Budget committee advances PUC borrowing package and trims wastewater bonds

The Board of Supervisors' Budget and Finance Committee on Wednesday sent the full board a Public Utilities Commission borrowing package that would authorize up to $492,820,000 in water revenue bonds, $224,570,000 in wastewater bonds and $12,610,000 in power bonds. The ordinance allows each enterprise to prepay its share of base rental payments under the project lease for the commission's headquarters at 525 Golden Gate Avenue and to refinance debt still outstanding. The committee cut the wastewater portion before approving the ordinance.

Utility staff told the committee that prepaying the headquarters lease produces savings now, while the water refunding does not, and that the commission would issue the debt only where savings materialize. The Build America Bonds still outstanding carry a federal subsidy that has been eroded by sequestration and is at risk in Congress, staff said. The budget analyst recommended the wastewater reduction on the grounds that the refinancing it covered had already closed without this authorization, and recommended approval of the ordinance as amended. A committee member pressed the department on how the refinancing fits a broader strategy to hold down the water and sewer bills ratepayers are already paying. The committee adopted the amendment and forwarded the ordinance to the full board without objection. No one spoke on it during public comment.

The committee also handled two other PUC items. Four professional services agreements, each not to exceed $20,000,000, would provide as-needed engineering support to the Hetch Hetchy Water and Power Division, covering asset management, condition and needs assessments, capital planning, and operations and maintenance. Staff said the contract ceilings reflect the division's past spending on this work plus growth in the capital plan and inflation, and that water and power ratepayers fund the contracts. The agreements went to the four highest-ranked proposers after a competitive solicitation. Staff described an asset base averaging well past its useful life, and said the consulting work is meant to help the division plan capital spending on those assets. The budget analyst asked for a technical correction to the initial term's end date and for language disclosing an extension option, and the committee adopted both before forwarding the resolutions with a positive recommendation.

The second was a contract with Deloitte Transactions and Business Analytics LLP, not to exceed $30,000,000, for program management on the power enterprise's capital program. Staff said the firm would handle program administration, strategic capital planning, program delivery and technical support under a local business subcontracting requirement, with the expectation that the expertise transfers to city staff over time. The stated goal is better project delivery and improved schedule and budget performance for clean power and reliability investments. Deloitte was the only firm to answer the solicitation. The analyst recommended adding disclosure of an extension option, and a committee member asked about the firm's social impact volunteer commitment. The committee amended the resolution and forwarded it without objection.

Outside the utilities, the committee forwarded a resolution accepting a $475,000 grant from the Governor's Office of Emergency Services, routed through the San Francisco General Hospital Foundation, for physical and digital infrastructure security at the Women's Options Center. A public health capital planning official said the money would pay for a new secure sally port and badge-access entry, that design is complete and construction is waiting on permits, and that city funds cover the rest of the project. The grant is retroactive. The chair tied the work to a heightened national security environment for abortion patients and providers, pointing to increases in threats and violence directed at reproductive health care. No one spoke during public comment, and the committee forwarded the item to the board on a unanimous roll call.

A second health item accepted a retroactive increase to the city's federal Ryan White HIV/AIDS funding, bringing the two-year total for Parts A and B to $6,102,743. The director of HIV services said the additional money funds low-barrier medical care and support services for people living with HIV in San Francisco through a group of partner agencies and a long list of services, and that the award arrived after the contract year had already started, which is why the request came to the committee as a retroactive acceptance. He told the committee the city's viral suppression rates rank at the top nationally and that disparities have largely been eliminated except among people experiencing housing instability, and he announced his upcoming retirement. The chair credited the city's record-low number of new diagnoses while flagging continuing disparities among Black and Latino residents and transgender women. The item went to the board with a positive recommendation and no public comment.

The committee also advanced three uncontested items. It approved a lease modification granting United Airlines a rental abatement of up to $7,175,000 for base building improvements, a retroactive amendment to the city's lease at 555 Polk Street at an annual base rent of $202,500 with 3 percent annual increases, and an increase in a wastewater treatment polymer contract with Polydyne, Inc. to a not-to-exceed amount of $12,060,000. Under the Polk Street amendment, public health staff said the city would take on about 9,000 square feet on the second floor for behavioral health and court-support programs, separating the city's lease from the court's, and the real estate director described a per-square-foot rent reduction, landlord-funded carpet and paint work, and an early termination option. Each item went to the full board with a positive recommendation, and none drew public comment.

Most of the day's agenda moved to the board by consent, with the committee's questions concentrated on the utility borrowing and the two consulting contracts. The clerk told the chamber at the start that items acted on would be expected at the Board of Supervisors on October 6 unless stated otherwise.