Good morning.

This meeting will come to order.

Welcome to the December 4th, 2025 regular meeting of the Government Auto and Oversight Committee

of the San Francisco Board of Supervisors.

I'm Supervisor Jackie Fielder, Chair of the Committee, joined by Vice Chair Danny Sauter

and soon Supervisor Cheryl.

The Committee Clerk is Monique Creighton, and our thanks to Jaime Echeverry of SFGovTV

for staff in this meeting.

Madam Clerk, do you have any announcements?

Yes.

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

When your item of interest comes up and public comment is called, please line up to speak

on your right.

Alternatively, you may submit public comment in writing in either of the following ways.

Email them to the Government Audit and Oversight Committee Clerk at monique.crayton at sfgov.org.

You can 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 US Postal Service to our office in City Hall

Number one Dr. Carlton B. Goodlett place room 244 San Francisco, California

94102 if you have documents you like to be included as part of the file

Please submit them to me before the end of the meeting

Please make sure to silence all cell phones and electronic devices to prevent any

Interruptions to today's proceedings

Finally, items acted upon today are expected to appear on the Board of Supervisors' Agenda of December 16, 2025, unless otherwise stated.

Thank you, Madam Clerk. Can you please call item one?

Yes. Item number one is a resolution authorizing the mayor, officers, and employees of the Office of the Mayor, Recreation and Park Commissioners,

commissioners, and officers, and employees of the Recreation and Park Department to solicit donations for India Basin Waterfront Park Initiative

from nonprofits, private organizations, grant makers, and foundations for six months,

effective upon approval of this resolution, notwithstanding the behested payment ordinance.

Thank you. And today we're joined by Ms. Lisa Branson, Director of Partnerships at the Recreation and Parks Department,

who will be presenting on this item. Ms. Branson, please go ahead.

Thank you, Chair Fielder.

Good morning, Supervisor Sauter.

I'm Lisa Branston, Director of Partnerships at the Recreation Park Department.

And as the clerk noted, I'm here today to ask you to approve a resolution granting certain members of the mayor's office

and recreation and park staff a six-month waiver of the behested payments ordinance

so that we can continue to assist with fundraising for the India Basin Waterfront Park Public-Private Partnership.

And just for some background, India Basin is an ambitious four-way public-private partnership

established to build a world-class park in Bayview-Hunter's Point neighborhood in deep

partnership with the community. Walking shoulder to shoulder with the department on this project

are three non-profits, Trust for Public Land, San Francisco Foundation, and perhaps most

importantly, our community non-profit partner, the A. Philip Randolph Institute. Through the work,

we've already turned a vacant lot purchased by the department in 2014 into a thriving park.

We're now in the process of turning the adjacent underperforming park into an inspirational public

space. A little background about why this is so important in this neighborhood right now.

As you can see from the slide, the community bears many of the markers of the city's most

underserved neighborhoods. Poor health outcomes, poor educational outcomes, and low household

incomes. Part of the reason for this is because it is a neighborhood where the

city's traditionally placed infrastructure that no one else wanted,

power plants and sewer treatment plants. An important goal of this project is to

bring a restorative piece of civic infrastructure to the community to begin

to fulfill some long promised green space.

we've already made significant progress

fulfilling commitments to the community

in 2022 we completed cleanup of toxic soil

on the former shipbuilding site

and last fall we opened the first section

of this new park to the public

and then in August we began construction

on the last section of the park

and expect to open it in early 2028

creating a 10-acre park.

The new section of the park will include community-driven amenities,

including a double basketball court, barbecue terrace,

playground, fitness court, and a boathouse.

Here are a few photos of the newly opened north section of the park,

which has thrived since opening just about a year ago.

It's had more than 19,000 visits,

dozens of community gatherings, programs, and events.

And last month, the initiative achieved an enormous milestone in environmental justice

with the removal of a PG&E tower that was a stark reminder of the area's industrial past

and its removal as a sign of the new green space to come.

Importantly, all this work is guided by an Equitable Development Plan, or EDP,

which is an emerging best practice in park construction,

and it guides us to focus on a number of areas,

many of which are not related to the regular work

of the Recreation and Park Department.

And even as we are building the park,

we are working with the community on many of these areas,

including offering free swim lessons to neighborhood youth

and providing construction skills training.

to community members so that they can play a role

in the construction of the park in their neighborhood.

We're also providing business opportunities

for community businesses.

And importantly, right now, to this particular issue at hand,

we are working on the connectivity, transit, access,

and safety focus area.

So in order to accomplish all of this,

the partners are working to leverage about $145 million

in public funds with about $85 million in private funding,

of which more than $76 million in private funding has been raised

to deliver this extraordinary park and the EDP programming.

And importantly, much of the EDP programming needs

to be delivered with private funding.

Public funding is generally for construction and not for this sort

of programming with nonprofits.

And as you can see from these charts, in addition to remediation,

design, construction, and administration, the partners are

committed to at least 15 million in EDP projects and programs.

And as you can see from the chart on the right,

we've been quite successful to date in securing public

and private funds, but the work is hard.

The fundraising work has been particularly hard,

and also we've moved the goalpost.

When I last came before this committee for a waiver,

we had about $2 million left to raise,

but when bids for construction came back high,

we moved the goalpost from $75 million to $85 million

rather than reducing the scope of the project.

And it's also the landscape for fundraising has changed quite a bit.

Many funders have turned from equity-related funding to other projects.

In the current environment, arts organizations are suffering and asking for funding,

so there's a lot more competition for funding.

and so one reason the waiver is so important is to help the partnership reach its revised

commitment to the community.

And I did want to note that the department takes ethics and transparency extremely seriously.

Partnership staff are meticulously tracking every contribution to the initiative, which

has, as I said, raised more than $76 million in private funding from about 70 gifts from

individuals or institutions.

And per separate but related Sunshine Ordinance, every donor contributing

$100 or more is listed on a dedicated page on the initiative website.

And we note on that page whether that donor has any sort of financial

relationship with the city.

And of course, we're happy to report on the fundraising efforts 60 days after

expiration of this waiver and are planning to file that report later this

month as part of the previous waiver so I hope you'll grant us this waiver to

help us continue to deliver these resources to the community and I'm happy

to take any questions thank you so much miss Branson my question for you is

is first off, under this waiver, what are the intended purposes of the solicited payments?

So I'd say they're sort of twofold.

One is specific, as I noted in some responses to the questions from you and your staff.

We are in discussions with Lyft to provide some of the transportation elements

that the community requested in the equitable development plan.

And Lyft is a restricted source because they have a permit to operate bike share stations in Golden Gate Park, or bike share stations in parks.

I'm not sure it's confined to just Golden Gate Park.

And so they're the only game in town for bike shares per their contract with the MTC.

And there's a specific request in the EDP for bike share stations near India Basin.

Now, this relationship right now is a business relationship.

We'll actually pay them to do their work,

but we want the freedom and the legal clarity

to be able to ask them for a reduction in their price.

They've given us one.

I think it's a standard business negotiation

to drop the price a little,

but out of an abundance of caution and transparency,

we recorded that small reduction in their fee as a donation

and listed it on our website.

So that's number one is that specific area.

Number two is that there is a lot of serendipity to fundraising

and we want to make sure that we are not afoul of any city rules.

If I'm at a ribbon cutting and we run into someone

who we think would be a good partner on the project.

So that's the other reason,

is sort of a little bit more unknown element

of trying to secure the resources for this project.

So to be clear, the ask from Lyft

is to provide subsidized rides

from the neighborhood to this park?

So we recently got a grant.

So we just secured the grant.

We're working on how to structure all of the pieces sort of as we speak.

But, um, the grant provides for funding for us to put either one or two bike

share stations near the park as requested by the community and also to pilot a

program where they would, um, geo fence.

So sort of electronically fence either all of the nine four one two four zip code

or some part of it and then allow community members to sign up to get subsidized rides,

which would be paid for through the grant.

But if we were to ask Lyft for a discount on that work so that we could stretch the grant funds further,

that would be the area where it could be a behested request.

Got it. So it's subsidized bike share rides?

And car rides.

And car rides.

Yes.

Car rides to this park or just anywhere?

To the park.

Okay, understood.

And obviously to and from the park.

Right, okay.

But it's about accessing the park

because the topography of the neighborhood is such

that it's a very steep hillside that abuts the park.

And the fastest way to get to the park as the crow flies

is down the steep hillside through a series of stairways.

So it's not super accessible.

And the subsidies amount to how much per ride?

It's not really per ride.

In very initial conversations with Lyft before the expiration of the last waiver,

I think they offered a subsidy of about 5%.

Not a lot.

No.

Okay, so this is more to fulfill the community benefits promise of India Basin,

not so much the completion of the project itself.

Yes and no, because as you saw in the slide of the budget,

$15 million of the commitment from the partners to the community

is these community benefits.

So in order to get to the full $225 million budget, we would include these pieces.

Okay. Thank you.

Other questions just around the previous waiver.

Was LIFT the only specific interested party that was solicited?

