The Budget and Finance Committee convened on February 4, 2026, with Chair Supervisor Connie Chan, Vice Chair Supervisor Matt Dorsey, and Member Supervisor Danny Sauter in attendance. The meeting addressed critical funding priorities, child care expansion, downtown revitalization initiatives, and public safety programs.
Chair Chan called the meeting to order and thanked SFGovTV for broadcasting. Clerk Brent Haliba provided procedural announcements, noting that items acted upon would appear on the February 10th Board of Supervisors agenda unless otherwise stated.
The committee unanimously approved Item 1: an ordinance appropriating $250,000 to the Department of Children, Youth, and Their Families (DCYF) for District 10's safety plan. This funding supports services at HOPE SF sites, violence prevention events, safe passages, school responses, and assistance to youth and residents impacted by violence in fiscal year 2025-2026. Tracy Gallardo, representing Supervisor Shimon Walton, explained the community-driven safety plan addresses rising youth violence through twice-yearly safety town hall meetings.
Item 2 was a comprehensive hearing on Proposition C (June 2018) reserve fund balance totaling $572.5 million at the conclusion of fiscal year 2024-2025. The hearing examined Mayor Lurie's announcement expanding child care subsidies to families earning up to 200% of Area Median Income (AMI)—approximately $312,000 annually for a family of four.
Key Points from Director Ingrid Mesquita (Department of Early Childhood):
The Controller's Office reported Prop C commercial rent tax revenue declined from $490 million (fiscal 2021) to averaging $190 million (fiscal 2022-2024), with projections falling to $142.8 million by fiscal year 2030. Annual program expenditures range from $207-235 million, creating a structural deficit projected to begin in 2033.
Spending Plan:
Committee Concerns:
Chair Chan expressed concerns about fiscal sustainability, noting the city is "spending future dollars as if on credit card" without clear revenue sources. She cited uncertainties around federal funding (Head Start cuts, $5 billion in withheld California funds) and requested:
Supervisor Melgar emphasized the need for:
Public commenters, including early childhood special educators, highlighted critical gaps:
The hearing was filed without objection, with the understanding that comprehensive budget discussions would continue in June 2026.
Item 3 addressed an ordinance aligning San Francisco with Senate Bill 972 (effective January 1, 2023), establishing definitions and fees for Compact Mobile Food Operations (CMFOs). The legislation defines three risk categories:
CMFO Categories:
Proposed Fees (subsequently waived through amendments):
Community Concerns:
More than 20 street vendors and advocates testified, raising critical issues:
Supervisor Jackie Fielder questioned enforcement priorities and support mechanisms. Department of Public Health confirmed enforcement is complaint-based and that all food facilities require commissary kitchens under state law.
Office of Economic and Workforce Development (OEWD) representative Rafael Moreno described coordination efforts with Office of Small Business providing one-stop support in multiple languages, building on Mission Street vendor pilot program success.
Committee Action:
Chair Chan continued the item to the February 11, 2026 meeting after accepting substantive amendments, requesting City Attorney analysis of potential exemptions for home kitchens until MECO program implementation. The committee expressed support for vendor pathways while acknowledging brick-and-mortar business concerns and space limitations.
Item 4 approved a hotel development incentive agreement providing up to $40 million (net present value) over 20 years to Bespoke Hospitality LLC for converting the historic Hearst Building at Third and Market from 70% vacant office space to a hotel with approximately 150 jobs.
Incentive Structure:
Economic Projections:
Critical Timeline:
Project must secure $30 million state historic tax credit by April 2026 deadline or lose funding to another municipality. Project entitled since 2019; certificate of occupancy required within five years or incentive reduces/eliminates.
Committee Concerns:
Chair Chan expressed broader concerns about downtown revitalization approach, noting multiple recent incentives:
Chair Chan requested Office of Economic and Workforce Development provide comprehensive downtown revitalization vision in single presentation rather than "piecemealing project by project," including updates on San Francisco Mall closure and Macy's men's department. She sought clearer profit threshold clauses protecting city interests.
The committee forwarded the ordinance to the full board without recommendation (3-0 vote) to allow broader policy discussion, though Vice Chair Dorsey expressed strong support, calling it essential for downtown investment and architectural heritage preservation.
Item 6 (called out of order) retroactively authorized San Francisco Police Department to accept and expend $1,119,862 from California Department of Justice's 2025 Tobacco Grant Program (funded through Proposition 56, 2016). Grant period: November 21, 2025 - June 30, 2029.
Funding supports SFPD's Drug Market Agency Coordination Center (DMACC) for civil and criminal enforcement against tobacco law violators, particularly regarding licensing, taxation, and sales to minors. SFPD has not expended funds; retroactive approval necessary due to November 21, 2025 start date.
Approved unanimously with recommendation (3-0).
Item 7 approved a professional services contract with Connections California LLC to operate the Reset Center at 444 6th Street—a safe alternative to jail for individuals arrested for public intoxication or drug use.
Contract Terms:
Performance Objectives:
Budget Concerns:
Budget Legislative Analyst noted only $3.1 million budgeted in DPH for fiscal year 2026-27, creating $3.2 million unfunded gap. Third fiscal year (2027-28) approximately $5.2 million completely unfunded. Public intoxication arrests increased 66% in 2025 compared to 2023-2024 average.
