Eggert Senior South Bay Rec Center, Memorial Park, Colonel Solomon's San Isidro Community Activity.

Another example of this office's commitment to investment in family friendly space.

Welcome to the new Jared Beck Park.

This park has been in the community since 1984.

Its last improvement was in 1994.

Specifically, what have we done?

We have two children's play areas, new fitness equipment.

Suffice to say altogether, this is a nearly eight million dollar project.

We were able to navigate that thanks to a name that you're going to remember, Assemblymember Brian Mainshine.

This would not have been possible if Brian didn't use uh his seat in the legislature to go and find his four million dollars in Sacramento and bring those dollars back to San Diego.

We are excited to finally enjoy all the new amenities.

These improvements restore Jarrabeg Park to full use.

It's such a great gathering spot for our community.

I wanted to tell you that this park has been special to Script Ranch since the day it opened.

This is one of many great park improvements we have across the city.

By the end of this year, we will have completed 93 new or improved park projects across the city of San Diego in just the last five years.

And I hope that that's reflective of a city administration that knows that infrastructure is a priority, that quality of life is what makes us special and unique in San Diego, and that the city's priorities are correct to benefit residents and children, particularly.

Three, two, one of the people who are not going to be able to do that.

Thank you, Council President.

Council Member Campbell, here.

Councilmember Whitburn.

Here.

Councilmember Foster.

Here.

Council Member One Von Wolpert.

Council President Pro Tem Lee.

Councilmember Campillo.

Here.

Councilmember Moreno.

President.

Councilmember Elo Rivera.

And Council President Lacava.

Present.

Also attending the meeting, our city attorney, Heather Ferber, independent budget analyst, Charles Modica, and myself, your city clerk, Deanna Fuentes.

Thank you, Council President.

Thank you, Madam Clerk.

A quorum is now present.

We will begin this morning with an invocation by Clerk Fuentes, followed with the land acknowledgement and the Pledge of Allegiance led by Councilmember Von Wolber.

Grant those who hold office in this city the spirit of wisdom, charity, and justice, that with steadfast purpose, they may faithfully serve in their offices to promote the well-being of all people.

We respectfully acknowledge that the Kumiai Nation are the original inhabitants of the unceded land now known as San Diego.

Despite enduring the horrors of genocide and colonization, the Kumei spirit remains unbroken.

We honor the resilience of their ancestors who fought to protect their culture and land today.

They carry their legacy forward, ensuring that their traditions continue to thrive in gratitude and strength.

We stand with the Kumeayai Nation connected to our past and committed to a thriving future.

Please turn and face the flag.

I pledge allegiance to the fire of the United States of America and to the Republic for which is one nation under God.

Madam Clerk, please go over how the public can offer their testimony.

Thank you, Council President.

I'd like to highlight the slide on the screen that reviews how the public can offer their public testimony during today's meeting.

If you are in person, please complete a speaker slip looking at the entrance of chambers and bring it to the front of the room in the clear box.

No further in-person testimony will be taken once the council begins virtual testimony.

For better meeting management purposes, each speaker will have one minute per item per person.

If you'd like to speak on three or more items, you will have a maximum of three minutes.

Thank you, Council President.

All right, thank you.

With that, please read the closed session items into the record.

Conference with legal counsel existing litigation pursuant to California Government Code Section 54956.9 D1 is CS1 City of San Diego versus 101 Ash LLC et al.

Conference with legal counsel anticipated litigation, initiation of litigation present to California Government Code Section 54956.9 D4, CS2, number of cases one.

Conference with labor negotiators pursuing to California Government Code Section 54957.6, CS3, City Designated Management Team Representatives.

Conference with Legal Council exists in litigation pursuant to California Government Code Section 54956.9 D one.

CS4, San Diego Police Officers Association versus City of San Diego, and CS5, Roll Day is versus City of San Diego.

Conference with legal council anticipated litigation.9 D4 is CS6, number of cases one.

Thank you, Council President.

All right, thank you.

With that, please proceed with public comment.

We have no public comment speakers here in Council Chamber, starting the five-minute timer and going to those participating remotely.

Blair Beekman, if you can please unmute and let me know which item or items you wish to speak to.

Hi, Blair Beekman.

Happy last week of our council community calendar year.

Um I wanted to speak to items uh C1 CS1 and CS3, please.

You'll have two minutes, please proceed.

Hi.

Uh thank you, Blair Beekman.

Uh, just to offer my two bits, I think I'll say that from now on.

Uh two bits and two cents uh for these items for CS1, uh, the abestus issues.

Uh this is uh litigation for I when I'm understanding is people uh when they re tried to re-establish the building, we're using asbestos or something and created more of a mess.

And and this is litigation to clean that up so we can get it all cleaned up.

Um, really good luck to I hope you can make clear uh what is needed to clean out a asbestos overall and how the community can feel safe that you are cleaning it out, that it is being cleaned out thoroughly for its future use.

Um it's important to explain that good luck in those attempts uh to do that.

And to speak to uh item CS3 or yeah, CS3 is labor negotiations.

Uh it's a large, large group uh of labor negotiations that involves police and fire department um also uh I believe.

It and they did last week, too.

Um this this week is it's more the police officer association.

Last week it had a lot more fire department and other uh items like that.

So I just wanted to uh quickly offer that I've been learning that uh from your committee meetings last week uh of police uh needing more uh managerial positions available to themselves uh for for services and work and stuff.

Um really look to the SCIU for that kind of help, I think.

I I'm sure you are, but just as a reminder of those things and the importance of uh working for non-police personnel in managerial positions, maybe of some help.

I don't know if that is uh ethical or not, but I thought I would mention it this time.

Thanks for your time.

Thank you.

Next is John Stump, if you can please unmute and let me know which item or items you wish to speak to.

Um CS1.

Thank you.

Please proceed.

Uh 50 years ago.

More than 50 years ago.

I lived next door to the S T G and E building.

It was a beautiful building.

I lived above the liquor store next door.

And you know, here we are again with S D G and E or whoever was the in-between.

Uh taking their old hand-me downs and thinking we're getting a bargain.

When is Council going to realize that dealing with a company that doesn't even have to register as a lobbyist is a problem.

The city council uh needs to rethink its relationship.

Just an aside, when I was sending you my comments for item 200.

The power went out in city heist and was off for uh 30 minutes.

So thank you, S D G and E for two disasters.

Bye-bye.

Thank you.

Your time has concluded.

That concludes public comment.

All right, I'm sorry.

Thank you, City Clerk.

We will now recess in the closed session and reconvene council today at 2 p.m.

or shortly thereafter.

So the city council earlier this week voted to approve 1.8 million dollars to go to the transportation department to repair high priority items within the right-of-way.

It's things like street light repairs, sidewalk repairs, high priority projects that are gonna happen because of that 1.8 million dollars.

It's all gonna be taking place within the parking district, so where people pay to park, that's where the improvements are going to be seen and felt.

The need downtown is huge in terms of our infrastructure.

We have over 1200 street lights that are out downtown.

So this is gonna make a huge impact in terms of the safety, visibility and the right of way, and making sure that our city is lit up.

Street light repairs actually require really technical expertise.

That's why you see their electricians on the job.

Uh, they're working in a very high voltage, high consequence type of situation.

They need to perform the work really safely.

And they also need to do the diagnostics to figure out exactly what's happening with the street light.

It might be an underground issue, it might be a wiring issue, it might be a fixture issue above.

And so they're doing that assessment, and then they're doing the fix after they've done all of that.

If you see a San Diego work best out in the field and our employees, please give them a high five, uh, a thumbs up because they are doing the work on behalf of the city and our residents, and they're really proud to be doing what they're doing.

Three, two, one.

Peter Seidler loved this city.

And he didn't just talk about making San Diego a better place.

He actually did it.

And so naming this street Peter Sidler Way uh is a promise that we will continue the work that he began to lead with heart, to lift up those in need and to build a San Diego where everyone has a place in this great city.

For both Peter and Trevor and Tony, who all have had a tremendous impact on the Padres franchise and a tremendous impact in our San Diego community.

It's fitting that these three streets named after these three great men will continue to greet Padres fans when they come to Petco Park for decades to come.

Peter Love, Tony Gwynn and Trevor Hoffman.

For me personally, whenever I get to drive up Imperial and now part of Peter Sidler Way in the car, I get a big kick out of it because my kids are always excited.

Go, hey, Trev or Dad, we're gonna get dog on your street for a minute.

I just think of Peter's family and the fun that those kids will have when they get to come up on that street.

His compassion, his vision that has left an indelible mark on the city of San Diego, and today it quite literally becomes a part of our city's map.

Peter showed us the way, and now fittingly he has one named after him.

Coast ride, please.

I was in a Marine Corps four years.

I was in Coronado.

I was in the Navy for four years.

So this is our annual veteran and military uh spouse uh appreciation breakfast.

This is my fourth time coming here.

I would not miss this.

I love coming here.

I love this event.

I think by by this event right here, it shows that they support the veterans.

I feel appreciated.

I feel valued.

I learned a lot of skills in the military that helped me to be the person that I am.

The military service has definitely been a benefit to me in how I do my city work.

City is a good place to work for, and I'm appreciating us going out of support to the military.

This year there was more police opportunities than ever before.

We never had this many police up here.

I think it would be encouraging if we could just get the other veterans to get here.

I've seen this grow.

Uh and like I said, I know that there's a lot more veterans that can be here.

We can pack this place out.

You have given to this nation, and you continue to give to this city, and we see you, we salute you, we respect you, and most of all, we thank you.

Kate Sessions knew a good idea when she planted one.

She believed the trees could turn uh what was then a city of dry brush hills into something absolutely beautiful and something that we all enjoy today.

All right.

Look at that.

Not only are we just celebrating new trees that we plant in the ground, we want to celebrate our existing trees that we have that already provide us lots of benefits and shade and ecosystem services.

Kate Sessions taught us that when you plant a tree, you're literally planting hope for cooler streets, cleaner air, and stronger communities.

And that's what you all are doing here today.

And I'm so grateful that you take time out of your busy schedules to help plant these 30 trees all across Oak Park.

Happy Kate Sessions Day, everybody.

Today marks an important milestone for Coral Gate and the San Isidro community.

One that has been years in the making.

And uh first part of that is to really understand the recreational needs of our communities.

Now we have this amazing park, and it's really important.

If our kids are playing, then they're probably out doing other things.

So let's invest in their being able to be kids, and the transformation we see today is the result of persistence, partnership, and shared commitment.

It shows what's possible when residents advocate.

One, two, three.

Thank you, Councilmember Campbell.

Councilmember Whitburn.

Councilmember Foster.

Councilmember Von Wolpert.

Council President Pro Tem Lee.

Councilmember Campillo.

Councilmember Moreno.

Councilmember Elo Rivera.

And Council President Lacava.

Present.

Also attending the meeting or Assistant City Attorney Leslie Fitzgerald, independent budget analyst, Charles Matica, Council of Affairs Advisor and the Mayor's Office, Coda Seizer, and myself, your city clerk, Deanna Fuentes.

Thank you, Council President.

We'll start off with uh excuse me, comments by Mayor's office, city council member, city attorney, independent budget analyst, or city clerk.

We'll start with Council Member Bon Wilbert.

My apologies.

And what happened in Bondy Beach in Australia and the horrific anti-Semitic anti-Semitic attacks we saw in the Jewish community in Australia during a time of holiness for the Jewish people.

And I know I speak up on every single mass shooting that we see in this country and that we have tools to fight it.

But I'm calling now to have our community come together to really double down on our efforts.

But we need to stand up against hate.

We have to stand up against gun violence because we can prevent this in our country.

And if we could have a moment of silence right now for all of the victims, um, I would appreciate that.

Um thank you very much to everyone, and I wish uh the Jewish community a very happy holy season and happy Hanukkah, and know that we here in San Diego we're gonna do everything we can to keep everyone safe this holiday season.

Thank you, Council President.

Uh thank you, Councilmember Bob Wolpert.

We'll go next to Councilmember Ila Rivera.

Uh thank you, Council President.

Uh thank you, Councilman Von Nilbert for um for your comments.

Uh I also just wanted to acknowledge um the shooting that that occurred, um shootings that occurred, but um especially the one that occurred um in Bonnie Beach in Australia.

Um it's just it's supposed to be a a really joyful, joyous occasion, the beginning of Hanukkah, and um the number of people who were already feeling afraid to worship um from the Jewish community in all parts of the world um was unacceptably high because of the violence that's been experienced.

Um what happened yesterday just um makes that exponentially worse.

Um people just should never be targeted for who they are and what they believe and um the god they worship.

Um I also do want to take a moment to recognize that um one of the shooters was disarmed by a Muslim man, um an immigrant um who put his own life on the line.

Um, and if there's any ability for um us to kind of see our common bonds and um the way that we're all dependent upon each other, um I think that was a an amazing example of that.

And so um thank you, Councilmember Von Wilpert, for uh your comments.

Thank you for calling attention to it.

Um, and I I do think that it is a really important moment for us to think about the ways in which we ensure that all people everywhere are seen as people, and we do not allow for dehumanization in any form because that to me is the root of these actions, is when um someone sees someone else as less lesser than um and um I hope we don't have to have any more conversations like this.

Thank you.

Thank you, Councilmember Illa Rivera.

We're going next to Councilmember Campbell.

Thank you, Chair.

I I want to thank my colleagues for their words.

I I agree completely, and I think probably just about everyone in San Diego agrees.

Uh, and I hope soon in America and that that will become apparent.

But I just want to speak about a potential way to stop this.

During the decade of the 1990s, I believe it was, there was a uh a law in place for 10 years brought by Senator Feinstein of California that there was a national ban on automatic weapons, such as the AK type weapons.

And during those 10 years, if you look at numbers of school shootings, you'll find that there were very, very few, maybe one a year at the most.

That law sunset, unfortunately.

The people in Congress at the time were not in the right party to keep that law going, and they did not vote to continue it.

And that's when all of this huge number of mass shootings began.

About the year 2000.

I'm sorry, I haven't I didn't know I was going to speak.

I haven't looked up the years recently, but I believe it was the 1990s.

At any rate, uh we need to do that again.

There was a time in New Zealand, a few years back when a mosque was attacked.

And uh in a mass shooting type of incident.

And the head of New Zealand at that time was a woman.

She had just been elected.

And she requested there to be a ban of automatic weapons, and there was.

And all automatic weapons were turned in.

New Zealand does not have automatic weapons among its population.

These are weapons of war, weapons for the military.

And they should not be in the hands of civilians, especially civilians crazy enough to do things like that.

So uh I think we should think again about banning this in our country.

It worked the first time.

I think it would work again.

And um not all guns, not talking about all guns, talking about automatic weapons.

Thank you, Council President.

All right.

Uh thank you.

So thank you, Councilmember Campbell, Councilmember Von Wolpert, and Council Member Elo Rivera.

Not seeing anybody else on the lights.

The clerk will now go over how the public can offer their testimony.

Clerk, please proceed.

Thank you, Council President.

Item S400.

Sorry.

Um, I will now highlight the slide on the screen that reviews how the public can offer their public testimony during this afternoon's meeting.

The order can be found on the agenda summary found online or at the table in the back of the room.

If you are in person, please complete a speaker slip locate at the entrance of chambers and bring it to the front of the room.

Council ambassadors are available near the entrance of chambers and can assist with questions and speaker slips.

No further in-person testimony will be taken once the council begins virtual testimony.

Thank you, Council President.

All right, thank you, Madam Clerk.

Please introduce item S400.

Item S400 is an informational item.

It is the fiscal year 2026 first quarter budget monitoring report.

If you'd like to speak to this item, please submit your speaker slip to the front of the room in the clear box.

And if you are participating remotely, now's the time to raise your hand by pressing star nine or the raise your hand icon.

Thank you, Council President.

All right, thank you.

And staff, as you settle in, introduce yourselves for the record and let us know how much time you need for the presentation.

Okay.

Good afternoon, Council President McCovin, Council members.

I'm Ben Batalia, Director of Finance.

With me is Chris Purcell, Financial Operations Manager, and Rolado Shorvel, CFO.

We're here today to present the fiscal year 2026 first quarter budget monitoring report.

We'll need about 10 minutes, please.

All right, when you're ready.

This report was developed in coordination with departments and utilizes data available during the first three months of the fiscal year.

The report is limited in scope, and it's primarily focused on major general fund revenues, significant revenue variances that were submitted by departments, public safety overtime, non-discretionary expenditures, as well as the reserves.

Future quarterly budget monitoring reports will provide more comprehensive projections as additional information becomes available.

I'll now turn it over to Chris to walk through the specifics.

This slide summarizes the projections for major general fund revenues, which are projected 1.8 million below budget.

This is primarily comprised of reductions in transient occupancy tax and sales tax, partially offset by an increase in property tax.

Despite assuming only moderate growth in the adopted budget, transient occupancy tax and sales tax continue to feel the effects of persistent inflation, a slowdown in the labor market, and the impacts of terrorists on consumer spending as well as leisure and business travel.

The slight bump in property tax is driven by increases in motor vehicle license fees and 1% property tax collections as continued elevated home prices in counter year 2024 supported a stable real estate market.

As part of our process, we requested that department submit updates on select budget items critical to balancing the budget and report any significant known changes in revenues and expenditures.

As a result, the report projected that departmental revenues would decrease by 10.7 million.

This includes a projected decrease of 8.8 million in revenue from the Balboa Park parking program, resulting from a shift in the implementation timeline from October to January, as well as anticipated adjustments to the proposed fee structure.

Since the release of our report, the city council approved the final fee structure.

Additionally, when the report was released, a conservative estimate projected a decrease of $8.1 million in reimbursements for prior year winter storm expenditures due to delays in the state's review.

On a positive note, city staff met with Cal OES on Friday to discuss the status of these reimbursements, and it is now anticipated that a significant portion of these will be have their review completed this fiscal year.

Rounding out the decreases is an estimated $1.5 million and reduced cannabis business tax revenue, reflecting lower taxable gross receipts and a limited number of outlets electing to expand their hours of operation.

These decreases are partially offset by the planned use of $5.9 million in fiscal year 2025 Measure C TOT revenue after litigation was recently resolved, as well as an increase of $1.8 million for reimbursable work performed by the police department on special events grants and task forces.

Although not reflected in the table, the overall decrease in TOT major revenues noted in the previous slide is anticipated to result in a $1.1 million reduction in reimbursements to the general fund.

Lastly, we have also received updated projections for on street parking revenues after the release of this report.

These indicate that reimbursements to the general fund may decrease by 5.6 million.

For public safety overtime, both fire rescue and police are projecting increases when compared to the budget by a combined $7.6 million.

We will note that both departments are projecting below fiscal year 2025 on audited levels.

Fire rescue's overtime increase, totaling $4.6 million, is primarily to maintain constant staffing, resulting from backfill for leave time taken, including industrial leave and light duty.

A portion of this increase is expected to be partially offset by reimbursements from deployments.

The $3 million increase in the police department is primarily to support increased activity at special events and parking enforcement.

As noted on the previous slide, this increase is projected to be partially offset by $1.8 million in reimbursements.

We will also note that there may be offsetting salary savings.

However, it will not be known until comprehensive projection can be performed as part of the mid-year process.

This slide summarizes the key points discussed and included in the report, reflecting a projected bottom line impact to the general fund of $22.9 million.

This is comprised of revenues projected to be $12.4 million under budget, while expenditures are anticipated to be $10.5 million over budget.

It is important to note that this process is limited in scope and occurs before more complete information is available.

As such, there have been additional updates since the reports are released that impact these numbers.

There may also be other factors or activities that can partially or fully mitigate this shortfall, including the mayor's recent memorandum, which outlined actions intended to immediately address spending in the current year.

We'll have a clearer picture once we complete the mid-year budget monitoring process, which is currently underway.

In conclusion, this analysis is limited in scope and focuses only on select revenue and expenditure updates.