Yes. I mean, as I said, we're running through the report.

We developed a tool in the department to scan people we talked to to see whether they trigger any of the prongs of the waiver,

and it's my belief that right now it just left.

Okay.

And you answered my other questions about the relationship, and you have already agreed to the reporting.

Yep.

Any reason why the goals of the passive payments waiver couldn't be accomplished by soliciting

passive payments from anyone who's not an interested party, so in this instance, not Lyft?

I think you already answered this, but I just wanted to be clear.

I mean, so yes, but it just makes it that much harder, right?

I mean, we'll certainly Lyft.

I think we need to work with Lyft.

So that's, but then the other thing is, as I mentioned, there is a little bit of serendipity

to fundraising and the fundraising landscape is really hard right now. We had some recent wonderful

successes like even just this week but I would say over the summer we got a lot of no's also.

So the bigger the field is to be able to talk to about the project the more likely we are to meet

the goals that we want to beat more quickly. And I just think speed is incumbent on this project

in a community where, I mean, Jackie Bryant, who's our partner, may come and speak and can speak to

the history much more. But I mean, it was decades of advocacy to even get Rec and Park to buy the

parcel. And then it took 10 years for the park to be built. And now we're like building this momentum

and speed on the project.

And I think anything we can do

to keep that momentum and speed going

is a really worthy goal.

Mm-hmm.

Agreed.

And I mean, 5% discount on bike share is not a lot.

Those rides should be free.

I mean, bike shares are not even competitive with rides.

So I am of the personal opinion that Lyft should be giving a lot more community benefits.

Well, we'll bring that back to them.

All right.

I think those are all my questions.

Just one last thing.

I believe you agreed to this, but can you confirm for the record, are you able to submit a memo detailing the interested parties you plan to solicit,

the identity of those interested parties, if they are known, and why you believe that they are interested parties?

Yes, within 60 days of the approval of the waiver.

Absolutely.

Thank you.

Colleagues, any other comments, questions?

All right.

If not, Madam Clerk, let's take public comment.

Yes, members of the public who wish to speak on this item

shall line up now along the side by the windows.

All speakers will have two minutes.

Good morning, supervisors.

My name is Jackie Bryant, and I run the A. Philip Randolph Institute San Francisco.

I'm joined by my friend and colleague, Kurt Grimes, who's also a Bayview-Hunters Point resident,

and he's the program manager at the A. Philip Randolph Institute.

And our organization has served thousands of families every year.

just to note we just completed a distribution of over 6,000 turkeys and

several thousand pounds of food across the city and our mayor joined us at

Sunnydale because we do serve all of the family housing developments across the

city but I've had the honor of working on this project for all like man Lisa

mentioned almost ten years over the last eight years I've been helping the

equitable development initiative and in that first two years we developed the equitable

development plan which lisa has a copy one of those areas of focus is transportation and

accessibility to and from the park so our community really prescribed that we need access

to the park it's not an easy space to get to and from and again as lisa mentioned one of the easiest

ways to get to the park from the hill where you have former public housing is stairwells. So to

like carry down your kids and strollers and things that you need, it's not the most accessible

location. And again, as Lisa mentioned, this is an over $200 million project.

It requires us to keep our community involved, and it's allowed us to change the story about Bayview Hunters Point.

So I am in support of requesting a waiver for the behesting for this particular item because we do need a partner.

We need to continue to think of creative solutions and partnerships in order to deliver on this park in the way that we mean to and to really keep our promises.

So I appreciate your time.

Thank you so much.

Thank you for your comments.

Do we have any additional public commenters for this item?

That concludes public comment.

Thank you, Madam Clerk.

Seeing no one else making public comment, public comment is now closed.

and colleagues. I'm introducing amendments today to this item to bring it in line with other

behested payment waivers heard by this committee, as well as the previous waiver granted regarding

the Indian Basin waterfront project. And the amendments will add reporting requirements to

the Board of Supervisors 60 days after the expiration of this waiver. I've also brought

copies of the amended legislation. My staff should have also emailed them to you. And so I now move

to amend this item as presented. Madam Clerk, please call the roll. Yes, and on the motion to amend this item as presented, Vice Chair Sauter.

Vice Chair Sauter, aye. Member Sheryl? Member Sheryl, aye. Chair Fielder? Aye. Chair Fielder, aye. I have three ayes. Thank you. The motion passes.

I now move to send this item to the full board with positive recommendation. Madam Clerk, please call the roll.

Yes, and on the motion to forward this item as amended to the full board with positive recommendation, Vice Chair Sauter?

Aye.

Vice Chair Sauter, aye.

Member Sherrill?

Aye.

Member Sherrill, aye.

Chair Fielder?

Aye.

Chair Fielder, aye.

I have three ayes.

Thank you.

The motion passes.

Madam Clerk, please call items two through four together.

Yes, items two through four are resolutions approved in historical property contracts between

SFCA Real Estate Holdings, LLC, the owners of 530 Jackson Street in the City and County of San Francisco,

1035 Howard, LLC, the owners of 1035 Howard Street in the City and County of San Francisco,

Nebelo, LLC, the owners of 331 Pennsylvania Avenue in the City and County of San Francisco

under Administrative Code Chapter 71 and authorizing the planning director

and the assessor recorder to execute and record the historical property contracts.

Thank you, Madam Clerk. And today we're joined by Ms. Shannon Ferguson, the Senior Preservation Planner at the Planning Department, who will be presenting on this item.

Afterwards, we will also hear from Mr. Nicholas Menard from the Budget and Legislative Analyst's Office to hear on items two and three.

Ms. Ferguson, please go ahead.

Good morning, Supervisors Shannon Ferguson, Planning Department staff.

The items before you today are three Mills Act historical property contracts.

The Mills Act legislation authorizes local governments to enter into contracts with private property owners of qualified historic properties.

The agreements are 10-year rolling contracts that are renewed annually.

The agreement provides property tax reduction to owners of those historic properties who can then allocate the tax savings to appropriate rehabilitation, restoration, and maintenance plans.

The department currently holds 48 Mills Act contracts.

The department received all three Mills Act applications by the May 1st filing date.

The department staff reviewed each application for completeness and then conducted pre-approval inspections

and worked with the applicants to revise the rehabilitation and maintenance plans as necessary.

On October 15, 2025, the Historic Preservation Commission unanimously recommended approval of all three contracts to the board.

The year packets contain evaluation for each property,

outlining the potential property tax savings for the first year.

These figures were compiled by the assessor's office.

Each property owner has outlined rehabilitation, restoration,

and maintenance plans that ensure work will be completed in conformance

with the secretary's standards for rehabilitation.

The first property is 530 Jackson Street.

It's a contributor to the Jackson Square Historic District

under Article 10 of the Planning Code.

It's located on the north side of Jackson Street

between Columbus Avenue and Montgomery Street.

It was constructed in 1907

and designed by architects of Merritt, Shea, and Lofquist.

It's a five-story over basement,

steel-reinforced brick masonry

and timber frame commercial building with classical motifs.

In 1998, the first-story storefront

was completely rebuilt to its present condition

and a two-story stucco-clad addition

was constructed on top of the building.

It's set back from the front facade.

It has both commercial and residential uses

and is currently vacant.

It's currently valued by the Assessor's Office

of over $5 million and required a historic structural report

to substantiate the exceptional circumstances

for granting an exception from the limitations

on liability, eligibility.

The property meets the requirements

and it's an exceptional example of architectural style

by architects of merit and granting this exemption

will assist in the preservation and rehabilitation of this building that would otherwise be in danger of demolition.

The rehabilitation plan proposes to rehabilitate the fire escape, waterproof the basement,

repair the flashing cornices, roof, windows, storefront, and repoint the brick masonry.

The estimated cost of this work is $804,319.

The maintenance plan proposes to inspect and make any necessary repairs to the brick,

the wood frame windows, as well as roofing and parapet walls on an annual basis.

The estimated cost of this work is $19,530.

The subject property meets one of the priority considerations for that's investment.

It will require significant associated costs to ensure preservation of this property,

and the owner will invest additional money towards rehabilitation other than from routine maintenance.

The second property is 1035 Howard Street.

It's a Category 2 significant building under Article 11 of the Planning Code.

It's located on the south side of Howard Street between Harriet and Russ Streets.

It was built in 1930 and is a three-story reinforced concrete industrial building

designed in the Art Deco style.

It was originally constructed for a flavoring extracts manufacturer and housed a laboratory

manufacturing plant warehouse and office space until 2016 when the company closed.

It's currently vacant.

It is also valued by the assessor's office at over $5 million, so a historic structure

report was submitted.

The rehabilitation plan proposes to perform seismic upgrades, replace the roof, repair

the parapet, retain and repair the hip skylights, repair and restore the concrete elevations,

windows, remove the stucco infill panels at window openings at the ground floor, and replace

with compatible glazing.

There will also be repairing the terracotta bulkhead and the art deco features on the

interior.

The estimated cost of work is over $3 million.

