Meeting Information
MINUTES
Recessed Meeting
Friday, April 24, 2002, 8:30 a.m.
City Hall, Board of Supervisors Chambers, Room
250
Chair: Commissioner Gonzalez; Vice-Chair:
Commissioner McGoldrick
Members: Commissioners Ammiano, Hall, and Schmeltzer
Alternates: Commissioners Peskin and Fellman
SPECIAL AGENDA
(There will be public comment on each item)
1. Call to Order and Roll Call
The meeting was called to order at 8:42 a.m.
Members Present: Chair Gonzalez, Vice-Chair McGoldrick; Commissioners Ammiano, Hall, Schmeltzer and Fellman.
Members Absent: None
2. Interview of Applicants Who Responded to Request for Qualifications for San Francisco Local Agency Formation Commission Energy Consultant(s) and Selection. The applicants are:
· Flynn and Associates
· Henwood Energy Services, Inc.
· R. W. Beck
· EES Consulting
Chair Gonzalez asked Donald Maynor, Esquire for an update from the April 19th meeting and stated that Commissioner Ammiano would have to leave the meeting at 9:30 a.m. to attend an MTA meeting in the East Bay.
Donald Maynor, Esquire stated that at the April 19th meeting, the Commissioners had asked him to consult with the consultants more about the project, get some cost estimates, and then make a recommendation at today’s meeting. He sent the consultants an Executive Summary and Issue Matrix on Saturday morning and then scheduled a conference call with all of the consultants on Monday morning. They spent almost an hour talking about the Executive Summary and the issues, giving them a sense of what the project would likely be about. They had a lot of discussion on how the best way to proceed was. There was some concern about having too many consultants and not having somebody take the lead. It was agreed that the best approach would be to have one of two consultants, either EES or R. W. Beck to assume the lead of the project itself.
His recommendation would be to choose one of those two firms and to allow the lead firm to use Henwood and Flynn to the extent that it would be helpful to the project. Flynn’s firm has some good information regarding the specific facilities and opportunities here in San Francisco. As you have learned, his firm has been paid to do work for the City. Henwood has good economic analysis, computers and software to do studies that would be helpful in identifying opportunities and quantifying them to a degree. He pointed out to all of the consultants that this kind of study is not easy. You want to have not only general information, but information specific to San Francisco to actually identify specific opportunities. To really quantify the extent of the opportunities would involve more sophisticated studies. You need more than a simple informational document. It is his recommendation today that the Commission would make available to the main consultant both Henwood and Flynn to provide information in the areas of specialty that was mentioned in their letters that he received last night and that the Commission has received copies of. Then, pick either R. W. Beck or EES as the main consultant to assume control of the report. It was also agreed that if any questions came up in connection with how the report should be handled, they could bring them back to Ms. Young and they could be resolved.
Commissioner Gonzalez asked what would guide the Commission in their decision to select either EES or R. W. Beck.
Donald Maynor, Esquire stated that both EES and R. W. Beck are both qualified firms and have both done similar types of studies because they have already identified some of this information. Their cost estimates were in the same range. He has had a lot of experience with R. W. Beck over the years and no experience with EES, therefore has a hard time giving a recommendation on EES based on his own personal experience. He has worked with R. W. Beck in the past. They have done a lot of studies like this, and he feels that the Commission would be comfortable with the product that they would provide. The difference between the two companies is that EES is from the Northwest and would give a better picture of the west coast marketplace. R. W. Beck is a Seattle firm, but the folks that will be working on this project are from California and have a lot more experience working with California public agencies. R. W. Beck has done bigger municipalization project studies, so they have more background in doing the bigger studies than EES.
Chair Gonzalez asked the Executive Officer if she had any comments.
Gloria L. Young, Executive Officer concurred with Donald Maynor, Esquire. She was involved in the interview process. Her first selection was Flynn and Associates because she thought that they brought a great deal of expertise, although there was some concern about the areas that they would need support in. They did in fact have knowledge about the City and County of San Francisco having worked with the Public Utilities Commission (PUC) on a number of projects. She thinks the proposal in terms of using several of the firms, one as primary and two as secondary would meet the needs of the Commission.
Commissioner Ammiano concurred with Ms. Young and acknowledged Mr. Smeloff, who was in the audience. He suggested that whomever they select, that they sit down with Mr. Smeloff so that there would be no duplication of duties. He knows that he has been working on similar areas in the power level.
