The meeting will come to order.

Welcome to the May 13, 2026 meeting of the budget and appropriation committee.

I'm Supervisor Connie Chan, Chair of the Committee.

I'm joined by Vice Chair, Supervisor Matt Dorsey and members Supervisor Danny Souter, Supervisor Shaman Walton, and our clerk is Brent Hutt Lipa.

I would like to thank Kalina Mendoza from Essekov TV for broadcasting this meeting.

Mr.

Clerk, do you have any announcements?

Thank you, Madam Chair.

Just a friendly reminder to those in attendance to please silence all cell phones and electronic devices to prevent interruptions to our proceedings.

Should you have any documents to be included as part of the files, they should be submitted to myself, the clerk.

Public comment will be taken on each item on this agenda.

When your item of interest comes up and public comment is called, please line up to speak on the west side of the chamber to your right, my left along those curtains.

And while not required to provide public comment, we do invite you to fill out a comment card and leave them on the trade by the television to your left by the doors if you wish for your name to be accurately recorded for the minutes.

Alternatively, you may submit public comment in writing in either of the following ways.

Email them to myself, the budget and appropriations committee clerk at Br ENT.j SFGO V dot or G.

If you submit public comment via email, it will be forwarded to the supervisors and also included as part of the official file.

You may also send your written comments via U.S.

Postal Service to our office in City Hall at 1.

Dr.

Carleton be good at place.

Room 244, San Francisco, California, 94102.

And thank you, Madam Chair.

Then that concludes my announcements.

Thank you, Mr.

Clerk.

And before we start, we will need to excuse President Rafael Mendelman.

Um like to move to excuse him.

Second by Vice Chair Dorsey and roll call, please.

And on that motion, do we excuse Supervisor Mandelman for attending today's meeting?

Moved by Chair Chan, seconded by Vice Chair Dorsey.

Vice Chair Dorsey.

Dorsey, I.

Member Sauter.

Sauter, aye.

Member Walton.

Aye.

Walton, aye.

Chair Chan.

Aye.

Chan, I.

We have four eyes.

Thank you.

The motion passes.

And um before we start and call the um items today, I would like to limit public comments to one minute.

And with that, uh Mr.

Clerk, please call items one, two, and three together.

Item numbers one through three.

Item one is our hearing to consider the mayor's May proposed budget for the Airport Commission, Board of Appeals, Department of Building Inspection, Planning Department, Child Support Services, Department of the Environment, Law Library, Municipal Transportation Agency, Port, the Public Library, the Public Utilities Commission, Rent Arbitration Board and Retirement System as of May 1st, 2026 for fiscal years 2026 to 2027 and 2027 to 2028.

Item number two is the proposed appropriation ordinance appropriating all estimated receipts and all estimated expenditures of the aforementioned departments, and item number three is the proposed annual salary ordinance, enumerating positions in the same.

Madam Chair.

Thank you.

And I before we start our department presentations, I would like to make just brief remarks, colleagues, and kind of set the tone for today.

It is the beginning of the budget process, and in the even numbers, uh years, we consider um certain department budgets, including our four enterprise agencies, uh, in the month of May.

This give us additional opportunity to review these budgets and city spending, ensure we're equitably and efficiently delivering critical public services.

Earlier this year, the Board of Supervisor unanimously passes a budget process motion that lay out our guiding principles as we evaluate a city budget by prioritizing services for the most vulnerable, including our immigrants, LGBTQ community, seniors and people with disabilities, children and youth, tenants and in-house people, BIPOC and African American communities and working families.

We also lay out the areas of the city budget and process.

We would scrutinize it.

We would be scrutinizing in order to help close our budget deficits, reviewing vacancies across all departments, including the ratio of management positions in to frontline workers, leveraging federal and state funding, reviewing large contract and administrative process, and reducing administrative and non-personnel costs.

Invest in oversight to root out wasteful and wasteful spending and corruption and streamlining capital costs.

Today we start that process review, starting that process by reviewing with uh basing on these principles and priorities.

I look forward to hearing from all departments and from everyone here, including budget stakeholders, and of course, Mayor Lurie's as well as all the partners, city partners.

When with that, uh before we proceed to department presentation, I want to invite Mayor's budget director, Sophia Kittler, up to start us off.

Good afternoon.

Thank you so much, Chair Chan and members of the committee for having us here today and for hearing the May first departments.

Um Mayor Lurry is honored to put forward um the first part of what will be kind of the next two months of budgeting.

Um the May 1st budget covers 13 departments, our four enterprise agencies and nine largely self-funded departments.

Um as Chair Chan noted, this is kind of our historical way of breaking up the true general fund um policy choices from kind of how we think about the mobility and the infrastructure of our city.

Um and so it kind of I think that the May the May 1st budget sometimes gets more overlooked than it should, but I think there's some really interesting stuff that I'm very excited to highlight.

Um first, I I want to really acknowledge and appreciate um the hard work and leadership at the San Francisco Airport.

Um SFO's uh increase like great success in being a tremendous airport has led to an increase in the amount of um in the passenger growth, which as a result gets us more general funds dollars.

So we are super thankful for that rebound for the hard work that they have put into building what is an amazing system at the airport, and kind of leading to the city's recovery overall.

Um DBI's full grant portfolio is funded.

This is something that we have been kind of like we had over the last few years been chipping away at looking for general fund savings.

I think this is something that the board felt spoke very um strongly and loudly about last year, and Mayor Lurry really heard that.

Um and this budget puts forward a full funding of that grant portfolio at the Department of Building Inspection.

Um this budgetly largely this budget largely backfills um proposed revenue losses in the department of the environment at this kind of like critical moment in um in our nation in kind of the the ecosystem, so to speak, of climate change.

This is something that we felt like we really needed to make sure that we were not entirely wiping out as had kind of like it looked like it might be from revenue projections.

Um the MTA, which is kind of has been we've been looking at the fiscal cliff for a very long time.

Um we are now, you know, kind of like putting our best foot forward.

The MTA has had to make very difficult financial choices to come to a balanced budget.

They have made real cuts from position eliminations, contract renegotiations, efficiency improvements.

Um ridership is now back to 99% of pre-pandemic levels.

Um, and this fiscal discipline matches the ridership recovery in a somewhat unconventional move.

We are assuming that in year two of this budget that our um our local and regional measures do pass at the ballot.

And if that does not come to pass, um we will have some devastating financial choices to make.

Um so I want to recognize that as a very unusual thing that we have done in this budget is is we are assuming that that revenue passes.

Um, but again, I want to really uplift the work that Director Kirschbaum and their team have done to kind of to look at the fiscal discipline necessary without the trade-offs of of um crippling of a system that really again will drive our financial recovery.

Um the public utilities commission is putting roughly 1.1 billion dollars to work and capital investment each year in this budget.

Um they have worked very hard to bring down rate decreases in clean power SF.

Um across generally their infrastructure is moving.

We are not waiting, we are not kicking the can down the road to while costs continue to escalate.

Um not finally.

Uh the port budget advances the fisherman's wharf forward initiative, um, which is a real investment in a neighborhood that needs it, that is again a driver of our economic recovery, and we are so proud of the work that they are doing there.

Um, this budget puts forward permanent SF.

It is not just a talking point anymore.

This budget combines the administrative functions of the Department of Building Inspection and Planning to kind of move towards a more unified structure that will allow us to better serve all of the residents of San Francisco as they move through a permitting process.

Um the bottom line here is is basically that we in a year where we have a tremendous um general funds deficit that we have been working through.

Uh our enterprise departments, our self-supporting departments, and these other um departments that do have general fund in them are really kind of working together to drive the recovery to bring us the city back on track to where we need to be, and we are so appreciative of their work.

Um, and uh we look forward to answering any questions as they come up through the department presentations.

Thank you, Ms.

Kittler.

And so with that, I would like to start with our first uh city department, the airport, and welcome director Mike Not Conquette.

Good afternoon, Chair Shan and members of the committee.

I'm Mike Nakornket Airport Director, and it's good to be with you today.

I'd like to thank the mayor's budget office team, Director Sophia Kittler and Matthew Puckett, as well as the budget legislative analyst Kerry Tam for the partnership throughout the budget development process.

I'm also joined by our airport external affairs and finance teams.

On the next slide, uh SFO's recovery has been robust.

In the current fiscal year 2026, quarter one, we're forecasting ninety-eight percent of pre-pandemic employment levels.

Our path forward demands on sustained focus and disciplined resource management.

The good news is that our fundamentals remain strong as shown in past downturns and currently trending very positively.

At the same time, the airport also continues to face several financial and operational pressures, and these include rising operating and construction costs, an increasingly challenging revenue environment, external economic and geopolitical factors, such as high fuel costs that could moderate travel demand.

As a result, despite the continued passenger growth that we're seeing, we're taking a very disciplined and measured approach towards the budget, keeping areas where we can control relatively flat and increasing primarily in COLA, CPI, prevailing wages, and debt service.

This approach strengthens our competitiveness while prioritizing essential services and strategic investments.

We're streamlining processes to achieve uh efficiency and drive revenue growth opportunities.

To manage uncertainties beyond our control, the airport methodically deploys various mechanisms such as passenger facility charges, customer facility charges, and the director's reserve in the capital plan.

We're managing the knowns while building resilience for the unknowns.

At the macro level, the airport's uh tax contribution to the city was $598 million in fiscal year 2024, comprised of $319 million in on-airport operations plus $279 million in visitor spending.

This revenue that supports the city is beyond the annual service payment to the general fund.

Policy decisions on labor and contracting directly shape SFO's competitiveness and our ability to attract airlines, tenants, and concessionaires.

This is why SFO's competitiveness is critical to the city's financial health.

SFO as a self-sustaining enterprise department is proud to contribute to the general fund via the annual service payment.

Fiscal year 2026 is forecast to be nearly $60 million dollars.

This is the most SFO has ever contributed.

This is a 2.9 increase over fiscal year 2025.

This growth continues at a slower pace than post-COVID surge between fiscal year 2020 and fiscal year 2025, where ASP averaged nearly 20% growth.

But looking ahead for the next two years, fiscal year 27 ASP is forecast to grow to 60.8 million, a modest 1.8% 1.5% increase, and fiscal year 28 is forecast at 63.6 million, a stronger 4.6% growth driven by a passenger forecast.

Revenue is growing, but not at the pace it once did, and passengers are spending a bit more carefully.

We see these impacts in our non-airline revenues and thus are responding accordingly in our budget.

This is a breakdown of the proposed operating budget of 1.79 billion dollars in fiscal year 2027 and 1.95 billion dollars in fiscal year 2028.

Cost growth is driven by COLA in personnel, CPI or prevailing wages in other lines, and capital projects coming online, which results in debt service.

Other areas are modest increases in right sizing, and collectively, this budget reflects SFO's deliberate strategy, investing in people and critical infrastructure to keep SFO competitive.

While there are no new positions proposed in fiscal year 27 and fiscal year 28, we are focusing on filling the current vacancies of over 200 positions.

These positions are critical to staying ahead of natural attrition, supporting operations, and generating revenues.

It requires a strong partnership that we have with our downtown colleagues and for position review and approvals.

On this slide, this is a visual representation of the airport's proposed organizational chart of 2,146 FTEs or full-time equivalents.

SFO is growing and we are keeping FTEs flat, which is why every position matters.

The goal is to maximize the effectiveness of existing resources, align staffing with evolving operational demands, and position the airport to meet future needs.

The airport wide vacancy rate is currently at 10.6%, which the team is diligently working on filling to meet our operational needs.

Management represents 7% of our overall FTEs, a deliberate ratio that ensures strategic oversight, accountability, and decision-making authority to run a complex 24-7 operation.

With flat FTEs over the next two years, the position reclassifications and hiring of vacant positions are critical to maintaining SFO as an economic engine for the region, generating revenues and growing ASP for San Francisco.

Capital operating budget reflects a combination of one-time and multi-year projects.

Operating revenue and capital improvement fund is based on the 2023 lease and use agreement schedule, while federal grants reflect airport improvement programs such as taxiway and runway projects.

The reduction, however, compared to fiscal year 2026, is due to the sunsetting of the infrastructure investment and jobs act or IIJA at the federal level.

These are net zero to the bottom line appropriation.

It's to align with our latest capital plan spending needs.

Now that Terminal One program is complete, there are appropriation savings of approximately $82 million that may be reappropriated to the Terminal 3 program cost center.

And I would like to thank you very much for your time and would be happy to answer any questions.

Vice Chair Dorsey.

Thank you, Chair Chan.

Can I ask if you could elaborate?

I notice in here on slide I think two limited bid competition.

Could you could you elaborate on that?

Are we having or is the airport having issues with bid participation because of some of the obstacles that we put in the way of competitive bidding?

Uh we're we're taking a very uh close look at that from a um construction standpoint.

We're we're still viewed as as very much the the partner of choice from the bidding community um uh because we we have a partnering process that is considered industry leading.

Um and and uh although although costs are relatively high when when you look at um the operations here at SFO because uh of the way our team partners with uh our potential bidders, um we we are still very much viewed as part partner of choice.

Um if you look at concessions, um it's a matter of build-out costs, operating costs, uh, the labor environment that that our concessionaires face.

So it's something that we're looking at very closely and and try to trying to maintain our our position as a good partners while at the same time making sure that that we continue to be competitive uh with our bidders.

Okay, I know that when um Supervisor Mandelman started working on some of the reforms around contracting, I think it was 12x um back, which has been since reformed.

I recall that there was a report that the city administrator put out citywide that um I think only 42 percent or maybe it was forty-two percent of bids came back with zero or one bidder.

So we're actually not at least citywide.

Our competitive bidding is literally not competitive.

We're not we're not getting any kind of and I think there were some obstacles to that.

12x is one of them, obviously that's been fixed, but that's kind of what I just wanted to tease out.

If you're putting bid solicitations out and there's no competition for it, is there something that is there friction that we're putting in with some of our our competitive bidding exclusions that we should look at?

And I guess that's a question for us, but I would just be interested to hear, and maybe this is something that you can come back when you get me more information, but I would be interested in hearing it.

We'll we'll take a closer analysis of that one and and come back to you on that.

Uh oh overall, we it's I I don't want to stay ahead of the data here, but we'll we'll have to get come back to you with the data.

