Government Audit and Oversight Committee Special Meeting – July 13, 2023
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Government Audit and Oversight Committee Special Meeting – July 13, 2023
The Government Audit and Oversight Committee of the San Francisco Board of Supervisors held a special meeting on July 13, 2023, chaired by Supervisor Dean Preston, with Vice Chair Catherine Stefani and Supervisor Connie Chan. The committee considered two items: a development agreement for 98 Franklin Street and a motion to audit the San Francisco Public Utilities Commission's (SFPUC) water and wastewater rate setting and oversight processes.
Discussion Items
Item 1: Development Agreement – 98 Franklin Street
- Chair Preston, sponsor, presented the agreement, which involves a 400-foot building with a five-story campus for the French American International High School and 385 housing units. The developer will dedicate a parcel at 600 McAllister Street (already entitled for 196 affordable units) to the city at no cost to fulfill inclusionary housing requirements. Additionally, $1 million in fees will go to pre-development costs for Parcel K in Hayes Valley, a long-promised affordable housing project. Chair Preston characterized the package as a "rare quadruple win" for a new high school, affordable housing sites, investment in Parcel K, and good jobs.
- Lee Lutensky, Deputy Director of Joint Development at OEWD, presented key terms: the agreement vests entitlements and requires land dedication before construction.
- Public comment: No in-person or remote speakers offered comments.
- Motion by Chair Preston to send item 1 to the full board with a positive recommendation as a committee report. Unanimous vote (3 ayes).
Item 2: Audit of SFPUC Water and Wastewater Enterprises
- Supervisor Safai, sponsor, requested a one-week continuance to allow further conversations with the Budget and Legislative Analyst (BLA) and SFPUC leadership. He explained the impetus: concerns about water rate increases without adequate ratepayer participation, vacant commissioner seats, a large contract without performance standards since 2018, and a vacant assistant GM position. He cited an example from DPH where similar scrutiny saved costs. He emphasized the goal is to find efficiencies to reduce ratepayer costs.
- Supervisor Chan expressed support, noting her own concerns about utility rate increases and ongoing studies at LAFCO. She supported audits to ensure good governance.
- Chair Preston thanked Supervisor Safai and noted the need to coordinate with existing audits and capacity.
- Public comment included several speakers:
- David Hooper (Outer Mission) raised sewer flooding issues, stating the SFPUC had long denied the problem, leading to higher costs. He supported the audit to compel forthright engagement.
- A caller (name not provided) criticized the SFPUC's debt growth from $0 in 2002 to $6 billion in 2022, alleged capital project cost overruns and pay-to-play contracting, and mentioned possible legal issues with Prop 218.
- Peter Dreckmeyer (Tuolumne River Trust) supported the audit and advocated for a joint study session on the "design drought," claiming it contributes to ecological collapse and excessive costs. He said the SFPUC failed to deliberate on the design drought's prudence.
- Molly (Sierra Club California) urged a full external audit, noting rate increases disproportionately impact low-income communities and the SFPUC's internal audits are insufficient.
- Dave Warner expressed concern that rates could rise further due to declining demand and fixed costs, and that the SFPUC's risk discussions were inadequate.
- Motion to continue item 2 to the July 20, 2023 GAO hearing. Unanimous vote (3 ayes).
Key Outcomes
- Item 1 (98 Franklin Street Development Agreement) was approved as a committee report and will appear on the Board of Supervisors agenda on July 18, 2023.
- Item 2 (Audit of SFPUC) was continued to the next Government Audit and Oversight Committee meeting on July 20, 2023.
