Annual Comprehensive Financial Report
Popular Annual Financial Report
Fiscal Year 2020-21
April 12, 2022
Nancy L. Hom
Acting Chief Financial Officer | Deputy CFO
Financial Services Bureau
1 Fiscal Year 2020-21
Annual Comprehensive Financial Report
2 Issued: February 25, 2022
• KPMG, LLP
• https://sfpuc.org/about-us/reports/audited-
financial-statements-reports
Summary of Audit Results
• Consolidated SFPUC audited financial
statements
Unmodified opinion
No material misstatements in the
financial statements
No internal control deficiencies
observed
Fiscal Year 2020-21
Popular Annual Financial Report
3 Issued: February 25, 2022
• Prepared by SFPUC Finance and
Communications teams
• Contributions from Enterprise and
Divisional management
• https://sfpuc.org/about-us/reports/popular-
annual-financial-reports
Accessibility: general public and
those without financial background
Highlights SFPUC’s commitment to
Mission & Values throughout
pandemic – supporting customers,
community and the environment.
Government Finance Officers Association
Achievement Awards
4 PAFR: Achievement Award in Popular
Annual Financial Reporting, since 2010
ACFR: Certificate of Achievement for
Excellence in Financial Reporting, since
2009
• SFPUC awarded both achievement
awards for prior fiscal year 2019-20
• Attests to SFPUC:
• Exceeding requirements of annual
comprehensive financial reporting,
• Production of high-quality reports for
professional and general public use
THANK YOU
5 OUR MISSION: To provide our customers with high-quality, efficient, and reliable water, power and sewer services in a manner that values environmental and community interests and sustains the resources entrusted to our care.
Financial Services Bureau
525 Golden Gate Avenue, 4th Floor
San Francisco, CA 94102
T 415.554.3155
F 415.554.3161
TTY 415.554.3488
Date: April 12, 2022
To: Anson Moran, President
Newsha Ajami, Vice-President
Sophie Maxwell, Commissioner
Tim Paulson, Commissioner
Through: Ronald P. Flynn, Chief of Staff & Acting AGM Business Services From: Nancy L. Hom, Acting co-Chief Financial Officer | Deputy CFO RE: FY 2020-21 Annual Comprehensive Financial Report and Popular Annual Financial Report
Financial Services is pleased to present the FY 2020-21 Annual Comprehensive Financial Report (ACFR) and the Popular Annual Financial Report (PAFR).
KPMG, LLP issued the ACFR on February 25, 2022 and SFPUC issued the PAFR same day. Both reports are available on SFPUC’s public-facing website.
FY 2020-21 ACFR: https://sfpuc.org/about-us/reports/audited-financial- statements-reports
FY 2020-21 PAFR: https://sfpuc.org/about-us/reports/popular-annual-financial- reports
The ACFR details our financial activities, condition and services as an organization and includes the Water, Wastewater, and Hetch Hetchy Water & Power & CleanPowerSF audited financial statements. Financial and statistical data includes ten years of financial/operating indicators and trends, social and economic data, and other metrics of interest to financial investors and the general public. The SFPUC has received the Government Finance Officers Association (GFOA) Certificate of Achievement in Financial Reporting annually since 2009 for the Annual Comprehensive Financial Report and looks forward to another award.
FY 2020-21 Annual Comprehensive Financial Report
FY 2020-21 Popular Annual Financial Report
Commission Meeting, 4/12/2022
Pg. 2
The PAFR, this year, focuses on our organization’s commitment to the SFPUC’s Mission and Values this past fiscal year and through the pandemic. The “Respond Recover and Reimagine” theme is supported by senior management’s contributed stories of achievements in organizational excellence, community outreach and support, and financial stewardship. The PAFR is specifically designed to be readily accessible and easily understandable to the general public and interested parties without a background in public finance.
Like the ACFR, the SFPUC has received the GFOA Popular Annual Financial report award annually since 2010 and looks forward to another award for FY 2020-21.
We thank the Commission for its continued support for our department’s commitment to excellence in financial report and transparency.
cc: Dennis J. Herrera, General Manager
att: FY 2020-21 Annual Comprehensive Financial Report FY 2020-21 Popular Annual Financial Report
San Francisco Public Utilities Commission
An Enterprise Department of the City and County of San Francisco, California Annual Comprehensive
Financial Report
Fiscal Years Ended June 30, 2021 and 2020
Sustaining the resources entrusted to our care.
Prepared by SFPUC Financial Services
Nancy L. Hom
Deputy Chief Financial Officer
The San Francisco Public Utilities Commission
An Enterprise Department of the City and County of
San Francisco, California
Annual Comprehensive Financial Report
For the Fiscal Years Ended
June 30, 2021 and 2020
Photo by: Robin Scheswohl
Kubota pipes are earthquake resistant ductile iron pipe, which bends but does not break during earthquakes are installed to ensure a reliable water supply to Zuckerberg San Francisco General Hospital.
The San Francisco Public Utilities Commission
TABLE OF CONTENTS
Introductory Section (Unaudited) Page
General Manager’s Transmittal Letter....................................................................................................... 1–2 The Reporting Entity.................................................................................................................................... 3–5 Mission, Vision and Values and Commission Members........................................................................... 5–6 Structure and Organizational Chart............................................................................................................ 6 Agency Strategic Plan.................................................................................................................................. 7 Enterprise Risk Management Framework................................................................................................. 7–9 San Francisco’s Budget Process................................................................................................................ 9–10 Operating and Capital Budgets................................................................................................................... 10–11 Ten-Year Financial Plan............................................................................................................................... 11 Ten-Year Capital Plan.................................................................................................................................. 11–12 Financial Transparency, Reporting and Auditing Process......................................................................... 12 Financial Authority and Policies ................................................................................................................. 12 Accounting Systems, Policies, and Internal Controls................................................................................ 13 Achievement Awards from Government Finance Officers Association…………........................................ 13–14
Financial Section
Page
Independent Auditors’ Report................................................................................................................. 15–16 Management’s Discussion and Analysis (Unaudited)............................................................................ 17–68 Basic Financial Statements..................................................................................................................... 69–164 Statements of Net Position – Proprietary Funds............................................................................... 69–70 Statements of Revenues, Expenses, and Changes in Net Position – Proprietary Funds .............. 71 Statements of Cash Flows – Proprietary Funds ………………………………………………………….............. 72–73 Notes to Basic Financial Statements................................................................................................. 74–164 Required Supplementary Information (Unaudited)……………………………............................................... 165–170 Schedules of the Proportionate Share of the Net Pension Liability ................................................ 165 Schedules of Employer Contributions - Pension Plan……………………………………………………………… 166–167 Schedules of Changes in Total Pension Liability and Related Ratios – Replacement Benefits Plan…………………………………………………………………………………………………………………………………… 168 Schedules of Changes in Other Post-employment Benefits Liability and Related Ratios Other Post-employment Healthcare Benefits Plan……………………………………………………….....……. 169 Schedules of Employer Contributions
Other Post-employment Healthcare Benefits Plan………………………………………………………....……. 170 Supplementary Information (Proprietary Funds)………………….............................................................. 171–175 Schedule of Changes in Net Position – Dollar and Percentage Change vs. Prior Year................. 171–172 Schedule of Changes in Revenues, Expenses, and Net Position – Dollar and Percentage Change vs. Prior Year........................................................................................................................ 173 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards.............................................................................................................
174–175
Statistical Section (Unaudited)
Financial Trends....................................................................................................................................... 176–204 Comparative Highlights of Revenues and Expenses......................................................................... 176–181 Changes in Net Position...................................................................................................................... 182–193 Summary of Net Position by Component........................................................................................... 194–199 Investments in Capital Assets............................................................................................................. 200–204
Page
Revenue Capacity.................................................................................................................................... 205–211 Water, Wastewater, Hetchy Power, and CleanPowerSF Rates History............................................ 205–208 Net Revenue and Debt Service Coverage ………................................................................................ 209–211 Debt Capacity........................................................................................................................................... 212–231 Debt Ratings........................................................................................................................................ 212 Summary of Debt Outstanding ………….............................................................................................. 213–215 History of Outstanding Debt by Type………......................................................................................... 216 Future Principal and Interest Payments for Debt Issues.................................................................. 217–231 Demographic and Economic Information............................................................................................... 232–248 City and County of San Francisco Economic and General Information........................................... 232–236 Summary of Accounts by Type of Customer...................................................................................... 237–238 Water Accounts and Billings............................................................................................................... 239 Historical Water Sales......................................................................................................................... 240–242 Bay Area Water Supply and Conservation Agency Members............................................................ 243 Water and Wastewater Accounts, and Billings by Type of Customer............................................... 244–245 Historical Hetchy Water Sales............................................................................................................ 246 Historical Hetchy Power Electric Sales...............................................................................................
Historical CleanPowerSF Electric Sales.............................................................................................. 247
248
Operating Information.............................................................................................................................. 249–255 Budgeted Full-Time Equivalent (FTEs) Employees by Division......................................................... 249 Operating and Capacity Indicators..................................................................................................... 250–251 Capacity Charge Revenues and Expenses......................................................................................... 252 Major Water Wholesale, Retail, and Sewer Customer Accounts by Revenue................................. 253 Major Electric Retail and Wholesale Customer Accounts by Revenue............................................ 254 Performance Measures....................................................................................................................... 255
Photo by: Sabrina Wong
Installing waterproof drywall on roof of Southeast Community Center on Evans Street.
Introductory Section (Unaudited)
General Manager’s Transmittal Letter
The Reporting Entity
Mission, Vision and Values and Commission Members
Structure and Organizational Chart
Agency Strategic Plan
Enterprise Risk Management Framework
San Francisco’s Budget Process
Operating and Capital Budgets
Ten-Year Financial Plan
Ten-Year Capital Plan
Financial Transparency, Reporting and Auditing Process
Financial Authority and Policies
Accounting Systems, Policies, and Internal Controls
Achievement Awards from Government Finance Officers Association
The San Francisco Public Utilities Commission
A Department of the City and County of San Francisco, California
Photo by: Sabrina Wong
Treasure Island Redevelopment Project: A view of Bay Bridge from Avenue of the Palms on Treasure Island.
1 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
London N. Breed
Mayor
Anson Moran
President
Newsha Ajami
Vice President
Sophie Maxwell
Commissioner
Tim Paulson
Commissioner
Dennis J. Herrara
General Manager
SAN FRANCISCO PUBLIC UTILITIES COMMISSION
GENERAL MANAGER’S TRANSMITTAL LETTER
February 25, 2022
Dear Customers and Stakeholders,
Despite the far-reaching impacts of the coronavirus pandemic in the past fiscal year, the San Francisco Public Utility Commission (SFPUC) sustained its mission and continued to provide our customers with high-quality, reliable water, power, and wastewater services 24 hours a day, seven days a week. We activated a business continuity plan at the outset of the pandemic to help the agency respond to the impacts of the pandemic, take steps to recover, and reimagine how we continue to deliver reliable water, power, and wastewater services in a post-pandemic future.
Many of our staff deployed as Disaster Service Workers to support citywide COVID-19 response efforts. During fiscal year 2020-21, the SFPUC provided 194 deployments to the City of San Francisco’s COVID Command Center. Of this number, 130 served within the City’s Department Operations Center, a critically important coordination point for agency resources to support emergencies.
Our agency was swift to reassign available SFPUC assets to support the City’s overall pandemic response. Every enterprise within our agency served and supported a role in response, recovery, and currently, in reimagining how we will serve our customers in the future.
The Water Enterprise deployed temporary emergency manifolds for some of San Francisco’s most vulnerable populations in highly effected neighborhoods like the Tenderloin district. To fulfill longer-term needs, the SFPUC collaborated with many agencies to identify and assess sites before installing permanent drink tap stations in San Francisco, and this work is ongoing. When there was a global supply chain shortage of personal protective equipment and resources during the early days of the pandemic, the Water Quality team’s labs produced their own hand sanitizer. The team also produced disinfectant for agency-wide use that reduced the time to fully disinfect a facility and conserved paper towel use.
The Power Enterprise made great strides in reimagining the customer experience. Hetchy Power launched a new billing system and an updated online portal for customers. The first solar plus battery storage project was completed, promoting resiliency in the power grid, and serving as a model for future installations. CleanPowerSF continued to make progress on its plan to provide affordable 100% renewable energy to all customers by 2025 – five years ahead of schedule. Importantly, the SFPUC continued its efforts to expand public power service in San Francisco, which will help deliver safe, reliable, clean power to new and existing customers.
Through Hetchy Power, the SFPUC helped the City respond and recover from the financial challenges of the COVID-19 pandemic by saving its municipal customers a projected $37 million in 2020 compared to the alternative offered by Pacific Gas & Electric. For those ratepayers who experienced financial hardships because of the pandemic, the agency provided a temporary 30 percent discount to eligible Hetchy Power residential customers through the SFPUC Emergency Community Assistance Program.1
1 Hetch Hetchy Power Customers projected to save more than $35 million this year during COVID-19 pandemic.
2 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The Wastewater Enterprise continued to sample for SARS-CoV-2 fragments in wastewater, collaborating with the University of California at Berkeley and Stanford University. The ongoing field work will contribute to the expanding field of wastewater epidemiology, further providing data for this field of study and assessment at the state and federal level.
In addition to providing customer assistance and bill relief programs, the SFPUC supported San Francisco’s COVID-19 response by activating the Southeast Community Facility at 1800 Oakdale as a vaccination and testing site. To date, more than 7,000 community members have received COVID vaccination, testing and social support services at the facility.
By prioritizing the ongoing maintenance and upgrades of our water, wastewater, and power infrastructure including the multi-billion-dollar, citywide Sewer System Improvement Program (SSIP), the SFPUC supported financial resilience and economic recovery. We have offered job training and contracting opportunities to the local community, kept people working, and have made steady progress on improving our system. We continue to prioritize hiring local workers and apprentices to further support the communities we serve during these challenging times.
The SFPUC also continues to support the community in other ways. We broke ground on a 40,000 square foot state-of-the-art community center at 1550 Evans Avenue in the Bayview Hunter’s Point community, designed to be a central hub for the local community to gather, learn, play, and grow.
Our agency embraced remote work early in the pandemic in March 2020. To ensure operations could continue without disruption or interruption, the SFPUC analyzed resource needs, the distribution of remote work equipment, and other support our employees needed. As we work to recover from the pandemic, and return employees to the workplace, the SFPUC is envisioning the future of work.
We may not know what the future of work will look like, but are considering various options, including those that could look very different than pre-pandemic. Regardless of the outcome, the health and safety of our employees will remain a top priority so we can continue to provide our customers with reliable, high-quality water, power, and wastewater services 24/7.
We would like to express appreciation to the Mayor, the Board of Supervisors, and our Commission for their continued support of our achievements in responsible financial management, financial transparency, and reporting excellence.
On behalf of the SFPUC, I am pleased to present the Annual Comprehensive Financial Report for the fiscal year ended June 30, 2021.
Respectfully submitted,
Dennis J. Herrera
General Manager
San Francisco Public Utilities Commission
3 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Enterprises Funds
Water Water
Wastewater Wastewater
Hetchy Water
Hetchy Power
CleanPowerSF
Hetch Hetchy
SFPUC Headquarter 525 Golden Gate Avenue
Photo by: Robin Scheswohl
The Reporting Entity - Profile of the San Francisco Public Utilities Commission
The San Francisco Public Utilities Commission (SFPUC), a department of the City and County of San Francisco (the City), is responsible for the operation, maintenance, and development of three utility enterprises: Water, Wastewater, and Hetch Hetchy Water and Power and CleanPowerSF. We provide wholesale and retail drinking water to the San Francisco Bay Area, wastewater collection and treatment within San Francisco and three neighboring municipalities, and power to residential and commercial customers and municipal facilities.
Our Business Services, External
Affairs, and Infrastructure
bureaus provide support and
administrative services and are
funded through utility rates and
charges.
The Water Enterprise operates the Hetch Hetchy Regional Water System (System), a wholesale and retail drinking water supply system that serves 2.7 million customers in Alameda, Santa Clara, San Mateo, and San Francisco counties. The upcountry portion of the System begins with Hetch Hetchy Reservoir in Yosemite National Park. Impounded by O’Shaughnessy Dam, Hetch Hetchy Reservoir water passes through hydroelectric powerhouses before it enters the San Joaquin Pipelines, the Tesla Ultraviolet Treatment Facility, and the Coast Range Tunnel on its journey to the Bay Area.
The Bay Area portion of the System includes water collection, treatment, and transmission facilities from the Alameda East Portal to the wholesale service area and terminal reservoirs in San Francisco.
Water storage facilities include watersheds, dams, and reservoirs such as our Calaveras, San Antonio, Crystal Springs, Pilarcitos, and San Andreas. The water treatment facilities are Tesla Ultraviolet Treatment Facility, disinfecting the Hetch Hetchy supply; Sunol Valley Water Treatment Plant, treating the water from the Calaveras and San Antonio supply as well as the stored Hetch Hetchy supply; and Harry Tracy Water Treatment Plant, treating the water from the Crystal Springs and San Andreas supply.
The water transmission system in the Bay Area and Peninsula includes the Bay Division, San Andreas, Sunset Supply, and Crystal Springs pipelines. The Bay Area transmission system also includes Irvington Tunnel 1 and Tunnel 2, the Bay Tunnel, and the Crystal Springs Bypass Tunnel.
The Water Enterprise also manages water distribution in the City. This system encompasses more than 1,250 miles of distribution pipelines, as well as 12 in-City reservoirs and eight water tanks with a total storage capacity of approximately 413 million gallons. Since June 2011, the Water Enterprise has operated the City’s Emergency Firefighting Water System (EFWS), formerly known as the Auxiliary Water Supply System (AWSS), an independent, high-pressure water supply system for fire suppression.
The majority of the drinking water is supplied by our system, originates as snowmelt within the 459- square-mile Hetch Hetchy Watershed on the upper Tuolumne River within Yosemite National Park. This high-quality water is transported 167 miles across California solely by gravity. The Hetch Hetchy water supply is augmented with precipitation collected in the reservoirs of the Alameda Creek Watershed in Alameda County, and the Peninsula Watershed in San Mateo County. The Regional Groundwater Storage and Recovery Project, currently under construction, will provide additional dry year water supply to the System for drought management.
Water Enterprise revenue is based on retail and wholesale water rate payments from customers. Retail rates are set by the SFPUC, while wholesale rates are set by the Commission pursuant to our Water Supply Agreement with our wholesale customers.
4 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The Wastewater Enterprise is responsible for the operation and maintenance of San Francisco’s combined sewer system that collects, treats, and discharges once treated, sanitary sewage (toilet flushing, bathroom and kitchen sinks, showers) and stormwater runoff (rainwater falling on our roofs, sidewalks and streets within San Francisco, parts of Daly City, the Bayshore Sanitary District, Brisbane, Treasure Island, and Yerba Buena Island. This work is crucial for the protection of public health, and for the environmental safety of the San Francisco Bay and Pacific Ocean. Our combined sewer system is unique to coastal California and offers significant environmental benefits because it captures and treats both stormwater (rain runoff) and sanitary sewage from homes and businesses, and these combined flows are referred to as wastewater.
San Francisco wastewater and stormwater flows are treated at three facilities: the Southeast Treatment Plant, the Oceanside Treatment Plant, and the North Point Wet Weather Facility, the last of which is operated only in wet weather. The sewer system currently can handle up to an average of 70 million gallons per day (MGD) in dry weather and can treat up to 575 MGD in wet weather. The Wastewater Enterprise operates 27 pump stations, 36 discharge points, and massive underground transport/storage structures around the City that have storage capacity up to 200 million gallons. We operate, clean, inspect, and maintain more than 1,000 miles of sewer pipes. We regularly monitor areas of the San Francisco shoreline for water quality where water recreation is common and provide water quality reports to the public using our 24-hour hotline, website, and e-newsletters.
The Wastewater Enterprise serves both residential and commercial accounts as well as some municipal customers. Our sewer facilities and resource recovery programs have received recognition from agencies at the state and national level, including the U.S. Environmental Protection Agency, National Association of Clean Water Agencies, and the California Water Environment Association.
In a combined sewer system, such as San Francisco’s, managing stormwater is an important priority for the SFPUC and the City. We take a comprehensive approach to managing stormwater and advancing flood resilience across the City. Although no sewer system can handle the heaviest rains, we are pursuing a variety of approaches to improve the City’s flood resilience in the face of increasingly intense rainstorms. The comprehensive RainReadySF Program, which is a combination of planned infrastructure improvements, coordinated City services and innovative programs, provides residents and businesses with the resources they need to reduce the risk of flooding during a major rainstorm.
The Hetch Hetchy Water and Power and CleanPowerSF Enterprise (Hetch Hetchy) comprises of three key components: (1) Hetch Hetchy water (Hetchy Water), which operates and maintains the upcountry water and power facilities; (2) Hetch Hetchy Power (Hetchy Power), responsible for all power utility wholesale and retail transactions and in-City power operations; and (3) CleanPowerSF, a Community Choice Aggregation (CCA) that provides San Francisco residents and businesses with electricity supply services sourced from new and existing clean energy sources.
Hetchy Water is responsible for operating the Hetch Hetchy Reservoir, the main source of water for the Hetch Hetchy Regional Water System (System) and plays a key role in water delivery in California.
Several of the Hetch Hetchy Water facilities are joint assets and are used for both water transmission and power generation and transmission. Operating and capital costs of these facilities are allocated 45% to Hetchy Water and 55% to Hetchy Power. Refer to Water Enterprise for more information on the System.
Hetchy Power is the publicly owned utility for San Francisco. The Hetchy Power System is comprised of transmission lines and some local distribution facilities. It has a generation portfolio that includes three major hydroelectric powerhouses – Holm, Kirkwood, and Moccasin – in the Sierra Nevada mountain range and 23 solar arrays in San Francisco. Hetchy Power revenue is based on retail and wholesale power-rate payments and charges collected from customers. Retail rates are set by the Commission.
Hetchy Power customers include San Francisco International Airport (SFO), libraries, police stations, City Hall, San Francisco Municipal Transportation Agency (SFMTA), San Francisco Port Authority, Treasure
5 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Island, Hunter’s Point Shipyard, and the Transbay Transit Center. Hetchy Power also owns, operates, and maintains approximately 60% of the streetlights in the City. Finally, Hetchy Power provides electrical maintenance services, energy efficiency programs, and distributed generation services to our customers.
CleanPowerSF, San Francisco’s CCA program, provides clean electricity supply to residents and businesses in San Francisco. Under this program, CleanPowerSF supplies customers with electricity from renewable sources like solar wind, and hydro power. Pacific Gas & Electric Company (PG&E) delivers the energy via their electrical grid. CleanPowerSF’s Green product features at least 50% California Renewable Portfolio Standard (RPS) certified renewable energy, and its SuperGreen product offers 100% California RPS-certified renewable energy.
CleanPowerSF serves approximately 380,000 customer accounts in San Francisco. Collectively, Hetch Hetchy Power and CleanPowerSF meet more than 70% of the electricity demand in San Francisco with clean power.
Mission, Vision, and Values
The mission of the San Francisco Public Utilities Commission (SFPUC or the Commission) is to provide our customers with high-quality, efficient, and reliable water, power, and wastewater services in a manner that is inclusive of environmental and community interests, and sustains the resources entrusted to the SFPUC’s care.
SFPUC value sustainability as a fundamental business principle, showcased through the adoption of an agency-wide strategic sustainability plan to ingrain the values of a sustainable future into our agency’s core processes. The SFPUC is a sustainable utility leader, recognized for superior results in service, value, environmental stewardship and innovation. Most importantly we value our workforce and community as reflected in the core values adopted by our organization.
• Communication: Listen and communicate honestly and openly. • Diversity: Valuing a workforce that reflects all manner of views, experiences, backgrounds, and talents, and recognize it is vital to the SFPUC success. • Equal Opportunity: Provide opportunities to all staff to contribute and reach their potential. To achieve this, the SFPUC must be a learning organization. • Excellence: Strive for personal and professional excellence, and recognize exemplary performance by seeking continuous improvement.
• Inclusiveness: Provide access and transparency to stakeholders and community members. • Respect: Understand and appreciate the inherent value of the SFPUC’s staff, customers, and community.
• Safety: Take the health and safety of the SFPUC’s employees, customers, and communities seriously.
• Service: Focus on customer satisfaction, health, and safety. • Stewardship: Responsibly manage the resources entrusted to the SFPUC’s care. • Teamwork: Support a cooperative work environment; the SFPUC team is strengthened by the diversity and contributions of its members.
• Trust: Act with honesty, integrity, and fairness.
6 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Fiscal Year 2021
San Francisco Mayor and Public Utilities Commission Members London N. Breed Sophie Maxwell Tim Paulson Newsha Ajami Mayor President Commissioner Commissioner
Anson Moran Ed Harrington Francesca Vietor
Vice President Commissioner Former Vice President
(July 2020 to September 2020)
Structure
The SFPUC is comprised of three utility enterprises, the Water Enterprise, Wastewater Enterprise, and the Power Enterprise, which is operated within Hetch Hetchy Water and Power and CleanPowerSF. The Bureaus, comprised of Business Services, External Affairs, Human Resources Services, Equity and Innovation, and Infrastructure, which provide critical support services and oversight to the Enterprises. Business Services Bureau includes Finance, Strategy, Innovation and Change, Customer Services, and Information Technology. External Affairs/Chief Strategy Office Bureau includes Community Benefits, Communications, Policy and Government Affairs. Human Resources Services includes Employee and Labor Relations, Health and Safety. Infrastructure/Chief Engineer Bureau includes Project Management, Engineering Management, Construction Management, Environmental Management, Water Capital Programs, Wastewater Capital Programs, Program Administration and Program Control. The Office of the General Manager oversees the three bureaus (Business Services, External Affairs and Human Resources Services) and Chief of Staff. The Office of the Deputy General Manager/Chief Operating Officer oversees the three enterprises, Infrastructure Bureau, Development Review, Real Estate and Emergency Planning and Security.
Organizational Chart
AGM is Assistant General Manager, the person who leads an Enterprise or Bureau.
7 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The Agency Strategic Plan is a high-level and future-oriented plan. The purpose is to better align the work of the Water, Wastewater and Hetch Hetchy Enterprises, set a strategic direction and identify key priorities.
The Agency Strategic Plan outlines the mission, vision and values and sets forth 6 priority goals and supporting objectives.
The goals are as follows:
• Reliable service and assets;
• Organizational excellence;
• Effective workforce;
• Financial sustainability;
• Stakeholder and community
interest; and
• Environmental stewardship.
Each Goal has one or more Executive
Champions who have worked across
the Enterprises, Infrastructure, and the
Bureaus to develop performance
measures including target and baseline
metrics. There is a Lead Strategist for
each of the six goal area who will carry
the vision of their respective goal area
will report biannually to the Goal
Champions on progress of achieving
the performance measures consistent
with the target/baseline. At the end of the fiscal year, each Goal Champion is required to report performance measured against the target/baseline. More details of the 2020 SFPUC Strategic plan are available at https://sfpuc.org/about-us/policies-plans/agency-strategic-plan and the Performance Measures in the Operating Information section of this report.
Enterprise Risk Management Framework
The SFPUC helps ensure successful implementation of our Mission, Vision, and Values by integrating the principles of Enterprise Risk Management (ERM) into organizational culture and strategic decision making. In planning for our future, the ERM framework promotes a culture where risks are identified, assessed, prioritized, and managed to minimize threats
hindering us from achieving our goals; and to maximize
opportunities benefiting the SFPUC. Accountability and
transparency are promoted through assignment of identified risks to owners, and routine reporting of mitigation status to senior management. The ERM framework is a continuous
process that strengthens organizational structure and culture through communication and awareness, by adding value to the strategic decision-making process. The Risk Management
division of the Strategy, Innovation and Change Bureau, provides strategic support to the SFPUC’s journey from a traditional risk management approach towards enterprise risk management – emphasizing effective management of the total cost of risk and management of risk for better outcomes.
8 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
In fiscal years 2015 and 2016 respectively, the Power Enterprise adopted the ISO 31000 standard for Risk Management for the Hetchy Power and CleanPowerSF program as the framework implementing and maturing ERM. The framework supports a systematic and proactive approach to identify and analyze risks that threaten business objectives before they occur. Proper identification of risks to business objectives ensures mitigation measures can be implemented to reduce the probability of certain risks occurring or reducing negative impact. The ERM process allows for a transparent flow of information throughout the enterprise and program, providing visibility of risks and issues to stakeholders across the business so that they can be discussed and managed openly.
Senior management in the Power Enterprise is deeply involved in the monitoring process and meets on a periodic basis to discuss immediate, emerging, and high priority risks; while a larger meeting of internal stakeholders is convened semi-annually to discuss broader risks across the enterprise. During these stakeholder discussions, new risks can be proposed and vetted for inclusion in the risk registry or existing risks retired if they no longer pose a threat to business objectives. Risks are profiled, and a risk register is retained in a risk management software application; which further assigns accountability and provides ongoing monitoring. Overall, the monitoring process established by the Power Enterprise and CleanPowerSF provides the ability for senior management to remain agile when to responding to priority risks without being siloed in the decision-making process.
The 2020 SFPUC Strategic Plan, by way of the strategic goal of Financial Sustainability, endeavors to formalize enterprise risk management across the organization. ERM will continue to be applied in various areas of the organization. Previous successes include the Business Services Bureau, Emergency Planning and Security, and specific project-related programs.
The SFPUC also engages other methodologies as part of a comprehensive process for risk management. This includes the SFPUC Purchased Insurance Program, a portfolio of insurance policies acquired to mitigate various liability risks in mission critical assets, operational and financial. ERM benefitted this strategic process as a guide for senior management to assess and identify areas where risks were transferred through the purchase of insurance. Realized benefits include total property insurance reimbursements of nearly $8.3 million related to the August 2013 “Rim Fire”, a large-scale wildfire that damaged and destroyed SFPUC mission critical assets in the Stanislaus National Forest.
Other risk management activities include contractual risk review and advisement for the Infrastructure Project Management Bureau and Contract Management Bureau for construction, professional and general service contracts. SFPUC Risk Management also collaborates with the Office of the Administrator’s City Risk Management for citywide risk management initiatives.
Risk Categories
9 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Overall, the SFPUC’s ERM initiatives are designed to reduce the chances of a negative outcome from occurring, lessen its impact, or transfer financial liabilities away from the organization. These initiatives can also increase opportunities and maximize the benefit from taking advantage of positive outcomes.
A combination of these strategies will help lower the total cost of risk for the SFPUC and achieve both short and long-term benefits to our ratepayers.
San Francisco’s Budget Process
The budget cycle for the biennial July 1 fiscal year budget begins in August and typically ends in July.
The two-year fixed budget is prepared, reviewed, enacted by the Board of Supervisors, signed by the Mayor, and implemented by departments and adjusted as necessary during this period. The Board of Supervisors does not adopt a new budget for the second fiscal year of the cycle unless there are significant increases or decreases in revenues or expenditures which then reopen the budget to follow the usual budget process.
On March 16, 2020, as a result of the COVID-19 pandemic, Mayor Breed announced a Public Health Order requiring that San Francisco residents remain in place except for essential needs and services. All businesses deemed non-essential were directed to shutter until further notice, causing an immediate and significant impact on City revenues. To ensure the City could re-tool the FY 2020-21 and 2021-22 budget to incorporate the impact of the pandemic, the budget cycle was extended through September 2020, and was not adopted until October 2020. In addition, the second year of the fixed two-year budget cycle was reopened due to continued uncertainty surrounding the COVID-19 pandemic. The purpose of the mid-cycle update was to ensure that the SFPUC would continue to balance the budget and maintain financial sustainability. Limited changes for mission critical items were made, and the agency rebalanced the budget around updated revenue projections.
The SFPUC’s two-year budget is comprised of two, single-year spending plans, which supports the ongoing mission of the SFPUC to provide its customers with high-quality, efficient, and reliable water, wastewater, and power services in a manner that is inclusive of environmental and community interests, and that sustains the resources entrusted to our care. The budget is a detailed operating plan that identifies estimated costs and results in relation to estimated revenues and represents a process through which policy decisions are deliberated, implemented, and controlled. The budget aligns funding to accomplish our long-term strategic goals and objectives, ensures funding for our operating programs, and purposefully supports the Strategic Plan targeted outcomes to ensure the appropriate application of resources to reach our goals.
Budgeting Basis
The City adopts budgets for all government funds on a budget basis relying on a current financial resources measurement focus and a modified accrual basis of accounting. The modified accrual method is a basis of accounting used with a current financial resources measurement focus. It modifies the accrual basis of accounting in two significant ways: first, revenues are only recognized when they are measurable and available; second, expenditures are recognized in the period in which the SFPUC normally liquidates the related liability rather than when the liability is first incurred, if earlier. The City Charter prohibits expending funds for which there is no legal appropriation.
Accounting Basis
The accounts of the SFPUC Enterprises are organized by proprietary fund type, specifically an enterprise fund. The activities of the Enterprises are accounted for with a separate set of self-balancing accounts that comprise the Enterprises’ assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, revenues, and expenses. Enterprise funds account for activities that (1) are financed with debt secured solely by a pledge of the net revenues from fees and charges of the activity; or (2) are required by laws or regulations that the activity’s costs of providing services, including capital costs (such as depreciation or debt service), be recovered with fees and charges, rather than with taxes
10 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
or similar revenues; or (3) that the pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs.
The financial activities of each Enterprise and the year-end audited financial statements are accounted for on a flow of economic resources measurement focus, using the accrual basis of accounting. Under this method, all assets, deferred outflows of resources, liabilities, and deferred inflows of resources associated with its operations are included on the Statement of Net Position; revenues are recorded when earned, and expenses recorded when liabilities are incurred. The SFPUC Enterprises apply all applicable Governmental Accounting Standards Board (GASB) pronouncements.
Fiscal Year 2022 Operating Budgets
The SFPUC annual budgets, including debt service and cash-funded capital, as well as operation programs total $1.48 billion and $1.43 billion for fiscal years 2022 and 2021, respectively. The operating programs include regular operating costs, maintenance of utility facilities and lands, as well as support services, like management, business services, planning, regulatory compliance, communication, and planned debt service for each of the Enterprise. Despite overall revenue growth trends, the budget includes a forecast of volumetric utility assumptions which incorporate the significant negative impact due to the COVID-19 pandemic. The operating budget is financed by both wholesale and retail rates, service charges and non-operating revenues, including rental income and interest earnings. Of the SFPUC fiscal year 2022 $1.48 billion operating budget, the Water Enterprise accounts for $633.3 million to fund the operations and maintenance of the SFPUC water system; Wastewater Enterprise’s operating budget of $404.5 million funds the operations and maintenance of the SFPUC’s sewer system. Hetch Hetchy Water and Power’s operating budget of $218.8 million funds the operations and maintenance of the upcountry water and power systems, including Power Enterprise activities within the City. CleanPowerSF’s operating budget of $226.5 million funds the operations and power purchases. Detailed budget information is available on our website https://sfpuc.org/about- us/reports/operating-and-capital-budgets.
Fiscal Year 2022 Capital Budgets
Our capital programs are intended to reconstruct, replace, expand, repair, or improve facilities that are under the SFPUC’s jurisdiction. The capital budgets are coordinated with the Ten-Year Capital Plan and the Ten-Year Financial Plan. The issuance of revenue bonds, other forms of indebtedness, and the execution of governmental loans are provided under the San Francisco City Charter to finance our capital programs. The repayment of this indebtedness is provided through rates and service charge revenues of the SFPUC that incurs the debt and benefits from the underlying capital improvements. The budget appropriations for capital programs are coordinated with the SFPUC’s Ten-Year Capital Financial Plans. The SFPUC develops stand-alone supplemental appropriations for our capital program which are coordinated with our operating budget review and approval cycle.
Total approved fiscal year 2022 capital budgets were $789.4 million, including $212.7 million for the Water Enterprise, $408.3 million for the Wastewater Enterprise, $166.0 million for Hetch Hetchy Water and Power Enterprise and $2.4 million for CleanPowerSF. The major capital investment for the Water Enterprise included Regional Water Supply and Storage Program and Watersheds and Land Management and Local Buildings and Grounds Improvements and Water Conveyance/Distribution System. The Water Supply and Storage Program includes upgrades to structures to meet the State Division of Safety of Dams requirements and projects to increase regional water supply diversification and explore alternative methods for expanding water sources. Watershed and Land Management program improve and/or protect the water quality and/or ecological resources impacted by the operations of the SFPUC water system. Projects include the repair, replacement and maintenance of roads, fences, or trails and the acquisition of easements or properties to meet these purposes. Local Buildings and Grounds Improvements includes improvements at Central Distribution Division (CDD) facilities and structures, and a new CDD headquarters at 2000 Marin to address life safety standards
11 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
for seismic events, building codes requirements and facilities that are past useful life. Local Water Conveyance and Distribution program includes funding to install, replace and renew the local water distribution system.
The Wastewater Enterprise’s major capital investment includes the Treatment Facilities and Stormwater Management/Flood Control from the Sewer System Improvement Program (SSIP) and the Collection System-Sewer Improvement programs from the Renewal and Replacement Program (R&R). The Treatment Facilities projects include the Bayside Biosolids (Digester) project for improvements to the combined sewer transport storage and near shore combined sewer discharge structures, and improvements to the liquid treatment at various plants. The Stormwater Management/Flood Control includes work on drainage basins, green infrastructure, flood resilience, and the Green infrastructure Stormwater Management Grant Program. The R&R Collection System-Sewer Improvement Program is to maintain the existing functionality of the sewage collection system and includes planned and emergency repairs and replacement of structurally inadequate sewers.
The Hetch Hetchy Water and Power’s major capital investment includes the Transmission/Distribution Improvement project, and Water infrastructure program. The Transmission/Distribution Improvements include the San Francisco Airport (SFO) Substation Improvements to plan, design, and construct needed upgrades at the substations. Water Infrastructure program include concept, development, design, and upgrades for operating, managing, and maintaining the Hetchy Water Infrastructure. The CleanPowerSF major capital investment includes the development of new renewable energy (solar photovoltaic) and battery storage projects on select SFPUC sites as well as development and implementation of new customer programs project for programs supporting demand response, electric mobility, local renewable energy generation, and building decarbonization technologies.
Ten-Year Financial Plan
The SFPUC prepares an annual updated Ten-Year Financial Plan as required by the City and County of San Francisco Charter Section 8B.123. The Ten-Year Financial Plan is a summary of projected revenues, expenditures, fund balances, and financial ratios for each enterprise over a rolling 10-year period. The Plan projections are based on current Mayor and Commission policies, goals and objectives.
For the ten year plan fiscal year 2022, these projections also include assumptions based on the severe impacts caused by the COVID-19 pandemic, the shelter-in-place order and resulting economic recession. A key objective is to promote SFPUC’s Strategic Plan goal of Financial Sustainability by estimating future revenue requirements and financial ratios while providing a view of resulting rates changes. Consolidating these key financial indicators into the Plan serves to inform the SFPUC’s long- term planning decisions, such as the biennial operating and capital budgets, long-range capital planning and capital financing strategies.
Ten-Year Capital Plan
The SFPUC prepares an annual updated Ten-Year Capital Plan as required by the City and County of San Francisco Charter Section 3.20. The Plan is to contain a list of projects to be executed during the 10- year planning horizon, including cost estimates and schedules. Both Ten-Year Financial and Capital Plan, serve as a basis and supporting documentation for the Commission’s capital budget and issuance of revenue bonds and other indebtedness to support the SFPUC capital program.
SFPUC fiscal years 2022 through 2031 Ten-Year Capital Plan totals $9.1 billion. Water Enterprise is approximately $2.0 billion, to include the addition of new 10th year, to with investments divided between regional and local (in-city predominately). Projects include Local Water Conveyance, Local Buildings and Grounds Improvements and Regional Water Supply and Storage. Wastewater Enterprise is approximately $5.4 billion which mainly includes the R&R program for the Collection System and SSIP such as Biosolid-Digester Project and Central Bayside System Improvement. Hetchy Water and Hetchy Power’s is approximately $1.6 billion is to fund up-county water/power projects and local power projects
12 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
such as O’Shaughnessy Dam Outlet Works and other Hetchy Power projects such as Power Distribution Services. CleanPowerSF is approximately $76 million to fund the development of new renewable energy (solar photovoltaic) and battery storage projects.
Financial Transparency, Reporting and Auditing Process
This report was prepared by SFPUC Financial Services in conformance with the principles and standards for financial reporting set forth by the GASB and U.S. Generally Accepted Accounting Principles (GAAP).
Recommended guidelines by the Government Finance Officers Association of the United States and Canada were also followed.
The SFPUC’s management is responsible for both the accuracy of the data presented and the completeness and fairness of its presentation, including all disclosures. The existing comprehensive structure on internal controls in the City and SFPUC ensures that the financial statements are free of any material misstatements. This report is accurate in all material respects, and it is presented in a manner designed to set forth fairly the financial position and the results of operations of the SFPUC. The included disclosures enable the reader to gain a thorough understanding of the SFPUC’s financial activities.
The SFPUC’s financial statements have been audited by KPMG LLP, an independent registered public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the SFPUC for the fiscal years ended June 30, 2021 and 2020 are fairly presented in conformity with GAAP, and are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statements presentation. The independent auditors rendered an unmodified “clean” opinion on the SFPUC’s financial statements for the fiscal year ended June 30, 2021 since 2008. The independent auditors’ report is presented as the first component of the financial section of this report. Management’s Discussion and Analysis (MDA) is presented after the independent auditors’ report, and provides a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement MDA and should be read in conjunction with it.
Financial Authority and Policies
The City is a Charter City under the California Constitution, and as a result, the Charter is the guiding document for financial authority and policies for City departments. The SFPUC is the department responsible for the maintenance, operation, and development of three utility enterprises: the Water Enterprise, the Wastewater Enterprise, and Hetch Hetchy Water and Power and CleanPowerSF Enterprise. Each of the SFPUC’s enterprise funds is operated and managed as a separate financial entity and separate enterprise entity.
The SFPUC’s financial policies, adopted and updated such as fund balance reserve and debt service coverage requirements are available on our website https://sfpuc.org/about-us/policies- plans/financial-plans-and-policies. The purpose and source for each of the designated reserves within its major funds of operating, capital projects, debt service, and trust are included in these guidelines which enable restricting funds for future infrastructure needs, replacement of aging facilities, bond reserves, and various operating reserves to mitigate unexpected occurrences. These reserves are critical to the SFPUC’s financial strength and high bond ratings. Further, the City has a long-standing practice of recognizing and reserving for known and anticipated liabilities. The City also has established an irrevocable trust for other post-employment benefits (also known as retiree medical) and continues to make the annual requirement contribution to ensure this future obligation is funded.
13 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Accounting Systems, Policies, and Internal Controls
In developing and maintaining the accounting systems, consideration is given by the administration as to the adequacy of internal controls. Internal controls are designed to provide reasonable, but not absolute, assurance. The SFPUC’s management is responsible for establishing and maintaining a system of internal controls designed to safeguard the enterprises’ assets from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in accordance with GAAP. For the fiscal year ended June 30, 2021, the independent auditors noted no matters involving internal controls over financial reporting that would be considered a material weakness for Water, Wastewater and Hetch Hetchy Water and Power and CleanPowerSF.
The SFPUC’s Finance Department is responsible for providing the financial services for the utility enterprises, including support for financial accounting and reporting, accounts payable, billing and collection of water, wastewater, and power charges, and other revenues. The SFPUC’s financial statements and records are maintained on an enterprise basis using the accrual method of accounting to ensure the timely matching of revenues against the costs of providing services. Revenues and expenses are recorded in the period in which the revenues are earned, and the expenses are incurred.
Achievement Awards
The Government Finance Officers Association of the United States and Canada (GFOA) awarded the Certificate of Achievement for Excellence in Financial Reporting to the SFPUC for its Annual Comprehensive Financial Report for the fiscal year ended June 30, 2020. This was the 12th consecutive year that the SFPUC has achieved this prestigious award. In order to be awarded the Certificate of Achievement, a government or reporting entity must publish an easily readable and efficiently organized Annual Comprehensive Financial Report. This report must satisfy both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to GFOA to determine its eligibility for another certificate.
Financial Section
Independent Auditors’ Report
Management’s Discussion and Analysis (Unaudited)
Basic Financial Statements
Statements of Net Position – Proprietary Funds
Statements of Revenues, Expenses, and Changes in Net Position – Proprietary Funds Statements of Cash Flows – Proprietary Funds
Notes to Basic Financial Statements
Required Supplementary Information (Unaudited)
Schedules of the Proportionate Share of the Net Pension Liability Schedules of Employer Contributions – Pension Plan
Schedules of Changes in Total Pension Liability and Related Ratios – Replacement Benefits Plan Schedules of Changes in Other Post-employment Benefits Liability and related Ratios Other Post-employment Healthcare Benefits Plan
Schedules of Employer Contributions – Other Post-employment Healthcare Benefits Plan
Supplementary Information (Proprietary Funds)
Schedule of Changes in Net Position – Dollar and Percentage Change vs. Prior Year Schedule of Changes in Revenues, Expenses, and Net Position – Dollar and Percentage Change vs. Prior Year
Independent Auditors’ Report on Internal Control
The San Francisco Public Utilities Commission
A Department of the City and County of San Francisco, California
Photo by: Robin Scheswohl
Removing the connections/hooks used to lift the
rebar cage at the Southeast Treatment Plant
KPMG LLP
Suite 1400
55 Second Street
San Francisco, CA 94105
KPMG LLP , a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.
Independent Auditors’ Report
The Honorable Mayor and Board of Supervisors
City and County of San Francisco, California:
Report on the Financial Statements
We have audited the accompanying financial statements of the business-type activities of each major fund of the San Francisco Public Utilities Commission (SFPUC), a department of the City and County of San Francisco, California, as of and for the years ended June 30, 2021 and 2020, and the related notes to the financial statements, which collectively comprise the SFPUC’s basic financial statements as listed in the tables of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of each major fund for SFPUC, as of June 30, 2021 and 2020, and the respective changes in financial position and, where applicable, cash flows thereof for the years then ended in accordance with U.S. generally accepted accounting principles.
Emphasis of Matter
As discussed in Note 1, the financial statements of SFPUC are intended to present the financial position, the changes in financial position and, where applicable, cash flows of only that portion of the business-type activities of each major fund of the City that is attributable to the transactions of SFPUC. They do not purport to, 16 and do not, present fairly the financial position of the City as of June 30, 2021 and 2020, the changes in its financial position, or, where applicable, its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
U.S. generally accepted accounting principles require that the management’s discussion and analysis on pages 17 – 68 and required supplementary information, as listed in the accompanying table of contents (collectively referred to as RSI) on pages 165 – 170 be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise SFPUC’s basic financial statements. The introductory section, supplementary information and statistical section as listed in the accompanying table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements.
The supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.
The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 25, 2022 on our consideration of the SFPUC’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the SFPUC’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the SFPUC’s internal control over financial reporting and compliance.
San Francisco, California
February 25, 2022
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
17 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
This section presents management’s analysis of the San Francisco Public Utilities Commission’s (SFPUC or the Commission) financial condition and activities as of and for the fiscal years ended June 30, 2021 and 2020. Management’s Discussion and Analysis (M DA) is intended to serve as an introduction to SFPUC’s financial statements. This information should be read in conjunction with the audited financial statements that follow this section. All dollar amounts, unless otherwise noted, are expressed in thousands of dollars.
In May 2016, SFPUC launched CleanPowerSF, a Community Choice Aggregation (CCA) program into operation, pooling the electricity demands of their residents and businesses for the purpose of buying electricity on behalf of those customers. CleanPowerSF provides San Francisco wi th new clean energy alternatives, with its objectives to reduce greenhouse gas emissions, and to provide the City and County of San Francisco’s (the City) energy consumers with renewable electricity supplies at competitive rates. The SFPUC intends CleanPow erSF to be financially independent, with ability to set rates and charges with adequate revenues, and to issue debt to support its operations and future projects. CleanPowerSF is discretely presented as a fund of the Hetch Hetchy Water and Power and CleanPowerSF Enterprise starting fiscal year 2017.
The information in this MDA is presented under the following headings:
• Organization and Business
• Overview of the Financial Statements
• Fund Financial Statements
• COVID-19
• Financial Analysis
• Capital Assets
• Debt Administration
• Rates and Charges
• Request for Information
Organization and Business
The SFPUC is a department of the City that is responsible for the maintenance, operation, and development of three utility enterprises and five funds. The three utility enterprises include Water, Wastewater, and Hetch Hetchy (Hetchy Water, Hetchy Power and CleanPowerSF).
Water Enterprise
As the third largest municipal water agency in California, the Water Enterprise collects, transmits, treats, and distributes high quality drinking water to a total population of approximately 2.7 million people, including retail customers in the City and wholesale customers located in San Mateo, Santa Clara, and Alameda Counties. The Water Enterprise sold approximately 189 million gallons of water per day in the year ended June 30, 2021. Approximately three -quarter of the water delivered by the Water Enterprise is to wholesale customers. Retail customers use the remaining one -quarter a nd are primarily San Francisco consumers, including residential, commercial, industrial, and governmental users. Wholesale customers include cities, water districts, one private utility, and one non-profit university. Service to these customers is provided pursuant to the 25 -year Amended and Restated Water Supply Agreement (WSA), commenced on July 1, 2009, which established the basis for determining the costs of wholesale service.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
18 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Wastewater Enterprise
The primary responsibility of the Wastewater Enterprise is to protect the public health and the surrounding bay and ocean receiving waters by collecting, transmitting, treating, and discharging storm and sanitary flows generated in the service area. This includes 1,12 5 miles of combined, sanitary, and storm collection system pipes including: gravity mains, force mains, culverts, transport storage boxes, and tunnels. San Francisco is the only coastal city in California with a combined sewer system that collects both was tewater and stormwater in the same network of pipes and provides treatment to remove harmful pollutants before discharging into the San Francisco Bay and Pacific Ocean. In addition, the Wastewater Enterprise serves on a contractual basis certain municipal customers located outside of the City limits, including the North San Mateo County Sanitation District No. 3, Bayshore Sanitary District, and the City of Brisbane. The Wastewater Enterprise recovers costs of service through user fees based on the volume and strength of sanitary flow. As of June 30, 2021, the Wastewater Enterprise serves 147,926 residential accounts, which discharge about
16.6 million units of sanitary flow per year (measured in hundreds of cubic feet, or ccf) and 26,430 non - residential acco unts, which discharge about 4.6 million ccf per year. These reflected decreases of 2.2 million units in non-residential accounts and 0.3 million units in residential accounts compared to prior year due to the COVID-19 public health precaution.
Hetchy Water
For efficiency and to streamline the coordination of upcountry water and power operations, Hetchy Water operates upcountry and joint-asset facilities, managing resources in an environmentally responsible manner to a high standard of safety an d reliability while meeting regulatory requirements. It is responsible for operating the Hetch Hetchy Reservoir, the main source of water for the Hetch Hetchy system. Hetchy Water operates, maintains, and improves water and power facilities, smaller dams a nd reservoirs, water transmission systems, power generation facilities, and power transmission assets, including transmission lines to the Newark substation. Hetchy Water delivers high -quality water from upcountry downhill to the Bay Area while optimizing the resulting generation of clean hydropower as water is transported through the system. It maintains land and properties consistent with public health and neighborhood concerns.
Hetchy Power
The core business of Hetchy Power, as a municipal department, is to provide adequate and reliable supplies of electric power to meet the electricity needs of City and County of San Francisco’s customers, and to offer, when available, power for the municipal loads and agricultural pumping demands consistent with prescribed contractual obligations and federal law.
Hetchy Power’s portfolio consists of hydroelectric generation, onsite solar at SFPUC and other City facilities, generation using bio -methane produced at SFPUC wastewater treatment facilities, and third -party purchases. Consistent with its commitment to the development of cleaner and greener power, and to address environmental concerns and community objectives, Hetchy Power continues to evaluate and expand its existing resource base to include additional renewa bles, distributed generation, demand management, and energy efficiency programs. As part of its mission and core functions, Hetchy Power provides reliable energy services at reasonable cost to customers, with attention to environmental effects and community concerns.
Hetch Hetchy Joint for Hetchy Water and Hetchy Power
A portion of Hetch Hetchy’s operating budget, capital program, and assets, provides benefit to both Hetchy Power and Hetchy Water. This is commonly referred to as joint costs and joint assets. Both operating and
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
19 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
capital costs that jointly benefit both funds are allocated 55% to Hetchy Power and 45% to Hetchy Water, as has historically been done by the SFPUC.
CleanPowerSF
The core business of CleanPowerSF is to provide greener electricity generation to residential and commercial consumers in San Francisco. Through CleanPowerSF, SFPUC seeks to achieve several complementary goals, including affordable and competitive electricity generation rates, a diverse electricity resource portfolio that is comprised of renewable and other clean sources of supply, and hig h-quality customer service.
Overview of the Financial Statements
The Department’s financial statements include the following:
Statements of Net Position present information on the Department’s assets, deferred outflows, liabilities, and deferred inflows as of year -end, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Department is improving or worsening.
While the Statements of Net Position provide information about the nature and amount of resources and obligations at year -end, the Statements of Revenues, Expenses, and Changes in Net Position present the results of the Department’s operations over the course of the fiscal year and information as to how the net position changed during the year. These statements can be used as an indicator of the extent to which the Department has successfully recovered its costs through user fee s and other charges. All changes in net position are reported during the period in which the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus , revenues and expenses are reported in these statements from some items that will result in cash flows in future fiscal periods, such as delayed collection of operating revenues and the expenses of employee earned but unused vacation leave.
The Statements of Cash Flows present changes in cash and cash equivalents resulting from operational, capital financing, non-capital financing, and investing activities. These statements summarize the annual flow of cash receipts and cash payments, without consideration of the timing of the event giving rise to the obligation or receipt, and exclude non-cash accounting measures of depreciation or amortization of assets.
The Notes to Financial Statements provide information that is essential to a full understanding of th e financial statements that is not presented on the face of the financial statements.
Fund Financial Statements
The Department has five funds: Water, Wastewater, Hetchy Water, Hetchy Power, and CleanPowerSF.
COVID-19
On February 25, 2020, the Mayor issued a Proclamation declaring a local emergency to exist in connection with the imminent spread within the City of the novel coronavirus (“COVID -19”). On March 16, 2020, the City’s Health Officer issued a stay safe at home order, Health Officer Order No. C19 -07 (the “Stay Safe At Home Order”), requiring most people and City employees to remain in their homes subject to certain exceptions including obtaining essential goods (such as food and necessary supplies ), and requirin g the closure of nonessential businesses. In addition, Section 2 of the second supplement to the emergency
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
20 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
proclamation authorizes the SFPUC to suspend (a) discontinuation or shut off of water , sewer, and power services for residents and businesses in the City for non -payment of water, sewer, and power bills, (b) the return of delinquent CleanPowerSF Customers to Pacific Gas & Electric Company (PG&E) generation service for failure to pay CleanPowerSF charges and (c) the imposition of late payment penalties or fees for delinquent water, sewer and power bills through July 11, 2020. The proclamation was extended on December 8, 2020 through June 30, 2021 and then again on April 27, 2021 through March 31, 2022 for Water Enterp rise, Wastewater Enterprise, and Hetchy Power. For CleanPowerSF, the suspension was extended to September 30, 2021. This proclamation did not have a material effect on the operations of the SFPUC.
Financial Analysis
Financial Highlights for Fiscal Year 2021
Department-wide Business Type Activities
• Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $2,736,309.
• Total assets exceeded total liabilities by $2,451,935. • Net position increased by $34,578 or 1.3% during the fiscal year. • Capital assets, net of accumulated depreciation and amortization, increased by $ 665,142 or 7.2% to $9,864,186.
• Operating revenues decreased by $48,315 or 3.6% to $1,300,448. • Operating expenses increased by $100,532 or 9.6% to $1,149,934.
Water
• Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $649,517.
• Total assets exceeded total liabilities by $418,167.
• Net position increased by $8,502 or 1.3% during the fiscal year. • Capital assets, net of accumulated depreciation and amortization, increased by $57,254 or 1.0% to $5,587,799.
• Current and other assets increased by $$31,110 or 4.4% mainly due to bond proceed s from the issuance of 2020 Series ABCD bonds.
• Operating revenues decreased by $1,739 or 0.3% to $581,612. • Operating expenses increased by $50,726 or 12.7% to $448,843
Wastewater
• Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $1,302,583.
• Total assets exceeded total liabilities by $1,266,577. • Net position increased by $9,647 or 0.7% during the year. • Capital assets, net of accumulated depreciation and amortization, increased by $544,562 or 17.8% to $3,606,850.
• Operating revenues decreased by $16,463 or 4.8% to $327,665. • Operating expenses increased by $29,961 or 11.4% to $292,220.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
21 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Hetchy Water
• Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $224,665.
• Total assets exceeded total liabilities by $216,214.
• Net position increased by $13,630 or 6.5% during the fiscal year. • Capital assets, net of accumulated depreciation and amortization, increased by $16,699 or 10. 4% to $177,481.
• Operating revenues, excluding interest and investment income, and other non -operating revenues, increased by $12,137 or 34.7% to $47,090.
• Operating expenses, excluding other non -operating expenses, increased by $5,644 or 12.6% to $50,517.
Hetchy Power
• Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $472,464.
• Total assets exceeded total liabilities by $462,136.
