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Budget panel forwards SFPUC bond authorizations and flags Treasure Island environmental hold
Summary
The Budget & Finance Committee voted to forward SFPUC measures to authorize water revenue bonds and an environmental surcharge fund, with the Treasure Island portion placed on controller reserve pending missing environmental documents; analysts said bond debt is modest for the average residential bill but Hetch Hetchy faces longer-term shortfalls.
The San Francisco Budget & Finance Committee on Monday voted to forward three Public Utilities Commission files that would authorize new water revenue bonds, allow short-term commercial-paper financing for select water projects and create an environmental enhancement surcharge fund — while placing the Treasure Island portion on controller reserve until required environmental documents are complete.
Ed Harrington, general manager of the San Francisco Public Utilities Commission, described the proposed bond tranche as one piece of the larger Water System Improvement Program (WESIP). He said the WESIP is a decades-long capital program that has required repeated debt issuance: "This is one of a number of tranches of bonds we've issued in the last few years, and we'll be issuing more this next year," Harrington said. He warned that most of the budget increases are driven by debt service and said the commission expects to continue raising rates "to pay that debt service."
Budget analyst Harvey Rose presented corrected consumer impacts tied to the bond file (110555), saying the average single-family residence would see about $0.23 per month in 2011–12, $0.35 per month in 2012–13, $0.63 in 2013–14 and $1.73 in 2014–15 from the bond tranche under consideration. Rose also characterized the proposed expansion of commercial paper authority (item 2) as a short-term, bridge financing tool that by itself "would not directly impact the rates."
Committee members agreed to move items 1 and 3 forward with recommendation and to forward item 2 while instructing staff to place the Treasure Island portion on controller reserve until environmental documents are finalized. Chair Carmen Chu summarized the action as a way to keep the budget process moving while ensuring the controller's office has the necessary environmental clearance before any Treasure Island expenditures proceed.
Harrington also outlined risks in the power enterprise (Hetch Hetchy). He said the Hetch Hetchy power business currently subsidizes general fund departments by roughly $25 million a year but that long-term capital needs and prior cuts could exhaust that subsidy. "If Hetch Hetchy runs out of money, all of this stops," Harrington said, noting the commission has reduced capital plans but still projects that Hetch Hetchy could be out of funds within four years without revenue changes. He told the committee that reducing subsidized power rates for entities such as City College or the Unified School District would worsen the system's finances unless offset elsewhere.
The committee did not set final long-term rate changes at the hearing; Harrington said PUC and Board decisions about rate design and potential increases will be necessary to stabilize finances over the coming years.
