Ms.

Lanier, if you could take roll call, please.

President Arce is excused.

Vice President LeBroni.

Here.

Commissioner Jamdar.

Commissioner Stacey.

Here.

Commissioner Thurlow.

Here you have a quorum.

Thank you.

Before calling the 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 ethnohistoric territory of the Mawekma Allone tribe and other familial descendants of the historic federally recognized Mission San Jose Verona Band of Alameda County.

The SFPUC also recognizes that every citizen residing within the Greater Bay Area has and continues to benefit from the use and occupation of the Muekma Ohlone 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 Mawekma Ohlone people have established a working partnership with the SFPUC and our productive and flourishing members within the many greater San Francisco Bay Area communities today.

Item three, approval of the minutes of July 14, 2026.

Are there any corrections to the minutes of the July 14, 2026 meeting?

Hearing none, uh Ms.

Lanier.

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

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

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

Moderator.

Moderator, are you there?

Hearing none.

Motion to approve the minutes.

Second.

President Arse is excused.

Vice President Leverone.

Aye.

Commissioner Jamdar.

Aye.

Commissioner Stacy?

Aye.

Commissioner Thurlow.

Aye.

Item 3 passes.

Item 4 is 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.

Members present who wish to speak are encouraged to complete and submit to the Director of Commission Affairs a speaker's card located on the table to the left of the public gallery seating area.

Please note that members are called to the podium to speak on in the same order that cards are received.

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 item four, general public comment.

Mr.

Francisco de Casta.

Commissioners Commissioners.

I want to talk about confined space.

So I c uh you know I'm I come here and uh I'm trying to educate y'all on combined space, but if y'all don't read what it entails, then we can go nowhere.

I think the first thing the commissioners should look in is that who put our three workers and others in harm's way.

And if the commissioners themselves know the policies that come with confined space.

You can't do or understand this remote control.

You have to go to the reservoirs and check it out for yourselves.

Don't do things remote control.

We are doing pretty good, you know.

I got this case opened up by OSHA helping us.

Other people are helping us.

The people who are traumatized, I put them back on track, and I'm going to support them and get them a job, each one of them.

That's not a big problem for me.

I am not going to see anybody treated like.

Thank you very much.

Thank you.

Moderator, are there any callers who have their hand raised?

Ms.

Lanyard, there are no callers that wish to be recognized.

Thank you.

Item five, report of the general manager.

First up, we're going to have the Hatchety Capital Improvement Program fourth quarter report for fiscal year 25-26.

And Katie Miller is going to present that.

Good afternoon, Vice President Leverone and Commissioners.

I'm Katie Miller, Director of Water Capital Programs.

Today I will share a summary of the Hechechi Capital Improvement Program for the past two quarters through June 30th, 2026.

Okay.

As a reminder, the Hechechi Capital Improvement Program includes 22 major projects that are funded by water power or joint water and power revenue and bonds.

These include two water projects on the San Joaquin pipelines, seven power projects at the hydroelectric facilities and power transmission lines, and 13 joint projects at the dams, tunnels, and pipelines that serve both water and power production.

There are currently 10 construction contracts underway for a total value of 280 million dollars.

This table shows a summary of project expenditures and cost forecasts grouped by the appropriate project's funding sources, water power or joint.

$568 million has been spent of the almost $2 billion budget, with $62 million spent during the third and fourth quarters for total expenditures during the fiscal year of 109 million dollars.

The program is on track for planned spending.

The two columns on the right of the table show the total cost variances for the projects or changes from the approved baseline budgets, including those that occurred during the fourth quarter on the far right.

Note that there have been no additional cost variances in the past two quarters.

And the cost variances in the second column from the left reflect project cost changes that were included in the fiscal year 27 to 36 10-year CIP that you approved in February.

Note that starting this new fiscal year 26-27 on July 1st, these variances are now shown as the new project approved baseline budgets.

During the past two quarters, several projects and contracts completed major milestones.

Two contracts received their CEQA approvals.

We advertised a request for qualifications and proposals for the Moccasin Dam and Reservoir long-term improvements project.

Two contracts reached substantial completion, and one contract was closed out.

And now we'll provide some highlights on a few projects.

During the last of five annual winter shutdowns of the Hechechi water system, all final and tunnel tunnel repairs were completed.

The priest flow control facility building walls and roof beams were erected, and the building was energized.

This photo shows an overhead view of the building's roof beams, and you can see the two major pipelines with flow control valves at the bottom of the shaft.

You can also on the left side see the stairwell, which is the only way to reach the bottom of the 300-foot shaft.

At the priest addit, 100% of the tunnel final concrete lining was completed, and a job order contract was initiated to install new communications lines for measuring tunnel pressure and elevation at Second Garodian Big Creek Shaft Big Creek Shafts.

And finally, the Moccusin water filtration plant major construction work continued to be performed on mechanical piping, walls, and building exterior.

San Joaquin Pipeline Valve and Safe Entry Project has spent 62% of its budget.

And construction is almost completed for four out of five of the contracts.

The phase 1A contract reached substantial completion, and the phase three contract was completed.

The remaining work underway is for the phase 2BC improvements at several crossover valve lots, which will continue until August of 2028.

This photo shows a removable spool piece being installed at the Pelican valve lot.

The Marcusin Powerhouse and Generator Step Up Transfer Transformer Rehabilitation has two remaining subprojects.

As you may recall, during the generator rewind subproject, the shaft for generator M1 was found to be out of alignment.

The repairs were made as proficiently as possible.

However, long-term vibration monitoring was recommended to assure the alignment conditions do not worsen over time.

Later at this meeting, project manager Javad Mersadi will be requesting your approval to amend the contract to allow this monitoring system to be installed under the project.

The second subproject for the powerhouse systems upgrade is being held at 95% design while construction sequencing challenges are being addressed.

For the O'Shaughnessy Dam Outlet Works Phase 1 project, the drainage and miscellaneous dam improvements contract, completed installation of all remaining ladder wells as seen in this photo.

The in-stream flow release valve contract was closed out, and the slide gates and drum gates planning work continued.

Finally, the Cherry Valley Dam spillway short-term improvements in Eleanor Dam Bridge interim repair contract received notice to proceed.

The contractor has mobilized and started early site work such as site grading and tree stump removal.

This is an excellent photo taken by our photographers using drones that helps provide a better understanding of the project and the spillway repairs.

The background shows Cherry Dam and Reservoir, and the spillway channel is located to the left of the dam, winding through the trees down to the base of the dam.

Finally, if you look closely, you can see two of the contractors' yellow back holes back hose in the spillway channel beginning the repair work.

And with that, I'm happy to take any questions.

Thank you, Ms.

Miller for a great report and update.

Commissioners, do we have any questions of Ms.

Miller?

Kate?

Commissioner Stacy.

Thank you.

And thank you for the report.

I had just a couple of questions.

It looks like the Cherry and LNR Damworks projects, the cost variance was for regulatory compliance that DSOD weighed in and wanted some things done differently.

Do you know when does DSOD typically weigh in?

Do they look at the project plans or are they monitoring on an ongoing as construction is ongoing?

How do they sort of coordinate with a project implementation?

Well, I'll state very generally that we coordinate closely with DSOD throughout the project.

We give them our major deliverables, such as alternatives analysis, conceptual engineering, and just assure that we're on track and they do review our deliverables.

In this particular case, I don't think it was I think Jimmy Leong is here and can help me out with this.

I don't think that it was a DSOD issue that caused cost to go up.

Oh, I thought it was because uh the speedway itself uh was there before, so because the berm will wash out doing some uh front event in 2010.

So we are just restoring the berm, but we are not adding any new features and the work actually far from the dam itself, so it will not affect the dam stability.

So in this case, DSOD have uh been informed regarding the work, but no formal approval approval process is needed.

I see.

Okay.

So what was the regulatory compliance that caused the cost variants?

I thought I read that in the report.

Yes.

So uh DSOD uh also um have uh done an annual inspection of the dams.

And uh from time to time they will identify some deficiency and that need to be addressed by the uh uh contract, which we were not told before.

So uh that is sometimes the the scope have increased, and that's why we uh need uh additional funding and time to address those issues.

I see.

Thank you.

Yeah, thank you.

And then I had uh a couple questions on the moccasin pen stocks.

It feels like a big project looming out there for us.

And what I understand from your report is that there are now going to be some geotechnical investigations to inform the feasibility of the tunnel.

And then later in the report, it looks like maybe the preferred alternative now is a drop shaft tunnel pen stocks, and then two above grade pen stocks.

Is that uh I can clarify that.

Um we got to uh AAR, the end, you know, where we had alternatives evaluated, and we were really torn between whether it should be a pipeline or a tunnel.

At that time we were looking at the alternate alignment that was not within our current Raker Act boundary.