• Net position increased by $6,857 or 1.5% during the fiscal year. • Capital assets, net of accumulated depreciation and amortization, increased by $46,627 or 10.5% to $492,056.
• Operating revenues, excluding interest and investment income, and other non -operating revenues, decreased by $4,488 or 3.2% to $136,383.
• Operating expenses, excluding interest expenses, other non -operating expenses, and amortization of premium, discount, and issuance costs, decreased by $2,489 or 1.7% to $145,638.
CleanPowerSF
• Total assets and deferred outflows of resources exceeded total liabilities and deferred inflows of resources by $87,080.
• Total assets exceeded total liabilities by $88,841.
• Net position decreased by $4,058 or 4.5% during the fiscal year. • CleanPowerSF had no capital assets, net of accumulated depreciatio n and amortization, as of June 30, 2021.
• Operating revenues, excluding interest and investment income, and other non -operating revenues, decreased by $37,762 or 15.4% to $207,698.
• Operating expenses, excluding interest expense increased by $16,690 or 8.5% to $212,716.
Financial Highlights for Fiscal Year 2020
Department-wide Business Type Activities
• Total assets of SFPUC exceeded total liabilities by $2,480,962. • Net position increased by $243,561 or 9.9% during the fiscal year. • Capital assets, net of accumulated depreciation and amortization, increased by $537,951 or 6.2% to $9,199,044.
• Operating revenues increased by $129,905 or 10.7% to $1,348,763. • Operating expenses increased by $122,218 or 13.2% to $1,049,402.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
22 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Water
• Total assets of the Water Enterprise exceeded total liabilities by $448,825. • Net position increased by $98,877 or 18.2% during the fiscal year. • Capital assets, net of accumulated depreciation and amortization, increased by $141,887 or 2.6% to $5,530,545.
• Current and other assets increased by $96,743 or 16.0% mainly due to increased receivables from other governments and cash from operating activities.
• Operating revenues increased by $40,960 or 7.6% to $583,351. • Operating expenses increased by $41,023 or 11.5% to $398,117.
Wastewater
• Total assets of the Wastewater Enterprise exceeded total liabilities by $1,273,337. • Net position increased by $63,793 or 5.2% during the year. • Capital assets, net of accumulated depreciation and amortization, increased by $340,484 or 12.5% to $3,062,288.
• Operating revenues increased by $13,047 or 3.9% to $344,128. • Operating expenses increased by $2,446 or 0.9% to $262,259.
Hetchy Water
• Total assets of Hetchy Water exceeded total liabilities by $206,283. • Net position increased by $9,862 or 4.9% during the fiscal year. • Capital assets, net of accumulated depreciation and amortization, increased by $11,679 or 7.8% to $160,782.
• Operating revenues, excluding interest and investment income, and other non -operating revenues, increased by $948 or 2.8% to $34,953.
• Operating expenses, excluding other non -operating expenses, decreased by $5,432 or 10.8% to $44,873.
Hetchy Power
• Total assets of Hetchy Power exceeded total liabilities by $459,800. • Net position increased by $19,892 or 4.5% during the fiscal year. • Capital assets, net of accumulated depreciation and amortization, increased by $43,901 or 10.9% to $445,429.
• Operating revenues, excluding interest and investment income, and other non -operating revenues, decreased by $2,690 or 1.9% to $140,871.
• Operating expenses, excluding interest expenses, other non -operating expenses, and amortization of premium, discount, and issuance costs, increased by $25,439 or 20.7% to $148,127.
CleanPowerSF
• Total assets of CleanPowerSF exceeded total liabilities by $92,717. • Net position increased by $51,137 or 127.8% during the fiscal year. • CleanPowerSF had no capital assets, net of accumulated depreciation and amortization, as of June 30, 2020.
• Operating revenues, excluding interest and investment income, and other non -operating revenues, increased by $77,640 or 46.3% to $245,460.
• Operating expenses, excluding interest expense increased by $58,742 or 42.8% to $196,026.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
23 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Financial Position
Department-wide Business Type Activities
The following table summarizes the department-wide changes in net position. Detailed discussion follows for each proprietary fund.
* Eliminated interfund payables and receivables of $0, $1,800 and $3,731 working capital loan between Hetchy Power and CleanPowerSF and $739, $847 and $954 between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters construction cost in fiscal years 2021, 2020 and 2019, respectively.
2021 - 2020 2020 - 2019
2021* 2020* 2019* Change Change
Total assets:
Current and other assets $ 1,555,134 1,615,614 1,818,271 (60,480) (202,657) 9,864,186 9,199,044 8,661,093 665,142 537,951
Total assets 11,419,320 10,814,658 10,479,364 604,662 335,294 Deferred outflows of resources:
Unamortized loss on refunding of debt 155,082 144,378 139,387 10,704 4,991 Pensions 113,149 115,744 97,016 (2,595) 18,728
Other post-employment benefits 61,590 43,100 20,903 18,490 22,197 Total deferred outflows of resources 329,821 303,222 257,306 26,599 45,916 Liabilities:
Current liabilities:
Bonds 133,308 119,435 125,512 13,873 (6,077)
Certificates of participation 4,160 3,955 3,765 205 190 Commercial paper 859,051 633,828 503,558 225,223 130,270 State revolving fund loans 4,150 2,458 1,239 1,692 1,219 Other liabilities 382,476 346,217 285,428 36,259 60,789 Subtotal current liabilities 1,383,145 1,105,893 919,502 277,252 186,391 Long-term liabilities:
Bonds 6,497,701 6,247,401 6,390,220 250,300 (142,819) Certificates of participation 134,020 138,310 142,442 (4,290) (4,132) State revolving fund loans 211,816 159,362 86,793 52,454 72,569 Other liabilities 740,703 682,730 659,005 57,973 23,725 Subtotal long-term liabilities 7,584,240 7,227,803 7,278,460 356,437 (50,657) Total liabilities:
Bonds 6,631,009 6,366,836 6,515,732 264,173 (148,896) Certificates of participation 138,180 142,265 146,207 (4,085) (3,942) Commercial paper 859,051 633,828 503,558 225,223 130,270 State revolving fund loans 215,966 161,820 88,032 54,146 73,788 Other liabilities 1,123,179 1,028,947 944,433 94,232 84,514 Total liabilities 8,967,385 8,333,696 8,197,962 633,689 135,734 Deferred inflows of resources:
Related to pensions 10,321 62,629 58,298 (52,308) 4,331 Other post-employment benefits 35,126 19,824 22,240 15,302 (2,416) Total deferred inflows of resources 45,447 82,453 80,538 (37,006) 1,915 Net position:
Net investment in capital assets 2,271,638 2,194,130 2,147,756 77,508 46,374 Restricted for debt service 48,677 17,285 18,617 31,392 (1,332) Restricted for capital projects 22,319 49,635 26,906 (27,316) 22,729 Unrestricted 393,675 440,681 264,891 (47,006) 175,790 Total net position $ 2,736,309 2,701,731 2,458,170 34,578 243,561 Capital assets, net of accumulated
depreciation and amortization
Table 1
Business Type Activities
Comparative Condensed Net Position
June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
24 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The following table summarizes Water’s changes in net position.
Water Net Position, Fiscal Year 2021
For the year ended June 30, 20 21, the Water Enterprise’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $649,517. Total net position increased from prior year by $8,502 or 1.3% (see Table 1A). The increase in net position was the result of an increase of $107,058 in assets and deferred outfl ows, offset by a net increase of $98,556 in liabilities and deferred inflows of resources.
Current and other assets are primarily comprised of restricted and unrestricted balances of cash, receivables for water deliveries and services, interfund receivables due from other governmental agencies, and inventory. They also include receivables, which represe nt cumulative amounts due from the wholesale 2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Total assets:
Current and other assets $ 732,316 701,206 604,463 31,110 96,743 5,587,799 5,530,545 5,388,658 57,254 141,887
Total assets 6,320,115 6,231,751 5,993,121 88,364 238,630 Deferred outflows of resources:
Unamortized loss on refunding of debt 154,991 144,189 139,061 10,802 5,128 Pensions 64,797 67,084 55,465 (2,287) 11,619
Other post-employment benefits 37,762 27,583 13,142 10,179 14,441 Total deferred outflows of resources 257,550 238,856 207,668 18,694 31,188 Liabilities:
Current liabilities:
Revenue bonds and Capital Appreciation Bonds 108,500 94,080 100,899 14,420 (6,819) Certificates of participation 2,970 2,824 2,688 146 136 Commercial paper 105,862 362,354 161,336 (256,492) 201,018 State revolving fund loans 1,667 — — 1,667 —
Other liabilities 152,871 134,563 132,251 18,308 2,312 Subtotal current liabilities 371,870 593,821 397,174 (221,951) 196,647 Long-term liabilities:
Revenue and capital appreciation bonds 4,886,275 4,601,215 4,709,678 285,060 (108,463) Certificates of participation 95,692 98,754 101,704 (3,062) (2,950) State revolving fund loans 105,740 73,271 — 32,469 73,271 Other liabilities 442,371 415,865 402,782 26,506 13,083 Subtotal long-term liabilities 5,530,078 5,189,105 5,214,164 340,973 (25,059) Total liabilities:
Revenue and capital appreciation bonds 4,994,775 4,695,295 4,810,577 299,480 (115,282) Certificates of participation 98,662 101,578 104,392 (2,916) (2,814) Commercial paper 105,862 362,354 161,336 (256,492) 201,018 State revolving fund loans 107,407 73,271 — 34,136 73,271 Other liabilities 595,242 550,428 535,033 44,814 15,395 Total liabilities 5,901,948 5,782,926 5,611,338 119,022 171,588 Deferred inflows of resources:
Related to pensions 4,885 34,894 33,330 (30,009) 1,564 Other post-employment benefits 21,315 11,772 13,983 9,543 (2,211) Total deferred inflows of resources 26,200 46,666 47,313 (20,466) (647) Net position:
Net investment in capital assets 517,302 527,856 563,457 (10,554) (35,601) Restricted for debt service 45,586 15,916 16,193 29,670 (277) Restricted for capital projects 22,319 43,122 — (20,803) 43,122 Unrestricted 64,310 54,121 (37,512) 10,189 91,633
Total net position $ 649,517 641,015 542,138 8,502 98,877 Capital assets, net of accumulated
depreciation and amortization
Table 1A
Proprietary Fund – Water
Comparative Condensed Net Position
June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
25 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
customers to match revenues with the Water Enterprise’s costs of providing service (the Balancing Account), in accordance with the provisions set forth in the WSA effective July 1, 2009. Balances are applied to future year rates. As of June 30, 2021, the Water Enterprise owed the wholesale customers $60,864, which was mainly due to higher water demand by the wholesale customers. This amount was recorded as a liability in accordance with the 2009 agreement. See No te 10, Water Supply Agreement, for additional details.
During the fiscal year 2021, current and other assets increased by $31,110 or 4.4%. The increases included $57,567 in restricted and unrestricted cash and investments mainly due to the issuance of the 2020 Series ABCD bonds, $2,372 in prepaid charges advances and others mainly for prepaid expenses of multiple software licensing and membership fees, $209 in restricted interest and other receivables, and $160 in inventory due to more purchases than issua nces during the fiscal year. The increases were offset by decreases of $23,725 from the State Water Resources Control Board (SWRCB) State Revolving Funds Loan relating to the SF Recycled Water project mainly from reimbursements received for prior year receivable, $4,470 in charges for services due to more collections than billings and an increase in allowance for doubtful accounts (allowance for doubtful accounts increased by $2,934 primarily due to the Mayor’s COVID-19 proclamation suspending shutoff of wa ter service and collection of past due accounts), $994 in interest receivable mainly due to lower interest rates and higher cash distributions than interest earnings, $7 due to cash received from other governments for grants relating to water efficiency, a nd $2 mainly due to collections from the Department of Public Works (DPW) for custom work projects.
Capital assets, net of accumulated depreciation and amortization, increased by $57,254 or 1.0% mainly due to San Andreas Pipeline No. 2 and San Francisco Groundwater Supply construction and capital improvement activities. The largest portion of the Water Enterprise’s net position of $517,302 or 7 9.6% represents net investment in capital assets (see Capital Assets section of the MDA for more information), which decreased by $10,554 or 2.0% from prior year’s $527,856. The change was explained by an increase of $67,808 in lia bilities related to capital assets mainly from the issuance of 2020 Series ABCD and 2020 Series EFGH bonds, offset by an increase of $57,254 in capital assets in buildings, structures, and improvements and construction in progress from depreciation.
Deferred outflows of resources increased by $18,694 due to increases of $10,802 for unamortized loss on refunding (the result of a $27,010 increase from the issuance of 2020 Series EFGH bonds, offset by a $15,156 decrease from amortization and $1,052 from refun ding of the 2010 Series D, 2011 Series D and 2012 Series C bonds), and $10,179 from OPEB obligations based on actuarial reports. These increases were offset by a $2,287 decrease relating to pensions based on actuarial reports.
Total liabilities increased by $119,022 or 2.1% which is due to increases of $299,480 in outstanding revenue bonds mainly due to the issuance of 2020 Series ABCD and 2020 Series EFGH bonds, $38,284 in net pension liability based on actuarial report, $34,136 increase in State Revolvin g Funds Loan payable due to additional loans relating to the SF Westside Recycled Water project, $25,956 in general liability based on actuarial report, $3,650 in accrued payroll, vacation and sick leave mainly due to actuarial estimates, 3% increase of co st of living adjustment (COLA), and more days in current year -end payroll accrual compared to prior year -end accrual, $2,921 in restricted and unrestricted payables due to higher accruals as compared to prior year mainly for the Information Technology proj ect and 19th Ave.
Infrastructure Improvement project, and $792 in unearned revenues mainly due to additional customer credit balances from overpayments. These increases were offset by decreases of $256,492 in commercial paper primarily due to refunding fro m the 2020 Series ABCD bonds, $14,913 in other post -employment benefits obligations from actuarial estimates, $6,557 in interest payable mainly due to refunding from the 2020 Series EFGH Bonds, $3,993 in the Wholesale Balancing Account due to higher demand from the wholesale customers (see Note 10 for details), $2,916 in certificates of participation from repayments and amortization of premium, $674 in due to other City departments from payments made for legal services
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
26 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
provided by the City Attorney and projects performed by the Department of Public Works for Sidewalk Inspection and Repair projects, $346 in workers’ compensation based on actuarial estimates, and $306 in pollution remediation liability as a result of additional expenditures incurred for th e Lake Merced Pacific Rod and Gun Club and 17th and Folsom sites (see Note 15(d) for details).
Deferred inflows of resources decreased by $20,466 from a $30,009 decrease related to pensions based on actuarial reports, offset by a $9,543 increase from OPEB obligations based on actuarial reports.
Water Net Position, Fiscal Year 2020
For the year ended June 30, 2020, the Water Enterprise’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $641,015. Total net position increased from prior year by $98,877 or 18.2% (see Table 1A). The increase in net position was the result of an increase of $269,818 in assets and deferred outflows of resources offset by an increase of $170,941 in liabilities and deferred inflows of resources.
Current and other assets are primarily comprised of restricted and unrestricted balances of cash, receivables for water deliveries and services, interfund receivables due from other governmental agencies, and inventory. This also includes receivables, which represent cumulative amounts due from the wholesale customers to match revenues with the Water Enterprise’s costs of providing service (the Balancing Account), in accordance with the provisions set forth in the WSA effective July 1, 2009 . Balances are applied to future year rates. As of June 30, 2020, the Water Enterprise owed the wholesale customers $64,857, which was mainly due to lower water demand by the wholesale customers. This amount was recorded as a liability in accordance with t he 2009 agreement. See Note 10, Water Supply Agreement, for additional details.
During the fiscal year 2020, current and other assets increased by $96,743 or 16.0%. The increases included $73,271 due from the State Water Resources Control Board (SWRCB) State Revolving Funds Loan relating to the SF Recycled Water project, $18,866 in restricted and unrestricted cash and investments mainly due to higher cash collections from customers, $4,810 in charges for services receivable mainly due to an 8% rate increas e, $1,336 in prepaid charges, advances and other receivables mainly for prepaid expenses of software licensing and membership fees, and $351 in inventory as a result of more purchases than issuances during the fiscal year. These increases were offset by de creases of $1,393 in interest receivable for interest allocation due to lower rates, $390 mainly due from the Office of Economic and Workforce Development for custom work projects, $88 due from other governments for grants relating to water efficiency, and $20 in restricted interest and other receivables from lower federal interest subsidy receivables compared to prior year.
Capital assets, net of accumulated depreciation and amortization, increased by $141,887 or 2.6% mainly from the property transfer of 639 Bryant Street for 2000 Marin Street and from construction and capital improvement activities. The largest portion of the Water Enterprise’s net position of $527,856 or 82.3% represents net investment in capital assets (see Capital Assets se ction of the MDA for more information), which decreased by $35,601 or 6.3% from prior year’s $563,457; as explained by a $177,488 increase in liabilities related to capital assets mainly from the issuance of commercial paper, offset by an increase of $141,887 in capital assets in buildings, structures, and improvements and construction in progress mainly from assets placed into service and pending year end fixed assets entries.
Deferred outflows of resources increased by $31,188 due to a $14,441 increase f rom other post - employment benefits (OPEB) obligations, and $11,619 increase relating to pensions based on actuarial reports. Unamortized loss on refunding increased by $5,128 from the issuance of the 2010 Series ABC revenue bonds.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
27 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Total liabilities increa sed by $171,588 or 3.1% which is explained by increases of $201,018 from additional commercial paper issuances, $73,271 in State Revolving Funds Loan payable relating to the SF Recycled Water project, $12,913 in other post -employment benefits obligations f rom actuarial assumptions, $4,464 in interest payable mainly from the issuance of 2019 Series ABC revenue bonds, $3,068 in accrued payroll, vacation and sick leave due to more days in current year end payroll accrual compared to prior year end accrual and 3% cost of living adjustment (COLA), $2,704 in net pension liability based on actuarial report, $674 due to other City departments primarily for legal services provided by the City Attorney and projects performed by the Department of Public Works for Sidewalk Inspection and Repair projects, and $28 in the Wholesale Balancing Account (see Note 10 for details). These increases were offset by decreases of $113,253 in outstanding revenue bonds due to refunding of principal from the issuance of 2019 Series ABC r evenue bonds, principal repayments and premium and discount amortization, $4,014 in restricted and unrestricted payables mainly due to lower retained contracts payable, $2,814 in outstanding certificates of participation due to repayment and amortization of premium, $2,029 in principal of capital appreciation bonds from repayment offset by accretions, $1,921 in unearned revenues mainly due to reduced custom work deposits, $1,162 in workers’ compensation based on actuarial estimates, $742 in general liabilit y based on actuarial report, and $617 in pollution remediation liability due to additional expenditures incurred in the current year for the Lake Merced and 17th and Folsom sites (see Note 15(d) for details).
Deferred inflows of resources decreased by $647 due to a $2,211 decrease in OPEB obligations, offset by a $1,564 increase relating to pensions based on actuarial report.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
28 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The following table summarizes Wastewater’s changes in net position.
Wastewater Net Position, Fiscal Year 2021
For the year ended June 30, 2021, the Wastewater Enterprise’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $1,302,583. The Wastewater Enterprise’s total net position increased by $9,647 or 0.7% as a re sult of increases of $70,501 in net investment in capital assets and $1,765 in restricted for debt service offset by a decrease of $62,619 in unrestricted net position (see Table 1B).
During the fiscal year 2021, current and other assets decreased by $11 8,831 or 25.1%. The decrease was mainly due to a decrease of $136,773 in restricted and unrestricted cash and investments largely 2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Total assets:
Current and other assets $ 354,789 473,620 821,796 (118,831) (348,176) 3,606,850 3,062,288 2,721,804 544,562 340,484
Total assets 3,961,639 3,535,908 3,543,600 425,731 (7,692) Deferred outflows of resources:
Unamortized loss on refunding of debt 91 189 326 (98) (137) Pensions 30,219 30,422 26,886 (203) 3,536
Other post-employment benefits 15,109 10,065 4,669 5,044 5,396 Total deferred outflows of resources 45,419 40,676 31,881 4,743 8,795 Liabilities:
Current liabilities:
Revenue bonds 22,880 23,240 22,085 (360) 1,155
Certificates of participation 785 747 711 38 36
Commercial paper 638,518 207,939 291,498 430,579 (83,559) State revolving fund loans 2,483 2,458 1,239 25 1,219 Other liabilities 147,038 148,585 101,156 (1,547) 47,429 Subtotal current liabilities 811,704 382,969 416,689 428,735 (33,720) Long-term liabilities:
Revenue bonds 1,567,042 1,598,493 1,630,524 (31,451) (32,031) Certificates of participation 25,302 26,112 26,892 (810) (780) State revolving fund loans 106,076 86,091 86,793 19,985 (702) Other liabilities 184,938 168,906 164,316 16,032 4,590 Subtotal long-term liabilities 1,883,358 1,879,602 1,908,525 3,756 (28,923) Total liabilities:
Revenue bonds 1,589,922 1,621,733 1,652,609 (31,811) (30,876) Certificates of participation 26,087 26,859 27,603 (772) (744) Commercial paper 638,518 207,939 291,498 430,579 (83,559) State revolving fund loans 108,559 88,549 88,032 20,010 517 Other liabilities 331,976 317,491 265,472 14,485 52,019 Total liabilities 2,695,062 2,262,571 2,325,214 432,491 (62,643) Deferred inflows of resources:
Related to pensions 2,148 16,892 16,157 (14,744) 735 Other post-employment benefits 7,265 4,185 4,967 3,080 (782) Total deferred inflows of resources 9,413 21,077 21,124 (11,664) (47) Net position:
Net investment in capital assets 1,253,789 1,183,288 1,133,662 70,501 49,626 Restricted for debt service 2,992 1,227 1,279 1,765 (52) Restricted for capital projects — — 18,505 — (18,505) Unrestricted 45,802 108,421 75,697 (62,619) 32,724
Total net position $ 1,302,583 1,292,936 1,229,143 9,647 63,793 Capital assets, net of accumulated
depreciation and amortization
Table 1B
Proprietary Fund – Wastewater
Comparative Condensed Net Position
June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
29 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
attributed to increased spending for the Sewer System Improvement Program (SSIP) and debt principal and interest repayment. Ot her decreases included $666 in receivables for charges for services mainly due to $2,172 increase in allowance for doubtful accounts as there were more sewer charge receivables aging over 120 days attributable to the suspension of collection efforts in res ponse to the COVID -19 emergency proclamation issued by the City Mayor. These decreases in current and other assets were offset by an increase of $17,490 in receivables from the State Water Resources Control Board (SWRCB) due to $20,755 in reimbursement rec eivable for disbursements claim relating to the Oceanside Plant (OSP) Digester Gas Utilization Upgrade Project offset by cash receipts of $3,265 in State Revolving Fund (SRF) reimbursement requests consisting of $2,041 for the Southeast Plant (SEP) 521/522 and Disinfection Upgrade and $1,224 for the Lake Merced Green Infrastructure projects. The other increases included $680 in prepaid charges, advances, and other receivable consisting of $546 prepayments to the San Francisco Estuary Institute, Bay Area Air Quality Management District, and Water Research Foundation, $290 in rent receivable mainly due a receivable from the San Francisco Community College, and $17 in custom work receivable offset by $173 prepaid expenses recognized to expense for the current y ear, $181 in inventory as there were more purchases than issuances during the year, $166 in restricted and unrestricted interest and other receivable mainly due to an increase in Federal interest subsidy receivable, and $91 increase in interfund receivables consisting of $47 from the Department of Public Works (DPW) for the Mission Bay South and Hunters View Development Projects, $24 from the San Francisco Port Commission (Port), and $20 from the Treasure Island Development Authority (TIDA).
Capital assets, net of accumulated depreciation and amortization, increased by $544,562 or 17.8% reflecting an increase in construction and capital improvement activities. The largest portion of the Wastewater Enterprise’s net position of $1,253,789 or 96. 3%, represents net investment in capital assets (see Capital Assets section of the MDA for more information). Deferred outflows of resources increased by $4,743 mainly due to $5,044 increase in other post -employment benefits based on actuarial report offse t by $203 decrease in pensions based on actuarial report and $98 amortization of the 2013 Series A bonds loss on refunding.
Total liabilities increased by $432,491 or 19.1%. As of June 30, 2021, total outstanding balance of $2,363,086 for revenue bonds p ayable, commercial paper, certificates of participation, and SRF loans represented 87.7% of total liabilities, an increase of $418,006 or 21.5%. The increase was mainly due to $435,450 additional commercial paper issuance and $22,467 SRF loan to fund the O SP Digester Gas Utilization Upgrade, the SEP 521/522 and Disinfection Upgrade, and the Lake Merced Green Infrastructure projects offset by $31,316 in debt repayments and $8,595 in amortization of premium during the year.
Other liabilities of $331,976 such as payables to vendors, contractors, and other government agencies for goods and services under contractual agreements and employees, increased by $14,485 or 4.6%, due to increases of $17,511 in net pension liability based on actuarial report, $3,912 in employee related benefits including vacation, workers’ compensation, and accrued payroll mainly due to actuarial estimates, 3% increase of cost of living adjustment (COLA), and more days in current year-end payroll accrual compared to prior year -end accrual, $822 in general liability based on actuarial estimates, $130 in customer credit balances mainly due to overpayments, and $26 in liens payable. These increases were offset by decreases of $7,472 in other post -employment benefits obligations based on actuar ial report, $145 in bond and loan interest payable due to lower outstanding debt principal and lower interest rates, $135 in restricted and unrestricted payable due to higher voucher payments than vouchers generated, and $109 in payable to Hetch Hetchy Pow er due to payment for the 525 Golden Gate Living Machine System, $54 decrease in deposit from P G&E due to expenses incurred for the Cross Bore Project, and $1 interfund payable to City Attorney’s Office. Deferred inflows of resources decreased by $11,664 d ue to $14,744 decrease in pensions based on actuarial report offset by $3,080 increase in other post -employment benefits based on actuarial report.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
30 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Wastewater Net Position, Fiscal Year 2020
For the year ended June 30, 2020, the Wastewater Enterprise’s a ssets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $1,292,936. The Wastewater Enterprise’s total net position increased by $63,793 or 5.2% as a result of increases of $49,626 in net investment in capital assets and $32,724 in unrestricted net position, offset by decreases of $18,505 in restricted for capital projects and $52 in restricted for debt service (see Table 1B).
During the fiscal year 2020, current and other assets decreased by $348,176 or 42.4%. Th e decrease was mainly due to a decrease of $309,289 in restricted and unrestricted cash and investments mainly due to increased spending for the Sewer System Improvement Program (SSIP) and debt principal and interest repayment. Other decreases included $39 ,043 in receivables from the State Water Resources Control Board (SWRCB) consisting of $36,152 in cash receipts for disbursements claim relating to the Southeast Plant (SEP) 521/522 and Disinfection Upgrade Project, $1,508 unreimbursed State Revolving Fund (SRF) claim, and $1,383 in cash receipts for the retention balance relating to the Stormwater Flood Management projects. The other decreases included $3,313 in restricted and unrestricted interest and other receivable due to lower cash balance in pooled c ash fund, $30 in custom work interfund receivables mainly due to collection from the Department of Public Works (DPW) for the Mission Bay South and Hunters Point Projects, and $21 in charges for services. These decreases in current and other assets were of fset by increases of $3,265 in reimbursement receivables from SWRCB for the SEP 521/522 and Disinfection Upgrade and Lake Merced projects, $192 in inventory as there were more purchases than issuances during the year and $63 in prepaid charges.
Capital assets, net of accumulated depreciation and amortization, increased by $340,484 or 12.5% reflecting an increase in construction and capital improvement activities. The largest portion of the Wastewater Enterprise’s net position of $1,183,288 or 91. 5%, represents net investment in capital assets (see Capital Assets section of the MDA for more information). Deferred outflows of resources increased by $8,795 mainly due to increases of $5,396 in other post -employment benefits and $3,536 in pensions based on actuarial report offset by $137 in amortization of the 2013 Series A bonds loss on refunding.
Total liabilities decreased by $62,643 or 2.7%. As of June 30, 2020, total outstanding balance of $1,945,080 for revenue bonds payable, commercial paper, ce rtificates of participation, and SRF loans represented 86.0% of total liabilities, a decrease of $114,662 or 5.6%. The decrease was mainly due to $111,984 in debt repayments, $8,824 in amortization of premium during the year, and $1,508 loan reduction for the SRF SEP 521/522 and Disinfection Upgrade unreimbursed disbursements claim, offset by $4,390 additional commercial paper issuance and $3,264 SRF loan to fund for the SEP 521/522 and Disinfection Upgrade and Lake Merced projects. Other liabilities of $31 7,491 such as payables to vendors, contractors, and other government agencies for goods and services under contractual agreements, increased by $52,019 or 19.6%, due to increases of $44,336 in restricted and unrestricted payable to vendors and contractors due to higher capital project spending, $4,616 in other post -employment benefits obligations based on actuarial report, $2,632 in employee related benefits including vacation, workers’ compensation, and accrued payroll mainly due to actuarial estimates, 3% increase of cost of living adjustment (COLA), and more days in current year -end accrual compared to prior year -end accrual, $1,198 in net pension liability based on actuarial report, $621 in customer credit balances mainly due to overpayments, $300 in pol lution remediation liability due to increased estimated cleanup liabilities for the toxic sediments at Yosemite Creek, and $1 interfund payable to City Attorney’s Office. These increases were offset by decreases of $1,070 in bond and loan interest payable due to lower outstanding debt principal, $477 in general liability based on actuarial estimates, $107 in payable to Hetch Hetchy Power due to payment for the 525 Golden Gate Living Machine System, and $31 decrease in deposit from P G&E due to expenses incurred for the Cross Bore Project. Deferred inflows of resources decreased by $47 due to $782
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
31 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
decrease in other post-employment benefits based on actuarial report offset by $735 increase in pensions based on actuarial report.
The following table summarizes Hetchy Water’s changes in net position.
Hetchy Water Net Position, Fiscal Year 2021
Hetchy Water’s net position of $224,665 increased by $13,630 or 6.5% resulting from an increase of $23,381 in total assets and deferred outflows of resources, offset by a net increase of $9,751 in total liabilities and deferred inflows of resources (see Table 1 C-A). The increase of $5,440 in current and other assets was attributed to increases of $7,423 in cash and investment with City Tre asury mainly due to a $16,000 transfer from the Water Enterprise to fund upcountry projects, offset by higher project spending, $413 increase in charges for services receivables due to higher consumption from Lawrence Livermore National Laboratory, and $4 increase in inventory due to more purchases than issuances during the fiscal year. The increases were offset by decreases of $1,996 in due from other governments mainly due to prior year reimbursements received for disaster emergency recoveries related to the 2018 Moccasin Storm and $186 in interest receivables due to lower annualized interest rate. Prepaid charges, advances, and other receivables decreased by $114 due to $448 Rim Fire insurance recovery collections and $4 in amortization of the advance pai d to the Recreation and Parks Department for the Civic Center Garage, offset by an increase of $338 in vendor prepayment to Turlock Irrigation District for Federal Energy Regulatory Commission (FERC) relicensing studies and California Department of Water Resources for annual dam fees.
Other decreases include $104 due from the City Attorney’s Office for legal services.
Capital assets, net of accumulated depreciation and amortization, increased by $16,699 or 10.4% to $177,481 primarily from construction and capital improvement activities for the Mountain Tunnel 2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Total assets:
Current and other assets $ 98,151 92,711 94,432 5,440 (1,721) 177,481 160,782 149,103 16,699 11,679
Total assets 275,632 253,493 243,535 22,139 9,958
Deferred outflows of resources:
Pensions 7,799 7,950 6,447 (151) 1,503
Other post-employment benefits 3,725 2,332 1,343 1,393 989 Total deferred outflows of resources 11,524 10,282 7,790 1,242 2,492 Liabilities:
Current liabilities 15,857 6,769 6,726 9,088 43
Long-term liabilities 43,561 40,441 38,123 3,120 2,318 Total liabilities 59,418 47,210 44,849 12,208 2,361 Deferred inflows of resources:
Related to pensions 988 4,335 3,874 (3,347) 461
Other post-employment benefits 2,085 1,195 1,429 890 (234) Total deferred inflows of resources 3,073 5,530 5,303 (2,457) 227 Net position:
Net investment in capital assets 177,481 160,782 149,103 16,699 11,679 Restricted for capital projects — 6,513 8,401 (6,513) (1,888) Unrestricted 47,184 43,740 43,669 3,444 71
Total net position $ 224,665 211,035 201,173 13,630 9,862 Proprietary Fund – Hetchy Water
Comparative Condensed Net Position
June 30, 2021, 2020, and 2019
Capital assets, net of accumulated
depreciation and amortization
Table 1C – A
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
32 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Improvement Project and Repair & Replacement Life Extension Program, and additions of facilities, improvements, machinery, and equipment. Deferred outflows of resources increased by $1,242 due to an increase of $1,393 in OPEB based on actuarial reports offset by a decrease of $151 in pensions.
Hetchy Water’s total liabilities increased by $12,208 or 25.9% to $59,418, as explained by increases of $5,778 in restricted payables to vendors and contractors mainly due to higher year -end expense accruals for capital projects, $5,168 in net pension liability based on actuarial report, $3,304 in unrestricted payables mainly for license and permit fees to National Park Service, $626 in employee relate d benefits including workers’ compensation, vacation, sick leave and accrued payroll mainly due to an extra day in current year-end payroll accrual when compared to prior year and a 3% cost of living adjustment increase in December 2020, and $4 increase in rental deposits. The increases were offset by decreases of $1,906 in OPEB obligations based on actuarial assumptions, $493 in grant advance due to recognition of Rim Fire grant revenue, $240 in payable due to the City Attorney’s Office for unbilled legal services, and $33 in general liability based on actuarial estimates.
Deferred inflows of resources decreased by $2,457 due to a decrease of $3,347 in relat ion to pensions offset by an increase of $890 in OPEB based on actuarial reports.
Hetchy Water Net Position, Fiscal Year 2020
Hetchy Water’s net position of $211,035 increased by $9,862 or 4.9% resulting from an increase of $12,450 in total assets and deferred outflows of resources, offset by an increase of $2,588 in total liabilities and deferred inflows of resources (see Table 1C -A). Decrease of $1,721 in current and other assets was attributed to decreases of $1,166 in cash and investment with City Treasury mainly due to reduced project spending, $336 in State grant receivable mainly fro m reimbursement related to disaster emergency recoveries for the Lower Cherry Aqueduct Project, $308 in interest receivables due to lower annualized interest rate, $50 decrease in charges for services receivables mainly due to lower consumption from Lawrence Livermore National Laboratory, and $11 decrease in inventory due to more issuance than purchase during the fiscal year. The decrease was offset by increases of $104 in due from the City Attorney’s Office for legal services, and $46 in prepaid charges, a dvances, and other receivables, of which $448 in pending Rim Fire insurance recoveries and $36 in rental receivables; offset by decreases of $434 in vendor prepayment mainly for Don Pedro Reservoir operating license and $4 in amortization of the advance paid to the Recreation and Parks Department for the Civic Center Garage.
Capital assets, net of accumulated depreciation and amortization, increased by $11,679 or 7.8% to $160,782 primarily due to additions of facilities, improvements, machinery, and equipment. Deferred outflows of resources increased by $2,492 due to increases of $1,503 in pensions and $989 in other post- employment benefits (OPEB) based on actuarial reports.
Hetchy Water’s total liabilities increased by $2,361 or 5.3% to $47,210, as explained by increases of $1,087 in net pension liability based on actuarial r eport, $946 in OPEB obligations based on actuarial assumptions, $450 in employee related benefits including workers’ compensation, vacation, sick leave and accrued payroll mainly due to more days in current year -end payroll accrual when compared to prior y ear, coupled with a 3% increase of cost of living adjustment ( COLA), $334 in general liability based on actuarial estimates, $240 in payable due to the City Attorney’s Office for unbilled legal services, and $4 in unearned revenue mainly due to $7 increase in rental deposits, offset by a decrease of $3 in sales tax payables. The increases were offset by a decrease of $700 in restricted and unrestricted payables to vendors and contractors due to lower capital spending.
Deferred inflows of resources increased by $227 due to an increase of $461 related to pensions, offset by a decrease of $234 in OPEB based on actuarial reports.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
33 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The following table summarizes Hetchy Power’s changes in net position.
* Included $1,800 and $3,731 working capital loan to CleanPowerSF in fiscal years 2020 and 2019, respectively.
Hetchy Power Net Position, Fiscal Year 2021
Hetchy Power’s net position of $472,464 increased by $6,857 or 1.5% resulting from an increase of $68,574 in total assets and deferred outflows of resources, offset by a net increase of $61,717 in total liabilities and deferred inflows of resources (see Table 1C -B). Increase of $20,430 in current and other assets was attributed to an increase of $16,057 in charges for services receivables, of which $ 15,673 was attributed to billing delays as a result of transitioning to new billing system implemented in April 2021. In addition, there was an increase of $1,051 in year -end accrual for California Independent System Operator (CAISO) Congestion Revenue Rig ht (CRR) credits, offset by an increase of $667 in allowance for doubtful accounts due to increased past due balances as a result of the Mayor’s emergency proclamation that 2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Total assets:
Current and other assets $ 249,275 228,845 * 239,222 * 20,430 (10,377) 492,056 445,429 401,528 46,627 43,901
Total assets 741,331 674,274 640,750 67,057 33,524
Deferred outflows of resources:
Pensions 9,531 9,716 7,879 (185) 1,837
Other post-employment benefits 4,552 2,850 1,641 1,702 1,209 Total deferred outflows of resources 14,083 12,566 9,520 1,517 3,046 Liabilities:
Current liabilities:
Bonds 1,928 2,115 2,528 (187) (413)
Certificates of participation 405 384 366 21 18
Commercial paper 114,671 63,535 50,724 51,136 12,811 Other liabilities 49,431 33,218 28,346 16,213 4,872 Subtotal current liabilities 166,435 99,252 81,964 67,183 17,288 Long-term liabilities:
Bonds 44,384 47,693 50,018 (3,309) (2,325)
Certificates of participation 13,026 13,444 13,846 (418) (402) Other liabilities 55,350 54,085 52,247 1,265 1,838
Subtotal long-term liabilities 112,760 115,222 116,111 (2,462) (889) Total liabilities:
Bonds 46,312 49,808 52,546 (3,496) (2,738)
Certificates of participation 13,431 13,828 14,212 (397) (384) Commercial paper 114,671 63,535 50,724 51,136 12,811 Other liabilities 104,781 87,303 80,593 17,478 6,710 Total liabilities 279,195 214,474 198,075 64,721 16,399 Deferred inflows of resources:
Related to pensions 1,207 5,298 4,734 (4,091) 564
Other post-employment benefits 2,548 1,461 1,746 1,087 (285) Total deferred inflows of resources 3,755 6,759 6,480 (3,004) 279 Net position:
Net investment in capital assets 323,066 322,204 301,534 862 20,670 Restricted for debt service 99 142 1,145 (43) (1,003) Unrestricted 149,299 143,261 143,036 6,038 225
Total net position $ 472,464 465,607 445,715 6,857 19,892 Table 1C – B
Proprietary Fund – Hetchy Power
Comparative Condensed Net Position
June 30, 2021, 2020, and 2019
Capital assets, net of accumulated
depreciation and amortization
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
34 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Hetchy Power temporarily suspend collection procedures and utility shutoffs for pas t due accounts to help customers with financial hardship due to COVID -19. Restricted interest and other receivables increased by $11,632 mainly due to vendor prepayment to PG&E for the Bay Corridor Project.
Prepaid charges, advances, and other receivables increased by $405 mainly due to $496 increase in vendor prepayments to PG&E for electric system reliability compliance product offset by decreases of $61 in receivables for the Distributed Antenna System (DAS) program due to more payments received, $16 in custom work receivables for Sunnydale Housing Projects, and $14 in amortization of the advance paid to the Recreation and Parks Department for the Civic Center Garage. Inventory increased by $211 due to more purchases than issuances during the fiscal year. The increases were offset by $3,280 decrease in cash and investment with/outside City Treasury due primarily to increase in capital spending. Due from other City departments decreased by $2,763, attributed to the final repayments of $1,800 from CleanPowe rSF for working capital loan, $506 for the Sustainable Energy Account, $331 from City Attorney’s Office for legal services, $109 from Wastewater Enterprise for the Living Machine System, and $105 from the Recreation and Parks Department for Energy Efficien cy Projects, offset by increases of $46 in interest receivable from Treasure Island Development Authority (TIDA) in connection of an upgraded submarine power cable for the Treasure Island to increase service capacity and $42 from the Department of Public W orks for Hunters Point Shipyard Development and Transbay Folsom Street Improvement custom work projects. Other decreases include $1,377 in grants receivable due to reimbursement received for disaster emergency recoveries related to the Rim Fire and 2018 Moccasin Storm, and $455 in interest receivables due to lower annualized interest rate.
Capital assets, net of accumulated depreciation and amortization, increased by $46,627 or 10.5% to $492,056 primarily due to additions of facilities, improvements, machi nery, and equipment for the Bay Corridor Project and Holm Powerhouse Rehabilitation and Kirkwood Powerhouse Oil Containment Upgrades.
Deferred outflows of resources increased by $1,517 due to an increase of $1,702 in OPEB based on actuarial reports offset by a decrease of $185 in pensions.
Hetchy Power’s total liabilities of $279,195 increased by $64,721 or 30.2%. As of June 30, 2021, outstanding debts increased by $47,243 and was attributable to $51,136 in commercial paper issuance for Hetchy Power facilities, offset by $2,402 in bonds and certificates of participation principal repayments, $1,272 in return of unspent bond proceeds for 2015 NCREBs, and $219 in amortization of premium and discount. Other liabilities of $104,781, such as payables to vendors , employees, contractors, and other government agencies for goods and services under contractual agreements, increased by $17,478 or
20.0%, mainly due to increases of $8,724 in unrestricted payables mainly for wheeling charges to APX Inc., $6,934 restricted payables to vendors and contractors due to higher year -end expense accruals for capital projects, $6,317 in net pension liability based on actuarial report, and $876 in employee related benefits including workers’ compensation, vacation, sick leave and a ccrued payroll mainly due to an extra day in current year-end payroll accrual when compared to prior year and a 3% cost of living adjustment increase in December 2020. Offsetting decreases include $2,330 in OPEB obligations based on actuarial assumptions, $1,649 in unearned revenue, $1,114 in general liability based on actuarial estimates, $231 in due to City Attorney’s Office for unbilled legal services, and $49 in interest payable as a result of decreased outstanding debts and lower interest rates for com mercial paper. Unearned revenue decreased by $1,649 due to $1,208 in remittance of utility tax collected, $1,193 in power revenue from commercial deposits, $681 in residential allowance refund for the Alice Griffith Housing Project, and $609 in recognition of Rim Fire grants revenue received in advance, offset by increases of $1,707 in deposits from custom work projects, $200 in prepayments from DAS program, $117 in overpayments received from customers, and $18 in deposits received from retail customers and security deposits for cottage rental.
Deferred inflows of resources decreased by $3,004 due to a decrease of $4,091 in relation to pensions offset by an increase of $1,087 in OPEB based on actuarial reports.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
35 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Hetchy Power Net Position, Fiscal Year 2020
Hetchy Power’s net position of $465,607 increased by $19,892 or 4.5% resulting from an increase of $36,570 in total assets and deferred outflows of resources, offset by an increase of $16,678 in total liabilities and deferred inflows of resources (see Tabl e 1C -B). Current and other assets decreased by $10,377 or 4.3%, of which $8,184 decrease in cash and investment with/outside City Treasury due primarily to increase in operating and capital spending. Charges for services receivable decreased by $2,837 due to decreases of $1,138 in billings, $1,127 in lower year-end accrual for California Independent System Operator (CAISO) Congestion Revenue Right (CRR) credits as related to prior year, and $572 increase in allowance for uncollectible due to higher past due balances as a result of the Mayor’s emergency declaration that Hetch Hetchy temporarily suspended collection procedures for past due accounts to help customers with financial hardship due to COVID-19. Prepaid charges, advances, and other receivables decre ased by $1,379 due to payment of $2,209 billing credits from Western Area Power Administration, and $13 in amortization of the advance paid to the Recreation and Parks Department for the Civic Center Garage, offset by increases of $615 in receivables for t he Distributed Antenna System (DAS) program due to higher billings, $173 in vendor prepayment for license and permit fees, $44 in rental receivables, and $11 in custom work receivables for the Sunnydale Housing Projects. Interest receivables decreased by $ 800 due to lower annualized interest rate. These decreases were offset by an increase of $1,588 in due from other City departments, of which $3,981 was a receivable from the Treasure Island Development Authority (TIDA) in connection of an upgraded submarin e power cable for the Treasure Island to increase service capacity and $331 from the City Attorney’s Office for legal services; offset by repayments of $2,000 from CleanPowerSF for working capital loan net of accrued interest of $69, $506 for the Sustainab le Energy Account, $108 from the Wastewater Enterprise for the Living Machine System, $105 from the Recreation and Parks Department for Energy Efficiency Projects, and $74 from the Department of Public Works for Hunters Point Shipyard Development , and Tran sbay Folsom Street Improvement custom work projects. State and Federal grants receivables increased by $1,043 due to disaster emergency recoveries for the 2018 Moccasin Storm Project, Early Intake Switchyard Project and Rim Fire Project, and $192 increase in inventory due to more purchase than issuance during the fiscal year.
Capital assets, net of accumulated depreciation and amortization, increased by $43,901 or 10.9% to $445,429 primarily from construction and capital improvement activities. Deferred ou tflows of resources increased by $3,046 due to increases of $1,837 in pensions and $1,209 in other post -employment benefits (OPEB) based on actuarial reports.
Hetchy Power’s total liabilities of $214,474 increased by $16,399 or 8.3%. As of June 30, 2020, outstanding debts increased by $9,689 and was attributable to $12,811 in commercial paper issuance for Hetchy Power facilities, offset by decreases of $2,894 in bonds and certificates of participation principal repayments and $228 in amortization of premiu m and discount. Other liabilities of $87,303, such as payables to vendors, contractors, and other government agencies for goods and services under contractual agreements, increased by $6,710 or 8.3%, mainly attributable to increases of $3,239 in restricted and unrestricted payables to vendors and contractors due to higher capital spending, $1,329 in net pension liability based on actuarial report, $1,157 in OPEB obligations based on actuarial assumptions, $747 in employee related benefits including workers’ compensation, vacation, sick leave and accrued payroll mainly due to more days in current year -end payroll accrual when compared to prior year, coupled with a 3% increase of COLA, $250 increase in due to other City departments, including $231 to the City Attorney’s Office for unbilled legal services and $19 to the Port of San Francisco for Pier 70 Shoreside Power Project, and $169 in general liability based on actuarial estimates. These increases were offset by a decrease of $147 in unearned revenue, of which $446 in customer deposits from retail and commercial customers and $74 in sales tax, utility, and electric energy surcharge tax payables, offset by increases of $360 in deposits from custom work projects, $11 in prepayments for the DAS program, and $2 from prepaid rent. Interest payable decreased by $34 due to lower bond and loan outstanding.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
36 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Deferred inflows of resources increased by $279 due to a $564 increase in pensions, offset by a decrease of $285 in OPEB based on actuarial reports.
The following table summarizes CleanPowerSF’s changes in net position.
* Included $1,800 and $3,731 working capital loan from Hetchy Power in fiscal year 2020 and 2019, respectively.
CleanPowerSF Net Position, Fiscal Year 2021
CleanPowerSF’s net position of $87,080 decreased by $4,058 or 4.5%, resulting from a net decrease of $134 in total assets and deferred outflows of resources and a net increase of $3,924 in total liabilities and deferred inflows of resources (see Table 1C -C). Total assets decreased by $537 due to a $6,447 decrease in charges for services receivables attributed to an increase of $3,675 in allowance for doubtful accounts due to higher past due balances in customer power utility accounts after the Mayor’s proclamation to extend the moratorium on utility shutoffs and bill collections to help customers experiencing financial hardship as a result of COVID -19. Other decreases include $2,772 in receivables mainly due to one -time customer assistance bill credits related to COVID -19 relief, $576 in prepaid charges, advances, and other receivables mainly due to lower vendor prepayments for purchased electricity and $160 in interest receivables due to lower annualized interest rate. The decreases were offset by an increase of $6,646 in cash and investment with City Treasury mainly from cash collateral received for power purchase agreement.
Deferred outflows of resources increased by $403 due to increases of $231 in pensions and $172 in OPEB based on actuarial reports.
Total liabilities of $32,501 increased by $3,339 or 11.4%, which was mainly explained by $9,000 in cash collateral received for power purchase agreement (see Note 15(a)), $1,203 in net pension liability based on actuarial report, $712 in OPEB obligations based on actuarial assumptions, and an increase of $200 in employee related benefits including vacation, sick leave and accrued payroll mainly due to an extra day in current year-end payroll accrual when compared to prior year, and a 3% cost of living adjustment increase 2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Total assets:
Current and other assets $ 121,342 121,879 63,044 (537) 58,835 Total assets 121,342 121,879 63,044 (537) 58,835
Deferred outflows of resources:
Pensions 803 572 339 231 233
Other post-employment benefits 442 270 108 172 162
Total deferred outflows of resources 1,245 842 447 403 395 Liabilities:
Current liabilities 17,389 24,991 * 17,056 (7,602) 7,935 Long-term liabilities 15,112 4,171 6,116 * 10,941 (1,945) Total liabilities 32,501 29,162 23,172 3,339 5,990
Deferred inflows of resources:
Related to pensions 1,093 1,210 203 (117) 1,007
Other post-employment benefits 1,913 1,211 115 702 1,096 Total deferred inflows of resources 3,006 2,421 318 585 2,103 Net position:
Unrestricted 87,080 91,138 40,001 (4,058) 51,137
Total net position $ 87,080 91,138 40,001 (4,058) 51,137 Proprietary Fund – CleanPowerSF
Comparative Condensed Net Position
June 30, 2021, 2020, and 2019
Table 1C – C
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
37 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
in December 2020. Other increases in unearned revenues, refunds, and other, include $90 from net energy metering credits to retail and commercial customers, $86 from customer prepayments, and $4 from utility and electric energy surcharge tax payable. These increases were offset by decreases of $6,047 in payables to vendors and contractors mainly from lower power purchases, $1,809 due to other City departments ($1,800 final working capital loan repayment to Hetchy Power and $9 to City Attorney’s Office for unb illed legal services), and $100 in general liability based on actuarial estimates.
Deferred inflows of resources increased by $585 due to an increase of $702 in OPEB based on actuarial reports offset by a decrease of $117 in relation to pensions.
CleanPowerSF Net Position, Fiscal Year 2020
CleanPowerSF’s net position of $91,138 increased by $51,137 or 127.8%, resulting from an increase of $59,230 in total assets and deferred outflows of resources, offset by an increase of $8,093 in total liabilities and deferred inflows of resources (see Tab le 1C-C). Increase in total assets was $58,835 due to $58,678 in cash and investment with City Treasury from higher electricity sales, $216 in prepaid charges, advances, and other receivables mainly due to higher vendor prepayments for purchased electricit y, and $18 increase in interest receivable due to higher average cash balance. Charges for services receivables decreased by $77 due to increase of $1,225 in allowance for uncollectible attributable to higher past due balances as a result of the Mayor’s em ergency declaration that Hetch Hetchy temporarily suspended collection procedures for past due accounts to help customers with financial hardship due to COVID -19, offset by $1,148 increase in billings from higher consumption.
Deferred outflows of resources increased by $395 due to increases of $233 in pensions and $162 in OPEB based on actuarial reports.
Total liabilities of $29,162 increased by $5,990 or 25.9%, which was explained by $5,696 in payables to vendors and contractors for goods and services un der contractual agreements as a result of higher power purchases, $955 in OPEB obligations based on actuarial assumptions, $735 in net pension liability based on actuarial report, $306 in unearned revenue, of which $306 from net energy metering credits to retail and commercial customers, and $13 from utility and electric energy surcharge tax payables, offset by a decrease of $13 from customers’ prepayments. Employee related benefits including vacation, sick leave and accrued payroll increased by $121 mainly due to more days in current year -end payroll accrual when compared to prior year, coupled with a 3% increase of COLA. General liability increased by $99 based on actuarial estimates. The increases were offset by a decrease of $1,922 in due to other City d epartments, including $2,000 working capital loan repayment to Hetchy Power, net of $69 accrued interest, and $9 to City Attorney’s Office for unbilled legal services.
Deferred inflows of resources increased by $2,103 due to a $1,096 increase in OPEB and a $1,007 increase in pensions based on actuarial reports.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
38 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Results of Operations
Department-wide Business Type Activities
The following table summarizes the department -wide revenues, expenses, and changes in net position.
Detailed discussion follows for each proprietary fund.
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Revenues:
Charges for services $ 1,259,466 1,303,411 1,172,573 (43,945) 130,838 Rents and concessions 13,800 13,135 13,989 665 (854) Other operating revenues 27,182 32,217 32,296 (5,035) (79) Interest and investment (loss) income (1,004) 32,103 46,639 (33,107) (14,536) Net gain from transfer of assets — — 619 — (619)
Other non-operating revenues 72,337 129,198 51,864 (56,861) 77,334 Total revenues 1,371,781 1,510,064 1,317,980 (138,283) 192,084 Expenses:
Operating expenses 1,149,934 1,049,402 927,184 100,532 122,218 Interest expenses 221,456 237,271 224,867 (15,815) 12,404 Amortization of premium, discount,
refunding loss, and issuance costs (16,498) (22,627) (23,722) 6,129 1,095 Non-operating expenses 3,582 1,652 3,766 1,930 (2,114) Total expenses 1,358,474 1,265,698 1,132,095 92,776 133,603 13,307 244,366 185,885 (231,059) 58,481
Capital contributions 4,180 — — 4,180 —
Transfers from the City and County of San Francisco 38,465 15,500 25,722 22,965 (10,222) Transfers to the City and County of San Francisco (21,374) (16,305) (24,362) (5,069) 8,057 Net transfers and capital contributions 21,271 (805) 1,360 22,076 (2,165) Change in net position 34,578 243,561 187,245 (208,983) 56,316 Net position at beginning of year 2,701,731 2,458,170 2,270,925 243,561 187,245 Net position at end of year $ 2,736,309 2,701,731 2,458,170 34,578 243,561 Table 2
Business Type Activities
Comparative Condensed Activities
Years ended June 30, 2021, 2020, and 2019
Change in net position before
transfers and capital contributions
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
39 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The following table summarizes Water’s revenues, expenses, and changes in net position.
Water Results of Operations, Fiscal Year 2021
The Water Enterprise’s total revenues of $627,826 for the year represented a decrease of $60,776 or 8.8% from prior year (see Table 2A). Decreases included $48,860 from other non -operating revenues, $10,177 from interest and investment income, $2,079 from other operating revenues, and $447 from charges for service. These decreases were offset by an increase of $787 from rents and concessions.
Charges for services were $550,306, a decrease of $447 or 0.1% mainly due to an 8.8% decrease in consumption for re tail customers, and the COVID -19 emergency proclamation issued by the City’s Mayor suspending collection of past due accounts, mainly resulting in a $2,945 increase in the allowance for doubtful accounts which reduced charges for services. This was offset by an adopted rate increase of 7.0% for retail customers beginning July 1, 2020. Rents and concessions were $12,911, an increase of $787 or
6.5% mainly due to rent increases and increased royalty revenues. Other operating revenues were $18,395, a decrease of $2,079 or 10.2% due to reduced capacity fees and sale of water to other City departments as a result of the SF Health Order relating to COVID -19, offset by a 7.0% adopted rate increase. Interest and investment income was $340, a decrease of $10,177 or 9 6.8% mainly due to unrealized losses resulting from decreases in value of fixed income securities from the City Treasury pool and lower interest earned on cash balances. Other non -operating revenues were $45,874, a decrease of $48,860 or 51.6% mainly due t o a prior year one -time gain of $63,600 from the property transfer of 2000 Marin Street and 639 Bryant Street offset by a $15,000 grant from the State of California for the SF Westside Recycle Water project in current year.
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Revenues:
Charges for services $ 550,306 550,753 509,703 (447) 41,050 Rents and concessions 12,911 12,124 13,010 787 (886) Other operating revenues 18,395 20,474 19,678 (2,079) 796 Interest and investment income 340 10,517 15,650 (10,177) (5,133) Other non-operating revenues 45,874 94,734 32,399 (48,860) 62,335 Total revenues 627,826 688,602 590,440 (60,776) 98,162 Expenses:
Operating expenses 448,843 398,117 357,094 50,726 41,023 Interest expenses 184,606 191,246 177,998 (6,640) 13,248 Amortization of premium, discount,
refunding loss, and issuance costs (7,782) (13,752) (17,788) 5,970 4,036 Non-operating expenses 2,208 529 1,388 1,679 (859)
Total expenses 627,875 576,140 518,692 51,735 57,448 (49) 112,462 71,748 (112,511) 40,714
Capital contributions 4,180 — — 4,180 —
Transfers from the City and County of San Francisco 21,025 1,220 1,200 19,805 20 Transfers to the City and County of San Francisco (16,654) (14,805) (20,334) (1,849) 5,529 Net transfers and capital contributions 8,551 (13,585) (19,134) 22,136 5,549 Change in net position 8,502 98,877 52,614 (90,375) 46,263 Net position at beginning of year 641,015 542,138 489,524 98,877 52,614 Net position at end of year $ 649,517 641,015 542,138 8,502 98,877 Table 2A
Proprietary Fund – Water
Comparative Condensed Activities
Years ended June 30, 2021, 2020, and 2019
Change in net position before
transfers and capital contributions
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
40 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The Water Enterprise’s total exp enses were $627,875, an increase of $51,735 or 9.0%. Operating expenses were $448,843, an increase of $50,726 or 12.7%, the result of increases of $27,126 in general administrative and other mainly from judgement and claims based on actuarial estimates, $1 2,585 in personnel services mainly due to pension obligations based on actuarial report and a 3% cost of living adjustment, $9,107 in services provided by other departments mainly from higher water assessment fees paid to Hetch Hetchy Water, $1,805 in depr eciation and amortization due to additional capital assets placed into service, and $978 in contractual services mainly from equipment maintenance. These increases were offset by a decrease of $875 in materials and supplies mainly for building and construc tion supplies.
