San Francisco Budget and Finance Committee Meeting - November 15, 2023
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San Francisco Budget and Finance Committee Meeting - November 15, 2023
The Budget and Finance Committee of the San Francisco Board of Supervisors met on Wednesday, November 15, 2023, at 18:15 UTC (11:15 AM local). The committee was chaired by Supervisor Connie Chan, with Vice Chair Rafael Mandelman and Supervisor Asha Safaí present. Supervisor Matt Dorsey also joined for the first item. The committee heard presentations, took public comment, and voted on several items, including health care rate trends, a project labor agreement hearing continuance, a transfer tax exemption for affordable housing, grant acceptance for Buchanan Mall, port lease approvals, a loan amendment for Sunnydale HOPE SF, and bond issuances for Treasure Island.
Consent Calendar
- There was no separate consent calendar; all items were considered individually.
Public Comments & Testimony
- Item 1 (Health Plan Rate Trends): One public speaker expressed that "health is not for sale" and argued against profiting from health care, stating that the current approach is not the future.
- Item 3 (Transfer Tax Exemption): John Avalos, representing the Council of Community Housing Organizations (CCHO), spoke in support, emphasizing that the transfer tax increase created unexpected financial burdens for nonprofit housing developers and that the exemption would relieve pressure and benefit tenants. Several other speakers, including Kevin Kitching (Mission Housing) and Katie Lamont (TNDC), also expressed support and thanked staff for collaboration. One speaker (Terry Phil) suggested that "affordable" needs to be defined more clearly.
- Item 8 (Sunnydale Loan Amendment): One public speaker advised to "fix what is there" rather than destroy, expressing general concern about the project.
- Item 9/10 (Bonds): One speaker commented that the presentation was boring but urged the city to make Treasure Island beautiful, cautioning against building "rabbit cages" and fake beauty.
Discussion Items
- Item 1 – Hearing on San Francisco Health Plan Rate Trends: Supervisor Chan requested the hearing to understand health care cost escalation ahead of the budget process. Health Service System (HSS) Executive Director Abby Yant presented data showing that 2024 premium increases jumped to 10.3% overall, a $79 million increase, which was $31 million more than budgeted. Factors included health care wage inflation, workforce shortages, increased mental health and substance abuse services, chronic conditions, long COVID, and cost shifting from Medicare/Medicaid. The CMS reimbursement increase for Medicare Advantage was lower than in past years (3.2% vs. typical 6%), leading to a 15% premium increase for the UnitedHealthcare Medicare Advantage plan. The HSS is pursuing an RFP for Medicare Advantage plans to gather market information. Supervisor Matt Dorsey commended HSS staff for their work. Chair Chan asked clarifying questions about the 2% of members (approximately 2,500 individuals) driving 79% of costs (approximately $640 million). The hearing was filed unanimously.
- Item 2 – Hearing on Citywide Project Labor Agreement and Annual Reports: Supervisor Safaí requested a continuance to December 6, 2023, to allow more time for participants to prepare. No public comment was made. The continuance was approved unanimously.
- Item 3 – Transfer Tax Exemption for Affordable Housing: Supervisor Dean Preston presented an ordinance to broaden the exemption from increased transfer tax rates for rent-restricted affordable housing, apply it retroactively to January 1, 2017, extend it through December 31, 2030, and waive penalties and interest. The Budget and Legislative Analyst (BLA) estimated a fiscal impact of $30-45 million in reduced general fund revenues over the entire period. Supervisor Preston, Chair Chan, Vice Chair Mandelman, and Supervisor Safaí all expressed support, with several adding as co-sponsors. Public comment was supportive. The ordinance was forwarded to the full board with positive recommendation.
- Item 4 – Grant Acceptance for Buchanan Mall: Tony Moran from Recreation and Park presented a resolution to accept a $3.9 million grant from California State Parks for the Buchanan Mall Project. The grant requires a one-to-one match, which will be met through other sources. The project will renovate two of five blocks, and a deed restriction will require the park remain public open space in perpetuity. No public comment. The resolution was forwarded unanimously.
- Items 5, 6, 7 – Port Leases: Presented together. Item 5 (Mission Rock lease amendments) was technical, clarifying port participation in future sales/refinancing. Item 6 (Recology lease at Pier 96) approved a six-year lease at $369,500/month initially, increasing 3% annually, with tenant paying for seismic and facility condition assessments (up to $1 million). Item 7 (Anderson Enterprises lease at Pier 68/70) approved a three-year lease with three one-year options, initial monthly rent of $66,702.15, and total revenue over the initial term estimated at $2.5 million. BLA reports recommended approval. No public comment. All three items were forwarded unanimously.
- Item 8 – Sunnydale HOPE SF Loan Amendment: MOHCD staff presented a request to increase the loan by approximately $1.5 million to a total of $26,567,405 for infrastructure phase 1A3. Reasons included extreme weather, unforeseen conditions, and temporary power connection costs. BLA noted some costs were avoidable and recommended a report back on cost-sharing with the developer and an agreement between MOHCD and SFPUC. Supervisor Safaí expressed frustration about city permitting delays and requested the city report back within 30 days on the PUC reimbursement amount and on whether there will be a cost-sharing agreement. Vice Chair Mandelman and Supervisor Safaí added themselves as co-sponsors. One public speaker commented. The resolution was forwarded unanimously with the added condition of a 30-day report back.
