Good morning.

This meeting will come to order.

Welcome to the first meeting of the Budget and Finance Committee this year.

Happy New Year.

Today is January 7, 2026.

I am Supervisor Connie Chan, Chair of the Committee.

I'm joined by Vice Chair Supervisor Matt Dorsey and Member Supervisor Cheyenne Chen.

Our Clerk is Brent Halepa.

I would like to thank Kalina Mendoza from SFGovTV for broadcasting this meeting.

Mr. Clark, do you have any announcements?

Happy New Year, 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.

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

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

when your item of interest comes up and public comment is called please line up

to speak on the west side of the chamber to your right my left along those

curtains and while not required to provide public comment we do invite you

to fill out a comment card and leave them on the tray by the television to

your left by the doors if you wish for your name 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 brent.jalipa at sfgov.org.

If you submit public comment via email, it will be forwarded to the supervisors

and also included as part of the official file.

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

to our office in City Hall at 1 Dr. Carlton B. Goodlick Place,

Room 244, San Francisco, California, 94102.

And finally, Madam Chair, items acted upon today are expected to appear

on the Board of Supervisors agenda of January 13th unless otherwise stated. Madam Chair. Thank you, Mr. Clark. And

before I call the items on the agenda today,

would like the general public to know for any items that have the budget and legislative analyst

report, we will go to the department presentation first,

followed by the budget and legislative analyst, and then we'll take questions and then we'll go to public comment.

So with that, Mr. Clerk, please call item number one.

Yes, item number one is a resolution approving the food and beverage minimum annual guarantee

and pre-security rent reduction program for food and beverage concession tenants,

allowing the San Francisco International Airport to enter into lease amendments

to lower the minimum annual guarantees for 18 of 69 food and beverage leases,

lower the percentage rent structure for seven pre-security leases,

and alter the annual minimum annual guarantee adjustment methodology for all food and beverage leases.

Madam Chair.

Thank you. And with that, we have SFO here.

Good morning, Supervisors. Happy New Year.

The airport is seeking your approval to implement the airport food and beverage minimum annual guarantee, or MAG,

and pre-security percentage rent reduction program,

which would support 25 tenants and alter the MAG adjustment methodology for most food and beverage leases.

The airport has been an industry leader for having an elevated food and beverage program

with a high level of local ownership and local concepts.

Through this program, the airport hopes to ensure financial viability of the F&B leases

with the goal of preserving quality concessions, customer service, and employment at the airport.

The program consists of three elements.

adjusts the minimum annual guarantee for certain food and beverage tenants,

lowers percentage rent for seven pre-security food and beverage tenants,

and changes the annual MAG adjustment methodology for all food and beverage leases,

with the exception of 10 leases.

The airport has 69 food and beverage leases,

and tenants typically pay the greater of a MAG or percentage rent.

In order to qualify for this program,

lease locations must be in excess of 12% of gross revenues

for post-security locations or 6% for pre-security locations.

The airport has identified 18 leases that have a MAG that is dramatically higher at 15% of gross revenues

than the average of 10%.

These 18 tenants will get a one-time reset, which will bring their MAGs in line with the rest of the program.

The new MAG for post-security locations will be 12% of their sales from 2024.

for pre-security locations the new mag will be 6% of sales from last year due

to its challenging location the airport also recommends that seven pre-security

leases get a lower percentage rent of a flat 6% instead of tiered percentage and

finally the airport recommends altering the mag adjustment methodology to the

industry standard of 85% of base rent from the prior year instead of based on

consumer price index. The value of the relief that staff are requesting today

is approximately 1.84 million and the BLA has requested that attachment A be

amended to include which leases have opted out of the MAG adjustment

methodology change. We are in acceptance with this

recommendation and have circulated amendments for your review. With this

amendment the BLA has recommended approval and I'm happy to answer any

questions with my colleague from our revenue development and management team

thank you thank you good morning Nick Menard from the budget legislative

analyst office item one is a resolution that would allow the airport to

implement a rent reduction program for food and beverage concession leases it

resets the mag or minimum annual guaranteed rent for 18 leases it

reduces the percentage rent for seven leases and then changes the annual

adjustment of the annual rent going forward starting in 2026. That would apply to about

61 leases, which we list in the report. We show on page six that these changes collectively

would result in $1.8 million in less revenue to the airport this calendar year. That does

have a general fund impact because 15% of non-airline revenues go to the general fund,

and so that would this would result therefore in about two hundred and

seventy five thousand dollars less to the general fund in the calendar year we

also recommend that the attachment to the resolution be amended to reflect the

composition of the rent reduction program that includes opt-outs as well

as some corrections about the terms that are the terms by which the leases are

changing we have an attachment in this report but we recommend approval of the

resolution as amended thank you could you help us understand a little bit about

what maybe there are different reasoning but do we understand the reasoning why

some of them are actually opting out of the minimum average guarantee sure

adjustments I'm gonna ask my colleague Cheryl Brennan who's our director of

revenue development and management thank you

Good morning, Supervisors.

I'm Cheryl Brennan, Director of Revenue Development and Management at San Francisco International Airport.

The tenants that are opting out have either older leases, which had a much lower mag to start with.

We changed the method we used to set mag over the years to get it closer to what they would actually pay in percentage.

or they're performing so well that they're so far into percentage rent

that the mag, if we use this new method, would actually grow.

Because the point of this is to make sure that the mag and percentage are close to each other.

So if someone started with a lower mag and they've done amazingly well, like proper food,

with sales, this adjustment would bring the mag way up and they're like,

why would we want to do that?

It's of no fiscal impact to us.

It's kind of a technicality.

Will there be issue if they are not consistent in terms of the MAG percentage, you know, in this case,

and especially if they are the legacy MAG percentage versus the one that you're now asked to comply to the adjustments

or work with, I should say, you know, with the adjustments?

Sure. So there's an administrative impact. There's a bit more work for my office and our accounting department because on January 1st every year we'll have to say these, let's say there's 10 leases. These eight will use this method, 85% of prior years rent paid to adjust their MEG. And these two, we're going to have to look up the CPI and do it in that way. So it's just a little bit more work administratively because we've got two rules for adjusting MEGs.

Yeah, I guess let me try to ask this again.

Is that the ones that with the older or lower or just older, Meg,

are the minimum average guarantee,

are there like a timeline that should and when expired

then you will have to renegotiate the minimum average guarantee?

Sure, yes.

So we have a lot of leases that are expiring all at the same time, October 31st of 2027.

We often lease in chunks, like when we renovate a building.

So those leases all start at the same time and expire at the same time.

So it happens that late 27 is when we will be catching up with a lot of new leases.

Good to know.

Thank you.

Okay.

Thank you.

Seeing no other name on the roster, let's go to public comment on this item.

Yes, we are now opening public comment for this item number one.

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

Madam Chair, we have no speakers.

Seeing no public comments, public comment is now closed.

First, I think we will make the motion to accept the amendment to the attachment.

a that's declaring and indicating the the list of concessions including those are opting out

or inclusive of the minimum average guarantee adjustments and then we will send the amended

item to full board with recommendation and a roll call please and on that motion to amend the

Resolution as so stated by the department and the chair hint to forward this resolution to the full board with positive recommendation as amended

Vice-chair Dorsey Dorsey I remember Chen Chen I chair Chan I

Chan I we have three eyes the motion passes

Thank you, and mr. Clerk, please call item two and three together. Thank you

Yes item numbers two and three are resolutions retroactively authorizing the environment department

department to accept and expend prizes from the United States Department of Energy's Office of

Energy Efficiency and Renewable Energy to develop or implement pilot programs to upgrade homes with

electric heat pump, water heaters, and energy efficiency measures. Item 2 is in the amount of

$400,000, which was confirmed and received by the department on December 12, 2023, to upgrade up to

200 homes and to execute the contracts between the city and the co-applicants necessary to carry out

the purposes of the project for which the prize was awarded and item number

three is in the amount of $400,000 which was confirmed and received by the

Environment Department on March 17th 2025 to upgrade 20 homes. Madam Chair.

Thank you and today we have the Department of Environment here.

My name is Alice Hur and I'm the Senior Policy Coordinator for the SF Environment Department.

I got pardon the interruption.

If you could speak directly to the microphone, please.

Thank you.

And I'm here to talk about two accept and expend packages

for federal electrification prizes from the Department of Energy.

So as you may know, the mission of the SF Environment Department

is to advance climate protection and to enhance the quality of life

for all San Franciscans.

