Good morning.

The meeting will come to order.

Welcome to the September 10th meeting of the Budget and Finance Committee.

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

I'm joined by Vice Chair, Supervisor Matt Dorsey, and Supervisor Member Supervisor Xian Chin, who uh who is sitting for Supervisor Joan Guardio uh today.

Uh and our clerk is Brent Halipa.

I would like to thank James Kawana uh from SFGov TV for broadcasting this meeting.

Mr.

Clerk, do you have any announcement?

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 or 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 in 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 we 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.

A L I P A Hat S F G-O-V.org.

If you submit a few 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 uh in City Hall.

Hat one, Dr.

Carlton B.

Good 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 16th, unless otherwise stated.

Madam Chair.

Thank you, Mr.

Clerk.

And before we call item number one, I would first like to make a motion to excuse Supervisor Joan Guardio.

A roll call, please.

And on the motion to excuse Supervisor and Guardio from attending today's meeting.

Vice Chair Dorsey.

Aye.

Dorsey, aye.

Member Chen.

Chen, I.

Chair Chan.

Aye.

Chan, I.

We have three eyes.

The motion passes.

And I would like to remind everybody that for items that have budget and legislative analysts report on our agenda.

Typically, we will go to department presentation and then budget and legislative analysts report, and then we will have comments and questions.

Then we'll go to public comments.

So with that, Mr.

Clerk, please call item number one.

Yes, item number one is an ordinance deappropriating 400,000 from General City Responsibility and approximately 14,000 from the Department of Public Works.

And appropriating for District 7 projects in the amount of approximately 164,000 to DPW for median uh improvements and Monterey Heights, new curb ramps in Westwood Park, sidewalk repair in Engleside Terraces, and for Westwood Park Pillars.

100,000 to the department of children, youth, and their families for playground update and black top at the West Portal Elementary School, and for a mural and signage updates at Commodore Slute Elementary, 50,000 to the Arts Commission for a mural on Monterey Boulevard, 50,000 to the Office of Economic and Workforce Development for a series of art pop-ups on Ocean Avenue.

And 50,000 to the municipal transportation agency for daylighting and bollards in Sunnyside in fiscal year.

Um 2025 to 2026.

Madam Chair.

Good morning.

Thank you, Chair Chan and members of the budget committee for hearing this item today.

My name is Emma Hare.

I am a legislative aide for Supervisor Mirna Melgar.

Uh every year, Supervisor Mirna Melgar operates the participatory budgeting program through her office, which takes proposals from members of districts, the members of the district seven community on projects that can improve the community.

Um these can be all kinds of things from murals to fixing a broken fence, anything that makes San Francisco and District 7 shine a little bit more.

So this year we had um a little bit more than a dozen proposals, and they were reviewed by the community review committee, which narrowed them down to make sure that they were all things that would benefit the district seven community.

And then it went to a public vote, in which eight projects prevailed.

Those projects are the ones that were mentioned by the clerk and are listed in the legislation.

Um and we had more than we had more than a thousand uh district seven residents vote this year, which is very exciting.

So we are uh hopeful that the budget committee will um approve this legislation to allocate said funds to the projects that have been selected by the community, and I am happy to take any questions or comments.

Thank you.

Good morning, Nick Menard from the budget legislative analyst office.

Item one is an ordinance that appropriates 414,000, 400,000 is from an account set aside for uh district seven participatory budget projects, and 14,000 is from the Department of Public Works budget.

Uh that money will be reappropriated to various projects, which we detail on page two of their report.

Uh, we recommend approval of item one.

Thank you.

We know that um it's always a heavy lifting, actually.

Uh, it may seem meanly like not a lot of money, but we know that the staff is always uh doing a lot of those heavy lifting and a lot of work.

We really appreciate Supervisor Malgar and team uh for the effort to keep this going.

Uh a long-standing tradition, and actually started with uh former board president Norman Yi in his own district.

So thank you for doing that.

And so with that, we'll go to public comment on this item.

Yes, if we add new members of the public who joined us today who wish to address this committee regarding this item number one.

That was your opportunity.

Madam Chair, we have no speakers.

Seeing no public comments, public comment is now closed.

Colleagues, I would like to move this item to a full board with recommendation and a roll call, please.

And on that motion to forward to the full board with a positive recommendation, Vice Chair Dorsey.

Dorsey I, Member Chen.

Chen, I, Chair Chan.

I.

Chan, I, we have three ayes.

The motion passes.

And Mr.

Clerk, please call item number two.

Yes, item number two is a resolution approving modification number five to an airport contract.

Uh project management support services for the San Francisco International Airport, international terminal building phase two project with AGS Inc.

to increase the contract amount by uh 2.85 million for a total not to exceed amount of 12.5 million and extend the contract term for services by 187 days from June 27, 2026 for a total term of June 16th, 2020 through December 31st, 2026, pursuant to the charter.

Madam Chair.

Thank you.

And we have uh airport here.

Good morning, good morning, Chair Chan, Vice Chair Dorsey, and uh Supervisor Chen.

Uh the airport requests your approval of modification number five to the project management project management support service contract with AGS Incorporated for the international terminal uh building phase uh project two phase two project.

The modification increases the contract by 2.85 million for a new not to exceed total of 12.5 million and extends the contract duration by six months from June 27, 2026 to December 31st, 2026.