- Items 9 and 10 – Treasure Island Bond Issuances: TIDA and Office of Public Finance presented two resolutions. Item 9 authorizes issuance of up to $10 million in tax increment bonds (IRFD), and Item 10 authorizes up to $17 million in special tax bonds (CFD). The bonds will fund infrastructure and affordable housing on Treasure Island. Estimated true interest costs are approximately 6.4-6.6%. BLA provided analysis. Chair Chan noted that Item 10 was introduced only a week prior, but she was comfortable moving forward given its close relationship to Item 9. No public comment besides a general remark. Both resolutions were forwarded unanimously.
Key Outcomes
- Item 1: Hearing filed unanimously (3 ayes).
- Item 2: Hearing continued to December 6, 2023, unanimously.
- Item 3: Ordinance forwarded to full board with positive recommendation (3 ayes). Supervisors Mandelman and Safaí added as co-sponsors.
- Item 4: Resolution forwarded to full board with positive recommendation (3 ayes). Supervisors Mandelman and Safaí added as co-sponsors.
- Items 5, 6, 7: All three resolutions forwarded to full board with positive recommendation (3 ayes).
- Item 8: Resolution forwarded to full board with positive recommendation (3 ayes), with a verbal commitment from MOHCD to report back within 30 days regarding the PUC reimbursement and the status of a cost-sharing agreement with SFPUC. Supervisors Mandelman and Safaí added as co-sponsors.
- Items 9 and 10: Both resolutions forwarded to full board with positive recommendation (3 ayes).
The committee will not meet next week due to the Thanksgiving holiday; the next meeting is scheduled for December 6, 2023.
Meeting Transcript
Good morning. The meeting will come to order. Welcome to the November 15, 2023 meeting of the Budget and Finance Committee. I'm Supervisor Connie Chan, Chair of the Committee. I'm joined by Vice Chair Rafael Mendelman and Supervisor Asha Safayi. I see we're also joined by our colleague from District 6, Supervisor Matt Dorsey. Thanks for being here. Our clerk is Brent Halipa. I would like to thank uh SAGov TV today for broadcasting them this meeting. Mr. Clerk, do you have any announcements? Thank you, Madam Chair. Just a friendly reminder to those in attendance to please make sure to silence all cell phones and electronic devices so as to not interpret our proceedings. Should you have any documents to be included as part of the file, this should be uh 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. Alternatively, you may submit public comment in writing in either of the following ways. Email them to myself, the budget and finance committee clerk at B-R-E-N T. A L I P A at SFGOV.org. If you submit public comment via email, it will be forwarded to the supervisors and also included as part of the official file. He may also send your written comments via U.S. Postal Service to our office in City Hall. That's one, Dr. Carlton B. Goodlit Place, Room 244, San Francisco, California, 94102. And due to the Thanksgiving holiday items acted upon today are expected to appear on the Board of Supervisors agenda of November 28th, unless otherwise stated. Madam Chair. Thank you, Mr. Clerk. And um before we call item number one, just wanted to um as usual, the the standard practice for this uh committee is that uh we will have items that um presentation and for the items that have budget and legislative analyst report, we will go to the department presentation, the BLA report, and then we'll go to into questions and then public comments. And with that, Mr. Clerk, please call item number one. Yes, item number one is a hearing to request information on health insurance rate trends and its impact on the rate the city will pay on behalf of its employees in advance and consideration of the city's budget process. Madam Chair. Thank you. Um colleagues, our first item is a hearing that I called for so that this body that is in charge with oversight and approving fiscal items and the city budget can be more informed as we begin to move into the budget process. Uh as you probably recall, um, last year um, as we were going through the budget process, we also learned the escalated cost of our how benefits uh by roughly about 18 million dollars. Um, and that we while that we were able to really maintain that um uh our budget and balance uh during that time. I think it is critical for us to learn in advance about the trajectory uh of the continuing escalated cost of health benefits. I learned as the Board of Supervisors appointee on the health services board about one of our most important uh roles as employers uh is negotiating and providing health care for our current workers and retirees. Although we may not always realize the rates that our health services system negotiates, of course, have an impact on our budget. Uh so I feel like it was important for us to understand the trends and in the market and what we can look forward to. Uh, I have asked the executive director of our health service uh system, uh Director Abby Yent to present and informed this body today. But before she starts, I would like to uh, you know, uh welcome our uh colleague and current board's uh appointee to the House Services Board Supervisor Matt Dorsey to make some additional remarks. Thank you so much, Chair Chan. Um and good morning, committee members and everyone. Um as you may know, I represent the Board of Supervisors on the Health Service System Board, whose executive director will be presenting to this to us uh at this morning's hearing. And before we hand it off to um Abby Yant, I would like to uh commend her and the entire team um at HSS for their great work. The uh San Francisco Health Service system has a long history of delivering rates that align with um industry trends that stay within the confines of our budget forecasts. This historical success reflects the organization's commitment to financial responsibility and adaptability within the dynamic health care landscape.
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