Budget & Finance Committee forwards downtown conversion tool, homelessness contracts and multiple budget items to full Board

The Budget and Finance Committee of the City and County of San Francisco met May 21 and voted to forward to the full Board a slate of ordinances and resolutions covering downtown financing, homelessness contracts, department budget adjustments and several finance actions.

The committee advanced a resolution of intention for a Downtown Revitalization and Economic Recovery Financing District authorized by state law (AB 24 88) that would use a portion of future property tax growth from commercial-to-residential conversions to help finance those conversions. Office of Economic and Workforce Development staff said preliminary consulting work identified about 50 likely candidate buildings that could yield roughly 4,400 to 4,400+ housing units if property owners convert and opt into the program by the state-authorized deadline. OEWD presented an estimate that, under a high‑takeup scenario, about $15.2 million of additional city property‑tax increment could be generated annually and potentially redirected back to participating projects as incentives over the program term. Jacob Bentliff of OEWD summarized the program: “The purpose of this district is specifically to support commercial to residential conversion projects,” and explained that projects must opt in by the end of 2032 and that a district board of directors would govern any district created.

Budget and Legislative Analyst and Controller staff cautioned that administrative and implementation costs and certain interactions with existing tax‑increment or redevelopment areas require close study. The BLA report noted costs the controller and clerk’s offices would incur to calculate tax divisions, hold hearings and staff a new board; OEWD and BLA staff said those costs could be reimbursable from district revenues but would likely appear in the near‑term city budget because revenue to reimburse the general fund would not be available until buildings are reconstructed and reassessed (an estimated five years or more). Committee members pressed for a robust financing plan and fiscal‑impact analysis before projects enroll. Several supervisors said they supported the item as a market signal to catalyze conversions but asked that the city track costs, caps on the share of tax increment diverted, and the net fiscal impact once service needs and new residents are accounted for.

The committee also advanced multiple homelessness and housing items. The Department of Homelessness and Supportive Housing asked to extend and increase existing contracts and to approve an assignment of a lease: - A second amendment with Episcopal Community Services (ECS) will extend operations and master‑lease stewardship at five long‑standing SRO hotel projects (Alder, Crosby, Elm, Hillsdale, Menton) for two more years and increase the contract by roughly $25.1 million to a revised not‑to‑exceed amount of about $72.3 million; the five properties together contain 464 units and the department reported occupancy rates above 90% at those sites. - A third amendment with 5 Keys Schools & Programs will extend and increase funding for the NextDoor congregate shelter (334 beds) by roughly $26.7 million, to a new total near $59.2 million, extending the contract through June 30, 2028. HSH said NextDoor had average occupancy around 93% in FY 2023–24 and that the program performs intake, case management, medical and behavioral‑health linkages and has placed hundreds of guests into permanent housing. - A consent/assignment resolution will transfer the lease and property‑management agreement for 1321 Mission St (the MARGO) from Tides Center (the former fiscal sponsor) to DISH SF so DISH can operate directly. HSH said the staff, services and standards will remain the same after the assignment; Lauren Hall of DISH described tenant outcomes and satisfaction at the MARGO.

Committee members discussed differences in per‑unit costs across the city’s supportive‑housing portfolio and noted that building condition, ownership model (city‑owned versus master‑leased privately owned SROs) and historic lease terms drive cost differences. HSH said reprocurement of systemwide site‑based supportive housing is planned and staff will work to improve parity of services while recognizing differences between legacy SROs and newer units.

On public‑safety and budget adjustments, the committee advanced an ordinance to reallocate approximately $7.9 million of ambulance revenue toward Fire Department salaries and overtime and to move salary savings to overtime accounts in the Department of Emergency Management and the Public Utilities Commission to cover increased overtime needs. Fire Department officials attributed the funds in part to retroactive higher Medicaid/managed‑care reimbursements for EMS transports; they asked the committee to approve reallocation to cover $3.7 million in salaries and $4.2 million in overtime. The BLA recommended approval with a technical reduction to the SFPUC overtime request; the committee accepted that reduction and forwarded the amended item.

Finance staff from the Comptroller’s Office presented two ordinances to authorize and appropriate proceeds for refunding certificates of participation (COPs) to refinance Moscone Center expansion debt. The proposed refunding COPs would be structured through the city’s master lease program and, if market conditions meet the city’s debt‑policy savings threshold, are intended to lower expected annual debt service (a March estimate showed average annual debt service near $24.2 million if executed under then‑market assumptions). Comptroller staff said issuance will be timed only if the city can meet the 3% net present‑value savings threshold in effect under the city’s debt policy.