The maintenance plan proposes to inspect to make any necessary repairs to the building

envelope, the windows, art deco features, doors, fire escapes, interior walls, and columns.

This work is estimated to cost $75,000 annually.

To note, the subject property has an approved major permit to alter for the work listed

in their Mills Act Rehabilitation and Maintenance Plan, and they'll be converting the building

to commercial storage that was approved by the HPC in March 2025.

And the property owner has also applied for federal rehabilitation tax credits.

The subject property meets two of the priority considerations, located in a priority equity

geography and investment.

The proposed rehabilitation will require significant associated costs, and the property owner

will invest significant additional money towards the rehabilitation.

They'll receive an estimated $260,000 in property taxes for the first year.

And the third property is 331 Pennsylvania Avenue.

It's listed on the National Register of Historic Places.

It's located on the east side of Pennsylvania Avenue between 18th and 19th Streets.

It's a two-story building over a basement of reinforced concrete in the Renaissance revival style.

It's a former hospital building for the Union Iron Works and was constructed in 1916 by Bethlehem Steel Company

and designed by architect of merit, Frederick H. Meyer.

In 2021, the building was adaptively reused for seven residential units, which are currently rented.

As the subject property is valued at over $3 million, it also required a historic structure

report, and it does meet the requirements for granting an exemption from the limitations

on eligibility, as it's an exceptional example of architectural style.

The rehabilitation plan proposes replacing the roof, painting the exterior, and the estimated

cost of that work is $400,000.

The maintenance plan proposes to inspect and make any necessary repairs or income replacement

to windows, doors, elevations, downspouts on an annual basis, and this work is estimated

to cost $15,000 annually.

The subject property meets one of the priority considerations, multifamily housing.

And on behalf of the Historic Preservation Commission, the department recommends approval

of all three Mills Act applications, as they are all qualified historic resources, their rehab and

maintenance plans were appropriate, and all work is intended to meet the Secretary of the Interior

Standards. This concludes my presentation. I'm happy to answer any questions. The property owners

are also in attendance today, and they'd like to address the committee during public comment.

Thank you. Thank you so much, Ms. Ferguson. And Mr. Nicholas Menard from the Budget and Legislative

Analyst's Office has a report to present on items two and three, which have fiscal impacts.

Please go ahead, Mr. Menard. Thank you, and good morning, Nick Menard from the Budget Legislative

Analyst's Office. So our report is on two of the properties, the 331 Pennsylvania property.

The estimated property tax loss is about $30,000 a year, so that is below our reporting threshold.

So this report deals with items two and three on your agenda pertaining to Mills Act contracts for

530 Jackson and 1035 Howard Street. Both contracts would essentially reduce property taxes for each

property by about $260,000 a year. There are 10-year contracts that renew automatically every

year unless the board takes action to not renew them. As we kind of describe on page nine of our

report, you'll see the renovation budget for the 530 Jackson. It's about $840,000 plus $20,000

a year. So over that initial 10-year period, that's about a million dollars of renovation work

pertaining to the historic attributes of the property. But the city would be giving up $2.6

million over that 10-year period. And so for that reason, one of our policy considerations in our

report is to actually put a notice of non-renewal now on this contract so it doesn't renew beyond

the initial 10 years because the city is losing money on this deal.

On the other hand, there may be other work that is happening at the property

that is not specific to the historic features of the property

that the property tax abatement could help fund.

We note on page 10 of our report for 1035 Howard,

The owners are putting in about $3.8 million of work related to maintaining the historic features of the property.

That includes the initial renovation and then maintenance over the next 10 years,

which is $1.2 million less than the property tax rebate that they would get over that initial 10-year period.

I believe they'll probably break even in year 15 based on the renovation budgets that we have.

We also note a couple other policy considerations.

One is that both properties exceed the $5 million cap established in the administrative code, Chapter 71, which kind of governs the local Mills Act program.

The board can approve Mills Act contracts for properties that exceed that $5 million cap, but these are way above.

These are both over $30 million in valuation.

In addition to that, Chapter 71 allows the city to assess maintenance fees for maintaining the contracts every year.

The city has to inspect the properties in person at least every five years.

There's a lot of city departments like the assessor's office, the city attorney, planning, that have to deal with this program on an ongoing basis.

But the city doesn't assess fees that could offset some of those costs.

We requested information about staff time assigned to the program.

We're still waiting on the information, so I don't have a cost estimate for you.

But that would be another way, given the city's structural budget deficit,

to manage the impact of the city financially while getting the benefits of these historic preservation projects.

But because both contracts would decrease property tax revenues, we consider approval to be a policy matter.

Thank you.

One question I have is, you know, if we decide to, separate of this, make sure that this comes back to the board for renewal, does that prevent them from having contracts in the future?

I don't believe so.

I think that they would just have to come back and go through the Mills Act application process once more.

Okay.

Thank you. Colleagues, any questions, comments? Seeing none, Madam Clerk, let's take public comment.

Yes, members of the public who wish to speak on this item should line up now along the side by the windows.

All speakers will have two minutes.

Good morning, supervisors.

My name is John Sweeney with Torbeno Real Estate Partners.

We're the owners of 1035 Howard.

The Engskelle building has been vacant since 2016, and while several adaptive reuse ideas

have been explored, ours is the first that is both compatible with the building's historic

fabric and aligned with its original warehouse use.

The building is a rare art deco industrial structure in San Francisco, and its defining features are deteriorating.

Without the project, some of those elements may be permanently lost.

Our rehabilitation includes $10 million in work, most of it preservation-focused,

as well as a major seismic and structural upgrade that will extend the building's life far beyond our reversible storage use.

These improvements are essential for any future tenant or use,

and the Mills Act is a critical tool to help offset the extraordinary costs of preserving a building of this scale.

We also meet two priority criteria.

We're located in a priority equity area,

and the project exceeds the city's rehabilitation investment threshold many times over.

An added community benefit is that 1035 will also serve as a generational community space for Soma Pilipinas,

Additionally, and important to note,

that the project will solely utilize union labor on all trades

throughout this development or redevelopment.

The Mills Act will ensure the Art Deco landmark is restored,

stabilized, and preserved for generations.

Thank you for your consideration.

Thank you for your comments.

Next speaker, please.

Good morning, supervisors.

My name is Larry Nibbe, and my brother and I, Sergio, personally own 331 Pennsylvania Avenue in Potrero.

We've had the building for several years.

It was an empty old convalescent hospital that we rehabilitated and structurally upgraded into seven rental units

and did a totally historic seismic upgrade, all union built, by the way.

And we're in the process now of asking for a Mills Act exemption

so we can continue to do some upgrades to the roof

and also windows and ornamental design

because it is an historical building.

We did not have any additions to the building.

The exterior is in keeping with the historical nature of the building,

and we have, over the course of construction, completed, again, as I mentioned, the seismic upgrading.

So the Mills Act exemption would help us to continue.

to preserve this beautiful building that we have.

Thank you very much for your attention.

Thank you for your comments.

Next speaker, please.

Hello, Supervisors.

David Wu with Selma Filipinas, the Filipino Cultural Heritage District.

And we respectfully urge you to approve the contract for 1035 Howard Street,

a project that offers meaningful and long-lasting community benefits for the Soma neighborhood.

This project will restore the historically significant Angskill building constructed in 1911

and designated an Article 11 Category 2 building and bring it back into active cultural and community-serving use.

The project includes prominent ground floor space for a new Filipino-owned community-serving business

as well as the first Soma Pilipinas managed cultural and educational space located in the heart of the Filipino Cultural Heritage District.

Both spaces will serve as new cultural anchors for our neighborhood and will be secured for over 20 years at deeply below market rates to ensure long-term community stability.

As you know, the purpose of the Mills Act is to provide owners of historic properties with the tax relief needed to undertake critical restoration work.

The Angskill Building is an ideal candidate.

Approximately $3.4 million is required solely for the historic restoration work,

with additional investment plan for interior improvements.

Mills Act support is essential to financing this scope of preservation

and enabling the broader public benefits embedded in this project.

The building is currently in severe disrepair and continues to deteriorate each year.

Its restoration will not only preserve an important piece of SOMA history,

it will also help the surrounding area and strengthen the cultural fabric of SOMA.

So thank you for your consideration and appreciate you hearing this item.

Thank you for your comments.

Next speaker, please.

Morning, supervisors.

My name is Tommy Baratsoff.

I'm here on behalf of 530 Jackson Street Project.

The Mills Act is an essential tool for enabling the owners of historic assets,

such as 530 Jackson, to complete critical improvements

that simply wouldn't be financially feasible under the operating conditions.

These contracts make it possible to restore and maintain buildings

in ways to preserve the architectural character and cultural fabric of each neighborhood.

Our team has a long-standing reputation as responsible and conscientious stewards of the historic properties.

We engage in thorough collaboration process with city staff as we enter into each Mills Act contract.

We do so with full commitment.

Over the past several years, construction costs have increased dramatically,

and many historic assets have simultaneously experienced 75% declines.

