Budget and Government Efficiency Committee Meeting – July 17, 2019

The Budget and Government Efficiency Committee met on July 17, 2019, at 9:00 AM to discuss four agenda items: a software contract for GIS services, the Fiscal Year 2020 Statement of Budgetary Principles, information on the San Diego Gas & Electric (SDG&E) franchise agreement, and information on 5G wireless facility regulations. The meeting included public comments on budget transparency, the franchise agreement, and wireless regulations. Two action items were passed unanimously, and committee members asked for further information on diversity metrics and the Verizon MOU.

Non-Agenda Public Comment

• Martha Weltz expressed concerns about the city's budget transparency, stating that performance-based budgeting hides department spending and that library funding for books is insufficient. She also criticized overtime use in the police department and park maintenance issues.

Discussion Items

1. ESRI Contract for GIS Services (Action Item, Unanimously Approved)

The Department of Information Technology presented a request to authorize a three-year, $3.15 million sole-source agreement with Environmental Systems Research Institute (ESRI) for mapping and GIS software. The city was recently recognized as a leader in GIS among 150,000 global customers. The contract covers critical public safety, public utilities, and the Get It Done app. Councilmember Montgomery asked about the sole-source justification (the city has worked with ESRI for ~25 years) and the contract length (three years to allow for technology updates). She also requested follow-up on the city's ELC report regarding hiring improvements. The motion passed unanimously.

2. Fiscal Year 2020 Statement of Budgetary Principles (Action Item, Unanimously Approved)

Chris Olson from the Independent Budget Analyst (IBA) presented the proposed FY2020 Statement of Budgetary Principles. The principles, first established in FY2008, outline expectations for the budget process and require quarterly reports from the mayor, adherence to structural budget deficit principles, and updates to the five-year financial outlook by November 2019. Councilmember Montgomery requested that performance dashboards include diversity and inclusion metrics, referencing a recent city auditor report showing pay disparities for women and people of color. The motion passed unanimously, with a request that the IBA explore adding such metrics.

3. San Diego Gas & Electric Franchise Agreement (Information Item)

Two presentations were made:

• Protect Our Communities Foundation: Bill Powers and Tyson Siegel argued that the current 50-year franchise (expiring January 2021) favors SDG&E and recommended a short-term (five-year) agreement with strong enforcement, data transparency, and alignment with the city's climate goals (100% clean energy by 2035). They noted SDG&E's high rates – San Diego residents pay approximately double what Sacramento customers pay – and cited a dispute over the Pure Water project where SDG&E allegedly failed to pay moving costs (~$100 million). They urged the city to hire outside legal counsel and form an ad hoc committee.
• San Diego Gas & Electric: Warren Reese and Vanessa Mopolo Garcia presented SDG&E's perspective, noting that the franchise fee (3% for both gas and electric) generates ~$125 million annually for the city, the highest in the region. They emphasized that franchise fees are passed through to customers, that the average residential customer pays about $11/month, and that SDG&E supports the city's climate goals (45% renewable energy, 3,000 charging stations). They also highlighted their diverse supplier expenditure (43%) and $23 million in charitable contributions.
• Public testimony (multiple speakers): Speakers expressed concerns about high rates, the utility's profit motive, and the need for accountability. Some urged the city to consider a municipal utility or stronger franchise terms. Others supported hiring outside counsel and forming a committee.
• Committee discussion: Councilmember Moreno requested clarification on the council's authority over the franchise; Deputy City Attorney Fritz Ortleb confirmed the city has the power to municipalize under Charter Section 1 and to grant franchises under Section 103. Members emphasized the need for apples-to-apples comparisons with other utilities (e.g., SMUD, LADWP) and expressed interest in a transparent, rigorous process.

4. 5G Wireless Facility Regulations (Information Item)

Development Services (Greg Hopkins, Karen Lynch, Simon C) presented proposed amendments to wireless regulations to comply with FCC orders, including shot clocks (60/90 days) for small cell facilities. The city has high design standards and aims to avoid visual clutter. The Planning Commission and Land Use and Housing Committee have recommended approval with additional requirements for historic areas and light glare studies.

• Public testimony: Paul O'Boyle (land use attorney representing wireless companies) expressed concerns that the ordinance was developed without sufficient industry input, that it may discriminate against wireless companies, and that the city's processes may not meet FCC shot clocks, leading to deemed-approved applications. Shariar Afshar (Verizon) praised city staff collaboration. Sal Espinosa (CWA) raised concerns about labor standards, transparency, and the recently signed MOU with Verizon, noting that the MOU grants Verizon expedited 10-day review (faster than FCC requirements) and lacks fair labor provisions. He urged the city to include community benefits like free internet and local hiring.
• Committee discussion: Councilmember Montgomery raised concerns about the Verizon MOU, noting the city had not completed a cost study before signing it (staff later said a study was completed just last week). She requested the MOU and cost study be shared with the council. Councilmember Bree emphasized the need for free basic internet access for all residents as a condition of 5G deployment.

Key Outcomes

• Motion to approve the ESRI contract (Item 1) passed unanimously.
• Motion to forward the FY2020 Statement of Budgetary Principles to full council passed unanimously, with a request to explore adding diversity metrics.
• No action taken on the franchise agreement or 5G information items; both are set for further discussion as the city prepares for upcoming decisions (franchise expiring January 2021; code update scheduled for July 23, 2019).
• Committee members requested additional information: a copy of the presentation, the cost study related to the Verizon MOU, and a follow-up on diversity metrics.
• The next Budget and Government Efficiency Committee meeting is scheduled for September 11, 2019, at 9:00 AM.