While the net impact of the general fund as of the report's release was projected to be 22.9 million, there may be opportunities to partially or fully offset this impact.

The Department of Finance will continue to monitor revenues and expenditures and will provide a comprehensive update with the release of the media report on January 30th, 2026.

That concludes our presentation, and we're available for any questions.

All right, thank you for the presentation.

We will now hear from the Office of the IBA.

Okay, thank you, Council President, Council members.

Thank you to the Department of Finance for your presentation.

Uh for our review of the first quarter report, Lisa Byrne and Sergio Alcalde will walk you through our analysis.

We did review the first quarter report and release our analysis of that a week ago today.

Thanks, Charles.

Um DOF's first quarter report covers general fund revenues, public safety overtime and staff level issues, the general fund risk management and development services reserves, homelessness programs, and the status of items that city council added in the fiscal year 2026 budget.

The first quarter report projects the city's major general fund revenues to be 1.8 million dollars below the adopted budget.

The shortfall is largely driven by a $2.9 million projected decline in general fund TOT revenue, which may be attributed to a decrease in international tourism.

Additionally, a 0.4 million projected decrease in sales tax revenue has also contributed to the projected overall shortfall.

These reductions are partially offset by property tax revenue, which is projected to come in 1.5 million dollars higher than budgeted.

We know that since the release of the first quarter report, an additional period of TOT and Sales Sax actuals have been remitted to the city.

With this, General Fund TOT revenue is now forecasted to end the fiscal year $4.1 million below the adopted budget, while sales tax revenue is anticipated to be $2.1 million higher.

The first quarter report projects revenue from the paid parking program at Balboa Park to come in $8.8 million lower than the budgeted amount.

Staff has noted that this projection was a preliminary estimate prior to parking to a parking fast fee structure being structured being approved.

With council's approved fee structure as well as a later than anticipated implementation date, our office projects the program to bring in $4 million, which represents an $8.5 million shortfall from the budget.

The first quarter report also protects revenue from cannabis business tax to come in $1.5 million less than the budgeted amount, largely due to increased competition from the illegal market and decreased wholesale prices caused by an oversupply of cannabis products.

Additionally anticipated revenue from extended operating hours for cannabis retail outlets have not materialized.

TOT special promotion program reimbursements for eligible general fund expenditures is projected to decline by $1.1 million.

This decrease is related to the projected TOT decline that I mentioned earlier.

Lastly, for departmental revenues, parking parking meter related revenue is anticipated to come in $2.1 million less than the budgeted amount.

This projection is based on actual revenue collections from parking initiatives, including the adopted budget, which did not account for behavior changes associated with double meter rates, the delayed implementation and reduced area for the downtown special event zone, and the underperformance of expanded meter hours.

These shortfalls are partially offset by unbudgeted loss of revenue fees related to ballet zones and construction projects encroaching into metered spaces, as well as council's action on October to waive contributions to community parking districts through fiscal year 2027.

I'd like to note that it may still be too early to fully assess special event zone revenue as the current projection is based solely on actuals received from September events.

Regarding expenditures, our report primarily primarily focuses on public safety overtime.

Fire rescue overtime is projected to exceed its budgeted amount by $4.6 million, though strike team revenue reduces this general fund impact to $3.7 million.

Fire rescue overtime spending, fire rescue overtime spending remains significantly elevated due to ongoing fire suppression staff shortfalls.

Well, the first quarter report states that full staffing is anticipated by the beginning of fiscal year 2027.

Staff has indicated that their current projection has been pushed back to mid to late May fiscal year 2027.

Similarly, police overtime is projected to exceed its budget by three point by three million dollars.

However, additional revenue related to reimbursable overtime activities and enhanced parking meter enforcement reduces this general fund impact to 1.2 million dollars.

Projected overtime expenditures in fiscal year 2026 are notably lower than fiscal year 2024 and fiscal year 2025 actuals, primarily as a result of efforts to better manage overtime, which began phasing in during the first quarter of the fiscal year 2025.

This table compares the police department's response times from the first quarter of fiscal year 2020 2025 to the same period of fiscal year 2026.

Priority zero, one, and three calls changed minimally, while priority two calls have improved.

Conversely, priority four call response times have increased by 23%.

While this could appear that limited resources are being shifted to protect response times for the most serious emergencies, it is important to note that other factors may impact these statistics.

The police department has cautioned that additional time and data will be needed to understand how reduced overtime spending affects both reactive and proactive policing.

Council may wish to receive more information on the department's efforts to reduce overtime and associated impacts on response times.

Now we'll hand it off to Lisa to cover the remaining slides.

Thank you, Sergio.

I'll start with reserves first, the general fund reserve.

With no contributions in fiscal year 24 and fiscal year 25, and no planned contribution for fiscal year 26, the general fund reserve is balanced as anticipated to remain at $207 million.

With a projected target of $263 million, the reserve shortfall is anticipated to be almost $56 million.

Additionally, the city has anticipated to begin fiscal year 26 with no excess equity, which is unspent money left over from the prior year.

This is based on unaudited actual results for fiscal year 25 when the city used all of its excess equity to balance out the year.

Given the city's fiscal challenges, the Department of Finance is working on proposed revisions to the reserve policy, which are anticipated to be presented early next year.

The Development Services Fund finished fiscal year 25 with an almost $18 million shortfall and no reserve balance.

Per the fiscal year 26 adopted budget, it is anticipated that revenue will be enough to cover expenditures, but there still will be no reserve.

Note that the policy target for fiscal year 26 is over $19 million.

Development services plans to begin to begin replenishing this reserve over the next several years.

All three risk management reserves are projected to have shortfalls for the fiscal for fiscal year 26.

As with the general fund reserve, no contributions are anticipated.

The first quarter projection for the public liability reserve shortfall is $18.5 million, which is comprised of two components.

First, the reserve target has increased by $8.3 million since fiscal year 24.

And second, there is an outstanding loan from the public liability reserve to the sewer fund, which is currently estimated to reach over $10 million in fiscal year 26.

We speak to the loan details in our report.

Today I'll note that the loan is intended to be paid back over five years starting fiscal year 27.

And also, if the public liability fund becomes unable to meet its financial obligations, the sewer fund will be required to immediately repay the full amount owed.

For the workers' compensation reserve, the estimated deficit is $12.7 million, and that also is due to two factors.

First, the reserve target increased by $4.2 million since fiscal year 24.

And second, there was an almost $18.5 million operating deficit in fiscal year 25, as expenditures came in almost 28% higher than fiscal year 24.

The risk management department is currently analyzing the underlying cost drivers to better understand this variance.

Last, the long-term disability reserves estimated deficit is $1.6 million, and that is caused by the reserve target increasing by $787,000 since fiscal year 24 and an $858,000 operating deficit in fiscal year 25.

Turning to homelessness programs.

First, the county grant for the domestic violence shelter has been reduced by $800,000, which results in $600,000 less funding than budgeted expenditures.

The homelessness strategies and solutions department will be exploring other resources for this program.

Aero Drive safe parking, which has had low utilization in the recent months, has been temporarily consolidated with HBAREX.

If it remains closed for the rest of the fiscal year, the anticipated anticipated savings is $170,000.

Fiscal year 25 Measure C TOT collections for homelessness programs totaled $5.9 million, but were not available for use until fiscal year 26 due to a delay in the resolution of Measure C litigation.

The five-year outlook assumes $4.2 million of this amount will be used to offset state homelessness housing assistance and prevention funds in fiscal year 26, and that is to preserve the HAP funds for fiscal year 27.

And then the rest of the $5.9 million would be used to support general fund homelessness expenses.

Alternatively, the full amount could be used in fiscal year 26 to help balance the general fund.

And last, the Rosecrant shelter window cost was $264,000, less than the $488,000 anticipated.

Additionally, the funding source for the shelter was changed to carry forward HAP funds.

This slide shows a partial list of council additions to the fiscal year 26 budget.

The full list is included as attachment one to our report, which provides a status update for each of the council additions.

Most of the additions are implemented or in process, but there are several position reductions that were not implemented.

First, a program coordinator in the police department, which the department indicates is serving a critical IT role.

The employment offer for this position was accepted in early June, and the position was filled at the end of June, but the and now is uh in an unbudgeted position, as are the rest of the positions on the on this slide.

The second one showed on this slide is a deputy director in the compliance department, which has been cited as necessary for separation of reporting structure for labor standards enforcement and hearings.

This position was filled in July.

Next, a media services coordinator and media services manager in the communications department.

The incumbents continue as the others to serve in these roles.

And last are two deputy chief operating officer positions in the mayor's office, which are not planned for elimination despite the budget reduction.

The first quarter report projects several general fund revenues will be below budget and several expenditure over, which is as noted, including in public safety over time.

Additionally, several reserve balances are projected to be below fiscal year 26 targets.

The administration has begun implementing various budget mitigation measures such as suspension of discretionary spending and non-essential overtime and reinstating the request of bill process for vacant positions.

As was mentioned, the first quarter report is based on three months of actual data and focuses on a few select areas, and it's not a comprehensive picture of projected general fund activity.

The mid-year report will be more robust robust, projecting full revenues and expenses for the general fund as well as non-gener departments.

This concludes our presentations, and we're here to answer any questions.

All right, thank you.

I always appreciate or we always appreciate the Office of the IBA's perspective on budget matters.

With that, Clerk, please proceed with public comment.

Thank you, Council President.

I do not have any speakers here in Council Chambers.

Oh Mr.

Kazuski, if you can please come to the microphone.

You'll have two minutes, please proceed.

Thank you.

Whenever I hear about the budget, I'm always reminded that the Torrey Pines Gliderport Concessionaire, which is our property, city owned property, in 2010, I believe, was documented to be bringing in 1.4 million dollars a year.

Okay.

Ten years, that would be what?

Uh 14 million dollars that the city has squandered.

Why don't you get a couple of park rangers, put them in there operating that site, and collect that money yourself.

There's a reason you don't, and there's a reason you have avoided this issue for what 15, 20 years, and it's disgusting how you have managed, mismanaged our city property.

Thank you.

Next is um starting the five-minute timer and going to those participating remotely, starting with John Stump.

If you can please unmute, you'll have two minutes.

Hi, thank you.

Um I love budget.

I I attended Judge Moss's um status hearing on the claims for the January 24th uh flood.

It was interesting.

Uh the plaintiff's attorneys uh were all concerned that the city was dragging its feet because it didn't have enough money to pay the claims, so they were trying to drag the process out.

And at that time, um the plaintiff's attorneys represented that the claims that uh they had might reach more than a hundred million dollars.

Uh, in response, the city's attorneys responded, oh no, those claims probably exceed one billion dollars.

Let me say that again.

Those claims probably exceed one billion dollars.

Now, that amount is mitigated somewhat by the fact that uh some of those claims include emotional distress, but there's uh big variance to what you've got on page 25 for public liability fund and one billion dollars.

Uh just in conclusion, uh I've constantly reminded you that by 2030 the amount you pay S D GET from Challony Shadow will exceed the amount that you receive in franchise fees.

Thank you.

Thank you.

Next is Peggy Walker, if you can please unmute.

Uh, thank you very much.

Good afternoon.

Um, I just want to note that I heard in this report that cannabis tax receipts were down due to illegal market and over saturation of marijuana products.

We were promised that we would have tax revenues by legalizing, but that has simply failed.

And I want to say that failing taxes and health issues are the reason that we're seeing surprising political news in other states.

A referendum campaign is gaining support to reverse marijuana legalization in Massachusetts and Maine, among others.

The response in this effort in response to studies showing uh search in young pot users and young adult pot users showing at hospital ER rooms with marijuana related psychiatric and health disorders.

Some in some states, these ER admissions have jumped as much as fourfold since legalization.

And in line with this, studies from the Journal of American Medical Association show a search in teen and young adult ER admissions for cannabis hypermesis syndrome or CHS, marked by intractable vomiting and erratic behavior.

I bring this here because diagnostic costs for showing up with CHS symptoms reportedly can average over 60, 76,000 per patient.

So I want to emphasize that tax revenues were a selling point for pot legalization that has failed to materialize and does so at high health costs.

Thank you.

Thank you.

Next is Kathleen Lippett, if you can please unmute.

Kathleen, there you go.

Thank you.

Good afternoon, Council.

And I certainly appreciate the previous speaker.

As she pointed out, a very significant finding that the revenues for Canvas business taxes, well, they will never compensate for the harms that have been done.

Trained economists look and consider the costs and benefits, and they include the moral and ethical factors.

That is a fair and equivocal equitable process, but the city continues to choose a process that is between unfair and unethical.

And you leave out the factors that don't align with your long-term goal of continuing to support this industry that does not need support.

The marijuana industry will undermine and contribute to ongoing uh fiscal problems and crime, and most importantly, health problems, mental health problems, homelessness, and everything else.

There is no justifiable reason.

If you did a profit and law, a profit and benefit statement, I don't know what you would put on the benefit side of marijuana, but there isn't a parent in the city who has children who have engaged in this who would say, yes, this is a great idea.

And for those of you who would never consider it for your family relatives, you should not consider it for the rest of us.

Thank you for letting me speak.

Thank you.

That does conclude public comment on this item.

All right, thank you, City Clerk.

Uh this is an information item.

No motion is required.

So I'll turn it over to my colleagues for any questions and comments.

Um Councilmember Bon Wolpert.

Um thank you.

Uh thank you for the presentation.

I know this is heard of the budget committee as well.

Um, great news coming into the first quarter, but I'm glad that we are being so diligent in monitoring it.

I mean, I heard this morning on a national news story about the city of Chicago is facing very similar issues that we are.

Every big city in the country is facing very similar issues that we are.

I do have questions though about the around $8 million OES reimbursement and what is going on there.

So at the time that we were uh working on the projections for the first quarter, we've been working closely with our own OES uh team who is working closely with the Cal OES team at the time.

Um California OES was uh pretty behind in their review of uh the city's submissions.

Uh to date, we've submitted about 14 million dollars worth of what we feel are eligible costs to be reimbursed.

Um, in order to get a more updated um uh timeline from them.

We did meet with them on Friday.

Uh some good news is that they are working through the submissions now, and they hope to get through all the that review uh very very soon.

Um, but we do know that at least a portion of it, maybe a large portion of it will.

Okay, and these were expenses incurred for the Palisades and Al Tedina fires or for a variety of emergencies.

These are specifically for the January of 2024 um winter uh storms.

Oh, so not even this current year.

That's correct.

They're over a year behind.

They are we also submitting requests for the strike forces we sent to the LA fires?

We are.

That's through a different process.

Um our fire rescue department is working uh through that with them.

Oh, that's right, because we went out for the floods on the east coast in Louisiana and Florida last year.

Right.

Councilmember, the the typically the assumption that we use for Cal OEA's reimbursements is about 18 months.

That's typically how long it they take, and about 80 percent of the reimbursement materialize.

So obviously, with an eight million dollar potential hole, we were very concerned, but really that conversation on Friday facilitated by Walt Bishop and his team was really helpful.

So they they basically told us in terms of eligibility that shouldn't be a concern in timing.

They were going to dedicate uh have dedicated people working through it, and we should receive the fund the funds by the end of the fiscal year.

Okay, all right.

Uh thank you.

Please do continue to meet with them.

Um we have to deploy for assistant mutual aid.

I mean, we would expect people to come here to San Diego if we needed them too.

Uh, but that is concerning.

Um, I also am encouraged by the improvements on police overtime.

Um, especially since the IBA noted that they'll be under the previous two fiscal years' actual overtime costs, so that is good news.

Um, kudos to the police department on that.

I know that the fire overtime continues to be incurred.

Um, I am hoping that we are able to get enough recruits this year to fully staff, and in January, I will be asking both all public safety departments for updating on their staffing projections.

And I know that we have to balance not having a third approachment for police officers in our budget, but then we end up paying for it anyway and overtime cost sometimes.

So um thank you for the update on this.

And I'm very much hoping that our sales tax and COT do increase in the spring, uh, but we'll see.

So thank you.

All right, thank you, Councilmember Von Wolpert.

We'll go next to Councilmember Moreno.

Thank you for the presentation.

Um, I do appreciate the Department of Finance producing this report in a timely manner, and also uh the IBA uh for your report as well.

Um I spoke at length on this item last week during the budget and government efficiency committee hearing about some council modifications made to fiscal year 26 budget that have not been implemented, which were detailed in the IBA's uh status of city council modifications and fiscal year uh 26 adopted budget, which is attached, which is attachment one to the IB's report on the first quarter budget monitoring report.

Uh, six positions that had been reduced uh continue being carried over by various departments as unbudgeted or supplemental.

Um these collectively carry a cost of over 1.5 million dollars.

Meanwhile, I would note that there are a couple positions on tomorrow's council agenda being requested for approval that were not funded in the fiscal year 26 budget.

Um the city council and the public take a significant amount of time during our annual budget deliberations to figure out how the public's money is best spent in any given year.

Uh the result of those discussions is the final passage of the budget.

It is fundamental to our form of government that the actions from this council is respected and also implemented as intended.

So I would urge this administration to implement the budget passing by the city council, including the positions highlighted in the IBA report that continue to be filled despite the fiscal year 26 budget not funding them.

Uh that concludes my comments, Council President.

Thank you.

All right, thank you, Councilmember Moreno.

Not seeing anybody else on the lights.

Um I'll also thank Department of Finance for the good work that you do and the ability to look into the future and make the projections that we build our budget on.

Um just uh a couple of questions, or maybe even just one.

Um risk managed.

I don't know if risk management is on the line or if anyone here has the answer, but I didn't hear anybody talk about workers' compensation and why that is off.

Um is there something happening in terms of the employees, or do we just not quite catch that correctly?

I believe we do have someone from risk management on the line.

Okay.

We are looking into this here for the media.

We'll have a better picture here at the mid year, and we'll be able to provide you a better response at that time.

All right, they'll look forward to that discussion in terms of whatever policies or budgeting that we need to think about that.

Um I know this is only first quarter, and nobody wants to jump to the conclusions.

Um I just one of the things I wanted to highlight that the 22 million is what we saw in the first quarter projected over the entire year.

We're not 22 already, but we project if the numbers don't change.

Um and um to Mr.

Gagan, a little bit of a cold uh question here.

Um, do we anticipate any mitigation being developed over the next couple of months, or are we just gonna while we wait till the mid-year?

Uh thank you for the question, Council President.

Mayor Gloria distributed a memo to department directors a few weeks ago related to budget mitigations that he'd be implementing in the current uh fiscal year, including the reimplementation of the request to fill process related to personnel and hiring decisions, uh including a stop to non-essential overtime and a stop to discretionary spending in order to free up room in the current year to ensure that the council and the mayor have enough uh uh uh room to make decisions as it comes to mitigating the full budget in either the mid-year or at the year end.

All right, I appreciate that.

And to the question about some of the positions that were identified by the council to be cut, I would expect something to come back in the mid-year kind of an explanation or proposed increased funding to cover that.

I know you explained a little bit of budget committee, but I think a more fuller robust explanation at mid-year would be helpful for all of us and give us better guidance for how we actually look at the FY uh 27 budget.

Um, and I think it's also um a good caution from some of the revenue, the new revenue that we implemented, whether it was the mayor's office or whether it was city council, that when you introduce revenue for previously untested, uh, to be very cautious about your revenue projections and how that may change uh the public's behavior going forward.

So I think we're all trying very, very hard, but you know, let's learn from uh the lessons.

So with that, again, thank you, Department of Finance, the good work, and our newest CFO uh for that in the mayor's office.

So thank you for that.

And City Clerk, please introduce item S401.

Item S401 is also an informational item.

Is the fiscal year 2027-2031 five-year financial outlook?

If you'd like to speak on this item, please be sure to submit your speakers up to the front of the room.

And if you are joining us virtually, please be sure to raise your hand by pressing star nine or the raise your hand icon.

Thank you, Council President.

All right, thank you.

Uh, with that, please reintroduce yourself for the record and let us know how much time you need for S401.