It's very rare that we would get that low of an amount of bidders to the solicitations that we put out.

Thank you.

And I do have a few questions.

I think they're they're more about the factors that out of your control, and just wanted to have a better understanding to keep a few factors.

Um, how do you what is your approach and managing a few factors such as um that is really more of a federal government approach, and how do you as a director for SFO um having that balance between local policy and dealing with federal government?

Um, and I I'm just gonna throw it out there and then you you can you can kind of uh answering one setting.

Um I just wanted to get an understanding of uh, by the way, you and your team manage SFO great, and we really do appreciate just as Director Kittler had mentioned that not only that you have come in um meeting that f 15% of general fund you know contribution to the city, we understand that you know, historically this is you're you're reaching new high with that 15%.

We're seeing now um almost close to six, well, it is six sixty million contribution to um San Francisco, and we really appreciate you and your team's effort.

Um, but we do understand external pressure as you indicated uh in your presentation, um, it's a factor that you actually have to manage uh constantly.

And um I think that question that I have um external pressure as both federal governments but also just the market in general.

Um, what is your approach to uh things like federal governments around ice immigration?

Um uh your approach to um autonomous vehicles um and being part of now the uh RISHARE that is gonna be visiting, could be visiting in SFO.

Uh and of course also overall labor harmony um at and at SFO.

Again, not necessarily under your control, um, but uh definitely the people that you have to partner with.

So immigration, autonomous vehicle, and uh labor harmony.

Okay.

And and thank you for that uh question, Chair Shannon.

And and certainly we we very much value our partnership with the city and are also proud of the $60 million ASP contribute contribution that we make to the general fund that is growing and reaching new highs every year.

To address your question holistically, in terms of weathering things that we cannot control, I think it's really the collaboration that we have within the airport stakeholder community.

So our staff, the airline partners, our local uh partners at the airport, uh whether it's uh SFPD, SF FD, uh federal level, uh local officials, uh, as well as uh downtown uh with the mayor's budget office uh uh and uh controller's office.

I I think the the partnerships and collaboration and the excellent communication that we have within the stakeholder community can can help us uh be able to be nimble to be able to adjust to to anything that comes our way.

One one good example of that might be rising fuel prices as we uh might not have control over the rising fuel prices itself that result in higher airfares.

We're able to collaborate with our community to be able to uh understand what that means for the airport, whether it's uh slightly moderating uh demand that we see over the summer that is all but then also offset by the uh 25 events uh including a major sporting event that we're gonna have here at San Francisco.

So all of that details are looked into uh as we come up with a forecast and understand how we handle each of these impacts and and the communication that we have amongst our team is is second to none.

Um and to address specifically uh your question with with regards to uh federal immigration enforcement.

We we are a sanctuary city and and we're part of the city and county of San Francisco, and we we do not get involved or facilitate or help the uh uh immigration enforcement actions and and uh we we very much uh are part of this city and county of San Francisco for the uh autonomous vehicles and just overall technology in general.

As you know, we have uh issued a uh permit for Waymo to operate um at San Francisco International Airport.

We continue to look at their operations and partner with them to understand uh what what the best operation is for our passengers, and and I think it's it's really embracing new technologies that come our way, whether it's uh autonomous vehicles, whether it's uh AI, whether it's uh anything that um is is a national trend, uh San Francisco usually sees first, and it's important for us to be uh at the forefront of those technological advancements because we know they're going to come our way.

So we we have to be ready for it.

We can't not be ready for it.

Um and then uh your last question is uh labor harmony.

Um we we continue to very much value our labor harmony.

Um there was a First Amendment action, for example, on May 1st that was led by SEIU, which we very much respected, um, and we there there was a lot of uh great communication amongst all parties, uh us, PD, uh as well as um as well as labor leaders on uh the actions of that day and um and and I felt that we were ready to uh to respect and and be ready for the uh the actions that occurred on May 1st.

If I may though, you know, clearly this is a budget committee, uh, you know, but I if I may take this moment to opine on your policy and your approach and and that I would want to urge you and the airport commission to consider um potentially a um conversation, if necessary, a closed session with your city attorney um advice and really reaching a uh approach of how do you reach that balance?

Because I understand you have federal agents actually in your territory.

That's just the way um the the what what mandates uh to operate an airport uh but to wanted to have a more um clear protocol for our for SFO specifically with a guideline of balancing approach of the Central A City uh ordnance as well as for to allow you to continue to follow uh federal guidelines.

Um I think second when it comes to transportation network companies and in this case uh RISHARE Um companies again.

Again, I I I look forward to learning more about just again um from Airport Commission, along with you, a better understanding of what is your approach, like policy, um, more specific in terms of your guiding principle, um regulating um autonomous vehicle, regulating uh artificial intelligence, um that is be it in at the experiment of your operation or when you formalize the use of that technology.

Last but not least, when it comes to labor harmony, I absolutely want to encourage airport commissioners as well as yourself to be able to step in when necessary and be able to kind of bring the stakeholder and or uh ensure that they stay at the table and to be able to continue to have those conversations and not have to lead to some of these actions and in while we in advance before before it leads to that point.

And but we know it is very complicated, and it's it's a large uh you're you are running a world class airport, so we we do appreciate that effort, and thank you so much for your for your answers to those questions.

Thank you.

And I don't see any other name on the roster at the moment.

Thank you for a presentation today.

Uh, and I think that our um budget legislative analysts will continue to work with you and uh evaluate your budget.

Thank you.

And next, we have the Board of Appeals.

Good afternoon, Chairman Chan and members of the board.

My name is Alec Longway, and I'm the legal assistant for the Board of Appeals.

And unfortunately, uh executive director Lamar was unable to attend today, so I'll be representing for the board of appeals.

Um can I have the see if I can get that better.

Sorry about that.

So the mission of the board is to provide a public uh the public with the final administrative review process for issuance and denials and suspicions of revocation modified subsidy permits, license, and other determinations provided.

Efficient and fair expeditious public hearings and decision making process before impartial panel.

And then slide three.

And then slide five, we are a self-uh supporting department, ninety-nine percent of our revenue comes from posing surcharges on permit, collecting new and renewed permits rate based on percentages of cases ordinary from underlying departments and particularly permits, uh, application volumes rates analyzed annually and adjusted by the controller's office if needed.

And then one percent of it comes from the filing fees collected by the board office when appeals are filed.

And uh slide six, sorry.

Um, we are not proposing any major changes, a slight a decrease in our proposed budget for fiscal year 27 and 26.

We budgeted for more costs related to our appeals management system, and we didn't not have those costs in 27.

For 20 eight, there is a proposed major minor increase in the budget, primarily related to increases in salary and fridge costs, fringe costs.

Sorry, and then seven.

Our proposed revenue covers our expenditures.

You can see here the expenditures, and then eight.

For eight, likely most departments or the bulk of the expenditures goes to labor costs, salaries, and fringe benefits, and then next to the interdepartment working orders such as rent for our office at 49 South Fenton's Department of Technology, which includes San Francisco government television, and the city attorney's office.

This is slide 10 and then 9.

Sorry, nine is just a breakdown of the proposed budget for the year 27.

And then for slide 10, we organized charts for the commissioners.

We have five commissioners, one department head, a legal assistant, me, and then also there's a legal clerk.

So we're pretty small office there.

Um slide six.

Um the controller's office is in the process of conducting a surcharge analysis to determine adjustments if needed.

I believe they're gonna do that on Wednesday, but I don't I mean on Thursday or something, and then slide 12 shows the appeal filing fee schedule that we charge for filing appeals, but this hasn't changed since 2010.

And I'm thank you for your time.

And if you have any questions, thank you.

And you say the filing fees hasn't changed since 2010.

Will you be doing any type of studies along with controller to see whether you need to increase the fee?

I believe they're uh Ms.

Lamar is uh working with them to see if that would be accurate, but we haven't changed them.

I think because it's uh for the public to access for them to file appeals, so they haven't been raised in a long time.

Understood.

Thank you so much for your work.

We don't have any additional questions.

Thank you for presenting today.

Thank you very much.

Thank you.

And next we will have our child support services.

Good afternoon, Chair Chan and members of the committee.

I'm Karen Roy, Director of the Department of Child Support Services.

Last year, the department delivered more than 21 million dollars directly to San Francisco families across every supervisorial district.

For many households, child support is essential to financial stability.

The program is fully funded through federal and state revenue with no impact to the city's general fund.

We do not anticipate funding adjustments during the state May May revise, and funding remains stable through the entire budget period.

Cost growth is primarily driven by increased salaries and benefits.

The department made targeted operational adjustments focused on efficiency and continuity of quality service.

These adjustments include vacancy management, selective and delayed hiring, and workload redistribution.

Most services are required by state and federal law.

Priority remains centered on helping families achieve support reliably through coordinated family focused surfaces.

The budget decisions were guided by federal performance standards, cost effectiveness requirements, case low complexity, and staffing capacity.

The department operates with a lean structure with 11% allocated to administrative compliance required functions.

The remaining workforce supports legal, operational, and case management responsibilities.

The department currently has seventy-three budgeted positions with 77% filled, 3% in recruitment, 20% of positions are vacant and managed through attrition as part of the department's long-term cost management strategy.

As reflected on this slide, staffing levels have been reduced over time while maintaining service capacity and managing increasing legal and enforcement complexity.

For fiscal year 2027, we anticipate demand for services from both assisted and non-assisted families to rise significantly due to the cost of living.

Nearly 90% of our staff are in direct service roles, and over 90% are non-management.

The operational outcomes for our organizational structure include support to compliance, accountability, and timely case processing across all major functions.

San Francisco continues to meet or exceed federal and state performance benchmarks and ranks among the top counties statewide in delivering support to families.

The department primarily serves low-income families, including many households, where child support represents a meaningful source of monthly income.

The department also works closely with city partners to support family stability, workforce participation, and public safety objectives.

In closing, the Department of Child Support Services remains a fully externally funded program delivering more than twenty-one million dollars annually to San Francisco families across every supervisorial district.

The proposed budget reflects a disciplined operational approach that maintains strong performance while managing ongoing cost pressures responsibly.

I would also like to thank and acknowledge the staff of the Department of Child Support Services.

The results reflected in this presentation are made possible through their professionalism, dedication, and daily commitment to the families we serve.

Thank you.

Each year always appreciate your work.

Thank you so much.

You always hit the height mark.

Thank you so much for your presentation, and thank you so much for your leadership and service.

I don't see any name on the roster.

I do not have additional question.

Thank you.

Thank you.

Thank you so much.

And with that, let's go to Department of the Environment.

Good afternoon, Chair Chair and Committee members.

Uh, today I'll provide a brief overview of our proposed budget, how we prioritize our work and budget impacts as requested by the chair.

Uh, first want to start off by thanking uh the budget office, uh budget director Sophia Kittler and Joshua for their work.

Uh, this has been a difficult budget time, uh, but here we go.

Uh so at its core, our department turns climate goals that we have as a city into implementation, public accountability, and benefits that residents can see and feel.

Our work spans several areas: climate, zero waste, energy, transportation, toxics reduction, and healthy ecosystems.

Together, they knit together an implementation architecture for our city's climate action plan.

As for how we set our budget priorities and our program priorities, we focus on where our legal responsibilities, our climate action plan obligations, and the current city priorities overlap.

And just to highlight how effective and common sense we are, we actually bring in money to San Francisco since November 22.

Uh, the money that we've received has been leveraged to bring in uh more than 85 million dollars in grants to the city.

That outside funding though depends on staff capacity to identify opportunities, build the partnerships for those grant proposals, apply, comply, and deliver.

San Francisco's goals when we think about benchmarks are codified under environment code chapter 9, which was recently approved unanimously by this board and signed by the mayor last month.

Our updated 2026 Climate Action Plan was released by the mayor on April 16th, right before SF Climate Week.

And so we track all of our work against these very public goals and performance measures for our department and the city.

The emissions picture and work is clear.

Transportation and buildings account for nearly 90% of our emissions and the corresponding pollution.

This is why clean transportation work and building decarbonization work are essential.

And I want to underscore how uh highly technical and performance-based our work is.

Our climate action plan uses emissions modeling to test whether our strategies are sufficient to meet both our 2030 and 2040 targets set by the city.

The purpose is not only to set the targets, but to know whether we're on track and to adjust.

Next, I'll move into our budget background.

I won't walk through every line.

Uh, the key takeaway over this slide and the next few slides is that our budget is very complicated.

It's highly restricted and tied to specific funding sources and scopes.

This is why you see SF environment here in this May meeting, because we're not primarily a general fund department, even though we receive some general fund support.

Most of our funding comes from restricted accounts like grants, fees, work orders, which limits our abilities to shift dollars when that flexible funding declines.

And while the amount of general fund received is small, the trend is significant over the past five years.

Direct general fund support has declined by more than 86% over this time period.

This means a decline, again, in terms of absolute dollar amounts from 2.9 million in 2223 to 391,000 in 27 and 28.

And this is creating a core budget pressure.

Work orders do remain important, and this is where I really want to acknowledge the work of the mayor's office and SFPUC for increasing support for our electrification work to help offset a portion of those general fund losses.

But the central issue is still the same: that 90% or over 90% of our funding is restricted.

And so when that one flexible funding source is decreased, the impact is actually larger than just the dollar amount.

It creates a cascading effect on the staffing model, which then allows us to manage grants, compete for new grants to bring in new funding, and then deliver on citywide climate work.

The next slides will show the cuts and reductions that we have made over the past few years as a result of the decline.

Prior cuts in this budget year have already eliminated three positions that have reduced our capacity to talk about our climate and electrification work with the community.

And I think one of the most immediate implementation risks is in our clean transportation team.

And so under our two-year budget, our clean transportation team moves from five FTE to 1.5 in 27 and 28.

With the increase in work order in the mayor's office and SFTC, we did delete a program manager position from this team, and now with the year two additional $200,000 reduction in the proposed May budget, we're being forced to consider now an elimination of another clean transportation position in year one.

The staffing reduction, as I said, will affect our ability to accept, manage, and deliver on our current existing grants and provide technical support to all the public charging providers and support the SFMTA's curbside charging program.

