San Francisco Government SmartTranscripts:

[Supervisor Connie Chan (Chair)]: Good morning. The meeting will come to order. Welcome to the October 15 meeting of the Budget and Finance Committee. I'm supervisor Connie Chan, chair of the committee. I'm joined by vice chair supervisor Matt Dorsey and member supervisor Joe Guardio. Our clerk is Brent Halipa, and I would like to thank, Colina Mendoza from ESEAGovTV for broadcasting this meeting. Mister Clark, do you have any announcements?

[Brent Jalipa (Committee Clerk)]: Thank you, madam chair. Just a friendly reminder to those in attendance to please make sure to silence all cell phones and electronic devices to prevent interruptions to our proceedings. Should you have any documents to be included as part of the file, they should be submitted to myself, the clerk. Public comment will be taken on each item on this agenda. When your item of interest comes up and public sorry, and public comment is called, Please line up to speak on the west side of the chamber to your right, my left, along those curtains. And while not required to provide public comment, we do invite you to fill out a comment card and leave them on the tray by the television to your left by the doors if you wish to be accurately recorded for the minutes. Alternatively, you may submit public comment in writing in either of the following ways. Email them to myself, the budget and finance committee clerk, at brent.jalipa@sfgov.org. If you submit public comment via email, it will be forwarded to the supervisors and also included as part of the official file. You may also send your written comments via US Postal Service to our office in City Hall at +1, 24494102. And finally, madam chair, items acted upon today are expected to appear on the board of supervisors agenda of October 21, unless otherwise stated. Madam chair.

[Supervisor Connie Chan (Chair)]: Thank you, mister Clark. And, of course, just a general reminder that when for the items that we have budget and legislative analyst reports, And today are items two, three, and five through nine. And for those items, we will have the department presentation first, followed by the budget and legislator analyst. Then we will take questions, and then we go to public comment. So with that, mister Clark, please call item number one.

[Brent Jalipa (Committee Clerk)]: Yes. Item number one is a resolution authorizing the Recreation and Park Department to accept and expend cash and or in kind grants from the San Francisco Irish Famine Memorial Committee valued at approximately 500,000 for the San Francisco Irish Famine Memorial Project effective upon approval of this resolution through notice of substantial completion. Madam chair.

[Supervisor Connie Chan (Chair)]: Thank you, mister Clerk. And today, we have S. F. Wreck and Park here. It's good to see you.

[Abigail Mayer (SF Recreation and Park Department)]: Good morning, supervisors. Chan, Dorsey, and On Guardio. I'm Abigail Mayer with the Recreation and Park Department, Partnerships Division. And I do have a presentation. Oh, great. Thank you. The San Francisco Irish Famine Memorial Committee was formed to memorialize the victims and the survivors of the great hunger that occurred in Ireland from 1845 to 1852. The committee aims to create the memorial to educate locals and visitors about the period of history that caused the starvation and death of over a million Irish people, and led to the immigration of over a million more who were forced to leave Ireland. The memorial will also serve to thank the state of California and the city of San Francisco for welcoming these individuals, and for the opportunities afforded to the Irish upon their arrival. On 03/19/2019, the board of supervisors passed a resolution supporting a permanent memorial in San Francisco for the victims and survivors of the Irish famine. And then the Recreation and Park Department was asked to work with the committee to deliver this project.

[Department of Early Childhood representative (unidentified)]: I don't know how to do this.

[Abigail Mayer (SF Recreation and Park Department)]: I'm sorry, I'm getting an error message on my on the screen. Okay, I'll just continue. The location for the memorial is on El Camino Del Mar in Lincoln Park, overlooking the 17th hole of the Lincoln Golf Course. And the committee would like to deliver this project in two phases. The Recreation and Park Department is working with the committee on phase one, which includes a concrete plaza, which will be designed and built in partnership. The second phase calls for future artwork to be installed on the plaza, and will be managed in partnership with the committee and the San Francisco Arts Commission staff. The committee, in partnership with their fiscal sponsor, SD Meyer, is proposing a combination of cash and in kind grant funding to the department for the design and construction of the plaza. The initial cost estimate is approximately $500,000 This includes in kind funding for design, regulatory reviews, construction, and cash funding to the recreation and park capital team for their project management services. If there are additional unforeseen costs, the committee has offered to donate additional funds to cover the full cost of the improvement project. We have really enjoyed working with the committee, and we look forward to full approval of this project, and, of course, the generous grant. Thank you, and I'm available for questions.

[Supervisor Connie Chan (Chair)]: Thank you. I think you have all three members of this committee, as cosponsor to this project. Clearly, we're very supportive of it. So let's go to public comments on this item.

[Brent Jalipa (Committee Clerk)]: Yes. If we have any members of the public who wish to address this committee regarding this item number one, now is your opportunity.

[Patrick Uniak (SF Irish Famine Memorial Committee)]: Good morning, commissioners. My name is Patrick Uniak. I'm the chair of the San Francisco Irish Family Memorial Committee. Our committee consists of representatives from almost 30 different Irish and Irish American organizations in San Francisco and the Bay Area. And I want to sincerely thank you, all of you, and everybody involved that supported our quest to build a family memorial in San Francisco. We really appreciate that and it means an awful lot to the Irish community and the Irish American community. For the past five or six years, we've been working with our partners, the San Francisco Park and Recreation Department, and I want to thank Abigail and her team for the wonderful support and direction and assistance she has given us over the past five or six years. We expect to break ground around 03/17/2026, weather permitting, and as you all know, March 17 is Saint Patrick's Day. It would be really nice to to, do the groundbreaking then. So thank you all once again for your support. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much for addressing this committee.

[Elizabeth Creeley (Consulate General of Ireland, San Francisco)]: Hi there. My name is Elizabeth Creeley. I'm the consular officer for the San Francisco Consulate General of Ireland. Supervisors Dorsey, Chan, and En Gardio, I just wanted to express, our gratitude, to you for leading this. Our gratitude to Abigail, Parks and Recreation for, leading this project as well. We are, as you know, I think, based on previous comments made by Consul General Nehal Smith, very, very, favorable, for this memorial. We know that it is, will be a meaningful site for Irish Americans in San Francisco, the Bay Area, and indeed, I would say throughout California, to visit, to reflect, to think about, what it means, to have such memorial. And we believe that it is in alignment as well and supportive of all immigrant communities in San Francisco. All of their journeys. All of their stories. Not just their departure, but their arrival, as well. And speaking on a personal note, my great great great grandparents came to San Francisco because of the famine. And I'm in California because of that event. And really look forward to the completion of this project and do believe it will be a very meaningful, addition to San Francisco's memorial spaces and public art. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much for your comments. Seeing no other speakers, my chair that completes our queue.

[Supervisor Connie Chan (Chair)]: Seeing no public comments, public comments now close. Vice chair Dorsey.

[Supervisor Matt Dorsey (Vice Chair)]: Thank you, Chair Chan. I just wanna wanna express my appreciation. I'm I'm really happy to support this. As someone who it occurred to me, who is also a descendant of the door I believe the Dorsey's came over in early 1850s and, you know, this is my family ended up in New York but, I think there were Irish Americans in many major cities including San Francisco so I am proud to support this and I'm really looking forward to the groundbreaking, hopefully, in time for, Saint Patrick's

[Supervisor Connie Chan (Chair)]: Day. Thank you. And, just quick questions. If groundbreaking is, March 2026, what is the expectations of completion? When do we expect it to be completed?