Donald Maynor, Esquire stated that there was a lot of discussion on that point. It is very important that the City staff be available to the consultants for that purpose because in order to make this study valuable, they need to know what is going on in the City and what information is available. In addition, we need to capture what took place in the public hearings and include that as an appendix to the study because there is a lot of valuable information that came out of that process as well.
Commissioner Schmeltzer stated that in reviewing the new documents that they had just received, she is noticing that the amount of time proposed by R. W. Beck is half the time that EES proposed.
Donald Maynor, Esquire stated that R. W. Beck noted 250 hours as the amount of time proposed to complete the project.
Commissioner Schmeltzer stated that EES noted 500 hours as the amount of time proposed to complete the project. She asked if the conference call between Mr. Maynor and the energy consultants included the time involved.
Donald Maynor, Esquire stated that he urged the consultants not to put too much emphasis on the cost and time because it is very difficult to estimate without knowing what the study is going to look like. The next step would be to sit down with the selected main consultant over the next few days and sketch out what the exact study should like and then get better time and cost estimates. These proposals were to give the Commission more of a ballpark amount. The Commission should not put too much weight on these amounts.
Commissioner Schmeltzer stated that what was noticeable to her was that for a $15,000 difference, the Commission would get twice as much time from EES Consulting.
Donald Maynor, Esquire stated that EES discussed an additional management fee.
Commissioner Fellman asked whether Mr. Maynor’s recommendation would be to select either EES or R. W. Beck as a primary contractor and asked if the Commission should select secondary contractors, or if that would be discretionary on the part of the primary contractor.
Donald Maynor, Esquire stated that he would recommend entering into three contracts. The extent to which the main contractor would use the other two contractors would be to some extent at their discretion. You want to find out what information these other two contractors have, what value they can bring to the report and that needs additional conversation and discussion. It may mean they would have a significant project or a minimal one. If you do not enter into the contracts now, it may create a problem later on. It was his sense after interviewing Flynn and Henwood, that they had valuable contributions to add to the report. He also thinks that there is good value to having more than one consultant involved in getting peer review and alternative viewpoints on some of these issues. The Commission was also concerned with losing time as a result of having too many consultants. In his discussions on Monday, he though time would be minimized if one consultant would assume control of the process.
Commissioner McGoldrick concurred with the very well informed recommendation that Mr. Maynor had made. He asked Mr. Maynor if he would see R. W. Beck as the prime contractor assuming control of the report.
Donald Maynor, Esquire stated that he would see either EES or R. W. Beck as the prime contractor assuming control of the report as both are qualified. His recommendation would be R. W. Beck simply because he has had more experience with them, and they have done bigger projects. But if the Commission feels from their own review from the material and presentations that EES is a better choice, they certainly are capable of assuming control of the project.
Commissioner McGoldrick stated that he feels that above all it is the value that Mr. Maynor brings to the recommendation, his experience with the energy consultants. After reading their reports, interviewing, and talking to them, the Commission could just go so far. Past experience is one of the things that he relies on most and tends to want to go along with Mr. Maynor’s recommendation.
Commissioner Gonzalez stated that from the meeting that was held on April 19th, that he liked EES Consulting and R. W. Beck. He was hesitant to move forward with the possibility of Flynn and Henwood. Particularly, Flynn as having control of the project. He thought that their San Francisco experience, while relevant, did not bring him to the level of confidence that he had with the other firms. He thinks what counsel is suggesting would be a good way to proceed in terms of making a selection between R. W. Beck and EES. He would like to hear thoughts on who the Commission would prefer. He leans toward EES as he liked their presentation and he did find compelling that some of the senior members of their firm would be participating. However, he would be satisfied with either firm.
Commissioner Hall confirmed with Mr. Maynor his statement that he would pick either EES or R. W. Beck as the main consultant. The difference is that R. W. Beck has had a larger scope of operations or experience and EES more specific. He asked if Mr. Maynor could go a little bit further other than his experience with R. W. Beck. Would EES have the same amount of experience as R. W. Beck on a large-scoped project such as this one?
Donald Maynor, Esquire stated that R. W. Beck is a larger firm and he thinks they would have more resources to rely upon.
