San Francisco Public Utilities Commission Meeting – October 26, 2021

The San Francisco Public Utilities Commission (SFPUC) held a regular meeting on October 26, 2021, to address routine approvals, receive updates on water supply and drought allocation, discuss a revocable permit for a cross-country course, and authorize major wastewater revenue bonds and notes. The meeting began with a land acknowledgment of Ohlone territory and proceeded through public comment, reports, and votes.

Consent Calendar

• Items approved unanimously (5-0):
  • Revocable license to BG Sunnyvale LLC for use of SFPUC Parcel No. 173.
  • Amendment No. 1 to Engineering Services for Pilarcitos Dam and Reservoir Improvements (increase contract contingency).
  • Increase in contract duration contingency for Contract WW-677 (Sewer Replacement No. 6) with Precision Engineering, Inc.
  • Acceptance of work by Michael O’Shaughnessy Construction, Inc. for Contract WW-678 (Sewer Replacement No. 7).
  • Approval of plans, specs, and award for Contract WW-715 (As-Needed Spot Sewer Replacement No. 43).
  • (No items were removed from the consent calendar.)

Public Comments & Testimony

• General Public Comment (item 4): Multiple speakers addressed various topics:

  • Eileen Bogan questioned why solar panels on terminal reservoirs only appear after community advocacy; noted San Francisco is an urban heat island.
  • Dave Warner criticized the collapse of voluntary agreement negotiations for the Lower San Joaquin River, urging the commission to push for a win-win deal.
  • Denise Louis (Center for Biological Diversity) urged the SFPUC to promote native plants and biodiversity.
  • Peter Drekmeier (Tuolumne River Trust) noted the failure of voluntary agreements and called for interim actions; reported only 45 fall-run Chinook salmon counted this year, compared to an average of 600.
  • David Pilpel raised concerns about requiring staff to return to office, calling it an unnecessary loss of talent; thanked acting GM Michael Carlin.
  • Ali Al Taha alleged contract fixing at the SFPUC, referencing the federal filing against former GM Harlan Kelly and questioned the role of procurement lawyers.

• On Communications (item 5D – Crystal Springs cross-country course): Numerous callers expressed support or opposition:

  • Supporters (including residents, students, and community members): Many said the course is a beloved resource, that the Belmont Heights Civic Improvement Association does not represent them, that traffic impacts are minimal, and that a small vocal minority should not dictate closure. Speakers included neighbors, a former mayor of Belmont, and parents of student-athletes.
  • Opponents (neighbors near the course): Raised concerns about increased event volume, spectator numbers (estimated 9,000 athletes and 11,000 spectators this season), parking, and traffic; argued the use has expanded beyond a simple cross-country course and that CEQA analysis was never performed.

• On BAWSCA Update (item 6): David Pilpel asked for more detail on supply/demand options; a caller criticized large corporate water users and alleged data misrepresentation.

• On General Manager Report (item 7A): One caller questioned the testing of the sewer system and pipe replacement data.

• On New Commission Business (item 8): Two callers sharply criticized Acting GM Carlin and the commission, alleging corruption; a third caller (Dave Warner) defended Mr. Carlin and thanked him for his service.

• On Consent Calendar (item 9): Callers questioned contract increases and cost overruns; one cited the Pilarcitos Dam project exceeding its budget.

• On Item 10 (Bond issuance): A caller expressed concerns about SSIP cost overruns and green bonds, warning of global financial risks.

Discussion Items

• Bay Area Water Supply and Conservation Agency (BAWSCA) Update (item 6): CEO Nicole Sandkulla presented drought allocation plans. Key points:

  • The water supply agreement includes Tier 1 (retail vs. wholesale cuts) and Tier 2 (cuts among wholesale customers). Under a 20% regional cut, San Francisco retail would face a 10% reduction while wholesale customers average 25% (range 10%-45%).
  • Residential per capita water use across BAWSCA agencies is at historic lows (average 63 gpcd in FY 2019-20, down from 79 in FY 2012-13). 32% of the service area uses less than 55 gpcd.
  • Other supplies (groundwater, surface water, recycled) are severely impacted by drought; some agencies have lost nearly all local supply.
  • The Tier 2 plan is being updated and will be adopted by BAWSCA board on November 18, 2021.
  • Commissioners noted the value of the data and asked for continued updates.

• Annual Policy and Government Affairs Update (item 7A): Megan Scott (Acting Director) reported on federal and state advocacy:

  • Secured first-ever appropriation for Army Corps dam repair loans (up to $950 million).
  • Helped secure $100 million in federal water/wastewater aid for California and $185 million in state water/wastewater ratepayer relief, plus $193.5 million for energy.
  • SFPUC anticipates full funding for eligible water enterprise arrears ($3.8 million) and partial funding for wastewater/power arrears.
  • Highlighted the need for better metering to streamline assistance.

• Commissioner Discussion on Crystal Springs Cross-Country Permit (item 5D): Commissioners expressed concern about revoking the permit based solely on a neighbor group's opposition; they noted the use is compatible with watershed protection and that neighborhood issues (parking, traffic) are not SFPUC’s responsibility. Staff confirmed the permit has no end date and that they are working with the College of San Mateo. No action was taken; a more thorough report is expected in January.

• New Commission Business (item 8): President Morant announced a resolution to be considered at the next meeting, codifying the commission’s policy priorities to guide the incoming General Manager. Commissioner Chami requested a future detailed update on the voluntary agreement status.

• Wastewater Revenue Notes and Bonds (item 10): Rich Morales (Treasury Manager) presented:

  • Proposed issuance of up to $390 million in 2021 Series AB Wastewater Revenue Notes (interim financing for SSIP biosolids and headworks projects) and up to $380 million in 2021 Series AB Wastewater Revenue Bonds (long-term financing).
  • The notes will be paid down by low-cost federal WIFIA loans (1.45% vs. ~3.25% for typical bonds); notes are expected to have interest rates of 0.5%-0.75%.
  • Both series will be sold competitively, with closure expected in November 2021. Subseries A notes/bonds will be designated as “green.”
  • Commissioners asked about past green bond performance; staff agreed to report results after the sale.

Key Outcomes

• Approved Minutes of October 12, 2021 (unanimous).
• Consent Calendar approved (5-0).
• Item 10 – Wastewater Financing: Motion to authorize issuance of up to $390 million in 2021 Series AB Wastewater Revenue Notes and up to $380 million in 2021 Series AB Wastewater Revenue Bonds, approve related documents, and authorize the General Manager to sell on a competitive (or by necessity negotiated) basis and award to lowest bidder. Approved unanimously (5-0).
• Closed Session: Motion to assert attorney-client privilege regarding litigation (San Joaquin Tributaries Authority vs. State Water Board); following closed session, motion not to disclose discussions. Both passed.
• Procedural Change: The President announced that items will no longer be removed from the consent calendar based on pre-meeting emails or memos; only requests made during the meeting will be honored.
• Directives: Staff to provide a detailed report on Crystal Springs cross-country course by January 2022; staff to report results of green bond/note sale; staff to schedule a presentation on voluntary agreement negotiations.
• Acknowledgments: Commission and public thanked Acting General Manager Michael Carlin for his leadership over the past 11 months.