So the impact shows up twice when it comes up to our department and our staff, reduce technical capacity, and then reduce ability to bring in additional dollars into the city.

That affects our climate action plan implementation and again technical coordination and building electrification work and support for our residents and businesses.

Some other changes that we're making in this budget is that we're transferring uh two positions from our department to SFMTA and DPH for better alignment.

And we are going to be ceasing work on the landscaping equipment ordinance due to lack of funding.

This slide shows where the staffing reductions become a funding and equity issue, primarily again affecting our clean transportation team.

And so without that clean transportation staffing stability, we likely will have to forego smaller but strategic funding grants that we've secured, like the Los Angeles Clean Incubators C 40 Cities grant and the Prop L funding, which was recently awarded by the CTA.

That funding was directly designed to support our curbside charging implementation and innovation in the city.

And as I mentioned earlier, we will also have a reduced capacity to apply for new grants going forward with the existing staff.

And that matters because the only way we can ensure equitable deployment of public charging is through grants.

The market forces alone will not go into the areas that are hard to reach and reach the communities that most need to enjoy the transition.

The last two slides, our response into Chair Chan's questions about our organizational chart.

We have 101 positions.

Again, they're all restricted based on their funding source, so we cannot move them around into different roles.

For MEA and the vast majority are local 21 and SEIU.

And our vacancy rate is low at about 7.6%.

And so with that, I will wrap up and say that we operate in a small, flexible funding base, a lean staffing structure and a large citywide mandate.

We are definitely aligned with the city's priorities around efficiency and delivering for the people.

We bring in outside funding, we coordinate implementation across the departments here in the city, and we provide public accountability for our city's climate commitments.

Thank you, and I'm happy to answer any questions.

Thank you.

And Supervisor Souter.

Thank you, Chair.

Thank you for the presentation, Director.

The with the decline in general funds through the years, you know, it seems that you're more reliant now, or you will have to be more reliant on bringing in grants.

Can you share a little bit about your capacity for that?

You know, how many staff work on that?

You know, if they have excess capacity at the moment to pursue additional grants.

What does that look like for you?

Um I think it's most evidently noted in our clean transportation work, so I think that's where we will be predominantly affected with being able to go after new grants.

1.5 FTs just simply isn't enough to both manage the existing grants we have to complete the tasks that we've agreed to and are obligated to continue to support kind of the broader technical implementation, and then also apply for new grants, which you know takes up a lot of time as well.

And so I do not think we're gonna have the capacity to go after new grants uh starting this fiscal year.

And can you tell me more about the clean transportation program, which looks like it's heavily impacted the sort of work that they do?

Uh the clean transportation team coordinates the kind of transportation sector uh work.

We focus primarily on vehicle electrification, and so one of our biggest charges, pun intended, is installing public uh EV charging across the city.

And so we think about the charging that uh takes place in public lots, that is work that we're helping to coordinate across our city family to make sure that they're being deployed.

Uh we've seen the direct result of their work over the past decade and where we've doubled the number of electric vehicle charging thanks to the work of this team.

They also are responsible for looking forward to see, well, how do we innovate and actually deploy new technologies into the city?

And so while the SFMTA is a partner in leading the curbside charging program, that originated from my team and the environment department, so that work doesn't happen without the technical expertise, and then going after and partnering with new innovators to get the first curbside chargers in the ground in partnering with all of our city departments, and then having the responsible city department lead on it, which in this case is SFMTA.

Um, and so we help basically facilitate access to charging for both residents, renters, uh, and the like.

So, do you these particular cuts, do you think this puts in jeopardy the public EV charging curb side?

Does it make it more challenging?

You know, I think the SFMTA is the program lead for for that, and so what I do know is we'll have reduced capacity to provide the support that we were intending to provide, uh evident by the Prop L grant in developing the application, doing the technical analysis, also doing city-to-city comparisons of how they've been deploying curbside charging there.

And so I can't tell you specifically what the impact will be, but in terms of the reduction in capacity and and our ability to lean in on that deployment, it will be reduced just by sheer uh number and capacity.

Um just for clarification, when you say that the position are deleted, are they currently filled, and then you delete them?

The position is going to be vacant, and so this brings up one of the the challenges.

So we focus on the remove the deletion of the positions from the clean transportation team.

Uh we have planned for the deletion of the program manager position, and we were kind of reorienting and realigning to get efficiency there.

With the additional $200,000 general fund cut coming in year two.

What that does is even though we have existing grant dollars in year one to potentially fill that like fund that position or a portion of that position, we know that the position doesn't have funding to be supported in year two.

And so the idea that with this vacancy we'll be able to backfill that and then have to basically terminate that position at the end of the year is not something I want to be in a position to do, and nor do I think it's realistic from a hiring perspective to kind of rely on that on that cycle of employee cycling.

Thank you.

Supervisors Sauter.

Thank you.

Still, how you know the department that we have today, in terms of general funding in terms of employees, how does it compare to departments of environments or similar agencies across the country, other major cities that we benchmark benchmark against?

Um we did prepare the slide because you asked this question in our budget hearing uh back in February, so we can we can pull up that slide.

Uh when this department was started now 30 years ago uh as a result of the last major charter reform effort, uh there was no one, there was no department environment.

So it started off as a small group as they figured out what uh the role should be and what the mandate should be and what the work should be, and that work has scaled appropriately as the need has changed and the information has changed.

And if we look into where we are now with our um current proposed budget and and the staffing level there, uh we model this out looking at comparisons of Boston, Seattle, DC, and Portland, just to see what their staffing level is for the same work that we're doing here in our city in our department.

And right now, the where we will end up with this current budget is a tick above that at-risk line, um, which is significantly lower than than if you wanted to benchmark us against other cities.

It's a little complicated because there's always different roles and exact positions, but this gives us a rough approximation of what we allocate here in our city, specifically for the roles around building electrification and clean transportation uh in comparison to these other cities.

Thank you.

Um I think this is a helpful slide.

And I mean, the to see a mismatch between the fact that we have 45% of our emissions coming from transportation and then such a uh small allotment allocated in in the uh FTEs, and furthermore, even with these budget cuts is concerning.

Um, and just to return to the the EV chargers, um, I found myself on don't ask me how I got there, but I found myself on the 2008 DPW annual report the other night, and I noted that they were celebrating in 2008 uh the EV charger uh pilot.

Uh and we're almost 20 years in uh and where it seems like we're maybe just now turning the corner from pilot to program.

Um, and so any threats to that certainly concern me.

And I know that's something that uh uh involves you, also certainly involves DPW and MTA particularly.

Um but um I just wanted to express my concern.

Thanks.

Thank you.

Um, thank you.

Um, so roughly how we understand that right now at this moment that the you are facing a cut about 4.3 million dollars, 4.4 million dollars pre compared to previous budget.

That that number is uh an expression also of the grants we receive, which also ebbs and flows.

Uh so that is probably not the most the number to kind of hinge yourself on.

It's it's the flexible source of funding from the general fund and the work orders that essentially we look at in terms of balancing our budget.

Um so that reduction over this this next two years will be about 200,000.

It's offset a little bit by the work order from the increased work order from the SFPUC that was secured, and so I think the decline is probably still off by one point 1.5 million.

So sorry, can we be more clear about this?

Uh so what you're saying is that um because your proposed budget that I'm looking at right now is uh prospectively anywhere between 36.8 um 36.5 and then 36.8 for the next two fiscal years, 36.5 million for this upcoming fiscal year, and the second fit year is 38.5.

Um, but that is what is the actually ultimately two years difference cut.

So your initial cut is about 4.3 million, and then you generate about 293,000.

Uh I'm gonna let our our CAO kind of walk you through because it is complicated because of the various funding sources we have.

Great, thank you, Leo Chi with the environment department.

Um feel free to cut me off if I'm giving too much detail or different information than you're looking for.

So the first question is the like we included the tables because we wanted to track all of your documents, and so in the current year, the official total budget is 40 million eight hundred eighty-seven thousand three hundred.

Um, actually, we could show that slide if that's helpful.

And then in the budget year 2627, it drops to 36,532,428.

And so what Ty was indicating is that that $4.3 million dollar drop.

Um, only, I like if I'm estimating about a quarter of it is related to the key climate and clean transportation work that we're talking about.

About half of it is technical due to us trying to align with the controller's office guidance about how an overhead model is supposed to work.

So that's really technical and can be set aside about half the amount.

And then if you look at the impound budget, basically there was a $15.6 million number in the final budget, but the rate process had not finished.

And so the refuse rate board did not grant the full proposal.

They only granted a smaller amount.

So when you look at the difference in that first row of solid waste impound account money, that's really just reflecting the budget accurately in the second year.

So those two effects that are about three million dollars, you can treat as technical.

The rest of it is lost to the department, and the drivers are our general fund that we receive directly, as well as reductions in federal and state grants and work orders.

Is does your budget inclusive currently that we're looking at this graph?

Does that include SFPUC 1.4 million dollars of work order?

It does.

It includes the roughly like 770,000 in the first year and 820 something thousand in the second year.

So that is now included in the work order.

So that's um that was a big change initially in the department phase.

We weren't expecting any, and so with the mayor's office coordination with PUC, they um restored the level they were at and even increased a bit more.

So that's the one um real saving grace for our budget being where it is.

Understood.

And then the three million that you lost or adjusted are technical adjustments and federal grants that you no longer receive.

Um, three million out of that four million.

Well, um, I mean, if if we look at the general fund row, right?

I mean, those are just the official general fund numbers.

So we had 904,833 in the current year, and that drops to 545,149 in the second year.

I mean, in 2627, and then it drops further to 390,998 in 2728.

So the general fund does continue to decrease each year.

The reason that the number in 2728 isn't exactly 200,000 is because the way that the mayor's office and controller's office handle salary and fringe, like some of the prior CFOs mentioned.

There's some built-in escalation.

So our original proposal would have had almost 600,000 in the second year, but they cut just over 200,000, and that's why we dropped to 390,000.

Thank you for pointing me out to the general fund support line line item.

I appreciate that.

I don't have any more questions, uh, and um we'll go from here on out.

Great, thank you so much.

Thank you for your answers, and thank you for your work.

And so with that, uh let's go to law library.

Okay, the slides pop up automatically.

There we go.

Thank you.

Okay.

Hello, Chairwoman Chan and committee members.

I'm Diane Rodriguez.

I'm the director of the law library, and with me today is Andrea Woods, our new assistant director, and also one of our reference librarians, um, Courtney Nuian.

Thanks for the opportunity to present our budget.

The law library has been in existence in San Francisco for 156 years.

We are the only public law library in San Francisco, and we are open and freely available to all.

This slide represents our appropriation, and it's mandated by California state statute and the city charter.

The appropriation supports only core services and fund amounts are determined by other departments that provide them, such as the Department of Real Estate for our lease, the Department of Human Resources, which supports our management and benefits, the Department of Technology, which supports all of our IT needs, and our appropriation actually covers roughly half of the operating budget required to run the law library.

Without our appropriation, we wouldn't have our space, our management positions, nor technology and support, including public computers that provide critical access to legal databases.

The remainder of our operating expenses are provided by a portion of civil filing fees from the San Francisco Superior Court.

This slide shows our projected filing fee budget for 2627.

Our filing fee revenue supports staff salaries and benefits, materials and collections, library systems, equipment, and insurance, and all of our supplies.

This slide represents the state of San Francisco filing fee revenue since 2008.

Filing fees have dropped over 37% in San Francisco since 2008, due mainly to passage of the California Uniform Civil Filing Fee Act in 2007, which no longer allowed filing fee increases statewide.

We're also affected by increased fee waivers and alternative dispute resolution, which is being more and more utilized by low-income filers.

The pandemic further decreased our filing fee revenue due to court closures and all that the pandemic, the troubles there.

But we are now recovering just now from pandemic fee filing filing fee losses.

So this slide represents us as the only public law library in San Francisco.

We offer many free legal information resources to the community.

And this slide represents our core services.

In addition to serving the public, we also serve city officials and departments, local legislators, law firms, small businesses, legal services organizations, and solo practitioners who rely on our resources to assist low-income and underserved communities.

With legal services funds under threat, we demand the demand for accessible information is growing, making law library essential services even greater.

San Francisco judges tell us that approximately 80% of civil filings in San Francisco are now self-represented.

Our team assists everyone with services to help them understand the law and protect their rights.

Topical examples include employment law, eviction, family law, consumer law, immigration, probate issues.

We're basically an A-Z for anyone that has a legal issue to work with in San Francisco.

We remain dedicated to our core services while integrating new technologies such as AI and legal databases with translation services for non-English speakers.

Our goal is to ensure that everyone has equal access to legal resources so each person has a fair opportunity with the law.

This year we have developed new partnerships with the San Francisco Public Library and increased outreach to spread the word across San Francisco.

This is our current appropriation city organizational chart.

All positions are full-time permanent, and our charter mandated third position remains unfilled due to budget constraints.

This chart represents our full law library staff, including our filing fee paid staff.

Our full staff includes positions funded by the filing fee revenue in orange, and we transitioned two librarian roles to library assistant positions due to funding constraints.

We have only two management positions, and we have little turnover in staff.

We're a small but mighty team of legal information professionals.

Thank you for the opportunity to present our budget.

Do you have any questions for me?

Yes.

And I think that last time when you came before us, or maybe it was a while ago, that your head of technology was also vacant.

Right.

It's been vacant for quite a few years because that's the only thing we can never offer as a budget reduction.

Yeah.

And then also, but it's kind of difficult for you, correct?

Because the goal also is that if you can have an online, a better, a more robust online archive and access, then you will have more, I guess, membership for your law library.

Right.

We aren't a membership library.

We're just free and open to everyone, but it would help us better serve people.

So much of our work has gone virtual.

Um people still come into the library and use all of our resources and all of their different formats.

But the more that we can have electronic accessibility, the more we're able to serve people remotely at all times.

You know, people are at work.

They can email us.

We can we can help them with much greater things.

So yeah, as we're so small, all of our out all of our efforts could be expanded if we had just that even one more position to be able to dedicate to that and let us all do more outreach and things like that.

May I put a note to say that you know the conversation perhaps could be with the city's Office of Innovation, and that we often time partners with others, uh technology partner, to just um be able to provide some support bridging bridging the gap for the time being.

