Good morning.

The meeting will come to order.

Welcome to the April 15, 2026 meeting of the Budget and Finance Committee.

I am Supervisor Connie Chan, Chair of the Committee.

I am joined by Vice Chair, Supervisor Matt Dorsey, and Member Supervisor Danny Souter.

Our clerk is Brandt Haliba.

I would like to uh thank Jeanette from SFGov TV 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, they should be submitted to myself, the clerk.

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

When your item of interest comes up in public comment is called.

Please line up to speak on the west side of the chamber to uh your right, my left along those curtains.

And while not required to provide public comment, we do invite you to fill out a comment card.

And leave them on the trade by the television to your left by the doors.

If you wish for your name to be accurately recorded for the minutes, alternatively, you may submit public comment in writing in either of the following ways.

I email them to myself, the budget and finance committee clerk.jsfgov.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 and city hall at one, Dr.

Carlton because of the place.

Room 244, San Francisco, California, 94102.

And finally, items acted upon today are expected to appear on the Board of Supervisors' agenda of April 21st, unless otherwise stated.

Madam Chair.

Thank you so much, Mr.

Clerk.

Please call item number one.

Yes, item number one.

Is a resolution retroactively authorizing the Department of Elections to accept and expend funds allocated by the California Secretary of State in an amount not to exceed approximately 416,000 to fund voting system and election management system replacement for the period of July 1st, 2025 through August 31st, 2026.

Madam Chair.

Thank you.

And today we have Department of Election here.

Thank you.

Good morning, Supervisors.

John Ernst, Director of Elections.

So this morning, the Department of Elections is requesting the committee's review and approval of an accept expend resolution authorizing the Department to obtain funds from the State of California totaling 416,431.10 cents for the reimbursement of costs associated with voting system replacement.

These funds are the city's allotment of a larger total that the State Legislature has provided for all counties in California.

The Department will apply the funds to reimburse costs incurred when making lease payments to the voting system vendor as required under an existing contract.

The city must also show that it provided matching funds of 138,810 and 37 cents to receive these state funds.

Since the lease payment under the contract exceeds the total of state funds by more than the 138,810 and 35 cents, the city meets the requirement regarding the matching funds with without having to make any additional expenditures.

And with that, I'll be glad to answer any questions regarding this resolution.

Thank you.

I don't actually have additional questions regarding specifically the item before us today.

And how how will we prepare for that?

So right now, no, there's I don't have concerns about any about election security and about any impairment of the election process by the Federal Government for June.

That's really the election that we're focused on right now.

We're not really we're we are planning for November, but right now our focus is on the on the June election.

We do have meetings with the uh Department of Emergency Management that is uh collaborative of all the security-related agencies and also support services like DPW will be part of that uh regarding supporting the department through the election cycle on election day.

And those conversations will include election security, of course, and including any sort of potential impingement of the elections process by any federal agency or authorities.

Um at this time, I I I don't expect there to be any sort of security issues arising in June.

And I just don't, and I have my experience, the Federal Government has not interfered with elections processes in San Francisco during my time as director.

And we do work with the FBI before every election and the DOJ.

So we have connections in those offices.

So I understand the fears, I understand the concerns, but at the same time, I do expect the election to be well administered and for people to vote safely and securely in in June.

And if I uh recall correctly, that the city does and Department of Election is part of, has been through the city's like surveillance uh policy uh Chapter 19, that if I understand correctly, that uh for the Department of Elections, you do have cameras.

Correct.

Could you re elaborate a little bit?

Certainly.

So, and we're also going to actually be bringing an amended uh request for an amended policy to the rules committee uh when uh after the third day rules over in a few weeks.

Uh so in our office, we actually live stream and also everywhere else we live stream uh election-related activities.

So any ballot handling processes that we undertake are actually live streamed on our website.

And then we also have some internal live streaming where we can monitor what's happening, like in the voting center, which which is in the ground floor of uh City Hall.

And then we also uh put cameras on the servers that we have that would record and administer the uh the election equipment uh and we and we record that.

So if if there were any entrant, any entrance into where the area where the servers are, we would record that internally, both at in the office at the warehouse.

Uh we live stream our elections processes where there's where there's ballot handling and and pro and uh in processing.

And then we also live stream but not record uh activities such as the opening of of the ballots, uh, the uh the distribution of ballots to the poll workers, uh, the inspectors to take the polls on election day, um, the provisional ballot processing that we do.

