San Francisco Government SmartTranscripts:

[Speaker 0.0]: Good morning. The meeting will come to order. Welcome to the 04/15/2026 meeting of the Budget and Finance Committee. I'm Supervisor Connie Chan, Chair of the Committee. I'm joined by Vice Chair, Supervisor Matt Dorsey, and member, Supervisor Danny Sauter. Our Clerk is Brent Haliba. I would like to thank Jeanette Eganoff from SOGov TV for broadcasting this meeting. Mr. Clerk, do you have any announcements?

[Speaker 1.0]: Thank you, madam chair. Just a friendly reminder to those in attendance to please make sure to silence all cell phones and electronic devices to prevent interruptions to our proceedings. Should you have any documents to be included as part of the file, they should be submitted to myself, the clerk. Public comment will be taken on each item on this agenda. When your item of interest comes up and public comment is called, please line up to speak on the west side of the chamber to your right, my left, along those curtains. And while not required to provide public comment, we do invite you to fill out a comment card and leave them on the tray by the television to your left by the doors if you wish 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 U. S. Postal Service, the Tower Office, City Hall at 1 Doctor. Carlton Beguth Place, Room 244, San Francisco, California, 94102. Finally items acted upon today are expected to appear on the board of supervisors agenda of April 21 unless otherwise stated. Madam chair.

[Speaker 0.0]: Thank you so much mister clerk please call item number one.

[Speaker 1.0]: Item number one. A resolution retroactively authorizing the department of elections to accept and expend funds allocated by the california secretary of state in an amount not to exceed approximately 416,000 to fund voting system and election management system replacement for the period of 07/01/2025 through 08/31/2026. Madam chair.

[Speaker 0.0]: Thank you and today we have department of election here.

[Speaker 2.0]: Thank you. Good morning, John Ernst, director of elections. So, this morning, the department of elections is requesting the committee's review and approval of an acceptance spend resolution authorizing the department to obtain funds from the state of California totaling $416,431.1 for the reimbursement of costs associated with voting system replacement. These funds are the city' allotment of a larger total that the state legislature has provided for all counties in California. The department will apply the funds to reimburse costs incurred when making lease payments to the voting system vendor as required under an existing contract. The city must also show that it provided matching funds of $138,810.03 $7 to receive the state funds. Since the lease payment under the contract exceeds the total of state funds by more than the $138,810.35 The city meets the requirement regarding the matching funds without having to make any additional expenditures. And with that, I'll be glad to answer any questions regarding this resolution.

[Speaker 0.0]: Thank you. I don't actually have additional questions regarding specifically the item before us today. I do have questions, if I may, about the upcoming elections, both in the primary and, again, in general election in November, given the fact that, if I understand correctly, and maybe I'm not, therefore I would love clarification, And do we have any concern about election security or involvement with the federal government? And how are we prepared for that?

[Speaker 2.0]: So right now, no. I don't have concerns about election security, about any impairment of the election process by the federal government for June. Naturally, the election that we're focused on right now, we're not really we are planning for November. Right now, our focus is on the June election. We do have meetings with the Department of Emergency Management that is collaborative of all the security related agencies and also support services like DPW will be part of that regarding supporting the department through the election cycle on Election Day. And, those conversations will include election security, of course, including any sort of potential impingement of the elections process by any federal agency or authorities. At this time, I don't expect there to be any sort of security issues arising in June. Just don't and in my experience, the federal government has not interfered with elections processes in San Francisco during my time as director. And, we do work with the FBI before every election, DOJ, so we have connections in those offices. So, I understand the fears, I understand the concerns, but at the same time, I do expect the election to be well administered and for people to vote safely and securely June.

[Speaker 0.0]: And, if I recall correctly that the city does, and Department of Election is part of, has been through the city's, like, surveillance policy Chapter 19, that, if I understand correctly, that for the Department of Elections, you do have cameras.

[Speaker 2.0]: Correct.

[Speaker 0.0]: Could elaborate a little bit?

