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SFPUC approves $699 million WIFIA loan to fund biosolids digester project
Summary
The San Francisco Public Utilities Commission approved a $699 million WIFIA loan to finance up to 49% of a new biosolids digester project, citing lower interest costs and longer repayment terms to reduce rate pressure for customers.
The San Francisco Public Utilities Commission on July 24 authorized the general manager to execute a Water Infrastructure Finance and Innovation Act (WIFIA) loan agreement for up to $699,242,023 to help finance the wastewater enterprise’s biosolids digester project.
Deputy Chief Financial Officer Charles Pearl told the commission the loan would fund about $625 million of project costs, with additional allowable financing costs included, and estimated an all‑in interest cost near 3.13 percent. Pearl said the federal WIFIA loan carries a lower estimated interest rate than typical revenue bonds and allows a 35‑year repayment period after project completion and deferred interest for up to two years after substantial completion.
"We submitted an application to fund 49% of the $1,300,000,000 biosolids digester project," Pearl said, and noted the SFPUC’s application was one of 12 selected nationally. Staff told commissioners the loan structure is a direct placement with the U.S. Environmental Protection Agency and will be on parity with existing wastewater revenue bonds and state revolving fund loans.
Why it matters: staff estimated the lower interest and longer repayment schedule could reduce debt service pressure on sewer rates compared with issuing revenue bonds. Pearl said using bond anticipation notes (BANs) to finance construction before WIFIA disbursements could further reduce interim borrowing costs.
Commission action: A commissioner moved approval and the commission adopted the recommendation by voice vote. The loan documents will be posted online after execution; staff said closing was scheduled later that week.
Next steps: staff will complete required finance documents, post them online after loan execution and return to the commission for related bond‑anticipation note approvals as needed.
