or Ms. Miller or people reporting on specific projects.

And in my mind, the capital plan is, you know, that overview look.

We're putting it all together, and you as staff members have worked really hard to fit it within this framework.

But then, on a more detailed basis, when we hear about the projects,

I think it's equally important to remember those priorities and to hear about what could we put off about this project,

or what were some less expensive alternatives considered, what were the tradeoffs.

And I think it's important for the commission to hear what that thought process was,

what that analytical process was, not only in the capital budget context, but in the

project-by-project context, because that's really where the rubber hits the road with

not only the priorities, but how we, I'm using the wrong word, it's, yeah, it's the

priorities for the budget, but then also how you, what projects go to the top of the list

and what projects. I'm remembering Ms. Miller just a meeting or two ago talked about we

really trying to think about what can we repair instead of replace or what can we extend the

life of for another 10 or 20 years before we take on these projects. That all adds up

to the budget decisions, the project decisions, it's not only affordability, but it's also

how do we keep our system safe and operative.

And so that's why I appreciate the four columns of priorities, and I feel like we need to

always keep those in mind through the budget process, but also through the project approval

and consideration process during the year.

So that, just my comment,

I think it's a really important thought process

to go through every step of the way,

and I appreciate that you do that.

Thank you, Commissioner.

And I know we spend a lot of time on this item,

and it was mostly my fault,

but I do have on roadmap that we do call public comment

if there's anyone that would like to comment on this item,

if you can, Ms. Lanier.

Remote callers, please raise your hand

if you wish to provide comment on item 5B.

Are there any members of the public present?

Mr. DaCosta.

Commissioners, I want you to pay careful attention

to what I say.

Resources and the indigenous people

and who stole the resources

and how are they diverted?

There was no talk about the quality of the water.

There was no talk about deferred maintenance.

There was no mention about change orders.

There was no mention that the SFPUC charged our rate payers more money and then had to refund.

What we talk is like, you know, as if everything belongs and is free, and you commissioners

cannot do a needs assessment, and you commissioners cannot put in writing what is viable and sustainable,

And you hear these reports, these reports are just general reports where the quality

of the water is not good at all, where you all had the audacity to dig into the watershed

and pollute the Hatch Hatchee water and give it to us.

So let us have a hearing how we come to these rates.

And let us come to a hearing that we look at the Raker Act and find out what was planned

then and how you all make a lot of money by catering to these large corporations.

Thank you very much.

Thank you.

MODERATOR, ARE THERE ANY CALLS WHO HAVE THEIR HAND RAISED?

MODERATOR?

OKAY, THANK YOU.

ALL RIGHT, SO CAN WE HAVE THE NEXT ITEM WHICH IS 5C?

is a PUC quarterly budget status report Anna Dooney will be presenting. All right I'm back so this

I'll keep it brief it's just our or not just but I'm talking about our quarterly budget projections for our annual operating budget

And give you a sense of how things are looking so far this year

So these are only initial results from the year and not necessarily indicative of what's to come

But I'll tell you what we're seeing so far in power. We're seeing similar trends that we saw last year

positive operating results driven by both lower demand as well as lower power

purchase costs and in water and wastewater currently we're seeing slight

shortfalls driven by lower volumes and I'm going to go through each enterprise

now in water we're nearly coming out even revenues are down since both retail

and wholesale sales are lower than budgeted it was a much cooler summer

than normal in both San Francisco and the wider Bay Area leading to less water

usage. A few other sources are also leading to negative revenue projections

at the moment, including reduced reliance on a federal subsidy, which we've more

than made up with. On the uses side, with some significant debt service savings

due to a refunding we did last year. Moving on to wastewater, revenues are

also coming in slightly below budget at the moment, and this is mostly consistent

with trends we saw both in water as well as last year. There are also some savings

on the uses side, but it's early, so we will continue to monitor the balance of sources

and uses throughout the year.

In power, sales are slightly down due to lower demand, but this is also more than made up

for on the uses side, where both the purchase of power as well as the costs of power are

down.

And then in Clean Power SF, similar to Hetchy Power, projecting large savings due to both

power purchase costs as well as a general reserve that was budgeted to help build up

our reserves. And I'm happy to report that all enterprises are meeting our financial

policy targets. Any questions about our quarter one financial results?

Thanks, Director Dooning. Questions from commissioners? I would note that the power

enterprise has increased revenues despite flat rates, meaning that we have a very, very

successful enterprise and a good year with a bright future ahead of us.

Yeah, the picture is more mixed on the sales side. There's retail sales are going in one

direction, wholesale sales might be going in another direction, but overall there's

slightly less demand so there's a lot of savings in terms of buying power and

the cost of those power purchase are also less than we had forecasted

originally so that's why you're seeing higher savings there.

Thank you Director. Better than projected yes. Thank you so much. Ms. Lanier can we call

public comment if there's anyone in the audience or on the line that would like

to comment on 5C? Remote callers please raise your hand if you wish to provide

comment on this item. Are there any members of the public present who wish to

provide comment seeing none moderator are there any members with their hand

raised all right great and it looks like we're going to present 5d and 5e together

is that right mr. general manager we are item 5d and e water enterprise capital

improvement program quarterly report is item 5d and the water system improvement

Program quarterly report is item 5e and Katie Miller will be presenting both of them

Good afternoon President Arce and Commissioners. I'm Katie Miller director of water capital programs if I could have the slides, please

Today I will provide a combined presentation on items 5d and 5e with an update on the water enterprise capital improvement program

As well as the water system improvement program as of the end of the first quarter of this fiscal year

year 25-26. I will start with the Water Enterprise Capital Improvement Program.

The regional and local water enterprise capital improvement programs include a total of 52

projects with a combined budget of $4.1 billion.

These pie charts show the budget broken down by project phase.

During the past two quarters, four new projects were initiated with three projects not yet

initiated for a total of 26 projects in planning and design phases and 23 projects in bid and

award construction and closeout phases.

in construction represent over $2 billion, $2.8 billion of this budget, or almost 70%.

About 38% of the program budget has been spent to date, with $162 million spent in the past

two quarters. Note there has been a significant increase in construction spending with an average

of $47 million per quarter spent in the past fiscal year, but trending upward with $93 million

dollars spent just in the past quarter. This is due to several large projects in construction,

including the Sonola Valley Water Treatment Plant Ozone Project and the San Francisco

Water Division Headquarters Project.

Sorry, I'm having trouble with the clicker.

Need a new battery.

Okay.

This table, similar to Table 3 in the quarterly reports, shows a summary of program expenditures

and cost forecasts at the end of September for all active projects by category.

The right to column show cost variances between the budgeted and forecast project costs.

This table shows that at the end of the first quarter, project budgets are mostly on track

with the approved budgets with about $88 million in cost increases forecasted over at this time.

During the past quarter, six regional projects and one local project forecasted cost increases.

Currently, there are nine regional projects in construction.

These photos show improvements being installed for the corrosion control project,

the San Antonio Pump Station Motor Control Center Upgrades Project,

and the Sonal Valley Water Treatment Plant Short-Term Improvements,

which started construction this past summer.

And now I'll provide just a few project highlights for you.

The Sonal Valley Water Treatment Plant Ozone Project has spent $64 million of its $326 million budget.

Note, I apologize, there's a typo on the slide for the amount spent to date,

which should be $64 million. During the past six months, significant site work has occurred,

including tie-ins and connections to the large 66-inch and 78-inch diameter raw water pipelines,

as shown in this photo. Additional work was completed on drainage and yard piping,

radio communications, electrical duct banks, and retaining walls. Due to the excellent

coordination and partnering between the contractor and the project team, all planned work and critical

connections were completed by October prior to the 100-day Hetch Hetchy water system shutdown,

which will start later this month. At that time, the Sonola Valley Water Treatment Plant will be

needed to operate reliably at full capacity. The Southern Skyline Boulevard Ridge Trail Extension

PROJECT MADE SIGNIFICANT PROGRESS IN CONSTRUCTION WITH APPROXIMATELY 93% OF THE WORK SCOPE

COMPLETED, INCLUDING PARKING LOT PAVING AS SHOWN IN THIS PHOTO. THE TRAIL IS ON TRACK FOR

COMPLETION BY THIS SUMMER. AND NOW WE'LL SHIFT TO THE LOCAL PROGRAM WHERE SIX PROJECTS ARE IN

CONSTRUCTION. THE MAIN REPLACEMENT PROGRAM CURRENTLY HAS 11 CONSTRUCTION CONTRACTS UNDERWAY

THROUGHOUT SAN FRANCISCO. THE PHOTO ON THE RIGHT SHOWS A MAIN

REPLACEMENT PROJECT ON PROSIDA STREET INSTALLING EARTHQUAKE

RESISTANT DUCKTYLE IRON PIPE TO CREATE A SEISMICALLY RELIABLE

PIPELINE SYSTEM FROM COLLEGE HILL RESERVOIR DIRECTLY TO SAN

FRANCISCO GENERAL HOSPITAL. THIS IS THE FINAL SEGMENT OF FIVE

EARTHQUAKE RESISTANT DUCKTYLE IRON PIPE CONTRACTS AND THIS PROJECT IS

nearing completion. And now we'll share highlights from one of the local projects,

the lead component services project. While the SFPUC replaced all known lead service lines in

the 1980s, there was concern that some of the galvanized steel lines may have unknown lead

components, such as short flexible connection piece known as a gooseneck. Thus, to be sure all

lead is removed from the system, we are replacing all galvanized steel services

with copper. Over the past two years of the construction contract, over 1,365

services have been replaced, with 167 services replaced just in the past

quarter. This photo shows the new copper service line being installed at a

residents on Fillmore Street. The new San Francisco Water Division headquarters project is 24% complete with $71 million spent to date. Approximately 80% of the trade packages have been awarded to date. Construction of the garage first level is completed as shown in this photo and utility trenching and installation are underway. I encourage you to drive by Cesar Chavez and Evans from time to time

and watch the progress of this major construction.