And one of the main ways we turn these climate goals into lived reality

is through electrification initiatives.

Buildings constitute almost 44% of all emissions in San Francisco,

and that's why decarbonization is a high focus for our department.

The department does not get many general fund resources

to conduct this climate work,

and so we leverage the general fund dollars we do receive

to bring in outside funding to enhance the city's capacity

to conduct this critical climate work.

The department has been very diligent and successful in bringing in these outside dollars,

which amount to $83.2 million in grants and two federal prizes totaling $800,000 since November 2022.

So honing in on these prizes, the Buildings Upgrade Prize is a U.S. Department of Energy prize

focused on accelerating building transformation through high-performance, energy-efficient,

and electrification technologies over three phases.

The core benefits are cutting energy costs, improving indoor air quality, and also occupant comfort.

And since this program started, it has awarded over $22 million in cash prizes nationwide.

So moving on to the Environment Department's winning concept, 200 by 200,

this concept was to upgrade 200 homes with high-efficiency measures

and electric heat pump water heaters in 200 days

within and around state-designated disadvantaged communities,

again speaking to the department's equity priorities.

This next slide is an overall summary,

but I'm going to move down to the bottom

and talk about the two distinct phases.

So phase one was to develop a pilot implementation plan

in collaboration with three partners

that went through specific timelines and focused deliverables,

whereas phase two was to implement a smaller-scale pilot

to upgrade 20 single-family homes

within and around these disadvantaged communities

to gather feedback and data

to inform the full-scale program implementation in phase three.

And both were in the amount of $400,000.

So I do want to conclude

on why we're bringing this authorization retroactively.

If you've noticed, I've called these prizes and not grants,

The distinction being that prizes are a streamlined way to deliver funds.

They do not have a grant agreement and negotiated scope of deliverables over time.

After the prize is won, it is immediately awarded and received by the recipient.

There is no funding category within the city for cash prizes.

As such, the department budgeted these prizes in the fiscal year 24, 25, and 25, 26 budget.

believing they had met all financial obligations.

However, after discussions with city attorneys

and the Comptroller's Office,

it was determined that prizes must follow

standard grant procedures under local rules,

which is why we're bringing these

accept and expend resolutions before you today.

So that's it on this particular A&E,

but I do want to quickly note

that we did recently win another electrification grant

for a heat pump water heater installation,

So we will be coming back to the committee likely in a few weeks.

Thank you and happy to take any questions.

Thank you.

And this is the first time I'm hearing cash prizes.

Please help me understand a little bit more about the difference.

I mean, I think eventually the city attorney determined that to be still very similar to a grant.

but you indicated in your presentation

that the cash prizes does not have any of the grant requirements.

Walk me through.

Because they're from the federal agencies.

Sure.

So I could have my colleagues jumped in if there's more to add,

but prizes are a more streamlined way of administering funds.

Normally with grants, there's a sort of lengthier negotiation process where you go over a scope of work, deliverables, timelines,

and then there's this formal grant agreement that's signed by both parties, and then usually a set of reporting requirements afterwards.

So a prize is just you submit an application for your project, and then if you're awarded, those funds come in immediately,

and they're received immediately.

There's no negotiated grant agreement, and the whole purpose of that is to kind of shorten the time frame

by which you can get these funds to start the work.

And typically, just normally,

you would then go through sort of report back

and just scope of the work.

Usually the quote-unquote negotiation is that.

It's really the compliance process.

And in this case, how does the State Department

declare that this has been completed?

And meaning the accounting itself from the State Department,

from the Federal Department to say,

this project has been completed,

or there would just be no follow-up whatsoever?

So, yeah, I can have my colleagues jump in if they have anything to add,

but there is no post-reporting requirement to the federal department.

Yeah.

Interesting.

And is this a standardized practice or just it's been like this for a while?

So this is somewhat unique.

So, like I said, we apply to both grants and different forms of award.

This prize is one of them.

So with our grants, we go through the standard A&E process.

And again, because we had received this prize and it doesn't have the same kind of characteristics of grant funding,

we budgeted it.

And when that budget was adopted, we believed we had fulfilled the financial obligations.

Of course.

Are we aware of the cash prize procedure as a standard federal procedure?

Let me defer to my colleagues from the energy team and policy team on that.

Sure.

Good morning, Supervisors.

I'm the Energy Program Manager for the Environment Department,

and I can speak about a little bit of the Buildings Up Challenge.

It was a contest that is put up by the Department of Energy,

and the purpose of the contest is to curate very innovative ideas

to advance electrification and energy efficiency.

And so this was, by itself, it was an innovative way for the Department of Energy to solicit concepts from the local communities.

So it's a little bit different than what the Department of Energy typically do.

They would often have a very defined scope.

They would ask for, like, you know, the responses for grant applications.

This was a very innovative way for the Department of Energy to bring dollars to communities to accelerate electrification and energy efficiency.

And so, like Alice mentioned, this was a competition that was designed to be implemented in three phases.

The first phase was the application, our concept.

So we got our award, and with that money, the intention was to use that money to build an implementation plan so we can compete in Phase 2.

And we also won Phase 2.

We completed the implementation plan.

And so the next round of funding was earmarked to, okay, let's try your implementation plan.

Put it into action as a pilot.

Let's do 20 homes.

and if that's successful apply to compete in phase three which is the final phase and the

full-scale rollout okay I hope that answers the question thank you interesting great that's good

to know I learn something new every day it really is so I appreciate that thank you and so with that

let's go to public comments on these two items yes we are opening public comment for these items

two and three if you have any members of the public who wish to address this

committee madam chair we have no speakers seeing no public comments public

comment is now closed colleagues I would like to send these two items to full

board with pop with recommendation and a roll call please and on that motion to

forward to the full board of the positive recommendation vice-chair Dorsey

Dorsey I member Chen Chen I Cher Chan I Chen I we have three eyes the motion

passes. Thank you. And Mr. Clerk, please call item four and five together. Item numbers four and five

are resolutions authorizing the Human Services Agency to accept and expend grants with and for

the following, each for the period of April 1st, 2026 through March 31st, 2030. Item number four

is for a total amount of $268,000 from the Blue Cross of California Partnership Plan, Inc. for

participation in a program entitled Housing and Homelessness Incentive Program Funding San Francisco.

Item number four, sorry, item number five is for a total amount of approximately one million

from the San Francisco Health Plan for participation in the program entitled

Housing and Homelessness Incentive Program Funding San Francisco. Madam Chair.

Thank you. And today we have Human Services Agency.

good morning chair Chan committee members I'm Celia Pedroza the budget director at HSA and I'm

here as you know to present on items four and five on today's committee agenda and both of

these items are related to grants that our agency was awarded through the state housing and

homelessness incentive program the grants will be funding a joint initiative between our agency

anthem Blue Cross Blue Shield the San Francisco health plan and the Department

of Homelessness and Supportive Housing under item 4 we respectfully request

your approval of an accept and expend resolution for the funding we're

receiving from anthem and that's in the amount of two hundred and sixty eight

thousand dollars under item 5 we also request your approval of a resolution

for the funding that we're receiving from San Francisco health plan in the

amount of a million seventy two thousand the funding generally supports

the state's Cal aim implementation in two ways first it's going to strengthen

the capacity of public benefits enrollment and advocacy for unhoused

individuals and secondly by increasing enrollment in Medi-Cal in particular

this will increase participation in Cal aim efforts related to enhanced care

management and community support services. These are both efforts intended to promote the health

and well-being of enrollees in Medi-Cal. Locally, through the partnership with our grantors and HSH,

we'll specifically be using this funding to pay for two temporary positions, one senior eligibility

worker and one program specialist, and their work will span between April 1st, 2026 through March 31st,

2030. The eligibility workers focus is going to be on increasing enrollment in

public benefits in a variety of programs including including CalFresh,

Medi-Cal, IHSS, and CAP. The program specialists will have a different focus.

