Good morning.

The meeting will come to order.

Welcome to the October 29, 2025 meeting of the Budget and Finance Committee.

I'm Supervisor Connie Chang, Chair of the Committee, and I'm joined by Vice Chair Supervisor Matt Dorsey and Supervisor Cheyenne Chin.

Our clerk is Brent Halipa.

I would like to thank Jamie Evercherry 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 to our proceedings.

Should you have any documents to be included as part of the file, these 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.

A L I P A S F G O V dot O R G.

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

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

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

Carlton Big 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 November 4th, unless otherwise stated.

Madam Chair.

Thank you, Mr.

Clerk.

And for uh general reminder for the public is that for any item that have budget and legislative analysts report, uh, what we would do usually is department presentation, then go to the budget and legislative analyst, and then we will take questions and comment from this body.

Then we'll go to public comment.

And so with that, Mr.

Clerk, please call item number one.

Yes, item number one is an ordinance amending the administrative code to create the small business rezoning construction relief program to provide financial support, including grants and loans to businesses impacted by construction relating to the city residential rezoning program adopted in 2025-2026, establishing the small business rezoning construction relief fund to receive monies for the program, designated the Office of Small Business and Office of Economic and Workforce Development to administer the fund and the program to promulgate rules and regulations and furtherance of the program and amending the business and tax regulations code to allow taxpayers to designate a portion of their gross receipt taxes for deposit in the fund.

Madam Chair.

Thank you, Mr.

Clerk, and we want to acknowledge and welcome Supervisor Malgar uh to the chamber, who is the sponsor of this legislation, and we thank you, Supervisor, for your leadership.

Uh, would you like to provide opening remarks?

Sure.

Thank you so much, Chair Chan, and thank you for scheduling this item.

This legislation establishes a small business rezoning construction relief fund and program as a proactive way to address any potential relocation or construction impacts when rezoning projects come to fruition.

Um from our uh rezoning efforts on the west side and north of San Francisco.

While we do not know the full impact or extent of how many small businesses may be impacted by potential construction projects related to the rezoning, we wanted to be proactive and responsive.

Um, this is an issue I've been thinking about for some time.

I requested that the budget and legislative analysts produce an analysis report last year.

Thank you so much, BLA, uh, for looking for ways to mitigate any potential impacts from residential construction along commercial corridors.

The study recommended that the city look into developing this program to support small businesses.

And we do have examples of similar efforts at responsive to infrastructure projects like the Van S BRT and the central subway, but not one necessarily for housing construction.

Small businesses do not have the protections that residential tenants do, uh, like rent control.

Unfortunately, as a local jurisdiction, we are more limited in what we can mandate from commercial property owners.

Small business owners provide all the capital improvements to their commercial spaces, which can be very costly, but do not to get to cash out on those investments if their lease ends.

If anything, these amended amenities benefit the property owner who could easily lease to another similar business for potentially higher rent.

So, with all of those considerations, we want to provide some type of meaningful assistance.

This fund will be administered by the Office of Small Business and the Office of Economic and Workforce Development.

It is meant to support any small business that may be displaced or affected due to the residential construction project within a rezoned area with a cost of relocation and/or potentially returning to the space they once occupied.

The fund and program can also support small businesses along the corridor that may not have to relocate but are impacted by a large construction project that may have other disruptions, for example, reduction of foot traffic.

We also included a two-year look back period so that the small businesses who may not have known they were being displaced by a residential development project could still reach out for support under this fund and program.

The Office of Small Businesses has successfully has a successful record of supporting displaced businesses impacted by disasters such as fires.

So I believe they know how to administer this program in the future.

We drafted the legislation to provide their team parameters, but it is also very flexible so they can design a program that ensures swift implementation and meets the needs as they know them.

The program needs to be easy, it needs to be accessible.

It is my intent that most of the direct support for small businesses would be through direct grants and technical assistance, but the Office of Small Business can also offer loans, though we know from experience that they're not as desirable.

Depending on the funding, the Office of Small Business will do their best to ensure that the grants are of a substantial enough amount and take into account higher cost of investment for businesses like restaurants that need extensive upfront capital for equipment and to meet code to build out a commercial kitchen.

In the legislation, we refer to the existing definition of small business as an entity that has a hundred or less full-time employees, and also annual gross receipts revenue of five million or less.

I also have an amendment today, madam chair, that will expand the definition so that small businesses that are restaurants or even bars that have up to 7 million of grocery seats revenue could be eligible because those types of businesses tend to have shorter margins.

We heard feedback that many restaurants could be left out of the original definition because they may generate more grocery seeds revenue but have higher expenditures for rent, labor, and overhead.

The fund itself is a category four fund.

This allows the fund balance to carry forward and accumulate interest, but it is not an automatic appropriation.

The fund would also need a general fund allocation, which I think this board and mayor should support, and can also collect outside contributions.

We also included an opt-in provision that allows taxpayers of the grocery seats tax to dedicate a portion of their taxes towards this cause, which is something we already do.

Before I reviewed proposed amendments for today, I just want to take a minute to thank Jen Lowe on my staff for having doggedly worked on this legislation for over a year.

The controllers team, the tax collectors team, and the city attorney's office, Hugo Cabrera and Kearney Matsubara for their support on drafting, and the small business advocates like the Council on District Merchants Association and the Golden Gate Restaurant Association for their contribution work and feedback throughout the process.

We received unanimous support for this legislation from the Small Business Commission, and I hope we can stand with small business advocates who have been actively calling for some type of assistance alongside other protections.

This is only one small piece.

The city is developing other tools to prevent the wholesale displacement of our beloved small businesses.

And Chair Chan, I thank you for your leadership on this issue, and being proactive as well.

We need our state legislature to provide more protections and support as well, and I'm committed to working with our local state representatives of this.

So with that, Chair Chan, I would like to provide a summary of amendments for the committee to consider today.

And they are substantive, so I understand that we will have to continue before voting on this item.

The first amendment is on page two, lines 14 to 25, under definitions in for the small business rezoning construction relief fund at a class under definitions to indicate that the gross revenue of a small business to qualify would be adjusted annually, in accordance with the increase in the consumer price index CPI, so that it will read a business or nonprofit organization with a hundred or fewer full-time employees and an annual uh gross revenue of 5 million or less for the 2025 calendar year and adjust it annually each year thereafter in accordance with the increase of the consumer price index.

All urban consumers for the San Francisco Oakland Hayward area for all items as reported by the U.S.

Bureau of Labor Statistics.

And I have shared these amendments with all of you.

Then on page two, lines 22 to 25, and page three, lines one to four under definition section 10.100-335, small business rezoning construction relief fund.

On page four, lines two to seventeen, on page six, lines five to six.

Um I have shared these amendments with the clerk also and the rest of you.

So thank you.

And after public comment, I hope you can consider these amendments.

I'll take any questions that you have.

Thank you.

Uh we will there be a city department uh presentation or this is we're good.

Okay.

Sorry, unless, but I do think that we have somebody here, right?

From no, they're not here.

Okay.

Okay.

Let's go to public comment.

Yes, we're now opening public comment for this item number one if we have any members of the public who wish to address this committee.

As soon as you approach the lecture, I'll start your time when you begin speaking.

Good morning, supervisors Kristen Evans.

I'm here on behalf of Small Business Forward.

Our steering committee sent you a letter this morning.

Uh, while we appreciate uh the lip service being paid to small businesses, the money is not there.

So today we are asking that there be a verbal commitment and hopefully actual commitment to actually putting funds in the fund.

Um, we're asking for an immediate two to three million dollar appropriation of funds to support small businesses already being impacted by the family zoning plan prior to it even being passed.

Thank you.

Thank you much, Kristen Evans.

Next speaker.

Hi, good morning.

I'm Laurie Thomas.

I'm the executive director of the Golden Gate Restaurant Association and also a longtime small business restaurant owner in the city.

Um I first and foremost want to just say that we are 100% in support of this and the amendments.

