San Francisco Government SmartTranscripts:

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Good morning. The meeting will come to order. Welcome to the 02/04/2026 of the Budget and Finance Committee. I'm supervisor Connie Chan, chair of the committee. I'm joined by vice chair supervisor Matt Dorsey and member of supervisor Danny Souter. Our clerk is Brent Halipa. I would like to thank Jeanette Eugene Lof. My apologies if I'm not saying your name correctly. But I nonetheless, I'm very grateful for SAGov TV for broadcasting this meeting. Mr. Clark, do you have any announcements?

[Brent Jalipa (Committee Clerk)]: Thank you, madam chair. Just a friendly reminder to those in attendance to please make sure to silence all cell phones and electronic devices to prevent interruptions to our proceedings should you have any documents to be included as part of the file 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 in 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 for your name to be accurately recorded for the minutes. Alternatively, you may submit public comment in writing in either of the following ways. Email them to myself, the budget and finance committee clerk at brent.jalipa@sfgov.org. If you submit public comment via email, it will be forwarded to the supervisors and also included as part of the official file. You may also send your written comments via US Postal Service to our office in City Hall at 1 Doctor. Carlton Beglewood Place, Room 244, San Francisco, California, 94102. And finally, items acted upon today are expected to appear on the Board of Supervisors' agenda of February 10, unless otherwise stated. Madam chair.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you Mr. Clark. And before we call the items for today, for the public that should know for all the items that we have budget and legislative analyst report, will go to the department presentation and then the report then we will go to questions and comments from the committee then we will go to public comments and with that mister clerk please call item number one

[Brent Jalipa (Committee Clerk)]: yes item number one is an ordinance de appropriating 250,000 from the general city responsibility and appropriating 250,000 to the department of children, youth, and their families to support the District ten safety plan, including services at the hope s f sites, violence prevention events, safe passages, response to schools, and as needed support to the youth and residents most impacted by violence in fiscal year twenty twenty five to twenty twenty six. Madam chair.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. And today, we have supervisor Shimon Walton's representative here, Tracy Gallardo.

[Tracy Gallardo (Legislative Aide to Supervisor Shamann Walton)]: Thank you, Supervisor Chan, members of the committee. As you guys are aware, Supervisor Walton put out the need for safety plans by neighborhood, and we have worked on ours. I brought a copy just so that people can see it. We've submitted it before. This is a process where a community gives input. We hold safety town hall meetings twice a year and once a year with all city departments to kind of figure out what the needs are of the community. As you see, there is a rise of violence right now, especially among youth, and so I think it's super important to have this passed. It is in alignment with the safety plan that has been implemented by community, and I'm available for questions. Thank you.

[Nick Menard (Budget & Legislative Analyst)]: Morning. Nick Menard from the budget legislative analyst office. Item one is an ordinance that reappropriates $250,000 set aside in the general city responsibility budget unit to DCYF to fund three positions at young community developers, a position to administer the violence prevention program, a violence interrupter to do school based conflict resolutions, and then an intern. These are three existing positions at that nonprofit that would continue those services primarily in D10. So this is just moving money around from one area of the general fund to the other. We recommend approval of item one.

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

[Unidentified speaker]: you

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: so much to Supervisor Walton and his team for bringing this work before us. And with that, let's go to public comment on this item.

[Brent Jalipa (Committee Clerk)]: Yes, we now invite members of the public who wish to address this committee regarding this item number one. Now is your opportunity to approach the lectern. Madam Chair, we have no speakers.

[Supervisor Connie Chan (Chair, Budget & 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 refer this ordinance to the full board with a recommendation of vice chair Dorsey. Aye. Dorsey, aye. Member Soder. Aye.

[Supervisor Danny Sauter (vote response override)]: Chair Chan. Aye. Chan. Aye. We have three ayes.

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

[Brent Jalipa (Committee Clerk)]: Yes item number two is a hearing on proposition c of June reserve fund balance totaling 572,500,000.0 at the conclusion of fiscal year twenty twenty four to 2025 according to the department of early childhood and how the city can use this reserve balance to expand eligibility for child care subsidies to families earning up to 200% area median income. Madam Chair.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. I want to acknowledge Supervisor Stephen Sherrill joining us today, and the floor is yours.

[Supervisor Stephen Sherrill]: Well, Chair Chan, thank you very much for having us here today. Vice Chair Dorsey, Supervisor Sauter, thank you for having us here today. I am really excited to be here. I am really excited that the mayor, in his State of the City speech, announced the expansion of this child care subsidy of baby prop C to families making 200% of the area median income. I think former supervisors Norman Yee and Jane Kim deserve an enormous amount of credit for being early leaders here. And the advocacy community I see Liz Weinigrad in the audience here and many others. Thank you all also for really fighting for our families for the future of San Francisco. I think we're all aware that we're the third oldest city in America. We're the fastest aging city in America. We have the lowest number of children per capita of any major city in America. And when it comes to young families, after housing, child care is the number one expense. This is really a critical issue for so many of our families. I can see Danny Sauter nodding here as he thinks about his checkbook getting lighter and now maybe heavier with this subsidy. But in all seriousness, this is near and dear to so many of our hearts, really even just sitting up here right now. Supervisor Melgar has long been a leader and a fighter on this. I'm really thrilled that we're here together and that we can be here. So with that, I also really want to thank Ingrid Mesquita, the director of Department of Early Childhood. Her work, her advocacy and not just advocacy, but work has gotten us to this point. So today, I'm very excited to be able to hear about the plans, really excited to begin this collaboration as the board supports you in not only building out the expansion of the subsidy, but also reaching out to members of our community. How do we get in touch with people? How do people know it's available? And so today, I'm excited to do three things. I know my colleagues are probably excited for some others. For me, it's about drilling into the budget, about looking at the implementation timelines, and then really about defining success. I know these are things you've thought of deeply. I think it's really important for us to understand, to help you along with that, and also to talk to our constituents as well. So with that, Director Mosquito or Sorry.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Supervisor Chuyama. I want to

[Supervisor Stephen Sherrill]: Oh, I apologize.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: No, no, no, no problem. Supervisor Malgar.

[Supervisor Myrna Melgar]: Thank you very much, Chair Chan. And thank you, Supervisor Cheryl, for introducing this hearing request. I also have had a long history with this issue and continue to hope that we can truly meet the will of the voters with baby proxy funds. I am grateful to our former mayor, Breed, for her leadership in merging the Department of Early Care and also the First Five, and clearly creating a vision for a comprehensive set of supports for families in San Francisco with Littles. And I also continue to have a vision for what this could be for our city. You know, the fact is, you know, the face of poverty in California is a woman, a single mom usually. And childcare and housing are the two biggest economic factors in the financial health of these families. In addition to that, every dollar we spent before the age of five has a multiplier effect that is beyond everything that we know in terms of school readiness, of school success, K through 12, and then workforce. So every dollar that we spend in the early years really dictates the success of these kids far beyond those first five years. I do look at it as an urban planner as well, in that we live in a city that is very segregated by race, and that young people who are in their childbearing years have a hard time affording our city in terms of housing in addition to childcare, and that I want to make sure that what we create supports the hopes and dreams that we have for our city for the next generation, and also supports the success of our public K-twelve education system, especially as the state has now rolled out its TK system. So I want to make sure that, as we are supporting this department and rolling out of these funds, that we also keep in mind that we have multiple goals. Some of those goals are not within the purview of this department, but it is absolutely necessary that we include them in our strategic planning and how we roll out these subsidies. In addition to that, I think that, you know, the systems that we may have built for earlier iterations of these subsidies may not be the ones at work for future iterations, because it is a different population. And I want to make sure that when we talk about quality and geographic equity, we are keeping in mind that the needs of the communities around San Francisco are diverse, that we have different language needs, different cultural needs, and that we keep in mind that in order for the program to be successful, we need to keep those in mind as well. So thank you, Supervisor Cheryl. Thank you, Director Mesquita and your staff for all the work that you've put into this. And I look forward to getting into the meat of this hearing, hearing from the advocates, and making sure that we are building a better tomorrow for all families and children in San Francisco. Thank you.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you, Supervisor Malgar and Supervisor Sherrill. Would you like to continue, too?

[Supervisor Stephen Sherrill]: Great. Thank you. Director Mosquito, please. Thank you for being here today. We really do appreciate this opportunity to collaborate with you.

[Ingrid Mezquita (Director, Department of Early Childhood)]: Absolutely. Good morning, Supervisors, Chair of the Budget and Finance Committee, and all the members, Supervisor Cheryl and Supervisor Melgar. And I think Supervisor Melgar said it all, like, really and this is really the framework of what we've been doing. I mean, your leadership throughout the last three especially being on a Children's Families Commission, working with us and setting up the department, organizing the strategic plan, understanding sort of the needs of parents and communities across our city, has really shaped what we have to date. And we didn't start just now. We've been doing this for quite some time, rolling out universal initiatives, starting with our Preschool for All program back as early as 2005. And so from those learnings, we've been able to develop sort of these roadmaps around what works, what are things that we still need to improve on, and how do we actually get children to be school ready. Because at the end of the day, this is really our North Star in the ability to be able to support families in their their journey, also in parenthood. So as I lay out the following 100 slides just kidding. Just a few slides. But they're very compact, so they say a lot. And I'm going to take you through that process. So part of it is also being doing a little bit of level setting for folks who are not as familiar with this legislation, ensuring that the legislation is also highlighted as part of our sort of guiding principles around not only looking at program quality, but also supporting the early educator workforce. And that was really what Prop C intended to do is to support a system of early learning that included early educators that are also mostly, if not almost all, comprised of women, immigrant, women of color. And so we want to ensure that as we build out this system of supports for families, we also take into consideration how this system is built. So I'll start with the Prop C spending spending the fund balance because that is what the request was for, is to better understand how this fund balance will be used to offset tuition costs, not only for families earning up to 200%, but also for the workforce that makes up this early care and education system. And without the workforce, honestly, we would not be able to be able to go towards a goal of a universal child care system. So part of Prop C has always been around, again, the quality of the care, children and families earning up to 200% of area median income. But it also went through a litigation process which created this fund balance. And through those three years that the funding was being the money was being collected, we also laid out a plan and a framework for how we were going to use the funds once we were allowed to actually use them. And so how we have done that is we started with expanding child care subsidy eligibility for families based, again, on the legislation that were under 85% of state median income. We've also been able to expand the workforce because without the workforce, again, we cannot expand the child care system. So we've been growing the capacity where the demand is the highest, and that has been really in infant and toddler care. We've been working for the last two decades on a universal preschool system, and honestly, now we can say we've checked that box. We're the first in the nation to have been able to get out the gates in doing that, and now we're doing that for earlier for earlier years. That's infant and toddler. And with that, we want to make sure that we're responsible in how we use the spend down of the fund balance, because at the end of the day, this is one time only funds. And so we want to ensure that we have some viable ramp offs, some smoothing out of the edges. And I'll talk a little bit more about that. So, again, sort of to level set, this is what the Prop C legislation defines eligible spending. We focused in the first couple of years after the litigation was was done, that we eliminated, practically eliminated the wait list for families who were lower income. And that we're extremely proud of. We built a lot of infant and toddler care, but also within the framework of that being a comprehensive early care and education services. It's not just care, it's also understanding the needs of the educator and understanding the needs of children. So getting into sort of the meat of how we're using the fund balance, we were already on on a plan to be able to use the fund balance on one time only projects. But that was only going to take us so far. The amount of facilities that need to be developed, what we need to invest in the workforce and to in terms of educational pathway excuse me, pathways, and ensuring that we're weaving the early care and education system into this broader ecosystem, which is called early childhood. That wasn't going to get us fast enough to be able to spend down the fund balance. And so, through a lot of input feedback, and also a lot of the advocacy here at the board and thank you again, Supervisor Milgar, because you've been very steadfast in this process for the last several years. We looked at the fund balance and said, well, I think that what we can do is we can also now we're in a good place to be able to expand the affordability of child care up to the 200% of area median income. In order to do that, we also have to run a lot of scenarios because the last thing that we want to do is pull the rug out of families, right, midway. We want to ensure that we can sustain this over time, while we're also parallel to that process, ensuring that we have other strategies as we roll out and we spend down the funds. Because this initiative really is twofold. It's to provide care, but it's also about lifting and professionalizing and supporting the early care and education workforce. So these two things are coupled. And it's difficult to uncouple them. So as we're using the subsidy, the fund balance, and I'll give you more detail, we are looking at now rolling out up to 200% of area median income. And in San Francisco, that means for a family of four, that's around $312,000 a year in annual income. At the same time, we have to build the early care and education infrastructure. That means investing in educational and career pathways for all the early care and education providers and educators who are part of this system. So we're also setting aside funding to ensure that people have a good entry point into this career, but also can see themselves in this career in the long term. This aligns very well with the mayors advancing the family opportunity agenda, which, again, Supervisor Milgard, you've been really pivotal to this, especially around housing. And this is an area where families as you said, Supervisor Sherrill, this is an area that families also struggle with. It's not just housing, it's also the affordability of childcare. Childcare is very expensive. And this is something that San Francisco can do and can do right now to help families as they're moving through, like I always say, journey of parenthood. So how is child care sort of central to affordability? Again, to sort of level set, we already are offering a tuition credit for families. And again, this has been part of a sort of a phased out rollout of the initiative. So right now, and the mayor also announced this, for families who are making up to 150% of area median income, which translates around $234,000 a year, families are already getting free. So that means their tuition is discounted at 100% of our reimbursement rate. At over 500 plus, we're actually almost reaching 600 programs across the city. As of this fall, that's going to be extended because that's how enrollment works. Families are, as they're coming into the fall semester, for those families who are earning above 150%, up to 200% of area median income will receive a 50% tuition discount. Which, if you have an infant, that translates to roughly $18,000 a year that you will be saving in child care costs. And, of course, we will continue to fund all of those families who are currently enrolled in our system. So we're starting now. So beyond sort of the vision setting of what baby prophecy was meant to do, we are now building not only the infrastructure, but also the expansion. This is more than just child care. Again, care sits within this very wonderful ecosystem of early childhood. And so we have to ensure that as children are experiencing their early childhood, we want to have this very, very real way of ensuring that when they enter kindergarten, they enter ready to learn. Because of all the research that has backed this up for the last thirty years, and for the last twenty years in San Francisco, our own local school readiness data indicates that if you start how you start school is how you end up. So if if we can give children sort of a head start, if you will, and being school ready, they don't necessarily have to have the burden of always having to catch up. Because what we've been able to see is that seldom do children really catch up. And so with that, we're first in the nation to in order to make sure that those healthy relationships with the educators are also that foster school readiness in the classrooms, whether it's infant, toddler, or preschool, we're providing the first in the nation wage augmentation. And when we say first in the nation, we really do mean first in the nation. In other places across the country, you've seen it like maybe in Denver, in Dallas, where the wage augmentation or a stipend is provided to teachers, but only within the public school system. Here, we're actually doing it in the private programs, in what we call the mixed delivery system, which is family child care, which is home day care, and also center based programs where we're lifting those wages to living wage as a minimum, as the floor, but also raising those wages to be comparable to that to the school district. Now that's the goal, and we are slowly getting there. And this is to, again, make sure that we have a stable workforce, that we're respecting the early educators in the work that they do every day in ensuring that our children are also getting the best early childhood experience they can. So right now, all ages are eligible, birth to five. And we're increasing capacity as we speak right now for infants and toddlers because really that's the focus of baby prop C. And all of this is locally led. And of course, we will be looking at the state to continuously leverage other public funds. And so to take you back to before the pandemic, just a few years ago, we we knew we were hopeful, I think. We were very optimistic that the litigation was going to be in favor of San Franciscans. And so we already started planning around how we were going to move into the infant and toddler world. But really, because of all the years of preschool focus, our mostly our funding and our supports were mostly going for preschool enrollment. We now have universal access in every neighborhood for preschool age children. So that was great. But in the early years, as you can see through this chart, most of our enrollment focused on funding preschool age children. Once we were able to get access to the Baby Prop C funds, we quickly shifted gears towards building more of that enrollment in infant and toddler. And so, as you can see in the blue and sort of turquoise bars, this is where we started seeing the impact and the growth and the funding that was going out for infant and toddler enrollment. And as of this year, actually infants and toddlers outpaced enrollment of preschool age children. And that is, again, a first. We are the first in the nation. And this is something that no other place can say that they've done it and done it well. And we're very proud of that. And we're not done. We're still enrolling more programs and more providers. And so in the last few years, again, like I said, even before the pandemic, we knew we were going to get litigation was going to be in our favor. We started enrolling more programs. We started looking at how to sort of support the early education workforce. We were bringing in programs every year, and we have not stopped. During the pandemic, however, I must say this because this is a the early education system was put to a major test during the pandemic, especially with public health, very stringent public health guidelines. But instead of contracting, like many places across the nation, we actually grew license capacity in San Francisco. And then this is, again, sort of, again, to a lot of leadership and support from not only this board, but also from the community that really believed in what we were doing. And so we stabilized the early care and education system. We grew spaces. And we actually funded lots of different types of grant making to ensure that the infrastructure was going to be left intact, knowing that we were going to be coming out of that pandemic. And so that demonstrates in the ability of us to be able to keep enrolling new programs every year. And so in our pipeline, we have what we call the pre alpha folks who are coming in as they're as as they are also focusing on infant and toddler care. We are doing much less a pre preschool expansion because we have reached universal access in every neighborhood. And so it doesn't make any sense for us to continue to build out preschool capacity. However, for infant and toddler care, the growth is much smaller because, one, the adult to child ratio is higher. And so what used to be in preschool, where you could have twenty, twenty four, 30 children, actually that gets reduced significantly. And these are all because of not only licensing standards, but also really evidence based around what is the right ratio when you're talking about babies and toddlers. So for every three children, you should be having one adult. So again, that reduces the number of actual number of children. It increased the number of staff. That also we also have to project around what is going to be the cost for wage augmentation. Because we again, this initiative is coupled between the cost of care, which is our tuition rate, but also what we are doing as part of wage support. We also have capital projects in the pipeline, meaning that as we're bringing in existing license capacity, we're also building new license capacity. We are in every affordable housing complex there is across the city. I'm hoping that with the new housing policy, the West Side is going to be able to have more of those opportunities to be able to build out more infant and toddler care. But wherever you tell us there's availability, we will be there in support of that. Including in two major hospitals. One is with San Francisco General, and the other is with Laguna Honda. And those projects are down the line, but nonetheless, we're still going to have babies down the line. So we're planning for that as well, including family child care homes. And again, our focus is for infant and toddler care. And so this is where all our sort of programs are across the city. Of course, it's a little bit more heavy on the Eastern Side Of San Francisco, and that's because of history too. It's most more dense. There are more children under the age of five living in the Eastern Side of the neighborhoods. And that's really has been the focus for the city for many, many years. But we're now we're sort of moving on the West Side of the city more and more. And so this has really shifted towards also the population of where families are, who is ready to start building and supporting infant and toddler care, and also how can we help. Because at the end of the day, we're a department that focuses on the whole early childhood experience, not only for children, for families, and for the educators who are part of this system. So, we have built out significantly on the East Side, and the West Side is now sort of the next sort of frontier, if you will, of building more care in neighborhoods like West Portal, the Sunset, the Richmond, and also especially in the Sunset. And this is one of the areas that we hope, I hope that we can really partner, because one of the difficulties with this West Side, which I'm sure for supervisors who live on the West Side know this much better than I do, is there are really systemic barriers on the West Side. The zoning is an issue to be able to build out a center based program. Most of the West Side is residential, predominantly residential. And so our presence mostly is within family child care homes and some school district sites. But we could always use a little bit of support and sort of help in how to create additional access for families in areas, especially in some of the commercial corridors. And part of, like I said, part of this initiative is a really two fold initiative. It's increasing access, but you cannot increase access without early educators. And so, we are very proud that we've been able to introduce a wage support for all the folks who are part of the Early Learning for All initiative, with again, building up a wage floor that is a living wage and only going up from there. Currently, we are providing not only a wage support, we're in the, where we provide grants directly to all the nonprofit organizations that serve children and families, and have teachers as their staff, but also family childcare providers who are owners and teachers, directors, and they do so many things as micro entrepreneur micro business entrepreneurs. And to give you an idea of what the average stipend is for those folks who have a stipend, We're averaging around $12,000 a year for assistant teachers. And for family child care owners, it's a little bit over $16,000 So it's a nice little boost. Absolutely, we could do more. But as we bring in also new providers, we also have to be mindful of how we spread sort of the wealth, if you will. We're also advancing people to have much more opportunities. Again, early education as part of a career to see themselves in this field for a long term. We have already funded and graduated four fifty six people who now have a degree, who have been part of apprenticeship programs. And we have another nine seventy one early educators who are receiving stipend to complete their coursework or do certifications, especially as in areas that are emerging as a real need, not only infant and toddler care, but children with disabilities or special needs. But our work is more than just place based. It's also looking at children's, all children's needs around family having access, first and foremost, absolutely, to high quality early care and education. And also having resources that they have in the home, like a home library. We've partnered up with the San Francisco Public Library and the state. And right now, every child in San Francisco is eligible to receive a free book in the mail with their names on it if they sign up with us. And that's a fantastic way of being able to, again, promote not only early literacy, but also the things that we know that also support children's language development and eventually school readiness. We also focus on pregnant people. We have a pregnancy family village that we fund. And we collaborate with DPH and UCSF and the San Francisco Health Network to ensure that families are getting access to prenatal and other supports, not just clinical supports, but all of these other community resources and supports. And as we're moving through the infant and toddler world, we're continuing to assess not only the space needs. There are some preschool classrooms across the city that no longer have the same type of wait list or enrollment. And part of that, again, has been because of the expansion, not only of transitional kindergarten, but also because we've been building preschool for many years. And so we're looking at some of those classrooms and converting them to infant and toddler spaces. But that also is not just a physical conversion of it. It also means that we have to support the early educators from focusing on pre K years to being much more age and developmentally appropriate in infant and toddler caregiving. So now is the breakdown of how we're going to create all of this wonderful access to families who are going to be part of this expansion into eligibility. And so with our fund balance, like I had mentioned earlier, we were already on a plan to spend the fund balance. But the, but in our original plan on spending the fund balance mostly was for those one time only projects. Mostly capital projects and also ensuring that teachers had access to completing their degrees. Those are things that once you have it, you have it and you're done. And so we looked again as to how we can actually be able to expand the eligibility of families. And so we are using the fund balance to be able to do that. But that only takes us through a certain period of time. Again, the fund balance is one time. And so what we are making a lot of these projections on is also the revenue of Baby Prop C. This is based on the controller's sort of projections of the information that we've been able to get from the controller's office around what the expected revenue looks like for the commercial rent tax. And based on the spending that we have, again, most of this half of the spending will be still to expand facility growth, or expansion of infant and toddler, because infrastructure wise, we need it. We cannot give parents what we don't have. So, we have to build that capacity. And also spending a portion of the fund balance in making tuition much more accessible for families earning up to 200% of area median income. And so we only have projections from the controller's office. That takes us up to fiscal year approximately, I believe, 30. And so a lot of everything else is sort a hypothetical at this point. We do have a few caveats here. One is that as we spend down the fund balance, we will, hopeful, knock on wood, there's the expiration of the interest subvention. So we get the general fund restoration. So we can put that money back into the system. And that we are somewhat suspended in time because of our ECE baseline. So that right now, again, is around $93,800,000 So understanding what our revenue looks like is a little bit of crystal ball looking right now out and beyond five years. But we do know what the expenses will look like if we continue on this path. So this is more a little bit hard on the eyes, but it's much more greater detail on how the Prop C expenditure and this only represents Prop C, by the way. Subsidies that we provide are also funded by other sources state, federal, and the Public Education Enrichment Fund. So this is just a snapshot of Prop C. It looks at the enrollment, but also the wage supports that we're currently funding, along with the one time only funds, which is the fund balance and the use of the fund balance. So the same categories that we have in our regular appropriations or our spending plan is also reflective in the lighter colors for the one time only funds are also fund balance. And as you can see, as we continue to draw on the fund balance, if we continue on the same sort of revenue projections that we currently have, again, the controller's office only gives us five years. Everything else is quite speculative. We are going to be running into a deficit. And so, we have some measures to be able to sort of smooth some of those things, and have sort of softer off ramps to ensure that families always have access. Because that is our, always and always has been our goal, is to ensure that families have this infrastructure and these investments on a long term basis. That we are not a fly by night kind of operation, but rather that this is part of the infrastructure of the city. So, as it is important to recognize that some of these things are unknowns in terms of the what is going to be collected on the commercial rent tax on an ongoing basis beyond five years, six, seven, eight years. But we are hopeful. We're also very hopeful that a lot of the advocacy that we're doing with the state is also going to pay off. Maybe not this year, but we have, you know, six, seven years to be able to plan for multiple strategies as we continue to spend down the fund balance. And so some of those options that we look at is going to be, and this is something that Supervisor Milgario had also mentioned, as part of housing, there are different ways of being able to look at sort of how much support you provide families in terms of how housing subsidies work. Very similar, we might start looking at how subsidies, sort of financial support is given to families above a certain sort of income threshold. Again, these are all sort of options to be able to consider. In terms of workforce development, being able to slow growth the growth of around how much investment we make into degree pathways or other types of things that, again, are drawing on the fund balance, including capital new development projects. So these are all part of the scenario plannings that would will take into effect six, seven years down the road. But that doesn't mean that we don't think about it until six, seven years down the road. But rather constantly monitor to ensure that we're being fiscally responsible. And that our projections are financially viable. So anything with any new initiatives or expansion of new initiatives, again, we would have to consider as part of the scenario planning. And that is it in terms of the lots of slides that I had. Great.

