San Francisco taps Truist and Bank of America for interim infrastructure financing

San Francisco taps Truist and Bank of America for interim infrastructure financingThe utility is renewing and expanding credit facilities to fund capital projects at lower short-term rates before locking in long-term debt.

Commissioners approved five credit facilities involving Bank of America and new entrant Truist Bank.

The interim funding strategy allows the utility to pay facility fees of roughly 0.21% to 0.42% rather than immediate long-term bond rates of approximately 4.25%.

The total authorized interim funding program across the water, wastewater, and power enterprises now stands at $2.45 billion.

Truist Bank was added to the program to diversify the utility's banking pool and strengthen investor appeal.

The San Francisco Public Utilities Commission (SFPUC) has authorized the execution of multiple reimbursement agreements and credit facilities to support its capital programs, introducing Truist Bank as a new lender while renewing ties with Bank of America (BANA). During the January 13 meeting, Capital Finance Director Nikolai Sklaroff presented five facilities for approval. These included two renewals for the Power Enterprise with Bank of America, and three facilities for the wastewater program, comprising one renewal with Bank of America and two new facilities. Truist Bank was selected for a $125 million facility (Series A-5), marking its entry into the SFPUC’s banking group. Sklaroff explained that the strategy utilizes a commercial paper program to fund contracts initially, rather than issuing long-term bonds immediately. "We don't actually borrow funds. We simply are able to demonstrate to the Controller that we have the resources to enter into these contracts," Sklaroff told the Commission. He noted that the cost for these facilities ranges from 21 to 42 basis points (0.21% to 0.42%). Once the utility needs to borrow, it issues commercial paper in tranches of typically $30 million to $50 million. Sklaroff highlighted the cost benefits, contrasting current short-term rates against 30-year bonds, which would cost approximately 4.25% in the current environment. "It's a very powerful tool for reducing the impact on our ratepayers of the large capital projects that we're undertaking currently," Sklaroff stated. The Commission's approval facilitates the full utilization of a $950 million expansion authorized by the Board of Supervisors the previous year. Sklaroff confirmed that the total interim funding program across all three enterprises now totals $2.45 billion. The move to include Truist Bank aligns with the SFPUC's goal to diversify its pool of lenders. Sklaroff noted that diversification is critical "as particular investors get full up on the different banks." While Truist is a new partner for the Commission, the bank brings relevant experience from other regions, including $310 million in tax-exempt municipal lending for infrastructure and water systems in Western North Carolina, alongside broader participation in sustainable finance markets.