Uh when we were able to acquire the property that allowed us to go back to our current alignment where the current pen stocks are.

Um we then started saying, hey, we should be looking into alternatives in the current alignment.

It's uh at least a hundred feet shorter.

Uh it's a lower cost, and it's uh right there.

It's um land that we're familiar with.

So then the it went to uh should we really be doing a tunnel or an above ground or buried pipeline?

And uh with the cost uncertainty related to this, we realized that the geotechnical information will give us a much better understanding of constructibility and cost.

So we went forward with a geotechnical investigation before selecting the preferred alternative.

So it has not been selected.

Um that geotech work started in March.

In June, they started the actual drilling, and it will be ongoing through uh September with analyzing the results and um having something available to then compare the alternatives again around January of next year.

And um for the there are currently four above ground pen stocks that come down that hill.

There are four that turn into two.

Okay, yes.

So if we if we if we're looking at above grade pen stocks, would it be one of the existing pen stocks?

Is that no?

We we've decided it's not worth the hammer forge welded uh steel is um deemed uh not uh not repairable.

I see.

So we're looking at totally new pen stock, and now it's just whether it's single, double, uh above ground, buried, or a tunnel and shaft.

Okay.

But the the cost to repair the existing pen stocks is uh is it prohibitive or is it really not feasible to repair those pen stocks?

I I think it's a little of both.

I think we we would be it's a hundred hundred years old.

Yeah.

A lot of the technology is obsolete, and um with what we know now about ground movement and pipelines.

Um we will be uh keeping the portion of the pipeline at the top of the hill, the both the tunnel from priests and portions of the pipeline at the top of the hill.

So we are salvaging as much as we can and replacing what really needs to be replaced.

Got it.

Thank you so much.

That's it.

Thank you, Commissioner Stacey.

Thank you, uh Ms.

Miller.

Um we have uh Ms.

Lanier public comment?

Remote callers, please raise your hand if you wish to provide comment on item 5A.

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

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

Ms.

Lanyard, there are no callers that we should be recognized.

Thank you.

That concludes the report.

Thank you.

Thank you.

Item six is the consent calendar.

Do we have uh comment from any of the commissioners on the consent calendar?

Commissioner Stacy.

I uh really am just uh interested in whether items I notice that item 6A has specified locations for where the repairs will take place.

6B is uh, I guess as yet unspecified, and 6C is an inspection contract.

Is 6C going to inform what we do in 6B?

Are those two related at all?

Hello, Aileen K.

Lau calling for 6B, I believe that's the WWE As needed spot sewer request.

So that one doesn't have any locations identified at this time.

We do want to have that contract available as the enterprise identifies locations of work.

I see.

So you just you know they're out there.

You're just not sure where they are yet.

And that's why I wondered if 6C was the inspections that might inform what what we end up doing under 6B.

Um is mostly for very large diameter sewer inspections.

So those are specified locations that we know about and is put in the contract already.

Thank you.

Oh.

But I but I will say we do have contracts available that will inform for the weather.

Correct.

Great.

Thank you so much.

Sorry, I just wanted to put the pieces together.

That's it.

Okay.

Mr.

Nero public comment.

Remote callers, please raise your hand if you wish to provide comment on the consent calendar.

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

Seeing then, moderator, are there any callers that have their hand raised?

Ms.

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

Thank you.

If I can now get a request for a motion and a second to approve the consent calendar.

Move to approve.

Second.

Second it.

President Arcee is excused.

Vice President Leverone?

Aye.

Commissioner Jamdar?

Aye.

Commissioner Stacy?

Aye.

Commissioner Thurlow?

Aye.

The item passes.

Next is the regular calendar.

Item number 14.

Will be discussed out of agenda sequence order and before the Commission considers agenda item number seven on the regular calendar.

Item 14.

Item 14.

Update and dis and discussion on the status of the selection process for a new general manager.

Thank you.

Last meeting we heard a presentation from the San Francisco Department of Human Resources and discussed the first step, which is a selection and engagement of an executive search firm.

To make sure that we are proceeding efficiently, I would like to ask Commissioner Stacy to be the Commission's point person to work with DHR to assure a smooth process.

Over the next several weeks, they'll get the process in place, and Commissioner Stacy will report back on the process and status in September when we return after our recess.

Currently, are there any questions on Commissioner Stacy being our conduit?

I just wanted to thank Commissioner Stacy for stepping up to the role.

So very happy that you can be our liaison.

I did have a comment on the selection of the search firm, but I don't know.

We can get to that next, right?

Okay.

What we'll do is Sean Sherburn, if he could please come to the uh podium to maybe give us uh update uh at this point and uh answer any questions that the Commissioners may have.

Absolutely.

Thank you, Vice President Lavaroni.

Uh Sean Sherburn with the Department of Human Resources.

Uh my colleague Gian O'Bito, uh client services consulting manager, who is also going to be assisting me with this effort.

Um both are happy to provide uh some additional updates.

Uh what has taken place since I last spoke with you all is the the bids for the executive search firms have all uh been received or were due uh and were received uh last Friday.

Uh so those are now being evaluated by our contract and procurement team uh and we expect um that well in advance of your next meeting, which is I believe August 11th, that we will have a firm identified.

Um I think the next meeting will be September September 8th.

Yeah.

Well more time.

Regardless, uh August 11th is uh a date that I'm working off of.

Uh I think um I I'm greatly appreciative that Commissioner Stacy has been uh denoted as our point person.

We will continue to update her and we will move the process along because I think really as we look forward to September, we would very much like to have as much in place as we can.

Uh so we uh plan to hit the ground running as soon as uh we have a firm in place.

Thank you very much for your efforts.

And um I know it's uh arduous task, but thank you very much uh for being uh so on top of it.

Um, I just had a few questions.

I know we had discussed having an extra meeting in August to sort of help finalize the search firm.

I don't know if that's still on the table.

Um I'm okay if uh Commissioner Stacy actually helps with that process on our behalf.

So just wanted to say that on the record.

Um and just wanted to reiterate that uh it would be good to select a firm that has a record of uh you know recruiting diverse candidates.

So that would be good to see from as the EG rep on the commission.

I would like to see that as a priority.

That's all.

Thank you.

Commissioner Stacy.

Uh thank you, and thank you to the Commission for your confidence.

I'm I'm I'm happy to be involved and uh will do whatever is necessary.

I also want this process to be as transparent and as inclusive as possible.

I Mr.

Sherburn, correct me if this is wrong, but as I understand it, DHR applies a consistent set of standards to choose the search firm, and that DHR will choose the search firm.

And once that happens, the next steps really would be working on uh the job posting and then um the posting.

And that once we return in September, I think we might have talked about a special meeting in August in the event that the commission did want to weigh in on the actual search firm selection process, but I also understand that because it's a competitive process, there really needs to be a consistent set of standards applied to all of the bids, and that that consistent set of standards has to inform the search firm that's selected.

Is that is that generally correct?

I have no corrections to anything that you just said.

I might just add that when the large RFP went out across the country, predominantly to California, um, given our uh location and our special needs here.

It evaluated all of those things were initially evaluated.

When we uh and so firms were already contracted in with the city, they're given an opportunity like they're being given in this particular instance with the general manager to express interest.

In doing so, they're asked uh to espouse, have you done work in this particular space in this industry?

What uh speak to your prior efforts that you've done speak in particular to your ability to attract uh and bring in diverse candidate pools.

That is absolutely one of the things that is evaluated uh with all of these bids.

So not just what would they do, but what have they done is important to the subject matter experts that are evaluating uh the bids that we've uh received.

And so I am pushing our contracting team.

Let's complete the evaluations, let's get this moving, and then I can present uh to Commissioner Stacy.

Here's the firm that came out on top.

What would you like to now do as a commission as a body uh to move this forward?

Uh what I've shared with you all at the last meeting is I would very much like to, and my team, Giano, uh, would like to be able to begin uh the work with the uh selected firm.

But I I've said this before, I think we can walk and chew gum at the same time.

My relationship with most of the firms that I've worked with will allow that to happen.

While things are working out on the procurement and contracting side, they will very much want to be building uh out the steps in this process, top of mind being the job description, what I've seen in the past, and I think what I've shared at the previous commission is they will very much want to reach out to each one of you individually to identify or help identify an ideal candidate profile, desired qualifications, but obviously building off of the job description that was done, I think in 2021.

Um we have some foundation to start with, but they're going to want to revisit all of it, and they're going to want to solicit each and every one of you individually and then collectively as a body when we uh arrive at a final draft of a job description.

And I think all of that can happen while you are on recess, a lot of that work can happen, and then by the time you come back, whether it's a special meeting or one of your regular meetings, be very much lined up or be very much in a position where you can finalize a job description, have a plan for posting the job, for recruiting, for advertising, and then a plan for when it will close and what those next steps will look like so that we're not planning things as we're going through it, but we have a roadmap ahead.

