Good morning.

The meeting will come to order.

Welcome to the June 17, 2026 meeting of the budget and finance committee.

I'm Supervisor Connie Chan, Chair of the Committee.

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

Our clerk, it's Brent Halipa.

And I want to thank Jamie Avachery from SFGov TV for broadcasting this meeting.

Mr.

Clerk, do you have any announcements?

Thank you, Madam Chair.

Just a friendly reminder to those in attendance to please make sure all uh 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 and public comment is called, please line up to speak on the west side of the chamber to your right, my left along those curtains.

And while not required to provide public comment, we do invite you to fill out a comment card and leave them on the trade by the television to your left by the doors.

If you wish 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.jsf G O V.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 one 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 June 23rd, unless otherwise stated.

Madam Chair.

Thank you, Mr.

Clerk.

And before we call item number uh, we called the items on this agenda.

I would like to remind the public that we have budget and legislative analyst report for items one and two on today's agenda.

And for those items we will have the department presentation first, followed by the budget and legislative analysts, then we will take questions and public comment.

Also, today we're joined by President Rafael Mendelman, who has requested that we take his item first.

So with that, Mr.

Clerk, please call item number two.

Yes, item number two.

Is an ordinance amending the administrative code to increase the minimum grant award amount requiring Board of Supervisors approval for acceptance and expenditure from 100,000 to the greater of 1 million for the federal single audit threshold amount set by the United States Office of Management and Budget starting October 1st, 2026.

Require boards board of supervisors approval of a grant increase only if it raises the grant to the approval threshold for the first time or increases a previously approved grant to 110% or more of the previously approved amount.

Authorize the controller to make rules governing the acceptance and expenditure of any grants or grant increases that do not require Board of Supervisors approval and make other non-substantive organized organizational changes to the sections of code relating to cash involving funds and acceptance and expense expenditure of grant funds.

Madam Chair.

Thank you.

President Amendelman.

Thank you, Chair Chan, for uh making time for this on today's agenda and uh committee members.

Um, this legislation uh would is in the spirit of uh get uh getting out of the way of uh public servants who are uh trying to do hard things, and we are asking them to do them more quickly, and we should find ways to help them do them more quickly.

So um this would raise the board of supervisors' grant accept and expend approval threshold from a hundred thousand dollars to a million dollars that would align it with the federal single audit threshold, which is the threshold where the federal government requires audits of uh of entities receiving um grants from the federal government.

Grants uh represent between eighteen and twenty-three percent of our annual city rev revenues.

Our departments are managing significant grant portfolios, and we want them to seek more grant funding, but the current process to get these grants approved requires substantial staff time uh for what are almost always um routine approvals.

Uh San Francisco set its hundred thousand dollar threshold uh 14 years ago in 2012, and it has not been adjusted since.

Um as I mentioned, the federal government has raised its own threshold for uh audits up to a million dollars.

Right now, um uh departments win small routine grants, do essential work for San Franciscans, but then have to wait sometimes months uh to spend them.

Um in practice, most grants under a million dollars, as I said, are approved without uh debate, um, according to the controller's office, from 2018 to 2025, more than half the grants reviewed by this board would not have required approval under this threshold.

And this would this change would reduce uh the volume of board reviewed grants by approximately 54%.

To me, that's a significant reduction in the administrative burden.

It also creates an opportunity to redirect staff time and resources to more impactful work.

Departments will be able to access funding sooner and move faster on delivering services without the delays that come with routine grant approval.

And I think we will also be reducing a discouragement that currently exists to seeking new grant funding.

When staff in different city departments are thinking about applying for uh for different grants, they have to calibrate their own workload, their ability to like carry this through an approval process and balance whether it's worth it given the size of the grant, and this will tilt those scales a little bit more towards seeking the grant funding.

Um I also want to be clear it is not like eliminating board of supervisors oversight of these grants eliminates oversight entirely.

The controller has a robust process.

Um they will still review product packages for compliance with grant standards, grantor regulations and federal requirements.

Uh, and we've worked closely with the controller's office.

They've confirmed that this change is implementable while maintaining financial integrity, and they've developed a centralized workflow system to be able to track grant packages from submission through final approval without relying on a board review process.

Now I do have two amendments that I hope the committee will make today.

Um the amendments um are substantive, and so uh therefore this would could not be forward to the full board, so I would ask the committee to continue it to uh to the next meeting of the budget and finance committee after making the amendments.

But um the two amendments which have been circulated, I'll walk through.

One deals with uh amendments to grants that increase them.

So the legislation that we originally proposed required board review when a grant was increased by 110% or more of the amount most recently approved by the board.