Great, I appreciate that.

Thank you.

Vice Chair Dorsey.

Thank you, Chair Chan.

That's actually, I'm glad you mentioned that because that was kind of where I was going.

I recall that last year we had some um, we heard from the district attorney's office about fees that they're incurring for their use of Lexus Nexus and West Law.

I assume those are databases you offer too.

We do.

And I'm just I I recall also that we I think we we started a conversation with the Department of Technology about whether there might be, you know, whether we should have a citywide license or use our collective, you know, we've got city attorneys and district attorneys in the law library, and I'm sure there's other uh offices that have that make use of these databases, whether as a city we might be able to leverage our collective bargaining power for a better deal for all of us, but I think it also picks up from what Chair Chan was talking about if there could be some expertise you could borrow if needed on some things because we're all using much of the same material.

Right, I agree with that 100%.

Um, I think the city would have more bargaining power if it was centralized to some negotiate some of those big legal contracts because they are so expensive.

However, the district attorneys want it uh or and the city attorney's contracts are proprietary in that they have all kinds of bells and whistles that operate like a law firm, allowing each attorney to have saved folders and share their information and keep it very private and confidential as attorneys need it to be.

Whereas in the law library, we have a patron access database which doesn't have all those features.

It allows everyone to do research, it just doesn't save anything.

So it while they couldn't be shared to substitute one over the other, I think the borrowing power would be uh the buying power would be great.

And we do offer Alexis Nexus digital library that anyone in the city um city staffers can tap into with unlimited use for electronic ebooks, legal ebooks.

Okay, okay.

This I appreciate it.

Yeah, thank you.

Um, and thank you so much for your service.

Sure, thank you.

Thank you.

And the next we have the city departments probably by far more popular than Apple Pie public library.

All right.

Good afternoon, Chair Chan and committee members.

I am Maureen Singleton.

I am the Chief Operating Officer for the San Francisco Public Library.

We wanted to thank you for this opportunity to walk through our budget with you today, and we will be focusing in on providing some foundation foundational information about the library that helps us focus our work, our services and our collections, and the partnerships we have with the community, the board, the mayor's office, and our sister city departments.

I'll walk you through a high overview of our budget and then share some stories that our data are telling us about how our patrons are utilizing our services and how satisfied they are with library services.

Next slide.

So since 1879, the city's public library has served as an anchor for our citizens, providing access and opportunities for our San Franciscans.

Our proposed budget for the upcoming fiscal years 27-28 continues with that tradition.

Serves as our guidepost for us as we build, evolve our services, our collections, and our budget.

Next slide, please.

Over the next two fiscal years, we have a total budget proposed of 400 million dollars, or approximately 200 million dollars per fiscal year.

Over that time period, each fiscal year, we provide a minimum of nearly 73,000 open hours for our community.

What that means is we are providing services across the city in our 27 branch libraries, our main library with our bookmobile services, and we have two support services that service back of house operations.

Overall, our total campus is 650,000 square feet.

And really, if you think about it, our core services is our library facilities themselves, as well as our services and collections that we provide for the community.

We have literacy services that span from youth services, adult services, technical and financial literacy, and specialized programs called Fog Reader programs, our career online high school program, and project read.

We also have accessibility services throughout our organization with specialty sites at the main library, the talking books and braille center, as well as the Deaf Services Center.

To provide all of these services, it takes a village.

And as you can see here, we have approximately 735 full-time equivalent employees across our organization on a net level.

Seven days a week.

Next slide, please.

This is our lifeblood.

It is also a voter mandate.

The voters have told us three times in 1994 and 2007 and most recently in 2022 that they want to prioritize library services for the city and county of San Francisco.

And in that, that represents a roughly 97% of our annual revenues.

We also have the benefit of a library preservation fund, fund balance, which is comparable to a savings account.

What we do with this funding is we treat it as a one-time source to help us fund one-time investments such as capital and equipment.

So we are very good stewards of that resource and use it wisely.

Next slide, please.

So this slide walks you through the major use categories for the library's proposed budget.

And as I've already mentioned, with a minimum of 73,000 hours that we're providing each month or each year, that is our largest cost category, which should be no surprise.

They are also our most valuable resources because we are providing direct services to the community.

The next highest cost category for us is typically our collections budget.

It is around 10 to 11% of our budget, which is on par with many of the peer libraries.

And as a city, as a set aside department, we are required to absorb all cost increases and stay within our available budget.

And the proposed budget does do that.

Our third highest cost category each year oscillates between capital, which depends upon the cash flow needs for a particular project, and services of other departments.

So that's where we pay departments like public works for helping us maintain our facilities in the state of good repair, or working with departments like the PUC, who serve as a pass through for our light heat and power costs.

Next slide, please.

So the next three slides, I'm gonna highlight some of the data stories that we're hearing from our patrons.

We do issue a monthly survey to active patrons that's randomized to make sure that no one is asked to complete the survey more than once a year.

What this helps us understand is the satisfaction that our patrons have with the services and budget decisions that we're making.

You can clearly see from this representation from February to April of this year that we have an overall satisfaction rate of 9.0.

So this would suggest that the patrons are quite satisfied with the services that are provided to Chair Chan's Point.

We are as popular as Apple Pie, and we like to keep it that way.

So we do, I do want to give you comfort in knowing that we monitor how these responses change over time to see how that should influence what decisions we're making around our investments for the community.

Next slide, please.

So this slide walks you through our circulation rates over time.

And what you're seeing here is a continued and steady growth in our overall circulation.

This covers both our physical circulation and our electronics.

The last three fiscal years, we've been breaking records.

In 23, we hit 12.6 million CERC.

In 14 or in fiscal year 24, we got to 14 and 25 at 14.5, and currently we are on track to increase over 3%, which would end the year at 14.9.

I'd like to invite everyone here and everyone listening to help us break that $15 million, 15 million CERC figure.

So get on over to your local library, check out some materials, whether you're talking a physical book or a vinyl or an audiobook, whatever your pleasure is, and help us break that barrier.

You can also see in this chart here that obviously our physical CERC is slightly higher than our electronic resources.

We are very responsive to what our patrons are telling us by their checkout habits.

Our amazing team at our circulations division definitely gets down to the detail level, understanding the demand by different titles, by different authors.

They are also very careful to look at where are we going to get the best deals from our vendors and also trying to find it in a cost-wise format.

So paperback whenever possible.

Next slide, please.

So the final digital or data slide that I wanted to share with you is about our foot traffic.

And if we were to think of this in the same vein as retail traffic, people are voting with their feet.

They're going into their libraries, and we're seeing a steady increase in their visiting of our facilities.

They could be coming in for resources, utilization of the space, our programming.

As you know, we've got some amazing signature programs.

One that happens every year in the spring at the main library called Night of Ideas, and all summer long, we have Summer Stride that brings in quite a collection of folks.

So we are proud to say that at over 80% of our, or I'm sorry, all but five of our branches are at 80% or higher than the pre-COVID foot traffic.

And in fact, there are five branches that have exceeded that foot traffic.

So to me, that tells the story that the patrons are very much interested in the services that we're providing and the facilities are indeed a resource or an anchor for them.

So with that, this concludes our presentation.

Our CFO Mike Fernandez is with us, and we're happy to answer any questions that you have for us.

Thank you, and Vice Chair Dorsey.

Thanks.

No questions.

I just appreciate the presentation.

I just, while you're here, I just wanted to express my appreciation to the library for your participation in something that's close to my heart, and that's the Read to Recovery program.

That has actually now been replicated in several jurisdictions.

I think three states.

The American Library Association is highlighting that at its conference this year as a national model.

And thank you for your work on this.

It's making a huge difference for a lot of people in the recovery community.

Just having access to free-to-keep literature at all branch libraries and every recovery tradition in all published languages.

That's what we should be doing.

And it's great that San Francisco is being sort of a role model for other jurisdictions in this.

Yeah, thank you for coming to us with that idea and working with our staff.

I myself, one day I was in at the main library, and the patron kept asking me, Are you sure it's free?

And I'm like, Yes, it's free.

This is here for you.

We are here for you.

Yeah, Doreen's digital legislation.

Yeah, we did some great work.

Thank you.

Thank you, and thank you for your presentation.

Thank you, sir, for your service.

And next we will have uh MTA.

Good afternoon.

Uh I'm here with I'm Julie Kirschbaum, the director of SFMTA.

I'm here with uh Brima Horter, our CFO, as well as uh Joel Ramos from our government affairs team.

Um I'm gonna work very hard to stick to your five-minute time limit, and then happy to I have some additional appendix slides, happy to cover at the end.

Uh we are very grateful for the opportunity to present our budget.

This was an extremely challenging cycle for us with uh us and our Bay Area partners facing an unprecedented fiscal cliff.

Uh that makes it all that much more rewarding to have a two-year budget that protects muni service while ensuring that we stretch every public dollar.

On April 21st, the SFMT board directors unanimously passed a two-year budget for the agency.

The bulk of the expenditures uh go directly to Muni service.

About half of our staff are Muni operators, supported by mechanics, custodians, station agents, and our infrastructure teams.

We also have a significant workforce that is focused on generating revenue for our MUNI system, including our parking control officers, the staff that manages our off-street parking garages as well as our repairing our parking meters, and then we also have core services related to our street operations, including maintaining our traffic signals, our school crossing guards, as well as our street safety work.

We are very proud that this budget does protect our core services.

We were able to approve a budget that does not have any reductions for Muni or Paratransit service.

We are very proud that Muni is currently carrying about half of all Bay Area transit, so really playing a key over disproportionate role in the region's air quality and equity work.

And we carry 14,000 US SFUSD school kids every day.

If successful, the regional revenue measure would raise about a billion dollars annually with about 155 million going to Muni.

I'm really grateful to our partners at the SFCTA that really navigated and negotiated a complex regional discussion to make sure that Muni was part of this measure.

The regional measure would be complemented by the second leg of the stool, which is a local measure, also currently being pursued by a group of citizens that are gathering signatures with the intent to put the measure on the ballot for November.

The measure would charge property owners based on the type and the size of their parcels, with larger units and non residential units paying a larger amount, and about 96% of single family residential paying 129 dollars under this measure.

That up to uh that 50% up to $65 could be passed on to rent controlled units.

If successful, the local measure would raise approximately $150 million annually for existing transit operations, plus uh about $10 million for service quality improvements, including maintaining growth.

Um because our um we are facing such a large deficit that grows over time with cost pressures like fuel right now, uh which is about 40% higher than we had forecasted last year, uh healthcare and things like that.

We also need to complement these measures with a continued commitment to efficiencies.

Um this uh budget includes the elimination of uh vacant positions as well as uh offsets about 20 million dollars of costs through reductions in uh materials and supplies, work orders, uh contracts.

Uh just to give a couple tangible examples.

Uh we are in the process of shifting our customers who currently use the Muni app to pay for their fares to the updated clipper system, which we estimate will save about a million and a half dollars per year.

Uh we were also able to negotiate about a million dollars of administrative savings with our paratransit contract provider.

Uh this budget also includes about $30 million of additional agency-generated revenue from things like an increased focus on fair compliance uh as well as a uh parking meter increase in year two, a revamp of our cable car uh fares to more closely match expenditures, and uh the uh year one elimination of the clipper discount, uh which uh right now cash paying and credit card paying customers pay three dollars, but clipper customers pay two eighty-five.

This would adjust everybody up to three dollars, and then an indexing of fares in year two.

Um, this two-year budget captures our initial efficiencies and really lays the groundwork for future efforts.

So, our work is not done, and we are really embracing a culture of efficiency and a commitment to continue to do hard work, um, including some of the work we've already done, such as eliminating manager positions, getting better contracts for the agency, and looking for ways that save costs while protecting our service.

Thank you.

Thank you, and um supervisor souder.

Thank you, Chair.

Um, thank you for the presentation and and all this difficult uh but important work.

Can you uh share a bit more detail on the positions that uh will be eliminated, the 54 operating positions and 35 project positions?

Uh what are those entail?

Um, yes, they they are uh uh largely spread um uh across um divisions in the case of the capital.

Some of them were legacy positions, you know, projects that had been uh completed or pursued in in other ways that we felt were important to remove from our headcount, and uh do not compromise any of our core capital delivery work, including our street safety work and our major projects like train control.

On the operating side, it is a mix of um uh our direct delivery positions like mechanics, um, as well as uh analysts and some supervisor positions, and we'd be happy to provide the the full list.

Okay, thank you.

Please do.

Thank you.

Just kind of curious about one of your slides, which is trying to match with what I got right now.

Yes, you eliminated more than 500 vacant positions that is cost saving of h structurally 170 million dollars.

Can you explain a little bit more about the additional position that you eliminated here in this slide?

54 operating and 35 project positions, and what are they?

Are they currently filled or how does that work?

Yeah, thank you for that question.

The 500 positions that we eliminated were in the last fiscal year, and they were vacant.

The current positions are vacant as well.

These 54 plus 35?

Yes.

Understood.

Okay.

Thank you.

And I understand that we got looking at the budget legislative analysts.

My assumption is we have now receive additional and complete information from SFMTA that we can now provide a better and more complete analysis of your budget for next week.

I guess that should be a question for you.

I not, but I just want to make sure that that's including the garage revenues and deficits.

I think that there's uh there's always been a question.

I think that this is 2023, that the controller did is it 23 or 24 or 23 or 10 or 2022, the controller actually did an independent audit about you know your structural the SFMTA structural deficits.

And that now with the bridge loan that you now receive from the state uh that you will be receiving from the state, plus the potential parcel and regional sales tax that you have included here.

Help me understand that um I think that everyone is gonna do everything they can about the regional measure and the local measure, and right now I'm looking at one of your slides here, provided it's page 18.

Help me understand that in the events that the regional measures or the local measure do not come to pass, or one or the other.

Have you worked out different kind of scenarios?

We have, um, and we've been working closely with uh the controller's office um because we are certifying our budget with um uh both measures.

Um because uh the if the November measures are successful on the ballot, uh they do not begin generating revenue in earnest until year two of the budget, so summer of uh 2028.

Uh so most of our um fiscal year 26-27 budget is balanced with um either uh internal efficiencies or with a two on the 200 million dollar loan that we received from the state.

