San Francisco Government SmartTranscripts:

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Good morning. The meeting will come to order. Welcome to the 10/29/2025 meeting of the Budget and Finance Committee. I'm supervisor Connie Chan, chair of the committee, and I'm joined by vice chair supervisor Matt Dorsey and supervisor Cheyenne Chen. Our clerk is Brent Halepa. I would like to thank Jamie Avicherry from SFgovTV for broadcasting this meeting. Mister Clerk, do you have any announcement?

[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 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 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 Doctor Carlton B. Gudelitt Place, Room 244, San Francisco, California 94102. And finally, madam chair, items acted upon today are expected to appear on the board of supervisors agenda of November 4, unless otherwise stated. Madam chair.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you, mister Clerk. And for a general reminder for the public is that for any item that have budget and legislative analyst report, what we would do usually is department presentation, then go to the budget and legislative analyst, and then we will take questions and comment from this body, then we'll go to public comments. And so with that, mister Clark, please call item number one.

[Brent Jalipa (Committee Clerk)]: Yes. Item number one is an ordinance amending the administrative code to create the small business rezone and construction relief program to provide financial support, including grants and loans, to businesses impacted by construction relating to the city residential rezoning program adopted in 2025 to 2026, establishing the small business rezoning construction relief fund to receive monies for the program, and designated the office of small business and office of economic and workforce development to administer the fund and the program to promulgate rules and regulations and furtherance of the program, and amending the business and tax regulations code to allow taxpayers to designate a portion of their gross receipt taxes for deposit in the fund. Madam chair.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you, mister Clerk. And we wanna acknowledge and welcome supervisor Malgar to the chamber, who is the sponsor of this legislation, and we thank you, supervisor, for your leadership. Would you like to provide opening remarks? Sure.

[Supervisor Myrna Melgar]: Thank you so much, chair Chan, and thank you for scheduling this item. This legislation establishes a small business rezoning construction relief fund and program as a proactive way to address any potential relocation or construction impacts when rezoning projects come to fruition from our rezoning efforts on the West Side, North Of San Francisco. While we do not know the full impact or extent of how many small businesses may be impacted by potential construction projects related to the rezoning, we wanted to be proactive and responsive. This is an issue I've been thinking about for some time. I requested that the budget and legislative analysts produce an analysis report last year. Thank you so much, BLA. Looking for ways to mitigate any potential impacts from residential construction along commercial corridors. The study recommended that the city look into developing this program to support small businesses. And we do have examples of similar efforts at responsive to infrastructure projects, like the Van Ness BRT and the central subway, but not one necessarily for housing construction. Small businesses do not have the protections that residential tenants do, like rent control. Unfortunately, as a local jurisdiction, we are more limited in what we can mandate from commercial property owners. Small business owners provide all the capital improvements to their commercial spaces, which can be very costly, but do not to get to cash out on those investments if their lease ends. If anything, these amenities benefit the property owner, who could easily lease to another similar business for potentially higher rent. So with all of those considerations, we want to provide some type of meaningful assistance. This fund will be administered by the Office of Small Business and the Office of Economic and Workforce Development. It is meant to support any small business that may be displaced or affected due to the residential construction project within a construction project within a rezoned area with a cost of relocation and or potentially returning to the space they once occupied. The fund and program can also support small businesses along the corridor that may not have to relocate but are impacted by a large construction project that may have other disruptions. For example, reduction of foot traffic. We also included a two year look back period so that the small businesses who may not have known they were being displaced by a residential development project could still reach out for support under this fund and program. The Office of Small Businesses has a successful record of supporting displaced businesses impacted by disasters, such as fires. So I believe they know how to administer this program in the future. We drafted the legislation to provide their team parameters. But it is also very flexible, so they can design a program that ensures swift implementation and meets the needs as they know them. The program needs to be easy. It needs to be accessible. It is my intent that most of the direct support for small businesses would be through direct grants and technical assistance. But the Office of Small Business can also offer loans, though we know from experience that they're not as desirable. Depending on the funding, the Office of Small Business will do their best to ensure that the grants are a a substantial enough amount And take into account higher costs of investment for businesses like restaurants that need extensive upfront capital for equipment and to meet code to build out a commercial kitchen. In the legislation, we refer to the existing definition of small business as an entity that has 100 or less full time employees and also annual gross receipts revenue of $5,000,000 or less. I also have an amendment today, Madam Chair, that will expand the definition so that small businesses that are restaurants or even bars that have up to $7,000,000 of gross receipts revenue could be eligible. Because those types of businesses tend to have shorter margins. We heard feedback that many restaurants could be left out of the original definition because they may generate more grocery seats revenue, but have higher expenditures for rent, labor, and overhead. The fund itself is a category four fund. This allows the fund balance to carry forward and accumulate interest. But it is not an automatic appropriation. The fund would also need a general fund allocation, which I think this board and mayor should support. And can also collect outside contributions. We also included an opt in provision that allows taxpayers of the gross receipts tax to dedicate a portion of their taxes towards this cause, which is something we already do. Before I reviewed proposed amendments for today, I just want to take a minute to thank Jen Lowe on my staff for having doggedly worked on this legislation for over a year, director Katie Tang, Carrie Birnbach, and her team for their ongoing input and work, the controller's team, the tax collector's team, and the city attorney's office, Hugo Cabrera, and Kerney Matsubara for their support on drafting, and the small business advocates like the Council on District Merchants Association and the Golden Gate Restaurant Association for their contribution, work, and feedback throughout the process. We received unanimous support for this legislation from the Small Business Commission. And I hope we can stand with small business advocates who have been actively calling for some type of assistance alongside other protections. This is only one small piece. The city is developing other tools to prevent the wholesale displacement of our beloved small businesses. And Chair Chan, I thank you for your leadership on this issue and being proactive as well. We need our state legislature to provide more protections and support as well. And I'm committed to working with our local state representatives of this. So with that, Chair Chan, I would like to provide a summary of amendments for the committee to consider today. And they are substantive, so I understand that we will have to continue before voting on this item. The first amendment is on page two, lines 14 to 25, under definitions for the small business rezoning construction relief fund, at a clause, under definitions, to indicate that the gross revenue of a small business to qualify would be adjusted annually, in accordance with the increase in the consumer price index CPI. So that it will read, a business or a nonprofit organization with 100 or fewer full time employees and an annual gross revenue of $5,000,000 or less for the 2025 calendar year, and adjusted annually each year thereafter in accordance with the increase of the consumer price index. All urban consumers for the San Francisco, Oakland, Hayward area for all items as reported by the US Bureau of Labor Statistics. And I have shared these amendments with all of you. Then on page two, lines 22 to 25. And page three, lines one to four, under definition, section 10.1 dash three three five, small business rezoning construction relief fund. On page four, lines two to 17. On page six, lines five to six, I have shared these amendments with the clerk also, and the rest of you. So thank you. And after public comment, I hope you can consider these amendments. I'll take any questions that you have.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. Will there be a city department presentation, or this is we're good?

[Supervisor Myrna Melgar]: Okay. I'm sorry. But I do think that we have somebody here, right, from no? They're not here. Okay.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: K. Let's go to public comment.

[Brent Jalipa (Committee Clerk)]: Yes. We're now opening public comment for this item number one if we have any members of the public who wish to address this committee. As soon as you approach the lectern, I'll start your time, and you'll begin speaking.

[Kristen Evans]: Good morning, supervisors. Kristen Evans. I'm here on behalf of Small Business Forward. Our steering committee sent you a letter this morning. While we appreciate the lip service being paid to small businesses, the money is not there. So today, we are asking that there be a verbal commitment, and hopefully, actual commitment to actually putting funds in the fund. We're asking for an immediate 2 to $3,000,000 appropriation of funds to support small businesses already being impacted by the family zoning plan, prior to it even being passed. Thank you.

[Brent Jalipa (Committee Clerk)]: Thank you much, Kristen Evans. Next speaker.

