Transcripts For SFGTV BOS Budget And Finance Committee 20240

Appear on the january 28 board of supervisors agenda unless otherwise stated. Thank you very much. Madam clergyman, can you call item 1 and 2. Clerk resolution approving the issuance of up to an additional 3,000,000,000 aggregate Principal Amount of San Francisco International Airport second series Revenue Bonds to finance and refinance airport capital plan projects; and item 2 ordinance appropriating 3,888,069,311 of proceeds from the sale of Revenue Bonds or commercial paper for Capital Improvement projects to the Airport Commission for fy20192020; and placing 3,888,069,311 on controllers reserve. Thank you, madam clerk. I think we have Cathy Widener from the airport joining us today. There has been a request to continue this item for one week, but i think well have the presentation for today. So if you wouldnt mind, ms. Widener, and we will hear from the b. L. A. Good morning. Cathy widener with the San Francisco International Airport. The two bond items for consideration before you are two bonds up to 3 million and to appropriate 3 million for the projects. The proceeds would be placed on controllers reserve pending the sale. This authority is needed to fund remaining Capital Projects in the airports Capital Improvement plan, which is comprised of the assent program as well as our infrastructure plan. Some of the projects be funded are the new harvey milk terminal 1, your courtyard connecter, the remainder of the boarding area be redevelopment project, our terminal 3 redevelopment project. These projects address critical Safety Operations or business needs. These include updating power supplies, expanding our noise insulation program, and updating some of the Airport Security systems. The airport proposes selling 3 billion in bonds through a negotiated sale with 30year terms at an estimated 6. 16 Interest Rate. Debt service on airport bonds is paid from airport concession and parking revenues as well as airplane rates and charges. The city fund is not responsible for any airport debt. These proposed bond activities have all been reviewed and approved by the Airport Commission, the airport Financial Advisory committee, and the citys Capital Planning committee. The Budget Analysts Office has reviewed and recommends approval of these actions, but does make a recommendation to amend the legislation that the airport agrees with and proposes that the amendment language state that the airport will submit the final official statement for each bond issuance covered by the proposed resolution to the clerk of the board after issuance and include the documents in the legislative file. Im joined today by kevin cone, the airport managing director, who is also available to answer specific questions you may about this process. Thank you. Could we hear from the b. L. A. , please. Good morning, chair fewer, members of the committee. Susan campbell from the office. The board is being asked to approve a resolution for the airport to issue 3 billion in airport Revenue Bonds and an ordinance appropriating 3. 9 billion of those bond proceeds plus the higher bond proceeds. In terms of the details of this request, if you look at exhibit 3 on page 6 of our report, the total Capital Program is 7. 6 billion. The board has previously approved or authorized about 4. 6 billion of funding, which 1. 6 is Still Available in terms of bond authorization and we are requesting another 3 billion in bond authorization. So the total would be 7. 6 billion. The appropriation is close to 3. 8 billion. That includes previously authorized bonds. So in terms of the and then of course the projects are somewhat summarized here. We do give more detail on the project in the appendix to the report. In terms of debt service, we show in exhibit 6, so if you look at the year i cant read my own writing here, 2019, youll see the debt service is a little over 400 million right now in the airport debt service. It does actually increase with the bond outstanding debt almost 800 million over 800 million and then stabilizes in future years the less than 800 million. In the coverage of the debt service youll see on page 7 of rush hour or the the airports projected revenues. They expect to increase to as much as 843 million in fiscal 202223. So in terms of a policy consideration, we do report what the official statement itself said for the prior bonds, that there are certain risk factors to be considered in terms of economic downturn, changes in airlines, revenues at the airport. We recommend an amendment to the proposed resolution. Our language is a little bit different in our report, but we do concur with what my colleague said. That amendment is to amend the proposed resolution, to direct the airport director to submit the bond issuance to the clerk. That is our advised recommendation. Otherwise, we recommend approvals as submitted and approval of the ordinance. Any members of the public like to comment on items 1 or 2 . Seeing none, Public Comment is now closed. So, colleagues, there has been a request from another supervisor to continue this item for one week and i think this is what the concerns are, exactly what the bill i just said on exhibit 6, it shows that theres an annual