The benefit of that, in addition to not having to preemptively cut service, is it also gives us um a little bit of a runway so that if one or both measures do not pass, uh we have time to implement the the service cuts and schedule changes that we would need in order to balance year two of the budget.

Um the uh if uh both measures failed, for example, we would be looking at about a 30% reduction in headcount, and we would be looking at eliminating about 20 routes.

Um our workhorse routes would see double uh the current um uh wait times uh and crowding.

Uh we would not have um service after 9 p.m.

except our core owl service, and we would uh uh likely uh significantly reduce, if not eliminate our cable car uh and F line service.

So we have mapped out both the uh labor process, the meet and confer timeline uh that would get us to those necessary layoffs, as well as uh a very uh truncated public process that would go um to to get us to those uh reduction numbers.

Um but as as you can imagine, we are doing uh everything we can to avoid those scenarios while making sure that we are ready in the background if if one or both measures does not pass.

Maybe I'm not seeing this in your slide, or maybe it's a different slide.

Do you have a ratio of your management to front light worker?

Our uh MEA staff, which is you know perhaps an oversimplification of our management staff is um uh uh under the current uh citywide uh cap of uh 2.7 percent um but we also you know we we aim for about um 10 to 1 in terms of our supervision, but that includes like uh a uh maintenance supervisor, you know, first level supervisor up to a superintendent and and uh beyond.

Understrip.

Thank you.

Um I don't see any of any other name on the roster, and uh thank you so much for your service.

Thank you.

Thank you.

And next we will have a combination of department of building inspection and planning department together.

Good afternoon, supervisors.

I'm Alex Koskin, CFO for DBI, and soon to be planning.

I'm joined by our executives, finance, and program staff.

I'm here to present the budgets for both the planning department and DBI.

In January, the mayor announced plans to combine city permitting.

Since then, we've been working together closely on a phased merge.

I'll quote the mayor directly.

For residents and small business alike, this will mean better coordination, time and cost savings in a more predictable permitting process, easing the way to build more housing and continue our economic recovery.

Both departments were asked to make budget reductions to address the city's projected general fund deficit, but we were able to achieve these targets without eliminating any core services.

There are three major changes to our budget.

First, the merger in fiscal year 27, staff from DBI and the city administrators permit center will transfer to planning.

DBI fees will continue to fund transfer DBI staff.

The plan for the final phase fully combining the departments is still being developed and is not reflected in the second year of the budget.

The second initiative is replacement of legacy permit systems.

We presented to COIT earlier this year, and they recommended funding the project.

Finally, in fiscal year 27, DBI will complete implementation of a 2024 fee study.

Expenditure highlights reflect those initiatives.

Big ones are labor.

You can see that planning, labor cost is going up, DBI labor cost is going down, but is offset by the services of other departments, the work order to planning going up.

The project revenue for permit replacement is in continuing projects, and that is also recovered from a variety of other departments based on their percentage of users of the new system.

Finally, I'd like to highlight the city grant program line.

These are our code enforcement outreach program and SRO program.

These are grants that the Department of Building Inspection provides to community-based organizations to provide these services.

And as the mayor's budget director mentioned, we've heard you the department and the mayor's office and the supervisors are very clear.

These services should stay, they should be fully funded.

They are no reductions to these services are in the first or the second year of the budget, so they will continue as normal.

On the revenue side, you can see recovery from other departments in the planning department are way up.

This reflects the project budget is housed entirely within planning, and planning will be recovering department share of cost from those departments through work orders.

And on the DBI side, fee revenue is increasing to reflect implementation of our fee study.

This org chart shows the plan for fiscal year 27.

Administration, including IT and external affairs, will live in planning as combined teams, but will continue to support both departments.

This chart shows department staffing over time.

With the vacant position reductions and transfers, the total combined size of both departments remains approximately the same.

As requested, this table shows the management ratio by division in both departments.

The combined average staff to manager ratio for both departments is approximately 20 to 1.

In 2024, DBI completed a fee study.

The study found that the department was not recovering costs and recommended increasing fees.

Rather than increase all at once, we have slowly phased in the recommended increase.

Due to returning demand and better than projected revenue last year and this year, we only need an additional 2% average fee increase to reach full cost recovery and end our reliance on one-time reserves.

Accompanying the budget is trailing legislation amending the build the building code fee tables to implement this fee increase.

Over the past few years, planning and DBI have made significant improvements to the permitting process.

Permit issuance times are down, and customer and staff satisfaction are up.

There is still room for improvement, but we are very proud of our progress and in the direction we are headed.

The current permit tracking system is over 25 years old and is no longer supported by Oracle.

A system failure would paralyze construction in the city.

The system must be replaced.

We began the system replacement project last year on a one-year contract and are currently negotiating a contract for continued implementation.

The contract will be presented to the board for approval later this summer in June or July.

Thank you, everybody.

Thank you for all our partners at the board, the controller's office, the mayor's office.

We're looking forward to working with the budget legislative analyst over the next week, and we will we're happy to answer any questions.

Thank you.

Thank you.

Supervisor Walton.

Thank you, Chair Chair.

Thank you for the presentation.

Just a question I know I asked prior, but I wanted to ask this here in today's meeting.

What is the cost savings for combining departments?

The department combination is more about efficiency and customer service rather than direct cost savings.

There may be cost savings over time, but that would be realized slowly, and that's not a focus of the planned department merger at this time.

Thank you.

Thank you.

Um I do have a few questions.

The projection of the modernizations of the calls here.

Maybe I'm not.

Oh, yeah.

Here, the line item.

Permit SF for the permit modernization for the 7.1 million dollars.

Could you walk us through what that money is for?

I have some colleagues here who would be happy to answer that question.

That funding is for permit modernization.

Um, as I think uh that you uh the members of the committee are aware we are uh both planning and DBI and our other permitting agencies are working off a very antiquated system from the 90s that's kind of held together with duct tape and some staples.

Um so we have begun, we did a one-year pilot with OpenGov uh as a start to that permit modernization.

The funding in our budget is to continue permit modernization.

It's our intent to seek a contract amendment to the OpenGov contract and utilize the funding in that line item, but that is of course subject to board and decision maker discretion in the contracting process.

What is the current results that you saw the pilot contract?

What can is there uh um information that we you can present about just the results of both efficiency?

I I think what I'm asking is a projection of efficiency because um for both combining the departments but also projection of using and utilizing open gov and your permit SF process.

Yeah, so maybe I'll answer the department process first and I'll just elaborate on Mr.

Koskin's answer, which is we're not pursuing this as a cost reduction measure or an efficiency saving measure.

Um, what we do find is that working as separate departments, there are um lots of bounces back and forth.

There are areas where we have been able to work through that just surely through collaboration in the departments as we do right now through our enforcement teams, but we know we can do better if we are actually working collaboratively from planning approval through building permitting through housing inspection.

What is the matrix to measure that success and efficiency?

I I think we'll look to our customers to give us their feedback on that.

I don't think that's good enough without a former matrix, though.

I mean, I think that if you're gonna combine two independent city departments, so the answer is way and see for customer response.

I mean, I don't think I can accept that as a as a as an answer.

Is there a question?

Yes.

The question is what is your matric of measuring success for combining and efficiency for combining the two city departments and for you to continue a pilot program like OpenGov that was actually a sole source contract.

I'm sorry you're not satisfied with my answer.

No, I'm not at all.

And can and I'm so what I'm expecting for you to come back and return next week is to show me the projection uh for the matrix for success.

Since you can't say it for yourself, then I'm actually gonna be asking for you and looking to see the efficiency should actually be comparing an existing standard of a category to permits that is currently actually having and what it takes for a permits to be review and issue and approved and versus what your projection of your going to be once you combine the city departments as well as will you continue to if you're gonna continue with this open gov contract, it should actually have a set standard and saying today it's gonna take us a 90 day for I don't know a window permits, and but the projection is once we actually have the combined of the city departments of both planning and DVI, as well as that we're gonna use and utilize this open gov contract, then that 90 days is going to be I don't know, two weeks of 14 days, and this is how long it would take us to get to that efficiency of wait time reduction.

I think that it is, I mean, that's a whole point uh of I think that's a most straightforward and simple measure of matrix of your success of efficiency.

But if you can't come up with that standard on your own, I'll come up for you, and that's what I'm expecting to see next week.

Thank you, Chair Chan.

I think your question was about the department merger, which I was responding to, but we are happy to provide you the metrics that we've seen so far with OpenGov.

I do want to reiterate again, our budget is not proposing a contract amendment with OpenGov.

That is a separate decision that we'll come to before with contract authority, but we're happy to give you that information.

Oh, I mean, I think that while that may be true, you already have like you predetermined a budget amount, right?

Like your ADP, like I'm right here is your line item.

You say permit modernizations, you already have for 26, 27, you have 7.17, 7 million dollars and 175,000 dollars, and then for in fact you're increasing it by 2027, 2028 to $7 million and $383,000 and $75, $750.

So I mean, right there, you're already increasing by the year, and it's not clear to me how do you come up with that projection of that spending if you don't already have a contract sort of projection or cost estimates in place?

We do have goals for how what how many permits we can get on board each year of those expenditures.

And the reason the budget increases is now ears is we are bringing other departments such as the port onto that permitting system in later years.

Yeah.

So how many contract, I mean, I shouldn't say contract, based on this contract, how many permits do you currently process, and then you're expecting that you can, are you increasing the volume of the permits that you can process per month?

And is there a percentage that you can project that you'll be able to increase?

We have seen that through the limited subset in the pilot so far, and we hope that will expand, yes.

And do we have that information right now, or will we have that information?

Again, we were prepared to give you this information as part of the contracting process, but we're happy between now and the next hearing to submit that to you if you're looking for it as part of the budget.

Yeah.

I I'm happy to separate the conversation between the actual contract versus the dollar amount that you are now setting aside to say this is how much we need to invest uh in permit modernization.

I think what is not clear to me is that um the budget that you set up side, it's really my assumption is it's really based off from the contract.

And if I may that I'm gonna give you this recommendation is what I'm really looking forward to see next week, is that I would like to understand with the soul contract that now you are so focusing on.

Is that I would like to understand with the understanding and thank you for that information that you have provided is that this source or contract will be expiring, you know, in September.

And what I'm actually wanting to understand and see next week is that in addition to this contract of OpenGov, that right now you have uh P predetermined about roughly like seven million dollars of spending each year.

What can you do within that budget as well?

It's like what are your alternatives?

Like, I get it, like we all seem so so gung ho and lucked in with the open gov, but the reality is you still have to come back to this board for approval and you don't even have the data for performance at the moment.

And so my question is should you actually come in short, meaning this social contract as a pilot come in short of expectation.

Um, what is the alternative?

Like, what are our alternatives?

What are our other options?

Do you have other options at the moment?

Uh we believe the system is performing, and we're erring on the side of doing permits correctly rather than in volume.

Um that does take more time and it means things are moving more slowly than we think, but we are very happy with the results, and I think we're hearing that from our consumers.

We're happy to give you those metrics.

Um, in terms of alternatives, uh, the alternatives are to continue the and expand this pilot through the contract amendment or to seek another system.

Have you seen the um letter that was provided to uh the board of supervisors from the um from the commission from the building inspection commission?

I'm not aware of that letter.

No problem.

Um, I want to share with you, and I think you should absolutely uh actually go over this letter that was um dated on um May 12th that was uh sent to us by the building Inspection commission, which I really appreciate their um letter, because in their letter, it was a clear indication about that they they're expressed concern uh about the merging of the two department.

And it actually clearly indicated um a few things, and that governance, one of the cat, there are many categories, but I'm just highlighting for you, as you indicated about efficiency of it's not about budget saving, but about efficiency of the merging of this department.

Governance and specialized function must be protected, and that it's indicated high rise and complex building peer review.

I also want to point, you know, so there's a few things that listed here.

I really urge you to go over it.

I do actually wanted to in and let you know that specifically though, that their concern, uh, about leadership, and that they they're their perspective about merging and what the structure of leadership should look like, and that they are saying in this letter that uh while they are supporting for efficiency and they understand, um, but they have concern, and here's is actually um the quote that they put in, is that they said the the current San Francisco part is to ensure that the head of building inspection services uh is a certified building official, reflecting the technical and public safety responsibility of the role.

Um this leadership structure must be preserved.

Um then it also said that today, if there is a dispute regarding safety between the departments, the DBI director and planning director stand on equal footing and can freely represent their positions and escalate them.

A merger that results in a department director who is not a technical expert or certified building official should not dilute the technical perspective in this new model.

How can the city ensure that it prioritizes enforcement rigor and independence of permit review and on site inspectors over other organizational priorities over time, regardless regardless of which individuals are in leadership positions?

It's a question actually posed by the commission.

So uh it seems to me that what the commission is flagging is not in agreement with the ultimate merger of leadership.

Um they may be supportive of sounds like throughout that they want be they are in agreement and supportive of efficiency, but they are not in support of any leadership come under another, definitely not with the DBI director underneath under the planning director.

And one of the and part of the letter too, actually says, I have not called up, I have not called you up yet, I'm not done.

And that um and the fact that here ethics measures to protect the public interest and root out corruption.

And here again, the DBI, as we have already known, through the last especially two years or few years, we know that there's actually a corruption problem with the department, regrettably, and so here that actually the question that I have again with the aspect of open gov.

And so does open gov, you know, and and because of all these things that we have done, and that I want to say that Department of the Building Inspection has done, along with with the oversights from the commission, has done a few key like reforms for the system.

So will then open gov permitting system to be able to track and flag the problems uh and be able to actually have those standard to flag any type potential of corruption and and those are technical aspects of the open gov that I'm not too sure is actually being considered.

So now I'm ready for you to step in to answer those questions if you if that if you're so inclined.

Thank you.

Good afternoon.

Uh I'm David Kane, Director, uh, interim director of DBI.

Uh I believe much of the content that you referred to in the letter, I can address that.

Sarah Dennis Phillips, uh, director of planning department and I uh over the past couple months have been working closely together to try to formulate what a merged department and what the organization structure would look like.

We have not come up with a final plan yet.

