From: Thomas Schwertscharf
To: Commission
Subject: Investigative Article
Date: Saturday, June 24, 2023 12:04:41 PM
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I have sent you an investigative article regarding Harlan Kelly and his upcoming trial. I want this article to be officially included in your record. Can you please explain to me why these criminal charges seem to be coming up in regards to the SFPUC over it’s long history? Since the board itself can’t be expected to lead I think it should be disbanded. Sincerely
Thomas Schwertscharf. Aquatic ecology expert.
Sent from my iPhone
June 26, 2023
Re: Spending Up, Sales Down, Short on Financial Oversight – A Perfect Storm? Dear Commissioners, General Manager Herrera and Assistant General Manager Ritchie, When the $5 billion WSIP program was implemented in the early 2000’s no one expected water demand (sales) to decline as it has in the last 20 years. With such large fixed costs retail water rates had to go up. From 15 years ago (the oldest rate data I could find), retail rates went up 300%. The Consumer Price Index during that same time increased by 50%.
Now the plan is to spend $8.8 billion on capital projects over the next 10 years and that does not include any significant spending on alternative water supplies.
Water sales are down. Spending is up, way up. In this year’s budget and rate meetings there was limited risk analysis presented for what rates will be if things don’t go as planned (and they never do). Risk analysis was remarkably missing1. Understanding and making decisions based on risk is a core function of executive management and a primary oversight responsibility that citizens rely on from the commission.
Topics that should have been addressed during budget and rate meetings:
1) What if water demand drops below assumptions? How will water rates be affected? Are there contingency plans? Water and sewer charges are based on water demand. What will rates look like in that scenario? Population, the most influential variable on water demand, has declined 7% in the last two years along with median household income.
As you know combined water and sewer rates are currently planned to increase 90% in the next 10 years. On a per ccf basis San Francisco already has by far the highest rates of any major urban supplier. What would the rates look like if demand continues to decline below projections? 2 Yes, it could be that more housing could increase population growth and water demand. But even so it is prudent to understand the risk to rates if demand continues to decline.
Such demand and rate sensitivity data were not presented at the commission hearing on water and sewer rates and such data was not asked for. Understanding how demand relates to rates is needed to understand demand/sales related financial risks.
2) What are the risks to the $8.8 billion 10 year capital plan? It was briefly mentioned that the capital budget does not include significant spending on alternative water supplies (AWS), but no range of possible AWS capital funding needed was provided. In addition to AWS capital funding, what are other risks to the capital plan, including investing in our existing infrastructure (such as mitigating Arkstorm flood risk)?
1 In a 47 page 10 year financial plan document included in the February 14 commission meeFgjTvng materials, there were two p
ages on minor operaFgjTvonal sensiFgjTvviFgjTves but no quanFgjTvfied risk analysis nor insights on how changes in demand or capital spending would affect rates. In a 44 page 10 year capital plan document included in the February 14th, 2023 repor
t there was no sensiFgjTvvity or quanFgjTvfied risk analysis. At the February 14th,2023 meFgjTvng a 3 minute subjecFgjTvve overv
iew of risk management was presented but no quanFgjTvfiable data was presented. The approach appeared to be a general overview of how risks might be addressed if any occur. 2 Per the January 30th, 2023 special meeFgjTvng presentaFgjTvon slide 20, projecFgjTvons are based on retail water rates increas
ing from 52.4 mgd in FY’22 to 54.1 mgd in FY’33. Note that in the last 30 years there has not been a 10 year period where retail demand has increased.
It was briefly mentioned that the $8.8 billion capital plan was front end loaded, but not quantified.
It should have been noted that 50% of the $8.8 billion was spent in the first 3 years along with attendant risks mentioned. Having such a large portion of the capital spent in the first three years severely reduces operational flexibility. If later it is determined financial priorities need to shift, there is less ability to do so.
No quantified risks to the capital budget were presented. No alternatives were provided including no alternative to spread out capital spending more evenly over the 10 year timeframe, providing better operational flexibility. Such information would provide an understanding of risks associated with the capital plan and vastly improve risk based decision making.
3) What is the relationship between rates and the 10 year capital plan? There was no discussion for how the 10 year capital plan affected water and sewer rates. How would rates be different if the capital plan was reduced or increased by 10%, 20% or by whatever amounts that should have been identified in item 2 above? How would rates change if the capital plan spending was not front end loaded? Understanding the relationship between rates and the capital plan would better inform the impact of the capital plan and the associated risks.
