SFPUC Commission Meeting Summary – June 13, 2023

On June 13, 2023, the San Francisco Public Utilities Commission (SFPUC) convened a regular meeting, with President Ajami presiding and Commissioners Paulson and Stacy present. Vice President Maxwell and Commissioner Rivera were excused. The commission discussed and voted on several capital improvement projects, contracts, grants, and financial reports. The meeting included a consent calendar, regular calendar items, and a closed session for legal matters. This summary captures the key decisions, reports, and public comment themes from the session.

Consent Calendar

• Approved the consent calendar (excluding item 5J) with a unanimous vote (3-0). Items included contract amendments, new contract awards, and extensions.
• Approved item 5J (as amended) with a unanimous vote (3-0). The amendment increases the contract cost contingency by $5,000,000 and adds 228 calendar days to Contract WW-639, bringing the total contract amount to $47,293,000 and total duration to up to 1,997 calendar days. Staff clarified a typo in the agenda, noting the correct increase is $5,000,000 (not $5,000 as originally printed).
• No public comments were made on the consent calendar items except for one caller on 5J, who expressed concerns about the lack of public meetings on the clean drinking water upgrade progress.

Public Comments & Testimony

• Item 4D (Water CIP Report): A caller asserted that Hetch Hetchy water was stolen from Indigenous peoples, emphasized that water is life, expressed opposition against mixing groundwater that could contaminate water quality, and urged the Commission to collaborate with Indigenous communities.
• Item 5J: A caller referenced the $2.6 billion infrastructure upgrade from 2002, urging the need for public meetings to report on the percentage of pipes replaced, and questioned the purpose of the additional $5 million while old pipes leak.
• Item 6 (John O'Connell Grant): A caller accused the Commission of not listening to Indigenous statements, urged learning from empirical data, and criticized the lack of people of color in presentation materials.
• Item 8 (Parsons Contract): A caller asked what the presenter was doing to stop contamination in the Bay and bring attention to new viruses found, and stressed the need for environmental orientations for contractors.
• General Public Comment: Dave Warner voiced concerns about the 92 MGD water supply shortfall cited in the Alternative Water Supply Program Quarterly Report, arguing it was disingenuous without considering population decline, demand trends, and high costs. He suggested a more balanced presentation and caution on capital expenditures.
• Item 16 (Closed Session): No public comments were made on closed session matters.

