San Francisco Board of Supervisors — Budget and Finance Committee (December 3, 2025)

On December 3, 2025, the Budget and Finance Committee (Chair Connie Chan; Members Danny Sauter and Bilal Mahmood) heard and advanced a series of grant acceptances and contract/lease actions primarily focused on homelessness services, permanent supportive housing rehabilitation funded through Homekey Plus, and Department of Public Health procurements and service agreements. The committee also debated an ordinance related to the City’s cannabis business tax, amending it to a 10-year suspension and forwarding it to the full Board without recommendation after extensive discussion about enforcement, public safety, affordability for medical patients, and General Fund impacts. Vice Chair Matt Dorsey was excused. Items approved were expected to appear on the Board of Supervisors agenda on December 9, 2025, unless otherwise stated.

Public Comments & Testimony

• Cannabis tax ordinance (Item 13): Multiple speakers (including representatives and members of the Brownie Mary Democratic Club, San Francisco Cannabis Alliance, dispensary owners/operators, equity program advocates, and medical cannabis patients) urged the City to repeal or further suspend the cannabis business tax.
  • Speakers emphasized affordability for medical patients, the risk that additional taxes could push consumers to the illicit market, and concerns about product safety in illegal markets.
  • Several speakers argued the tax would harm small businesses and jobs, and some urged state-level revenue changes (e.g., returning state cannabis revenues to the City).
• All other items: No public speakers.

Discussion Items

• Items 1–2: District Attorney insurance fraud grants (retroactive acceptance/expansion)

  • Presenter: Tina Noonzober, Managing Attorney, Economic Crimes Unit (District Attorney’s Office).
  • Action requested: Retroactively authorize acceptance/expansion of California Department of Insurance grants for July 1, 2025–June 30, 2026:
    • Workers’ Compensation Insurance Fraud Program: approximately $1.1 million.
    • Automobile Insurance Fraud Program: approximately $347,000.
  • Program details (project descriptions):
    • Workers’ comp grant funds 2 full-time DA investigators and 1.35 attorney positions.
    • Auto grant funds 0.5 attorney and 0.5 investigator.
    • Funding supports training and outreach.
    • Examples cited: workers’ comp fraud impacts City funds (City is self-insured); auto fraud funds help address predatory towing.
  • Committee questions: Supervisor Mahmood asked about trends and caseloads; DA’s office stated it is seeing an uptick in referrals and complexity (rings/multiple defendants) but did not provide numbers during the meeting.

• Item 3: HSH — Episcopal Community Services (ECS) Sanctuary Shelter (201 8th Street) third amendment

  • Presenter: Emily Cohen, Department of Homelessness and Supportive Housing (HSH).
  • BLA: Nick Menard, Budget and Legislative Analyst.
  • Action requested (project description): Extend shelter grant term by 24 months (from June 30, 2026 to June 30, 2028) for a total term July 1, 2021–June 30, 2028; increase not-to-exceed by approximately $15.1 million to a new total of approximately $40.9 million.
  • Program stats (project descriptions):
    • Capacity: 200 adults.
    • Cost: $88 per bed per night (includes lease and meals).
    • System context: part of 1,800+ congregate adult shelter beds.
    • Placement via 311 self-referral.
    • FY prior year reported: 90% occupancy; served 780+ unique clients.
    • Client demographics cited: 31% Black/African American; 24% age 55+.
  • Performance monitoring discussion:
    • Supervisor Sauter questioned gaps in objectives (including coordinated entry referrals).
    • HSH stated coordinated entry referral performance was addressed with training and process corrections, and referrals had increased since.
    • HSH removed an objective related to non-mandatory community meeting participation, describing it as a poor indicator and outside provider control; HSH said it is exploring alternative measures (e.g., case management participation).
  • Procurement timeline discussion: HSH described a multi-year re-procurement approach using a human-centered design process and RFP cycles; HSH agreed to provide additional timelines/briefings.

• Item 4: HSH — Felton Institute Bayview Drop-In Center third amendment ("Mother Brown’s Kitchen")

  • Presenter: Emily Cohen (HSH), with Felton staff present.
  • BLA: Nick Menard.
  • Action requested (project description): Extend term by 24 months (from June 30, 2026 to June 30, 2028) for total term April 1, 2022–June 30, 2028; increase not-to-exceed by approximately $7.1 million to approximately $16.8 million (HSH presentation referenced approximately $16.9 million).
  • Program details/stats (project descriptions):
    • 24/7 drop-in operations (no beds), providing showers, laundry, lockers, mail, and two meals/day.
    • FY24–25 survey: 95% of respondents rated services satisfactory or better.
    • Reported meals delivered last fiscal year: 114,000+ meals.
  • Committee question: Supervisor Sauter asked how drop-in centers fit the broader system; HSH described the center as a neighborhood hub and linkage point from street to shelter/housing/benefits.