The above are all essential areas that citizens should expect to be understood and weighed in the decision process for taking on such significant spending in a declining demand environment. But none of them were discussed at either of the two budget meetings (January 30th, 2023 and February 14th, 2023) nor the rates approval meeting (May 23rd, 2023).3
Neither SFPUC management nor the commissioners seemed to be aware of the importance of understanding these risks. The questions need to be asked (or materials presented) for at least two reasons:
i) Are the risks reasonable?
ii) Does management have a highly informed understanding of all of the major risks and how did management get to the conclusion that the risks were reasonable? This is about evaluating management.
There are good attributes to GM Herrera and his direct reports, but there isn’t sufficient financial oversight at least with respect to governance for an organization expecting to have $10 billion or more in debt and declining demand. Such expertise has not been demonstrated in meetings and does not appear in their biographies. There should be better financial expertise in Mr. Herrera’s direct reports. The same holds true for the commissioners, excellent strengths brought to the commission, but not as much strength in financial oversight.
Please consider finding ways to beef up the SFPUC’s financial expertise at both the executive level and commission oversight level to ensure a better view into our future and reduce the risk of very difficult financial decisions years from now. I am speaking only from my experience of commission meetings, my perspectives of the issues and reading the backgrounds of the individuals mentioned. I have no visibility or connection to any internal discussion.
I’ve been a technology CFO for more than 20 years and specializing in technology finance functions for 35 years. This letter is not intended to be adversarial. Instead, it is intended to provide a view of you the
3 See footnote 1 on prior page.
commissioners, you GM Herrera and Mr. Herrera’s direct reports through a different lens and ideally offers an opportunity to learn and grow in the area of financial oversight.
I also acknowledge the large amount of work talented professionals have put in preparing the projections and presentations. It’s possible that the above three topics and risks have been quantified internally but didn’t make it to a commission level discussion. If so, that’s a mistake to be embraced and to learn from.
The fear of course is that demand, rather than rising 3%, drops 10% or more in the next 10 years.4 Then add that the SFPUC decides to invest in AWS (as one might not imagine that demand could decline further as was the case in 2015) spending another $1-2 billion. Or add that $1 billion or more needs to be spent on infrastructure. What happens to rates in this scenario and is it tolerable? Rather than rates going up 90% in the next 10 years, do they go up 200%? A quantified discussion of the three topics above is appropriate at the commission level, particularly when already dealing with such large rate increases in an environment of declining demand.
Best regards,
Dave Warner
cc: Nicole Sandkulla, BAWSCA CEO
4 From FY 2015 to FY 2022, retail demand dropped from 60.3 mgd to 52.4 mgd, a 13% decline in 7 years. In 2015, at the h
eight of the 2012-2015 drought, few would have imagined demand conFgjTvnuing to decline another 13% in 7 years, not to menFgjTvon imagining it would decline at all.
From:
To: Commission
Subject: Drought Plans
Date: Monday, June 26, 2023 8:55:01 PM
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Gentlemen:
Born and raised in San Francisco I am proud of the way water users have responded in the face of drought by conserving water. I am concerned that the rates are already high, a problem for low income residents. The current proposals follow a consistent pattern on the part of the SFPUC of overestimating demand. Your projections have consistently exceeded the delivery amounts. Current proposals would also , it seems involve raising rates, which is a social justice concern.
I urge you to put a higher priority on preventing collapse of the Bay Delta system, which already shows signs of significant distress[toxic algae blooms, plummeting fish stocks].
We have over- promised water to many users
while ignoring the rights of native tribes. and smaller farmers. We need to change patterns that compromise social justice while promising a system break-down in the Delta.
I urge the SFPUC to modify its plans accordingly.
Geil Sredanovic
Co-chair, Social Justice Task Force, San Mateo County Democracy for America
Menlo Park, CA 94025Park
From: Russell Middleton
To: Commission
Subject: Re: Clarendon EFWS Upgrade: Poor planning, execution, and communication Date: Monday, July 17, 2023 8:20:57 AM
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Please confirm receipt, next steps, and timeline for these.
Thanks,
Russell
On Fri, Jul 14, 2023 at 2:15 PM Russell Middleton wrote:
Dear SF Water Commissioners,
I'm writing to request the Commission investigate the planning, execution, and communication of the Clarendon Emergency Firefighting Water System Upgrade (link). The project has created a serious eyesore in a previously beautiful woodland for the last 2.5 years, which is substantially longer than the forecast, and during which the basics of site management have not been implemented.
