San Francisco Government SmartTranscripts:

[Supervisor Connie Chan, Chair]: Good morning. This meeting will come to order. Welcome to the first meeting of the budget and finance committee this year. Happy New Year. Today is 01/07/2026. I am supervisor Connie Chan, chair of the committee. I'm joined by vice chair supervisor Matt Dorsey and member supervisor Cheyenne Chin. Our clerk is Brent Halipa. I would like to thank Kalina Mendoza from SFGov TV for broadcasting this meeting. Mister clerk, you have any announcement?

[Brent Jalipa, Committee Clerk]: Happy New Year, 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, and 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 and 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 for your name to be accurately recorded for the minutes. Alternatively, you may submit public comment in writing in either of the following ways. I'll email them to myself, the Budget and Finance Committee clerk at b r e n t dot j a l I p a at s f g o v dot o r g. If you submit public comment via email, it will be forwarded to the supervisors and also included as part of the official file. You may also send your written comments via U. S. Postal Service to our office and city hall at 1 Doctor. Carlton B. Goodlett Place, Room 244, San Francisco, California, 94102. And finally, chair, items acted upon today are expected to appear on the board of supervisors agenda of January 13 unless otherwise stated. Madam chair.

[Supervisor Connie Chan, Chair]: Thank you, mister Clark. And before I call the items on the agenda today I would like the general public to know for any items that have the budget and legislative analyst report we will go to the department presentation first followed by the budget and legislative analyst, and then we'll take questions, and then we'll go to public comment. So with that, Mr. Clerk, please call item number one.

[Brent Jalipa, Committee Clerk]: Yes. Item number one is a resolution approving the food and beverage minimum annual guarantee and pre security rent reduction program for food and beverage concession tenants, allowing the San Francisco International Airport to enter into lease amendments to lower the minimum annual guarantees for 18 of 69 food and beverage leases, lowered the percentage rent structure for seven pre security leases, and altered the min annual minimum annual guarantee adjustment methodology for all food and beverage leases. Madam chair.

[Supervisor Connie Chan, Chair]: Thank you. And with that, we have SFO here.

[Unidentified SFO Representative]: Good morning, Supervisors. Happy New Year. The airport is seeking your approval to implement the Airport Food and Beverage Minimum Annual Guarantee, or MAG, and Pre Security Percentage Rent Reduction Program, which would support 25 tenants and alter the MAG adjustment methodology for most food and beverage leases. The airport has been an industry leader for having an elevated food and beverage program with a high level of local ownership and local concepts. Through this program, the airport hopes to ensure financial viability of the F and B leases with the goal of preserving quality concessions, customer service, and employment at the airport. The program consists of three elements: adjust the minimum annual guarantee for certain food and beverage tenants, lowers percentage rent for seven pre security food and beverage tenants, and changes the annual MAG adjustment methodology for all food and beverage leases, with the exception of 10 leases. The airport has 69 food and beverage leases and tenants typically pay the greater of a mag or percentage rent. In order to qualify for this program, lease locations must be in excess of 12% of gross revenues for post security locations or 6% for pre security locations. The airport has identified 18 leases that have a MAG that is dramatically higher at 15% of gross revenues than the average of 10%. These 18 tenants will get a one time reset which will bring their MAGs in line with the rest of the program. The new MAG for post security locations will be 12% of their sales from 2024. For pre security locations, the new MAG will be 6% of sales from last year due to its challenging location. The airport also recommends that seven pre security leases get a lower percentage rent of a flat 6% instead of tiered percentage. And finally, the airport recommends altering the MAG adjustment methodology to the industry standard of 85% of base rent from the prior year instead of based on a consumer price index. The value of the relief that staff are requesting today is approximately 1,840,000.00 and the BLA has requested that attachment a be amended to include which leases have opted out of the MAG adjustment methodology change. We are in acceptance with this recommendation and have circulated amendments for your review. With this amendment, the BLA has recommended approval, and I'm happy to answer any questions with my colleague from our revenue development and management team. Thank you.

[Supervisor Connie Chan, Chair]: Thank you.

[Nick Menard, Budget and Legislative Analyst]: Good morning. Nick Menard from the Budget Legislative Analyst Office. Item one is a resolution that would allow the airport to implement a rent reduction program for food and beverage concession leases. It resets the MAG, or minimum annual guaranteed rent, for 18 leases. It reduces the percentage rent for seven leases, and then changes the annual adjustment of the annual rent going forward starting in 2026. That would apply to about 61 leases, which we list in the report. We show on page six that these changes collectively would result in $1,800,000 in less revenue to the airport this calendar year. That does have a general fund impact because 15% of non airline revenues go to the general fund. And so this would result, therefore, in about $275,000 less to the general fund in the calendar year. We also recommend that the attachment to the resolution be amended to reflect the composition of the rent reduction program. That includes opt outs as well as some corrections about the terms that are the terms by which the leases are changing. We have an attachment in this report, but we recommend approval of the resolution as amended.

[Supervisor Connie Chan, Chair]: Thank you. Could you help us understand a little bit about what maybe there are different reasoning, but do we understand the reasoning why some of them are actually opting out of the minimum average guarantee Sure.

[Supervisor Matt Dorsey, Vice Chair]: I'm going to ask my colleague, Cheryl Brennan, who's our Director of Revenue Development and Management.

[Supervisor Connie Chan, Chair]: Thank you.

[Cheryl Brennan, Director of Revenue Development & Management, SFO]: Good morning, supervisors. I'm Cheryl Brennan, director of revenue development and management at the San Francisco International Airport. The tenants that are opting out have either older leases which had a much lower MEG to start with. We changed the method we used to set MEG over the years to get it closer to what they would actually pay in percentage. Or they're performing so well that they're so far into percentage rent that the mag, if we use this new method, would actually grow. Because the point of this is to make sure the mag and percentage are close to each other. So if someone started with a lower mag and they've done amazingly well, like proper food, with sales, this adjustment would bring the mag way up and they're like, why would we want to do that? It's of no fiscal impact to us. It's kind of a technicality.

[Supervisor Connie Chan, Chair]: Will there be issue if they are not consistent in terms of the MAG percentage in this case, and especially if they are the legacy MAC percentage versus the one that you're now asked to comply to the adjustments or work with, I should say, with the adjustment?

[Cheryl Brennan, Director of Revenue Development & Management, SFO]: Sure. So there's an administrative impact. There's a bit more work for my office and our accounting department because on January 1 every year we'll have to say these let's say there's 10 leases. These eight will use this method, 85 of prior year's rent paid, to adjust their MEG. And these two, we're going to have to look up the CPI and do it in that way. So it's just a little bit more work administratively because we've got two rules for adjusting MEGs.

[Supervisor Connie Chan, Chair]: Yeah. I guess let me try to ask this again. Is that the ones that with the older or lower or just older MEG or the minimum average guarantee, are there like a timeline that when should and when expire then they will have to you will have to renegotiate the minimum average guarantee or

[Cheryl Brennan, Director of Revenue Development & Management, SFO]: sure yes so we have a lot of leases that are expiring all at the same time, 10/31/2027. We often lease in chunks like when we renovate a building. You know, those leases all start at the same time and expire at the same time. So it happens that late twenty seven is when we will be catching up with a lot of new leases.

[Supervisor Connie Chan, Chair]: Good to know. Thank you.

[Luis Calderon, Program Manager, Residential System of Care (DPH Behavioral Health Services)]: Okay. Thank you.

[Supervisor Connie Chan, Chair]: Seeing no other name on the roster let's go to public comment on this item.

[Brent Jalipa, Committee Clerk]: Yes we are now opening public comment for this item number one if we have any members of the audience who wish to address this committee. Madam Chair we have no speakers.

[Supervisor Connie Chan, Chair]: Seeing no public comments, public comment is now closed. First, I think we will make the motion to accept the amendment to the attachment A, that' declaring and indicating the list of concessions including those are opting out or inclusive of the minimum average guarantee adjustments and then we will send the amended item to full board with recommendation and a roll call, please.

[Brent Jalipa, Committee Clerk]: And on that motion, to amend the resolution as so stated by the department and the chair, hint to forward this resolution to the full board with positive recommendation as amended. Vice chair Dorsey.

[Supervisor Matt Dorsey, Vice Chair]: Aye.

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

[Supervisor Connie Chan, Chair]: The motion passes. Thank you. Mr. Clerk please call item two and three together. Thank you.

