Good morning.

The meeting will come to order.

Welcome to the July 15.

Um the budget and finance committee.

Uh, I am Supervisor Connie Chan, Chair of the Committee.

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

Uh uh, our clerk, it's Brent Halipa.

Mr.

Clerk, do you have any announcement?

Thank you, Madam Chair.

Just a friendly reminder to those in attendance to please silence also silence all cell phones and electronic devices uh to prevent interruptions to our proceedings.

And should you have any documents to be submitted 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 in 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, the budget and finance committee clerk at B R E N T.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 Big 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 July 21st, unless otherwise stated.

Madam Chair.

Thank you, Mr.

Clerk.

And before you call item uh one, uh colleagues and uh to everyone here, I would like to take the privilege of the floor, if I may, to uh make some remarks.

So as everyone and uh well colleagues, as you know, I have made no secret of my intention to step down as chair of the budget committee at the end of this month in July.

I will also not be chairing the committee next week on July 22nd, and have already requested that Vice Chair Dorsey run that meeting.

So making today my last meeting as chair of this committee.

Um if I may serving these last four years as chair of the budget and finance and budget and appropriation committees, uh guiding the board board's work on the city's annual budget process has been a privilege.

Uh I have been very honored that my colleagues and two different board presidents have entrusted me with our crucial charge to oversee the committee's work to ensure we're upholding the highest standards of oversight for our city's contracts, leases, and spending, guarding against corruption and misconduct, safeguarding our public dollars, and I believe that work that we have done together these past four years have fulfilled that charge, and we have upheld the public's trust.

And when I say we, I just also wanted to give special thanks to Francis Shea, um, who has been really uh my partner in this um chairing the budget committees.

So finally, I do want to recognize and thank everyone who are the backbone of this committee, because let's face it, us politicians, uh the elected come and go, but the people who are here every day to make sure that we can do this job well, they are the vital part of the system that served the public.

So first and foremost, thank you.

Our clerk Brent Halipa um and the entire team at the clerk's office.

And of course, our budget and legislative analyst team, led by uh Nick Matnar.

Thank you.

And Christina, thank you.

Uh and then uh, of course, our controller team with, of course, you know, Greg Wagner, but really Devin is the real one who does the real job here in the committee, Devin McCaulay.

Uh, and of course, the mayor's budget director, Sophia Kittler and her team.

Thank you.

Uh, and last but not least, uh, and never really least, I would like to thank the SOGov TV team and apologize wholeheartedly for butchering their names every week on a weekly basis.

So for the final time, I would like to thank, and I know that I will still make this not right, but please forgive me.

Matthew, thank you so much to Matthew Eknall, Jaime Avateri, Suze Eat Nose, Eugene Labadia, Kalina Mendoza, uh James Kawana, and Jeanette uh Eknotov from ASICAF TV for podcasting this meeting.

So now, on to the meeting, because we have to get back to work.

Um just a reminder to the public.

We will have the budget and legislative analyst report for most of the items on today's agenda.

And uh for those item, as I as a chair have set it up to be uh is that uh is that uh I oftentimes has the department presentation first, followed by the budget and legislative analyst, then we take questions and public comment.

And the reason why I have done this um just it may not be the same uh after this.

The reason why I've done this is because I always believe that the department and the budget analyst analyst should be really come as a pair in their presentation to give a full picture of what this item is about.

So allowing this body to ask those questions and make comments before we interrupt those presentations, because I think you know, sometimes I learn from the fact that that answer is just one slide away when you're interrupt to ask the questions, and the same for the report that we would get um out oftentimes actually help answer those questions, not just for ourselves but the public.

So, but I see that Vice Chair Dorsey have some remark, so I will go to the Vice Chair Dorsey before we call item number one.

Vice Chair Dorsey.

Thank you, uh Chair Chan.

And before we get started, I just did want to follow up on your um outgoing remarks, and I know we will have an opportunity to customarily at the full board when we pass the first vote.

We all we all say things, but I did want to begin by thanking you, Chair Chan, um, for your steady leadership and tireless work on this budget process, um, not just this year, but in previous years.

Um I know from many years of working here in City Hall that chairing the budget committee is never easy.

It's one of the toughest jobs in this building, and that is especially true in a year defined by difficult fiscal realities.

Um but you led these proceedings with professionalism, patience, and a genuine willingness to work collaboratively.

Um and I know that there are some men of my age who can bristle at the idea of praising a mentor who's younger than he is.

Uh, but I'm not one of them.

Um so I just want to say to you, uh, Connie, you've been an amazing mentor to me on budget, and I really want to say thank you.

Thank you.

Uh Supervisor Sarder.

Well, Chair Chan, I'll add um thanks as well.

And as the the new member of this committee, thanks for bringing me on board and um for guiding me at times and teaching me at times.

And um uh you know, you have in in some uh better years and then some more difficult years, either way.

You've you've led this uh this body, this committee, and frankly the entire board.

So thank you.

Thank you.

So with that, let's uh Mr.

Clerk, please call item number one.

Yes, item number one is a resolution approving the second amendment to a contract between Children's Council of San Francisco and the Department of Early Childhood for the provision of the early early care workforce compensation and administrative services to support the city's implementation of the San Francisco Citywide Plan for early care and education workforce development and compensation initiatives, increasing the agreement amount by approximately 70.5 million for a total amount not to exceed approximately 234.9 million for a term of October 1st, 2022 through June 30th, 2027, and authorizing uh DEC to enter into any additions, amendments, or other modifications to the agreement that do not materially increase the obligations nor liabilities or materially decrease the benefits of the city.

Madam Chair.

Thank you.

And today we have uh Department of Early Childhood here.

Good morning, supervisors, um Supervisor Chan, um committee chair for your last session.

Um Supervisor Sauter and Supervisor Dorsey.

I just want to say, Supervisor Chan, I really want to thank you because you have shepered this process for the baby pro baby props implementation for the last four years.

And I think that um every time that we come and present a piece of it, it is a little bit of history that you also have been able to leave behind as the first phase of this implementation of this really like landmark um type of programming that has happened.

Um we are sort of like this beacon um across the nation of what um uh what really government can do for children and families um in in their local jurisdictions.

And for that, I'm presenting today Ingrid Musquita, by the way, I'm the executive director of the Department of Early Childhood, and the amendment that you have today is to extend our early educator wage supports.

And this is a part two, part one of the baby propsy or the babies and families first fund is to support access and affordability to early care and education services across the city.

And the second part, which is as important, is to make sure that early educators who work as part of this early education system are also have wage support that can not only keep them in the field of early care and education but also help them in their career pathways.

And so what you have in front of you is a way the wage support part of baby props C that is through a grant with children's council.

And what we're asking you today is to be able to extend this grant.

And as we look both at this grant amendment and the BLA recommendations, we know that there are still some key questions that we're continuing to refine as these investments are helping not only our early educators but also our programs and most importantly the children and families of our city.

And so for the purpose of this grant, we're looking at measures of success both in outcomes, service objectives, and also performance measures, and we look at that through ensuring that the funds are actually reaching eligible programs and educators accurately and in a timely manner, and that the wage benefits and professional development that are also part of this grant and the working condition supports, which is the newest addition and the last final phase of the wage workforce development portion of baby propsy, must help make early education sustainable and a rewarding career.

So as we make these improvements, we look in a workforce that is going to expand as we expand early care and education services, that it's more stable, then we're making sure that we're creating a really solid infrastructure, and that we have better qualified early educators to serve children and families.

So what this grant agreement represents is in dollars.

So we started back this four years ago, all the way through now extending it through June 30th of 2027.

And just a little bit of data to be able to show what we've been able to do since we implemented this wage support, and that is that San Francisco has been able to demonstrate that when you actually invest in early educators, you actually are able not only to retain people in the workforce, but you're also able to expand.

And so we've been able to increase wages for early educators since day one since we implemented this program.

And what we're showing is that that retention rate is much higher than in other parts of the Bay Area or in the state of California, not only in the retention, but also in the wages.

But it really what it shows is that teachers do have a high rate of job satisfaction in San Francisco, and that they are willing to stay in their career for a longer period of time than in other places that we've been able to see.

So, in essence, we have been able to have one raise compensation for all teachers in all different settings, whether it's in family child care or center-based programs, but it also has been able to create sort of like this really like movement within the early education field that this is a viable and sustainable way of being able to be able to see yourself in this career.

So our wage support reaches over 3,000 people citywide, and over 1,400 educators in our highest needs centers get the wage support, and they're seeing an average of almost 47% an increase to their base wage.

And they're seeing an average of almost 47% an increase to their base wage.

And for family child care operators, that's a little bit over 1,700 people that are participating in the teacher stipend, or what we call now the CARES program, the 3.0 version because it's gone through a couple of iterations.

And their average wage increase has been over 60 6600.

And because it's given out over twice in a fiscal year, that averages out to over $13,000 for family child care to be able to see their compensation go up.

So this is we're having a pretty significant reach citywide, and that's one of the things that we're most proud of.

So the way that we're spending this funding is that our approach is pretty much that we've been going higher and higher every year, and as we're expanding early care and education, that only makes sense.

We're adding more teachers to every classroom because we're adding more children.

And with that, um the wage support follows.

So as you can see, we will continue to maintain this um this kind of trends trend for quite some time.

And as all of these steps add up to um to every cycle, we're also analyzing, and this is where we're taking the BLA recommendations along with areas that we we have now, as we've implemented the first three years of this grant, we also have lessons learned.

So taking into account all of that information, we are updating not only the service objectives, but the outcomes and the performance measures, because as we're bringing in more sites into the early care and education network, that means that we're bringing in more teachers and we have to analyze what is the cost to that is in terms of the wage support.

So as we're looking at this, we want to make sure that everyone is always maintained informed about how funds are being used.

Um but really what we're looking at is to make sure that teachers are fairly compensated and that their working conditions also improve.

And how the growth, the size, the availability and their qualifications, and how this is again looked as a career ladder for early educators, and that they're compensated justly.

Thank you.

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

Item one is a resolution that approves an amendment between the grant agreement between uh Department of Early Childhood and Children's Council.

The amendment increases the value of the grant to 234.9 million dollars uh with no change to the term, which ends uh June 2027.

So the under the grant, Children's Council uh disperses grants for uh workforce compensation initiatives for the uh for early early child educators.

We summarize the grant types on pages three and four of the report.

And then on page eight, you can see the grant budget.

This is a 75 million dollar a year grant.

Um nearly all of that or 71 million dollars uh is dispersed to child care providers uh for the workforce compensation grants.

Uh we do have um recommendations for DEC, which it sounds like have been accepted to we did get a lot of system level data from DEC, and I appreciate the engagement um from the staff over the past week.

Um but I think that there's an opportunity to improve the per the nuts and bolts performance management of this grant, uh which the purpose of which is to pay children's counsel to accurately and timely disperse grants to child care uh organizations.

And so I think that the perform the service and um outcome objectives need to have quantitative targets associated with them.

Um to define timely to and also to evaluate how accurate the payments are, for example.

And those tar performance should be measured against those targets on an annual basis.

Um these recommendations are consistent with the controller's recent guidance to require all city departments to actually have these uh characteristics of performance management and their grants as of June 2025.

So we're we're now a year past that deadline.

Um we also recommend expanding the outcome objectives to measure the impacts on the size of the early care and education system to see if it's having an impact on the number of child care slots available in San Francisco and to also measure the quality of the workforce registration data, which is used to validate um that teachers receiving these grants have the credentials that qualify them for receiving the grants.

Happy to answer any other questions.

Thank you.

Just kind of curious if there's any you would like to add and respond to the recommendations provided by the budget and legislative analyst.

I think it does sound like I think over the last week or last few days it sounds like we have been in communications and trying to figure out like how what other details that Department of Early Childhood can provide to sort of meet and respond to the budget and legislative analyst but I I want to make sure that we give you a chance to respond to the recommendations.

Right.

And data is one of the areas that we know we have to upgrade.

So we've been using the California workforce registry which is um is a registry that's used across every county across the state it's specifically for early educators and that is going through also an upgrading system because it's should be tied to the California teacher credentialing system.

And so what we've been doing is we we've been working with them as well as we've been working with um internally with the city um department of technology to see is this the data system that accurately reflects the needs of the wage supports since that workforce registry is really specific to teacher credentialing and so we're kind of putting round pig square whole into it so we are we're updating it at least the portion that we use to make sure that we're actually capturing all the data that we need it may not be relevant for the rest of California but it certainly is something relevant for our county.

Yeah.

Vice Chair Dorsey Thank you Chair Chan I um appreciate the BLA pointing out just some possible shortcomings with performance measurement and I think it's it's something that's important in all circumstances but I do think sometimes especially when it's voter mandated you know I I always want to be sensitive because when we go to voters asking for things as we'll be doing this year on other topics making sure that we are measuring and reporting out how this money is being well spent with performance metrics that come here I think it does matter.

So I appreciate the work that you'll do to make sure that um the uh concerns that the BLA addressed that are important to us as well are solved.

Yes.

Thank you.

I could you have me understand a little bit more about sort of that this state um classify educators or I should say teachers and are you saying that we need to expand that certification or in tracking how we understand just a little bit more about the data tracking part.

Yeah so um in California like many other places across the nation we um we rely on a what's called a mixed service delivery system.

It's um in San Francisco it's licensed child care through either family child care center based or even the school district each one of those systems have different requirements for back not only background for education but also credentialing.

And so our our task is to ensure that we have alignment in the city to ensure that children are in quality care.

So that has to we have to create a horizontal alignment across family child care center based and school district that is age appropriate obviously for children.

And so with professional development that's how we support early educators to be able to come up to what the state has as teacher credentialing for early educators and their standards for that.

So there are different levels of credentialing depending on not only the age of children that you're teaching but also in the setting that you're you're eventually going to go into I mean I think in city collects city college actually provide um credentialing I believe it's like a 12 units like then you then you qualify to to be to be that and so does that system actually helps you yes we have bought out all of their child development units in Spanish, English, Cantonese, because we know that there's a need um to ensure that early educators have full access.

Great.

Thank you.

Thank you for answering that questions and thank you.

I I I think that the BLA report is helpful to sort of point out you know how do we contain to track that really help your team to kind of figure out strategically moving forward I often find that as a blueprint for many city departments because you already have to do the actual work it is always good to have someone who is independent and professional and have may not be necessary that subject expertise but actually with the outsider look uh with different kind of expertise and being able to help you soar the necessary data plan that you need to track.

It is always good to have someone who is independent and professional and have may not be necessary the subject expertise, but actually with the outsider look uh with different kind of expertise and being able to help you soar the necessary data plan that you need to track.

Thank you for your presentation today.

I am in support of moving this forward today.

