SFPUC presents water operating budget and $10 billion capital outlook; Millbrae operations center draws public pushback

San Francisco — The San Francisco Public Utilities Commission on Thursday received a detailed presentation of the Water Enterprise operating budget and a 10‑year capital improvement plan that staff said aims to balance seismic reliability, regulatory compliance and affordability.

Assistant General Manager for Water Steve Ritchie told commissioners the system serves about 2.7 million people across the Bay Area and faces large, long‑term capital needs. He said work completed under the Water System Improvement Program totaled about $4.8 billion since 2002 and that the commission now faces roughly $10 billion in projected capital needs over coming decades, split about $6.8 billion for local and regional projects and $3.3 billion for Hetch Hetchy projects.

Ritchie and finance staff presented FY26–FY28 operating figures — roughly $750 million to $783 million and about 870 full‑time equivalent positions — and a set of proposed personnel additions tied to new facilities and regulatory requirements. Laura Bush, deputy chief financial officer, said the Water Enterprise issues bonds and pays debt service for the water portion of Hetch Hetchy projects and outlined the commission’s capital financing and debt service coverage policies, noting internal planning targets to exceed a 1.2 coverage ratio.

Why it matters: The plan prioritizes dam safety, transmission and main replacement, treatment plant upgrades and alternative water supplies while attempting to limit upward pressure on rates. Ritchie emphasized interim measures and project sequencing for three identified dam projects (Pilarcitos, San Andreas and Turner) and described a risk‑based prioritization and deliverability review for Hetch Hetchy work.

Key projects and costs cited by staff include the in‑city headquarters at 2000 Marin (total budget about $418 million), Millbrae Operations Center improvements (total budget about $428 million), a Moccasin penstock rehabilitation project (about $533 million), multiple regional treatment projects (for example, a Sonoma ozone project cited at roughly $326 million) and a set of dam safety improvements with an estimated $1.4 billion total. Ritchie also described two alternative water‑supply efforts: the Peninsula Pure Water program (staff estimate ~ $700 million) and a Pure Water SF demonstration project (roughly $100 million).

Public comment and local concerns: Speakers from Millbrae and a representative reading a BOSCA comment letter pressed the commission to reduce the Millbrae project scope or provide clearer justification and fiscal detail. Steven Rinaldi, vice mayor of Millbrae, urged commissioners to "scale back staff's half‑billion dollar capital improvement plan for the Millbrae parcel," saying the proposal was "far too expensive" and would displace a local business and employees. A BOSCA representative said the agency supports deferral where appropriate but requested more information on how the Millbrae scope and timing have evolved and emphasized that dam and reservoir work deferred beyond the 10‑year window will still require ongoing engagement with state dam‑safety officials.

What commissioners asked: Members probed the share of aging infrastructure (Ritchie described many Hetch Hetchy assets as more than 100 years old), deliverability and the concentration of projects in years 3–5 of the plan, and the balance between revenue‑funded and bond‑funded capital. Staff said they are reducing reliance on debt for capital where feasible, are preparing interim dam projects to satisfy Division of Safety of Dams (DSOD) concerns, and will publish a 10‑year financial plan with more detail.

Next steps: Commissioners accepted the presentation and agreed to continue deliberations. The commission voted to continue the meeting to a special session on Thursday, Feb. 5, 2026, at 1:30 p.m. in City Hall Room 408 for further discussion and follow‑up information requested by commissioners and stakeholders.