Municipal Transportation Agency - Regular Meeting

I'M NOW CALLING THE FEBRUARY 17, 2026 REGULAR MEETING OF THE MUNICIPAL TRANSPORTATION AGENCY BOARD OF DIRECTORS AND PARKING AUTHORITY COMMISSION TO ORDER. SECRETARY SILVA, PLEASE CALL THE ROLE.

ON THE ROLE, DIRECTOR CHEN. I'M SORRY, HE STEPPED AWAY. HE IS PRESENT THOUGH. DIRECTOR HEMINGER.

HERE.

HEMINGER PRESENT. DIRECTOR HENDERSON.

HERE.

HENDERSON PRESENT. DIRECTOR HINSEY.

Present.

Hinzi present. Director Kahina?

Here.

Kahina present. Chair Tarloff? Here. Tarloff present. As I mentioned just a moment ago, Directors Chen and Felder will be joining us momentarily. For the record, I note that Director Hinzi is attending this meeting remotely. Director Hinzi is reminded that she must appear on camera throughout the meeting and in order to speak or vote on any items. Places you on item number three. The ringing and use of cell phones and similar sound-producing electronic devices are prohibited at this meeting. The chair may order the removal from the meeting room. Any person responsible for the ringing or use of a cell phone or other device. Places you on item number four, approval of minutes for the January 20 regular meeting.

Directors, are there any changes to the minutes? Seeing none, we'll now open public comment for item four for two minutes each.

Members of the public wishing to provide comment will have two minutes each. There'll be a warning at 30 seconds and a chime when the time is up. Any speakers can come up to the podium at this time. Seeing none in the audience and no accommodations.

Thank you. Public comment is now closed. Colleagues, is there a motion and a second?

So moved.

Second.

Secretary Silva, please call the roll. On the motion to approve the minutes, Director Chen.

Aye.

Chen, aye. Director Hemminger.

Aye.

Hemminger, aye. Director Henderson.

Aye.

Henderson, aye. Director Hinzey. Aye. Hinzey, aye. Director Kahina. Aye. Kahina, aye. Chair Tarloff. Aye. Tarloff, aye. Thank you. The minutes are approved unanimously. Thank you. Please call the next item. Places you on item number five, communications. I have none.

Thank you.

Please call the next item. Places you on item number six, the director's report.

Thank you. Good afternoon, Chair Tarloff, Vice Chair Kahina, Directors Judson True. I am standing in for Julie Kirschbaum, Director of Transportation today. Great to be here on this rainy Tuesday. I have a number of items for you today. First, I'd like to, it seems like a while ago now, but I'd like to report back on the Super Bowl. The SFMTA really stepped up, as did the entire city, for Super Bowl week, and I really want to start by appreciating the hundreds of MTA staff who kept the city moving during that week and in the pre-Super Bowl celebrations, many of which took place right here in San Francisco. All our teams contributed to the success of these events, but here are a few highlights. we added 352 extra hours of muni service during super bowl week and had many more riders than usual muni delivered more than a hundred thousand additional passenger trips during super bowl week than in the previous week and the saturday before super bowl sunday saw the second highest ridership on a saturday since before the pandemic I want to thank the muni operators, transit supervisors, station agents, fare inspectors, maintenance staff, and the other transit operations staff who put those extra hours in. To keep traffic moving around the areas where there were Super Bowl fan events, around 200 parking enforcement staff worked each day during Super Bowl week. I want to thank them for keeping traffic flowing safely and freely. And speaking of those events, our special events team reviewed and issued 20 permits for Super Bowl-related events. And our taxis, access, and mobility services division ensured that people with mobility needs could get around and access streets that were closed. Our street operation shops installed 3,800 temporary signs to support events, venues, security, and safety at 450 locations across the city. Our security team worked with the San Francisco Police Department to address security needs throughout the week. Our team also helped staff the city's Emergency Operations Center and Joint Information Center and much, much more. This was an incredible team effort, and I'm sure there are many staff who I haven't mentioned who deserve to be appreciated for working together to make it all possible. I do want to especially thank a few folks, and this is by no means exhaustive, but Tony Henderson, Nick Chapman, Leslie Bienenfeld, Jonathan Kibrick, Jarrett Hornbostel, Nikki Kobayashi, Romulo Benedian, James Saracino, and Jonathan Yu, and of course, many, many more. San Francisco shined bright during Super Bowl week. The weather was especially good that week, and our agency helped make that possible in ways large and small. My next item is Ride Muni to School Week, which was also that week before the Super Bowl, February 2nd to 6th. Ride Muni to School Week is part of our Safe Routes to School program, which teaches students and their parents and caregivers to get to school by walking, biking, carpooling, and taking transit. We tabled at 12 high-transit-use SFUSD schools around the city, celebrating students who ride Muni. We engaged with over 1,000 students, giving away I Love Muni notebooks, pencil cases, and tote bags. We also sponsored a Ride Muni to School Week art contest, which is still live and is accepting entries for the end of February. More information can be found on the Safe Routes to Schools website, sfsaferoutes.org. And now, looking ahead, today is the start of Lunar New Year, and I want to, on behalf of the SFMTA, wish everyone a very happy Lunar New Year. Year of the horse begins today. San Francisco's Chinese New Year parade will be held on Saturday, March 7th, and we will be there. Supervisors Chan, Chen, Sauter, and Mandelman introduced legislation to use funds from the General Reserve to provide free parking and muni service to celebrate the Lunar New Year. That legislation passed the Board of Supervisors Appropriations Committee last Wednesday with a recommendation for approval and goes to the full Board of Supervisors soon. If approved, we will provide the first hour of parking free from February 8th through March 8th at the Portsmouth Square Garage in Chinatown and free muni on March 7th for the Chinese New Year parade, except for cable car. There will also be bus reroutes and extra muni service on March 7th. And not only will we be supporting the Chinese New Year parade, but as I mentioned, we'll also be participating in it. We'll have a contingent riding on our motorized cable car in the parade. Board members are, of course, invited to join. We hope to see many of you there. And we've also invited community leaders from Chinatown to join us. The week before the parade, we'll be launching a cable car we've decorated in honor of Lunar New Year. On Thursday, February 26th at 2 p.m., that cable car will depart from the barn, cable car barn at 1201 Mason for its inaugural ride. We'd love for members of the board to join us for that special ride, and then the car will be in regular service for the public to enjoy. Finally, I'd like to let you know about one more event we have planned for February, in fact, for this week. We're hosting a Hop on Muni Pub Crawl during San Francisco Beer Week with our partners Standard Deviant Brewing and the San Francisco City Football Club. The kickoff will be this Friday, February 20th at 5 p.m. at Standard Deviant Brewing, which is on 14th Street near Mission. The event will highlight how easy it is to explore San Francisco using transit while supporting small, independent businesses along our corridors. It will also feature the Hop On Muni IPA, a transit-inspired beer. More information is available at sfmta.com forward slash hoponmuni. So I'm sure all of you will be at that on Friday. And Madam Chair, that completes my report.

Thank you. We will now open public comment on the director's report for two minutes each. I would like to remind folks of what Mr. True, acting director True, shared. A report back on the Super Bowl, Ride Muni to school week, the Lunar New Year and our plans, and the Hop on Muni pub crawl. If you feel that Mr. True missed addressing a topic, you may comment on that during item nine, which is general public comment. If you are here to speak on an item later in today's agenda, please wait to make your comment until that item is called. With that, public comment is now open.

Members of the public wish to provide comment. We'll have two minutes each. A warning sound will chime at 30 seconds and then a chime when the time is up. Any speakers can come up to the podium at this time. Seeing none in the room and no accommodation requests.

Thank you. We'll now close public comment. Colleagues, any questions for Mr. True? Director Chen?

Thank you, Chair. Thank you for acknowledging Lunar New Year. Chair Tarlov and I were actually just at an event earlier. And I think the Portsmouth Square Garage is doing first hour free already. It seems like so. But to everyone here, . So thank you.

Thank you, Director Chen. I believe we are ready to move to the next item.

Please, Secretary Silva. Directors, that places you on item number seven, the Citizens Advisory Council report. Our chair is joining us remotely.

Good afternoon, directors. I have a very brief report this month. We heard a presentation at our meeting earlier in the month on the 29 sunset improvement project, and the CAC strongly supports this improvement project, the phase two, and we are excited for the speed, reliability, and safety improvements from the implementation of this project. We're glad to see that the agency is being responsive to any requests to make the 29 sunset faster and more efficient, and these are the kinds of changes we like to see. So, thank you.

Thank you, Chair Leifer. I suppose we will open public comment on the CAC report for two minutes each, please.

Members of the public wishing to provide comment will have two minutes each. There will be a warning sound at 30 seconds and a chime when the time is up. Any speakers can come up to the podium at this time. Seeing none in the room and no accommodation requests.

Thank you. We will now close public comment. Colleagues, it's my understanding that this item will be coming before our board, I believe you said, Secretary Silva, later this spring. Is that correct? So I don't know if it makes sense for us to comment on it now. But if you'd like to, you're certainly welcome to. Very good. Secretary Silva, please call the next item.

Directors, that places you on item number eight, new or unfinished business by board members. Colleagues, do you have any items to share?

Director Hemminger.

Thank you, Madam Chair. Colleagues, Christmas is going to come late this year, not early. You all have a box in front of you. And if one of you wants to open the box, then you can figure out what's inside. As you know, from time to time, I remind you that in addition to running a far-flung transportation network in San Francisco, we are a 33% owner of a train service that has been running on the San Francisco peninsula since Abraham Lincoln was president. And thank you, director. So we have a visual sighting. And for those of you who still have one of these train sets in your basement, and even for those of you who play with it from time to time, this is interoperable, I have been informed. So you should be able just to plop it down on the tracks and make it go around the basement. We do a lot of business with this railroad. And in recent years, there's been quite a bit of business, because really the biggest change and improvement in the history of this service occurred in the last couple of years with electrification of the line. It's one of the first projects of its kind in the country. When these trains were introduced, when Abraham Lincoln was president, it was steam that powered the trains. And then for many years after that, diesel fuel. And now that we've got the electrified line, the diesel service has been retired except for the little piece that goes from San Jose to Gilroy, which is still running on diesel. And we would like to change that fact as soon as we can. So I wanted to bring you a little memento from your friends and colleagues at the Caltrain. I think you're aware that I represent you as one of three San Franciscans. Shimon Walton is the representative of the Board of Supervisors. And Greg Wagner is the brand new member and the controller of the city and county. So I hope you enjoy your train, and don't be embarrassed if you still aren't playing with the train, because a lot of people do it, believe me. Thank you very much, Madam Chair.

Thank you.

Thank you, Director Hemminger. I will enjoy this train. It's very cute. And I also see that Director Henderson has something to share.