It's going fast.

I will now provide a concise summary of the Regional Water System Improvement Program

as of the end of September.

The Regional Program, consisting of 52 projects for a total budget of $3.8 billion,

is 99% complete with only $59 million budget unspent.

There are only four projects remaining with one active project in planning

and one in construction.

This table shows a summary of the budgets, expenditures, and cost variances for the two

remaining active projects.

There are no project cost variances to report at this time.

The regional groundwater storage and recovery project is 91% complete at this time.

For the two remaining construction contracts, the phase IIA contract to rehabilitate wells

and add variable speed drives, completed startup testing, and reached substantial completion.

The Phase 2b contract to complete installation of the South Sunset Main Well and pipeline

connection to Cal Waters facility started construction, with the contractor mobilizing

and performing various site work.

For the Alameda Creek Recapture Project, planning for a redesigned facility continues to be

underway.

During the quarter, several alternatives for pump station configurations were analyzed for

carrying forward to the alternatives analysis.

And with that, I'd be happy to answer any questions.

Thank you, Ms. Miller.

Questions from Commission colleagues?

Vice President Leveroni.

Thank you very much for the report, Thoreau.

Just wanted to get a little understanding of the terminology.

So on page three we have approved budget.

And when we say approved budget, is that approved on day one or does that also include if there

were any changes made to the original budget after it was started?

The approved budget is really referring to the budgets that you all approved in the last

CIP process really two years ago.

only a couple of changes that were made just last year in the budget approval

process one of them being the Sunil Valley Water Treatment Plant ozone

project but the rest of them go back to the 2024 CIP budget that you all

approved in February okay and that looks like that has been staying pretty much

on course on a number of these examples that you have here that's correct the

Projects are trending pretty well right now.

Okay.

And then just on page 11, there's a reference to current approve of the budget.

Is that, do I interpret that different than approved budget?

There have been occasions in the past where we have adjusted the budget mid-cycle, but in this case, the only one was the ozone that we did in 2025, but everything else has stayed the same.

I apologize for the confusion on that.

No confusion.

Excellent.

Thank you.

And thank you for the great work on this.

It was very good.

All right.

Thank you, commissioners.

Ms. O'Neill, can we take public comment on items 5D and E?

Yes.

First, I'd like to conduct a mic check for our moderator.

Are you there, moderator?

Yes, I'm here.

Are you guys able to hear me in city hall?

Yes, we can.

Thank you very much.

Remote callers, please raise your hand.

If you wish to provide general public comment.

FOR ITEMS 5D AND E ARE THERE ANY MEMBERS OF THE PUBLIC PRESENT WHO WISH TO COMMENT ON THIS ITEM THESE ITEMS

SEEING NONE MODERATOR DO YOU HAVE ANY PEOPLE WITH THEIR HAND RAISED

MS. LENIRE THERE'S ONE CALLER THAT WISHED TO BE RECOGNIZED THANK YOU

CALLER I'VE INMUTE YOUR LINE YOU HAVE TWO MINUTES

OKAY THIS IS DAVE WARNER FOR SOMEHOW ITEM 5B WAS NOT THERE WAS NOT PUBLIC COMMENT FOR THAT

I'd love to comment for that.

So if possible, I'd love to comment on both items,

5B and 5D, but it might take me a little more

than two minutes, is that okay?

Yes, please continue.

Okay, so first, 5B, just terrific that you guys

did this progress report, and so I would say thank you

so much for making the change.

I think it's a terrific step forward.

I also would like to thank the commissioners

for the outstanding questions that were asked.

The only thing I'd say, and I don't mean

this is a significant criticism,

but it's a little hard to make sense of this

when you don't know what the underlying

demand assumptions are.

And I bring this up in one context.

The only thing I might take a slight exception to

is the comment that delaying projects

means increased construction costs,

which that yes, probably is true,

but it's also not a sure thing.

But the offsetting thing that I think is more important

is delaying projects reduces the need for debt

or certainly delays the need for debt.

Ideally, it reduces it because you're doing the project later

and can afford to spend more on it.

But reducing debt is a huge thing

because it increases flexibility

and already the SIPC is pretty heavily debt laden.

So I just thoroughly encourage

there's more benefit to deferring projects

than purely the risk of increasing construction costs.

So that's my end of comment 5B.

And then I just talk about 5D.

The only thing I'd say is to Commissioner Leveroni's statement, at the fourth quarter of 2024, the fiscal fourth quarter, the capital project report showed a $600 million variance between the original budget and what was currently forecast.

And so my understanding is budgets were reset starting with fiscal 2025.

And so what you're really only seeing is changes that have occurred in the budget since the beginning of fiscal 2025, which I think right now is less than a full year.

Okay, that's it. And thanks for letting me do both comments. And I really appreciate all your service. That's it.

Thank you.

Thank you, caller, for comments. Ms. Lanier, there are no more callers that wish to be recognized.

Thank you.

Thank you, Ms. Lanier. Item 5F is a Wastewater Enterprise Capital Improvement Program quarterly report.

Bessie Tam will be presenting.

Good afternoon, President Arcee and Commissioners.

This is Bessie Tam, Wastewater Capital Programs Director, reporting on Q1.

Thank you for the slides.

Okay.

So as usual, I want to start up with some construction updates.

On the far left, this is a photo of the channel forcepane intertie project located near Cesar Chavez.

So this is a really major construction project where the intertie will provide a bypass of one of our most critical forcepane on the bay side,

providing dry weather redundancy for about a quarter to a third of channel forcepane.

So to piggyback on what Commissioner Stacey mentioned, this is a very good value project for us, valued about a little bit over $30 million that provides a substantial dry weather redundancy for critical infrastructure.

In the middle photo is Seacliff Pump Station No. 1, pump station and force mean upgrade.

upgrade. This is another critical pump station force main project for the wastewater system

happening right now. Last but not least, at our channel pump station, we have a project there

doing screen replacements and other improvements for this critical pump station in our wastewater

water system. We provide an update on the SSIP phase one status. The phase one program continues

to be maintained at the overall budget. The blue text highlights the changes between last

quarter and this one. So one of the projects moved from closeout to completion, and we

We also have some additional progress on projects moving from design to bid and award, as highlighted

in the blue here.

The program continues to make steady progress, increasing slightly from 76% to 77% completion

for our $4.7 billion SSIP Phase I.

In this slide is the cost summary for both the SSIP Phase I and the other SSIP program.

In the second to last column, in terms of the cost variance, some of this was highlighted

in previous quarters, and we do compare the cost variance between the budget that the

commission last approved in the 10-year CIP budget cycle versus the current forecast.

The last column highlights the change between the quarters.

So what changed between last quarter and this one?

overall cost variance reflect changes in increase in budget for the BDFP project

in terms of incorporating our biogas project. There are also changes in

forecast for our Lower Alamany flood resilient project. In this quarter, the

$12.9 million increase that you see, it reflects the change in forecast for our

Folsom flood resilient project. So that project has progressed in design. Two of

the contracts. So the Folsom project has four contracts. One is in construction, three of them

were in design. Two of the design projects have progressed to 95 percent and is ready to go

towards bid and award. The updated estimates reflect a higher increase because of the additional

design coordination that we need to make with Caltran. So that is the current update. Now,

For us, the project going to bid and award, we see the actual numbers.

These variants will change as we actualize the numbers and actual bids that we receive

from the contractor.

For the facility and infrastructure list of projects, we have a slight positive variance

reflecting closing out of one of the projects and realizing the cost savings from the program.

In line with the progress that the program has been making in the last quarter, we reported

on about 20 milestones being met in the program on the projects and subprojects.

In this one, we're showing about 18 milestones being completed.

Of note is the advertisement of the Southeast Plant Nutrient Project.

That's a major project that, again, wastewater and PUC is undertaking to protect the water

quality of the bay by addressing nutrient reduction from our southeast treatment plant.

Now I'm going to highlight the two maker projects that's active in the southeast treatment plant.

This is our BDFP project, as you can see here.

The biogas, I just want to highlight that for the biogas utilization project, that is

a design bill contract, and they have achieved 75% design package.

and moving forward on that.

So lots of progress being made.

The digesters, the concrete work has been completed.

They are actually painting or have painted the digesters

by now at this time.

So lots of progress being made here.

Last but not least is our new Headworks project.

I wanna thank the commissioners, the general manager

and our mayor for the ribbon cutting

that occurred in September, 2025,

highlighting the completion of the Headworks project.

So we're moving into testing and closeout.

We just wanted to make sure that all the components

are tested fully and then we are transitioning

the operation of this slowly to a wastewater enterprise.

And with that, I'm happy to answer any questions you have.

Thank you, Ms. Tam.

Colleagues, questions?

All right, well, thank you, Ms. Lanier.

Can we see if there's any public comment?

Yes, remote callers, please raise your hand

if you wish to provide comment on this item.

Are there any members of the public present

who wish to comment?

Seeing none, moderator, are there any members

of the public with their hand raised?

Ms. Lanier, there are no callers

that wish to be recognized.

Thank you.

Thank you, Ms. Lanier.

Item 5G is a progressive design build contracting update.

And Steve Robinson will be presenting.

President RCA, Commissioners, thank you.

