CleanPowerSF Sfpuc Commission
June 25, 2024

Nikolai J. Sklaroff,
Capital Finance Director
June 25, 2024
2024 Wastewater Bonds
Authorization
Agenda
• FY2023-24 Capital Financing Plan
• Wastewater Capital Financing Strategy
• Series 2024 ABCD Wastewater Revenue
Bonds
• Commission Authorization
• Authorize the issuance of up to:
• $480 million of Series A (SSIP) (Green Bonds) (Taxable) • $125 million of Series B (Non-SSIP) (Taxable)
• $700 million of Series C (SSIP) (Green Bonds) and Series D (Non-SSIP)
2 Capital Financing Accomplishments
(FY 2023-24)
3 • Issued:
• $414.0 million of new money water revenue bonds in July • $514.8 million of tender refunding water revenue bonds in August
• $123.9 million of new money power revenue bonds in September • Renewed:
• $75 million CleanPowerSF credit facility with JPMorgan • Board of Supervisors approval to expand up to $150 million • Administered:
• Three Commercial Paper programs totaling $1.5 billion • Three revenue bond programs totaling $7.3 billion
• $2.5 billion of Federal, State and other obligations
• $4.2 billion of Green Bonds and three Green Bond Reports Capital Financing Plan Tasks
(FY 24 Tasks Pending)
4 Note: Dates and amounts are approximate and subject to change; presented to the Commission in October 2023.

Activity​ Enterprise
Size
($ Million)
Expected Actions
Commission Closing
Wastewater and Water
Credit Facilities
Approve renewal
or replacement of bank
credit facilities for interim
funding programs
Wastewater
​Wastewater​
Wastewater​
Wastewater​
Water​
$200
​ 150​
75​
100​
100​
Q2 FY24​
Q3 FY24​
Q4 FY24​
Q4 FY24​
Q4 FY24​
Q2 FY24​
​Q3 FY24​
Q1 FY25​
Q1 FY25​
Q1 FY25​
Wastewater Revenue
Bonds–Authorize Revenue
Bonds to refinance
outstanding commercial
paper and allow new
project encumbrance
Up to $775​ Up to
$775​ Q4 FY24​ Q1 FY25​
Outstanding and Planned Debt
(Wastewater Enterprise)
5 Debt Type Outstanding
($billion)
Revenue Bonds and Notes $ 2.370
WIFIA Loan Draws 0.915
SRF Loan Draws 0.336
Subordinate Obligations/COPs 0.024
Total $ 3.645
Debt Type 10 Year Plan
($billion)
Revenue Bonds - FY25 $ 1.108
Revenue Bonds – FY26-34 5.110
Total $ 6.218
Of which:
• WIFIA Loan Draws $ 0.668
• SRF Loan Draws $ 0.064
Bond Market Conditions
6Source: Montague DeRose and Associates, Municipal Advisor, as of June 14, 2024

Federal Reserve Rate Actions
7 0
1 2
3 4
5 6
2022
Q!
2022
Q2
2022
Q3
2022
Q4
2023
Q1
2023
Q2
2023
Q3
2023
Q4
2024
Q1
2024
Q2
2024
Q3
2024
Q4
2025
Q1
2025
Q2
2025
Q3
2025
Q4
Interest Rates (%)
Taxable Interest Rate Changes
Fed Funds 30 Year Treasury
Projection
Source: Wells Fargo U.S. Economic Forecast, May 8, 2024

2024 Wastewater Revenue Bonds
(Structure Overview)
• Series 2024ABCD Wastewater Revenue Bonds
• Series A (Green Bonds) (Taxable) project funding
Biosolids Digester Facilities Project (BDFP)
• Series B (Taxable) re-financing previous expenditure
and remaining appropriation for Southeast
Community Center (SECC)
• Series C (SSIP) (Green Bonds) project funding and
retiring outstanding commercial paper
• Series D (Non-SSIP) project funding and retiring
outstanding commercial paper
8 9
Why Taxable Bonds for 2024A
(BDFP)
Series A (Green Bonds) (Taxable) project funding Biosolids Digester Facilities Project (BDFP)
• Provides time for project team to finalize Biogas Utilization Project (BUP) plans and financing team to review and recommend re- financing options (such as tax-exempt debt) or funding remaining BDFP costs on a taxable basis to maximize potential Investment Tax Credits from the Inflation Reduction Act
• Series 2024 A and B Bonds to be sold as taxable bonds • Same Preliminary Official Statement as Tax-Exempt Bonds with simultaneous closings
• 2024 A Bonds will fund costs for BDFP until final plans for the BUP are established
• Structured with short maturities in October 2026 and 2027 • Maturities under 60 months allowed to be considered “excluded principal” per the Debt Management Policy and Indenture • Excluded from the calculation of Annual Debt Service (and Debt Service Coverage) 10 Why Taxable Bonds for 2024B
(Southeast Community Center)
Series B (Taxable) re-financing previous expenditure and remaining appropriation for Southeast Community Center
(SECC)
• Allows for flexible use of facility without need for tax compliance monitoring regarding private use
• 2024 B Bonds will refinance costs for SECC funded from previously issued bonds (2018B and 2023C) and fund remaining appropriation • Re-structured with short maturities to pay debt service quickly, take advantage of market demand, and comply with tax regulations • Commission Resolution approves the refinancing despite not satisfying the 3% NPV debt service savings test by finding that significant non-economic factors exist that justify the waiver (desire to optimize use of space at SECC), pursuant to WWE financing Ordinance No. 181-23
11 Sources and Uses of Funds*
($ millions)
Sources Series 2024
A and B
Series 2024
C and D
Total
Par Amount $543.1 $626.7 $1,169.8
Premium - 63.6 63.6
Total $543.1 $690.3 $1,233.4
Uses Series 2024
A and B
Series 2024
C and D
Total
Commercial Paper Takeout $158.2 $334.1 $492.3
Project Fund 241.0 302.5 543.5
Escrow Deposit 106.6 - 106.6
Capitalized interest 35.8 51.7 87.5
Issuance Costs/UW Fees 1.5 1.9 3.5
Total $543.1 $690.3 $1,233.4
*Preliminary and subject to change. As of May 29, 2024. Assumes existing market conditions and bond ratings, pending review. 12 Not To Exceed Amounts
(Series 2024 Wastewater Bonds)
Purpose Green Bonds Tax Status Not to Exceed
for Resolution
Series A Biosolids
Digesters
Facilities
Project
(BDFP)
Yes (SSIP) Taxable $480 million
Series B Southeast
Community
Center
(SECC)
No Taxable 125 million
Series C Sewer System
Improvement
Project (SSIP)
Yes (SSIP) Tax Exempt
700 million
Series D Non SSIP No Tax Exempt
TOTAL $1.305 billion
13 WWE Net Debt Service Projections
Source: Montague DeRose and Associates, Municipal Advisor; preliminary and subject to change; as of June 6, 2024 $0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
$1,400,000,000
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060
2061
2062
2063
2064
2065
2066
2067
Wastewater Debt Service Projections
Outstanding Rev Bond NDS Outstanding SRF Loans Planned SRF Loans WIFIA 1&2 WIFIA 3a&b 2024ABCD New Money NDS
Projected Cap Plan NDS (2025-2033) Capital Plan NDS (post 2033) Coverage Revenue Available Rev at 1.35x
14 Anticipated Bond Sales
• Bonds are expected to be priced July 16-18th
• Separate Pricings for Taxable and Tax-Exempt Bonds
Selected via competitive RFP process with assistance of Municipal Advisors
Series AB (July 17)
Senior Manager (Books) BofA Securities
Co-Sr Manager Morgan Stanley
Co-Managers J.P. Morgan, Jefferies, and Siebert
Williams Shank
Series CD (July 18)
Senior Manager (Books) Morgan Stanley
Co-Sr Manager BofA Securities
Co-Managers J.P. Morgan, Jefferies, Siebert
Williams Shank
15 • SB 450 (enacted in October 2017) requires local agencies to disclose estimates of certain debt financing-related information at time of authorization
• Information obtained from municipal advisor included in Commission Staff report:

Good Faith Estimates
(SB 450 Requirement)
2024 Series AB
Wastewater Revenue
Bonds
(Federally Taxable)
2024 Series CD
Wastewater
Revenue Bonds
True Interest Cost 5.0372% 4.2718%
Finance Charge $1,500,397.55 $ 1,899,931.69
Amount of Proceeds Received by the
Public Body for Sale of the Bonds
net of reserves or capitalized interest
(CAPI) deposits and the finance
charge of the bonds
$505,773,563.72 $ 636,660,767.35
Total Payment Amount (i.e., Total Net
Debt Service net of CAPI)
$611,786,885.98 $1,267,518,750.00
16 Green Bonds Program
• SSIP Programmatic Certification with Climate Bonds Initiative • The Climate Bonds Initiative (CBI) is an international, investor- focused non-profit organization, that the capital markets consider the highest standard for green bond certification
• SSIP Programmatic Certification received from CBI in 2016 • Third-party verification by Sustainalytics
• 2024A and 2024C CBI Certification
• Received Climate Bonds Standard Certification under SSIP Programmatic Certification

17 • Preliminary Official Statement (POS)
Disclosure describing bond terms and condition of the
Wastewater Enterprise
• Continuing Disclosure Certificate (Appendix in POS)
Outlines disclosure reporting requirements during term of bond • Form of 17th and 18th Supplemental Indentures
Agreement between SFPUC and bondholders
17th for Series A (taxable) for short term maturities
18th for Series B (taxable) and Series CD long (tax-exempt) term maturities
• Bond Purchase Contracts
Outlines terms of bond sale for negotiated sale
Series AB (taxable) Bond Purchase Contract - BofA Securities Series CD (tax exempt) Bond Purchase Contract - Morgan Stanley • Escrow Agreements
Form of Transaction Documents
Recommended Commission Action
• Authorize bond issuance of up to:
• $480 million of Series A (SSIP) (Green Notes) (Taxable) • $125 million of Series B (Non-SSIP) (Taxable)
• $700 million of Series C (SSIP) (Green Bonds) and Series D (Non-SSIP)
• Approve form of related bond documents
• Authorize General Manager to sell Bonds in one or
more series on a negotiated basis
18 19
Questions

AGENDA ITEM
Public Utilities Commission
City and County of San Francisco

DEPARTMENT

Financial Services

AGENDA NO.

16 MEETING DATE

June 25, 2024

Calendar: Regular Calendar
Project Manager: Nikolai J. Sklaroff

Authorize the issuance of up to $4 80 million 2024 Series A (SSIP) (Green Bonds) (Federally Taxable) Bonds to finance certain capital projects benefiting the Wastewater Enterprise related to the Biosolids Digester Facilities Project from the SSIP, authorize the issuance of up to $125 million 2024 Series B (Non -SSIP) (Federally Taxable) Bonds to finance and re-finance certain capital projects benefiting the Wastewater Enterprise related to the Southeast Community Center that are Non-SSIP, and authorize the issuance of up to $700 million tax-exempt 2024 Series C (SSIP) (Green Bonds) and 2024 Series D (Non-SSIP) Bonds to finance and refinance, by retiring commercial paper, various capital projects benefiting the Wastewater Enterprise (collectively, the “2024 Wastewater Bonds).

Summary of
Proposed
Commission
Action:

Authorize the issuance of up to $ 480 million of taxable 2024 Series A Bonds for new money, the issuance of up to $125 million of taxable 2024 Series B Bonds to re-finance prior expenditures and fund new money, and the issuance of up to $700 million of tax- exempt 2024 Series C Bonds and 2024 Series D Bonds for new money and to retire tax- exempt commercial paper . The Commission resolution will approve bond sales as follows:

(1) The Wastewater Revenue Bonds, 2024 Series A (SSIP) (Green Bonds) (Federally Taxable) (2024 Series A Bonds) to fund certain costs related to the Biosolids Digester Facilities Project, a project of the Sewer System Improvement Program (SSIP), and fund capitalized interest to mitigate short- term budget impacts;

(2) The Wastewater Revenue Bonds, 2024 Series B (Non-SSIP) (Federally Taxable) (2024 Series B Bonds) to re -finance certain costs related to the Southeast Community Center (the “Center”) with taxable debt. There is a desire to change and optimize space and event uses of the Southeast Community Center which represents a significant non- economic factor, and which necessitates the execution of this refinancing with taxable debt. The refinancing will not meet the three- percent net present value debt service savings refunding test though this issuance may be authorized by finding the non-economic factor described above justifies a waiver of this savings test.

The refinancing with taxable debt will align the current and future planned use of the Center, will fund future costs related to the Southeast Community Center, and fund capitalized interest to mitigate short- term budget impacts; the authorizing resolution will find that these significant non -economic factors justify the refunding;
Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 2

(3) The Wastewater Revenue Bonds, 2024 Series C (SSIP) (Green Bonds) (2024 Series C Bonds) to retire tax -exempt commercial paper, fund non- SSIP improvements and fund capitalized interest to mitigate short- term budget impacts;

(4) The Wastewater Revenue Bonds, 2024 Series D (Non-SSIP) (2024 Series D Bonds) to retire tax-exempt commercial paper, fund SSIP improvements and Series D (Non-SSIP) to fund non- SSIP improvements and fund capitalized interest to mitigate short-term budget impacts;

The Commission , by resolution, will also approve the form of, and authorize the execution and delivery of, related documents; authorize the General Manager to sell the 2024 Wastewater Bonds in one or more series of bonds on a negotiated basis, as the General Manager determines is in the best financial interest of the San Francisco Public Utilities Commission (SFPUC); delegate to the General Manager authorization to appoint underwriters and enter into one or more bond purchase contracts with underwriters selected from the City’s pool of pre -qualified underwriters subject to a competitive
procurement process and in accordance with the City’s policies and procedures with respect thereto, subject to the limits on Underwriters’ compensation set forth in the resolution.

Background: The 2024 Wastewater Bonds will be issued pursuant to Proposition E, approved by San Francisco voters on November 5, 2002, codified as San Francisco Charter as Section 8B.124, and by various ordinances and resolutions approved by the Board and the San Francisco Public Utilities Com mission (SFPUC). Proceeds of the 2024 Wastewater Bonds will be used to finance costs of Wastewater Enterprise capital projects as follows:
the Series A Bonds will finance costs related to the Biosolids Digester Facilities Project, a project of the Sewer System Improvement Program (SSIP) benefiting the Wastewater Enterprise, on a Federally Taxable basis and fund capitalized interest; the Series B Bonds will finance future capital costs and re-finance costs related to the Southeast Community Center, a project of the Wastewater Enterprise, on a Federally Taxable basis and fund capitalized interest for new money financing cost; the Series C Bonds will finance the cost of projects of the SSIP on a tax-exempt basis and fund capitalized interest, the Series D Bonds will finance Wastewater Enterprise capital program project costs that are non- SSIP on a tax-exempt basis and fund capitalized interest.

The 2024 Wastewater Bonds transaction was included as part of the FY 2023-24 Capital Financing Plan presented to the Commission on October 10, 2023. The issuance of the 2024 Wastewater Bonds is being done in compliance with the “Debt Management Policies & Procedures ,” most recently updated and approved by the Commission on November 26, 2019.
“Green Bond” Designation: In conjunction with the issuance of the 2016 Series A Wastewater Revenue Bonds, issued on May 10, 2016, staff worked with its independent verifier, Sustainalytics, to have all projects in the S SIP certified for “Green Bond” designation pursuant to the Climate Bonds Initiative’s “Climate Bonds Standard.” With this programmatic certification, any bonds issued to finance and refinance the SSIP can be designated as “Green Bonds.” The Climate Bonds Standard Board approval of the Pre- issuance Certification of the 2024 Series A and Series C Bonds is currently pending.

Subject to receipt of such approval prior to mailing of the Preliminary Official Statement (POS), which will have been given based on the fact that the proceeds of the proposed Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 3

2024 Series A Bonds and 2024 Series C Bonds have or will fund SSIP Projects, the 2024 Series A and Series C Bonds will be designated and sold as “Green Bonds” certified by the Climate Bonds Initiative pursuant to their prior programmatic certification and within two years of issuance, the expenditure of proceeds will be verified by Sustainalytics, which has verified the SFPUC’s Wastewater Green Bonds to date.

Plan of Finance: SFPUC staff is recommending the SFPUC issue a combination of taxable and tax-exempt bonds, with slightly different underwriting syndicates leading the taxable and tax-exempt series.

The taxable 2024 Series A Bonds will be issued to mature within the next five years. Per the Indenture and the Debt Management Policy, maturities under sixty months are allowed to be considered variable rate bonds and its principal to be considered “excluded principal” for purposes of calculati ng annual debt service and debt service coverage because repayment of principal will come from moneys other than Net Revenues such as re-financing the maturing debt by issuing new bonds. These bonds will be issued initially on a taxable basis with the expectation that all or a portion of the bonds may be refinanced later on a lower cost tax -exempt basis. This interim step is being taken in light of the change in reasonable expectations with respect to the recent changes underway in the procurement and acquisition of biogas processing equipment for the Biosolids Digester Facilities Project and how the biogas that is generated from this project may be utilized.

Given components of this project are currently evolving, the 2024 Series A Bonds are being issued on a taxable basis to provide flexibility to, and not limit, the project planners since tax-exempt bonds are subject to private use restrictions while taxable bonds are not.

The SFPUC may refinance this series into long-term tax-exempt bonds should the SFPUC proceed with a plan for biogas utilization that permits the use of tax - exempt bond
proceeds. Otherwise, the SFPUC plans to refinance this series with taxable bonds or other sources, as described below. The SFPUC is also assessing how to best leverage tax credits from the Inflation Reduction Act that could be generated by this project. It is the SFPUC’s intention not to do anything with the Biosolids Digester Facilities Project including the use of the biogas that would result in a change in use and tax treatment of the existing digesters financing.

The taxable 2024 Series B Bonds principal will be amortized over approximately 13 years instead of the remaining 20- year period of the tax- exempt bonds to be defeased and refunded with the proceeds of the 2024 Series B Bonds. The 2024 Series B taxable bonds will be amortized on a shorter basis than the tax -exempt bonds to mitigate the impact of higher interest rates on taxable bonds. The bonds are being issued on a taxable basis to allow for more flexible use of the Southeast Community Center as projects funded with taxable bonds are not subject to the private use tax limitations necessary to qualify for tax-exempt financing, as previously described. As discussed below, these significant non- economic reasons will justify this refin ancing, which is not anticipated to produce net present value savings.

The tax-exempt 2024 Series C and 2024 Series D Bond principal will be amortized over approximately 30 years with long-term fixed rate bonds to wrap around current debt service to maintain level debt service.

The 2024 Series Wastewater Bonds are sized to fund prior expenditures for both SSIP and non-SSIP capital costs which were originally financed by Commercial Paper, as well as fund spending for additional SSIP and non-SSIP capital projects through June 20 25.

Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 4

Retiring outstanding Commercial Paper allow s the Wastewater Enterprise to enter into additional contracts in reliance on the availability of commercial paper to fund budget appropriation releases.

The Wastewater Enterprise is facing significant future rate pressure to fund its large capital program. The structuring outlined above is intended to mitigate those pressures while also mitigating tax risk by carefu lly navigating complex tax rules governing the issuance of low er-cost tax -exempt financing . Unlike the funding of the Water Enterprise’s Water System Improvement Program (WSIP), for which the capital program costs were spread over the much larger retail and wholesale water rate base, the costs of the Wastewater Enterprise’s capital investments will need to be spread over a smaller sewer service area rate base. As a result , the SFPUC has been amortizing high- cost financing more quickly and using longer term financing for the lowest cost forms of borrowing.

To mitigate such rate pressure, the SFPUC utilizes a broad range of funding instruments and structuring options for the Wastewater Enterprise. In addition to structuring strategies such as those described above, staff also incorporate grants, subsidized loans, low -cost State (SRF) and federal (WIFIA) loans, a Commercial Paper Interim Funding Program, and a combination of long- and shorter-term revenue bonds in the SFPUC’s portfolio of financing tools. The SFPUC can also manage the impact of changes in prevailing interest rates through the amortization of the debt, which changes the average life of each borrowing.

Structure of the Bonds:

(1) 2024 Series A Bonds – The SFPUC expects to issue up to $480 million to fund certain costs related to the Biosolids Digester Facilities Project on a taxable basis, and to fund capitalized interest. The 2024 Series A Bonds would be structured as taxable fixed rate bonds with a final maturity not-to-exceed 5 years and include capitalized interest through April 2026. The interest rates will be determined on the transaction date and will remain fixed for the term of the bonds.

(2) 2024 Series B Bonds – The SFPUC expects to issue up to $125 million to refund certain costs related to the Southeast Community Center on a Federally Taxable Basis, and to finance future costs, and to fund capitalized interest. The refunding will defease portions of the Wastewater Revenue Bonds, 2018 Series B and Wastewater Revenue Bonds, 2023 Series B bonds attributed to costs related to the Southeast Community Center. The 2024 Series B Bonds would be structured as taxable fixed rate bonds with a maturity not-to-exceed 30 years from the original issue date, but the final maturity is expected to be approximately 13 years and include capitalized interest through April 2026. The interest rates will be determined on the transaction date and will remain fixed for the term of the bonds.

(3) 2024 Series CD Bonds – The SFPUC expects to issue up to $700 million to fund Wastewater Enterprise capital improvements (including through the retirement of commercial paper previously issued for such projects) and to fund capitalized interest. The 2024 Series CD Bonds would be structured as tax-exempt fixed rate bonds with a final maturity not -to-exceed 30 years from the original issue date Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 5

and include capitalized interest through April 2026. The interest rates will be determined on the transaction date and will remain fixed for the term of the bonds.

Schedule for 2024 Wastewater Bonds: All the 2024 Wastewater Bonds are anticipated to be priced in mid-July (although the taxable and tax -exempt bonds may be priced on separate days). All four series of the 2024 Wastewater Bonds will be marketed pursuant to the same Preliminary Official Statement and will close together on the same day in late July. All dates are preliminary and subject to change based on market conditions.

Analysis of Financing Alternatives: As part of the Wastewater Enterprise’ s 10-Year Financial Plan, the SFPUC analyzes financing options for the capital program, taking into consideration capital project funding needs and timing, available financing alternatives, and market conditions and impacts on the ratepayers. For each financing, SFPUC Finance staff examines the most cost-effective financing structure within the context of the overall capital plan.

SFPUC Finance staff has reviewed the Wastewa ter Enterprise’s outstanding debt portfolio and capital financing needs and recomme nds primary funding through long- term fixed rate revenue bonds. Based on this review, staff has determined that these transactions minimize costs and meet near-term construction contract award and payment requirements. However, the Commission utilizes certain strategic short- term financing products such as its Commercial Paper Interim Funding program, short term revenue notes, subsidized loans, low-cost State (SRF) and federal (WIFIA) loans , and grants to mitigate costs and create economies of scale. SFPUC staff continues to evaluate other strategies relative to future debt with the goal of mitigating the impact of planned capital expenditures.

As noted above, the capital finance team in consultation with Bond Counsel and the City Attorney’s Office recommends the issuance of two of the series of bonds on a taxable basis (i.e., the bonds would not be issued on a tax- exempt basis) in connection with certain projects in the Wastewater Capital Improvement Plan. The Southeast Community Center opened in Oct ober 2022 and was built to mitigate impacts of the southeast treatment plant on the surrounding community. Based on the original intended use of the facility, it was initially envisioned as a facility that would qualify for tax -exempt financing. However, changes in the planned use of the facility, together with a desire to maximize flexibility of its future use by removing additional constraints on its operations has caused the financing team, in consultation with the City Attorney’s Office, to recommend a reevaluation of the use of tax-exempt financing previously utilized to fund the center. Accordingly, it has been recommended to retire outstanding commercial paper and defease tax -
exempt debt previously issued to finance the Southeast Community Center on a taxable basis. Pursuant to authorization permitted by Ordinance 181-23, this Commission may approve this defeasance though it will not satisfy the 3% net present value debt service savings test typically required for Wastewater Revenue Refunding Bonds due to the significant non-economic factors discussed above. The preliminary estimate for the cost of this defeasance is approximately $3.2 million or roughly -3.033% of refunded par, however with financing team intends to further mitigate the cost of the defeasance working with tax counsel, including the use of short maturities and couponing strategies. Importantly, this strategy mitigates the risk of adverse tax consequences and reputational harm and provides optimal flexibility to use the facilities for the benefit of the community surrounding the Southeast Community Center for whom it is intended.

Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 6

The Biosolids Digester Facilities Project was originally envisioned as a tax -exempt facility, and it is still hoped that it will remain so. The digesters take wastewater effluent and convert it to high quality fertilizer (biosolids) and produces exh aust gas that can be further processed into methane for renewable energy. However due to the evolving nature of the biogas utilization component of the facility, the project team will need to solidify and confirm plans for the offtake of bio-methane produced by the new digesters before further tax -exempt debt can be issued for this project . In developing t hese plans, the SFPUC intends to preserve the tax -exempt status of the enti re Biosolids project and to have these plans affirmed by tax counsel . As such, additional funding for the project as part of this financing will be issued on a short duration, taxable basis until plans are finalized, at which point the taxable bonds can potentially be re-financed with tax-exempt long-term revenue bonds, if appropriate. Additionally, as mentioned above, the SFPUC is assessing whether tax credits from the Inflation Reduction Act could be applied to this project, and staff are working with SFPUCs legal and municipal advisors to determine whether it would be advantageous to continue financing on a taxable basis to maximize potential federal refundable credits.

SB 450 Legislation Compliance: In 2017, California Senate Bill 450 (SB 450) was enacted. SB 450 requires the governing body of a local public body to obtain and disclose, prior to authorization of a new bond issue, good faith estimates of the following financing-related information:

1. True Interest Cost (TIC) of the bonds.

2. Finance charge of the bonds: This represents the sum of all fees and charges paid to third parties.

3. Amount of proceeds received: This represents proceeds of the bonds net of the fees and charges paid to third parties and any reserves or capitalized interest funded by the bonds.

4. Total payment amount: This represents t he sum of all debt service payments on the bonds calculated to the final maturity of the bonds.

SB 450 requires that the good f aith estimates be obtained from either the issuer’s municipal advisor, underwriter or third -party lender. Staff has consulted with its co - municipal advisor, Montague DeRos e & Associates LLC, and obtained estimates with regard to the respective 2024 Wastewater Bonds.

The Commission has been presented this information for recent bond sales as required and was last presented with this type of required information as part of its approval of the 2023 Series A Power Revenue Bonds that sold in October 2023. The Commission will continue to be presented with this information for all future bond authorization requests as required under SB 450.

The following represents a good faith reasonable estimate of certain costs for each bond sale for purposes of compliance with SB 450, based upon information available as of May 29, 2024. Actual results will be determined on the pricing date of the bonds and will likely vary based on interest rate and other market and structuring changes.

1. True Interest Cost:

2024 Series AB Wastewater Revenue Bonds (Federally Taxable): 5.0372% 2024 Series CD Wastewater Revenue Bonds: 4.2718%
Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 7

2. Finance Charge of the Bonds (reflects costs of issuance and underwriter’s discount):

2024 Series AB Wastewater Revenue Bonds (Federally Taxable): $1,500,397.55 2024 Series CD Wastewater Revenue Bonds: $1,899,931.69

3. Amount of Proceeds Received by the Public Body for Sale of the Bonds (net of reserves or capitalized interest (“CAPI”) deposits and the finance charge of the bonds):

2024 Series AB Wastewater Revenue Bonds (Federally Taxable):
$505,773,563.72
2024 Series CD Wastewater Revenue Bonds: $636,660,767.35

4. Total Payment Amount (i.e., Total Net Debt Service net of CAPI)

2024 Series AB Wastewater Revenue Bonds (Federally Taxable):
$611,786,885.98
2024 Series CD Wastewater Revenue Bonds: $1,267,518,750.00

Method of Sale: In consultation with the SFPUC’s Municipal Advisors on this transaction (Montague DeRose & Associates and Backstrom McCarley & Berry), SFPUC staff has recommended a negotiated sale for the 2024 Wastewater Bonds. In a negotiated sale, the SFPUC hires underwriters for the bonds through a competitive process from among the firms that have been prequalified in the City’s underwriting pool. The underwriters are therefore able to work with the SFPUC on structuring the transaction and preparing documents, including the disclosure document. In addition, they assist with the process of preparing materials for rating agencies and investors, and premarketing and marketing of the bonds. Staff has recommended this method of sale because:
1) unprecedented market volatility during the past two years, due to uncertainty regarding Fed monetary policy and global events and a negotiated sale process provides more market information and timing flexibility which can improve the results of a bond sale;
2) the proposed 2024 Wastewater Bond transaction includes refinancing transactions, which are sensitive to market conditions and/or structure considerations;
3) the size and complexity of the proposed sale;
4) the greater “real time” structuring flexibility in a negotiated vs competitive sale; 5) the ability to more effectively market to green bond investors in support of the SFPUC’s goal of remaining a leader in sustainable finance; and 6) to allow the SFPUC to select diverse underwriting teams which include smaller, minority and/or women-owned firms as part of the underwriting team.

A Request for Proposals was sent to all firms in the Controller’s Office of Public Finance Underwriter Pool. A total of 14 proposals were received by January 26, 2024, and reviewed by the SFPUC’s Co-Municipal Advisors and staff, to serve an underwriting role. After a formal evaluation and scoring process, BofA Securities, Inc., has been recommended as Bookrunning Senior Manager for the 2024 Taxable Series AB Bond sale and Morgan Stanley & Co. LLC has been recommended as Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 8

Co-Senior Manager. Morgan Stanley & Co. LLC has been recommended as Bookrunning Senior Manager for the 2024 Tax Exempt Series CD Bonds sale and BofA Securities, Inc., as Co-Senior Manager. J.P. Morgan Securities LLC, Jefferies LLC, Samuel A. Ramirez & Co. Inc., and Siebert Williams Shank & Co. LLC have been recommended as Co-Managers for all 2024 Wastewater Bonds. Morgan Stanley’s and BofA’s proposals were selected based on their respective experience, underwriting capabilities, technical expertise, financing ideas and competitive fees, and each of these firms have been integral participants in the financing team that prepared the proposed bond transaction.

Bond Documents: The Commission is being asked to approve the form and authorize the execution of documents relating to the Bonds, as described below.

1) Official Statements (Preliminary/Final) – This document provides investors with information necessary to make an informed investment decision. It describes, among other things, the terms of bonds, sources of repayment, risks that should be considered in evaluating an investment in the bonds, and information about the SFPUC and the Wastewater Enterprise, including information about the Wastewater Enterprise’s financial condition and operations. A preliminary official statement will be provided to rating age ncies and prospective investors. The form of the preliminary official statement is intended to be substantially final (except for certain pricing information and updates that may occur prior to sale); however, the General Manager is authorized pursuant to this resolution to make such changes as are necessary to finalize the preliminary official statement.

Following the sale, a final official statement in
substantially the form of the preliminary official statement will be prepared and delivered to purchase rs. The Commission has periodically received formal training regarding its disclosure responsibilities, most recently in February 2023. a) Continuing Disclosure Certificate – This document sets forth the SFPUC’s commitment to providing audited financial statements and certain financial information and operating data on an annual basis, as well as notices of certain listed events as set forth by the Securities and Exchange Commission’s (SEC) Rule 15c2- 12, while the bonds are outstanding. The Cont inuing Disclosure
Certificate is contained as an appendix within the Official Statement. 2) Indentures (as amended by the Seventeenth and Eighteenth Supplemental Indentures) - The Indentures are agreements between the SFPUC and the Trustee which sets forth the contractual terms of the Bonds, including the pledge of revenues, flow of funds, covenants, defaults and remedy provisions, and provisions to issue additional debt.

The supplemental Indentures set for th the terms of each individual series of bonds, including maturities, interest rates and terms of early redemption. Additional indentures have also been executed in conjunction with other parity borrowing, such as Federal WIFIA loans.
3) Bond Purchase Contracts – The agreements between the SFPUC and the Underwriters setting forth conditions upon which the bonds will be offered and underwritten by the Underwriters, including provisions allowing the Underwriters to not underwrite the bonds in the event of certain circumstances.
4) Escrow Agreement – Related to the refunding, it is the agreement with the escrow agent (typically the Trustee) to hold the escrow securities that are purchased with proceeds of the refunding bonds and used to legally defease the refunded bonds through the bonds’ first optional redemption date. The agreement also outlines the Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 9

roles and responsibilities of the escrow agent to pay debt service on the refunded bonds until their redemption date.

Legal and Advisory Team: SFPUC Capital Finance staff worked collaboratively with outside municipal advisors, as well as the City Attorney’s Office and outside co- bond and disclosure counsel, to develop all aspects of the documents associated with the sale of the 2024 Wastewater Bonds, including all attachments. The professionals working with the SFPUC on this financing are as follows:
• Issuer Counsel: City Attorney’s Office of the City and County of San Francisco • Disclosure Counsel: Orrick, Herrington & Sutcliffe LLP • Bond Counsel: Norton Rose Fulbright US LLP
• Co-Municipal Advisors: Montague DeRose & Associates and Backstrom McCarley Berry & Co.
• Trustee: U.S. Bank Trust Company National Association • Independent Pricing Verification Agent: PFM California Advisors LLC • Escrow Verification Agent: to be selected closer to transaction pricing

In addition, the preparation of the Preliminary Official Statement has required the input of SFPUC employees across the organization, without whom this important document could not be comple ted, including in the Wastewater Enterprise, Infrastructure and the Finance and Business Services teams.

As this transaction will be sold on a negotiated basis, per the SFPUC’s debt policies, an independent pricing verification agent —a municipal advisor not otherwise involved in the transaction —has been engaged to provide an independent pricing report and comparative sales details to reassure that the sale provided fair pricing for the rate payers.

Disclosure Considerations: As discussed during the Commissioner’s disclosure training held at the February 14, 2023, regular meeting, under federal securities laws the SFPUC must disclose the financial condition of the Wa stewater Enterprise to prospective investors in the Preliminary Official Statement and the Official Statement for the Bonds, and such disclosure must be complete and accurate with no material misstatem ents or material omissions.

The preparation of the Preliminary Official Statement reflects a rigorous and iterative drafting and review process including subject matter experts and senior management within the Wa stewater Enterprise, Infrastructure and SSIP program managers, the City Attorney’s Office and SFPUC’s financing team. In addition, the SFPUC was assisted in the preparation of the document by Orrick, Herrington & Sutcliffe LLP, disclosure counsel. Orrick has served as the Disclosure Counsel to the SFPUC since 2010.

Prior to distribution to investors, the Preliminary Official Statement will be updated to reflect the most current information regarding the Wastewater Enterprise. The final Official Statement will be distributed subsequent to the sale of the Bonds and will include relevant pricing-related information.

Counsel has advised that prior to approval of the form of Preliminary Official Statement, Commissioners should review the attached documents and be satisfied that:
1) They understand the key terms of the bond transaction, including commitments undertaken by the SFPUC;
2) The process followed in the preparation of the Preliminary Official Statement Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 10

and the Official Statement is adequate; and
3) SFPUC officers or the City Attorney’s Office are aware of all matters important to the financial condition of the Wastewater Enterprise of which Commissioners have personal knowledge.

A summary level “Questions and Answers” about the bonds is set forth below:

Q. What is the size of the bond issue?
A. The SFPUC expects to issue in aggregate up to $1.305 billion principal amount of the 2024 Wastewater Bonds to fund improvements (including retiring previously issued commercial paper and refunding certain previously issued tax exempt bonds) and capitalized interest.

Q. Why are bonds being issued?
A. The 2024 Wastewater Bonds are being issued to fund a portion of the Wastewater Enterprise’s capital improvement program, including portions of the SSIP. The bonds will also fund capitalized interest and costs of issuing and underwriting the bonds . Additional amounts to refund up to $121.18 million of costs related to the Southeast Community Center and $3.6 million to fund additional costs for the Center.

Q. What is the bond structure?
A. The 2024 Wastewater Bonds will be issued as senior lien fixed rate bonds, with a final maturity of 30 years or less. The 2024 Series AB Bonds will be on a taxable basis and the 2024 Series CD Bonds will be issued on a tax-exempt basis. The 2024 Wastewater Bonds will not fund a debt service reserve fund, but will fund capitalized interest for any new money costs and will fund the costs of issuance and bond underwriting fees.

Q. How will the Bonds be sold?
A. The SFPUC has engaged an underwriting syndicate led by Morgan Stanley and BofA Securities , together with four co -managers, to market and price the bonds based on investor demand and market conditions at the time of sale. The SPFUC’s Municipal Advisors will assist SFPUC in negotiating the final interest rates with the Underwriters . In addition, a pricing consultant (PFM Financial Advisors LLC) has been engaged to independently monitor and verify that the pricing is fair.

Q. How will debt service on the Bonds be paid?
A. Except as described below, t he 2024 Wastewater Bonds will be repaid from “net revenues” of the Wastewater Enterprise, in accordance with the Wastewater Indenture, the primary source of which is rates and charges . Net revenues are those revenues remaining after the payment of Operating and Maintenance Expenses of the Wa stewater Enterprise . The Commission intends that the principal of the taxable 2024 Series B Bonds will be refinanced with tax-exempt or taxable bonds, or other sources of funds which do not constitute net revenues.

Q. If the 2024 Wastewater Bonds for new improvements are issued in an amount up to $1.29 billion, how much debt will be payable from the revenues of the Wastewater Enterprise?
A. Including the 2024 Wastewater Bonds, and approximately $400 million in Parity State SRF Loans, the Wastewater Enterprise will have approximately $4.06 Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 11

billion in long-term debt outstanding. Further, SFPUC has executed $1.58 billion in parity WIFIA loans and has draw n $914.85 million. In addition to this long- term debt, the SFPUC’s 2009 Golden Gate Certificates of Participation payment obligation is also payable from the revenues of the Wastewater Enterprise on a subordinate basis as well as costs related to commercial paper , revolving notes and direct bank agreements. In FY 2029, after the capitalized interest period and excluded principal period is over, average annual debt service will be approximately $44.35 million for the 20 24 Wastewater Bonds, and total debt service will be $267.58 million for that same year.

Q. What impact will the issuance of the 2024 Wastewater Bonds have on Wastewater Enterprise rates?
A. Debt service and debt service coverage requirements have been included in the current 10-Year Financial Plan, which projects overall average annual sewer rate increases of 9.7% for the period FY 2024- 25 through FY 2033 -34. The 2024 Wastewater Bonds are being sold to meet the funding needs of the W astewater Enterprise Capital Plan. Future projected debt in the plan is based on an assumed rate of 6% amortized over 30 years; it is expected that the structuring of the current transaction may produce savings compared to the assumed rates.

Q. Will issuance of the Bonds have a negative impact on the Wastewa ter Enterprise’s credit ratings?
A. The SFPUC will apply for ratings for the 20 24 Wastewater Bonds and for confirmation of the existing ratings of outstanding Wa stewater Revenue Bonds.

Many factors determine future bond ratings, many of which are beyond management’s co ntrol, but other factors remain in the Commission and management’s control, including rate increases and debt service coverage levels.

Staff expects to have further rating agency feedback at the Commission meeting.

If there is any information Commissioners believe they need to understand the transaction as presented for approval, or to evaluate the adequacy of disclosure, or if Commissioners have important information concerning the Wastewater Enterprise of which they are not sure SFPUC is aware, Commissioners are encouraged to contact SFPUC finance staff or the City Attorney’s Office.

Environmental
Review:

This bond sale is subject to Proposition E (of 2002) and related ordinances and resolutions adopted by the Board of Supervisors (Board). S ection 8B.124 of the City Charter grants authority to the Board to approve the issuance of indebtedness, including revenue bonds, by ordinance upon two- thirds vote of its members and under certain conditions. One of the conditions to the Board's authorizat ion of such indebtedness is c
ertification by the San Francisco Planning Department that facilities under the jurisdiction of the Public Utilities Commission funded with such bonds will comply with applicable requirements of the California Environmental Quality Act (CEQA).

The Environmental Review Officer issued Proposition E CEQA Certificates (“CEQA Certificates”) required under Charter Section 8B.124 for the proposed sale of wastewater revenue bonds, including notes, commercial paper, and other forms of indebtedness, on June 26, 2018 related to Ordinance No. 89-15 and part of file number 150362 on file with the Clerk of the Board (related to Ordinance No. 111-16 and part of file number 160471 on file with the Clerk of the Board), on November 30, 2020 related to Ordinance No. 173- 20 and part of file number 200837 on file with the Clerk of the Board, on August 2, 2022, related to Ordinance No. 110-22 and part of file number 220500 on file with the Clerk of Execute Agreement: Authorize the Issuance of 2024 Series A, B, C and D Wastewater Revenue Bonds Commission Meeting Date: June 25, 2024
Page: 12

the Board; and on August 15, 2023, related to Ordinance No. 181 -23 and part of file number 230666 on file with the Clerk of the Board.

The projects to be funded by bond proceeds are listed in Exhibit A of the CEQA Certificates. Some projects listed have already undergone CEQA review and have been approved by this Commission, while others are in the planning and design phases or are still under environmental review. The Certificates cite the CEQA compliance for projects that have been certified (for Environmental Impact Reports), approved (for Mitigated Negative Declarations)
, or determined to be exempt, as well as projects that do not constitute a project under CEQA.

This proposed action does not constitute approval of projects that have not yet completed CEQA review and have not been approved by this Commission. For all projects listed in Exhibit A of the CEQA Certificates that have not yet been approved, environmental review will be completed and considered by this Commission prior to the approval of expenditure of funds for construction.

The CEQA Certificates and associated Ordinances can be found here:
https://sfpuc.sharefile.com/public/share/web-sd43738c898074e29a1dd0d9c239be336

Recommendation: SFPUC staff recommends that the Commission adopt the attached resolution.

Attachments: 1) Form of Preliminary Official Statement (POS) (including Form of Continuing Disclosure Certificate as Appendix D)
2) Form of Seventeenth, and Eighteenth Supplemental Indentures 3) Form of Bond Purchase Contracts
a) Series AB (taxable)
b) Series CD (tax-exempt)
4) Form of Escrow Agreements

PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO. __________
WHEREAS, At a duly called and held election on November 5, 2002, a majority of voters voting on the measure approved Proposition E, codified as Article VIIIB (“Article VIIIB”) of the Charter (the “Charter”) of the City and County of San Francisco (the “City”), which, among other things, authorized the Public Utilities Commission (the “Commission”) of the City to issue its revenue bonds, including notes, commercial paper or other forms of indebtedness , including refunding indebtedness, when authorized by ordinance approved by a two-thirds vote of the Board of Supervisors of the City (the “Board”), for the purpose of reconstructing, replacing, expanding, repairing or improving water facilities or clean water facilities, or combinations of water and clean water facilities under the jurisdiction of the Commission, subject to the satisfaction of certain conditions; and
WHEREAS, The Com mission adopted the Indenture dated as of January 1, 2003 (as amended and supplemented, the “Indenture”), between the Commission and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), as trustee thereunder (the “Trustee”); and
WHEREAS, On September 29, 2020, the Board passed by two-thirds vote Ordinance No. 173-20, approving the issuance and sale of wastewater revenue bonds, commercial paper, revolving credit notes, or bond anticipation notes, authori zing the Commission to execute and deliver one or more State of California Water Resources Control Board Installment Sale Agreements in connection with State Revolving Fund Loans, and authorizing the Commission to execute and deliver loan agreements with t he United States Environmental Protection Agency under the Water Infrastructure Finance and Innovation Act, all pursuant to Article VIIIB of the Charter, in an aggregate principal amount not to exceed $349,919,252, to finance capital projects benefiting the Enterprise (as defined in the Indenture), and further authorizing the approval of the issuance of wastewater revenue refunding bonds, to refund any outstanding obligations of the Enterprise, subject to the limitations set forth therein; and WHEREAS, On July 27, 2021, the Board passed by two- thirds vote Ordinance No. 128- 21, amending Ordinance No. 173- 20 and increasing the authorized issuance thereunder not to exceed $563,430,430 of bonds, loans or other forms of indebtedness; and WHEREAS, On June 14, 2022, the Board passed by two- thirds vote Ordinance No. 110- 22, approving the issuance and sale of wastewater revenue bonds, commercial paper, revolving credit notes, or bond anticipation notes, authorizing the Commission to execute and deliver one or more Sta te of California Water Resources Control Board Installment Sale Agreements in connection with State Revolving Fund Loans, and authorizing the Commission to execute and deliver loan agreements with the United States Environmental Protection Agency under the Water Infrastructure Finance and Innovation Act, all pursuant to Article VIIIB of the Charter, in an aggregate principal amount not to exceed $704,198,901, to finance capital projects benefiting the Enterprise, and further authorizing the approval of the issuance of wastewater revenue refunding

bonds, to refund any outstanding obligations of the Enterprise, subject to the limitations set forth therein; and
WHEREAS, On July 25, 2023, the Board passed by two- thirds vote Ordinance No. 181 - 23, approving the issuance and sale of wastewater revenue bonds, commercial paper, revolving credit notes, or bond anticipation notes, authorizing the Commission to execute and deliver one or more State of California Water Resources Control Board Installment S ale Agreements in connection with State Revolving Fund Loans, and authorizing the Commission to execute and deliver loan agreements with the United States Environmental Protection Agency under the Water Infrastructure Finance and Innovation Act, all pursua nt to Article VIIIB of the Charter, in an aggregate principal amount not to exceed $1,047,288,286, to finance capital projects benefiting the Enterprise, and further authorizing the approval of the issuance of wastewater revenue refunding bonds, to refund any outstanding obligations of the Enterprise, subject to the limitations set forth therein; and
WHEREAS, Pursuant to Ordinance Nos. 173-20, 128-21, 110-22 and 181-23 (collectively, the “Authorizing Ordinances”), there remains authority to issue an additional $1,854,755,439 aggregate principal amount of bonds to finance capital projects benefiting the Enterprise; and WHEREAS, Pursuant to Ordinance No. 181- 23, the Board authorized the issuance of refunding bonds for the Enterprise without limitation as to am ount, but subject to the satisfaction of certain conditions, including the achievement of three- percent (3%) net present value debt service savings , unless the Commission determines that there are “significant non- economic factors” which justify the refunding and a waiver of such conditions; and WHEREAS, The Commission has previously issued three series of bonds under the Indenture designated the “Public Utilities Commission of the City and County of San Francisco Wastewater Revenue Bonds, 2018 Series A (Gr een Bonds), 2018 Series B and 2018 Series C (Green Bonds) (collectively, the “2018 Bonds”), in the original principal amount of $594,145,000, as more specifically described in that certain applicable Seventh Supplemental Indenture or Eighth Supplemental Indenture, each dated as of August 1, 2018, each by and between the Commission and the Trustee; and
WHEREAS, The Commission has previously issued three series of bonds under the Indenture designated the “Public Utilities Commission of the City and County of San Francisco Wastewater Revenue Bonds, 2023 Series A (SSIP) (Green Bonds), 2023 Series B (Non-SSIP) and 2023 Series C (Refunding - SSIP) (Green Bonds)” (collectively, the “2023 Bonds”), in the original principal amount of $974,380,000, as more specificall y described in that certain Fifteenth Supplemental Indenture, dated as of April 1, 2023, by and between the Commission and the Trustee; and
WHEREAS, Under the authority granted under Article VIIIB of the Charter (as supplemented by California Government Code Sections 53580 et seq.), and the various ordinances and resolutions adopted by the Board and the Commission thereunder, it is proposed that the Commission issue (i) one or more series or subseries of wastewater revenue bonds, in an aggregate principal amount not to exceed $700,000,000, issued on a Federally tax-exempt basis (collectively the “2024 Tax- Exempt Bonds”), for the purpose of financing or refinancing (through the

retirement of commercial paper notes) various capital projects benefiting the Enterprise (including reimbursing the Commission for certain capital costs previously paid from other moneys), financing capitalized interest and paying costs of issuance related thereto, and (ii) one or more series or subseries of wastewater revenue bonds, in an aggregate principal amount not to exceed $605,000,000, issued on a Federally taxable basis (collectively, the “2024 Taxable Bonds” and, together with the 2024 Tax- Exempt Bonds, the “2024 Bonds” ), for the purpose of (a) financing, on an interim basis, c ertain costs of the Biosolids Digester Facilities Project (the “BDFP”), financing or refinancing (through the retirement of commercial paper notes) various capital projects benefiting the Enterprise (including reimbursing the Commission for certain capital costs previously paid from other moneys) , financing capitalized interest and paying costs of issuance related thereto, in an aggregate principal amount not to exceed $ 480,000,000, (b) financing the costs of defeasing and refunding a portion of the outstanding 2018 Bonds and the outstanding 2023 Bonds, (the “Southeast Community Center Refunding Project”), financing capital costs related to the Southeast Community Center project, financing capitalized interest and paying costs of issuance related thereto, in an aggregate principal amount not to exceed $125,000,000; and WHEREAS, It is anticipated that the 2024 Taxable Bonds issued to finance the BDFP will be refinanced in whole or in part with the proceeds of tax -exempt refunding bonds, or any other available sources of funds which do not constitute Net Revenue, and otherwise with the proceeds of taxable refunding bonds, on or before their maturity; and WHEREAS, It is anticipated that the 2024 Taxable Bonds issued to finance the Southeast Community Center Refunding Project will not satisfy the three-percent (3%) net present value debt service savings test specified by Ordinance No. 181-23, and the Commission finds that significant non-economic factors exist that justify the waiver of such savings test, including a desire to change and optimize space and event uses of the Southeast Community Center; WHEREAS, The Southeast Community Center Refunding Project, being the defeasance and refunding of a portion of the outstanding 2018 Bonds and the outstanding 2023 Bonds, is to be accomplished by depositing proceeds of the 2024 Taxable Bonds, and certain other amounts, if any, in the applicable irrevocable escrow funds, each established and held in trust by the trustee for the 2018 Bonds and the 2023 Bonds to be defeased and refunded (as the case may be) pursuant to one or more escrow agreements between the Commission and said trustee (the “Escrow Agreement”), which moneys and the investment income thereon are to be applied to pay the principal of and the interest to the date fixed for redemption, and redemption premium, if any, on all or a portion of the 2018 Bonds and the 2023 Bonds to be refunded (as the case may be), as provided therein; and
WHEREAS, It is proposed that such 2024 Tax-Exempt Bonds be issued as obligations the interest on which is exempt from federal income tax pursuant to the Supplemental Indentures, and that the 2024 Taxable Bonds be issued on a Federally taxable basis pursuant to the Supplemental Indentures; and
WHEREAS, It is proposed that one or more Preliminary Official Statement (as defined herein) and one or more Official Statement (as defined herein) will be used in connection with the offering and sale of the 2024 Bonds, from time to time; and

WHEREAS, It is proposed that the 2024 Bonds be sold on one or more dates, in a negotiated sale pursuant to one or more bond purchase contracts (defined herein as, the “Bond Purchase Contracts”); and
WHEREAS, It is proposed that one or more continuing disclosure certificates with respect to the 2024 Bonds (the “Continuing Disclosure Certificates”) be executed and delivered by the Commission in order to assist the underwriters thereof in complying with Securities and Exchange Commission Rule l5c2-12 (“Rule 15c2-12”); and
WHEREAS, Pursuant to Article IX of the Indenture, the Indenture may be amended from time to time upon compliance with the terms and conditions provided in said Article IX; and WHEREAS, The Commission has been presented with and has examined the proposed forms of the Supplemental Indenture s, the Bond Purchase Contracts, the Escrow Agreement, the Preliminary Official Statement, and the Continuing Disclosure Certificates; and WHEREAS, The Commission is duly authorized and empowered, pursuant to each and every requirement of law, to authorize the foregoing transactions and issue the 2024 Bonds and to authorize the execution and delivery, as applicable, of the Supplemental Indentures, the Bond Purchase Contracts, the Preliminary Official Statement, the Official Statement, the Escrow Agreement, t he Continuing Disclosure Certificates and related documents, for the purposes described herein and in the manner and upon the terms provided herein; and WHEREAS, Senate Bill 450 (Chapter 625 of the 2017- 2018 Session of the California Legislature) (“SB 450” ) requires that the governing body of a public body obtain from an underwriter, municipal advisor or private lender and disclose, prior to authorizing the issuance of bonds with a term of greater than 13 months, good faith estimates of the following information in a meeting open to the public: (a) the true interest cost of the bonds, (b) the sum of all fees and charges paid to third parties with respect to the bonds, (c) the amount of proceeds of the bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the bonds, and (d) the sum total of all debt service payments on the bonds calculated to the final maturity of the bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds; and WHEREAS, The voters of the City approved Proposition P in November 2002, pursuant to which this Resolution and the 2024 Bonds are subject to the provisions of Section 5A.30 et seq. (“Public Utilities Re venue Bond Oversight Committee”) of Article V of Chapter 5 of the San Francisco Administrative Code (the “Proposition P Requirements”), including the requirement that, to the extent permitted by law, one -twentieth of one percent (0.05%) of the gross procee ds from each issuance or sale of new money public utility revenue bonds shall be deposited in a fund established by the Office of the Controller of the City (the “Controller’s Office”) and appropriated by the Board at the direction of the Public Utilities Revenue Bond Oversight Committee to cover the costs of said committee; and
WHEREAS, Section 1.150- 2(f) of the United States Income Tax Regulations (the “Treasury Regulations”) provides generally that proceeds of tax -exempt debt may be used to reimburse an expenditure made prior to the issuance of such debt if such expenditures are

“preliminary expenditures” of the type described in Section 1.150- 2(f) of the Treasury Regulations; and
WHEREAS, The Commission intends to reimburse from a portion of the proceeds of the 2024 Bonds certain preliminary expenditures of the type described in Section l. l 50- 2(f) of the Treasury Regulations (the “Preliminary Expenditures”); and WHEREAS, Section 8B.124 of Article VIIIB of the Charter (“Section 8B.124”) allows for the issuance of revenue bonds and other forms of indebtedness, subject to the provision of certain certifications of an independent engineer retained by the Commission and certain certifications by the San Francisco Planning Department, which certifications make the findings and determinations set forth in Section 8B.124; and
WHEREAS, The Environmental Review Officer issued California Environmental Quality Act (CEQA) Certificates (the “CEQA Certificates”) required under Charter Section 8B.124 for the proposed sale of wastewater revenue bonds, including notes, commercial paper, and other forms of indebtedness, on June 26, 2018, related to Ordinance No. 89-15 and part of file number 150362 on file with the Clerk of the Board (related to Ordinance No. 111-16 and part of file number 160471 on file with the Clerk of the Board), on November 30, 2020, related to Ordinance No. 173-20 and part of file number 200837 on file with the Clerk of the Board, on August 2, 2022, related to Ordinance No. 110-22 and part of file number 220500 on file with the Clerk of the Board, and on August 15, 2023, related to Ordinance No. 181-23 and part of file number 230666 on file with the Clerk of the Board; and
WHEREAS, The projects listed in Exhibit A of the CEQA Certificates are either: ( a) not considered to be projects under CEQA, (b) are projects under CEQA and a CEQA determination has already been issued, or (c) are projects under CEQA that will undergo CEQA review prior to approval; and
WHEREAS, The Commission has reviewed and consider ed project -specific Final Environmental Impact Reports (Final EIRs) and Mitigated Negative Declarations and adopted CEQA Findings and Mitigation Monitoring and Reporting Programs for the projects listed in Exhibit A of the CEQA Certificates, which are on file with the Secretary of the Commission, and finds that the Final EIRs and Mitigated Negative Declarations are adequate for its use as the decision making body for the actions taken herein, and hereby reaffirms the previously adopted CEQA Findings, includi ng the Statements of Overriding Considerations and the Mitigation Monitoring and Reporting Programs and incorporates the same herein as part of this Resolution by this reference thereto; and
WHEREAS, Some projects listed in Exhibit A of the CEQA Certificates have not yet been approved, and this Resolution does not constitute project approval or approval of expenditure of 2024 Bond funds for project construction, and projects that have not yet been approved will be subject to the Commission’s review and consideration of completed environmental documentation prior to the Commission’s approval of the expenditure of funds for construction; and WHEREAS, Pursuant to the provisions of Chapter 31 of the San Francisco Administrative Code, any additional projects whic h are not listed in Exhibit A of the CEQA Certificates will

comply with applicable CEQA requirements prior to project approval or any expenditure of 2024 Bond funds to finance the acquisition or construction of such projects following project approval by the Commission; and
WHEREAS, Certificates intended to meet the requirements set forth in Section 8B.124 will have been presented for review by the Board (the “Certificates”), and the Certificates will be filed with the Clerk of the Board and the Secretary of the Commission prior to the issuance of the 2024 Bonds; now, therefore, be it
RESOLVED by the Public Utilities Commission of the City and County of San Francisco, as follows:

Section 1. Issuance of the 2024 Bonds. The issuance of the 2024 Bonds in such series or subseries, on such dates, in such amounts and at such times as the Commission may determine, in an aggregate principal amounts (i) not to exceed $700,000,000 for the 2024 Tax- Exempt Bonds and (ii) not to exceed $605,000,000 for the 2024 Taxable Bonds, is hereby authorized and approved by the Commission pursuant to Article VIIIB of the Charter and the Authorizing Ordinances, and subject to the limitations and conditions provided herein.

The 2024 Tax -Exempt Bonds may be issued for the purpose of financing or refinancing (through the retirement of commercial paper notes) various capital projects benefiting the Enterprise (including reimbursing the Commission for certain capital costs previously paid with the proceeds of wastewater commercial paper notes or other moneys), as may be determined by the General Manager of the Commission (the “General Manager”), financing capitalized interest and paying costs of issuance of the 2024 Tax-Exempt Bonds.

The 2024 Taxable B onds may be issued for the purpose of (a) financing, on an interim basis, the cost of the BDFP, financing or refinancing (through the retirement of commercial paper notes) various capital projects benefiting the Enterprise (including reimbursing the Commis sion for certain capital costs previously paid with the proceeds of wastewater commercial paper notes or other moneys), as may be determined by the General Manager , financing capitalized interest and paying costs of issuance related thereto, in an aggregate principal amount not to exceed $480,000,000 and (b) financing the cost of the Southeast Community Center Refunding Project, financing capital costs related to the Southeast Community Center project, financing capitalized interest and paying costs of issuance related thereto, in an aggregate principal amount not to exceed $125,000,000.

If determined to be beneficial to the Commission, by the General Manager, with the advice of the Commission’s munici pal advisors (the “Municipal Advisors”), 2024 Bond proceeds may also be applied to costs associated with (i) the provision of credit enhancement of any series or subseries of 2024 Bonds (including without limitation bond insurance policies and/or reserve fund surety bonds or insurance policies), and (ii) the funding of a debt service reserve for one or more series or subseries of 2024 Bonds, if any.

The 2024 Bonds shall be issued in accordance with the Authorizing Ordinances, this Resolution, the Indenture (as supplemented as provided herein) and the Charter (as supplemented by California Government Code Sections 53580 et seq.), including but not limited to, the provision

of certifications required by Section 8B.124 to the Secretary of the Commission and the Clerk of the Board. The General Manager is hereby authorized and directed to determine the aggregate principal amount of each series or subseries of the 2024 Bonds to be issued (subject to the maximum amount and further limitations and conditions set forth herein) and to determine the title and series or subseries designation of each series or subseries of the 2024 Bonds. The 2024 Bonds may be issued as tax exempt bonds or taxable bonds, or any combination thereof, subject to the limitations contained in t his Resolution. The forms of the 2024 Bonds, in substantially the form set forth in the Supplemental Indentures (as defined below) and presented to this meeting, is hereby approved. The General Manager (or their designee) is hereby authorized and directed to approve and to execute the 2024 Bonds by manual or facsimile signature, and the Secretary of the Commission (or their designee) is hereby authorized and directed to attest, by manual or facsimile signature, with such changes, additions, amendments or modifications thereto, which they may approve with the advice of the City Attorney, such approval to be conclusively evidenced by the execution and delivery of the 2024 Bonds, subject to the limitations set forth in Section 2 hereof.

Section 2. Sale of the 2024 Bonds . The sale of the 2024 Bonds, on one or more dates, is hereby authorized and approved by the Commission pursuant to the Charter (as supplemented by California Government Code Sections 53580 et seq.), the Authorizing Ordinances and this Resolution, and subj ect to the limitations and conditions provided herein. The sale of the 2024 Bonds through negotiated sale(s) to the underwriters of the applicable series of the 2024 Bonds, with the advice of the Municipal Advisors, provided that (i) the sale of the 2024 B onds through negotiated process(es) is likely to enhance the ability of the Commission to timely sell the 2024 Bonds or to achieve a lower overall cost to the Commission, or both, and (ii) the applicable requirements of the Commission’s Debt Management Pol icies and Procedures, as the same may have been amended and in effect at the time of such determination, have been satisfied. The interest rate or rates on any series or subseries of 2024 Bonds shall not exceed 12% per annum, the final maturity of the 2024 Tax-Exempt Bonds and the 2024 Taxable Bonds shall not be later than 40 years after the issue date thereof, provided that the final maturity of the 2024 Taxable Bonds issued for the Southeast Community Center Refunding Project shall not extend beyond the maturity date of the bonds to be refunded.