Real quick, I just wanted to say happy Mardi Gras to everybody, happy Lunar New Year, and let you know that I had the chance to get on the Black History Month cable car a week ago, maybe, or a little over a week ago. And it was really a fun time. It was really just an amazing experience. I don't know. It was a great experience. It made me so proud to be part of the history and legacy of this agency. And I was really proud of the high school students, the Washington high school students, who had a presentation. I decorated the cable car with some poems that they wrote and some other history facts. And it was just a really enjoyable experience. And I hadn't been on a cable car in probably, I don't know, 10 years or something like that. So it was nice to take a trip around the city and go downtown and just enjoy It was a great Super Bowl weekend, and that was sort of my kickoff to the weekend. And so I just wanted to thank the students and Acting Chief Equity Officer Andrea and her team, Mike, and Benjamin, and Nosa, and a bunch of people. I mean, it was just so many staff there who made the trip. And we had almost like a little school assembly. It was very lovely, and I want to thank also It was countless staff, but Willa and Cassandra for getting us to and from our destination safely on the cable car. And it just made me really proud. I think sometimes right now, celebrating cultural events is maybe frowned upon in some areas. But I saw through that event how important each one of our employees and all of the background that we bring to this agency make for a really well-rounded and robust transit system and the impact of different groups on delivering excellent service. And so I just want to say thank you to everybody. And it was a really well-done event.

Thank you, Director Henderson. And thank you for representing the board at that event. I wish I could have gone. And Director Felder.

Well, I just wanted to follow up on Director Hemminger's, you know, remarks around Caltrain because I think it's also an important reminder just of how far as a region transit has come in the last few decades. And I look back to the degree to which Caltrain was a part of, of the way people got around the Bay Area, not just for work, but for play. And that has fundamentally changed in the last 25 years or 30 years. And I think it's really an important reminder of what we've seen even over the course of the last few years, how much more ridership we're seeing on weekends and outside of you know, the core commute times. And it's not to say that we can't be focused and we obviously need to be focused on the commute times. But I think the Dorito transit is a part of all aspects of people's lives has really changed. And Caltrain in this, you know, market has been a huge part of that. And so I just wanted to sort of acknowledge that. It's also healthy sometimes, I think, to view things through the eyes of other generations. And I see my son and the degree to which he is not only using not just Caltrain, but BART and Muni all interchangeably and together in a way that 25 years ago kids just weren't doing. AND I THINK THAT'S A REAL MARK OF THE PROGRESS THAT WE'VE MADE AS A REGION AND IT'S AN IMPORTANT REMINDER AS WE MOVE INTO THE CHALLENGES OF THE NEXT FEW YEARS OF HOW IMPORTANT IT IS FOR US TO HOLD TOGETHER THAT PROGRESS THAT WE'VE MADE AND MAKE SURE THAT THESE CHALLENGES ARE JUST SMALL PIT STOPS BUT NOT THINGS THAT TAKE US OFF TRACK BECAUSE WE HAVE MADE GREAT PROGRESS. SO I JUST WANTED TO TAKE THE OPPORTUNITY TO NOTE THAT AROUND CAL TRAIN SPECIFICALLY.

Thank you, Director Felder. I believe we should open public comment on this item for two minutes each.

Members of the public wishing to provide comment will have two minutes each. There'll be a warning sound at 30 seconds and a chime when the time is up. Any speakers can come up to the podium at this time. Seeing none in the room and no accommodation requests.

Thank you. We will now close public comment. Secretary Silva, please call the next item.

Directors, that places you on item number nine, general public comment. Members of the public may address the board of directors on matters that are within the board's jurisdiction and are not on today's calendar. Two minutes.

Yes, we will now open public comment on this item for two minutes each.

Members of the public wishing to provide comment will have two minutes each. There'll be a chime at 30 seconds and a, there'll be a warning at 30 seconds and a chime when the time is up. Any speakers can come up to the podium at this time. This is for general public comment for items not on the agenda.

Ah. My name is Lonnie Mason. I'm the executive director of First Generation for Environmental Health and Economic Development, dealing in the Bayview-Hunters Point community. When it comes to parking, the community is a little bit upset. They've been getting a lot of tickets on their cars and saying that they illegally parked a certain way. They don't know what's illegal and not legal. And so I think we can be some type of support and help in regards to warning the community and helping the community understand what is actually legal and what is actually not legal as far as their parking situation. I'VE GOT ANOTHER THING, AND I DON'T KNOW WHO TO GET IN CONTACT WITH IN ORDER TO RESOLVE THAT ISSUE. MAYBE YOU GUYS CAN DIRECT ME TO SOMEWHERE WHO CAN HANDLE THAT. I CAN TALK TO EITHER ONE OF YOU GUYS OR WHOEVER IT MAY BE IN REGARDS TO THE PARKING SITUATION THERE IN THE BAY VIEW HUNTERS POINT, BECAUSE THE COMMUNITY REACHED OUT TO ME. SECOND, I DON'T KNOW IF THIS HAS ANYTHING TO DO WITH THIS PARTICULAR SITUATION IN REGARDS TO THE PARKING. I RECEIVED A TICKET A FEW YEARS BACK, RIGHT? And I wanted to protest it. And they said I was on Mission and, no, they said I was on Main and Market. I told them I never parked there before because I worked at PG&E. So this is back in 86 through 97. And so I asked to see it. They wouldn't show it to me. So they said I had to come in. I came in and I paid. And when I paid, they said I had to go see another individual to actually see that ticket, where I got. One of the things as a meter reader for PG&E, I know the city like the back of my hand because I've been to every neighborhood. I was on the recovery team for PG&E in 1989 when it came to the... the cleanup and turning people's gas meters back on. But what the gentleman showed me, he showed me that I was in another location. I didn't need to see that I was in New Montgomery. But I told them, this is a one-way street. This is New Montgomery.

Sir, thank you. I'm sorry, your time is now concluded. However, and this period for public comment isn't meant to be a question and answer thing, but Acting Director Trudeau, is there a staff member who could maybe talk with this gentleman?

Yes, absolutely. We'll follow up. Yes, yes. Thank you. Thank you, sir. Who do I leave the information with?

Thank you, sir. Next speaker please.

Hello, Chair Tarloff and directors. My name is Susan George, and I live in District 9. And I'm just here to express my concern about the possibility of the $40 million of capital funds.

Ma'am, I'm sorry to interrupt you, but that's an item on today's agenda. Oh, it is? So if you would like to comment later when that item is called.

Oh, sure. Thank you. Of course. That's going to be item number 11. Next speaker, please.

Good afternoon. My name is Abram Blackwood. Happy New Year, Lunar New Year. Members of the board and fellow colleagues, I stand here today as a heavy duty mechanic dedicated to keeping the SFMT fleet moving safely through our streets. We all understand the pressure to meet pullout times, but we need to address the reality of the shop floor. Currently, we are operating a sufficient shortage of mechanics. Despite being short staffed, the directive from management remains the same, do more with less. We are being pressed to work faster and faster to compensate for empty bays and missing personnel, sacrificing the meticulous care required for heavy-duty maintenance. In our line of work, fast is often the enemy of safe. Whether we are under a standard 40-foot coach or a 60-foot articulating bus, we are just turning wrenches. We are responsible for multi-ton vehicles carrying dozens of lives. The 40-foot coach are the workhorses of the narrow streets, requiring perfect steering and braking response. Meanwhile, the 60-foot coaches bring even more complexity with articulating joints and massive weights that demand absolute precision. A rush brake job on a 40-footer or a hurried check on hydraulic bellows of a 60-footer isn't just mechanical oversight, it's a public safety hazard. When you are trying to squeeze more productivity out of fewer people, you create a pit crew mentality where speed is rewarded through thoroughness is penalized. If a bolt isn't secure because a mechanic has been timed against an impossible clock, the consequences follow that bus is going on garrier mission and through the crowded street zones. One mechanical failure at 30 miles an hour on a vehicle that the size can result in a catastrophic, no amount of efficiency can justify it. We cannot lean our way out of safety protocols. We're professionals who take. Is that it?

Thank you. Thank you. Next speaker.

Hello. My name is Patricia Barrasa. I'm the Director of Partnerships for Livable Cities that puts on Sunday Streets. We just wanted to come and say thank you for your Open Streets program. We have been getting a lot of advocacy letters. I'm sharing about 90% of them because we're continuing to get them every day. The Open Streets program is what makes Sunday Streets happen, and we are actively advocating for funding for our 18th season. But in these letters, you will see how amazing it is for our programs in San Francisco to have open streets and have neighborhoods be able to walk and bike. We even had two people meet and get married. So huge kudos to all of you. I also want you guys to know, because I know that maybe it doesn't trickle up so much, your Muny Love stickers have been something that folks have been talking about. Your outreach team at each of our Sunday streets, including myself, that has been excited to get my 49 sticker and my J Church sticker. has been a huge asset to our program. So I just wanted to come and share that, share the letters with you, and then just thank you for your partnership.

Thank you. Any other speakers for general public comment? I'm seeing none in the room and no accommodation requests.

Thank you. We will now close public comment. Secretary Silva, will you please call the next item?

Directors, that places you on item 10, your consent calendar. These items are considered to be simple or routine and will be acted upon by single vote unless a member of the board or public requests that an item be taken off consent and heard separately. For all speakers providing public comment, please identify which item number you are speaking to. Item 10.1, requesting the controller to allot funds and to draw warrants against such funds available or will be available in payment of the listed claims in the agenda under 10.1 A and B. Item 10.2, approving tow-away no-stopping zones in a new transit boarding island on Evans Avenue between Rankin Street and Quince Street. TO PROVIDE TO MODIFY THE INTERIM TRAVEL LANE CHANGES AND BIKEWAYS IMPLEMENTED AS PART OF THE EVANS AVENUE QUICK BUILD PROJECT IN 2022 FOLLOWING REMOVAL OF TEMPORARY CONSTRUCTION STAGING FOR THE COMPLETED SAN FRANCISCO PUBLIC UTILITIES COMMISSION HEADWORKS FACILITY. Item 10.3, authorizing the director of transportation to execute grant number 2025-11 with the Roberts Foundation to accept and expend a $50,000 workforce development planning grant from the foundation's IGNITE fund to support the SFMTA youth career pathways into the trades program, which includes a mutual indemnification clause as a condition of funding. That concludes your consent calendar.

Thank you. We will now open public comment on the consent calendar for two minutes each.

Members of the public wishing to provide comment will have two minutes each. There will be a warning at 30 seconds and a chime when the time is up. Any speakers can come up to the podium at this time. This is for the consent calendar. Seeing none in the room and no accommodation requests.

Thank you. Public comment is now closed. Directors, may I have a motion and a second to approve the consent calendar? I move the item. Second.

Thank you. Secretary Silva, please call the roll. On the motion to approve the consent calendar, Director Chen.

Aye.

Chen, aye. Director Felder.

Aye.

Felder, aye. Director Hemminger.

Aye.

Hemminger, aye. Director Henderson.

Aye.

Henderson, aye. Director Hinze. Aye. Hinze, aye. Director Kahina. Aye. Kahina, aye. Chair Tarloff. Aye. Tarloff, aye. Thank you. The consent calendar is approved unanimously. Thank you. Secretary Silva, please call the next item. Directors, that places you on item number 11, presentation and discussion regarding a fiscal year 2027 to fiscal year 2031 capital improvement program update.