[Abigail Mayer (SF Recreation and Park Department)]: Hi, yeah, thank you for your question. If we are able to achieve this exciting goal of groundbreaking in March 2026, then I believe the plaza project, the construction duration is just a couple of months. So it'll just depend on, you know, weather, and any unforeseen circumstances or issues. But I believe it's a pretty quick project.

[Supervisor Connie Chan (Chair)]: And, I think I think there was, expectation that we were going to actually start this year, and that, it seems like there's a little bit of a delay. Could you explain why?

[Abigail Mayer (SF Recreation and Park Department)]: Oh, sure. We're working with the committee on, well, we worked with them on the planning and the design phases, and now, they have launched their robust fundraising campaign. And so, you know, one of the requirements is that all the funding is secured and in place before we break ground on a project in the city.

[Supervisor Connie Chan (Chair)]: And has it received all the necessary permits and approval with arts commission and everyone else?

[Abigail Mayer (SF Recreation and Park Department)]: Yes. Oh, yeah. That's a great point too. There was a little delay in getting the permit, but the DBI permit has been secured.

[Supervisor Connie Chan (Chair)]: Wonderful. I think all three of us, look forward to your groundbreaking in March 2026. We're looking forward to it. And, let's make sure that it happens, and let us know how we can provide the support. And so, thank you. Thank you for bringing this this to us. And with that, I would like to, colleagues, move this item to full board with recommendation and a roll call, please.

[Brent Jalipa (Committee Clerk)]: And on that motion to forward to the full board with a positive recommendation. Vice chair Dorsey?

[Supervisor Matt Dorsey (Vice Chair)]: Aye.

[Brent Jalipa (Committee Clerk)]: Dorsey, aye. Member Guardio? Aye. And Guardio, aye. Chair Chan?

[Supervisor Connie Chan (Chair)]: Aye.

[Brent Jalipa (Committee Clerk)]: Chan, aye. We have three ayes.

[Supervisor Connie Chan (Chair)]: The motion passes. Thank you. And, mister Clerk, please call item number two.

[Brent Jalipa (Committee Clerk)]: Yes. Item number two is a resolution approving and authorizing the director of property to enter into a lease of approximately 12,000 square feet of real property located at 845 Jackson Street on the 4th Floor with Chinese Hospital Association as landlord for an initial term of three years with one option to extend, the term for one year. Effective upon approval of this resolution for an initial annual base rent of approximately 500,000, authorizing the director of property on behalf of the Department of Public Health to execute the lease and authorizing the director of property to enter into other amendments or modifications to the lease that did not materially increase the obligations nor liabilities to the city and are necessary to effectuate the purposes of this lease or this resolution. Madam chair.

[Supervisor Connie Chan (Chair)]: Thank you. And today, we have real estate division here.

[Sally Orth (Director of Real Estate, City and County of San Francisco)]: Thank you. Good morning, chair Chan and supervisors. My name is Sally Orth, and I am the director of real estate. I'm also joined by representatives of the Department of Public Health. And I'm pleased to be here today to present on a lease at 845 Jackson Street. And I thank you for sharing the presentation. So by way of background, DPH is seeking to lease space at 845 Jackson Street, also known as Chinese Hospital, as a temporary relocation site. This move is necessary while the Chinatown Public Health Center, or CPHC, undergoes renovations, including seismic retrofitting and modernization of building systems funded through the 2024 Healthy, Safe, and Vibrant General Obligation Bond program. The lease will provide temporary space for approximately 40 CPHC employees, allowing them to continue serving the community during construction. The clinic will remain within the Chinatown neighborhood, ensuring continuity of care for approximately 4,400 San Franciscans, and the patient population is primarily monolingual Chinese speaking, low income, elderly, and or immigrant residents. Services provided at the site will include primary care, specialty services, nurse and medical assistant visits, clinical pharmacist consultations, lab services, and behavioral health support. Key lease terms for the 845 Jackson Street space are as follows. It is approximately 11,894 square feet of space. It will require a change of use from community hospital to outpatient health services. And it has a three year lease term with one optional one year extension. The monthly expenses are shown here on the slide, and the annual base rent is $42 per square foot, which is at or below market rate. Prior to occupancy, certain tenant improvements are required to meet state licensing standards, and the city will reimburse the landlord for these improvements in an amount not to exceed $300,000 Additionally, the city will reimburse the landlord up to $1,600 for new signage. This concludes my presentation, and again, I'd like to note that representatives of the Department of Public Health are here, as well as myself, to answer any questions you may have. Thank you.

[Nick Menard (Budget and Legislative Analyst)]: Good morning. Nick Menard from the Budget Legislative Analyst Office. Item two is a resolution that approves, a lease between DPH and Chinese Hospital, with DPH renting space at 845 Jackson Street, to use temporarily to relocate services at the Chinatown Public Health Center, which is being renovated, funded by a general obligation bond that the board approved earlier this year. The lease has an initial term of three years with one option to extend. We summarize the other lease terms on page three of our report. You can see that over the initial three year term, and and if the option to extend is exercised, we estimate that the city will spend $2,100,000 on this lease in rent, utilities, and building operating costs. In addition to that, the city will fund up to $300,000 for tenant improvements to make the space suitable for DPH's use. Those would also be funded by the general fund. We recommend approval item two.

[Supervisor Connie Chan (Chair)]: Thank you. Could you walk us through the timeline again really quick? When are we going to execute this lease, and then for three years? Is that correct? But as soon as we are we approve this, does that mean that we can start are they we can start moving into the space, or or is there, say, timeline?

[Sally Orth (Director of Real Estate, City and County of San Francisco)]: So the lease will become effective upon execution, rent will be paid, upon the space being converted to, meet state licensing requirements. In terms of the project of how long that will take, I would, defer to colleagues from the Department of Public Health to answer some more questions about that.

[Kay Kim (Department of Public Health, Project Manager)]: Good morning, chair Chen.

[Scarlett Lam (San Francisco Municipal Transportation Agency)]: Yeah.

[Kay Kim (Department of Public Health, Project Manager)]: I'm Kay Kim from project manager from DPH. So in terms of the, getting the change of use permit, Chinese hospital are currently working with architect to submit the design document to HCAI. So the getting the HCAI permit will take, we are expecting by end of this year. And then, any related construction, we are expecting another three months. So that will take us to the, March next year. And then, rent payment will start after, Chinese hospitals secure both HCAI and then CDPH change of use permit. So which, we are expecting to happen around April of the next year.

[Supervisor Connie Chan (Chair)]: And how does that coincide with the, renovation at, Health Clinic Number 4?

[Kay Kim (Department of Public Health, Project Manager)]: Can you

[Supervisor Connie Chan (Chair)]: So is that working out, like, with the renovation? Is it creating any type of delay to the renovation, or I should say the Yes. The demolitions to the to the site?

[Kay Kim (Department of Public Health, Project Manager)]: Yeah. Thank you for clarifying the question. So initially, our project was expecting to begin the construction in February, because currently our Chinatown Public Residential renovation under general obligation bondage, under under the BID phase. But, Chinese hospital originally estimated that they already require CDPH, change of use permit. But once they submitted their permits to the CDPH, CD, CDPH subsequently request the Chinese hospital to get the full HCAI design permit. So which actually delayed the project, couple of, couple of months. So we are actively working at DPW, and then both with the Chinese hospital to align the, change of use permit, and then bid schedule. And then we try to expedite as as much as we can to get this change of use permit. So project does not delayed further.

[Supervisor Connie Chan (Chair)]: One month is not too bad. It's I I I think that's okay. I can understand that. But, that's good to know. Thank you so much for the answers. I think that's still relatively aligned, for that one month of spring, March, and and and February. That's good. Thank you so much for the information.

[Kay Kim (Department of Public Health, Project Manager)]: Thank you.