Section 3. Escrow Agreement. The proposed form of the Escrow Agreement submitted to this Commission, and the terms and conditions thereof, is hereby approved. In order to implement the defeasance and refunding of a portion of the outstanding 2018 Bonds and the outstanding 2023 Bonds, the General Manager (or their designee) is hereby authorized to enter into the Escrow Agreement with the Trustee, as escrow agent for the outstanding wastewater revenue bonds being defeased and refunded with a portion of the 2024 Taxable Bonds, substantially in the forms presented to this meeting and on file with the Secretary of the Commission, with such changes and additions as the General Manager may approve upon consultation with the City Attor ney, each such approval to be evidenced conclusively by the delivery to the trustee of the Escrow Agreement.

The Secretary of the Commission is directed to file a copy of said form of the Escrow Agreement with the minutes of this meeting.

Section 4. Disposition of Re venues; Pledge of Net Revenues; Rate Covenant . Section

5.01(b) of the Indenture, which sets forth the disposition of Revenues (as defined in the Indenture) applicable to the 2024 Bonds relating to the Enterprise is hereby confirmed by the Commission and the Commission further confirms, pledges and covenants with the holders of the 2024 Bonds

that the Revenues shall be appropriated and expended in the order of priority set forth in Section

5.01(b) of the Indenture and the 2024 Bonds shall be subject to the pledge of Net Revenues (as defined in the Indenture) as set forth in Section 5.01(c) of the Indenture, as the same may be amended from time to time. This Commission also declares that the Commission will comply with all of the terms, provisions and covenants contained in the Indenture, as the same may be amended from time to time, including the covenants to establish, fix and prescribe rates, fees and charges sufficient to enable the Commission to comply with the terms, conditions and covenants of the Indenture.

Section 5. Supplemental Indentures. The proposed forms of the Supplemental Indentures for the 2024 Bonds (the “Supplemental Indentures”) submitted to this Commission, and the terms and conditions thereof, are hereby approved. The General Manager (or their designee) is authorized and directed to execute and deliver and the Secretary of the Commission (or their designee) is authorized to attest the Supplemental Indentures in such forms, with such additions thereto or changes therein which they may approve with the advice of the City Attorney, such approval to be conclusively evidenced by the execution and delivery of such Supplemental Indentures. The Secretary of the Commission is directed to file a copy of the form of the Supplemental Indentures with the minutes of this meeting. Subject to the further limitations hereof, the principal amounts, dates, maturity dates, maximum interest rate or rates, series designations (including the designation of any series of bonds as “notes”), interest payment dates, forms, registration privileges, place or places of payment, terms of redemption, insurance provisions and other terms of the 2024 Bonds shall be as provided in the Supplemental Indentures.

Section 6. Preliminary Official Statement and Official Statement. The Preliminary Official Statement for the 2024 Bonds (with any supplements thereto, the “Preliminary Official Statement”), in substantially the form submitted to the Commission, is hereby approved, and the General Manager (or their designee) is hereby authorized to certify from t ime to time, for and on behalf of the Commission, that the Preliminary Official Statement, with such changes, additions and supplements as they may deem necessary or appropriate in the interest of the Commission, in consultation with the City Attorney, is deemed final as of its date, within the meaning of Rule 15c2-12 (except for the omission of certain final pricing, rating and related information as permitted by Rule 15c2- 12). The Preliminary Official Statement is hereby authorized to be used from time to time in connection with the marketing of the 2024 Bonds. In connection with the sale of all or a portion of the 2024 Bonds, the General Manager (or their designee) is hereby authorized and directed, for and on behalf of the Commission, to execute an Offic ial Statement for the 2024 Bonds (with any supplements thereto, the “Official Statement), in substantially the form of the Preliminary Official Statement, and to cause the delivery of such Official Statement to the purchasers or underwriters of the 2024 Bonds.

Section 7. Bond Purchase Contracts . The proposed forms of Bond Purchase Contracts, submitted to this Commission, are hereby approved. The General Manager is authorized to select and appoint one or more underwriters (each, an “Underwriter,” and collectively, the “Underwriters”) from the Commission’s or the City’s pool of pre -qualified underwriters subject to a competitive procurement process and in accordance with the City’s policies and procedures with respect thereto, subject to the limits on Underwriters’ compe nsation set forth below. The General Manager is hereby authorized and directed, for and on behalf of and in the name of the Commission, to sell in one or more negotiated sales with such Underwriter or Underwriters, the

2024 Bonds in such aggregate principa l amount as the General Manager may determine, subject to the further limitations and conditions hereof. The General Manager is hereby authorized to enter into one or more Bond Purchase Contracts with one or more of the Underwriters, individually or collectively as the General Manager deems appropriate, substantially in the form presented at this meeting, with such changes and additions as the General Manager may approve upon consultation with the City Attorney, such approval to be evidenced conclusively by the execution and delivery of each such Bond Purchase Contract; provided, however, that the total compensation to the Underwriter(s), inclusive of all expense reimbursement, with respect to the 2024 Bonds shall not exceed 0.20% of the aggregate par value of the 2024 Bonds to be sold pursuant to the applicable Bond Purchase Contract. The 2024 Bonds sold in such negotiated sale shall be delivered to the Underwriters upon payment of the purchase price agreed upon in the applicable Bond Purchase Contract. The Secretary of the Commission is directed to file copies of said forms of Bond Purchase Contracts with the minutes of this meeting.

Section 8. Continuing Disclosure Certificates . The proposed form of the Continuing Disclosure Certificates, submitted to this Commission, is hereby approved. The General Manager (or their designee) is hereby authorized and directed to execute Continuing Disclosure Certificates substantially in the form submitted to this Commission, with such additions, changes and corrections thereto as the General Manager (or their designee) shall approve with the advice of the City Attorney, such approval to be conclusively evidenced by the execution and delivery of such Continuing Disclosure Certificates. The Secretary of the Commission is directed to file a copy of said form of Continuing Disclosure Certificates with the minutes of this meeting.

Section 9. Proposition P. Pursuant to Proposition P approved by the voters of the City in November 2002, this Resolution and the 2024 Bonds are subject to, and incorporate by reference, the Proposition P Requirements. Pursuant to the Proposition P Requirements, to the extent permitted by law, one-twentieth of one percent (0.05%) of the gross proceeds from the issuance or sale of new money public utility revenue bonds shall be deposited in a fund established by the Controller’s Office and appropriated by the Board at the direction of the Public Utilities Revenue Bond Oversight Committee established by Proposition P Requirements to cover the costs of said committee.

Section 10. Allocation. The Commission will make a reimbursement allocation, which is a written allocation by the Commission that evidences the Commission’s use of proceeds of the 2024 Bonds to reimburse Preliminary Expenditures.

Section 11. General Authority. The General Manager, the Deputy General Manager and Chief Operating Officer, the Chief Financial Officer and Assistant General Manager, Business Services, and the Deputy Chief Financial Officer of the Commission and the officers of the City are hereby authorized and directed, each actin g alone, for and in the name and on behalf of this Commission, to execute and deliver any and all documents, certificates and representations, including, but not limited to, signature certificates, no-litigation certificates, tax certificates, letters of representation relating to book-entry registration, custody agreements, filing agent agreements, and certificates concerning the contents of the Official Statement and the Preliminary Official Statement, to contract for municipal bond insurance for all or a portion of the 2024 Bonds if determined by the General Manager, with the advice of the Municipal Advisors, to be beneficial to the Commission, to contract for one or more surety bonds or insurance policies for the debt

service reserves, if any, for the 2024 Bonds if determined by the General Manager, with the advice of the Municipal Advisors, to be beneficial to the Commission, to designate all or a portion of the 2024 Bonds as “green bonds” (if applicable), to designate any portion of the principal of the 2024 Bonds, including but not limited to the principal of the 2024 Taxable Bonds issued to finance the BDFP, as Excluded Principal (as defined in the Indenture), to do any and all things and take any and all actions which may be necessary or advisable, in their discretion, to effectuate the issuance and sale of the 2024 Bonds, the financing or refinancing of the capital projects benefiting the Enterprise, the retirement of commercial paper, the refunding of the outstanding Enterprise revenue bonds with the proceeds of the 2024 Bonds, as applicable, and the other actions the Commission has approved in this Resolution. Furthermore, if determined by the General Manager, with the advice of the Municipal Advisors, to be beneficial to the Commission, the Commission is authorized to provide for the execution and delivery, as applicable, of one or more additional supplemental indenture(s), one or more additional preliminary official statement(s) and official statement(s), one or more additional escrow agreement(s), one or more additional bond purchase contract(s) and one or more additional continuing disclosure certificate(s), at such time(s) as the Commission may determine, for the purposes set forth herein and subject to the limitations set forth herein. The General Manager (or their designee) is authorized to delegate any of the responsibilities or duties set forth in this Resolution to the Deputy General Manager and Chief Operating Officer, the Chief Financial Officer and Assistant General Manager, Business Services, or the Deputy Chief Financial Officer, of the Commission.

Section 12. SB 450 Compliance . The Commission acknowledges that the good faith estimates required by Section 5852.1 of the California Government Code are disclosed in the staff report and are available to the public at the meeting at which this Resolution is approved.

Section 13. Ratification. All actions heretofore taken by the officials, employees and agents of the Commission with respect to the authorization, sale and issuance of the 2024 Bonds are hereby approved, confirmed and ratified; and be it
FURTHER RESOLVED, this resolution shall take effect from and after its adoption.

I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting on June 25, 2024.

Secretary, Public Utilities Commission

OH&S DRAFT – Distributed 06/18/24
This Preliminary Official Statement and the information contained herein are subject to completion and amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of thes e securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qu alification under the securities laws of such jurisdiction.

PRELIMINARY OFFICIAL STATEMENT DATED JULY __, 2024

NEW ISSUE – Book-Entry Only

Ratings:

Moody’s: “__”
S&P: “__”
See “RATINGS.”
In the opinion of Norton Rose Fulbright US LLP , San Francisco, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming compliance with certain covenants in the documents pertaining to the Tax -Exempt Bonds and requirements of the Internal Revenue Code of 1986, as described herein, interest on the T ax-Exempt Bonds is not included in the gross income of the owners thereof for federal income tax purposes . In the further opinion of Bond Counsel, interest on the Tax -Exempt Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax on individuals . Bond Counsel is also of the opinion that, under existing law, interest on the 2024ABCD Bonds is exempt from personal income taxes of the State of California . Bond Counsel expresses no opinion with respect to the exclusion from gross income for federal income tax purposes of the interest on the Taxable Bonds. Such interest is not intended to be excluded from gross income for federal income tax purposes. See “TAX MATTERS” herein.

$__________*
Public Utilities Commission of the
City and County of San Francisco
Wastewater Revenue Bonds
$__________*
2024 Series A
(SSIP) (Green Bonds)
(Federally Taxable)
$__________*
2024 Series B
(Non-SSIP)
(Federally Taxable)
$__________*
2024 Series C
(SSIP) (Green Bonds)
$__________*
2024 Series D
(Non-SSIP)

Dated: Date of Delivery Due: As shown on inside front cover This cover page contains certain information for quick reference only. It is not intended to be a summary of the security or terms of this issue. Investors are instructed to read the entire Official Statement, including the appendices hereto, to obtain information essential to making an informed investment decision.

General. This Official Statement provides information regarding the above-captioned bonds (collectively, the “ 2024ABCD Bonds ”) of the Public Utilities Commission of the City and County of San Francisco (the “SFPUC”). Capitalized terms not otherwise defined on this cover shall have the meanings ascribed to such terms herein.

Authority for Issuance . The SFPUC is issuing the 2024ABCD Bonds pursuant to authority granted by the Charter of the City and County of San Francisco (the “ City”), under Proposition E, approved by San Francisco voters on November 5, 2002. The 2024ABCD Bonds will be issued under supplemental indentures that supplement the Indenture, dated as of January 1, 2003 (as amended and supplemented, the “Indenture”), by and between the SFPUC and U.S. Bank Trust Company, National Association, as successor to U.S. Bank National Association, as trustee (the “Trustee”). See “SECURITY FOR THE BONDS.” All bonds, notes and other obligations of the SFPUC issued and outstanding at any given time under the Indenture, including the 2024ABCD Bonds, and Parity Loans as the context requires, are referred to collectively in this Official Statement as the “Bonds.” Purpose. The 2024ABCD Bonds are being issued to finance certain capital projects benefiting the Wastewater Enterprise, including from the Sewer System Improvemen t Program (the “ SSIP”), to retire tax -exempt Commercial Paper Notes issued to finance certain capital projects benefiting the Wastewater Enterprise, including from the SSIP, to defease a portion of the SFPUC ’s outstanding Bonds , to fund capitalized interest with respect to the 2024A BCD Bonds through April 1, 2026*, and to pay the costs of issuance of the 2024A BCD Bonds. See “PLAN OF FINANCE, ” “ESTIMATED SOURCES AND USES OF FUNDS ,” “GREEN BONDS DESIGNATION AND CLIMATE CERTIFICATION” and “WASTEWATER ENTERPRISE CAPITAL PROGRAM.” Denominations and Interest . The 2024ABCD Bonds will be available in denominations of $5,000 or any integral multiple thereof and will mature in the years and amounts and accrue interest from their date of delivery at the rates set forth on the inside cover pages of this Official Statement. Interest on the 2024ABCD Bonds is payable semiannually on April 1 and October 1 of each year, commencing on October 1, 2024.

See “THE 2024ABCD BONDS.”
Book-Entry Only. The 2024ABCD Bonds will be issued as fully registered bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, New York, and will be available to ultimate purchasers (the “ Beneficial Owners”) under the book-entry only system maintained by DTC. Beneficial Owners will not receive physical certificates representing their interests in the 2024ABCD Bonds. The principal of, premium, if any, and interest on the 2024ABCD Bonds are payable to DTC by the Trustee, and, so long as

* Preliminary, subject to change.

DTC is acting as securities depository for the 2024ABCD Bond s, disbursements of such payments to DTC Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC Participants. See “THE 2024ABCD BONDS.” Redemption. The 2024ABCD Bonds are subject to redemption prior to their stated maturities as described herein. See “THE 2024ABCD BONDS – Redemption.”
Security. Under the Indenture, the SFPUC has irrevocably pledged the Net Revenues of the Wastewater Enterprise to the punctual payment of principal of, premium, if any, and interest on the Bonds, which consist of any parity revenue bonds, notes and other obligations issued under the Indenture, including the 2024ABCD Bonds, and Parity Loans, subject to the allocation of funds provided in the Indenture. The 2024ABCD Bonds are payable on a parity with certain Outstanding Bonds previously issued by the SFPUC under the In denture and certain Parity Loans.

No Reserve Account will be established for the 2024ABCD Bonds. See “SECURITY FOR THE BONDS.” Limited Obligation. The SFPUC is not obligated to pay the principal of, premium, if any, or interest on the Bonds from any source of funds other than Net Revenues of the Wastewater Enterprise. The SFPUC has no taxing power. The General Fund of the City is not liable for the payment of the principal of, premium, if any, or interest on the Bonds, and neither the credit nor the taxing power of the City is pledged to the payment of the principal of, premium, if any, or interest on the Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien, or encumbrance upon, any of the property of the City or of the SFPUC o r any of its income or receipts, except Net Revenues of the Wastewater Enterprise. See “SECURITY FOR THE BONDS.” The 2024ABCD Bonds are offered when, as and if issued by the SFPUC and received by the Underwriters, subject to the approval of validity by Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel to the SFPUC, and to certain other conditions. Certain matters will be passed upon for the SFPUC and the City by Orrick, Herrington & Sutcliffe LLP, San Francisco, California, Disclosure Counsel, and by the City Attorney of the City and County of San Francisco. Montague DeRose and Associates, LLC, Walnut Creek, California, and Backstrom McCarley Berry & Co., LLC, San Francisco, California, Co -Municipal Advisors to the SFPUC, assisted in the structuring of this financing.

Certain matters will be passed upon for the Underwriters by Hawkins Delafield & Wood LLP, San Francisco , California. It is expected that the 2024ABCD Bonds in fully registered form will be available for delivery in book -entry form through the facilities of DTC on or about July __, 2024*.

BofA Securities Morgan Stanley Morgan Stanley BofA Securities J.P. Morgan Jefferies J.P. Morgan Jefferies
Ramirez & Co., Inc. Siebert Williams Shank & Co., LLC Ramirez & Co., Inc. Siebert Williams Shank & Co., LLC (Underwriters for the 2024AB Bonds) (Underwriters for the 2024CD Bonds)

The date of this Official Statement is __________, 2024.

MATURITY SCHEDULES*
Wastewater Revenue Bonds
2024 Series A (SSIP) (Green Bonds) (Federally Taxable)
Maturity
(October 1) Principal Amount Interest Rate Price†
CUSIP‡
Base Number
79768H

Wastewater Revenue Bonds
2024 Series B (Non-SSIP) (Federally Taxable)
$__________ Serial Bonds
Maturity
(October 1) Principal Amount Interest Rate Price†
CUSIP‡
Base Number
79768H

* Preliminary, subject to change.
† Reoffering prices have been provided by the 2024AB Underwriters. See “UNDERWRITING – 2024AB Bonds.” ‡ CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, which is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. This data is not intended to create a database and does not serve in any w ay as a substitute for the CUSIP Global Services data base. Neither the SFPUC nor the 2024AB Underwriters assume any responsibility for the accuracy of the CUSIP data.

MATURITY SCHEDULES* (CONTINUED)
Wastewater Revenue Bonds
2024 Series C (SSIP) (Green Bonds)
$__________ Serial Bonds
Maturity
(October 1) Principal Amount Interest Rate Yield†
CUSIP‡
Base Number
79768H

$__________ _____% Term Bonds due October 1, 20__ Yield† ______ CUSIP‡ 79768H ___ $__________ _____% Term Bonds due October 1, 20__ Yield† ______ CUSIP‡ 79768H ___ Wastewater Revenue Bonds
2024 Series D (Non-SSIP)
$__________ Serial Bonds
Maturity
(October 1) Principal Amount Interest Rate Yield†
CUSIP‡
Base Number
79768H

$__________ _____% Term Bonds due October 1, 20__ Yield† ______ CUSIP‡ 79768H ___ $__________ _____% Term Bonds due October 1, 20__ Yield† ______ CUSIP‡ 79768H ___

* Preliminary, subject to change.
† Reoffering yields have been provided by the 2024CD Underwriters. See “UNDERWRITING – 2024CD Bonds.” ‡ CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, which is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Global Services data base. Neither the SFPUC nor the 2024 CD Underwriters assume any responsibility for the accuracy of the CUSIP data.

SFPUC WASTEWATER ENTERPRISE AND MAJOR FACILITIES

Figure 1-1 – SFPUC Wastewater Enterprise and Major Facilities (Not to Scale) The SFPUC Wastewater Enterprise operates and maintains the City ’s combined sewer system, which collects and treats both sewage and stormwater. The map in Figure 1- 1 shows the location of key facilities (as described below) owned by the City and under the jurisdiction of the SFPUC and the urban watershed boundaries which encompass the major drainage areas of San Francisco.

The system consists of approximately 1,0 00 miles of main sewer lines that collect sanitary sewage from homes and businesses and s tormwater runoff; large transport/storage box facilities; 29 pump stations that transport sewage and stormwater; and two all -weather treatment plants and one wet -weather treatment facility that discharge treated water into the San Francisco Bay and Pacific Ocean. San Francisco has eight distinct urban watersheds: five on the Bayside (North Shore; Channel; Islais; Sunnydale; and Yosemite) and three on the Westside (Richmond; Sunset; and Lake Merced). The all-weather treatment plants and wet-weather facility treat sewage and stormwater based on whether the collection point is located on the Bayside or the Westside. The Oceanside Water Pollution Control Plant is not connected to the Bayside tre atment systems, and the Southeast Water Pollution Control Plant and North Point Wet Weather Facility are not connected to the Westside treatment system. See “THE WASTEWATER ENTERPRISE.”
The Bonds are not secured by a legal or equitable pledge of, or charge , lien or encumbrance upon, any of the property of the City or of the SFPUC or any of its income or receipts, except the Net Revenues of the Wastewater Enterprise. See “SECURITY FOR THE BONDS.”

2 GENERAL INFORMATION
No dealer, broker, salesperson or other person has been authorized by the SFPUC to give any information or to make any representation other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the SFPUC.

This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the 2024ABCD Bonds, by any person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the initial purchasers of the 2024ABCD Bonds. Any statement made in this Official Statement involving any forecast or matter of estimates or opinion, whethe r or not expressly so stated, is intended solely as such and not as a representation of fact.

The information set forth herein other than that provided by the SFPUC, although obtained from sources which are believed to be reliable, is not guaranteed as to accuracy or completeness. The information and expressions of opinion herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there h as been no change in the affairs of the SFPUC or the City since the date hereof.

The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in ac cordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.

The City maintains a website at https://www.sf.gov/ and the SFPUC maintains a website at https://www.sfpuc.gov/. The City and the SFPUC also maintain social media accounts . In addition, certain information and reports found on other websites and other information and reports are referred to in this Official Statement. The information and reports available on such websites, social media accounts and the other referenced information and reports, are not incorporated by reference into this Official Statement and should not be relied upon in making an investment in the 2024ABCD Bonds.

The issuance and sale of the 2024ABCD Bonds have not been registered under the Securities Act of 1933 in reliance upon the exemption provided thereunder by Section 3(a)(2) for the issuance and sale of municipal securities.

This Official Statement is delivered for use in connection with the issuance, sale and delivery of the 2024ABCD Bonds and may not be reproduced or used, in whole or in part, for any other purpose.

FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS CONTAINED IN THIS OFFICIAL STATEMENT REFLECT NOT HISTORICAL FACTS BUT FORECASTS AND “ FO RWARD-LOOKING STATEMENTS.” ALL FORW ARD-

LOOKING STATEMENTS ARE PREDICTIONS AND ARE SUBJECT TO KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES. NO ASSURANCE CAN BE GIVEN THAT THE FUTURE RESULTS DISCUSSED

HEREIN WILL BE ACHIEVED, AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE FORECASTS DESCRIBED HEREIN. IN THIS RESPECT, THE WORDS “ESTIMATE,” “PROJECT,” “ANTICIPATE,” “EXPECT,” “INTEND,” “BELIEVE” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD -LOOKING STATEMENTS. ALL PROJECTIONS, FORECASTS, ASSUMPTIONS,

EXPRESSIONS OF OPINIONS, ESTIMATES AND OTHER FORWARD- LOOKING STATEMENTS ARE

EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STAT EMENTS SET FORTH IN THIS OFFICIAL STATEMENT. GIVEN THEIR UNCERTAINTY , INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH STATEMENTS.

iii

SAN FRANCISCO PUBLIC UTILITIES COMMISSION
Tim Paulson, President
Anthony Rivera, Vice President
Newsha Ajami, Commissioner
Kate H. Stacy, Commissioner

PUBLIC UTILITIES COMMISSION OFFICIALS
Dennis J. Herrera, General Manager
Ronald P. Flynn, Deputy General Manager and Chief Operating Officer Nancy L. Hom, Assistant General Manager, Business Services and Chief Financial Officer Joel Prather, Assistant General Manager, Wastewater Enterprise Masood Ordikhani, Assistant General Manager, External Affairs Barbara Hale, Assistant General Manager, Power Enterprise Stephen Robinson, Assistant General Manager, Infrastructure Division Steven R. Ritchie, Assistant General Manager, Water Enterprise

CITY AND COUNTY OF SAN FRANCISCO
MAYOR
London Breed

BOARD OF SUPERVISORS
Aaron Peskin, Board President, District 3
Connie Chan, District 1 Dean Preston, District 5
Matt Dorsey, District 6 Hillary Ronen, District 9
Joel Engardio, District 4 Ahsha Safaí, District 11
Rafael Mandelman, District 8 Catherine Stefani, District 2 Myrna Melgar, District 7 Shamann Walton, District 10

CITY ATTORNEY
David Chiu

CITY TREASURER
José Cisneros

OTHER CITY AND COUNTY OFFICIALS
Greg Wagner, Controller
Carmen Chu, City Administrator

SPECIAL SERVICES

Bond Counsel
Norton Rose Fulbright US LLP
San Francisco, California
Co-Municipal Advisors
Montague DeRose and Associates, LLC
Walnut Creek, California
Disclosure Counsel
Orrick, Herrington & Sutcliffe LLP
San Francisco, California
Backstrom McCarley Berry & Co., LLC
San Francisco, California

Trustee Verification Agent
U.S. Bank Trust Company, National Association
San Francisco, California
__________

TABLE OF CONTENTS
Page Page
iv
INTRODUCTION .............................................................. 1 General ........................................................................... 1 Authority for Issuance .................................................... 1 Purpose .......................................................................... 2 The SFPUC and the Wastewater Enterprise ................... 2 Security for the 2024ABCD Bonds ................................ 2 No Reserve Account for 2024ABCD Bonds .................. 3 Outstanding and Future Parity Bonds and Other
Indebtedness.............................................................. 3 Risk Factors ................................................................... 4 Continuing Disclosure .................................................... 4 Other Matters ................................................................. 4 THE 2024ABCD BONDS .................................................. 5 General ........................................................................... 5 Securities Depository and Book-Entry System .............. 5 Redemption .................................................................... 5 Defeasance ..................................................................... 9 PLAN OF FINANCE........................................................ 10 General ......................................................................... 10 Refunded Bonds ........................................................... 10 Escrow Fund ................................................................ 11 ESTIMATED SOURCES AND USES OF FUNDS ......... 12

GREEN BONDS DESIGNATION AND CLIMATE
CERTIFICATION .................................................. 13 Designation as Green Bonds ........................................ 13 Certification by the Climate Bonds Initiative ............... 13 United Nations Sustainable Development Goals.......... 14 Use of Proceeds ............................................................ 14 Process for Project Evaluation and Selection ............... 15 Management of Proceeds ............................................. 16 Green Bond Reporting ................................................. 16 SECURITY FOR THE BONDS ....................................... 17 Pledge of Net Revenues ............................................... 17 Flow of Funds .............................................................. 18 Rate Covenants ............................................................ 19 No Reserve Account for 2024ABCD Bonds ................ 21 Additional Series of Bonds .......................................... 21 Additional Parity Loans ............................................... 23 Refunding Bonds ......................................................... 23 Subordinate Obligations; Obligations Not Payable
from Revenues ........................................................ 24 Investments .................................................................. 24 OBLIGATIONS PAYABLE FROM NET REVENUES ... 24
Authority for Issuance of Revenue Bonds and Other
Obligations Payable from Net Revenues ................. 24 Outstanding Parity Revenue Bonds .............................. 25 Additional Bonds ......................................................... 26 Parity Loans ................................................................. 26 Water Infrastructure Finance and Innovation Act
Loans....................................................................... 28 Contingent Payment Obligations ................................. 31 Subordinate Debt and Interim Funding Program ......... 31 Other Subordinate Obligations Payable from Net
Revenues ................................................................. 32 Revenue Bond Oversight Committee ........................... 32 Debt Service Requirements .......................................... 32 THE CITY AND COUNTY OF SAN FRANCISCO ........ 34
THE PUBLIC UTILITIES COMMISSION ..................... 36 General ......................................................................... 36 Organization, Purposes and Powers ............................. 36 Commission Members ................................................. 37 Management ................................................................ 38 Ongoing Investigations ................................................ 39 Employee Relations ..................................................... 40 Employee Benefit Plans............................................... 42 THE WASTEWA TER ENTERPRISE .............................. 46 Background and History .............................................. 46 Service Area ................................................................ 46 Customer Base ............................................................. 47 Combined Sewage and Stormwater System ................ 48 Wastewater Treatment ................................................. 50 System Capacity .......................................................... 52 Current System Demands ............................................ 53 Recent Factors Impacting Wastewater Revenues ......... 54 Projected Future Demand ............................................ 54 WASTEWATER ENTERPRISE CAPITAL PROGRAM . 55
Capital and Financial Planning Process ....................... 55 Sewer System Improvement Program ......................... 55 Renewal and Replacement ........................................... 59 Treasure Island Capital Improvements ........................ 59 Wastewater Facilities and Infrastructure ...................... 60 Environmental Planning Considerations...................... 60 Climate Action Plan ..................................................... 61

FINANCING PLAN FOR WASTEWATER
ENTERPRISE CAPITAL PROGRAM ................. 62
Long Term Financing of Capital Program ................... 62 Interim Funding Program Facilities ............................. 62 Sources and Uses of Funding the Capital Program ...... 62 FINANCIAL OPERATIONS ........................................... 64 General ........................................................................ 64 Wastewater Enterprise Rate Setting ............................. 65 Wastewater Enterprise Rates and Charges ................... 67 Revenues ..................................................................... 74 Operating and Maintenance Expenses ......................... 76 Financial Management Policies ................................... 77 Investment of SFPUC Funds ....................................... 78 Risk Management and Insurance ................................. 79 HISTORICAL OPERATING RESULTS.......................... 81 Summary of Historical Operating Results and Debt
Service Coverage .................................................... 81 PROJECTED OPERATING RESULTS ........................... 83 Assumptions Used in Projections ................................ 85 RISK FACTORS .............................................................. 86 General ........................................................................ 86 Limited Obligation ...................................................... 86 No Reserve Account .................................................... 86 WIFIA Loan Agreements ............................................. 87 Interim Funding Program Facilities ............................. 87 Risks Related to Net Revenues .................................... 87 Limitations on Rate Setting and Challenge to
Established Rates .................................................... 88 Initiative, Referendum and Charter Amendments
and Future Legislation ............................................ 88 Risks Related to Wastewater Enterprise Facilities
and Operation ......................................................... 88 Cost of Capital Program Projects; Timely
Completion of Capital Program Projects ................ 90 Construction Related Risks ......................................... 91 TABLE OF CONTENTS (Continued)
Page Page

v
Cybersecurity ............................................................... 92 Climate Change, Risk of Sea Level Rise and
Flooding Damage .................................................... 93 Pandemics; COVID-19 Pandemic ................................ 96 Green Bonds ................................................................ 96 Inverse Condemnation ................................................. 96 Economic, Political, Social and Environmental
Conditions ............................................................... 97 Bankruptcy ................................................................... 97 Limitations on Remedies.............................................. 98 Loss of Tax Exemption/Risk of Tax Audit of
Municipal Issuers .................................................... 98 Change in Tax Law ...................................................... 98 Failure to Maintain Credit Ratings ............................... 99 Secondary Market ........................................................ 99 Uncertainties of Projections, Forecasts and
Assumptions............................................................ 99 Other Risks .................................................................. 99 REGULATORY MATTERS ........................................... 100 History and Background ............................................ 100 Federal and State Clean Water Act Permits ................ 100 Combined Sewer Overflow Control Policy ................ 101 Stormwater Regulations ............................................. 102 Regulatory Trends ...................................................... 102 Other Regulatory Agencies with Jurisdiction Over
the Wastewater Enterprise ..................................... 104 Other Laws Affecting the Wastewater Enterprise ....... 104

CONSTITUTIONAL, STATUTORY AND CHARTER
LIMITATIONS .................................................... 104 State Law Limitations ................................................ 104 Initiative and Referendum ......................................... 107 Charter Limitations .................................................... 107 Future Charter Amendments ...................................... 108 LITIGATION ................................................................. 108 TAX MATTERS ............................................................. 108 Tax-Exempt Bonds .................................................... 108 Taxable Bonds ............................................................ 110 CERTAIN LEGAL MATTERS ....................................... 113 RATINGS ........................................................................ 114 UNDERWRITING .......................................................... 114 2024AB Bonds ........................................................... 114 2024CD Bonds ........................................................... 115 FINANCIAL STATEMENTS ......................................... 116 CONTINUING DISCLOSURE ...................................... 116 VERIFICATION OF MA THEMA TICAL ACCURACY. 117
CO-MUNICIPAL ADVISORS ........................................ 117 INDEPENDENT PRICING CONSULTANT .................. 117
MISCELLANEOUS........................................................ 118 APPROV AL AND EXECUTION ................................... 119

APPENDIX A SUMMARY OF CERTAIN
PROVISIONS OF THE INDENTURE ................... 1

APPENDIX B SFPUC WASTEWATER ENTERPRISE
FINANCIAL STATEMENTS ................................. 1

APPENDIX C PROPOSED FORM OF OPINION OF
BOND COUNSEL .................................................. 1

APPENDIX D FORM OF CONTINUING
DISCLOSURE CERTIFICATE .............................. 1

APPENDIX E SECURITIES DEPOSITORY AND
THE BOOK-ENTRY SYSTEM .............................. 1

1 OFFICIAL STATEMENT
$__________*
Public Utilities Commission of the
City and County of San Francisco
Wastewater Revenue Bonds
$__________*
2024 Series A
(SSIP) (Green Bonds)
(Federally Taxable)
$__________*
2024 Series B
(Non-SSIP)
(Federally Taxable)
$__________*
2024 Series C
(SSIP) (Green Bonds)
$__________*
2024 Series D
(Non-SSIP)

INTRODUCTION
This Introduction is qualified in its entirety by reference to the more detailed information included and referred to elsewhere in this Official Statement. The offering of the hereinafter defined 2024ABCD Bonds to potential investors is made only by means of the entire Official Statement. Capitalized term s used in this Introduction and not otherwise defined have the respective meanings assigned to them elsewhere in this Official Statement, including “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.” General
This Official Statement, including th e cover page s and Appendices hereto, is provided to furnish certain information in connection with the offering by the Public Utilities Commission of the City and County of San Francisco (the “SFPUC”) of its Wastewater Revenue Bonds, 2024 Series A (SSIP) (Green Bonds) (Federally Taxable) (the “ 2024A Bonds”), 2024 Series B (Non -SSIP) (Federally Taxable) (the “ 2024B Bonds” and, together with the 2024A Bonds, the “ 2024AB Bonds” or the “ Taxable Bonds”), 2024 Serie s C (SSIP) (Green Bonds) (the “2024C Bonds ”), and 2024 Series D (Non- SSIP) (the “2024D Bonds ” and, together with the 2024C Bonds, the “2024CD Bonds” or the “ Ta x-Exempt Bonds” and, together with the 2024AB Bonds, the “ 2024ABCD Bonds”).

All bonds, notes and other obligations of the SFPUC issued and outstanding at any given time under the Indenture (as defined herein), including the 2024ABCD Bonds and the Parity Loans (as defined herein) as the context requires, are referred to collectively in this Official Statement as the “Bonds.” The SFPUC anticipates that it will sell the 2024AB Bonds and the 2024CD Bonds on different dates but will issue the 2024AB Bonds and the 2024CD Bonds on the same date . The sale and issuance of the 2024AB Bonds is not contingent upon the sale and issuance of the 2024 CD Bonds, and the sale and issuance of the 2024CD Bonds is not contingent upon the sale and issuance of the 2024AB Bonds. The size, timing and structure of the anticipated transactions remain subject to mark et conditions and the SFPUC reserves the right to change, modify or cancel its plans as it deems appropriate.

Authority for Issuance
The SFPUC is issuing the 2024ABCD Bonds pursuant to authority granted by the Charter (the “ Charter”) of the City and County of San Francisco (the “ City”), under Proposition E, approved by San Francisco voters on November 5, 2002 (“Proposition E”).

The 2024A Bonds will be issued under a Seventeenth Supplemental Indenture, dated as of July 1, 2024 (the “Seventeenth Supplemental Indenture ”), by and between the SFPUC and U.S. Bank Trust Company, National Association, as successor to U.S. Bank National Association, as trustee (the “ Trustee”). The 2024B Bonds, 2024C Bonds and 2024D Bonds will be issued under an Eighteenth Supplementa l Indenture, dated as of July 1, 2024 (the “Eighteenth Supplemental Indenture ”), by and between the SFPUC and the Trustee. The Seventeenth

* Preliminary, subject to change.

2 Supplemental Indenture and Eighteenth Supplemental Indenture supplement the Indenture, dated as of January 1, 2003 (the “Original Indenture” and, as amended and supplemented, including as supplemented by the Seventeenth Supplemental Indenture and Eighteenth Supplemental Indenture, the “ Indenture”), by and between the SFPUC and the Trustee.

The 2024ABCD Bonds are being issued pursuant to Ordinance No. 173- 20, adopted by the Board of Supervisors of the City (the “ Board of Supervisors ”) on September 29, 2020, Ordinance No. 128- 21, adopted by the Board of Supervisors on July 27, 2021, Ordinance No. 110- 22, adopted by the Board of Supervisors on June 14, 2022, and Ordinance No. 1 81-23, adopted by the Board of Supervisors on July 25, 2023, and under a resolution adopted by the SFPUC governing body (the “Commission”) on June 25, 2024.

See “OBLIGATIONS PAYABLE FROM NET REV ENUES – Authority for Issuance of Revenue Bonds and Other Obligations Payable from Net Revenues.”
Purpose
The 2024ABCD Bonds are being issued to finance certain capital projects benefiting the Wastewater Enterprise, including from the Sewer System Improvem ent Program (the “SSIP”), to retire tax -exempt Commercial Paper Notes issued to finance certain capital projects benefiting the Wastewater Enterprise, including from the SSIP, to defease a portion of the SFPUC ’s outstanding 2018B Bonds (as defined herein) and a portion of the outstanding 2023B Bonds (as defined herein) , to fund capitalized interest with respect to the 2024ABCD Bonds through April 1, 2026*, and to pay the costs of issuance of the 2024ABCD Bonds. The Commercial Paper Notes to be retired with the proceeds of the 2024A, 2024C Bonds and 2024D Bonds will be paid within 90 days of the issuance of the 2024A Bonds, 2024C Bonds and 2024D Bonds, respectively. See “PLAN OF FINANCE,” “ESTIMATED SOURCES AND USES OF FUNDS, ” “GREEN BONDS DESIGNATION AND CLIMATE CERTIFICATION ” and “WASTEWATER ENTERPRISE CAPITAL PROGRAM.”
The SFPUC and the Wastewater Enterprise
The SFPUC is a department of the City responsible for the maintenance, operation and development of three utility enterprises. See “THE PUBLIC UTILITIES COMMISSION.” The Wastewater Enterprise provides sewage and stormwater collection, treatment and disposal services to residential, commercial and industrial customers in San Francisco, as well as three municipal sewer service providers that serve residents and businesse s in northern San Mateo County. The Wastewater Enterprise’s services are provided through (i) a combined sewer system that collects sewage and stormwater, (ii) two all- weather treatment plants and one wet -weather treatment facility and (iii) effluent outfa lls to the San Francisco Bay and Pacific Ocean. See “THE WASTEWATER ENTERPRISE.”
The SFPUC’s Water Enterprise delivers retail water services to San Francisco and wholesale water to users in three other Bay Area counties, and the SFPUC ’s Power Enterprise delivers power, mainly hydroelectric, for City government operations and to other users. See “THE PUBLIC UTILITIES COMMISSION. ” The revenues of the Water Enterprise and the Power Enterprise are not available for, and do not secure, payment of the principal of, premium, if any, or interest on the Bonds, including the 2024ABCD Bonds.

Security for the 2024ABCD Bonds
Under the Indenture, the SFPUC has irrevocably pledged the Net Revenues of the Wastewater Enterprise to the punctual payment of principal of, premium, if any, and interest on the Bonds, which consist of any parity revenue bonds, notes and obligations issued under the Indenture, including the 2024ABC D Bonds, and Parity Loans, subject to the flow of funds contained in the Indenture. The 2024ABCD Bonds and all other Bonds are secured by a parity lien on Net Revenues. Under the Indenture, Parity Loans are treated as “ Bonds” for certain purposes and are therefore secured by a pledge of Net Revenues on a parity with the 2024ABCD Bonds. See “SECURITY FOR THE BONDS” and “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”

3 The Indenture defines “ Net Revenues” as all “Revenues” less all “Operation and Maintenance Costs of the Enterprise” (each as defined herein). Revenues are generated principally from the sewer service charges to customers for the sanitary wastewater and stormwater collection, treatment and disposal services of the Wastewater Enterprise. Wastewater rates are set by the SFPUC, subject to rejection by resolution of the Board of Supervisors.

See “FINANCIAL OPERATIONS – Wastewater Enterprise Rates and Charges.” The SFPUC is not obligated to pay the principal of, premium, if any, or interest on the Bonds from any source of funds other than Net Revenues of the Wastewater Enterprise. The SFPUC has no taxing power.

The General Fund of the City is not liable for the payment of the principal of, premium, if any, or interest on the Bonds, and neither the credit nor the taxing power of the City is pledged to the payment of the principal of, premium, if any, or interest on the Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the pr operty of the City or of the SFPUC or any of its income or receipts, except Net Revenues of the Wastewater Enterprise. See “SECURITY FOR THE BONDS.” No Reserve Account for 2024ABCD Bonds
No Reserve Account will be established for the 2024ABCD Bonds.

Outstanding and Future Parity Bonds and Other Indebtedness Parity Bonds. The SFPUC has 14 series of outstanding parity revenue bonds, issued under the Indenture, in the aggregate principal amount of approximately $3.249 billion as of July 1, 2024. See “OBLIGATIONS PAYABLE FROM NET REVENUES – Outstanding Parity Revenue Bonds.”
The Indenture permits, upon the satisfaction of certain conditions, the issuance of additional bonds secured by a pledge of Net Revenues (the “ Additional Bonds”) on a parity with the Outstanding Bonds and the 2024ABCD Bonds. See “SECURITY FOR THE BONDS – Additional Series of Bonds.” Parity Loans. Under the Indenture, the SFPUC may enter into loan agreements with the State of California (the “State”) and any board, department or agency thereof, or the federal government and any board, department and agency t hereof, to finance certain categories of projects relating to the facilities of the Wastewater Enterprise.

These loans (referred to herein as the “ Parity Loans”) are payable from Net Revenues on a parity with the Bonds.

In accordance with the Fifth Supplem ental Indenture, dated as of September 14, 2017, Parity Loans are treated as “Bonds” for certain purposes under the Indenture. See “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
As of the date of this Official Statement, the SFPUC has enter ed into seven State Revolving Fund (“SRF”) loans with the State for the Wastewater Enterprise. These SRF loans constitute “Parity Loans” under the Indenture.

The maximum aggregate amount that may be disbursed under such existing SRF loans is approximately $400.5 million. The SFPUC has also applied for three additional SRF loans for the Wastewater Enterprise. See “OBLIGATIONS PAYABLE FROM NET REVENUES – Parity Loans ” and “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
WIFIA Bonds. The SFPUC has issued three parity Bonds under the Indenture to evidence its repayment obligation to the United States Environmental Protection Agency (the “ EPA”), acting by and through the Administrator of the EPA (the “ WIFIA Lender ”), under the WIFIA Loan Agreements (as defined and further described herein). The WIFIA Lender has agreed to make (i) the BDFP WIFIA Loan (as defined and further described herein) to the SFPUC in an amount not to exceed $699,242,023 to finance eligible costs of the Biosolids Digester Facilities Project plus certain eligible expenses , (ii) the STPI WIFIA Loan (as defined and further described herein) to the SFPUC in an amount not to exceed $513,861,981 to finance eligible costs of the Southeast Treatment Plant Improvements Project plus certain eligible expenses , and (iii) up to five loans to the SFPUC in an aggregate amount not to exceed $791,337,456 to finance certain Wastewater Enterprise capital improvement projects, including the Project 1 WIFIA Loan (as defined and further des cribed herein) , in an amount not to exceed $369,335,021. The WIFIA Bonds (as defined and further described herein) are payable from and secured by a pledge of Net Revenues on a parity with the Bonds. As of the date of this Official Statement, the SFPUC has made two

4 draws on the BDFP WIFIA Loan and the principal amount of the BDFP WIFIA Bond (as defined herein) is approximately $562,277,529 and one draw on the STPI WIFIA Loan and the principal amount of the S TPI WIFIA Bond (as defined herein) is approximately $352,573,021. See “ OBLIGATIONS PAYABLE FROM NET REVENUES – Water Infrastructure Finance and Innovation Act Loans ” and “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
Risk Factors
Investment in the 2024ABCD Bonds is subject to certain risks that should be considered, in addition to other matters set forth in this Official Statement, in evaluating an investment in the 2024ABCD Bonds. For a general overview of certain risk factors, see “RISK FACTORS.”
Continuing Disclosure
The SFPUC will covenant for the benefit of the Owners and Beneficial Owners of the 2024ABCD Bonds to provide certain financial information and operating data regarding the Wastewater Enterprise not later than March 31 following the end of it s Fiscal Year (presently June 30), beginning on March 31, 2025 , with respect to the report for Fiscal Year 2023-24, and to provide notices of the occurrence of certain enumerated events. These covenants will be made to assist the Underwriters in complying with Rule 15c2 -12(b)(5) of the Securities and Exchange Commission (the “Rule”). See “CONTINUING DISCLOSURE ” and “APPENDIX D – FORM OF CONTINUING DISCLOSURE CERTIFICATE.”
Other Matters
Brief descriptions of the 2024ABCD Bonds, the security and sources of payment for the 2024ABCD Bonds, the SFPUC and the Wastewater Enterprise are provided herein. Such descriptions do not purport to be comprehensive or definitive. Definitions of certain capitalized terms used herein may be foun d in “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE. ” All references made to various documents herein are qualified in their entirety by reference to the forms thereof, all of which are available for inspection at the office of the SFPUC at:

San Francisco Public Utilities Commission
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
Attention: Chief Financial Officer and Assistant General Manager, Business Services (415) 554-3155

5 THE 2024ABCD BONDS
General
The 2024ABCD Bonds will be dated as of their date of delivery and will accrue interest from their date of delivery at the rates per annum set forth on the inside cover pages of this Official Statement. Interest on the 2024ABCD Bonds will be calculated based on a 360 -day year compos ed of twelve 30 -day months. Interest on the 2024ABCD Bonds is payable on April 1 and October 1 each year, commencing October 1, 2024 . The 2024ABCD Bonds will mature on the dates and in the principal amounts set forth on the inside cover pages of this Offic ial Statement. The 2024ABCD Bonds will be issued in fully registered form in denominations of $5,000 or any integral multiple of $5,000. Under the Indenture, the record date with respect to the payment of principal of and interest on the 2024ABCD Bonds is the 15 th day of the month immediately preceding an interest payment date, whether such day is a Business Day.

Securities Depository and Book-Entry System
The 2024ABCD Bonds will be issued in fully registered form, registered in the name of Cede & Co., as nominee for The Depository Trust Company ( “DTC”), New York, New York, as the Owner of the 2024ABCD Bonds. So long as DTC, or its nominee, Cede & Co., is the Owner of the 2024ABCD Bonds, all payments on the 2024ABCD Bonds will be made directly to DTC. Disbursement of such payments to the DTC Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners of the 2024ABCD Bonds will be the responsibility of the DTC Participants. See “APPENDIX E – SECURITIES DEPOSITORY AND THE BOOK-ENTRY SYSTEM.”
Redemption*
Redemption of 2024A Bonds
Optional Redemption of 2024A Bonds. The 2024A Bonds are subject to redemption prior to their stated maturity, at the option of the SFPUC, from and to the extent of any source of available funds, as a whole or in part, on any date on or after October 1, 20__
*, at a redemption price equal to 100% of the principal amount of the 2024A Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. If 2024A Bonds are to be optionally redeemed in part, the SFPUC shall direct the maturities, or portions thereof, to be redeemed, and, if less than all of the 2024A Bonds of a particular maturity are to be redeemed, the 2024A Bonds shall be redeemed pro-rata within any such maturity.

Make-Whole Optional Redemption of 2024A Bonds. Before October 1, 20__, the 2024A Bonds are subject to redemption prior to their respective stated maturity dates either in whole or in part, at the option of the SFPUC, at any time, at a redemption price equal to the greater of (i) 100% of the principal amount thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption. The 2024A Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the SFPUC in its sole discretion. See “– Definitions for Make -Whole Optional Redemption of 2024A Bonds and 2024B Bonds ” below.

Redemption of 2024B Bonds
Optional Redemption of 2024B Bonds. The 2024B Bonds are subject to redemption prior to their stated maturity, at the option of the SFPUC, from and to extent of any source of available funds, as a whole or in part, on any date on or after October 1, 20__
†, at a redemption price equal to 100% of the principal amount of the 2024B Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. If 2024B Bonds are to be optionally redeemed in part, the SFPUC shall direct the maturities, or portions thereof, to be

* Preliminary, subject to change.
† Preliminary, subject to change.

6 redeemed, and, if less than all of the 2024B Bonds of a particular maturity are to be redeemed, the 2024B Bonds shall be redeemed pro-rata within any such maturity.

Make-Whole Optional Redemption of 2024B Bonds. Before October 1, 20__, the 2024B Bonds are subject to redemption prior to their respective stated maturity dates either in whole or in part, at the option of the SFPUC, at any time, at a redemption price equal to the greater of (i) 100% of the principal amou nt thereof or (ii) the Discounted Value thereof, plus in either case, accrued interest thereon to the date of redemption. The 2024B Bonds may be redeemed in any order of maturity and in any principal amount within a maturity as selected by the SFPUC in its sole discretion.

Redemption of 2024C Bonds
Optional Redemption of 2024C Bonds . The 2024C Bonds are subject to redemption prior to their stated maturity, at the option of the SFPUC, from and to extent of any source of available funds, as a whole or in par t, on any date on or after October 1, 20__ *, at a redemption price equal to 100% of the principal amount of the 2024C Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. If 2024C Bonds are to be optionally redeemed in part, the SFPUC shall direct the maturities, or portions thereof, to be redeemed, and, if less than all of the 2024C Bonds of a particular maturity are to be redeemed, the 2024C Bonds shall be redeemed by lot within any such maturity.

Mandatory Sinking Fund Redemption of 2024C Bonds . The 2024C Bonds maturing on October 1, 20__, and payable from the 2024 Series C Sinking Fund Account, are further subject to redemption prior to their stated maturity, from the 2024 Series C Sinking Fund Account, on any October 1 on or after October 1, 20__, pro- rata within any such maturity if less than all of the 2024C Bonds of such maturity and tenor be redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium.

The Trustee, on or before September 30 of each year (commencing on or before September 30, 20__), will deposit in the 2024 Series C Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem or to pay at maturity, as the case may be, the principal of 2024C Term Bonds in the following respective principal amounts on the next succeeding October 1 in each of the following years.

Redemption Date
(October 1) Principal Amount

* Maturity
The Trustee, on or before September 30 of each year (commencing on or before September 30, 20__), will deposit in the 2024 Series C Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem or to pay at maturity, as the case may be, the principal of 2024C Term Bonds in the following respective principal amounts on the next succeeding October 1 in each of the following years.

* Preliminary, subject to change.

7 Redemption Date
(October 1) Principal Amount

* Maturity

Redemption of 2024D Bonds
Optional Redemption of 2024D Bonds . The 2024D Bonds are subject to redemption prior to their stated maturity, at the option of the SFPUC, from and to extent of any source of available funds, as a whole or in part, on any date on or after October 1, 20__*, at a redemption price equal to 100% of the principal amount of the 2024D Bonds to be redeemed, plus accrued interest thereon to the date fixed for redemption, without premium. If 2024D Bonds are to be optionally redee med in part, the SFPUC shall direct the maturities, or portions thereof, to be redeemed, and, if less than all of the 2024D Bonds of a particular maturity are to be redeemed, the 2024D Bonds shall be redeemed by lot within any such maturity.

Mandatory Sinking Fund Redemption of 2024D Bonds . The 2024D Bonds maturing on October 1, 20__, and payable from the 2024 Series D Sinking Fund Account, are further subject to redemption prior to their stated maturity, from the 2024 Series D Sinking Fund Ac count, on any October 1 on or after October 1, 20__, pro -rata within any such maturity if less than all of the 2024D Bonds of such maturity and tenor be redeemed, upon payment of the principal amount thereof and accrued interest thereon to the date fixed for redemption, without premium.

The Trustee, on or before September 30 of each year (commencing on or before September 30, 20__), will deposit in the 2024 Series D Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem or to pay at maturity, as the case may be, the principal of 2024D Term Bonds in the following respective principal amounts on the next succeeding October 1 in each of the following years.

Redemption Date
(October 1) Principal Amount

* Maturity
The Trustee, on or before September 30 of each year (commencing on or before September 30, 20__), will deposit in the 2024 Series D Sinking Fund Account from the Principal Fund moneys in an amount sufficient to call and redeem or to pay at maturity, as the case may be, the principal of 2024D Term Bonds in the following respective principal amounts on the next succeeding October 1 in each of the following years.

8 Redemption Date
(October 1) Principal Amount

* Maturity
Definitions for Make-Whole Optional Redemption of 2024C Bonds and 2024D Bonds “Blended Treasury Yield” means, with respect to a maturity of the 2024C Bonds or a maturity of the 2024D Bonds, as applicable, the yield computed by the SFPUC or the Calculation Agent as the linear interpolation of two Market Treasury Yields is comparable to the interpolated Market Treasury Yield equals the date that corresponds to the remaining average life of t he maturity to be redeemed from the redemption date. The first Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security, or a U.S. Treasury constant maturity with the maturity closest to but no later than the date corresponding to the remaining average life of the 2024C Bonds maturity or the 2024D Bonds maturity, as applicable, to be redeemed. The second Market Treasury Yield shall be the yield on an actively traded U.S. Treasury security or a U.S. Treasury constant maturity wit h the maturity closest to but no earlier than the date corresponding to the remaining average life of the 2024C Bonds maturity or the 2024D Bonds maturity, as applicable, to be redeemed. “Calculation Agent ” means a municipal advisor or other agent selected by the SFPUC to perform the calculations required in connection with the redemption of any 2024C Bonds or 2024D Bonds, as applicable, pursuant to the Indenture.
“Discount Yield” with respect to the 2024C Bonds means, the Blended Treasury Yield, as determi ned by the SFPUC or the Calculation Agent with respect to the 2024C Bonds maturity to be redeemed: (i) plus _____ (__) basis points with respect to the 2024C Bonds maturing in 20__, and (ii) plus _____ (__) basis points with respect to the 2024C Bonds matu ring in 20__. “ Discount Yield ” with respect to the 2024D Bonds means, the Blended Treasury Yield, as determined by the SFPUC or the Calculation Agent with respect to the 2024D Bonds maturity to be redeemed: (i) plus _____ (__) basis points with respect to the 2024D Bonds maturing in 20__, and (ii) plus _____ (__) basis points with respect to the 2024D Bonds maturing in 20__. The Discount Yield will be calculated assuming semi-annual compounding based upon a 360-day year consisting of twelve 30-day months. “Discounted Value” means, with respect to each outstanding maturity of the 2024C Bonds or the 2024D Bonds, as applicable, to be redeemed, the sum as determined by the SFPUC or the Calculation Agent of the amounts obtained by discounting all remaining scheduled payments of principal and interest (exclusive of interest accrued to the date of redemption) on such maturity from their respective scheduled payment dates to the applicable redemption date, at a yield (computed on a semi -annual basis, assuming a 360-d ay year consisting of twelve 30- day months) equal to the applicable Discount Yield.
“Market Treasury Yield ” means that yield, as determined by the SFPUC or the Calculation Agent, assuming semi-annual compounding based upon a 360- day year consisting of twelve 30- day months, which is equal to:
(i) the yield determined using the average of the bid and ask prices for the applicable maturity of an actively traded U.S. Treasury security, reported, as of 11:00 a.m., New York City time, on the Valuation Date on the display designated as “ Page PX1 ” of the Bloomberg Financial Markets Services Screen (or, if not available, any other nationally recognized trading screen reporting on- line intraday trading in U.S. Treasury securities); or
(ii) if the yield described in (i) above is not reported as of such time or the yield reported as of such time is not ascertainable, the most recent yield published for the applicable U.S. Treasury constant

9 maturity from the federal Reserve Statistical Release H.15 Daily Update (or any comparable or successor publication) reported, as of 11:00 a.m., New York City time, on the Valuation Date; or (iii) if the yields described in (i) and (ii) above are not reported as of such time or the yields reported as of such time are not ascertainable, the yield for the applicable maturity of any actively traded U.S. Treasury security shall be based upon the average of yields determined using bid and ask price quotations for such security (after excluding the highest and lowest quotations) as of 3:30 p.m ., New York City time, on the Valuation Date received from no less than five primary dealers in U.S. Government securities selected by the SFPUC.
“Valuation Date” means no less than the third Business Day nor more than the twentieth Business Day preceding the redemption date.

General Redemption Provisions
Selection of 2024C and 2024D Bonds for Redemption . Whenever less than all of the 2024C Bonds or 2024D Bonds of any one maturity and tenor of any Series are called for redemption and such 2024C Bonds or 2024D Bonds are redeemable by lot, the Trustee will select the 2024C Bonds or 2024D Bonds of such maturity and tenor to be redeemed from the Outstanding 2024C Bonds or 2024D Bonds of such maturity and tenor, by lot or by any other manner which the Trustee deems fair and equitable. For purposes of such selection, 2024C Bonds or 2024D Bonds will be deemed to be made up of $5,000 portions of principal and any such portion may be redeemed separately.

Notice of R edemption for 2024ABCD Bond s. Notice of redemption will be mailed by the Trustee at least 30 days but not more than 60 days prior to the redemption date to DTC (so long as the DTC Book- Entry System is used). The actual receipt by the owner of any 2024ABCD Bonds of notice of such redemption is not a condition precedent to redemption, and failure to receive a redemption notice or any defect in a redemption notice will not affect the validity of the proceedings for the redemption of such 2024ABCD Bonds or the cessation of the accrual of interest on the date fixed for such redemption. See “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE – GENERAL REDEMPTION PROVISIONS – Notice of Redemption” and “APPENDIX E – SECURITIES DEPOSITORY AND THE BOOK-ENTRY SYSTEM.”
Rescission of Notice of Redemption for 2024ABCD Bond s. The SFPUC may, at its option, prior to the date fixed for redemption in any notice of redemption of 2024ABCD Bonds, rescind and cancel such notice of redemption by written request to the Trustee and the Trustee will mail notice of such cancellation to the recipients of the notice of redemption being cancelled.

Effect of Redemption for 2024ABCD Bond s. When notice of redemption has been duly given as described above, and moneys for payment of the redemption price are held by the Trustee, the 2024ABCD Bonds so called for redemption will, on the redemption date designated in such notice, become due and payable at the redemption price specified in such notice; and from and after the date so designated, interest on the 2024ABCD Bonds so called for redemption will cease to accrue, those 2024ABCD Bonds will cease to be entitled to any benefit or security under the Indenture, and the Owners of those 2024ABCD Bonds will have no rights in respect thereof except to receive payment of the redemption price thereof. The Trustee will, upon surrender for payment of any of said 2024ABCD Bonds, pay such 2024ABCD Bonds at the redemption price, together with accrued interest thereon. All 2024ABCD Bonds redeemed will be cancelled upon surrender and no 2024ABCD Bonds will be issued in place thereof.

Defeasance
The obligations of the SFPUC and the pledge, lien, covenants and agreements of the SFPUC made or provided for in the Indenture as to any 2024ABCD Bonds will be fully discharged and satisfied and will no longer be deemed outstanding thereunder if certain conditions set forth in the Indenture are satisfied. See “APPENDIX A –

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
– DEFEASANCE.”

10 PLAN OF FINANCE*
General
The 2024A Bonds are being issued to (i) retire approximately $ ___* m illion principal amount of and interest on tax-exempt Commercial Paper Notes issued to finance certain capital projects benefiting the Wastewater Enterprise from the SSIP, (ii) finance certain capital projects benefiting the Wastewater Enterprise from the SSIP, (iii) fund capitalized interest with respect to the 2024A Bonds through April 1, 2026 *, and ( iv) pay the costs of issuance of the 2024A Bonds. The Commercial Paper Notes to be retired with the proceeds of the 2024A Bonds will be paid within 90 days of the issuance of the 2024A Bonds.

The 2024B Bonds are being issued to (i) finance certain capital projects benefiting the Wastewater Enterprise, (i i) fund capitalized interest with respect to the 2024 B Bonds through April 1, 2026 *, (iii) defease a portion of the outstanding 2018B Bonds and a portion of the outstanding 2023B Bonds and (iii) pay the costs of issuance of the 2024B Bonds.

The 2024C Bonds are being issued to (i) retire approximately $___ * million principal amount of and interest on tax-exempt Commercial Paper Notes issued to finance certain capital projects benefiting the Wastewater Enterprise from the SSIP, (ii) finance certain capital projects benefiting the Wastewater Enterprise from the SSIP, (iii) fund capitalized interest with respect to the 2024 C Bonds through April 1, 2026 *, and (iv) pay the costs of
issuance of the 2024C Bonds. The Commercial Paper Notes to be retired with the proceeds of the 2024C Bonds will be paid within 90 days of the issuance of the 2024C Bonds.