They will be training CBO staff at both shelter and navigation centers to help

clients obtain and maintain their benefits the the CBO staff will receive

enhanced training around how to apply and maintain access to benefits in

conclusion I just want to spotlight that at the end of this grant period what

we're attempting to achieve is of course an increase in enrollment but also we

want to leave the CBOs best equipped to independently assist their unhoused

clients in accessing and maintaining public benefits thank you I definitely

think it's critical work at this moment including that I really think the

continuum of care benefits for housing and for many other issue for our

homeless population has been very significantly helpful and and it's been

successful it's been deemed successful so I'm glad that we having these grants

to be able to do some of those those work thank you so much for your work and

let's go to public comment on these two items yes we are opening public comment

for these items four and five if you have any members of the public who wish to

address this committee madam chair we have no speakers seeing no public

comments public comment is now closed colleagues I would like to send these

two items to full board with recommendation and a roll call please and on a motion to forward to

the full board with a positive recommendation vice chair dorsey dorsey i member chen chen

i chan i chan i we have three eyes the motion passes thank you thank you mr clerk please call

item number six item number six is a resolution retroactively approving and authorizing the mayor

and the director of the mayor's office of housing and community development to execute a grant

agreement with rsu associates lp in an amount not to exceed approximately 15.3 million for a 20-year

term to provide operating subsidies for a 100 affordable housing project housing for low-income

and formerly homeless households including transition aged youth located at 78 hate street

and 120 octavia street approving the form of and authorizing the execution of the grant agreement

with a retroactive commencement date of October 1st, 2025,

and authorizing the director of MoCD to enter into any additions, amendments,

or other modifications to the grant agreement that do not materially increase the obligations

nor liabilities of the city or materially decrease the benefits to the city,

and authorizing the director to take actions necessary to implement this resolution has defined their end.

Madam Chair.

Thank you.

And today we have Mayor's Office of Housing and Community Development here.

Good morning.

supervisors chair chair and my name is Sarah Ambrall I'm the director of

housing development for mayor's office of housing and community development I'm

here to present on item 6 related to the proposed grant agreement to provide

operating subsidy for supportive housing units for transitional age youths at 78

hate Street for 32 supportive housing units not to exceed 15.3 million dollars

for a 20-year term next slide please 78 is a 64 unit affordable housing

development constructed on a small infill city-owned site at Haight and Octavia and one of

the last central freeway parcels to be developed as affordable housing. It includes 32 units for

transitional age youth who have experienced or are at risk of homelessness with supportive services

provided by Larkin Street Services. The remaining 31 units are studios for adult households. It also

includes a three-bedroom child care unit and completed construction in September of 2025.

To date, of the 64 units, 41 are leased up, including the child care units.

Next slide, please.

The supportive housing units need an operating subsidy to be feasible to operate

as households only pay 30% of their income in rent.

The Lost General Fund is allocated at $10.5 million for the 20 years,

and we also have a COSER from NPLH, the No Place Like Home HCD Fund for $4.7 million.

The proposed leveraging of the state funds covers 15 of those homeless units and reduces the burden on the LASP general fund.

MoCD fully supports this request and thanks you for your consideration.

We're happy to answer any questions you may have.

Thank you.

item six is a resolution that approves an agreement between MOHCD and RSU

associates LP retro to retroactively start October 1st 2025 and how the

agreement has a value of 15.4 million dollars the agreement would essentially

fund two different types of rental subsidies to support 32 units of an

affordable housing project at 78 hate these units will be for formerly

homeless transitional age youth and as we discussed on page 18 of the report

about ten point six million dollars will be funded by the city's local operating

subsidy program that's a general fund cost paid out of the general fund every

year and then a four point eight million dollars of the subsidies over 20 years

will be from the no place like home grant which is a state grant that was

provided to this project that reduces the the general fund support needed for these units

we recommend approval of item six thank you vice chair dorsey thank you chair chan um thanks for

the presentation over the holiday uh recess um the chronicle did a story about tndc's plan to

sell some of its buildings. And that raises some questions, I think larger questions,

not just about TNDC, but about the entire sort of nonprofit and supportive housing portfolio.

But I just want to ask what kind of assurances the city has that TNDC has the financial capacity

to operate this 78 Haight Street over the full 20-year term.

That's a great question. Thank you, Supervisor. So as you know, the property does have this

COSAR for the homeless units. It also has another capitalized COSAR for the non-PSH

units that are a part of the capitalized cost providing additional security.

So we feel the properties that

TNDC is offering for sale at the moment do not have COSARs attached

to them. So that is the biggest financial detriment to those projects

is that they don't have the long-term subsidy attached to them.

I think we will probably want

more detail about this, some of the issues that were raised by the Chronicle and what

TNDC is in. But broadly, while I got you, what would we want to look at if the city were to

revisit how we underwrite and monitor operating subsidies? In regards to our underwriting

guidelines in general? Yeah, this, I mean, for operators serving, one thing that I'm hearing is

that there's elevated acuity issues, but I think there's also other financial issues, and

obviously, we want to set our non-profit partners and departments up for success,

and it is clear to us, I think, that we're not doing that. So I do think at some point,

we policy makers members of the board of supervisors have to look in the mirror and ask

ourselves what what do we need to do to make the mayor's office of housing and community development

department of homelessness and supportive housing and all of our non-profit partners successful

this is probably a larger conversation if there's a high level sort of just

yeah as a policy perspective i think there are a lot of things that we can do and i definitely think

that this requires a larger conversation with the director of MoCD.

But what we're doing currently is providing coasters a lot of the time.

As you're seeing more often, we've seen it with 2970 16th Street

that just recently came for approval a couple months ago,

that we're really trying to shore up and recognizing

that we're not going to be able to pay for maintenance and services

without having higher rent levels.

Coordination with HSH and services provision is really important too,

especially when it comes to higher acuity.

DPH plays a really important role in those processes for any of the projects, particularly

that has PSH and HSH as well.

So I think further coordination and support for financial services related to services

is really important because it's only a scratch.

I will say that MoCD is actually underwriting every four years.

We go through a process where we re-evaluate our underwriting guidelines that also in turn

looks to our permanent supportive housing.

In 2026, we are due for that as well.

So that is coming up as an opportunity.

Great.

Okay, thanks.

And I do want to make note of that.

And so then I think during April, it's likely when we're going to start some of the hearing, maybe March as well, during the budget appropriation.

Then perhaps we want to be inclusive of this as part of those budget hearing leading to the budget process.

then perhaps we've been having this conversation for a while with MOCD during these when these

project come or when these agreements coming through particularly loan agreements or grant

agreement then I think that maybe underwriting guideline from what I'm hearing from I share

Dorsey is we are expecting that there will be a presentation since it's for 2026 that will be

inclusive of underwriting guidelines like principles for the existing and what your approach for the next five years will be.

Okay.

Thank you.

And so 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.

Good morning.

My name is Essence Winston.

I'm a San Francisco native and a two-time HBCU alumni.

I hold a Bachelor of Arts in Political Science from Johnson C. Smith University and a Master

of Arts in Political Science from Howard University.

Thank you for the opportunity to speak today.

I want to begin by saying that I do support this funding and the intention behind it.

Stable and affordable housing is necessary and long-term operating subsidies help keep

people housed.

That matters.

If we're committing over $15 million across a 20-year term to keep people housed, we need

to make sure these sites are equipped to address addiction, fentanyl, and mental health, or we will

fail the very people this funding is meant to help. I want to respectfully offer a broader perspective.

This crisis in San Francisco is not only a housing issue, it is also a drug crisis,

particularly a fentanyl crisis, and housing alone will not solve it. Through my professional

experience working at a local non-profit here in San Francisco, I have the opportunity to build

real relationships with residents. I didn't just see numbers or units filled. I saw people's lives

up close. I worked with individuals who had housing, a bed, access to services and staff

support, yet still struggled to remain inside or maintain stability. In those relationships,

I saw how addiction and untreated mental health conditions affected everyday decision-making.

I saw residents return to unsafe relationships, including situations involving domestic violence,

because addiction and trauma impaired their judgment and sense of safety.

I saw people miss critical appointments, violate housing rules, or disengage from services,

not because housing wasn't available, but because addiction kept them in a consistent survival mindset.

I also witnessed how stigma follows people even after they are housed.

Some residents express feeling judged in the workplace, in public spaces,

and sometimes even with systems meant to support them.

As we fund housing, we should also be funding housing with recovery.

Housing should be paired with treatment access, detox pathways, medication-assisted treatment, behavioral health services.

Thank you.

But thank you much, Essence Winston, for addressing this committee.

And Madam Chair, that completes our cue.

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

Vice Chair Dorsey.

Thank you, Chair Chan.

I don't normally comment on public comment, but I want to say amen.

And I'd love to reach out and have a conversation.

I'll hand you my card after this.

Thank you for that comment.

Thank you.

