2-Year Capital Budget &
10-Year Capital
Improvement Plan
Budget Team
32 33
What is the 10-Year Capital Improvement Plan?
• Long range forecast of
capital investment, updated
annually as required by Charter
• Plan comprised of high-
level project categories
and projects
• Individual project data sheets with
scope, schedule and cost
• First two years = 2-Year
capital budget
• Includes a detailed Capital Plan
Report
34 Overview of the Capital Planning Process
Guidance
• Capital Planning Improvement Initiative (CPII) guided development—recognized with GFOA 2025 Award for Excellence
• Started several months earlier than prior cycle (January 2025) • Key outputs: 10-Year Capital Improvement Plan Development Guidelines, enhanced Budget Instructions, dynamic scenario modeling, enterprise-specific resource planning methodologies, and risk-based prioritization models
Result
• Reduced initial $15.9B proposal to $12.5B plan while maintaining service reliability and regulatory compliance
January to May 2025:
Enterprise Budget
Development
May 2025: Resource
Planning & Deliverability
Assessment
August to November 2025:
Budget Steering Committee
Deliberation
December 2025: General
Manager approval for
Commission consideration
35 How the Plan Has Changed from 2 Years Ago
Enhanced CPII Guidance & More Realistic Cost Projections • CPII process introduced rigorous cost estimation revealing more accurate costs and previously underestimated needs
• Incorporated realistic inflation impacts into long-term forecasts (SF construction costs up 24% since 2019; 2nd most expensive city globally) • Comprehensive infrastructure assessment showed aging systems (40-100+ years old) reaching end of life alongside expanding regulatory and climate needs Disciplined Response
• $3.4B reduction through strategic tradeoffs, project deferrals, and phasing adjustments based on deliverability capacity – longer planning horizon incorporated • Final $12.5B plan balances system reliability and regulatory compliance with ratepayer affordability to the extent possible
36 Rigorous Prioritization & Strategic Reductions
Strategic Project Deferrals
Wastewater: Deferred over hundreds of millions in low and medium priority projects beyond 10-year horizon while
maintaining regulatory compliance and Level of Service
goals
Water: Reduced plan from initial proposal by over $1.5B through careful calibration of project timing and scope Net Result
$3.4B reduction ($15.9B to $12.5B) while maintaining
essential service reliability
Water and Wastewater plans approximately $500M less
than version approved just two years ago ($9.6B to $9.1B) Budget Steering
Committee review of
capital plans,
operational impacts,
and rate implications
Multiple plan versions
evaluated to balance
infrastructure needs
against affordability
constraints
Risk-based
prioritization models
provided objective
framework for project
tradeoffs
Enhanced Governance &
Decision-Making
37 Plan Grew by ~$700M, Driven by Power
$Billion FY 2025-34 FY 2027-36 Change Change %
Water 3.0 2.5 (0.5) -17%
Wastewater 6.0 5.9 (0.1) -2%
Hetchy
Water 1.5 1.9 0.3 22%
Hetchy
Power 1.2 2.2 1.0 80%
CleanPower
SF 0.0 0.0 (0.0) -21%
11.8 12.5 0.7 6%
Comparison to Prior Plan10-Year Capital Plan
0 200
400
600
800
1000
1200
1400
1600
1800
FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33 FY 33-34 FY 34-35 FY 35-36 $ in Millions
Wastewater Water Hetchy Water Hetchy Power CleanPowerSF 38 Capital Plan by Enterprise
Water
20%
Wastewater
47%
Hetchy Water
15%
Hetchy Power
18%
CleanPowerSF
<1%
FY 2026-27 to FY 2035-36 Capital Plan
Uses by Enterprise
Wastewater 10-Year Total,
$Millions
SEP Mainstream Nutrient Reduction 1,419
Collection System – Large Diameter 458
Channel FM Reliability 454
Collection System – Sewer Improvements - Small
Diameter 410
Treatment Plant Improvements 286
Water
Local Water Conveyance/Distribution System 477
Millbrae Operations Center Improvements 366
Pure Water Peninsula 116
New SFWD Headquarters 99
SVWTP Ozone 84
Hetchy Water
HHW – Moccasin Penstock Rehabilitation 510
HHW - Moccasin Dam & Reservoir Long Term Improvement 144 HHW - O'Shaughnessy Dam Outlet Works Phase II 116
Cluster 14 - Warnerville Imprv & New TL to Oakdale 96
Hetchy Power
Spear Street Substation 482
Large Load Substation 1 479
BCTD Backup Loop 233
Westside Substation 200
Grid Connections 178
39 2-Year Capital Budget
With focus on repurposing prior appropriations and
deliverability capacity, the 2-Year Budget shrunk by
38% in FY 2026-27 and by 4% in FY2027-28 versus
the prior 10-Year Plan.
$Million
Prior
Plan FY
26-27
Proposed
Plan
FY 26-27 Change
Prior
Plan FY
27-28
Proposed
Plan FY
27-28 Change
Wastewater 908.9 537.5 (371.4) 532.3 665.9 133.6
Water 514.2 327.7 (186.5) 368.7 279.4 (89.3)
Hetchy Water 165.5 160.7 (4.8) 184.3 207.7 23.4
Hetchy Power 125 34.8 (90.2) 154.1 42.9 (111.2)
CleanPowerSF 0.4 0 (0.4) 0.5 0 (0.5)
1,714.0 1,060.7 (653.3) 1,239.9 1,195.9 (44.0)
0 200
400
600
800
1000
1200
1400
1600
1800
FY2026-27 FY2027-28
Proposed Budget (in millions)
Fiscal Year
2-Year Budget Comparison to
Prior Plan
Prior Plan Proposed Plan
40 Summary and Highlights
Most sophisticated capital planning effort
in SFPUC history
To arrive at $12.5B capital plan, significant
tradeoffs were made
Two distinct portfolios:
$9.1B Water and Wastewater:
Federal/state regulatory mandates
(nutrient removal, water quality
standards) and critical infrastructure
renewal for many assets 100+ years old
$3.4B Power: Strategic investments for
SF's clean energy future, grid
modernization, support for economic
growth and housing expansion