I do want to hope that not only this committee, but ongoing, I know that you know formerly we have like the select committee.

Um, but I I I think that the the board should continue to track um specifically of how we can continue to track the data and support and spending and disperse the funding.

So thank you.

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 one.

That was your opportunity.

Madam Chair, we have no speakers.

Seeing no public comments, public comment is now closed.

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

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

Dorsey, I.

Member Sauter.

Sodter.

I Chair Chan.

Aye.

Chan.

I we have three ayes.

The motion passes.

And Mr.

Clark, please call item number two.

Yes, item number two is a resolution retroactively approving and authorizing the general manager of the San Francisco Public Utilities Commission to execute amendment number one to the joint exercise of powers agreement for sewer service.

With the City of Brisbane and Guadalupe Valley Municipal Improvement District.

Increasing the duration of the original agreement from July 31st, 2025 to the earlier of December 31st, 2027, or until the execution of a new long-term agreement pursuant to the Charter.

Madam Chair.

Thank you.

And today we have SIPUC here.

Good morning.

Thank you, Chair Chan.

Fellow supervisors.

My name is Joel Prather.

I am the Assistant General Manager for Wastewater Enterprise around the San Francisco PUC.

Here here here today to request approval and authorization for PUC to actually execute execute an agreement to the joint exercise amendment to the joint exercise powers agreement of the sewer services for the City of Brisbane and uh their district, the Guadalupe Valley Municipal Improvement District.

While the vast majority of our wastewater treatment services are here in the city, we do accept flows from three wholesale customers.

The first of those is Daily City, which includes a small portion of Daily City in the Westlake area, uh the Bay Shore Sanitary District, which is a small area uh off of Geneva Avenue near the Cow Palace, and then finally uh Brisbane, which includes the entire city of Brisbane through their pumped flow, collected and pumped flows through their district, the Guadalupe Valley Municipal District.

Uh the current agreements that are in place for all three utilities were established in 1995 and set to and set to sunset in 2025.

And while we did start working on updating these agreements long before they were set to expire, um we have yet reached yet to reach full agreement on some very small details.

Um the language in both the Daily City and the Bay Shore Sanitary District Agreements do have um language in place to automatically extend the agreement in these circumstances, but the Brisbane agreement did not have that language, and this thus why we are here today to request that addition to this specific agreement.

And I am here to answer any questions along with staff uh from our finance team at PUC.

What were the specific details that actually hold up that you couldn't actually meet the 2025 deadline?

Um of the specifics were uh the sampling um we have to sample some of their flows to make sure we know what's coming into our system.

Um there's been some back and forth on the rate updates, and then um one of the major changes we're good we're we're trying to make is to consolidate all three wholesale contracts into one contract so that we're not in this type of situation going forward.

Um and then you know, we requires approval, all these modifications require approvals from various boards, various commissions, and it's just taking a little more time than we anticipated.

But we do uh we do feel that we will be able to reach agreement um by at the very latest uh the end of 2027, if not earlier.

And then I think for this uh amendment agreement you are including are you including uh uh uh authorizations for the general manager to be able to renew the contract or renew the agreement without coming to the board of supervisors.

I am not sure if that is in this agreement at this time.

Do we know?

I don't I don't think so.

I think it's just this first amendment to the agreement that we're asking for authorization for to the existing agreement with Bay Shore Sand or Brisbane.

I don't know, because are you you were just mentioning the auto like approval?

Yeah, we will be back to the board with the new contract eventually.

Eventually when would that be?

That will be sometime before the end of 2027, preferable, hopefully with one contract for all three wholesale contractors.

Understood.

So what we're agreeing today is a sort of like a temporary holder for existing ones since 1995.

It expired in 2025, so we're agreed we are approving temporarily retroactively until you now then will have with Brisbane specifically by 2027, you will then have it with Daily City, Westlake, and Brisbane.

Daily City Um Bay Shore and Risbank, yes, that's correct.

Yeah.

Yeah.

Okay.

Um that will be 2027 because then you are now combining all these areas into one agreement for the district for wastewater treatment.

That is our intent, yes.

Okay.

Thank you.

Thank you so much uh for answering the question.

We'll go to public commons on this item.

Yes, we're gonna open public comment for this item number two.

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

Madam Chair, we have no speakers.

See no public comments, public comment is now closed.

Colleagues, uh I will make the motion to move this forward with positive recommendation on the roll call, please.

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

Member Sauter.

Saudder, I, Chair Chan.

I.

Chan, I we have three eyes.

The motion passes.

With that, Mr.

Clerk, please call items three and four together.

Yes, item numbers three and four.

Her resolutions approving and authorizing a purchase and sale agreement between the city and county and Pacific Gas and Electric Company for the following and affirming findings that the following actions are consistent with the general plan and a priority policies of the planning code, affirming the planning departments and California Public Utilities Commission's determinations under the California Environmental Quality Act, authorizing director of property to execute documents and make certain document modifications and take certain actions and furtherance of the purchase and sale agreement and respective resolutions that do not materially increase the obligations nor liabilities to the city and are necessary to effectuate the purposes of the purchase and sale agreements or resolutions.

Item number three is for the city's acquisition of certain real property located at 5,000 Hunters Point Boulevard in the Bayview neighborhood, consisting of approximately 14,000 square feet in land area for the amount of 575,000 uh placing the property under the jurisdiction of the recreation and park department and authorizing the uh uh reservation of an easement to PGE for access and subsurface utilities within the property.

And item number four is in the amount of nine hundred and fifty thousand, granting PGE said easement in John McLaren Park under Visitation Avenue and Mansell Street.

Madam Chair.

Thank you.

And today we have Supervisor Walton's uh office here.

Thank you, Chair Chan.

Vice Chair Dorsey and Supervisor Sauder.

This is Natalie G, legislative aide to Supervisor Shimon Walton.

And so the items before you, the city and PGE have worked collaboratively for several years to develop an agreement that advances shared interests and most importantly benefits the residents of San Francisco.

This partnership enables the three major infrastructure projects in District 10 to proceed to park improvements at India Basin and McLaren Park and PGE initiative to strengthen the city's electric grid.

The legislative actions before you would authorize Wreckham Park to acquire a key parcel necessary to complete the India Basin Waterfront Park Project as planned and secure funding for the visitation avenue pedestrian and bicycle safety project in the in McLaren Park.

Additionally, PGE would obtain an underground easement within McLaren Park to implement its eggbert switching station project, enhancing the resilience of San Francisco electrical infrastructure.

For item number three, Supervisor Walton is requesting your support for this item, which involves the city's acquisition of PGE owned property at 5,000 Hunters Point Boulevard, block 4629A lot 012 for inclusion in the India Basin Waterfront Park, also known as the IBWP project.

This is a critical acquisition needed to support the IBWP project.

The site occupies a central public-facing portion of the IBWP layout, serving as a primary public entry area along Hunters Point Boulevard, and whose plan layout serves as an integral aspect of the park's passive open space and circulation plan.

Number two, given the PGE's pit's unique sunken topography, it's basically grade level that is substantially lower than the park's adjacent grade.

The development of the IBWP without incorporation of the PGE pit will significantly diminish the spatial quality of the park, leading to a massive pit basically in the new park.

Number three, since the initial development of the IBWP project, the PGE Pit acquisition was always contemplated as part of the project plan and has assumed in all project approvals.

Therefore, this acquisition would allow IBWP project currently in his final phase three of construction to be completed in its entirety as originally envisioned.

And finally, number four, acquisition would represent an ongoing commitment to the Bayview neighborhood by ensuring completion of the flagship 225 million IBWP project begun over 10 years ago.

Having a unique waterfront setting and governed by its innovative community-oriented equity development plan.

Acquisition of the PGE pit property with the subterranean utility easement would support the delivery of more open space and improve access to existing facilities to address population growth and public infrastructure in this high NEAT area and emerging neighborhood.

For item number four, likewise, Supervisor Walton asked for your support of the execution of an easement for PGE's installation of a high voltage transmission line at McKillarin Park, which is going to be beneath the existing park roads at Mansell and Visitation Avenue.

Number one, the easement supports a citywide electrical grid infrastructure while directly serving a McLaren Park purpose in that it would allow PGE to establish and maintain of its broader Eggbert switching station project.

Basically, it's a broader 3.1 mile high high voltage electric transmission line infrastructure project from Brisbane to San Francisco to provide electrical infrastructure redundancy for San Franciscans.

And it's below the McLaren Park Roads at Mansell and Visitation Avenue.

And it does not eliminate or reduce any park space from above.

PG and E will pay the city $950,000 for this easement, which will directly apply to and help fund the city's McLaren Park and Viz Valley Avenue Pedestrian and Bicycle Safety Improvement Project, a project that will improve the safety and accessibility of pedestrians and cyclists.

Number two, the project support to the city's Viz Valley Pedestrian and Bike and Safety Improvement Project supports the city's transit first policy, adopted by the board, which emphasizes the importance of providing and prioritizing transportation via public transit, walking, bicycling for all trips in the city, including to parks and open space.

Number three, the easement purchase and sale agreement, whose closing is conditioned upon the concurrent closing of PG Union's sale of block 4629A Lot 012, aka 5100 points boulevard to the city for inclusion in RPD's India Basin Waterfront Project supports delivery of a critical programmatic land area to ensure the development of the IBWP in its entirety as originally envisioned.

And lastly, both the acquisition and easement support numerous objectives and policies of the city's recreation and open space element, aka rows of the general plan.

And on behalf of Supervisor Walton, we are asking for your support in approving both resolutions.

Thank you for so much for your time and consideration.

Thank you.

And we'll thank thank you.

I was thank you, Miss Nally G.

I was wondering if Ragn Park is also gonna do, because I saw this lie.

Please go ahead.

She she did a really good job though.

She I think she took all your talking points.

Should I just go?

Um thank you, Miss G from Supervisor Walton's office.

Um good morning, supervisors.

Yeah, El Golan, Deputy Director of Planning for the Recreation and Park Department, Supervisor Chen, thank you for chairing this committee and helping keep the city's finances on track for many years, and for your support for the recreation and park department and our mission to provide high quality open spaces and recreational activities to all San Franciscans.

I'm here today to present on two items.

The acquisition of land from PGE by Rack Park at India Basin in connection with our India Basin Waterfront Park Development Project and the granting of an underground easement to PGE in McLaren Park in connection with their Agbert Switching Station Project and Rec Parks Visitation Avenue Pedestrian and Bicycle Safety Improvement Project.

I'm joined today by Director Sally Orth of the Department of Real Estate, Sarah Yoel, PGE's Bay Area Manager, Local Government Affairs, and Rec Park project managers for both projects.

And we are all available to answer any questions you may have at the end of this presentation.

The city through Rec Park, the Real Estate Department and City Attorney's Office and PGE have been negotiating and working together for several years to come to agreement on these land use transactions that would benefit both parties and above all the people of San Francisco by allowing these three major infrastructure projects in D10 to move forward, two park projects and a PG ⁇ E project.

These two interconnected legislative actions would allow Rec Park to acquire a parcel needed to complete our India Basin Waterfront Park project as planned and to receive funding needed for the Visitation AV Pedestrian and Bicycle Safety Improvement Project in McLaren Park.

PGE would acquire an underground easement on a portion of McLaren Park, allowing it to execute its Eggbird switching station project, which would add resiliency to San Francisco's electric grid.

For a brief overview and reminder of the India Basin Waterfront Park Project and where we are today, India Basin Waterfront Park is a RPD's major $225 million recreational open space development in the Bayview neighborhood, which has been in progress for several years.

It is a 10-acre waterfront park development project involving the comprehensive remediation and renovation of several components comprising the India Basin Waterfront Park.

The project transforms the former Brownfield site into an interconnected waterfront open space that will connect 64 acres of shoreline from Herons Head to future Northside Park.

The project's construction consists of three phases, with the first two already completed in 2022 and 2024, and it is currently in its third and final phase with expected completion in 2028.

With this legislation, Rec Park seeks to acquire the PGE owned parcel located at 5000 Hunters Point Boulevard, Block 4629A Lot 12, which is centrally located within the India Basin Waterfront Project Area and integral to the programmatic layout of the project.

The city's acquisition of this parcel was included in initial project planning and approvals and was approved previously by the Planning Commission, the Parks Recreation and Open Space Advisory Committee, and the Recreation and Park Commission, and will allow the project to be completed in its entirety with a key public entry area included as originally envisioned, with a former PGE transition tower removed.

The image on the right depicts the India Basin waterfront site plan with the PGE parcel located locations circled for visual reference.

Key terms of the purchase and sale agreement between the city and PGE include the city's acquisition of the parcel for $575,000 to be paid from the open space acquisition fund.

PGE assumes responsibility and the significant cost for decommissioning and removing its transition tower to facilitate the park's development.

This has already been completed.

PGE reserves a 25-foot-wide underground utility easement across the parcel so PGE can maintain their existing underground utilities.

Acquisition of the parcel by the city would include delivery of the property with a tower and remaining PG ⁇ E elements fully removed to allow us to construct the park as soon as possible.

For visual reference, these images depict the existing PG ⁇ E parcel in relation to the surrounding India Basin Shoreline Park before and after the PG ⁇ E transition tower removal, which was completed by PG ⁇ E in March 2026 at PGE's cost.

As you can see, the parcel occupies a major central portion of the park along the Hunter's Point Boulevard street frontage, and its inclusion creates a more publicly accessible park.

The second legislative item before you pertains to McLaren Park, in which RPD seeks to grant PGE an underground utility easement beneath existing park roads that will allow PGE to install portion of its planned Agbert switching station project.

I will maybe skip the explanation since Ms.

G shared some information about this project.

But key aspects of this transaction include $950,000 sale price to be paid by PGE to Rec Park for the underground easement.

Funding from the sale will be applied to Rec Park's Visitation AV Pedestrian and Bicycle Safety Improvement Project, which I'll share more about in the next slide.

The easement will span approximately 15 foot wide, 3,000 linear feet long strip of land beneath existing park roads at Minsell Street and Visitation AV, and will not convert the existing public outdoor recreational park use, nor result in any permanent above ground changes to the park.

Immediately after PGE completes its project, PGE shall repave the full width of the roadway, curb to curb to city's standards.

As I mentioned before, these two transaction before you transactions before you today are interconnected, and each is conditioned upon concurrent execution of the other.

As you can see, the image in the bottom is a typical roadway section of the view of the visit of Visitation Ave, and the image on the right is a plan view of PGE's project footprint.

Finally, to expand a little more on the Visitation Ave Pedestrian and Bicycle Safety Improvement Project.

This is a rec park-led project in partnership with Public Works, SFMTA, and other city agencies.