[Laurie Thomas]: Hi. Good morning. I'm Laurie Thomas. I'm the executive director of the Golden Gate Restaurant Association, and also a long time small business restaurant owner in the city. I first and foremost wanna just say that we are a 100% in support of this and the amendments. And while we recognize that there's a need for funds in the future, we'd like to just memorialize this and move forward as quickly as possible. I want to give a huge shout out to the Office of Small Business, to Supervisor Melgar, and to Jen for what was really proactive and thoughtful and engaged work to get this. And we're super thankful for this. And we hope that anything we can do to help move this forward that you reach out in the future. So thank you everybody for your work on this. We appreciate it.

[Brent Jalipa (Committee Clerk)]: And thank you much, Laurie Thomas. And with no further speakers, madam chair, that completes our queue.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. Seeing no public comment no more public comments. Public comment is now closed. I wanna thank supervisor Melgar for this fun. It's very critical coming in a time as you have acknowledged about the mayor's upzoning plan, creating potential impact while significant impacts to our small business. I am disappointed that the small business the office of small business is not present today. What I while I am 150% supportive of this fund supervisor, What I am I have issue with is actually the office of small business during this entire process of the upzoning plan. While that office of small business has been providing technical support, for our constituents, for many merchants and small business throughout the city, what they have not done, through during this upzoning process is to step up to the plate, providing, necessary and concrete proposal and policy recommendations to allow people like us, policymaker, in the legislative branch, but also as well as the executive branch, to actually put forth both amendments to the upzoning plan, as well as either impact fees or necessary fees or funding sources recommendations to allow us to provide concrete support to small business that they actually serve. Instead, what we have been seeing is sort of dodging that responsibility and allowing everyone, especially the stakeholder, to actually, like, fight for themselves, to fend for themselves, and among all the small business. And to task, supervisors, in this space to do the almost impossible. Meaning, to start and to have a fund during the budget deficits, which is very difficult already. And as of, you know, yesterday,

[Supervisor Joel Engardio]: or,

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: you know, we are announcing $3,500,000 for the immigration rate, because we're anticipating those increase, and so that we can providing those aid to the immigrant defense funds. To today, we're gonna announce, along with mayor Lurry, additional funding to tackle CalFresh, because the Trump administration is stopping the funding. And now that this upzoning plan in itself is a self imposed process, by the states and to the city, and the city is now creating this upzoning plan without, again, a concrete plan, to protect our small business. All which is to say, I'm disappointed in the office of small business, and I'm also disappointed that they're not here today. But I am grateful and really appreciative to you, supervisor Malgar, of your effort. You're doing the impossible work, and I so appreciate your leadership, not just as our supervisor, but also our land use chair. And for that, I'm so just very grateful for for that. And so I would like to, colleagues, first move, make the motion to amend the legislation as proposed by supervisor Malgar. And a roll call on that, please.

[Brent Jalipa (Committee Clerk)]: And on that motion to accept amend the amendments, to the ordinance as so read into the record by supervisor Malgar, Vice chair Dorsey? Aye. Dorsey, aye, member Chen. Chen, aye. Chair Chan? Aye. Chen, aye. We have three ayes.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: The motion passes. And supervisor Melgar, I know that it's substantive, so we must continue this. And thank you so much for your partnership. You have been so great. You provided, like, a very important and critical protections for our small business. And you and I, as we have conversation before about, you know, as our legacy CU really function as a stake, like, as I imagine, but yours is a carrot, which is your your strength to provide and protect our community. And just thought that perhaps if it's okay with you, I would continue this to the call chair, and that allow us to have the CU end this to percent inform of all colleagues at the full board.

[Supervisor Myrna Melgar]: Yes. Thank you. That works, madam chair. I am grateful for your thoughtfulness about it. All I would ask is that we try to land the plane Absolutely. At the same time as everything else. As you well know, there are multiple pieces of, trailing ledge or other legislation that is related to the abzoning plan, but are not, you know, changes to the planning code. Supervisor Chen has a bunch. You have a lot. Everybody's got it. So, we will hopefully schedule everything and get it to the full board all at around the same time, so that this cake comes together. Thank you. Thank you.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: We appreciate you, supervisor Maggard. Again, like I said, you're doing the impossible. And with that, colleagues, I would like to make the motion to continue the amended legislation, to call chair. And a roll call, please.

[Brent Jalipa (Committee Clerk)]: And on that motion to continue this ordinance, to the call of the chair as amended, vice chair Dorsey. Dorsey, I. Member Chen. Chen, I. Chair Chan. Aye. Chan, I. We have three ayes.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: The motion passes. Thank you, supervisor Malgar. Mister Clerk, please call item number two.

[Brent Jalipa (Committee Clerk)]: Yes. Item number two is a hearing, to consider the release of reserved funds to the Department of Emergency Management placed on the Budget and Finance Committee reserve by this year's budget and appropriation ordinance in the amount of 9,900,000.0 to fund the implementation of the Community Safety Ambassador Program. Madam chair.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. And, we have our department of emergency management here.

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Hi. Good morning. Good morning, chair Chan and vice chair Dorsey and supervisor Chen. My name is Adrienne Bekele. I'm deputy director for the department of emergency management, and I oversee the coordinated street response division, for the department. With me here today is Sam Dodge. He manages the ambassador programs for the department, which we are going to be speaking about today. The purpose of today's agenda item, and I believe we have a a presentation coming up, is to very clearly communicate about the impacts of the, community safety ambassador programs that have been, thus far throughout the city, and to request the release of $9,900,000 that's currently on reserve, with the Department of Emergency Management's budget to fund the continuation of the program and the new solicitation that has been issued. Before I start, I do want to thank the budget legislative analysts, especially Nicholas. Thank you so much, Nicholas, for your support and for doing such a thorough review of our of our program, and working to provide the attached report in your packets. I also wanna thank the human services agency contracts team. Leslie Lau is also here today and can answer any questions about the administrative process for the DEM contracts. They will also be performing the administrative functions for any of the new contracts that come, result of the RFP. And so are we able to pull up the slides? Just want to speak through

[Brent Jalipa (Committee Clerk)]: Through the chair, to, miss Pichelli. Your instructions were supposed to bring in your slide deck and drive it on the