Trying to get this right. All right, I'll leave it there. Good afternoon, Chair Tarloff and directors. My name is Rob Hawkes, and I'm the Director of Capital Budget and Funding Strategy here at the MTA. This presentation that I'll be giving provides a high-level update on the development of the FY27 to FY31 Capital Improvement Program, or CIP, with a focus on fiscal constraints, tradeoffs, and policy direction. The CIP is a five-year plan of capital investment that we reassess and update every two years, aligned with the two-year budget cycle. The actual CIP document is structured with the 10 capital program areas shown on the screen. And this board has final approval authority over the final CIP and capital budget, which is planned for April. The five-year capital improvement program is a fiscally constrained plan, meaning it only includes projects we reasonably expect to be able to fund, and it is built off the SFMTA's 20-year unconstrained capital plan, last updated in 2023. The first two years of the CIP comprise the agency's two-year capital budget and represent a shared commitment between the board and staff regarding which capital investments will be delivered. The final three years are intentionally more flexible and are revisited at the start of each CIP cycle to reflect updated funding, costs, and priorities. At a high level, the total programming for the proposed FY27 to FY31 CIP is anticipated to be approximately $2.3 billion, including a two-year capital budget for FY27 and FY28 of about $1.1 billion. Around $600 million is planned to be spent by projects in FY27, with another $520 planned for FY28. Our capital program delivers significant safety and reliability investments every year. To summarize the fiscal environment for the FY27 to FY31 CIP, we are now estimating approximately $250 million less in revenue than in the prior CIP, although the impact varies by program depending on funding source restrictions. Some of this change reflects the normal volatility of discretionary grant funding. Between CIP cycles, the agency successfully secured several grants that were not anticipated in the prior CIP. At the same time, we did not receive certain competitive funds that had been assumed in earlier planning. This highlights the inherent uncertainty in relying on competitive and discretionary funding sources. In addition to revenue changes, many capital project budgets have increased since the pandemic due to scope refinements, schedule adjustments, and escalating construction costs. As a result, estimated revenues are not sufficient to fund all previously approved projects while also accommodating emerging priorities. This is the context in which staff is evaluating capital adjustments, including the potential use of one-time capital flexibility to support the two-year operating budget. This slide outlines staff's initial approach to developing the FY27 to FY31 CIP in light of the fiscal constraints I just discussed. The first priority is to ensure that the agency meets its existing contractual and legal obligations. As part of balancing the overall agency budget, we are also identifying up to $40 million of additional flexible capital funding across FY27 and FY28 that could potentially be shifted on a one-time basis to support the operating budget. Any such shift would not eliminate capital projects, but could result in projects being delayed, phased, or scaled differently. In making these adjustments, staff's intent is to protect core stated good repair investments, particularly urgent fixed guideway needs, and to fund projects by phase when full funding is not immediately available. which also helps maintain project and grant readiness. Finally, this approach emphasizes empowering subject matter experts to prioritize investments based on safety, regulatory compliance, reliability, equity, and opportunities to reduce long-term operating and maintenance costs. facilities program is anticipated to receive approximately 138 million dollars in the new cip representing about six percent of total capital revenues while overall needs continue to exceed available funding particularly with the loss of discretionary grant opportunities and increasing costs associated with the kirkland yard project there are important opportunities within this program the petrero yard modernization project and the parking control officer or pco building both advance long-standing commitment to our workforce and support ongoing operations and revenue generation. Completion of these projects will allow more staff to work in modern, seismically-safe facilities. The Potrero project also builds on the Board-adopted joint development framework, which staff hopes to use as a model for future facilities investments, including the future Presidio yard modernization. In response to reduced revenues, the CIP proposes slowing the pace of fleet electrification within the facilities program, resulting in the deferral of Kirkland Yard electrification and a reduced scope for the Islayas Creek and Woods pilot projects. This means that there will be no full-scale facilities electrification projects in the CIP, which will delay the large-scale adoption of battery electric bus fleet by at least five years. Consistent with the broader approach to prioritize state of repair, staff is also proposing incremental investments in existing facilities, such as HVAC systems, roofing, and restrooms, to maintain safety, functionality, and reliability. Taken together, these choices defer some of electrification investments in the near term while preserving core facilities and workforce needs. The fleet program is the largest component of the capital improvement program, anticipated to receive just over a billion dollars in the new CIP, or about 44% of total capital revenues. This program is heavily reliant on formula funding programmed by the Metropolitan Transportation Commission, which prioritizes vehicle replacement over midlife overhauls and does not fully cover the higher upfront costs associated with zero emission buses. As a result, the fleet program faces increasing funding pressure in this coming CIP, particularly as the new light rail vehicles reach their quarter life maintenance milestones in the coming years. At the same time, the agency's recent capital programs have made significant investments to replace the entire 30-, 40-, and 60-foot bus fleet and to complete the LRV procurement. These investments, combined with a disciplined maintenance strategy, have allowed the SFMTA's fleet maintenance program to become a model for sustaining state of good repair and improving reliability. Building on those gains, staff proposes to continue investing in fleet to maintain service reliability, including the planned procurement of 18 battery electric buses and 450 hybrid electric buses. To meet overhaul and maintenance targets, we also plan to rely on in-house staff to deliver quarter life and midlife overhauls, supporting the ongoing reliability of approximately 700 vehicles across the system. The SFMTA is facing financial hardship as we cannot offset the higher cost of purchasing zero-emission buses and associated facilities upgrades when compared to the cost of hybrid electric buses. We will need to seek a multi-year exemption from the zero-emission bus purchase requirement in the California Air Resource Board's Innovative Clean Transit Regulation, or ICT regulation. At the same time, we are working with state and regional partners to advocate to CARB for more comprehensive changes to the regulation. The agency will need a letter from the MTA board of directors declaring the transit agency in good faith has applied for all available funding and financing options that could be used to offset the higher capital costs of zero emission buses and associated infrastructure. Staff will be coming back to the board at a future meeting to discuss that further. The parking and curb management program is one of the agency's smallest capital programs, planned to receive approximately $6 million in the new CIP. These assets generally do not compete well for external grant funding and therefore rely on the agency's most flexible capital sources, which has contributed to historic underinvestment and left some revenue generating assets in a poor state of good repair. The prior CIP marked the first significant state of good repair investment in this program in many years, including funding to modernize parking garage elevators. Building on that progress, the new CIP proposes to establish a baseline level of state of good repair investment beginning in year three of the CIP, by reinvesting some of the parking garage revenues, helping to stabilize these assets and protect ongoing revenue that supports transit operations. This proposed policy will be coming back to the board in the future, but our target would be to direct $3 million annually from off-street parking garage revenues to reinvest in state good repair for those assets. The traffic signals and signs program is planned to receive approximately $66 million in the new CIP, or about 3% of total capital revenues. Historically, funding dedicated to signal and signs data grid repair has been limited, which has contributed to a growing backlog of needed upgrades and maintenance across the system. The SFCTA Prop L program and the 2024 citywide general obligation bond expenditure plans both recognize the urgency of this need and allow the agency to increase investment in traffic signals compared to the prior CIP. In this new CIP, staff proposes to prioritize signal and sign state of good repair and to closely review shop activities to identify work that can be shifted from the operating budget to capital. This approach is intended to stretch available resources and increase investment in critical signal infrastructure that supports safety, reliability, and day-to-day system performance. The streets program is planned to receive approximately $242 million in the new CIP, representing about 11% of total capital revenues. A key challenge for this program is that many of its dedicated funding sources and external grants are structured to prioritize expansion or other funder-specific objectives, which can make it more difficult to consistently address state of good repair needs. That said, the successful 2024 citywide geo bond will allow the agency to modestly increase street investment compared to the prior CIP. In the new CIP, staff proposes to continue prioritizing community driven street safety improvements and to focus investments along the high injury network where interventions have the greatest potential to reduce serious injuries and fatalities. The fixed guideway program is anticipated to receive approximately $535 million in the new CIP, representing about 23% of total capital revenues. This program has the largest unmet stated good repair need in the capital program, and the train control upgrade project will continue to use a significant portion of the formula funding the agency receives each year for fixed guideway infrastructure. This project remains the agency's highest priority fixed guideway investment and has also been successful in attracting discretionary grant funding. Proactive efforts such as the Fix-It Week program and other maintenance initiatives have helped extend the useful life of critical assets and improve reliability for riders. However, these strategies alone are not sufficient over the long term and will require additional funding as assets continue to age. In response to these challenges and opportunities, staff is recommending an approach that prioritizes safety and reliability while preserving future flexibility. This includes pursuing additional discretionary grants for the train control project to close out your funding gap, funding the design phase of the special subway, excuse me, subway special track work project while seeking future construction funding, and maintaining baseline fixed guideway funding even as some flexible capital is shifted on a one-time basis to support the operating budget. The approach also includes targeted incremental investments to maintain the structural integrity of this Twin Peaks tunnel and to expand the tunnel inspection program so issues can be identified and addressed before they become more urgent or costly. Finally, within the fixed guideway program, staff proposes establishing programmatic funding lines to allow the maintenance of way team to respond quickly to small emergent needs as they arise, improving day-to-day reliability and safety. The transit optimization and expansion program is expected to receive approximately $238 million in the new CIP, or about 10% of the total revenues. And the CIP staff is proposing to place greater emphasis on transit optimization rather than expansion as we prioritize state of good repair and the need to support day-to-day operations. The transit optimization component of this program has proven effective at improving system efficiency, supporting ridership growth, and delivering projects through a complete streets approach that often allows us to leverage additional funding from partner agencies. Building on that success, the new CIP prioritizes projects with existing funding commitments, executed contracts, or required local match. Expansion projects would be advanced selectively and would be limited to those supported by competitive grant funding, allowing the agency to pursue growth opportunities without increasing pressure on local or flexible capital resources. The agency-wide category includes capital investment that support core operating functions or span multiple capital programs. These are projects that do not fit cleanly within a single CIP program but are necessary to support the overall system delivery. A key challenge for this category is that it does not have a dedicated funding source. As a result, it relies heavily on the agency's most flexible capital revenues, which are also the primary source of potential one-time operating flexibility. In the proposed CIP, we are taking a more disciplined approach to this category. We're proposing to retain funding for joint maintenance projects with BART in the Shared Market Street subway stations, as those are critical safety and reliability investments with interagency obligations. At the same time, we are reducing funding for other prior agency-wide line items, such as reserves and non-revenue vehicles, where those costs are now more appropriately reflected within individual CIP programs. This improves transparency and ensures that funding is aligned with program accountability. Overall, this approach narrows the agency-wide category to truly cost cross-cutting and contractual needs, while reducing reliance on flexible funds in a constrained fiscal environment. Similar to parking and curb management, the agency's smallest capital programs, which include communications and information technology, security, and taxi access and mobility services, do not have dedicated funding sources and therefore rely heavily on limited grant opportunities and the agency's most flexible capital funds. Given these constraints, the planned approach is to prioritize investments that improve safety or reduce long-term operating costs, aggressively pursue external grant funding, and reduce overall spending in these programs compared to prior CIPs. This approach allows the agency to preserve flexible resources that may be needed to support transit service and other operating priorities while continue to address critical needs within these smaller programs. Finally, we plan to incorporate the taxi access and mobility program into relevant other CIP programs. I'll discuss that a bit more in a later slide. As discussed earlier, the capital program does not exist in isolation from the operating budget. The two-year operating shortfall directly affects how much flexibility we have within the CIP. For FY26-27, we're facing a structural gap that cannot be closed through efficiencies alone. Even with the cost controls and improved revenue forecasting, one-time sources will be necessary to stabilize the agency while longer-term solutions are developed. Our objective is to balance the operating budget in a way that minimizes structural harm to the capital program, avoids creating long-term cost escalations, and preserves core safety and reliability investments. At the workshop, we outlined the potential mix of one-time sources required to close the estimated $307 million FY27 gap. Those options included a state loan of up to $200 million, limited reserve drawdown, flexing some funds from capital to operations, and one-time savings from prior cost containment. Each option has trade-offs. The state loan provides scale but creates future repayment obligations. Reserves provide stability but must be restored. Capital flex reduces near-term pressure but can increase future costs if overused. The key policy question is not whether we use one-time tools, it's how to balance them responsibly and proportionately. We've heard several consistent themes from the board, strong concern about over-reliance on flexing capital funds, interest in understanding the real project level impacts of any flex, clear direction that any flex must be one time, a preference to prioritize the state loan and limit reserve depletion, and a desire for a clear reserve restoration policy. This feedback materially shaped the recommendation you'll see in the next slide. We have scaled back the proposed flex significantly in response. This slide shows the distribution of revenues across the 10 CIP programs. Fleet and Transit Fixed Guideway, our two largest transit state of good repair programs, remain the largest programs in the CIP. This programming also assumes a $20 million flex from capital to operations in FY27 only. Compared to the prior CIP, total programmed revenue is approximately $246 million lower, or about 10% overall. However, the impact is not uniform across all programs. The changes reflects a mix of shrinking or uncertain discretionary sources, timing shifts in major capital projects, changes in external funding policy, adjustments in project cash flow assumptions. It's important to distinguish between structural reductions and timing-driven fluctuations. Two of the highest priorities in the CIP are safety and state of good repair. That emphasis is reflected in a modest increase in the streets program and a significant increase in signals and signs. These are our primary street safety delivery programs, while signals and signs is responsible for maintaining the city's traffic control devices, signals, and signs in a state of good repair. The increases align with our commitment to the city's street safety initiative, regulatory compliance, and reducing long-term maintenance costs. The reductions in fleet and transit fixed guideway do not reflect deprioritization. In fleet, the decrease largely reflects the wrap-up of the LRV4 procurement. As that major procurement winds down, the program size naturally contracts and shifts toward bus replacements and vehicle overhauls. In transit fixed guideway, fluctuations are largely driven by the train control project, which represents roughly 2 thirds of the program. When a project of that scale moves between design and construction phases, annual cash flows can vary significantly. That volatility is typical for large capital programs. It does not signal reduced commitment. The reduction in facilities reflects two factors. First, a substantial portion of Potrero funding was shifted from FY27 into FY26, into the prior CIP. That funding is therefore no longer reflected within this five-year window. Second, the program experienced the loss of an anticipated federal grant as federal priorities shifted. That is an external funding change, not a reprioritization decision, though. Transit optimization is disproportionately impacted by the decline in developer fee revenues. Part of what's affecting transit optimization and expansion revenues is the shift in when certain development impact fees are collected. Recent local and state policy changes allow developers to defer payment of fees longer into the project lifecycle, which can temporary slower shift the timing of collection compared to prior assumptions. It's a timing issue, not a permanent loss of the fund source. Once the pipeline matures under the new structure, the revenue stream should become more predictable. And so what you're seeing is a gap of multiple years of funding in the source, which should return once that maturation occurs. The reduction in the taxis, access, and mobility services program does not represent reduced investment. Rather, these investments are being integrated into relevant capital programs across the CIP. Embedding accessibility improvements within larger capital projects should ultimately increase the total investment in access and mobility improvements. When we return in April with the final CIP, you will see those projects redistributed across programs. Overall, while the top line number is lower, the CIP continues to prioritize safety, regulatory compliance, reliability, and long-term asset health consistent with the investment principles I discussed earlier. Based on board feedback, we're recommending a reduced flex of $20 million in FY27 only. This represents less than 1% of the total five-year CIP. Importantly, the flex is distributed across programs, no single project is defunded, and core state of good repair investments are protected. At this scale, the flex does not materially increase long-term costs. It meaningfully reduces pressure on reserves and limits borrowing reliance. Next steps include incorporating updated state revenue, general fund changes, efficiencies, and the state loan into the draft operating budget. In March, BRII will return with a proposed operating budget balancing strategy, reserve policy recommendations, updated revenue forecasts. And our goal is to bring forward a balanced package that is transparent about trade-offs, disciplined in its use of one-time funds, and protective of long-term capital health. This slide places today's capital budget update within the broader two-year budget development process. Since November, the board has been moving through the major components of the budget in a structured sequence. We began with the local revenue measure, enterprise revenue and fair policy, and efficiencies update, and the muni equity strategy overview. Earlier this month, we held the board workshop to discuss the scale of the operating shortfall and potential one-time tools. And today's capital budget update builds directly on that workshop discussion. It reflects board feedback on capital flex, reserve use, and prioritization. So what comes next? On March 3rd, we'll return with the FY25-26 six-month financial update, incorporating updated revenue forecasts. And on March 17th, we'll present the proposed muni equity strategy approval and the draft FY26-27 and FY27-28 budget balancing plan. That March 17th meeting will be where the full balancing strategy, including the mix of efficiencies, revenues, loan, reserve, and capital flex, is brought together for a policy direction. The formal budget hearing for both operating and capital budgets will occur on April 7. And final budget approval is scheduled for April 21. Just provided a high level overview of where we are in the development of the FY27 to FY31 capital improvement program. Sorry, my iPad's going crazy. Staff will return to the board in April with a draft CIP document for review and discussion ahead of planned adoption later that month alongside the operating budget. That concludes my presentation. And I'm happy to take any questions and hear public comment.