Thank you, Council President Rolanda Trevel, Chief Financial Officer, and with me is Ben Batelia, uh Director of Finance.

And we need about 10 minutes.

All right, when you're ready.

So this uh is a critical report.

This is a five-year outlook for fiscal year 2027 to 2020 31.

Um, and it really marks the beginning of our uh budget preparation process.

This is still a planning document at this point, but it points uh to the next fiscal year and how we are projecting to be uh in terms of our structural uh budget uh and then covering also the the following four fiscal years after that.

In terms of the composition uh or the outline of the report and what's included, uh we typically start with our baseline projections that is basically looking at uh our FY26 service levels and projecting out uh for the following four uh five fiscal years.

Uh in addition to that, we uh also do an analysis on baseline uh beyond baseline uh components that includes any CIP that is scheduled to open over the next uh five years, uh whether it be a library, a park, a fire station, uh we will we need to fund those uh the operating costs for those facilities as well as maintenance of those are included in the beyond baseline component.

We also do an analysis on the current service levels for homelessness and to the extent some of the grant funds from the state or the federal government are drying up uh and the general fund we need to kick in potentially uh additional resources.

We do the analysis and present it in this beyond baseline section.

Um there's uh potential mitigation action section where we talk about budget reductions efficiencies as well as potential new revenue.

Uh there's a section on some of the larger policy items for the city, for example, climate action plan, the Syria mission building operations and fleet uh electrification and things of that matter, as well as their city compensation philosophy and recruitment and retention.

Uh finally, we include a uh section on infrastructure funds, and that's because there is such a close um relationship between debt service and the way we're financing a lot of these uh aging infrastructure and the pressure that that can also have on the general fund as we continue to finance or and identify uh emergency needs, for example, on the stormwater front.

Here you see the actual outlook uh starting with FI26.

Uh, as you can see, this is a balanced budget.

Uh however, uh, as we went through the exercise, you may remember we were uh closing a larger than 300 million dollars structural uh problem last fiscal year.

We made some significant progress.

Uh however, we did use about 48 million dollars in one-time uh resources to fund ongoing expenditures.

So that 48 million dollars then carries over to the next fiscal year, and then it grows in addition to that because of softer revenue growth, as well as uh some uh expenditure increases that really are outpacing the growth in our revenues.

So we see a next the next couple of fiscal years, $88.8 million for 27, about 106.9 million dollars for 28, and then we saw that large reduction in 29, and that's mostly because uh of the uh pension payment decreasing substantially uh in 2029 after a large portion of our liabilities paid uh completely paid off in 2028.

The other component is there's uh convention center bonds are paid off in 2028.

So 2029 assumes that about 12 million dollars of that revenue will come back to reimburse the general fund.

Terms of assumptions, uh, like I explained before, that we assume the same levels of service as we have in our current fiscal year without really any enhancements, uh, and those get projected out uh for the outlook period.

We're also looking at revenue growth.

Uh revenue growth is based on our key uh economic indicators that we're looking at uh at this point, some of the historical data, as well as the work from our consultants uh really trying to get it as accurate as as possible.

Uh we also include some inflationary uh increases for contracts and supplies, IT, and to the extent we know, for example, that there might be an SDGE uh rate increase or water or sewer rate increase, those get factored in as well.

An important assumption as well is the uh salary increases assumption.

Uh, this is for general salary increases across the board.

We use the 15 uh average CPI or consumer price index to develop that number, uh, and that gets basically applied to every labor group as well as unclassified and unrepresented.

For pension, we're using last year's uh actual report.

Uh we should see a new report come out early January.

Uh just a point to make here uh in terms of uh caution is that that the 5% salary increase that were went into effect in July was not factored into the uh pension projections.

Uh so there should be uh uh an increase in our pension payment once the new report comes out.

On a positive note, however, is the investment returns for SDSERS were higher than what the actuary expected at 9.4 versus 6.5.

So there should be some mitigating um investment earnings there to mitigate that increase.

Uh we do include the transfer to the climate equity fund uh for the infrastructure fund based on the formula in the charter.

There really there's no required contribution to the infrastructure fund, therefore it's not included.

Um we do not include any reserve contributions as we're still working on some policy revisions for our reserves.

In terms of how revenues uh compare uh from FY26 to FY27, you see about 41 million dollars uh in additional major revenues.

On a on a given healthy year, you typically would see about 70 million dollars growth.

So you can see a little bit of the tamper growth there from sales tax and TOT not coming in as strong as we typically see.

Uh most of the increase that you see there are is related to to property taxes.

Uh, in terms of other revenue, we are removing some of the one-time revenues that were included in FY26.

Uh, for example, that Cal OES reimbursement.

We're also adjusting for some of the parking revenue adjustments that we've seen based on consumer behavior and the decisions on Balboa Park.

Um, and basically you see a net change uh once everything's factored in about 28.1 million dollars uh in increases to revenue compared to the previous fiscal year.

On the expenditure front, uh personal expenditures growing by about 51.1 million.

About a little bit over half of that is related to the general salary increase as projected.

There's also increases related to pension, workers' compensation, and fringe benefits.

On the now non-personal expenditures front, we see increases due to debt service payments as we continue to finance more of our infrastructure election costs for the expected elections in 2026.

We are seeing usage in assignment fees come in higher because of increases in our vehicle purchase prices.

And then we're also removing some of the one-time reductions that occurred in 26 and adding them back for FY27.

So the net amount of increases for expenditures is about 116.8 million dollars.

With that, I'll hand it over to Ben and he'll cover the rest of the presentation.

In addition to the baseline forecast, this outlook includes costs that are associated with operating new and expanded facilities that are projected to open within this outlook period.

First, the library department is anticipating the expansion of the City Heights Library Annex in fiscal year 27 and the expansion of the Ocean Beach and Oak Park branch libraries in fiscal year 2028.

Parks and Rec is anticipating 35 new and expanded parks and joint use facilities during the outlook period.

And the fire rescue department is anticipating opening two new fire stations.

Black Mountain Ranch Fire Station in fiscal year 2028 and Otai Mesa Fire Station in fiscal year 2029.

The total need to support the operations of these new and expanded facilities is an additional 42 positions and about $7 million in fiscal year 2027.

Homelessness programs and services are primarily supported by TOT revenue as well as various state federal and other grants.

The outlook assumes additional state HAP grant funding through fiscal year 2028, but absent any additional grants.

And this is projected to be about $15 million in fiscal year 2027 and increasing to about $28 million in fiscal year 2031.

So when the operational costs for the new and expanded facilities as well as the additional general fund support for homelessness programs and services are added to the baseline projections.

The projected shortfall increases at each fiscal year throughout the outlook, with the projected deficit in fiscal year 27 increasing from $88.8 million to about $110.6 million.

Current available resources are not sufficient to mitigate the shortfall in fiscal year 2027 or beyond.

The outlooks identified the need for solutions to mitigate the projected baseline shortfalls over the next five years, in addition to funding the operations of new and expanded facilities and current homelessness service levels.

Ongoing budget reductions will be necessary in fiscal year 2027 in order to address the structural budget deficit.

All general fund departments, as well as select non-general funds, have been asked to prepare budget reduction proposals for consideration.

Departments have also been asked to consider additional revenue generating activities.

Other mitigation actions will be identified throughout the budget development process for fiscal year 2027.

The outlook includes several other priorities that could significantly impact the city's general fund during the outlook period.

The maintenance backlog of general fund facilities continues to grow and is currently underfunded.

The Department of General Services is working on establishing annual funding goals, and these will be included in next year's outlook.

Work continues towards implementing the climate action plan, including upgrading city facilities from natural gas to electricity and converting the city's fleet to electric vehicles, both of which are anticipated to require significant resources.

Additional investments are expected through grants, potential energy savings company solutions, and restricted sources outside of the general fund.

The cost to service residences that were deemed ineligible to reserve to receive trash and recycling services prior to transitioning to private holler service is currently being estimated, and this will need to be supported by the general fund.

And finally, the city has made significant progress in addressing employee compensation over the past few fiscal years.

Work continues to move move all job classifications toward the market median for wages while also focusing on the ability to recruit, retain, and engage highly qualified employees.

And finally, this outlook also discusses general fund infrastructure needs in an effort to provide a more holistic view of the city's financial landscape and also to better illustrate the scale of the general fund's structural budget deficit.

To reach the city's goal of an average street network pavement condition and index of 65 over 10 years, the total cost is estimated to be about 1.7 billion.

Streetlight and sidewalk repairs continue to experience increased backlogs due to underfunding.

A significant funding gap is projected for the unfunded needs of stormwater infrastructure.

This has was last estimated to be approximately $4.1 billion, though this amount is likely increased with the increasing costs of executing projects as well as the continued deterioration of assets.

And finally, the capital backlog of the city's general fund facilities were estimated to be over 500 million with the last condition assessment that was completed in fiscal year 2016.

This is most likely uh most recently been estimated at over a billion dollars.

These unfunded capital needs are not isolated challenges.

They also compete directly with the budget allocated towards general fund operations, such as public safety as well as neighborhood services.

While the city has relied on restricted revenue sources, one-time allocations and debt financing to fund our CIP program, these funding sources are not sufficient to support the growing infrastructure needs of the city.

Additional general fund resources that would otherwise fund operations will have to either be directed as one-time allocations to the CIP program or committed from the general fund to support ongoing financing costs.

This outlook, while it's not a budget, is intended to provide the city council and the public with information to facilitate an informed discussion in advance of the fiscal year 2027 budget process.

And as required by the City Council or the City Charter, the mayor will present a balanced budget by April 15th of 2026.

That concludes our presentation today, and we're happy to answer any questions.

All right.

Once again, thank you for the presentation.

Uh, and again, once again, we'll have the office of the IBA provide a presentation as well.

Thank you, Council President.

Um, as with the first quarter report, our office released a report reviewing the five-year outlook last week as well.

Uh, here to make that presentation with Mayor Julian Andalina, Noah Fleischmann and Amy Lee.

I will turn it over to them to kick things off, and then I will wrap up on the final slides of our presentation.

Thank you, Council President, Council members, and Department of Finance staff.

Our office released our analysis of the general fund five-year outlook last Monday, and our presentation today will cover key takeaways from that report.

In addition to Charles, I'm joined by Noah Fleischmann and Amy Lee, though our whole team is available for discussion and questions.

And our presentation will take less than 20 minutes.

For some background, as you know, the outlook is a planning tool that provides a preview of what you might see in next year's general fund budget, the mayor's budget priorities, as well as the city's overall financial condition.

It's prepared annually as required by the charter, and our office also provides you with an annual review of it.

This document also provides council the chance to consider its own priorities and strategies for balancing the budget.

Our report covers the city's overall fiscal condition as well as the review of baseline revenues and expenditures, additional expenditures that go beyond the baseline, and those not included in the outlook.

And finally, we discuss resource and mitigation considerations.

Beginning with the city's overall fiscal condition, this slide reflects the city's persistent structural budget deficit where resources are insufficient to maintain current service levels.

You'll see in fiscal year 2026, the general fund budget was balanced, showing no shortfall, but it was balanced using 48.8 million dollars in one-time resources.

This approach is unsustainable for the long term, and the city now has limited one-time resources remaining as well as limited near-term ongoing revenue options.

Looking forward to the next five years, the shortfall peaks at 139 million in fiscal year 2028, which includes additional funding for homelessness programs and for new and expanded facilities.

Without new revenues, operational deficits will require program and service reductions.

And it should be emphasized that these shortfalls do not include significant unfunded infrastructure needs and other council priorities.

With that, I'm gonna hand it over to Noah to discuss revenues.

Thank you, Jillian.

The outlook for FY 2027 projects general fund revenue to total 2.2 billion, which is a 1.4% increase above what we estimate to end the current fiscal year at.

The later years in the outlook project an average annual growth rate of 3.2% for the general funds revenues.

On these next two slides, our office raises three potential downside risks that are not part of the 110.6 million shortfall in the FY27 outlook.

First, the FY27 outlook includes 5.8 million in one-time revenue from the sale of the Tailgate Park parking lot located just east of PETCO Park.

Given the timing constraints with the resolving pending litigation associated with this sale, our office believes it may be a risk to include these sales proceeds as revenue in the FY2027 budget.

Second, the outlook forecasts a 2.5% growth in sales tax revenue in the FY27 budget, which our office believes may be slightly optimistic given current economic data.

A slightly lower growth rate of 1.8% would reduce the sales tax revenue projection by $2.6 million.

Third, cannabis business tax revenue from retailers is projected to decline by 3.5% in FY 2027, which may be optimistic.

Over the last four fiscal years, CBT retail revenue has declined on average by 9.6%.

If that rate is applied, applied, and all things being equal, CBT revenue and FY27 would be $1.2 million less than currently projected.

The outlook also does not account for efforts that may benefit CPT revenue, such as increased enforcement of the illicit or unregulated market and state and federal legislation banning or restricting the sale of intoxicating hemp products that compete with the legal regulated cannabis market.

The outlook also assumes on-street parking meter revenue to be 22 million for FY 2027, which accounts for expansion activities and increased expenditures for parking meter operations.

Additionally, recent council approved changes to the revenue split between community parking districts and the general fund is projected to add $3.9 million above the outlook baseline projection for on-street parking meter revenue in FY2027.

The outlook assumes $11 million in annual parking revenue from Balboa Park.

$8 million of that is from the city's implementation of the Balboa Park paid parking program, and $3 million is from the San Diego Zoo's parking lot.

Annual revenue from paid parking at Balboa Park in FY 2027 will vary depending on potential changes to visitor parking behavior and pending parking revenue sharing negotiations with the zoo.

The outlook also includes an ongoing $11.2 million transfer of excess fund balance to the general fund from the emergency medical services fund.

Current projections show this ongoing transfer to be sustainable during the outlook period, but this could be impacted by potential changes to the city's EMS delivery method and the enactment of the one big beautiful bill act, which may increase the number of uninsured patients and reduce reimbursement rates for ambulance transports.

Moving on to expenditures, the outlook projects general fund expenditures to total $2.3 billion in FY 2027, a 5.4% increase above the FY 2026 adopted budget.

The seven largest drivers of the increase are displayed on this slide and are covered in more detail later in this presentation and our report.9 million increase in expenditures would only be to support existing service levels.

Therefore, decision makers may ultimately determine that continuation of certain baseline services may not be possible given the city's structural deficit.

The outlook assumes that personnel related expenditures for wages will increase by 2.94% in FY 2027 in the remaining outlook years.

As DOF noted, this increase is equal to the average consumer price index for San Diego County over the last 15 years.

However, actual expenditures will vary depending on negotiations with the recognized employee organizations.

The outlook also includes a $12.2 million expenditure from the general fund in FY 2027 to support the project replacing the city's current SAP Enterprise Resource Planning System.

Over the five-year outlook period, total general fund costs for replacing the SAP system are expected to be $60.8 million, with the remainder of the project's $138 million budget being covered by non-gener departments.

Moving next to debt financing, this slide covers available debt funding as compared to appropriations for projects and how the city's debt ratios fare with the anticipated debt included in the outlook projections.

The outlook's baselines include new debt service costs associated with the two lease revenue bonds issuances assumed over the outlook.

As shown in the top right table, about $680 million in lease revenue bonds are anticipated to be issued to cover about $23 million in unfunded existing and anticipated appropriations.

Of the $203 million, about $111 million is in existing appropriations, which are also highlighted in the table on the top left.

The remaining $93 million of the $203 million in unfunded existing and anticipated appropriations is for future appropriation requests anticipated to be brought by council, which includes the remaining stormwater WiFi A match and debt for SAP modernization.

This leaves $474 million in debt capacity that could be used to support additional capital projects.

Recent updates to the city's debt policy require that the outlook include a capacity analysis to project the impacts of new debt issuance on the city's debt ratios.

Our analysis, developed in consultation with the Department of Finance projects the city's debt ratios to remain within the debt policy parameters under outlook assumptions.

Lastly, the bottom table shows that including the anticipated bond insurances, the city is expected to meet both the 10% and 25% debt ratio benchmarks for all outlook years, though it is closing in on the 25% benchmark in FY27 and FY28.

Now I'll hand it over to Amy Lee.

Thank you, Noah.

The outlook also projects additional expenditures for priorities beyond the baseline, including operating costs for new library, parks and recreation, and fire rescue facilities assumed to open during the outlook period, including two library branch expansions and one in replacement, 20 newer expanded parks, 14 new joint use facilities, and two new fire stations.

As with previous years, given the uncertainty over full construction funding and timeline, it may be premature to project the opening of some new facilities currently in development.

Another consideration is how to balance additional expenditures for new facilities with likely service level reductions needed to balance the budget.

If existing services, programs, and facilities are a higher priority, delaying the opening of new facilities should be considered.

Priorities beyond the baseline in the outlook also include funding needs to maintain current homelessness programs and services.

Overall identifying annual funding gaps ranging from 15 million to about 28 million during the outlook period.

The homelessness funding cap is largely driven by anticipated reductions in state HAP funds, assumed to cease altogether by fiscal year 2028 in the outlook, along with projected changes in TOT reimbursements and measure C revenue.

Of note, one-time Measure C funds earmarked for homelessness collected in 2025 but available for fiscal year 2026 are assumed in the outlook to offset the use of state HAP funds in fiscal year 2026, allowing $4.2 million and HAP to be available to help buffer the homelessness funding gap in fiscal year 2027.

However, an alternate use for the 5.9 million from Measure C would be to help address the probable current year general fund revenue shortfall.

This would, however, increase reliance on HAP funds in the current year, which would increase the fiscal year 2027 homelessness funding gap by 4.2 million to around 19 million.

Final decisions on how the 5.9 million will be applied will be made during the budget monitoring process.

We also note other uncertainties in the outlook related to homelessness, including the status of future state HAP funds.

In preparation for fiscal year 2027 budget development, council may wish to consider reevaluating and prioritizing existing homelessness programs and strategies given limited resources, as well as opportunities to increase non-general fund resources or reduce expenditures, for instance through further program consolidations or cuts, while still considering program outcomes.

We next turn to funds funding needs not included in the outlook, starting first with solid waste management.

The outlook includes potential impacts to the general fund, including $10 million for eligible customers receiving increased service levels, as well as $5 million for ineligible customers not yet transitioning to private haulers.

The $5 million could decline as fines could offset the expenses.

Both of these amounts should be one-time payments, and our office recommends the Department of Finance include these payments when developing projections for the mid-year report, as these payments should be made in fiscal year 2026.

The outlook also assumes $3 million ongoing for the general from the general fund to support a financial assistance program.

However, additional ongoing funding during the outlook period could be needed as one, the program has not been fully developed yet, and associated costs could exceed assumed funding, and two, subsidies could lose value if not adjusted for fees and inflation over time.

While the outlook includes $200,000 more for arts and culture funding than approved in the fiscal year 2027 council budget priorities resolution, it is $16.3 million short of the full penny for the arts goal.

Additionally, unfunded operating needs include $464,000 in fiscal year 2027 to restore the SD access for all mobile hotspot program service levels.

For infrastructure, the most recent CIP outlook identified 6.51 billion general fund capital infrastructure gap.

The city faces a long-term funding challenge that cannot be addressed through existing sources, although new, although not addressing these issues will lead to additional emergency spending.

Next, I will hand it off to Charles to cover the remaining slides.

Thank you, Amy.

So as you have seen, overall the outlook is not positive, especially in FY's 27 and 28.

As the city is required to adopt the balanced budget each year, the baseline deficit that you see projected for the next fiscal year is particularly noteworthy as it will need to be closed in the budget that is ultimately adopted in June.

In prior years, we've been able to close deficit through excess equity or unspent money that's left over from the prior year, and or by delaying contributions to our general fund reserves.

This year, however, excess equity is not projected to be available, as you saw in the first quarter report.

And while prior outlooks had included reserve contributions in their baseline expenditures, so that delaying contributions was able to be seen as a mitigation.

And consequently, delaying reserve contributions would not have an impact on the baseline's bottom line.