Despite this, we continue to honor our obligations and move forward with the work as promised

because we believe in the purpose of the Mills Act and in our role as partners to the city.

For many small property owners, this program is the only means by which they can undertake

the costly and complex improvements required to maintain the integrity of our most historic neighborhoods.

It remains one of the few practical mechanisms that supports preservation at scale,

especially during a period of economic strain.

Appreciate your time. Thank you.

Thank you.

Next speaker, please.

Hello, supervisors. I'm John Goldman, owner of Goldman Architects.

We're located at 172 Rust, about 100 feet from the 1035 Howard Building.

It's been, for many, many years, one of my favorite buildings in the whole neighborhood.

I love Art Deco and Modern Design.

In fact, I collect industrial design objects from that period.

So I had a specific interest in this project.

When I saw the initial plans, I had a number of concerns about the plans.

But working with the developer owner, these concerns have all been successfully addressed.

I'm very happy with the results.

I'm very happy with the way the developer owner has been willing to work with my firm and with other neighbors.

And so we strongly recommend the approval of the Mills application.

Thank you for your comments.

Next speaker, please.

Morning, commissioners.

My name is Justin Appold.

I'm a homeowner right across the street from 1035 Howard.

This is a large vacant building that's in a residential area of Soma.

When I initially heard that a storage facility was going to go in this building, I was super disappointed.

prior to COVID. This was going to be turned into biotech offices and laboratory space that I feel

like would have really added to the neighborhood and brought some positive presence to our area.

I subsequently organized opposition. Some of these meetings have been very contentious.

The United Players Club, which is on the corner, came out with 50 or so people to multiple meetings.

the developers came out with the union to try and show that they had support for the project.

And so I'm actually here today, believe it or not, to speak in conditional support of the project at this point

because I feel like a lot of concessions have been made.

You know, some space was donated to the neighbors or the Soma Filipinas.

initially they were asking for an active use waiver on the first 25 feet of all three stories

of the building. So there would have been no in and out other than the self-storage and the

commercial storage happening on the ground floor, which would have basically walled off half the

city block for us and not been any good. Now on the ground floor, at least they are doing the

right thing some of the space is going to be some Filipinas and they've also

promised to turn a section on the far side of Rust Street towards Folsom into

retail space we're dedicated towards retail space so I am I'm supporting the

project conditional on some some things that they've promised to do or at least

recommendations that have been made which include using that area for retail

space and also putting corridors in on the second and third floor so that storage will not happen

right up against the windows for the neighbors to see. Thank you for your comments. Do we have

any additional public commenters? That concludes public comment. Thank you, Madam Clerk. Seeing no

public commenters. Public comment is now closed.

Colleagues, any questions, comments?

As the BLA mentioned during their presentation, the total estimated cost to the property

owners of rehabilitating and maintaining 530

Jackson Street over the initial 10-year period of the proposed Mills Act

contract is approximately $1 million, which is

$1.6 million less than the estimated reduction

in property tax of $2.6 million over the same period.

And while I understand the importance of maintaining our historical properties,

I do have some concerns that the reduced property taxes would continue in perpetuity

and until the Mills Act contract is terminated.

This is an issue especially if the property owners are not upholding their end of the bargain.

And so because of that and based on the practice of previous GAO chairs,

I plan to work in conjunction with the planning department and the appropriate supervisors to file and introduce a notice of non-renewal on these Mills Act contracts.

This, of course, does not mean that the property owners will be ineligible for future extensions of their contracts with the city,

but simply means that the contracts and the corresponding decreases in property taxes will not be automatically renewed after the initial tenure term and will have to come back to the board.

for pre-approval. And so I now move to send items two through four to the full board of supervisors

with positive recommendation. Madam Clerk, please call the roll. Yes, and on the motion, two forward

items two, three, and four to the full board with positive recommendation. Vice Chair Sauter? Aye.

Vice Chair Sauter, aye. Member Sherrill? Aye. Member Sherrill, aye. Chair Fielder? Aye. Chair Fielder,

aye. I have three ayes. Thank you. The motion passes. Madam Clerk, please call item five. Yes, item number

5 is a resolution authorizing the San Francisco Police Department to enter into a memorandum

of understanding agreement with the United States Capitol Police to provide supplemental

law enforcement services for the period beginning on January 1st, 2026 and ending on December 31st,

2026. Thank you. And today we have Carl Nesita, Government Affairs Liaison for SFPD, to present

on this item. Mr. Nesita, please go ahead. Thank you, Chair Fielder. Good morning, Vice

Chair Sauter and Supervisor Cheryl. I am Carl Nesita, Government Affairs Liaison for the Police

Department. As Ms. Creighton just announced, this item is a resolution approving the Police

Department's MOU with the United States Capitol Police to provide supplemental law enforcement

services for calendar year 2026. This MOU continues the structure this committee and the

board has already approved for prior years for the same purpose, that being 24-7 site security

at the San Francisco residence of Speaker Emerita Nancy Pelosi

as part of the Capitol Police's protective mission.

The assigned officers maintain a visible presence,

monitor any suspicious activity, respond to incidents,

and coordinate with the USCP and other agencies if needed.

These are explicitly supplemental services

over and above SFPD's baseline patrol and 911 obligations.

contracting for these services will not reduce normal and regular ongoing service the department

otherwise provides citywide. As you know, the agreement grew out of the October 2022

attack on Paul Pelosi. In response, USCP asked SFPD to formalize a local around-the-clock

supplemental detail at the residence, and the city then chose to enter into a voluntary

reimbursed agreement. Financially, SFPD anticipates more than $1 million in revenue

from this one-year agreement, which requires board approval under the city charter.

The MOU includes invoicing and payment provisions, so the cost of these supplemental services are

borne by the federal government and not the city's general fund. Either party may terminate the MOU

on 30 days written notice, so the city is not locked in if circumstances or federal funding

change, and to the extent SFPD generates public records under the agreement, they remain subject

to the California Public Records Act and the Sunshine Ordinance.

So in short, this is a time-limited, one-year, fully reimbursed agreement that continues

the current supplemental protective services at Pelosi's residence through the end of

2026 without reducing baseline patrol and with fiscal and oversight safeguards for San

Francisco.

Happy to answer any questions you may have.

Thank you, Mr. Nesita.

Colleagues, any questions?

comments seeing none thank you mr. Nesita madam clerk let's take public comment please go ahead

yes members of the public who wish to speak on this item should line up now

along the side by the windows all speakers will have two minutes

it appears we have no public comment seeing no public commenters public comment is now closed

and I now move to send this item to the full board of supervisors with positive

recommendation madam clerk please call the roll yes and on the motion to forward

this resolution to the full board of supervisors with a positive

recommendation vice chair solder vice chair solder I member Cheryl member

Cheryl I chair Fielder I chair Fielder I have three eyes thank you the motion

passes madam clerk please call item six yes item number six is a hearing to

receive an update on the city's nonprofit monitoring program, including the findings

and plan improvements describing the citywide nonprofit monitoring and capacity building

program fiscal year 2023-2024 annual report. Thank you. And Vice Chair Sautter will be leading

on this hearing today. But before I hand it off, I just wanted to thank Laura Marshall,

citywide nonprofit policy manager of city performance at the Office of the Controller

for presenting on this item today and being available for questions.

Vice Chair Sautner, please go ahead.

Thank you, Chair Fielder.

Colleagues, I've called for this hearing today on nonprofit monitoring

because, as we all know, we rely heavily as a city on nonprofits

to administer critical services and programs.

We have contracts numbering nearly $2 billion annually to fund this work,

and that is with hundreds of nonprofits each year.

We need to ensure this money is being spent to achieve their goals,

And just as importantly, the city needs to do its part in making contracting and compliance more clear for nonprofits,

most of whom do incredible work on tight budgets with small teams.

And this is why the work that the Comptroller's Office does to administer the citywide nonprofit monitoring capacity building program is so important.

There is a new report hot off the fresh, or fresh off the presses, I should say, for fiscal year 2425.

And to speak through that annual report, answer some of our questions on this topic,

we do have Laura Marshall from the Comptroller's Office here for a presentation.

Ms. Marshall.

Good morning, Supervisors.

Thank you for having me, Laura Marshall, with the Comptroller's Office.

And as you mentioned, I'm very excited to talk to you about some of the highlights and findings of our fiscal year 25 annual report.

And so we'll dive right in.

So the citywide nonprofit monitoring and capacity building program has been around since 2006.

And we've been expanding it in recent years to account for the expanding scale of nonprofit contracting that the city is doing.

The program has four components.

And so our report and our information spans these different elements.

We have our longstanding program for fiscal monitoring, where we coordinate departments

to perform fiscal oversight of their contractors.

We have a brand new program on contract monitoring that I'm very excited to tell you,

sort of how we're rolling out this new initiative.

We have capacity building services that we provide to provide coaching and training to

nonprofits.

and then we administer the corrective action policy when there are serious or severe issues

that arise through the monitoring practices.

So I will dive into starting with the fiscal monitoring program

and some of our key highlights from last year.

