Informational Presentation Only
–
Non Action
Item
Interim Financing Program
Introduction
Nikolai J. Sklaroff
Capital Finance Director
January 14, 2025
Agenda
• Summary
• Purpose of Interim Funding Programs
• Current Interim Funding Programs
• Need for Resizing and Expansion of Programs
• Recent Ordinance and Future Commission Action
2 Summary
• The Board of Supervisors (BoS) first authorized the
SFPUC's Interim Financing program in 1998, and has
amended the capacity several times since then
• The current $1.5 billion interim financing program is used to lower costs to ratepayers, by allowing the SFPUC to
borrow funds on a short-term basis only when needed.
• The interim financing program also allows the SFPUC to release funds on Controller’s Appropriation Reserve
without incurring the added cost of issuing bonds early. • The BoS recently approved an ordinance authorizing the expansion of the interim financing program for all three enterprises by a total $950 million.
• Some of the credit facilities for the new expansion are expected to be presented to the Commission in February. 3 4
Purpose of Interim Funding
• Increase flexibility by allowing the ability to release appropriation from the Controller against the interim funding programs to incur actual expenditures
• Increase flexibility in the timing of future bond issuances and reduce interest costs by providing additional credit facilities to interim fund capital projects as needed
Meet Interim Appropriation Release Needs
• Approximately 3 to 4% all-in Commercial Paper borrowing rate in today's market (interest rate (coupon), credit facility fees, dealer fees)
• As the Federal Reserve begins to lower rates, the rates on commercial paper should decline
• Credit agreements such as revolvers provide direct bank loans at a predetermined spread to a benchmark index (ex. SOFR or SIFMA) Provides low-cost interim funding of Capital Programs
5 Comparison of Rates
0.29%
3.79%
6%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
Credit Facility Fee Alone Commercial Paper Issuance for One Month^
30-year Tax-Exempt Bonds Maturity
2054*
10-Year Financial Plan Borrowing
Assumptions
Interest Rates
3.39%
^Water A-2 Commercial Paper issuance that includes Credit Facility Fee of 0.29% and Dealer Fee of 0.05%. *30-Year Bonds Rate is from BVAL Muni AAA Curve as of January 3, 2025. 0 1
2 3
4 5
6 1/7/2015 1/7/2016 1/7/2017 1/7/2018 1/7/2019 1/7/2020 1/7/2021 1/7/2022 1/7/2023 1/7/2024 Historical SIFMA Rate vs 30-Yr Tax-Exempt Bond Rate
SIFMA 30-Year AAA BVAL
6 Wastewater
Interim Funding Program
• Authorized for $750 million previously
• $500 million of Additional Authorization Approved by Commission, BOS and Mayor effective December 25, 2024
• Existing Facilities: Five series ($675 million) for Commercial Paper (CP); one series ($75 million) for Revolving Credit Line:
Series
Amount
($millions) Credit Facility Bank Facility Type
Exp. Date
A-1 $150 Sumitomo Mitsui Bank Letter of Credit 3/2/29
A-2 150 Bank of America Letter of Credit 4/24/26
A-4 150 TD Bank, N.A. Liquidity Facility 7/3/28
A-6 125 Bank of America Liquidity Facility 8/2/27
A-7 100 Sumitomo Mitsui Bank Letter of Credit 5/31/27
R-1 75 US Bank Revolving Credit
Agreement
7/16/27
TOTAL $750 Existing Facilities
500 Unutilized new authorization
$1,250 Total Program Authorization
7 Water
Interim Funding Program
• Authorized for $500 million previously
• $250 million Authorization Approved by Commission, BOS and Mayor Effective December 25, 2024
• Existing Facilities: three series ($400 million) for Commercial Paper (CP); one series ($100 million) for Revolving Credit Line:
Series
Amount
($millions) Credit Facility Bank Facility Type
Exp. Date
A-1 100 Sumitomo Mitsui Bank Letter of Credit 5/16/25
A-2 200 Sumitomo Mitsui Bank Letter of Credit 6/14/27
A-3 100 Barclay’s Bank Letter of Credit 7/15/27
R-1 100 US Bank Revolving Credit
Agreement
7/16/27
Total $500 Existing Facilities
250 Unutilized new authorization
$750 Total Program Authorization
8 Power
Interim Funding Program
• Authorized for $250 million of interim financing previously • $200 million of Additional Authorization Approved by Commission, BOS and Mayor effective December 31, 2024
• Existing facilities consist of two series ($250 million) for Commercial Paper (CP):
Series
Amount
($millions) Credit Facility Bank Facility Type
Exp. Date
A-1 125 Bank of America Letter of Credit 3/6/26
A-2 125 Bank of America Letter of Credit 3/6/26
Total $250 Existing Facilities
200 Unutilized new authorization
$450 Total Program Authorization
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Commercial Paper Program Expansion History and 10-Year Financial Plan Bond Issuance (in Millions)
Water Water Expansion (2009) Water Expansion (2024)
Wastewater Wastewater Expansion 1 (2012) Wastewater Expansion 2 (2014) Wastewater Expansion 3 (2017) Wastewater Expansion 4 (2024) Power Power Expansion (2019) Power Expansion 2 (2024) 10-Yr Financial Plan Bond Issuance 10-Year CIP
Interim Financing Program
Expansion
9 Wastewater
Water
Power
Annual Bond Issuance
(Calendar Year)
10 *This chart represents only bonds issued. In addition, there are various other financing tools the SFPUC utilizes including loans and credit facilities that we obtain and maintain. $0
$500
$1,000
$1,500
$2,000
$2,500
2001 2002 2003 2006 2009 2010 2011 2012 2013 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 $ millions
SFPUC Annual Issuance
Water (Green) Water (Non-Green) Wastewater (Green) Wastewater (Non-Green) Power (Green) Power (Non-Green) • The $1.142 billion of 2024 ABCD Wastewater Bonds represent the SFPUC’s largest bond issuance to date.