[Supervisor Stephen Sherrill]: Well, thank you, Director Mesquita. I've got a variety of questions here, kind of first starting with the budget, then getting into the implementation timeline, and then finally talking about a definition of success. Colleagues, I could easily just hammer through all my questions, but that may not make the most sense. So please do not hesitate to interrupt me if you'd like to follow on or you have a set of questions kind of in that thread. So I may miss your name on the roster or something like that. I know is an excellent moderator here. But please don't hesitate to interrupt. I think this is going be very collaborative. Great. So first of all, thank you. That was really comprehensive. You've put an enormous amount of work into this, obviously, not only for today, but really for the whole part. So talking about the budget. So the proposal presented today really kind of two main spending categories, obviously, one time only programs, ongoing programs. When we talk about quality spaces, I'm curious, looking at that map, how this infrastructure will be geographically distributed. How will the city be deciding where the funding for either infrastructure improvements or new construction will go.

[Ingrid Mezquita (Director, Department of Early Childhood)]: Well, our priority has always been affordable housing. So we have been part of all the hope s f projects we've been pretty much in every affordable housing project across the city Most of them are within the Eastern Side of the city, historically. It doesn't mean that they can't happen, also, even in mixed housing on the Western Side. So we're looking at those spaces because that's where families are. And so it, it, you know, infant and toddler care should be and could be very place based. We're also looking at the hospitals like Laguna Honda and SF General to be able to build out that kind of infrastructure. For infant and toddler care, it really comes down to sort of like real estate, right? Location, location, location. Typically, that's how you build out programs. For infant and toddler care, it really is location, location, location as well. So where families are at, where the more sort of geographically, where especially children zero to five are being mostly clustered, it's where it makes sense to build out infant and toddler care. It doesn't preclude us from funding in areas probably where there's people go to work, or things like that. But really, the focus really is in more neighborhood based areas. Because as we all know who have had babies, it's not easier, easy to put them in a carrier or in a stroller or even try to drive somewhere, you take a lot of stuff with you. So we also have to make it convenient as conveniently as possible for families who are dropping off their babies.

[Supervisor Stephen Sherrill]: Has there been an exploration of citing new child care facilities closer to where people work instead of where people live? Has that been expressed by parents or advocates as something of interest?

[Ingrid Mezquita (Director, Department of Early Childhood)]: In the so we also have parent focus groups that we've been developing over the multiple years as people have babies. They sort of age out as their children get older. But every year, we have multiple parent focus groups that give us this type of feedback around where they're asking for care to be. Part of that is really now and I think the pandemic has shifted a lot of ways of how we see work and workplaces. And so what families are really asking it for, to be much more neighborhood focused, much more culturally and linguistically responsive to what their needs are. And so we're looking at development and building out infant and toddler care within that context, because that's what families are asking us.

[Supervisor Stephen Sherrill]: And so are we looking at that information for the past several years where remote work obviously came onto the fore? But are we projecting out that those remote work trends are going to continue over the next decade? Or do we think there might be a shift in that behavior?

[Ingrid Mezquita (Director, Department of Early Childhood)]: You know, I think this is an area for also sort of the business economic development team. What we're responding is to what parents are telling us, right? And so right now, in this moment, in the way of how work and life sort of balancing act that we do as parents has sort of shaken out, is that families are focusing much more in their neighborhoods. And that's where they're asking us to consider to building out, or supporting, or enrolling new programs.

[Supervisor Myrna Melgar]: Thank you, supervisor. I just wanted to follow-up Go, on that go, on your specific line of questioning. So, you know, we you inherited a system that was already there, and then expanded it, you know, within the newly formed department. And at the risk of stirring up the pot, I'm just going to put it out there because we could create a different system. And, you know, I'm going to push back on a little bit on something that you said earlier about the sort of East Side west Side divide. Because while it is true that most low income families have lived in the East Side because that's how we decided it in the city, in terms of where we build affordable housing, where we build housing. The fact is, the Marina District and Supervisor Cheryl's district actually has one of the highest concentration of children. And you know, they're not necessarily low income children. We do have providers there. There's the Montessori's and the Waldorf's that are very expensive and high quality. They're not necessarily part of the Elfa system. So, for me, you know, like the promise of public education is that. It's an equalizer. It is where families meet other families that perhaps have more resources or less resources. Kids sort of grow up knowing different kinds of people. And then meeting those families may involve having new connections, new social capital, introduction to different opportunities. And so that is sort of like there's all this evidence out in the world about that in terms of public education. It's the same for the pre-five education as well. And so I'm wondering if we have thought about both the qualifications of alpha providers, but also a different way to disperse the subsidy that may not necessarily be based on, you know, the family, but the center. And incentivizing those centers or providers to take children as opposed to the other way around.

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yes. Thank you. Yes to everything you're saying. Absolutely. And we also do have a history with some of the programs in the Presidio, for example. One of them actually started a school called Presidio Knowles, right off the Lombard, which now has, is one of the largest, you know, Mandarin immersion programs here in the South Of Market. And we, as a city, funded, supported, embraced, and brought that program in. And so, yes, absolutely, I think the relationships really do matter with the programs on the West Side, too, to be able to also promote what the benefits are of having an early learning for all system, really, for families to access citywide, regardless of where they live, or regardless of where they work. It's also about parent choice, too. And incentivizing not only the programs, but also working with those communities. And as district supervisors in those communities, I would also look to you to be able to help us in that endeavor.

[Supervisor Myrna Melgar]: But how specifically, Director Mesquita, would we do that? So, like I look at places like Union Street or West Portal. And, you know, very healthy commercial corridors. And I can tell you the service class in those areas are almost overwhelmingly Latino, female, people who have children, and those kids are somewhere else. And the thought of having them be at a Montessori it's two different universes. So how exactly do we make that connection on a practical level? Because I see that we have this opportunity here with this fund that we haven't spent. And I want to make sure that we you know, do it in a way that builds an infrastructure that we can believe in to make a better tomorrow. Because I also think that that will help the sort of segregation in public schools. Because by definition, these kids turn five. Every year, predictably, there's a bunch of kids who turn five and go into kindergarten, no Absolutely. Matter Absolutely.

[Ingrid Mezquita (Director, Department of Early Childhood)]: And as a child of a segregated school system here in San Francisco Unified School District, I was bussed from the mission to Chinatown. I never made it to the West Side, by the way. But having also that was 50 or I won't say how many decades ago, but that was a very long time ago. And that is what we're trying to build a better tomorrow. And we do have lots of private programs that are participating that are on the West Side who truly sort of align with these values. Everything that you have said, most of the programs that are part of Elfa have expressed the same thing. And they're putting in place, not only through the tuition sort of reimbursement that we're providing, through the wage support, they also do their own fundraising to support a more economically diverse population. And for those programs that still are sort of on the fence, absolutely. We talk to them all the time. We work with them as to where they might need a little bit more support. And we are open for that. This is not a passfail sort of situation. It's like, how can we get there with you that also doesn't impede also on the bottom line, too? Because that's also a concern. And we understand that.

[Supervisor Stephen Sherrill]: Great. Thank you. One thing, you know, in terms of this geographic distribution, you showed a map, I think, on slide nine of the alpha and pre alpha sites. Do we have a map of the non alpha sites?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Not in this presentation, but we can provide

[Supervisor Stephen Sherrill]: you A theoretical quick graph. It is available. Oh, yeah. Yes. I think that would be important to look at as we look at expansion across neighborhoods because when I look at these budgets, there is a lot of spending towards building new sites. And that is not bad. That's probably very, very good. But there's going to be inherent tension, as we look at spending down the capital, of saying, hey, should we build out a new site, or should we give a family money to go to an existing site? I think that's an inherent obvious tension. And I know from my point of view I guess this is less of a question, more of an ask I would love to understand where the non alpha sites are as well to better inform how we think about spending on either capital or infrastructure or on expanded subsidies or on expanded certifications of existing sites to be in the alpha program. So I would love, as just a follow-up item, to see kind of a map, if we have a map of where the non alpha sites are as well. Question, in terms of workforce development, there's certifications for inclusion. Does that include special education certifications?

[Ingrid Mezquita (Director, Department of Early Childhood)]: So that's a different certification that only teachers that work in local education agencies are required to have. That's the public education system. For us in infant, toddler, and pre K in community settings, we call that inclusive settings. So, it's more around inclusive practices. And it is a certificate, not certification or credential. It is more of a certificate, which means that we cluster college coursework that focuses on atypical development.

[Supervisor Stephen Sherrill]: Does this spend down plan include funding dedicated to hiring or training providers that will serve children

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yes. Diverse Yes.

[Rafael Moreno (Office of Economic & Workforce Development)]: Learning abilities?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Because it does not we actually have to create it. Like Yeah. Because it does not exist. It exists in a credential for special education in public education, but it does not exist for certified in community based settings. So that is a knowledge base that we need to develop, grow, and also create systems for.

[Supervisor Stephen Sherrill]: One last question on the budget here for me. Tenderloin has the highest concentration of children in the city, I believe. I believe that's still the statistic. But there are also a lot of safety concerns. Have we thought around investing in security personnel around child care sites in neighborhoods that have safety concerns?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yes. And this is a coordinated response. So we're working with the mayor's office around multiple strategies on how to support the child care programs in the Tenderloin and the families and the children who live there.

[Supervisor Stephen Sherrill]: Thank you. Well, you two can fight it out.

[Supervisor Matt Dorsey (Vice Chair)]: Go ahead.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: I'm just trying to conclude this.

[Supervisor Danny Sauter]: You, director. I wanted to look forward a little bit to the expansion on the horizon. Fall twenty twenty six, is that when people can start signing up? Or is that when children would actually begin to be placed in the centers?

[Ingrid Mezquita (Director, Department of Early Childhood)]: So currently, we already have close to 10,000 kids enrolled. The distribution is half more a little bit more than half of that is infant and toddler. Families who are currently enrolled earning up to 150% of area median income are already getting the tuition credit 100%. As we're looking at the fall enrollment, which means that we have to as we're bringing in new programs to build more capacity, new spaces, and as some of those babies age out, they're leaving that space behind. We'll be enrolling additional families. So we will be able to go up to 200% of area median income. So it's a both and and, I guess, it's an and.

[Supervisor Danny Sauter]: But could someone sign up someone who's now eligible under this expanded up to 200% AMI, can they sign up now? Or does the sign up not begin until the fall is what I'm asking?

[Ingrid Mezquita (Director, Department of Early Childhood)]: No, no, no, no. Every so we're working with 100% private programs. So we fund private, this private system that's made up of the early care and education system. Those programs have their own enrollment sort of like ways of how families come in. And so they have enrollment periods of when they accept new applications or new students. And so it's really based on each program. But we have sort of a seasonal, if you will, sort of enrollment period, which is usually like college. By March, you kind of know whether you're going to be able to be offered a space or not.

[Supervisor Danny Sauter]: But the subsidy expansion begins in the fall?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yes. Okay. And that's for budget purposes.

[Supervisor Danny Sauter]: There was a prior expansion under the previous mayor. What did you learn from that expansion? How many more families enrolled? And how does that prepare you for what you're going to do here? What do you expect?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yeah, so the availability, so we have expanded access. The one thing that is, we're still, it's an art, a little bit of an art and a science, mostly art, is the preferences of families. Cultural preferences, language preferences, location preferences. Those are still a little bit difficult to pinpoint to us exact like science. But the availability of more infant and toddler care has certainly brought in more families, for sure, and being able to access it. Because now it's available, and it's also not strenuous, as it's much more affordable.

[Supervisor Danny Sauter]: But do you think I mean, I believe the prior expansion was 01/2010 to 01/1950, and now we're going from 150 to 200. I'm trying to understand, like, what you expect the demand to be.

[Ingrid Mezquita (Director, Department of Early Childhood)]: Well, the uptake we're looking at is based on the availability of spaces that we're bringing online. And that's just because it's what's available. So as we're bringing in new infant and toddler spaces, for example, we've been bringing in close to 400 spaces new every year of infant and toddler. And the difference here, and I know that doesn't sound like a huge number, but in the infant and toddler world, it's huge. And that's because of the child to adult ratio. These are smaller group settings, and so that enrollment number is big. So we've been able to fill those up, those additional 400 spaces. So we're bringing down in addition to what we already have in place. And we already have close almost close to 5,000 children enrolled in infant and toddler care.

[Supervisor Danny Sauter]: So with this I guess I'm looking for specifics. With this next expansion, you expect 400 more or so?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Approximately 400 to 600 more, as we're bringing also new providers. So it's that capacity. It's constantly having to bring in every year more infant and toddler spaces, which there's a scarcity of.

[Patrick Leung (CFO, Sheriff’s Office)]: Is that 400 to

[Supervisor Stephen Sherrill]: 600 more children every year or across the whole ten year BROWN: period? Every year. Every year. Okay. And then going back to the point that Supervisor Sauter made about the expansion to 150% of AMI, I've got a number that maybe 145 families enrolled in that expansion. I don't know if that's an accurate number.

[Ingrid Mezquita (Director, Department of Early Childhood)]: It's not a complete picture. 145 is more the portable vouchers, if you will, where families choose, whether it's in family child care or they might use choose a center. And again, it's an art and a science. It's like there's family preference in this sort of equation. We also have direct contracts with center based programs, which they're the ones who dominate, really, the child enrollment. Those, by our accounts, between the vouchers where families sort of make weave in and out of different programs and the center based contracted spaces that we have, it's more around 800 children.

[Supervisor Stephen Sherrill]: 800 new children who weren't getting a subsidy before now are getting a subsidy?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Of current budget year, yes.

[Supervisor Myrna Melgar]: Okay. So not to overdrill on this point, but you did give us projections that have a number. And so it's hard to square sort of like the art and the science because math is finite, you know. And if you say that we project a deficit in 2033 because we are basing that on a percentage uptake of families between 150200% of AMI, you know, that sort of puts us in this position, right? Because we have to like, the chair of the budget committee has to balance the budget every year. And then if we are relying on the interests of this fund, you know, it puts us in this position. So I just want to drill down on this, because I did look at those numbers of the uptake of families between 100150% of AMI. And I'd like to know what is that percentage uptake that you are basing that chart, you know, of the deficit starting in 2033 on? Is it 100% of eligible families? Is it the percentage that you have observed since we expanded the program? What is it? What is that

[Ingrid Mezquita (Director, Department of Early Childhood)]: percentage It's a combination of both. So when we were operating our universal preschool system, which was not means tested at all, it was just you were four, you were a resident in the city, we had an uptake. That uptake percentage was around 45% or so. And so, of families with a four year old that enrolled. And so, we're also looking at other factors as well. It's not just the uptake, but also what we can offer in terms of an available space. So as we're looking at the facility pipeline and the number of spaces that we're bringing on board, We're also having to look at the compensation model that we also have, which is a wage support. So it's all of those three factors. It's the number of eligible families, but also the number of spaces that are going to be coming online. And it's also the wage support. So all of these three things are part of the scenario planning.

[Supervisor Myrna Melgar]: Why did we abandon that system?

[Ingrid Mezquita (Director, Department of Early Childhood)]: This was a very community led, community driven process for not only Baby Prop C, the legislation of how it was written, but also the compensation program and how it was rolled out. So these were things that the community was very adamant about in terms of certainties that needed to happen to be able to expand early care and education access.

[Supervisor Myrna Melgar]: Okay. I'm not going to belabor the point. Thank you.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: I I mean Yes. If I may then.

[Supervisor Stephen Sherrill]: Please. Please.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: So I I I wanna I I do actually I I appreciate that. And I wanna drill down into just where a baby prop c really is. And I'm looking at the controller's office because let's actually go through what exactly is funding baby prop c. The baby prop c, and correct me if I'm wrong, I am looking to the Controller's Office, is that is really a gross receipts for, a person and a group that is leasing commercial space in San Francisco. That's including both leasing as tenants, but also a subleasing as a subtenants. And from that on, we tax them for the grocery seats. As you indicated, because of lawsuits, have cumulatively piled up these sets of money, which what really allowed the mayor to be able to make that announcement, I think, also has to do with this committee approving, you know, roughly about $436,000,000 for children's council and then another 237,000 237,000,000 And for Wu Di, $436,000,000 for Children's Council. And but really, that money allocated and approved from this body last year has everything to do with the fact that it's really where what we anticipate, it's the next three fiscal years. Well, actually, from July 2025 all the way to December 2028. We know that what you're having, which I really appreciate my colleagues, they're drilling you down. It's like, how is this, their money that we have provided are actually being allocated? And it particularly, like, that's being spent wisely, that is actually equitable all across. I'm now asking the controllers, help me understand the projection of this very prop c, like, you know, in terms of gross receipts. Both retroactively, how much do we actually generate in terms of tax revenue and then what is the projection let's just let's not go as far as 2030 just the next two fiscal years just help us understand.

[Devin McAuley (Citywide Budget Manager, Controller’s Office)]: Thank you for your question chair Chan Devin McAuley from the controller's citywide budget manager You're correct. So in 2021, there was the $490,000,000 of actuals collected. And over that since the time of fiscal 'twenty two to 'twenty four, it has averaged about 190,000,000 per

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: 190?

[Devin McAuley (Citywide Budget Manager, Controller’s Office)]: This last year, of course, that has fallen. And we do project that that will continue to be soft and fall through fiscal thirty because of the softness in the commercial rent market.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Yeah. And and so it's one of the reason why we all do care about downtown. We don't we all care about the revitalizations of of, really, the commercial, property and then trying to make sure that because that is really how baby prop c generated so we were at one point at four thirty seven million dollars is that correct of of the gross receipts generated from baby prop c and then now we're projecting at $190,000,000 and less in the coming years.

[Devin McAuley (Citywide Budget Manager, Controller’s Office)]: That's correct so fiscal twenty one was April and we are projected to be below 190 going forward.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you and then but what I'm seeing here what from your presentation and please correct me if I'm wrong and that if you're ongoing, you're you're for your ongoing roughly and because I there's like two numbers here. I'm trying to I'm kind of confused for your slide that is on page four, your slide four is it $346,600,000 annual spending or is it 693.9 annual spending?

[Ingrid Mezquita (Director, Department of Early Childhood)]: I have our fiscal person actually answer that very detailed question.

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

[Department of Early Childhood fiscal lead (name not stated)]: I just want to make a quick comment first on the the collection. The it's a commercial rents tax, so it's not based on the receipts of the business. It's based on the cost of the of the lease. And so that was, to your point, the lease and the sublease. Sure. That initial amount that was allocated in 2019 was not a single year of collections. That was based on the 2018 passage and collections that had been collected over the years prior to the litigation. And so that's why there was such a big amount. It's not that it was a precipitous decline. The only other comment on that is that because of that, there's a long tail on it. Leases are long term leases. They're capitalized on businesses. And so while we saw many declines, we saw office vacancies go way up, those leases were still maintained, which is why we've had relatively consistent revenues. There is a decline in the interest because as we use the fund balance and we use the controller's office yields, but as we we draw down on the fund balance, generate less interest every year. Right? And so that overall because that's counted in our projections, that means that we have less and less revenues part of the reason why that tail is shown there. For this, this is cumulative over ten years. So this amount of money that you're seeing here is the total spend. On the top, it's the one time only. So historically, as we've been trying to spend this money, it's, you know, about $350,000,000 total on the one time only programs. That's between '26 and '35. And then on the bottom is the expanded ongoing programs, that's the deficit spending only. So that's not the money that's generated on an annual basis from prop C, that amount of money obviously we're running on our operating revenue, that's our OpEx. Since this was about spending down our balance the bottom amount represents just that deficit deficit spending on an operating basis though so that's where programs are ongoing programs we are just allowing them to exceed our our annual income And that will generate over ten years a deficit approximate deficit of $346,600,000

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Sorry. So the $346,600,000 is a deficit?

[Department of Early Childhood fiscal lead (name not stated)]: That's the that's the deficit spending. So the slide that shows this here, if you look on the bottom, that purple line, that's the one time only spending. You can see how low that is, right? Over ten years, that generates $347,000,000 which isn't going to wouldn't spend down that $5.72, right? Sure.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: But sorry. I'm sorry to interrupt. I just really wanna make sure I understand it. So per fiscal year

[Department of Early Childhood fiscal lead (name not stated)]: Yes.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: How much are you budgeting to spend per fiscal year?