[Brent Jalipa, Committee Clerk]: Item numbers two and three are resolutions retroactively authorizing the environment department to accept and expend prizes from the united states department of energy's office of energy efficiency and renewable energy to develop or implement pilot programs to upgrade homes with electric heat pump water heaters and energy efficiency measures item two is in the amount of 400,000 which was confirmed and received by the department on 12/12/2023 to upgrade up to 200 homes and to execute the contracts between the city and the co applicants necessary to carry out the purposes of the project for which the prize was awarded and item number three is in the amount of 400,000 which confirmed and received by the environment department on 03/17/2025 to upgrade 20 homes. Madam chair.

[Supervisor Connie Chan, Chair]: Thank you and today we have the department of environment here. My name is Alice Hurt

[Alice Hurt, Senior Policy Coordinator, SF Environment]: and I'm the senior policy coordinator for the SF environment department.

[Brent Jalipa, Committee Clerk]: I got part of the interruption. If you could speak directly to the microphone. Thank you.

[Alice Hurt, Senior Policy Coordinator, SF Environment]: And, I'm here to talk about two acceptance and spend packages for federal electrification prices from the Department of Energy. So, as you may know, the mission of the SF Environment Department is to advance climate protection and to enhance quality of life for all San Franciscans. And, one of the main ways we turn these climate goals into lived reality is through electrification initiatives. Buildings constitute almost 44% of all emissions in San Francisco, and that's why decarbonization is a high focus for our department. The department does not get many general fund resources to conduct this climate work, and so we leverage general fund dollars we do receive to bring in outside funding to enhance the city's capacity to conduct this critical climate work. The department has been very diligent and successful in bringing in these outside dollars which amount to 83,200,000.0 in grants and two federal prizes totaling 800,000 since November 2022. So honing in on these prizes, the Buildings Upgrade Prize is a U. S. Department of Energy prize focused on accelerating building transformation through high performance, energy efficient, and electrification technologies over three phases. The core benefits are cutting energy costs, improving indoor air quality, and also occupant comfort. And since this program started, it is awarded 22 over 22,000,000 in cash prizes nationwide. So, moving on to the environment department's winning concept, two by 200 by 200, This concept was to upgrade 200 homes with high efficiency measures and electric heat pump water heaters in two hundred days within and around state designated disadvantaged communities, again speaking to the department's equity priorities. This next slide is an overall summary, but I'm going to move down to the bottom and talk about the two distinct phases. So phase one was to develop a pilot implementation plan in collaboration with three partners that went through specific timelines and focused deliverables, whereas phase two was to implement a smaller scale pilot to upgrade 20 single family homes within and around these disadvantaged communities to gather feedback and data to inform the full scale program implementation in phase three, and both were in the amount of $400,000 So, I do want to conclude on why we're bringing this authorization retroactively. If you've noticed, I've called these prizes and not grants. The distinction being that prizes are a streamlined way to deliver funds. They do not have a grant agreement and negotiated scope of deliverables over time. After the prize is won, it is immediately awarded and received by the recipient. There is no funding category within the city for cash prizes. As such, the department budgeted these prizes in the fiscal year 2425, and 2526 budget, believing they had met all financial obligations. However, after discussions with city attorneys and the controller's office, it was determined that prizes must follow standard grant procedures under local rules, which is why we're bringing these accept and expend resolutions before you today. So that's it on this particular A and E, but I do want to quickly note that we did recently win another electrification grant for a heat pump water heater installation, so we will be coming back to the committee likely in a few weeks. Thank you and happy to take any questions.

[Supervisor Connie Chan, Chair]: Thank you. And this is the first time I'm hearing cash prizes. Please help me understand a little bit more about the difference. I mean, think eventually the city attorney determined that to be still very similar to a grant. But you indicated in your presentation that the cash prices does not have any of the grant requirement. Walk me through. Because they're from the states I mean, they're from the federal agencies.

[Alice Hurt, Senior Policy Coordinator, SF Environment]: Sure. So I can have my colleagues jump in if there's more to add. But prizes are a more streamlined way of administering funds. Normally with grants, there's a sort of lengthier negotiation process where you go over a scope of work, deliverables, timelines, and then there's this formal grant agreement that's signed by both parties, and then usually a set of reporting requirements afterwards. So a prize is just you submit an application for your project, and then if you're awarded, those funds come in immediately, and they're received immediately. There's no negotiated grant agreement, and the whole purpose of that is to kind of shorten the time frame by which you can get these funds to start the work.

[Supervisor Connie Chan, Chair]: And typically, just normally, when you would then go through sort of report back and just scope of the work, usually the quote unquote negotiation is that it's really the compliance process. And in this case, how does the the the state department, declare that this has been completed? And and meaning the accounting itself from the state depart I mean, from the, you know, federal department to say, this is this project as we completed, or or they would there would just be no follow-up whatsoever.

[Alice Hurt, Senior Policy Coordinator, SF Environment]: Yeah. I can have my colleagues jump in if they have anything to add, but there is no post reporting requirement to the federal department.

[Supervisor Connie Chan, Chair]: Yeah. Interesting. And is this a standardized practice or just it's been like this for a while.

[Alice Hurt, Senior Policy Coordinator, SF Environment]: So this is somewhat unique. So like I said, we apply to both grants and different forms of award. This prize is one of them. So with our grants, we go through the standard A and E process. And again, because we had received this prize and it doesn't have the same kind of characteristics of grant funding, we budgeted it. And when that budget was adopted, we believed we had fulfilled the financial obligations.

[Supervisor Connie Chan, Chair]: Of course. Are we aware of the cash price procedure as a standard federal procedure?

[Alice Hurt, Senior Policy Coordinator, SF Environment]: Let me defer to my colleagues from the energy team and policy team on that.

[Unidentified Energy Program Manager, SF Environment]: Good morning, supervisors. I'm the energy program manager for the environment department. And I can speak about a little bit of the Billings Up Challenge. It was a contest that is put up by the Department of Energy. And the purpose of the contest is to curate like very innovative ideas to advance electrification and energy efficiency. And so, this was a by itself it was an innovative way for the department of energy to solicit concepts from the local communities. So, it's a little bit different than what the department of energy typically do. They would often have a very defined scope. They would ask for, like, you know, the the responses for grant applications. This was a very innovative way for the Department of Energy to bring dollars to their communities to accelerate electrification and energy efficiency. And so, you know, like Alice mentioned, this was a competition that was designed to be implemented in three phases. The first phase was the application, our concept. So, we got our award. And, with that money, the intention was to use that money to build an implementation plan so we can compete in phase two. And, we also won phase two. We completed the implementation plan. And so, the next round of funding was earmarked to, okay, let's try your implementation plan. Put it into action as a pilot. Let's do 20 homes. And, if that's successful, apply to compete in phase three, which is the final phase and the full scale rollout.

[Kelly Kirkpatrick, Director of New Beds & Facilities, DPH]: Okay.

[Unidentified Energy Program Manager, SF Environment]: I hope that answers the question.

[Supervisor Connie Chan, Chair]: Thank you. Interesting. Great. That's good to know. I learn something new every day. It really is. So I appreciate that. Thank you. And so with that let's go to public comments on these two items.

[Brent Jalipa, Committee Clerk]: Yes we are opening public comment for these items two and three. If we have any members of the public who wish to address this committee. Madam Chair, we have no speakers.

[Supervisor Connie Chan, Chair]: Seeing no public comments, public comment is now closed. Colleagues, I would like to send these two items 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 the positive recommendation Vice Chair Dorsey. Dorsey aye. Member Chen. Chen aye. Chair Chan.

[Supervisor Connie Chan, Chair]: Aye. Chan

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

[Supervisor Connie Chan, Chair]: The motion passes. Thank Thank you. And Mr. Clerk please call item four and five together.

[Brent Jalipa, Committee Clerk]: Item numbers four and five are resolutions authorizing the human services agency to accept and expend grants with and for the following each for the period of 04/01/2026 through 03/31/2030 item number four is for a total amount of 268,000 from the blue cross of California partnership plan inc for participation in a program entitled housing and homelessness incentive program funding San Francisco item number four sorry item number five is for a total amount of approximately 1,000,000 from the San Francisco health plan for participation in the program entitled housing and homelessness incentive program funding San Francisco. Madam Chair.

[Supervisor Connie Chan, Chair]: Thank you. And today we have Human Services Agency.