This contract results from a 2019 competitive um request for proposal process in AGS Incorporated, was the highest scoring proposer.

Uh, the international terminal building phase project two phase two project is a part of the assent program, and AGS will provide overall management expertise and oversight of the project, including design and construction management services, project control, contract administration, cost estimating services, and field inspections.

There is a LBE uh subconsulting participation requirement of 18% with AGS surpassing with 18.5.

The airport conducted a formal performance evaluation of the contractor for the period of September 2024 to February 2025, and the contractor met or exceeded expectations in the actual performance categories.

Uh the BLA has recommended approval, and I have my colleague Rick Thal with us for in case you have any questions after the BLA report.

Thank you.

Item two is a resolution that approves an amendment to an airport contract with AGS Incorporated.

Uh there are also several several um subcontractors, which we detail in our report uh on page seven.

Uh the contract provides project management support services for a capital project in the international terminal to redo the um federal inspection area.

We detail the uh budget for the contract on page nine of the report uh and the total cost of the contract, $12.5 million dollars is funded by airport revenue bonds.

The this contract is about 4.2% of the total um capital project budget, which is about 292 million dollars.

That is a pretty consistent share of the total project budget as it was estimated from the request for proposals back in 2019 when the contract was originally procured.

And there are no performance issues with this contract.

So we recommend approval of item two.

Thank you.

Thank you, Airport for bringing this forward.

Good to hear a contractor exceeding the expectation.

And so thank you so much for your work.

We'll go to public comment.

I don't have any other questions, so let's go to public comment on this item.

Yes, we're now opening public comment for this item number two.

If you have any members of the public who wish to address this committee, Madam Chair, we have no speakers.

Seeing no public comment, public comment is now close.

Colleagues, I would like to move this item to full board with recommendation and a roll call, please.

And on that motion to forward this resolution to the full board with a positive recommendation, Vice Chair Dorsey.

Dorsey, I member Chen.

Chen I, Chair Chan.

Aye.

Chan I.

We have three ayes.

The motion passes.

And Mr.

Clerk, please call item number three.

Item number three is a resolution approving and authorizing the execution, delivery, and performance of the First Amendment to a port lease for building 49 located at 701 Illinois Street within Crane Cove Park between the Port of San Francisco and the Young Men's Christian Association of San Francisco to eliminate the provision, which would reduce by 6,000 the amount of rent credits that are intended to offset operation and maintenance costs associated with the public restrooms and provide 150,000 in new rent credits to partially offset unexpected costs related to improving the structural condition of building 49, effective upon the leader of uh ports execution of the first amendment or October 1st, 2025, and authorizing the executive director to enter into any additions, amendments, or other modifications that do not materially increase obligations nor liabilities to the city or port and are necessary or advisable to complete the transactions, which this resolution contemplates and effectuate the purpose and intent of this resolution.

Madam Chair.

Thank you.

And we have um SF Port here.

Good morning, Chair Chan.

Supervisors Dorsey and Chen Wyatt Donner Landle with the Ports Real Estate and Development Team.

I'm here to present on this amendment to the YMCA lease in Greencoe Park.

So the Dog Patch YMCA at Crane Cove opened in February 2025.

We're very excited to have it open.

It's a great addition to the park, and I'd like to thank the Y for their partnership in this project.

So the project is within Dog Patch Cranco Park, a port park opened for about seven years.

Within that, the master tenant is the Y, which operates the community wellness facility.

Dog Patch Paddle is a subtenant.

They offer retail and aquatics, including kayaking, and the Y is seeking an additional subtenant for retail food and beverage.

During construction of this project, the Y faced a lot of complexity, and there was some additional seismic work needed to get the building ready for opening.

That increased the costs.

And so the port and Y work together to offer some additional rent credits to offset this cost.

So of the a little over 400,000 in structural improvements.

And there was a penalty for delays in construction related to opening the restroom.

They asked for a waiver of that for three months due to those delays in constructions.

And the port commission approved and I'd like to thank Supervisortive of both the 150,000 dollars in rent credits and the waiver of the six thousand dollar penalton as well for his sponsorship of this item.

I am available to answer any questions.

Do you remember when you came before us that uh and I would need you to help me uh remind me um that it wasn't the rent wasn't really high, I think, for uh YMCA, and partly because they were committed to do um renovation uh and the improvement and I also remember we I think we provided them uh a sort of like a waiver or so source because they're or uh if I remember correctly, if we were doing the city, the port is going to do the renovation, then you know we have to go through the bidding and all the stuff.

So what happened is we know that they're TED tenants, so we sort of release the YMCA for them to actually do the renovation themselves and they can select whoever it is they want to select and then come to the do the renovation, and that we also because they're doing the renovation, then we give them some kind of credit already uh for rent and but before longer term because we assume that they're gonna be there for longer.

Could you remind me all those terms again?

Sure.

So the the lease is for 10 years, the rent escalates throughout over the course of the 10 years, it's uh around 1.06 million dollars.

So this credit brings it down to 913,000 dollars.

It's about a 14% discount on the the total period.

Um and yes, the YMCA does the construction.

Uh, I I will emphasize that the port's historic structures are are quite complex and difficult to work with, and we regularly see uh unanticipated change orders for construction.

Um, and this is really an effort to work with a good partner in the Y to make sure this is successful.