Thank you so much, Mr. Jaquez. I will open public comment for this item first before directors weigh in. Public comment is now open for two minutes each on this item.

Members of the public wishing to provide comment will have two minutes each. There'll be a warning sound at 30 seconds and a chime when the time is up. Any speakers can come up to the podium at this time. This is item number 11 for the capital improvement program.

Good afternoon. My name is Jody Medeiros, and I am the executive director of Walk San Francisco. We are the nonprofit that speaks on behalf of all pedestrians and keeps us safe walking around our city. I do want to start by saying a funded, efficient, and reliable muni is part of the equation for making our streets safe and for people to get around in two feet. Over the past 10 years, the SFMTA has invested in designing our streets for safety over speed, using effective and inexpensive tools like the quick build toolkit. This really does help change street design. And the results are proving that it is making a big difference, and we could be at a turning point for finally seeing a drop in severe and fatal crashes. And that's why we really say now is the time to double down, because we have to keep doing what's working to bring safety to our streets citywide. We're asking that this board directs the agency to not flex $20 million from livable streets capital to operations. The Livable Streets Capital Improvement Plan is already underfunded for the benefit it provides everyone living or visiting San Francisco. Street safety projects are cost effective, the best return on investment that the city could do, and it's really those that are necessary to prevent injury and death. Our safety and the safety of our most vulnerable, whether that be our children, our seniors, should never be compromised. And we ask that this board really prioritize our safety when directing the agency on what to do next. Thank you.

Thank you. Next speaker.

Good afternoon, Board of Directors, Claire Amable, Director of Advocacy for the San Francisco Bicycle Coalition. I want to thank all of you for sharing your concerns about using capital funds to backfill operating costs at the special budget meeting earlier this month. We agree with Director Hemminger's remarks calling the practice bad and harrowing. It is still disappointing to see that 20 million of those funds are still on the table today. three percent of the mta's budget is spent on street safety projects and even less of that goes to bike and ped projects even though they are cost effective and have proven to increase safety the bucket of funds for pedestrian and bike projects is so small yet these are the projects that prevent traffic violence while it is adequate to hear that 20 million flex wouldn't result in defunding a specific project I'm curious about what that money could have funded and what specifically it is being proposed to fund. Greater transparency is needed. We know that saving Muni is the top issue this year. We have said repeatedly that a transit-friendly city is a bike-friendly city, and when Muni is under threat, that'll have negative impacts on other sustainable modes. We have been vocal supporters of both transportation measures and understand the gravity of what will happen in the event one or both don't pass. Transit and street advocates have begun gathering signatures and educating people about the regional measure and will start doing the same thing for the local measure as early as next month. We are glad to see an increase in the CIP over the next five years and would like to see bike and pedestrian projects take priority. We ask that you all please continue protecting the capital funds for street safety projects because those are the projects that save lives on our streets and are a drop in the bucket in the agency's overall budget. Thank you so much.

My name is Susan George. I live in District 9. I am a member both of the Bike Coalition and WalkSF. I am a pedestrian. I'm a senior. And just getting down here, you know, I use Muni and walking. And I know that Muni is extremely important. I use it on a regular basis. But also I know that crossing the street is super important in a safe manner. And every single day, every single day that I walk, I see people that are distracted, nearly hit me, and they wave as they go by. So it's just super important. You've done some wonderful things on Cortland. It has really improved the safety of crossing Cortland, especially during the rush hour. But I can't imagine... Cutting back on funds for further safety measures for pedestrians and bicyclists in this city.

We just can't afford to do that So thank you for listening Thank you any other speakers in the room for this item Seeing none in the room and no accommodation requests

Thank you. Public comment on this item is now closed. Directors, comments or questions for Mr. Huckes? Director Felder?

I was just hoping, could you speak a little bit about, of the 20 million flex funds that you're suggesting, what would be the process for determining where within the CIP those funds would come from?

So we deducted $20 million off the top of the revenues available to CIP programming back in July when we did the initial estimates of CIP revenue. So to say specifically where they came from is, at this point, impossible to do. I could guess where the funds could have been invested, but they were taken off the top. So no specific projects were depleted or taken from.

OK, yeah, I mean, I certainly understand that. But I do think from a public perspective, having some sense of what is being sacrificed would be helpful. Because I think without it, there's sometimes an assumption that funds are being taken from places that perhaps they're not.

That's fair. Justin, were you going to say something?

Sure. Director Felder through the chair. Judson True, acting director today. I think that, you know, I think what we would like to, you know, I think what Rob went through very much in the presentation is the focus on the investments that we are making, including on street safety and on the signals and other infrastructure. And so I think we do have a full, you know, unconstrained capital plan. We have a five-year CIP. So I think as we move forward, you know, in the next, in the next program, if we're, you know, not flexing those funds, that would be a very good time to talk about, you know, where else those investments could occur. But I think what we feel, you know, confident in even, you know, with the reduced overall five-year CIP is in the investments that we are looking to make in areas like street safety. So that's what I would emphasize.

Would it be helpful to maybe take a look at, in the appendix, slide 30? I found it quite interesting and I think it's germane to this part of the conversation. It's a comparison of the last cycle revenue for livable streets this cycle and I believe it actually has a positive variance. Am I reading that correctly?

That's correct, yeah. We're investing more in the Louisville Street CIP program than we did in the prior CIP. A lot of the revenue fluctuations, which by bringing up this slide, you see a lot of variance, ups and downs across revenue sources. And it's probably worth pointing out that one of the biggest negative impacts on the CIP is something I talked about with transit optimization, which is the loss of developer fees in the program. That's a $20 million hit to the program. And on the other side, the increase to the program over the last CIP is the winning of a raise grant for $23 million, as well as some other increase to the TNC revenues, TNC tax revenues. So it's, there's some swings both ways.