And this also actually reminds me, I think I wanted to, not too sure, but like for, I

think for the BLA, but also for all the city departments coming forward too, I think from

now on during your presentation, especially for facility contracts or similarly, like

particularly this one, not just this one, but any facilities contracts that we would

love to see a presentation of the conditions of those facilities of those units and in this case

the seven eight seven to eight eight streets and 120 Octavia Street like to get the the facades of

the buildings as well as the interior including the common area or a sample units for us to actually

have a better understanding what we're funding and the condition and the funding a condition of the

units that we're funding.

And that applies to not just MOC CD.

It's already been part of the presentation for Department of Homelessness in

Supportive Housing.

We are going to continue to ask that of Department of Public Health as well as

Human Services Agency.

Again, this is only applicable to all contracts and grant agreements related

to facilities.

And so that really helped us just have a better understanding.

I wish I could tour all these facilities before they come to us for approval so that we truly understand what we're funding and the work that is being done in those spaces.

But photos is probably the best next thing, so we would appreciate that.

So if it is possible, I am supportive of these subsidies today.

I would love for these to be included as photos before the January 13th full board vote, if possible.

Thank you.

And with that, colleagues, I don't see that we have additional comments.

Vice Chair Dorsey, what is your will, particularly for this item?

Thank you, Chair Chen.

I would like to move to send this to the full board with our positive recommendation.

Thank you.

A roll call, please.

Pardon.

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

Vice Chair Dorsey?

Aye.

Dorsey, aye.

Member Chen?

Chen, aye.

Chair Chan?

Aye.

Chan, aye.

We have three ayes.

The motion passes.

Thank you.

And Mr. Clerk, please call items 7 through 9 together.

Item number seven through nine are resolutions as they relate to a 95-unit multifamily rental housing development known as 967 mission and granting general authority to city officials to take actions necessary to implement their respective resolutions.

Item number seven, authorizes the execution and delivery of a multifamily housing revenue note in a principal amount not to exceed $21.75 million and a multifamily housing revenue note in an aggregate principal amount not to exceed $20 million for the purpose of providing financing for the construction of the project, approving the form of and authorizing the execution of a funding loan agreement, providing the terms and conditions of the loan from the funding lender identified therein to the city,

for the execution and delivery of the notes, approving the form of and authorizing the

execution of a borrower loan agreement, providing the terms and conditions of the

loan from the city to the borrower, approving the form of and authorizing the execution

of a regulatory agreement and declaration of restrictive covenants, approving the form

of and authorizing the execution of an assignment of deed of trust and loan document,

authorizing the collection of certain fees, modifications, changes, and additions to the

documents ratifying and approving any action here before taken in connection

with the back-to-back loans the notes and the project item number eight approves

and authorizes director of property and the director of mayor's office of

housing and community development to enter into a ground lease with 967

mission LP for a lease term of 75 years and one 24-year option to extend and an

annual base rent of 15,000 authorizing the mayor and the director of MoCD to

execute loan documents related to the loan to 967 Mission LP to provide financing for the

development and construction of the project, approving and authorizing an amended, restated

and consolidated loan agreement in an amount not to exceed $44.3 million for a minimum loan amount

of 57 years with 967 Mission LP to finance the development and construction of the project,

determining that the less-than-market rent payable under-the-ground lease will serve public purpose

by providing affordable housing for low-income senior households in need

in accordance with the Administrative Code,

adopting findings that declaring that the property is exempt surplus land

pursuant to the California Surplus Land Act,

adopting findings that the project and proposed transactions

are consistent with the general plan and the eight priority policies of the Planning Code.

And item number nine, approves and authorizes the mayor and director of MoCD

to execute a grant agreement with 967 Mission LP

in an amount of approximately $10.5 million

for a term of 15 years to provide operating subsidies for this project.

Madam Chair.

Thank you, Mr. Clerk.

And here we are, Mayor's Office of Housing.

Thank you.

Thank you, Supervisors Chair Chan,

and Sarah Emeril again, Director of Housing Development from OCD.

We're here before you today with three resolutions

related to the development of a new 100% affordable senior project

at 967 Mission, located in south of Market Neighborhood, D6,

by project co-sponsors John Stewart Company

and Bayview Hunters Point Multipurpose Senior Services.

The first resolution authorizes the issuance of the tax-exempt bonds

not exceeding $41.7 million to facilitate the construction of the project.

The second resolution authorizes two primary actions.

First is the ground lease, the city-owned property to 967 Mission LP,

which is a limited partnership owned and created by the sponsors

to develop and own the improvements for up to 99 years,

similar terms for the city-funded new affordable housing communities.

In the second, a city loan up to $44.3 million

for a minimum loan term of 57 years to the limited partnership.

The last resolution authorizes the city to enter into a 15-year

capitalized operating subsidy again for $10.5 million,

also known as the Senior Operating Subsidy, or SOS.

Next slide, please.

As you can see from the history of this project, it has been in the making for over 10 years now,

starting with the first land dedication from 5M in 2015, which was approved by this board in 2019.

MoCD then issued a nine-site joint RFQ in November 2020 and was selected to the sponsors in April 2021.

Since then, the sponsors have applied to various state financing opportunities,

but due to various changes at the state level, the project was no longer financially feasible

for state financing, which includes MHP and ASIC.

In 2025, the project applied and was awarded bond and tax credits

and is set to close construction financing in February 2026.

Next slide, please.

The sponsor will develop 94 units of housing featuring a mix of studios and one-bedroom units.

24 of the homes will be reserved for seniors exiting homelessness

with rental operating subsidies and on-site supportive services

that will be funded by the city's local operating subsidy program, or LASP.

Five additional homes will be reserved for HIV plus positive households

with incomes restricted to no more than 30% MoCD AMI

and referred to the project by MoCD.

There will be 40 units set aside and supported by the SOS contract.

That's also before you today.

Half of those units will be set aside for seniors at 15% AMI

and the other half for seniors at 25% AMI.

The remaining 25% general affordable homes will be unsubsidized

and restricted at 50% AMI.

The building also features a manager unit, 24-hour desk coverage,

plus standard amenities of community room and kitchen.

Next slide, please.

As previously noted, the project was not successful for state financing

due to being in a low-income area.

There's been various changes at the state level, as we know,

over the last couple of years that's really put some of our projects

that are in lower resource areas at risk of funding opportunities.

MoCD elected to move forward with a shovel-ready project

and backfill the loss of state funding with the support of federal home funds

and additional local funds.

Due to market changes, the project also received a low equity buy-in.

As we know, the market right now is pretty low,

so it was 86 cents on the dollar,

which normally has been quite lower than what we have seen historically

in early 2024 and 2025.

But it also tracks with other projects in our pipeline.

2970 16th Street just came in at an 80% equity buy-in.

And so the lower the equity costs, unfortunately, is the higher the city support for the project.

So both items resulted in a higher gap from the city and therefore a larger city subsidy per unit.

As previously noted, construction is set to start in February 2026 and be completed in December 2027 with full occupancy by April 2028.

Next slide, please.

For some context on the senior operating subsidy for history on July 8, 2019,

the Board of Supervisors amended the administrative code

to establish the SOS subsidy program fund,

which lowered rents and housing developments

occupied by extremely low-income seniors.

This was established as a Category 4 special fund

to receive any monies appropriate or donated

for the purpose of providing project-based subsidies

to the project.

And with that, we had two initial projects

that were awarded under the initial SOS program,

which was 1296 Fatwell and 735 Davis.

In September of 2021, the Board of Supervisors authorized and delegated authority to MOSE

to accept and expend a grant award of $52.3 million from the California Department of

Housing and Community Development Permanent Loan Housing Allocation Program, which we

applied to intending to supplant some of the city funding for the SOS program.

So now under that permanent local housing allocation program,

MoCD is authorized to provide 15-year project-based operating contracts

for households at 15% and 25% AMIs.

With these new funds, staff developed and this committee approved the SOS Program

and Policy's Procedure Manual effective July 21, 2023.

Next slide, please.

