Alrighty, good morning, and welcome to the budget and government efficiency committee meeting of June 17, 2026.

Our committee committee liaison, Natalie Kessler, will provide information and instruction for the public to participate in today's meeting.

Thank you, Chair.

While members of the public are able to attend the meetings in person, this meeting is being televised and live streamed on the city's website, and council administration will continue to make arrangements for the public to comment using the Zoom webinar platform.

Members of the public who wish to provide virtual testimony must enter the virtual queue by raising their hand before the queue closes.

The queue will close when the last virtual speaker finishes speaking or five minutes after in-person testimony ends, whichever occurs first.

This will allow for better meeting management between the two platforms and ensure the committee is able to manage and conduct city business.

Council President Pro Tem Lee.

Council Rivera, and Chair Foster.

Here.

Constraints.

So I want to make sure that we get one of our items on the information portion of this agenda heard.

So we will dispense of the consent agenda and then we will move to item seven, City of San Diego settlements and judgment.

And then once we hear item seven, we will go back to the discussion agenda, have that poured dispense of that section of the agenda, and then close with the remaining of the informational items.

So with that, we will now take up non-agenda public comment.

The council members respect and appreciate the public's input and are fully committed to protecting every participant's free speech rights at council and council meetings.

Natalie, please proceed with non-agenda public comment.

Is an opportunity for members of the public to comment on items that are not on the agenda but within the subject matter jurisdiction of the committee, each speaker will have two minutes.

And we have received three speaker slips from individuals in the committee room.

We will begin with those three before we move to the virtual queue.

Allegedly, Audra, please approach the electron, and you'll be followed by Maximilian Schmidt and Joyce and Yada.

Yeah, I wasn't really sure what I was gonna say this morning, but I just find it interesting that this is called the budget and government efficiency meeting.

Like you're protecting our safety, like you guys are providing housing, all of these things, these trigger words that you know allow the illusion to continue.

And it's just very dangerous because things don't have to be this way.

The I mean, again, like the government is so good at doing horrible business and staying in business because we continue to fund you guys, and you continue to take money from us, and people, you know, have the hopes of you actually providing affordable housing, but there is no affordable housing.

There are so many homeless people on the street that see all of these buildings come up and you know think that maybe that's something that they can get into.

And then even when you do a provide something that you get into a contract with a housing unit, you know, we have people that are being abused by the people that you contract with.

And so because you take your hands out of it, you know, these people are suffering by the choices that you make.

And it's just sad because the people should quit funding this kind of nonsense until you guys like you should be having less and less money.

There are people on the street that are like, you know what, I got a hundred bucks.

How long can I make this last?

And I'd like to see you guys work in that way.

That would be efficient.

That would be making sure our money is spent wisely when you have less to deal with.

But it's like you guys have so much money to at your disposal that I mean, that's why you just keep coming to us for more.

Oh, well, we, you know, got into some kind of fraud waste and abuse, and you know, there's all these settlements, but we'll have you pay for it.

And it's like if you guys were personally responsible, you wouldn't engage in that.

But because you're not and you have access to all these funds, the racket continues.

Thank you, Maximilian Schmidt.

Um, hi, I'm a whistleblower on Freemasonry, and I'm proud to open Pandora's box and expose some of the biggest secrets known to mankind.

Um Hermetic chants done in the Masonic Lodge actually allow people to be telepathic as well as human sacrifices where they can actually look through people's eyes and read people's minds.

And there's evidence of this.

Um, the evidence is the triangles on top of buildings in all American cities and across the world.

Um, it's a pagan symbol that's being worshipped.

Also, pyramids on the one dollar bill, there's a pyramid with an eye on it that also um represents this.

And people and telepaths have existed before technology existed.

Um during the time of Christ, Jesus during the um Last Supper said, uh drink my blood, eat my flesh, because he knew that people were doing human sacrifices to become telepathic.

And I also want to spill the beans on something that's bigger than anything Julian Assange ever spilled to the public, or anything bigger than Edward Snowden ever spilled to the public.

Is that there's an underground genocide going on where um Freemasons and pagans who make up most of the West Coast are actually killing off Catholics and Patriots.

What they're doing is they're they're um looking through their eyes and reading their mind and putting a constant um voice in their head and sensitizing them to noises like an animal.

And this leads them to homelessness, leads them to drugs, leads them to suicide, leads them to over, leads them to overdose, and um it's truly a genocide.

I think of the um thousands of overdoses in California and the hundreds of suicides.

I'd say the majority of them were made paranoid purposefully by pagans, and these people that are made paranoid thought, oh my gosh, like I'm going crazy.

Someone just read my mind, but really they didn't know they're not crazy.

People can read people's minds, and the evidence does exist.

The Masonic Lodge is evidence.

There's there's like a hundred in San Diego.

Um, like I said, the all sing I providence on the one dollar bill, and this is big news and needs to be shared.

Thank you.

And our final speaker in the committee room is Joy Sanyata.

Natalie, uh, just to let you know I'm speaking a lot today.

I didn't have time to practice, so you're probably gonna have to cut me off, which is great.

Okay, so is this on?

It doesn't seem like it.

Yes, it's on.

It's on, thank you so much.

So uh structural budget deficit.

We need to write this ship because it is listing.

And I wish you could see the uh photo here of the ship and then it's listing.

That's our structural budget deficit.

So when a ship is lifting, it means the vessel is experiencing a persistent sustained tilt to one side, port or starboard.

This condition is caused by an internal imbalance in weight distribution, such as an uneven cargo, flooding, or improperly balanced ballast tanks, rather than temporary external forces like wind or waves.

End of the Google quote.

So I'm gonna continue and perhaps get stronger as we go along because nobody seems to be jumping on board of the ship with me and and seeing it listing, and uh I don't know why people aren't jumping on board.

Even I I don't see even most of the public doing that.

So I'm gonna continue.

So I I want to mention one thing.

This is what one part that's confusing me.

It's called encumbered.

So from a staff report, big increasing, no, by increasing the expenditure authority, the city council is not obligating city funding.

Departments may only spend what is approved and available in their operating budgets.

I don't get that.

End of quote.

And it's involved with one of our items today.

So um we just need a robust togetherness on this.

Thank you.

Thank you for that concluding statement.

This concludes in-person public testimony.

We will now move to the virtual queue, and I've started the five-minute timer.

There are six hands raised in the virtual queue for an agenda public comment.

We'll begin with Terry Ann Skelly.

Please unmute and begin.

Good morning, budget and government efficiency committee, Chair Foster.

My name is Terry Ann Skelly.

Those of us who advocate for policies that enhance good public health and safety would say that money is well spent there.

This morning I'd like to draw attention to the city's tobacco retailer's licensure program ordinance and the enforcement efforts associated with it.

As a parent, I applaud your efforts to reduce tobacco product sales to those under the age of 21, and to remove unauthorized tobacco products from the shelves, like illegal flavored tobacco products, and prosecute those who continue to sell them.

This is money well spent, and there is money to be made there as well.

City fines could be increased in collective consistency, making it even more worthwhile to enforce these laws.

I feel we owe it to our young people, their families and neighborhoods to take action.

And the city needs to make sure that it will be easy for residents, parents, and school administrators to file a complaint.

Thank you for your continued funding of enforcement actions that affirm our city's commitment to healthy and safe young adults, and perhaps make the budget better by doing so as well.

Thank you for hearing my concerns this morning.

Thank you.

Our next speaker is Becky Rapp.

Please unmute and begin.

Good morning.

My name is Becky Rapp.

And today I'd like to thank Attorney Ferbert for and her office for taking action against the illegal sale of marijuana products at Mira Mesa Smoke and Vape and Prime Smoke and Vape in Rancho Bernardo.

The recent temporary restraining orders demonstrate that the city has the authority to enforce the law.

However, these two smoke shops are only a drop in the bucket.

San Diego has well over 200 smoke and vape shops, and many continue to openly advertise and sell products that appear to violate state and local laws, including marijuana products, flavored tobacco products, and Kratom.

While enforcement against two businesses is a positive first step, it does little to address the bigger problem if hundreds of other retailers continue operating without consequence.

From a budget and government efficiency perspective, enforcement actions only work if there are meaningful consequences for businesses that continue to violate the law.

I encourage this committee to evaluate whether the city's current fines, penalties, and enforcement mechanisms are sufficient to achieve compliance.

When businesses repeatedly violate the law or ignore enforcement actions altogether, the city should consider increasing penalties, including substantial fines, recovery of enforcement costs, and ultimately the suspension or revocation of licenses and permits.

If a business refuses to comply after being warned cited or even subjected to a court order, taxpayers should not be forced to continue funding repeated enforcement efforts against the same bad actors.

Government efficiency means more than balancing the budget.

It means using public resources effectively and holding violators accountable.

Residents deserve neighborhoods where laws are enforced consistently and businesses are held accountable.

Thank you.

Thank you.

Our next speaker is Francine Maxwell.

Please unmute and begin.

Good morning, Francine Maxwell, Southeastern San Diego resident.

As you guys prepare for the multiple legislative recesses, wouldn't it be an option for you to ask the IBA to hold webinars while you're on legislative recesses in multiple months to help the community understand how you monitor monthly and quarterly spending reports to track actual expenses against the city revenues.

We could begin to be educated.

The next generation of activists can be educated while you're on legislative recess through the IBA.

The IBA can re-educate people about the memos that all of the council offices.

We have an opportunity to build trust while you're on legislative break.

Absolutely connecting with the community, writing policies that are going to further move San Diego forward.

So we have options that we should begin to do things differently.

We always get excited about the budget.

The budget has been signed.

Now let's go to work and roll up our sleeves and educate the community so that when you decide to propose something, we could begin to already understand it.

And maybe it could be an easy vote that comes from the people of the city of San Diego.

Again, everyone knows that education is the great equalizer, respecting your legislative breaks and your recesses, but the IBA has enough staff that we should be having over 200 people on a webinar being educated multiple times during the week because they're working, and there's other departments that could also be doing the same thing.

You can get suggestions on cost-saving things as well.

So please consider San Diego.

Let's do something different as we begin to work on trust.

Thank you.

Our next speaker.

Oh, excuse me, Judy, before you begin, the five-minute timer concluded.

We have three hands remaining in the queue.

We will take no additional callers after these three.

Please proceed, Judy Strang.

Good morning.

And thank you for this opportunity to address the budget and government efficiency committee.

I was very much taken with a discussion yesterday regarding communities of concern and the spent expenditures that would assist them, particularly in the park and rec departments.

And would love to address that at even greater concern now.

But as a public health educator, we study communities of concern because we know that they experience considerable health inequities.

And we look at what we can do to improve them.

And we know they cost money health inequities.

My gosh, when you think of the cost to people, to their families, to neighborhoods when people have ill health.

And we recognize that tobacco stores, vape stores, marijuana storefronts more often locate in communities of concern and of course sell their products there.

We also recognize that the leading cause of death and preventable disease in California is smoking and vaping.

And so I ask ourselves, as many have already done this morning.

Can't we do a more elaborate job in enforcing against our vape and smoke shops who we know sell illegal products and Craig Creedum, by the way, is illegal in the state of California to sell.

Clearly, the state has offered public release public health release documents on that.

And can't we amp up the fines?

These are people who are making money off the ill health of communities of concern.

This seems like an ideal time to increase our budget by going after the stores that really only hurt communities concerned the most.

Thank you.

Thank you.

Our next speaker is Madison.

Please unmute and begin.

Hi, good morning, budget committee.

As you consider budget priorities, I'd like to encourage the city to explore how artificial intelligence can be used as a cost-effective tool to help protect young people from predatory industries and businesses.

California recently announced an AI tool that helps identify marijuana product packaging that may appeal to children.

I think this demonstrates an important principle that technology can help governments do more with limited resources.

The city faces ongoing budget constraints, and enforcement staff can only be in so many places at once.

AI has the potential to help identify problematic advertising, monitor compliance with local regulations, analyze complaints, flag concerning trends, and support enforcement efforts more efficiently.

Used responsibly, these tools can help direct human inspectors and investigators toward the areas of greatest concern.

This is especially important when it comes to businesses that profit from products that can harm young people, including intoxicating substances.

Prevention is almost always less expensive than dealing with the long-term costs of addiction, mental health challenges, emergency response, and other consequences after harm has occurred.

As you make budget decisions, I encourage you to view technology not just as an expense, but as an investment in smarter government.

If AI can help protect children, improve compliance, and make enforcement more efficient, it may ultimately save taxpayer dollars while advancing one of the city's most important responsibilities, keeping young people safe.

Thank you.

Thank you.

Our final speaker in the queue is Kathleen Lippett.

Please unmute and begin.

Good morning, budget committee.

My name is Kathleen Lippett.

I'd like to address the issue of a failure to look at outcomes of policies that the city adopts.

California State Audit of Homeless Programs found that more than 44 billion dollars was spent statewide from 2018 to 2023.

And the report cited a lack of transparency, oversight, and measurable outcomes were preventing meaningful progress.

Homeless bureaucracies have grown as the taxpayer money spent on the problem has continued to increase.

Throwing more money at a problem that has turned out to be ineffective, except to encourage all it does is it can encourage craft, grift, and corruption from the amounts of money allocated, hundreds continue to die, and we continue to pour more funding from ending up in drug overdoses, disease, traffic injuries, and homicide.

The city does not have a public health department like the county does.

It is shocking to me that the county continues to tolerate the city's adoption of ordinances that will fuel the problems that the county has to deal with at the public health level.

One of the ways that the Athenians dealt with politicians that were not doing their job and that might have been turned out turned out to be wasting valuable and limited public tax money was to ostracize them for 10 years.

They also had a unique system where they randomly chose politicians to elect to elect, but they did put a lot of pressure on them once they were in office to make sure that they followed the processes that they were required to follow.

Not sure that random election wouldn't random selection might not be a better idea, but I do appreciate okay, thanks.

Thank you.

This does conclude your time.

And Chair, this concludes non-agenda public comment.

Thank you so much.

And thank you to the public for your comments.

We will now move to committee members, mayoral staff, city attorney, and IBA for comment.

Do we have any comments at this time?

Hearing none, do we have any requests for continuance?

Alrighty, hearing none, we will now dispense with the approval of our consent agenda.

Natalie, please proceed with any public comment.

Thank you, Chair.

The public comment period for the consent agenda is now open.

The consent agenda includes item one, approval of the committee minutes from April 8th, 2026.

Item two, First Amendment to as needed citywide cooperative agreement with CINTES Corporation number two for uniform and fire protection services.

And we do have three speakers' lips for individuals in the committee room.

Each speaker will have one minute per item.

And we will begin with allegedly Audra, you've indicated on your speaker slip that you wish to speak to all three items.

So you will have three minutes to manage, and you'll be followed by Joyce and Yada.

Alright, and your minutes last time you're talking about living wage and prevailing wage.

Um it's just interesting because you guys like determine your raises, your your salaries, and you know, and then you're sitting here, you know, determining what a living wage is for people, and it's nothing close to what you guys make sitting on this dais.

And yet you you know that they don't make that much, yet you continue to come after people for more money.

And it's like, at what point are you gonna cut your salary, you know, and get down to a living wage that you guys are saying is a living wage and see if you can live, you know, practice what you preach?

Why don't you guys, you know, show the people that you can live with that amount of money and that you don't need as much as you do if you're expecting everybody else to live under those terms?

It's it's very, you guys gaslight the people all the time with the things you do, and it's just sad because you're you know you're just mismanaging the money and then determining, you know, how much somebody's gonna be able to live with, and with all of your contracts that you continue to not exceed.

Again, I don't know why you've put that language in there.

Why are we saying it's not to exceed, and then every contract you exceed the not to exceed amount?

Um, and you get into these ad needed as needed contracts, and it's like how much did the actual uniforms cost if this, you know, as needed services like being increased by three million dollars?

I mean, that's a lot of money for you know, just laundering repair and replacements.

So, you know, it's an as needed.

It's like, do you not have someone who already does that?

Are we contracting with someone who does, and then we're just adding them?

I mean, it's just there's a lot of fraud, waste, and abuse that you guys engage in.

And so when you talk about being efficient, I mean you're efficient at being wasteful and engaging in fraud.

Um, and then this as needed fencing, this is interesting because it's talking about homeless strategies and solutions.

And I know that Dreams for Change and downtown San Diego partnership at Tent City, put up a fence that is actually impeding people's ability to evacuate during a fire.

It is a metal fence that has uh spikes on it that are facing inward.

So it's like a prison cell for these people that are in there, and then they bring in plastic fencing to segregate the people, all while telling them they like can't talk to each other.

But putting the tent so close that it's literally a fire danger, and the you know, fire extinguishers are nowhere to be found.

There's a nice little red thing that says fire extinguisher, but there's no fire extinguishers there.

The city is on that property, you guys know it.

Henry and Sean, you guys were saying that you would want to talk about it.

It's like what happened to that?

You guys have a federal lawsuit right now against you guys and dreams for change and downtown partnership for this kind of abuse of the homeless people at Tent City.

Thank you.

This does conclude your time.

Joyce and Yada, you've indicated that you wish to speak to items two and three.

So you'll have two minutes to manage.

Thank you.

All right.

Number two.

Uh yes to the First Amendment to Centus Corp.

Number two contract.

The perfect storm hit San Diego in January of 2024.

One of the shocking statements said from a fire department person.

This was at a uh a city council meeting, was that firefighters didn't have the appropriate protection for safety apparel outdated?

I still can't get over that.

So this contract began in September of 2024.

So have the firefighters do they have the safety apparel and whatever else they needed?

Has it been provided to them now?

Is it a budget item?

It better not be a budget item.

Increasing expenditure author.

I won't say that because I I it has to do with encumbering.

So we'll look at that at another time.

Uh EOC uh exempt because there's less than 15.

Uh, number three, yes to that item, First Amendment on the fences and so forth.

EOC exempt again because of less than 15.

Um, how long?

Oh, here we go on the uncumbered again.

But I'll give you this question.

How long can funds be encumbered and not spent as a real expenditure?

You know, I don't get that from staff report physical considerations.

This contract is as needed funds are available from the budget, but will be in again, it's encumbered.

I'm sorry, I'm stumbling on encumbered, so love to all.

We'll talk later.

Thank you.

Our final speaker in the committee room is Maximilian Schmidt, and you've indicated that you wish to speak to all three items on the consent agenda.

So you'll have three minutes to manage.

Um hi, like like was said earlier.

Um the citywide as needed uh fence installation does have to do with the homeless.

And I just wanted to say that I think that we need a um statewide uh state of emergency concerning the homeless.

I just wanted to share uh a story about a homeless man um who had an apartment, had his whole life together, and then started to get targeted.