[Speaker 2.0]: Certainly. So, and we're also going to actually, we'll be bringing an amended request for an amended policy to the Rules Committee when after the thirty day rule is over in a few weeks. So, in our office, we actually livestream, and also at our warehouse, we livestream election related activities. So, any ballot handling processes that we undertake are actually livestreamed on our website. And then, we also have some internal livestreaming where we can monitor what's happening, like in the voting center, which is in the Ground Floor of City Hall. And then we also put cameras on the servers that we have that would record and administer the election equipment, and we record that. So, there were any entrance into area where the servers are, we would record that internally, both in the office, at the warehouse. We livestream our elections processes where there's ballot handling and processing. And then we also livestream, but not record, activities such as the opening of the ballots, the distribution of ballots to the poll workers, the inspectors to take the polls on Election Day, the provisional ballot processing that we do. And we have a rather robust schedule and regime on our website that people can click into and watch. And also, we have a pretty robust observation practice that we have in the department. So, I think it's far more robust than other counties in the state. So, we actually allow people to come and visit the department and actually be next and with our personnel as we process the ballots. They can see what we're doing. Nothing's being hidden. There's no walls or anything between people. Other than the ballot processing, we don't allow people in the tabulation room. So, we have the cameras, we record any sensitive areas, and also we have the in person observation that we promote and we support through the election cycle. So, if people have concerns, they're welcome either to watch us remotely or to visit us in person and take part.

[Speaker 0.0]: Thank you. And, Director Arts, I just want to be on a record, too, about like how I personally am very grateful for the work that you've been doing for, you know, decades now. Has it been decades?

[Speaker 2.0]: It's been a few weeks.

[Speaker 0.0]: Yeah. And so I just want to express my gratitude. Thank you. You've really been making sure that San Francisco has been a leading city in integrity around election, for election. It is amazing. Like, when I first learned about the surveillance policy that you brought forth, I didn't recognize and thought about the fact that when the department election having these live camera and live streaming Mhmm. And what it actually means for not just the city, but an example for the entire nation to see that you can have, like, integrity in your election and security in election. And and and this you're doing this the most bipartisan way, and there's no, any type of political involvements with it. So, again and it's really great to hear that you already have the leadership and the foresight. Of course, we do know that. But just hearing from you, again, on the record publicly talking about your anticipation and collaboration with other city agency anticipating potential you know not that we think that there will be but for this November but I just think that I really appreciate the leadership and the preparedness

[Speaker 3.0]: Thank you.

[Speaker 0.0]: Thank you. Vice Chair Dorsey.

[Speaker 4.0]: Thank you, Chair Chan.

[Speaker 5.0]: I want to associate myself with the Chair's remarks. I have been around the city government long enough to remember when the Department of Elections wasn't always well run. And then there were some issues and questions, and I think your department and your leadership have been really great. I think you, you know, we transitioned to ranked choice voting, and there's a lot of innovations that San Francisco has done that you have been responsible for. And I also would just appreciate during this time where the Trump administration is really elevating these sort of accusations of ballot fraud, the concern is that this is something that delegitimizes democracy itself. And I really I think it is important that you're being proactive in addressing those kinds of things with transparency in the way that you're doing it. So I just wanted to add that. No questions. Just wanted to

[Speaker 2.0]: Thank you.

[Speaker 5.0]: Express my appreciation for you as well.

[Speaker 2.0]: Thank you.

[Speaker 0.0]: Thank you and with that we''ll go to public comment on this item.

[Speaker 1.0]: Yes for now opening public comment for this item number one if we have any members of the public who wish to address this committee. Madam chair we have no speakers.

[Speaker 0.0]: Seeing no public comments public comment is now closed colleagues I would like to send this item to full board with recommendation and a roll call please.

[Speaker 1.0]: And on that motion to refer this resolution to the full board with recommendation vice chair Dorsey. Dorsey aye. Member Sauter. Aye. Sauter aye. Chair Chan. Aye. Chan aye. We have three ayes.

[Speaker 0.0]: The motion passes. Thank you. Mr. Clark please call item two and three together.

[Speaker 1.0]: Yes item numbers two and three are resolutions establishing the appropriations limits for fiscal year 2025 to 2026 pursuant to the California constitution. Item number two established at approximately 14,600,000,000 due to the addition of non residential new construction and the percent change in population within the San Francisco Metropolitan Area from the previous year for the purpose of computation of its appropriations limit. Item number three is for the special tax districts and infrastructure revitalization and financing districts and determining other matters in connection there with as defined. Madam chair.

[Speaker 0.0]: Thank you and today we have office of public finance here.