Um the rent on that structure is complicated because of the condition it was in.

Yeah, and it is serving a park within the port uh and providing a restroom, which is a really critical amenity to the park that the park did not have with that structure.

Um so that's part of the different push and pull of the rent and um delivering this successfully.

Yeah, and then so how's the restroom?

So when is the restroom renovation timeline?

The restrooms open and operating, yeah.

Okay.

I mean, I I think that is something not for not to pick on the Cranco Park or YMCA.

In fact, they're great partner.

We were so pleased.

I was very pleased.

I I don't want to speak for everyone else, you know.

But I was very pleased that when the port and uh YMCA came to an agreement and that YMCA was gonna take the space of Cranco Park because they do so much more, um, you know, and many recreational activities uh in that they're willing to take up that space.

Um and we know it's very welcoming for families and and that's what we want them to be.

So I'm still very excited about the partnership.

I do think that for the long term, I agree with you that not only the port property, any city properties have our like challenging issues.

That's why we always tend to look to our partners and our um le like our tenants to help us to take care of some of the stuff.

But as it turns out, I don't know if it's fair, you know, for our tenants or even like like what do we then how do we analyze to say this is actually fair both for the tenants and for the for the landlord uh city uh as a landlord.

So I I think not today, in the longer term as you return, uh as the port returns.

Uh let's have a better understanding uh as you continue to uh lease out all the port spaces and this is just generally speaking for all the city departments.

Definitely we're always endeavoring to improve our delivery of projects and working with partners, um, but happy to be here today with something that I think both partners are, you know, maybe not the ideal situation, but we can be live with and be happy that you're working out.

Yeah, I'm glad you're working out the terms and condition.

Uh and I I I appreciate uh again YMCA for the work.

Um I don't see any other name on the roster.

I don't have any other questions.

Uh let's go to public comment on this item.

That's where you're now opening public comment for this item number three.

If we have any members of the public who wish to address this committee, Madam Chair, we have no speakers.

Seeing no public comments, public comment is now closed.

Um, colleagues, I would like to move this item to full board with recommendation uh and a roll call, please.

And on the motion to forward this resolution to the full board with a positive recommendation, Vice Chair Dorsey.

Dorsey, I, Member Chen.

Chen, aye, Chair Chan.

I Chan, I.

We have three ayes.

The motion passes.

Thank you.

And um, Mr.

Clerk, please call item number four.

Item number four is an ordinance amending the planning code to waive certain development impact fees in the market and Octavia Area Plan or the Market and Octavia Area Plan and Upper Market Neighborhood Commercial District Affordable Housing Fee, the Market and Octavia Community Improvements Fund, the Van S and Market Affordable Housing and Neighborhood Infrastructure Fee, and the Van S and Market Community Facilities fee to amend the Van S and Market Residential Special Use District to provide that the Market and Octavia Community Advisory Committee shall sunset six months after the effective date of this ordinance and to make conforming amendments to some of the definitions in the planning code, confirming the planning department's determination under the California Environmental Quality Act, and making public necessity, convenience, and welfare findings, and making findings of consistency with the general plan and the eight priority policies of the planning code.

Madam Chair.

Thank you.

And today we have the Office of Economic and Workforce Development here.

Thank you very much, Chair Chan.

Good morning, supervisors.

Jacob Bentley with the Office of Economic and Workforce Development.

The item before you is an ordinance relating to the Market and Octavia Plan Area that was adopted in 2007.

This was an ordinance that uh upzoned the area after the removal of the Central Freeway to create a transit-oriented mixed-use neighborhood in this area.

As part of the plan, uh, two impact fees, development impact fees were created that apply to the entire Market Octavia area that you see in that map.

Also within the area, mostly in the red area that you see around Van Nessen Market, the plan also created a Van Nessen Market SUD special use district that imposes an additional three impact fees on top of those baseline two impact fees for market Octavia.

So there's a total of five development impact fees in that Van Nessen market or sometimes called the hub area.

Uh since 2008, the plan has been quite successful in delivering what it set out to do.

4,800 new housing units have been completed in the area since 2008.

1,700 of those have been affordable, or 35% of them.

The community infrastructure fees in the area also generated over that time 53 million dollars that went to community infrastructure projects.

Most of which, uh, from the original plan have been completed as of this date.

So it's been a successful plan in many regards.

Uh however, times have changed since the pandemic, as we all know very well.

Uh, in terms of development, the development pipeline has effectively uh shut down since that time in the market Octavia area since 2020.

Only two market rate residential projects have broken ground and been completed for just 37 units.

There are currently 26 projects in the planning department's development pipeline that have been approved but not yet moved forward to construction and completion.

Those represent 2700 units in this area that are approved but currently stalled due to market conditions and development costs.

Of course, with the slowdown in development, consequently, the revenue from these development impact fees has also stalled.

There's been almost no revenue since 2020 into this program, and the planning department currently projects no additional revenue over the next three years, given that there are no projects currently moving forward to construction.

So effectively, we had a really good run from uh 2008 to 2019.

Since 2020, we're now looking at potentially an eight-year stretch of time where there will be no revenue coming in uh from these fee programs.

Meanwhile, the area plan fees themselves have actually become uh an impediment to moving forward with the projects because they do represent a significant cost to developing these projects between a third and half of any given project's uh total impact fee bill to the city is represented by the fees we're talking about here today.