[Supervisor Connie Chan (Chair)]: Thank you so much for your work. I don't have any other questions. No name on the roster. We will go to public comments on this item.

[Brent Jalipa (Committee Clerk)]: Yes. We're now opening public comment for this item number two, if we have any members of the public who wish to address this committee. Madam chair, we have no speakers.

[Supervisor Connie Chan (Chair)]: Seeing no public comments, public comment is now closed. Colleagues, I would like to move this item to full board with recommendation and a roll call, please.

[Brent Jalipa (Committee Clerk)]: And on that motion to forward to the full board with a positive recommendation, vice chair Dorsey? Aye. Dorsey, aye. Member and Guardio? And Guardio, aye. Chair Chan?

[Supervisor Connie Chan (Chair)]: Aye.

[Brent Jalipa (Committee Clerk)]: Chan, aye. We have three ayes.

[Supervisor Connie Chan (Chair)]: The motion passes. Thank you. And, mister Clark, please call item number three.

[Brent Jalipa (Committee Clerk)]: Yes. Item number three is a resolution approving a first amendment to the lease agreement with the Transbay Joint Powers Authority for continued Muni operations at the Salesforce Transit Center located at 1st Admission Streets for a term effective upon approval of this resolution through 12/31/2050 with two ten year options and a current estimated annual operating charge of approximately 1,200,000.0 and to authorize the, Municipal Transportation Agency's director of transportation to enter into any extensions, amendments, or modifications to the lease amendment that do not materially increase the obligations nor liabilities to the city or materially reduce the benefits and are necessary or advisable to effectuate the purposes of the lease as modified by the lease amendment or this resolution. Madam chair.

[Supervisor Connie Chan (Chair)]: Thank you. And today, we have, SFMTA here.

[Scarlett Lam (San Francisco Municipal Transportation Agency)]: Hi. Good morning. Honorable Chair Chen and honorable supervisors. I'm Scarlett Lam, representing the Municipal Transportation Agency. Along with me is Manager, Kasaya Tan, and also Facility Director for the Transbay Joint Power Authorities. We are pleased to present to you a very short presentation about the lease amendment today. So next. Yay. Good. Okay. So we are we are respect we respectfully seeking your approval and support for the First Amendment to the lease amend to the lease agreement for the Transbay joint power authorities to continue municipal, Muni tran operation at the Transbay Centre, through 12/31/2050, and for and with two ten years options to renew. For the current year, operating cost will be a million $203,280 Next. Thank you. So as you know, the Transbay Center is to, was to be able to replace the regional Trans Bay hub. And basically, it is it was a pilot project back in 2018 because it was a very successful regional co co cooperation. So we are pres so we are continuing the operational commitment. And next. So, what are the current budget, bus operation here? For Muni, we run five nines. 5 R Fulton, 7 Height, 3830 R Gary, 25 Transbay, to the, Treasure Island, and the 714 Early Bird Bart. There are also other transit operators working off the transit centers, such as AC Transit, Westcat, Golden Gate, and also San Tran, and Greyhorn. So at the below grade, we are also looking at potential future expansion as well. For MTA, we occupy on the plaza level is 50,436 square feet. That will roughly occupy for a net of 21.8% of the total space. Next. Thank you. So how is the center operate? In terms of the revenue, it operates, coming from advertising revenues, naming rights, and events, rentals, retail sales rentals. On the cost side, it will be the normal cost of running a transit center management, security, janitor service, and so on. So at the end of the year, if revenue is more than expenditure, of course, that's great. But if expenditure is more than revenue, then it will be paid according to the proportion of the airy space for the, transit operators. So AC transit has the bus deck, and then MTA has the plaza level. So that is how they are where we are dividing the cost. Next. Thank you. Should be there. And so, for the current year, we are looking at a little bit over 1,200,000.0. For the next year, we're

[Brent Jalipa (Committee Clerk)]: looking at approximately 1,130,000.00

[Scarlett Lam (San Francisco Municipal Transportation Agency)]: to one point slight decrease. We hope that because, like, we are hoping the economy is going to recover, as well as the retail space rental is going to bring in more revenues. Again, to summarize what we are, the lease before you is to continue the lease through 12/31/2050 with two options to renew and, two ten year option to renew. If at any time, if at any year, the projected operating deficit will be more than $3,000,000 then MTA would have the option of terminating the list or discussing with TJPA, on the next step. So is there any questions?

[Supervisor Connie Chan (Chair)]: Are you done with your presentation?

[Scarlett Lam (San Francisco Municipal Transportation Agency)]: Yes. I am done. Thank you.

[Supervisor Connie Chan (Chair)]: Okay. Thank you.

[Nick Menard (Budget and Legislative Analyst)]: Item three is a resolution that approves an amendment to MTA's existing lease with the Transbay Joint Powers Authority. The amendment extends the lease through December 2050. It adds two options to extend, by ten years each, creating a total possible term through December 2070. Under the lease, MTA Pairs pays a proportional share of the transit center's net operating costs based on the amount of space that they rent, at the center. We summarize the fiscal impact on page 10 of the report. MTA is estimating that they will have to pay $1,200,000 to use this, bus terminal. That's actually a decrease from prior years, when it was closer to $1,400,000 back in twenty eighteen, 'nineteen. And as was noted by MTA, they are projecting that the rent will decrease a little bit next year to $1,200,000 based on expectations of increased leasing at the site. The revenues of the transit center are primarily retail concession leases at the transit center, as well as operating grants funded by, regional transit revenues. There's about a 30% vacancy at the transit center. And the j Transbay is working with a broker to fill those spaces. And as the revenues increase, the rent should go down going forward. Recommend approval of item three.

[Supervisor Connie Chan (Chair)]: Thank you. I have I do actually have a few couple questions about five and five r and thirty eight and thirty eight gear r, Gary, that is you mentioned that it's operating or are they stopping at the transit center, or are they going are they departing from the transit center if because if I understand correctly, like, this summer, like, especially five or maybe five r, are actually stopping at Market in 5th Street. But maybe I'm incorrect.

[Scarlett Lam (San Francisco Municipal Transportation Agency)]: Yeah. They are going through the Trans Space Center, and then stop and pick up passengers and so on.

[Supervisor Connie Chan (Chair)]: So if they're coming from the West Side, are they stopping at Market in, 5th Street, or are they gonna be stopping at the transit center? Or are is this just saying that it departing from the transit center?

[Kazaya Tang (SFMTA, Real Estate Manager)]: Good morning. My name is Kazaya Tang. I'm the real estate manager at MTA. Those are very good questions. Unfortunately, that's more on the transit operations side, which I don't have specific information to address your question. So I'd like to go back and speak with our operations group so that I can respond to your question on those lines.

[Supervisor Connie Chan (Chair)]: I would like that. I mean, I think that you're asking us, to approve to lease the space for the pilot program. In your presentation, you mentioned the pilot program is going well, and yet here we are. We I'm seeing that SFMTA is reducing service starting this summer started this summer. And so I would just like to understand then in that if that's the case, then what are the bus line that is actually operating at the transit center? I mean, if look. If 5 5R and 38 and 38Gary 38Gary and 38R are operating from transit center, both departing and arrival, amazing. Because I think that is makes so much sense. But if I understand correctly, that's not the case. So then if that is not the case, then what kind what are the bus lines that operating a transit center with this lease extension?

[Kazaya Tang (SFMTA, Real Estate Manager)]: So I just want to make sure I understand your question. You're asking whether or not these specific lines originate or originate and not just pass through the transit center. Is that what you're asking?