[Speaker 6.0]: Office of public finance will be next but I'm also from the comptroller's office Michael Mitten. This is my tenth year presenting the GAN limit. AI tells me it's my aluminum anniversary, so gifts are welcome under $25 So the GAN limit, in short, is a limit on taxes. It's a companion to prop 13 which limited property tax. The Gann limit limits all taxes. If we collect too much, then over a two year period we have to refund the taxes. The limit that we' allowed to collect increases each year by an income factor or the growth of commercial real estate in the city as well as population growth and this year the city has actually shrunk by four tenths of a percent but the nine Berry Counties has increased and our commercial value has also increased. So the total increase in our limit is more than 10%. We can also take away some We can also increase the limit by voter approval and our Prop M, which was passed in 2024, exempts all of our business taxes from this limit for the next four years and that increases our limit by 1,600,000,000. That takes our base limit to 11,700,000,000 and after we do the increases for the cost of living and the voter approved increases we get to 14,600,000,000 is the limit and our tax proceeds that are subject to the limit here are 6,300,000,000 we can remove some capital outlay and some other federal requirements and that makes our net tax proceeds 5,500,000,000 and that leaves us 9,000,000,000 underneath the limit. And I will pass it off to my OPF colleague.

[Speaker 7.0]: Good morning chair Chan and supervisors I'm Bridget Katz with the office of public finance and I will be presenting on the resolution establishing the appropriations limit for fiscal twenty five -twenty six for special tax districts and infrastructure and revitalization financing districts. Community facilities districts, special tax districts and infrastructure revitalization financing districts are government entities whose appropriations limits were established at the times that these districts were formed the laws governing these districts provide for an adjustment of the appropriation limit based on two factors population and the cost of living population growth is determined using the year over year change in San Francisco city and county population so as michael just mentioned per the state department of finance this was a decline in point 39% over the last year the cost of living is determined using the change in California per capita personal income per the state department of finance this was 6.44% for a combined adjustment factor of 6.02% for fiscal twenty five-twenty six for these districts this table shows the fiscal twenty five-twenty six appropriations limit by district when applying that 6.02% adjustment to last year's appropriations limit and just as as I mentioned the original appropriations limit were set at the time of formation of these districts that concludes my presentation and I'd be happy to answer any questions from committee members

[Speaker 3.0]: good morning supervisors nick menard from the budget legislative analyst office Items two and three are two resolutions setting the appropriation limits for tax proceeds, both for the city and then for special tax districts. We show on pages four and five of our report the city appropriation subject to the limit of $5,500,000,000 which is below the $14,600,000,000 limit that item two would establish. And then on page six, we show the changes in appropriation limits for the special tax districts. Very little spending qualifies or is subject to the limit within those special tax districts so we're also not anywhere near the limit on any of those districts we recommend approval of items two and three

[Speaker 0.0]: Thank you. I don't see any name on the roster. I don't have additional questions. Thank you so much for your work. And with that, let's go to public comment on these two items.

[Speaker 1.0]: We' now opening public comment for both these items two and three if we have any members of the public who wish to address this committee. Madam Chair we have no speakers.

[Speaker 0.0]: Seeing no public comments public comment is now closed. Colleagues I do want to flag for you that we have requested for the budget and legislative analyst to provide further analysis includes that we will have hearing this coming end of this month as well as early may for us to dive deeper into the city' debt policies, managements, fee waiver, and related issues. So we will have more conversation then, potentially involving the controller for our hearing. I just want to put that on the record as we anticipate as we inch in closer to the budget process. So, with that, I would like to send these two items to full board with recommendation and a roll call please.

[Speaker 1.0]: And on that motion to refer both resolutions to the full board with the recommendation vice chair Dorsey. Dorsey aye member sotter aye chair Chan aye we have three ayes.

[Speaker 0.0]: The motion passes. And with that Mr. Clerk please call item number four.

[Speaker 1.0]: Item number four is an ordinance extending for an additional five years through 07/01/2031 the delegation of authority under the charter to the general manager of the public utilities commission previously authorized and extended by four past ordinances to enter into grant agreements under the sfpuc's green infrastructure grant program with terms of up to twenty years after the project completion date as defined by the grant agreements. Madam Chair.

[Speaker 0.0]: Thank you. Today we have sfpuc here.