That represents 20,000 to $60,000 of additional cost per unit developed in the area.

So uh effectively the we're at a point now in the current conditions where these fees have become really counterproductive in achieving the goals of the plan, which is to provide housing in a vibrant mixed-use neighborhood.

That brings us to the ordinance before you today, which was introduced by Mayor Lurie with the co-sponsorship of Supervisor Dorsey and Mahmood, who represent two of the three supervisorial districts that are covered by this plan area.

The ordinance would sunset all five of these development impact fees in the area.

Uh it would also sunset the Market and Octavia Community Advisory Committee.

This was a community advisory committee as is typical that was set up when the plan was adopted.

Many of the area plans that have come subsequently have included a sunset date for those CACs.

And in fact, the Board of Supervisors' current policy is that when new ones are created, they should have, I believe, a three-year sunset.

So by making this change, it would bring the market Octavia CAC into conformance with others, for example, the Eastern Neighborhood CAC has recently sunset.

I want to be very clear that while the proposal is waiving the area plan impact fees, that all of the citywide development impact fees would continue to apply to these projects.

Those include the inclusionary housing fee program, the transportation sustainability fee, child care fee, as well as the arts, public arts fee program.

Also, these developments would generate significant property tax revenue when they're able to move forward.

On both of these points, as you'll see in the BLA report, we're projecting that as far as the citywide impact fees coming in, those total to about 135 million dollars of citywide impact fees we would get when these projects are able to break ground as compared with around 80 million of the local area impact fees that we'd be foregoing to try and achieve that citywide revenue.

As far as the property tax is concerned, the estimate from BLA is around $13.5 million a year in new property tax revenue per year if all the projects in the pipeline are constructed, which over 10 years would be another 135 million.

So effectively, the sooner we get these out of the ground, the sooner we start realizing that additional revenue.

And an important thing about both the citywide impact fees and property tax are that those are fee revenue sources that can be used very generally throughout the city.

The impact fees can be used on the city overall citywide infrastructure needs and affordable housing needs.

And the property tax, of course, as you all know, is what funds all of our city services.

The current fees that we're talking about waiving can only be spent on capital improvement projects in this area.

That's important to remember.

They will continue to be achieved by the capital departments that are responsible for those projects.

So everything on that list is in the capital plan of the responsible department, whether it's REC Park or Public Works or MTA to move forward.

You know, we've worked with the departments, they all recognize that these fees are a very small portion of any given capital project in this area in terms of the funding stack.

It's also a very unreliable and volatile funding source.

So many of the projects that happen in this area already have to find other sources in order to be able to move ahead, such as the Buchanan Mall project that recently started without receiving the additional impact fee revenue from this program that it was anticipating.

So with that supervisors, we believe this is an opportunity to take stock of the conditions that we face today while also celebrating the success of this plan and make these necessary and appropriate modifications to the plan to ensure that it can continue to deliver the vibrant walkable transit-oriented neighborhood it was envisioned to.

I'm here also with staff from the planning department and MOCD and here for any questions.

Thank you so much.

Item four is an ordinance that would waive development impact fees in the Market Octavia Area Plan and Van Niss and Market Special Use District.

So they are five fees, two for affordable housing, and three for infrastructure.

And they the ordinance would also sunset the market and Octavia Community Advisory Committee six months after enactment.

The plan department does not expect that any of these fees will be paid from projects currently in the pipeline due to market conditions and the fact that the fees are not due now until the projects are fully developed.

As we detail on page 20 of our report, the total uh fee waivers amount to about 81 million dollars.

That's based on the 26 projects that are in the pipeline in this area.

That includes 47.6 million dollars for infrastructure and 33.4 million dollars for affordable housing.

And on the infrastructure, we do detail the projects on page 18 of our report.

The projects would still be subject to citywide fees that apply in this area.

And again, based on the 26 projects in the pipeline, those fees, if the projects were developed, would amount to $135 million.

And as also we know in our report, if all 26 projects are developed, they would generate, we estimate about $13.5 million in property tax revenue for the city.

That's a general fund revenue.

We didn't estimate the other tax revenue that would the city would benefit from in terms of sales tax, but those are other benefits we did not quantify.

We did not we know it as a policy consideration in our report that the board could consider alternatives to this proposal, including not waiving all five fees, adding a sunset date to this fee waiver to provide to test the theory that this will move all the projects forward or most of the projects forward, and also provide some kind of time incentive for the developers to move forward.

We also recommend the board considering a goal of using the additional tax revenue generated within the area to basically backfill the fee revenue loss for affordable housing and infrastructure, because we know those projects are depending on that revenue to some extent, but we do consider approval to be a policy matter for the board.

Thank you.

Vice Chair Dorsey.

Thank you.

Thank you, Chair Chan, and thank you to everyone at OEWD and the BLA for your work and insights on this.

I am delighted to join with the mayor and supervisor Machmood in bringing forward this legislation today, which will help kickstart projects in the Market Octavia area.

This area is particularly important not only because of its contributions to our citywide housing goals, but also because of its strategic location as a transit hub at the gateway of our civic center and downtown.

This legislation has the potential to deliver 2,700 units to the area.

Bringing new homes to this neighborhood will fulfill a nearly two decades long vision supporting small businesses and jobs, contributing to our tax base, and moving the needle on downtown recovery.