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: My apologies. I will just speak through them if that's okay. And then we'll be able to provide we provided them in the packet. And so I'll be able to speak to the presentation. My sincere apologies, for that technical glitch. But I do want to, just present to you, some of the historical context of our ambassador program thus far. We have kind of a past state, a current state, and a future state of our ambassador program. Many different ambassador programs started in about 2020 and 2021. Those were across about 34 different, ambassador programs. And they focused on four key areas of of safety, of hospitality, of cleaning, and of wellness. What we're really trying to do now in our current state as well as our future state is really hone in on the, safety, ambassadors. And so our current state began at the, July and is a six month current state. There are three different bridge contracts that we are working through, and those are were initiated to ensure no break in service. The these are three contracts that were executed under HSA with DEM performing the operational oversight. The initial step for these bridge contracts was really to consolidate all of this work together for the safety ambassadors specifically, And to focus a single program with a single scope of work, and, very similar reporting requirements. Our focus has been on the ongoing work in the Tenderloin and mid market, as well as smaller grants in the 16th And Mission area, as well as in our Tenderloin parks. And our future state that we are intending to fund with this $9,900,000 is to begin in on January 1, and to really take all of the different community safety ambassador programs and consolidate them into a single procurement, and a single scope, and a single standardized way to, to implement the program. Our current program scope, I just want to briefly talk you through that. As I mentioned, we have three different grants, that total just under $11,000,000 across all three grants. And again, those are focused on the Tenderloin mid market, as well as 16th And Mission, and the Tenderloin Parks. Overall, all of these are community safety ambassador grants that really focus on positive engagements and activations, as well as de escalations in the community when necessary. The current program spending across those three grants, has been, invoiced to date about 50% of the way. And so we are, invoiced through three months for all three of the grants. And for, the, for the mission grant, we are, at about, $233,000 for the for the Tenderloin Parks grant, we are at about $218,000 and for the mid market Tenderloin grant, we're at about $4,500,000 Overall, we are between 46, excuse me, 4447% spent when we are about 50% of the way through the program. So we feel very comfortable with the way that we've been projecting our budget, the way that we've been spending down the money associated with the grants. And, because these contracts have such kind of minor capital and operating costs and are really tied to personnel, that's why we're seeing just a a bit of minor underspending due to some of the attrition and staff turnover. So we feel very comfortable with the way that we've been managing, and we've been projecting our budget, and spending these down over the past three months. We also have some metrics that have been, executed in our, current program performance that I wanted to just briefly speak through. Impact accountability has been very, very important to the Department of Emergency Management and our partners. And so we utilize the monthly reports that we receive from our existing grants, and the ambassadors performing the work under those grants to track progress over time and to measure the impact. Some of the data that's come from those monthly reports will be in your budget packet for you to to review. It shows the geographic areas. It also shows the the number of block faces that is covered. It shows either collectively or an average of the amount of trash that's picked up, or the number of de escalations that the ambassadors are performing on behalf of the community. And while that data does tell kind of the top level story of the program, it doesn't always show kind of the softer or the more impactful ways the ambassadors have been able to support the community. One of these such examples happened, over last weekend. Our Tenderloin, parks ambassadors were supporting a little Saigon trick or treat event in the Tenderloin, on Sunday. And right as the event was starting and the kids began to arrive, someone was experiencing a mental health crisis just outside the park. Our Tenderloin ambassadors were able to call 911, and within minutes, public safety was able to arrive and mitigate the air the the concern and make the area safe for the kids. So this is just another example that's not always captured in the raw metrics that we receive that really proves the impact of the ambassadors in our in our ongoing program. We do have some identified areas for improvement. One of the things that happened during, the budget process was this committee wanted to ensure DEM was really intentional about evaluating consistently the ambassador programs that we've been, that we've been running and overseeing. And so, we have identified six major areas for improvement that we've seen improvement thus far over the last several months, and we intend to continue to improve. First and foremost, really is the flexibility of our deployment of our ambassadors. It's time, it's location, it's our ability to change between fixed post deployments and roving post deployments, really making sure that our ambassadors are able to adapt to the needs of the conditions on the street, rather than sticking to one thing that was assigned several years ago and continues to be required under a contract. So flexibility is an area that we've begun to improve, and we really intend to continue to improve with this new program starting in January. The second is where we've noticed that, when we coordinate our ambassadors in a much more strategic and a much more consolidated way under a single program, that really helps us, have consistent goals, consistent deliverables, and consistent reports. That also helps with our evaluation. So when we are managed in a more coordinated way under a single program, that has also really helped us improve. The third is our coordination with other programs, with our neighborhood street teams, as well as our drug market agency coordination center. And so our ability to coordinate these ambassadors over the last several months, and our intention to continue and improve that coordination beginning in January under this new contract, really has, has helped, give us a North Star and a guiding light as we're trying to figure out how to improve this program. We acknowledge that, there are a bunch of, additional ambassador programs, across the city that we will continue to also have to coordinate, and so we intend to do that as well. We are also looking to help work with the our community benefit districts, as well as our other those other ambassador programs that are managed perhaps, from the private sector or from, our other partners to make sure that we're all contributing to, fit into that piece of the puzzle. The one of the additional areas for improvement that we've identified is a greater diversity,

[Supervisor Joel Engardio]: of our providers. We know that,

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: we should always be on the we should always be offering fair and competitive solicitations for our programs. And so as we've moved into the next phase of this, this program, we have created this competitive solicitation to ensure that we have a greater diversity of our providers. And we're really pleased with that. And then lastly, one area that we have seen some flexibility in since, July 1, but we look forward to to working more on, is doing some, changes and some some trials and pilot programs in real time. One of the areas that we've done this over the last several months is we've created a flex team of ambassadors within the Mid Market and Tenderloin area, and we've been able to do that based on some of the flexibility that's in our existing contract. We want in this future program to continue that level of flexibility, and to ensure that we are able to pilot new things based on changing street conditions over time. And so, that is one of the last areas that we've identified for improvement. In the new ambassador program that we are intending to start start in January, contingent on the release of this funding, really is trying to take these six areas for improvement and expand upon them. DEM and HSA have worked very closely together in order to have a more streamlined approach, and a strategic ambassador program. And so the new program that would be supported by this $9,900,000, that's on reserve will encompass 12 different service areas. And in order to do this, we issued a new request for proposals that opened at the October, and it just closed last Friday. We're very pleased, especially because we are, looking to increase the diversity of our of our providers, that we received 10 proposals for this RFP, and nine of which are qualified and are meeting the minimum qualifications. So right now, we have a subject matter expert panel that's doing an evaluation of the proposals, And they look to have those evaluations done by the end of next week so that we can issue a, we can issue a, notice of letter of intent, to proceed with multiple grantees based off of that RFP. And we expect to have fully executed agreements in December so that we can make sure we do not have a break in service, and begin January 1. The new program scope, outlines a couple of different, fairly consistent, service areas that we have in our current exist or excuse me, our current ambassador programs. These include things like positive engagements with people in need, interventions like de escalation, and effectively requesting support from city agencies. Deterring drug activity is a really big deal. Making sure that we are reminding people who may be openly using drugs that that is not acceptable. That's a key component of this contract. And then ensuring a safe and clean environment is also a scope of work. Performing light cleaning, doing any disposal of any needles, or anything else in the area as necessary. These ambassadors will also be asked and required to render immediate aid. That includes deployment of Narcan or potentially performing wellness checks on those who may need it in the community. And, again, calling 911 and soliciting the assistance of city resources where required. Activating public spaces is also a a key component of this contract. There are examples in UN Plaza, where our ambassadors have been really integral to making sure that as we activate these spaces, that is kind of the end of the cycle that we generally see. You can interrupt negative street activity, but if you're not able to activate that space and truly hold the space, it the cycle will start all over. So activating of the space, is really important as well. Our new program coverage in, beginning in January, outlines 12 specific, service areas across the city. Some of the areas are maintained from our existing scope of work of across the three different grants, but some are in addition. And so, some of the areas that are being maintained include this, the Tenderloin, the Civic Center, Polk Gulch, as well as some of the mid market areas. But some of the areas that we're expanding include Soma as well as the mission. We're also adding new deployable teams. And so there are, three daytime or morning shift teams, as well as two swing shift or kind of afternoon and evening teams. And these teams will be deployable at the discretion of the Department of Emergency Management based on the conditions noted in the streets, based on requests from the community, and based on what we're really seeing out there. And so this really speaks to the level of flexibility that we've been working to improve. We're also going to be adding four small teams dedicated to commercial corridors across the city. We've heard very strongly that we need to do more to support our business community as well as its visitors. And so this is our intention to deploy different, ambassador teams that are focused on these commercial corridors and support there. We've also added some flexibility to our parks ambassadors in the new scope of this contract. Right now, they are, limited to three parks in the Tenderloin, but we are expanding that scope to be any park property to make sure that we're, we're sharing that, that capability across the city. And then we've also continued the scope of what we're calling our neighborhood respite sites. There are two currently in operation. One is at Turk And Hyde, and one is at 6th And Jesse. These really serve as kind of outdoor living rooms for people who may not have other areas to safely socialize other than the sidewalk. So this is also a a component of our new of our new scope of work. Our the new program budget is a DEM, you know, is very committed to using public funds appropriately and and strategically, and we would not budget for ambassador programs if we did not feel very, very strongly that these are integral pieces to the neighborhood street teams and to our ongoing work in our in our community. And so the total annualized maximum budget for this program is, just under $25,800,000 across all 12 of the service areas. So roughly speaking, that's just a little under 13,000,000 for six months. So, of course, our our request today is to release $9,900,000 but the we do anticipate that the first six months of this program will be able to be covered by that 9.9 because d DEM has been working to identify other sources of funding with other city departments, as well as to account for some of the minor underspending that we're seeing in our existing grants, and some anticipated ramp up costs, from, selected grantees that would get us to the 13,000,000 for that first six months. So overall, our request to the committee, really is to release the $9,900,000 that is currently on reserve. It was put on reserve pending substantial process, progress with the competitive procurement. We do feel that we have been very strategic and very intentional about doing this competitive procurement. And, I'm happy to answer any questions that you may have. And, again, I I apologize for the technical difficulties. Thank you.

