AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
DEPARTMENT Business Services AGENDA NO. 10
MEETING DATE February 14, 2023
Adopt the FY 2023-24 SFPUC Capital Budget (San Francisco Administrative Code Section 3.3(c)) and Authorize Associated Bond Financing: Regular Calendar Manager: Laura Busch
Summary of Proposed
Commission Action:
Public Hearing to consider and possible action to adopt the FY 2023-24 Capital Budget of the San Francisco Public Utilities Commission of $1,601,613,100; and authorize the General Manager to seek Board of Supervisors approval for the issuance of (1) $358,985,453 aggregate principal amount of Water Revenue Bonds and other forms of indebtedness, including commercial paper and State Revolving Fund (SRF) loans, (2) $ 1,047,288,286 aggregate principal amount of Wastewater Revenue Bonds and other forms of indebtedness, including commercial paper and SRF loans, and (3) $41,031,367 aggregate principal amount of Power Revenue Bonds and other forms of indebtedness, including commercial paper and loans, subject to the terms of Charter Sections 9.107(6) and 9.107(8).
Background &
Description:
Under San Francisco Administrative Code Section 3.3, the San Francisco Public Utilities Commission (SFPUC ) must hold two budget meetings, the first regarding budget priorities and the second to adopt a proposed budget. The second meeting must occur at least 15 days after the first meeting.
Accordingly, on December 13 , 2022 , the SFPUC held a duly noticed public meeting to consider FY 2023- 24 budget priorities at which members of the public provided input. Additionally, on January 30, 2023, the SFPUC General Manager and staff presented in a duly noticed public hearing the pr eliminary proposed FY 2023- 24 Capital Budget to the Commission for the Water Enterprise, Wastewater Enterprise, and Hetch Hetchy Water and Power including the Power Enterprise and CleanPowerSF. Copies of the Capital Budget materials from those hearings are on file with the Commission Secretary and available via links provided on meeting dates noted above.
APPROVAL:
COMMISSION
SECRETARY Donna Hood
FY 2023-24 Capital Budget Development
The development of the attached FY 2023- 24 Capital Budget occurred from J uly through December 2022 and was directed by the Budget Steering Committee, comprised of the SFPUC Executive Team supported by the Capital Planning Subcommittee. In August 2022 budget instructions were issued describing how to proceed with capital planning development. The main FY 2023 -24 capital budgeting goal was to develop a balanced budget that is deliverable, incorporating current projects needs and ratepayer affordability. The FY 2023-24 Capital Budget is consistent with the first year of the 10 -Year Capital Plan that the Commission is also considering on February 14, 2023.
Baseline Review
As a preliminary step to the capital budget development, a baseline review of all existing project appropriations was completed for potential closeout or repurposing to new capital budget needs. Additionally, Finance staff conducted an evaluation of each enterprise's utilization of budgeted funds and the change in total unspent appropriation balances from 2017 through 2022. This important step focused on capital project delivery and reduced the amount of new funding requested in FY 2023- 24 to more efficiently use existing project appropriations and financing resources.
Capital Plan Quality Review
The SFPUC Infrastructure Bureau reviewed and validated the Capital Plan project submissions for a consistent and comprehensive capital planning approach across the agency comprised of individual project datasheets describing the project budget, schedule, and scope. The capital budget requests went through a separate project quality review process involving (1) validation of costs and schedule of all proposed projects, (2) assessment of the ability to deliver projects as scheduled including looking at historic versus planned spending and available resources, and (3) the assessment by each Enterprise of its ability to onboard new assets as planned. This capital planning effort helps assure the budget request s meet each Enterprise’s long -range capital needs, reflects a sound project prioritization process, and supports affordability by promoting efficient use of ratepayer funds.