And I feel strongly about this that there is no downtown recovery without a mid-market recovery too.

While the tremendous progress has been made on housing production in the area, we are at an impasse for reasons that are not not entirely in our control, but for factors that we do have some control over.

Since 2020, many projects have stalled.

Nobody, not the city, not our residents, not small businesses or employers benefit from vacant lots and holes in the ground.

This legislation simply waives additional fees that apply only to this area.

These additional fees have put these projects at a disadvantage compared to other parts of the city.

Projects will still pay their fair share of citywide fees.

As you've heard from staff, we're not giving anything up.

Our fee revenue since the pandemic has been stagnant, and we aren't expecting for at least that for another at least another uh few three years.

Uh, we only stand to gain the benefits of the remaining citywide impact fees, increased property tax revenue, and of course the many added benefits of new residents and foot traffic in this area.

This legislation has broad support from the San Francisco Building Trades Council and other affiliated unions.

Um, this proposal impacts uh three supervisor districts, districts five, six, and eight, so it has generated much discussion and interest.

I am happy to say that we have reached a consensus among the supervisors whose districts are impacted.

Specifically, I want to thank President Mandelman for his suggestion that we break this discussion into two parts.

First, to address the fee waiver for the 26 pipeline projects representing almost 2,700 units in this area that have been approved but have not been able to begin construction due to market conditions and high development costs.

Some of these projects have been stalled for five years or more, and it's important that we do everything we can to help move them forward and get them unstuck and do this as quickly as possible.

And second, to address how the fee waiver should be applied to future projects that have yet to be approved.

We have broad consensus to move forward with this fee waiver for the first category of projects, and we are continuing to have productive discussions on the second category, but are not quite ready to move forward with that today.

To effectuate this, after public comment, I would like to duplicate the file, amend one version to limit the applicability of this waiver to pipeline projects, and continue the duplicate as conversations consider, continue to take place around future projects and the long-term applicability of this waiver.

These amendments I am under I am informed are non-substantive.

And Chair, I am happy to uh get into the details of where we are striking language after public comment.

But I am informed that President Mandelman and Supervisor Machmo both have staff members here who would welcome the opportunity to give comments.

So through the chair, might I ask them to come up.

Hello.

Thank you, Chair Chan, Supervisor Dorsey and Supervisor Chen.

My name is Melanie Matthewson.

I'm a legislative aide for President Mandelman.

I'm here today on his behalf to express his support for this legislation as amended.

President Mandelman's goal with this amendment and the subsequent duplicate is to accelerate the completion of already approved projects while incentivizing future development to comply with the local family zoning program that's currently under consideration.

We believe this approach achieves that goal.

I want to thank Jacob Bentliff and Lee Lakinski from OEWD, Andrea Ruiz Esquida, and Brad Rusey from the City Attorney's Office, Lily Langlose from Planning, and Chair Chan and her aide Frances Shay for their work on this amendment.

Thanks.

Hi.

Thank you, Chair Chan.

Thank you, Vice Chair Dorsey, Member Chen.

My name is Rain El Cooper.

I'm a legislative aide for Supervisor Balal Machmood.

He couldn't make it today as he's at the Air District Board, which is meeting as we speak.

Our office really appreciates the opportunities we've had to engage with members of the community, especially members of the Hayes Valley Neighborhood Association who've been uh active in their interest on this topic.

We also really appreciate the staff of OEWD and the planning department, Mo CD, DPW, as well as the Arts Commission for helping answer uh some of the many questions we've had from community about the impacts of this legislation uh and the impacts of this fee waiver may have on the district.

Uh the supervisors in support of the amendment as described by Vice Chair Dorsey, duplicating the file, waiving the fees for the pipeline projects, and continuing to engage around amendments to this legislation as it applies to future projects to reflect the feedback uh we've been receiving and to help make sure this waiver is designed in a way that best incentivize best incentivizes getting housing built and delivering the best value for residents in the market Octavia area.

Thanks so much.

Great, thank you.

Um Ms.

Matheson and Mr.

Cooper as well.

Let me add my thanks to um staff and to the city attorney's office and to all the neighborhood leaders and organizations who contributed to these productive conversations and got us to the good place we are in today.

In addition, I would like to thank Madison Tam from my office for her great work on this as always.

I'm committed to uh continuing the work to as we bring this duplicated file back.

Um I'm particularly bullish on the hub, I will say in my district.

Um I believe it has the potential to be district six next great high density paragon of 21st century urbanism like uh Eastcut and some other neighborhoods.

So it will be my intention to see that at least three additional fees that apply only to this SUD area are waived in perpetuity for pipeline and future projects too.

Um Chair, that concludes my remarks for now.

And after public comment, I will make the motions to uh effectuate this prop compromise.

Um these amendments.

Thank you.

I appreciate it.

I think that let's um really identify what we're giving up today.

Uh what we're giving up today is eighty-one million dollars worth of fees as indicated by the budget and legislative analyst report.

And these fees are affordable housing fees, community improvements fees, and neighborhood infrastructure fees, and community facilities uh fees, a total of eighty-one million dollars that we anticipated from these 26 um approved and uh pipeline project.

Um I think that uh when I look at this uh eighty-one million dollars fee waivers, but specifically also about the market attavia as an area.

