Thank you, Council President Pro Ten.

Councilmember Campbell.

Councilmember Whitburn.

Councilmember Foster.

Councilmember Von Wolper.

Councilmember Campillo.

Here.

Councilmember Moreno.

President.

Councilmember Elo Rivera.

Council President Lacava.

And Council President Pro Tem Lee.

Here.

Also attending the meeting are Assistant City Attorney Michelle Garland, Independent Budget Analyst, Charles Monica, Council of Affairs Advisor in the Mayor's Office, Coda Zeiser, and myself, your city clerk, Deanna Fuentes.

Thank you, Council President Pro Tem.

Thank you.

A quorum is now present.

We will begin this afternoon with an invocation by Clerk Fuentes.

Followed by the land acknowledgement and the pledge of allegiance led by Councilmember Kimpio.

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 Kumeyai Nation are the original inhabitants of the unceded land now known as San Diego.

Despite enduring the horrors of genocide and colonization, the Kumiai 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 Kumeayay Nation, connected to our past and committed to a thriving future.

Please stand, face the flag.

Hand over your heart.

Ready?

Begin.

Pledge allegiance to the flag of the United States of America and to the Republic for which it stands, one nation under God, indivisible with liberty and justice abroad.

Now are there any mayor, council, city attorney, independent budget analyst or city clerk comments.

Seeing none, uh the clerk will now go over how the public can offer their public testimony.

Uh please proceed.

Thank you, Council President Pro Tem.

I'd like to highlight there was a slide.

There it is again, 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 here in Council Chambers.

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

Council ambassadors are available near the entrance 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 Pro Tem.

Thank you.

We'll go ahead and get started with our afternoon's informational uh agenda.

Uh clerk will be please introduce item 200.

Item 200 is the performance audit of the Mission Bay and San Diego Regional Parks Improvement Funds for fiscal year 2024.

If you'd like to speak on this item, now is the time to raise your hand by pressing star nine or the raise your hand icon or by submitting a speaker slip as noted to the front of the room in the clear box.

Thank you, Council President Pro Tem.

Thank you.

We'll go ahead and turn it over to our Office of the City Auditor.

Uh if you'll introduce yourselves to the record and let us know how much time you'll need.

Uh good afternoon, Councilmember's Andy Hanao City Auditor.

Uh we are here to present our audit of the Mission Bay and San Diego Regional Park Improvement Funds for fiscal year 2024.

And can we have about 10 minutes, please?

Thank you.

Thanks.

As we get started, this audit involves the cooperation of many departments, as you can see on this slide, as well as the oversight committees, so we really appreciate all of their cooperation and assistance.

The city uh charter requires that our office report annually the extent and nature of the Mission Bay and San Diego Regional Park improvement funds revenues, expenses, and improvements.

Our objectives were to verify the collection, allocation, and use of the mission bay park lease revenues from fiscal year 2024, complied uh with charter requirements, as well as determine if the improvement fund oversight committees are properly informed to fulfill their responsibilities.

We found that expenses were in compliance with charter requirements, and as far as revenues, we could not verify that all revenues were collected and deposited into the funds as required due to a management imposed moratorium on the city treasurer's lease revenue audits and issues with the application of lease payments.

Management has taken substantial steps to resolve those issues and agreed to all five recommendations, and we will continue to monitor uh progress towards fully implementing the recommendations as part of this year's uh mission bay audit.

By way of background, a city council ordinance established the Mission Bay Park and San Diego Regional Park improvement funds in 2002.

And since then, voters uh have added these funds to the city charter.

Mission Bay Park lease revenue is deposited into a general fund account throughout the fiscal year and allocated to the improvement funds uh after the fiscal year end.

The allocation uh to the funds is based on a formula that has changed over the years, and we'll describe the current formula uh here on the next slide.

Uh with me today is Principal Performance Auditor Nathan Otto and Senior Performance Auditor Daniel Kish, and I'll hand it over to them for the details of what we found and recommended.

Thanks, Andy.

Uh good afternoon, everyone.

So city charter specifies how to allocate the revenue.

Uh the first 20 million dollars goes to the general fund, and then uh 35% of the revenues in excess of that is transferred to the San Diego Regional Parks Improvement Fund, and the remainder of that excess goes to the Mission Bay Improvement Fund.

Uh we found that the total adjusted mission bay lease revenues were approximately $37 million, which is about a 7% decrease from the previous year in fiscal year 23.

And that first 20 million dollars uh did go to the general fund timely and appropriately.

So that's a good news story as part of this audit.

And then a total of 16.9 million that spillover amount was distributed to the improvement funds, as you can see in the exhibit on this slide, and that followed the formula that it was supposed to, so that's more good news there.

Uh one of the wrinkles in this year's audit was the question of how accurate that that total uh lease revenue figure was.

So about a year ago, the city's annual report on internal controls, uh, which is also uh for being discussed this this afternoon, but the one a year ago stated there were issues with EDD's lease management as well as invoicing and payment processing.

And that resulted in a large backlog of unreconciled lease payment discrepancies and an understatement of city lease revenue.

Andy noted this, but uh over the course of us completing this audit, EDD did appear to have taken steps uh to make a lot of progress on this issue.

And since we do the audit every year, it's something we'll be checking on our next go-round.

However, for this iteration, due to this understatement of lease revenue, we could not confirm that all the mission bay lease revenue payments in fiscal year 24 were applied appropriately.

So we have four findings here.

Um note that due to a lease audit moratorium that began in July of 2024, the Office of the City Treasurer could not complete and formally close all of its planned audits, which uh include examining lease revenue.

The audit moratorium was noted in that city's annual report I mentioned, but it was not until eight months until after the moratorium had been implemented.

EDD stated the moratorium was implemented to improve business practices and perform accurate financial reporting.

But we just note uh as internal controls, official notes, you know, limiting the treasurer's revenue auditing role weakens an important financial control for the city and it can result in lost revenue to the city, as well as even uh us not identifying money that we may owe as a city to tenants.

Uh and so our recommendation on this one was to the CFO or other city executive leadership to issue a memo or other written guidance that uh laid out and discouraged future audit moratorium like that, and which required promptly informing the Office of the City Auditor and the chair of the audit committee if the ability uh to perform lease revenue audit functions is restricted in the future.

And to their credit, we we did get uh buy-in from the CFO and they actually have issued that that guidance.

So that's something that's already been done.

Our second finding, uh, we found that the city did not assess late penalty fees for fiscal year 24 due to a large backlog of unapplied payments, uh, including mission bay lease revenue for fiscal year 24.

So EDD shared that when a lese makes a rental payment, the that rental payment must note the accurate uh contract invoice number to ensure the payments are applied to the correct account.

So, as you can see on the exhibit on this slide, when basically when the information doesn't match up, the payments post to a credit account.

And both the Office of the City Treasurer and EDD review this credit list to apply payments to the correct accounts.

EDD stated uh due to this large backlog of unapplied payments, no fee penalties were assessed for fiscal year 2024 or uh yeah, 2024.

So uh we just point out you know, not assessing late fees when they are warranted results in a potential loss in revenue for the city, and it undermines the importance of timely payment.

So we included a couple of recommendations in this finding about strengthening internal processes, including verification of lease terms, quality control checks of revenue received, and reconciling payment data.

And uh EDD has shared some updated policies and pre uh procedures with us, and it is something we'll look at in our next iteration of this audit.

For a third finding, we found that 35% of the city's mission bay rental agreements are in holdover status, some for multiple years, which may be leading to foregone revenue for the city as well as perceived favoritism amongst lessees.

Most of the lease and permit agreements require appraisals to be conducted while the agreements are in holdover status.

Most agreements also require city council approval to extend the lease beyond the agreement terms.

However, during the course of our audit, we found that EDD had not renewed the expired leases, sought council approval, or conducted site appraisals to ensure the expired lease agreements have provided revenue to the city at fair market rate.

With leases and holdover, the city may be losing out on potential revenue.

Also, the city may potentially confer an unfair benefit to the current tenant, which could be perceived as favoritism amongst lessees.

Therefore, we recommended that EDD should ensure that agreements should should ensure that the agreements which have extended beyond lease agreement terms receive the required council approval and appraisal to ensure agreements are binding and that fair market rental rate is received.

EDD stated efforts have been done to ensure mission bay agreements are currently leased at fair market rate, that it monitors tenants and holdover, and that it seeks to renew lease agreements.

In our upcoming annual audit of mission Bay Leases, we will verify these updates and ensure that leases lease renewals go to council when required.

Profinding for we reviewed the project information shared with the improvement fund oversight committees.

We found that city departments provided several high-level project status updates to the Mission Bay Park and San Diego Regional Parks Improvement Fund Oversight Committees.

However, these presentations did not include the detailed expenditure information.

We found that no guidance exists that states which project information city departments should provide to ensure the committees can effectively oversee project expenditures and outcomes.

We also found that historically the information requested by the oversight committees regularly changed with changes in committee board membership.

Therefore, we recommend that Parks and Recreation and ENCP work with both improvement fund oversight committees to reach an agreement on which specific project elements should be provided and the frequency that departments should generate and share the reports.

During the course of this audit, we also reviewed the two outstanding recommendations from the fiscal year 2021 Mission Bay Performance Audit.

We found that both of these recommendations have been implemented.

As Indy previously stated, city management agreed to implement all five recommendations.

We're happy to answer any of your questions.

Thank you for the presentation.

We will now turn to see if we've got any public comment on item 200.

Thank you, Council President Pro Tem.

We have no speakers here in Council Chambers.

I'm sorry at the five-minute time.

We're going to go to those participating remotely.

We currently have four speakers in the queue, two minutes each.

Sorry for the redirect.

If the original, if you can please unmute.

Yes, so this just further shows the fraud, waste and abuse and the negligence of the city when you can't even, you know, make sure that all of these uh programs and things are running in a manner where you can track things, be transparent, uh, not get in your own way, because that's what you guys tend to do is get in your own way by you know not having something in place or you know, hiding information or not being able to complete things, which is now going to make you know people think that you're favoring some over others.

Um, and that leads me to uh, you know, talk about the what's actually happening in these parts, which would also be uh the negligence that is you know happening in the city, um, that would prove that if this kind of stuff is going on, that stuff is also, I mean, is the money being spent wisely anyway when you know, just in Linda Vista skate park and by the recreation center.

I mean, there's been four murders this year.

Two of them with were within two days, and it doesn't seem like anything is being done to implement some kind of security measures or lighting that would ensure safety for the children that are going to be enjoying the park.

Um, you know, when things like that happen and nobody's kind of you know working in that manner to fix it, like Raul Campillo, like this is your community and your like how many more murders need to happen before something takes place and you guys ensure that if there is that there's some kind of security cameras and lighting that would potentially deter people from going to that park and doing it.