Commissioner Hall asked Mr. Maynor what he meant by resources.
Donald Maynor, Esquire stated resources within the firm. R. W. Beck has done an extensive amount of work on appearing in trial on condemnation and valuation of electric facilities. EES has had minimal experience in that area. However, he does not think that would be a major focus in this phase of the study. If this would be a second part of the study, then clearly R. W. Beck has an advantage in that area. R. W. Beck has had more experience working with utilities in California. One of the gentlemen who is assigned to the project used to operate as a manager in SMUD. You would have more local, regionalized experience in California. They have a Sacramento office and so they are very much in the hub of what goes on with public power. In terms of contracts with municipal utilities, they would dominate versus EES. But EES has worked with a number of California utilities. There is no question that they have adequate experience in California to do a study like this.
Commissioner Hall asked if the difference in hours would be reflected in different approaches that experience might bring.
Donald Maynor, Esquire stated that it is hard to know what was in the energy consultant’s minds when they looked at the project, and how they valued the time. He wouldn’t put too much emphasis on these letters because it was not the purpose of the letter to submit a project with a cap or legal limitation--it was more to get a sense.
Commissioner Hall stated that he particularly liked the fact that with EES the principals themselves would be involved. He asked Mr. Maynor that if in his past experience with R. W. Beck had worked with the principals or others.
Donald Maynor, Esquire stated that he had worked with two people that have made appearances here. Mr. Mellor, he believes is a principal in the Sacramento office or is a high level person. He is not sure the Commission is getting low-level participants from either company.
Commissioner Schmeltzer stated that she recognizes what Mr. Maynor is saying about the emphasis on these letters, and she does think that the Commission would want to talk more about the focus of what the report should look like. In looking at the number of hours for the amount of money being spent, for 250 hours you will get one draft and it would be hard to spend too much time to get a second substantial revision within the amount of time proposed. She understands that the amount of time could vary. That is when she would start looking at the amount of money you would have to get another substantial draft if the Commission decides it is needed. Her concern, and seeing that one of the companies has significant more hours available, says that you would have the cushion to have a lot more work in one area. It depends on what you like what you see to begin with.
Donald Maynor, Esquire stated that what Commissioner Schmeltzer said was true. If you have a lot of experience in an area, you can spend a lot less time coming up with the same result as somebody who hasn’t done it as much as you have. This is a very important study for San Francisco. When you look at feasibility cost studies and what you are going to spend looking at transmission, you will spend huge sums of money and may spend a little bit more over budget than originally intended. He would be concerned with costs, but he thinks it would be well worth the Commission’s time to have a quality report. He thinks the Commission could get a quality report from both consultants. It may take EES more time to come up with the same quality report than R. W. Beck because R. W. Beck has done the bigger studies and may have more in-house knowledge.
Commissioner Fellman pointed out that R. W. Beck had done the East Bay MUD study which was distributed to the Commissioners and that completed the background that the Commission wants to look at. Any consultant is going to have to rely on that. The Commission wanted whoever we picked to rely on that study already. So we have R. W. Beck as one of our final contenders that has done the work. Presumably since it is a public document, we would be able to use the benefit of their expertise in this. We are going to be using it anyway. She thinks Henwood is excellent on the analysis and Flynn is excellent on the localized knowledge as she is familiar with their work. Her recommendation would be R. W. Beck because the Commission can build on the work that they have already done that would cut down on the time necessary to do the work, along with the connection with Flynn and Henwood.
Commissioner Ammiano stated that if the Commission would get R. W. Beck’s best people because they are so large.
Donald Maynor, Esquire acknowledged Mr. Bell from R. W. Beck in the audience. Mr. Bell asked if he could sit in on the meeting as he was here on other business. Otherwise, it was agreed that the consultants would not be here to make presentations this morning. He stated that Mr. Bell and Mr. Mellor, who gave their presentations on April 19th, are senior people in the Sacramento office and that the Commission is getting their highest level California folks assigned to the project.
Commissioner Fellman stated that when the Commission is negotiating the scope of work, her other recommendation would be that we look toward a ceiling on the cost of the contract and negotiate the scope of work within that ceiling. It would be desirable to have a fixed price. She understands that can’t always happen but at least have a ceiling so we know that for the price we are going to pay, we are going to get a complete set of work, rather than just a first draft. In addition, she suggested that the Commission have an opportunity to comment on the drafts and that the final product reflects the input of the LAFCo as well.