[Celia Pedroza, Budget Director, Human Services Agency]: Good morning Chair Chan, committee members. I'm Celia Pedroza, the budget director at HSA. And I'm here, as you know, to present on items four and five on today's committee agenda. Both of these items are related to grants that our agency was awarded through the state housing and homelessness incentive program. The grants will be funding a joint initiative between our agency, anthem, blue cross, blue shield, the San Francisco health plan, and the department of homelessness and supportive housing. Under item four, we respectfully request your approval of an accept and expend resolution for the funding we're receiving from Anthem, and that's in the amount of $268,000 Under item five, we also request your approval of a resolution for the funding that we're receiving from San Francisco health plan in the amount of 1,072,000. The funding generally supports the state's CalAIM implementation in two ways. First, it's going to strengthen the capacity of public benefits enrollment and advocacy for unhoused individuals. And secondly, by increasing enrollment in Medi Cal in particular, this will increase participation in Cal AIM efforts related to enhanced care management and community support services. These are both efforts intended to promote the health and well-being of enrollees in Medi Cal. Locally, through the partnership with our grantors and HSH, we'll specifically be using this funding to pay for two temporary positions, one senior eligibility worker and one program specialist. And their work will span between 04/01/2026 through 03/31/2030. The eligibility worker's focus is going to be on increasing enrollment in public benefits in a variety of programs, including CalFresh, Medi Cal, IHSS, and CAP. The program specialist will have a different focus. They will be training CBO staff at both shelter and navigation centers to help clients obtain and maintain their benefits. The CBO staff will receive enhanced training around how to apply and maintain access to benefits. In conclusion, I just want to spotlight that at the end of this grant period, what we're attempting to achieve is, of course, an increase in enrollment, but also we want to leave the CBOs best equipped to independently assist their unhoused clients in accessing and maintaining public benefits.

[Supervisor Connie Chan, Chair]: Thank you. I definitely think it's critical work at this moment, including that I really think the continuum of care benefits for housing and for many other issue for our homeless population has been very significantly helpful and it's been successful. It's been deemed successful. So I'm glad that we're having these grants to be able to do some of those work. Thank you so much for your work, and let's go to public comment on these two items.

[Brent Jalipa, Committee Clerk]: Yes, we are opening public comment for these items four and five. If we have any members of the public who wish to address this committee. Madam Chair, we have no speakers.

[Supervisor Connie Chan, Chair]: Seeing no public comments, public comment is now closed. Colleagues, I would like to send these two items to full board with recommendation and a roll call, please.

[Brent Jalipa, Committee Clerk]: And on a motion to forward to the full board with a positive recommendation, Vice Chair Dorsey. Dorsey, aye. Member Chen. Chen, aye. Chair Chan. Aye. Chan, aye. We have three ayes.

[Supervisor Connie Chan, Chair]: The motion passes. Thank you. Thank you. Mister clerk, please call item number six.

[Brent Jalipa, Committee Clerk]: Item number six is a resolution retro actively approving and authorizing the mayor and the director of the mayor's office of housing and community development to execute a grant agreement with RSU Associates LP in an amount not to exceed approximately 15,300,000.0 for a twenty year term to provide operating subsidies for a 100% affordable housing project housing for low income and formerly homeless households, including transition aged youth located at 78 Haight Street and 120 Octavia Street, approving the form of and authorizing the execution of the grant agreement with a retroactive commencement date of 10/01/2025 and authorizing director of MOCD to enter into any additions, amendments, or other modifications to the grant agreement that do not materially increase the obligations nor liabilities of the city or materially decrease the benefits of this to the city, and authorizing the director to take actions necessary to implement this resolution has defined their end. Madam chair.

[Supervisor Connie Chan, Chair]: Thank you. And today, have Mayor's Office of Housing and Community Development here.

[Sarah Ambrogi, Director of Housing Development, MOHCD]: Good morning, Supervisors, Chair, Chair. My name is Sarah Ambroil. I'm the Director of Housing Development for Mayor's Office of Housing and Community Development. I'm here to present on Item six related to the proposed grant agreement to provide operating subsidy for supportive housing units for transitional age youth at 78 Haight Street for 32 supportive housing units, not to exceed $15,300,000 for a twenty year term. 78 Hay is a 64 unit affordable housing development constructed on a small infill city owned site at Hay in Octavia and one of the last Central Freeway parcels to be developed as affordable housing It includes 32 units for transitional age youth who have experienced or are at risk of homelessness with supportive services provided by Larkin Street Services. The remaining 31 units are studios for adult households. It also includes a three bedroom child care unit and completed construction in September 2025. To date, of the 64 units, 41 are leased up, including the child care units. Next slide, please. The supportive housing units need an operating subsidy to be feasible to operate as households only pay 30% of their income and rent. The loss per general fund is allocated at $10,500,000 for the twenty years. We also have a co serve from MPLH, the no place like home hcd funds for 4,700,000.0 the proposed leveraging of the state funds for the fifth coverage 15 of those homeless units and reduces the burden on the lost general fund. MOCID fully supports this request and thanks you for your consideration. We're happy to answer any questions you may have.

[Supervisor Connie Chan, Chair]: Thank you.

[Nick Menard, Budget and Legislative Analyst]: Item six is a resolution that approves an agreement between MOHCD and RSU Associates LP to retroactively start 10/01/2025, and the agreement has a value of $15,400,000 The agreement would essentially fund two different types of rental subsidies to support 32 units of an affordable housing project at 78 Hate. These units will be for formerly homeless transitional age youth. And as we discussed on page 18 of the report, about $10,600,000 will be funded by the city's local operating subsidy program. That's a general fund cost paid out of the general fund every year. And then a $4,800,000 of the subsidies over twenty years will be from the No Place Like Home grant, which is a state grant that was provided to this project. That reduces the general fund support needed for these units. We recommend approval of item six.

[Supervisor Connie Chan, Chair]: Thank you. Vice Chair Dorsey.

[Supervisor Matt Dorsey, Vice Chair]: Thank you, Chair Chan. Thanks for the presentation. Over the holiday recess, the Chronicle did a story about TNDC's plan to sell some of its buildings. And that raises some questions I think larger questions, not just about TNDC, but about the entire sort of nonprofit and supportive housing portfolio. But I just wanted to ask what kind of assurances the city has that TNDC has the financial capacity to operate this 78 Hate Street over the full twenty year term?

[Sarah Ambrogi, Director of Housing Development, MOHCD]: That's a great question. Thank you, Supervisor. So, as you know, the property does have this coaster for the homeless units. It also has another capitalized coaster for the non PSH units that are a part of the capitalized cost providing additional security. So, we feel the properties that TNDC is offering for sale at the moment do not have COSARs attached to them, so that is the biggest financial detriment to that those projects is that they don't have long term subsidy attached to them.

[Supervisor Matt Dorsey, Vice Chair]: Okay. I think that there we will probably want more detail about this some of the issues that were raised by the chronicle and what's TD and D TNDC is in. Broadly, while I get you, what is what would we want to look at if the city were to revisit how we underwrite and monitor operating subsidies?

[Sarah Ambrogi, Director of Housing Development, MOHCD]: In regards to our underwriting guidelines

[Supervisor Matt Dorsey, Vice Chair]: in Yeah. This, I mean, for operators serving, one thing that I'm hearing is that there's elevated acuity issues. But I think there's some there's also other financial issues and obviously we want to set our nonprofit partners and departments up for success. And it is clear to us I think that we're not doing that. So I do think at some point we policymakers, members of the Board of Supervisors have to look in the mirror and ask ourselves, what do we need to do to make the mayor's office of housing and community development, Department of Homelessness and Supportive Housing, and all of our nonprofit partners successful? This is probably a larger conversation, but if there's a high level sort of just Yeah,

[Sarah Ambrogi, Director of Housing Development, MOHCD]: as a policy perspective, I think there are a lot of things that we can do, and I definitely think that this requires a larger conversation with the director of MOCD. But what we're doing currently is providing coasters a lot of the time, as you're seeing more often. We've seen it with 2970 16th Street that just recently came for approval a couple months ago, that we're really trying to shore up and recognizing that we're not going to be able to pay for maintenance and services without having higher rent levels. Coordination with HSH and services provision is really important too, especially when it comes to higher acuity. DPH plays a really important role in those processes for any of the projects, particularly that has PSH and HSH as well. So I think further coordination and support for financial services related to services is really important because it's only a scratch. I will say that most CD is actually underwriting every four years. We go through a process where we reevaluate our underwriting guidelines that also in turn looks to our permanent supportive housing and in 2026 we are due for that as well so that is coming up as an opportunity.