debt service from approximately 450 million in 2018 to 800 million in 2025. But then exhibit 8 in the report shows and then levelling off at a slightly less than 800 million in 2040. And then in exhibit 8 shows revenue projection increasing for fiscal year 201819 580 million and its going to be growing. We have been hearing lately, of late, about an economic downturn. So i think that another week we could ask ms. Wagner from the airport to come back and maybe to give an explanation of how you will manage that sale of bonds in the happenstance of an economic downturn or change in airline travel. So i understand that this is not exactly interfering with your timeline. Thats correct, chair fewer. Wed be happy to come back next week. Im happy to offer if youd like to hear some of the concerns now from kevin cone. We can talk a little bit about that or take this week to work with the Budget Analysts Office. I think we would prefer you to work with the budget analyst. What i would like to do is to make a motion to accept the amendments that were brought forward with the b. L. A. Thank you. And then id like to continue this item as amended until the next budget meeting. Thank you very much. We can take that without objection. Clerk number 3 is ordinance deappropriating 10,369,224 of Capital Projects appropriations and reappropriating 10,369,224 in hetch hetchy power for the power Asset Acquisition analysis project of the Public Utilities commission for fy20192020. Thank you very much. Do we have barbara hail here . Hello barbara. Good morning. Barbara hail assistant general manager for power. As you know, the board and mayor directed the San Francisco p. U. C. To study and acquire the pgne system. That has been going on for over a year. 17. 2 million is needed for the project through the end of this fiscal year. 7. 8 million has already been appropriated. 10. 4 million more is needed, and that is what is proposed in the item before you. It was heard by our commission on november 12 and approved or before you seeking your approval as well. The sources of these funds are hetch hetchy revenues and are not needed at this time. They are delineated in the analyst report. If you have any questions, im happy to answer them. Thank you, ms. Hail. Could we have a b. L. A. Report. Yes, the proposed ordinance to appropriate 10. 4 million in the hetch hetchy budget to be used for the potential purchase of pgne assets. The total cost of the study is shown in table 2 of page 15 of our report of 17. 2 million almost. The other the balance above the 10. 4 million has been previously appropriated by the board of supervisors and is available. In terms of the projects which have been defunded or from which these projects have been obtained, we show them in table 1 of our report. As we show on the next page, four are uncompleted projects. Two are projects that have sufficient funding, the intervening facilities and the streetlight replacement project which have sufficient funding in the current fiscal year. And then one project that is current has been delayed. The funding for that project wont be used at this time so that money has been made available, but there would be request for funding for that project at a later date. We recommend approval for this project. Thank you very much. This is open for Public Comment. Any members of the public like to comment on item number 3 . Seeing none, Public Comment is closed. Colleagues, any questions or comments . Seeing none, this is moved to the full board with a positive recommendation. We can take that without objections. Madam clerk, can you please call item number 4. Clerk item number 4 ordinance delegating authority under charter, section 9. 118, to the general manager of the Public Utilities commission to enter into agreements with terms in excess of ten years or requiring expenditures of 10,000,000 or more for power and related products and Services Required to supply San Franciscos Community Choice Aggregation Program, cleanpowersf, subject to specified conditions; thank you very much. We have mike himes. Hi, how are you, mike . Could we get a presentation, please. Yes, good morning, members of the board. Michael himes, im the director of the cleanpowersf program for the San Francisco Public Utilities commission. You have before you legislation that would authorize the general manager of the p. U. C. To enter into Renewal Energy contracts with a pool of short contracts bid with a solicitation the p. U. C. Issued last year. Ive got a few slides and well provide some background on the solicitation and the legislation you have before you. Thank you. For those not aware, cleanpowersf is San Franciscos clean choice Aggregation Program developed and operated by the cleanpowers sf. We started serving in may of 2016 with a goal of providing cleaner and more Renewal Energy to san franciscans at affordable and stable rates, while investigating locally in clean energy infrastructure. In fiscal year 2019, the p. U. C. Completed large enrolments into the cleanpowersf program. You can see on this slide some of our enrolment statistics. More than 370,000 customers are served by the program. We recently crossed the 7,000 customers enrolled milestone for the super green product. Our optout rate has remained stable at 3. 