That will be important to you all and equally important to the to the firm and to the candidates because we will probably be better situated having timelines for when would interviews happen, when would evaluations be happening, because we will want to get the candidates' schedules locked down as well to say if you do move on in this process, there will be interviews on this date, potentially interviews on that date, so that they're well aware in advance that if you're planning vacations or you're planning time off, do so quite judiciously if you were serious about moving uh forward in this process and becoming the next general manager for the SFPUC.

Uh thank you for that clarification.

I I also really appreciate that this is going to be an ongoing collaboration with DHR and the search firm and a sort of uh constant consultation as we go through.

And once we get to the point where we have applications that we can really uh drill down with DHR and with the search firm about how to manage that and next steps and how to make decisions.

So I I really appreciate the expertise that's brought to bear here.

And I also uh I really echo Commissioner Jamdar's desire, and I'm glad to hear you say that it it would be really important to have as diverse an applicant pool as possible to cast the net as wide as possible.

Um I know you you said at our last meeting that you want to make our job as hard as possible with as many excellent applicants as as may be out there.

And I uh I I appreciate that too.

Commissioner Thurlow.

Thank you so much for being here.

I just wanted to kind of reiterate a question that I asked you last time, which is as the month of August goes by, you know, there of course there's urgency and time sensitivity to the process in general.

Um what should we expect?

Should we expect the things that you described previously to be things like a roadmap and timeline, things that we see in our early September meeting in terms of interview timelines, uh draft job description, or is there are we in any way hindering the process through an August recess where uh Commissioner Stacy is really the only person accessible to your team at DHR?

I actually would put it a different way.

I think having Commissioner Stacy identified as our point person, having any particular commission have a point person is going to enable us, enable the executive search firm to continue to be able to move this along.

So I think this commission is very well situated to keep things moving in a way.

Even though you're not going to be meeting as a body in the month of August, I still imagine that if you got a call from an executive recruiter, if that is how we you decide to do this, to be able to speak to what your desires are, that you would pick up that phone call or that have that meeting and be able to move it forward.

I think that will be something very critically important and very formative to the executive search firm in building out this process.

All of the other things, the dates, the timelines, where we post, when we post, for how long, those will be put together and very likely would be something presented at your next meeting.

I don't know that we're losing that much, because I think the development time for putting a job description together for doing the outreach that you want is about the time period that you all are going to be on recess.

So as long as some of these things can happen in the background, and I believe very much so that they can, uh I think this commission is as well situated as they can be.

And we will continue to move it along as Commissioner Stacy said, our commitment is to support you in supporting the executive search firm, making sure that we are getting the community's involvement in this and transparency will be important, and that's where these meetings will become critically important.

But getting everything there is something that we can do in this uh immediate term that we're in now.

That actually leads into my next question, which was how do we think and what's the time scale for structuring sort of broader stakeholder outreach?

And that, and then um sort of relatedly, how do what are the metrics of success that these search firms what what do we use as the metrics of success for prior search outcomes?

Um, and how and and how can we think about that also through the lens of community engagement?

Let me take the latter question.

So, how do we evaluate search firms and what are we looking at is the premise of your question.

So we are looking at not what would you do, but what have you done?

So one of the uh one of the rubrics that we would look at uh generally speaking is what ha what work have you done in this particular space recruiting the head of an agency for a uh large municipality or large um uh water wastewater agency, that would be critically important uh in this evaluation, so they're being able to speak to that.

How did you recruit candidates for that?

How did you keep them engaged?

What were the volume that you got?

What was the diversity of that?

Those are all things being measured.

Timeline is part of that, but I find it to be less valuable because there's well, they can put it an aggressive timeline forward, and uh they can, and they very likely will.

And I I did the same thing.

I'm like, absolutely, we can have somebody uh in, I forget what I said, 10 to 12 weeks, 16 weeks.

And that's all doable if everything lines up.

But the experience has been most of the variables that drive timeline uh have to do with things on your side of the DIAs and uh other key stakeholders involvement as well.

Uh it's not so much on the executive search firm.

They're going to take their cues from what you all need.

So it's an important feature.

Like I don't want to see an executive search firm put forward a proposal that says that we will take six months to a year.

We still want them to be aggressive in pushing this forward.

So those are all of the key factors that go into how we evaluate the bids that are coming in.

And I do want to reiterate again, it's what have you done, not what would you do.

But can I ask one quick follow-up on that before you go on?

Ending the search with a candidate that's hired is one metric of success.

Um but I would think there would be some need to evaluate how well that person fit and solved organizational issues in the long term or longer term.

Um so I'm wondering how do we understand that piece of it.

So I I don't have a direct answer to that.

Uh I have sort of an indirect response, which is most of these firms have a clause that if the candidate who is selected doesn't work out for any number of reasons within a specific period of time, that they will come in and do the effort again.

So I guarantee you that they are wanting to make sure that you all have the right candidate and that that candidate is set up for success along the way.

So it's a shared responsibility that the uh executive search firm has.

One, helping you all find the right candidate, but also helping the right candidate find you guys in this commission and making sure that it's the right job for them.

So my experience over the last decade and more recently with the Recon Park Commission, the Port Commission, we had the uh the inaugural director of arts and culture, has been that these are in some cases they're candidates who are internal, in some cases they are not.

Um they were difficult decisions for those bodies to make.

They were very strong candidates uh in each and every one of those.

I think you and each one of those were done by different uh executive search firms that we work with.

And you all are uniquely situated as commissioners, as you are your colleagues at Wreck and Park and the port to see that these are good candidates coming forward.

So I don't know that we necessarily have a lens in when we're looking at a bid to be able to do that.

And that's why I sort of answered it in that in that uh different way that they don't want to come back and have to do this again.

You all don't want to have to come back and do this again.

You want to get it done right at uh on the first go-around.

Perfect.

And then when is the right time for the community and other stakeholders to be weighing in?

They're really gonna lean on you.

Uh I'm not gonna make eye contact with Tiffany, but uh that's probably gonna be uh some work that will be in partnership.

How do you all want to do this?

Some commissions have done surveys that any like the community, employees, executives, anyone who's interested can can provide that.

Uh sometimes and more often it's in these exact forums.

As you bring forward a job description, that will be a place for community input.

Um when we stood up the new department on sheriff department oversight, uh, that board wanted to have um meetings where they went out to community centers and did various road shows, well documented in the media.

Um that was important to them, but they were a brand new board hiring their uh their very first uh director for that position.

So it's we're we're gonna be informed by you.

Uh all options are on the table for how that happens, but this forum is going to be key to that, and anything you do in addition to that will be additive to your efforts.

But you speak on behalf of your constituent grooms.

I've one of them in Noe Valley.

I'm very excited about this recruitment.

Um I'm excited about the work that you all are doing, and I think that same enthusiasm is going to be held by the executive search firm.

I expect it will be.

Thank you.

And and thanks, Commissioner Sacey, for taking this on.

Thank you, Mr.

Sherburn.

And again, thank you, Commissioner Stacey, for taking this on.

Very confident uh of your being able to communicate.

And I think to uh Mr.

Sherburn, you know, having 2021 as a uh basis of a start uh and having that produced our former general manager or soon to be former general manager, Dennis Herrera, um it it worked.

Um we're very pleased with the result uh of that, and the city definitely benefited from his leadership in the uh SFPUC.

Um at this time, would you um I first of all I encourage all commissioners to individually speak with uh we all have a lot of little ideas and things that we'd like to see, so please communicate that uh at your convenience to Commissioner Stacy.

Um would you like to introduce your team at this time or are we pretty much good to move on?

I would love to make Giano stand up.

So uh Gianobito is uh, as I mentioned at the at the nascent stages, is one of my client services consulting managers.

Uh he is fresh off of the Reckon Park.

Did I get that right?

Reckon Park uh Commission recruitment uh that yielded uh remind me, Kate?

Sarah.

Yes.

So he is very well minted in this process uh and has worked uh with many uh different executive search firms and commissions.

So you are in very good hands uh, whether it's with me uh and or uh Giano as well.

Thank you very much.

Thank you.

No other questions from the Commission?

Okay.

Remote callers, please raise your hand if you wish to provide comment on item number 14.

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

Seeing none, moderator, are there any calls who have their hand raised for item 14?

Ms.

Linair, there's one call that wish to be recognized.

Thank you.

Caller, I have a mute you're in line.

You have two minutes.

Thank you.

Good afternoon.

This is Peter Directmeyer from Yosemite Rivers Lowland.

Five years ago, I was interviewed by the search form to share qualities that the NGO community would like to see in a new general manager.

