Harlan Kelly Jr., general manager of the San Francisco Public Utilities Commission, recently sat down with Brown and Caldwell Senior Vice President Jay Patil to talk about his career and the commission's Water System Improvement Program.

March 19, 2013

What are the greatest challenges and opportunities in California water today?
One of our greatest challenges is having enough water to satisfy customer demands. That's something we've been very mindful of as California's and the Bay Area's population continues to grow. I believe this challenge can be met through a combination of new water supply facilities, storage and conservation. Another big challenge is getting people to pay attention to infrastructure. It's not simply the water that comes out of the tap, or the treated water discharged into receiving waters. We have aging dams, tunnels, treatment facilities, pipelines and reservoirs. Rehabilitating and keeping systems in a state of good repair is very challenging, especially as it relates to ratepayer affordability. Those are the things we must balance in California as we deliver water and treat our wastewater.

You've been working for San Francisco for nearly your entire career, and now you are taking the helm of one of its largest agencies. What do you see as the top priorities for SFPUC over the next few years?
It's been a 30-year journey from when I started working for the City and County of San Francisco, becoming City Engineer in 1996, to managing this large revenue enterprise public utility. I worked for probably the most demanding mayor there was, Willie Brown. He wanted everything done quickly. He was so passionate about it that when there was a problem he would say, "I want your resignation on my desk if you don't get this done." After that I served for a period as director of Public Works. When the SFPUC's Water System Improvement Program started up, I was asked to oversee it. Mayor Brown wanted someone who knew how to move projects along and had experience with managing city employees and consultant teams.

We have an amazing water system and deliver some of the best drinking water in the nation, plus a historic combined sewer system. Because our water flows from the Sierra, we have tremendous power generation that is 100 percent green. Supporting these systems are 2,300 talented and hard-working people whose stories don't get told much because the system works so well.

My vision is to look for opportunities to improve the organization and the way we deliver service and embrace our customers. We also are pioneering ways to provide more community benefits by aligning our services and resources to impact positively the communities that we serve. It is a different mindset, but a paradigm shift that will ultimately lead to a more responsive agency that continually works for people.

What are some of the most significant projects you've been involved with in your career?
I have worked on a host of Public Works projects from the Moscone Convention Center Expansion to the restoration of our historic City Hall. However, my time at the SFPUC has provided me with some of the most challenging and rewarding experiences. WSIP allowed me to develop and manage the largest capital improvement program the city has ever undertaken and one of the largest in the country. With 80-plus water projects dams, tunnels, pipelines and treatment facilities we have seen and done it all. We built the state's largest UV water treatment facility and now are finishing holing through on the first tunnel under San Francisco Bay. Even with these amazing achievements, I am probably most proud of our WSIP safety record. We reached 2.5 million crafts hours without a single lost hour due to job site injuries.

Of course, the construction of our new LEED Platinum standard SFPUC headquarters has been very fulfilling. I oversaw a team of creative engineers and designers that helped us produce a very sustainable and satisfying work environment.

Water requires a lot of energy. What synergies do you see between the water and power enterprises?
We're fortunate to own and operate the Hetch Hetchy Water and Power System. We not only deliver pristine water by gravity, we are a net energy producer through our hydroelectric facilities. In the early 1900s, a city engineer named Michael O'Shaughnessy had the drive to build an amazing water and power system. He had the political tenacity and the engineering ingenuity to make it happen. We're fortunate to have such a great system that produces pristine drinking water and so much hydropower.

San Francisco already has the lowest per capita water use in the state due in part to aggressive conservation measures. What additional steps are you considering to reduce the average San Franciscan's water footprint?
San Francisco does not have a lot of front yards and back yards. That's one reason that water usage is low in the city. We have also pursued an aggressive water conservation program by actively promoting rebates for fixtures, and helping shape innovative city policies to minimize water usage. Although we have one of the lowest per capita usage bases in California, we are still looking at ways to reduce usage, such as focusing on large commercial and institutional water users, such as the Housing Authority, to install low-flow toilets and shower heads. We're also diversifying our water supplies with recycled water, groundwater, and rainwater harvesting. These efforts afford us opportunities to partner with other neighboring cities and agencies to leverage resources and knowledge. We recently celebrated a partnership with the City of Daly City to begin using recycled water at Harding Park Golf Course.

Your new headquarters building has been described as a "living machine." What is it like working there every day? What is your favorite feature?
I was San Francisco City Engineer when the city bought the building from the state for $2. We were looking to convert the building into an office building that would house several city departments. We shelved the plan after the dot-com crash and office rents dropped. After I came to the SFPUC, we considered buying the building for our headquarters, and looked for ways to make it affordable. The look and feel of the building is outstanding. An integrated, hybrid solar array and wind turbine installation can generate up to 7 percent of the building's energy needs and our state-of-the-art raised flooring system reduces heating, cooling and ventilation energy costs by 50 percent. We treat about 5,000 gallons of water a day and recycle it into the urinals and toilets through the "living machine."

The work of more than 100 local artists is displayed on each floor. We have an interactive video wall in our lobby that tells the complete story of our water, power and sewer systems. The building is equipped with electric charging stations and bike storage areas. There is a childcare facility that can accommodate about 50 children. It is also one of the seismically safest buildings in San Francisco.