Interest expenses decreased by $6,640, as compared to prior year, mainly due to refunded bonds.
Amortization of bond premium, discount, refunding loss and issuance costs decreased by $5,970 due to the issuance of the 2020 Series EFGH revenue bonds, which refunded 2010 Series D, 2011 Series D, 2012 Series ABC, and 2017 Series ABC revenue bonds. Non -operating expenses increased by $1,679 due to increased grants and rebates awarded for water conservation relating to the Onsite Water Reuse Grant Program and community-based services.
Transfers in of $21,025 from the City included $20,040 for the Emergency Firefighting Water System and $985 from the General Fund for Native Plant Garden project and low income assistance programs.
Transfers out of $16,654 included $16,000 to Hetch Hetchy Water to f und various upcountry water projects, $622 to the Arts Commission for arts enrichment fund for the SF Recycled Water, Sunol Valley Water Improvement and Mountain Tunnel Improvement projects, and $32 to the Office of the City Administrator for the Water Enterprise’s contribution to the Surety Bond Program. Capital contribution of $4,180 was received for water pipeline assets from the Department of Public Works in the current year.
Water Results of Operations, Fiscal Year 2020
The Water Enterprise’s total revenues of $688,602 for the year represented an increase of $98,162 or
16.6% from prior year (see Table 2A). Increases included $62,335 from other non -operating revenues, $41,050 from charges for services, and $796 from other operating revenues. These increases were offset by decreases of $5,133 in interest and investment income, and $886 from rents and concessions.
Charges for services were $550,753, an increase of $41,050 or 8.1% due to an adopted rate increase of
8.0% for retail cust omers beginning July 1, 2019 coupled with a 5.7% increase in consumption by wholesale customers. Rents and concessions were $12,124, a decrease of $886 or 6.8% mainly from termination of leases. Other operating revenues were $20,474, an increase of $796 or 4.0% due to an
8.0% rate increase offset by a decrease in capacity fee revenues. Interest and investment income were $10,517, a decrease of $5,133 or 32.8% due to lower annualized interest rates. Other non -operating revenues were $94,734, an increase of $62,335 or 192.4% mainly due to a one-time gain of $63,600 from the property transfer of 639 Bryant Street for 2000 Marin Street in San Francisco, CA.
The Water Enterprise’s total expenses were $576,140, an increase of $57,488 or 11.1%. Operating expenses were $398,117, an increase of $41,023 or 11.5% due to increases of $21,413 in depreciation and amortization due to additional capital assets placed into service in the prior year, $8,447 in general administrative and other mainly from reduced capitalizatio n of buildings, structures and improvements and equipment purchases and higher capital project expenses, $8,349 in personnel services primarily due to cost of living adjustments, pension and OPEB obligations based on actuarial reports, $1,377 in services provided by other departments mainly from higher water assessment fees paid to Hetch Hetchy Water, $808 in contractual services mainly from consulting and maintenance services, $629 in materials and supplies mainly for building and construction supplies. In terest expenses increased by $13,248 from reduced interest capitalization for capital projects. Amortization of bond premium, discount, refunding loss and issuance costs decreased by $4,036 due to issuance of 2019 Series ABC revenue bonds which
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
41 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
refunded 2010 Series F, 2011 Series A, 2011 Series B, 2011 Series C, and 2012 Series A bonds. Non - operating expenses decreased by $859 mainly from reduced rebates paid to customers.
Transfers in of $1,220 were from the General Fund for low income assistance programs and pathway improvements to Miraloma Park. Transfers out of $14,805 included $14,000 to Hetch Hetchy Water to fund various upcountry capital projects, $558 to the Arts Commission for arts enrichment, $215 to the San Francisco Municipal Transportation Agency for water conservation projects, and $32 to the Office of the City Administrator for the Surety Bond Program.
The following table summarizes Wastewater’s revenues, expenses, and changes in net position.
Wastewater Results of Operations, Fiscal Year 2021
The Wastewater Enterprise’s total revenues were $331,389 a decrease of $30,472 or 8.4% from prior year (see Table 2B). Charges for services decreased by $13,485 or 4.1% mainly due to a sanitary flow decrease of 2,474,116 ccf or 10.2% from residential and non -residential customers and $2,172 increase in allowance for doubtful accounts as there were more sewer charge receivables aging over 120 days attributable to the suspension of collection efforts in response to the COVID -19 emergency proclamation issued by the City Mayor offset by a n average 8% adopted rate increase. Interest and investment income decreased by $13,324 or 109.8% due to lower pooled and fiscal agent cash balances, and a lower annualized interest rate. Other operating revenues decreased by $2,956 or 25.2% mainly due to decreases of $2,186 in capacity fees resulting from a 25.2% decrease in average permit price and a 7.9% decrease in permits issued as only essential construction projects were allowed due to SF Health Order related to COVID-19 and $770 in other operating revenues to other City departments such as the Real Estate, Human Services Agency, and Academy of Science due to the COVID -19 shelter in place order. Other non -operating 2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Revenues:
Charges for services $ 318,236 331,721 317,761 (13,485) 13,960 Rents and concessions 642 664 702 (22) (38)
Other operating revenues 8,787 11,743 12,618 (2,956) (875) Interest and investment (loss) income (1,187) 12,137 20,701 (13,324) (8,564) Net gain from transfer of assets — — 619 — (619)
Other non-operating revenues 4,911 5,596 5,545 (685) 51 Total revenues 331,389 361,861 357,946 (30,472) 3,915 Expenses:
Operating expenses 292,220 262,259 259,813 29,961 2,446 Interest expenses 34,862 43,216 43,803 (8,354) (587) Amortization of premium,
refunding loss, and issuance costs (8,497) (8,647) (5,697) 150 (2,950) Non-operating expenses 409 52 1,013 357 (961)
Total expenses 318,994 296,880 298,932 22,114 (2,052) Change in net position before transfers 12,395 64,981 59,014 (52,586) 5,967 Transfers from the City and County of San Francisco 1,440 280 — 1,160 280 Transfers to the City and County of San Francisco (4,188) (1,468) (3,996) (2,720) 2,528 Net transfers (2,748) (1,188) (3,996) (1,560) 2,808
Change in net position 9,647 63,793 55,018 (54,146) 8,775 Net position at beginning of year 1,292,936 1,229,143 1,174,125 63,793 55,018 Net position at end of year $ 1,302,583 1,292,936 1,229,143 9,647 63,793 Table 2B
Proprietary Fund – Wastewater
Comparative Condensed Activities
Years ended June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
42 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
revenues decreased by $685 mainly due to decreases of $667 in miscellaneous revenue lar gely attributed to $642 receipts from California State Parks Foundation for a project at Yosemite Slough Site in prior year, $20 in gain from sale of assets, and $22 in Federal Emergency Management Agency (FEMA) grant relating to COVID-19 offset by $27 increase in federal interest subsidy. Rents and concessions decreased by $22 or
3.3% mainly due to the COVID-19 past due rent collection suspension as approved by the Commission.
Total expenses were $318,994, an increase of $22,114 or 7.4% due to increases of $29,961 in operating expenses, $357 in City grants program expenses as there were more expenses incurred for community - based organization services, and $150 decrease in amorti zation, refunding loss, and issuance cost due to $230 decrease in bond premium offset by decreases of $40 in issuance cost, and $40 in refunding loss amortization offset by a decrease of $8,354 in interest expenses due to lower interest rate compared to prior year and a decrease in outstanding bond principal balance. The increase of $29,961 in operating expenses was mainly due to increases of $20,866 in general and administrative and other operating expenses mainly due to higher capital project expenses rel ated to the SSIP Biosolids Digester Project, $9,051 in depreciation expense due to more capitalized assets put in service, $1,004 in services provided by other departments mainly for Department of Public Works general administration and building repair services, General Services Agency (GSA) facilities management services, and City risk management services, and $100 in materials and supplies mainly due to water sewage treatment supplies for Bayside Operations. These increases were offset by a decrease of $ 564 in personnel services mainly due $7,873 decrease in other post -employment benefits based on actuarial report offset by increases of $4,574 in expenses related to pension due to increase in retirement contribution rates, $2,051 in salaries and fringe benefits due to a 3% increase in cost of living adjustment (COLA), and $684 in workers’ compensation claims. Other decrease included $496 in contractual services mainly due to lower professional and specialized services.
Net transfers of $2,748 included tr ansfer out of $4,000 in art enrichment fund to the San Francisco Art Commission for the Southeast Plant Biosolids Digester Facilities, 1550 Southeast Community Center, and Treasure Island Capital Improvement Projects, $156 to Recreation and Park for Crocker Amazon Park, and $32 to the Office of the City Administrator for the Surety Bond Program, offset by $1,440 transfer in from General Fund for the Sidewalk Garden Grants Project.
Wastewater Results of Operations, Fiscal Year 2020
The Wastewater Enterprise’s total revenues were $361,861, an increase of $3,915 or 1.1% from prior year (see Table 2B). Charges for services increased by $13,960 or 4.4% mainly due to an average 7% adopted rate increase, offset by a sanitary flow decrease of 215,896 ccf or 0.9% from residential and non - residential customers. Other non -operating revenues increased slightly by $51 mainly due to $642 in miscellaneous revenue largely due to receipts from California State Parks Foundation for a project at Yosemite Slough Site, $38 gain from sale of assets in current year, $14 in federal interest subsidy, and $11 in Federal Emergency Management Agency (FEMA) grant relating to COVID-19, offset by a decrease of $391 in biofuel revenue as the SFGreasecycle Program en ded in prior year, grants received in prior year of $234 from the State for the stormwater flood management projects and $29 from the Green Infrastructure Leadership Exchange. These increases were offset by a decrease of $8,564 or 41.4% in interest and investment income due to lower pooled and fiscal agent cash balances and lower annualized interest rate.
Other operating revenues decreased by $875 mainly due to $981 decrease in capacity fees resulting from a 16% decrease in permits issued and increase in un collectible allowance, offset by $106 increase in charges for services to other City departments such as the Recreation and Park and San Francisco General Hospital, $619 gain from transfer of assets in prior year, and $38 decrease or 5.4% in rents and concessions mainly due to $56 catch -up billing adjustment in prior year for a lease at Southeast Water Pollution Control Plant offset by $18 increase in rental revenue from tenants with 3% consumer price index average rate increase.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
43 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Total expenses were $296,880, a decrease of $2,052 or 0.7% due to decreases of $2,950 in amortization of premium, refunding loss, and issuance cost due to decrease of $2,760 in issuance cost attributable to bond series 2018 ABC issuance in prior year, decrease of $36 in refunding lo ss and increase of $154 in bond premium, $961 in other non -operating expenses mainly due to $987 loss from sale of assets in prior year offset by $26 increase in City grants program expenses as there were more expenses incurred for community-based organiza tion services, and $587 decrease in interest expenses mainly due to more capitalization of interest expense for fixed assets in the current year. These decreases were offset by an increase of $2,446 in operating expenses. The increase of $2,446 in operating expenses was mainly due to $10,320 increase in personnel services due to 3% increase in COLA, increase in retirement contribution rates and expenses related to pension and other post -employment benefits, $2,934 in depreciation expense due to more capital ized assets put in service, $680 in services provided by other departments mainly for legal services, street cleaning, neighborhood beautification, and risk management services, and $317 in contractual services mainly due to higher professional and special ized services. These increases were offset by decreases of $10,943 in general and administrative and other operating expenses mainly due to higher capitalization of capital project spending and prior year higher capital project expense related to the South east Plant Improvement Project and $862 in materials and supplies mainly due to water sewage treatment supplies for Bayside Operations.
Net transfers of $1,188 included transfer out of $1,436 to the San Francisco Art Commission for integrated artworks at the Headworks Facility and $32 to the Office of the City Administrator for the Surety Bond Program, offset by $240 transfer in from General Fund for the Central Shop Relocation Project contingency release and $40 for the Sidewalk Garden Grants Project.
The following table summarizes Hetchy Water’s revenues, expenses, and changes in net position.
Hetchy Water Results of Operations, Fiscal Year 2021
Hetchy Water’s total revenues were $48,210, an increase of $7,464 or 18.3% from prior year’s revenues (see Table 2C -A). Increase was due to $12,182 from charges for services, offset by decreases of $2,509 from other non -operating revenues, $2,164 in interest and investment income, and $45 from rents and concessions.
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Revenues:
Charges for services $ 46,979 34,797 33,880 12,182 917 Rents and concessions 111 156 125 (45) 31
Interest and investment (loss) income (232) 1,932 2,670 (2,164) (738) Other non-operating revenues 1,352 3,861 3,013 (2,509) 848 Total revenues 48,210 40,746 39,688 7,464 1,058
Expenses:
Operating expenses 50,517 44,873 50,305 5,644 (5,432) Non-operating expenses 63 11 — 52 11
Total expenses 50,580 44,884 50,305 5,696 (5,421)
Change in net position before transfers (2,370) (4,138) (10,617) 1,768 6,479 Transfers from the City and County of San Francisco 16,000 14,000 20,000 2,000 (6,000) Change in net position 13,630 9,862 9,383 3,768 479 Net position at beginning of year 211,035 201,173 191,790 9,862 9,383 Net position at end of year $ 224,665 211,035 201,173 13,630 9,862 Table 2C – A
Proprietary Fund – Hetchy Water
Comparative Condensed Activities
Years ended June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
44 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Charges for services were $46,9 79, an increase of $12,182 or 35.0% mainly due to increased water assessment fees from the Water Enterprise to fund upcountry water -related costs and higher consumption from Lawrence Livermore National Laboratory. Rents were $111, a decrease of $45 or 28.8 % mainly from lower cottage rental revenue. Other non -operating revenues were $1,352, a decrease of $2,509 or 65.0% mainly due to decreases of $1,510 in Federal and State grants revenue resulting from lower collections from State grants related to 2018 Moccasin Storm, $995 from prior year Rim Fire recoveries, and $4 in net gain from sale of fixed assets. Interest and investment loss was $232 mainly due to unrealized loss attributed to decrease in market value in cash and investments with City Treasury and lower interest rates.
Total operating expenses, excluding other non-operating expenses, were $50,517, an increase of $5,644 or
12.6%. The increase was attributed to $3,567 in personnel services resulting from cost of living adjustments, higher retirement contribution rates, and increased personnel and fringe benefit costs. Other increases include $773 in contractual services mainly from increased engineering and management consulting services, $733 in depreciation and amortization related to additional building, structure and equipment placed in service, $664 in services provided by other departments mainly due to higher bureau support costs and legal service charges from City Attorney’s Office, and $162 in other operating expenses mainly due to higher capital spending. These increases were offset by dec reases of $190 in general and administrative expenses mainly due to lower judgements and claims expenses and $65 decrease in materials and supplies mainly for water and sewage treatment supplies.
Other non-operating expenses were $63, an increase of $52 due to payments to community -based organization programs. A transfer in of $16,000 was received from the Water Enterprise to fund upcountry projects.
As a result of the above activities, net position for the year ended June 30, 2021 increased by $13,6 30 or
6.5% compared to prior year.
Hetchy Water Results of Operations, Fiscal Year 2020
Hetchy Water’s total revenues were $40,746, an increase of $1,058 or 2.7% from prior year’s revenues (see Table 2C -A). Increases included $917 from charges for servic es, $848 from other non -operating revenues, and $31 from rents and concessions. These increases were offset by a decrease of $738 in interest and investment income.
Charges for services were $34,797, an increase of $917 or 2.7% due to increased water asse ssment fees from the Water Enterprise to fund upcountry water -related costs. Rents were $156, an increase of $31 or
24.8% mainly from cottage rental revenue. Other non -operating revenues were $3,861, an increase of $848 or 28.1% mainly due to payment of $9 95 from Rim Fire insurance recoveries, offset by decreases of $125 collections from State grants related to 2018 Moccasin Storm Project and Lower Cherry Aqueduct Project, $18 in overhead charges and $4 decrease in net gain from sale of fixed assets and scr ap. Interest and investment income were $1,932, a decrease of $738 or 27.6% mainly due to lower unrealized gains attributed to decrease in market value in cash and investments with City Treasury.
Total operating expenses, excluding other non -operating expenses were $44,873, a decrease of $5,432 or
10.8%. The decrease was attributed to $8,831 in other operating expenses mainly due to reduced capital spending and $104 in depreciation and amortization related to building, structure and equipment. These decreases were offset by increases of $2,597 in personnel services resulting from cost of living adjustments, higher retirement contribution rates, higher pension obligations based on actuarial reports and increased personnel and fringe benefit costs, $437 in co ntractual services mainly from increased engineering services, $231 in services provided by other departments mainly due to higher light, heat, and
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
45 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
power charges, $204 in water and sewage treatment supplies for water facilities, and $34 in general and administrative expenses mainly due to higher judgements and claims based on actuarial estimates.
Other non -operating expenses increased by $11 due to payments to community -based organization programs. Transfer in of $14,000 was received from the Water Enterprise to fund upcountry projects.
As a result of the above activities, net position for the year ended June 30, 2020 increased by $9,862 or
4.9% compared to prior year.
The following table summarizes Hetchy Power’s revenues, expenses, and changes in net position.
Hetchy Power Results of Operations, Fiscal Year 2021
Hetchy Power’s total revenues were $ 155,680, a decrease of $15,943 or 9.3% from prior year’s revenues (see Table 2C-B). Decreases included $5,733 from other non-operating revenues, $5,722 from interest and investment income, $4,433 from charges for services, and $55 from rents and concessions.
Charges for services were $136,247, a decrease of $4,433 or 3.2% was attributed to a decrease of $8,362 in sales to City department s, wholesale, and Treasure Island customers due to COVID -19 related impacts and $667 increase in allowance for doubtful accounts. Receivables aging over 120 days increased significantly due to the suspension of collection efforts and moratorium on utility shutoffs in response to the COVID-19 emergency proclamation issued by the Mayor. The decrease was offset by increases of $2,537 in sales to retail customers mainly due to new affordable redevelopment housing accounts and $2,059 in resale of capacity to CleanPowerSF due to excess capacity of electric system reliability compliance product.
Rents were $136, a decrease of $55 or 28.8% mainly due to lower cottage rental revenue. Interest and investment income were $24, a decrease of $5,722 or 99.6% mainly due to decreases of $4,691 in 2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Revenues:
Charges for services $ 136,247 140,680 143,409 (4,433) (2,729) Rents and concessions 136 191 152 (55) 39
Interest and investment income 24 5,746 6,883 (5,722) (1,137) Other non-operating revenues 19,273 25,006 10,907 (5,733) 14,099 Total revenues 155,680 171,623 161,351 (15,943) 10,272 Expenses:
Operating expenses 145,638 148,127 122,688 (2,489) 25,439 Interest expenses 1,970 2,740 2,936 (770) (196)
Amortization of premium, discount,
and issuance costs (219) (228) (237) 9 9
Non-operating expenses 902 1,060 1,365 (158) (305)
Total expenses 148,291 151,699 126,752 (3,408) 24,947 Change in net position before transfers 7,389 19,924 34,599 (12,535) (14,675) Transfers from the City and County of San Francisco — — 4,522 — (4,522) Transfers to the City and County of San Francisco (532) (32) (32) (500) — Net transfers (532) (32) 4,490 (500) (4,522)
Change in net position 6,857 19,892 39,089 (13,035) (19,197) Net position at beginning of year 465,607 445,715 406,626 19,892 39,089 Net position at end of year $ 472,464 465,607 445,715 6,857 19,892 Table 2C – B
Proprietary Fund – Hetchy Power
Comparative Condensed Activities
Years ended June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
46 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
interest earned from lower interest rates and cash balance, unrealized loss, and $1,031 from interest accrued for Treasure Island submarine power cable in prior year.
Other non-operating revenues were $19,273, a decrease of $5,733 or 22.9% , mainly due to decreases of $5,739 from Low Carbon Fuel Standard (LCFS) credit sales revenue attributed to less carbon fuel credit generated by San Francisco Municipal Transportation Agency, $2,574 in license fee from Transbay Cable Project due to final paymen t received in prior year, $1,139 in Cap and Trade revenue due to decrease of 23,000 or 16% allowance sold, and $654 decrease in fees collected from DAS program. Other decreases include $402 in State and Federal grants revenue resulting from lower collections from State grants related to 2018 Moccasin Storm and Federal grants related to Hazard Mitigation grant, $70 in Federal interest subsidy due to lower debt outstanding, $37 in damage claims revenue, and $5 in net gain from sale of fixed assets. These decr eases were offset by increases of $2,921 in collection for Power System Impact Mitigation Project, $797 in settlement revenue related to litigation, $736 in commercial deposits from Alice Griffith Housing Project recognized as revenue, $259 in overhead cha rges, and $174 in miscellaneous revenue mainly from generation interconnection study and refunds from vendor.
Total operating expenses, excluding interest expenses, other non -operating expenses, and amortization of premium, discount, and issuance costs, d ecreased by $2,489 or 1.7% , to $145,638. The decrease was primarily due to $6,138 in purchased electricity and transmission, distribution, and other power costs due to lower electricity sales, $289 in services provided by other departments mainly due to lo wer bureau support costs, $270 in material and supplies due to lower equipment maintenance, and $96 decrease in depreciation and amortization for machinery and equipment. The decreases were offset by increases of $1,704 in general and administrative expens es mainly due to higher litigation expenses, $1,572 in other operating expenses mainly due to higher capital spending, $984 in contractual services mainly from new in- city inventory warehouse rental at Pier 23 in San Francisco, and $44 in personnel service s resulting from cost of living adjustments, higher retirement contribution rates, higher pension obligations based on actuarial reports, and increased personnel and fringe benefit costs.
Interest expenses were $1,970, a decrease of $770 or 28.1% due to d ecrease in outstanding debt and lower interest rates for commercial paper. Amortization of premium and discount slightly decreased by $9 or 3.9% to $219.
Other non-operating expenses were $902, a decrease of $158 or 14.9% mainly due to decrease in payments for GoSolarSF Incentive Program. Transfer out of $532 includes $500 to General Fund for repayment of Educational Revenue Augmentation Funds and $32 to the Office of the City’s Administrator for the Surety Bond Program.
As a result of the above ac tivities, net position for the year ended June 30, 2021 increased by $6,857 or
1.5% compared to prior year.
Hetchy Power Results of Operations, Fiscal Year 2020
Hetchy Power’s total revenues were $171,623, an increase of $10,272 or 6.4% from prior year’s revenues (see Table 2C-B). Increases included $14,099 from other non -operating revenues and $39 from rents and concessions. The increases were offset by decreases of $2,729 from charges for services and $1,137 from interest and investment income.
Charges for services were $140,680, a decrease of $2,729 or 1.9% was attributed to decreases of $4,213 in sale of electricity to retail, wholesale and Treasure Island customers due to COVID -19 and California Independent System Operator (CAISO) Congestion R evenue Right (CRR) credits, and $709 in resale of capacity related to electric system reliability compliance product, offset by an increase of $2,193 in sales to
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
47 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
other City departments mainly due to average rate increase. Rents were $191, an increase of $39 or 25.7% mainly from cottage rental revenue. Interest and investment income were $5,746, a decrease of $1,137 or
16.5% mainly due to $1,073 in interest earned resulting from lower interest rates and $1,023 in unrealized gains attributed to decrease in ma rket value in cash and investments with City Treasury, offset by an increase of $959 in interest accrued in connection of an upgraded submarine power cable for the Treasure Island. Other non-operating revenues were $25,006, increase of $14,099 or 129.3% ma inly due to $6,920 from Low Carbon Fuel Standard (LCFS) credit sales revenue, $4,825 from the Power System Impact Mitigation Project, $1,610 in fees collected from the Distributed Antenna System (DAS) program, $1,479 in State and Federal grants related to disaster emergency recoveries for the 2018 Moccasin Storm Project, Early Intake Switchyard Project and Rim Fire Project, $341 in Cap and Trade revenues, $92 reimbursement for the Central Subway Project, $52 in annual license fee received from the Transbay Cable Project, $42 in damage claims, and $12 in overhead charges. These increases were offset by decreases of $705 in Rim Fire insurance recoveries from prior year, $330 in miscellaneous revenue from completion of Hunters Point Projects, $195 in settlement received from prior year, $41 in Federal interest subsidy due to lower debt outstanding, and $3 in net gain from sale of fixed assets, scrap, and waste.
Total operating expenses, excluding interest expenses, other non -operating expenses, and amortization of premium, discount, and issuance costs, increased by $25,439 or 20.7% to $148,127. The increase was attributed to $16,130 in other operating expenses mainly due to lower capitalization of project expense, $3,129 in personnel services resulting from cost of living adjustments, higher retirement contribution rates, higher pension obligations based on actuarial reports and increased personnel and fringe benefit costs, $1,656 in contractual services mainly for equipment maintenance and property rent, $1,588 in materials and supplies mainly explained by prior year recognition of material and supplies to inventory for the in -city warehouse, $1,394 in purchased electricity and transmission, distribution and other power costs mainly due to wheeling charge rate in crease, $1,239 in depreciation and amortization related to additional building, structure and equipment placed in service, and $710 in general and administrative expenses mainly due to judgements and claims based on actuarial estimates. These increases wer e offset by a decrease of $407 in services of other departments mainly due to legal services provided by City Attorney.
Interest expenses were $2,740, a decrease of $196 or 6.7% mainly due to higher capitalized interest.
Amortization of premium and discount slightly decreased by $9 or 3.8% to $228.
Other non-operating expenses were $1,060, a decrease of $305 or 22.3% due to $354 in loss from sale of fixed assets in prior year, offset by an increase of $49 in payments for GoSolarSF Incentive Program and community-based organization programs. Transfer out of $32 to the Office of the City’s Administrator for the Surety Bond Program.
As a result of the above activities, net position for the year ended June 30, 2020 increased by $19,892 or
4.5% compared to prior year.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
48 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The following table summarizes CleanPowerSF’s revenues, expenses, and changes in net position.
CleanPowerSF Results of Operations, Fiscal Year 2021
CleanPowerSF’s total revenues were $208,676, a $38,556 or 15.6% decrease over prior year (see Table 2C-C). Charges for services decreased by $37,762 or 15.4% mainly due to a decrease of $32,077 in electricity sales to retail and commercial customers resulting from consumption decrease of 92,503 MWh or 3%, a one-time customer assistance bill credit of $2,817 related to COVID-19 utility bill relief, an increase of $2,451 in allowance for doubtful accounts, and $417 lower capacity sales to other entities. Receivables aging over 120 days increased significantly due to the suspension of collection efforts and moratorium on utility shutoffs in response to the COVID -19 emergency proclamation issued by the Mayor. Interest and investment income decreased by $1,720 or 97.1% due to unrealized loss and lower interest rates on pooled cash and investments. Other non -operating revenue increased by $926 due to liquidated damage compensation from vendor for the delay of Renewable Energy Project.
Total operating expenses, excluding interest expenses, were $212,716, an increase of $16,690 or 8.5% from prior year. The increase was due to $16,219 in purchased electricity and transmission, distribution, and other power costs as a result of higher prices in the CAISO market and increase in resource adequacy capacity purchases related to new compliance requirements from the California Public Utilities Commission.
Other increases include $1,200 in services provided by other departments due to increased labor support from Hetchy Power and legal service charges from City Attorney’s Office, and $305 increase in other operating expenses mainly from the Neighborhood Steward Program and the new Local Renewable Ene rgy Program. These increases were offset by decreases of $529 in professional and contractual services mainly from lower management consulting services, $279 in personnel services mainly due to lower pension obligations and OPEB based on actuarial reports, $195 in general and administrative expenses mainly due to lower judgements and claims based on actuarial estimates, and $31 in material and supplies due to reduced furnishings expenses. Interest expenses were $18, a decrease of $51 or 73.9% due to lower principal outstanding from Hetchy Power working capital loan.
As a result of the above activities, net position for the year ended June 30, 2021 decreased by $4,058 or
4.5% compared to prior year.
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Revenues:
Charges for services $ 207,698 245,460 167,820 (37,762) 77,640 Interest and investment income 51 1,771 735 (1,720) 1,036 Other non-operating revenues 927 1 — 926 1
Total revenues 208,676 247,232 168,555 (38,556) 78,677 Expenses:
Operating expenses 212,716 196,026 137,284 16,690 58,742 Interest expenses 18 69 130 (51) (61)
Total expenses 212,734 196,095 137,414 16,639 58,681 Change in net position (4,058) 51,137 31,141 (55,195) 19,996 Net position at beginning of year 91,138 40,001 8,860 51,137 31,141 Net position at end of year $ 87,080 91,138 40,001 (4,058) 51,137 Table 2C – C
Proprietary Fund – CleanPowerSF
Comparative Condensed Activities
Years ended June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
49 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
CleanPowerSF Results of Operations, Fiscal Year 2020
CleanPowerSF’s total revenues were $247,232, a $78,677 or 46.7% increase over prior year (see Table 2C-C). Charges for services increased by $77,640 or 46.3% mainly due to $74,099 increased electricity sales to retail and commercial customers, and $3,541 fr om capacity sales to Hetchy Power and other entities. Consumption increased to 1,010,934 MWh or 51% and number of customer accounts have grown from 376,787 to 383,895 as of June 2020. Interest and investment income increased by $1,036 or 141% due to $638 i n interest earned resulting from higher average cash balance and $398 in unrealized gains attributed to increase in market value in cash and investments with City Treasury. Other non -operating revenue increased by $1 due to termination fees from customers.
Total operating expenses, excluding interest expenses were $196,026, an increase of $58,742 or 42.8% from prior year. The increase was due to $51,932 in purchased electricity and transmission, distribution and other power costs as a result of higher electr icity sales, $3,308 in personnel services resulting from cost of living adjustments, higher retirement contribution rates, higher pension obligations based on actuarial reports and increased personnel and fringe benefit costs, $2,771 in professional and co ntractual services mainly from services provided by Calpine Energy Solution for customer billings, $1,142 in general and administrative mainly from increased taxes, license, and permits fees, $63 in other operating expenses mainly from the Neighborhood Steward Program Project and $6 in materials and supplies. These increases were offset by a decrease of $480 in services provided by other departments mainly explained by lower mail services and support provided by Hetchy Power for administrative services. Int erest expenses were $69, a decrease of $61 or 46.9% due to lower outstanding balance for the working capital loan from Hetchy Power.
As a result of the above activities, net position for the year ended June 30, 2020 increased by $51,137 or 127.8% compared to prior year.
Capital Assets
Department-wide Business Type Activities
The following table summarizes the department-wide changes in capital assets. Detailed discussion follows for each proprietary fund.
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Facilities, improvements, machinery, and equipment $ 7,595,329 7,419,330 7,167,172 175,999 252,158 Intangible assets 35,102 32,528 34,853 2,574 (2,325) Land and rights-of-way 154,001 155,089 71,228 (1,088) 83,861 Construction work in progress 2,079,754 1,592,097 1,387,840 487,657 204,257 Total $ 9,864,186 9,199,044 8,661,093 665,142 537,951 Table 3
Business Type Activities
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
50 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The following table summarizes Water’s changes in capital assets.
Water Capital Assets, Fiscal Year 2021
The Water Enterprise has net capital assets of $ 5,587,799 invested in a broad range of utility capital assets as of June 30, 2021 (see Table 3 A). The investment in capital assets includes land, facilities, improvements, water treatment plants, aqueducts, water transmission, distribution mains, water storage facilities, pump stations, water reclamation facilities, machinery, and equipment. The Water Enterprise’s net revenue and long term debt are used to finance capital investments. Capital assets, net of accumulated depreciation and amortization, increased by $57,524 from the prior year. Construction work in progress increased by $39,920 primarily due to additions from the SF Recycled Water project, Sunol Long Term Improvements and Regional Groundwater Storage and Recovery projects. Facilities, improvements, machinery, and equipment increased by $19,748 mainly attributable to the San Andreas Pipeli ne Number 2 and Water Main Replacement projects. Intangible assets decreased by $1,326 due to $1,601 in amortization, offset by $143 addition for information technology and $132 addition for automated meter reading system. Land decreased by $1,088 as the r esult of sale of the Wool Ranch property in the Alameda Creek Watershed and reimbursement of land costs for 2000 Marin Street, San Francisco, CA.
Major additions to construction work in progress during the year ended June 30, 2021 include the following:
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Facilities, improvements, machinery, and equipment $ 4,948,186 4,928,438 4,890,207 19,748 38,231 Intangible assets 2,763 4,089 5,816 (1,326) (1,727)
Land and rights-of-way 104,248 105,336 30,029 (1,088) 75,307 Construction work in progress 532,602 492,682 462,606 39,920 30,076 Total $ 5,587,799 5,530,545 5,388,658 57,254 141,887 Table 3A
Proprietary Fund – Water
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2021, 2020, and 2019
SF Recycled Water Project $ 41,231
Sunol Long Term Improvements 15,516
Regional Groundwater Storage & Recovery 12,298
New Water Utility Services 7,992
San Andreas Pipeline Number 2 Replacement 7,961
Water Main Replacement - WD-2739 Castro/19th/26th Streets 7,953 Calaveras Dam Replacement 7,915
Water Main Replacement - WD-2766 Taraval Street 5,172
Auxiliary Water Supply System - Pump Station Number 2 5,135 Other project additions individually below $5,000 86,496 Total $ 197,669
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
51 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the year ended June 30, 2021 include the following:
See Note 4 for additional information about capital assets.
Water System Improvement Program (WSIP)
The WSIP delivers capital improvements that enhance the Water Enterprise’s ability to provide reliable, affordable, high -quality drinking water to its 27 wholesale customers and regional retail customers in Alameda, Santa Clara, and San Mateo Counties, as well as approximately 800,000 residential customers in San Francisco, in an environmentally sustainable manner. The program is structured to cost -effectively meet water quality requirements and long -term water supply objectives, as well as improve seismic and delivery reliability.
Overall, the $4.8 billion WSIP to upgrade the City of San Francisco’s regional and local drinking water systems is 99% completed with $4.8 billion of project appropriations expended through fiscal year ended June 30, 2021. The program consists of 35 local projects located within San Francisco and 52 regional projects spread over seven different counties from the Sierra Foothills to San Francisco. As of June 30, 2021, 35 local projects were completed, an d the completion date was June 3, 2020. For regional projects, 44 are completed and the expected completion date is May 2023. Additional details regarding the WSIP are available at https://sfpuc.org/construction-contracts/water-infrastructure-improvements.
Water Capital Assets, Fiscal Year 2020
The Water Enterprise has net capital assets of $5,530,545 invested in a broad range of utility capital assets as of June 30, 2020 (see Table 3A). The investment in capital assets includes land, facilities, improvements, water treatment plants, aqueducts, water transmission, distribution mains, water storage facilities, pump stations, water reclamation facilities, machinery, and equipment. The Water Enterprise’s net revenue and long term debt are used to finance capital investments. Capital assets, net of accumulated depreciation and amortization, increased by $141,887 from the prior year. Land increased by $75,307 mainly as the result of a property transfer related to 639 Bryant Street for 2000 Ma rin Street completed in the fiscal year. Facilities, improvements, machinery, and equipment increased by $38,231 mainly attributable to Sunol Corp Yard, Water Main Replacement, and Alameda Creek Watershed projects.
Construction work in progress increased b y $30,076 primarily due to additions from Recycled Water project, San Andreas Pipeline replacement, and Watershed and Environmental Improvement program.
Intangible assets decreased by $1,727 due to $2,101 amortization, offset by increases of $374 from Microsoft SharePoint software and IBM Maximo software improvements.
San Andreas Pipeline Number 2 Replacement - 4 Segments in San Bruno $ 43,340 Water Main Replacement - WD-2692 Geary Blvd/36th/48th/Point Lobos Ave 9,329 Water Main Replacement - WD-2719 22nd/Valencia St./Potrero Ave 8,004 New Water Utility Services 7,992
Alameda Creek Watershed Fish Passage Facilities 7,465
Water Main Replacement - WD-2766 Taraval Street 7,328
Water Main Replacement - WD-2793 Geary Blvd/Cleary Ct./Market St. 6,655 Other items individually below $5,000 72,342
Total $ 162,455
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
52 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Major additions to construction work in progress during the year ended June 30, 2020 include the following:
Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the year ended June 30, 2020 include the following:
See Note 4 for additional information about capital assets.
Water System Improvement Program
The WSIP delivers capital improvements that enhance the Water Enterprise’s ability to provide reliable, affordable, high -quality drinking water to its 27 wholesale customers and regional retail customers in Alameda, Santa Clara, and San Mateo Counties, as well as approximately 800,000 residential customers in San Francisco, in an environmentally sustainable manner. The program is structured to cost -effectively meet water quality requirements and long -term water supply objectives, as well as improve sei smic and delivery reliability.
Overall, the $4.8 billion WSIP to upgrade the City of San Francisco’s regional and local drinking water systems is 99% completed with $4.8 billion of project appropriations expended through fiscal year ended June 30, 2020. T he program consists of 35 local projects located within San Francisco and 52 regional projects spread over seven different counties from the Sierra Foothills to San Francisco. As of June 30, 2020, 35 local projects were completed, and the completion date w as June 3, 2020. For regional projects, SF Recycled Water Project $ 46,912
San Andreas Pipeline Number 2 Replacement 27,817
Watershed and Environmental Improvement Program 13,117
Regional Groundwater Storage & Recovery 11,864
Calaveras Dam Replacement 11,119
Water Main Replacement - Van Ness Avenue/Market/Lombard Streets 8,120 New Water Utility Services 7,908
Sunol Long Term Improvements 7,222
San Francisco Groundwater Supply 6,647
Renew Water Utility Services 6,276
Peninsula Water System Improvements 5,922
Water Main Replacement - 16th Street 5,769
Other project additions individually below $5,000 61,734 Total $ 220,427
Sunol Corp Yard - Administration Building $ 32,965
Water Main Replacement - Van Ness Avenue/Market/Lombard Streets 20,692 Water Main Replacement - 16th Street 9,104
Alameda Creek Watershed Fish Passage Facilities 8,597
Sunol Corp Yard - Shop Building #1 8,543
Irving Street Pipeline 7,926
New Water Utility Services 7,908
Renew Water Utility Services 6,276
Sunol Corp Yard - Shop Building #4 5,847
Other items individually below $5,000 70,874
Total $ 178,732
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
53 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
42 are completed and the expected completion date is May 2023. Additional details regarding the WSIP are available at https://sfpuc.org/construction-contracts/water-infrastructure-improvements.
The following table summarizes Wastewater’s changes in capital assets.
Wastewater Capital Assets, Fiscal Year 2021
The Wastewater Enterprise has capital assets of $3,606,850, net of accumulated depreciation and amortization, invested in a broad range of utility capital assets as of June 30, 2021 (see Table 3 B). This amount represents an increase of $544,562 or 17.8% from prior fisca l year. The investment in capital assets includes land, buildings, improvements, wastewater treatment plants, sewer pipes and mains, underground transport and storage boxes, pump stations, machinery, and equipment. Construction work in progress increased by $430,306 or 47.3%. Facilities, improvements, machinery, and equipment increased by $109,895 or 5.2%, and intangible assets increased by $4,361 or 143.2% due to asset additions of $2,457 for the Operational Decision System Project and $1,904 for the Customer Billing System Project.
Major additions to construction work in progress during the year ended June 30, 2021 include the following:
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Facilities, improvements, machinery, and equipment $ 2,214,227 2,104,332 1,916,979 109,895 187,353 Intangible assets 7,407 3,046 3,183 4,361 (137)
Land and rights-of-way 44,572 44,572 36,018 — 8,554 Construction work in progress 1,340,644 910,338 765,624 430,306 144,714 Total $ 3,606,850 3,062,288 2,721,804 544,562 340,484 Table 3B
Proprietary Fund – Wastewater
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2021, 2020, and 2019
Southeast Plant Biosolids and Digester Facilities Project $ 259,938 Southeast Plant New Headworks Grit Removal and Influent Pump Station 110,472 Southeast Community Center 47,373
Southeast Plant Power Feed and Primary Switchgear Upgrades 18,881 Mariposa Pump Station & Force Main 11,031
Oceanside Plant Digester Gas Handling Utilization 8,856 Seismic Reliability - Phase 1 7,647
Public Works Various Locations Number 35 Infrastructure Improvements 7,134 As-Needed Spot Sewer Replacement Number 40 7,101
Ocean Beach Project 6,727
Force Main Rehabilitation at Embarcadero and Jackson Streets 6,615 Facility-Wide Distributed Control System Upgrade 5,998
Van Ness Bus Rapid Transit Sewer Improvements 5,482
As-Needed Spot Sewer Replacement No. 38 4,972
Public Works Various Locations Number 40 Infrastructure Improvements 4,918 Southeast Plant 062 Archimedes Screw Pump 4,697
Taraval Sewer Improvements 4,070
As-Needed Main Sewer Replacement Number 7 4,043
Other project additions individually below $4,000 93,864 Total Total $ 619,819
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
54 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the year ended June 30, 2021 include the following:
See Note 4 for additional information about capital assets.
Sewer System Improvement Program (SSIP)
The Sewer System Improvement Program (SSIP) includes three phases over 20 years to improve the existing wastewater system. In March 2016, the refined program scope and budget increased from $6.9 billion to $7.0 billion was endorsed by the Commission, which is now referred to as the 2016 SSIP Baseline program.
As of June 30, 2021, 37 projects or 52.9% totaling $367 million were completed, 8 projects in pre - construction phase, 18 projects in construction phase, and 7 projects in close -out phase. The OSP Condition Assessment Repairs was completed on January 29, 2021 with reported project expenditures of $11.6 million. The project includes planning, design, and environmental review of major improvements to the plant including rehabilitation of building structures, rehabilitation or replacement of mechanical and electrical equipment, and seismic retrofit of process tanks and buildings. Improvements focus on maintaining operational reliability and extending the service life of buildings that are required to remain in operation for 30 years or more. The SEP Seismic Reliability and Condition Assessment Improvements Project is on -going construction. The project is reported at 86.0% completion and forecasted final completion is on March 8, 2022. Program expenditures as of June 30, 2021 totaled $1,546.1 million.
Additional details regarding the SSIP are available at https://sfpuc.org/construction-contracts/sewer- system-improvement-program.
Van Ness Bus Rapid Transit Sewer Improvements $ 20,665
Richmond Early Implementation Project 13,620
Geary Bus Rapid Transit Sewer Improvements 12,287
Public Works Lombard Street Infrastructure Improvements 11,794 Southeast Plant 062 Archimedes Screw Pump 10,421
Taraval Sewer Improvements 10,397
Sunset Green Infrastructure 9,932
Public Works Various Locations Number 35 Infrastructure Improvements 8,722 As Needed Spot Sewer Replacement Number 40 7,112
Public Works Various Locations Number 39 Infrastructure Improvements 6,493 Public Works Various Locations Number 36 Infrastructure Improvements 6,056 Public Works Various Locations Number 43 Infrastructure Improvements 6,023 As Needed Spot Sewer Replacement Number 38 4,972
Public Works Alemany Blvd Infrastructure Improvements 4,956 Beach and Sansome Street Combined Sewer Distribution Rehabilitation 4,708 Public Works Second Street Infrastructure Improvements 4,560 As Needed Main Sewer Replacement Number 7 4,043
North Point Facility Dewatering Pump Replacement 3,725
Public Works Palou Avenue Infrastructure Improvements 3,514 Various Locations Sewer Replacement Number 7 3,429
Oceanside Plant Door Replacement 3,082
Other project additions individually below $3,000 25,763 Total $ 186,274
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
55 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Wastewater Capital Assets, Fiscal Year 2020
The Wastewater Enterprise has capital assets of $3,062,288, net of accumulated depreciation and amortization, invested in a broad range of utility capital assets as of June 30, 2020 (see Table 3B). This amount represents an increase of $340,484, or 12.5% f rom prior fiscal year. The investment in capital assets includes land, buildings, improvements, wastewater treatment plants, sewer pipes and mains, underground transport and storage boxes, pump stations, machinery, and equipment. Facilities, improvements, machinery, and equipment increased by $187,353 or 9.8%, construction work in progress increased by $144,714 or 18.9%, and land and rights -of-way increased by $8,554 or 23.7% due to the Rankin Street land purchase, offset by a decrease of $137 or 4.3%, in i ntangible assets due to amortization.
Major additions to construction work in progress during the year ended June 30, 2020 include the following:
Southeast Plant Biosolids and Digester Facilities Project $ 116,761 Southeast Plant New Headworks Grit Removal and Influent Pump Station 69,287 Southeast Community Center 14,708
Seismic Reliability - Phase 1 13,066
Oceanside Plant Digester Gas Handling Utilization 11,087 As-Needed Spot Sewer Replacement No. 38 10,501
Southeast Plant Water System Improvements 9,206
Program Management 9,088
Public Works Lombard Street Infrastructure Improvements 7,729 Mariposa Pump Station & Force Main 7,411
Islais Creek Outfall 7,401
Geary Bus Rapid Transit Sewer Improvements 6,013
Southeast Plant 062 Archimedes Screw Pump 5,236
Richmond Early Implementation Project 5,211
Channel Tunnel/Bayside Drainage 5,180
Public Works Various Locations Pavement Number 37 4,966 Van Ness Bus Rapid Transit Sewer Improvements 4,674
Public Works Various Locations Number 39 Infrastructure Improvements 4,639 As-Needed Main Sewer Replacement #7 4,385
Ocean Beach Project 4,255
Westside Pump Station Reliability Improvements 4,245
Taraval Sewer Improvements 4,174
Other project additions individually below $4,000 76,575 Total Total $ 405,798
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
56 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the year ended June 30, 2020 include the following:
See Note 4 for additional information about capital assets.
Sewer System Improvement Program
The SSIP includes three phases over 20 years to improve the existing wastewater system. In March 2016, the refined program scope and budget increased from $6.9 billion to $7.0 billion endorsed by the Commission along with the baseline for scope, schedule, and budget for phase I, II, and III projects.
As of June 30, 2020, 32 projects or 45.7% totaling $324 million were completed, with 15 projects in pre - construction phase, 17 projects in construction phase, and 6 projects in close -out phase. The SEP Existin g Digester Gas Handling Improvements was completed on February 28, 2020 with reported project expenditures of $15.5 million. The goal of this project is to cost effectively integrate the digester gas handling system at the SEP, improve the reliability of t he cogeneration facility, and provide backup fuel source for the boilers. The SEP New Headworks Facility –SCOPE II.A is on -going construction. The project is reported at 82.7% completion and forecasted final completion is on November 14, 2020. Program expenditures as of June 30, 2020 totaled $1,079.0 million. Additional details regarding the SSIP are available at https://sfpuc.org/construction-contracts/sewer-system-improvement-program.
Southeast Plant Water System Improvements $ 64,526
Griffith Pump Station Improvements 20,305
Oceanside Plant Condition Assessment Repairs 15,440
Seismic Reliability - Phase 1 14,317
As Needed Spot Sewer Replacement Number 38 12,136
Islais Creek Outfall 9,206
Southeast Plant 740 Digester Gas Upgrade 8,688
Various Locations Sewer Replacement Number 3 8,245
Public Works Various Locations Pavement Number 37 7,123 Public Works Filbert Other Street Infrastructure Improvements 5,784 Public Works Various Locations Number 28 Infrastructure Improvements 5,772 Various Locations Sewer Replacement Number 5 5,013
Oceanside Plant Building 620 Digester Recirculation Pump 4,965 Westside Pump Station Reliability Improvements 4,756
5th/North/6th Division Street Combined Sewer Discharge 4,691 Public Works Evans Avenue Infrastructure Improvements 4,538 As Needed Main Sewer Replacement Number 7 4,385
Public Works As Needed Number 11 Infrastructure Improvements 4,284 Public Works Irving Street Phase 2 Infrastructure Improvements 4,115 Public Works Clayton Other Street Infrastructure Improvements 3,950 46th/47th/48th Avenues Sewer Replacement 3,149
TotalWastewater 16th Street Sewer Replacement 3,080
Oceanside Plant Facility Ventilation System 3,042
Other project additions individually below $3,000 28,880 Total $ 250,390
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
57 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The following table summarizes Hetchy Water’s changes in capital assets.
Hetchy Water Capital Assets, Fiscal Year 2021
Hetchy Water has capital assets of $177,481, net of accumulated depreciation and amortization, invested in a broad range of utility capital assets as of June 30, 2021 (see Table 3C -A). This amount represents an increase of $16,699 or 10.4%, primarily due to increases of $11,005 in construction work in progress and $5,902 in facilities, improvements, machinery, and equipment, offset by a decrease of $208 in amortization of intangible assets.
For the year ended June 30, 2021, Hetchy Water’s major additions to construct ion work in progress totaled $22,586. Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service totaled $11,703 (see Table 3D).
See Note 4 for additional information about capital assets.
Hetchy Water Capital Assets, Fiscal Year 2020
Hetchy Water has capital assets of $160,782, net of accumulated depreciation and amortization, invested in a broad range of utility capital assets as of June 30, 2020 (see Table 3C -A). This amount represents an increase of $11,679 or 7.8%, primarily due to an increase of $25,183 in facilities, improvements, machinery, and equipment, offset by decreases of $13,297 in construction work in progress, and $207 in amortization of intangible assets.
For the year ended June 30, 2020, Hetchy Water’s major additions to construction work in progress totaled $17,669. Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service totaled $30,249 (see Table 3E).
See Note 4 for additional information about capital assets.
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Facilities, improvements, machinery, and equipment $ 128,335 122,433 97,250 5,902 25,183 Intangible assets 10,581 10,789 10,996 (208) (207)
Land and rights-of-way 3,232 3,232 3,232 — —
Construction work in progress 35,333 24,328 37,625 11,005 (13,297) Total $ 177,481 160,782 149,103 16,699 11,679
Table 3C – A
Proprietary Fund – Hetchy Water
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
58 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The following table summarizes Hetchy Power’s changes in capital assets.
Hetchy Power Capital Assets, Fiscal Year 2021
Hetchy Power has capital assets of $492,056, net of accumulated depreciation and amortization, invested in utility capital assets as of June 30, 2021 (see Table 3C -B). This amount represents an increase of $46,627 or 10.5%, primarily due to increases of $40,454 in facilities, improvements, machinery, and equipment and $6,426 in construction work in progress, offset by a decrease of $253 in amortization of intangible assets.
For the year ended June 30, 2021, Hetchy Power’s major additions to construction work in progress totaled $70,059. Major depreciable facilities, im provements, intangible assets, machinery, and equipment placed in service totaled $55,828 (see Table 3D).
See Note 4 for additional information about capital assets.
Hetchy Power Capital Assets, Fiscal Year 2020
Hetchy Power has capital assets of $445,429, net of accumulated depreciation and amortization, invested in utility capital assets as of June 30, 2020 (see Table 3C -B). This amount represents an increase of $43,901 or 10.9%, primarily due to increases of $42,764 in construction work in progr ess and $1,391 in facilities, improvements, machinery, and equipment; offset by a decrease of $254 in amortization of intangible assets.
For the year ended June 30, 2020, Hetchy Power’s major additions to construction work in progress totaled $70,125. Major depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service totaled $16,860 (see Table 3E).
See Note 4 for additional information about capital assets.
CleanPowerSF Capital Assets
CleanPowerSF had no capital assets as of June 30, 2021 and 2020.
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Facilities, improvements, machinery, and equipment $ 304,581 264,127 262,736 40,454 1,391 Intangible assets 14,351 14,604 14,858 (253) (254)
Land and rights-of-way 1,949 1,949 1,949 — —
Construction work in progress 171,175 164,749 121,985 6,426 42,764 Total $ 492,056 445,429 401,528 46,627 43,901
Capital Assets, Net of Accumulated Depreciation and Amortization As of June 30, 2021, 2020, and 2019
Table 3C – B
Proprietary Fund – Hetchy Power
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
59 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Major additions to construction work in progress, depreciable facilities, improvements, intangible assets, machinery, and equipment placed in service, including transfers of completed projects from construction work in progress, during the year ended June 30, 2021 and 2020 include the following:
Hetchy Hetchy Total
Water Power 2021
Bay Corridor Project $ — 31,556 31,556
Mountain Tunnel Improvement Project 7,744 9,465 17,209 Transmission Line Clearance Mitigation & Upgrade — 6,176 6,176 Repair & Replacement Life Extension Program 5,188 — 5,188 Moccasin Penstock Rehabilitation and Powerhouse Rewind — 4,374 4,374 Van Ness - Bus Rapid Transit — 2,742 2,742
Moccasin Reservoir Security Fence 2,723 — 2,723
San Joaquin Pipeline Valve & Safe Entry Improvement 2,115 — 2,115 Treasure Island Capital Improvements — 2,025 2,025
Other project additions individually below $2,000 4,816 13,721 18,537 Additions to Construction Work in Progress $ 22,586 70,059 92,645 Holm Powerhouse Rehabilitation & Kirkwood Powerhouse
Oil Containment Upgrades $ — 21,920 21,920
Electrical Underground Duct Bank 23rd & Illinois South Street — 18,133 18,133 Moccasin Reservoir Security Fence 3,549 — 3,549
Switch Yard Asset — 3,533 3,533
San Joaquin Pipeline Rehabilitation 3,243 — 3,243
San Francisco Academy Solar Carport — 2,657 2,657
Other project additions individually below $2,000 4,911 9,585 14,496 Facilities, Improvements, Intangible Assets, Machinery, and Equipment Placed in Service $ 11,703 55,828 67,531 and Equipment Placed in Service Year ended June 30, 2021
Major Additions to Construction Work in Progress and Facilities, Improvements, Intangible Assets, Machinery, and Equipment Placed in Service Table 3D
Proprietary Funds – Hetchy Water and Hetchy Power
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
60 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Debt Administration
Department-wide Business Type Activities
The following table summarizes the department-wide outstanding debt, net of unamortized costs, discount, and premium. Detailed discussion follows for each proprietary fund.
Hetchy Hetchy Total
Water Power 2020
Bay Corridor Project $ — 16,789 16,789
2018 Moccasin Storm 8,966 — 8,966
Power Asset Acquisition Analysis — 8,580 8,580
Van Ness - Bus Rapid Transit — 8,557 8,557
Other Powerhouse Projects — 7,687 7,687
Mountain Tunnel Improvement Project 2,477 3,027 5,504 Warnerville Substation Rehabilitation — 5,067 5,067
Other project additions individually below $5,000 6,226 20,418 26,644 Additions to Construction Work in Progress $ 17,669 70,125 87,794 San Joaquin Pipeline Replacement $ 7,315 — 7,315
Moccasin Creek Downstream Channel Improvements 5,055 — 5,055 Lower Cherry Aqueduct Rehabilitation 4,442 — 4,442
Kirkwood Penstock — 3,668 3,668
Moccasin Spillway Facilities 3,141 — 3,141
Guardrail & Pavement 1,376 1,681 3,057
Intervening Facilities — 2,335 2,335
Early Intake Switchyard Slope Hazard Mitigation — 2,219 2,219 Other project additions individually below $2,000 8,920 6,957 15,877 Facilities, Improvements, Intangible Assets, Machinery, and Equipment Placed in Service $ 30,249 16,860 47,109 and Equipment Placed in Service Proprietary Funds – Hetchy Water and Hetchy Power
Intangible Assets, Machinery, and Equipment Placed in Service Year ended June 30, 2020
Table 3E
Major Additions to Construction Work in Progress and Facilities, Improvements, 2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Revenue bonds $ 6,624,720 6,358,056 6,503,164 266,664 (145,108) Clean Renewable Energy Bonds 2008 823 1,231 1,639 (408) (408) Capital appreciation bonds — — 2,029 — (2,029)
Commercial paper 859,051 633,828 503,558 225,223 130,270 Certificates of participation 138,180 142,265 146,207 (4,085) (3,942) State revolving fund loans 215,966 161,820 88,032 54,146 73,788 Qualified Energy Conservation Bonds 2011 3,687 4,229 4,765 (542) (536) New Clean Renewable Energy Bonds 1,779 3,320 4,135 (1,541) (815) Total $ 7,844,206 7,304,749 7,253,529 539,457 51,220 As of June 30, 2021, 2020, and 2019
Table 4
Business Type Activities
Outstanding Debt, Net of Unamortized Costs
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
61 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Water Debt Administration
As of June 30, 2021, the Water Enterprise had $5,306,706 total debt outstanding, an increase of $74,208 over the prior year, as shown below in Table 4A. More detailed information about the Water Enterprise’s debt activity is presented in Notes 6, 7, 8 and 9 to the financial statements.
The increase of $299,480 in revenue bonds was due to increases of $1,011,155 from the issuance of 2020 Series ABCD revenue bonds and 2020 Series EFGH revenue refunding bonds, $73,542 in bond premium from the issuance of 2020 Series ABCD revenue bonds, and $10 from amortization of discount.