Someone um followed behind him, and as he was walking, read his mind and said, Um, oh, I'm I'm nervous about my first day of work, or um, I I feel like going playing basketball right now, or um, anything.

The person was actually reading the person's mind, and then as he continued walking down the street, he said, Wow, I just walked past literally 10 people in a row, all with yellow shirts on.

That's so strange.

And then now I see a guy sitting behind me with a yellow shirt, and then the person became paranoid, and the person became so paranoid that they turned to drugs and became homeless.

And then while homeless, the person overdosed on drugs and died, all because they thought that it's impossible that somebody can read their mind and that they were crazy, and they were intentionally made subconsciously paranoid, intentionally made paranoid, intentionally turned to drugs, and intentionally through uh intentionally killed.

Um by mind reading.

And I just wanted to say there are 5,000 suicides per year in California.

Nearly 5,000, and there are nearly 10,000 drug overdoses, and there needs to be a state of an emergency that people are being killed because of the lie that another human being cannot read another human being's mind because if they believe a human being cannot read someone's mind, they can easily be taken advantage of to become paranoid.

And if they become paranoid, they can easily commit suicide.

If they become paranoid, they can easily overdose on drugs.

So we need a state of emergency in California, and city council needs to make a public statement.

They need to say, um, city council needs to get together and say to the whole public, we would like to let the public know that the majority of people on the West Coast can are pagans who have done a pagan ritual involving a hermetic chant who can actually read your mind.

And if you think that you were in public and someone read your mind and that you're all of a sudden very paranoid, just know that you're not crazy.

That person actually can read your mind.

Don't become paranoid and turn to drugs and suicide.

These people pagans are literally there's an underground genocide.

Pagans are killing off Christians, Catholics, and patriots.

It is a state of emergency.

There needs to be a public comment made to the public, people can read people's minds.

We will now move to the virtual queue.

There's one hand raised in the virtual queue.

Phone number ending in 8813.

Please unmute and indicate which item or items you wish to speak to.

Phone number ending in 8813.

Okay, Consuelo here, practicing Peg and herself.

Can you please indicate which item or items you wish to speak to?

All three items I will be touching based on.

Okay, three minutes to be answered.

Uh with that being said, I want to uh first off address how uh things pertaining to homelessness, lucrative, that'll never get solved.

Like a doctor, you know, giving you uh uh a remedy to solve your your illness.

Well, that's a customer loss, isn't it?

So yeah, that'll never get solved.

Also, um, piggyback off of what was mentioned earlier, as far as uh the living wage, um, yeah, where is that equity that you all preach about?

Because you know it would be nice if you all got to live on the same wages as the majority of your constituents do.

Um, yeah, it's just very unfortunate that more of the city uh doesn't get to chime in in these truly important meetings, and um I wish it was different, but I'm glad for the ones who are there um who are paying attention.

Thank you for being there.

And that's all I got.

Thank you.

And Chair, this concludes public comment on the consent agenda.

Thank you.

Um for those comments.

Um, I will now turn it over to committee members for questions and comments and to entertain a motion.

We will start with Pro Tem Lee.

Cheryl, uh move the consent agenda.

Thank you so much.

We have a second.

Uh we have a second from council member um Moreno.

Um so we have a first by Pro Tim Lee, a second by uh Councilmember Moreno.

We will now have each uh committee member register their vote.

Thank you.

And chair that passes unanimously for zero.

All righty.

Thank you so much.

As we indicated at the onset of this meeting, we will now move to information item number seven.

Natalie, please introduce item seven.

Just before you do so, just um want to make sure as we um open things up for public comment that any public comments that are given, please make sure they are applicable and pertinent to the item that we are discussing as we move forward.

So thank you.

Thank you.

Please um go ahead.

Oh, it's gonna say item seven is City of San Diego settlements and judgments.

Chair.

Please introduce yourselves for the record and let us know how much time you will need for your presentation, and feel free to begin.

Good morning.

I'm Angelo Colton, risk management department director.

I believe I'll need between 20 and 25 minutes for the full presentation.

Okay.

Um first of all, I wanted to say good morning, count uh committee chair Foster and committee members.

Thank you for inviting me to come speak on this topic.

With me is Chris Griffin, who is the city's public liability and loss recovery program manager, and I'm the risk management director if I fail to say that already.

This is just an overview of what topics I'll be going over in this presentation.

So I'm gonna talk a little bit about the public liability process and our insurance coverage here at the city of San Diego, about our multi-year liability expense expenses and claims counts.

I'll provide a bit of a breakdown of expenses and claims by department, and then a little bit more detail on the police department, which was a request by the committee, and then look into how we compare to the other members of PRISM, which is our insurance JPA.

I'll explain that more in a second.

Um go into a little more detail about how we're seeing significant spikes in costs, and then end with what risk management department is doing to mitigate.

So the um all of our settlements and judgments, everything is governed by the California Tort Claims Act.

It sets a procedure for how you file a claim for money or damages against a government entity in California.

I provided the specific um government code section on the slide.

This would cover property damage, personal injury, wrongful death, breach of contract, those types of things.

Generally, a claim needs to be filed before one can sue the government.

There are some exceptions to that rule, but typically a file need a claim needs to be filed with the risk management department first.

Um most claims need to be presented within six months of when the incident or event occurred.

Again, there are some exceptions to that as well, but six months is kind of a good rule of thumb.

And then each claim that we receive is evaluated on case-by-case basis in the event that then becomes a lawsuit.

Again, evaluated on a case-by-case basis based on its own merits.

So a joint powers authority.

Oh, excuse me, a joint powers authority representing many different, I think I have the number on here, over 400 different entities throughout the state of California.

It was established in 1979.

It is a member directed risk sharing pool.

So we acquire our insurance coverage through PRISM, through that pool.

The primary goal, of course, is to serve their primary goal to serve California public agencies.

And then I will also be mentioning in the presentation a few times, a lion, who is the insurance broker for PRISM.

Our insurance coverage with the city of San Diego, we are part of PRISM's general liability to program.

That is their larger liability program.

They are split into two.

Um I did have a typo on the slide that was uploaded to the agenda.

I want to uh correct that.

There are 30 entities in this program.

Um we are one of them, so there's 13 of them are counties, 17 are cities.

These are typically larger organizations, higher self-insured retentions.

This includes coverage for property damage or bodily injury resulting from general liability claims or lawsuits filed against the city, including any of the expenses associated with defending those lawsuits.

We have a self-insured retention.

That amount varies depending on the year of incident.

You'll see in some slides later, we used to have one as low as three million dollars.

Right now, our self-insured retention is seven and a half million.

And what that means is that in the event we need to pay out a settlement or judgment, we the city are responsible for that first seven and a half million dollars before our insurance coverage kicks in.

Similar to a deductible that you might have on your homeowner's insurance or your car insurance, except we actually have to pay the seven and a half million out first, then they will reimburse after just some different kinds of data I'm gonna be going over in this presentation.

Most of the information was prepared by the risk management department using information from our risk management information system, unless I've noted it otherwise, and I'll try to point it out as I go through the slides.

This would cover anything handled by the risk management department.

There is one exception, the pure water project being implemented by the public utilities department does have its own owner-controlled insurance program.

We do not have data on those claims that is managed independently.

So those are not included in the figures I will be presenting today.

The other thing I want to point out is that there is a difference between the year in which we pay out a settlement or judgment is very rarely in the same year in which the event occurred.

So let's say, for example, somebody tripped and fell today, filed a claim, we're not gonna pay that out before the end of this fiscal year, which is only in a couple of weeks.

It will get paid out next year or the year after that or the year after that, assuming we are even liable for it.

So that's one of the things we need to remember when we're talking about where our expenses are coming from.

What we're paying for today are items that occurred last year or potentially even multiple years in the past.

And I also want to note that any fiscal year 2026 data presented on these slides is incomplete as the year has not ended yet.

So I've also got information I noted before in these slides that was prepared by Prism and Alliant as well.

So going into kind of an overview of the expenses and insurance premiums for the city of San Diego dating back to fiscal year 2018, you can see um a large increase happening since 2018.

What we did on this slide, the orange component of the bar represents claims paid out in a particular fiscal year minus any insurance reimbursements we received.

So it's the net amount we paid.

And then the blue is actually the cost of our liability insurance premiums.

So in fiscal year 2018, our total expense for claims, settlements, judgments, and insurance premiums was around 35 million dollars.

For 2026, right now we're at about 83 million dollars combined.

The next slide shows the number of claims we've received in every fiscal year since 2017.

Um 2017, we had over 2,000 claims, and then it kind of dipped down a little bit in 21 and 22.

And then you can see we've got a larger number of claims in the 3,000 range in 20 fiscal years 23 through 25.

We do see large spikes in the number of claims we receive in our wet rainier years, typically related to infrastructure issues and concerns.

Um, and then we've got a lower claims count so far this fiscal year, a little bit under 2,000 right now.

Breaking down our cost by department, this is a chart adding together 10 years of expenses, kind of broken out by the departments that we tag the claim to as either being the responsible party or being the ones associated with whatever it is we're being we're being sued over or have a claim filed for.

Excuse me.

So over the past 10 years, you can see the dollars, these are just the top 10 departments.

Police department represents roughly a third.

Our transportation and stormwater departments also represent roughly a third.

And then I don't have my glasses on.

I believe it's public utilities, is the next bar or the next pie.

One thing I do want to note, and this is one of the kind of constraints of our current system.

Transportation and stormwater are combined for any purposes of data analytics from our current system because they used to be the same department, and in our current system, we were not able to separate those out without a lot of manual hours.

So they are combined for the purposes of this presentation.

And then just looking at the number of claims or lawsuits we receive, transportation stormwater far outpaces any other department in this city with simply the sheer number and volume of claims and lawsuits we receive, more than half come from them.

With that, I'm going to move into a little bit more detail on police department specifically.

So this slide shows police department settlements and judgments over the last 10 years.

Keep in mind the year in which we pay those settlements and judgments is not the year in which the event occurred.

So we do have there was a spike in 2021, 2022, another one in 2024.

We've also seen a spike this year.

And then on the right side are the insurance proceeds, and again, that's the year in which we receive the insurance proceed, may not match with the year in which we pay out the settlement or judgment as there is a lag.

So there's not really a clear tie in there, but we did see you know significant insurance proceeds in fiscal years 21, 22, 24, and of course, 2026 offsetting those settlements and judgments.

Looking at the police department compared to the rest of the city, this is dating back to, so this is 10 years' worth of data going back to fiscal years 2017.

We can see that the police department has some spikes of activity in a few of the years, but we also see similar spikes going on throughout the city, even in other departments as well.

One of the points I do want to make here is that settlements and judgments are very unpredictable.

We can kind of predict what we think might be happening citywide as a whole based on trends, based, you know, just on growth trends, but to predict which department when, where something might come, these are they're just too too unpredictable to kind of chaotic, to be honest with you.

This is a chart that PRISM prepared for us, comparing City of San Diego's record on police-related, law enforcement-related settlements and judgments.

This would only be anything that hit our Prism layer that they were aware of that were required to report to them.

So we're the blue line on this chart, and then the orange line on that chart are the rest of the members of the Prism group.

So the other 29 entities in the group.

I don't have my glasses on.

I think that's 2023.

We've gone under.

So we've actually been performing better than the rest of the law enforcement agencies in the Prism pool.

This slide provides a breakdown of the public liability claims associated with the police department into categories, kind of groups based on the type of lawsuit or claim filed.

As you can see, the largest expense is in the civil rights category, and this is 10 years of data, by the way.

Civil rights category followed by police shootings, and city vehicle accidents is actually quite high within the police department as well, which kind of makes sense considering they're often in, you know, high speed or kind of quick response situations, and then a little bit with police dogs and also with employment claims, which would be police officers themselves filing claims or lawsuits against the city.

And then just a count of police claims and lawsuits over the last 10 years.

You can see we tend to hover between you know 220 and 330 or so claims kind of somewhere in there each year.

And then this was PRISMS data providing comparing our number of police related claims to all of the other members in the pool, and again, you can see we trend slightly lower than other agencies with law enforcement.

With that, I'm gonna switch back into more general broad discussions.

So, one of the things that we are noticing significantly is the increase in liability costs just rising at an exponential and almost becoming untenable rate.

So, what I've done here is we're showing our highest settlements and judgments going back to 2001, which is as far back as our system goes.

So in 2001, the highest settlement or judgment we paid out was 1.3 million dollars.

In 2026, we've got a $30 million.

If we take that $1.3 million, sorry, the blue line is the city's actuals, and those dots are the specific years in which a high amount occurred.

The orange line then is a CPI increase.

So if we take that 1.3 million dollars that we paid out in 2001 and add, you know, the consumer price index and just kind of increase that based on a fairly standard inflationary rate, that would be less than $2.5 million today.

So if our settlements and judgments were increasing solely based on kind of the cost of goods rising, we would have seen $2.5 million being our max payout this year.

Instead, we're at $30.

This is not unique to the city of San Diego.

This is a slide prepared by Alliant from a presentation they gave to another entity a few months ago, just back in March.

This is providing some information from the American Property Casualty Insurance Association.

They've done essentially a very similar thing.

That blue line is more the actuals of losses incurred, and then that bright green line at the bottom is what they would have anticipated it to be based on consumer price index increases.

And another chart, this one was prepared by Prism, who's our insurance pool, so this is actual results from the pool itself.

This, oh gosh, I don't have my glasses on, dates back a really long time.

Um sorry.

Really far back, back to 92.

But we can see they were much, much lower, and then there's starting to be a gradual increase, and then just these last eight years, there's been a significant spike.

And keep in mind this is for the entire pool that we are a part of.

So this is all those 30 entities that are part of this pool.

There are other general liability program, the smaller one, the GL1, also has a similar result.

So even the smaller agencies are being hit really hard.

This is a slide prepared by Alliant.

This is showing some information from the American Tort Reform Association.

They have done an analysis of the locations in which kind of you know the big payouts are happening.

And if you look at the um the graphic with with the with the circles on it, California has been in the top five every single year.

And in fact, Los Angeles got hit so hard in 2025 that Los Angeles itself became the number one above and beyond the rest of the state.

So basically, this is based on an annual report that the American Tort Reform Association does every year based on the worst jurisdictions across what they deem the worst jurisdictions across the country, and they call them judicial hell holes.

Another example, this is some quotes from a report done by the U.S.

Chamber of Commerce Institute for legal reform.

This report is called Nuclear Verdicts, an update on trends, causes and solutions, and was published in May of 2024.

They point out nuclear verdicts, which are verdicts of 10 million or more, are on the rise.

They point out four different states, California being one of them, hosting half of the nation's nuclear verdicts, and they go on to state their concerns about how nuclear verdicts adversely affect society in many ways by driving up costs of goods and services, creating insurability problems, inhibiting growth, et cetera, et cetera, et cetera, which gets to my concern, which is the impact on our taxes and the services we are able to provide to our communities.

Because for them, of course, this is a business and an investment.

So what we see in 2011, our insurance premium at that point in time was $5.9 million dollars.

We had a $3 million self-insured retention.

If we grew that $5.9 million again by CPI, we would expect an $8.9 million insurance premium with a $3 million self-insured retention this year.

Instead, our insurance premium is $35.4 million in fiscal year 2026 with a $7.5 million self-insured retention.

I do also want to note the stars on this chart indicate the times in which we have changed our amount of coverage in order to offset spiking rates in the premiums.

So there are a couple of years where we had an IMCD, an individual member deductible, which would mean that in addition to the self-insured retention, we also had another small dollar amount.

We had to pay in total as a city before insurance coverage would kick in.

Is that 22?

2002.

We went to a five mil SIR.

No, it's 22.

22.

Thank you.

22.

We went to a 5 million SIR.

And then just this last year for fiscal year 26, we raised it to a 7.5 million SIR to achieve $3.6 million in savings in our insurance premium because of the significant budget of cuts that were occurring last year.

PRISM has also done a similar analysis for the entire general liability programs.

This would be both programs now, so this is both their smaller and their larger liability programs, showing a $658 million increase in insurance premiums to the program over 10 years.

So going from $100 million to over $700 million in a 10-year period.

In summary, the number of the claims we're receiving is rising exponentially.

The value of settlements and judgments is rising exponentially.

This is a citywide impact.

This is not unique to the police department.

We do see this with infrastructure as well.

Insurance premiums are rising in response while also limiting coverage.

This is far outpacing tax growth and taking resources from other city services.

What risk management is doing to mitigate, we've added staff in an attempt to resolve claims faster and less expensive.

If we can resolve them quickly, number one, we save the costs of plaintiffs' attorneys who typically take 30, 40, 30 to 40% of a judgment or settlement themselves.

My staff are also cheaper than the city attorney's office, no offense, city attorneys.

But if, and then of course, if we do have monies owed to a member of our community, then we're getting their money sooner, which is nice to do as well.

It also sets a different timeline for when somebody can turn around and sue us, and it shortens that timeline as well.

Our membership in PRISM brings us both cost savings and litigation support.

PRISM is also supporting various tort reform efforts, and through PRISM's legislative committee, of which I am a member, we evaluate pending legislation before the state and determine whether PRISM as a group as a whole wants to opine or provide response.

The risk management departments we're also continually evaluating our level of coverage versus the insurance premiums and that rise in premium.

It's a fine line trying to decide at what point we want our SIR versus where our insurance kicks in, and of course, what that impact is on the premium.

We've also improved communication and coordination both with departments and with the city attorney's office to look at how we are responding to claims and ensuring that we don't have repeat occurrences of things.

One thing that I mentioned earlier is that all of those charts prepared in this presentation were prepared manually.

My staff have to export data, manually manipulate it, create charts and reports.

We do not have data readily available for departments at this point in time, but one of the things we are working on with the new system is developing dashboards so that departments and directors and chiefs can run their own loss reports and see what's going on related to their departments.

And finally, one more comment I wanted to make is that when I was talking both with PRISM and Alliant about this presentation, they both offered to come provide presentation to this committee or full counsel.

Should you be interested in that.

They could also discuss our discuss our other lines of insurance beyond just liability if that's of interest.

So with that, I conclude my presentation.

Thank you.

All righty, thank you so much for that.

I don't believe we have any IBA or city attorney comments on this item.

Not having any, we will now go to public comment.

Thank you, Chair.

The public comment period for item seven is now open.

Each speaker will have one minute to speak to item seven.

We've received five speaker slips from individuals in the committee room, and there are three hands raised in the virtual queue.

We'll begin with allegedly Audra, and you'll be followed by Nicole Lilly, Joyce and Yada, and Maximilian Schmidt.

One minute, this is so embarrassing.