• Items 5–8: Homekey Plus permanent supportive housing rehabilitation and operations — 1035 Van Ness Ave and 835 Turk St

  • Presenter: Emily Cohen (HSH), with partner agencies present; coordination with MOHCD.
  • BLA: Nick Menard.

  1035 Van Ness Ave (Items 5–6)

  • Project description: Former assisted living facility, 9-story building; planned to operate as permanent supportive housing for veterans.
  • Units: 124 units after rehabilitation.
  • Schedule estimate: Rehab construction beginning January 2026, completion July 2026.
  • Item 5 (Homekey Plus accept/execute agreements): Total award not-to-exceed approximately $39 million, including:
    • Up to approximately $36 million disbursed by HCD as a grant to 1035 Vets LLC (acquisition/operating support).
    • Up to $3 million disbursed to the City for rehabilitation (City accept-and-expend of $3 million).
    • City match commitment up to $8 million plus a minimum 5 years operating subsidy; additionally committing up to 15 years operating subsidies through the Local Operating Subsidy Program (LASP), subject to appropriations.
  • Item 6 (MOHCD loan + grant agreement): Not-to-exceed $11 million total consisting of $8 million loan (minimum 55-year term, 0% interest) plus $3 million grant (Homekey Plus pass-through), both with 55-year terms.
  • BLA cost notes (project descriptions): total development costs (including acquisition) approximately $334,000 per unit; City funding approximately $64,000 per unit. Ongoing costs discussed included LASP rental subsidies beginning around year 6 (stated as $1.3 million starting cost) and supportive services starting around $400,000/year funded by Proposition C.
  • Ownership policy note: BLA noted the property would be owned by Swords to Plowshares (not the City), with an option for the City to purchase under certain conditions.

  835 Turk St (Items 7–8)

  • Project description: City-owned property acquired 2022; operated as permanent supportive housing with Five Keys since 2023.
  • Units: 106 units; rehab includes creation of 6 new ADA units and structural/seismic and building systems upgrades.
  • Item 7 (Homekey Plus accept/execute agreements): Total award not-to-exceed approximately $17.3 million, including:
    • Up to approximately $13.7 million disbursed to the City for rehabilitation and associated relocation costs (accepted/expended retroactively for eligible costs incurred from March 5, 2024 through the state deadline).
    • Up to approximately $3.6 million disbursed to 835 Turk LLC for operating support.
    • City match commitment approximately $16.3 million plus minimum 5 years operating subsidy; additionally committing up to 15 years LASP operating subsidies, subject to appropriations.
  • Item 8 (ground lease + financing):
    • Ground lease term 55 years; total rent $1.
    • Loan not-to-exceed approximately $12.9 million (minimum 55-year term; 0% interest).
    • Grant not-to-exceed approximately $13.7 million (Homekey Plus pass-through).
    • Included findings on surplus lands exemptions and public purpose for less-than-market rent.
  • BLA cost notes (project descriptions): total development budget approximately $400,000 per unit; ongoing costs referenced included LASP rental subsidies of approximately $1.8 million/year, plus HSH and public health services.

• Item 9: DPH specialty drug distribution contract amendment (CuraScript)

  • Presenter: David Smith, Chief Pharmacist Officer, Department of Public Health (DPH).
  • BLA: Nick Menard.
  • Action requested (project description): Extend term by 4 years (through November 30, 2030) for total term December 1, 2023–November 30, 2030; increase contract authority by approximately $89.5 million to a not-to-exceed of approximately $98.5 million.
  • Program details/stats (project descriptions):
    • DPH described this as contract authority; annual spend is part of DPH’s budget process.
    • About 88% of spend driven by long-acting injectable buprenorphine for substance use disorder; DPH stated the drug decreases deaths by 50% when utilized.
    • Additional categories: Nexplanon implants; pulmonary arterial hypertension medications.
    • DPH stated reimbursement/cost recovery is trending 98–99% (BLA cited historical recovery around 95%).
  • BLA notes: utilization increasing 10–20% per year; spending about $10 million/year currently and projected to rise to $22 million/year by FY 2030.
  • Committee discussion: Chair Chan asked about potential federal changes to eligibility/reimbursement; DPH noted uncertainty and potential mitigation via prioritizing lower-cost alternatives for uninsured patients.

• Item 10: DPH mental health services contract amendment — Hyde Street Community Services

  • Presenter: Dr. LaDonna Norman, Director, Intensive Services and Access (Adult & Older Adult System of Care), DPH.
  • BLA: Nick Menard.
  • Action requested (project description): Extend term by 2 years (through June 30, 2028) for total term July 1, 2018–June 30, 2028; increase not-to-exceed by approximately $11.8 million to approximately $38.8 million (DPH presentation referenced $11.7 million increase and $38.7 million total).
  • Service volumes (project descriptions): outpatient program serves approximately 540 clients/year; Full Service Partnership serves approximately 50 clients/year.
  • Funding (BLA): program about $3 million/year, with 28% from the General Fund (remainder from state/Medi-Cal).
  • Committee question: Chair Chan asked about “units of service” monitoring and exemption; DPH explained transition away from cost reimbursement toward CalAIM payment reform and performance monitoring tied to client services and federal drawdown compliance.