[Nick Menard (Budget and Legislative Analyst)]: Good morning, supervisors. Nick Menard from the Budget Legislative Analyst's Office. Item two is a hearing that would release $9,900,000 of from Budget and Finance Committee Reserve in the Department of Emergency Management's general fund budget this year. There was also a similar reserve because this money's being work ordered to HSA. There's a mirror reserve in HSA's budget that I think should also be released if you move forward with this request. The funding will be used to fund new street ambassador contracts that are currently in the procurement process and will start 01/01/2026. We summarize the services of these contracts on pages three and four of the report. They are essentially the same duties as the existing street ambassador services, but they are but what's being procured would allow the city to expand staffing within the existing service areas, and then also add service areas. So new new new areas of the city that can be staffed with community ambassadors. We show the fiscal impact of these contracts on page five of the report, assuming that they are procured at the maximum budget stated in the RFP, which is $25,770,000 So over the initial two and a half years of those contracts, they would cost about $67,000,000 And then if the options to extend that are in the RFP are fully exercised, the total cost of the contracts through December 2030 would be $142,800,000 The structure of the RFP and the contract associated with the solicitation, I think, is a big improvement from the city's prior management of their street ambassador program. They incorporate our recommendations to increase competition in the procurement process, to have a clearer, budget for these programs, and to have, defined outcome measures, that the city will measure the performance of the ambassador vendors on. We detail those changes on page six of our report. We also note that the size of the new ambassador program that would start January 1 is actually beyond what was budgeted for the program this year and next year. So DEM will require approximately $3,000,000 in funding from other departments to fully fund the ambassador program this year. And then, I believe, between 7.5 and $7,800,000 next fiscal year, to maintain the ambassador program at the level that it's being procured at now. Because the funding for the DEM budget for street ambassadors decreases from 20.7 to $18,600,000 between this year and next year. And so there'll be a bigger funding gap next year. So one thing I think the board should consider is working with the mayor's office and the Department of Emergency Management to actually scope a program that fits within the existing budget, given the city's structural budget deficit. This may not be the time to expand this program. But we do recommend releasing the reserve in the DEM budget and the HSA budget.

[Laurie Thomas]: Thank you. Just trying to help

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: me understand, right now, that it's both in your presentation provided and it's within the register file online. I'm kind of confused about both the new program coverage as well as the new program budget. So you do have a, PM citywide deployable, that is in the budget. And it says $2,100,000, roughly. $2,150,000. And then here in the coverage in your presentation, that is it existing coverage? And it says no. Is it what what do you mean by that?

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: I'm I'm happy to clarify. Thanks for that question. So the, the budget that is scoped within the presentation is our anticipated breakdown of how we will fund the program starting January 1. So there's no existing budget for a PM deployable team in our existing three contracts that we have right now. So that is intended to be a new service that would begin January 1 and would cost roughly 2,100,000.0.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Got it. And it's January 2026.

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Correct.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Uh-huh. And so and and what about the commercial core is that is that actually the same for commercial corridors?

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Yes.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Things that it says currently is not cover, but with the new budget,

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: it will

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: then be yes on all these columns. Correct.

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: It would be yes. So the the intention of that chart was to really show the difference between the existing coverage that we have right now through the end of this calendar year, and what would change as we move forward into January.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: I mean, I think at some point not at some point. For the upcoming budget process, I concur with budget and legislative analyst. Is that what we would like to see is you know, we we do see that this is the funding actually come from different city departments. What we'd like to see in the coming budget proposal from the mayor, through you, is that then it should all just be consolidated, and then into one line item under DM or wherever you end up going to go. But it is best to both consolidate funding sources. And as you have slowly but surely, I wouldn't say consolidating contract, but streamlining them. Mhmm. And I I definitely am seeing a good breakdown a good breakdown of like, they're reasonable. Right? Like, you're breaking them down through morning and, you know, AM and PM. That is for citywide. You basically can they're not exposed, and you deploy them as necessary and as needed. I think that's important because we know, while the heavy, you know, concentration should be really the deployment should be really tenderloins on a market and civic center, there's still needs everywhere else. I also think that it's good to break down into corridors, commercial corridors and parks. Again, they just have different hours Right. Of needs. How I I think there's, you know, both from the BLA, and your presentation touch upon sort of this metric of, like, how do we measure this? And I think you actually did have some here kinda mentioning about performance

[Gary Chang (Senior Program Manager, SFMTA)]: Mhmm.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: And and where you think things are in terms of, you know, de escalation and incident tracking. And and I think that that is the question that I have for us, that is this is this are we are we setting with the goal basically is having the ambassador. Their job really is to deescalate any type of confrontation, on our on our streets. And then where does law enforcement come in, and when do they come in?

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Yeah. Absolutely. And something that I did not mention in the presentation, but that is outlined in the, request for proposals that we submitted and will be in the new contracts, is additional outcome metrics that we intend to see before and after the new contract term is is complete. And one of those is at least a 20% reduction in both three one one and nine one one calls in the areas deployed, where ambassadors are deployed. And so, we're looking to measure ourselves, not just by the output of what the ambassadors are doing in that specific area, but the outcome and the general, feeling, sentiment, and overall safety of that area long term after the scope of the contract is complete. So we look to measure ourselves that in that way as well. In terms of our engagement with law enforcement, you know, we've been working very closely with, with our ambassadors, both in our current contracts, and will continue in our new ones, to make sure that a requirement of the contract and of the ambassadors working with us is to make sure that they feel comfortable coordinating with local law enforcement, that they are very in tune with the city services that can be provided to people who need assistance on the street, and that they are part of the integrated network of what city services can provide. There is also a requirement in the, in what will become the new contracts, that, that the ambassadors will have specific trainings of not just de escalation, but how and when to involve local law enforcement to ensure their safety and their protection. And so we, as we enter into the negotiation phase with each of the grantees that have been selected, we will be very intentional to work with them and ensure that we have clearly written down our expectations for their safety, our expectations for their engagement with local law enforcement, and we will also be working with the police department, the sheriff's office, and other law enforcement, in the areas to make sure that they are, seen as a team, and as people who services that will be expected to respond if ambassadors do request that help.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: I think also what I'm looking for is a couple of things. I think one is safety protocols for the workers Mhmm. That are that are doing this work. And I think that's critical, and it may also be equipment. And I'm not suggesting arm. I'm just suggesting equipments that could it be a radio? Could it be, like, what other else that could help them to call for help Yep. Faster, sooner, more direct. And then I think, eventually, when you do come back, I'd like to understand better about on-site supervision, that in coordinating with the ambassadors, that be able to provide them support from the city directly, not necessary, again, from law enforcement. But if necessary, maybe law enforcement, on on on-site, meaning having the ambassador, in the premise, but then from time to time that you do have a on-site, could it be a police officer? Could it be a sheriff? Could it be someone else? But that is also, again, be able to call for help, for support, or be able to say, ambassador, we do not engage in the situation. Now we need to call for backup or help. Like, having someone that is from the city directly, I Yeah. I would like to learn more about deployments of that strategy.

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Understood. And happy to come back and and provide that to you, especially after we're completed we've completed the negotiations with the new grants and the new contracts. One thing that I think may be helpful to add is what we've seen is actually a great increase in our ability to communicate directly with our ambassador teams due to their consolidation under the Department of Emergency Management. Having our department both be the coordinator of the ambassador programs, but also be part of the nine one one system has been a very helpful impactful way for us to very quickly communicate, any incidents, risk, or any times where they should be avoiding the area. And so we have seen over the last several months a rapid increase in our ability to get information out to ambassadors, to make sure that they know that there's an active incident in this area, and it's because things are routed through the department of emergency management. So we've definitely seen an increase and an improvement there, and we look forward to to continuing to make those improvements.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: And last but not least, and I see now I see, vice chair Dorsey has questions. So I'm I'm gonna end here with my last questions. And and but more like a statement, and what I would like to see, as we move forward, as a recommendation to the to to the departments, but also to the executive branch, is the consistent effort and potential, if possible, to turn the ambassador to be directly working with the city as city workers. And that because, again, I think there are invaluable assets, especially when they're trained well and do well. We should do everything we can to retain them. But I think that a contract relationship is a little bit more tenuous, or can be. You know, nothing better than directly having them as city workers, and that, you know, and that it's actually under DM, and that there is, again, a pathway to success, and pathway to retain talents and workforce. And and also, again, to retain institutional memory and skills, it's just very invaluable, and it's already hard for people to be willing to do this work, let alone to be able to retain them and and to show them that they're valued, but also give them a pathway to leadership role to to to turn their experience to train other people. So I I would really like to see that, again, in in your RFP and and also in your contract moving forward that with with that goal in mind.