But if there isn't that kind of stuff at these parks, then those are the perfect, you know uh place to go and engage in a crime because you're not going to be caught because there is no lighting for people to see it, and you know that you can just go do it and get away with it.

So, you know, when we're talking about the negligence with your money, it also bleeds over into how you're handling the parks.

And it's very sad because you know, people shouldn't have to be put in dangerous situations because of your guys' negligence.

Your time has concluded.

Our next speaker is 8700.

After that is Blair Beekman, 8700 star six to unmute.

Uh, thank you so much.

Uh Joyce and the other CD3.

Okay, City of San Diego strategic plan, operating principles, trust and transparency, physical considerations.

The audit evaluated several issues relating to lease revenue and the accounting of revenue and expenditures from me.

We are where are these issues?

Were these issues presented from 12 excuse me, were issues present from 2010 to 2023?

And the oversight committees, the two of them, they were held back from doing their necessary work.

That's not okay.

And I'm not comfortable with the leasing with the reason given for the lease audit more moratorium not providing access to the software, excuse me, here.

Okay.

So um how do all these issues impact the credibility of our ACFER?

Or are they hidden away from auditors like MGO and Crow?

Uh, because they don't have to do the internal audit report, the internal control report.

So this feels like a big trust and transparency issue.

These audit reports are so important and needed, so valuable, they're so valuable.

And the the oversight is in the implementation.

So who's really following up on the implementation I'm worrying on this?

Umitor panel, buried in the 46 pages of this audit are clues, red flags, guiding post to our structural budget deficit, in my opinion.

All past audits would give us an eagle eye.

Your time has concluded.

My apologies.

The five-minute timer has also concluded.

We have three speakers in the queue.

No additional speakers will be taken after that.

Blair Beekman, if you can please unmute, please unmute.

After that is Catherine Rhodes and Judy String, our final speaker.

All right, thank you, Flair Beekman.

Uh thanks for this item.

I wish Council President Lacaba was here today for this item.

It's really important talking about park accountability.

Um I guess for myself to begin, uh, thank you that you have caught this uh accounting error and you've corrected it, and you're making it public.

That's a really important first step.

Thank you.

Thank you guys for doing that.

Um so it's important to proceed softly, I think, cautiously at this time and to but to be able to ask questions.

For instance, we were all around in 2024 when this first happened.

Why exactly did we allow it?

Can we go into a bit of detail more why exactly this was allowed by ourselves and why the mayor's office uh promoted this idea in the first place?

I know it's it was a bit of a nip and chuck in savings dollars.

I mean, that's basic, but uh some formal explanations of the initial reasoning could be helpful in clarity overall.

And how we uh don't let this happen again, basically.

Um with that said, uh I also wanted to note the importance of um we're really trying to work on accountability issues with park uh funding overall.

Uh the the current questions about park funding allocation.

I think is a question we haven't fully answered yet.

Um I I can be in agreement that a lot is going to be going to a special bubble park fund.

But memos have been stated here in council that some money it has been slated to go for the San Diego General Fund.

Can that be more be made more clear at this time and we can have an overall understanding of park accountability budgeting issues at this time?

Uh it'd be a good time to practice that accountability.

And uh to conclude, um just really asked the question uh of the uh of strong mayor versus city council and city council is trying to work towards administrative organization at this time.

Do we need to re uh address the good those good ideas at this time?

I hope we can.

Thank you.

Thank you.

Catherine Rhodes, if you can please unmute.

Uh hello, this is Kathrine Rhodes.

And uh just what everybody else said, um, you know, I don't understand why you had a or why our strong mayor, Todd Gloria put a moratorium on the lease revenue audits.

Um why would he have the that ability to do that?

And then of course, you know, the the fix for that is what um council president Pro Tim Kent Lee came out with his fiscal accountability and transparency reform ballot measure, where um instead of just having a strong mayor form of government who can just make up things like let's not um let's put an uh moratorium on these revenue audits.

Um you could have an actual um strong mayor, strong city council form of government.

So he can't go around and just you know delete these audits that are actually needed.

And then of course, this is only for fiscal year 2024.

Um, you know, where's the one for 2025?

Should we be getting that soon?

Um I don't know.

So um thank you for the audit committee for doing as much as you can, but I think this is a um a problem with the mayor saying that um they can't do the job or he's not gonna give them the funding to do the job, and you the city council not having enough power over him to um you know to force the issue.

And so you guys really need to um change that and hopefully if you put something into the city charter to take out out the powder or away from the mayor.

And then um during that discussion also at the rules committee, the mayor's office said basically he'll give you everything you want.

Um you don't have to go through um a city charter change for for you, the city council to get things you want, like um not having this moratorium on the revenue audits.

So he said that you can have basically everything you want want.

So I would see if um if somebody from the mayor's office is there and if they could tell us um that they're not going to do these moratoriums anymore.

That would be a good idea.

Good afternoon, San Diego City Council's uh Native San Diego and person who's always lived by the coast and who knows the Mission Bay area well, as does my family.

I was a little stunned by the audit report, but to start with the good news, there was an audit report, and that the IBA took the job responsibly to take a hard look at past lease arrangements, whether the money came in as it was expected, and whether it was more importantly, allocated like we all would have expected it to.

I was very surprised about the lack of oversight with lease lease.

I think the comment made by the IBA that when some leasees are not followed up with to get the lease agreement signed or appropriately negotiated, it implies favoritism.

And let me just say that again.

It implies favoritism, and that I think has concerned all of us as residents of the city of San Diego.

When we have leases, and we have a lot of them with our gorgeous public lands that go out to private entities, sometimes masquerading as nonprofits, but nevertheless, they are private entities and they make a lot of money off our public lands.

We are concerned when we're not got getting our fair share of what they take in.

And it does imply favoritism.

The question is, is there really favoritism?

And how would we know?

So the good news in this conversation is you have begun the conversation, you're sharing this information with us.

You've given us a five-point plan of how to get back on track regarding the city's revenue so that we can have more faith going forward that we the citizens will be protected from abuse and that the money will come in as expected and be spent as said.

Thank you.

That does conclude public comment on this item.

Thank you.

Thank you.

We'll now take council member questions and comments, starting with the chair of our audit committee, uh, Councilmember Moreno.

Thank you.

Thank you for the presentation and and thank you to the city auditor for your work on this audit.

Um, this is an annual audit, so we will be hearing um on this matter again.

Um will it come back to the audit committee?

Oh, we are just about to start um this year's version of the audit.

Um has been delayed a little bit due to budget reductions.

We had to hold some positions vacant for uh the last six months, but those have been filled, and so we'll be starting it soon.

So probably in the fall.

In the fall.

Yeah, okay, wonderful.

Well, um, thank you for that.

Uh the issue of the city not being able to properly distribute lease payments to the correct accounts was something that the audit committee first learned of at the March meeting when it was disclosed in the internal controls report, which was apparently eight months after the issue happened.

Uh the audit committee did review this item last November, and today is the first time it's come before us, the city council.

Uh at that time, staff indicated that the problem was being addressed and expected it to be resolved by the end of the fiscal year.

Um, as the auditor noted, uh, the problem of the problem resulted in a large backlog of unresolved lease payment discrepancies.

Um in March, I had a great concern, not just about the actual dollar amount that had not been distributed to the right account, but more importantly, whether this issue was a symptom of something larger and might need a higher level of disclosure.

Uh my concern did increase when it was revealed that a moratorium had been placed on the city treasurer's ability to continue auditing uh the situation.

The office of the city treasurer is required per council policy 700-10 to conduct an audit of each percentage lease for the first year of operation and at least once every five years.

Now, restricting their ability to do this is a significant action.

On page seven of the audit, it states the following EDD limited uh reportfolio access to only its staff and removed access from the audit office of the city treasurer.

EDD believed it was counterproductive to allow access to leasing management software containing inaccurate information while it was actively working to reconcile um accounts so that accurate payments could be applied and correct revenue could be realized.

According to EDD, it provided all data and information to the city treasurer upon request to continue revenue audits, despite not providing access to the software.

Um, however, the city treasurer indicated that its ability to complete revenue audits was limited by the moratorium, which explicitly instructs the city treasurer to pause audits and restrict contact with EDD.

It later goes on to say that the audit and treasure, that the auditor and treasurer had to instead rely on data from SAP and reports provided by EDD to support their analysis.

No direct access to the actual data for two top officials in the city for an extended period of extended period of time.

I find this to be very concerning, and I think everybody on the DIAS should feel the same way.

As the auditor states, these actions weaken an important internal financial control, hinders oversight and transparency, and could potentially damage the city's reputation and credibility for billing practices and financial reporting.

Now I do appreciate the auditor's first recommendation, which speaks to discouraging future moratoriums and which requires promptly informing the city auditor and the chair of the audit committee if the ability to perform lease revenue audit functions is restricted in the future.

This is absolutely critical, and I'm glad to see that management agreed to provide provided the direction to the department staff in compliance with council policy 700-10.

The audit states that the economic development department appears to have taken steps to subsequently resolve this issue, and I would ask staff to expand upon exactly what steps have been taken to resolve this issue, and also can the auditor expand on what you need to see done for this issue to be resolved in your eyes.

Good afternoon, Monica Hardman, assistant director.

I'm taking a seat because I realize there'll be numerous questions.

So thank you for the opportunity to expound upon what the department is doing to resolve these issues.

So the first thing that we did is that we took an internal look at improving our system processes.

So in this, we made sure that we created processes to ensure that unapplied payments were reviewed in a timely manner and researched, matched to the corresponding invoices.

We also have been improving our internal tracking of lease obligations and our escalation provisions and strengthening the oversight of the agreements that include the percentage rent.

Secondly, we launched a very intensive tenant outreach campaign to encourage our tenants to use the city's online payment portal.

So this portal, it requires the tenants to supply all of the necessary invoice and accounting information up front, which really eliminates the primary source of the payment matching issue.

And then third, that we've discussed before, we are currently modernized, modernizing our software system.

So we are upgrading our real estate management portfolio system.

We're currently in version six.

We are upgrading to version 11 that will be complete at the beginning of FY27.

So in July of 2026, we will be upgraded to version 11.

And concurrently, we're also in the process of engaging upon a request for proposal for the long-term leasing solution.

And we're working with various departments to ensure that we can have that completed in a timely fashion.

Thank you for that update.

According to the audit, which looks at fiscal year 24 only, of the 11 leases that are in holdover status, six of them have been in holdover for more than eight years.

And in audit committee, it was stated that one was terminated.

When were the other leases in Mission Bay updated?

Thank you for the question.

So of the 10 minus the one that was terminated, they're actively being addressed.

