Good morning.

The meeting will come to order.

Welcome to a special meeting of the budget and finance committee.

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

I'm joined by Vice Chair, Supervisor Matt Dorsey and Member Supervisor Joan Guardio.

Today we're also joined by President Rafael Mendelman.

Our clerk is Brent Halipa.

I would like to thank uh SFgov TV.

Jamie Averchery for broadcasting this meeting.

Mr.

Clark, 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 to prevent interruptions to our proceedings.

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

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

When 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 under tray uh 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 to budget and finance committee clerk at B R E N T.J.A.

L.

I P A HET SF GO V.O.R.J.

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 the one Dr.

Carlton because of the place room 244, San Francisco, California, 94102.

And thank you, Madam Chair.

That concludes my announcements.

Thank you, Mr.

Clerk.

Before we call our only item on the agenda, I would like to remind the public that we do have a budget legislative analyst report for that item.

So we will have the department presentation, and then we'll follow by the budget and legislative analyst report, questions and comments of those spotted public commons, and we'll go from here on out.

And with that, Mr.

Clerk, please call item number one.

Yes, item number one is an ordinance.

Amending the planning code to create a time limited amnesty program for properties listed on the Department of Building Inspections Internal Quality Control Audit and subject to a notice of violation.

Consider those properties as non-complying structures and non-conforming uses following certification and waive fees and penalties associated with the planning department's review of requests for amnesty and refund any fees and penalties already paid by amnesty projects, amending the building code to require certification of existing conditions for amnesty projects, prohibit expansion or intensification of non-compliant amnesty structures, create a streamlined process for reviewing amnesty project applications and waive fees associated with amnesty projects, and refund any fees and penalties already paid by Amnesty Projects, affirming the planning department's determination under the California Environmental Quality Act, making findings of consistent consistency with the general plan and the eight priority policies of the planning code and making findings of necessity and convenience.

And madam chair, we are in receipt of your memo that this item may be referred as a committee to report to today's Board of Supervisors meeting.

Thank you so much for flagging that for a committee for today's uh vote effort.

Uh but before we go to the department presentation, President Mendelman.

Thank you, uh Chair Chan and colleagues, and especially thank you for making uh some time for this this morning.

Um the ordinance before you will provide relief to scores of property owners who were unwittingly and through no fault of their own swept and swept up in the sad and sorry saga of Bernie Kern and Rodrigo Santos.

In January 2023, Rodrigo Santos, a building and construction engineer who'd done extensive work in San Francisco and served on the city's building inspection commission and city college board of trustees, was found guilty of leading multiple fraud schemes, tax evasion, and providing falsified documents to the FBI.

Santos had defrauded his clients, submitted false plans to the Department of Building Inspection, and worked beyond the scope of his permits dozens of times.

He also stole money from his clients by misrepresenting the fees that were owed to DBI and keeping the difference.

That same year, former DBI inspector Bernie Curran was found guilty of accepting illegal gratitudes for personal gain in connection with building inspections he performed.

Santos had made payments to Curran to approve illegal work, including unauthorized demolitions and unpermitted construction.

These convictions, however, were not the end of the story for the city or for owners of properties that Santos and Curran had touched.

In May 2021, DBI had initiated an internal review of properties that were associated with either man.

DBI identified nearly 5,500 such properties to be audited.

The internal quality control audit looked for evidence of work done beyond the scope of a permit, unpermitted work, missing inspections, and other violations.

It was completed this past January, and the good news was that no imminent life safety hazards were found.

However, approximately 130 audited properties were found to have unauthorized work that needed to be brought up to code.

Of course, the vast majority of these owners had purchased their properties without knowing that either Santos or Curran had done unpermitted work on them.

They had no way of knowing that they would be hit with notices of violation requiring them to undertake potentially costly corrective work on the properties requiring payment of tens of thousands of dollars in unanticipated permit fees.

One owner learned that their staircase was illegal and had to pay $21,000 to cover DBI fees, legal fees, and the hiring of an architect to create new drawings and permit sets to rebuild the staircase consistent with code requirements.

Another owner learned they had to redo a driveway because it was not permeable and renovate their front doorway because it did not have the right transom.

A third owner learned that their home had not gotten its required permits and therefore, among other problems, now required a conditional use permit to comply with my large luxury home legislation.