Uh and we have a rather robust schedule and and uh uh regime uh on our website that people can click into and watch.

Uh so uh and also we have a pretty robust uh uh uh observation uh practice that we have in the departments.

I think it's far more robust than other counties in the state.

So we actually allow people to come and visit the department and actually be next and with our personnel as we process the ballots, they can see what we're doing.

Uh nothing's being hidden.

There's there's no walls or anything between people other than the ballot processing.

We don't allow people in the tabulation room.

So, yeah, with the we have the cameras, uh, we record any sensitive areas, and then also we have the in-person observation that we promote and we support through the election cycle.

So if people have concerns, uh they're welcome to either to watch us uh remotely or to visit us in person and take part.

Thank you, and Director Args.

I just want to be on a record too about like how uh I personally am very grateful for the work that you've been doing for you know decades now.

Is it been decades?

It's been a few years.

Yeah.

And so I just want to express my gratitude.

You really been making sure that San Francisco is being the leading city in uh integrity around election, uh, for election.

Uh it is amazing like when I first learned about the surveillance uh policy that you brought forth.

I didn't recognize and thought about the fact that when the Department of Election having these live camera on live streaming and what it actually means for not just a city but an example for the entire nation to see that you can have like integrity in your election and security in the election.

And and and this you're doing this the most bipartisan way, and there's no uh any type of political involvements with it.

So again, uh I and it's really great to hear that you you already have the leadership and the four sides.

Of course, we do know that, but just hearing from you again on the record publicly talking about your anticipation and collaboration with other city agency anticipating potential, you know, not that we think that there will be, but for this November, but I just think that I really appreciate the leadership and the preparedness.

Um Vice Chair Dorsey.

Thank you, Chair Chan.

I want to associate myself with uh the Chair's remarks.

I I have been around uh city government long enough to remember when the Department of Elections wasn't always well run.

And then there were some issues and questions, and I think your department and your leadership have been really great.

I think um you know we uh transitioned to uh ranked choice voting, and there's there's a lot of innovations that San Francisco has done that you have been uh responsible for.

And I also just appreciate during this time where the Trump administration is really elevating these sort of like accusations of ballot fraud.

The concern is that this is something that delegitimizes democracy itself.

And I really I think it is important that you're being proactive in addressing those kinds of things with the transparency in the way that you're doing it.

So I just wanted to uh add that no questions.

Just wanted to express my appreciation for you as well.

Thank you.

Thank you.

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

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

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

Madam Chair, we have no speakers.

Seeing no public commons, 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 refer this resolution to the full board with recommendation, Vice Chair Dorsey.

Dorsey, aye, member Sutter.

Soder, aye, Chair Chan.

Aye.

Chan, I we have three ayes.

The motion passes.

Thank you.

And Mr.

Clark, please call item two and three together.

Yes, item numbers two and three are resolutions establishing the appropriations limits for fiscal year 2025 to 2026 pursuant to the California Constitution.

Item number two established at approximately 14.6 billion due to the addition of local non-residential new construction and the percent change in population within the San Francisco metropolitan area from the previous year for the purpose of computation of its appropriations limit.

Item number three is for the special tax districts and infrastructure revitalization and financing districts and determining other matters in connection therewith, as defined.

Madam Chair.

Thank you.

And today we have Office of Public Finance here.

Uh Office of Public Finance will be next.

Um, but I'm also from the controller's office.

Uh Michael Bitten.

Um, this is my tenth year presenting the GAN limit.

AI tells me it's my aluminum anniversary, so um gifts are welcome under $25.

Uh so the GAN limit in short is a limit on taxes.

Um it's a companion to Prop 13, which limited property tax.

The GAN limit limits all taxes.

If we collect too much, then over a two-year period we have to refund the taxes.

Um the limit that we were allowed to were allowed to collect increases each year by an income factor or the growth of commercial real estate in the city, as well as population growth.

And this year, the city is actually shrunk by four-tenths of a percent, but the nine at nine barrier counties has increased and our uh commercial value has also increased.

So the total increase in our limit is more than 10 percent.

Um we can also take away some we can also increase the limit by voter approval, and our Prop M, which was passed in 2024, exempts all of our business taxes from this limit for the next four years.

And that increases our limit by 1.6 billion.

Uh that takes our base limit to 11.7 billion.