I think that the way I viewed it and I end up, you know, come to the came to the conclusion and in agreement uh was because that I think that I also view this eighty-one million dollars as an investment that we probably would typically do if we were to do a housing bond or anything that or even a revenue bond to um sort of spur and boost housing production.

So that's how I view fee waiver uh in this um legislation.

That the fee waiver is a goal with the goal with a policy goal to boost the housing production that is desperately needed, not just for the city but in the area.

And that I am grateful for my colleagues who are willing uh to take on that housing production, um, you know, ease the burden uh on some other areas, including uh the west side.

Um so I I think that to see this coming forward and to move it forward.

Uh I am in agreement.

What I do have question about though is um at some point uh we need to, and I had this conversation, I think, even when the old MOHCD came like last week uh about uh Baboa SFR, and that is about the infrastructure loan.

Uh and that including a clause of waiving the loan, uh or forgive the loan uh because of the infrastructure.

That uh you know, burden that we put on the development.

Um I think it's uh it's about time that we take a step back as a city and start talking about impact fees, about infrastructure investments that we uh at from time to time, piecemeal um those costs on to different developments that come to the different areas.

Um as a city uh at some point uh to look at it holistically as citywide, but it be the infrastructure that we need as a city, uh, affordable housing that we need as a city, that how do we invest in that, but also continue to um push forward with some of the development, what is uh a fair uh a way to share that financial burden, not just from the developers' point of view, but also our taxpayers and cities point of view.

And I think that I look to the budget and legislative analyst uh and I look to the controller, sort of help us, particularly at the Office of Public Finance, help us understand and better understand, maybe in partnership with OEWD, um, what that actually will look like for the long term.

Um, and so for that I am pleased to see that at least for the 26th project that is right now, let's let's move those four forward and thank you so much for the amendment that that everybody could agree on, and I appreciate it.

And I think that the agreement is really lending on where how about let's um pause uh the potentially permanent fee waiver for the project that we don't even know about.

You know, that's not really approved.

Um, maybe still in discussion, but may and in the area, but but not really we we don't know what they look like just yet.

And so let's focus on the 26 that's already in the pipeline.

Um I don't have any other questions, uh, but I do look forward to continuing conversation.

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

Yes, we're now opening public comment for this item number four.

If we have any members of the public who wish to address this committee.

First speaker, lineup.

I'll start your time.

Um good morning.

My name is Hughes Mendoza, and I'm a field representative with the Carpenter's Local 22 here in the city of San Francisco.

I would like to start by thanking each and every one of you for your time and attention to this matter.

I'm here representing nearly 4,000 members of Carpenter's Local 22 who live and work in the city of San Francisco.

As the largest union in residential construction, we are here in support of the proposed ordinance to waive development impact fees in the market in Octavia area plan.

Our members have worn the brunt of San Francisco's ongoing housing crisis when projects are not built.

It's our members who are out of work, and when housing is not built, it's our members and the entire working class who are driven out of San Francisco.

So we thank Mayor Leary and the board for introducing and considering smart and reasonable initiatives such as this.

San Francisco has to do what it can to get projects in the area plan unstuck and to start getting construction going.

Our members are here.

We are ready to get to work and ready to build the housing San Francisco needs.

We thank you again for consideration of this legislation, and we look forward to working together with the board to build the San Francisco we all wish to see.

Thank you for your time.

And thank you much for addressing this committee.

Next speaker, please.

Morning supervisors.

Uh Mark Bebs and I'm president of Emerald Fund.

We are San Francisco housing developers.

We've built three projects in the area: 100 VS, 150 Venus, 101 Pulk, totaling 1,000 apartments, including 120 uh affordable um homes.

And we're working on one oak, which is one of the one of the uh pipeline projects, 541 homes.

Um, and it it the numbers don't work.

That's why we're not seeing any um new residential construction in San Francisco.

Um, the fee reduction would be very material.

It would uh probably, in terms of reduction of cost or um or uh income increases it, it would speed up construction by about 18 to 24 months getting started with the project.

And if the project did go forward, if it did pencil, we'd be paying over seven million dollars of fees, uh impact fees, and the property taxes alone would be five million dollars every year going forward into perpetuity.

And as of right now, we're not paying any fees, and so uh the project doesn't work.

So this would be a big um help.

Uh it wouldn't start us tomorrow, but it would get us, as I said, 18 to 24 months closer uh to starting.

So thank you.

And thank you much for your comments.

Next speaker.

Good morning, Supervisors Jane Natoli.

I'm the San Francisco organizing director for UMB Action here to speak in support on this item today.

Uh I think we've seen that it's a challenging environment, and with the Market Octavia Plan, we think that this is an innovative way to try and move forward with this to try and unlock some homes.

Uh as Mark said before me, um, you know, that's that's property taxes that we can realize to also pay for services in the future.

That's more places and more options for people to live.

It's more jobs for, you know, good San Franciscan jobs that we have right here.

These are all benefits that we see.

We are aware that there's a trade-off with some of these fees that were previously negotiated, but considering nothing is moving forward at this moment, we think that this is the kind of um approach that we need to take to really kind of dig in and figure out how we can unlock it.

Uh, also want to say this on behalf of some of the other organizations who couldn't quite make it today, our friends at Housing Action Coalition also in strong support of this uh and want to see this move forward.