In that particular case, the owner had spent upwards of $50,000 in planning permit and legal fees.

I introduced this ordinance in February.

It would establish an amnesty program that will waive local planning code violations for this discrete set of properties that were subject to DBI's internal quality control audit.

The legislation would further waive fees that would otherwise be required to remedy such violations and would allow for refunds to property owners who already paid such speed such fees.

Heard the ordinance in April and voted unanimously to recommend approval of the item.

And it was heard in planning at the planning commission in May, and the Commission voted to recommend approval as well.

We do have one change that a minor that I have we've circulated and I've handed out to and it's just to the findings on page four lines one and two, correcting the number of properties that have received NOVs.

And so I would ask that before, as I hope you forward this with positive recommendation to the full board for consideration later today as a committee report that you make that amendment.

The urgency, and I apologize for um for rushing this at you, but uh we realized that the state budget, which uh will include a significant restriction or prohibition on further building code amendments from local governments for a period of I think six well to through 2031, could possibly be read to uh make that to well, at least could call into question um the effectiveness of this ordinance, and so we would like to get it done as quickly as possible and well before the October 1st date when the budget will take effect.

So that um is why we're asking you why we we realized at the very last minute that we wanted to try and get this heard and voted on uh as soon as possible before the September, before the August break and have it go into effect after uh after the September first board meeting in September.

Want to thank lots of city staff.

Um, this is uh been a project uh that has engaged many departments in DBI.

I want to thank Director Patrick Garriuden, Christine Gaswarek, Tate Hanna, who we will be hearing from, Patrick Hannon, and Matthew Green from Planning.

I especially want to thank Liz Wadi and Aaron Starr, Veronica Flores, and Audrey Audrey Merlone.

And then from the city attorney's office, I want to thank uh Austin Yang, Rob Kapla, Kristen Jensen, Peter Milianich, and of course always Brad Russian who helps with all things.

And then I want to thank uh Calvin Ho in my office.

I think that's everything I have to tell you.

Tate Hanna from DBI has more to tell you.

Good morning, Chair Chan and committee members.

Thank you again for holding the special hearing.

And thank you, President Mandelman, for authoring this ordinance.

Before you today is file number 250191.

A bit of background and timeline that brought us here in 2018, DBI identified irregularities and payments from Marigo Santos at the time, a licensed engineer and former building inspection commission president.

Uh, at that time of uh determining the irregularities, DBI notified the controller's office.

From there, the city attorney investigated uh the issues and eventually sued Santos, alleging work exceeding the scope of permits and misuse of licensed engineering stamps.

In 2020, the U.S.

attorney's office followed suit, charging Santos with defrauding his clients.

In 2021, Bernard Curran, at the time a senior building inspector at DBI, was put on leave pending an investigation.

Later that year, the U.S.

attorney's office charged both Kern and Santos with wire fraud, alleging Kern accepted bribes from Santos for preferential treatment.

Kern and Santos were found guilty and both were sentenced to prison terms.

In 2021, to uh respond to some of this internal corruption, DBI launched and began implementing departmental reforms, including bolstering our reporting to state licensing boards, monitoring out-of-district inspections, establishing the expanded compliance control program, which allows us to monitor particularly bad actors and ensure their future building permit applications get additional scrutiny, creating anonymous staff reporting tools, implementing whistleblower trainings, establishing a 48-hour lock on inspection records, creating an audit log for inspection records, and posting inspection notes and notices of violation online.

Despite those internal changes, uh there was still the issue of the 5,445 properties that were touched by Rodrigo Santos and Bernard Kern.

And so in 2021, DBI, with guidance from the city attorney initiated the internal quality control audit.

DBI staff reviewed the 5,445 properties for work beyond the scope of permit, unpermitted work, missing inspections, uninvestigated complaints, and other improper activities.

In 2025, DBI staff completed review and published the final report of the internal quality audit showing that although there were no imminent life safety hazards, 2% of the total properties were found to have building code violations.

Per state law, building code violations must be abated and brought into compliance.

And as such, uh President Mandelman worked with the department to initiate file number 250191, which will establish an amnesty program for these property owners.

The ordinance will waive planning code violations as well as waiving planning and DBI fees associated with abating the building code violations in question.