During the last budget cycle, the current year's projected deficit was filled in substantial part by implementing new revenues.

But moving forward, revenues that do not require a public vote are more limited.

In the City Council budget priority memos, some council members did discuss implementing paid parking at the beach in the bay.

But given the need for legal review and Coastal Commission approval, even if council does elect to proceed with those, it is not clear that they could be accomplished in FI27.

And beyond that, at this point, we would recommend that council not budget against revenue streams before they are established.

It is noteworthy that the city does continue to pursue state and federal grants, but those grants are largely one-time awards for specific projects and really should not be used to support ongoing baseline needs.

Which unfortunately means that closing the deficit that's projected for the next year is going to need to rely mainly on expenditure cuts.

Departments have already been requested to prepare potential reductions for the upcoming year, but beyond that, we stress the continued need for structural realignment of the city's budget so that its ongoing expenses are matched with ongoing revenues.

It will be critical to identify essential programs and services to maintain and to avoid any unnecessary budget and program increases.

Beyond that, given that spending cuts have already initially been requested of all departments, council should consider the potential impacts that inadequately funding departments could have on the services they provide, and also consider that the city's constituents may ultimately be better served by the city providing fewer services well than more services poorly.

As it is today, the city's existing resources are insufficient to allow it to provide the services that it currently does, and we believe that that should be acknowledged.

In the absence of major new revenues, it is important that we align our ongoing expenditures with ongoing resources so that if and when new revenue sources do materialize through increased taxes or fees, residents can see a commensurate higher level of service.

Our report does include a discussion of some of those potential revenues that could be pursued in the future, although, given the timelines associated with them and the need to obtain voter approval, they should not be assumed in the FY27 budget.

Among those potential future revenues are a sales tax measure, as was attempted in 2024.

For reference, a one-set measure would generate roughly 360 to 400 million dollars.

Obviously, voter approval would be required.

We note that general obligation bonds are commonly used by other cities.

They are supported by a tax on the assessed value of properties and are used to fund capital infrastructure.

For reference, the 100 million dollar general obligation bond would increase annual property taxes by $1.75 per $100,000 of assessed value.

Again, voter approval would be required.

We note that in 2022 and 2024, the city considered asking voters to approve a fee to support stormwater infrastructure based on the square footage of impermeable surfaces of a property.

Those would have generated between 74 and 129 million dollars, although ultimately the city did not proceed with them due to the high voter threshold that is required.

We do note that over the past several years, other revenue discussions have included a potential increase to the property transfer tax that is assessed when properties are told sold.

San Diego's transfer tax is currently the lowest default amount that is provided by state law at 55 cents per $1,000 of a property sale price.

That generates roughly $11.5 million per year.

We note that other jurisdictions have higher amounts or even progressively graduated increases depending on a property sale price.

And finally, currently pending in the rules committee is a potential vacation home and short-term rental tax, although a potential ballot measure for that has not yet been finalized, and consequently we do not have estimates for any revenue that it might generate.

To wrap up, uh we find that the outlook's overall projected revenues and expenses are reasonable, if not slightly optimistic, and the fact that significant deficits are still projected in each year underscores a significant structural budget imbalance that we've been operating under four years.

We did make significant progress last year to stabilize the city's finances, including the implementation of a number of new revenues, along with significant expenditure cuts.

But moving forward, the potential to establish more near-term revenue increases is limited, and the need to balance the upcoming year's budget with cuts cannot be avoided.

To that end, we believe that the city should work to constrain cost increases to identify and prioritize critical and essential programs, and especially given the city's limited resources, ensure that the programs that it does fund are closely evaluated for effectiveness.

That wraps up our presentation, and as you heard, I and my whole team are available for questions as well.

All right, thank you for the presentation and everybody at the office of the IBA who worked on that.

Certainly a sobering and candid conversation about the five year projections.

So with that, uh clerk, please proceed with public comment.

Thank you, Council President.

Don Hendon, if you can please come up to the microphone.

Don and then Pob Kazuski, you'll be after Don.

You'll have two minutes.

Please proceed.

The higher micro.

Thank you so much.

Uh came actually for adjournment for Brenda Jackson, but having heard what's being said and spent some time around.

Um budgets in other cities.

And uh just offer some prayer and some encouragement that things will get better.

We are in tough times all around the country and are all around the nation.

And as we inhale and exhale, take in the good, exhale the bad, that things will get better, and I'm praying for us all.

Thank you, and God bless you for all you do, everyone.

Bob Kazuski, if you can come forward, please.

The city government is a huge, huge animal.

It has many, many working parts.

There are many places where money can be squirreled away and wasted and siphoned.

Um as citizens, we have very little insight to what goes on in this city and where all the money is going.

But many citizens have specific insights into specific parts of this city's operation.

And the reason we have advisory boards is so that you can get those citizens who know those specific parts to advise the city.

And that helps with everything.

It helps with budget, it helps with management, it helps with the way citizens are served.

And yet, this city from the little teeny spec sample that I've made, this city is in big trouble.

What I've seen at the Tory Pines Glider port is just one little tiny drop of blood from this big giant animal.

And what do I see there?

I see a multi-million dollar piece of property being leased for free for decades, and I think you've increased it to what, $3,000 a year to a private company that's making millions of dollars a year.

Now, how wasteful is that, Joe Lacava?

That's in your district, and you've known about this from before you were elected.

When Corey Briggs and I talked with you on the phone, you knew about it before you were elected.

And yet you totally ignore it.

How many other drops of blood in this city are being totally ignored by this council and this mayor?

It is disgusting.

Five minutes on the timer going to those participating remotely.

We currently have three callers in the queue.

John Stump, if you can please unmute, you'll have two minutes.

Please proceed.

Hi, thank you very much.

Uh, in the five-year projection, I did not see or hear the projection on the public liability fund.

The quarterly uh report said the fund was short, uh, some 16 million dollars.

And as I reported earlier, the liability estimate by the city attorney at Judge Boss's courtroom last Thursday is one billion dollars.

So where's the analysis on what the city is doing there?

Secondly, there's projections concerning franchise fees, particularly SDG.

Now, a responsible city council would be wanting to influence the reduction in franchise fees because they want to make sure that the residents of San Diego and the city departments receive the lowest utility bills.

But in the projections, they're projecting some 13% increases.

I don't think the numbers that are being projected in the five-year walk or reflect the reality in item 200.

Second, they make a big deal out of the $8 million bribe that SDGE will pay the City of San Diego if it re-opts for another 10 years in 2031 for another 10-year franchise at the highest utility rates in the country.

You don't want that.

Please eliminate you want reduction in cost.

Thank you.

Thank you.

Next is Andrea Ebbing.

If you can please unmute Hi, my name is Andrea Ebbing, and uh wanted to just uh comment on just one thing I didn't see was um anything about other pay.

So there's a line item in transparent California, which is where you can see all city and county employees uh pay items, and it's other pay.

So it's not pension, it's not benefits, it's not overtime, um, and it's not regular pay.

It's something called other pay.

And city employees uh received 152 million dollars of other pay in 2024.

So we just don't know the residents still don't know what it is.

It's 1446 or 142 in 2023, and it was 152 in uh 2024.

So that's transparentcalifornia.com.

If you look up the city of San Diego, um you can export the file and look up other pay that way.

That's one thing.

Um, the next thing is the homeless um spending and like whatever the I heard uh Charles Magita say something about the uh importance of overseeing the programs and the usefulness of them that we do fund.

Um again, you know, I'm on the record here.

We have opioid distributors pretending to be treatment facilities and importing addicts from all over the country.

So we're making our issue situation so much worse.

I think it's really time we start triaging our eligible for services, drug test them, and if they test positive, they don't get the services.

I'm sorry, but that's just it's it's unacceptable at this point.

We have to do something drastic.

Uh and lastly, it's just revenue.

Like we really need to get back into the situation from back in the day when we had COMBIS, the convention of business bureau.

If we do have such a bureau, it's not effective.

We should really include that.

Thank you.

Kathleen Lippett, your final speaker, if you can please unmute.

Thank you.

Um, thank you to John Stump's wise comments too.

The homeless program has continued to bleed money.

It's a clear indication of the city's ongoing ignorance ignoring of primary contributing factors, such as the failure to prevent increasing drug use.

Sadly, it appears the city plans to continue to ignore the ongoing cost deficits associated with homelessness.

Additionally, the change in projected baseline revenues and resources from fiscal 2726 and the adopted budget to 2027 acknowledged an increase of 51.1 million in personal expenses, 65.8 million in non-personal expenditures, salaries, wages, retirement ADC, workers' compensation, fringe benefits, and debt service payments and election costs.

City leaders and workers should not be reaping such additional benefits that the public has no hope of reaping.

And you should be ashamed of yourself for doing so.

The projected 3.5% annual decline in taxable gross revenue receipts from retail marijuana outlets was framed as maybe optimistic.

That is an understatement, which reflects the city's failure to evaluate the associated costs of the marijuana program.

An intractable, thriving, illegal market, or a realistic and current understanding of the marijuana market that continues to circle the drain.

The city has transferred the onus of revenue deficits onto the back of the publics that they are supposed to serve.

And nothing could be more inequitable.

When city leaders have participated in such fiscal irresponsibility and financial decisions, there should be a law that prohibits them from holding any future public office.

Thank you for letting me speak.

Thank you.

That does conclude public comment.

If you had raised your hand after the five-minute timer, had Wayne, you can definitely email us at Cityclerk at Sandieago.gov and those comments will be distributed.

Thank you, Council President.

All right, thank you, City Clerk.

Again, this is an informational item and no motions required.

And I'll turn it over to my colleagues for any questions and comments.

We'll go to Councilmember Von Wolpert.

Um, thank you for the presentation on this.

Um I have some specific questions about going on with the transportation department on slide 12 of the I think it was our Department of Finance's presentation, not the IBA.

Um one of the the questions I get all of us get from all of our residents are when are the roads going to be fixed, when are the lights going to be fixed in the sidewalks?

And slide 12, yeah, of the Department of Finance's presentation talked about general fund infrastructure needs.

And the section on street light and sidewalk repairs replacements.

Both asset asset types continue to be underfunded, yes, because we're in a budget deficit, I understand that.

But it states electricians are spending the majority of their time for dig alert markouts, leaving little time for routine streetlight repairs.

I know I talked to with the mayor's office about this briefly.

I think he has a very good idea that that should be a fee for service.

Currently, are we charging a fee to go out and do dig alert markouts for developers or SGG and E or whoever?

The city's not currently charging a fee, but we are we have an internal working group working on establishing a fee for either partial or for full um cost replacement.

Um we plan to bring that forward to the city council for consideration within the next couple of months.

Okay.

Um we should be doing full cost replacement.

Uh unless this is gonna impact you know, individuals who are trying to just redevelop their single home.

But if it's a larger company that does major development projects, they should be paying the full cost for for services for this, um, which would hopefully allow us to hire electricians specifically to do that because our taxpayers are depending on us to use electricians to actually fix the street lights.

I do agree we have to do dig alert markouts.

We don't want people coming in to dig up the street and everyone's power gets cut off because they don't know what they're digging.

But I'd I'd be particularly interested in seeing that done at full cost recovery.

And then what is this note about the mill and pave team backfills work for sidewalk replacements?

Um I'll ask the uh transportation department to respond to that if they are on virtually.

Sounds like nobody is.

Um, but my understanding is um the department is using uh current mill and pave teams to backfill the work of sidewalk replacement teams where they are understaffed.

That's my understanding.

Okay, we'll follow up on this because the mill and paved teams should be fixing the streets.

Um then I have another question on uh our EMS system.

I'm glad that NOAA brought up the fact that the big ugly bill act, which will cut the county estimates around 400,000 county residents will be kicked off the rolls of Medicaid because of the big beautiful big ugly bill.

And I didn't I put two and two together until right now.

It's the city that does the EMS transport for hundreds of thousands of residents, and we are the ones who bill people for our ambulance rides.

So I we just I know I'm gonna get a briefing soon from Becky Knowles in the fire department about potentially putting out a new RFP out since we have the alliance model.

I just didn't think about the fact that the federal government is now going to be cutting off people from health insurance, and then we cannot bill them when we provide ambulance transport through 911.

So our EMS fund after 2027 may not be where it is today.

Um so we shouldn't be counting on it.

Thank you for bringing that up.

It's another reason that the federal government is making it hard for us here in local government by cutting people off of their health care.

But I'd like to just add that to our conversation as public safety chair about what we do about that.

Um right, thank you, Councilmember Von Wolpert.

We'll go next to Councilmember Campbell.

Thank you, Council President, and and thank you guys for the presentation.

Uh as we move through the fiscal year 27 budget process, I'd like to begin by emphasizing the importance of continuing to protect key city services.

It's about making sure that we use taxpayer dollars as efficiently and responsibly as possible.

We cannot afford to repeat the mistakes made in the previous budget cycle.

As council members, it is our responsibility to put forward solutions that are both reasonable and fiscally sound while carefully balancing the needs of our community with our financial realities.

That includes deepening our commitment to homelessness prevention and wraparound services because we know these programs work.

When we interview, intervene early with rental assistance, housing stability case management, and diversion resources, we stabilize households before they fall into crisis.

These strategies keep families housed, reduce inflow to shelters, and ultimately deliver far better outcomes for residents at a fraction of the cost of long-term homelessness.

We also must continue supporting critical public safety needs, such as increasing personnel and assuring our first responders have the tools and facilities they need to protect our communities.

At the same time, we need to ensure our neighborhoods receive the infrastructure improvements they've been waiting for, safer crosswalks, timely street paving, repaired sidewalks, and street lights.

And finally, we want to maintain and modernize the public amenities that our residents rely on libraries, recreation centers, open spaces, coastal assets, while preparing for long-term climate challenges through stormwater upgrades, brush management, and coastal protection.

With that, I look forward to working with my council colleagues and developing the upcoming budget for fiscal year 27.

It will be tough and tough decisions need to be made.

Let us be mature and responsible enough to make them.

Thank you.

All right, thank you, Councilmember Campbell.

Uh, not seeing anybody else on the lights.

Uh I'll have for a few comments as everybody has stated, uh, FY26 budget was a very, very tough conversation.

Um, and uh we didn't get any favors for that coming into FY27 uh for a variety of reasons that were pretty eloquent stated by finance as well as the office of the IBA.

Uh so we'll look forward to mitigations at the mid-year uh as well as uh hear uh proposals in the mayor's preliminary budget come April.

Um I think it's uh incumbent on the council to start thinking about that with either the January memos when we update that now that we have a little more information going forward uh and starts seriously thinking as to as the um IBA said whether we should better uh the city is better served by providing fewer services well than more services poorly.

Uh and I think today's presentation, uh which will not often be presented, uh I also take into account the IBA's admonition to be more open and transparent about the insufficiency of its existing resources.

I think it was a lot of candid conversations both for finance and the IBA serving the council very well uh with the blunt talk.

Uh we have some challenges in front of us, and so we're gonna, as council member camps, so we're all gonna have to work together to figure out how to navigate that and get through especially in the next two years going forward, but which is our our toughest years in front of us in the five-year outlook, uh, not to mention the infrastructure.

Uh so I'm gonna take advantage of the fact that Ms.

Bizak walked in the chambers at exactly the wrong time uh to ask the question Councilmember Von Wolbert asked, which I think is actually probably just poorly worded, because I think I know what it means.

And I don't know if you want to get in the screen, but under the infrastructure component of the Department of Finance, it's the last bullet under street light and sidewalk, mill and paved team backfills work for sidewalk replacements.

Can you clarify what that means?

I absolutely can.

So, yes, we do have a millennium, and their operations are for 30 lane miles for this year.

What that is referencing is in addition to that, when we do sidewalk repairs and we have to excavate out into the right of way, we have to backfill the asphalt that is immediately adjacent to the concrete work for both ADA ramps and sidewalks.

So that is what that is referencing.

Oh, I was wrong.

Backfills as the physical action of backfilling soil.

Okay.

Well, thank you for that.

Does that answer your question, Councilmember?

Thank you.

So you don't mean that employees are backfilling the jobs of sidewalk repair people.

You mean we're physically pouring material?

Correct.

Okay, and so why is that on there?

What is that doing?

Are you alerting us to something wrong?

Is that a normal part of processing a street repavement?

That is one of the many aspects associated with sidewalk projects as well as street paving projects.

So that's one of the components.

One of the smaller of the few components, but it is certainly an element that is not funded right now.

So we need to make sure when when we're doing improvements in the right of way, both sidewalk repairs as well as road repairs, that those are coordinated.

Okay, got it.

Um I appreciate it.

Thank you.

I'm glad we asked.

Um, again, uh, you know, the fact that you've the finance and IBA has dived into both the operational components as well as the infrastructure backlog.

I think it's incumbent upon all of us to really think about both of those uh and the expectations of our neighborhoods that have been waiting for infrastructure as you highlight when we deliver new projects to meet that need, it comes at additional cost because there's an operational component to that.

So I appreciate that candor.

So no one else, uh no one else being on the lights.

I will again thank uh Rolando, our CFO, Department of Finance, the Office of the IBA for the very good work.

Um, and that we'll need to seriously take into account.

So with that, Clerk, please introduce item S402.

Item S402 is the authorization to enter into and sign a cooperative procurement contract with genuine parts company doing business as DBA NAPA integrated business solutions for the purchase of vendor managed inventory and logistics management solutions for fleets and facilities.

If you'd like to speak to this item, please be sure to submit a speaker slip to the front of the room in the clear box, or raise your hand by pressing star nine or the raise your hand icon.

Thank you, Council President.

Uh thank you, City Clerk.

Uh, before staff uh I turn it over to staff for a presentation.

I just wanted to make note that this item was heard at budget last week.

Uh it was passed unanimously.

Uh, but given the dollar amount and give it some of the budget conversations we had today.

Uh I thought it was appropriate to actually bring it as a discussion item for the full council.

So thank you for making yourself available.

Um, with that.

Um with that, please introduce yourself for the record uh and let us know how much time you need.

Thank you.

Good afternoon, Chair Lakava and Council members.

I'm Ashira Little, I'm the director of the Department of General Services.

And with me today, I have Gina Dulley, uh Deputy Director and Rex Ragoucos program manager within a division.

We'll need about 15 minutes for the presentation.

All right, when you're ready.

Before you today is a cooperative contract for the purchase of parts and supplies for the city's fleet.

As you may already know, our fleet includes over 5,000 vehicles and equipment, and the fleet operations division completes over 40,000 work orders annually.

These work orders and this contract support frontline vehicles that are core to city operations and perform essential work of the city every day.

In recent years, our fleet has grown and work orders have increased accordingly with completion of over 45,000 work orders last fiscal year.

Managing such a large fleet and the associated work orders for preventive maintenance, inspection, and repairs requires a contract that can handle the complexities and wide range of parts and supplies required to keep operations running efficiently.

The NAPA contract before you today is highly responsive to our needs and provides parts in a timely manner, which of course reduces downtime across the fleet.

This contract is invaluable to our operations and ability to maintain the fleet within the resources currently allocated.

I will now turn it over to Gina and Rex to walk you through the presentation and give you a comprehensive understanding of the terms of the contract.

Gina.

Good afternoon, Council President Lacava and members of the City Council.

My name is Gina Doulet.

I'm a deputy director in the Department of General Services, and joining me as Rex Ragukos Program Manager and Department of General Services.

We are seeking authorization to enter into a cooperative agreement with Genuine Parts Company, NAPA Integrated Business Solutions, who I'll refer to as NAPA, for the purchase of an inventory and logistics management solution for auto parts and supplies for the city's fleet.

This is an as needed contract funded through the Fleet Operations Fund.

As Director Little mentioned, the city has over 5,000 pieces of motive equipment.

This contract ensures that departments like transportation, public utilities, parks and rec, stormwater, and certainly police and fire remain operationally responsive.