And while we recognize that there's a need for funds in the future, we'd like to just memorialize this and move forward as quickly as possible.

I want to give a huge shout out to the Office of Small Business to Supervisor Malgar and to Jen for what was really proactive and thoughtful and engaged uh work to get this, and we're um super thankful for this, and we hope that um anything we can do to help move this forward that you reach out in the future.

So thank you everybody for your work on this.

We appreciate it.

And thank you much, Lori Thomas.

And with no further speakers, madam chair, that completes our queue.

Thank you.

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

Um I want to thank Supervisor Malgar for uh this fund.

It's very critical coming in a time as you have acknowledged about the mayor's upzoning plan, creating uh potential impact while significant impacts to our small business.

Um I am disappointed that the small business uh the office of small business is not present today.

Uh what I while I am 150% supportive of this fund, Supervisor.

Uh, uh what I am uh have I have issue with is uh actually the Office of Small Business during this entire process of the upzoning um plan.

Um, while that Office of Small Business has been providing technical support uh for our constituents for many merchants and small business throughout the city, what they have not done uh through during this upzoning process is to step up to the plate, providing uh necessary and concrete proposal and policy recommendations to allow people like us, policymaker uh in the legislative branch, but also as well as the executive branch to actually put forward both amendments to the upzoning plan as well as either impact fees or necessary fees or funding sources recommendations to allow us to provide concrete support to small business that they actually serve.

Uh instead, what we have been seeing is sort of dodging that responsibility and allowing uh everyone, especially the stakeholder, to actually like fight for themselves to fend for themselves uh and among all the small businesses and to task uh supervisors uh in this space to do the almost impossible, uh, meaning to start and to have a fund during the budget deficits, which is very difficult already, and as of you know, yesterday or you know, we are announcing $3.5 million for the immigration rate uh because we're anticipating those increases, and so that we can providing those aid to the immigrant defense funds.

To today, we're gonna announce along with Mayor Lurie uh additional funding to tackle CalFrush uh because the Trump administration is stopping the funding.

Uh and now that this upzoning plan in itself is a self-imposed process uh by the states and to the city, and the city is now creating this upzoning plan without again a concrete plan uh to protect our small business.

All which is to say I'm disappointed in the Office of Small Business, and I'm also disappointed that they're not here today.

Um, but I am grateful and really appreciative to you, Supervisor Malgar, uh, of your effort.

Uh you're doing the impossible work, and I so appreciate your leadership, not just as our supervisor, but also our land use chair.

Uh, and for that, I'm so just very grateful uh for for that.

And so I would like to colleagues uh first move uh make the motion to amend uh the legislation as proposed by Supervisor Malgar and a roll call on that, please.

And on that motion to accept amend the amendments to the ordinance are so written to the record by Supervisor Milgar.

Vice Chair Dorsey.

Dorsey, I member Chen.

Chen, I, Chair Chan.

Chan, I we have three eyes.

The motion passes.

And Supervisor Melgar, I know that it's substantive, so we must continue this and thank you so much for your partnership.

You have been so great.

Uh, you provided like a very important and critical protections for our small business.

Um, and you and I, as we have conversation before about you know, as our legacy CU really function as a stake, like as I imagine, but yours is a carrot, which is your your strength to provide and protect our community.

Um, and just thought that perhaps if it's okay with you, I would continue this to the call chair uh and that allow us to have uh the CU and this to present informed uh of all colleagues at the full board.

Yes, thank you.

That works, uh Madam Chair.

I uh am grateful uh for your thoughtfulness about it.

All I would ask is that we try to land the plane at the same time as everything else, as you well know.

There are multiple pieces of trailing ledger or other legislation that is related to the ebb zoning plan, but are not um, you know, changes to the planning code.

Uh Supervisor Chen has a bunch, you have everybody's got so um we will hopefully schedule everything and get it to the full board all at around the same time so that this cake comes together.

Thank you.

Thank you.

We appreciate you, Supervisor Malgar.

Again, like I said, you're doing the impossible.

Um, and with that, colleagues, I would like to make the motion to continue the amended legislation uh to call a chair and a roll call, please.

And on that motion to continue this ordinance to the call of the chair as amended by Chair Dorsey, Dorsey, I, Member Chen.

Chen, aye, Chair Chan.

Aye.

Chan, I we have three ayes.

The motion passes.

Thank you, Supervisor Malgar.

And Mr.

Clerk, please call item number two.

Yes, item number two is a hearing uh to consider the release of reserved funds to the Department of Emergency Management placed on the budget and finance committee reserved by this year's budget and appropriation ordinance in the amount of 9.9 million to fund the implementation of the community safety ambassador program.

Madam Chair.

Thank you.

And uh we have our Department of Emergency Management here.

Hi, good morning.

Uh, good morning, Chair Chan and Vice Chair Dorsey and Supervisor Chen.

Uh, my name's Adrian Bikelli, I'm Deputy Director for the Department of Emergency Management, and I oversee the Coordinated Street Response Division for the department.

Um, with me here today is Sam Dodge.

He manages the ambassador programs for the department, which we are going to be speaking about today.

Um, the purpose of today's agenda item, and I believe we have a uh presentation coming up, uh, is to very clearly communicate about the impacts of the uh community safety ambassador programs that have been uh thus far throughout the city and to request the release of $9.9 million that's currently on reserve uh with the Department of Emergency Management's budget to fund the continuation of the program and the new solicitation that has been issued.

Um before I start, I do want to thank the budget legislative analysts, especially Nicholas.

Thank you so much, Nicholas, for your support and for doing such a thorough review of our of our program and working to provide the attached report in your packets.

I also want to thank the Human Services Agency contracts team.

Uh Leslie Lau is also here today and can answer any questions about the administrative process for the DEM contracts.

Um they will also be performing the administrative functions for any of the new contracts that come uh result of the RFP.

Um, and so are we able to pull up the slides?

Just want to speak through the uh through the chair uh to uh Ms.

McKelly.

Uh your instructions were supposed to bring in your slide deck and drive it on the uh my apologies.

I will just speak through them if that's okay, um, and then we'll be able to uh uh provide we provided them in the packet, and so I'll be able to speak to the presentation.

My sincere apologies um for that technical glitch.

But I do want to um just present to you uh some of the historical context of our ambassador program thus far.

Um we have kind of a past state, a current state, and a future state of our ambassador program.

Umbassador programs started um in about uh 2020 and 2021.

Those were across about 34 different uh ambassador programs, and they focused on four key areas of uh safety, of hospitality, of cleaning, and of wellness.

What we're really trying to do now in our current state as well as our future state is really hone in on the uh safety uh ambassadors, and so our current state began at the um beginning of July and is a six-month current state.

There are three different um bridge contracts that we are working through, um and those are were uh initiated to ensure no break in service.

Um, these are three contracts that were executed under HSA, with DEM performing the operational over site.

Um the initial step uh for these bridge contracts was really to consolidate all of this work together uh for the safety ambassadors specifically and to focus a single program with a single scope of work and uh very similar reporting requirements.

Our focus has been on the ongoing work in the tenderloin and mid-market, as well as smaller grants in the 16th emission area, as well as in our tenderloin parks.

Um, and our future state that we are intending to fund with this 9.9 million dollars is to begin in on January 1 of next year, and to really take all of the different community safety ambassador programs and consolidate them into a single procurement and a single scope and a single standardized way to implement the program.

Our current program scope, I just want to briefly talk you through that.

As I mentioned, we have three different grants that total just under 11 million dollars across all three grants.

And again, those are focused on the tenderloin mid-market as well as 16th and mission and the tenderloin parks.

Overall, all of these are community safety ambassador grants that really focus on positive engagements and activations as well as de-escalations in the community when necessary.

The current program spending across those three grants has been invoiced to date about 50% of the way.

And so we are invoiced through three months for all three of the grants, and for uh the um for the mission grant, we are at about 233,000 for the um for the tenderloin parks grant.

We are at about 218,000, and for the mid-market tenderloin grant, we're at about 4.5 million dollars.