I see. So these, the development fees have now been eliminated is?

No, the impact we're seeing is that they're being eliminated from our CIP. But the program overall citywide, the city changed the legislation so that the developer fees are paid by the developer at certificate of occupancy as opposed to at the initial permitting, which is in our CIP creating a multi-year delay or loss of those revenues. So in a next CIP or the one following, we might see a return of those revenues once we know more about them. But for right now, we did not feel comfortable We don't think we're going to get any in the next two years.

Yeah, I see. That's a very significant change. But regardless, what I see is projected revenue of $242 million. in this cycle versus 214 in the previous cycle. So I think that that is, it seems to me to be a pretty positive trend for these programs. But anyway, sorry, Director Felder, I thought that might be helpful.

Yeah, no, I think that's very much clarifying and I think helpful.

Thank you. Director Chen.

Thank you, Chair. Thank you, Mr. Hawkins. Let's see. So I think echoing Director Felder's comments, what I've heard is that, you know, when we say we're flexing $20 million from the capital program, that $20 million, you know, in a different world where we had a different funding environment, right, that would have been spread out across our multiple buckets, probably in the rough proportions of the capital plan would be today. So, you know, the biggest portion would be to the fleet, you know, and these smaller buckets, right? Even if we don't exactly know, even if we can't say, oh yeah, this specific thing is not being funded or what have you, we have a general idea of where these things will go.

So the factors determining the distribution of revenues across the program are both revenue availability driven. So there's a lot of restrictions on some revenue. So some programs are going to get more, others are going to get less, just based on what's available to them from those restricted sources. Another part of it is policy driven. So in the CIP, we're more heavily emphasizing state of good repair over prior CIPs. So to say it would be proportionately distributed across is not entirely accurate, because I think Fleet is nearly fully funded based on their needs. And other programs still have needs that maybe didn't get funded. And a lot of that is driven by the availability of restricted funding. So probably none of it would go to Fleet. It might go to another program. But it's, again, hard to say specifically.

OK, so thank you. And to rephrase then, it's to say we would fund sort of like, we would look to fund the biggest needs, and that would be a reflection of our policy priorities. But it's not necessarily, oh, well, we can't say, oh, yeah, this is coming from a specific part of the budget. Got it. OK. So I think trying to think about top line, I think it sounds like the CIP is funding some of our biggest commitments. We have big headline commitments that we are funding, Potrero Yard, the PCO facilities, parking control officers, the train control project, midlife overhauls. And so those are sort of like our star capital projects.

Yeah, I would add to that a bunch of bus replacements, too. I don't have the number off the top of my head, but there's a number listed in there. Yeah.

OK. Thank you.

But those are the major projects.

And we are following through with our contractual commitments and also our commitments to our staff to make sure that we have good facilities and good buses for the public.

Yeah. And to add, because those were mostly transit related, there's a big streets investments in Howard Streetscape and Folsom Streetscape that are in the CIP that are fully funded.

Yes. And then I think my second thing is I think there has been some comment from the public and I want to echo I think what you said in your presentation that there is not a decrease but actually an increase when we look at street, when we look at signals, signals and streets, signal signs and streets. there will be investment in the areas like the agency's commitment to that is not going down. Correct? Yes. Okay. You mentioned, I might bounce around a little bit, so apologies, but I think you mentioned a little bit about the electrification state mandate. And so it, you know, I think originally SFMTA wanted, was going to make more investments in electrification, more electric buses, like making sure our yards are electrified. It are, and now it's a little bit, and now the situation is a little bit more fluid. the technology is still a little bit, the technology is still sort of developing, right? We're testing buses and some of them don't quite fit the needs of our hills and streets. Are other agencies in California also sort of facing this issue?

That's a good question.

I can speak to that again. Director Chen, Judson True. The answer to that is yes. Other agencies are facing similar challenges. It's a topic, frequent topic of discussion at the California Transit Association. And I think those, you will continue to hear, you know, other agencies looking at that exemption process and facing some of the same challenges. We can provide more information on that if you'd like as well because different agencies are in different places with it, and we obviously feel very good about the environmental benefits of our fleet now.

Thank you. Yes, so I think it is a well-intentioned state mandate, I think, running up against the operational realities of running transit. So I think I would agree. It may not make sense to make those investments right now. And hopefully we can work with our state lobbyists, or our state delegation, and to figure out how to make that a little bit better. Let's see. There is one thing that there are some groups out in the world saying that Muni could fund its operations deficit through repurposing some capital funds, such as the Prop L half cent sales tax that is a major funder for these capital projects. My understanding is that many of these funds have restrictions.

Yeah, that's my understanding as well. So that expenditure plan is based on a voter-approved expenditure plan, which includes a lot of restrictions, including that the funds are meant for capital projects. It would have to go back to the voters, or there'd have to be a state law change for more of the funds to be available for operations. We do use a small portion for paratransit operations, but that is a very small amount compared to the overall Prop L expenditure plan.

Right, and it was written into the, that paratransit was written into the plan back in 22, 24?

Yeah, 22, yeah.

Great. Moved in 23.

Yes, and that's true for most of the revenue sources in the capital CIP, right? Yes.

Yeah. The most flexible source we have is our population baseline, which is the source we're proposing for the 20 million flex. There's other sources that could be used for operations but would require a lot of work to do, including starting that work a couple years ago, which is not practical at this point. So that doesn't really solve our problem that we have for FY27. If we still have the problem in FY30, that's a conversation we could have today, but it doesn't help with 27.

Yes, and I guess maybe for the board, I think the board is aligned on saying, hey, we really are afraid of flexing capital operations because then that starts you down a path of really under-investing in our fleet and our facilities and our maintenance and It wasn't that long ago, actually, when Muni was facing some severe deferred maintenance problems. We really don't want to be there again. I guess that's most of my questions. I guess I'm surprised by I guess also acknowledging, I think, that the earthquake safety and emergency response bond for the June election, I think, has some impact on the capital plan and just pointing that out, right?

There is funding in that proposed bond that would go to the Potrera Yard Modernization Project, $200 million. So if it were to pass, it would be added to the CIP, yes. It's not in the current CIP? No, but it doesn't really impact the other programs at all.

Right, OK. So it's not in the current CIP, but if it did pass, then it would be, OK. Yeah, it would be added in the FY31 program here. Got it. OK. Yeah, I guess the last thing is I was surprised by how much of our capital funds come from new development, new housing, new office. So it is, I think, a little regrettable that we're moving, that the city is moving some of the collection of impact fees. But it is also probably the right thing to do. It's also, I think, the right thing to help incentivize more development. And so in the long run, we should Knock on wood, if everything comes back and people are building again, then we should. It's an added incentive, so we should be seeing more revenue in the long run. Yeah. Essentially, we'll catch up, but it'll take a few years.

We're just going to have a gap of a couple of years where we're not seeing those revenues.

Great.

Thank you. Thank you, Chair.

Director Chen, actually, I wasn't sure I heard you correctly. Were you saying that you are not comfortable with moving forward with flexing the $20 million?

I think, sorry, my iteration was I think at the board workshop, many of us on the board were scared of doing too much and also making it an ongoing practice. But I think the current proposal is you know, a best of a bad situation. And so, I personally would be in support of it. I'm happy. I'm very interested to hear what my colleagues have to say.

Yeah, I think that I said that it's, you know, kind of a menu of bad choices to a certain degree, but we are where we are. Okay. Thank you for clarifying. Vice Chair Kahina.

Thank you so much, Chair. I agree it is a menu of bad choices. And I think my highest level question, of course, was, is there a way to avoid the 20 million flexing? And what does that scenario look like? But I'll get into some more detailed questions that will then segue into that bigger one. Thank you so much, Chair, for pointing out slide 30. I think one of the things that gives folks pause oftentimes, and just to echo what Director Felder was saying, that understanding what are the material impacts of any shifts in the funding rate or any sort of tradeoffs that we're going to have in this particular CIP proposal. And what would be helpful, and perhaps you could speak to that right now, is of these sources, are there ones that are really restrictive or super flexible? Because then that helps understand, colors the picture a little bit more of what programs are actually not going to be able to get funded because perhaps a source is quite restrictive or it is quite flexible. So we could park it to something that was lost and was restrictive. I don't know if you could speak to that. Yeah.

So the fund source we're proposing for the 20 million flex is our most flexible source, the population baseline funds. They can essentially be used for any purpose within the agency, operations or capital. The bulk of the CIP, though, is comprised of fund sources that are restricted either to specific projects because they're a grant that's been awarded for that project or to specific programs because they're a line item in an expenditure plan like Prop L or Regional Measure 3 or something like that. Very few of our sources are truly flexible for purposes beyond what they're currently programmed to. Some might have flexibility across programs or something like that, but there's Very few. There's less than five that would be flexible to operations. I can't think of what they are off the top of my head. We could say FTA formula funds could be used for operations in a limited way, but that's one of those where I said we'd have to have had that conversation with the Metropolitan Transportation Commission, MTC, like two years ago to start that process. So it's sort of a difficult position to be in.

No, for sure. And I think I'm narrowing kind of my focus on some of the Vision Zero work that we have and some of the priorities that we've expressed on the board in our subcommittee, things that we want to scale, things that we want to see, what we want to do more of. to improve street safety. And so this can come in a briefing. But I am curious to understand, as we're seeing some of the the negative balances on that sheet. Is a program that was previously funded through restrictive sources no longer going to get funded? And is that 20 million flexible funding, would that help sustain that effort if it doesn't get flexed? So it's a little bit more of that type of detail. Again, we can go into this in a little bit more detail in a briefing, but I think that's the piece that I would like to understand a little bit more, is just a better appreciation of the material impacts this flexing would have on some of our programmatic efforts around Vision Zero.

Vice Chair Gein, if I may, Judson True. I think what I heard you asking is, are there specific programs that we would have funded if it had gotten a source of money that wasn't available for some reason? And I don't know of anything off the top of my head on that, but we can go back and look at it and report back on whether there is anything. As Rob talked about, if we were going to spend $20 million more, that would be not necessarily distributed evenly across the programs or anything like that. So I'm not entirely clear that we would be making a recommendation that it would go to some particular street safety program. But we can take a look at that question and see if there's anything that jumps out to report back.

Great. Thank you for that. And again, this is mostly just to understand in a more nuanced way the particulars of any trade-offs that we would have and if that $20 million could support just sustaining or growing or scaling certain efforts that are a priority. But again, it's a menu of bad options, so I know we're limited in what we can do. But just trying to turn every stone there to see what could happen. The next piece I was going to focus on is Potrero Yard. You mentioned, Rob, a shift in federal funding. Can you speak a little bit more to that?

There was, so that was in reference to the Kirkland and Islayas Creek Woods pilot project. There was a grant for Islayas Creek and Woods that we've had to reprogram due to changing federal priorities. Yeah. So it's

What's the shift?

I think it's a slight shift away from a focus on electric infrastructure.

The policy redirection is, at the federal level, less emphasis on zero emission electric buses.