Project goals include creating safe pedestrian connections, slowing vehicle speeds and calming traffic, expanding the bike network, and providing vehicle parking at high demand locations.

Its scope of work includes new bikeways, sidewalks, lighting, and signage.

The project will provide better connections to nearby destinations such as Kaufman Pool, Hurzrec Center and Playground, Leland Avenue Rain Garden, and Visitation Valley Middle School.

These images depict the project plan and images of typical traffic calming elements.

The project is anticipated to begin construction later this year, and the entirety of PGE's payment of $950,000 for the underground easement will go towards project costs.

This concludes my presentation.

As I mentioned, my team and I are available for any questions, as are the city's director of real estate and PGE's Bay Area Manager, Local Government Affairs.

Thank you for your time and consideration.

Thank you.

Good morning, supervisors.

Christina Malamut from the Budget and Legislative Analysts Office.

Item three would approve the city's purchase of 5,000 Hunters Point Boulevard from PGE for $575,000.

Acquisition of this site will facilitate phase three of the India Basin Waterfront Development Project.

It was formerly a site for a PGE transmission tower.

PGE has already decommissioned and relocated the tower.

The purchase price of $575,000 was negotiated and exceeds the appraised value of the site.

However, the price, the kind of difference between the appraisal and the price is less than PGE's cost to remove the tower.

Acquisition is will be funded by the Open Space Acquisition Fund.

And then item four is a resolution to approve the city's sale of an easement to PGE in order to install underground utilities along underneath Visitation Avenue in John McLaren Park for $950,000.

This will allow PGE to construct a transmission line to improve electrical service to San Francisco.

The purchase price of $950,000 again is uh was negotiated and exceeds the appraised value to the city's benefit, and that was to really provide a contribution to safety improvements for uh pedestrians and bicyclists along Visitation Avenue.

It reflects about a third of the construction cost for those improvements.

Um in addition, uh PGE has agreed to repave the roadway curb to curb after they uh construct the transmission line.

Uh we recommend approval of items three and four.

Thank you.

Uh just kind of the quick question.

I mean, I think Indian Basin has long been any investments from the city.

Um we're very fortunate to have uh grant funding and contribution from Finland Trompet support.

Um what I'm seeing here is that for this for this particular part of it purchasing this area, including the negotiation with PGE for the transmission or transmission tower being decommissioned.

This is actually coming from the open space acquisition fund.

Um how did that kind of come about?

How me a little understand a little bit of the process?

My assumption is this was not, or maybe it was.

Maybe it was part of the um PROZAC's um list.

So walk us through just a little bit.

Um yes.

Thank you, Supervisor.

Um, it is typical for us to use the Open Space Acquisition Fund to acquire land for open space since that is pretty much the only thing we can use it for.

Um, and since this project um you know is already very costly, and we do have this funding source uh dedicated specifically to land acquisitions, we chose to utilize it.

Uh we have sufficient funding to continue with um everything else that we are planning.

Um, and um we did go through the standard process of going through PROZAC and um getting their recommendation and the recreation park commission's approval and recommendation to the board.

Thank you.

Do we have the I know that it says that remaining die has about 11.8 million dollars in the balance.

Do we also have the list of just like a about uh pieces of land and that is waiting to be acquired or worked on.

Um so we have two lists.

One list is the list of um properties recommended by PROZAC that is on our website.

Every time we um add a property, we update that.

It does not mean that all of these properties would be acquired.

Uh many times we don't have a willing seller uh or it just doesn't work out.

Um then we have a smaller list of properties that we're working on, uh actively working on invest investigating, doing due diligence, for example, in D3 with Supervisor Sauter.

Um, and I don't have that list on me today, but but we do have it.

And then finally, we have um acquisitions associated with development agreements like um Schlaglock and Petrero that were envisioned years ago as the projects were approved.

We'll love to get uh the second the second list that you mentioned, a smaller list that you're actively working on, that um you can see the 11 remaining of the balance of the 11.8 million dollars could be allocated.

Yes, supervisor.

Thank you.

Thank you.

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

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

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

Good morning, supervisors.

I did leave my speaker card um on the side there, but my name is Jacqueline Bryant.

I'm the executive director of the A.

Philip Randolph Institute San Francisco, and I'm one of the original task members that was on the India Basin project way before it was a park, way before it was even an idea.

So I've spent 11 years working on this project specifically.

And what I'm most proud of is on the India Basin Waterfront Park Project, we established and created an equitable development plan, one in which the community really drove the conversation and created strategies on how we can build this park in an equitable way.

And to get past the portion of having PG ⁇ E remove that transmission tower in India Basin was a huge accomplishment for the community.

Um so I'm here in support of both items three and four and to just really overstate the work that Wreck and Park has done to work directly with community to be informative, especially when we're dealing with very complex situations and issues like this one that many of our communities don't understand.

What we do recognize is that the work that Wreck and Park has done has been to benefit our community, has been to benefit the city, and I'm just really um I think honored to be on the project to see how far it's come along.

And in some of those images, I was just reflecting on how beautiful that space is today.

Um and so I just want to continue to uh overstate my support in items three and four.

Thank you.

And thank you, Jacqueline Bryant.

Next speaker.

Good morning, supervisors.

My name is Kurt Grimes, and I am the senior program manager with the A.

Philip Randolph Institute.

I am also a San Francisco resident.

I was a native, and I have the pleasure of being someone who has the opportunity to work, live, and play in District 10.

I'm here to support file item number 260717, approving the purchase of a property at 5000 Hunters Point Boulevard as part of a phase three of the India Basin Waterfront Park Project.

India Basin has been transferred or transformed over the over the past decade through a thoughtful phased approach that has brought new park space and public access to the waterfront.

This property is the key needed to complete a vision by expanding connecting approximately 64 acres of waterfront parkland.

This project has been shaped through years of community engagement involving neighborhood residents and partners, including Reckon Park, the A.

Philip Randolph Institute San Francisco, Trust for Public Land, and the San Francisco Foundation.

Completing this acquisition acquisition will help ensure future generations have access to safe, beautiful open space along the part of the waterfront that was inaccessible for many years.

India Basin is becoming a place where families can gather, children can play, and residents can enjoy the shoreline.

I am also here in support of file item number 26071H, which grants the easement needed to move forward with Visitation Avenue Pedestrian and Bicycle Safety Project adjacent to McLaren Park.

This project will make it safer for people walking, biking, and driving, add protected bike lanes, sidewalks, and improved lighting, slow traffic and create safer crossings, improve connections to McLaren Park and the surrounding neighborhood, and add parking where it is most needed.

Everyone deserves to be able to get access to McLaren safely, whether they're walking, biking, or driving.

These improvements will make a real difference for the speaker's time has expired.

But thank you much, Kirk Grant for the COVID.

Thank you very much.

Next speaker, please.

Hi, good morning, supervisors, Zach Lipton, and thank you, Chair Chan, for your your steady leadership on this committee, brokering real collaboration through multiple difficult budget cycles.

Thank you.

Together, these represent a real win-win both financially for the city and for our parks.

At India Basin, this will convert an unsightly electrical facility to parkland, connecting the pieces of India Basin Waterfront Park and delivering the vision of a connected park on the city's southeastern waterfront.

And McLaren Park, really one of the city's best and often underappreciated parks.

This improves the redundancy of San Francisco's electrical grid while improving the park.

The agreement includes the repaving of Visitas Avenue and Mansell at PGE's expense, plus additional funding, and that will enable some really important pedestrian safety improvements on these key entrances to the park, which also serves the middle school, helping to ensure that both park visitors and students have safe routes to the park and to school.

I've seen these uh safety improvements um in progress over many years.

Um it's been a long time coming, and I'm really excited that this will help finally get the job done.

Thank you.

And thank you, Zach Luton.

Next speaker.

Good morning, Chair Chan and members of the committee, Sarah Yoel with PGE.

On behalf of PGE, I'd like to express our strong support for this agreement and our appreciation for the partnership with the San Francisco Reckon Park Department.

For many years, community leaders envisioned something better for this site.

Through collaboration and a shared commitment to the neighborhood, we've been able to remove what was once what what many saw as an eyesore and help create the future entrance to a world-class waterfront park.

PGE has made a significant investment in this project because we believe it creates lasting value for the community and for our neighbors in Bayview Hunters Point.

The removal of the transmission tower and transformation for this site reflects years of planning, coordination, and partnership to help realize a long-standing community vision for this waterfront.

Today's approval is an important milestone in bringing that vision to life.

While the transaction remains subject to CPUC approval, we are excited to take this next step and hope to finalize the cell later this year.

We are proud of what has been accomplished through this partnership and look forward to positive impact this park will have for generations to come.

Thank you.

Thank you much, Sarah Yellow.

And seeing no other people in line, Madam Chair that completes our cue.

Seeing a more public commons, public comment is out close.

Colleagues I will lie to send these two items to full board with recommendation and the roll call, please.

And on that motion to send both items to the full board with recommendation.

Dorsey, I, Member Sauter.

Sauter, I, Chair Chan.

Aye.

Chan, I we have three axes.

A motion passes.

And Mr.

Clerk, please call item number five.

Yes, item number five.

Is a resolution approving a port uh commission?

Uh with JPPF 1300 Battery LP for approximately 4600 square feet of a single-story restaurant space and approximately 3,000 square feet of outdoor dining area located at 1300 Battery Street for a term effective upon approval of this resolution and expiring on May 5th, 2046 for a monthly base rent of 5,000 with a 15 percent base rent increase every five years for a total base rent of approximately 1.5 million percentage rent of 1 percent of gross sales and rent credit of up to approximately 1,500 uh a month for 120 months of actual documented cost of landlord work and tenant improvements and authorizing the acting executive director of the port to enter into any additions, amendments or other modifications to the lease that do not materially increase the obligations nor liabilities to the city or the port and are necessary or advisable to complete the transactions, which this resolution contemplates and effectuate the purpose and intent of this resolution.

That do not materially increase the obligations nor liabilities to the city or the port and are necessary or advisable to complete the transactions, which this resolution contemplates and effectuate the purpose and intent of this resolution.

Madam Chair.

Thank you, Mr.

Clark.

And today we have uh San Francisco Port here.

Good morning.

I'm Scott Lansidel, Deputy Director of Real Estate for the Port.

Good to be here.

Supervisors Dorsey, Souter, great to see you again.

Supervisor Chan.

It's been a pleasure to be here with you on a number of these occasions as we push forward new leases at the port and uh appreciate your support over time.

So thank you.

Here today to talk about Fog City Diner or what was Fog City Diner at the corner of Battery and the Embarkadero across from Pier 27, the cruise terminal.

This uh this lease uh and ground lease is uh an interesting one given that it really is a postage stamp size property at the corner of uh the uh Levi's Plaza Park.

Uh the operator and ground lessor is uh Jamestown properties uh which is the entity that also controls the park and Levi's Plaza.

Um they secured the ground lease with the purchase of the Levi's interests in 2018, I believe.

Um this lease dates back to, or the original lease dates back to, I believe, 1976, uh was a uh almost passed-through structure as it was set up, which was that almost all the dollars coming from the retail agreement flowed back through the ground lease to port uh in a retail structure.

In 2025, no longer able to sustain operations Fog City closed, which was unfortunate, um, and allowing this Fog City location to go dark at a time when we were starting to see recovery in the district.

Uh unfortunately at the time the port was not able to quickly enough respond with modifications to the retail lease, given that uh the the you know secondary ground lease structure uh really created obstacles in quick uh reaction and I guess nimbleness in adjusting the document.

Um ultimately uh Fog City closed and JCJPPF uh took the site back out to market.

Um they were lucky enough to secure a new subtenant, uh a new uh restaurant concept called Moonchild, which is exciting, a young local uh chef Floyd Nunn, who will be opening this location with his wife.

Umfortunately, given the structure, uh the market rent to support any restaurant within the San Francisco area uh set up a set up a ground lease structure where effectively JPPF would operate underwater.

Uh and so uh we engaged with JPPF to restructure the ground lease, really allowing for uh sustainable operation of the new subtenant and facilitating further investments into the location to uh clean up the facility and reopen.

Um as I mentioned, the original ground lease terms really were set above market.

Um so that monthly base rent was roughly sixteen thousand dollars, a high percentage rent at almost seven percent.

Uh and since closure, JPPF has continued to pay the port despite being in the negotiation and uh with an eye towards a lower ground lease payment.

Um the sublease is set up such that uh the operator will pay a base rent of twelve thousand dollars a month uh with increases and five percent uh percentage rent.

Um the proposed new terms of the ground lease as restructured uh adjust rent to five thousand dollars a month with five-year increases at fifteen uh fifteen percent, and the port participates with a twenty percent share of percentage rent above the base rent, which is the one percent.

Uh the port also will contribute through rent credits to support uh reimbursement of capital dollars into the facility, which include a new roof, new mechanical, and upgrades to the to the building.

Um from our perspective at the port, um, we were really left in a position with after closure where uh the opera it really made no sense for the operator to continue or the ground lesor to continue to pay rent unless there was an ability to restructure this.

Uh the port did not want the property back really in in the interest of the port and the district.

We're really excited to be able to facilitate reoccupancy, a new concept and new opening along the waterfront as the waterfront continues to recover.

And we see additional foot traffic and office tenancy in the district, both at Levi's Plaza, Waterfront Plaza, and around the corner at two buildings.

We control the roundhouse building and beltline building, which have also seen new interests in activity.

And this will serve as a great amenity for that district.

With that, I'm open to take comments.

Thank you.

Thank you.

Silvia Sauter.

Thank you, Chair.

And I just want to thank the port for bringing this forward.

This is a space that I think is a unique location.

It does kind of straddle some of our residential areas, but also, of course, a big hospitality and tourism corner of our city.

And I think this will do a good job of pleasing and serving both of those audiences.

And it's a space that was beloved, and so we've had a lot of interest and uh folks and neighbors reaching out.

I'm curious about this, and uh I look forward to seeing this move forward.

And I think it's just one more good uh sign of progress for the port and one more opening on the waterfront.

So thanks for your work to bring this forward.

Great, and thank you for your continued support, uh, Supervisor Souter.

Thank you.

So um 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.

Now is your opportunity.

Madam Chair, we have no speakers.

Seeing no public commons, public comment is now closed.

Uh what is your will, Supervisor Sauter?

I would like to ask that we move this forward to the full board with recommendation, please.

Uh a roll call, please.

And on that map on that motion by member Sauter that we refer this resolution to the full board with a recommendation.

Vice Chair Dorsey Dorsey, aye.

Member Sauter.

Soder, I.

Chair Chan.

Aye.

Chan, I we have three ayes.

The motion passes.

And thank you.

Um Mr.

Clark, please call item number six.

Yes, item number six.