Overall, we are between 46, excuse me, 44 and 47% spent when we are about 50% of the way through the program.

So we feel very comfortable with the way that we've been projecting our budget, the way that we've been spending down the money associated with the grants.

And because these contracts have such kind of minor capital and operating costs and are really tied to personnel, that's why we're seeing just a bit of minor underspending due to some of the attrition and staff turnover.

So we feel very comfortable with the way that we've been managing and we've been projecting our budget and spending these down over the past three months.

We also have some metrics that have been executed in our current program performance that I wanted to just briefly speak through.

Impact as well as accountability has been very, very important to the Department of Emergency Management and our partners.

And so we utilize the monthly reports that we receive from our existing grants and the ambassadors performing the work under those grants to track progress over time and to measure the impact.

Some of the data that's come from those monthly reports will be in your budget packet for you to review.

It shows the geographic areas, it also shows the number of block faces that is covered, it shows either collectively or an average of the amount of trash that's picked up or the number of de-escalations that the ambassadors are performing on behalf of the community.

And while that data does tell kind of the top-level story of the program, it doesn't always show kind of the softer or the more impactful ways that the ambassadors have been able to support the community.

One of these such examples happened over last weekend.

Our tenderloin parks ambassadors were supporting a little Saigon trick-or-treat event in the tenderloin on Sunday, and right as the event was starting and the kids began to arrive, someone was experiencing a mental health crisis just outside the park.

Our tenderloin ambassadors were able to call 911, and within minutes, public safety was able to arrive and mitigate the area the concern and make the area safe for the kids.

So this is just another example that's not always captured in the raw metrics that we receive that really proves the impact of the ambassadors and our ongoing program.

We do have some identified areas for improvement.

One of the things that happened during the budget process was this committee wanted to ensure DEM was really intentional about evaluating consistently the ambassador programs that we've been that we've been running and overseeing.

And so we have identified six major areas for improvement that we've seen improvement thus far over the last several months, and we intend to continue to improve.

First and foremost, really is the flexibility of our deployment of our ambassadors.

It's time, it's location, it's our ability to change between fixed post deployments and roving post-deployments, really making sure that our ambassadors are able to adapt to the needs of the conditions on the street rather than sticking to one thing that was assigned several years ago and continues to be required under a contract.

So flexibility is an area that we've begun to improve and we really intend to continue to improve with this new program starting in January.

The second is where we've noticed that when we coordinate our ambassadors in a much more strategic and a much more consolidated way under a single program, that really helps us have consistent goals, consistent deliverables, and consistent reports.

That also helps with our evaluation.

So when we are managed in a more coordinated way under a single program, that has also really helped us improve.

The third is our coordination with other programs with our neighborhood street teams as well as our drug market agency coordination center.

And so our ability to coordinate these ambassadors over the last several months and our intention to continue and improve that coordination beginning in January under this new contract really has helped give us a North Star and a guiding light as we're trying to figure out how to improve this program.

We acknowledge that there are a bunch of additional ambassador programs across the city that we will continue to also have to coordinate, and so we intend to do that as well.

Those other ambassador programs that are managed perhaps from the private sector or from our other partners to make sure that we're all contributing to fit into that piece of the puzzle.

The one of the additional areas for improvement that we've identified is a greater diversity of our providers.

We know that we should always be offering fair and competitive solicitations for our programs, and so as we've moved into the next phase of this program, we have created this competitive solicitation to ensure that we have a greater diversity of our providers, and we're really pleased with that.

And then lastly, one area that we have seen some flexibility in since July 1st, but we look forward to working more on, is doing some changes and some trials and pilot programs in real time.

One of the areas that we've done this over the last several months is we've created a flex team of ambassadors within the mid-market and tenderloin area, and we've been able to do that based on some of the flexibility that's in our existing contract.

We want in this future program to continue that level of flexibility and to ensure that we are able to pilot new things based on changing street conditions over time.

And so that is one of the last areas that we've identified for improvement.

In the new ambassador program that we are intending to start in January, contingent on the release of this funding, really is trying to take these six areas for improvement and expand upon them.

DEM and HSA have worked very closely together in order to have a more streamlined approach and a strategic ambassador program.

And so the new program that will be supported by this 9.9 million dollars that's on reserve will encompass 12 different service areas.

And in order to do this, we issued a new request for proposals that opened at the beginning of October and it just closed last Friday.

We're very pleased, especially because we are looking to increase the diversity of our providers that we received 10 proposals for this RFP, and nine of which are qualified and are meeting the minimum qualifications.

So right now we have a subject matter subject matter expert panel that's doing an evaluation of the proposals, and they look to have those those evaluations done by the end of next week so that we can issue a we can issue a notice of letter of intent to proceed with multiple grantees based off of that RFP.

And we expect to have fully executed agreements in December so that we can make sure we do not have a break-in service and begin January 1.

The new program scope outlines a couple of different um fairly consistent service areas that we have in our current exist or excuse me, our current ambassador programs.

These include things like positive engagements with people in need, interventions like de-escalation and effectively requesting support from city agencies.

Deterring drug activity is a really big deal, making sure that we are reminding people who may be openly using drugs that that is not acceptable.

That's a key component of this contract.

And then ensuring a safe and clean environment is also a scope of work, performing light cleaning, doing any disposal of any needles or anything else in the area as necessary.

That includes deployment of Narcan or potentially performing wellness checks on those who may need it in the community.

And again, calling 911 and soliciting the assistance of city resources where required.

Activating public spaces is also a key component of this contract.

There are examples in UN Plaza, where our ambassadors have been really integral to making sure that as we activate these spaces, that is kind of the end of the cycle that we generally see.

You can interrupt negative street activity, but if you're not able to activate that space and truly hold the space, it the cycle will start all over.

So activating of the space is really important as well.

Our new program coverage beginning in January outlines 12 specific service areas across the city.

Some of the areas are maintained from our existing scope of work of across the three different grants, but some are in addition.

And so some of the areas that are being maintained include this the tenderloin, the civic center, Polk Gulch, as well as some of the mid-market areas.

But some of the areas that we're expanding include SOMA as well as the mission.

We're also adding new deployable teams.

And so there are three daytime or morning shift teams as well as two swing shift or kind of afternoon and evening teams.

And these teams will be deployable at the discretion of the Department of Emergency Management based on the conditions noted in the streets, based on requests from the community, and based on what we're really seeing out there.

And so this really speaks to the level of flexibility that we've been working to improve.

We're also going to be adding four small teams dedicated to commercial corridors across the city.

We've heard very strongly that we need to do more to support our business community as well as its visitors.

And so this is our intention to deploy different ambassador teams that are focused on these commercial corridors and support there.

We've also added some flexibility to our parks ambassadors in the new scope of this contract.

Right now they are limited to three parks in the tenderloin, but we are expanding that scope to be any park property to make sure that we're sharing that capability across the city.

And then we've also continued the scope of what we're calling our neighborhood respite sites.

There are two currently in operation.

One is at Turk and Hyde, and one is at 6th and Jesse.

These really serve as kind of outdoor living rooms for people who may not have other areas to safely socialize other than the sidewalk.

So this is also a component of our new of our new scope of work.

We would not budget for ambassador programs if we did not feel very very strongly that these are integral pieces to the neighborhood street teams and to our ongoing work in our community.

And so the total annualized maximum budget for this program is just under 25.8 million dollars across all 12 of the service areas.

So roughly speaking, that's just a little under 13 million for six months.

So of course, our our request today is to release $9.9 million dollars, but the we do anticipate that the first six months of this program will be able to be covered by that 9.9 because DEM has been working to identify other sources of funding with other city departments as well as to account for some of the minor underspending that we're seeing in our existing grants and some anticipated ramp up costs from uh selected grantees that would get us to the $13 million for that first six months.

So overall, our request to the committee uh really is to release the $9.9 million dollars that is currently on reserve.

Um it was put on reserve pending substantial process uh progress with the competitive procurement.