And after we do the increases for the cost of living and the voter approved increases, we get to 14.6 billion is the limit.

And our tax proceeds that are subject to the limit here are 6.3 billion.

We can just we can remove some capital outlay and some other federal requirements, and that makes our net tax proceeds 5.5 billion, and that leaves us 9 billion underneath the limit.

And I will pass it off to my OPF colleague.

And uh good morning, Chair Chan and Supervisors.

I'm Bridget Katz with the Office of Public Finance, and I will be presenting on the resolution establishing the appropriations limit for fiscal 25-26 for special tax districts and infrastructure and revitalization financing districts.

Uh community facilities districts, special tax districts, and infrastructure and revitalization financing districts are government entities whose appropriations limits were established at the times that these districts were formed.

The laws governing these districts provide for an adjustment of the appropriation limit based on two factors uh population and the cost of living.

Population growth is determined using the year-over-year change in San Francisco city and county population.

Um as Michael just mentioned, per the uh State Department of Finance, this um was a decline in point three nine percent over the last year.

The cost of living is determined using the change in California per capita personal income.

Per the State Department of Finance, this was 6.44 percent for a combined adjustment factor of 6.02 percent for fiscal 2526 for these districts.

This table shows the fiscal 2526 appropriations limit by district when applying that 6.02% adjustment to last year's appropriations limit.

Um just as I mentioned, the original appropriations limit were set at the time of formation of these districts.

Uh that concludes my presentation, and I'd be happy to answer any questions from committee members.

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

Items two and three are two resolutions setting the appropriation limits for tax proceeds, both for the city and then for uh special tax districts.

We show on pages four and five of our report.

The city um appropriations subject to the limit or $5.5 billion, uh which is below the $14.6 billion limit that would uh item two would establish.

And then on page six, we show the changes in appropriation limits for the special tax districts.

Very little spending is uh qualifies or is subject to the limit within those special tax districts.

Um, so we're also not anywhere near the limit on any of those districts.

Uh we recommend approval of items two and three.

Thank you.

Uh I don't see any name ROS on the roster.

I don't have additional questions.

Thank you so much for your work.

Um and with that, let's go to public comment on these two items.

Yes, we're now opening public comment for both these items two and three.

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

Madam Chair, we have no speakers.

Seeing no public commons, uh, public common is now close.

Um colleagues, I do want to flag for you that um we have requested for the budget and legislative analysts to provide further analysis include you know that we will have hearing this coming uh and uh end of this month as well as early May for us to dive deeper into the city's uh debt uh policies, managements, fee waiver, and related issues.

So we will have uh more conversation then, potentially involving the controller uh for our hearing.

So I just want to put that on the record as we anticipate um as we inching closer to the budget process.

So with that, um I would like to send these two items to full board with recommendation and the roll call, please.

And on that motion refer both resolutions to the full board uh with a recommendation, Vice Chair Dorsey.

Dorsey, uh, member Sauter.

SODER.

I Chair Chan.

I Chan, I we have three ayes.

The motion passes.

And with that, Mr.

Clerk, please call item number four.

Item number four is an ordinance extending for an additional five years through July 1st, 2031.

The delegation of authority under the charter to the general manager of the public utilities commission previously authorized and extended by four past ordinances to enter into grant agreements under the SFPUC's green infrastructure grant program with terms of up to 20 years after the project completion date as defined by the grant agreements.

Madam Chair.

Thank you.

And today we have SFPUC here.

Thank you.

Good morning, supervisors.

My name is Willis Logsden.

I'm a senior watershed planner in the wastewater enterprise at the SFPUC, and today I'm introducing an ordinance that extends this of PUC's authority to administer its green infrastructure grant program through June of 2031.

And I'd like to um thank Supervisor Mattelman for uh sponsoring this legislation.

Um so before we dive in, I just wanted to give a little bit of background.

Uh San Francisco has a combined sewer system, which means that both stormwater and wastewater flow through the same pipes.

Managing stormwater is essential to protecting the reliability and the performance of that system.

One way that we manage stormwater is through green infrastructure, which is a set of engineered stormwater management tools that capture slow down and clean stormwater.

The goal is to reduce the volume and the flow of water entering the combined sewer system.

Some examples include rain gardens, green roofs, rainwater harvesting, and permeable pavement.

In addition to reducing pressure on the sewer system, these projects also deliver public benefits like neighborhood greening, climate resilience, and improved public spaces.