To utilize the amnesty program, property owners must come forward within the next five years, pursue a certificate of existing conditions so that the non-compliance does not get intensified, apply for a building permit via streamlined pathway, and then complete the work and finalize the permit.

The code advisory committee and its relevant subcommittees met on March 12th, 2025 and unanimously recommended approval.

The building inspection commission then met on April 16th and reviewed the ordinance, unanimously recommend recommending approval as well.

Thank you for your time.

Happy to answer any questions.

Good morning, Nick Menard from the BLA.

Item one is an ordinance that amends the planning and building code to provide uh fee waivers for permits and penalties and grant amnesty from planning code enforcement for property owners who have received a notice of violation resulting from DBI's internal quality control audit.

That audit took place over about four years and has resulted in 177 properties that uh have been flagged as having potential building or uh planning code violations, of which 136 of those properties have received notices of violation, and 41 remain under investigation.

So this ordinance would essentially allow three years for those property owners uh to apply to this amnesty program, remediate any building code violations, and then the city would be waiving fees uh for them to come into compliance with the building and planning code.

This is not providing any funding for the property owners to undertake uh the work to make those um changes to their properties to be in conformance with the building code.

Uh we estimate the cost of the fee waivers on page four of the report.

You'll see it amounts to about nine hundred and twenty-five thousand dollars.

Uh, mostly that are those are DBI uh fee waivers, and according to DBI, they can absorb these uh lost revenues without any impact and services.

And this two policy considerations we're noting in our report.

One is that the waivers assume the property owners did not collude with Santos or Curran when undertaking the unpermitted work on their properties.

Uh, we know that there are some cases where people actually wrote checks to a nonprofit uh that you know was associated with Bernie Curran.

Uh, and so though the audit did not really investigate those connections.

Um, in addition to that, the audit scope was limited to properties touched by Santos, and then same-day inspections completed by Curran.

So the audit did not review the full body of his work at DBI, and so those properties are not part of the amnesty program, um, and there may be issues with them.

So I do think the city should investigate these two outstanding issues, the potential of the property owners who may have colluded with these people, and then the remaining unpermitted work.

But this to consider approval to be a policy writer for the board.

Thank you.

Um I have added myself as a co-sponsor um to the legislation.

Uh, thank you so much for all your work uh on this.

It is it is a situation that is rather challenging for the city.

Uh all of us together as a as uh to regain public trust uh through this process.

While I can understand the analysis from the budget and legislator analyst about potentially other homeowners could be uh part of the issues uh and problem for this, um, I think that uh at this time in good faith uh just looking at where the city is at.

I I concur with this approach uh to just grant annasty.

And in the end though, it's it's that the homeowners still actually have to uh make sure that they're they meet the permit uh or that they actually meet the standard and in renovation on their own dimes, where it's only simply waiving the fees uh today.

I don't have any other questions, and uh unless you have uh additional information to share.

Thank you so much.

Thank you, Chair Chan.

Uh just briefly, Audrey Morlone Planning Department staff.

The planning commission heard this item on May 1st.

They did recommend uh adoption of approval.

They had one um suggestion versus a official recommended modification, and that was to exclude persons and entities that are listed on the city's expanded compliance control program from the proposed amnesty program.

I believe at this time that recommended modification has not been incorporated into the ordinance, but I'd be happy to answer any additional questions.

Thank you.

Okay, so with that, let's go to public comment on this item.

Yes, right now we're opening public comment.

Uh, if we have any members of the public who wish to address this committee regarding this item.

Madam Chair, we have no speakers.

Seeing no public comments, public comment is now close.

Uh colleagues, I would like to first um make the amendment um proposed by President Mendelman.

Are we making additional amendments or are we actually just stick with got it?

And then um, and to move the amended uh legislation to full board with recommendation as a committee report for today's board agenda and a roll call, please.

And on that motion to amend this ordinance, uh accepting other proposed amendments as offered by your president mentleman, and to forward this ordinance to the full board with a positive recommendation as amended as a committee report to today's board meeting.

Vice Chair Dorsey.

Okay, Dorsey, I member and Gardio and Guardio, I, Chair Chan aye chan aye we have three ayes the motion passes thank you and mr clerk do we have any other business before us today madam chair that concludes our business this meeting is adjourned for the