I mean, good God.

Uh talk about fraud waste and abuse and your guys' um negligence and the fact that we have to continue to pay it.

That $30 million settlement was for Arabella McCormick, who died from being starved to death by her foster family and beaten.

And all of the people that were supposed to be there to be mandated reporters failed her.

So it's like, I mean, people are dying because of negligence.

And so, yeah, things are going to continue to increase when you engage in that kind of behaviors.

And it's like we shouldn't, I mean, Arabella shouldn't have died.

We shouldn't have to pay that 30 million dollars.

These increases that you guys are going to continue to get more claims and higher settlements.

I mean, we need to be having something on the every time you have a settlement, there needs to be a total of how much has been paid out so that the people can see all of this transparently.

Thank you.

Nicole Lilly, and you've been seated time by Tyler.

Can you raise your hand, Tyler?

Thank you.

So you'll have two minutes.

Hello, my name is Nicole Lilly.

I am the executive director of our time to act.

I want to begin by thanking Chair Foster for bringing this item forward for discussion, and to the members of this committee for your conviction in voting to end the flock contract, despite your colleagues' lack of courage in our most recent budget.

I'm here today because the conversation around settlements and judgment is inextricable to the budget we just passed.

Its passage does not mark the end of the conversation around the bloated police budget and misappropriation of public dollars.

If anything, the outcome demands a more serious discussion.

It requires acknowledging that there is zero justification for the extreme prioritization of a department that costs 116.31 million dollars in settlements and judgments alone, with an overwhelming amount of that total as a result of civil rights violations and police shootings.

There is zero justification.

This is a completely unacceptable reality.

It is the continued diluted prioritization of police funding over all else, every budget year that led to the deadly divestment from stormwater infrastructure that facilitated the 106.26 million dollars in settlements within that department.

The way the city allocates our public dollars is obscenely inequitable.

The police kill our community members, our youth, they violate our civil liberties, they act without real consequence and then expect the public to foot the bill while picking the pockets of the city services and departments that actually keep us safe.

We demand true accountability, not continued trainings of a department that was never meant to protect people or tort reform that continues shorting those impacted.

Accountability means systemic changes to how the violations of the police department are handled.

It means settlements and judgments must be factored into SDPD's bloated budget development, and the cost of their conduct cannot be ignored.

How many people must die or be traumatized at the hands of police for things to change?

You cannot put a price on life, but community is painfully familiar with the cost of the city's historic apathy and inaction on this issue.

I strongly urge you to take real action in this conversation.

Thank you.

Thank you, Joyce and Yada, and you'll be followed by Maximilian Schmidt.

Excellent presentation.

I really needed to see that.

It was just amazing.

So quickly this statement the buck stops here.

Prevention is the key in a lot of these settlement and settlements and judgment.

So settlements and judgments by tight.

Number one, civil rights, number two, police shootings, number three, uh city uh vehicle accidents.

So on the video vehicle accidents, uh, a question I d I don't want to cry, but uh I'm really concerned about pursuits.

Uh, and I'd love to have more data on that.

And and I send love to our police officers and anyone, any young person that ever gets involved with that.

So uh on the what risk management is doing to mitigate.

I the one of them that I really support was the implementation of clear AI for enhanced data evalue analytics.

So love to all.

This is good stuff.

Thank you.

Thank you.

Maximilian Schmidt, you're our final speaker in the committee room.

Then we will move to the virtual queue.

There are five hands up.

Um, concerning um settlements and judgment with the city of San Diego, um, I think that a lot there needs they need to be a city of San Diego needs to be sued a lot more for not drawing public awareness to the fact that people can um look through other people's eyes and read other people's minds.

Um I believe that um people are dying all all across California because they're being made intentionally paranoid, and and I'm using my first amendment right here to say that for um concerning settlements and judgments.

There needs to be the Masonic Lodge needs to be able to be sued easier because the Masonic Lodge has connections with the police department, the Masonic Lodge is connection with the city government, and they're that's where the hermetic chants are going on that allow people to look through people's eyes, read people's minds, make them paranoid and drive them to suicide and drug overdose, and it's a state of emergency.

Thank you.

This concludes in person public testimony.

We will now move to the virtual queue.

There are five hands raised in the virtual queue, and I've started the five-minute timer.

Carmen Valdez, Carmen, please unmute and provide your comments.

Hello, my name is Carmen.

I'm a D9 resident, and I'm here with Youth Will.

Um, after today's presentation and during the budget hearings, it's understood how a lot of the money is spent on the police department.

However, many, if not all settlement settlements of police misconduct are coming out of the general fund, and that is not right when the department is the highest funded department in the city.

It's just ridiculous the fact that San Diegans are paying three times for police misconduct.

Um, when community members are targeted, harmed, killed by STPD through excessive force, wrongful debts, police brutality, racial profiling, when public dollars fund the settlements and follow that follow and third when settlements take money from already limited public dollars, um, which lead to reductions to the programs and services our communities generally depend on.

There has to be accountability.

Um the city must introduce mechanism to mechanisms to hold departments responsible when their conduct drives up costs and there must be opposition to disgraceful tort reform efforts.

Thank you.

Thank you.

Our next speaker is phone number ending in 8813.

Please press star six and begin.

Hi, before you start my time, how long do we have a minute or two?

One minute.

Okay, thanks.

Alright.

So Gonzalo here, um, I guess I'm just going to go ahead and uh yeah, just uh basically call it what it is, and that is um uh the financial cost of government failure.

And uh, you know, time and time again, the city and especially the county have demonstrated just how sloppy, reckless, and careless um they can be.

Uh, you know, and and it's so sad because behind every uh settlement is a mistake, a failure, a poor oversight.

Um, and uh it's it's a system that has failed the people, and um and and that's not what government is supposed to be doing.

And you know, there's the tragic case of Arabella McCormick.

That's one example that should never be forgotten, and others who have suffered harm due to the incompetent negligence.

Um, hands of local.

Thank you for that concluding statement.

This does conclude your time.

Our next speaker is phone number ending in two six six zero.

Phone number ending in two six six zero.

Please press star six and begin.

Good morning, council members.

My name is Brendan Piglin, I'm a senior policy advocate for the ATIU of San Diego and Imperial County.

The city charter requires the city council to consider the needs of San Diego residents in the best interest of the city when making decisions.

Presidents do not need unlawful searches, sexual harassment, falsification of records, and excessive force.

It is not in our best interest to devastate families and communities, cause lasting physical and emotional trauma, and expose taxpayers to significant financial liability.

For the last decade, the San Diego police department paid at least 16 million dollars in settlements and judgment, the majority of which were for civil rights violations and police shootings.

This should not be the cost of doing business.

We hope the city seriously considers proactive harm prevention policies over tort reform, which has been documented to have a troubling and disproportionate effect on racial and ethnic minorities who have been injured and seek justice from civil courts.

At a time when San Diego patients budget deficit and continues to underinvest in essential program services and infrastructure, holding law enforcement accountable for misconduct is not only a moral imperative, but a fiscal necessity.

Thank you.

Thank you.

Our next speaker is Noah.

Please unmute and begin.

Good morning, Chair Foster and committee members.

My name is Noah Yiick, and I'm a researcher with the Center on Policy Initiatives.

How many people are going to have to be killed or be traumatized at the hands of the police for things to change?

Every dollar spent on settlements for the police targeting, harming, or killing our community members is a dollar taken from real community safety.

We should be going into libraries, parks and rec, waste theft enforcement, youth programs, and housing.

The question before us should not be how do we reduce costs.

The question is how do we stop the harm?

How do we stop the police department from stealing and tormenting the lives of San Diegans?

The real work of repairing the harm is fixing the problem.

Accountability does not exist as a symbolic gesture.

It leads to real change or it means nothing.

We need to track and publicly report whether the police are following through on non-monetary settlement terms.

We need to introduce departmental financial responsibility so that the department faces real financial pressure to change its behavior, and we need to oppose disgraceful tort reform efforts which put money above accountability and justice for San Diegans.

Thank you.

Thank you.

The five-minute timer is about to expire.

We have one hand remaining in the queue.

We will take no additional callers.

Francine Maxwell, please unmute and begin.

Thank you, Francine Maxwell, Southeastern San Diego resident.

Thank you so much for the presentation.

This is a conversation starter and absolutely a webinar topic.

We need to know so that again, as our city council works hard on new policies and ordinance, we can begin to build trust.

We know that the San Diego police department is a lot of them over 10 standing count, are suing their own department.

We appreciate first responders because they run to danger.

But what calls them to question is when the city seals a settlement.

And so to seal a settlement, knowing that the public will have to get an attorney so that we can get it unsealed.

So we're off to something wonderful, being transparent.

Let's keep it up.

Thank you.

And Chair, this concludes public comment on item seven.

Alrighty, thank you so much.

And thank you to the public for their comments, and thank you.

As I indicated, this is an informational item, so no motion is required.

Um I think I will go ahead and um kick off the conversation.

Um I requested this item to be docketed because I believe the city has a responsibility to understand the physical impact of um settlements and judgments and what they mean for the taxpayers we serve, especially as we talk about um our policing efforts.

Um I want to say this go this uh current budget cycle, I believe, the police budget.

Um, I believe it is at approximately about 725 million dollars.

If I am correct, but one thing that tends to go uh unnoticed, not discussed in great detail, is what we are doing on the other end when it comes to litigation resulting from civil rights issues, police officer involved shootings, and just overall liability due to misconduct and certain things that are happening as our policing efforts are being deployed in various communities.

So I've been very troubled at how we have this conversation as we are looking at moving a six billion dollar budget, and especially as I've indicated on several occasions, that the one department that is indicated to be prioritizing the city charter is the police department.

And I think if we are obligated as such, but I think we also need to make sure that we are closely monitoring how we are doing our policing and what the overall impacts that result from the decisions that are being made.

Being faced with over 40 million dollars in payouts, I think that calls for a very need for a significant conversation.

And so that was my purpose for bringing and wanting to see this item come forward.

Um I will say this, it does appear based on the information that was provided.

We have three departments where these settlements and discussions when we talk about claims lie.

One is in policing, two is in transportation and stormwater, which we all know the devastation of the storms, or the 22 of the 20 uh 24 floods and what we are experiencing there, and not to mention all of the trips and falls, all of the issues with our roads and bicycles and vehicles being damaged.

Um and so I think as we are starting this conversation and looking at the police department, Angela, I think you and your team will there'll be a request uh for you guys to come back in the same way we are focused on policing today.

Um I think we need to have a follow-up conversation and look at our transportation and stormwater and also our public utilities.

Um we can work you can work with my office to see how we get that scheduled as these conversations continue.

Um, one thing I just also want to make sure that we're clear.

I'm not here to relitigate the circumstances.

I think the circumstances and the cases are very clear.

Um, but one thing that I think we need to do, and and um I will speak to the efforts you indicated that risk is taking to mitigate um the rise in cost and what you are looking at trying to achieve I'm gonna say through the legislative process, and I must say I'm disappointed because to hear that we are simply going to try and approach this from a legislative perspective to where we are actually going to look at how we can limit uh time frames.

We may want to, you know, you get lost in the term efficiency, but it's actually putting more I guess umers on the what I will say the victims, shortening their time frame, shortening what the and adding more administrative efforts to what they need to do instead of focusing internally on the things that we could control.

And um I think our COO, our mayor, really needs to dive into this, and and when we use the term accountability, I think we need to increase our efforts surrounding these efforts because what I see is a pattern.

What I see is continued misconduct.

I don't see the corrective um efforts that are needed to bring things in line and to mitigate what we see coming before us and the unfortunate expenditure of dollars of the public uh tax dollars.

Um, so with that, um, I'd like to think if we can have the San Diego police department um come forward, and I think uh, you know, as we look at these settlements and the involving wrongful death, excessive force allegations.

If you could come up and shed some light in regards to what policies are being updated, being looked at, what training, supervision, or operational changes are being implemented on following these issues, concerns, um, because quite honestly, we just need to do better.

We need to see some accountability, and we cannot see this pattern in the same, same um instances coming about.

Um so I'll give you an opportunity to go through some detail, um, so you can update and give us some understanding as to what's taking place.

Good morning, and thank you, Chair Foster and committee.

Um, my name is Mike Ramsey.

I'm the captain of the training division for the San Diego Police Department, and I want to specifically talk about the significant increases we have committed to training, especially over the last 12 months.

Um the department continuously evaluates significant incidents, um, legal developments, community expectations, and operational trends that identify opportunities for training and improvement.

Over the past year, San Diego has made San Diego Police Department, has made significant investments in training, supervision and risk reduction efforts, including expanding the training division, which more than doubled, increasing scenario-based instruction, enhancing de-escalation and strategic communication training, strengthening supervisory development programs, and ensuring insurance training remains aligned with current law policy and best practices.

The department's continued investments in these areas will play critical role in liability mitigation for the city.

Additionally, the department routinely reviews operational practices, training curriculum, and supervisory processes.

The department can to ensure personnel are equipped with and we can respond safely, professionally and effective to come to complex and rapidly evolving situations.

Specifically, the increases over the last 12 months and what we have done.

Like I mentioned earlier, we doubled our in-service training teams.

Um we created two field operation training teams, two sergeants and six officers.

Traditionally, officers attended advanced officer training on an 18-month cycle.

That's mandated by uh POST, the state of California.

We have more than tripled that type of training and exposure our officers are seeing now.

These specific teams respond to use of force, field tactics, de-escalation, communication, report writing, just to list a few.

The traditional perishable skills that are mandated by posts, these these teams are focusing on, especially the communications, de-escalation, and defensive tactics.

Scenario-based and high reputation training is the main focus of these teams to um get the officers a lot of reputation in these types of scenario-based incidents to make sure they have exposures to current and best practices.

Also, relevant and current responses based on training relevant related to current trends.

So these teams will look at trends, they'll look at incidents, they'll get feedback from the commands on a specific incident, and they'll immediately look at any training information that could be used for those incidents, they'll respond to those commands and immediately be involved with the debriefs and provide necessary training if needed.

Communication and training directly addresses the interpersonal friction that generates some of these complaints.

These field operation teams create internal consistency for all officers, same standards reducing police violations, leadership.

Some of these other classes we have developed.

Leadership development has been a key effort for our department as well in the last 12 months.

We've uh created a command cohort, which is 90 hours of leadership development classes.

We've created uh created what's called a L 380 field command and critical incident management and patrol operation, and that's based on the incident command system.

We've created a leadership 101.

These are for officers and detectives, introduction to leadership, expansion and revision of the new sergeant lieutenant agency specific training.

We've created a mentoring program where we have more than 155 volunteers providing coaching and mentoring to our recruits and assisted assisting them in navigating with academy and field training.

We have a character of leadership course that we have partnered with the fire department.

We have a we've recently had a command convention, which is working groups of department focusing on top priorities.

We applied for numerous grants that we had received.

One of them is a 500,000 grant for virtual reality and mixed reality training, strictly focusing on use of force and de-escalation.

We have now implemented training management for all liaisons for all area commands.

So that gives us the ability to as a training unit to res re uh receive real-time incident information and things we need to focus on.

We have creation of an online training portal for San Diego PD internet courses, post courses, regional and outside courses, and college programs and partnerships.

We also have online career development portal for pathways and career development for our promotions.

We're currently piloting a self-paced online training program for officers to complete on their own.

The most effective method of reducing future settlements is preventing the underlying incidents from occurring.

Investments in training, supervision, policy development, and organizational accounting bill of accountability is a significant, less costly than litigation.

And for that reason, Chief Wall emphasized Light of this top three priorities was training division.

We have committed to that by making it the top priority within the department, and we have focused a lot of efforts on continual training and providing the best training possible and best practices.

Thank you.

Because I know the chief has mentioned some very um specific things as far as certain training requirements and timelines associated with those requirements.

So I think I'd like to see more, you know, written response to make sure we understand exactly what that is, and also so the public can understand what those efforts are.

But I guess as we have this robust training, I guess my follow-up question would be what are we putting in place to understand the effectiveness of the training?

How are you able to take what you have established the criteria, and how are you monitoring the effectiveness in regards to actually seeing the mitigation and impact on the other side?

And also, I will follow this.

Also, I will add to that: how are we holding our officers accountable in regards to those mishaps and the liabilities that we are seeing?

Because individuals should be held liable if we are having this level of misconduct and issues to where we are seeing over a hundred over a hundred million dollars paid out over a period of time.

So at least uh I can speak to a few metrics we use.

We have a force analysis unit that continually receives data on all use of force, all police interactions, including even show of force.

Um that's one way to capture some data.

So we look at that as a metric, we revisit those every few months to see if there's any changes, and also regarding the accountability, I do have Captain Campbell here from internal affairs.

We do work closely with eternal affairs.

We have a use of force review out of my office that looks at the cases to see whether they're within policy, the officers' actions.

We work closely with eternal affairs and that's one metric of measuring.

And then also uh moving forward would be the amount of complaints specifically that come in, use of force or any type of misconduct would be a metric.

So once these teams are established, uh which they are now uh last few months, once we probably revisit this next quarter, we'll have probably looking at the data and hopefully we'll have the some metrics that show the reduction in those areas.

Captain, from an internal affairs perspective, is there anything you would like to add?

No, Chair, I'll just add that we do have uh you know robust internal procedure for investigating uh things that come out, whether they come out through a civil process, through a claim, or they come in as a complaint to us, and uh it is a time-consuming process to make sure that we get a solid investigation so that ultimately if there is misconduct that that an employee can be held accountable.

Uh, but that is a slow process.

Um, as uh Captain Ramsey said, we do work hand in hand with uh speaking with them about trends we may be seeing so that things can be implemented in the training.

Um, but uh again, we we do have a robust process for figuring out what happened so that ultimately if there is uh accountability on the back end, it's well supported.

Understood.

I guess um I guess let me ask let me ask this as a as a follow-up.

So there was a recent article um that KBBS ran that said um black people are nine times um uh receive uh certain charges nine times more than others.

What are you putting in place to address those types of disparities as we talk about training as we talk about policies?

I have not been aware of any recent policy updates or certain things that are taking place.

So how are we addressing that and and what's the plan for something as such?

I'm I'm not familiar with that article, so I don't want to speak to that.

I can say that we continue to have racial profiling type uh state mandated courses that the officers receive through the AOT cycle.

Um that's been in place.

Um part of our strategic communication and de-escalation is um the appropriate communication to use as a DLS escalation tool.

Uh we continually do that through the scenario-based training, the reputation, and that's where we're trying to get the officers to gain those skills so we don't have that friction within the community the way or the way the uh the either the perception or how what is exactly said.

So that that is part of our scenario-based training that we focus on.

But I have not seen that article.

