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Subcommittee backs increased SFPUC commercial paper program and amended water bond authorization
Summary
The subcommittee agreed to increase SFPUC's wastewater commercial paper capacity and to forward a water revenue bond authorization reduced by $25 million, while adding conditions limiting SFPUC refundings to transactions delivering at least 3% net present value savings and a cumulative refunding cap.
The Budget and Finance Subcommittee heard detailed briefings from Todd Rejstrom, SFPUC assistant general manager and CFO, on financing actions to support the sewer and water capital programs and voted to forward both items, adopting an amendment limiting certain refunding authorities.
Rejstrom requested authority to increase the wastewater commercial paper program from $150 million to $300 million to permit short-term, low-cost borrowing for sewer capital projects; he said commercial paper currently borrows at about 1% while long-term bonds are running 4%–5%. The increase is intended to reduce ratepayer costs by utilizing cheaper short-term debt and later replacing it with longer-term bonds when projects are completed.
On the water side, SFPUC sought authorization to issue water revenue bonds to continue the Water System Improvement Program (WESIP), reimburse settlement costs related to the Mitchell case, and refund earlier bonds. The package as presented would total roughly $653 million (including capitalized interest and debt service), with an anticipated sale in late May/early June. The budget analyst recommended trimming the requested authorization by $25 million to align with anticipated need; SFPUC agreed.
Chair Carmen Chiu also read a set of amendments that the committee adopted, authorizing water-revenue refundings by the SFPUC only if they deliver at least 3% net present value savings for ratepayers, imposing a cumulative refunded-principal cap of $500 million (beginning with refundings after July 1, 2012), and requiring a savings report and official statement within 30 days of any executed refunding.
Public comment included concerns about long-term community impacts from wastewater digesters and requests that the sewer system improvement project create career jobs in Bayview Hunters Point. The committee forwarded the financing items with the budget analyst's recommendation and the chair's refunding amendments.
Next steps: the items will proceed to the full Board for consideration.