[Supervisor Matt Dorsey, Vice Chair]: And

[Supervisor Connie Chan, Chair]: I do want to make note of that and so then I will I think during April it's likely when we're going to start some of the hearing maybe March as well during the budget appropriation then perhaps we want to be inclusive of this as part of those budget hearing leading to the budget process then perhaps we've been having this conversation for a while with MOCD during these when these projects come in or when these agreements coming through particularly loan agreements or grant agreement then I think that maybe underwriting guideline from what I'm hearing from my Sher Dorsey is we are expecting that there will be a presentation since it's for 2026 that will be inclusive of underwriting guidelines like principles for the existing and what your approach for the next five years will be. Okay. Thank you. And so with that, let's go to public comment on this item.

[Brent Jalipa, Committee Clerk]: Yes, if we have any members of the public who wish to address this committee regarding this item number six, Now is your opportunity.

[Essence Winston, Public Commenter]: Good morning. My name is Essence Winston. I'm a San Francisco native and a two time HBCU alumni. I hold a bachelor of arts in political science from Johnson C Smith University and a master of arts in political science from Howard University. Thank you for the opportunity to speak today. I want to begin by saying that I do support this funding and the intention behind it. Stable and affordable housing is necessary, and long term operating subsidies help keep people housed. That matters. If we're committing over 15,000,000 across a twenty year term to keep people housed, we need to make sure these sites are equipped to address addiction, fentanyl, and mental health, or we will fail the very people this funding is meant to help. I want to respectfully offer a broader perspective. This crisis in San Francisco is not only a housing issue, it is also a drug crisis, particularly a fentanyl crisis, and housing alone will not solve it. Through my professional experience working at a local nonprofit here in San Francisco, I had the opportunity to build real relationships with residents. I didn't just see numbers or units filled. I saw people's lives up close. I worked with individuals who had housing, a bed, access to services, and staff support, yet still struggled to remain inside or maintain stability. In those relationships, I saw how addiction and untreated mental health conditions affected everyday decision making. I saw residents return to unsafe relationships, including situations involving domestic violence, because addiction and trauma impaired their judgment and sense of safety. I saw people miss critical appointments, violate housing rules, or disengage from services not because housing wasn't available, but because addiction kept them in a consistent survival mindset. I also witnessed how stigma follows people even after they are housed. Some residents express feeling judged in the workplace and public spaces, and sometimes even with systems meant to support them. As we fund housing, we should also be funding housing with recovery. Housing should be paired with treatment access, detox pathways, medication assisted treatment, behavioral health services. Thank you.

[Brent Jalipa, Committee Clerk]: But thank you much. Essence Winston for addressing this committee. And, madam chair, that completes our queue.

[Supervisor Connie Chan, Chair]: Seeing no more public comments, public comment is now closed. Vice chair Dorsey.

[Supervisor Matt Dorsey, Vice Chair]: Thank you, chair Chan. I don't normally comment on public comment, but I'm I want to say amen and I want to I'd love to reach out and have a conversation I'll hand you my card after this thank you for that comment

[Supervisor Connie Chan, Chair]: thank you and this also actually reminds me I think I wanted to not too sure but like for I think for the BLA, but also for all the city departments coming forward too. Think from now on during your presentation, especially for facility contracts or similarly, like particularly this one not just this one, but any facilities contracts that we would love to see a presentation of the conditions of those facilities, of those units. And in this case, the 78 Hay Streets and 120 Octavia Street like to get the facades of the buildings as well as the interior, including the common area or sample units for us to actually have a better understanding what we're funding and the condition and the funding a condition of the units that we're funding. And that applies to not just MOXCD. It's already been part of the presentation for Department of Homelessness in support of housing. We are going to continue to ask that of Department of Public Health as well as Human Services Agency. Again, this is only applicable to all contracts and grant agreements related to facilities. And so that really help us just have a better understanding. I wish I could tour all these facilities before they come to us for approval so that we truly understand what we're funding and the work that is being done in those spaces. But photos is probably the best next thing so we would appreciate that so if it is possible I am supportive of these of these subsidies today I would love for these to be included as photos for before the January 13 full board vote, if possible. Thank you. And with that, colleagues, I don't see that we have additional comments. Vice chair Dorsey what is your will particularly for this item?

[Supervisor Matt Dorsey, Vice Chair]: Thank you chair Chan I would like to move to send this to the full board with our positive recommendation.

[Supervisor Connie Chan, Chair]: Thank you a roll call please.

[Brent Jalipa, Committee Clerk]: Pardon and on that motion by vice chair dorsey that we forward this resolution to the full board with a positive recommendation vice chair dorsey aye. Member chen chen aye chair chan aye chen aye we have three ayes

[Supervisor Connie Chan, Chair]: the motion passes thank you and mr clerk please call items seven through nine together

[Brent Jalipa, Committee Clerk]: item number seven through nine are resolutions as they relate to a 95 unit multifamily rental housing development known as 967 mission in granting general authority the city officials to take actions necessary to implement the respective resolutions. Item number seven authorizes the execution and delivery of a multi family housing revenue note in a principal amount not to exceed 21,000,003 and a multi family housing revenue note in an aggregate principal amount not to exceed 20,000,000 for the purpose of providing financing for the construction of the project approving the form of and authorizing the execution of a funding loan agreement providing the terms and conditions of the loan from the funding lender identified therein to the city for the execution and delivery of the notes approving the form of and authorizing the execution of a borrower loan agreement, providing the terms and conditions of the loan from the city to the borrower, approving the form of and authorizing the execution of a regulatory agreement and declaration of restrictive covenants, approving the form of and authorizing the execution of an assignment of deed of trust and loan documents, authorizing the collection of certain fees, modifications, changes, and additions to the documents, ratifying and approving any action here to for taking in connection with the back to back loans the notes and the project. Item number eight approves and authorizes director of property and the director of mayor's office of housing and community development to enter into a ground lease with September for a lease term of seventy five years and one twenty four year option to extend at an annual base rent of 15,000 authorizing the mayor and director of mo c d to execute loan documents related to the loan to nine sixty seven mission l p to provide financing for the development and construction of the project approving and authorizing an amended restated and consolidated loan agreement in an amount not to exceed 44,300,000.0 for a minimum loan amount of fifty seven years with nine sixty seven mission lp to finance the development and construction of the project determining that the less than market rent payable under the ground lease will serve public purpose by providing affordable housing for low income senior households in need in accordance with the administrative code adopting findings that declaring that the property is exempt surplus land pursuant to the California surplus land act adopting findings that the project and proposed transactions are consistent with the general plan and the eight priority policies of the planning code. And, item number nine, have previously authorized the mayor and director of Mossadie to execute a grant agreement with nine sixty seven Mission LP in an amount of approximately 10,500,000.0 for a term of fifteen years to provide operating subsidies for this project. Madam chair.

[Supervisor Connie Chan, Chair]: Thank you mr. Clerk and here we are mayor's office of housing thank you.