Amending the agreement to discontinue a 50,000 monthly management fee paid by the port to PASHA.

Adopt revised revenue sharing and special event provisions, restructure Pasha's exclusive use of the Pardon of the Port's Pier 80 terminal and authorize the port to enter into amendments or other modifications to the First Amendment to the agreement that do not materially increase the obligations nor liabilities to the city nor the port.

Madam Chair.

Again, we have, thank you.

And we have um San Francisco Port here.

Good morning, supervisors.

Uh my name is Boris Delapine.

I'm the Port of San Francisco's government affairs manager.

Um Pier 80, located at the foot of Cesar Chavez Avenue, is a 60-acre site.

It's uh the port of San Francisco's largest cargo terminal.

Ports like ours, we enter into uh terminal operating agreements to help run the specialized operations required to manage a marine terminal.

Operators are chosen for their Steva Doring know-how, labor relations, logistics systems.

The operators secure the cargo commitments and long-term throughput for these terminals.

Pesha Automotive started from a gas station in uh Fort Mason.

They used to uh store cars deployed to uh World War II servicemen.

They've since grown into uh a global transportation and logistics company spanning auto processing terminals in San Diego, Los Angeles, Hawaii, with international freight services across North America, Europe, and Asia.

They're a true San Francisco small business success story, and uh they even have a a model of their ships in the Smithsonian at the U.S.

History Museum in DC.

In 2016, the port entered into a 15-year terminal agreement uh with two five-year options with Pesha Automotives.

Our original agreement with them included a fixed $50,000 uh per month payment for maintenance security, marketing of the terminal, regardless of the volume that came through the pier.

Um that agreement also included uh shared revenue on vehicles that move through Pier 80.

Automobile volumes grew steadily for the first five years of the agreement, uh peaking at over 125,000 vehicles in fiscal year 2021.

Volumes then dropped sharply in fiscal year 2122, and they haven't recovered.

Uh the main driver is Tesla, the largest uh customer at Pier 80, shifting production from their Fremont plant to new plants in China and Germany to serve those markets directly, uh, plus rising competition, eroded uh Tesla's export share last year.

They did not renew their minimum annual volume guarantee with Pescia.

Uh new business from Toyota and GM imports out of Mexico has helped with the volume throughput, but it hasn't closed the gap.

And so uh today, the resolution before you allows us to amend that terminal agreement with Pesha to restore financial balance and add flexibility.

First, the amended agreement will discontinue and eliminate that $50,000 uh dollar monthly fixed management fee that we pay to Pesia, so that saves the port $600,000 annually.

Next, the new agreement brings a new revenue sharing model to encourage more events like the successful Portola Music Festival that happens at Pier 80.

Uh with this new agreement, we'll be splitting a rent uh event revenue with Pesia 5050.

And then additionally, there's a new model that includes a 40 to 60 split on tariff revenue in excess of uh uh tariff revenue below 4.5 million dollars, and then uh anything above that uh goes to Pesha.

Um finally, we've had recent cruise ship calls at Pier 80, and the new agreement allows a shared use area with Metro services to potentially expand cruise operations down there.

Uh PASHA has been a committed partner throughout this process.

This amendment has been vetted with our Southern Advisory Committee.

It was approved by our port commission last month.

Uh we want to thank Supervisor Walton for sponsoring this resolution.

And then today I'm joined by uh the port's Deputy Director of Maritime Dominic Moreno and our phenomenal summer intern Betsy Duong, who's going to read a message from Pesia during public comment, and then we're available to answer any questions that you have.

Thank you.

Thank you.

Um I explain a little bit more about the share uh TARAS revenue.

The shared revenue model for revenue, sure.

So uh any any revenue that comes uh that is below 4.5 million dollars will be shared 4060 between 40 going to the port, 60 going to Pesha, and anything in excess of 4.5 million dollars will go solely to uh Pesia for future uh vehicle imports or any other break bolt cargo that comes across the pier.

And so now with this new amendment.

What would that happen?

Or just we're continue on to split.

Correct.

So that split is maintained in the new in the in the proposed amendment.

Plus, but we're also expanding sort of the event management and adding crews and taking away the $50,000 a month uh maintenance fee that we've been paying.

So it's favorable to both the port and to Pesha for future business.

Okay, thank you.

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

We'll go to public commons uh right now.

Yes, if we have members of the public who wish to address this committee regarding this item number six, now is your opportunity.

Good morning, supervisors.

My name is Betsy Dong, and I'm the external affairs intern with the Port of San Francisco.

I will be reading a letter on behalf of Sophie Silvestri, the director of commercial and and external affairs for Pesha Automotive Services.

Good afternoon, Supervisors Chan, Dorsey and Sauter.

I am providing these comments to read into record today.

I apologize that I cannot be there in person.

I wanted to take a moment to express our support for the proposed amendment to the terminal management agreement between the Port of San Francisco and Pesha Automotive Services.

A little bit about us.

Pesha's roots in San Francisco run deep.

Our family company was founded at San Francisco's Fort Mason in 1947, and our automotive processing business began here nearly 80 years ago.

Today we remain a third generation family-owned and operated company, and our return to Pier 80 in 2016 represented more than a business opportunity.

It was a return to our origins.

Since then, Pescia and the Port have worked together to transform an underutilized facility into a productive maritime asset supporting economic activity at the port.

The success of that partnership has been built on collaboration, mutual trust, and a shared commitment to maintaining a strong waterfront.

Like many businesses, we have faced change changing market conditions over the years, but one of the reasons Pesha has remained in business for more than eight decades is our ability to adapt, evolve, and find solutions alongside our public sector partners.

This amendment is another example of that long-standing partnership in action.

It reflects thoughtful collaboration between the port and PASHA to ensure PR80 remains viable and productive into the future.

On behalf of PACHA Automotive Services, I respectfully ask for your support of this item as it advances to the full board of supervisors.

We appreciate your consideration and your continued commitment to San Francisco's maritime industry, waterfront jobs, and economic vitality.

Thank you for your time and consideration.

Thank you much, Sophie Silvestri by proxy.

And seeing no other people in line, Madam Chair, that completes our queue.

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

Colleagues, I would like to move this 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, I, Member Sauter.

Solder I, Chair Chan.

I.

Chan, I we have three eyes.

The motion passes.

Mr.

Clerk, please call item number seven.

Item number seven is a resolution authorizing the mayor's office of housing and community development on behalf of the city and county to accept an in-kind gift of consulting services provided by seven Fuse Fellows.

Through the Fuse Fellows Program.

Valued at approximately 2.5 million from Fuse Core to for the term to commence on August 1st, 2026 and to expire October 20th, 2028.

So to strengthen uh coordination strategy and systems across public health, housing, homelessness, and human services to improve service delivery for San Francisco residents.

And the director of Mo C D or Designee to execute a master agreement for the acceptance of the in-kind gift of consulting services.

Madam Chair.

Thank you.

And with that, we have the mayor's Office of Housing and Community Development here.

Oh, hey.

Hello.

Uh good morning, supervisors.

Benjamin McCloskey, Deputy Director for Finance and Administration at MOHCD.

MOHCD is sponsoring this legislation on behalf of the five city departments that are participating.

And this again, this is as the clerk mentioned, this is acceptance of an in-kind gift of executive consulting services to five different city departments from Fuse Corps.

What is FuseCore?

Who is FuseCore?

Fuse is a nonprofit that runs an executive fellowship program that's specifically targeted to partnering with local governments.

They recruit and identify experienced, usually mid-career professionals who are hired and paid by Fuse.

They work as a cohort.

So not only does Fuse cover the payroll benefits, but they also, the participants also get executive coaching and participating in trainings.

So if you takes care of the recruiting and the hiring, then the fellows are embedded in city departments to work on a discrete one to two-year project.

Whatever work product is created by the fellows, it is city property and stays with the city.

So that's an overview of Fuse and how the program works.

Again, there wouldn't be any cost to the city.

Fuse would be employing recruiting, employing, and paying the fellows.

The city, of course, would be providing workspace and other collaboration and resources.

But that's the that's the only commitment of the city.

And the the anything that the fellows create would become the city's property.

So there are seven fellows contemplated spread across five different city departments, DPH, HSH, Mo C D, Planning, and HSA.

Public Health and Planning both have two fellows contemplated.

The slide in front of you briefly describes a one-liner example or explanation rather of what each of the fellows would be working on.

But just to give you a sense of the type of work that the fellows might be doing, I'll just very briefly at MOCD.

Accelerating affordable housing lease up placements.

So within our existing housing portfolio, the leaseup process is managed by each of our nonprofit housing partners.

And each of them kind of work through that process in their own way.

They have their own systems and processes and steps that they follow.

And over time, we've realized that if we can help all of those partners come to more alignment around how they approach the leaseup process, we'd be able to support them better.

We could design systems that would help them move faster through the lease up process, but that requires a lot of convening and collaboration and understanding of how each each entity approaches the lease up process.

So that's that's the what's contemplated for Mo C D.

And each of the each of the fellows would kind of have a similar scope or scale of project to work on over the one to two years.

So the action that's requested of you today is to approve this in-kind gift of consulting services, approximately two and a half million dollars in value.

And then secondly, to authorize the director of Mo C D to execute the agreement with Fuse on behalf of the city.

We're just doing one agreement covering all of the seven fellows and all five departments.

Emily Cohen from HSH, Susie Smith from HSA, Alex Koskin and Lisa Chen from City Planning, Risha Donju from DPH, and we also have two representatives from Fuse Corps here if you have any questions about either the projects that are being proposed or the structure that Fuse works with.

Thank you.

Thank you.

I don't see any name on the roster.

We will go to public comments on this item.

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 will move this 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 Sauter, I, Chair Chan.

Aye.

Chan, I we have three ayes.

The motion passes.

And with that, Mr.

Clark, could you please call items eight and nine together?

Yes, item numbers eight and nine.

Item number eight is a resolution approving and authorizing the First Amendment to the loan agreement between the city acting by and through the mayor's Office of Housing and Community Development and 1234.

Great Highway LLC to finance pre-development costs associated with the development of an approximately 216-unit multifamily residential project, affordable to low-income and formerly homeless seniors, including a commercial shelf for communities serving space on the property located at 1234, 1270 and 1280 great highway.

In uh total amount not to exceed approximately 27.2 million adopting findings that the project and proposed transactions are consistent with the general plan and eight priority policies of the planning code and authorizing the director of Mo CD to make certain modifications to the loan agreement and take certain actions in furtherance of that resolution.

And item number nine approves and authorizes the director of property and the director of the mayor's office of housing and community development to enter into a ground lease for real property owned by the city located at 1939 Market Street with Mercy Housing California 109 LP for a lease term of 75 years and one 24-year option to extend and an annual base rent of 15,000 in order to construct a 187 unit multifamily rental housing development affordable to low-income households and adopting the same findings that the project and the proposed transactions are consistent with the general plan and aid priority policies of the planning code and determining that the less than market rent payable under the ground lease will serve a public purpose by providing affordable housing for low-income households in need in accordance with the administrative code and authorizing the director of property and the director of Mo C D to execute the ground lease and make certain modifications and take certain actions in furtherance of that resolution as defined.

Madam Chair.

Thank you.

And the way that we will proceed is that we will have one project at a time.

We'll go to the presentation BLA report, and then we'll go back to item number nine for presentation and BLA report.

Thank you.

Good morning, supervisors.

My name is Jenny Collins, and I'm a project manager with the mayor's Office of Housing Community Development.

And I'm joined today by project uh sponsored tenderloin neighborhood development corporation.

This is uh regarding item agenda item number eight.

We're here today to request approval of an amendment to the city's loan agreement with 1234 Great Highway LLC that would advance $3,248,500 in anticipated pre-development funding, increasing the loan authorization from $24 million to $27,248,500 for the $1234 Great Highway Affordable Senior Housing Project.

This is not an increase in the city's overall financing commitment, rather it advances a portion of the funding to pay off a higher interest pre-development loan and reduce financing costs during the project's extended hold.

In January 2023, MOCD released INOFA for the acquisition and pre-development of affordable rental housing.

Following a competitive selection process, TNDC and Self-Help for the Elderly were selected to develop the property as affordable housing for seniors.

In December 2023, the board approved a 24 million loan million dollar loan to acquire the property and fund pre-development activities.

The acquisition was successfully completed, allowing the sponsor to refinance its short-term acquisition loan and preserve the site for future affordable housing while the existing roadway motel continues to operate and offset holding costs.

At the time, the sponsor anticipated the project would start construction in late 2026 after securing state financing through the state's multifamily housing program.

Since then, that funding source has been exhausted and no alternative state financing is currently available for the project.

As a result, the project has been delayed while we wait for future state funding opportunities.

For context, the state's 2025 multifamily housing program funding round was oversubscribed by approximately 400 million dollars, leaving many affordable housing projects throughout the state without the funding needed to move forward.

The amendment before you today is intended to preserve the project's financial viability during this delay.

Rather than increasing the project's overall financing need, it advanced it advances a portion of the city's anticipated funding so the project can repay a higher interest 4.62% pre-development loan from the corporation for supportive housing.

Paying off that loan now of uh avoids additional interest costs that would otherwise continue to accrue while the project waits for construction financing.

The amendment also reimburses the sponsor for eligible pre-development and holding costs incurred and pays a portion of the developer fee earned upon project entitlement.

In short, this amendment pays forward funding the city already anticipated providing while reducing carrying costs and preserving the project's readiness to compete for federal state for future state and federal financing.

The amendment also extends the outside construction commencement and occupancy deadlines to reflect the statewide delay in affordable housing financing while preserving the city's existing protections.

If the project cannot move forward with a reason within a reasonable time frame, the city retains the ability to require transfer of the property to another qualified affordable housing developer or back to the city, which we don't really anticipate happening.

Importantly, this amendment does not increase the project's overall estimated development cost or the city's funding commitment to the project.

It simply advances a pre-development funding that was already expected as part of the project's overall financing plan, allowing the project to avoid unnecessary financing costs during this delay in state funding.

The sponsor and I are happy to answer any questions you have.

Thank you for your time and consideration.

Thank you.

Item eight is a proposed resolution to amend an existing loan agreement between the city and 1234 Great Highway LLC to increase the loan amount by approximately $3.2 million for a new total of approximately $27.2 million.

This is for a proposed $199 unit affordable housing project for seniors.

As mentioned by the department, the project is stalled due to lack of available state financing.

And the proposed loan would reimburse the developer for eligible pre-development expenditures and allow the sponsor to repay interim debt, thereby reducing interest costs.

Thank you.

Thank you.

Just one quick question, though.

You know, I think it was two uh election cycle ago there was uh for the state that there was a 10 billion dollars um housing bond.

