Good morning.

The meeting will come to order.

Welcome to the September 11, 2024 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 Mirna Magar, and just also want to acknowledge Supervisor Matt Dorsey joining us today.

Our clerk, it's Brent Halipa.

I would like to thank Suze Eatnos from SFGov TV for broadcasting this meeting.

Mr.

Clark, do you have any announcements?

Yes, Madam Chair, just a friendly reminder to those in attendance to please make sure to 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 file, it 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 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 finance committee clerk at B R E N T dot J 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.

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

Postal Service to our office in City Hall at one Dr.

Carlton B.

Goodlick Place.

Room 244, San Francisco, California 94102.

And finally, Madam Chair, items acted upon today are expected to appear on the Board of Supervisors' agenda of September 17th, unless otherwise stated.

Madam Chair.

Thank you, Mr.

Clerk.

And with that, just a general reminder for the public that typically the way we go is we go to the item on the agenda, and if it has a budget and legislative analyst report, then it will come right after immediately after department presentation, and then we'll go to comments from the committee, and then we'll go to public commons.

And so with that, Mr.

Clerk, please call item number one.

Yes, item number one has an ordinance authorizing the execution and delivery of certificates of participation in one or more series on a tax exempt and or taxable basis, and from time to time evidencing and representing an aggregate principal amount of not to exceed approximately 61.4 million to finance and refinance certain capital improvement uh projects within the city and county's capital plan and generally consisting of critical repairs, renovations, and improvements to city owned buildings, facilities, streets, and works maintained and utilized by various city departments, approving the form of a supplement to trust agreement between the city and U.S.

bank trust company, National Association has successor and interest to U.S.

Bank National Association, has trustee, including certain indemnities contained, approving respective forms of a supplement to property lease and supplement to project lease, each between the city and the trustee for the lease to the trustee and lease back to the city of all or a portion of certain real property and improvements owned by the city and located at 375 Laguna Honda Boulevard within the city at one South Van S Avenue and one Morland Drive, uh San Bruno, California, together with any other property determined by the city's director of public finance to be made subject to the lease and lease back arrangements.

Uh approving the forms of uh an official notice of sale, notice of intention to sell the certificates, an official statement in preliminary and final form, a purchase contract between the city and one or more initial purchases of the certificates, a continuing disclosure certificate, granting general authority to the city officials to take necessary actions in connection with the authorization sale, execution, hand delivery of the certificates, and approving modifications to documents, ratifying previous action taken in connection therewith.

Madam Chair.

Thank you, Mr.

Clerk.

Um, and with that, we have controller's office of public finance here with the presentation.

Thank you.

Good morning.

My name is Olivia Chen, and I'm here on behalf of the Office of Resilience and Capital Planning in the City Administrator's Office, and I'm here with the Office of Public Finance to seek authorization for the certificates of participation and street reservicing programs for 2025.

The critical repairs program is in its fourth year, having begun in fiscal year 2021.

As you may recall, the general fund capital budget was cut to one-third what it had been in previous years for capital investments.

Certificates of participation have helped to maintain funding levels for critical maintenance and renewal projects throughout the city's general fund departments.

Critically, this year we have allocated over 23 million to street repair projects.

The city has used a variety of sources to cover street repaving over the past 15 years.

Given reductions in the general fund paygo program that have lasted longer than expected, we're doing our best to use certificates of participation capacity and other means to continue to fund streets at the highest level possible.

Even with these COPs, the program is $8 million short of full funding.

Other projects listed here included in this program represent critical renewal projects and address a legal mandate related to the underground storage tanks that requires a larger investment than this year's capital budget for general fund departments could include.

The departments are available here today to answer any questions about these projects.

And with that now, I will pass it to Grant Carson with the Office of Public Finance to discuss the market details.

Thank you, Olivia.

Good morning, supervisors, Grant Carson, controller's office of public finance.

Here on this page, we have the estimated financing terms for the COPs as prepared by our municipal advisor on this transaction, KN public finance, and their good faith estimate.

I'll note that the these items were the financing proceeds were previously appropriated in the adopted budget, so no supplemental appropriation ordinance is required.

On the right, we have the assumed uh sources and uses.

We estimate $56.8 million in COP borrowing proceeds, which would fully fund our $45 million in project funds and CSA audit fee.

We've also assumed $5.5 million in capitalized interest, basically a proxy for using our commercial paper program as interim financing, uh $4.8 million for debt service reserve fund, and then $1.4 million in transaction expenses, including cost of issuance at a million, including rating agency fees, municipal advisor, bond disclosure council, and $400,000 for underwriters discounts.

Uh and then as we have on prior COP transactions, we include a reserve for market uncertainty to uh ensure that we have sufficient capacity under authorized amount to fully borrow about 4.6 million for that reserve for market uncertainty brings us to our maximum not to exceed power amount of 61,395,000.

Moving up to the top left, we have the estimated financing results at this point.

Uh we've assumed a 25-year term with final maturity in 2050, uh, true interest cost or TIC of 6.7%, uh, which gets us to an average annual debt service number 4.8 million.