Richard Morales, debt manager for the San Francisco Public Utilities Commission, asked the commission to adopt updated debt policies and to authorize a taxable water‑revenue refunding in a combined presentation on Nov. 26.

On the debt‑policy revisions (item 12), Morales told commissioners the changes establish a separate disclosure appendix to reflect new Securities and Exchange Commission ‘‘listed events’’ that require issuer disclosure within 10 business days, including the 2019 additions for the incurrence of a material financial obligation and a default under a financial obligation reflecting financial difficulties. Morales said staff propose a formal Disclosure Practices Working Group — the assistant general manager CFO, two deputy CFOs and the debt manager, with consultation from the city attorney and outside disclosure counsel — to meet semi‑annually or as needed to monitor financial and debt obligations.

Other policy changes Morales described include formal recognition of WIFIA (Water Infrastructure Finance and Innovation Act) loans as a low‑cost financing tool and technical amendments related to wastewater bond indenture provisions to allow more market‑standard variable‑rate provisions.

On the bond transaction (item 13) Morales said the commission was being asked to authorize the issuance of up to $850,000,000 of 2019 series A–D taxable water revenue bonds, to be sold in one or more series on either a competitive or negotiated basis; staff recommended selling on a negotiated basis led by Morgan Stanley after a request for proposals. Morales described that series A–C would advance‑refund multiple prior water bond series and series D would refinance outstanding taxable commercial paper. He explained the 2017 federal tax law change prohibits tax‑exempt advance refundings, so the PUC is pursuing a taxable advance‑refunding because taxable rates are historically low; given current market conditions the transaction was expected to yield meaningful present‑value savings (staff estimated about $88 million in present‑value savings, roughly 14% of the refunded par, using market assumptions available at the hearing).

Morales also reported the water enterprise received a Moody’s upgrade (from Aa3 to Aa2) and an S&P affirmation at AA‑, and said strong water supply, stable finances, robust liquidity and strong management were cited by the rating agencies.

Why it matters: adopting formal disclosure procedures and recognizing state and federal low‑cost loan programs clarifies the PUC’s approach to compliance and financing. The bond authorization, if executed at the stated pricing window, is expected to reduce future debt service costs for the water enterprise and therefore could moderate future rate increases for water customers.

Commission action: the commission adopted the revised debt policies and authorized the issuance and sale (and delegated award authority to the general manager based on lowest cost criteria) of up to $850,000,000 of taxable water revenue bonds (series 2019 A–D). Staff indicated pricing was planned for the week of Dec. 9 with a likely close in late December or early January.