The fiscal monitoring program, we use this program to ensure that nonprofits adhere

to the city's financial and administrative standards,

but also to ensure that we have strong and sustainable nonprofits to continue to deliver services year over year.

The program this past year accounted for $1.4 billion.

The nonprofits that we monitored received that much from the city,

which is about 87% of all of our spending that's going to nonprofits.

The work of the controller in this program is really to backbone the program.

We provide administrative support.

We provide tools and guidance and a system,

and we really work to facilitate and coordinate departments.

We had 16 departments in our program,

so a lot of facilitation and coordination

to make sure they're working together well

and performing joint and consistent monitoring.

We also use our systems to provide data and analysis

to help inform program operations.

So as I mentioned, we have 16 departments, a little bit of information about the departments

in our program and the scale of their contracting.

Interestingly, the majority of nonprofits receive funding from two or more departments.

So this is a big goal of our program to reduce duplication and really ensure consistency,

that nonprofits are receiving a single monitoring and a consistent monitoring, regardless of

who is funding them.

Each year we perform a risk assessment

to develop the monitoring pool.

And we do that in the fall, and then we launch the monitoring.

Departments initiate the monitoring,

perform the monitoring activities.

Contractors have a chance to respond and correct issues,

even in real time during the monitoring cycle.

So the information we're reporting on today

is the results at the end of that cycle,

after that back and forth takes place,

so those final results of the monitoring.

We had 206 nonprofits in our pool last year, and as I mentioned,

that's 87% of all city spending.

20 of them got a good performance waiver

due to their prior year performance.

And of the remaining, 72% met all of the standards

at the end of the monitoring.

And I just want to highlight that.

That has been consistent year over year, that close to three quarters of nonprofits,

either right from the get-go or through that back-and-forth process,

are able to end our cycle in full conformance with our standards.

So it's a pretty high level year over year.

At the end of the cycle, we had 49 nonprofits that had one or more findings

as a result of the monitoring.

So we wanted to provide a few highlights of the types of findings

that we were seeing as most common.

This is really focusing on the fiscal review that we do,

and the most common finding this past year was providing a timely audit.

So audits are due within nine months of the end of the fiscal year,

and we saw that 15 nonprofits were not able to meet that timeline standard.

This is actually an improvement from the prior year when we had 28 nonprofits

sort of having lags in being able to provide their audit.

Other top issues we saw were related to cash flow, cost allocation, gaps in board oversight,

But again, the scale of the proportion of nonprofits with these issues is actually going down.

Fewer nonprofits having these findings compared to the prior year.

As I mentioned earlier, we really want to use the monitoring process to assess the financial health of the nonprofits

so we can have strong and sustainable organizations.

So we have certain standards that we look at that test certain financial health indicators.

So monitors are doing calculations, they're sort of doing ratios to test this,

And we see that in these financial health indicators,

while the proportion is going down for several of them in terms of findings in these areas,

we had two that saw an increase in findings.

And they both sort of relate to cash flow.

So having enough revenue to cover costs.

So these ratios were showing that they had some cash flow constraints.

We're seeing a slight increase of those types of findings in our pool.

And that's something that we're taking in to think about how do we operationally

think about that moving forward and provide supports around those areas.

So those are some highlights from our fiscal review from last year.

And I'll dive into our new program, our contract monitoring program.

So this is new.

So we don't have results of actual monitoring that happened, but I did want to provide a

sense of scale of the reach of this program and, you know, future state.

We set policy that requires departments to perform contract monitoring on any contract

expected to exceed $200,000 in a year.

So when we look at last year's pool of those types of contracts,

we see over 1,200 contracts that would exceed that threshold

that would then be required to be monitored

for over 300 nonprofits that have those contracts of that level.

So we don't have those specific results,

but that's sort of what we're thinking as the scale of this future program.

Our work in this program over the course of the last year

has really been to get it up and running.

And really, we set our policy for contract monitoring last December.

We convened work groups of departments to support implementation.

We're facilitating and providing coaching and guidance and feedback to departments

as they're starting to set up their own programs.

I will note this is a different context than the fiscal monitoring program.

We really backbone that program.

We have systems and tools, and we're tracking and coordinating a lot of the actual monitoring.

but the scale of that is much smaller because we're focused on the nonprofits versus the contracts.

With 1,200 contracts, all with different scopes, we don't expect that that will be a part of our role moving forward.

A bit of background and history.

This program really arose out of board legislation that amended Admin Code 10.6-1 back in March 2024,

and we issued our policy tied to that legislation in December of 2024.

We then convened our work group, and we're really aiming in our work group process towards our first key milestone of our policy,

which went into place on July 1 of 2025, which required that departments have updated policies and procedures to reflect new guidelines.

So we convened departments to work with them throughout the spring of last year with a goal of helping them develop or update and revise their existing policies and procedures on their contract oversight practices.

And then we requested those documents from them after that milestone of July 1.

So we spent the fall preparing for our first required annual report of this program per the legislation that just came out on Tuesday where we were reviewing and assessing those departmental policies and procedures for how they would be performing contract oversight moving forward.

So the results here in this report and in this presentation relate to that assessment of department policies.

We really think policies and procedures are foundational documents.

You need to set really clear expectations for staff and for contractors on what they need to do, when they need to do it, how they should do it, how to have a consistent set of standards.

And then we can sort of implement from there.

So we were looking at departments' alignment to our policy, and our policy had five required components.

We wanted to see a point-in-time monitoring approach where departments were doing site visits or going out and assessing the performance of their contracts.

We wanted to see that there were performance measures.

They had procedures for setting targets

and that were requiring those elements,

reporting and engagement requirements, being clear and detailed.

And we wanted an overarching policy and procedure document

that helped staff consistently implement.

So as a result of our assessment,

we ended up categorizing the different departmental policies

that we received into three groups.

We had a group of very strong policies and procedures.

We labeled exemplary.

These were ready for full implementation, meaning we expect, given the level of detail

and clarity in those policies, that staff could begin implementing those policies immediately

and really have an effective and consistent practice across staff and contractors.

We had another group that had really strong policies but did need some adjustments

adjustments and improvements to refine on clarity and level of detail.

And then we had a smaller group that was in that developing category that

needed a bit more work to come into alignment with our policy.

Some trends in this, we had

really, we saw some good tailoring by departments around their

performance measures and how they were rolling that out through their contracts.

Really clear reporting requirements across a lot of the policies and

detailed engagement practices, sort of how they're working directly with their contractors

to implement on their contracts. Some of the challenges that we saw, we have a lot of

departments that have really, you know, longstanding practices for monitoring and,

you know, have maybe grown those programs over time. And so getting to the level of detail

of documentation of those practices could be challenging for departments, sort of getting it

written down clearly and aligned to our policy, even as they were already kind of implementing

on some of the stuff. The other challenge was when there are larger departments that have

multiple programs, multiple divisions in their department, finding an approach to create some

unification of that policy, really being clear what their department-wide policy is, but still

allowing enough variability or flexibility at the program level to account for specific program

needs in contract oversight. So we definitely saw that come up as a challenge. And then the third

thing would be the sort of level of detail provided in these policies. In some cases,

the policy language was pretty broad, and we wanted to see more step-by-step guidance to make

sure that staff knew exactly what to implement and how to implement it. So those are some of the

that we saw in our review of department policies.

As I mentioned, we're working to continue implementation

of this new requirement, and we have our ongoing work group

to address some of these challenges that we saw

in those policies and procedures.

Our third component of our program is our corrective action

policy implementation.

We updated our corrective action policy.

It has been around for many years, but we issued an update to it in our December 2024 policy suite.

Most of the work of corrective action, the vast majority of it,

happens in this first bucket of oversight and monitoring and at the department level.

They're day-to-day working with our contractors and working through issues.

In some cases, when issues are rising to a level of being serious or severe,

they escalate those issues to us, either through a fiscal context or through a contract performance context.

And we do coordination across all of their funding, that nonprofit's funding department,

to understand the issues and determine whether to designate them to a corrective action tier.

And if we do designate them, we then administer a corrective action plan and coaching process

where we set clear milestones for how they can resolve their issues

and be de-designated from that tier.

So as a result of fiscal year 25 sort of activities,

we designated 14 nonprofits to tier 2 and 2 nonprofits to tier 3.

The types of issues we were seeing in this group of organizations

is largely related to having cost allocation

or agency-wide budget concerns, missing audits or audits showing serious findings, invoicing

and subcontractor management gaps, as well as some significant cash flow concerns, and

we saw that in our earlier set of standards as well.

So our work is to engage and start creating action plans for these organizations.

I will note that we did have, this is a little bit higher than it was last year.

We had 11, I believe, designated to a tier last year.

four of those were de-designated as a result of improving on their performance, and several

new organizations came onto the list. So we are doing action planning, setting up goals for those

nonprofits that are on there, and part of that work is also to deploy some capacity building

supports. Capacity building services, we have contracts with consultants to provide coaching

and training to nonprofits directly.

It's available to all nonprofits.

However, we want to prioritize the ones where we're designating them

because we want them to really get support to address those issues.