Thank you for your time.

And thank you much for addressing this committee.

Next speaker.

Uh good morning, supervisors.

My name is Robin Levitt.

I'm a 30-plus year resident of Hayes Valley in the Market Octavia plan area.

I chaired the three campaigns to replace the Central Freeway with Octavia Boulevard.

Uh, and I participated in the crafting and adoption of the Market Octavia Plan.

I've also met been a member of the Market Octavia CAC since the its inception in 2008.

So there are the two issues that I want to address are the sunsetting of the impact fees and the sunsetting of the market Octavia CAC.

Um with regard to the impact fees, given all the economic and social factors affecting development, it's unclear if remove removing them will make any difference regarding the remarks made by the uh gentlemen from Emerald Fund.

Presumably all these stall projects when they submitted their plans years ago, took these impact fees into account when they did their pro forma in that time the the projects worked with the impact fees.

So what has changed now except the economic and social factors that are affecting us?

So those are more important than these impact fees.

Um I want to add if more housing and tax revenue is the stated goal, I have to ask myself why is the city left five former freeway parcels along Octavia Boulevard, slated for housing, undeveloped and vacant for the past 20 years.

They could have been developed many years ago and we could have gotten uh taxes from those.

Um regarding the sunsetting of the CAC, the body has two roles.

One is to provide community input on uh the impact fees, and the other is to make sure that development in the market Octavia plan area is consistent with uh the market octavia plan.

Um looking at is it my time up?

Um, 30 seconds.

Oh, okay.

So, anyhow, I just want to say I have a lot of questions.

I want to make sure that there's community input into future uh community improvements, and where's the money for needed in community improvements going to come from that will make the market octavia plan successful?

There are many that have as yet been funded.

So I caution you about removing these impact fees.

Thank you.

And thank you much for addressing this committee.

Next speaker.

Good morning, supervisors.

Uh, my name is Vladimir, and I'm the chair uh of the transportation and planning committee uh of the Hayes Valley Neighborhood Association.

So uh we all want to unlock the construction of more housing.

Uh housing is in fact the backbone of the Mark and Octavia Plan, which uh HBA helped shape uh with SF planning uh and support its adoption way back in 2007.

Our neighborhood has welcomed new development at all income levels during that time.

Uh with that being said, uh the Mark and Octavia plan was designed to manage growth in a way that benefits all residents, not just developers.

The community impact fees are a fundamental part of this balance.

They're essential for funding vital neighborhood improvements such as affordable housing, improved public spaces, and transit infrastructure.

These aren't luxuries, these are necessities that help mitigate the effects of a development and maintain a livable city for everyone.

So it's important to not lose sight of the community partners that were critical to the success of the plan area and made it attractive for development in the first place, where not for community members fighting to get the central freeway demolished and working alongside planning to establish the MNO area plan.

We wouldn't even be talking about any of this right now.

So I also want to note that this whole process has been rushed uh with only one community meeting taking place because I took it upon myself to organize a meeting with city agencies.

Uh to say that these community impact fees uh which have had such an outsized uh positive benefit to the neighborhoods are the reason projects aren't penciling out is very disingenuous uh when we know the lending landscape and the rising costs of labor and materials are the real hindrance.

Uh any discussion of foregoing over 81 million in potential community impact fees needs to come with commitments from developers that they will indeed build and not just sell entitled projects for a higher dollar amount and ask for endless extensions.

Uh I want to thank you in advance for your thoughtfulness on this matter.

Uh again, the potential sunsetting needs to be done with a level of attention care that acknowledges these community impact fees and aren't the reason uh and we know that these aren't the reason why these projects aren't penciling out and not getting done.

All right, thank you.

And thank you for addressing this committee.

Next speaker.

Good morning, Chair Chan and members of the budget and finance committee.

My name is Kelly Growth with the Council of Community Housing Organizations.

We are opposed to waiving these impact fees, but support the amendments that would sunset this fee waiver.

Impact fees are a basic promise that developers help pay for the child care, transit, open space, and affordable housing that helps our communities thrive.

Taking them away breaks that promise, damages community trust, and weakens San Francisco's planning framework.

The fact that this legislation was put forward without the committee input was deeply disappointing.

In addition, the planning department has said that the real reasons for the slowdown in building housing is attributed to the current economy, including high interest rates and raising construction costs.

Waiving these fees will take 81 million away from affordable housing and neighborhood needs, which we desperately need to meet our housing goals.

Thank you.

And thank you much, Kelly Griffith.

Next speaker, please.

Hello, yes.

Uh, I'll be sharing a public comment regarding residential um buildings that are stacked.

I've had a prior prior experience with someone that had given out permits for public housing, affordable housing, but they said this psychological social effect that might not be weighed in your analysis is that it's like if you put animals in cages on top of each other, it's gonna have an offset of epidemics that are gonna impact mental health.

So I'm not sure if you're weighing that in your economic development plans, but I do recommend you assess to see if developing infrastructure at scale in urban areas would be constructive to the livelihoods of residents in foresight.

So it's not 2020 again.

And thank you for your comments.

And seeing no other speakers, Madam Chair, that completes our cue.

Seeing no public no more public comments, public comments now closed.

Vice Chair Dorsey.

Thank you, Chair Chan.

And I would uh like now to uh first duplicate this file.