The 2024D Bonds are being issued to (i) retire approximately $___ * million principal amount of and interest on tax-exempt Commercial Paper Notes issued to finance certain capital projects benefiting the Wastewater Enterprise, (ii) finance certain capital projects benefiting the Wastewater Enterprise, (iii) fund capitalized interest with respect to the 2024D Bonds through April 1, 2026
*, and (iv) pay the costs of issuance of the 2024D Bonds. The Commercial Paper Notes to be retired with the proceeds of the 2024D Bonds will be paid within 90 days of the issuance of the 2024D Bonds.

See “ESTIMATED SOURCES AND USES OF FUNDS, ” “ GREEN BONDS DESIGNATION AND CLIMATE CERTIFICATION” and “WASTEWATER ENTERPRISE CAPITAL PROGRAM.” Refunded Bonds*
The following tables detail the 2018B Bonds and the 2023B Bonds which may be refunded with proceeds of the 2024B Bonds, as described under “– General.” The 2018B Bonds to be refunded (the “Refunded 2018B Bonds”) and the 2023B Bonds to be refunded (the “Refunded 2023B Bonds ” and, together with the Refunded 2018B Bonds, the “ Refunded Bonds”) will only be determined by the SFPUC at the time that the SFPUC an d the Underwriters for the 2024AB Bonds execute a bond purchase contract for the 2024AB Bonds. Until such time, the series, maturity dates and principal amounts of the Refunded Bonds remain subject to change by the SFPUC in its sole discretion.

Public Utilities Commission of the City and County of San Francisco Wastewater Revenue Bonds, 2018 Series B
Maturity
Outstanding
Principal
Amount Interest Rate
CUSIP
(Base No.
79768H)
Principal
Amount to be
Refunded
Payment or
Redemption
Date
10/01/2026 $ 5,900,000 5.00% EY0 $ 4,000,000 10/01/2026 10/01/2043 57,585,000 5.00 FM5 18,670,000 04/01/2028
Total: $63,485,000 $22,670,000

* Preliminary, subject to change.

11 Public Utilities Commission of the City and County of San Francisco Wastewater Revenue Bonds, 2023 Series B
Maturity
Outstanding
Principal
Amount Interest Rate
CUSIP
(Base No.
79768H)
Principal
Amount to be
Refunded
Payment or
Redemption
Date
10/01/2026 $ 8,000,000 5.00% HP6 $ 8,000,000 10/01/2026 10/01/2037 14,430,000 5.00 JD1 1,620,000 10/01/2032
10/01/2038 10,000,000 4.00 JE9 10,000,000 10/01/2032
10/01/2038 15,575,000 5.00 JF6 15,575,000 10/01/2032
10/01/2039 10,000,000 4.00 JG4 10,000,000 10/01/2032
10/01/2039 16,790,000 5.00 JH2 16,790,000 10/01/2032
10/01/2040 9,065,000 5.00 JJ8 9,065,000 10/01/2032
10/01/2041 6,490,000 5.00 JK5 6,490,000 10/01/2032
10/01/2042 7,025,000 5.00 JL3 7,025,000 10/01/2032
Total: $97,375,000 $84,565,000
Escrow Fund
The Refunded 2018B Bonds were issued pursuant to, and will be defeased in accordance with, the terms of the Original Indenture, as supplemented by the Seventh Supplemental Indenture, dated as of August 1, 2018 (the “Seventh Supplemental Indenture ”), by and between the SFPUC and U.S. Bank Trust Company, National Association, as successor to U.S. Bank National Association, as trustee . The Refunded 2023B Bonds were issued pursuant to, and will be defeased in accordance with, the terms of the Original Indenture, as supplemented by the Fifteenth Supplemental Indenture, dated as of April 1, 2023 (the “ Fifteenth Supplemental Indenture ”), by and between the SFPUC and U.S. Bank Trust Company, National Association, as successor to U.S. Bank National Association, as trustee.

A portion of the proceeds of the 2024B Bonds (the “ Escrow Proceeds”) will be delivered to U.S. Bank Trust Company, National Association, as escrow agent (the “Escrow Agent”), under that certain Escrow Agreement, dated as of July 1, 2024 (the “Escrow Agreement”), by and between the SFPUC and the Escrow Agent. The Escrow Agent will deposit the Escrow Proceeds in accordance with the Escrow Agreement in an irrevocable escrow fun d (the “Escrow Fund”) for the benefit of the owners of the Refunded 2018B Bonds and Refunded 2023B Bonds, to be invested in the Initial Government Securities (as defined in the Escrow Agreement and referred to herein as the “Initial Government Securities ”), with any remaining amounts (if any) held in cash. The Initial Government Securities, together with earnings thereon, plus the amounts held in cash (if any), will be used (i) to provide for the payment of interest on the Refunded 2018B Bonds as such inter est becomes due and payable, the payment of principal of the Refunded 2018B Bonds maturing on October 1, 2026 *, on such date, and the redemption of the
Refunded 2018B Bonds maturing on October 1, 2043 *, on April 1, 2028 * (the “Refunded 2018B Bonds Redemption Date ”), at the redemption price of 100% of the principal amount of such Refunded 2018B Bonds, together with interest accrued thereon to the Refunded 2018B Bonds Redemption Date, and (ii) to provide for the payment of interest on the Refunded 2023B Bonds maturing on October 1, 2026 *, on such date, and the redemption
of the Refunded 2023B Bonds maturing on and after October 1, 2037 *, on October 1, 2032* (the “Refunded 2023B Bonds Redemption Date ”), at the redemption price of 100% of the principal amount of such Refunded 2023B Bonds, together with interest accrued thereon to the Refunded 2023B Bonds Redemption Date.

As a result of the deposit and application of funds as provided in the Escrow Agreement, the Refunded 2018B Bonds will be defeased pursuant to the Original Indenture and the Seventh Supplemental Indenture, and the Refunded 2023B Bonds will be defeased purs uant to the Original Indenture and the Fifteenth Supplemental Indenture, as of the date of issuance of the 2024B Bonds.

* Preliminary, subject to change.

12 Sufficiency of the deposits in the irrevocable Escrow Fund for the purposes described in the previous paragraph will be verified by __________ (the “Verification Agent ”). See “VERIFICATION OF MATHEMATICAL ACCURACY .”

ESTIMATED SOURCES AND USES OF FUNDS
The proceeds of the 2024ABCD Bonds are expected to be applied as follows:

2024A
Bonds
2024B
Bonds
2024C
Bonds
2024D
Bonds
Total
2024ABCD
Bonds
Sources of Funds
Par Amount
Original Issue [Discount/Premium] -- --
Total Sources

Uses of Funds
Retirement of Commercial Paper Notes --
Deposit to Capital Project Fund
Deposit to Escrow Fund(1) -- -- --
Capitalized Interest(2)
Underwriters’ Discount
Costs of Issuance(3)
Total Uses

(1) Represents deposit to the Escrow Fund established under the E scrow Agreement. See “ PLAN OF FINANCE ” and “OBLIGATIONS PAYABLE FROM NET REVENUES – Outstanding Parity Revenue Bonds.” (2) Represents capitalized interest through April 1, 2026*. (3) The costs of issuance include amounts for legal fees, Trustee and Escrow Agent fees, municipal advisor fees, Verification Agent fees, escrow bidding fees, rating agency fees, printing costs, and other costs relating to the issuance of the 2024ABCD Bonds.

13 GREEN BONDS DESIGNATION AND CLIMATE CERTIFICATION
Designation as Green Bonds
The SFPUC is committed to providing sewage and stormwater collection, treatment and disposal services in a manner that values environmental and community interests. San Francisco issued its first climate action plan in 2004. Environmental stewardship is a key element of the SFPUC ’s mission statement and the SFPUC remains prominent in the City ’s most recent climate action plan, released in 2021 and supplemented in 2023 (see “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Climate Action Plan ”). The 2024A Bonds and the 2024C Bonds are being designated by the SFPUC as “ Green Bonds” (the “2024 Green Bonds ”). The purpose of designating such Bonds as “ Green Bonds” is to allow investors to invest directly in notes and bonds that finance the cost of environmentally beneficial projects ( “Green Projects ”). For purposes of such deter mination, the SFPUC considers the projects included in the SSIP to be Green Projects (“SSIP Green Projects ”). See “ PLAN OF FINANCE,” “ESTIMATED SOURCES AND USES OF FUNDS ” and “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Sewer System Improvement Program.”
The Indenture does not restrict the use of proceeds of future issuances of Bonds to the financing of Green Projects and in the future the SFPUC may issue Additional Bonds which are not designated as green bonds or certified by the Climate Bonds Initiative (the “ CBI”). The repayment obligations of the SFPUC with respect to the 2024 Green Bonds are not conditioned on the completion of any particular project or the satisfaction of any condition relating to the status of the 2024 Green Bonds or the c ertification of such bonds by the CBI. The SFPUC assumes no obligation to ensure compliance with any legal or other principles of green bonds, as such principles may evolve over time. See “ SECURITY FOR THE BONDS. ” The terms “ Climate Bond ” and “green bonds” are neither defined in, nor related to the Indenture, and their use herein is for identification purposes only and is not intended to provide or imply that a holder of the 2024 Green is entitled to any additional security other than as provided in the Indenture. The SFPUC has no continuing legal obligation to maintain the Climate Bond certification of the 2024 Green Bonds.

The designation of the 2024 Green Bonds as “ Green Bonds ” does not imply that such obligations are entitled to any particular advantageous treatment under the Internal Revenue Code of 1986 (the “ Code”).

Certification by the Climate Bonds Initiative
The CBI is an international, investor -focused non- profit organization working to focus the global bond market on climate change solutions through the development and promotion of an efficient green bond market. The CBI establishes and manages the Climate Bonds Standard (the “Climate Bonds Standard”).

The 2024 Green Bonds have been certified by the CBI as “Climate Bonds Standard Certified ” based on a pre-issuance verification report from Morningstar Sustainalytics ( “Sustainalytics”), a verifier approved by the Climate Bonds Standard Board and retained by the SFPUC . Sustainalytics has verified that the SFPUC ’s bonds issued to finance and refinance SSIP Green Projects meet the requirements of the Water Climate Bond Standard. The CBI also requires post -issuance verification of compliance as part of the certification process. As such, the SFPUC has provided infor mation concerning prior and anticipated capital project expenditures related to the SSIP (some of which does not appear in this Official Statement) to Sustainalytics. Certification of the 2024 Green Bonds by the CBI essentially reflects the alignment of th e issuance with Climate Bonds Standard v2.1 and the explanation of the significance of this certification may be obtained from the CBI.

The certification of the 2024 Green Bonds as Climate Bonds by the CBI is based solely on the Climate Bonds Standard and does not, and is not intended to, make any representation, warranty, undertaking, express or implied, or give any assurance with respect to any other matter relating to the 2024 Green Bonds or any SSIP Green Project, including but not limited to this Offic ial Statement, the transaction documents, the SFPUC or the management of the SFPUC.

The certification of the 2024 Green Bonds as Climate Bonds by the CBI was addressed solely to the SFPUC and is not a recommendation to any person to purchase, hold or sell the 2024 Green Bonds and such

14 certification does not address the market price or suitability of the 2024 Green Bonds for a particular investor. Each potential purchaser of the 2024 Green Bonds should determine for itself the relevance of this certification. Any purchase of the 2024 Green Bonds should be based upon such investigation that each potential purchaser deems necessary. The certification also does not address the merits of the decision by the SFPUC or any third party to participate in any SSIP Gre en Project and does not express and should not be deemed to be an expression of an opinion as to the SFPUC or any aspect of any SSIP Green Project (including but not limited to the financial viability of any SSIP Green Project) other than with respect to conformance with the Climate Bonds Standard.

In issuing or monitoring, as applicable, the certification, the CBI has assumed and relied upon and will assume and rely upon the fairness, accuracy, reasonableness and completeness in all material respects of t he information supplied or otherwise made available to the CBI. The CBI does not assume or accept any responsibility or liability to any person for independently verifying (and it has not verified) such information or to undertake (and it has not undertak en) any independent evaluation of any SSIP Green Project or the SFPUC. In addition, the CBI does not assume any obligation to conduct (and it has not conducted) any physical inspection of any SSIP Green Project. The certification may only be used with the 2024 Green Bonds and may not be used for any other purpose without the CBI’s prior written consent.

The certification does not, and is not in any way intended to, address the likelihood of timely payment of interest when due on the 2024 Green Bonds and/or the payment of principal at maturity or any other date.

The certification may be withdrawn at any time in the CBI’s sole and absolute discretion and there can be no assurance that such certification will not be withdrawn. The SFPUC has not undertaken to contest any such withdrawal or to provide notice thereof.

The CBI is not a licensed broker -dealer or a nationally recognized statistical ratings organization.

Certification by the CBI is not a recommendation to buy, sell or hold securities, and such certif ication may be subject to revision or withdrawal, including, without limitation, if the SFPUC ’s future capital expenditures from the proceeds of the 2024 Green Bonds vary from the anticipated expenditures reviewed by the CBI. The SFPUC will undertake reasonable efforts to ensure that any adjustment of capital expenditures or other actions taken with respect to the 2024 Green Bonds will not result in revision or withdrawal of the CBI ’s certification; however, there can be no guarantee that such adjustment or other action or a future revision to the CBI ’s criteria for certifying bonds will not result in a withdrawal or revision of the CBI ’s certification. The SFPUC expects to post information reflecting the expenditure of the proceeds of the 2024 Green Bonds on its website. See “ – Green Bond Reporting” below.

United Nations Sustainable Development Goals
Impacts from SSIP projects financed and refinanced by the SFPUC ’s Green Bonds are also aligned with several United Nations Sustainable Development Goals ( “UN S DGs”). By reference to the International Capital Market Association (“ICMA”) “Green, Social and Sustainability Bonds: A High- Level Mapping to the Sustainable Development Goals” (June 2023), the projects financed and refinanced by the 2024 Green Bonds prima rily aim to address the following goals: 3 (Good Health and Well -being), 6 (Clean Water and Sanitation), 7 (Affordable and Clean Energy), 9 (Industry, Innovation and Infrastructure), 11 (Sustainable Cities and Communities), 12 (Responsible Consumption and Production), 13 (Climate Action), 14 (Life Below Water) and 15 (Life on Land). The determination of whether the impacts of a particular SSIP project align with one or more UN SDGs is based on criteria that the SFPUC has deemed to be appropriate and may dif fer from criteria applied by investors. See also “ – Process for Project Evaluation and Selection.”
As promulgated by the ICMA and most recently updated in June 2021, the “ Green Bond Principles ” have four core components (Use of Proceeds, Process for Projec t Evaluation and Selection, Management of Proceeds, and Reporting), each of which are further described below.

Use of Proceeds
A portion of the proceeds of the 2024 Green Bonds will (i) finance certain capital projects benefiting the Wastewater Enterprise from the SSIP and (ii) retire a portion of the tax- exempt Commercial Paper Notes that were

15 used to finance certain capital projects benefiting the Wastewater Enterprise from the SSIP. Such proceeds of the 2024 Green Bonds will be, and proceeds of such tax -exempt Commercial Paper Notes have been, expended on projects the SFPUC considers to be “Green Projects.” Program goals for the SSIP include the following:
• Provide a compliant, reliable, resilient and flexible system responsive to catastrophic events; • Integrate grey and green infrastructure to manage stormwater and minimize flooding; • Provide benefits to impacted communities;
• Modify the system to adapt to climate change;
• Achieve economic and environmental sustainability; and • Maintain ratepayer affordability.

Process for Project Evaluation and Selection
The SSIP was initiated as a citywide investment to upgrade the SFPUC ’s existing infrastructure to ensure a reliable, sustainable, and seismically safe sewer system. As further described under “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Sewer System Improvement Program, ” the highest priority and best -defined projects, which focused on maintaining regulatory compliance, enhancing process reliability and redundancy, implementing pilot green in frastructure projects, improving plant odor control, and replacing existing biosolids and headworks facilities with state -of-the-art technology, were included in the first phase of the SSIP . Other SSIP projects are initiated based on priority, schedule, and affordability, as part of its rolling 10-year capital plan.

General SSIP projects, which align with various UN SDGs, include, but are not limited to, the following:
• Biosolids-Digester Facilities Project. Replace existing, aged, and failing solids handli ng facilities with new state -of-the art biosolids digester facilities (see “ WASTEWATER ENTERPRISE CAPITAL PROGRAM – Sewer System Improvement Program – Program Scope – Treatment Facilities – Biosolids Digester Facilities Project”). (UN SDGs 3, 6, 7, 9, 11, 12, 13) • Central Bayside System Improvements. Enhance collection system. (UN SDGs 3, 6, 9, 11, 13) • Urban Watershed Assessment. Alternatives that balance the use of grey versus green infrastructure for improvements to watershed surf ace drainage and collection system management at each of San Francisco’s eight drainage basins. (UN SDGs 3, 6, 9, 11) • Flood Resilience -Hydraulic. Mitigate flooding during large storms; implement small stormwater capture and conveyance improvements at criti cal flood -prone neighborhoods; improvements to stormwater conveyance. (UN SDGs 3, 6, 9, 11, 13)
• SSIP Program -Wide Management . Programmatic planning work for systemwide infrastructure that identifies and prioritizes the capital improvement needs of the wast ewater system; evaluate the feasibility and cost- effectiveness for the SFPUC to generate bioenergy. (UN SDGs 3, 6, 7, 9, 11, 12, 13)
• Stormwater Management . Enhancing conveyance in the Channel and Islais Creek watersheds to provide reliability and redundancy, and increase capacity to manage storm events. (UN SDGs 3, 6, 9, 11, 13)
• Treatment Plant Improvement. Improving the level of screening and grit removal in existing facilities; condition assessment and rehabilitation of building structures; replacing and integrating a facility-wide distributed control system; seismic retrofitting; replacing mechanical and electrical equipment. (UN SDGs 3, 6, 7, 9, 11, 12, 13)
• Collection System Improvements . Rehabilitating and replacing interceptors, tunnels, pump stations , force mains and transport/storage boxes; rehabilitating combined sewer discharge structures and preventing backflow of bay water through combined sewer discharges due to sea level rise. (UN SDGs 3, 6, 9, 11, 12, 13)
Additional information about the SSIP may be found under “ WASTEWATER ENTERPRISE CAPITAL PROGRAM – Sewer System Improvement Program.”

16 Management of Proceeds
The proceeds of the tax -exempt Commercial Paper Notes to be retired with the proceeds of the 2024 Green Bonds were, and the proceeds of the 2024 Green Bonds to finance certain capital projects benefiting the Wastewater Enterprise from the SSIP are expected to be, expended on projects the SFPUC considers to be “Green Projects. ” Such projects are generally described above under “ – Use of Proceeds. ” The SFPUC records proceeds of its green bonds in separate capital project funds available only to eligible projects. Non -eligible projects cannot access proceeds generated from green bonds.

Green Bond Reporting
The SFPUC will provide post -issuance verification reports by Sustainalytics to the CBI as part of the certification process for the 2024 Green Bonds. In addition, the SFPUC publishes annually a project spending and management of proceeds report (the “ Green Bond Report”) for all outstanding gree n bonds issued by the SFPUC, including those issued to finance and refinance capital projects of the Wastewater Enterprise. The next Green Bond Report will include projects financed and refinanced by proceeds of the 2024 Green Bonds. The post -issuance verification reports and Green Bond Reports will be made available at https://sfpuc. gov/about-us/reports/debt- management-and-disclosure-reports. The information available on such website is not incorporated by reference into this Official Statement and should not be relied upon in making an investment in the 2024 Green Bonds.

17 SECURITY FOR THE BONDS
Pledge of Net Revenues
General. Under the Indenture, the SFPUC has irrevocably pledged the Net Revenues of the Wastewater Enterprise to the punctual payment of principal of, premium, if any, and interest on the Bonds, which consist of any parity revenue bonds, notes and obligations issue d under the Indenture, including the 2024ABCD Bonds, and Parity Loans. This pledge is subject to the flow of funds contained in the Indenture, as described below. See “– Flow of Funds.”
The facilities comprising the Wastewater Enterprise have not been pled ged or mortgaged and do not otherwise secure payment of the Bonds.

Pursuant to Section 5451 of the California Government Code, the pledge of, lien on and security interest in Net Revenues and certain other funds granted by the Indenture is valid and binding in accordance with the terms thereof from the time of issuance of the 2024ABCD Bonds; the Net Revenues and such other funds will be immediately subject to such pledge; and such pledge will constitute a lien and security interest which will immediately attach to such Net Revenues and other funds and will be effective, binding and enforceable against the SFPUC, its successors, purchasers of the Net Revenues, creditors, and all others asserting rights therein to the extent set forth and in accordance with th e terms of the Indenture irrespective of whether those parties have notice of such pledge and without the need for any physical delivery, recordation, filing or other further act. Such pledge, lien and security interest are not subject to the provisions of Article 9 of the California Uniform Commercial Code.

For definitions of capitalized terms used herein and not otherwise defined, see “ APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE – THE INDENTURE – DEFINITIONS; EQUAL SECURITY: CERTIFICATES AND OPINIONS.”
Limited Obligation . THE SFPUC IS NOT OBLIGATED TO PAY THE PRINCIPAL OF, PREMIUM, IF

ANY , OR INTEREST ON THE BONDS EXCEPT FROM NET REVENUES OF THE WASTEWATER ENTERPRISE. THE SFPUC HAS NO TAXING POWER. THE GENERAL FUND OF THE CITY IS NOT

LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY , OR INTEREST ON THE BONDS,

AND NEITHER THE CREDIT NOR THE TAXING POWER OF THE CITY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY , OR INTEREST ON THE BONDS. THE BONDS ARE NOT

SECURED BY A LEGAL OR EQUITABLE PLEDGE OF, OR CHARGE, LIEN, OR ENCUMBRANCE UPON,

ANY OF THE PROPERTY OF THE CITY OR OF THE SFPUC OR ANY OF ITS INCOME OR RECEIPTS, EXCEPT NET REVENUES OF THE WASTEWATER ENTERPRISE.

Wastewater Enterprise. The Indenture defines “ Enterprise” (referred to in this Official Statement as the “Wastewater Enterprise”) as the whole and each and every part of the municipal sanitary waste and stormwater collection, treatment and disposal system and auxiliary or related facilities of the SFPUC, including all of the presently existing system of the SFPUC for the collection, treatment and disposal of sanitary waste and stormwater and all future additions, betterments, and extensions to the system or any part thereof.

Net Revenues. The Indenture defines “Net Revenues” as all Revenues, less all Operation and Maintenance Costs of the Wastewater Enterprise.

The Indenture defines “Revenues” as all gross revenues of the Wastewater Enterprise, including all charges received for and all other income and receipt s derived by the SFPUC from the operation of the Wastewater Enterprise, or arising from the Wastewater Enterprise, including connection and installation charges, but excluding:
(a) any money received by or for the account of the SFPUC from the levy or collecti on of taxes; (b) moneys received from the State of California and the United States of America and required to be deposited in restricted funds;

18 (c) refundable deposits made to establish credit;
(d) advances and contributions made to the SFPUC to be applied to construction; (e) moneys received constituting casualty insurance proceeds with respect to all or any part of the Wastewater Enterprise (which shall be received and disposed of pursuant to the Indenture) and moneys received constituting other insurance proceeds;
(f) moneys received from the sale or disposition of all or any part of the Wastewater Enterprise (which shall be received and disposed of pursuant to the Indenture); (g) moneys received upon the taking by or under the threat of eminent domain of all or any part of the Wastewater Enterprise (which moneys shall be received and disposed of pursuant to the Indenture);
(h) proceeds from Bonds issued by the SFPUC or proceeds from loans or other indebtedness obtained by the SFPUC; and
(i) moneys or securities received by the SFPUC as gifts or grants the use of which is restricted by the donor or grantor.

The term “Revenues” also includes (i) all interest or other income (excluding profits or losses from the sale or disposition of Permitted Investments or other securities owned by or o n behalf of the SFPUC) derived from the deposit or investment of any moneys in any fund or account established under the Indenture (excluding any Rebate Fund and any escrow fund pledged for the payment of defeased bonds) or in any fund or account of the Wa stewater Enterprise and legally available to pay Debt Service, and (ii) any other moneys, proceeds and other amounts that the SFPUC determines should be “Revenues” under the Indenture.

The Indenture defines “Operation and Maintenance Costs of the Enterprise” (referred to in this Official Statement as the “ Operation and Maintenance Costs of the Wastewater Enterprise ”) as the reasonable and necessary costs of operating and maintaining the Wastewater Enterprise, calculated on the basis of generally accepted accounting principles, including (among other things) salaries and wages, fees for services, costs of materials, supplies and fuel, reasonable expenses of management, legal fees, accounting fees, repairs and other expenses necessary to maintain and preserve the Wastewater Enterprise in good repair and working order, and reasonable amounts for administration, overhead, insurance, taxes (if any), and the payment of pension charges and proportionate payments to such compensation and other insurance or o utside reserve funds as the SFPUC may establish or the Board of Supervisors may require with respect to employees of the SFPUC, as provided in the Charter.

However, the term “ Operation and Maintenance Costs of the Wastewater Enterprise” excludes in all cas es (a) depreciation and obsolescence charges or reserves therefor, (b) amortization of intangibles or other bookkeeping entries of a similar nature, (c) costs of capital additions, replacements, betterments, extensions or improvements to the Wastewater Enterprise, which under generally accepted accounting principles are chargeable to a capital account or to a reserve for depreciation, (d) charges for the payment of principal of and interest on any revenue bonds or other indebtedness issued before or after t he date of the Indenture for Wastewater Enterprise purposes and (e) such costs as are scheduled to be paid by the SFPUC from moneys other than Revenues, such moneys to be clearly available for such purpose.

Flow of Funds
The Indenture provides that all Revenues must be paid into the Revenue Fund, which must be maintained in the City treasury. Moneys in the Revenue Fund, including earnings thereon, are required by the Indenture to be applied for the following purposes and only in the following order of prior ity:

19 (a) payment of Operation and Maintenance Costs of the Wastewater Enterprise; (b) payment of Bonds, Parity Loans, Policy Costs and amounts due as reimbursement under any Letter of Credit Agreement, as provided in the Indenture; and (c) any other lawful purpose of the SFPUC.

Net Revenues deposited in the Revenue Fund, as described in (b) above, will be applied to pay interest and principal on the Bonds (which include Parity Loans) and to make deposits to the Bond Reserve Fund if the amounts therein are less than the Required Reserve. See “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
The Indenture defines “ Refundable Credits ” as (a) with respect to a Series of Bonds issued as Build America Bonds under Section 54AA of the Code, the amounts which are payable by the federal government under Section 6431 of the Code, which the SFPUC has elected to receive under Section 54AA(g)(1) of the Code, and (b) with respect to a Series of Bonds issued as Build America Bonds under any other provision of the Code that creates a substantially similar direct-pay subsidy program, the amounts which are payable by the federal government under the applicable provisions of the Code, which the SFPUC has elected to receive under the applicable provisions of the Code.

The Indenture defines “Build America Bonds” as any bonds or other obligations issued as Build America Bonds under Section 54AA of the Code, or under any other provision of the Code that creates a substantially similar direct-pay subsidy program.

The Indenture provides that all of the Refundable Credits received by the SFPUC shall be deposited immediately upon receipt in the Interest Fund, and such Refundable Credits are irrevocably pledged to the punctual payment of the interest on the Bonds issued as Build America Bonds, and the Refundable Credits shall not be used for any other purpose while any of the Bonds issued as Build America Bonds remain Outstanding.

Rate Covenants
Sufficiency of Revenues . The SFPUC has covenanted in the Indenture that it will, to the fullest extent permitted by law, establish, fix and prescribe prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the sanitary waste and stormwater collection, treatment and disposal services and facilities furnished by the Wastewater Enterprise so as to yield Revenues at least sufficient, after making reasonable allowances for contingencies and error in the estimates, to pay the following amounts:
(a) the interest on and principal of the Bonds (which include Parity Loans) as they become due and payable (but not including any interest for which moneys have been deposited in the Interest Fund from the proceeds of any Series of Bonds or from any other source); (b) all other payments required for compliance with the terms of the Indenture and of any Supplemental Indenture providing for the issuance of Additional Bonds pursuant to the Indenture; (c) all other payments to meet any other obligations of the SFPUC which are charges, liens or encumbrances upon, or payable from, Revenues; and
(d) all current Operation and Maintenance Costs of the Wastewater Enterprise (but not including such Operation and Maintenance Costs of the Wastewater Enterprise as are scheduled to be paid by the SFPUC from moneys other than Revenues, such moneys to be clearly available for such purpose).

Debt Service Coverage. In addition to the requirements set forth under “ – Sufficiency of Revenues” above, the Indenture provides that the SFPUC will, to the fullest extent permitted by law, establish, fix, and prescribe, prior to the commencement of each Fiscal Year, rates, fees and charges in connection with the sanitary waste and stormwater collection, trea tment and disposal services and facilities furnished by the Wastewater Enterprise, which

20 are reasonably expected to be at least sufficient to yield during such Fiscal Year Net Revenues (together with any fund balances of the SFPUC which are available for p ayment of Debt Service, but excluding the Bond Reserve Fund), equal to 1.25 times the Annual Debt Service payable in such Fiscal Year.

The SFPUC may make adjustments from time to time in such rates, fees and charges and may make such classification thereof as it deems necessary, but is obligated not to reduce such rates, fees and charges below those in effect unless the Revenues resulting after such reduced rates are put into effect will at all times be sufficient to meet the requirements described in this section, “Rate Covenants.” So long as the SFPUC has complied with its obligations described under “ – Sufficiency of Revenues ” above and the first paragraph under this “ – Debt Service Coverage” subsection, the failure to yield the amount of Revenues as described under “– Sufficiency of Revenues” above, or the failure of Net Revenues to equal 1.25 times Annual Debt Service as set forth in the first paragraph under this “ – Debt Service Coverage” subsection at the end of a Fiscal Year, will not constitute a def ault or an Event of Default under the Indenture so long as the SFPUC has complied with its obligations described under “ – Sufficiency of Revenues” above and the first paragraph under this “– Debt Service Coverage” subsection at the commencement of the succeeding Fiscal Year. “Annual Debt Service ” is defined in the Indenture as the sum of principal and interest on all Outstanding Bonds (including Parity Loans) as computed for the twelve -month period ending June 30 to which reference is made, and calculated by the SFPUC using the following assumptions:
(a) in determining the principal amount due for such twelve -month period ending June 30, payment will (unless a different subsection of this definition applies for purposes of determining principal maturities or amo rtization) be assumed to be made in accordance with the amortization schedule established for such debt, including any Minimum Sinking Fund Account Payments or any scheduled redemption or payment of Bonds on the basis of Accreted Value, and for such purpos e, the redemption payment or payment of Accreted Value will be deemed a principal payment and interest that is compounded and paid as Accreted Value will be deemed due on the scheduled redemption or Payment Date of such Capital Appreciation Bond, but excluding Excluded Principal.
(b) if any Outstanding Bonds constitute Variable Rate Indebtedness, the interest rate will, as of the date of calculation, be: (i) the greater of (a) the average SIFMA rate over the past 3 years times 150% or (b) 4 percent or (ii) if, designated in writing by the SFPUC in the Supplemental Indenture authorizing such Bonds (which the SFPUC must certify, in the case of obligations interest on which is not excluded from gross income for federal income tax purposes under the Code), a fixed rate of interest reasonably determined by the SFPUC for obligations with similar duration, which interest rate has been certified by a Qualified Financial Advisor as reasonable concurrent with the execution and delivery of such Supplemental Indenture.
(c) if Defeasance Obligations have been deposited with and are held by the Trustee or another fiduciary to be used to pay principal and/or interest on specified Bonds, or any amounts have been deposited in the Interest Fund from the proceeds of any Series of Bonds or from any other source to pay interest on such Bonds, then the principal and/or interest to be paid from such Defeasance Obligations or from the earnings thereon, or from such amounts in the Interest Fund, shall be disregarded and not included in calculating Annual Debt Service. (d) in determining the amount of interest coming due during any twelve -month period ending June 30 on any Series of Bonds that are issued as Build America Bonds or obligations issued under any future program similar to Build America Bonds, amounts equal to the Refundable Credits the SFPUC is scheduled to receive during each twelve- month period ending June 30 will be deducted from such interest.
“Excluded Principal ” means each payment of principal of Bonds with a remaining term, on the date of calculation, of not greater than 60 months that the SFPUC intends to pay from the proceeds of Bonds or Parity Loans, other bonds, notes or other obligations of the SFPUC or moneys other than Net Revenues.

21 The SFPUC has determined that the princ ipal of the 2024A Bonds will qualify as “Excluded Principal ” under the Indenture . As a result of this determination, the principal of the 2024A Bonds will be excluded from the calculation of Annual Debt Service for purposes of the rate covenant described a bove and the requirements for issuing Additional Bonds under the Indenture . See “– Debt Service Coverage, ” “– Additional Series of Bonds – Indenture Requirements, ” and “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
Pursuant to federal sequestration legislation passed by Congress in 2011 and 2013, federal subsidy payments for direct pay bonds, including Build America Bonds, have been reduced (by formula) from the original funding subsidy level of 35% of interest costs on direct pay bonds, including Build America Bonds. The current sequestration reduction rate of the federal subsidy payment for Build America Bonds is 5.7% (or a net subsidy level of 33.005% of interest costs on Build America Bonds), which rate will remain in effect through September 30, 2030, unless changed by legislation. Refundable credits sought by the SFPUC for its Build America Bonds have been and are expected to be reduced by this percentage until September 30, 203 1. This reduction has and will increase the SFPUC’s net interest cost. The SFPUC can give no assurance regarding the level of subsidy payments or changes in the sequestration rate, if any, in the future. In Fiscal Years 2021-22 and 2022-23, the SFPUC received approximately $3.5 million and $3.5 million, respectively, in Refundable Credits for the Wastewater Enterprise.

No Reserve Account for 2024ABCD Bonds
The Indenture requires that the Bond Reserve Fund be established with the Trustee and funded in an amount equal to the “ Required Reserve,” if any, applicable to each series of Bonds. If the Required Reserve for a Series of Bonds is greater than zero, the Indenture requires the establishment of a bond reserve account (each, a “Reserve Account”) within the Bond Reserve Fund for such Series of Bonds, and requires the deposit in that bond reserve account of an amount equal to the Required Reserve for the related Series of Bonds.

The Seventeenth Supplemental Indenture and the Eighteenth Supplemental Indenture do not require the establishment of a Reserve Account for the respective 2024ABCD Bond s. The Reserve Account established for the 2010B Bonds (as defined herein) do not secure the 2024ABCD Bond s. No Reserve Account has been established for any other series of Outstanding Bonds. See “OBLIGATIONS PAYABLE FROM NET REVENUES – Outstanding Parity Revenue Bonds.”
Additional Series of Bonds
The Charter and the Indenture authorize the issuance of Additional Bonds payable from Net Revenues on a parity with Outstanding Bonds and the 2024ABCD Bonds, upon satisfaction of the conditions set forth therein.

The SFPUC expects to issue Additional Bonds, which may include Bonds evidencing obligations to repay the WIFIA Lender in connection with additional WIFIA loans, to finance the costs of additional improvements included in the SSIP and other portions of the Wastewater Enterprise ’s capital program. See “FINANCING PLAN FOR WASTEWATER ENTERPRISE CAPITAL PROGRAM ” and “RISK FACTORS – Costs of SSI P Projects; Timely Completion of SSIP Projects.”
Charter Requirements . Under the Charter, the SFPUC may issue revenue bonds (including Additional Bonds) relating to the Wastewater Enterprise without voter approval in the following circumstances, among others:
(a) to issue revenue bonds (including Additional Bonds) approved by an affirmative vote of two- thirds of the members of the Board of Supervisors for the purpose of reconstructing, replacing, expanding, repairing or improving the Wastewater Enterprise or for any other lawful purpose of the Wastewater Enterprise, including the refunding of existing obligations; (b) to issue bonds (including Additional Bonds) approved by an affirmative vote of three -fourths of the members of the Board of Supervisors if the bonds a re to finance buildings, fixtures or equipment which are deemed necessary by the Board of Supervisors to comply with an order of a duly constituted state or federal authority having jurisdiction over the Wastewater Enterprise; and

22 (c) to issue refunding bonds which are expected to result in net debt service savings to the City on a present value basis, calculated as described in the SFPUC ’s Debt Management Policies and Procedures.

The Charter also generally authorizes the SFPUC to issue revenue bonds upon the a pproval of a majority of the voters voting on the proposition at a general or special election.

Notwithstanding any other provision of the Charter or of any ordinance of the City, the Board of Supervisors may, in connection with the issuance of additional bonds as described under paragraph (a) above, take any and all actions necessary to authorize, issue and repay such bonds, including, but not limited to, modifying schedules of rates and charges to provide for the payment and retirement of such bonds, subj ect to the following conditions:
(a) Certification by an independent engineer retained by the SFPUC that:
(1) the projects to be financed by the additional bonds, including the prioritization, cost estimates and scheduling, meet utility standards; and
(2) that estimated net revenue after payment of operating and maintenance expenses will be sufficient to meet debt service coverage and other indenture or resolution requirements, including debt service on the bonds to be issued, and estimated repair and replaceme nt costs.
(b) Certification by the City Planning Department that facilities under the jurisdiction of the SFPUC funded with such bonds will comply with applicable requirements of the California Environmental Quality Act (“CEQA”).

Indenture Requirements. The Indenture provides that Additional Bonds secured on a parity with the Bonds may be issued for any lawful purpose if no Event of Default has occurred and is continuing under the Indenture or any Supplemental Indenture and no event has occurred which, but for the passage of time or the giving of notice, would constitute an Event of Default under the Indenture or any Supplemental Indenture. Prior to the issuance of such Additional Bonds, the SFPUC is required to file with the Trustee, among other documents, the following:
(a) a Certificate of the SFPUC setting forth for each of the next three Fiscal Years estimates of (A) Revenues, (B) Operation and Maintenance Costs of the Enterprise and (3) Net Revenues; and (b) a Certificate of the SFPUC demonstrating that (1) the ratio of (A) Net Revenues for the most recent Fiscal Year for which audited financial statements are available, or any consecutive twelve calendar month period during the eighteen calendar month period prior to the issuance of such additional Series of Bonds, to (B) Annual Debt Service for the current Fiscal Year, calculated as of the date of sale of, and including such additional Series of Bonds, will not be less than 1.25:1; or (2) the ratio of (A) Net Revenues projected by the SFPUC for each of the next three Fiscal Years as determined in the Indenture, and including in such projections amounts projected to be received from any adopted rate increases and fund balances of the SFPUC which are projected to be available for the paym ent of Debt Service (but excluding the Bond Reserve Fund), to (B) Annual Debt Service in each of such three Fiscal Years, calculated as of the date of sale of and including such additional Series of Bonds, will not be less than 1.25:1 in each of such Fisca l Years.

See “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE – THE INDENTURE – DEFINITIONS; EQUAL SECURITY: CERTIFICATES AND OPINIONS” and “– ISSUANCE OF ADDITIONAL SERIES OF BONDS.”
The Indenture provides the SFPUC with flexibility as to the nature and terms of any Additional Bonds issued with a lien and charge on Net Revenues on a parity with the Outstanding Bonds. Such Additional Bonds may:
mature over any period of time; bear interest at a fixed, variable or zero rate; be in any denominatio ns; be in any

23 form (including registered, coupon or book- entry); include or exclude redemption provisions; be subject to optional or mandatory tender for purchase; be sold at such price or prices; be further secured by any separate and additional security; and otherwise include such additional terms and provisions as the SFPUC may determine, consistent with the Indenture and applicable provisions of the Charter.

Additional Parity Loans
Pursuant to the Charter, the SFPUC can incur indebtedness, including additional State and federal loans, without voter approval, but subject to Board of Supervisors ’ approval. In addition, the Indenture permits the SFPUC to enter into Parity Loans or loans on a subordinated lien basis relative to the Bonds, as determined by the SFPUC.

Under the Indenture, the SFPUC may only enter into additional Parity Loans if no Event of Default has occurred and is continuing under the Indenture or any Supplemental Indenture (and no event has occurred which, but for the passage of time or the giving of notice, would constitute an Event of Default under the Indenture or any Supplemental Indenture).

In addition, in connection with the execution and delivery of such Parity Loans, the SFPUC is required to deliver a Certificate to the Trustee setting forth, for each of the next three Fiscal Years after the delivery of the Parity Loans:
(a) the Revenues and Operation and Maintenance Costs of the Wastewater Enterprise and Net Revenues; and
(b) the Annual Debt Service assuming delivery of the Parity Loans; demonstrating that the estimated Net Revenues (together with any fund balances of the SFPUC which are available for Debt Service, but excluding the Bond Reserve Fund), in each of such three Fiscal Years is at least equal to 1.25 times the Annual Debt Service.

Pursuant to the SRF loan program (the “ SRF Loan Program ”), the SFPUC has entered into seven SRF loans that fund certain capital projects of the Wastewater Enterprise with a maximum principal amount authorized to be disbursed thereunder of approximately $4 00.5 million. The SFPUC has applied for three additional SRF loans and plans to apply for additional SRF loans over the next several years to obtain long- term financing for a portion of the SSIP. However, the SFPUC can give no assurance that it will receiv e additional SRF loans. The seven SRF loans constitute “Parity Loans” under the Indenture. The SFPUC may also enter into additional WIFIA loans constituting “Parity Loans.” See “OBLIGATIONS PAYABLE FROM NET REVENUES – Parity Loans” and “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.”
Refunding Bonds
City Charter Requirements. The Charter allows refunding bonds to be issued without voter approval if such refunding results in net debt service savings on a present value basis, calculated as provided by ordinance. The Charter also allows refunding bonds to be issued without voter approval and without satisfying such net debt service savings requirement when approved by a vote of two-thirds of the members of the Board of Supervisors.

Indenture Requirements . The Indenture provides that Additional Bonds may be issued to refund any Bonds without meeting the test for the issuance of Additional Bonds described above, if the SFPUC delivers to the Trustee (among other documents) a certificate of a Qualified Financial Advisor to the effect that after giving effect to the application of the proceeds of the additional Series of Bonds, either (i) Annual Debt Service will not be increased in any Fiscal Year (excluding Debt Service on the Outst anding Bonds to be refunded) in an amount in excess of 5% or (ii) the Average Annual Debt Service for the Bonds of such additional Series will be equal to or less than the Average Annual Debt Service on the Bonds to be refunded (during the period from the issuance of the additional Series to the last maturity date of the Outstanding Bonds to be refunded).

24 Subordinate Obligations; Obligations Not Payable from Revenues The Indenture permits the SFPUC to authorize and issue bonds, notes, warrants, certificates or other obligations or evidences of indebtedness, the principal of or interest on which would be payable either (i) from Net Revenues after and subordinate to the payment from Net Revenues of the principal of and interest on the Bonds, or (ii) from moneys which are not Revenues. The SFPUC may issue bonds or incur other indebtedness secured by a pledge of Net Revenues on a basis subordinate to the pledge thereof securing the Bonds without limitation.

Investments
The Indenture provides that moneys in all funds and accounts held by the Trustee under the Indenture shall be invested upon receipt in Permitted Investments as directed by the SFPUC and all accounts funds and accounts held by the City Treasurer (the “ City Treasurer”) shall be invested in Legal Inves tments. “Legal Investments” means any bonds, notes, certificates of indebtedness, bills, acceptances or other securities in which the City Treasurer may legally invest the SFPUC ’s funds. For information regarding the investment of moneys held in the various funds and accounts of the SFPUC, see “FINANCIAL OPERATIONS – Investment of SFPUC Funds.”

OBLIGATIONS PAYABLE FROM NET REVENUES
Authority for Issuance of Revenue Bonds and Other Obligations Payable from Net Revenues The Charter authorizes the SFPUC to issue revenue bonds and commercial paper notes and to incur other obligations payable from or secured by a pledge of revenues. The 2024ABCD Bonds are being issued pursuant to Ordinance No. 173-20, adopted by the Board of Supervisors on September 29, 2020, Ordinance No. 128- 21, adopted by the Board of Supervisors on July 27, 2021, Ordinance No. 110 -22, adopted by the Board of Supervisors on June 14, 2022, and Ordinance No. 181 -23, adopted by the Board of Supervisors on July 25, 2023, and under a resolution adopted by the Commission on June 25, 2024. See “SECURITY FOR THE BONDS – Additional Series of Bonds,” “– Additional Parity Loans” and “– Refunding Bonds.”

25 Outstanding Parity Revenue Bonds
The following outstanding parity revenue bonds have been issued pursuant to the Indenture and are secured by a parity pledge of Net Revenues on a parity with the 2024ABCD Bonds and the Parity Loans.

Series of Bonds Purpose
Original Principal
Amount
Principal Amount
Outstanding as of
July 1, 2024
Wastewater Revenue Bonds, 2010 Series B (“2010B Bonds”)(1) Finance and refinance SSIP and other capital program costs $192,515,000 $169,985,000 Wastewater Revenue Bonds, 2013 Series B (“2013B Bonds”) Finance and refinance SSIP and other capital program costs 331,585,000 93,095,000 Wastewater Revenue Bonds, 2016 Series A (“2016A Bonds”) Finance and refinance SSIP and other capital program costs 240,580,000 229,345,000 Wastewater Revenue Bonds, 2016 Series B (“2016B Bonds”) Finance and refinance capital program costs 67,820,000 64,650,000 Wastewater Revenue Bonds, 2018 Series A (“2018A Bonds”) Finance and refinance SSIP and other capital program costs 229,050,000 207,595,000 Wastewater Revenue Bonds, 2018 Series B (“2018B Bonds”)(2) Finance capital program costs 185,950,000 168,545,000 Wastewater Revenue Bonds, 2021 Series A (“2021A Bonds”) Finance SSIP costs 260,835,000 260,835,000 Wastewater Revenue Bonds, 2021 Series B (“2021B Bonds”) Finance capital program costs 37,045,000 37,045,000 Wastewater Revenue Bonds, 2022 Series B (“2022B Bonds”) Refinance SSIP and other capital program costs 137,080,000 128,755,000 Wastewater Revenue Bonds (WIFIA Biosolids Loan)
(“BDFP WIFIA Bond”)(3)
Finance Biosolids Digester Facilities Project 562,277,529 562,277,529 Wastewater Revenue Bonds (Southeast Treatment Plant
Improvements Project WIFIA Loan) (“STPI WIFIA Bond”)(4) Finance Southeast Treatment Plant Improvement Project 352,573,021 352,573,021 Wastewater Revenue Bonds, 2023 Series A (“2023A Bonds”) Finance SSIP costs 530,565,000 530,565,000 Wastewater Revenue Bonds, 2023 Series B (“2023B Bonds”)(2) Finance capital program costs 278,155,000 278,155,000 Wastewater Revenue Bonds, 2023 Series C (“2023C Bonds”) Refinance SSIP and other capital program costs 165,660,000 165,660,000 Total: $3,571,690,550 $3,249,080,550

(1) Issued as Build America Bonds. See “SECURITY FOR THE BONDS – Flow of Funds” and “– Rate Covenants.” (2) A portion of such amount is expected to be refunded by the 2024B Bonds. See “PLAN OF FINANCE.” (3) Issued under the Eleventh Supplemental Indenture in connection with the BDFP WIFIA Loan. See “– W ater Infrastructure Finance and Innovation Act Loans. ” Original Principal Amount and Principal Amount Outstanding are rounded. On March 27, 2024, a portion of the proceeds of the BDFP WIFIA Bond was used to defease the SFPUC’s Wastewater Revenue Notes, 2021 Series A (Green Notes), maturing on October 1, 2025.
(4) Issued under the Tenth Supplemental Indenture in connection with the STPI WIFIA Loan. See “– Water Infrastructure Finance and Innovation Act Loans.” Original Principal Amount and Principal Amount Outstanding are rounded. On March 27, 2024, a portion of the proceeds of the STPI WIFIA Bond was used to defease the SFPUC ’s Wastewater Revenue Notes, 2021 Series B (Green Notes), maturing on October 1, 2026.

26 Additional Bonds
General. The SFPUC intends to issue Additional Bonds under the Indenture to finance select capital program projects, including SSIP projects. See “WASTEWATER ENTERPRISE CAPITAL PROGRAM ,” “FINANCING PLAN FOR WASTEWATER ENTERPRISE CAPITAL PROGRAM ” and “PROJECTED OPERATING RESULTS.”
Parity Loans
The SFPUC has entered into seven SRF loans with the State. These SRF loans constitute “Parity Loans” under the Indenture. The SFPUC has also applied for three additional SRF loans and plans to apply for additional SRF loans with the State over the next several years to obtain long- term financing for a portion of the SSIP. Such SRF loans are low-cost loans provided and administered by the State Water Resources Control Board on a project - by-project basis. The State’s SRF Loan Program provides favorable terms to the SFPUC, including up to 30- year amortizing loan terms which generally commence one year following project completion, an interest rate on each SRF loan that is equal to one-half of the true interest cost for the State ’s most recent general obligation bond issue at the time such loan is entered into, and repayment of the SRF loans on a parity with the Bonds rather than on a basis senior to the Bonds. The SRF Loan Program offers loans to applicant entities based on available moneys and placement in a statewide intended use plan. SRF Loan Program moneys are disbursed on a cost -incurred basis pursuant to disbursement requests submitted by the SFPUC under the SRF loan documents. Although placement in the intended use plan is a necessary condition to receiving SRF Loan Program moneys, such placement does not create an obligation on the part of the applicant to accept SRF Loan Program moneys.

In connection with the SFPUC ’s Wastewater Enterprise, the following table sets forth the SRF loans that the SFPUC has entered into pursuant to the State ’s SRF Loan Program, the SRF loan commitment amount, the disbursement amount requested and received as of March 4, 202 4, the interest rate, the estimated/actual project completion date, the estimated loan repayment commencement date and the final maturity of each SRF loan.

27 State Revolving Fund Loans
Project
SRF Loan
Commitment
Amount
Disbursement
Amount
Requested as of
March 4, 2024(1)
Disbursement
Amount
Received as of
March 4, 2024 Interest Rate
Estimated/Actual
Project
Completion
Date
Estimated/Actual
Loan Repayment
Commencement
Date(2) Final Maturity
Lake Merced Green
Infrastructure Project $ 7,435,000 $6,261,946 $6,115,588 1.6% April 24, 2018(3) July 31, 2021

July 31, 2050
Southeast Treatment Plant
Primary/Secondary Clarifier
Upgrade Project 34,445,778 30,494,680 29,197,239 1.8 January 21, 2019(3) March 30, 2019

March 30, 2048
Southeast Treatment Plant
521/522 and Disinfection
Upgrade Project 40,006,740 39,777,650 39,740,686 1.8 June 30, 2021(3) July 18, 2020

July 18, 2049
North Point Facility Outfall
Rehabilitation Project 20,199,435 17,713,411 17,705,698 1.8 October 31, 2018(3) February 28, 2019

February 28, 2048
Southeast Water Pollution
Control Plant Biosolids
Digester Facilities Project 132,000,000 132,000,000 132,000,000 1.4 May 11, 2029(4) May 1, 2027

May 1, 2056
OSP Digester Gas Utilization
Upgrade Project 54,387,969 33,349,280 33,230,029 1.4 June 2, 2025(4) March 31, 2025

March 31, 2054
Southeast Plant New
Headworks (Grit)
Replacement
112,036,181 78,620,278 78,620,278 1.1 August 31, 2027(4) March 1, 2025

March 1, 2054
Total: $400,511,103 $338,217,245 $336,609,518
____________________
(1) SRF Loan Program moneys are disbursed on a cost-incurred basis pursuant to disbursement requests submitted by the SFPUC. (2) SRF loans generally amortize over a 30-year term commencing one year following the estimated project completion date as set forth in the applicable loan agreement. (3) Actual project completion dates; repayment schedules have been established and repayments have commenced for these projects. (4) Estimated project completion dates; loan repayment expected to commence one year following estimated project completion date as set forth in the applicable loan agreement (originally May 1, 2026, for Southeast Water Pollution Control Plant Biosolids Digester Facilities Project; originally March 31, 2024 , for OSP Digester Gas Utilization Upgrade Project; and originally March 1, 2024, for Southeast Plant New Headworks (Grit) Replacement.

28 In addition to the SRF loans described above, the SFPUC has applied for three additional SRF loans to finance: (i) the Wawona Area Stormwater Improvement Project (the “ Wawona Project”), (ii) the Treasure Island Water Resource Recovery Facility (the “Treasure Island Water Resource Recovery Facility”) and (iii) the Folsom Stormwater Improvement Project (Phase 2) (the “Folsom Project”).

In September 2023, the State Water Resources Control Board approved the Clean Water State Revolving Fund Intended Use Plan for State Fiscal Year 2023-24, which includes a list of projects that the Division of Financial Assistance anticipates funding (the “ 2023-24 Fundable List ”). The 2023-24 Fundable List includes, among others, full funding for the Wawona Project ($40 million loan and $5 million grant), partial funding in the amount of $65 million for the Treasure Island Water Resource Recovery Facility ($50 million loan and $15 million grant), and partial funding in the amount of $55 million for the Folsom Project ($50 million loan and $5 million grant).

Inclusion on the 2023- 24 Fundable List does not, however, constitute a financing commitment, a guarantee that sufficient funds from the anticipated sources of funds will be available, or a determination of eligibility. Any such funding would take the form of a loan from the State Water Resources Control Board to the SFPUC, constituting a Parity Loan. After the 2023- 24 Fundable L ist was released, the SFPUC submitted a request to the State Water Resources Control Board to reallocate the full funding for the Wawona Project to the Treasure Island Water Resource Recovery Facility. If such request is approved, the SFPUC anticipates wit hdrawing the SRF loan application for the Wawona Project. The SFPUC is working with the State Water Resources Control Board to obtain approval of the SRF loan applications and negotiate SRF loan terms for the remaining two projects. If approved by the State Water Resources Control Board, the SFPUC anticipates that an SRF loan for each of the Folsom Project and the Treasure Island Water Resource Recovery Facility will close in Fiscal Year 2024-25.

The SFPUC has also entered into a WIFIA loan to provide parti al funding to the Wawona Project and the Treasure Island Water Resource Recovery Facility. For more information, see “ – Water Infrastructure Finance and Innovation Act Loans – Master Agreement and Project Loans” below.

The SFPUC has covenanted in the Seventeenth Supplemental Indenture and Eighteenth Supplemental Indenture not to enter into state loans payable on a basis senior to the Bonds.

Water Infrastructure Finance and Innovation Act Loans
Biosolids Digester Facilities Project. In July 2018, the SF PUC entered into the WIFIA Loan Agreement, dated as of July 27, 2018 (the “ Original BDFP WIFIA Loan Agreement ”), with the EPA, acting by and through the WIFIA Lender, pursuant to which the WIFIA Lender agreed to make a loan to the SFPUC in an amount not to exceed $699,242,023 to finance eligible costs of the Biosolids Digester Facilities Project to be located at the Southeast Treatment Plant (the “BDFP WIFIA Loan”). The BDFP WIFIA Loan does not constitute a “ Parity Loan” under the Indenture. Instead, to evidence its repayment obligation pursuant to the BDFP WIFIA Loan to the EPA, the SFPUC issued a parity Bond under the Ninth Supplemental Indenture, dated as of July 27, 2018 (the “Ninth Supplemental Indenture”), between the SFPUC and the Trustee. In June 2020, the SFPUC and the WIFIA Lender agreed to make administrative revisions to the Original BDFP WIFIA Loan Agreement and to enter into a new loan agreement (the “Revised BDFP WIFIA Loan Agreement”). The Original BDFP WIFIA Loan Agreement has been terminated and is no longer in full force and effect, and the Ninth Supplemental Indenture has been surrendered and cancelled by the SFPUC and the WIFIA Lender. Pursua nt to the Revised BDFP WIFIA Loan Agreement, the BDFP WIFIA Loan bears interest at a fixed rate of 1.45% and will mature no later than April 1, 2059. To evidence its repayment obligation pursuant to the BDFP WIFIA Loan to the EPA, the SFPUC issued the BDFP WIFIA Bond, a parity Bond under the Eleventh Supplemental Indenture, dated as of June 12, 2020, between the SFPUC and the Trustee. As of the date of this Official Statement, the SFPUC has made two draws on the BDFP WIFIA Loan and the principal amount of t he BDFP WIFIA Bond is approximately $562,277,529. On March 27, 2024, a portion of the proceeds of the BDFP WIFIA Bond was used to defease the SFPUC ’s Wastewater Revenue Notes, 2021 Series A Notes (Green Notes) (the “2021A Notes”), maturing on October 1, 2025.

No payment of principal or interest on the BDFP WIFIA Loan is anticipated to be made prior to April 1, 2026. Prior to April 1, 2026, interest on the BDFP WIFIA Loan is expected to accrete and will be added to the outstanding principal balance of the BDFP WIFIA Bond. From April 1, 2026, through April 1, 2043, only interest is expected to be payable on the BDFP WIFIA Loan. Principal of the BDFP WIFIA Loan is expected to be amortized commencing on April 1, 2043, and to continue through the final maturity date of the BDFP WIFIA Loan.

29 Southeast Treatment Plant Improvements Project. In June 2020, the SFPUC entered into the WIFIA Loan Agreement, dated as o f June 12, 2020 (the “ STPI WIFIA Loan Agreement”), with the EPA, pursuant to which the WIFIA Lender agreed to make a loan to the SFPUC in an amount not to exceed $513,861,981 to finance eligible costs of the Southeast Treatment Plant Improvements Project ( the “STPI WIFIA Loan ”), which includes the Biosolids Digester Facilities Project and the SEP New Headworks (Grit) Replacement Project. Pursuant to the STPI WIFIA Loan Agreement, the STPI WIFIA Loan bears interest at a fixed rate of 1.45% and will mature no later than April 1, 2062. The STPI WIFIA Loan does not constitute a “ Parity Loan” under the Indenture. Instead, to evidence its repayment obligation pursuant to the STPI WIFIA Loan to the EPA, the SFPUC issued the STPI WIFIA Bond, a parity Bond under the Tenth Supplemental Indenture, dated as of June 12, 2020, between the SFPUC and the Trustee. As of the date of this Official Statement, the SFPUC has made one draw on the STPI WIFIA Loan Agreement and the principal amount of the STPI WIFIA Bond is approximately $352,573,021. On March 27, 2024, a portion of the proceeds of the STPI WIFIA Bond was used to defease the SFPUC ’s Wastewater Revenue Notes, 2021 Series B Notes (Green Notes) (the “2021B Notes”), maturing on October 1, 2026.

No payment of principal or interest on the STPI WIFIA Loan is anticipated to be made prior to April 1, 2032. Prior to April 1, 2032, interest on the STPI WIFIA Loan is expected to accrete and will be added to the outstanding principal balance of the STPI WIFIA Bond. From April 1, 2032, through April 1, 2043, only interest is expected to be payable on the STPI WIFIA Loan. Principal of the STPI WIFIA Loan is expected to be amortized commencing on April 1, 2043, and to continue through the final maturity date of the STPI WIFIA Loan.

Master Agreement and Project Loan s. In April 2023, the SFPUC entered into the WIFIA Master Agreement, dated April 26, 2023 (the “WIFIA Master Agreement”), with the EPA, pursuant to which the WIFIA Lender agreed to make up to five loans to the SFP UC in an aggregate amount not to exceed $791,337,456 to finance certain Wastewater Enterprise capital improvement projects. In April 2023, the SFPUC also entered into the first WIFIA Loan Agreement (the “ Project 1 Loan Agreement ” and, together with the Revised BDFP WIFIA Loan Agreement and the STPI WIFIA Loan Agreement, the “ WIFIA Loan Agreements ”), with the EPA, pursuant to which the WIFIA Lender agreed to make a loan to the SFPUC in an amount not to exceed $369,335,021 to finance a portion of eligible project costs for a project that includes the following components: (1) Yosemite Creek Daylighting, (2) Wawona Area Stormwater Improvements and Vicente Street Water Main Replacement, (3) Folsom Area Stormwater Improvements, (4) Westside Pump Station Reliability Improvements, (5) North Shore Pump Station, and (6) Treasure Island Water Resource Recovery Facility (collectively, the “ Project 1 Projects ”) (“Project 1 WIFIA Loan” and, together with the BDFP WIFIA Loan and the STPI WIFIA Loan, the “ WIFIA Loans”).

Pursuant to the Project 1 Loan Agreement, the Project 1 WIFIA Loan bears interest at a fixed rate of 3.65% and will mature no later than October 1, 2061. The Project 1 Loa n does not constitute a “ Parity Loan ” under the Indenture. Instead, to evidence its repayment obligation pursuant to the Project 1 Loan to the EPA, the SFPUC issued a parity Bond (the “ Project 1 WIFIA Bond” and, together with the BDFP WIFIA Bond and the STPI WIFIA Bond, the “ WIFIA Bonds”) under the Sixteenth Supplemental Indenture, dated as of April 26, 2023, between the SFPUC and the Trustee. As of the date of this Official Statement, the SFPUC has not yet drawn on the Project 1 Loan Agreement and no principal amount of the Project 1 WIFIA Bond is currently outstanding.