[Department of Early Childhood fiscal lead (name not stated)]: Oh, I can actually tell you if you wanna if you wanna it changes by year as this deficit goes up. You can see right here the green line is our operating cost. So we have to add to that the onetime only cost, and we get up into the range of that $250,000,000 a year.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: So you're you're roughly spending about $250,000,000 a year.

[Department of Early Childhood fiscal lead (name not stated)]: Total expenditures for prop c are ranging between 207 in fiscal year twenty seven all the way out to 235,000,000 a year in fiscal year twenty thirty five.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: So you're roughly anywhere between $230,000,000 to $250,000,000?

[Department of Early Childhood fiscal lead (name not stated)]: Yeah. 200 to 235. Yeah.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: K. Per year?

[Community interpreter (Spanish–English)]: Per year.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Per fiscal year. Annual. Great. And then we're generating anywhere between $190,000,000.

[Department of Early Childhood fiscal lead (name not stated)]: I I It goes down. So Right. Yeah. The and we we have to deduct from that. So on the revenue line, it's a little bit different here how we've done it because we have that 15% tax of the general fund. Those funds are never part of our operating revenue. Right? That's a fixed amount that gets transferred to the city. And so when we look at our revenue, including interest, we are looking at fiscal year 'twenty seven projected at 156.2. Out to fiscal year 'thirty well, I'll go to 'thirty because that's where controller's office ends 142,800,000.0. So there's a decline that's eating into that deficit. Right? Part of the deficit is up like, an uptick in the operating cost, and part of the deficit is the decline in the revenue, which, again, includes that decline in interest because the fund balance is going down, so those yields decline.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Totally. I mean, I think this is a long and then the the reason why I'm I'm drilling this down is because, actually, supervisor Marilyn Malgar and I have this conversation Yeah. That is really, with the, been a long time. Right? It's like, okay. We know that it's it's it's not news to us, by the way, that this has been in decline. And we knew that this was in decline. And what we have been doing is that to sort of this we had this conversation and thinking about as policymakers that are we going to sort of, you know, we see that there's this money that is cumulative, you know, because of the lawsuits and generating interest. And then the mayor had a tendency in balancing the budget during off years to take those interests, not just baby prop c, but also big c, taking those interest, plugging that hole somewhere, and then or do we spend it all down? Even though we know that what we're gonna bring in in in projection in the next two, five, ten fiscal years is actually gonna be much lower than what we want to how we went in when we think about universal child care. Now I I actually wanna applaud mayor Lurie for just go ahead and say, let's do this universal child care. We're going to go for it for the next three fiscal year and see what happened. So I think the question actually back to, you know, director Ingrid, like, it's it's that, you know, you are now have taken that leap. Great. We're gonna go for this whole thing, which, again, I'm gonna defer all my colleagues to sort of opine about the policy itself, how to spend, and because they just have much better expertise, on that than I do. But some are, you know, parents with young toddlers and kids, and And Supervisor Malgaard really has been in the trenches with the service providers. What I do want to ask, though, is that in projection of understanding that deficit and understanding the fiscal reality, and while you are now significantly expanding the universal child care program, what is then are we going to do in the projection of the outer year of the fourth and the fifth and sixth fiscal years starting from 2028, when you know that money is going to be spent down? What is the plan? Yes.

[Ingrid Mezquita (Director, Department of Early Childhood)]: And so we also are very aware of that. And because of that, we've been very fiscally responsible in how even risk averse, if you will of how we were using the one time only funds, which was specific for one time only. And as we're planning these different scenarios of the expansion to families who are up to 200% of area median income, we have other scenarios too, which includes sort of the smoothing out of the tuition, not looking at what are the different sort of levels of tuition assistance that we can provide in the outer years if the Prop C regular revenue continues to sort of have this long term pattern. But also, we're leaning we're also leaning on the state. Like TK, the state also is also has plans for rolling out more infant and toddler funding.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Then I'm sorry to interrupt you right there. That is exactly what I worry about, what you're doing right there as a planning. Why is that? It's because right now, as we all know, HESTSTAR by the federal government already has taken a hit, and that is a problem for all of us already. And not only that, we also know that Trump administration has also would help, which is thanks to, you know, our attorney general Rob Bonta is now entangled the lawsuit in trying to unlock $5,000,000,000 for the state of California, again, for child support and many child care, funding and support. So technically in my opinion I m so glad that we released that funding for children s council and for Wu Yi in advance because that s also anticipating the potential of head start cuts from the federal government and again the withhold of the $5,000,000,000 of these child care funding from the federal government right now that is being withheld. What I do worry is that where it seems to be in the next three fiscal years already setting us out setting us ourselves for failure or false hope for a lot of parents thinking that they would qualify. But when we when and putting our child care service providers in a bind where they're now, like, at the two ends. On one hand, we are expecting them to expand the child care service for also middle income and for many others because now we set the expectation. But at the same time, they are now facing a federal government that they can't quite care for the lowest, like, income, of of their families that they have to child they have to care for because of the head start and because of, you know, federal government withholding that $5,000,000,000. So help me understand that not even just on an outer ear then. Right now in this immediate term, with this expectation that I'm just saying that you have a hard job, and it's almost impossible, and I'm just pointing it out, the obvious. But because we have to talk about that fiscal reality, while it sounds great that we're providing universal child care, I love it. We are. But I am doubting that financial reality even at this moment.

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yes. I think you've said it all. I think we're being very careful. This is where we did not go fully into this overly ambitious uptake as well. Because we're also having to be cautious and watch around what's happening. And the city has always has stood by, especially our immigrant families, has always stood by lower income families. And that's why how baby prop C rolled out. It rolled out really with the highest priority of families who had the least access and being able to roll out. And that is what makes up currently the majority of our system right now of completely free financial assistance in combination with federal and state dollars. And so, it's a little bit of plain Jenga, right? If those federal dollars were to go away and and cross all my fingers and toes, that the you know, there's going to be a massive, like, outcry over that. And, of course, sort of looking also at our local leaders and legislators to champion early childhood for the lowest resource families. That's all we can do is look at the different projections, the trends, and be very mindful and watch it on a month by month basis. This isn't this is looking at the horizon, but also looking at near term. It's an and. So as we're looking at the highest and best use of the spend down of our fund balance, we're also looking at what are the emerging needs of our community and our vulnerable communities.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: And so, I think that brings to the reserve in your presentation on slide four again like going back to having the reserve of $60,000,000 for the salary support and then $15,000,000 of just rainy day. Help me understand is that what you anticipate the kind of reserve is that you' listing here and maybe I just do not understand how it' being written So is the 60,000,000 and 15,000,000 combined $75,000,000 of reserve is it per fiscal year that you are holding yourself to say I need to have this kind of level of reserve per fiscal year? Yes. Or is it like from fiscal year twenty six to '35?

[Ingrid Mezquita (Director, Department of Early Childhood)]: It's yeah, it's one time to just keep it always because we've made a commitment to the early education workforce of a salary support. So the $60,000,000 represents one year's worth of what we're currently allocated for. So if, God forbid, something horrible more horrible than what has been happening, We still have a commitment to that salary support for all the early educators that are in our who depend on the salary support.

[Supervisor Myrna Melgar]: Supervisor Malkar. Thank you. You know, this is the last I'm going to say about this, because, I mean, it's no secret that I support the expansion. And it bums me out that I think that we're not doing it differently. I think that I have made that clear to some folks. I think we have spent a lot of time thinking out goals and programs. And our goals of you know, racial equity, kindergarten readiness. I think we have not spent enough time on the fiscal. I want to not miss the opportunity that we have this big pot of money instead of like, spending it, that we can be more strategic about the sustainability of the system. I think those two things are not polar opposites. The predictability of the commitment that we've made to the workforce can happen with a different system than one we currently have. So, that's all I'm going to say. I do think that for us, you know, sort of vetting an expansion that we know sets us up for failure in a couple budget cycles, it is not what I want to be doing. I would rather think about, is giving the same subsidy to somebody at 50% of AMI and 149 of AMI the right thing to do? Is it, the alpha system in the way that we have it right now the right there's a bunch of things that have fiscal impact that I think we haven't thought through enough. And I do think that it is an opportunity to think about money, both revenues and how we spend it, while still keeping our promises to the workforce and actually expanding it. But, you know, thank you for bringing these issues. I do think that every year that we spend the interest is hard for me. It's been difficult. And we are in a deficit. I don't want to do it anymore. But it is hard to do it if we don't have a projection that is more science than art in terms of where we're putting this money in terms of our promises.

[Supervisor Stephen Sherrill]: Can I ask a couple questions about the Elfa system specifically? I've been told that there's a ceiling of about 20 centers per year that can enter the Elfa system. But I've also seen the expansion maybe is more than that in years past. About how many Elfa systems are you targeting to enter the system each year going forward? New programs to enter the Elfa system.

[Ingrid Mezquita (Director, Department of Early Childhood)]: So there's a combination. It's a combination sort of answer to that. One, we already have planned expansion as part of our capital dollars that we're funding into facilities. So, we have to also consider that. The number of new classrooms, new early care and education settings comes with enrollment and teachers. And so, with the programs that already have that capacity and are interested in participating in our city's network, they also have to meet certain criteria. And again, this is not a pass or fail. We're a public grant making entity. We have to have criteria that's part of public stewardship and accountability. And one of them is a focus on infant and toddler. And so, some programs may be willing to come into the system, but they only offer pre K. And so, that takes us into sort of another level of a conversation around whether they're interested in expanding an infant toddler, or they're willing to do sort of some modifications, All of those things. And that's why it takes a little bit of time for some programs.

[Supervisor Stephen Sherrill]: Is the focus on infant and toddler driven by what are the demographic numbers or the availability numbers that drive that focus on infant and toddlers?

[Ingrid Mezquita (Director, Department of Early Childhood)]: So the reason baby prop C made it to the ballot is because of the low availability of license capacity for infant and toddler. So of all the spaces, licensed spaces in San Francisco, when we first started, only 15% of those licensed spaces were for infant and toddler care. That is a huge delta.

[Supervisor Stephen Sherrill]: How does that relate to the number of infants and toddlers in the city? Understand that is a small percentage of the entire number of spaces. But how does that relate to the actual number

[Ingrid Mezquita (Director, Department of Early Childhood)]: of kids? Right. Currently, children under the age of three, which that would be considered up to sort of a little bit of an older toddler. We have approximately 6,500 births a year. So, you know, we're talking somewhere in the vicinity of 24,000 or so children. Less than definitely less than 25,000 under the age of three. Not all families who birth in San Francisco stay in San Francisco, too. So there's also that percentage that we have to consider. And And sorry, how can I many do

[Supervisor Stephen Sherrill]: spaces were there for those, let's call it 2,400, 24,000 kids, give or take?

[Ingrid Mezquita (Director, Department of Early Childhood)]: No. No. We're probably around, around 12,000, if licensed spaces at this point. But that's also assuming that every infant and toddler is going to go into group licensed care.

[Supervisor Stephen Sherrill]: Sure. So not every there is not a license space for every infant and toddler born in San Francisco?

[Dr. Megan Rohrer (Policy Director, Compass Family Services)]: Correct.

[Supervisor Stephen Sherrill]: Okay. When do providers have to register to be one of those kind of new providers in the ELPHA system? Is there a deadline? Is it a rolling application?

[Ingrid Mezquita (Director, Department of Early Childhood)]: We have an enrollment process on our website that's all laid out. And we usually open up that enrollment period in the springtime as programs are sort of looking at their enrollment for the following year. They're sort of making these considerations of whether they want to or not want to participate in our system. And we take those applications. And again, it's sort of a there's a lot of follow-up and a lot of conversations that we have with each and every program that applies to see whether this is a good fit for them right now or a little bit later.

[Supervisor Stephen Sherrill]: Why an annual process versus a rolling process?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Because there's also a capacity issue around the training, education. Sometimes programs need teachers need coursework. There are all of this sort of logistical things that need to be organized. And part of that is also capacity both at the college courts level, but there's also capacity around what, any modifications that need to be made, especially to early care environments. So there's a number of factors.

[Supervisor Stephen Sherrill]: Got it. Do we have a sense of how many sites you'll be entering into the system, new sites entering into the system over the next few months or next year?

[Ingrid Mezquita (Director, Department of Early Childhood)]: I believe we have currently if we go to slide currently we have close to 30 who are ready of existing licensed programs. And then we have 22 sites that are in the pipeline that are already existing providers that are expanding.

[Supervisor Stephen Sherrill]: So when you say they're ready, what's the difference between ready and part of the program?

[Ingrid Mezquita (Director, Department of Early Childhood)]: That they're already licensed. So they're licensed. They have capacity. Some of them are plug and play. Some of them are not. But that they will be coming in. These are already existing sites. And then there's new sites, brand new, that we're facilitating through funding to be able to bring online.

[Supervisor Stephen Sherrill]: But aren't there more than 29 licensed sites in the city that are not part of the Elfa system?

[Ingrid Mezquita (Director, Department of Early Childhood)]: We are already covering over 75% of infant and toddler care in the city. And to answer your question, yes, there are. And there are a variety of programs for a variety of reasons that some programs may not want to participate. So we're looking at all the programs who are interested in participating.

[Supervisor Stephen Sherrill]: So then what's difference between a licensed site? And I know there's specific differences that probably are too myopic to get into today. But what's difference between a licensed site and a site that is a certified ELSA ELPHA site?

[Ingrid Mezquita (Director, Department of Early Childhood)]: All sites for us to consider have to be licensed by community care licensing, which is a state Right.

[Supervisor Stephen Sherrill]: But like what's that jump?

[Department of Early Childhood fiscal lead (name not stated)]: Like, right,

[Supervisor Stephen Sherrill]: I got a community care license. Great. Now I want to be alpha. What does that gap look like? What does that process look like?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Maybe at the most would be between family child care and center based programs, no more than 200 sites. That's the delta.

[Supervisor Stephen Sherrill]: Oh, sorry. Let me rephrase my question. If I, Steven, run a licensed child care center and I would like to become a certified alpha, part of the alpha system, what do I have to do to get certified to be part of the alpha system?

[Regina Chavez (Early Childhood Special Educator)]: All you need to do

[Ingrid Mezquita (Director, Department of Early Childhood)]: is contact us, and then we will walk you through the process.

[Supervisor Stephen Sherrill]: Right, but there's a process. What's that process look like?

[Ingrid Mezquita (Director, Department of Early Childhood)]: That process looks like is, one, you also have to have your license in good standing.

[Supervisor Stephen Sherrill]: Right, let's assume that I've done that.

[Ingrid Mezquita (Director, Department of Early Childhood)]: You've done that. Great.

[Supervisor Stephen Sherrill]: I think there are a lot out there who've done that.

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yes. And the other is that we also have a minimum requirement of teachers having child development background. So part of this program really is to support children's healthy development. And that's ensuring that we're looking at children's cognitive, social, all their, sort of, the entire development of children. And so there is a requirement that has to have child development coursework for the people who are going to do the caregiving and education of our kids.

[Supervisor Stephen Sherrill]: Okay. So this is not like a totally simple context, Dustin, you're in. There's a decent amount of getting documents in order, putting together background or CVs or something on all the teachers. This is a process. Like, there is a

[Ingrid Mezquita (Director, Department of Early Childhood)]: It's a process because, again, this early care and education system was designed specifically to support children's development, provide family support, and ensure that the educators are also have a career and also adjust wage. So with all of those things in mind those are the parameters for how the initiative was designed developed and implemented for the last five years.

[Supervisor Stephen Sherrill]: I think Supervisors Chan and Melgar both touched on the financial sustainability of this program. And one of the questions I would have and this might be an open question is when we look at the one time only funds, there's a lot of infrastructure improvements there. Are the thresholds for accepting new licensed facilities into the Alpha system too high? Could we be spending more money on subsidies or building out a longer financial roadmap by looking at incorporating existing license facilities into the Alpha program?

[Ingrid Mezquita (Director, Department of Early Childhood)]: It's all of that. It's all of that. It's necessary. This is a this the early care and education system has very similar to public education has been severely neglected and underfunded for decades. And so we are trying to catch up to a standard of what children deserve and families deserve. And so our investments are to support early educators, the facilities in which children spend eight to ten hours a day, to ensure that they're designed specifically for child optimum child development, and that we facilitate the funding to support that.

[Supervisor Stephen Sherrill]: If a provider already has Elfa certified sites in the city and opens a new facility, will that new facility get automatically added to the system?

[Ingrid Mezquita (Director, Department of Early Childhood)]: If it's an existing provider that we've had a funding relationship with, yes.

[Supervisor Stephen Sherrill]: Yes. So like pretty simple move right in. We're giving them the benefit of the doubt. The process moves quickly?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Well, because they already know what the standards are, they've been meeting them.

[Supervisor Stephen Sherrill]: And does that happen on that annual basis? Like, if the annual application to become an ELPHA program is between February and May, and they open up in July, can they just, hey, we're turning it on?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yes. And that's because we've been part of the process from the very beginning, including site where they're going to move into, whether it's a new site. We've been extending capital funding for capital new development. Like, there's a whole entire process that leads up to that opening of that new classroom.

[Supervisor Stephen Sherrill]: Okay. I've heard some differing things there, so we might follow-up on that. Any other questions on implementation timelines, anything there? I'm curious about the one time only spending over the next ten years. It's a lot. It's $347,000,000 there. What are some of the metrics or targets you're trying to hit with that spending? Do we have a certain number of facilities, a certain number of teachers, a certain number of spots? What are the numbers that that nearly $350,000,000 is going towards?

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yes. So in order to build out an infinite a universal system to support infant and toddler care across the city, we also have to invest in the workforce. That means that we also have to recruit new people because we also have an attrition. Our workforce is aging for people who have been in the field for thirty, almost forty years, some even fifty. People are leaving the field. And so there's both accumulation of replacement, but also adding. And so that those dollars over the course of the next seven to ten years is an investment of recruiting, retaining, and also advancing the early care and education workforce. And yes, with precision planning, we're looking at anywhere from 800 to new early educators that are needed over the next ten years to, again, sort of for the people who are leaving because they're retiring, but also because we're also adding more spaces across the city.

[Supervisor Stephen Sherrill]: So then I guess I'll ask one last combo question. In terms of targets, it sounds like 800 new individual providers in the workforce, how many new children and families do we hope to add to the system over the next ten years? And how many new facilities do we hope to light up, both as ones that we're investing capital dollars into and as ones we're looking to get certified into the Alpha system?

[Ingrid Mezquita (Director, Department of Early Childhood)]: On the ideal sense, it's at least 50 new facilities that we would need. And some of this is mostly within areas that are have been underserved because of the again, sort of like the inability to be able to expand in areas like in the Western Side.

[Supervisor Stephen Sherrill]: And how many new families are we hoping at? Or children, really? Think about it as children, not families.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Because

[Ingrid Mezquita (Director, Department of Early Childhood)]: Yeah. So we're looking at least a minimum of 2,200 and again, this are infants and toddlers. So the enrollment number may not look like impressive, but it is 2,200 at minimum, more than what we currently have right now.

[Supervisor Stephen Sherrill]: That's cumulative over the next ten years.

[Ingrid Mezquita (Director, Department of Early Childhood)]: Because we're also backing in to what the resources that we have.

[Supervisor Stephen Sherrill]: Okay. Thank you. I don't have any more questions. Thank you for

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. Thank you, Supervisor Sherrill. I think this is like a very important hearing for us to have I think director Keita I think what I would look forward to and along with your CFO here that is for this upcoming budget is first I would like to understand a strategy on reserve tackling potential further federal cuts and also potentially not receiving the $5,000,000,000 for the state of California from the federal government. We'92ll love to see in your presentation for budget is two scenarios I think one scenario is of you know in the out year of 2028 when you potentially has no additional funding which is roughly anywhere between $190,000,000 or 145 to $190,000,000 what does that actually scenario funding scenarios look like for you and then and then of course the second scenario is that if we're consistent with the stream or in potentially increase of a spending scenarios of which is around two thirty to two fifty million dollars and more and so we'92ll love to learn more clearly that'92s not the fiscal well and so I would love to learn more in this coming June seeing that those kind of key information in your budget proposal. But thank you. Like, this is really important work. I think that, you know, spending on childcare is worth it. It is something that San Francisco should most definitely invest in, even should the revenue that we generate from the gross receipts from baby prop c is going to be, quote unquote, less than what is really cost us I think there is the children spending baseline there' so many so much more that as an indication why San Francisco should invest in universal child care and that it does mean that you know both for mayor lurie his administration as well as this body to start thinking about that what are actually our spending priority and if budget is the statement of our values, then we ought to actually make sure you are funded. And the work that you're doing, that we're we're not leaving you hanging to actually tackling this deficit by simply cutting, what you already are providing, but actually to help you to continue to make sure that you're fully funded. I think that's really my goal of why we are drilling down and to recognize that is the responsibility of this body, but particularly those who have expressed, you know, in in saying that we are interested and that we're supportive of your work, then we need to put our money where our mouth is. So thank you so much for your work, and I really am grateful for your for you and your team, and for the all the child care service providers and the workers for the work that they provide for our kids. So with that,

[Supervisor Stephen Sherrill]: so Thank

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: lesser you. What is your will of this hearing? Would you like it to be filed? And would before I go to public comment, would you like it for it to be filed, or would you like it for it to be continued?

[Supervisor Stephen Sherrill]: I'd love it to be filed. Thank you very much.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Understood. Let's go to public comment on this item.

[Brent Jalipa (Committee Clerk)]: Yes we' now opening public comment for this item number two. If we have any members of the public who wish to address this committee please line up along those curtains to your right my left and as soon as we have our first speaker I will start our time accordingly and we have two minutes. First speaker please.

[Connie Chan (Parent Voices parent leader, not the Supervisor)]: Good morning, supervisors. My name is Connie Chan. I'm a parent leader with pan voices in San Francisco, and I also serve on the steering committee with the family service alliance. I'm here today with my daughter. She is not in full time childcare. Right now, on the wait list for the family, friends, and neighbor care, but I've been told that the wait list is very long. I care for my daughter every day. We attend playgroups at different family resource centers across the city. These playgroups help my daughter learn, make friends, and get ready for kindergarten. They also support me as a parent and learn I learn ways to support her learning and emotions at home. I support mayor lurie's proposal to expand child care coverage to middle income families at the same time we need to expand family choice to include family friends and neighbor care if alpha is not available to meet the needs of families. I also hope the city will continue to support playgroups and other programs at family resource centers. They' very essential to families like mine. Thank you for listening.