Thank you in advance for your consideration and support.

with me today are representatives from John Stewart Company and Bayview Senior

Services and we're able to answer any questions you may have items eight and

nine are two resolutions that pertain to an affordable housing project at 967

mission one resolution approves a gap loan of the city property to the

developers John Stewart Company and Bayview Hunters Point multi-service

senior services and as well as a gap loan of forty four point three million

dollars and then the other resolution approves a rental subsidy agreement for

40 of the units to allow them to be rented at 15 to 25 percent AMI the

project will be 94 units all for seniors at varying income levels we show the

total development budget on page 26 of our report you can see that the city is

funding forty four point three million dollars of the total development cost of

seventy nine million dollars that translates into a per unit cost of about

four hundred and sixty five thousand dollars that the city is funding that is

a little less than double what the city usually funds so this MOCD typically

funds about two hundred fifty to three hundred thousand dollars per unit this

project is more expensive in part because the project was not awarded the

state funding that I think the developers were originally anticipating when they were awarded

pre-development funding a couple years ago due to the site being in a low resource area under the

state criteria for awarding affordable housing financing. But we do recommend approval of items

eight and nine. Thank you. I want to understand, you know, just seeing that there's a similar

scoring for both, I mean exact scoring I should say, both at 89 out of 100 for John Stewart Company,

Bayview Hunters Point, Multipurpose Senior Services, and then also 89 out of 100 points

for Tenderloin Neighborhood Development Corporation. Could you walk us through that

since they were both at equal of 89 out of the 100 in terms of their scoring, what was the,

sort of like a tiebreaker what what happened there it's a great question supervisor um the

selection panel ultimately ruled in favor of john stewart and bayview senior services because they

had actually geared their outreach and to the local communities most notably some of filipinas

and actually working with the local community whereas the helping with the design of the

building how we engage local residents so theirs was a little bit more robust with that

type of local neighborhood commitment.

And understood.

And then they just end up having more local or like community support.

That's right.

Neighborhood input.

Great.

Vice Chair Dorsey.

Thank you, Chair Chan.

And actually, that was one of the questions I was going to ask about community outreach.

So I think you answered it in part.

This is on the same block as the Mint Mall and Mint Hall.

and it's sort of the beating heart in many ways of the Zoma Pilipinas Cultural District.

I just wanted to make sure that there has been community outreach.

I know that this is the site of the Capua Gardens that was a temporary activation of that,

so I'm grateful to see this moving forward, and I appreciate the community outreach.

Is there any more that you wanted to add to that?

Just for a little bit more, the project team had developed a lot of the design of the building,

in regard to security, how the entrance will work, the flow of residents moving in and out,

and also just to recognize that Bayview Senior Services and John Stewart are very strong providers

in many of our local communities.

So the ongoing support of working with the community won't just end at Lisa, of course.

It'll be ongoing.

Okay.

The other thing I just wanted to say is that, you know,

that we have had persistent public safety challenges in West Selma,

particularly around the 6th Street corridor,

and this is something that's close to there.

I know that this is something that we're going to be looking at for, I think, mid-2028,

so I'm optimistic that we will be in a better place by then.

But I'm just wondering, in the agreements that are before us today,

Do we have any leverage for the operation of this to make sure that the city's interests are protected to making sure that there is security or just something to make sure that folks are not, seniors especially, are not being put into a situation where they're facing threatening or challenging environments?

Yeah, that's a very good question.

If you're alluding to overall street conditions, again, I'll just point back to the relationship that JSCO and Bayview Senior has with local city agencies, such as Public Works and SFPD, to really kind of mitigate local street conditions.

I'll also just note that while most city provides financing for the project, we don't really have enforcement over those street conditions.

However, in the past, it has been if there is a service provider or a property manager

that is not working directly with the community, working to ease the tensions or concerns that are out there,

we do have the ability to work with them and HSH to try to find alternative service providers.

That has been done in the past.

Those are through the HSH contracts for service provision.

And we have in the past also been able to help negotiate a transfer of ownership of property management if we needed to.

As a last resort, of course, we do want to help and build capacity for our property managers.

But again, JSCO and Bayview Senior Services have not had historical issues with that.

In the timeline for this project as we move toward people moving in, will we have opportunities for –

we'll be seeing or this is the last contract that you'll be seeing yep all

right okay thank you thanks you and so with that let's go to public comments on

these three items yes we are now opening public comment for these items 7 8 and

9 if we have any members of the public who wish to address this committee

madam chair we have no speakers seeing no public comments public comment is now

Close colleagues. I would like to send these three items to full board with

recommendation and a roll call please and I'm on that motion to send all three

items to the full board with positive recommendation vice-chair Dorsey Dorsey

I member Chen Chen I church and I Chen I we have three eyes the motion passes and

mr. clerk please call item number 10 item number 10 is a resolution

authorizing the Department of Public Health to accept and expend a grant in the amount

of approximately $6.7 million from the San Francisco General Hospital Foundation for

participation in a program entitled ZPCQI Round 3, Optimizing Epic to Drive True North

and Developing Our People the ZSFG Way for the period of January 1, 2026 through June

30, 2029, approving the Notice of Award Agreement pursuant to the Charter.

and to authorize the Director of Health to enter into amendments or modifications to the grant agreement

that do not materially increase the obligations nor liabilities to the city

and are necessary to effectuate the purposes of the grant agreement or this resolution.

Madam Chair.

Thank you.

And today we have the San Francisco General Hospital here.

Hi, good morning.

My name is Angelica Jernigan.

I am the Chief Administrative Officer at ZSFG.

I am presenting on the grant program to support our work around strategy and performance improvement.

San Francisco General Hospital Foundation is providing funds from the ZPCQI Fund to support our initiatives to optimize EPIC,

which is our electronic medical record, and to develop our staff members through lean methodologies.

This is the third round of funding at an amount of $6,755,486, with a start date of January.

Previous rounds of the ZPCQI Fund supported several programs, including the ones funded in this round.

Specifically, this will support our Kaizen Promotion Office, which is the department that works with us, the CSFG executive team, in our strategy development, program implementation, and data analysis through our electronic medical record.

Additionally, the KPO provides training of staff on how to do performance improvement projects

in their own departments to support these strategic initiatives,

such as quality improvement for our patients and patient flow throughout the hospital,

as well as financial improvements within the hospital.

That is the end of my presentation.

Welcome.

Any questions?

I don't have any other questions.

Thank you so much.

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

Yes, we are opening public comment for this item number 10.

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

Madam Chair, we have no speakers.

Seeing no public comments, public comment is now closed.

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

And on the motion to forward this resolution to the full board with a positive recommendation,

Vice Chair Dorsey.

Dorsey, aye.

Member Chen.

Chen, aye.

Chair Chan. Aye. Chan, aye. We have three eyes. The motion passes. Thank you. And Mr. Clark, please call item number 11.

Yes, item number 11 is a resolution retroactively authorizing the Department of Public Health to accept and expend a grant in the amount of approximately $1.1 million from the California Department of Health for participation in a program entitled

Disease Intervention Specialist, DIS, Workforce Development Grant

for the period of July 1, 2025 through June 30, 2026,

approving the grant agreement pursuant to the charter

and to authorize it to Director of Health

to enter into amendments or modifications to the grant agreement

that do not materially increase the obligations nor liabilities to the city

and are necessary to effectuate the purposes of the grant.

Madam Chair.

Thank you, and we have Department of Public Health here.

Good morning.

Sorry, good morning, Chair Chan and committee members.

My name is Anthony Taylor.

I'm the STI and HIV Program Manager with Department of Public Health's Population Health Division.

As noted, we're here to request the retroactive authorization of this grant for $1.1 million approximately.

The grant supports the DPH in developing and expanding training

and sustaining the disease investigation and intervention workforce

with a focus on HIV, STI, and hepatitis C and MPOX.

The grant project is intended to scale prevention efforts,

increase capacity to conduct disease investigation,

ensure appropriate treatment, link people to care and ongoing case management,

monitor disease trends, and rapidly respond to outbreaks.

We're seeking the retroactive authorization to accept and expend the grant as DPH received

the award letter from, for this grant on October 28th of 2025 for a project start date of July

1st, 2025.

The project start date was predetermined by the grantor.

Um, DPH brought this item to the board of supervisors after going through the fiscal

approvals process, including controller's office review and approval.

And with that, we just respectfully request retroactive approval of the item, and I'm

happy to answer any questions you may have.

Could you elaborate a retroactivity?

And so, let me try to find a thing.

So we did receive the award letter after the predetermined start date from the California Department of Public Health.

Sorry, when did you receive the start date?

Because this is July 1st, 2025, and then it's only through June.

Like, you only have six months.

Correct.

So it's a six-month retroactivity.

And could you clarify when was the notification for your start date?

When did we receive the notification?

That was in October of 2025.