The gap that we've identified is that large grants could receive a substantial dollar increase and still fall under that 110% threshold and uh bypassing board review.

So this amendment would create a two thousand two hundred thousand dollar limit to the increases uh that would then trigger uh board review of existing grants.

The $200,000 threshold ensures that these increases are still uh reviewed while maintaining the overall intent of improving efficiency and making better use of time, staff time and resources.

The second set of amendments is at the request of the city attorney uh to allow the city to accept pro bono legal services without board approval.

These services are typically privileged and confidential over the course of litigation, and thus the services to be approved would generally come retroactively uh one or two years after the litigation has been finished, so fairly pointless at that point.

But um uh allowing for this kind of uh expediting this kind of assistance is particularly important given the city's ongoing litigation against the Trump administration.

Outside law firms are more willing to provide pro bono support on high profile matters when they do not when they're not required to publicly disclose their involvement while a case is live.

Requiring board approval can discourage firms from stepping forward.

Um, and so uh I think that these are two worthwhile amendments.

I hope the board the committee will uh make them.

Um, and I do want to thank the city controller, Greg Wagner, who's um helped us think this through over, I think at this point it may be years, it's definitely more than months, um, and his staff as well as the deputy city attorney Brad Russian our deputy city attorney Brad Russian and uh uh staff in his office for their engagement on the legislation.

I want to thank Sarah Crowley in particular, um, and then I want to thank legislative aides in my office who've worked on this uh Maeve Skelly currently and formerly Melanie Mathewson and uh with that, um, I believe there is a BLA report.

Good morning, Supervisors.

Nick Winard from the budget legislative analysts office.

Item two is an ordinance that amends chapter 10 of the administrative code to increase the board approval uh for grant acceptance expenditure from 100,000 to a million dollars or the OMB single audit review threshold starting August 2026.

And we looked at grants that were that the board approved between January 2025 and April 2026.

During that time, the board reviewed about 113 grants, and 45% of them were below the 100 the $1 million threshold.

So about that percentage of grants would no longer require board review, but it only represented about 2% of the total grant revenues that were accepted by the board.

So the grants that are above 1 million dollars that would still be subject to board approval are a much bigger share of the grant revenue pot.

And we note as a policy consideration that this would reduce the time for executing grants by a couple weeks because that's how long it takes to get through the board process, but it does reduce the board's uh visibility input and oversight into the use of these grant funds.

So we consider approval to be a policy matter for the board.

Thank you.

Um I am in support of this amendment simply because uh for any type of contract um that comes to the board in terms of revenue, currently the threshold stands at one million dollars as well.

Um and so I find that accept and expand grant versus contract uh or versus revenue generated from contract uh at one million to be consistent.

I can be supportive of that.

Um love to learn a little bit more about the exempt and proponent legal services and free litigation uh only because just trying to have a better understanding of how that would then interact with the board's um policy.

I do understand, you know, eventual that it will we can always have closed session and other means for the board to actually understand the work that the city attorney is doing overall, um, in terms of legal um suits and settlement.

So I think it's just something that um the board of supervisors needs to be aware of, but overall I'm supportive of it and is supportive of the amendments today and its continuance since this substantive for further discussion.

And so Vice Chair Dorsey.

Thank you, Chair Chan, and thank you, President Mandelman, for your work on this.

I'm actually really persuaded by the point you made about you know being in a city department and having to go through assess this is gonna cost us $25,000 to get this $15,000 grant that we might be leaving a lot of money on the table.

That I think is a really excellent point that uh resonates with me, having worked in the city government for a long time.

So I'm gonna support this and would like to be at it as a co-sponsor.

President Mendelman.

Um thank you.

Uh, Chair Chan.

I would just like to afford the city attorney the opportunity if he wants to talk a little bit about the pro bono um legal services.

Sure.

Deputy City Attorney Brad Russian President Mandelman explained, I think the the reason that we're seeking this amendment, the basic reason.

Um frequently in litigation, when we get pro bono counsel or um pro bono expert uh expert services in the litigation, the fact that we've gotten that and the name of the firm, the amount that they are contributing is privileged during the course of the litigation and potentially even after the litigation is over for like an expert who was never disclosed in the litigation.

So we can't come to the board and see if we did come to the board and seek an A and E uh accept and expend resolution prior to that, it really wouldn't be able to disclose anything because it's all privilege and it wouldn't mean anything for you.

We still are obligated to report to the ethics commission um gifts to the department and the department and the the reports that we do to the ethics commission are very, they're basically like redacted for most of the same information, but we do disclose it when we can.

So I think the purpose here would be sort of to align the code with our current practice and make it clear that you know we don't have to come to the board for an A and E in these circumstances.