That was at the request of the Commission.

And appreciated that opportunity.

Wouldn't necessarily need to be me, but someone who is familiar with the SFPUC and might be able to provide a little bit of an outside perspective.

I did want to clarify one thing that Chair Leveroni said regarding the process last time around.

It actually fell apart.

It got off to a really good start with a search firm.

And the mayor at the time then announced that she wanted uh Mr.

Herrera to be the general manager and it really boxed in the commission.

Um they could have asserted themselves and said, no, we want to do a national church, but they um allowed that to proceed.

So there was really no competition.

We had there was one applicant.

And I hope that we can avoid that problem again.

It might be worthwhile to check with the mayor to make sure that he is on board with a normal search process where you really get a big pool of candidates and have wonderful people to choose from.

Thank you so much.

Thank you, caller, for your comments.

Ms.

Linette, there are no more callers that we should be recognized.

Thank you.

Item seven.

Adopt the amended Alameda Watershed Management Plan.

Adopt rules and regulations governing fishing access to Calaveris Reservoir, and adopt a modified mitigation monitoring and reporting program under the California Environmental Quality Act.

Good afternoon, Commissioners.

Vice President LeBroni, I'm Tim Ramirez.

I'm the Division Manager for Natural Resources and Lands Management.

I'm happy to be here to bring this item to you today.

Four years ago, July 2022, this Commission determined that we could provide public fishing access at Calaverish Reservoir.

We were directed to scope out that fishing program, um, to submit it to environmental review, to amend our drinking water permit, and then to amend our Alameda Watershed Management Plan, which specifically prohibits fishing.

So we needed to make that change.

I'm here today, four years later, having done all those things and they've been presented to you.

Uh we have as part of the item the addendum to the Alameda Water Shed Management Plan.

Thank you to our colleagues at the planning department for their work with that.

Um we were able also to update our what we call previously the grazing resource management plan and now the range land management plan.

Um most of the Alameda watershed is grazed with tenants, um, and those leases are actually out to bid right now, and this uh new updated addendum will support um those new leases eventually when we're ready to issue them, which is great.

Um we also have the fishing rules and regulations presented as well that will govern um the program itself.

Um four years sounds like a long time.

Um it's a very heavy lift to get this work done.

This plan was adopted by the Commission 26 years ago.

This is the first time we've ever actually updated it and gone through the process again with city planning.

So it's a very healthy exercise to revisit how you're doing things and what you're doing.

Um it's hard to describe how important these plans are to our day-to-day business.

Our staff use these every single day to guide decisions that are made and need to be made in the watersheds.

Um we're not done yet, assuming that things go well today.

We need then to go forward and construct the um site itself.

We still need to amend our drinking water um permit with our water quality friends also in the water enterprise.

They're talking to the state about that.

Um, they need this determination to um make those decisions happen and to support them.

Um then we also will need to uh arrange the permit program and all the things to come with it.

So we're talking about opening the site in about a year in July of 2027.

Um I wanted to just uh take a moment as well to um acknowledge the work that was done and thank a couple people who were a big part of that.

There's a lot of people that we would like to thank.

I'm gonna call out two specifically just because they're part of the team here at the PUC, and they orchestrated all the work um the last several years.

One of them is here today, Ellen Ayson, who is our planning and compliance manager.

And then thankfully we have uh a planner, Joanne Wilson, who'd been with us for a couple of decades, retired and came back as a retired person and was here at the beginning and knew what was happening when we started using the plan to uh affect management.

Um thankfully, because of her uh experience, we were able really to make this happen in a really thorough and thoughtful way.

Um and it sounds like it wasn't very quick, but in the grand scheme of things, it's pretty quick for us to go back and do that work um in that amount of time.

That's the high-level overview.

There's a lot of material in front of you.

I would be happy to answer questions if anybody has any.

Commissioners.

Commissioner Stacey.

This was a really fun read.

I I really uh it was exciting to see the update.

It's been a long time, as you mentioned.

I also really appreciated that there was a red line version so that it was easy to pull out the changes and see what was different.

I mean, aside from the grazing uh regulations that have changed and the fishing fishing regulations, there were a lot of other updates that were pretty important acknowledging it was pre-WISIP.

Uh it was before even the natural resources and land management team was formed.

So it was it was a really it was an interesting read, and it it was really helpful to have the red line just to see the changes.

I do um I have a couple of questions and comments.

I think the Alameda watershed area is a is a complicated watershed area because of the diversity of uses in and around.

You've got pretty significant urban uses, you've got a lot of grazing, you've got agriculture, and I am sure that not only drafting the plan, but doing the day-to-day work out there is pretty complicated with managing all of those uses.

Fertilizer, urban runoff can all affect the watershed and the water quality.

So I really appreciate the attention to this watershed.

Um I did have some questions about the fishing.

Will there be a monitor at the reservoir, a human being at the reservoir?

Is that do you have that level of detail on how this fishing program will work?

We're working on the details.

I would say that we're gonna use our experience on the Peninsula watershed with our docent program for the um Fifal Facale Ridge Trail.

Where uh in that particular case, we do have people with the guests all the time.

We will not be able to provide that on a regular basis for this location.

We will have somebody from our staff once a day be there and to check in on things.

We'll know who's going to be there.

We'll have a permit, we'll know the names of the people, how many people are with them, um, they'll have that date set aside.

Um so we'll be very clear about who has the ability to be there on those days, and our staff will know that.

We also work very closely with uh fish and game warden in the region, um, who is the county person.

We've uh been consulting with him for years about all this.

He knows it's a big change.

He's usually the person who catches the people who are trespassing now in fishing.

Um so he's also very much aware of it, and he will be able to assist as well.

And the County Sheriff's Office is also always part of our regular routine business, um, both in Santa Clara County and Alameda County.

This happens to be very very close to the border of both those counties.

Yeah.

Um and if we need help, um, they're quick to respond.

Um, and they also will know about the change and will be able to assist um when we need them to help.

So what seemed complicated to me about the fishing, it you're going to allow it just in one location at the reservoir.

You're going to build what sounds like might be a dock or something on the side from which people fish.

No dock.

No dock.

Nothing in the water.

Shoreline fishing, nothing in the water.

No boats.

And limited location for the shoreline fishing.

Correct.

Because it sounds like you would like people to take away large mouth bass, but catch and release the resident rainbow trout.

Is that right?

So you it's at a high level, yes.

Um just to be really clear, we do not regulate fishing itself.

The state regulates fishing.

So they set the rules about how people can fish.

We are the landowners and set the um criteria for access to the site.

So at the moment, under state regulations, um, it's barbless hooks, and you can't keep any fish at all if you want to fish for trout.

So we would love to have the non-8 fish removed from the reservoir.

That would only help support the native fish population.

Um we can't dictate that.

We can't make that happen.

Hopefully that will play out the way that it you just described it, which will be a net benefit.

Um, but those issues were all assessed by the state when they updated their fishing regulations.

So they did that part of the work.

We just talk about the land and the public access to the site itself.

Uh-huh.

Okay.

And one more question.

Uh there are st there are steelhead, we're attempting to restore or are being restored in Alameda Creek.

But those steelheads never make it into Calaveris Reservoir, is that right?

The fish that have access to the watershed now from the ocean and the bay cannot get into the reservoir.

Okay.

That's correct.

The fish that are in the reservoir as a result, the genetic work that we did in coordination with the National Fisheries Service were determined to be the I'm going to paraphrase here, but sort of the real deal fish that had been there before construction of the dam itself.

They're non-hatchery range.

Correct is the same.

They have a distinct set signal, which they've done work in the southern uh in the South Bay in all the small creeks that feed the bay.

This was a gap in their work until they went out and collected that data, and they were very excited to know that those fish in fact are a little bit of a reservoir themselves in terms of the genetic integrity and the unique ability to provide that um life cycle to that particular species.

I think I'm sure you know this, Commissioner Stacy, but the fish in the reservoir, it's the same species as the fish below the dam.

Um it's just how they're referred to and their ability to get to the ocean and the bay or not.

The fish in the reservoir, the reservoir is their ocean, and then they go upstream in the Order Hondo and spawn and come back.

See.

Interesting.

Okay, thank you.

Um I have a I have a lot of scribbled notes here, but I think uh that was oh, I I wanted to ask about golf courses.

Um is there a golf course within the watershed, or it's at the edge, it it's adjacent to the watershed.

We had a golf course tenant on our property that is on land that we um are managing, but it's downstream of the reservoirs themselves.

Um that lease no longer exists.

Um, and so the golf course is no longer there.

It's been taken over by an adjacent grazing tenant, and it was put out as part of the grazing RFP to be continued to graze.

Okay.

Yep.