They're either currently going through lease negotiations or through an active competitive RFP process.

So for example, we currently have Sportsman Seafood and Diana Laning that the RFP was just issued in February of 2026.

So they are all actively negotiated, being negotiated, and we're working to get those done as quickly as possible.

Got you.

Not when they're going to be renegotiated, because that's what's happening right now.

When the it's determined that they should be closed.

There is an end date, right?

Yes, happy to provide that.

We can give a status update for those 10 where they're at in the process and the anticipated timeline where either the RFP will be done or will they be back before council for consideration for the new lease.

Thank you.

What is the current bag log backlog of leases in the city and how long will it take to work through it and catch up?

So currently we have 178 agreements that are in hold over, and we're actively working through those.

Of course, they have to be prioritized based on staff capacity.

We have uh three vacancies, so only 10 of those are filled at the moment, and we've actively been working with consultants and you know other assistants just to help us get through this backlog.

Thank you for that response, and thank you for being here.

Um this administration has known about these uh lease revenue issues uh for years, and uh we still have leases if we just specifically look in Mission Bay that have not been updated uh for 12 years now.

Um obviously this issue applies to leases throughout the city, uh, which makes, as you mentioned, the problem 178 times more egregious than the 10 in mission bay.

Um not only are we likely losing out on revenue, which once again I always point this out.

If we look at what rents were 12 years ago alone just in an apartment, it's it's night and day.

Um the issue stay you know, comparing that now to prime land that the city holds in this specific case to Mission Bay, it's just it makes me sick to my stomach.

Um the auditor states that the city may potentially be conferring an unfair benefit to the current tenant, uh, creating unnecessarily um a necessary uncertainty for both the city and the lessee, and limiting the city's ability to enact and enforce updated contract provisions.

Um this also can lead to perceived favoritism uh from other lessees.

Uh the auditor also states that in reviewing the annual mission bay revenue allocation, uh, the auditor identified 933,834 in deferred revenue to the city for fiscal year 24.

Uh can the auditor speak to this finding and explain uh for the public what deferred revenue is in this case.

Yeah, I can I can say a few things about that.

Right.

So the deferred revenue um is just money that was expected but just not received or recognized in that period.

So yeah, about a little less than a million dollars.

Um it's possible it was on that that credit list that the report talks about where it just hadn't been been matched at the time we did this audit in the scope period we looked at.

So we'll be seeing how that amount changes on the next go-round, but we flagged it for purposes here because that that is a notable amount of money that so is it is it expected that this deferred revenue for fiscal year 24, the 933 million that you mentioned, will that ever be received?

I I think yeah, I wouldn't I wouldn't assume that it won't be received.

Um it could have already been paid and just not recognized in that accounting period because you we got to close the books at some point.

So it could have be that fate, or it may not have been received at all yet.

Maybe the the tenant did not send in the check for that month.

So we we don't know.

We don't know when next time we go around, we'll compare the figure that we receive with that $933,000 figure you just mentioned.

And Councilmember Moreno, if I may, um we have confirmed that that $933,000 it has been received.

Thank you.

Thank you for that.

Um and if I may have my extra three minutes, Pro Tem.

We gave you those, so I'm gonna give you my three minutes as well.

Oh, I've already been okay.

Well, if I may have an thank you uh from my colleagues, if I may have some time.

Um thank you.

I I also share the concern of the oversight committee that expressed that they weren't getting sufficient information on projects and expenditures that were supposed to monitor.

Uh the role is oversight, and the city has a duty to get um them all the relevant information uh that they required to fulfill their duty.

Uh I am glad to see in the audit that in mid-year fiscal year 24, both committees began to get expanded project information, but implementing recommendation 4.1 uh to reach an agreement and mechanisms to specify which uh specific project elements should be provided and the frequency that the department should generate and share the report is critical to implement by the end of the fiscal year.

Um I will end by saying that when the city cannot properly keep track of lease revenues and associated late fees, there's great potential for the wrong amount to be deposited into the mission bay improvement fund.

When that happens, uh, we're potentially running afoul of the uh charter requirement.

That was approved by voters uh to fund the Mission Bay improvement fund at a specific specific and prescribed level.

Um hearing that steps have been taken to resolve this issue is good, um, but I don't think I'm gonna be satisfied until the city auditor can fully confirm this.

Um additionally, even if it is resolved as far as uh refining the process by which we collect and distribute lease revenues, um, I do not think it was proper to restrict the city treasurer's access to the data they need to do the lease revenue audits.

They're specifically tasked to doing, nor was it appropriate to restrict the auditor from seeing that data firsthand for the purpose of performing this audit.

Neither of those things should ever happen again.

Um and additionally, just for the body, um, I will be leaving this body in in December.

Um so with that being um uh known, I have asked that our outside auditor crow keep tabs on this issue for their external audits.

Um you know, I keep on reiterating this as the um chair of the audit committee.

Especially when we're looking down 120 million dollar budget deficit.

So with that, I move that we approve uh staff's recommendation.

Thank you.

Thank you, Councilmember Moreno.

It is an informational item only, so no motion will be required with it.

We'll turn next to Councilmember Vaughn Wolpert.

Thank you very much.

And thank you to our auditor for the presentation and the work on this.

On audit slide five, it says the total adjusted revenues for mission bay lease revenues was approximately 37 million, a seven percent decrease from FY2023.

So why is lease revenue going down emission bay?

That was just one of the indicators that potentially the full revenues weren't recognized because of the backlog.

Um because you would expect it to go up, but TOT went up that year, and they should kind of track together, right?

They're both percentages of the revenue that they received.

So it's just one indicator that perhaps some of this revenue got caught up in the accounting issues and wasn't recognized from mission base.

So that's why you know we noted we couldn't verify that the amount was right that year, and we're gonna check it again during this year's audit.

Okay.

Monica, do you have any comments on that one?

Again, um, as the city auditor mentioned, it was a snapshot in time.

Um we have since reconciled and have received all that 933,000.

So I don't know if that could have been the issue or something else.

I would say um globally, you know, there have been some situations where revenue has been down, but we would expect that you know those would remain at a certain level.

So I think looking at it in this new year will really provide us the data points that we need now that we have reconciled um and we're receiving revenue and getting through those payment issues to see if there's any global trends, but that's about all that I could really mention at this time.

Okay.

Yeah, we are we're in 120 million dollar budget deficit, and we're not tracking why we're not getting lease revenue from one of our most popular parks.

Um can someone from the mayor's office please explain how an audit can be refused.

If the treasurer is being asked, how much money did you bring in for the city?

How can city management say we're not gonna tell you?

I've never heard of this.

Yeah, thank you for that question, Councilmember.

I don't think it was in an effort to hide the ball or um refuse the audit or not participate in that process.

I do think when EDD and formerly Dream consolidated, there was a lot of cleanup work that needed to take place.

And so I think to get your arms around kind of the back end mess that we were trying to get through and the backlog, I think that is the intent of that moratorium.

I don't think it was anything beyond that that has since obviously been lifted.

The commitment is on the table as seen in the management response.

Um that's I think that's the reasoning there.

Okay.

Uh and we're not gonna do that in the future.

Uh no, and then if there is ever a situation where things are not able to be met or delivered, um, there is the council policy process, the notification of the city auditor as well as the audit committee in the rare event that some type of action needs to be taken.

Um, but in the as in the management response, the commitment is there.

Okay, I find it very perplexing and really frustrating that we'd ask how much money is an account and city management's gonna say, well, we're not gonna tell you.

So I mean, I'm glad it has been resolved since, but I I cannot believe that was one of the responses.

Um I do have a question about how we can help at council.

So, Monica, you said there's only 13 property agents employed by the city of San Diego to oversee how many leases?

That is correct.

So we currently have 13 FTEs for our entire lease portfolio, which is over 900.

10 of those are filled.

Can anyone in the Department of Finance tell me if those are general fund positions?

Are those 13 FTEs general fund?

I'm getting a no R.

Why?

I mean, if we're getting lease revenue, isn't that not a money-making fund?

How are these not shifted from the general fund to be paid for by the leases?

Maybe you could hire more property agents to enforce the leases and get more money into the city with a net improvement on the general fund.

Good afternoon, Ben Batalia, Director of Finance.

So, yes, those 13 positions are within the general fund, but the revenue from those leases are also deposited into the general fund as well.

So they do support those positions.

But couldn't we hire more people if it didn't take the burden on the general fund?

We made it into a separate enterprise fund.

I mean, we need more than 13 people to manage 900 properties, which is why we have 178 holdover leases.

I haven't even gotten to my farmers' leases in San Pasqual who have been waiting 15 years to get their leases done.

So I just we obviously need more people to manage our leases, but we're not hiring people under general fund positions right now because of the budget deficit in the general fund.

So have we thought about moving them over into an enterprise funded source so we could have more property agents to bring in more revenue?

So the more majority of these uh leases are general fund leases.

That revenue comes into the general fund.

Um it's significant.

It's like it's tens of millions of dollars.

So if we were to move that all into an enterprise fund with the additional 13 positions plus maybe a few more, we would really just be transferring that revenue back to the general fund to support general fund operations.

Okay, then can I ask why we only have 13 property agents for 900 properties?

I think it's probably not your department.

That's really just yeah, that I mean that's a policy call.

That's a budgetary decision.

Okay.

I I'd love follow-up from the mayor's office on you know we need to bring in money for the city.

And we know Mission Bay is making money, it's a beautiful place to go.

So I just if TOT was up that year, there's absolutely no reason that the city shouldn't be getting lease revenue from our lessees.

Um if the issue is we don't have enough employees to go out and manage our properties, then we should have more employees managing our properties.

Uh okay.

Well, thank you for the information about it.

Hopefully, we can write this ship, and I appreciate the audit.

Thank you.

We'll turn next to council member Foster.

Um thank you for the presentation and clearly we have more work to do, but I just wanted to kind of pick up off of where my colleague was at.

Um and I can appreciate the discussion on the number of FTEs.

I guess what I'm struggling with is I'm not necessarily hearing a plan to resolve these outstanding issues.

And so I would ask the mayor's office.

Do we have a plan on these hundred and seventy-eight holdovers and things that we are doing on how we are going to resolve them?

And and I'm going to ask from a project management perspective.

Meaning, do we have a schedule on identified leases, how you are approaching them, due dates, timelines, to where staff understands what they should be working on, clear directives, what the expectations are and systematically making our way through this backlog.

Thank you for the question, Councilmember Foster.

I'm going to start and then I'll let the mayor's office add anything that they would like to.

As I mentioned earlier, in terms of the plan to resolve the issue, a huge component of that is the upgrade and future RFP for our leasing management software.

So number one, we need to reduce the human error.