Um it was, I believe, approved by the voters, and out of which of that 10 billion dollars or it's like five billion dollars is for matching, meaning for local jurisdiction for uh multifamily project um that we could do a get it matching.

You may not be able to answer on top of your head.

I'm just curious.

So please um no worries if this is just out outside and kind of out of the blue.

Um will is there any uh understanding from us from the city that by looking at the passage of that bond that we could deem qualifying anyway?

Because you mentioned that you know the the expectation was over actually 400 million um the worth of project that actually came over subscribe.

I think that's the way you described it, and just kind of carry as was the affordable housing bond that passed by the state by that 10 billion dollars was included as a funding source, it was actually outside of that 10 billion dollars.

I am not sure how to answer, but Sheila.

Yes, my apologies.

I'll take a stab at this.

Hi.

Sheila Nicolapoulos, Director of Policy from OCD.

So I mean, I think with all of these projects, we are um aggressive and considering all of the potential funding sources from various state programs that are possible.

So uh we certainly will look at any options that are out there, and we will continue to do so.

So on the specific question about the state bonds, I would have to go back and look at how that funding is getting distributed regionally and then where it gets.

Usually the funding like that will go into specific programs, so we'd have to look at how it gets allocated.

But yeah, I I thank you.

Because I think that out of which the top 10 billion, it's like there's like a 1 billion dollars for like rural farm housing and then 5 billion, it's really for matching.

And it seems like it's really gearing towards Southern California more than for Northern California at that time.

But if I understand we now have another round of affordable housing bond that's coming in this November.

So I'm just I'm just throwing it out there too.

I totally understand that you know the funding is um scarce, and so we need to figure out how to be competitive, and if there's any way that we can make a local project more competitive, we should as a city should explore.

Thank you.

Thank you.

Thank you.

We're ready for item nine.

Right.

Hello.

Um Matt Graves, uh senior project manager at Mo C D presenting on 1939 Market Street.

Um we are well, the resolution before you is asking for four things.

So the first thing is that uh we would like to enter into a ground lease for the real property owned by the city at 1939 Market Street.

Uh second, uh adopt the findings that the project is consistent with the general plan and the planning code.

Third, uh determine that the below market rent will serve a public purse purpose by providing affordable housing for low-income households, and fourth, authorize the director of property and director of MOCD to exit uh execute the ground lease.

Um 1939 uh is a proposed project uh in support of the LGBTQ plus senior community.

Um it's 185 affordable units, mostly studios, uh which would reflect the demographic that we are targeting.

And then 79 one bedroom units.

Um as for target populations, I just mentioned is for LGBTQ.

Well, it does a preference for LGBTQ uh plus seniors.

Uh and to the end, we have 75 units of uh that are subsidized by SOS, 55 that will be subsidized by VASH, uh, which is provided by the VA, 40 units of LOSP, uh, and then nine plus units will which will come with uh funding for services uh rather than direct subsidy.

And the AMI bans will be between 30 percent to 60 percent, which is about uh an annual income of 32,000 to 65,000 for one person household.

And it will include uh in addition to resident space, which is meant just for residents, it will also have um space uh we've been referring to as uh commercial space, about sixteen hundred square feet that will also provide services uh for people outside of the building per se.

Uh and the uh land was acquired by the city in 2020.

Uh it there's a building on site that had three tenants.

Uh they re-signed their leases and voluntarily waived relocation benefits at the time of acquisition.

About a year later in 2021, uh Mercy Housing was selected as the sponsor under Mo C D's multi-site request for qualifications.

In 2022, uh Mercy applied to planning for entitlements under SP 35, which was then approved by planning.

And in 2023, Mercy started applying for funding.

Uh at first we applied for MHP, but unfortunately were uh denied uh due to scoring of the project.

Uh in the following year in 2024, uh again, Mercy applied for ASIC funding and was again denied due to scoring.

But in 2025, uh the project was uh awarded ASIC uh in March 2025.

I mean it was awarded in December of 2025.

And then uh 2026 uh in May, Mercy applied for the final round of financing for TCAC funding, which if we were awarded that in August uh would be the complete capital stack.

Um here is how uh the total development cost breaks out.

Um happy to go line by line.

Um, but I'll just point out that most CDs or the city's loan is fifty-two point three million dollars of the total 177 million dollars.

Uh and I'm here represented by uh Mercy and Open House, who will be the owner operator for the site.

Uh so happy to answer any questions.

Item nine is a resolution that approves a ground lease uh between MOHCD and an affiliate of Mercy Housing for 1939 Market Street, which is a city-owned property.

The lease has a 75-year term with one twenty-four-year option to extend and base around $15,100 per year.

Um the lease will allow Mercy to demolish the existing site and prepare it for to develop a new affordable housing project.

The gap financing would be subject to board approval based on the estimated size at this time.

Um we will review that when it comes back to the board in the fall.

The lease terminates February 202 February 23rd, 2027, if all the uh development funding sources have not been secured by that time.

We recommend approval of item nine.

Thank you.

And Vice Chair Dorsey.

Uh thank you, Chair Chan.

I think this is um a great project that I am happy to support.

But I did want to want to just ask if it is possible to elaborate a little bit on the HIV services that are going to be for nine of the units.

Um I think one thing that seemed to come up actually in the last couple of years on the budget was that some of the challenges we may f face with long-term HIV survivors, seniors who are living with HIV.

I'm just curious if you could explain a little bit what kind of services those would be and how that will that will work.

Yeah, so we do have a team within MOCD that um focuses specifically on this.

Um while I'm not a member of that team, I can provide a high-level overview of what they provide.

So um it's based on funding amounts, so it can vary from year to year.

Um and like I said, it's not a direct subsidy for the unit, but it pays for the services.

So we'll have on-site services so that residents won't have to travel further to access them.

Uh they'll be provided on-site.

Uh I know that there is um uh almost like a case management.

They'll there's um one person who is kind of directly interacting with residents themselves to help them through whatever services they are trying to seek themselves and to line them up or set them up with uh resources that they are trying to find.

Um I'm happy to provide the specifics of this pro of those programs uh to your office.

Um that's about as high level as I can provide now.

Thanks.

Thank you.

So with that, uh no name on the roster.

I don't have additional questions.

We'll go to public comments on this on these two items.

Yes, if we have any members of the public who wish to address this committee regarding both these items number eight and nine.

That was your opportunity.

Madam Chair, we have no speakers.

Seeing no public comments, public comment is now closed.

Colleagues, I would like to move these two items to full board with recommendation and a roll call, please.

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

Dorsey, I, Member Sauter.

SODR, I Chair Chan.

I.

Chan, I we have three ayes.

The motion passes.

Thank you.

And Mr.

Clark, could you please call items 10, 11, and 12 together?

Yes.

Items 10 through 12.

Item number 10 is a resolution authorizing the Department of Technology and the Office of Contract Administration to enter into the First Amendment to the agreement between the City and County and Zones LLC for Microsoft Enterprise products to increase the contract amount by 60 million for a new total not to exceed amount of 115 million and extend the term by 36 months from September 1st, 2026 for a total term of September 1st, 2023 through August 31st, 2029, with the option of three one-year extensions.

Item number 11 is a resolution approving the second amendment to a contract between the city acting by and through its Office of Contract Administration and Canon USA Inc.

for copy our machine leases, rentals, and purchases to increase the contract amount by 6.3 million for a total not to exceed amount of 15.3 million with no changes through the contract term of six years, eight months, and 15 days from April 1st, 2024 through December 15, 2030.

And item number 12 is a resolution approving an amendment between the city also by and through the Office of Contract Administration and Segillo Supply Supply Inc.

for plumbing supplies, extending the term by two years from November 30th, 2029 for a neutral term of December 1st, 2024 through November 30th, 2031, and increasing the contract amount by approximately 12.3 million for a new total not to exceed amount of approximately 15.3 million.

Whole three resolutions also authorizes the Office of Contract Administration to make necessary non-material changes to the respective amendments prior to its final execution by all parties that did not materially increase the obligations nor liabilities to the city and are necessary or advisable to effectuate the purposes of the respective agreements.

Madam Chair.

Thank you.

And we will go to one item presentation and then we'll go to budget and legislative ends the report and then we'll go to the next item.

The floor is yours.

Yeah.

Thank you, Chair Chen.

Good morning, supervisors and colleagues.

My name is Howe CS, Strategic Sourcing Manager with the Department of Technology.

I am here to request your approval of the first amendment to the Citywide Agreement with Zones LLC for Microsoft Sobware and Cloud Products.

We are requesting this extension because the current contract expired on August 31st this year.

No change in scope.

This is only a continue continuation, not an expansion of the agreement.

All city departments except MTA use this agreement to procure more than 30 different Microsoft products from everyday productivity tools like Outlook, Excel, PowerPoint, tool cloud database, cybersecurity tools that support critical operation.

So I have listed a few examples here.

Cost control is central to this request.

DT estimates the city will avoid about 10.5 million dollars in cost over the next three years by staying on this agreement.

That totals come from three areas.

First, six million from staying on Microsoft's large government pricing instead of the tail pricing.

Second, 3.5 million from additional discounts that we successfully negotiated with Microsoft Directly.

And third, 1 million from eliminating about 1,500 inactive licenses across the city.

And beyond the dollar savings, this centralized agreement also avoids having more than 20 departments to run their own Microsoft procurements, which would be slower and more costly.

And we do not stop managing costs once this country is signed.

DT launch an annual launch annual through up through process and sends monthly reports on in active licenses.

So department can close out accounts they no longer need.

So this concludes my presentation.

Thank you.

Item 10 is a resolution that approves the first amendment to DT's contract with zones, LLC, a Microsoft reseller.

You can see the cost of this contract on page 37 of the report.

It is about 17.6 million dollars per year, which is a slight decrease from the $18.3 million the city will spend this year due to discounts that were negotiated by the Department of Technology and management of unused licenses.

We recommend approval of item 10.

Just want to thank you, Mr.

Hoshi.

Like thank you so much for your work.

You know, I think you've been at it for quite some time to really get this going to make sure we consolidate some of these contracts and really create I do believe every million dollars count and you truly have shown what kind of saving you have accomplish with what you have been doing.

So I'm just really, really grateful.

Vice Chair Dorsey.

Thank you, Chair Chan.

I am uh appreciative for your your work on this.

And I don't know if this is a better question for BLA or for you, but I'm uh I'm wondering.

This seems to be a good example of uh enterprise purchasing that's citywide for technology.

And I know in the budget process sometimes it will come up that uh the one that comes to it to mind is our Lexus Nexus accounts for different law offices.

Um I think we've speculated on whether we the city should get one account.

Are there opportunities for consolidating these kinds of contracts elsewhere?

Is this a model for that we should be really looking at expanding?

Maybe this is a qu a better question for BLA or for or actually for the Department of Technology is this is something.

Sure.

Yeah, I can try to answer first and then probably BLA has at this no answer.

Yeah, so TT already identify about 25 opportunities, and we also already have enterprise agreements citywide enterprise agreement with this 25.

And then we also identify at this no opportunity together with our lovely colleagues from OCA.

Yes.

So we have Claire Tierra and we are trying our best to save the city manly.

Uh at the same time we need to balance the Lestos Le Climate because entering it negotiating this enterprise agreement has a lot of uh special condition, including the partnership from the vendor, including the support from the individual department and department sometimes want more control over the lower cost.

Yes.

So but we are trying our best.

Thank you.

Thank you.

Thank you.

Thank you so much for your work.

Um so we can go to the next item.

Thank you.

Yes, good morning, Chair Chan, Vice Chair Dorsey, Supervisor Sauter.

I'm Angela Yip here with the Office of the City Administrator representing the Office of Contract Administration today.

And before I begin, I wanted to uh give a special thanks to Chair Chan as well as Francis on your sh on your staff for all of your incredible hard work as chair of this committee.

Um so I'm here today to request your approval to execute the second amendment to the city's term contract with Canon USA incorporated for the lease, rental, and purchase of copier machines, increasing the not-to-exceed amount to $15.3 million dollars.

Um OCA maintains three-term contracts through which all city departments can lease, rent, or buy copier machines to support the provision of services.

And these centrally procured contracts add value to the city and save taxpayer money both by reducing the time and resources it takes for departments to buy copier machines and also by securing advantageous pricing.

And the pricing structure of this particular term contract provides departments with discounts up to 60% off the listed price.

OCA first entered into this contract with Canon in April 2024.

The first amendment executed in November 2025 extended the term contract by the term of the contract by five years, but did not increase the not to exceed amount.

So the amendment before you would increase the not-to-exceed amount by six point three million dollars to a total of fifteen point three million dollars, which is what we estimate is needed to cover existing lease commitments and future needs citywide through the end of the contract term.

Um before you are some of the biggest users of this depart uh of this term contract, including the public library, city administrators office, human services agency, police, and public works.

And we respectfully request your approval of this amendment.

Item 11 is an amendment to uh an existing agreement between OCA and Canon to increase the not to exceed amount by approximately 6.3 million for a new total of 15.3 million with no change to the existing uh term of the contract, which ends in December 2030.

Uh the contract is primarily used for leases of photo cop photo copy copyers by departments and OCA selected Canon and two other proposers through a solicitation conducted by another government entity.

Exhibit three on page 44 of our report shows the basis of the not to exceed amount, which is based on historical spending, anticipated future leases, and a 20% contingency.

OCA anticipates that annual spending will increase from approximately $1.1 million to up to $1.9 million based on the anticipated future leases.

We recommend approval of item 11.

Thank you.

Thank you.

And I am also here today to request your approval of a contract amendment to the city's term contract with Sigalow Supply Incorporated for plumbing supplies.

The Office of Contract Administration maintains several term contracts for various plumbing supplies needed by city departments.

And as with the Canon contract, these plumbing supply contracts eliminate the need for individual departments to conduct their own solicitations to purchase uh necessary plumbing supplies and secure as discounted pricing.

The amendment before you would exercise an option to extend the term by two years and increase the not-to-exceed amount by $12.3 million for a total not-to-exceed amount of $15.5 million.

OCA awarded this contract to Sigilos Supply Incorporated in July 2024 following a competitive solicitation process.

Siglow was awarded based on the discounts they could provide off of the listed price.

And since then, this contract has been used heavily by city departments with the biggest users being the PUC, DPW, and the airport.

We respectfully request your approval and happy to answer any questions.

Thank you.

We understand it may seemingly to be mundane and but is we also know is absolutely necessary.

But for item 12.

Item 12 is a resolution that amends the city's contract with Cigillo Supply Incorporated, which provides plumbing supplies to city departments.

It's a citywide term contract.

The amendment extent expands the agreement from 3.2 to $15.5 million and increases the contract term by two years from November 2029 to November 31.