[Supervisor Connie Chan (Chair)]: I'm asking that if they're actually arriving as the final destination, because they start from I mean, there's two direction. I mean, are they actually arriving and and as the final destination for at transit center, and then they go back out to the West Side, or are they is that still the case? Because that's not what we were told for the summer, particularly for five and five R, that it should be stopping at 5th And Market, and and then folks need to make connection there on out. And and if that's the case, then what are the bus lines operating, both arriving and departing from transit center?

[Kazaya Tang (SFMTA, Real Estate Manager)]: Understood. Thank you. I'll get that information.

[Supervisor Connie Chan (Chair)]: And I think I'm in support of this item today. It will be going to the full board on October 21, and I would like to have that information before we we go to the full board Certainly. For for for final votes. Vice chair Dorsey.

[Supervisor Matt Dorsey (Vice Chair)]: Thank you, chair Chan. Obviously, this is in my district, and then this is something I'm happy to support. I do think I do have a lot of optimism about the commercial, the success of commercial leases as we invest in downtown. But I also, to Chair Chan's point, listen, the more, activity the more use that we have of the transit center, the the that will help with our, you know, the the commercial, leasing as well. I use this pretty regularly for when I go to Treasure Island, so but I Fantastic. Don't use it as much for other routes, but, I'll be supporting this.

[Kazaya Tang (SFMTA, Real Estate Manager)]: Absolutely.

[Supervisor Connie Chan (Chair)]: It's a it's a great spot, and I would like to definitely see the more use of it. I mean, I think '30 eight, particularly 38 Gary, it really has been coming back up. You know, being able to have that direct route from the West Side to there, it's amazing. I think that when it be the first Thursday of the month, where they have events there, or be it, like, about parade, any type of civic, you know, events, that folks on the West Side can be encouraged to take the 38th area will be will be great. It will be, it's something that to that we should work on. But I just wanna understand and learn more

[Kazaya Tang (SFMTA, Real Estate Manager)]: about that. Thank you so much for your support.

[Supervisor Connie Chan (Chair)]: Thank you. And with that, let's go to public comment on this item.

[Brent Jalipa (Committee Clerk)]: Yes. If we have any members of the public who wish to address this committee regarding this item number three that was your opportunity. Madam chair, we have no speakers.

[Supervisor Connie Chan (Chair)]: Seeing no public comments, public comment is now closed. Colleagues now would like to move this item to full board with recommendation, but still waiting for that additional information, and, like, roll call, please.

[Brent Jalipa (Committee Clerk)]: And on the motion to forward to the full board with a positive recommendation, vice chair Dorsey. And Dorsey, aye. Member and Guardio. And Guardio, aye. Chair Chan.

[Supervisor Connie Chan (Chair)]: Aye. Chan, aye. We have three ayes.

[Supervisor Connie Chan (Chair)]: The motion passes. Clerk, please call item number four.

[Brent Jalipa (Committee Clerk)]: Yes. Item number four is a resolution approving and authorizing the general manager of the Public Utilities Commission to execute a funding and license agreement between the PUC and the Unified School District for the construction, operation, and maintenance of an on-site solar, photovoltaic system at the Mission Bay School for an amount not to exceed approximately 653,000 for a duration of thirty years from 10/31/2025 through 10/31/2055 pursuant to the charter. Madam chair.

[Supervisor Connie Chan (Chair)]: Thank you. And we have SFPUC

[Brent Jalipa (Committee Clerk)]: here.

[Jamie Seidel (SFPUC Power Enterprise)]: Good morning, supervisors. I'm Jamie Seidel. I'm the manager of the resources projects group at the SFPUC Power Enterprise. I'm here to request approval for a solar funding license agreement between SFPUC and the San Francisco Unified School District. Before I present that, I'd like to give you a little background on what the DER projects team works on with our Hetch Hetchy power customers. We deliver renewable energy projects such as solar electric and energy storage, energy efficiency including lighting and mechanical retrofits, electrification, for example, converting gas fired equipment to electric heat pumps for heating and cooling needs of our customers. Our renewable energy portfolio currently consists of 30 project locations, 3.5 megawatts of solar capacity, and 550 kilowatt hours of energy storage. That it's set up on the you can do one more screen. Thank you. The Unified School District is in the process of completing the construction of a new elementary school in the Mission Bay neighborhood located at 1415 Owen Street. It's a $129,000,000 project. SFPUC proposes to partner with them to fund and own the solar electric system, and this would be our ninth project for the school district. SOPUC would fund the design and installation of a 112 kilowatt solar electric system for $653,000 Work is performed under a school district construction contract. The FLA is a thirty year agreement, so it requires your approval per the charter. And the thirty year agreement is intended to track with the life of the solar asset. Construction on the main building started in October 2022. Solar construction started February 2025 and is now 100% complete. The solar asset is operational, having received permission to operate in July. And on a side note, SF School Unified School District proceeded with the solar construction, pending approval of this agreement at their own risk since the solar is required under title 24 energy code. Happy to answer any questions you might have, and thank you for your time.

[Supervisor Connie Chan (Chair)]: Thank you. It's very exciting. Oh, vice chair Dorsey.

[Supervisor Matt Dorsey (Vice Chair)]: Thank you, chair Chan. I will start with those words. It's very exciting. Actually, this is a well, there's a lot of excitement about this school, in Mission Bay, and I just want to express my appreciation for everything you're doing, for this school, for the neighborhood. And, you know, sometimes I I worry a little bit in the current environment whether we're losing sight of some of the really thing the the the climate priorities that we really need that we can't lose focus on and I appreciate, SFPUC's leadership on that. So, I'm happy to support this.

[Supervisor Connie Chan (Chair)]: Help me understand and, what is the funding source again for the 129,000,000?

[Jamie Seidel (SFPUC Power Enterprise)]: That's a school district bucket of money. So I I think they funded it with bond money, but it's outside my subject matter expertise.

[Supervisor Connie Chan (Chair)]: And then this is the you mentioned this is the ninth school that we're project that we're partner that SFPUC is partnering them on. And it's all so the I see. Then so the $129,000,000 is for the mission based school itself from the bond. And that part of this that they're spending it on is $653,000 roughly with SFPUC for the solar project.

[Jamie Seidel (SFPUC Power Enterprise)]: Yes. So PUC would contribute the $6.53 to the project for the solar project cost. And the $129,000,000, that's school district money. So once again Right. I don't have all that information.

[Supervisor Connie Chan (Chair)]: No problem. I'm just trying to understand, is it coming from the 129, or is it coming from

[Jamie Seidel (SFPUC Power Enterprise)]: That's coming from PUC to the school district.

[Supervisor Connie Chan (Chair)]: To support the school district for this project for the solar project. Thank you so much Sure. For the clarification. I really appreciate it. And with that, if there's no more other comments, we would like to go to public comment.

[Brent Jalipa (Committee Clerk)]: Yes. If we have any members of the public who wish to address this committee regarding this item number four, and that was your opportunity. Madam chair, we have no speakers.

[Supervisor Connie Chan (Chair)]: Seeing no public comments, public comments is now closed. Colleagues, I would like to move this item to full board with recommendation and a roll call, please.

[Brent Jalipa (Committee Clerk)]: Not a motion to forward to the full board with a positive recommendation. Vice chair Dorsey. Dorsey, aye, member Engadio. Aye. Engadio, aye. Chair Chan. Aye. Chan, aye. We have three ayes.

[Supervisor Connie Chan (Chair)]: The motion passes. And, mister Clark, please call item number five.