These increases were offset by decreases of $625,080 from the refund ing of various revenue bonds by the 2020 Series EFGH refunding revenue bonds, $76,440 from principal repayment, $57,820 from refunding of premium, and $25,887 from amortization of premium. The increase of $34,136 in State revolving funds loans was from $49 ,546 additional loan proceeds and reimbursement request for the SF Westside Recycled Water project, offset by $15,410 due to $15,000 for the grant portion received and $410 of disallowed reimbursement request from the program. The decrease of $2,916 in cer tificates of participation was $2,824 from repayment and $92 from amortization of premium. The Water Enterprise had $79,251 in tax-exempt and $26,611 in taxable commercial paper as of June 30, 2021, and $335,793 in tax-exempt and $26,561 in taxable commerc ial paper as of June 30, 2020. The decrease of $256,492 was due to $272,820 from refunding of tax -exempt commercial paper by the 2020 Series ABCD revenue bonds, offset by additional issuances of $16,278 in tax-exempt and $50 in taxable commercial paper.
Credit Ratings and Bond Insurance – The Water Enterprise carried underlying ratings of “Aa2” and “AA -” from Moody’s and Standard & Poor’s (S&P) at June 30, 2021, and “Aa2” and “AA -” from Moody’s and Standard & Poor’s (S&P) at June 30, 2020, respectively.
Debt Service Coverage – Pursuant to the Amended and Restated Indenture, the Water Enterprise is required to collect sufficient net revenues each fiscal year, together with any Water Enterprise funds (except Bond Reserve Funds), which are available for payment of debt service and are not budgeted to be expended, at least equal to 1.25 times annual debt service for said fiscal year. During fiscal years 2021 and 2020, the Water Enterprise’s net revenues, together with fund balances available to pay debt service and not budgeted to be expended, were sufficient to meet the rate covenant requirements under the Water Enterprise’s Amended and Restated Indenture (see Note 9).
Debt Authorization – Pursuant to the Charter Section 8B.124, the Water Enterprise can incur indebtedness upon two-thirds vote of the Board of Supervisors, as approved by voters in Proposition E in November 2002.
As of June 30, 2021, the Board of Supervisors has authorized the issuance of $4,617,099 in revenue bonds under Proposition E, with $3,660,525 issued against th is authorization. The Water Enterprise can also incur indebtedness of up to $1,628,000 for improvements to the water system pursuant to Proposition A that was approved by the voters in November 2002. As of June 30, 2021, $1,499,230 of the $1,628,000 2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Revenue bonds $ 4,994,775 4,695,295 4,808,548 299,480 (113,253) Capital appreciation bonds — — 2,029 — (2,029)
Commercial paper 105,862 362,354 161,336 (256,492) 201,018 Certificates of participation 98,662 101,578 104,392 (2,916) (2,814) State revolving fund loans 107,407 73,271 — 34,136 73,271 Total $ 5,306,706 5,232,498 5,076,305 74,208 156,193 Table 4A
Proprietary Fund – Water
Outstanding Debt, Net of Unamortized Costs
As of June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
62 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Proposition A authorized bonds were issued. The Water Enterprise is also authorized to issue up to $500,000 in commercial paper.
Cost of Debt Capital – The Water Enterprise’s outstanding long-term debt has coupon interest rates ranging from 0.3% to 7.0% as of J une 30, 2021 and 2020. The Water Enterprise’s short-term debt has interest rates ranging from 0.1% to 0.3% during fiscal year 2021, and 0.2% to 2.2% during fiscal year 2020.
Wastewater Debt Administration
As of June 30, 2021, 2020, and 2019, the Wastewater Enterprise’s debt from revenue bonds, commercial paper, certificates of participation, and State revolving fund loans were $2,363,086, $1,945,080, and $2,059,742, respectively, as shown in Table 4 B. More det ailed information about the Wastewater Enterprise’s debt activity is presented in Notes 6, 7, 8 and 9 to the financial statement.
The increase of $418,006 was mainly due to $435,450 issuance of commercial paper and $22,46 8 of State Revolving Fund loans for the OSP Digester Gas Utilization Upgrade, SEP 521/522 and Disinfection Upgrade and Lake Merced Green Infrastructure projects, offset by $31,316 repayment of outstanding debt and $8,596 of premium amortizations.
Credit Ratings and Bond Insurance – As of June 30, 2021 and 2020, the Wastewater Enterprise carried underlying ratings of “Aa2” and “AA” from Moody’s and Standard & Poor’s (S&P), respectively.
Debt Service Coverage – Pursuant to the Indenture for the Wastewater bonds, the Wastewater Enterprise covenants to collect sufficient net revenues each fiscal year, together with any Wastewater Enterprise funds (except Bond Reserve Funds) that are available for payment of debt service and are not budgeted to be expended, at least equal to 1.25 times annual debt service for said fiscal year. During fiscal years 2021 and 2020, the Wastewater Enterprise’s net revenues, together with fund balances available to pay debt service and not budgeted to be expended, were sufficient to meet the rate covenant requirements under the Indenture (see Note 9).
Debt Authorization – Pursuant to the Charter Section 8B.124, the Wastewater Enterprise can incur indebtedness upon two -thirds vote of the Board of Supervisors. As of June 30, 2021, the Wastewater Enterprise had $3,791,781 in combined debt issuance authorization from the Board of Superv isors under Proposition E, with $2,735,709 issued against this authorization. The Wastewater Enterprise has a $750,000 authorized commercial paper program, with $638,518 in tax -exempt commercial paper outstanding as of June 30, 2021 and $207,939 in tax -exempt commercial paper outstanding as of June 30, 2020.
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Revenue bonds $ 1,589,922 1,621,733 1,652,609 (31,811) (30,876) Commercial paper 638,518 207,939 291,498 430,579 (83,559) Certificates of participation 26,087 26,859 27,603 (772) (744) State revolving fund loans 108,559 88,549 88,032 20,010 517 Total $ 2,363,086 1,945,080 2,059,742 418,006 (114,662) Table 4B
Proprietary Fund – Wastewater
Outstanding Debt, Net of Unamortized Costs
As of June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
63 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Cost of Debt Capital – The coupon interest rates on the Wastewater Enterprise’s outstanding revenue bonds ranged from 1.0% to 5.8%, with a blended true interest cost of 3.4%, after factoring in federa l interest subsidy receipts on Build America Bonds at June 30, 2021. The 2009 Series C certificates of participation carried coupon interest rates from 2.0% to 5.0% and 2009 Series D certificates of participation carried coupon interest rates from 6.4% to 6.5% in fiscal years 2021 and 2020, respectively.
The interest rates on short -term debt ranged from 0.1% to 0.2% as of end of fiscal year 2021 and from
0.2% to 1.9% during fiscal year 2020. The State revolving fund loans (CWSRF loans) carried interest rate s ranging from 0.8% to 1.8% for a weighted average of 1.4% as of end of fiscal year 2021.
Hetchy Water Debt Administration
Hetchy Water did not have debt outstanding as of June 30, 202 1 and 20 20. Debt, including bond issuances, associated with the funding of water -related, upcountry infrastructure capital improvements is issued through the Water Enterprise, and is reflected in the Water Enterprise’s financial statements.
Hetchy Power Debt Administration
As of June 30, 30, 2021 and 2020, Hetchy Pow er had outstanding debt of $174,414 and $127,171, respectively, as shown in Table 4C. More detailed information about the Hetchy Power’s debt activity is presented in Notes 6, 7 8 and 9 to the financial statements.
The increase of $47,243 was mainly du e to an increase of $51,136 in commercial paper issuance, offset by $2,402 in principal repayments, $1,272 in return of unspent bond proceeds for 2015 NCREBs, and $219 in amortization of premium and discount.
Credit Ratings and Bond Insurance – The Power Enterprise’s 2015 Series AB Power Revenue Bonds have been rated “AA -” by Fitch Inc and “AA” by Standard and Poor’s (S&P) as of June 30, 2021 and 2020, respectively.
In December 2020, Moody's Investors Service, ("Moody's") assigned a first -time A2 I ssuer Rating to CleanPowerSF, with a stable outlook. Hetch Hetchy Water and Power contains the Power Enterprise as a separate enterprise fund, with CleanPowerSF a component unit of the Power Enterprise. CleanPowerSF is tracked and audited as a standalone f und, with financial statements, including revenues and expenses, separate and discrete from the Power Enterprise. As such, CleanPowerSF is deemed to be a separate credit from the Power Enterprise, with its own credit rating.
2021 - 2020 2020 - 2019
2021 2020 2019 Change Change
Clean Renewable Energy Bonds 2008 $ 823 1,231 1,639 (408) (408) Certificates of Participation 2009 Series C 838 1,235 1,619 (397) (384) Certificates of Participation 2009 Series D (BABs) 12,593 12,593 12,593 — — Qualified Energy Conservation Bonds 2011 3,687 4,229 4,765 (542) (536) New Clean Renewable Energy Bonds 2012 — 130 713 (130) (583) New Clean Renewable Energy Bonds 2015 1,779 3,190 3,422 (1,411) (232) 2015 Series A Revenue Bonds 35,297 35,444 35,585 (147) (141) 2015 Series B Revenue Bonds 4,726 5,584 6,422 (858) (838) Commercial Paper 114,671 63,535 50,724 51,136 12,811 Total $ 174,414 127,171 117,482 47,243 9,689
Table 4C
Proprietary Fund – Hetchy Power
Outstanding Debt, Net of Unamortized Costs
As of June 30, 2021, 2020, and 2019
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
64 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Debt Service Coverage – Pursuant to the Indenture, the Power Enterprise is required to collect sufficient net revenues each fiscal year, together with any Available Funds (except Bond Reserve Funds) which include unappropriated fund balances and reserves, and cash and book value of investments held by the Treasurer for the Hetchy Power, that the SFPUC reasonably expects would be available, to pay principal and interest becoming due and payable on all outstanding bonds as provided in the Indenture, less any refundable credits, at least eq ual to 1.25 times annual debt service for said fiscal year. The Series 2015 AB power revenue bonds represent the first series of senior lien revenue bonds of Hetchy Power. Pursuant to Power’s Master Trust Indenture, senior lien debt service coverage exclud es debt service on subordinate obligations, such as Hetchy Power’s existing CREBS, NCREBs, and QECBs. Because interest on the Series 2015 AB power revenue bonds was capitalized, Hetchy Power was not obligated to make debt service payments on the Series 2015 AB power revenue bonds until fiscal year 2018. Therefore, Hetchy Power did not calculate and report the Indenture -based debt service coverage ratio prior to fiscal year 2018. During fiscal year 2021, the Power Enterprise’s net revenues, together with fun d balances available to pay debt service and not budgeted to be expended, were sufficient to meet the rate covenant requirements under the Power Enterprise’s Indenture (see Note 9).
Debt Authorization – Pursuant to Charter Section 9.107(6), the Power Enterprise can incur indebtedness upon three-fourths vote of the Board of Supervisors, for the purpose of the reconstruction or replacement of existing water facilities and electric power facilities, or combi nations thereof, under the jurisdiction of the Public Utilities Commission. Pursuant to Charter Section 9.107(8), the Power Enterprise can issue revenue bonds, without voter approval, upon an affirmative vote of the Board of Supervisors, for the purpose of the acquisition, construction, installation, equipping, improvement, or rehabilitation of equipment or facilities for renewable energy and energy conservation. Pursuant to Proposition A, approved by the San Francisco voters on June 5, 2018, City Charter Section 8B.124 is amended to authorize the Power Enterprise to enter into indebtedness, including revenue bonds, notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two -thirds vote of the Board of Supervisors t o reconstruct, replace, expand, repair, improve or construct new power facilities under the jurisdiction of SFPUC or for any other purpose of the Power Enterprise, and in compliance with City Charter Section 8B.124. Proposition A expressly prohibits the SFPUC from issuing bonds to finance the construction of power plants that generate electricity using fossil fuels or nuclear energy. As of June 30, 2021 and 2020, $39,555 of Hetchy Power revenue bonds were issued against existing authorization of $535,699 and $392,728, respectively.
Cost of Debt Capital – The Power Enterprise’s outstanding long-term senior lien debt consists of the 2015 Series AB Power Revenue Bonds issued in May 2015, which are the first series of bonds issued under the Master Indenture an d are senior in lien to all the other Power Enterprise’s outstanding debt obligations.
Coupon interest rates range from 3.0% to 5.0%. The Power Enterprise has previously issued and incurred debt service on Tax Credit Bonds and certificates of participation , which constitute subordinate obligations.
Interest rates on the Tax Credit Bonds, which include QECBs and NCREBs, rang ing from 1.2% to 1.5% (net of the federal tax subsidy). Certificates of participation carried interest rates ranging from 2.0% to 6.5%. The Power Enterprise’s short -term debt issued under its commercial paper program has interest rates ranging from 0.1% to 0.2% and 0.2% to 4.0% during fiscal years 2021 and 2020, respectively.
CleanPowerSF Debt Administration
CleanPowerSF did not have debt outstanding as of June 30, 2021 and 2020.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
65 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Rates and Charges
Water and Wastewater Enterprises
Proposition E, as approved by the voters in November 2002, amended the City Charter by adding the new Article VIIIB, entitled “Public Utilities,” which changed the Commission’s ability to issue new revenue bonds and set retail water and wastewater rates. The Commission is required to:
• Establish rates, fees, and charges based on cost of service; • Retain an independent rate consultant to conduct cost of service studies at least every five years; • Consider establishing new connection fees;
• Consider conservation incentives and lifeline rates;
• Adopt a rolling five-year forecast annually; and
• Establish a Rate Fairness Board.
Pursuant to the City and County of San Francisco Charter Section 8B.125, an independent rate study is performed at least once every five years . In compliance with City Charter section 8B.125, a rate study was completed in April 2018 and resulted in an approved four -year water and wastewater rate increase from July 1, 2018 through June 30, 2022. The SFPUC Rates Schedules and Fees is available at https://sfpuc.org/accounts-services/water-power-and-sewer-rates.
Water Enterprise
Wholesale Customers
The WSA prescribes the rate setting process for the wholesale water rates. The WSA has a 25 -year term, beginning on July 1, 2009, with two 5 -year extension options. The WSA was amended and restated on December 11, 2018 by the SFPUC. The contract changed the ra te basis by which the capital cost recovery is determined from a “utility basis” to a “cash basis,” resulting in the repayment of the cost of capital over the life of the debt funding of those assets rather than the life of the asset. The WSA requires the rate be calculated and set annually and include a reconciliation between prior year revenues and expenses. Refer to Note 10 of the notes to financial statements for further discussion on the balancing account of the wholesale customers.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
66 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
1 2
3 4
Four-year retail rate increases adopted and effective July 1, 2014.
Wholesale rates adopted annually; no increase for wholesale rates effective July 1, 2017; no increase projected through June 30, 2022 from 10 Year Financial Plan.
Four-year retail rate increases adopted and effective July 1, 2018.
Five-year retail rate increases adopted and effective July 1, 2009. 1 Four-year rate increases adopted and effective July 1, 2009. 2 Four-year rate increases adopted and effective July 1, 2014. 3 Four-year rate increases adopted and effective July 1, 2018.
Water Enterprise
The following table is the Water Enterprise's ten-year average rate adjustments:
Wastewater Enterprise
The following table is the Wastewater Enterprise’s ten-year approved average rate adjustments:
Hetchy Water
Hetchy Water charges for services relates to the storage and delivery of water. Assessment fees from the Water Enterprise, which cover the water -related upcountry costs, were $44,149 and $34,585 for the years ended June 30, 2021 and 2020, respectively. In fiscal year 2022, the assessment fees will be $45,815, an increase of $1,666 or 3.8% as reflected in the fiscal year 2022 adopted budget.
Hetchy Power
Municipal Rates
Hetchy Power charges for services relates to power generation and electricity deliver y to contractual and municipal customers. For municipal power services, customers are typically charged a General Use rate or Enterprise rate. Enterprise rates are charged based on projected PG&E equivalent rates by customer class.
General fund department customers are mostly charged a General Use rate, a rate that is currently below July 1, 2012 12.5 1 % 11.4 %
July 1, 2013 6.5 1 (16.4)
July 1, 2014 12.0 2 19.6
July 1, 2015 12.0 2 28.0
July 1, 2016 10.0 2 9.3
July 1, 2017 7.0 2 —
July 1, 2018 9.0 4 —
July 1, 2019 8.0 4 —
July 1, 2020 7.0 4 —
July 1, 2021 7.0 4 —
Effective date Retail Wholesale 3
Ten-year Average Rate Adjustments
Effective Date Rate
July 1, 2012 5.0 1 %
July 1, 2013 5.0 1
July 1, 2014 5.0 2
July 1, 2015 5.0 2
July 1, 2016 7.0 2
July 1, 2017 11.0 2
July 1, 2018 7.0 3
July 1, 2019 7.0 3
July 1, 2020 8.0 3
July 1, 2021 8.0 3
Ten-year Average Rate Adjustments
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
67 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
cost of service. These General Use rates, however, are moving closer towards cost of service and increasing by $0.01 per kWh on an annual basis beginning July 1, 2020. The Gene ral Use rates have been adopted every two years.
On May 10, 2020, the Commission adopted two years of General Use rates effective July 1, 2020 through June 30, 2022. The adopted General Use rate for fiscal years 2021 and 2022 are $0.08877/kWh and $0.09877/kWh, respectively. The Power Enterprise continues to develop rates under the cost of service analysis model and has started work on the next power rate study which is projected to be completed in 2022.
Retail Rates
The Commission approved a new schedule of retail electric rates, fees, and charges for residential, commercial, and industrial customers where Hetch Hetchy has been designated as the power provider for retail customers to be applied to meter readings on or after July 1, 2016. Total bun dled service charges for residential service rates and low -income residential service rates are calculated using the total rates, monthly, based on monthly meter reading, plus any applicable taxes.
To date, Hetchy Power has prepared service standards, dev eloped system plans and specifications, acquired materials and equipment, and initiated construction of primary distribution facilities.
Pursuant to City and County of San Francisco Charter Section 8B.125, an independent rate study is performed at least o nce every five years. The rate study is undertaken to examine future revenue requirements and cost -of-service of the Power Enterprise. In fall 2015, SFPUC engaged a consultant to perform a cost-of-service study. The informed rate setting from this study re sulted in recommendation and approval by the Commission in the spring 2016 for rates to be effective July 1, 2016. Work is underway on the next power rate study which is projected to be completed in 2022 and provide power rates effective for fiscal year 20 23. The SFPUC Rates Schedules and Fees is available at https://sfpuc.org/accounts- services/water-power-and-sewer-rates.
CleanPowerSF
CleanPowerSF began offering services in May 2016, giving residential and commercial electricity consumers in San Francisco a choice of having their electricity supplied from clean renewable sources, such as solar and wind, at competitive rates. CleanPowerSF offers two products: a “Green” product comprised of at least 48% renewable energy and a “SuperGreen” product co mprised of 100% renewable energy. Most customers take service under the “Green” product rates and remaining customers have opted to upgrade to “SuperGreen” product rates. On May 25, 2021, Commission approved a CleanPowerSF rate adjustment formula. Through Resolution 21-0085 CleanPowerSF rates will be formulaically adjusted, when PG&E rates change to the lesser of no more than 5% higher than PG&E generation rates or rates that recover program costs.
The CleanPowerSF Rates Schedules are available at http://cleanpowersf.org/residential for residential customers and http://cleanpowersf.org/commercial for commercial customers.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Management’s Discussion and Analysis (Unaudited)
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
68 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
CleanPowerSF revenues are adequate to support its own operations; the SFPUC intends that these rates be sufficient to pay for impending projects, and be financially independent from Hetch Hetchy in the future.
CleanPowerSF is subject to Section 8B.125 of the City Charter, which requires an independent rate study be performed at least once every five years, and the Commission sets rates and charges for the program.
CleanPowerSF rates will be included in the next power rate study which is projected to be completed in 2022.
Request for Information
This report is designed to provide our citizens, customers, investors, and creditors with an overview of the SFPUC’s finances and to demonstrate the Department’s accountability for the money it receives. Questions regarding any of the information provided in this report or requests for additional financial information should be addressed to San Francisco Public Utilities Commission, Chief Financial Officer, 525 Golden Gate Avenue, 13th Floor, San Francisco, CA 94102.
This report is available at https://sfpuc.org/about-us/reports/audited-financial-statements-reports.
69 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
A. Included interfund payables and interfund receivables for fiscal year 2021 of $739 between Wastewater and Hetchy Power for th e 525 Golden Gate Avenue Headquarters construction costs and $0 working capital loan between Hetchy Power and CleanPowerSF.
B. Included interfund payables and interfund receivables for fiscal year 2020 of $847 between Wastewater and Hetchy Power for th e 525 Golden Gate Avenue Headquarters construction costs and $1,800 working capital loan between Hetchy Power and CleanPowerSF.
See accompanying notes to basic financial statements.
Assets 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Current assets:
Cash and investments with City Treasury........................................................................................................................................................................................................................$ 483,827 451,499 281,572 351,915 89,373 79,172 190,719 191,687 90,838 84,192 — — 1,136,329 1,158,465 Cash and investments outside City Treasury.....................................................................................................................................................................................................................xx 301 353 366 356 1 1 611 1 — — — — 1,279 711 Receivables:
Charges for services (net of allowance for doubtful
accounts of $5,445, $5,369, $0, $1,258, and $5,485 in 2021 and $2,500, $3,189, $0, $591, and $1,810 in 2020).................................................................................................................................................................................................................xx 55,473 59,946 33,081 33,749 442 29 19,024 2,967 28,265 34,712 — — 136,285 131,403 Due from other City departments, current portion................................................................................................................................................................................................................................xx 248 250 281 190 — 104 7,413 2,874 — — (110) A (1,909) B 7,832 1,509 Due from other governments..........................................................................................................................................................................................................xx 16 23 — — 579 2,575 267 1,644 — — — — 862 4,242 Interest ...........................................................................................................................................................................................................................................xx 257 1,251 189 983 21 183 125 580 55 215 — — 647 3,212 Restricted due from other governments................................................................................................................................................................................................................xx 49,546 73,271 20,755 3,265 — — — — — — — — 70,301 76,536 Restricted interest and other receivable (net of allowance for doubtful accounts of $24, $68, $0, $0 and $0 in 2021 and
$13, $38, $0, $0 and $0 in 2020)..................................................................................xx 3,983 3,774 2,841 1,864 — 24 11,800 168 — — — — 18,624 5,830 Total current receivables..............................................................................................................................................................................................................................................xx 109,523 138,515 57,147 40,051 1,042 2,915 38,629 8,233 28,320 34,927 (110) (1,909) 234,551 222,732 Prepaid charges, advances, and other receivables, current portion..............................................................................................................................................................................................................................xx 6,147 3,705 877 195 402 512 2,666 2,247 2,184 2,760 — — 12,276 9,419 Inventory....................................................................................................................................................................................................................................................xx 5,937 5,777 2,657 2,476 191 187 1,820 1,609 — — — — 10,605 10,049 Restricted cash and investments outside City Treasury, current portion....................................................................................................................................................................................................................................................xx 57,165 16,638 298 11,043 — — 153 151 — — — — 57,616 27,832 Total current assets...........................................................................................................................................................................................................................................xx 662,900 616,487 342,917 406,036 91,009 82,787 234,598 203,928 121,342 121,879 (110) (1,909) 1,452,656 1,429,208 Non-current assets: xx
Restricted cash and investments with City Treasury....................................................................................................................................................................................................xx — — — 55,132 6,990 9,768 5,241 8,060 — — — — 12,231 72,960 Restricted cash and investments outside City Treasury, less current portion.................................................................................................................................................................................................xx 65,688 80,924 9,898 10,461 — — 3,690 3,795 — — — — 79,276 95,180 Restricted interest and other receivable, and prepaid (net of allowance xx for doubtful accounts of $8, $29, $0, $0, and $0 in 2021 and xx $8, $29, $0, $0, and $0 in 2020)……………...............................................................................xx 4 4 450 467 — — — — — — — — 454 471 Charges for services, less current portion (net of allowance for doubtful xx accounts of $658, $569 $0, $0, and $0 in 2021 and xx
$669, $577 $0, $0, and $0 in 2020)…………....................................................................………….xx 207 204 341 339 — — — — — — — — 548 543 Prepaid charges, advances, and other receivables, less current portion.............................xx 3,517 3,587 1,183 1,185 152 156 753 767 — — — — 5,605 5,695 Capital assets, not being depreciated and amortized............................................................................................................................................................................................................................xx 637,529 598,697 1,388,262 957,956 38,571 27,566 174,555 168,129 — — — — 2,238,917 1,752,348 Capital assets, net of accumulated depreciation and amortization...............................................................................................................................................................................................................xx4,950,270 4,931,848 2,218,588 2,104,332 138,910 133,216 317,501 277,300 — — — — 7,625,269 7,446,696 Due from other City departments, less current portion.............................................................xx — — — — — — 4,993 12,295 — — (629) A (738) B 4,364 11,557 Total non-current assets........................................................................................................................................................................................................................................xx5,657,215 5,615,264 3,618,722 3,129,872 184,623 170,706 506,733 470,346 — — (629) (738) 9,966,664 9,385,450 Total assets................................................................................................................................xx6,320,115 6,231,751 3,961,639 3,535,908 275,632 253,493 741,331 674,274 121,342 121,879 (739) (2,647) 11,419,320 10,814,658 Deferred outflows of resources xx
Unamortized loss on refunding of debt.........................................................................................xx 154,991 144,189 91 189 — — — — — — — — 155,082 144,378 Pensions..................................................................................................................................................................xx 64,797 67,084 30,219 30,422 7,799 7,950 9,531 9,716 803 572 — — 113,149 115,744 Other post-employment benefits..................................................................................................................................................................xx 37,762 27,583 15,109 10,065 3,725 2,332 4,552 2,850 442 270 — — 61,590 43,100 Total deferred outflows of resources.......................................................................................................................$ 257,550 238,856 45,419 40,676 11,524 10,282 14,083 12,566 1,245 842 — — 329,821 303,222 (Continued)
CleanPowerSF
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Statements of Net Position
Proprietary Funds
June 30, 2021 and 2020
(In thousands)
Business Type Activities – Proprietary Funds
Water SFPUC TotalWastewater Hetchy Water Hetchy Power Eliminations
70 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
C. Included interfund payables and interfund receivables for fiscal year 2021 of $739 between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters construction costs and $0 working capita l loan between Hetchy Power and CleanPowerSF.
D. Included interfund payables and interfund receivables for fiscal year 2020 of $847 be tween Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters construction costs and $1,800 working capital l oan between Hetchy Power and CleanPowerSF.
See accompanying notes to basic financial statements.
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Liabilities
Current liabilities:
Accounts payable...............................................................................................................................................................................................................................................$ 16,183 10,574 15,282 20,044 4,262 958 22,909 14,185 15,859 21,906 — — 74,495 67,667 Accrued payroll................................................................................................................................................................................................................................................xx 9,845 8,491 6,147 5,510 1,042 888 2,596 2,298 291 200 — — 19,921 17,387 Accrued vacation and sick leave, current portion...............................................................................................................................................................................................................xx 6,787 6,169 5,811 4,801 1,059 911 1,777 1,596 205 175 — — 15,639 13,652 Accrued workers’ compensation, current portion.................................................................................................................................................................................................................xx 1,694 1,781 1,198 1,112 197 201 378 384 — — — — 3,467 3,478 Due to other City departments, current portion......................................................................................................................................................................xx — 674 110 110 — 240 369 231 — 1,809 (110) C (1,909) D 369 1,155 Damage claims liability, current portion....................................................................................................................................................................................................................xx 14,400 4,740 5,892 8,994 218 274 409 705 6 53 — — 20,925 14,766 Unearned revenues, refunds, and other, current portion.......................................................................................................................................................................................................................................xx 18,966 18,174 5,345 5,243 22 18 5,141 4,852 1,028 848 — — 30,502 29,135 Bond and loan interest payable.................................................................................................................................................................................................................................xx 36,195 42,752 17,271 17,416 — — 459 508 — — — — 53,925 60,676 Bonds, current portion.................................................................................................................................................................................................................................xx 108,500 94,080 22,880 23,240 — — 1,928 2,115 — — — — 133,308 119,435 Certificates of participation, current portion....................................................................................................................................................xx 2,970 2,824 785 747 — — 405 384 — — — — 4,160 3,955 Commercial paper...............................................................................................................................................................................................................................................xx 105,862 362,354 638,518 207,939 — — 114,671 63,535 — — — — 859,051 633,828 State revolving funds loans payable, current portion……………...…xx 1,667 — 2,483 2,458 — — — — — — — — 4,150 2,458 Wholesale balancing account, current portion....................................................................xx 21,538 11,257 — — — — — — — — — — 21,538 11,257 Current liabilities payable from restricted assets.............................................................................................................................................................................................................xx 27,263 29,951 89,982 85,355 9,057 3,279 15,393 8,459 — — — — 141,695 127,044 Total current liabilities......................................................................................................................................................................................................................................xx 371,870 593,821 811,704 382,969 15,857 6,769 166,435 99,252 17,389 24,991 (110) (1,909) 1,383,145 1,105,893 Long-term liabilities: xx
Other post-employment benefits obligations.......................................................................................................................................................................................................................xx 148,771 163,684 50,711 58,183 14,444 16,350 17,653 19,983 2,909 2,197 — — 234,488 260,397 Net pension liability....................................................................................xx 216,417 178,133 103,746 86,235 26,645 21,477 32,566 26,249 3,008 1,805 — — 382,382 313,899 Accrued vacation and sick leave, less current portion..........................................................................................................................................................................................................xx 7,129 5,451 5,847 4,113 1,126 735 1,840 1,361 195 116 — — 16,137 11,776 Accrued workers’ compensation, less current portion............................................................................................................................................................................................................xx 7,134 7,393 5,384 4,939 923 986 1,740 1,816 — — — — 15,181 15,134 Due to other City departments, less current portion........................xx — — 629 739 — — — 369 — — (629) C (738) D — 370 Damage claims liability, less current portion...............................................................................................................................................................................................................xx 22,323 6,027 10,821 6,897 307 284 699 1,517 — 53 — — 34,150 14,778 Unearned revenues, refunds, and other, less current portion.......................................................................................................................................................................................................................................xx — — — — 116 609 852 2,790 9,000 — — — 9,968 3,399 Bonds, less current portion............................................................................................................................................................................................................................xx 4,886,275 4,601,215 1,567,042 1,598,493 — — 44,384 47,693 — — — — 6,497,701 6,247,401 Certificates of participation, less current portion.......................................................................................................................................................................................................................................xx 95,692 98,754 25,302 26,112 — — 13,026 13,444 — — — — 134,020 138,310 State revolving funds loans payable, less current portion…………..xx 105,740 73,271 106,076 86,091 — — — — — — — — 211,816 159,362 Wholesale balancing account, less current portion....................................................................xx 39,326 53,600 — — — — — — — — — — 39,326 53,600 Pollution remediation obligations.........................................................................................................................................................................................................xx 1,271 1,577 7,800 7,800 — — — — — — — — 9,071 9,377 Total long-term liabilities....................................................................................................................................................................................................................................xx 5,530,078 5,189,105 1,883,358 1,879,602 43,561 40,441 112,760 115,222 15,112 4,171 (629) (738) 7,584,240 7,227,803 Total liabilities..............................................................................................................................................................................................................................................xx 5,901,948 5,782,926 2,695,062 2,262,571 59,418 47,210 279,195 214,474 32,501 29,162 (739) (2,647) 8,967,385 8,333,696 Deferred inflows of resources xx
Related to pensions..............................................................................................................................................................................................................................................xx 4,885 34,894 2,148 16,892 988 4,335 1,207 5,298 1,093 1,210 — — 10,321 62,629 Other post-employment benefits..................................................................................................................................................................xx 21,315 11,772 7,265 4,185 2,085 1,195 2,548 1,461 1,913 1,211 — — 35,126 19,824 Total deferred inflows of resources....................................................xx 26,200 46,666 9,413 21,077 3,073 5,530 3,755 6,759 3,006 2,421 — — 45,447 82,453 Net position xx
Net investment in capital assets................................................................................................................................................................................................................xx 517,302 527,856 1,253,789 1,183,288 177,481 160,782 323,066 322,204 — — — — 2,271,638 2,194,130 Restricted for debt service....................................................................................................................................................................................................................................xx 45,586 15,916 2,992 1,227 — — 99 142 — — — — 48,677 17,285 Restricted for capital projects................................................................................................................................................................................................................................xx 22,319 43,122 — — — 6,513 — — — — — — 22,319 49,635 Unrestricted...................................................................................................................................................................................................................................................xx 64,310 54,121 45,802 108,421 47,184 43,740 149,299 143,261 87,080 91,138 — — 393,675 440,681 Total net position...............................................................................................................................................................................................................................................$ 649,517 641,015 1,302,583 1,292,936 224,665 211,035 472,464 465,607 87,080 91,138 — — 2,736,309 2,701,731 Business Type Activities – Proprietary Funds
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Statements of Net Position
Proprietary Funds
June 30, 2021 and 2020
(In thousands)
EliminationsCleanPowerSF SFPUC TotalWater Wastewater Hetchy Water Hetchy Power
71 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
See accompanying notes to basic financial statements.
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Operating revenues:
Charges for services..............................................................................................................$ 550,306 550,753 318,236 331,721 46,979 34,797 136,247 140,680 207,698 245,460 1,259,466 1,303,411 Rents and concessions........................................................................................................................xx 12,911 12,124 642 664 111 156 136 191 — — 13,800 13,135 Capacity fees........................................................................................................................xx 1,326 2,169 3,710 5,896 — — — — — — 5,036 8,065 Other revenues......................................................................................................................................................xx 17,069 18,305 5,077 5,847 — — — — — — 22,146 24,152 Total operating revenues.................................................................................................................................xx 581,612 583,351 327,665 344,128 47,090 34,953 136,383 140,871 207,698 245,460 1,300,448 1,348,763 Operating expenses: xx
Personnel services.....................................................................................................................xx 132,528 119,943 90,449 91,013 19,871 16,304 40,756 40,712 7,641 7,920 291,245 275,892 Contractual services......................................................................................................................xx 15,501 14,523 18,861 19,357 2,415 1,642 8,726 7,742 7,028 7,557 52,531 50,821 Transmission/distribution and other power costs......................................................................................................................xx — — — — — — 36,711 41,405 1,012 220 37,723 41,625 Purchased electricity.........................................................................................................................................................................xx — — — — — — 5,982 7,426 189,977 174,550 195,959 181,976 Materials and supplies......................................................................................................................xx 13,175 14,050 9,091 8,991 1,272 1,337 1,990 2,260 26 57 25,554 26,695 Depreciation and amortization.............................................................................................................................................................................................xx 144,033 142,228 72,018 62,967 6,009 5,276 15,627 15,723 — — 237,687 226,194 Services provided by other departments..............................................................................................................................................................................xx 70,235 61,128 38,313 37,309 2,517 1,853 6,137 6,426 3,928 2,728 121,130 109,444 General and administrative and other.......................................................................................................................xx 73,371 46,245 63,488 42,622 18,433 18,461 29,709 26,433 3,104 2,994 188,105 136,755 Total operating expenses..................................................................................xx 448,843 398,117 292,220 262,259 50,517 44,873 145,638 148,127 212,716 196,026 1,149,934 1,049,402 Operating income (loss).....................................................................................................xx 132,769 185,234 35,445 81,869 (3,427) (9,920) (9,255) (7,256) (5,018) 49,434 150,514 299,361 Non-operating revenues (expenses): xx
Federal and state grants.....................................................................................................xx 14,829 209 — — 1,349 2,859 1,483 1,885 — — 17,661 4,953 Interest and investment income (loss)...................................................................................xx 340 10,517 (1,187) 12,137 (232) 1,932 24 5,746 51 1,771 (1,004) 32,103 Interest expenses...............................................................................................................xx (184,606) (191,246) (34,862) (43,216) — — (1,970) (2,740) (18) (69) (221,456) (237,271) Amortization of premium, discount, refunding loss, and issuance costs..............xx 7,782 13,752 8,497 8,647 — — 219 228 — — 16,498 22,627 Net gain from sale of assets..............................................................................................xx 2,556 63,963 18 38 — 4 — 5 — — 2,574 64,010 Other non-operating revenues.......................................................................................xx 28,489 30,562 4,893 5,558 3 998 17,790 23,116 927 1 52,102 60,235 Other Non-operating expenses.....................................................................................xx (2,208) (529) (409) (52) (63) (11) (902) (1,060) — — (3,582) (1,652) Net non-operating revenues (expenses)........................................................xx (132,818) (72,772) (23,050) (16,888) 1,057 5,782 16,644 27,180 960 1,703 (137,207) (54,995) Change in net position before capital contributions and transfers.....................................................................xx (49) 112,462 12,395 64,981 (2,370) (4,138) 7,389 19,924 (4,058) 51,137 13,307 244,366 Capital contributions.................................................................................................................xx 4,180 — — — — — — — — — 4,180 — Transfers from the City and County of San Francisco.................................................................................................................xx 21,025 1,220 1,440 280 16,000 14,000 — — — — 38,465 15,500 Transfers to the City and County of San Francisco..............................................................................................................xx (16,654) (14,805) (4,188) (1,468) — — (532) (32) — — (21,374) (16,305) Net capital contributions and transfers…....................................................xx 8,551 (13,585) (2,748) (1,188) 16,000 14,000 (532) (32) — — 21,271 (805) Change in net position....................................................................................................................................xx 8,502 98,877 9,647 63,793 13,630 9,862 6,857 19,892 (4,058) 51,137 34,578 243,561 Net position at beginning of year....................................................................................................................................................................................................................................................................................................................................................................................................................................... year…………………………………………………………………………..…………………………………………………………..…………………………………………………………..xx 641,015 542,138 1,292,936 1,229,143 211,035 201,173 465,607 445,715 91,138 40,001 2,701,731 2,458,170 Net position at end of year.................................................................................................$ 649,517 641,015 1,302,583 1,292,936 224,665 211,035 472,464 465,607 87,080 91,138 2,736,309 2,701,731
Business Type Activities – Proprietary Funds
Water Wastewater Hetchy Water Hetchy Power SFPUC TotalCleanPowerSF
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Statements of Revenues, Expenses, and Changes in Net Position Proprietary Funds
June 30, 2021 and 2020
(In thousands)
72 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
See accompanying notes to basic financial statements
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Cash flows from operating activities:
Cash received from customers, including cash deposits..........................................................................................................................................................................$ 570,041 565,100 327,879 343,966 46,176 34,843 120,981 142,063 223,325 245,843 1,288,402 1,331,815 Cash received from tenants for rent.....................................................................................................................................................................................................................................xx 12,542 11,921 362 640 116 127 142 157 — — 13,162 12,845 Cash paid to employees for services........................................................................................xx (132,235) (127,216) (90,918) (89,751) (19,597) (15,959) (40,236) (39,924) (5,344) (4,401) (288,330) (277,251) Cash paid to suppliers for goods and services......................................................................xx (138,125) (133,064) (128,808) (99,755) (20,967) (21,185) (81,743) (77,267) (212,085) (184,310) (581,728) (515,581) Cash paid for judgments and claims.......................................................................................xx (3,969) (3,976) (3,295) (4,105) (563) (343) (4,361) (1,572) (153) (208) (12,341) (10,204) Net cash provided by (used in) operating activities....................................................................xx 308,254 312,765 105,220 150,995 5,165 (2,517) (5,217) 23,457 5,743 56,924 419,165 541,624 Cash flows from non-capital financing activities: xx
Cash received from grants..............................................................................................................................................................................xx 14,836 255 — 1,383 3,345 3,195 2,860 842 — — 21,041 5,675 Cash received from settlements................................................................................................xx — 914 — — — — 797 — — — 797 914 Cash received from license fees................................................................................................xx — — — — — — 3,151 5,712 — — 3,151 5,712 Cash received from miscellaneous revenues..........................................................................................xx 4,643 5,771 831 1,522 3 998 13,427 16,252 927 1 19,831 24,544 Cash paid for rebates, program incentives, and other.....................................................................xx (2,208) (529) (409) (52) (63) (11) (902) (1,060) — — (3,582) (1,652) Cash paid for Hetchy Power loan interest..........................................................................................xx — — — — — — — — (235) — (235) — Transfers from the City and County of San Francisco.................................................................................................................................................................................................................xx 21,025 1,220 1,440 280 16,000 14,000 — — — — 38,465 15,500 Transfers to the City and County of San Francisco.................................................................................................................................................................................................................xx (16,654) (14,805) (4,188) (1,468) — — (532) (32) — — (21,374) (16,305) Net cash provided by (used in) non-capital financing activities..................................xx 21,642 (7,174) (2,326) 1,665 19,285 18,182 18,801 21,714 692 1 58,094 34,388 Cash flows from capital and related financing activities: xx Proceeds from sale of capital assets.........................................................................................xx 2,647 397 12 38 — 4 — 5 — — 2,659 444 Proceeds from bond issuance, net of premium, discount, refunding loss, xx and issuance costs..................................................................................................................................xx 1,000,920 613,002 — — — — — — — — 1,000,920 613,002 Proceeds from commercial paper borrowings.....................................................................xx 16,328 201,018 435,450 4,390 — — 51,136 12,811 — — 502,914 218,219 Proceeds from State revolving fund loans............................................................................xx 57,861 — 4,811 36,152 — — — — — — 62,672 36,152 Principal paid on commercial paper............................................................................................xx (272,820) — (4,871) (87,949) — — — — — — (277,691) (87,949) Principal paid on long-term debt................................................................................................xx (704,344) (720,633) (23,987) (22,796) — — (3,674) (2,894) — — (732,005) (746,323) Principal paid on state revolving fund loans............................................................................xx — — (2,458) (1,239) — — — — — — (2,458) (1,239) Interest paid on commercial paper..............................................................................................................................................................................................................................xx (348) (2,010) (484) (4,288) — — (132) (805) — — (964) (7,103) Interest paid on long-term debt.....................................................................................................................xx (210,276) (211,864) (66,654) (67,775) — — (2,970) (3,096) — — (279,900) (282,735) Interest paid on state revolving fund loans........................................................................................................................................................................................................................xx — — (1,123) (787) — — — — — — (1,123) (787) Issuance costs paid on long-term debt.....................................................................................................................xx (3,032) (1,913) — (40) — — — — — — (3,032) (1,953) Acquisition and construction of capital assets...........................................................................xx (184,144) (200,600) (582,840) (337,299) (16,981) (19,075) (62,461) (66,390) — — (846,426) (623,364) Federal interest income subsidy..........................................................................................................xx 23,869 23,894 2,297 4,032 — — 511 467 — — 26,677 28,393 Net cash used in capital and related financing activities.......................................xx (273,339) (298,709) (239,847) (477,561) (16,981) (19,071) (17,590) (59,902) — — (547,757) (855,243) Cash flows from investing activities: xx
Interest income received...............................................................................................................xx 4,185 10,001 3,169 15,087 739 1,816 1,986 5,847 802 1,187 10,881 33,938 Proceeds from sale of investment outside City Treasury................................................................xx 323,586 347,361 134,955 101,291 — — 3,968 5,028 — — 462,509 453,680 Purchase of investments outside City Treasury.....................................................................xx (323,586) (297,633) (134,955) (92,971) — — (3,968) (5,028) — — (462,509) (395,632) Net cash provided by investing activities ............................................... xx 4,185 59,729 3,169 23,407 739 1,816 1,986 5,847 802 1,187 10,881 91,986 Increase (decrease) in cash and cash equivalents......................................................xx 60,742 66,611 (133,784) (301,494) 8,208 (1,590) (2,020) (8,884) 7,237 58,112 (59,617) (187,245) Cash and cash equivalents: xx
Beginning of year.......................................................................................................................xx 545,847 479,236 425,690 727,184 88,068 89,658 202,285 211,169 83,527 25,415 1,345,417 1,532,662 End of year...................................................................................................................................$ 606,589 545,847 291,906 425,690 96,276 88,068 200,265 202,285 90,764 83,527 1,285,800 1,345,417 Reconciliation of cash and cash equivalents to the statements of net position:
Cash and investments with City Treasury:
Unrestricted...................................................................................................................................$ 483,827 451,499 281,572 351,915 89,373 79,172 190,719 191,687 90,838 84,192 1,136,329 1,158,465 Restricted............................................................................................................................................. — — — 55,132 6,990 9,768 5,241 8,060 — — 12,231 72,960 Less: Unrealized gain on investments with City Treasury..............................................................................................................xx (392) (3,567) (228) (3,217) (88) (873) (149) (1,409) (74) (665) (931) (9,731) Cash and investments outside City Treasury: xx
Unrestricted.........................................................................................................................................xx 301 353 366 356 1 1 611 1 — — 1,279 711 Restricted..............................................................................................................................................................xx 122,853 97,562 10,196 21,504 — — 3,843 3,946 — — 136,892 123,012 Cash and cash equivalents at end of year on statements of cash flows........................................................................................$ 606,589 545,847 291,906 425,690 96,276 88,068 200,265 202,285 90,764 83,527 1,285,800 1,345,417 (Continued)
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Statements of Cash Flows
Proprietary Funds
Years ended June 30, 2021 and 2020
(In thousands)
Business Type Activities – Proprietary Funds
Water Wastewater Hetchy Water Hetchy Power SFPUC TotalCleanPowerSF
73 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
See accompanying notes to basic financial statements.
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Reconciliation of operating income (loss) to net cash provided by (used in) operating activities:
Operating income (loss)................................................................................................................................................................................................$ 132,769 185,234 35,445 81,869 (3,427) (9,920) (9,255) (7,256) (5,018) 49,434 150,514 299,361 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization...................................................................................................................................................................................................................................................xx 144,033 142,228 72,018 62,967 6,009 5,276 15,627 15,723 — — 237,687 226,194 Provision for uncollectible accounts...........................................................................................................................................................................................................................xx 2,945 781 2,201 908 — — 667 572 3,675 1,225 9,488 3,486 Write-off of capital assets and other non-cash items.....................................................................................................................................................................................................................................................................xx 3,810 5,285 4,203 4,728 51 1,062 8,333 11,175 — — 16,397 22,250 Changes in operating assets and liabilities: xx
Receivables: xx
Charges for services...........................................................................................................................................................................................................................................xx 1,537 (5,585) (1,506) (870) (413) 50 (16,724) 2,265 2,772 (1,148) (14,334) (5,288) Due from other City departments...........................................................................................................................................................................................................................xx 93 323 148 (129) 104 (104) 2,437 (1,627) — — 2,782 (1,537) Prepaid charges, advances, and other..............................................................................................................................................................................................................................xx (2,385) (1,343) (716) (79) 114 (46) (12,172) 1,994 576 (216) (14,583) 310 Inventory....................................................................................................................................................................................................................................................xx (160) (351) (181) (192) (4) 11 (211) (192) — — (556) (724) Accounts payable...............................................................................................................................................................................................................................................xx 5,609 (2,050) (4,762) 1,912 3,304 358 8,724 65 (6,047) 5,696 6,828 5,981 Accrued payroll................................................................................................................................................................................................................................................xx 1,354 1,548 637 858 154 243 298 494 91 41 2,534 3,184 Other post-employment benefits obligations...............................................................................................................................................................................................................xx (15,549) (3,739) (9,436) (1,562) (2,409) (277) (2,945) (337) 1,242 1,889 (29,097) (4,026) Pension obligations.....................................................................................................................................................xx 10,562 (7,351) 2,970 (1,603) 1,972 45 2,411 56 855 1,509 18,770 (7,344) Accrued vacation and sick leave................................................................................................................................................................................................................................xx 2,296 1,520 2,744 1,637 539 258 660 314 109 80 6,348 3,809 Accrued workers' compensation..................................................................................................................................................................................................................................xx (346) (1,162) 531 137 (67) (51) (82) (61) — — 36 (1,137) Due to other City departments............................................................................................................................................................................................xx (674) 674 — 1 (240) 240 (231) 250 (1,592) (1,991) (2,737) (826) Wholesale balancing account..................................................................................................................................................................................................................................xx (3,993) 28 — — — — — — — — (3,993) 28 Damage claims liability.....................................................................................................................................................................................................................................xx 25,956 (742) 822 (477) (33) 334 (1,114) 169 (100) 99 25,531 (617) Unearned revenues, refunds, and other liabilities..........................................................................................................................................................................................................................xx 703 (1,916) 102 590 (489) 4 (1,640) (147) 9,180 306 7,856 (1,163) Pollution remediation obligations...............................................................................................................................................................................................................................xx (306) (617) — 300 — — — — — — (306) (317) Total adjustments..............................................................................................................................................................................................................................................xx 175,485 127,531 69,775 69,126 8,592 7,403 4,038 30,713 10,761 7,490 268,651 242,263 Net cash provided by (used in) operating activities......................................................................................................................................................................................................................$ 308,254 312,765 105,220 150,995 5,165 (2,517) (5,217) 23,457 5,743 56,924 419,165 541,624 Noncash transactions:
Accrued capital asset costs....................................................................................................................................................................................................................................$ 27,263 29,951 89,982 85,355 9,057 3,279 15,393 8,459 — — 141,695 127,044 Land aquired through real property exchange....................................................................................................................................................................................................................................xx — 63,600 — — — — — — — — — 63,600 Interfund payables...................................................................................................xx — 674 739 849 — — — — — 1,800 739 3,323 Interfund receivables...................................................................................................xx — — — — — — 739 2,649 — — 739 2,649 Unrealized (gain) loss on investments..........................................................................................xx (392) (3,567) (228) (3,217) (88) (873) (149) (1,409) (74) (665) (931) (9,731) Capital contributions..........................................................................................xx 4,180 — — — — — — — — — 4,180 — Business Type Activities – Proprietary Funds
Water Wastewater Hetchy Water Hetchy Power SFPUC TotalCleanPowerSF
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Statements of Cash Flows
Proprietary Funds
Years ended June 30, 2021 and 2020
(In thousands)
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
74 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
(1) Description of Reporting Entity
The San Francisco Public Utilities Commission ( SFPUC or the Commission), established in 1932, is responsible for providing operational oversight of the public utility enterprises of the City, which include the Water, Wastewater , Hetchy Water and Power and CleanPowerSF . The Commission is responsible for determining such matters as the rates and charges for services, approval of contracts, and organizational policy.
Until August 1, 2008, the Commission consisted of five members, all appointed by the Mayor.
Proposition E, a City and County of San Francisco Charter amendment approved by the voters in the June 3, 2008 election, terminated the terms of all five existing members of the Commission, changed the process for appointing new members, and set qualifications for all members. Under the amended Charter, the Mayor continues to nominate candidates to the Commission, but nominees do not take office until the Board of Supervisors votes to approve their appointments by a majority (at least six members). The amended Charter provides for staggered four -year terms for the Commission members and requires them to meet the following qualifications:
• Seat 1 must have experience in environmental policy and an understanding of environmental justice issues.
• Seat 2 must have experience in ratepayer or consumer advocacy. • Seat 3 must have experience in project finance.
• Seat 4 must have expertise in water systems, power systems, or public utility management. • Seat 5 is an at-large member.
The SFPUC is a department of the City, and as such, the financial operations of the Water Enterprise, the Wastewater Enterprise, and H etchy Water and Hetchy Power and CleanPowerSF (Hetch Hetchy) are included in the Annual Comprehensive Financial Report of the City as enterprise funds. These financial statements are intended to present only the financial position, and the changes in financial position and cash flows of only the portion of the City that is attributable to the transactions of the enterprises. They do not purport to, and do not , present fairly the financial position of the City as of June 30, 2021 and 2020, the changes in its financial position, or, where applicable, the cash flows for the years then ended in conformity with U.S. generally accepted accounting principles (GAAP).
Water Enterprise
The San Francisco Water Enterprise was established in 1930 under the provisions of the Charter of the City and County of San Francisco (the City). The Water Enterprise acquired the fully developed, mature water works for San Francisco on March 3, 1930. Since then, the City has operated and maintained the water works as the San Francisco Water Enterprise. The Board of Supervisors of the City has adopted resolutions (the Water Resolutions) providing for the issuance of various water revenue and refunding bond series. The Water Resolutions require the City to keep separate books of records and accounts of the Water Enterprise. The Water Enterprise, which consists of a syste m of reservoirs, storage tanks, water treatment plants, pump stations, and pipelines, is engaged in the distribution of water to San Francisco and certain suburban areas. In fiscal year 2021, the Water Enterprise sold approximately 68,812 million gallons, i.e., about 189 million gallons per day of water, to approximately 2.7 million people within San Francisco and certain suburban areas.
Wastewater Enterprise
The San Francisco Wastewater Enterprise, formerly known as the San Francisco Clean Water Program (the Program), was established in 1977 following the transfer of all sewage system related assets and liabilities of the City to the Program.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
75 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
In 1976, the electorate of the City approved a proposition authorizing the City to issue $240,000 in revenue bonds pursuant to the Revenue Bond Law of 1941 of the State of California for the purpose of acquiring, constructing, improving, and financing improvements to the City’s municipal sewage treatment and disposal system. Since then, the City’s Board of Su pervisors has adopted resolutions (Wastewater Resolutions) providing for the issuance of various sewer revenue and refunding bond series. The Wastewater Resolutions require the City to keep separate books of records and accounts of the Wastewater Enterprise.
Hetch Hetchy
San Francisco Hetch Hetchy Water and Power (Hetch Hetchy) was established as a result of the Raker Act of 1913, which granted water and power resources rights -of-way on the Tuolumne River in Yosemite National Park and Stanislaus National Forest to the City and County of San Francisco (the City). CleanPowerSF, lau nched in May 2016, provides green electricity from renewable sources to residential and commercial customers in San Francisco and was reported as part of Hetch Hetchy starting fiscal year 2016. Hetch Hetchy is a stand -alone enterprise comprised of three fu nds, Hetchy Power (aka the Power Enterprise), CleanPowerSF and Hetchy Water, the portion of the Water Enterprise’s operations, specifically the upcountry water supply and transmission service. Hetch Hetchy accounts for the activities of Hetch Hetchy Water and Power and is engaged in the collection and conveyance of approximately 85% of the regional system’s water supply and in the generation and transmission of electricity from that resource, as well as the City Power services including energy efficiency and renewable.
Approximately 81% of the electricity generated by Hetchy Power is used to provide electric service to the City’s municipal customers (including the San Francisco Municipal Transportation Agency, Recreation and Parks Department, the Port of S an Francisco, the San Francisco International Airport and its tenants, Zuckerberg San Francisco General Hospital and Trauma Center, streetlights, Moscone Convention Center, and the Water and Wastewater Enterprises). The remaining 19% of electricity generated is sold to CleanPowerSF and the wholesale electric market. As a result of the 1913 Raker Act, energy produced above the City’s Municipal Load is sold first to the Districts to cover their agricultural pumping and municipal load needs and any remaining e nergy is either sold to other municipalities and/or government agencies (not for resale) or sold into the CAISO. Hetch Hetchy operation is an integrated system of reservoirs, hydroelectric power plants, aqueducts, pipelines, and transmission lines
Hetch Hetchy also purchases wholesale electric power from various energy providers that are used in conjunction with owned hydro resources to meet the power requirements of its customers. Operations and business decisions can be greatly influenced by market cond itions, state and federal power matters before the California Public Utilities Commission (CPUC), the CAISO, and the Federal Energy Regulatory Commission (FERC). Therefore, Hetch Hetchy serves as the City’s representative at CPUC, CAISO, and FERC forums and continues to monitor regulatory proceedings.
(2) Significant Accounting Policies
(a) Basis of Accounting and Measurement Focus
Fund Financial Statements
The accounts of Water, Wastewater, Hetchy Water, Hetchy Power and CleanPowerSF are organized on the basis of a proprietary fund type and are included as enterprise funds of the City. The activities are accounted for with a separate set of self -balancing ac counts that comprise the funds’ assets, deferred outflows, liabilities, deferred inflows, net position, revenues, and expenses. Enterprise funds account for activities (i) that are financed with debt
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
76 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
that is secured solely by a pledge of the net revenues f rom fees and charges of the activity; or (ii) that are required by laws or regulations that the activity’s costs of providing services, including capital costs (such as depreciation or debt service), be recovered with fees and charges, rather than with taxes or similar revenues; or (iii) that the pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs (such as depreciation or debt service).
The financial activities of Water, Wastewater, Hetchy Wate r, Hetchy Power and CleanPowerSF are accounted for on a flow of economic resources measurement focus, using the accrual basis of accounting in accordance with U.S. GAAP. Under this method, all assets and liabilities associated with its operations are inclu ded on the statements of net position ; revenues are recognized when earned, and expenses are recognized when liabilities are incurred. Water and Wastewater Enterprises’ operating revenues are defined as charges to customers , rental income, capacity fees and other revenues while Hetchy Water , Hetchy Power and CleanPowerSF’s operating revenues are defined as charges to customers and rental incomes.
Operating expenses include the costs of delivering services, administrative expenses, and depreciation and amortization on capital assets. Revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.
The SFPUC applies all applicable Governmental Accounting Standards Board (GASB) pronouncements.
(b) Cash and Cash Equivalents
The SFPUC considers its pooled deposits and investments held with the City Treasury to be demand deposits and, therefore, cash and cash equivalents for financial reporting. The City Treasury also holds non -pooled cash and investments for the SFPUC. Non -pooled restricted deposits and restricted deposits and investments held outside the City Treasury with original maturities of three months or less are also considered to be cash equivalents.