So it was already?

Yeah, it was passed.

It was already passed, the actual grant.

Thank you.

I just wanted to be on the record.

That's all.

Thank you.

We're still supportive of it.

I just wanted to have the explanation of retroactivity

that six months into the actual grant,

you have less than six months to complete.

Thank you very much.

Let's go to public comment on this item.

Yes, we are opening public comment for this item number 11.

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

Madam Chair, we have no speakers. Seeing no public comments, public comment is now

closed. Colleagues, I would like to send 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 aye. Member Chen.

Chen aye. Chair Chan. Aye. Chen aye. We have three ayes. The motion passes. Thank

you. And Mr. Clerk, please call item number 12. Yes, item number 12. Is a

resolution approving amendment number one to the agreement between the city and county acting by

and through its department of public health and a and a health services inc to provide rehabilitative

board and care residential services to extend the term by three years from june 30th 2026

for a total term of july 1st 2024 through june 30th 2029 and to increase the amount by approximately

of $22.7 million, for a total not to exceed amount of $32.6 million, and to authorize

DPH to enter into amendments or modifications to the agreement that has now materially increased

the obligations nor liabilities to the city and are necessary to effectuate the purposes

of the agreement or this resolution.

Madam Chair.

Thank you.

And again, we have Department of Public Health here.

Good morning, supervisors.

Good morning, Madam Chair.

My name is Luis Calderon, Program Manager for the Residential System of Care with Behavioral Health Services for the Department of Public Health.

We're here to ask for your support on extending the grant from ANA Health Services from an amount for $22,722,000 and not to exceed for a total of $32,654,000.

This is for an extent for another three years from July 1, 2024,

through June 30, 2029.

The contract will be an extension of three more years

for a total of five years.

ANA Health Services is a 24-hour residential care facility

in San Francisco.

Thank you.

I'm sorry.

I'm kidding.

that provides services for 18 to 59 services for adults

with serial mental illness, co-occurring medical

and physical conditions.

They provide rehabilitative boarding care

licensed residential facility for clients' transition

from acute care and for extreme setting

to independent living.

ANA Health Services provides this rehabilitative program

for an average of 12 months stay to prepare these clients

to move to a more less supervised setting.

They run two programs, Victoria's House,

here in the heart of San Francisco with a total of 46 beds.

All are from San Francisco.

and the San Pablo facility, which we have an as-needed number

of beds with a maximum capacity of 25 beds.

They provide support services higher

than the other RCF facilities in terms

of providing medical management, care coordination,

transportation to clinic visits,

support getting entitlements, and helping men apply

apply for housing and helping them with discharge planning.

This program is a home-like environment program where they receive these services at both facilities.

We're asking for your support for this extension of the program and an increase of the budget.

If you have any questions.

I do.

I think I would like to actually have a better understanding of the facilities themselves.

Yes.

And I think we have requested for additional, similar to what we have discussed previously,

is to have more photos, both not just the facades of the exterior of the buildings, but also the interior.

So these are the interiors.

These are from the San Pablo facility.

San Pablo facility is a large 225-bed facility.

It was an assisted living facility that A&A Health Services purchased.

They have multiple contracts with other counties.

We only purchased a maximum of 25 beds right now as needed.

They are fully accessible units.

As you can see, they're very large.

We started that contract in 2021 with a maximum of 30,

but we've been averaging less depending on our needs.

In 2022, we opened the Victoria's house in the heart of San Francisco.

It used to be an old Victorian house that we had contracts with that facility many, many years ago.

It closed. It was closed for several years until AA Health Services bought it.

And that is the interior of the home.

The home is beautiful.

I don't think there's the facade of the location in San Francisco on Shadwell Street.

It is for ambulatory clients, not fully accessible for wheelchair users.

That is the location.

If you want more pictures, we can provide you some more extensive pictures.

Understood.

So help me understand, though.

So the San Francisco location is not quite ADA accessible, but the San Pablo one is.

It is, yes.

It was renovated. It has an elevator. Actually, you can see it right by the name right there.

It's a renovated center elevator. The gap is an inch wider than the fire department will authorize it to make it fully accessible.

I was there. It works, but it's fully made. It's not quite exactly that.

That's good to know. Thank you so much for your work.

It's good to have you doing the inspection to make sure that it is fully accessible.

I do appreciate that.

Thank you for adding the photo.

And then I know that we received this.

We have yet to receive.

I wonder if we are receiving the electronic copy of this updated presentation.

And if we have not, we would love to have the updated electronic version of this so that we can add to the legislature.

You should have received it by now.

Thank you.

Thank you so much for updating it.

We appreciate your work, truly.

And with that, let's go to.

I don't have any additional questions.

let's go to public comment on this item oh sorry

my apologies before we go to public comment

thanks I was interested actually why don't we hear from

BLA what I was going to ask about was some of the performance

I was intrigued by the section

in the BLA report on performance monitoring I know that this is not a

subject to Medi-Cal sort of the typical kinds of performance metrics

but I wanted to tease out a little bit about how we measure success for this.

So why don't we hear from the BLA?

My apologies.

Thank you.

Item 12 is a resolution that approves an amendment to a contract

between the Department of Public Health and ANA Health Services, LLC.

They are a private company that operates boarding care facilities in California.

So the amendment extends the agreement through June 2029, and that increases the contract value from just under $10 million to $32.6 million.

The agreement would fund, going forward, 71 board and care beds, including 46 in the mission and the remainder in the facility in San Pablo.

As we discussed on page 31 of our report, we do believe DPH could improve its performance measurement of this program.

We know that the department is visiting the site monthly and doing utilization reviews.

But because the services are not Medi-Cal reimbursable and this is not a nonprofit contractor,

the typical triggers for the DPH performance measurement of this program are absent, right?

And so the only thing that they're tracking is if 50% of clients completing the program in 12 months

and then attendance and group therapy.

And so when we think about, you know, these are not just board and care beds,

but there are also treatment beds.

There could be a kind of more robust measurement

of what's happening in the facility,

such as are people getting treatment plans on a timely basis?

Are they completing the milestones of those treatment plans?

Are they exiting?

These are short-term beds.

These are about one-year beds.

Are they exiting to appropriate housing placements,

or are they cycling back through the system?

I think these things would be important for DPH

and the Board of Supervisors to understand about this program.

I think the department's also working on the set of compliance objectives

that the contractor has to meet,

which are, I think, an important risk management piece

of the performance measurement system

that is still under development by the department.

We did talk to the program staff at DPH,

and they agree with our recommendations.

We show the budget for the program on page 33 of the report.

This is about a $6.2 million a year program funded by Proposition C, Homeless Gross Receipts Tax.

But we do recommend approval of Item 12.

Vice Chair Dorsey.

Thank you, Chair Chen.

Can I ask maybe just a high-level answer?

How do we define success for a program like this?

Right.

The difference between this and other residential care facilities,

most of the other residential care facilities are their permanent homes.

This is a new pilot, a new way to provide treatment programs for clients

that don't generally succeed at residential treatment programs,

medical license and reimburse medical ones.

and it serves as a purpose to step down for clients that are in acute lock settings or with forensic history.

A lot of our facilities do not take clients with significant forensic history.

ANA, especially Victoria House, takes clients directly out of jail with significant psychiatric histories

and their substance on top with the forensic histories.

This is a model problem for that.

The clients go there with a very low threshold to get into the programs.

They attend groups.

Our goals, we agree with BLA report.

We're improving our trying to make sure that all the clients attend

at least a number of groups per week, at least four groups per week.

They re-engage these clients into the community with a special outings,

help them connect with services.

So once they step from, for example,

for a mental health rehabilitation center,

a locked facility,

they stepped into Victoria's house.

They started going out, rejoining society,

accessing services,

establishing their medical services,

continuing with their intensive case managers.

Once they have that routine development

and their success,

they can move to a less supportive environment.

still could be supportive housing,

or some of them clients are looking

for more permanent, stable housing

so they're moved to another residential care

facility, not to the street.

The goal is to so they don't

return to the previous

location, which could be the hospital

or could be the street.

Okay. Great. Thank you.

Thank you.

And

I'm like trying to catch

up now. Did we go to public comment

on this item yet? I don't think so.