My name is Steven Robinson, Assistant General Manager of Infrastructure.

I'm actually joined today by Jignesh Desai, Project Manager for that Nutrients project

that Director Tam was just mentioning.

You may recall back in October I came and presented a summary of different contract delivery methods.

And I expressed at that time the intention to come back and walk through in slower time

what progressive design build means, so that's what we're doing today.

We do have a number of contracts underway using that method,

But we were here specifically because of that Southeast plant nutrient project that's coming as a major investment and project design.

Sorry, Progressive Design Build was selected as the best method to do that with.

And we're now well through the procurement process and intending to come to you for a ward sometime early next year.

So this presentation is in advance of that.

We want to talk specifically, though, around the sequence of how Progressive Design Build works

and what actions then we would bring to you as the commission during that process as the project develops.

So to recap from last time, there are a range of delivery methods that we use.

On screen you'll see three, the primary ones.

And we also talked about job order contracts and as-needed construction contracts

that we typically use for smaller and more routine construction work.

For anything that's standalone and of a significant size,

we typically use one of these three methods that you see here on screen.

per Chapter 6.

About 2 thirds of our contracts by number

are in the traditional design bid build method.

That's when we have, as an owner, two direct contracts,

one between the designer and one between the contractor,

unless, of course, we can do the design in-house ourselves.

Selection for that is typically based on the low bid,

but there is a provision in Chapter 6

that allows us to use an element of best value

that's not fully around price within a design bid build

environment.

Construction manager at risk here, or sometimes called CMGC,

construction management general contractor,

we've used them several projects.

The Southeast Community Facility,

Headworks that we've just seen again,

were completed using this method.

Biosolids is using that method and continues.

Again, there are separate contracts involved,

but the construction contractors brought on much earlier

during the design process to help advise

and make sure that the design is heading

in the right direction.

It's primarily selected based on qualifications,

and then we then bid out trade packages

during the construction phase.

Design build, the main difference here is that we as the owner then only have one contract

with a single entity, the design builder.

It can be a lump sum fixed price or a progressive in nature over time.

And there are lots of factors that we consider when we're comparing and selecting these methods.

And I covered those last time, so we'll not get into that today, but we want to talk more

specifically about progressive design build and the process of how that works.

Generally speaking, there are two phases in execution of a Progressive Design Bill contract.

Simply put, a pre-construction services phase and a construction services phase.

Pre-construction includes the effort needed in advance of getting to construction.

All of the planning, all of the design, and procurement process of trade packages to initiate

the physical construction work.

There is what I would call a bright line for what construction means, and it may not necessarily

be the traditional breaking of ground on a construction site.

You can think about early procurement of long lead electrical items, for example, something

that may take a few years to manufacture.

A method like this allows us to procure those in advance and really help the schedule.

So this is a different way of thinking from design, bid, build.

Rather than a linear process of doing all of the planning and design before initiating

construction, we're breaking it up into elements and doing enough of the initial work through

designed to be able to initiate that construction phase in sequence and we

follow on then with those packages. The benefit of this ultimately is staggering

the work and allowing overlapping of the schedule which in theory if we do it

correctly allows some reduction in the schedule and perhaps even some savings

then and money over time. The procurement process follows and allows for more

collaboration with the bidders in advance of them submitting their

proposal. This is a very formal and well-controlled process but it does

provide the ability for both parties then to share information and understand risk.

The environmental secret process can begin after pre-construction has started,

but before the construction phase starts. It's more of an integrated and collaborative process

for project development. So I'd like to head over to Jigesh at this point to go more into

the details of exactly how this works and when we'll be coming to you at each stage of the project.

Thank you, AGM Robinson, for that project delivery overview.

Good afternoon, commissioners.

My name is Jignesh Desai.

I'm principal project manager for infrastructure.

I've been fortunate to work with every project delivery method available in my last 26 years

with PUC.

My first design build project dates back to 2013, involving the replacement of floating

covers on five digesters and the biosolids cake bin at the Southeast plant.

Work that SFPUC received the Western Pacific Region Design Build Award.

I'm also a design build certified professional through the Design Build

Institute of America.

Thank you for the opportunity today to review the progressive design build

sequence.

The graphic in front of you today has four distinct tiers.

The top tier is pre-construction services, shaded in green.

Second tier is construction services, shaded in light blue.

You will notice, as our AGM mentioned, that progressive design build allows overlap between these two top tiers,

resulting in schedule efficiencies because designer and builder function as one integrated team.

The third tier is commission actions, and the bottom tier is contract milestones.

even though I said distinct years but they interact with in a coordinated

fashion between those tiers Commission action one everything starts with your

action and everything ends with your actions so the first section will be

before beginning any pre-construction work a project manager you will come in

front of you to request the award of contract following the conclusion of

full request for qualification and request for proposal procurement by the

department. Once the award is given during the early planning phase, the design build team

collaborates with the SFPUC team to validate scope, schedule, and budget, confirming the baseline

project requirements, including geotechnical data, existing asset conditions, technology evaluations,

permitting challenges, supply chain consideration, and other major risk. The purpose of this planning

phase is to develop and validate best possible information early, ensuring decisions are

grounded in accurate, reliable data. The outcome is a realistic risk-informer estimate for

scope, budget, and schedule. Once the design is underway, tools such as design to budget,

right, very important principle, and pool planning will be used during the design development.

Commission action two is project approval.

At a CEQA Environmental Review Progressive,

staff will return to request project approval

and adoption of mitigation monitoring and reporting program,

also known as MMRP.

CEQA in a progressive design bill

is always going to be a critical path.

And this commission action two enables procurement

of trade packages, as our AGM mentioned,

and the start of construction services

with a notice to proceed.

Commission action three will be contract modifications.

These are pre-planned progressive modifications

aligned with project financing and phasing,

not a typical traditional change order modification.

So these are all baked into our consideration

from the get go.

So those are not change order modification.

So throughout the project,

the team uses a detailed cost model

and real time cost controls.

The team also uses design-build best practices

to help us with collaboration and integration

to hit our performance requirements.

And lastly, the construction occurs in phases,

followed by commissioning, training,

and turnover to operations.

And last but not very important action

is the final contract closeout.

This final action accepts project completion

and authorizes final payment.

So in summary, across the project lifecycle, this commission takes four authorization actions,

contract award, project approval, planned contract modification, and contract closeout.

Now, effective change management begins in the pre-construction services with a detailed

cost model built on a clear work breakdown structure. Monthly maintenance and updates

of these models, both the cost schedule and keeping track of the scope. And discipline

in tracking and managing contingency. Contingency is reserved strictly for unanticipated or

unforeseeable conditions that could not reasonably be identified during planning and design.

One of the benefits of having the builder and designer on board as one integrated entity enhances constructability views from get-go.

Phasing of work, which is also important when you time it, what you time it across the life cycle of construction.

Also very important planning work.

And continuous de-risking the project, that is the risk reduction.

Protection of contingency for true, unforeseeable conditions only.

So the processes that we outlined today, number one, streamlines the project delivery and improves efficiency.

Number two, aligns with Chapter 6 requirements.

Number three, it establishes a clear, transparent framework for contract award, modification, and contingency management.

Number four, enhances oversight, your oversight, and promotes exceptional outcomes for highly complex capital projects.

and last but not least supports the SFPU submission to deliver critical and

reliable service to our ratepayers with affordability in the mind. With that we

are happy to take questions the Commission may have. Thank you Mr. Tassai

AGM Robinson. Questions from the Commission? Vice President Leverroni. Not a

question but just a comment that's thank you very much for you know doing more in

in this area of progressive. I know it's not easy on staff and that to go through this

process, but I think in the overall picture that we're all trying to accomplish here,

thank you very much for looking at the progressive design build. Thank you.

Commissioner Stacy. Thank you for the presentation. I'm not

sure I fully understand the sort of budget and cost containment aspect of this kind of

contracting process. You're not really getting a price up front. Is that right? You have

worked out a budget, and then you're very collaborative with the contractor. I guess

it's like a GMGC sort of contractor that works through all of the phases with you.

It seems like it will take a very close collaboration, a lot of expertise and intelligence in house

in order to manage and oversee costs.

Does it really cost that much?

Can we do it for less?

is it worth spending this much more to get something additional?

Could you talk a little bit about sort of the budgeting and the cost containment or cost framework of a process like this?

Thank you.

Yeah, I'll start us off at least.

But I want to sing some of Jignesh's praises first, though, as a subject matter expert in the field,

because I think what you're getting to, Commissioner Stacey, is the trust element that needs to be built and honed between the two entities,

between the owner and then the design builder.

And yes, it does take a culture of change for us

if we're typically used to doing design bid-bill contracts

that are very different.

So we need to foster that and gently take steps

towards these more collaborative methods.

And I think today I've mentioned a few projects

that we've done like this very successfully in the past

and have some of our larger investments using CMGC,

which is similar but different.

So in this case, the design builder will come on much earlier.

And you're right, there is not a defined price point,

let's say, at the very beginning.

They're not being selected based on price.

But that level of intimate collaboration you're describing is exactly what's needed to foster trust and what I described, understanding risk.

And which party is in the best place to mitigate that risk, therefore should own it.

And we're not pretending or in any way assuming ownership of risk when we shouldn't in the first place.

And that helps us get towards what Jignesh described, more of a design-to-budget approach, which allows us to actually work towards a budget in the future and hold ourselves to it, hold both parties to it.

Do you have anything you want to add?

Yeah. Thank you.

So one of the things I learned early on is the most expensive on the project is the time.

It's most expensive in construction, not making decisions on a timely manner.