We do feel that we have been very strategic and very intentional about doing this competitive procurement, and um I'm happy to answer any questions that you may have.

And again, I I apologize for the technical difficulties.

Thank you.

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

Item two is a hearing that would release $9.9 million dollars of uh from budget and finance committee reserve in the Department of Emergency Management's uh general fund budget this year.

Uh there was also a similar reserve because this money's being work ordered to HSA.

There's a mirror reserve in HSA's budget that I think should also be released if you move forward with this um request.

The funding will be used to fund new street ambassador contracts uh that are currently in the procurement process and will start January 1st uh 2026.

We summarize the services of these contracts on pages three and four of the report.

They are essentially the same duties as the existing street ambassador services, um, but they are but what's being procured um would allow the city to expand staffing within the existing uh service areas and then also add service areas so new new um new areas of the city that can be staffed with community ambassadors.

Uh we show um the fiscal impact of these contracts on page five of the report, assuming that they are procured at the maximum budget stated in the RFP, which is 25.77 million dollars.

So over the initial two and a half years of those contracts, they would cost about sixty-seven million dollars.

Um, and then if the options to extend that are in the RFP are fully exercised, the total cost of the contracts through December 2030 would be 142.8 million dollars.

Um the structure of the RFP and the contract kind of like associated with the solicitation, I think is a uh big improvement from the city's prior management of the street ambassador program.

They incorporate our recommendations to increase competition in the procurement process, to have a clearer um budget for these programs, and to have uh defined outcome measures uh that the city will measure the performance of the ambassador vendors on.

We detail those changes on page six of our report.

Uh we also note that the size of the new ambassador program that would start January 1st is actually beyond what was budgeted for the program this year and next year.

So DEM will require approximately three million dollars and funding from other departments to fully fund the ambassador program this year, and then I believe between 7.5 and 7.8 million dollars next fiscal year uh to maintain the ambassador program at the level that it's being procured at now because the funding for the DEM budget for street ambassadors decreases from 20.7 to 18.6 million dollars between this year and next year.

Um, and so there'll be a bigger funding gap next year.

Uh so one thing I think the board should consider is working with the mayor's office and the Department of Emergency Management to actually scope a program that fits within the existing budget, given the city's structural budget deficit.

This may not be the time to expand this program, uh, but we do recommend releasing the reserve in the DEM budget and the HSA budget.

Thank you.

Um just trying to help me understand right now that I it's both in your presentation provided and it's within the legislative file online.

Um I'm kind of confused about both the new program coverage as well as the new program budget.

So you do have a um PM citywide deployable that is in the budget, and it says 2.1 million dollars, roughly, 2.15 million dollars.

And then here in the coverage in your presentation, that is it existing coverage, and it says no.

Is it what what do you mean by that?

I'm happy to clarify.

Thanks for that question.

So the uh the budget that is scoped within the presentation is our anticipated breakdown of how we will fund the program starting January 1.

So there's no existing budget for a PM deployable team in our existing three contracts that we have right now.

So that is intended to be a new service that would begin January 1 and would cost roughly 2.1 million.

Got it in this January 2026.

Correct.

Uh and so, and uh and what about the commercial core?

Is that is that actually the same for commercial corridors?

Yes.

But with the new budget, it would then be yes on all these columns.

Correct.

It would be yes.

So the the intention of that chart was to really show the difference between the existing coverage that we have right now through the end of this calendar year and what would change as we move forward into January.

Um, I mean, I think at some point, not at some point for the upcoming budget process.

Uh, I concur with budget and legislative analyst.

Is that what we would like to see is, you know, we we do see that this is the funding actually come from different city departments.

Uh, what we'd like to see in the coming budget proposal uh from the mayor through you is that then it should all just be consolidated and then into one line item under DM or wherever you end up going to go, but it is best to both consolidate funding sources, um, and as you have slowly but surely, I wouldn't say consolidating contract, but streamlining them.

Uh and I I definitely uh am seeing a good breakdown, a good breakdown of like they're reasonable, right?

Like you're breaking them down through morning and you know a.m.

and p.m.

That is for citywide.

You basically can they're not fixed posts and you deploy them as necessary and as needed.

I think that's important because we know um while the heavy you know concentration should be really um the deployment should be really tenderloin, it's not a market and civic center, um, there's still needs everywhere else.

I also think that it's good to break down into corridors, commercial corridors and parks.

Again, they just have different hours, um, of needs.

Um how I think there's uh, you know, both from the BLA and your presentation touch upon sort of this matrix of like how do we measure this?

And I think you actually did have some here kind of mentioning about performance and and where you think things are in terms of you know de-escalation and incident tracking.

Um, and I think that is the question that I have for us.

That is this are we are we setting with the goal basically is having the ambassador?

Their job really is to de-escal de-escalate any type of confrontation um on our on our streets, and then where does law enforcement come in and when do they come in?

Yeah, absolutely.

And something that I did not mention in the presentation, but that is outlined in the request for proposals that we submitted and will be in the new contracts is additional outcome metrics that we intend to see before and after the new contract term is is complete.

And one of those is at least a 20% reduction in both 311 and 911 calls in the areas deployed uh where ambassadors are deployed.

And so we're looking to measure ourselves not just by the output of what the ambassadors are doing in that specific area, but the outcome and the general um feeling, sentiment, and and overall safety of that area long term after the scope of the contract is complete.

So we look to measure ourselves that in that way as well.

In terms of our engagement with law enforcement, we've been working very closely with our ambassadors, both in our our current contracts and will continue in our new ones, to make sure that a requirement of the contract and of the ambassadors working with us is to make sure that they feel comfortable coordinating with local law enforcement, that they are very in tune with the city services that can be provided to people who need assistance on the street, and that they are part of the integrated network of what city services can provide.

And so we, as we enter into the negoti the negotiation phase with each of the grantees that have been selected, we will be very intentional to work with them and ensure that we have clearly written down our expectations for their safety, our expectations for their engagement with local law enforcement, and we will also be working with the police department, the sheriff's office, and other law enforcement in the areas to make sure that they are seen as a team and as people who uh services that will be expected to respond if ambassadors do request that help.

I think also what I'm looking for is a couple of things.

I think one is um safety protocols for the workers that are that are doing this work, and I think that's critical.

And it may also be equipments, and I'm not suggesting ARM, I'm just suggesting equipments that could it be a radio, could it be like what other else that could help them to call for help?

Yep, faster, sooner, more direct.

Uh, and then I think um eventually when you do come back, I'd like to understand a better about uh on-site supervision, um, that in coordinating with the ambassadors uh that being able to provide them uh supports from the city directly, not necessarily again from law enforcement, but if necessary, maybe law enforcement uh on on site, meaning having the ambassador uh in the premise, but then from time to time that you do have a on site, could it be a police officer, could it be a sheriff's, could it be someone else?

Um, but that is also again be able to call for help for support, or be able to say, ambassador, we do not engage in the situation.

Now we need to call for backup or help, like having someone that is from the city directly.

I I would like to learn more about deployments of that strategy.

Understood and happy to come back and provide that to you, especially after we're completed, we've completed the negotiations with the new grants and the new contracts.

Um, one thing that I think may be helpful to add is what we've seen is actually a great increase in our ability to communicate directly with our ambassador teams due to their consolidation under the Department of Emergency Management.

Having our department both be the coordinator of the ambassador programs, but also be part of the 911 system has been a very helpful and very impactful way for us to very quickly communicate any incidents, risk, or any times where they should be avoiding the area.

And so we have seen over the last several months a rapid increase in our ability to get information out to ambassadors to make sure that they know there's an active incident in this area, and it's because things are routed through the Department of Emergency Management.

So we've definitely seen an increase and an improvement there, and we look forward to to continuing to make those improvements.

And last but not least, and I see now I see uh Vice Chair Dorsey has questions, so I'm I'm gonna end here with my last questions and and but more like a statements and what I would like to see um as we move forward um as a recommendation to the to to the departments but also to the executive branch is the consistent effort and potential, if possible, to turn the ambassador um to be directly working with the city as city workers.