We are still kind of in the middle of that process of trying to determine uh what will be the exact structure, but uh I I've taken the comments, I've heard the comments that you've that you read in that letter, uh both from the commission and from others in the community, and Sarah and I are working closely together to make sure those concerns are addressed.

Uh, you know, I think being the technical expert being the uh acting as the building official, I'm I'm well aware of all of the current concerns that they've raised and and trying to make sure that they do get addressed in the new structure.

Thank you.

And let me ask you this question too then.

Um so I mean, I think, and I I it's it's disappointing, but it is happening, you know, to re from news reporting about the implementation of this open gov.

Um it's and and maybe you can inlign me like maybe you can correct on the record, and then some of these things that is uh indicated, seems like by even inclusive of former staff or open gov, um, as well as our current city workers expressing concerns about this open govementation.

So will will it or will it not to include what I kind of just indicated when it comes to sort of this flags and checks uh for any corruption?

Yes, I think as was mentioned earlier, uh we're we're trying to be thoughtful and careful about not rushing the implementation to be methodical in the types of permits we're we're rolling out.

Um we our team at DBI has worked hard over the past few years to put in controls and procedures and policies to try to minimize and make sure the the problems that we that the department experienced with uh corruption in the past, uh that we have ways to track and control and prevent them in the future.

And so as we go forward with moving uh moving forward with the implementation of OpenGov, we are looking to make sure we do it thoughtfully to make sure that we do get proper controls, audit procedures uh put in place with the system.

So according to this news reporting, it's really by the standard that it seems like that there's a lag of open gov meeting the deadline.

Is that correct?

I I would say that the initial schedule that was contemplated.

Uh we found that again the the complexities that we have with San Francisco, some of the the items that you noted uh with having proper audit and controls in place has meant that we needed just to slow down the process a little bit, make sure that we do it right, not set targets on having a certain magnitude of permits that we must do in a certain time period, but make sure that we do it right and that we implement it the right way.

And so were you supposed to, or not you, but like open gov as a contractor, that they were supposed to deliver 15 permit types on a new system by March 16?

But but you have not met that date.

I I apologize, I'm not privy to the precise details of the contract and what was promised before I stepped in as interim director.

Uh I I know that there we do have a a schedule of uh permit types that are gonna be implemented in the next uh few months that we are we are targeting for a summer launch to try to expand the program.

So who can answer questions about the I my assumption is you gotta have some kind of determination of what you're trying to get at and sp in terms of your spending for a permitting system that then that you come to a conclusion of $7 million dollars per year that you have to spend.

Um walk me through that.

Do you?

I mean, I think there's a commitment to say like let's have a new permit system by the end of the by the end of this pilot, we will have a brand new system.

It will be like, you know, um for us ready to go and and it's expiring in September, and now you're already actively in under undergoing a contract negotiation, seems like you're pushing for a contract renewal uh or moving forward with this contract.

Um, and so what is what is your goal of implementation of a a comprehensive permitting system?

I think that could be several years off, but to answer I think the immediate question you're asking, uh we started with very small scopes of of permits.

The next round that we're gonna do are very significant, many thousands of of permits that we're gonna be doing.

So the trade permits, electrical, plumbing permits, uh re-roofing permits.

There it's a high volume and it requires a lot of in inspection work by our inspectors uh out in the field, and so I think after those are implemented this summer, we'll have a good sense of where we're headed with this with this project.

So at the at the moment we're we're optimistic and trying to make the the best of it that we can.

Uh I think by the time we get to the end of the summer, we'll have a good sense of where we're headed.

Hmm.

How do you respond to?

I mean, now I'm literally quoting the article.

It says one former OpenGov employee agree with the city staffer sentiments, saying the company is not even close to its competitors in terms of feature parity.

Tell me more.

I don't I don't know that that that precise person's take.

I would say that we are a com very complex large city, uh, not just our size, but the the way we operate, the uh level of housing code enforcement that we that we do, it's it's unique to any other city in the nation.

Absolutely.

So do you have a backup plan if it's not open gov?

Uh we do have our current system that we that we are going to maintain for several years into the future.

So we will have that process.

At this point, we are committed to to trying to move forward with OpenGov and implement it as as smartly as we can.

So help me understand.

So for the next few years, several years, according to you, several years, my assumption is more than three.

So in the next more than three years, we will have two systems.

One is open gov, and then one is what we currently have, which is 25 years, and according to many people, it's it's kind of broken with Oracle.

Potentially several years.

I don't I don't know whether it will precisely be three, but several years I expect we'll be working in two systems and and still be needing to maintain the old Oracle system, yes.

Yeah.

And I guess then what I'm asking is do we have alternative beyond our existing system or or open gov?

If we get into the future and we find that the open gov system is just not working, then it we we will make a decision and determination at that point.

We're not there yet, and I don't expect that will happen before the end of this uh calendar year.

I think we need to see how the next few permit launches uh are released and and really focus on trying to uh implement open gov as best we can.

And remind me again how much is the current open gov sole source contract for the pilot.

I believe it's a seven million dollar a year annual.

Is that five five point nine?

Sorry.

Sorry, five how much?

5.9 million.

5.9 million for the existing contract expiring in um in September.

And are you on budget?

Yes, we are on budget.

So you currently uh because because the fiscal year ends in June.

So you're saying that 5.9 million you actually can operate through September.

Yes.

Okay, I will hold your words to it.

Um that's really good to know that you already have five point nine million dollars budgeted that will actually help you operate until September.

Um, and here's what I'm asking for a few things uh when you come back next week.

Uh I now I see my colleagues are asking questions.

Uh so you know what I'm gonna let my colleagues go.

My apologies, colleagues and supervisor Sauter.

Thank you, Chair.

Um, thank you for the presentation.

Uh I think you know, what is kind of uh, you know, we're talking about the the narrow budget, but clearly looming over that is this uh plan merger.

And I think um, you know, next week uh it would be helpful to get a sense of how you're thinking about this evolution.

I mean, I understand it's not happening overnight.

Um it is something that will be done uh within a few years, and I'd love to see kind of the phased approach of that, uh, how you anticipate things changing year by year, uh, what gets combined, what doesn't get combined.

Um, you know, I recognize uh it is not necessarily about cost savings, but about outcomes, and I think that's the right way to look at it.

Um, and I know we'll we'll have plenty of time uh for further conversation about the um the permit SF and OpenGov as it comes before the board and in committee.

Um, and you know, this this slide or this um these performance measures on slide 11.

I mean, that's again what I'd love to keep us focused on, which is to say uh whether it is the technology with the permitting system or whether it is the merger itself, how is that going to result in better outcomes for moving things more quickly, more transparently, more effectively for your users, for your customers for our city?

Um, because I'd like to get a sense of how much of the these improvements that we all want, right?

We all want to cut down on the time, we all want to cut down on the back and forth uh for permits, especially those really small ones like the windows and the doors and things like that.

How much of that can we expect to be improved from a personnel side of the coordination with the merger?

How much of that do we think comes from the technology side?

That's that's what I'd like to see is where uh how much is reasonable?

Are we talking about 20% improvement, 40% improvement, and where does that come from?

Again, the the personnel side versus the technology side.

Um so I think there's there's ways you can sharpen that up uh when you come back to this body.

Thank you.

Thank you.

And Supervisor Walton.

Thank you, Chair Chan.

Uh you said 5.9 to September, you're on track.

Can you send over those actuals so we can see the spending?

Thank you.

Yes, we will.

Thank you.

So I wanted to understand better that um when you return, uh, is a few things.

Again, the matrix of success of efficiency for you to merge your uh department.

I think ultimately is you have um this letter from the commission.

Um, if you want to, well, actually, I am asking uh for you to have a written response jointly, probably from both of you to respond to addressing some of these concerns from the commission and what your perspective and approach to the merger.

Uh I know that you have that little graph, um, and ultimately you may come into like the charter um amendments in order for your merger merger to be anything different, but um, and I'm always gonna be the one that say this, and and you'll see that that's not just for the planning department and for the building inspection commission uh and planning commission.

I'm always like on the side of having transparency, having oversight, um, and going to have uh more commissions that is uh be able to work directly with the department and directly with the uh having checks and balance directly with the leadership.

Uh in that there's no confusion with leadership structure.

Um that is why I I actually am in an agreement with the commission on this one, and I'm gonna um I I'm not speaking for the committee.

I'm speaking for myself as the chair, and that I think that I concur with their concern.

And so I would like to see that.

Uh I would also like to see that you know, yes, you are now um asking for this body to approve your budget with the line item of uh permit modernization.

Uh specifically, I'm looking at that seven million dollars.

Uh, we'll like to have a better understanding of maybe not necessarily actually specifically about open gov.

How about that?

Not as a contract, but truly as your city department, that right now, as you issue all these categories of permits and overall like your date of average day of um way time, average for response, your average um time for uh uh review, and then your average time for permits solution, like approved or denied or adjustment and what it is today versus of what your goal is supposed to be, a projection of actual goal, and then to see how does open gov actually measure up, both in implementation but also results.

And most importantly though, also is what I like to know is what is your plan B if it's not open gov?

Um, and that what are your other options not going back to the existing system?

Because that's not what I'm asking for.

I'm not asking you to go back to the 25 year old or a goal system that you currently have.

What I'm asking is that like when you chart out a course and you move forward open gov, for example, like as a contract or just process, if that system doesn't work for you and if in according to you know, some other like including even a former open gov employee are saying, hey, city, county, and San Francisco, you actually may have other options out there that are actually better for you.

I am asking the departments to explore that on your own term, and and that you need to come back at least and plan.

I don't need you to say, well, now I'm coming back with clarity.

No, that's not what I'm asking for, or to come back to say, well, well, then I guess we can default to what we have.

No, I'm asking then are there a course of action that you're gonna take as a plan.

Should OpenGov does not work for you, what are your other options?

Like, are you going back out for a bit?

Are you do you know what I mean?

Like just a course of action.

Yes.

Uh, the course of action there would be, as I mentioned, I believe by the end of this calendar year, we'll have a sense of where we're headed in the future with OpenGov.

And then at that point towards the end of the year, we could make an evaluation and say, you know, do we need to look at other alternatives in the interim period?

We would need to transition and so we would fall back to our existing system and continue to maintain that.

It would likely be a several year process to have to unwind the current work we've done with OpenGov, then have to research and procure a new system.

So during that interim period, we would fall back to our our existing uh permit system.

I mean, that's a concern.

Yeah.

I mean, it really is, and and can I just say the most alarming um of this because clearly I'm not the experts in this, but if there are experts here, and that's including our city workers, and according to the standard article, this is the quote.

It says, set one current employee.

I think San Francisco is funding the research and development work of open gov.

I'm not inclined to fund the research and development of open gov.

What I'm inclined to fund is the development of a permanent system permitting system that actually works for San Franciscans, and I frankly want it now.

Like I think that's the right thing to do.

That in fact, that's what we're supposed to do.

Is the reason why when that the sole source contract went to open gov, I did not I I have questions, but I wasn't opposing it for that moment because show us what you got.

Like show us that actually it works, but if you do not show us that it works, I'm not inclined to support it, and um not until that it's being shown that to to work.

Um so of course it's a separate conversation, but it certainly is a budget conversation today.

Um it may be a contract conversation in June or July, but I I just want to be transparent and upfront about where I'm standing.

Thank you, Chair.

I believe your commentary will help us move to a better place.

So appreciate the comments.

I and I I want to recognize the fact that you just step into this role and it what you were not here all along.

So I really do appreciate you, uh Director King, um, and thank you so much for your work.

Thank you.

I don't see any other name on the roster, and I appreciate both the Department of Buildings Inspection and thank you, Director Sarah Dennis Phillips, as well for your presentation.

And with that, we'll move on to SAPORT.

Good afternoon, Chair Chan and committee members.

While we're getting the slides set up, I wanted to make a few opening remarks.

First, I want to expect some appreciation, starting with the waterfront supervisors on the committee, Supervisors Dorsey, Sauter, and Walton.

We really appreciate your partnership and your stewardship and support for your waterfront districts is a huge foundation for our success.

So just wanted to express that to start.

In terms of the budget submission before you, I want to thank uh Mayor Leary, budget director Sophia Kittler, as well as our budget analyst uh Luisa Coy for putting things together in a way that we're excited to move forward with you today.

Um I will ask our deputy director of finance and administration, Megan Wallace to step up here in a moment to go through the details, but I wanted to share a couple framing comments that really I think have guided us as we put together this budget.

The first is um the port is very glad to see that over the past couple fiscal years our revenues have rebounded from the pandemic and actually exceed our pre-pandemic revenues.

So, as an enterprise department where our operations are funded from those revenues, that is a good sign.

You know, we feel like we're part of the leading edge of the recovery of San Francisco, and it's really helping us get our footing and trying to look towards the future.

However, that dynamic is now accompanied by projections that show our expenditures actually rising at a greater rate than our admittedly conservative revenue projections.

That that delta between those two, those net revenues is really where we fund our capital work, our improvements to poor property, our investments to really drive our portfolio forward.

And so that is something we really take seriously, and we know that we have to drive those revenues and beat those projections.

Related to that, I think we're seeing a lot of uh investment interest through outpour property from north to south.

I think it is part of the green shoots that we're all seeing in San Francisco, but it's something that we know we have to take advantage of this and convert those opportunities.

And so, one thing I've really emphasize to our team is that we need to be great partners.

We need to be great partners with uh our tenants, we need to be great partners with our development partners.

We need to be great partners with this building with the board of supervisors and with the mayor, the mayor.

We need to be great partners with our community benefit districts.

Like those are the ways we create the conditions for investment that are going to allow us to convert those opportunities.

Um, and I think it's super important for us to realize that we're a 24-7 port.

People come down, uh our businesses are open all the time on the water side and the land side, and so two places we're investing, you know, and obviously that's driving the expenditure part of what I just said is in uh public safety and cleanliness overnight, so that we can be a port that is welcoming that people can come to be a part of the working waterfront, part of the recreational waterfront, part of tourism, and they can see that the waterfront is a place they want to be.

So, with that, I'd like to hand it off to Megan to talk through how we're going to uh tailor our budget to try to meet those goals, and I'm gonna be happy to join Megan in answering any questions.

Thank you.

Thank you, Mike.

