Supervisor Jake McGoldrick: We Must Rebuild Our Water System

This November's ballot contains two initiatives that will go a very long way toward finally putting the Public Utility Commission's house in order. Propositions A and E will enable San Francisco to undertake much needed seismic upgrades of the Hetch-Hetchy Water System while also increasing financial oversight and accountability of management of the public water system.

For decades, revenues from the sale of water and electricity have been transferred from the SFPUC to the city's General Fund to cover budget shortfalls, rather than being used for much-needed system repairs and upgrades. This lack of leadership has left us without necessary maintenance and vulnerable to seismic disasters. In its current state, a catastrophic seismic event could cut off the city's water supply for as long as 30 days. This would be a disaster for the local economy.

San Francisco's failure to maintain and improve the system has resulted in the passage of state legislation that could allow a takeover of the system if the City fails to finance and make necessary improvements. Under legislation sponsored by state Sen. Jackie Speier, a joint powers board would be formed by San Francisco and suburban users to finance the portions of the system that lie outside San Francisco.

Because the regional water system would be funded separately under the Speier legislation and because the sewer project isn't ready yet, San Francisco's part of the total dollar amount of Prop. A has been reduced from its original $4.6 billion to $1.6 billion. Proposition A revenue bonds would be repaid by San Francisco water consumers through increased rates, rather than by raising property taxes. Although the vast majority of California municipalities allow revenue bonds to be issued without a vote of the people, San Francisco is an exception.

This year, various groups came together to develop a plan to repair and improve the aging water system. From that work came the SFPUC's Capital Improvement Program (CIP), which evaluates system needs and sets out a long-term plan for implementing and financing needed improvements. The CIP has been reviewed both by an independent engineering and bond finance firm with decades of experience in water infrastructure and by a "blue ribbon task force" convened by SPUR to review the consultant's findings. Both found that the SFPUC should be confident in moving forward with the CIP.

Propositions A and E rolled out of that work. Proposition A would authorize the City to borrow $1.6 billion to pay for improvements to the water system. The money would be used to: upgrade and strengthen the system's pipelines, tunnels and other facilities against earthquakes; upgrade the system used to store water and pipe it to the Bay Area; upgrade the water distribution system in San Francisco; meet future water quality standards; and increase water system capacity.

Rates charged to water system customers in San Francisco would be increased over time to repay these bonds, with landlords allowed to pass on to tenants half of the increase in water rates resulting from the bond. Suburban water system users would finance and pay for their share of improvements to the water system.

In the peak year of the Capital Improvement Program, the average single-family household's water bill will rise about $14.50 per month, from $26 to $40.50.

However, Prop. E will set up a system that will keep rates as low as possible while still ensuring reliability.

Proposition E, a companion measure on the November ballot, will give the SFPUC some of the administrative tools necessary to successfully carry out the revenue bond program and maintain the system after improvements.

The Charter amendment would protect SFPUC revenues, redefine rate-setting procedures, provide for future maintenance and allow planning for the agency's long-term strategic direction. The intent of the Charter amendment is not only to aid in the implementation of the CIP, but also to ensure that the system will not be allowed to deteriorate again.

Under Proposition E, rate increases would be subject to review by a new Rate Fairness Board and it would require Board of Supervisors' approval. Proposition E would also limit the SFPUC to using surplus funds from any utility to operate, maintain or repair other utilities. The SFPUC could transfer money not needed to operate and maintain its utilities to the City's General Fund only under certain conditions and only with approval of three-fourths of the Board of Supervisors.

Under Prop E, the SFPUC also could issue revenue bonds to make improvements to power, water and sewer utilities subject to approval by two-thirds of the Board of Supervisors.

Proposition E would require the SFPUC to create long-term plans to operate, maintain, finance and improve the utilities subject to extensive public hearings.

These "good government" reforms are similar to those already enacted for Muni and the Recreation and Park Department and will enable the SFPUC to be managed more effectively and not suffer the ill effects of the inefficient and outmoded management strictures contained in the current Charter.

Taken together, Propositions A and E will improve the physical and fiscal health of the SFPUC water system while helping ensure its health for many years to come.

Jake McGoldrick is a San Francisco supervisor representing District 1.

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