Okay, and and I understand I I believe in the article.

Um said that litigation that that I guess a suit has been filed.

Is that accurate?

Are you aware of any suit that has been filed or claimed?

I not as of this moment, and I don't have any details with me on any specific suits or claims today.

Okay.

So I will um I did send over a copy of that article over to the chief uh to Chief Wall, and and again, um I'll ask the same question in line with past litigation.

As you saw, one of the um areas where we had high claims was in civil rights.

What have you guys done to review those and what have you guys gone through policy-wise to do any corrective action to address um these civil rights um infractions from from not happening?

Well, not speaking any specific case, uh I could tell you in general uh when you look at some of those cases, they're related to use of force, defensive tactics, um arrests, detentions.

So those are all part of our continual training.

We focus on all those topics um to make sure that the officers understand the uh laws that they're implying, um, the laws of arrest, uh, use of force when it when it can be applied, detentions.

All that is covered through our training, and especially even more so with the training teams, because the officers are not getting the standard AOT state mandated post.

They're getting well above um what's mandated by the state.

We're we're these training teams are getting in front of these training divisions um now monthly, and we're focusing on topics, uh trends, um things that you have mentioned.

That is the focus of our training.

Um but they those are all perishable skills.

A lot of those lead to perishable skills, which is defensive tactics and um de-escalation.

So that's that's our our focus to reduce the litigation concerns.

Okay.

I guess let me ask this question.

As we look at this, has there been any any internal conversations regarding pretext stops and how the department currently utilizes pretext stops?

Well, I again I'm not at liberty to to talk about the internal communications within the department on that.

Um I can get back to you.

Um but I I'm not in a position to talk about the all the interactions and internal chats within the department because I'm not involved at all.

Who's here to do that?

Is there anyone here from leadership?

Where is the chief of police?

Where is the COO?

The mayor.

Today it's just myself and Captain Campbell.

So, Matt, why how are we how how do we proceed as we don't have anyone here to answer the appropriate questions?

Uh Chair Foster, we can get back to you on that.

I I myself also haven't been involved in any of those internal conversations with the police department, uh, but you have our commitment to continue the conversation with you.

Okay.

And and and one thing that we need to do is we talk about and we use the word efficiency.

When we're having these conversations and we're having a public conversation, we need to make sure the correct people are available in the room in the appropriate leadership positions that make decisions so that we can all understand where we are at and what we are trying to accomplish.

If I'm going to hear that we have over 116 million dollars of settlements, where we just recently paid out 30 million for our for an officer-involved shooting, where we just paid out 10 million dollars for some abuse to a young child that has that is no longer with us, and not to have someone here to understand what are we doing from a policy perspective to mitigate these ongoing issues, and they are ongoing based on what I am seeing and what I understand that comes in in regards to litigation.

So that's something that we need to correct.

And this is something where the COO, Chief of Police, and somewhat of leadership, even if it is the um the what do we want to call the officer that's in charge, the the XO, right?

There is someone that is responsible and they need to be here.

And if we are not looking at how we are having these context contacts, if we are not having real conversations about pre-text stops, if we are not having the conversations about saturation of certain areas and where we are at, then we are just doing a disservice, and we cannot have that.

We cannot have that.

So I think as we move forward, I will turn it over to my colleagues.

Um, but it but I do um Matt, I would like um uh an item to come back to where we can actually dive into the specifics and understand how we are going to mitigate these costs, because at the end of the day, we can say they are pub they are coming out of the public liability fund, but that is supported by the general fund.

And the more we spend, the more it impacts our ability to one, make sure that we are doing the best job we can do in regards to policing, that we are not being discriminatory.

It's how we are deploying those services, but also being able to serve all of our and meet our obligations for all of the other services that we need to provide.

So I will pause here and I will turn it over to my colleagues.

But this is the start of a conversation.

I think there's much more needed here.

I think we need to again not do what we typically used to do, but let's look at how we move forward and and how we are deploying our policing and how we are mitigating these uh issues of misconduct and and uh I want to say the culture of our police department here in the city of San Diego.

So with that, I will turn it over to I will pause here and I will turn it over to my colleagues.

Um we will start with Council Member Ilo Rivera.

All right, thank you, Chair Foster.

Uh I want to say thank you for bringing this this item forward.

Um thank you, Angela, for the presentation.

But uh Chair, I think initiating this conversation is a really important thing to do.

And while I appreciate the data in the report, I think it's important to acknowledge that the dollar amounts that we are referencing are just uh uh they don't they don't not only do they not tell the full story, they tell what I would say is probably um if not the least important and far less important part of the story of what those dollars represent because they they represent harm that a person or business experienced regardless of whether or not the city was at fault, and there's a couple in uh incidents in particular that I want to call attention to because they are the largest dollar amounts, and they're also the most disturb disturbing stories uh that those dollar amounts uh are representative of.

I think about us having this conversation in this room because this room is where we have the conversations to determine whether we settle or we move forward toward to trial, and again, the two biggest settlements that I'm thinking about are two of the most disturbing conversations that I have participated in as a council member.

Uh the first, um, the death of Kanoa Wilson, a 16-year-old San Diegan who should still be alive, and um even more disturbing and jarring was the story of of Arabella McCormick.

Um there's not a single conversation I've had as a council member that's that's um disturbed me more than that.

And I think we're kind of losing the forest for the trees and how we're discussing this topic because Kano is a 16-year-old who who died with um and should still be here, and Arabella was an 11-year-old.

And what happened to her is beyond my comprehension died of starvation and abuse, I think that's part's important to name, and SDPD and the city were alleged to have an SDPD officer, was alleged to have visited the home, failed in her mandated reporter duties, and contributed to the abuse by directly supplying wooden paddles, not paddle paddles to the family, and I I'm not gonna apologize for saying all that because it's what happened.

Um again, by failing to talk about what actually happened and center the harm, I I think we will find ourselves in a situation where um we neither keep costs down or actually address the bigger part of the problem here, which is the harm that is caused.

And there's the financial cost of that harm, and there's also the loss of of trust in communities that the city has a responsibility to take care of to protect, and that's there's an unquantifiable cost to to that erosion and trust.

So uh I have a a few questions here.

Um first, can we can we go to the the slide about the increases in in cost?

Are you citywide?

We have a few slides.

It can be uh any of them to be honest.

Um I think the you know the what the one on the one on in relation to in relation to inflation, I think is is the one that I think is important.

Yeah.

So Angela, I think you'd said, and we're looking at the highest settlements, and that inflation adjusted amount would mean that the highest settlement would have been about 2.5 million dollars.

That's correct.

So what I think this actually shows is that juries are placing a more appropriate value on the lives of the of people who die for wrong wrongful causes.

Councilmember Foster and I have talked about this at different points in time.

You've talked about it publicly.

Um black folks in particular and people of color more broadly is one of the reasons why that number stayed so low for so long, and it is not a coincidence that this spike happened at the same time that more focus was placed on the value of black lives, the demand that black lives actually matter in this country.

So that's not coincidental.

The timeline matches very well with some of the most high profile cases of young black men in particular being wrongfully killed.

So diagnosing that increase in settlement amount as the problem here, and I'm not saying you're doing that, Angela.

I think this is a an a city issue and a societal issue.

I think we're we're heading down the wrong path if that's the thing that we're trying to solve for.

Certainly was worth more than 2.5 million dollars, which is what his family could have expected if the inflation adjusted increase is all that they would have seen as a as a settlement amount, or as a as a as a um amount of jury awarded them.

If we can go now to the nuclear verdict slide.

Yeah.

So look, it is it is a fact.

Go back right there.

Yeah, it's a fact.

There are there are um there are cases that we see that are nonsense where folks are trying to take advantage of the city, they're trying to take advantage of a company, um to win the lottery via a lawsuit.

That's real, that happens.

But I am 100% against us partnering with big business that is aiming to socialize the costs of their negligence by minimizing the amount that they can be held accountable when they're negligent.

And that is what the U.S.

Chamber of Commerce is aiming to do through their quote unquote legal reform.

It's their attempt to have the rest of us pay when they do something that results in a baby needing to be fed through a tube for the rest of their life, or a baby not being able to live the life that they should, or a family member having to quit their job and become 24-7 caretakers for their child because a multi-billion dollar corporation was negligent.

And I surely hope that the city does not think that the way to solve the problems that we are seeing and increased liability cost is by getting in bed with big business to reduce their risk.

I'm not going to dismiss the impact that these costs have on the city because those are real, but again, I think we are very much focusing on the symptom rather than the cause and heading down a path that in the big picture will actually have far more of a negative effect on society than a positive one.

Because again, make no mistake, we all end up paying those costs one way or another.

We're just socializing them away from billionaires and away from multi-billion dollar corporations and to the public, which you know that's the chamber's chamber's job is to advocate for big business, and obviously that's good for their bottom bottom line, but it's not good for ours.

So uh one question that I had for you, Charles, is are there accounting practices that could be used to better represent what we are expecting liability costs to be for departments?

Because as Chair Foster's mentioned, this just gets kind of pooled in this general category of liability, and that's not an accurate picture.

So I want to kind of answer that in two parts.

Uh first, there probably are practices that you can use to say where kind of the impact departments that are associated with judgments or settlements that are um being paid by the city.

We do that when we have a sewer main break, it will go and be kind of allocated against our public utilities department and particularly our metro immunity sewer system.

Uh, when there's a waterline make break, go to our water fund.

Um, so a mechanism to allocate out settlements and judgments and kind of tie them to a department or at least say where they are coming from, uh, while that may not exist for general fund departments, it probably could.

Um, I do want to like that's the first part of the response.

Second part, when we are talking about these judgments coming out of the public liability fund, I think council members and Angela both noted, public liability fund is in large part funded by the general fund.

Um, so when dollars are going out of the public liability fund, they do have an impact on our ability to fund other general fund departments and general fund operations because we are looking largely at the transportation department and the police department, it's also worth noting that those are funded out of the general fund as well.

So while there is likely some transparency related benefits, we're saying which departments are associated with settlements and um judgments, or I think associated is better than same cost by, because I don't want to imply causation on some of these.

It's gonna have the same net impact on the city.

Um taking it out of the police department's budget.

It's it's kind of a di a distinction possible, possibly without a financial difference at any rate.

Uh general fund or the general tax dollars that are paying for general city services, if they go to the public liability fund or the police department, it's still ultimately coming out of the general fund.

Uh yeah, I understood.

I think one one thing I'd be curious about is the extent to which our next budget could account for the projected liability costs of that department and bake that into that department budget.

So I on that one I would want to have a conversation with Angela and her team because as you heard, their system requires a lot of manual legwork right now to try and pull out different settlements associated with different departments and activities.

Um hopefully the new clear AI one will be a little bit more user-friendly and might allow for that more, but I would certainly want to uh incorporate Angela's expertise in that.

Angela, I don't know if you wanted to add anything.

If I could um I would have some concerns as well, because the uh claims and lawsuits coming are unpredictable.

And so but we we budget for the public liability fund.

Correct, but as a whole for the general fund in total, um we're basing that on information we have currently available and we know we've got some insurance backing as well.

Some of these larger claims or settlements hitting a particular department in one year could have a significant impact on their ability to complete their services for that year.

Right.

I think this is where like, so looking forward versus looking back matters.

I I'm not I'm not talking yet about a mid-year adjustment where you bake that in.

But I'm not I'm not talking about that.

I'm talking about factoring it in on the front end when we think about what we are going to allocate to a department, transportation you know, as well.

Um and if if we are if we were budgeting for a public liability fund, presumably all of the risks within the various departments are being so accumulated in in order to I I think it probably gets a little bit more complicated than that, Angela.

Please correct me if I'm wrong, but in general, when we're looking at what we should set aside into our public liability reserves and a public liability fund, we're looking at the past three years of settlements and payments that have gone out, taking a prediction of a certain proportion of those that we want to have set aside in dollars so that we can make claims going forward.

Uh and as Angela said, those are citywide amounts that are going out or fund wide amounts that are going out.

The amounts going out in any particular year are going to vary pretty significantly from department to department.

Um certainly a look back is probably something that can be accomplished.

Trying to do that prospectively is likely significantly more difficult.

Okay.

Um continue that conversation.

Uh uh, last a few more couple uh questions here.

I'll try to be quick.

Um the first, uh I see the value in clear uh AI, um and I want to make sure that we are because there's this piece about allocating resources where we think the highest risk is.

And the reality is that the most well-resourced people are often the most litigious people, and if we were stripping out the humanity of the analysis, which AI can do unless you prompt it otherwise, I could see a situation where high resource communities are deemed more urgent in terms of action because litigation is more likely to come from the cracked sidewalk in a high resource community than a cracked sidewalk in a low resource community.

I just want to make sure that we're uh thinking about that on the front end and not and not um finding ourselves in a situation where a system that has had the humanity stripped out of it isn't sending resources um because folks have access to attorneys and not because there's need.

Most definitely I hear the concern.

We are not actually, I don't even know if clear AI is capable of doing what you're suggesting, but at this point in time, what we're focused on is the data analytics components of the system, and essentially what my staff can do manually using Excel being able to be done by a system in the snap of a finger versus taking I don't know, three, four weeks of time to do that.

Totally understanding that I I'm I see the value of AI systems.

And to clear to just add on that, anything related to either estimating a reserve that we anticipate for a claim or a lawsuit or um processing of that item will still be done by a human being by one of my employees.

Just again this the put a final point on that.

The demands made by higher income people tend to be greater.

And so a system that were that was looking at at settlement amounts or jury verdicts, and then placing a zip code on those amounts and then placing a degree of risk on those areas because of those those verdicts or settlements that have come from the that those geographic areas could start to drift in the direction that I'm going.

That's where my that's where my line of questions is coming from.

And then the last thing related to police training.

Thank you for being generous with time here.

Chair, I appreciate you referencing the KPBS article.

Um, and if I could ask um Captain to join us again, um SDPD was asked for a response to this article and did not um provide one in certain instances and then provided others uh response to other sections of it.

But the data is the data, and um again, black Sandy Agans are nine times more likely to be charged with nothing more than resisting an officer.

That is that being the sole charge.

And the civil rights liability risk there are transparent enough, I don't need to um belabor that.

Um but I am curious about the the part of the conversation where the department and and if you have a response to the spine, and if not, then maybe it's the follow-up conversation that the chair is queuing up.

But that specific issue of charging black Sandy Agans with resisting an officer, so I mean I I hope the department does not think that black Sandy Agans are nine times more likely to resist arrest.

Um what are we doing to mitigate that specific risk?

I don't I I'm not familiar with that.

I'll I can look into it and get back to you.

I just don't have the information on that particular article.

But it's it's not the article, the article is is highlighting it, it's a data point, right?

It's it's it's an the data is and we've had this conversation so many times.

The data is confirming a thing that we've heard time and time again from community.

So this is something that Councilman Foster, I imagine you grew up sharing these stories.

I've had my own experiences, and we've certainly heard it from the neighborhood, and then that's just anecdotal.

So because it's anecdotal, we don't take it seriously.

Well, because it's anecdotal and it's come comes from the sources that comes from, we don't take it seriously.

The data now shows what we've heard from the community, which is I didn't do anything, I wasn't being charged with anything, and I'm getting now charged with the resisting arrest.

Um, so it I don't want to focus on the article, I want to focus on the data.

So, are you not familiar with the data?

Yeah, I I do I I can get with our crime analysis unit, uh I could ask about data, which would be a standalone resistant arrest case or standalone or additional charges.

So I don't have that data through the training division.

Um again, I could I can reach out to uh my colleagues and find out about that specific dollar data from crime analysis unit.

Okay, thank you.

My and my my last question, and this is both for Angela and for you, Captain.

Do we do an assessment of the situations where the arrival of officers unnecessarily increases risk?

And I don't that that's like that in no way is uh is a knock on officers.

There's a fact that when an officer shows up with a gun on their hip, the risk have increased.

And so are we assessing the situations where having an officer arrive is increasing the city's risk and a draw on police time and resources?

Any assessment of risk associated with the operations of the police department would fall to the police department to conduct the risk management department would not have the information or resources to do set analysis.

Okay.

So I could just say from calls for service where officers are responding because someone called for them.

But we do go over initial re-assessments all the way through the police academy and continual training on evaluating what the incident is and taking appropriate action if you even need it, or um not being involved if if it doesn't involve the police.

And how about the number of officers that respond to certain types of calls?

If it's uh a cold report writing type, you know, investigation of a burglary, it's just generally one officer.

Um if it's a call for service involving an incident of a fight, a suspect on scene, then it's a minimum of two officers that respond.

And depending on obviously if it involves the allegations of a weapon, um, even a non-traditional weapons, then those numbers can go up.

And when we look at our de-escalation involving our resources, whether it's canine, uh, now we have different resources responding.

So it really depends on the event or the incident.

Of course.

I think there might be some value in some partnership here because I would be surprised if there was not some correlation between the number of officers who arrive an event and the likelihood that an incident occurs where um the city ends up incurring some sort of liability, and then from that sussing out, did we really need the level of response that we got?

Well, and I might just add part of our training with our with our sergeants is to evaluate that on scene once, especially if they're there, look at our resources.

If the resources aren't needed, then the officers need to um you know what we call go back in service and um you know go to a different event.

So uh that's part of their training to evaluate those.

And final pointer, chief has been very good about leaning into certain things that he's said he's going to lean into over time in particular.

I want to give credit where credit is due there.

Um again, I think in in part if if um we're working in partnership here, one of the things that we could potentially look at are the situations, the sort of calls that are routinely not found to need um police involvement or um significant police involvement, and sometimes spin out into situations that end up uh result uh resulting in the city incurring liability, and I trust that under this leadership that a more rigorous analysis will be done.

A question that I repeatedly asked, previous chief was what can we take off the plate of SDPD to allow current resources to go further to reduce stress on officers, to reduce risk, and the response every single time was I want more officers.

And that's not an answer to the actual question, and I think Chief Wall has been more willing in conversations with me to actually dig into that question, and so again, as we're thinking about the enormous costs that uh come with this, both in terms of community trust and city resources, I think this is worth analysis.

Um I appreciate the response to the question.

Chair, thank you for all the time here.

Uh, there is another part of this conversation with the city just being resourced well enough to do the work that needs to be done.

Um, but I've said that piece a lot, and I appreciate the opportunity to have uh the time to make the other points here this morning.

Thank you.

Thank you, council member um Ilo Rivera.

Um I don't see anyone um else on the lights.

Um but I will close with this.

Um we have work to do.

Um I think as you look at this and and um as you look at it from a cumulative perspective, I think one thing that we all need to do is to acknowledge that we do see patterns, that we do need to see drastic improvement, and that's going to take some real uncomfortable conversations and some real conversations.

