SFPUC reports $988 million bond sale, cites nearly $2 million a year in refunding cash‑flow savings

Nicholas Klaroff, presenting the results of a bond sale approved May 27, told the San Francisco Public Utilities Commission that the sale raised $988,000,000 and included new money and refunding components.

Klaroff said the sale produced $304,000,000 earmarked for local and regional projects, $133,000,000 for Hetch Hetchy and about $555,000,000 of refunding bonds. “It’s especially a pleasure to come bearing good news,” he said, and reported the refunding portion produced cash‑flow savings of “just under $2,000,000 a year in debt service.”

Why it matters: the SFPUC said the refundings and new issuances together have helped reduce the future rate impact of its capital program. Staff reported the agency has issued more than $2 billion of bonds across recent financings while noting that only about $437,000,000 of that total was new borrowing; the rest was refinancing aimed at lowering future debt costs for ratepayers.

Key details from the presentation: the commission had previously authorized up to $1.5 billion of potential bonds, including about $474 million of new money and roughly $1 billion of potential refundings. After the sale the agency reported pricing that yielded a true interest cost (TIC) of 3.54% on the shorter refunding portion and said the broader transaction delivered an estimated $39.4 million in cash‑flow savings from the sale being presented, complementing $56.2 million in cash‑flow savings from an earlier financing — a combined $95.6 million in savings cited by staff.

Klaroff explained market drivers: a favorable window on the short end of the yield curve, oversubscription from retail and institutional buyers, and legal clarifications that permitted use of special call features on prior Build America bonds. He also told commissioners the team engaged independent advisors and a post‑sale fairness review by PFM Financial Advisors that determined the pricing was fair.

Commissioners asked about the timing of future sales and sensitivity to federal subsidy changes that affect Build America bond subsidies. Klaroff told the commission the staff would continue to monitor markets and that a 75‑basis‑point movement in rates would likely be needed to justify refunding the remaining Build America series; he said the commission had authorized staff in May to move quickly if market conditions warranted.

Ending: commissioners thanked finance staff for the sale and for cross‑agency coordination. Staff indicated the next new‑money sale is scheduled for fiscal 2027 and that they will return with any further opportunities to refinance additional series if market conditions and federal subsidy guidance make it advantageous.