The fleet operations division ensures city vehicles stay ready to deploy, supporting street repairs, trash removal, park and beach maintenance, and emergency response.

At some point, each piece of motive equipment will need preventive maintenance and repair.

While fleet can prepare for vehicle maintenance, the timing of repairs is harder to predict, which is why it's critical to have a vendor that has quick access to inventory locally through a network of suppliers and retail storefronts, but also regionally and even nationally.

Since 2017, the city's fleet has grown by over 1,000 vehicles.

Fleet operations must be prepared to meet this need now and in the future.

In the graph shown here, you can see the number of fleet vehicles represented by the orange line overlaying the number of work orders.

Fleet operations is truly keeping the city in motion.

Over the last four years, the division has completed on average 42,000 work orders annually, and in the last calendar year alone, over 110,000 parts were ordered to maintain and repair city vehicles.

Vehicle size is rising, fleet sizes rising, excuse me, while maintenance demand is accelerating, placing increasing pressure on parts availability, labor, and vehicle uptime.

A growing fleet equals a growing workload equals the need to provide necessary resources to our most critical employees, the dozens of fleet technicians who are mission critical to a functioning city.

Without a contractor that provides auto parts and supplies for over 40,000 vehicle work orders a year, there are tangible risks such as increased vehicle downtime and higher costs for critical parts, which lead to reduced fleet availability.

We estimate that we would need at least a dozen individual contracts if we weren't able to leverage a contract with this breadth and depth of parts.

Vehicle downtime could be attributed to difficulty sourcing parts from multiple vendors and then waiting for those parts to arrive.

With NAPA, we have access to local, regional, and national inventory through one vendor who delivers parts to vehicle maintenance facilities located at Choice Operations Yard, Rose Canyon Yard, Merrimar Operations Yard, and other sites dedicated to police and fire vehicle maintenance and repair.

So rather than each city, county, or public agency conducting its own full procurement process, SourceWell completes that process once on behalf of all participating members.

Public agencies can then piggyback on those contracts, saving time, reducing administrative burden, and ensuring compliance with public procurement laws.

Four out of six bidders qualified, and NAPA was ranked the highest by a significant margin.

These are the criteria in order of weight that the bidders were evaluated on by a committee of four, comprised of one procurement manager and three procurement analysts.

Of the four qualified vendors, NAPA scored highest in all areas, but most importantly, with pricing and broadest parts coverage.

The city has about 200 different types of vehicles and equipment and functions more like a mission critical operation than a traditional garage.

Because so much of the fleet is deployed for health and safety reasons, we determine that of the four pricing models that NAPA's contract offers.

Option three, which is an all-inclusive pricing model where the city pays only for the parts it uses at a fixed margin above NAPA's cost, and NAPA absorbs all staffing, inventory, delivery, and operating expense, provides the most stable and predictable budgeting option.

Of the four options, option three is the only model that fully transfers operational supply chain risk and price surging away from the city.

We are sensitive to the potential for marketplace volatility and aim to minimize risk wherever we can.

NAPA also provides a facility located in Kearney Mesa, strictly dedicated to supporting city needs.

NAPA's distribution network allows us to get parts quickly, avoiding bogging down fleet techs and parts buyers with researching parts availability from multiple vendors, then having to drive to a storefront to pick up parts.

Our highly skilled technicians can spend time doing what they are trained and certified to do, which is maintaining and repairing vehicles.

Here are two examples of how the pricing model is applied.

You can see the retail cost for a fairly high volume part, which is an oil filter, is about 1450.

The contract price is 11, and the city in this example would have a 24% savings.

Another high volume item is a break rotor for a police SUV.

On the retail market, this price would cost about $95.

The contract price would be around 77 with a 19% savings for the city.

For the fiscal overview, I'm going to go ahead and turn that over to Rex.

Thank you, Gina.

For this contract, a not-to-exceed amount of $56.9 million is being requested.

A contingency is included to account for vehicle additions to the fleet and fluctuations in parts demand and pricing over the multi-year term since fleet maintenance needs can vary year to year due to equipment failures and emergency repairs.

The contingency ensures we can meet operational requirements, reducing the need to return to council before the contract expires.

This will be funded by the fleet operations fund, and the expenses are subject to the annual council appropriation.

The amounts reflected on this slide show the anticipated parts usage needed to support the city's fleet.

The 56.9 million projected expense consists of the initial term from 2026 to 2028 for 29.7 million and two optional renewal years, which total 27.3 million.

I'd like to highlight the 4.49 million for FY26.

With council's approval, this is the projected expense for the second half of FY26.

The subsequent amount show our projected expenses for each fiscal year thereafter.

As mentioned previously by Gina, this is an as-needed contract where expenses will be incurred only when parts are purchased.3208 and AR35.11, which has been certified by the purchasing agent.

And for the execution of the contract through December 3rd, 2028, with two one-year options.

Overall, given the competitive process, the operational needs of our fleet, and the fiscal safeguards built into the pricing model, we respectfully request council's approval to proceed with a cooperative agreement.

And with that, we're happy to answer any questions or comments.

All right.

Thank you very much for the presentation.

Clerk, please proceed with public comment.

Thank you, Council President.

We do not have any speakers here in council chambers for this item.

Sorry, the five-minute time are going to those participating remotely.

Starting with John Stump, if you can please unmute.

After that, we have James.

Well, great.

You know, as you is times get tougher, you get smarter on how you do things.

And I, you know, as a former Detroiter, I've bought a lot of parts from Napa.

The analysis I don't see is how NAPA meets the standards for diversity, participation of women, and compensation of executives.

When I looked at the uh analysis on the NAPA site, the they are in the lower 50 percent.

They're in Atlanta, but they hire no uh black African Americans.

Uh you know, in the future, the council should be informed at least on factors of what are driving the costs and what are the participation of San Diegans in this process.

Are all the employees of Napa going to be out of town on the telephone?

Or are there going to be actual city of San, you know, City of San Diego residents participating in this contract.

But you know, generally, as times get tougher, uh you start to get smarter.

And um not having a parts store at the city of San Diego is more the way industry is going.

Thank you very much.

Thank you, James.

If you can please unmute.

Hi, uh, I'll keep this kind of short because I wasn't planning on uh speaking about this.

Um, but NAPA Auto Parts is different than NAPA IBS.

Um, and in my you know quick Google search over the last few minutes.

It seems like there's a number of controversies around NAPA IBS.

I just want people to at least investigate about these.

Uh, some of these are include overcharging the city of Houston for similar services, and it seems like there are some other kind of controversies around pricing uh in other states with NAPA IBS specifically.

Thank you.

And our final speaker is Lori Saldania, if you can please unmute.

Uh thank you.

Yes, to follow up on John Stomp's remarks, the lack of diversity in so many of the city's contracts has been ongoing, pervasive, and cost savings measures uh mean that somewhere workers are probably not being paid what they need to be paid.

And outsourcing to a company with a track record, as the previous speaker mentioned, uh, outsourcing to a company located in another state, outsourcing to a state that has a highly diverse population, but then the contractors don't show diverse hiring.

Those are all red flags that this council needs to pay attention to.

I understand the need to conserve on the finances to tie in with the rest of the reports today, but somewhere somebody is being potentially harmed as a result of these contracting decisions, either financially or they're not being paid as well, or they're not being paid at all.

If in fact what Mr.

Sump pointed out is accurate, that there are no employees, no black employees showing under the workforce reports.

So I agree the city needs to do its best to manage a budget in difficult financial times, but don't place that burden on other states and other communities that we are struggling with here in San Diego.

That ultimately doesn't really solve the problems.

It just shifts them to another population.

Thank you.

Thank you.

That does conclude public comment on this item.

All right, thank you, City Clerk.

So we'll now turn it over to council members for questions, comments, and entertain a motion.

We'll start with the chair of the budget committee.

Council member Foster.

Thank you, Council President, and thank you, staff, for the presentation.

We did just hear this item at committee.

I'd like to think we had a good conversation to get some clarity and understanding as to what this contract entails.

A big part of that was the ability for NAPA to provide say storage and certain efficiencies.

So that is appreciated.

What are we seeing as far as the as price increase the significance?

Because I think before we would be around 30 million or so if I recall, and now we're up to 50 million or so is what we're looking for capacity.

Thank you for your question, Councilmember Foster.

I think the primary driver in the increase in the contract amount really has to do with the amount of vehicles that have been added to the fleet.

So we need to account for carrying for those vehicles.

And over the last several years, you can see in the one of the earlier slides, the fleet has grown over a thousand vehicles since 2017.

And the trend that we've seen in the last handful of years, maybe three or four years, is that we've been adding 100 vehicles a year to the city's fleet.

So we really are looking at that and accounting for that in these projections.

Thank you for that.

I think that provides some additional clarification.

Also, um, just as important as the parts are, we want to make sure that we're actually getting the vehicles in to be maintained.

So I think I look forward to that continued conversation to see how we can look at closing the gaps to make sure that we are in what I call a high performance type scenario, right?

Um, but also um just to um kind of quickly touch upon um the comments that we've heard um during the public comment period.

Um I I think one of the things that has always been a conversation in the past is just how we use co-ops and when we use co-ops.

Um a lot of times we find it's challenging as we look at how we do business and how other jurisdictions may do business in regards to expectations around diversity and things of that nature.

Um so I think that's even why it's even more important to make sure that as we talk about utilizing these contracts that we are doing a true cost benefit analysis.

Um my last question just before we move on, um, would be I know you mentioned that there are savings in certain things, but do we have an idea of what the overall savings is by you utilizing this co-op.

So I I really think it would go back to the slide where we were talking about the retail price versus the contract price, and that's where we would look at the overall savings.

Also, I think it's important to note that NAPA scored highest, even with their various pricing models during the evaluation period and scored well above the next bidder.

Um during the same time in 2024, there was also another RFP strictly for auto parts and not the integrated business solution.

There were 21 vendors that responded to that RFP for auto parts that Sourcewell was managing.

Uh NAPA also scored highest on that for the pricing of their parts amongst 21 vendors.

So I I think they're placed very competitively nationally.

We'd likely end up with the same results locally.

Okay, I I just think as we are looking at contracts of this significance, I I think there needs to be more of an effort on that cost-benefit analysis and to actually document that this is a benefit to the public and the taxpayers.

Um I think we owe them that.

So we can have some more conversations as we continue to look at that.

Um, the other thing that I would like to just say quickly, two other things.

One, just thank you in regards to addressing the contingency.

Typically, we probably do a 20% contingency on something like this, but we have taken it down to 10%.

So I appreciate you guys bringing that number down.

And then the uh what was my last point I was going to make.

Um I'll come back to it, um, but just really wanted to say thank you for bringing that contingency number down as we continue to move forward and address our budget um issues.

Um I think I wanted to make one more comment just so everyone knows I recall what it is.

This is just to set capacity levels for our contract, all of the um department I uh I will say spend or allocations will come through each budget budget cycle.

So I don't want the public to think that hey, with this approval, we're just running and gunning and staff is moving on.

So there is a process, it follows that budget cycle and that process as we allocate um dollars for each fiscal year.

So um again, thank you.

Um, and I will um move staff's recommendation.

All right, thank you, Councilmember.

So we have a motion by council member Foster to move the recommendation.

Go next to Council President Pro Tem Lee.

Thank you, Council President, and thank you to budget chair Foster for um clarifying uh several of those things, including the as needed um component of the contract.

With that, I'll second the motion.

All right.

So we have a motion by Councilmember Foster and a second by Council President Pro Tem Lee to move the staff recommendation.

We'll go to Councilmember Von Wilpert.

Um thank you.

Uh thank you for the presentation and the work on this item.

I do understand why we'd want to use our bulk buying power, other jurisdictions to buy at lower prices.

Um I do have a couple of questions though.

So you see the staff report says that this will be paid through the fleet operations fund, and what fund sources fund that fund.

Thank you for the question, Councilmember.

Uh that is funded um by the usage fees from the the um fleet operations department, uh, which is citywide for all departments.

Got it.

So somebody brings in one of the the vehicles to repair and then they charge it to a department.

That is correct.

Okay.

So there was a picture in one of the slides of a trash truck.

Is that going to be paid for by the new trash fund then?

So all of the maintenance and repair of the solid waste fund vehicles will be charged to the solid waste fund.

They are paying for that, that's correct.

Okay.

Um God, that's what I thought, but I wanted to make sure.

I also have a question about how this contract for procurement of parts to repair our vehicles relates to the contract which the city auditor is currently auditing for vehicle rentals under the Hertz contract.

One of the things we've heard about why we're renting so many vehicles and why there was unauthorized spending to the tune of six million dollars under the Hertz rental contract, is because we don't have enough vehicles.

But now I'm hearing that one of the reasons we need more parts is because we've added over a thousand vehicles over the last five years.

So I'm trying to square those two things together.

Councilmore, I will answer that question.

Thank you for asking.

So the HERC rental contract does include uh well supports all city departments that need rental rental vehicles, and there are a number of reasons why uh departments rent vehicles that could be waiting for the vehicle that's on order or on budgeted uh needs or seasonal needs, as well as if a vehicle is in fleet uh for a substantial amount of time, they may need to rent uh a vehicle.

Uh but this contract alone does not uh influence that in a large amount, but it does significantly significantly reduce our downtime, whether that's for preventive maintenance repairs or uh bit inspections that departments are waiting on their vehicles.

I hope that answers your question.

I I mean I was hoping to hear that because we're gonna get vehicles out back on the road faster, we would need fewer rental vehicles because this is a lot of money to spend on reparts if we're still just gonna rent vehicles.

For those vehicles that are down because of uh there are they are in the shop, this will reduce that need, yes.

Okay, do you know how many vehicles we have to rent because we vehicles are currently down?

I do not have that number, but can certainly follow up with you.

Okay, I'd like to to know that.

And is Councilmember Foster said we're not actually allocating $56 million today?

We're just allocating, we're just agreeing to a contract that would allow us to spend that, but I'm gonna want to know before I ever budget anything into this parts repair contract how this will help reduce the the city's burden on relying on rental vehicles.

Understood.

Okay, all right, thank you.

All right, thank you, Councilmember Von Wolpert.

I don't see anybody else in the lights.

Um I will thank you that you did the presentation twice in two weeks.

Uh, but given the dollar amounts when not all that the public sees is 56.9 million.

Uh given some of the budget challenges, it can be a little bit daunting.

And uh as council member foster said, when you actually look at how the dollars are being allocated, it's not to exceed.

You only tap into that's capacity.

That's I think the word he used, and it's only 4.5 for this year, which I assume was accounted for in the uh adoption of the budget.

Um, and uh to Councilmember Von Wolpert's question, I suspect that the faster a park can be turned in, the less time that a uh vehicle is gonna be in the shop.

And I think someone told me we have 200 different types of vehicles that are covered by this, so uh having access to somebody of the scale that can deliver whatever part uh that we need is greatly helpful to the good work.

So with that, we have a motion by Councilmember Foster and a second by Council President Pro Tem Lee to move the staff recommendation.

Please call the roll.

Mr.

The Voting System, please cast your vote.

That passes unanimously, eight to zero.

Thank you, Council President.

With Councilmember Campio absent, thank you.

All right, again, thank you for the presentation.

So with that, clerk, please introduce item 200.

Item 200 is the SDGE 2025 presentation on gas and electric rates.

This is an informational item only.

If you'd like to speak on this item, please be sure to submit your speaker slip to the front of the room in the clear box.

If you have people seating you time, please be sure to submit both of those speaker slips or any additional speaker slips together in order to do so.

If you are participating remotely, please be sure to submit your speakers.

Please be sure to raise your hand by tapping the raise your hand icon or star nine.

Thank you, Council President.

All right, thank you, City Clerk, for introducing that item as a reminder, and then they'll probably be repeated.

Uh, this is one of the presentations required under the energy cooperation agreement.

So we appreciate SDG coming in.

So introduce yourselves for the record and let us know how much time you need for the presentation.

Hi, my name is Brittany Appelstein Seats.

I'm with SDGE, and we need 15 minutes.

All right.

So I want to caution the people with the signs or maybe people behind you that want to see what's going on.

So just be cautious of your colleagues in the behind you.

So go ahead and proceed.

Great.

Thank you, Council members, for having us uh in again this year.

As you mentioned, this is part of one of our franchise requirements under the Energy Cooperation Agreement.

I wanted to start off the presentation by talking about a couple things that SDGE has been working on this year, some in partnership with the city based on feedback we've received from you.

The one I wanted to highlight first is our energization timelines.

I think we've heard from a lot of council members as well as our customers that they want to see us increase our times to energize customers.

So over the last year we've changed our processes and we have increased our connection times by 504 percent, and our panel upgrades are down to 30 days.

We also um have increased our time to connect solar customers.

Um it takes about three days on average to connect a customer who wants rooftop solar.

So in November alone, we authorized over 1,300 solar installations.

Those are solar paired with battery systems.

Um for the year so far, about 13,000 solar and battery installations.

So these are really big numbers, and we're really proud of that.

I also wanted to highlight that we've done over 10,000 hours of employee volunteer work in the community.

Um, this is something that our our employees feel very strongly about, and we're really happy that we are part of the communities that we serve.

We also hit 18 years with no catastrophic wildfires in the region, which is a huge milestone, especially because two-thirds of our territory is in the high uh high threat wildfire zone.

And then finally, we just won for the 20th year in a row.

We are the most reliable utility in the Western United States.

So, with that, I'm going to pass it on to Adam Pierce, and he's going to talk about our rates.

Well, thanks, Brittany, and good afternoon, Council members.

My name is Adam Pierce.

I'm the Vice President of Energy Procurement Electric Rates at San Diego Gas and Electric.

So I thought I'd start my portion of the presentation and talk a little bit about what goes into your energy bill on both the natural gas and electric side.

So the first component is infrastructure costs.

So on the natural gas front, these are things like pipelines or or your meters.

On the electric side, this is you know the poles and wires to deliver energy into our homes and businesses.

The second is state mandated programs.

So these are things that are authorized and required by the state of California that are collected through our rates.

These are things like energy efficiency programs as well as low income programs for our customers.

They're coming from San Diego Community Power.

So for this portion of the presentation, as we're talking about our electric delivery bills are really related to those first two line items, the infrastructure cost as well as the state mandated programs.

So moving to the next slide and talking a little bit about what we're preliminary estimating our bills to look like as we head into January.

On a combined basis, we're currently estimating about a $4 per month increase for the natural gas and electric delivery portion of the bill.

Breaking that down in between those two components, it's about $3 on the electric front, going from 133 dollars to 136 dollars in January.

And this is driven by a few factors.

The first and one of the larger drivers is uh as we move into 2026, we're currently forecasting lower electricity usage, uh helping put upward pressure on bills as we head into 2026.

The others are a few others.

Um is updates to the indifference rate calculation for our legacy generation portfolio cost or PCIA charges, as well as authorized grid upgrades, such as new upgraded circuits and new substations here in the city of San Diego.

And those are being offset by some things rolling out of rates and slightly lower state mandated cost.

On the natural gas front, we're expecting about a dollar increase, and that's driven by uh authorized pipeline safety upgrades and some slight increases in state program cost.

Um I think the big thing that I'll highlight on the commodity portion for the natural gas portion of the bill.

We will not know what that looks like in January until the end of December.

And that's based on several market factors, weather uh usage, uh if there's any pipeline outages, underground storage levels as well in Southern California.

The good news is is as we sit today, all those factors are looking relatively positive and stable as we head into January, but something that we're keeping a close eye on, and to the extent that changes, we'll make sure to let customers know ASAP.

So you heard me highlight that the estimates that I'm providing right now are preliminary.

You know, as we go into the end of the year, we will uh true up all of our our balances for the year and as well as there is a uh commission meeting here this Thursday where there's a few pending items that potentially could be heard.

And so we wanted to be you know transparent about those and what other costs could be coming into bills uh as early as uh January to the extent they are voted out at the December 18th meeting.

The first is related to wildfire mitigation costs spent from 2019 through 2022.