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Understood. Thank you.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. Vice chair Dorsey.

[Supervisor Matt Dorsey (Vice Chair)]: Thank you, chair Chan. I think one of the questions I had you started to I think you you may have answered completely, but I wanna give you a chance to maybe elaborate on it. But I was going to ask about, whether bringing it into DEM has enabled better coordination and oversight and those kinds of things. I think you touched on that a little bit, but Yeah. Any any are there any other ways that

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Definitely. What we what I think has been one of the most impactful improvements of bringing this into DEM has been our ability to coordinate directly with the new neighborhood street teams. If you think about the mayor has his breaking the cycle initiative, but if you think of the negative street conditions as a cycle, you you can begin with offering services, offering outreach, offering engagement to someone. If they take you up on on your offer, then you're able to get them placed into shelter, or into treatment, or into whatever services they they require. And and sometimes there is, you know, debris left over, and we need to come and clean that up. But if we don't hold that space, if we don't activate that space, that space becomes vulnerable to essentially reencampment or or the ability for negative street conditions to return to that exact area. And it becomes an exhausting cycle. We see it every single day, especially when we have fewer resources overnight. Every morning, our teams are going out and they are cleaning up the exact same areas that they cleaned the day before, the day before, the day before. And so when we have integrated these ambassador programs into DEM, which is the same department that coordinates the neighborhood street teams, and coordinates the work across the outreach, across any enforcement that's required across the cleaning. We now have that final leg of that cycle of being able to hold that space, and being able to activate that space. And so, although we still have a ways to go, I have seen the coordination under DEM as being incredibly valuable for that reason, in addition to the reason that I mentioned before about integration with nine one one and our critical incidents.

[Supervisor Matt Dorsey (Vice Chair)]: I am appreciative that you incorporated the BLA's recommendations on increasing competition. I note that there was a deadline last Friday for RFPs to come in. Yes. And I'm just wondering, do how many do we have a number?

[Nick Menard (Budget and Legislative Analyst)]: 10. Okay.

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Which is very exciting for us. Yeah. And nine of the 10 were fully qualified. And so our evaluation panel is currently reviewing those nine proposals that met the minimum qualifications. Okay. And their deadline is the end of next week to make their rankings based on the criteria in the RFP. And we intend to issue notices of intent to award, by the end of next week on November 7 to the selected grantees.

[Supervisor Matt Dorsey (Vice Chair)]: Okay. I have been a fan of urban alchemy in these programs for a while. I think just by virtue of being a mid market resident and a District six supervisor. I think in the course of this year, I also became a dog dad and a regular sort of at the at the UN Plaza Dog Park. And, I I I have come to appreciate even more, the services that, our ambassadors, render just as a knowledgeable, friendly, engaging presence, in the public spaces, for difficult dogs and their owners and just just a multitude of things that that can play out. They're really valued part of the neighborhood and the community. So I am going to be supporting this. Thanks so much.

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Thank you, supervisor.

[Supervisor Joel Engardio]: Thank you, chair. Thank you for the presentation. I do have a question on the new program coverage. Sure. You mentioned that, we are increasing eight ambassadors in four supervisors district. Can you let me know who they are?

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Oh, to clarify, those are the supervisors of those ambassador teams. So that wasn't specific to specific districts from the board of supervisors. So what that chart notes is that we're we plan to have four different teams. Each team will be two ambassadors plus one supervisor.

[Brent Jalipa (Committee Clerk)]: And that's

[Gary Chang (Senior Program Manager, SFMTA)]: the question.

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Okay. And those three will be working together to specifically focus on commercial corridors

[Supervisor Joel Engardio]: So it's all commercial corridor across the city. Or can you name, I'm really, for as a supervisor for the cert 11 Yep. I also want to say, you know, the, ambassadors program on the street, it's invaluable. Like, in District 11, we have seen displacement from a lot of this intervention program that we've been doing in the downtown, in the Mission. So in District 11, we have seen more impact. And then with Street Ambassador, it's definitely helping a lot with our merchants, especially early in the morning. I have heard directly from business saying that it's difficult to even open their stores. So some of those is really challenged without, you know, intervention from, whether it's from our law enforcement, or from our, street team. At the same time, it's cleaning the street is also very important. I think the invaluable services that it's added to very busy commercial corridor, and also transit corridor. I think we have couple in our district. I just want to say in support, and also, you know, want to make sure that the commercial corridor is really continue to have those support. And thank you for that presentation.

[Eric Rozelle]: Yeah.

[Supervisor Joel Engardio]: Thank you for the clarification, too.

[Adrienne Bekele (Deputy Director, Department of Emergency Management)]: Of course. And all credit to to your district as well. The the way that, we knew we wanted to implement this in in our future programming was because we were able to pilot this commercial corridor team in the Excelsior. And so this was an area where we were able to increase temporarily the flexibility that we have in our current grants, realize its impact, realize its success, and then move that to future programming times four. So, we're really looking forward to the opportunity to continue to do that for your district, as well as spread spread the love across the city.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. And, thank you for your presentation today. Again, the presentation is on the file of along with the hearing. And so with that, let's go to public comment on this item.

[Brent Jalipa (Committee Clerk)]: Yes. We are now opening public comment for this item number two, if we have any members of the public who wish to address this committee.

[Eric Rozelle]: Good morning, supervisors. My name is Eric Rozelle, and I'm speaking on behalf of the Tenderloin Community Benefit District and as a longtime resident of the Tenderloin. I'm here today in strong support of releasing the 9,900,000.0 and reserve funds to the Department of Emergency Management for the Community Safety Ambassador Program. In the Tenderloin, safety ambassadors are a highly trusted and visible presence. They deescalate conflicts, assist residents, and assist in connecting people to vital city and social services. Their daily work creates a safer, more welcoming environment for everyone. This improved safety also directly benefits small businesses. A cleaner, safer street encourages foot traffic and makes customers and employees feel more secure, which is essential for local economic vitality. Critically, the program benefits the 3,500 youth and families, 4,000 plus seniors and people with disabilities, in addition to the 35,000 Tenderloin residents as a whole we serve. Seizures and people with disabilities rely on their wellness checks and direct assistance to navigate the neighborhood, especially when confronting challenges to safe street conditions. Youth and families benefit from the de escalation of conflicts and ambassadors' roles in making our local parks and public spaces cleaner and safer. The program is also important local economic investment for our residents who often hire where we often hire Tenderloin residents for these living wage jobs, providing professional development and pathways to stability for community members who might otherwise face barriers to employment. This is a proven community driven model that strengthens safety, provides opportunity, and supports local commerce in San Francisco's most challenged and diverse neighborhoods. We urge your full support and immediate release of the reserve funds. Thank you. And we are grateful for your support and partnership in helping the Tenderloin and San Francisco thrive.

[Brent Jalipa (Committee Clerk)]: Thank you much, Eric Rizzo. Next speaker, please.

