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SFPUC authorizes up to $450 million in water revenue refunding bonds to lower debt costs
Summary
The commission approved authorization to refinance up to $450 million of outstanding water revenue bonds (2006A and portions of 2009 A/B), aiming to lower interest rates and produce an estimated $12–14 million in annual debt‑service savings and roughly $53 million in total savings over the next several years.
Deputy CFO Charles Pearl asked the San Francisco Public Utilities Commission to authorize issuance of refunding water revenue bonds of up to $450 million to refinance outstanding water enterprise bonds (series 2006A and portions of 2009A and 2009B). Pearl told commissioners that market interest rates were at historic lows and that preliminary market assumptions showed tax‑exempt interest rates around 2.7% versus existing bonds around 4.5%, producing an estimated present‑value savings of about $53 million and roughly $12–14 million in annual debt service savings over the next several years.
Pearl said the Board of Supervisors has preapproved refunding authority in prior years and that the current request uses the remaining preapproval from 2012. He said the utility expects to bring the transaction to market in March and will share final savings figures with the Board of Supervisors after sale. "We're bringing the 4.5% bonds down to about, on average, about 2.5," Pearl said, noting the largest share of the savings would occur in the next five to six years.
After questions from commissioners the commission voted to authorize the refunding and delegate authority to the general manager to sell and award series to bidders. The motion carried; staff will present final sale results and the realized savings in a follow‑up report to the Board of Supervisors.