I think this is quite specific, and I am my apologize and bring my budget book with me, but you know how in our ordinance for budget that there's specific uh with like source summary for funding will then um somehow this actually become a line item like collectively and say this is uh this is a sort like pro bono services that the city attorney actually receive uh in the annual budget in projection.

Just I'm just curious.

I think that's could be for controller.

Good morning, supervisors.

Devin Macaulay, citywide budget manager.

Um, Chair Chan, your question about having this appear in the AAO budget book.

I don't believe there'll be a line item in the budget book for that uh to the extent that the ANE uh accept and expend process occurs outside of the annual budget process.

Um it comes before you typically um during the year uh outside of the budget process.

Thank you.

Just kind of curious and would just um again uh advise and suggest.

Should there be uh potentially as you continue with this overall to be able to have some kind of projection um of what you expect to receive as pro bono legal services?

Just a thought.

Thank you.

I appreciate it.

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

Let's go to public uh comments on this item.

Yes, right now opening public comment for this item number two.

If we have any members of the public who have uh who joined us today who wish to address this committee, oh and uh madam chair, um let's see uh public comment will be set up.

My apologies.

Let's set uh public comments for both the budget and finance, and we'll come back for the budget and appropriation.

But let's set public comments for today, both meetings at one minute.

Thank you much, madam chair.

First speaker, please.

I'm sorry, I'm sorry, one more time.

Good morning, supervisors.

Amanda Freed from the treasurer's office, uh a bureaucrat that spends a lot of time on acceptance expense, and just want to um acknowledge uh President Mandelman for this legislation and uh while I will miss seeing you all very regularly on Wednesday morning and begging my colleagues in the controller's office to approve my acceptance expense.

I'm very grateful for this legislation.

Thank you.

Thank you much, Amanda Freedom.

And seeing no other speakers online, Madam Chair to completes our cue.

Seeing no public comments, public comment is now closed.

Colleagues, I would like to first move the uh amendments proposed by President Mendelman and then continue the amended item to our next budget and finance meeting, which is scheduled for July 8th.

And the roll and the roll call, please.

Yes, and on that motion that we amend this ordinance as written to the record by Supervisor Mandelman, and that we continue this ordinance to the July 8th meeting of this committee as amended.

Vice Chair Dorsey, Dorsey, aye.

Member Sauter.

Soder, aye, Chair Chan.

Aye, Chan, I we have three ayes.

The motion passes.

Thank you, colleagues.

Thank you.

And Mr.

Clerk, please call item number one.

Yes, item number one is a resolution approving an amended and restated lease agreement between the city and county and TED's Inc.

for the retail space located at 44 Ellis in the Ellis O'Farrell Garage, to amend the calculation of the monthly base rent to a percentage rent calculated as eight percent of gross revenues retroactive to January first, twenty twenty-one to amend the monthly water charge to 2.4,000.

Retroactive to February 1st, 2024, to amend the calculation of base rent and water charge during the first option to extend to require TEDs to pay 4,000 in administrative fee to impose minimum hours of operation to waive TAD's obligation to pay base rent for the period beginning on April 1st, 2020 to December 31st, 2020, and to waive TAD's obligation to pay outstanding water charges for the period beginning February 1st, 2020 to January 31st, 2024.

Effective upon approval of this resolution through the expiration date of April 30th, 2029.

Madam Chair.

Thank you.

And today we have SFMTA here.

Or real estate.

My apologies.

Morning, supervisors.

My name is Kazia Tang.

I'm the real estate manager at SFMTA.

I'd like to go through a simple presentation.

Um for TADS amended and restated lease agreement.

Back in during the pandemic, like many other city agencies, we had to quickly amend uh leases to conform to the current uh economic environment that the pandemic put us in, and we are making attempts to uh formally make those amendments, and this is one of them.

Uh the key terms here are that this would be a 10-year lease, continuing from the original lease date with two five-year options.

The tenant improvements that were completed in March of 2020 totaled to about 2.7 million.

And we provided rent relief, like I said, to um our tenants during this time as part of the city um administrators' memo.

Here's a simple chart to show what our annual rent revenue was for the following fiscal years.

The key provisions of the proposed and restated amended lease are that the lease expires 10 years from the original date of 2019.

So it expires April 30th of 2029, including five two-year options to extend.

I'm sorry, two five-year options to extend.

Um rent will continue as agreed at 8% of gross revenues until the initial term, and then once an option to extend is um uh exercised, that will convert to a fixed rent.

The rental projection conservatively is about 241,281 dollars, equivalent to 44.95 cents per square foot, which exceeds the fair market comparable value of 43.3 cents.