[Sarah Ambrogi, Director of Housing Development, MOHCD]: Thank you supervisors chair Chan director of housing development from ocd We're here before you today with three resolutions related to the development of a new 100% affordable senior project at 967 Mission located in South Of Market Neighborhood D-six by project co sponsors John Stewart Company and Bayview Hunters Point Multipurpose Senior Services. The first resolution authorizes the issuance of the tax exempt bonds not exceeding 41,700,000.0 to facilitate the construction of the project. The second resolution authorizes two primary actions. First is the ground lease, the city owned property, to nine sixty seven Mission LP, which is a limited partnership owned and created by the sponsors to develop and own the improvements for up to ninety nine years. Similar terms for the city funded new affordable housing communities. The second, a city loan of $44,300,000 for a minimum loan term of fifty seven years to the limited partnership. The last resolution authorizes the city to enter into a fifteen year capitalized operating subsidy, again, for $10,500,000 also known as the senior operating subsidy, or SOS. Next slide, please. As you can see from the history of this project, it's been in the making for over ten years now, starting with the first land dedication from 5 ms in 2015, which was approved by this board in 2019. Mossadie then issued a nine site joint RFQ in November 2020 and was selected to sponsors in April 2021. Since then, the sponsors have applied to various state financing opportunities, but due to various changes at the state level, the project was no longer financially feasible for state financing, which includes MHP and AISC. In 2025, the project applied and was awarded bond and tax credits and is set to close construction financing in February 2026. Next slide, please. The sponsor will develop 94 units of housing featuring a mix of studios and one bedroom units. 24 of the homes will be reserved for seniors exiting homelessness with rental operating subsidies and on-site supportive services that will be funded by the city's Local Operating subsidy program, or LASP. Five additional homes will be reserved for HIV plus positive households with incomes restricted to no more than 30% MOCD AMI and referred to the project by MOCD. There will be 40 units set aside and supported by the SOS contract that's also before you today. Half of those units will be set aside for seniors at 15% AMI and the other half for seniors at 25% AMI. The remaining 25% general affordable homes will be unsubsidized and restricted at 50% AMI. The building also features a management unit, twenty four hour desk coverage, plus standard amenities of community room and kitchen. Next slide, please. As previously noted, the project was not successful for state financing due to being in a low income area. There's been various changes at the state level, as we know, over the last couple of years that's really put some of our projects that are in lower income or lower resource areas at risk of funding opportunities. MOCID elected to move forward with a shovel ready project and backfill the loss of state funding with the support of federal home funds and additional local funds. Due to market changes, the project also received a low equity buy in. As we know, the market right now is pretty low. And so it's 86¢ on the dollar, which normally is has been quite lower than what we have seen historically in early twenty twenty four and '25. But it also tracks with other projects in our pipeline. 2970 16th Street just came in at an 80% equity buy in. So the lower the equity costs, unfortunately, is the higher the city support for the project. So both items resulted in a higher gap from the city and, therefore, a larger city's subsidy per unit. As previously noted, construction is set to start in February 2026 and be completed in December 2027, with full occupancy by April 2028. Next slide, please. For some context on the senior operating subsidy, on 07/08/2019, the Board of Supervisors amended the administrative code to establish the SOS subsidy program fund, which lowered rents and housing developments occupied by extremely low income seniors. This was established as a Category IV special fund to receive any money as appropriate as or donated for the purpose of providing project based subsidies to the project. And with that, we had two initial projects that were awarded under the initial SOS program, was twelve ninety six well, and seven thirty five Davis. In December sorry, in September 2021, the Board of Supervisors offered authorized and delegated authority to MOSI to accept an expended grant award of $52,300,000 from the California Department of Housing and Community Development permanent loan housing allocation program, which we applied to intending to supplant some of the city funding for the SOS program. So, now, under that permanent local housing allocation program, most cities authorized to provide fifteen year project based operating contracts for households at 1525% AMIs. With these new funds, staff developed and this committee approved the SOS Program and Policies Procedure Manual effective 07/21/2023. Next slide, please. Thank you in advance for your consideration and support. With me today are representatives from John Stewart Company and Bayview Senior Services, and we're able to answer any questions you may have.

[Nick Menard, Budget and Legislative Analyst]: Items eight and nine are two resolutions that pertain to an affordable housing project at 967 Mission. One resolution approves a gap loan of the city property to the developers, John Stewart Company, and Bayview Hunters Point Multi Service Senior Services, and as well as a gap loan of $44,300,000 And then the other resolution approves a rental subsidy agreement for 40 of the units to allow them to be rented at 15% to 25% AMI. The project will be 94 units, all for seniors at varying income levels. We show the total development budget on page 26 of our report. You can see that the city is funding $44,300,000 of the total development cost of $79,000,000 That translates into a per unit cost of about $465,000 that the city is funding. That is a little less than double what the city usually funds. So this MOECD typically funds about $250,000 to $300,000 per unit. This project is more expensive, in part because the project was not awarded the state funding that I think the developers were originally anticipating when they were awarded predevelopment funding a couple of years ago due to the site being in a low resource area under the state criteria for awarding affordable housing financing. But we do recommend approval of items eight and nine.

[Supervisor Connie Chan, Chair]: Thank you. I want to understand, just seeing that there's a similar scoring for both I mean, the exact scoring, I should say, both at 89 out of 100 for John Stewart Company, Bayview Hunters Point, Multipurpose Senior Services, and then also 89 out of 100 points for Tenderloin Neighborhood Development Corporation. Could you walk us through that since they were both at equal of 89 out of the 100 in terms of their scoring, was the sort of like a tiebreaker? What happened there?

[Sarah Ambrogi, Director of Housing Development, MOHCD]: It's a great question, supervisor. The selection panel ultimately ruled in favor of John Stewart and Bayview Senior Services because they had actually geared their outreach to the local community names, most notably some of Filipinas and actually working with the local community, whereas the helping with the design of the building, how we engage local residents. So theirs was a little bit more robust with that type of local neighborhood commitment.

[Supervisor Connie Chan, Chair]: Understood. And then they just end up having more local or like community support neighborhood That's right. Inputs. Great. Vice Chair Dorsey.

[Supervisor Matt Dorsey, Vice Chair]: Thank you, Chair Chan. Actually, that was one of the questions I was going to ask about community outreach so I think you answered it in part this is on the same block as the Mint Mall the Mint Mall and Mint Hall and it's a sort of beating heart in many ways of the soma pilipinas cultural district just wanted to make sure that there is that there has been community outreach. I know that this is the site of the Kapwa Gardens that was a temporary activation of that. So I'm grateful to see this moving forward, I appreciate the community outreach. Is there any more that you wanted to add to that?

[Sarah Ambrogi, Director of Housing Development, MOHCD]: For a little bit more. The project team had developed a lot of the design of the building in regard to security, how the entrance will work, the flow of residents moving in and out, and also just to recognize that Bayview Senior Services and John Stewart are very strong providers in many of our local communities. So the ongoing support of working with the community won't just end at lease up, of course. It'll be ongoing.

[Supervisor Matt Dorsey, Vice Chair]: Okay. The other thing I just wanted to say is that we have had persistent public safety challenges in West SoMa, particularly around the 6th Street corridor, and that this is something that's close to there. I know that this is something that we're going to be looking at for, I think, mid-twenty twenty eight, so I'm optimistic that we will be in a better place by then. But I'm just wondering in the agreements that are before us today, do we have any leverage for the operation of this to make sure that the city that this the city's interests are protected to making sure that there is security or just something to make sure that the folks are not seniors especially are not being put into a situation where they're facing threatening or challenging environments?

[Sarah Ambrogi, Director of Housing Development, MOHCD]: Yeah, that's a very good question. If you're alluding to overall street conditions, again, I'll just point back to the relationship that JSCO and Bayview Sr. Has with local city agencies, such as Public Works and SFPD, to really kind of mitigate local street conditions. I'll also just note that while MOCity provides financing for the project, we don't really have enforcement over those street conditions. However, in the past, it has been if there is a service provider or a property manager that is not working directly with the community, working to ease the tensions or concerns that are out there, we do have the ability to work with them and to try to find alternative service providers. That has been done in the past. Those are through the HSH contracts for service provision. And we have, in the past, also been able to help negotiate a transfer of ownership of property management if we needed to. As a last resort, of course, we do want to help them build capacity for our property managers. But again, JSCO and Bayview Senior Services have not had historical issues with that.

[Supervisor Matt Dorsey, Vice Chair]: In the timeline for this project as we move toward people moving in, will we have opportunities for, will there be more things coming, agreements with operators or anything like that that we'll be seeing or?

[Sarah Ambrogi, Director of Housing Development, MOHCD]: This is the last contract that you'll

[Cheryl Brennan, Director of Revenue Development & Management, SFO]: be seeing. All

[Supervisor Matt Dorsey, Vice Chair]: right. Okay.

[Supervisor Connie Chan, Chair]: Thank you. Thanks. Thank you. And so with that, let's go to public comments on these three items.

[Brent Jalipa, Committee Clerk]: Yes we're now opening public comment for these items seven, eight, and nine. If we have any members of the public who wish to address this committee. Madam chair we have no speakers.

[Supervisor Connie Chan, Chair]: Seeing no public comments public comment is now closed. Colleagues I would like to send these three items to full board with recommendation and a roll call, please.

[Brent Jalipa, Committee Clerk]: And I have a motion to send all three items to the full board with a positive recommendation. Vice chair Dorsey. Dorsey, aye. Member Chen? Aye. Chen, aye. Chair Chan?

[Supervisor Connie Chan, Chair]: Aye.