So Commissioner, you're absolutely right.

We'll have to be together right on the, with the design builder to collaborate and make decisions quicker, faster, and the right decisions.

Now, how do we ensure the decisions that we are making is the right decision?

We are bringing a renowned qualified team

who have done many, many projects across the country,

and some of them are international firms, right?

So they bring the designer together,

and during the development from the get-go,

as an owner, we are more performance-based

rather than prescriptive requirement.

Where we get in trouble most of the time

is the prescriptive requirement.

So we say, okay, this is the sandbox

that we have at the Southeast plant.

These are the influent concentration.

I need to meet this concentration

for the nutrient reduction.

Those are the performance and we invite the innovation,

how we gonna hit our targets on the budget and schedule.

And the way to do is once I,

one of the things I mentioned is the beginning

with the cost model.

Knowing what scope is must have, like to have,

could be deferrable, and there'll be some sacrifices

on our side as well, that if we can't afford,

then we have to sacrifice on like to have things, right?

So that discipline will be required on our side,

and you're absolutely right.

That's a mindset that we'll have to get used to.

I hope I answered, but I think having decision made

with the right information, having contractor on board

to tell you, okay, this is how you phase it,

you can be efficient in your costs,

and we can meet our budget.

I think that's the best because in other delivery,

when bid comes, we have no recourse to change our thinking

on the strategy and scope because bid is bid.

We're not gonna go back and redesign the whole project.

Here, continuously, we are progressing design,

keeping those targets in our mind.

So I think that's the way this delivery method

allows that cost control.

Yeah, and it sounds extremely collaborative

that you are just hand in hand from the very beginning

and that you, this idea of designing to budget

is something that you work through together with the...

Yeah, it's a hard work, Commissioner.

Design build is not a magic bullet.

We have to be part and parcel of right there

with design building, collaborating.

Yeah, and very actively involved

in all of the decisions along the way.

Absolutely.

So thank you for that information.

It's very helpful.

Thank you.

And I liked that the idea that we're looking at this model

on top of all the different benefits,

specifically looking at the ability to control costs

and potentially even realize savings positively impacts rates

because we talked about the fourth pillar

being the construction costs.

So there's so much good about the team taking this direction

and appreciating the general manager for scheduling this update

because I think it's part of us at the commission

becoming acclimated to seeing the,

what is called in the presentation,

the budget modifications.

These are not change orders.

These are phased approvals named budget modifications

that are anticipated and part of realizing the benefits

of progressive design build.

So thanks.

I think it's good for all of us to keep seeing this

as you bring the projects forward.

All right, is there any public comment, Ms. Lanier?

Remote callers, please raise your hand

if you wish to provide comment on item 5G.

Are there any members of the public present

who wish to comment on this item?

Seeing none, moderator, are there any callers

who have their hand raised?

Ms. Lanier, there are no callers

that wish to be recognized.

Thank you.

Okay, that concludes my report.

Thank you, Mr. General Manager.

Can we call the next item, Ms. Lanier?

ITEM SIX, BAY AREA WATER SUPPLY AND CONSERVATION AGENCY REPORT.

GOOD AFTERNOON PRESIDENT ARCE AND COMMISSIONERS.

BEFORE I GET STARTED WITH JUST ONE ITEM THAT I WAS GOING TO TALK TO YOU ABOUT TODAY,

I JUST WANTED TO COMMENT THAT WE ALSO RECEIVED THE LETTER FROM ASSEMBLY MEMBER PAPIN ON THE

PROJECT AND OUR UNDERSTANDING AT BASCA HAVING WORKED ON THIS PROJECT FOR SEVERAL YEARS IS THAT

SAN FRANCISCO HAS BEEN IN COMMUNICATION WITH THE CITY OF MILBRAE AND JUST LIKE THE ASSEMBLY

MEMBER WE WOULD HOPE THAT THAT COMMUNICATION WOULD CONTINUE AND THAT THOSE DISCUSSIONS WOULD

WOULD CONTINUE TO TRY TO SOLVE ANY PROBLEMS THAT MIGHT PERSIST BETWEEN THE COMMISSION AND

MILBRAE AND WE HOPE THAT THOSE DO SUCCEED SO THAT THAT WOULD BE MY COMMENT THERE WHAT I CAME TO

to talk to you about today was something very positive and exciting. Earlier this year,

I think about April, you approved an amendment to the water supply agreement on your side

between the SFPUC and the wholesale customers. And I'm pleased to report that as of December 2nd,

all of our Bosca members, all 26 wholesale customers have approved the amendment as well.

And so that is now in effect.

And just to remind you that the amendment solved a long-standing concern that four agencies in the South Bay that had a minimum purchase requirement due to conservation were no longer able to meet that minimum purchase obligation.

In other words, they couldn't buy enough water from you to meet that purchase obligation because their customers simply weren't using that much water.

And that's Milpitas, Alameda County Water District, Sunnyvale, and Mountain View.

And so the amendment process went through and provides that flexibility.

It also provided flexibility in implementing drought restrictions.

And we did, alongside the water supply amendment, adopt a new what's called a Tier 2 water supply allocation among the wholesale agencies.

And that, I think, makes everybody happy.

That was a collaborative process over 36 months.

So I'm really excited to get this under our belts.

I look forward to working with your staff on whenever the next water supply amendment happens to come by.

I know there continue to be small issues here and there in implementing the 2009 agreement.

But we do work well together and I thank the staff of the commission for working well on this amendment.

And the team here to get that approved and on its way.

So that is my report for today. I'm happy to take any questions.

Thank you, Mr. Smigel.

Colleagues, Commissioner Jamdar.

Thank you so much for that presentation.

I just wanted to clarify, I think you mentioned there, in light of this letter that is before us,

you said there have been communications with the city of Milbrae and the PUC.

I just wanted to make sure that members who have come to speak to it are reassured at that front.

So the project, and it would probably be better to address this with your staff,

but as i understand it the project has been in development for many years and through that

process bosca becomes aware of a project we have a review process within the cip

spelled out in the water supply agreement and so we comment on capital programs and projects

and certainly we're aware that the staff has been in communication with millbrae at certain times

over the last, say, three to five years on this project,

but obviously more communication is necessary

given the level of public comment that we're hearing today.

Thank you.

I appreciate the report, and again,

thank you for the partnership and your representation

of two-thirds of our water rate payers.

On the same vein, only because of respect,

and you've mentioned the Millbury campus,

we've heard from members of the community,

with some of the community business,

current council member of Millbrae, Mayor of Millbrae,

and we got the letter from the State Assembly,

Water, Parks and Wildlife Committee.

I think you've all got our attention.

I'm just learning some of the specifics.

I heard reference to a 2023 RFP,

and I don't want to get a head of staff kind of response

or helping us fill in the blanks

some of this stuff but if if I can ask is this is this something that we're

going to see at the Commission there was someone spoke about a January

presentation is this something that's going to come before us or this is is

this is this an RFP this is this something that's already happening I

wasn't on the Commission in 2023 so we don't have any plans to make a

presentation to you in short order okay but is RFP already out or is this

something that's projected for the future.

Yeah, Steve Ritchie, assistant general manager for water.

I've had to sit here and listen and I'm going to not speak unless I'm spoken to.

And so just to provide a little bit of information on January 13th,

I am currently scheduled to appear at the Millbrae City Council

to discuss the project that January 13th, 2026.

The RFP that was referred to was actually an RFP issued in September of 2024.

It was an RFP for construction by CMGC contractors.

So it was really a document that was aimed at construction.

It wasn't a plan.

and as part of that, part of the contracting process, we require

contractors who receive those to sign non-disclosure agreements. For some

reason that I still don't understand, a Millbrae staff person requested a copy

of that RFP, which was again a construction document, and was told that

he had needed to sign a non-disclosure agreement, and there was a lot of

kerfuffle around that, and within a couple of weeks after that I had met

WITH THAT STAFF PERSON AND THE CITY MANAGER FOR FOR MILBRAE I'VE ALREADY MET WITH THE

CITY MANAGER ACTUALLY THE REPRESENTATIVE OF THE CITY MANAGER SEVERAL WEEKS BEFORE TALKING

ABOUT WHERE THE PROJECT WAS AT BECAUSE THERE WERE QUESTIONS ABOUT THAT SO WE'VE MET WITH

THE THE CITY STAFF YOU KNOW THREE OR FOUR TIMES ALSO THIS THIS GOES BACK ACTUALLY EVEN

further because of the original extension of the OSH lease.

So there's a lot of detail there.

We're in the midst of preparing a response in detail to Assemblymember Pappin's letter

and trying to set the record straight and indicate what the real value of the project

is and what the process has been.

But January 13th is me appearing at the Bilmeray City Council.

Got it.

My hunch is that it'll probably be a lively conversation,

not a conversation we're part of.

Hopefully a lot of good things happen, get resolved,

and by the time, if it ever comes back to us

at the commission, it could either come in like a lion

or come in like a lamb.

I hope it's the latter through whatever work gets done

to work through this stuff.

So thank you for helping us understand

kind of what we're hearing today.

Thanks.

Any other colleagues?

All right.

Do we have public comment, Ms. Lanier?

Remote callers, please raise your hand if you wish to provide comment on item six.

Ms. Ann Schneider.

Hi.

Thank you.

I served on Millbrae City Council from 2016 until my term was limited out last December.

I'VE BEEN THE BOARD MEMBER FOR

MILBRAE FOR THE LAST THREE YEARS.

AND I DON'T RECALL AT ANY TIME

HAVING SPECIFIC CONVERSATIONS OF

WHAT WOULD HAPPEN AT THE PROPERTY

AT THE SFPUC PROPERTY IN SAN

FRANCISCO.