Number two, we need to automate workflows.

And then number three, we need to provide visibility into our lease compliance.

So those are all things that we are currently struggling with with a system that is very much out of date.

So those issues will be resolved partially with the upgrade to version 11, as I mentioned, that would be implemented in July of 2026, and then again looking long term for how we can continue to improve efficiencies there with another potential system.

Secondly, in regards um to your question on what is the plan, how are we looking at that?

We do have a work plan that we prioritize based on council and my oral priorities that we are utilizing our existing staff and also looking at ways in which we can utilize any type of assistance through consultants to help make us as efficient as possible.

So sorry, council member.

Can I just uh add some detail?

Um this is the audit of mission bay only for Fiscal 24, but we did do an audit of all city lease management and I think it was 2022, so four years ago, and that was one of the recommendations, have a plan to work down the backlog to prioritize and work it down, and so we're still following up on that.

I can appreciate that, but even if we just simply isolate the discussion we're having here today, I guess for my own understanding, again on looking for a plan.

And it's really troubling if we don't have an overall plan and outline so that we can systematically see which lease is up first, which leases up today, what that date is and for in order for us to update it, it's it's no different than what engineering and capital projects does is they make their way through a project, a step-by-step schedule that shows the activities, what those expectations are, what the due dates are, so that we can bring some accountability and bring some professionalism and some management to systematically work through this process.

Even if we went through and put together an as-needed contract to supplement staff.

What will we hold those contractors to?

How will we convey what those needs are, what the expectations are, what's due on day one, two, three, four, and five.

That's where I'm that's where I'm going with this, and I think that would answer a lot of questions of the council.

Um and also our auditor's office, so we have a clear line of what we are monitoring and what our needs are.

Is there a way we can Yeah, heard, Councilmember, uh, especially as we go through the next few weeks of budget discussion, I think that information and what is coming down the pipeline awareness is especially critical.

So we can have economic development staff um work with city auditor and others and provide you kind of what the next few months look like, opportunities for as needed contracts, timelines for um you know additional software upgrade procurements, um, just so you have a better idea of what's coming down the pipeline and to better inform the budget discussions we're about to have.

Okay.

I appreciate that.

And I think that would be a useful tool so we can make sure we're all marching to the same accord, especially as we are looking at competing priorities when you talk about the mayor's priorities versus the council's priorities, right?

So I think that would be a good useful tool so that we are all clear on where we are headed and how we are going to attack this.

So thank you.

Um that'd conclude my comments.

Thank you.

Next up is Councilmember Ila Rivera.

Thank you, uh, Council President Bro Tem.

Thanks, Andy, you and your team um for the work here.

Um I appreciate the questions for my colleagues, um, Councilmember Von Wolpert and Councilmember uh Foster um really digging in and obviously um Councilmember Moreno's leadership on the audit committee.

I uh I too am frustrated with the the number of of holder releases and I think the questions about what the plan is and why things are the way they are is important.

I also do think that it's important to note that this is a long-standing problem.

Um this is not a defense of um the way that responded uh problem has been responded to since um 2020 or 2021.

Um but I'll I'll I'll draw an analogy to street lights where we were so far behind that even doing work at a regular pace meant that we were unacceptably behind and that staff was underwater in a way where they could never see themselves getting up uh get getting their head above the surface.

Um I I think that some of that was um the failure to invest in a in in our city staff in such a way that uh to equip them.

But I also in in this instance really do think that it's important for us to ask who benefited from the status quo, who benefited from so many leases being held in in holdover status, who meant who benefited from not paying fair market value for incredibly valuable properties.

I think it was the friends of folks who who served on this dais in the past and who served in the mayor's office in the past.

And I want to say that part out loud, because these things did not happen by accident.

And for sure, we need to do better to get to a place where every single property that the city is is owns, the city is being fairly compensated for.

But in a moment where the city is being attacked for mismanagement and we are we're trying to get to a better place, it is important to note who who drove the car into the ditch.

Now, to Councilmember Foster's point, because we're in the hole that we are in, there's there's got to be a plan, not only the whole the the number of of leases and holdover status, but the city's overall budget situation.

And so uh when we're we're making difficult decisions about what should be cut, what should we maintain, and how and who we seek revenue from to fill the gap, um that plan becomes incredibly important.

And so um Code, I know you've answered a number of questions already, but um it's it's one of those things that I think the council has been pretty consistent in and wanting to make sure that there is there is uh um whether it's from enterprise funds or the general fund that the leases are are up to date.

Um there's been a willingness to partner from from labor to see that uh um a willingness to allow some of that work to be contracted out because they recognize the big picture, the importance of making sure that we're getting fair market value for all these leases.

So um this is a a just a I think a really important issue on the on the uh PUD front, we've talked about how every dollar we don't collect in fair market value for those leases that are in holdover status is a dollar that we are not allowed were not able to then reinvest into uh providing uh uh uh subsidies and discounts to seniors and people who can barely pay their water bill.

Uh every dollar that we don't get in for fair market value for our leases that are um that support that flow into the general fund is a dollar that we are not able to um to keep library uh libraries open, parks and rec centers properly funded, um, and even you know have difficult conversations about public safety.

And so this is just an incredibly important issue.

I know that the um it it's pretty narrow as being presented today, but as Andy said, uh this is an issue that was brought to our attention a c uh a few years back, and I think the consistency from the council has been there.

Um and so that plan that Councilman Foster was talking about is incredibly important, and then the action um is incredibly important as well.

Um so again, thank you to my colleagues for asking the questions they did.

Um but also let's not let those folks off the hook who who got us into this situation, and we should think about who benefited and who and who their friends are because I don't think it's a coincidence.

Thank you.

We'll turn next to Councilmember Campbell.

Thank you.

Uh Council President Pro Tem.

Um I just like first to ask uh is my understanding that as of April of 25, in other words, one year ago, this moratorium was lifted.

Is that correct?

Um I think it was technically lifted around that time.

I believe it was around September that the Treasurer got back the system access that they needed, right?

That is correct.

So it was lifted in April, however, it took the treasurer several months to get back over to work on it.

Um also I'd just like to remind everyone that the real estate division was uh a department of it on its own for a while, um, a good one long while under various administrations, but was removed into economic development department only in um twenty twenty-four, I forget which month, uh, but it was not at the beginning of 2024 as I recall.

And uh wanted to just recall that the software being used by real estate division was then, if this is correct, was then five years out of date at that time, and wasn't that one of the reasons they hadn't put the moratorium because they couldn't get the correct numbers out of that old system.

Thank you for the question, Councilmember Campbell.

So, yes, in terms of the software, um, RE portfolio at the time, we knew that there were errors in that system, and that um SAP is a financial system of record, and it was just a challenges with reconciliation and knowing that um what was currently in our e-portfolio was not correct, and that's when we had the collective decision regarding the moratorium and just working to get um information outside of the system to be as efficient with people's time.

So uh there was not a silo uh attempt to keep the auditor away from the money uh answers.

The it was actually a series of department heads who got together and realized that the numbers coming out were not right, and we had to get that straightened out so we could have the proper numbers.

Correct.

And you know, just to clarify during the moratorium, revenues were still being collected, even with the holdover leases that we've discussed, CPI adjustments were still being done.

So there was never at any point where revenue was, you know, just totally stopped.

It was just really the reconciliation of it with um airs as to you know what accounts it went to where we had to go through a a larger process to get that all reconciled.

Thank you.

And I and I appreciate my uh colleagues' questions, many of which were ones I was gonna ask.

Um the 900 leases that we have on city property, uh we evidently have budgeted 13 full-time equivalents to watch over those leases, but only have 10 of those positions filled.

Is that correct?

That is correct.

Now, of those 10 people, they're each responsible for at least 90 leases.

Is that correct?

You know, it depends on each person's portfolio.

We have a range of, you know, associate to property to supervising, so it depends on the classification, um, what workload that they have, but if you were to make a general average, that would be correct.

It sounds like a large load to me.

I uh I would ask Andy, do we have any ideas generally or or you, Monica, in the real estate world, how many portfolios can one real estate expert manage at a time and do an excellent job?

I'm I do not recall for sure.

We may have benchmarked that in our 2022 audit of citywide lease management, looking at all 900 leases.

This is just looking at mission bay only.

So we didn't look at that on this audit.

So I don't have any information on that at this moment for you.

Okay, well, these 900 are the whole city, it's not not just mission bay.

But on the mission bay ones, the 10 that were not being followed up on uh and updated are now currently being dealt with.

Is that correct?

That is correct.

Okay, so pretty soon we will we will see what the outcome is of those uh of that work.

But I I would just like to say that it seems to me the department um which took in the real estate division uh may need more help with its real estate problems, and uh if it does, I would like to hear as a council member how many full-time equivalents more of real estate experts are needed so that the city can uh prioritize and and make a high priority getting as much bang for the buck as we can on our leases that we're putting out.

Um do you have any ideas at this time of how many you would like to have if you had uh a wish and you could make a wish for as many as you need it.

I appreciate the question.

Um also just want to mention looking at the leasing software was really one of our priorities because you know the software will help us do more with less staffing and understanding just you know the the dire needs that we're in with the budget.

Um I don't have a number off the top of my head because we're always looking at ways we can be more efficient with what we do have.

I can confirm though that um industry standards outside of you know city government that you know approximately 90 leases per person is is pretty high.

Okay, it reminds me the code enforcers trying to spec 130 entities each every week, which is uh obviously humanly impossible.

So I think what we need to do as a council is realize that when we need to hire more expertise as a city or contract out for more expertise, we have to spend money to do that.

If we spend money to do that, then we have to cut the budget somewhere else because we're not in a in a uh plush situation in terms of uh how much revenue the city is getting this these past year, two years, and how bad it was under COVID as well, and how we really haven't totally recovered after that.

So uh these are tough decisions that we're going to have to be making in the next several weeks.

And um I hope that we all realize that uh sometimes getting more expertise is actually a savings than a cost, and that sometimes we have to give some things up in order to pay for other things.

And um at any rate, I really appreciate all the work that went into this, and I know Andy, you will soon be coming back to us with the with the correct numbers for 2025 as well as for 2026 that fiscal year will be over July 1st, 2026.

So I I appreciate that.

I appreciate all your work and oversight.

It's so important that we have these audits, and it's so important that the public realize that uh the city is in financial straights, and we cannot do everything for everybody that they want without paying.

And so these are tough decisions that have to be made, and we need to have the public's help in this and understanding in this.

So thank you so much for uh everyone's comments and questions, and and thank you for all your hard work.

And thank you, uh Chair Pro Tem.

Thank you, Councilmember Campbell.

Um I think that concludes the speakers from my colleagues.