[Speaker 8.0]: Morning supervisors my name is willis logsden I'm a senior watershed planner in the wastewater enterprise at the SPUC and today I'm introducing an ordinance that extends the SPUC's authority administer its green infrastructure grant program through June 2031. And, I'd like to thank supervisor Mandelman for sponsoring this legislation. So, before we dive in, I just wanted to give a little bit of background. San Francisco has a combined sewer system, means that both storm water and waste water flow through the same pipes. Managing storm water is essential to protecting the route reliability and the performance of that system. One way that we manage storm water is through green infrastructure which is a set of engineered storm water management tools that capture, slow down, and clean storm water. The goal is to reduce the volume and the flow of water entering the combined sewer system. Some examples include rain gardens, green roofs, rain water harvesting, and permeable pavement. In addition to reducing pressure on the sewer system, these projects also deliver public benefits like neighborhood greening, climate resilience, and improved public spaces. Green infrastructure works by capturing storm water runoff as it flows off of concrete and other impervious surfaces in our city. The area that contributes storm water to the green infrastructure is called the Drainage Management area. And this concept of the drainage management area is important for this particular program because it is how we set our maximum grant funding per project. In the example shown here, the sports court comprises an area of about half an acre which flows towards an engineered planter that is sized and designed to collect and store that water. And, the green infrastructure grant program is just one component of the SFPUC's citywide strategy for building green infrastructure. Our agency's long term vision is to manage 1,000,000,000 gallons of storm water each year using green infrastructure by the year 2050. That's equivalent to capturing about 10% of the rain that falls on San Francisco in an average year. In And order to reach that goal, have three approaches that we utilize. The first is the storm water management ordinance which regulates new and redevelopment projects in the city which was implemented in 2010. We have capital projects that SFPC builds and operates ourselves. And we have grant programs that offer incentives to property owners and community groups to build green infrastructure including the g I grant program. And we're currently about one third of the way to our billion gallon goal and on track to meet that goal by 2050. The green infrastructure grant was launched in 2019 to provide funding for large properties in San Francisco to build green infrastructure that reduces the amount of storm water entering the sewer system. The program provides funding for both design and construction on facilities in both public and private properties. The program targets large, highly impervious areas, for example, asphalt school yards and large parking lots, which are the main contributors of storm water to our system. Awarded projects enter into a grant agreement with s f p u c and the property owner is responsible for maintaining the project for the duration of the twenty year agreement. The twenty year maintenance requirement is intended to align with the typical useful life of a green infrastructure asset. This also aligns with the expected performance of projects delivered through our wastewater capital program. By investing us at PUC ratepayer dollars in these projects, we believe they should have the equivalent level of performance over their life cycle as if we're building the projects ourselves. And lastly, the twenty years of maintenance also helps ensure that these projects can meaningfully contribute to our citywide 1,000,000,000 gallon goal. The program has five eligibility criteria. Firstly, being located on a parcel or public right of way that connects to an SFPUC sewer system. We also have a minimum project size requirement of that half an acre drainage management area that I mentioned earlier. There's also a performance requirement related to the design of the facilities to ensure that each project captures an appropriate volume of storm water. And the grant team, the application team must have experience designing constructing projects of a similar size and be in good standing with our program. And, then lastly, each project must achieve at least two additional co benefits beyond just storm water management including community engagement, climate resilience, and education. To date we have awarded about $30,000,000 in grants to 29 projects including 11 public schools, five public parks, nine private schools, one housing development, and one artist cooperative. Nine projects have been completed to date and there are currently nine more projects in construction that will be complete later this year. When complete, these projects will manage about 18,000,000 gallons of storm water each year. Overall, we're really happy with the outcomes we've seen from this program so far the level of participation to date. Our team's gone out to about 68 different properties to assess them for opportunities for green infrastructure. And the result has been a pretty consistent rate of applications each year over the last seven years with an average of new, four new projects awarded each year. The program is funded through the wastewater capital plan which includes both grant funding and funds for the program administration. To date, have awarded about half of the 61,300,000 allocated in the capital plan. Applications are reviewed and awarded on an annual basis with the next application cycle expected to be this fall. Grant awards are based on the size of the project and the proposed budget. For that, we use a cost per acre managed metric to calculate the maximum grant award for each project. And that's based on the drainage management area. So in summary, projects with larger drainage management areas that capture more storm water are eligible for more funding. In addition to that cost per acre metric, we also have a per project cap of 2,500,000 in funding per project. Since the launch of the program in 2019, SFPEC has come before the Board of Supervisors roughly every two years to extend the general manager's delegated authority to enter into agreements beyond ten years. Before coming to the board we also update the program rules at our commission. The SFPEC commission recently approved a resolution adopting several updates to the program. The maximum cost per acre was increased from 1,035,000 per impervious acre managed to 1,120,000 per acre managed to account for inflation and to continue to be able to cover the full cost of design and construction of these projects. And the per project maximum grant award of 2,500,000 remained in place. And, in the spirit of continuous improvement we made revisions to the program eligibility criteria and requirements which are aimed at clarifying program rules and maximizing the benefits of the program. In the past the delegated authority to the sfpc general manager sunset every two years however because today we're requesting a five year extension to the general manager's delegated authority our commission also authorized the sfpc general manager to increase the maximum grant award on an annual basis to account for construction cost inflation. And this will allow the program to update the cost per acre as needed for each annual application cycle. And for that we will use the San Francisco annual infrastructure cost construction cost inflation estimate which is a standard escalation index used for infrastructure planning in the city. And then lastly the commission authorized SAPC's general manager to approve future non material changes to the program guidelines such as process improvements and clarifying edits to the guidelines. So, in summary, today we're seeking an extension of the board's delegated authority to allow the SPUC general manager to enter into agreements with terms of up to twenty years after project completion. That'll ensure that the grant funded assets are maintained for their useful life. And extending this authority will allow SPUC to continue partnering with property owners and community organizations to implement green infrastructure that benefits both our sewer system and our neighborhoods. With that, I want to thank you for your time. I'm happy to answer any questions on this legislation. And my colleague, Jeremy Spitz, also has a couple of amendments to introduce to the Board, as well.