Chair Chan and Supervisor Sauter expressed concerns about lack of identified funding beyond first year. Chair Chan requested second and third fiscal year funding be placed on reserve during June budget process, requiring Sheriff's Office to return to committee with results and accountability measures before release.
Vice Chair Dorsey strongly supported the program, calling it "the single most important drug policy innovation San Francisco has made since the advent of the fentanyl crisis," emphasizing accountability measures missing from previous approaches and potential to reduce police booking time from several hours to 15 minutes.
Public Comment Concerns:
Treatment on Demand Coalition and advocates questioned:
Approved unanimously with recommendation (3-0), with understanding Sheriff's Office returns in budget process to address funding gaps and demonstrate results.
Item 5 approved terms for San Francisco Public Utilities Commission agreements with City of Daly City for the Vista Grande Drainage Basin Improvement Project at Lake Merced:
Agreements:
Project Background:
Lake Merced water levels historically declined due to dam construction disconnecting lake from ocean, creek diversions, groundwater pumping, and drought. Vista Grande Canal and Tunnel (built 1897) lack adequate capacity during large storms, causing Daly City flooding and uncontrolled overflow into Lake Merced.
Project replaces tunnel with larger diameter to increase capacity and includes inlet pipeline allowing SFPUC to remove water preventing overflow. All agreements at appraised fair market value per Chapter 23, Administrative Code.
Approved unanimously with recommendation (3-0).
Item 8 authorized Tax Collector to sell 13 tax-defaulted properties at public and sealed bid auction. Properties delinquent for 9 years (state law requires sale). Of 200,000+ city parcels, these represent tiny fraction.
Treasurer and Tax Collector's Office conducted extensive outreach:
Committee Action:
Amended list to remove two inhabited properties in District 11 at Supervisor Chin's request:
Public auction: April 20, 2026; Sealed bid auction: May 14, 2026
Approved unanimously as amended with recommendation (3-0).
Item 9 amended Police Code to revise procedures for alarm companies and users to claim refunds of overpaid alarm fees. Creates clear process mirroring business tax refund procedures.
Background:
Alarm companies typically pay city upfront for customer permits annually. Customers occasionally added, removed, or canceled throughout year, especially during bulk renewals, leading to overpayments. Current code unclear on refund process, resulting in balances sitting on city books without clear path to refund.
Ordinance creates clear timeline for requesting refunds, reduces confusion, aligns with standard refund procedures. No new fees; no changes to payment amounts.
Approved unanimously with recommendation (3-0).
Item 10 reviewed and approved budget guidelines for Board of Supervisors and Clerk of the Board annual budget.
General Fund Requests:
Budget Legislative Analyst COLA
LAFCO (Local Agency Formation Commission) placeholder: $445,158 (to be reviewed June 2026)
Total General Fund Requests:
Non-General Fund Request:
Safety and Communications Concerns:
Chair Chan raised critical infrastructure issues following recent power outage:
Clerk of the Board Angela Calvillo reported:
Chair Chan requested two additional budget line items for safety measures:
Clerk authorized to submit proposed budget to Mayor's Budget Office and Controller's Office. Committee will review updates and placeholders during Board's budget phase in June-July 2026.
Approved unanimously (3-0); hearing filed.
The meeting adjourned after completing all business. Items approved are expected to appear on the February 10, 2026 Board of Supervisors agenda unless otherwise stated.
Good morning. The meeting will come to order. Welcome to the February 4th, 2026 of the Budget and Finance Committee. I'm Supervisor Connie Chan, Chair of the Committee. I'm joined by Vice Chair Supervisor Matt Dorsey and Member Supervisor Danny Sauter. Our clerk is Brent Haliba. I would like to thank Jeanette Eugene Loff. My apologies. if I'm not saying your name correctly, but nonetheless, I'm very grateful for SFGovTV for broadcasting this meeting. Mr. Clark, do you have any announcements? Thank you, Madam Chair. Just a friendly reminder to those in attendance to please make sure to silence all cell phones and electronic devices to prevent interruptions to our proceedings. Should you have any documents to be included as part of the file, 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 Beagle Place, room 244, San Francisco, California, 94102. And finally, items acted upon today are expected to appear on the Board of Supervisors agenda of February 10th, unless otherwise stated. Madam Chair. Thank you, Mr. Clerk. And before we call the items for today, for the public that should know, for all the items that we have budget and legislative analyst report, we will go to the department presentation and then the report. Then we will go to questions and comments from the committee. Then we will go to public comments. And with that, Mr. Clerk, please call item number one. Yes, item number one is an ordinance deappropriating $250,000 from the general city responsibility and appropriating $250,000 to the Department of Children, Youth, and their families to support the District 10 safety plan, including services at the HOPE SF sites, violence prevention events, safe passages, response to schools, and as needed support to the youth and residents most impacted by violence in fiscal year 2025 to 2026. Madam Chair. Thank you. And today we have Supervisor Shimon Walton's representative here, Tracy Gallardo. Thank you, Supervisor Chen, members of the committee. As you guys are aware, Supervisor Walton put out the need for safety plans by neighborhood, and we have worked on ours. I brought a copy just so that people can see it. We've submitted it before. This is a process where community gives input. We hold safety town hall meetings twice a year and once a year with all city departments to kind of figure out what the needs are of the community. As you see, there is a rise of violence right now, especially among youth, and so I think it's super important to have this passed. It is in alignment with the safety plan that has been implemented by community, and I'm available for questions. Thank you.