[Brent Jalipa (Committee Clerk)]: Yes. Item number five is a resolution approving and authorizing the general manager of the Public Utilities Commission to execute amendment number three to a contract for power scheduling coordination and related supported services with APX Inc. To allow for the processing of the California independent system operator power transmission service charges to increase the contract by approximately 366,000,000 for a total not exceeding contract amount of approximately 1,200,000,000.0 and to extend the contract term for an additional three years starting 03/10/2027 for a total term of 05/31/2022 through 05/25/2030 pursuant to the charter. Madam chair.

[Supervisor Connie Chan (Chair)]: Thank you. And, again, we have SFUOC.

[Suni Jones (SFPUC Power Enterprise)]: Hi. My name is, good morning, supervisors. My name is Suni Jones, and I am the manager of wholesale and retail services for the power enterprise. The proposed item before you today would approve amendment three to the power scheduling coordination agreement between the San Francisco Public Utilities Commission and APX. This amendment increases the not to exceed amount by $3,100,000 for professional services, and $363,000,000 for pass through charges, for a total not to exceed $1,300,000,000 Additionally, staff request a three year extension for a new contract term of eight years. We are requesting amendment three prior to issuing a new RFO, because we believe that prior to issuing an RFO, the SFPC should build up and enhance internal expertise and in house capabilities. We believe these improvements will streamline the new RFO and make it accessible to a broader range of potential bidders. So on this first slide, we describe the reason the SFPEC requires a scheduling coordinator. As you may know, HHECHE and Clean Power SF transmit power via the California independent system operator, or CAISO. To participate in the CAISO market, you must be a CAISO certified scheduling coordinator, or you must contract with a certified scheduling coordinator. The SFPUC is not a certified scheduling coordinator, so we contract with APX for those services.

[Sheila Nicholas (Mayor’s Office of Housing and Community Development)]: Next slide.

[Suni Jones (SFPUC Power Enterprise)]: The next slide describes the CAISO pass through costs that are invoiced by the ISO and paid by APX on the SFPUC's behalf. The SFPUC incurs CAISO costs for participating in the CAISO energy market. These pass through costs are fixed and non negotiable in any scheduling coordinator service scenario. Some of these costs include charges for transmission, charges for electricity, charges to maintain grid reliability. These are pass through costs only, and APX does not charge the SFPC an additional fee for this service. The next slide outlines the previous amendments to this contract and justifications. An important point to call out here is the extreme increase of $636,000,000 in the second amendment. This was due to a significant and unforeseen increase in energy market prices. These market dynamics were beyond the scope of what we anticipated at the time of the original contract when the original contract was negotiated. This amendment provided the necessary additional funding to ensure uninterrupted service delivery and compliance with operational requirements. The main drivers for these higher than expected prices were supply chain delays, global energy shortages, trade disruptions, the Ukraine war, and extreme weather. For some context, in 2021 and 2022, Clean Power SF's Kaiso pass through costs increased 197 and Hetch Hetchy power increased 67%. As mentioned earlier, if the third amendment is approved, the increase and the extension, we plan to use this time to strengthen in house capabilities and build additional in house expertise to streamline and simplify the RFO process. To accomplish it, some initial steps include working with the Moccasin powerhouse system operators to install automated systems in the powerhouse. APX currently manages these automated systems for the power system operators, but installing these systems locally will further SFP's in house capabilities and allow additional independence. In this slide, we summarize the contract and its amendments. While we recognize that the overall financial scope is considerable, it is important to underscore that the vast majority of these costs are CAISO fixed, non negotiable pass through charges. In our last slide, staff is requesting the board to authorize the SFPC general manager to increase contract capacity and add 3,100,000 to professional services and $362,600,000 in CAISO pass through charges. The total not to exceed amount is $1,260,000,000 This is the end of the presentation. Please let me know if you have any questions.

[Supervisor Connie Chan (Chair)]: Thank you.

[Nick Menard (Budget and Legislative Analyst)]: Item five is a resolution that approves an amendment to PUC's contract with APX Incorporated. They are an authorized power scheduler with the California, grid operator, the CAISO. The, amendment extends the agreement by three years, from May 2027 to May 2030, and increases the value of the contract by $365,000,000 to $1,200,000,000 we summarize the contract spending on page 14 of the report. You can see PUC is actually, projecting that they'll spend, dollars 1,000,000,000. So there's about a 20% contingency that brings us to the $1,200,000,000 not to exceed amount. So it's unlikely that they're gonna spend all of this money on this contract. But given the volatility in the energy market, I think a a kind of contingency of this size makes sense. 99% of the charges are passed through to CAISO. And so APX is actually getting about a little less than $1,000,000 a year for their work to make these transactions, but the bulk of these charges are to the grid operator. We recommend a pool of item five.

[Supervisor Connie Chan (Chair)]: Thank you. I I appreciate the having the foresight to do, internal investment with roughly about the $3,000,000. I think that makes a lot of sense to really figure out ways to be further independent. Although, I don't know how much more you can be really independent from Caio ISO we're, like, tied to them. But I I do agree that, you know, just to be able to have a bit independence from or or just having a second opinion or independence from a service as such APX. I I think that's really what we're looking for, and I I appreciate that, investments and, I mean, support of this. Clearly, it's a fixed cost, like you said, majority of it, 99% of it, it's really passed through. So thank you so much for for just recognizing and pointing out the 2023, the second amendments was really significant. But having this sort of proactive strategy to try to what what else we could do under a very challenging circumstance. It's not easy. You have a lot of restriction, and but but to be able to learn more about it, I I look forward to that.

[Suni Jones (SFPUC Power Enterprise)]: I appreciate that. Thank you.

[Supervisor Connie Chan (Chair)]: Thank you. Thank you so much for your work. With that, let's go to public comment on this item.

[Brent Jalipa (Committee Clerk)]: Yes. We are opening public comment for this item number five. If we have any members of the public who wish to address this committee. Madam chair, we have no speakers.

[Supervisor Connie Chan (Chair)]: Seeing no public comments, public comments are closed. Colleagues, I would like to move this item to full board with recommendation and a roll call, please.

[Brent Jalipa (Committee Clerk)]: And on the motion to forward to the full board with a positive recommendation to vice chair Dorsey. Dorsey, aye. Member Angadio Angadio, aye. Chair Chan? Aye. Chan, aye. We have three ayes.

[Supervisor Connie Chan (Chair)]: The motion passes. And mister Clerk, please call items six and seven together.

[Brent Jalipa (Committee Clerk)]: Yes. Item number six and seven are resolutions, retroactively approving contracts between the city and county, acting by and through the Department of Early Childhood, and the following for the city's implementation of the San Francisco citywide plan for early care and education, both resolutions for a three year and six month term from 07/01/2025 to 12/31/2028 and authorizing DEC to enter into any amendments or other modifications to the amendment that do not materially increase the obligations nor liabilities or materially decrease the benefits to the city and are necessary or advisable to effectuate the purposes of the respective agreements or resolutions. Item number six is with Children's Council of San Francisco for a total not to exceed amount of approximately 436,300,000.0. And item number seven is with Wuyi Children's Services for a total not exceeding amount of approximately 237,700,000.0. Madam chair.

[Supervisor Connie Chan (Chair)]: Thank you. And today, we have Department of Early Childhood here.

