San Francisco Public Utilities Commission Meeting — June 25, 2024

The San Francisco Public Utilities Commission (SFPUC) held a regular meeting on June 25, 2024, beginning at 9:30 AM. The meeting included recognition of a retiring employee, quarterly budget and capital project updates, a racial equity progress report, approval of multiple leases, contracts, and financing agreements, as well as the appointment of a new Commission Secretary. All votes were unanimous (3–0) with three commissioners present.

Consent Calendar

• Approval of Minutes: The commission unanimously approved the minutes from the May 14, 2024, May 28, 2024, and June 11, 2024, meetings.
• Consent Calendar Items: A total of 11 consent calendar items (A–K) were approved without discussion or public comment. These most likely included routine contract awards, lease approvals, and other routine actions typically bundled as consent items.

Public Comments & Testimony

• General Public Comment:
  • A community member from the Bayview expressed frustration over stalled funding and underutilization of the Assistance Center, noting that the controller’s office had received presentations from community members. The speaker warned that if no action is taken, the community may take “holistic action.”
  • Ian Vogen commented on the Ocean Beach Master Plan, stating that it focused only on wave action and ignored sediment transport, and that managed retreat would be expensive and ineffective. He also raised concerns about Stonestown not having on-site dedicated water piping and instead paying for connections, despite nearby hookup possibilities.
  • Peter Dreckmeyer (policy director for a 12-year-old retract) encouraged the commission to direct staff to produce a memo on capital investment risks highlighted in the long-term vulnerability assessment, citing a quote from that assessment about trade-offs between reliability and price.
  • A third remote caller raised a fiscal sustainability concern, stating that the SFPUC has a $6.7 billion deficit in reserves, meaning the agency lacks enough money to replenish assets without borrowing, which adds about 75% to asset costs. He urged an audit or review of the agency’s financial condition.
• Public Comment on Specific Agenda Items: No public comments were received on any of the regular calendar items (items 5B, 5C, 5D, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19).

