City Council - Regular Meeting

Thank you.

Good evening, everyone. We'll go ahead and call this meeting of the South San Francisco City Council this Wednesday, September the 9th to order, and we'll start, as usual, with a roll call.

Reporting in progress. Thank you, Mayor. Councilmember Coleman?

Here.

Councilmember Flores?

Present.

Councilmember Nicholas? Present. Vice Mayor Nogales?

Here.

Mayor Adiego?

Here. And tonight, I've asked Eva Romero, who's in the on-deck circle, if she would not mind leading us in the Pledge of Allegiance. So if you're able to stand, please do so, and she'll lead us off.

I pledge allegiance to the flag of the United States of America, to the flag of the United States The public will get your stands. One nation under God, admissible and liberty and justice for all.

Very good. Yeah.

Thank you, Ava.

Moving on to Levine Act disclosures. Does the council have any conflicts to report tonight?

Any conflicts, Mark? Okay. Looks like no one does.

Moving on to announcements from staff.

Good evening. We have three different things I would like to call to everyone's attention tonight. The first is an event to mark the 25th anniversary of 9-11. So while a sobering event, it is important, we believe, to mark the 25th anniversary. We are having a short ceremony on Friday, September 11th, the actual day. at 9 a.m. at Fire Station 61 on Canal Street. Parking will be very limited, so please plan accordingly. On a more lighthearted note, we are encouraging you to vote and vote early and vote often. We're having a sticker contest about voting. So we are encouraging everybody not only in South San Francisco but even beyond to vote for their favorite designs for two different stickers. One is going to be I voted in SSF for those who are eligible to vote. and the other is a future SS voter for those who are younger than 18. So there's two different contests. There's a QR code here and you can also go to our website to find that and to learn more information. The last day to vote is this coming Sunday the 13th. So please do that by this Sunday. And then the big grand event you all have been hearing about and have decided about and we plan for all year long. It feels like Concert in the Park is this Saturday, the 12th, starting at 1130 in the morning. Cool and the Gang will be playing. We're expecting a beautiful weather day and lots of folks to attend. So again, please plan accordingly. Thank you to our sponsors, including Genentech. And we look forward to seeing everybody there on September 12th on Saturday, starting at 1130. Thank you.

Thank you, Ms. Snyder. And next up.

We'll now move on to council comments request honoring the life of requests.

Okay. Why don't I go to the far left here because I never call on Councilman Coleman first. So tonight he gets to be ready or not. He's first.

All right. Not too much, but... Something that I attended was a ribbon cutting for the new Central Kitchen for South City Unified. And you can tell it's the beginning of the year because they did three grand openings, three ribbon cuttings this year for the school district. One was the Central Grand Kitchen. The second was the Westboro Middle School. their new field in pavement ribbon cutting, and then I believe they had one also for a new TK Center as well. So big congratulations to the school district, and we're looking forward to so much more. And that's all I have for today, thank you.

Okay, thank you very much. And now to my near left, Councilman.

Thank you, Mr. Mayor. This past two weeks, I attended several stakeholder meetings. I joined our South San Francisco hoteliers and general managers of many of our hotels at the quarterly meeting that I hold with them in the conference. with the staff of the Conference Center as well, as well as members and staff of the San Francisco Travel Association or Travel Peninsula. It's always a great time to be able to share council updates, what's happening here in our city with that stakeholder group, as well as be able to get updated information how our hotels are doing. Appreciate also our police department always being present as a liaison to connect to them and be there to answer questions as well. I did attend as well the Central Kitchen grand opening of the South San Francisco Unified School District. It's really remarkable to see a state-of-the-art kitchen. It almost looks like a Michelin restaurant type of kitchen, and it's really great to be able to know that our entire schools covering four cities are now being covered. And not only the Central Kitchen that operates the school district, but also a brand new cafeteria there at El Camino High School. Also yesterday started with the help of, in support of department heads and staff, we started to engage some of our District 5 business owners on the Linden Corridor of District 5 to engage with them and start hearing ideas and concerns about parking, as we all know. Big beautiful Grand Linden and Pine Park is coming hopefully early next year. So we're engaging in conversations to make sure that business owners as well as residents are well aware of what's coming and we're also able to work with them with any issues regarding parking enforcement and making the life of our businesses around that area a lot better. Those are the events I have to report. That's all I have. Thank you, Mr. Mayor.

Thank you. Thank you, Mayor.

