San Francisco Public Utilities Commission Meeting - March 28, 2023

The San Francisco Public Utilities Commission (SFPUC) held its regular meeting on March 28, 2023, to discuss water supply conditions, capital improvement programs, bond issuance, cooperative agreements, and other business. Commissioners voted unanimously on all consent and regular calendar items. The meeting included updates on the end of the drought emergency, notable progress on the Mountain Tunnel Improvement Project, and a presentation on the upcoming $865 million wastewater bond issuance.

Consent Calendar

• Item 6: Consent calendar approved unanimously (5-0). Items included re-award of a construction management contract to Town Cent Management Incorporated CM Pros joint venture and an increase for the College Hill Reservoir roof substructure replacement after a full inspection revealed additional decay.

Public Comments & Testimony

• Peter Dreckmeyer (Tuolumne River Trust) commented on Item 4A, noting that the water supply report title changed from “drought conditions” and questioned the timing of the drought emergency declaration when storage was over a million acre-feet. On Item 5, he criticized the Bay Area Water Supply and Conservation Agency (BAWSCA) for not analyzing the Tuolumne River Voluntary Agreement and urged commissioners to examine peer review issues. During general public comment, he reported that only 466 salmon returned to the Tuolumne River this season, far below the 38,000 federal doubling goal.
• Speaker (Gloria Barry) on Item 8 supported the SFUSD internship grant and suggested it could be expanded as a form of reparations, urging partnership with a new Department of Reparations.
• Speaker (Nicole Sinkula-Bosca) on Item 4B praised the Mountain Tunnel project and noted that the original billion-dollar tunnel alternative was avoided through repairs.
• Speaker (public) on Item 7 urged the commission to tap into the federal infrastructure bill for solar projects.
• Speaker (public) on Item 9 highlighted past flooding collaboration with Caltrans and called for commissioner orientation on flood risk.

Discussion Items

• Item 4A: Water Supply Conditions Update – Steve Ritchie reported that reservoir storage is near capacity, precipitation at Hetch Hetchy exceeds 50 inches (double March average), snowpack is 250% of the April 1st median, and water demand remains low (13% savings baseline). The Governor lifted the 15% reduction order, and staff will bring a proposal to lift the local drought emergency and surcharge at the April 11 meeting. Commissioner Maxwell asked about flood risk on the Tuolumne; Ritchie explained the Dos Rios floodplain project performed well. Commissioner Rivera inquired about Trinity Reservoir’s low storage due to inter-basin transfers.
• Item 4B: Hetch Hetchy CIP Quarterly Report – Randy Anderson reported $211 million spent (27% completion) on the program, with 17 projects (9 pre-construction, 6 in construction, 2 closeout). Cost variances totaled $34 million due to revised budgets. Highlights: Mountain Tunnel shaft excavation completed, bypass tunnels tied in during 49-day winter outage, and major equipment delivered to Moccasin Powerhouse. Commissioner Maxwell and Commissioner Stacy discussed incorporating climate extremes into design; Anderson noted a balancing act with costs. Commissioner Paulson asked about replacing 100-year-old penstocks with cracks – alternatives under study for 80-100 year design life.
• Item 4C: Wastewater Enterprise Quarterly Report – Carolyn Chu (standing in for Stephen Robinson) reported SSIP at 52.6% completion ($4.4 billion program, $5.97 billion budget, $49.1 million over forecast). Cost increases from headworks, new trades buildings, and equipment delays. Southeast area major projects: biosolids construction ongoing; headworks delayed 20 months to 2026 due to wet weather restrictions, complexity, and supply chain issues. Southeast Community Facility grand opening occurred. Commissioner Maxwell asked about a large 84-inch pipe in a photo – Chu clarified it is permanent.
• Item 4D: Report on SFPUC Activities – General Manager Eric Sandler announced a scheduling error (missing time in Prop 218 rate hearing notice) will move the rate hearing from May 9 to May 23. Public comment noted the error was caught by a community member.
• Item 5: BAWSCA Report – Nicole Sinkula-Bosca presented updated per capita water use: 60 gallons per day residential, 26% reduction from peak (despite 33% population increase). She discussed recycled water projects (South Bay, Peninsula) and noted BAWSCA will update its long-term water supply strategy to 2045. Commissioners discussed on-site reuse and direct potable reuse. Commissioner Stacy commended the focus on recycling.
• Item 7: $865 Million Bond Issuance – The commission authorized issuance of 2023 Series A, B, and C bonds (A and B for new wastewater projects, C for refunding). The package includes green bonds for SSIP, refinancing of 2018 mandatory put bonds, and use of low-interest federal WIFIA loans locked at 1.45%. Underwriters: BofA (Series A/B) and Goldman Sachs (Series C). The good faith estimate assumes 5% interest, but staff noted the inverted yield curve may allow lower rates. Ratings affirmed with stable outlook.
• Item 8: SFUSD Work Based Learning Grant Amendment – Approved increase of $28,350 and three-year extension (total $34,350 over four years) to host three summer interns per year at the College Hill Learning Garden. The program prioritizes students from environmental justice communities.
• Item 9: Special Ordinance for Caltrans Cooperative Agreements – Approved recommendation to the Board of Supervisors to waive certain administrative codes allowing cooperative agreements with Caltrans for engineering review on Lower Alemany and Folsom stormwater projects. Commissioners asked about labor standards; staff confirmed state prevailing wages would apply.

Key Outcomes

• Minutes of March 14, 2023 approved unanimously (4-0).
• Consent Calendar approved unanimously (5-0).
• Item 7: Bond Issuance approved unanimously (5-0) – authorizes up to $865 million in 2023 Series A/B bonds for wastewater and Series C for refunding; delegates authority to General Manager.
• Item 8: SFUSD Grant Amendment approved unanimously (4-0).
• Item 9: Special Ordinance for Caltrans approved unanimously (4-0) – recommendation to Board of Supervisors.
• Rate Hearing Rescheduled – Due to a time omission in the Prop 218 notice, the sewer/water rate hearing moved from May 9 to May 23, 2023. A corrected notice will go out April 7.
• Drought Emergency Lifting – Staff will present a resolution to lift the local drought emergency and surcharge at the April 11, 2023 meeting.
• Future Discussion – Commissioner Maxwell requested a comprehensive overview of all SFPUC internship programs and their fields.