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

[Salam Jaser (Parent Voices member)]: Thank you. My name is Salam Jaser. I'm a parent of two children, and I'm a member of Parent Voices Advocacy Group. I'm asking that the definition of high quality childcare be broadened to include family, friend, and neighborhood providers, as well as licensed but not accredited childcare centers and family childcare homes. High quality care should not be defined by accreditation or loan. Many family friendly neighbor providers and licensed non accredited programs provide safe, nurturing, and culturally responsive care that families trust and depend on, especially families working on traditional hours and families from diverse communities. These providers build strong relationship and meet children needs in ways that matter. Instead of excluding them, we should invest in them with appropriate training, resource, and support. These providers can continue to offer high quality care with respective family choice and promoting equity. Thank you for your time and opportunity.

[Brent Jalipa (Committee Clerk)]: And, thank you much for your comments. And, before we hear from our next speaker, I do want to remind the public commenters, I do invite you to fill out a comment card if the spelling of your name in the minutes is important to you. Otherwise, you have to rely on how I think your name should be spelled. But, with that, next speaker, please.

[Maria Jaundres (Parent Voices SF leader)]: Thank you. Good morning, supervisors. My name is Maria Jaundres. I am a San Francisco resident, small business owner, and a leader with Parent Voices San Francisco. Like many families, I've had balanced work, survival, and the impossible cause of childcare in this city, thanks to childcare funding. I wanna thank the mayor for expanding childcare assistance, offering free and discounted care for middle income families like mine, is a strong step towards universal child care. But eligibility does not equal access. Families are paying up to 30,000 for child care per year, hundreds still remain in the wait list. The system, it's only includes about one third of the existing providers. Family child care homes and family, friends and neighborhood cares often are the only option that families like mine have and are being excluded. If we expand eligibility without expanding supply, families will qualify on paper, but there will still no place to take the children. I urge you and the mayor prioritize families that are waiting, expand the provider network immediately, remove unnecessary barriers to trust for trusted providers, and partner with parents and providers for the implementation. San Francisco can lead, but only if the system works for families. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you for addressing this committee. Next speaker, please.

[Tracy Zeropoulos (Preschool teacher, Pacific Primary)]: Good afternoon. My name is Tracy Zeropoulos. Thank you for holding this meeting. I live in District 6, and I work in District 5. I am first and foremost a mother of a four year old, and fortunate enough to benefit from the Children's Council and Wu Yi stifen for my child, and I wouldn't it was definitely a lifeline for me to be able to do the job that that I do and to work in the realm I do. I am a preschool teacher at Pacific Primary. It's a model center in SF, and I work with very passionate people who also benefit from this stipend. And I feel like, as a preschool teacher, we are building up the internal voice of these children that they will hear forever for the rest of their lives, letting them know that their voice can be heard, that they can stand up and do things that are hard, and this is no small feat. I invite you to come to my Prairie Dog classroom and be with me with my 18, three, and four year olds and see the mental gymnastics that we do, the the reasoning and brain building art that we do in our classroom. At the same time, as a child care worker, the workforce spice stifle for my colleagues and me are in a precarious position as well. The requirements are shifting. We may have to support an increase of low income families to 50%. While our commitment to equity and community would love to see this, the stipends for the children are not meeting how much our tuition is. So Pacific Primary pays $10,000 for each child that comes in of low income. And like I said, we would love to see more low income families in our preschool. If we were at 50%, that would mean that we would pay $750,000 a year for those 50% of low income families to come in, and that drops us off of the alpha stipends and

[Brent Jalipa (Committee Clerk)]: Speaker's time has expired, but thank you so much.

[Tracy Zeropoulos (Preschool teacher, Pacific Primary)]: Thank you for hearing me.

[Regina Chavez (Early Childhood Special Educator)]: Have a good day.

[Brent Jalipa (Committee Clerk)]: Next speaker, please.

[Maria Lustori (Organizer, Parent Voices SF)]: Good morning, supervisors. Thank you for this hearing. My name is Maria Lustori. I'm the organizer of ParentVoices San Francisco. ParentVoices is a member of a national network of organizations called Child Care for Every Family Network. And they are writing to applaud what San Francisco has done. What Mayor Lori's announcement really excited a lot of people. We got a call even from Toronto, National Daily, wanting to find out about it. We know that we are afraid of certain things, what's happening in the country right now, the cut on head start, projections of revenue loss. But I think we have to think that children, their time to be little like Kelsey is short. We have to act now. We have to do what we need to do today and then plan when the like we always say, we cross the bridge when we get there. It's good to plan. And supervisor Chan, you were concerned about Head Start. Center for Law and Social Policy actually shared with us that NAACCP filed a preliminary injunction, and they won. So Head Start right now is funded again. We hope it holds. So a lot of good people are doing a lot of good things. We're hopeful, and we want to work with with you. We want to work with everyone. We echo everything I echo everything that the parents have said so far. And you will also be getting a letter the letter the official letter from Child Care for Every Family Network. San Francisco is setting a example that inspires a lot of of people in the country. New Mexico did their own policy, but was not funded by by new revenue. Ours is. New York also did. So we have to be proud of what we've done, and we hope you continue to work with with us, with the community, to really address the needs of families and expand the care that families need. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much, Maria Luztari. Next speaker.

[Kula Koenig (Chief Policy Officer, Safe & Sound)]: Good afternoon supervisors. My name is Kula Koenig and I'm the new Chief Policy Officer at Safe and Sound in District 10, five days into my role. I'm here today representing the Family Services Alliance, a collaboration of more than 40 family support organizations, including all 26 family resource centers currently funded by the Department of Early Childhood. The Family Service Alliance, in partnership with the Child Care Planning and Advisory Council, strongly supports expanding child care subsidies to families earning up to 200% of the area median income. As a mom of a almost two year old myself, I am totally understand the cost of child care. I also want to name a real disconnect that we're hearing from families and providers. Family resource centers are a trusted community based support for families with young children. And right now, they receive a combined $1,500,000 grant that is set to expire next year. So at a time when, you know, the city is holding it's all about $600,000,000 in proxy funding, there's still no identified funding for the Family Resource Center. Family Resource Center are eligible to receive this this this funding as they provide comprehensive early care and education services that support the physical, emotional, and cognitive development of children under the age of six. So, we're well in line with what is proposed in PROPSEE. And Family Resource Centers are there to support infant and toddlers' well-being. You know, they strengthen the caregiver and child relationships, they stabilize their basic need, and they reduce toxic stress. This is so important. So, we're requesting a line item breakdown of the reserve spending, and we're really hoping that we can see some specific funding for the family resource centers. It's really, really critical in this time. Thank you so much.

[Brent Jalipa (Committee Clerk)]: And thank you, Kulikane. Next speaker, please.

[Claudia Quiñones (Chief of Staff, Children’s Council of SF)]: Hello. Good morning. My name is Claudia Quinones, and I am the Chief of Staff at Children's Council of San Francisco. I'm also co chair of the UPK Workgroup under CPAC. And first, I just wanted to share my appreciation for moving forward Prop C, particularly to the mayor, Board of Supervisors, and Department of Early Childhood. I do want to recognize that I've been in the field for over sixteen years. And to see now our conversations, how they shift so drastically to having feeling hopeless, our staff feeling hopeless that they're unable to maybe support a family or put them on list. They have to wait for care to now be able to say, oh, I have an option for you. I have a voucher for you. Let's get you started has been a game changer. And I just want to recognize the great work that the department has put forward. I do want to acknowledge two things in the sense of special needs. And being able to support inclusion environments for our children is a significant also advancement, and that we're really excited to see that moving forward. And the other thing I would want to elevate is the need to continue to invest resources for our Latin A children that, as we see through our kind of readiness preparation of them being ready for kindergarten, that population, particularly, and children with special needs are having the lowest scores. So, making sure that we still continue to focalize investments into this group of our community, to make sure that they have what they need to be able to move forward successfully into kindergarten. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you, Connie Chan. Next speaker.

[Mark Ryle (CEO, Wu Yee Children’s Services)]: Good morning, Chair and Supervisors. My name is Mark Ryle. I'm the CEO of WUE Children's Services. WUE Children's Services is the largest provider of early childhood education in the city, serving more kids than anyone except the school district. I tell you this not to boast, although my colleagues may differ. I tell you because we are knee deep in this work every day, and we have from the beginning, from the EEC's beginning and certainly from the mayor's initiative, been at the table talking through this. It is critically important to your comments, Chair Chan, that we figure this out long term. And every conversation we've had has been about efficiency, about effectiveness, trying to do more with less and sometimes do more with more. And we can't sacrifice quality in an expeditious process. It's too important. If anything, we learn from friends, family, and neighbors programs and family child care centers as they learn from us. So I support everything you're thinking about in the detail you are, and I'm proud of the bold measure taken. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much. Next speaker.

[Sarah Kilday (Early Care Educators of San Francisco)]: Good afternoon, supervisors. Thank you for spending so much time on this important topic. My name is Sarah Kilday. I work with early care educators of San Francisco, talking with early care educators of San Francisco throughout the city. And we keep a pulse on what their experiences are as funds have rolled out to them. One thing that we're hearing lately is post pandemic, there are reports of forty percent to sixty percent of classrooms having children with identified needs or waiting to be identified for specialized services. I want to take you with your important questions about sustainability of these funds to a more granular level of the experience of educators in the classroom supporting children and families. As an early educator in the classroom myself in District 3 working on a master's degree years ago in special education focused on early care and education, I had a child who had a stroke at one year of age. He lost mobility in his left side. The parents were advised to remove him from our program, and they were distraught. We came together as a group of educators and said the best thing for him was to stay where he was, with familiar friends, with familiar educators who could care for him. His parents cried. We worked as specialists with specialists and with me working on my master's to integrate his services into his regular routine and our classroom, and we were able to keep him in our program with success. When I got my master's, I was told I'd hit the wage ceiling, so I left early care and education. These are the investments we lose if we don't ensure the right resources are at the, site level. And I don't just mean the wage increases. I mean the staffing that can come together as teams to figure out individualized services for every child. Let's be mindful as we allocate resources that sufficient funds go to the workplace and working conditions that allow us to support quality early care and education. Thank you for your time.

[Brent Jalipa (Committee Clerk)]: And thank you for your comments. Next speaker.

[Regina Chavez (Early Childhood Special Educator)]: Hello. I'm Regina Chavez. I'm an early childhood special educator. I've been in this field for over twenty three years, and I'm grateful for every moment. And as the previous speakers have mentioned, special education in early childhood is underfunded. Children okay, this is such a strong topic for me. So right now, unless you have a 33% delay, you do not get services. So if you have a 15% delay or a 20% delay, you don't get services. So I think that it's really imperative as we're thinking about these funds and we're thinking about children with special needs that every classroom, every site has an early childhood special educator, a speech therapist, and an occupational therapist. So we can work on a transdisciplinary approach to support all children. It is imperative that we support all children. It is not okay that kids who have a 30% delay aren't getting services. You know, every family and every child deserves access to a free and appropriate education, and it's why I came into this field. And my heart is broken after twenty three years of seeing kiddos and families underserved. And so we have a really big opportunity, and I implore you to please support our families and children.

[Brent Jalipa (Committee Clerk)]: Thank you, Regina Chavez. Next speaker.

[Dr. Megan Rohrer (Policy Director, Compass Family Services)]: Good to see you all again so soon. Doctor. Megan Rohr, Policy Director at Compass Family Services. Down one block at 37 Grove, we are currently helping anyone in who is in need of childcare to get connected. So, if you came to this hearing because you were like, I need childcare, call Compass or walk a block down. We'll help you out. But we also have a childcare center up at 144 Leavenworth, where we actually pay for our own special education staff and speech therapists. Because the assessments that people need to transition from zero to five before they go to SFUSD schooling, those are contract positions. And they go to the areas of town they think are the safest. And so let's guess how many want to go to the Tenderloin to try to provide these services. So, we finance that on our own, and still, it's hard to keep special education staff employed when they hear from a five year old about what the dead body on the sidewalk in front of our building looked like, that they saw on a Saturday, and they're trying to actually work through their assessment. We need support for special education for these students.

[Patrick Leung (CFO, Sheriff’s Office)]: It can

[Dr. Megan Rohrer (Policy Director, Compass Family Services)]: take up to a year and a half to transition between the special education provided in ECEs to what you will get in the San Francisco Unified School District. It's a gap we can cover with funding and support. It's going to take some safety support, maybe from DEC, or maybe from specialized SFPD three year exempt funding, but it's something we can accomplish. Thank you.

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

[Mei Guo (District 11 resident)]: Good afternoon, supervisors. My name is Mei Guo, and I live and work in District 11 Of San Francisco. We thank the mayor and the department for their work to expand subsidy eligibility to 200% AMI and offer full subsidies for families up to 150% AMI. Our goal must remain to grow the system in a way that is equitable, sustainable, and responsive to family needs while keeping those with the greatest barriers at the center. As DEC noticed in its budget priorities last week, expansion cannot truly work without investment in other areas. Babies funding is still needed for more support for family child care providers, especially as UPK continues its rollout. Many family child care providers have seen enrollments drop since its inception. Thank you very much for your time.

[Brent Jalipa (Committee Clerk)]: And thank you for addressing this committee. Next speaker, please.

[Liz Winograd (Advocate)]: Good afternoon, supervisors. My name is Liz Winograd. I just want to thank Supervisor Sherrill for your commitment to hosting this hearing. And also thank you to Supervisor Sauter and Melgar for signing on and sponsoring. I appreciate you creating spaces for community voices. I also appreciate the time, attention, and openness you've brought to today's discussion. Your willingness to listen and engage thoughtfully with the issues before us is essential. I'm grateful for the opportunity to contribute.

[Regina Chavez (Early Childhood Special Educator)]: Thank you.

[Brent Jalipa (Committee Clerk)]: Thank you much Liz. Seeing no other speakers in line, Madam Chair, that completes our queue.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. Seeing no more public comments public comment is now closed. Upon the request of supervisor Cheryl colleagues I will make the motion to file this hearing. This hearing has been heard and now filed. A roll call, please.

[Brent Jalipa (Committee Clerk)]: And on that motion that this hearing be heard and filed. Vice Chair Dorsey. Aye. Dorsey, aye. Member Soder?

[Supervisor Danny Sauter (vote response override)]: Aye. Soder, aye. Chair Chan? Aye. Chan, aye.

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

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: The motion passes. Thank you. And with that, I know that supervisor Jackie Fielder is going to join us for item number three. I'm pretty sure she's on her way. So let's let's call item number three.

[Brent Jalipa (Committee Clerk)]: Item number three is an ordinance amending the health and business and tax regulations codes to revise the definition of a mobile food facility permit and add definitions for compact mobile food operations mobile support unit and permitted auxiliary conveyance permits to reflect recent amendments to the California retail food code and revise existing definitions of various other terms to reflect state law definitions in that code, establish annual permit and plan check fees for auxiliary conveyance, compact mobile food operation and mobile support unit permits and remove annual food facility surcharge fees amending the public works code to include a definition for compact mobile food operations and to expand the department of public works street vending authority to include regulation of compact mobile food operations and require that department to consult with the department of public health and fire department when issuing rules and regulations to regulate street vendors.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you and supervisor jackie filer is joining us on this legislation and supervisor filer.

[Supervisor Jackie Fielder]: Thank you so much chair Chan I want to thank the department of public health for moving this forward and hearing me out on some concerns that have been coming from the community. I do have questions for the department. Chair, I'm not sure how you want me to proceed, if you want my questions after their presentation, or

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Yeah. So then, if that's the case, then let's go for the presentation for our department of public health and the or and the floor is yours.

[Phillips Osa (Senior Environmental Health Inspector, DPH)]: Okay. All right. Good morning, Chair Chan, Vice Chair Dorsey, and Supervisor Sauter, and as well Supervisor Fielder. My name is Phillips Osa, and I'm a senior environmental health inspector with the Department of Public Health. Today, I am here to present an ordinance that would amend the Health Code, Business and Tax Regulations Code, and Public Works Code to establish compact mobile food operation definitions and fees. I will be presenting today alongside Jennifer Callower, acting director of the Department of Public Health's Environmental Health Branch. Next slide please. The compact mobile food operations background for brief background the California legislature amended the California retail food code to formally recognize compact mobile food operations as a distinct category of food facility through Senate Bill nine seventy two to enhance the safety of sidewalk food vending. The Senate Bill nine seventy two went into effect 01/01/2023. A and what a compact mobile food operation or c m f o is it's a type of mobile food facility at a smaller scale and it operates from an individual a push cart a pedal driven cart or a wagon etcetera. Next slide please. An overview of the compact mobile food operations is this local ordinance file 02/50967 brings San Francisco in alignment with the state level code changes established in senate bill nine seventy two. Today's ordinance amends article eight of the health code which defines various types of food preparation and service establishments. The ordinance is designed to support public health economic opportunity and regulatory clarity for vendors and enforcement agencies alike. Next slide please. Alright. The CMFO is defined. To reiterate, these definitions on the slide bring our local codes into alignment with the state definitions. There are three c m f o categories defined in the ordinance. The first c m f o low risk is approved for the sale of more than 25 square feet of prepackaged non potentially hazardous foods and or whole uncut produce. An example of this would be a cart serving chips, bottled drinks, and whole uncut fruit. The second category is CMFO moderate risk and it is approved for prepackaged potentially hazardous foods and or limited food preparation that does not include preparing raw meat, raw poultry, or raw fish. And, an example of these of this would be a coffee cart, a fruit cart or a tamale cart. And, third is the CMFO high risk and it is approved for limited food preparation including the preparation of raw meat, raw poultry, or raw fish. And, an example closely resembling this would be the Halal cart which is permitted in San Francisco. Francisco. Alright, next slide please. And, other ordinance amendments. Today's ordinance includes a few definition updates in alignment with the state code amendments which includes mobile support units which provide supplies to CMFOs and other mobile food facilities. It also includes permitted auxiliary conveyances which are required hand washing and or ware washing sinks for operating a CMFO at a site specific location. The ordinance also includes language that clarifies the joint authority of DPH and DPW to enforce and permit compact mobile food operations. Alright, next one. Alright, permitting. Compact mobile food operations require permits from DPH and DPW and also SF Fire if the CMFO involves an open flame. To summarize the process, an applicant will fill out the CMFO application. There will be a structural inspection which may include SF fire if applicable. And at the end of that point, the DPH permit will be issued to the CMFO. Next slide. And here are the fees. The slide shows the fees established in the ordinance for the CMFO categories. Today, you have all received amendments which Jennifer Califor Caliwort will speak about on the next slide. These amendments will waive all city department licenses and permit fees for CMFOs. And now I will pass the presentation to Jennifer Callowort, acting director of DPH's environmental health branch.

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

[Phillips Osa (Senior Environmental Health Inspector, DPH)]: Thank you.

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Thank you, Senior Inspector Ossai. Hi, I'm Jen Calloward, I'm the acting director of the environmental health branch. Good morning committee members, thanks for having us. Today you can go to the next slide please. Today you've received the draft amendments to be read into the record these amendments are summarized on the slides. The amendments expand the definition of stadium concessions to include food facilities and stadiums with a capacity of 5,000 or more this was included in the original legislation but there's an amendment to the legislative title only the amendment revised the mobile food facility category one and two which is our food trucks to low risk and high risk and revised the respective fees for both categories to $778 And the amendment also waives, as was discussed, all city department license and permit fees to the compact mobile food operations. We are requesting several amendments to the legislation, as just discussed. Clerk, would you like me to read the amendment into the record?

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Are you finished with your presentation in its entirety before you

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Yes, other than my conclusion slide thanking everyone.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Understood. Because I believe that supervisor Fielder also have amendments, and why don't we hold off the amendments on reading to the records and then allowing supervisor Fielder commenting on the legislation itself? And I think that she also have amendments, no. But because you're already coming to the agreement for the amendments. Would it be Okay then we'll see the floor to Supervisor Fielder, and then we'll have you to read out loud of those

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: amendments? Absolutely. And then I just want to mention that we have representatives, the Department of Public Works and OEWD here, in case there's specific questions from the committee or Supervisor Fielder around their subject.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you so much. Yes. Supervisor Fielder.

[Supervisor Jackie Fielder]: Thank you, Chair. Thank you so much, Director Cowart. And I just want to thank all the departments for coming together, well as the city attorney's office, to work on those amendments to ensure that any permits and fees assessed on CMFOs could be waived for this. I just want to give the departments an opportunity to shed light on how we got to this point. So I'll have a series of questions, and I'm so glad Department of Public Works is here as well as OEWD to help answer these questions. But just just it's all for clarity, so think in advance. But can you shed light about why we are putting forward this legislation now instead of two years ago when the state law passed?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Yeah. Thank you for that question. As mentioned by Supervisor Fielder, the legislation went into effect statewide in 2023. With the process of getting a legislation together, that does take time. There was also considerations of multiple permits needed for compact mobiles, including a fire permit as well as permit from the Department of Public Works based on location. So there's been several interactions with those departments, the community, to determine the best step forward. There's also been several communication lines between the SF Planning Department and the Office of Small Business in terms of having these permits be applicable to vacant to vibrant locations which are not on public right away they're on private property and so based on all those conversations and putting together the legislation to meet, including the fee waivers, we are here today, two years later.

[Supervisor Jackie Fielder]: Thank you. Yep. And my other question is, are permits required under the state law?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Permits are required for food sales under the state law and under the California Retail Food Code if they're served to the public and retailed or whether there's a fee or not.

[Supervisor Jackie Fielder]: Okay. Thank you. And as far as who is required to use a commissary, what kinds of foods or risk levels are required to use a commissary? Who which kind of stakeholders in the CMFO world are required to use a commissary?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: All food establishments that serve food and beverage in the state of California are required to have a commissary kitchen or a permitted kitchen. So that can be a restaurant, a commissary, like we think about catering, as well as any permitted food storage to store their food, prepare their food, and also store their equipment, and to be able to clean and sanitize appropriately to prevent foodborne illness.

[Supervisor Jackie Fielder]: Thank you. And then with respect to the equipment requirements, depending on the risk level, there's requirements for a sink or, you know, when it comes to open flames, there's just a lot of specifications. Are those requirements under local law or state law?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Those requirements are under state law.

[Supervisor Jackie Fielder]: Okay. And then just a question about enforcement from the environmental sector of DPH. Will DPH be stepping up enforcement after this ordinance is passed, or kind of the same amount as we've seen?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: We're required to enforce the retail food code. And so we have a task force with DPW, fire, police, and environmental health under DPH. Though that there's no plan to not disassemble that task force. And so we will continue to enforce.

[Supervisor Jackie Fielder]: Thank you. And when it comes to enforcement, are these how does DPH decide to or this task force decide to deploy enforcement? And to where in the city?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: So we have a complaint base or a complaint based system, right? So we receive three eleven complaints from a variety of stakeholders, including our brick and mortar permittees who serve food and beverage. So we do prioritize based on complaint base.

[Supervisor Jackie Fielder]: Okay. That's helpful information. Those are all my questions for DPH. I wanted to invite OEWD thank you so much, director Cowart.

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Thank you.