On greener transportation, got it. And so the project is currently part of this CIP proposal. Can you explain, and you already started this with Director Chen, but just trying to understand how the relationship between the GO bond or the GO bond and the CIP that you're proposing. So given, looking at the timeline, Any decision that we make on the CIP is going to predate what happens or the decision that the electorate makes on the GEO bond. So I just want to understand what happens there since the coordination, the timing doesn't quite work out.

Right. So while the board adopts the CIP at one time as a sort of snapshot in time, the document itself is a living document that we revise over time throughout the two years with several layers of staff approvals that go all the way up to Director Kirschbaum. So if that bond were to pass by the voters, we would amend the CIP to add it in, and it would go through our standard approval process to do that.

So the CIP that we would pass, that would not have into account the $200 million from the GEO bond. If it does pass in June, you would park it in there so that it becomes part of what the Board of Supervisors ends up proposing.

That's the current proposal, unless you would like us to include it. We could make that choice to include it at the time you adopt it, but we don't typically include voter-approved measures before they achieve voter approval.

And if we do, let's say, Just playing out that scenario, let's say we do include it, does it still necessitate us flexing that $20 million if we are going to get that $200 million? It does? OK. In a scenario where we don't get it, what happens then?

Vice Chair Keene, I think that the question of the $200 million in the GO bond is really about how the Pretoria Yard project itself is funded and supported over time. And so I think when you hear that item, you will hear about, you know, what the scenario is with or without, you know, the bond passing. But essentially the main thing is that, you know, that bond helps us, just helps us make the project, you know, cheaper overall and move forward. So we'll be sure to brief you on that. as you hear that item. So it's really not, it doesn't play into the CIP as a whole. It's really focused specifically on the Potrero Yard project. It doesn't, that money doesn't help us save money somewhere else or anything like that. It's just sort of contained within the financing plan for Potrero Yard itself.

Okay.

And that money in the geobot is not flexible in any way. So it's entirely, you know, oriented towards Potrero Yard.

So our costs increase and the funding increases if that were to pass? So there's like a one-to-one relationship between, because it's a restrictive source, right? So we can only use it for a particular purpose. We can actualize the purpose and we would include it on the cost side. And the revenue side. And the revenue side. They would balance each other out. Got it. Okay. Thank you for that. And let's see. The other piece I was going to ask, you mentioned, Rob, that parking infrastructure as a whole doesn't necessarily get the most funding. It's not really competitive for a restrictive grant. sources or revenue sources, and oftentimes we have to use our less flexible sources to support or maintain a state of good repair for our parking infrastructure. Just want to understand, I saw that in your sheet there's not been any change in our sort of investment in that. But my assumption is that costs have increased in maintaining our parking facilities. I just want to understand what materially happens in this scenario if we approve that level of investment.

So that $6 million that's in there for the parking and curb management program is dedicated to renovation of elevators in some of the parking facilities. And so you'll see that it does match the last CIP. But if we were to look back further, you would see that there's been less investment in the past. And I think the prior CIP was the first time that that program was included as its own standalone item, too, so we could track it. But in the third year of the CIP, as I mentioned, the plan or the proposal will be to bring back to you a proposal to use some of the parking revenues that we received from the off-street parking to reinvest back into the program to increase the revenues. But that would have to be a policy change that we need to bring for you all to approve.

I think one of the things that, again, just gives me pause about flexing this $20 million is our ability to be able to scale certain efforts that have been promising for us, especially on the Vision Zero side of the equation. And so I'll just bring out one scenario, speed cameras. The pilot is going to end quite neatly with our CIP approval process with that timeline. And it would be lovely to have that flexibility to be able to scale that program if the state would allow us to increase the number of speed cameras that we could have across the city. So I'm just really just flagging this for the different members of the board. And I know that the last few years of the CIP is really flexible by design because we want to allow for this type of flexibility. But I'm cautious about needing, especially with the increase in costs of just everything now. Letting go of that flexible funding source that we have within the CIP and using it in other places. Again, like I understand these are not the options that we want to have. These are not the things that we want to, you know, the tools that we want to use to be able to balance things out or create a more sustainable agency. And these are tough decisions all around. But I'm still quite reluctant to flex that funding and would, you know, as we get deeper into this conversation, really challenge the teams to just push a little bit more and see if there's a way to not have to flex that $20 million. Not to say you haven't done that work already. I know you've done it exhaustively.

yeah i just as we get more information about what's going on with the city what's going on with other things like i i think they're i i want to challenge the team to just try to see how much more we could push it yeah and as when uh cfo primo order comes back in march there'll be further discussion on what the whole menu of options looks like uh and at that point we'll have more opportunity for you to provide input on the the entire picture for the operating budget of this, which this is just one piece. So you move one lever, you have to move the lever somewhere else.

Thank you so much, Rob.

Thank you. So in terms of our feedback from the board workshop, what I feel like I'm remembering is that, and I believe it was covered in one of the slides, but that we are The proposal that we were looking at was to use some of our reserves, flex some of our CIP budget, and also to tap into the fund balance. So those three sources together to make up the shortfall after the state loan and, gosh, I mean, it's still the ballot measure. Yeah. The conversation has been very much about this one-time need. And where we found ourselves in the last cycle was talking about using one-time money for an ongoing need. And that was a much more difficult conversation. I just wanted to point that out. But yeah, I hear what you're saying.

And I appreciate you bringing up the loan as well. I think we're still trying to understand a bit more the nuances of what that particular revenue source is going to look like. And so I agree with Rob. Once Bree comes back and we have a better picture of all of those things, I think it'll just give us a better understanding, a better grounding, really, of what these options really mean once the rubber hits the road and we can actually see what the actual impacts will be and our commitments in accepting these different revenue sources like the loan and those pieces. Because they do have multi-year commitments that we would have to adhere to.

Thank you. All right. Director Hemminger.

Thank you, Madam Chair. And my memory is probably leakier than yours, but I recall that we had another fund source on the table, which was some kind of use of one-time cost savings that had been achieved.

That's what I'm calling.

Oh, you're just using a different word. Well, that's fine. So we're synced up on that. I want to continue this conversation about flexing. This is a pretty tough one for me. What the staff is proposing, what's in their report is, look, it's only $20 million. It's less than 1% of the total CIP. So let's go ahead and do it. And I just am not on board with that strategy, especially given the fact that we've got those other alternatives. that do not set a precedent that we're willing, when push comes to shove, to use capital funding for operations. And look, the road to hell is paved with good intentions, and we are all good, honorable people, and so are the staff. And I can guarantee you that if we do it this year, it's going to be on the table again the following year. And I've seen, frankly, too many transit operators in the Bay Area fall prey to this strategy. And it's just unhealthy, in my opinion, that we're headed down a path that could require us to relitigate that every year. And we've got to win every year because if you lose one time, you know, the thing about slippery slopes is it's really hard to get off them. And we're not on the slope yet. And we have, I think, some reasonable ways of dealing with a one-time problem. It's a very large one-time problem. of $300 million, and we're going to have to find $300 the next year and the next year and the next year. We're hoping that it's new revenue from the voters, but it may not be. So my view is that the correct number for flexing is zero. And given the fact that It's $20 million. It's less than 1%. This is not an argument about money. It's an argument about principle. And I often joke that sometimes you need to rise above principle to get a good result. That is not the case here. I don't think we're compelled to rise above principle here. And I think the principle we need to preserve is that one of the things we're not going to do is to gut our capital program over the years so that we could avoid the tough calls on the operating budget. Thank you, Madam Chair.

Thank you, Director Hemminger. Director Hinze.

Thank you, Madam Chair. I think all my substantive questions have been answered. I asked and answered by my colleagues, so thank you for that. I did just want to flag, I think, as Director Chen pointed out, I think the most, I think, surprising takeaway for me when I was going through this was our fleet and facilities and how that would delay electrification and and all that for at least another five years. I think that that's just something to flag as we go forward here. And I know that that's an area of concern for me. To Director Hemminger's point, I know staff is proposing this to be a one-time thing. are, in order for it to be a one-time thing, I would assume that we would need the ballot measures passed. How certain can we be that this will be a one-time thing to Director Heminger's point?

PROBABLY SOMETHING I SHOULD TRY TO ANSWER FOR JULIE. I THINK THAT IS THE STATED GOAL OF STAFF WITH THIS PROPOSAL. I THINK THE ONE IRONY OR I CALL IT AN IRONY OF ANYTHING THAT MAKES THE OPERATING BUDGET MORE CHALLENGING DOWN THE LINE IS THE PRESSURE TO FLEX COULD ACTUALLY INCREASE BECAUSE of the slight additional pressure on operating because the other sources have an additional cost down the line. I think one of the things that the board discussion has been great for, both today and at the workshop, and I'm sure into March, is that the choices we make on the capital budget and operating budget are inextricably linked. And while Director Hemminger is certainly correct that we're not talking about flexing $100 million, which would have a significant impact on operating deficits in the future, what we're trying to do with this modest flex proposal is is make a choice to use one small slice of money that has the least cost down the line compared to replenishing the reserve, for example. So I think that is the trade-off that the board faces and that we face as we work on our continued staff recommendations. I mean, I think there's also at least some reasonable policy argument that funds are flexible for a reason, and that flexibility that the population baseline allows makes that a policy choice, not a sort of set in stone that that money must be used for capital. While it's also very good that most capital sources are restricted because otherwise that temptation, you know, at the policy level for any transit agency or any public agency to, you know, look at tomorrow instead of next week, you know, becomes more real. So, Director Hensley, that was a little longer answer than I intended, but I think, I hope that that was helpful.

Yeah, no, I appreciated the guidance, and yeah, I appreciated the perspective. I think, like, I think I, I don't mean to, like, from my perspective, like, I don't mean to kick the, I don't mean to kick the can down the road another two weeks or a month here, but I think, um, my colleagues have raised, um, some important follow-up items, particularly for, uh, Vice-Chair Kikita about like anything specifically in-street safety that we're not investing in that we could have if some specific sources allocated for specific projects wouldn't necessarily have been awarded. I think that that would be good research work as well as when CMO Warner comes back, a deeper dive into all of our funding options, and particularly with any update as to state revenues and protections, although I'm not sure how much of that goes into CIP versus operating. But I think that there are, There are things to be said on both sides here. One, I see what Director Hemminger is coming from to a large extent degree, but also maybe the various options that we have, sort of the pain needs to be distributed among all of them. It's sort of like taking a little from a lot of different pots. So I think kind of a deeper dive into things that would not be funded. However, on the street side, I do agree with Director Chen that I do see that the street safety investments are going up, but a lot of those are very specific, like The projects outlined in the 2024 are very specific. And so it would be nice to sort of generally see if there are any sort of general impacts to . So Madam Chair, not helpful feedback, but I appreciate the time.

Thank you, Director Hinze. I think it might be helpful to just go back to slide 17, which is the very high-level list of options that we are looking at. Similar to Director Hemminger, I'm focused on what I've been calling the fund balance, and that's the last item on the list. And I'd like to understand a little bit more about what that is. I feel like I'm remembering correctly that one of the reasons that we needed to go back and look again at the fiscal year 25-26 budget was that that carryover fund was not what we had projected before we adopted that two-year budget. Can you talk a little bit about what that is and how volatile it is and

Yeah. So I believe you're referring to what we call the fund balance. It's basically all the funds that don't get spent in the year and they fall to fund balance to be used for the next budget year. I can't speak to the specifics. That would be a better question for our CFO when she comes in March, on March 3rd. But that piece is built on all of the cost controls that we're working on in FY26 and all the efficiencies that we've been working on and all the little places to make little cuts to try to build that up.