And I noted that there are lessees who are paying uh discounted rates for water, and in the past weren't obligated to implement any conservation measures, and I was glad to see that at least the conservation measures are going to be part of your leases, but I didn't see that they would also be paying a non-discounted rate for water.

I am not sure which uh leases you are referring to, but I will say that um we worked very closely with the rates team to make sure that we revisited all of the old leases that were in place to make sure that everybody um is paying uh a rate that has been approved by this commission.

There is a non-ployable rate that some of the customers pay.

Um but they should all be charged at this point going forward at the rate that has been adopted by this commission.

There's no there's no discounted rate for anybody.

Great.

Okay.

I think that's it for now.

I wanted to thank you for recognizing the other changes in the plan, um, which I didn't want to get into, but I will say also one additional thing, which is we own more land in the watershed than we did 26 years ago, which was the result of our program that we have also started as part of with to acquire properties to protect the watershed and to protect ranking water quality.

That was another one of the things we were able to do in the update to take advantage of that chance to make the map accurate.

So I noticed that a couple of hearings ago we had a report on where we've spent money, and I was surprised to see that we had spent more money in the Alameda watershed until I read the details, and it was because of the land acquisition in the Alameda watershed.

So that that really helps you kind of rationalize what the watershed looks like and have the ability to control the uses.

And this watershed plan and the secret document attached to it supports those acquisitions.

So when we go forward with those kind of proposals, this is our environmental compliance document for those acquisitions.

Uh-huh.

Um, so it's another role the plan has in our day-to-day operation.

Uh it's also the one place where most of the watershed is not owned publicly or by us, which is why there was so much opportunity for this particular program.

Most of the other places we own property are entirely owned by us already or by somebody else like the National Park Service.

We only own about 25% of the drainage basin above the reservoirs.

About 40, but it is um public.

The other 60 percent is privately held.

Great.

Thank you.

Thank you.

Thank you.

Any other questions, Commissioners?

Um go ahead and open to public comment.

Remote callers, please raise your hand if you wish to provide a comment on item 7.

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.

Lenny, are there no callers that we should be recognized?

Thank you.

Uh Commissioner Stacy.

Sorry, my notes are messy.

Uh I noticed that the report mentioned overnight camping, but I thought maybe the only overnight camping in the watershed was the nature study overnights near the Sinnol.

I noticed that the report mentioned overnight camping, but I thought maybe the only overnight camping in the watershed was the nature study overnights near the Sinnol.

Is there other overnight camping in the Alameda watershed?

The only camping I'm aware of overnight is run by the East Bay Park Regional District, East Bay Park, East Bay Regional Park District, excuse me.

They have a lease with us, and they also own their own property, and there is a place called Backpack campsite, which is just above the diversion dam.

And they operate that facility.

We do not regulate or provide camping or overnight camping for that matter, but they do, and they do it in the watershed, but they do it under their own regulations.

And there's somebody with the campers from the East Bay.

They get a permit to camp.

I see.

It's permitted.

Okay.

Yep.

And they run that program.

Okay.

Thank you.

I I appreciate that this watershed plan acknowledges sort of the interrelated nature of all of the different jurisdictions and all of the uses, and it's it's really all about implementing it well.

And kudos to your staff who is out there doing that.

East Bay Parks is a really key partner.

They're the biggest landowner in Alameda County, or the second biggest landowner.

And so their property adjoins ours, and it is very important to make sure we're always on the same page with them.

Thank you for pointing that out.

Thank you.

Thank you, Commissioner.

Do we need to do public comment or to go?

Okay.

If I can get a motion.

We Tiffany called it, yeah.

I will move to approve.

Okay.

Second motion.

Commissioner President Arceus, excuse.

Vice President LeBroni.

Aye.

Commissioner Jamdar.

Aye.

Commissioner Stacy.

Aye.

Commissioner Thurlow?

Aye.

Item 7 passes.

Item 8, authorize the issuance one, up to 506 million dollars of wastewater revenue bonds 2026 Series A, federally taxable 2026 Series A bonds to fund certain costs related to the Biosolids Digester Facilities Project, retire commercial paper notes, and fund capitalized interest to mitigate short-term budget impacts, and two, up to $556 million of Wastewater Revenue Bonds 2026 Series B, 2026 Series B bonds to refund a portion of certain outstanding bonds.

Good afternoon, Commissioners.

We have a busy afternoon for you.

We actually have four agenda items that will ultimately constitute six different financings that we hope financing facilities that we hope to close in August while you are in recess.

We appreciate that when we come to you with one financing, that means hundreds of pages of reading.

We uh thank you for your indulgence in in uh in reviewing all of these materials.

We'll try to accelerate the presentation as much as uh possible.

Um I am grateful to my colleagues before I go to my slides.

Uh Edward Quang is going to assist me in uh these presentations.

My colleague uh Earl has uh helped with the presentations.

We have two of our financial advisors from Baxter McCarley Berry here today to assist with questions, and we have uh members of the enterprises available as well.

Um I want to particularly um give a shout out to our General Counsel and the City Attorney's Office.

Um we are fully staffed, this would be a large load to carry in.

And uh we've been short several uh deputy city attorneys, and so uh we greatly appreciate our uh General Counsel's special assistance with this large load of uh financing.

But I'm particularly excited to share these items with you today, because not only do we have good news for you, but we're gonna be able to show you several ways in which we are helping to uh reduce costs and make our rates more affordable with with some of these financings.

And if I could have the first slide, please.

So first of all, our first item, agenda uh item number eight is for wastewater bonds.

We will have an interim financing uh for wastewater bonds and a refinancing uh for wastewater bonds to produce savings and eliminate uh risks.

Now you may ask why is issuing a new uh financing, especially a taxable financing a way of saving money.

I will remind you that a year ago in February, February 2005, our 10-year plan called for 931 million of wastewater bonds to be issued this past fiscal year.

We haven't issued that for several reasons.

One was new credit facilities we were able to implement.

We accelerated our WIFIA draws, leveraging 1.45 percent interest financing, and we have been able to defer that large financing.

We are still able to defer that financing even further.

We expect to come back to you at about the new year for that large financing.

This interim financing will carry us through our needs till then.

We have to demonstrate to the controller as we enter into new contracts that we have resources.

By refinancing our commercial paper, we create that capacity and allows us to carry forward.

Agenda item number nine that Edward will go through will describe two credit facilities.

One that is allowing us to use up the final portion of the 950 million of additional capacity the Board of Supervisors approved for our three enterprises.

That is 125 million, and also uh savings that we will achieve by uh replacing one of our uh facilities.

Uh agenda item 10 is an interim financing for water that is similarly allowing us to take care of reserve releases without accelerating our bond transaction, and number 11 is for a non-financing item that we will explain shortly.

Um, if I could have the slides, please.

Um again, this agenda item eight is both new money and uh refunding.

As you know, the uh the biodigester facilities project or BDFP was first financed in 2024 with taxable bonds.

We are doing that again with this financing.

This is to allow maximum flexibility for the financing team as they consider the offtake for that facility.

We are converting, as you know, at the Southeast Treatment Plant, a 1950s era treatment plant into a modern resource recovery plant.

That means there are off takers for the biogas, the solids, the treated water.

In addition, we are we are pursuing tax credits, uh which creates some tension with the tax exemption.

So we are doing this on an interim basis on taxable interim basis now.

We allow the facility to come to completion, all the contracts to be negotiated, the tax credits hopefully will still be eligible based on changes in Washington, D.C.

And at that time we will optimize the mix of tax exempt and taxable financing with a refinancing at that point.

The transaction, let me just advance the slides to.

Sorry, I'm having difficulty with my clicker here today.

In the interest of time, we have several refinancing opportunities.

When we do a new borrowing, we look at opportunities to save our ratepayers money by refinancing debt.

This process began last November with planning and an RFP in December, and we identified transactions at that point.

The first transaction is the 2010 Billed America bonds, as we have described in the past.

We are reducing our exposure to this Federal program.

The Federal Government was uh had promised at the time to deliver 35 percent subsidies.

Those have been reduced due to sequestration, and now we are subject to Congress needing to act to waive sequestration to avoid losing that uh subsidy altogether.

So we would like to reduce that.

At this point, we can also achieve savings for our ratepayers as well.

The 2013 bonds are no longer at this current time economic.

We would not proceed with those next week.

We ask that you continue to approve those, and when those become financially economical, we will uh refund those as well.

The 2016 bonds produce uh strong debt service savings.

In fact, each of those produces in excess of 8.6 percent net present value savings.

Our debt policies set a minimum floor of 3 percent, as do the city's policies.

In aggregate, the three were funding that we would do uh will produce about if if today's rates as of this morning hold for next week when we plan to go to market, subject to your approval.

Uh we would produce approximately $32.6 uh million dollars of gross savings, about 12 million dollars this year, a million seven for the subsequent ten years, and six hundred thousand for the subsequent three years.