(c) Investments
Money market funds are carried at cost, w hich approximates fair value. All other investments are stated at fair value based upon quoted market prices. Changes in fair value are recognized as investment gains or losses and are recorded as a component of non-operating revenues.
(d) Inventory
Inventory consists primarily of construction materials and maintenance supplies and is valued at average cost. Inventory is expensed as it is consumed.
(e) Capital Assets
Capital assets are defined as assets with an initial individual cost of more than $5 and an estimated useful life in excess of one year. Capital assets with an original acquisition date prior to July 1, 1977 are recorded in the financial statements at estimated cost, as determined by an independent professional appraisal, or at cost, if known. All sub sequent acquisitions have been recorded at cost. All donated capital assets are valued at estimated fair value at the time of donation. Depreciation and amortization are computed using the straight -line method over the estimated useful lives of the related assets, which range from 1 to 100 years for equipment and 1 to 200 years for buildings, structures, and improvements. No depreciation or amortization is recorded in the year of acquisition, and depreciation or amortization is recorded in the year of disposal.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
77 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
(f) Intangible Assets
Under GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets , intangible assets are defined as identifiable, non -financial assets capable of being separated, sold, transferred, or licensed, and include contractual or legal rights. Examples of intangible assets include rights-of-way easements, land use rights, water rights, licenses, and permits. The accounting pronouncement also provides guidance on the capitalization of internally generated intangible assets, such as the development and installation of computer software by or on behalf of the reporting entity.
According to the standard, the SFPUC is required to capitalize intangible assets with a useful life extending beyond one reporting period. The SFPUC has established a capitalization threshold of $100. GASB Statement No. 51 also requires amortization of intangible assets over the benefit period, except for certain assets having an indefinite useful life. Assets with an indefinite useful life generally provide a benefit that is not constrained by legal or contractual limitations or any other external factor, and therefore, are not amortized (see Note 4).
(g) Construction Work in Progress
The cost of acquisition and construction of major plant an d equipment is recorded as construction work in progress. Costs of discontinued construction projects are recorded as an expenses in the year in which the decision is made to discontinue such projects.
(h) Capitalization of Interest
A portion of the interest cost incurred on capital projects is capitalized on assets that require a period of time for construction or to otherwise prepare them for their intended use. Such amounts are amortized over the useful lives of the assets (see Note 4).
(i) Bond Discount, Premium, and Issuance Costs
Bond issuance costs related to prepaid insurance costs are capitalized and amortized using the effective interest method. Other bond issuance costs are expensed when incurred. Original issue bond discount or premium are offset against the related debt and are also amortized using the effective interest method.
(j) Accrued Vacation and Sick Leave
Accrued vacation pay, which may be accumulated up to ten weeks per employee, is charged to expense as earned. Sick leave earned subsequent to December 6, 1978 is non-vesting and may be accumulated up to six months per employee.
(k) Workers’ Compensation
The SFPUC is self -insured for workers’ compensation claims and accrues the estimated cost of those claims, including the estimated cost of incurred but not reported claims (see Note 14(b)).
(l) General Liability
The SFPUC is self -insured for general liability and uninsurable property damage claims.
Commercially uninsurable property includes assets that are underground or provide transmission and distribution. Maintained commercial coverage does not cover claims attributed to loss from earthquake, contamination, pollution remediation efforts , and other specific naturally occurring contaminants such as mold. The liability represents an estimate of the cost of all outstanding claims, including adverse loss development, and estimated incurred but not reported claims (see Note 14(a)).
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
78 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
(m) Arbitrage Rebate Payable
Certain bonds are subject to arbitrage rebate requirements in accordance with regulations issued by the U.S. Treasury Department. The requirements generally stipulate that earnings from the investment of the tax -exempt bond proceeds that exceed related interest costs on the bonds must be remitted to the federal government on every f ifth anniversary of each bond issue. The SFPUC did not have arbitrage rebate liability as of June 30, 2021 and 2020.
(n) Refunding of Debt
Gains or losses occurring from refunding of debt prior to maturity are reported as deferred outflows and deferred inflows of resources from refunding of debt. Deferred outflows and deferred inflows of resources are recognized as a component of interest expense using the effective interest method over the remaining life of the old debt or the life of the new d ebt, whichever is shorter.
(o) Income Taxes
As a department of a government agency, the SFPUC is exempt from both federal income taxes and California State franchise taxes.
(p) Revenue Recognition
Charges for water, wastewater, and power services are based on usage. Effective July 1, 2013, the majority of residential and non -residential customers are billed on a monthly basis except for building and contractor customers which are billed on a bi -monthly basis by the Water and Wastewater Enterprises. Hetchy Water, Hetchy Power and CleanPowerSF revenues are based on consumption and billing rates. Generally, customers are billed monthly. Revenues earned but unbilled are accrued as charges for services and reflected as a receivable on the Statements of Net Position. The unbilled amounts for the fiscal years ending June 30, 2021 and 2020 are as follow:
(q) Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expen ses during the reporting period. Actual results could differ from those estimates.
(r) Eliminations
Eliminations for internal activities between Wastewater , Hetchy Power and CleanPowerSF are made in the Statements of Net Position. There were activities requir ing eliminations during the fiscal year ended June 30, 2021 and June 30, 2020.
(s) Accounting and Financial Reporting for Pollution Remediation Obligations According to GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations , a government would have to estimate its expected outlays for Fiscal Years
Ending June 30 Water Wastewater
Hetchy
Water
Hetchy
Power CleanPowerSF
SFPUC
Total
2021 $ 30,277 14,175 — 13,823 12,600 70,875 2020 29,876 13,429 — 350 15,730 59,385
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
79 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
pollution remediation if it knows a site is polluted , and any of the following recognition triggers occur:
• Pollution poses an imminent danger to the public or environment and a government has little or no discretion to avoid fixing the problem;
• A government has violated a pollution prevention-related permit or license; • A regulator has identified (or evidence indicates it will identify) a government as responsible (or potentially responsible) for cleaning up pollution, or for paying all o r some of the cost of the cleanup;
• A government is named (or evidence indicates that it will be named) in a lawsuit to compel it to address the pollution; or
• A government begins or legally obligates itself to begin cleanup or post -cleanup activities (limited to amounts the government is legally required to complete).
As a part of ongoing operations, situations may occur requiring the removal of pollution or other hazardous material. These situations typically arise in the process of acquiring an asset, preparing an asset for its intended use, or during the design phase of projects under review by the project managers. Other times, pollution may arise during the implementation and construction of a major or minor capital project. Examples of pollution may include, but are not limited to: asbestos or lead paint removal; leaking of sewage in underground pipes or neighboring areas , chemical spills , removal and disposal of known toxic wast e, harmful biological and chemical pollution of water , or contamination of surrounding soils by underground storage tanks (see Note 15(d)).
(t) Other Post-employment Benefits (OPEB)
As prescribed under GASB Statement No. 75, Accounting and Financial Reporting for Post - employment Benefits Other than Pensions , net OPEB liability, deferred outflows/inflows of resources related to OPEB, and OPEB expense are actuarially determined on a cit ywide basis.
Net OPEB liability is measured as the portion of the present value of projected benefit payments to be provided to current active and inactive employees attributed to those employees’ past service, less the amount of the Retiree Healthcare Tru st Fund investments measured at fair value (see Note 12(b)).
(u) New Accounting Standards Adopted in Fiscal Year 2021 1) In January 2017, the GASB issued Statement No. 84, Fiduciary Activities. GASB Statement No. 84 establishes criteria for state and local governments to identify fiduciary activities and how those activities should be reported. The new standard is effective for periods beginning after December 15, 2019. The SFPUC adopted the pr ovisions of this Statement in fiscal year 2021, which did not have a significant effect on its financial statements.
2) In August 2018, the GASB issued Statement No. 90, Accounting and Financial Reporting for Majority Equity Interests. GASB Statement No. 90 provides clarification when a government should report a majority equity interest in a legally separate organization as either a component unit or an investment. The new standard is effective for periods beginning after December 15, 2019. The SFPUC adopted the provisions of this Statement in fiscal year 2021, which did not have a significant effect on its financial statements.
3) In June 2020, the GASB issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Interna l Revenue Code Section 457 Deferred Compensation Plans —an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32. GASB Statement No. 97 clarifies the criteria used in determining whether a fiduciary component unit exists and clarifies financial reporting for
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
80 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Internal Revenue Code section 457 deferred compensation plans. The new standard is effective for periods beginning after June 15, 2021. The SFPUC adopted early the provision of Statement No. 97 in fiscal year 2021, w hich did not have a significant effect on its financial statements.
4) In October 2021, the GASB issued Statement No. 98, The Annual Comprehensive Financial Report. GASB Statement No. 98 updates existing accounting standards by changing the name of the Compr ehensive Annual Financial Report to the Annual Comprehensive Financial Report. The new standard is effective for periods ending after December 15, 2021. The SFPUC adopted the provisions of this Statement in fiscal year 2021, which did not have a significant effect on its financial statements.
(v) GASB Statements Implemented in Fiscal Year 2020
In May 2020, the GASB issued Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance. The primary objective of this Statement is to provide temporary relief to governments and other stakeholders in light of the COVID -19 pandemic. That objective is accomplished by postponing the effective dates of certain provisions in Statements and Implementation Guides that first became effective or are scheduled to become effective for periods beginning after June 15, 2018. The SFPUC adopted the provisions of this Statement in fiscal year 2020.
(w) Future Implementation of New Accounting Standards
1) In June 2 017, the GASB issued Statement No. 87, Leases. GASB Statement No. 87 establishes a single model for lease accounting and requires reporting of certain lease liabilities that currently are not reported. The new standard is effective for periods beginning after June 15, 2021. The SFPUC will implement the provisions of Statement No. 87 in fiscal year 2022.
2) In June 2018, the GASB issued Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period . GASB Statement No. 89 establ ishes accounting requirements for interest cost incurred before the end of a construction period. The new standard is effective for periods beginning after December 15, 2020. The SFPUC will implement the provisions of Statement No. 89 in fiscal year 2022.
3) In May 2019, the GASB issued Statement No. 91, Conduit Debt Obligations . GASB Statement No. 91 enhances the compatibility and consistency of conduit debt obligation reporting and reporting of related transactions by State and local government issuers. The new standard is effective for periods beginning after December 15, 2021. The SFPUC will implement the provisions of Statement No. 91 in fiscal year 2023.
4) In January 2020, the GASB issued Statement No. 92, Omnibus 2020. GASB Statement No. 92 addresses practice issues that have been identified during implementation and application of certain GASB Statements. The new standard is effective for periods beginning after June 15, 2021. The SFPUC will implement the provisions of Statement No. 92 in fiscal year 2022.
5) In March 2020, the GASB issued Statement No. 93, Replacement of Interbank Offered Rates (IBOR). The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an IBOR. The new standard is effective for periods beginning after June 15, 2021. The SFPUC will implement the provisions of Statement No. 93 in fiscal year 2022.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
81 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
6) In March 2020, the GASB Issued Statement No. 94, Public-Private and Public -Public Partnerships and Availability Payment Arrangements . The primary objective of this Statement is to improve financial reporting by addressing issues related to public -private and public-public partnership arrangements (PPPs). The new standard is effective for periods beginning after June 15, 2022. The SFPUC will implement the provisions of Statement No. 94 in fiscal year 2023.
7) In May 2020, the GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements . This Statement provides guidance on the accounting and financial reporting for subscription -based information technology arrangements (SBITAs) by a government. The new standard is effective for periods beginning after June 15, 2022. The SFPUC will implement the provisions of Statement No. 96 in fiscal year 2023.
(x) Reclassifications
The Wastewater Enterprise has reclassified certain amounts relating to the prior period to conform to its current period p resentation. These reclassifications had no effect on previously reported changes in net position.
(3) Cash, Cash Equivalents, and Investments
Cash, cash equivalents, and investments with the City Treasury are invested in an unrated City pool pursuant to investment policy guidelines established by the City Treasurer. The objectives of the policy guidelines are, in order of priority, preservation of capital, liquidity, and yield. The policy addresses soundness of financial institutions in which the City will deposit funds, types of investment instruments as permitted by the California Government Code, and the percentage of the portfolio that may be invested in certain in struments with longer terms to maturity. The City Treasurer allocates income from the investment of pooled cash at month-end in proportion to SFPUC’s average daily cash balances. The primary objectives of SFPUC’s investment policy are consistent with the City’s policy.
The SFPUC categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy is based on the valuation inputs used to measure fair value of the assets. Level 1 inputs are quoted prices in active market s for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. The inputs and techniques used for valuing securities are not necessarily an indication of risk associated with investin g in those securities.
Commercial paper is valued using a variety of techniques such as matrix pricing; market corroborated pricing inputs such as yield curve, indices, and other market related data. Commercial paper, money market investments, and cash an d cash equivalents are exempt from fair value treatment under GASB Statement No. 72.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
82 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Department-wide Business Type Activities
Department-wide restricted and unrestricted cash and investments outside City Treasury as of June 30, 2021 and 2020 consist of the following:
Department-wide cash, cash equivalents , and investments are shown on the accompanying statements of net position as follows:
The following table shows the percentage distribution of the City’s pooled investments by maturity:
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3)
U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 93,956 93,956 — — — Money Market Funds A-1+/P-1 < 90 days 81 81 — — —
Cash and Cash Equivalents N/A 42,855 42,855 — — —
Total Restricted Cash and Investments outside City Treasury $ 136,892 136,892 — — — Cash and Cash Equivalents N/A 1,279 1,279 — — —
Total Cash and Investments outside City Treasury $ 1,279 1,279 — — — SFPUC's Cash and Investments outside City Treasury
Fair Value Measurements Using
June 30, 2021
Investments
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3)
U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 109,764 109,764 — — — Money Market Funds A-1+/P-1 < 90 days 170 170 — — —
Cash and Cash Equivalents N/A 13,078 13,078 — — —
Total Restricted Cash and Investments outside City Treasury $ 123,012 123,012 — — — Cash and Cash Equivalents N/A 711 711 — — —
Total Cash and Investments outside City Treasury $ 711 711 — — — SFPUC's Cash and Investments outside City Treasury
Fair Value Measurements Using
June 30, 2020
Investments
2021 2020
Current assets:
Cash and investments with City Treasury $ 1,136,329 1,158,465 Cash and investments outside City Treasury 1,279 711
Restricted cash and investments outside City Treasury 57,616 27,832 Non-current assets:
Restricted cash and investments with City Treasury 12,231 72,960 Restricted cash and investments outside City Treasury 79,276 95,180 Total cash, cash equivalents, and investments $ 1,286,731 1,355,148 Fiscal Years
ended June 30 Under 1 1 to less than 6 6 to less than 12 12 to 60 2021 14.5% 27.6% 29.7% 28.2%
2020 30.1% 32.4% 15.6% 21.9%
Investment maturities (in months)
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
83 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Water Enterprise
Restricted assets are held by an independent trustee outside the City’s investment pool. The assets are held for the purpose of paying future interest and principal on the bonds and for eligible capital project expenditures. The current balances as of June 30, 2021 and 2020 were $122,853 and $97,562, respectively. The Water Enterprise held all investments in guaranteed investment contracts, treasury and government obligations, commercial paper, corporate bonds, and notes, as well as money market mutual funds consisting of Treasury and Government Obligations.
Funds held by the trustee established under the 2002 Amended and Restated Indentures agreements are invested in “Permitted Investments,” as defined in the agreement, which includes money market funds and investment agreements. The agreement permits investment in money market funds registered under the Federal Investment Company Act of 1940 whose shares are registered under the Federal Securities Act of 1933 and have a rating by S&P of “AAAm -G,” “AAAm,” or “AAm,” and a rating by Mood y’s of “Aaa,” “Aa1,” or “Aa2”. The credit ratings of the money market funds invested in as of June 30, 2021 were “Aaa -mf” and “P-1” by Moody’s, and “AAAm” and “A -1+” by S&P. The credit ratings of the money market funds invested in as of June 30, 2020 were “Aaa-mf” and “P-1” by Moody’s, and “AAAm” and “A -1+” by S&P. Investment agreements must be with a U.S. bank or trust company that have a rating by Moody’s and S&P of “A” or higher, or are guaranteed by any entity with a rating of “A” or higher, at the time the agreement is entered.
The following tables present the Water Enterprise’s restricted and unrestricted cash and investments outside City Treasury as of June 30, 2021 and 2020:
The restricted cash and investments outside City Treasury as of June 30, 2021 and 2020 included an unrealized gain due to changes in fair value on commercial paper of $0.
Additional cash outside of the investment pool included revolving fund and cash in transit. The revolving fund has a balance of $28 as of June 30, 2 021 and 2020, respectively, which is held in a commercial bank in non interest bearing checking accounts covered by Federal Deposit Insurance Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 79,973 79,973 — — — Money Market Funds A-1+/P-1 < 90 days 55 55 — — —
Cash and Cash Equivalents N/A 42,825 42,825 — — —
Total Restricted Cash and Investments outside City Treasury $ 122,853 122,853 — — — Cash and Cash Equivalents N/A 301 301 — — —
Total Cash and Investments outside City Treasury $ 301 301 — — — Investments
Water's Cash and Investments outside City Treasury
Fair Value Measurements Using
June 30, 2021
Water
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 84,463 84,463 — — — Money Market Funds A-1+/P-1 < 90 days 46 46 — — —
Cash and Cash Equivalents N/A 13,053 13,053 — — —
Total Restricted Cash and Investments outside City Treasury $ 97,562 97,562 — — — Cash and Cash Equivalents N/A 353 353 — — —
Total Cash and Investments outside City Treasury $ 353 353 — — — Fair Value Measurements Using
June 30, 2020
Investments
Water's Cash and Investments outside City Treasury
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
84 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Corporation depository insurance. These accounts were established as provided by the City’s Administrative Code for revolving fund needs. The cash in transit was $273 and $325 as of June 30, 2021 and 2020, respectively.
The Water Enterprise’s cash, cash equivalents , and investments are shown on the accompanying Statements of Net Position as follows:
Wastewater Enterprise
The restricted cash for bond reserves is held by an independent trustee outside the City investment pool. The balances as of June 30, 2021 and 2020 were $10,196 and $21,504, respectively. Funds held by the trustee established under the 2003 Indenture are invested in “Permitted Investments” as defined in the Indenture. “Permitted Investments” include money market funds registered under the Federal Investment Company Act of 1940 and whose shares are registered under the Federal Securities Act of 1933 and having a rating by S&P of “AAAm -G,” “AAAm,” or “AAm” and a rating by Moody’s of “Aaa,” “Aa1,” or “Aa2.”
The following table s present the Wastewater Enterprise’s restricted and unrestricted cash and investments outside City Treasury as of June 30, 2021 and 2020:
2021 2020
Current assets:
Cash and investments with City Treasury $ 483,827 451,499 Cash and investments outside City Treasury 301 353
Restricted cash and investments outside City Treasury 57,165 16,638 Non-current assets:
Restricted cash and investments outside City Treasury 65,688 80,924 Total cash, cash equivalents, and investments $ 606,981 549,414 Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 10,159 10,159 — — — Money Market Funds A-1+/P-1 < 90 days 26 26 — — —
Cash and Cash Equivalents N/A 11 11 — — —
Total Restricted Cash and Investments outside City Treasury $ 10,196 10,196 — — — Cash and Cash Equivalents N/A 366 366 — — —
Total Cash and Investments outside City Treasury $ 366 366 — — — Wastewater's Cash and Investments outside City Treasury Fair Value Measurements Using
June 30, 2021
Investments
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 21,372 21,372 — — — Money Market Funds A-1+/P-1 < 90 days 124 124 — — —
Cash and Cash Equivalents N/A 8 8 — — —
Total Restricted Cash and Investments outside City Treasury $ 21,504 21,504 — — — Cash and Cash Equivalents N/A 356 356 — — —
Total Cash and Investments outside City Treasury $ 356 356 — — — Wastewater's Cash and Investments outside City Treasury Fair Value Measurements Using
June 30, 2020
Investments
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
85 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The restricted cash and investments outside City Treasury as of June 30, 2021 and 2020 included a $0 unrealized gain due to changes in fair values on Commercial Paper.
The Wastewater Enterprise’s cash, cash equivalents , and investments are shown on the accompanying Statements of Net Position as follows:
Hetch Hetchy
Restricted assets are held by an independent trustee outside the City’s investment pool. The assets are held for the purpose of paying future interest and principal on the bonds and for eligible capital project expenditures. The balances as of June 30, 2021 and 2020 were $3,843 and $3,946, respectively. Hetch Hetchy held all investments in guaranteed investment contracts, treasury and government obligations, commercial paper, corporate bonds, and notes, as well as money market mutual funds consisting of treasury and government obliga tions. The balance as of June 30, 2021 included 2015 Series A bonds proceeds of $2,193, certificates of participation proceeds of $1,115, $612 held at a commercial bank in a non -interest-bearing checking account that is covered by depository insurance, 201 5 Series B bonds proceeds of $516, and commercial paper of $19. The balance as of June 30, 2020 included 2015 Series A bonds proceeds of $2,193, certificates of participation proceeds of $1,220, 2015 Series B bonds proceeds of $516, commercial paper of $17 , and $2 held at a commercial bank in a non -interest-bearing checking account that is covered by depository insurance.
Hetch Hetchy did not have any unrealized gain and loss in the restricted cash and investments outside City Treasury as of June 30, 2021 and 2020.
For fiscal year 2021 and 2020, proceeds from 2015 Series A and B bonds held as restricted cash and investments outside City Treasury in the amount of $2,709 were invested in U.S. Treasury Money Market with maturity date less than 90 days. The credit ratings of the U.S. Tr easury Money Market as of June 30, 2021 and 2020 were “AAAm” by S&P and “Aaa-mf” by Moody’s.
2021 2020
Current assets:
Cash and investments with City Treasury $ 281,572 351,915 Cash and investments outside City Treasury 366 356
Restricted cash and investments outside City Treasury 298 11,043 Non-current assets:
Restricted cash and investments with City Treasury - 55,132 Restricted cash and investments outside City Treasury 9,898 10,461 Total cash, cash equivalents, and investments $ 292,134 428,907
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
86 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The following tables present the Hetch Hetchy restricted and unrestricted cash and investments outside City Treasury as of June 30, 2021 and 2020:
Hetch Water and Hetchy Power and CleanPowerSF cash, cash equivalents , and investments as of June 30, 2021 and 2020 are shown on the accompanying Statements of Net Position as follows:
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) Hetchy Water
Cash and Cash Equivalents N/A $ 1 1 — — —
Total Cash and Investments outside City Treasury $ 1 1 — — — Hetchy Power
U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 3,824 3,824 — — — Cash and Cash Equivalents N/A 19 19 — — —
Total Restricted Cash and Investments outside City Treasury $ 3,843 3,843 — — — Cash and Cash Equivalents N/A 611 611 — — —
Total Cash and Investments outside City Treasury $ 611 611 — — — Investments
Hetchy Water and Hetchy Power's Cash and Investments outside City Treasury Fair Value Measurements Using
June 30, 2021
Credit Ratings
Investments
exempt from
Quoted prices in
active markets for
identical assets
Significant
other
observable
inputs
Unobservable
Inputs
(S&P/Moody's) Maturities Fair Value fair value (Level 1) (Level 2) (Level 3) Hetchy Water
Cash and Cash Equivalents N/A $ 1 1 — — —
Total Cash and Investments outside City Treasury $ 1 1 — — — Hetchy Power
U.S. Treasury Money Market Funds AAAm/Aaa-mf < 90 days $ 3,929 3,929 — — — Cash and Cash Equivalents N/A 17 17 — — —
Total Restricted Cash and Investments outside City Treasury $ 3,946 3,946 — — — Cash and Cash Equivalents N/A 1 1 — — —
Total Cash and Investments outside City Treasury $ 1 1 — — — Hetchy Water and Hetchy Power's Cash and Investments outside City Treasury Fair Value Measurements Using
June 30, 2020
Investments
Hetchy Hetchy
Water Power CleanPowerSF Total 2021
Current assets:
Cash and investments with City Treasury $ 89,373 190,719 90,838 370,930 Cash and investments outside City Treasury 1 611 — 612 Restricted cash and investments outside City Treasury — 153 — 153 Non-current assets:
Restricted cash and investments with City Treasury 6,990 5,241 — 12,231 Restricted cash and investments outside City Treasury — 3,690 — 3,690 Total cash, cash equivalents, and investments $ 96,364 200,414 90,838 387,616 Hetchy Hetchy
Water Power CleanPowerSF Total 2020
Current assets:
Cash and investments with City Treasury $ 79,172 191,687 84,192 355,051 Cash and investments outside City Treasury 1 1 — 2
Restricted cash and investments outside City Treasury — 151 — 151 Non-current assets:
Restricted cash and investments with City Treasury 9,768 8,060 — 17,828 Restricted cash and investments outside City Treasury — 3,795 — 3,795 Total cash, cash equivalents, and investments $ 88,941 203,694 84,192 376,827
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
87 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
(4) Capital Assets
Department-wide Business Type Activities
Capital assets with a useful life of 50 years or greater include buildings and structures, reservoirs, dams, treatment plants, pump stations, certain water mains and pipelines, sewer systems, transmission and distributions systems, tunnels, and bridges.
Department-wide capital assets as of June 30, 2021 and 2020 consist of the following:
* Decrease in construction work in progress is greater than increase in capital assets being depreciated is mainly explained by $16,397 in capital project writeoffs for Water, Wastewater Hetchy Water and Hetchy Power offset by $10,181 mainly related to direct additions to facilities and improvements, intangible assets and machinery and equipment.
* Decrease in construction work in progress is greater than increase in capital assets being depreciated is mainly explained by $22,250 in capital project writeoffs for Water, Wastewater, Hetchy Water and Hetchy Power. The remaining difference of $11,281 is related to $20,328 of construction work in progress transferred to land offset by $9,047 direct additions to intangible assets and machinery and equipment.
2020 Increases Decreases 2021
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 155,089 — (1,088) 154,001
Intangible assets 5,162 — — 5,162
Construction work in progress 1,592,097 910,133 (422,476) * 2,079,754 Total capital assets not being depreciated and amortized 1,752,348 910,133 (423,564) 2,238,917 Capital assets being depreciated and amortized:
Facilities and improvements 10,400,544 395,635 — 10,796,179 Intangible assets 73,827 4,636 — 78,463
Machinery and equipment 557,168 15,989 (311) 572,846
Total capital assets being depreciated and amortized 11,031,539 416,260 * (311) 11,447,488 Less accumulated depreciation and amortization for:
Facilities and improvements (3,157,846) (214,224) — (3,372,070) Intangible assets (46,461) (2,062) — (48,523)
Machinery and equipment (380,536) (21,401) 311 (401,626) Total accumulated depreciation and amortization (3,584,843) (237,687) 311 (3,822,219) Total capital assets being depreciated and amortized, net 7,446,696 178,573 — 7,625,269 Total capital assets, net $ 9,199,044 1,088,706 (423,564) 9,864,186 2019 Increases Decreases 2020
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 71,228 83,929 (68) 155,089
Intangible assets 5,162 — — 5,162
Construction work in progress 1,387,840 714,019 (509,762) * 1,592,097 Total capital assets not being depreciated and amortized 1,464,230 797,948 (509,830) 1,752,348 Capital assets being depreciated and amortized:
Facilities and improvements 9,939,123 461,421 — 10,400,544 Intangible assets 73,453 374 — 73,827
Machinery and equipment 544,492 14,436 (1,760) 557,168 Total capital assets being depreciated and amortized 10,557,068 476,231 * (1,760) 11,031,539 Less accumulated depreciation and amortization for:
Facilities and improvements (2,957,715) (200,134) 3 (3,157,846) Intangible assets (43,762) (2,699) — (46,461)
Machinery and equipment (358,728) (23,568) 1,760 (380,536) Total accumulated depreciation and amortization (3,360,205) (226,401) 1,763 (3,584,843) Total capital assets being depreciated and amortized, net 7,196,863 249,830 3 7,446,696 Total capital assets, net $ 8,661,093 1,047,778 (509,827) 9,199,044
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
88 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Water Capital Assets – Water’s capital assets as of June 30, 2021 and 2020 consist of the following:
* Decrease in construction work in progress includes $3,810 in capital project write-offs, mainly related to Eastside Recycled Water and San Andreas Spillway projects. The remaining differences of $8,516 is due to direct additions to facilities and improvements, intangible assets and machinery and equipment.
* Decrease in construction work in progress includes $5,285 in capital project write-offs, mainly related to Daly City Recycle Water, New Fuel Station, and Row Gaps projects. The remaining difference of $6,334 is related to $11,774 of construction work in progress transferred to land offset by $5,440 direct additions to intangible assets and machinery and equipment.
2020 Increases Decreases 2021
Capital assets not being depreciated and amortized:
Land $ 105,336 — (1,088) 104,248
Intangible assets 679 — — 679
Construction work in progress 492,682 197,669 (157,749) * 532,602 Total capital assets not being depreciated and amortized 598,697 197,669 (158,837) 637,529 Capital assets being depreciated and amortized:
Facilities and improvements 6,258,333 154,905 — 6,413,238 Intangible assets 23,497 275 — 23,772
Machinery and equipment 319,000 7,275 (149) 326,126
Total capital assets being depreciated and amortized 6,600,830 162,455 (149) 6,763,136 Less accumulated depreciation and amortization for:
Facilities and improvements (1,423,722) (130,793) — (1,554,515) Intangible assets (20,087) (1,601) — (21,688)
Machinery and equipment (225,173) (11,639) 149 (236,663) Total accumulated depreciation and amortization (1,668,982) (144,033) 149 (1,812,866) Total capital assets being depreciated and amortized, net 4,931,848 18,422 — 4,950,270 Total capital assets, net $ 5,530,545 216,091 (158,837) 5,587,799 2019 Increases Decreases 2020
Capital assets not being depreciated and amortized:
Land $ 30,029 75,375 (68) 105,336
Intangible assets 679 — — 679
Construction work in progress 462,606 220,427 (190,351) * 492,682 Total capital assets not being depreciated and amortized 493,314 295,802 (190,419) 598,697 Capital assets being depreciated and amortized:
Facilities and improvements 6,088,534 169,799 — 6,258,333 Intangible assets 23,123 374 — 23,497
Machinery and equipment 311,154 8,559 (713) 319,000
Total capital assets being depreciated and amortized 6,422,811 178,732 (713) 6,600,830 Less accumulated depreciation and amortization for:
Facilities and improvements (1,297,056) (126,666) — (1,423,722) Intangible assets (17,986) (2,101) — (20,087)
Machinery and equipment (212,425) (13,461) 713 (225,173) Total accumulated depreciation and amortization (1,527,467) (142,228) 713 (1,668,982) Total capital assets being depreciated and amortized, net 4,895,344 36,504 — 4,931,848 Total capital assets, net $ 5,388,658 332,306 (190,419) 5,530,545
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
89 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Wastewater Capital Assets – Wastewater’s capital assets as of June 30, 2021 and 2020 consist of the following:
*Decrease in construction work in progress is greater than increase in capital assets being depreciated is explained by $4,203 in capital project write-offs, mainly related to the Watershed Storm Management Project, Operational Decision System Ph 2 Project, and the Seacliff Ave Sewer Replacement-627 Project offset by $964 direct additions to machinery and equipment.
* Decrease in construction work in progress is greater than increase in capital assets being depreciated is explained by $4,728 in capital project write-offs, mainly related to the Collection System Condition Assessment Project, Westside Pump Station Force Main Project, and the Oceanside Plant Improvements Project. The remaining difference of $5,966 is related to $8,554 of constructio n work in progress transferred to land offset by $2,588 direct additions to intangible assets and machinery and equipment.
2020 Increases Decreases 2021
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 44,572 — — 44,572
Intangible assets 3,046 — — 3,046
Construction work in progress 910,338 619,819 (189,513) * 1,340,644 Total capital assets not being depreciated and amortized 957,956 619,819 (189,513) 1,388,262 Capital assets being depreciated and amortized:
Facilities and improvements 3,419,029 180,949 — 3,599,978 Intangible assets 4,615 4,361 — 8,976
Machinery and equipment 101,595 964 (162) 102,397
Total capital assets being depreciated and amortized 3,525,239 186,274 * (162) 3,711,351 Less accumulated depreciation and amortization for:
Facilities and improvements (1,344,830) (67,279) — (1,412,109) Intangible assets (4,615) — — (4,615)
Machinery and equipment (71,462) (4,739) 162 (76,039)
Total accumulated depreciation and amortization (1,420,907) (72,018) 162 (1,492,763) Total capital assets being depreciated and amortized, net 2,104,332 114,256 — 2,218,588 Total capital assets, net $ 3,062,288 734,075 (189,513) 3,606,850 2019 Increases Decreases 2020
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 36,018 8,554 — 44,572
Intangible assets 3,046 — — 3,046
Construction work in progress 765,624 405,798 (261,084) * 910,338 Total capital assets not being depreciated and amortized 804,688 414,352 (261,084) 957,956 Capital assets being depreciated and amortized:
Facilities and improvements 3,171,227 247,802 — 3,419,029 Intangible assets 4,615 — — 4,615
Machinery and equipment 99,961 2,588 (954) 101,595
Total capital assets being depreciated and amortized 3,275,803 250,390 * (954) 3,525,239 Less accumulated depreciation and amortization for:
Facilities and improvements (1,286,210) (58,620) — (1,344,830) Intangible assets (4,478) (137) — (4,615)
Machinery and equipment (67,999) (4,417) 954 (71,462)
Total accumulated depreciation and amortization (1,358,687) (63,174) 954 (1,420,907) Total capital assets being depreciated and amortized, net 1,917,116 187,216 — 2,104,332 Total capital assets, net $ 2,721,804 601,568 (261,084) 3,062,288
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
90 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Hetchy Water Capital Assets – Hetchy Water’s capital assets as of June 30, 2021 and 2020 consist of the following:
* Decrease in construction work in progress included $51 in capital project write-offs, mainly related to Hetchy Water’s share of road improvement projects and 2018 Moccasin Storm Project. The remaining difference of $173 was offset by direct additions to machinery and equipment.
* Decrease in construction work in progress is greater than increase in capital assets being depreciated explained by $1,062 in capital project write -offs, mainly related to Hetchy Water’s share of 2018 Moccasin Storm Project and Lower Cherry Aqueduct Project. The remaining difference of $345 was offset by direct additions to machinery and equipment.
2020 Increases Decreases 2021
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 3,232 — — 3,232
Intangible assets 6 — — 6
Construction work in progress 24,328 22,586 (11,581) * 35,333 Total capital assets not being depreciated and amortized 27,566 22,586 (11,581) 38,571 Capital assets being depreciated and amortized:
Facilities and improvements 284,480 11,488 — 295,968 Intangible assets 20,522 — — 20,522
Machinery and equipment 27,303 215 — 27,518
Total capital assets being depreciated and amortized 332,305 11,703 * — 344,008 Less accumulated depreciation and amortization for:
Facilities and improvements (169,874) (4,821) — (174,695) Intangible assets (9,739) (208) — (9,947)
Machinery and equipment (19,476) (980) — (20,456)
Total accumulated depreciation and amortization (199,089) (6,009) — (205,098) Total capital assets being depreciated and amortized, net 133,216 5,694 — 138,910 Total capital assets, net $ 160,782 28,280 (11,581) 177,481 2019 Increases Decreases 2020
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 3,232 — — 3,232
Intangible assets 6 — — 6
Construction work in progress 37,625 17,669 (30,966) * 24,328 Total capital assets not being depreciated and amortized 40,863 17,669 (30,966) 27,566 Capital assets being depreciated and amortized:
Facilities and improvements 254,630 29,850 — 284,480 Intangible assets 20,522 — — 20,522
Machinery and equipment 26,932 399 (28) 27,303
Total capital assets being depreciated and amortized 302,084 30,249 * (28) 332,305 Less accumulated depreciation and amortization for:
Facilities and improvements (166,017) (3,860) 3 (169,874) Intangible assets (9,532) (207) — (9,739)
Machinery and equipment (18,295) (1,209) 28 (19,476)
Total accumulated depreciation and amortization (193,844) (5,276) 31 (199,089) Total capital assets being depreciated and amortized, net 108,240 24,973 3 133,216 Total capital assets, net $ 149,103 42,642 (30,963) 160,782 —
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
91 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Hetchy Power Capital Assets – Hetchy Power’s capital assets as of June 30, 2021 and 2020 consist of the following:
* Decrease in construction work in progress is greater than increase in capital assets being depreciated explained by $8,333 in capital project write-offs, mainly related to Bay Corridor Project, Transmission and Distribution System Improvement Project, and Treasure Island Capital Improvement Project. The remaining difference of $528 was offset by direct additions to machinery and equipment.
* Decrease in construction work in progress is greater than increase in capital assets bei ng depreciated explained by $11,175 in capital project write -offs, mainly related to Transmission and Distribution System Improvement Project, Transbay Cable Project, Treasure Island Submarine Project and Alternative Transmission Project. The remaining dif ference of $674 was offset by direct additions to machinery and equipment.
GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30 , 1989 Financial Accounting Standards Board (FASB) and American Institute of Certified Public Accountants (AICPA) Pronouncements, requires that interest expense incurred during construction of assets be capitalized.
2020 Increases Decreases 2021
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 1,949 — — 1,949
Intangible assets 1,431 — — 1,431
Construction work in progress 164,749 70,059 (63,633) * 171,175 Total capital assets not being depreciated and amortized 168,129 70,059 (63,633) 174,555 Capital assets being depreciated and amortized:
Facilities and improvements 438,702 48,293 — 486,995 Intangible assets 25,193 — — 25,193
Machinery and equipment 109,270 7,535 — 116,805
Total capital assets being depreciated and amortized 573,165 55,828 * — 628,993 Less accumulated depreciation and amortization for:
Facilities and improvements (219,420) (11,331) — (230,751) Intangible assets (12,020) (253) — (12,273)
Machinery and equipment (64,425) (4,043) — (68,468)
Total accumulated depreciation and amortization (295,865) (15,627) — (311,492) Total capital assets being depreciated and amortized, net 277,300 40,201 — 317,501 Total capital assets, net $ 445,429 110,260 (63,633) 492,056 2019 Increases Decreases 2020
Capital assets not being depreciated and amortized:
Land and rights-of-way $ 1,949 — — 1,949
Intangible assets 1,431 — — 1,431
Construction work in progress 121,985 70,125 (27,361) * 164,749 Total capital assets not being depreciated and amortized 125,365 70,125 (27,361) 168,129 Capital assets being depreciated and amortized:
Facilities and improvements 424,732 13,970 — 438,702 Intangible assets 25,193 — — 25,193
Machinery and equipment 106,445 2,890 (65) 109,270
Total capital assets being depreciated and amortized 556,370 16,860 * (65) 573,165 Less accumulated depreciation and amortization for:
Facilities and improvements (208,432) (10,988) — (219,420) Intangible assets (11,766) (254) — (12,020)
Machinery and equipment (60,009) (4,481) 65 (64,425)
Total accumulated depreciation and amortization (280,207) (15,723) 65 (295,865) Total capital assets being depreciated and amortized, net 276,163 1,137 — 277,300 Total capital assets, net $ 401,528 71,262 (27,361) 445,429
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
92 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Interest included in the construction work in progress and total interest expense incurred during the years ended June 30, 2021 and 2020 are as follows:
(5) Restricted Assets
Department-wide Business Type Activities
The following table summarizes the department-wide restricted assets as of June 30, 20 21 and 2020.
Water Restricted Assets
Pursuant to the Indentures, all revenues of the Water Enterprise (except amounts on deposit in the rebate fund) are irrevocably pledged to the punctual payment of debt service on the Water Revenue and Refunding Bonds. Accordingly, the revenues of the Water Enterprise shall not be used for any other purpose while any of its Water Revenue and Refunding Bonds are outstanding, except as expressly permitted by the Indentures. Further, all revenues shall be deposited by the City Treasurer, by instruction of the Water Enterprise, in special funds designated as the Water Enterpr ise Revenue Fund (the Water Revenue Fund), which must be maintained in the City Treasury. These funds, held at the City Treasury, are recorded in the statement of net position of the Water Enterprise as cash and investments. Deposits in the Water Revenue F und, including earnings thereon, shall be appropriated, transferred, expended, or used for the following purposes pertaining to the financing, maintenance, and operation of the Water Enterprise in accordance with the following priority:
1. The payment of operation and maintenance expenses for such utility and related facilities;
2. The payment of pension charges and proportionate payments to such compensation and other insurance or outside reserve funds as the Water Enterprise may establish or the Board of Supervisors may require with respect to employees of the Water Enterprise;
3. The payment of principal, interest, reserve, sinking fund, and other mandatory funds created to secure Revenue Bonds issued by the Water Enterprise for the acquisition, construction , or extension of facilities owned, operated, or controlled by the Water Enterprise; Hetchy SFPUC
Water Wastewater Power Total
Interest expensed $ 184,606 34,862 1,970 221,438
Interest included in construction work in progress 19,461 33,420 1,083 53,964 Total interest incurred $ 204,067 68,282 3,053 275,402 - 2021
Hetchy SFPUC
Water Wastewater Power Total
Interest expensed $ 191,246 43,216 2,740 237,202
Interest included in construction work in progress 27,164 28,563 1,127 56,854 Total interest incurred $ 218,410 71,779 3,867 294,056 - 2020
2021 2020
Cash and investments with City Treasury $ 12,231 72,960 Cash and investments outside City Treasury 136,892 123,012 Interest and other receivables 89,379 82,837
Total restricted assets $ 238,502 278,809
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
93 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
4. The payment of principal and interest on General Obligation Bonds issued by the City for the Water Enterprise’s purposes;
5. Reconstruction and replacement as determined by the Water Enterprise or as required by any of the Water Enterprise’s Revenue Bond ordinances duly adopted and approved; and
6. The acquisition of land, real property, or interest in real property for, and the acquisition, construction, enlargement, and improve ment of, new and existing buildings, structures, facilities, equipment, appliances, and other property necessary or convenient to the development or improvement of such utility owned, controlled, or operated by the Water Enterprise; and for any other lawfu l purpose of the Water Enterprise, including the transfer of surplus funds pursuant to the Charter.
In accordance with the Indenture, the bond financing program maintains certain restricted cash and investment balances in trust. Restricted assets held in trust consisted of the following as of June 30, 2021 and 2020:
Restricted assets listed above as cash and investments with City Treasury are held in fund accounts within the Water Revenue Fund of the City Treasury.
Wastewater Restricted Assets
The Master Bond Resolution was discharged upon the issuance of the 2003 Series A Refunding Bonds. Pursuant to the Indenture, which became effective with the issuance of the 2003 Series A 2021 2020
Cash and investments outside City Treasury:
2010B Water revenue bond fund $ 21,492 21,581
2010D Water revenue bond fund — 2,935
2010E Water revenue bond fund 16,299 16,831
2010G Water revenue bond fund 17,698 17,691
2011A Water revenue bond fund — 1
2011B Water revenue bond fund 670 670
2011C Water revenue bond fund 140 802
2011D Water revenue bond fund — 1,981
2012A Water revenue bond fund 1 2,961
2012B Water revenue bond fund — 807
2012C1 Water revenue refunding bond fund — 1,181
2012C2 Water revenue refunding bond fund — 3,399
2015A Water revenue refunding bond fund — 1
2016B Water revenue bond fund — 1
2017A Water revenue bond fund — 363
2017B Water revenue bond fund — 4,239
2017D Water revenue refunding bond fund — 1
2019A Water revenue refunding bond fund — 47
2019B Water revenue refunding bond fund — 6
2019C Water revenue refunding bond fund — 2
2020A Water revenue bond fund 7,370 —
2020B Water revenue bond fund 3,097 —
2020C Water revenue bond fund 3,463 —
2020D Water revenue bond fund 1,513 —
2020F Water revenue refunding bond fund 12 —
2020G Water revenue refunding bond fund 22 —
2020H Water revenue refunding bond fund 7 —
2009C Certificates of participation - 525 Golden Gate 1,638 1,816 2009D Certificates of participation - 525 Golden Gate 6,551 7,147 Commercial Paper - Tax Exempt 29,793 15
Commercial Paper - Taxable 34 31
Habitat reserve endowment fund 13,053 13,053
Total cash and investments outside City Treasury 122,853 97,562 Interest and other receivables:
Water bond construction fund including capacity fee receivables 3,987 3,778 Due from other government for State Revolving Fund 49,546 73,271 Total restricted assets $ 176,386 174,611
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
94 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Refunding Bonds, all net revenues of the Wastewater Enterprise (except am ounts on deposit in the rebate fund) are irrevocably pledged to the punctual payment of debt service on the Wastewater revenue bonds. Accordingly, the net revenues of the Wastewater Enterprise shall not be used for any other purpose while any of its revenu e bonds are outstanding except as expressly permitted by the Indenture. Further, all net revenues shall be deposited by the City Treasurer, by instruction of the Wastewater Enterprise, in special funds designated as the Revenue Fund, which must be maintain ed in the City Treasury. These funds, held at the City Treasury, are recorded in the statements of net position of the Wastewater Enterprise as cash and investments. Deposits in the Revenue Fund, including earnings thereon, shall be appropriated, transferr ed, expended, or used for the following purposes and only in accordance with the following priority:
1. The payment of operation and maintenance costs of the Wastewater Enterprise;
2. The payment of State revolving fund loans;
3. The payment of bonds, parity State revolving fund loans, p olicy costs, and amounts due as reimbursement under any letter of credit agreement; and
4. Any other lawful purpose of the Wastewater Enterprise.
In accordance with the Indenture, the Wastewater Enterprise maintains certain restricted cash and investment balances in trust. Restricted assets held in trust consisted of the following as of June 30, 2021 and 2020:
Restricted assets listed above as cash and investments with City Treasury are held in fund accounts within the Sewer Revenue Fund of the City Treasury.
Hetchy Water Restricted Assets
Hetchy Water restricted assets held in trust consist of the following as of June 30, 2021 and 2020:
Restricted assets listed above as cash and investments with City Treasury are held in funds accounts within the Hetchy Water Revenue Fund.
2021 2020
Cash and investments with City Treasury:
Wastewater revenue bond construction fund $ — 55,132
Cash and investments outside City Treasury:
2009 Series C Certificates of Participation – 525 Golden Gate 433 480 2009 Series D Certificates of Participation – 525 Golden Gate 1,732 1,890 2010 Series A Wastewater revenue bond fund 3,592 3,621 2010 Series B Wastewater revenue bond fund 4,401 6,493 2018 Series A Wastewater revenue bond fund — 4,002
2018 Series B Wastewater revenue bond fund — 3,462
2018 Series C Wastewater revenue bond fund — 1,424
Commercial Paper - Tax Exempt 38 132
Total cash and investments outside City Treasury 10,196 21,504 Interest and other receivables:
Wastewater revenue bond construction fund including capacity fee receivables 3,291 2,331 Due from other government for State Revolving Fund 20,755 3,265 Total restricted assets $ 34,242 82,232
2021 2020
Hetchy Water
Cash and investments with City Treasury:
Hetch Hetchy bond construction fund $ 6,990 9,768
Interest receivable:
Hetch Hetchy bond construction fund — 24
Total restricted assets $ 6,990 9,792
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
95 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Hetchy Power Restricted Assets
Pursuant to the Hetchy Power Trust Indenture (the “Indenture”), established in fiscal year 2015, net revenues of the Hetchy Power are pledged first to the 2015 Series AB Bonds, and have a priority lien on the pledge of net revenues to the outstanding CREBs , QECBs, and NCREBs (the “Subordinate Obligations”). The Lease/Purchase Agreements for the Subordinate Obligations pledge the net revenues of the Hetchy Power to these bonds, and such pledge is subordinate in lien to the net revenues pledge for the 2015 Series AB Bonds (the “Bonds” or “Bond”).
In the Indenture, the SFPUC covenants and agrees that it will pay into the Revenue Fund as received all Revenues of Hetchy Power and shall be used and applied, as provided by the Indenture, solely for the purposes of operating and maintaining Hetchy Power and paying all costs, charges, and expenses in connection therewith and for the purpose of making repairs, renewals, and replacements to Hetchy Power and constructing additions, betterments, and extensions thereto.
The Indenture provides that Revenues deposited in the Revenue Fund shall be disbursed in the following order of priority:
1. The payment of operation and maintenance expenses;
2. Any priority reconstruction and replacement fund deposits;
3. Deposit in the interest account of each Bond Fund;
4. Deposit in the bond retirement account of each Bond Fund;
5. Deposit in the reserve fund;
6. (i) Payment of principal and premium, if any, and interest on any Subordinate Obligations; (ii) deposit into a reserve fund securing any Sub ordinate Obligations; (iii) Swap Agreement payments pursuant to Swap Agreements entered into by the SFPUC with respect to any Subordinate Obligations; and (iv) payment to any financial institution or insurance company providing any letter of credit, line of credit, or other credit or liquidity facility, including municipal bond insurance and guarantees, that secures the payment of principal of or interest on any Subordinate Obligations; in each case in any order of priority within this paragraph which may be hereafter established by the SFPUC by resolution;
7. Any additional reconstruction and replacement fund deposits into the reconstruction and replacement fund;
8. Any necessary or desirable capital additions or improvements to the Hetchy Power;
9. Any payment unde r a Take -or-Pay Power Purchase Agreement that does not constitute an operation and maintenance expense;
10. Any payment under a Swap Agreement that does not constitute a Swap Agreement payment; and
11. Any other lawful purpose of the SFPUC.
In the Indenture, the SFPUC covenants and agrees to transfer to the Trustee for deposit in the Interest Account of each applicable Bond Fund all Refundable Credits received by the SFPUC.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
96 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
In accordance with the Agreements, Hetchy Power maintains certain restricted cash and investment balances in trust. Restricted assets held in trust consist of the following as of June 30, 2021 and 2020:
Restricted assets listed above as cash and investments with City Treasury are held in funds accounts within the Hetchy Power Revenue Fund.
(6) Short-Term Debt
Department-wide Business Type Activities
The following table summarizes the department-wide short-term commercial paper debt.
Water Short-Term Debt
The Commission and the Board of Supervisors have authorized the issuance of up to $500,000 in commercial paper pursuant to the voter-approved 2002 Proposition E. As of June 30, 2021 and 2020, amounts outstanding under Proposition E were $105,862 and $362,354, respectively.
Commercial paper interest rates ranged from 0.1% to 2.2%.
With maturities up to 270 days, the Water Enterprise intends to maintain the program by remarketing the commercial paper upon maturity over the near -to-medium term, at which time outstanding commercial paper will likely be refunded with revenue bonds. This is being done to take advantage of the continued low interest rate environment. If the commercial paper interest rates rise to a level that exceeds these benefits, the Water Enterprise will refinance the commercial paper with the long -term, fixed-rate debt.
In accordance with GASB Statement No. 88, Certain Disclosures Related to Debt , Including Direct Borrowing and Direct Placements, the Water Enterprise had $394,138 and $137,646 in unused authorization as of June 30, 2021 and 2020, respectively. Significant Events of default as specified in the Reimbursement Agreements, or Revolving Credit Agreement include 1 . payment defaults 2 . material breach of warranty, representation, or other non -remedied breach of covenants as specified in the respective agreements (n ot cured within applicable grace periods) and 3 . bankruptcy and 2021 2020
Hetchy Power
Cash and investments with City Treasury:
Hetch Hetchy bond construction fund $ 5,241 8,060
Cash and investments outside City Treasury:
2009 Series C Certificates of Participation – 525 Golden Gate 223 247 2009 Series D Certificates of Participation – 525 Golden Gate 892 973 2015 Series A Revenue Bonds 2,193 2,193
2015 Series B Revenue Bonds 516 516
Commercial Paper 19 17
Total restricted cash and investments outside City Treasury 3,843 3,946 Interest receivable:
Hetch Hetchy bond construction fund 11,800 168
Total restricted assets $ 20,884 12,174
2020 Additions Reductions 2021
Water $ 362,354 16,328 (272,820) 105,862
Wastewater 207,939 435,450 (4,871) 638,518
Hetchy Power 63,535 51,136 — 114,671
SFPUC Total $ 633,828 502,914 (277,691) 859,051
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
97 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
insolvency events, which may result in all outstanding obligations to be immediately due and payable (unless waived by the respective Bank, if applicable); or issuance of a No -Issuance Notice, reduction in credit to outstanding amount plus interest coverage, and/or termination of the respective agreement. As of June 30, 2021, there were no such events describe herein.
Wastewater Short-Term Debt
Under the voter approved 2002 Proposition E, the Commission and Board of Supervisors has authorized the issuance of up to $750,000 in commercial paper for the purpose of reconstructing, expanding, repairing, or improving the Wastewater Enterprise’s facilities. T he Wastewater Enterprise had $638,518 and $207,939 in commercial paper outstanding as of June 30, 2021 and 2020, respectively.
In accordance with GASB Statement No. 88, Certain Disclosures Related to Debt , Including Direct Borrowings and Direct Placement s, the Wastewater Enterprise had $111,482 and $542,061 in unused authorization as of June 30, 202 1 and 2020, respectively. Significant Events of default as specified in the Reimbursement Agreements, Revolving Credit and Term Loan Agreements, or Revolving Credit Agreements include 1 . payment defaults 2 . material breach of warranty, representation, or other non-remedied breach of covenants as specified in the respective agreements (not cured within applicable grace periods), and 3 . bankruptcy and i nsolvency events, which may result in all outstanding obligations to be immediately due and payable (unless waived by the respective Bank, if applicable); or issuance of a No-Issuance Notice, reduction in credit to outstanding amount plus interest coverage, and/or termination of the respective agreement. As of June 30, 2021, there were no such events described herein.
Hetchy Water Short-Term Debt
Hetchy Water had no commercial paper outstanding as of June 30, 2021 and 2020.
Hetchy Power Short-Term Debt
Effective March 2019, under Charter Sections 9.107(6) and 9.107(8), and 2018 Proposition A, the Commission and Board of Supervisors authorized the issuance of up to $250,000 in commercial paper notes for the purpose of reconstructing, repl acing, expanding, repairing or improving power facilities of Hetchy Power. Interest rates for the commercial paper ranged from 0.1% to 0.2% and
0.2% to 4.0% in fiscal year 2021 and 2020, respectively. Hetchy Power had $114,671 and $63,535 commercial paper outstanding as of June 30, 20 21 and 20 20, respectively. The Power Enterprise had $135,329 and $186,465 in unused authorization as of June 30, 2021 and 2020, respectively.
In accordance with GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements , Significant Events of default as specified in the Reimbursement Agreements include 1 . non-payment, 2 . material breach of warranty, representation, or other non - remedied breach of covenants as specified in the respective agreements and 3 . bankruptcy, which may result in all outstanding obligations to be immediately due and payable (unless waived by the respective Bank, if applicable); or issuance of a No-Issuance Notice, reduction in credit to outstanding amount plus interest coverage, and/or termination of the respective agreement. As of June 30, 2021, there were no such events described herein.
CleanPowerSF Short-Term Debt
CleanPowerSF had no commercial paper outstanding as of June 30, 2021 and 2020.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
98 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
(7) Changes in Long-Term Liabilities
Department-wide Long-Term Liability activities for the year s ended June 30, 20 21 and 2020 are as follows:
*Included elimination entries of interfund payables and receivables between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters Living Machine.