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

[Supervisor Connie Chan, Chair]: The motion passes. Mister clerk, please call item number 10.

[Brent Jalipa, Committee Clerk]: Item number 10 is a resolution authorizing the department of public health to accept and expend a grant in the amount of approximately 6,700,000.0 from the San Francisco General Foundation for participation in a program entitled ZPCQI round three optimizing epic to drive true north and developing our people the s the z s f g way for the period of 01/01/2026 through 06/30/2029 approving the notice of award agreement pursuant to the charter and to authorize the director of health to enter into amendments or modifications to the grant agreement that do not materially increase the obligations nor liabilities to the city and are necessary to effectuate the purposes of the grant agreement or this resolution. Madam chair.

[Supervisor Connie Chan, Chair]: Thank you and today we have the San Francisco General Hospital here.

[Angelica Jernigan, Chief Administrative Officer, ZSFG]: Hi, good morning. My name is Angelica Jernigan. I am the Chief Administrative Officer at ZSFG. I am presenting on the grant program to support our work around strategy and performance improvement. San Francisco General Foundation is providing funds from the ZPCQI fund to support our initiatives to optimize EPIC, which is our electronic medical record, and to develop our staff members through lean methodologies. This is the third round of funding at an amount of 6,755,486 with a start date of January. Previous rounds of ZPCQI funds supported several programs, including the ones funded in this round. Specifically, this will support our Kaizen Promotion Office, which is the department that works with us, the CSFG executive team, and our strategy development program implementation and data analysis through our EPIC our electronic medical record. Additionally, the KPO provides training of staff on how to do performance improvement projects in their own departments to support these strategic initiatives, such as quality improvement for our patients and patient flow throughout the hospital, as well as financial improvements within the hospital. That is the end of my presentation. Welcome. Any questions?

[Supervisor Connie Chan, Chair]: I don'92t have any other questions. Thank you so much. Let'92s go to public comment on this item.\

[Brent Jalipa, Committee Clerk]: Yes, we'92re opening public comment for this item number 10. If we have any members of the public who wish to address this committee. Madam chair we have no speakers.

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

[Brent Jalipa, Committee Clerk]: And on the motion to forward this resolution to the full board with a pause of recommendation vice chair Dorsey. Dorsey aye. Member Chen aye. Chair Chan?

[Supervisor Connie Chan, Chair]: Aye.

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

[Supervisor Connie Chan, Chair]: The motion passes. Thank you and Mr. Clark, please call item number 11.

[Brent Jalipa, Committee Clerk]: Yes. Item number 11 is a resolution retroactively authorizing the Department of Public Health to accept and expend a grant in the amount of approximately 1,100,000.0 from the California Department of Health for participation in a program entitled disease intervention specialist, DIS, workforce development grant for the period of 07/01/2025, through 06/30/2026, approving the grant agreement pursuant to the charter and to authorize the director of health to enter into amendments or modifications to the grant agreement that do not materially increase the obligations nor liabilities to the city and are necessary to effectuate the purposes of the grant. Madam Chair.

[Supervisor Connie Chan, Chair]: Thank you. And we have Department of Public Health here.

[Anthony Taylor, STI & HIV Program Manager, DPH]: Good morning. Sorry, good morning Chair Chan and committee members. My name is Anthony Taylor. I'm the STI and HIV program manager with Department of Public Health's Population Health Division. As noted, we're here to request the retroactive authorization of this grant for 1,100,000.0 approximately. The grant supports DPH in developing and expanding training and sustaining the disease investigation and intervention workforce with a focus on HIV, STI, and hepatitis C, and mPOXX. The grant project is intended to scale prevention efforts, increase capacity to conduct disease investigation, ensure appropriate treatment, link people to care and ongoing case management, monitor disease trends, and rapidly respond to outbreaks. We're seeking the retroactive authorization to accept and expend the grant as DPH received the award letter from for this grant on 10/28/2025 for a project start date of 07/01/2025. The project start date was predetermined by the grantor. DPH brought this item to the Board of Supervisors after going through the fiscal approvals process, including comptroller's office review and approval. And with that, we just respectfully request retroactive approval of the item, and I'm happy to answer any questions you may have.

[Supervisor Connie Chan, Chair]: Could you elaborate the retroactivity?

[Anthony Taylor, STI & HIV Program Manager, DPH]: And so, so we did receive the award letter after the predetermined start date from the California Department of Public Health. There

[Supervisor Connie Chan, Chair]: a Sorry. When did you receive the start date? Because this is July 1 Correct. 2025, and then it's only through June like, only have six months.

[Anthony Taylor, STI & HIV Program Manager, DPH]: Right.

[Supervisor Connie Chan, Chair]: So it's six months retroactivity and the, could you clarify when was the notification for your start date?

[Anthony Taylor, STI & HIV Program Manager, DPH]: When did we receive the notification? That was in October 2025.

[Supervisor Connie Chan, Chair]: So it's where it was already

[Anthony Taylor, STI & HIV Program Manager, DPH]: Yeah. It was passed.

[Supervisor Connie Chan, Chair]: It was already passed Correct. The actual grant. Yeah. Thank you. I just wanted to be on the record.

[Anthony Taylor, STI & HIV Program Manager, DPH]: That's Thank you.

[Supervisor Connie Chan, Chair]: We're still supportive of it. I I just wanted to have the explanation of retroactivity that six months into the actual grant you have less than six months to complete thank you very much let's go to public comment on this item yes

[Brent Jalipa, Committee Clerk]: we are opening public comment for this item number 11 if we have any members of the public who wish to address this committee. Madam chair we have no speakers.

[Supervisor Connie Chan, Chair]: Seeing no public comments public comment is now closed colleagues I would like to send 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. Aye. Chair Chan.

[Supervisor Connie Chan, Chair]: Aye. Chan

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

[Supervisor Connie Chan, Chair]: The motion passes thank you mr. Clerk please call item number 12.

[Brent Jalipa, Committee Clerk]: Yes item number 12 has a resolution approving amendment number one to the agreement between the city and county acting by and through its department of public health and a and a health services inc to provide rehabilitative board and care residential services to extend the term by three years from 06/30/2026 for a total term of 07/01/2024 through 06/30/2029 and to increase the amount by approximately 22,700,000.0 for a total not to exceed amount of 32,600,000.0 and to authorize dph to enter into amendments or modifications to the agreement that' not materially increase the obligations nor liabilities to the city and are necessary to perpetuate the purposes of the agreement or this resolution. Madam Chair.

[Supervisor Connie Chan, Chair]: Thank you and again we have department of public health here.

[Luis Calderon, Program Manager, Residential System of Care (DPH Behavioral Health Services)]: Morning, supervisors. Good morning, madam chair. My name is Luis Calderon, program manager for the residential system of care with behavioral health services for the Department of Public Health. We're here to ask for your support on extending the grant from ANA Health Services from an amount from 22,000,007 and $22,000 and not too extreme for a total of $32,654,000 This is for an extent for another three years from 07/01/2024 through 06/30/2029. The contract will be an extension of three more years for a total of five years. ANA Health Services is a twenty four hour residential care facility in San Francisco. Thank you. I'm sorry. That provides services for 18 to 59 service for adults with severe mental illness, co occurring medical and physical conditions. They provide rehabilitated boarding care licensed residential facility for clients transition from acute care and for existing setting to independent living. ANA Health Services provides this rehabilitative program for an average of twelve months stay to prepare these clients to move to a more less supervised setting. They they run two programs at Victoria's House here in this in the heart of San Francisco with a total of 46 beds. All are from San Francisco. And the San Pablo facility, we have an as needed number of beds with a maximum capacity of 25 beds. They provide support services higher than the other RCF facilities in terms of providing medical management, care coordination, transportation to clinic visits, support getting entitlements, and helping them apply for housing and helping them with their discharge planning. This program is a home like environment program where they receive these services at both facilities. We're asking for your support for this extension of the program and an increase of the budget if you have any questions.

[Supervisor Connie Chan, Chair]: I do. I think I would like to actually have a better understanding of the facilities themselves.

[Brent Jalipa, Committee Clerk]: Yes.

[Supervisor Connie Chan, Chair]: And I think we have requested for additional similar what we have discussed previously is to have more photos, both not just the facades of the exterior of the buildings, but also the interior.

[Luis Calderon, Program Manager, Residential System of Care (DPH Behavioral Health Services)]: So these are are they not showing?