So uh I'll close it by noting that my colleagues too asked many of the questions that I think I would have, and I appreciate um their directness in trying to get information um about where we stand.

Uh I certainly agree with them all about not just getting our processes correct.

I think this is why the Office of the City Auditor plays such an important role uh for us here at the city, because you're you're helping to unpeel layers of what we may not be looking at from a day-to-day process given the amount of workload that a department may have.

Um and I think uh thank you, Councilmember Campbell, for just simply pointing out how tremendous that workload is.

And so I think for us, this is an opportunity to understand where we've lost out as a city on potential revenue.

Uh and beyond just the revenue as a dollar figure, um, I also think of the fact that our our lessees are not all just commercial businesses or institutions that are running different facilities.

Um Monica, maybe a better question for you or whoever knows the answer, but of the 31 leases that we have in Mission Bay, I assume at least a number of those are nonprofit organizations that are operating facilities that are serving the public uh that the city would otherwise not be able to do.

Do we have a sense of what that looks like?

I don't have the list in front of me, but it would be accurate that there would be a combination of nonprofit and for profit.

And uh I'm gonna assume that some of those are also in holdover status.

And so I think when I uh when we point out that the holdovers are not just impacting our uh opportunities to adjust uh leases to match up, um, that there are also organizations, uh entities that are operating facilities where the holderover status means that they're not putting anything into those facilities.

Uh and that is frankly at the end of the day, a lost opportunity for the public.

Uh if any of them have been in long holdover status, um typically with each of these lease updates, this council has seen them as an opportunity for the city to also require capital investment in some of these facilities that would again serve the public.

They uh longer term sort of agreements with organizations allow them to execute um financial agreements that would allow them to make capital improvements of uh or collect philanthropic dollars.

That is an impact that may not be a direct fiscal impact of the city, but actually has a direct uh correlation to what the public benefits from.

And so to me, I see this not just the discussion of how can the city gain more revenue, it's also um thinking about how do we adequately serve the public with the resources that we've got, knowing that the land um uh and and the organizations that are running programs from that um also have an impact on that front.

So that is only a thing I would add to the discussion that we've had and um look forward to perhaps some further discussions on how we evaluate leases across um the city.

So I think that concludes our speakers for um this item.

Again, it was an informational item, so no motion was uh necessary.

Uh with that we'll turn clerk to item 201.

Item 201 is the 2025 annual report on internal financial control.

If you'd like to speak on this item, please be sure to submit your speaker slip.

This is also an informational item.

You can submit your speaker slip by submitting it to the clear box at the front of the room, or if you are participating remotely, now it's the time to raise your hand by pressing star nine or the raise your hand icon.

Thank you, Council President Petam.

Thank you.

We'll turn it over to the team once you're ready.

If you'll introduce yourselves for the record and let us know how much time you'll need.

Good afternoon, Council President Pro Tem Lee and Council members.

I'm Ben Vitalia, Director of Finance.

With me today is Jeff Peel, Chief Accountant in the Department of Finance.

Today we're here to present the city's annual report on internal financial controls for calendar year 2025.

And today we'll need about 10 minutes.

This annual report is issued pursuant to the city's municipal code, which was amended by the city council in 2004.

It requires a high standard of quality in and efficacy of the city's financial reporting and disclosure practices.

The municipal code requires that management perform an annual evaluation of the city's internal financial controls, submit a written annual report to the audit committee and the city council, and submit a certification by city management regarding the design, maintenance, and effectiveness of the city's internal financial controls.

I'll now turn it over to Jeff to discuss the highlights of the report.

The focus of this report is to provide an overview of management's approach to developing and maintaining a strong and effective system of internal controls over financial reporting, and to highlight some of the accomplishments of the past year that support those objectives.

The objectives of the financial reporting are to produce financial information that is reliable, relevant, and timely.

Management's ability to meet these objectives depends in part on the design and effectiveness of the processes, policies and procedures, and safeguards it has in place to reduce or mitigate risks over financial reporting.

Internal controls are important because without such controls, it would be challenging to prepare reliable financial reports that utilize that are utilized by management, investors, rating agencies, and other interested parties.

The city's internal control program is based on the best practices established by COSO.

COSO is the committee of sponsoring organizations of the Treadway Commission.

COSO has developed a conceptual framework to guide businesses and government entities in areas of risk management, internal controls, and fraud deterrence.

The framework includes five interrelated components: control environment, risk assessment, control activities, information and communication, and monitoring activities.

Within each of the components, another layer of 17 principles helps guide as well.

I will describe each one of the components briefly.

Control environment is the organizational attitude toward internal controls.

It starts with the tone at the top.

Management creates an environment where everyone in the organization believes internal controls are important and each person has a role.

Secondly, is risk assessment, which is how management identifies, assesses, evaluates, and manages the amount of risk.

It is always important to note that risk can never be completely eliminated.

Thirdly, is control activities.

These are the policies and procedures that help ensure management's objectives are carried out and the necessary actions are taken to address risks.

This includes segregation of duties, reviews, and approvals within the processes.

The fourth component is information and communication.

This is the distribution of information needed to perform control activities and to understand internal control responsibilities throughout the organization.

And the last component is monitoring activities, which is the evaluation of each of the other four components to ensure that they are functioning effectively and organizational objectives are being met.

The Department of Finance used the management assessment template to help assess the effectiveness of the city's system of internal financial controls as it relates to the five components and 17 principles of the COSO framework.

This tool helps management analyze and provide the structure of this report.

The assessment can be found in attachment one.

I want to highlight a few highlights from the from the report.

First, the city received a clean audit opinion for the fiscal year 2025 annual comprehensive financial report with no significant deficiencies and no material weaknesses in internal controls.

Next, the city received a certificate of achievement for excellence in financial reporting from the Government Finance Officers Association, GFOA.

This is the 11th consecutive year the city has received this award.

The city also received the budget presentation award from GFOA for the FY25 adopted budget and the budget excellence award from the California Society of Municipal Finance Officers, CSFMO, for the FY24-25 capital and operating budgets.

In last year's internal financial controls report, a risk was identified with the revenue compliance program.

As you recall, the program identified opportunities for enhanced internal controls over economic development departments real estate divisions invoicing and payment processing, as well as the lease audit management.

We wanted to provide a brief update on the addressing that risk.

The moratorium, mutually agreed upon by economic development and the city treasurer for lease audits concluded in April of 2025.

The revenue compliance has since returned resumed auditing of leases, which has now allowed uh city treasurer to work in tandem with the economic development department to maintain strong internal controls and ensure that there are that any potential risk are identified and mitigated.

The economic development department has also formalized internal processes and significant processes have been made to address the backlog.

The department has continued to make improvements to ensure revenue is accurately captured and reported in compliance with the current city policy and documented internal processes.

The economic development department is also upgrading its aging software system.

The technology enhancements are intended to reduce human errors, automate workflows, and provide visibility into lease compliance.

We also wanted to provide a brief update on a couple of outstanding audit items related to the human capital management.

One is the uncompetitive compensation, which is being resolved with the total compensation strategy.

The other is improving the employee performance process, which is also being addressed with a series of implementations focused on trends and completion rates.

The human resources department and personnel department are working with the city auditor to close these recommendations.

Based on our evaluation, we have concluded that the internal financial controls are effective.

That concludes our presentation, and we are happy to answer any questions.

Thank you.

Do we have any public comment?

We have no public comment here in Council Chambers.

We have several people with their hands raised.

Starting with Catherine Rhodes, you have four people.

If you can please unmute, I'm sorry, the five-minute timer.

Wonderful.

Um, first, um, you know, everything you have here on your five components of internal controls, they weren't done for the the Mission Bay um parks, the item 200 that you just had.

Um, you know, the risk assessment of of knowing, you know, which leases are not outstanding.

I mean, every single one of these components of your um uh of your, you know, internal financial controls wasn't being met.

So, you know, uh um so the mayor's basically saying we're doing everything great.

Um they're not.

The city council um is it it's not a strong city council.

You guys really do need to put forward um can lease ballot proposition so that we can have a strong city council to counter the strong mayor right now, because he's doing everything he just wants.

Um, and then he's coming to you in this report here, telling you everything's fine, don't worry about it.

We've got your back.

They don't have your back.

Um, they don't have the the the public's back.

Um, you know, how about the internal controls over um the the budget coming up?

Um, you know, there was a union tribune article today that says that um you know there's I forgot a 400 and something percent increase in the amount of middle managers that came about.

And all these middle managers started coming about in um in 2013 when Todd Gloria was the I mayor, and he wanted to get around the five-year pensionable pay freeze.

And the way to get around that is to make people be non-union members and um become middle managers, and then their pay sometimes doubled, sometimes tripled.

Um, I don't see you have internal controls.

And then, of course, I always have my big problem with the um with the fund balances.

You don't have all the fund balances.

Is the original, if you can please unmute after that will be 8700.

I mean, obviously, I don't you you guys have an item prior to this that shows that this is not working, as Catherine was pointing out, and it's like I don't understand how you could be getting awards for this when just the item before is showing that for years, nearly a decade, there has been issues that this internal controls didn't catch, didn't do anything about.

I mean, and it constantly there are issues showing the mismanagement, fraud waste and abuse that is taking place in the city.

So for you guys to sit here and give a presentation like this as though, you know, this is working really well.

Obviously, it is not from the prior item.

I don't know if you guys don't think about those things or if you're kind of just like throwing it in our face to be like, oh, yeah, everything is fine, just don't pay attention to the prior item that we had in question, how the internal controls were working there and why they didn't stop these things for years.

Like it's for years, this has been going on.

And for years you guys have been in debt and mismanaging the money.

So it's like weird that you can see here and bring forward an item and act like your internal controls are working really well.

Is it are they working well to hide that stuff?

Uh because if that's the case, then sure, yeah, they're working extremely well because they're making sure that you know business as usual goes on with the you know intentional willful negligence and mismanagement of the people's money who work very, very hard.

So it is a slap in the face to sit here and tout that everything is going well when you just prove prior to this that it wasn't.

And so I think you need to rethink the way that you're presenting this item and not claim that it works really well and you know, be all excited because you're getting awards because the people you're probably getting awards from are people that are also hiding things and just wanting to make it seem like things are our are you know hunky-dory when in fact they aren't.

But everything is inverted, and so we get an inversion inverted version of the concluded next is 8700.

After that, we'll be Blair Beekman.

8700, star six to unmute.

Uh Joy Sanyata, BD3 from the staff report.

Rather, the controls are intended to mitigate the risks of financial reporting errors to a level that is acceptable based on conditions of materiality, end of quote.

I studied materiality in this context, and believe me, I was not reassured in any way.

Also, expenditures appeared to be in compliance.

Look up the word appeared in this context.