Discussion Items

• Recognition of Retiree: The General Manager honored Ray Jackson, a plumber who retired after 25 years of service. Supervisors and colleagues praised his dedication, humor, and mentorship. Commissioners expressed gratitude and presented a resolution.
• Quarterly Budget Status Report (Item 5B): Deputy CFO Laura Bush reported that for Q3 of FY2023-24, the wastewater, power, and CleanPowerSF enterprises are projecting positive operating results, but water faces a shortfall. Key drivers: removal of the drought surcharge (rescinded May 2023) caused revenue shortfalls for water and wastewater, partially offset by state grant funding ($8.1M for water, $11.6M for wastewater for arrearages/discounts). Water also had $9.8M in legal settlements. Power revenues were above budget due to higher wholesale sales and generation. Financial ratios remain on target.
• Wastewater Enterprise Quarterly Report (Item 5C): Bessie Taylor presented updates on the wastewater capital program. Major projects: the Biosolids Digester Facilities project is 51.1% complete; the Headworks Facility project is 86.3% complete. The SSIP Phase 1 overall completion is 67.6%. No budget variances were noted from the last quarter. Staff reported that delays from resource constraints are being addressed through procurement of additional consultant resources and changing delivery methods.
• Racial Equity Progress Report (Item 5D): Dr. Chris Bijou provided an update on the agency’s racial equity efforts. Agency demographics: 32% Asian, 8.6% Black, 13% Hispanic/Latino, 2.1% multiracial, 44.2.7% white, 0.6% Indigenous. A 2023 racial equity survey found retention and promotion as the top concern, followed by hiring and recruiting. Staff launched a 42-match pilot mentorship program, relaunched professional development for managers (focused on managing diverse teams), and developed a career pathways tool. Monthly professional development sessions are also being expanded agency-wide. Commissioners praised the work and noted the importance of retention.
• Lease Approvals (Items 8 & 9):
  • Item 8: A three-year lease (with two-year option) for 38,013 sq. ft. at 3801 Third St. (Bayview Plaza) for the Wastewater Enterprise’s collection system division. Base rent: $32,220/month with 3% annual increases. Staff noted limited available space in the Bayview.
  • Item 9: A five-year lease (with two-year option) for 27,000 sq. ft. warehouse, 6,000 sq. ft. office, and 13,000 sq. ft. outdoor yard at 1900 Oakdale Ave. for plumbers, laborers, and engineers. Rent: $58,893.50/month, flat for five years. Staff compared 12 other properties and found this one uniquely suited.
• Contract Awards (Items 10, 11, 12):
  • Item 10: As-Needed Main Sewer Replacement No. 10 awarded to Mitchell Engineering for $16,028,745 (730-day duration). Three bids received, all above estimate; staff attributed to risk of unknown work locations.
  • Item 11: Geary Boulevard Sewer and Water Improvements Phase 2 awarded to Cratus Inc. for $45,957,003 (1,034-day duration). Six bids received; low bid was below engineer’s estimate. Project coordinates with the Geary BRT project.
  • Item 12: Amendment No. 2 to the Lower Alemany Area Stormwater Improvement Project engineering contract with McMillen Jacobs Associates, increasing the contract by $8.3M to $17.8M and extending duration by three years (total 9 years). The increase is driven by complex modeling and encroachment permit requirements from Caltrans (crossing under freeways, bridge structure modeling, etc.) and design of a temporary bypass road. Commissioner Stacy expressed concern about the cost increase; staff explained that requirements became apparent during detailed design.
• Commercial Equipment Rebate Program (Item 13): Julie Ortiz presented a public hearing to approve a Commercial Equipment Rebate Program effective July 1, 2024, to promote water conservation. The program offers two types of rebates: metered (up to $7 per 748 gallons saved over 10 years, max $750,000/ project) and estimated savings (lower rates). Minimum annual water savings lowered from 150,000 to 75,000 gallons. Total estimated water savings from nine past projects is 243 million gallons. Commissioners endorsed the program.
• Interim Financing Programs (Items 14 & 15): Director of Capital Finance Nikolai Sklarov presented the renewal of credit facility agreements for the Wastewater Enterprise ($275M total) and Water Enterprise ($200M total). These short-term facilities (commercial paper and revolving credit) allow the SFPUC to borrow for construction before issuing long-term bonds. The replacements were selected through an RFP process; fees increased slightly. Unanimously approved.
• Bond Issuance (Item 16): Authorize up to $1.305 billion in bonds. This includes:
  • Series A: Up to $480M taxable (short-term) for the Biosolids Digester project to preserve eligibility for IRA tax credits.
  • Series B: Up to $125M taxable (short-term) for the Southeast Community Center.
  • Series C & D: Up to $700M tax-exempt to refinance commercial paper and fund new construction (green bonds). Estimated interest cost as of pricing date (July 17-18) is 4.3% overall. Commissioner Stacy noted the importance of taxable bonds for flexibility and green bonds. Unanimously approved.
• Utility User Tax Refund (Item 17): CFO Nancy Hom presented a request to authorize the General Manager to seek Board of Supervisors approval to refund $754,141 in overpaid utility user taxes to three customers: Oliver de Silva ($101,825), Sunol Ag Park ($340), and Alameda County ($651,976). The overpayment resulted from charging the wrong tax rate (7.5% instead of 6.5%) and improperly remitting to San Francisco instead of Alameda County. The City Attorney is still negotiating with Alameda County. Unanimously approved.
• Delay of Discount Consolidation (Item 18): Rates Manager Matthew Freiburg presented a request to delay the implementation of the discount consolidation for Hetch Hetchy Power customers on rate schedules A1 UP and A10 US from July 1, 2024, to January 20, 2025. This impacts 21 accounts managed by nonprofits serving low-income housing, which would have experienced 26.5% to 50% bill increases (approximately $8,000 to $27,000/year). The six-month delay will soften the impact and cost the agency an estimated $88,000 in lost revenue, which has no significant financial effect. Unanimously approved.
• Appointment of Commission Secretary (Item 19): President Paulson announced the selection of Tiffany Lenair as the new Commission Secretary, replacing retiring Secretary Donna Hood (effective June 28, 2024). The motion also authorized the General Manager to assign temporary staff to cover duties during the transition period. Commissioner Rivera thanked interim secretary Cerrillo Espinoza for his service. Unanimously approved.

Key Outcomes

• Approved Minutes: May 14, May 28, and June 11, 2024 (3-0).
• Consent Calendar: Unanimously approved (3-0).
• Leases: Items 8 and 9 approved (3-0).
• Contracts: Items 10 ($16.0M), 11 ($45.9M), and 12 ($17.8M amendment) approved (3-0).
• Commercial Rebate Program (Item 13): Approved (3-0).
• Credit Facilities (Items 14 & 15): Approved (3-0).
• Bond Issuance (Item 16): Authorized up to $1.305B (3-0).
• Utility Tax Refund (Item 17): Approved (3-0).
• Delay of Discount Consolidation (Item 18): Approved (3-0).
• Appointment of Commission Secretary (Item 19): Approved, appointing Tiffany Lenair (3-0).