• Item 11: DPH grant agreement — Community Care Expansion Preservation Project (CDSS/BDO Government Services)

  • Presenter: Yun-Jang Kim, Director of Residential System of Care, Behavioral Health Services (DPH).
  • Action requested (project description): Approve grant agreement with anticipated revenue approximately $7.4 million for a performance-based period from execution through June 30, 2029.
  • Program design (project descriptions): preserve/avoid closure of licensed adult/senior residential care facilities, prioritizing those serving people experiencing or at risk of homelessness.
    • Approximately $3.2 million (40%) for operating subsidies (time-limited through 2028).
    • Approximately $4.2 million (60%) for capital repairs/upgrades.
    • DPH identified 20 eligible facilities and planned to engage CalMHSA to disperse funds and provide technical assistance.
  • Nonstandard terms discussed: binding arbitration dispute resolution; indemnification/hold harmless; waiver of certain damages; DPH stated these terms are similar to other state grants previously approved and reviewed by the City Attorney.

• Item 12: Recreation and Park — Active Network (ActiveNet) software contract extension

  • Presenter: Anne-Marie Donnelly, Assistant Superintendent, Recreation & Community Services, Recreation and Park Department.
  • Action requested (project description): Two-year extension through December 31, 2027 for a total term January 1, 2016–December 31, 2027, with no change to cost (approximately $100,000 annually).
  • Operational stats (project descriptions): system supports program registration, memberships/scholarships, point-of-sale, and reservations/permits; processes $20+ million in annual transactions.
  • Committee note: Chair Chan asked whether this was the same as a pickleball reservation system; department indicated it is different.

• Item 13: Cannabis business tax ordinance — amended to suspend for 10 years

  • Presenter: Sophie Marie, Legislative Aide to Board President Rafael Mandelman.
  • Amendment direction (project description): Rather than repeal outright, amend to suspend the cannabis business tax for 10 years.
  • Context cited: Illicit market estimated at 50–60% of San Francisco cannabis sales; prior Board actions suspended the tax three times (implementation originally planned January 2021, then suspended through December 2021, December 2022, and December 2025).
  • BLA fiscal impacts (project descriptions):
    • If suspended, Controller projected General Fund revenue foregone: $3.7 million in FY 2026 (half-year effect due to calendar-year tax) and $8.7 million in FY 2026–27.
    • BLA described the action as a policy call given structural deficit impacts.
  • Supervisor positions:
    • Supervisor Mahmood: Expressed support; stated he views the measure as a public safety tool and cited daily observation of an illegal cannabis market at Market & Jones; argued overregulation and costs help illicit markets persist and that tax relief should be paired with enforcement.
    • Supervisor Sauter: Expressed support for suspension; acknowledged General Fund impact but emphasized protecting small businesses, employees, and commercial corridor activity.
    • Chair Chan: Expressed opposition to a decade-long suspension and concern about fiscal responsibility; argued illicit sales should be addressed via enforcement, and questioned how foregone revenues would be offset during an anticipated $800 million deficit over two fiscal years. She supported adopting the amendment for further Board debate but moved the item forward without recommendation.
  • Procedural note: Committee recessed from approximately 12:05–12:15 for Chair Chan to confer with Board President Mandelman, then returned to vote on forwarding.

Key Outcomes

• Vice Chair excused: Motion to excuse Vice Chair Matt Dorsey approved 3–0.
• Items 1–2 (DA insurance fraud grants): Forwarded to full Board with positive recommendation, vote 3–0.
• Item 3 (ECS Sanctuary Shelter amendment): Forwarded with positive recommendation, vote 3–0.
• Item 4 (Felton Bayview Drop-In Center amendment): Forwarded with positive recommendation, vote 3–0.
• Items 5–8 (Homekey Plus: 1035 Van Ness & 835 Turk): Forwarded with positive recommendation, vote 3–0.
• Item 9 (DPH CuraScript specialty drugs): Forwarded with positive recommendation, vote 3–0.
• Item 10 (DPH Hyde Street mental health services): Forwarded with positive recommendation, vote 3–0.
• Item 11 (DPH CDSS/BDO CCE Preservation grant): Forwarded with positive recommendation, vote 3–0.
• Item 12 (Rec & Park ActiveNet extension): Forwarded with positive recommendation, vote 3–0.
• Item 13 (Cannabis business tax ordinance):
  • Amended to suspend the cannabis business tax through tax years 2021–2035 (including making the ordinance retroactive to January 1, 2026, per amendment language read into the record); amendment approved 3–0.
  • Forwarded to full Board without recommendation, vote 3–0.