Green infrastructure works by capturing stormwater runoff as it flows off of concrete and other impervious surfaces in our city.

The area that contributes stormwater to the green infrastructure is called the drainage management area.

And this concept of the drainage management area is important for this particular program because it is how we set our maximum grant funding per project.

In the example shown here, the sports court comprises an area of about half an acre, which flows towards an engineered planter that is sized and designed to collect and store that water.

And in order to reach that goal, we have three approaches that we utilize.

The first is the stormwater management ordinance, which regulates new and redevelopment projects in the city, which was implemented in 2010.

We have capital projects that SFPC builds and operates ourselves.

And we have grant programs that offer incentives to property owners and community groups to build green infrastructure, including the GI grant program.

And we're currently about one third of the way to our billion gallon goal and on track to meet that goal by 2050.

The green infrastructure grant was launched in 2019 to provide funding for large properties in San Francisco to build green infrastructure that reduces the amount of stormwater entering the sewer system.

The program provides funding for both design and construction on facilities in both public and private properties.

The program targets large, highly impervious areas, for example, asphalt schoolyards and large parking lots, which are the main contributors of stormwater to our system.

Awarded projects enter into a grant agreement with the SFPUC, and the property owner is responsible for maintaining the project for the duration of the 20-year agreement.

The 20-year maintenance requirement is intended to align with the typical useful life of a green infrastructure asset.

This also aligns with the expected performance of projects delivered through our wastewater capital program.

By investing SFPUC ratepayer dollars in these projects, we believe they should have the equivalent level of performance over their life cycle as if we're building the projects ourselves.

And lastly, the 20 years of maintenance also helps ensure that these projects can meaningfully contribute to our citywide 1 billion gallon goal.

The program has five eligibility criteria.

Firstly, being located on a parcel or public right-of-way that connects to an SFPUC sewer system.

We also have a minimum project size requirement of that half an acre drainage management area that I mentioned earlier.

There is also a performance requirement related to the design of the facilities to ensure that each project captures an appropriate volume of stormwater.

And the grant team of the application team must have experience designing or constructing projects of a similar size and be in good standing with our program.

And then lastly, each project must achieve at least two additional co-benefits beyond just stormwater management, including community engagement, climate resilience, and education.

To date, we have awarded about $30 million in grants to 29 projects, including 11 public schools, five public parks, nine private schools, one housing development, and one artist cooperative.

Nine projects have been completed to date, and there are currently nine more projects in construction that will be complete later this year.

When complete, these projects will manage about 18 million gallons of stormwater each year.

Overall, we're really happy with the outcomes we've seen from this program so far and the level of participation to date.

Our team's gone out to about 68 different properties to assess them for opportunities for green infrastructure, and the result has been a pretty consistent rate of applications each year over the last seven years with an average of new four new projects awarded each year.

The program is funded through the wastewater capital plan, which includes both grant funding and funds for the program administration.

To date, we have awarded about half of the 61.3 million allocated in the capital plan.

Applications are reviewed and awarded on an annual basis with the next application cycle expected to be this fall.

Grant awards are based on the size of the project and the proposed budget.

For that, we use a cost per acre managed metric to calculate the maximum grant award for each project, and that's based on the drainage management area.

So in summary projects with larger drainage management areas that capture more stormwater are eligible for more funding.

In addition to that cost per acre metric, we also have a per project cap of 2.5 million in funding per project.

Since the launch of the program in 2019, SFPUC has come before the Board of Supervisors roughly every two years to extend the general manager's delegated authority to enter into agreements beyond 10 years.

Before coming to the board, we also update the program rules at our commission.

The SFPUC Commission recently approved a resolution adopting several updates to the program.

The maximum cost per acre was increased from 1,035,000 per impervious acre managed to 1,120,000 per acre managed to account for inflation and to continue to be able to cover the full cost of design and construction of these projects.

And the per project maximum grant award of 2.5 million remained in place.

And in the spirit of continuous improvement, we made revisions to the program eligibility criteria and requirements, which are aimed at clarifying program rules and maximizing the benefits of the program.

In the past, the delegated authority to the SFPC general manager sunset every two years.

However, because today we are requesting a five-year extension to the general manager's delegated authority.

Our commission also authorized the SFPC General Manager to increase the maximum grant award on an annual basis to account for construction cost inflation.

And this will allow the program to update the cost per acre as needed for each annual application cycle.

