San Francisco Public Utilities Commission Meeting - April 11, 2023

On April 11, 2023, the San Francisco Public Utilities Commission (SFPUC) held a regular meeting. Commissioners voted to rescind the local water shortage emergency, adopt a new customer assistance program, approve rules for the Social Impact Partnership Program, approve a $791 million WIFIA loan agreement, award a $90 million wastewater program management contract, and terminate the Alameda Creek Recapture Project contract. The meeting also featured a water supply update, public comments from community members and contractors, and discussions on equity and small business inclusion.

Consent Calendar

• Items 5A-5F (approved unanimously): Included a $5 million job order contract, amendments for security consulting, Treasure Island wastewater engineering, Folsom stormwater tunnel engineering, Stern Grove emergency restoration cost increase, and a lease with SPRO LLC. Commissioner Stacy requested item 5G be severed.
• Item 5G (approved unanimously): Authorized an amended MOU with Recreation and Parks to use electrical facilities at McLaren Park for the Sunnydale Hope SF project. Commissioner Stacy disclosed her firm's work with Mercy Housing on the site.

Public Comments & Testimony

• Water Supply Update (Item 4A): Peter Drekmeier (Tuolumne River Trust) urged the Commission to consider taking a year off the "design drought" to reduce alternative water supply needs, citing the SFPUC's entitlement to over 1 million acre-feet from the Tuolumne River this year and a 2.7 million acre-foot snowpack.
• Consent Calendar (Item 5): James Mabry (Construction Site Services) requested that micro LBE goals be implemented on the Treasure Island Wastewater Treatment Plant contract (Item 5C). A caller raised concerns about Merced Manor Reservoir repairs.
• Customer Assistance Program (Item 7): A public commenter praised the program and requested that micro LBE goals be included in PUC contracts to help underserved communities.
• Social Impact Partnership Program (Item 8): No public comments.
• WIFIA Loan (Item 9): A caller questioned whether the additional debt would increase rates, noting that the total borrowing (bonds plus EPA loan) could increase PUC debt by 37%.
• Contract Award (Item 10): James Mabry and others asked for higher micro LBE goals on the Biosolids Headworks project, arguing that current goals do not reach the smallest businesses.
• Alameda Creek Termination (Item 11): A caller from BAWSCA expressed support for the termination and noted the project's challenges. Another caller commended staff transparency. Peter Drekmeier cautioned against over-investing in alternative water supplies.
• General Public Comment (Item 13): Several micro LBE contractors from the Bayview neighborhood spoke about the Biosolids Headworks project, asserting that larger contractors do not subcontract to local micro businesses. They requested the Commission mandate inclusion of micro LBE goals on the project. Commissioners acknowledged the comments and committed to a future agenda item on micro LBE programs.

Discussion Items

• Item 4A – Water Supply Update: Steve Ritchie reported that reservoir storage is healthy, snowpack is above 250% of normal, and year-to-date precipitation is 160% of average at Hetch Hetchy (185% in Bay Area). The Governor's March 24 executive order removed the directive for Stage 2 conservation, and the State Water Board rescinded curtailment orders on April 4. The SFPUC recommends rescinding the local drought emergency and surcharge. Commissioner Maxwell discussed flood control, groundwater recharge, and hydropower optimization.
• Item 6 – Rescind Water Shortage Emergency: The Commission voted to rescind the November 2021 emergency declaration and drought surcharge (effective May 1, 2023) while continuing a voluntary 11% reduction until state board regulations expire. The item passed unanimously.
• Item 7 – Customer Assistance Program: Michael Perlstein presented a program that expands discounts from 200% of federal poverty level to 50% of area median income (AMI), with two tiers: 25% discount for very low income (50-80% AMI) and 40% discount for extremely low income (0-30% AMI). The program eliminates late payment charges for single-family residential customers and exempts low-income customers from shutoffs/liens for one year. $8 million annual funding was approved. Commissioners expressed support and requested future data on expanding eligibility above 80% AMI. The resolution passed unanimously.
• Item 8 – Social Impact Partnership Program: Valerie Toulier Lewa presented rules and regulations for the SIP program, which allows contractors to voluntarily commit to community benefits. The program includes a public dashboard, performance benchmarks, and enforcement mechanisms. Exemptions are limited and require GM approval. The Commission approved the rules unanimously.
• Item 9 – WIFIA Loan Agreement: Alexandra Gannell and Nikolai Sklarov presented a master loan agreement with the EPA for up to $791 million, with an initial $369 million sub-loan for six wastewater projects. The interest rate is tied to U.S. Treasury rates (currently ~3.61%). The loan allows a one-time adjustment before drawdown. The Commission approved the agreement unanimously.
• Item 10 – Wastewater Program Management Contract: Stephen Robinson presented the award of a $90 million, 10-year contract to AECOM for program management of the entire wastewater capital plan. The contract includes a 20.25% LBE commitment and a racial equity component. Commissioners discussed the need for innovation and flexibility. The item passed unanimously.
• Item 11 – Terminate Alameda Creek Recapture Contract: Katie Miller recommended terminating the contract with Anvil Builders due to site erosion, cost overruns, and operational concerns. Termination costs are estimated at $13-16 million, versus $30.8 million to continue. The project will be redesigned after bank stabilization. The Commission approved termination unanimously.

Key Outcomes

• Votes: All action items were approved unanimously (4-0).
• Rescission of Drought Emergency: Effective May 1, 2023, the local water shortage emergency and drought surcharge are rescinded; voluntary 11% reduction continues.
• Customer Assistance Program: New discount tiers and protections take effect July 1, 2023. Staff will report back after one year.
• Social Impact Partnership Program: Rules adopted effective April 22, 2023.
• WIFIA Loan: Master and sub-loan agreements approved; closing expected soon.
• Wastewater Program Management Contract: Awarded to AECOM; subject to Board of Supervisors approval.
• Contract Termination: Alameda Creek Recapture Project contract terminated; staff will conduct lessons-learned review and report back.
• Future Agenda Item: Commission directed staff to present an educational item on micro LBE programs and inclusion in upcoming meetings.
• Closed Session: The Commission voted to assert attorney-client privilege and went into closed session on the Yosemite Slough sediment contamination claim. After reconvening, they recommended additional funding to the Board of Supervisors for the settlement.