The expansion of the not-to-exceed amount is based on historical spending to date, which has been about $2.9 million a year.

We reviewed the spending data.

We believe it's reasonable and we recommend approval of item 12.

Thank you.

I don't have additional question.

I don't see any name on the roster.

We will go to public commons for all three items.

Yes, if we have any members of the public who wish to address this committee regarding these item numbers 10, 11, and 12.

That was your opportunity.

Madam Chair, we have no speakers.

Seeing no public comments, public comment is now closed.

Colleagues, I would like to send these three items 10, 11, and 12 to full board with recommendation and a roll call, please.

And on a motion or refer all three resolutions to the full board with recommendation.

And Dorsey, I, Member Soder.

Soder.

I chair Chan.

Aye.

Chan.

I we have three eyes.

The motion passes.

Thank you.

And um I just realized.

Oh, interesting.

May I my apologies.

I just see that if I could do this and let's call all uh items out of order that I would like to call item 14 first, and then we will probably call items 13 15 and 16 together later.

Let's go to item 14.

Yes, item number 14 is an ordinance appropriating 1.9 million of boarding of prisoners revenue and approximately 14 million to overtime salaries and deappropriating approximately 12.1 million from retirement fringe benefits vehicles and various capital projects and work orders in the sheriff's office to support the department's projected increases in overtime as required per the administrative code in fiscal year 2025 to 2026.

Madam Chair.

Thank you.

And today we have the sheriff's office here.

Good uh afternoon.

Almost good afternoon, uh Chair Can Chair Dorsey, Supervisor Solder.

My name is Patrick Leung.

I'm the Chief Financial Officer for the Sheriff's Office.

Uh today we are requesting the committee's recommendation for an ordinance to appropriate additional Europrisoner revenue and to shift existing budget dollars to cover uh the overages and overtime.

In this table before you it depicts our general fund operating and the proposed ordinance would help shift approximately 9.6 million dollars in salary and fringe, um 740,000 in vehicles into overtime.

The remaining 3.5 million overage would be covered through the appropriation of approximately 1.9 million in Bureau of Prisoner Revenue and also the liquidation of approximately 1.6 million in various capital projects.

Additionally, we are also requesting to move approximately 287,000 in fringe benefits within our work order fund uh to cover overtime services within fund 10,060.

Within fiscal year 26, um the majority of our overtime is driven by required staffing minimums and also operational needs.

In this slide, we've highlighted the major overtime contributors.

The largest outlay is the staffing at our jails.

Uh two years ago when we opened the annex, we we did request over 100 positions in the last two budget cycles.

Um however they did not make it into the budget, and presently the annex is staffed entirely on overtime.

We've also seen increase in overtime to comply with uh court decisions.

And in total, when we compare our overtime from fiscal year 26 to our overtime two years ago, overtime at our jails has increased by approximately 5.3 million.

Other large contributors to our overtime has been staffing at General Hospital to cover the med and psych ward and offward watch, uh increased court proceedings, and also increased uh emergency service unit deployments.

Within fiscal year 26, we've hired 118 deputies.

We do anticipate overtime we'll be able to reduce once the majority of these hires have completed the required training at the academy and also have completed jail training.

In this slide, we show the sworn staffing over the last eight years.

We did reach a low point in fiscal year 23-24.

Um, and with our accelerated hiring program, we've reduced the staffing gap over the last two years by 92 deputies.

In this next slide, we show uh our sworn workforce composition.

While we've been able to hire a great number of deputies in the last two years, this table shows 27% of our deputies in the department at present have less than five years of service.

There are two service bans, the 10 to 15 years and also 20 to 25 years of service.

That brings us cause for concern.

There are significantly fewer deputies within these service bans than there should be.

If we compare the number of deputies in the 10 to 20 to 15 years, there's 93 deputies that are supposed to replace the deputies that are in the 15 to 20 year ban, which has 136.

With each retirement, we face the loss of many years of institutional knowledge, and passing down this knowledge and now having a proper succession plan is critical to business continuity.

The Sheriff's Office has implemented two strategies to help aid these efforts.

One is the reinstatement of our senior deputy uh sheriff classification to act as lead workers and also to provide mentorship for new deputies.

And then the other program is our retirement retention incentive program, or RIP, where we rehire deputies who have retired on the CalPERS retirement system but wish to continue their service to the city.

Year to date, we've had 22 members participate in the RIP program, and we can see this total reflected within the number of sworn that have more than 30 years of service.

In this next slide, we can see the comparison of January 2024 to where it was presently.

We have more than a hundred more deputies in the less than five years, and the number of deputies with more than 30 years have more than doubled in the last year and a half.

This slide shows the hiring and separation trends.

We can see the five-year period of decline from fiscal year 20 to 24, and we've only reversed that trend in the last two fiscal years.

One highlight that I want to show within our average jail population count.

The jail population is now back to pre-pandemic levels.

However, at present, over 70% of our inmates are now housed over at our San Bruno jail facilities versus approximately 50% back in 2019.

With the increased number of uh with the increased number population at San Bruno, that has caused us to have uh increased staffing resources uh for transportation.

For fiscal year 26, the Sheriff's Office has implemented several strategies to help reduce costs.

Uh one of which is our RIP program.

With the 22 members currently participating in RIP, we've helped save $1.2 million in fiscal year 2026.

We've also implemented reductions and suspension of certain deployment activities.

The drug multi-agency coordination center.

We've also reduced the homeless uh the eight stock wagons, the illegal vending operations with DPW.

We've also suspended the midnight watch to our information technology service support service unit.

We've reduced our Prop F uh hours.

We've also suspended deputy entry practice and testing during the fourth last quarter for fiscal year 26.

The last couple of items that helped to reduce costs is the temporary assignments to our custody and field operation divisions.

We've detailed our newly hired deputy recruits who are awaiting the start of the academy into our cut into administrative functions within our custody and field operations.

We've also delayed the jail training officer program for deputies into fiscal year 27, and we detailed possibly seven background investigators into custody.

For fiscal year 27, we will need to continue many of these efforts.

And additionally, we're currently working on staffing changes with the goal of keeping within budget for fiscal year 27.

The last slide that I want to present is a staffing comparison.

It's broken out between our sworn professional staff and also our cadets.

We've made some improvements in our sworn staffing.

However, our professional staff has suffered with more vacancies than we had over the last couple of years.

With fiscal year 27, we hope to address some of the vacancies and to and this will help us allow to reduce some of the overtime, particularly in our uh ID fingerprint unit.

If there are any questions from the committee members, I'd be more than happy to answer them.

Item 14 is an ordinance that changes appropriations in the sheriff's uh office to accomplish, I think, two goals.

One is to um address a projected general fund deficit of $7.5 million, which we detail on page 57 of our report, and the other is to increase the overtime budget uh to $50 million, which we detail on page 58 of our report.

Um the overtime budget was actually exceeded in February 2026.

Um the sheriff should have come before then to address his overtime budget.

We're now in a new fiscal year.

So this is severely late in coming.

Um this nevertheless is an improvement in the sheriff's financial condition in mid-year.

This uh the controller's office issued a report showing that the sheriff was going to overspend its budget by 10 million dollars and require a bailout from the General Reserve.

Um this solution allows the deficit, which was reduced to 7.5 million dollars to be managed by essentially cannibalizing the sheriff's existing budget for other purposes.

In addition to that, the Sheriff's Office reduced overtime starting in March 2026 from about $2 million of pay period to about $1.6 million of pay period or about 25% by reducing overtime department wide and all its major functions, which we detail in the report.

We do have just two policy considerations.

One is the you know, the the budget that you voted on yesterday assumes, you know, for this fiscal year a further reduction in the sheriff's overtime from one from 1.6 million dollars to 1.3 million dollars of pay period.

Uh I I think the sheriff and the mayor's office should closely monitor actual overtime expenses in the first quarter of the year.

The controller will issue an overtime report in October following the end of the first quarter of the year, and I do believe this committee should hold a hearing on the department's overtime spending to adjust appropriations as necessary if it looks like anyone's going to blow through their budget, and then at that time have a policy discussion about why the overtime budgets are not necessary.

Um because now the money's been spent, the people have been paid, this is a complete fate accompli.

There's not uh an opportunity to have a policy discussion about the level of overtime spending in the sheriff's office.

Um and then point number two is that this is the second time uh that the sheriff overtime solution has included using funds that were appropriated for jail maintenance.

Uh they did they did about I think six or seven million dollars in 2024.

We're now taking 1.5 million dollars here in 2026.

I don't think that that's a sustainable model for managing overtime.

The funds were deemed urgent and necessary and in our but in our reviews of the sheriff's budget in prior years and may increase litigation risk.

Uh so we urge you to consider those points and considering this appropriation.

Thank you.

And Vice Chair Dorsey.

Thank you, Chair Chan.

So during the last year's budget cycle, the mayor and the board um approved funding for overtime.

Um there was, I recall, a uh also a general fund supplemental last spring, and my understanding is that uh the Sheriff's Department has hired deputies and cadets since then.

Can you walk us through what drove um overtime increases this year?

Sure.

We've reopened the Annex in November of 2023.

And for at least the Annex facility, that's been dri uh that's been staffed just solely on overtime.

Um we first opened the Annex, we had two dorms open.

We've had with the increase in the jail population, we've reopened at 1.5 dorms throughout the year.

Um I don't know off the top of my head how many dorms are actively open, but with each dorm that we open, that helps uh that requires additional staffing.

The other factors that have also helped um drive up some of our overtime needs have been increased court proceedings, both at the civil courthouse, juvenile courthouse.

Um we've also had increased staffing needs to comply with some of the court decisions.

There was a um court decision that required us to provide uh uh unfiltered access to sunlight for um individuals who have been in our custody for um at least a year.

And so um some of those factors do drive up our um personnel costs.

The number of deputies that we've hired um has far exceeded the original goal of 75.

And with that also requires um additional resources in training in um background and personnel, just some of the administrative functions that allow us to bring on new deputies and um to to have them properly chained before uh uh before they can become full-fledged deputies.

Okay.

Can you help me understand how um the department manages deployments to jails and to other departmental assignments?

There's several factors that are considered.

Um of which is the collective bargaining agreement that um identifies minimum staffing requirements.

There's other factors such as classification of the types of individuals within our custody.

Um there's also staffing adjustments that are made for when somebody takes time off or when there's um holidays or major events.

And within the deploym the overall deployment, that's there's each division has responsibility for their own deployments, but there are um movements within each division.

There could be uh detailed assignments or there could be temporary um uh overtime assignments to fill in um uh shifts where we're not meeting the the minimum requirements.

Um I know that the civil grand jury report released last month highlighted that um the department exceeds its overtime budgets.

Um that's as we heard it's coming at the expense of capital projects and maintenance.

I I'm just trying to figure out is there um how do we fix this?

I mean, is the is this something that we have to just reassess that we're not funding the department adequately?

I mean the I I think the current propo the proposed ordinance isn't the optimal solution.

We would much have preferred to be able to use those uh budgetary dollars to help on our capital improvements.

Um it was uh a sacrifice that we had to make to be able to keep within the budget.

I think in terms of um this year specifically, we hired more than we're able to hire more deputies than what we had originally forecasts.

I think um kind of that saying of um short-term gain or short short-term pains, long-term gains.

We do have to address the significant staffing shortage that we have.

And I think at least for the um future fiscal years, the number of deputies that we hire will pay much greater dividends than what we've than the sacrifices that we've had to make.

Um there are challenges within the budget um to keep within the budget, more so because there aren't a lot of tolerances to allow for contingencies to happen.

Um but our goal is at least within the sheriff's office, our goal is to find um adjustments that we are able to make uh within the staffing that we have to try to keep within the budget.

Um our goal this year is to make the capital improvements that have been approved within the budget.

Um I think at least with the most recent hires, there's sixty-two deputies right now that are in different phases within the academy.

And the hope is that once they've completed the necessary training at the academy, that they've completed the jail trading officer program and start counting toward minimums that we'd have additional staffing resources that we can use utilize within our field operations and our custody division to where we're able to meet within the budget.

Um the better we do at addressing the short staffing shortfall.

We should be intuitively expecting overtime to come down as well.

Is staff, I mean, my understanding is understaffing is the main driver of I think that was one of the things that was odd about this is that we're making progress on staffing, but under not on overtime.

But in the future, you think we'll as we close that gap.

Do you think we'll make we'll see more improvements on reducing overtime?

I think we'll be able to reduce some of the overtime.

Um there is still a large staffing gap.

Uh one of the slides that we've shown two years ago, our staffing gap, at least comparing the authorized positions to actuals, we're 230 below, and right now just pull up the slide.

We're still 138 below where we should be.

Um within our department, there's certainly sacrifices that we've made and it's for the foreseeable feature.

I think those adjustments within the staffing uh strategies that we've implemented to help reduce costs will continue.

Um, but it's certainly going to be an ongoing challenge.

Um and we're making adjustments as best we can.

The um the new deputies that we've hired, once they do complete training, it should um provide additional staffing resources to where um we won't have as high of an overtime, but I think for the foreseeable future, it's not going to eliminate all the overtime that we're currently expending.

Okay.

Great.

Thank you.

Um I just kind of want to understand that what happened when you knew that by October, I believe, 2025, you knew that you're gonna be spending more than you should with over time.

What happened during between the time period of October 2025 and to May?

So within our staffing plan, or I I'll talk speak to my unit in general, but it it it does cover over to other units within our department.

Um we've had significant staffing shortages on the sworn side.

Sure.

We've also experienced I guess I should ask specifically that you knew that from October, we knew uh as a city that from October 2025 and on out, you were already over time, like you're overspending on your overtime budget.

And at which point did you actually how did what steps did you take to problem solve it?

Because right now, this is actually significant issue that the budget and legislative analyst has point out.

Um you did not stop spending.

You continue on to spend.

Um explain that.

I mean, I think technically then the controller would have stepped in to really stop you contr spending anything at all.

Um you were supposed to come to this body for a supplemental, however, you're supposed to work out with the mayor's office.

Um, and I understand there were conversation.

I need to understand exactly how those conversations took place and what happened and what did you actually do, and that ended you making the decision that you're coming here in on July 15 well past your budget period for fiscal 25-26.

Thank you for that question.

Originally we had anticipated requesting a um overtime supplemental.

We had some conversations with the mayor's office.

Um, however, that wasn't going to be a feasible solution.

Um at that point within our department.

It wasn't a feeling feasible solution because you we are not going to tap into general reserve to cover.

Yeah.

And how much dot how much were we talking about then?

At that point, um the projection varied.

I believe at that point in time, the high uh it was around seven million dollars.

Uh-huh.