Um that would be the end of the slideshow regarding the TADS um restated and amended lease that we're requesting retroactive approval for.

Thank you.

Item one is a resolution that approves an amended and restated lease uh between MTA and TADS Inc., which is a restaurant and uh at 44 Ellis Street in the LSO Ferrell Garage.

Uh we summarize the lease terms on page four of the report, uh, but they essentially formalize uh lease amendments that were made by MTA uh verbally during the pandemic to switch from a fixed to a percentage rent structure, which they did for uh many of their tenant leases.

And as we discussed in November, uh this is one of 16 leases that switched to that structure, but that does not have a formal lease amendment associated with that change.

So this is uh one of three leases that have been formalized.

There's a queue of 13 more that still need to be formalized that are underway at MTA.

Um, and then as we discuss on page seven of our report, you can see that this is uh generating about two hundred forty-one thousand dollars a year in rent to MTA that's used to pay for transit operations at MTA, and it exceeds the uh market rent uh that uh was con what an appraisal show would be market rent for this space by um a couple dollars per square foot.

So we do recommend approval of item two and we recommend that the resolution be amended to state that it is retroactive.

Thank you.

Supervisor Sauter.

Uh thank you, Chair.

Um, this is I think in many ways similar to uh something we saw before this body uh a few months ago in district six, um, and I think we're seeing these to square up um what was discussed during the pandemic and some of the adjustments and formalizing that so um appreciate uh the work to get this in line and uh I'm glad to see that things are picking up in Union Square and on this property on LS.

So I'll be supporting this and in fact have an amendment to uh uh do one of the recommendations from the BLA is simply making this retroactive.

So you have those amendments before you and I would ask that we uh accept that amendment and uh send this to the full board with recommendation.

Thank you.

And so with that, we will go to public comment.

Thank you.

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

If we have any members of the public who wish to address this committee, Madam Chair, we have no speakers.

Seeing no public comments, public comment is now closed.

Um, would you like to make the amendment?

Uh make your motion to amend and then and then send.

Yes, I'd like to make a motion to amend the item to um to introduce retroactive language and send to the full board with recommendation.

And with that, a roll call, please on that motion.

And on that motion by member solder that we amend this resolution.

Uh associated uh and to or uh to accept retroactive language and to refer this resolution to the full board with recommendation as amended.

Uh Vice Chair Dorsey.

Dorsey, aye.

Member Sauter.

Aye.

Sauter, I, Chair Chan.

Aye.

Chan, aye, we have three ayes.

The motion passes.

And Mr.

Clerk, please call item number three.

Yes, item number three is a motion enacting a 4.5% cost of living adjustment to the base fiscal year 2025 to 2026 contract amount of approximately 3.4 million for uh budget and legislative analyst services to be effectuated as of July 1st, 2026, resulting in a new fiscal year 2026 to 2027 contract amount of approximately 3.5 million, an annual increase of approximately 152,000, and a total not to exceed contract amount of 36 million for the contract term ending December 31st, 2031, and directing the clerk of the board to take all necessary administrative action to amend the contract accordingly.

Madam Chair.

Thank you.

And uh today we have um the clerk of the board up.

Please go ahead.

Good morning, Chair Chan and committee members.

I'm Dr.

Edward Deasis.

I'm the CFO for the Board of Supervisors.

Uh today I'm bringing before you to request approval of a motion to enact a cost of living adjustment for the BLA contract.

Under the contract, you are provided with uh services, including policy analysis, legislative analysis, and budget analysis.

As you know, the current contract is with Harvey Ambrose Associates LLC.

The current NATIC seat amount is 36 million.

The contract is for 10 years and runs to December 31, 2031 2031.

Today we're requesting the committee's approval to effectuate a contract amendment to enact a COLA adjustment of four and a half percent effective July 1, 2026.

I'll add that the funding authority and the budget is included in the department's June 1 budget and controller's office has certified that uh this contract generates savings for the city.

Um I will keep my comments brief there because I know we have a long day, so I will yield the rest of my time and I'm available for questions.

Thank you.

Thank you for the presentation.

We appreciate our partnership and um with the budget and legislative analyst, as this is part of the contract.

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 three, now is your opportunity.

Madam Chair, we have no speakers.

Seeing no public comments, public comments now closed.

Colleagues, I would like to um make the motion to move this uh item to full board with recommendation and a roll call, please.

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

Dorsey, aye, member Sauter.

Saudder, aye, Chair Chan.

Aye, Chan, I we have three ayes.

The motion passes.

And Mr.

Clerk, do we have any other business before us today?

Uh Madam Chair, that concludes our business.