Last year, we had 12 nonprofits that received coaching of about 260 hours,

and we did deliver several trainings as well.

So we will continue that capacity building work in the coming year.

And we have new capacity building services as well for contract monitoring.

We have sort of, we're expanding our program into that area as well.

So coming up in the coming year, we've already started our fiscal monitoring cycle for 26.

And we're engaging our steering committee on our contract monitoring program and continuing to roll out some new initiatives on the capacity building side.

And I have some links here, as well as I want to appreciate the team that contributed to our work on the program.

Happy to answer any questions.

Vice Chair Sautner.

Thank you, Chair.

And Ms. Marshall, thank you for this work and for your presentation.

I do have a couple questions.

First, you know, I think you began the report by just really illustrating how many different

departments have contracts and fund nonprofits.

16 kind of within this scope.

Do you think the breadth of having so many departments with contracts, does that make

things more difficult for you?

And is there any effort that you're aware of to consolidate this funding and grant making?

I can't speak to the second part of your question because that's not on our sort of scope of our program to do that.

What I can say is we have grown our program year over year as more departments do engage with nonprofits

and sort of increase their own contracting efforts in that space.

We've brought in new departments to the fiscal monitoring program over the last couple years.

So we added this past year city administrator joined, and they have a few different grant programs that we're kind of including in our pool.

And, you know, we've had just different growth over the last few years.

So we are ready to welcome everyone in, meaning we have a good, steady process, and we have training for new monitors as new staff join.

We have the sort of capability to coordinate them.

And so our goal is really to have a consistent and coordinated approach for staff and for contractors.

So if more departments are in, we can kind of deploy around that.

I think we will want to coordinate regardless of if they're joining our program or not.

If a department is funding an organization, sometimes a one-off, we do want to engage them on this work as well.

So regardless of how consolidated or not consolidated the contracting is, we are ready and able to coordinate.

Okay.

Thank you.

And then can you explain a little bit more about the waiver process and how someone obtains that and how we still have some level of oversight even with the waiver?

And you're speaking to the fiscal monitoring waiver?

Yeah.

The good performance waiver criteria, we do look at it in the same way we look at all of our risk assessment criteria.

when we're doing our risk assessment process.

We look at the volume of funding, multiple department funding

that an organization receives.

We look at any past monitoring findings they may have had,

and we look at other risk factors like turnover in their executive director,

which can destabilize an organization for a year or two as that turnover happens,

or other major changes to programming, including large jumps in funding.

So if we see an organization gets, you know, has a 100% increase in the amount of funding they're getting from the city, that can also be kind of slightly destabilizing.

So we look at all of those factors through our risk assessment process each fall to determine at the first step which organizations are going to be in our pool, but then at the second step whether they're qualified to receive a good performance waiver.

And so we have sort of a threshold of no findings or sort of a low level of findings in a prior year and no other major risk factors like turnover or jumps in funding, that kind of thing.

And if they meet those criteria, they would be eligible for a waiver.

There are some departments that may have reasons to monitor an organization regardless of that eligibility.

For example, if they have federal or state funding going to that organization, that grant may require that they do a site visit or do some sort of monitoring approach.

So eligibility for a waiver doesn't sort of automatically mean they receive a waiver.

And it's just a one-year waiver? Is that right?

Yes. We would require that they get a monitoring the subsequent year.

In terms of the capacity building program and resources, you know, I see that 12 nonprofits took advantage of that, which seems low.

Is there an effort to expand that or are you really just trying to keep that narrow to the folks on tier two and three?

There are constraints, mostly contracting and budget restraints.

So we have contracts with consultants that have certain values to them.

And we're trying to expand slightly on the amount of contracts we have.

we when a non-profit tends to be on a tier it's usually because things are pretty challenging

for them and the issues are pretty deep they've been there for a while and it takes longer to

to sort of fix and so that requires more of the resource that we have we had in prior years

you know we we have delivered capacity building to non-profits in very light touch ways and we

we would like to do more of that sort of preventative work.

So we go through in the monitoring,

all of that sort of early stage,

lowercase corrective action, right?

It's sort of like little minor things

that could use some tightening.

Can we get a coach out to help with that few hours of work?

That is the goal for the work,

but usually we have to prioritize

the sort of escalated versions of this work

given our resource constraints.

Can you clarify the differences in consequences and in monitoring for Tier 2 versus Tier 3?

How should we think of the difference between those two?

We think of the distinction really regarding whether the issue is serious or severe.

So there are different specific criteria, but there are also sort of other things that may be sort of considered serious versus severe.

In terms of the monitoring and the activity that our office performs, it's not very different between them.

We conduct an action plan process with the nonprofit and their funding departments.

We identify milestones and goals.

We identify how we're going to work through those issues together, whether there's capacity building supports needed, how long that will take.

So we do all of that same planning regardless of tier.

And we usually have sort of they continue to be monitored in the same way where we're and we're coordinating through that to see are the monitoring results showing that they're kind of also addressing some of these issues.

So our work on these tends to be structurally similar.

Often the Tier 3 is more frequent, for example, where we're kind of setting closer milestones,

we're meeting more regularly, and the work tends to take more time.

From a contracting angle, which is not our role, departments may consider a Tier 3 organization

as less eligible for funding versus a tier two.

The sort of fact of being on tier two should not be a reason why they're less eligible for funding.

However, if they're on tier two, they may also have other performance concerns

that could be reasons why they're less eligible for funding.

And is the general public able to review the nonprofits that are in tier two and three?

Like, is that available?

I mean, obviously within this report, but publicly online, some easier to view dashboard?

We don't have it on a dashboard.

Right now we have it just solely through our report.

That's sort of been the way we've sort of produced that information through our annual report each year.

So it's more in a static version of the document.

We've explored whether to make it on an online dashboard so that we could then show,

mostly so we could show when nonprofits are no longer on one of those

because that's our goal is to get them improved and off of the list

and so we can take them kind of out of that version.

But we haven't – I think there are other reasons why it might be –

there might be some other more punitive implications for the nonprofit

to have it on a public dashboard, for example.

Sure, and I think we have to find that balance.

I mean, it's certainly something we all need to be aware of in this building when we're thinking about contracts, specifically Tier 3.

But you're right.

If they are making the efforts that we want them to and making the improvements, we also don't want it to be a mark on them for the future.

Thankfully, there's only a few nonprofits at this point on Tier 3.

what would it you know and and hopefully you know we and and you and and they will make progress to

get off tier three but on the other hand if things don't get better what does it take from for someone

to go from tier three to essentially being you know prohibited from working with the city what

would have to happen for that to be to take place there is not necessarily a direct line between

tier three and a prohibition on contracting, mostly because our goal for the corrective

action policy is generally related to nonprofit financial management or contract management

concerns that are sort of not tied to things like fraud or sort of public integrity concerns

or other kinds of things.

So those would typically go through a debarment process, for example,

which would then prohibit contracting when they rise to that level of there's an investigation,

there's fraud, or some kind of other issues of that nature.

For our point of view, most of the issues that we're working on

and actively engaging with nonprofits on are really around skill building

and kind of getting them to sort of have the right tools

and procedures in place to meet our standards

and not kind of going a different route.

I think there are some cases where there are...

So the goal of the Tier 3 is not a direct line to sort of a prohibition.

However, the goal of Tier 3 is to put a spotlight on the fact

that there are severe issues that could put city funds at risk.

And so by doing that, there are other avenues that departments

or policymakers can make, such as they may score lower in solicitations.

Departments may say that we're not going to fund you anymore

because you are on this status and we don't trust

that you're managing our funding appropriately.

There may be some other sort of implications

that are choices that folks can make,

but they're not necessarily a direct prohibition.

Speaking of prohibition, the last thing I want to ask for at this point is around the Parks Alliance

and kind of, you know, from that example, if there was anything that,

you know, any reform to this process and, you know, what, in retrospect, if there was anything

that this process could have caught,

or do you think it was so outside of the bounds

of normal monitoring?

Yes.

It's a tricky issue.

So monitoring, as we see,

70-some-odd percent of nonprofits

are fully aligned with our standards.

This is our goal is to look and see

that they're following policies and procedures.

They have the documentations in place.

They can perform at that level.

Um, even with that, that review is not an audit. It's not necessarily, um, an investigation,

right? There's sort of, uh, it's a process meant to find, um, find certain types of issues that are

more related to, um, financial management as opposed to financial abuse or fraud or, um,

those types of things. So it can be harder to spot the types of issues that we saw come up through

some of these other cases like Parks Alliance through our monitoring approach. And even through

an auditing approach, it can be harder to find. But that is more of the type of thing that would

type of approach that would find those types of issues. So we tend to want to use monitoring.

at a certain level, and we do have a practice when we see that things are happening in the

monitoring that we're not sure about. It looks funny or it looks weird. We're seeing these things

and we're not sure what's happening. We do connect with our partners in the audits division

occasionally to say, can you sniff test this, or maybe this is a referral for an audit, or some

other kind of connection to go deeper a little more intensity so that is a goal of the monitoring

to identify those things and make those referrals if we think that something is not quite right but

it's not the goal of monitoring to go that to that level through that process but specifically

within your process like after all of the everything we've learned about the parks alliance

Has there been anything that you've changed in that referral process?