[Speaker 0.0]: Great. Could we go over the amendments right now?

[Speaker 5.0]: Yes. Thank you.

[Speaker 9.0]: Thank you, Will. Hello, Chair Chans, members of the Budget and Finance Committee. My name is Jeremy Spitz. These amendments have been distributed to you. They are just clerical amendments that were offered to us by the city attorney after we had already introduced the ordinance. So, I can read them into the record very quickly. Please bear with me. There are a few. So, on page one, in the long title, adding an S to ordinance numbers, and then striking ordinance number after all of the different ordinance numbers. On page two, line 16, striking city before administrative code. On page two, line 24, adding the word of after modifications. On page three, line seven, adding July 31 of each year. On page three, line 12, adding or the before municipal, so combined sewer system area or the municipal. On page three, line 18, adding a dash between three and quarters. On page four, line nine, striking the word is and adding the word are on page four, line 14, again, specifying July 31, and then adding the word cost before escalation. On page four, line eighteen and nineteen, striking the word updated and adding the word current. Page five, line 14 through 23, striking all of the file numbers and just keeping the ordinance numbers. On page six, line eighteen and nineteen, striking to after amendments, and adding the word to after modifications, and then after grant agreements, adding that do not extend the terms of the agreements beyond twenty years. On page seven, line twenty two and twenty three, again, adding ordinance numbers and then striking the individual ordinance number before all the ordinance numbers. And on page eight, line two, specifying that the ordinance shall become effective at twelve a. M. On the thirty first day after enactment. Thank you.

[Speaker 0.0]: Thank you. And confirming with our Deputy City Attorney that none of these amendments are substantive, he's nodding, so thank you. And I just definitely want to thank SPUC for the green infrastructure program. It has benefited the Richmond greatly, both for our Lafayette Elementary School and as well as our Alamo Elementary School. The kids love it. I know particularly for Lafayette Elementary, they even have blueberries grown in their little tiny green garden now, but overall also have other infrastructure that supplement it overall. So is actually what happened what ended up happening is with the green infrastructure it adds allow the school to have the opportunity to add many other features to their outdoor space instead of asphalt concrete outside So thank you for that work. And Supervisor Sauter.

[Speaker 4.0]: Thank you, Chair. And thank you for the presentation and for the program. I think it's a wonderful program, and I have no concerns about this extension. One question, just when we're looking at the map, I recognize that with the criteria, I think we're going to we are seeing more funding and more projects on the West Side and the South Side. And I anticipate that will continue just given that minimum acreage. But then you had, early in the presentation, had a map that showed all of the potential green sites throughout the city. And I guess I'm trying to square those up, right? If we're not seeing many in District 3, District 2 of these projects funded, how do we get that green infrastructure? What are the opportunities and other funding ways to get that?

[Speaker 8.0]: Yeah, that's a great question. So yeah, I think the half acre minimum size requirement could have something to do with that that has some limits on the type of properties that could be eligible for this program. So I think in the future, if we start to run out of opportunities for large sites, we would consider adjusting that threshold to a smaller minimum size that could create opportunities for smaller properties to participate in this program. And then we also do have other grant programs outside of the green infrastructure grant. We also offer what's called the Urban Watershed Stewardship Grant that will be coming back online in the next year or so that provides opportunities for grant funding for smaller scale projects. And so we are trying to provide opportunities for different land uses to be able to capture storm water throughout the city wherever it's feasible. And so if a project or a property isn't eligible for this program, there might be other avenues for funding that we could offer.

[Speaker 4.0]: Good. Thank you. And I encourage that. I know this weekend in Chinatown, we're doing the rain guardians in Spafford Alley. So I look forward to that and thank you for all your work on this.

[Speaker 8.0]: Thank you.