Good afternoon, supervisors.

Um, I'm gonna briefly walk you through the port's operating budget or proposed budget for fiscal years 2026-27, 2027-28.

Before I go too far, I just want to remind everybody that the port manages seven and a half miles of waterfront, really some of the most iconic public assets along in our city.

Um, our mission is to advance environmentally and financially sustainable maritime, recreational, and economic opportunities that serve San Francisco, the region, and California more broadly.

And that does mean balancing many responsibilities at once.

We have over 500 leaseholds uh across our real estate and maritime portfolios, and with all of these requirements, as Mike had indicated, we really rely heavily on our partnerships.

Before I get into the budget, also want to just highlight the economic value uh that is drived by the waterfront.

Um, we do represent the gateway into the city.

Um, we do draw in thousands of jobs, hospitality, retail, and tourism through the work of our tenants.

Um, cruise operations, we estimate generate approximately $1 million dollars per call.

Um, and just notably through all of this worth work sales tax, possessor interest tax, all directly support the general fund.

Notably, we're also advocating and moving forward with our work on our shoreline resilience work in partnership with other city departments, recognizing that we're protecting billions of dollars of assets inland from our shoreline.

When it comes to the budget, notably, the Harbor Fund is an enterprise fund, so all of our revenues are generated directly from our activities and invested back into our maritime and real estate portfolios.

We do include about 40 million dollars of work orders within our budget, between our risk management, you know, property insurance, fire boat investments, working with city attorney.

So you will see the port's contributions within the larger budget.

Our part priorities are focused on continue to be maintaining a safe, clean, and vibrant waterfront.

One important investment in this budget is strengthening staffing in our maintenance division so we can better support day-to-day cleaning and upkeep as Mike had indicated.

We want to be a 24-7 port.

We are continuing modernization efforts where we are partners in the permitting activities, but we are also investing in our own systems related to asset management and property management.

All of our activities around development, Pier 70, Mission Rock, 3032, and Seawall Lot 330, are of course critical for looking at the future of housing jobs and other activities along the waterfront.

And then just thinking about another major focus in our budget is protecting our assets and preparing the waterfront for the future.

Much of the port's infrastructure is aging and increasingly vulnerable to flood and seismic risks.

Accordingly, the ports capital improvement program prioritizes state of good repair investments, resilience integration, and risk reduction.

As the supervisors may recall, that does include investments in removal and disposal of our dry docks in the southern waterfront, as well as improvements to our facilities to maintain make sure that we are retaining our revenues.

But the budget also advances sustainability priorities, such as through zero emission fleet transition efforts and water quality improvements and biodiversity.

We do continue to prioritize community engagement, public access, workforce development, and other activities around our stewardship responsibilities.

So getting into our budget, the first year of the budget is approximately 234 million dollars.

This includes 129 million for our operating investments and 86.5 million for capital.

That leaves just over a 19 million dollar net operating income.

So if you look at the, you know, in the proposed budget, that distance between the revenues that we're generating and the expenditures in our budget represents the amount that we as an organization put away in our budget to dedicate to future capital improvements.

In the following year, you can see that our overall budget declines to 188 million dollars.

That's taking into account escalation within our operating budget.

So the cost of personnel, non-personnel expenses all continue to grow and escalate, but we reduced our investment in capital just because in the first year of the budget, we drew down a significant amount of fund balance to address significant one-time needs.

But overall, just really want to make sure that supervisors and the public are aware of the port's ongoing financial management, really trying to ensure that we're maximizing our net operating income because it's so critical to supporting our capital program, which includes a 1.9 billion dollar deferred maintenance need within our 10-year capital plan.

I won't spend a lot of time on our org structure.

Just want to recognize how vast the needs are of the services that we provide at the port.

You can see that you know, looking at the executive uh division, all the way finance and administration, real estate, maritime planning and environment, engineering, maintenance.

We basically are operating as a small city along our waterfront, and it requires a significant amount of um engagement across divisions and coordination of our efforts.

And uh today we have approximately 288 FTEs represented in our staff.

Um we are um proposing uh to continue to fill positions.

Currently, we have 306 positions budgeted, and we are proposing an increase of 10 more.

Um, probably I misspoke, sorry.

We have 307 uh budgeted FTEs, and we're uh requesting to increase um that to 317.

Um and just to put that into perspective, wanting to highlight the trends around our budgeted staff as well as our filled staff, um, you can see that we much like our budgeted revenues and expenditures, we've consistently carried a different significant difference between um what we have um the authority for in terms of staffing and what we've actually filled.

Um, and going uh through the pandemic, you can see that we saw a decline in our overall staffing, uh, just as we were trying to retract our resources um to accommodate you know declines in our revenues.

But now, as we're coming up out of the pandemic, seeing strong economic recovery.

Um, the port's request to increase our FTEs really reflects the growing operations and effort that we're making to support um having a safe, clean, and vibrant waterfront.

So thank you so much for your time and welcome any questions.

Thank you, and Supervisor Sauter.

Uh thank you for the presentation and uh I just want to express um my appreciation for um partnership with our office, uh, particularly on uh on Fisherman's Wharf and uh all along the waterfront.

Um things are are looking better, and I think they're headed in the right direction.

Um I was at uh the wharf last night, I was visiting uh took my niece to museum mechanique, so it was a good evening.

Um, you know, looking at your priorities, I was really happy to see the focus on uh on clean and safe and maintenance.

I mean, those are the things that we hear about most in particular, and I think you're doing a fantastic job on maintenance.

You're doing a lot of that in partnership with the fisherman's wharf CBD.

Um, on safety on the safety side, I want to particularly appreciate your work there.

Um we've had a lot come through our office in terms of uh the illegal vending along the waterfront, and some of that is a permitting outreach, but some of that is a safety outreach.

Um additionally, we've had a lot of focus and need on on side shows along the waterfront and on some of that activity, both on the embarcadero, but into port property, particularly Pier 27.

Uh, and your response has been fantastic on that.

So I want to acknowledge that and uh appreciate the focus on that.

I want to see that continue.

Thanks.

Thank you, and Vice Chair Dorsey.

Thank you, Chair Chan.

I'm glad uh Supervisor Sauter brought it up because um I do think that what you'd mentioned about partnerships and um security is important.

One thing that I hear from a lot of the waterfront um businesses, especially around the ballpark, is they're they're being undercut by illegal vending in some cases, just full-on bars thing, you know, the like people operating out of cars and vehicles.

I don't know if there's if you can speak to any of your involvement in um port enforcement around legal vending.

I know this is something that it seems to me this I think ABC is involved in it, SFPD is involved in it.

I think there's DPH when it's some kinds of carts, and I know that you have a role to play in that, so if you could help me understand um how that plays out, but I do know I will say this.

It is for businesses that really need to do well when the ball games are there, it's really dispiriting for them to see um what the city seems to tolerate sometimes in terms of illegal vending.

So, it's a it's a really great point, and I appreciate that you highlighted that it it is a challenge that is faced by the fact that the enforcement abilities are spread a bunch of around a bunch of different agencies.

For the alcohol, you have you know the police department and law enforcement and ABC for vending uh public works as the city's enforcer for public for hot dog carts, it's public health.

So, insofar as Oracle Park is on our property, our security team has taken the lead in organizing what we call the vending enforcement task force to bring all of those enforcement agencies together in one group.

Um and we deployed at over 50 uh events and baseball games last year.

Um that is not an easy scheduling effort.

Um and obviously it's a it's a situation where it is a very direct moment where that team moves around and is able to address or discourage that activity, but it may be happening on the other side of the ballpark.

Um so we're not resting on those laurels.

We know we want to do more because we want those experiences to be great.

It's one of the great ways we get people to come to our city.

Um, and we're very mindful of those businesses, even when they're not on poor property, because that's part of the vibrance of the waterfront too.

Um so I would say it's a work in progress, and and some of the challenges from state law are things we're still managing our way through.

Um, but we're really appreciative of the partnership that we've had from those agencies, and I think our security team just wants to continue to grow that effort, including at Oracle Park, which also is not on our property, but we are very much part of those efforts as well.

So I I know in my district, even during my time, you know, my turn this my first four years on the board.

You know, we have had the the residential community in Mission Bay is growing.

Mission Rock has come online.

Um we are we're getting I mean we get compliments from I hear compliments about the port um folks and the maintenance and security that you do provide, but we also get reports on street condition issues that are playing out there, and I think this is more a function of this becoming a more populated neighborhood.

Um but if you could address any thoughts on where we're gonna be as the neighborhood continues to grow and what's what you'll need.

One thing I'm looking for is is the future phases of mission rock in particular because right now lot A, which is an important parking resource, is kind of a dead zone.

Um and I think it's the classic eyes on the park moment um that once that project is fully realized, I think it becomes a link in having the population there.

It drives more revenues into the development, which is actually funding a lot of its own maintenance on its streets and parks.

Um, but in the meantime, we've got to step into that, and and it's something where we do need to partner with Mission Rock Partners and the Giants, especially uh on China Basin Park and on the things that happen in that general vicinity.

Uh as you move south, you know, you have the the sort of booming mission rock mission bay neighborhood, excuse me, um which has its um challenges as well, but obviously we want to be good partners as well as the the sort of the different parks and different things still come come out of that project that are still being delivered.

Um so, you know, I I think the the challenge for us is always you know good coordination.

We're not the enforcers ourselves, but we have a a really strong security team both in the daytime and as part of this budget.

We want to have that night security team that can really be the coordinator and and uh sort of communicator to make sure strategy um and enforcement actions are happening in a timely way, um, so that we're not waiting to the next morning to find out what happened, but we're actually getting after it right when it happens.

Okay, okay, I appreciate it.

Thanks.

Thank you.

And so with that, uh I don't have any anti-ditional questions.

I appreciate your work, and um we will go to SFUC.

Good afternoon, supervisors.

Dennis Herrera, the general manager of the Public Utilities Commission.

A pleasure to be before you today.

And number one, thank you for your service and doing a wonderful job at running a very efficient and quick uh finance committee meeting today.

So uh Supervisor Chan, thank you so much.

And thank you to uh the entirety of uh the mayor's budget staff, uh Sophia and her team.

We can't tell you how much we appreciate all the work that you've done with us uh helping us uh get to where we are today.

So it's our pleasure to be with you here today, and I know that uh many of you, all of you are aware of what the PUC does delivering three essential 24-7 services when it comes to water, wastewater, and power services on the retail basis here in the city and county of San Francisco, but also for the 2.7 million other uh residents of the Bay Area that we serve through our wholesale water service uh as well, all the time trying to make sure that we are being good stewards of the environment and protecting public health and the San Francisco Bay more generally.

Here's a look at our agency, which uh I know many of you are aware is powered by uh 2500 of the most dedicated public servants that you would find anywhere housed across our three enterprises and multiple bureaus that support them and are that are not just here in the city and county of San Francisco, but range across the straight the state all the way up to uh 160 miles away at Yosemite National Park.

Today we're here to talk about our budget and our capital proposal for the next two fiscal years, which is in the final which is the final stage in a long and rigorous process that started over a year ago.

Our priorities for this budget reflect the commitments that are listed here.

They include being responsive to the mayor's instructions to focus on core operational services, and we measure those through our level of service goals set at each enterprise.

At the same time, we have responsibilities to our ratepayers to maintain long-term financial sustainability, to be stewards of the resources in our care while continuing to lead the clean energy transition.

And finally, we want to ensure that we are investing in our workforce and the communities that we serve.

This budget strives to balance those commitments in the face of major challenges, including the need for critical upgrades, high construction costs, complex regulatory obligations, and unfortunately, a lack of federal support that I know that many of my colleagues across the city are also suffering from in their departments.

Uh for the details, I'm going to turn this over to our budget director, Anna Dooning, uh, and I'm happy to take any questions that you might have after her presentation.

Thanks very much.

All right, good afternoon, budget chair Chan, Supervisors, and members of the budget and appropriations committee.

Um I'm Anna Dunning, the budget director at the SFPUC.

So there are actually going to be two budgetary ordinances for your consideration.

Our operating budget, which is part of the AAO or the mayor's proposed budget, as well as our capital budget, which will be presented as a separate supplemental next week.

Our operating budget is funded almost entirely by ratepayer revenues.

Meanwhile, our capital budget is funded by a combination of operating revenues as well as debt.

With debt financing making up around 70% of the capital budget.

Over a third of that goes towards our capital costs that I mentioned on the previous slide.

The second high cost highest cost in our budget is the purchase of power, and that's for power that we cannot generate ourselves.

Our proposed operating budget for the next two fiscal years is nearly 2.2 billion dollars, and it will grow by about 12% or $257 million from the current year.

Most of that growth is again driven by capital, including debt service costs that are just now coming online for recently completed wastewater projects.

Outside of capital-related costs, there are other changes in this budget, all of which are closely aligned with our priorities.

They include staffing and maintenance costs to operate new facilities that are near completion in water and wastewater, including the biodigesters shown in this photo.

They include customer incentive programs to encourage our customers to transition to clean energy through electric vehicles, solar installations, heat pumps, and more.

They also include ongoing operating funds for several community programs that have been funded inconsistently in prior budgets.

Moving on now to our capital budget, which again you will hear more about next week.

In our water and wastewater enterprises, investments are focused on major capital upgrades that are required for system quality, reliability, as well as regulatory compliance.

Meanwhile, in the power enterprise, capital investments will go towards system resiliency as well as customer growth.

We're building new assets to deliver clean energy to new customers.

This chart shows a breakdown by enterprise of that capital budget over the next two years, and you can see wastewater as well as the water enterprises dominate those investments.

And finally, we will also be requesting your authorization authorization for debt financing along with our capital budget next week, and you'll see that training legislation soon.

So that is our very quick overview.

We have leadership from across every enterprise here to address your questions.

Supervisor Walton.

Thank you, Chair Chan.

Just as we look at the budget for this year and next year, how much what's the increase to ratepayers within this budget?

So the rate increases that were adopted by our commission a couple years ago are reflected in the revenue increases in the budget.

Those rate increases in water are 7% over the next two years.

In wastewater, they're 15% and 14.5%, and in power, they're about 7%.