Um as required.

It is required by state law.

Our uh financial advisors uh provide you with a good faith estimate that was delivered as part of the package.

As I say, um rates have gone up a little bit, but still produce the savings that I just described.

Um I have buried the lead uh by uh not revealing the big news, which is that uh your senior leadership uh helped present bond to bond rating agencies.

You may recall that in 2024.

SP reduced our outlook from stable to negative uh working with our financial advisors, our large underwriting team.

Uh we developed a strategy that first uh involved the entire finance department working on the 10-year plans that you have seen in in these last two years addressing those concerns.

Uh but ultimately we learned last week that SP has not only affirmed the rating, but has restored the stable outlook, and Moody's has also affirmed the rating and stable outlook.

So I'm very pleased to be able to share that with you today.

And uh with that, uh be happy to answer any questions and uh uh look forward to your approval of this agenda item.

Commissioners.

Commissioner Thurlow.

Um, first of all, thank you for the Thank you for the presentation, and that's really great news in terms of the ratings stabilization.

Um I just thought I would mention is that I think it can be useful to have the MPV and cash flow breakdown in the report.

Um I think it's been in the report before, and as I was doing the reading this time, I know that rates fluctuate, so it can be it can, you know, it can be in some ways dated or not totally accurate.

I think that's helpful for understanding um why which series are viable and not viable.

So that's just uh a general comment, but it seems like generally like fantastic news in terms of all of the series that makes sense to move forward with.

So thank you for all the hard work and that and um in speaking to the creating a stable plan that helps us shore up our ratings.

Appreciate the comment, and we'll make sure to take that to heart.

Thank you.

Um I guess on item eight, we would open for public comment.

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

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

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

Ms.

Lenier, there are no callers that we should be recognized.

Thank you.

Okay.

Request a motion and a second to approve item eight.

Motion to approve item eight.

And a second.

Second.

President Arce is excused.

Vice President Lavaroni.

Aye.

Commissioner Jamdar.

Hi.

Commissioner Stacy.

Aye.

Commissioner Thurlow.

Hi.

Item eight passes item nine.

Approve credit facility agreements for interim funding of the San Francisco Public Utilities Wastewater Enterprise Capital Project.

Good afternoon, Commissioners.

My name is Edward Quang, Capital Finance.

Today we're requesting approval of two credit facilities agreements that support the wastewater and rum funding program, along with approval of the updated commercial paper offering memorandum.

First, we'll review quickly how the interim funding program works, so why it's an important financing tool, and then uh discuss discuss the specific facilities before you today.

Okay.

Okay.

Credit facilities themselves carry relatively small uh fees ranging between 25 and 40 basis points and support access to commercial paper markets where funds are needed.

Um in June, uh we solicited competitive proposals from the pre-qualified banking pool maintained by the Airport Commission and utilized to utilize the remaining 125 million of expanded uh wastewater interim funding authority that this commission approved in 2024 and the board subsequently approved uh that year.

Um as well as soliciting for uh replacement proposals for the water and wastewater uh interim programs that would be expiring uh this upcoming fiscal year.

The solicitation solicitation went out, uh was sent to the pool in June of 26, and we received responses from seven banks.

Today's recommendation addresses our most immediate wastewater enterprise needs through uh the addition of one new facility and replacement uh one facility for cost savings.

Uh we will bring additional facilities and recommendations to the commission as a result of this uh solicitation later this fall as well.

This slide summarizes uh the wastewater enterprises current interim funding program.

Uh the commission previously expanded the program uh authorization to 1.25 million.

Today we're requesting approval to replace an existing facility, Series A6, with a lower cost alternative, and utilize the remaining authorized capacity of the program by adding a new 125 million dollar series.

Uh no increase in the commission's previously authorized program size is being requested.

Um I just also wanted to highlight that the series highlighted in green were entered into pursuant to the expanded authority.

Okay.

Um first um replacing.

Oh, staff is recommending two actions today.

First, we're replacing the Series A6 Bank of America Liquidity Facility with the Royal Bank of Canada facility, and that reduces uh their annual fee that we pay from 42 to 33 basis points, uh lowering ongoing costs, uh, and we're still maintaining strong uh short-term ratings of for that facility.

Second, we recommend establishing a new 125 million dollar A9 facility with TD bank and an initial fee of 27 basis points.

Uh this and this utilizes the remaining program authorization and provides additional capacity to release project budgets and support uh the capital program.

Both uh facilities include extension options providing flexibility while preserving our ability to negotiate competitively procuring future renewals in the future.

So in the last bullet on this slide just uh notes that the new fee agreement for series A9 provides a new provision that the there's a step-up fee should we enter into subordinate wastewater revenue bonds.

Um we respectfully request the commission approval of the forms of agreements necessary to replace the A6 facility with the Royal Bank of Canada facility and establish a new A9 facility with TD Bank and as well as approving the updated form of uh commercial paper offering memorandum.

Thank you very much.

Any questions?

Thank you very much.

Commissioners.

No questions.

Um just one question on the step-up fee.

Um have we ever in the past had to use that or be charged with that?

Specifically the step-up fee we haven't had in our agreements, but uh on some of the other um liquidity facilities that we have in place.

We do have termination provisions, so this is just unique to including it is what the bank had requested in this case.

Yeah.

Very good job.

Yeah, but even with the step-up fee, the fee is still quite competitive.

Quite competitive.

Okay.

Thank you.

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

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.

Linier, no callers that we should be recognized.

Thank you.

Commissioner Stacy.

I I should have said this on the last item too.

I just wanted to say thank you to the entire finance team for all of the hard work, not only on the rating, but on these on these items that come to us.

I I think I said this at the last hearing, but I feel like you have done a really good job over the years of educating us.

We had a lot of background earlier, maybe last year, maybe earlier this year.

So I end up feeling like I don't have as many questions anymore because it's starting to look a little familiar to me.

But I I do just want to appreciate all the work that the entire team puts into this.

It is really critical for saving costs and keeping us within that affordability metric.

And it's always great to hear when we can uh save uh on the costs of the debt financing because there's an awful lot of it.

So thank you.

Thank you, Commissioner Stacy.

Um I can call for a motion for item number nine.

Move to approve item nine.

Seconded.

President Arceus excused.

Vice President LeVaroni?

Aye.

Commissioner Jamdar?

Aye.

Commissioner Stacy?

Aye.

Commissioner Thurlow?

Aye.

The item passes.

Item 10.

Authorize the issuance of up to 400 million of 2026 water revenue bonds to fund the cost of San Francisco Public Utilities Commission Water Enterprise Capital Projects and to retire commercial paper and approve the form and authorize the execution and delivery of related documents.

First, Commissioner Stacey, thank you for your kind comments.

I feel very bad for our team and both our internal team and an external team that it has been such a busy summer.

They haven't had much beach time this year.

So I appreciate you recognizing them for that.

Agenda item number 10 will approve a short-term water revenue bond as I described earlier.

It has been specifically structured to have no impact on our fiscal year 27 expenditures.

Edward did a great job describing to you again how we try to always use the lowest form, lowest cost form of financing for each of our needs.

That when we are looking at our needs, we're doing this three-dimensional chess where we're looking at cash spending and the controller's reserve releases that we have referred to.

As a reminder, the Commission approves projects, we go to the Board of Supervisors for authorization to issue debt.

And then when our teams need to expend funds to award contracts to make commitments, they need to ask to have that release.

Well, as our programs have grown, uh we've uh solicited more facilities from the Board of Supervisors, but there's a finite capacity for that.

And as it grows, this divergence of how much has been put in these encumbrances versus the cash spending has also grown.

And as you can see here, we have a long pathway for spending for for the water enterprise, but we will need more resources for our August releases.

And that is what this financing is intended to address.

Now finance and our infrastructure team and our enterprises have all worked very hard over the last number of months together with our capital budgeting team to use the reserve releases more efficiently.

And our May reserve releases were addressed that way.

But we have we still have a need for August.

So on short order, we began in May the process of a interim financing through an RFP for something that is called a direct purchase.

You will recall we use this tool for our power enterprise earlier this year.

The direct purchase allows us to borrow directly without using an offering document to the market.

That's the biggest time commitment in terms of creating the disclosure.

And more importantly, we don't want to accelerate those bonds.

That would cause our ratepayers to have to pay more.

So this interim financing is designed to address that.

We did this RFP.

We received seven very solid bids.

Working with our financial advisory team, we selected Wells Fargo Bank as the direct purchaser of those bonds.

These are structured as bonds.

We have been given the opportunity to structure them on either a fixed basis or taxable basis.

I we still have that choice.

I wouldn't want to preclude anything, but I think our strong inclination is to recommend doing that on a fixed basis given the low interest rates.