We focused, you know, today to start the conversation on the police department.

But I'd like to see where we can fit this in, if it's the appropriations ordinance or if it's the budgetary principles, but I would like to see some specific language come forward to where we make this part of the conversation, and we continue to bring this to the forefront and we continue to address the issues.

And I want to be clear, I'm not looking to change the issues just simply, as I said previously, looking at working with the state and working on some legislative actions to put the owners on the victims.

I'm looking for internal steps on what we can do as a city to bring things in line, to bring change and accountability, and to appropriately deliver our services.

With that, if you have a comment that you would like to share, because that will be my expectation as we move forward and finalizing this budget process for the fiscal year 2020 7 budget.

Excuse me.

We can certainly work to include that in the statement of budgetary principles.

I think it probably fits best there.

So the administration will have to agree on that, have a representative sitting right to my left who you could ask, but we would certainly push hard to have that included if that is the will of this committee.

Okay.

But I'm not looking for obstacles.

And if we need to find another way, if we need to go into the AO ordinance where we mandate that, that is our ordinance, I am more than open to take that approach as well.

Um so we can talk more about that as we move forward.

We have the appropriations ordinance here today that we will hear um after we're done done with this item.

But once it leaves here, then it goes to council.

If we need to do something at council, then I will definitely do it there.

Um, Council, but I do think it fits cleaner into the statement of budgetary principles.

But that said, if I get pushback on that, I will let you know before this the AO gets to council.

Chair, if it's helpful to you, uh, we would agree to bring a presentation like this forward as part of the statement of budgetary principles, and when that resolution comes forward to committee and council.

Okay.

And again, I'm looking for some uh annual or or major type conversations.

We need to bring this to the forefront, and we need to make sure that we are looking at our policies, our procedures, and how we are, I want to say doing the right thing.

Because I just want to agree, I agree with my colleague.

It's not about a news article, it's not about a story, it's about what we do, it's about how we deploy the services, and it's and again it's it's with the understanding that all people are a value.

I can't stress that enough.

Um the other thing that I will say is I want to say that it's important that we stand up our commission on police practices.

Um we've had our challenges.

Um I've had to step in and sit on the panel to uh bring our new director in.

With this budget cycle, we are addressing uh their casework management software, but I can't stress enough that we need to stand that up, that we need to make sure that they are in a position uh to uh do the work that the voters is looking for them to do.

So that will be a priority as we move forward, and I think fits in with this.

Um the other thing I will say is um when we put the Office of Race and Equity in place, if you go back through the legislative record and look at the details, there were very specific dollars that were put into that office to specifically bring some consultants in to look at how we better police and to address some very specific issues in regards to cultural competencies and to address discrimination and disparities.

So I would ask that the Department of Race and Equity.

Let's look at the challenges we are having in regards to what has been conveyed here in regards to civil rights violations in regards to our officer involved shooting situations and our policies with the our policies and procedures that are detailed on the police website and look at what we can do differently.

You know, why do we have when there's a standard traffic stop in Southeastern Division?

Why do we find 10 cars?

And when you look, you have one black female handcuffed in the vehicle, but we have 10 units, 10 officers there for the stop.

So I think there's all sorts of things that we need to look at that we can do better.

And before I go, I just want to leave this one one last story, and this is a personal story.

And I'm going to talk about my son.

My son, 17 years old, had his first contact with San Diego with SDPD.

He was driving from my house to my parents' house, which is a stone throw away.

It was 11 30 at night.

He was working on his college applications, he had a midnight deadline.

Got it done, he was on his way to my parents' house to spend the night.

He got stopped, allegedly running a stop sign.

He was followed by San Diego Police Department almost until he got to my parents' house, and I received a phone call saying I got stopped.

I get dressed, I go to the location, I find three officers there.

Within minutes, there's another one that comes.

We're there for a period of time.

And the reason my son did not present his car insurance is because the amount of lights that were shining on him truly had him shaking, and he was terrified to reach into the glove compartment.

This is a 17-year-old black man that has never had any contact with a police officer, that was terrified to reach into his glove box.

So when we talk about public trust, when we talk about what's right and what's wrong, that's something that San Diego police and the end officers, they need to understand why they are met with the resistance that it was all a training exercise.

This is my son.

As I was serving as chief of staff for then council member Monica Montgomery Steph.

And I was simply told it was a training exercise, and then come to find out the officer wrote the ticket wrong.

And so as we went to court to try and cure, we were told it wasn't even in the system because a ticket was written wrong.

And I had to sit there with my son and explain to him what took place.

Actually, made an officer come over and explain to him why he was telling my son his community is unsafe.

The only individuals that had a weapon were the police officers.

And the first thing out of their mouth was my community's unsafe.

And I will say this.

We want to talk about my community being unsafe.

San Diego police plays a role in my community being unsafe.

And it's the way that we treat people and police people in my community.

And that needs to stop.

So I will leave that there.

Thank you so much for this.

We have a lot of work to do on this.

I look forward to the continued conversations regarding our police liabilities, but also looking at our transportation stormwater and also our public utilities.

So thank you for this.

I will leave this here, and we will now move on and go back to our discussion agenda, and we will please introduce item number four.

Thank you.

Thank you, Chair.

Item number four, fiscal year 2027 appropriation ordinance.

Chair.

Yes, thank you, uh staff.

Please introduce yourself and let us know how much time you need for your presentation, and feel free to begin.

Good morning, Committee Chair Foster and Committee members.

I'm Ben Bitalia, Director of Finance, and with me today is Chris Purcell, Financial Operations Manager.

We'll need about five minutes today, please.

Today we'll be presenting the fiscal year 2027 appropriation ordinance.

The mayor signed the budget resolution.

The adoption of the appropriation ordinance is the final step in the fiscal year 2027 budget process.

As outlined in Charter Section 69, the AO appropriates the budget based on the two controlling documents.

The salary ordinance, which sets the compensation for city employees, and the budget resolution, which incorporates the mayor's draft budget as modified by the May revision and the city council's additional modifications.

The purpose of the AO is to define the legal level at which the mayor and the CFO are authorized to control operational and capital project expenditures.

Additionally, it facilitates administration of the city's $6.4 billion budget by providing certain delegations of authority to the CFO, mostly for routine non-policy items.

Charter Section 69 requires that the city council adopt the AO by June 30th each year.

This year there are three requested modifications to the AO.

The first is modifying Section 2G2 and adding a new section 2G4, which authorizes the CFO to reallocate unobligated CDBG balances to previously council approved nonprofit facility improvement projects to support timely project completion.

This authority to reallocate funds from completed, canceled, or ineligible CDBG projects to eligible nonprofit facility projects in line with the consolidated plan objectives will assist the city in meeting federal timeliness requirements.

The second update authorizes the CFO to accept appropriate and expend grants that are awarded to the office of the city clerk.

This new section improves administrative efficiency for the city clerk's grant funded projects, and it expands the city's ability to leverage external funding sources.

The third update removes section 2B8, which removes the automated refuse container fund from the special revenue fund section.

With the establishment of the Solid Waste Management Fund, this fund will be fully exhausted and closed in fiscal year 2026, and therefore this section is no longer required.

Finally, there are minor language updates throughout the document, including updating the fiscal year as well as the recitals.

Tomorrow, the Department of Finance will release the fiscal year 2027 operating and capital appropriations along with the annual change letter and the budget resolution.

We'll be presenting the full AO with these attachments to the city council on June 23rd.

And once adopted, we'll codify the fiscal year 2027 adopted budget into law.

Staff's recommendation today is to forward the fiscal year 2027 appropriation ordinance to city council for approval.

That concludes our presentation today, and we're available for any questions you might have.

Alrighty, thank you so much.

We will go to the IBA for comment.

Great, thank you, Chair Foster.

Um, so for the most part, the language in the draft appropriations ordinance or AO remains largely the same as what we had last year, although there is an item on G4 or page 17 that I'll draw the committee's attention to.

This would authorize the CFO to transfer unobligated CDBG funds to previously awarded nonprofit facility improvement projects above the amount council approved in the HUD annual action plan.

This is anticipated to align the AO with the FY27 HUD action plan and staff's intended purpose is to be able to quickly respond to project cost increases without needing to bring the same projects back to council for approval.

Um economic development department staff noted that when the city maintains a large CDBG fund balance, the city is also at risk of monitoring and penalties from HUD.

That said, we do want to note that this would be an additional delegation of authority.

If the committee wishes council to retain this budgetary authority, it may wish to also discuss ways that council could expedite any authorization of increased appropriations on a project by project basis if they are needed, just to ensure the city's ability to expend CDBG funds in a timely manner in line with federal guidelines.

Alternatively, the committee could consider amending the language before you now to more clearly state that this is about previously approved projects, essentially by adding it to say that the CFO was authorized to transfer unobligated CBG balances to community and economic development activities and to appropriate and expend those transfers for only previously approved nonprofit facility improvement projects.

With that, we are available for questions, and I also note that Noah Fleischman on my team is available on the Zoom for any particularly technical questions.

Thank you, Chair.

All righty, thank you so much.

With that, Natalie, please proceed with public comment.

The public comment paper item four is open, and we have three slips submitted in the committee room.

We will begin with allegedly Audra, followed by Joyce and Yada and Maximilian Schmidt.

Each speaker will have one minute to speak to item four.

Yes, anything that you can do to be transparent when you're letting people know where the funding is going, and you should absolutely be bringing in what we were just talking about to make sure that.

I mean, if the police say that they're training, it's like the obviously you're not.

I mean, because we continue to have problems.

So how do they need to update that?

I mean, I understand as you know, somebody of color or whatever, which I'm of color too, I don't even know why we use that language, but and have been beaten by an officer.

Every time I see them put their gloves on, I get PTSD.

So it isn't just a blacker, you know, brown thing.

It also has to do with women who are white.

And it happens on a massive scale, and nothing happens.

I didn't get any justice for that.

It was on tape.

The officer was exonerated.

So it's like, I don't know that you can really train for situations when you have officers that actually get off on beating up women.

The officer that did it to me told me you're welcome, and he's extremely proud of it.

I don't think that you can train someone to not do that.

Thank you, Joyce and Yada.

Is this one minute, Natalie?

Yes.

Okay.

Um I don't think I'll say what I was gonna say.

Um, which which made a lot of sense.

Um I just liked what was being discussed on the former item and how it tied in with the statement of budgetary principles and uh AO.

So I think we need to look at that.

I do not like the statement of budgetary principles.

I'm looking forward to that item coming up soon.

We have to improve them, and I want more collaboration.

I want more understanding of authority and accepting authority and that sort of thing.

I just I'm not real up on understanding AO but I'm getting there slowly and it just seems to be more about human relations and and power struggles perhaps so um thank you for this and and uh let's look at equity I think we need a new vision a noble vision love tool thank you our final speaker in the committee room is Maximilian um hi I know this was mentioned earlier but I think there does need to be more transparency especially with um police funding there was a few stories told I just wanted to also share why I believe that in my story with the police um I've been handcuffed over 10 times simply for trying to get the word out about the underground genocide that people are being made purposefully paranoid by people who can read their minds and they think it's impossible people can read their minds and I've been handcuffed and taken to psych wards for writing about this online and for protesting this in public and then in psych wards I've been also um mentally abused by people who could read my minds and I just wanted to say that this is an issue of the First Amendment I've been handcuffed over 10 times due it has been a violation of my First Amendment right and the police um are harassing me reading my mind when they're doing it and um there's an underground genocide happening people are being made intentionally paranoid driven to drugs overdose and suicides and um masons are thank you responsible this concludes in person public testimony we will now move to the virtual queue there are two hands raised in the virtual queue circulate please unmute and provide your comments.

Good morning my name is Aria I'm the policy manager at circulate planning and policy and I just wanted to thank everyone here for working um to get us to where we are today in advancing the appropriations ordinance um this year's ordinance includes substantial wins for road safety it provides funding to fix the fail 15, implement the speed management plan and restore half of the multimodal team bring it back from a proposed full elimination and I just want to thank the council for fighting to fund these priorities in the upcoming fiscal year sustained investment of this nature is how we make progress towards division so thank you for all your work um on the budget this season.

Thank you.

Our next speaker is phone number ending in eight eight one six I'm sorry eight eight one three please press star six and beginning follow here can you hear me yes can you hear me okay so here yeah I just uh too wanted to just mention transparency transparency transparency and I also want to uh thank the public the concerned citizens who are there the ones who are not scripted and not being paid to to show up and pay attention it's so crucial that uh more people do this so perhaps um you know that's uh something that the the city council needs to to work on as far as you know having the people know what in fact is happening with their money and what decisions are being made um on our dime that's all I have to say thank you thank you and our final speaker in this in the queue is Nancy Nancy please unmute and begin uh hi thank you um I really just want to speak up and and say thank you to council member foster for sharing that story about your son that sounds extremely traumatic and should never happen it's that's such it's so gross to hear that um as as a mom and just as a person um and I just knowing how much money, how much taxpayer dollars are going towards SDPD.

Right, I've I've seen SDPD roll in really deep on things that are like what?

Why are there four cop cars here?

There's a a person that is like passed out on the side of the road.

Why are we not calling EMT?

It's like that just seems inappropriate use of funds um and so I just really appreciate emphasis on um more transparency on use of STPD funding.

You're getting a lot of money, and we want to know that it's being used well, and rolling in deep like that seems really inappropriate and a misuse of taxpayer funds.

Thank you.

Thank you.

And Chair, this concludes public comment on item four.

Alrighty, thank you, Natalie, and thank you to the public for your comments on this item.

I will now turn it over to committee members for questions and comments and entertain a motion.

I think I don't want to necessarily um make the sausage here as we're sitting on the on the dais.

Um what I would like to ask, and and Matt Wiley, I'll put this to you.

Um I'm okay with moving this item forward to council because it still needs to go to council.

We still have statutory timelines that we need to do to make sure we get this in place.

Um, but I would like a commitment that as we are going from, you know, as we conclude today and we move to council that we have some more dialogue and and um in collaboration with the IBA's office um to look at what language we can add to this um as it goes to council um and we um just address um that delegation of authority and then and um transparency um concerns uh because I do have transparency concerns.

Chair Foster, you have our commitment to have that dialogue.

Okay, very good.

And um I guess I will uh make the motion to move um staff's recommendation with the understanding that we will be working together um as this item moves forward to council um to address the uh CDBG uh concerns.

Just to clarify um as long as I think what we were trying to do is just to make sure that the delegation authority on on the previous item on the Hunt Action Plan was matching the AO as long as it's in uh in alignment, you would be okay with that.

I think we're looking for some clarity, right?

Um just make sure that both are in alignment.

Is that fair?

Uh by and large, I think that's quite fair.

I think some kind of um report requirement or something to hit the transparency side too when there's a significant increase in one CDPG project funded project versus another, um, would be appropriate too.

But I think that's some of the sausage making that perhaps the chair wanted to avoid this morning.

Um, I understand.

Correct and appreciate it, and again, these are CDBG dollars that are very specific to impacted communities, and so I think it is of the value to make sure that we are having the conversations that we need to have and that we are as transparent as we can be to the public and how we are doing this, right?

And totally appreciate and understand the need because of the statutory timelines and how um you know the HUD dollars operate and our our obligations for reporting and and and potential impact to future um dollars and all that good stuff.

So totally understand, but I think I'll leave that there for the motion.

Um so with that we have a motion on the floor.

Um do we have a second?

All right, second by um council member Elo Rivera.

Um, not seeing anyone else on the lights.

Um Natalie, please call for the question.

And that passes 3-0 with council member Lee absent.

Oh, let us um we will take a quick um pause um as we have um lost a quorum, but uh council president pro Tim Lee will be um right back.

He had to step out um to take care of something.

So thank you so much.

We'll take a quick of hopefully uh no more than a five minute pause.

All righty, thank you for your patience and um apologies for the quick um recess, but we will now reconvene as we um have a quorum.

Do we need to call roll?

Council President Pro Tem Lee.

Here.

Council Member Ila Rivera.

And Chair Foster?

Here.

All righty.

With that, we have a quorum present.

We concluded item four.

We will now uh move to item five.

Now we please introduce item five.

Thank you, Chair.

Item five is master lease agreement to finance general fund vehicles and equipment.

Thank you so much.

Staff, please introduce yourself for the record and let us know how much time you will need for your presentation, and feel free to begin.

Joining me today is Marisel Valdivinos, financing coordinator in Department of Finance.

We'll need about six minutes.

The financing ordinance will also declare the city's intent to reimburse itself for prior expenditures and to authorize the mayor and CFO or their designees to take all steps necessary to finalize the transaction.

Marisol will now walk walk you through the details of this financing.

Thanks.

The proposed financing of the 48.3 million is anticipated to be used for 213 general fund fleet vehicles and equipment that have been ordered and are anticipated to be ordered over a 15 month period following execution.

Associated sales tax and outfitting costs for the vehicles and equipment will be cash funded and budgeted in the vehicle replacement fund.

The purchase contracts for these vehicles and equipment were approved by city council in July of 2022, with the understanding that they would be financed through EVFP with a mass release agreement brought forth closer to the time of the vehicle or equipment delivery.

Based on current marking conditions, estimated interest rates range from 3.91% to 4.1%, depending on the repayment terms.

Actual rates will be determined at closing.

Lease payments will be made semi-annually from the vehicle replacement fund.

The projected debt service for this financing was incorporated into the city's five-year financial outlook and remains within the debt ratio limits established by the city's debt policy.

As shown in the schedule, annual payments are expected to peak in the early years and then gradually decline as obligations are repaid.

The city may draw only the funds it needs and is under no obligation to utilize the full authorized amount.

Any unused capacity may also be available to finance additional eligible equipment and vehicles if needed.

The interest rates will be fixed at closing and financing will only proceed if the rate remains below the established ceiling of 7%.

The city commits to budgeting and appropriating annual lease payments through the term.

An additional feature of this agreement is the optional escrow.

This allows the city to draw down all or a portion, all or a part of the financing proceeds before vehicles or equipment are actually delivered.

The escrow feature gives the city additional flexibility if there are delivery delays or if market conditions make it financially beneficial to fund earlier as we wait for these assets to arrive.

Since it's anticipated that the city will pay the vendors upon asset delivery, then reimburse itself through a lease funding.

The city is required by treasury regulations to declare its official intent to reimburse itself using the master lease agreement.

The ordinance contains language that satisfies this requirement.

The anticipated timeline has us taking the item to City Council July 7th, 2026 for the first reading of the ordinance, followed by the second reading after the summer recess, August 25th, 2026, with the execution of the agreement in early September.