And that because again, I think there are invaluable assets, especially when they're trained well and do well, uh we should do everything we can to retain them.

Uh, but I think that a contract relationship is a little bit more tenuous or can be, uh, you know, nothing better than directly having them as city workers and that you know, and that it's actually under DEM and that there is uh again a pathway to success and pathway to retain talents and workforce uh and and also again to retain institutional memory and skills, uh it's just very invaluable and it's already hard for people to be willing to do this work, uh land on to be able to retain them and and to um show them that they're valued, but also give them a pathway to leadership role to to turn their experience to train other people.

So I I would really like to see that um again in in your RFP and and also in your contract moving forward that with with that go in mind.

So thank you.

Thank you, Vice Chair Dorsey.

Thank you, Chair Chan.

I think one of the questions I had you started to, I think you you may have answered completely, but I want to give you a chance to maybe elaborate on it.

But I was going to ask about um whether bringing it into DEM has enabled better coordination and oversight and those kinds of things.

I think you touched on that a little bit, but yeah.

Are there any other ways that um, definitely?

Um what we what I think has been one of the most impactful um improvements of bringing this into DEM has been our ability to coordinate directly with the new neighborhood street teams.

Um if you think about uh the mayor has his breaking the cycle initiative.

But if you think of the negative street conditions as a cycle, um you you can begin with offering services, offering outreach, offering engagement to someone.

Um if they take you up on your offer, then you're able to get them placed into shelter or into treatment or into whatever services they they require.

Um and sometimes there is you know debris left over, and we need to come and clean that up.

Um, but if we don't hold that space, if we don't activate that space, that space becomes vulnerable to essentially re-encampment or or the ability for negative street conditions to return to that exact area.

And it becomes an exhausting cycle.

We see it every single day, especially when we have fewer resources overnight.

Every morning, our teams are going out and they are cleaning up the exact same areas that they cleaned the day before, the day before, the day before.

And so when we have integrated these ambassador programs into DEM, which is the same department that coordinates the neighborhood street teams and coordinates the work across the outreach, across any enforcement that's required across the cleaning, we now have that final leg of that cycle of being able to hold that space and being able to activate that space.

And so although we still have a ways to go, I have seen the coordination under DEM as being incredibly valuable for that reason, in addition to the reason that I mentioned before about integration with 911 and our critical incidents.

I note that there was a deadline last Friday for RFPs to come in.

I'm just wondering, do how many do we have a number?

There are ten.

Okay.

Which is very exciting for us.

Yeah, and nine of the ten were uh fully qualified.

And so our evaluation panel is currently um reviewing those nine proposals that met the minimum qualifications.

And uh their deadline is the end of next week to make uh their rankings based on the criteria in the RFP.

And we intend to issue notices of intent to award uh by the end of next week on November 7th to the selected grantees.

Okay.

Um I uh have been a fan of urban alchemy and these programs for a while.

I think just by virtue of being a mid-market um resident and a district six supervisor.

I think in the course of this year, I also became a dog dad and a regular, sort of at the at the UN Plaza Dog Park.

And I I've have come to appreciate even more um the services that um our ambassadors uh render, just as a knowledgeable, friendly, um, engaging presence uh in the public spaces for difficult dogs and other owners and just a multitude of things that can play out.

Um, they're really uh valued part of the neighborhood and the community.

So I am going to be supporting this.

Thanks so much.

Thank you, Supervisor.

So I shame.

Thank you, Chair.

Thank you for the presentation.

I do have a question on the new program coverage.

Sure.

You mentioned that uh we uh increasing uh eight ambassadors in four supervisors district.

Uh can you let me know who they are?

Oh, uh to clarify, those are the supervisors of those ambassador teams.

So that wasn't specific to specific districts from the Board of Supervisors.

So what that chart notes is that we're we plan to have four different teams.

Each team will be two ambassadors plus one supervisor, and those three will be working together to specifically focus on commercial corridors across the city.

So, all comosal corridor across the city.

Can you name uh um I'm really um for as a supervisor for district 11?

I also wanted to say, you know, the um uh ambassadors program on the street, it's very it's invaluable.

Like I in District 11, we have seen displacement uh from a lot a lot of this intervention program that we've been doing in the downtown the mission.

So in District 11, we have seen more uh impact, and then with a street ambassador, it's definitely helping a lot with our merchants, especially early in the morning.

I have heard from directly from business saying that you know they they it's difficult to even open their stores.

So some of those is really challenge with DAO uh um, you know, intervention from um whether it's from our law enforcement or off of my uh street team.

Uh at the same time, it's cleaning the street is also very important.

I I think uh the invaluable services that it's added to BC basic very busy um commercial corridor and also transit corridor.

I think we have couple in our district.

Um I just want to say in support and also um you know want to make sure that the commercial corridor is really um continue to have those support um and I and thank you for that presentation.

Yeah, thank you for the clarification too.

Of course, and all credit to to your district as well.

The way that we knew we wanted to implement this in our future programming was because we were able to pilot this commercial corridor team in the Excelsior.

Um and so this was an area where we were able to increase temporarily the flexibility that we have in our current grants, realize its impact, realize its success, and then move that to future programming times four.

So um we're we're really looking forward to the opportunity to continue to do that for your district as well as spread spread the love across the city.

Thank you, and um thank you for your presentation today.

Uh again, the presentation is on the file of along with the hearing.

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

Guess 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.

Um good morning, supervisors.

My name is Eric Rosell, and I'm speaking on behalf of the Tinderlink community benefit district and as a long-time resident of the Tinderloin.

I'm here today in strong support of releasing the 9.9 million and reserve funds to the Department of Emergency Management for the Community Safety Ambassador Program.

And the Tinderloin safety ambassadors are a highly trusted and visible presence.

They de-escalate conflicts, assist residents, and assist in connecting people to vital city and social services.

Their daily work creates a safer, more welcoming environment for everyone.

This improved safety also directly benefits small businesses.

A cleaner, safer street, encourages foot traffic and makes customers and employees feel more secure, which is essential for so um local economic vitality.

Critically, the program benefits the 3500 youth and families, 4,000 plus seniors and people with disabilities, in addition to the 35,000 tenderloin residents as a whole we serve.

Seniors and people with disabilities rely on their wellness checks and direct assistance to navigate the neighborhood, especially when confronting challenges to safe street conditions.

Youth and families benefit from the de-escalation of conflicts and ambassadors' roles in making our local parks and public spaces cleaner and safer.

The program is also an important local economic investment for our residents who often hire where we often hire tenderloin residents for these living wage jobs, providing professional development and pathways to stability for community members who might otherwise face barriers to employment.

This is a proven community-driven model that strengthens safety, provides opportunity, and supports local commerce in San Francisco, the most challenged and diverse neighborhoods.

We urge your full support and immediate release of the reserve funds.

Thank you.

And we are grateful for your support and partnership in helping the Tenderloin and San Francisco thrive.

Thank you much, Eric Rosal.

Next speaker, please.

Good morning.

My name is Robert Singer, and I'm the park steward manager for the Tenderloin Community Benefit District.

Our park stewards program began in 2020 after Tenderloin neighbors asked for parks that were cleaner, safer, and more welcoming for their families.

And I want to thank the brief story that was uh mentioned during the presentation of Sunday at Macaulay Park, where we had somebody who interrupted our trick-or-treat event.

And fortunately, I was there with my tap with my team.

We clicked we got on 911.

The cops showed up very quickly and got the man out of there and took him out of the scene.

So we're able to have a nice event for the kids.

So that's why it's important that we're out there.

So we have 16 park stewards that oversee Bodecker Park, Turkhide Mini Park, and Macaulay Park every single day of the year, 365 days a year.

As long as the parks are open, we're there.

Our stewards open the gates each morning, keep the parks clean, and make sure they remain safe and inviting for everyone who walks through.