[Robert Singer]: Good morning. My name is Robert Singer, and I'm the park steward manager for the Tenderloin Community Benefit District. Our park stewards program began in 2020 after Tenderloin neighbors asked for parks that were cleaner, safer, and more welcoming for their families. And I wanna thank the brief story that was, mentioned during the presentation of Sunday at Macaulay Park, where we had somebody who interrupted our trick or treat event. And fortunately, I was there with my with my team. We quickly got on 911. The cops showed up very quickly and got the man out of there and took him out of the scene. So we were able to have a nice event for the kids. So that's why it's important that we're out there. So we have 16 park stewards that oversee Boedecker Park, Turkiye Mini Park, and Macaulay Park every single day of the year, three hundred sixty five days a year. As long as the parks are open, we're there. Our stewards open the gates each morning, keep the parks clean, and make sure they remain safe and inviting for everyone who walks through. Now our services are made possible for through the funding from the Department of Emergency Management that we've been talking about, and this allows us to maintain that consistent presence in these parks. Because we're in the parks every day cleaning the inside of the parks, the park custodians can spend more time taking care of the other parks in the city. Because we also clean the outside of the parks, the sidewalks and hosing down the sidewalks, each day, Public works groups can focus on other issues in the neighborhood. Also, because we're consistently reminding people about the rules of the parks, no smoking, no drinking, no drug use, police and, park rangers can focus on more important issues. So I wanna thank everybody for your initial investments into this program, and we appreciate continued investment in this model to ensure that these parks remain safe, inclusive spaces. And we invite you to come visit our parks in the Tenderloin to enjoy, a clean, safe environment and see what the difference this investment makes. Thank you.

[Brent Jalipa (Committee Clerk)]: Thank you much, Mark Singer. And with no further speakers, madam chair, that completes our queue.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. And seeing no more public comments, public comment is now closed. Colleagues, I would like to have this hearing filed and heard so that we release the reserve funds. And I make the motion to do so, and a roll call, please, on that motion.

[Brent Jalipa (Committee Clerk)]: And on that motion, to approve the release of 9,900,000.0 to the Department of Emergency Management and that this hearing be heard and filed. Vice chair Dorsey. Aye. Dorsey, aye. Member Chen. Chen. Aye. Chair Chan.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Aye.

[Brent Jalipa (Committee Clerk)]: Chen. Aye. We have three ayes.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: The motion passes. Clerk, please call item number three.

[Brent Jalipa (Committee Clerk)]: Yes. Item number three is a resolution exempting from the competitive bidding policy set forth in the administrative code approving a port lease for the continued operation of an observation wheel at Seawall Lot 301 between the port and Skystar Wheel LLC for a period of eighteen months with one eighteen month extension option to commence on 11/01/2025 through 04/30/2027 for a monthly base rent of 11,000 with annual increases plus a percentage rent of 8% for an estimated revenue of 1,800,000.0 and adopting environmental findings under the California Environmental Quality Act. Madam chair.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. And I believe, supervisors, Danny Sauter's, office would like to, provide opening remarks.

[Tita Bell (Chief of Staff to Supervisor Danny Sauter)]: Thank you. Good morning, chair Chan, vice chair Dorsey, supervisor Chen. I'm Tita Bell, chief of staff to supervisor Danny Sauter of District 3. I'm here to voice the supervisor's strong support for the eighteen month lease extension of the Sky Star Wheel in our district at Fisherman's Wharf. Since the wheel's arrival at Fisherman's Wharf in 2023, it has become a joyful new way for people to experience this breathtaking part of our city. And this is not just for tourists. It's for families, for seniors, for community members who might not otherwise have access to these types of experience. And supervisor Dorsey, dogs are also allowed on the wheel. The wheel has clearly helped energize Fisherman's Wharf, bringing foot traffic to restaurants and retailers, and it has also generated important revenue for our port. The wheel has proven also to be a committed community member supporting, the Fisherman's Wharf CBD, the SF Chamber of Commerce, and SF Travel. They have helped, support and promote events and create community serving programs. So this is what it looks like when we invest in activating our public spaces with creativity and care. It's also a symbol of the city's resilience, reminding us of everything that San Francisco still has to offer. So let's keep that momentum going. Supervisor Sauter hopes to have the committee's support for the lease extension and waiver of the competitive bidding policy. And the port is here to present the item. Thank you.

[Scott Lancel (Deputy Director of Real Estate, Port of San Francisco)]: I got this right. Thank you. Good morning, supervisors. Good to be here again. I'm Scott Lancel, the deputy director of real estate for the port. I'm happy to have this in front of you today, to consider the eighteen month extension with an option for a further eighteen month, period of operation to continue to support, what has been as described a very successful run at the port. The Sky Star Wheel, not only is an attraction at the wharf, but, has generated significant revenue to the port through our revenue share with the lease, since, its initial, location at the wharf for the APEC conference in November 2023. I think the wheel has generated close to $10,000,000 of gross revenue. The port has participated in close to a million of that, 760,000. And with this extension, we're moving from a 5% of sales, share to an 8% share with a slight increase in base rent. So continuing to, kind of, as partners succeed in in their success or or benefit from their success. We were we were here at the board or at the board for the competitive waiver initially, and now we're here again with this eighteen month extension. So as you can see in the slide, there's been over 600,000 riders, since the arrival of the wheel in Fisherman's Wharf. And, the operator has reached out to the community and provided, complimentary, over 2,000 complimentary tickets to underserved youth in communities to get, local residents down to the wharf and allow everyone to experience and enjoy the ride and the views. So here's a brief summary of the terms. Eighteen months, with an extension through 2028. The port does have a ninety day termination option to accommodate, the forthcoming further development of the wharf with the Fisherman's Wharf revitalized interest in the area. As that entitlement and approval proceeds, we retain flexibility to allow that to move forward when ready. The rent, as I noted, has increased slightly on the base rent, and then we've bumped up percentage share, increased our security deposit to allow for restoration of the site if and when the wheel were to move, and then some measures that really ensure there's incentive to have the wheel removed when the port has interest to do so with a holdover holdover provision, which really would push up rent to, again, incentivize incentivize that removal when necessary. And that's the presentation. I'm happy to answer any questions.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: I know why. I think I know why, but I don't want to assume in your presentation. Could you elaborate why bidding competitive bidding is not practical?

[Scott Lancel (Deputy Director of Real Estate, Port of San Francisco)]: Yes. As you'd imagine In

[Nick Menard (Budget and Legislative Analyst)]: this case.

[Scott Lancel (Deputy Director of Real Estate, Port of San Francisco)]: In this case, the for one, the use is very unique. Right? The the operator so there were a few operators. I think we were here before this originally moved from Golden Gate Park to this location. The operator, in order to get the permitting and Cal OSHA requirements met to make sure this was safe, made significant investments in the site, really, just to accommodate this short term period of time. So, so considering a period of eighteen months or even thirty six months, the the world of competitive bidders or others that could, replace this wheel or or, support investment, in this it was it was north of $2,000,000 of investments for such a short period of time is very, very limited. And so, we've requested the waiver, or we did request the waiver initially.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Got it. Cost is more than the profits and benefits for both the city and the vendor. Yeah. Understood. Please keep it there. That's all I can ask. I don't mind it. Please keep it there. It sounds good to me. I don't see any other name on the roster. Let's go to public comment on this item.

[Scott Lancel (Deputy Director of Real Estate, Port of San Francisco)]: Thank you.

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

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: 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 Chen Chen, aye. Chair Chan? Aye. Chen, aye. We have three ayes.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: The motion passes. Should clerk please call item number four?

[Brent Jalipa (Committee Clerk)]: Yes. Item number four is a resolution approving an agreement with Complete Coach Net sorry. Complete Coach Works to perform midlife overhaul services to replace and rehabilitate systems for up to 152 standard and 69 articulated hybrid electric new flyer coaches in an amount not to exceed approximately 95,400,000.0 for a contract term not to exceed five years from the date of notice to proceed. Madam

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: chair. Thank you. And today, we have SFMTA here.