Thank you for your time.

We welcome any questions the committee may have.

Alrighty.

Thank you for their presentation.

Now we please proceed with public comment.

The public comment period for item five is open, and we have received three speaker slips from individuals in the committee room.

There's one hand raised in the virtual queue.

We will begin with those in the committee room.

Allegedly, Audra, please approach the elector, and you'll be followed by Joyce and Yada and Maximilian Schmidt.

You guys love giving money to like JP Morgan, who's a triad with like, you know, BlackRock and Vanguard.

School.

Like, have you know, global monopoly on finance, but it's all good.

We only worry about Trump.

Um I am concerned that this is 213 vehicles, uh, and this forty-eight point three million dollars is going to be used for just those.

And like, I mean, that's like a couple hundred grand, two hundred and twenty-six thousand a vehicle.

I mean, if you split them evenly, but it's like that's a lot of money.

And like when you guys, if you're gonna be uh bringing in any kind of an electric vehicles, those cost more money, and they actually damage our roads more.

And even like, you know, public transit has deemed that spending money on these electric the fleets has been not beneficial and is actually uh it continued to just cost more.

So it it's not something that we need to be engaging in, but it's concerning that we're spending that much money on your fleet.

Thank you.

Joyce and Yata.

Okay.

Uh I'll say yes on this.

And let's talk about the EOC.

Uh they are underrepresenting, with Latino and female in sales, and females in management and financial.

Uh JP Morgan Chase Bank.

Uh they're they're called a recommended contractor on the EOC.

I wasn't sure about that.

I guess it's because it's not finally approved yet, but there are 52 employees and the one category that stood out to me was 17 white males, and that was the biggest category out of the 52.

So that's it.

Thank you for the presentation.

And uh love to all.

Thank you.

Our final speaker in the committee room is Max.

Hi, I wanted to say that I'm opposed to this.

Um the city of San Diego holds approximately six point eight three billion dollars in total non-current liabilities, long-term debt, and they're spending fifty almost fifty million dollars to upgrade their vehicles.

And I wanna say with my first amendment right, the reason why I'm opposed to going into more debt is because there is an underground genocide going on in San Diego where people are being made intentionally paranoid to the point of suicides and drug overdoses that nobody is talking about.

And that is why I'm opposed to this, because n we're spending fifty million dollars for vehicles, and no one is talking about how Freemasons are stalking people, um, speaking gibberish behind their head while reading their mind, making them extremely paranoid to the point of um they turn to drugs and suicide.

And there's an underground genocide that the you need to talk about.

Thank you.

This concludes in person public testimony.

We will now move to the virtual queue.

There are two hands raised in the virtual queue.

As a reminder, each speaker will have one minute.

Hector, please unmute and begin.

All right, thanks for taking my call.

This doesn't pass the smell test to me, man.

You're gonna buy them with cash and then finance them with a lease.

Uh put this on the shelf.

Don't do it, man.

Just give the give the guys with cars and light trucks, give them a magnet to put on their own car.

Don't buy any more new cars, no more new cars, no more new little light trucks.

Just give them a magnet for the city, pay their insurance, pay their tires.

It would probably save the city a lot of money.

And then uh put off doing it for a couple more years.

We don't have the money.

You know, this is just like crazy.

So plus the new car market is crashed.

City Chevrolet is going out of business.

All these places are are going bankrupt.

And the repo market's taking off.

There's a lot of good deals.

Don't buy any new cars.

Just buy them two years old or a year old.

The market is probably paid top dollar for these cars.

And the everything car dealers are crashing.

Thank you.

This concludes your time.

Our final speaker with their hand raised, is phone number ending in 8813.

Please press star six and begin.

Hey, Consolo here.

No, so I'm just uh timing in to say that I'm I'm listening and uh I I truly uh, uh it's it's crazy.

It's crazy.

Some of the things that are happening within our city and um gosh, just finding so much information out, but I I totally agree with um what Audra uh comment and um yeah that's all I have to say.

Thank you.

Thank you.

And Chair, this concludes public comment on item five.

All righty, thank you for that, and thank you to all of the um speakers that um gave comment.

I will now turn it over to the committee members for questions and comments and entertain a motion.

Not seeing anyone on the lights, I will uh move staff's recommendation.

We have a second by Pro Tim Lee.

Uh not seeing anyone else on the lights, please call for the question.

And that passes three zero with Vice Chair Marino absent.

All right, thank you so much.

Um, that brings item number five um to a close.

We will now go back to our information agenda.

Um please introduce item six.

Item six is cost-benefit analysis of renting versus purchasing light to heavy duty vehicles and equipment.

Chair.

Thank you so much.

Staff, please uh introduce yourselves for the record and let us know how much time you will need for your presentation, and feel free to begin.

Hi, good morning, Bethany Bizek, Chief Performance and Logistics Officer.

Since November, our collective city team has been working to finalize this analysis, which provides the break-even points when it's most economical to rent or own a vehicle.

This is the first time we've had such a robust analysis to help inform data-driven decisions for our entire city team.

In addition to the analysis in the presentation, the team will share important information about the assumptions of the study and existing constraints that impact our ability to expand city operations.

And with that, the team has been working really hard over the past several months.

So I'd really like to acknowledge our city teams who've been critical to completing this effort.

That includes staff from the performance and analytics department, general services, and purchasing and contracting.

With that, we'll need 10 minutes.

Thank you.

All right, thank you, Bethany.

Good afternoon, Chair Foster and budget committee members.

My name is David Onyate.

I'm the assistant deputy director with the Department of General Services.

Um, I'm joined today by Deputy Director Mike Simons, uh PNC Director Claudia Barca and Panda Director Alex Hempton.

This presentation is an informational item that was previously requested by committee member Ila Rivera.

Before we dig into the analysis, I'm going to provide some context about the city's fleet and its operations, as well as the use of the HERCWIN on contract, and then Alex will go over the cost-benefit analysis details.

Fleet operation maintains over 5,000 vehicles and voted equipment, which includes the city's own rental pool of about 112 uh vehicles.

Fleet is also responsible for the acquisition, maintenance, fueling, replacement, and disposal of city vehicles and equipment.

This graph shows you that the fleet has grown by over 645 vehicles over the past 10 years.

Despite the growth shown in the previous chart, fleet has only received 15 additional positions over the last 10 years, and these positions were exclusive to supporting environmental services solid waste collection, mostly due to SB 1383.

The number of repair staff needed for the remaining 4800 vehicles and growing has not kept up with that growth for us to maintain service levels.

Many departments use city-owned vehicles and equipment to support daily operations.

Those with the highest amounts includes PUD, transportation, stormwater, and ESD.

However, when city-owned equipment are not an option, a rental contract is often necessary.

The city's current vehicle and equipment rental contract was awarded in 2019 with an initial not-to-exceed amount of 14.3 million dollars over the life of the contract.

Since 2019, this agreement was amended several times to address operational needs.

Amendment 8, the latest amendment extended the contract for an additional two years and increase the not-to-exceed value to 66 and a half million dollars.

Because of the unprecedented demand on rentals, PNC added additional contract oversight controls to help better understand and manage the contract utilization.

These controls include insuring departments are broken up.

Uh and turn part the department requests are broken up on a line-by-line basis to clearly note what is being rented.

Departments must include a reason code for each vehicle or piece of equipment.

And departments must have an assigned department designee that confirms that the request is valid and in line with departmental cooperational goals.

If the department's reason code is tied to repairs or vehicle order delays, fleet will verify that the city vehicle is in fact being repaired or that the vehicle is on order.

If all criteria is met, P and C staff will approve the purchase requisition and the rental is authorized.

The slide here will show the various reason codes that the department are required to assign to each vehicle or equipment on the purchase requisition.

The reason codes generally fall into three main categories: maintenance and repair, operational needs, or unplanned or emergency needs.

These reason codes allow us to have improved monitoring and reporting and enables us to narrow down what is driving the contract use.

It's important to note that there are very various budgetary, operational, and external factors that must be considered before making any business or operational decisions.

Regarding our staffing level, of the 160 budgeted technician positions, 54 of these positions are either vacant or filled by employees on protected leave.

Fully filled staffing levels are required for us to maintain the city's current and projected fleet.

However, more staff is needed to account for the backlog of work that currently exists.

We also have facility capacity restraint constraints for our garages, our base base, and our parking.

Choices repair facility maintains over 1700 vehicles.

And we have not expanded that site since 1962.

Lastly, we are experiencing long delivery times for vehicle purchases due to upfitting and new emissions and other regulatory requirements.

Depending on the vehicle, it can take one to three years for a vehicle to be put into service.

And now I'll turn it over to Alex to review the cost-benefit analysis.

Thanks, David.

So this analysis was requested by council member Ilo Rivera at the March 2025 budget and government efficiency committee meeting.

The ask was for a comparison of renting versus buying across the full spectrum of vehicles.

Performance and analytics department staff, specifically Alex Tang and our data scientist Matt Endo worked collaboratively with purchasing and contracting general and general services and the city's executive team on this analysis.

Also, thank you to communications for editing and the design work of the final report.

This analysis was structured around four questions.

What does ownership cost?

What does Herc charge for rentals?

When does buying make more sense than renting?

And what are uh where are their savings?

The end product is a reusable framework to inform future decision making.

Our analysis uses an ideal scenario to compare financial impacts of renting versus purchasing.

This means operational factors such as staffing, facility capacity, and fleet size were not included.

The findings should be considered in context with real-world constraints that will affect the feasibility.

Data came primarily from internal systems, so fleet records, purchase prices, maintenance history, and resale values.

One external source was used, the actual Herc rentals expenditure data so that rental uh figures reflect what the city really pays.

We compared median costs across vehicle groups to capture the full picture, including overhead and resale value.

Ownership is generally more cost-effective for vehicles used continuously with predictable year-round demand, and adopting a hybrid approach based on break-even points provides the most flexibility and long-term savings.

Permanently renting is better generally only for the short-term seasonal specialized or temporary projects vehicles.

The break-even point represents the number of months at which purchasing becomes more cost-effective than renting.

So identifying these points allows departments to make more informed decisions whether to continue renting or to invest in a purchase.

So purchasing requires a significant upfront investment, whereas renting has lower costs in the earlier years.

So shown here, the aerial vehicle break-even point is at about the four and a half years, and with a typical life cycle of eight years, in this case, it would make more sense to purchase if the expected use succeeded the four and a half years.

The medium excavator tells a very different story.

So the breakeven point here is just over nine years, and meaning that purchasing only becomes more cost effective after that time frame.

So since the equipment's expected lifespan is only eight years, the city would not recover the cost before replacement.

The recommendation here would be to rent the medium excavators.

This table shows every vehicle type we're purchasing beats renting over an eight-year period with annual savings shown.

Savings range from $900 a year for the scissor lift to over $53,000 a year for a generator.

Double asterisk items are base model comparisons, so the actual savings may differ once the upfitting is factored in.

And the single asterisk items are not currently owned by fleet, so this could represent a new acquisition opportunity.

The pickup truck comparison here highlights an additional factor to consider, which is the upfitting of the vehicles.

City-owned trucks are upfitted with job-specific gear to meet the needs of the department, such as radios, warning lights, toolboxes, and safety markings.

So while most of the city's fleet is standardized, general services met with departments last year to standardize the light duty vehicles to reduce the number of customizations.

A rental truck that looks cheaper on paper may still not be operational suitable for the field crews, as it might not have all the required equipment.

This shows an example of a standardized city truck upfitting invoice for a city Ford F 150.

So this also illustrates how extensive the customization requirements can be.

Items include warning lights, beacon light, toolbox, spray line bed, GPS wiring, and labor costs.

Upfitting costs were not included in the base model pickup comparisons, and saving figures for the pickups are conservative.

This table is the core decision reference, so how long the city must use a vehicle before buying is better than renting.

The fastest breakeven is the generator at nine months, and the slowest would be the half ton pickup truck at nearly six years.

A general decision rule is that if planned usage exceeds the breakeven time by otherwise rent.

This covers the additional vehicles such as heavier and more specialized equipment with longer breakeven horizons.

The red items have breakeven points exceeding their service life, where renting would be the better choice.

And the purple items have insufficient data to make confident conclusions, which we'll explain more on a uh next slide.

The items shown on this slide were the ones noted in red, and these are the six vehicle types that should be rented long term.

Annual savings from renting range from $500 for the mini dump truck to $17,000 for the dozer.

These are not purchase candidates regardless of the frequency of use, as the economics don't support it within their useful lives.

For the light trailer, Flatpad trailers, SCVs, water trailers, and skid steer loaders, more data is required.

So on these, the maintenance history is too limited to produce the reliable cost projections, and forcing a conclusion on these would be misleading.

So our analysis shows the financial financially optimal paths to buy or rent different vehicle types, but four constraints really limit the ability to act on the recommendations.

So with staffing and understaffing more specifically, vehicles will be down longer than the model assumes as there is not sufficient staff to maintain them.

Around facilities, the city facilities aren't large enough to keep up with the existing or the proposed demand, and more vehicles without more base space would just compel on the repair bottleneck.

With procurement, the multi-year lead times mean that the buying benefits can be delayed and require advanced planning.

And with the debt capacity, borrowing constraints that the city is under can push the city city toward renting, where buying would be the better long-term choice.

So to conclude, no single strategy, all buying or all renting is right for the city's diverse fleet needs.

A hybrid approach, guided by this breakeven framework gives departments a practical approach for balancing the cost efficiency with the operational flexibility.

Moving forward, continued improvements in fleet data quality, tracking vehicle utilization, and monitoring the rental usage will strengthen the city's ability to evaluate fleet performance and make informed decisions regarding the vehicle ownership, rentals, and the overall fleet composition.

And to summarize, by what you use heavily and consistently and rent what is specialized seasonal or short term.

So thank you for your time.

We're available for any questions.

Alrighty, thank you for that.

We will now turn to the IBA for comment.

Thank you, Chair Foster.

I'll turn this over to Jordan Moore to provide comments.

Thank you, Charles, and good afternoon now, members of the committee.

My name is Jordan Moore with the office of the IBA.

Our office reviewed the cost-benefit analysis conducted by Panda in coordination with the Department of General Services and Purchasing and Contracting in response to the request made by Councilmember.

We find that the analysis does respond to the council members' question, which is a determination of if renting or purchasing specific vehicles is more cost effective.

Given the limitations noted in the report, such as assumptions around current fleet staffing, maintenance schedules, bay and yard space, and the appropriate utilization of vehicles, we believe that this report does provide a useful analysis for fleet acquisition strategies on a go forward basis.

Additionally, we find it notable that the city is currently basically in line with the recommendations of the cost-benefit analysis.

Most vehicles that are more cost-effective to purchase are being purchased, while vehicles that are more cost effective to rent are generally being rented on a long-term basis, with specific exemptions mostly focused on things like operational readiness or other criteria.

The study really does not have many any major recommendations that would dramatically change the city's current practices or purchasing patterns, save for potentially increasing the size of the vehicle rental pool.

We look forward to working with General Services to implement this recommendation in a future budget in order to achieve potential long-term savings, particularly on outside vehicle rentals.

However, we have a note that this will most likely not solve all of the city's increased costs for rentals and fleet services.

As noted in the written report, recent increases in rental costs have more to do with internal bureaucratic issues, such as delays in vehicle procurement, the need to increase rentals during COVID to maintain distancing rules and how this changed expectations of city forces going into the future, and the addition of new services without proper budgeting for additional equipment needed to provide those services.

We appreciate that purchasing and contracting and general services, along with the Department of Finance, have taken steps to attempt to mitigate cost increases, such as implementing the new reporting requirements for departments requesting rentals that you just heard of, as well as changing budgetary processes to ensure that all costs are included when departments are upsizing their operation.

This should decrease rental costs in the near term and there's or at least provide the city with enough information that dramatic increases in contractual costs will no longer be surprises that require retroactive action.

We look forward to the conversation here at the committee today, and our office is also available if you have any questions.

Thank you.

Thank you for those comments.

Um we will now turn to uh public comment.

Thank you, Chair.

The public comment period for item six is now open.

We have received five speakers lists in the committee room for item six.

We will begin with allegedly Audra, followed by Maximilian Schmidt, then Andres and Tim Douglas.

You guys in your COVID shit.

Um limited space to keep vehicles.

No wonder you guys are getting rated parking lots, sparking spots.

I mean, good job, right?

Because then you're gonna have nowhere to put them.

I mean, Tent City is taking up one of your lots over in B Lot, so I mean maybe, you know, do something better with the homeless and you can have your spot back.

Um, and then the requirements with carb and your climate action plan, eventually you're gonna want all these vehicles to be electric and it's gonna cost us way more.

Just the fact that it takes two to three years to procure a vehicle.

That's like if you're 16, you should start planning to drive a car when you're like 12.

I mean, it's like, which one do you want?

And so by the time it gets put into service, it's one to three years.

That's three to six years to bring in a vehicle.

So are you like thinking about the future plans?

I mean, if you're seriously gonna be implementing electric vehicles and you're buying gas vehicles right now, like what the fuck are we doing?

Like this is just insanity, but you guys just you let people know.

So I appreciate that.

It's good.

Thank you, Maximilian Schmidt.

Hi, um, I'm against the city using tax dollars to rent or purchase any vehicles whatsoever.

And the reason why I'm opposed to that is because there is an underground genocide that needs to be addressed.

And what is happening is people who are telepathic, meaning that they're Freemasons who've done a Hermetic Chan or human sacrifice in the Masonic Lodge to be able to look through people's eyes and read their minds, are harassing people and making them intentionally paranoid, and driving them to suicide and driving them to drug use and drug overdose.

And it all revolves around the lie that a human being cannot read someone's mind, and there's so much misinformation online that if you read online like about mind control, you'll get a bunch of bogus about technology and mental illness.

City council needs to address this genocide, they need to tell the public, yes, Freemasons can read your mind.

Thank you, Andres.

Good afternoon, Chair Foster and committee members.

This analysis highlights infrastructural constraints of our personnel, our bargaining members who remain chronically understaffed doing the work of multiple employees, but also it highlights the need for more managerial oversight and process improvements to evaluate their performance on a higher level of scrutiny to optimize their efficiency and place our bargaining members in better positions.

In addition, we look forward to continued collaboration with the Department of General Services Fleet Division to center our bargaining members again who actually performed the work to repair and maintenance these vehicles.

Thank you.

Thank you.

Tim Douglas, and you'll be followed by Joyce and Yata.

Good afternoon.

Tim Douglas, elected president of ASME Local 127.

This report is very helpful for us to understand the importance of purchasing vehicles versus renting them.

We haven't had this type of analyst before to show the vehicles types what is the best decision for the city.