Madam chair, we have not let's go to public comment on this item

Yes, we are opening public comment for this item number 12 if we have any members of the public wish to address this committee

Madam chair, we have no speakers seeing no public comment public comment is now closed and

My assumption is we are on board sending the item to

Send the item number 12 to a full board with recommendation and

call please. And on the motion to forward to the full board with a positive recommendation,

Vice Chair Dorsey? Aye. Dorsey, aye. Member Chen? Aye. Chen, aye. Chair Chan? Aye. Chen,

aye. We have three ayes. The motion passes. And with that, Mr. Clerk, please call item 13 and 14

together. Yes, item numbers 13 and 14 are resolutions authorizing the Department of

Public Health to enter into a grant agreement for a term commencing on the execution of the

grant agreement through June 30, 2030, between the city and county acting by and through its

Department of Public Health and the California Department of Health Care Services and its

third-party administrator, Advocates for Human Potential, Inc., including provisions allowing

for the recapture of allowable project expenses incurred retroactive to May 6, 2025, authorizing

the grantor to apply for a receiver in the event of the city's default and authorizing

DPH to enter into amendments or modifications to the grant agreements that do not materially

increase the obligations nor liabilities of the city and are necessary to effectuate the

purposes of the respective grants.

Item number 13, having anticipated revenue to the city of approximately $21.3 million,

including a permitted and restricted use at 887 Potrero Avenue, retroactively authorizing

DPH to accept and expend grants funds for the period of May 6, 2025 through June 30,

2030, and item number 14, having anticipated revenue of approximately $6.3 million, including

a permitted and restricted use at 333 7th Street, and retroactively authorizing DPH

to accept and expend grant funds.

Madam Chair.

Thank you.

And again, we have Department of Public Health here.

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

I'm Kelly Kirkpatrick, the Director of New Beds and Facilities at DPH.

I'm very pleased to be here to seek your approval for over $27 million

for one-time capital improvements to two city-owned buildings.

These two projects are critical to helping address San Francisco's homelessness

and behavioral health crisis by adding much-needed behavioral health,

residential care, and treatment beds.

These funds are from the California Department of Healthcare Services, or DHCS,

as part of the state's Proposition 1 efforts to reform

and expand California's behavioral health system.

In December of 2024, the board authorized DPH to apply

for round one of the Bond Behavioral Health Continuum

Improvement Program, also known as BCHIP, funding.

DHCS notified DPH in May that we were awarded two projects,

these two, 887th Trail and 333 7th Street.

Now I will dive into the details of the two projects

and some specifics of the grants.

Next slide, please.

SFDPs would like to accept 21.3 million for the,

from the state for improvements to 887 for CHURRO,

also known as the Behavioral Health Center on the ZSFG campus.

After many important conversations with stakeholders,

including clients of the BHC, our staff, and labor partners,

the BHC represents a critical pathway to add 90 new behavioral

health beds and expanded residential care for some of San Francisco's most vulnerable

residents, which was recently announced by the mayor's office in December.

For this grant specifically, this includes more than 50 new locked subacute mental health

beds for people under conservatorship at the BHC.

Additionally, related from a project plan perspective, but separate from this grant

agreement, we will also add 40 new assisted living beds for individuals who need long-term

care and community-based support in Hayes Valley.

The BHC was built in 1992 as a locked facility.

It already meets all the infrastructure

and licensing requirements for this high level of care.

Facility improvements funded by the grant include renovated staff

and patient spaces on the second and third floor,

which will have this locked level of care.

The second floor will be the new beds for the 50 additional locked beds.

It will also replace building support and life safety systems

that are approaching end of life, such as elevators, HVAC, and fire alarms.

More specifically, this project plan for the Behavioral Health Center conversion is as follows.

And again, this is a complex multi-property project,

and I just want to clarify the larger plan in context of this grant agreement.

So this grant agreement is funding the capital improvements at the BHC

for the 50 new locked beds on the second floor.

An additional property at 624 Laguna in Hayes Valley,

which was recently acquired by the city, will be operated by city staff and will allow the clients from the second floor who currently are at the BHC to move together with the staff at the BHC as a community to 624 Laguna Street.

Additionally, another property on Laguna Street will yield 40 net new assisted living beds in Hayes Valley as well.

The city's engaged in extensive and ongoing discussions with SCIU, Local 1021, regarding the potential impacts of this project plan.

We are very pleased that we reached resolution with SEIU in December of 2025 on the plan that I just outlined.

We expect the interconnected projects and processes to take shape over the next year.

We anticipate the transition of the second floor clients of the BHC and staff either in late 2026 or early 2027

and add the locked beds on the second floor of the BHC sometime in 2028 after construction.

SFDPH is committed to continuing to work with SEIU, our staff, and clients every step of the way.

This is a vital step forward in addressing the critical shortage of locked mental health beds in San Francisco,

contributing to prolonged hospitalizations, repeated psychiatric crises, and homelessness among individuals with serious mental illness.

Move on to our next project, 3337th Street.

SFDPH is reopening a proven treatment program to help people with both mental health and substance use challenges at 333 7th Street.

This 16-bed residential program expected to open in winter 2026, by which we mean November or December of 2026,

and will provide 24-7 care and support to help people stabilize, recover, and rebuild their lives.

The 7th Street site previously served the community for over 20 years as a trusted treatment program known as Joe Ruffin Place before closing in 2021.

A brief recap of important milestones for this project.

In October 2024, the city acquired the property as part of Baker-PRC Place's debt repayment agreement, which was approved by the board in April of 2024.

In December of 2024, the board authorized DPH to apply for round one of bond B-chip funding.

In May of 2025, DPH was awarded $6.3 million in bond B-chip Prop 1 funding to modernize

this facility.

This includes repairs, a new roof, mechanical upgrades, and a new elevator to ensure full

ADA accessibility, our only ADA dual diagnosis program that we will have in the city.

And then we introduced the grant agreement on December 16th to the board, which we're

considering now, in order to meet the state deadline of approving the grant agreement

by January 29, 2026.

We will conduct an RFP in the spring of 2026 to select a qualified operator for the 7th

Street Treatment Program.

This will allow DPH to assess a broader swath of providers and ensure alignment with key

treatment best practices and the department's good neighbor policies.

DPH and the mayor's office are continuing to engage with the neighboring community to

listen to and address concerns.

The 7th Street Treatment Program is a structured, drug-free program with 24-7 staff, where clients

are required to participate in structured daily schedules, including one-on-one counseling,

group counseling, service coordination, that all promote recovery and well-being throughout

the day.

We also recognize how critical it is to be a good neighbor where our services are located.

So, over the next year, while we work to improve the building and run an RFP for a new provider,

we will work in partnership with the community to develop additional ambassador and safety enhancements to demonstrate our commitment as a community partner.

With this in mind, we do want to clarify that 3337th Street is exempted from the geographic equity legislation for several reasons.

First, the program will provide licensed behavioral health treatment as a social rehab facility, which is not a covered facility under the legislation.

Additionally, DPEACH applied for bond B-chip funding for the site with board approval in December of 2024 prior to the passage of geo-equity legislation.

And additionally, financial decision-making occurred when the board approved the acquisition of the property in April 2024 with plans to continue the same use that had been at the site for over 20 years.

This project brings together what we need to succeed, a city-owned building, state investment, and a proven treatment model.

It's a smart, cost-effective way to expand access to care while minimizing local impact.

Next on to some specifics of the grant.

This grant is retroactive because we received the grant agreement after the predetermined project start date.

So DHCS sent the initial notices of conditional awards for Bond-Beadship Round 1 on May 6th.

The project period for both grants began on that date, meaning we could be reimbursed

if any planning costs were incurred from May 6 or moving forward.

And the grant agreement goes through June 30, 2030.

DPH received the final grant agreements from DHCS on October 29.

We brought it as quickly as we could, working through the controller's office and the city

attorney's office to introduce to you all about six weeks later at the beginning of

December.

Next slide.

And then we are also seeking approval for some of the state's nonstandard terms for

these agreements.

The board has approved similar nonstandard terms and pass speech grants, but we just

wanted to call it out.

Related to declarations of restriction, meaning that we need to use the sites for the same

uses for 30 years, other financial and legal risk indemnification, and kind of receivership

elements that are standard for all of the $6 billion worth of grants the state will be issuing

under Bonham Beach Hub. With that, I just want to thank you for your consideration. We respectfully

ask for your approval of these two items. I'm here to answer any questions. Thank you. I think

with the same expectation that we have requested earlier about just facility, especially particularly

this one that you mentioned that there was actually capital improvements made, including

like roof and things like that. And the picture that presented today was still with the border up

entrance and window. We'd love to get an updated both the facade of the facility as well as inside.