I mean, has there been anything you've changed out of this process yet?

I think one of the things that...

I think the Parks Alliance is a tricky one

because I don't think there was anything that the monitors would have looked at

that would have identified the issues that came out with a deeper review.

there are things that have come up over the year where years where we want to think about

you know is this something that monitors should have caught or seen and I think a lot of that

has to do with when we identify that there are things like we would have looked at that thing

what happened it's usually related to training for monitors knowing what to look for knowing

how to look at these documents well, knowing how to understand them. So the monitors are often like

contract analysts at a department, and we want to make sure that they understand what they're seeing

when they're looking at a budget, looking at invoices, trying to compare invoices, etc.

That's adorable. So we want to make sure that staff understand within their role of being a monitor

what to look at, how to identify things, how to look at their audit and see what is going on in

the organization by reviewing the audit. So a lot of it has to do with training and making sure

that the folks doing the work really have a good, confident grasp on what to look for and know what

to do when they see something that they can't understand. How do they escalate internally when

like, I didn't understand this, I need to, should we go deeper here? How to make those referrals

appropriately when they see something that's off.

I guess I want to just keep digging on this piece.

I mean, I want to recognize it's not entirely,

certainly not on you or, you know,

this process to be the only thing

that should have caught what happened

with the parks alliance.

I mean, it's much more expansive than that.

But it does feel like there should,

there has to be some sort of lesson out of that for,

if it's not directly for this monitoring program,

than maybe something else that needs to exist.

And I just think as someone who works on this

and works deeply with nonprofits

and with monitoring and oversight,

that's something I would love to hear

from yourself and from the department more on

because there has to be,

you know it can't just be that it was such a special set of circumstances there has to be

something that we learn out of this so I'll leave you with that thank you vice chair Stauder for

your leadership on this and I just wanted to give a quick shout out to the students at St. Gabriel

who are visiting today good to see you welcome supervisor Cheryl thank you chair Fielder

Vice Chair Sauter, thank you for bringing this up.

I'm going to ask a really basic question.

I apologize if this is silly.

So the monitoring pool, it doesn't cover all of the nonprofits with whom the city has grant agreements.

What's the difference between what's in and what's not?

Yes.

We use a risk-based approach to create the pool.

so our thresholds so this is our our starting point is to look at funding thresholds for the

year by department that are in the pool so they provide to us a list of their contracts and how

much they're anticipating those contracts to be worth for the year and we we look at a 200,000

or sorry it's a hundred thousand dollars in total spending by the department on that contractor so

it's not a contract level. We're sort of putting a department level. So, you know, if one department

has two or three contracts that all total about $100,000 or more, that's in for that department.

But in order to be in the pool, then another department would need to fund also at $100,000

level. So there's another cap of about $200,000. So when we see joint funding across departments,

we have a lower threshold of $200,000 of total city funding going to that organization.

We also have a sort of above the higher level when it's one department.

So we have just actually in this year moving forward lowered that level to $500,000.

It used to be a million.

So in the coming year, if one department funds a nonprofit for $500,000, they're in the pool.

and if two or more departments fund them for at least $200,000, they're in the pool.

So it's a little bit wonky, but we're trying to capture sort of that joint funding at a lower level

because there's more risk around sort of multiple departments funding the same organization,

but also sort of a single department with sort of a chunky contract or two with that nonprofit to get them in the pool.

So it has very little to do with the nonprofit themselves.

It has more to do with the contracts that they hold with the city.

Yep, so the risk level based on funding threshold.

Thank you. You said something, Vice Chair Sauter's kind of line of questioning on the parks lines, you said something about the, I don't know, not good stuff, let's call it, that happened there probably wouldn't have been flagged in some of these monitoring procedures.

I didn't quite understand why. Do you mind providing a little more clarity on that? And I'm sorry if you feel like you're repeating yourself here.

I don't believe I've shared that, so it's not a repeat, but I think it's just the wonky nature of our monitoring.

So we're requesting financial documents like the agency-wide budget, the audited financial statements,

some supporting documentation around payroll records, for example, their policies and procedures,

any subcontracts they have. So we're gathering a whole lot of documents and looking at those

documents to check for certain specific standards. So for the agency-wide budget, for example,

we want to make sure that they're structuring their budget in a way that helps us see cost

across programs and making sure they're allocating costs appropriately so they're not over-representing

one program or another, or they have their indirects all in order. So we're looking at

those details. An organization can have a very strong agency-wide budget that is perfectly in

order. And that will meet the standards. And I think that that was true for some organizations,

like potentially true for Parks Alliance, if they met those standards in the monitoring.

it doesn't necessarily we aren't necessarily going we're going through their financial

statements that they have prepared to test for you know do you have enough working capital other

things if they have prepared financial statements that show that they meet our standards then they

have sort of met the standards so I think some of the issues that that's why I was saying if you

You have to kind of go to audit level depth to start to see the sort of when people are deliberately misrepresenting their financial statements or some other of their materials.

So that's the sort of things that we wouldn't necessarily catch because the materials they did provide met the standards.

So in here we talk about the fiscal monitoring program and some of the corrective action plans and all that.

I know that your job is not to judge the outcomes of the program.

Like, are they delivering services well?

Are they accomplishing their mission?

I know that's not really your job.

But has there been any analysis of a relationship between the fiscal health of an organization and the outcomes they're delivering on the services, not the outcomes necessarily on the fiscal elements, but on the services they're delivering?

I would say that I hope it is somewhat of our job in the future to do that, meaning our contract monitoring program, we have set standards where we are trying to start to regularize the contract monitoring and make sure that as departments are doing this, they are doing it in certain ways, like having performance measures clearly documented with targets and tracked through reports.

We have set up our contract monitoring policy with the goal that we can start to create a framework for how we can show the impact of service.

And through that, tie it also to the financial strength and health of the organization as well as the cost of that service.

So that is a future goal, however, and as I mentioned, we're still kind of rolling through the program to try to implement.

We're starting with that foundation of setting policies, and we're designing toward how do we get to a place where maybe not the controller's office can say,

but at the very least a department can really show the sort of comprehensive view of these services at the contract level that they're delivering,

whether that contractor is performing financially, whether they're performing programmatically,

and the impact of all of that work.

So that's our future state goal.

So how can we help you get there quicker?

Or what roadblocks can we help either navigate or get out of the way?

I don't have any specific roadblocks right now because we're still very much in our design and implementation stage.

How can we help you get there quicker?

I will take that question back.

And we are doing some work with departments now because I think we're,

we, as I mentioned,

we've convened a steering committee of departments to really talk through

these performance monitoring activities and rolling that out.

So I want to,

we want to like engage them on some of this design of what,

how do we get there quicker through them?

Because they're each at different levels as we've seen.

And so how do we kind of start to bring all of those departments along with

us?

Yeah, I think in all of this, a lot of this is about public trust.

And I think I won't speak for the other members of the committee, but I wouldn't be surprised if they agree with me on this.

I think for us, it's not about how do we catch more bad people or prove that people are doing a bad job.

It's just let's prove to San Franciscans, is it good or is it bad?

And if it's really good, great.

Let's invest more money behind these great services.

If it's not, maybe we take a different tack.

And I think for many San Franciscans, probably share my frustration, where it feels like we're spending a lot of money, and you hear about one or two people who blow up spectacularly, and it just erodes trust across.

So I think we are very much supportive in you reaching that goal and would love to provide the help where possible.

I just have one more question.

You talked about the corrective action plans and the consequences of noncompliance.

and I had a little hard time following, so I apologize.

But can you talk about what happens

if an organization doesn't meet the targets

of their corrective action plan?

You go through all this stuff,

they got the corrective action plan

and then they still can't get it done.

What happens then?

And again, I apologize if I just couldn't follow before.

No, that's fine.

If the organization is on Tier 2, the implication of continued noncompliance could be escalation to Tier 3.

So if they are not able, they're not participatory, they're not coming and meeting those milestones,

it likely means they're still not meeting the standards as well.

And so if we're seeing that they're continuing to not improve on those performance issues or financial management issues,

that that would lead to an escalation in most cases to Tier 3.

And then the Tier 3 implication is that risk to funding.

Departments may have more discretion in sort of using that as criteria to remove funding.