[Supervisor Jackie Fielder]: I just wanted to invite OEWD. Mister Rafael Moreno from office of economic and workforce development is here. Can you shed light on kind of how the city because, you know, you have been in this position and kind of, you know, had a a front row seat to how this has all unfolded over the past several years. I'm wondering if you can shed light on kind of how we got to this point and what the city, from OEWD's perspective, is doing to ensure that this is not unjustly keeping food vendors out of our economy, but truly being a pathway, just invite you to share more

[Rafael Moreno (Office of Economic & Workforce Development)]: on that. Definitely. Thank you, again. Rafael Moreno I'm sorry with OWD. So this effort, just to take a step back a little bit it' really coordinating the different departments that have overseen these permitting for food vending for street vending etcetera so it' dpws dph it' our departments like fire and supporting of in our support department the police department and so first it' very complex right it' not as simple as we may think it is and so according to departments that come up with actually true programming and permits that really support vending and invite into the economy and and ensuring that continues to be part of our vibrancy in neighborhoods like the mission right where we it's there right it exists and so we' doing that in partnership with the department to coordinate in alignment with the mayor' priorities of really streamlining our permitting process and ensuring that small businesses with street vendors are are part of this process and are being able to get very clear direction on where to go and how to do things and so we are supporting this and coordinating the departments around this effort as well working in partnership with community members community groups like the mission street vendors association to really get insight and input on how we can produce these permits and produce these programs in the long term.

[Supervisor Jackie Fielder]: Thank you. And then you know there are so many departments involved because it has to do with the street and the right of way which involves DPW, DPH because of the food and the health codes, fire because of kind of egress and accessibility issues. How can we ensure that I don't know. What is kind of feasible for now, especially because there is a lot of complaints from constituents, from other vendors, from brick and mortar about, in general, legal vending and vending from people that have no intention of becoming a part of the system or regulated. Just how is the city and kind of the departments thinking about building on the modicum of success that we've seen with the pilot in the mission when it comes to merchandise retailing and how do we rope in food vendors into those considerations and that system especially because space is limited.

[Rafael Moreno (Office of Economic & Workforce Development)]: No definitely it is it is a complex process right I think you know we refer to the Mission Street vendor pilot program we have on Mission Street right which we really got to test what works and what doesn't work right how are we measuring space how are we looking at the relationship of having a good neighbor policy with among vendors with brick and mortar businesses and really balancing out those two right as well ensuring that there's enforcement from our colleagues at DPW and so really using that as a model to how that we can look in other commercial quarters and commercial districts throughout the city of what works and what doesn' work and again you' all you' it' a very neighborhood specific approach that we' doing in the mission does that is that necessary going work in the neighborhood such as like Chinatown might not right we have to look we have to consider sidewalk widths we have to consider all these different factors and so that is something we as collective departments are looking at for these next steps and how we really deploy a more robust stronger program right that really is bringing in folks into compliance as well as ensuring brick and mortar businesses have room to you know be able to sell there' room and path and travel for folks visiting the neighborhood and being in the neighborhood, as well as ensuring that there's a level of enforcement happening from our colleagues at DPW and DPH for folks who don't want to be in compliance.

[Supervisor Jackie Fielder]: Thank you. And then just lastly, my understanding is that and I just want for the record that food vendors can come to the Office of Small Business to get help with their permits and any requirements around plan checks and the structure of the carts and kind of they can basically have like a one stop shop at Office of Small Business with the the language that they're most comfortable speaking

[Rafael Moreno (Office of Economic & Workforce Development)]: correct yeah we welcome any vendors to come come to the office of small business we're here located at City Hall on the 1st Floor able to talk to our business coaches down there to really figure out their business model their business plan which would help direct them to the next step of going to the permit center with dph to do the plan check of the cards and what cards they want to do and even if they don't before they want to get to that step of maybe stopping osb you know our office you know our divisions Economic Development Division, OEWD are happy to meet with folks in a group setting, one on ones, to really just kind of think that through like we have been so we can really coordinate and refer you into the right direction.

[Supervisor Jackie Fielder]: Thank you. And then you know those are my questions at this point thank

[Rafael Moreno (Office of Economic & Workforce Development)]: you supervisor

[Supervisor Jackie Fielder]: thank you

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: thank you supervisor I think just offhand quick question I thought that the state law does allow home kitchen meaning I'm just thinking I'm just throwing out by the way I really appreciate the whole the whole mobile food facility category and being able to codifying it, it's great. Just reading through this, too, to understand the difference between mobile food facility versus, I guess, you say here, is this the compact? Is that what it is? The compact food facility. I love how you clearly define motorized vehicles versus push cars and different kind of risk. I really appreciate the work. Clearly everybody has put in the work but just kind of I'm just looking through the whole preparation facilities that by definition it doesn't seem that it includes home kitchen which I thought that state law allows

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: So the state law enacted the microenterprise home kitchen in 2019. It

[Patrick Leung (CFO, Sheriff’s Office)]: was

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: put into law to give local county and city jurisdictions the tool or opportunity to enact a program versus the compact mobile operation amendments is requiring the city and local jurisdictions to create a permit system. So it's allowing saying that if city wants to enact a program, that there is that opportunity, and here's the code that would go along with that. So it is available. When it was enacted, the city collectively it would impact several different departments. It's not just a Department of Public Health permit.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Like DBI then?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: DBI, fire, planning. You think about the stakeholders for the property owners. So there was a lot of different key stakeholders. And the decision was made by the city to not opt in at that time.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: I am not drilling into this today. I know there's a lot of conversations and a lot of work already. I want to say this, and I'm gonna I I think I kinda know what supervisor Fielder was kinda going going with, and I'm I'm gonna put it out there. I'm not trying to derail the conversation that has already taken place. But I really want to strongly encourage Department of Public Health to actually recognize that the micro kitchen and it's happening. And I I'm just kinda again, because you already went through the step about the compact food facility with push car and everything. The next steps I can imagine, like, which we saw, like, some example is that you have entrepreneurs that is be it, creating a new jam or a kimchi, that they then will, you know, bike around in a farmer's market that they wanna participate. And and I think those are worthwhile opportunity, for many people who do want to. It's almost like a start up. It's like a food start up that I do want to encourage us to think about in that direction and allowing young people I would say younger entrepreneurs tend to have those opportunity and experimenting and be ice cream. I can just think of, like, a million things. Maybe that's because my side alternative dream career would be like, oh, I'll be riding around bike if I really can bike, you know, and be, like, you know, selling kimchi or jam or something. And and just be, a start up and joining, like, Farmers Market and just having that opportunity, I think, it's it's interesting. And also just a just a thought about City College of San Francisco having a great culinary program and just kind of see how that can really come together. I I just and I just wanna encourage after this, maybe, like, there's gonna be a whole another level of just start thinking the potential of that. It's really worthwhile for this economy, both the micro economy, local economy, to be able to encourage that to flourish. Just seeing, I think, just one more opportunity for workers to be able to launch their own career and business. So just wanted to encourage that thought. Supervisor Soudar.

[Supervisor Danny Sauter]: Thank you, Chair. How does this particular category compare to temporary food facilities?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: So the temporary food facilities is also in the California Retail Food Code. That is connected to a community event. The compact mobile operation does not need to be connected to a community event.

[Supervisor Danny Sauter]: Okay. I think that's an important distinction because temporary food facilities are more common at farmers markets. And then what we're talking about here is a little

[Brent Jalipa (Committee Clerk)]: bit

[Supervisor Danny Sauter]: more kind of ad hoc on the streets and sidewalks. Is that accurate?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Correct. And the annual temporary permit has a limitation on the number of days you can operate out of a year. It's roughly a couple days a week. And so the compact mobile would allow unlimited and then not being part of an event. The cottage food permit is also a home kitchen permit where you we have in place in San Francisco, and that is where people can make cottage foods. And those are also sold at the farmers markets and at temp events. And then all of the retail food vendors that have prepackaged potentially hazardous foods at farmers markets also have a permit. We've just recently enacted an annual permit, which allows unlimited participation in any farmers market in San Francisco for one set fee, which allows a huge expanse for these small businesses and entrepreneurs to participate in marketing And their

[Supervisor Stephen Sherrill]: thank

[Supervisor Danny Sauter]: you for that work. Having run a farmers market before, the quarterly process was very painful and time intensive and costly. So moving it to an annual period has made a big difference, I know. So I would just encourage you to keep looking for ways like that to make it easier on all the organizers. Thanks.

[Salam Jaser (Parent Voices member)]: Thank you.

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

[Supervisor Jackie Fielder]: Yes, thank you so much. Building on Unchaired Trans questions around MECO, just aside from the interdepartmental work that it would take involving so many departments, From the DPH end of things, what would it take to run a MECO program?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: It's a great question. There would have to be a budget analysis conducted on the cost for the department. It's a very large program, so we would need to have conversations about staffing needs and do a full analysis of that program.

[Supervisor Jackie Fielder]: Okay.

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Yeah, before I could comment any further.

[Supervisor Jackie Fielder]: Thank you. Just, you know, I concur with Chair Chan's remarks about Mako and how you know, in the spirit of making it easier to run a small business, open a small business in San Francisco, this seems like a synergistic opportunity, not just for the food vendors, but also for the city. You know, I've talked to the mayor several times over the past year about what we can do to activate the plazas, to make Mission Street more vibrant, welcoming. And aside from the regular enforcement of laws, it also has to be a welcoming place. And in the Mission, food vendors are a part of that. They have to be and just are completely a part of the social and economic fabric of street conditions that I think it is actually helpful for us as a city and helpful to our constituents, helpful and promote it's promotional as well to have tourists be able to come to places like the mission, feel a sense of of vibrancy and and activity that is not the kind that we've been seeing over the past handful of years since COVID. And so I'm looking forward to looking more into the MECO program. I'm looking forward to more conversations with the mayor's office about the MECO program because I think it's really just a win win for everyone. And so I hope to also have the support of my colleagues on that. Thank you so much, Director, for answering my questions. Thank you to Chair Chan for having me, thanks to the committee.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. Thank you. And with that, could you please now go ahead and read the amendment proposed that, and then we'll go to public comments on this item.

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Thank you. All right. So the amendments include on page one, line four, we would like to delete the word add. And page one line six we would like to delete the word add as well on page one line seven through nine we would like to add expand the definition of stadium concession to include food facilities and stadiums with a seating capacity of 5,000 or more. On page one, lines eleven and twelve, we are deleting remove annual food facility surcharge fees and adding waive license and permit fees for compact mobile food operations. On page one, line 14, we are adding the word to. On page one, line 15, we would like to add the word the before fire department. On page seven, line 11, we are deleting the number one and adding low risk. On page seven, line 16, we are deleting the number two and adding high risk. On page 13, line 18, we are deleting the number one and adding low risk. We are also deleting the number 893 and replacing it with 778. On page 13, line 19, we are deleting the number two and adding high risk. We are also deleting the number eight ninety 3 and replacing it with seven seventy eight. On page 15, line 15, we are deleting the number one and adding low risk. And on line 16, we are deleting the number two and adding high risk. On page 17 lines five through 13 we are adding D all permit fees and license fees required on the municipal code for the operation of a compact mobile food operation shall be CMFO shall be waived by the department otherwise authorized to impose such fees. For purposes of this section D, permit fees means all permit application or other fees payable to the city under application for or issuance of any permit relating to the operation of a CMFO. And license fees means fees payable to the city relating to the operation of a CMFO, including but not limited to fees imposed under Section 249.23B of the health code. Notwithstanding the foregoing sentence, the waiver in this subsection d does not apply to the business registration fee imposed under Article 12 of the Business and Tax Regulations Code. On page 18, line 12, we are adding except where the municipal code provides for a waiver. On page 20, lines 11 through 18, we would like to add this ordinance as introduced on 09/30/2025, proposed to amend the business and tax regulations code by eliminating a permit fee for a catering facility and rescinding section 249.21 which estimated a food facility charge which established excuse me a food facility charge but those changes to the business and tax code had already been effectuated through the enactment of ordinance number two seventy nine dash 24 which was approved on 01/18/2025 and the ordinance number 140 dash 25 which is approved 08/31/2025. Therefore, the inclusion of these proposed amendments was in error. The committee amendments introduced on 02/04/2026 omit these proposed changes from the ordinance. On page 21, line one, we are adding section six. We respectfully request that the committee accept these amendments.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. And deputy city attorney, Brett Resi. Sounds like these amendments

[Brett Russi (Deputy City Attorney)]: Good afternoon, supervisors. Deputy city attorney, Brett Russi. These amendments are substantive and will require a second committee hearing. So if you wish to adopt them today, should continue at this a future meeting.

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

[Brent Jalipa (Committee Clerk)]: Yes we''re now opening public comment for this item number three if we have any members of the public who wish to address this committee just as a note interpretive services were requested and unfortunately, with the length of item number two, our interpreter did have to leave. But, in partnership with OSEA, any public comment given in language will be provided to me in I'd say, will be interpreted as a hard file and will be provided to me for inclusion into the file. So with that, first speaker please.

[Josh Jacobo (Mission vendors advocate/organizer)]: Real quick before we start that. As a note, we do have somebody that could translate for the vendors if that'll be allowed within the two minutes.

[Brent Jalipa (Committee Clerk)]: Any public comment given in language, we will also afford that same time interpretation.

[Josh Jacobo (Mission vendors advocate/organizer)]: Gotcha. So, could be here and then here, correct? Yes. Okay. Thank you. So good afternoon supervisors my name is Josh Jacobo and I'm an organizer and a director with no extra cows or NC a message it mission district agency we support street vendors through policy analysis and advocacy Behind me stand 20 street 20 voices. Street vending isn't just commerce, its culture, history, and for many families it's the lowest barrier to economic mobility. We wanna be very clear today. We're pro legislation. We believe the intent of this policy and want it and want it to succeed. Our ask is simply that the full spirit of the legislation be implemented including MECO. So at this policy works for everyone essentially the vendors it impacts at its core. As this legislation currently stands vendors face a crushing financial hurdle. A population earning an average of about 2,000 a month in monthly revenue would be expected to absorb an enormous cost essentially over night. That reality puts families at risk of being pushed out rather than brought into compliance essentially a de facto ban. Our ask is simple fairness and certainty. Fairness means giving families a real chance to adapt when rules change not asking them to absorb the impact all at once. Certainty means knowing that the protections are fully in place before enforcement begins. That's why completing WICO matters. With the full policy package in place this legislation can do what it's intended to do. Create stability, support compliance, and allow vendors to succeed. Together we can ensure this policy becomes a path forward not a barrier for vendors and their families and our shared community. Lastly thank you to our partners in supervisor fielder's office Rafael Moreno and his colleagues as well. You.

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

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Good afternoon.

[Community interpreter (Spanish–English)]: Hi everyone. My name is Karina. This is Andreas.

[Brent Jalipa (Committee Clerk)]: Actually I'm pausing your time. To the person providing interpretive services, there is another microphone. Okay. Please continue.

[Dina Brazil (Right-of-Way Manager, SFPUC)]: So, Andrea.

[Community interpreter (Spanish–English)]: Good afternoon my name is Andrea and I'm the leader of the committee of vendors in the Mission District Of San Francisco. I wanna be clear what this ordinance means to vendors like me. The legislation without our without support is a economic destruction to us. Oh we are we are being asked to come to comply with these ordinance ordinances and we do however. We keep getting we keep trying to get support. However, the way that it's being lengthened, it's not helping us at all.

[Maria Jaundres (Parent Voices SF leader)]: Without

[Community interpreter (Spanish–English)]: the program, we are forced to use different kitchens. Something that is very expensive that costs around $2,000 without the support of the city.

[Liz Winograd (Advocate)]: We

[Community interpreter (Spanish–English)]: are asked to buy cards between 8,000 to $16,000. And the majority of us do not have that kind of money. When this program passes, the application of the law is not going to wait. We have rent. We have different costs. The vendors will be displaced without any support. If the city wants vendors to be able to have a livelihood. You should consider advancing the program MICO. Something that creates a safe space for us and support to be able to win.

[Maria Jaundres (Parent Voices SF leader)]: Thank you.

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

[Community interpreter (Spanish–English)]: Good afternoon. Our community has gotten around 1,000 signatures in our community that understands what we're going through. We are trying to get support. However, that is not happening. Our ask is that MIGO passes at the same time that the CMFO law passes. Because that would mean that our families will be able to stay afloat. Because we are low income, we do not have the resources to be able to add the expense of a car to our daily life. Since Saturday, we have not been able to vent in our usual spots, which means this week, we do not have the income to feed our families. Thank you for listening.

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

[Community interpreter (Spanish–English)]: Good morning. This is Edgard. I am also a leader and part of the committee here in the vision Mission Vendors District. I have been a vendor for many, many years. I know what it means to be able to vent. And I know what it means to not. In this moment, the city is asking us be legalized. Without giving us the floor to stand up. That is not the way.

[Phillips Osa (Senior Environmental Health Inspector, DPH)]: It's a

[Community interpreter (Spanish–English)]: plan that is not certain. We keep hearing that Mico will come later. That the money will maybe come later. That the space will go later. But later does not protect us. When this ordinance is in order. Without MCO, we face a decline of thousands of dollars and new costs every year. Without support with the cards We face costs that we do not expect. That we cannot pay. And without space, we cannot comply with what we have. And where to go? If these supports come at the same time regulation will disappear immediately. What we're certain is right now. The only the only form to the only form to sorry, excuse me. The only form the only way to avoid displacement is right now. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much for your comments.

[Community interpreter (Spanish–English)]: I am a representative of more than 60 members in the mission.

[Maria Jaundres (Parent Voices SF leader)]: We

[Community interpreter (Spanish–English)]: come here to seek support to be able to continue vending in the mission now that many vendors, we have stopped vending daily And in this moment, we are suspended from vending. Super Bowl. Because of the Super Bowl. And instead of letting us be able to make a little bit of money. The city is causing us to be deprived of these extra this extra income, and they are not supporting us.

[Maria Jaundres (Parent Voices SF leader)]: Because

[Community interpreter (Spanish–English)]: we are part of the Hispanic community

[Maria Jaundres (Parent Voices SF leader)]: Super

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Bowl.

[Community interpreter (Spanish–English)]: We are important to the people who come to the Super Bowl

[Maria Jaundres (Parent Voices SF leader)]: that

[Community interpreter (Spanish–English)]: come to want to get to know the culture that San Francisco has. That's everything, thank you.

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

[Community interpreter (Spanish–English)]: I am also a part of the Mission Vendors Association, and I am here to let you everyone know that because this is depriving us from being able to vent, it's affecting our livelihoods and our families. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much for your comments. Next speaker.

[Community interpreter (Spanish–English)]: This policy could be seen as something that is bright and new in helping us. However, without evaluation, it is not it's not what it makes it seem. Thank you so much.

[Brent Jalipa (Committee Clerk)]: And thank you. Next speaker.

[Community interpreter (Spanish–English)]: I'm also part of the committee of food vendors in the Mission District Of San Francisco. The offenders should not be able to lose their livelihood because of certain laws that are passing. The policy should not be able to decide who can survive and who cannot. Super Bowl. We are here to ask supervisors, please put your hand in our hearts and see how it is affecting us and our family because of the Super Bowl. We don't ask. We do not ask for handouts. We are just asking for you guys to let us work. This is the only income we have to bring food to our table, to our children, and to our families. Thank you. And we ask for you guys to consider putting yourself in our shoes and in our hearts. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you, Cecilia Contreras. Next speaker.

[Community interpreter (Spanish–English)]: We are here for us to support everything that can give us get us out of the risk of being displaced. We are we are very cautious of cross contamination and antibacterial ways that go into our food. We are very, very cautious. That is the one thing that we take pride in. And, we just want your guys' support, for you guys to listen to us, for you guys to actually put these things in place. And I appreciate you guys, I would appreciate your support, I am disabled for life. I can only work up to four hours because of my kidney transplant. Thank you, guys. I hope that you guys are willing to support us because without your support, we don't I don't have the support to bring food every day to my family. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much for your comments. Next speaker.

[Community interpreter (Spanish–English)]: I'm also part of the Mission Food Vendors Association. We ask for a just a just policy that will support us as vendors in the community. We ask you guys to let us work. We work legally. We pay our taxes. And if we don't work, we can't afford to support our families. Thank you. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you, Desenia. Next speaker.

[Community interpreter (Spanish–English)]: I am a single mother, and I have a little girl and a little boy, and I am here to ask for your support. I am here fighting because I don't have any other support, and without work, I cannot take care of my little children. Thank you.

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

[Community interpreter (Spanish–English)]: We are asking for permission to be able to sell, for you guys to give us the opportunity to sell. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much. Next speaker.

[Community interpreter (Spanish–English)]: We keep hearing that the city is working towards That the that you guys are working towards a solution. However, we cannot work without. Without your support, and this law needs to move forward with everything else put in place. They need to be put in place at the same time so that we don't have the risk of being displaced. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much for your comments. Next speaker.

[Leila Ovando (Director of Food & Equity Access, Nuestra Casa)]: Good afternoon, supervisors. My name is Leila Ovando. I am the director of food and equity access for Nuestra Costa. I was also the ones who provided the food serve safe food handlers cards for our food vendors. So they are certified through us, or they got it through our programs. And I'd just like to start with I'd like to be clear about what is at stake here. It is not that we are against the ordinance. We would just like to make it clear that the regulation without the accompanying support is not neutral. It produces a predictable outcome, economic displacement of the very communities this ordinance is meant to protect. Food vendors are already operating at the margins when we pass regulation without simultaneously legalizing MECO, without funding required carts without funding for required carts and without resolving vending spaces, we are not creating a pathway, we are creating a cliff. Once the ordinance takes effect effect, enforcement costs and compliance pressures begin immediately. Promises of future fixes do not pause that reality, unfortunately. Food equity is not just about what is available, but who is allowed to produce it, sell it, and survive doing so. State law created MECO specifically to open doors, low income and in for and immigrant food entrepreneurs, leaving it out here leaving it out here closes the doors for that. We often hear that the city is working on it or it sounds like solutions or it's coming soon for vendors. That uncertainty is devastating because rent and food costs do not wait for enforcement to enforcement or to operate on future timelines. Equity requires certainty. If this ordinance moves forward, the supports must move Thank for time as parallelization. Thank you very much.

[Brent Jalipa (Committee Clerk)]: And thank you for addressing this committee. Next speaker, please.

[Lee Lutenski (OEWD)]: Thank you.

[Alma Castellanos (Director of Operations, GLECHA)]: Good afternoon, supervisors. My name is Alma Castellanos, I'm the Director of Operations at GLECHA. We do small business support primarily for Latino businesses here in San Francisco. I want to start off by saying thank you to DPH and OEWD and Jackie Felder's office for giving us the platform and the space to be able to come together and bring this to the table so we can all discuss this. I do believe that right now, because the program is so new and it's a program we haven't had, there is a lot of there's a lot of alignment and then a lot of disalignment. And we've seen that, know, that's what the conversations are for, is for us to come here and discuss this. I do feel, however, there is alignment in some areas, and I believe there's an opportunity for us to align and reach a solution together so we can move forward for the best interests of the community. Like I said, we do the small business support in San Francisco, so we understand what a brick and mortar goes through, but then we also understand what our small businesses that are on the street vendor side also go through. So definitely we are here to support in any way, and we would love to see, you know, some kind of alignment between all to better for everybody. Thank you.