Uh, if the the current proposed decision is is voted out as is, we could see about a five dollar increase uh to bills as well.

Again, that may or may not be voted out on the December 18th meeting to the extent it's not voted out.

Um my next estimation would be is sometime in the first quarter or second quarter, we could see that roll into bills.

Now, with that five dollar increase, we also see uh a few things rolling out of bills as well as we head through 2026.

The first here is related to what's known as the Cal Shape program.

So you many of you may be familiar with this program.

This was authorized by the uh California Energy Commission uh through AB 841.

Uh this was related to upgrading the HVAC in plumbing systems within K-12 schools within California.

There's about 100 million dollars of unspent dollars uh in this fund right now.

Uh the CEC has indicated that they would be uh providing that back to uh customers this year by December 1st, 2026.

We've been very active up in Sacramento around programs like this and and looking at unspent dollars and passing them back to customers.

And with this program in particular, we're really actively working with uh our Sacramento office to try to get these funds back to customers ASAP, but that would reduce bills by about $2 or so per month.

The third here is related to our general rate case.

So as you recall, each four or every four years we go in front of our regulator to set our operating budget.

So costs associated with 2024 will still be in our rates in 2026.

However, they will be rolling out of rates August 1st.

So as those roll off, we'll see customers save about $3 or so per month.

And the last proceeding here is the cost of capital proceedings.

So that sets our regulated return from our the CPU C regulated entity that we are.

And to the extent that that is voted out, it would reduce uh bills by a little less than 50 cents or so per month.

So again, we may see uh an uptick here early in the year related to some wildfire mitigation costs, but we do expect to see some things rolling out of the bills later in the year to help offset that.

So wanted to highlight and and recognize that you know the rates and bills here in California continue to be uh on the high side, and it's really driven by uh a Q a few key factors that that we continue to see here.

And the first here, and and some of the drivers here are on the left-hand side is really around wildfire resiliency.

I talked about some of the wildfire investments that that we've continued to make.

As Brittany mentioned, you know, very proud of the fact that over the last 18 years there's been no catastrophic wildfire in our service territory uh given challenging conditions up and down the state.

That's something that we're gonna continue to be mindful of and continue to invest for the safety of our customers.

She also mentioned uh our reliability being the most reliable utility in the Western U.S.

for 20 years in a row.

We know our customers depend on us each and every day, and it's something that we take uh very seriously, and we'll continue to uh invest in to make sure those customers have great service.

And then last, I'd say it's you know the aggressive but necessary clean energy policy that we have here in California, continue to make sure that our infrastructure is ready and able to handle additional flows of electrons, whether it's building electrification, electric vehicles, other things of that nature, making sure our grid is ready and able to have that.

Now, with those pressures, we understand that are are going to continue to remain in our bills.

We want to make sure of what we're doing at San Diego Gas and Electric to help balance and stabilize those bills for customers.

So, what you see here on the right hand side of the slide is some of the things that we've done and will continue to do uh to help stabilize bills here now and into the future.

The first is uh over the last two years, we've returned about 300 million dollars of investment tax credit refunds back to customers, directly helping offset some bills.

We talked a little bit about accelerating the return of the unspent dollars in the Cal Shape program.

We'll continue to look for for programs like that to be able to return back to our customers.

There's an open proceeding in front of the CPUC currently, right now, around the climate credit and how it's being distributed to our customers.

As many of you know, there's a climate credit that is distributed twice a year on the electric side, once a year on the natural gas side.

We think that not only uh should we be looking at additional state funds for the amount of GHG reduction we've been able to do over the last several years, but also making sure that those customers are getting those uh credits when they need it most, which we think is during the hot summer months.

We've continued to look at non-cost effective programs and identified about 300 million dollars worth of state mandated programs that are currently in our uh that are withbedded within our our rate structure.

We filed an application to remove 300 million dollars of those costs over the next five years.

We've talked about public purpose programs or PPP.

Uh it's about 335 million dollars currently estimated to be in our bills next year.

Look, we think there's a lot of of good programs that that are needed as part of this, but what we're looking looking at alternative financing mechanisms to take things out of our bills and look for other ways to potentially fund these programs.

Uh and then last, looking at supporting electrification.

You know, we think about as we increase the amount of usage on our system, the majority of our costs that we collect through our rates are fixed.

If we're able to increase those sales, we're able to spread those costs over a larger base and helping put downward pressure on customer bills and continue to look for ways to reduce operational costs, whether it's reducing the cost of undergrounding by 50%, looking at the the types of uh jobs in which we send technicians out and making sure it's absolutely critical versus things that could be handled over the phone or through the call center, or making sure that we're continuing to uh look at all the contracts that we have and make sure that they have the most optimal terms for our customers and making sure that we're taking those costs and being able to pass them back to help stabilize and balance bills.

So with that, I'll talk, turn it over to Brittany, and uh she'll provide some overview of some of our customer support.

Sure.

So we we know that across the country people are struggling with bills across the board, everything from food, gasoline, utility bills, water, electricity, um, that people are struggling.

And so we do have as a ton of different programs to help support our customers.

So I think you know a lot of these.

I will go over them briefly.

We're always happy to give any of the council members one pagers on these programs to provide to your constituents so that they can uh they can apply for these programs and take advantage of them.

We have care and FARA, which reduce bills.

We have a special discount for our medical baseline customers, customers who uh require certain medical equipment.

We also have a rearage management programs to help people pay down their bills.

Um at this point, we have about 15% of our customers in arrears, which is down from even pre-pandemic levels, so pre-pandemic, we were at about 21%, and we're now down to 15% as we work with our customers to help reduce bills.

We also have a program called Neighbor to Neighbor.

This is a shareholder-funded program that helps provide relief for past due balances.

And we've just put in about another million dollars of shareholder funds into that program.

This year we're looking at how we can best help our small businesses.

We know that they're very important in our communities, and we want to support these small businesses, and so we are just creating a pilot program with shareholder funds so that if these uh small businesses are struggling with bills, they can come to us and we can provide assistance.

Um, and then I also I know you're all veryware of our solar equity program where we use shareholder dollars to help put solar installations on homes throughout the community.

So, with that, um, we wanted to open it up for questions.

All right, thank you for your presentation.

With that, clerk, please proceed with public comment.

Thank you, Council President.

We do have several speakers here and in the queue, so it will be one minute per person.

If I can ask the following individuals to please come up to the yellow reserve seats in the front of the room, and if I can ask Gail Villamonte to please come up to the high lectern here for the microphone to the tall microphone, and then we'll have Serena Pika, Barbara Jaffe Rose, Philip Petri, Anna Ramos, Craig D Rose, Lisa Eiler, Christian Fuentes, and Jessica Anderson.

If you can all please come up to that first row.

Gail, you'll have a minute, please proceed.

Thank you.

Thank you, Council members.

Actually, if SDGE just reduced its profit from the one million dollars a day it takes out of San Diego into its parent company, CIPRA, we'd have a 20% at least reduction in rate immediately.

My name is Gail Viemante.

Thank you for your engagement in what I'm about to say.

I'm a senior on a fixed income.

I installed solar three years ago, and have seen my good intentions and the almost equal amount of kilowatt hours of electricity I returned to the grid, increasingly penalized in the interest of SDG and E profits, sanctioned, I'm afraid, by the city council.

You could save billions for the city and its residents.

San Diego and residents, businesses, your city agencies, and community groups, schools continue to suffer from the inordinately high profits being drained from our city by S D G and E and its parent company SEMPR.

Is that it?

Really?

Thank you so much.

Next is Serena.

Hi, this is Serena Helka from Climate Action Campaign where we're fighting for an affordable pollution-free future.

As you know, SDGE is bringing in ref record profits while San Diego families suffer.

They fight every program and legislation that would bring rate relief to San Diegans, even Cal Shape that improves air quality for kids at schools.

Bills are not high because of critical energy efficiency programs.

These provide access to cost-saving solutions for customers that need it most, especially in communities of concern.

Bills are high because SDGE's priority is profit for their shareholders over the needs of the communities that you serve.

Despite this, we're hopeful that council has momentum to fight back for energy affordability.

Really importantly, we saw you take action this summer to pass the utility affordability and accountability resolution, supporting a historic package of state bills that offer utility reforms and path to rate relief.

Now there are more tools like becoming a party to the proceedings at the CPUC on behalf of San Diego communities.

We hope this you take this opportunity and appreciate your work.

Thank you for that concluding remark, Serena.

Good afternoon.

My name is Barbara Jaffe Rose.

I live in District 7.

I'm on the board of Public Powers San Diego.

Affordability is a major problem these days, and I've seen you all address affordability crises at one time or another.

Yet all our constituents are being squeezed and overwhelmed, and many of us are in arrears, all because we all have to pay SDGE's highest electrical rates in the country.

And you have for years remained practically silent and unmoved on this particular issue.

Oh, yes, occasional lip service, but that's it.

You, the city council are the folks who hired SDGE and therefore oversee their practices.

They're gouging us, and you need to restrain them.

A corporation should not be allowed to use SDGE as their cash cow.

You hired them, and if you don't, and if they don't comply, you have the power to end the franchise.

There's a viable alternative existing, and that's what 42 other California cities are using, a nonprofit power utility.

Please, now's the time to seriously address this critical affordability issue.

Thank you for that concluding remark.

Phillip.

Good afternoon, Council members.

My name is Phil Petrie.

I live in District 3.

The investor owned utilities are not getting us across the finish line in transitioning to clean energy.

In fact, they are a roadblock to clean energy.

San Diego should be doing everything we can to promote and render affordable rooftop solar for everyone.

Instead, SDGE is reducing savings from solar with a fixed rate fee.

My electric bills are approximately $10 a month higher.

The for-profit utilities always have their eye on maximizing profit taking for their shareholders instead of prioritizing the common good.

That means public power is clearly the preferred option, no matter how unrealistic we may think it is now.

The truly unrealistic approach is just to not worry too much about climate change and hope that business as usual will just go away.

Please stop accepting SDG and E's profit margins and start fighting for our communities and the health of our planet.

Thank you.

Thank you.

Next is Anna Ramos.

Hello, Council members.

My name is Anna Ramos.

I'm a community organizer in District 8 of the City of San Diego.

I'm here because I constantly talk to folks about how unaffordable housing is right now, but on top of that, people are also really struggling to pay utilities.

On average, folks are paying over a hundred dollars a month.

Um, and they're when they were used to paying 50 to 60 dollars.

It's going to the point where people are thousands of dollars in debt uh with no way to pay for it.

Their wages are just not keeping up with the cost of living, and at this rate, folks will be in debt for life.

People don't have a choice, electric electricity is a basic necessity.

And while SDGE continues to make record profits, uh San Diegans are barely making ends meet, especially in a time like this where people are losing their EBT and their Medi-Cal.

What you're asking them to do is unfair.

We need the city to help San Diego stay afloat, not help SDG's property margin.

Thank you for that concluding remark.

Craig D.

Rose.

After that, we'll have Lisa Eiler, Christian Fuentes, Jessica Anderson, Simon Andrez, and Rita Clement.

Please proceed.

Yes, I am Craig Rose.

I live in District 7.

I'm a member of Public Power San Diego.

Just wanted to make a couple of points.

I have some dazzling props to make the points.

Uh AI was not used in the creation of these props.

SDGE's profits up this year, 16% through the first nine months.

16%.

Total profits for the first nine months, $780 million.

SDG neglected to mention that.

Thank you for your time.

Thank you, Lisa.

Good afternoon, Council members.

I'm Dr.

Lisa Eiler and I live in Council District 2.

I'm a professor at UC San Diego, where I direct a center within the Sanford Institute for empathy and compassion.

I urge you to have empathy for your constituents who are suffering from the exorbitant rates set by SDG and E.

I'm sure we all agree that in today's world, access to electricity is a basic right to continue to place such a public good in the hands of a profit making machine beholden primarily to stakeholders is irresponsible and lacks compassion, particularly for the over 25% of their customers who are behind on their bills.

SDGE is a schoolyard bully taking your constituents' lunch money over and over again.

You have the power to stop this theft and protect our city from this extortion.

For compassion's sake, please use it.

Christian Fuentes.

Christian Fuentes.

Jessica Anderson.

Good afternoon, Council members.

My name is Jessica Anderson.

I live in District 9.

I'm here today because SDGE is contributing to both the affordability and climate crisis that we are facing in San Diego.

San Diego pays amongst the highest electricity rates in the country, and yet SDGE has no real intention to lower their profits.

All they care about is their profits, which reached a whopping $891 million last year, while one in four households in San Diego cannot even afford to pay their utility bills.

Over the past year, my bills have continued to increase, even as I do everything I can to implement more efficient practices.

My bill from last this time last year is nearly doubled this year.

The city must do more in 2026.

I'm asking you to allocate city staff and resources to fight these rate cases directly at the CPUC.

Schedule a hearing to discuss the flaws of the phase one public power study, release the phase two public power study, and above all, I'm asking you to do more to prioritize San Diegans well-being over SDGE's profits.

Thank you.

Simon Andres.

I'm here today because the current SDGE utility rates are unsustainable.

San Diegans already pay some of the highest electricity rates in the nation, and yet we constantly are asked to pay more while SDGE records record profits.

So we need the city to be more active in 2026.

And again, we're asking you to allocate the city staff to fight the rate, to fight these rate cases directly at the CPUC.

Uh strengthen the city's legislative platform and schedule a hearing to discuss the phase one study and release the phase two public power study.

Thank you.

Rita Clement.

If I can ask the following individuals to please come up to the yellow reserve seats in front.

Or Cisneros, Omar Federico, Ramon Flores.

If you can all please come up to the other reserve seats.

Good afternoon, Council members.

My name is Rita Clement, and I'm a volunteer with San Diego 350.

Affordability is the issue of the day.

Groceries are needed by everyone, as you know.

Water rates are increasing.

I am asking the council to encourage the assignment of staff to fight SDG rate increases directly at the CPUC.

People cannot afford to continue to pay higher health care costs, in addition to STGE rates.

Thank you for listening.

Thank you.

Mariah Cisneros.

Or Maria, sorry.

Maria Cesneros.

Going once, Maria.

After that, Omar Federico.

Hi, my name is Ramon Flores.

I live by city side.

I'm a servant senior building.

Brand new.

Electric has gone up.

I have call to company and the phone.

And I get bad thing because one time was beyond my control.

That payment went went in late.

Even that period.

I went to the office because it was a bank error.

Then you make me run around.

Elderly.

Santa don't feel good.

Okay.

I'm disabled, diabetic, COPD, and a lot of skin issues.

I cannot.

Thank you for that.

Good to do that.

Somewhere when you say on your phone, sorry.

That goes somewhere and I'm sorry, sir.

I do have to be fair with everyone's time.

Omar Federico.

Sir.

I'm sorry, sir.

Sir, can you hear me?

Sir.

Sir.

You know, Sir.

Your time is up.

I'm sorry.

You seem to have a legitimate issue, but your time is up.

We have to treat everybody the same.

Oman Federico.

Good afternoon, Council.

Good afternoon, Councilmember Foster.

My name's Omar.

I'm a lifelong D4 resident.

Some 15 years ago, uh SDGE had brick and mortar pay centers where folks could go pay.

I think they closed them all down at the same time because 15 years ago, those rates were too high, the lines were too long, because people couldn't figure out how to pay.

Since 2016, their rates have on average been 8% more than the surrounding areas of LA, Riverside.

When I was at UCLA as a college student, I was paying less in electricity than I am now.

In D4, not as nice of a place, honestly, as where I was living at before.

It's time for you guys to really look into how the city can support a public power pol um system and move away from these for-profit folks that you know don't care for our interests at all.

Thank you.

Thank you, Grace.

Rojas Jimenez, if you can please come forward.

Barbara Pinto, after that, Isaiah Glasso, Michelle Krug, Neilam Rotano Rotani.

If you can please come up to the front row.

Please proceed.

My name is Grace Rojas Jimenez, and I'm born and raised in San Diego Cumiai territory and currently reside in District 4.

I am here today with ACE to reject our current SDG utility rates and invest in public power.

SDG rates are some of the highest in the nation, and continued investment in investor-owned utilities will be detrimental for our community.

SGG uh SDGE is a for-profit corporate company, which reportedly earned about 900 million in 2024.

And we cannot afford business as usual and continue to fail our communities while this corporation profits.

I don't want to give consent for my uh uh utility power uh being in S D G and E and for public power.

And I also don't give consent for my uh tax dollars to be given to the genocide of Palestinian.

I do have to be fair.

Barbara Pinto.

Hello, my name is Barbara Pinto.

I'm district eight, I'm a member of ACE.

Uh, we're asking the city council to make a study of the rates being charged, the San Diego City residents, and to pay attention to their forever increasing profits.

As their profits continue to grow, we continue to struggle, paying more than anybody else in the country.

We are the most expensive city in the United States, uh, tapping the rates, of course, for housing.

I am 79 years old, I'm a resident, I've lived here and worked all of my life, and I there was a time when our monthly expenses were affordable and acceptable.

What we were making in the 80s and 90s in the early 2000s, of course, does not fit the uh bill today.

Um for you for ourselves, we were asking you to put profits before people.

State laws could constrain invest your own utilities and level the playing field.

This we feel is fair.

Thank you.

Thank you, Isaiah.

Good afternoon, City Council.

Um, I want to thank the community for showing up today to give public comments.

Um, you know, we heard a little bit today about transparency from SDG, which I think is just a total joke.

They they never show up with honest intentions.

SDG is a for profit monopoly.

They act as a wealth extraction system that takes from the many and gives to the few.

As they squeeze our communities for every penny, they've now turned their eyes on unionized employees.

SDGs continue its shameful history of union busting.

Just recently, they attempted to block a vote of seven employees.

Seven only, only seven employees unionizing.

Their greed knows no bounds.

All SDG employees should know this.

The bosses will never be loyal to you.

SDGE executives see you only as a cost to cut because they are only loyal to their profits.

On the other hand, the state law requires newly formed public utilities guarantee collective bargaining agreement agreements and maintain the number of unionized employees for three years.

They also have better pay, higher unitization rates, and they do that at half the cost to customers.

Never trust SDG council members, please.

For that concluding remark, Michelle Cruz.

Good afternoon.

I used it as a way to also be able to weigh in on information that gets shared during that time and then go back to their comments.

But as a uh differently challenged senior as a blind woman on a fixed income, um the rates are hard, and what we just heard is it's likely that there'll be a $9.50 increase to my bill.

These are really hard to juggle with other expenses.

Um the um information about all of the programs that are available is not um widely broadcast.

Um I I've seen about care and farah, but I didn't know about any of the others.

So please make that more available.

Thank you, Neilam.

Hello, good evening, San Diego Council members.

My name is Neilam Raoutani.

I live in District 8 since 2003 to now.

I'm here today because of the current SDG utility rates are unstable, and I'm tired with the increasing rates.

We all Sandy are struggling because jobs are getting very hard and minimum wage is not increasing that way.

If I pay all this bill, we cannot afford our unnecessary stuff like shoes, clothing, everything.

Thank you.

Thank you for those comments.

Dory.

Dory Brugman.

After that, we have Park Troutman.

If you can please come up to the front.

Of course.

They have every incentive to present their rates as logical, as normal, as necessary.

Um, but really it's it's price fixing at the state level in a system that was rigged by these for-profit utilities over a hundred years ago who had a hand in designing that very system.

Um also, why are you presenting the cost of capital proceedings as reducing rates as if that's something that y'all did?

Because that was activists who showed up at the state level to prevent SDG from raising their return on equity in that proceeding.

Um I also want to shout out some recent coverage in the New York Times about lawmakers in New York, actually.

Uh, after completing a new gen feasibility study, they are pursuing a public utility takeover in the Hudson Valley.

These lawmakers understands that public utilities are a pathway to affordability, and I want to ask our council members to be inspired by their courage.

Thank you for that concluding remark.

Park Troutman.

Park, you have several people seating you time, if they can please raise their hand.