And so we had indicated at the board workshop that we were interested in seeing if, for a one-time use, there might be 50 to 85 million available through that mechanism.

Yeah, I believe that's what CFO Moroder said could be available at the end of the fiscal year to be used as .

And the farther along we are in the fiscal year, the more confidence we can have in that number. So that will definitely be part of the conversation. I think that we would expect that that would be part of the solution. Again, going back to this slide 17, these numbers along with our whatever modest increases in fare and parking revenue and the other efficiencies that we – the efficiencies could be calculated here if they were saving money in the current year or they could be calculated as future savings. And so all of those will go into the balancing plan that the board hears in March. And that also gets paired with new estimates of, you know, general fund revenue, other revenues that are coming in. So, you know, the budget will get, you know, as Breeze mentioned, we haven't updated the $307 million in some time, but that will be part of the update in March is what is, you know, how is the deficit change with March. REVENUE BEING DOWN HERE, UP THERE, AND SAME WITH EXPEDITURES. ALL OF THIS WILL GO INTO THE BOARD'S CONSIDERATION OF THE OUTLINE OF A BALANCING PLAN THAT THE STAFF WILL BRING.

Right. We're building the plane while we're flying it, in short. So my general understanding of the pros and cons of this list is that the state loan, which I personally believe we'll be relying on quite heavily, the debt service is... Very significant. I believe CFO Mahorter said $40 million a year.

Yeah, I think we're still calculating that, so I wouldn't count on any particular number yet.

But it's significant.

I mean, debt service is a cost, absolutely.

Yeah, whereas reserves, the downside for that is the current... REQUIREMENT IS THAT IT BE REPLACED IN THE NEXT BUDGET CYCLE. I BELIEVE STAFF IS WORKING ON BRINGING SOME OPTIONS TO US IF WE WANT TO LOOK AT AMENDING OUR POLICY AROUND THAT.

CORRECT. YES. WE WILL BRING A REVISED RECOMMENDATION.

BUT WHATEVER POLICY WE LOOK AT THAT WOULD BE, THAT WOULD make it less onerous to pay it back right away would put us potentially in a position of vulnerability for unexpected economic or act of God scenarios. So I've long felt very nervous about using the reserve. I think I've said that a number of times with an understanding that it's a one-time use. I feel a little bit better. This is where it's like there's no fun in any of these, except that we balance the budget and we move forward in the hope that we are able to secure more revenues going forward. But just one other thing about the reserves, a 10% of the budget is another piece of policy. Other kinds of entities create a 15% reserve and that's something also to just be keeping in mind. So capital funds, we've been talking about today. Up to $40 million is what the CFO thinks the system could absorb. keeping in mind our commitment to state of good repair. I feel like there is a compelling argument in this presentation that the focus on state of good repair is a priority. And I would agree with that priority. But I'm hearing from my colleagues that none of us feels terrific about using capital for operating. And given Director Hemminger's many years of experience, his cautioning us about a slippery slope is something that I take seriously. And then the fund balance. I think I just asked about that, but it feels like the squishiest part. But it's also something that doesn't require us to go further in debt. So it's appealing for that reason. I do have a question, and I would like to understand better, Judson, what you were saying about things being unrestricted for, funds being unrestricted for a reason to give us flexibility is a good point. But the population-based formula funds, I don't think I really have a good handle on what that is, again, how volatile it is. If it isn't restricted, does it have an intended use? And if you could talk about that a little bit more.

So the population baseline funds are a set aside out of the city's general fund budget. The city has a number of set asides. This is just one of them. And we get somewhere in the neighborhood of $40 to $50 million a year, I believe is the number. Don't quote me on it. And of that amount, 75% is set aside for transit, operations, maintenance, and capital. 25% is set aside for... capital projects that improve street safety for all road users. That's what's written in the legislation. And so those are really, that's all that the law says about those funds. At the MTA, we've used a portion of the transit portion for a number of years now to support the transit operations, the balance for transit capital, and then the 25% street safety piece has gone to street safety projects, which is what we're continuing in this CIP as well.

And is it fair to say that in the street safety, state of good repair for signals is being prioritized there?

So that's not a use that we've typically used those population baselines funds for in the past. We are now using some of the funds to maintain signals and signs and the street safety assets in a state of good repair. But yes, that is an eligible use of the funds.

Yeah, and I feel like that is something I'm particularly concerned. Director Chen and I were just in Chinatown, and we were noticing a potential phasing issue with some of the crossing by Rose Pack Station, the diagonal signal was out of phase with the perpendicular crossing. And those... those issues have a direct impact on safety, and we need to be on top of those things. And I guess that just takes us to exactly where Vice Chair Kahina was, which is, you know, I guess we're ready to get into the granular detail, which is probably right on time. I guess those really cover my questions. Colleagues, anything else? Dominica, please.

I just have, so I'm very torn with this because, so I appreciate that the number went from 40 to 20. And I think maybe as you felt about the reserve chair, I think that I feel similarly about flexing the capital. And I wonder if there's a way for us to be able to building like the previous version of the board did to create the reserve. Is there a way for us to build in some one-time use of this source? And I don't want to create policy to hamstring the staff, but I do think that we have to figure out a way to avoid going down the slippery like if this is in fact a slippery slope then is there a way for us to use it once now because we are in this unprecedented time and then but make sure that future use of this type of funding is limited on the like limited to the worst scenario that I guess is like what we're experiencing now. And maybe that can make us feel a little bit more comfortable about saying use this $20 million, knowing that we won't come back and use it next year without certain conditions being met. Because I think that I just don't want to... I would like to avoid having to have this conversation year after year. And I think that if we can build in some sort of parameters around the way we use this source to fill the gaps, then maybe I would feel more comfortable about saying 20 million or whatever the number ends up being.

Director Henderson, the board can state clearly any sort of policy preference like that as part of the budget actions. And that, you know, while that doesn't legally bind a future board, it could make, it could influence a future discussion, just as your you know, policies on the reserve are something that you're, you know, that you know have to be discussed to draw down on the reserve. So, you know, while there is no way to, you know, tie a future board's decision making hands, in my experience, those sorts of policy pronouncements have a, can have a weight that does have some lasting impact. That would be my answer to that. Thank you.

What is the mechanism for a future board, which conceivably none of us might be sitting on, to know that we made a policy recommendation like that? I could defer to...

or general counsel, Susan Cleveland-Holmes, on how that's been done in the past, but you could put it in the budget resolution. You could have a standalone board policy on it that would require, you know, a future board to adjust it in the budget if they wanted to go in another direction. Those are a few quick reactions, but Susan, other thoughts?

Yeah, I agree with that, Deputy City Attorney Susan Cleveland-Knowles. The board can establish a formal policy, and you could adopt that as part of your budget or at the same time as your budget. And then if that is board policy, a future board would need to specifically go against that policy or make an exception to that policy. You could have as... Judson Trier just said you could also just have a whereas clause in your resolution just to formalize it so that the future board knows that that was your intent, that it's a one-time fix for a significant issue. But we can present, as you kind of coalesce around a strategy, we're happy to present options for you. But I think the staff is presenting these all additionally as one-time solutions to an immediate issue.

Thank you. Director Felder.

Yeah, I just wanted to go back to one thing that weighs on me as we think about this, which is the state loan. And correct me if I have this wrong, but the state loan will come with a variable interest rate, correct?

That is what Bree said at the workshop, yeah.

I guess one of my worries is that, obviously, there will be interest. And so to the degree to which we don't minimize that loan, we're going to be bearing the cost of that interest. And to the degree to which it's a variable rate, that's a liability that we can't completely predict. And so from that perspective, I do think that, at least for me, if we can keep these flex dollars in a reasonable place, let's call it 1%, as has been discussed, I think that does put us in a situation where we should be thinking long and hard about whether this is a dynamic where we look at it and we make the judgment that Director Hemminger suggested is hard to make but sometimes necessary, where we rise above principle. Because the cost, as Judson suggested, to the agency down the road could be extreme and could actually force us into a situation where we're making tougher choices for not having made what I would consider to potentially be just a smart fiscal choice now to flex a modest amount.

Yeah, just predicting the future, we're going to be prioritizing. None of these funds are coming out of just an unlimited source that there's no pain associated with tapping them. And so we will be. needing to prioritize, you know, if we are able to pay back the state loan in a more expedited fashion, for example, before we replenish the reserves, I mean, that tradeoff is pretty plain to me. You know, tens of millions... of money that doesn't go to any project versus that vulnerability that makes me very nervous. But I... I think we have provided a lot of feedback. I hope it's been helpful. I would like to thank my colleagues for being willing to be very engaged with this topic. It's extremely important. It's an extremely important part of the long-term strategy for an existential problem that we are addressing. So unless there's anything else, Secretary Silva, will you please call the next item? Thank you. Thank you so much.

Thank you, Rob. Thank you.

Directors, that places you on item number 12, authorizing the Director of Transportation to execute the Fourth Amendment to SFMTA contract number 2018-48 with Universal Protection Service, LP, doing business as Allied Universal Security Services, for unarmed and armed guard security services for SFMTA properties and transit facilities. To extend the term by one year, increase the contract amount by a net amount of approximately $5.9 million for a total amount not to exceed approximately $65 million and fund the extended term subject to approval by the Board of Supervisors under Charter Section 9.118 and recommending that the Board of Supervisors approve the Fourth Amendment pursuant to that authority.

