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SFPUC authorizes up to $675 million in wastewater revenue bonds to fund capital projects
Summary
The commission authorized the issuance of Series 2018 A, B and C wastewater revenue bonds (not to exceed $675 million) to fund upcoming wastewater capital projects, with staff citing alternatives like SRF and a WIFIA loan; staff estimated a true interest cost near 3.4% and modest rate impacts.
SAN FRANCISCO
The San Francisco Public Utilities Commission on July 10 authorized the issuance of up to $675 million in wastewater revenue bonds (Series 2018 A, B and C) to finance capital work in the wastewater enterprise.
Presenting staff described a three-part financing approach: fixed-rate senior lien bonds (Series A and B), and a long-dated Series C put bond with a five-year initial put feature intended to capture short-end yield advantages while preserving the option to remarket or convert to long-term financing afterward. Staff emphasized a diversified capital-financing strategy that includes state revolving fund loans and pursuit of a WIFIA loan to lower overall interest costs.
Martin Perez (presenting finance staff) told commissioners the total issuance would not exceed $675 million and estimated the combined true interest cost for the three series at roughly 3.4 percent. He said the plan would save roughly $13.5 million in interest costs over the first five years versus a longer-term fixed-rate-only approach and that the repayment schedule over 30 years results in an approximate $0.08 monthly increase in sewer charges already incorporated in adopted rates.
Why it matters: The bonds will fund major wastewater capital projects over the next 12 to 18 months, including biosolids-related work anticipated to be supported by both SRF loans and a WIFIA loan. The financing decisions affect long-term rate modeling, debt policy and capital program scheduling.
What officials said: Commissioners asked whether remarketing risks on the Series C bond could change future rates. Staff said the 10-year financial plan uses conservative planning assumptions (including a 5 percent planning interest rate) to accommodate potential higher costs.
Vote: The commission moved and approved authorization to sell the Series 2018 A, B and C wastewater revenue bonds by voice vote.
Next steps: If authorized, staff planned to price the bonds the week of July 16, present a WIFIA loan approval on July 24, close the WIFIA loan later in July and close the ABC bond sales in early August.