WE KNOW THAT WHEN THE ORIGINAL

OSH CLOSED THAT TARGET WANTED TO

COME IN BUT THEY WANTED A LONG

TERM LEASE LIKE A 10, 20 YEAR

LEASE IN TARGET AND SFPUC WASN'T

WILLING TO GIVE THAT.

AND THEN WE DIDN'T KNOW ANYTHING

at all. So I do hope that there will be a good discussion in January. But I'm going to tell you,

and I'm usually really good at this, that there was no communication. During that same time frame,

we were working on our El Camino Real downtown specific plan. And we've upgraded most of our

El Camino Real to pretty high density. We're limited, by the way, by SFO of the density that

we can do in Millbrae. So again, that didn't come up in terms of taking very valuable commercial

property off the tax rolls with that. I actually put my receipt in for a different reason. As a Bosco

member, and I'm speaking just for myself as that one member, but I also serve on the policy committee,

and we have been looking at our own projects, and in light of affordability, what projects we should

be saying, do we really have to do them? Can they be pushed off? Is there another way to do them?

on top of the fact that many of us, including the city of Milbrae, are looking at water alternatives that are all bloody expensive.

So just know that we're doing our part on our side to try to figure out how to keep things affordable.

Thank you.

Thanks. Steve Rinaldi from the city of Milbrae here again to speak to the commission.

I would like to thank you for the time that you've spent listening to us.

I would also like to thank Mr. Ritchie as well as Mr. Schmeagle for their information that they provided.

I can tell you that I've been on council for over a year, and I recently just learned a Mr. Ritchie's meeting with our city manager,

where he told us that they were anticipating breaking ground in October of 2026.

This has now become mission critical for me and the residents of Millbrae, as this is our last hardware store.

Listening to the reports today, it's clear that you folks are looking at ways to save money with projects that are going on.

And I think we have an opportunity to scale this project back.

This is the largest parcel of land within the San Mateo County on El Camino Real.

Plus, you have Harry Tracy, which all sits above Meadows Swim Club right over by 280.

So I think working with us together would be a great way to get this project off the ground and do it right.

I can also say that Assemblymember Papin, who is also the chair of Water, Wildlife, and Parks, has specifically said, you know, learning about this, it's of great concern to her.

and she wants a win-win for both of us.

And as a city council member here,

we don't make decisions with one person.

It takes five.

So we need three votes to say yes on our side.

We are looking forward to this January 13th meeting.

We're looking forward to making it productive.

And last piece of information I want to give you,

you are more than welcome to come down

and see the parcel yourself.

It fully sits surrounded by the city of Milbre

on El Camino Real in our commercial downtown district.

Millbrae is only 3.2 square miles only 10% of it is zoned for commercial and

you folks are the largest parcel on El Camino within that batch so thank you

for your time I want to wish you all happy holidays we are now off because I

have a public meeting happening later tonight Millbrae God bless take care

thank you councilmember moderator are there any colors who have their hand

raised miss linear there are no colors that wish to be recognized thank you

Thank you.

Thank you.

Thank you all.

Ms. Lanier, can we call the next item, please?

The next item is item 7, consent calendar.

Colleagues, is there any comments or questions on the consent calendar?

And if not, can we take public comment on consent calendar item 7?

Ms. Lanier.

Callers, please raise your hand if you wish to provide comment on item 7.

Are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any callers who have their hand raised?

Ms. Lanier, there are no callers in the queue.

Thank you.

All right.

Well, then, if that is the case, I'd like to get a motion to approve the consent calendar.

Colleagues?

Motion to approve.

Motion from Vice President Leveronis.

Is there a second?

Seconded.

From Commissioner Jamdar can we have roll call please Ms. Lanier. President Arce? Aye. Vice President Leveroni? Aye.

Commissioner Jamdar? Aye. Commissioner Stacey? Aye. Commissioner Thurlow is excused. The item passes. Thank you, Ms. Lanier. Can we hear item 8 please?

The next item is item 8,

which is a public hearing to consider and

possible action to adopt new rules and regulations governing hydrant use for temporary water supply and

and associated amendments to the rules and regulations governing water service to customers

in conformance with the requirements of Charter Section 4.104,

and authorize the general manager to prove any non-substantive amendments or minor corrections

to the rules and regulations governing hydrant use for temporary water supply

that the general manager, in consultation with the city attorney,

determines are necessary to appropriate to facilitate implementation of the hydrant use permit program.

Thank you.

Oh, yes, we're just setting up our presentation here.

So good afternoon, commissioners.

Bill Tien, division manager, San Francisco Water Division.

I'm here today to talk to you about SFPUC rules and regulations governing hydrant use

for temporary water supply.

SFPUC has exclusive jurisdiction owns and operates all hydrants in the city and county of San Francisco.

For your information, there is 8,952 low-pressure hydrants in San Francisco.

SFPUC allows customers to apply for a revocable permit to use low-pressure hydrants for temporary water supply for up to six months.

There's a typo in here. It's actually only six months for the purposes of general construction, filmmaking, special events, or mobile sanitation.

Some of the challenges that we currently face with the program are that the current hydrant use program has been in place for many years.

The use of water meter, the use of straight hookups without meters or backflow prevention.

Also, the improper tools, the proper use of tools when operating a hydrant resulting in

damage to the hydrant affecting its operation.

You'll see that in my next slide here.

Sorry, I missed the slide there, guys.

On the left, you see a representation of a straight hookup.

There is no meter, there's no backflow prevention device on that hydrant.

On the right, it's a similar setup, but at this location, they stretched a hose across

the sidewalk, across the intersection, and were using it on the other side of the street.

For that, it also presented hazards to pedestrians, as well as motorists driving over a pressurized

hose at speed, not to mention the person using the hose on the other side of the street.

So when we found that, we promptly put it into that.

On the next slide you'll see the damage to a hydrant when an improper tool is used.

This spindle is inoperable to the San Francisco Fire Department.

So if the fire department was to come use it, they'd have to use the upper barrel.

There's a significant cost for us to fix this.

This hydrant would be taken back out of service, a new hydrant would be placed in its place,

taken back to the yard, refurbished, and put back in stock ready for use at considerable

cost.

Depending on its location, if the new hydrogen that was going to be put in this place would be subject to continued damage, we'd have to reevaluate what we would do at that point.

So the hydro rules and regulations update.

So the purpose of the proposed rules and regulations is to protect and ensure the health and safety of the residents and the businesses of San Francisco.

Protect and ensure the proper operation and maintenance of the SFPUC's water system and

all connections to that water system are properly protected by the use of backflow prevention.

Impose fines and penalties on individuals who gain access to water through the hydrants

without permit or fail to use the proper tools on that hydrant.

In summary, staff recommends to the Commission, adopt the new rules and regulations governing

hydro use for temporary water supply, adopt associated amendments to the rules and regulations

governing water service to our customers.

And I thank you.

Thank you very much.

Mr. Tian, questions from Commissioners?

Commissioner Stacey.

Thank you.

You mentioned, and it's in the draft rules and regulations, that these temporary uses are generally for sanitation, filmmaking, special events, and construction.

Can you give us a sense of the scope?

How much is this program used?

We have about 300 meters out at any one time in San Francisco being used for those various categories that I listed.

I see.

I remember when I was a kid, the next door neighbor would fill up their pool using the

fire hydrant.

I sort of wondered about it, but thank you.

We do have hydrants that are hooked up to pools.

We'll drain your pool.

That's a long time ago.

Thank you.

Vice President Leverroni.

I think there needs to be some rules and regulations going around this.

On your committee, will there be that will put the guidelines for the rules?

Will there be the fire department, anybody from the fire department, anybody from the construction or film industry to, say, all get on the same page?

Is that something you think is necessary?

It might not be necessary.

It's not necessary, sir.

Okay.

But we are always in very good collaboration with the fire department when it comes to use of any fire hydrant in San Francisco.

Okay.

We have an excellent working relationship with them.

And once one is off, meaning that you have to take it in for repair,

what's the repair time on that?

Oh, within a week.

But I would only take it out.

I would literally bring a new hydrant out and swap it out.

It's just a quick operation.

And we would just take the other one back to the yard to be refurbished

and put back an inventory for deployment again.

Okay.

Thank you.

Yeah.

All right.

Unless there's any other questions, we can go to public comment.

Ms. Lanier?

Remote callers, please raise your hand.

if you wish to provide comment on this item.

Are there any members of the public present

who wish to comment?

Seeing none, moderator,

are there any members who have their hand raised?

Ms. Lanier, there are no callers in the queue.

Thank you.

I'd like to recognize my colleagues

from the Water Division

who worked very long and hard with this

with the City Attorney's Office,

especially Kathy Molina,

Dawn Lampe, and Patricia Matias, and Kevin Lewis.

This was a big lift.

It took a very long time,

and I like to recognize all their efforts.

So, thank you.

All right. Thank you.

Thank you all. Great work, team.

Sounds like a good prompt to get a motion

to approve the item.

Motion to approve.

Motion by Commissioner Jemdar.

Is there a second? Second.

From Commissioner Stacey.

Roll call, please, Tiffany.

President Arce. Aye.

Vice President Leveroni. Aye.

Commissioner Jemdar. Aye.

Commissioner Stacey. Aye.

Commissioner Thurlow has excused.

The item passes.

Thank you, Ms. Lanier.

Can we hear item nine, please?

Item nine, approve the terms and conditions and authorize the general manager and or city's director of property to execute certain agreements with the city of Daly City.