However, in clean power SF, there are two programs within within the power enterprise, Clean Power SF as well as Hutch Hatchy Power, Clean Power SF rates are actually going down by 20 to 25%.

And those decreases were adopted by our commission in March.

And in layman's terms, what's the what amount will the individuals' bill go up?

So in the individuals get a combined water and wastewater bill, the average bill increase will be around 10.5%.

In dollars?

In dollars, it really varies by household and by size by how much water you use.

For the single family home, does anybody have this off the top of their head, Matt?

And and we, if you don't like have it right now with you, we can definitely have this conversation later.

Yeah, I okay.

I can recall the chart which we went through in our rate slides.

So the average single family home, which is we have the best data on them because they have their own meters.

Their bill right now, around 160, 170 dollars a month.

It'll be going up to around 180 to 190 a month.

Okay.

Thank you.

Okay, thank you.

Um your capital improvements and your constructions budget.

Um, I think I think I was asking a little bit more of help us understand a better about when you're spending what your capital plan, 1.9 billion dollars for the water and wastewater appropriation, and then about 300 million dollars to the power appropriation.

My apologies, are there projections sort of the revenue that you do generate from from DC improvement?

So in water and wastewater, we're largely not generating revenue.

Those are projects to maintain our services, in some cases to make upgrades or to comply with new regulations.

Um, but new revenue tends to come from new customers, and insofar as population is not growing all that fast, we're not necessarily bringing on new customers in water and wastewater.

On the other hand, in power, those investments are aimed at inquiring new customers to deliver them clean energy.

And those investments over time will bring new rate payers onto Hatchety Power and then allow us to reduce rates for all of our customers.

That, however, is going to take many years, as we need these are really big projects that will take five to ten plus years to first build even before we bring on those customers.

So we're really talking about revenue generation, you know, 10 years out from now.

I see.

I also want to express my gratitude to Director Herrero.

Are your director or your general manager?

I don't know.

General Manager.

And because as this body has granted the 9.118 authority for to you to not having to come to us for electricity or battery and power purchase, and yet I think your team has done a great job to really make sure that whenever possible you still come back to the board for conversation.

And so we appreciate that effort, and that it has been proven for the last um at least I know more than two years now that you have been proven in good faith that you're consistently trying to make sure that if you you you preserve and you exercise that authority carefully.

And so we really do I really personally really appreciate your your effort on that.

So with that, uh we will go to thank you so much uh for your time and thank you so much for your uh service, and we will go to rent operation board.

Rent board.

Good afternoon, Chair Chan, Supervisors Dorsey Sauter, and Walton.

I am Christina Varner, the executive director of the residential rent stabilization and arbitration board, also known as the San Francisco Rent Board.

I appreciate the opportunity to present you with the department's fiscal year 2026-27 and 2027-28 budget.

Um, I would like to thank uh mayor's budget office, Sophia, Joshua, thank you so much for your support, and Grayson Spencer at the controller's office.

Um, next slide, please.

Here you will see the rent board's mission.

Um fiscal year 2425 saw 3,861 total filings, including landlord and tenant petitions, appeals, eviction notices, and buyouts.

And we project about 4,400 filings for the current fiscal year.

Fiscal year 2425 saw well over 25,000 phone contacts with similar numbers again projected for this fiscal year.

Our administrative law judges resolved over 730 petitions last fiscal year across over 2300 units, and this year have resolved 600 petitions across nearly 1,400 units so far.

Next slide, please.

Here you can see the rent board's organizational structure and uh answering the call of the question, Chair Chan.

Um, since expanding in fiscal years 21 and 22, the department has been budgeted 50 full-time employees and currently has 49 filled positions.

All positions are permanent civil service except for the executive director, deputy director, attorneys, and supervising attorneys, which are permanent exempt.

There are eight members of senior staff and two supervisors.

The hearings unit and the public information unit each have two managers and supervise 11 and 13 employees respectively, both units engaging in complex multifunctions that require such supervision.

The clerical unit supervisor directs five employees, and the inventory and fee unit supervisor directs seven.

The operations and finance manager manages the inventory and fee unit, finance and operations, and participates in budget preparation.

The deputy director oversees four supervisors and three units, and six employees report to the executive director.

Two attorney positions are vacant.

One is will be filled when it's operationally necessary, and one is being held vacant for attrition savings.

The present position allocation meets current service demands.

Next slide, please.

Here you can see the rent board's budget summary data.

The proposed budget for 2627 will decrease by 135,040, and then the budget will increase to 677.906, which is an increase of 542.40 from today's budget and still less than what was forecasted one year ago.

The increase is primarily due to increases in wage and mandatory fringe benefits and some small work order increases.

The full-time employee count will remain at 50.

Next slide, please.

Here you will see the rent board's proposed total revenue for the coming fiscal year.

The rent board derives the majority of its revenue from the annual per unit fee that is charged to the property owner with half the costs passed through to the tenant.

The controller's office calculates the fee based on property data and what is needed to support the department's programmatic work.

We expect that due to fund balance available to the department that accumulated during periods of slow hiring, the fee will remain at $59 per residential dwelling unit for the next two years.

Next slide, please.

Here you can see the proposed total expenditures for the next fiscal year.

As is true year over year, salaries and mandatory fringe benefits hover around 80% of the total budget.

That allocation directly funds the core operations to carry out the department's mission and supports tenants and property owners to resolve disputes.

We try to keep other costs as low as possible, including work orders with departments like Repro Mail, the Department of Real Estate, SF 311, Accounting, Treasurer and Tax Collector, and then ensure that non-personal services and materials and supplies costs stay low.

Next slide, please.

The department's mission and core operations are aligned with Mayor Lurie's call to make the city more affordable and livable for families.

Staff daily provide information to the public around their rights and responsibilities around the rent ordinance and related laws, lessening the need for unnecessary disputes.

Our hearings unit brings the cases before it to a successful resolution, whether that is certifying capital improvements for a landlord to protect their investment or settling decreased housing service claims so that significant proportion of claims do not have to go to hearing.

During the commission streamlining process, our commission's work was found to be so critical that the landlord and tenant communities unanimously agreed that the commission should continue to exist in its current form.

Our work is seen as being fair and balanced and essential to the community's well-being.

Next slide, please.

The department is committed to modernization as a means for delivering effective common sense government to the city's landlords and tenants and has begun building a new primary case management system that will enable members of the public to file and interact with the department online.

The department critically collected over 95% of the assessed 2025 rent board fee, ensuring that the department is not reliant on the general fund.

We partnered with Data SF to make rent board data easily accessible, supporting informed decisions about the city's housing landscape.

In closing, I would like to highlight the constant and dedicated public service of the rent board team, and thank you, Chair Chan and supervisors for your time and very hard work today.

And I will take any questions.

It keeps us very busy, Chair Chan.

That's a good thing.

Care to elaborate just a little bit.

Sure.

We attempt that to engage in, you know, outside of our open front counter that's open daily, and our phone lines that are open six hours per day and fully staffed six hours per day.

We go out to the communities and engage in outreach opportunities at late at least twice per month with our public information unit inventory and fee unit staff.

So we've been working really hard to continue to try to get the word out to owners about their rights and responsibilities with regard to the housing inventory, and we're finding again, as I stated in my presentation, we have had growth with reporting into the inventory.

So it has grown 18% from 24 to 25, and it's continuing to grow this year.

We recently set it uh sent out a notification to non-compliant owners to so that they would be aware that they are uh not reporting into the inventory as they should be, and we've we've had some great response from that and increased reporting.

So we're we're continuously working to get the word out, and it really assists us and their tenants and the department to for the owners to be reporting in so that um there will be fewer disputes and tenants will not be filing petitions for unlawful rent increase if the owners are unlicensed and passing through, pardon, and raising their tenants' uh annual lobo rent.

Thank you so much for your work.

We really appreciate it.

Thank you very much.

Thank you.

And uh I don't see any other name on the roster, so thank you.

And uh with that, we'll go to retirement.

Last but not least for today's on the agenda.

Good afternoon.

I am Alison Romano, CEO and CIO of the employees retirement system.

Thank you, Chair Chan and supervisors for all the important work that you do.

Thank you to the mayor's budget team and to the BLA throughout this process.

Today I will uh walk through uh SFRS mission and our strategic plan, how the budget ties to that, and then put the budget in context of the money and the liabilities that we manage.

Spurs is dedicated to securing, protecting, and prudently investing the pension trust assets, administering mandated benefit programs, and providing promise benefits to active and retired members and their beneficiaries.

So everything that we do is core to that mission and considered core operational services.

To be successful for our mission, we need to invest sufficiently and efficiently in our people and our systems to deliver on the investment returns, our benefits administration, and our business operations.

As a reminder, Spurs does not receive general fund support.

Today we are responsible for overseeing 48 billion dollars in assets.

We serve 83,000 members in the pension plan and 37,000 on the DC plan.

I'm pleased to report that SPERS continues to deliver on the mission.

And I want to highlight a few key statistics from our successful fiscal year 2025.

Importantly, we've continued to make progress in terms of both the investment side of our business and on administration.

Our actuarial funded status is 97%.

That is tremendously healthy.

And to put a frame of reference on that, the average funded status across city, state, and uh plans is somewhere in the 78 to 81% range.

So we have a much stronger funded status than many of our peers.

Our investment performance has exceeded our actual rate of return for five, 10, and 20 years.

Now, why is this important?

Because a strong pension plan helps the city with its long-term financial health.

If we have a strong plan, contributions from the city are managed.

If we have a strong plan, that is an input into the cost of capital for the city to be able to borrow.

And again, I am pleased to say we're in a strong financial position.

In addition to that, we do a lot to administer the mandated benefits and serve our members.

Last year, we responded to over 14,000 email inquiries from our participants, hosted 23 retirement planning webinars, were open five days a week, and conducted over 3,000 appointments.

We have made a strong effort to meet our members where they are, whether they want to come to our office, whether we go to their departments, whether we work with DHR on programs that they have.

In addition to everything that we do on the pension plan side, I am very proud of what we've accomplished on the deferred comp side.

60% of city employees participate in this program.

That is employees who have said after money comes out of my paycheck to pay taxes, to contribute to the DB plan, to pay all my bills.

I think DC offers a good opportunity for me to invest in my future.

So 60% again is a strong opportunity, a strong participation rate, and it something that can put our employees in a better position to retire.

Our objectives are threefold to have best in class operations, financial strength, and institutional adeptness.

This strategic plan ties to our annual work plan, which ties to our budget.

And just to provide an example, data, in addition to money, is one of our assets.

We need to invest in technology systems and the people to implement those systems to secure that data, protect that data, and utilize the data to make good investment decisions and administer benefits.

Taken together, taking into account that strategic plan and our mission, we are proposing a budget this year of 62.6 million dollars.

As you can see in the pie graph, the vast majority of that is related to the pension plan.

2.4 is related to the SFDC plan, and 1.7 to the retiree health care trust fund.

Now it's important to put our budget in the in context.

And first I'll start by putting our budget in context of the liabilities that we manage.

What you'll see on this page is a bar graph of the liabilities.

So 39.446 billion in liabilities currently.

So a big differential there.

That's relative to liabilities.

Let's talk about the assets that we manage.

Again, here we spend little relative to the assets in the investments.

The last three years, admittedly, have been very strong in the markets, and our organization has been in a position to capitalize on those strong returns.

So for every dollar that the city and county puts in in contributions, we have earned on average $3.82 over the last three years.

For every budget dollar that we spend, we've earned $52.33.

Again, a pretty good return on investment.

Finally, though we are not general fund, we always seek to be a good partner with the city.

We allow the city to prepay its contributions, which we anticipate will save $25 million dollars this year.

In addition, as a direct result of our investments exceeding the actuarial expectations, that has driven a reduction of $42.4 million dollars and what the city would have otherwise had to pay this budget year.

Hopefully that is a compelling story relative to our liabilities, assets, and the performance that we have delivered on behalf of our members and participants.

Thank you.

It is a compelling presentation.

We appreciate all your work that you're doing, especially in light of a very difficult just overall economic situation.

So I appreciate the work.

Thank you.

And so with that, I believe this is our last city department for the for the day, and that we will go to public comment for the items.

Yes, we are now opening public comment for these items one, two, three, regarding the hearing and the proposed appropriation ordinance and the annual salary ordinances of the uh mayor's enterprise budgets limited by the airport commission, board of appeals, department of building inspection, city planning, child support services, uh, department of the environment, law library, municipal transportation agency, port, public library, PUC, and the rent arbitration board and retirement system.

And we can accept public comment uh regarding the budgets for those departments.

And with that, oh and uh the the chair did announce that uh we are limiting public comment to one minute, but if we have a first speaker, good afternoon, budget in appropriations committee.

Griffin Lee representing Connect SF staff and membership.

Um there's a lot uh I could question and comment on, but uh focusing specifically on the MTA budget.

Um this presentation here actually surprised me a bit because numbers they're throwing in their budget presentations again are uh different than recent past budget presentations.

Uh let me take a step back.

On February 2nd, in their budget workshop, uh they addressed transit uh budget represented seventy-seven transit represented 77% of their overall budget in the parcel tax legal text, it says nearly 90%, and today it said just over 75%.

There's a lack of discrepancy and clear transparency on what transit is actually attributing to to the overall budget of the municipal transportation agency.

Secondly, I appreciate the questioning on some of those uh topics today, but I uh wrap up my sense real quick.

One thing on the MT.

Thank you much, Griffin Lee for addressing this committee.

Right to us.

If we have any other speakers who want to address this committee, now is your opportunity.

Madam Chair, that completes our queue.

Seeing no more public comments, public comment is now close.

Um, colleagues, I would like to move to continue these three items to our meeting next week.

Second by Vice Chair Dorsey, and we'll do a roll call, please.

And on that motion that we continue the hearing and both appropriation, sorry, and both ordinances to the May 20th meeting of this committee.

Moved by Chair Chan, seconded by Vice Chair Dorsey, Vice Chair Dorsey.

Aye, Dorsey, aye.

Member Sauter, Sauter, aye.

Member Walton.

All right, Walton, aye, Chair Chan.

I Chan, aye.

We have four eyes.

The motion passes.

And Mr.

Clerk, do we have any other business before us today?

Uh Madam Chair to completes our business.

The meetings are journal.