Commissioner Hall stated that he agrees with Commissioner Fellman, but he feels it should have been done already, and that approach should be before us now-to put a ceiling on the product the Commission wants. Are we able to do that now?
Donald Maynor, Esquire stated that if Flynn and Henwood are added, the Commission is looking at a $100,000 project. There is some money that the Commission is going to spend on analysis of the two legal entities that would be handled by Ms. Miller.
Commissioner Hall asked if the Commission is defining what they want to get for that $100,000 and if the consultants know what product the Commission wants. Not to say that here’s $100,000, you tell us the best way to go.
Donald Maynor, Esquire stated that we came up with an Executive Summary, Issues Matrix and the next step, if the Commission is agreeable, is that he would like to spend time with whomever the Commission chooses as the main consultant and work out how it will be implemented, who is going to do what, how long it’s going to take, where the emphasis should be, and where the opportunities are to be developed. That way the Commission gets the most for their money and gets a report with direction and substance to it. After that meeting takes place, the consultants can go ahead and implement it. If they have some problems or need some feedback along the way, then we are available to do that. There should be a draft that becomes available sometime mid-June. The recommendation is that when a draft becomes available that there be a public hearing where the public gets an opportunity to comment on these issues as well as look at the draft. Then, Commissioners and the public would have an opportunity to say "it’s a good start, but we need more information in this area, or you really didn’t talk about this issue, and it is important to us, and we can expand and modify before the Commission has a final document."
Commissioner Hall asked if the project would be capped off. Would the consultants come back to us and say this phase is going to cost "x" amount of dollars over and above what we are expected to do at this point and time?
Donald Maynor, Esquire stated that if we sat down with the consultants and they came up with an approach that was twice as expensive as $100,000, adjustments would have to be made. We would stay within that $100,000. On the other hand, if you have your study and in the public hearing process, you say you really like what Henwood did over here but would like more information, it may cost more to get that information. So if the Commission wants more than is proposed when the draft comes out, there would be a possibility of additional costs. But, the intent is clearly to stay within the budgeted amount.
Commissioner Hall asked if each and every consultant is bidding on the same set of parameters at this point in time.
Donald Maynor, Esquire stated that wasn’t the case. The difference is that the project parameters are the same, but Henwood and Flynn would both pick up discreet pieces of the project. EES and R. W. Beck said they would assume the role of doing the whole project and at the same time be able to use Flynn and Henwood to the extent that would be useful. They are assuming the same parameters, but their role is that of the main consultant.
Commissioner Hall asked if R. W. Beck is talking about using Flynn or Henwood in areas of expertise that they don’t have or should they need them.
Donald Maynor, Esquire stated that both EES and R. W. Beck have expertise in those areas and they could spend a lot of time having as much expertise as Henwood and Flynn do, but that may not be a good use of the allocated money.
Commissioner Hall asked if it would be more expeditiously efficient to use Flynn. He asked if there is a basic difference between EES and R. W. Beck.
Donald Maynor, Esquire stated that EES and R. W. Beck are very similar. He would say that the difference between the two is size. EES is a miniature R. W. Beck. Both are capable of doing and handling this role as the main consultant for this project. Both of these firms are capable of doing the whole project themselves.
Commissioner Hall asked which outfit, R. W. Beck or EES was more supportive of going to Flynn and Henwood.
Donald Maynor, Esquire stated neither one.
Commissioner Hall asked if both mentioned using Flynn or Henwood.
Donald Maynor, Esquire stated that that was the understanding that they came to when they met as a group on Monday, and no one had a problem with the idea.
Commissioner Fellman recommended that what the Commission needs to do as a process is pick the primary contractor, have discussions with them regarding the scope of work before entering into the contract. During those discussions, areas where the consultants may need support should be identified. It may be that they don’t need the support that we think they need right now. If Mr. Maynor said that we would want to enter into a contract with all three, she would recommend that the Commission identify a primary consultant as the definitive contractor and then put Henwood and Flynn on reserve, with the understanding that after the negotiations, we would identify what their scope of work would be if any. It may be that analytical work is not needed with R. W. Beck or EES. She stated that Flynn’s expertise in San Francisco that no one else has would probably be needed.