Um we had some internal discussions within our department to try to find um changes that we can make internally to try to drive down the costs.

Um we had conversations with the controller's office and uh with the mayor's office and um where we might be able to find savings.

Um I think and what did you do?

What change did you make?

Uh we outlined many of the changes within one of the slides.

Uh we had um reductions in many of the deployments.

ESU prop our we reduced the number of Prop F retiree hours.

Um we deployed um some of the background investigators.

We've um we've delayed the jail training officer uh program for um some of the cadets that had passed the academy and we sh deferred that into fiscal year 27.

Some of those changes did allow us or those changes did reduce the cost that we have and it allow us to keep within the budget.

Um the significant delay was trying to um see whether those changes were successful.

We did have to go back and make go through several iterations before we came up with a um solution where we felt confident that we would keep within the budget.

Um I think we would have definitely be having a different conversation if we had submitted a proposal to where we're still two, three million dollars over.

Um with the changes that we made on reassigning or not reassigning, detailing the deputies that are now in the May Academy class.

We may 2027.

No.

They started the academy May 8th.

And there was a period of approximately a month, a month and a half where in the class is about 40, I believe it was 42.

Those deputy recruits were detailed to custody operations, to field operations, to our IT unit.

It wasn't until about May before we could see the that the pay period information matched our current or projections of being able to keep within the budget.

Interesting.

Okay.

Who is uh right now like point of contact for at the sheriff's office for the Capital Planning Committee?

Um that falls within our uh planning and projects division.

It's right now it's the commanding officer is Chief Deputy Um Lizette Adams, uh, but our facilities manager um uh John Gadino is also heavily involved.

Uh there's also um a captain that helps oversee some of the work.

I want to encourage them along with you and we're and as well as sheriff uh my motto to actually meet with City Administrator Chu, uh Carmen Chu, as well as as she's the chair of the Capital Planning Committee as well as with Mr.

Brian Strong and to truly have a a long-term vision and a conversation that really about the need for the facilities.

And you have roughly about 400 million dollars of certificate of participation that have not been spent, and that you should have a discussion about creating a concrete capital planning improvement plan that allows you to tap into the certificate and participation and no longer to hold up some of your maintenance funds from your budget in such use.

If you can actually tap into some of these capital improvements funds into and shift them into operation use, then that means you should really rethink your strategy and approach about your funding sources and how you actually spending them.

It's my recommendation.

So that's one.

And second, that I know that the controller has done a quarterly report, you know, for uh overtime spending.

Um we are aware.

Uh I I have to say I did defer to Director Kittler to work with you on your overtime spending.

That I did not intervene and and uh just kind of allow you to work it out and also with the understanding that when you came before us during budget, and I'm just articulating my role in this too, that I understand that when you came before us during budget during in June is with the understanding that you will come back for this dollar amount that you're coming.

But we also understand it's it's it's basically you're already you're already catching up with your budget for the fiscal year 27-28.

So I'm gonna strongly encourage you in the next six months to really work out some of your capital planning because I do agree with the budget and legislative analysts that if you continue to with this method, at some point you're putting the facility at a much significant risk than the city should bear in terms of liability.

So that's my strong recommendation for you at the moment.

Um I do also want to remind this body, along with our colleagues at um GAO at the government audit on oversights.

There is an audit that is ongoing.

I want to strongly encourage you to work closely with the budget and legislative analysts.

I think that the police department has actually uh done very similar, especially around overtime spending with the budget and legislative analyst, and as a result, it actually again giving them policy recommendation how they can actually do better in terms in terms of the operation.

Um there are tweaks, they're tweaks about you know, how do you track overtime spending, how do you track all holiday all holiday and sick um day you know requests and all those things really help and and tweak them and help them continue to track their overtime spending.

You know, request, and all those things really help and tweak them and help them continue to track their overtime spending.

I saw that your name was on the roster.

With that, thank you for your work.

It is difficult and challenging.

Um, but I really want to continue to encourage you to work closely with the controller with the budget and legislative analysts on the audit and absolutely should reach out to the Capital Planning Committee for uh to figure out that that certificate of participation funding that you have to figure out how how do you then use utilize some of them to manage your existing justice.

Just on the certificate of participation, we have uh been having discussions with um Brian Strong with the Capitol uh committee on um trying to uh modify what we could use the funding on, but those conversations have so far been ongoing.

Great.

And last but not least, this is a policy and not a budgetary recommendation.

You know, given what the governor has done with San Quintin and to the rehab of San Quentin and then with a new vision and the investment of 100 million dollars of how they re-envision San Quentin.

It is my recommendation for the sheriff's office to actually also re-evaluate its vision when it comes to county jail uh management and facility management.

Should you come to a space where you truly are going to tap the capital um you know funds for the certificate of participation, it is moment.

I think that you should take the opportunity to have both vision about what criminal justice reform for rehab facility actually should look like.

And I think that Governor Newsom's vision for that for what it's not always I concur with a lot of things that he does, but I think that one I do concur with the initiative that he has taken upon.

So thank you for your time, and we will go to public comment on this item.

Yes, we are opening public comment on this item number 14.

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

Madam Chair, we have no speakers.

See no public comments.

Public comment is now closed.

Wow, it pains me, Collees, but I will move this item to full board with recommendation.

A roll call, please.

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

Dorsey, aye, Member Sauter.

Sauder, aye, Chair Chan.

Aye.

Chan, I.

We have three ayes.

The motion passes.

And with that, um, Mr.

Clerk, please call items 13, 15, and 16 together.

Yes, item number 13 is a resolution approving and authorizing the director of property on behalf of the Department of Homelessness and Supportive Housing to enter into a lease of real property consisting of approximately 31.2,000 square feet with buildings totaling approximately 23,000 square feet, located at 125 Bay Shore Boulevard with YWL Orion Properties LLC as landlord for an initial term of 10 years with two five-year options to extend thereafter.

Anticipated to commence on July 1st, 2026 for use by the Department of Homelessness and Supportive Housing for emergency shelter purposes at initial annual base rent of approximately 655,000 with 3 percent annual increases, authorizing the director of property on behalf of the uh Department of Homelessness and Supportive Housing to execute the lease, affirming the planning department's determination under CEQA, adopting the planning departments of findings of consistency with the general plan and the eight priority policies of the planning code and authorizing the director of property to enter into amendments or modifications to the lease that do not materially increase the obligations nor liabilities to the city and are necessary to effectuate the purposes of the lease or this resolution.

And item numbers 15 and 16 are hearings to consider the release of reserved funds to the Department of Homelessness and Support of Housing placed on the budget and finance committee reserve by the annual appropriation ordinance for fiscal years 2025 to 2026 and 2026 to 2027.

Item number 15 was in the amount of approximately 2.4 million to fund ongoing community ambassador services at two shelter programs, five key schools and programs at the embark and era navigation center and 685 LS semiconducate shelter.

And item number 16 is in the amount of approximately 4.4 million to fund and expand ongoing community ambassador services in the South of Market and Tenderloin neighborhoods.

Madam Chair.

Thank you.

And the way that we will proceed is we will go to item 13 presentation, go to BLA report, and then we will go back to combining both 15 and 16 together, then we will go to the BLA report.

Thank you.

Good afternoon, Chair Chan and committee members.

Emily Cohen with the Department of Homelessness and Supportive Housing.

The resolution before you today would allow the Department of Homelessness and Supportive Housing to continue through the extension or through a new lease would allow us to continue operations of the Bay Shore Navigation Center.

This is a long-term shelter in our community.

It has about a hundred it has 128 beds available nightly for adults experiencing homelessness, very high occupancy rate at 97%.

Last year we served approximately 570 unique individuals at this site.

It is operated by five keys schools and program, and they have had very strong both program and fiscal compliance and monitoring.

So we on the operational side, we have an agreement with five keys to continue operating the site and look forward to long-term partnerships so we can keep this project going.

I'll turn it over to Sally from Real Estate.

Thank you, Emily, and thank you, supervisors.

I'll just quickly go over the terms of the lease.

So as Emily mentioned, this lease is going to allow the city to continue to provide these needed services at this location and also allow the city to secure it for a longer term at favorable rental rates.

The premises is approximately 31,200 square feet, which is comprised of a uh warehouse of a little of almost 13,000 square feet and then 10,000 square feet of ancillary office space.

It's a 10-year term at $21 per square foot for the initial base year rent, and then we'll uh escalate at 3% annually thereafter.

Uh the city is responsible for utilities, janitorial, um, et cetera, but the landlord would be responsible for property taxes, insurance, major repairs.

Uh the lease also comes with two options uh to extend for uh five years each, and happy to answer any questions you might have.

Thank you.

Item 13 is a resolution that approves a new lease between the city and WYL Orion properties, which is the owner of 125 Bay Shore Boulevard.

Uh the lease includes the warehouse on the site and the surrounding uh area around the warehouse.

We summarize the lease terms on page 52 of our report.

And on 50 page 54, you can see the over the initial 10-year term total rent that this um HSH will pay is about 7.5 million dollars based on an um an initial rent of six six hundred and fifty-five thousand dollars per year.

The rent would reset to market rate um if the lease is extended.

These costs are funded by the general fund.

Uh we reviewed the program monitoring report uh for the uh navigation center, which is operated by five keys and did not see any major issues, and so we recommend approval of this new lease, item 13.

Thank you.

You want to go ahead to 15 and 16?

Thank you again, Chair Chan Supervisors Emily Cohen with the Department of Homelessness and Support of Housing.

The next two items are requests from the department to release release reserve funds that will support community ambassador service, public-spaced activation, and our good neighbor work that surrounds our interim and permanent housing sites.

Together, these requests help ensure that our programs not only serve people experiencing homelessness, but also operate as good neighbors in the communities in which they are located.

The first request, I guess maybe it's actually the second request in the item 16 is for $4.4 million from reserve to sustain and expand community ambassador services and site activation at Turk and Hyde.

So this particular release of funds would support ongoing ambassador services in SOMA, what West Soma specifically, Tenderloin, 6th Street, right near the Hope House site, and the Turk and Hyde Park activation or corner activation.

This funding really complements the work that we've been doing to enhance our good neighbor practices and ensure that our programs can be assets to the communities in which they are housed.

Again, just a little more about the release of reserves and the areas in which they will be located.

The second request is for $2.4 million to continue ongoing ambassador services at two particular sites that uh currently enjoy this level of support.

And this is at the Embarcadero Navigation Center.

These funds would allow us to continue the five keys ambassadors at that site until the program winds down.

And the second is for the five keys ambassador services at 685 Ellis Street, which is a shelter that will convert to a permanent housing site in the coming years.

But we have found this to be an incredible tool to help our programs integrate better into community and help support our hosting neighborhoods and uh really provide more rapid response to situations on the street uh in and around our programs.

And I will stop there and happy to take any questions.

Items 15 and 16 are proposed hearings to release a total of approximately six six point nine million in reserved funds from HSH's fiscal year 25-26 general fund budget.

Item 15 would release approximately 2.4 million.

This would continue existing service levels for community ambassador services that serve two shelter sites, including the Embarcadero Navigation Center and 685 Ellis Street.

And item 16 would release the balance of approximately 4.4 million.

Um the bulk of this, about 3.3 million, um, reflects an enhancement in community ambassador services.

They would provide kind of like a a team of ambassadors to patrol the Soma West neighborhood.

Um then the remaining amounts would continue existing service levels for community ambassador services at the Hope House and Mid Market, and also continue site activation at a parking lot located at Hyde and Turk Street just for one year.

Um we are recommending approval of the release of reserve funds, but um I just wanted to note we have a couple other recommendations.

Um the funding for the existing community ambassador services flows through grant agreements with the um service providers and operators of the shelter and permanent supportive housing sites who then subcontract with providers for the ambassador services, and in some cases they subcontract at least one case, subcontract those services out again.

Um so in our review of those agreements, uh we have a few recommendations to HSH.

Um the first is to add service and outcome objectives for the ambassador services consistent with the objectives for the citywide community ambassador services.

Um the existing agreements don't have objectives for the ambassador services.

Um the second is that we recommend that where possible HSH directly contract with the providers of ambassador services to ensure greater um insight and control of those services.

Um finally we're recommending that um HSH uh really coordinate with DEM on particularly on the neighborhood-based community ambassador services to ensure that that's appropriately coordinated with the other citywide neighborhood-based community ambassador services.

Thank you.

Vice Chair Dorsey.

Thank you, Chair Chan.

Um I want to speak briefly in support of releasing these reserve funds.

Um District 6 uh that I represent has long carried an outsized chair of the city's shelters, supportive housing and behavioral health services.

I think when we ask neighborhoods to shoulder these kinds of responsibilities, we also have an obligation to invest the resources necessary to mitigate predictable harms and help these neighborhoods thrive.

Um I have heard directly from residents who live around Hope House and throughout SOMA, including in my own neighborhood, about the difference these ambassadors have made.

They provide a rapid response to quality of life issues that residents experience every day, including things like public drug use, uh, loitering, behavioral health uh crises, trash, and other concerns.

Um they respond often long before a police officer is available.

Um resident described how before the ambassador program walking home onto Hama Street was a daily challenge.

Um today, when an issue arises, ambassadors are often on scene within minutes.

That really is a meaningful improvement to the people who live there.

Um this isn't about replacing law enforcement, but it is to making sure that we have the right response for the right situation while helping keep our neighborhoods safe and livable.

The feedback from the community I represent, uh at least to the ambassador services has been overwhelmingly positive.

Including from neighborhood organizations that have urged us to continue this funding because they've seen firsthand how effective these ambassadors have been.

For me, this is about insisting that our city keep faith with disproportionately burdened neighborhoods.

Uh, not just in District 6, but I see my colleague uh Supervisor Mockmood here in his district as well.

If we are going to continue asking neighborhoods, any neighborhood in San Francisco to host critical services, we should commit to invest in the people and the programs to ensure that these facilities are always good neighbors.

I think these ambassador programs have demonstrated their value, and I will be supporting uh the release of these funds.

Thank you.

Um I think the question again is it seems to me though maybe more direct questions like if you want to answer about uh but according to the budget and legislative analyst report is asking will will there just be a direct contract?

Um is there consideration?

What is the response?

Thank you, Chair Chan.

Yes, we agree with most of the BLA's recommendations, certainly on the outcome objectives that we plan to do that.

So appreciate that recommendation.

Certainly the coordination with DEM, that is something that's already in process, and now it will also include DPH as they take over street outreach.

I think the question around subcontracting is one that we need to grapple with.

I think some of these contracts are quite small and makes sense to have them tied to a specific site.

I think the Hope House one, for example, is very much coordinated with the internal operations of the site.