But we don't have to go for a rating, and we don't have to create another long document for you to read in the form of a preliminary official statement.

Let me advance a little bit.

So we had the good faith estimate that was provided to you as part of your package.

Rates have inched up a little bit.

At the time, the the interest rate was going to be a 335.

It is now about a 358.

It's still a very attractive rate.

These bonds would be taken out next August when we do the larger transaction.

It is in the plan is 1.1 billion.

That will be determined based on the actual spending at that time.

So at this time we are seeking authorization for a 400 million dollar direct purchase.

Again, this is the amount that would be repaid with that larger transaction.

And with this document that we still do have a bond purchase agreement.

We still do have continuing disclosure requirements, but we don't have to provide an official statement to the marketplace.

And with that, we'd ask you to authorize the transaction.

I am happy to answer any questions.

Commissioners.

One question then on the fixed versus a variable.

Is there any ceiling or floor on that if we the longer we wait or the closer or is whatever the rates are at the time of say August or September, whatever?

We would expect to set the rate based on our current schedule on August 11th and close the transaction August 13th.

That is the advantage of doing this direct purchase with the bank.

Thank you.

There are no other questions.

We can open for public comment.

Remote callers, please raise your hand if you wish to provide comment on item 10.

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

Seeing none, Moderator, are there any college who have their hand raised?

Ms.

Lanier, there are no callers that we should be recognized.

Thank you.

Call for a motion and a second to approve.

Motion to approve item 10.

And we have a second.

Second.

Second from President R.C.

is excused.

Vice President Leveroni.

Commissioner Jamdar.

Commissioner Stacey.

Commissioner Thurlow.

Item 10 passes.

Item 11.

Authorize the General Manager to enter, amend or otherwise administer a non-capital financing standby letters of credit as required security for California Department of Fish and Wildlife Perm.

Thank you very much.

Commissioner, as I promised, this is the last item we have today.

Edward did a nice job describing a certain type of credit facility that we enter into for financing.

Those types of credit facilities are facilities we expect to draw upon.

Sometimes we enter into facilities to secure behaviors.

For example, our power enterprise is both a receiver and a grant of letters of credit for power purchase agreements.

We enter into certain permits, and the State of California, specifically fish and wildlife, has long required our wastewater enterprise to maintain if I could have the slides, please, maintain credit facilities to ensure that we have the resources available to honor our commitments under those permits.

I think we in finance would argue that based on our strong double-A credit and the fact that we are part of the city and county of San Francisco, we can certainly demonstrate we have that ability.

But the State has had this requirement for some time.

There have been ongoing discussions to try to change that requirement.

But in the meantime, we do have these facilities in place.

We have 11 such standby letters of credit already in place.

This is our first time entering a new agreement like this since this team has come on board.

And we have worked closely with the City Attorney's Office and our external council to both clarify terms on the existing agreements and create flexibility for entering into a new agreement.

So what we are seeking today is authority for the general manager to enter into these agreements as water receives permits and to stay compliant with those permits.

Again, these are not financing facilities.

We have never drawn on one of these.

We would hope never to draw on one of these.

So with that, it's really not a financing for capital projects, but because we work with the banks and have those relationships, we are happy to assist with this.

And again, we really appreciate the work that our General Counsel has done in helping us move this forward.

Thank you, Mr.

Sklarov.

Any Commissioner Jimdar.

Just wanted to repeat back what you said because again, I am not a finance expert.

So this is just a backup credit facility.

Just so you don't plan to draw on it, but in an emergency you might need to.

The state wants to have the ability to draw on a facility if we ever don't honor those.

Again, we would not expect that to ever happen.

Frankly, well, I let's say that the State is used to deal with uh different kinds of developers who don't have the resources or the environmental commitment that the SFP seed has.

Thank you.

Thank you.

And again, I like to echo Commissioner Stacy's thank you.

Um I spent hours reading these, and that was the easy part, I will say, because you made it so clear, and you had to do all the heavy lifting.

I also like to include our general counsel, uh, Ms.

Bergman on uh assisting and um and doing uh all the heavy lifting, but thank you very much.

This was uh a lot to cover, but you you did it uh very uh simplified and uh understandable.

So thank you very much to you and your teams.

Thank you, Commissioner.

Um public comment.

Remote callers, please raise your hand if you wish to provide comment on item 11.

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

Seeing none, Moderator, are there any calls who have their hand raised for item eleven?

Ms.

Lenny, are there no callers that we should be recognized?

Thank you.

Motion to approve item eleven.

And second.

President R.C.

has excused Vice President Lavarone.

Aye.

Commissioner Jamdar.

Aye.

Commissioner Stacy.

Aye.

Commissioner Thurlow.

Aye.

Item 11 passes item 12.

Approve an increase of 400,000 to the existing cost contingency and an increase of 212 calendar days to the existing duration contingency for contract number DB-121 R2, Moccasin Powerhouse Generator Rehabilitation with General Electric Renewables US L C Commissioners, Gerard Manager, good afternoon.

My name is Jabad Mercedes.

I am project manager to Project DB 121 R2, Marketing Powerhouse General Generator Rehabilitation.

This project is located 130 miles approximately east of San Francisco in Marcusin, which is in Tuanemy County.

You can see the building in salmon color, that's the original powerhouse that was constructed in 1920s, more than 100 years ago.

To the right, you see in blue the replacement powerhouse, which was commissioned in 1969, more than 50 years ago, 57 years ago to be exact.

Most of the components within the powerhouse were old and beyond their life expense expectancy.

In May 2021, this body approved the contract to General Electric to reassemble service renew and rehab the aging components.

And that includes stator, state uh housing winding and associated electrical and mechanical components.

That project went well, and a lot of components were rehabilitated and reinstalled.

But during the reinstallation project team realized that the shaft connecting the turbine to generator was out of alignment.

And if you see on the sketch to the right, you see the shaft in the middle, generator on top, and uh turbine at the bottom.

Energy from high pressure water rotates the shaft by turbine.

That energy is comes to the generator, which is converted to electrical energy and jumps on the grid and evidented to the public.

In May 2025, this commission approved augmentation to general electricity contract to take care of this misalignment and eccentricity and excessive vibration.

That project, that change order, that argumentation was completed and right now successfully, and the shaft misalignment was within tolerances, and right now both units are working adequately.

This experience highlighted the need for a proactive and preventive vibration monitoring system that can continuously monitor vibration and instability, lock and maintain records of all events, detect, identify, and report patterns and trends.

And most importantly, alert development and stability and excessive vibration at early stages.

Therefore, staff recommends, argumentation of contract, 400,000 in cost contingency, and 212 days in schedule contingency to replace to procure this vibration monitoring system.

Thank you.

Questions?

Commissioner Stacy?

Just a comment.

Sounds like a really good idea, pretty straightforward, and hopefully it will help in the future avoid these kinds of problems or at least an earlier anticipation of them.

So preventive measure, proactive measure, just make sure it won't happen again.

It's good to be proactive.

Thank you.

Thank you.

Public comment.

Remote callers, please raise your hand if you wish to provide comment on item 12.

Are there any members of the public president wish to comment?

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

Mr.

Lanier, there are no callers that we should be recognized.

Thank you.

Offer a motion and a second to approve.

Move to approve.

Second.

President RC is excused.

Vice President Lavaroni.

Hi.

Commissioner Jamdar.

Aye.

Commissioner Stacey.

Hi.

Commissioner Thurlow.

Aye.

Item 12 passes item 13.

Award contract number PRO.0339R, Power Capital Program Management Contract to Deloitte Transactions and Business Analytics LLP to provide program management consulting services to support delivery of the Power Enterprise Capital Improvement Programs.

Good afternoon, Commissioners.

My name is Jimmy Long, Principal Project Manager of Infrastructure Division.

Today I am here to request your approval to award Contract Pro CO339R, the power program management contract, subject to the approval by the Board of Supervisor.

May I have the slide, please?

I'm here with uh Sony Dolly Wall, who is the infrastructure division uh director of uh power program.

And um she will be the contract manager of Pro 339R once the agreement is executed.

So Sony and I will be here to answer any question after the presentation.

The FSPUC is San Francisco local clean electricity electricity provider.

Through Hadchi Power and Clean Power SF, we serve municipal facilities and thousands of residents and businesses customers across the city.

The power enterprise capital improvement plans directly support system reliability and clean energy expansion to serve the growing customer demands.

When Pro339R was issued, the total approved capital improvement budget for fiscal year 26 to 35 was approximately 1.3 billion.

Early this year, this commission approved an updated capital plan, increasing the 10-year budget for fiscal year 27 to 36 to 2.2 billion to deliver this large and growing capital portfolio effectively.

SSPUC seeks to retain a qualified consultant to provide comprehensive program management support.