No payment of principal or interest on the Project 1 Loan is anticipated to be made prior to April 1, 2032.

Prior to April 1, 2032, interest on the Project 1 Loan is expected to accrete and will be added to the outstanding principal balance of the Project 1 WIFIA Bond. From April 1, 2032, through April 1, 2041, only interest is expected to be payable on the Project 1 Loan. Principal of the Project 1 Loan is expected to be amortized commencing on October 1, 2041, and to continue through the final maturity date of the Project 1 Loan.

The SFPUC is in the process of securing a second loan under the WIFIA Master Agreement for approximately $145.2 million to finance (1) Ocean Beach Climate Change Adaptation, (2) Combined Sewer Discharge Structure Rehabilitation and Upgrades – Part 1, (3) Geary Bus Rapid Transit Sewer Improvements, (4) Seacliff No. 1 Pump Station and Force Main Upgrade, and (5) Seacliff No. Pump Station and Force Main Upgrade (collectively, the “Project 2 Projects”) (the “Project 2 WIFIA Loan”). The SFPUC anticipates it will enter into a second WIFIA Loan Agreement with the EPA for the Project 2 WIFIA Loan in the second quarter of Fiscal Year 2024-25.

30 WIFIA Bonds. The BDFP WIFIA Bond and the STPI WIFIA Bond are, and the Project 1 WIFIA Bond will be, payable from and secured by a pledge of Net Revenues on a parity with the Bonds.

The WIFIA Loan Agreements permit the SFPUC to draw under the respective WIFIA Loans from time to time, provided that such loans must be disbursed no later than one year following the substantial completion date of each project as set forth in the respective WIFIA Loan Agreements (May 1, 2024, for the Biosolids Digester Facilities Project; July 26, 2027, for the Southeast Treatment Plant Improvements Project ; and May 8, 2028 for the Project 1 Projects). Each draw is subject to the satisfaction of conditions, including without limitation, the delivery to the EPA of financial projections evidencing that the SFPUC will be able to satisfy its rate covenant for the current fiscal year and each of the next 10 fiscal years.

If an event of default occurs under a WIFIA Loan Agreement, the EPA may elect to suspend future disbursements of such WIFIA Loan, to terminate the capitalized interest period (thus causing interest to be payable on a current basis), to require the payment of a default interest rate (equal to such WIFIA Loan rate plus 200 basis points) and to institute legal action to enforce the provisions of such WIFIA Loan Agreement. However, the EPA cannot take any action, in law or in equity, which would affect the application of the Net Revenues of the Wastewater Enterprise or to accelerate the payment obligations under such WIFIA Bond except pursua nt to the EPA’s rights as a parity Bondholder under the Indenture.

No reserve account was established to secure the WIFIA Loans.

Conditions to Disbursements under WIFIA Loan Agreements . The ability of the SFPUC to obtain disbursements from the EPA under the WIFIA Loan Agreements is subject to several conditions, including the payment of certain fees, if applicable, and the delivery of certain documentation, including an updated financial plan, copies of financing and project documents, proof of insurance re quired under the respective WIFIA Loan Agreements and a requisition that contains certain representations of the SFPUC as of the disbursement date.

The EPA is permitted to refuse disbursement upon the occurrence and continuance of certain events of default under the WIFIA Loan Agreements or the occurrence and continuance of events that would be an event of default with the passage of time and/or giving of notice. Such events include, among others , and as applicable (i) failure of the SFPUC to diligently pursue work on the applicable project or to achieve substantial completion of the applicable project by July 26, 2029, with respect to the STPI WIFIA Loan Agreement, by May 1, 2026, with respect to the BDFP WIFIA Loan Agreement , by May 8, 2030, with respect to the Project 1 Loan Agreement ; (ii) a default by the SFPUC under any of the principal contracts relating to the applicable project and the SFPUC fails to cure such default or replace the contract; (iii) the occurrence of a Bankruptcy Related Event (as defined in the WIFIA Loan Agreements) with respect to the counterparty to any of the principal contracts relating to the applicable project, unless such contract is replaced; (iv) abandonment of the applicable project by the SFPUC; (v) failure of the SFPUC to operate the applicable project for a continuous period of at least 180 days unless the cessation in operations is excused pursuant to the respective WIFIA Loan Agreements; (vi) a covenant default under the respective WIFIA Loan Agreements; (vii) misrepresentations made by the SFPUC under the respective WIFIA Loan Agreements or a document delivered in connection with the respective WIFIA Loan Agreements, (viii) acceleration of parity debt or a default under documents relating to the SFPUC ’s parity debt; (ix) one or more judgments for the payment of money that in the aggregate exceed $50 million or would cause a Material Adverse Effect (as defined under the WIFIA Loan Agreements) are rendered against the SFPUC, and such judgment(s) are unpaid for a period of 30 consecutive days or for which an action has been legally taken by a judgment creditor to attach or levy upon the SFPUC ’s assets for the enforcement of such judgment(s); (x) the SFPUC fails to maintain its existence; (xi) a Bankruptcy Relat ed Event (as defined under the WIFIA Loan Agreements) with respect to the SFPUC occurs; (xii) the respective WIFIA Loans or documents related to the respective WIFIA Loans are no longer valid; (xiii) failure to comply with the rate covenant set forth in the Indenture; (xiv) failure by the SFPUC to construct the respective projects consistent with government approvals or good engineering practices or failure to comply with applicable federal or local law; (xv) occurrence of a Material Adverse Effect (as defi ned in the WIFIA Loan Agreement), or an event or condition that could reasonably be expected to result in a Material Adverse Effect; or (xvi) failure to comply with certain other provisions of the WIFIA Loan Agreement (such as the maintenance of insurance) . See also “RISK FACTORS – WIFIA Loan Agreements.”

31 Contingent Payment Obligations
The Wastewater Enterprise has no interest rate swaps, caps or hedges or other contingent payment obligations payable from Net Revenues. The Wastewater Enterprise may in the future, however, incur contingent payment obligations payable from Net Revenues. Such contingent payment obligations may be payable on a parity with the Bonds if the conditions for the issuance of parity debt under the Indenture are met. See “SECURITY FOR THE BONDS – Additional Series of Bonds,” and “– Additional Parity Loans.” Subordinate Debt and Interim Funding Program
No Limits on Subordinate Debt . The SFPUC may issue bonds or incur other indebtedness secured by a pledge of Net Revenues on a basis subordinate to the pledge thereof securing the Bonds, without limitation.

Interim Funding Program . Pursuant to the Charter, the SFPUC has established an Interim Funding Program (the “ Interim Funding Program ”) (formerly known as the “ Commercial Paper Program ”) to fund construction costs relating to Wastewater Enterprise capital projects.

The Interim Funding Program is authorized for the Wastewater Enterprise in the amount of $750 million.

Of this amount, $675 million is authorized for the SFPUC to issue tax -exempt and taxable commercial paper notes (the “Commercial Paper Notes”) secured by five bank credit facilities, as set forth below:

Commercial Paper Notes
Bank Credit Facilities
Credit Facility Bank Amount Stated Expiration Date
Letter of Credit Sumitomo Mitsui Banking Corporation,
acting through its New York Branch
$150 million March 2, 2029
Letter of Credit Bank of America, N.A. $150 million April 24, 2026 Revolving Credit and
Term Loan Agreement
TD Bank, N.A. $75 million July 6, 2027
Revolving Credit and
Term Loan Agreement
State Street Bank and Trust Company $200 million October 10, 2024 Letter of Credit Sumitomo Mitsui Banking Corporation,
acting through its New York Branch
$100 million May 31, 2027
The remaining $75 million of the Interim Funding Program is in the form of a bank revolving credit agreement with U.S. Bank National Association (the “ U.S. Bank Credit Facility ”), with a stated expiration date of __________. The U.S. Bank Credit Facility p ermits the SFPUC to make draws directly on the bank, with the SFPUC’s payment obligation evidenced by a tax-exempt revolving note (the “Revolving Notes”).

The Commercial Paper Notes and the Revolving Notes are payable from Net Revenues, and are secured on a parity lien basis with each other. The Commercial Paper Notes and the Revolving Notes, collectively, are secured on a basis subordinate to the payment of debt service on the Bonds (including the Parity Loans and the WIFIA Bonds).

As of July 2, 2024, the SFPUC had approximately $___ million principal amount of Commercial Paper Notes outstanding and no outstanding principal balance on any of the Revolving Notes. Approximately $___ *
million principal amount of and interest on tax-exempt Commercial Paper Notes will be retired with proceeds of the 2024A Bonds, 2024C Bonds and 2024D Bonds. See “PLAN OF FINANCE.”

* Preliminary, subject to change.

32 Other Subordinate Obligations Payable from Net Revenues The SFPUC completed the construction of a 13 -story office building at 525 Golden Gate Avenue in San Francisco to house the administrative offices of the SFPUC ’s three utility enterprises and moved into the building in 2012. Total project costs were approximately $202 million and were financed with land and property sale proceeds, fund balances, grants and the proceeds of certificates of participation (the “ 2009 Golden Gate COPs ”), representing interests in a City General Fund lease, executed and delivered i n two series (one of which constitutes Build America Bonds) on October 7, 2009, in the aggregate principal amount of $167,670,000. Pursuant to a memorandum of understanding between the City and the SFPUC, the SFPUC will reimburse the City General Fund for all debt service in connection with this City financing (net of Refundable Credits received). The final maturity date on the 2009 Golden Gate COPs is November 1, 2041. As of July 1, 2024 , the principal amount outstanding of the 2009 Golden Gate COPs was $1 25 million. The SFPUC allocates such payment obligations internally among its three utility enterprises based on percentage usage. The Wastewater Enterprise is responsible for 18.88% of such obligations, payable from Net Revenues on a basis subordinate to the payment of principal of and interest on the Bonds.

Revenue Bond Oversight Committee
On November 5, 2002, the voters of San Francisco adopted Proposition P, an ordinance that established the Public Utilities Revenue Bond Oversight Committee ( “RBOC”) to report publicly to the Mayor, the SFPUC and the Board of Supervisors regarding the expenditure of revenue bond proceeds on the repair, replacement, upgrading and expansion of the Wastewater Enterprise, the Water Enterprise and the Power Enterprise.

The RBOC has seven members appointed as follows: two by the Mayor, two by the Board of Supervisors, one by the City Controller, one by the Bay Area Water Users Association under the auspices of the Bay Area Water Supply and Conservation Agency. The seventh member is the City’s Budget Analyst or their representative. Pursuant to Proposition P, the RBOC receives 1/20th of 1% of the gross new money revenue bond proceeds to fund the cost of retaining the services of outside auditors, inspectors, and necessary experts to perform independent reviews.

The provisions of the ordinance establishing the RBOC are set to expire on January 1, 2025.

The RBOC may, by majority vote of all its members, prohibit the issuance or sale of authorized SFPUC revenue bonds which have yet t o be issued or sold if, after reviewing materials provided by the SFPUC and conducting its own independent audit, and after consultation with the City Attorney, the RBOC determines that revenue bond proceeds have been or are being spent on purposes not aut horized by the authorizing bond resolution or otherwise in a manner amounting to an illegal expenditure or illegal waste of such revenue bond proceeds . The SFPUC may appeal such a decision to the Board of Supervisors within 30 days . The Board of Supervisors may overturn such a decision by the RBOC by a two- thirds vote of all members of the Board of Supervisors with evidence from the SFPUC of corrective measures satisfactory to the Board of Supervisors or may remand the decision to the RBOC for fur ther consideration. To date, the RBOC has not prohibited the issuance or sale of any authorized SFPUC revenue bonds of the Wastewater Enterprise, the Water Enterprise or the Power Enterprise.

Debt Service Requirements
Set forth in the following table are debt service requirements for the Outstanding Bonds and the 2024ABCD Bonds assuming no early redemptions.

33 DEBT SERVICE REQUIREMENTS ON
OUTSTANDING BONDS AND 2024ABCD BONDS
Fiscal Year
(ending
June 30)
Outstanding
Parity
Revenue
Bonds(1)(2)(3)
Parity
Loans(4)
2024A
Bonds
Interest(3)
2024A
Bonds
Principal
2024B
Bonds
Interest(3)
2024B
Bonds
Principal
2024C
Bonds
Interest(3)
2024C
Bonds
Principal
2024D
Bonds
Interest(3)
2024D
Bonds
Principal
Total Bond
Debt
Service
Total Debt
Service
including
Parity
Loans(6)
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
TOTAL(6)

(1) Comprised of debt service relating to the outstanding 2010B Bonds, 2013B Bonds, 2016A Bonds, 2016B Bonds, 2018A Bonds, 2018B Bonds, 2021A Bonds, 2021B Bonds, 2022B Bonds , BDFP WIFIA Bond (relating to two draws on the BDFP WIFIA Loan as of the date of this Official Statement) , STPI WIFIA Bond (relating to one draw on the STPI WIFIA Loan as of the date of this Official Statement) and 2023A Bonds, 2023B Bonds and 2023C Bonds . Assumes 2023C Bonds bear interest at a rate of 4% per annum after the Initial Term Rate Period (as defined in the Fifteenth Supplemental Indenture). Does not include debt service relating to the Project 1 WIFIA Bond (relating to the Project 1 WIFIA Loan) , any Parity Loans, subordinate Commercial Paper Notes or Revolving Notes. See “– Outstanding Parity Revenue Bonds,” “– Parity Loans,” “– Water Infrastructure Finance and Innovation Act Loans” and “– Subordinate Debt and Interim Funding Program.” (2) Calculation of interest due on outstanding parity revenue bonds shown without an offset for Refundable Credits. (3) Net of capitalized interest payments.
(4) Includes SRF loans for Lake Merced Green Infrastructure Project, Southeast Treatment Plant Primary/Secondary Clarifier Upgrade Project, Sou theast Treatment Plant 521/522 and Disinfection Upgrade Project and North Point Facility Outfall Rehabilitation Project for which payment schedules have been established. See “– Parity Loans.” Does not include debt service relating to Parity Loans for which a payment schedule has not been established. (5) Totals may not add due to independent rounding.

34 THE CITY AND COUNTY OF SAN FRANCISCO
THE FOLLOWING INFORMATION IS PROVIDED FOR CONVENIENCE ONLY . THE GENERAL

FUND OF THE CITY IS NOT LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY , OR INTEREST ON THE 2024ABCD BONDS, AND NEITHER THE CREDIT NOR THE TAXING POWER OF THE

CITY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY , OR INTEREST ON THE 2024ABCD BONDS. THE 2024ABCD BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF, OR CHARGE, LIEN, OR ENCUMBRANCE UPON, ANY OF THE PROPERTY OF THE CITY .

General. San Francisco is the economic and cultural center of the San Francisco Bay Area and northern California. The limits of San Francisco encompass over 93 square miles, of which 49 square miles are land, with the balance consisting of tidelands and a portion of the San Francisco Bay. San Francisco is located at the northern tip of the San Francisco Peninsula, bounded by the Pacific Oc ean to the west, the San Francisco Bay and the San Francisco-Oakland Bay Bridge to the east, the entrance to the San Francisco Bay and the Golden Gate Bridge to the north, and San Mateo County to the south. Silicon Valley is about a 40- minute drive to the south, and the Napa - Sonoma wine country is about an hour ’s drive to the north. The California Department of Finance estimates San Francisco’s population as of January 1, 2023 was 831,703.

The San Francisco Bay Area consists of the nine counties contiguous to the Bay: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano and Sonoma Counties (collectively, the “ Bay Area”).

The economy of the Bay Area includes a wide range of industries, supplying local needs as well as t he needs of national and international markets. Major business sectors in the Bay Area include technology, retail, entertainment and the arts, conventions and tourism, service businesses, banking, professional and financial services, corporate headquarters, international and wholesale trade, multimedia and advertising, healthcare and higher education. The California State Supreme Court is also based in San Francisco.

San Francisco has historically been a major convention and tourist destination. However, the COVID- 19 pandemic significantly adversely impacted, and may continue to adversely impact , tourism and convention activities in San Francisco.

San Francisco benefits from a highly skilled, educated and professional labor force . The City estimates the per-capita personal income of San Francisco for fiscal year 2022- 23 was $17 5,597. The San Francisco Unified School District (“SFUSD”), which is a separate legal entity from the City, operates 73 elementary schools, 13 middle schools, 17 high schools, 47 early education schools, and three County and Court schools . Higher education institutions located in San Francisco include the University of San Francisco, California State University – San Francisco, University of California – San Francisco (a medical school and health science campus), the UC College of the Law, San Francisco (formerly University of California Hastings College of the Law), the University of the Pacific ’s School of Dentistry, Golden Gate University, City College of San Francisco (a public community college), the San Francisco Conservatory of Music, and the Academy of Art University.

San Francisco International Airport ( “SFO”), located 14 miles south of downtown San Francisco in an unincorporated area of San Mateo County, is owned by the City and is operated by the San Francisco Airport Commission (the “ Airport Commission”), and is a principal commercial service airport for the Bay Area and one of the nation’s principal gateways for Pacific Rim traffic. The COVID-19 pandemic significantly adversely impacted tourism and travel in the San Francisco Bay Area. To date, passenger levels have reco vered, though they have not yet returned to pre -pandemic levels. In fi scal year 2022- 23, enplanements were approximately 81.8% of enplanements in fiscal year 2018 -19 (prior to the COVID -19 pandemic). San Francisco is also served by the Bay Area Rapid Transit District ( “BART”) (an electric rail commuter service linking San Francisco with the East Bay and the San Francisco Peninsula, including SFO), Caltrain (a conventional commuter rail line linking the City with the San Francisco Peninsula), and bus and ferry services between San Francisco and residential areas to the north, east and south of San Francisco. San Francisco Municipal Railway ( “Muni”), operated by the San Francisco Municipal Transportation Agency ( “SFMTA”), provides bus and streetcar service within San Francisco (although since fiscal year 2019-20, telecommuting has caused ridership into and within San Francisco to decline significantly compared to pre -pandemic levels). The Port of San Francisco (the “ Port”), which administers 7.5 miles of Bay waterfront held in “ public trust” by the Port on behalf of the people of California, promotes a balance of maritime - related commerce, fishing, recreational, industrial and commercial activities, and natural resource pr otection.

35 Government. San Francisco is a city and county chartered pursuant to Article XI, Sections 3, 4, 5 and 6 of the Constitution of the State of California and is the only consolidated city and county in California. V oters approved the City’s current Charter at the November 1995 election. The City is governed by a Board of Supervisors elected from 11 districts to serve four -year terms, and a Mayor who serves as chief executive officer, elected citywide to a four-year term. The City ’s original budget fo r fiscal years 2023-24 and 202 4-25 totals $14. 6 billion and $ 14.5 billion, respectively. The General Fund portion of each year ’s proposed budget is $6.8 billion in fiscal year 2023-24 and $7.0 billion in fiscal year 2024- 25, with the balance allocated to all other funds, including enterprise fund departments, such as the Airport Commission, SFMTA, the Port Commission and the SFPUC. According to the Controller of the City (the “Controller”), at the start of fiscal year 2023- 24, total net assessed valuation of taxable property in San Francisco was approximately $343.9 billion.

City Financial Challenges . The City continues to face financial challenges resulting from a variety of factors, including continuing remote work by a significant portion of the regional workforce, slower than anticipated recovery in the local hospitality and convention industries, and general economic conditions. These conditions have resulted in projected budget deficits (absent corrective actions) in the hundreds of millions of dollars in future fiscal years, rising to approximately $1.36 billion in fiscal year 2027- 28. On June 3, 2024, the Controller issued its most recent report on the status of the San Francisco economy for May 2024. The Controller’s re port noted that the job market in the San Francisco Metropolitan Statistical Area has been improving in 2024, with an addition of 1,900 jobs in San Francisco and San Mateo counties between February and April. Unemployment has dropped to 3.4%, down from 4.0% in January, with the leisure and hospitality sector leading the area’s job growth, followed by the education, health and government sectors, while tech job losses continue. The report also notes that office vacancies in the first quarter of 2024 are 32.4% (as compared to 5.6% in the fourth quarter of 2019). Furthermore, San Francisco domestic air travel through March 2024 is at 84% of 2019 levels, while San Francisco international travel now exceeds 2019 levels. Muni and BART ridership and bridge crossings into and out of San Francisco continue to remain notably lower than pre-pandemic levels.

The City ’s financial challenges described above have not significantly impacted the Wastewater Enterprise’s operations or financial condition. See “ THE WASTEWATER ENTERPRISE – Service Area – Recent Economic Developments” and “– Recent Factors Impacting Wastewater Revenues.”

36 THE PUBLIC UTILITIES COMMISSION
General
The SFPUC is a department of the City responsible for the maintenance, operation and development of three utility enterprises: the Wastewater Enterprise, the Water Enterprise and the Power Enterprise (which is a component of Hetch Hetchy Water and Power). The SFPUC ’s enterprises are operated and ma naged as separate financial entities with separate enterprise funds.
• The Wastewater Enterprise provides wastewater and stormwater collection, treatment and disposal services for San Francisco.
• The Water Enterprise provides drinking water to retail customer s in San Francisco, to certain retail customers outside San Francisco and to wholesale customers in three other Bay Area counties (the “Water Enterprise”).
• Hetch Hetchy Water and Power operates dams (including O ’Shaughnessy Dam), reservoirs (including Hetch Hetchy Reservoir), hydroelectric generation and transmission facilities and water transmission facilities from Hetch Hetchy Valley to the connection with the Water Enterprise (collectively, the “Hetch Hetchy Project ”). In addition, Hetch Hetchy Water and Power provides hydroelectric, solar and other power for municipal and public infrastructure, services and facilities (the “ Power Enterprise”). CleanPowerSF ( “CleanPowerSF”), managed by the Power Enterprise, is a Community Choice Aggregation program.

The revenues of the Water Enterprise, the Power Enterprise and CleanPowerSF are not available for payment of the principal of, premium, if any, or interest on the Bonds. See “SECURITY FOR THE BONDS – Pledge of Net Revenues.”
Organization, Purposes and Powers
Wastewater Enterprise . The Wastewater Enterprise’ s collection and treatment system consists of a combined sewer collection system conveying sewage and stormwater flows within San Francisco to three water pollution control plants located within San Francisco. Treated effluent flows are then discharged through mostly deep-water outfalls into the San Francisco Bay and the Pacific Ocean. The Wastewater Enterprise also currently provides sewage treatment service on Treasure Island pursuant to contract, an d operates an onsite sewage and stormwater reclamation and treatment facility at the SFPUC headquarters at 525 Golden Gate Avenue, San Francisco, California. See “THE WASTEWATER ENTERPRISE.” Water Enterprise. Nearly 2.7 million people rely on water supplie d by the SFPUC to meet their daily water needs through its Water Enterprise. The SFPUC serves as the retail water supplier for San Francisco and is responsible for water deliveries to residents and institutions within San Francisco city limits, as well as to a number of retail accounts outside of San Francisco city limits. In addition, the SFPUC sells water to 27 wholesale customer entities in San Mateo, Alameda and Santa Clara Counties under contractual agreements.

The revenues of the Water Enterprise are not “Revenues” under the Indenture and do not secure the payment of the principal of, premium, if any, or interest on the Bonds. See “SECURITY FOR THE BONDS - Pledge of Net Revenues.”
Hetch Hetchy – Water and Power Operations . Hetch Hetchy Water and Power operates the dams (among them O’Shaughnessy Dam being the largest), reservoirs (among them Hetch Hetchy Reservoir being the largest), hydroelectric generation and transmission facilities and water transmission facilities from Hetch Hetchy Valley to the connection with the Water Enterprise, which provides water for distribution through the Water Enterprise and hydroelectric, solar and other power for municipal and public infrastructure, services and facilities of San Francisco.

The Power Enterprise, wh ich is a component of the Hetch Hetchy Project, was created in 2005 as a separate system within Hetch Hetchy Water and Power. The Power Enterprise provides electric power to meet the municipal

37 requirements of the City, including power to operate municipal streetcars and electric buses, street and traffic lights, municipal buildings and other City facilities, including SFO. Additionally, the Power Enterprise provides power to the Modesto Irrigation District and Turlock Irrigation District, located in the cen tral valley of California, to certain commercial customers consistent with prescribed contractual obligations and federal law and to certain retail customers in San Francisco. CleanPowerSF, managed by the Power Enterprise, is a Community Choice Aggregation program, pursuant to which the SFPUC pools the electricity demands of CleanPowerSF customers, including certain of the San Francisco ’s residents and businesses, for the purpose of buying electricity on behalf of such customers.

CleanPowerSF provides San Francisco with new clean energy alternatives at competitive rates.

In September 2019, in connection with the bankruptcy of Pacific Gas & Electric Company ( “PG&E”) and PG&E Corporation, the City submitted a non -binding indication of interest to purchase subs tantially all of PG&E ’s electric distribution and transmission assets needed to provide retail electric service to all electricity customers within the geographic boundaries of San Francisco. The City subsequently submitted an additional non- binding indication of interest to PG&E in September 2020. PG&E has not indicated a willingness to sell any such assets. The City remains interested in acquiring these assets from PG&E, and in July 2021, submitted a petition to the California Public Utilities Commission ( “CPUC”) for a formal determination of the fair market value of PG&E ’s assets the City is interested in acquiring. In April 2023, the City filed direct testimony of four expert witnesses with the CPUC regarding the specific assets under consideration for a cquisition and the value of such assets. In December 2019, the City’s Planning Department initiated review of the acquisition project under CE QA and is currently preparing an environmental impact report in compliance with CEQA. A transaction has not been consummated with PG&E, and neither the SFPUC nor the City are able to predict whether a transaction will be consummated or what the terms of any such transaction would be, if consummated.

The revenues of the Power Enterprise and the revenues of CleanP owerSF are not “Revenues” under the Indenture and do not secure the payment of the principal of, premium, if any, or interest on the Bonds. See “SECURITY FOR THE BONDS – Pledge of Net Revenues.”
Commission Members
Under the Charter, the SFPUC is given excl usive charge of the operation and management of all water, wastewater and energy supplies and utilities owned or maintained by the City, as well as the real, personal and financial assets under the SFPUC’s jurisdiction. The SFPUC is governed by the Commission.

The Commission consists of five members appointed by the Mayor, subject to confirmation by a majority of the Board of Supervisors. Seat 1 is designated for a member with experience in environmental policy and an understanding of environmental justice issues. Seat 2 is designated for a member with experience in ratepayer or consumer advocacy. Seat 3 is designated for a member with experience in project finance. Seat 4 is designated for a member with expertise in water systems, power systems, or public utility management. Seat 5 is designated for an at-large member. Members are appointed for four -year terms and are eligible for reappointment. Members may be suspended by the Mayor and may be removed by a three -fourths vote of the Board of Supervisors for official misconduct.

38 The current members of the Commission and the ir appointment dates and expiration dates of their current terms are set forth below:

Name and Title Seat Appointment Date Term Expires
Tim Paulson, President 3 April 29, 2019(1) August 1, 2024(2) Anthony Rivera, Vice President 5 October 11, 2022(1) August 1, 2024(2) Newsha Ajami 1 February 4, 2021(1) August 1, 2024(2)
Kate H. Stacy 4 October 18, 2022 August 1, 2026
_______________
(1) Currently serving out the remainder of the seat’s four-year term, which expires August 1, 2024. (2) Pursuant to Section 4.101.5 of the Charter, the tenure of a member of the Commission will terminate no later than 60 days after the expiration of the member’s term, unless the member is reappointed.

Seat 2 is currently vacant. The term of Seat 2 expires August 1, 2025.

Management
Management of the SFPUC is led by the General Manager. The General Manager is appointed by the Mayor from candidates submitted by the Commission. Once appointed by the Mayor, the General Manager serves at the pleasure of the Commission; however, the Commission also has Charter authority to employ and does employ the General Manager under an individual contract.

Brief biographies of the General Manager and principal members of the senior management of the SFPUC are set forth below.

Dennis J. Herrera . Dennis J. Herrera commenced serving as the General Manager of the SFPUC on November 1, 2021. Prior to his appointment, Mr. Herrera had been re -elected in November 2019 to a four -year term as City Attorney for the City and County of San Francisco. Mr. Herrera was first elected City Attorney in December 2001. Before becoming City Attorney, Mr. Herrera had been a partner in a private law firm and had served in the Clinton Administration as Chief of Staff of the United States Maritime Administration. He also served as president of the San Francisco Police Commission and was a member of the San Francisco Public Transportation Commission. Mr. Herrera earned a B.A. from Villanova University and a J.D. from George Washington School of Law.

Ronald P . Flynn. Ronald P. Flynn is the Deputy General Manager and Chief Operating Officer of the SFPUC. Appointed to this role in 2022, Mr. Flynn works with the General Manager on all policy and strategic initiatives, oversees the SFPUC ’s daily operations, including business services (finance, accounting, audits, customer services, information technology), external affairs (communications, legislative, community benefits, equity), and human resources. Prior to this position, Mr. Flynn served for almost 16 years in the San Francisco City Attorney’s Office under Dennis Herrera. For the last seven years he was the Chief Deputy City Attorney, where he oversaw the City’s litigation teams, as well as wor ked closely with departments and agencies, including the SFPUC, on procurement, financial, and litigation matters. He worked on Hetch Hetchy litigation, PG&E’ s bankruptcy, and other SFPUC -related issues. Mr. Flynn previously served as Team Leader of the Construction and Public Contracting Team in the City Attorney ’s Office, working on many SFPUC projects, including the Water System Improvement Program. Mr. Flynn earned a B.Sc. from California Polytechnic State University, San Luis Obispo, an Ed.M. from Harvard University, and a J.D. from University of California, Berkeley School of Law.

Nancy L. Hom. Nancy L. Hom is the Chief Financial Officer and Assistant General Manager for Business Services, providing direction and oversight for the Financial Services, A udit, Loans and Grants, Information Technology Services, Customer Services, and Strategy Innovation and Change bureaus. She has led several important bureaus of Business Services, including serving as the Assurance and Internal Control Director for 10 years; and more recently as the SFPUC ’s Co -Deputy Chief Financial Officer. Ms. Hom has nearly 20 years of experience leading financial and governance teams in public agencies and has extensive knowledge of the City’ s financial and accounting guidelines and systems, capital improvement projects and regulatory affairs. Prior to joining the SFPUC, she served as the Chief Financial Officer for the Department of Child Support Services and as a

39 leader in the Office of the Controller ’s Budget and Analysis division. Ms . Hom earned a B.S. in Business Administration from San Francisco State University, concentrating in Finance, Internal Audit, and Project Management. She also maintains two professional certifications from the Institute of Internal Auditors as a Certified Internal Auditor and Certified Risk Management Assurance professional.

Joel Prather. Joel Prather is the Assistant General Manager of the Wastewater Enterprise. His professional background includes more than a decade at SFPUC Wastewater Enterprise, and ove r 20 years with the City. He started with San Francisco Public Works in the Bureau of Street and Sewer Repair and came to the SFPUC in 2011 as a Maintenance Planner. Prior to his appointment in his current role, he held the position of Maintenance Manager, where he managed the day to day maintenance systems and practices for the wastewater treatment facilities . He earned a B.A. in urban studies from San Francisco State University.

Masood Ordikhani . Masood Ordikhani serves as the Assistant General Manager, E xternal Affairs for the SFPUC. Previously, he served as the SFPUC ’s first Chief Equity and Innovation Officer, leading the agency’ s racial equity work. Prior to that role, he was the Director of Workforce and Economic Program Services within the SFPUC’s Infrastructure Division . During his tenure in that role, Mr. Ordikhani and his team have developed and delivered several nationally recognized programs . Prior to joining the SFPUC, Mr. Ordikhani was the Deputy Director of the City ’s Human Rights Commission. In addition, prior to his more than 14 years of public service, he was an attorney in private practice. He is a graduate of the University of California, Berkeley and UC College of the Law, San Francisco (formerly University of California Hastings College of the Law).

Barbara Hale. Barbara Hale is Assistant General Manager of the Power Enterprise. Ms. Hale oversees the Power Enterprise, where she is responsible for all commercial arrangements associated with the purchase and sale of power, whether wholesa le or retail, and operations of retail electric service programs. Prior to this role, Ms. Hale served as Analyst, Advisor to the President, Administrative Law Judge, and Division Director at the California Public Utilities Commission. Ms. Hale graduated cu m laude from San Francisco State University with a B.A. in Economics, receiving special recognition for high achievement with the Department Honors Award, and pursued extensive graduate coursework in Applied Economics.

Stephen Robinson. Stephen Robinson is the Assistant General Manager for Infrastructure, where he is responsible for capital programs and project implementation for SFPUC facilities, including the Water Capital Improvement Plan, the Wastewater Capital Improvement Plan (which includes the Sewer System Improvement Program), and the Hetchy Capital Improvement Program. Previously, he was the Director of the Wastewater Enterprise Capital Program for SFPUC ’s Infrastructure Division. He is a Professional Civil Engineer and a UK Chartered Civil Enginee r with over two decades of planning, design, construction, and management experience in the water/wastewater sector. Prior to joining SFPUC, Mr. Robinson worked with MWH/Stantec as a consultant and served in the British Army as a Royal Engineer Captain. Mr . Robinson has a master ’s degree in Civil Engineering and Management from the Queens University of Belfast, Northern Ireland.

Steven R. Ritchie. Steven Ritchie is the Assistant General Manager of the Water Enterprise, responsible for overseeing water system operations and planning from the Hetch Hetchy Project through the Regional Water System to the City Distribution Division. He is also responsible for the management of the SFPUC ’s lands and natural resources. Mr. Ritchie was the Manager of Planning at th e SFPUC from 1995 to 1998. Prior to his current assignment, he managed the South Bay Salt Pond Restoration Project, a multi -agency effort to restore 15,100 acres of valuable habitat in South San Francisco Bay, while providing for flood risk management and public access. In addition, Mr. Ritchie has worked at management positions at the San Francisco Bay Regional Water Quality Control Board (1987-1995), the CalFed Bay Delta Program (1998- 2000), and URS consultants (2000- 2004). He has a B.S. and M.S. in Civil Engineering from Stanford University.

Ongoing Investigations
In January 2020, the City’ s former Director of Public Works, Mohammad Nuru, was criminally charged with honest services wire fraud, conspiracy to commit money laundering and making false stateme nts to the Federal Bureau of Investigation (“FBI”). Mr. Nuru later pled guilty to honest services wire fraud and was sentenced to seven years in prison in August 2022. The FBI investigation into Mr. Nuru has led to the discovery of further corruption involving various former City officials and contractors, including the SFPUC ’s then General Manager, Harlan L.

40 Kelly, Jr. In November 2020, Mr. Kelly was charged in connection with an alleged bribery scheme involving Walter Wong, a San Francisco construction executive and permit expediting consultant, and an alleged bank fraud scheme involving Victor Makras, a San Francisco real estate broker and property developer. In July 2023, Mr. Kelly was convicted of one count of conspiracy to commit honest services wire fraud, one count of honest services wire fraud and four counts related to charges stemming from a bank fraud scheme. In March 2024, Mr. Kelly was sentenced to four years in prison, beginning June 2024.

The FBI investigation may be ongoing, a nd the City can give no assurance when the FBI will complete any investigation. The San Francisco District Attorney’s Office may also be independently investigating certain matters related to alleged corruption involving various former City officials and c ontractors, and the City can give no assurance when the District Attorney’s Office will complete any investigation.

Employee Relations
San Francisco. The City’s budget for fiscal years 2022-23 and 2023-24 included approximately 39,813 and 40,028 full -time and part -time budgeted and funded City positions, respectively. City workers are represented by 36 different labor unions. The largest unions in the City include the International Federation of Professional and Technical Engineers, Local 21 (“IFPTE”), which represent Wastewater Enterprise employees.

Wages, hours and working conditions of City employees, including employees of the SFPUC, are determined by collective bargaining pursuant to State law (the Meyers -Milias-Brown Act, California Government Code Sections 3500-3511) and the City Charter. San Francisco is unusual among California ’s cities and counties in that nearly all of its employees, including managerial and executive -level employees, are represented by labor organizations.

Further, the City Charte r requires binding arbitration to resolve negotiations in the event of an impasse. If an impasse occurs, the parties are required to convene a tripartite arbitration panel, chaired by an impartial third - party arbitrator, which sets the disputed terms of th e new agreement. The award of the arbitration panel is final and binding. This process applies to almost all City employees . Since 1976, no City employees have participated in a union-authorized strike, which is prohibited by the City Charter . On July 24, 2023, the California Public Employment Relations Board ( “PERB”) ruled in favor of the Service Employees International Union, Local 1021 (“SEIU”) and IFPTE, concluding that City Charter sections A8.346 and A8.409 prohibiting strikes by City employees are invalid, affirming an earlier ruling of an administrative law judge that such City Charter provisions violate the Meyers -Milias-Brown Act. The City has filed a notice of appeal to the California Court of Appeal with respect to the PERB decisi on. The City can give no assurance whether the appeal will be successful . See “RISK FACTORS – Risks Related to Wastewater Enterprise Facilities and Operation – Labor Actions.” The City’s employee selection procedures are established and maintained through a civil service system. In general, selection procedures and other merit system issues, with the exception of discipline, are not subject to arbitration. Disciplinary actions are generally subject to grievance arbitration, with the exception of sworn poli ce officers and fire fighters.

In 2022, the City negotiated two- year agreements (for fiscal years 2022 -23 through 2023-24) with 27 labor unions, including IFPTE and Laborers Internationals, Local 261, which represents Wastewater Enterprise employees. For fiscal year 2022-23, the parties agreed to a base wage increase of 5.25% on July 1, 2022. For fiscal year 2023-24, the parties agreed to a base wage increase of 2.5% on July 1, 2023, and 2.25% on January 6, 2024, with a provision to delay the fiscal year 2023 -24 increase by six months if the City’ s budget deficit for fiscal year 2023-24, as projected in the March 2023 update to the five -year financial plan, exceeded $300 million. The scheduled July 1, 2023 wage increase was implemented as the March 2023 upda te to the five-year financial plan did not project a $300 million deficit.

SFPUC. The SFPUC currently employs approximately 2,300 of the City’ s workers , of which approximately 17.6% work for the Wastewater Enterprise . The Charter governs the SFPUC ’s employment policies and authorizes the San Francisco Civil Service Commission to establish rules and procedures to implement those policies. Of the 36 labor unions representing City workers more broadly, 14 presently represent SFPUC employees, as set forth in “Table 1 – Wastewater Enterprise Memoranda of Understanding.”

41 Over the next five years, approximately 38.9% of the SFPUC workforce agency- wide, including approximately 48.6% of the Wastewater Enterprise workforce, will be eligible for retirement. A new generation of jobs will require workers with specialized training, skills and experience . The SFPUC ’s 2020 Strategic Sustainability Plan includes an “ effective workforce” goal, which focuses on a number of workforce development and sustainability initiatives. The SFPUC provides career opportunities and training to San Francisco residents and partners with unions, the City and other stakeholders to support apprenticeships and pre -apprentice training programs in the ski lled trad es to help maintain a skilled and reliable workforce for the SFPUC ’s operations and infrastructure development. In addition, the SFPUC provides high school, college and graduate student internship programs that span a variety of fields including e ngineering, water and wastewater management, finance, communications, human resources and information technology. The SFPUC also provides ethics training, diversity training, management training, environmental management system training, as well as fraud prevention and awareness training.

The following table summarizes the number of SFPUC and Wastewater Enterprise employees covered by a memorandum of understanding (similar to a collective bargaining agreement), each of which expired on June 30, 2024. The City is in the process of negotiating successor Memoranda of Understanding with negotiated wage increases potentially coming into effect on July 1, 2024. Pursuant to the City’s Administrative Code , new MOUs were submitted to the Board of Supervisors by May 15, 2024. The City expects to reach agreements with these labor unions on or prior to June 30, 2024.

TABLE 1

WASTEWATER ENTERPRISE

MEMORANDA OF UNDERSTANDING
Employee Bargaining Unit
SFPUC
Full-Time
Equivalent
Employment(1)
Wastewater
Enterprise
Full-Time
Equivalent
Employment(1)
International Association of Machinists, Lodge 1414 56 6 Carpenters, Local 22 21 3
Hod Carriers, Local 36 2 2
International Brotherhood of Electrical Workers, Local 6 141 24 Laborers, Local 261 168 44
Municipal Executives Association 206 24
Operating Engineers, Local 3 26 2
Plumbers, Local 38 239 36
International Federation of Professional and Technical Engineers, Local 21 1,111 191 Service Employees International Union, Local 1021 342 43 San Francisco City Workers United 14 5
Stationary Engineers, Local 39 299 183
Teamsters, Local 853 36 12
Transport Workers Union Local 250-A, Automotive Service Workers 11 1 Unrepresented Employees(2) 1 0
Total 2,673 576

(1) Represents budgeted numbers as of July 2023. Actual full-time equivalent employment totals will differ from the number of positions budgeted by the SFPUC for a variety of reasons, including certain requirements in the respective memoranda of understanding (similar to collective bargaining agreements). See “ FINANCIAL OPERATIONS – General – City Budget Process.
(2) Not covered by a memorandum of understanding (similar to a collective bargaining agreement).

Source: SFPUC, Human Resources Services.

42 Employee Benefit Plans
Retirement System Plan Description . The San Francisco City and County Employees ’ Retirement System (the “Retirement System” or “SFERS”) is charged with administering a defined- benefit pension plan (the “ Plan”) that covers substantially all City employees, including SFPUC employees, and cert ain other employees . The Retirement System was initially established by approval of San Francisco voters on November 2, 1920, and the State Legislature on January 12, 1921, and is currently codified in the Charter . The Charter provisions governing the Retirement System may be revised only by a Charter amendment, which requires an affirmative public vote at a duly called election . The Retirement System is administered by the Retirement Board (the “ Retirement Board”). The Plan provides basic service retiremen t, disability and death benefits based on specified percentages of final average salary and provides cost-of-living adjustments after retirement. The Plan also provides pension continuation benefits to qualified survivors.

Funding Practices . Employer and e mployee (member) contributions are mandated by the Charter .

Sponsoring employers, including the SFPUC, are required to contribute 100% of the actuarially determined contribution approved by the Retirement Board. The Charter specifies that employer contribu tions consist of the normal cost (the present value of the benefits that SFERS expects to become payable in the future attributable to a current year’s employment) plus an amortization of the unfunded liability over a period not to exceed 20 years . The Retirement Board sets the funding policy subject to the Charter requirements.

The Retirement Board adopts the economic and demographic assumptions used in the annual valuations .

Demographic assumptions such as retirement, termination and disability rates are based upon periodic demographic studies performed by a consulting actuarial firm approximately every five years . Economic assumptions are reviewed each year by the Retirement Board after receiving an economic experience analysis from the consulting actuarial firm. The Retirement Board adopted the current demographic assumptions at its December 9, 2020 Retirement Board meeting based on the experience study dated August 12, 2020. The current discount rate of 7.20% was adopted at the November 10, 2021 Retirement Board meeting, effective for the July 1, 2021 actuarial valuation.

The Retirement Board voted to maintain these assumptions for the 2022 and 2023 actuarial valuations at its November 17, 2022 and November 8, 2023 meetings, respectively. In the long term, the true cost of a pension plan is determined by actual results and not by assumptions.

While employee contribution rates are mandated by the Charter, sources of payment of employee contributions may be the subject of collective bargaining agreements with each union or bargaini ng unit . Since July 1, 2011, substantially all employee groups have agreed through collective bargaining for employees to contribute all employee contributions through pre-tax payroll deductions.

The following table shows total Retirement System liabilitie s, assets and percent funded for the last five actuarial valuations, as well as total contributions for fiscal years 2018-19 through 2022-23.

43 TABLE 2

CITY AND COUNTY OF SAN FRANCISCO
EMPLOYEES’ RETIREMENT SYSTEM
FISCAL YEARS 2018-19 THROUGH 2022-23
(IN THOUSANDS)
As of
July
1st
Actuarial
Liability
Market Value
of Assets
Actuarial
Value of
Assets
Market
Percent
Funded
Actuarial
Percent
Funded
Employee and
Employer
Contribution
in Prior Fiscal
Year
Employer
Contribution
Rates in Prior
Fiscal Year(1)
2019 $28,798,581 $26,078,649 $25,247,549 90.6% 87.7% $1,026,036 23.31% 2020 29,499,918 26,620,218 26,695,844 90.2 90.5 1,143,634 25.19 2021 31,905,275 35,673,834 30,043,222 111.8 94.2 1,245,957 26.90 2022 33,591,565 32,798,524 32,275,474 97.6 96.1 1,191,934 24.41 2023 35,351,967 33,688,428 34,137,005 95.3 96.6 1,086,567 21.35

(1) Employer contribution rates are shown before required employer/employee cost -sharing provisions. Employer contribution rates for fiscal years 2022-23 and 2023-24 are 21.35% and 18.24%, respectively.

Source: SFERS’ audited year -end financial statements and required supplemental information. SFERS ’ annual Actuarial Valuation Report dated July 1st.

Note: Information above reflects entire Retirement System, which covers substantially all City employees, including SFPUC employees, and certain other employees.

The City ’s net pension liabilities were approximately $ 2.6 billion for Fiscal Year 202 2-23. The amount allocable to the Wastewater Enterprise, as of June 30, 2023, was approximately $49.5 million.

The SFPUC is required to contribute at an actuarially determined rate and allocates the applicable portions of such contribution to the separate enterprises, including the Wastewater Enterprise. For Fiscal Years 201 8-19 through 202 2-23, the SFPUC ’s employee contribution rates varied from 7.5% to 1 2.0% as a percentage of gross covered salary. For Fiscal Years 2018-19 through 2022-23, the Wastewater Enterprise has paid 100% of its required contributions. The contributions by the Wastewater Enterprise required for Fiscal Years 2018-19 through 2022- 23 are summarized in the following table:

TABLE 3

WASTEWATER ENTERPRISE RETIREMENT SYSTEM CONTRIBUTION
FISCAL YEARS 2018-19 THROUGH 2022-23
(IN THOUSANDS)
Fiscal Year
(Measurement
Period)
Employer
Contribution
Rates
Wastewater
Enterprise
Contribution
2018-19 23.3% $12,816
2019-20 25.2 14,352
2020-21 26.9 16,083
2021-22 24.4 14,543
2022-23 21.4 12,383

Source: SFERS Actuarial Valuation reports as of July 1, 2019, July 1, 2020, July 1, 2021 and July 1, 2022, and SFPUC audited financial statements.

Plan Financial Reports and Funded Status. 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 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.

44 Health Care Benefits. The SFPUC participates in the City ’s agent multiple employer defined benefit plan, which operates as a cost -sharing multiple employer defined benefit plan for the SFPUC (the “ OPEB Plan”). The OPEB Plan is maintained by the City and is administered through the City’ s Health Service System and provides postemployment medical, dental and vision insurance benefits to eligible employees, retired employees, and surviving spouses. 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.

As prescribed under Governmental Accounting Standards Board (“ GASB”) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, net OPEB liability, deferred outflows/inflows of resources related to OPEB, and OPEB expense are actuarially determined on a citywide 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 Trust Fund investments measured at fair value.

The following table shows the components of the City’ s annual OPEB allocations for the Wastewater Enterprise for Fiscal Years 20 20-21 through 202 2-23, for the amount contributed to the plan, and changes in the City’s net OPEB obligation:

TABLE 4

ANNUAL OPEB OBLIGATION
FOR FISCAL YEARS 2020-21 TO 2022-23
(IN THOUSANDS)
2020-21 2021-22 2022-23
City’s reported net OPEB liabilities $3,823,336 $3,691,122 $3,746,270 Wastewater Enterprise’s proportionate share of City’s
contribution 3,263 3,365 3,412
Wastewater Enterprise’s proportionate share of City’s OPEB liability 50,711 49,123 49,035

Source: SFPUC, Financial Services.

The City’s OPEB net position liability was approximately $3.7 billion for Fiscal Year 2022-23. The amount allocable to the Wastewater Enterprise, as of June 30, 2023, was approximately $49.0 million.

The City issues a publicly available financial report on a City -wide level that includes the complete note disclosures and required supplementary information related to the City’ s post-retirement health care obligations. The report may 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, CA 94102, or by calling (415) 554-7500.

Pension and Health Care Cost Reforms . V oters implemented City employee pension and health care cost reforms to help mitigate future cost increases. These include the following propositions:

Proposition B. Proposition B was a Charter amendment approved by voters in June 2008 that increased the years of service required to qualify for employer -funded retiree health benefits for City employees who retire under SFERS and were hired on or after January 10, 2009. Previously, employees became eligible to participate in the retirement health care system after five years of service and the employer paid 100% of the contribution. Beginning with employees hired on or after January 10, 2009, empl oyees remain eligible to participate in the retirement health care system after five years of service, however, no employer contributions are required until 10 years of service.

From 10 to 15 years of service, employers pay 50% of the contribution, from 15 to 20 years of service 75%, and for employees with 20 years or more of service, 100%.

Proposition B also established a health care trust fund to pay for future costs related to retiree health care.

Employees hired on or after January 10, 2009, contribute up to 2% of their pre -tax pay, with employers contributing

45 an additional 1%, to the health care trust fund. Proposition B also increased maximum pension benefits for employees retiring at and after age 60 and enhances cost of living increases for pensions.

Proposition C . Proposition C was a Charter amendment approved by voters in November 2011 that changed the way the City and current and future employees share in funding SFERS pension and health benefits.

With regard to pension benefits, the base employee contribution rate remains at 7.5% for most employees when the City contribution rate is between 11% and 12% of City payroll. Employees making at least $50,000 will pay an additional amount up to 6% of compensation when the City contribution rate is over 12% of City payroll.

When the City contribution rate falls below 11%, employee contributions will be decreased proportionately.

Proposition C creates new retirement plans for employees hired on or after January 7, 2012 that: (1) for miscellaneous employees, increased the minimum retirement age to 53 with 20 years of service or 60 with 10 years; (2) for safety employees, kept the minimum retirement age at 50 with five years of service, but increased the age for maximum benefits to 58; (3) for all employees, limited covered compensation, calculated final compensation from a three year average, and changed the multipliers used to calculate pension benefits; and (4) for miscellaneous employees, raised the age of eligibility to receive vesting allowance to 53 and reduced by half the City’s contribution to vesting allowances.

With regard to health benefits, elected officials and employees hired on or before January 9, 2009, contribute up to 1% of compensation toward their retiree health care, with matching contribution by the City. For employees or elected officials who left the City workforce before June 30, 2001, and retire after January 6, 2012, Proposition C requires that the City contributions toward retiree health benefits remain at the same levels they were when the employee left the City workforce.

Proposition C also limits cost of living adjustments for SFERS retirees; however, in 2015, the Court of Appeals held in a suit against the City brought by a retiree organization, Protect Our Benefits v. City and County of San Francisco, 235 Cal. App. 4th 619 (2015) that certain changes to payment of supplemental cost of living allowances imposed by Proposition C could not be applied to current City employees and those who retired after November 1996 when the supplemental cost of living allowance provisions were originally adopted, but could be applied to SFERS members who retired before November 1996. This decision is now final and its implementation increased the July 1, 2016 unfunded actuarial liability by $429.3 million for Supplemental COLAs granted retroactive to July 1, 2013 and July 1, 2014.

On July 13, 2016, the Retirement Board adopted a resolution to exempt members who retired before November 6, 1996, from the “fully funded” provision related to payment of Supplemental COLAs under Proposition C. The resolution directed that retroactive payments for Supplemental COLAs be made to these retirees. After the Retirement Board adopted said resolution, the Retirement System published an actuarial study on the cost to t he fund of payments to the pre‐1996 retirees. The study reports that the two retroactive supplemental payments will trigger immediate payments of $34 million, create additional liability for continuing payments of $114 million, and cause a new unfunded liability of $148 million. This liability does not include the Supplemental COLA payments that may be triggered in the future. Under the cost sharing formulas in Proposition C, the City and its employees will pay for these costs in the form of higher yearly contribution rates. The City Controller has projected the future cost to the City and its employees to be $260 million, with over $200 million to be paid in the next five fiscal years. The City obtained a permanent injunction to prevent SFERS from making Supplemental COLA payments to these members who retired before November 6, 1996. The Superior Court ’s injunction was affirmed by the Court of Appeal.

46 THE WASTEWATER ENTERPRISE
Background and History
Initial development of the City’s combined system dates back to the second half of the 19th century. In accordance with common engineering practice of that period, the combined system collected both sewage and stormwater runoff and transported them to a large number of discharge points on the shoreline of San Francisco Bay.

The Wastewater Enterprise provides sewage and stormwater collection, treatment and disposal services through the operation of combined sewage and stormwater system. The Wastewater Enterprise provides such sanitary wastewater and stormwater services across eight distinct urban watersheds, with the Southeast Treatment Plant (as defined herein) providing all -weather wastewater treatment and the North Point Facility (as defined herein) providing wet -weather treatment, serving the North Shore, Channel, Islais, Sunnydale, and Yosemite urban watersheds with effluent outfalls to the San Francisco Bay (the “ Bayside Watersheds ”), and the Oceanside Treatment Plant (as defined herein) providing all -weather wastewater treatment serving the Richmond, Sunset, and Lake Merced urban watersheds with an effluent outfall to the Pacific Ocean (the “Westside Watersheds”).

The combined sewage and stormwater system handles an average of approximately 40 billion gallons per year of combined wastewater and stormwater. Approximately 34 billion gallons per year receive full secondary treatment, 4.5 billion gallons per year receive primary or decant treatment and are discharged to deep -water outfalls, and 1.5 billion gallons per year receive the equivalent to wet-weather primary treatment and are discharged through nearshore outfalls.

In several small areas of San Francisco representing less than 3 % of the City ’s total sewer mileage , wastewater and stormwater are collected and conveyed in separat e storm and sanitary sewers . These separate storm and sanitary sewers are generally located in redevelopment areas within San Francisco that are subject to the City ’s stormwater management ordinance. These redevelopment projects are also required to includ e green infrastructure to manage and treat stormwater. Green infrastructure includes tools such as rain gardens, green roofs and permeable pavement that slow and clean stormwater prior to discharge into the receiving waters or sewers in adjacent areas.

The operations of the Wastewater Enterprise are highly regulated. For more information, see “REGULATORY MATTERS.”
Service Area
General. The service area of the Wastewater Enterprise encompasses approximately 29,773 acres and includes residents of San Francisco and of northern San Mateo County through arrangements with three municipal sewer service providers: North San Mateo County Sanitati on District, the Bayshore Sanitary District and the City of Brisbane (collectively, the “ Municipal Customers ”). The SFPUC also currently provides wastewater treatment service on Treasure Island and Yerba Buena Island pursuant to contract, and expects event ually to expand its service area to include Treasure Island and Yerba Buena Island. See “– Wastewater Treatment – Contract Services, ” “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Treasure Island Capital Improvements ” and “FINANCING PLAN FOR WASTEWATER ENTERPRISE CAPITAL PROGRAM.” The Wastewater Enterprise serves residential, commercial and industrial users, making up a daytime “population equivalent” of approximately 942,433 in 2022. The United States Census Bureau estimates of the total daytime and nighttime populations of the City from calendar years 2018 to 2022 (most recent data available) are reflected in the table below.

47 TABLE 5

CITY AND COUNTY OF SAN FRANCISCO POPULATION
CALENDAR YEARS 2018 TO 2022
2018 2019 2020 2021 2022
Daytime(1) 1,132,295 1,150,041 1,109,742 940,211 942,433 Nighttime 883,305 881,549 874,784 815,201 804,437

(1) Includes the estimated number of people who work, but do not live, within San Francisco.

Source: United States Census Bureau, American Community Survey 1-Year Survey for calendar years 2018, 2019, 2021 and 2022; 5-year Survey for calendar year 2020.

Recent Economic Developments . As shown in “ Table 5 – City and County of San Francisco Population – Calendar Years 2018 to 2022, ” San Francisco has experienced an overall decline in both daytime and nighttime (resident) population since calendar year 2019 . This is due to, among other factors, widespread business closures, worker migration out of San Francisco as a result of remote work policies, a general decline in tourism, and unemployment concentrated recently in the tech -heavy information , professional and business services sectors, which can be attributed in some part to the COVID -19 pandemic. As of March 2024, remote work in San Francisco has persisted, with weekly office attendance at approximately 46% of pre -pandemic levels. Despite the general decline in population since calendar year 2019, the number of active sewer accounts has generally remained steady, as described under “– Customer Base” and shown in “Table 6 – Summary of Active Sewer Accounts by User Type – Fiscal Years 2018- 19 to 2022 -23.” See also “– Recent Factors Impacting Wastewater Revenues ” and “THE CITY AND COUNTY OF SAN FRANCISCO.”
Customer Base
As of June 30, 2023 , the SFPUC has 175,680 active retail wastewater accounts. Of these, approximately 85% are residential accounts, with the remainder being com mercial, industrial, or municipal. Major non-residential customer categories include retail, offices, restaurants, and services, which together account for approximately 15% of all customers. The remaining accounts are primarily accounts associated with fire suppression water accounts. As shown in “Table 6 – Summary of Active Sewer Accounts by User Type – Fiscal Years 2018-19 to 2022-23” below, the total number of customer accounts has increased by a total of 1 % since Fiscal Year 201 8-19, despite general declines in San Francisco ’s population since calendar year 2018. See “– Service Area” and “Table 5 – City and County of San Francisco Population – Calendar Years 2018 to 2022.” In addition to its retail customers, the SFPUC provides wholesa le sewage treatment services to the Municipal Customers located in northern San Mateo County, and operates wastewater treatment facilities on Treasure Island and Yerba Buena Island. See “– Wastewater Treatment – Contract Services.” The following table sets forth a five -year history of the number of customer accounts served by the Wastewater Enterprise, grouped by user type.

48 TABLE 6

SUMMARY OF ACTIVE SEWER ACCOUNTS BY USER TYPE
FISCAL YEARS 2018-19 TO 2022-23
User Type 2018-19 2019-20 2020-21 2021-22 2022-23
Multi-Family Residential(1) 36,387 36,467 36,528 36,595 36,603 Single-Family Residential 111,681 111,869 111,398 111,786 111,995 Subtotal Residential 148,068 148,336 147,926 148,381 148,598

Commercial(1) 24,802 24,721 24,941 25,278 25,564
Municipal Customers 772 1,150 1,182 1,208 1,218
Unmetered Properties 306 302 300 297 294
Suburban(2) 8 7 7 7 6
Total 173,956 174,516 174,356 175,171 175,680

(1) Includes Presidio Trust Wastewater Accounts, which consist of one multi-family residential, one mixed -use (residential and commercial), and three commercial customer accounts.
(2) In addition to suburban customers, service is provided to North San Mateo County Sanitation District, Bayshore Sanitary District and the City of Brisbane.

Source: SFPUC.

Separate rate schedules apply to single- family residential, multi- family residential, and non- residential customers. See “FINANCIAL OPERATIONS – Wastewater Enterprise Rates and Charges.” Combined Sewage and Stormwater System
On average, over three quarters of San Francisco’s annual rainfall occurs between November and March.

Depending on the duration, intensity and storm pattern, combined flows of sewage and stormwater can exceed the collection and treatment system hydraulic capaci ty, resulting in combined sewer discharges. The SFPUC ’s permits explicitly authorize combined sewer discharges from the system ’s 3 5 combined sewer discharge outfalls when a storm exceeds the system ’s capacity. To reduce the number and volume of combined sewer discharges during wet - weather events, the system relies on a series of large underground transport/storage structures (box sewers and tunnels) around the perimeter of San Francisco to intercept, temporarily store and transport the mixture of storm runoff and sewage to treatment facilities. When the storage capacity of the sewers, the transport/storage structures and the wet weather capacity of their associated treatment facilities are exceeded during large storms, combined sewage is discharged through one or more combined sewer discharge outfalls. The Westside treatment system has seven combined sewer discharge outfalls to the Pacific Ocean, and the Bayside treatment system has 29 combined sewer discharge outfalls to San Francisco Bay. The primary purpose of this system is to maximize treatment and discharge at the wastewater treatment plants and minimize the incidence and volume of discharge from the combined sewer outfalls.

Sewer Lines . The Wastewater Enterprise ’s collection and transport system includes approximately 1,000 miles of main sewer lines, of which approximately 800 miles is made up of collecting sewers of 36 inches or less in diameter. See “Table 7 – Sewer System by Pipe Length in Miles and Age ,” which summarizes these assets by age. The SFPUC ’s capital program includes replacing specific sewer sections that have been priori tized for replacement using an asset management approach that considers the current condition of the section in question and applicable risks of failure. Sewers are inspected through closed- circuit television and the likelihood of failure is calculated on a condition scoring algorithm that takes into account the severity and quantity of defects identified in each inspection.