But I also think the the recommendation to directly subcontract with, say, SOMO West since that is a larger contract with a bigger neighborhood coverage than just the one site.

I would take that recommendation and I will bring that back to my colleagues and see if we can implement it.

And then what about just the matrix of measuring for success?

I mean, I think the question that we've been talking about this, I think, for at least three fiscal year three fiscal years now.

And I think that I am just kind of curious.

I mean, I think we have three long years and more actually to really develop sort of this matrix, how to measure for success.

Um, and yet we're still trying to grapple with how to do that.

So I I think personally I'm frustrated uh with that question coming up once more.

But I also think that second piece of it is the question that I have with the community benefit district ambassadors.

I don't see them doing things that are too different.

And I say this as both at budget committee chair at the moment, and then but also uh as uh a taxpayer.

Um while I do not work or live in a community benefit district, I can certainly understand that there are, you know, the idea about community benefit district for property owners to they vote into saying we are going to pay more so that we can dictate how we want to have a level of service, mostly really street cleaning and inclusive now, they have expended over time, especially since pandemic has exploded to extending having their own ambassadors program and that they're I think East Cut have like even more real time.

They even have their own phone number and hotline that they can actually call in and get their ambassador or the the property owners be able to get property uh ambassadors on sites in real time.

Everybody functioned slightly differently.

How does this ambassador program either supplement or different or being able to kind of say at some point if I'm property owner that it's being paying tax dollars, because we're kind of also paying for it as a city.

So it's the baseline will be Department of Public Work Services and law enforcement, of course.

And then now taxpayers are paying themselves on another level for another level of service, but somehow the city is now also funding these services.

I'm just trying to see, like at some point, like how are the dollars being spent and can we be more effective, both from the city's end, but also people who are paying the property tax end.

That's a great question, Chair Chan, and something I think that it certainly goes far beyond my department and these specific uh subcontracts for ambassador services.

I'm no expert in the community benefit district sort of financing and how that all works.

But the way I understand this and think about it in terms of supporting homeless service sites in high impact neighborhoods is that right, there's the base, then the taxpayers have taxed themselves to have an enhanced service, and then we put an additional challenge, per t potential challenge in the neighborhood.

Um with that responsibility comes our commitment to increase the level of service in the area to help mitigate any unforeseen or unanticipated negative consequences of one of our programs in the area.

And you know, we see that there are particular neighborhoods that have concentrations of either HSH or DPH funded programs, and we want to do our best to provide additional coverage and support for those people receiving our services as well as the businesses and residents that live nearby.

Um but I think what you're bringing up is really important around sort of a citywide or larger vision and strategy for this funding strategy and an accountability strategy as well.

Absolutely.

Understood.

Okay.

I don't see any name on the roster.

I don't have additional questions.

We'll go to public comments on the size of them.

Yes, we are now opening public comment for these items.

13 15 and 16.

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

Uh good afternoon.

I have lived in the mid-market neighborhood for 17 years.

The city's concentration of HSH and DPH funded shelters, services, and per and permanent supportive housing has had a significant impact on neighborhood safety and livability.

The problems don't stay confined to these facilities.

They spill out into the surrounding neighbor residential streets where residents regularly encounter open drug use, people passed out on sidewalks, aggressive behavior, human waste, and blocked entrances to our homes.

Over the past year, I have attended the board meetings of many of these nonprofit providers, your funding, and there are two needs that stand out.

One is an enforceable good neighbor policy, which I'm happy to see you're on, and I hope it's implemented as soon as possible.

The other is a dedicated ambassador resource for mid-market.

I want to share how having mid-market ambassadors have impacted my day-to-day life.

Um a few months ago, the mayor's office funded four months of after hours um mid-market CBD ambassador security program.

And around the same time, we had the Elban Urchemy expanded, uh, Urban Alchemy expanded, ambassador coverage south of Howard, which included my block.

The results have been dramatic.

Before ambassadors, our block consistently ranked in the top 15 for police calls, where we experienced continual chaos day and night.

Since receiving this 24-7 ambassador coverage, police calls have dropped, and we now rank number 33.

So for anyone who's looking for a metric, there's your metric.

We went from top 15 to now number 33.

We're consistently in the 30s.

Instead of waiting for police who often never show up, we now have ambassadors who respond quickly, address quality of life issues, and provide a visible presence and enforce enforcement of no loitering that restores a sense of safety.

Ambassadors are not a substitute police for police, but they are an essential service.

I urge you to fund the mid-market CBD ambassador program.

And anyone who's on the fence, I urge you to read speakers, the chronicle article describes.

Thank you much for addressing this committee.

Next speaker, please.

Hello, my name is Leah.

I've been living in Soma West for more than 10 years.

I want to highlight two key benefits of the community ambassador program: deterrence and efficiency of reporting.

On the deterrent side, SOMA has the highest crime rate in San Francisco, higher than the tender line.

And as a result of that, there is just a lot of chaos and diff uh challenging situations residents encounter.

Last week I was eating dinner with a friend at a restaurant near Moscone Center, and uh sitting near the window, and a man came up, smashed the window, and I was hit with class shards.

We cannot prevent this from happening, but having more people around to deter activity like that is very helpful.

Second is the ease of reporting.

Oftentimes I do not report crimes to um non police or police non-emergency because when I have been on the phone calling, trying to fill out the report, I have had people threaten me.

They see me on the phone, they see me glancing over, trying to describe the height, the weight, the clothing, and they threaten me.

And so I've decided it's often not worth it.

The community ambassadors, I can just give an intersection, say I'm having a problem, and they will come immediately, um, typically within a few minutes.

I can step, you know, into a restaurant or wherever it is, make that call, and it's very fast and efficient.

And so the community ambassadors have had a huge impact on the quality of life in our neighborhood, and I urge you to please um uh approve this funding.

Thank you.

Thank you, Mash Lea, for addressing this committee.

And seeing no other speakers in line, Madam Chair, that completes our queue.

Seeing a more popular comment, public comment is now closed.

What is your will supervisor?

Uh I would like to um move these items to the full board of supervisors with our positive recommendation.

I would maybe correct that or maybe change that if I may is to Because I think the item 13 is to move.

Sorry, because I I did this.

I combined it the items 13 to move to full board positive recommendation, but 15 and 16 are actually technically hearing to release the funds.

So Why don't I move item 13 to the full board of supervisors with our positive recommendation and a roll call on that motion, please?

And on the motion that we refer the resolution and item number 13 to the full board with a positive recommendation moved by Vice Chair Dorsey.

Vice Chair Dorsey.

Yes.

Dorsey I, Member Sauter.

SODER I, Chair Chan.

I.

Chan, I we have three ayes.

The motion passes.

And on 15 and 16, I would like to make a motion to consider these it these heard and filed and to release the funds.

And the roll call, please.

And on that motion by Vice Chair Dorsey that this committee approves to release approximately $2.4 million in item 15 and $4.4 million in item 16 to the Department of Home Assistance Support of Housing and that these hearings be heard and filed.

Vice Chair Dorsey.

Aye.

Dorsey I.

Member Soder.

Solder, I, Chair Chan.

Aye.

Chan.

We have three ayes.

The motion passes.

And with that, Mr.

Clark, please call item 17.

Yes, item number 13 is a motion ordering submitted to the voters at an election to be held on November 3, 2026, an ordinance amending the business and tax regulations code to beginning March 1st, 2027.

Eliminate the real property transfer tax vote foreclosure exemption for the transfer of all properties other than the transfer of residential and mixed-use properties with fewer than five residential units, and to make other non-substantive clarifications to the real property transfer tax and increasing the city's appropriations limit by the amount of real property transfer tax collected for four years from November 3, 2026.

Madam Chair.

Thank you.

And today we have Supervisor Bala Mammu here.

Welcome to the chamber.

Thank you, Chair Chan.

Um and thank you, colleagues, as well.

This measure gives San Francisco voters the opportunity to decide whether our transfer tax code should reflect the way today's real estate market operates rather than the market that existed decades ago.

Before I go further, I want to thank the many partners who made this possible.

First our drafting city attorneys, Carol Ruart and Scott Reiber, for their work getting this measure into shape.

I want to thank Ned Siegel and Ali Bondy and the mayor's office for their work, and want to thank Controller Wagner and Grayson Spencer for their rigorous analysis and to assess the recorder Joaquin Torres and his team for the data that helps ground this conversation.

I want to thank my co-sponsors, Supervisor Dorsey, Melgar, Chen, Wong, and Walton for standing behind this measure and SEIU 2015 and SCIU 1021 for their support as well.

This measure comes at a critical moment for the city's finances.

As we all know, San Francisco is confronting a serious budget crisis, one that has forced difficult trade-offs across city departments and services.

At a time when we are being asked to do more with less, it is entirely reasonable to ask whether our tax code is capturing revenue.

It was always meant to capture.

This is not about creating a new tax, but closing a gap that has grown substantially as the market has changed.

Historically, the foreclosure exemption was primar primarily used in traditional lender foreclosures, where a bank took title to a property and transfer tax would generally be paid later when the lender ultimately sold the property.

According to the assessor recorder, that was the predominant pattern for many years.

The data released by the assessor recorder now shows that this pattern has changed significantly over the last three years.

Instead of primarily involving banks and modest residential properties, many of the exemption claims now involve high-value commercial multifamily, office, and other investment properties changing hands between sophisticated real estate investors.

Between fiscal year 2023 to 24 and fiscal year 2025 to 26, more than half of the exemption claims involve properties valued over 10 million dollars compared to just 4 to 5 percent in the preceding 15 years.

That represents a dramatic shift in how this exemption is being used.

When market conditions shift this dramatically, it's worth recognizing that our tracks code, however unintentionally, has helped create new business practices around it.

Sophisticated investors are structuring transactions specifically to take advantage of an exemption that was never designed with them in mind.

When the code inadvertently shapes behavior in ways original drafters didn't anticipate, it becomes our job as a board and as legislators to go back and correct that.

During that same three-year period I reference, transactions involving income producing and investment oriented properties account for more than $450 million in transfer taxes that otherwise would have been generated compared with roughly $50 million over the prior 15 years combined.

The controller's office weighed in as well, and their analysis reinforces the scale of what we are discussing.

In their opinion, the measure would significantly increase the city's real property transfer tax revenues with an estimated average of 100 to 150 million dollars annually over the first or next five years.

Given the budget challenges we are navigating, that is meaningful revenue that we cannot afford to leave on the table.

The controller was also candid that this revenue will be unpredictable and cyclical, since it depends heavily on foreclosure activity and real estate conditions.

To illustrate that swing in fiscal year 2021 to 22 before the pandemic driven downturn, the measure would have generated just $3.2 million.

By 25-26, it would have generated $232 million, a function of the rise in distressed properties, not in change in policy.

Based on the city's experience in prior downturns, the controller expects for closure related transactions to gradually normalize over a four to six year period as the market recovers.

Importantly, this proposal does not eliminate the exemption for homeowners or small residential properties.

The exemption would remain in place for single family homes, smaller multifamily properties with fewer than five residential units, and qualifying small mixed use properties.

The measure instead asks whether larger commercial and investment property transfers should continue to receive the same treatment under today's market conditions.

This is ultimately a policy question about whether the tax code is operating as originally intended or whether it should be updated in light of significant changes in the marketplace.

I appreciate the assessor recorder for providing objective data that helps inform this discussion because good policy starts with good information, and this analysis gives both policymakers and voters a clearer picture of how the exemption is functioning today.

Colleagues, I'd also like to read three amendments into the record at this time.

This measure was never intended, I want to note, as a poison pill against other measures on the ballot.

And these amendments make that clear for voters and for future courts.

If this measure and any other qualifying measures, including the San Francisco Affordable Housing Guarantee Act, both pass in November, we want it to be abundantly clear today that both can go into effect legally.

Because even if you disagree with the other measures on the ballot, we need to move beyond the poison pill fights of the past and instead allow the ballot measures to be voted on on their own merits.

The amendments read on page two, lines six through seven, we're deleting quote, and the tax it imposes shall be known as the quote real property transfer tax, quote quote.

On page three, line 15 through 17, we would replace the real property transfer tax as a general tax with the following.

The tax this Article 12C imposes is a general tax.

On page 4, lines 8 through 9, we would add language extending the four-year appropriations limit increase to also cover revenue collected under, quote, any other ordinance amending on Article 12 C of the Business and Tax Regulations Code that the voters approve at the November 3rd, 2026 election.

At the end of the day, this legislation simply places the question before the voters.

San Francisco needs this revenue right now.

We are in a budget crisis.

This measure asks a straightforward question.

Should transfers between sophisticated real estate investors keep receiving an exemption that was never built for them while the city cuts services elsewhere.

I'm asking my colleagues to send this to the voters so they can decide for themselves whether this is the moment to close that gap.

Thank you for hearing the item today, colleagues, and I'm available for questions as are Lee and Maggie from OEWD, and I believe Janice Levy and Controller Wagner from the controller's office are here as well.

Supervisor SAR.

Thank you, Chair Channel.

I would simply like to uh make a motion to move those amendments into the file as read into the record by Supervisor Muttmoon.

We will do so after public comment.

Uh public comment.

Very good.

I don't see any name on the roster.

Let's go to public comment on this item.

Yes, we are now opening public comment on this item number 17.

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

Hello, Kristen Evans, District 5 small business owner and advocate for affordable housing.

We support that amendment.

Thanks so much.

Thank you much, Kristen Evans.

And seeing no other people in line, Madam Chair, that completes our queue.

Thank you.

And seeing no more public comments, public comment is now closed.

Sorry, uh proposed by Supervisor Sauter as Rat Outlaw amendments by Supervisor Matmoo.

Roll call, please.

And on that motion by Member Sauter, that we accept the amendments as so read into the record by Supervisor McMood.

Vice Chair Dorsey.

Aye.

Dorsey, aye.

Member Sauter.

Chan, I we have three ayes.

Uh the motion passes.

And with that.

Um what is everybody's will on this committee on this measure?

Supervisor Sauter.

I would like to ask that we uh move this to the full board with a recommendation, please.

Uh with that, a roll call, please.

And on the motion by Member Sauter.

That we refer this motion to the member.

Oh, sorry, we can't.

We have to sit because that's a substantive.

Go ahead.

Hmm.

Okay.

Supervisor Sauter.

In that case, I will ask that we continue this item for one week.

Um, please on that motion.

Yes, and on that motion by Member Sauter that we continue this motion to the July 22nd meeting of this committee as amended.

Vice Chair Dorsey.

Dorsey, aye.

Member Sauter.

Sauter, aye, Chair Chan.

Aye.

Chan, I we have three ayes.

The motion passes.

And um Mr.

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

I am chair to concludes our business.

Wonderful.

Thank you.

This meeting is adjourned.