Now, our services are made possible through the funding from the Department of Emergency Management that we've been talking about.

And this allows us to maintain that consistent presence in these parks.

Because we're in the parks every day cleaning the inside of the parks, the park custodians can spend more time taking care of the other parks in the city.

Because we also clean the outside the parks, the sidewalks and hosing down the sidewalks each day.

Public works groups can focus on other issues in the neighborhood.

Also, because we're consistently reminding people about the rules of the parks, no smoking, no drinking, no drug use.

Police and uh park rangers can focus on more important issues.

So I want to thank everybody for your initial investments into this program, and we appreciate continued investment in this model to ensure that these parks remain safe, inclusive spaces, and we invite you to come visit our parks in the tenderloin to enjoy uh a clean, safe environment and see what the difference this investment makes.

Thank you.

Thank you much for singer.

And with no further speakers, Madam Chair, that completes our queue.

Thank you.

And seeing no more public comments, public comment is now close.

Colleagues, I would like to um have this uh hearing file and heard so that we release the reserve fund.

And I make the motion to do so and the roll call, please on that motion.

And on that motion to approve the release of 9.9 million to the Department of Emergency Emergency Management, and that this hearing be heard and filed.

Vice Chair Dorsey, Dorsey, I, Member Chen.

Chen, I, Chair Chan.

Aye, Chan, I we have three eyes.

The motion passes.

Sure clerk, please call item number three.

Yes, item number three is a resolution exempting from the competitive bidding policy set forth in the administrative code uh approving a port uh lease for the continued operation of an observation wheel at Seawall Law 301 between the port and Sky Star Wheel LLC for a period of 18 months with one 18 month extension option to commence on November 1st, 2025 through April 30th, 2027 for a monthly base uh rent of 11,000 with annual increases plus a percentage rent of 8% for an estimated revenue of 1.8 million and adopting environmental findings under the California Environmental Quality Act.

Madam Chair.

Thank you.

And I believe uh Supervisors Danny Sauter's uh office would like to uh provide opening remarks.

Thank you.

Good morning, Chair Chan, Vice Chair Dorsey, Supervisor Chen.

I'm Tita Bell, Chief of Staff to Supervisor Danny Sauter of District Three.

I'm here to voice the supervisor's strong support for the 18 month lease extension of the Sky Star Wheel in our district at Fisherman's Wharf.

Since the wheel's arrival at Fisherman's Wharf in 2023, it has become a joyful new way for people to um experience this breathtaking part of our city.

And this is not just for tourists, it's for families, for seniors, for community members who might not otherwise have access to these types of experience.

And supervisors Dorsey dogs are also allowed on the wheel.

Um the wheel has clearly helped energize Fisherman's Wharf, bringing foot traffic to restaurants and retailers, and it has also generated um important revenue for our port.

The wheel has proven also to be a committed community member supporting the Fisherman's Wharf CBD, the SF Chamber of Commerce, and SF Travel.

Um, they have helped uh support and promote events and create community serving programs.

So this is what it looks like when we invest in activating our public spaces with creativity and care.

It's also a symbol of the city's resilience, reminding us of everything that San Francisco still has to offer.

So let's keep that momentum going.

Um Supervisor Sauter hopes to have the committee's support for the lease extension and waiver of the competitive bidding policy, and the port is here to present the item.

Thank you.

I got this right.

Um thank you.

Good morning, supervisors.

Good to be here again.

I'm Scott Lansettle, the deputy director of real estate for the port.

Um, happy to have this in front of you today to consider the 18-month extension with an option for a further 18-month um period of operation to continue to support uh what has been as described a very successful run at the port.

Um, the sky star wheel uh not only is an attraction at the wharf um but um has generated significant revenue to the port through our revenue share with the lease um since uh initial uh location at the wharf for the APEC conference in November of 2023.

I think the wheel has generated close to 10 million dollars of gross revenue.

Uh the port has participated in close to a million of that, 760,000.

Um, and with this extension, we're moving from a five percent of sales uh share to an 8% share with a slight increase in base rent.

So continuing to um kind of as partners succeed in in their success or benefit from their success.

Um, we were we were here at the board or at the board for the competitive waiver initially, um, and now we're here again with this 18-month extension.

Um so as you can see in the slide, um there's been over 600,000 riders uh since the arrival of the wheel in Fisherman's wharf, and the operator has reached out to the community and provided uh complimentary over 2,000 complimentary tickets to underserved youth and communities to get uh local residents down to the wharf and allow everyone to experience and enjoy the ride and the views.

So here's a brief summary of the terms: 18 months with an extension through 2028.

The port does have a 90-day termination option to accommodate the forthcoming further development of the wharf with the fisherman's wharf revitalized interest in the area.

As that entitlement and approval proceeds, we retain flexibility to allow that to move forward when ready.

The rent, as I noted, has increased slightly on the base rent, and then we've bumped up percentage share, increased our security deposit to allow for kind of restoration of the site if and when the wheel were to move, and then some measures that really ensure there's incentive to have the wheel removed when the port has interest to do so with a hold or holdover provision, which really would push up rent um uh to again incentivize incentivize that removal when necessary.

Um, and that's the presentation.

I'm happy to answer any questions.

Um I know why, I think I know why, but I don't want to assume in your presentation.

Could you elaborate why bidding competitive bidding is not practical?

Um, yes, as you'd imagine.

In this case, uh uh the for one, the use is very unique, right?

Um the operators, so there are a few operators.

Um, I think we were here before this originally moved from Golden Gate Park to this location.

Um, the operator, in order to get the permitting and calosha requirements met to make sure this was safe, uh, made significant investments uh in the site really just to accommodate this short-term period of time.

So um, so considering a period of 18 months or even 36 months, um, the world of competitive bidders or others that could uh replace this wheel or or um support investment uh in this it was north of two million dollars of investments for such a short period of time is very very limited, and so um we've requested the waiver or we did request the waiver initially.

Got it.

Cost is more than the profits and benefits for both the city and the vendor.

Yeah, understood.

Um please keep it there.

That's all I can ask.

I don't mind it, please keep it there.

It sounds good to me.

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

Let's go to public comment on this item.

Thank you.

Yes, if you have any members of the public who has to address this committee regarding this item number three, now is your opportunity.

Madam Chair, we have no speakers.

Seeing no public comments, public comments now closed.

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, aye, Chair Chan.

Aye.

Chan, aye.

We have three ayes.

The motion passes.

Yes, item number four is a resolution approving an agreement with complete coach networks.

Sorry, complete coach works to perform midlife overhaul services to replace and rehabilitate systems for up to 152 standard and 69 articulated hybrid electric new flyer coaches in an amount not to exceed approximately 95.4 million for a contract term not to exceed five years from the date of notice to proceed.

Madam Chair.

Thank you.

And today we have SFMTA here.

Hi, good morning.

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

My name is Gary Chang, uh, senior program manager with uh SFMTA Transit Program Delivery, and I also have my staff, Stephen Lin, who will be helping me to chair the PowerPoint.

Uh today I'm here to present the midlife overhaul phase two of the overhaul program.

Next slide, please.

Uh so this is a very infamous icons that you probably may have seen it in other PowerPoint presentations.

So it kind of gives me a little flashback of the memories when I first joined Muni back in late 90s that when we procure vehicles, we procure a large quantity in about a short two to three years.

So when everything new and exciting, it was great.

But however, as they all aged, then the service availability and then uh basically the availabilities become low.

And since then, we applied the lessons learned.

What we have done was actually spread out the procurements.

So actually, we try to uh do a procurement of about roughly every year about 100 vehicles, and then afterwards we do follow the preventive maintenance as recommended by the manufacturers religiously.

Uh what I mean religiously, like really really follow strictly, and then afterwards, we will also do a uh midlife overhaul as well.

And between 2013 to 2019, SFMTA actually had replaced it the whole entire rubber tire fleet close to about 800 uh 14 vehicles.