Um Caroline Quatlander, thank you.

Chris Roberts.

You had to leave.

Uh and Masada.

Oh, thank you.

You'll have uh three minutes, please proceed.

Thank you.

Hello, my name is Park Trautman.

I'm with San Diego 350.

I should begin by acknowledging that when you decide to go into public service, you probably did not imagine a year like this.

Not only do you have the yawning gap between needs on one hand and authority and resources on the other, that has been compounded by a federal administration whose main motive seems to be malice.

But I'll just say that San Diego's high uh San Diego Gas and Electrics high rates are set up the state level.

However, there are things that you can do in 2026 that can begin to change things.

And are not expensive because this requires some staff time.

I don't want to be cavalier about that after the presentations earlier.

But before I get into the things you can do, just want to mention that the way that STGE is presentation talks about themselves essentially being innocent bystanders to their nationally high rates is inaccurate.

A lot of examples I could give.

They're actually advocating to increase that number.

But also mentioned their slides mentioned uh wildfire mitigation that did not mention that this summer they successfully lobbied uh to reduce a proposal that would have limited the amount of profit they could take off of wildfire mitigation.

Okay, so what can you do?

First, you can engage in your public power reports that the city uh has um and has created one and needs release the other one.

It's also uh the you have influence with the state legislation, like state legislators.

Uh the platform Ledge platform for 25-26 already has some good language, but it could do more.

It could, for instance, you could support legislation at the state level to limit excessive profits from investor-owned utilities or level the playing field at the public utilities commission.

Uh we've already heard uh earlier this year uh suggestions of looking at what can be done uh with this uh given the uh talking about balcony solar.

So please pursue such ideas.

It's also been mentioned intervening at the PUC, uh, which would be really timely because their next general rate case begins next year.

You teach yourself up to do this by supporting AB 1017, uh burner's bill on transparency in those cases.

You teach yourself up, take a swing.

We would love to work with you.

Thank you.

Thank you.

That does conclude public comment here in Council Chambers.

We received two speakers in opposition that did not wish to speak.

Uh Russ Hamm and Eve Boyer.

We will move to those participating remotely.

I started the five-minute timer.

We currently have seven speakers with their hands raised.

John Stump, if you can please unmute.

You know, you talk about fairness.

If you're going to be fair to everybody, S D GE should have submitted the written report and gotten one minute.

That would have been fair.

You know, SDGE claims is one of their great things, pipeline safety and wildfire mitigation.

The reason they do that, they do either one of those things is because they got sued the last time there was a big fire.

On Fairmont Avenue and City Heights, we have a pipeline that is older and bigger than the San Bruno, and they better replace it.

Now, you know, I get I gave you written comments.

I suggested nine ways the council could um improve and lower costs.

Everybody's right, you should be participating in the hearings to c keep costs down.

Also, eliminate that $8 billion, $8 million bribe.

Thank you.

Thank you.

Next is Andrea Ebbing, if you can please unmute.

Hi, my name is Andrea Ebbing, and I just want to talk about the uh the rate increase.

And I'm curious as to why we are receiving a rate increase when your STTE is receiving a dramatic decrease in your um compensation packages, because you currently have people in finance training people in India to take over their jobs.

So you are doing offshore uh employment, taking jobs out of San Diego, removing faithful loyal employees, displacing them, and cutting your labor way down, but you're also paving the way for an unscrupulous amount of financial error that you're gonna blame on uh transition and lack of understanding and language barrier.

Um but we can actually chalk it up to uh frustrated rogue employees who are now training others in other countries to do their jobs, and they're gonna teach them the wrong way.

And then everybody's gonna laugh and laugh and laugh when all this money goes away.

Has concluded.

Next is Laurie Zaldania, if you can please unmute.

Yes, thank you.

Can you hear me?

Yes, please proceed.

So as everyone else has been speaking, it's clear we are paying too much, and we are not getting the safety that solar power would provide.

If you really want to avoid high transmission line pat fire, then start doing rooftop solar energy locally and get rid of the emission towers.

It's subsidiary, and they are using their spare rates for solar energy.

I volunteered for a foundation one, a unanimous decision for the Supreme Court over the net energy metering agreement that is taking money, even more money out of San Diego's pocket to want safety.

They will focus on putting rooftop settler, including on schools which lost millions because of S T G and E lobbying against fair solar reimbursement rates.

So let's keep asking.

Your time has concluded.

James, if you can please unmute the question, I stand with my fellow San Diegans in rage and solidarity.

We see that SDGE provides about 99% of the electricity in San Diego.

Now, at what point do we acknowledge that this is a monopoly and that San Diego residents are trapped with no real alternative?

On the slide explaining the drivers of rising electricity costs, I noticed something missing.

Record profits.

SDGE earns m hundreds of millions of dollars every year.

Yet profits are never framed as part of the problem, only as something we're expected to accept.

We're also told that SDGE supports rooftop solar, but they lobbied for NEM 3.0, which effectively killed residential solar for ordinary ordinary families.

The most disturbing realization for me is that my current monthly utility bill is the lowest it will be for the future.

To the city council members, we're being asked to choose between executives and shareholders or San Diegans being able to keep their lights on.

And that should not be a difficult decision.

Thank you for those concluding comments.

That's the five-minute timer.

We have three speakers in the queue.

No additional speakers will be taken.

Mike, if you can please unmute.

Yo, hi, can you hear me?

Yes, please proceed.

Hi, my name is uh uh Mike Meaning.

Good evening, council members.

Uh I live in District One.

I'm also a member with Public Power San Diego.

I'm here today because the current SDGE utility rates are unsustainable.

San Diego's already pay the highest electricity rates in the nation, yet we are consistently asked to pay more and more while SDGE records record profits.

It's astounding that electric rate payers in Silicon Valley, Sacramento, and LA pay 40, 30, and 20% less for electricity, respectively.

Why?

Those power entities are nonprofit.

But this council and SDGE feel that us San Diegans are expected to put SDG and E's nearly billion dollars in annual profit uh while we struggle to meet beast base needs like food and housing.

I plead with this council to make SDG accountable for their uh rates and actions.

I implore the voters to vote on folks on the council that will, if y'all won't dropping the franchise agreement and backing public power to utility takeover would be a great starting point.

And I thank you uh for your time and consideration on the matter.

Thank you.

And our final speaker is Blair Beekman, if you can please unmute.

All right, thank you, Blair Beekman.

Thank you for this item.

I wish I had more uh insight and knowledge of it.

I do not, but I just I have my regular talking points and the importance of how we need to be better considering community energy.

And that with your item about economic models from 27 to 32 or so for the future of San Diego.

I hope you can be addressing better, you know, economic patterns and practices uh for our future.

You we can be talking about subsidy for this item.

It has to, I guess, become a real regular conversation for ourselves.

But how can we move past you know this inflationary tax and spend, you know, uh program that we're currently on where we have to keep we're slaves to more and more rate increases in inflation as somehow the savior for all of us and when it necessarily is not.

A lot of people are gonna suffer in this process at this time.

Um good luck that we can talk about our utility things where there can be cost savings and a community effort towards decision making.

Thank you.

Thank you.

As noted the five-minute timer had already concluded, so no additional speakers can be taken.

If you do have comments, please email them to City Clerk at Sandigo.gov and those will be distributed.

That concludes public comment for this meeting, this item.

All right, thank you, City Clerk.

Uh, this is an information item, no emotions required.

We'll turn it over to my council colleagues for questions and comments.

We'll start with councilmember Elo Rivera.

All right, thank you, Council President.

Um Brittany, thank you for the presentation.

I I'll start by thanking uh you for the work that you and your your colleagues do in the community.

I I do truly appreciate that.

Um we've done good work together.

We've planted trees, we've painted neighborhoods, we've cleaned up neighborhoods that um appreciate those efforts.

And I think that one of the tensions in this conversation is the um care that is shown in events like that, like those, and the experience of the folks that we see here that are here today, and so many people across San Diego who are struggling um with affordability um and a big part of that are their utility bills.

And um, so the the questions that I have are are gonna be focused on on that.

It's it's it's just a fact that um this is a regulated monopoly, and um that puts SDGE in a unique position of trust and responsibility, and so the the questions are gonna be how that responsibility is being exercised.

Um so the the first um questions um are um about how STG is considering lowering its return on equity rate with the PUC proactively proactively, um, given that there's so many folks who are struggling with affordability.

Thank you for the question, council member.

And as I mentioned in the the prepared slides, uh there is an active proceeding looking at our regulated cost of capital in front of the commission as of right now.

It would reduce our return on equity by about 35 basis points.

Um now again, as you think about uh the investments that we need to make in the safety and resiliency in our region, we also have to show that we are a financially stable company, strong balance sheet, strong credit rating and making sure that we're able to attract that capital at the lowest cost possible and be able to pass those savings back to our customers.

So at the same time, we're looking at making sure that we are staying uh financially stable.

Now, at the end of the day, we'll have our position based on market data.

Other people will have their positions based on on their market data.

It's ultimately the commission's decision as our regulator to look at what that appropriate cost of capital should be that balances customer affordability as well as attracting capital to the state.

So this is where people start to lose their mind because I think I think there was a lot in that answer.

And I'm not gonna pick apart every word, but I'm gonna dissect it a little bit.

And I think you know, there's there's the discussion that's happened, and there's what's SDGE actively attempting to do.

And I think what you're trying to tell me right now is SCGE needs to continue to make a lot of money so you can save people money, and I don't think they believe that.

I don't think that folks believe I think so as you saw on the slide that there's just I just I I don't want to get into a huge back and forth.

Yeah, you guys are so far from being anything but solid financially.

It's there's been hundreds of millions of dollars of profits year after year, and sometimes that hundreds of millions cracks into the billion dollar range.

So it this is just like not the room to to pretend like we're on the cusp of of falling into a bad financial position.

And I'm just gonna leave it there.

Just it's best if we just leave that part there.

Okay.

The next question is about um having SCGE and CCA charges on a single bill.

Um, which can make it simpler for customers to pay for all of their electricity charges, but it also can be complicated.

So can you talk to us about how you're making it easier for customers to understand their bills and seize what opportunities are there for savings without uh creating additional cost, confusion, and inconvenience for them?

Sure, absolutely.

So, first off, everything that we do on our bills has to be approved by the CPUC.

So unfortunately, it does take a while for us to revise our bills.

Um, but we are working on, I think you've seen the My Energy Center, which um has taken out a little bit of the mystery, and we continue to improve on that.

We're working with the CCAs on how to better show our bills and depict where the costs are, and so that people know what they are paying for.

So I don't know if you have you used the My My Energy Center where it breaks down the bills.

It should be much more easy to understand, and we'll continue to work with the CCAs and the CPUC to improve that experience.

Okay.

Um so one of the things we've heard from constituents is that customers uh report that unpaid CCA balances are not transferred when service moves, which often results in confusion and collections for customers that are otherwise very responsible.

Um I know the CCAs have requested a fix to this.

Why hasn't that been prioritized?

And when can customers expect a root resolution to that issue?

I am not aware of that issue, but I know that our teams work very closely with the CCAs to ensure an experience that is satisfactory to the customers.

I will highlight this with the team and we can get back to you.

Um the CCAs, we meet with them regularly, sometimes on a weekly basis.

Executives meet with them on, I believe a monthly, if not quarterly basis.

And so this is a time where they can raise issues and concerns.

I haven't yet heard of this one, um, but I sit on those meetings, and so I will ask the CCAs uh at our next meeting.

Okay, and I will follow up with the with uh Sandy Community Power as well to make sure that um there's there's meeting regularly and there's meeting regularly, regularly collaboratively, and I I do hope uh not hope, I expect that it's the it's the it's the latter.

Um because that's incredibly important.

Uh the the next question I have is uh about something that was um covered last week, uh, and it relates to um the way SDGE uh engages with their employees, and you know, one of the things that has often been said about STGE um with the very fair critiques and frustrations around affordability is that, well, you know, at a minimum, they're a good solid employer.

Um, but I was extremely concerned to hear that a um a law firm which is just like so well known for being a union busting firm had been hired by SDG to I just want to ask have rate period dollars ever been used to pay Jackson Lewis to do work for SCG So uh we're not permitted to talk about our private contracts and who we use.

We use several different law firms.

Um I would think this is you know Jackson Lewis is an employment law firm that's used by many people across the company the country um, but we aren't permitted to talk about specific contracts that we enter into.

Understood.

I I would just say that's extremely concerning.

Um Jackson Lewis is used by many companies, but it's used for many companies for what I would consider nefarious purposes of undermining the efforts of workers to unionize so that they can have their collective ver uh voice heard.

That is especially important when they're engaging with a company of uh of the size of SDGE.

Um, undermining those efforts to be able to unionize uh is an attempt to undermine the power of workers and to make it more difficult for them to uplift themselves.

And so the conversation around affordability, we often on this diet talk about it from two angles.

One is the cost of of things in the community, you know, in the community, housing, utility bills, et cetera, and the other is what people are being are being paid.

Um and it's incre incredibly important to me that uh those who are granted the privilege of doing business with the city are not undermining the efforts of uh folks to again have their collective voice heard and ensure that they're being treated with dignity, respect, and earning what they need to earn to live in the city.

The last question is actually for Coda because you know so we have this this conversation here, and there's there's the element of truth that so much that STGE does is governed by the CPUC, and that also can't be an excuse either for them or for us to simply be okay with what's going on right now with with the the the cost of of utility bills and uh if I may have my additional three minutes, Council President.

So I'd like to know what steps we need to take to ensure that we're a party to the proceeding SCGE's general rate case at the C UPC in 2026.

Um I know that the city already participates as a party to the proceedings as an uh uh on behalf of our municipal accounts, um, but I I think that we have a responsibility to actually stand up and speak up for Sandy Yegans and actually play an active role so that they know that we are actively engaging on behalf of the people and not watch just simply watching what happens there and and saying, sorry, it's out of our control.

Yes, uh councilmember, thank you.

You absolutely have our commitment to be a more present role through that process.

Are there formal steps that the city needs to need to take in order to do that?

Are we prepared to take those?

Have we taken those?

Uh thank you for the question, Councilmember Heather Warner, Deputy Director of the Energy Division.

Yes, so the formal proceeding at the CPUC, the city does file for a motion for party status.

That's a filing with the CPUC, our standing as one of the largest customers of SDGE.

We have been a motion, um, we have been a party intervener with the general rate case for the last several rate cases.

This past year was the first one where this uh the city did take a position on items not specifically and directly about our rates specifically, but some of those issues that were raised regarding um bills, bill structure, residential rates, et cetera, and we can continue to do so within you know what is the appropriate bounds of us as an intervener.

God, I appreciate that.

I think that's incredibly important.

I think that it's fair for San Diegans to expect us to engage actively and meaningfully in a process that that has a direct impact on their cost of living.

Um STGNE's been granted a the privilege of doing business in the city, they have an incredible, they make a lot of money in San Diego, and uh we should be doing everything that we can to make sure that San Diegans are getting um the fairest deal possible.

Um all of what we just talked about is connected.

I think it's a it's it's speaks to the power that a monopoly has during a moment of of incredible economic pain for a lot of people.

Um, and so um I appreciate the answers, Brittany again.

I appreciate the work that's done in the community sincerely.

And I think for for me, there's this this distinction between you as a human being and STGE as a corporation that is consistently and I mean I don't even like fault SDG for this, it's just who STG is.

STG S D G and E is you might be willing to put people before profit as a human, but that is not how STGE operates as a business, and the impacts are being felt by San Diegans in a very real way.

And so I just again I think it's it's that much more important for us as a city to step in and advocate on behalf of Sandy Agans and ensure that this isn't an uh an unnecessary and additional pain point in what is already a way too expensive city.

Thank you, Council President.

All right, thank you, Councilmember Vera.

Um, Councilmember Bon Wolpert.

Um thank you for the presentation today, and thank you to my colleague, Councilman Irove, for your great questions as well.

Um and thank you to the members of the public who are here today uh who are speaking up about what we needed to do for this franchise agreement, which is ask STGE to come in and hear from the public about how your rates are impacting them because so often this decision is made up in Sacramento and everyone comes in here and asks us to do something about it when we can't because our hands are tied by Sacramento.

So it's part of the franchise agreement to allow you to provide the power and energy to San Diego.

We required you to come in once a year and talk to people who are struggling under the bills they're paying for SGG ⁇ E.

And so I was very heartened to see um in the news a few weeks ago that the CPUC is asking STGE to have a lower profit rate this year.

I think that's a good idea.

Um Sierra Fund or Sierra Club asked for even lower, but this is the the rate that Turn asked for.

So I know the vote is on December 18th.

Um so given what SCGE has heard today from all the folks who are really struggling to pay some of the highest utility rates in the country.

How about STGE doesn't fight that on December 18th, and you just accept a lower profit rate given that the company made 891 million dollars of profit last year?

Sure.

So the cost capital is being voted out on December 18th.

One thing I did want to highlight was we weren't touting this as a way of reduction, but if you look at the what that reduction would be, it would be about 50 cents per month of reduction.

But what we really want to focus on in 2026 are how are we going to remove some of the state mandated programs that use our bill as a tax collector, and these are costs that our customers have to pay.

So as an example, we have some programs that we would like to remove.

They are outdated.

They were bit they were created about 10, 15 years ago that don't make any sense any longer.

So as an example, we have a program that we are required to do.

It is about five million dollars a year, and it's for those energy reports that you get once a month that compare you to our neighbors.

First off, our customers do not like those programs.

Yet we are still required to pay five million dollars annually.

We'd like to take those out of bills, and then those savings go back to customers.

We also have a program for refrigeration cap.

The cost is about $2 million annually that customers are paying on their bills.

This cap costs between $20 and $50 online or at some type of uh utility store where you can buy this type of equipment.

You can put it on yourself, but because we're required to run a program around it, we have to hire administrators, we have to send people out to your house.

So all of these costs that are required by our state legislature that may have made sense 10 years ago need to be re-examined and pulled out of rates.

So in 2026, we are going to our legislator with a slate of affordability proposals, things we can take out of rates that will impact rates January 1, 2027 to reduce bills.

And once we pull that list together, we want to come back and meet with each of you so that we can hopefully gain support on what we can do that are practical actions that will reduce bills by significant amounts immediately.

You can see by that one program, Cal Shape being taken out, it reduces bills by about $2 a month.

So let's keep taking those type of programs out that no longer make sense, are inefficient, and do not save rate payers any dollars.

Let's remove them from our bills.

Okay.

For the record, I do like being compared to see what my neighbors are spending to see if I'm spending too much money.

I really do like that part of the bill.

But my question is are you going to be fighting for higher prior profits for STG on December 18th for shareholders?

On December 18th, I don't believe it's an open hearing.

Well, you had to submit some sort of position before the hearing.

Are you going to be asking for higher profits than the recommended CPUC rate?

We will continue to fight to hire sure that we are compensating.

Can I finish?

My question was are you going to accept the CPUC's proposed rate or are you going to fight for a higher rate?

We are asking for a rate that we think is commensurate with the risk of employment.

Is that higher or lower?

I was gonna finish.

Can I just finish my sentence?

So but I'm still I haven't got an answer to the question that I asked in the beginning.

My first question was this are you going to hire ask for a higher profit rate or not?

Whether you think it's the commensurate, well, I'm just asking, are you asking for a higher profit rate than the 9.88 that the CPUC asked you to do?

Yes, we asked we asked for a higher rate.

And are you going to continue to do that?

If that decision is voted out by the commission, that is what will ultimately be in our rates.

And so, okay, so you are fighting for higher profits.

That's just what I'm going to get from this.

That could be one simple thing you could do because we're also seeing what you know SEMPRA's, your parent company's CEO makes.

He makes 20-something million a year.

And so you can't come in here and tell us that you're not capitalized when most of this money is being sucked up into the pay and benefits for these energy executives who just I mean, four that's 40 million of the last two years that was reported by uh uh union tribune.