[Gary Chang (Senior Program Manager, SFMTA)]: Hi. Good morning. Good morning, chair Chan, vice chair Dorsey, and supervisor Chan. My name is Gary Chang, Senior Program Manager with, SFMTA Transit Program Delivery. And I also have my staff, Stephen Lin, who will be helping me to chair the PowerPoint. Today I'm here to present the midlife overhaul phase two of the overhaul program. Next slide, please. So this is a very infamous icons that you probably may have seen it in other PowerPoint presentations. So it's kind of giving me a little flashback of the memories when I first joined Muni back in late '90s that when we procure vehicles, we procure a large quantity in about a short two to three years. So when everything new and exciting, it was great. But however, as they all aged, then the service availability, and then basically the availabilities become low. And since then, we applied the lessons learned. What we have done was actually spread out the procurements. So actually, we try to do a procurement of about, roughly every year, about 100 vehicles. And then afterwards, we do follow the preventive maintenance as recommended by the manufacturers religiously. What I mean religiously, like really, really follow strictly. And then afterwards, we will also do a, midlife overhaul as well. And between 2013 to 2019, SFMTA actually had replaced the whole entire rubber tire fleet, close to about 800, 14 vehicles. And the advantage of that, during the, spread out of procurements there, it'll lower the age of the fleet. And more importantly, since we are taking a chunk at it every year, so we have an opportunity to introduce new technology. And I just listed a few, like the air conditioning, camera systems, stroller parking seats on the configurations, and anything on the ADA accessibility as well. So because based on the quantity of the fleet and the configurations and the propulsion system differences, we actually had divided it in that eight fourteen buses into three phases of the overhaul. The overhaul program is actually a mandate in the TA grant agreement when these vehicles were purchased. And the goal of the overhaul is to really to help to sustain the coach's availability, maintainability, until the end of this useful life. And the one it's coloring green is actually the one that are currently in process. And the one item that's going to the board today is actually the second gray color one. So what kind of work are we going to be doing? So definitely propulsion system will be the number one item on the list. That will be including engines, the batteries, and the hybrid traction motors, HVAC system, refurbishment of the operator area, suspensions, and etcetera. But one line item in the contract there is what we call the unforeseen work. It this is just like our regular house remodeling. Once you open up the sheetrock, you you sometimes you may not know what you're going to be finding. So that's kind of a line for us to do any extra work that may, discover during the overhaul. And let me give a little bit of project status. So of the phase one vehicles, there are a total of 315 vehicles. And out of the first 112, we actually had kept the work in house. But, however, that was only, conducting the overhaul on the propulsion system only. And that was already that's already been completed. And the other two zero three, we have a contract with Complete Coach Works. And NTP date was back in July 2022. And as of today, we are at about 187 coaches. Roughly 91% completed it. And we do anticipate to finish up all that work by early, 2026. CCW Complete Coach Works does meet our quality expectations, project schedules, and also within the approved budget. The contract PO for the phase one with the complete coach works was $93,000,000 And so what kind of results are we getting? So here, what we have collected the data of the, areas that they performed at the overhaul. And the blue line was the basically, we are tracking the performance of the vehicle before the overhaul. And the red line on the right there is actually tracking the vehicle performance afterwards. And as we can see that we do see an improvement. But I usually like to point out is or think about it, if we didn't do it, we would have to keep following that blue line and trending down. So currently, today, what I have is the phase two for the contractor selections. We did issue RFP back in August 24. And November 24, we did receive one responsive bid. And after the review of the proposals and multiple negotiations, kind of tightening down the scope of work and pricings, the pricing was also conducted, a price analysis, from the con third party contractor. A little bit of history about CCW. So they are actually located in Riverside. They have been doing this kind of line of work for about thirty five years. And, actually, SFMTA first encounter with them was back in mid two thousand. The current schedule that we're gonna be looking at is, obviously after, if we got approval from this board, it will move on to the board of supervisors. And we are anticipating, try to issue the NTP by, end of this year. And then, basically, for the amount of vehicles and the work, we will be anticipating to finish up all the work in early twenty twenty eight. And the item request for your approval is the contract, with CCW in the amount of roughly $95,000,000 to overhaul two twenty one coaches. 152 of them are 40 foot hybrids, and 69 of them are 60 foot hybrids. And the contract term is for five years, and, with the two one year options. And that's all for my presentations. And I do want to really give a big thank you to the BLA team to do a really thorough review. Thank you very much.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you.

[Nick Menard (Budget and Legislative Analyst)]: Item four is a resolution that approves a new contract between MTA and Complete Coach Works. The contract is for $95,000,000 and has an initial five year term with options to extend an additional two years. The contract will fund Complete Coach Works to overhaul two twenty one buses that MTA purchased between 2016 and 2018. They're about halfway through their useful life, and this will help, keep those buses in service and reduce, routine maintenance costs. We summarize the budget on page 14 of our report. You can see that this contract is largely funded by Federal Transit Administration funds. Those are allocated to San Francisco based on, essentially, population. So they're not a competitive grant. And the cost per bus is essentially very similar to the existing complete Coachworks contract, plus inflation. And MTA did work with a consultant to prepare an independent cost estimate prior to the solicitation to confirm the reasonableness of these costs. We do have just a cleanup amendment for you to consider on item four, which is the resolution doesn't state that there is an option to extend the agreement. The agreement does have a two year option to extend. In any case, the MTA will have to come back to the board if the spending exceeds $95,400,000 plus $500,000 allowed by the charter. So this is really just a a factual cleanup in the resolution. Happy to answer any other questions.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. I I think, thank you. I think it's very meticulous of ways to figuring out how do we extend the life of, you know, our vehicles. And I'm glad to hear that you're also rigorously maintaining them, according to the manual and suggestions. And, and I think I don't have any other questions. Let's go to public comment on this item. Yes.

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

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Seeing no public comment, public comment is now closed. Colleagues, I would like to first amend the resolution as proposed by the BLA to correctly state that the term is five years with two one year options for renewal, for a maximum contract term of seven years, and then send the amended legislation to full board with recommendation. A roll call, please.

[Brent Jalipa (Committee Clerk)]: And on that motion to amend the resolution, to accept the BLA's recommendation and to forward the resolution to the full board to the positive recommendation as amended. Vice chair Dorsey. Aye. Dorsey, aye. Member Chen. Chen, aye. Chair Chan.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Aye.

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

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: The motion passes. Mister Clerk, please call item number five.

[Brent Jalipa (Committee Clerk)]: Yes. Item number five is a resolution approving amendment number six to the international terminal duty free and luxury store lease between DFS Group LP and the city and county acting by and through its airport commission, temporarily reducing percentage rate to 20% of gross revenues up to 100,000,000 and thirty two percent of gross revenues above 100,000,000 for lease years 2026 through 2029 and a temporary reduction in the minimum annual guarantee for the same period by establishing the bag at 25,000,000 for 2026 with annual adjustments as provided in the lease, effective upon approval by the board of supervisors. Madam chair.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. And we have SFO here.

[Daniel Singh (San Francisco International Airport)]: Good morning, chair Chan. Good morning, vice chair Dorsey. Good morning, supervisor Chan. Daniel Singh with SFO. The airport is seeking your approval for amendment number six to the international terminal duty free and luxury store concession lease with DFS Group LP. DFS currently leases approximately 47,778 square feet of space across 17 locations throughout the airport, but primarily in International Terminal A And G. DFS is a joint venture partnership with five small business partners with 5% ownership, each with 5% ownership. The amendment proposes a temporary reduction in percentage rent and the minimum annual guarantee for a four year period covering lease years seven through 10, which is equivalent to calendar year 2026, through 2029. DFS and its joint venture partners continue to experience financial losses due to the gap between sales projections, at least commencement and actual performance, caused by the demographic shift in international travelers. Under the proposed amendment, DFS would pay 28% of the gross revenue up to $100,000,000 or 32 percent of gross revenue above $100,000,000 along with the minimum annual guarantee of $25,000,000 for year seven and subjected to annual adjustments, for lease year eight through 10. No changes are proposed to the total leased area or overall lease term. And, the proposed percentage rent of 28 to 32% is still higher than the average percentage rent of other specialty retail at the airport. At the start of Leishir Alevin, which is 01/01/2030, the temporary rent relief would expire. The original rent structure, including the 42,000,000 minimum annual guarantee and the original tiered percentage rent schedule, which would be reinstated for the remainder of the lease term, which continues through 03/31/2034. The proposed amendment would provide an estimated 74,620,000 in total rent assistance to the SFO duty free and luxury store joint venture over the four year period. Based on the joint venture structure, the assistance includes approximately 55,970,000.00 to DFS and approximately 18,660,000.00 to the five airport concession disadvantaged business enterprises partners. The BLA has recommended approval. And today, I have our director of revenue, development and management with me to answer any potential questions that you might have after the BLA report.