[Brent Jalipa (Committee Clerk)]: And thank you much for addressing this committee. And, seeing no other speakers in line, Madam Chair, that completes our queue.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Seeing no more public comments, public comment is now closed. Colleagues, first, of course, this needs to be amended, and then, which I am in support of the amendments today. Should you also support the amendments, we will have to continue to the next meeting. However, I do want to say this, And if I could ask public health for two questions. One, it's about related to Super Bowl, and second is the implementation of this legislation and fees and how long is it gonna take you to do so. Given the fact that, you know, this is still pending in committee at the moment so you're probably my assumption is you're going off the existing fee structure or law or regulation. The fact that it's pending right now, how has the enforcement what does the enforcement actually look like, if any? And what does the looks like, if any?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: So the enforcement of food vending is focused on operating without a permit, which is the same if you're doing pending or not. Understood. So that's how we approach it. And then our enforcement is based on complaint based and risk, so health risk in San Francisco. So we enforce citywide and have multiple operations throughout the

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: month. Understood. It sounds to me, though, I was like I just have to say I just learned about that the acronym OMEGO, is micro enterprise home kitchen operations now I understand what it is clearly there's sense of wanting to see there's a program for that is there a conversation about providing potentially if the vendor in this case clearly they probably will still need a compact mobility they still have to pay for that fee or even if they're the mobile food facility fee so help me understand that is there was there ever a conversation say if this is a microenterprise home kitchen operations but then now they're selling on the streets be it through a push car or through a motorized vehicle could there be temporarily an exemption until you establish a program that you can actually issue or that you fit into the category of definition as a kitchen?

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: No. There is no existing category right now for home kitchen other than the cottage food operation permit.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Yeah. And so I think that's my question. Right? So this is sort of like we're leaving a void there that when you recognize that state law is allowing you to do so, but local level is not like codifying that program. So you have people that caught in between. Clearly, they're allowed to do so because of state law saying you could as long as there' a local codified program issuing you the permit to do so. I' asking for the short term could there be a consideration and say if you comply with what the state law already has and yet we as a city have not been able to provide either staffing, permitting process, whatever it is that' on us But that does not mean you are illegally operating, that we could then provide you an exemption, as long as you meet all the other criterias and fees.

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: So it's a question that's larger than Department of Public Health. But the health department is committed to having those conversations citywide with all the relevant agencies. I am committed to do that. It is I have not seen a temporary permit in place for something like that, given the complexities of it. And the resources also that need to be taken into consideration citywide given the climate And the budget climate.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Yeah. And and I think that this is a kind kind of questions that I may have for city attorney to help us sort out like what if city providing an exemption for a home kitchen and then know and instead of putting providing an exemption for home kitchen produce food products instead of penalizing them or in any way just because we don't have the resources to be able to staff up and permit and codifying like is that an option that that we could so because of that if I and I m putting out there and colleagues that I would like to continue this as substantive and that I would like to continue to the call chair to allow me to just explore this question with city attorney and with department of public health that potentially providing an amendment for exemption for a micro kitchen until just having an exemption in place. So I'm I'm I am open for discussion. So that allow us to continue this item to the call chair. I see nodding. So if I may then, Thank you so much

[Lee Lutenski (OEWD)]: for your

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: work. Thank you. Just because of continuing to call chair does not mean that we cannot bring it into the next meeting. I just want to

[Ingrid Mezquita (Director, Department of Early Childhood)]: be I understand.

[Jen Calloward (Acting Director, Environmental Health Branch, DPH)]: Yeah. I just want to

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: clarify that. Yeah. That we could still continue the discussion and move this forward. It just allow us a little bit more time and and allowed me to just have that questions. Would the city attorney just allow me to ask that question? So I really appreciate your work. I really appreciate everybody came out for public comments. I wanted to kind of look at supervisor Fielder. How do you feel about continuing to to the the call chair? Or would you like to move us forward?

[Supervisor Jackie Fielder]: Absolutely. Appreciate that. And would love to be a part of the discussions with city attorney. And, yeah, thank you so much.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. So with that, I would first like to make the motion to amend.

[Brent Jalipa (Committee Clerk)]: Actually, madam chair, ahead ahead of that motion, I'd be remiss if I didn't mention that if we did continue to the call to the chair instead of a date certain because of the amendments, I will need to re notice the I wouldn't need to re notice this as a fiat.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Understood. So what I'm gonna do is I'm going to continue to the next meeting. And then if we need, like, more time and figure this out, then we will continue to call a chair. Is that okay? I I I'm just just I wanna be in good faith, like, to say that's not my intention to stop this because I do understand there' also public health purpose that we' trying to carry out managing food vendors so we' do that then thank you so much for the reminder Let me make the motion to amend the legislation as proposed by the department of public health and then to continue to the next meeting with the intention potentially that we will continue that conversation. And the roll call please.

[Brent Jalipa (Committee Clerk)]: And on that motion that we accept the amendments as are read into the record by the department and that we continue this ordinance to the February 11 meeting of this committee as amended. Vice chair Dorsey. Aye. Member Sauter. Aye. Chair Chan.

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

[Supervisor Connie Chan (vote response override)]: Chan. Aye. We have three ayes.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: The motion passes. Thank you. And, colleagues, my apologies. I want to recognize the time is 01:19PM. It's not what we anticipate or it's not what I anticipated for for this. I am going to continue what is on our agenda as in its order but if you feel like there are any things you would like to call out of order please let me know otherwise I' going to continue to item four. Hold on one second. Okay. Yeah? Which one? But I just wanted to make sure that there's nothing no one wants to have hurry. Otherwise Like, because you so let'92s call item number four.\

[Brent Jalipa (Committee Clerk)]: Yes item number four is an ordinance approving a hotel development incentive agreement between the city and county and bespoke hospitality llc for the Hearst Hotel Development Project to provide financial assistance not to exceed 40,000,000 in net present value over twenty years calculated for measurement purposes only as a percentage of new transient occupancy taxes the city actually receives from occupancy of guest rooms in a proposed new hotel related to the development and operation of a project on certain real property known as 5 3rd Street and 17 To 29 3rd Street waiving chapter 21 g of the administrative code and certain sections of the labor and employment code ratifying past actions and authorizing future actions in furtherance of this ordinance and making findings under the California environmental quality act and making findings of consistency with the general plan and the eight priority policies of the planning code. Madam chair.

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

[Supervisor Matt Dorsey (Vice Chair)]: Thank you, Chair Chan. This agreement is an essential catalyst for downtown investment that will help to bring new life to an iconic historic building along Market Street's corridor. Tourism is the backbone of San Francisco's economy, as we know, and a vibrant hotel scene helps us to attract and retain conventions and leisure travelers alike. Beyond that, the reason I am so bullish on adaptive reuse projects like this one and those we discussed at yesterday's full board meeting is that they enable us to retain our rich architectural heritage and historic assets, which make our downtown streetscape such a globally admired destination, while also facilitating new uses to invigorate our downtown for twenty first century economic imperatives. This is exactly the kind of adaptive reuse project we should be supporting. This hotel will generate significant economic activity as well as tax revenue, support the preservation of an historic resource, as I mentioned, and bring roughly a 150 hotel jobs including good union jobs to the heart of downtown. This financing structure is a creative way to make the project possible while implementing important guardrails. As you'll hear from staff, this agreement was tailored to match the project's feasibility gap and it has a sunset. The city would make an incentive payments of up to $40,000,000 over twenty years. If that cap is reached sooner, payments would cease. If it generates less, it would expire in twenty years. Last year, the state of California awarded this project a nearly $30,000,000 historic preservation grant. The project must draw these funds down by April or the state will direct those dollars to another project. And none of the other eligible projects is in San Francisco. So for our city, this is a use it or lose it proposition, we'd lose out potentially on a $30,000,000 generational investment to another municipality. We are blessed to have historic buildings like this one on our main thoroughfare and throughout our city and I hope we can maximize every opportunity to preserve and enhance and repurpose them. We are also blessed to have the talented staff at oe wd working hard through the details, I thank them for their efforts to balance our shared goals of financial responsibility and supporting downtown revitalization. I look forward to supporting this item today and sending it out to the full board in time to leverage the historic preservation dollars. Thank you so much Chair Chan.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you and the floor is yours.

[Maggie Mattson (OEWD, Joint Development Team)]: Good afternoon Chair Chan, Supervisor Dorsey, and Supervisor Soder. My name is Maggie Mattson and I'm here from OEWD's joint development team. I'm pleased to be here today to introduce this legislation which will enable the redevelopment of the iconic hearse building at 3rd And Market Downtown taking it from a nearly vacant office building to a vibrant and booming hotel The legislation before you today, is sponsored by mayor lurie and cosponsored by supervisor Dorsey, ratifies an agreement between the city and hearse hotels developers who are JMA ventures through their affiliate LLC bespoke hospitality. This agreement would provide a financial incentive equivalent to the project's demonstrated funding gap. Receiving this incentive is critical to the hearse hotels' ability to move forward when it is otherwise shovel ready. This legislation is just part of a multiyear focused effort to invest in downtown and to create a resilient neighborhood that is open twenty four hours a day, not just nine to five. To achieve this, we need to encourage projects like this hotel that have the potential to transform their surrounding area in terms of commercial and economic activity, pedestrian activity, and neighborhood feel. The tool that we are using, which is an incentive based on the transient occupancy taxes generated generated by the hotel, was first used by the five thirty SAMHSA agreement approved by the Board of Supervisors last year. We have created parameters for its use, as you can see on screen. We're looking at new hotels that are poised to make a significant economic impact and have a demonstrated funding gap that we've got with a third party. To encourage development, these projects have a five year clock to build before they begin to see their incentive payments decrease or they lose access entirely. The maximum percentage of TOT that we offer for these incentives is 89.3% to ensure that we don't impact the share of TOT that is allocated to arts and cultural funds. The maximum term length is twenty years. In reviewing the Hearst Hotel project, we found it to be a great fit for this hotel incentive tool, as well as an excellent project to further our policy goals on downtown recovery in hotels. Its location at 3rd And Market is on a key block in the downtown corridor linking the Financial District to nearby Powell and Union Square areas and is close to the Moscone Convention Center. This is a historic building that was once the headquarters for the San Francisco Examiner and features a lobby designed by Julia Morgan that will remain preserved as is. Its current use as an office building has left it about 70% vacant. That number is actually about 74% as of December 2025, and it's worth noticing that or it's worth noting that a large percentage of those occupied office spaces are actually JMA, the developer. So, in actuality, that's it's a very vacant building. So it is a prime candidate for an adaptive reuse project. This is also a fully entitled project that is ready to go, save for this funding gap, and the developer team is very motivated to get started on their construction timeline. Before we get into the details of the agreement, I wanted to pause on this picture of the beautiful historic lobby designed by Julia Morgan, which, again, will be preserved. In terms of logistics, incentive payments will be based on a percentage of the transient occupancy tax that's generated by the hotel. For Hearst, this will be an 89.3% rebate for twenty years, which we came to after vetting the project's feasibility gap with our third party consultants and running through several different scenarios with them. As mentioned previously, the city will retain the 10.7% of TOT revenue that is dedicated to arts and culture for property from 2018. And because the incentive is based on actual hotel performance, there's no risk to the city if the hotel underperforms. And then on the flip side, if the hotel overperforms, the term is then reduced as there is an upper end cap for what the developer is able to receive. We had the developer submit their financial materials and economic impact report, which we vetted with our financial consultant, BAE. We looked at net impact of the project, during and after the incentive period, and found it to have a fiscally positive effect on the general fund, even during the incentive period. Some of the highlights from our economic analysis include a more than tenfold increase in property tax revenue for the city as hotel compared to its current use. As you saw in the previous slide, positive general fund revenues from day one, and then revenue of $3,100,000 annually from the for the city from TOT after the twenty year agreement period ends. The project would directly and indirectly support about 150 jobs, with 100 of those on-site through the hotel, restaurant, and ground floor retail. Construction of the project would support about three zero nine jobs, two fifty nine of those would be direct construction jobs. And, also, critically, the project would generate about $32,600,000 in direct annual economic activity. That number goes up to $42,600,000 when factoring in multiplier effects. As we see it, this is a win win for the city that will grow the city's general fund and help create a strong and vibrant downtown. As I mentioned before, this is a highly motivated project team that is prepared to meet our five year construction timeline. Hotel opening is thought it is two and a half years from now and the project has been entitled since 2019. The development team, as supervisor Dorsey was mentioning, has secured state historic tax credits for the project and has an upcoming deadline in April to remain eligible for those credits. A timely approval of this agreement will help support the certainty of the project receiving those credits. Overall, this agreement is the missing piece that will bring the project from entitlement to construction and completion, And OEWD looks forward to being part of the shared future for downtown that the Hearst Hotel will help create. Thank you. And our office will be around for questions.

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

[Nick Menard (Budget & Legislative Analyst)]: Item four is an ordinance that approves a hotel incentive agreement between the city and bespoke hospitality LLC. It also provides a waiver from chapter 21 gs of the administrative code related grants and then certain sections of the labor and employment code. The incentive agreement would allow the city to repay the hotel owner what they paid to the city in hotel tax over twenty years, up to $40,000,000 in net present value using a 9% discount rate. The city would retain the 1.5 of the 14% hotel tax to use for arts and culture. We also show on page six of our report, there is a benefit to the general fund from converting this from office to hotel use that amounts to about $700,000 a year over the incentive period. That's in part due to a modest increase in revenues and then a decrease in the service population that results in the city spending less in the area because of the change in use. We know it as a policy consideration that this is actually quite similar in terms of the deal terms to the 530 Sansom project. It's different in one key respect, though, that it's not the 530 Sansom project resulted in a hotel and a fire station. This is just a hotel. So beyond the fiscal benefits of the project, there's no other public infrastructure as part of this agreement. There are benefits to revitalizing revitalizing the the area area as as well. Well, But but they're harder to quantify. But we do recommend approval of item four.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. I mean, look, I think that this is not just about this particular just colleagues I think it's for me I am again like not just project by project or legislation by legislation what I am having issue with and taking issue with it's really the overall approach with Mayor Lurie and with the Office of Economic Workforce Development around downtown revitalization. And that I'm just going to go through sort of what the kind of type of investments that we have put in for specifically downtown and of course first and foremost that was what was just actually approved yesterday for the downtown revitalization financing plan that we know it's roughly about $610,000,000 of public dollars tax increments that will be determined how it should be spent in that just in that area by the downtown revitalization board of directors. That is city's commitments to the area. But not too long before then, we also have waived both the conversion impact fee from commercial to residential, and then we also subsequently waive inclusionary requirements, again, for commercial converting to residential. So, overall, the downtown area has received like, has been infused, I would say, in the last two fiscal years, quite a bit of projected tax revenue in that area. Now, of course, like we say, they are projected revenues because we can't be sure exactly how much and what yields and and what kind of results as well. And I I think what essentially happening is that we're spending future dollars, as if we're on credit card, to try to figure out the kind of spending will yield the results of revitalization of downtown, which I recognize is very critical. This particular one that, again, is another proposal by Office of Economic Workforce and Development to say, how do we then also projecting another $40,000,000 over the next twenty years that we anticipate that we'll generate to subsidize very specific one hotel development project, which I I will say it is in a very critical space for the downtown revitalization. What I what I do want to sort of remind all of us is we have this approach in the past of giving projected tax revenue and anticipating that there will be effort to revitalize that space. And what was done was actually by former Mayor Ed Lee and Supervisor Jane Kim with the payroll tax waiver specifically for us a mid market for Twitter and in the market building. We see what is happening, you know, almost two decades later, or a decade later. I'm not too sure if we can all say the results is what we're looking for when it comes to the payroll tax exemption. And that it actually really go back to that area and be able to revitalize mid market. And so I with the same skepticism that I have that I carry today with what we're doing here is that, again, I can see that let's put some investments. What I do not see, and I would like for OUWD to answer the question, is that so if in the events that this really works, meaning, like, we are providing this, and that this hotel with the mixed use really is coming alive and generating profit, helping the area In in is there sort of, like, a measure of threshold and to say, maybe the city doesn't really have to give up all $40,000,000 of public dollars. Instead, this is where we're gonna stop because you have now made your profit.

[Lee Lutenski (OEWD)]: Thank you for your comments, chair Chan. I'm Lee Lutenski with the Office of Economic and Workforce Development. And yes, you're absolutely right that we've been very focused over the last few years on deploying economic incentives and tools to help revitalize particularly our downtown, but really across the city on a lot of our large projects. This tool that we are proposing to use with the hotel incentive agreement is a commonly used tool in municipalities across the country. And we did a number of case studies in Los Angeles where this tool was used. And that was instructive to us in how we created a framework for use here. So to your question, we have elected to apply this tool to new hotels only because we want the benefit of that economic growth. We have also elected to do a firm cap on the amount of the incentive. We have actually scaled that cap to actually fill the distinct upfront capital need that the project has today. So even though the revenues are coming in over time based on hotel performance, the full amount that is limited within the cap, the $40,000,000, is necessary to advance the project. And so if the hotel does overperform, we stand to benefit by, number one, the agreement will end early. And we will take the benefit of the hotel tax back into our general fund sooner. And in general, we want the hotel to perform as well as it can because of the additional economic benefits. I will also add that if the hotel underperforms, once that twenty year term expires, the agreement does end, whether or not that cap has been reached. So the city does not bear the financial risk of underperformance. I would add just one more thing about the way we're approaching this tool, which is that projects. We want this to be a limited time tool with really strong performance milestones. And so the contract actually requires the project to get a certificate of occupancy within five years, or the incentive actually will reduce and potentially be eliminated. Thank you.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Sorry. And maybe I don't understand it, because you mentioned a cap. Like, they are doing well, what is the cap?

[Lee Lutenski (OEWD)]: It is that $40,000,000 expressed as a net present value.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: And so I think this is my question, right? Like, can there actually be a clause or a condition that is, like, whichever that is lesser? Meaning, like, if they are actually meeting their profits and and and their profitable goal, whatever that is, and I don't know that, and I look to you and also BAE, urban economics, to kind of help us determine that. Is that, again, one more step is to say, well, Okay, the city will cap at $40,000,000 or whichever that is lesser in the events that they meet their profit goals earlier?

[Lee Lutenski (OEWD)]: Yeah. Thank you for the clarification and question. When we did structure the program, it's I would think of it more like the state historic tax credit program, where there's sort of a value to the upfront credit. And in this case, there's this $40,000,000 value to the upfront incentive that we are providing. That overall amount of money allows the project to then leverage that and get financing to move forward. So if we were to add a clause that were to potentially take that away in year ten, it would not achieve the goal. It would not be an incentive. It would not allow them to actually get the financing they need to advance the project. So essentially, we've scaled it to be the sort of minimum that they need to actually move the project forward. And so I hope that answers your question.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: It does. And I think that's explicitly to say we are funding this project. Right? Like, we are financing this project. And I think that's exactly why I'm having problem with it is that this is a private entity and that is a private business that they will be profiting from it. Clearly, they will then pay hotel tax, to the city. What I'm saying is then that is not clear to me or having a transparent, like, clause that indicating how is the city will then financially benefiting in in that equation. That is more specific in its projection.

[Lee Lutenski (OEWD)]: Yeah. We and again, when we studied other hotel incentive agreements that are used in Los Angeles and around the country, many of those types of, essentially, the government saying, we are going to incentivize a hotel project, often those are applied to existing hotels that are paying taxes already. And they're just used to kind of help the hotel reinvest and keep going. Again, we've tried to actually rein in the use of this tool to be very targeted. We do think there's great benefit to this type of an incentive given all of the economic activity it will spur, plus the significant growth to our general fund revenues from day one. So that's the way we're framing that benefit.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Sorry. Then I must be mistaken. What is the projection of the general funds that we're going to generate?

[Lee Lutenski (OEWD)]: From the first year of the project opening during the term of the incentive agreement, the general fund will receive a net increase of $577,000 annually. After the incentive agreement ends, that will be $3,100,000 annually. And then we estimate, through our third party consultant reports and peer reviews that there would be about $32,600,000 annually in economic activity.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: And that's our projection? And so what is the cost would be if they don't meet that projection?

[Lee Lutenski (OEWD)]: Well, the economic activity is a cost of all of the spending that comes from the people coming here and the tourism. The property tax revenue projections are much more based on a metric of how we think the assessed value of the hotel is going to be once it's open. So that one is much more of a straight line calculation.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Sorry. Help me understand one more time. The projection of $500 something thousand per year is a

[Lee Lutenski (OEWD)]: That is the projected net increase in property tax revenue that the city will gain from the day the hotel opens, essentially, even during the term of this hotel tax incentive agreement.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: CHIEF Supervisor Sauter.

[Supervisor Danny Sauter]: CHIEF JUSTICE Thank you. And one more question for OUWD. If we were to not approve this, what do you anticipate happening with the hotel development proposal?

[Lee Lutenski (OEWD)]: Thank you, Supervisor. As Maggie presented, this project has been entitled since 2019 and has undergone significant effort to prepare their permit drawings. So they are poised to move forward. However, a big part of their capital stack that will help them move forward is their state historic tax credit allocation. That allocation requires them to advance the project this year. And so if we are delayed in being able to add this program on top of that and thus allow the project to move forward, it's quite possible they would lose that allocation and therefore not be able to move forward at all.

[Supervisor Danny Sauter]: Thank you.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: So colleagues, here's what I'm going to challenge both the mayor's office and the office of economic and workforce development. Like, I am in a position of, fine, we can move this forward. I'm not in a way to stopping it to move forward, but I will say this to the mayor and mister mayor Larry and and also the mayor's office as well the office of workforce and economic development economic and workforce development is this, that I will not I I wanna say to my colleagues too, though, as well, is that I I think that let's, like, pause any more of these one, like, project at a time in the same very fine the downtown revitalization area that we're already now providing a financing plan that I would like for us to stop. I'm not saying that stopped your work, but for the budget committee to will will not schedule, like, any type of this one off deal within the area, within within the downtown revitalizing area of the of a similar kind. And to allow a more comprehensive conversation in one setting. If that office of economic and workforce development has a plan for different types of project within that area bring them at once and not this piecemealing of like we're just doing this for one this one hotel I mean I like to hear what you are doing with San Francisco mall that is now like closed down early on. Like to understand the Macy men's departments, where are you at with that. Like all of those should be in one setting to help us understand a few things. One is I think will help us in have and the budget legislative analyst to be able to really guide us through and along with the controller to guide us through the projection of tax revenue that we anticipate to both gain and to also give away. That in within the financing plan, within the same area, it's not this sort of like on top of we're doing this, on top of we're doing that. Because mind you we also just did four four seven battery and clearly it's out of the, area for the downtown which is the Van Ness and Market Atavia fee waiver that which is 85,000,000. So I all I'm asking is that instead of piecemealing project by project I would ask that for us for office of economic and workforce development to advise this body as well as advising mayor Lurie for a truly comprehensive revitalization vision that together with all these different types of projects with different kinds of financing tool and mechanisms that we're employing and what are we getting and how are we really this because this one is twenty years and then the financing plan is forty five which makes sense but again how is it actually going to work together within the framework so that's all I'm asking today colleagues I am I am going to actually live leave this for you I think that I would not personally would be voting against for this to be if this were to go out with recommendation not because I think that somehow is something wrong with this particular deal in fact I think this particular deal is something that the city should honor us because clearly that the developer has the project sponsor has invested both the state grant funding and support, and it's worthwhile for us to make that match. But I I think that I put this really back on OUWD and on Mayor to really give us a vision as a body to articulate to us why we should continue to support things like this. I' m also I can be voting in support to send this out without recommendation to allow us to have a conversation at full board.