[Supervisor Connie Chan, Chair]: Female Oh, there

[Luis Calderon, Program Manager, Residential System of Care (DPH Behavioral Health Services)]: you go. Right, there you go. So those are the interiors. These are from the San Pablo facility. San Pablo facility is a large two twenty five bed facility. It was assisted living facility that ANA Health Services purchased. They have multiple contracts with other counties. We only purchase a maximum of 25 beds right now as needed. They are fully accessible units. As you can see, they're very large. We started that contract in 2021 with a maximum of 30, but we've been averaging less depending on our needs. On 2022, we opened the Victoria's House in the heart of San Francisco. It used to be an old Victorian house that we had contracts with that facility many, many years ago. It closed. It was closed for several years until a health services bought it. And that is the interior of the home. The home is beautiful. Don't think there's there's the facade of the location in San Francisco on Shotwell Street. It is for ambulatory clients, not fully accessible for wheelchair users. That is the location of that. If you want more pictures, we can provide you some more extensive pictures.

[Supervisor Connie Chan, Chair]: Understood. So help me understand, though. So the San Francisco location is not quite ADA accessible, but the San Pablo one is?

[Luis Calderon, Program Manager, Residential System of Care (DPH Behavioral Health Services)]: It is, yes. Okay. It was renovated. It has an elevator. Actually, can see it right by the name right there. It's one of the central elevator. The gap is an inch wider than the fire department will authorize it to make it fully accessible. I was there. It works. But it's fully made that it's not quite exactly that.

[Supervisor Connie Chan, Chair]: That's good to know. Thank you so much for your work. Yes. It is good to know how it's good to have you doing the inspection to make sure that it is fully accessible. I do appreciate that. Thank you for adding the photo. And then we I know that we received this we have yet to receive I wonder if we are receiving the electronic copy of this updated presentation. And if we have not, we would love to have the updated electronic version of this so that we can add to the legislature.

[Luis Calderon, Program Manager, Residential System of Care (DPH Behavioral Health Services)]: You should have received it by now, yes.

[Supervisor Connie Chan, Chair]: Thank you. Thank you so much for updating it. We appreciate your work, truly. And with that, let's go to I don't have any additional questions. Let's go to public comment on this item.

[Supervisor Matt Dorsey, Vice Chair]: I was intrigued by the section in the BLA report on performance monitoring. I know that this is not a subject to medical, sort of the typical kinds of performance metrics, but I would wanted to tease out a little bit about how we measure success for this. So why don't we hear from the BLA?

[Supervisor Connie Chan, Chair]: My apologies. Thank you.

[Nick Menard, Budget and Legislative Analyst]: Item 12 is a resolution that approves an amendment to a contract between the Department of Public Health and ANA Health Services LLC. They are a private company that operates boarding care facilities in California. So the amendment extends the agreement through June 2029, and that increases the contract value from just under $10,000,000 to $32,600,000 The agreement would fund, going forward, 71 boarding care beds, including 46 in the Mission and the remainder in the facility in San Pablo. As we discussed on page 31 of our report, you know, we do believe DPH could improve its performance measurement of this program. We know that the department is visiting the site monthly and doing utilization reviews. Because the services are not Medi Cal reimbursable and this is not a nonprofit contractor, the typical triggers for the DPH performance measurement of this program are absent, right? And so the only thing that they're tracking is if fifty percent of clients completing the program in twelve months and then attendance and group therapy. And so when we think about these are not just portent care beds, but they're also treatment beds, There could be a kind of more robust measurement of what's happening in the facility, such as are people getting treatment plans on a timely basis? Are they completing the milestones of those treatment plans? Are they exiting these are short term beds. These are about one year beds. Are they exiting to appropriate housing placements? Or are they cycling back through the system? I think these things would be important for DPH and the Board of Supervisors to understand about this program. I think the department is also working on the set of compliance objectives that contractor has to meet, which are, I think, an important risk management piece of the performance measurement system that is still under development by the department. We did talk to the program staff at dph and they agree with our recommendations. We show the budget for the program on page 33 of the report. This is about a $6,200,000 a year program funded by proposition c homeless gross receipts tax, but we do recommend approval of item 12.

[Supervisor Connie Chan, Chair]: Vice Chair Dorsey.

[Supervisor Matt Dorsey, Vice Chair]: Thank you, Chair Chan. Can I ask the maybe just a high level answer? How do we define success for a program like this?

[Luis Calderon, Program Manager, Residential System of Care (DPH Behavioral Health Services)]: The difference between this and other residential care facilities, most of the other residential care facilities are their permanent homes. A This new pilot, a new way to provide treatment programs for clients that don't generally succeed at residential treatment programs, medical license and reimburse medical ones. And it serves as a purpose to step down for clients that are in acute lock settings or with forensic history. A lot of our facilities do not take clients with significant forensic history. ANA, especially Victoria House, takes directly clients directly out of jail with significant psychiatric histories and their substance and on top with the forensic histories. This is a model for that. The clients go there with a very low threshold to get into the programs. They attend groups. Our goals, we agree with BLA report. We're improving our trying to make sure that all the clients attend at least a number of groups per week, at least four groups per week. They reengage these clients into regular into the community with special outings, help them and connect with services. Once they stepped from, for example, for a mental health rehabilitation center, a locked facility, they stepped into Victoria's house. They started going out, rejoining society, accessing services, establishing their medical services, continuing with their intensive case managers. Once they have that routine development and those success, they can move to a less supportive environment. It still could be supportive housing. Or some of the clients are looking for more permanent stable housing, so they're moved to another residential care facility.

[Nick Menard, Budget and Legislative Analyst]: Okay.

[Luis Calderon, Program Manager, Residential System of Care (DPH Behavioral Health Services)]: Not to the street. The goal is to so they don't return to the previous location, which could be the hospital, could be the street.

[Supervisor Matt Dorsey, Vice Chair]: Okay. Great. Thank

[Supervisor Connie Chan, Chair]: you. Thank you. And I'm like trying to catch up now. Do we go to public comment on this item yet? I don't think so.

[Brent Jalipa, Committee Clerk]: Madam chair we have not.

[Supervisor Connie Chan, Chair]: Let's go to public comment on this item.

[Brent Jalipa, Committee Clerk]: Yes we are opening public comment for this item number 12 if we have any members of the public who wish to address this committee. Madam chair we have no speakers.

[Supervisor Connie Chan, Chair]: Seeing no public comment, public comment is now closed. And my assumption is we are on board sending the item to sending item number 12 to full board with recommendation and with that 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. Aye. Dorsey aye. Member Chen. Chen? Aye. Chair Chan? Aye. Chen? We have three ayes.

[Supervisor Connie Chan, Chair]: The motion passes. And with that Mr. Clerk please call item thirteen and fourteen together.

[Brent Jalipa, Committee Clerk]: Yes item numbers thirteen and fourteen are resolutions authorizing the Department of Public Health to enter into a grant agreement for a term commencing on the execution of the grant agreement through 06/30/2030, between the city and county acting by and through its Department of Public Health and the California department of health care services and its third party administrator advocates for human potential inc including provisions allowing for the recapture of allowable project expenses incurred retroactive to 05/06/2025 authorizing the grantor to apply for a receiver in the event of the city's default and authorizing d p h to enter into amendments or modifications to the grant agreements that do not materially increase the obligations nor liabilities of the city and are necessary to perpetuate the purposes of the respective grants. Item number 13 having anticipated revenue to the city of approximately 21,300,000.0 including a permitted and restricted use at $8.87 per terro avenue retroactively authorizing dph to accept and expend grants funds for the period of 05/06/2025 through 06/30/2030 and item number 14 having anticipated revenue of approximately 6,300,000.0 including a permitted and restricted use at 333 7th Street and retroactively authorizing dph to accept and expend grant funds. Madam chair.

[Supervisor Connie Chan, Chair]: Thank you and again we have department of public health here.