[Department of Early Childhood representative (unidentified)]: Good morning, Budget and Finance Committee members, Chair Chan, and supervisors, thank you for allowing me to do just a brief presentation on both of the contracts that are before you this morning, for Children's Council and Mui E Children's Services. This is our, our way of how we're developing a really effective system of early care and education system in San Francisco through our strong partnerships, in order to serve the children, families, and providers of our city in every district. And so, the contract overview is really is about supporting both families, providers, and everyone who makes the system of care in San Francisco. It is about access. It's also about affordability and subsidy management for San Francisco's families from birth through age 12. Our focus for local dollars are for birth to five. However, we also administer state dollars, that provides, childcare services for families with children up to the age of 12. There are three core services in both of these contracts. It's for information, referral, and connection for the family to childcare programs. So it's a little bit of a love match that happens. It also includes enrollment and program reimbursement, meaning that the providers get their subsidy payments for all the children who are enrolled on behalf of the city and state funds. And it's also administering, in a very effective way all of these public childcare subsidies that make it through hundreds of, childcare providers across the city and serves thousands of children and families. We prioritize low income families, of course, to get access, full access. That includes families who are also state eligible, like CalWORKs and foster care. We also support middle income families, which is something that only San Francisco does, honestly, throughout the nation, that provides financial relief to families, for childcare. And again, it is a service that is from birth to age 12, leveraging a lot of state resources for older children, school age children. It's about access and connection to almost 8,000, families that are seeking care at any point in time during the year. Lots of referrals with, very quick response rate from our two major, community partners. We fund, through what is called a childcare voucher system, both for, again, for local funding, but also state funding. And, we also track all the vacancies across this, our city's, network of providers, to ensure that families have, real time information of where they can enroll. And we also have lots of performance measures and accountability for these contracts. And we're tracking pretty much almost everything, every point, throughout the journey of a family and a child and a provider. And we require, of course, annual fiscal and ongoing compliance monitoring. So the, really, sort of the test of this is that we have over 20,000 children and families in our system of care. Through our early learning for all programming and services, we match and we leverage the heck out of every federal and state dollars, to ensure that we're creating a universal access across the city. And we almost have over almost 600 early learning for all providers, which was described as a mixed delivery system, meaning that it is both in center based care as well in family child care. And that is the end of my presentation.

[Supervisor Connie Chan (Chair)]: Thank you.

[Nick Menard (Budget and Legislative Analyst)]: Item six and seven are two resolutions, that approve contracts, with the Department of Early Childhood, and one with Children's Council of San Francisco, and one with WOU Children's Services. Each contract, has this very similar scope of services. They do intake and referral for families, seeking childcare. They enroll eligible families, in childcare, and provide subsidies to, to eligible families based on income. The Children's Council administers both the locally funded tuition subsidies for childcare providers, as well as, state and federal subsidies, that flow through HSA. Wu Yi administers locally funded subsidies for childcare. We summarize the fiscal impact of these contracts on page 22 of the report. You can see that there's about $200,000,000 of spending a year across both contracts. The local funding is primarily Proposition C commercial rents tax, as well as some P funding. And then as I mentioned, the Children's Council has federal and state funding flowing through it as well. We recommend approval of items six and seven.

[Supervisor Connie Chan (Chair)]: Thank you. I'm kinda just curious overall. I see that both the WUI and then, as well as the children council, on their budget summary, includes of of, professional services cons for consultants. Could you walk us through a little bit, what the consultants fees are? They're not significant. They're just very minor, but I'm just kinda curious, like, what kind of professional services are are both agency getting in terms of support?

[Department of Early Childhood representative (unidentified)]: Yes. So part of our process, with both organizations is, a process that we're really building the plane as we're flying it. The professional services contracts, have an array of services. Some of them actually has to do more with, the further development of how families get connected through, through the online portal, through, some families self refer. Some families choose to be connected, in, through human sort of touch. And so the professional services contracts are two or professional services consulting line items are really meant to enhance that experience, whether through data system or through the ability to, do more human centered design work with families.

[Supervisor Connie Chan (Chair)]: And, could you help me understand what is indirect expenses are?

[Department of Early Childhood representative (unidentified)]: Indirect expenses, like in all nonprofit, contracts, are what is sort of a what would be considered sort of a shared cost. So we fund very specific, staff in each one of the agencies, but there's also other staff that work on the projects, but not directly. And so a small portion of that gets charged, and there is a cap by the city that allows a certain amount, that you can charge indirectly.

[Supervisor Connie Chan (Chair)]: What is the

[Department of Early Childhood representative (unidentified)]: cap? The cap, both for administrative and indirect, is no more than 15%.

[Supervisor Connie Chan (Chair)]: No more than 15% of the entire contract?

[Department of Early Childhood representative (unidentified)]: Yeah. Of all program expenses. Yes. Not the pass through, though, because that's the bulk of of their contracts, or the pass through payments to providers, childcare providers.

[Supervisor Connie Chan (Chair)]: Understood. So, but basically, the pass through, which is the for here, is the actual subsidies for the enrollment. Correct. And then, so it's 15% of the excluding the the pass through. Correct. Great. Thank you. I I mean, I think through the conversations, and the budget and legislative analyst report, help us understand a little bit about your approach to, you know, evaluation, for the contractor. You know, I think the typical ones from DPH or HSA is that, you know, they have staff independently go on sites and do site inspection. But it sounds to me that the report here is that your your contractors, and in this case, the children council and WUI, they provide you the report, and then the staff then go back out to independently verify what it's basis on the report. How do you find it? Like, meaning, like, what what is your approach to that? And then what what do you find as the pros and cons, if if any?

[Department of Early Childhood representative (unidentified)]: Yeah. Like all grants, there's grant management and monitoring and performance measures and logic models that are tied to an evaluation framework. And that's how we approach the work for any, grant or contract. The work that is performed by both agencies is is really very community based. Families connect better, with, community based organizations, and so their access points are much more accessible. And so with that in mind, that's how we've designed sort of the logic model around what are the services that the grantees provide, what do we monitor in terms of quality assurances, ensuring that we're always aligning to the city's, guidelines, especially around, cost allowable, all of those things. I think that this work can't be not cannot be done, sort of independently of all of our community partners. And so, it really is a partnership that you work through in co designing what the services will look like. And, of course, always taking into account, and this is part of our evaluation framework, is we always connect with families too to ensure that their voice and their experience is part of that journey, and it's designed that way. And so there are things that, obviously, government services can do, and but there are things that sometimes community partners are better situated, to be able to connect, in real time with families, especially with families with very young children.

[Supervisor Connie Chan (Chair)]: And I'm I'm sort of just still learning and thinking about it too. It's like it and it's kinda links back to the Department of Homelessness and Supportive Housing, and just thinking a it's almost sort of this, what do the individuals receiving the service think? And so is that what you're indicating that you do independently what you actually separate and apart doing is a family surveys or surveys for the families? Yes. Got it.

[Department of Early Childhood representative (unidentified)]: Yes. We do surveys. We review family focus groups, and we also have parents as part of a ongoing parent advisory group, that we take feedback. And and we refresh those families because children grow up and end up going to, school age care. But nonetheless, we keep that feedback loop ongoing.

[Supervisor Connie Chan (Chair)]: And then that's independent from the service provider.

[Brent Jalipa (Committee Clerk)]: Yes.

[Supervisor Connie Chan (Chair)]: Great. Thank you. Really appreciate your work. I'm glad to see these two coming through, these two contract, and, look forward to seeing the subsidies distribution. And with that, I don't have any other questions, and let's go to public comments on these two items.

[Brent Jalipa (Committee Clerk)]: Yes. We are opening public comment for both of these item numbers eight and nine. If we have any members of the public who wish to address this committee.

[Supervisor Connie Chan (Chair)]: Six and seven. Yeah.

[Brent Jalipa (Committee Clerk)]: Madam chair, we have no speakers.

[Supervisor Connie Chan (Chair)]: Seeing no public comments, public comment is now closed. And, colleagues, I would like to send items six and seven to full board with recommendation and a roll call, please.