And we'll for that we will use the San Francisco annual infrastructure cost construction cost inflation estimate, which is a standard escalation index used for infrastructure planning in the city.

So in summary, today uh we are seeking an extension of the board's delegated authority to allow the SFPUC general manager to enter into agreements with terms of up to 20 years after project completion.

That'll ensure that the grant funded assets are maintained for their useful life.

And extending this authority will allow SAPUC to continue partnering with property owners and community organizations to implement green infrastructure that benefits both our sewer system and our neighborhoods.

With that, I want to thank you for your time.

I'm happy to answer any questions on this legislation.

And my colleague Jeremy Spitz also has a couple of amendments to uh introduce to the board as well.

Great.

Could we go over to amendments right now?

Yes.

Thank you.

Thank you, Will.

Hello, Chair Chance, members of the budget and finance committee.

My name is Jeremy Spitz.

Um these amendments have been distributed to you.

They are just clerical amendments that were offered to us by the city attorney after we had already introduced the ordinance.

Um so I can read them into the record very quickly.

Please bear with me, there are a few.

So on page one, in the long title, uh adding an S to ordinance numbers, and then striking ordinance number after all of the different ordinance numbers.

On page two, line 16, striking city before administrative code on page two, line 24, um, adding the word of after modifications on page three, line seven, adding July 31st of each of each year.

On page three, line twelve, adding um or the before municipal, so combined sewer system area or the municipal on page three, line eighteen, adding a dash between three and quarters on page four, line nine, striking the word is and adding the word R on page four, line fourteen, um, again specifying July 31st and then adding the word cost before escalation on page four, line eighteen and nineteen, um, striking the word updated and adding the word current, page five, line fourteen through twenty-three, striking all of the file numbers and just keeping the ordinance numbers.

Um page six, line eighteen and nineteen, striking two after amendments and adding the word two after modifications, and then after grant agreements, adding that do not extend the terms of the agreements beyond 20 years.

On page seven, line 22 and 23, um, again, adding ordinance numbers and then striking the individual ordinance number before all the ordinance numbers.

And on page eight, line two, um, specifying that the ordinance shall become effective at 12 a.m.

on the 31st day after enactment.

Thank you.

Thank you.

And confirming with our deputy city attorney that none of these amendments are substantive.

He's nodding, so thank you.

And uh I just definitely uh want to thank SFPUC for the green infrastructure program.

It has benefited the Richmond greatly, both for our Lafayette Elementary School and as well as our Alamo elementary school.

Um the kids love it.

Uh I know particularly for Lafayette Elementary, they even have like blueberries grown in their little tiny green garden now, and and but overall also have other infrastructure that um supplements it overall.

So it is actually what happened, what ended up happening is with the green infrastructure, it adds allow the school to have the opportunity to add many other uh features to their outdoor space instead of asphalt um uh concrete outside.

So thank you for that work and um supervisor Sauder.

Thank you, Chair, and thank you for the presentation and for the program.

I think it's a wonderful program, and I have no concerns about this extension.

Um question, just when we're looking at the map, you know.

I recognize that with the criteria, I think we're gonna we are seeing more funding and more projects in the west side on the south side, and I anticipate that will continue just given the um that that minimum acreage.

Um but then you had early in the presentation you had a map that showed all of the potential green sites throughout the city.

Um I guess I'm trying to s to square up square those up, right?

If if we're not seeing many in District 3, district two of these projects funded.

Um, how do we get that green infrastructure?

What what are the opportunities and other funding ways to get that?

Yeah, that's a great question.

Um so yeah, I think the you know the half acre minimum size requirement could have something to do with that that has um you know some limits on the type of properties that could be eligible for this program.

Um so I think in the future, if we start to you know run out of opportunities for large sites, we would consider um you know adjusting that that threshold to a smaller minimum size that could um you know create opportunities for smaller properties to participate in this program.

Um and then we also do have other grant programs outside of the green infrastructure grant.

Um we also offer uh what's called the Urban Watershed Stewardship Grant that will be coming back to online in the next um you know the next year or so um that provides opportunities for grant funding for smaller scale projects.

And so we are trying to you know provide opportunities for you know different land uses to be able to um you know capture stormwater like throughout the city wherever it's feasible.

Um and so if if a project or a property isn't eligible for this program, there might be other um you know other avenues for for funding that that we could offer.

Yeah, good.