6 since program launch. Weve also made significant progress on the development of the Energy Supply surveying cleanpowersf customers. We are on track to achieve the mayors goal of 50 rpseligible renewal product in 2020 with the green product. The mix cleanpowersf has detained, we have emissions below 90 levels which makes a significant contribution to the citys progress in reducing Greenhouse Gas emissions. We are looking at developing an integrated Resource Plan which is focusing on achieving 100 Renewal Energy supply, which will bring that goal by 2030. The p. U. C. Is putting final touches on a local Energy Report to supply cleanpowersf with energy from products developed on city property. This is a report that is informing the integrated Resource Plan that i referred to. That i. R. P. Is required under state law and is due to the p. U. C. On may 1 of this year. Well be presenting work done on this report to the local Agency Commission this friday. These reports and planning process are informing the development of cleanpowersfs first tenyear capital plan which will come to the board later this year. Of course, while were conducting our planning, we need to continue to procure to supply our customers and ensure that were on track to meet the citys goals and state regulatory obligations. To that effect, on august 12 last year we issued offers for local Renewal Energy supplies. This r. F. O. Sought business from new or existing eligible Renewal Energy resources under california state law located within the n. P. 15 region in northern california, which is a trading area defined by the California Independent system operator. The local Renewal Energy r. F. O. Indicated the reference was in the nine counties and energy from those areas. The r. F. O. Requested that Renewal Energy deliveries would commence no sooner than january of 2021 and no later than december of 2024, with Contract Terms of up to 25 years in duration. Bidders were also invited to offer Renewal Energy with minimum annual deliveries of 50,000 megawatt hours per year and no more than 600,000 megawatt hours per year. On the low end were talking about projects that can deliver six to eight times than the largest Solar Project in San Francisco can. Thats a range that represents 2 to 18 of cleanpowersfs annual demand. So its a portion of the need all Renewal Energy deliveries need to meet other requirements established by the board and by the San Francisco Public Utilities commission. Our bid evaluation process considered the criteria identified here, including the qualifications and experience of the bidders in developing and operating Renewal Energy plants of comparable size. The viability of the projects, so the likelihood that the project would get developed. The value of the bid to the cleanpowersf energy portfolio. So the cost and also the value of the Energy Delivered and how that energy fits the demand profile. The location of the project. Also whether the bidders proposed a Community Benefit component. Thats an optional component made to the community at no cost in accordance with the San Francisco public utility commissions 2011 Community Benefits policy and 2009 Environmental Justice policy. As a result of the r. F. O. , we received more than 43 unique business from 13 Different Companies Offering Energy from 16 distinct projects. So what that means is they offered different configurations of supply from these 16 projects. As a result of the evaluation and scoring process, the p. U. C. Short listed ten projects with nine suppliers. The legislation before you today is modeled after previous contract authorizations brought before the board approving Energy Contracting processes to support service. Were seeking the boards approval to continue using pro forma agreements for power purchasing agreements, that includes Energy Standards projects, such as the edison, power pool, for purchases that are less than five years. And city pro forma power contracts that have been developed since cleanpowersf launched by the s. F. P. U. C. Working with the office covering both short and longterm agreements. The request to approve use of these pro forma contracts will allow the p. U. C. To obtain the best terms and the best suppliers possible and the previous actions taken by the board. The ordinance also requests authorization to waive certain city contract provisions that are not standard in electric Energy Contracts and could disadvantage the city in its negotiations. The ordinance requires that the general manager of the sfpuc find and document that any waivers requested are reasonable and in the public interest. Again, this is a component that has also been presented and approved by the board in previous actions. The ordinance would approve the use of the Community Benefits component in the contract and to the extent that the general manager finds that they are feasible and appropriate. Lastly, the ordinance conditionally authorizes the sfpuc to execute contracts exceeding ten years in duration and 10 million in total expenditures. Subject to a number of conditions, ive identified them here, that is, that its limited to Renewal Energy purchase from the pool of shortlisted bidders identified in