[Kelly Kirkpatrick, Director of New Beds & Facilities, DPH]: Good morning chair Chan supervisor Dorsey and supervisor Chen I'm Kelly Kirkpatrick the director of new beds and facilities at dph and very pleased to be here to seek your approval for over $27,000,000 for one time capital improvements to two city owned buildings These two projects are critical to helping address San Francisco' homelessness and behavioral health crisis by adding much needed behavioral health residential care and treatment beds. These funds are from the California Department of Health Care Services or dhcs as part of the state's Proposition one efforts to reform and expand California's behavioral health system. In December 2024, the board authorized DPH to apply for round one of the Bond Behavioral Health Continuum Improvement Program, also known as b chip, funding. D D H C S notified DPH in May that we were awarded two projects, these two, 887 Petro and 333 7th Street. Now I will dive into the details of the two projects and some specifics of the grants. Next slide, please. SFDPs would like to accept $21,300,000 from the state for improvements to 887 for Turo, also known as the behavioral health center on the ZSFG campus. After many important conversations with stakeholders, including clients of the BHC, our staff, and labor partners, the BHC represents a critical pathway to add 90 new health behavioral health beds and expanded residential care for some of San Francisco's most vulnerable residents, which was recently announced by the mayor's office in December. For this grant specifically, this includes more than 50 new lock subacute mental health beds for people under conservatorship at the BHC. Additionally, related from a project plan perspective but separate from this grant agreement, we will also add 40 new assisted living beds for individuals who need long term care and community based support in Hayes Valley. The bhc was built in 1992 as a locked facility it already meets all the infrastructure and licensing requirements for this high level of care facility improvements funded by the grant include renovated staff and patient spaces on the 2nd And 3rd Floor, which will have this locked level of care. The 2nd Floor will be the new beds for the 50 additional locked beds. It will also replace building support and life safety systems that are approaching end of life, such as elevators, HVAC, and fire alarms. More specifically, this project plan for the behavioral health center conversion is as follows. And again, this is a complex multi property project, and I just want to clarify the larger plan in context of this grant agreement. So this grant agreement is funding the capital improvements at the BHC for the 50 new locked beds on the 2nd Floor. An additional property at 624 Laguna in Hayes Valley, which was recently acquired by the city, will be operated by city staff and will allow the clients from the 2nd Floor who currently are at the bhc to move together with the staff at the bhc as a community to 624 Laguna Street. Additionally another property on Laguna Street will yield 40 net new assisted living beds in Hayes Valley as well. The city's engaged in extensive and ongoing discussions with SEIU Local ten twenty one regarding the potential impacts of this project plan. We are very pleased that we reached resolution with SEIU in December 2025 on the plan that I just outlined. We expect the interconnected projects and processes to take shape over the next year. We anticipate the transition of the 2nd Floor clients of the BHC and staff either in late twenty twenty six or early twenty twenty seven, and add the locked beds on the 2nd Floor of the BHC sometime in 2028 after construction. SFDPH is committed to continuing to work with SEIU, our staff, and clients every step of the way. This is a vital step forward in addressing the critical shortage of locked mental health beds in San Francisco contributing to prolonged hospitalizations, repeated psychiatric crises, and homelessness among individuals with serious mental illness. Move on to our next project, 3337th Street. SFDPH is reopening a proven treatment program to help people with both mental health and substance use challenges at 3337th Street. This 16 bed residential program expected to open in winter twenty twenty six, which we mean November or December 2026, and will provide 20 fourseven care and support to help people stabilize, recover, and rebuild their lives. The 7th Street site previously served the community for over twenty years as a trusted treatment program known as Joe Ruffin place before closing in 2021. A brief recap of important milestones for this project in October 2024 the city acquired the property as part of Baker PRC's a places debt repayment agreement which was approved by the board in April 2024 in December 2024 the board authorized dph to apply for round one of bond b chip funding In May 2025, DPH was awarded $6,300,000 in bond B CHIP prop one funding to modernize this facility. This includes repairs, a new roof, mechanical upgrades, and a new elevator to ensure full ADA accessibility, our only ADA dual diagnosis program that we will have in the city. And then, we introduced the grant agreement on December 16 to the board, which we're considering now, in order to meet the state deadline of approving the grant agreement by 01/29/2026. We will conduct an RFP in the 2026 to select a qualified operator for the 7th Street treatment program. This will allow DPH to assess a broader swath of providers and ensure alignment with key treatment best practices and the department's good neighbor policies. DPH and the mayor's office are continuing to engage with the neighboring community to listen to and address concerns. The 7th Street treatment program is a structured drug free program with 20 fourseven staff where clients are required to participate in structured daily schedules, including one on one counseling, group counseling, service coordination that all promote recovery and well-being throughout the day. We also recognize how critical it is to be a good neighbor where our services are located. So over the next year, while we work to improve the building and run an RFP for a new provider, we will work in partnership with the community to develop additional ambassador and safety enhancements to demonstrate our commitment as a community partner. With this in mind, we do want to clarify that 3337th Street is exempted from the geographic equity legislation for several reasons. First the program will provide licensed behavioral health treatment as a social rehab facility which is not a covered facility under the legislation additionally d peach applied for bond b chip funding for the site with board approval in December 2024 prior to the passage geo equity legislation and additionally financial decision making occurred when the board approved the property and the acquisition of the property in April 2024 with plans to continue the same use that had been at the site for over twenty years This project brings together what we need to succeed: a city owned building, state investment, and a proven treatment model. It's a smart, cost effective way to expand access to care while minimizing local impact. Next, on to some specifics of the grant. This grant is retroactive because we received the grant agreement after the predetermined project start date. So DHCS sent the initial notices of conditional awards for Bond Beach at Brown 1 on May 6. The project period for both grants began on that date, meaning we could be reimbursed if any planning costs were incurred from May 6 or moving forward. And the grant agreement goes through 06/30/2030. DPH received the final grant agreements from DHCS on October 29, and we brought it as quickly as we could, working through the controller's office and city attorney's office to introduce to you all about six weeks later at the December. Next slide. And then we're also seeking approval for some of the state's nonstandard terms for these agreements. The Board has approved similar nonstandard terms in past B CHIP grants, but we just wanted to call it out related to declarations of restriction, meaning that we need to use the sites for the same uses for thirty years, other, you know, financial and legal risk indemnification, and kind of receivership elements that are standard for all of the $6,000,000,000 worth of grants the state will be issuing under bond b chip. With that, I just want to thank you for your consideration. We respectfully ask for your approval of these two items. I'm here to answer any questions.

[Supervisor Connie Chan, Chair]: Thank you. I think with the same expectation that we have requested earlier about just facility, especially particularly this one that you mentioned, that there was actually capital improvements made, including like roof and things like that. And the picture that presented today was still with the border up entrance and window. We'd love to get an updated both the facade of the facility as well as inside.

[Kelly Kirkpatrick, Director of New Beds & Facilities, DPH]: Once they are renovate so this money is for the capital improvement? The capital. Do that. So it will look lovely once we receive the $6,000,000 and expect construction to be done in the next year but that is what it currently looks like without the $6,300,000 of capital funds to fix it up. Sure

[Supervisor Connie Chan, Chair]: Then can we still have, like, perhaps then the I guess then let's have the rendering of what you're anticipated to look like and the scope of the work. And just still would love to see the existing condition, the interior of it. I think that, again, it's for record tracking. We just like to learn more about the existing condition and then what the work that you anticipated to do, whether $6,000,000 or however way that what other scope of work that you deem necessary for it to be operable when you do start to operate at the facility. Just help us have a better understanding of the facility itself.

[Kelly Kirkpatrick, Director of New Beds & Facilities, DPH]: Okay. We can do that.

[Supervisor Connie Chan, Chair]: Do you think we can have that before Tuesday? January 13, next Tuesday.

[Kelly Kirkpatrick, Director of New Beds & Facilities, DPH]: Next Tuesday. Pictures of the interior?

[Supervisor Connie Chan, Chair]: Correct. Correct. The interior, the existing interior, existing, you know and if there's any rendering

[Kelly Kirkpatrick, Director of New Beds & Facilities, DPH]: of there's no rendering but there are floor plans potentially I believe so we can get to the clerk any of those files that we have either floor plans and existing photos of the interior wonderful

[Supervisor Connie Chan, Chair]: Vice Chair Dorsey.

[Supervisor Matt Dorsey, Vice Chair]: Thank you chair Chan. I actually go by this so I know that it hasn't been it's still boarded up but the improvements are coming. I wanted to ask because I have gotten this question I think you're aware of it that there are some folks in my district who are objecting to this as something that they see as not consistent with the geographic equity requirements under the one city, one shelter framework. I'd like to

[Nick Menard, Budget and Legislative Analyst]: it's

[Brent Jalipa, Committee Clerk]: my

[Supervisor Matt Dorsey, Vice Chair]: it is my