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Committee backs up to $295M in SFPUC water revenue bonds to finish WSIP
Summary
The Budget & Finance Committee on Oct. 26 recommended the Board approve up to $295 million in water revenue bonds to fund remaining Water System Improvement Program work, refinance commercial paper and finance capitalized interest; bonds would be taxable and certified as green bonds.
The San Francisco Budget & Finance Committee recommended that the full Board of Supervisors approve a resolution authorizing up to $295,000,000 in water revenue bonds for the San Francisco Public Utilities Commission’s Water System Improvement Program (WSIP).
Charles Pearl, deputy chief financial officer at the SFPUC, told the committee the bonds would be issued on a competitive basis, carry fixed rates for terms up to 30 years and — if sold at current market levels — would yield roughly a 3.6 percent interest rate. He said the issuance covers the taxable portion of WSIP financing and will principally be used to retire the water enterprise’s commercial paper and to finance remaining WSIP project costs, capitalized interest and issuance expenses. “These bonds will be repaid from water enterprise revenues,” Pearl said, adding that the series is being certified as green bonds to reflect environmental benefits.
Pearl described the tax status as taxable rather than tax‑exempt because parts of the system serve private wholesale customers (he cited Stanford University and California Water Service as examples), creating private‑activity exposure under IRS rules. The SFPUC estimates the overall WSIP program at about $4.7 billion and told supervisors the water enterprise currently carries roughly $4.1 billion in outstanding debt.
Addressing customer impacts, the SFPUC projected that the financing would translate into an approximate $3 monthly increase in water rates, with roughly $1 of that borne by San Francisco retail customers and the remainder allocated to wholesale customers, according to the presentation. The budget analyst also provided estimated annual debt service and recommended committee approval.
Supervisor Katie Tang moved the item with a positive recommendation to the full Board; Supervisor Norman Yee seconded. The committee recorded the motion as taken without objection and forwarded the matter for Board consideration.
Next steps: the SFPUC plans to pursue competitive sale and pricing in November with a close targeted toward late December if the Board approves the authorization at its next meeting.