[Supervisor Matt Dorsey (Vice Chair)]: Thank you, Chair Chan. One of the things, just so people know, when we send something out to the full board without a recommendation, usually I have always viewed this as something that we're doing as a courtesy to our colleagues because we want the opportunity to explain what's playing out here because all of us have responsibility for the city's finances. So I don't see this as something I'm going to be just as enthusiastic before the full board. But I do think there's some these are questions that I think our colleagues deserve to hear. So I would like to even though I'm supporting it, and on everything else being equal, would probably send it out with a positive recommendation. Why don't we send it out without a recommendation so that we can discuss it at the full board?

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: This is why I appreciate you as the Vice Chair, Supervisor Dorsey, always. Roll call on that motion? Oh, wait. Do we need to go to public comments?

[Brent Jalipa (Committee Clerk)]: Yes, we do, Madam Chair.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Let's go to public comment on this item.

[Brent Jalipa (Committee Clerk)]: Yes, we are now opening public comment for this item number four. If we have any members of the public who have joined us that wish to address this committee. Madam Chair, we have no speakers.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Seeing no public comments, public comment is now closed. A roll call on the motion proposed by supervisor by Vice Chair Dorsey.

[Brent Jalipa (Committee Clerk)]: And on that motion by Vice Chair Dorsey that we refer this ordinance to the full board without recommendation. Vice chair dorsey. Aye. Dorsey aye member sotter.

[Supervisor Danny Sauter]: Aye.

[Supervisor Danny Sauter (vote response override)]: Chair Chan. Aye. Chan aye. We have three ayes.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: The motion passes. Colleagues, as I have gotten a note, I really want to respect our police department, if I may call out a order is for item number six to be called as they have requested because I know that this has been a longer than anticipated hearing. Sir clerk, please call item number six.

[Brent Jalipa (Committee Clerk)]: Yes. Item number six is a resolution retroactively authorizing the police department to accept and expend the grant in the amount of approximately 1,100,000.0 from the California department of justice for the 2025 tobacco grant program to fund personnel and operating expenses for the sfpd's drug market agency coordination center with the project period beginning on 11/21/2025, through 06/30/2029. Madam Chair.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. We'll have our police department here today.

[Captain Ahern (SFPD, DMACC)]: CHAIRMAN Good afternoon, and I appreciate how flexible you're being here by adding this item. I appreciate everyone's time. I'm Captain Ahern of the San Francisco Police Department, Demack, and good afternoon Chair Chan, Vice Chair Dorsey, Supervisor Sauter. As the clerk mentioned, this is item six, and it concerns a retroactive accept and expand resolution authorizing SFP to accept and expand a grant from the California Department of Justice's 2025 tobacco grant program in the amount of $1,119,862 The fund from the California Department of Justice's tobacco grant program are made available through prop 56 passed in 2016. The aim of the program is to identify and take civil and criminal enforcement action against violators of tobacco laws, particularly those involving licensing, taxation, and sales to minors. I'll just go the grant funds will continue to promote DMACC's mission in disrupting illegal markets and enhance quality of safety in the city's most impacted communities. And the reason this is retroactive is we received notification of the award in 11/21/2025 for the project beginning from 11/21/2025 to 06/30/2029. The SFPD has not expended any grant funds to date. However, due to the start date of the grant funds, retroactive approval is necessary. And we respectfully request re retroactive approval to accept and expend the California Department of Justice's grant.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. Really appreciate your work. And let's go to public comment on this item.

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

[Supervisor Connie Chan (Chair, Budget & 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 that we refer this resolution to the full board with recommendation vice chair Dorsey. Dorsey aye member Sauter aye chair Chan aye we have three ayes

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: the motion passes and mr clerk please call item number five

[Brent Jalipa (Committee Clerk)]: item number five is a resolution approving the terms and conditions and authorizing the general manager of the san francisco public utilities commission and or city's director of property to execute agreements with the city of daly city consisting of a license amendment to extend the term of an sfpu c license for habitat mitigation monitoring and facilities by an additional five years for a total of ten years and four months for an additional use fee of approximately 23,500.0 and a total use fee of approximately 51,000 execute a fifty year lease agreement to construct operate and maintain sfpuc owned overflow facilities at Lake Merced for a total use fee of approximately 2,000 on SFPUC Parcel Number 55 or Lake Merced tract and execute a purchase and sale agreement, quick claim deed, and easement deed for the quick claim of two existing SFPUC tunnel easements and the sale of five easements for storm water facilities for a total purchase price of 71,000 pursuant to the charter effective on the date of the agreements are executed by both parties for a total combined amount of approximately $97,000 and adopting findings that the conveyance is consistent with the general plan and the eight priority policies of the planning code. Madam Chair.

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

[Dina Brazil (Right-of-Way Manager, SFPUC)]: Hi. Yes. Thank you. Good morning or good afternoon, supervisors. My name is Dina Brazil. I'm the right of way manager for the SPUC, and I acquire property rights for infrastructure projects. Today, we're going to talk about the real estate agreements necessary to implement the Vista Grande drainage basin improvement project at Lake Merced. The city and county of San Francisco acquired the Lake Merced tract, which we refer to as Parcel 55 in 1930, as part of Spring Valley Water Company acquisition. We maintain Lake Merced for recreation and wildlife habitat, and we continue to maintain the capability of using Lake Merced as a non potable emergency water supply. Unfortunately, water levels have historically declined, threatening the long term viability of Lake Merced. Lake Merced was originally a coastal estuary. During large rain events, the lake would fill up with water and overflow, creating a stream that connected the lake to the ocean. The lake drained an area of approximately 10 square miles. The Spring Valley Water Company built a dam that disconnected the lake from the ocean and allowed for Lake Merced to be used as a source of drinking water. Spring Valley built facilities to divert the creeks that drain into Lake Merced, protecting water quality, but removing a source of water for the lake. Groundwater pumping has also negatively impacted lake levels. The lake is hydraulically connected to the underlying West Side groundwater basin. The aquifer is shallow in this location, and the lake is a surface expression of that shallow aquifer. Increased demands for groundwater pumping lowered groundwater levels within the basin, and thus surface level water levels in the lake. And, of course, drought conditions throughout the twentieth century limited rainfall as a source of lake water. Among the facilities built by Spring Valley and acquired by the city were the Lake Merced Drainage canal and drainage tunnel, which we now call the Vista Grande Canal And Tunnel. The canal and Tunnel were constructed in 1897 to divert storm water from both San Francisco and Daly City areas out to the Pacific Ocean. They are operated exclusively by Daly City. The canal and tunnel do not have adequate capacity during large storm events, and that's caused flooding issues in Daly City. During these large storm events, the canal has also overflowed, sending uncontrolled flows across John Muir Drive into Lake Merced. The canal is located on property that used to be part of Parcel 55. However, in 1993, the SF sold just over 17 acres of land to the Olympic Club, which included the canal. The SFPUC retained easements for the canal, which it subsequently quitclaimed to Daly City. The SFPUC still owns the tunnel and the tunnel easements, and Daly City operates it under a long term lease agreement. The eastern half of the tunnel is on property owned by the Olympic Club, while the western half is on National Park Service lands under the management of GGNRA. Daly City and the SFPUC have been collaborating on the Vista Grande drainage basin improvement project for decades. While it is a Daly City project, it presents an opportunity to address the problems with flooding, uncontrolled overflows, and lake water levels with a holistic approach that would restore the original hydrology of the landscape. For this reason, the SFPUC is contributing funds to the project and has conditionally agreed to provide the real estate necessary to construct the project. Through the proposed legislation before you today, the SPUC would quitclaim its existing tunnel easements to Daly City so that Daly City can replace the tunnel for one with a larger diameter to increase capacity. It would convey five new easements to Daly City for the facilities that would be constructed, owned, and operated by Daly City on SFPUC PUC lands, including a force main and lake outfall, allowing treated storm water to be diverted into the lake. And the SF PUC would give Daly City a license for fifty years to construct, operate, and maintain an SFPUC inlet pipeline that allows us to remove water from the lake to prevent overflow. Finally, the SFPUC would extend the term of an existing license for habitat mitigation sites that are currently being constructed on Parcel 55 to satisfy conditions of the California Coastal Commission's coastal development permit for the project. Chapter 23 of San Francisco's Administrative Code requires that the city receive fair market value for its property. Daly City commissioned an appraisal from associated right of way services, and under the real estate agreements, Daly City will pay the appraised value for each of the rights and privileges conveyed. And now I'd like to answer any questions you might have.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. Really appreciate your work on this. We'll go to public comment on this item.

[Committee Clerk (alternate/staff)]: Just now, we now invite members of the public who have joined us today who wish to address this committee regarding this item. Now is your opportunity to line up to speak. Along the side by the windows. All speakers will have two minutes. It appears we have no public comment.

[Supervisor Connie Chan (Chair, Budget & 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.

[Committee Clerk (alternate/staff)]: Yes. And on the motion to forward this item to the full board with a positive recommendation, vice chair Dorsey.

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

[Committee Clerk (alternate/staff)]: Vice chair Dorsey, I. Member Sauter? Aye. Member Sauter aye. Chair Chan? Aye. Chair Chan? Aye. Have three ayes. The motion passes.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. And, madam clerk, please go to item number seven.

[Committee Clerk (alternate/staff)]: Yes item number seven is a resolution approving and authorizing the city and county acting through the sheriff's office to enter into a professional services contract with connections CA LLC for operating the rapid enforcement support evaluation and triage center a safe alternative to incarceration for individuals bought brought in by law enforcement for public intoxication or drug use submitted under the administrative code as a core initiative term of two years and two months commencing on 02/01/2026 through 03/31/2028 with an option to extend for one additional year authorizing the sheriff to execute any amendments, make certain modifications, and take certain actions that do not materially increase the obligations or liabilities to the city and we and are necessary or advisable to effectuate the purposes of the contract in affirming the planning department's determination under the California Environmental Quality Act.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. And we have the sheriff's department here.

[Patrick Leung (CFO, Sheriff’s Office)]: Good afternoon, chair Chan, vice chair Dorsey, supervisor Sauter. My name is Patrick Leung. I'm the chief financial officer for the sheriff's office. Today we are requesting the committee's recommendation for our reset center contract. I want to first start out with a description of the brief description of the contract. The RESET Center offers an alternative to jail and hospitalization for persons who are arrested, either for intoxication or being under the influence of a controlled substance or drug, and also engaged in disordered behavior. The contractor for this for the RESET Center is Connections California LLC. The term of the agreement is from 02/01/2026 until 03/31/2028, with a one year option. And the contract amount is for approximately $14,500,000 I do want to make note that of this amount, 1,400,000.0 is tied to performance incentives. And so, if the performance goals are not met, the city would the total amount that the city would have to pay would be less. The contract also utilizes Chapter 21B. And I do want to acknowledge that it did help us shorten some of the timelines to get this contract in place. Some of the characteristics for the RESET center. The services will be provided at four forty four sixth Street. The center will operate twenty four hours a day, seven days a week, and it has an operating capacity of serving 25 clients at a time. The contractor will provide six staff members for each shift, with primary staff being the registered nurse, a case manager, behavioral health specialist, and peer support specialists. This also will be supported by two on-site sheriff deputies. And reset center operations was a collaboration between sheriff's office, department of public health, police department, district attorney's office, and the fire department. In terms of admission requirements, any law enforcement agency in San Francisco can bring an individual to the RESET Center who meets the following criteria. The person must be 18 years of age. They must be detained for either violating for a violation of either disorderly conduct for public intoxication, or being under the influence. The person may not have any active warrants. The person cannot exhibit aggressive or combative behavior. And then, there are some other factors that will be evaluated before the person is admitted, such as if they need medical attention that's beyond what the center can provide. In terms of program goals, we do the contract does wish to stabilize clients experiencing intoxication and substance use disorder. We want to be able to reduce the risk of harm to the self and others. We want to be able to address immediate and minor medical needs, to also prevent unnecessary arrests and additional criminal justice involvement, and also to link the clients to follow-up ongoing city services. For any participant of the program, they will receive a brief physical health screening. The center will triage and refer them to hospital based services. The center will provide safe sobering services, crisis intervention, de escalation, crisis counseling. The staff will be providing support of peer engagement and substance use disorder counseling. We also want to provide any medical services for minor physical health needs, and assist the person with any self administration of over the counter medication. And lastly, the to provide individualized discharge planning focused on linking the person to other city supportive services to bring the person to their long term recovery goals. For our program objectives, as stated earlier, some of the contract payments are tied to incentive payments. And so for the program objectives, what we wish to achieve through this contract, 75% of officers will report significantly reduced booking times when utilizing the RESET Center as compared to the jail. We want that at least ninety percent of the individuals at the center will remain until sober. And of the of that population, at least twenty percent of those individuals will elect to remain at the center for continued rest, engagement, or other services. And of that population, at least twenty five percent will be connected to a health and or social service at discharge. And that could be treatment, referring them to a center, or case management. As I stated before, the contract does have incentive payments, and part of the part of the payments for the contract is tied to the performance objectives stated here. If the committee members have any questions that you would like answered, we'd be more to try to answer them.

[Nick Menard (Budget & Legislative Analyst)]: Item seven is a resolution that approves a new contract between the sheriff's office and connection CA LLC to operate the reset center at 4446th Street. This is a two year and two month contract with one optional extension. And the value of the contract is $14,600,000 That amount is sufficient to pay for the initial term of the contract. It would not cover the optional extension year. And so exercising that extension would require board approval. The contract would allow this entity to operate the Reset Center, which is a twenty four hour program that allows people who are arrested for public intoxication to go sober up and then receive referrals to services. The staffing mix includes nurses and peer counselors and then administrative support. There are service and outcome objectives we show on page 12 of our report. You can see that that then has an impact on the contract budget, which show on page 13. Minimally, city will pay $6,300,000 on an annual basis for the program. It could increase to as much as $6,600,000 if certain outcome and service objectives are met in the contract. This is a new program, and it's funded by the general fund. This is part of the mayor's breaking the cycle initiative, which is part of a larger reorganization of the systems of care in DPH and HSH to address the crisis on the streets. There is funding for this program this year and next year in DPH's budget. It is not sufficient to actually pay for this contract. So there's $3,100,000 in DPH's budget for this program. So there's a kind of unbudgeted portion of about at least $3,200,000 in new general fund costs next year that will have to come out of the budget process. So I think it's for that reason we are considering approval of the because it's a new program and it's not fully budgeted approval is a policy matter for the board. We also show on page 15 of the report the arrest for public intoxication for 2023 through 2025. There's been an increase for those kinds of arrests in 2025, about a 66% increase relative to the prior two year average. But this will allow, because it will allow quicker drop offs than the booking process in the jail, it will allow for additional arrests until the site is filled out. It only has a capacity for about 25 people. So it will reduce the law enforcement time to process people in and out of jail and kind of make those connections into this program kind of more effectively.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Vice Chair Dorsey.

[Supervisor Matt Dorsey (Vice Chair)]: Thank you. Thank you, Chair Chan. I want to start by thanking the mayor's office for their partnership on the project to which this item pertains. As well, thank you to the sheriff's office and the Department of Public Health. I will say, as a policymaker, I really appreciate having been brought into this discussion early, the ongoing collaboration with my team, and the time all of you have taken to engage early and often with the residents of my district. That spirit of collaboration matters, and I think it shows in the way this proposal has been shaped. This item matters a lot to me. Not solely because it's in my district, not solely even because this is a priority for me as a recovering addict myself. It matters because, in my view, I think this is the single most important drug policy innovation San Francisco has made since the advent of the fentanyl crisis. I think it will work. I think it imposes a much needed measure of accountability that has been too long missing in our approach to public drug use and its myriad related harms. I think it will help start shutting down the magnet San Francisco has become as a national and even global destination for drug related lawlessness. And I think it will save lives. For many years, when offenders have been arrested for public drug use or intoxication, our only real options have been jail or the emergency room, both of which take police officers off patrol for several hours. Neither option works well. Both keep us stuck in the same cycle. And frankly, the same cycle is something we can ill afford in today's fentanyl era with the drug overdose crisis we continue to experience. RESET is an innovative approach that will improve efficiencies and outcomes. Scaled up, I think this is the model of how we will finally make progress toward ending the phenomenon of public drug use in San Francisco. It is an involuntary custodial intervention for people engaged in illicit drug use in public. It will reduce from several hours to fifteen minutes the amount of time police officers will need to make an arrest, to confiscate users' drugs and paraphernalia, to get drug use off the street, and to put drug users into a supervised and coercive setting that will hopefully enable them to make better choices, or to face escalating consequences that are themselves foundational elements for those who have success in their recovery journeys most of the time. Substance use disorder, the clinical term for drug addiction, is a medical condition, but it frequently also results in crime and not solely the crime of using illicit drugs in public. It fuels retail theft, street disorder, and no small number of episodes of serious property and even violent crime. It is also among our leading causes of preventable death, and if we are serious about saving lives, we need better, more consequential, demand side interventions that give those with addictions a real chance for recovery, that recognize illicit drugs are a public health and a public safety problem, and that make no apologies for making clear that the party is over. I know we've heard from some advocates who feel that our criminal justice system has no role to play in addressing public drug use. I would say they are free to petition our state legislature to repeal our drug laws. But until and unless that happens, San Franciscans have a reasonable expectation to see their state laws enforced. We owe San Franciscans nothing less than to take every step we can to make to stop making our city a national destination for drug related lawlessness. The RESET Center alone won't accomplish this, but I have every confidence that it reflects the bold kind of approach we need that will end that phenomenon. Finally, an aspect of this program I wanna single out for praise is that it's structured for performance and oversight. Payments are tied to clear metrics like officer drop off off time, staffing levels, and connections to services. It's a pilot with defined outcomes and the ability for the board to reassess based on results. That kind of accountability matters to everyone who stands to benefit from it, especially those on our streets at the end of their rope addicted to drugs that are deadlier than ever before in human history. If we are serious about cleaner and safer streets and about helping people recover from rather than succumb to their addictions, We need innovations like this. That's why I support this item, and I urge my colleagues to do the

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: same. Supervisor Sauter.

[Supervisor Danny Sauter]: Thank you, Chair. I will be supporting this item as well. I think

[Unidentified speaker]: are

[Supervisor Danny Sauter]: things are so desperate that we need to try new approaches and new models. That being said, I am concerned about the lack of identified funding after the first year. I think for such you know, for an initiative that is so important and is such a priority, there should be you know, that funding should be identified. There should be more thought put into that. I wonder to the sheriff's department, has there been any exercise done on the potential savings? I know a large driving theory behind this is that they'll be saving time of officers and sheriffs. Has there been an exercise to quantify those potential savings? And could, you know, could that factor into the funding in the future?

[Undersheriff Kathryn Johnson (SFSO)]: Afternoon. My name's Kathryn Johnson. I'm the under sheriff here on behalf of Sheriff Miyamoto, who is at a training conference. We have looked at that. We've tried to quantify what the savings would be. It's hard to say because this is a new program. It is innovative. We've looked at what it would look like to defer people going to the jail, and to the hospital, and to the sobering center as well. We've looked at those numbers. We do not yet have projections for those because it is a new program, but we have started looking at those numbers. Can I just also add, though? I want to talk about the controller mentioned this, and Supervisor Dorsey, did as well the innovation of I this want to add that it also adds a critical service gap that's missing right now from the county jails. We have wonderful programs in the jails, and those programs are for people who spend some time in the jail, individuals who are booked and subsequently housed. This segment of the population is booked, but they're not housed. They get released within a few hours. And based on that, we're unable to connect them with services, services that are really needed. This program will do that. It will afford people the opportunity to get clean and sober and help themselves. It provides for public safety and provides for a service gap that's currently missing in the jail because of the short duration of stay in the jail. I just wanted to point that out. Thank you.

[Supervisor Danny Sauter]: And just to wrap up, I mean, again, I'll be supporting it. But with that cautionary note, if this does prove to be productive, which I hope it does, we all hope it does, I think we've got to figure out the funding fast.

[Undersheriff Kathryn Johnson (SFSO)]: Yes, sir.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. I mean, really concur. And this is why you're coming to the budget committee. I think that putting the policy aside and a pilot program like this, I do concur. And I also defer to Vice Chair Dorsey, who really has both the lived experience, but really being in the trenches with the community to try to and experts to try to figure this out, and what is the best vision in terms of really around both a public health crisis but recognizing that so much of it has now dropping on the lap of law enforcement. And that requires innovative approach to both in order to problem solve this I'm in support of this and I do wanted to send this out today but I too am concerned about the budget and about the funding and that let'92s also be clear that you will come before us again in a short month maybe less for a supplemental for your overtime which I pride myself that to Paul as a sheriff, Mayimoto that, we have put your we may have shaved 2,000,000 out of your budget last year but we put it on reserve for you to ensure that you could use that to to now then likely be able to put back into your overtime spending. Clearly, there's something to be discussed upcoming in June about the sheriff's department budget both in the overtime spending but now added to this is this and that because it' a new program I think that this body is curious to see how this is implemented I have asked budget and legislative analyst to help me to sort out what is the best way that we allow you to have this approval today and to do what you gotta do and to implement this program, but to also bring you back to this body for, conversation like the way that you have today is that I would like to colleagues and I'm putting it out there for discussion that we approve this to I want to say to the ten ten point sorry the $1,010,537,000 dollars $10,537,426 as approved of this contract of the not to exceed amount and that you do come back for us for the remaining 4,000,000 for it to be released. Technically I I I think that's what I'm trying to do but I I look to Deputy City Attorney Brad Russi, helped me to figure out, like, if we were to make this amendment, how is it possible? How do I amend this?

[Brett Russi (Deputy City Attorney)]: Deputy City Attorney Brad Russi, I think this would essentially require the contract to be modified. So because it's an up or down vote here in the committee, if the department wanted to agree to make that amendment, they could, and we would need to make some revisions to the resolution to the contract, and then they would need to come back for an amendment for the extra $4,000,000 whenever they need that later.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: But sorry. So what if we're not we're not amending the contract of the $14,000,000 We're simply saying that we're releasing them for a $10,000,000 and that we wanted to come back for the remaining 4?