And the advantage of that during the spread out of procurements there, it lowered the age of the fleet, and more importantly, since we are taking a chunk at it every year, so we have an opportunity to introduce new technology.

And I just listed a few, like the air conditioning, camera systems, stroller parking seats on the configurations, and anything on the ADA accessibility as well.

So, because based on the quantity of the fleet and the configurations and the propulsion system differences, we actually had uh divided it in that 814 buses into three phases, three phases of the overhaul.

Um, the overhaul program is actually a mandate in the TA grant agreement when these vehicles were purchased.

And the the goal of the overhaul is to really to help to sustain the coach's availability, maintainability till the end of this useful life.

And the one it's coloring gray uh green is actually the one that are currently in process, and the one item that's going to the board today is actually the second gray color one.

So, what kind of work are we gonna be doing?

So, definitely uh propulsion system will be the number one item on the list that will be including engines, the batteries, and the hybrid traction motors, HVAC system, refurbishment of the operator area, suspensions and etc.

Uh, but one line item in the contract there is what we call the unforeseen work.

It this is just like our regular house remodeling, once you open up the sheetrock, you you sometimes you may not know what you're gonna be finding.

So that's kind of a line for us to do any extra work that may uh discover during the overhaul.

And let me give a little bit of project status.

So of the phase one vehicles, there are total of 315 vehicles, and out of the first 112, we actually had kept the work in-house, but however, that was only uh conducting the overhaul on the propulsion system only, and that was already that's already been completed, and the other 203.

Uh, we have a contract with complete coach works and NTP date was back in July 2022, and as of today, we are at about 187 coaches, roughly 91% completed it, and we do anticipate to finish up all that work by early uh quarter one of 2026.

Uh CCW complete coach works does meet our quality expectations, project schedules, and also within the approved budget.

The contract PO for the phase one with the complete coach works was 93 million dollars.

And so, what kind of results are we getting?

So, uh, here what we have collected the data of the uh areas that they performed at the overhaul, and the blue line was the basically we are tracking the performance of the vehicle before the overhaul.

And the red line on the right there is actually tracking the vehicle performance afterwards, and as we can see that we do see an improvement, but I usually like to point out is or think about it.

If we didn't do it, we would have to kept following that blue line and trending down.

Um, so currently today, what I have is the phase two uh for the contractor selections.

We did issue RFP uh back in August 24th and November 24th.

Uh, we did receive one responsive bid, and after the review of the proposals and multiple negotiations, uh kind of tightening down the scope of work and pricings.

Um the pricing was also conducted a price analysis uh from the third party contractor.

Uh a little bit of history about CCW.

So they are actually located it in Riverside.

They have been doing this kind of line of work for about 35 years, and actually SFMTA first encounter with them was back in mid-2000.

Uh the current schedule that we're going to be looking at is um obviously after uh if we got an approval from this board, it will move on to the board of supervisors, and we are anticipating uh try to issue the NTP by uh end of this year, and then uh basically for the amount of vehicles and the work we will be anticipating to finish up all the work in early 2028.

And the item request for your approval is the contract uh with uh CCW in the amount of roughly ninety-five million dollars to overhaul two hundred twenty-one coaches.

Uh, one hundred and fifty-two of them are forty-foot hybrids, and sixty-nine of them are sixty-foot hybrids, and the contract term is for five years and uh with uh two one year options.

And that's all for my presentations, and I do want to really give a big thank you to the BLA team, do a really thorough review.

Thank you very much.

Thank you.

Item four is a resolution that approves a new contract between MTA and complete coach works.

The contract um is for ninety-five million dollars and has an initial five-year term with options to extend an additional two years.

The contract will fund complete coach works to overhaul 221 buses that MTA purchased between 2016 and 2018.

They're about halfway through their useful life, and this will help um keep those buses in service and reduce um routine maintenance costs.

We summarize the budget on page 14 of our report.

You can see that this contract is largely funded by federal transit administration funds, those are allocated to San Francisco based on essentially population, so they're not a competitive grant.

And the cost per bus is essentially very similar to the existing complete coach works contract uh plus inflation.

Um, and MTA did work with the consultant to prepare an independent cost estimate prior to the solicitation to um confirm the reasonableness of these costs.

We do have just a cleanup amendment uh for you to consider item four, which is the resolution doesn't state that there's an option to extend the agreement.

The agreement does have a two-year option to extend.

Um in any case, the MTA will have to come back to the board if the spending exceeds um 95.4 million dollars plus five hundred thousand dollars allowed by the charter.

Um so this is really just a a factual cleanup in the resolution.

Happy to answer any other questions.

Thank you.

Um I think um thank you.

I think it's very meticulous uh ways to figure out how do we extend the life of you know our vehicles uh and I'm glad to hear that you're also rigorously maintaining them according to the manual and suggestions and uh and I think I don't have any other questions.

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

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

That was your opportunity.

Madam Chair, we have no speakers.

Seeing no public comment, public comment is now closed.

Colleagues, I would like to first amend the resolution as proposed by the BLA to correctly state that the term is five years with two one year options for renewal uh for a maximum contract term of seven years, and then send the amended legislation to full board with recommendation uh a roll call, please.

And on that motion to amend the resolution, uh to accept the BLA's recommendation, and to forward the resolution to the full board to the positive recommendation as amended.

Vice Chair Dorsey.

Dorsey, aye, member Chen.

Chen, aye, Chair Chan.

Aye.

Chan I.

We have three eyes.

The motion passes.

Yes, item number five is a resolution approving amendment number six to the international terminal duty-free and luxury store lease between DFS group LP and the city and county, acting by and through its airport commission, temporarily reducing percentage rate to 20% of gross revenues up to 100 million and 32% of gross revenues above 100 million for lease years 2026 through 2029 and a temporary reduction in the minimum annual guarantee for the same period by establishing the bag at 25 million for 2026 with annual adjustments as provided in the lease, effective bond approval by the board of supervisors.

Madam Chair.

Thank you.

And we have SFO here.

Good morning, Chair Chan.

Good morning, Vice Chair Dorsey.

Good morning, Supervisor Chen.

Um Daniel's saying with SFO, the airport is seeking your approval for amendment number six to the international terminal duty-free and luxury store concession lease with DFS group LP.

DFS currently leases approximately 47,778 square feet of space across 17 locations throughout the airport, but primarily in international terminal A and G.

DFS is a joint venture partnership with five small business partners with 5% ownership, each with 5% ownership.

The amendment proposes a temporary reduction in percentage rent and the minimum annual guarantee for a four-year period covering lease years seven through 10, which is equivalent to calendar year 2026 through 2029.

DFS and its joint venture partners continue to experience financial losses due to the gap between sales projections at lease commencement and actual performance caused by the demographic shift in international travelers.

Under the proposed amendment, DFS would pay 28% of the gross revenue up to $100 million or 32% of gross revenue above 100 million, along with the minimum annual guarantee of 25 million for lease year seven and subjected to annual adjustments for lease year eight through ten.

No changes are proposed to the total leased area or overall lease term, and uh the proposed percentage rent of 28 to 32 percent is still higher than the average percentage rent of other specialty retail uh at the airport.

At the start of lease year 11, which is January 1st of 2030, the temporary rent relief would expire.

The original rent structure, including the 42 million minimum annual guarantee and the original tiered percentage rent schedule, which would be reinstated for the remainder of the lease term, which continues through March 31st, 2034.

The proposed amendment would provide an estimated 74.62 million in total rent assistance to the SFO duty-free and luxury store joint venture over the four-year period based on the joint venture structure.

The assistance includes approximately 55.97 million to DFS and approximately 18.66 million to the five airport concession disadvantaged business enterprises partners.

The BLA has recommended approval, and today um I have our director of revenue uh development and management with me to answer any potential questions that you might have after the BLA report.

Item five is a resolution that approves an amendment to a lease that the airport has with DFS group.

Um the lease allows DFS to rent about 46,000 square feet of space at the airport, mostly in the international terminal, and use that space for luxury uh retail and for duty-free retail.