The main issues (and resulting questions) are as follows:
1. Planning: I was told by Steve Kech ([email protected]) that the long delay to the project was caused by the discovery that parts (valves) were unavailable after trees were uprooted, and diggers, fencing, and storage equipment were parked in the woodland. The site then remained in this condition (photos attached) for over a year until the parts could be obtained.
Questions
: Why did SF Water fail to confirm availability of the parts before breaking ground in 2021? At this time it was well known that covid was causing supply chain issues, such that - even for my small residential project - I waited until parts had arrived before breaking ground. Why did SF Water not do the same for the woodland?
2. Execution: While the equipment sat unused in the woodland, it gathered 100s of graffiti tags, and was left in an unsightly condition.
Diggers were parked in the woodland, unused
and unmoved, for over a year. SF Water employees told me that there was a requirement to clean graffiti within seven days, but this was done, and tags on diggers and fencing have been uncleaned at any point.
Questions
: Why has SF Water not fulfilled its responsibility to keep the site tidy, and - once it discovered the long delay - not require contractors to remove equipment?
3. Communication: For two years there was no signage at the site at all. After this time several small letter-size sheets were added. Steve Kech tells me that he is still trying to add the correct, large, signage, 28 months after the project started(!). He routinely takes 10-14 days to reply to emails, a delay would be unacceptable in any private business.
Questions: Why was the proper signage not in place from the start? Why is SF Water still unable to add this, 6+ months after it was made aware that it was missing? Why does your contact person take 10-14 days to respond to questions? In addition to the questions above, I would like to understand the disincentive for SF Water to repeat the many failures of this project. What will be done differently in future projects to improve planning, execution, and communication?
Please confirm receipt and timeline for this to be addressed. I would be happy to provide more detail or attend meetings as needed.
Yours,
Russell Middleton
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.
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
T 415.554.3155
F 415.554.3161
TTY 415.554.3488
July 31, 2023
Russell Middleton
Re: Clarendon EFWS
Upgrade Project
Dear Mr. Middleton,
Thank you for your email regarding the Clarendon Emergency Firefighting Water System Upgrade Project. This is a critical project to provide an additional layer of fire protection to San Francisco residents following earthquakes and other major emergencies. The project calls for the installation of new pipelines and valving at the corner of Clarendon Avenue and Dellbrook Avenue. This location was strategically selected to provide needed access and additional water supply and pressure to improve the City’s post-seismic event fire suppression capabilities, particularly for the northern and western areas of San Francisco.
We appreciate your inquiry and hope that this letter is responsive to your questions.
From your letter: 1. Planning: I was told by Steve Kech ([email protected]) that the long delay to the project was caused by the discovery that parts (valves) were unavailable after trees were uprooted, and diggers, fencing, and storage equipment were parked in the woodland. The site then remained in this condition (photos attached) for over a year until the parts could be obtained.
Questions: Why did SF Water fail to confirm availability of the parts before breaking ground in 2021? At this time it was well known that covid was causing supply chain issues, such that - even for my small residential project - I waited until parts had arrived before breaking ground. Why did SF Water not do the same for the woodland?
Response: As standard industry practice, the purchase of material and equipment crucial to the execution of the project occurs as soon as possible after the construction contract has started. Upon placing the order, the contractor was misinformed by the manufacturer regarding the lead time and delivery of the valves. Unfortunately, COVID supply chain issues, as Mr. Kech mentioned to you, caused unanticipated delays in receipt of the valves.
Although the project team made efforts to pursue alternative valve options to
Re: Clarendon EFWS Upgrade Project
July 31, 2023
mitigate the delay, there were no other options that were deemed acceptable to meet the requirements of our system.
Other work at the site, however, has been ongoing despite the valve delay.
The construction sequencing required the tree removal and site clearance as a first step in the project. Had the valves been delivered on schedule, there would not have been a long period of time between tree removal and major site construction. While the team waited for the valves, they proceeded with other portions of the project that were accessible and independent of the valve delivery and installation; tree removal at the time it occurred was appropriate and necessary.
These supply chain issues are regrettable and outside of the SFPUC’s control.
Our teams are identifying possible alternative contracting methods to address such issues on future contracts, if and when feasible.
From your letter: 2. Execution: While the equipment sat unused in the woodland, it gathered 100s of graffiti tags, and was left in an unsightly condition. Diggers were parked in the woodland, unused and unmoved, for over a year. SF Water employees told me that there was a requirement to clean graffiti within seven days, but this was done, and tags on diggers and fencing have been uncleaned at any point.