So maybe you don't ask for higher profits.

You know, that may be one thing to show that you are listening to the people who are asking you not to charge them as much.

Um, also I wanted to um recognize the signs that were coming about union busting, and I want to thank Councilmore Iroveira for bringing this up.

You know, I had asked when uh we approved this uh franchise agreement for the next 10 years.

I asked uh the CEO on the record that uh STG would not be using any money any ratepayer monies or or funds to fund companies that traditionally try to talk employees out of unions, and these are actually publicly available.

Um they're called LM10 reports, and they're on the city's uh I mean the State Department of Labor.

While we still have a department of labor that collect statistics, I don't know if Trump is going to take that away from us, but for public-facing uh union busting companies who do come in and interact with employees face to face, they do have to report companies have to report on what they have paid.

And actually, I'm just looking it up right now, and I'm quite alarmed by some of the San Diego companies I was not aware of that just filed reports saying they have done this.

Um SDGE's last report was uh in 2017, I believe, signed by Scott Kreider.

So can you still attest that you are not using any ratepayer money to hire union busting firms going forward for the purpose of union?

I mean, I understand the Jackson Lewis question.

That's it.

Is that like a what is a union busting company?

Is that like is there a registry of companies?

Uh they're called persuaders, and they're companies that are asking uh employees not to unionize.

Um, so not that I am aware of, we can come back and check, but at this time we are not hiring specific companies that are union persuaders.

Okay.

Um, and I just want we have 1,400 union members at SDGE.

Over the last 18 months, we just unionized 200 new members.

We had successful negotiations with our internal union to unionize those people.

We've had an over 100-year relationship with our internal union as well as all the other union contractors that we support every day.

I would argue we are one of the best union supporting companies in this city.

And I think that there are a lot of unions that would back me up on that.

There are, except probably not the communications workers of America who were trying to organize your call centers.

And SDG in 2019 paid over 40 million dollars to a company called Cruz and Associates to fight that union organizing effort.

So beyond that is public information, public information, Scott Kreider signed it.

But I'm glad to hear we're not using that now because I don't want those built into our profits.

And I just hope that SCG continues to listen to folks about affordability.

And I always give SGGE credit for the work you are doing for fire resilience.

And that is a huge deal.

Whether or not it needed to cost as much as it does is something the CPUC will decide, but I do applaud that effort.

And it is successful, and I do want to recognize that.

I just hope that you can listen to the folks here and you know lower the profit margins and uh provide a better service.

So thank you.

All right, thank you, Councilmember Von Wilpert.

Um not seeing anybody else in the lights.

I'll kind of jump in.

You know, when we support when uh six council members voted to support the franchise, the new franchise agreement.

There was a number of elements in it, and one of them was this to have you guys come back.

So instead of everybody just yelling at us all the time, they could yell at you.

You could feel a little bit of the pain.

Um can debate whether it really makes any difference going forward.

You don't really have a great story to tell for the things that people are most upset about.

I think we can all all be um honest about that.

Um so to either Coda or Mr.

Wilde, what is the status of the phase two power study, public power study?

That is currently uh being finalized right now.

Um so we should have an update sometime in January or February, I believe.

Okay.

Yes, sir.

I think yeah, that was what we heard last time.

I just wanted to double check going forward.

Um, I'm trying to think of what questions to ask because they're all kind of gotcha questions, and you know that's what you come here for.

Um the um a lot of the programs you offer for low income or people that are having difficulty are actually paid by ratepayers.

Has SDG kind of we're kind of past, I'm gonna say we're past COVID now, that we're just kind of regular business.

Has SDG actually provided relief to ratepayers out of its own pocket as opposed to CARE or FARA?

Yes, absolutely.

So in our neighbor to neighbor program, those are all share shareholder funded.

And we have put in over, I think it's about 13 million over the last three to four years, including about a million that were about to refund because it was getting a little bit low.

So, yes, those are shareholder dollars that go and directly help our customers.

Okay.

Um I'm getting a little bit rusty since I don't share environment, but I remember that there was a statewide audit of all the investor-owned utilities.

And one of the things they talked about was the profits of the investor owned.

And as you always like to remind us that when you go to the CPUC, you predict a profit level, and so the rate is set based on a predicted.

You're not guaranteed that profit predicted.

SDG had a remarkable track record of exceeding that profit year after year after year.

Um the um LA and Sacramento and PGE had some good years, it's had some bad years, some good years and bad years, which to me kind of leveled out.

They got what they needed to run their uh investor own uh utility uh and provide service.

One can talk about PGE and what they've done, but we won't talk about that.

So part of the question is if P if SDG still has that same track record, and I suspect you are because you have really smart people constantly exceeding the profit rate that was built in to the right case.

There is a conversation that I think the city should pursue about maybe some of that should flow back to the ratepayers as opposed to rewarding shareholders and investors going forward.

How you would do that calculation, I don't know.

But when it's year after year after year after year, something isn't right.

And when people are paying such high rates, there has to be some kind of mechanism to allow you to get the rate of return that you need for your capital, as was mentioned a couple of times, but also to provide a little bit of relief to ratepayers when you make thoughtful strategic decisions to lower your actual costs while preserving your revenue coming in.

So I think that's that's a conversation that we actually ought to do something about.

We've talked about it in the past.

The other thing I'll mention is you talked a lot about the cost of capital.

We need to have these profits so that we can get good rates and stuff.

The city doesn't have any profits, and we have a pretty good credit rating, and we're able to get pretty competitive loan rates going forward.

It's not apples to apples.

You're a private public, you know, you're a private firm, we're a public agency.

But there's something in there.

And I can tell you I can sit here and I can listen, and I'm okay with stuff that I don't like, but responsible.

But it gets frustrating as Councilmember Elo Rivera kind of pointed out when you get questions in front of a difficult audience, and it's like, you know, that's just as incredible.

So you've worked very hard, Brittany.

We've known each other for a long time.

It's a difficult conversation when you're really talking about the most vulnerable San Diegans.

Um and what they're being asked to pay.

Now the city is raising its water rates too, so we're not um we're not blameless in this conversation.

Uh, but I do look forward to the day that the bill is actually more straightforward, because I certainly don't understand it.

Um I do appreciate the other thing.

I do have to give you credit because I've complained about energizing new projects and how that used to be very slow.

Um, and also solar installations and the complaints about that being very slow.

So there are some good things.

And you know, I won't even talk about the nonprofit stuff that you do, but it's a continuing challenge, and we don't seem to make much progress for having you come out here every year and we yell at you and beat up on you, and these good people take up their personal time.

There has to be a better way to get better results.

So we'll continue to work on that.

I think our legislative uh agenda is tomorrow's docket, right?

The 2026 legislative platform is Wednesday.

Wednesday.

There you go.

Thank you for that.

So uh my colleagues be thinking about stuff that we might add on to that that isn't already there.

Um anyway, I appreciate the comments of Councilmember Yellow Rivera and Council Member Vaughn Wolpert.

I don't see anybody else in the lights, so we'll close there and thank you for uh coming out here with the presentation and any updates.

Thank you for your time.

All right.

So with that, we will now take up non-agenda public comment to almost wrap up our council meeting for today.

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 committee meetings.

Clerk, please proceed with public comment.

Thank you, Council President.

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 city council.

Each speaker will have two minutes.

Please note if there are eight or more speakers on a single topic.

The maximum time for the topic will be 16 minutes.

If you are in chambers, please submit your speakers up to the front of the room in the clear box.

And if you are participating virtually, please raise your hand to speak by tapping the raise your hand icon or star nine.

If I can have Bob Kazuski, please come forward.

And I know you have a video that you'd like us to show.

Bob Kazuski here.

The council should know that in two and a half weeks I have had over 5,000 responses.

I have also spoken at length with a uh citizen, a voter, uh uh consumer advocate in San Diego who is here today, uh, Bob Kazuski, uh, who I have a great deal of respect for, and you'll be hearing from him shortly.

I know that the mayor has had contact with Mr.

Kazowski and my staff has, um, and I look forward to hearing from him today.

He has also uh had uh petitions before uh the uh utilities commission uh on this very issue.

In spite of um Mr.

Kazowski's and others' efforts to reverse course, the CPU C declined to do so.

We can thank Mr.

Kazowski that he he argued the position uh vociferously at the commission.

Unfortunately, they didn't they didn't uh decide to reverse course on the 858.

And the good news was they requested comments on deferring on 935.

I'm gonna call on uh um Bob Kazutsky.

Bob, I want to thank you for your tenacity and the fact that when you do write, I mean you it it's well well argued and uh you know informative and therefore you know got my attention and thank you.

Is this a two-minute?

Yep.

Okay.

Okay, it's a challenge.

I am Bob Kazuski from La Jolla.

Unfortunately, I cannot offer a complete argument on this complex topic in two minutes.

It is still possible to reverse the ill effects of the 858 split without harming anyone who have all has already switched to the new code.

On January 13th, I filed a petition with the CPUC to extend permissive dialing in 858.

Please amend R 200843 to include comments in support of that petition.

If the San Diego City Council won't speak for San Diego, then who will Mr.

Kazuski is right.

There are all kinds of arguments, but Mr.

Pathville may not you.

Christian Fuentes Christian Fuentes.

I'm sorry, the five-minute timer going to those participating remotely, starting with Barbara Gordon.

If you can please unmute, we currently have five speakers in the queue.

Um good afternoon.

Um I wanted to share an important study published this week in the Journal of American Medical Association with research from Kaiser Permanente that reveals pre-netal prenatal marijuana exposure continues to garner increased attention due to its potential risk on fetal development.

This study reveals just how inconsistent and inaccurate information about marijuana use and pregnancy remains across California retail market.

Survey found that one in five button bud tenders told a pregnant caller that marijuana use is safe during pregnancy, despite national medical guidelines against it.

Research indicates that the use of marijuana during pregnancy adversely affects the developing brain, potentially leading to long-term cognitive and behavioral issues in children.

These effects could manifest as attention deficit, increase hyperactivity, and challenges with learning and memory.

This new study shows that while bud tenders often view as trusted, most of those lack accurate information about prenatal risk.

California requires retailers to offer a state mandate warning brochure to new customers, but this study shows how often existing warnings go unseen, unmentioned, or ignored to protect public health and ensure accuracy, consistent communication.

I urge this council to enact policies that will require warning labels on the front of packaging with clear evidence-based health messages and require comprehensive education and training for retail workers and promote an effective public health campaign to all of our residents.

Thank you for letting me speak.

Thank you.

Next is Blair Beekman.

If you can please unmute Blair Beekman.

Hi, thank you, Blair Beekman.

Thanks for the meeting today.

Here in mid-December.

In Oakland tomorrow, they are going to have a big item.

The clock item has returned.

Oakland uh city government has not done the greatest job in creating uh uh an open accountable public process for the flock issues I've been talking about for the past month and a half now.

I've been trying to prepare yourselves for as much as you're talking about uh you know the good of public safety that uh our current surveillance is doing.

Um we have to be moving forward in ways.

We have to be considering how to balance continuing good public safety, which what I've been trying to describe, and that you guys very clearly know is that we can reduce the amount of surveillance tech and still offer the same amount of good public safety help for the San Diego local neighborhoods, and we have to have that conversation more clear and regular, and it's from that we can be deciding that we can have a more principled ALPR vendor besides block.

And I think those are like really important goals that I think by the February time period when uh uh tech ordinance things will come around again for review.

We should all be prepared to have those conversations more openly and regularly.

And what are we gonna do then?

What are gonna be as our next steps?

You know, as we can as a full community and in asking all those questions, public safety yet reduced tech that can still do the same job.

And um, we really can do it.

And uh I'm I'm really hopeful, and we can have those conversations in Oakland tomorrow away, and they don't approve of it, they can put it off for a little bit longer for more community dialogue.

Man, it is the public process.

It's so important with this stuff.

This isn't just dictates from city government.

This is a community process that the future of our technology and public safety is about.

I hope we understand that and working towards those goals.

Thanks a lot, guys.

See you tomorrow.

Thank you, John Stump.

If you can please unmute.

Hi.

Well, that was a great hearing.

Um here's a problem that your future uh legislative calendar should be looking at.

It should be reviewing the lobbyist rules.

The way I understand the lobbyist rules right now.

Is that if you got a city contract, you got a city franchise, you got a city lease, you're exempt from being a lobbyist.

You don't have to disclose as this woman uh from SDG suggested.

Well, you know, after we have the hearing, we'll come back to you and we'll meet with you individually and talk about things we could remove from the legislative mandates.

The council needs to have a revision to the lobbyist rules, so that any organization that's huge franchises worth hundreds of millions of dollars, has to register as a lobbyist and participate in reporting.

Even the amount that the current lobbyists can uh provide exceeds what the uh private citizen can contribute.

Please SDG should be a registered lobbyist, and every contact you have with this group of gouging ripoffs should be reported, and they should not be able to wander the city halls free of oversight.

Uh the other problem you have is you don't require workforce analysis anymore, and I hope you do that.

Thank you very much.

Thank you.

Next is Francine Maxwell, if you can please unmute the five-minute timer.

Also concluded there was four speakers in the queue.

No additional speakers will be taken.

Please proceed.

Francine Maxwell, Southeastern San Diego.

Marnie, to watch you go from Sean and then to Henry to be disruptive when the public is speaking, it was just deplorable to watch.

You're disrespectful.

We're excited as a city to know that you're going to be holding some hearings in 2026.

But where is the hearing to tell us where our tax dollars are going from which account when we are paying exuberant amounts because of police interaction with the public?

So very excited to see this hate presentation, just like the hate presentation that the Human Relations Commission has had, and I'm hoping that it's expanded.

We will not tolerate only speaking about LGBTQIA hate, Jewish hate.

We want BIPOC hate.

Okay, all hate is deplorable, but what you're not gonna do is continue to mismanage and and make sure that the community is not getting a full picture of hate in the eighth largest city.

You have an opportunity to dismantle, as short as it is, as you're running for Congress.

Take the opportunity as the chair of public safety and talk about the less than six percent African Americans that are getting pulled over at over 33 to over 35 percent.

This is an opportunity for us to win and have a safe, uncomfortable conversation about what is taking place.

The Napa conversation that did not happen a couple years ago, the council would have been all over it, but it's not it's not, I guess it's not um reaching the radar today that uh Napa has a problem with uh diversity.

BIPOC doesn't exist in Napa.

Many constituents throughout the city of San Diego have tried to obtain positions, and it does not regulate in BIPOC.

Joe Locave, as president, you should have said something for Marnie to be able to pop around from seat to seat.

Next is Madison, if you can please unmute.

Hi, thank you.

Good evening.

I'm here to share some concerns about the impact of today's cannabis products on young people and public health.

Many vape oils and concentrates now contain THC levels of 80 to 90 percent.

These high potency products raise serious concerns about youth exposure, addiction, and long-term health effects.

Research increasingly shows that frequent marijuana use, especially smoking or vaping high THC products, can strain the cardiovascular system, increasing heart rate and blood pressure, and raising the risk of heart rhythm problems.

There is also growing evidence linking heavy use to mental health challenges, including anxiety, depression, and psychosis, with young people being particularly vulnerable.

At the same time, cannabis marketing has evolved rapidly.

Flavored vapes, edible products that resemble candy, and social media style branding can make these products especially appealing to minors.

Many young people now report vaping as their primary way of using marijuana, and they start in middle school.

San Diego has an opportunity to lead by focusing on prevention and education.

Clear labeling on THC potency and health risks, strong retail oversight, and policies that reduce youth appeal can help protect young people while respecting adult use laws.

Thank you for your time and for prioritizing public health and youth safety.

Our final speaker, James R.

If you can please unmute, James.

Yeah, hi.

I uh just want the city council to continue to at least support uh legal marijuana.

Um I do believe that there should be restrictions for uh use, mostly in adults.

Um, but marijuana use has been a godsend to me and my family as a father, as a son, as a son of a combat veteran.

Uh marijuana has provided so many medical uses for our lives, and uh not only myself, but there are many people in my family that would not be here today if it wasn't for the accessible of safe marijuana, and that's what this taxation legalization provides.

Uh, if you criminalize it or make it illegal, then it's just gonna make um more of these uh you know traditional drug dealers more common, and I think it's gonna have a larger impact on crime and even uh potential overdoses.

So the fact that it's legal, it is regulated, uh, makes it safe for use for adults.

Thank you.

That includes your comments, that concludes on agenda.

Public comment for today.

Thank you, Council President.

All right, thank you.

City clerk.

Does the city attorney have anything to report out from closed session?

Yes, thank you, Council President.

Today, in a closed session meeting, the city council took the following actions.

The city council voted on closed session item number two to authorize the initiation of litigation.

Once litigation is formally commenced, the action, the defendants, and other particulars will be disclosed to any person upon inquiry, unless to do so would jeopardize effective service of process or settlement negotiations.

The motion passed unanimously nine to zero.

The city council also voted on closed session item number six to authorize the initiation of litigation.

Once litigation is formally commenced, the action, the defendants, and other particulars will be disclosed to any person upon inquiry, unless to do so would jeopardize effective service of process or settlement negotiations.

The motion passed unanimously, nine to zero.

That concludes my report.

All right, thank you.

And with that, we have one adjournment of memory by council member Foster.

Council Member.

Yes, thank you, Council President.

Today we adjourn this meeting in memory of Miss Mrs.

Brenda E.

Jackson Jackson, born Brenda Atoy Roberts, who was raised in San Diego and part of the District 4 community.

Brenda spent her early years growing up in southeastern San Diego, where family, neighbors, and community played a central role in her life.

She attended Stockton Elementary School, Gompers Junior High School, and Lincoln High School, building strong roots in District 4 from a young age.

Growing up in this community instilled in Brenda a strong work ethic and a commitment to creating opportunity.

From an early age, she learned the value of perseverance, independence and planning ahead.

After graduating high school, Brenda continued her education and personal development at City College.

She developed interest in finance, computers, and entrepreneurship, reflecting a forward thinking and disciplined mindset.

Brenda went on to dedicate 45 years of outstanding service to the city of San Diego, working across multiple departments.

Brenda understood the power of knowledge as a tool for long term stability.

These interests led her to build a successful path as an investor and property manager.

Through her work, she demonstrated responsibility, vision, and careful stewardship.

Brenda believed in ownership and in building something meaningful that could support her family.

At a young age, Brenda met the love of her life, Andrew Roberts, known to many as Tubby.

Their story began as next door neighbors, a simple beginning that grew into a lasting partnership.

Brenda and Andrew were married on June 21st, 1971, beginning a union that would span more than five decades.

Their marriage was defined by commitment, loyalty, and shared purpose.

Together they raised two sons, pouring into them values of responsibility, resilience, and family unity.

Brenda was deeply devoted to her family and took pride in supporting those she loved.

She and Andrew shared nearly every aspect of life side by side.

They enjoyed traveling together, creating memories and creating memories across the years.

Together they worked to manage their properties, blending family and business with trust and care.

Brenda was known for her strength, her business sense, and her steady presence.

She carried herself with quiet confidence and intention.

Brenda understood that success is not only about what we build, but about how we care for others along the way.

Her life reflected a belief in stability, partnership, and generational opportunity.

Brenda's early years in Southeastern San Diego remained an important part of her story.

Her journey reflects the values learned in District 4 and carried forward throughout her life.

Brenda's legacy lives on through her husband, her sons, and all who touched her, who who and all who were touched by her life.

On behalf of the residents of District 4, I extend our deepest condolences to the Roberts family.

We honor Brenda Jackson for her life's contributions and her enduring impact.

May her memory be a blessing.

Thank you.

I'd like to add that her husband, he's here now.

Raise your hand, please.

This is Carl Jackson, that's his name.

And he worked 49 years as a bus driver here for MTS.

Thank you so much, Councilmember Council.

Thank you.

And thank you for that, Councilmember Foster.

Thank you.

And with that, we will now adjourn counsel to the special council meeting on Tuesday, December 16th, 2025 at 10 a.m.