Uh the lease began in um early 2020 with the onset of the pandemic and has been amended several times to uh provide rent relief to the tenant, which has um not met its sales targets due to a decline in passenger travel through the airport due to COVID and then a change in the composition of the international traveler, which has driven down luxury sales below what they were projected at the uh start of the lease.

And so what this amendment does is that it um reduces the minimum guaranteed rent from where it is now from $30 million down to $25 million through 2029, and then it reduces the percentage rent from where it would be if the amendment's not approved, which is between 30 and 45.8% of sales.

It reduces that percentage rent to 28 to 32 percent of sales.

Um that is based on a survey that the airport did of other airports of what their percentage rent for luxury retail um is.

You can um see in our report what we think the fiscal impact of these changes are on page 23.

This will reduce revenues to the airport by 74.6 million dollars over the next four years.

That does have an impact on the general fund because 15 percent of non-airline revenues actually go to the general fund.

And so over the four-year period, the chain the decrease in the general fund uh revenues would be 11.2 million dollars.

So that's about one to three and a half million dollars per year.

Um, but it will change depending on you know how well DFS does financially.

We did review financial statements from the organization, which show that they have lost uh 115 million dollars since this lease was entered into that includes um tens of millions of dollars in capital improvements that were made to this to the retail spaces as well as um operating losses um each year since the lease began.

And so this the airports already provided about 46 million dollars in rent relief.

This is another 74 million dollars in rent relief.

So the airports essentially making DFS whole and then some is about 120 million dollars in rent relief.

Like I said, they've already they've lost 115 million dollars on this lease.

I think they're probably gonna also be net income negative next year, so there will be additional losses.

Um, and then after there's still four more years left on the lease after um these amendments would take effect so we can revisit any changes that the airport proposes um a few years from now.

But we do I think this is reasonable, it's been an incremental approach.

The the new rate appears to be market rate.

There are um real financial losses here, and I do think that there's an interest in keeping um a tenant of this size in place at the airport.

So we recommend approval of this item.

Thank you.

I think this question is either for SFO or for the controller.

I'm just interested to understand a little bit better about the revenue projection that the city is gonna have.

Uh, will that also kind of inclusive of where SFO is heading?

Um during the pandemic, SFO has made it clear to us that to that with your own analysis with SFO is that the FUI recovery to pre-pandemic level is likely after 2028.

So I'm not surprised that this is still coming before us to kind of talk about the fact that international visitor has been significantly declined, hasn't really been back to the pre-2019 uh pre-COVID level.

Um, so I'm just kind of wondering like as we're gonna come to having the revenue projection, um, will this sort of be part of that discussion or are that we just gonna look to SFO for independent analysis.

Good morning, Chair Chan.

Devin McColly from the controller's office, citywide budget manager.

We are currently updating our five-year uh financial forecast now uh to look um precisely at the general fund revenues, and so we do anticipate that to be published um in late December.

Um, and of course we will uh have updated projections for uh the coming budget years as well as the out years.

Thank you.

Um I look for you to learn more about just where the airport is at in terms of your projection and your analysis uh about about this.

I I you you were doing great, you know, last year.

Uh, I think bought in your met your 15 percent obligation to the general fund.

That is roughly almost 60 million dollars.

Um, and certainly we appreciate that.

But um, just kind of curious to see um with this, and it seems like according to the BLA, the projection is that there will be a continual loss of revenue.

Um, and so wanted to better understand um how how do we mitigate this uh and how we can as a city uh to help support and medigate.

I'll differ to our director of revenue development and management.

Good morning, I'm Cheryl Brennan, Director of Revenue Development and Management, and we are nearly back at uh international passenger traffic levels, but the demographic has changed, they're coming from different countries and the spending is quite different.

Um the loss of uh significant portion of our travelers from the People's Republic of China has particularly you know hit duty-free sales acutely.

So, um, so what we've projected for sales for the four years of this next relief package is conservative.

We have left spending where it is, which is about eleven or twelve dollars per international passengers.

We were um closer to twenty before, you know, right before the pandemic.

And um, and when we leased this in 2017, we had uh, you know, really robust forecasts.

We had been you know growing and growing and uh the future looked very bright.

So and another uh this is another reason why we're taking this in incremental steps.

DFS would prefer that we just amend the lease through the end of the term in 2034, but it was just it's very difficult to plan very far ahead in this environment.

So, um, so for the next four years, we are assuming very little change in consumer spending on a per passenger basis, and then our international passenger traffic is um forecast uh to to be stable, no big growth at this point.

In fact, I think we've I think we've cooled down a tad when we looked to 26 and 27, just from where we thought we'd be six months ago.

I understand.

I'm going, you know, slowly ahead, I guess.

I mean giving terrorists and the political landscape, it's very difficult to predict.

I understand.

Thank you so much uh for your presentation.

Uh and with that, uh well let's go to public comment on this item.

Yes, if we have any members of the public who have joined us today who wish to address this committee regarding this item number five, 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 full board with recommendation and a roll call, please.

And on the 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 eyes.

The motion passes.

Thank you.

And Mr.

Clark, please call item number six.

Yes, item number six is a resolution authorizing the human services agency on behalf of the city and county to apply for and accept the county allocation award under the California Department of Housing and Community Development Transitional Housing Program for an amount up to 4.7 mil uh million and the housing navigation and maintenance program for an amount uh to approximately uh 618,000, which provide funding to help young adults secure and maintain housing.

Madam Chair.

Thank you.

And today we have Department of Supportive Sorry, Department of Homelessness and Support of Housing.

Uh Human Services.

Human Services, my apologies.

Please go ahead.

I am David McCann.

I'm with the policy and planning team with the Human Services Agency.

I'm presenting on agenda item six, which is a resolution to apply for and accept funds from the California Department of Housing and Community Development for two programs, the transitional housing program and for the housing navigation uh and maintenance program.

So a bit of background about the resolution.

The state of California Department of Housing and Community Development issued two funding opportunities to continue its prior year services to help young adults and child welfare systems secure and maintain housing.

The first grant opportunity is for up to four million seven hundred and forty one thousand two hundred and twenty four to support the transitional housing program for the current for current or former foster care youth ages eighteen to twenty-five.

The other opportunity is for up to six hundred and seventeen thousand eight hundred and seventy to fund the housing navigation services to help child welfare involved young adults aged eighteen to twenty one that the California department of housing and community development requires this resolution uh the board of supervisors resolution to apply for and accept these funds this is a requirement we need to fulfill each year to apply for the funds only the funding was already anticipated in the this year's fiscal year budget fiscal year 25 26 and approved by the board so we do not need to seek an accept and expend.

DHCD sets the amount of money allocated to San Francisco based on the number of young adults in our child welfare system and based on the number of counties who apply for and accept these funds.

Young adults currently or formerly in child welfare face acute challenges with homelessness as many of you may know and housing instability in San Francisco is always difficult due to the high cost housing market.

The goal of this programming is to reduce homelessness for former foster youth working in collaboration with the Department of Homelessness and Support of Housing the San Francisco Housing Authority some services that will be provided by this grant funding include support for finding and applying for housing lease up and pre-housing direct services move in deposits housing subsidies housing support and navigation housing stabilization and retention services and linkages to uh youth the youth homeless response services access points and navigation centers these resources can support up to 70 uh foster care youth and we ask for the board to approve this resolution thank you thank you thank you for your work on this I don't see any name on the roster I don't have additional questions we certainly hope that you get the grant so we can get it going and with that let's go to public comment on this item yes if we have any members of the public who wish to address this committee regarding this item number six now is your opportunity madam chair we have no speakers seeing no public comments public comments now closed colleagues I would like to send this item to full board with recommendation and a roll call please and on the motion to forward to the full board to the positive recommendation vice chair dorsey Dorsey aye member Chen Chen I Chair Chan aye Chan aye we have three eyes the motion passes thank you thank you um Mr Clark do we have any other business before us today?

Madam Chair that concludes our business thank you and the meeting is adjourned.