I would just like to thank everyone who joined the Mayor and Councilmember Flores on the tree lighting event last August 31st in honor of Juliana and September as Childhood Cancer Awareness Month. And I would like to request that we join these meetings In memory of Gloria Steinem, an American journalist and, of course, an American icon, social movement activist, who's recognized leader of the second wave of feminism in the United States, she pushed open the doors not only for herself but for millions of women behind her. I believe that because of her, I'm here as only the fourth woman in the City Council of South San Francisco and was given a chance to become the Vice President of Drug Safety and Pharmacovigilance of a precision oncology company. I owe it to her and for her continuing to lift others and in us, she will live on. The last two weeks was also a little tough for my extended family. We lost my sister-in-law, my husband's sister, Nilda Mendoza. And a week prior to that, I lost my first cousin, who's like an older brother to me, Rosario Mir. And on the same day, we also lost one of my cousins-in-law, Gilmore Manto, who said his final goodbye on the same day. Although I cannot be with them physically during this difficult time, I'm keeping them in my prayers and their memories will live on. And another person is Hermine Hilda Cacho, a teacher for four decades, who was the mother of one of our Kaiser nurses here, Arlene Bukaling, and may her soul rest in peace. Thank you, Mayor.

Okay, Mr. Vice Mayor, you're up.

Thank you. Just really quick. I attended the Rotary Club meeting last week and I was joined by our police chief who was recognized by the Rotary for all his years of service. And so I just wanted to thank members of the Rotary for the invite and also recognizing Police Chief Campbell. That's all I have, Mr. Mayor.

I've got three items I wanted to cover, and especially I find myself in the closing moments of my time in service, and I'm looking to my colleagues to kind of maybe pick up some of the activities that I've been involved in. I think the first one is maybe the most important one, in this moment. So there's a Coleman Creek Advisory Committee that advises to the One Shoreline group. And we are, I'm not gonna say loggerheads, but we're on kind of different sides of the way of thinking. In the budget that was approved, maintenance that South San Francisco will do, there was an amount of money that was approved. And it was roughly one half of what we had hoped for. And there is some concern that the one shoreline group, the administration may be trying to hold on to more monies for some of their grander projects. And they are wonderful. I mean, they're talking about where the creek enters the bay, then there's a lot of land that actually is in one shoreline's control. You know, having a park, creating more of a space there where it's natural and people could enjoy the creek as it enters, and something we don't often do along the creek now is enjoy. But, you know, the maintenance is essential with the POSSIBILITY OF SOME PRETTY ROUGH STORMS COMING THIS YEAR. THERE ARE SOME SEGMENTS OF COMA CREEK THAT ARE IN NEED OF REPAIR. AND THERE ARE SECTIONS THAT WE COULD LOSE IN A BIG STORM. We're just getting started on negotiating with them in these meetings and the nice thing is that Donna Colson from Burlingame, she's the representative for this end of the county and she came to that meeting and she was very open to having additional discussions. I think we, maybe impressed her with our point of view. So there's an opening there, and it's not easy because it's one of those afternoon things in the middle of the week, but we really do need to have someone there at this time because it's going to be a big issue moving forward. We no longer have control over the purse strings, and there's a lot at stake. Earlier in the week, I met with Philip Vitale, and they're doing some final work on the Memorial, Veterans Memorial area that's gonna be adjacent to the new swimming pool. And so when the pool is done, and the old pool is demolished, then they'll be able to finish up an area for, reflection and for gathering for uh for veterans events and one of the uh fun projects is there's an eternal flame that used to be in the 60s i think it was designed in 67 and for about 20 years or 15 years it was at city uh civic center downtown by the city hall and then it got moved to the park and it was in an area that you you could see it as you drove by but a lot of people really didn't know what it was it's a mosaic piece so over all those years uh, 50 plus years, um, you know, some of the mosaic tiles fall out. So there's been a competition where there's, uh, four artists and, um, they open it up to the public. So people had an opportunity to vote and our arts commission and other bodies will be weighing in on that. But, um, I'm hoping that someone on council can, you know, work with the veterans. I'm not a veteran, but my father was a veteran of the Korean war. So this was something that he was very interested in. And then I've got a number of friends that served in Vietnam and, and they, they go to these meetings. So hopefully someone on the council can step up and see that to completion. And yeah, I think that the other thing, one of the meetings that I enjoy the most, besides here with you, is the Bay Conservation Development Commission. So it's a twice a month meeting. Sometimes they skip a meeting. It's in San Francisco, but you can Zoom. And if you like science, if you're interested in the bay and the environment and and all of that, I'm always learning something there. It's really one of my best days is when I go out there and kind of leave all these issues behind and just kind of focus on the Bay and what's happening around it. And the interesting thing is that it's all interrelated because the Bay is, the water's rising. And so the water, the tidal influence comes further up all the creeks. And so BCDC's jurisdiction is expanding. well into Coma Creek. So if you're into science and you have afternoons free, you're going to be sitting with supervisors from all nine counties, people from state lands, the Army Corps of Engineers. There's just a lot of real powerhouse people, so there's no end to what you can learn in any given session. And the way it works is it's an appointment by a bag. So there are four appointments. We're the west side. And if you get appointed and we share it with San Francisco, that's that's that's most important. So I've had it for roughly 12 years. And prior to that, there were a couple of supervisors in San Francisco that had it for a short amount of time. but so it kind of jumps back and forth between San Francisco and San Mateo County cities, I think down through San Carlos. So you have to be an alternate for a period of time, but quite often San Francisco puts someone on there who's close to turning out. So Joe Furnikees and I held it for the last, 25 years with a little time in between so South San Francisco has had an undue amount of influence and and sometimes you can bring things home like the mooring ordinance just people that Worked with richly on that and some of our Bay Trail, you know problems. So it's just Be nice to see the South San Franciscan on that BCDC, but you have to serve as an alternate initially. So anyway something to think about. And that's all I have for you tonight. So we'll move along with the meeting.