The objective of this contract is to optimize capital project delivery processes to increase successful completion of high quality projects.

This is the first delegated program management contract for power capital programs.

It aligns with this uh the similar program management contracts for the water and wastewater capital improvement programs.

The proposed contract has a not to exceed amount of 30 million and a duration of 10 years.

A 10-year term ensures continuity through a full 10-year capital plan.

The contract value reflects expected needs over the next decade with the goal of building expertise and improving processes that will ultimately transition to city staff.

The scope of service is organized into four major categories: program administration, strategic capital planning, program delivery, project technical support.

Overall, the structure mirrors, water and wastewater program management model.

The RIP was advertised twice.

In the first run, the sole proposal received was deemed non-responsive.

So staff survey the market and we find a solicitation.

Upon readvertisement, additional firms express interest, but the FSPUC automatically receive one responsive proposal from Deloitte Transactions and Business Analytics LLP.

So staff respectfully requests approval to award contract pro 0339R to delay for an amount not to exceed 30 million and a duration of 10 years, subject to approval by the Board of Supervisors.

Sony and I are available to any answer any questions.

Commissioners, questions.

Commissioner Stacy.

And I was glad to see that the intent is to transfer the expertise eventually over that 10-year period in-house and to and to really train staff.

What I had a hard time doing as I was reading this is really visualizing an example of how Deloitte might be helping.

It sounds it's not construction management.

I I understand that function, but it it's not construction management.

It's really it's almost uh it feels a little nebulous, but maybe it's like a uh a management advice on how to conduct your activities.

Can you give sort of a concrete example of what Deloitte might be doing in a particular circumstance?

Yes, absolutely.

And may I have the slide, please?

And um, this is a slide slide talking about the scope of work.

Um there are four main items.

The first one is a general program administration.

But the key function that Deloitte is going to provide is it includes a strategic capital planning, which involves our 10-year budget cycle, right, to help to standardize our process, procedure, prioritize our needs.

Um, and then we also have the program delivery.

We are talking about uh consistent risk management system, quality control, safety across the entire program, not individual projects.

So this is the first uh program management contract.

Before this one, there's no program management, so the management or improvement of processes on the project to project basis.

Now we have the 2.2 billion program is a time to really hone in and uh bring our processes up to the industrial standard and streamline that so that it can provide efficiency to run the entire program.

Eventually, it will save costs and schedule and increase the quality of our project.

And um the last one is the project uh support.

Individual projects also have their need, especially for power projects.

So we have the um uh power system modeling, we need to look at it holistically uh in order to determine the need for individual projects.

So this uh contract will be able to provide that type of expertise that we may not be able to get from individual projects.

I hope that answers the question.

That is helpful, thank you.

And it sounds like a really good idea.

Commissioner Thurlow?

I have a question that dovetails with Commissioner Stacy's.

I think it seems really great that the the structure of the program is designed to transition to PUC staff eventually.

Um it's extremely broad, right?

The mandate is extremely broad.

And I wonder if the combination of those things actually made the procurement process harder.

Like harder, was it harder to identify people who had the scale of such a broad remit of activities, and then also were eager to engage in a contract where the end point is transitioning to PUC staff?

Is that I'm just kind of wondering if you can elaborate on what you think made the procurement process so challenging.

Yeah, definitely.

And uh fairly speaking, the power industry is growing.

There's a lot of area of people are drawing the same expertise elsewhere.

So uh even within California, we are competing to many other utilities who are trying to ramp up their program.

So a lot of the same consultants or contractor is interesting in our job, but they are also serving other clients.

They may not have the capacity to support different programs, or maybe sometimes there will be a conflict of interest.

So uh is also the expertise actually spread across the country.

Uh in our first go around, for example, we require the key and the lead personnel to be uh in the San Francisco Bay Area.

That actually deters some of the company to beat on our job because they are also serving other clients with the same expertise.

So after the survey, we actually widen uh amend the requirement, only the key staff, the program management advisor or the and the program technical advisor instead of the whole team need to be here.

So that actually helped to attract more interest in this project.

Um on the other hand, to answer your question regarding the training and the transition, yes, this expertise is very unique, uh especially in POC, we are developing our program.

So we will be um having the consultant work uh uh side by side with our staff, and we learn from them, and we also require them to document all the requirements or the processes they develop for us so that uh they can provide training and bring our staff up to speed and then eventually let our staff take over and continue to run the program effectively.

Um and then I have a question following up on the point that you just made.

Do you expect to transition all of these functional areas of expertise, or is it or are you aiming to genuinely transition a subset of these balloons on your diagram realistically and then have some kind of program management contracts in perpetuity like the other enterprises?

Yes, I think that is a very realistic uh assumption.

And no matter how much we want to step up, there are some specialty area we may not have the knowledge or may not be able to keep up with the industrial trend.

So we will certainly need uh certain type of support.

But hopefully, by the transition the knowledge or the technology to city staff, we can lesser the demand of the external consultant.

But you're right.

Uh we uh we expect that in the future we may still need similar type of support going forward, especially the program seems to be keep growing rather than shrinking.

Right.

Right.

But the frameworks are the kinds of things that you can more easily adopt and integrate across staff and this sort of nuanced technical pieces are likely uh sort of steady state version of support that you'll need.

Yes.

Okay, perfect.

Thank you so much.

Yeah, you're welcome.

Commissioner Jamdar.

Thank you, uh, Commissioner Leverone.

Um I just had a clarifying question.

You said that other uh enterprises have similar contracts.

Correct.

Uh so is it across the whole capital planning budget?

So very similar.

And is it Deloitte or is it other folks?

Yes.

Well, what water enterprise?

KD Muller also have a PMC program management contract.

All right.

Yeah, thank you.

Yes, both water and wastewater have program management contracts that are 10 years in duration.

The water one is $80 million.

The wastewater one is $90 million.

The idea is it's just like our rolling CIP.

We anticipate the this expertise to come and go as things evolve, as new regulations come out, as climate change causes changes in our expectations, but always there to support us to make sure we're using best practices from global experts.

And is it the same firm or are those different for us?

For uh wastewater, it's AECOM.

And for water, it's HDR Stan Tech joint venture.

So we have uh the whole whole array of global experts at our disposal.

And um I'm also happy to report that uh because we have the three directors now in infrastructure uh for water, wastewater, and power, and now we have the new directors of capital planning within the enterprises.

Um we've been able to really kind of join forces and assure that the way that we're managing these uh program management contracts and utilizing this expertise is consistent across our programs, uh bringing more consistency to our capital planning and to our uh delivery of the capital programs.

Thank you.

Appreciate it.

Thank you, Commissioners.

Open for public comment.

Remote college, please raise your hand if you wish to provide comment on item 13.

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

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

Ms.

Lear, there are no callers that wish to be recognized.

Thank you.

And call for uh a motion to approve.

So moved.

Second.

President Arce is excused, Vice President Leveroni.

Aye.

Commissioner Jamdar.

Aye.

Commissioner Stacey?

Aye.

Commissioner Thurlow?

Aye.

Item 13 passes.

Item 15, communications.

Thank you.

Thank you.

Any uh discussion on the communications item 15?

Commissioners.

Item 16.

Items initiated by commissioners.

Items.

Commissioner Stacy.

I uh saw that on our list of communications we have the alternative water supply program report.

I think it might already be scheduled for a hearing, but I think it would be really great to have a hearing on the alternative water supply.

It's been a couple years, and I don't think this commission has heard has had a hearing on the alternative water supply.

I I think Mr.

Flynn, it might also, it might already be calendared.

I just wanted to make sure that we we had a hearing on the alternative water supply report.

Okay.

Thank you.

And do we need to public comment?

Remote callers, please raise your hand if you wish to provide comment on item 16.

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.

Item 17, public comment on 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?

Seeing none moderator, are there any calls that have their hand raised?

Ms.

Lanier, there are no callers in the queue.

Thank you.

Item 18.

Motion on whether to assert the attorney client privilege regarding the matters listed on the agenda.

Commissioners, may I have a motion on whether to assert the attorney client privilege regarding the matters of closed session?

I move to assert the attorney client privilege.

Second.

And seconded by President Arce is excused.

Vice President LeBroni.

Aye.

Commissioner Jamdar?

Aye.

Commissioner Stacy?

Aye.

Commissioner Thurlow.

Aye.

The item passes.

San Francisco government television.

Okay.

Are we ready?

Item nineteen.

Report following closed session.

The commission is recommending that the board approve the items referred to under agenda item eighteen.

Item twenty motion regarding whether to disclose the discussion during closed session, pursuant to San Francisco administrative code section six seven point one two Ayah on whether to disclose the discussion during closed session.

Commissioner Jamdar.

Commissioner Stacey.