State budget mess could increase water bills

The state’s budget woes could trickle down to San Francisco’s water bills.

Water rates may rise in coming years because the state’s financial difficulties have delayed some $30 million in anticipated grants, according to the San Francisco Public Utilities Commission.

The commission is considering issuing $30 million in bonds — which ratepayers would have to cover for more than 30 years — to pay for the work that it had previously expected a state grant program to fund.

The grants were supposed to pay for replacing and repairing some of San Francisco’s sewer system, among other things, starting this year. The money was supposed to come from funds authorized by state voters in 2006.

But according to SFPUC Chief Financial Officer Todd Rydstrom, the state has informed the water agency that the application and approval process for the grant funds “is being put on long-term hold.”

California Department of Water Resources spokesman Matt Notley said the agency is currently accepting applications for the very grant money Rydstrom said was on hold. However, at the time The San Francisco Examiner spoke to him Monday, he could not confirm whether issuance of the money itself was on hold or not.

Rydstrom could not be reached late Monday to determine who had told him the money was on hold.

In an earlier interview, he said that issuing $30 million in grants would not have an impact on water rates for a few years, in part because bond interest rates are at “generational lows.” He said no money would be paid on the bond until 2013, and then the rate would increase an average of 30 cents a month for most residential customers. The next year the rate hike would go up to about 39 cents a month, where he said it would level off until the debt was finally paid.

Once the state’s financial situation improves, the agency will apply for the grant money, Rydstrom said.

But the SFPUC can’t wait for the state “to get its stuff together” financially because work on The City’s infrastructure is so urgent.

“Our sewer system, a lot of it was installed in the 1930s and ’40s. It’s really prudent that we continue to do what we planned,” Rydstrom said.

kworth@sfexaminer.com

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