49 TABLE 7

SEWER SYSTEM BY PIPE LENGTH IN MILES AND AGE
Year Built
Gravity Pipe
≤ 36” Diameter All Other Pipe(1) Total Pipe Percent of Total 1860 – 1900 56 35 92 9%
1901 – 1940 305 65 370 37%
1941 – 1980 161 57 217 21%
1981 – present 259 52 310 31%
Unknown 21 1 22 2%
Total(2) 802 210 1,011 100%

(1) Includes gravity pipe greater than 36” in diameter, tunnels, force mains, transport/storage, effluent outfall and overflow discharge.
(2) Totals may not add due to independent rounding.

Source: SFPUC, Wastewater Enterprise.

Transport/Storage Structures. In addition to sewer lines, the Wastewater Enterprise maintains 24 miles of underground transport/storage structures that are located around the perimeter of San Francisco to intercept, temporarily store and transport the mix of stormwater runoff and sewage to treatment facilities . These structures , which operate in both dry and wet weather, were built between 1979 and 1997. The largest of these structures, the Westside transport structure, is approximately two miles long, 45 feet deep and 25 feet wide. The transport/storage structures were designed with sufficient storage to reduce combined sewer discharges and protect beneficial uses of receiving waters for the San Francisco Bay and Pacific Ocean. The transport/storage and collection system provides approximately 200 million gallons worth of storage, or approximately 1.5 to three days of dry weather storage depending on the specific storage box sections and related upstream service area.

The SFPUC b elieves that the performance of the transport/storage structures and treatment facilities complies with the requirements of the n ational Combined Sewer Overflow Control Policy, as implemented by discharge permits issued by the EPA and the San Francisco Bay Regional Water Quality Control Board (the “Regional Water Quality Control Board ”). See “REGULATORY MATTERS – Combined Sewer Overflow Control Policy.” By providing both storage volume and detention time, the transport/storage structures allow for delayed treatment of combined sewage and stormwater flows at the treatment plants at the conclusion of a wet weather event. They also provide a “buffer” for dry weather flows in the event of an unplanned outage.

Pump Stations . The Wastewater Enterprise has 29 pump stations, which include 10 major all- weather pump stations, seven major wet-weather pump stations and 12 minor pump stations.

Outfalls and Nearshore Discharge Structures . The Wastewater Enterprise has three offshore outfalls that discharge to deep waters – Southeast Outfall, Northpoint Outfall, and Southwest Ocean Outfall. In addition to these outfalls, 35 combined sewer discharge structures, or near-shore outfalls, serve as relief points of the combined sewer system. These structures operate infrequently, and only during large storm events. Discharges through these permitted facilities receive the equivalent of wet weather primary treatment.

Urban Watershed Management. The SFPUC, through its combined sewer operations, manages stormwater drainage and is working to improve system performance. The SFPUC ’s stormwater program is designed to maximize stormwater management before flows enter the combined system, engage community members, improve watershed function, enhance the environmental quality of San Francisco’s neighborhoods, and protect the water quality of the San Francisco Bay and Pacific Ocean. To achieve these goals, the SFPUC has adopted regulations that require new and redevelopment projects in San Francisco to install and operate green infrastructure for managing stormwater runoff.

50 Wastewater Treatment
Wastewater Treatment Plants. The Wastewater Enterprise operates three major wastewater treatment facilities (in addition to the transport/storage structures that provide the equivalent of wet weather primary treatment), two serving the Bayside Watersheds and one serving the Westside Watersheds:
• Southeast Water Pollution Control Plant (the “ Southeast Treatment Plant”), which treats dry and wet weather flows collected from the Bayside Watersheds (18, 597 acres, or 63% of the total city service area) as well as the Municipal Customers;
• North Point Wet Weather Facility (the “ North Point Facility ”), which treats a portion of wet- weather flows collected from the north Bayside Watersheds; and • Oceanside Water Pollution Control Plant (the “Oceanside Treatment Plant ”), which treats dry and wet weather flows collected from the Westside Watersheds (11,176 acres, or 37% of the total city service area) and minor flows from northern San Mateo County.

The Oceanside Treatment Plant and related collection facilities in the Westside Watersheds are not interconnected with the Southeast Treatment Plant or the North Point Facility and related collection facilities in the Bayside Watersheds.

Southeast Treatment Plant. The Southeast Treatment Plant is an all -weather secondary wastewater treatment plant serving the sewage and stormwater treatment needs for nearly two -thirds of San Francisco in the Bayside Watersheds, which consists of 18,587 acres including the Ma rina, Downtown, South of Market Area, Mission, Hunters Point, and Visitacion Valley neighborhoods, plus 1.65 million gallons per day ( “mgd”) from the Municipal Customers. Land uses in the Bayside Watersheds are a mixture of residential, commercial, light industrial and heavy industrial. The Southeast Treatment Plant, as the only Bayside dry- weather facility, is a critical component of the system that must meet high availability requirements. The Bayside Watersheds wastewater flow is collected by the combined sewer system and conveyed to the Southeast Treatment Plant via gravity sewers, tunnels, transport/storage structures, pump stations and force mains.

The Southeast Treatment Plant provides preliminary, primary and secondary treatment us ing a high-purity- oxygen activated sludge process prior to effluent disinfection. Sludge treatment consists of gravity- belt thickening, anaerobic digestion, chemical conditioning and dewatering. The Southeast Treatment Plant ’s treated effluent is discharged during dry weather into the San Francisco Bay through a deep- water outfall near Pier 80. During wet weather, treated effluent is discharged through the Pier 80 outfall and through an additional outfall at the shoreline of Islais Creek.

The Southeast Treatment Plant was planned and designed in the 1940s and commenced operations in 1951 as a primary treatment facility. To meet the mandates of the federal Clean Water Act, the Southeast Treatment Plant was expanded in the early 1980s to provide secondary trea tment of all Bayside Watersheds’ dry-weather flows with a daily average design capacity of approximately 85 mgd and peak- hour design flow of 142 mgd. In 1996, the Southeast Treatment Plant ’s wet weather capacity was increased to 250 mgd, with 150 mgd recei ving secondary treatment prior to disinfection and discharge. During wet weather, additional wet- weather facilities are operated at the Southeast Treatment Plant to provide primary treatment and disinfection to the remaining 100 mgd of combined sewage flow.

The Southeast Treatment Plant operates every day of the year in both wet weather and dry weather conditions. Many of its critical systems have operated past their expected useful life and replacement facilities are needed to ensure reliability requiremen ts are met, including seismic upgrades. At the start of SSIP, the program management consultant conducted a full condition assessment of the Southeast Treatment Plant and the highest priority needs were identified for both the liquid treatment and solids t reatment facilities. The assessment considered current maintenance records, remaining life and compliance with levels of service. Projects have been identified for all of the major treatment processes, and for various support, monitoring and control system s. Maintenance and repair projects, including repairs to digester roofs and existing biosolids treatment and storage equipment, have been

51 undertaken to bolster some of the facilities considered to be the most vulnerable so that they function until the new facilities are completed. See “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Sewer System Improvement Program.” Because the Southeast Treatment Plant is not interconnected with the other treatment plants, it cannot be shut down during construction of such projec ts as there would be no substitute wastewater treatment option. Instead, the Southeast Treatment Plant will remain in service during construction. See “RISK FACTORS – Risks Related to Wastewater Enterprise Facilities and Operation – Aging Facilities” and “– Limited Redundancy.” North Point Wet-Weather Facility. The North Point Facility is a wet-weather primary wastewater treatment plant serving the northeast quadrant of the Bayside Watersheds, an area comprising of predominantly commercial and residential land uses. The North Point Facility was originally constructed in 1951 as an all -weather primary treatment facility, but did not incorporate digesters , so sludge was pumped to the digesters at the newly constructed Southeast Treatment Plant for treatment. In response to the mandates of the federal Clean Water Act, the North Point Facility was converted into a strictly wet- weather treatment plant in 1983, providing up to 150 mgd of primary treatment.

The North Point Facility provides prelimin ary, primary and disinfection treatment. Effluent from the North Point Facility is discharged into the San Francisco Bay through a deep water outfall system at Piers 33 and 35. At the conclusion of each wet -weather event, grit and solids are flushed out of the sedimentation tanks and directed to the Channel Pump Station, which pumps them to the Southeast Treatment Plant for treatment.

Oceanside Treatment Plant . Constructed in 1993, the Oceanside Treatment Plant is an all -weather secondary wastewater treatment plant that provides the wastewater treatment and stormwater treatment needs for the Westside Watersheds and San Mateo County flows that drain to the Westside Watersheds. Land uses in the Westside Watersheds are primarily residential.

The Oceanside Treat ment Plant ’s dry weather capacity is up to 43 mgd of secondary treatment. The Oceanside Treatment Plant ’s wet-weather capacity is up to 65 mgd of primary and 43 mgd of secondary treatment using the high-purity-oxygen activated sludge process. Sludge treatment consists of thickening, anaerobic digestion, chemical conditioning and dewatering. The Oceanside Treatment Plant began operations in 1993 and complies with all dry- and wet-weather discharge requirements. Up to 195 mgd of plant effluent and decanted we t weather flow from the westside transport storage boxes is discharged approximately four miles offshore into the Pacific Ocean through a deep ocean outfall.

Emergency Operations. The SFPUC believes that it maintains up-to-date contingency plans in the event of an unplanned outage or failure of a treatment facility, process unit, pump station, sewer pipeline or other infrastructure element. The wastewater collection and treatment system is designed with some redundancy and flexibility in order to facilitate responses to emergency events, though the Westside Watersheds and Bayside Watersheds are not interconnected.

If an unplanned shutdown of critical treatment facilities were to occur, the transport/storage s tructures and collection system pipes provide approximately 200 million gallons of storage (providing approximately 1.5 to three days of storage in some portions of the system, depending on the inflow). The wastewater treatment facilities and major pump stations are also built with some redundancy, and in some instances may continue operation with select equipment outages. Critical infrastructure elements with higher failure risk or for which adequate redundancy is not available have been identified as proj ects in the SSIP to increase system flexibility and the ability to respond to unplanned events. See “RISK FACTORS – Risks Related to Wastewater Enterprise Facilities and Operations.” Biosolids Management . The Southeast Treatment Plant and the Oceanside Treatment Plant produce approximately 55,000 wet tons of biosolids per year. Biosolids are highly treated, anaerobically digested wastewater solids that are rich in plant nutrients and utilized as fertilizer. The SFPUC ’s biosolids are transported to Sacramento County and used as a fertilizer, transported to Lystek, a facility which processes biosolids into a liquid fertilizer, and transported to a facility in Merced where they are processed into biosolids compost.

The Wastewater Enterprise coordinates the transportation, use, testing, and reporting for biosolids in accordance with applicable regulations. The SFPUC plans to implement technology at the Southeast Treatment Plant which will produce “ Class A” biosolids a s part of a major capital upgrade of the plant. The Biosolids Digester

52 Facilities Project (the “ Biosolids Digester Facilities Project ”) will replace existing infrastructure, produce a high quality biosolids product, ensure system reliability and reduce negative impacts to the neighborhood with respect to aesthetics and odors. For more information about the Biosolids Digester Facilities Project, see “ WASTEWATER ENTERPRISE CAPITAL PROGRAM – Sewer System Improvement Program – Program Scope – Treatment Facilities – Biosolids Digester Facilities Project.” See also “REGULATORY MATTERS.” Contract Services. The Wastewater Enterprise operates wastewater treatment facilities on Treasure Island and Yerba Buena Island, both located in the San Francisco Bay between San Francisco and Oakland, pursuant to an agreement with the Treasure Island Development Authority (“ TIDA”). TIDA is a non -profit public benefit agency created by the Board of Supervisors in 1997 vested with the rights to administer municipal services to Treas ure Island and Yerba Buena Island during interim reuse of the property. Such contractual wastewater treatment service is provided at a wastewater treatment plant currently owned by TIDA and operated by the SFPUC on Treasure Island.

The wastewater system serving Treasure Island and Yerba Buena Island currently relies on pumping to convey sewage to the treatment plant on Treasure Island for treatment and discharge. The treatment plant is designed to provide secondary treatment of an average of 2.0 mgd and can provide secondary treatment of up to 4.4 mgd during wet weather. The wastewater collection system consists of 10 miles of sewers and several wastewater pump stations, while the stormwater collection system includes several stormwater pump stations and several shallow water outfalls. The SFPUC currently operates and maintains 16 pump stations. These existing facilities are not owned by the SFPUC and are not interconnected with the Wastewater Enterprise’s combined sewer system in San Francisco.

The SFPUC is not currently the wastewater utility provider on Treasure Island and Yerba Buena Island, but rather an independent contractor of that provider.

It is not anticipated that the SFPUC will acquire existing facilities; rather, the SFPUC expects to replace the wastewater infrastructure on Treasure Island and Yerba Buena Island with new, SFPUC-owned facilities and that the existing facilities currently owned by TIDA will be decommissioned and demolished as part of the area’s redevelopment plans. The Treasure Island Water Resource Recovery Facility is being constructed as part of ongoing redevelopment activities on Treasure Island and is anticipated to be completed in August 2026. See “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Treasure Island Capital Improvements – Treasure Island Water Resource Recovery Facility.” The SFPUC anticipates that certain new facilities being built by developers as part of the project, including the new collection and treatment facilities, will eventually be transferred to the SFPUC and integrated into the Wastewater Enterprise’s overall system assets, beginning with four pump stations by late 2024 or early 2025.

Following completion of the Treasure Island Water Resource Recovery Facility and related asset transfers, the SFPUC plans to provide wastewater treatment service and impose rates and charges directly on customers on Treasure Island and Yerba Buena Island. Payments the SFPUC receives from such customers would constitute Revenues, as and to the extent provided under the Indenture. The SFPUC is expected to become responsible for operation and maintenance of the new collection and treatment facilities, and such costs would constitute Operation and Maintenance Costs of the Wastewater Enterprise, as and to the extent provided under the Indenture. Finally, the SFPUC would be responsible for the future repair and replacement of all facilities transferred to it, including the new collection and treatment facilities. See “OBLIGATIONS PAYABLE FROM NET REVENUES – Parity Loans,” “– Projected F uture Demand,” “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Treasure Island Capital Improvements” and “FINANCING PLAN FOR WASTEWATER ENTERPRISE CAPITAL PROGRAM.” System Capacity
When the three treatment facilities and other elements of the collection system are fully operational, the Wastewater Enterprise can provide up to 575 mgd of combined wastewater and stormwater treatment, including 193 mgd of secondary treatment, 272 mgd of primary treatment and 110 mgd of equivalent-to-primary treatment.

53 TABLE 8

TREATMENT PLANT MAXIMUM CAPACITY
(MILLION GALLONS PER DAY)
Plant Dry Weather Peak Wet Weather
Southeast Treatment Plant 85.4 250.0
Oceanside Treatment Plant 43.0 65.0
North Point Facility -- 150.0
Total 128.4 465.0

Source: SFPUC, Wastewater Enterprise.

The three treatment plants each discharge through separate deep-water outfalls. At the Southeast Treatment Plant, during peak wet -weather events , secondary treated effluent also can be discharged through a shallow water outfall to Is lais channel. The combined sewer system is designed to handle wet -weather events and its permits explicitly authorize combined sewer discharges from the system ’s 3 5 combined sewer discharge outfalls when a storm exceeds the capacity of the system. See “– Combined Sewage and Stormwater System.” The combined sewer and stormwater system has the capacity to divert, manage, and treat a large volume of wastewater and stormwater. Some extreme storms can exceed the capacity of the system. Building infrastructure large enough to prevent flooding in extremely large storms is not feasible. Flooding did occur in some areas of San Francisco during the extreme storms that occurred in late December 2022 and early January 2023. Such storms did not have a significant impact on the operation of the Wastewater System, but did cause some damage, including damage to motors and sludge pumps at the Southeast Treatment Plant, pumps and equipment at the North Shore Pump Station, compressors, instruments at the Westside Pump Station a nd instruments within the Westside transport structure and an inlet gate at the Channel Pump Station and created sinkholes at various locations throughout San Francisco. The SFPUC anticipates that both short - and long- term capital projects will be required to complete repairs to damaged facilities. Total cost of damages is expected to be at least $4.1 million; however, final costs will not be known until at least 2025. The SFPUC anticipates it will be able to pay such costs from reserves, revenues of the Wastewater Enterprise, and/or proceeds of existing Wastewater Enterprise bonds. The City has applied for federal and State disaster relief funding, and the SFPUC plans to seek reimbursement for qualified expenses. See also “RISK FACTORS – Risks Related to Wastewater Enterprise Facilities and Operation – Natural and Man-Made Disasters; Flooding.”
Current System Demands
Wastewater Enterprise facilities collected, treated and discharged an average of approximately 58. 8 mgd of sanitary wastewater during dry-weather periods between calendar years 2019 to 2023.

TABLE 9

A VERAGE DRY WEATHER TREATMENT
CALENDAR YEARS 2019 TO 2023
(MILLION GALLONS PER DAY)
Plant 2019 2020 2021 2022 2023
Southeast Treatment Plant 52.6 48.3 48.1 42.7 44.2
Oceanside Treatment Plant 12.4 11.6 12.6 10.9 10.4
Total 65.0 59.9 60.7 53.6 54.6

Source: SFPUC, Wastewater Enterprise.

54 Recent Factors Impacting Wastewater Revenues
Billed sewer discharge volumes are based on metered water usage; therefore, lower than anticipated water usage results in lower than anticipated revenues. Retail water usage was approximately 59.5 mgd in Fiscal Year 2018-19, and approximately 52. 0 mgd in Fiscal Year 2022 -23, approximately 13 % lower than pre -pandemic Fiscal Year 2018-19 levels. Several factors have contributed to the SFPUC ’s reduced retail water sales in recent years, including, but not limited to, certain developments in the local San Francisco economy and weather conditions. See “– Service Area – Recent Economic Developments .” For example, there has been a general decline in San Francisco’s population in recent years due to, among other factors, widespread business closures, worker migration out of San Francisco as a result of remote work policies, a general decline in tourism, and unemployment concentrated recently in the tech -heavy information, professional and business services sectors, which can be attributed in some part to the COVID-19 pandemic.

Specifically, according to the United States Census Bureau, in calendar year 2019, prior to the onset of the COVID-19 pandemic, the daytime population in San Francisco was 1,150,041 people and the nighttime (resident) population was 881,549 people. In calendar year 202 2 (most recent data avai lable from the United States Census Bureau), the daytime population decreased by 18. 1% to 942,433 people and the nighttime population (resident) population decreased by 8.7 % to 804,437 people. See also “ Table 5 – City and County of San Francisco Population – Calendar Years 2018 to 2022.” While comparable data is not yet available from the United States Census Bureau for calendar year 202 3, reports from the California Department of Finance, Demographic Research Unit, show a

0.6% decline in the resident popul ation between July 2022 and July 2023. In addition, San Francisco still lags the State as a whole in time spent at workplaces, and weekly office attendance has only reached approximately 44% of pre-pandemic levels, as compared to 6 3% in Austin, Texas, 49% in Los Angeles, California and 53% in New York, New York, all as of June 5, 2024. The City has also experienced the largest increase in office vacancy among major urban office markets in the United States . Office vacancy in San Francisco was estimated at 32% as of March 2024, as compared to ap proximately 5% before the COVID -19 pandemic , and as further compared to 23% in Austin, Texas, 27% in Los Angeles, California and 18% in New York, New York, as of March 2024.

In addition, weather conditions and actions taken in response thereto over the past several years have resulted in reduced water usage. Water Years 2020 to 2022 represent the driest three -year period on record for California. During such time, retail water sales declined as customers were asked to conserve water. Precipitation and snowpack in Water Year 2023 was significantly above average, while precipitation and snowpack in Water Year 2024 is trending at or above average . In years with greater than normal rainfall, retail water sales generally decline as customers typically reduce water use for outdoor irrigation. Because billed sewer discharge volumes are based on metered water usage, lower than anticipated water usage results in lower than anticipated revenues for the Wastewater Enterprise.

Projected Future Demand
The 2025 Financial Plan (as defined herein) projects that in -City wastewater flows will increase through Fiscal Year 2025 -26 as water usage recovers from its all -time low during Fiscal Year 2021 -22 caused by the combined effects of the pandemic and recent drought. After Fiscal Year 2025 -26, water usage is projected to decrease slightly over time despite an assumed population growth of approximately 0.6% annually. See “– Service Area” and “– Customer Base.” This differential is attributable to decreases in average per capita water usage due to ongoing conservation initiatives, including plumbing codes which apply to all new development, as well as the impact of price elasticity on demands caused by large rate increases.

This growth includes the SFPUC ’s planned expansion of its service area to include Treasure Island and Yerba Buena Island. In connection with such expansion, the SFPUC is constructing the Treasure Island Water Resource Recovery Facility, a new facility that will provide reliable service for Treasure Island and Yerba Buena Island residents and meet the recycled water demands of future redevelopment on Treasure Island and Yerba Buena Island. See “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Treasure Island Capital Improvements.” The Board of Supervisors and Mayor Breed approved the City’ s housing plan for the next eight years (2022-2030) on February 1, 2023 (the “Housing Element 2022 Update ”). The Housing Element 2022 Update targets the cr eation of 82,000 units by 2031. To maintain a more conservative revenue outlook, t he 2025 Financial

55 Plan used a forecast based on the prior Housing Element 2020 Update to forecast population growth. In addition to the Treasure Island Water Resource Recovery Facility , this population growth may require dry-weather treatment capacity expansion at Wastewater Enterprise’s treatment plants over the next 10-20 years.

Because the SFPUC maintains a combined sewer system, there may be other factors in the future, including environmental changes and regulatory developments, that could require expanded collection or treatment capacity.

See “REGULATORY MATTERS.”

WASTEWATER ENTERPRISE CAPITAL PROGRAM
Capital and Financial Planning Process
The SFPUC’s long-term capital and financial planning is performed on an annual rolling 10- year forward looking basis. The SFPUC prepares a 10- year capital plan for each of its enterprises, as required by the Charter, which serves as the basis for the development of the annual 10- year financial plan. Proposed long- term capital programs, projects and investments, and related costs are included in the 10- year financial plan. Consistent with the Charter, updates to the 10 -year capital plan and 10 -year financial plan are generally reviewed at least annually and adopted by the Commission each February. The 10- year financial plan provides estimated rate impacts of projected capital and operating spendi ng and assures compliance with the SFPUC ’s adopted financial policies, including its debt service coverage and fund balance reserve policy targets.

The 10- year capital plan is not a budget and is not “ appropriated” like a budget. The annual capital programs can be revised during the development of the budget and final projects, costs and totals for specific capital improvements to be financed can change. Consequently, even though the annual budgets passed are based on the 10 - year capital plan, they may occasionally differ from it.

The Wastewater Enterprise’ s 10 -year capital plan for Fiscal Years 2024 -25 to 2033 -34, adopted by the Commission on February 13, 2024 (the “ 2025 Capital Plan ”), totals approximately $6.040 billion, which includes approximately $892. 5 million budgeted for Fiscal Year 2024- 25. See “ FINANCING PLAN FOR WASTEWATER ENTERPRISE CAPITAL PROGRAM.” The 2025 Capital Plan includes projects in four categories, each of which is further described below: (i) the SSIP; (ii) Renewal and Replacement; (i ii) Treasure Island Capital Improvements; and (iv) Wastewater Facilities and Infrastructure.

The total cost of the 2025 Capital Plan is approximately $1. 161 billion more than the previous capital plan adopted by the Commission in February 2023. The increase is primarily driven by the inclusion of the Mainstream Nutrient Reduction Project, which is needed to meet expected regulatory requirements, as well as co sts increases in existing projects, such as the Biosolids Digester Facilities Project and the Folsom Area Stormwater Improvements Project. For more information about these projects, see “ – Sewer System Improvement Program – Program Scope – Treatment Facilities – Mainstream Nutrient Reduction Project ,” “– Biosolids Digester Facilities Project” and “ – Stormwater Management/Flood Resilience – Folsom Stormwater Improvement Project (Phase 1 and 2).” Sewer System Improvement Program
Program Summary . The Sewer S ystem Improvement Program was initiated as a citywide investment to upgrade the SFPUC’s existing infrastructure to ensure a reliable, sustainable, and seismically safe sewer system. The SSIP contains a series of major capital improvement projects that are necessary to maintain the City ’s combined sewage and stormwater system in a state of good repair, as well as to continue meeting Commission-endorsed goals and levels of service. The Commission ’s original authorization of the SSIP in August 2012 contemplate d a three- phase implementation approach over a 20- year period to manage rate impacts, considered construction sequencing impacts, and maintained existing operations and permit compliance. The highest priority and best -defined projects, which focused on mai ntaining regulatory compliance, enhancing process reliability and redundancy, implementing pilot green infrastructure projects, improving plant odor control, and replacing existing biosolids and headworks facilities with state -of-the-art technology, were i ncluded in the first phase of the SSIP ( “Phase 1 Projects ”). The SFPUC has since transitioned from implementing the original three -phase approach over a 20- year period to implementing Phase 1 Projects and initiating projects originally identified for the second and third phases of the

56 SSIP (referred to herein as the “Other SSIP Projects”) based on priority, schedule, and affordability, as part of its rolling 10 -year capital plan. The budget for Phase 1 Projects in the 2025 Capital Plan is $839.9 million and the budget for Other SSIP Projects in the 2025 Capital Plan is $3.162 billion, for a total of $4.002 billion.

Program Objectives and Goals . The SSIP capital improvement projects are designed to address infrastructure challenges and needs facing the Wastewater Enterprise, maximize system reliability and flexibility, improve operational and seismic reliability, and promote current and future regulatory compliance. The SSIP project development considers environmental benefits, sustainability, and community benefits in addressing long- term wastewater needs. The program goals for the SSIP include the following: (1) maintain a compliant, reliable, resilient and flexible system that can respond to catastrophic events; (2) integrate grey and green infrastructure to manage stormwater and minimize flooding; (3) provide bene fits to impacted communities; (4) modify the system to adapt to climate change; (5) achieve economic and environmental sustainability; and (6) maintain ratepayer affordability.

Program Scope. The SSIP is further separated into four major categories: (i) Pr ogram Management, which make up approximately $134. 3 million of the 2025 Capital Plan, (ii) Treatment Facilities, which make up approximately $2.859 billion of the 2025 Capital Plan, (iii) Sewer/Collection System, which make up approximately $206.0 million of the 2025 Capital Plan, and (iv) Stormwater Management/Flood Resilience, which make up approximately $802.5 million of the 2025 Capital Plan. Each category is further described below.

Program Management . This category includes overall program management support for SSIP capital projects and associated land reuse projects. The SFPUC aims to identify the best utilization of the Southeast Treatment Plant land development and building assets to develop the most efficient and economic approach to transform the existing wastewater plant into an integrated, well-connected campus that fulfills operation needs while prioritizing public safety and cultivating a healthy and inspired workforce. Various conceptual design efforts will create a site-wide prioritized vision of how the Southeast Treatment Plant campus will function and develop for the next generation. This category also includes support for securing low -interest loans and grants, including SRF loans and WIFIA loans (see “ OBLIGATIONS PAYABLE FROM NET REVENUES – Parity Loans” and “– Water Infrastructure Finance and Innovation Act Loans ”). Furthermore, this category includes support for continuous internal process improvements in an effort to achieve better efficiencies and outcomes with project delivery, as well as for asset management integration and regulatory compliance.

Treatment Facilities . P
hase 1 Projects focus mainly on improvements to the treatment plants and wet - weather facility. Treatment plant projects provide improvements at the Southeast Treatm ent Plant, Oceanside Treatment Plant and North Point Facility are aimed at updating existing infrastructure and technologies, increasing seismic and operational reliability, and reducing odors, noise, visual and other negative public impacts. These projects also help maintain regulatory compliance by ensuring continued and reliable asset performance.

A majority of the Phase 1 Projects are occurring at the Southeast Treatment Plant to upgrade the buildings and systems that were originally constructed in the 1950s (for example, see “– Biosolids Digester Facilities Project” below). There are also other Phase 1 projects focused on liquid treatment and basic infrastructure, including construction of a new all -weather headworks facility (see “– SEP New Headworks ( Grit) Replacement Project ” below), improvements to existing clarifiers, facility -wide distributed control systems, and power feed and switchgear. The Southeast Treatment Plant will be operational throughout the construction of these capital improvements. See also “WASTEWATER ENTERPRISE – Wastewater Treatment – Southeast Treatment Plant” and “RISK FACTORS – Risks Related to Wastewater Enterprise Facilities and Operation – Limited Redundancy.” In addition to the work at Southeast Treatment Plant, there are also Phase 1 Projects being implemented to improve the seismic, electrical and general reliability to both the Oceanside Treatment Plant and the North Point Facility. Other SSIP Projects have also been initiated to provide various process improvements to the Southeast Treatment Plant, Oceanside Treatment Plant and North Point Facility.

Significant projects within the treatment facilities category include the following:
• Biosolids Digester Facilities Project. The largest component of the Phase 1 Projects is the Biosolids Digester Facilities Project, which will replace and relocate the SFPUC ’s existing solids treatment facilities

57 at the Southeast Treatment Plant with more reliable, efficient, and modern technologies and facilities. The Biosolids Digester Facilities Project, which consists of new digester and solids handling facilities to replace the existing facilities at the Southeast Treatment Plant, will include more modern treatment processes designed to produce “ Class A” biosolids. Biosolids treatment processes are expected to include solids thickening, screening, dewatering, thermal hydrolysis pretreatment, digestion, gas handling, biogas utilization, and odor control. As of December 2023, construction is at approximately 50% completion, and the construction work packages for all the major biosolids facilities have been bid and awarded. Construction of the five digester vessels is in its final stages. Mechanical, electrical, and plumbing installations have been initiated in the digester basement, solids pretreatment building, and supporting facilities and pipe galleries. Foundation work and underground utilities for biosolids dewatering building are near complete and concrete slabs are being placed. Project completion is scheduled for 2029. The original budget for the Bio solids Digester Facilities Project, approved by the Commission in August 2012, was $1.681 billion; however, the budget for the project has significantly increased to $2.673 billion, with $753.5 million in the 2025 Capital Plan. While the scope and schedule of the project remains the same, the budget has increased due in part to, complex site and construction conditions, volatile commodity costs, supply chain issues related to the COVID -19 pandemic, and a limited pool of potential and qualified bidders on contracts. The SFPUC can provide no assurance that the total cost of the Biosolids Digester Facilities Project will not be higher than, or that the ultimate completion date of the project will not be later than, currently estimated. See also “ RISK FACTORS – Cost of Capital Program Projects; Timely Completion of Capital Program Projects ” and “– Construction Related Risks. ” The SFPUC has secured an SRF loan in the amount of $132.0 million, the BDFP WIFIA Loan in the amount of up to $699 million, and the STPI WIFIA Loan in the amount of up to $514 million for a portion of the project. See “ OBLIGATIONS PAYABLE FROM NET REVENUES – Parity Loans ” and “– Water Infrastructure Finance and Innovation Act Loans.”
The SFPUC is also developing a biogas utilization facility to process biogas produced by the Biosolids Digester Facilities Project. The biogas utilization facility will accept biogas from the new biosolids digesters, treat and upgrade the biogas to natural gas quality, and compress and inject the biogas into an e xisting PG&E pipeline. The SFPUC anticipates that the biogas utilization facility will be ready for operation in alignment with the start- up and commissioning of the Biosolids Digester Facilities Project; however, the SFPUC can provide no assurance with re spect to the ultimate completion date for the entire project. The biogas utilization facility is expected to have a construction cost of approximately $100 million. The economic and financing features of the biogas utilization facility are under developmen t and this project cost is not currently included in the 2025 Capital Plan.
• Mainstream Nutrient Reduction Project . Reducing nutrient loading into San Francisco Bay is one of the most pressing water quality issues facing the San Francisco Bay Area. The Southeast Treatment Plant Mainstream Nutrient Reduction Project is needed to meet expected regulatory requirements and to help meet the regulatory compliance level of service goals for the Wastewater Enterprise. The purpose of the project is to reduce the amount of nutrients, specifically total inorganic nitrogen, discharged in the effluent from the Southeast Treatment Plant into the San Francisco Bay. Based on a preliminary project scoping efforts, the proposed project assumes maximizing the use and/or retrofit of existing infrastructure in an effort to reduce costs . The proposed project includes planning, environmental review, design, construction and facility start -up and commissioning. The current project budget is $1.470 billion, with $1.185 billion in the 2025 Capital Plan. However, the SFPUC can provide no assurance that the total cost of the Mainstream Nutrient Reduction Project will not be higher than currently estimated.
• S
EP New Headworks (Grit) Replacement Project . The Southeast Treatment Plant has two existing headworks facilities. The new 250 mgd headworks project consists of the following: new influent junction structure and influent monitoring; new primary influent distribution structure; new bar screens, washer -compacters and screenings handling facility; new grit basins; grit washers and grit handling facility; a new odor control facility; two new primary substations; electrical, instrumentation and control rooms/building; demolition of the two existing headworks facilities; rehabilitation of the existing Southeast Lift Station; and upgrades to the Bruce Flynn Pump Station. The purpose of the project is to meet new design seismic standards and achieve a higher level of debris, screening, and grit removal. The project is currently in construction and anticipated to be completed in 2027. The total project budget is $716.7 million, with $25.4 million in the 2025 Capital Plan; however, the SFPUC can provide no assurance that the total cost of the project will not be higher than currently estimated. T he SFPUC has secured an SRF loan in the amount of $112.0 million and the STPI WIFIA Loan in the amount of up to $514 million for a

58 portion of the project. See “ OBLIGATIONS PAYABLE FROM NET REVENUES – Water Infrastructure Finance and Innovation Act Loans” and “ – Parity Loans.”
Sewer/Collection System. This category includes projects focused on increasing the reliability of the sewer system and/or increasing the operational flexibility to collect and convey combined sewage to the treatment plants .

The wastewater assets covered in this category include sewers, conveyance pump stations and force mains, transport/storage boxes, and combined sewer discharge structures. By continuing to maintain the collection system assets in a state of good repair, these project s will also ensure continued current and future regulatory compliance , including minimum control requirements , such as maximizing use of the collection system for storage and maximizing flows to the treatment plant. In addition, projects are prioritized to address the reliability of critical force mains that serve as an artery to convey combined sewage to the treatment plants. The collection system projects also include interdepartmental projects that capture sewer improvement opportunities arising from capital projects initiated by other City agencies.

Stormwater Management/Flood Resilience. T
his category includes projects focused on stormwater
management and flood resilience, including increasing conveyance capacity and improving flood resilience in low - lying areas. Phase 1 Projects in this category included planning- level grey infrastructure project assessments and evaluation of green infrastructure through implementation of low -impact design projects in various areas throughout San Francisco. Since no sew er system, including the City’s sewer system, can be designed to manage all stormwater in all storms, the SFPUC encourages property owners to obtain flood insurance and provides other resources, such as floodwater grants that offer up to $100,000 to eligible property owners to help protect their properties against flooding during heavy rainstorms. Specific improvements for the collection system have been prioritized through a strategy of balancing the needs of the collection system for system reliability and stormwater management. Project prioritization and phasing was guided by the Commission- endorsed levels of service, the timing of critical needs, and opportunities for capital investments.

Significant projects within the stormwater management/flood resilience category include the following:
• Folsom Stormwater Improvement Project (Phase 1 and 2) . This project includes the construction of approximately 3,500 linear foot, 12-foot internal diameter tunnel from the vicinity of Alameda/Treat Streets to the vicinity of 7th/Berry Streets, and the construction of nearly 12,500 linear feet of sewer pipes to divert wastewater flows, including large volumes of stormwater during heavy rains, towards the new tunnel infrastructure. The majority of the project is currently in the design phase and the first package of small diameter work is currently in construction. Recent cost increases for the project, as reflected in the 2025 Capital Plan, reflect higher design costs and anticipated construction durations due to added complexity of tunnel and large sewer boxes work in congested city streets. The total project budget for phase 1, which covers the project through the design phase, is $38.4 million, all of which has been previously appropriated, and the total project budget for phase 2, which covers the construction phase, is $391.2 million, with $318.8 million in the 2025 Capital Plan. The SFPUC has applied for an SRF loan for a portion of the Folsom Project. See “ OBLIGATIONS PAYABLE FROM NET REVENUES – Parity Loans.”
• W
awona Area Stormwater Improvement Project . This project includes the installation of a new sewer pipe under Vicente Street, from Wawona Street to 34th Avenue. Replacement of existing water transmission and distribution mains on Wawona Street, 15th Avenue and on Vicente Street west of 19th Avenue has been coordinated and is being constructed jointly under the same construction contract. The project is designed to increase the conveyance capacity at the intersection of 15th Avenue and Wawona Street to reduce the frequency of flooding in the area. Construction was completed in spring 2024 and t his project is currently in the closeout phase .

The total project budget is $28.4 million, all of which has been previously appropriated. • L
ower Alemany Area Stormwate r Improvements Project . The Lower Alemany Area Stormwater Improvements Project includes construction of a 10- foot diameter underground pipe from Stoneybrook Avenue to Industrial Street designed to carry stormwater away from the lower Alemany area and to re duce the frequency of flooding in the area. This project is currently in the design phase. The total project budget is $299.6 million, with $269.4 million in the 2025 Capital Plan.

59 The SFPUC has secured the Project 1 WIFIA Loan for a portion of each of these projects as well as other projects. See “OBLIGATIONS PAYABLE FROM NET REVENUES – Water Infrastructure Finance and Innovation Act Loans.”
Renewal and Replacement
The Wastewater Enterprise undertakes renewal and replacement projects to improve performan ce or extend the service life of an existing asset. These projects are typically annual ongoing projects and fall into two categories:
(i) Renewal and Replacement Collection System and (ii) Renewal and Replacement Treatment Plants. Renewal and replacement projects make up approximately $1.738 billion of the 2025 Capital Plan.

The Renewal and Replacement Collection System category includes the following projects: condition assessment projects to clean, inspect, and perform condition assessment of sewer facil ities; sewer improvement projects to maintain the existing functionality of the collection system and repair and replace sewers; and spot sewer repair projects, which consist of as-needed repair of localized sections of existing sewer facilities.

The Renew al and Replacement Treatment Plants category includes projects to maintain the capacity and reliable performance, and extend the useful life of aging assets such as transport/storage boxes, discharge structures, pump stations, force mains, tunnels and treatment plants.

The Wastewater Enterprise sewer system consists of two all -weather treatment plants (Southeast and Oceanside) and one wet -weather treatment facility (North Point), 29 pump stations, eight transport/storage boxes, and 35 combined sewer discha rge outfalls. Priority lists are maintained for both collection and treatment projects, with collection system projects identified using an asset management approach which considers the current condition of the section in question and applicable risks of f ailure. See “ THE WASTEWATER ENTERPRISE – Combined Sewage and Stormwater System – Sewer Lines.”
Treasure Island Capital Improvements
The Wastewater Enterprise currently operates wastewater treatment facilities on Treasure Island and Yerba Buena Island through agreements with TIDA . The SFPUC does not expect to acquire these facilities , and the SFPUC is planning to expand its service area to include Treasure Island and Yerba Buena Island utilizing new - constructed, SFPUC -owned infrastructure . See “ THE WASTEWATER ENTERPRISE – Wastewater Treatment – Contract Services.” The Treasure Island Water Resource Recovery Facility will provide reliable service for Treasure Island and Yerba Buena Island residents and meet the recycled water demands of future redevelopment on Treasure Island and Yerba Buena. The project is further described below. Treasure Island capital improvement projects make up approximately $40.9 million of the 2025 Capital Plan.

Treasure Island Water Resource Recovery Facility. The Treasure Island Water Resource Recovery Facility, which is being constructed immediately adjacent and to the south of the existing facility, is expected to have the capacity to treat an estimated 1.3 mgd of average dry -weather flow and a peak wet-weather flow of 3.9 mgd. The preliminary treatment would remove rags, large objects, and grit. The secondary treatment process would use biological nutrient removal reactors/basins to remove biochemical oxygen demand and suspended solids. The membrane bioreacto r is a combination of suspended growth biological treatment system (activated sludge) in combination with membrane filtration equipment which is used to perform solid -liquid separation. Secondary- treated effluent will be disinfected via series of UV trains . The disinfected secondary -treated effluent would pass through constructed wetlands, and then be discharged into the adjacent stormwater outfall pipe for discharge to San Francisco Bay. Solids generated in the treatment processes would be thickened and tr ansported to the Oceanside Treatment Plant for digestion. The resulting biosolids would be transported to an off -site landfill or suitable location for land application. In addition, the new facility will be designed to achieve the disinfected tertiary tre atment.

Approximately 0.43 to 0.98 mgd of recycled water is expected be diverted from the new facility for landscape irrigation, urban farming, and toilet flushing. The remainder of the disinfected effluent from the treatment plant would be directed to the wetlands and ultimately to receiving water. The SFPUC awarded a design -build contract to build the Treasure Island Water Resource Recovery Facility in 2022. The project is now in construction and anticipated to be completed in August 2026 . The total proje ct budget is $222.2 million, with $40.9 million in the 2025 Capital Plan. The SFPUC has applied for an SRF loan and has secured the Project 1 WIFIA Loan for a portion

60 of the Treasure Island Water Resource Recovery Facility. See “ OBLIGATIONS PAYABLE FROM NE T REVENUES – Parity Loans” and “– Water Infrastructure Finance and Innovation Act Loans.” Wastewater Facilities and Infrastructure
Wastewater facilities and infrastructure projects are intended to provide necessary upgrades to existing facilities to maintain their intended functions. Wastewater facilities and infrastructure projects make up approximately $258.9 million of the 2025 Capital Plan. Significant projects within the wastewater facilities and infrastructure category include the following:
• Ocean B each Climate Change Adaptation Project . This project is necessary to protect the integrity of wastewater assets built to protect public health and the environment, including the existing Lake Merced Tunnel, the Westside Pump Station and the Oceanside Treat ment Plant. This project is one of the first City Climate Change Adaptation projects led by the SFPUC. The Lake Merced Tunnel has a storage capacity of up to 10 million gallons for combined sewage and stormwater flows and is located closest to the section of Ocean Beach most severely impacted from, and most vulnerable to, continued bluff erosion. The Lake Merced Tunnel could become structurally compromised if sudden bluff retreat is experienced during a large storm event. This project will implement a compr ehensive shoreline management and protection plan in partnership with stakeholders and regulatory agencies to provide a long- term solution to the erosion issues to the City along Ocean Beach, and to mitigate potential impacts to the Lake Merced Tunnel and other critical wastewater assets at this location. The majority of the project is currently in design, except for the annual contract to reduce excess loading on the existing sewer boxes from sand. The total project budget is estimated to cost approximately $209.6 million, with $152.6 million in the 2025 Capital Plan. The SFPUC is the lead agency for the project with other City departments contributing funds for non-utility infrastructure and facilities. • Southeast Bay Outfall and Southeast Treatment Plant B ooster Station Replacement. Southeast Bay Outfall is a critical asset that conveys final effluent from the Southeast Treatment Plant to the San Francisco Bay. This project is needed to continue providing reliable operations, protecting water quality in San Francisco Bay, and aligning with the City’s waterfront adaptation plans for sea level rise. This project would evaluate and recommend improvements for the existing Southeast Bay Outfall and the associated booster station. This project assumes construction of a new booster station and outfall that would convey effluent from the Southeast Treatment Plant to the San Francisco Bay. This project is being developed in close collaboration with the Port in conjunction with the City’s efforts with the U.S. Army Cor ps of Engineers to plan and implement coastal defenses in the Islais Creek area to mitigate sea level rise. See also “RISK FACTORS – Climate Change, Risk of Sea Level Rise and Flooding Damage – Impact on City of San Francisco.” This project includes all ph ases of work, planning, environmental review, right -of-way, design, construction contract procurement, construction, and closeout. The SFPUC is in the planning phase for this project and construction is expected to begin outside of the 2025 Capital Plan. The total project budget is estimated to cost approximately $3.0 billion, with $80.3 million in the 2025 Capital Plan. The SFPUC also has a current project underway to perform a condition assessment (and any needed interim repairs) on the outfall and another separate project to rehabilitate the booster station. The intent of these two other projects is to prolong the life span of the respec tive assets and allow for proper planning and construction of this outfall project and its multiple layers of jurisdictions and coordination with outside agencies.

Environmental Planning Considerations
Projects undertaken by the SFPUC are subject to CEQA and certain projects involving the participation of federal agencies, including projects on federal land, are also subject to the National Environmental Policy Act (“NEPA”). The San Francisco Planning Department (the “Planning Department ”), acting as the CE QA lead agency under Chapter 31 of the City’ s Administrative Code (“Chapter 31”), generally coordinates CEQA review of SFPUC projects. The SFPUC also coordinates with federal NEPA lead agencies to prepare NEPA documentation for SFPUC projects.

Under CEQA, a project that may have a significant effect on the environment and is to be carried out or approved by a public agency must comply with a comprehensive environmental review process, including the preparation of an environmental impact report ( “EIR”). The EIR reflects not only an independent technical analysis

61 of the project ’s potential environmental impacts, but also the comments of other agencies with some form of jurisdiction over the project and the comments of interested members of the public. Contents of the EIR include a detailed statement of the project ’s significant environmental effects; any such effects that cannot be avoided if the project is implemented; mitigation measures proposed to minimize such effects; alternatives to the proposed project; the relationship between short -term and long -term impacts; any significant irreversible environmental changes that would result from the project; the project ’s growth-inducing impacts; and a brief statement setting forth the agency’ s reasons for determining that certain effects are not significant and hence do not require discussion in the EIR. Before approving a project, the SFPUC must make findings on whether or how it can mitigate the significant environmental effects of the project. If the project requires mitigation, the SFPUC must adopt a mitigation monitoring and reporting plan on how the mitigation is carried out during project implementation. If a project ’s significant effects can be mitigated, the SFPUC can adopt a written statement (calle d a mitigated negative declaration) or if the project will not have a significant effect on the environment, the SFPUC may adopt a written statement (called a negative declaration) to that effect and in both cases need not prepare an EIR. After deciding to approve or carry out a project, either following the EIR process or after adopting a mitigated negative declaration or a negative declaration, the Planning Department must file a notice of such determination with the Office of the County Clerk. CEQA also contains several exemptions, which the SFPUC uses for its projects when appropriate.

Any action or proceeding challenging the Planning Department determination must be brought within 30 days following the filing of such notice. Actions have been, and in the future may be, filed challenging a project ’s compliance with CEQA, including the adequacy of the EIR and other environmental documents for particular projects. If an action challenging the SFPUC ’s compliance with CEQA is successful, the particular project could be delayed, revised, suspended or canceled.

As part of its regular planning and budgetary process, the SFPUC gives careful attention to environmental considerations. All projects are evaluated under the SFPUC ’s environmental evaluation procedures (Infrastructure Procedures 7.01 and 7.02) , developed in compliance with federal and State laws and regulations, City ordinances and the City’s Administrative Code procedures, including Chapter 31.

Prior to the sale of bonds, the Planning Department will is sue a “ Planning Certificate ” required under Proposition E. The Planning Certificate will identify the status of environmental review for each capital project to be funded under the proposed bond sale and the type of CEQA document either completed or to be completed for each project. CEQA compliance must be completed for each project prior to project approval or approval to award a construction contract to implement any project to be funded by the proposed bond sale. The Planning Certificate for the projects to be financed by the 2024ABCD Bonds was issued in August 2023.

Climate Action Plan
In September 2021, the City adopted a set of emissions reduction targets : achieve net-zero greenhouse gas emissions generated by the City by 2040 and reduce emissions associated with consumption of all goods and services in the City (regardless of where emissions originate) 80% by 2050. In December 2021, Mayor Breed released the City ’s Climate Action Plan (the “ Climate Action Plan ”) detailing the actions needed to accomplish these targets, developed through a multi -agency and stakeholder process led by the San Francisco Environment Department (the “ Environment Department”). The Climate Action Plan is a roadmap of goals, strategies and actions to achieve emission reductions across six sectors: energy supply, building operations, transportation and land use, housing, responsible production and consumption, and healthy ecosystems . Key strategies include, but are not limited to, provision of 100% carbon- free energy, decarbonization of buildings, and increases in the public transit, active transportation, and vehicle electrification networks . In addition to reducing emissions to zero over the next 20 years, the Climate Action Plan strives to ensure all San Franciscans have the skills, knowledge, and resources to meet future interconnected challenges, including climate change. To do so, the proposed strategies aim to leverage community strengths, advance racial and social equity, and provide critical benefits to the ent ire community. The Climate Action Plan includes sections on funding and investment, monitoring and reporting. The City also maintains a public -facing reporting mechanism to keep stakeholders and residents informed on progress made against performance metri cs laid out in the Climate Action Plan . The Environment Department contracted with the University of California, Berkeley, Center for Law, Energy & the Environment (the “ CLEE”) to assess options for funding the equitable implementation of the Climate Actio n Plan. CLEE released its report entitled “ Funding San Francisco Climate Action” in November 2022.

62 In 2023, together with the Environment Department, the SFPUC released the San Francisco ’s Climate Action Plan 2021 – Water Supply Addendum 2023, which adds “water supply” as a seventh sector to the Climate Action Plan. The addendum focuses on how the City plans to address and secure water supplies that are impacted by multiple climate challenges , including climate change , by continuing to implement effective water conservation programs; deploying innovative ways to conserve, recover, and reuse water; and augmenting the SFPUC ’s Regional Water System by investing in alternative water supply projects.

FINANCING PLAN FOR WASTEWATER ENTERPRISE CAPITAL PROGRAM Long Term Financing of Capital Program
Pursuant to the Wastewater Enterprise ’s 10 -year financial plan for Fiscal Years 202 4-25 to 203 3-34 (the “2025 Financial Plan ”), which is based on the 2025 Capital Plan, and which was adopted by the SFPUC Commission on February 13 , 2024, long-term debt financing is projected to fund approximately $4.9 billion of the 2025 Capital Plan. Revenue (pay-as-you-go) funding is projected to provide approximately $1. 1 billion of funds and capacity fees is projected to provide approximately $ 61.0 million of the remaining portion of the 2025 Capital Plan.

Long-term debt financing is expected to be comprised primarily of Additional Bonds and Parity Loans (such as additional SRF loans or WIFIA loans). See “PLAN OF FINANCE, ” “OBLIGATIONS PAYABLE FROM NET REVENUES – Water Infrastructure Finance and Innovation Act Loans.” Interim Funding Program Facilities
The SFPUC utilizes the Interim Funding Program to meet the expenditure and encumbrance needs of capital projects on an interim basis through design and into the early project construction phase. The Interim Funding Program is authorized for the Wastewater Enterprise in the amount of $750 million. The SFPUC may issue Commercial Paper Notes or make draws on the U.S. Bank Credit Facility. See “ OBLIGATIONS PAYABLE FROM NET REVENUES – Subordinate Debt and Interim Funding Program. ” Interim funding program obligations are then refunded and consolidated into either long- term revenue bond issues or a Parity Loan when the outstanding and encumbered amount of the interim funding obligations approaches authorized limits. This approach allows the SFPUC to take advantage of historically lower short -term interest rates, and to siz e and closely time long -term financings with projected need.

As of July 2, 202 4, the SFPUC had approximately $___ million principal amount of Commercial Paper Notes outstanding and no outstanding principal balance on any of the Revolving Notes. Approximately $ ___* million of principal amount of and interest on tax -exempt Commercial Paper Notes will be retired with proceeds of the 2024A Bonds, 2024C Bonds and 2024D Bonds. See “PLAN OF FINANCE.” The SFPUC anticipates issuing additional Commercial Paper Notes and making draws directly on the U.S. Bank Credit Facility to provide interim financing for Wastewater Enterprise capital projects. See “OBLIGATIONS PAYABLE FROM NET REVENUES – Subordinate Debt and Interim Funding Program.”
Sources and Uses of Funding the Capital Program
The table below sets forth projected sources and uses of funds for the Wastewater Enterprise ’s capital program, including the SSIP, for Fiscal Years 2024- 25 through 2028- 29. Non- SSIP capital program categories include Renewal and Replacement projects, Treasure Island Capital Improvement projects and Wastewater Facilities and Infrastructure projects. Sources of funding for the capital program include debt financing, wastewater revenues and capacity charge revenues. The projected repayment of principal and interest on future debt financings has been incorporated into the SFPUC ’s rates for Fiscal Years 20 45-25 through 2025-26, as approved by the Commission in May 2023, as well as the remaining projection period set forth in the 2025 Financ ial Plan, as adopted by the Commission on February 13, 2024. The approved rate changes are expected to increase revenues by 10.7% for Fiscal Year 2024 -25 and by 10.0% for Fiscal Year 2025- 26, and projected rate changes are expected to increase revenues by 10.7% to 11.7% annually for Fiscal Years 2026- 27 through 2028- 29. Any future rate increases are

* Preliminary, subject to change.

63 subject to future approval by the Commission and the ability to reject rate increases by the Board of Supervisors.

See “FINANCIAL OPERATIONS – Wastewater Enterprise Rates and Charges.” TABLE 10

WASTEWATER ENTERPRISE CAPITAL PROGRAM
FINANCING PLAN FOR FISCAL YEARS 2024-25 TO 2028-29
(IN THOUSANDS)(1)
2024-25 2025-26 2026-27 2027-28 2028-29

USES OF FUNDS
SSIP $638,396 $594,418 $689,828 $350,747 $156,748
Renewal and Replacement 152,539 167,124 170,727 174,026 162,986 Treasure Island Capital
Improvements
36,625 4,273 0 0 0
Wastewater Facilities &
Infrastructure
64,961 57,097 48,295 7,506 5,376
Total Uses(2) $892,521 $822,912 $908,850 $532,279 $325,111

SOURCES OF FUNDS
Revenue Bonds/Parity Loans(3) $774,782 $683,538 $806,528 $447,426 $253,145 Wastewater Revenues 112,415 133,891 96,674 79,036 65,974 Capacity Charge Revenues 5,323 5,483 5,647 5,817 5,991
Total Sources(2) $892,521 $822,912 $908,850 $532,279 $325,111

(1) Amounts set forth are projections. Actual results may differ materially from these projections. See “FORWARD-LOOKING STATEMENTS.”
(2) Totals may not add due to rounding.
(3) Reflects anticipated long -term debt financing needs, which may come from the issuance of Additional Bonds and Parity Loans (such as SRF l oans and/or WIFIA loans). Specific amounts for each funding source are not currently available. See also “Table 26 – Projected Revenue, Operating and Maintenance Expense and Debt Service Coverage for Fiscal Year Ending June 30 (In Thousands) ” and “PROJECTED OPERATING RESULTS – Assumptions Used in Projections – Projected Debt Service.”
Source: SFPUC, Financial Services.

64 FINANCIAL OPERATIONS
General
The SFPUC is a department of the City and, as such, the financial operations of the SFPUC ’s three enterprises are included in the Annual Comprehensive Financial Report of the City and shown as enterprise funds.

The City’s Annual Comprehensive Financial Report is not incorporated by reference herein.

The following information is provided with respect to the Wastewater Enterprise only and does not purport to reflect the financial position of the SFPUC or the City as a whole.

Basis of Accounting. The accounts of the Wastewater Enterprise are organized based on a proprietary fund type, specifically an enterprise fund. The financial activities of the Wastewater Enterprise are accounted for on a flow of economic resources measurem ent focus, using the accrual basis of accounting. Under this method, all assets and liabilities associated with its operations are included on the statement of net position ; revenues are r ecognized when earned, and expenses are recognized when liabilities are incurred.

The SFPUC applies all applicable GASB pronouncements.

City Budget Process . The SFPUC ’s operating and capital budget preparation and approval is a part of a City-wide process. The SFPUC is one of several departments that prepares biannual budgets. The Commission reviews and approves the SFPUC ’s two-year budget, which is then submitted to the Mayor ’s Office for review. The Mayor then incorporates the proposed budget, with amendments, into the City- wide budget that is submitted to the Board of Supervisors for approval. Under the Charter, the Board of Supervisors may increase or decrease any proposed expenditure in the Mayor ’s budget so long as the aggregate changes do not cause the expenditures to exceed the total amount of expen ditures proposed by the Mayor. The Charter further provides that the Mayor may reduce or reject any expenditure authorized by the Board of Supervisors except appropriations for bond interest, redemption or other fixed charges, subject to reinstatement of a ny such expenditure by a two- thirds vote of the Board of Supervisors.

City Services Auditor. On November 4, 2003, voters of San Francisco adopted Proposition C, an ordinance that established the City Services Auditor ( “CSA”), an audit function within the O ffice of the City Controller .

Pursuant to the provisions of this ordinance, which have been incorporated into the Charter, the CSA has broad oversight authority and responsibilities including, but not limited to, (i) reporting upon level of effectiveness f or City public services, (ii) auditing financial and management performance of City departments and functions, (iii) ensuring the financial integrity and improving the overall performance and efficiency of City government, and (iv) maintaining a whistleblower hotline to investigate upon reports of fraud, waste and abuse.

CSA has engaged HKA Global, Inc. and Yano Accountancy Corporation to conduct a three -phase performance audit of select revenue bonds issued by the SFPUC to determine whether revenue bond funds were spent in accordance with the stated purposes and permissible use of such bonds . The first phase included the audit of three series of revenue bonds issued by the Wa stewater Enterprise and three series of revenue bonds issued by the Water Enterprise. In February 2022, CSA issued the audit report for the first phase, which concluded that the revenue bond expenditures for such bonds were spent appropriately, and made two recommendations that (i) the SFPUC coordinate with RBOC to determine the most eff ective method to comprehensively report project expenditures by funding source and uses of revenue bond proceeds, and (ii) the SFPUC comply with its policies regarding quality assurance audits . The SFPUC has since implemented both recommendations from the first phase audit report.

The second phase included the audit of three series of revenue bonds issued by the Wastewater Enterprise, two series of revenue bonds issued by the Water Enterprise and one series of revenue bonds issued by the Power Enterprise. In August 2023, CSA issued the audit report for the second phase, which concluded that nearly all revenue bond expenditures were spent appropriately . The audit identified two contracts with expenditures totaling $15.36 million (representing less than 1.5% of the audited expenditures) in which CSA determined that the SFPUC did not comply with certain internal control guidance and preferred procurement practices. CSA recommended that

65 the SFPUC: (i) follow guidance from the COSO Internal Control -Integrated Framework (the “COSO Framework”) and require completion of impartiality/confidentiality statement forms on certain procurements to strengthen its control environment, which the SFPUC partially concurred, (ii) follow guidance from the COSO Framework and request publicly available information from the City Attorney on its investigations of SFPUC procurement practices and periodically report such information to the RBOC to strengthen its monitoring activities, which the SFPUC did not concur. In addition, CSA recommended that the SFPUC coordinate with RBOC and San Francisco Public Works (“SFPW”) to quantify, evaluate, and report on monetary impacts of SFPW ’s overhead rates on total sewer engineering direct labor and benefits so that RBOC can exercise proper oversight, which the SFPUC did not concur.

The third phase is currently ongoing and includes the audit of three series of revenue bonds issued by the Wastewater Enterprise, one series of revenue bonds issued by the Water Enterprise, and two series of revenue bonds issued by the Power Enterprise . The SFPUC anticipates that the audit report for the third phase will be issued by August 2024.

Financial Management Policies . To support sound financial management practices during periods of instability, ensure organizational accountability and disciplined decision making, and maintain the highest practical credit ratings, the SFPUC conducted an extensive peer review study to compare the financial policies of other United States municipal utilities, analyze rating agency evaluations of financial policies and recommend changes to the SFPUC ’s existing financial policies. Based on this study, the Commission adopted in 2017 a Debt Service Coverage Policy, a Capital Financing Policy and a Fund Balance Reserve Policy. The SFPUC subsequently revised its Debt Management Policies and Procedures, which the Commission adopted in 2019. See “– Financial Management Policies.” In addition, the Commission adopted a Ratepayer Assurance Policy to address the prudent use of ratepayer funds and the establishment of rates and charges and to ensure process transparency.

Wastewater Enterprise Rate Setting
General. Sewer service charges are the primary funding source for the payment of costs associated with the Wastewater Enterprise’s combined sewer system to manage sewage, wastewater and sanitary waste. Pursuant to the Charter, an independent consultant prepares an analysis of projected revenues and revenue requirements of the Wastewater Enterprise at least once every five years. Based on t his analysis, the SFPUC sets rates projected to be sufficient to fund the proposed budget, to maintain an adequate operating reserve and to comply with Indenture requirements. In addition to meeting the SFPUC ’s capital financing, debt service coverage and reserve policy targets, the rates must also comply with regulations or policies promulgated by the EPA, the State Water Resources Control Board and the Board of Supervisors and with the requirements of the Cit y’s Charter and the State Constitution; however, the SFPUC ’s sewer service rates are not subject to any approval proceedings by the California Public Utilities Commission or any other State or federal agencies. See “CONSTITUTIONAL,

STATUTORY AND CHARTER LIMITATIONS
– State Law Limitations.”
Federal and State Requirements. Under federal clean water laws and regulations, entities accepting federal grant funds and loans (such as the SFPUC) must comply with certain requirements related to the sufficiency of revenues and system operations, maintenance and replacement. Federal and State requirements related to grant and loan funding are administered and enforced by the State Water Resources Control Board. See “REGULATORY MATTERS” for a more detailed discussion of State and federal regulations affecting the Wastewater Enterprise.