Commissioner Gonzalez asked if that was similar to Mr. Maynor’s suggestion.
Donald Maynor, Esquire stated that was an implementation issue. Whatever is easiest and he doesn’t want the Commission to have time slip as a result of not having contractors available.
Commissioner Gonzalez stated that the Commission has heard his preference for the two firms and asked to hear what the rest of the Commission is thinking in order to make a motion. He would be prepared to change and support either EES or R. W. Beck but has a preference for EES.
Commissioner Schmeltzer stated that she was somewhat torn between EES and R. W. Beck. She liked what she heard from EES; however, she does not have familiarity with their work and has not seen their reports that they have done. She has seen R. W. Beck’s work in the past, in particularly, the East Bay MUD study. She would have liked to see more detail in the study, but she thinks it is a good study to build from. On balance, the California and Bay Area experience would lead her to recommend R. W. Beck. Perhaps in the future, when they have seen the work from EES and some of the reports they have done somewhere else, the Commission would have more comfort with them.
Commissioner Hall stated that he would echo Commissioner Schmeltzer’s feeling because he feels there may be more of an advantage with R. W. Beck. His concern and his questioning to Mr. Maynor was based upon the personal input of the principals of the company. He doesn’t want R. W. Beck, if they were chosen, to say "we could go here, go here," and it is going to cost so much more. He is not accusing them of that, but he wants to make sure they can do the work and are fully aware of what they are getting themselves into.
Vice-Chair McGoldrick stated that he expressed confidence in the recommendation that Mr. Maynor had brought forth, and he would support that process whereby Mr. Maynor works out the details. He recommended R. W. Beck.
Commissioner Ammiano stated that he recommended R. W. Beck.
Commissioner Fellman stated that she had already expressed her preference with R. W. Beck based on their current work.
Chair Gonzalez stated that a motion was taken from Commissioner Schmeltzer, seconded by Commissioner Ammiano, with unanimous consent that the primary energy consultant chosen is R. W. Beck, and that an agreement be made as to how both Flynn and Henwood’s services would be utilized.
Commissioner Fellman recommended that the Commission appoint a Sub-Committee to work with Mr. Maynor and Ms. Young in negotiating these agreements so we could move expeditiously to figure out the scope of work.
Gloria L. Young, Executive Officer suggested that if the Commission is interested in that process in order to more quickly move the process, she would strongly urge that the Commission appoint two Commissioners instead of a Sub-Committee. That way, the Commission does not have to have public hearings to go through the negotiation process.
Commissioner Fellman stated it could be called a Task Force.
Chair Gonzalez asked if Mr. Maynor agreed.
Donald Maynor, Esquire agreed.
Commissioner Schmeltzer stated that she would be happy to volunteer for the Task Force.
Chair Gonzalez asked if whether a Task Force consisting of Commissioner Schmeltzer, Commissioner Fellman and himself would comprise a majority of a LAFCo and therefore cause a problem.
Commissioner Fellman stated that Nancy Miller, Esquire’s legal opinion was that both Commissioner Schmeltzer and herself count as one vote because Commissioner Fellman is an alternate.
Chair Gonzalez asked the Commissioners if they would prefer to participate. He asked when the Executive Officer expects these meetings to take place.
Gloria L. Young, Executive Officer suggested that the Task Force meet as soon as possible and would have the LAFCo Commission Clerk pull together calendar dates so a meeting could be held in the next week or so.
Commissioner Hall asked how many meetings would be involved and how long each meeting would take.
Gloria L. Young, Executive Officer stated two, no more than three meetings that would last at least an hour to make it reasonable and substantive. Mr. Maynor may also want to participate.
Chair Gonzalez stated that Commissioner Hall is deferring to him, so the Task Force would consist of Commissioner Schmeltzer, Chair Gonzalez and Commissioner Fellman.
Gloria L. Young, Executive Officer suggested doing the first meeting as a conference call.
Donald Maynor, Esquire stated that for the first meeting, he would try and get the other consultants involved to see what they could contribute and Mr. Smeloff in terms of what the City has available. That would help the energy consultants give the Commission a better cost estimate of what it is going to take to do the project. He thinks that the more information that is available at the initial meeting, in terms of putting the contract together would not be difficult, but he thought they did a good job in identifying what the study would look like. Now it is a question of who has the information, how much time it is going to take to get it, and which of the consultants would be used to facilitate that process. He thinks one meeting would solve a lot of questions.