May I have the slides, please?

Good afternoon, commissioners.

Good evening probably is more accurate at this point.

My name is Dina Brazil, and I'm the right-of-way manager for the infrastructure division of the SFPUC.

I'm here today to seek your approval of various real estate agreements in support of Daly City's Vista Grande drainage basin improvement project.

Earlier this year, on July 8th, this commission approved a memorandum of agreement with Daly City for this project,

so I know you're already somewhat familiar with it,

But I'd like to run through some of the background and history again to provide some context for the real estate agreements.

We refer to the Lake Merced tract interchangeably as Parcel 55.

The city and county of San Francisco acquired Parcel 55 in 1930 as part of the Spring Valley Water Company acquisition.

We maintain Lake Merced for recreation and wildlife habitat under an MOU with Rec Park.

and the SFPUC maintains the capability of using Lake Merced as a non-potable emergency water supply.

Due to factors we'll get into in the next slide, water levels have historically declined,

threatening the long-term viability of Lake Merced.

Through the Spring Valley acquisition, the city also acquired the Lake Merced Drainage Canal and Drainage Tunnel,

which we now call the Vista Grande Canal and Tunnel.

The Canal and Tunnel were constructed in 1897

to carry stormwater out to the Pacific Ocean.

They carry stormwater from both San Francisco

and Daly City areas,

but they're operated exclusively by Daly City.

The Canal and Tunnel do not have adequate capacity

during large storm events,

and that's caused flooding issues in Daly City.

During these large storm events,

the canal has also overflowed,

sending uncontrolled flows across John Muir Drive into Lake Merced.

Prior to the existence of these facilities, the Vista Grande Basin drained naturally into Lake Merced.

The canal and tunnel took that water supply and diverted it away from the lake,

which effectively turned Lake Merced into a terminal lake that's fed mostly by rainfall.

The canal is located on property that used to be part of parcel 55.

However, in 1993, the SFPUC sold just over 17 acres of land to the Olympic Club, which included the canal.

The SFPUC retained easements for the canal, which it subsequently quit claimed to Daly City.

Daly City now owns the canal and the canal easement on the Olympic Club property.

The Vista Grande Tunnel crosses more than one parcel.

The eastern half of the tunnel, more or less, is on land owned by the Olympic Club, and the western half of the tunnel is on National Park Service lands under the management of the Golden Gate National Recreation Area.

The SFPUC still owns the tunnel and the tunnel easements, and Daly City operates it under a lease agreement.

Daly City and the SFPUC have been collaborating on the Vista Grande drainage basin improvement

project for decades. While it is a Daly City project, it presents an opportunity to address

two problems with a holistic approach that would restore the original hydrology of the landscape.

For this reason, the SFPUC is contributing funds to the project and has conditionally agreed to

provide the real estate necessary to construct the project through the memorandum of agreement.

that I mentioned earlier. This graphic is actually a little outdated, but it's still

the best representation of the project that we have for this purpose. Working from the

bottom up, the project would root stormwater from the Vista Grande Canal through a culvert

that would be constructed on the sliver of Parcel 55 that lies on the west side of John

Muir Drive. It would then replace the upstream portion of the canal with a collection box

and other facilities. It would construct a treatment wetland and it would replace the

Vista Grande tunnel with a larger diameter tunnel for increased capacity. The project

would also construct a force main and lake outfall allowing treated stormwater to be

diverted into the lake as well as an inlet pipeline that would allow for water to be

removed from the lake if lake levels get too high.

through the resolution before you today and subject to the approval of the Board of Supervisors

the SFPUC would quit claim its existing tunnel easements to Daly City it would convey five new

easements to Daly City for the facilities that would be constructed owned and operated by Daly

City on SFPUC lands the SFPUC would give Daly City a license for 50 years to construct operate

and maintain the SFPUC inlet pipeline that allows us to control the lake water level to prevent

overflow. And finally, an amendment to an existing license for habitat mitigation sites

that are currently being constructed on Parcel 55 to satisfy conditions of the California Coastal

Commission's coastal development permit for the project. The location of the tunnel easements to

be quick claimed. The easements to be conveyed in the 50-year license area are very approximately

depicted here along with the land ownership in the area. And the location of the mitigation

site's license area is depicted here. Combined, they total roughly 10 acres. This amendment would

extend the term of the license by five years for a total term of just over 10 years. We issued this

license for a term of five years knowing we'd need approval for a longer term. The reason for

that is that the Coastal Commission originally asked for 40 acres of mitigation area, which we

would not have been able to accommodate on site. The Coastal Commission agreed to reduce that number

by a four to one ratio if the work were done prior to project construction, which forced our hand.

The license was issued on August 21st of this year, and we issued the license somewhat at risk.

However, the memorandum of agreement that this commission had approved in July contemplated this required mitigation.

So we felt a little more comfortable issuing the license with a five-year term, which the GM had the delegated authority to sign,

so that construction on the mitigation sites could commence and the project would not be delayed.

Chapter 23 of our administrative code requires that the city receive fair market value for its property,

as determined by an MAI appraiser.

Daily City commissioned an appraisal

from Associated Right-of-Way Services

in a reputable appraisal company

that we also contract with.

And under the real estate agreements,

Daily City will pay the appraised value

for each of the rights and privileges conveyed.

The three agreements you would be approving today

are a purchase and sale agreement,

which also contains the two quick claim deeds

and easement deed, a license agreement for the SFPUC overflow pipeline, and an amendment to the

existing license agreement for the habitat mitigation sites. The project environmental

impact report and environmental impact statement was certified in December of 2017. On July 9th

of 2025, Daly City adopted an addendum to the EIR-EIS for the additional habitat mitigation

site work. SFPUC's environmental management group determined that these real estate agreements

are within the scope of the project authorized under the environmental documents. I'm joined

now by our program manager, Obi and Zoe, and assistant general manager, Mr. Steve Ritchie,

to help answer any questions you may have about the project or these agreements.

Thank you, Ms. Rizzo. Thank you.

Questions? Commissioner Stacey. Not really a question, just a comment. It's

been a long time coming. It's nice to see both the plans for managing the

hydrology of that area moving forward but also rationalizing ownership and

responsibilities so I just wanted to appreciate all of the efforts of all of

the PUC staff to to get to this point so thank you thank you all right any other

questions yeah thank you to you and your entire team is there any public comment

miss Lanier remote callers please raise your hand if you wish to provide comment

on item nine.

Are there any members present

who wish to comment on this item?

Seeing none, moderator,

are there any members with their hand raised?

Ms. Lanier, there are no callers in the queue.

Thank you.

Thank you, Ms. Lanier.

With that, can we get a motion to approve item nine?

Motion to approve.

From Commissioner Stacy,

seconded by Commissioner Jamdar.

Can we have roll call, Ms. Lanier?

President Arce.

Aye.

Vice President Leveroni.

Aye.

Commissioner Jamdar.

Aye.

Aye.

Commissioner Thurlow is excused.

Item 9 passes.

Item 10, 11, and 12 will be presented together and voted on separately.

Item 10, approve the terms and conditions and authorize the general manager to execute a purchase and sale agreement and easement deed with Katie O. Chang for the acquisition of an approximately 9.2 square foot easement for a subsurface sewer tunnel across property located at 491 Gavin Street, San Francisco, California.

Item 11, approve the terms and conditions and authorize the general manager to execute a purchase and sale agreement and easement deed with Robert Sui and Thwin Lee Sui as trustees of the Sui Family Trust for the acquisition of an approximately 298.2 square foot easement for a subsurface sewer tunnel across property located at 495 Gavin Street, San Francisco, California.

And 12, approve the terms and conditions and authorize the general manager to execute a purchase and sale agreement and easement deed with Waylon Ruei Hall for the acquisition of an approximately 693.2 square foot easement for a subsurface sewer tunnel across property located at 499 Gavin Street, San Francisco, California.

Thank you, Tiffany.

May I please have the slides?

Hi, Dina Brazil again, right-of-way manager. You get a three-for-one deal this time. In these three

items, I'm seeking your approval of three purchase and sale agreements for the acquisition of easements

for a subsurface sewer tunnel for the Lower Alamany Area Stormwater Improvements Project.

First, a little bit about the project itself. This is probably the first time you're hearing about it.

The lower Alamany area lies within the Islaes Creek Basin, which is historically flooded during large storms.

Development in the area has exacerbated the flooding problem.

Our existing stormwater system doesn't have adequate collection capacity to meet the needs of the area,

so we developed the project to address our SISIP level of service goals of managing stormwater during a five-year, three-hour storm.

The project complies with a 2021 California Regional Water Quality Control Board cleanup and abatement order requiring remedial action on the part of the SFPUC to abate threats of sewer overflows in certain low-lying areas of San Francisco, including the lower Alamany area.

The project proposes to construct the Alamany auxiliary sewer depicted here in red.

The sewer would consist of approximately 6,350 linear feet of a 10-foot diameter tunnel running along Alamany Boulevard and Gavin Street and turning north at Bayshore to Boutwell.

At Boutwell, it turns into a 13-foot by 7-foot box sewer for the remaining 1,000 feet.

It ultimately connects to the industrial sewer at Barnbell.

The primary benefited area is shown here in green.

The project would also provide ancillary benefits to the Cayuga area, shown in blue.

For the most part, the sewer manages to avoid private property, staying mostly within public city streets in Caltrans right-of-way.

But the tunnel does, however, cross private property at one location at the western end of Gavin Street.

As you see here, the tunnel would cross beneath the driveways of three residential properties.