Summary of Charter Rate -Setting Requirements . Pursuant to certain provisions of Proposition E, which became effective with respect to the Wastewater Enterprise on January 3, 2003, the Chart er was amended to authorize the Commission to set rates, fees and other charges in connection with providing Wastewater Enterprise services. These rate changes are subject to rejection, within 30 days of submission, by the Board of Supervisors. If the Board of Supervisors does not act within 30 days, the rates become effective without further action.

In setting Wastewater Enterprise rates, fees and charges, the Commission must:
(a) establish rates, fees and charges at levels sufficient (i) to improve or maintai n financial condition and bond ratings at or above levels equivalent to highly rated utilities, (ii) to meet requirements and covenants under all bond resolutions and indentures (including the Indenture) and (iii) to

66 provide sufficient resources for the continued financial health (including appropriate reserves), operation, maintenance and repair, consistent with good utility practice; (b) retain an independent rate consultant to conduct rate and cost of service studies at least every five years;
(c) set retail rates, fees and charges based on the cost of service; (d) conduct all studies mandated by applicable State or federal law to consider implementing connection fees servicing new development;
(e) conduct studies of rate -based conservation incentives and/or lifeline rat es and similar rate structures to provide assistance to low income users, and to take the results of each study into account when establishing rates, fees and charges, in accordance with State and federal laws; and (f) adopt annually a rolling five-year forecast of rates, fees and charges.

Rate Setting Process. The Wastewater Enterprise periodically adjusts rates based on a comprehensive cost of service analysis and the resulting revenue requirement analysis, as required by the Charter. The biannual budget submitted to the Commission, the Mayor and the Board of Supervisors for approval, along with the long- term projections in the 10-year financial plan adopted by the Commission, are used as the basis for determining annual revenue require ments. The Wastewater Enterprise projects revenues under the existing schedule of rates for sufficiency. If additional revenues are required to meet budgetary sufficiency or if the cost structure of the Wastewater Enterprise has changed, recommended rate s chedule increases are submitted to the Commission for its consideration. After following public notice procedures established by the California Constitution and the City ’s Administrative Code and receiving public comment, the Commission adopts a rate resol ution and transmits its recommended rate schedules to the Board of Supervisors. Once submitted, the Board of Supervisors has authority under the Charter to vote to reject the proposed rate schedules within 30 days. If rejected, the existing rate schedules remain in effect until a new rate schedule is resubmitted by the Commission and not rejected by the Board of Supervisors.

As part of the annual 10 -year financial plan process, the Wastewater Enterprise develops a 10 -year rate forecast using projected revenues under existing rates plus additional revenues from projected rate increases, as required, to meet the projected revenue requirements during the forecast period. This forecast is updated each year resulting in a “ rolling” rate forecast that is intended to moderate the effects of any significant changes in revenue requirements in any year.

In addition to complying with the requirements of the Charter, the rate -setting process must comply with the requirements of the State Constitution. See “CONSTITUTIONAL, STATUTORY AND CHARTER

LIMITATIONS
– State Law Limitations.”
SFPUC Citizens Advisory Committee and Rate Fairness Board . The Public Utilities Commission Citizens’ Advisory Committee (“CAC”), established by a Charter amendment in 2002, provides recommendati ons to the SFPUC’s General Manager and the Board of Supervisors regarding the SFPUC ’s long-term strategic, financial and capital improvement plans for all of its enterprises . The CAC is comprised of 17 appointees. Each member of the Board of Supervisors may appoint one member who must be a resident of their supervisory district. Candidates must demonstrate one or more of the following qualifications: represent a community, business, environmental or environmental justice organization, or have demonstrated knowledge, skill or experience in a field related to public utilities, environmental justice or environmental science. Two additional members of the CAC are appointed by the President of the Board of Supervisors, one of whom represents a small business and the other of whom represents an environmental justice organization. Four members are appointed by the Mayor and must include one member who represents regional water customers of the SFPUC, one member who represents a large San Francisco water user, one member who has knowledge of engineering or financial management and one member who represents a regional or statewide environmental organization.

67 Proposition E, approved by San Francisco voters in 2002, directed the establishment of a Rate Fairness Board to advise the SFPUC on water, sewer and power rate matters. The Rate Fairness Board consists of seven members: the City Administrator or their designee; the Controller or their designee; the Director of the Mayor ’s Office of Public Finance o r their designee; two residential San Francisco retail customers, consisting of one appointed by the Mayor and one by the Board of Supervisors; and two San Francisco retail business customers, consisting of a large business customer appointed by the Mayor and a small business customer appointed by the Board of Supervisors. Specific powers for the Rate Fairness Board include the authority to: (1) annually review the five-year rate forecasts produced by the SFPUC enterprises, including the Wastewater Enterpri se; (2) hold one or more public hearings on annual rate recommendations before the SFPUC adopts rates; (3) provide a report and recommendations to the SFPUC on any rate proposal; and (4) in connection with periodic rate studies, submit to the SFPUC rate policy recommendations for the Commission’ s consideration, including recommendations to reallocate costs among various retail utility customer classifications, subject to any outstanding bond requirements. The Rate Fairness Board is not authorized, however, to reject proposed rates approved by the Commission.

Wastewater Enterprise Rates and Charges
General. The SFPUC’s wastewater system is a combined sewer system to manage sewage, wastewater, and sanitary waste. Within this combined system, sanitary sewer and stormwater generally comprise approximately 89% and 11%, respectively, of the annual flows treated by the Wastewater Enterprise, though these percentages vary year- to-year based on rainfall.

Prior to July 1, 2023, c ustomers’ sewer service charges were co mprised of a fixed monthly service charge and a variable sewer service charge per discharge unit based only on their sanitary sewage contributions to the system and sewage loading for non -residential customers. Generally, the amount of monthly discharge units is determined by multiplying a customer ’s monthly metered water consumption by a “ flow factor” applicable to such account. The calculation is designed to approximate that portion of the account ’s total water use returned to the sewer system as wastewat er. For example, a customer using 10 units of water and having a flow factor of 90% would be billed for nine discharge units. Each discharge unit represents 100 cubic feet of water discharged.

Beginning July 1, 2023, the Wastewater Enterprise ’s sewer service charges include a fixed monthly service charge, a variable sanitary sewer component per discharge unit and a stormwater runoff component based on property size and/or parcel characteristics. This approach allows the SFPUC to more directly recover costs related to collecting and treating stormwater runoff based on property characteristics that result in greater stormwater runoff, while sanitary sewer costs continue to be based on the assumed percentage of metered water usage discharged into the sewer syst em. To support the implementation of the stormwater runoff component of the sewer service charge, the SFPUC has also initiated a stormwater credit program to offer bill discounts to customers that manage stormwater on their property through the use of gree n infrastructure. This update increases transparency about the components of sewer service charges while simultaneously providing incentives for customers to manage stormwater on their properties and divert it from the collection system.

In May 2023, the Commission approved three years of annual retail water and sewer service rate increases beginning July 1, 2023, and applicable to Fiscal Years 2023- 24 through 2025- 26. Overall, the rate changes are expected to increase revenues by 9.0% annually for each of the three Fiscal Years.

On December 12, 2023, the City was served with a purported class action lawsuit challenging the compliance of the rates charged by the Wastewater Enterprise with the requirements of Proposition 218. See “CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS – State Law Limitations – Proposition 218” and “– Proposition 218 Litigation.”
Historical Wastewater Rates and Charges. In April 2018, the Commission approved four years of annual retail water and sewer service rate increases beginning July 1, 2018, and applicable to Fiscal Years 2018 -19 through 2021-22. There was no rate increase in Fiscal Year 2022 -23. As further descri bed below, separate rate schedules applied to residential and non-residential customers.

68 Historical Residential
Prior to July 1, 2023, the Wastewater Enterprise ’s rate structure for residential customers included a fixed monthly service charge and a varia ble sewer service charge per discharge unit based on the assumed percentage of metered water usage discharged into the sewer system, calculated assuming domestic strength sewage. The standard flow factor applied to metered water usage to determine billable discharge units is 90% for single -family residential accounts and 95% for multi-family residential accounts.

Pursuant to the rate schedule applicable to Fiscal Years 2018 -19 through 2022- 23, the SFPUC could automatically implement a temporary drought surcharge if the Commission declared a drought emergency and triggered certain drought response actions set forth in the SFPUC ’s water shortage allocation plan. The surcharge could not exceed the requested volumetric reduction in water usage and only applied to volumetric water and wastewater charges. A temporary drought surcharge was in place from April 1, 2022 through May 1, 2023. The temporary drought surcharge was designed to be bill-neutral for customers who met established conservation targets.

The following table sets forth the historical single - and multi-family residential monthly service charge and sewer service charge for Fiscal Years 2018 -19 through 2021-22, which were approved in April 2018, and for Fiscal Year 2022-23, for which there was no rate increase.

TABLE 11

HISTORICAL SINGLE-FAMILY AND MULTI-FAMILY RESIDENTIAL

MONTHLY SERVICE CHARGES
FOR FISCAL YEARS 2018-19 THROUGH 2022-23
Fiscal Year
Monthly Service
Charge
Sewer Service
Charge(1)
(per discharge unit(2))
2018-19 $0.98 $13.06
2019-20 2.19 13.88
2020-21 3.60 14.89
2021-22(1) 5.21 15.97
2022-23(1)(3) 5.21 15.97
_______________
(1) Does not include the temporary drought surcharge of 5% on volumetric rates in effect from April 1, 2022, through May 1, 2023.
(2) One discharge unit equals 100 cubic feet of wastewater. (3) There was no rate increase in Fiscal Year 2022-23.

Source: SFPUC, Financial Services.

The following table sets forth historical single- and multi-family residential estimated average monthly bills (comprised of the monthly service charge and the sewer service charge) for Fiscal Years 2018-19 through 2022-23.

69 TABLE 12

HISTORICAL SINGLE-FAMILY AND MULTI-FAMILY RESIDENTIAL

ESTIMATED A VERAGE MONTHLY BILL
FOR FISCAL YEARS 2018-19 THROUGH 2022-23
Fiscal Year Single-Family(1)
Multi-Family
(per dwelling unit)(1)
2018-19 $61.19 $52.02
2019-20 65.56 55.67
2020-21 75.37 60.14
2021-22(2) 72.44 64.95
2022-23(2)(3) 72.51 64.95
_______________
(1) Average billable wastewater volume for single-family residential customers is based on historical mean. Average water consumption amount for multi-family residential customers is assumed to be 1,250 cubic feet of water per month, or 1,187.5 billable discharge units, for 3 dwelling units.
(2) A temporary drought surcharge of 5% on volumetric rates was in effect from April 1, 2022, through May 1, 2023. Single - family residential average monthly bill reflects actual historical average usage (including actual conservation achieved) and drought surcharge for Fiscal Year 2022- 23. Multi -family residential average monthly bill reflects estimated historical average usage (including estimated conservation achieved) and drought surcharge for Fiscal Year 2022- 23, resulting in no net change to the average monthly bill.
(3) There was no rate increase in Fiscal Year 2022-23.

Source: SFPUC, Financial Services.

Historical Non-Residential
Prior to July 1, 2023, the Wastewater Enterprise ’s rate structure for non -residential customers included a fixed monthly service charge and a variable sewer service charge per discharge unit based on the assumed percentage of metered water usage discharged into the sewer system and sewage loading, which measures the pollutant concentrations within customer discharges (i.e., suspended solids, oil/grease and chemical oxygen demand). The standard flow factor applied to metered water usage to determine billable discharge units is 90% for non-residential accounts. Non -residential customers whose sewage loadings were not based on periodic sampling were charged based on standard paramet er loadings established by the SFPUC for each Standard Industrial Classification code.

The following table sets forth the historical non -residential monthly service charge, the sewer service charge, and sewage loading charges for each pollutant parameter for Fiscal Years 2018 -19 through 2021- 22, which were approved in April 2018, and for Fiscal Year 2022-23, for which there was no rate increase.

TABLE 13

HISTORICAL NON-RESIDENTIAL

MONTHLY SERVICE CHARGES
FOR FISCAL YEARS 2018-19 THROUGH 2022-23
Fiscal Year
Monthly
Service Charge
Sewer Service
Charge
(per discharge
unit(1))
Suspended
Solids
(per pound)
Oil/Grease
(per pound)
Chemical
Oxygen
Demand
(per pound)
2018-19 $0.98 $ 7.84 $1.320 $1.331 $0.519
2019-20 2.19 8.29 1.412 1.424 0.555
2020-21 3.60 8.86 1.525 1.538 0.599
2021-22 5.21 9.46 1.647 1.661 0.647
2022-23(2) 5.21 9.46 1.647 1.661 0.647

(1) One discharge unit equals 100 cubic feet of wastewater. (2) There was no rate increase in Fiscal Year 2022-23.

Source: SFPUC, Financial Services.

70 In July 2018, the Commission adopted rules for billing stormwater -related sewer service charges for unmetered properties (i.e., vacant lots, parking lots, and other properties that do not have water or wastewater service). Non -residential owners of unmetered properties were charged a monthly sewer service charge based on whether they had “ low runoff” or “standard runoff. ” The following table sets forth the historical monthly service charges attributable to stormwater runoff for unmetered parcels for Fiscal Years 2018 -19 through 2021- 22, and for Fiscal Year 2022-23, for which there was no rate increase.

TABLE 14

HISTORICAL MONTHLY SERVICE CHARGES
ATTRIBUTABLE TO STORMWATER RUNOFF FOR UNMETERED PARCELS(1) FOR FISCAL YEARS 2018-19 THROUGH 2022-23
Fiscal Year Low Runoff Standard Runoff
2018-19 $19.83 $32.49
2019-20 20.47 33.56
2020-21 21.31 34.93
2021-22 22.16 36.31
2022-23(2) 22.16 36.31

(1) This was a monthly sewer service charge attributable to stormwater runoff for property owners who did not have water and wastewater accounts with the SFPUC.
(2) There was no rate increase in Fiscal Year 2022-23.

Source: SFPUC, Financial Services.

Current Wastewater Rates and Charges. The sewer service rates applicable to Fiscal Years 2023 -24 through 2025-26 are described below. Separate rate schedules apply to residential and non-residential customers.

Current Residential
Beginning July 1, 2023, the Wastewater Enterprise ’s sewer service charges for residential customers include a fixed monthly service charge, a variable sanitary sewer component, and a stormwater runoff component based on property size and/or parcel characteristics. The sanitary sewer component continues to be based on the assumed percentage of metered water usage discharged into the sewer system, or “ flow factor,” and is calculated assuming domestic strength sewage. The standard flow factor applied to metered water usage to determine billable discharge units is 90% for single-family residential accounts and 95% for multi-family residential accounts.

Pursuant to the rate schedule applicable to Fiscal Years 2023 -24 through 2025- 26, the SFPUC can automatically implement a temporary drought surcharge if the Commission declares a drought emergency and triggers certain drought response actions set for th in the SFPUC’s water shortage allocation plan. The surcharge may not exceed the requested volumetric reduction in water usage and would only be applied to volumetric water and wastewater charges. No drought surcharge is currently in place.

The following table sets forth the adopted single - and multi-family residential monthly service charges and sanitary sewer component of the sewer service charges for Fiscal Years 2023 -24 through 2025- 26, which were approved in May 2023.

71 TABLE 15

ADOPTED SINGLE-FAMILY AND MULTI-FAMILY RESIDENTIAL
MONTHLY SEWER SERVICE CHARGES(1)
FOR FISCAL YEARS 2023-24 THROUGH 2025-26
Fiscal Year
Monthly Service
Charge
Sanitary Sewer
Component (per
discharge unit(2))
2023-24(3) $4.85 $16.91
2024-25(3) 5.28 17.80
2025-26(3) 5.76 18.72
_______________
(1) Does not include stormwater runoff component of the sewer service charge. See “ Table 16 – Adopted Simplified Residential Monthly Stormwater Runoff Component of the Sewer Service Charge” below. (2) One discharge unit equals 100 cubic feet of wastewater. (3) Rates approved on May 23, 2023.

Source: SFPUC, Financial Services.

The stormwater runoff component is based on the property characteristics of the City assessor’s parcel on which a sewer account is located . Single- and multi-family residential wastewater customers with 6,000 square feet or less net parcel area and having six or fewer dwelling units are assessed a “ Simplified Residential” amount, one of three tiered amounts based on their total parcel area. Residential parcels greater than 6,000 square feet of net parcel area or having more than six dwelling units, and any other parcels which do not meet the eligibility criteria for the “Simplified Residential” amount are assessed a “ Standard Stormwater ” amount based on the measured permeable and impermeable areas of the parcel. See “– Current Non-Residential” below. If there is more than one active sewer account on a parcel, the calculated stormwater runoff component for the City assessor’s parcel amount is spl it equally to all accounts. The following table sets forth the adopted “ Simplified Residential” monthly stormwater runoff component of the sewer service charge by tier for Fiscal Years 2023-24 through 2025-26.

TABLE 16

ADOPTED SIMPLIFIED RESIDENTIAL

MONTHLY STORMWATER RUNOFF COMPONENT
OF THE SEWER SERVICE CHARGE BY TIER(1)
FOR FISCAL YEARS 2023-24 THROUGH 2025-26
Fiscal Year
Tier 1(2)
(per 100 cubic feet)
Tier 2(2)
(per 100 cubic feet)
Tier 3(2)
(per 100 cubic feet)
2023-24(3) $2.31 $ 3.60 $ 5.41
2024-25(3) 5.04 7.84 11.79
2025-26(3) 8.24 12.82 19.27
_______________
(1) For single - and multi -family residential customers with 6,000 square feet or less net parcel area and with six or fewer dwelling units.
(2) Tier 1: 0-1,700 square feet parcel area; Tier 2: 1,701-3,300 square feet parcel area; and Tier 3: 3,301-6,000 square feet parcel area.
(3) Rates approved on May 23, 2023.

Source: SFPUC, Financial Services.

The following table sets forth single - and multi-family projected average monthly bills (comprised of the monthly service charge, the sanitary sewer component of the sewer service charge and assuming Tier 2 of the stormwater runoff component of the sewer service charge) for Fiscal Years 2023-24 through 2025-26.

72 TABLE 17

SINGLE-FAMILY AND MULTI-FAMILY RESIDENTIAL

PROJECTED AVERAGE MONTHLY BILL
FOR FISCAL YEARS 2023-24 THROUGH 2025-26

Fiscal Year Single-Family(1)
Multi-Family
(per dwelling unit)(1)
2023-24(3) $77.14 $69.75
2024-25(3) 86.37 74.83
2025-26(3) 96.56 80.29
_______________
(1) Average billable wastewater volume for single-family residential customers is based on projected volumes ranging from 410 to 420 cubic feet of billable wastewater discharges. Average water consumption amount for multi -family residential customers is assumed to be 1,250 cubic feet of water per month, or 1,187.5 billable discharge units, for 3 dwelling units.

Assumes Tier 2 of the Simplified Residential amounts for the stormwater runoff component of the sewer service charge. (2) Rates approved on May 23, 2023.

Source: SFPUC, Financial Services.

Effective September 2023, the SFPUC ’s Customer Assistance Program offers a two -tiered discount off wastewater charges for individually metered single -family residential customers. Customers with incomes below 50% of the area median income ( “AMI”) receive a 25% discount and customers with incomes below 30% of the AMI receive a 40% discount. In addition, the SFPUC ’s Low -Income Non- Profit Housing Program offers a 15% discount off wastewater charges for residential customers in properties owned and operated by certain nonprofits.

Finally, the SFPUC’s Community Housing Program offers a 50% discount off wastewater charges for certain single - room-occupancy hotels providing transitional housing to the homeless and general assistance recipients.

Current Non-Residential
Beginning July 1, 2023, the Wastewater Enterprise ’s sewer service charges for non -residential customers include a fixed monthly service charge, a variable sanitary sewer co mponent, and a stormwater runoff component based on property size and/or parcel characteristics. The sanitary sewer component continues to be based on the assumed percentage of metered water usage discharged into the sewer system and sewage loading, which measures the pollutant concentrations within customer discharges (i.e., suspended solids, oil/grease and chemical oxygen demand). The standard flow factor applied to metered water usage to determine billable discharge units is 90% for non-residential accounts. Non-residential customers whose sewage loadings are not based on periodic sampling are charged based on standard parameter loadings established by the SFPUC for each Standard Industrial Classification code.

The following table sets forth the adopted non -residential monthly service charge, the sanitary sewer component of the sewer service charge, and sewage loading charges for each pollutant parameter for Fiscal Years 2023-24 through 2025-26, which were approved in May 2023.

73 TABLE 18

ADOPTED NON-RESIDENTIAL
MONTHLY SEWER SERVICE CHARGES(1)
FOR FISCAL YEARS 2023-24 THROUGH 2025-26
Fiscal Year
Monthly
Service Charge
Sanitary Sewer
Component
(per discharge
unit(2))
Suspended
Solids
(per pound)
Oil/Grease
(per pound)
Chemical
Oxygen
Demand
(per pound)
2023-24(3) $4.85 $9.74 $1.681 $1.053 $0.861
2024-25(3) 5.28 10.09 1.808 1.142 0.925
2025-26(3) 5.76 10.43 1.944 1.239 0.944

(1) Does not include stormwater runoff component of the sewer service charge. See “Table 19 – Adopted Standard Stormwater – Monthly Stormwater Runoff Component of the Sewer Service Charge” below. (2) One discharge unit equals 100 cubic feet of wastewater. (3) Rates approved on May 23, 2023.

Source: SFPUC, Financial Services.

The stormwater runoff component is based on the property characteristics of the City assessor’s parcel on which a sewer account is located. Non -residential parcels, mixed -use parcels, lots without wastewater service, residential parcels greater than 6,000 square feet of net parcel area or having more than six dwelling units, and any other parcels which do not meet the eligibility criteria for “ Simplified Residential” are assessed the “Standard Stormwater” amount based on the measured permeable and impermeable areas of the parcel. Impermeable areas include sidewalks, roofs, pavement and other surfaces which do not allow for infiltration of stormwater and therefore generate greater runoff. Permeable areas include lawns, gardens, and other surfaces which do allow infiltration. Permeable and impermeable areas are determined for each parcel using geospatial analysis. If there is more than one active sewer account on a parcel, the calculated stormwater runoff component for the City assessor’s parcel amount is split equally to all accounts. T he following table sets forth the adopted “ Standard Stormwater ” monthly stormwater runoff component of the sewer service charge for Fiscal Years 2023-24 through 2025-26.

TABLE 19

ADOPTED STANDARD STORMWATER

MONTHLY STORMWATER RUNOFF COMPONENT

OF THE SEWER SERVICE CHARGE
(1)
FOR FISCAL YEARS 2023-24 THROUGH 2025-26
Fiscal Year
Permeable Area
(per 100 cubic feet)
Impermeable Area
(per 100 cubic feet)
2023-24(2) $0.19 $1.89
2024-25(2) 0.41 4.11
2025-26(2) 0.67 6.72
_______________
(1) For non-residential, mixed-use, and large residential parcels (over 6,000 square feet or with more than six dwelling units). (2) Rates approved on May 23, 2023.

Source: SFPUC, Financial Services.

Appeals. While most customers are billed for sewer usage based on standard flow factor assumptions, customers may appeal this determination. For example, it is assumed that 90% of the volume of water measured at the customer meter for a single- family residential user is discharged to the sewer system as wastewater requir ing treatment. Customers who can demonstrate higher rates of consumptive use than that reflected in the applicable flow factor, such as irrigation, can apply to the Residential Users Appeals Board for a lower flow factor (i.e., percentage of metered water returned to the sewage system).

74 Revenues
Sewer Service Charges . Sewer service charges are imposed based on discharge volume estimates and, in the case of non -residential users, suspended solids, oil and grease and chemical oxygen demand. See “– Wastewater Enterprise Rates and Charges. ” The following table show s billed discharge by category for Fiscal Years 2018-19 to 2022-23.

TABLE 20

ANNUAL BILLED DISCHARGE BY CATEGORY
FOR FISCAL YEARS 2018-19 TO 2022-23
Fiscal Year
Volume
(Hundred Cubic
Feet)
Suspended Solids
(Thousand
Pounds)(1)
Oil and Grease
(Thousand
Pounds)(1)
Chemical Oxygen
Demand
(Thousand
Pounds)(1)
2018-19 23,869,718 41,543 12,656 101,847
2019-20 23,671,422 41,198 12,551 101,001
2020-21 21,242,770 36,971 11,264 90,638
2021-22 20,958,241 36,523 11,127 89,541
2022-23 21,014,073 36,573 11,142 89,663

(1) Listed pounds of strength parameters include both usage by non- residential users, for whom strengths are calculated and assessed separately, as well as assumed usage for residential users, for whom assumed strengths are embedded in the billed volumetric rate.

Source: SFPUC, Financial Services.

The following table shows sewer billings by customer class for Fiscal Years 2018-19 to 2022-23. For Fiscal Year 2022-23, the top 10 retail customers accounted for approximately 3.9% of sewer billings.

TABLE 21

ANNUAL SEWER BILLINGS BY USER TYPE
FOR FISCAL YEARS 2018-19 TO 2022-23
(IN THOUSANDS)
User Type 2018-19 2019-20 2020-21 2021-22 2022-23
Multi-Family Residential $133,454 $146,630 $153,697 $161,553 $167,375 Single-Family Residential 79,971 89,688 95,297 96,687 96,545 Subtotal Residential $213,425 $236,318 $248,994 $258,240 $263,920

Commercial $90,781 $86,237 $60,490 $78,207 $86,205
Municipal Customers 7,517 7,400 6,114 8,829 9,197
Suburban 3 3 3 2 3
Total $311,726 $329,958 $315,601 $345,278(1) $359,325(2)

(1) Increase in Fiscal Year 2021-22 billings primarily due to planned rate increase implemented on July 1, 2021; also includes two months of mandatory temporary drought surcharge of 5% effective as of April 1, 2022. (2) Increase in Fiscal Year 202 2-23 billings primarily due to mandatory temporary drought surcharge of 5% in place through May 1, 2023.

Source: SFPUC, Financial Services.

Sewer Account Billing and Delinquencies. Sewer service charges are billed on a combined water and sewer utility bill on either a monthly or bi -monthly basis. Payments are due 15 days after the bill date. If payments are not made, late payment charges are assessed 15 days from the due date or 30 days from the bill date. Accounts are considered delinquent 15 days after a seco nd unpaid combined water and sewer utility bill. Water service may be disconnected, or a lien may be assessed against the property for non-payment of water and sewer services.

75 Current accounts receivables as of June 30, 2023, are shown in the following table. These amounts exclude receivables from Municipal Customers.

TABLE 22

ACCOUNTS RECEIV ABLES AGING REPORT
AS OF JUNE 30, 2023
Period Amount Percent of Total
Percent of Total
Fiscal Year 2022-23
Revenues(1)
Current $15,810,268 45.58% 4.59%
31 – 60 Days 2,620,040 7.55 0.76
61 – 90 Days 1,653,812 4.77 0.48
Over 90 Days(2) 14,604,581 42.10 4.24
Total 34,688,702 100.00%

Credit Balances (1,306,835)
Total Aged Receivables 33,381,867
Less Allowance For Doubtful Accounts (10,626,516)

Accounts Receivable, Net of Allowance $22,755,351

(1) Revenues consists of sewer service charges only.
(2) Includes approximately $1 1.8 million in outstanding tax liens and balances forwarded to the City Treasurer ’s Bureau of Delinquent Revenue for collection.

Source: SFPUC, Financial Services.

Once an account is delinquent, a series of notices are sent to the customer and if payment is still not made, action to shut off the water supply is initiated. However, if the delinquent account is in the name of the property owner and payment is still not made despite such notices, the customer will receive a lien warning notice. After a lien notice is delivered, a lien hearing is held and, if the bill still remains outstanding, the lien is recorded and can only be removed upon full payment of all unpaid charges, plus administrative fees and interest. Liens not paid during the Fiscal Year in which they are recorded are transferred to the City Tax Collector ’s Office, Bureau of Delinquent Revenues for collection as a lien against the property. Accounts for which property transfers occurred prior to recording the lien and closed accounts with amounts less than $25 are normally written off as uncollectible.

Since the start of the COVID -19 pandemic, the number of SFPUC account bills that are 90 days or more past due has grown from approximately $631,000 in March 2020 to approximately $14.6 million at the end of Fiscal Year 2023. Such increase is primarily driven by a moratorium on water shutoffs, liens and other collections processes resulting from the COVID -19 pandemic, which allowed customers to accrue large arrearages without any financial penalties. Th e moratorium is still currently in effect; however, the SFPUC has discretion to restart severance and liens processes to multifamily residential accounts carrying balances greater than $25,000 which are 90 days or more past due and plans to resume such processes in Fiscal Year 2024-25.

The State Water Resources Control Board previously created the California Water and Wastewater Arrearages Payment Program to provide relief to community water and wastewater systems for unpaid bills related to the COVID -19 pandemic. The funding covered water debt from residential and commercial customers accrued between March 4, 2020 and June 15, 2021. The SFPUC received approximately $15.2 million of funding under the original arrearages program, $9.3 million of which has bee n credited against eligible wastewater accounts. In July 2023, Governor Newsom signed a budget trailer bill expanding the program to December 31, 2022. The SFPUC has received approximately $19.7 million of funding under the extended arrearages program, $11.6 million of which has been credited against eligible wastewater accounts.

As part of the SFPUC’s Customer Assistance Program effective July 1, 2023, the Commission approved the suspension of the application of late payment charges to single -family residential water and wastewater accounts

76 which are past -due on their bills, as well as a shutoff and lien policy which establishes that all accounts with household incomes at or below 50% of AMI that are enrolled in the SFPUC ’s Customer Assistance Program and maintain engagement with the SFPUC are eligible to be exempted from disconnection or lien due to nonpayment.

For more information regarding the SFPUC ’s Customer Assistance Program, see “– Wastewater Enterprise Rates and Charges – Current Wastewater Rates and Charges – Current Residential.” Because of these collections processes, the SFPUC ’s annual write -offs for wastewater accounts remain relatively low . The following table shows a five -year history of write -offs for uncollectible accounts, excluding Municipal Customers:

TABLE 23

WRITE-OFFS FOR UNCOLLECTIBLE ACCOUNTS
FISCAL YEARS 2018-19 TO 2022-23
Fiscal Year Amount
2018-19 $2,232
2019-20 1,631
2020-21 1,801
2021-22(1) 0
2022-23 1,784

(1) No amount for write -offs for uncollectible accounts in Fiscal Year 2021 -22 due in part to the suspension in collection activities from the COVID-19 pandemic.

Source: SFPUC, Financial Services.

Capacity Charges. Effective July 1, 2005, any customer requesting a new connection to the sewer system or requiring additional collection or treatment capacity because of any addition, improvement, modification or change in use of an existing connection as determined solely by the General Manager must pay a capacity charge for the new or additional capacity required to serve the customer. The capacity charge is site specific and may not be sold, traded or conveyed in a manner to another site or customer. The capacity charge does not convey or imply ownership in or of any facilities of the Wastewater Enterprise.

Effective July 1, 2014, capacity charges are assessed based on water meter equivalents, which provide a direct estimate of wastewater flow to the system, and Standard Industrial Classification code, which accoun ts for wastewater strength. For a single residential customer with a 5/8 ” water meter, the wastewater capacity charge fee for Fiscal Year 2023-24 is $5,834. The capacity charge is adjusted on July 1 of each subsequent year by the annual change in the 20-City Average Construction Cost Index published by Engineering News Record Magazine.

Capacity charges have averaged approximately 1. 3% of revenues from Fiscal Year 2019 -2020 through 2022-23.

Operating and Maintenance Expenses
“Operating and Maintenance Expenses ” cover the general operational expenses of the Wastewater Enterprise. These expenses include labor and employment benefits, contractual services, materials and supplies, depreciation, general and administrative, services from other departments and other miscellaneous costs. See “HISTORICAL OPERATING RESULTS” and “THE PUBLIC UTILITIES COMMISSION – Employee Relations.” Services from other departments include payment for services from other City departments, such as the City Attorney’s Office and the General Services Agency.

Allocation of Costs . Various common costs incurred by the SFPUC are allocated among the Wastewater Enterprise, the Water Enterprise and the Power Enterprise. Allocations are based on methodology established by an independent i ndirect cost study, and SFPUC management ’s best estimate s and may change from year to year depending on activities undertaken by each enterprise and information available.

77 For Fiscal Years 2021-22 and 2022-23, the SFPUC allocated $3 6.4 million and $37.6 million, respectively, in administrative costs to the Wastewater Enterprise. For Fiscal Year 202 3-24, the SFPUC has budgeted $ 39.0 million in administrative costs to the Wastewater Enterprise. Administrative costs are recorded as personal service expenses and also in other various operating expenses in the Wastewater Enterprise financial statements.

Payments to/from the City . The SFPUC receives payments from other City agencies for their share of the proportionate cost of the wastewater utility service provided to them. For Fiscal Years 2021-22 and 2022- 23, these service deliveries generated approximately $ 7.8 million and $8.0 million in revenues, respectively. Over the past five Fiscal Years, including Fiscal Year 202 2-23, revenues from service deliveries have averaged approximately

1.9% of Wastewater Enterprise revenues. For Fiscal Year 202 3-24, the SFPUC has budgeted $ 8.0 million in revenues from service deliveries.

A variety of City departments provide services such as engineering, purchasing, legal, telecommunications and human resources to the Wastewater Enterprise, and charge amounts designed to recover those costs. For Fiscal Years 2021-22 and 2022 -23, these charges totaled approximately $37.7 million and $35.7 million, respectively. For Fiscal Year 2023-24, the SFPUC has budgeted $38.8 million for such charges.

The SFPUC makes payments to the City relating to the financing of the SFPUC ’s headquarters at 525 Golden Gate Avenue, San Francisco, California. See “OBLIGATIONS PAYABLE FROM NET REVE NUES – Other Subordinate Obligations Payable from Net Revenues.” Financial Management Policies
The SFPUC makes no representation that the following policies and targets will not be revised or amended and, except to the extent required for compliance with t he terms of the Indenture, makes no representation that these policies will be followed by the SFPUC or that targets will be met.

Debt Management Policies and Procedures . The SFPUC has established “ Debt Management Policies and Procedures” (the “Debt Policies”) for debt financing under its jurisdiction. The SFPUC has also established separate “SFPUC Municipal Securities Disclosure Policies and Procedures ” (the “Disclosure Policies”) which are appended to the Debt Policies. The Debt Policies, including the ap pended Disclosure Policies, apply to all SFPUC enterprises, including the Wastewater Enterprise, and are intended to enable the SFPUC to effectively manage its debt issuance and administration practices and comply with all debt issuance and administration rules and regulations. The Debt Policies are reviewed bi-annually and revised, as necessary, with Commission approval.

Revisions to the Debt Policies were most recently adopted by the Commission in 2019. This included revisions to three key areas:
(1) Disclosure – The Disclosure Policies now cover two amendments that were made to Rule 15c2 -12, effective February 27, 2019 (the “Rule 15c2-12 Amendments”). See the Listed Events 15 and 16 in “APPENDIX D – FORM OF CONTINUING DISCLOSURE CERTIFICATE. ” In addition, pursuant to the Disclosure Policies, the SFPUC developed a Disclosure Practices Working Group (the “ DPWG”). The DPWG m eets at least semiannually to better and more effectively administer the SFPUC ’s continuing disclosure requirements, particularly to monitor the SFPUC’s financial obligations and financial difficulties, if any, in light of the Rule 15c2 -12 Amendments. The DPWG is comprised of the Chief Financial Officer and Assistant General Manager, Business Services, two Deputy Chief Financial Officers and the Debt Manager of the SFPUC, with legal consultation from the City Attorney ’s Office and the SFPUC’s outside disclosure counsel.
(2) Variable Rate Obligations – The Debt Policies, which set forth and describe various types of debt obligations that the SFPUC may issue, now allow the SFPUC to issue variable rate obligations of the Wastewater Enterprise with more market-standard provisions.
(3) WIFIA Loans – The Debt Policies were revised to add WIFIA loans as a permitted form of low - cost debt financing instrument, comparable to the low -cost State Revolving Fund loans that the SFPUC has, from

78 time-to-time, executed with the State. See “OBLIGATIONS PAYABLE FROM NET REVENUES – Water Infrastructure Finance and Innovation Act Loans.”
Debt Service Coverage Policy. The Commission adopted a debt service coverage policy (the “Debt Service Coverage Policy”) in 2017, which applies to all SFPUC enterprises, including the Wastewater Enterprise. Pursuant to the Debt Service Coverage Policy, to ensure that the SFPUC maintains access to low -cost capital and retains financial flexibility for contingencies, the SFPUC will aim to adopt budgets , rates and financial plans that generate revenues such that debt service coverage calculated on an Indenture basis (including certain available fund balances) will be at least 1.35 times and debt service coverage calculated on a current basis (Net Revenues divided by debt service on Bonds and Parity Loans) will be at least 1.10 times.

Separate from the Debt Service Coverage Policy, the Indenture includes a rate covenant that debt service coverage calculated on an Indenture basis (including certain availab le fund balances) will be at least 1.25 times . See “SECURITY FOR THE BONDS – Rate Covenants – Debt Service Coverage.” Capital Financing Policy . The Commission adopted a capital financing policy (the “Capital Financing Policy”) in 2017, which applies to all SFPUC enterprises, including the Wastewater Enterprise. The SFPUC relies mainly on current revenue and debt financing to pay for capital assets or improvements. According to the Capital Financing Policy, the appropriate mix of c urrent revenues versus debt financing depends, in part, on the capital investment lifecycle of the Wastewater Enterprise. Accordingly, the SFPUC has determined that over the 10- year financial planning horizon, the SFPUC will aim to pay for a minimum ranging between 15% and 30% of the Wastewater Enterprise’s capital budget from current revenues.

Fund Balance Reserve Policy. The Commission adopted a fund balance reserve policy (the “ Fund Balance Reserve Policy ”) in 2017, which applies to all SFPUC enterprises , including the Wastewater Enterprise.

Pursuant to the Fund Balance Reserve Policy, for the time period covered in the 10 -year financial plan, the SFPUC will aim to propose operating and capital budgets and rates for adoption such that the Fund Balance Res erve totals a minimum of 90 days or 25% of operations and maintenance expenses (including programmatic projects and excluding debt service and revenue -funded capital) throughout the forecast period. Amounts in excess of such minimum will be considered for contingencies and rate stabilization.

Affordability Policy. The Commission adopted its most recent affordability policy (the “ Affordability Policy”) in 2023, which applies to the Wastewater Enterprise and the Water Enterprise. Pursuant to the Affordability Policy, the SFPUC will, when adopting rates and approving budgets and financial plans, review the average residential combined water and sewer bill over the next 20 years, and aim to set rates that will result in the average residential combined bill not exceeding 3% of income for a “ typical” customer (defined as the 40 th percentile San
Francisco household income ), 7% of income for a “ low-income” customer (defined as the 20 th percentile San Francisco household income ), and 5% of income for a “ low-income” customer after accounting for enrollment in applicable low -income discount programs (see “FINANCIAL OPERATIONS – Wastewater Enterprise Rates and Charges”). If such average res idential combined bills are projected to exceed the targets within the 20 -year period, the SFPUC must provide a rationale and develop strategies to reduce costs , including providing progress reports to the Commission in subsequent budget and financial plan adoptions.

Investment of SFPUC Funds
The SFPUC’s pooled deposits and investments are invested pursuant to State law and the investment policy established from time to time by the City Treasurer and overseen by the Treasury Oversight Committee. The current policy seeks the preservation of capital, liquidity and yield, in that order of priority. Under the City Treasurer ’s current investment procedures, the SFPUC’s pooled deposits and investments are invested in the City’s larger pooled investment fund (the “ City Pool”). Among other purposes, the City Pool serves in effect as a disbursement account for expenditures from the City ’s various segregated and pooled funds. Investments are generally made so that securities can be held to maturity. The City Treasurer calculated the weighted average maturity of these investments as of March 31, 2024, to be 438 days (most recent data available).

The following table sets forth the approximate book values of the investments held in the City Pool reported by the City Treasurer as of March 31, 2024. The Wastewater Enterprise’ s pooled deposits and investments

79 accounted for approximately $397.92 million, or approximately 2.497%, of such amounts. The Water Enterprise and the Power Enterprise each have their own pooled deposits and investments that are separate from the Wastewater Enterprise.

TABLE 24

CITY POOLED INVESTMENT FUND
(AS OF MARCH 31, 2024)
Investments
Book Value
(millions)
U.S. Treasuries $3,551.2
Federal Agencies 6,804.0
Public Time Deposits 40.0
Negotiable CDs 2,080.0
Commercial Paper 1,164.1
Money Market Funds 1,688.3
Supranationals 608.1
Total $15,935.7

Source: Office of the Treasurer and Tax Collector of the City and County of San Francisco.

The SFPUC ’s non- pooled deposits and investments consist primarily of funds related to the SFPUC ’s Outstanding Bonds, which are invested pursuant to policy established by the SFPUC, subject to the restrictions contained in the applicable bond documentation.

Risk Management and Insurance
The SFPUC ’s risk management program encompasses both self- insured and insured coverage. Risk assessments and coverage are coordinated by the SFPUC Enterprise Risk Manager through the City Office of Risk Management. With certain exceptions, the City and SFPUC ’s general approach is to first evaluate self -insurance for the risk of loss to which it is exposed. Based on this analysis, the SFPUC has determined that mitigating risk through a “self-retention” mechanism is more economical as it manages risks internally and administers, adjusts, settles, defends and pays claims from budgeted resources (i.e., pay -as-you-go). When economically more viable or when required by debt financing covenants, the SFPUC obtains commercial insurance.

At least annually, the City reviews and actuarially determines general liability and workers ’ compensation liabilities, which are recorded as “ Damages and Claims ” and “Accrued Worker’s Compensation ” in the financial statements.

The SFPUC does not maintain commercial earthquake coverage, with certain minor exceptions, such as a sub-limit for fire-sprinkler leakage due to earthquake under the Property Insurance program.

The following is a summary of the SFPUC’s coverage approach to risk:

80 Primary Risks Typical Coverage Approach
General Liability Purchased Insurance & Self-Insured
Property Purchased Insurance & Self-Insured
Electronic Data Processing Purchased Insurance & Self-Insured Workers’ Compensation Self-Insured through City-Wide Pool Other Risks Typical Coverage Approach
Surety Bonds Purchased and Contractually Transferred
Professional Liability Combination of Self-Insured, Purchased Insurance and Contractual Risk Transfer Errors & Omissions Combination of Self-Insured, Purchased Insurance and Contractual Risk Transfer Builders Risk Purchased Insurance & Contractual Risk Transfer Public Officials Liability Purchased Insurance
Employment Practices Liability Purchased Insurance
Crime Purchased Insurance
Cyber Liability Purchased Insurance

The SFPUC ’s property risk management approach varies depending on whether the facility is currently under construction, or if the property is part of revenue -generating operations. The majority of purchased insurance is for revenue -generating facilities, debt- financed facilities and mandated coverage to meet statutory or contractual requirements. For Fiscal Year 2023-24, the SFPUC’s insured coverage is through an insurance policy purchased by the City on a City -wide basis, which provides up to $1 billion of coverage against certain losses with respect to scheduled property. Such scheduled property includes certain properties of the City and its departments, including, but not limited to, the SFPUC ’s enterprises which alone have a total value of approximately $2.8 billion. The SFPUC is currently exploring different options for insured coverage for Fiscal Year 2024-25.

Additionally, the SFPUC acknowledges the importance of aligning strategic planning to the risk management process and has implemented an Enterprise Risk Management program to meet this need. The framework provides a strategic approach to managing operational risks. The Enterprise Risk Management program has been implemented thus far for Information Technology Services, the Power Enterprise and CleanPowerSF and plans are in place to continue implementation across the remainder of the SFPUC as needed.

Capital Project Risk Management . For capital construction projects, similar to the City ’s practice, the SFPUC has utilized traditional contractual risk transfer, contractor -controlled insurance programs or other alternative insurance programs. Under the latter two approaches, the insurance program usually provides coverage for the entire construction project, along with multiple risk coverages, such as general liability and workers compensation. When a contractual risk transfer is used for capital construction risks, the SFPUC requires each contractor to provide its own insurance, while ensuring that the full scope of work be covered with satisfactory levels to limit the SFPUC’s risk exposure balanced by that which is commercially available.

Performance bonds are required, and builder ’s risk insurance must be purchased, in most phases of the construction contracting process for such phases, as bid, performance, and payment or maintenance. Additionally, bonds may be required in other contracts where goods or services are provided to ensure compliance with applicable terms and conditions such as warranty.

Professional liability policies are either directly purchased insurance on behalf of the SFPUC, transf erred through contract to the contracted professional, or retained through self -insurance on a case-by-case basis depending on the size, complexity or scope of construction or professional service contracts. Professional liability policies are typically pu rchased for services provided by engineers, architects, design professionals and other licensed or certified professional service providers.

Builder’s risk policies of insurance are required to be provided either through an owner -controlled insurance program or the contractor on all construction projects for the full value of the construction.

81 HISTORICAL OPERATING RESULTS
Summary of Historical Operating Results and Debt Service Coverage The historical results of operations reflected in the fol lowing table are based on the tables contained in the SFPUC’s financial statements entitled “ Statements of Revenues, Expenses and Changes in Net Position” and “Statements of Cash Flows ” for the Fiscal Years listed. This table excludes certain non -operating revenue and expenses included in the “ Statements of Revenues, Expenses and Changes in Net Position” table. Consequently, “Operating and Investment Income ” presented in this table differs from “ Change in net position” in the “Statements of Revenues, Expens es and Changes in Net Position” table. The calculation of debt service coverage includes net operating income and funds not budgeted to be spent in the next twelve months and legally available to pay debt service, as permitted under the Indenture. The audited financial statements of the Wastewater Enterprise for Fiscal Years 2022-23 and 2021-22, prepared by the SFPUC, are attached as APPENDIX B to this Official Statement. The audited financial statements for Fiscal Year 2022 -23 were audited by Macias Gini & O’Connell LLP, independent certified public accountants, and the audited financial statements for Fiscal Year 2021 -22 were audited by KPMG LLP, independent certified public accountants. The following table should be read in conjunction with such financial statements. Macias Gini & O ’Connell LLP and KPMG LLP have not reviewed the following table. See “APPENDIX B – SFPUC WASTEWATER ENTERPRISE FINANCIAL STATEMENTS.”

82 TABLE 25

HISTORICAL REVENUE, OPERATING & MAINTENANCE EXPENSE
AND DEBT SERVICE COVERAGE FOR FISCAL YEARS ENDED JUNE 30 (IN THOUSANDS)(1)
2019 2020 2021 2022 2023

OPERATING & INVESTMENT REVENUE
Sewer Service Charges(2) $317,761 $331,721 $316,766 $354,526 $352,986 Other Revenues(3) 6,443 6,511 5,719 7,037 7,048
Investing Activities(4) 20,701 12,137 (1,187) (7,087) 2,556 Capacity Charges(5) 6,877 5,896 3,710 6,280 3,077
Total Revenues $351,782 $356,265 $325,008 $360,756 $365,667

OPERATING & MAINTENANCE EXPENSE
Salary and Fringe Benefits(6) $80,693 $91,013 $90,449 $63,456 $89,726 Contractual Services 19,040 19,357 18,861 19,115 20,777 Materials and Supplies(7) 9,853 8,991 9,091 11,844 14,306 Depreciation(8) 60,033 62,967 72,018 77,573 78,035
Services of Other Departments 36,629 37,309 38,313 39,645 40,999 General and Administrative (9) 6,470 4,969 3,854 6,353 (950) Other(10) 47,095 37,653 58,151 37,024 11,390
Total Operating Expenses $259,813 $262,259 $290,737 $255,010 $254,283

OPERATING AND INVESTMENT INCOME $91,969 $94,006 $34,271 $105,746 $111,384

COVERAGE CALCULATION(11)
Operating and Investment Income $91,969 $94,006 $34,271 $105,746 $111,384 + Adjustment to Investing Activities(12) (8,047) 2,950 4,356 8,422 2,392 + Depreciation & Non-Cash Expenses 68,568 68,603 78,368 77,806 84,450 + Changes in Working Capital(13) (2,125) 523 (8,596) (36,470) (19,376) = “Net Revenues” 150,365 166,082 108,399 155,504 178,850 + Other Available Funds(14) 103,281 215,722 197,778 155,331 134,593 Funds Available for Bond Debt Service $253,646 $381,804 $306,177 $310,835 $313,443 Bond and Loan Debt Service(15)(16) $60,347 $62,797 $82,066 $86,619 $98,811 DEBT SERVICE COVERAGE (15)
Indenture Basis (14)(16) 4.20x 6.08x 3.73x 3.59x 3.17x
Current Basis (17) 2.49x 2.64x 1.32x 1.80x 1.81x

(1) Operating and Investment Income presented in this table differs from the “ Change in net position ” presented in the “Statements of Revenues, Expenses and Changes in Net Position” in the audited financial statements set forth in “APPENDIX B – SFPUC WASTEWATER ENTERPRISE FINANCIAL STATEMENTS.” This table presents Debt Service Coverage as defined under the Indenture and excludes certain elements of non -operating revenue and expenses included in the “Statements of Revenues, Expenses and Changes in Net Position” table in the audited financial statements. Examples of excluded elements are grant revenue, interest expense and gains from sale of assets. Totals may not add due to independent rounding.
(2) Decrease in Fiscal Year 2022-23 is mainly due to an increase in allowance for doubtful accounts as there were more sewer charge receivables aging over 120 days, offset by a 5% drought surcharge and a sanitary flow increase of 47,124 ccf or 0.2% from residential and non-residential customers.
(3) Includes approximately $476,000 in non-operating revenues in Fiscal Year 2021-22 and $680,000 in non-operating revenues in Fiscal Year 2022-23 only. Does not include non-operating revenues for prior Fiscal Years. (4) Increase in Fiscal Year 2022-23 is mainly due to a decrease in unrealized loss in City Treasury pooled investments attributed to improved market value of investments and higher interest rates, an increase in interest earned from pooled cash due to increase in cash balances and higher annualized interest rate, increase in interest earned from fiscal agent account due to increase in fiscal agent cash balances and rising interest rates, and interest earned from lease receivables. (footnotes continue on following page)

83 (5) Decrease in Fiscal Year 2022-23 is mainly due to a decrease in revenue resulting from decreases in average permit price by 55% and permits issued by 12.2%, offset by decrease in allowance for doubtful accounts and adjustments. (6) Decrease in Fiscal Year 2021 -22 mainly related to GASB 68 pension adjustment offset by a 4% increase in cost of living adjustment (“COLA”). Increase in Fiscal Year 2022-23 is mainly due to an increase in expenses related to GASB 68 pension adjustment and 5.25% increase in COLA.
(7) Increase in Fiscal Year 2022-23 is mainly due to increase in water sewage treatment supplies for Bayside Operations. (8) Increase in Fiscal Year 2022-23 is mainly due to more capitalized assets put in service. (9) Decrease in Fiscal Year 2022-23 is mainly due to decrease in judgment and claims expenses. (10) Decrease in Fiscal Year 2022-23 is mainly due to increased capitalized expenditures to fixed assets. (11) The Indenture defines “Net Revenues” on a cash basis. (12) Represents adjustments to show investing activities on a cash basis. (13) Represents adjustments to bring net income to a cash basis. (14) Per the Indenture, includes any fund balances of the SFPUC or the Wastewater Enterprise available for payment of debt service and not budgeted to be expended during the 12 months following a calculation date, excluding monies held in any Reserve Account established under the Indenture.
(15) Bond and Loan Debt Service and Debt Service Coverage calculated per Indenture are net of capitalized interest, federal interest subsi dy payments and Excluded Principal; these differ from amounts presented in previous Annual Reports (as defined herein) and financial statements.
(16) Bond and Loan Debt Service and Debt Service Coverage does not include debt service on subordinate obligations, including the Wastewater Enterprise’ s share of lease payments associated with the 2009 Golden Gate COPs and debt service on Commercial Paper Notes.
(17) Calculated as the sum of Net Revenues plus “ Other Available Funds,” divided by debt service on Bonds (including Parity Loans). The Indenture includes a rate covenant of 1.25x “ Debt Service Coverage.” See “SECURITY FOR THE BONDS – Rate Covenants – Debt Service Coverage.”
(18) Calculated as Net Revenues divided by debt service on Bonds (including Parity Loans).

Source: SFPUC, Financial Services.

PROJECTED OPERATING RESULTS
The following table presents projected operating results for the Wastewater Enterprise. These projections are based on an analysis of historical trends, adjusted where appropriate for known or anticipated changes in operations. The projections are also based on the assumption that all rate increases necessary to finance future expenses, including the Wastewater Enterprise’s capital program, will be approved and implemented.

THESE PROJECTIONS, ALL OR SOME OF WHICH MAY OR MAY NOT BE REALIZED, ARE BASED ON THE ISSUANCE OF ADDITIONAL BONDS FOR THE CAPITAL PROGRAM. CHANGES IN THE

CIRCUMSTANCES THAT FORM THE BASES FOR THE ASSUMPTIONS USED IN DEVELOPING THESE

PROJECTIONS, AS WELL AS UNANTICIPATED EVENTS, MAY OCCUR SUBSEQUENT TO THE DATE OF THIS OFFICIAL STATEMENT. THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE PROJECTIONS SHOWN.

84 TABLE 26

PROJECTED REVENUE, OPERATING AND MAINTENANCE EXPENSE
AND DEBT SERVICE COVERAGE FOR FISCAL YEAR ENDING JUNE 30 (IN THOUSANDS)(1)
2024 2025 2026 2027 2028

REVENUE
Sewer Service(2) $386,109 $434,041 $478,757 $535,308 $598,926 Capacity Charges 5,168 5,323 5,483 5,647 5,817
Interest Income(3) 6,639 2,056 1,941 1,795 2,251
Other Miscellaneous Income 8,064 7,161 7,334 7,540 7,751 Total Revenues $405,979 $448,582 $493,515 $550,289 $614,746

OPERATION AND

MAINTENANCE COSTS OF THE
WASTEWATER ENTERPRISE(4)
$224,124 $224,568 $224,752 $231,559 $238,731
less FUND BALANCE BUDGETED
AND APPROPRIATED (10,085) (9,428) (12,008) (14,657) (14,635) NET REVENUES(5) $191,940 $233,442 $280,771 $333,388 $390,649

plus OTHER A V AILABLE
FUNDS(6) $155,887 $159,101 $147,093 $132,435 $117,800

FUNDS AV AILABLE FOR DEBT
SERVICE $347,827 $392,543 $427,864 $465,823 $508,450

DEBT SERVICE(7)(8) $95,114 $119,236 $145,076 $234,597 $309,486

DEBT SERVICE COVERAGE(8)
Indenture Basis(9) 3,66x 3.29x 2.95x 1.99x 1.64x
Current Basis(10) 2.02x 1.96x 1.94x 1.42x 1.26x

(1) Amounts set forth in the table are projections. Projections for Fiscal Year 2023-24 are based on the SFPUC’s quarterly audit and performance review report for the third quarter of Fiscal Year 2023 -24, ending March 31, 2024. Projections for Fiscal Years 2024-25 through 2027 -28 are based on the 2025 Financial Plan, adopted by the Commission on February 13, 2024.

Actual results may differ materially from these projections. See “FORWARD-LOOKING STATEMENTS” and “– Assumptions Used in Projections.” Totals may not add due to independent rounding. (2) Reflects annual rate increases of 9% for Fiscal Years 2023-24 through 2025-26 and 12% for Fiscal Years 2026-27 and 2027-

28. See “– Assumptions Used in Projections.”
(3) Assumes a 1.2% earnings rate on invested cash balance through Fiscal Year 2026-27 and 1.7% for Fiscal Year 2027-28. (4) Operating and Maintenance Expenses net of depreciation and other non-cash items per Indenture. (5) Represents Net Revenues under the Indenture.
(6) Per the Indenture, includes any fund balances of the SFPUC or the Wastewater Enterprise available for payment of debt service and not budgeted to be expended during the 12 months following a calculation date, excluding monies held in any Reserve Account established under the Indenture.
(7) Projected debt service consists of the projected, not actual, debt service on the 2010B Bonds (net of anticipated Refundable Credits), 2013B Bonds, 2016A Bonds, 2016B Bonds, 2018A Bonds, 2018B Bonds, 2021A Bonds, 2021 B Bonds, 2022B Bonds, BDFP WIFIA Bond, 2023A Bonds, 2023B Bonds, 2023C Bonds, 2024ABCD Bonds (all net of capitalized interest), Additional Bonds and seven existing Pa rity Loans. Projected debt service does not include debt service on the STPI WIFIA Bond or the Project 1 WIFIA Bond. Assumes continuation of current 5.7% sequestration rate for Refundable Credits (see “SECURITY FOR THE BONDS – Rate Covenants – Debt Service Coverage”). See also “– Assumptions Used in Projections – Projected Debt Service.”
(8) Debt Service and Debt Service Coverage does not include debt service on subordinate obligations, including the Wastewater Enterprise’s share of lease payments associated with the 2009 Golden Gate COPs and debt service on Commercial Paper Notes.
(footnotes continue on following page)

85 (9) Calculated as the sum of Net Revenues plus “ Other Available Funds,” divided by debt service on Bonds and Parity Loans.

The Indenture inc ludes a rate covenant of 1.25x “ Debt Service Coverage. ” See “SECURITY FOR THE BONDS – Rate Covenants – Debt Service Coverage.”
(10) Calculated as Net Revenues divided by debt service on Bonds and Parity Loans.

Source: SFPUC, Financial Services.

Assumptions Used in Projections
In the preparation of the projections set forth in the table above, the SFPUC has made certain assumptions with respect to conditions that may occur in the future. While the SFPUC believes these assumptions are reasonable for the purpose of the projections, they are dependent on future events, and actual conditions are likely to differ, perhaps materially, from those assumed. To the extent actual future conditions differ from those assumed by the SFPUC or provided to the SFPUC by others, actual results will vary from those projected. This projected information has not been compiled, reviewed or examined by the SFPUC’s independent auditors.

The assumptions used in the table above include the following:

Projected Revenue and Rate Increases. Projected revenues are based on projected wastewater service sales and the schedules of rates to be effective in each year. Projected revenues assume a 9.0% annual rate increase for Fiscal Years 2023 -24 through 2025 -26, as approved by the Commission in May 2023 (see “ FINANCIAL OPERATIONS – Wastewater Enterprise Rates and Charges ”), and a 12.0% annual rate increase for Fiscal Years 2026-27 and 2027-28, which are subject to future approval by the Commission and the ability to reject rate increases by the Board of Supervisors.

Projected Operation and Maintenance Costs of the Wastewater Enterprise . Operation and Maintenance Costs of the Wastewater Enterprise are projected to grow by 11.4% for Fiscal Year 2023 -24, 4.5% for Fiscal Year 2024-25, 0.1% for Fiscal 2025-26, 3.0% for Fiscal Year 2026-27, and 3.1% for Fiscal Year 2027-28. The increase in Fiscal Year 2023 -24 reflects increased salary costs and significant budget savings in F iscal Year 2022-23, while increases in Fiscal Year s 20 24-25 through Fiscal Year 202 7-28 reflect an anticipated return closer to historical normal operations.

Projected Debt Service. Projected debt service consists of the projected, not actual, debt service on the 2010B Bonds (net of anticipated Refundable Credits), 2013B B onds, 2016A Bonds, 2016B Bonds, 2018A Bonds, 2018B Bonds, 2021A Bonds, 2021B Bonds, 2022B Bonds, BDFP WIFIA Bond 2023A Bonds, 2023B Bonds, 2023C Bonds, 2024A BCD Bonds (all net of capitalized interest), Additional Bonds and seven existing Parity Loans .

Projected debt service does not include debt service on the STPI WIFIA Bond or the Project 1 WIFIA Bond.

Assumes continuation of current 5.7% sequestration rate for Refundable Credits (see “ SECURITY FOR THE BONDS – Rate Covenants – Debt Service Coverage”).

Following the issuance of the 2024ABCD Bonds, the SFPUC anticipates that it will issue approximately $2.6 billion of Additional Bonds between Fiscal Years 202 4-25 and 2027 -28 to finance Wastewater Enterprise capital projects pursuant to the 2025 Capital Plan. The projected debt service during the projection period for the 2024ABCD Bonds and the Additional Bonds assumes 30 -year term with level debt service, a 6% interest rate , no debt service reserve fund and up to 24 months of capitalized interest during projection period. The actual issuance dates, borrowing rates and capitalized interest periods may vary from these assumptions. The SFPUC may also issue refunding bonds from time to time in response to market conditions in order to achieve debt service savings.