Moving forward, this will help our city with crews plan for vehicle replacements and other situations like seasonal needs and projected specific needs for my members.

The report also highlights the importance and the need to invest in city facilities like maintenance yards and base space.

Not having investments at the key main maintenance maintenance yard for the city since 1960s.

We continue to impact frontline service until we find a solution to this.

I want to thank again everyone in the city staff for putting this together.

Thank you.

Thank you.

Our final speaker in the committee room is Joy.

Wasn't he good that last speaker?

Uh, thank you.

Uh okay, thank you, uh, committee member Ilo Rivera.

Always good work from you.

Thank you.

And uh the presentation was good, and of course, Panda always gets five stars.

And uh I just love their work so very much.

And and of course they're coming out with a hybrid, which is uh so innovative and so creative, and I just love the word hybrid.

So sorry to hear about the vacancies.

And uh, I mean, what are these departments gonna do?

The resources are just depleted.

I just oh my god.

If I ever saw the big picture of what's going on in these departments, I would cry forever and never.

I wouldn't be able to participate.

So uh uh Jordan, as always great work.

Now I'm gonna have to study this internal bureaucratic issues.

I'm gonna have to research that.

Thank you, everybody.

Love to all.

Thank you.

This concludes in-person public testimony.

We will now move to the virtual queue.

There is one hand raised in the virtual queue.

Phone number ending in 8813.

Please press star six and begin.

Okay, go to the hair.

Yeah, I'm just again just paying attention and listening in.

It's amazing how people overlook your major flaws.

And um, that's sweet, I guess.

Um, uh well, it doesn't.

It doesn't make it okay, but I'm sure you guys need to hear something that is uh other than the truth, um, which is deemed positive.

But anyways, um, so yeah, back to this.

More fraud, waste and abuse.

You know, the people are going to eventually have to be using gas cars.

I mean, I'm sorry, electric cars in the future.

You guys I don't I don't understand this whole thing.

It's like if they're going to mandate uh having to be in electric cars, why is money being spent on these vehicles?

It's just more waste.

Thank you.

This doesn't make sense.

This does conclude your time.

And Chair, this concludes public comment on item six.

Um thank you so much, um Natalie, and uh thank you for the um public comment.

Um just a reminder this is an information item, so no motion is required.

Um, I do see that we have council member elo um Rivera on the lights.

All right, thank you, uh Chair.

I appreciate this item being heard.

Appreciate the the work that was done by the Department of General Services, purchasing and contracting, and uh um and IBA as well for your analysis here.

Uh obviously, this was a lot of work, um, and and took a lot of thinking through complicated issues.

And um I appreciate that the time that it I appreciate that you took the time to do it thoroughly rather than a more simplistic version that um wouldn't have provided as much insight.

There's um a couple of kind of uh like I ironic aspects of the conversation.

The whole point of asking the questions and having the presentation is to not continue to avoid the truth when it comes to ways to improve the way we do things.

In that lies an acknowledgement that there are there is room for improvement.

Um, that's our job.

We're trying to do it here.

Um, and I appreciate staff working with us.

I think one of the frustrating uh one of the frustrating things that was happening that led to the request was the very surface level responses that were provided to questions about renting versus owning.

And it just very much seemed like this was a thing that we did because it was a thing that we did, and there wasn't much more thought to it than that.

Um to me, there's two underlying kind of foundational issues here.

Um, one is the city not being resource right, and because the city isn't resource right, um, we are not able to up operate in the um optimal way to deliver the services that the city the city residents deserve.

And then there's how the city has responded to that lack of resources, and one option would have been to talk about the need for more resources.

Another option would to move forward with faux financial and fiscal responsibility uh that kept short-term costs down uh while long term costs grew.

So I you know, I hope we're turning the page toward a more honest assessment of the resources that the city needs.

I know that the uh Charles, you and your team continue to make that point.

Um, and I think some of us on the council are acknowledging that point but we're going to have to just either accept that or be honest with the the the consequences which would which are either well reduced services and um not really saving money for the city in the long term I had one very specific question the the generators um the city doesn't own was it generators that there's a fifty three thousand dollar annual savings from owning not at this time we we own none none how many should we own or sorry how many should we how many do we have how many are we renting Alex is gonna see if he has that data available for you.

I think we're gonna have to get back to you on the number of generators that we were renting and for how long we're renting them.

It's a that's a lot of money on an annual basis.

I mean that like you know so that kind of brings me to my next point which is how are we going to act on this and that's not necessarily a panda question that might be more of a a MAT question it's a s maybe it's a Bethany question um but it goes beyond just one single department um or even branch of the city.

Thanks council member yes it it certainly does so the action that we'll take is every time that we decide that we need to bring a new vehicle into service we're gonna take a look at this report and determine what makes the most sense how long are we planning to use it.

Also are multiple departments having the potential to use it even if there's a short term need let's say for one department but then it can be used long term for another department making a citywide decision rather than just a single department decision.

So on a case-by-case basis we'll be able to determine what's the best match uh based on these recommendations by the equipment and vehicle type okay I appreciate that Bethany um is that a thing that we can be updated on as you're as you those decisions are starting to be made so that we can understand what that looks like in real time yes absolutely I appreciate that going back to the generator I'm not like trying to focus too much on one thing with the the dollar amount per generator it just is like we came to we just had a budget conversation where we were like really like counting pennies at the end and um do you have a sense of how many of those we're using so uh I think that the comment in the report was specific related to GG DGS Department of General Services own generators which right can be used across multiple departments there are separate departments that own generators for example um pumps and generators are owned by stormwater department for example so I think that was specific to the department of general services owned generators uh in the tens let's say between PUD and stormwater they're probably the highest users of pumps and generators in the tens not hundreds.

Well that's good.

But even the tens is half million bucks.

Understood yeah Jordan did you no I was just looking in the report so generators I would assume that are DGS would be something that would be rented by departments and shared.

In the recommendation that had to do with you know increasing the rental pool I note m all the different scenarios talk about two generators so not one but you would do two but that would still be it's probably about a hundred thousand dollars in savings that you would get by purchasing those two um the other things that look like your light towers scissor the spoon lifts forklifts those are all things that again this is not the excuse you could see how departments would say well I only did a generator for a certain amount of time let's just go rent it what I think this analysis shows and was the one benefit of it is you now can say well we know multiple people are using it.

We don't need to rent this anymore we can buy one that they can then be shared amongst other people.

Again, it's not a huge savings, but you're right.

Like two generators, that's a hundred thousand dollars in savings that we could probably achieve.

Again, assuming full utilization and all the other caveats that come with this kind of analysis.

Yeah.

I'm not gonna obviously, you know, optimizing renting versus owning doesn't fix the structural budget crisis.

Uh more resources are ultimately what's needed.

And we should be as efficient as possible.

This is an example of how we can do that.

Um, and so I really do appreciate the work.

I appreciate there's already a plan for how to implement it.

Um the last thing I will say is this that that part, Jordan, I think is something that stood out to me since I got to the city, is how often and I think there's been some improvements in this area, but there's a lot of room for growth.

Um the regularity with which departments talk about other departments as if they're like separate corporate entities and not part of the same team of that is like should have the same mission of improving the lives of San Diegans.

And worth noting that that is a a culture that was set, and uh, and these are uh business practices that were deployed by a mayor who is currently critiquing the city being in the position that it's in, and he set much of this in motion.

Um so uh appreciate the analysis.

Thank you for the work on this, appreciate the conversation that concludes my comments.

Thank you for that.

Uh we will now go to Council President Pro Tim Lee.

Thank you, Chair, and thank you to Council Member for sort of putting us on this path.

Because I I I think these last couple of years in particular have shown us that when we're pinching and trying to figure out every resource available, um, we owe it to ourselves to analyze uh where we can.

And I I think what I appreciated here in particular is that there's probably an easier ability to answer the lease versus uh own question if a number of the limiting factors that you've identified were not what they are, but somehow we've got to balance all of those into the equation.

Some of those will apply regardless of whether we've got greater resources.

Some of them would hopefully change if resources change as well.

Um the capacity and ability to store, I think is is one that we've just got that's a massive limiting factor given uh where our operational yards are.

Um and maybe at the end of the day, there's a there's a choice of balance of what we lease versus own of what types based on the capacity that we've got.

Staffing stuck out to me as well, especially the the note about how many positions are vacant and or on some kind of leave.

Um, on that end, are the vacancies have we been seeing these vacancies more from a long-term standpoint in certain position classifications, and we're budgeting for those savings year over year.

Um, looks like Mike Simons, our deputy director is kind of the like.

Good morning uh committee.

Um, my name's Mike Simons.

I'm the deputy director of free operations.

Um, there is a technician shortage, it's nationwide.

Um, it happened right about before COVID.

When COVID started, the technicians on the outside started making very a lot more money.

Um, asked me in 127 came through.

Would you approve salary adjustments?

That helped my recruitment retention.

Uh my recruitment retention is coming up right now, but again, the last two years we've had the RTFs.

Um, you know, the request to fills, and when they get lifted, I get a chance to try to fill some.

I also have an aged workforce where I have I'll have three retirements by the end of this calendar year.

So, as of this morning, I have 26 full-time vacancies.

I have three more retirements coming, and I have about 25 people on protected leave, and that usually runs 14 to 17 percent.

That sounds daunting uh at a very minimum, and um so I I just want to caveat this as well.

Most technicians, when they're a technician, um, that they will work light duty vehicles, they will work heavy-duty trucks.

That that is their that they do that for their lifetimes at the city.

You can be working on a street sweeper one day, you can be working on a milling machine the next day.

Um, so we really need you know high quality people.

Understood.

Rolando, maybe more of a question for you, but from a vacancy savings standpoint, I I presume that to some degree we've accounted for longer-term vacancies that we see in some cases.

So, so even if we were to increase positions, it wouldn't necessarily increase our capacity in terms of the number of vehicles we could maintain if we're carrying longer-term vacancies without seeing other shifts that would allow us to better fill those vacancies.

That's correct.

Council Member said, Pro Tim Lee, the the those vacancies would be factored in uh into the budget as vacancy savings.

Uh the other area to look at is to the extent um these folks are in long-term disability or workers uh or part of the workers' compensation program, then driving uh in and looking at the that detail and trying to determine if there is a way to bring those folks forward in light duty capacity, although in this case probably not if they're mechanics.

Um but yes, absolutely, the the vacancy factor would be factored into the budget.

Got it.

I I just don't see some of this problem going away anytime too soon, meaning the the need to lease is always gonna be there to some degree, and just trying to be creative makes me wonder what kind of long-term arrangements can be made um when there are long-term lease needs as well.

Um, even if they're seasonal, I mean, we're beginning to sort of see repeating cycles and having the ability for the staff that we do have to be able to do their work in a way that is gonna be efficient, but also I think helpful for them because recognizing that folks are being asked to do a lot, uh, that just sits on my mind as well.

So these are all things to perhaps think of as we move forward.

I mean, I too wish that we're gonna be in a position where resource-wise we get a little more flexibility to make some of these decisions, but it does also sound like we've got some really structural challenges uh from a staffing standpoint for these positions, uh capacity standpoint that also ultimately will dictate whether we get to make that choice at the end of the day.

So thank you.

Thank you again for uh.

All righty, thank you.

Um for those comments.

Um I guess I just want to go back to um council member Ilo Rivera's comments, and I felt just to summarize, he was really the question is now that we have the analysis and uh I think the question I have is how are we operationalizing what's in the report?

I kind of um heard staff say, hey, we'll pull out the report, but I'm not sure that it suffices how we operationalize the report.

And typically that's done through um various processes, whether it's a administrative regulation, a process narrative.

How are we um going about that?

Because for me, that is how we deal with things from a an accountability standpoint, making sure that staff, no matter what department you work in, that you are fully aware of what the requirements are and what is expect what the expectations are, right?

And I think one of the things that really came out that stuck with me in regards to the IBA's comment, and I think I can try to quote you are the internal bureaucratic issues.

And how are we solving that?

Because I think that speaks to just about everything that we do at the city of San Diego.

So how are we how are we addressing that?

How are we addressing the internal bureaucratic issues?

Sure.

Thanks, uh council member.

Um Jordan, you might want to speak specifically about exactly what you are speaking to in terms of those that terminology.

But what I'll say in terms of the actual process, how this will occur during, let's say the FY28 budget setting process, a department will come forward and they will say we need to bring on X number of new vehicles for a new program and X number of FTEs for a program through the BRC process.

They'll say these vehicles and these FTs are needed, then that would be determined whether or not it would be budgeted through the BRC through the executive team group.

And if it were to be put into the mayor's budget, then Department of General Services as the centralized entity will be looking at those individual requests and determining whether or not there would be a buy versus a rent.

They'll make that determination.

If there's a reason that it needs to go one way versus another compared to what the department is asking for, then there'll be a conversation between the two.

After a piece of equipment is budgeted, then Department of General Services specifically is the intake.

There is a form that is created, it's originated by the operating department, it's sent to general services to actually purchase that piece of equipment.

That's the secondary check about whether or not it would be purchased at that time after the budget has been approved, associated with that piece of equipment.

So I would say those are two bookends of the budget process where DGS will be able to confirm the appropriate decision based on what the cost-benefit analysis is showing.

Part of this too was as this issue's been going on for the last year, right?

So I cover many of the operational departments that are noted that have been having rental things, public utilities, transportation stormwater.

I also cover general services.

So I see it from both sides.

Things that were happening in the past were things where the Herc rental contract was at one point set up for operational efficiency, right?

If a department decided they needed a rental that day, you know, transportation, public utility, stormwater used to be able to just call Herc and say, Hey, I need a pickup truck, and boom, the pickup truck was there.

That's how those things flowed through.

Obviously, at some point that got out of hand.

Now you've heard about all the things that departments have to go through now in order to get rentals approved.

You have to actually have a reason code, you have to have those things put forward, you have to check in with purchasing and contracting, you have to check in with fleet, make sure those things are done.

So that's one of the things that has been handled at this point.

Also to Bethany's point, the budgetary process.

We were seeing budgetary, you know, requests coming through for equip for new teams, which had not been a thing that the city had been doing for a number of years.

Well, even if sometimes the budget had the budget for a new vehicle, that wasn't always communicated down the line that it needed to be down to DGS, those things have been fixed.

So I will say many of the internal bureaucratic issues have been starting to get solved.

I actually have pulled Herc spending last week to see where has spending been on that contract.

If the 26 trend holds, we're down to about half of what the spending was in 2025.

So some things are going forward.

I would say one of the last big issues that we're having as a city when it comes to vehicle procurement is that one and a half to three year timeline.

Now, some of that is internal, fleet has been doing things to make sure that departments know when it is that they need to know what you need, how their ordering timelines work, stuff like that.

That is the one place, though, where it's not just internal, it's also external.

There have been new requirements thrown down by the state on you now need to have EV purchases.

So many of your purchases need to be EVs.

You also have supply chain issues still with vehicles where we can call up our vendor and say, Hey, we need 10 pickup trucks next year, and they go, that's nice.

The where you are in the queue is you'll get them in 48 months, not you know, or 24 months, not 12.

So some of those things will need to be addressed going forward.

I think some of those things with an idea of the rental pool is that's why I said that's the one recommendation that I found interesting, because that allows you to have some additional capacity to deal with some issues, but again, a lot of things have been solved, and it's now just as you have your reason codes, as we're seeing where the rentals and what is driving rental costs is going forward.

If that brings up more issues, more processes will need to be fixed in order to address that long-term cost.

But I will say to the purchasing contracting fleets credit, once that issue arose, there have been new processes that have been put into place that from what I can see in the data are working.

And again, I guess my question is in what format are these processes being conveyed?

We just talked about staffing levels, we just talked about how people come and go who's here, who's not here.

How are we conveying this?

Because again, I'm going to accountability.

If it is not properly conveyed, and we are dealing in how the city deals with accountability, right?

Dimensions, what is it?

Discipline, dimensions and discipline.

You have to be very clear.

This is an operational issue.

How are we doing that?

I'm not hearing how are we doing that?

Is it handled within SAP and the controls?

Tell me how we are doing it.

That's what I want to know.

Chair, are you asking specifically how as part of the budget addition process?

How these not this new information will be incorporated?

Not just the budget.

Because what impacts the budget is how the operations conducts their themselves, right?

So we can have a budget like we do every day.

I'm gonna go back to what we hear in our comments.

A not to exceed amount.

We come back and just simply say we need more dollars.

Here it is.

How are we holding folks accountable to where if you are running a service or a department and you know how do you determine that they understand what their vehicle uses is, and if there are issues or things that they need to work out, what steps they need to go through to get said vehicle, whether it's a purchase or a rental?

How are we operationalizing this?

So and so the right hand knows what the left hand is doing, and vice versa.

That's my question because I'm not hearing the answer to that.

I'm hearing Department of Finance is in a good place.

They feel they have certain controls and getting the information they need, but how does the employee, the manager, the person who's making the decision?

As we talk about, we came to certain standards with upfitting, where is that at?

If I'm a if I'm a new person in the department and I need to order a truck, what do I know what I can upfit with and what I do what I can't?

That's what I'm getting to.

That consistency.

So long-term, we are achieving what we can achieve, and we truly are, as we use the word efficient, that we are moving forward in an efficient manner.

That's what I'm driving at.

So, council um council member, I think one of the innovations or the new improvements that has been made.

We did have an audit.

There was a fleet audit that was performed.

Two things came out of that.

One was the assignment of a fleet coordinator within every operating department that has been completed, and they are they have been assigned that role.

They are the centralized point of contact for all things fleet coordination.

If there's a problem about purchasing the vehicles, the procurement, they're the ones that approve every single rental uh request before it comes over to DGS.

In addition to that, we've also established monthly meetings between the client departments and DGS.

And there's a standardized agenda that includes procurements, it includes utilization rate, it includes the dashboard review of every single vehicle that Panda created.

So there's a standardized format that ensures that we have the same conversation with every single department and with the fleet.

Show me that standardized format.

I'm happy to.

Show me where it exists and what gives the authority to take action if someone does not meet those obligations.

I'd like to see an AR.

Something needs to be presented.

Simply saying we have a report, that's not it.

That's not how you're going to maintain operational efficiency and consistency.

Understood.

I'm happy to forward uh all those agendas, the standardized format, and also the recommendations from the auditor that specifically spoke to that.

So we're happy to do that.

The one thing that should not happen is those individuals who are now in the in the departments who are who are receiving information from other staff individuals.

They should not then in turn get bogged down with going back to each individual and saying, I need this, I need this, I need this, I need this, and I need that in order to move your item forward.

That's what an AR and oper in a true document will resolve.