Thank you.

And I encourage that.

I know um this weekend in Chinatown we're doing the rain guardians in Spofford Alley.

So uh I look forward to that and and um thank you for all your work on this.

Thank you.

Thank you.

And so with that, let's go to Papa Common on this item.

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

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

Madam Chair, we have no speakers.

See you no public comment, public comment is now closed.

Colleagues, I would like to make the motion to uh accept the amendment uh clerical amendment uh proposed by SFPUC and move the amended legislation to full board with recommendation and a roll call, please.

And on that motion that we amend this ordinance as so written at the record by the department and to refer this ordinance to the full board with a recommendation as amended.

Vice Chair Dorsey.

Dorsey I, Member Sauter.

Sauter, I, Chair Chan.

I.

Chan, I we have three ayes.

The motion passes.

Thank you.

And Mr.

Clerk, please call item number five.

Item number five is a resolution approving and authorizing the general manager of the San Francisco Public Utilities Commission to execute a contract for the HEC Water and Power North American Electric Reliability Corporation compliance and audit support to Archer Energy Solutions LLC to provide as needed professional services to Hedgehogi Water and Power to meet North American Electric Reliability Corporation, Western Electricity Coordinating Council, California Independent System Operator, and the California Public Utilities Commission regulatory requirements for in the mountain not to exceed 11.6 million with a duration of five years with an anticipated time frame from May 2026 through May 2031, pursuant to the charter.

Madam Chair.

Thank you.

And again, we have SFPUC here.

Good morning.

My name is Adam Ozerkowitz.

I'm the uh division manager for Hatchet Water and Power of the San Francisco Public Utility Commission based out of Moccusin.

Uh here to um request approval for professional services 327 um HHWP NERC compliance uh audit and support.

Um Hatchet Water Empower owns and operates components of the bulk electrical power system.

This is the network of power generation and transmission networks that bring uh energy to the customers.

Um Hechachi operates four electrical powerhouses, uh numerous miles of high voltage transmission lines, uh, two substations and two switch yards that are interconnected to other utilities, including uh PG ⁇ E uh Turlock uh irrigation district and Modesto Irrigation District.

The the bulk electrical system um is overseen by NURC, the North American Reliable Electric Reliability Corporation and its subsidiaries, Western, the WEC uh Western Electricity Coordinating Council as well as the California Public Utility Commission.

Um this regulatory oversight by NURC uh serves to provide uh a reliable electrical system for all of the power customers in the U.S.

Uh that regulatory oversight oversees operational um and planning components of the power generation and transmission system, as well as security oversight, uh including cybersecurity of components of the bulk electrical system.

Uh these standards require the bulk electrical system asset owners and operators to meet all of these NURC compliance standards.

Uh NURC has the authority for financial uh fines for violations of their regulatory um uh regulations, uh operational restrictions and can result in uh mitigation costs as well as uh reputational harm.

Uh the professional services contract 327 um provides support uh for meeting these reliability standards.

Um 56 reliability standards uh that affect roughly um uh over 1,800 devices within the uh SFPUC uh components of the bulk electrical system.

All of these standards require procedural documentation development, uh implementation of um operational procedures, uh staff training, um, and all of these standards and um components are uh subject to NURC um audits and updates.

So the contract provides maintenance support of the NURC compliance program overall, uh training for staff, document uh development, uh subject matter expertise for NURC uh compliance as well as uh NURC uh implementation, uh, and then preparedness for um audits, whether it's a NURC audit or a self-audit as directed by NURC, uh, and then support for revising um or creating um procedures for new standards that make that may come to light.

So with that, I'll take um any questions and ask for the support for um the professional services 327 contract.

Thank you.

Item five is a resolution that approves a new agreement between the PUC's power division and Archer Energy Solutions.

The contract has a five-year term and a value of 11.6 million dollars for those five years.

There is also an option to extend the agreement by four additional years.

And this agreement would allow Archer to continue to provide safety and operational um compliance reviews to ensure that the power division uh complies with the regulatory regulatory standards.

We showed the budget for the contract on page 12 of our report.

You can see this is about a $2.3 million a year contract funded by power customer revenues.

Um that is similar to what they've been spending over the past couple years, so I think it's a reasonable budget.

Uh there is a current contract that has about $750,000 of remaining spending on it and a term that extends through March 2027.

Uh this contract I think may be undersized relative to historical spending and the fact that the billing rates, CPI every year.