86 RISK FACTORS
This section provides a general overview of certain risk factors which should be considered, in addition to the other matters set forth in this Official Statement, in evaluating an investment in the 2024ABCD Bonds. This section is not meant to be a comprehensive or definitive discussion of all of the risks associated with an investment in the 2024ABCD Bonds. The order in which this information is presented does not necessarily reflect the relative importance of various risks or the probability of their occurrence.

Potential investors in the 2024ABCD Bonds are advised to consider the following factors, among others, and to review this entire Official Statement to obtain information essential to the making of an informed investment decision. Any one or more of the risk factors discussed below, among others, could lead to a decrease in the market price and/or in the marketability of the 2024ABCD Bonds or adversely affect the ability of the SFPUC to make timely payments of principal of or interest on the 2024ABCD Bonds. There can be no assurance that other risk factors not discussed herein will not become material in the future, and the SFPUC has not undertaken to update investors about the emergence of the risk factors in the future.

General
The ability of the SFPUC to comply with its covenants under the Indenture and to generate Net Revenues sufficient to pay principal of and interest on the Bonds may be adversely affected by actions and events outside of the control of the SFPUC and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or persons obligated to pay fees and charges. Among other matters, general and local economic conditions and changes in law and government regulations could adversely affect the amount of Net Revenues realized by the SFPUC or significantly raise the cost of operating the Wastewater Enterprise.

In addition, the realization of futu re Net Revenues is subject to, among other things, the capabilities of management of the SFPUC, the ability of the SFPUC to provide service to its customers, the ability of the SFPUC to establish, maintain and collect charges from its customers and the abi lity of the SFPUC to establish, maintain and collect rates and charges sufficient to pay for Operation and Maintenance Costs of the Wastewater Enterprise, the Bonds and other obligations payable from Net Revenues. See “FINANCIAL OPERATIONS” and “OBLIGATIONS PAYABLE FROM NET REVENUES.”
Limited Obligation
If the SFPUC defaults on its obligations to make debt service payments on the Bonds, the Trustee has the right under the Indenture to accelerate the total unpaid principal amount of the Bonds. However, in the event of a default and such acceleration, there can be no assurance that the SFPUC, and correspondingly the Trustee, will have sufficient moneys available for payment of the Bonds.

The SFPUC is not obligated to pay the principal of, premium, if any, or i nterest on the Bonds except from Net Revenues. The SFPUC has no taxing power. The General Fund of the City is not liable for the payment of the principal of, premium, if any, or interest on the Bonds, and neither the credit nor the taxing power of the City is pledged to the payment of the principal of, premium, if any, or interest on the Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the City or of the SFPUC or any of its incom e or receipts, except Net Revenues of the Wastewater Enterprise.

No Reserve Account
No Reserve Account has been established for the 2024ABCD Bonds. The Reserve Accounts established with respect to other Series of Bonds do not secure the 2024ABCD Bonds.

87 WIFIA Loan Agreements
Disbursements under the WIFIA Loan Agreements are subject to various conditions. See “ OBLIGATIONS PAYABLE FROM NET REVENUES – Water Infrastructure Finance and Innovation Act Loans – Conditions to Disbursements under WIFIA Loan Agreements .” If the SFPUC is unable to make draws under the WIFIA Loan Agreements to finance eligible costs of the Biosolids Digester Facilities Project, the Southeast Treatment Plant Improvements Project or the Project 1 Projects, as applicable, the SFPUC may need to issue additional notes, revenue bonds or other revenue secured obligations to pay for such project costs. There can be no assurance that the SFPUC will be able to issue such obligations or that the issuance of such obligations will not result in higher borrowing costs.

Interim Funding Program Facilities
Commercial Paper Notes. The bank credit facilities supporting the Commercial Paper Notes are subject to early termination upon the occurrence of certain events, including the failure of the SFPUC to make certain payments, the occurrence of certain bankruptcy or insolvency- related events, the reduction below specified levels or the withdrawal or suspension of ratings on certain obligations of the SFPUC payable from Net Revenues or certain other specified ev ents of default. Upon the occurrence of such termination, one or more of the following would likely occur: (a) the SFPUC would be prohibited from issuing additional notes supported by such credit facilities; (b) any outstanding reimbursement obligation of the SFPUC to the bank providing such facility for draws made for the payment of principal of or interest on Commercial Paper Notes could bear interest at rates higher than the rates borne by the Commercial Paper Notes; and (c) any such outstanding reimburs ement obligation of the SFPUC could be accelerated and become immediately due and payable. The Commercial Paper Notes and any reimbursement obligations are payable from Net Revenues on a basis subordinate to the Bonds.

Revolving Notes. The commitment of th e bank to make advances under the U.S. Bank Credit Facility (the repayment obligation of the SFPUC for which are evidenced by the Revolving Notes) may be terminated by the bank upon the occurrence of certain events, including the failure of the SFPUC to ma ke certain payments, the occurrence of certain bankruptcy or insolvency- related events, the reduction below specified levels or the withdrawal or suspension of ratings on certain obligations of the SFPUC payable from Net Revenue or certain other specified events of defaults. Upon such an event of default, (a) the outstanding repayment obligation of the SFPUC evidenced by the Revolving Notes would bear interest at substantially increased interest rates and (b) the bank could declare all amounts outstanding under the Revolving Notes to be immediately due and payable. The Revolving Notes and any payment obligations thereunder are payable from Net Revenues on a basis subordinate to the Bonds.

See “OBLIGATIONS PAYABLE FROM NET REVENUES – Subordinate Debt and Interim Funding Program.”
Risks Related to Net Revenues
Unanticipated Decreases in Water Sales Volumes . Under the SFPUC ’s current rate structure, customers ’ sewer service charges are comprised of a fixed monthly service charge, a variable sanitary sewer component and a stormwater runoff component based on property size and/or parcel characteristics . The variable sanitary sewer component is based on the assume d percentage of metered water usage discharged into the sewer system, or “ flow factor.” As a result, water deliveries at less than expected levels would result in lower than expected Revenues of the Wastewater Enterprise. Reduced water deliveries could result from, among other circumstances, changes in the local economy, reduced water supply, conservation measures or damage to storage, transportation, treatment or delivery systems of the SFPUC’ s Water Enterprise. See “FINANCIAL OPERATIONS – Wastewater Enterprise Rates and Charges – Current Wastewater Rates and Charges ” and “– Risks Related to Wastewater Enterprise Facilities and Operation – Seismic Hazards” and “–Natural and Man-Made Disasters; Flooding.” Increased Operating and Maintenance Expenses . There can be no assurance that the Operating and Maintenance Expenses of the SFPUC, such as wages and salaries, pension and other benefits, and purchased power costs, will not increase, perhaps substantially. See “FINANCIAL OPERATIONS – Operating and Maintenance Expenses.”

88 Limitations on Rate Setting and Challenge to Established Rates The generation of Revenues sufficient to satisfy the requirements of the Indenture and to pay the principal of and interest on the Bonds will require the SFPUC to raise wastewater rates payable by its customers. The increase of wastewater rates is subject to various substantive and procedural requirements and limitations. See “CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS.”
On December 12, 2023, the City was served with a purporte d class action lawsuit challenging the compliance of the rates charged by the Wastewater Enterprise with the requirements of Proposition 218. See “CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS – State Law Limitations – Proposition 218” and “– Proposition 218 Litigation.”
Initiative, Referendum and Charter Amendments and Future Legislation Under the State Constitution, California voters have the ability to initiate legislation and require a public vote on legislation passed by the State Legislature through the powers of initiative and referendum, respectively. The SFPUC is unable to predict whether any such initiatives might be submitted to or approved by the voters, the nature of such initiatives, or their potential impact on the SFPUC or the Wa stewater Enterprise. See “CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS.”
Under the Charter, San Francisco voters can restrict or revise the powers of the SFPUC through the approval of a Charter amendment or other initiative. For example, in June 1998 the San Francisco electorate approved Proposition H which, subject to certain exceptions, including a limited exception to raise rates to pay debt service on voter-approved debt, froze the SFPUC’s water and sewer rates through July 1, 2006. The SFPUC can give no assurance that the electorate will not seek in the future to freeze or limit rate increases. See “CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS – Charter Limitations.” In addition, the SFPUC is subject to various laws, rules and regulations adopted by the local, State and federal governments and their agencies. The SFPUC is unable to predict the adoption or amendment of any such laws, rules or regulations, or their effect on the operations or financial condition of the SFPUC.

Risks Related to Wastewater Enterprise Facilities and Operation The operation of the Wastewater Enterprise, and the physical condition of the Wastewater Enterprise facilities, are subject to a number of risk factors that could adversely affect the reliability of the SFPUC to provide sewage and stormwater collection and treatment services, or increase the operating expenses of the Wastewater Enterprise. Prolonged damage to the Wastewater Enterprise facilities could interrupt the ability of the SFPUC to realize Net Revenues suff icient to pay principal of and interest on the Bonds, or require the SFPUC to increase expenditures for repairs significantly enough to adversely impact the SFPUC ’s ability to pay the principal of or interest on the Bonds. These factors could include, among others, the following:

Aging Facilities. Certain Wastewater Enterprise facilities are near the end of their useful life. Aging assets may result in decreased reliability due to potential sewer line breakage and unplanned facility outages and place a greater maintenance burden on Wastewater Enterprise operations. See “THE WASTEWATER ENTERPRISE – Combined Sewage and Stormwater System.” Aging sewers, if left unaddressed, could potentially result in increasing system failures, sinkholes in the street, reduced system reliability, regulatory violations and possibly risks to public health and safety and the environment.

The SFPUC uses a risk-based approach to improve sewers. The capital program is intended to help increase system reliability through equipment and facility improvement including, among other things, increasing sewer inspections and condition assessments in order to prioritize areas of pipeline improvements more effectively . In addition to the collection system, other types of facilities, such as tre atment plants and pump stations, also face potential reliability issues due to age.

89 Limited Redundancy. Many critical Wastewater Enterprise facilities must remain constantly operational to collect and treat sewage and stormwater flows and meet relevant reg ulatory requirements. See “REGULATORY MATTERS.” Certain of these Wastewater Enterprise facilities and systems are aging and have limited redundancy.

See “– Aging Facilities. ” In addition, the Oceanside Treatment Plant and the other facilities in the Westside Watersheds are not interconnected with the Southeast Treatment Plant, the North Point Facility or the other facilities in the Bayside Watersheds. See “THE WASTEWATER ENTER PRISE – Wastewater Treatment. ” This limited redundancy in facilities and systems constrains the SFPUC ’s ability to take components of the system out of service for maintenance and repairs, or to provide backup treatment and other facilities in the event of an unplanned outage.

For example, work at the Southeast Treatment Plant is being performed while the plant is operating, requiring coordination of facility and systems shutdowns with construction plans. During dry weather, however, the collection system does have excess storage capacity due to the transport/storage structures which can provide up to 200 million gallons worth of capacity and help facilitate treatment flexibility when needed. The SFPUC ’s capital program is adding some redundancy where feasib le, including power supply redundancy for the treatment facilities , and rehabilitation and addition of redundant pumps at some major pump stations.

Seismic Hazards. The Bay Area is in a seismically active region. The San Andreas Fault lies immediately west of San Francisco, and the Hayward Fault is approximately 15 miles to the east of San Francisco. A third major fault, the Calaveras Fault, is a branch of the Hayward Fault and lies east of the Hayward Fault.

During the past 150 years, the San Francisco Bay Area has experienced several major and numerous minor earthquakes. The largest was the 1906 San Francisco earthquake along the San Andreas Fault with an estimated magnitude of 8.2 on the Richter scale. The 1868 Hayward earthquake along the Hayward Fault had an estimated magnitude of between 6.8 and 7.0 on the Richter scale. The 1989 Loma Prieta earthquake along the San Andreas Fault had an estimated magnitude of 6.9 on the Richter scale. The most recent significant earthquake was the 2014 South Napa earthquake on the West Napa Fault, the northern extension of the Calaveras Fault, which had a magnitude of 6.0 on the Richter scale and an epicenter near the city of Napa, approximately 50 miles north of San Francisco. According to United States Geological Surve y findings, a significant earthquake along these or other faults is probable during the repayment period of the Bonds. A significant earthquake that impacts San Francisco could adversely affect the ability of Wastewater Enterprise customers to pay for service and the capital and operating expenses of the Wastewater Enterprise.

Older facilities may have an increased risk of failure in the event of an earthquake. The capital program includes recently completed, planned and proposed improvements to such older facilities for the purpose of improving seismic reliability.

With certain minor exceptions, the SFPUC does not maintain commercial earthquake insurance coverage for the facilities. See “FINANCIAL OPERATIONS – Risk Management and Insurance.” Natural and Man -Made Disasters; Flooding. Natural disasters such as earthquakes, large rainstorms, landslides and fires, and man -made disasters or accidents, could interrupt operation of the Wastewater Enterprise, resulting in liability claims against the Wastewater Ente rprise, or otherwise adversely impacting the ability of the Wastewater Enterprise to provide services and/or collect Revenues. See “– Risks Related to Net Revenues – Unanticipated Decreases in Water Sales V olumes” and “– Climate Change, Risk of Sea Level R ise and Flooding Damage.”
For example, major rainstorms in San Francisco that deliver a volume of stormwater that exceeds the capacity of the combined sewer system can result in flooding. During these severe storm events, properties in low - lying areas with structures built on or near land that was originally creeks or bays may experience surface flooding or backups through their building’s internal plumbing fixtures. In the last 10 years, severe rainstorms caused flooding in certain low -lying areas and resulted in some property damage in 2017, 2021, the end of 2022 and the beginning of 2023.

The storm event at the end of 2022 and the beginning of 2023 has given rise to over 100 claims and seven individual lawsuits with private property -owner plaintiffs. The SFPUC answered two lawsuits covering a majority of the plaintiffs on December 19, 2023. The SFPUC is vigorously defending these lawsuits. For more information

90 regarding recent storms and flooding, including a description of damage to Wastewater Enterprise facilities , see “THE WASTEWATER ENTERPRISE – System Capacity.”
Statutory and Regulatory Compliance . The operation of the Wastewater Enterprise is subject to a variety of federal and State statutory and regulatory requirements concerning matters such as water quality, discharge requirements and biosolids management. Significant fines and penalties , as well as orders requiring capital improvement plans and projects, could result should the SFPUC fail to comply with applicable laws and regulations.

Claims could also be made by priva te parties. Changes in the scope and standards for public agency wastewater systems such as the Wastewater Enterprise may also lead to administrative orders issued by federal or State regulators. Such regulatory actions could also require significant capit al expenditures to achieve statutory and regulatory compliance, which may impact the SFPUC ’s capital improvement plans, projects and priorities for the Wastewater Enterprise. Future compliance with increased regulatory requirements or enforcement orders could impose substantial additional operating expenses on the Wastewater Enterprise. See “REGULATORY MATTERS.” Labor Actions . The Charter prohibits SFPUC and other City employees from engaging in certain labor actions (e.g., strikes). Nonetheless, a work sto ppage or other labor action could limit the SFPUC ’s ability to operate the Wastewater Facilities and adversely impact Revenues.

Casualty Losses . The SFPUC ’s risk management program includes both self -insured and insured coverages; however, the program does not provide coverage for every conceivable risk of loss. Damage attributable to seismic events and environmental pollution are excluded. In situations where the SFPUC has not purchased commercial coverage, the Wastewater Enterprise has a “ self-retention” program that it administers and retains budgeted resources internally to provide coverage for loss liabilities. See also “FINANCIAL OPERATIONS – Risk Management and Insurance. ” The SFPUC is not required to either insure against or self -insure against every potential risk of loss, and there is a risk that damage or destruction of property and equipment comprising the Wastewater Enterprise could occur for which no insurance or self -insurance funds will be available. There can be no assurance that insurance pr oviders will pay claims under any policies promptly, or at all, should a claim be made under such policies in connection with property loss or damage. It is possible that an insurance provider will refuse to pay a claim, especially if it is substantial, an d force the SFPUC to sue to collect on or settle the insurance claim.

Further, there can be no assurances that any insurance proceeds will be sufficient to rebuild or replace any damaged property.

Safety and Security . The occurrence of military conflicts and terrorist activities may adversely impact the operations of the SFPUC, including the Wastewater Enterprise, and/or the finances of the SFPUC. The SFPUC continually plans and prepares for emergency situations. However, there can be no assurance that any existing or additional safety and security measures will prove adequate in the event that military conflicts or terrorist activities are directed against the assets of the Wastewater Enterprise or that costs of security measures will not be greater than presently anticipated.

Cost of Capital Program Projects; Timely Completion of Capital Program Projects The completion of various capital program projects could be delayed and the overall cost of such projects could increase for a variety of reasons, including, but not limited to, actions by State or federal regulatory agencies, voter initiatives, legal challenges on environmental or other grounds, prolonged contractor disputes, changes in price of commodities or labor, unanticipated geologic , soil, hydrologic or hydraulic conditions, the occurrence of an earthquake or other natural disaster, or the occurrence of a worldwide health concern such as the COVID -19 pandemic. See “WASTEWATER ENTERPRISE CAPITAL PROGRAM.”
The SFPUC intends to finance t he continued development and implementation of capital program projects using proceeds of certain Outstanding Bonds (including draws under the existing WIFIA Loan Agreements ) and draws under the existing SRF loan documents, as well as through the issuance of Additional Bonds and Parity Loans (such as additional SRF loans or WIFIA loans) . If capital program projects are completed at the cost and on the schedule presently under consideration by the SFPUC, the cost of such projects will require a significant planned increase in the amount of debt payable from Revenues, which will result in significant planned rate increases.

Correspondingly, debt service coverage for the Bonds will also be significantly lower than it is currently. Were capital program projects delayed or the cost of capital program projects to increase without an offsetting reduction in

91 the program scope, the SFPUC would be required either to incur more debt payable from Revenues or to cash fund those costs from Revenues. Either option would likely increase rates payable by SFPUC customers to levels higher than presently anticipated by the SFPUC, and could result in lower debt service coverage ratios than presently anticipated by the SFPUC. See “OBLIGATIONS PAYABLE FROM NET REVENUES – Water Infra structure Finance and Innovation Act Loans ” and “FINANCING PLAN FOR WASTEWATER ENTERPRISE CAPITAL PROGRAM.”
Over the next several years the SFPUC expects to issue Additional Bonds and Parity Loans to fund development and implementation of SSIP projects. The issuance by the SFPUC of such debt is subject to various approval requirements. See “OBLIGATIONS PAYABLE FROM NET REVENUES.” The ability of the SFPUC to issue Additional Bonds and Parity Loans to finance the development and implementation of capital prog ram projects may also be adversely affected by any adverse change in the financial position of the SFPUC or by general market conditions. There can be no assurance that the SFPUC will be able to issue Additional Bonds or Parity Loans in an aggregate amount sufficient to finance all of the costs of completing the capital program projects.

Construction Related Risks
General. Construction proje cts in the Wastewater Enterprise’s capital program are subject to ordinary construction risks and delays applicable to projects of their kind, including but not limited to (i) inclement weather affecting contractor performance and timeliness of completion, which could affect the costs and availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors; (ii) contractor claims or nonperformance; (iii) failure of contractors to execute within contract price; (iv) work stoppages or slowdowns; (v) failure of contractors to meet schedule terms; (vi) supply chain issues; (vii) errors or omissions in contract documents requiring change orders; (viii) the occurrence of a major seismic event; or (ix) unanticipated project site conditions, including the discovery of hazardous materials on the site or other issues regarding compliance with applicable environmental standards, and other natural hazards or seismic events encountered during construction. In addition, given the limited red undancy of certain Wastewater Enterprise facilities and systems, such systems must remain operational during construction, which could affect construction schedules or budgets. See “– Risks Related to Wastewater Enterprise Facilities and Operation.”
In addition, the SFPUC expects numerous other large construction projects to be scheduled in the region simultaneously, which could potentially limit contractor resources available to the SFPUC during bidding or construction phases. The SFPUC conducts regular contractor outreach and expects to continue to work closely with potential contractors to attempt to mitigate the impact of such simultaneous scheduling of large projects.

Furthermore, much of the construction work for the Wastewater Enterprise’s capital program will occur at a single physical location, the Southeast Treatment Plant. The phasing staging, materials and/or equipment laydown areas, parking, truck routes, security, and operating needs are being clearly defined for the plant and each individual project by the SFPUC, with consideration of multiple project interfaces. The Southeast Treatment Plant will remain in operation while these projects are being implemented. Currently logistics planning is identifying on and off site parking, construction laydown and staging areas, truck routing for regular operations and construction and the overall facility and equipment shut-down schedule required to maintain permit compliance and complete the SSIP.

Increased construction costs or delays for any reason in connection with the Wastewater Enterprise’s capital program could impact the Wastewater Enterprise’ s financial condition in general and the implementation of its capital programs in particular.

See also “ – Cost of Capital Program Projects; Timely Completion of Capital Program Projects ” and “SEWER SYSTEM IMPROVEMENT PROGRAM – Biosolids Digester Facilities Project” and “– Potential Changes to SSIP Projects.”
Land Acquisition . Certain of the Wastewater Enterprise’s capital projects will require the SFPUC to acquire land in and around its facilities in San Francisco. For example, the Southeast Treatment Plant is located in a

92 densely urban environment with industrial and residential buildings – as such, securing space around the Southeast Treatment Plant will be critical. A right-of-way manager has been hired to manage land issues because many parcels require long lead times to gain site control. Property is challenging to acquire or lease in the Bay Area generally and in San Francisco in particular. Real estate pri ces in San Francisco and throughout the Bay Area can be volatile and have in general been increasing during recent years. The approved project budgets currently include estimated costs related to future land purchases required for the expansion of the Sout heast Treatment Plant and potential land leases for construction staging areas. At present, the SFPUC cannot predict the final cost of such acquisitions and leases; but it is possible that such costs may exceed budgeted amounts.

Cybersecurity
City Measures. The City, like many other large public and private entities, relies on a large and complex technology environment to conduct its operations, and faces multiple cybersecurity threats including, but not limited to, hacking, viruses, malware and other attacks on its computing and other digital networks and systems (collectively, “Systems Technology”). As a recipient and provider of personal, private, or sensitive information, the City has been the subject of cybersecurity incidents that have resulted in or could have resulted in adverse consequences to the City’s Systems Technology and that required a response action to mitigate the consequences.

Cybersecurity incidents could result from unintentional events, or from deliberate attacks by unauthorized entities or individuals attempting to gain access to the City ’s Systems Technology for the purposes of misappropriating assets or information or causing operational disruption and damage. To mitigate the risk of business operations impact and/or damage fr om cybersecurity incidents or cyber-attacks, the City invests in multiple forms of cybersecurity and operational safeguards. In 2016, the City adopted a City- wide Cyber Security Policy (the “City Cyber Policy”) to support, maintain, and secure critical inf rastructure and data systems. The objectives of the City Cyber Policy include the protection of critical infrastructure and information, manage risk, improve cyber security event detection and remediation, and facilitate cyber awareness across all City dep artments. The City ’s Department of Technology has established a cybersecurity team to work across all City departments, including the SFPUC, to implement the City Cyber Policy. The City Cyber Policy is reviewed periodically.

The City has also appointed a C ity Chief Information Security Officer (the “ CCISO”), who is directly responsible for understanding the business and related cybersecurity needs of the City’ s 54 departments, including the SFPUC. The CCISO is responsible for identifying, evaluating, responding, and reporting on information security risks in a manner that meets compliance and regulatory requirements, and aligns with and supports the risk posture of the City. Mayor Breed addressed this issue on June 4, 2021 in Executive Directive 21- 02, Ensuring Strong and Organized City Defense Against Cybersecurity Attacks ( “Executive Directive 21 -02”), which sets forth requirements for City departments to strengthen and improve the City’s cyber functions and programs.

SFPUC Measures. The SFPUC also relies o n a large and complex technology environment to conduct its operations. Although the SFPUC maintains its own business and control networks that are separate from the City’ s network, the SFPUC faces similar cybersecurity threats as the City, including hacki ng, viruses, malware and other attacks on its computing and other digital networks and systems. To mitigate the risk of and damage from cybersecurity incidences or cyberattacks, the SFPUC abides by the City Cyber Policy and also maintains its own cybersecurity program (the “ SFPUC Cybersecurity Program”). The SFPUC Cybersecurity Program is based on National Institute of Standards and Technology cybersecurity guidance. In addition, control networks for the Water Enterprise and the Wastewater Enterprise adhere to the Department of Homeland Security ’s Cybersecurity and Infrastructure Security Agency’s Cross-Sector Cybersecurity Performance Goals, as recommended by the EPA. The control networks for the Power Enterprise adhere to the North American Electric Reliab ility Corporation critical infrastructure protection controls. The SFPUC Cybersecurity Program includes industry standard cybersecurity solutions, and the SFPUC ’s technologies are continuously tested as part of an internal vulnerability program. The SFPUC’s technical controls are prescriptive for hardening servers, network devices and databases, and for addressing system administrator controls, mobile device management, incident response, security patching, antivirus, email, passwords, remote access, secure asset disposal, end user controls, and timely removal of access to systems and facilities for staff that leave employment at the SFPUC. In addition to the SFPUC ’s controls and in alignment with Executive Directive 21 -02, the SFPUC has deployed the city- wide-real-time threat monitoring and alerting solution. The SFPUC Cybersecurity Program is periodically reviewed for effectiveness by independent consultants, most recently in June 2022. Pursuant to the SFPUC ’s policies, the City Services Auditor and

93 independent cybersecurity auditors performed extensive penetration and vulnerability testing on the SFPUC ’s business and control networks. In addition, the City Services Auditor conducts annual cybersecurity maturity assessments.

The SFPUC has also appointed a Chief Information Security Officer (the “ CISO”), who reports to the SFPUC’s Chief Information Officer. In addition to working with the CCISO on cybersecurity policy development and solution sharing, the CISO is responsible for annual updates to the SFPUC ’s policies, is charged with identifying and monitoring threats which are typically addressed by the SFPUC ’s information technology services team, educating staff concerning vulnerabilities and constantly improving the SFPUC Cybersecurity Program.

While the SFPUC Cybersecurity Program is periodically reviewed, no assurances can be given by the SFPUC that such measures will ensure against other cybersecurity threats and attacks. Cybersecurity breaches could damage the SFPUC’s information security systems and c ause material disruption to the SFPUC ’s operations and the provision of SFPUC services. The costs of remedying any such damage or protecting against future attacks could be substantial. Further, cybersecurity breaches could expose the SFPUC to material lit igation and other legal risks, which could cause the SFPUC to incur material costs related to such legal claims or proceedings. The SFPUC currently purchases liability insurance covering cyber -losses and requires its technology vendors to purchase technology errors and omissions insurance coverage.

Climate Change, Risk of Sea Level Rise and Flooding Damage Impact on City of San Francisco. Numerous scientific studies on global climate change show that, among other effects on the global ecosystem, sea levels will rise, extreme temperatures will become more common, and extreme weather events will become more frequent as a result of increasing global temperatures attributable to atmospheric pollution.

The Fourth National Climate Assessment, published by the United States Global Change Research Program in November 2018 ( “NCA4”), finds that more frequent and intense extreme weather and climate- related events, as well as changes in average climate conditions, are expected to continue to damage infrastructure, ecosys tems and social systems over the next 25 to 100 years. NCA4 states that rising temperatures, sea level rise, and changes in extreme events are expected to increasingly disrupt and damage critical infrastructure and property and regional economies and indus tries that depend on natural resources and favorable climate conditions. Disruptions could include more frequent and longer-lasting power outages, fuel shortages and service disruptions. NCA4 states that the continued increase in the frequency and extent of high- tide flooding due to sea level rise threatens coastal public infrastructure. NCA4 also states that expected increases in the severity and frequency of heavy precipitation events will affect inland infrastructure, including access to roads, the viability of bridges and the safety of pipelines.

Sea levels will continue to rise in the future due to the increasing temperature of the oceans causing thermal expansion and growing ocean volume from glaciers and ice caps melting into the ocean. Between 1854 a nd 2016, sea level rose about nine inches according to the tidal gauge at Fort Point, a location underneath the Golden Gate Bridge. Weather and tidal patterns, including 100- year or more storms and king tides, may exacerbate the effects of climate related sea level rise. Coastal areas like San Francisco are at risk of substantial flood damage over time, affecting private development and public infrastructure, including roads, utilities, emergency services, schools, and parks. As a result, the City could los e considerable tax revenues and many residents, businesses, and governmental operations along the waterfront could be displaced. The City may elect to mitigate these effects to maintain its current shoreline and protect critical infrastructure at a potentially significant cost.

Adapting to sea level rise is a key component of the City’ s policies. The City and its enterprise departments have been preparing for future sea level rise for many years and have issued a number of public reports. For example, in March 2016, the City released a report entitled “ Sea Level Rise Action Plan, ” identifying geographic zones at risk of sea level rise and providing a framework for adaptation strategies to confront these risks. That study shows an upper range of end- of-century projections for permanent sea level rise, including the effects of temporary flooding due to a 100- year storm, of up to 108 inches above the 2015 average high tide. To implement this p lan, the Mayor’s Sea Level Rise Coordinating Committee, co -chaired by the Planning Department and Office of Resilience and Capital Planning, joined the Port , the SFPUC and other public agencies in moving several initiatives forward.

94 This included a Citywide Sea Level Rise Vulnerability and Consequences Assessment to identify and evaluate sea level rise impacts across the City and in various neighborhoods that was released in February 2020.

In April 2017, the Working Group of the California Ocean Protection Council Science Advisory Team (in collaboration with several state ag encies, including the California Natural Resource Agency, the Governor ’s Office of Planning and Research, and the California Energy Commission) published a report, that was formally adopted in March 2018, entitled “ Rising Seas in California: An Update on Sea Level Rise Science” (the “Sea Level Rise Report”) to provide a new synthesis of the state of science regarding sea level rise. The Sea Level Rise Report provides the basis for State guidance to S tate and local agencies for incorporating sea l evel rise into design, planning, permitting, construction, investment and other decisions. Among many findings, the Sea Level Rise Report indicates that the effects of sea level rise are already being felt in coastal California with more extensive coastal flooding during storms, exacerbated tidal flooding, and increased coastal erosion. In addition, the report notes that the rate of ice sheet loss from Greenland and Antarctic ice sheets poses a particular risk of sea level rise for the California coastline.

In March 2020, a consortium of State and local agencies, led by the Bay Area Conservation and Development Commission, released a detailed study entitled, “Adapting to Rising Tides Bay Area: Regional Sea Level Rise Vulnerability and Adaptation Study,” on how sea level rise could alter the Bay Area. The study states that a 48-inch increase in the bay ’s water level in coming decades could cause more than 100,000 Bay Area jobs to be relocated, nearly 30,000 lower-income residents to be displaced, and 68,000 ac res of ecologically valuable shoreline habitat to be lost. The study further argues that without a far -sighted, nine-county response, the region’ s economic and transportation systems could be undermined along with the environment. For example, runways at S FO could largely be under water.

The City has already incorporated site specific adaption plans in the conditions of approval for certain large waterfront development projects, such as the Candlestick/Hunters Point Shipyard, Treasure Island, Pier 70 and Mission Rock projects. Also, the City has partnered with the U.S. Army Corps of Engineers to develop a plan to fortify the Port’s seawall from sea level rise. A draft plan estimates the total cost of that project at $13.5 billion; and, subject to U.S. Army Corps of Engineers and Congressional approval, 65% of the cost would be e ligible for federal funding. The City is developing a financing strategy to provide the remaining funds, including using funding from the November 2018 approved Proposition A, authorizing the issuance of up to $425 million in general obligation bonds for repair and improvement projects on the seawall.

Portions of the San Francisco Bay Area, including San Francisco, are built on fill that was placed over saturated silty clay known as “Bay Mud.” Bay Mud is soft and compressible, and the consolidation of the Bay Mud under the weight of the existing fill is ongoing. A report issued in March 2018 by researchers at the University of California, Berkeley ( “UC Berkeley ”) and the University of Arizona suggests that flooding risk from climate change could be exacerbated in the San Francisco Bay Area due to the sinking or settling of the ground surface, known as subsidence. The study claims that the risk of subsidence is more significant for certain parts of San Francisco built on fill.

Projections of the effects of gl obal climate change on San Francisco are complex and depend on many factors that are outside the City ’s control. The various scientific studies that forecast climate change and its adverse effects, including sea level rise and flooding risk, are based on a ssumptions contained in such studies, but actual events may vary materially. Also, the scientific understanding of climate change and its effects continues to evolve.

Accordingly, the City is unable to forecast when sea level rise or other adverse effects of climate change (e.g., the occurrence and frequency of 100- year storm events and king tides) will occur. In particular, the City cannot predict the timing or precise magnitude of adverse economic effects, including, without limitation, material adverse e ffects on the business operations or financial condition of the City and the local economy during the term of the 2024ABCD Bonds. While the effects of climate change may be mitigated by the City ’s past and future investment in adaptation strategies, the City can give no assurance about the net effects of those strategies and whether the City will take additional adaptive mitigation measures. If necessary, such additional measures could require significant capital resources.

In September 2017, the San Franc isco City Attorney filed a lawsuit on behalf of the People of the State of California in San Francisco Superior Court against the five largest investor -owned oil companies seeking to have the

95 companies pay into an abatement fund to help fund infrastructure for climate change adaptation. In July 2018, the United States District Court for the Northern District of California denied the plaintiff’s motion for remand to State court and then dismissed the lawsuit, which the City had joined as a plaintiff. The pla intiffs appealed these decisions to the United States Court of Appeals for the Ninth Circuit, which in May 2020 vacated the District Court’s order that found the case arose under federal law, remanding the case back to the District Court to determine if there were any other grounds for federal jurisdiction. In June 2021, the U.S. Supreme Court declined to review the Ninth Circuit’s decision. In October 2022, the District Court ordered the case remanded to State court and stayed the remand pending any appeal s. In November 2022, the defendants appealed the District Court’s decision to the Ninth Circuit. In November 2023, the Ninth Circuit rejected defendants’ appeal of remand to state court. The City’s case has been remanded to and coordinated with similar municipal lawsuits and the State of California’s lawsuit in San Francisco Superior Court. In June 2024, the San Francisco City Attorney moved to file an amended complaint seeking abatement funds and damages. While the City believes that the claims in this l awsuit are meritorious, it can give no assurance regarding whether the lawsuit will be successful and obtain the requested relief from the courts, or contributions to the abatement fund from the defendant oil companies.

Impact on SFPUC Wastewater Enterprise . The impacts of climate change that would most affect the Wastewater Enterprise relate to changing rainfall patterns, sea level rise and rising tides. Existing climate change models show varied results in terms of projected rainfall patterns, making proacti ve, long-term planning difficult. If changes in rainfall patterns do occur, significant changes in rainfall (e.g., intensity, duration or frequency or certain combinations thereof) could substantially alter the likelihood of flooding.

Projected levels for sea level rise and rising tides is expected to result in a backflow (or inflow) of San Francisco Bay water into the sewer system at the lowest weir elevation and increased infiltration due to higher groundwater in coastal areas. In response, the Wastewater Enterprise is planning to implement, through the SSIP, a monitoring program and backflow mitigation measures at some points where tides may backflow into the system. In addition, the SFPUC is working collaboratively with various other City agencies on im mediate-, mid- and long-term solutions focused on city-wide perimeter protection from sea level rise and rising tides.

In 2016, the SFPUC completed a city- wide flood resilience analysis to characterize the impact of storms, develop a risk -based framework t o identify and prioritize investments in projects to reduce or mitigate flooding risks, and confirm the City’s standard design storm through a benefit -cost analysis. This study served as the foundation for prioritizing certain capital investments including the projects designed to increase the collection system conveyance capacity in low-lying areas (i.e., the Folsom Stormwater Improvement Project, the Wawona Area Stormwater Improvement Project and the Lower Alemany Area Stormwater Improvement Project) . See “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Sewer System Improvement Program – Stormwater Management/Flood Resilience.” In 2017, in conjunction with other City departments and industry experts, the SFPUC developed a suite of programmatic strategies for flood resilience intended to reduce flood risk citywide from storms that exceed the capacity of the SFPUC’s stormwater collection system. However, the effect of climate change on future storms will be significant, leading to more powerful storms that exceed t he capacity of most urban conveyance systems across the United States, including the SFPUC’s system. Planning for these future storms will require strategies and solutions that extend beyond the SFPUC’s system.

The SFPUC has developed a 100- Year Storm Flood Risk Map that shows parcels in San Francisco where deep and contiguous flooding from storm runoff (rather than from inundation from the San Francisco Bay or Pacific Ocean) is highly likely to occur during a 100- year storm. A “100- year storm” means a sto rm with a 1% chance of occurring in a given year. The SFPUC used computer modeling that simulated flooding occurring Citywide under a 100-year storm to identify such parcels. The purpose of the flood risk map is to inform existing and future property owners about flood risk on their properties and promote resilience. The flood risk map is based on past hydrology patterns and does not reflect recent developments, such as the study on extreme precipitation in the San Francisco region described above, or future projected hydrology patterns .

The City undertook a unique, first of its kind in the nation climate modeling collaboration between a municipality, climate scientists at Lawrence Berkeley National Laboratory (“LBNL”) and climate consultants at Pathways Climate Institute to create a research team that focused on a better understanding of future precipitation events through climate modeling. Using supercomputing resources at LBNL’s scientific computing center, the research team found that the effect of clim ate change on future storms is predicted to be significant, leading to more

96 powerful events unleashing substantially more water. The City is transitioning toward efforts that would consolidate and coordinate sea level rise adaptation and overall resilience planning so that City departments can maximize efficiency and the co -benefits of investment dollars. The City has developed and continues to refine the governance structure of the Climate Resilience Program (also known as ClimateSF) to improve how the City manages, finances and implements climate resilience projects and/or programs.

Pandemics; COVID-19 Pandemic
A pandemic, epidemic or outbreak of an infectious disease can have significant adverse health and financial impacts on global and local economies. For example, the COVID -19 pandemic significantly impacted the City and resulted in prolonged stay- at-home orders that impacted each of the SFPUC ’s enterprises, including the Wastewater Enterprise. In addition to certain direct impacts on the operations and finances of the Wastewater Enterprise, COVID-19 had significant and varied impacts on general economic activity at the local, national and global levels, including supply chain and labor market disruptions. Such disruptions, among other effects, resulted in increases in materials, labor, transportation and other costs across a wide number of sectors, as well as delays in delivery of projects and equipment. The Wastewater Enterprise experienced, and may in the future experience, increases in certain costs, such as for bulk chemical supplies, and delays in the delivery of equipment as a result of COVID -19’s disruption of supply chains. Additionally, such disruptions may result in schedule delays for the Wastewater Enterprise’s capital projects or increased costs for such projects.

Green Bonds
The 2024 Green Bonds are being designated by the SFPUC as “ Green Bonds” and have been certified by the CBI as “Climate Bonds Standard Certified. ” See “GREEN BONDS DESIGNATION AND CLIMATE CERTIFICATION.” The purpose of de signating the 2024 Green Bonds as “ Green Bonds” is to allow investors to invest directly in bonds that finance the cost of environmentally beneficial projects . The SFPUC does not make any representation, however, as to the suitability of the 2024 Green Bonds to fulfill the environmental and sustainability criteria of particular investors. The 2024 Green Bonds may not be a suitable investment for all investors seeking exposure to green or sustainable assets. There is currently no market consensus on what pre cise attributes are required for a particular project to be defined as “ green” or “sustainable,” and therefore no assurance can be provided to investors that the projects financed or refinanced by proceeds of the 2024 Green Bonds will continue to meet investor expectations.

The terms “ Green Bonds ” and “Green Projects ” are neither defined in nor related to provisions in the Indenture or otherwise defined under State or federal laws. The use of such terms herein is for identification purposes only and is not intended to provide or imply that owner s of the 2024 Green Bonds are entitled to any additional security other than as provided in the Indenture. The SFPUC assumes no obligation to ensure that these projects comply with the principles of “Green Projects” as such principles may hereafter evolve.

Inverse Condemnation
Under the doctrine of inverse condemnation (a legal concept that entitles property owners to just compensation if their private property is damaged by a public use), California courts have im posed liability on public agencies in legal actions brought by private property holders for damages caused by such public agencies ’ infrastructure. In City of Oroville v. Superior Court of Butte County , 7 Cal. 5th 1091 (2019), however, the California Supreme Court held that damage to private property must be substantially caused by an inherent risk presented by the deliberate design, construction or maintenance of the public improvement. Thus, if the inherent risks associated with the SFPUC ’s facilities, in cluding wastewater and stormwater collection facilities (other than flood control projects), as deliberately designed, constructed or maintained, are determined to be the substantial cause of damage to private property from flooding, sewage back -up or otherwise, and the doctrine of inverse condemnation applies, the SFPUC could be liable for direct and indirect property damage to private parties and such liability, in the aggregate, could be substantial. In addition to such claims for property damage, the SF PUC could also be liable for punitive damages and other damages under other theories of liability, including if the SFPUC were found to have acted unreasonably or to have been negligent, which liability, in the aggregate, could be substantial.

97 Economic, Political, Social and Environmental Conditions Changes in economic, political, social, or environmental conditions on a local, State, federal, and/or international level may adversely affect investment risk generally. Such conditional changes may include (but are not limited to) fluctuations in business production, consumer prices, or financial markets, unemployment rates, availability of skilled labor, technological advancements, shortages or surpluses in natural resources or energy supplies, changes in law, social unrest, fluctuations in the crime rate, political conflict, acts of war or terrorism, environmental damage, and natural disasters.

Bankruptcy
The SFPUC, being an enterprise department of the City, likely cannot itself file for bankruptcy. While an involuntary bankruptcy petition cannot be filed against the City, the City is only authorized to file for bankruptcy under certain circumstances. Should the City file for bankruptcy, there could be adverse effects on the holders of the Bonds.

To the exten t that Revenues are “ special revenues ” under the United States Bankruptcy Code (the “Bankruptcy Code”), the Revenues collected after the date of the bankruptcy filing should be subject to the lien of the Indenture. If any or all of the Revenues are determi ned not to be “special revenues, ” then any such amounts collected after the commencement of the bankruptcy case will likely not be subject to the lien of the Indenture. “Special revenues” are defined to include revenues derived from the ownership or operation of projects or systems that are primarily used to provide utility services . No assurance can be given that a court would hold that any or all Revenues are special revenues . In a case arising from the insolvency proceedings of Puerto Rico, the United States Court of Appeals for the First Circuit concluded that while a debtor has the right to voluntarily apply special revenues to the payment of debt service during the pendency of a bankr uptcy case, the debtor is not obligated to do so, even though the special revenues are subject to the lien of the bond documents . The holders of the Bonds may not be able to assert a claim against any property of the City other than the Net Revenues, and i f any or all of the Revenues are no longer subject to the lien of the Indenture, then there may be limited, if any, funds from which the holders of the Bonds are entitled to be paid.

The Bankruptcy Code provides that “ special revenues” can be applied to ne cessary operating expenses of the project or system, before they are applied to other obligations. This rule applies regardless of the provisions of the transaction documents. It is not clear precisely which expenses would constitute necessary operating ex penses, and any definition in the transaction documents may not be applicable.

If the City is in bankruptcy, the parties (including the Trustee and the holders of the Bonds) may be prohibited from taking any action to collect any amount from the City or to enforce any obligation of the City, unless the permission of the bankruptcy court is obtained. These restrictions may also prevent the Trustee from making payments to the holders of the Bonds from funds in the Trustee ’s possession. The rate covenants (see “SECURITY FOR THE BONDS – Rate Covenants”) may not be enforceable in bankruptcy by the Trustee or the holders of the Bonds.

Revenues are deposited with and held by the City Treasurer and may be commingled with other City funds.

See “SECURITY FOR THE BONDS – Flow of Funds.” If the City is in bankruptcy, the City may not be required to turn over to the Trustee any Revenues that are in its possession at the time of the bankruptcy filing or come into its possession after the bankruptcy filing. In addition, if the City has possession of Revenues (whether collected before or after commencement of the bankruptcy) and if the City does not voluntarily turn over such Revenues to the Trustee, it is not entirely clear what procedures the Trustee and the holders of the Bonds would have to follow to attempt to obtain possession of such Revenues, how much time it would take for such procedures to be completed, or whether such procedures would ultimately be successful. The United States Court of Appeals for the First Circuit, in another case involving the insolvency proceedings of Puerto Rico, concluded that a bankruptcy court does not have the power to order a debtor to comply with state law.

The City may be able to borrow additional money that is secured by a lien on any of its property (including the Revenues), which lien could have priority over the lien of the Indenture, or to cause some of the Revenues to be

98 released to it, free and clear of the lien of the Indenture, in each case as long as the bankruptcy court determi nes that the rights of the Trustee and the holders of the Bonds will be adequately protected.

If the City is in bankruptcy, it may be able, without the consent and over the objection of the Trustee and the holders of the Bonds, to alter the priority, inter est rate, principal amount, payment terms, collateral, maturity dates, payment sources, covenants (including tax- related covenants and the rate covenant ), and other terms or provisions of the Indenture and the Bonds, as long as the bankruptcy court determi nes that the alterations are fair and equitable.

There may be delays in payments on the Bonds while the court considers any of these issues. There may be other possible effects of a bankruptcy of the City that could result in delays or reductions in payments on the Bonds, or result in losses to the holders of the Bonds. Regardless of any specific adverse determinations in a City bankruptcy proceeding, the fact of a City bankruptcy proceeding could have an adverse effect on the liquidity and value of the Bonds.

The SFPUC invests Revenues in the City’ s Pooled Investment Fund. See “FINANCIAL OPERATIONS – Investment of SFPUC Funds. ” In the event of a bankruptcy of the City, there may be delays or reductions in payments on the Bonds.

Limitations on Remedies
The remedies available to the owners of the Bonds upon the occurrence of an event of default under the Indenture in many respects depend upon judicial actions which are themselves often subject to discretion and delay and could prove both expensive and time consuming to obtain. In addition to the limitations on remedies contained in the Indenture, the rights and obligations under the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance , moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against charter cities and counties in Cali fornia. The opinion to be delivered by Bond Counsel, concurrently with the issuance of the 2024ABCD Bonds, that the 2024ABCD Bonds constitute valid and binding, limited obligations of the SFPUC, and the Indenture constitutes a valid and binding obligation of the SFPUC, will also be subject to such limitations. The various other legal opinions to be delivered concurrently with the issuance of the 2024ABCD Bonds will be similarly qualified. See “APPENDIX C – PROPOSED FORM OF OPINION OF BOND COUNSEL.”
If the SFPUC fails to comply with its covenants under the Indenture or to pay principal of or interest on the Bonds, there can be no assurance that the available legal remedies will be adequate to protect the interests of the holders of the Bonds.

Loss of Tax Exemption/Risk of Tax Audit of Municipal Issuers As discussed under “ TAX MATTERS,” interest on the Tax -Exempt Bonds could fail to be excluded from the gross income of the owners thereof for purposes of federal income taxation retroactive to the date of the issuance of the Tax -Exempt Bonds as a result of future acts or omissions of the SFPUC in violation of its covenants to comply with requirements of the Code. Should such an event of taxability occur, the Tax- Exempt Bonds are not subject to redemption or any increase in interest rate and will remain outstanding until maturity.

The Internal Revenue Service (the “ IRS”) has an expanded program for the auditing of tax- exempt obligations, including both random and targeted audits. It is possible that the Tax -Exempt Bonds could be selected for audit by the IRS. It is also possible that the market value of the Tax- Exempt Bonds would be affected as a result of such an audit of the Tax-Exempt Bonds (or by an audit of similar securities).

Change in Tax Law
As discusse d under “ TAX MATTERS,” current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Tax-Exempt Bonds to be subject, directly or

99 indirectly, in whole or in part, to federal income taxa tion or to be subject to state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest.

Failure to Maintain Credit Ratings
Certain rating agencies have assigned ratings to the 2024A BCD Bonds. The ratings issued reflect only the views of such rating agencies. Any explanation of the significance of these ratings should be obtained from the respective rating agencies. See “RATINGS.” There is no assurance current ratings will continue for any given period or that such ratings will not be revised downward or withdrawn entirely by the rating agencies if, in the respective judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings could be expected to have an adverse effect on the market price or the marketing of the 2024ABCD Bonds.

The SFPUC undertakes no obligation to maintain its current credit ratings on the 2024ABCD Bonds or to oppose any such downward revision, suspension or withdrawal.

Secondary Market
There can be no guarantee that there will be a secondary market for the 2024ABCD Bonds or, if a secondary market exists, that the 2024ABCD Bonds can be sold for any particular price. Occasionally, because of general market conditio ns or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Uncertainties of Projections, Forecasts and Assumptions Certain information contained in this Official Statement is based upon assumpt ions and projections.

Projections and assumptions are inherently subject to significant uncertainties. Inevitably, some assumptions will not be realized and unanticipated events and circumstances may occur and actual results are likely to differ, perhaps materially, from those projected. Accordingly, such projections are not necessarily indicative of future performance, and the SFPUC assumes no responsibility for the accuracy of such projections. See “FORWA RD-LOOKING STATEMENTS.”
Other Risks
The discussion in this section, “ RISK FACTORS,” is not meant to be a comprehensive or definitive list of the risks associated with an investment in the 2024ABCD Bonds. There may be other risks inherent in ownership of the 2024ABCD Bonds in addition to those described in this section. Investors are advised to read the entire Official Statement in order to obtain information necessary to make an investment in the 2024ABCD Bonds.

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REGULATORY MATTERS
The SFPUC believes that the Wastewater Enterprise is in material compliance with the Porter -Cologne Act and the Clean Water Act (each as described below) . This section summarizes the regulatory framework governing the Wastewater Enterprise and its operations.

History and Background
In 1969, the State adopted the Porter -Cologne Water Quality Act (the “ Porter-Cologne Act”), creating the State’s current legal framework for the protection of water quality. This adoption was followed at the federal level by the Water Pollution Control Act Amendments of 1972 (the “ Clean Water Act”). The Clean Water Act provided an aggressive timetable for eliminating pollution of the nation’s waters and established the basic secondary treatment requirement that 85% of pollutants, as defined in administrative regulations, be removed from sanitar y wastewater.

The Clean Water Act also required the issuance of discharge permits on a nationwide basis and established a federal grant program for construction of publicly owned wastewater facilities, subsequently replaced by the state revolving fund loan program. Although the EPA has ultimate responsibility for administering the Clean Water Act, many functions have been delegated to the State. The administration of the current loan program and enforcement of regulations are a joint undertaking of the Stat e Water Resources Control Board, the Regional Water Quality Control Board, and EPA Region IX.

Federal and State Clean Water Act Permits
Under the Porter -Cologne Act and the Clean Water Act, the Regional Water Quality Control Board administers water pollution control programs. The EPA and the Regional Water Quality Control Board issue discharge permits under Section 402 of the Clean Water Act, which establishes the National Pollutant Discharge Elimination System ( “NPDES”) permit system. These permits, issued for a five -year period, are also wastewater discharge requirements for the purposes of the Porter -Cologne Act and apply to discharges from the SFPUC ’s treatment plants and combined sewer discharge facilities.

A small portion of the Wastewater Enterprise system within San Francisco, representing less than 3% of the City’s total sewer mileage, consists of separate storm and sanitary sewers. This portion of the system is regulated under the State General Permit for Small Municipal Separate Storm Sewer Systems (MS4) (NPDES Permit No.

CAS000004) and the State Waste Discharge Requirements for Sanitary Sewer Systems (Order No. 2006- 0003- DWQ).

The Wastewater Enterprise’s combined sewer system is regulated under two wastewater NPDES permits:
the 2013 Bayside Permit (NPDES Permit No. CA0037664; issued by the Regional Water Quality Control Board), covering the Southeast Treatment Plant, the North Point Facility and other bayside facilities that discharge into the San Francisco Bay; and the 2019 Oceanside Permit (NPDES Permit No. CA0037681; issued jointly by the Regional Water Quality Control Board and EPA Region IX), covering the Oceanside Treatment Plant discharges and other westside facilities that discharge into the Pacific Ocean. The City has appealed two provisions of the 2019 Oceanside Permit that impose generic prohibitions against causing or contributing to a violation of water quality standards. The appeal is now pending before the United States Supreme Court, pursuant to the City’s petition for certiorari filed in January 2024, which was granted in May 2024.

In February 2016, the EPA and the Regional Water Quality Control Board initiated an investigation of the SFPUC’s operations of the City’s combined sewer system with a particular focus on the SFPUC ’s operations during wet weather conditions. In October 2019, the EPA issued a Notice of Violation ( “NOV”) to San Francisco, but the NOV did not impose any penalties or require any specific correcti ve actions. The City Attorney ’s Office, the SFPUC, the Regional Water Quality Control Board and EPA have continued to discuss the allegations. In November 2021, the SFPUC and the Regional Water Quality Control Board entered into a negotiated settlement tha t resolves the Regional Water Quality Control Board’s claims relating to flooding in low -lying areas. Under the settlement the SFPUC is required to construct three flood resilience capital projects already included in the Wastewater Enterprise capital impr ovement plan (i.e., the Folsom Stormwater Improvement Project, the Wawona Area Stormwater Improvement Project and the Lower Alemany Area Stormwater Improvement Project) , at a cost of approximately $632 million, and to implement specified storm response act ivities. See “WASTEWATER ENTERPRISE CAPITAL

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PROGRAM – Sewer System Improvement Program – Stormwater Management/Flood Resilience.” The EPA’s National Enforcement Investigations Center conducted an inspection of the SFPUC ’s facilities in early 2022 and issued an inspection report in June 2022. The SFPUC responded to the report within the required timeframe.

On May 1, 2024, the EPA and the Regional Water Quality Control Board filed a lawsuit alleging Clean Water Act violations. The regulators allege that com bined sewage discharges from the Bayside system from November 2013 to the present are discharging pollutants that cause violations of applicable water quality standards and that an injunction is required to prevent any further violations. The regulators f urther allege violations of the Oceanside and Bayside discharge permits based on failure to perform condition assessments, inspections, cleaning, repair and replacement and performance monitoring requirements for various components of the combined sewer system. SFPUC is developing factual and legal arguments in response to these allegations. The parties have entered into a court-approved stipulation staying the litigation so that the parties can participate in private mediation. At this time, the SFPUC ca nnot determine any further potential costs associated with resolving the EPA and the Regional Water Quality Control Board’s allegations or the extent to which the pending action will result in penalties or affect the SFPUC’s current operations or the Wastewater Enterprise’s short-term and long-term capital improvement plans.

The City intends to vigorously defend the action.

In addition, in April 2023, the City and the Regional Water Quality Control Board finalized a settlement to pay approximately $236,500 to resolve administrative civil liability claims regarding alleged permit violations that occurred from approximately October 2013 to October 2021. Under the settlement, SFPUC paid half of the full amount towards a supplemental environmental project.

In a letter dated March 6, 2024, San Francisco Baykeeper (“Baykeeper”) provided the City with a notice regarding alleged violations of the Clean Water Act and the discharge permit for the Bayside combined sewer facilities (the “Bayside Permit”). The letter alleges that historical and ongoing discharges of pollutants in and near Mission Channel, Islais Channel, and other parts of the San Francisco Bay are occurring in violation of the Clean Water Act and the Bayside Permit. In May 2024, Baykeeper filed a citizen suit enforcement action alleging violations largely consistent with its notice letter. Baykeeper is seeking to intervene in the lawsuit filed by the EPA and the Regional Water Quality Control Board. The suit seeks (i) penalties and injunctive r elief to prevent further alleged violations and (ii) Baykeeper’s costs, including attorneys’ and experts’ fees. Baykeeper has joined the court - approved stipulation staying the litigation so that the parties can participate in private mediation. At this tim e, the SFPUC cannot determine any specific costs associated with resolving Baykeeper’s allegations or the extent to which the Baykeeper action will result in penalties or affect the SFPUC’s current operations or the Wastewater Enterprise’s short-term and long-term capital improvement plans. The City intends to vigorously defend the action.

Combined Sewer Overflow Control Policy
To address the unique characteristics of combined sewer systems, the EPA adopted the Combined Sewer Overflow Control Policy (the “ CSO Control Policy ”) in 1994. The CSO Control Policy established a consistent national approach for controlling discharges from combined sewer overflow outfalls to the nation’s water, and has since been incorporated into the Clean Water Act by the Wet Weath er Water Quality Act of 2000. That approach includes the identification of nine minimum controls (“ Nine Minimum Controls ”) that combined sewer systems can implement to reduce water quality impacts from their combined sewer discharges.

Consistent with the CSO Control Policy requirements and the Nine Minimum Controls, the SFPUC has undertaken decades of planning and implemented a multi -billion dollar long-term control plan to reduce and control its combined sewer discharges. This plan resulted in, among other improvements, substantial increases in treatment and storage capacity, including construction of transport/storage boxes, which can hold millions of gallons of flows.

These improvements resulted in substantial reductions in the annual average number o f combined sewer discharges from the collection system. The SFPUC continues to maintain and operate the combined sewer system consistent with the CSO Control Policy requirements and the Nine Minimum Controls, including collecting discharge monitoring data .

The SFPUC’s discharge permits require the preparation of reports analyzing the efficacy of the system’s wet weather operations and the compliance with the Nine Minimum Controls.

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Stormwater Regulations
In 1987, the Clean Water Act was revised to more eff ectively address pollution caused by stormwater runoff. The regulations require stormwater management plans for municipalities and controls on certain construction sites and other industries. Urban areas with combined sewers, such as most of San Francisco, are exempt from such regulations. However, because a small portion of San Francisco is served by separate storm sewer systems, the permit for small Municipal Separate Storm Sewer System (“ MS4”) (NPDES Permit No. CAS000004) issued by the State Water Resour ces Control Board regulates the stormwater discharge from the SFPUC’s separate storm sewer systems. The SFPUC operates a stormwater management program that complies with the requirements of the MS4 permit.

Regulatory Trends
Regulatory developments at the State and federal level, as well as ongoing permit reissuance activities, may increase operations costs and capital needs of the Wastewater Enterprise and may have an effect on the Wastewater Enterprise operations and its revenues. In the future, additional contaminants of emerging concern will likely be identified, and additional requirements for biosolids or effluent may be developed as improved analytical techniques and treatment technologies and methodologies become available. Additional source control m easures, public education and outreach, and additional or advanced treatment processes may be necessary to achieve compliance.

The SFPUC is actively engaged with regulatory officials and the public in the development of these regulatory matters.

These topics and their possible effect on the Wastewater Enterprise are briefly described below:

Impaired Water Bodies and Total Maximum Daily Loads . The Clean Water Act requires states to identify all water bodies that do not achieve designated water quality standa rds or objectives. Such water bodies are designated as “impaired,” and states are required to identify all sources contributing to the impairment under the Total Maximum Daily Load ( “TMDL”) program. States are required to designate wasteload allocations to each contributing point source, such as the SFPUC discharges, in order to promote the recovery of the water body.

Central and lower San Francisco Bay are currently listed as “ impaired” for a number of organic and inorganic pollutants, as well as invasive species and trash. The Regional Water Quality Control Board has completed San Francisco Bay TMDLs for mercury and polychlorinated biphenyl ( “PCBs”) and has issued a fecal indicator bacteria TMDL for San Francisco Bay beaches.

The San Francisco Bay mercury and PCBs TMDLs are implemented through a group watershed permit (Order No. R2 -2020038) that applies to all municipal, industrial and stormwater discharges to San Francisco Bay.

The watershed permit contains effluent limitation s for mercury and PCB discharges from the Southeast Treatment Plant with which the SFPUC currently complies.

Contaminated Bay Sediments . California Water Code, Division 7, Chapter 5.6, established a program to assess sediment contamination of the State ’s enclosed bays and estuaries. Known as the Bay Protection and Toxic Cleanup Program, the focus of this effort was to identify contaminated sediments with elevated levels of toxins.

In 1999, a Statewide plan identified Mission Creek and Islais Creek as high priority toxic hot spots. For Mission Creek, the plan included a preliminary estimate of investigation and study costs at $1 million, remediation and follow -up monitoring ranging from $0.8 to $1.8 million, and possible sewer system structural changes up to $75 million. For Islais Creek, the plan included a preliminary estimate of investigation and study costs at $1 million, remediation and follow -up monitoring ranging from $0.8 to $5.2 million, and possible sewer system structural changes up to $75 million. Such estimated costs were developed by the Regional Water Quality Control Board and State Water Resources Control Board in 1998 and 1999. The SFPUC provided comments and data studies disputing both the extent of contamination in the creeks and any asserted causal relationship to SFPUC activities. The plan is not self-executing, and requires further regulatory action by the Regional Water Quality Control Board, which has indicated that contaminated sediment issues will be addressed through the TMDL analysis and implementation programs mentioned above. In 2002, both Mission Creek and Islais Creek were added to the Clean Water Act 303(d) list of water quality limited segments (i.e., impaired waterways). A TMDL (or related action) must be completed for the liste d waterways. Pursuant to a directive issued in June 2023, the Regional Water Quality Control Board is

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requiring the SFPUC to conduct an investigation to determine whether Mission Channel and Islais Channel remain impaired, or whether they may be removed fr om the impaired waters list. The SFPUC disputes the extent of the contamination in the Channels and any causal relationship to SFPUC activities. Nevertheless, the SFPUC is complying with the directive and will actively participate in the development of a ny TMDLs for such areas.