Questions: Why has SF Water not fulfilled its responsibility to keep the site tidy, and - once it discovered the long delay - not require contractors to remove equipment?
Response: It is standard practice to allow the contractor to keep equipment at the work site. That this particular site has been a target for excessive graffiti has been a source of frustration. The SFPUC regularly inspects the area and the contractor responsible for the site has responded promptly to remove graffiti at each occurrence. Unfortunately, the site often is re-tagged within the same day. We are committed to keeping the site neat and graffiti-free and will redouble our efforts. Also, we are working with the contractor to remove any equipment that is no longer needed from the site. Please note that there will be ongoing construction activity to complete the project between now and the end of the year.
From your letter: 3. Communication: For two years there was no signage at the site at all. After this time several small letter-size sheets were added. Steve Kech tells me that he is still trying to add the correct, large, signage, 28 months after the project started(!). He routinely takes 10-14 days to reply to emails, a delay would be unacceptable in any private business.
Questions: Why was the proper signage not in place from the start? Why is SF Water still unable to add this, 6+ months after it was made aware that it was missing? Why does your contact person take 10-14 days to respond to questions?
In addition to the questions above, I would like to understand the disincentive for SF Water to repeat the many failures of this project.
Re: Clarendon EFWS Upgrade Project
July 31, 2023
What will be done differently in future projects to improve planning, execution, and communication?
Response: In compliance with our standard construction practices, the team mailed 10-day and 30-day notices before the start of construction to all neighbors, and we have strived for timely and accurate responses to all public inquiries, including several email correspondences with you directly. The team acknowledges that the contractor was deficient in failing to install adequate and consistent project signage; the contractor is currently fabricating a project information sign for the site that will be installed as soon as it is available.
I want to thank you again for contacting us. We appreciate when members of the public bring to our attention issues such as you have raised in your letter.
Staff already are applying “lessons learned” from this project for future projects including mitigation strategies for materials procurement delays as well as best practices to maintain site cleanliness and appearance.
We regret that this construction project has caused disruption and impacted the surrounding neighborhood. We greatly appreciate your patience as we finish this critical project to upgrade San Francisco’s Emergency Firefighting Water System.
Sincerely,
Stephen D. Robinson, Assistant General Manager for Infrastructure
cc:
SFPUC Commissioners
Dennis Herrera, General Manager
Howard Fung for
July 28, 2023
Re: Your goals in your service as SFPUC commissioners
Dear Commissioners,
As a new water year starts, please consider reviewing or upda?gIG:ng your goals for how you want to leave the SFPUC be?gI2:er off. For me, having a personal mission, combined with annual goals, is a great focusing tool par?gIG:cularly in the context of being pulled in so many different direc?gIG:ons. Please also consider having a review at the end of the year to look back and see what was accomplished.
As commissioner Paulson once said (to the best of my recollec?gIG:on), “we’ve had all these workshops but when are we going to make decisions?” Goal se?gI2flng could help address ques?gIG:ons like this.
In the context of excellent opera?gIG:ons and serious a?gI2:en?gIG:on to San Francisco’s sewer system challenges, it seems like there are a number of opportuni?gIG:es for SFPUC improvement:
1) It seems like commissioners in large part are a “rubber stamp.” From my vantage point I have not seen where you as commissioners have significantly influenced the direc?gIG:on of the SFPUC. I don’t know the new commissioners yet, but the other three have highly valuable backgrounds and exper?gIG:se that should be leveraged. One goal could be to have more of an impact on the direc?gIG:on of the SFPUC.
2) As you know from my previous le?gI2:ers and comments, both the commissioners and the two top execu?gIG:ves don’t have adequate financial exper?gIG:se for the precarious and complex financial situa?gIG:on the SFPUC finds itself in. Finding solu?gIG:ons to beef up both the commission’s and top execu?gIG:ves’ financial exper?gIG:se is a valuable goal. A big risk is astronomical water rates. 3) A be?gI2:er understanding of the risk of higher water and sewer rates is needed. What would these rates look like if demand comes in below staff assump?gIG:ons? What would rates look like if new investments in alterna?gIG:ve water supplies are made but demand for those supplies is never realized? What are op?gIG:ons for reducing the risk to water rates? Pressing for answers to these ques?gIG:ons are valuable for understanding risk trade-offs. 4) Staff reports are remarkably biased. Demand has been consistently overstated and supply understated. Or mi?gIG:ga?gIG:ng data has been le?gqq2 out. Hiding how numbers are calculated and leaving out the normal benefit of ra?gIG:oning are just two small examples in years of bias. The current dra?gqq2 AWS report is remarkably biased (more on that in a separate le?gI2:er). The lack of leveraging the robust Long Term Vulnerability Assessment for risk analysis is another example.