The tunnel will be installed by horizontal directional drilling, which is a trenchless

method with minimal impact. The tunnel would be over 50 feet deep at this location, and there

would be no change to how the property owners would use their property. While the SFPC wouldn't

require the use of the surface of the properties, we do need a property right in order to install

and operate the tunnel. Our engineers determined that we require a 20-foot wide subsurface right-of-way.

We made offers to each of the property owners and successfully negotiated purchase and sale agreements with each, which have all been signed by the sellers.

The first easement to be acquired, shown here on 499 Gavin, is the largest of the three.

The total square footage of the easement would be about 693 square feet, and the negotiated purchase price is $32,000.

The next largest easement at 495 Gavin Street would be approximately 298 square feet, and

we negotiated a price of $25,000 for this easement.

And the last easement is only about 9 square feet on 491 Gavin Street, and the purchase

price would be $2,500 for this easement.

on march 25th of 2025 the san francisco planning department determined the project is categorically

exempt from sequa on september 10th 2025 the planning department filed a notice of exemption

at the county clerk's office which was subsequently posted at the state clearinghouse on september 11

2025 i'm now joined by my project team and we're happy to answer any questions you might have about

this project or about the easements. All right. Thank you, Ms. Brazil. Colleagues, do we have

questions? Commissioner Stacey. Thank you, and thank you for this work. Did you say that each of

these easements were individually negotiated with the property owners? That's correct. You make an

offer to each one individually, and there is an agreement negotiated that is specific to the

property, one easement deed per property.

Yeah.

These prices don't seem unreasonable.

And when I did the math very quickly,

it seemed to be pretty variable per square foot for each property.

But I assume you're sort of looking at the totality of what you use

and working with the individual property owners,

who could have chosen to be much more unreasonable.

And that's right.

We were very fortunate that all three property owners were very reasonable.

We make an offer based on the appraised value.

So we get an appraisal for each acquisition, and that's the offer price.

At that point, you can't compel a property owner to accept that value.

So they are afforded with the opportunity to get their own appraisal.

we by law are required to give them $5,000 toward the cost of that appraisal. In this case,

they didn't do that. They entered straight into negotiations. There isn't really a rhyme or reason

for why they negotiate a certain way. With one of these properties, they took our original offer.

For the other two, we went a little bit of a back and forth. But at the end of the day,

we really just have to land on a number that we consider to be reasonable with,

of course, the alternative being that you'd have to go in,

you'd have to enter into like imminent domain proceedings,

which is incredibly costly and very unpopular.

And time consuming for sure. Yeah. Yeah. Okay. Great. Thank you so much.

Thank you, commissioner. Any other questions? All right.

Ms. Lanier, any public comment?

Remote callers, please raise your hand.

if you wish to provide comment on item numbers 10, 11, or 12.

Are there any members present who would like to speak?

Seeing none, moderator, are there any callers who have their hand raised?

Ms. Lanier, there are no callers in the queue.

Thank you.

Thank you, Ms. Brazil.

And team, can we get a motion to approve, colleagues?

Motion to approve.

From Commissioner Stacey.

Seconded.

By Commissioner Jamdar.

Can we have a roll call, please, Ms. Lanier?

Yes, this vote is for item 10.

Oh, I should clarify.

This was, we're going separately.

So can I clarify, Commissioner Stacey,

was your motion to approve item 10?

Move to approve item 10.

Am I right that that was seconded by Commissioner Jamdar?

That's correct.

All right, can we have roll call on this motion please?

Yes, President Arce?

Aye.

Vice President Leveroni?

Aye.

Commissioner Jamdar?

Aye.

Commissioner Stacey?

Aye.

Commissioner Thurlow is excused, the item passes.

All right, can we get a motion to approve item 11?

So moved.

By Commissioner Jamdar?

Second.

Second by Commissioner Stacy.

Can we have roll call Ms Lanier?

President Arce?

Aye.

Vice President Leveroni?

Aye.

Commissioner Jamdar?

Aye.

Commissioner Stacy?

Aye.

Commissioner Thurlow is excused.

How about a motion to approve item 12?

So moved.

By Commissioner Stacy?

Seconded.

From Commissioner Jamdar?

President Arce?

Aye.

Vice President Leveroni?

Aye.

Commissioner Jamdar?

Aye.

Commissioner Stacy?

Aye.

Commissioner Thurlow is excused.

The next item.

Item 13.

Please note that the PowerPoint presentation title slide was published with an incorrect date and should reflect today's date, December 9th, 2025.

Item 13 approve an increase of 500,000 to the cost contingency and an increase of 910 calendar days to the duration contingency for contract number WD-2794 B as in Boy Sonal long-term improvements Alameda Creek Watershed Center with S.J. Amoroso Construction Company.

Good afternoon. May I have the slides please?

GOOD AFTERNOON PRESIDENT ARCE, COMMISSIONERS, G.M.

HERRERA, BRIAN DESOR, PUC, SENIOR PROJECT MANAGER.

STAFF IS RECOMMENDING THAT THE COMMISSION APPROVE AN INCREASE OF $500,000 IN COST CONTAGENCY

AND AN INCREASE OF 910 CALENDAR DAYS TO DURATION CONTINGENCY FOR CONTRACT WD 2794B SNOW LONG TERM IMPROVEMENTS ALAMENDA CREEK WATERSHED CENTER.

THE OBJECTIVE OF THE PROJECT IS TO PROVIDE A GATHERING PLACE FOR INCREASING THE AWARENESS AND APPRECIATION OF THE NATURE, NATURE, THE NATURAL,

cultural, scenic, and recreational resources

of the Alameda Creek Watershed,

and the history of the SFPUC water supply system.

The project scope includes construction

of a LEED Gold Net Zero Energy facility

with interpretive display exhibit areas,

freshwater aquarium, history display alcoves,

lab classroom, community room, kitchen, patios,

administrative offices, and a 2.5-acre landscape area

with native plants, trails, seating areas,

and water and landscape features.

The photo on the right is of the entry area

to the facility and the exhibition hall.

The current status of the project, construction

started in March of 2020 and is about 97% complete.

The building, internal systems, furniture, fixtures, landscaping, public art, site restoration, and some exhibits are complete.

The photo on the left shows one of the history display alcoves, which was designed with the help of the Muwekwa Ohlone tribe and includes an artifacts excavation exhibit.

The photo on the right shows the exhibition hall and the freshwater aquarium.

The remaining work includes installation of the remaining exhibits.

The exhibits are about 95% complete.

However we found some installation issues and there's also some ADA disability or excuse

me accessibility issues that need to be addressed which is requiring the contractor to revisit

and repair some of the exhibits.

Repairs to the gutter system to address cracks

and water leaks into the building.

Some leaks were identified and through some investigation,

the contractor realized that there were some cracks

in the gutter system on the roof

and have to make those repairs

as well as do some repairs inside the building.

Investigate and repair cracks.

INVESTIGATION AND REPAIRS TO AQUARIUM AND ARTIFACT

EXCAVATION EXHIBIT TO ADDRESS CRACKS AND WATER LEAKAGE.

THE AQUARIUM, THERE'S A LEAK IN ONE OF THE WALLS BEHIND

THE AQUARIUM AND THE CONTRACTOR NEEDS TO IDENTIFY THE

SOURCE OF THAT LEAK AND MAKE THOSE REPAIRS.

SIMILARLY, THERE'S SOME LEAKS IN THE EXHIBIT THAT WERE

were identified after the exhibit was installed,

and we had to remove that exhibit and open the space up

to allow for investigation to that water source leak.

These photos, the one on top left,

is one of the history exhibit work

at one of the history alcoves.

On the bottom, it shows the crack in the gutter system,

AND ON THE RIGHT IT SHOWS THE ARTIFACTS EXCAVATION PIT WITH WATER LEAKS IN IT.

SO WHY ARE THE COSTS AND DURATION CONTINGENCIES NECESSARY?

THE $500,000 INCREASE TO COST CONTINGENCY WOULD COVER ANY POTENTIAL ADDITIONAL EXTENDED

overhead costs related to city cost delays.

The 910 calendar day increase to the duration contingency

would allow time to complete the exhibit installation

and corrective action work,

water leak investigation repairs, gutter repairs,

and the two years of maintenance on the facility.

Maintenance, there's a two year maintenance period

on the facility and it covers all the major systems

WITHIN THE BUILDING AND THAT IS TO START AT SUBSTANTIAL COMPLETION AND OCCUR DURING

THE OCCUPANCY AND OPERATION OF THE FACILITY.

THE GRAPH REPRESENTS THE AUTHORIZED CONTRACT DURATION LIMIT AND THE REQUESTED INCREASE

IN DURATION CONTINGENCY. IF THIS REQUEST IS APPROVED, THE DURATION,

DURATION WOULD INCREASE UP TO 3033 CALENDAR DAYS AND THE CONTRACT WOULD END BY JUNE OF

2028. THESE ARE SOME MORE PHOTOS OF THE FACILITY AND THE LANDSCAPE AREA AND OF THE BUILDING.

THIS CONCLUDES MY PRESENTATION. THANK YOU. I'D BE HAPPY TO ANSWER ANY QUESTIONS.

THANK YOU, MR. D'SAUR. IT'S A BEAUTIFUL FACILITY. QUESTIONS? COMMISSIONER STACY.

Thank you.

I just have a couple of questions.

I couldn't get all the numbers to add up on in the staff report

under the budget and cost item in that report.

Can I just make sure I understand where we are now?

So the original contract was 27 and a half million.

Correct.

Give or take.

With about a 10% contingency of 2.7-ish million.

Then there was a $5 million, $5.2, maybe $5.3 million increase to the contract amount that brought us up to about $32.8 million.