So there are sort of that escalation from Tier 2 to Tier 3.

on the tier three side there's I think it's it's the same risk as the the defunding departments

really are trying to in most cases when they are when they're working with an organization on tier

three where they're there because the department continues to want that service in some way and so

they are sort of working through these issues rather than canceling that contract I think as

that process extends, departments can determine when they are done with participating and

wanting to pivot services. It's not always an easy answer because there are times when

we really need that service and this is the only organization that can provide it. We

also want to acknowledge that it can take multiple years to deal with some things and

so the progress can look slow for some, even as they are working towards it. And so we want to

be mindful of that as we're thinking about when do we sort of, when do departments make those

choices? Where is the line that they're working towards as things kind of- But there isn't a point

where the controller's office is saying, hey, department, cut them off. Not any kind of official

way. I think we would be looking case by case to see, are they actually participating? Is this,

are they hitting their own roadblocks and that's why they can't meet the milestone or are they

totally you know checked out I haven't seen any that are checked out I've only seen

sort of participatory organizations but it can be hard it's difficult work great thank you appreciate

it thank you colleagues for the great questions a lot of them were answered

from my perspective just a few one on fiscal monitoring for each of the monitored

contractors, are there any trends on what is the most common issue that's being flagged

through the controllers fiscal monitoring program? We do have some trend analysis.

The audit findings have tended in the last couple of years to be high, and a lot of it is related to

delays in being able to prepare an audit timely.

And we are seeing a bit more, with a bit more frequency issues within the audit.

So we're seeing, you know, cash flow issues, but also sort of some deficiencies or material

weaknesses.

We're seeing a little bit more of that come up than we had seen in previous years.

they're still at sort of lower levels, but we're just sort of noticing more of them as findings.

We typically, we have a fair number of findings year over year related to cost allocation.

Cost allocation is how the agency sort of applies its shared and indirect across its different

programs and making sure that they have a program for each.

Well, each contract usually funds a program, but sometimes they have multiple contracts

funding a program or et cetera.

And so how are you allocating costs across your agency?

That's really complicated for newer programs, for sort of more emerging nonprofits.

as they're growing into multiple programs,

this can be tricky for them

just to kind of have the right level of financial staff

to be able to prepare that type of budget

and to manage to it.

And so those could come up frequently as findings

and it's a big area for our training work

and sort of our coaching work as well.

Those are the things that come to mind.

We have a little bit of trend analysis in the report,

but it's just from one year to the next.

Looking back at multiple years would take more work.

Yeah.

I've also, you know, heard extant concerns about regarding cash flow

that Citi doesn't provide its end of the bargain

when there is a contract awarded

and that the funding doesn't necessarily come, you know, in a timely fashion.

um what what are we doing to hold up our end of the bargain from the city side yeah

outside of the monitoring program the controller's office also does a lot of policy work and

coordination work with city departments and non-profits to try to improve our contracting

space generally so I think contract certification timeliness and uh um you know invoicing constraints

are sort of a big topic right now

as we're engaging with nonprofits.

So some of the same issues you are noting, supervisor.

And so we have, these have been common for years.

These are pressing challenges,

but they're also really tricky challenges.

So there is policy setting underway

in the controller's office around invoicing

just to try to set some new standards and clarity

around sort of how to invoice,

what documentation is needed,

and working with departments to clarify that

so we can get a good invoice right from the beginning.

There's also some new cash advance guidance

coming out of the controller's office.

So trying to clarify how nonprofits can get those advances.

I would say they're not always easy for nonprofits to manage to because it means they have less money coming in the door later.

So you really need a savvy finance officer to be able to do kind of planning work for that.

But that's another strategy to support sort of cash flow.

And then I think the other item that comes up a lot is sort of related to cost of doing business increases.

So we hear a lot of that.

So those are sort of policy choices on the contracting side of sort of how are we funding, are we overall funding contracts sufficiently to cover the cost of service?

Thank you. Regarding contract monitoring, can you detail some of the policies and procedures that require improvement regarding contracts administered by the Department of Technology specifically, and what might be some key gaps between their policies and procedures and city policy?

I don't have that in my hand, but I can consult with my colleague to get some of their issues.

We can come back to it as well.

I'll look it up, but I think most of the issues that came out were they had a reasonable policy

document that expressed the policy, but the level of detail in their procedures to allow

staff to be able to follow sort of a guide like here's when you need to do the monitoring, here's

the timeline for the letters, here's the you know like the sort of step-by-steps were sparse. Okay

thank you. Regarding capacity building in the civil grand jury hearing on non-profit capacity

the city agreed that there is a need to streamline the process for grants and agrees that it's hard

for nonprofits, especially ones with smaller contracts

to navigate the city's contracting process.

And the city also believes that we can better streamline

and leverage existing resources using technology

and process realignment.

Has there been any progress regarding how the city plans

to leverage technology to streamline some of these processes?

I think that

from the monitoring program end

we are not working on that

but I think there's other work at play that might be with

the city administrator but I'm not sure

I don't have an answer to that question

happy to follow up offline

And then regarding, actually, those are all my questions.

Thank you really much for your presentation and answering our questions.

Madam Clerk, let's take public comments.

Yes, members of the public who wish to speak on this item should line up now along the side by the windows.

All speakers will have two minutes.

Good afternoon, Supervisors Fielders, Cheryl and Soudert.

Thank you, Supervisor Soudert, for sponsoring this hearing.

There are a lot of concerns on behalf of myself and the Connected SF staff and our members.

I definitely urge this monitoring program and we urge the monitoring program to incorporate

outcomes to the financial contracts of the nonprofits secondly I think there needs to

be some consolidation in the best interest of San Franciscans the contract monitoring program and

and City Hall.

And I would hope maybe moving forward,

we can bring in the department specifically

to talk about their contracts

and bring the metrics to the table

tied to the financial,

tied to the money that they're actually being received.

It's very concerning,

especially when we see on Tuesday

one of the nonprofits move to Tier 3.

I also think we need to focus a little bit more on punishment on the Tier 2 and Tier 3 nonprofits.

Timelines, et cetera.

It felt like a lot of words out in the presentation for those specific nonprofits in those categories.

Thanks so much.

Thank you for your comments.

Next speaker, please.

Hello, supervisors and staff.

My name is Rocio Molina here from the San Francisco Human Services Network, which represents

over 80 nonprofits that do a lot of the work that we're talking about here today.

First, I'd like to thank Laura for her work in engaging with the nonprofits to discuss

some of these topics.

As she's mentioned, we've brought a lot of challenges and solutions to her and the

controller's office about the contracting processes and some of the ways that we can

support more transparency.

In specific, as she mentioned, we would love to discuss outcomes, transparency, and more efficient communications with our program monitors and the departments.

Unfortunately, a lot of this does take staff capacity, which is limited and is an indirect cost, which is not always appropriately funded through the contracts.

So these are activities that the organizations are funding in order to really create an effective partnership with the city.

As she mentioned, the cost of doing business has been low for years, if not non-existent,

which I think we're seeing the compounding effects of now,

because staff turnover does result in a lot of these reporting challenges,

in these delays, as she mentioned, in the audit process,

because staff has to catch up on the work of previous organization members that maybe left,

maybe didn't necessarily leave as detailed information, and that process can result in a lot of these delays.

It doesn't mean the information is not there, but it does mean that maybe it's difficult to track down.

We also would love increased engagement ahead of some of these fiscal monitoring policies

and other standardization policies so that we can effectively partner and implement them

as opposed to acting on them retroactively as new kind of instructions being delivered

and needing to be reacted to immediately, which can cause a lot of stress and delays,

again, compounding the effects that she mentioned.

Thank you so much.

Happy to talk more about this with any of you.

Thank you for your comments.

Do you have any additional public commenters?

That concludes public comment.

Thank you, Madam Clerk.

Seeing no one else making public comment, public comment is now closed.

I now move to continue this item to the call of the chair madam clerk please call the roll yes

and on the motion to continue this item to the call of the chair vice chair Sauter vice chair

Sauter I member Cheryl member Cheryl I chair Filder I chair Filder I I have three eyes thank

you the motion passes and thank you verse chair Sauter for your work on this hearing thank you

so much to the presenter as well all right madam clerk please call items 7 through 10 yes item 7

through 10 is one ordinance and three resolutions authorizing and approving settlement of lawsuits

and unlitigated claims against the city please note that items number seven will be referred

to the full board as a committee report for consideration on december 9th 2025.

colleagues any questions or comments seeing none um

madam clerk let's open up public comment yes members of the public who wish to speak on these

items should line up now along the side by the windows all speakers will have

two minutes it appears we have no public comment thank you seeing no one else

making public comment public comment is now closed I now move to send item 7 to

the full board of supervisors with positive recommendation as a committee

report madam clerk please call the roll yes and on the motion to forward item

number 7 to the full board as a committee report with positive

recommendation. Vice Chair Sauter. Vice Chair Sauter, aye. Member Sheryl. Member Sheryl, aye.

Chair Fielder. Aye. Chair Fielder, aye. Have three ayes. Thank you. The motion passes.

And I now move to send items eight through ten to the full board of supervisors with positive

recommendation. Madam Clerk. Yes, and on the motion to forward items eight through ten to the full

board with positive recommendation. Vice Chair Sauter. Aye. Vice Chair Sauter, aye. Member Sheryl.

member Cheryl aye chair Fielder aye chair Fielder I have three eyes thank you the motion passes

madam clerk is there any other business before us today that completes our meeting agenda

thank you seeing no other business we are adjourned

Thank you.