Understanding bias and pressing staff to reduce or eliminate bias would be a goal that improves both decision making and trust in the SFPUC.
5) Demand projec?gIG:ons are consistently overstated, which can lead to significant adverse decisions and financial consequences. BAWSCA had an innova?gIG:ve demand sensi?gIG:vity analysis. Consider having the SFPUC do the same in advance of the 2025 UWMP . 6) The SFPUC’s track record of improving the lower Tuolumne ecosystem is poor at best. Any ?gIG:me reservoirs aren’t full, the SFPUC captures all of the water it is en?gIG:tled to. Any conserva?gIG:on done by water users only goes to storage, not to the plight of the salmon. Tuolumne salmon counts
now measure in the hundreds. The SFPUC has so far refused to do a risk analysis on the design drought, even with a wealth of data available. A good step forward would be to conduct a risk analysis on the design drought. You would likely find that some the water that is being stored isn’t needed. This has big implica?gIG:ons for the ecosystem, alterna?gIG:ve water supplies, drought planning and li?gIG:ga?gIG:on.
The big ques?gIG:on is, what do you want to accomplish as commissioners? Se?gI2flng goals at the beginning of the year improves chances of realizing them.
Best regards,
Dave Warner
From: Kristin Mercer
To: Commission
Cc: Johnston, Timothy (CPC); Ramirez, Tim; Rando, Casey Subject: Needless damaging burns of Crystal Springs grasslands Date: Monday, July 31, 2023 2:57:04 PM
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Dear SFPUC Commissioners and Staff,
I was appalled at your recent controlled burns of 20 acres of grassland at Filoli (Crystal Springs) on June 30 and July 31 this year. Please see this video of the unwarranted impacts you imposed on neighboring homes just ½ mile from the fire.
https://drive.google.com/file/d/1kTG9H5fJxPIkF5xEXbyGQCJwjT Hb4YS/view?usp=drive link
Your burn - pictured above - sent a smoke plume a thousand feet into the air that traveled 10 miles south with the wind to pollute the air of thousands of residents in nearby Redwood City, Woodside, and beyond. What’s worse – burning is not an effective means of reducing invasives; there are far more sustainable methods of grassland restoration that yield better outcomes
Craig Dremann, founder of Reveg Edge, has collected data from the results of CalFire burns of MidPeninsula Open Space grasslands. His published research shows that the outcome of CalFire’s controlled grassland burns is an increase in invasive grass species. Dremann has successfully demonstrated that a far better alternative is to mow invasives before they reach seed stage, thus allowing the later-emerging native species to thrive without competition. Native grasses grow lower and less dense, and are naturally fire resistant.
Properly timed mowing allows a re-emerging of native seeds that have been dormant in the soil for decades. A hot-burn of the same land destroys these dormant native seeds along with the invasives.
I urge you to review his publications, listed below, and visit his restoration sites in Woodside and Portola Valley.
In reality, this burn was merely an excuse for CalFire to practice burning - “to a man with a hammer, everything looks like a nail.” But CalFire knows nothing about restoration of grasses. Burning may rejuvenate forests, but it has never successfully restored native grasslands, and may in fact destroy native grass seeds. The perfectly flat and easily accessible 20-acre parcel at Filoli could be mowed for less expense and better results. Please stop pointless burning. Investigate the highly successful and sustainable techniques demonstrated by Dremann, and proven by the cities of Woodside and Portola Valley.
Ecological restoration in Los Altos Hills; two acres with poppies, were formerly a weed field
Ecological Restoration of the Kite Hill Preserve, Woodside
Respectfully,
Kristin Mercer,
Belmont
References:
https://www.researchgate.net/publication/348588830 RESTORATION NOTE Grasslands KITE HILL PRESERVE Woodside California--Best-Restored Wildflower Meadow in 2020-- without sowing a single seed
The Almanac; Menlo Park, Atherton, Portola Valley, Woodside:
https://www.almanacnews.com/news/2019/05/01/kite-hill-going-back-to-its-roots
Woodside-Portola Valley Ready: https://wpv-ready.org/Learn/Topics/Weeds-to-Wildflowers
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