[Brent Jalipa (Committee Clerk)]: Cannot have a motion to send item numbers six and seven to the full board with a positive recommendation. Vice Chair Dorsey?

[Supervisor Connie Chan (Chair)]: Aye.

[Brent Jalipa (Committee Clerk)]: Dorsey, aye. Member En gardeo? Aye. Angadio, aye. Chair Chan.

[Supervisor Connie Chan (Chair)]: Aye. Chan, aye. We have three ayes.

[Supervisor Connie Chan (Chair)]: The motion passes. And mister Clark, please call items eight and nine together.

[Brent Jalipa (Committee Clerk)]: Yes. Item numbers eight and nine are ordinances amending the business and tax regulations code to effect the following. Item number eight temporarily exempts transfers of certain rent restricted affordable housing from the real property transfer tax retroactive to transfers on or after 04/12/2024 and affirming the planning department's determination under the California Environmental Quality Act. And item number nine excludes from gross receipts tax the gross receipts of low income housing partnerships received from the lease of residential real estate beginning with the 2026 tax year. Suspend the business registration certificate and fee requirements for those partnerships beginning with the registration year commencing 04/01/2026. Exempt the city from the commercial vacancy tax retroactive to 01/01/2025, and exempt persons holding property to be used for city sponsored affordable housing projects from the commercial vacancy tax retroactive to 01/01/2022 and refund commercial vacancy taxes paid by exempt persons. Madam chair.

[Supervisor Connie Chan (Chair)]: Thank you. And we have the mayor's office of mayor's office of housing and community development here.

[Sheila Nicholas (Mayor’s Office of Housing and Community Development)]: Good morning, supervisors. I'm Sheila Nicholas with the mayor's office of housing and community development. Before you today are two ordinances that will amend taxing rules for affordable housing projects in San Francisco. The proposed tax cleanup package will address several unintended consequences of tax regulations that are impacting deed restricted, a 100% affordable housing properties. As operating costs for affordable housing climb, relief from these taxes will allow our affordable housing providers to focus limited resources on residents and on operating building operations. File 250,890 will exempt affordable housing from transfer taxes. This ordinance will exempt deed restricted, 100% affordable housing properties from transfer taxes, which includes fifteen year limited partner exit transactions that restructure financing. Transfer taxes are transactions imposed by the city for the privilege of transferring ownership. And for affordable housing, partial ownership changes are needed to restructure financing, which then triggers a formal change in ownership structure and the transfer tax associated with that change. An exemption will ease financial challenges for the city's affordable housing developers and support MOCD's work to stabilize the city's portfolio of affordable housing. The exemption will be retroactive to April 2024, and refunds will be available to project sponsors who paid transfer taxes after that date. According to the assessor recorder's office, 10 affordable housing providers have paid $3,900,000 in transfer taxes since then, when the ordinance would go into retroactively go into effect. File 250,891 includes several additional changes. One is to exempt taxable partnerships that own affordable housing from the gross receipts tax and registration fees. Most, if not all, affordable housing providers in San Francisco structure building ownership under an LLC partnership. Although these partnerships will likely never have to pay gross receipts, Prop C, or other taxes, they are required to pay registration fees. This becomes a bureaucratic hurdle when the city is trying to pay any of these entities, as they have to be in tax compliance before they receive funds under the terms of loan agreements. Exempting partnerships that are created by nonprofit housing developers for housing development would remove this barrier. And file 02/50891 also will exempt affordable housing pipeline properties from the commercial vacancy tax. Some sites that are acquired for affordable housing development have an existing commercial building that will be demolished when the housing construction starts. When that commercial building is vacant, it may be subject to the commercial vacancy tax. Although MOHCD prioritizes interim uses when possible, when a commercial building doesn't meet code requirements, it typically does not make sense to renovate a building that will be demolished in a few years. For example, MOHCD paid more than $700,000 in commercial vacancy tax in 1979 Mission for three fiscal years. Although the parking lot was used for tiny homes, the commercial building was vacant during that time, and therefore subject to the commercial vacancy tax. And these payments were drawn from the housing trust fund. These changes are supported by MOHCD and our partners in affordable housing development. I'm joined by Lydia Eley, MOHCD deputy director of housing, and Amanda Fried, chief of policy and communications at the tax collector's office, to answer any questions you may have. Thank you.

[Supervisor Connie Chan (Chair)]: Thank you.

[Nick Menard (Budget and Legislative Analyst)]: Items eight and nine are, two ordinances related to tax changes, most of which apply to affordable housing. File 250,890 would exempt the affordable housing sites that meet certain eligibility criteria from the transfer tax from 04/12/2024 through December 2030. And then file 02/50891 makes other changes to the city's taxes for affordable housing. It excludes the income from affordable housing projects from the calculation of the gross receipts tax for those entities. It suspends the requirement that those entity affordable housing operators register pay a business registration certificate with the treasurer tax collector's office. Both of those start in 2026. And then it exempts entities that are using or plan to use sites for affordable housing in the future. It exempts those sites from the commercial vacancy tax, retroactive to, January 2022. In addition to that, the city is also exempting itself, regardless of whether the site is gonna be used for affordable housing or not, it the city would be exempting itself from the convert any land that is subject to the commercial vacancy tax. And that's retroactive to January 2025. So we summarize the fiscal impacts on page 31 of our report. Together, these changes would result in an immediate refund of potentially $4,000,000 Most of that is general fund revenue. And then going forward, based on the past couple years of data, We estimate that this could result in $3,000,000 in mostly general fund revenue foregone each year. The bulk of that is from the transfer tax, which is a lumpy tax. It's only triggered in certain kinds of property transactions. And so it may be more or less in a given year. Looking at the projects that paid the transfer tax over the past year, we estimate that this is about we estimate that this is about $4,400 per unit. So that's a one time savings for these affordable housing projects that would accrue to them, essentially, every ten to fifteen years as they refinance, and would no longer have to pay the transfer tax. The city savings from the commercial vacancy tax is about $800,000 a year. Again, that's the city exempting itself from the commercial vacancy tax. So it's essentially just moving money from one fund to another. And so there's no net fiscal savings. The commercial vacancy tax revenues go into a small business fund that is supposed to fund programs to benefit small businesses. And so that fund would no longer gate at about $800,000 a year from city sites that are currently subject to the commercial vacancy tax. We consider approval of these matters to be a policy matter for the board.

[Supervisor Connie Chan (Chair)]: Thank you. Can you help me understand a little bit a few things? And I'm in support of it, but I I want just wanted to understand make and make sure that I I understand it clearly. It seems that there are two definitions in these two legislation, there seems to be two definitions of one is affordable housing, which is a rent restricted affordable housing. And then the other one is a qualified lessor that is identified by different sections of of the law, and so which identify as low income housing partnership. Can you help me understand the the sort of, like, the two groups, or are they at the how are they different, and are they the same group? Sorry.

[Amanda Fried (Office of the Treasurer & Tax Collector)]: Morning, supervisors. Amanda Fried from the office of the treasurer and tax collector. Wherever you see qualified lessor, that comes from the business and tax regulations code. That's how we there are certain provisions in the registration and tax requirement that do or do not apply to qualified lessors of residential real estate. That was passed in the original gross receipts tax and sort of continued on in prop m. So for example, one of the interesting things is that, certain residential buildings, if they have more than four units, have to register each building separately as its own business. Whereas any other type of, use would they would group them all together. So if you had multiple buildings, they would they would all be registered together. That has led to some issues for affordable housing developers because they have to register each building separately, pay for each one separately. It's not it hasn't been that the money itself is a lot of trouble. But if they do that late or pay late, their, funding from MOCD gets held up. So I get probably six to 10 phone calls a year from affordable housing developers sort of panicked, like, hey. This payment has held up. Can you can you help? What do I need to do? And they owe, you know, a couple $100. So that that's something we're seeking to clean up, and that's where you see that definition come from.