[Speaker 0.0]: Thank you and so with that let' go to public comment on this item.

[Speaker 1.0]: Yes we' now opening public comment for this item number four if we have any members of the public who wish to address this committee. Madam Chair we have no speakers.

[Speaker 0.0]: Seeing no public comment public comment is now closed colleagues I would like to make the motion to accept the amendment clerical amendment proposed by sapuc and move the amended legislation to full board with recommendation and a roll call please.

[Speaker 1.0]: And on that motion that we amend this ordinance as are written at the record by the department and to refer this ordinance to the full board with the recommendation as amended. Vice chair Dorsey. Aye. Dorsey aye. Member Sauter. Aye. Sauter aye. Chair Chan. Aye. Chan aye. We have three ayes.

[Speaker 0.0]: The motion passes thank you and mr clerk please call item number five

[Speaker 1.0]: yes item number five is a resolution approving and authorizing the general manager of the san francisco public utilities commission to execute a contract for the hetch hetchy water and power north american electric reliability corporation compliance and audit support to archer energy solutions ill see to provide as needed professional services to hetch hetchy water and power to meet north american electric reliability corporation western electricity coordinating council california independent system operator and the california public utilities commission regulatory requirements for an amount not to exceed 11,600,000 with a duration of five years with an anticipated time frame from May 2026 through May 2031 pursuant to the charter. Madam Chair.

[Speaker 0.0]: Thank you. And, again, we have SPUC here.

[Speaker 10.0]: Good morning. My name is Adam Ozerkwitz. I'm the division manager for Hetch Hetchy Water and Power of the San Francisco Public Utility Commission based out of Moccasin. Here to request approval for Professional Services three twenty seven, HHWP NERC compliance audit and support. Hetch Hetchy Water and Power owns and operates components of the bulk electrical power system. This is the network of power generation and transmission networks that bring energy to the customers. Hetch Hetchy operates four electrical powerhouses, numerous miles of high voltage transmission lines, two substations, and two switchyards that are interconnected to other utilities, including PG and E, Turlock Irrigation District, and Modesto Irrigation District. The bulk electrical system is overseen by NERC, the North American Electric Reliability Corporation, and its subsidiaries Western the WECC, Western Electricity Coordinating Council, as well as the California Public Utility Commission. This regulatory oversight by NERC serves to provide a reliable electrical system for all of the power customers in The U. S. That regulatory oversight oversees operational and planning components of the power generation and transmission system, as well as security oversight, including cybersecurity of components of the bulk electrical system. These standards require the bulk electrical system asset owners and operators to meet all of these NERC compliance standards. New case the authority for financial fines for violations of their regulatory regulations operational restrictions and cannot result in mitigation costs as well as reputational harm The professional services contract 327 provides support for meeting these reliability standards 56 reliability standards that affect roughly over 1,800 devices within the SFPUC components of the bulk electrical system. All of these standards require procedural documentation development, implementation of operational procedures, staff training, And all of these standards and components are subject to NERC audits and updates. So the contract provides maintenance support of the NERC compliance program overall, training for staff, document development, subject matter expertise for our NERC compliance, as well as NERC implementation. And then preparedness for audits, whether it's a NERC audit or a self audit as directed by NERC. And then support for revising or creating procedures for new standards that may come to light. So with that, I'll take any questions and ask for the support for the Professional Services 03/27 contract.

[Speaker 0.0]: Thank you.

[Speaker 3.0]: Item five is a resolution that approves a new agreement between the pc's power division and archer energy solutions The contract has a five year term and a value of $11,600,000 for those five years. There is also an option to extend the agreement by four additional years. And this agreement would allow Archer to continue to provide safety and operational compliance reviews to ensure that the Power Division complies with the regulatory standards. We show the budget for the contract on page 12 of our report. You can see this is about a $2,300,000 a year contract funded by power customer revenues. That is similar to what they've been spending over the past couple of years, so I think it's a reasonable budget. There is a current contract that has about $750,000 of remaining spending on it and a term that extends through March 2027. This contract, I think, may be undersized relative to historical spending and the fact that the billing rates CPI every year. So that remaining pool of funds could be used to top up this contract. And we recommend approval of item five.

[Speaker 0.0]: Understood. I think I just want a clarification on what you just said for the BLA for Mr. Menard. What you indicated is that we believe SAPUC, by projection, probably will come back, at least for the CPI increase or the duration of the contract?