I was not reassured.

I am leaning on this in this way, that risk is more discretionary and subjective.

And I'm sorry to have to say that because I love our department of finance.

They know that, and the people that are in there, they're great people, but something's wrong here.

Do you see what is calling to us?

It's a red flag of opportunity.

Let us accept what happens.

Let us look at it though, with an eagle's eye.

Let us seize the opportunity to change to grow and to become a better city for all.

We're not there yet, but let's try to do it together.

Look to all.

Thank you.

Next is Blair Beekman.

If you can please unmute the five-minute timer also concluded there were four speakers in the queue.

No additional speakers will be taken.

Blair Beekman, after that is Kathleen Lippett.

Hi, thank you.

Uh Blair Beekman.

Thanks for this item.

Thanks for the public comment on this item.

Um, I feel uh similar.

Um really nice work on the previous item.

I think everyone is involved on the previous item, and I think it relates to what uh you're talking about overall for this item, uh overall uh accounting and auditing issues uh for our city concerns.

So um uh a good history was presented on the previous problems and what we need to do to address this is issues that stem far back before Mayor Gloria.

Um we I good luck that we really can be addressing the previous item and how it relates to this item.

And I think we really can do it as a city.

These are the one of the projects that we work as a community at this time.

Uh so I hope we don't get caught up in uh, you know, uh people get lost in the process, and we really develop something really good with this.

Uh, everyone offered good ideas.

Good luck with that.

Um for this uh type of thing, uh you know, I think we still have to acknowledge that we made mistakes in 2024.

I mean, why did that happen?

At least we're holding ourselves accountable now.

But what did we do wrong in 2024?

And um, as much as I think the mayor's office and had a part in in bringing this up to accountability at this time, I think it suggests the overall ideas that uh, you know, council has been asking how do we create a better set of uh governance at this time.

There's something lacking in our governance policies that the strong mayor position is is is lacks something in in creating a better governance.

I really hope the strong mayor position can learn to take suggestions from our current city council on what can be better organizational practices and better governance practices, and and learn to be flexible in that thinking.

And I hope uh that can develop our future of a county.

Kathleen Lippett, if you can please unmute.

After that is Judy String.

Kathleen, I can unmute for you.

Yes, it takes a minute to find the unmute button that thank you.

Uh my name is Kathleen Lippett, and good afternoon.

The public is really served so well by individuals such as Catherine Rhodes and Audra for their candor.

I am also confused as to why the city receives so many accolades for audits when they are clearly in deficit, when they clearly have sent it there, they are doing f fiscally irresponsible things like spending out all of their reserves, finding everywhere to look, under turn overturning every rock to find taxpayer money, not taking the money out of the city budgets.

San Diego has the worst fiscal health of any city in the county.

That's hardly something to brag about.

And they while serving in the California Senate, one of the senators decided to prepare a fiscal ranking of the cities.

When cities are delinquent and paying real property tax, I'm sorry, when taxpayers are delinquent and paying real property tax on their homes, even one day.

The county treasurer taxes them a 10% penalty of the amount that they're due.

So why does Sacramento allow cities to be so complacent in their fiscal reporting responsibilities?

Having due dates and penalties should at least be a two-way street.

Also, the city is not served by one party or the other having a total say without having alternative opinions because clearly you all need to get out of your echo chambers and listen to alternative opinions, which typically prove to have some merit.

The last thing is strong public employee unions tend to influence the outcome of who is elected to the city councils.

And when they control who becomes their bosses, they tend to get a little greedy.

Good afternoon, San Diego City Council.

I just have kind of an a comment or an observation that I've been making because I think all everyone on City Council has some of the same concerns about receiving the revenue that we need and what are the internal financial controls that could make that happen.

But I noticed on the last item that my own city council person, Joe Locava, was missing.

And we were talking about Mission Bay.

Do you know in your city council district which are the city least public properties?

Do you know what's been going on and have those leases been negotiated recently?

Do you know what sort of loss of funding has happened because of those leases not being negotiated?

Are you aware that they might be presenting the vision, the optic, if you will, of preferential treatment?

Because perhaps that's the problem is that you all don't have a good handle on who it is within your city council district that holds leases of public property.

And we in the public, of course, very difficult for us to understand who in our neighborhoods might uh the what public land in our neighborhoods might be under lease, and so hard for us to know whether we're receiving the funding we need.

So maybe the buck doesn't stop at the mayor's office.

Maybe the buck doesn't stop with middle management, maybe it stops at the city council, or at least it's something for us all to consider.

And this is our opportunity that this report is providing us to take a look at our our own 19 our own nine city council districts and ask ourselves if we've got a good handle on it.

Thank you.

Thank you.

Next, and our final speaker is Tony, if you can please unmute.

Yes, hello, City Council.

Good afternoon.

Um I just wanted to speak and comment on these this audit issue that's going on with these parks right now, um, these issues that we're having being under budget on the whole, about 120 million dollars.

And I wanted to speak to an issue that uh Bob Kaye has been coming to city council for for the last 20 years.

Um he's been talking about how in Joe Lakava's district, um, the Hoya glider port park um is getting away with paying uh I think it's only five thousand or ten thousand dollars a year is what their lease is.

Um, and they're making millions of dollars off of a public park, um, and they're paying a super tiny minimal lease that they've been locked into for the last 20 years, and it's really depressing.

I go to city council chambers, and Bob tells me that he's been raising this issue for over 20 years, and I was there in person when he asked y'all to play the video of him speaking before this city council and bringing this issue to the city council's attention back then.

This was back in 2006, and he played this video in front of y'all, and still I'm not seeing a single one of you uh taking this issue by the reins and investigating this issue.

I it's really depressing as somebody that tries to weigh in and tries to make a difference in city council, understanding that y'all uh are supposedly listening to our inputs and our opinions, and you're supposed to take what we say seriously, and then I see somebody who's been working on the same issue of corruption uh of the city not getting paid its its due fair share for a park that it publicly owns, uh, and he's been raising the alarm on this issue for over 20 years, and it still hasn't been addressed.

It's like if this issue doesn't get addressed, how many other issues you know get swept under the rug that people have to continue fighting for and coming to city council meetings for?

It's not an easy thing to do to clock out of work, to go to city council in person.

I've gotten four parking tickets in the last five months from my involvement in these city council meetings, and still these issues aren't being addressed.

Your time has concluded, and that does conclude public comment on item two oh one.

Thank you, Council President Pro Temperal.

Thank you.

Uh thank you for the presentation and uh see no other comments.

Uh well I'll turn first to Councilmember Ili Rivera.

Uh thank you, uh Council President Pro Tem.

I I just um I want to say thank you for um the report here.

Um the the public comment here, I I was very predictable.

Um I spoke with my team about this last week when we were looking going through the agenda.

And completely understand why in a moment like this one where we're going through the budget challenges we are, that this conversation can feel detached from reality.

But it's also it's a technical response to a technical question.

And I I just want to kind of uh ask for you all to reiterate that the report out that we heard is not a declaration that everything is being done perfectly or that every decision that's been made has been ideal, but instead a answer to the question as to whether or not specific internal financial controls are in place and best practices are being adhered to.

Is that correct?

That is that is correct, Council uh member Rivera.

The the the intent of the report is to basically say, do we have a a strong enough system control to be able to produce financial statements that are reliable that that investors can look at and are properly following the accounting standards and the rules of accounting that the auditor goes through and verifies that that's the threshold.

Of course, there's materiality, it's never perfection, it will never be the goal because to get a perfect financial statements would be extremely expensive.

But it is it materially accurate enough.

Uh do we have a strong system of internal controls?

That that's really the question that we're answering.

Okay.

I I I appreciate that.

And I'm glad that we're doing things um in such a way that ensures that investors see us in in the way that you just mentioned and that we're doing the things that we need to be that need to be done on that front.

And at the same time, I just think it's important to acknowledge that just because we're saying that we're we are checking those boxes, and I don't mean that um in a you know flippant way.

Um like but again in a technical way, just because we're checking checking those boxes does not mean that we think that everything's perfect and we don't need to do things differently when it comes to the city's finances.

Um we have different opinions as to the best way to do that.

Um but again I want to say thank you, and then I I I just wanted to kind of acknowledge the the disconnect here um between having a conversation where we say we're we're doing things right, and then two days from now we're gonna be presented with a budget that's gonna be telling us all the ways that things aren't okay.

Um and and while that can feel incongruent in this instance, um it's just because we're answering kind of two different questions.

Uh thank you, Council President Pro Tem.

Thank you.

Next up is Councilmember Von Wilbur.

Um thank you, and thank you, uh Councilman Ili Rivera, because I was gonna make the same comment about how we saw the earlier item that we're not collecting revenue from leases that we should be, and now we're going to say we're doing a good job with financial controls, but it's I understand it's answering a very technical question.

I I mean I've also been very upset by the lack of um city staff's ability to conform to budgeted contracting items and allowing contracts to expire, and we're still spending money that's not been authorized by the city council.

And I know we had an audit about it.

We're gonna have an audit of the HERC rental contract, which is one of the ones that spiraled out of control.

I am glad that we do have a new improvements to AREBA and contracting processes.

Um it's still it's it's really hard for us to get our heads around this when one of the big j biggest budget items we're going to see next week or in a few days is you know, external contracts or outside contracts.

It's hundreds of millions of dollars, and it's very hard for us to dig into it.

And now that I'm seeing so many contracts come through that are overdue that are past due, and we're just expected to rubber stamp them.

It has made me very frustrated.

And so uh something on on the PowerPoint slide that said highlights of CY 2025, revenue compliance program, process improvements and SIP system upgrades.

Can you tell me more about what those are?

I think it's slide seven in the PowerPoint.

I I think that that relates to the uh the economic development, uh the leases, and uh we can have uh we could have a uh uh liaison from economic development and speak to that.

Thank you for the question, Councilmember Von Wolper.

This is the lease system upgrade that I spoke to on the previous item.

So we're currently in version six, we're upgrading now to version eleven, and then we're in the process of doing RFP for a future system.

Okay.

And can I ask what is the plan going forward to upgrade you know, city software?

I know that is a budget issue.

Um but when I was first elected, the water department wasn't billing residents for water, and I went over to PUD and was given a presentation of the system they had to go through, the software system, and it honestly looked similar to what I use at the Oregon Trail as a video game in middle school.

And finally, it has been upgraded, and they hired new staff who understands how to do billing, and it's working, and we're getting more revenue into the city.

But why is it that our you know economic development department is still using software from if it's 11, that was six, it could be you know 10, 15 years ago.

You know, what is our internal processes to make sure we're updating software?

I know it comes at a cost, but do we have any kind of management plan for this for software for our city?