Budgetary Control
Attached is an overview of the FY 2023- 24 Capital Budget for each enterprise. The budget summary includes an “Authority,” column which contains a 5-digit code (the “Authority Code”). If this budget is adopted by the Commission, the General Manager would have authority to re - allocate project appropriations within the same Authority Code, subject to the procedures set forth in the Infrastructure Division’s Procedures Manual on Project Change Management. This procedure establishes a formal process for all SFPUC capital projects or programs to identify, track, and approve or deny Change Authorization Requests to project scope, schedule and/or budgets. However, the reallocation of project appropriations from one Authority Code to a different one would require both Commission and Board of Supervisors approval. This level of capital project budgetary control is consistent with the Board of Supervisors level of control, as determined by the FY 2023-24 Capital budget appropriation ordinances.
FY 2023-24 Capital Budget Approval
This Resolution approves the proposed SFPUC Capital Budget of $1,601,613,100 for FY 2023- 24 as presented at the budget hearings on January 30, 2023, and as shown on Attachment A.
It also authorizes the General Manager to submit capital project supplemental appropriation ordinances and associated bond authorization ordinances to the Mayor and Board of Supervisors. These ordinances will also be presented to the City’s Capital Planning Committee at a future date and the Board of Supervisors in June 2023.
Authorize: Adoption of FY 2023-24 Capital Budget and Authorize Associated Bond Financing Commission Meeting Date: February 14, 2023
Result of
Inaction
Delay the SFPUC Capital Budget submittal to the Controller and Mayor’s Office.
Budget &
Financing Costs:
The SFPUC FY 2023-24 capital budget and associated financing costs are as follows:
FY 2023-24
Capital Budget
Amount Financing
Costs
Total
Wastewater 985,504,159 157,093,243 1,142,597,402
Water 289,992,804 42,285,202 332,278,006
Hetchy Water 85,888,257 11,562,616 97,450,873
Hetchy Power 21,524,894 6,154,705 27,679,599
CleanPowerSF 1,607,220 0 1,607,220
Total $1,384,517,334 $217,095,766 $1,601,613,100
Bond
Authorization
The SFPUC FY 2023 -24 bond authorization and associated financing costs are as follows:
FY 2023-24
Capital Budget
Amount Financing
Costs
Total
Wastewater 890,195,043 157,093,243 1,047,288,286
Water – Regional/
Local
239,616,146 42,285,202 281,901,348
Water - Hetchy 65,521,489 11,562,616 77,084,105
Water - Total 305,137,635 53,847,818 358,985,453
Power 34,876,662 6,154,705 41,031,367
Total $1,230,209,340 $217,095,766 $1,447,305,106
Environmental
Review:
This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines Sections 15060(c) and 15378(b)(4), because adoption of the Capital Budget involves creation of a government funding mechanism or other fiscal activities and does not involve any commitment to any specific project which may result in a potentially significant impact on the environment. The SFPUC will consider approval of project s to be funded through this Capital Budget only after completing any environmental review required by CEQA, Administrative Code Chapter 31, and Proposition E (approved by the voters in 2002 for Water and Wastewater projects).
Recommendation SFPUC staff recommends that the Commission adopt the attached resolution.
Attachment Attachment A: FY 2023-24 SFPUC Capital Budget
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.