Interest Maturity Due within
rate (Calendar Year) 2020 Additions Reductions 2021 one year Revenue Bonds:
2010A wastewater revenue bonds 4.00 – 5.00 % 2021 $ 17,210 — (8,390) 8,820 8,820 2010B water revenue bonds (Build America) 4.00 – 6.00 2040 373,420 — (11,920) 361,500 12,330 2010B wastewater revenue bonds (Build America) 4.65 – 5.82 2040 192,515 — — 192,515 — 2010D water revenue refunding bonds 3.00 – 5.00 2021 30,990 — (30,990) — — 2010E water revenue bonds (Build America) 4.90 – 6.00 2040 344,200 — — 344,200 — 2010G water revenue bonds (Build America) 6.95 2050 351,470 — — 351,470 — 2011B water revenue bonds 3.50 – 5.00 2041 1,485 — (730) 755 755 2011C water revenue bonds 3.00 – 5.00 2041 1,620 — (795) 825 825 2011D water revenue refunding bonds 4.00 – 5.00 2028 19,135 — (19,135) — — 2012A water revenue bonds 4.00 – 5.00 2043 216,540 — (216,540) — — 2012B water revenue bonds 4.00 – 5.00 2043 16,520 — (16,520) — — 2012C1 water revenue refunding bonds 4.00 2031 8,465 — (8,465) — — 2012C2 water revenue refunding bonds 4.00 – 5.00 2032 69,570 — (69,570) — — 2013A wastewater revenue bonds 1.00 – 5.00 2025 44,445 — (14,850) 29,595 14,060 2013B wastewater revenue bonds 4.00 – 5.00 2042 331,585 — — 331,585 — 2015A water revenue refunding bonds 2.00 – 5.00 2036 412,380 — (14,635) 397,745 15,325 2015A Hetchy Power Revenue Bonds 4.00 – 5.00 2045 32,025 — — 32,025 — 2015B Hetchy Power Revenue Bonds 3.00 – 4.00 2026 5,335 — (785) 4,550 815 2016A water revenue refunding bonds 4.00 – 5.00 2039 763,005 — (19,955) 743,050 23,315 2016B water revenue refunding bonds 1.50 – 5.00 2030 95,980 — (14,455) 81,525 10,015 2016C water revenue bonds 0.87 – 4.19 2046 242,755 — (5,705) 237,050 5,820 2016A wastewater revenue bonds 4.00 – 5.00 2046 240,580 — — 240,580 — 2016B wastewater revenue bonds 4.00 – 5.00 2046 67,820 — — 67,820 — 2017A water revenue bonds 5.00 2047 121,140 — (94,140) 27,000 — 2017B water revenue bonds 5.00 2047 147,725 — (114,795) 32,930 — 2017C water revenue bonds 5.00 2047 70,675 — (54,925) 15,750 — 2017D water revenue refunding bonds 2.00 – 5.00 2035 348,610 — (890) 347,720 925 2017E water revenue refunding bonds 4.00 – 5.00 2031 48,890 — — 48,890 — 2017F water revenue refunding bonds 5.00 2031 8,705 — — 8,705 — 2017G water revenue refunding bonds 2.03 – 2.91 2024 33,280 — (500) 32,780 820 2018A wastewater revenue bonds 4.00 – 5.00 2043 229,050 — — 229,050 — 2018B wastewater revenue bonds 5.00 2043 185,950 — — 185,950 — 2018C wastewater revenue bonds 2.13 2048 179,145 — — 179,145 — 2019A water revenue refunding bonds 1.81 – 3.47 2043 622,580 — (6,855) 615,725 24,405 2019B water revenue refunding bonds 3.15 – 3.52 2041 16,450 — — 16,450 65 2019C water revenue refunding bonds 3.15 – 3.52 2041 17,925 — — 17,925 75 2020A water revenue bonds 4.00 – 5.00 2050 — 150,895 — 150,895 — 2020B water revenue bonds 5.00 2050 — 61,330 — 61,330 — 2020C water revenue bonds 4.00 2050 — 85,335 — 85,335 — 2020D water revenue bonds 3.00 2050 — 49,200 — 49,200 — 2020E water revenue refunding bonds 2.83 – 2.95 2047 — 341,435 — 341,435 5,900 2020F water revenue refunding bonds 0.26 – 3.15 2047 — 136,880 — 136,880 1,425 2020G water revenue refunding bonds 0.26 – 3.10 2043 — 120,585 — 120,585 5,820 2020H water revenue refunding bonds 0.26 – 3.15 2047 — 65,495 — 65,495 680 Clean Renewable Energy Bonds 0.00 2022 1,265 — (422) 843 422 Qualified Energy Conservation Bonds 4.74 2027 4,229 — (542) 3,687 549 New Clean Renewable Energy Bonds 2012 4.74 2020 130 — (130) — — New Clean Renewable Energy Bonds 2015 4.62 2032 3,190 — (1,411) 1,779 142 Less issuance discount (177) — 24 (153) —
Add issuance premiums 449,024 73,542 (92,498) 430,068 — Total revenue bonds payable 6,366,836 1,084,697 (820,524) 6,631,009 133,308 2009C Certificates of Participation (COPs) 2.00 – 5.00 2022 12,490 — (3,955) 8,535 4,160 2009C COPs issuance premiums 225 — (130) 95 —
2009D COPs (Build America) 6.36 – 6.49 2041 129,550 — — 129,550 — State Revolving Fund Loans (CWSRF Loans) Water 1.00 2051 73,271 49,546 (15,410) 107,407 1,667 State Revolving Fund Loans (CWSRF Loans) Wastewater 0.80 – 1.80 2051 88,549 22,468 (2,458) 108,559 2,483 Other post-employment benefits obligations 260,397 26,291 (52,200) 234,488 — Net Pension Liability 313,899 164,517 (96,034) 382,382 — Accrued vacation and sick leave 25,428 18,447 (12,099) 31,776 15,639 Accrued workers’ compensation 18,612 4,641 (4,605) 18,648 3,467 Due to Other City departments 851 — (482) 369 369
Damage claims liability 29,544 38,914 (13,383) 55,075 20,925 Wholesale balancing account water 64,857 — (3,993) 60,864 21,538 Pollution remediation obligations 9,377 — (306) 9,071 — Unearned revenues, refunds, and other 9,117 28,750 (21,708) 16,159 6,191 Total $ 7,403,003 1,438,271 (1,047,287) 7,793,987 209,747 *
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
99 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
* Included elimination entries of interfund payables and receivables between Wastewater and Hetchy Power for the 525 Golden Gate Avenue Headquarters Living Machine.
Interest Maturity Due within
rate (Calendar Year) 2019 Additions Reductions 2020 one year Revenue Bonds:
2009A water revenue bonds 4.00 – 5.25 % 2019 $ 9,635 — (9,635) — — 2009B water revenue bonds 4.00 – 5.00 2019 9,635 — (9,635) — — 2010A water revenue bonds 2.00 – 5.00 2019 2,530 — (2,530) — — 2010A wastewater revenue bonds 4.00 – 5.00 2021 25,190 — (7,980) 17,210 8,390 2010B water revenue bonds (Build America) 4.00 – 6.00 2040 384,975 — (11,555) 373,420 11,920 2010B wastewater revenue bonds (Build America) 4.65 – 5.82 2040 192,515 — — 192,515 — 2010D water revenue refunding bonds 3.00 – 5.00 2021 47,770 — (16,780) 30,990 17,640 2010E water revenue bonds (Build America) 4.90 – 6.00 2040 344,200 — — 344,200 — 2010F water revenue bonds 3.00 – 5.50 2030 23,975 — (23,975) — — 2010G water revenue bonds (Build America) 6.95 2050 351,470 — — 351,470 — 2011A water revenue bonds 4.25 – 5.00 2019 322,480 — (322,480) — — 2011B water revenue bonds 3.50 – 5.00 2041 17,870 — (16,385) 1,485 730 2011C water revenue bonds 3.00 – 5.00 2041 19,475 — (17,855) 1,620 795 2011D water revenue refunding bonds 4.00 – 5.00 2028 19,135 — — 19,135 — 2012A water revenue bonds 4.00 – 5.00 2043 459,455 — (242,915) 216,540 — 2012B water revenue bonds 4.00 – 5.00 2043 16,520 — — 16,520 — 2012C1 water revenue refunding bonds 4.00 2031 8,465 — — 8,465 — 2012C2 water revenue refunding bonds 4.00 – 5.00 2032 69,570 — — 69,570 — 2012D water revenue refunding bonds 1.75 – 5.00 2019 12,215 — (12,215) — — 2013A wastewater revenue bonds 1.00 – 5.00 2025 58,550 — (14,105) 44,445 14,850 2013B wastewater revenue bonds 4.00 – 5.00 2042 331,585 — — 331,585 — 2015A water revenue refunding bonds 2.00 – 5.00 2036 426,380 — (14,000) 412,380 14,635 2015A Hetchy Power Revenue Bonds 4.00 – 5.00 2045 32,025 — — 32,025 — 2015B Hetchy Power Revenue Bonds 3.00 – 4.00 2026 6,090 — (755) 5,335 785 2016A water revenue refunding bonds 4.00 – 5.00 2039 763,005 — — 763,005 19,955 2016B water revenue refunding bonds 1.50 – 5.00 2030 104,900 — (8,920) 95,980 14,455 2016C water revenue bonds 0.87 – 4.19 2046 248,360 — (5,605) 242,755 5,705 2016A wastewater revenue bonds 4.00 – 5.00 2046 240,580 — — 240,580 — 2016B wastewater revenue bonds 4.00 – 5.00 2046 67,820 — — 67,820 — 2017A water revenue bonds 5.00 2047 121,140 — — 121,140 — 2017B water revenue bonds 5.00 2047 147,725 — — 147,725 — 2017C water revenue bonds 5.00 2047 70,675 — — 70,675 — 2017D water revenue refunding bonds 2.00 – 5.00 2035 349,470 — (860) 348,610 890 2017E water revenue refunding bonds 4.00 – 5.00 2031 48,890 — — 48,890 — 2017F water revenue refunding bonds 5.00 2031 8,705 — — 8,705 — 2017G water revenue refunding bonds 2.03 – 2.91 2024 33,780 — (500) 33,280 500 2018A wastewater revenue bonds 4.00 – 5.00 2043 229,050 — — 229,050 — 2018B wastewater revenue bonds 5.00 2043 185,950 — — 185,950 — 2018C wastewater revenue bonds 2.13 2048 179,145 — — 179,145 — 2019A water revenue refunding bonds 1.81 – 3.47 2043 — 622,580 — 622,580 6,855 2019B water revenue refunding bonds 3.15 – 3.52 2041 — 16,450 — 16,450 — 2019C water revenue refunding bonds 3.15 – 3.52 2041 — 17,925 — 17,925 — Clean Renewable Energy Bonds 0.00 2022 1,687 — (422) 1,265 422 Qualified Energy Conservation Bonds 4.74 2027 4,765 — (536) 4,229 542 New Clean Renewable Energy Bonds 2012 4.74 2020 713 — (583) 130 130 New Clean Renewable Energy Bonds 2015 4.62 2032 3,422 — (232) 3,190 236 Less issuance discount (202) — 25 (177) —
Add issuance premiums 512,413 — (63,389) 449,024 —
Total revenue bonds payable 6,513,703 656,955 (803,822) 6,366,836 119,435 1991 Capital appreciation bonds 0.00 2019 2,029 71 (2,100) — — 2009C Certificates of Participation (COPs) 2.00 – 5.00 2022 16,255 — (3,765) 12,490 3,955 4160 2009C COPs issuance premiums 402 — (177) 225 —
2009D COPs (Build America) 6.36 – 6.49 2041 129,550 — — 129,550 — State Revolving Fund Loans (CWSRF Loans) Water 1.00 2051 — 73,271 — 73,271 — State Revolving Fund Loans (CWSRF Loans) Wastewater 1.60 – 1.80 2050 88,032 1,756 (1,239) 88,549 2,458 Other post-employment benefits obligations 239,810 41,364 (20,777) 260,397 — Net Pension Liability 306,846 72,578 (65,525) 313,899 — Accrued vacation and sick leave 21,619 16,281 (12,472) 25,428 13,652 Accrued workers’ compensation 19,749 3,333 (4,470) 18,612 3,478 Due to Other City departments 350 14,331 (13,830) 851 481 (117) Damage claims liability 30,161 12,700 (13,317) 29,544 14,766 851 Wholesale balancing account water 64,829 833 (805) 64,857 11,257 — Pollution remediation obligations 9,694 300 (617) 9,377 — Unearned revenues, refunds, and other 8,954 19,215 (19,052) 9,117 5,718 Total $ 7,451,983 912,988 (961,968) 7,403,003 175,200 *
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
100 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Water Long-Term Liability activities for the years ended June 30, 2021 and 2020 are as follows:
Interest Maturity Due within
rate (Calendar Year) 2020 Additions Reductions 2021 one year Revenue Bonds:
2010B revenue bonds (Build America) 4.00 – 6.00 % 2040 $ 373,420 — (11,920) 361,500 12,330 2010D revenue refunding bonds 3.00 – 5.00 2021 30,990 — (30,990) — — 2010E revenue bonds (Build America) 4.90 – 6.00 2040 344,200 — — 344,200 — 2010G revenue bonds (Build America) 6.95 2050 351,470 — — 351,470 — 2011B revenue bonds 3.50 – 5.00 2041 1,485 — (730) 755 755 2011C revenue bonds 3.00 – 5.00 2041 1,620 — (795) 825 825 2011D revenue refunding bonds 4.00 – 5.00 2028 19,135 — (19,135) — — 2012A revenue bonds 4.00 – 5.00 2043 216,540 — (216,540) — — 2012B revenue bonds 4.00 – 5.00 2043 16,520 — (16,520) — — 2012C1 revenue refunding bonds 4.00 2031 8,465 — (8,465) — — 2012C2 revenue refunding bonds 4.00 – 5.00 2032 69,570 — (69,570) — — 2015A revenue refunding bonds 2.00 – 5.00 2036 412,380 — (14,635) 397,745 15,325 2016A revenue refunding bonds 4.00 – 5.00 2039 763,005 — (19,955) 743,050 23,315 2016B revenue refunding bonds 1.50 – 5.00 2030 95,980 — (14,455) 81,525 10,015 2016C revenue bonds 0.87 – 4.19 2046 242,755 — (5,705) 237,050 5,820 2017A revenue bonds 5.00 2047 121,140 — (94,140) 27,000 — 2017B revenue bonds 5.00 2047 147,725 — (114,795) 32,930 — 2017C revenue bonds 5.00 2047 70,675 — (54,925) 15,750 — 2017D revenue refunding bonds 2.00 – 5.00 2035 348,610 — (890) 347,720 925 2017E revenue refunding bonds 4.00 – 5.00 2031 48,890 — — 48,890 — 2017F revenue refunding bonds 5.00 2031 8,705 — — 8,705 — 2017G revenue refunding bonds 2.03 – 2.91 2024 33,280 — (500) 32,780 820 2019A revenue refunding bonds 1.81 – 3.47 2043 622,580 — (6,855) 615,725 24,405 2019B revenue refunding bonds 3.15 – 3.52 2041 16,450 — — 16,450 65 2019C revenue refunding bonds 3.15 – 3.52 2041 17,925 — — 17,925 75 2020A revenue bonds 4.00 – 5.00 2050 — 150,895 — 150,895 — 2020B revenue bonds 5.00 2050 — 61,330 — 61,330 —
2020C revenue bonds 4.00 2050 — 85,335 — 85,335 —
2020D revenue bonds 3.00 2050 — 49,200 — 49,200 —
2020E revenue refunding bonds 2.83 – 2.95 2047 — 341,435 — 341,435 5,900 2020F revenue refunding bonds 0.26 – 3.15 2047 — 136,880 — 136,880 1,425 2020G revenue refunding bonds 0.26 – 3.10 2043 — 120,585 — 120,585 5,820 2020H revenue refunding bonds 0.26 – 3.15 2047 — 65,495 — 65,495 680 Less issuance discount (143) — 10 (133) —
Add issuance premiums 311,923 73,542 (83,707) 301,758 — Total revenue bonds payable 4,695,295 1,084,697 (785,217) 4,994,775 108,500 2009C Certificates of Participation (COPs) 2.00 – 5.00 2022 8,918 — (2,824) 6,094 2,970 2009C COPs issuance premiums 161 — (92) 69 —
2009D COPs (Build America) 6.36 – 6.49 2041 92,499 — — 92,499 — State Revolving Funds Loan 1.00 2051 73,271 49,546 (15,410) 107,407 1,667 Other post-employment benefits obligations 163,684 14,036 (28,949) 148,771 — Net pension liability 178,133 93,066 (54,782) 216,417 — Accrued vacation and sick leave 11,620 10,109 (7,813) 13,916 6,787 Accrued workers’ compensation 9,174 1,912 (2,258) 8,828 1,694 Damage claims liability 10,767 27,643 (1,687) 36,723 14,400 Wholesale balancing account 64,857 — (3,993) 60,864 21,538 Pollution remediation obligations 1,577 — (306) 1,271 — Total $ 5,309,956 1,281,009 (903,331) 5,687,634 157,556
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
101 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The payments of principal and interest amounts on various bonds are secured by net revenues of the Water Enterprise.
a) Capital Appreciation Bonds
The capital appreciation bonds mature from November 1, 2018 and November 1, 2019. The bonds were insured by Municipal Bond Insurance Association (MBIA) and carried “Aaa” and “AAA” ratings from Moody’s and S&P , respectively. In February 2009, the bonds were further reinsured by National Public Finance Guarantees Corp. (NPFGC) and carried “Baa1” and “A” ratings from Moody’s and S&P, respectively. On May 29, 2013, the SFPUC transferred $2,500 to U.S. Bank, trustee of the 1991 Series A San Francisco Water Revenue Bonds (the Bonds), for the purpose of replacing the debt service reserve surety policy that had been satisfying the reserve requirement Interest Maturity Due within
rate (Calendar Year) 2019 Additions Reductions 2020 one year Revenue Bonds:
2009A revenue bonds 4.00 – 5.25 % 2019 $ 9,635 — (9,635) — — 2009B revenue bonds 4.00 – 5.00 2019 9,635 — (9,635) — — 2010A revenue bonds 2.00 – 5.00 2019 2,530 — (2,530) — — 2010B revenue bonds (Build America) 4.00 – 6.00 2040 384,975 — (11,555) 373,420 11,920 2010D revenue refunding bonds 3.00 – 5.00 2021 47,770 — (16,780) 30,990 17,640 2010E revenue bonds (Build America) 4.90 – 6.00 2040 344,200 — — 344,200 — 2010F revenue bonds 3.00 – 5.50 2030 23,975 — (23,975) — — 2010G revenue bonds (Build America) 6.95 2050 351,470 — — 351,470 — 2011A revenue bonds 4.25 – 5.00 2019 322,480 — (322,480) — — 2011B revenue bonds 3.50 – 5.00 2041 17,870 — (16,385) 1,485 730 2011C revenue bonds 3.00 – 5.00 2041 19,475 — (17,855) 1,620 795 2011D revenue refunding bonds 4.00 – 5.00 2028 19,135 — — 19,135 — 2012A revenue bonds 4.00 – 5.00 2043 459,455 — (242,915) 216,540 — 2012B revenue bonds 4.00 – 5.00 2043 16,520 — — 16,520 — 2012C1 revenue refunding bonds 4.00 2031 8,465 — — 8,465 — 2012C2 revenue refunding bonds 4.00 – 5.00 2032 69,570 — — 69,570 — 2012D revenue refunding bonds 1.75 – 5.00 2019 12,215 — (12,215) — — 2015A revenue refunding bonds 2.00 – 5.00 2036 426,380 — (14,000) 412,380 14,635 2016A revenue refunding bonds 4.00 – 5.00 2039 763,005 — — 763,005 19,955 2016B revenue refunding bonds 1.50 – 5.00 2030 104,900 — (8,920) 95,980 14,455 2016C revenue bonds 0.87 – 4.19 2046 248,360 — (5,605) 242,755 5,705 2017A revenue bonds 5.00 2047 121,140 — — 121,140 — 2017B revenue bonds 5.00 2047 147,725 — — 147,725 — 2017C revenue bonds 5.00 2047 70,675 — — 70,675 —
2017D revenue refunding bonds 2.00 – 5.00 2035 349,470 — (860) 348,610 890 2017E revenue refunding bonds 4.00 – 5.00 2031 48,890 — — 48,890 — 2017F revenue refunding bonds 5.00 2031 8,705 — — 8,705 — 2017G revenue refunding bonds 2.03 – 2.91 2024 33,780 — (500) 33,280 500 2019A revenue refunding bonds 1.81 – 3.47 2043 — 622,580 — 622,580 6,855 2019B revenue refunding bonds 3.15 – 3.52 2041 — 16,450 — 16,450 — 2019C revenue refunding bonds 3.15 – 3.52 2041 — 17,925 — 17,925 — Less issuance discount (154) — 11 (143) —
Add issuance premiums 366,297 — (54,374) 311,923 —
Total revenue bonds payable 4,808,548 656,955 (770,208) 4,695,295 94,080 1991 Capital appreciation bonds 0.00 2019 2,029 71 (2,100) — — 2009C Certificates of Participation (COPs) 2.00 – 5.00 2022 11,606 — (2,688) 8,918 2,824 2009C COPs issuance premiums 287 — (126) 161 —
2009D COPs (Build America) 6.36 – 6.49 2041 92,499 — — 92,499 — State Revolving Funds Loan 1.00 2051 — 73,271 — 73,271 — Other post-employment benefits obligations 150,771 25,253 (12,340) 163,684 — Net pension liability 175,429 39,194 (36,490) 178,133 — Accrued vacation and sick leave 10,100 9,716 (8,196) 11,620 6,169 Accrued workers’ compensation 10,336 1,065 (2,227) 9,174 1,781 Damage claims liability 11,509 709 (1,451) 10,767 4,740 Wholesale balancing account 64,829 833 (805) 64,857 11,257 Pollution remediation obligations 2,194 — (617) 1,577 — Total $ 5,340,137 807,067 (837,248) 5,309,956 120,851
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
102 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
of the bonds. The surety policy had been provided by NPFGC. With this transfer, the surety policy is effectively terminated. The amount deposited with the U.S. Bank will continue to satisfy the reserve requirement on the bonds. Interest on the capital appreciation bonds is due upon maturity and is recognized as annual interest expense over the life of the bonds using the interest method. The Water Enterprise has recognized $2,029 of unpaid principal and interest on the capital appreciation bonds as of June 30, 2019 and has reported it as capital appreciation bonds in the acc ompanying statements of net position. As of June 30, 2021 and 2020, the balance of unpaid principal and interest on the capital appreciation bonds was $0. b) Water Revenue Bonds 2009 Series A
On April 16, 2015, the Water Enterprise issued $429,600 of the 2015 Series A revenue bonds for the purpose of refunding $431,860 of the then outstanding 2006 Series A revenue bonds and $39,030 of the 2009 Series A revenue bonds. The 2015 bonds bear coupon rates of 2.0% and
5.0% and mature serially from 2018 to 2036. T he refunded 2009 Series A bonds carried coupon rates of 5.0% and matured serially between 2023 and 2026. Although the refunding resulted in the recognition of a deferred accounting loss of $6,168, the economic gain was $2,559 or 6.6% of the refunded princi pal. The remaining 2009 Series A bonds not refunded included serial and term bonds with interest rates ranging from 4.0% to 5.3%. The Bonds mature through November 1, 2039.
A portion of the proceeds of the 2015 Series A revenue refunding bonds was deposit ed with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, dated April 1, 2015, to refund and legally defease a portion of the outstanding 2009 Series A bonds. This deposit, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities consisting of United States Treasury Securities - SLGS. The principal and interest on monies held by the escrow agent will be sufficient to refund and legally defea se the 2009 Series A bonds maturing on November 1, 2023 to and including November 1, 2026.
A portion of the proceeds of the 2016 Series A refunding bonds was deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, dated O ctober 1, 2016, to refund and legally defease a portion of the outstanding 2009 Series A bonds. This deposit, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to refund and legally defease bonds maturing November 1, 2020 through and including November 1, 2022 and November 1, 2026 to and including November 1, 2039. As of June 30, 2021 and 2020, the principal amount of 2009 Series A bonds outstanding was $0.
c) Water Revenue Bonds 2009 Series B
During fiscal year 2010, the Water Enterprise issued revenue bonds, 2009 Series B in the amount of $412,000. The purpose of the bonds is to provide $377,778 in new money for WSIP capital projects, with the balance applied to financing costs and a cash -funded debt service reserve. The bonds were rated “AA -” and “A1” from S&P and Moody’s, respectively. The bonds include serial and term bonds with interest rates varying from 4.0% to 5.0%. The bonds mature through November 1, 2039. The 2009 Series B bonds have a true interest cost of 4.5%.
On February 27, 2013, the Wholesale Water Customers BAWSCA made an early repayment of $356,139 to the Wate r Enterprise. Prepayment proceeds in the amount of $24,014 were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, dated February 27, 2013, to refund and legally defease a portion of the outstanding 2009 Series
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
103 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
B bonds. This deposit, together with certain other available monies, was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities consisting of United States Treasury Securities - SLGS. The principal and interest on mo nies held by the escrow agent will be sufficient to partially defease a portion of the 2009 Series B bonds maturing November 1, 2013 through 2018.
A portion of the proceeds of the 2016 Series A refunding bonds was deposited with the trustee, acting as esc row agent under the irrevocable Escrow Agreement, dated October 1, 2016, to refund and legally defease a portion of the outstanding 2009 Series B bonds. This deposit, together with certain other available monies was held by the escrow agent under the Escro w Agreement and invested in non -callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to refund and legally defease all of the maturities of the 2009 Series B bonds starting on November 1, 2020 and th ereafter. As of June 30, 2021 and 2020, the principal amount of 2009 Series B bonds outstanding was $0.
d) Water Revenue Bonds 2010 Series AB
In fiscal year 2010, the Water Enterprise issued revenue bonds, 2010 Series ABC in the combined principal amount of $488,705. The purpose of the bonds is to refund $14,400 of outstanding 2001 Series A revenue bonds, to provide $58,748 in proceeds for the Advanced Meter Infrastructure System (AMI) Project and to provide $364,757 in new money for WSIP capital pr ojects, with the balance applied to financing costs and a cash -funded debt service reserve fund. The bonds were rated “AA -” and “Aa2” from S&P and Moody’s, respectively. The bonds included serial and term bonds with interest rates ranging from 2.0% to 6.0%.
The 2010 Series A Bonds in the par amount of $56,945 were issued as tax -exempt bonds to provide funds for the SFPUC’s AMI Project and pay financing costs. The 2010 Series A bonds were issued as serial bonds with coupons ranging from 2.0% to 5.0% and have a final maturity of 2030. The Series A bonds have a true interest cost of 3.8%.
On February 27, 2013, the Wholesale Water Customers BAWSCA made an early repayment of $356,139 to the Water Enterprise. Prepayment proceeds in the amount of $11,681 were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, dated February 27, 2013, to refund and legally defease a portion of the outstanding 2010 Series A bonds. This deposit, together with certain other available monies, was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities consisting of United States Treasury Securities - SLGS. The principal and interest on monies held by the escrow agent will be sufficient to partially de fease a portion of the 2010 Series A bonds maturing November 1, 2013 through 2018.
A portion of the proceeds of the 2016 Series B refunding bonds was deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, dated October 1, 2016, to refund and legally defease a portion of the outstanding 2010 Series A bonds. This deposit, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem all of the maturities of the 2010 Series A bonds starting on November 1, 2020 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2010 Series A bonds outstanding was $0.
The 2010 Series B Bonds in the par amount of $417,720 were issued as taxable Build America Bonds (with Direct Pay Subsidy) to provide $364,757 in new money for WSIP capital projects and pay financing costs. The 2010 Series B bonds were issued as serial and term bonds with coupons
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
104 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
ranging from 4.0% to 6.0% and have a final maturity of 2040. The Series B bonds have a true interest cost (net of federal subsidy) of 3.9%. As of June 30, 2021 and 2020, the principal amount outstanding was $361,500 and $373,420, respectively.
e) Water Revenue Bonds 2010 Series DE
In July 2010, the Water Enterprise issued revenue bonds 2010 Series DE in the combined principal amount of $446,925. The purpose of the bonds is to advance refund $31,570 of outstanding 2002 Series A revenue bonds and to provide $372,689 in new money for WSIP capital projects, with the balance applied to financing costs and a cash -funded debt service reserve fund. The bonds were rated “AA -” and “Aa2” from S&P and Moody’s, respectively. T he bonds included serial and term bonds with interest rates ranging from 3.0% to 6.0%.
The 2010 Series D Bonds in the par amount of $102,725 were issued as tax -exempt bonds to provide $72,243 in new money for WSIP capital projects and $35,080 to advance refund a portion of outstanding 2002 Series A revenue bonds. The Series D bonds were issued as serial bonds with coupons ranging from 3.0% to 5.0% and have a final maturity of 2021. The Series D bonds have a true interest cost of 2.5%.
On February 27, 2013, the Wholesale Water Customers BAWSCA made an early repayment of $356,139 to the Water Enterprise. $12,360 of the repayment proceeds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, dated February 27 , 2013, to refund and legally defease a portion of the outstanding 2010 Series D bonds. BAWSCA repayment funds were combined with $165 from the 2010 Series D Capitalized Interest Account.
This deposit, together with certain other available monies, was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities consisting of United States Treasury Securities - SLGS. The principal and interest on monies held by the escrow agent will be sufficient to partially defease a portion of the 2010 Series D bonds maturing November 1, 2015 through 2017. A portion of the proceeds from 2020 Series E and 2020 Series G refunding bonds was deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreements, dated October 1, 2020, to refund and legally defease the outstanding 2010 Series D bonds.
These deposits, together with certain other available monies were held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities. The p rincipal and interest on monies held by the escrow agent will be sufficient to refund and legally defease all of the maturities of the 2010 Series D bonds starting on November 1, 2021. As of June 30, 2021 and 2020, the principal amount of 2010 Series D bon ds outstanding was $0 and $30,990, respectively.
The 2010 Series E Bonds in the par amount of $344,200 were issued as taxable Build America Bonds (with Direct Pay Subsidy) to provide $300,446 in new money proceeds for WSIP capital projects. The Series E b onds were issued as serial and term bonds with coupons ranging from
4.9% to 6.0% and have a final maturity of 2040. The Series E bonds have a true interest cost (net of federal subsidy) of 3.8%. As of June 30, 2021 and 2020, the principal amount of 2010 Se ries E bonds outstanding was $344,200.
f) Water Revenue Bonds 2010 Series FG
In December 2010, the Water Enterprise issued revenue bonds 2010 Series FG in the combined principal amount of $532,430. The purpose of the bonds is to provide $437,980 in new money for WSIP capital projects, with the balance applied to financing costs and a cash -funded debt service reserve. The bonds were rated “AA -” and “Aa2” from S&P and Moody’s, respectively. The bonds included serial and term bonds with interest rates ranging from 3.0% to 7.0%.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
105 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The $180,960 Series F bonds were issued as tax -exempt bonds to provide $149,728 in new money for WSIP capital projects. The Series F bonds were issued as serial and term bonds with coupons ranging from 3.0% to 5.5% and have a final maturity of 2030. The Series F bonds have a true interest cost of 4.8%.
On February 27, 2013, the Wholesale Water Customers BAWSCA made an early repayment of $356,139 to the Water Enterprise. $3,646 of the repayment proceeds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, dated February 27, 2013, to refund and legally defease a portion of the outstanding 2010 Series F bonds. BAWSCA repayment funds were combined with $131 from the 2010 Series F Capitalized Inter est Account.
This deposit, together with certain other available monies, was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities consisting of United States Treasury Securities - SLGS. The principal and inter est on monies held by the escrow agent will be sufficient to partially defease a portion of the 2010 Series F bonds maturing November 1, 2017 and 2018.
A portion of the proceeds of the 2016 Series A refunding bonds and 2019 Series A refunding bonds was deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreements, dated October 1, 2016 and December 1, 2019, respectively, to refund and legally defease a portion of the outstanding 2010 Series F bonds. These deposits, together w ith certain other available monies were held by the escrow agent under the Escrow Agreement and invested in non-callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to refund and legally defease all of the maturities of the 2010 Series F bonds starting on November 1, 2020 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2010 Series F bonds outstanding was $0.
The $351,470 Series G bonds were issued as taxable Build America Bonds (with Direct Pay Subsidy) to provide $288,252 in new money for WSIP capital projects. The Series G bonds were issued as term bonds with a coupon of 7.0% and have a final maturity of 2050. The Series G bonds have a true interest cost (net of federal subsidy ) of 4.5%. As of June 30, 2021 and 2020, the principal amount of 2010 Series G bonds outstanding was $351,470.
g) Water Revenue Bonds 2011 Series ABCD
In August 2011, the Water Enterprise issued revenue bonds, 2011 Series ABCD in the combined principal amo unt of $720,750. The purpose of the bonds is to provide new money for WSIP capital projects, to finance Hetch Hetchy Water Improvements, and to finance the Local Water Main Replacement Projects, as well as refund $56,670 of outstanding 2001 Series A and 20 02 Series A revenue bonds, with the balance applied to financing costs and a cash -funded debt service reserve. The bonds were rated “AA -” and “Aa3” from S&P and Moody’s, respectively. The bonds included serial and term bonds with interest rates varying from 3.0% to 5.0%.
The $602,715 Series A bonds were issued as tax -exempt bonds to provide $525,000 in new money for WSIP capital projects. The Series A bonds were issued as serial and term bonds with coupons ranging from 4.3% to 5.0% and have a final maturity of 2041. The Series A bonds have a true interest cost of 4.6%.
A portion of the proceeds of the 2017 Series D and G and 2019 Series A refunding bonds was deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreements, dated December 1, 2017 and December 1, 2019, respectively, to refund and legally defease a portion of the outs tanding 2011 Series A bonds. These deposits, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non -
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
106 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2011 Series A bonds starting on November 1, 2020 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2011 Series A bonds outstanding was $0.
The $28,975 Series B bonds were issued as ta x-exempt bonds to provide $27,710 to finance improvements to certain up -country water storage and transmission facilities under the jurisdiction of Hetch Hetchy Water and Power and CleanPowerSF. The Series B bonds were issued as serial and term bonds with coupons ranging from 3.5% to 5.0% and have a final maturity of 2041. The Series B bonds have a true interest cost of 4.5%.
On February 27, 2013, the Wholesale Water Customers BAWSCA made an early repayment of $356,139 to the Water Enterprise. $515 of the repayment proceeds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, dated February 27, 2013, to refund and legally defease a portion of the outstanding 2011 Series B bonds. This deposit, together with cert ain other available monies, was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities consisting of United States Treasury Securities - SLGS. The principal and interest on monies held by the escrow agent will b e sufficient to partially defease a portion of the 2011 Series B bonds maturing November 1, 2017 through 2018.
A portion of the proceeds from the 2017 Series F and 2019 Series B refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreements, dated December 1, 2017 and December 1, 2019, respectively, to refund and legally defease a portion of the outstanding 2011 Series B bonds. These deposits, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non- callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2011 Series B bonds starting on November 1, 2022 and there after. As of June 30, 2021 and 2020, the principal amount of 2011 Series B bonds outstanding was $755 and $1,485, respectively.
The $33,595 Series C bonds were issued as tax -exempt bonds to provide $33,772 to finance certain water main replacement projects within the City. The Series C bonds were issued as serial and term bonds with coupons ranging from 3.0% to 5.0% and have a final maturity of 2041. The Series C bonds have a true interest cost of 4.4%.
On February 27, 2013, the Wholesale Water Customers BAWSCA made an early repayment of $356,139 to the Water Enterprise. $3,824 of the repayment proceeds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, dated February 27, 2013, to refund and legally defease a po rtion of the outstanding 2011 Series C bonds. This deposit, together with certain other available monies, was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities consisting of United States Treasury Securities - SLGS. The principal and interest on monies held by the escrow agent will be sufficient to partially defease a portion of the 2011 Series C bonds maturing November 1, 2014 through 2018.
A portion of the proceeds of the 2017 Series E and 2019 Series C r efunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreements, dated December 1, 2017 and December 1, 2019, respectively, to refund and legally defease a portion of the outstanding 2011 Series C bonds. These deposits, together with certain other available monies were held by the escrow agent under the Escrow Agreement and invested in non-callable Federal Securities. The principal and interest on monies held by the escrow agent will
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
107 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
be sufficient to redeem the maturities of the 2011 Series C bonds starting on November 1, 2022 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2011 Series C bonds outstanding was $825 and $1,620, respectively.
The $55,465 Series D bonds were issued as tax -exempt bonds to provide $59,381 to refund, on a current basis, a portion of the 2001 Series A bonds as well as refund, on an advance basis, a portion of the 2002 Series A bonds. The Series D bonds were issued as serial bonds with coupons ranging from 4.0% to 5 .0% and have a final maturity of 2028. The Series D bonds have a true interest cost of 3.8%.
A portion of the proceeds of the 2017 Series E refunding bonds was deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement, date d December 1, 2017, to refund and legally defease a portion of the outstanding 2011 Series D bonds. This deposit, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2011 Series D bonds starting on November 1, 2022 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2011 Series D bonds outstanding was $0 and $19,135, respectively.
h) Water Revenue Bonds 2012 Series AB and C (C1 and C2)
In June 2012, the Water Enterprise issued revenue bonds, 2012 Series ABC in the combined principal amount of $701,880. The purpose of the bonds was to provide $530,000 of new money for WSIP capital projects, $15,750 to reimburse the Water Enterprise for costs to settle litigation arising out of certain capital projects of benefit to the Water Enterprise, and to refund $99,180 of outstanding 2001 Serie s A and 2002 Series A revenue bonds, with the balance applied to financing costs and a cash -funded debt service reserve. The bonds were rated “AA -” and “Aa3” from S&P and Moody’s, respectively. The bonds included serial and term bonds with interest rates varying from 4.0% to 5.0%.
The $591,610 Series A bonds were issued as tax -exempt bonds to provide $530,000 in new money for WSIP capital projects. The Series A bonds were issued as serial and term bonds with coupons ranging from 4.0% to 5.0% and have a final maturity of 2043. The Series A bonds have a true interest cost of 4.3%. A portion of the proceeds of the 2017 Series D, 2019 Series A, and 2020 Series E refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreements, dated December 1, 2017, December 1, 2019, and October 1, 2020 respectively, to refund and legally defease a portion of the outstanding 2012 Series A bonds. These deposits, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2012 Series A bonds starting on November 1, 2031 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2012 Series A bonds outstanding was $0 and $216,540, respectively.
The $16,520 Series B bonds were issued as tax-exempt bonds to reimburse the Water Enterprise $15,750 for costs to settle litigation arising out of certain capital projects of benefit to the Water Enterprise. The Series B bonds were issued as serial and term bonds with coupons ranging from
4.0% to 5.0% and have a final maturity of 2043. The Series B bonds have a true interest cost of
4.1%. A portion of the proceeds of the 2020 Series G refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement dated October 1, 2020 to refund and legally defease a portion of the outstanding 2012 Series B bonds. These deposits, together with certain other available monies was held by the escrow agent under the Escrow
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
108 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Agreement and invested in non -callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient t o redeem the maturities of the 2012 Series B bonds starting on November 1, 2031 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2012 Series B bonds outstanding was $0 and $16,520, respectively.
The $93,750 Series C bonds were issued as tax-exempt bonds to provide $101,147 to refund, on a current basis, a portion of the 2001 Series A bonds as well as refund, on an advance basis, a portion of the 2002 Series A bonds. The Series C bonds were issued as serial bonds with coupons ranging from 4.0% to 5.0% and have a final maturity of 2032. The Series C bonds have a true interest cost of 3.7%. A portion of the proceeds of the 2017 Series E and 2020 Series G refunding bonds was deposited with the trustee, acting as escrow agent under th e irrevocable Escrow Agreements dated December 1, 2017 and October 1, 2020, respectively, to refund and legally defease a portion of the outstanding 2012 Series C bonds. This deposit, together with certain other available monies was held by the escrow agen t under the Escrow Agreement and invested in non-callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2012 Series C bonds starting on November 1, 2025 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2012 Series C bonds outstanding was $0 and $78,035, respectively.
i) Water Revenue Refunding Bonds 2012 Series D
In August 2012, the Water Enterprise issued tax-exempt revenue bonds, 2012 Series D in the amount of $24,040 for the purpose of refunding the remaining portion of the outstanding 2002 Series B bonds maturing on and after November 1, 2013. The bonds carried “Aa3” and “AA -” ratings from Moody’s and S&P, respectively. The 2012 Series D refundin g bonds include serial bonds with interest rates ranging from 1.8% to 5.0% and have a final maturity in 2019. The Series D bonds have a true interest cost of 1.34%. Unamortized 2002 Series B bond issuance costs were $258 at the date of the refunding. The r efunding resulted in the recognition of a deferred accounting loss of $582, $108 gross debt service savings over the next seven -year terms, and an economic gain of $1,397 or 5.8% of the refunded principal. As of June 30, 2021 and 2020, the principal amount of 2012 Series D bonds outstanding was $0.
j) Water Revenue Refunding Bonds 2015 Series A
In April 2015, the Water Enterprise issued tax -exempt revenue bonds, 2015 Series A in the amount of $429,600 for the purpose of refunding all the outstanding 2006 Ser ies A bonds maturing on and after November 1, 2015 and portion of the outstanding 2009 Series A bonds maturing on and after November 1, 2023. The bonds carried “Aa3” and “AA -” ratings from Moody’s and S&P, respectively. The 2015 Series A bonds include seri al bonds with interest rates varying from 2.0% to 5.0% and have a final maturity in 2036. The Series A bonds have a true interest cost of 3.3%. Unamortized 2006 Series A bond issuance costs were $1,392, and there were no unamortized bond issuance costs for 2009 Series A bonds at the date of the refunding.
The refunding resulted in the recognition of a deferred accounting loss of $25,365, gross debt service savings of $28,148 over the next 20 two-year terms, and an economic gain of $48,561 or
10.3% of refunded principal. As of June 30, 2021 and 2020, the principal amount of 2015 Series A bonds outstanding was $397,745 and $412,380, respectively.
k) Water Revenue Refunding Bonds 2016 Series AB
In October 2016, the Water Enterprise issued tax-exempt revenue bonds, 2016 Series AB in the aggregate amount of $893,820. The 2016 Series A bonds were issued for the purpose of refunding a portion of the outstanding 2009 Series A bonds maturing on and aft er November 1,
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
109 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
2020, a portion of the outstanding 2009 Series B bonds maturing on and after November 1, 2020, and a portion of the outstanding 2010 Series F bonds maturing on and after November 1, 2021. The 2016 Series B bonds were issued for the purpose o f refunding, on a current basis, all the outstanding 2006 Series B and Series C bonds, and a portion of the outstanding 2010 Series A bonds maturing on and after November 1, 2020, the bonds carried “Aa3” and “AA-” ratings from Moody’s and S&P, respectively. The 2016 Series AB bonds include serial bonds with interest rates varying from 1.5% to 5.0% and have a final maturity in 2039. The Series AB bonds have a true interest cost of 2.9%. Unamortized bond issuance costs at the date of refunding were $145 for 2006 Series B bonds and $54 for 2006 Series C bonds. The refunding resulted in the recognition of a deferred accounting loss of $106,205, gross debt service savings of $135,966, and an economic gain of $107,152 or 11.5% of refunded principal. As of June 30, 2021 and 2020, the principal amount of 2016 Series AB bonds outstanding was $824,575 and $858,985, respectively.
l) Water Revenue Bonds 2016 Series C
In December 2016, the Water Enterprise issued taxable bonds, 2016 Series C in the amount of $259,350. The bonds were issued as Green Bonds. The purpose of the bonds was to refund all of the outstanding taxable commercial paper notes in the approximate amount of $237,000, and to provide $19,975 of new money for WSIP capital projects. The bonds carried “Aa3” and “AA-” ratings from Moody’s and S&P, respectively. The 2016 Series C bonds include serial bonds with interest rates varying from 0.9% to 4.0% and have a final maturity in 2046, and two term bonds with 4.0% and 4.2% interest rates and final maturities of 20 41 and 2046. The Series C bonds have a true interest cost of 3.9%. As of June 30 , 2021 and 2020, the principal amount of 2016 Series C bonds outstanding was $237,050 and $242,755, respectively.
m) Water Revenue Bonds 2017 Series ABC
In December 2017, the Water Enterprise issued tax -exempt revenue bonds, 2017 ABC in the aggregate amount of $339,540. The purpose of the 2017 Series ABC Bonds was to refund approximately $120,500 aggregate principal amount of commercial paper notes and to provide $230,500 new money for WSIP capital projects, other various capital projects of the Water Enterprise, and capital projects of Hetch Hetchy Water. The bonds carried “Aa3” and “AA -” ratings from Moody’s and S&P, respectively. The 2017 Series ABC bond s include serial bonds with coupon rates of 5.0% and have final maturity in 2045, and four term bonds with coupons of 5.0% and final maturities from 2045 to 2047.
The $121,140 2017 Series A bonds were issued as tax -exempt Green Bonds to refund approximately $60,265 of commercial paper notes and to provide $65,500 in new money for WSIP capital projects. The Series A bonds have a true interest cost of 3.8%. A portion of the proceeds of the 2020 Series E refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement dated October 1, 2020 to refund and legally defease a portion of the outstanding 2017 Series A bonds. These deposits, together with certain other available monies was held by the escrow agent under th e Escrow Agreement and invested in non-callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2017 Series A bonds starting on November 1, 2030 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2017 Series A bonds outstanding was $27,000 and $121,140, respectively.
The $147,725 2017 Series B bonds were issued as tax -exempt bonds to provide $150,000 in new money for Water Enterprise capital projects (no n-WSIP). The Series B bonds were issued as serial and term bonds with coupons of 5.0% and have a final maturity of 2047. The Series B
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
110 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
bonds have a true interest cost of 3.8%. A portion of the proceeds of the 2020 Series F refunding bonds were deposited wit h the trustee, acting as escrow agent under the irrevocable Escrow Agreement dated October 1, 2020 to refund and legally defease a portion of the outstanding 2017 Series B bonds. These deposits, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities.
The principal and interest on monies held by the escrow agent will be sufficient to redeem the maturities of the 2017 Series B bonds starting on November 1, 2030 and t hereafter. As of June 30, 2021 and 2020, the principal amount of 2017 Series B bonds outstanding was $32,930 and $147,725, respectively.
The $70,675 2017 Series C bonds were issued as tax -exempt bonds to refund approximately $60,266 of commercial paper no tes and to provide $15,000 in new money for Hetch Hetchy Water capital projects. The Series C bonds were issued as serial bonds and a term bond with coupons of 5.0% and have a final maturity of 2047. The Series C bonds have a true interest cost of 3.8%. A portion of the proceeds of the 2020 Series H refunding bonds were deposited with the trustee, acting as escrow agent under the irrevocable Escrow Agreement dated October 1, 2020 to refund and legally defease a portion of the outstanding 2017 Series C bonds . These deposits, together with certain other available monies was held by the escrow agent under the Escrow Agreement and invested in non -callable Federal Securities. The principal and interest on monies held by the escrow agent will be sufficient to rede em the maturities of the 2017 Series C bonds starting on November 1, 2030 and thereafter. As of June 30, 2021 and 2020, the principal amount of 2017 Series C bonds outstanding was $15,750 and $70,675, respectively.
n) Water Revenue Refunding Bonds 2017 Series DEFG
In December 2017, the Water Enterprise issued tax -exempt revenue bonds, 2017 Series DEF, and taxable 2017 Series G refunding bonds in the aggregate amount of $442,180. The 2017 Series D (WSIP, Green) bonds were issued for the purpose of refunding a portion of the outstanding 2011 Series A (WSIP) bonds maturing on and after November 1, 2022, a portion of the outstanding 2012 Series A bonds maturing on and after November 1, 2031.
The 2017 Series E bonds were issued for the purpose of refunding a port ion of the outstanding 2011 Series C bonds maturing on or after November 1, 2022, a portion of the outstanding 2011 Series D bonds maturing on and after November 1, 2022, a portion of 2012 Series C1 bonds maturing on or after November 1, 2029.
The 2017 Series F bonds were issued for the purpose of refunding a portion of the outstanding 2011 Series B bonds maturing on or after November 1, 2022.
The taxable 2017 Series G (WSIP, Green) bonds were issued to refund a portion of the outstanding 2011 Series A bonds maturing on and after November 1, 2022.
The bonds carried “Aa3” and “AA -” ratings from Moody’s and S&P, respectively. The 2017 Series DEFG bonds include serial bonds with interest rates varying from 2.0% to 5.0% and have a final maturity in 20 35. The Series DEFG bonds have a true interest cost of 2.9%. The refunding resulted in the recognition of a deferred accounting loss of $34,275, gross debt service savings of $68,942, and an economic gain of $51,698 or 10.7% of refunded principal. . As of June 30, 2021 and 2020, the principal amount of 2017 Series DEFG bonds outstanding was $438,095 and $439,485, respectively.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
111 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
o) Water Revenue Refunding Bonds 2019 Series ABC
In January 2020, the Water Enterprise issued taxable revenue bonds, 2019 Series ABC refunding bonds in the aggregate amount of $656,955. The 2019 Series A (WSIP, Green) bonds were issued for the purpose of refunding a portion of the outstanding 2010 Series F (WSIP) bonds maturing on and after November 1, 2020, a portion of the outstanding 2011 Series A (WSIP) bonds maturing on and after November 1, 2020, and a portion of the outstanding 2012 Series A (WSIP) bonds maturing on and after November 1, 2035.
The 2019 Series B (Hetch Hetchy Water) bonds were issued for the purpose of refunding a portion of the outstanding 2011 Series B bonds maturing on or after November 1, 2032.
The 2019 Series C (Local) bonds were issued for the purpose of refunding a portion of the outstanding 2011 Series C bonds maturing on or after November 1, 2032.
The bonds carried “Aa2” and “AA -” ratings from Moody’s and S&P, respectively. The 2019 Series ABC bonds include serial bonds with interest rates varying from 1.8% to 3.5% and have a final maturity in 2043. The Series ABC bonds have a true interest cos t of 3.3%. The refunding resulted in the recognition of a deferred accounting loss of $17,329, gross debt service savings of $119,827, and an economic gain of $92,556 or 14.0% of refunded principal. . As of June 30, 2021 and 2020, the principal amount of 2019 Series ABC bonds outstanding was $650,100 and $656,955, respectively.
p) Water Revenue Bonds 2020 Series ABCD
In September 2020, the Water Enterprise issued tax-exempt revenue bonds, 2020 Series ABCD in the aggregate amount of $346,760. The purpose of the 2020 Series ABCD Bonds was to refund approximately $229,770 aggregate principal amount of commercial paper notes and to provide $164,632 new money for various capital projects of the Water Enterprise, and capital projects of Hetch Hetchy Wat er. The bonds carried “Aa2” and “AA -” ratings from Moody’s and S&P, respectively. The 2020 Series ABCD bonds include term bonds with coupons of 3.0% to 5.0% and final maturities from 2045 to 2050.
The $150,895 2020 Series A bonds were issued as tax-exempt Green Bonds to refund approximately $180,000 of commercial paper notes for WSIP capital projects. The Series A bonds were issued as term bonds with coupons of 4.0% and 5.0% and a final maturity of 2050. The 2020 Series A bonds have a true interest cost of 3.3%. As of June 30, 2021, the principal amount of 2020 Series A bonds outstanding was $150,895.
The $61,330 Series B bonds were issued as tax -exempt bonds to provide $69,644 in new money for Water Enterprise capital projects (non -WSIP, Regiona l). The Series B bonds were issued as term bonds with coupons of 5.0% and have a final maturity of 2050. The Series B bonds have a true interest cost of 3.7%. As of June 30, 2021, the principal amount of 2020 Series B bonds outstanding was $61,330.
The $85,335 Series C bonds were issued as tax -exempt bonds to provide $94,948 in new money for Water Enterprise capital projects (non -WSIP, Local). The Series C bonds were issued as term bonds with coupons of 4.0% and have a final maturity of 2050. The Series C bonds have a true interest cost of 3.0%. As of June 30, 2021, the principal amount of 2020 Series C bonds outstanding was $85,335.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
112 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The $49,200 Series D bonds were issued as tax -exempt bonds to refund approximately $49,761 of commercial paper notes for Het ch Hetchy Water capital projects. The Series D bonds were issued as term bonds with coupons of 3.0% and a final maturity of 2050. The 2020 Series D bonds have a true interest cost of 2.7%. As of June 30, 2021, the principal amount of 2020 Series D bonds outstanding was $49,200.
q) Water Revenue Bonds 2020 Series EFGH
In October 2020, the Water Enterprise issued taxable revenue bonds, 2020 Series EFGH refunding bonds in the aggregate amount of $664,395. The 2020 Series E (WSIP, Green) bonds were issued for the purpose of refunding a portion of the outstanding 2010 Series D (WSIP) bonds maturing on and after November 1, 2020, a portion of the outstanding 2012 Series A (WSIP) bonds maturing on and after November 1, 2038, and a portion of the outstanding 2017 Ser ies A (WSIP) bonds maturing on and after November 1, 2030.
The 2020 Series F (non-WSIP, Regional) bonds were issued for the purpose of refunding a portion of the outstanding 2017 Series B bonds maturing on or after November 1, 2030.
The 2020 Series G (non-WSIP, Local) bonds were issued for the purpose of refunding a portion of the outstanding 2010 Series D bonds maturing on or after November 1, 2020, a portion of the 2011 Series D bonds maturing on or after November 1, 2022, a portion of 2012 Series B bo nds maturing on or after November 1, 2031, and a portion of 2012 Series C bonds maturing on or after November 1, 2025.
The 2020 Series H (Hetch Hetchy Water) bonds issued for the purpose of refunding a portion of the outstanding 2017 Series C bonds maturing on or after November 1, 2030.
The bonds carried “Aa2” and “AA -” ratings from Moody’s and S&P, respectively. The 2020 Series EFGH bonds include serial bonds and term bonds with interest rates varying from 0.3% to 3.1% and have a final maturity in 2047. The Series EFGH bonds have a true interest cost of 2.7%. The refunding resulted in the recognition of a deferred accounting loss of $27,010, gross debt service savings of $117,114, and an economic gain of $75,212 or 12.0% of refunded principal. As of June 30, 2021, the principal amount of 2020 Series EFGH bonds outstanding was $664,395.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
113 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
r) Future Annual Debt Service of Revenue Bonds
The following table presents the future annual debt service relating to the revenue and refunding bonds outstanding as of June 30, 20 21. The federal interest subsidy amounts represent 35.0%, excluding sequestration, of the interest for the revenue bond 2010 Series B, E, and G.
* The SFPUC received IRS notice, dated June 29, 2021, that the federal interest subsidies on the 2010 Series B bonds, 2010 Series E bonds, and 2010 Series G bonds are reduced by 5.7%, or a total reduction of $20,081, due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same.
As defined in the Indentures, the principal and interest of the Water Enterprise’s revenue and refunding bonds are payable from its revenues, as well as monies deposited in certain funds and accounts pledged thereto (See Note 5).
s) SF Westside Recycled Water Project and Future Annual Debt Service for Clean Water State Revolving Fund (CWSRF) Loan and Grant
In September 2017, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a Clean Water State Revolving Fund (CWSRF) Loan and Grant to fund the Water Enterprise’s SF Westside Recycled Water Project. The CWSRF loan is in the amount of $186,220, which includes $15,000 of principal forgiveness, or a grant. It will bear an interest rate of 1.0% for a 30 -year term, with loan repayment beginning one year afte r substantial completion of project construction. The CWSRF loan is secured on a parity lien basis with the Water Enterprise’s outstanding revenue bonds. The principal outstanding as of June 30, 2021 was $107,407. In addition, there was $15,000 of principal forgiveness. As of June 30, 2020, principal outstanding was $73,271.
Interest before Federal interest Interest net
Principal subsidy subsidy* of subsidy
Fiscal years ending June 30:
2022 $ 108,500 207,724 (21,621) 186,103
2023 125,285 203,067 (21,290) 181,777
2024 135,095 197,481 (20,841) 176,640
2025 140,485 191,563 (20,370) 171,193
2026 151,930 185,085 (19,876) 165,209
2027-2031 855,920 810,584 (90,665) 719,919
2032-2036 1,043,890 590,944 (70,000) 520,944
2037-2041 1,130,175 340,236 (41,112) 299,124
2042-2046 530,145 166,499 (19,364) 147,135
2047-2051 471,725 61,353 (7,098) 54,255
4,693,150 2,954,536 (332,237) 2,622,299
Less: Current portion (108,500)
Less: Unamortized bond discount (133)
Add: Unamortized bond premiums 301,758
Long-term portion as of June 30, 2021 $ 4,886,275
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
114 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
t) Proposition A
On November 5, 2002, the San Francisco voters passed Proposition A, which provides for the issuance of revenue bonds and/or other forms of indebtedness by the Commissio n in a principal amount not to exceed $1,628,000 to finance the acquisition and construction of improvements to the City’s Water System. As of June 30, 2021, there was no commercial paper outstanding pursuant to this authorization and $1,499,230 of bonds h ad been issued in fiscal years 2006, 2010, 2012, 2021 against Prop A. The total authorization against Prop A was $1,499,230 as of June 30, 2021.
u) Proposition E
On November 5, 2002, the San Francisco voters passed Proposition E, which authorizes the Board of Supervisors’ approval of the issuance of revenue bonds and/or other forms of indebtedness by the Commission to finance costs for the Commission’s capital programs, including WSIP. As of June 30, 2021, the Board of Supervisors has authorized the issuance of $4,617,099 in revenue bonds with $3,660,525 issued against this authorization; and in September 2017, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a Clean Water State Revolving Fund (CWSRF) Loan and Grant to fund the Water Enterprise’s SF Westside Recycled Water Project in the amount of $186,220 (which includes a $15,000 grant and $107,407 in reimbursements requested on the loan as of June 30, 2021). Additionally, $105,862 and $362,354 in commercial paper was outstanding pursuant to this authorization as of June 30, 2021 and 2020, respectively.
v) Events of Default and Remedies
In accordance with GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowing and Direct Placements , significant events of default as specified in the Water Enterprise Indenture (applicable to Water Revenue Bonds, Capital Appreciation Bonds and CWSRF Loan) include 1) Non-payment 2) material breach of warranty, representation or indenture covenants (not cured within applicable grace periods) and 3 ) bankruptcy and insolvency events, which may result in the Trustee (upon written request by the majority of the owners (by aggregate amount of the bond obligations or of a credit provider), declaring the principal and the interest accrued ther eon, and of all Capital Appreciation bonds then outstanding, in the amount of the Accreted Value thereof, to be due and payable immediat ely. As of June 30, 2021, there were no such events describe herein.
Principal Interest Total
Fiscal years ending June 30:
2022 $ 1,667 574 2,241
2023 3,222 1,057 4,279
2024 3,254 1,025 4,279
2025 3,287 993 4,280
2026 3,320 960 4,280
2027-2031 17,103 4,294 21,397
2032-2036 17,975 3,422 21,397
2037-2041 18,892 2,505 21,397
2042-2046 19,856 1,541 21,397
2047-2051 18,831 529 19,360
Total 107,407 16,900 124,307
Less: Current portion (1,667)
Long-term portion as of June 30, 2021 $ 105,740
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
115 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Wastewater Long-Term Liability activities for the year ended June 30, 2021 and 2020 are as follows:
The payments of principal and interest amounts on various bonds are secured by net revenues of the Wastewater Enterprise.