Um then I would like to move to make a motion to amend the original file to narrow its scope of the waiver to pipeline projects.

To do that, um I would move to strike lines 22 through 25 of page five, and then that would resequence the following two paragraphs on page six, as paragraphs one and two.

Um I would then move to send the item as amended to the full board with a positive recommendation.

And finally, then I would move to the continue the duplicated unamended file to the call of the chair, or is that necessary?

Yeah.

Okay.

Sorry.

Uh the the duplicated unamended file would be continued to the call of the chair.

Okay.

And on that, okay.

First off, the original file is to be duplicated.

The parent file is to be amended as so written to the record by Vice Chair Dorsey.

Um, and we will forward the parent file to the full board with a recommendation as amended.

And then we will take the duplicated file unamended and continue that to the call of the chair.

Sounds right.

Yes, and on that motion by Vice Chair Dorsey.

Uh, yes.

Uh Vice Chair Dorsey.

Aye.

Dorsey, I.

Member Chen.

Chen I.

Chair Chan.

I.

Chan I.

We have three ayes.

The motion passes.

Thank you.

And then we still we're not done yet.

Uh, with that item number five, please.

Yes, item number five is a resolution authorizing the recreation and park department to accept an in-kind grant from the Union Square Alliance.

Value that approximately 300,000 for uh sound system improvements at the Union Square Plaza stage, effective upon approval of this resolution through notice of substantial completion.

Madam Chair, thank you.

And today we have recreation park department here.

Hello, everybody.

Good morning.

I'm Susan Side with the Partnerships Division at Rack and Park, and I'm here to talk about uh item number five, as so described by the clerk just now, which is a $300,000 in-kind grant from the Union Square Alliance for Union Square Plaza.

The department is expected to partner with the Union Square Alliance on an improvement project for the existing stage at the plaza.

The Union Square Alliance was established in 1999 to elevate the plaza with uh well as a welcoming destination for the public visitors and businesses in the area by activating this gathering space through music and arts installations, events and programming.

The Union Square Alliance has helped to revitalize the space post-pandemic for both local residents and visitors from all over the world.

In 2023 and 2024, they partnered with the City of San Francisco to present a series of large and small concerts, which are attended by thousands of people.

And since earlier this year, they've activated the plaza on a daily basis, including events using the stage several times a week.

All of these activities have required portable sound systems to be brought out often at considerable cost to the sponsors of the events for the plaza.

The Union Square Alliance is proposing two 20-foot metal pillars that will be installed on either side of the existing stage rather than having to haul in the speakers for each event.

This will streamline the process and enable a more permanent sound system to be affixed to these pillars.

It will make programming more efficient, more accessible to performers, and allow for a better live experience for the audience members with better sound.

The department would own and maintain the pillars, on which the speakers, which would be owned by the Union Square Alliance would be mounted on.

The improvements in speakers have been funded by a grant from the Office of OEWD.

I am here with Ken Rich from the Union Square Alliance to answer any questions that you might have, but I respectfully ask the committee to support the department's in kind grant for the speakers.

Thank you.

It's good to see you.

Thank you so much for your presentation today.

We appreciate you being here.

I don't see any other questions.

Uh it's good to have a better sound system at Union Square Plaza, and especially we are supposedly have more free concerts there, as a part of the agreements from another planning entertainment for additional concerts on the West Side in Gunning Park.

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

Thank you.

Thank you, Supervisors.

My name is Ken Rich.

I'm here representing the Union Square Alliance.

This project has been a long time coming, and we're really grateful to be here and grateful to Supervisor Sauter, the Rec Park Department, and OEWD for partnering with us.

The Union Square District, as you know, is the epicenter of our downtown recovery.

We're the most important retail center in the region, the site for more than 12,000 hotel rooms and ground zero for tourism and the cable car.

Union Square Plaza is in the middle of all of this and is of late really been picking up steam with daily activities ranging from kids' play hours, chess, ping pong, noontime concerts, and much more.

Music from small-scale performers to major concerts is a centerpiece.

And up to now, as Susan mentioned, each time there's an event, sound equipment has to be rented, set up, brought in at significant cost in both dollars and time.

The project will provide permanent infrastructure that just needs to be plugged into by the performers.

This will make it easier, quicker, and cheaper to put on music uh musical and other events.

It will also ensure that the sound is projected where it's supposed to be, down on the plaza where the audience is and not bouncing off the buildings around.

Working with Rec Park, we've identified the sound equipment to be ordered, and we've procured a contractor to build the pillars and secured all the required permits.

As soon as we get Board of Supervisors approval, we're ready to start, pull the trigger on all this, and we expect to cut the ribbon on the new system in the March of next year.

Thanks again.

And I'm available for any questions.

Thank you much, Ken Rich.

If we have no other speakers, Madam Chair, I could put CRQ.

Seeing no more public comments, public comment is now close.

Colleagues, I would like to move this item to full board with recommendation and a roll call, please.

And on that motion to forward to the full board with a positive recommendation, Vice Chair Dorsey.

Dorsey, I, Member Chen.

Chen, I.

Chair Chan.

I.

Chan, I.

We have three ayes.

The motion passes.

Thank you, supervisors.

Thank you.

And uh, Sir Clark, do we have any other business before us today?

Madam Chair, that completes our business.

The meeting is adjourned.