We we do, councilmember, and there is a IT strategic plan, especially when you have legacy systems like the one that we're referring to, where you can actually cause vulnerabilities in terms of cybersecurity and things like that.

But absolutely, this is an area that I know uh uh the Christina Bibler had um flagged for us uh a few years back, and we're moving forward with the RFP for this particular uh software.

And and maybe just to redirect a little bit the the discussion here with this particular report is it the the scope is very narrow.

It's it's about any time that we are producing financial information for external uh use, for example, financial statements, official statements when we issue our bonds.

So this is really uh something that was added to the municipal code after all the issues that we saw in the early 2000s to make sure that if there was an issue in in terms of internal controls for financial reporting, that we would be presenting that to the city council.

So we recognize that there are issues, operational issues, and other financial problems throughout the city, but the the scope, at least for this particular report is very is very narrow.

Yeah, it's that we are accurately reporting the f the fiscal condition of the city to the investors.

But I I and I understand that that's why this is accurate, this statement.

But it's it is a sad state of affairs that we do have to report some of these things to the city that they're not running so well.

So but I do understand the difference.

And and thank you for you know your work.

Um you guys are always briefing us early.

I appreciate you know, Rolando, since you've taken over, you've been completely accessible and transparent.

I know the employee groups are enjoying working with with you as well.

So I know that you know the Department of Finance is not responsible for all the operational needs of the city, and often you have to try and answer questions about them when your job is just to properly make sure they're funded.

So I just I appreciate what you do and thank you for continuing to work with us.

Thank you.

Seeing no other speakers, that'll conclude this item.

Uh, thank you for the presentation.

Once again, as a reminder, that was an informational item only, so no motion was required.

We will now take up non-agenda public comment.

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

Clerk, will you please proceed with public comment?

Thank you, Council President Pro Tem.

We do have a couple speakers here in Council Chambers parole 2.7.

Non agenda public comment is an opportunity for members of the public to comment on items that are not on the agenda but within the subject matter jurisdiction of the city council.

Each speaker will have two minutes.

Please note there are eight or more speakers on a single topic.

The maximum time for the topic will be 16 minutes.

If you're in chambers, please be sure to submit your speaker slip now.

Or if you are joining us virtually, press the raise your hand icon or star nine.

If I can have um Jubali Gutierrez, please come up to the microphone.

After that, Al Del Mastro and Dylan Benson.

Please come up to the first row.

If I've already called your name, you should come up to the first row now.

Good afternoon.

My name is Jubilee Gutierrez.

Thank you, Council President and Council members.

I am a resident of this community.

I'm here today since we're seeing in our downtown area is not just a policy issue, it's a human one.

Every day, more individuals are living without stable shelter.

We see people sleeping on sidewalks and doorways and in places never meant for rest or safety.

This is not because they chose to live this way, or it's just a factor that's pushed them.

Many factors have pushed them to live this way.

But also there's not enough accessible and adequate shelter options available to them.

Long wait lists and why long wait lists and denied requests remain common, leaving many individuals without immediate help, despite a population of about 1.4 million residents.

The 2025 point in time count reported 9,905 people experiencing homelessness countywide, including 5,714 unsheltered, 4,191 in shelters.

According to the University of San Diego, which conducted a research as of May of 2025, nearly nine 94% of unhoused individuals seeking shelter were denied, primarily due to lack of space.

This crisis also reaches diverse groups such as seniors, families struggling to make ends meets, and students who cannot find housing they can afford.

The people we see experiencing homelessness are not statistics.

They are individuals with families, heart emotions, and human needs, which is why I'm speaking about their dignity as well.

The contrast is especially striking in downtown San Diego.

Yet alongside this prosperity is visible human suffering when homelessness becomes just another part of the scenery.

Indifference takes root, which is why I'm asking, and I'm also bringing awareness to this issue.

Demands both urgent action and long-term solutions grounded in empathy.

I urge the council to expand shelter shelter capacity in the downtown area.

Invest in transitional housing and partner with local organizations.

Thank you.

Al Del Mastro.

Hi, my name is Al Del Mastro.

I'm an ex-blue-collar worker.

I'm a disabled veteran.

I'm a senior, and yes, I'm a small mom and pop landlord.

I've been a landlord for over 20 years.

Uh I've destroyed my body through my hard work and my service to this country and the community.

I live in a five plex in Claremont.

I never bought a house because I wanted to be a responsible senior.

This new law that the city council is putting on the ballot in June is extremely misleading.

I guess even a judge has made them reword it as from a vacation home to an empty home law because how misleading it was.

The true ugliness for me is this law.

Would it um pardon me?

If it takes me longer to renovate an apartment than six months or 183 days, I'm gonna be fined $8,000 to $10,000.

The deal is 90% of all mom and pop landlords are over the age of 55 to 80.

So if one of us gets cancer, our wife dies, anything like that happens, we're gonna get a fine on top of it.

This is about as ugly a law that you guys are I know you guys ain't that bad a people.

That what anybody would put forth.

I think since the judge even changed about it.

The first time when I saw this being presented was it was for millionaires who own houses and mansions in Lahoya.

But it'll affect anybody that has an open property, no matter unless I go into a nursing home.

If you read the details, if I don't go into an emergency home and I have a heart attack or my spouse dies, I'm getting an eight or ten thousand dollar fine on top of it.

And margins are real slim with us now.

We still I s my wife and I both still have parents who are alive, and uh we still take care of them.

And so this is uh this is a little cruel.

I don't know if we should be doing this to handicapped people, disabled voter resistance.

I concludes your time.

Thank you.

Dylan Benson.

Hello.

Uh, you can excuse the customs and courtesies.

Uh just talking about some things today.

Um, Councilmember El Overa, you were super quick to talk about how investors view us.

I think now's the wrong time to like look at those kind of things, especially when there's huge margins uh of just missing money.

And then when we're looking at like you guys are already getting paid more than congressmen, congresswomen, all of you.

Um Todd Gloria is getting you are actually, and and Miss Campbell, when the uh uh people were having the comments on agendas, you got up and started clipping your toenails behind.

You you haven't cared about what anyone has said today.

I've watched you.

Um we're talking about uh Councilmember Campbell, you also said sometimes we need to give things up to get other things done.

Is that including your personal salary, which once again is more than the congressmen and women?

Probably not.

So you guys will be hearing from me.

We're talking about these money problems.

Um it's long standing.

You guys have been in this money problem for what two decades now.

I'm not a big money guy, but I'll be coming back with more facts uh next time, and they'll be customs and courtesies next time.

But I just want to appreciate the time for letting me speak today.

So thank you.

Thank you.

I started the five-minute timer going to those participating remotely.

We currently have nine people in the queue with their hands raised, starting with the original.

If you can please unmute.

I love when people come in and uh, you know, really hold you guys accountable because there's more accolades a lot of times, and people are misled thinking that what you guys are doing is actually beneficial to their life.

But you know what Dylan was saying, it's like you guys get paid exorbitant amounts of money, and you're never willing to cut back on that, but you're willing to make cuts to the people.

And it's sad because there's so much fraud, waste, and abuse.

And and Sean, as you guys are sitting here trying to explain away those last two items, I don't think it's really fair because it's like if your internal controls were working, then they would be working and this kind of stuff wouldn't be taking place.

But it's like, I mean, people will come in as you know, what has been stated before about you know, from the glider port and talking about that lease for 20 years.

So imagine how much money is actually being lost due to the you know quid pro quote that's going on here, and these people are you know benefiting from making you know millions of dollars off of that site while the city isn't.

So who's getting the kickbacks for that?

Because it makes you wonder like when things aren't being addressed when it's decades-long issues, and you guys have this all the time, where it's like people will come in and tell you certain really egregious things that are taking place that you guys should be mitigating.

I mean, it's even like 10 City, and we know that you know, if Steven Whitburn is friends with Teresa Smith, then obviously you guys aren't gonna do anything about making sure that the people at 10 City are actually, you know, being provided the services that they're supposed to, that they're getting into housing.

So it's like you guys sit here and you virtue signal and you gaslight the people as if we can't see through what you're doing.

And it's like, and you literally sit up there and act like everything is fine when time and time again it does all you have to do is come to a meeting and you can see that things are and that you're mismanaging money and that there's missing money, or that money's going from here to there, and this project can't be completed because of this, or we're not gonna shut this down because I'm getting kickbacks from it.

It's very transparent what you're going you're doing, and that's the only thing you're transparent about.

Everything else you're not.

Your time has concluded, Kaya.

If you can please unmute.

Hello.

Yes, we can hear me.

Okay, hi.

Um actually my name is Sue Taylor.

This is my daughter's computer.

Um, I just wanted to talk about some general information about leases.

Um I did listen to the item on the performance audit.

And I wanted you to know that as of today, I uh background, I worked in the real estate department for 41 years and retired a couple years ago.

As of today, there's 825 total leases of those, 164 are at the airports.

And of those, a good portion of those, like over 100 are probably airport tie-down agreements, airplane tie-down agreements, which don't require a whole lot of work.

Um that leaves there's about 60 that are where the city is the lesse.

So that would be like your office space buildings, or it could even be the bridge kiosks and on over the 15, things like that.

Um so that leaves about 600 um agreements that would have to be handled by those 13 people.

Um then also regarding holdovers in general.

There's 180 holdovers.

Um probably the most egregious are the samples wall, where there's 22 of those.

And the reason why I say that is because um, you know, a couple of years ago there was a program coordinator added just to work on those leases, but that has not been done.

Um, but a lot of the other holdovers like Mission Bay, yeah, there's 11.

Two of those went out to RFP, those are the big ones.

Six of them are storage, so they're like canoe storage for the different rowing clubs, which bring in 200 to 300 a month.

So those are permits, like three-year permits to get renewed and not major leases.

Um two of them are telecommunication sites, which do get yearly increases, um, even though they're on holdover.

And one of them is the Boy Scouts on Fiesta Island.

So, whatever you guys want to do with that.

But I just wanted to say that sometimes the holdovers are non-revenue and there's no no value there.

But the high value ones are the ones that should be worked on.

Thank you.

Thank you.

Next is Peggy Walker, if you can please unmute.

Thank you.

Good afternoon.

I'm a public health professional, and if young people are our priority, and they should be, I ask you to look at the science and data to consider real consequences of adding more marijuana businesses.

A C program preferring more high potency products will only increase adverse health and economic outcomes.

Economic downsides include increased need for health care treatment and access, especially for young people.

You know, there's already a problem when 40% of San Diego County's marijuana related ER admissions are aged 12 to 17, and those 15 to 24 have the highest number of cannabis-related ER visits of all ages.

You know, there's a problem when Rady's Children's Hospital reports 600 child admissions for cannabis-related treatment last year, and the county predicts a 129% increase in youth substance treatment needs in the future.