What is your agency doing to help reduce energy use and/or purchase more "green" energy?
Everyone is moving toward maximizing green energy. Since 2004, we've built over 7 megawatts of clean, renewable energy facilities here in San Francisco. We are also preparing to launch our own community choice aggregation program, called CleanPowerSF, to offer San Franciscans the opportunity to choose a 100 percent renewable energy supply. This program will coincide with a build-out of our own renewable resources, which will create jobs and help secure San Francisco's clean energy future. The customer and the public will benefit from more renewable energy, increased competition and, above all else, more energy choices.

SFPUC is wrapping up its $4.6 billion Water System Improvement Program and is beginning to gear up for the next major renewal effort, the Sewer System Improvement Program. What are the key objectives of SSIP and some of the most significant needs to be addressed?
Key components of SSIP include increasing seismic reliability, reducing flooding, upgrading aging infrastructure, minimizing combined sewer discharges, and adapting to climate change. With each of these programs we define the levels of service we are trying to accomplish. The levels of service help us balance operational needs and budget constraints. Through this process, we have a unique opportunity to evaluate the potential projects and define the scope of SSIP. The great thing about SSIP is the experience we have gained through WSIP. The SSIP program is different, so not everything will apply. But we have established a good track record delivering a $4.6 billion water system program that is currently on budget. As with any infrastructure program, the major challenge isn't the engineering, but 1) making it affordable and 2) educating the public about the urgent need to invest in infrastructure to protect public health and the environment. It is all about timing and credibility, however, and I believe we have accrued a good deal of both through our work on WSIP.

SFPUC has been progressive in attempting to integrate community benefits into its business philosophy. How is that initiative going?
We are the first public utility in the nation to adopt an Environmental Justice Policy and a Community Benefits Policy that guides our efforts to be a good neighbor to all whose lives or neighborhoods are affected by our operations. By balancing economic, environmental, and social equity goals, we can create job opportunities, revitalize low-income neighborhoods and support our nation's climate change priorities. As we make critical investments in our infrastructure, we focus our community benefits on a sustainable future for the people and places that make San Francisco so special.

One of the mayor's top priorities is to foster more local job creation. The Board of Supervisors recently passed a significant local hire ordinance. What does SFPUC do to foster local job growth?
The SFPUC has been one of the leaders in the local hire movement. We funded the studies to jump-start the programs. The regional nature of our water system made this involvement even more important because we have so much infrastructure work outside San Francisco. We wanted to make sure the regional communities that pay two-thirds of the cost of operating our water system were represented in the legislation. Through the creation of local jobs, we are reinvesting ratepayer dollars in the areas where they originated. The sheer volume of infrastructure work within the SFPUC makes us a dominant player.

The ordinance has had a lot of challenges because, as I mentioned, not all projects are 100 percent within San Francisco. It was a long conversation before the city could broker an agreement. One challenge going forward is whether we can consistently meet the local hiring requirements as we create more work for the private sector. There is the possibility that with the specialized work required, certain crafts and equipment operators may not be available in San Francisco. We need to study availability before we ratchet up local hiring goals. At the same time, we're trying to protect our ratepayers by hiring companies that can finish the job at the most reasonable cost. I remain optimistic that we will successfully work through these remaining challenges.

What is the biggest challenge facing SFPUC in the next couple of years?
Our biggest challenge for the next year is developing a palatable rate proposal as the current five-year rate package sunsets. We know we have capital work to do, but we also need to get the funding to do the work. Ratepayers need to be sufficiently on board with the next phase.

In the 1980s, agencies may have had opportunities to raise rates to pay for the next big infrastructure project. Of course, raising rates is never politically enticing. However, if we don't pay for infrastructure improvements along the way, there is a big bill waiting for us when capital projects become necessary. The SFPUC is now working with other utilities to develop an infrastructure bank to create low-interest loans, making it more palatable for municipalities to invest in their infrastructure.


Name: Harlan Kelly Jr.

Title: General Manager, San Francisco Public Utilities Commission

Background: Kelly previously served as SFPUC's assistant general manager of infrastructure, and was responsible for implementing more than $10 billion in capital programs for water, sewer and power, including the $4.6 billion Water System Improvement Program, the $6.9 billion Sewer System Improvement Program, and the $191 million SFPUC Headquarters and Administration Building. His civil engineering career spanning nearly three decades includes his tenure as the city engineer of San Francisco. At San Francisco Department of Public Works, he held functional and project management positions, including acting general manager and deputy director of engineering.

Kelly is a licensed professional engineer and a graduate of the University of California at Berkeley. He is the recipient of the Municipal Fiscal Advisory Committee's Public Municipal Excellence Award from the San Francisco Planning and Urban Research Association; the Public Works Leader of the Year Award from the American Public Works Association Northern California Chapter; the Eminent Engineer Award from the National Engineering Honor Society Tau Beta Pi; and the Heroes and Hearts Award from the San Francisco General Hospital Foundation for exceptional community service. He is a member of the Construction Managers Association of America, the American Society of Civil Engineers, the National Society of Black Engineers, and the American Public Works Association.

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