So moving forward, there needs to be some consistency and clear directions to staff on how to proceed.

Can we make that happen?

Is that an unreasonable request?

No, not at all.

Thank you.

Um we will that that's that's the end of my questions for this um item.

Not seeing any others on the lights.

Thank you, staff.

Um, I will be making some calls.

I will touch base with purchasing and contracting in the various um departments, because I'm still not comfortable with how we are managing this and uh conveying our expectations citywide so that we can truly be efficient and understand our book of business and how we're moving forward.

Um so thank you.

With that, that brings that item to a close.

We will now move on to item eight.

Item eight, fiscal year 26, suspension of contracted services and customer service impacts due to transportation department budget limitations.

Chair.

Thank you so much.

Staff.

Please introduce yourselves and let us know how much time you will need for your presentation.

And please begin.

Good afternoon.

Naomi Chavez, interim director for transportation department with me today.

Patrick Ock, interim deputy director, and we will need 10 minutes for this presentation.

Transportation appreciates the opportunity to walk this committee through our ongoing budgetary issues and what led to the suspension of selected contracted services.

First, a little background on why we contract out these services.

Transportation has historically been under resource for right-of-way maintenance.

We simply don't have the staff available to deliver these services at the level the public and this council expects.

That's why we utilize outside contractors to perform this work, including tree trimming and maintenance, graffiti abatement on residential private property, weed abatement, and sidewalk slicing.

Sidewalk slicing is the only one of the services not being reduced as it helps address critical safety issues and reduces city liability.

The other services were suspended May 15 after projections showed the department was over budget for fiscal year 26.

So how did we get here?

As you can see, the department's baseline overtime budget has been consistently 1.3 million dollars, while our actual overtime spending has been between five and seven million dollars annually.

This makes it extremely difficult for the department to stay within budget.

The situation is better for fiscal year 27.

We received a 2.7 million increase to the baseline overtime budget, plus an additional additional $1 million for reimbursable work for other city departments and in-house CIP sidewalk projects.

That totals five million dollars, which is still not enough to cover the actual overtime spending that transportation has experienced over the past three fiscal years.

Turning to vehicle rentals, we have been budgeted for less than $300,000 for rentals annually.

We have been able to reduce the use of rentals, but that also comes at a cost to operational efficiency.

So why is transportation over budget?

First, the historic underfunding for overtime and rentals I just mentioned.

We also receive significant volume of priority one emergencies that crews must respond to within 24 hours for public safety reasons.

Factors driving that high volume include the back-to-back holiday storms around Christmas and New Year's that resulted in over 280 calls for service to address fallen trees and limbs.

The strong winds from those storms also contributed to the nearly 170 knocked over streetlight poles that had to be replaced citywide this year.

There are also several service requests from other departments, including electrician support for DSD and ECP for traffic signal resets, lighting support for parks and rec and library, sidewalk repairs for park and wreck, asphalt striping and signage support for various departments, security and traffic control support for special events, and asphalt repairs to airports and parks and rec.

The photo on the right is of pothole repair crews paving the Oregon Pavilion parking and parking lot in Balboa Park for much needed fixes.

In addition, transportation had to implement several new parking initiatives without any new staff and resources.

Inflation and the rising cost for goods and materials is another major factor.

For a deeper dive of the department's many needs, we presented our service backlogs and our FY27 budget request to the ATI committee in January.

Here's a look at the unbudgeted items that transportation must absorb in its budget each year.

Personal protective equipment such as rain gear, eyewear, gloves, safety vests, and boots must be purchased to ensure our crews can do their work safely and effectively.

In addition, we must provide various annual safety trainings for employees.

We rely heavily on grant funding and our two-person safety team to provide these required trainings at a reduced cost.

We also periodically need emergency engineering support.

One recent example is the train derailment that struck the harbor drive bridge.

This occurred over a weekend and required engineers to come and assess the damage to our transportation asset.

Compliance issues must also be addressed.

For example, as part of an agreement with the Coastal Commission, the city must monitor the Cooks Crack Sea Cave in La Jolla.

It's located directly underneath a city street and was addressed years ago by filling in the cave with concrete.

We routinely inspected for safety concerns per the agreement.

Another unbudgeted ask that will be we will be recertifying the quiet zone in downtown.

We requested funding in fiscal year 27, but didn't receive an allocation.

Finally, we have maintenance repair and security needs at the Choyas operations yard.

Examples for this fiscal year include installing a new HVAC system for our sign shop and additional security costs due to the delayed opening of the employee parking lot project.

To address our lack of funding, transportation brought forward two separate actions that city council approved last fall.

The first was having our in-house sidewalk crews tackle the largest CIP project ever by installing sidewalk replacements at over 250 locations in Mira Mesa and UTC.

This freed up nearly two million dollars in general fund dollars to be used in citywide repairs.

Another benefit is city crews got the job done in under nine months compared to the normal CIP contracting process that would have taken two and a half years.

The second action allocated 1.8 million dollars in community parking district revenue to transportation.

That resulted in over 5,000 neighborhood repairs in those districts, including pothole street lights and sidewalks.

We also implemented crosswalks, red curves, and other traffic safety upgrades at 185 locations.

And finally, our safety team has been able to provide the OSHA 10 hazard recognition training in-house, helping reduce cost by 95%.

Because of that effort, we now have 263 employees now certified for life.

Previously, only 15 staff members had had this training.

The next two slides show the cuts to contracted services and the impacts.

We've frozen over $1 million for tree trimming, which eliminates about 7,500 per active palm tree pruning that improves public safety and the right of way.

There's also a cut of 220,000 for graffiti abatement on private property.

That will result in about 1,200 cases that won't be addressed until the new fiscal year begins July 1.

Another 400,000 is being cut from weed abatement across two contracts.

This means over 90 locations will go without weed abatement until July 1.

We know the first question one might ask is what else could you have cut?

Here's a list of the other existing contracts we have in descending order of value.

Each addresses an operational compliance or safety issue that couldn't be cut.

One is related to security services for the Choyas Yard, a cost shared by multiple departments.

Other contracts are for required fire extinguisher expect inspections, janitorial services, underground service alerts, and proper hazardous waste disposal.

We also couldn't cut the traffic data collection services even if we wanted to.

That contract is already underfunded, as we typically run out of funds by the third quarter of each fiscal year, just like we did last year.

When that happens, we can no longer do traffic counts to support service requests.

In summary, transportation's budget situation forced the elimination of selected contracted services for the remainder of fiscal year 26.

Those services will resume July 1.

These reductions will have a significant impact in our ability to deliver core neighborhood service that the public demands.

This will also lead to increased liability citywide, as we haven't been able to address any service requests in those areas for the final six weeks of the fiscal year.

We expect to see an increase in customer requests and complaints, although uh we haven't seen anything to date.

We're also committed to sharing this information with the public through updates on get it done.

Thank you for your time, and I'd be happy to answer any questions.

Thank you for your presentation.

We will go to the IBA for comment.

Thank you, Chair Jordan has comments on this one as well.

Thank you, Charles.

Again, good afternoon, Jordan Moore with the IBA.

As you have heard, transportation is currently exceeding budgeted spending levels for non-personnel expenditures, which has resulted in the department suspending remaining spending for various contracted services, resulting in decreased service levels.

This is due to a combination of factors, including inflationary pressures for materials and services, as well as increased spending to achieve desired service levels.

At the outset, our office appreciates that transportation department of finance are following the process contained in the statement of budgetary principles that requires the mayor and the executive branch to inform the council if budget of service levels are anticipated to change during the year.

That said, we believe that there are more questions regarding why transportation spending is now so far over budget, the services need to be suspended.

As stated by staff, spending for items such as overtime materials and rentals have been increasing over the last couple of years to maintain what transportation calls in their report desired service levels.

However, it is not clear that those desired service levels reflect the priorities that this council established when it adopted the FY2026 budget in June of last year.

Our office has written about a lack of funding for various services within transportation over a number of years.

But one pattern that we have seen is that transportation has been increasing service levels for activities such as pawhole repair, sidewalk repair, and street lights by increasing spending above budgeted levels.

As we have also warned, both in our reports regarding budget monitoring reports as well as well in our review of the proposed budget last year.

If there is overspending on some services without additional resources, there will be decreased spending on other services.

This has now come to pass with reduced spending for services to trees, weeds, and graffiti, all of which had amounts allocated to them in the final adopted budget in order to keep up with other services provided by transportation.

Thus, we believe that the committee should ask questions of staff that we have raised in the past, such as how do current budgeted levels impact various service levels across the across all asset types for transportation, including streets, sidewalks, street lights, trees, and others.

How does the department determine desired service levels?

And how does the department prioritize its operations when increased needs in one area require reduced spending in others?

Thank you.

Thank you for those comments.

Uh Natalie, let's see uh, let's proceed with public comment.

The public comment period for item eight is now open, and we've received three speakers from individuals in the committee room.

Allegedly, Audra, please approach the lecture and you'll be followed by Joyce and Yada and Maximilian Schmidt.

I'm confused.

Are you saying that this is only for a couple of weeks that it's suspended or longer than that?

Because this seems like a public safety issue with like, you know, uh potential El Nino uh storms and you guys not dealing with the trees and weed abatement.

Um, I just feel like this is putting people in a severe public safety issue.

So is this just for a couple of weeks until July 1st comes, and then you guys are going to put these back in place?

Or is this going to be that once July 1st comes, you you know, figure that you're not still able to provide these because of the budget?

I mean, I think the public needs to know, so if you guys can address that, um, this is a significant concern when those things are necessary to make sure that the storm infrastructure can handle what's going on because I just I feel like this needs to be addressed for transparency for the public immediately.

Thank you, Joyce and Yatta.

Uh first something positive and then something more uh serious.

Um creative solutions to get the job done.

That's a quote.

Uh in number one, in house cruise taking on sidewalk CIP projects.

Number two, uh TD utilizing a community parking, uh district funds, and number two, number three, in house OSHA training, reduce costs by 95%.

Congratulations.

Now, why?

No, not why.

A statement.

We are kicking the can of the structural budget deficit down the road.

Now, nobody, all the people that are involved, you're all loved, and nobody's pointing the finger at you.

Nobody, I'm not.

Because it's not that and and going in the past is a failure.

It's now.

So let's do it.

Thank you.

Maximilian Schmidt.

Hi, I came here today to try and help people, and the transportation department is a very serious um issue with me because I take I ride the trolley and I take the public buses and SD.

Um I believe that all contracts should be cut until it is made uh common knowledge that the the public it's called city sponsored and state sponsored genocide against Christians or basically anyone outside the occult, where the public transportation is actually being used to uh commit genocide, where it will, for example, the Charlie intercom will read someone's mind over the intercom, and the person will think, oh my gosh, that's I'm like I'm I'm going crazy, I'm going crazy.

I did the Charlie Intercom just read my mind.

Oh my gosh, and they'll get their phone out and they'll like research like mind reading and say a bunch of bogus about um technology and like mental illness, and until the city the city needs to make a public service announcement that um there's hermetic chance going on in the song lodge and that Freemasons can read people's mind and that they're not crazy.

Thank you.

This concludes in-person public testimony.

We will now move to the virtual queue.

There is one hand raised in the virtual queue.

Phone number ending in 8813.

Please press star six and begin.

Okay, for um Gonzalo here, just amen to uh what Joy said.

No apologies.

Um also especially Audra.

Uh yeah, but you know what?

To just to comment on what you said, you know.

They always have the county to bail them out, so they're gonna um do what they do what they do and behave reckless because the county always bails them out.

Anyways, um what else?

What else?

What else?

That's pretty much it.

Thank you.

Thank you.

And Chair, this concludes public comment on item eight.

Alrighty, thank you.

Um to the public for the comments.

Um with that, just a reminder, this is an information item, so no motion um is required.

Um, don't see anyone on the lights.

Um, I guess I will um kick it off and and uh I think I have to say this is where process is very, very frustrating.

And this is where I think our current structure, and I I I'm gonna go back to as we talk about a strong mayor form of government.

This is one of the issues um that is just very, very concerning to me.

That we go through and and I'll use this FY27 budget months and months of conversations about the budget.

We establish the budget, we have allocations for graffiti abatement, we have allocations for weed abatement, and then we get a memo that just simply says we are cutting service, and there's nothing we can do about it.

That is what we get with a strong mayor form of government, and that to me is very, very problematic the way we are currently structured.

What is even more troubling to me is we picked an item such as graffiti abatement, and to answer a question that I think was a very relevant question is what does this actually mean?

The way the memorandum was written, it said as of May 15th, the operations has decided to terminate services to stop, so there has not been graffiti abatement since May 15th, is the way I interpret this, and services will be reinstated once a new budget is put in place, which we have dollars allocated in the FY27 on budget for graffiti abatement.

Why is this so critical to me?

Because all of the graffiti abatement calls typically come from three districts: District 4, District 8, and District 9.

And to put on top of that, when we talk about graffiti abatement, the graffiti that I get in my district, it is gang graffiti, and I drove the district this morning, and I am saturated with graffiti, and we start to talk about what it means to be on public property versus private property.

Most of the graffiti is on fences.

I would assume that's private property, or someone's block wall, but it is everywhere, and these are the things that are painful in how we are making said decisions.

Who is making that decision?

Who sat in the room and said we're going to stop graffiti abatement?

Who took into account that there could be a potential loss of life?

Who did that?

Who had that conversation?

Because I have it all over my community right now.

My staff is going to make a phone call to get you out there, Bethany, to drive it with them because it is everywhere.

And to tell me that you just don't have the dollars to do it when we allocated it, that's unacceptable.

My expectation is the graffiti gets removed.

You deal with the private property owners or the individuals that are doing the graffiti, you deal with that.

But to go and tell my constituents that no, we've just elected, it's not a priority for us.

We've elected some to move in a different direction.

That's that's just unacceptable to me.

Um, so if you can provide some clarity as to how we are making these decisions, as to how we are determining that, this is a non-issue when we can go three months or whatever it may be, and letting things stand and build up, how we are doing that, if you can shed some light, I think that would be helpful to the public and this council, because this strong mayor form of government, these are the things when we talk about delegation of authority, increasing capacities for contracts, that's what creates the issues that we're having.

So I'll turn it over to staff.

Thank you, Terra Foster.

Um I will like to um clarify that graffiti abatement in our right-of-way, public abatement is still happening.

Our city crews are out there.

Uh that there is no stop to those services.

You are correct.

This is for the private residential properties, which the city does not have a legal obligation to do.

Um, in terms of like the number of or or the the highest number of cases.

So it's 9, 4 and 3 for private, where we see the most the most need.

And in the public right away, which like I said, our crews are out there abating at the moment.

District 3 has the largest need.

So that work is still taking place.

Presents the information to the mayor, provides operational recommendations, and the mayor makes the decision.

Which again goes back to my comment about a strong mayor form of government.

That's where we need more communication.

I appreciate the compliance with the budget principles, as I think this is the first time that we have brought an item forward as those decisions are made.

But again, I'm going to go back to even as we are making those decisions.

What's the guiding principles?

How are they made?

That is problematic.

And again, when we talk about we're not legally obligated to do something, doesn't mean we should not do it and take care of it.

There's a lot of things that we are not legally obligated to do that we do.

And there's probably more things that are not legally obligated that we should do.

So we need to do better, we need to do more, we need to do it faster.

We are headed into the summertime.

If there's anything I can do to be helpful, let me know.

And I will help out in any way I can.

But this is something graffiti abatement is something that we have made intentional allocations over the past seven years to make sure that we had allocation for graffiti abatement.

Because right now, my district's saturated.

A timeline of oh, we just made the decision to cancel it.

That's unacceptable.

With that, I'll turn it over to Councilmember Iglo Rivera.

Thank you, Chair Foster.

Uh, thanks for the update here.

I do appreciate that the communication's happening.

Um, and understanding the nuance that um he provided in terms of graffiti abatement, I will share the the urgency that council member foster is sharing.

I sh uh uh expressed, I share that because it really is a matter of life and death, and I've seen it in my district since I've been in this position.

Um started as um tagging crews devolved into a um a young teenager losing their life, and so um when I see gang related tagging in my district, that's where my head goes.

And I know I've shared with with the mayor in some meetings about um the uptick in graffiti that we've seen in district nine.

How concerned I am about that.

Some of that is on Caltrans property, but at the end of the day, uh you know who doesn't give a damn about uh jurisdictional boundaries, gangs, um, and community members.

Um and there's the urgency to get that cleaned up is I I just want to say I share that.

Um the one thing I do want to add, Councilman Foster, to to what you said is in this past budget cycle, while there were deviations from what the council approved.

I I I I want to make sure the council's also owning the multiple points in time where the council decided to pull back from revenue that was in that budget, and so um it doesn't mean that we wouldn't have been over budget, but it means that there would have been a little bit more uh slack in the line to um to fill some gaps, and so I I feel it's important to point that part out because the having our cake and eating the two of opposing revenue and wanting services um we need to make sure that the the broader council um isn't engaging in that.

We heard a bit of that in the in the the budget conversation that we just got through, and um I wanted to make sure that we're owning our our part of that as well.

Now, I don't think the three of us um were the tip of that sphere, but at the end of the day, the the body did have um uh a few different examples of of pulling back from revenue and um again that that only leaves it leaves us worse off to to get the work done that we need to get done.

So um thank you again for the report.

Um, and we're for the update here.

Um I this is better than learning about it after the fact, and um I'll I'll just echo the concern around graffiti abatement and what that means from a public safety perspective that council member foster shared.

Thank you.

Alrighty, thank you for that.

And and again, um thank you, Bethany, to you and your team for um getting this memo um docketed um so we can have the conversation.

Um, and and I just want to go on record and and just as we looked at the presentation.

One thing that was in there, you you know you talked about the need for um employee protective equipment.

Um I just got to state and and this is me talking as a an individual that spent 25 years in the construction industry.

That's non-negotiable, right?

I was successful in the construction industry working for um large construction firms because safety was prioritized.

Injuries hurt your budgets, injured injuries hurt your ability to get things done.

Um, and so I just cannot um stress that enough, um, making sure that we are providing the um personal protective equipment that we should be providing um to our employees, and I know that has been a problem in the past as we are looking at our our um budget allocations and expenditures, but that is one area that should be non negotiable, and we should be providing that to make sure that we are um equipping our um employees appropriately and we are out there safe and um folks are um able to return home the same way they left home.

So um I will leave that there.

Um, and this brings us to the end of today's agenda.

Thank you to the members of the public and staff for your participation.

I will now adjourn this meeting of the budget and government efficiency committee to our next regularly scheduled meeting, which is on Wednesday, July 8th, 2026 at 9 a.m.

We are adjourned.