Um, so that remaining pool of funds could be used to top up this contract.

We recommend approval of item five.

Understood.

Um I think uh just want to clarification on what you just said for the BIA for Mr.

Minard, like what you indicated is that we believe they that SAPUC by projection probably will come back at least for the CPI increase for the contra remaining of the contract or the duration of the contract.

I think if they're gonna continue to spend at the rate that they've been spending, this 11.6 million dollars is not sufficient.

There uh but because they have 750,000 left over on an existing contract that doesn't expire for a year.

Um I think it's possible they could use that to fund to to build some of the work going forward, and that this 11.6 million dollars could get them through the remaining you know, four years.

Understood.

So with the saving that they have, or I shouldn't say saving with with the unspent funding plus what we are approving today or intend to approve today, together that they are likely to be able to have uh well, extension the unspent fund becomes a contingency funding for them.

That they could probably not have to come back for additional funding.

Probably won't have to come back until probably like the last year of the contract.

I think that what I'm thinking about too is like we're in a high inflationary environment.

Uh we're at 3%, it's gonna go higher given the energy crisis and other inflationary like federal policy.

Um and this contract budget essentially doesn't assume any inflation.

Um they've been spending $2.3 million a year on the existing contract.

So I do think it's a little undersized, and they'll probably have to come back before this five years is up.

Thank you.

Is this as a PUC have a respond to that?

Yeah, we do realize that concern.

A couple of things have shifted over the past uh duration of this contract.

We were able to bring some staff on board, subject matter experts that should alleviate some of uh that uh spending and potentially lower the the use rate of the contract capacity.

However, that would be subject to those staff remaining on board and we don't have any attrition.

Um so we do realize that we're we're really close on what the capacity of the contract is and what we expect to spend.

Okay.

Good to know.

Thank you.

Just want to be on the record about that.

Um sorry, I have one more question.

I think this is for SFPUC.

Um, so in that event, um, just really uh about staffing.

What is the projection of dollar amount that we think it's gonna potentially be additional to what we are approving today?

The the additional contract capacity over the duration of the contract.

Um I don't have that projection um on hand.

Um however, if we look at the current spend rate, which is the 2.3 million per year, I think that that's what you currently calculated, correct?

So that would that would put us out uh over the five-year contract, um a little uh only about a million over what we're currently requesting.

Understood.

Thank you.

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

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

Uh now is your opportunity.

Madam Chair, we have no speakers.

Seeing no public commons, public comment is now closed.

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

Not a motion to refer this resolution to the full board with a recommendation, Vice Chair Dorsey.

Dorsey, aye, member Sauter.

Soccer, I, Chair Chan.

I.

Chan, I.

We have three ayes.

The motion passes.

And Mr.

Clark, please call item number six.

Yes, item number six is a resolution approving the agreement between the Peninsula Corridor Joint Powers Board members boards, member agencies comprised of the city and county of San Francisco, San Mateo County uh transit district, and the Santa Clara Valley Transportation Authority regarding the Peninsula Corridor Joint Powers Board's fiscal obligations to California public employees retirement system, uh effective upon execution of the agreement by all member agencies and authorizing the MTA agency director of transportation to execute the agreement.

Madam Chair.

Thank you.

And it is good to have our very own county transportation authority here.

Great.

Good morning, committee members.

Jesse Kaler, Director of Strategy at the San Francisco County Transportation Authority.

The Transportation Authority partners with SFMTA to provide staff support to San Francisco's three appointees to the Caltran Joint Powers Board.

This does include Supervisor Shimon Walton.

We have been in coordination with his office on this item.

The item before you is to consider recommending that the board approve an agreement with the two other member agencies of Caltrain, the Santa Clara Valley Transportation Authority and the San Mateo County Transit District, also known as SAMTRANs.

Under the proposed agreement, the three Caltrain member agencies would agree to share financial responsibility with respect to Caltrain's pension funding obligations with the California public employee retirement system, CalPERS, in the event that Caltrain were to be dissolved, or if CalPers were to terminate its contract with Caltrain, and only in the very unlikely event that Caltrain were to be unable to fulfill these obligations.

Caltrain is in the process of negotiating what is known as a successor agency designation and contract with CalPers as one part of a set of steps underway to give the Caltrain board and executive director greater oversight of and authority for the agency's dedicated employees.