Other items the committee forwarded included a modification to the airport capital‑program support services contract with T.Y. Lin International (increase of $32 million, extend term through September 2029) to support SFO’s multi‑billion‑dollar capital plan; a TEFRA hearing‑related approval to permit California Enterprise Development Authority to issue up to $15 million of tax‑exempt revenue obligations for the California Institute of Integral Studies (CIIS) campus refinancing; acceptance of a retroactive CalAIM grant for the Adult Probation Department (~$1.5 million) to support Medi‑Cal enrollment and reentry planning; a correction to a senior operating subsidy grant for Chinatown SROs LLC (+~$572,765) to complete a 15‑year subsidy; an ordinance to raise stall fees at the Alemany farmers market from $50 to $60 per day and add a CPI escalator (committee asked that staff notify vendors and noted there is no administrative appeal right in the ordinance as drafted); and administrative items from the clerk’s office (assessment‑appeals fee changes and a proposed plan to license the clerk’s legislative‑management software; the clerk requested a two‑week continuance on the licensing item to finalize accounting treatment with the Controller).

Committee members and agency staff reiterated that most of these items are being forwarded to the full Board with a positive recommendation and that several items will return with additional analysis or non‑substantive amendments (for example, the OEWD financing plan and BLA/controller work on the Downtown Financing District; clerks and controller will finalize fund language for the licensing fund). The committee’s roll calls on the items recorded unanimous positive recommendations (three ayes) on each forwarded measure.

Votes at a glance (committee action: forward to full Board with positive recommendation unless otherwise noted): - Item 1 — SFO contract mod with T.Y. Lin International: increase $32,000,000; extend term through 09/29/2029 — forwarded (3–0). - Item 2 — TEFRA/California Enterprise Development Authority: authorize issuance up to $15,000,000 for CIIS refinancing — forwarded (3–0). - Item 3 — Adult Probation Dept: retroactive CalAIM JI Path Round 3 grant acceptance, $1,500,000 — forwarded (3–0). - Item 4 — MOHCD first amendment: Chinatown SROs LLC senior operating subsidy + ~$572,765 (to fully fund 15‑year, 6‑month term) — forwarded (3–0). - Item 5 — Ordinance: raise stall fees at Alemany farmers market from $50 to $60 and add CPI escalator — forwarded (3–0). - Item 6 — Resolution of intention to form Downtown Revitalization and Economic Recovery Financing District (AB 24 88) — forwarded (3–0); departments to return with financing plan, fiscal impact analysis and administrative cost tracking. - Item 7 — Appropriation ordinance: reallocate ambulance revenue and shift salary savings to overtime across Fire, DEM and SFPUC (PUC overtime reduced per BLA recommendation) — forwarded as amended (3–0). - Item 8 — Ordinance: authorize issuance of refunding certificates of participation to prepay lease obligations (Moscone/COP structure) — forwarded (3–0). - Item 9 — Appropriation ordinance: appropriate COP refunding proceeds (not‑to‑exceed $379,000,000 in funds placed on controller reserve pending sale) — forwarded (3–0). - Item 10 — HSH second amendment with Episcopal Community Services (five PSH hotels) + ~$25.1M, extend to 06/30/2027 — forwarded as amended (3–0). - Item 11 — HSH third amendment with 5 Keys for NextDoor shelter + ~$26.7M, extend to 06/30/2028 — forwarded (3–0). - Item 12 — HSH assignment: consent to transfer lease & property management for 1321 Mission (the MARGO) from Tides Center to DISH SF — forwarded (3–0). - Item 13 — Administrative Code: increase Assessment Appeals Board filing, hearing and findings fees (code amendments plus two clarifying non‑substantive edits requested by clerk) — forwarded as amended (3–0). - Item 14 — Clerk of the Board license‑sales ordinance for legislative management system and fund creation — continued two weeks to allow Controller/Clerk to finalize fund/accounting language (motion carried) (3–0 to continue). - Item 15 — Motion: Budget & Legislative Analyst contract extension and FY 2025–26 COLA (4.5%) and related not‑to‑exceed adjustments — forwarded (3–0).

What to expect next: Most measures will appear on the Board of Supervisors agenda for the next Board meeting (the clerk noted the items are expected to appear on the June 3 Board agenda unless otherwise stated). For several of the larger or novel items — notably the Downtown Revitalization Financing District and the Moscone refunding COPs — staff will return with additional technical analyses (financing plan, fiscal impacts, and market timing) before final Board decisions.

Speakers quoted or cited in this report are included in the article’s speaker list below and direct quotes are taken from the meeting transcript.

Ending: The committee adjourned after completing its agenda and announced a next scheduled Finance & Appropriations Committee meeting that afternoon.