The 1999 Statewide plan also identified Central Basin (adjacent to the San Francisco Bayside shoreline) as a moderate priority toxic hot spot, but did not identify investigation or remediation costs (costs were only developed for the high priority sites). Central Basin has also been placed on the Clean Water Act 303(d) list of water quality limited segments. To date, the SFPUC has not been issued any directives relating to the Central Basin. The SFPUC disputes any causal relationship to SFPUC activities and will actively participate in the development of any TMDLs for such areas.

The EPA has listed Yosemite Creek (or Slough) as a “Superfund” site under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ( “CERCLA”). The site (which lies adjacent to Hunters Point and the former United States Navy Shipyard) is approximately 1, 600 feet long and 400 feet wide, and depending on tide, is either a mudflat or shallow submerged waterway. Studies have been conducted since the 1990s to better understand the nature of the sediments and contamination at the site, and to develop a remediation plan for the removal of such material. The primary contaminants of concern are PCBs and lead. In 2013, the EPA estimated the cost for site remediation at $15.5 million on a present value basis, but the SFPUC can give no assurance whether such amount is or will be the final clean- up cost estimate as such amount is subject to the completion of additional studies and the EPA ’s adoption of a final remediation plan. In 2016, the EPA determined that additional studies were required to develop the cleanup plan, and those studies are expected to be completed in 2025. The EPA named the City a potentially responsible party under CERCLA for the cleanup because of the role the City’s combined sewer system may have played in transporting contaminants to the creek. The City, along with other potentially responsible parties, is participating in a voluntary nonbinding mediation to allocate financial responsibility for the cleanup. The SFPUC cannot reasonably predict whether or to what extent it may be financially responsible for remediation of the contamination, or whether such cleanup obligations will have any adverse impact on the financial condition of the Wastewater Enterprise or sewer system operations.

Pursuant to GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations, the Wastewater Enterprise reported $8.1 million and $7.8 million in pollution remediation liability as of June 30, 2022, and June 30, 2023, respectively.

Contaminants of Emerging Concern . Contaminants of emerging concern include alkyl phenols, endocrine disrupting chemicals, flame retardants, hormones, personal care product s, pharmaceuticals, steroids, human-made chemicals such as perfluoroalkyl substances (PFAS) and perfluorooctane sulfonate (PFOS), microplastics and pesticides. Pharmaceuticals typically include prescription and over -the-counter therapeutic drugs for both human and veterinary treatment. Personal care products typically include soaps, fragrances and cosmetics. Secondary treatment facilities remove some of these contaminants, even though they are not specifically designed for this purpose. Currently no water q uality standards exist for most of these compounds, therefore, the SFPUC permits do not contain effluent limitations for them.

Nutrient Control for the Bayside . San Francisco Bay has long been recognized as a nutrient -enriched estuary; however, until recen tly, it had not experienced negative effects of over -enrichment. Changes recently observed in San Francisco Bay indicate that its resilience to the effects of nutrient enrichment may be declining. In response to these changes, the Regional Water Quality Control Board issued a regional permit (NPDES No.

CA0038873) in 2014 requiring all municipal dischargers to the San Francisco Bay monitor and report nutrient discharges. The Regional Water Quality Control Board re -issued this permit in 2019 and stated its intent to consider establishing effluent limitations in future permits to prevent further increases in nutrient loads from municipal wastewater treatment plants. In 2022, San Francisco Bay experienced a very large algal bloom that resulted in significant fis h die -offs. Monitoring of this bloom indicated that, while nitrogen discharges from municipal wastewater treatment plants did not cause the bloom, they contributed to the size and duration. In response to this bloom, the San Francisco Bay Regional Water Quality Control Board has drafted a revised regional permit that it currently is scheduled to issue in 2024 with requirements that will ultimately necessitate substantially reducing nitrogen loads from municipal wastewater treatment plants, including the Southeast Treatment Plant. The SFPUC

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and regional groups such as the Bay Area Clean Water Association (of which the SFPUC is a member) are working with the Regional Water Quality Control Board on this permit revision.

In anticipation of this permit revision a nd future permit revisions, the SFPUC has established the Mainstream Nutrient Reduction Project. See “WASTEWATER ENTERPRISE CAPITAL PROGRAM – Sewer System Improvement Program – Program Scope – Treatment Facilities – Mainstream Nutrient Reduction Project.” Other Regulatory Agencies with Jurisdiction Over the Wastewater Enterprise Other regulatory agencies with approval or oversight responsibilities over the siting, construction or operational impacts of the Wastewater Enterprise on air, water and natural resources include the Bay Area Air Quality Management District, the Bay Conser vation and Development Commission, the California Coastal Commission, the State Lands Commission, the California Department of Public Health, the National Marine Fisheries Service, the United States Fish and Wildlife Service, the California Department of F ish and Wildlife, and the U.S. Army Corps of Engineers.

Other Laws Affecting the Wastewater Enterprise
As a public agency the SFPUC ’s actions must be consistent with CEQA and, where federal approvals or funding is involved, NEPA. The federal Clean Air Act and the California Clean Air Act of 1988 also regulate emissions from the treatment facilities. All of the SFPUC ’s treatment facilities meet present Bay Area Air Quality Management District standards.

CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS
The activities of the SFPUC and the Wastewater Enterprise, including, without limitation, the establishment of rates for sewer service and the issuance of Bonds (which include Parity Loans), are subject to several limitations under both State and local law. Certain of such limitations are summarized below. Additionally, such limitations may be revised, enhanced, expanded or otherwise altered as provided under State and local law, including in certain instances by legislation adopted by State, regional or local a uthorities, including the State Legislature or the Board of Supervisors, or by California or San Francisco voters themselves through the power of initiative or referendum, by voting in favor of amendments to the Charter or in any other lawful manner.

State Law Limitations
Tax and Spending Limitations . The taxing powers of public agencies in the State are limited by Article XIIIA of the California Constitution, added by an initiative amendment approved by the voters on June 6, 1978, and commonly known as Proposition 13.

Article XIIIA limits the maximum ad valorem tax on real property to 1% of “full cash value, ” which is defined as “the County Assessor’s valuation of real property as shown on the Fiscal Year 1975-76 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. ” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or reducti on in the consumer price index or comparable local data, or declining property value caused by damage, destruction, or other factors.

The tax rate limitation referred to above does not apply to ad valorem taxes to pay the debt service on any indebtedness a pproved by the voters before July 1, 1978, or on any bonded indebtedness for the acquisition or improvement of real property approved by two-thirds of the votes cast by the voters voting on the proposition.

Under the terms of Article XIIIA and pursuant to an allocation system created by implementing legislation, each county is required to levy the maximum ad valorem tax permitted by Article XIIIA and to distribute the proceeds to local agencies.

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Assessed valuation growth allowed under Article XIIIA (new construction, change of ownership and up to 2% annual value growth) is allocated among the jurisdictions that serve the tax rate area within which the growth occurs. Local agencies and schools share the growth of base revenues from the tax rate area. Each year ’s growth allocation becomes part of each agency ’s allocation in the following year. The availability of revenues from tax bases to such entities may be affected by the existence of certain successor agencies to former redevelopment agencies that, under c ertain circumstances, may be entitled to such revenues resulting from the upgrading of certain property values.

Under State law, any fee that exceeds the reasonable cost of providing the service for which the fee is charged may be considered a “ special tax ” that must be authorized by a two- thirds vote of the electorate.

Accordingly, if a portion of the SFPUC ’s wastewater user rates or capacity charges were determined by a court to exceed the reasonable cost of providing service, the SFPUC might not be permi tted to continue to collect that portion unless it were authorized to do so by a two- thirds majority of the votes cast in an election to authorize the collection of that portion of the rates or fees. If the SFPUC were unable to obtain such a two- thirds majority vote and were unable to reduce costs, such failure could adversely affect the SFPUC ’s ability to pay the debt service on the Bonds.

The United States Supreme Court has upheld Article XIIIA against a challenge alleging violation of equal protection under the Fourteenth Amendment to the United States Constitution.

Proposition 218. Proposition 218, a State ballot initiative known as the “ Right to V ote on Taxes Act,” was approved by California voters on November 5, 1996. The initiative added Articles XIIIC and XIIID to the California Constitution, creating additional requirements for the imposition by most local governments of “ general taxes, ” “special taxes,” “assessments,” “fees,” and “charges.” Articles XIIIC and XIIID became effective, pursuant to their terms, as of November 6, 1996, although compliance with some of the provisions was deferred until July 1, 1997, and certain of the provisions purport to apply to any tax imposed for general gove rnmental purposes (i.e., “ general taxes”) imposed, extended or increased on or after January 1, 1995 and prior to November 6, 1996.

Article XIIID imposes substantive and procedural requirements on the imposition, extension or increase of any “fee” or “charge” subject to its provisions. A “fee” or “charge” subject to Article XIIID includes any levy, other than an ad valorem tax, special tax or assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership. Article XIIID prohibits, among other things, the imposition of any proposed fee or charge, and, possibly, the increase of any existing fee or charge, in the event written protests against the proposed fee or charge are presented at a required public hearing on the fee o r charge by a majority of owners of the parcels upon which the fee or charge is to be imposed. Except for fees and charges for water, sewer and refuse collection services, the approval of a majority of the property owners subject to the fee or charge, or a t the option of the agency, by a two-thirds vote of the electorate residing in the affected area, is required not less than 45 days following the public hearing on any such proposed new or increased fee or charge.

The California Supreme Court decisions in Richmond v. Shasta Community Services District , 32 Cal. 4th 409 (2004) ( “Richmond”), and Bighorn- Desert View Water Agency v. Verjil , 39 Cal. 4th 206 (2006) ( “Bighorn”) have clarified uncertainty surrounding the applicability of Section 6 of Article XIIID t o service fees and charges. In Richmond, the Shasta Community Services District charged a water connection fee, which included a capacity charge for capital improvements to the water system and a fire suppression charge. The Court held that both the capacity charge and the fire suppression charge were not subject to Article XIIID because a water connection fee is not a property-related fee or charge because it results from the property owner ’s voluntary decision to apply for the connection. In both Richmond and Bighorn, however, the Court stated that a fee for ongoing water service through an existing connection is imposed “ as an incident of property ownership” within the meaning of Article XIIID, rejecting, in Bighorn, the water agency’ s argument that consumption -based water charges are not imposed “ as an incident of property ownership” but as a result of the voluntary decisions of customers as to how much water to use.

The SFPUC provides public notice of proposed wastewater rate increases in accordance with the requirements of Article XIIID through means that include, among others, holding informational presentations at community group meetings, mailings to residential and commercial customers of public hearings on rate increases, and press releases and medi a campaigns regarding rate increases, followed by public hearings conducted by the

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SFPUC’s Rate Fairness Board and by the SFPUC itself. The SFPUC also develops and adopts retail utility user rates and fees in accordance with the requirements of Article XIIID(6)(b) that limit property-related fees and charges.

Article XIIIC extends the people ’s initiative power to reduce or repeal previously authorized local taxes, assessments, fees and charges. This extension of the initiative power is not limited by the te rms of Article XIIIC to fees, taxes, assessment fees and charges imposed after November 6, 1996 and absent other authority could result in retroactive reduction in any existing taxes, assessments, fees or charges. In Bighorn, the Court concluded that under Article XIIIC local voters by initiative may reduce a public agency ’s water rates and delivery charges. The Court noted, however, that it was not holding that the authorized initiative power is free of all limitations, stating that it was not determining whether the electorate’s initiative power is subject to the public agency ’s statutory obligation to set water service charges at a level that will “ pay the operating expenses of the agency, … provide for repairs and depreciation of works, provide a reasonable surplus for improvements, extensions, and enlargements, pay the interest on any bonded debt, and provide a sinking or other fund for the payment of the principal of such debt as it may become due.”
Article XIIID imposes the substantive requireme nt that any wastewater charges may not exceed the proportional cost of providing service to customers. The Fourth District of the California Court of Appeal decision in Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano, 235 Cal.App.4th 1493 (2015), clarified that tiered rate structures are compatible with the cost of service limitations of Article XIIID when each tier structure is supported by cost of service calculations. The court held that San Juan Capistrano’ s water rates violated Ar ticle XIIID because no evidence in the record adequately showed that each tier corresponded to the cost of providing service at a given level of usage.

The courts have not fully interpreted the provisions of Proposition 218. The SFPUC is unable to predict how courts will further interpret Article XIIIC and Article XIIID, and what, if any, further implementing legislation will be enacted. Under the Bighorn case, San Francisco voters could adopt an initiative measure that reduces or repeals the SFPUC ’s wastew ater rates and charges, though it is not clear whether (and courts have not decided whether) any such reduction or repeal by initiative would be enforceable in a situation in which such rates and charges are pledged to the repayment of bonded indebtedness. There can be no assurance that the courts will not further interpret, or the voters will not amend, Article XIIIC and Article XIIID to limit the ability of the SFPUC to impose, levy, charge and collect increased fees and charges for the Wastewater Enterpr ise, or to call into question wastewater rate increases previously adopted by the SFPUC. No assurance may be given that Articles XIIIC and XIIID will not have a material adverse impact on Net Revenues.

On December 12, 2023, the City was served with a purported class action lawsuit challenging the compliance of the rates charged by the Wastewater Enterprise with the requirements of Proposition 218. See “– Proposition 218 Litigation.”
Proposition 218 Litigation . The Wastewater Enterprise provides sewer system services for the collection, treatment and disposal of sanitary wastewater and stormwater. Unlike most California municipal systems, where sanitary wastewater and stormwater are collected separately and stormwater is not treated, the Wastewater Enterprise is a combined sewer system providing treatment for sewage, wastewater, and sanitary waste. See “THE WASTEWATER ENTERPRISE – Combined Sewage and Stormwater System.” To increase transparency about the elements of sewer service charges while simultaneously providing incentives for customers to manage stormwater on their properties and divert it from the collection system, the Wastewater Enterprise revised its sewer service charges, effective July 1, 2023, to include both a sanitary sewer component and a stormwater runoff component.

See “THE WASTEWATER ENTERPRISE – Wastewater Enterprise Rates and Charges.” On December 12, 2023, the City was served with a purported class action lawsuit filed in California Superior Court challenging the compliance of the rates charged by the Wastewater Enterprise with the requirements of Proposition 218. Gluck, et al. v. City and County of San Francisco, et al. , SF. Superior Court Case No. CGC -23- 609954. See also “ – State Law Limitations – Proposition 218.” The complaint assert ed, in effect, that the Wastewater Enterprise sewer service charges exceed the cost of providing sewer service because a portion of the proceeds of such charges has been and will continue to be used to fund the cost of “ stormwater service” and that the Wastewater Enterprise has imposed “ stormwater charges ” without required voter approval . The plaintiffs sought

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refunds of certain sewer service fees paid by customers, interest, attorneys ’ fees and other costs, and injunctive relief.

On February 26, 2024, the Superior Court issued an order sustaining the City’ s demurrer to the complaint without leave to amend as to all of the plaintiffs ’ claims and dismissing the case in full. The plaintif fs filed a notice of appeal of this order to the California Court of Appeal on March 29, 2024. The City intends to continue vigorously defending the action.

Were the plaintiffs to prevail upon appeal and were the outcome of the lawsuit to be unfavorable to the City, there could be an adverse impact on the operations and/or financial condition of the Wastewater Enterprise.

The SFPUC believes, though, that any settlement obligations or adjudicated liability could be lawfully funded through future sewer service charges.

Proposition 26. Proposition 26, which amended Article XIIIA and XIIIC of the California Constitution, was approved by the electorate at the November 2, 2010 election. Proposition 26 imposes a two- thirds voter approval requirement for the imposition of fees and charges by the State. It also imposes a majority voter approval requirement on local governments with respect to fees and charges for general purposes, and a two- thirds voter approval requirement with respect to fees and charges for special purposes. According to its supporters, Proposition 26 was designed to prevent the circumvention of tax limitations imposed by the voters pursuant to Proposition 13, approved in 1978, Proposition 218, and other measures through the use of non -tax fees and charges.

Proposition 26 expressly excludes from its scope “ a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable cost to the g overnmental entity of providing the service or product to the payor ” and “assessments and property-related fees imposed in accordance with the provisions of Article XIIID. ” The SFPUC believes that the initiative is not intended to, and would not, apply to fees for wastewater services charged by the SFPUC. The SFPUC, however, is unable to predict how Proposition 26 will be interpreted by the courts to apply to the provision of wastewater services by local governments such as the SFPUC.

Initiative 1935. A voter initiative entitled “ The Taxpayer Protection and Government Accountability Act ” (“Initiative 1935”) has been determined to be eligible for the November 2024 Statewide general election and, unless withdrawn by its proponent prior to June 27, 2024, will be certified as qualified for the ballot in such election. Were it to be adopted by a majority of voters in the Statewide general election, Initiative 1935 would amend the California Constitution to, among other things, provide that charges for services or product provided directly to the payor (such as charges for wastewater services ) are “ taxes” subject to voter approval unless the local government can prove by clear and convincing evidence that the charge is reasonable and does not exceed the “ actual cost” of providing the service or product, defined as “ (i) the minimum amount necessary to reimburse the government for the cost of providing the service or the product to the payor and (ii) where the amount charged is not used by the government for any purpose other than reimbursing that cost .” If adopted, Initiative 1935 would be subject to judicial interpretation. The SFPUC is unable to predict whether and how Initiative 1935, if adopted, would be interpreted by the courts, and there can be no ass urance that any such interpretation or application would not have an adverse impact on the SFPUC, the Wastewater Enterprise or Wastewater Revenues.

Initiative and Referendum
Article XIIIA and Articles XIIIC and XIIID of the California Constitution were ado pted pursuant to the State’s constitutional initiative process. From time to time other initiative measures could be adopted by California or San Francisco voters, placing additional limitations on the ability of the SFPUC to increase revenues.

Charter Limitations
The Charter requires that bonds (such as the Bonds) secured by revenues, other than refunding bonds, may be issued only with the assent of a majority of voters. However, under the Charter amendments enacted by the voters in November 2002 (Proposit ion E) and in June 2018 (Proposition A), the SFPUC may issue revenue bonds, including notes, commercial paper or other forms of indebtedness, when authorized by ordinance approved by a two-thirds vote of the Board of Supervisors, for the purpose of reconst ructing, replacing, expanding, repairing or

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improving water facilities, clean water facilities, power facilities, or combinations of water, clean water and power facilities under the jurisdiction of the SFPUC or for any other lawful purpose of the water, c lean water or power utilities of the City in furtherance of the purposes provided in the Charter , including the refunding of existing obligations (and subject to the further conditions contained in Proposition E and Proposition A). See “OBLIGATIONS PAYABLE FROM NET REVENUES – Authority for Issuance of Revenue Bonds and Other Obligations Payable from Net Revenues ” and “SECURITY FOR THE BONDS – Additional Series of Bonds, ” “– Additional Parity Loans” and “– Refunding Bonds.”
Future Charter Amendments
San Francisco voters could adopt additional Charter amendments in the future which would limit the ability of the SFPUC to issue debt or to enact rate increases, affect the financial condition or operation of the Wastewater Enterprise or implement other changes af fecting the financial condition or operations of the SFPUC and the Wastewater Enterprise. See “RISK FACTORS – Initiative, Referendum and Charter Amendments and Future Legislation.”

LITIGATION
The SFPUC is not aware of any litigation, pending or threatened, questioning the political existence of the City or the SFPUC or contesting the SFPUC ’s power to fix wastewater rates and charges, or in any way questioning or affecting:
(i) the proceedings under which the 2024ABCD Bonds are to be issued; (ii) the validity of any provision of the 2024ABCD Bonds or the Indenture; (iii) the pledge of Net Revenues by the SFPUC under the Indenture; or (iv) the titles to office of the present members of the Board of Supervisors and the Commission.

There are several suits and claims pending against the City and the SFPUC impacting the Wastewater Enterprise, which may include personal injury, wrongful death and other suits and claims against which the City may self-insure. The aggregate amount of the self -insured liabilities of the City and the SFPUC which may result from such suits and claims if determined adversely to the City or the SFPUC will not, in the opinion of the City Attorney, materially impair the ability of the SFPUC to pay principal of or interest on the 2024ABCD Bonds as they become due. Other than as disclosed elsewhere in this Official Statement, there is no litigation pending, with service of process having been accomplished, against the City or the SFPUC which if determined adversely to the City or the SFPUC would, in the opinion of the City Attorney, materially impair the ability of the SFPUC to pay principal of and interest on the 2024ABCD Bonds as they become due. See also “RISK FACTORS – Risks Related to Wastewater Enterprise Facilities and Operation – Natural and Man- Made Disasters; Flooding ,” “REGULATORY MATTERS – Federal and State Clean Water Act Permits ” and “CONSTITUTIONAL, STATUTORY AND CHARTER LIMITATIONS – State Law Limitations – Proposition 218 Litigation.”

TAX MATTERS
Tax-Exempt Bonds
Federal Tax Exemption . In the opinion of Bond Counsel to the SFPUC, under existing statutes, regulations, rulings and judicial decisions, and assuming compliance by the SFPUC with certain covenants in the applicable resolution, the Tax Certificate and other documents pertaining to the Tax-Exempt Bonds and requirements of the Code regarding the use, expenditure and investment of proceeds of the Tax- Exempt Bonds and the timely payment of certain investment earnings to the United States, interest on the Tax -Exempt Bonds is not included in the gross income of the owners of the Tax- Exempt Bonds for federal income tax purposes . Failure to comply with such covenants and requirements may cause interest on the Tax -Exempt Bonds to be included in gross income retroactive to the date of issuance of the Tax-Exempt Bonds.

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In the further opinion of Bond Counsel, interest on the Tax -Exempt Bonds is not treated as an item of tax preference for purposes of the federal alternative minimum tax on individuals . Bond Counsel expresses no opini on regarding the applicability of the federal corporate alternative minimum tax to the adjusted financial statement income of certain corporations.

Ownership of, or the receipt of interest on, tax- exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with excess passive income, individual recipients of Social Security or Railroad Retirement benefits, taxpayers that may be deemed to have incurred or continued indebtedness to purchase or carry tax- exempt obligations and taxpayers who may be eligible for the earned income tax credit . Bond Counsel expresses no opinion with respect to any collateral tax consequences and, accordingly, prospective purchasers of the Tax- Exempt Bonds should consult their tax advisors as to the applicability of any collateral tax consequences.

Certain require ments and procedures contained or referred to in the applicable resolution, the Tax Certificate or other documents pertaining to the Tax- Exempt Bonds may be changed, and certain actions may be taken or not taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax- exempt obligations. Bond Counsel expresses no opinion as to the effect of any change to any document pertaining to the Tax-Exempt Bonds or of any action taken or not taken where such change is made or action is taken or not taken without the approval of Bond Counsel or in reliance upon the advice of counsel other than Bond Counsel with respect to the exclusion from gross income of the interest on the Tax-Exempt Bonds for federal income tax purposes.

Bond Counsel’s opinion is not a guarantee of result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and judicial decisions and the representations and covenants of the SFPUC described above . No ruling has been sought from the IRS with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel ’s opinion is not binding on the IRS . The IRS has an ongoing program of examining the tax- exempt status of the interest on municipal obligations . If an examination of the Tax- Exempt Bonds is commenced, under current procedures the IRS is likely to treat the SFPUC as the “ taxpayer,” and the owners of the Tax-Exempt Bonds would have no right to participate in the examination process . In responding to or defending an examination of the tax- exempt status of the interest on the Tax- Exempt Bonds, the SFPUC may have different or conflicting interests from the owners . Additionally, public awareness of any future examination of the Tax-Exempt Bonds could adversely affect the value and liquidity of the Tax- Exempt Bonds during the pendency of the examination, regardless of its ultimate outcome.

Tax Accounting Treatment of Bond Premium and Original Issue Discount Bond Premium. To the extent a purchaser acquires a Tax -Exempt Bond at a price in excess of the amount payable at its maturity, such excess will constitute “ bond premium ” under the Code . The Code and applicable Treasury Regulations provide generally that bond premium on a tax- exempt obligation is amortized over the remaining term of the obligation (or a shorter period in the case of certain callable obligations) based on the obligation’s yield to maturity (or shorter period in the case of certain callable obligations) . The amount of premium so amortized reduces the owner ’s basis in such obligation for federal income tax purposes, though such amortized premium is not deductible for federal income tax pur poses. This reduction in basis will increase the amount of any gain (or decrease the amount of any loss) recognized for federal income tax purposes upon a sale or other taxable disposition of the obligation. Bond Counsel is not opining on the accounting for bond premium or the consequence to a Tax -Exempt Bond purchaser of purchasing a Tax- Exempt Bond with bond premium . Accordingly, persons considering the purchase of Tax- Exempt Bonds with bond premium should consult their own tax advisors with respect to the determination of bond premium on such Tax- Exempt Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such Tax-Exempt Bonds.

Original Issue Discount . T
he excess, if any, of the stated r edemption price at maturity of Tax -Exempt Bonds of a particular maturity over the initial offering price to the public of the Tax- Exempt Bonds of that maturity at which a substantial amount of the Tax- Exempt Bonds of that maturity is sold to the public is “ original issue discount.” Original issue discount accruing on a Tax- Exempt Bond is treated as interest excluded from the gross income of the owner thereof for federal income tax purposes under the same conditions and limitations as are

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applicable to inter est payable on such Tax -Exempt Bond . Original issue discount on a Tax- Exempt Bond of a particular maturity purchased pursuant to the initial public offering at the initial public offering price at which a substantial amount of the Tax -Exempt Bonds of that maturity is sold to the public accrues on a semiannual basis over the term of the Tax -Exempt Bond on the basis of a constant yield; and within each semiannual period accrues on a ratable daily basis. The amount of original issue discount on a Tax-Exempt Bond accruing during each period is added to the adjusted basis of such Tax-Exempt Bond, which will affect the amount of taxable gain upon disposition (including sale, redemption or payment on maturity) of such Tax- Exempt Bond. The Code includes certain provisions relating to the accrual of original issue discount in the case of purchasers that purchase Tax -Exempt Bonds other than at the initial offering price . Bond Counsel is not opining on the accounting for or consequence to a Tax-Exempt Bond purchaser of purchasing a Tax- Exempt Bond with original issue discount . Accordingly, persons considering the purchase of Tax- Exempt Bonds with original issue discount should consult their own tax advisors with respect to the determination of original issue discount on such Tax -Exempt Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of such Tax- Exempt Bonds.

Information Reporting and Backup Withholding. Interest paid on the Tax -Exempt Bonds will be subject to information reporting in a manner similar to interest paid on taxable obligations . Although such reporting requirement does not, in and of itself, affect the excludability of such interest from gross income for federal income tax purposes, such reporting requirement causes the payment of interest on the Tax -Exempt Bonds to be subject to backup withholding if such interest is paid to beneficial owners who (a) are not “ exempt recipients,” and (b) either fail to provide certain identifying information (such as the beneficial owner ’s taxpayer identification number) in the required manner or have been identified by the IRS as having failed to report all interest and dividends required to be shown on their income tax returns . Generally, individuals are not exempt recipients, whereas corporations and certain other entities are exempt recipients . Amounts withheld under the backup withholding rules from a payment to a beneficial owner are allowed as a refund or credit against such beneficial owner ’s federal income tax liability so long as the required information is furnished to the IRS.

State Tax Exemption. In the further opinion of Bond Counsel, interest on the Tax- Exempt Bonds is exempt from personal income taxes imposed by the State of California.

Future Developments. Existing law may change to reduce or eliminate the benefit to owners of the Tax- Exempt Bonds of the exclusion of the interest on the Tax- Exempt Bonds from gross income for federal income tax purposes or of the exemption of interest on the Tax- Exempt Bonds from State of California personal income taxation. Any proposed legislation, whether or not enacted, or administrative action, whether or not taken, could also affect the value and marketability of the Tax -Exempt Bonds . Prospective purchasers of the Tax -Exempt Bonds should consult their own tax advisors with respect to any proposed or future change in tax law.

Proposed Form of Opinion . A copy of the form of opinion of Bond Counsel relating to the Tax- Exempt Bonds is included in APPENDIX C hereto.

Taxable Bonds
General. The issuance and delivery of the Taxable Bonds is subject to the delivery of an opinion of Bond Counsel that under existing State of California law, interest on the Taxable Bonds is exempt from personal income taxes imposed by the State of California.

Below is a general summary of the United States federal income tax consequences of the purchase and ownership of the Taxable Bonds . The discussion below is based upon the Code, Treasury Regulations, rulings and judicial decisions now in effect, all of which are subject to change (possibly with retroactive effect) or possibly a differing interpretation. No assurance can be given that future changes in the law will not alter the statements herein .

The discussion below does not purport to deal with United States federal income tax consequences applicable to all categories of investors . Further, the discussion below does not purport to cover all aspects of United States federal income taxation that may be relevant to a particular investor in the Taxable Bonds in light of the investor ’s particular personal investment circumstances or to certain types of investors subject to special treatment under United States federal income tax laws (including insurance companies, tax -exempt organizations, financial institutions, broker - dealers and persons that have hedged the risk of owning the Taxable Bonds) . Such discussion is therefore limited to

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certain issues relating to initial investors that will hold the Taxable Bonds as “ capital assets” within the meaning of Section 1221 of the Code, and that acquire such Taxable Bonds for investment and not as a dealer or for resale .

Except as specifically discussed below, the discussion below addresses the United States federal income tax consequences applicable only to beneficial owners of the Taxable Bonds that are “ United States persons” within the meaning of Section 7701(a)(30) of the Code ( “United States persons ”) and does not address any consequence to persons other than United States persons . Prospective investors should note that no rulings have been or will be sought from the IRS with respect to any of the U.S. federal income tax consequences discussed herein, and no assurance can be given that the IRS will not take contrary positions. A form of Bond Counsel’s anticipated opinion is included as Appendix C.

PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN DETERMINING

THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE TAXABLE BONDS.

Payments of Stated Interest on the Taxable Bonds . The stated interest paid on the Taxable Bonds will be included in the gross income, as defined in Section 61 of the Code, of the beneficial owners of the Taxable Bonds, and will be subject to U.S. federal income taxation when received or accrued, depending on the tax accounting method used by the beneficial owners thereof.

Original Issue Discount. If a substantial amount of the Taxable Bonds of any stated maturity is purchased at original issuance for a purchase price (the “ Issue Price”) that is less than their face amount by more than one quarter of one percent times the number of complete years to maturity, the Taxable Bonds of such maturity will be treated as being issued with “original issue discount .” The amount of the original issue discount will equal the excess of the principal amount payable on such Taxable Bonds at maturity over the Issue Price of such Taxable Bonds, and the amount of the original issue discount on the Taxable Bonds will be amortized over the life of the Taxable Bonds using the “ constant yield method” provided in the Treasury Regulations . As the original issue discount accrues under the constant yield method, the beneficial owners of the Taxable Bonds, rega rdless of their regular method of accounting, will be required to include such accrued amount in their gross income as interest . This can result in taxable income to the beneficial owners of the Taxable Bonds that exceeds actual cash distributions to the beneficial owners in a taxable year.

The amount of the original issue discount that accrues on the Taxable Bonds each taxable year will be reported annually to the IRS and to the beneficial owners . The portion of the original issue discount included in each beneficial owner ’s gross income while the beneficial owner holds the Taxable Bonds will increase the adjusted tax basis of the Taxable Bonds in the hands of such beneficial owner.

Premium. If a beneficial owner purchases a Taxable Bond for an amount that is greater than its stated redemption price at maturity, such beneficial owner will be considered to have purchased the Taxable Bond with “amortizable bond premium ” equal in amount to such excess . A beneficial owner may elect to amortize such premium using a constant yield method over the remaining term of the Taxable Bond and may offset interest otherwise required to be included in respect of the Taxable Bond during any taxable year by the amortized amount of such premium for the taxable year . Bond premium on a Taxable Bond held by a beneficial owner who does not make such an election will decrease the amount of gain or increase the amount of loss otherwise recognized on the sale, exchange, redemption or retirement of a Taxable Bond . However, if the Taxable Bond may be optionally redeemed after the beneficial owner acquires it at a price in excess of its stated redemption price at maturity, special rules would apply under the Treasury Regulations which could result in a deferral of the amortization of some bond premium until later in the term of the Taxable Bond . Any election to amortize bond premium applies to all taxable debt instruments held by the beneficial owner on or after the first day of the first taxable year to which such election applies, and may be revoked only with the consent of the IRS.

Medicare Contribution Tax. Pursuant to Section 1411 of the Code, as enacted by the Health Care and Education Reconciliation Act of 2010, an additional tax is imposed on individuals beginning January 1, 2013. The additional tax is 3.8% of the lesser of (i) net investment income (defined as gross income from interest, dividends, net gain from disposition of property not used in a trade or business and certain other listed items of gross income), or (ii) the excess of “modified adjusted gross income ” of the individual over $200,000 for unmarried individuals ($250,000 for married couples filing a joint return and a surviving spouse) . Holders of the Taxable Bonds should

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consult their tax advisors concerning this additi onal tax, as it may apply to interest earned with respect to the Taxable Bonds as well as gain on the sale of a Taxable Bond.

Disposition of Bonds and Market Discount . A beneficial owner of Taxable Bonds will generally recognize gain or loss on the redemption, sale or exchange of Taxable Bonds equal to the difference between the redemption or sales price (exclusive of the amount paid for accrued interest) and the beneficial owner ’s adjusted tax basis in the Taxable Bonds. Generally, the beneficial ow ner’s adjusted tax basis in the Taxable Bonds will be the beneficial owner’s initial cost, increased by the original issue discount previously included in the beneficial owner ’s income to the date of disposition. Any gain or loss generally will be capital gain or loss and will be long- term or short -term, depending on the beneficial owner’s holding period for the Taxable Bonds.

Under current law, a purchaser of Taxable Bonds who did not purchase the Taxable Bonds in the initial public offering (a “subsequent purchaser”) generally will be required, on the disposition (or earlier partial principal payment) of the Taxable Bonds, to recognize as ordinary income a portion of the gain, if any, to the extent of the accrued “market discount.” In general, market discount is the amount by which the price paid for the Taxable Bonds by a subsequent purchaser is less than the sum of Issue Price and the amount of original issue discount previously accrued on the Taxable Bonds. The Code also limits the deductibility of inter est incurred by a subsequent purchaser on funds borrowed to acquire Taxable Bonds with market discount . As an alternative to the inclusion of market discount in income upon disposition, a subsequent purchaser may elect to include market discount in income currently as it accrues on all market discount instruments acquired by the subsequent purchaser in that taxable year or thereafter, in which case the interest deferral rule will not apply . The re -characterization of gain as ordinary income on a subsequent disposition of Taxable Bonds could have a material effect on the market value of the Taxable Bonds.

Legal Defeasance. If the District elects to defease the Taxable Bonds by depositing in escrow sufficient cash and/or obligations to pay when due outstanding Taxable Bonds (a “legal defeasance”), under current tax law, a beneficial owner of Taxable Bonds may be deemed to have sold or exchanged its Taxable Bonds . In the event of such a legal defeasance, a beneficial owner of Taxable Bonds generally would recogn ize gain or loss in the manner described above. Ownership of the Taxable Bonds after a deemed sale or exchange as a result of a legal defeasance may have tax consequences different from those described above, and each beneficial owner should consult its ow n tax advisor regarding the consequences to such beneficial owner of a legal defeasance of the Taxable Bonds.

Backup Withholding. Under Section 3406 of the Code, a beneficial owner of the Taxable Bonds that is a United States person may, under certain circumstances, be subject to “ backup withholding” on payments of current or accrued interest on the Taxable Bonds or with respect to proceeds received from the disposition of the Taxable Bonds. This withholding applies if such beneficial owner of Taxable Bonds : (i) fails to furnish to the payor such beneficial owner ’s social security number or other taxpayer identification number ( “TIN”); (ii) furnishes the payor an incorrect TIN; (iii) fails to properly report interest, dividends or other “ reportable payments ” as defined in the Code; or (iv) under certain circumstances, fails to provide the payor with a certified statement, signed under penalty of perjury, that the TIN provided to the payor is correct and that such beneficial owner is not subject to backup withholding.

Backup withholding will not apply to beneficial owners that are corporations or that fall within certain categories and (if and when required) demonstrate that fact . Beneficial owners of the Taxable Bonds should consult their own tax advisors rega rding their qualification for exemption from backup withholding and the procedures for obtaining such exemption . The backup withholding tax is not an additional tax, and taxpayers may use amounts withheld as a credit against their federal income tax liability or may claim a refund as long as they timely provide certain information to the Service.

Withholding on Payments to Nonresident Alien Individuals and Foreign Corporations . Under Sections 1441 and 1442 of the Code, nonresident alien individuals and fore ign corporations are generally subject to withholding at the rate of 30% on periodic income items arising from sources within the United States, provided that such income is not “effectively connected” with the conduct of a United States trade or business, within the meaning of Section 864 of the Code . Where interest on the Taxable Bonds received by nonresident aliens and foreign corporations is not treated as effectively connected income, such interest will be subject to 30% withholding, or any lower rate specified in an income tax treaty, unless such income is treated as “ portfolio interest” within the meaning

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of Sections 871 and 881 of the Code . Interest will be treated as portfolio interest under such sections if : (i) the beneficial owner provides a statement to the payor certifying, under penalties of perjury, that such beneficial owner is not a United States person, and provides the name and address of such beneficial owner; (ii) such interest is treated as not effectively connected with the beneficial owner ’s United States trade or business; (iii) interest payments are not made to a person within a foreign country that the IRS has included on a list of countries having provisions inadequate to prevent United States tax evasion; (iv) inter est payable on the Taxable Bonds is not deemed contingent interest within the meaning of the portfolio debt provision; (v) such beneficial owner is not a controlled foreign corporation, within the meaning of Section 957 of the Code; and (vi) such beneficia l owner is not a bank receiving interest with respect to the Taxable Bonds pursuant to a loan agreement entered into in the ordinary course of the bank’s trade or business.

Assuming payments with respect to the Taxable Bonds are treated as portfolio interest within the meaning of Sections 871 and 881 of the Code, no backup withholding under Section 1441 and 1442 of the Code and no backup withholding under Section 3406 of the Code will be required with respect to beneficial owners or intermediaries that have furnished Form W -8BEN, Form W -8BEN-E, Form W -8EXP or Form W -8IMY , as applicable, provided the payor does not have actual knowledge or reason to know that such person is a United States person.

Foreign Account Tax Compliance Act . Sections 1 471 through 1474 of the Code impose a 30% withholding tax on certain types of payments made to a foreign financial institution, unless the foreign financial institution enters into an agreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain United States persons or U.S. -owned entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent the foreign financial institution from complying wi th these and other reporting requirements, or unless the foreign financial institution is otherwise exempt from those requirements . In addition, the Foreign Account Tax Compliance Act ( “FATCA”) imposes a 30% withholding tax on the same types of payments to a non-financial foreign entity unless the entity certifies that it does not have any substantial U.S. owners or the entity furnishes identifying information regarding each substantial United States owner . Failure to comply with the additional certificatio n, information reporting and other specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on payments of the interest on and principal of the Taxable Bonds and sales proceeds of Taxable Bonds held by or through a f oreign entity. In general, withholding under FATCA currently applies to payments of U.S. source interest (including OID) and will apply to “foreign passthru payments ” but no earlier than two years after the date of publication of final regulations defining the term “ foreign passthru payment .” Prospective investors should consult their own tax advisors regarding FATCA and its effect on them.

Reporting of Interest Payments. Subject to certain exceptions, interest payments made to beneficial owners of the Taxable Bonds will be reported to the IRS . Such information will be filed each year with the IRS on Form 1099-INT (or other appropriate reporting form), which will reflect the name, address and TIN of the beneficial owner. A copy of Form 1099 will be sent to e ach beneficial owner of a Taxable Bond for U.S. federal income tax purposes.

Proposed Form of Opinion . The proposed form of opinion of Bond Counsel regarding the Taxable Bonds is attached in APPENDIX C.

The preceding discussion of certain United States fed eral income tax consequences is for general information only and is not tax advice . Accordingly, each investor should consult with its own tax advisor as to particular tax consequences to it of purchasing, owning and disposing of the Taxable Bonds, includi ng the applicability and effect of any state, local or foreign tax law, and of any proposed change in applicable law.

CERTAIN LEGAL MATTERS
Certain legal matters incident to the authorization, sale and delivery of the 2024ABCD Bonds are subject to the appr oval of Norton Rose Fulbright US LLP, San Francisco, California, Bond Counsel to the SFPUC . Certain legal matters are being passed upon for the SFPUC by the City Attorney and by Orrick, Herrington & Sutcliffe LLP , San Francisco, California (“Disclosure Counsel”). Certain legal matters are being passed upon for the Underwriters

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by Hawkins Delafield & Wood LLP, San Francisco , California. Bond Counsel and Disclosure Counsel will receive compensation that is contingent upon the sale and delivery of the 2024ABCD Bonds.

The form of approving opinion of Bond Counsel is set forth in Appendix C, and will be available at the time of delivery of th e 2024ABCD Bonds. Bond Counsel is not passing upon and undertakes no responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

Orrick, Herrington & Sutcliffe LLP has served as Disclosure Counsel to t he SFPUC and in such capacity has advised the SFPUC with respect to the requirements of applicable securities laws and participated with responsible SFPUC officials and staff in conferences and meetings where information contained in this Official Statement was reviewed for accuracy and completeness. Disclosure Counsel is not responsible for the accuracy or completeness of the information presented in this Official Statement and has not undertaken to independently verify any of such information. Rather, the SFPUC is solely responsible for the accuracy and completeness of the information contained in this Official Statement. Upon the issuance of the 2024ABCD Bonds, Orrick, Herrington & Sutcliffe LLP will deliver a letter to the SFPUC concerning certain matter s with respect to th is Official Statement.

No purchaser or holder of the 2024ABCD Bonds, or other person or party other than the SFPUC, will be entitled to rely on such letter or on the fact that Orrick, Herrington & Sutcliffe LLP has acted as Disclosure C ounsel to the SFPUC.

RATINGS
Moody’s Investors Service ( “Moody’s”) has assigned a long- term municipal bond rating of “ ___” to the 2024ABCD Bonds, and S&P Global Ratings, a division of Standard & Poor ’s Financial Services LLC (“S&P”), has assigned a long-term municipal bond rating of “___” to the 2024ABCD Bonds.

The ratings assigned by Moody’ s and S&P express only the views of the respective rating agencies. The explanation of the significance of these ratings, and any outlook associated with these ratings, may be obtained from Moody’s and S&P, respectively. Each rating agency generally bases its rating on its own investigations, studies, and assumptions. The SFPUC has provided certain additional information and materials to the rating agencies (some of which does not appear in this Official Statement).

A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. There is no assurance such ratings will continue for any given period of tim e or that such ratings will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2024ABCD Bonds. The SFPUC undertakes no responsibility to maintain its current ratings on the 2024ABCD Bonds or to oppose any such downward revision, suspension or withdrawal.

UNDERWRITING
2024AB Bonds
The 2024AB Bonds are being purchased by BofA Securities, Inc. , on behalf of itself , Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Jefferies LLC, Samuel A. Ramirez & Co., Inc., and Siebert Williams Shank & Co., LLC (collectively, the “2024AB Underwriters”).

The 2024AB Underwriters have agreed to purchase from the SFPUC the 2024A Bonds at a purchase price of $__________ (consisting of $__________ aggregate principal amount of the 2024A Bonds, less an underwriters ’ discount of $__________), and the 2024B Bonds at a purchase price of $__________ (consisting of $__________ aggregate principal amount of the 2024B Bonds, less an underwriters ’ discount of $__________) . Under the bond purchase contract to be entered into in connection with the purchase of the 2024AB Bo nds, the 2024AB Underwriters will be obligated to purchase all of the 2024AB Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions to be satisfied by the SFPUC.

The 2024AB Underwriters have certified the reoffering prices or yields with respect to the 2024AB Bonds set forth on the inside cover pages of this Official Statement. The SFPUC takes no responsibility for the accuracy of

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these prices or yields. The 2024AB Underwriter s may offer and sell the 2024AB Bonds to certain dealers and others at prices lower than or yields higher than the offering prices or yields stated on the inside cover pages. The offering prices or yields may be changed from time to time by the 2024AB Underwriters.

The 2024AB Unde rwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the 2024AB Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various investment banking services for the SFPUC for which they received or will receive customary fees.

In the ordinary course of their various business activities, the 2024AB Underwriter s and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and se curities activities may involve securities and instruments of the SFPUC.

BofA Securities, Inc., one of the 2024AB Underwriter s of the 2024AB Bonds, has entered into a distribution agreement with its affiliate Merrill Lynch, Pierce, Fenner & Smith Incorpora ted (“MLPF&S”). As part of this arrangement, BofA Securities, Inc. may distribute securities to MLPF&S, which may in turn distribute such securities to investors through the financial advisor network of MLPF&S. As part of this arrangement, BofA Securities, Inc. may compensate MLPF&S as a dealer for their selling efforts with respect to the 2024AB Bonds.

Morgan Stanley & Co. LLC, one of the 2024AB Underwriters of the 2024AB Bonds, has entered into a retail distribution arrangement with its affiliate Morgan S tanley Smith Barney LLC. As part of this arrangement, Morgan Stanley & Co. LLC may distribute municipal securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC . As part of this arrangement, Morgan Stanley & C o. LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the 2024AB Bonds.

J.P. Morgan Securities LLC (“JPMS”), one of the 2024AB Underwriters of the 2024AB Bonds, has entered into negotiated dealer agreements with each of Charles Schwab & Co., Inc. ( “CS&Co.”) and LPL Financial LLC (“LPL”) for the retail distribution of certain securities offerings at the original issue prices . Pursuant to each dealer agreement, each of CS&Co. and LPL may purchase 2024AB Bonds from JPMS at the original issue price less a negotiated portion of the selling concession applicable to any 2024AB Bonds that such firm sells. 2024CD Bonds
The 2024CD Bonds are being purchased by Morgan Stanley & Co. LLC, on behalf of itself, BofA Securities, Inc., J.P. Morgan Securities LLC, Jefferies LLC, Samuel A. Ramirez & Co., Inc., and Siebert Williams Shank & Co., LLC (collectively, the “2024CD Underwriters”).

The 2024CD Underwriters have agreed to purchase from the SFPUC the 2024C Bonds at a purchase price of $__________ (consisting of $__________ aggregate principal amount of the 2024C Bonds, [less/plus] an original issue [discount/premium] of $__________, less an underwriters’ discount of $__________), and the 2024D Bonds at a purchase price of $__________ (consisting of $__________ aggregate principal amount of the 2024D Bonds, [less/plus] an original issue [discount/premium] of $__________, less an underwriters ’ discount of $__________).

Under the bond purchase contract to be entered into in connection with the purchase of the 2024CD Bonds, the 2024CD Underwriters will be obligated to purchase all of the 2024CD Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions to be satisfied by the SFPUC.

The 2024CD Underwriters have certified the reoffering prices or yields with respect to the 2024CD Bonds set forth on the inside cover pages of this Official Statement. The SF PUC takes no responsibility for the accuracy of these prices or yields. The 2024CD Underwriter s may offer and sell the 2024CD Bonds to certain dealers and others at prices lower than or yields higher than the offering prices or yields stated on the inside cover pages. The offering prices or yields may be changed from time to time by the 2024CD Underwriters.

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The 2024CD Underwriter s and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the 2024CD Underwriter s and their respective affiliates have, from time to time, performed, and m ay in the future perform, various investment banking services for the SFPUC for which they received or will receive customary fees.

In the ordinary course of their various business activities, the 2024CD Underwriter s and their respective affiliates may mak e or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the SFPUC.

Morgan Stanley & Co. LLC, one of the 2024CD Underwriter s of the 2024CD Bonds, has entered into a retail distribution arrangement with its affiliate Morgan Stanley Smith Barney LLC . As part of this arrangement, Morgan Stanley & Co. LLC may distribute municipal securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC . As part of this arrangement, Morgan Stanley & Co. LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the 2024CD Bonds.

BofA Securities, Inc., one of the 2024CD Underwrite rs of the 2024CD Bonds, has entered into a distribution agreement with its affiliate MLPF&S. As part of this arrangement, BofA Securities, Inc. may distribute securities to MLPF&S, which may in turn distribute such securities to investors through the financial advisor network of MLPF&S. As part of this arrangement, BofA Securities, Inc. may compensate MLPF&S as a dealer for their selling efforts with respect to the 2024CD Bonds.

J.P. Morgan Securities LLC (“JPMS”), one of the 2024CD Underwriters of the 2024CD Bonds, has entered into negotiated dealer agreements with each of Charles Schwab & Co., Inc. ( “CS&Co.”) and LPL Financial LLC (“LPL”) for the retail distribution of certain securities offerings at the original issue prices . Pursuant to each dealer agreement, each of CS&Co. and LPL may purchase 2024CD Bonds from JPMS at the original issue price less a negotiated portion of the selling concession applicable to any 2024CD Bonds that such firm sells.

FINANCIAL STATEMENTS
Attached as Appendix B are the au dited financial statements of the Wastewater Enterprise for Fiscal Year s 2022-23 and 2021- 22, prepared by the SFPUC . The audited financial statements for Fiscal Year 2022 -23 were audited by Macias Gini & O’Connell LLP, independent certified public accounta nts, and the audited financial statements for Fiscal Year 2021 -22 were audited by KPMG LLP, independent certified public accountants . These audited financial statements are included for convenience.

The audited financial statements of the SFPUC are public documents and the SFPUC has not requested nor did the SFPUC obtain permission from the auditors to include the audited financial statements as an Appendix to this Official Statement. Accordingly, the auditors have made no representation in connection with inclusion of the audited financial statements herein that there has been no material change in the financial condition of the SFPUC since the most recent audit was concluded. The auditors have not been engaged to perform and have not performed, since the date of the report included herein, any procedures on the financial statements addressed in that report. The auditors also have not performed any procedures relating to this Official Statement.

CONTINUING DISCLOSURE
The SFPUC will covenant for the benefit o f the Owners and Beneficial Owners of the 2024ABCD Bonds, under a continuing disclosure certificate dated as of the date of delivery (the “ Disclosure Certificate”), to provide certain financial information and operating data regarding the Wastewater Enterprise (the “Annual Report ”) not later than March 31 following the end of its Fiscal Year (presently June 30), beginning on March 31, 2025 , with the report for Fisc al Year 2023-24, and to promptly provide notices of the occurrence of certain enumerated events set forth in the Disclosure Certificate (“Listed Events”).

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The SFPUC will agree to file the Annual Report and any notice of Listed Events as described in the Disclosure Certificate. The specific nature of the information to be contained in the Annual Report or the notices of Listed Events is set forth in the Disclosure Certificate. These covenants have been made to assist the Underwriters in complying with the Rule. The form of the Disclosure Certificate is attached to this Official Statement as APPENDIX D.

In 2017, the SFPUC and U.S. Bank National Association ( “U.S. Bank ”) entered into revolving credit agreements providing for the extension of credit to the SFPUC in the amount of $100,000,000 for the Water Enterprise and $75,000,000 for the Wastewater Enterprise. The SFPUC has not drawn on either credit facility and has no outstanding obligations thereunder. On January 7, 2022, the SFPUC and U.S. Bank entered into amendments to such credit facilities extending the respective commitment expiration dates to July 18, 2024. The SFPUC filed listed event notices regarding such extensions on February 3, 2022.

VERIFICATION OF MATHEMATICAL ACCURACY
Upon delivery of the 2024B Bonds, the Verification Agent will deliver a report on the mathematical accuracy of certain computations, contained in schedules provided to them on behalf of the SFPUC, relating to (a) the sufficiency of the anticipated receipts from the cash deposited in the Escrow Fund to refund the Refunded 2018B Bonds and the Refunded 2023B Bonds , and (b) the “ yield” on the investments deposited in the Escrow Fund for the Refunded 2018B Bonds and the Refunded 2023B Bonds and on the 2024B Bonds considered by Bond Counsel in connection with the opinion rendered by such firm that the 2024B Bonds are not “ arbitrage bonds ” within the meaning of Section 148 of the Tax Code, as amended.

CO-MUNICIPAL ADVISORS
Montague DeRose and Associates, LLC, Walnut Creek, California, and Backstrom McCarley Berry & Co., LLC, San Francisco, California (the “ Co-Municipal Advisors”), are acting as co -municipal advisors to the SFPUC with respect to the 2024ABCD Bonds. The Co-Municipal Advisors have assisted the SFP UC in the preparation of this Official Statement and in other matters relating to the planning, structuring, execution and delivery of the 2024ABCD Bonds. The Co-Municipal Advisors have not independently verified any of the data contained herein or conducted a detailed investigation of the affairs of the SFPUC to determine the accuracy or completeness of this Official Statement. Because of its limited participation, the Co -Municipal Advisors assume no responsibility for the accuracy or completeness of any o f the information contained herein. The Co-Municipal Advisors will not purchase or make a market in any of the 2024ABCD Bonds.

The compensation to be received by the Co- Municipal Advisors from the SFPUC for services provided in connection with the planning, structuring, execution and delivery of the 2024AB Bonds is contingent upon the sale and delivery of the 2024AB Bonds. The compensation to be received by the Co- Municipal Advisors from the SFPUC for services provided in connection with the planning, struc turing, execution and delivery of the 2024CD Bonds is contingent upon the sale and delivery of the 2024CD Bonds.

INDEPENDENT PRICING CONSULTANT
PFM California Advisors LLC, San Francisco, California , is acting as an independent pricing consultant to the SFPUC with respect to the 2024ABCD Bonds (the “ Independent Pricing Consultant ”). As required by the SFPUC’s Debt Policies, the Independent Pricing Consultant will monitor the pricing process and provide an independent pricing report to the SFPUC certifying whether the pricing results were fair and reasonable to the SFPUC in light of prevailing market conditions. The Pricing Consultant has not independently verified any of the data contained herein or conducted a detailed investigation of the affai rs of the SFPUC to determine the accuracy or completeness of this Official Statement. Because of its limited participation, the Pricing Consultant assumes no responsibility for the accuracy or completeness of any of the information contained herein. The Pricing Consultant will not purchase or make a market in any of the 2024ABCD Bonds.

The compensation to be received by the Pricing Consultant from the SFPUC for services provided in connection with the planning, structuring, execution and delivery of the 2024AB Bonds is contingent upon the sale

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and delivery of the 2024AB Bonds. The compensation to be received by the Pricing Consultant from the SFPUC for services provided in connection with the planning, structuring, execution and delivery of the 2024CD Bonds is contingent upon the sale and delivery of the 2024CD Bonds.

MISCELLANEOUS
References made in this Official Statement to certain documents and reports are brief summaries thereof that do not purport to be complete or definitive, and reference is made to such documents and reports for full and complete statements of the contents thereof.

The appendices to this Official Statement are integral parts of this Official Statement. Investors must read the entire Official Statement, including the appendices, to obtain information essential to making an informed investment decision.

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APPROV AL AND EXECUTION
This Official Statement has been duly approved, executed and delivered by the SFPUC.

PUBLIC UTILITIES COMMISSION OF THE

CITY AND COUNTY OF SAN FRANCISCO
By:

General Manager

1 APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

1 APPENDIX B

SFPUC WASTEWATER ENTERPRISE FINANCIAL STATEMENTS

1 APPENDIX C

PROPOSED FORM OF OPINION OF BOND COUNSEL

1 APPENDIX D

FORM OF CONTINUING DISCLOSURE CERTIFICATE

$__________
Public Utilities Commission of the
City and County of San Francisco
Wastewater Revenue Bonds
$__________
2024 Series A
(SSIP) (Green Bonds)
(Federally Taxable)
$__________
2024 Series B
(Non-SSIP)
(Federally Taxable)
$__________
2024 Series C
(SSIP) (Green Bonds)
$__________
2024 Series D
(Non-SSIP)

[Closing Date]
This Continuing Disclosure Certificate (the “ Disclosure Certificate ”) is executed and delivered by the Public Utilities Commission of the City and County of San Francisco (the “ SFPUC”) in connection with the issuance of its Wastewater Revenue Bonds, 2024 S eries A (SSIP) (Green Bonds) (Federally Taxable) (the “ 2024A Bonds”), 2024 Series B (Non- SSIP) (Federally Taxable) (the “2024B Bonds”), 2024 Series C (SSIP) (Green Bonds) (the “2024C Bonds”), and 2024 Series D (Non -SSIP) (the “2024D Bonds” and, together with the 2024A Bonds, the 2024B Bonds and the 2024C Bonds, the “2024ABCD Bonds”).

The 2024A Bonds are being issued pursuant to a Seventeenth Supplemental Indenture, dated as of July 1, 2024 (the “Seventeenth Supplemental Indenture ”), by and between the SFPUC and U.S. Bank Trust Company, National Association, as successor to U.S. Bank National Association, as trustee (the “ Trustee”). The 2024B Bonds, 2024C Bonds and 2024D Bonds are being issued pursuant to an Eighteenth Supplemental Indenture, dated as of July 1, 2024 (the “ Eighteenth Supplemental Indenture ”), by and between the SFPUC and the Trustee. The Seventeenth Supplemental Indenture and Eighteenth Supplemental Indenture supplement the Indenture, dated as of January 1, 2003 (as amended and supplemented, including as supplemented by the Seventeenth Supplemental Indenture and Eighteenth Supplemental Indenture, the “ Indenture”), by and between the SFPUC and the Trustee .

The SFPUC covenants and agrees as follows:

SECTION 1. Purpose of the Disclosure Certificate . This Disclosure Certificate is being executed and delivered by the SFPUC for the benefit of the Holders and Beneficial Owners of the 2024ABCD Bonds and in order to assist the Participating Underwriters in complying with Securities and Exchang e Commission (the “ S.E.C.”) Rule 15c2-12(b)(5).

SECTION 2. D efinitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the SFPUC pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Beneficial Owner” shall mean any person that: (a) has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any 2024ABCD Bonds (including persons holding 2024ABCD Bonds through nominees, depositories or other intermediaries) including, but not limited to, the power to vote or consent with respect to any 2024ABCD Bonds or to dispose of ownership of any 2024ABCD Bonds; or (b) is treated as the owner of any 2024ABCD Bonds for federal income tax purposes. “Dissemination Agent” shall mean the SFPUC, acting in its capacity as Dissemination Agent under this Disclosure Certificate, or any successor Dissemination Agent designated in writing by the SFPUC and which has filed with the SFPUC a written acceptance of such designation.

2 “Financial Obligation ” means, for purposes of the Listed Events set out in Section 5(a)(15) and Section (5)(a)(16), a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarante e of (i) or (ii). The term “Financial Obligation” shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule.
“Holder” shall mean either the registered owners of the 2024ABCD Bonds, or, if the 2024ABCD Bonds are registered in the name of The Depository Trust Company or another recognized depository, any applicable participant in such depository system.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive continuing disclosure filings pursuant to the Rule.

Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB currently located at http://emma.msrb.org.
“Official Statement” shall mean the final Official Statement, dated ____ ______, 2024 , prepared in connection with the sale and offering of the 2024ABCD Bonds. “Participating Underwriters” shall mean any of the original underwriters or purchasers of the 2024ABCD Bonds required to comply with the Rule in connection with the offering of the 2024ABCD Bonds. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the S.E.C. under the Securities Exchange Act of 1934, as the same may be amended from time to time.

SECTION 3. Provision of Annual Reports.
(a) The SFPUC shall, or shall cause the Dissemination Agent to, not later than March 31 of each year, commencing with the report for Fiscal Year 202 3-24 (which is due not later than March 31, 2025), provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If the Dissemination Agent is not the SFPUC, the SFPUC shall provide the Annual Report to the Dissemination Agent not later than 15 days prior to said date. The Annual Report must be submitted in electronic format and accompanied by such identifying information as is prescribe d by the MSRB, and may cross -reference other information as provided in Section 4 of this Disclosure Certificate. However, if the audited financial statements of the SFPUC are not available by the date required above for the filing of the Annual Report, the SFPUC shall submit unaudited financial statements and submit the audited financial statements as soon as they are available. If the SFPUC ’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). (b) If the SFPUC is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the SFPUC shall send a notice to the MSRB in substantially the form attached as Exhibit A. (c) The Dissemination Agent shall (if the Dissemination Agent is other than the SFPUC) file a report with the SFPUC certifying the date that the Annual Report was provided to the MSRB pursuant to this Disclosure Certificate.