Meeting Transcript
Good afternoon. Uh this meeting will come to order. Welcome to the July 13th 2023 special meeting of the government audit and oversight committee of the San Francisco Board of Supervisors. I'm Supervisor Dean Preston, Chair of the Committee, joined by Vice Chair Catherine Stephanie and Supervisor Connie Chan. Our committee clerk today is Stephanie Cabrera, and we want to thank the team at SFGov TV for staffing this meeting. Madam Clerk, any announcements. Yes, thank you, Chair. The Board of Supervisors and its committees are convening hybrid meetings that allow in-person attendance and public comment while still providing remote access and public comment via telephone. The board recognizes that equitable public access is essential and will be taking public comment as follows. First, the public comment will be taken on each item on this agenda. Those attending in person will be allowed to speak first, and we'll take those who are waiting on the telephone line. When your item of interest comes up and public comment is called, those joining us in person should line up and speak to speak, and those on the telephone should dial star three to be added to the speaker queue. If you're on your telephone, please remember to turn down your TV and all listening devices that you may be using. Alternatively, you may submit public written public comment by email to the government audit and oversight clerk, Stephanie Gabrera at Stephanie.cabrera, C A B R E R A at SFgov.org. You may also send your written comments via U.S. Postal Service to our post off our office in City Hall at one Dr. Carlton B. Goodlit Place, room 244, San Francisco, California 94102. If you submit public comment in writing, it will be forwarded to the supervisors and included as part of the official file. Finally, items acted upon today are expected to appear on the Board of Supervisors agenda of July 18th, unless otherwise stated. Thank you. Thank you, Madam Clerk, and um welcome back everyone to this uh meeting room that has been rarely used in the pandemic. Uh, but it's good to be back here at least for today. Um but uh why don't we go ahead and call our first item? Thank you. Item number one is an ordinance approving a development agreement between the city and county of San Francisco and 98 Franklin Street, LLC for certain real property at 98 Franklin Street. Consisting of three parcels located in the Van Ness and Market Residential Special Use District on the east side of Franklin Street between Oak and Market Streets, waiving certain provisions of administrative code, Chapter 56, adopting findings under the California Environmental Equality Act and making findings of conformity with the general plan and the eight priority policies of the planning code section 101.1b and findings of public necessity, convenience, and general welfare under planning code section 302. This file was requested as a committee report. Members of the public who wish to provide public comment on this item and are viewing remotely should call the public call-in number scrolling across your screen and enter the meeting ID when prompted. If you are already dialed in and haven't already done so, please dial star three to be added to the speaker queue. The system prompt will indicate that you have raised your hand. Please wait until the system indicates that you have been unmuted and you may begin your comments when we go to public comment. Thank you. Thank you, Madam Clerk. Um, and before we hear from departments on this, I wanted to speak briefly to this item uh that I'm the sponsor of and this uh what's before us today uh colleagues is a development agreement related to the mixed use project um at 98 Franklin Street uh as well as projects uh at 600 McAllister Street and uh Parcel K in Hayes Valley. Uh this development agreement along with companion uh planning code amendments uh that were positively recommended on Monday at the land use and transportation committee uh will help activate uh the several sites uh that I just mentioned, two of which will be 100% affordable housing uh for a total in the whole uh of the three project of uh up to 671 homes. Um as discussed on Monday uh when we heard uh this in in land use committee, the package seeks to do uh the following um three main things. Um as discussed on Monday uh when we heard uh this in in land use committee, the package seeks to do uh the following um three main things unstick the development at 98 Franklin Street, a proposed residential uh housing project that would sit atop a new high school and which has not been able to move forward since the Board of Supervisors unanimously rezoned uh the uh site uh in 2020. Um the package would also enable a land dedication uh for the city to develop 100% affordable housing. Um and lastly, it would jump start the long dormant affordable housing project uh at Parcel K in Hayes Valley, which is currently occupied and used on an interim basis uh as uh a site uh run by proxy and uh this uh package would uh have the city allocating a million dollars of the fees here uh to the pre-development costs uh for Parcel K. So our office views this as a uh rare quadruple win, a new high school, uh new site in District 5 for 100 percent affordable housing, uh a renewed investment in the city's uh promise to deliver affordable housing at Parcel K and uh good jobs for San Franciscans building new housing at the site on 98 Franklin Street, which uh to date has not moved forward. Um the development agreement requires the developer at 98 uh Franklin to dedicate to the city at no cost the city property for the creation of 100 percent affordable housing to satisfy their inclusionary housing uh requirement. Um and in addition, as I mentioned, the the uh developer uh pays a million dollars in affordable housing funds earmarked to uh to Parcel K to get that project going. And that has been for those who in that familiar with that site, this is a promise over 20 years old, a promise to build affordable housing on Parcel K in Hayes Valley, and one that we intend to uh see to fruition, and we appreciate the partnership of the mayor's office of housing and community development, which is gearing up for the RFP or RFQ or whatever Alphabet Soup it is uh to get that process started, and uh then these funds will certainly help on pre-development. So I'm also really excited as we announced earlier this week uh to uh announce the intention uh of the uh developers as part of this deal to acquire the property uh for the city at 600 McAllister Street. That is an update since this package was first announced at the Board of Supervisors uh in last uh fall. This is uh I think a really positive development for two reasons. First, located at uh the corner of Franklin and McAllister, 600 McAllisters is actually even closer to the 98 Franklin site uh than the previously announced property uh that that uh was uh initially uh planned to be part of this deal at 600 Van Ness. So the movement to 600 uh McAllister brings the affordable housing even closer uh to the uh the market rate housing site. Uh second, this site uh 600 McAllister, in contrast uh to the uh the site on the on Van Ness actually has entitlements for a higher number of affordable units.
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