[Speaker 3.0]: I think if they're going to continue to spend at the rate that they've been spending, this $11,600,000 is not sufficient. But because they have $750,000 left over on an existing contract that doesn't expire for a year, I think it's possible they could use that to fund to bill some of the work going forward, and that this $11,600,000 could get them through the remaining, you know, four years.

[Speaker 0.0]: Understood. So with the saving that they had or I I shouldn't say saving. With with the unspent funding, plus what we are approving today or intend to approve today, together that they are likely to be able to have well, essentially, the unspent fund becomes a contingency

[Speaker 4.0]: Yes.

[Speaker 0.0]: Funding for them that they could probably not have to come back for additional funding.

[Speaker 3.0]: Probably won't have to come back until probably like the last year of the contract. I think that what I'm thinking about, too, is like we're in a high inflationary environment. We're at 3%. It's going to go higher given the energy crisis and other inflationary, like federal policy. And this contract budget essentially doesn't assume any inflation. And they've been spending $2,300,000 a year on the existing contracts. So I do think it's a little undersized, and they'll probably have to come back before this five years is up.

[Speaker 0.0]: Thank you. Does the PUC ever respond to that?

[Speaker 10.0]: Yeah, we do realize that concern. A couple of things have shifted over the past duration of this contract. We're able to bring some staff on board, subject matter experts, that should alleviate some of that spending and potentially lower the use rate of the contract capacity. However, that would be subject to those staff remaining on board, and we don't have any attrition. So, we do realize that we're really close on what the capacity of the contract is and what we expect to spend.

[Speaker 0.0]: Okay. Good to know. Thank you. Just want to be on the record about that. Sorry, have one more question. I think this is for SRUC. So, that event, just really about staffing, what is the projection of dollar amount that we think it's going to potentially be additional to what we are approving today?

[Speaker 10.0]: The additional contract capacity over the duration of the contract? I don't have that projection on hand. However, if we look at the current spend rate, which is the $2,300,000 per year, I think Yes. That's what you currently calculated, correct? So that would put us out over the five year contract, only about $1,000,000 over what we're currently requesting.

[Speaker 0.0]: Understood. Thank you. And with that let' go to public comment on this item.

[Speaker 1.0]: Yes. If we have any members of the public who wish to address this committee regarding this item number five, now is your opportunity. Madam chair we have no speakers.

[Speaker 0.0]: 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.

[Speaker 1.0]: Now I have a motion to refer this resolution to the full board with the recommendation vice chair Dorsey.

[Speaker 5.0]: Aye.

[Speaker 1.0]: Dorsey, aye. Member Soder. Aye. Sauter, aye. Chair Chan. Aye. Chan, aye. We have three ayes.

[Speaker 0.0]: The motion passes. And, mister clerk, please call item number six.

[Speaker 1.0]: Yes. Item number six is a resolution approving the agreement between the Peninsula Corridor Joint Powers Board Members boards member agencies comprised of the city and county of san francisco san matteo county transit district and the santa clara valley transportation authority regarding the peninsula corridor joint powers boards fiscal obligations to california public employees retirement system effective upon execution of the agreement by all member agencies and authorizing the mta agency director of transportation to execute the agreement. Madam Chair.

[Speaker 0.0]: Thank you. It is good to have our very own county transportation authority here.

[Speaker 11.0]: Great. Good morning, committee members. Jesse Kahler, director of strategy at the San Francisco County Transportation Authority. Transportation Authority partners with SFMTA to provide staff support to San Francisco's three appointees to the Caltrans Joint Powers Board. This does include Supervisor Shimon Walton. We have been in coordination with his office on this item. The item before you is to consider recommending that the Board approve an agreement with the two other member agencies of Caltrain, the Santa Clara Valley Transportation Authority, and the San Mateo County Transit District, also known as Sam Trans. Under the proposed agreement, the three Caltrain member agencies would agree to share financial responsibility with respect to Caltrain's pension funding obligations with the California Public Employee Retirement System, CalPERS, in the event that Caltrain were to be dissolved or if CalPERS were to terminate its contract with Caltrain, and only in the very unlikely event that Caltrain were to be unable to fulfill these obligations. Caltrain is in the process of negotiating what is known as a successor agency designation and contract with CalPERS, as one part of a set of steps underway to give the Caltrain board and executive director greater oversight of and authority for the agency's dedicated employees. Since the three member agencies formed Caltrain in the early nineteen ninety's, Sam Trans has served as managing agency for the railroad, including to date, Sam Trans's role to employ all public agency staff serving Caltrain. In 2022, the three member agencies and Caltrain entered into a four party memorandum of understanding concerning the governance of the railroad, including to establish a dedicated executive director and to codify provisions for the management and oversight of rail employees. As part of the work stemming from that MOU, counsel for Caltrain and counsels for the three member agencies have determined that Caltrain should have its own separate contract with CalPERS for the railroads employees. As a precondition of entering into a contract with CalPERS, state law requires that the member agencies of the Joint Powers Board agree to accept financial responsibility for the JPB's pension obligations in the event that Caltrain were to be dissolved, or if the contract were terminated, and again, only Caltrain would not have, would have insufficient assets to cover those obligations. Given these parameters, it is extremely unlikely that this clause would ever be triggered, as Caltrain's assets are valued at approximately $4,200,000,000 and the estimate of pension liability for rail employees has been estimated at approximately $16,000,000 Still, a formal agreement among the member agencies to provide a backstop for these obligations is necessary to fulfill CalPERS requirements. Given the low likelihood that the member agency backstop would ever need to be called upon, the recommended agreement does not apportion relative responsibility among the member agencies. If and when such apportionment were to be needed, the proposed agreement calls for this to be established through a future agreement among the parties. The Valley Transportation Authority Board approved the agreement last month, and the SamTrans Board approved the agreement earlier this month, with these approvals generally conditioned on board approval by all three member agencies. The SFMTA board also recommended approval last month. That concludes my remarks. We are happy to address any questions. Thanks.