Good afternoon, Chair Tarloff, Directors, Kimberly Burris, Chief Security Officer with SFMTA. And I'm here before you today seeking approval for the extension of our security contract with Allied Universal Security Services. And just wanted to do some context setting really quickly. Our security contract is only one element of our overall security program. Our security program is a multi-pronged approach to safety for staff and customers, which includes our non-sworn uniform staff, which is our MTAP program, our ambassadorship, as well as our TFIs. And they offer support across our system, and they are very visible across our system. We also have our MOU with SFPD for crime response and prevention. We have our Muni Safe that takes a look at specific incident types on our system, like our safety equity initiative that focuses on harassment that occurs in public transportation. And we coordinate with Homeland Security through TSA to ensure security of critical infrastructures and make sure that those assets are protected during our special events like what's coming up next in World Cup. And then the last but not least is our contract security for our facility protection, which I'll go over with you today. Uh-oh. Through this contract, Ally Universal supports the MTA by providing services at over 25 of our MTA transit locations, including our transit divisions, our subway locations, and our revenue locations. Allied actually oversees a network of three subcontracted security companies, and they coordinate all security services for MTA citywide. Our unarmed security guard coverage is 24 hours, seven days a week at critical sites. Our coverage includes system-wide surveillance, and it provides armed guard protection reserved only for revenue collections. We do not use armed guard protection anywhere other than our revenue collections. Our unarmed and armed guard services are essential because it serves as the first line of defense for inappropriate activity, and it helps to ensure the safety of staff and the public. It guards against vandalism, breach of our non-public facilities that can lead to bodily injury and property damage, and it acts as a visible deterrent for our revenue operations at various sites across the city. Guards also provide protection in our subway stations at opening and closing. They partner with our station agents to monitor passengers and assess risks. And they provide situational awareness. Through our Security Operations Center, we are able to centralize and manage our operations remotely. And because we have improved our communication capabilities, we have improved our response and our reporting. The existing contract went through a competitive bidding process that was awarded through this board, the MTA board, as well as the Board of Supervisors in December of 2019. The contract started on April the 1st, 2021. It is a three-year term contract with three one-year options. And we have executed all three options. We are currently in the third and final option right now that is scheduled to expire on March 31st, 2026. The original term was a not to exceed amount of 59 million and is important to note that spending in this contracts has some flexibility and that the Contract spending is based on actual costs through invoicing and expenses are not standard or fixed so monthly invoicing reflects actual service provided and The ask of this board is to extend the one-year term, giving us a new expiration date of March 31, 2027, to fund the extended term with the contract divisions and modifications, and increase the contract amount by a net $5.9 million for a not-to-exceed amount of $64 million. We were able to negotiate savings through negotiation with the contractor by reducing management fees by 10% for the extended term. We increased service levels due to additional guard patrol requirements at the central subway platforms. In the existing contract, Central Subway was noted, but it was undetermined when it would open, so there were no actual service hours associated to Central Subway at the time of the original contract. We also were able to eliminate contract cost escalations, generally coming from prevailing wages. for the remaining term and the use of the contract contingency, we agreed to offset, use that to offset the authority of the contract extension. The projected expenditure for this extension year is $10.9 million. That is $10.5 million to fund the additional year with the additional $431K that came from the increase in service levels due to the central subway. We agreed to apply most of the contract contingency to offset those costs associated with the extension. And we also agreed to use underutilized contract funds to reduce the authority amount of the contract. We are very conscious of our financial outlook, and so we are being very intentional in stabilizing contract costs in such uncertain times. Staff are conducting a comprehensive reassessment of MTA's unarmed and armed guard security structure as part of an agency-wide initiative to identify cost savings to respond to the severe budget constraints. This effort includes developing of a revised RFP that reflects cost saving strategies for long-term sustainability. And in October, MTA issued a request for information to the vendor community to solicit feedback on opportunities to reduce costs while maintaining service quality. And we're looking at leveraging technology and hardening our infrastructure at our facilities. This will allow us to restructure our operations overall, re-scope for a new RFP, and reduce our security contract service hours for even more additional potential cost savings. With this one year extension, it's a very small timeline, but we would request approval of the extension through this board and the board of supervisors with looking to issue a new RFP in the spring. And then in 2027, we would finalize an agreement and issue a new contract beginning to start on April 1st, 2027. And that concludes my presentation, and I'll stand by for any questions that you have.

Thank you, Ms. Barrows. We'll go to public comment first. Public comment is open now on this item for two minutes each.

Members of the public wishing to provide comment will have two minutes each. There'll be a warning at 30 seconds and a chime when the time is up. Any speakers can come up to the podium at this time. Seeing none in the room and no accommodation requests.

Thank you. Public comment is now closed. Directors, Director Henderson.

Thank you, Chair, and thank you, Ms. Burgess. I have a couple of questions. One, I'm curious about whether in this contract there is any requirement to hire people locally, or do folks who work for the security company come from all over?

So there is a requirement for 20% LBE. OK. So we currently have three subcontractors under the LBE requirement that work directly under Allied Universal.

OK. And then my other question for you was this contract will take us through basically another year, and then while you do the RFP and negotiate the next contract? And then how long do you anticipate that next contract? Or maybe instead of saying that, what's expected term or the maximum term of the next contract that would be allowed as a result of the next RFP?

I think we're looking at another three-year term for a new contract.

Got it. And then you might have some possible extensions or you would have to rebid it out. Okay. Okay. All right. Thank you.

Thank you, Director Hemminger. Henderson, Director Hemminger.

Thank you, Madam Chair. Colleagues, just a little walk down memory lane here. When I first joined this board several years ago, we had sort of fallen into a bad dynamic. where the staff would be bringing expired contracts to the board like three days before they expired and The board had nothing to say except yes And I I think we had I thought we had Sort of slayed that beast, but this is maybe the bad old days rearing its head again because We had an original contract term of three years and then three one-year options. And it seems to me what should have happened is when we were in the first or second of those options, we were getting ready to bid it out. Because as it is, we're just giving another year of a contract to our contractor. And that means nobody else gets to bid on it during that time. So look, I hope you take the criticism to heart. And it really is no fun to be on a board when you keep being presented with issues that you really can't vote another way. And I would appreciate it if we could just back the process up a bit like we were, I thought, getting into the habit of. Then we would have a way of getting competitive bidding into the play and giving us something to do up here besides just say yes.

Funny enough, that comes to my question, which is that I believe there is a strategy that's being employed with our larger contracts of extending them so that we can fold it into our efficiency work. But I, like Director Hemminger, don't recall seeing it coming to us at a moment where it's really too late to do anything else. Maybe Secretary Silva, you might, because there have been several contracts like this. And I appreciate the strategy. certainly, of giving ourselves more time to craft the RFP given our current circumstances. But I'm just looking for some clarification around that.

of Director Hemminger, we can look at when we brought you other contracts and how that played in. You know, obviously I'm not here to, Julie would probably be able to speak to this more specifically, but I do think that we hear you, Director Hemminger, and we will, you know, make every effort to, you know, provide real time, you know, real lead times. I know on this contract we have, without obviously going out to bid, We were able to negotiate some reductions, but obviously that's compared to what would be your response, which I completely understand. So we look forward to learning from this RFI process and working with the transit security team to craft a contract that accomplishes our security goals and saves us some money and the next contract would be our goal.

The only other thing I'll add is that that was the main reason why we only went for a one-year extension, because we do want to go out to bid and have it go through the competitive process. And so where most other contracts probably aren't requesting a one-year extension, probably more, we're only requesting a one-year extension because initially we were going to go to RFP, we considered that, but we did want to make the necessary changes that we need to make in our business model, continue to make the changes that we are making in our business models that allow for us to have the underspending in the first place so that we can continue to work on our efficiencies, look at what the industry is telling us that we could do to make more cuts and then re-scope our RFP.

Vice Chair Kahina.

Thank you so much for your presentation, Kim. I do echo what Director Hemminger says as well. In that point, I could say it's well taken and taken to heart. I know that this is a tricky time to present contracts, especially with not understanding what our financial situation is going to be post-November. So I understand that that might have also played a factor in just the calculus of how negotiate this contract. I do appreciate that you're able to negotiate a 10% reduction as you're gearing up to take it back to bid. I do wonder, it's probably premature to ask this, but I do wonder As you're looking at this agreement and looking at, and perhaps you could speak to this, to some of the services that you have seen across the years have benefited our system, our security, and those that just haven't really been, haven't given us the bang for our buck. I don't know if you could speak to those particular nuances of the agreement at the extension.

Sure. So one of the things that we've observed over the past five years with this contract, or six years with this contract, is the service hours and the need for the hours have changed since the initiation of the original contract. And that's based on a combination of things. We learned a lot from COVID. So service hours changed as a result of COVID. But then we also changed our business model a bit, which allowed for us to see some reduction in service hours. For example, we... stood up our security operations center, which we had not been operating before. And that allows for us to manage the security operations overall remotely, which allows us to reduce our at some of the service hours in terms of our mobile patrol. We also changed the way we look at and handle our video surveillance, which video surveillance as well as the security console works out of our security operations center. I know it may be hard to believe, but five, six years ago, in order to process a request for video, we were still placing them on CD-ROMs and delivering them to people. We no longer do that anymore. So that allowed for us to reduce our service hours as well. We now do everything electronically through a shared link. And so no longer do we have to rely on the contractor to provide us service hours to complete those tasks. And so we have made tremendous changes in our business model, which has allowed the reduction of our service hours. And we think that with the extension year, we can create more cuts.

And recently, there have been a lot of reports about how different metros and different cities have used the type of access that's given to video surveillance systems to other law enforcement operators, federally or locally as well. And so I do hope that as you draft this next set of RFPs, or RFI, sorry, you pay careful attention to that particular piece of the RFI and that particular clause because I, I do share the concerns that other folks in this sort of oversight role have shared in the past of just who has access to what and what kind of access is given and I know in my community in particular that has been a concern that has raised a lot of fears and a lot of concerns about folks willing to participate in law enforcement, folks willing to participate in certain sort of different sorts of safety or engagements with law enforcement because of those issues. And so I know you take that to heart, but I just had to mention it in this space. Thank you, Kim.

All right, very good. May I have a motion and a second to approve?

I move the item.

Second.

Thank you. Secretary Silva, please call the roll.

On that motion, Director Chen. Aye. Chen, aye. Director Felder. Aye. Felder, aye. Director Hemminger.

Aye.

Heminger, aye. Director Henderson? Aye. Henderson, aye. Director Hinze? Aye. Hinze, aye. Director Kahina?

Aye.

Kahina, aye. Chair Tarloff? Aye. Tarloff, aye. Thank you. The item is approved unanimously.

Thank you.

Secretary Silva, please call the next item.

Very good. Places you on item number 13, discussion and vote pursuant to admin code section 67.10D as to whether to invoke the attorney-client privilege and conduct a closed session conference with legal counsel.

May I have, oh no, we need to open public comment for item 13 for two minutes each, please.

Members of the public wishing to provide comment will have two minutes each. There will be a warning sound at 30 seconds and a chime when the time is up. Any speakers can come up to the podium at this time. Seeing none in the room and no accommodation requests.

We will now close public comment. May I have a motion and a second? So moved.

Second.

Secretary Silva, please call the roll. On the motion to go into closed session, Director Chen.

Aye.

Chen, aye. Director Felder.

Aye.

Felder, aye. Director Hemminger.

Aye.

Hemminger, aye. Director Henderson. Aye. Henderson, aye. Director Hinze. Aye. Hinze, aye. Director Kahina.

Aye.

Kahina, aye. Chair Tarloff. Aye. Tarloff, aye. Thank you. The board will now go into closed session.

Thank you. you

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SFGov TV San Francisco Government Television

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SF gov TV San Francisco government television

Directors, that places you on item number 14, the announcement of closed session. The board met in closed session and voted to approve the item. Places you on item number 15, motion to disclose or not disclose the information discussed in closed session.

Colleagues may have a motion and a second.

Motion not to disclose. Second.

Secretary Silva, please call the roll. On the motion to not disclose, Director Chen.

Do we need public comment?

No public comment.

Okay. Aye.

Chen, aye. Director Felder? Aye. Felder, aye. Director Hemminger? Aye. Hemminger, aye. Director Henderson? Aye. Henderson, aye. Director Hinze? Aye. Hinze, aye. Director Kahina?

Aye.

Kahina, aye. Chair Tarloff? Aye. Tarloff, aye. Thank you. That motion passes unanimously and concludes the business before you today.

Thank you, colleagues, staff, and members of the public. We are now adjourned. Our next meetings will be on March 3rd and March 17th. Thank you.