Discussion Items

• Report of the General Manager:
  • HR Update (4a): Wendy Macy presented quarterly hiring statistics. Vacancies are decreasing, with 282 hires in FY 2022-23, exceeding exits. Infrastructure had the highest vacancy rate, followed by HRS, though recent efforts have improved. The presentation highlighted collaboration with communications to enhance recruitment through job fairs, website improvements, and social media. Commissioner Stacy praised the website improvements; Commissioner Paulson asked about the composition of infrastructure vacancies, and Commissioner Stacy requested a breakdown by education level for future reports.
  • Bond and Loan Financing (4b): Nikolai Skarloff reported that on April 5, 2023, the PUC issued $974 million in bonds for the Wastewater Enterprise, including $750 million in new revenue bonds and refunding of prior bonds. The all-in interest rate was 3.08%, lower than the good faith estimate of 3.35-3.77%. Green bonds (CBI-certified) attracted significant ESG investor interest, and all bonds were rated double-A. Additionally, a WIFIA loan closed on April 26, 2023, locking in a 3.65% rate versus the estimate of 4.046%. The loan's optionality allows drawing at favorable times, as demonstrated by borrowing at 1.45% earlier this year.
  • Quarterly Budget Report (4c): Laura Bush presented Q3 FY 2022-23 results. All enterprises (Water, Wastewater, Power, CleanPowerSF) project positive net operating results: Water +$27.8M, Wastewater +$19.7M, Power +$49.6M, CleanPowerSF +$14.3M. Higher power prices boosted wholesale revenues, while drought surcharge removal reduced retail sales. Budget adjustments were made for increased power purchase costs, and all financial ratios are on target.
  • Water CIP Report (4d): Stephen Robinson reported 36 projects in the Water Enterprise CIP with a total budget of $3.3 billion, 33% complete, with ~$1 billion expended and ~$30 million spent in Q3. Key updates included the Sunol ozone project reaching 95% design, Harry Tracy filter underdrain construction nearing halfway, and the San Francisco Recycled Water Project facing a 3-year delay due to PG&E requiring primary power for the Golden Gate Park pump station (originally approved for secondary power). Commissioner Stacy asked about the regional groundwater treatment program's alignment with the well findings, and about the Eflocculant polymer feed optimization at Sunol; staff confirmed linkages and optimization efforts.
  • Water System Improvement Program (WSIP) Quarterly Report (4e): Brian DeSora reported two active projects and one in closeout. The Alameda Creek Recapture Project faced increased costs ($10.2M in anticipated change orders) and significant erosion issues, prompting staff to recommend terminating the construction contract. The project will be re-evaluated and redesigned, with a new contract issued only after pond banks are stabilized. The Regional Groundwater Storage and Recovery Project completed Contract A, with ongoing work at wells. Commissioner Stacy asked about interaction between groundwater well findings and the treatment program; staff noted new contaminants (e.g., perchlorate) have influenced treatment needs.
  • Activities & Events (4f): General Manager mentioned that EPA Assistant Administrator for Water visited to announce WIFIA loans for the North Side Treatment Plant, highlighting the PUC's status as a major WIFIA user.
• Item 6 (Grant to John O'Connell High School): Blair Randall and Carmen Ayton presented a request for $375,000 over two years to continue a career exposure and environmental education grant with John O'Connell High School. The program includes externships for teachers, field trips to Hetch Hetchy, and career panels. Commissioners praised the program for its alignment with workforce development and environmental stewardship. Commissioner Stacy asked about measurable outcomes; staff noted tracking is difficult due to privacy but they’ve seen increased awareness and some students moving into SFPUC training programs.
• Item 7 (Folsom Stormwater Contract Modification): Derek Adams presented a request to modify Contract PRO.0101 (tunnel design for the Folsom Area Stormwater Improvement Project) by $7.5 million and 48 months (new total: $17.2M, 9 years 1 month). The modification funds engineering support during construction and additional modeling required by Caltrans for relocating the launch shaft under I-80 and for the US-101 foundation. Commissioner Stacy asked about the foundation modification; staff explained piling removal and replacement. President Ajami raised concerns about lack of prior awareness of underground structures, emphasizing the need for better data digitization.
• Item 8 (Parsons CM Contract Modification): Stephen Robinson requested a $12 million increase (new total: $47M) with no time extension for Contract PRO.0104, providing program construction management services for the Southeast Treatment Plant. The increase is needed due to increased utilization, including electrical inspection support, safety management, and COVID-related efforts. Staff noted they will use time to consider bringing work in-house. Commissioner Stacy and President Ajami probed the necessity and future direction.
• Item 9 (Sewer Inspection Contract): John Wong presented a request to award Contract WW-735 to Pipe and Plant Solutions for $1,998,888, with a 330-day duration, for main sewer inspection. The contract will support asset management by feeding data into the system. Commissioner Stacy asked about how locations are selected (geographic grouping) and inspection frequency (typically every 5-10 years).
• Item 10 (Airport MOU Extension): Danny Fung presented a request to extend the MOU with the Airport Commission for two years (through June 30, 2025) with no change to the $3.8M amount, for design work on electric capacity upgrades.
• Item 11 (Commercial Clothes Washer Rebate Program): Steve Ritchie presented a proposal to adopt a rebate program for commercial clothes washers, providing up to $5,000 per machine to promote water and energy conservation. The program dates back to 2004, and funding is targeted to neighborhoods with limited access to laundromats. Julie Ortiz noted outreach will include flyers, site visits, and community groups. There are estimated under 300 laundromats in the city.
• Item 12 (Zoo Recycled Water Grant): Steve Ritchie requested authorization to accept a $538,051 grant from the California Department of Water Resources for construction of pipeline to the San Francisco Zoo as part of the West Side Recycled Water Project. The grant covers a portion of the $2.3M construction cost. The project will supply an annual average of 100 million gallons of recycled water (307 acre-feet)

Key Outcomes

• Consent Calendar (excluding 5J): Approved unanimously (3-0).
• Item 5J as amended: Approved unanimously (3-0).
• Item 6 (Grant to John O'Connell High School): Approved unanimously (3-0).
• Item 7 (Folsom Contract Modification): Approved unanimously (3-0).
• Item 8 (Parsons Contract Increase): Approved unanimously (3-0), with direction for staff to explore in-house capabilities.
• Item 9 (Sewer Inspection Contract Award): Approved unanimously (3-0).
• Item 10 (Airport MOU Extension): Approved unanimously (3-0).
• Item 11 (Commercial Clothes Washer Rebate Program): Approved unanimously (3-0).
• Item 12 (Zoo Recycled Water Grant): Approved unanimously (3-0).
• Closed Session: Commission voted not to disclose discussions (3-0).
• Minutes of May 23, 2023: Approved unanimously (3-0).

No reportable actions were taken during closed session.

Note: The agenda listed item 5j as a consent item, but it was pulled for discussion and amended. The minutes for this meeting were not available; this summary is based solely on the transcript.