WHEREAS, On December 13, 2022 and January 30, 2023, this Commission heard and considered budget priorities for the department and the San Francisco Public Utilities Commission (SFPUC) General Manager and staff presented the preliminary proposed FY 2023-24 Capital Budget for the Water Enterprise, Wastewater Enterprise, and Hetch Hetchy Water & Power, including the Power Enterprise and CleanPowerSF (“Capital Budget”) including the list of projects, cost estimates, and schedules to the Commission; and
WHEREAS, An overview of the proposed FY 2023-24 Capital Budget for each SFPUC Enterprise is set forth as Attachment A and is on file with the Commission Secretary; and
WHEREAS, As a preliminary step to development of the FY 2023-24 Capital Budget, a baseline review o f all existing project appropriations was completed for potential closeout or repurposing to new capital budget needs; and
WHEREAS, The FY 2023-24 Capital Budget submittals went through a quality review to assure the budget addressees the immediate capital improvement needs of each Enterprise and reflects a sound project prioritization process which included a validation of costs and schedule of all proposed projects and an assessment of the ability to deliver the projects within FY 2023-24; and
WHEREAS, The proposed FY 2023- 24 Capital Budget must be submitted to, and approved by the Mayor and the Board of Supervisors; and
WHEREAS, The SFPUC General Manager recommends that the Commission request a supplemental appropriation ordinance for the capital expenditures for each of the three Enterprises presented in the proposed FY 2023- 24 Capital Budget to timely implement public improvement projects; and
WHEREAS, This action does not constitute a project under the California Environmental Quality Act (CEQA) Guidelines Sections 15060(c) and 15378(b)(4), because adoption of the Capital Budget involves creation of a government funding mechanism or other fiscal activities and does not involve any commitment to any specific project which may result in a potentially significant impact on the environment ; and the SFPUC will consider approval of projects to be funded through this Capital Budget only after completing any environmental review required by CEQA, Administrative Code Chapter 31, and Proposition E (approved by the voters in 2002 for Water and Wastewater projects); and
WHEREAS, This Commission has considered the proposed FY 2023-24 Capital Budget for the Water Enterprise, Wastewater Enterprise, and Hetch Hetchy Water and Power, including the Power Enterprise and CleanPowerSF, which totals $1,601,613,100, as set forth in Attachment A to the February 14, 2023 staff report; now, therefore, be it
RESOLVED, That this Commission hereby adopts the FY 2023- 24 SFPUC Capital Budget in the amount of $1,601,613,100 for the Water Enterprise, the Wastewater Enterprise, and Hetch Hetchy Water and Power, including the Power Enterprise and CleanPowerSF as presented at the public hearings on January 30, 2023 and as set forth in the attached Attachment A, as follows:
FY 2023-24
Capital Budget
Amount
Financing
Costs
Total
Wastewater 985,504,159 157,093,243 1,142,597,402
Water 289,992,804 42,285,202 332,278,006
Hetchy Water 85,888,257 11,562,616 97,450,873
Hetchy Power 21,524,894 6,154,705 27,679,599
CleanPowerSF 1,607,220 0 1,607,220
Total $1,384,517,334 $217,095,766 $1,601,613,100
and be it;
FURTHER RESOLVED, That the SFPUC General Manager is authorized to reallocate funds within an Authority Code as provided in the staff report and Attachment A appended to this Resolution and to make further technical adjustments to these approved amounts as may be necessary, or upon further direction from the Commission, the Mayor, or the Board of Supervisors; and, be it
FURTHER RESOLVED, The General Manager is hereby authorized and directed to submit to the Board of Supervisors proposed ordinances authorizing the issuance of (1) not to exceed $358,985,453 aggregate principal amount of Water Revenue Bonds and other forms of indebtedness, including commercial paper and State Revolving Fund (SRF) loans, (2) $1,047,288,286 aggregate principal amount of Wastewater Revenue Bonds and other forms of indebtedness, including commercial paper and SRF loans, under the terms of Pr oposition E (approved by the voters November 2002), and (3) $41,031,367 aggregate principal amount of Power Revenue Bonds and other forms of indebtedness, including commercial paper and loans, subject to the terms of Charter Sections 9.107(6) and 9.107(8). The General Manager shall return to this Commission for a subsequent discretionary approval of any disclosure and transaction related documents prepared in connection with the issuance of such Bonds and other forms of indebtedness.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of February 14, 2023.