Chair Gonzalez asked if we could move onto Item Number 4 before Commissioner Ammiano has to leave. He would like his opinion on the item.
No Public Comment
Public Comment Closed
3. Discussion and Authorization to the Executive Officer to request release of reserves in the amount negotiated for the contract to provide energy consultant(s) services.
Gloria L. Young, Executive Officer recommended that the Commission request a release of reserves of $364,000 from the Finance Committee. That would give the Commission $100,000 for the consultant services in addition to the legal consultant services to take us through the end of this fiscal year. Also, this budget year is ending quite quickly and we have less than $50,000 in our existing budget to use that is not unallocated reserve. In order to continue the operation of the Commission, we need to ask for release of those funds so we have an operating budget when we move into the fiscal year. She stated that she went through the budget hearing process with the Budget Committee of the Board of Supervisors. The Budget Analyst and the Controller’s Office recommended that we use the existing $364,000 of unreserved amount and that we request from the City and County of San Francisco the additional funds that would bring our budget to its full total of $458,000. That way, we would not be requesting a replenishment of the budget in the amount that she had indicated in the budget document. She will bring that back to the Commission as the Commission goes through the final budget hearing in May. The release of $364,000 would be the Commission’s operating budget that would be added to for the fiscal year.
Chair Gonzalez asked to go back to the first item of $50,000 for the unallocated reserve and that the Executive Officer wants to go to the Finance Committee.
Gloria L. Young, Executive Officer stated that we have approximately $50,000 remaining in our existing budget that we are currently spending for salary support, Commissioner stipends, CALAFCo fiscal year membership dues, paper, supplies, and notices. She expects that that amount would be expended before the end of this fiscal year. We also have had additional support from the attorneys in which an additional $25,000 is needed to add to the allocated $100,000 for the fiscal year. Her request is for an approval from the Commission to go to the Finance Committee and request a release of $364,000 that would include the money to set aside for the use of energy consultants.
Chair Gonzalez stated that seeking the release of the reserve would not commit the Commission in terms of whatever the budget is that is being put together with the energy consultants. You are simply asking the Finance Committee now that we are in the eve of moving forward on the item to release the reserve.
Gloria L. Young, Executive Officer concurred.
Chair Gonzalez stated that there was a lengthy discussion at the Board of Supervisors when we dealt with the LAFCo budget. Because of our unique situation as a state agency, the whole process of going to the Finance Committee for a reserve is virtually a courtesy, but he thinks it is a good practice and he is satisfied that Ms. Young has it under control.
Commissioner Hall motioned to approve for the Executive Officer to request a release of reserve of $364,000 from the Finance Committee; Chair Gonzalez stated that it was unanimous to take that action.
No Public Comment
Public Comment Closed
4. Future Agenda Items
Chair Gonzalez stated that he would like to invite Mr. Smeloff to attend a future meeting to make a presentation to the Commission concerning his proposals and remarks that have been in the press in regards to his thoughts on how the City should proceed. At the same time, he recommended holding a calendar discussion about the power authority measure that went to the ballot and discuss some of the components of it. He asked if either Commissioner Ammiano or a member of his staff would be willing to make a presentation on this subject.
Commissioner Ammiano concurred.
Chair Gonzalez suggested discussing Assemblyman Kelly’s proposal around San Francisco’s bankruptcy litigation. These are things the Commission should move towards and get some kind of discussion going while our consultants are working on the matters we just dealt with.
Donald Maynor, Esquire asked if the Commission wanted to be informed about what direction the bankruptcy proceedings are going.
Chair Gonzalez stated specifically as to what the Assemblyman has in mind in terms of how we might use it as an opportunity. If Mr. Maynor or Ms. Young could contact his staff and see if anybody there would be available to make a presentation.
Donald Maynor, Esquire stated that he had already spoken to one of the lawyers in the City that is assigned to that issue, and she is very well acquainted with the proposals and what is going on there.
No Public Comment.
Public Comment Closed.
5. Public Comment on Items not on the Agenda
No Public Comment
6. Adjournment
The meeting of the San Francisco Local Agency Formation Commission adjourned at 9:30 a.m.
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