Interest Maturity Due within
rate (Calendar Year) 2020 Additions Reductions 2021 one year Revenue bonds:
2010 Series A 4.00 – 5.00 % 2021 $ 17,210 — (8,390) 8,820 8,820 2010 Series B (Build America) 4.65 – 5.82 2040 192,515 — — 192,515 — 2013 Series A 1.00 – 5.00 2025 44,445 — (14,850) 29,595 14,060 2013 Series B 4.00 – 5.00 2042 331,585 — — 331,585 — 2016 Series A 4.00 – 5.00 2046 240,580 — — 240,580 — 2016 Series B 4.00 – 5.00 2046 67,820 — — 67,820 —
2018 Series A 4.00 – 5.00 2043 229,050 — — 229,050 — 2018 Series B 5.00 2043 185,950 — — 185,950 —
2018 Series C 2.13 2048 179,145 — — 179,145 —
For issuance premiums 133,433 — (8,571) 124,862 —
Total revenue bonds payable 1,621,733 — (31,811) 1,589,922 22,880 2009 Series C Certificates of Participation (COPs) 2.00 – 5.00 2022 2,358 — (747) 1,611 785 2009 Series C COPs issuance premiums 43 — (25) 18 —
2009 Series D COPs (Build America) 6.36 – 6.49 2041 24,458 — — 24,458 — State Revolving Fund Loans (CWSRF Loans) 0.80 – 1.80 2051 88,549 22,468 (2,458) 108,559 2,483 Other post-employment benefits obligations 58,183 6,609 (14,081) 50,711 — Net pension liability 86,235 42,533 (25,022) 103,746 — Accrued vacation and sick leave 8,914 5,406 (2,662) 11,658 5,811 Accrued workers’ compensation 6,051 2,616 (2,085) 6,582 1,198 Due to Other City departments 849 — (110) 739 110
Damage claims liability 15,891 6,428 (5,606) 16,713 5,892 Pollution remediation obligations 7,800 — — 7,800 — Total $ 1,921,064 86,060 (84,607) 1,922,517 39,159
Interest Maturity Due within
rate (Calendar Year) 2019 Additions Reductions 2020 one year Revenue bonds:
2010 Series A 4.00 – 5.00 % 2021 $ 25,190 — (7,980) 17,210 8,390 2010 Series B (Build America) 4.65 – 5.82 2040 192,515 — — 192,515 — 2013 Series A 1.00 – 5.00 2025 58,550 — (14,105) 44,445 14,850 2013 Series B 4.00 – 5.00 2042 331,585 — — 331,585 — 2016 Series A 4.00 – 5.00 2046 240,580 — — 240,580 — 2016 Series B 4.00 – 5.00 2046 67,820 — — 67,820 —
2018 Series A 4.00 – 5.00 2043 229,050 — — 229,050 — 2018 Series B 5.00 2043 185,950 — — 185,950 —
2018 Series C 2.13 2048 179,145 — — 179,145 —
For issuance premiums 142,224 — (8,791) 133,433 —
Total revenue bonds payable 1,652,609 — (30,876) 1,621,733 23,240 2009 Series C Certificates of Participation (COPs) 2.00 – 5.00 2022 3,069 — (711) 2,358 747 2009 Series C COPs issuance premiums 76 — (33) 43 —
2009 Series D COPs (Build America) 6.36 – 6.49 2041 24,458 — — 24,458 — State Revolving Fund Loans (CWSRF Loans) 1.60 – 1.80 2050 88,032 1,756 (1,239) 88,549 2,458 Other post-employment benefits obligations 53,567 9,002 (4,386) 58,183 — Net pension liability 85,037 18,863 (17,665) 86,235 — Accrued vacation and sick leave 7,277 4,324 (2,687) 8,914 4,801 Accrued workers’ compensation 5,914 1,932 (1,795) 6,051 1,112 Due to Other City departments 955 1 (107) 849 110
Damage claims liability 16,368 1,952 (2,429) 15,891 8,994 Pollution remediation obligations 7,500 300 — 7,800 — Total $ 1,944,862 38,130 (61,928) 1,921,064 41,462
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
116 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
(a) Wastewater Revenue Bonds 2010 Series A
During fiscal year 2010, the Wastewater Enterprise issued revenue bonds 2010 Series A in the amount of $47,050 with interest rates ranging from 4.0% to 5.0%. Proceeds from the bonds were used to redeem $50,000 in outstanding commercial paper notes, fund a cash debt service reserve fund, and pay the costs o f issuing the bonds. The bonds were rated “Aa3” and “AA-” by Moody’s and S&P, respectively at the time of issuance. Bonds mature through October 1, 2021. The true interest cost is 2.9%. As of June 30, 2021 and 2020, the 2010 Series A bonds’ principal amount outstanding was $8,820 and $17,210, respectively.
(b) Wastewater Revenue Bonds 2010 Series B
During fiscal year 2010, the Wastewater Enterprise issued revenue bonds 2010 Series B (Federally Taxable – Build America Bonds – Direct Payment) in the amount of $192,515 with interest rates ranging from 4.7% to 5.8%. Proceeds from the bonds were used to redeem $53,500 in outstanding commercial paper notes, provide funding for capital projects in the amount of $112,429, fund a cash debt service reserve fund, and pa y financing costs for the bonds. The bonds were rated “Aa3” and “AA -” by Moody’s and S&P, respectively at the time of issuance. Bonds mature through October 1, 2040. The true interest cost is 3.7%. As of June 30, 2021 and 2020, the 2010 Series B bonds’ principal amount outstanding was $192,515.
(c) Wastewater Revenue Bonds 2013 Series A
In January 2013, the Wastewater Enterprise issued tax-exempt revenue bonds 2013 Series A in the amount of $193,400 for the purpose of refunding the remaining portion of the outstanding 2003 Series A bonds maturing on and after October 1, 2013. The bonds carried “Aa3” and “AA-” ratings from Moody’s and S&P, respectively at the time of issuance. The 2013 Series A refunding bonds include serial bonds with interest rates varying from 1.0% to 5.0% and have a final maturity in October 2025. The Series A bonds have a true interest cost of 1.2%. The 2013 Series A bonds also refunded the remaining portion of the outstanding state revolving fund loans. The refunding resulted in the recognition of a deferred accounting loss of $2,986, gross debt service savings of $35,107 over the next 13 years, and an economi c gain of $32,783 or
15.4% of the refunded principal. As of June 30, 2021 and 2020, the principal amount outstanding of the 2013 Series A bonds was $29,595 and $44,445, respectively.
(d) Wastewater Revenue Bonds 2013 Series B
In February 2013, the Wastewater Enterprise issued revenue bonds 2013 Series B in the amount of $331,585 with interest rates ranging from 4.0% to 5.0%. Proceeds from the bonds were used for Wastewater capital projects, pay off all outstanding Wastewater commercial paper notes, and pay th e costs of issuing the bonds. The bonds were rated “Aa3” and “AA -” by Moody’s and S&P, respectively at the time of issuance. Bonds mature through October 1, 2042.
The true interest cost is 3.6%. As of June 30, 2021 and 2020, the principal amount outstanding of the 2013 Series B bonds was $331,585.
(e) Wastewater Revenue Bonds 2016 Series A
In May 2016, the Wastewater Enterprise issued tax -exempt revenue bonds 2016 Series A (Green Bonds) in the amount of $240,580 with interest rates ranging from 4.0% to 5.0%.
Proceeds from the bonds were used for Wastewater capital projects, to pay off $53,439 of outstanding commercial paper notes , to fund capitalized interest, and pay the costs of issuing the bonds. The bonds carried ratings of “AA” and “Aa3” from S&P and Moody’s, respectively at
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
117 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
the time of issuance. Bonds mature through October 1, 2046. The bonds have a true interest cost of 3.2 %. As of June 30, 2021 and 2020, the principal amount outstanding of the 2016 Series A bonds was $240,580.
(f) Wastewater Revenue Bonds 2016 Series B
In May 2016, the Wastewater Enterprise issued tax-exempt revenue bonds 2016 Series B in the amount of $67,82 0 with interest rates ranging from 4.0% to 5.0%. Proceeds from the bonds were used for Wastewater capital projects, to pay off $20,560 of outstanding commercial paper notes, to fund capitalized interest, and pay the costs of issuing the bonds. The bonds ca rried ratings of “AA” and “Aa3” from S&P and Moody’s, respectively at the time of issuance. Bonds mature through October 1, 2046. The bonds have a true interest cost of 3.2%. As of June 30, 2021 and 2020, the principal amount outstanding of the 2016 Series B bonds was $67,820.
(g) Wastewater Revenue Bonds 2018 Series A
In August 2018, the Wastewater Enterprise issued tax-exempt revenue bonds 2018 Series A (SSIP) (Green Bonds) in the amount of $229,050 with interest rates ranging from 4.0% to 5.0%.
Proceeds fr om the bonds were used for Wastewater capital projects in furtherance of the SFPUC’s Sewer System Improvement Program (SSIP), to pay off $25,000 of outstanding commercial paper notes, to fund capitalized interest, and pay the costs of issuing the bonds.
The bonds carried ratings of “AA” and “Aa3” from S&P and Moody’s, respectively at the time of issuance. Bonds mature through October 1, 2043. The bonds have a true interest cost of 3.4%.
As of June 30, 2021 and 2020, the principal amount outstanding of the 2018 Series A bonds was $229,050.
(h) Wastewater Revenue Bonds 2018 Series B
In August 2018, the Wastewater Enterprise issued tax-exempt revenue bonds 2018 Series B (Non-SSIP) in the amount of $185,950 with 5.0% interest rate. Proceeds fro m the bonds were used for Wastewater capital projects, to fund capitalized interest, and pay the costs of issuing the bonds. The bonds carried ratings of “AA” and “Aa3” from S&P and Moody’s, respectively at the time of issuance. Bonds mature through Octobe r 1, 2043. The bonds have a true interest cost of 3.5%. As of June 30, 2021 and 2020, the principal amount outstanding of the 2018 Series B bonds was $185,950.
(i) Wastewater Revenue Bonds 2018 Series C
In August 2018, the Wastewater Enterprise issued tax-exempt revenue bonds 2018 Series C (SSIP) (Green Bonds) in the amount of $179,145 with 2.1% interest rate. Proceeds from the bonds were used for Wastewater capital projects, to fund capitalized interest, and pay the costs of issuing the bonds. The bonds carried ratings of “AA” and “Aa3” from S&P and Moody’s, respectively at the time of issuance. Bonds mature through October 1, 2048. The Initial Mandatory Tender date of the 2018 Series C bonds is October 1 , 2023. The bonds have a true interest cost of 3.5%. As of June 30, 2021 and 2020, the principal amount outstanding of the 2018 Series C bonds was $179,145.
(j) Future Annual Debt Service of Revenue and Refunding Bonds
The following table presents the futur e annual debt service relating to the revenue and refunding bonds outstanding as of June 30, 20 21. The interest before subsidy amounts include the interest for 2010 Series A and B, 2013 Series A and B, 2016 Series A and B, and 2018
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
118 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Series A, B, and C bonds. The federal interest subsidy amounts represent 35% of the interest, excluding sequestration, for the 2010 Series B revenue bonds.
* The SFPUC received IRS notice , dated June 29, 2021 , that the federal interest subsidy on the 2010 Series B bonds is reduced by 5.7%, or a total reduction of $2,536, due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same.
As defined in the Indenture, the principal and interest of the Wastewater Enterprise’s refunding bonds are payable from its corresponding revenue as well as monies deposited in certain funds and accounts pledged thereto (see Note 5).
(k) Lake Merced Green Infrastructure Project CWSRF Loan
In January 2016, then amended in May 2016, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a Clean Water State Revolving Fund (“CWSRF”) Loan to fund the Lake Merced Green Infrastructure Project of the Sewer System Improvement Program. The aggregate amount of the CWSRF loans is $7,435. The loan bears an interest rate of 1.6% which was equal to one -half of the State of California’s most recent 30 -year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30-year term, with loan repayment beginning one year after substantial completion of each project’s construction; substantial completion is expected by July 2020. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has received loan disbursements to date totaling $6,116 and a construction period interest of $166 transferred to principal. As of June 30, 2021 and 2020, the principal amount outstanding of the loan was $6,282 and $6,117, respectively.
(l) Southeast Plant (SEP) 521/522 and Disinfection Upgrade Project CWSRF Loan
In September 2017, then amended in December 2017 and May 2018, the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the SEP 521/522 and Disinfection Upgrade Project of the Sewer System Improvement Program. The aggregate amount of the CWSRF loans is $40,007. T he loan bears an interest rate of 1.8% which was equal to one -half of the State of California’s most recent 30 -year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30 -year term, with loan repaym ent beginning one year after substantial completion of each project’s construction; substantial completion occurred in July 2019. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has rec eived proceeds from loan disbursements to date totaling Interest before Federal interest Interest net
Principal subsidy subsidy* of subsidy
Fiscal years ending June 30:
2022 $ 22,880 63,863 (3,527) 60,336
2023 34,345 62,496 (3,471) 59,025
2024 36,905 62,441 (3,356) 59,085
2025 36,935 62,291 (3,235) 59,056
2026 38,675 60,451 (3,105) 57,346
2027-2031 223,005 270,455 (13,298) 257,157
2032-2036 281,885 206,774 (8,781) 197,993
2037-2041 351,845 130,881 (3,182) 127,699
2042-2046 312,460 53,422 — 53,422
2047-2049 126,125 6,874 — 6,874
1,465,060 979,948 (41,955) 937,993
Less: Current portion (22,880)
Add: Unamortized bond premiums 124,862
Long-term portion as of June 30, 2021 $ 1,567,042
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
119 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
$39,741. As of June 30, 2021 and 2020, the principal amount outstanding of the loan was $38,512 and $38,193, respectively.
(m) North Point Facility Outfall Rehabilitation Project CWSRF Loan
In September 2017 the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the North Point Facility Outfall Rehabilitation Project of the Sewer System Improvement Program. The aggregate amount of the CWSRF loans is $20,199. The loan bears an interest rate of 1.8% which was equal to one -half of the State of California’s most recent 30 -year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30 -year term, with loan repayment beginning one year after substantial completion of each project’s construction , substantial completion occurred in February 2018. The CWSRF loans is secured on a parity lien basis with the Wastewater Enterprise’s outstanding re venue bonds. The SFPUC has received proceeds from loan disbursements to date totaling $17,706. As of June 30, 2021 and 2020 the principal amount outstanding of the loan was $16,181 and $16,644, respectively.
(n) Southeast Plant (SEP) Primary/Secondary Clarifier Upgrade Project CWSRF Loan
In September 2017 the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the SEP Primary/Secondary Clarifier Upgrade Project of the Sewer System Improvement Program. The aggregate amount of the CWSRF loans is $34,446 . The loan bears an interest rate of 0.8% which was equal to one -half of the State of California’s most recent 30-year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30 -year term, with loan repayment beginning one year after substantial completion of each project’s construction; substantial completion occurred in June 2018. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has received proceeds from loan disbursements to date totaling $29,197. As of June 30, 2021 and 2020, the principal amount outstanding of the loan was $26,829 and $27,595, respectively.
(o) Oceanside Plant (OSP) Digester Gas Utilization Upgrade Project
In May 2020 the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the OSP Digester Gas Utilization Upgrade Project of the Sewer System Improvement Program. The CWSRF loan is in the amount of $54,388, which includes $4,000 of principal forgiveness, or a grant. The loan bears an interest rate of 1.4% which was equal to one -half of the State of California’s most recent 30 -year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30 -year term, with loan repayment beginning one year after substantial completion of each project’s construction; substantial completion is expected in August 2021.
The CWSRF loan is secured on a parity lien basi s with the Wastewater Enterprise’s outstanding revenue bonds. The SFPUC has received proceeds from loan disbursements to date totaling $0 and a receivable for reimbursement of $20,755. As of June 30, 2021 and 2020, the principal amount outstanding of the loan was $20,755 and $0, respectively.
(p) Southeast Plant (SEP) Biosolids Digester Facilities Project
In May 2020 the SFPUC entered into an Installment Sale Agreement with the State Water Resources Control Board for a CWSRF Loan to fund the SEP Biosolids Digester Facilities Project of the Sewer System Improvement Program. The CWSRF loan is in the amount of $132,000, which includes $4,000 of principal forgiveness, or a grant. The loan bears an interest rate of
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
120 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
1.4% which was equal to one -half of the State of California’s most recent 30 -year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30 -year term, with loan repayment beginning one year after substantial completion of each project’s construction; substantial completion is expected in May 2026. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds.
As of June 30, 2021 and 2020, the principal amount outstanding of the loan was $0.
(q) Southeast Plant (SEP) New Headworks (Grit) Replacement Project
In May 2021, the SFPUC entered into an Installment Sale Agreement with t he State Water Resources Control Board for a CWSRF Loan to fund the SEP New Headworks (Grit) Replacement Project of the Sewer System Improvement Program. The CWSRF loan is in the amount of $112,036. The loan bears an interest rate of 1.1% which was equal t o one-half of the State of California’s most recent 30 -year General Obligation Bond true interest cost at the time the agreement was executed. The CWSRF loan will have a 30 -year term, with loan repayment beginning one year after substantial completion of e ach project’s construction; substantial completion is expected in March 2024. The CWSRF loan is secured on a parity lien basis with the Wastewater Enterprise’s outstanding revenue bonds. As of June 30, 2021 and 2020, the principal amount outstanding of the loan was $0.
(r) Future Annual Debt Services of State Revolving Fund Loans (CWSRF Loans)
The future annual debt services relating to the State Revolving Fund Loan to fund the Lake Merced Green Infrastructure Project, the North Point Facility Outfall Rehabilitation Project, the SEP Primary/Secondary Clarifier Upgrade Project, the SEP 521/522 and Disinfect ion Upgrade Project and the OSP Digester Gas Utilization Upgrade Project outstanding as of June 30, 2021 are as follows:
(s) WIFIA Loan Agreement-Biosolids Digester Facility Project
In July 2018 the SFPUC entered into a “Water Infrastructure Finance and Innovation Act (WIFIA)” Loan Agreement (“WIFIA Loan”) with the United States Environmental Protection Agency in the amount of $699,242. The WIFIA Loan was entered into pursuant to the WIFIA statute authorized by Congress in 2014. The WIFIA Loan will fund 49% of the costs of the Wastewater Enterprise’s Biosolids Digester Facility Project plus certain eligible expenses. Payment of the WIFIA Loan will be secured by a senior lien pledge of the Wastewate r Enterprise’s net revenues and is on a parity lien basis with the SFPUC’s outstanding Wastewater Revenue Bonds and Clean Water Principal Interest Total
Fiscal years ending June 30:
2022 $ 2,483 1,254 3,737
2023 3,043 1,553 4,596
2024 3,095 1,509 4,604
2025 3,148 1,464 4,612
2026 3,202 1,419 4,621
2027-2031 16,854 6,378 23,232
2032-2036 18,352 5,110 23,462
2037-2041 19,983 3,729 23,712
2042-2046 21,761 2,225 23,986
2047-2051 15,798 659 16,457
2052 840 12 852
Total 108,559 25,312 133,871
Less: Current portion (2,483)
Long-term portion as of June 30, 2021 $ 106,076
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
121 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
State Revolving Fund (“SRF”) Loans entered into with the California State Water Resources Control Board.
The original 2018 loa n bore a fixed interest rate of 3.09% for a 35 -year term, with loan repayment expected to begin in fiscal year 2026, after substantial completion of project construction. In June 2020 the SFPUC re -executed the WIFIA Loan Agreement to have a fixed interest rate of 1.45% for a 35 -year term. All other terms of WIFIA Loan Agreement are unchanged.
The SFPUC has not submitted any requests for loan disbursements to date and there is no outstanding loan principal as of June 30, 2021.
(t) WIFIA Loan Agreement-Southeast Treatment Plant Improvements Project
In June 2020 the SFPUC entered into a “Water Infrastructure Finance and Innovation Act (WIFIA) Loan Agreement (WIFIA Loan) with the United States Environmental Protection Agency in the amount of $513,862. The WIFIA Loan was entered into pursuant to the WIFIA statute authorized by Congress in 2014. The WIFIA Loan will fund 49% of the costs of the Wastewater Enterprise’s SEP New Headworks Replacement Project and additional costs of the revised Biosolids Digester Facility Project plus certain eligible expenses. Payment of the WIFIA Loan will be secured by a senior lien pledge of the Wastewater Enterprise’s net revenues and is on a parity lien basis with the SFPUC’s outstanding Wastewater Revenue Bonds and Clean Water Sta te Revolving Fund (“SRF”) Loans entered into with the California State Water Resources Control Board. The loan will bear a fixed interest rate of 1.45% for a 35 -year term, with loan repayment expected to begin in fiscal year 2025, after substantial complet ion of project construction. The SFPUC has not submitted any requests for loan disbursements to date and there is no outstanding loan principal as of June 30, 2021.
(u) Events of Default and Remedies
In accordance with GASB Statement No. 88, Certain Disclosures Related to Debt , Including Direct Borrowings and Direct Placements , significant events of default as specified in the Wastewater Enterprise Indenture (applicable to Wastewater Revenue Bonds, SRF Loans, and WIFIA Loan include 1) Non-payment 2) material breach of warranty, representation, or indenture covenants (not cured within applicable grace periods), and 3) bankruptcy and insolvency events, which may result in the Trustee (upon written request by the majority of the owners (by aggregate amount of the bond obligations or of a credit provider), declaring the principal and the interest accrued thereon, to be due and payable immediately. As of June 30, 202 1, there were no such events described herein.
Hetchy Water Long-Term Liability activities for the years ended June 30, 2021 and 2020 are as follows:
Due within
2020 Additions Reductions 2021 one year
Other post-employment benefits obligations $ 16,350 1,818 (3,724) 14,444 — Net pension liability 21,477 12,119 (6,951) 26,645 — Accrued vacation and sick leave 1,646 1,034 (495) 2,185 1,059 Accrued workers’ compensation 1,187 18 (85) 1,120 197 Due to Other City departments 240 — (240) — —
Damage claims liability 558 478 (511) 525 218
Unearned revenues, refunds, and other 627 629 (1,118) 138 22 Total $ 42,085 16,096 (13,124) 45,057 1,496
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
122 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Hetchy Power Long -Term Liabilit y activities for the years ended June 30, 20 21 and 20 20 are as follows:
Due within
2019 Additions Reductions 2020 one year
Other post-employment benefits obligations $ 15,404 2,206 (1,260) 16,350 — Net pension liability 20,390 5,611 (4,524) 21,477 —
Accrued vacation and sick leave 1,388 653 (395) 1,646 911 Accrued workers’ compensation 1,238 75 (126) 1,187 201 Due to Other City departments — 240 — 240 240
Damage claims liability 224 550 (216) 558 274
Unearned revenues, refunds, and other 623 24 (20) 627 18 Total $ 39,267 9,359 (6,541) 42,085 1,644
Interest Maturity Due within
Rate (Calendar Year) 2020 Additions Reductions 2021 one year Bonds:
Clean Renewable Energy Bonds 0.00 % 2022 $ 1,265 — (422) 843 422 Qualified Energy Conservation Bonds 4.74 2027 4,229 — (542) 3,687 549 New Clean Renewable Energy Bonds 2012 4.74 2020 130 — (130) — — New Clean Renewable Energy Bonds 2015 4.62 2032 3,190 — (1,411) 1,779 142 2015 Series A Revenue Bonds 4.00 - 5.00 2045 32,025 — — 32,025 — 2015 Series B Revenue Bonds 3.00 - 4.00 2026 5,335 — (785) 4,550 815 Less issuance discount (34) — 14 (20) —
Add issuance premiums 3,668 — (220) 3,448 —
Total bonds payable 49,808 — (3,496) 46,312 1,928
2009 Series C Certificates of Participation (COPs) 2.00 – 5.00 2022 1,214 — (384) 830 405 2009 Series C COPs issuance premiums 21 — (13) 8 —
2009 Series D COPs (Build America) 6.36 – 6.49 2041 12,593 — — 12,593 — Other post-employment benefits obligations 19,983 2,223 (4,553) 17,653 — Net pension liability 26,249 14,812 (8,495) 32,566 — Accrued vacation and sick leave 2,957 1,763 (1,103) 3,617 1,777 Accrued workers’ compensation 2,200 95 (177) 2,118 378 Due to Other City departments 600 — (231) 369 369
Damage claims liability 2,222 4,212 (5,326) 1,108 409 Unearned revenues, refunds, and other 7,642 8,560 (10,209) 5,993 5,141 Total $ 125,489 31,665 (33,987) 123,167 10,407
Interest Maturity Due within
Rate (Calendar Year) 2019 Additions Reductions 2020 one year Bonds:
Clean Renewable Energy Bonds 0.00 % 2022 $ 1,687 — (422) 1,265 422 Qualified Energy Conservation Bonds 4.74 2027 4,765 — (536) 4,229 542 New Clean Renewable Energy Bonds 2012 4.74 2020 713 — (583) 130 130 New Clean Renewable Energy Bonds 2015 4.62 2032 3,422 — (232) 3,190 236 2015 Series A Revenue Bonds 4.00 - 5.00 2045 32,025 — — 32,025 — 2015 Series B Revenue Bonds 3.00 - 4.00 2026 6,090 — (755) 5,335 785 Less issuance discount (48) — 14 (34) —
Add issuance premiums 3,892 — (224) 3,668 —
Total bonds payable 52,546 — (2,738) 49,808 2,115 — 2009 Series C Certificates of Participation (COPs) 2.00 – 5.00 2022 1,580 — (366) 1,214 384 2009 Series C COPs issuance premiums 39 — (18) 21 —
2009 Series D COPs (Build America) 6.36 – 6.49 2041 12,593 — — 12,593 — Other post-employment benefits obligations 18,826 2,697 (1,540) 19,983 — Net pension liability 24,920 6,858 (5,529) 26,249 —
Accrued vacation and sick leave 2,643 1,474 (1,160) 2,957 1,596 Accrued workers’ compensation 2,261 261 (322) 2,200 384 Due to Other City departments 350 14,090 (13,840) 600 231 Damage claims liability 2,053 9,182 (9,013) 2,222 705 Unearned revenues, refunds, and other 7,789 5,815 (5,962) 7,642 4,852 Total $ 125,600 40,377 (40,488) 125,489 10,267
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
123 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
CleanPowerSF Long -Term Liability activities for the years ended June 30 , 2021 and 20 20 are as follows:
GASB Statement No. 88 Implemented in Fiscal Year 2019
In March 2018, the GASB issued Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements . GASB Statement No. 88 establishes additional financial statement note disclosure requirements related to debt obligations of governments, including direct borrowings and direct placements. This Statement applies to all Hetchy Power bonds and is discussed in each bond hereafter.
(a) Clean Renewable Energy Bonds
In November 2008, Hetchy Power issued $6,325 of taxable CREBs to finance the installation of solar energy equipment on City -owned facilities, including Chinatown Bra nch Library, Maxine Hall Medical Center, City Distribution Division Warehouse, North Point Wastewater Plant, Chinatown Public Health Center, Municipal Transportation Agency Woods, and Municipal Transportation Agency Ways and Structures. The CREBs were non -rated and privately -placed with Banc of America Leasing. The net effective interest rate on the CREBs, after the federal tax subsidy, is 0% through 2022. Hetchy Power began making principal payments in the amount of $422 on December 15, 2008 and will conti nue annual payments for 15 years until December 15, 2022. Funding for these payments will be guaranteed by net power revenues. Interest payments are not required, since the effective equivalent of interest on the bonds is paid in the form of federal tax credits in lieu of interest paid by the issuer.
Significant events of default as specified in the Equipment Lease/Purchase Agreement, include
1. payment defaults, 2 . material breach of warranty, representation, or covenants of the Equipment Lease/Purchase A greement (not cured within applicable grace periods) and 3 . bankruptcy and insolvency events, which could cause acceleration of all Rental Payments.
Assets constructed by the projects funded from proceeds of this debt obligation are pledged as collateral. As of June 30, 2021, there were no such events described herein.
Due within
2020 Additions Reductions 2021 one year
Other post-employment benefits obligations $ 2,197 1,605 (893) 2,909 — Net pension liability 1,805 1,987 (784) 3,008 —
Accrued vacation and sick leave 291 135 (26) 400 205 Damage claims liability 106 153 (253) 6 6
Unearned revenues, refunds, and other 848 19,561 (10,381) 10,028 1,028 Total $ 5,247 23,441 (12,337) 16,351 1,239
Due within
2019 Additions Reductions 2020 one year
Other post-employment benefits obligations $ 1,242 2,206 (1,251) 2,197 — Net pension liability 1,070 2,052 (1,317) 1,805 —
Accrued vacation and sick leave 211 114 (34) 291 175 Damage claims liability 7 307 (208) 106 53
Unearned revenues, refunds, and other 542 13,376 (13,070) 848 848 Total $ 3,072 18,055 (15,880) 5,247 1,076
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
124 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The future annual debt service relating to the CREBs outstanding as of June 30, 202 1 is as follows:
(b) Qualified Energy Conservation Bonds
In December 2011, Hetchy Power issued $8,291 of taxable QECBs. The QECBs were issued to fund certain qualified green components for the SFPUC’s 525 Golden Gate Headquarters project. The QECBs were non -rated and privately placed with Ban c of America Leasing. The net effective interest rate on the QECBs, after the federal tax subsidy, is 1.2% through 2028.
Significant events of default as specified in the Equipment Lease/Purchase Agreement, include 1) payment defaults 2 ) material breach of warranty, representation, or covenants of the Equipment Lease/Purchase Agreement (not cured within applicable grace periods) and 3 ) bankruptcy and insolvency events, which could cause acceleration of all Rental Payments.
Assets constructed by the projects funded from proceeds of this debt obligation are pledge d as collateral. As of June 30, 2021, there were no such events described herein.
The future annual debt service relating to the QECBs outstanding as of June 30, 202 1 is as follows:
* The SFPUC received IRS notice, dated June 29, 2021, that the federal interest subsidy is reduced by 5.7% or a total reduction of $26 due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same.
(c) New Clean Renewable Energy Bonds 2012
In April 2012, Hetchy Power issued $6,600 of taxable NCREBs. The NCREBs were issued to fund certain qualified facilities that provide clean, renewable energy at Davies Symphony Hall, City Hall, and University Mound Reservoir. The NCREBs were non-rated and privately placed with Banc of America Leasing. The net effective interest rate on the NCREBs, after the federal tax subsidy, is 1.5% through 2021. $288 and $2,523 of principal was prepaid in fiscal year 2017 and 2016, respectively. There was no prep ayment the reafter. 2012 NCREBs have been fully repaid as of June 30, 2021.
Fiscal years ending June 30: Principal
2022 $ 422
2023 421
843
Less: Current portion (422)
Less: Unamortized bond discount (20)
Long-term portion as of June 30, 2021 $ 401
Interest
before
Federal
interest
Interest
net
Fiscal years ending June 30: Principal subsidy subsidy* of subsidy 2022 $ 549 168 (119) 49
2023 555 142 (100) 42
2024 562 116 (82) 34
2025 569 89 (63) 26
2026 576 62 (44) 18
2027-2028 876 42 (28) 14
3,687 619 (436) 183
Less: Current portion (549)
Long-term portion as of June 30, 2021 $ 3,138
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
125 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Significant events of default as specified in the Equipment Lease/Purchase Agreement, include 1) payment defaults 2 ) material breach of warranty, representation, or covenants of the Equipment Lease/Purchase Agreement (not cured within applicable grace periods) and 3 ) bankruptcy and insolvency events, which could cause acceleration of all Rental Payments.
Assets constructed by the projects funded from proceeds of this debt obligation are pledged as collateral. As of June 30, 2021, there were no such events described herein.
(d) New Clean Renewable Energy Bonds 2015
In October 2015, Hetchy Power issued $4,100 of taxable 2015 NCREBs. The 2015 NCREBs were issued to fund certain qualified clean, renewable energy solar generation facilities at the Marina Middle School and the San Francisco Police Academy. The 2015 NCREBs were non - rated and privately placed with Banc of America Leasing. The net effective interest rate on the 2015 NCREBs, after the federal tax subsidy, is 1.4% through 2033. $1,272 and $0 of principal were prepaid in fiscal years 2021 and 2020, respectively.
Significant events of default as specified in the Equipment Lease/Purchase Agreement, include 1) payment defaults 2 ) material breach of warranty, representation, or covenants of the Equipment Lease/Purchase Agreement (not cured within applicable grace per iods) and 3 ) bankruptcy and insolvency events, which could cause acceleration of all Rental Payments.
Assets constructed by the projects funded from proceeds of this debt obligation are pledged as collateral. As of June 30, 2021, there were no such events described herein.
The future annual debt service relating to the 2015 NCREBs outstanding as of June 30, 2021 is as follows:
* The SFPUC received IRS notice, dated June 29, 2021, that the federal interest subsidy is reduced by 5.7% or a total reduction of $20 due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same.
(e) Power Revenue Bonds 2015 Series A (Green) and Series B
In May 2015, Hetchy Power issued tax-exempt revenue bonds, 2015 Series A (Green) in the amount of $32,025 with interest rates ranging from 4.0% to 5.0% and 2015 Series B in the amount of $7,530 with interest rates ranging from 3.0% to 4.0%. Proceeds from the bonds were used to finance reconstruction or replacement of existing facilities of the SFPUC’s Hetch Hetchy project, to fund capitalized interest on the 2015 Series AB Bonds, to fund a debt service reserve account for the 2015 Series AB Bonds, and to pay costs of issuance of the 2015 Series AB bonds. The bonds were rated “A+” and “AA -” by S&P and Fitch, respectively. Final maturity for Interest
before
Federal
interest
Interest
net
Fiscal years ending June 30: Principal subsidy subsidy* of subsidy 2022 $ 142 81 (53) 28
2023 146 74 (49) 25
2024 148 67 (44) 23
2025 150 60 (40) 20
2026 152 53 (35) 18
2027-2031 792 159 (105) 54
2032-2033 249 12 (8) 4
1,779 506 (334) 172
Less: Current portion (142)
Long-term portion as of June 30, 2021 $ 1,637
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
126 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
2015 Series AB are November 1, 2045 and November 1, 2026, respectively. The true interest cost is 3.95%. As of June 30, 2021 and 2020, the outstanding principal amounts were $36,575 and $37,360, respectively.
Significant events of default as specified in the Power Enterprise Indenture (applicable to Power Revenue Bonds) include 1 . non-payment, 2 . material breach of warranty, representation, or indenture covenants (not cured within applicable grace periods) and 3 . bankruptcy and insolvency events, which may result in the Trustee (upon written request by the majority of the owners (by aggregate amount of the bond obligations), declare the principal a nd the interest accrued thereon to be due and payable immediately. As of June 30, 2021, there were no such events described herein.
The future annual debt service relating to the 2015 Series AB Bonds outstanding as of June 30, 2021 are as follows:
(8) Certificates of Participation Issued for the 525 Golden Gate Avenue Headquarters Building
Department-wide Business Type Activities
In October 2009, the City issued $167,670 in certificates of participation to fund the headquarters building of the SFPUC at 525 Golden Gate Avenue. The 2009 Series C were issued for $38,120 and 2009 Series D for $129,550 as “Build America Bonds” (BABs) on a taxable basis under the 2009 American Recovery and Reinvestment Act. The 2009 Series C certificates carry interest rates ranging from 2.0% to 5.0% and mature on November 1, 2022. The 2009 Series D certificates carry interest Fiscal years ending June 30: Principal Interest Total
2022 $ — 1,593 1,593
2023 — 1,593 1,593
2024 — 1,593 1,593
2025 — 1,593 1,593
2026 — 1,593 1,593
2027-2031 5,235 7,388 12,623
2032-2036 6,860 5,873 12,733
2037-2041 8,755 3,931 12,686
2042-2046 11,175 1,452 12,627
32,025 26,609 58,634
Add: Unamortized bond premium 3,272
Long-term portion as of June 30, 2021 $ 35,297
Hetchy Power - Power Revenue Bonds 2015 Series A (Green) Fiscal years ending June 30: Principal Interest Total
2022 $ 815 157 972
2023 850 124 974
2024 880 93 973
2025 910 62 972
2026 945 25 970
2027 150 3 153
4,550 464 5,014
Less: Current portion (815)
Add: Unamortized bond premium 176
Long-term portion as of June 30, 2021 $ 3,911
Hetchy Power - Power Revenue Bonds 2015 Series B
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
127 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
rates ranging from 6.4% to 6 .5% and mature on November 1, 2041 . After adjusting for the federal interest subsidy, the true interest cost averages 3.4% and 4.3% for Series C and Series D, respectively.
Under the terms of a memorandum of understanding (MOU) between the City and the SF PUC dated October 1, 2009, the City conveyed the real property to the Trustee, the Bank of New York Mellon Trust Company, N.A., which was replaced by U.S. Bank in March 2014 under a property lease in exchange for the proceeds of the sale of the certificate s. The Trustee has leased the property back to the City for the City’s use under a project lease. The City is obligated under the project lease to pay base rental payments and other payments to the Trustee each year during the 32 -year term of the project lease. The Commission makes annual base rental payments to the City for the building equal to annual debt service on the certificates. It is anticipated these lease costs will be offset with reductions in costs associated with current office rental expense. There are no events of default stated in this memorandum of understanding.
Each of the three enterprises has an ownership interest in the building equal to their projected usage of space as follows: Water (73%), Wastewater (15%), and Hetchy Power (12%). Similarly, each enterprise is responsible for a portion of the annual base rental payment based on their o wnership percentages less contributed equity. The percentage share of Base Rental Payments for the enterprises is as follows: Water (71.4%), Wastewater (18.9%), and Hetchy Power (9.7%).
Water Enterprise
The future annual debt services relating to the cer tificates of participation 2009 Series C and D outstanding as of June 30, 2021 are as follows:
* The SFPUC received IRS notice , dated June 29, 2021 , that the federal interest subsidy on the 2009 Series D bonds is reduced by 5.7%, or a total reduction of $1,521 due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same.
Principal Interest Total
Fiscal years ending June 30:
2022 $ 2,970 230 3,200
2023 3,124 78 3,202
6,094 308 6,402
Less: Current portion (2,970)
Add: Unamortized bond premiums 69
Long-term portion as of June 30, 2021 $ 3,193
Certificates of Participation 2009 Series C
(Tax-Exempt)
Principal
Interest before
subsidy
Federal interest
subsidy*
Interest net
of subsidy
Fiscal years ending June 30:
2022 $ — 5,968 (1,970) 3,998
2023 — 5,968 (1,970) 3,998
2024 3,267 5,864 (1,935) 3,929
2025 3,402 5,652 (1,865) 3,787
2026 3,545 5,431 (1,792) 3,639
2027-2031 20,099 23,497 (7,755) 15,742
2032-2036 24,751 16,291 (5,377) 10,914
2037-2041 30,523 7,357 (2,428) 4,929
2042 6,912 224 (74) 150
Total 76,252 (25,166) 51,086
Long-term portion as of June 30, 2021 $ 92,499
Certificates of Participation 2009 Series D
(Taxable BABs)
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
128 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Wastewater Enterprise
The fut ure annual debt services relating to the certificates of participation 2009 Series C and D outstanding as of June 30, 2021 are as follows:
* The SFPUC received IRS notice , dated June 29, 2021 , that the federal interest subsidy on the 2009 Series D bonds is reduced by 5.7%, or a total reduction of $402, due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same.
Hetchy Power
The future annual debt services relating to the certificates of participation 2009 Series C and D outstanding as of June 30, 2021 are as follows:
Principal Interest Total
Fiscal years ending June 30:
2022 $ 785 61 846
2023 826 21 847
1,611 82 1,693
Less: Current portion (785)
Add: Unamortized bond premiums 18
Long-term portion as of June 30, 2021 $ 844
Certificates of Participation 2009 Series C
(Tax-Exempt)
Principal
Interest
before
Federal
interest
Interest net
of subsidy
Fiscal years ending June 30:
2022 $ — 1,578 (521) 1,057
2023 — 1,578 (521) 1,057
2024 864 1,551 (512) 1,039
2025 900 1,494 (493) 1,001
2026 937 1,436 (474) 962
2027-2031 5,314 6,213 (2,050) 4,163
2032-2036 6,544 4,308 (1,422) 2,886
2037-2041 8,071 1,945 (642) 1,303
2042 1,828 59 (20) 39
Total 20,162 (6,655) 13,507
Long-term portion as of June 30, 2021 $ 24,458
Certificates of Participation 2009 Series D
(Taxable BABs)
Principal Interest Total
Fiscal years ending June 30:
2022 $ 405 31 436
2023 425 10 435
830 41 871
Less: Current portion (405)
Add: Unamortized bond premium 8
Long-term portion as of June 30, 2015Long-term portion as of June 30, 2021 $ 433 Certificates of Participation 2009 Series C
(Tax-Exempt)
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
129 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
* The SFPUC received IRS notice, dated June 29, 2021, that the federal interest subsidy on the 2009 Series D bonds is reduced by 5.7%, or a total reduction of $207, due to sequestration over the remaining life of the bonds assuming the sequestration rate will remain the same.
(9) Revenue Pledge
Department-wide Business Type Activities
Department-wide revenue pledge for the years ended June 30, 2021 and 2020 are as follows:
Water Revenue Pledge
The Water Enterprise has pledged future revenues to repay various revenue bonds and State Revolving Fund loans . Proceeds from the revenue bonds and State Revolving Fund loans provided financing for various capital construction projects, and to refund previously issued bonds. The bonds and State Revolving Fund loans are payable solely from revenues of the Water Enterprise through the fiscal year ending 2051.
The original amount of revenue bonds and State Revolving Fund loans issued, total principal and interest remaining, principal and interest paid during fiscal years 20 21 and 20 20, applicable net revenues and funds available for debt service are as follows:
Principal
Interest before
subsidy
Federal interest
subsidy*
Interest net
of subsidy
Fiscal years ending June 30:
2022 $ — 812 (268) 544
2023 — 812 (268) 544
2024 445 798 (263) 535
2025 463 769 (254) 515
2026 483 739 (244) 495
2027-2031 2,736 3,199 (1,056) 2,143
2032-2036 3,370 2,218 (732) 1,486
2037-2041 4,155 1,002 (331) 671
2042 941 32 (10) 22
Total 10,381 (3,426) 6,955
Long-term portion as of June 30, 2021 $ 12,593
Certificates of Participation 2009 Series D
(Taxable BABs)
2021 2020
Bonds issued with revenue pledge $ 6,623,446 6,317,406 Clean Water State Revolving Fund (CWSRF) loans with
revenue pledge 221,088 164,484
Principal and interest remaining due at the end of the year 10,421,954 10,112,715 Principal and interest paid during the year 335,861 336,750 Net revenues for the year ended June 30 458,054 540,551 Funds available for debt service 808,093 1,044,243
2021 2020
Bonds issued with revenue pledge $ 4,891,480 4,585,440 Clean Water State Revolving Fund (CWSRF) loans with
revenue pledge 107,407 73,271
Principal and interest remaining due at the end of the year 7,771,993 7,388,886 Principal and interest paid during the year 248,427 269,210 Net revenues for the year ended June 30 339,046 339,947 Funds available for debt service 467,738 581,878
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
130 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Wastewater Revenue Pledge
The Wastewater Enterprise has pledged future revenues to repay various revenue bonds and State Revolving Fund loans . Proceeds from the revenue bonds and State Revolving Fund loans provided financing for various capital construction projects, and to refund previously issued bonds. The bonds and State Revolving Fund loans payable through fiscal year s 2049 and 2052, respectively and are solely from revenues of the Wastewater Enterprise.
The original amount of revenue bonds and State Revolving Fund loans issued, total principal and interest remaining, principal and interest paid during fiscal years 20 21 and 20 20, applicable net revenues, and funds available for debt service are as follows:
Hetchy Power Revenue Pledge
Hetchy Power has pledged future power revenues to repay the 2008 CREBs, the 2011 QECBs, the 2012 NCREBs, and the 2015 NCREBs. Additionally, Hetchy Power has pledged future power revenues for 2015 Series AB power revenue bonds. Proceeds from the bonds provided financing for various capital construction and facility energy efficiency projects. The Series 2015 AB power revenue bonds are payable through fiscal year 2046 and are solely payable from net revenues of Hetchy Power on a senior lien basis to the 2008 CREBs, the 2011 QECBs, the 2012 NCREBs, and the 2015 NCREBs.
The original amount of bonds issued, total principal and interest remaining, principal and interest paid during fiscal years 2021 and 2020, applicable net revenues, and funds available for debt service are as follows:
* Per Indenture, debt service for coverage is calculated using the amount of principal and interest paid during the year for the 20 15 series AB power revenue bonds, which has a senior lien on power enterprise revenues; principal and interest paid during the year for the 2015 Series AB power revenue bonds was $2,567.
(10) Water Wholesale Balancing Account
Water Supply Agreement
From 1984 -2009, the Water Enterprise provided water service pursuant to the terms of the 1984 Water Settlement Agreement and Master Water Sales Contract, which established the basis for water rates to be charged to those customers (Wholesale Customers). Th e Master Water Sales Contract expired on June 30, 2009. The Commission and the Wholesale Customers approved a Water Supply Agreement (WSA) effective July 1, 2009 (the contract was restated 2021 2020
Bonds issued with revenue pledge $ 1,667,095 1,667,095 Clean Water State Revolving Fund (CWSRF) loans with
revenue pledge 113,681 91,213
Principal and interest remaining due at the end of the year 2,578,879 2,647,000 Principal and interest paid during the year 82,066 62,797 Net revenues for the year ended June 30 108,399 166,082 Funds available for debt service 306,177 381,804
2021 2020
Bonds issued with revenue pledge $ 64,871 64,871
Principal and interest remaining due at the end of the year 71,082 76,829 Principal and interest paid during the year* 5,368 4,743 Net revenues for the year ended June 30 10,609 34,522 Funds available for debt service 34,178 80,561
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
131 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
and amended by the SFPUC on December 11, 2018). The WSA has a 25 -year term from July 1, 2009 with two options for five -year extensions. The existing 184 million gallons per day (mgd) Supply Assurance continues under the WSA and no increase in the Supply Assurance will be considered before December 31, 2028. During the per iod from 2009 to 2028, the WSA limits the quantity of water delivered to Retail Customers and Wholesale Customers from the watersheds to 265 mgd. Under the WSA, annual operating expenses, including debt service on bonds sold to finance regional system impr ovements and regional capital projects funded from revenues, will be allocated between Retail Customers and Wholesale Customers on the basis of proportionate annual water use. The original WSA stated the Wholesale Customers’ share of net book value of exis ting regional assets as of June 30, 2009 would be recovered on level annual payment over the 25 -year term of the WSA at an interest rate of 5.13%. The 25 -year term repayment obligation was settled in February 2013. The Wholesale Customers made an early repayment to the Water Enterprise of the outstanding balance of $356,139 as discussed further in the “BAWSCA Early Repayment” Section 5.03 of the WSA. The WSA continues much of the rate setting, accounting, and dispute resolution provisions contained in the expired contract, and has emergency and drought-pricing adjustment provisions.
Pursuant to the terms of the WSA, the Water Enterprise is required to establish water rates applicable to the Wholesale Customers annually. The wholesale water rates are based o n an estimate of the level of revenues necessary to recoup the cost of distributing water to the Wholesale Customers in accordance with the methodology outlined in Article V of the WSA (the Wholesale Revenue Requirement (WRR), previously known as the Subur ban Revenue Requirement. During fiscal years ending in 2021 and 2020, the WRR, net of adjustments, charged to such wholesale customers was $275,992 and $256,280, respectively. Such amounts are subject to final review by the Wholesale Customers, along with a trailing wholesale balancing account compliance audit of the WRR calculation.
Pursuant to Article VII, Section 7.02 of the WSA, the Water Enterprise is required to re-compute the WRR after the close of each fiscal year based on the actual costs incurred in the delivery of water to the Wholesale Customers. The difference between the wholesale revenues earned during the year and the “actual” WRR is recorded in a separate account (the Balancing Account) and represents the cumulative amount that is either owed to the Wholesale Customers (if the wholesale revenues exceed the WRR) or owed to the City (if the WRR exceeds the wholesale revenues paid). In accordance with Article VI of the WSA, the amount recorded in the Balancing Account shall earn interest at a rate equal to the average rate received by the City during the year on the invested pooled funds of the City Treasury, and shall be taken into considerat ion in the determination of subsequent wholesale water rates. The Water Enterprise owed the Wholesale Customers $60,864 and $64,857 for the years ended June 30, 2021 and 2020, respectively, a decrease of $3,993. Refer to the compliance audit report for the final balancing account available at https://sfpuc.org/about-us/reports/audited-financial-statements-reports.
In addition to advancing funds to acquire the pre -2009 assets as discussed previously, the Water Enterprise has also previously appropriated fun ds, advanced through rates charged to Retail Customers, for construction of capital projects that were not yet placed into service as of June 30, 2009. Wholesale Customers’ share of these construction work in progress costs is calculated in accordance with the provisions in the WSA, including a 10 -year repayment term and payment of annual principal and interest rate calculated at 4.0% annually. The total obligation of the Wholesale Customers to the Water Enterprise is estimated at $9,542, and the level annual payment including principal and interest is approximately $1,159. The Wholesale Customers made the first annual payment as of June 30, 2015 and will end on June 30, 2024.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
132 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
(11) Other Non-Operating Revenues - Hetchy Power Trans Bay Cable Construction and Licensing Fees
In 2007, the Board of Supervisors adopted the resolution to enter into two non-exclusive licenses with the Trans Bay Cable LLC (the Licensee) for the Trans Bay Cable Project. The Licensee proposed to install, operate, and m aintain approximately 53 miles of high -voltage direct current transmission cable running from the City of Pittsburg to the City. The first license is a Construction License to install a 400 MW high-voltage transmission line, with a four -year term. The Licensee has paid Hetchy Power $3,500 in Renewable Energy, Transmission and Grid Reliability. Of this amount, $1,905 of the payments were spent for study and development of two City -owned transmission projects, a Newark - San Francisco project, and a Potrero-Embarcadero project. In 2020, the Board of Supervisors adopted an ordinance to use $1,593 of the remaining funds from this license to analyze the proposed purchase of power assets from Pacific Gas & Electric Company. The entire licensing fees were fully spent as of 2020.
The second license is an operational license for operation of the transmission line with 25 -year term and an option to renew for 10 years. The Licensee agrees to pay Hetchy Power in excess of $20,000 in 10 separate installments of $2,000 annu ally with adjustments for inflation, as the “San Francisco Electric Reliability Payment” to implement, advance, promote, or enhance policies and projects consistent with City Energy Policies. The project came on line November 29, 2010, and Hetchy Power received the first installment of $2,000. As of June 30, 2021, cumulative revenues to date of $22,708 were recorded, with final payment of $2,574 received in fiscal year 2020. Per agreement, the SFPUC shall consult with Departments of Environment and Public H ealth, as well as community members, including the Power Plant Task Force, in developing its proposals to the Board of Supervisors on how to spend the San Francisco Electricity Reliability Payment, and shall consider specifically renewable energy, conserva tion, and environmental health programs, which benefit low - income, at -risk, and environmentally disadvantaged communities. The San Francisco Electricity Reliability Payment shall also be partly used for green jobs training and placement programs, which benefit low-income, at-risk, and environmentally disadvantaged communities. As of June 30, 2021, cumulative expenses of $9,611 have been incurred, with $1,254 and $843 in fiscal years 2021 and 2020, respectively.
(12) Employee Benefits
a) Pension Plan
San Francisco City and County Employees’ Retirement System – The SFPUC participates in a cost-sharing multiple-employer defined benefit pension Plan ( SFERS Plan). The SFERS Plan is administered by the San Francisco City and County Employees’ Retirement System (SFERS). For purposes of measuring the net pension liability, deferred outflows/inflows of resources related to pensions, pension expense, information about the fiduciary net position of the SFERS Plan, and additions to/deductions from the SFERS Plan’s fiduciary net position have been determined on the same basis as they are reported by the SFERS Plan. Contributions are recognized in the period in which they are due pursuant to legal requirements. Benefit payments (including refunds of employee contribution s) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
Replacement Benefits Plan – The Replacement Benefits Plan (RBP) is a qualified excess benefit plan established in October 1989. Internal Revenue Code Section 415(m) provides for excess benefit arrangements that legally permit benefit payments above the Section 415 limits, provided that the payments are not paid from the SFERS Plan. The RBP allows the City to pay SFERS retirees any portion of the Charter -mandated retirement allowance that exceeds the annual Section 415(b) limit. The RBP plan does not meet the criteria of a qualified trust under
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
133 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
GASB Statement No. 73 because RBP assets are subject to the claims of the employer’s general creditors under federal and state law in the event of insolvency.
GASB Statements No. 68 and No. 73 require that the SFERS Plan and RBP reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:
SFERS Plan – The City is an employer of the SFERS Plan with a proportionate share of 94.39% as of June 30, 2020 (measurement date), and 94.13% as of June 30, 2019 (measurement date) a 0.26% increased from prior year. SFPUC’s allocation percentage was determined based on its employer contributions divided by the City’s total employer contributions for fiscal years 2020 and 2019. The net pension liability, deferred outflows/inflows of resources related to pensions, amortization of deferred outflows/inflows, and pension expense are based on each department’s allocated percentage . SFPUC’s allocation of the City’s proportionate share was
7.46%: 4.2 1% for Water, 2.0 3% for Wastewater, 0.5 2% for Hetchy Water, 0.6 4% for Hetchy Power an d 0.0 6% for CleanPowerSF as of June 30, 20 20 (measurement date). SFPUC’s allocation of the City’s proportionate share was 7.45%: 4.23% for Water, 2.05% for Wastewater,
0.51% for Hetchy Water, 0.62% for Hetchy Power and 0.04% for CleanPowerSF as of June 30, 2019 (measurement date).
RBP – The Water Enterprise’s allocation percentage was determined based on the Water Enterprise’s headcount (both active members and retirees) divided by the City’s total headcount for fiscal year 2020. The Water Enterprise’s total pension liability, deferred outflows/inflows of resources related to pensions, amortization of deferred outfl ows/inflows and pension expense is based on the Water Enterprise’s allocated percentage. The Water Enterprise’s allocation of the City’s proportionate share was 0.64% as of the measurement date.
Plan Description – The Plan provides basic service retiremen t, disability, and death benefits based on specified percentages of defined final average monthly salary and provides annual cost of living adjustments (COLA) after retirement. The Plan also provides pension continuation benefits to qualified survivors. Th e San Francisco City and County Charter and the Administrative Code are the authorities which establish and amend the benefit provisions and employer obligations of the Plan. The Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for the Plan.
That report may be obtained on the Retirement System’s website http://mysfers.org or by writing to the San Francisco City and County Employees’ Retirement System, 1145 Market Street, 5th Floor, San Francisco, CA 94103 or by calling (415) 487-7000.
Benefits – The Retirement System provides service retirement, disability, and death benefits based on specified percentages of defined final average monthly salary and annual COLA after retirement. Benefits and refunds are recognized when due and payable in accordanc e with the terms of the SFERS Plan. The Retirement System pays benefits according to the category of employment and the type of benefit coverage provided by the City and County.
The four main categories of Plan members are:
a. Miscellaneous Non-Safety Members – staff, operational, supervisory, and all other eligible employees who are not in special membership categories.
Fiscal Year 2021 Fiscal Year 2020
Valuation Date (VD) June 30, 2019 updated to June 30, 2020 June 30, 2018 updated to June 30, 2019 Measurement Date (MD) June 30, 2020 June 30, 2019
Measurement Period (MP) July 1, 2019 to June 30, 2020 July 1, 2018 to June 30, 2019 San Francisco Employees’ Retirement System (SFERS) – Cost Sharing
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
134 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
b. Sheriff’s Department and Miscellaneous Safety members – sheriffs assuming office on and after January 7, 2012, and undershe riffs, deputized personnel of the Sheriff’s department, and miscellaneous safety employees hired on and after January 7, 2012. c. Firefighter Members – firefighters and other employees whose principal duties are in fire prevention and suppression work or who occupy positions designated by law as firefighter member positions.
d. Police Members – police officers and other employees whose principal duties are in active law enforcement or who occupy positions designated by law as police member positions.
The membership groups and the related service retirement benefits are included in the Notes to the Basic Financial Statements of San Francisco Employees’ Retirement System.
All members are eligible to apply for a disability retirement benefit, regardless of age, when they have 10 or more years of credited service and they sustain an injury or illness that prevents them from performing their duties. Safety members are eligible to apply for an industrial disability retirement benefit from their first day on the job if their disability is caused by an illness or injury that they receive while performing their duties.
All retired members receive a benefit adjustment each July 1, which is the Basic COLA. The majority of adjustments are determined by changes in Consumer Pr ice Index with increases capped at 2%. The Plan provides for a Supplemental COLA in years when there are sufficient “excess” investment earnings in the Plan. The maximum benefit adjustment each July 1 is 3.5% including the Basic COLA. Effective July 1, 201 2, voters approved changes in the criteria for payment of the Supplemental COLA benefit, so that Supplemental COLAs would only be paid when the Plan is also fully funded on a market value of assets basis. Certain provision of this voter-approved proposition were challenged in the Courts. A decision by the California Courts modified the interpretation of the proposition. Effective July 1, 2012, members who retired before November 6, 1996 will receive a Supplemental COLA only when the Plan is also fully funded on a market value of assets basis. However, the “full funding” requirement does not apply to members who retired on or after November 6, 1996 and were hired before January 7, 2012. For all members hired before January 7, 2012, all Supplemental COLAs paid to them in retirement benefits will continue into the future even where an additional Supplemental COLA is not payable in any given year. For members hired on and after January 7, 2012, a Supplemental COLA will only be paid to retirees when the Plan is fu lly funded on a market value of asset basis and in addition for these members, Supplemental COLAs will not be permanent adjustments to retirement benefits. That is, in years when a Supplemental COLA is not paid, all previously paid Supplemental COLAs will expire.