Once they are renovated. So this money is for the capital improvements to do that. So it will look

lovely once we receive the six million dollars and expect construction to be done in the next year.

But that is what it currently looks like without the six point three million dollars of capital

funds to fix it up sure then can we still have like perhaps then the i guess then let's have the

rendering um of what you're anticipated to look like and the scope the work um and just still

would love to see the existing condition the interior of it or you know i i think that again

it's for record tracking we just like to learn more about the existing condition and then what

the work that you anticipated to do, whether $6 million or however way that what others scope the work that you deem necessary for it to be operable.

When you do start to operate at the facility, just help us have a better understanding of the facility itself.

Okay, we can do that.

Do you think we can have that before Tuesday?

January 13th, next Tuesday.

Next Tuesday.

Pictures of the interior?

Correct. Correct. The interior, the existing interior, existing, you know, and if there's any rendering.

There's no rendering, but there are floor plans potentially, I believe.

So we can get to the clerk any of those files that we have, either floor plans and existing photos of the interior.

Wonderful.

Vice Chair Dwasi.

Thank you, Chair Chan.

Yeah, I actually go by this.

so I know that it hasn't been.

It's still boarded up, but the improvements are coming.

I wanted to ask, because I have gotten this question,

and I think you're aware of it,

that there are some folks in my district

who are objecting to this as something that they see

as not consistent with the geographic equity requirements

under the one-city, one-shelter framework.

I'd like to it's my it is my understanding that this was is is not that this is not a project that

doesn't apply to that those restrictions can you walk through why yes happy to recap

there's three reasons and the city attorney can confer as well the first is that residential care

and treatment programs as defined in the legislation are not a covered facility.

And so this will be a social rehab licensed facility by the state,

and it is exempt because it is not considered a covered facility as licensed treatment.

The second is that there is an exemption in the legislation for projects

where we applied under bond B-CHIP in December of 2024, having made,

And then additionally, financial decision-making related to the project was made in April of 2024 when the board authorized the acquisition of the property for the same use it had operated as for 20 years.

Okay.

This is located just – it's close to a school, the Bessie Carmichael School.

It's on the same block as VMD Park.

I have had conversations with Father Georgi from the St. Michael's Ukrainian church next

door.

What I have heard from Father Georgi is that when this was Joe Ruffin's place, this was

a good neighbor.

I think they used to host 12-step meetings.

There's a lot of concern from the neighborhood.

And I just wanted to ask if there is on-site or off-site safety and security measures that

we're contemplating if there are problems so the site is staffed 24 7 and

it is a very structured program where clients have activities throughout the

day so there's not the kind of the program itself is not a coming and going

kind of program we are committed to ensuring that our provider is a good

neighbor meaning and DPH has very specific provisions related to our good

neighbor policy. That includes, you know, kind of having regular check-ins, a clear

point of contact, so having hosting community meetings with community

members, having clear points of contact 24-7 should something arise, ensuring

that there is no lingering smoking or any of that around the perimeter of the

building, and having policies in place to ensure that. Additionally, we will ensure

that folks with a history of kind of high-level offenses, given the proximity to those sensitive

areas with arson or sex-related offenses or anything involving children, will not be permitted

at this site. But relationships are key as well. And I'm glad, you know, we know the priest as well,

having reached out to him and are committed to having ourselves as our program managers,

as well as our provider, ensuring that there are strong communications and relationships

with those proximate neighbors.

Okay.

It occurs to me that even since this was operated as Joe Ruffin Place

under Baker Places, conditions in the neighborhood have changed,

and it may be for the well-being of the residents of this program

that access to the outdoors.

I'm a three-time drug rehab graduate.

I am familiar with these facilities.

to the extent they're going to be bothersome to anybody,

it's not going to be more than cigarettes.

People are outside smoking,

and I know that's typical of many drug treatment facilities.

That may not be a good idea for the residents now.

I think we're in a different...

This neighborhood is in a different place than it was

several years ago when this was opening,

so it may be something to think about,

and I don't know if DPH is giving thought to that,

or if there's a smoking policy or not.

But I know that I have seen in residential treatment programs that there's sometimes different rules.

I think some people feel like deal with the important thing and you'll come back for the cigarettes and that kind of stuff later.

I will say that it does.

I have heard from residents that sometimes it will add to the visual appearance of disorder that's playing out,

even if people are in a treatment or sober facility.

And I've seen this and heard this from other facilities that are drug-free, abstinence-based programs.

But people do smoke.

And it still looks like disorder.

So I'd like to invite you to just, if there's any detail on that you could offer, I'd appreciate it.

We know that that is definitely a practice that we will need to work with the provider who is selected and have a very clear policy.

As you noted, some of our other treatment programs, we can maybe model some of their policies where they're required to have, like, a walking, accompanied walking smoke break so they are not lingering in front of the location.

So we will work with the provider to address and make sure that there is no one just hanging out outside the facility, having that impact,

and figure out mitigation strategies that some of our other treatment programs use,

including those walking options and things like that.

Okay.

Great.

Thanks.

Thank you.

And with that, let's go to public comments on these two items.

Yes, we are opening public comment for these items 13 and 14.

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

Madam Chair, we have no speakers.

Seeing no public comments, public comment is now closed.

Vice Chair Dorsey.

Thank you, Chair Chan.

So I suppose I want to, first I want to express my appreciation to DPH for your work on this

and the presentation.

I'm going to address item 14 in this.

I will be supportive of both.

I want to say that I'm, even over the objections of some residents who are not happy about

this, I want to make myself clear from the outset, as somebody who's in recovery myself,

that I strongly support abstinence-based drug treatment programs.

I support investments that help people to stabilize, heal, move forward,

get on the other side of their addictions.

That, to me, is the solution to this crisis that we face.

This is an incidental to me being here.

This is literally why I asked for this job.

And it is personal to me in ways politics has never been personal to me.

residential abstinence based drug treatment facilities like 333 7th Street

7th Street are essential they save lives they save mine so I'm going to

support this I am a co-sponsor of it I know that we may have disagreements on

aspects of drug policy but I would like to think that in this building we all

believe that facilities like these are necessary to help people who are

struggling with their addictions to get on the other side of their drug

dependence. Our solutions have to include real durable pathways to abstinence-based treatment,

and by abstinence-based, I mean abstinence from illicit drugs. That can include,

abstinence from illicit drugs can include medication-assisted treatment and the gold

standard options that are really working, especially for people with opioid use disorders.

At the same time, I understand why many of my soma residents and constituents,

and not just my constituents, they're my neighbors, because this is my neighborhood,

are just exhausted and frustrated. This is a neighborhood that carried the cumulative impact

of the city siting facilities over the years that is just disproportionate to this neighborhood.

I think it was especially acute with the outsized deployment of shelter-in-place hotels during COVID

that really lost control of large portions of this neighborhood.

I think we're making slow progress back in some places, not all places,

but we've got a long way to go.

So the public's frustration is real.

It deserves to be acknowledged and addressed.

I think it's important.

The concern and opposition I've heard from the community

is not opposition to recovery or treatment.

It's about overconcentration.

and I know that I've had these conversations with the mayor and his team

I was a co-sponsor with Supervisor Mahmood of the what that would started as the

geographic equity ordinance but my support for this project item 14 is

unequivocal it does come with my clear expectation however that the city is

going to take its obligation seriously to the neighborhood I think that is an

obligation that is also to the residents and the people that we're going to serve

in this obviously I'll be I go by this all the time so I will be what you know

watching it closely but we can and most do both serve people who are

endeavoring to get on the other side of their addictions and make sure that we're

not doing this in a way that is diminishing the neighborhood or adding to

the challenges that the city itself has already imposed to these residents so

going forward the city needs a clear framework for evaluating these impacts

and mitigating them and with that I am just I appreciate everybody's

presentation everybody's work on this including the city attorneys on this

Thank You chair Chan

thank you and what is your will with the items 13 and 14 thank you chair Chan I

would move to send this to the full board with our positive recommendation a

roll call please and on that motion by Vice Chair Dorsey that we forward both

resolutions to the full board with positive recommendation vice chair Dorsey

Dorsey I remember chin chin I chair Chan I

Chan I we have three eyes the motion passes thank you and mr. clerk do we

have any other business before us today I'm at a chair that concludes her

business thank you and the meetings adjourned

Thank you.