[Speaker 0.0]: Thank you.

[Speaker 3.0]: Item six is a resolution that would an agreement between MTA, Sam Trans, and VTA to accept Caltrain's financial obligations to CalPERS if Caltrain is unable to meet them going forward. This is related to Caltrain being able to enter into an agreement with CalPERS and requiring, because it's a JPA, the member agencies to basically backstop those liabilities. We discuss on page 16 of our report the unfunded pension liabilities of Caltrain are $15,700,000 Caltrain has $4,360,000,000 in assets, 10% of which are liquid, and only $400,000,000 of total liabilities. So if it were to liquidate tomorrow, we believe that Caltrain was very well poised to meet this unfunded pension liability without contribution from the city, though the actual share of the city's responsibilities would be determined in a future agreement. I don't think it's completely without risk that Caltrain does go under. We show on page 18 of our report the kind of financial condition of the member agencies in Caltrain, both in terms of ridership and then their pre COVID financial condition relative to as it is in 'twenty four, 'twenty five. And you can see Caltrain ridership is down 38%. And their net income is negative $200,000,000 when it was only negative $75,000,000 pre COVID. The good news is that the regional sales tax that's pending before voters would cover all Caltrain expenses for the next fourteen years. So in that, if does pass, that will also further reduce risk to the city. The final thing I'll say is that this $15,700,000 unfunded liability is a point in time. It's from 2023. It's subject to change based on the contributions that Caltrain makes to CalPERS and then the performance of the CalPERS investment assets. So that number could go up or down depending on the number of staff that are at Caltrain, the agency's contribution to CalPERS, and performance of financial markets. Ultimately, I do think this is a low risk agreement for the city, and we recommend approval of Item six.

[Speaker 0.0]: Thank you. I feel like this spins a long time coming that supervisor Walton and even when supervisor Aaron Peskin was on the board that there was a really a long time discussion that particularly that when and he still is supervisor Walton that being in joint trans bay authority that just been quite an ongoing discussion about governing and staffing and and this is almost the most neutral way to ensure that the staff can stay on board and and actually be protected with their pension while I think not just San Francisco but clearly shown in the budget legislative analyst report that the entire Bay Area as a transit system has to tackle deficits across. So I am supportive of this agreement today. I think it's actually much needed while it does have its risk I think it's a regional like a shared regional risk that we already have. And I anticipate not as an entire region, collectively, will also problem solve should this really hit us. It's better that we're all in this together. And so, with that, I don't have any other question or comment. I don't see names on rosters. So, let's go to public comment on this item.

[Speaker 1.0]: Yes, we're opening 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.

[Speaker 0.0]: Seeing no public comments public comment is now closed and with that colleagues I would like to move this item to full board with recommendation and a roll call please.

[Speaker 1.0]: And on that motion to refer to the full board with recommendation vice chair Dorsey.

[Speaker 3.0]: Aye.

[Speaker 1.0]: Dorsey. Aye. Member Sauter. Aye. Sauter. Aye. Chair Chan. Aye. Chan. Aye. We have three ayes.

[Speaker 0.0]: The motion passes. With that are there any other business before us today, mister clerk?

[Speaker 1.0]: Madam chair, that concludes our business.

[Speaker 0.0]: The meeting is adjourned.