Funding and Contribution Policy
SFERS Plan – Contributions are made by both the City and the participating employees.
Employee contributions are mandatory as required by the Charter. Employee contribution rates varied from 7.5% to 13.0% as a percentage of gross covered salary in fiscal years 2021 and 2020. Most employee groups agreed through collective bargaining for employees to contribute the full amount of the employee contributions on a pretax basis. The City is required to contribute at an actuarially determined rate. Based on the July 1, 2019 ac tuarial report, the required employer contribution rate for fiscal year 2021 was 22.40% to 26.90%. Based on the July 1, 2018 actuarial report, the required employer contribution rate for fiscal year 2020 was
20.69% to 25.19%.
Employer contributions and e mployee contributions made by the employer to the SFERS Plan are recognized when due and the employer has made a formal commitment to provide the
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
135 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
contributions. The City’s proportionate share of employer contributions recognized by the Retirement System in fiscal years ended June 30, 20 20 and 2019 (measurement years) were $701,307 and $ 607,408, respectively. The SFPUC’s allocation of employer contributions for fiscal years 2020 and 2019 (measurement periods) were $52,242 and $46,246, respectively.
The Water Enterprise’s allocation of employer contributions for fiscal years 20 20 and 201 9 (measurement periods) were $29,647 and $26,440, respectively. The Wastewater Enterprise’s allocation of employer contributions for fiscal years 20 20 and 201 9 (measurement periods) were $14,352 and $12,816, respectively. Hetchy Water’s allocation of employer contributions for fiscal years 2020 and 2019 (measurement periods) were $3,574 and $3,073, respectively.
Hetchy Power’s allocation of employer contributions for fiscal years 20 20 and 201 9 (measurement periods) were $4,369 and $3,756, respectively. CleanPowerSF’s allocation of employer contributions for fiscal years 2020 and 2019 (measurement periods) were $300 and $161, respectively.
Replacement Benefits Plan – The RBP is and will remain unfunded and the rights of any participant and beneficiary are limited to those specified in the RBP. The RBP constitutes an unsecured promise by the City to make benefit pa yments in the future to the extent funded by the City. The City paid $3,600 replacement benefits in the year ended June 30, 2021.
Pension Liabilities, Pension Expenses, and Deferred Outflows and Inflows of Resources Related to Pensions
Fiscal Year 2021
The City reported net pension liabilities for its proportionate share of the pension liability of the Plan and RBP of $5,292,473 (which includes RBP pension liability of $185,203) as of June 30, 2021. The City’s net pension liability for the SFERS Plan is measured as the proportionate share of the net pension liability. The net pension liability of the SFERS Plan is measured as of June 30, 2020 (measurement date), and the total pensio n liability for the SFERS Plan and RBP used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2019 rolled forward to June 30, 2020 using standard update procedures. The City’s proportion of the net pension liabi lity for the SFERS Plan was based on a projection of the City’s long -term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. The SFPUC’s allocation of the City’s proportionate share of the net pension liability for the plan as of June 30 20 21 was $381,205, of which $215,240 for Water Enterprise , $ 103,746 for Wastewater Enterprise , $ 26,645 for Hetchy Water, $32,566 for Hetchy Power and $3,008 for CleanPowerSF. The Water Enterprise's allocation of the total pension liability for the RBP as of June 30, 2021 was $1,177.
For the year ended June 30, 2021, the City’s recognized pension expense was $962,576 (which includes R BP pension expense of $25,243) including amortization of deferred outflow/inflow related pension items. SFPUC’s allocation of pension expense including amortization of deferred outflow/inflow related pension items were $77,865 of which $43,929 for the Water Enterprise, $19,053 for the Wastewater Enterprise, $6,103 for Hetchy Water, $ 7,459 for Hetchy Power, and $1,321 for CleanPowerSF. Pension expense increased from the prior year, largely due to the amortization of deferrals.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
136 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
At June 30, 20 21, SFPUC’s reported deferred outflows of resources and deferred inflows of resources related to pensions were the following:
Amounts reported as deferred outflows, exclusive of contributions made after the measurement date, and deferred inflows of resources will be amortized annually and recognized in pension expense as follows:
Fiscal Year 2020
The City reported net pension liabilities for its proportionate share of the pension liability of the Plan of $4,213,808 as of June 30, 2020. The City’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2019 (measurement date), and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2018 rolled forward to June 30, 2019 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long -term share of contributions to the pension plan relative to the projected contributions of all participating Hetchy Hetchy SFPUC
Water Wastewater Water Power CleanPowerSF Total
Pension contribution subsequent $ 33,367 16,083 4,130 5,048 466 59,094 7,310 3,524 905 1,106 102 12,947
actual experience
11,817 5,696 1,463 1,788 165 20,929
Net difference between projected and actual 4,507 2,172 558 682 63 7,982 6,987 2,744 743 907 7 11,388
$ 63,988 30,219 7,799 9,531 803 112,340
Hetchy Hetchy SFPUC
Fiscal Year 2021 Water Wastewater Water Power CleanPowerSF Total $ 674 325 83 102 9 1,193
actual experience
3,728 1,797 462 564 52 6,603
54 26 443 541 1,032 2,096
$ 4,456 2,148 988 1,207 1,093 9,892
to the measurement date
SFERS Plan - Schedule of Deferred Inflows of Resources
Total
earnings on pension plan investments
SFERS Plan - Schedule of Deferred Outflows of Resources Differences between expected and
Fiscal Year 2021
Changes in assumptions
Change in employer's proportion
Differences between expected and
Changes in assumptions
Change in employer's proportion
Total
$ 112 —
actual experience
315 13
382 416
$ 809 429
Water Enterprise - RBP
Total
Schedule of
Deferred Outflows
of Resources
Schedule of
Deferred Inflows
of ResourcesFiscal Year 2021
Differences between expected and
Changes in assumptions
Change in employer's proportion
RBP
Fiscal
years Water Wastewater
Hetchy
Water
Hetchy
Power CleanPowerSF
SFPUC
Total Water
2022 $ 54 (787) (115) (141) (472) (1,461) 109
2023 6,166 3,009 665 812 (195) 10,457 193
2024 11,286 5,528 1,160 1,418 (90) 19,302 12
2025 8,659 4,238 971 1,187 1 15,056 66
Total $ 26,165 11,988 2,681 3,276 (756) 43,354 380 Deferred Outflows/(Inflows) of Resources
SFERS Plan
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
137 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
employers, actuarially determined. The SFPUC’s allocation of the City’s proportionate share of the net pension liability for the plan as of June 30 20 20 was $313,899, of which $178,133 for Water Enterprise, $86,235 for Wastewater Enterprise, $21,477 for He tchy Water, $26,249 for Hetchy Power and $1,805 for CleanPowerSF.
For the year ended June 30, 2020, the City’s recognized pension expense was $883,395 including amortization of deferred outflow/inflow related pension items. SFPUC’s allocation of pension expense including amortization of deferred outflow/inflow related pension items were $44,896 of which $ 22,296 for the Water Enterprise, $ 12,748 for the Wastewater Enterprise, $3,619 for Hetchy Water, $ 4,424 for Hetchy Power, and $ 1,809 for CleanPowerSF. Pension expense increased from the prior year, largely due to the amortization of deferrals.
At June 30, 20 20, SFPUC’s reported deferred outflows of resources and deferred inflows of resources related to pensions were the following:
Amounts reported as deferred outflows, exclusive of contributions made after the measurement date, and deferred inflows of resources will be amortized annually and recognized in pension expense as follows:
Actuarial Assumptions
Fiscal Year 2021
A summary of the actuarial assumptions and methods used to calculate the Total Pension Liability as of June 30, 20 20 (measurement period) is provided below, including any assumptions that differ from those used in the July 1, 2019 actuarial valuation. Refer to the July Hetchy Hetchy SFPUC
Water Wastewater Water Power CleanPowerSF Total
Pension contribution subsequent $ 29,647 14,352 3,574 4,369 300 52,242 1,319 639 159 194 13 2,324
actual experience
25,333 12,264 3,055 3,733 257 44,642
10,785 3,167 1,162 1,420 2 16,536
$ 67,084 30,422 7,950 9,716 572 115,744
to the measurement date
Changes in assumptions
Schedule of Deferred Outflows of Resources
Fiscal Year 2020
Differences between expected and
Change in employer's proportion
Total
Hetchy Hetchy SFPUC
Fiscal Year 2020 Water Wastewater Water Power CleanPowerSF Total $ 1,961 949 236 289 20 3,455
actual experience
Net difference between projected and actual 32,824 15,891 3,958 4,837 333 57,843 109 52 141 172 857 1,331
$ 34,894 16,892 4,335 5,298 1,210 62,629
earnings on pension plan investments
Schedule of Deferred Inflows of Resources
Total
Change in employer's proportion
Differences between expected and
Fiscal
years Water Wastewater
Hetchy
Water
Hetchy
Power CleanPowerSF
SFPUC
Total
2021 $ 11,020 4,181 1,197 1,464 (235) 17,627
2022 (8,610) (5,055) (1,047) (1,280) (425) (16,417)
2023 (2,494) (1,240) (293) (359) (181) (4,567)
2024 2,627 1,292 184 224 (97) 4,230
Total $ 2,543 (822) 41 49 (938) 873
Deferred Outflows/(Inflows) of Resources
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
138 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
1, 2019 actuarial valuation report for a complete description of all other assumptions, which can be found on the Retirement System’s website http://mysfers.org.
For healthy annuitants, the sex distinct 2009 CalPERS healthy annuitant mortality table, adjusted 1.014 for females and 0.909 for males. For active members, the sex distinct 2009 CalPERS employee mortality tables, adjusted 0.918 for females and 0.948 for males. Rates are projected generationally from the 2009 base year using a modified version of the MP -2015 projection scale.
The actuarial assumptions used at the June 30, 2020 measurement date was based upon the result of a demographic experience study for the period July 1, 2009 through June 30, 2014 and an economic experience study as of July 1, 2019.
Fiscal Year 2020
A summary of the actuarial assumptions and methods used to calculate the Total Pension Liability as of June 30, 2019 (measurement period) is provided below, including any assumptions that differ from those used in the July 1, 2018 actuarial valuation. Refer to the July Key Actuarial Assumptions SFERS Plan
Valuation Date June 30, 2019 updated to June 30, 2020
Measurement Date June 30, 2020
Actuarial Cost Method Entry-Age Normal Cost
Expected Rate of Return 7.40% net of pension plan investment, including inflation Municipal Bond Yield 3.50% as of June 30, 2019
2.21% as of June 30, 2020
Bond Buyer 20-Bond GO Index, June 27, 2019 and June 25, 2020 Inflation 2.75%
Salary Increases 3.50% plus merit component based on employee classification and years of service Discount Rate 7.40% as of June 30, 2019
7.40% as of June 30, 2020
Administrative Expenses 0.60% of payroll as of June 30, 2019
0.60% of payroll as of June 30, 2020
Old Miscellaneous Old Police & Fire
Old Police & Fire,
Charters A8.595
Old Police & Fire,
Charters A8.559
and all New Plans pre 7/1/75 and A8.596 and A8.585
Basic COLA June 30, 2019 2.00% 2.50% 3.10% 4.20%
Basic COLA June 30, 2020 2.00% 2.50% 3.10% 4.20%
Key Actuarial Assumptions Replacement Benefits Plan
Valuation Date June 30, 2019 updated to June 30, 2020
Measurement Date June 30, 2020
Actuarial Cost Method Entry-Age Normal Cost
Municipal Bond Yield 2.21% as of June 30, 2020
Bond Buyer 20-Bond GO Index, June 27, 2019 and June 25, 2020 Inflation 2.75%
Salary Increases 3.50% plus merit component based on employee classification and years of service Discount Rate 2.21% as of June 30, 2020
Administrative Expenses 0.60% of payroll as of June 30, 2020 Old Police & Fire, Old Police & Fire,
Old Miscellaneous Old Police & Fire Charters Charters
Basic COLA June 30, 2020 2.00% 2.50% 3.10% 4.20%
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
139 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
1, 2018 actuarial valuation report for a complete description of all other assumptions, which can be found on the Retirement System’s website http://mysfers.org.
Mortality rates for active members and healthy annuitants were based upon the adjusted Employee and Healthy Annuitant CalPERS mortality tables projected generationally from the 2009 base year using a modified version of the MP-2015 projection scale.
Discount Rate
Fiscal Year 2021
SFERS Plan – The beginning and end of year measurements are based on different assumptions and contribution methods that may result in different discount rates. The discount rate was 7.40% as of June 30, 20 20 (measurement date) and June 30, 201 9 (measurement date).
The discount rate used to measure the Total Pension Liability as of June 30, 2020 was 7.40%.
The projection of cash flows used to determine the discount rate assumed that plan member contributions will continue to be made at the rates specified in the Charter. Employer contributions were assumed to be made in accordance with the contribution policy in effect for July 1, 2019 actuarial valuation. That policy includes contributions equal to the employer portion of the entry age normal costs for members as of the valuation date, a p ayment for the expected administrative expenses, and an amortization payment on the unfunded actuarial liability.
The amortization payment is based on closed periods that vary in length depending on the source. Charter amendments prior to July 1, 2014 are amortized over 20 years. After July 1, 2014, any Charter changes to active member benefits are amortized over 15 years and changes to inactive member benefits, including Supplemental COLAs, are amortized over 5 years. The remaining unfunded actuarial liab ility not attributable to Charter amendments as of July 1, 2013 is amortized over a 19 -year period commencing July 1, 2014. Experience gains and losses and assumption or method changes on or after July 1, 2014 are amortized over 20 years. The full amortiza tion payment for the 2015 assumption changes is phased in over a period of 5 years. For the July 1, 2016 valuation, the increase in the unfunded actuarial liability Key Actuarial Assumptions SFERS Plan
Valuation Date June 30, 2018 updated to June 30, 2019
Measurement Date June 30, 2019
Actuarial Cost Method Entry-Age Normal Cost
Expected Rate of Return 7.40% net of pension plan investment, including inflation Municipal Bond Yield 3.87% as of June 30, 2018
3.50% as of June 30, 2019
Bond Buyer 20-Bond GO Index, June 28, 2018 and June 27, 2019 Inflation 2.75%
Salary Increases 3.50% plus merit component based on employee classification and years of service Discount Rate 7.50% as of June 30, 2018
7.40% as of June 30, 2019
Administrative Expenses 0.60% of payroll as of June 30, 2018
0.60% of payroll as of June 30, 2019
Old Miscellaneous Old Police & Fire
Old Police & Fire,
Charters A8.595
Old Police & Fire,
Charters A8.559
and all New Plans pre 7/1/75 and A8.596 and A8.585
Basic COLA June 30, 2018 2.00% 2.50% 3.10% 4.20%
Basic COLA June 30, 2019 2.00% 2.50% 3.10% 4.20%
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
140 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
attributable to the Supplemental COLAs granted on July 1, 2013 and July 1, 2014 are amortized over 17 -years and 5 -years respectively. All amortization schedules are established as a level percentage of payroll so payments increase 3.50% each year. The unfunded actuarial liability is based on an actuarial value of assets that smooths investment g ains and losses over five years and a measurement of the actuarial liability that excludes the value of any future Supplemental COLAs.
While the contributions and measure of actuarial liability in the funding valuation do not anticipate any future Supplemental COLAs, the projected contributions for the determination of the discount rate include the anticipated future amortization payments on future Supplemental COLAs for current members when they are expected to be granted. For members who worked after November 6, 1996 and before Proposition C passed (Post 97 Retirees), a Supplemental COLA is granted if the actual investment earnings during the year exceed the expected investment earnings on the actuarial value of assets. For members who did not work after November 6, 1996 and before Proposition C passed, the market value of assets must also exceed the actuarial liability at the beginning of the year for a Supplemental COLA to be granted.
When a Supplemental COLA is granted, the amount depends on the amount of excess earnings and the basic COLA amount for each membership group. The large majority of members receive a 1.50% Supplemental COLA when granted.
Because the probability of a Supplemental COLA depends on the current funded level of the Retirement System for certain members, an assumption was developed as of June 30, 2020 for the probability and amount of Supplemental COLA for each future year. There were no excess earnings during the fiscal year ending June 30, 2020; consequently, no Supplemental COLA will be paid effective July 1, 2020. The table below shows the net assumed Supplemental COLA for members with a 2.00% Basic COLA for sample years.
The projection of benefit payments to current members for determining the discount rate includes the payment of anticipated future Supplemental COLAs.
Based on these assumptions, the Retirement System’s fiduciary net position was projected to be available to make projected future benefit payments for current members for all future years.
Projected benefit payments are discounted at the long-term expected return on assets of 7.40% to the extent the fiduciary net position is available to make the payments and at the municipal bond rate of 2.21% to the extent they are not available. The single equivale nt rate used to determine the Total Pension Liability as of June 30, 2020 is 7.40%.
The long-term expected rate of return on pension plan investments was 7.40%. It was set by the Retirement Board after consideration of both expected future returns and his torical returns experienced by the Retirement System. Expected future returns were determined by using a building-block method in which best -estimate ranges of expected future real rates of return were developed for each major asset class. These ranges wer e combined to produce the long - Fiscal years 96 - Prop C
2022 0.75 % 0.19 %
2024 0.75 0.27
2026 0.75 0.30
2028 0.75 0.33
2030 0.75 0.35
2032 0.75 0.37
2034 0.75 0.38
Before 11/6/96
or After Prop C
Assumed Supplemental COLA for Members
with a 2.00% Basic COLA
+
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
141 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Target allocation and best estimates of geometric long -term expected real rates of return (net of pension plan investment expense and inflation) for each major asset class are summarized in the following table:
RBP – The beginning and end of year measurements are based on different assumptions that result in different discount rates. The discount rate was 2.21% as of June 30, 2020. This reflects the yield for a 20 -year, tax-exempt general obligation municipal bond with an average rating of AA/Aa or higher. The Municipal Bond Yields are the Bond Buyer 20-Year GO Index as of June 27, 2019 and June 25, 2020. These are the rates used to determine the total pension liability as of June 30, 2020.
The inflation assumption of 2.75% compounded annually was used for projecting the annual IRC Section 415(b) limitations. However, the actual IRC Section 415(b) limitations published by the IRS of $230 for 2020 was used for the 2020 measurement date.
The SFERS assumptions about Basic and Supplemental COLA previously discussed also apply to the R BP, including the impact of the State Appeals Court determination that the full funding requirement for payment of Supplemental COLA included in Proposition C was unconstitutional and the impact is accounted for as a change in benefits.
On June 30, 2021, City’s membership i n the RBP had a total of 683 active members and 105 retirees and beneficiaries currently receiving benefits. The Water Enterprise has 4 active members and 1 retiree and beneficiary currently receiving benefits.
Fiscal Year 2020
SFERS Plan – The beginnin g and end of year measurements are based on different assumptions and contribution methods that may result in different discount rates. The discount rate was 7.40% as of June 30, 2019 (measurement date) and 7.50% as of June 30, 2018 (measurement date).
The discount rate used to measure the Total Pension Liability as of June 30, 2019 was 7.40%.
The projection of cash flows used to determine the discount rate assumed that plan member contributions will continue to be made at the rates specified in the Chart er. Employer contributions were assumed to be made in accordance with the contribution policy in effect for July 1, 2018 actuarial valuation. That policy includes contributions equal to the employer portion of the entry age normal costs for members as of t he valuation date, a payment for the expected administrative expenses, and an amortization payment on the unfunded actuarial liability.
The amortization payment is based on closed periods that vary in length depending on the source. Charter amendments pri or to July 1, 2014 are amortized over 20 years. After July 1, Target
Allocation
Long-term Expected
Real Rate of Return
31.0 % 4.9 %
18.0 7.9
17.0 5.7
15.0 3.0
Private Credit 10.0 4.8
6.0 (0.5)
3.0 2.7
100.0
Long-Term Expected Real Rates of Return
Asset Class
Treasuries
Liquid Credit
Private Equity
Hedge Funds/Absolute
Global Equity
Total
Real Assets
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
142 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
2014, any Charter changes to active member benefits are amortized over 15 years and changes to inactive member benefits, including Supplemental COLAs, are amortized over 5 years. The remaining u nfunded actuarial liability not attributable to Charter amendments as of July 1, 2013 is amortized over a 19 -year period commencing July 1, 2014. Experience gains and losses and assumption or method changes on or after July 1, 2014 are amortized over 20 years. The full amortization payment for the 2015 assumption changes is phased in over a period of 5 years. For the July 1, 2016 valuation, the increase in the unfunded actuarial liability attributable to the Supplemental COLAs granted on July 1, 2013 and July 1, 2014 are amortized over 17 -years and 5 -years respectively. All amortization schedules are established as a level percentage of payroll so payments increase 3.50% each year. The unfunded actuarial liability is based on an actuarial value of assets tha t smooths investment gains and losses over five years and a measurement of the actuarial liability that excludes the value of any future Supplemental COLAs.
While the contributions and measure of actuarial liability in the funding valuation do not anticipate any future Supplemental COLAs, the projected contributions for the determination of the discount rate include the anticipated future amortization payments on future Supplemental COLAs for current members when they are expected to be granted. For member s who worked after November 6, 1996 and before Proposition C passed (Post 97 Retirees), a Supplemental COLA is granted if the actual investment earnings during the year exceed the expected investment earnings on the actuarial value of assets. For members w ho did not work after November 6, 1996 and before Proposition C passed, the market value of assets must also exceed the actuarial liability at the beginning of the year for a Supplemental COLA to be granted.
When a Supplemental COLA is granted, the amount depends on the amount of excess earnings and the basic COLA amount for each membership group. The large majority of members receive a 1.50% Supplemental COLA when granted.
Because the probability of a Supplemental COLA depends on the current funded level of the Retirement System for certain members, the following assumptions were developed for the probability and amount of Supplemental COLA for each future year. The City has assumed that a full Supplemental COLA will be paid to all Post 97 Retirees effecti ve July 1, 2019. The table below shows the net assumed Supplemental COLA for members with a 2.00% Basic COLA for sample years.
The projection of benefit payments to current members for determining the discount rate includes the payment of anticipated future Supplemental COLAs.
Based on these assumptions, the Retirement System’s fiduciary net position was projected to be available to make projected future benefit payments for current members for all future years.
Projected benefit payments are discounted at the long-term expected return on assets of 7.40% to the extent the fiduciary net position is available to make the payments and at the municipal bond rate of 3.50% to the extent they are not available. The single equivalent rate used to determine the Total Pension Liability as of June 30, 2019 is 7.40%.
FY2020
Fiscal years 96 - Prop C
2021 0.75 % 0.27 %
2023 0.75 0.34
2025 0.75 0.36
2027 0.75 0.37
2030 0.75 0.38
Before 11/6/96
or After Prop C
Assumed Supplemental COLA for Members
with a 2.00% Basic COLA
+
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
143 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
The long-term expected rate of return on pension plan investments was 7.40%. It was set by the Retirement Board after consideration of both expected future returns and historical returns experienced by the Retirement System. Expected future returns were determined by using a building-block method in which best -estimate ranges of expected future real rates of return were developed for each major asset class. These ranges were combined to prod uce the long - term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.
Target allocation and best estimates of geometric long-term expected real rates of return (net of pension plan investment expense and inflation) for each major asset class are summarized in the following table:
Sensitivity of Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents the SFPUC’s allocation of the employer’s proportionate share of the net pension liability for the SFERS Plan, calculated using the discount rate, as well as what the SFPUC’s allocation of the employer’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate.
The following presents the Water Enterprise’s allocation of the employer’s proportionate share of the total pension liability for the R BP, calculated using the discount rate, as well as what the Water Enterprise’s allocation of the employer’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate.
Target
Allocation
Long-term Expected
Real Rate of Return
31.0 % 5.3 %
18.0 8.3
17.0 5.4
15.0 3.9
Private Credit 10.0 5.2
6.0 0.9
3.0 3.6
100.0
Long-Term Expected Real Rates of Return
Treasuries
Asset Class
Global Equity
Liquid Credit
Total
Private Equity
Real Assets
Hedge Funds/Absolute
Hetchy Hetchy SFPUC
Water Wastewater Water Power CleanPowerSF Total
$ 380,571 183,436 47,111 57,580 5,318 674,016 215,240 103,746 26,645 32,566 3,008 381,205 78,645 37,907 9,736 11,899 1,099 139,286 Hetchy Hetchy SFPUC
Water Wastewater Water Power CleanPowerSF Total
$ 336,241 162,775 40,539 49,547 3,407 592,509 178,133 86,235 21,477 26,249 1,805 313,899 47,500 22,995 5,727 6,999 481 83,702 Fiscal Year 2021
SFERS Plan - Schedule of Employers’ Proportionate Share of the Net Pension Liability 1% Increase Share of NPL @ 8.40%
1% Decrease Share of NPL @ 6.40%
1% Increase Share of NPL @ 8.40%
Share of NPL @ 7.40%
1% Decrease Share of NPL @ 6.40%
Fiscal Year 2020
Schedule of Employers’ Proportionate Share of the Net Pension Liability Share of NPL @ 7.40%
Water
$ 1,418
1,177
989 1% Increase Share of NPL @ 3.21%
Replacement Benefits Plan
Schedule of Employers’ Proportionate Share
of the Net Pension Liability
Fiscal Year 2021
1% Decrease Share of NPL @ 1.21%
Share of NPL @ 2.21%
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
144 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
b) Other Post-Employment Benefits
The SFPUC participates in the City’s single-employer defined benefit other post -employment benefits plan (the Plan). The Plan is maintained by the City and is administered through the City’s Health Service System. It provides post-employment medical, dental and vision insurance benefits to eligible employees, retired employees, surviving spouses, and domestic partners.
Health benefit provisions are established and may be amended through negotiations between the City and the respective bargaining units. The City does not issue a separate report on its other post-employment benefit plan.
GASB Statement No. 75 requires that reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.
The SFPUC’s allocation percentage of the Plan was determined based on its percentage of citywide “pay-as-you-go” contributions for the year ended June 30, 20 20 and June 30, 20 19.
The SFPUC’s net OPEB liability, deferred outflows/inflows of resources related to OPEB, amortization of deferred outflows/inflows and OPEB expense to each department is based on SFPUC’s allocated percentage. The SFPUC’s proportionate share of the City’s OPEB elements as of June 30, 20 20 (measurement date) was 6.14%: 3.89% for the Water Enterprise, 1.33% for the Wastewater Enterprise, 0.38% for Hetchy Water, 0.46% for Hetchy Power , and 0.08% for CleanPowerSF. The SFPUC’s proportionate share of the City’s OPEB elements as of June 30, 2019 (measurement date) was 6.66%: 4.18% for the Water Enterprise, 1.49% for the Wastewater Enterprise, 0.42% for Hetchy Water, 0.51% for Hetchy Power, and 0.06% for CleanPowerSF.
Benefits – Permanent full -time and elected employees are eligible to retire and receive postretirement health insurance benefits when they are eligible for retirement benefits from the City and County of San Francisco’s Retirement System. The eligibility requirements are as follows:
1 Age 53 with 20 years of credited service, age 60 with 10 years of credited service, or age 65 for Miscellaneous members hire d on or after January 7, 2012.
2 No service requirement for Safety members retiring under the industrial disability benefit or for surviving spouses/domestic partners of those killed in the line of duty.
Fiscal Year 2021 Fiscal Year 2020
Valuation Date (VD) June 30, 2020 June 30, 2018 updated to June 30, 2019 Measurement Date (MD) June 30, 2020 June 30, 2019
Measurement Period (MP) July 1, 2019 to June 30, 2020 July 1, 2018 to June 30, 2019 San Francisco Health Service System Retiree Plan - Single-Employer FY2021
Normal Retirement Miscellaneous Age 50 with 20 years of credited service 1 Age 60 with 10 years of credited service
Safety Age 50 with 5 years of credited service
Disabled Retirement2 Any age with 10 years of credited service Terminated Vested 5 years of credited service at separation
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
145 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Retiree healthcare benefits are administered by the San Francisco Health Service System and include the following:
Projections of the sharing of benefit related costs are based on an established pattern of practice.
Contributions – Benefits provided under the Plan are currently paid through “pay as you go” funding. Additionally, under the City Charter, active officers and employees of the City who commenced employment on or after January 10, 2009, shall contribute to the Retiree Health Care Trust Fund (Trust Fund) a percentage of compensation not to exceed 2% of pre -tax compensation. The City shall contribute 1 % of compensation for officers and employees who commenced employment on or after January 10, 2009 until the City’s GASB Actuary has determined that the City’s portion of the Trust Fund is fully funded. At that time, the City’s 1% contribution shall cease, and officers and employees will each contribute 50% of the maximum 2% of pre-tax compensation.
Starting July 1, 2016, active officers and employees of the City who commenced employment on or before January 9, 2009, shall contribute 0.25% of pre -tax compensation into the Trust Fund.
Beginning on July 1st of each subsequent year, the active officers and employees of the City who commenced employment on or before January 9, 2009, shall contribute an additional
0.25% of pre -tax compensation up to a maximum of 1%. Starting July 1, 2016, the City shall contribute 0.25% of compensation into the Trust Fund for each officer and employee who commenced employment on or before January 9, 2009. Beginning on July 1st of each subsequent year, the City shall contribute an additional 0.25% of compensation, up to a maximum of 1% for each officer and employee who commenced employment on or before January 9, 2009. When the City’s actuary has determined that the City’s portion of the Trust Fund is fully funded, the City’s 1% co ntribution shall cease, and officers and employees will each contribute 50% of the maximum 1% of pre -tax compensation. Additional or existing contribution requirements may be established or modified by amendment to the City’s Charter.
Fiscal Year 2021
For the fiscal year ended June 30, 2021, the City’s funding was based on “pay-as-you-go” plus a contribution of $39,555 to the Retiree Healthcare Trust Fund. The “pay -as-you-go” portion paid by the City was $ 206,439 for a total contribution of $ 245,994 for the fiscal year ended June 30, 2021. The SFPUC’s proportionate share of contributions for fiscal year 20 21 was $15,087:
$9,572 for Water Enterprise, $3,263 for the Wastewater Enterprise, $9 29 for Hetchy Water, $1,136 for Hetchy Power, and $187 for CleanPowerSF.
Fiscal Year 2020
For the fiscal year ended June 30, 2020, the City’s funding was based on “pay-as-you-go” plus a contribution of $39,518 to the Retiree Healthcare Trust Fund. The “pay -as-you-go” portion paid by the City was $196,445 for a total contribution of $235,963 for the fiscal year ended June 30, 2020. The SFPUC’s proportionate share of contributions for fiscal year 20 20 was $15,690:
$9,863 for Water Enterprise, $3,506 for the Wastewater Enterprise, $98 5 for Hetchy Water, $1,204 for Hetchy Power, and $132 for CleanPowerSF.
Medical: PPO – City Health Plan (self-insured) and UHC Medicare Advantage (fully-insured) HMO – Kaiser (fully-insured) and Blue Shield (flex-funded) Dental: Delta Dental, DeltaCare USA and United Healthcare Dental Vision: Vision benefits are provided under the medical insurance plans and are administered by Vision Service Plan.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
146 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
OPEB Liabilities, OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB
Fiscal Year 2021
As of June 30, 20 21, the City reported net OPEB liabilities related to the Plan of $ 3,823,334.
The SFPUC’s proportionate share of the City ’s net OPEB liability as of June 30, 20 21 was $234,488: $148,771 for Water Enterprise, $50,711 for the Wastewater Enterprise, $ 14,444 for Hetchy Water, $17,653 for Hetchy Power, and $2,909 for CleanPowerSF.
For the year ended June 30, 20 21, the City’s recognized OPEB expense was $ 320,684.
Amortization of the City’s deferred outflows and inflows is included as a component of OPEB expense. The SFPUC’s proportiona te share of the City’s OPEB expense was a net credit of $14,011: $5,978 for Water Enterprise, $6,174 for the Wastewater Enterprise, $1,480 for Hetchy Water, $1,809 for Hetchy Power, offset by $1,430 expense for CleanPowerSF.
As of June 30, 20 21, the SFPUC’s reported its proportionate share of the City’s deferred outflows and inflows of resources related to OPEB from the following sources:
Amounts reported as deferred outflows, exclusive of contributions made after the measurement date, and deferred inflows of resources will be amortized annually and recognized in OPEB expense as follows:
Fiscal Year 2020
As of June 30, 20 20, the City reported net OPEB liabilities related to the Plan of $3,915,814.
The SFPUC’s proportionate share of the City ’s net OPEB liability as of June 30, 20 20 was Hetchy Hetchy SFPUC
Fiscal Year 2021 Water Wastewater Water Power Total
Contribution subsequent to the $ 9,572 3,263 929 1,136 187 15,087 measurement date
Differences between expected and 5,394 1,839 524 640 106 8,503 actual experience
7,531 2,567 731 894 147 11,870
Net difference between projected and actual 97 33 9 12 2 153 15,168 7,407 1,532 1,870 — 25,977
$ 37,762 15,109 3,725 4,552 442 61,590
Changes in assumptions
earnings on pension plan investments
Total
Schedule of Deferred Outflows of Resources
CleanPowerSF
Change in proportion
Hetchy Hetchy SFPUC
Fiscal Year 2021 Water Wastewater Water Power CleanPowerSF Total Differences between expected and $ 21,315 7,265 2,070 2,529 417 33,596 actual experience — — — — — —
— — 15 19 1,496 1,530
$ 21,315 7,265 2,085 2,548 1,913 35,126 Total Schedule of Deferred Inflows of Resources
Changes in assumptions
Change in proportion
Hetchy Hetchy SFPUC
Fiscal years Water Wastewater Water Power CleanPowerSF Total 2022 $ 1,266 829 90 110 (328) 1,967 2023 1,324 849 96 117 (326) 2,060 2024 1,312 846 94 116 (326) 2,042 2025 1,351 859 99 120 (326) 2,103 2026 1,368 788 245 299 (222) 2,478 Thereafter 254 410 87 106 (130) 727 Total $ 6,875 4,581 711 868 (1,658) 11,377
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
147 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
$260,397: $163,684 for Water Enterprise, $58,183 for the Wastewater Enterprise, $16,350 for Hetchy Water, $19,983 for Hetchy Power, and $2,197 for CleanPowerSF.
For the year ended June 30, 2020, the City’s recognized OPEB expense was $330,673.
Amortization of the City’s deferred outflows and inflows is included as a component of OPEB expense. The SFPUC’s proportionate share of the City’s OPEB expense was $11,663: $6,125 for Water Enterprise, $1,943 for the Wastewater Enterprise, $708 for Hetchy Water, $866 for Hetchy Power, and $2,021 for CleanPowerSF.
As of June 30, 20 20, the SFPUC ’s reported its proportionate share of the City’s deferred outflows and inflows of resources related to OPEB from the following sources:
Amounts reported as deferred outflows, exclusive of contributions made after the measurement date, and deferred infl ows of resources will be amortized annually and recognized in OPEB expense as follows:
Hetchy Hetchy SFPUC
Fiscal Year 2020 Water Wastewater Water Power Total
Contribution subsequent to the
measurement date $ 9,863 3,506 985 1,204 132 15,690 Differences between expected and
actual experience 6,953 2,472 694 849 93 11,061 3,318 1,179 331 405 45 5,278 7,449 2,908 322 392 — 11,071 $ 27,583 10,065 2,332 2,850 270 43,100 Schedule of Deferred Outflows of Resources
CleanPowerSF
Changes in assumptions
Change in employer's proportion
Total
Hetchy Hetchy SFPUC
Fiscal Year 2020 Water Wastewater Water Power CleanPowerSF Total Differences between expected and
actual experience $ 11,517 4,094 1,150 1,406 155 18,322 Net difference between projected and actual
255 91 26 31 3 406 — — 19 24 1,053 1,096 $ 11,772 4,185 1,195 1,461 1,211 19,824 Schedule of Deferred Inflows of Resources
earnings on plan investments
Change in employer's proportion
Total
Hetchy Hetchy SFPUC
Fiscal years Water Wastewater Water Power CleanPowerSF Total 2021 $ 909 376 (8) (9) (195) 1,073 2022 909 376 (8) (9) (195) 1,073 2023 972 399 (1) (2) (195) 1,173 2024 960 394 (3) (3) (195) 1,153 2025 1,002 409 2 2 (195) 1,220 Thereafter 1,196 420 170 206 (98) 1,894 Total $ 5,948 2,374 152 185 (1,073) 7,586
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
148 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Actuarial Assumptions
Fiscal Year 2021
A summary of the actuarial assumptions and methods used to calculate the total OPEB liability as of June 30, 2020 (measurement date) is provided below:
The mortality rates in the base tables are projected generationally from the base year using the MP-2019 projection scale.
Key Actuarial Assumptions
Valuation Date June 30, 2020
Measurement Date June 30, 2020
Actuarial Cost Method The Entry Age Actuarial Cost Method is used to measure the Plan's Total OPEB Liability Healthcare Cost Trend Rates Pre-Medicare trend starts at 4.00% in 2022, 7.00% in 2023, trending down to ultimate rate of 4.04% in 2075 Medicare trend starts at 1.00% in 2022, 7.50% in 2023, trending down to ultimate rate of 4.04% in 2075 10-County average trend starts at 4.50% in 2022, 5.50% in 2023, trending down to ultimate rate of 4.04% in 2075 Vision and expenses trend remains a flat 3.00% for all years Expected Rate of Return on Plan Assets
Salary Increase Rate Wage Inflation Component: 3.25%
Additional Merit Component (dependent on years of service):
Police: 0.50% - 7.50%
Fire: 0.50% - 14.00%
Muni Drivers: 0.00% - 16.00%
Craft: 0.50% - 3.75%
Misc: 0.30% - 5.50%
Inflation Rate Wage Inflation: 3.25% compounded annually Consumer Price Inflation: 2.50% compounded annually
Mortality Tables
7.00%
Base mortality tables are developed by multiplying a published table by an adjustment factor developed in SFERS experience study for the period ending June 30, 2019.
Mortality Tables
Non-Annuitants
Male Female
Miscellaneous 0.834 0.866
Safety 1.011 0.979
Healthy Retirees
Male Female
Miscellaneous 1.031 0.977
Safety 0.947 1.044
Disabled Retirees
Male Female
Miscellaneous 1.045 1.003
Safety 0.916 0.995
Beneficiaries
Male Female
Miscellaneous 1.031 0.977
Safety 1.031 0.977PubG-2010 Employee
Published Table
Adjustment Factor
PubG-2010 Employee
PubG-2010 Employee
PubS-2010 Employee
Published Table
Adjustment Factor
PubS-2010 Employee
Adjustment Factor
Published Table
Base mortality tables are developed by multiplying a published table by an adjustment factor developed in SFERS experience study for the period ending June 30, 2019.
PubG-2010 Employee
Adjustment Factor
PubS-2010 Employee
PubG-2010 Employee
Published Table
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
149 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Fiscal Year 2020
A summary of the actuarial assumptions and methods used to calculate the total OPEB liability as of June 30, 2019 (measurement date) is provided below:
The mortality rates in the base tables are projected generationally from the base year using the modified version of the MP -2015 projection scale. The scale was modified using the Society of Actuaries’ model implementation tool with rates converging to the ultimate rate in 2017 (instead of 2029) and an ultimate rate of improvement of 0.85% (instead of 1.0 0%) up to age 85 decreasing to 0.70% (instead of 0.85%) at age 95.
Sensitivity of Liabilities to Changes in the Healthcare Cost Trend Rate and Discount Rate
The following presents the SFPUC’s proportionate share of the City’s net OPEB liability calculated using the healthcare cost trend rate, as well as what its allocation of the City’s net OPEB liability would be if it were calculated using a healthcare cost trend rate that is 1% lower or 1% higher than the current rate as of June 30, 2021 and June 30, 2020:
Key Actuarial Assumptions
Valuation Date June 30, 2018 updated to June 30, 2019
Measurement Date June 30, 2019
Actuarial Cost Method The Entry Age Actuarial Cost Method is used to measure the Plan's Total OPEB Liability Healthcare Cost Trend Rates Pre-Medicare trend starts at 6.35% in 2021 and trends down to ultimate rate of 3.93% in 2076 Medicare trend starts at 7.0% in 2021 and trends down to ultimate rate of 3.93% in 2076 10-County average trend starts at 5.82% in 2021 and trends down to ultimate rate of 3.93% in 2076 Vision and expenses trend remains a flat 3.5% for all years Expected Rate of Return on Plan Assets
Discount Rate
Salary Increase Rate Wage Inflation Component: 3.50%
Additional Merit Component (dependent on years of service):
Police: 1.50% - 8.00%
Fire: 1.50% - 15.00%
Muni Drivers: 0.00% - 15.00%
Craft: 0.00% - 3.50%
Misc: 0.00% - 5.25%
Inflation Rate Wage Inflation: 3.50% compounded annually Consumer Price Inflation: 2.75% compounded annually
Mortality Tables
Non-Annuitant - CalPERS employee mortality tables without scale BB projection Gender Base Year
Female 2009
Male 2009
Healthy Annuitants - CalPERS healthy annuitant mortality table without scale BB projection Gender Base Year
Female 2009
Male 2009
Miscellaneous Disable Annuitants - RP-2014 Disabled Retiree Tables without MP-2014 projection Gender Base Year
Female 2006
Male 2006
Safety Disables Annuitants - CalPERS industrial disability mortality table without scale BB projection Gender Base Year
Female 2009
Male 2009
7.40%
7.40%
Base mortality tables are developed by multiplying a published table by an adjustment factor developed in SFERS experience study for the period ending June 30, 2014.
0.918
0.948
Adjustment
0.983
0.909
Adjustment
Adjustment
1.014
0.909
1.066
0.942
Adjustment
Hetchy Hetchy
Water Wastewater Water Power CleanPowerSF Total 2021
$ 128,633 43,846 12,488 15,264 2,515 202,746 148,771 50,711 14,444 17,653 2,909 234,488 175,020 59,657 16,992 20,767 3,422 275,858 1% Decrease
Healthcare Trend
1% Increase
Schedule of Employers’ Proportionate Share of the Net OPEB Liability (Healthcare cost trend rate)
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
150 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Discount Rate
Fiscal Year 2021
The discount rate used to measure the Total OPEB Liability as of June 30, 2020 was 7.0%.
Based on the assumption that plan member contributions will continue to be made at the rates specified in the Charter, it was determined that the Plan’s projected fiduciary net position will be greater than or equal to the benefit payments projected for each future period. As such, the long-term expected rate of return on plan investments was applied to all period s of projected benefit payments to determine the total OPEB liability.
The long-term expected rate of return on OPEB plan investments was 7.0% based on expected future returns and historical returns experienced by the Trust Fund. Expected future returns were determined based on 10 -year and 20 -year capital market assumptions for the Trust Fund’s asset allocation.
Target allocation for each major asset class and best estimates of geometric real rates of return are summarized in the following table:
The asset allocation targets summarized have a 20 -year return estimate of 6.90%, which was weighted against a 10-year model estimating a 6.93% return, resulting in the ultimate long-term expected rate of return of 7.00%.
The following presents the SFPUC’s proportionate share of the City’s net OPEB liability calculated using the discount rate, as well as what the SFPUC’s proportionate share of the City’s Hetchy Hetchy
Water Wastewater Water Power CleanPowerSF Total 2020
$ 141,666 50,356 14,150 17,295 1,901 225,368 163,684 58,183 16,350 19,983 2,197 260,397 191,022 67,900 19,080 23,320 2,563 303,885 Schedule of Employers’ Proportionate Share of the Net OPEB Liability (Healthcare cost trend rate) 1% Decrease
Healthcare Trend
1% Increase
Asset Class
Target
Allocation
Long-term
Expected Real
Rate of Return
Equities
U.S. Large Cap 28.0 % 8.4 %
U.S. Small Cap 3.0 9.8
Developed Market Equity (non-U.S.) 15.0 9.6
Emerging Market Equity 13.0 11.7
Credit
Bank Loans 3.0 4.9
High Yield Bonds 3.0 4.9
Emerging Market Bonds 3.0 4.8
Rate Securities
Investment Grade Bonds 9.0 2.2
Long-term Government Bonds 4.0 3.1
Short-term Treasury Inflation-Protected Securities (TIPS) 4.0 1.9 Private Markets
Private Equity 5.0 12.5
Core Private Real Estate 5.0 6.4
Risk Mitigating Strategies
Global Macro 5.0 4.1
Total 100.0%
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
151 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
net OPEB liability would be if it were calculated using a discount ra te that is 1% lower or 1% higher than the current rate:
Fiscal Year 2020
The discount rate used to measure the total OPEB liability as of June 30, 2019 was 7.40%.
Based on the assumption that plan member contributions will continue to be made at the rates specified in the Charter, it was determined that the Plan’s projected fiduciary net position will be greater than or equal to the benefit payments projected for each future period. As such, the long-term expected rate of return on plan investments wa s applied to all periods of projected benefit payments to determine the total OPEB liability.
The long-term expected rate of return on OPEB plan investments was 7.40% based on expected future returns and historical returns experienced by the Trust Fund. E xpected future returns were determined based on 10 -year and 20 -year capital market assumptions for the Trust Fund’s asset allocation. Target allocation for each major asset class and best estimates of geometric real rates of return are summarized in the following table:
The asset allocation targets summarized above have a 20 -year return estimate of 8.30%, which was weighted against a 10-year model estimating a 7.50% return, resulting in the ultimate long- term expected rate of return of 7.40%.
The follow ing presents the SFPUC ’s proportionate share of the City’s net OPEB liability calculated using the discount rate, as well as what the SFPUC’s proportionate share of the City’s net OPEB liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate:
Hetchy Hetchy SFPUC
Water Wastewater Water Power CleanPowerSF Total
$ 172,646 58,848 16,761 20,486 3,376 272,117 148,771 50,711 14,444 17,653 2,909 234,488 129,281 44,067 12,551 15,341 2,528 203,768 1% Increase 8.00% Schedule of Employers’ Proportionate Share of the Net OPEB Liability (Discount Rate) Fiscal Year 2021
1% Decrease 6.00%
Discount Rate 7.00%
Asset Class
Target
Allocation
Long-term
Expected Real
Rate of Return
Equities
U.S. Equities 41.0 % 8.1 %
Developed Market Equity (non-U.S.) 20.0 8.5
Emerging Market Equity 16.0 10.4
Credit
High Yield Bonds 3.0 6.5
Bank Loans 3.0 6.1
Emerging Market Bonds 3.0 5.2
Rate Securities
Investment Grade Bonds 9.0 3.9
Treasury Inflation Protected Securities 5.0 3.6
Total 100.0%
Hetchy Hetchy SFPUC
Water Wastewater Water Power CleanPowerSF Total
$ 189,008 67,184 18,879 23,074 2,536 300,681 163,684 58,183 16,350 19,983 2,197 260,397 142,994 50,829 14,283 17,457 1,919 227,482 1% Decrease 6.40%
Discount Rate 7.40%
1% Increase 8.40%
Schedule of Employers’ Proportionate Share of the Net OPEB Liability (Discount Rate) Fiscal Year 2020
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
152 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
City issues a publicly available financial report that includes the complete note disclosures and required supplementary information related to the City’s post -employment health care obligations. The report ma y be obtained by writing to the City and County of San Francisco, Office of the Controller, 1 Dr. Carlton B. Goodlett Place, Room 316, San Francisco, California 94102, or by calling (415) 554-7500.
(13) Related Parties
Various common costs incurred by the Commission are allocated proratably between Water, Wastewater, Hetchy Water and Hetchy Power and CleanPowerSF. The allocations are based on the Commission management’s best estimate and may change from year to year depe nding on the activities incurred by each enterprise and the information available.
The following tables show the administrative costs including COVID-19 Project expenses for the years ended June 30, 2021 and 2020:
SFPUC’s 75-year lease agreement with the San Francisco Recreation and Parks Department (SFRPD), for the use of parking spaces for its fleet of vehicles at the Civic Center Garage, commenced on February 1, 2011. The total payment under this agreement is $6,274, w hich was fully made as of fiscal year 2015. The expenses and prepayments among the three SFPUC Enterprises are based on 525 Golden Gate occupancy.
The following tables show the allocable share of expenses and prepayments for the years ended June 30, 2021 and 2020:
Water Enterprise
The Water Enterprise purchases water from Hetch Hetchy Water. The amounts, totaling $44,149 and $34,585 for the years ended June 30, 2021 and 2020, respectively, have been included in the services provided by other departments in the accompanying financial statements.
The Water Enterprise purchases electricity from Hetch Hetchy Power at market rates. The amounts, totaling $9,790 and $9,909 for the years ended June 30, 2021 and 2020, respectively, have been included in services provided by other departments in the accompanying financial statements.
The Water Enterprise sold water to the Wastewater Enterprise at retail rates. This amount, totaling $1,308 and $1,474 for the years ended June 30, 2021 and 2020, respectively, has been included in charges for services in the accompanying financial statements.
Fiscal SFPUC
Years Total
2021 $ 48,374 49.4% 29,457 30.0% 4,585 4.7% 13,202 13.5% 2,312 2.4% 97,930 2020 45,533 49.3% 27,897 30.2% 4,326 4.7% 12,581 13.6% 2,041 2.2% 92,378 Hetchy PowerHetchy WaterWastewaterWater CleanPowerSF
Hetchy Hetchy SFPUC
Water Wastewater Water Power Total
Allocable share of expenses $ 45 21 4 13 83 Allocable share of prepayment 3,309 1,167 156 766 5,398 Hetchy Hetchy SFPUC
Water Wastewater Water Power Total
Allocable share of expenses $ 45 22 5 13 85 Allocable share of prepayment 3,354 1,188 159 780 5,481 2021
2020
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
153 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
Since fiscal year 2008, the Water Enterprise has charged City departments for water usage with the exception of fire hydrants, which are used for general public safety. In fiscal years 20 21 and 2020, the Water Enterprise delivered water for fire hydrant pu rposes totaling $7, based on metered usage and applicable water rates, and the amount has been excluded from operating revenues in the accompanying financial statements.
A variety of City departments provide services such as engineering, purchasing, legal , data processing, telecommunications, and human resources to the Water Enterprise and charge amounts designed to recover those departments’ costs. These charges, totaling $16,239 and $16,634 for the years ended June 30, 2021 and 2020, respectively, have been included in services provided by other departments in the accompanying financial statements.
During the fiscal year ended June 30, 20 21, the Water Enterprise transferred $1 6,000 to Hetch Hetchy Water to fund various upcountry capit al projects, $622 to the Arts Commission for arts enrichment, and $32 to the Office of the City Administrator for the Surety Bond Program. The Water Enterprise received $20,040 from the City for the Emergency Firefighting Water system, and $985 from the General Fund for low income assistance programs and the Native Plant Garden project.
As of June 30, 2021, the Water Enterprise has no payables to other City departments. As of June 30, 2020, the Water Enterprise had payables in the amount of $606 to the Off ice of the City Attorney for legal services provided, and $68 to the Department of Public Works for sidewalk inspection and repair projects.
Wastewater Enterprise
The Wastewater Enterprise purchases electricity from Hetch Hetchy Power at market rates. This amount, totaling $10,122 and $10,760 for the years ended June 30, 2021 and 2020, respectively, has been included in services provided by other departments in the accompanying financial statements.
The Wastewater Enterprise purchases water from Water Enterprise at retail rates. This amount, totaling $1,308 and $1,474 for the years ended June 30, 2021 and 2020, respectively, has been included in services provided by other departments in the accompanying financial statements.
The Wastewater Enterprise provides sewer services to other City departments at non-residential rates established by the Commission, and through the Customer Services Bureau, bills and collects sewer service charges on behalf of the Wastewater Enterprise.
The City’s Department of Public Works provides certain engineering and other services to the Wastewater Enterprise and charges amounts designed to recover its costs. These services are primarily related to street cleaning, engineering, building repair, and sewer repair. These amounts totaling approximately $15,088 and $12,750 for the years ended June 30, 2021 and 2020, respectively, have been included in services provided by other departments in the accompanying financial statements.
A variety of other City departments provide services such as purchasing, legal, data processing, telecommunications, and human resources to the Wastewater Enterprise and charge amounts designed to recover those departments’ costs. These charges totaling approximately $11,795 and $12,324 for the years ended June 30, 2021 and 2020, respectively, have been included in services provided by other departments in the accompanying financial statements.
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
154 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
As of June 30, 20 21 and 2020, the Wastewater Enterprise has payables in the amount of $739 and $848, respectively, which is associated with the SFPUC Headquarters Living Machine system. As of June 30, 2021 and 2020, the Wastewater Enterprise has payable of $0 and $1, respectively to the City Attorney’s Office for legal services provided.
SFPUC’s 30 -year lease agreement with the San Francisco Port Commission, for the use of approximately 4,833 square feet of land located within Seawall Lot 345 and within the public right-of- way on Terry A. Francois Boulevard and on Illinois Street, commenced on September 1, 2018. SFPUC intends to use the premises for the reconstruction of the Mariposa Pump Station and Force Main Improvements. Total payment under this agreement is $502, which was fully made as of fiscal year 2019. As of June 30, 202 1, the Wastewater Enterprise’s expenses and prepayment were $17 and $455, respectively, and as of June 30, 2020 were $17 and $472, respectively.
Hetchy Water
The Water Enterprise purchases water from Hetchy Water. Included in the operating revenues are the water assessment fees of $44,149 and $34,585 for the years ended June 30, 2021 and 2020, respectively. The water assessment fees represent a recovery to fund upcountry, water-related costs that are not otherwise funded through Hetchy water-related revenue or Water revenue bonds.
A variety of City departments provide direct services such as engineering, purchasing, legal, data processing, telecommunication, and human resources to Hetchy Water and charge amounts designed to recover those departments’ costs. These charges totaling approximately $ 2,517 and $1,853 for the years ended June 30, 20 21 and 2020, respectively, have been included in services provided by other departments in the accompanying financial statements.
Hetchy Water received $16,000 and $ 14,000 for the years ended June 30, 202 1 and 20 20, respectively, from the Water Enterprise to fund upcountry projects.
Hetchy Water had no receivable or pay able with other City departments as of June 30, 2021. A s of June 30, 2020, Hetchy Water had $240 in payable and $104 in receivable with the City Attorney’s Office for legal services.
Hetchy Power
As of June 30, 2021, and 2020, operating revenues in sales of power to departments within the City were $82,129 and $99,797, respectively.
A variety of City departments provide direct services such as engineering, purchasing, legal, data processing, telecommunication, and human resou rces to Hetchy Power and charge amounts designed to recover those departments’ costs. These charges totaling approximately $6,137 and $6,426 for the years ended June 30, 2021 and 2020, respectively, have been included in services provided by other departments in the accompanying financial statements.
The Water Enterprise also purchases electricity and gas from Hetchy Power. This amount totaled $9,790 and $9,909 for the years ended June 30, 2021 and 2020, respectively.
The Wastewater Enterprise purchases electricity and gas from Hetchy Power. This amount totaled $10,122 and $10,760 for the years ended June 30, 2021 and 2020, respectively.
The Low Carbon Fuel Standard (LCFS) program is a regulatory program overseen by th e California Air Resources Board (CARB). The LCFS program seeks to reduce the carbon intensity of California’s
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Notes to Basic Financial Statements
June 30, 2021 and 2020
(Dollars in thousands, unless otherwise stated)
155 | San Francisco Public Utilities Commission Annual Comprehensive Financial Report FY 2021
transportation fuel by 20% by 2030. Transportation fuel suppliers can achieve this goal by either reducing the carbon intensity of their fuels or purchasing LCFS credits from other fuel suppliers that have a lower carbon intensity. In 2017, the San Francisco Municipal Transportation Agency (SFMTA) joined the LCFS program, signing up its transit fleet of electric buses, cable cars, and light rail vehicles and generating LCFS credits. Through a Memorandum of Understanding (MOU) with SFMTA, approved by the SFPUC Commission in Resolution 17 -0199, net proceeds from the sale of LCFS credits would be shared 50/50 between SFMTA and Hetchy Power. Under the M OU, Hetchy Power would take responsibility for selling the LCFS credits. In Ordinance 0199 -19, the Board of Supervisors authorized Hetchy Power to establish the Low Carbon Fuel Standard Fund to account for the revenue and expenditure from the sale of LCFS credits. The Ordinance also allowed Hetchy Power to sell LCFS credits on behalf of other City agencies. During fiscal year ended June 30, 2021, Hetchy Power received total payments of $2,362 for the LCSF credits, of which $1,181 or 50% was reallocated to SFMTA and the remaining portion was reported as other non-operating revenues on the Statements of Revenues, Expenses, and Change in Net Position. During fiscal year ended June 30, 2020, Hetchy Power received total payments of $13,840 for the LCSF credits, o f which $6,920 or 50% was reallocated to SFMTA and the remaining portion was reported as other non-operating revenues on the Statements of Revenues, Expenses, and Change in Net Position.