[Supervisor Connie Chan (Chair)]: Thank you. Very helpful. And then, why is the the transfer tax exemptions has a sunset date of 01/01/2031, but then it doesn't seem like there's a sunset date for the commercial vacancy tax. Or I'm not seeking to have a sunset date. Maybe I'm confused, and help me understand because I'm just trying to I'm just reading it through, and it seems like one has sunset day and the other one doesn't.

[Sheila Nicholas (Mayor’s Office of Housing and Community Development)]: Thanks. I did have a note about this. So the the transfer tax, for the transfer tax, the it does have the expiration date, which is the existing law. And then the city attorney recommended that for prop two, two eighteen purposes that we maintain that sunset date. And so we have maintained that, but we could certainly, when it if appropriate at the time, extend it.

[Supervisor Connie Chan (Chair)]: They extend it. And then but then commercial text does not have a sense that they therefore, you don't need to put it in. Yes. Understood. Great. Those are just the technical things that I I I am I read through it, and I'm just kinda curious of, like, how it's being written. Clearly, it's complicated, but I am I'm glad to learn more. With that, I I'm in support of this. I think that, I know it's according to the budget and legislative analyst report, it is, you know, causing a bit of a general fund, but then at the same time, we also know it's not enough. It's it's not quite a, quote, unquote, game changer for our non profit housers, but I think every dollar count. And I would like to be added as a co sponsors for both eight and nine, and to, just supportive of how do we continue to provide incentive for, building more affordable housing, and and units that really, providing, in this case, rent restricted, affordable housing. So with that, vice oh, supervisor Iengardio.

[Supervisor Joel Engardio (Member)]: Thank you. I just want to get a clarification, on the budget and legislative analyst report. Maybe I'm reading it wrong, but it feels like there's some discrepancy. On page 28, under commercial vacancy tax, it says, MOHDD has introduced legislation to reduce taxes and fees on affordable housing to ease financial challenges for development. But then on page 31, the very last line and the first line of 32, it says, although this has no overall fiscal impact to the city, it does have a negative fiscal impact on funding available for the production of affordable housing. So I just want to understand, we're trying to help create affordable housing, and this line is saying it might have an impact on the funding available for production of affordable housing. Is there like, how would you clarify that?

[Sheila Nicholas (Mayor’s Office of Housing and Community Development)]: I think what it's saying is that because the commercial vacancy tax is a pot of money that is staying within the city, that the overall city funds don't decrease. But what it does when, like, when an MOHCD is paying that commercial vacancy tax, is it moves the money from MOHCD through the tax collector and then into the small business fund. So the money is still available for public use, but it has moved away from affordable housing and into small business.

[Supervisor Joel Engardio (Member)]: So for anyone watching online or on SFGovTV, just to understand, in the long term, this is this is going to help produce the affordable housing you need, even though technically some of the funds won't be used for affordable housing? Like, is

[Sheila Nicholas (Mayor’s Office of Housing and Community Development)]: it No. It what we're proposing is that we no longer we we no longer move the we no longer pay the commercial vacancy tax, and therefore, the funds will stay within our affordable housing pot rather than moving over to the small business pot.

[Supervisor Joel Engardio (Member)]: Got it. Alright. Thank you.

[Supervisor Connie Chan (Chair)]: Thank you. With that, I would like to go to public comments on item these two items.

[Brent Jalipa (Committee Clerk)]: Yes. We're opening public comment, for both these items, eight and nine, if we have any members of the public who wish to address this committee.

[Carlos Milgosa (Mission Housing Development Corporation)]: Hi. Good morning, everyone. I'm Carlos Milgosa. I'm a project developer with Mission Housing Development Corporation. I'd like to briefly highlight these two new San Francisco ordinances that create major financial and policy benefits for affordable and supportive housing developers like us. First, the transfer tax exemption ordinance eliminates the city's real, property transfer tax on qualified rent, restricted affordable housing. If a project has at least fifty five years of affordability covenants and 90% of its units qualify for the welfare exemption. Any transfer, including an acquisition, refinancing, or partnership restructuring is completely exempt from tax, transfer tax through 2030. That means millions of dollars of potential savings at closing or investor exit. It's also retroactive, to April 2024, allowing eligible nonprofits to seek refunds for tax, taxes already paid. For a project this size of 929 Mission Street, this could translate to, hundreds of thousands of avoided costs that can instead go towards, resident services and long term, reserves. Second, the companion tax relief ordinance extends that support into operations. It offers exemptions from the gross receipts tax and business registrations fees for affordable housing lessors beginning in 2026 and waives the commercial vacancy tax for regulated, affordable sites. Together, these provisions reduce recurring operation expenses and help stabilize long term affordability by freeing more revenue for maintenance and resident support. In short, these ordinance, represent a strong municipal commitment. They reduce both transactional costs at closing and ongoing cost of ownership, improve, project feasibility, and strengthen, sustainability, for permanent supportive housing and deeply affordable housing. Thank you.

[Brent Jalipa (Committee Clerk)]: Thank you much for your comments. Next speaker, please.

[Brianna Morales (Housing Action Coalition)]: Good afternoon, supervisors. My name is Brianna Morales, and I am with the Housing Action Coalition as their community organizer. We are a member supported nonprofit that believes California and, certainly, San Francisco should be a place where all people of all incomes can afford to live, work, and belong. HACC's members include industry experts, affordable builders, and community advocates who are all working to bring more affordable homes to California. We're here today in strong support of both ordinances before you, the transfer tax exemption for affordable housing and the tax and fee exemptions for low income housing partnerships and city sponsored affordable housing projects. In my work with affordable builders and nonprofit developers, I hear every day how hard it is to get projects over the finish line between rising costs, complicated financing, and long approval timelines. Even the most mission driven teams are struggling to make the numbers work. These ordinances would make a real difference. They remove taxes and fees that were never really meant to hit affordable housing projects in the first place and help stretch limited dollars further. So more of those funds can go directly towards homes for San Franciscans. Together, I really feel like they would make a difference in building homes for people and preserving affordable homes and homeowners to do their jobs. And beyond housing, in the midst of a housing crisis, this helps our broader recovery. A thriving inclusive neighborhood, means that the city is able to be active and vibrant, and that folks can pursue opportunities that they may not have been able to pursue. When we make it easier to invest in housing and bring life to San Francisco, we're saying that it's open and available for opportunities. So on behalf of HACC and residents and our members, we work alongside. We urge you to pass these ordinances and keep saying yes to housing and to the folks who make the city beautiful. Thank you very much.

[Brent Jalipa (Committee Clerk)]: And thank you, Brandon Morales. Seeing no other speakers, madam chair, that completes our queue.

[Supervisor Connie Chan (Chair)]: Seeing no more public comments. Public comments now closed. Colleagues, I would like to move items eight and nine to full board with recommendation and a roll call, please.

[Brent Jalipa (Committee Clerk)]: And on that motion to forward both ordinances to the full board with positive recommendation, vice chair Dorsey. Dorsey, aye. Member and Guardio. Aye. And Guardio, aye. Chair Chan. Aye. Chan, aye. We have three ayes.

[Supervisor Connie Chan (Chair)]: The motion passes. And, mister Clerk, do we have any other items before us today?

[Brent Jalipa (Committee Clerk)]: Madam chair, that concludes our business.

[Supervisor Connie Chan (Chair)]: The meeting is adjourned.