[Nick Menard (Budget and Legislative Analyst)]: Item five is a resolution that approves an amendment to a lease that the airport has with DFS Group. The lease allows DFS to rent about 46,000 square feet of space at the airport, mostly in the international terminal, and use that space for luxury retail and for duty free retail. The lease began in early twenty twenty with the onset of the pandemic and has been amended several times to provide rent relief to the tenant, which has not met its sales targets due to a decline in passenger travel through the airport due to COVID and then a change in the composition of the international traveler, which has driven down luxury sales below what they were projected at the start of the lease. And so what this amendment does is that it reduces the minimum guaranteed rent from where it is now from $30,000,000 down to $25,000,000 through 2029. And then it reduces the percentage rent from where it would be if the amendment is not approved, which is between 3045.8% of sales. It reduces that percentage rent to 28% to 32% of sales. And that is based on a survey that the airport did of other airports of what their percentage rent for luxury retail is. You can see in our report what we think the fiscal impact of these changes are on page 23. This will reduce revenues to the airport by 74,600,000 over the next four years. That does have an impact on the general fund because 15% of non airline revenues actually go to the general fund. And so over the four year period, the change the decrease in the general fund, revenues would be $11,200,000 So that's about $1,000,000 to $3,500,000 per year. But it will change depending on how well DFS does financially. We did review financial statements from the organization, which showed that they have lost $115,000,000 since this lease was entered into. That includes tens of millions of dollars in capital improvements that were made to the retail spaces, as well as operating losses each year since the lease began. And so this the airport's already provided about $46,000,000 in rent relief. This is another $74,000,000 in rent relief. So the airport's essentially making DFS whole and then some. It's about $120,000,000 in rent relief. Like I said, they've already they've lost $115,000,000 on this lease. I think they're probably gonna also be net income negative next year, So there will be additional losses. And then after there's still four more years left on the lease after these amendments would take effect. So we can revisit any changes that the airport proposes a few years from now. But we do I think this is reasonable. It's been an incremental approach. The the new rate appears to be market rate. There are, real financial losses here. And I do think that there's an interest in keeping, a tenant of this size in place at the airport. So we recommend approval of this item.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. I think this question is either for SFO or for the controller. I'm just interested to understand a little bit better about the revenue projection that the city is gonna have. Will that also kinda inclusive of where SFO is heading? During the pandemic, SFO has made it clear to us that to that with your own analysis with SFO is that the full recovery to pre pandemic level is likely after 2028. So I'm not surprised that this is still coming before us to kind of talk about the fact that international visitor has been significantly declined, hasn't really been back to the pre 2019, pre COVID level. So I'm just kind of wonder, like, as we're gonna come to having the revenue projection, will will this sort of be part of that discussion, or or or that way you're just gonna look to SFO for independent analysis?

[Brent Jalipa (Committee Clerk)]: Good morning, Chair Chan. Devin McCullough from the controller's office, citywide budget manager. We are currently updating our five year, financial forecast now, to look, precisely at the general fund revenues. And so we do anticipate that to be published, in late December. And, of course, we will, have updated projections for, the coming budget years, as well as the out years.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. I look forward to learn more about just where the airport is at in terms of your projection and your analysis, about about this. I I you you were doing great, you know, last year. I think brought in your met your 15% obligation to the general fund. That is roughly almost $60,000,000. And, certainly, we appreciate that. But, just kinda curious to see, with this, and it seems like according to the BLA, the projection is that there will be a continued loss of revenue. And so wanted to better understand, how how do we mitigate this, and how we can, as a city, to help support and mitigate.

[Daniel Singh (San Francisco International Airport)]: I'll defer to our director of revenue development and management.

[Cheryl Brennan (Director of Revenue Development and Management, SFO)]: Good morning. I'm Cheryl Brennan, director of revenue development and management. And we are nearly back at, international passenger traffic levels, but the demographic has changed. They're coming from different countries, and the spending is quite different. The loss of a significant portion of our travelers from the People's Republic Of China has particularly, you know, hit duty free sales acutely. So, so what we've projected for sales for the four years of this this next relief package is conservative. We have left spending where it is, which is about 11 or $12 per international passengers. We were, closer to 20 before you know, right before the pandemic. And, and when we leased this in 2017, we had, you know, a really robust forecast. We had been, you know, growing and growing, and the future looked very bright. So and another, this is another reason why we're taking this in incremental steps. DFS would prefer that we just amend the lease through the end of the term in two thousand and thirty four, but it was just, it's very difficult to plan very far ahead in this environment. So, so, so for the next four years, we are assuming very little change in consumer spending on a per passenger basis. And then our international passenger traffic is forecast to to be stable. No big growth at this point. In fact, I think we've I think we've cooled down a tad when we look to '26 '27, just from where we thought we'd be six months ago.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: I understand.

[Cheryl Brennan (Director of Revenue Development and Management, SFO)]: Going, you know, slowly ahead, I guess.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: I mean, given terrorism the political landscape, it's very difficult to predict. Yes. I understand. Thank you so much, for your presentation. 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 have joined us today who wish to address this committee regarding this item number five, that was your opportunity. Madam chair, we have no speakers.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: 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 the 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 Chen. Chen, aye. Chair Chan.

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

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: The motion passes. Thank you. And mister Cook, please call item number six.

[Brent Jalipa (Committee Clerk)]: Yes. Item number six is a resolution authorizing the human services agency on behalf of the city and county to apply for and accept the county allocation award under the California Department of Housing and Community Development transitional housing program for an amount up to 4.7 mill million and the housing navigation and maintenance program for an amount to approximately 618,000, which provide funding to help young adults secure and maintain housing. Madam chair.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. And today, we have departmental supportive sorry. Department of Homelessness and Supportive Housing? No.

[David McCann (Policy and Planning, Human Services Agency)]: Human Services Agency.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Human Services. My apologies. Please go ahead.

[David McCann (Policy and Planning, Human Services Agency)]: Hi. I'm David McCann. I'm with the policy and planning team of the Human Services Agency. I'm presenting on agenda item six, which is a resolution to apply for and accept funds from the California Department of Housing and Community Development, for two programs, the Transitional Housing Program, and for the Housing Navigation, and Maintenance Program. So a bit of background about the resolution. The State of California Department of Housing and Community Development issued two funding opportunities to continue its prior year services to help young adults in the child welfare system secure and maintain housing. The first grant opportunity is for up to $4,741,224 to support the transitional housing program for the current for current or former foster care youth ages 18 to 25. The other opportunity is for up to $617,870 to fund the housing navigation services to help child welfare involved young adults aged 18 to 21. Note the California Department of Housing and Community Development requires this resolution the board of supervisors resolution to apply for and accept these funds. This is a requirement we need to fulfill each year to apply for the funds only. The funding was already anticipated in this year's fiscal year budget, fiscal year 'twenty five-'twenty six, and approved by the board. So we do not need to seek and accept and expend. DHCD sets the amount of money allocated to San Francisco based on the number of young adults in our child welfare system, and based on the number of counties who apply for and accept these funds. Young adults currently or formerly in child welfare face acute challenges with homelessness, as many of you may know. And housing instability in San Francisco is always difficult due to the high cost housing market. The goal of this programming is to reduce homelessness for former foster youth, working in collaboration with the Department of Homelessness in support of housing and San Francisco Housing Authority. Some services that will be provided by this grant funding include support for finding and applying for housing, lease up and pre housing direct services, move in deposits, housing subsidies, housing support and navigation, housing stabilization and retention services, and linkages to the youth homeless response services, access points, and navigation centers. These resources can support up to 70, foster care youth. And we ask for the, board to approve this resolution. Thank you.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. Thank you for your work on this. I don't see any name on the roster. I don't have additional questions. We certainly hope that you get the grant so we can get it going. And with that, let's go to public comment on this item. Yes.

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

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Seeing no public comments, public comment is now closed. Colleagues, I would like to send 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, vice chair Dorsey.

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

[Brent Jalipa (Committee Clerk)]: Dorsey, aye. Member Chen Chen, aye. Chair Chan? Aye. Chen, aye. We have three ayes.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: The motion passes.

[David McCann (Policy and Planning, Human Services Agency)]: Thank you.

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. Mister Clerk, do we have any other business before us today?

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

[Supervisor Connie Chan (Chair, Budget and Finance Committee)]: Thank you. And the meeting is adjourned.