☆ Is San Francisco Public Utility Commission under water?
Depicted: Hetch Hetchy Dam. Image by Wikimedia Commons
The reason we can live on the Peninsula is because we have water. We buy it from San Francisco Public Utility Commission (SFPUC) as part of a consortium of 26 agencies (BAWSCA); and the sustainability of our civilization here, on the coast, is under threat—not just from the potential ~56% cutbacks in the 3rd year of the next drought, but from a lack of FISCAL sustainability. Opp Now exclusive op/ed by Gregg Dieguez, Vice Chair of the Midcoast Community Council, here expressing his own opinions.
SFPUC has a $6.7 billion deficit in reserves, and recent increases in debt service have driven the agency cash flow negative, preventing it from accumulating capital reserves to avoid more borrowing. It’s a Debt Death Spiral. Bonds increase the costs of assets by about 75% (except for the $20 billion BAHFA bond (RM4), which would pay $28.3 billion in interest!). More borrowing will make the cash flow problem worse.
Hetch Hetchy water users (hey, that’s you!) face a 20% rate increase for the agency to just “stay afloat.” The agency is planning to issue nearly $1 billion in green bonds to upgrade and increase the resilience of its wastewater and stormwater systems. It is also in a lawsuit regarding excessive pollution in the Bay from its aging, old-technology “combined sewage” infrastructure — which includes untreated sewage, wastewater and storm-water runoff. SFPUC also has an additional $17 billion to $25 billion in Alternative Water Supply projects on the table. So, a lot more rate increases will follow - unless we reconsider our growth-driven economy and our financial management practices.
SFPUC is just the tip of the iceberg, but there is a tidal wave of infrastructure borrowing coming our way. Virtually every California public works agency faces similar reserve deficiencies.
The implications:
1. We must reset financial management practices for all public works, school districts, etc., to build reserves and avoid borrowing. This means more fees and taxes, but reduced long-term costs. Begin with an audit of SFPUC and its asset inventories by franchise (e.g. water, sewer).
2. We cannot afford any more bonds, for anything, until we assess the totality of asset replenishment requirements in the Bay Area, and clearly prioritize our needs.
3. Bonds are another Inter-Generational Injustice burden to our descendants - because we didn’t build replenishment reserves for the assets we exhausted by our use - see also: Crisis, Climate and Pension Liabilities, Unfunded.
There are of course many related issues regarding the sustainability of SFPUC’s water, the development of alternative water supplies, and other social justice and legal matters. However, without fiscal sustainability, hopes of addressing those concerns are doomed to fail.
Civilization is expensive. We need to prioritize what we’re building and borrowing before we run out of both water and money.
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