[Brett Russi (Deputy City Attorney)]: Right. I don't know. Might defer to the clerk on whether there could be a committee hold in that way. I'm not familiar with the committee doing that in the past.

[Nick Menard (Budget & Legislative Analyst)]: I would need to

[Patrick Leung (CFO, Sheriff’s Office)]: If I may just comment on that.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: You're not even budgeted for the $3,100,000 either, for the remaining of the contract.

[Patrick Leung (CFO, Sheriff’s Office)]: We're budgeted for this year. We intend to make a budget request for next fiscal year. Given that the contract term is spread out over three fiscal years, to your point, the last year I'm doing the math right. The last year of the contract that would fall under fiscal year '28 would be five approximately $5,200,000 And so, you know, we could work out an arrangement to where it's not specifically within the contract, but we would have to make a request for the budget. And then at that point in time, it would be up to the board or the mayor's office on whether to approve that portion.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Right. Because the assumption is that you still have to come back to this body to to fund your budget for the remaining. So I'm just seeking some help. I do want to be supportive, and I want to move this forward. But I don't want to miss the opportunity for you to come back for this line item discussion because typically then we wouldn't really do that in budget like to for that vice chair Dorsey.

[Supervisor Matt Dorsey (Vice Chair)]: Thank you chair Chan I think where I would be concerned about changing the 14,000,000 amount is because I think that would affect our contractor who is blameless in the sort of ill plan like not having an idea of where this money is coming from is a problem that I think we're trying to solve for here so that there's some accountability. I would be resistant to changing the contractor amount because I think it feels to me like this is not a good way to kick off a new contract with a new relationship. I have no problem dragging the department before us, because ultimately, this is what you sign up for. Sure so I don't know if there's a way to do that where we're is that does that solve for what you're trying to solve for

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: yeah I mean technically like if you are if you are the contract is $14,500,000 and then out of which what $3,100,000 is not even funded. You know, we're approving a $14,500,000 contract, which I have no problem of with, but I'm just saying that, like, out of which anyways. But I it looks like you may have some response to to what I'm thinking.

[Undersheriff Kathryn Johnson (SFSO)]: I think to Patrick's point, I think what he's saying is we would have to come before the board for the one year extension, which is the tail end of this contract.

[Patrick Leung (CFO, Sheriff’s Office)]: Sorry, not the extension, but for the last year of the contract. Given that right now, this year is funded, a portion of next year is funded, we would certainly be requesting the unfunded portion for next year. But for fiscal year 'twenty eight, at you're funded. Correct. And so we would still have to make that request. And I think at that point in time, we could have that discussion.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: But technically, you wouldn't. And then hear me out why. Because once we approve this contract as it currently is, that the fund will once you come for a two fiscal year budget, right? Mr. Leung, please correct me if I'm wrong, but then if you come in June, and then we don't really go into the line well we could, but in this case that's what I'm trying to say that I'm not going to go into the line item and trying to hold you to it is that then you will then be funded in it will be it will be funded. And we want you to be funded. But what I'm trying to say is that like we want you to then come back to this body to having the similar dialogue with account with some kind of accountability to tell us before we release the remaining of the fund to you that you will come back. So I'm also happy to approve the contract as in full and then somehow figure out ways to put their second year or the third, which is remaining of the 5 something million dollars on reserve.

[Patrick Leung (CFO, Sheriff’s Office)]: I know in the past, like, we've had to have reserve holds on the budget. Yeah. Right? And then to make that request. So if that's a mechanism to resolve it.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Okay. So I think that sorry. It looked like the budget legislative analyst may have some thoughts.

[Nick Menard (Budget & Legislative Analyst)]: Just to confirm with my colleague, the city attorney and control's office, one idea to split the difference would be to and the budget process in June to put a portion of the money on reserve so they can come to the committee explain what's going on but it doesn't it doesn't require a contract amendment.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Great so can we agree to that today it's just like well you're not fully funded anyway so then just know that like when you do come back in June that and I also want the contractor to recognize that too like that like while we are while we are seeing supportive of like this pilot program we we do want to see results and I think this body it has instead of additional hearing on specifically on the recess center then you would just be part of the budget committee report back and put the second fiscal year on reserve and until you come back when you're finished. Because right now we're funding you the remaining of this fiscal year, if I understand that correctly, and then also the two the next two fiscal year, but the second half of the fiscal year, you're not funded? Or you're not funded on the third year?

[Patrick Leung (CFO, Sheriff’s Office)]: We're not funded on the a portion of the second year and the third year. So Yeah. Yes.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Okay. Sounds good. Alright. Let's make note of that that that this will come back. The Reset Center will come back. Thank you so much, deputy sheriff Johnson, for making a note Yep. And that you will come back for this. I appreciate it. And so with that, let's go to public comment. Oh, I don't have any more questions. I don't see any name on the roster. Let's go to public comment on this item.

[Brent Jalipa (Committee Clerk)]: Yes. We're now opening public comment for this item number seven. If we have any members of the public who wish to address this committee, now would be our opportunity.

[Zach (Public commenter)]: Hello, members of the board. My name is Zach. It's kinda disappointing to hear your votes are already cast before you formally cast your votes. Anyhow, my concerns are with this as policing as governance. That aside, I have greater concerns with the contractor here. They read to me a lot like Urban Alchemy, who is also a scandal ridden organization that takes lots and lots of money, not just from San Francisco, but from all kinds of other cities across the country and have had their operations been shut down because they have had either some sort of malfeasance or abuse in their facilities. Similar with connections Arizona, is where connections California is a subsidiary of, a lot of abuse has been reported from them, such as being mistreated by people, and there are people who have committed their own family members to their mental health facilities and been demeaned through that, people who have experienced worsening conditions of their mental health by being treated at their facilities and not receiving adequate care until after they've moved somewhere else. This is probably just going end up being more of a waste of cities' money, which last year you guys already said that or maybe somebody else has already said that there's a potential that urban alchemy has been misspending city funds. So I think this is another risk that Connections California can also be misspending the city's funds in order to operate this facility.

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

[Kevin (Community Organizer, TNDC)]: Afternoon, supervisors. My name's Kevin. I'm a community organizer with TNDC. We're part of the Treatment On Demand Coalition. And the coalition would like to highlight some questions we have about the Reset Center. We're in agreement that, you know, folks need more spaces to be outside of the streets. It's critical for community safety. Having said that, we do have some outstanding questions on the efficacy of this particular space in terms of achieving sustained safety on our streets as well as not harming unhoused folks and people struggling with their substance use. And please note that at the core of our concerns, we're wondering where DPH is on this, as this is a public health intervention. Why, should we task law enforcement with the public health intervention, and, you know, continue the sort of iterative failed war on drugs approach? One of our other main questions is, while the center is gonna provide transportation to services, after discharge, what services are gonna be eligible, for this transportation? If people are unable to make their own arrangements for for for getting follow-up services, are they gonna be discharged back to the street starting at Square one, which doesn't help us, right, achieve community safety ultimately? And it feels to me that the city, is ultimately relying on jail and emergency rooms as our priority connections for folks because other spaces that already meet their sobering needs exist, including the sobering centers provided by DPH and SOMA RISE. So in addition to this, we want to know if the National Sobering Collaborative, which is located in Emeryville, if they've been consulted in the implementation of this new RESET Center. Last but not least, there should be medical services on-site at the RESET Center if folks are expected to be there to sober up. So will full time medical staff be present? Are individuals who are dependent on fentanyl, are they going to have the appropriate withdrawal management on-site and detox services if treatment is to be initiated? So these are all our questions. We'll follow-up with a letter to the sheriff's office with some of our questions in more detail, and we're grateful.

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

[Kevin (Community Organizer, TNDC)]: Thank you so much. Please.

[Flo Kelly (District 9 resident)]: Hi. I'm Flo Kelly, and I live in District 9. And I'm passionate about about people that live in San Francisco under very difficult circumstances. Yeah. It's like the folks that live in the RVs, they're actually getting towed now. They are getting towed even though they have a permit. So all those policies that supposedly the city put together so carefully regarding RVs, it who live in their RVs were not consulted. What would work for you? What would work for you? And we, as with the Coalition on Homelessness, you know, trying to speak on other people's behalf, we were not really listened to. So of the 25 seats that are available at the Reset Center, the city will spend about $28,280,000 per year per chair, money that could be used to fund ongoing treatment and housing. So to compare, we spend $35,000 per year on rental sub subsidies with support services. And I I have to tell you that when RVs are getting towed, lot of times people don't get them back because they can't afford to get them back. And so they just become homeless. Okay. I'm a little bit off topic there. But frankly, the homelessness and drug addiction go together very, very much so in this city. So I recommend that you listen to science and listen to people who are themselves experiencing addiction and homelessness and that help them to spell out what policies would really work based on what their needs are. Because what works for one person does not necessarily work

[Brent Jalipa (Committee Clerk)]: But for another thank you much, Flo Kelly, for addressing this committee. And seeing no other speakers, madam chair, that completes our queue.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Seeing no more public comments, public comment is now closed. I think clearly there's some work to do and some questions that require answer. I think, again, I would be inclined to put money on reserve, but also discuss funding issues, results, and all those things that was brought up by including not just from this body, but also during public comments. I just want to acknowledge that. And so with that, what is your will, Supervisor Vice Chair Dorsey?

[Supervisor Matt Dorsey (Vice Chair)]: Thank you, Chair Chan. I would acknowledging that we will be hearing from the sheriff's office in the next few months to discuss the sources for the full funding. I would like to move to forward this item to the full board of supervisors with our positive recommendation.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: A roll call, please.

[Brent Jalipa (Committee Clerk)]: And on that motion by Vice Chair Dorsey that we refer this resolution to full board with recommendation vice chair Dorsey Dorsey aye member Sauter aye chair Chan aye Chan aye we have three ayes

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: the motion passes and the next item is item number eight.

[Brent Jalipa (Committee Clerk)]: Yes item number eight is a resolution authorizing the tax collector to sell certain parcels of tax defaulted real property at public auction and sealed bid auction. Madam chair.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you and we have our treasurer and tax collector' office here.

[Representative, Office of the Treasurer & Tax Collector (name not clearly audible)]: Afternoon. Mankiew with the office of the treasurer and tax collector. Item eight is a resolution authorizing the tax collector to sell tax defaulted properties at public and sealed bid auction. Just for a little bit of background, these auctions are governed by state law. Property becomes eligible for auction when an owner fails to pay their taxes for five years, and we are required by state law to sell the parcels at auction when they have been in default for nine years. There are 13 parcels listed for auction and all have been delinquent for nine years. These are of course a tiny portion of the over 200,000 parcels in the city and county of San Francisco. We have closely reviewed each parcel before the Board and provided each member with the Board a memo outlining our process and detailing specific information about parcels of interest in their districts. We researched the physical characteristics and ownership history of each parcel and sent regular mailings to the property and any related addresses for the entirety of the time that the parcels were in default. For parcels that didn't have a known contact, we take additional steps that far exceed what the state requires, including mailing notifications to neighboring parcels to make them aware of the auction. We've taken additional steps to bring all available city resources to bear for any occupied property where an individual could be at risk of losing their home. Sheriff's deputies have already visited each occupied property to provide an in person notification. We've also worked closely with Adult Protective Services, the Mayor's Office of Housing and Community Development, Homeownership SF, and other social services to provide financial counseling and any other legal assistance. Once approved, the list of parcels will be published in a newspaper of record. The public auction will take place starting on April 20, and the sealed bid auction will take place on May 14. And with that, I'll take any questions.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. From what I do understand is that Supervisor Chan is requesting that this committee, this body, to amend the list to remove two inhabited properties. Could you in her district could you speak a little bit about them? Or do you have the I have address.

[Representative, Office of the Treasurer & Tax Collector (name not clearly audible)]: We've been in contact with Supervisor Chin's office, briefed her and her staff, and based on those briefings, they've decided to request that these be pulled. We don't have any objection to that.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. And those are the two the two addresses are 674 Muscat Street and 41 Sears Street East That is District correct.

[Representative, Office of the Treasurer & Tax Collector (name not clearly audible)]: Yeah, those are the ones they've let us know they would like to remove.

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

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

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Seeing no public comments, public comment is now closed. Colleagues, I would first like to amend the list to remove the two addresses proposed by Supervisor Chan, and a roll call please.

[Brent Jalipa (Committee Clerk)]: And on that motion that we amend the tax defaulted properties subject to public tax sale list to remove 674 Moscow Street and 41 Seers Street. Vice chair Dorsey.

[Rafael Moreno (Office of Economic & Workforce Development)]: Aye.

[Brent Jalipa (Committee Clerk)]: Dorsey aye member sotter.

[Regina Chavez (Early Childhood Special Educator)]: Aye.

[Brent Jalipa (Committee Clerk)]: Sotter aye chair Chan aye we have three ayes.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: The motion passes and I would like to send the amended list to full board with recommendation.

[Brent Jalipa (Committee Clerk)]: And on that motion that we refer the resolution with the new amended list to the full board with recommendation Vice Chair Dorsey. Dorsey aye member sotter aye chair Chan aye we have three ayes.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: The motion passes. Thank you. Mr. Clerk please call item number nine.

[Brent Jalipa (Committee Clerk)]: Item number nine is an ordinance amending the police code to revise the procedures for alarm companies and alarm users to claim refunds or credits of overpaid alarm fees under the police emergency alarm ordinance. Madam chair.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you and again we have our treasurer and tax collectors office.

[Representative, Office of the Treasurer & Tax Collector (name not clearly audible)]: Thank you this ordinance addresses a very minor technical issue with how emergency alarm fees are refunded when there' an overpayment. This ordinance does not create any new fees does not change the amount that anybody pays. How the process currently works is that alarm companies typically pay the city up front for their customers' alarm permits each year. Because customers are occasionally added, removed, or canceled throughout the year, companies may overpay at times, especially during the bulk annual renewals that we do at the end of the year. Right now, the code is unclear on how those overpayments can be refunded. That has led to a small number of balances sitting on the city books with no clear path to provide the refund. This ordinance creates a clear process and timeline for alarm companies and users to request the refund. It mirrors our business tax refund process. And just in summary, it clarifies our refund process aligns alarm fees with our standard refunds and should reduce the confusion any confusion that exists.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. And I say it's about time, so let's go to public comment on this item.

[Brent Jalipa (Committee Clerk)]: Yes, we're now taking public comment for this item number 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, Budget & 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 that we refer this ordinance to the full board with recommendation vice chair Dorsey.

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

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

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: The motion passes. Thank you. And, mister clerk, please call item number 10.

[Brent Jalipa (Committee Clerk)]: Yes. Item number 10 is a hearing to consider the review and approval of the budget guidelines for the board of supervisors and clerk of the board, annual budget for fiscal years 2026 to 2027 and 2027 to 2028 for submission to the mayor and controller. Madam Chair.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you and thank you so much. We have our clerk of the board here and the floor is

[Angela Calvillo (Clerk of the Board)]: Members of the committee chair Chan thank you so much for this opportunity to present before you. I'm also here with the Department's Administrative Deputy, Doctor. Edward de Assis. Thank you, Edward, for prudently managing the Department's financial data. Today's hearing is the second on the department's annual budget discussion as set forth in the board's Rules of Order six point eight and six point nine. And as you recall, we were last before you in December 2025 where we presented we shared a bit of our good work that we're doing in the clerk's office as well as to receive the committee's budget guidelines by which we would construct the proposed budget. To wrap up the department's budget phase after your review and any questions today we would like to formally request authorization to submit the department's proposed budget to the controller and the mayor for their budget phase. And finally, the budgeting process will continue when the board's phase in June and July occurs, where we will return to present to you any changes or updates to the placeholders from our earlier submission. So, we have one slide for you today. It shows the budget instructions requested from the department. Slide one recaps those requests. We have no changes to report from December till today. There are four items, items one through four. These are the general fund requests, not for the budget year, but for the out year, fiscal year 2027 through 'twenty eight, which we are requesting that you annualize in our budget, as they were funded by the Board from this last the current year. Happy to review them individually, but I want to start just by calling out two items specifically for the Assessment Appeals Board. The general climate for the Assessment Appeals is expected to remain critically high through 2030, at least. For comparison, during the last downturn after the global financial crisis from 2009 to 2012, the AAB employed five full time equivalent employees to process an average of 6,000 applications. During the current downturn, the AAB employees eight, thanks to the committee, the Board of Supervisors, that were funded in the current year, they are full time equivalent employees to manage 9,000 applications. However, the added three employees are only funded through the end of the budget year. The upcoming filing period, July to September 2026, the AAB is projected to receive another 8,700 applications, which would result in case management of over 16,000 appeals applications to process. Existing AAB staff are currently working nights and weekends to process these appeals. And to the first half of our AAB request is that we ask you to protect these three fourteen oh six senior clerk positions by converting them to permanent positions and to annualize their salary and fringe in the out year beginning in fiscal year twenty twenty seven through 'twenty eight. This request is shown on line two for the proposed budget at 469,939 thousand dollars The second half of our AAB request is, I believe, on line three. Represented is to annualize the funding for the higher stipends for AAB members. The volume of appeals have corresponded increasing in hearings that require adjudication. For comparison, the downtown the downturn saw 11 hearings a week, about three and a half to three to three and a half hours per meeting. But now we have 16 hearings per week. We are really working our board members for the AAB every day. And then just to continue, items five and six are non general well, are, I should say

[Brent Jalipa (Committee Clerk)]: They are general fund.

[Flo Kelly (District 9 resident)]: They are

[Brent Jalipa (Committee Clerk)]: general fund.

[Angela Calvillo (Clerk of the Board)]: Line five is the cost of living adjustment for the BLA. And line six is the placeholder for the LAFCO agency Formation Commission. That is 445,158. In June, we will come back to review those items with you. The total budget requests for general fund for the department to meet the department's charter mandates are $152,651 in the budget year. That's 2026 through 'twenty seven. Beginning in fiscal year 'twenty seven-'twenty eight, the amount is larger due to the annualization, the requested annualization of the aforementioned items for the AAB particularly, where the amount will increase to 733,466. The final item is Item seven. It's a non general fund request, but it is an administrative request that we bring to you every couple of years to appropriate $27,320 of special revenue in the Prop J outreach fund which is collected for the board to use in outreach advertising. These savings have accumulated in prior fiscal years mainly from city departments general fund budgets being used to pay for their outreach advertising costs, and the 10% that is required to be accumulated for the board's outreach advertising. And for transparency, we're just requesting authorization to move funds into our outreach budget. So then the last bit of information is to ask the committee, does the committee have or foresee any other recommendations that they may need for the fiscal year 'twenty six-'twenty seven and 'twenty seven-'twenty eight proposed budget. Typically we work to collect this information before the hearing, which we have done, but also recognize that new requests emerge throughout the year. And then without further ado, we humbly request that the committee approve the budget requests as presented today. And we are available for questions. Thank you for your time.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you so much for your work. I have this one random question. I think I wonder if I did remember to send an hour to copy you on it. Is to the city administrator, Chew, about voice over internet, that potentially we could the Board supervisor could potentially losing our landline in our offices. Could you help us understand where we're at specifically on that? Because I understand if we maintain our landline, it will somewhat be part of our budget. I don't know. I just wanted to understand that.

[Angela Calvillo (Clerk of the Board)]: We have been working with DT on the VoIP concern, the issues there. One of them is not yet settled that we would lose our telephone numbers. So, I have a meeting with DT Director tomorrow, and we'll find out once and for all if we, in fact, can keep our numbers. There are other concerns with the VOIP, and I will report to the Board on what those issues are, and we'll continue to move forward.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Great. And then, I think one additional item that I don't quite see here addressing, but maybe it is just part of operating budget, is really I know that all of us that have the satellite phones. And and this is I it's come about has to do with the power outage that I have no access to my phone my phone was out of battery and I start to realize like oh you know like for all my colleagues who also probably sit in the dark and just thinking about the satellite phones that we should all have we have two we have two sets I believe for each office how has that been maintained and sort of just the overall security system or access to communications for all my colleagues on the board, and including for the clerk's office in this context?

[Angela Calvillo (Clerk of the Board)]: Thank you so much for asking that question, Madam Chair. I did have a conversation with the deputy administrator, Katie Petrucioni, and we've been working on making sure that there will be a map that's created. They're going to map the entire building, but we would like them to also map the 2nd Floor. So we are aware of which plugs will actually work and be on the generator in general. To your question regarding the phones, I am grateful to Mary Ann Carroll, Director of Department of Emergency Management. She did provide us the radios to ensure that at least Board members could speak to the clerk, speak to your Chief of Staff. There are still three other staff in your offices that do not have radios. And we have put in last year for the funding to have something which would also allow us to Purchase

[Unidentified speaker]: more 800 megahertz radios using funding. We submitted an application this year for

[Angela Calvillo (Clerk of the Board)]: We were denied that funding last year, but we're going to try it again this year. We're also looking into purchasing the Starlink.

[Unidentified speaker]: Yes, Starlink satellite phones through Elon Musk's company. Basically, those Starlink satellite setups would be you'd be able to use those to access the internet remotely for more VOR. And it goes through the satellite system. The other item that you do have are I don't know if you recall the satellite phones that each district office has. Yeah. That's available, too.

[Angela Calvillo (Clerk of the Board)]: But we will work with you, a supervisor, if you have other ideas that we should investigate. And happy that you weren't interested in this and bringing it to this setting. Thank you so much.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Yeah. I think that, colleagues, I would like to say that I want to do authorize Madam Clerk to submit the budget today on our behalf but those are still two outstanding technical issues like which is one is potentially the board supervisor losing its landline again I find it critical in the time of disaster to just simply dependent on internet for access or communications while we're in here. That's one of my concerns. And then second is the satellite phone, but equipments and both also around security and safety sense. So those are the two items of budget line items that I' interested in learning more and potentially be adding really in terms of safety measure for the upcoming fiscal year and forward for the board' budget.

[Angela Calvillo (Clerk of the Board)]: Thank you.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. So, with that let's go to public comment. If there's no more no? Okay. 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 10 that was your opportunity. Madam chair we have no speakers.

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Seeing no public comments public comments is now closed colleagues I would like to move to authorize the clerk of the board to submit the department' proposed budget as presented today to the mayor' budget office and the office of the controller and move that this hearing be heard and filed. Roll call please.

[Brent Jalipa (Committee Clerk)]: On that motion vice chair dorsey.

[Unidentified speaker]: Aye.

[Brent Jalipa (Committee Clerk)]: Dorsey aye. Member sotter. Aye. Chair Chan.

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

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

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: The motion passes. And, mister Clark,

[Committee Clerk (alternate/staff)]: do we have

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: any other items before us today?

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

[Supervisor Connie Chan (Chair, Budget & Finance Committee)]: Thank you. The meeting is adjourned.

[Supervisor Myrna Melgar]: SFGov TV, San Francisco government television.