But what I'm not understanding are the cost contingencies, because in the report it says approved increase to cost contingency is $6 million,

which seems to be more than where we end up now with the cost contingencies of $4 million.

What am I missing here?

Well, I think so when we came back and asked for the increase in cost contingency of $6 million,

and a cost increase of $5.2 million.

Those were the upper limits of what we can issue change orders for.

To date, we have not used all that contingency.

Oh, I see.

But our trends were saying, well, with the trend, with the delays,

potential delay costs and negotiations on final costs,

we're thinking we may need additional contingency.

I see.

So this current cost contingency number of 3.546 is just what we have spent

or anticipate spending on cost contingency, but it might go up to $6 million?

Is that what that means?

I'm sorry.

Let me look at where we...

It's on page 4 of the staff report under the item.

I've lost it.

Thanks, Commissioner Stacey. Unless Brian corrects me, the current cost contingency number in the staff report of 3.5 million is what's remaining of contingency and to which we're requesting an additional 500,000.

I see. Okay.

Yes, that's that. Sorry, that's correct. That's the remaining contingency that's left that the commission approved us for.

The 3.546 million.

That's what's less of that $6 million plus $2.7 million that was approved?

Yes.

Okay.

And then for all of the leaks and the repairs, who is responsible for those?

Was that all contractor error so that the contractor was responsible for fixing all the leaks and the cracks

that you mentioned as problematic in this construction process?

So again, we are in the investigation process to determine the cause of the leaks.

I see.

And also looking at our design to see what was in place.

And then once we identify that, we'll be able to start negotiating with the contractor

on ownership of those repairs and costs.

I see.

So if the PUC is determined to be responsible, then we may have to add more to this contract.

But you haven't figured all of that out yet with the contractor.

Okay.

Thank you.

Ms. Lanier, I'll be right back.

I'm handing the gavel over to Vice President Leveroni until I get back.

Thank you.

Are there any further questions from the Commission?

Ms. Lanier, are there any questions?

Remote callers, please raise your hand if you wish to provide comment on this item.

Are there any members of the public present who wish to comment?

Seeing none, moderator, are there any callers who have their hand raised?

Ms. Lanier, there are no callers in the queue.

Thank you.

If I can call for a motion.

Move to approve item 13 seconded okay commissioners Stacy and John Dara

First and a second and now we call for a vote president Arce stepped away vice president Leveroni aye

Commissioner Jamdar aye commissioner Stacy aye commissioner Thurlow is excused the item passes

item 14

Approve an increase of $1 million to the cost contingency and an increase of 382 calendar days to the duration contingency

for contract number HH-1015 O'Shaughnessy Dam Drainage and Miscellaneous Improvements with Sierra Mountain Construction Incorporated.

Good afternoon, Vice President, Labor and Commissioners.

My name is Jimmy Leung. I am the Project Manager for O'Shaughnessy Dam Outlet Work Phase 1.

I am here to request your approval of increases of cost and duration contingency for Contract HH 1015, Osanis Sea Dam drainage and miscellaneous improvements

The contract is essential to ensure safe access and reliable operations of Osanis Sea Dam

Constructed in the 1920s and raised in 1938

O'Sonasee Dam remains a cornerstone of San Francisco water and power system

Surfing residents around the Bay Area

When the Commission awarded the contract in August 2024 last year

The scope included selective concrete demolition

ladder well platform replacement, drainage cleaning, watertight door replacement and excess improvements.

Since then, site conditions have required modification to the ladder well platforms

and additional crack sealing in supply wells.

These adjustments are necessary to reduce leakage and enhance safe access within the dam.

Staff recommends an increase of $1 million to the cost contingency, bringing the revised contract cost limit to $6,814,550 and an extension of 382 calendar days to the duration contingency.

The time extension is needed to allow critical work to be scheduled towards the end of summer when spring runoff subsides and supply wells can be drained safely.

If the request is not approved, necessary safety improvement will be delayed, increasing risk to SSPUC crews during dam operations.

In summary, getting these increases will allow us to adapt to actual site conditions, safeguard worker safety, and ensure reliable operation at the dam.

Thank you for your consideration. I'm happy to answer any questions you may have.

Thank you, Mr. Leong. Are there any questions by the Commission?

Hearing none, Ms. Lanier.

Remote callers, please raise your hand if you wish to provide comment on item 14.

Are there any members of the public present who wish to comment on this item?

Seeing none, moderator, are there any callers who have their hand raised?

Ms. Lanier, there are no callers in the queue.

Thank you.

Request for a motion.

Move to approve item 13.

14.

14.

14, sorry.

Seconded.

Second.

President Arce has stepped away. And can we call for a vote? Vice President

Leveroni. Aye. Commissioner Jamdar. Aye. Commissioner Stacey. Aye. Commissioner

Thurlow is excused. Item 14 passes. Item 15, communications.

Any colleagues, any questions or comments, discussion on 15 communications?

Commissioner Stacey.

Thank you.

We had correspondence on two issues, and we also had public comment on them today.

Mr. Dreckmeyer had suggested a workshop on the Bay Delta plan amendments

and the healthy rivers and landscapes.

I agree.

It was one of the hearings that I asked for in September, so hopefully that will be on

our schedule sometime in 2026.

I think this is maybe more appropriate for items initiated by commissioners.

The communications themselves are not for discussion.

Oh.

Okay.

I'll wait.

They're information only.

I see.

Thank you.

Maybe just a point of clarification then.

So what would be the appropriate type of comment then with respect to the way this item is

agendized?

If there's a request for additional information about a particular communication, that can

be agendized for a future meeting.

Got it.

Perfect.

Thank you.

Any other colleagues?

Comments?

All right.

Can we didn't let's see.

Item 16.

No discussion or public comment.

So we can move to item 16.

Is that right, Ms. Lanier?

Yes.

Items initiated by commissioners.

Commissioners, are there any items to initiate for further discussion?

Can we turn to Commissioner Stacey first in light of the last comment?

Okay.

I just wanted to note for the commission and confirm with the general manager that we would

be having a hearing on the Bay Delta Plan amendment and the healthy rivers and landscapes

programs in sometime in 2026. Okay, I understood you to have different things there. I'm working

through the list as you can see. You said something different. You said something about

a hearing versus a workshop. We never discussed a workshop. Okay. Yeah, we are having there will

will be presentations with respect to the Bay Delta Plan, its interaction with

healthy rivers and landscapes. Yes. That's fine. I just I thought it was

important to have a public hearing both for the commissioners to sort of learn

together and also to be able to hear from the public. Yeah. But yeah, they were

informational presentations that I asked for. The other the other issue that I had

was we got correspondence and testimony on the synthetic turf at Crocker Amazon.

And I don't know, I will expect that PUC's authority to direct Rec and Park on their

turf is pretty limited, but I do think it is an issue of concern, and I hope that at

at least the PUC can be involved in the discussions because of the effect on groundwater as much as,

or wastewater streams, if not drinking water.

I do think, actually, I think it's, Rec and Park is taking the lead, and there has been a lot of presentation.

We are not involved in that proposal, and we haven't been, and I think there's been a,

there was sort of a decision that Rec and Park was taking the lead on that.

Okay. Thanks.

Thanks, Commissioner Stacey. Any other comments or items to initiate?

Since we did have an item initiated by Commissioner Stacey,

I know that our guidance is to ask for public comment

if there is any public comment which should be provided by the public.

Remote callers, please raise your hand if you wish to provide comment on this item.

Are there any members of the public present who wish to comment?

Seeing none, moderator, are there any callers who have their hand raised?

Ms. Lanier, there are no callers in the queue.

Thank you.

Can you call the next item, please, Ms. Lanier?

Yes.

The next item, item 17, public comment on the matters to be addressed during closed session.

Remote callers, please raise your hand if you wish to provide comment on item 18.

Are there any members of the public present who wish to comment on this item?

Moderator, are there any calls who have their hand raised?

Ms. Lanier, there are no callers in the queue.

Thank you.

All right, colleagues, may I have a motion on whether to assert the attorney-client privilege regarding the closed session matter listed under item 18 for conference with legal counsel?

Motion to assert the attorney-client privilege regarding the matter.

Motion. Thank you. Vice President Lavarone makes a motion. Is there a second?

Second.

Commissioner Jamdar, for the second, we have roll call, please.

President Arce?

Aye.

Vice President Jamdar?

Aye.

Commissioner Leverroni?

Aye.

Commissioner Stacey?

Aye.

Commissioner Thurlow is excused.

Thank you, we'll go into closed session.

Thank you, Mr. Nair.

Thank you.

We'll be right back.

We'll be right back.

Thank you.

Thank you.

We'll be right back.

Thank you.

Thank you.

Thank you.

Thank you.

Thank you.

Thank you.

Thank you.

I'm sorry.

Open session following our closed session and under item 19 I'm going to announce that

the commission is recommending that the board approve the settlement referenced in item

number 18.

In item 20, would you like to read item 20 or shall I go ahead and ask for that motion

Ms. Lanier?

With respect to our next item 20, I'd like to request a motion not to disclose discussions

during closed session.

So moved.

Motion by Commissioner Stacey.

Second.

Second by Commissioner Jamdar.

Can we have a roll call Ms. Lanier?

Yes.

President Arce.

Aye.

Vice President Leveroni.

Aye.

Commissioner Jamdar.

Aye.

Commissioner Stacey.

Aye.

And Commissioner Thurlow is excused.

Item 20 passes.

Thank you and with that we're at item 21

adjournment at 434.

Thank you all.

We'll see you next time.

Thank you.