Studies show teens living within 10 minutes of dispensaries, those on Medicaid and those from lower income neighborhoods are more likely to use marijuana and have higher psychosis rates.

Ironically, this worsens existing mental health inequities right in seats target targeted communities.

Remember, the pad industry's business model is to keep existing users dependent and to hook future generations, and no reparation or tax revenue justifies the resulting child poisonings, addiction, cannabis, hypermesis, psychosis, drops out, suicide, DUI injuries, or death.

Now, one young person's future is worth that trade-off.

We don't need more marijuana businesses.

We need drug-free kids.

Thank you for listening.

Thank you, Blair Beekman.

If you can please unmute.

Thank you.

Uh Blair Beekman.

Thanks for the meeting today.

Um it was an important meeting on ideas of accountability.

Um we need it.

I like accountability ideas.

Good luck what we could be doing.

I wish council person was here today.

Um good luck how he can be returning uh to upcoming city council meetings.

Um I wanted to comment uh thank you from public comment today.

Uh I I'm also interested in the idea that we continue dialogue on uh not just council, but the mayor can take uh a slight reduction in pay and how that can be good faith efforts and uh ideas to really address the budget in the future.

Good luck in really considering that issue.

Uh I think it's worth considering.

Um, I also wanted to comment uh at this time, you know.

Uh I'm trying my best to learn how to balance that the fact that we're in a current war in Iran and how that connects to our lives here at the local level.

Do we have to be in deep fear?

Or do we have to be in flight fear?

Or I mean uh I unbelievably we don't seem to have to be in fear.

Things seem to be in check.

Um I think that's really lucky on our end.

Uh um what are we doing?

I hope we can be continuing to address important matters uh from there.

And that, you know, in noting how things are going around the world, we we then can balance best practices and best ideals.

And when we do that stuff here, I keep saying at the local level, openly and clearly, it simply gives everyone around the world uh ideas of better reasoning and peace.

And and so it's working towards our best selves that is how to uh address war and not to continuously hide and be secretive because of war.

Uh, it's an important lesson we're learning, and I hope we practice it well.

And and I hope we practice dialogue instead of harm in the future and trust.

Good luck how we can do that.

Thank you.

Thank you.

Next is Madison.

After that, Francine Maxwell.

Madison, please unmute.

Hi, good afternoon.

Um, I'm a mother of young children, and I'm here today to speak about the public safety risks associated with high THC cannabis and what that means for our roads.

A recent federally funded study highlighted something important.

We still do not have a reliable practical way to measure marijuana impairment at the roadside, like we do with alcohol.

Researchers are now working on a new THC breathalyzer using 3D printed technology, but they do acknowledge it's only a proof of concept and requires significant further validation.

While marijuana use becomes more normalized and accessible, our ability to keep impaired drivers off the road has not kept pace.

The study makes clear that there is a growing need for fast, reliable roadside tools due to the increasing cannabis use, and that the current lack of such tools raises the risk of accidents and fatalities caused by intoxicated drivers.

Even more concerning, federal researchers and agencies have acknowledged that THC levels in the body do not reliably correlate with impairment the way alcohol does.

That means law enforcement is left without clear objective standards, making it much harder to identify and prevent impaired driving in real time.

At the same time, we know THC affects reaction time, motor coordination, and judgment, all which are critical for safe driving.

When you combine increased access to high potency products with limited enforcement tools, you create a real and growing public safety gap.

This is especially relevant as the city considers expanding marijuana storefronts.

More retail access means more use and more inevitably increases the risk of impaired driving on our roads.

I urge you to take a cautious approach and prioritize road safety for this issue.

Thank you.

Thank you, Francine Maxwell, if you can please unmute.

Good afternoon, Francine Maxwell.

Thank you for allowing me to speak.

I'm asking for the city council to reimagine the CPP.

Reimagine you engaging and getting um more involved, especially since for the last five years, so many things have been classified as miscellaneous.

You should have the police department give you an explanation of why they're labeling so much miscellaneous and not telling the CPP when we used to get a spreadsheet of all complaints made to the San Diego police department.

That's what the measure B calls for.

I would also like the city council to have some bold leadership and demand that Joan Dawson be interviewed with you guys in close session and ask why a city attorney is rewriting the policies and procedures for an independent commission.

The CPP is independent.

The city attorney's office is the SDP's attorneys.

We're supposed to have our own attorney, an independent attorney.

Can you guys ask your colleague Marnie when she takes a break from running for Congress when she's going to get us our independent attorney?

We have a new executive director that absolutely needs help.

We need a legal voice on our independent commission.

Where's the help?

City Council, you are in charge of CPP.

Those of you that are running for re-election, those of you that are looking for your next office out of City Council, think about how we're going to attach this to your leg that you did not do what Measure B has called for you to do.

We respect meet and confer.

They can take as long as they want to.

But to have the city attorney butting in to the CPP to have a city council person, chair of public safety, not secure us our own attorney.

You should be ashamed of yourselves.

Our next speaker is Kathleen Leppett, if you can please unmute Kathleen Lippett.

I can unmute for you.

I will need to move on to the next speaker.

I know.

There you are.

Sorry.

I'm trying.

Okay.

Thank you.

Um good afternoon.

The earlier comment on the glider port that is making millions while it enjoys the benefit of profiting by by a sweetheart lease is really troubling.

There are a number of similar issues where either ongoing support, the city's ongoing support of a failed policy or the absence of a policy that really should be in place.

Both are critical to look at.

City policies should be evaluated for their costs versus benefits.

And the city policies that have led to higher city costs in terms of law enforcement, diverted limited resources, emergencies, etc.

Those are where your policies are either absent or they're not working.

The failure to regulate and audit city smoke shops is a good example.

They continue to sell products that have been banned by the state.

These products harm our youth and their futures, as well as undermine the profits of permitted shops that are operating according to city regulations.

The city has allowed alcohol retailers that unfairly draw limited law enforcement resources, resources, overserve customers that lead to customers leaving and getting into crashes, DUIs, or hitting pedestrian injuries or deaths or getting into fights or committing rapes.

The city needs a non-sale conditional use permit to hold them accountable.

And last, please stop with all the euphemisms.

The public is tired of ballot measures, initiatives, et cetera, that say one thing, but when you read the fine print means something totally different.

The Inflation Reduction Act, perfect example.

Drug dealers became caregivers.

Marijuana University.

Hello, Catherine Rhodes.

Um, you know, the 1998 Tory Pine Slider Port sweetheart lease was given to a retired city of San Diego employee who's making so much private money for themselves and paying the city very little in lease revenue.

Um, why don't you have it be a percentage of the lease instead?

Right now it's a gift of public funds.

In fact, there was a 2022 um San Diego County Grand Jury report on the Tory Pine Squad Report lease.

So far, nothing has happened.

You know, it's pathetic.

So anyway, your new budget comes out next Wednesday.

Why is everybody gonna get um 10% at least in the MEA gonna get 10% raises?

Um, and the management analysts are gonna get like 18.8% raises.

How could they possibly get raises when we have a um structural budget deficit?

Um, plus um since 2023, they already got a 23% raise.

So they've gotten 23% in the last three years.

Now they're gonna get another 10% more.

And remember, in 2013 is when I mayor or inter Mayor Todd Gloria um started using the league legal loophole in the city charter to violate the five-year pensionable pay freeze by creating the middle managers.

At that point, there were 70 mil middle managers.

Now the um another UT report came out in the San Diego County Taxpayer Association came out that um the middle managers um that are non-union workers have exploded by 461% over 15 years.

Um, and then also um during close session last week, you guys didn't re um you didn't report out that you had all these tentative agreements with all the unions.

Um, in fact, you you didn't say you um you you didn't say anything about any tentative agreements.

I don't know why.

I think that um the city attorney should um talk about that.

Um and so I don't see how you could possibly be giving anybody any raise or time has concluded if you're raising your hand after the five-minute timer has concluded already.

So you may take any additional comments, the city clerk at Sandyhood.gov, and those will be distributed.

Becky Rapp, please proceed.

Good afternoon.

My name is I come here today to ask you to please prioritize public health in relation to marijuana consumption.

It's more important than ever before that accurate science based information is presented to this council and to the public you serve.

A recent report from the National Academies of Sciences, our nation's leading scientific advisory board is recommending federal action to address the serious health risks associated with marijuana consumption.

This is a clear warning from the science community that booksea is not in line with serious public health risks.

The report highlights several critical terms.

Hello.

Barbara Gordon, you're our final speaker.

Um, thank you.

Um good afternoon.

Um I am concerned as a public health advocate that nearly every week a new intoxicating mind altering product emerges, often unnoticed until reports surface as people being harmed, and the physical and mental health of our youth is in jeopardy.

Products like intoxicating THC hemp and kratom are dangerous and addictive.

Intoxicating hemp comp compounds like Delta 8, Delta 10, and many others.

The products are available in convenience stores, vape shops, online without any oversight, and in many places without any age restriction.

Potent kratom compounds become especially dangerous when it is concentrated in products like dummies, drinks, powders, capsules, are also sold in smoke shop, gas stations, convenience stores, and online.

These products can be just as harmful as synthetic opiates posing serious danger.

The FDA warns that Kratom products like 7OH is not approved.

It's not lawful and unsafe, with risk including seizures, depression, anxiety, addiction, withdrawals, and overdose like symptoms.

I am urging the city council to treat intoxicating products as a public health issue, not as a product that is in the gray area.

As a as a community, we need to insist that any mind-altering substance that are manufactured, packaging, marketed, should not be allowed to be sold in in the marketplace.

Public safety is the city's primary responsibility.

Thank you for letting me speak.

Thank you.

Becky Rep, I am coming back to you.

I'm not sure if the issue was on my end or not.

Okay, thank you.

I appreciate it.

You had one minute left.

Great.

Thank you.

I was just speaking about the National Academies of Sciences and their recommendations.

And I just wanted to add that here in San Diego, our emergency departments and pediatric specialists are seeing these real impacts.

Youth experiencing psychosis, severe anxiety, and cannabinoid hyperemesis syndrome.

I urge this council to invite physicians from Raydy Children's Hospital and doctors from our local emergency departments to come and speak directly to you.

Let them share what they're seeing firsthand.

Let this council hear directly from the medical community about these products and how they're affecting our youth and our families.

The National Academy's report is clear.

We need better public education, better data, and policies grounded in public health, not just access and revenue.

Thank you.

Thank you.

That does conclude non-agenda public comment for today's meeting.

Thank you.

And with that, we will now adjourn council to the regularly scheduled council meeting on Tuesday, April 14th, 2026 at 10 o'clock a.m.

We adjourned the city.