Secretary, Public Utilities Commission
Attachment A
FY 2023-24 SFPUC Capital Budget
Attachment A Wastewater Enterprise
Funding Source $
Authority Description of Appropriation or Fund FY 2023-24
19471 Proceeds Sale of Bonds 1,047,288,286
19141 Wastewater Revenue 81,338,116
19141 Wastewater Capacity Fee 13,971,000
TOTAL - Funding Source 1,142,597,402
Use of Funds $
Authority Description of Appropriation or Fund FY 2023-24 SSIP
19142 Program Management 18,000,000
19142 Biosolids/Digester Project 535,788,474
19142 Treatment Plant Improvements - Southeast 47,996,135 19142 Treatment Plant Improvements - Other 25,443,455
SSIP - Treatment Facilities Program 609,228,064
19142 Collection System Improvements 83,121,607
19142
Stormwater Management/Green
Infrastructure 24,836,303
19142 Flood Resilience/Hydraulic Improvements 43,349,386 TOTAL - SSIP 778,535,360
Non-SSIP
19141 Renewal & Replacement-Collection System 89,097,199 19141 Renewal & Replacement-Treatment Facilities 6,211,917 19134 Treasure Island 111,659,683
TOTAL - Non SSIP 206,968,799
19471 Financing Cost 157,093,243
TOTAL - Use of Funds 1,142,597,402
Attachment A Water Enterprise
Funding Source $
Authority Description of Appropriation or Fund FY 2023-24
17731 Proceeds Sale of Bonds 281,901,348
19133 Water Enterprise Revenue 45,579,658
19063 Water Capacity Fee 4,797,000
TOTAL - Funding Source 332,278,006
Use Of Funds $
Authority Description of Appropriation or Fund FY 2023-24 19056 Regional Water Treatment Program 153,057,848
19058 Water Supply and Storage 4,764,596
19059 Watershed & Land Management 12,158,483
19060 Communications and Monitoring 1,998,767
19061 Buildings & Grounds Regional 9,096,882
19069 Long Term Monitoring & Permit Program 400,000
Total Regional Water 181,476,576
Local
Water
80119 Water Supply Projects 2,336,692
19063 Local Water Conveyance/Distribution 87,789,810
19065 System Monitoring & Control 3,833,442
19066 Local Reservoir & Tank Improvements 10,582,000
19067 Pump Station Improvements 859,859
19112 Automated Meter Reading System 3,114,425
TOTAL - Local Water 108,516,228
17731 Financing Costs 42,285,202
TOTAL - Use of Funds 332,278,006
Attachment A Hetch Hetchy
Funding Source $
Authority Description of Appropriation or Fund FY 2023-24
15366 Proceeds Sale Power Bonds 41,031,367
15366 Proceeds Sale Water Bonds 77,084,105
15405 Hetch Hetchy Revenue Funds 5,015,000
15404 Cap and Trade Revenue 890,000
21284 Low Carbon Fuel Standard 1,110,000
TOTAL - Funding Source 125,130,472
Use of Funds $
Authority Description of Appropriation or Fund FY 2023-24
15372 Distribution Services Retail - SFO Substation 9,122,894 15377 Streetlights 2,815,000
15400 Small Renewables 1,000,000
15404 Energy Efficiency - General Fund 1,000,000
15383 Power Asset Acquisition 7,587,000
TOTAL - Power 21,524,894
15363 Water Infrastructure Projects 48,857,770
15365 Joint Water/Power Projects 37,030,487
TOTAL - Water 85,888,257
15366 Financing Cost Power 6,154,705
15366 Financing Cost Water 11,562,616
TOTAL - Use of Funds 125,130,472
Attachment A CleanPowerSF
Funding Source $
Authority Description of Appropriation or Fund FY 2023-24
80233 ITI from CleanPowerSF Funds 759,000
80444 DAC Program 848,220
TOTAL-Source of Fund 1,607,220
Use of Funds $
Authority Description of Appropriation or Fund FY 2023-24
80233 Local Renewable Energy Program 759,000
80444 DAC Solar Program 848,220
Total-Uses of Fund 1,607,220