Since the three member agencies formed Caltrain in the early 1990s, SAMTRANS has served as managing agency for the railroad, including to date SAMTRANs' role to employ all public agency staff serving Caltrain.

In 2022, the three member agencies and Caltrain entered into a four-party memorandum of understanding concerning the governance of the railroad, including to establish a dedicated executive director and to codify provisions for the management and oversight of rail employees.

As part of the work stemming from that MOU, Council for Caltrain and Councils for the three member agencies have determined that Caltrain should have its own separate contract with CalPERDS for the railroad's employees.

As a precondition of entering into a contract with CalPers, state law requires that the member agencies of the Joint Powers Board agree to accept financial responsibility for the JPB's pension obligations in the event that Caltrain were to be dissolved, or if the contract were terminated, and again, only if if uh Caltrain would not have in would have insufficient assets to cover those obligations.

Given these parameters, it is in streak extremely unlikely that this clause would ever be triggered as Caltrain's assets are valued at approximately 4.2 billion dollars, and the estimate of pension liability for rail employees has been estimated at approximately 16 million dollars.

Still, a formal agreement among the member agencies to provide a backstop for these obligations is necessary to fulfill CalPERS requirements.

Given the low likelihood that the member agency backstop would ever need to be called upon, the recommended agreement does not apportion relative responsibility among the member agencies.

If and when such apportionment were needed were to be needed, the proposed agreement agreement calls for this to be established through a future agreement among the parties.

The Valley Transportation Authority Board approved the agreement last month, and the SAM Trans board approved the agreement earlier this month, with these approvals generally conditioned on board approval by all three member agencies.

The SFMTA board also recommended approval last month.

That concludes my remarks.

We are happy to address any questions.

Thanks.

Thank you.

Item six is a resolution that would approve an agreement between MTA, SAMTRANs, and VTA to accept uh Caltrain's financial obligations to CalPERS if Caltrain is unable to meet them going forward.

Um this is related to Caltrain being able to enter into an agreement with CalPERS and requiring, because it's a JPA, the member agencies to basically um backstop those liabilities.

We discussed on page 16 of our report the unfunded pension liabilities of uh Caltrain are at 15.7 million dollars.

Uh CalTrain has 4.36 billion dollars in assets, 10 percent of which are liquid, um, and only 400 million dollars of total liabilities.

So if it were to liquidate tomorrow, we believe that Caltrain is very well poised to meet this unfunded pension liability without contribution from the city, though the actual share of the city's responsibilities uh would be determined in a future agreement.

Um I don't think it's completely without risk that Caltrain does go under.

We show on page 18 of our report uh the kind of financial condition of the of the member agencies in Caltrain, both in terms of ridership and then their pre-COVID financial condition relative to as it is in 2425.

And you can see Caltrain ridership is down 38 percent, and they and their net income is um you know negative 200 million dollars when it was only negative seven seventy-five million dollars pre-COVID.

Um the good news is that the regional sales tax that's pending before voters uh would cover all Caltrain expenses for the next 14 years.

Um if that does pass, that will also further reduce uh risk to the city.

The final thing I'll say is that this $15.7 million unfunded liability is a point in time, it's from 2023.

It's subject to change based on the contributions that Caltrain makes to CalPERS and then the performance of the CalPERS investment assets.

And so that number could go up or down depending on the number of staff that are you know at Caltrain, the agency's contribution to CalPERS and performance of financial markets.

Uh but ultimately, I do think this is a low risk agreement for the city, and we recommend approval of item six.

Thank you.

Um I feel like this has been a long time coming that Supervisor Walton and even when Supervisor Aaron Preskin was on the board, that there was a really a long time discussion that uh particularly that when he still is Supervisor Walton, that being in Trent joint Trans Bay um authority, that just been quite quite an ongoing discussion about governing and staffing, and and this is uh almost the most neutral way to ensure that the staff can stay on board and and actually uh be protected with their pension, while I think not just San Francisco, but clearly shown in the budget legislative analyst report that the entire Bay Area as a transit system has to tackle uh deficits in across.

Um I am supportive of this um agreement today.

I think it's actually much needed.

Uh while it does have its risk, I think it's a regional, like a shared regional risk that we all already have.

And and that I anticipate that as an entire region collectively, we will also problem solve should should this really hit us.

Um it's better that we're all in this together.

And so with that, I don't have any other question or comment.

I don't see names on rosters.

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

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

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