• Aggregate bond issuances in 2023 were the largest year of bond issuances.
Capital Financing Plan
(Fiscal Year 2024-25)
11 Commission Action Estimated
Transaction Size
($ Million)
Commission
Action
Closing
1. Water, Wastewater and Power -
Authorize expansion of interim funding
program and approve bank credit
facilities agreements
$250 - Water Q1 FY24-25 Q2 FY24-25
$500 – Wastewater Q1 FY24-25 Q2 FY24-25
$200 - Power Q1 FY24-25 Q2 FY24-25
2. Water - Authorize Revenue Bonds to
refinance outstanding commercial paper,
deposit funds into project fund accounts
and allow new project encumbrance.
Up to $762 Q2 FY24-25 Q3 FY24-25
3. Wastewater – Approve second loan
under the WIFIA Programmatic Master
Agreement
$145 Q2 FY24-25 Q3 FY24-25
4. Water - Approve renewal or replacement
of bank credit facilities for interim funding
programs
Up to $100 Q4 FY24-25 Q4 FY24-25
5. Water – Authorize Clean Water State
Revolving Fund (SRF) execution of Loan
Agreement
TBD TBD TBD
5. Debt Policy Update - Adopt an update
to the Debt Management Policy and
Procedures -- Q4 FY24-25 --
Interim Funding Program
Expansion Process
12 Commission
approves
resolution to
prepare
Ordinance
Board of
Supervisors
approves
Ordinance
and Mayor
Signs
Ordinance
SFPUC
conducts
competitive
solicitation(s)
for additional
credit
facilities
Commission
approves
each new
credit facility
per BOS
Authorization
Legislative Action
• In September 2024, the Commission approved Resolution 24-0193 which authorized the General Manager to introduce an ordinance to expand the Interim Funding Program for all 3 enterprises.
• Ordinance 269-24 was approved by the BoS and signed by the Mayor in November and became effective on December 26, 2024.
13 Fiscal Year 2007 2012 2015 2017 2025
Wastewater $150m $300m $500m $750m $1.25b
Ordinance/Resolution 266-06 91-12 378-14 193-17 269-24
BOS Approval Oct-06 May-12 Sep-14 May-17 Nov-24
Fiscal Year 2003 2009 2025
Water $250m $500m $750m
Ordinance/Resolution 300-03 311-08 269-24
BOS Approval May-03 Dec-08 Nov-24
Fiscal Year 2016 2019 2025
Power* $90m $250m $450m
Ordinance 427-15 2-19 269-24
BOS Approval Nov-15 Jan-19 Nov-24
*The Power Enterprise Commercial Paper Program is authorized under Sections 9.107(6) and 9.107(8) in addition to Chapter 43, Article V of the Charter as of November 2018.
Competitive Solicitation and
Commission Action
14 • SFPUC along with municipal advisors,
Backstrom McCarley Berry & Co., LLC
conducted a competitive solicitation for
credit facilities for the expansion of
Power and Water interim funding
facilities as well as a replacement for an
expiring Water credit facility.
• Notice of Intent to Award sent to
proposers on 12/16/24 to begin
document preparation, subject to
Commission approval.
• Credit facility agreements expected to
be submitted for Commission approval
at the February 11 Commission Meeting.
Next Steps
15 • Staff will return to the Commission for approval of the new credit facilities for Water and Power at the February 11th Commission Meeting
o One replacement facility for a water credit facility due to expire May 16, 2025
o Two new facilities totaling $250 million for the Water Enterprise o Two new facilities totaling $200 million for the Power Enterprise o These new facilities will facilitate Controller Reserve releases in advance of issuance of bonds in May for Water and later for Power.
• Solicitation for new Wastewater Facilities will proceed when needs warrant, but no additional costs will be incurred until needed 16 Questions