Thank you, Mayor. We will now move on to public comments. We will begin with Leslie Fong.

Good evening, Mayor, Vice Mayor, and City Council Member. I know you guys know the election's coming up, so I'm putting a plug in for Floor Nicholas. because I think she's really great for the position for District 3 and she cares about our community. The second item is a plug for a South City restaurant called Conchinita. It's right across from Starbucks and the Guatemala Mexican food. It is a place that you have to check out. They make the best chorizo omelet I've ever tasted in my life. They need sliced tomato, avocado, and they got Cream cheese on top of it, or no, sour cream, sorry. And then they have chips and also some other item. So go check it out. And the last one is in Burlingame called Alamna. They have great breakfast. Gladys is the greatest server I've ever done. And their scone is to die for. So check them out. It's right off Basie Chapman and also Burlingame. So you know what? I know we live in South City, but I think we could find Horizon to go other places. city to check out the peninsula, what they offer since we have a culture of diverse culture, cuisine, whatever else. That's it, thank you.

Ava Marie Romero.

Hi Mayor, Vice Mayor and Council Members. This is Ava Marie and I'm here to speak for a disabilities art showcase that is happening from October 1st to October 31st on 800 Main Street at Redwood City Center for Creativity. And this is the flyer right there. And they can submit until September 25th online, and there's a QR code. So I'm gonna leave this with you guys. And congratulations to Mark Nogales for running for County's Board of Supervisors District 5. So I just wanna let you know, congratulations. We wish you the best of luck. So I'm gonna leave this with the council members. That's for city, here you go.

Thank you, Ava.

You're welcome.

Thank you. Sam Takuti.

Mayor Adiago, board members of the South San Francisco City Council, and fellow citizens, my name is Sam Katkoudy. This week I would like to use my three minutes for public comment to serve as a warning to all of the electorate of South San Francisco. The victories of the socialist candidates in Democratic primaries is very concerning to me. These socialists cannot win. They run strictly as socialists, so they pretend to run as Democrat socialists. The sad thing about all this is that the people who vote for these socialists have never had the experience of living under a socialist regime. While I haven't either, in 2008, my wife and I vacationed for a week on the Venezuelan island of Vistula Margarita. While there, we befriended an individual who lived six months in New York City in the summer and six months on the island in the winter in the city of Port Lamar. He told us that unless you get to the grocery store in your neighborhood shortly after their opening, the store would have already run out of such staples such as beans, rice, bread, milk, and other foods. I wonder how many Americans who are used to finding a fully stocked store 24 hours a day would like this. I hate to say this, but those who vote for these socialist candidates have little idea of the various differences that there are in this world except what they read on the internet. I would hope that the citizenry of South San Francisco can see through all of these socialist pipe dreams. While the de facto leader of the socialist movement is Bernie Sanders, he certainly is no pauper. Aside from owning his own house in Burlington, Vermont, He also owns a vacation home on Lake Champlain. Aside from that, his estimated net worth is between two and a half to four million dollars. Pretty hypocritical for an individual who's always crying about the evils of capitalism. Many socialists want to abolish the Electoral College, the presidency, the Senate, the Supreme Court, the Pentagon, corporations, ICE, the police, the prisons, and borders. Seems like anarchy to me. Seeing that roughly 50% of the residents of South San Francisco are over 50 and more worldly than those who voted for socialists in other parts of the country, they hopefully will see the sheer folly of electing a socialist in this city. Thank you.

Okay, Sam, thank you for the update.

Corey David.

Good evening, Mr. David.

Good evening. It's election time again, a celebration of small-D democracy. Well, at least for some of us. In a perfect world, a candidate would run on their record, but not necessarily in South San Francisco. In South City, that record might include amassing unmanageable debt. Legacy projects built at great expense to benefit a select few, not the many. Misleading promises for the use of dollars generated by tax measures. Taking cover from residents by lying about the future of city-owned facilities. A total lack of transparency and failures to account for millions of dollars in sales of city properties. Reckless spending on 75 issued city credit cards without explanation to the taxpayer. Cozy relationships with corporate benefactors who create donor programs promoting candidates of use to them. Acknowledgement of many neglected parts of our city. There might even be a few uncomfortable questions about residency status, and I'm not talking about swapping districts for a particular district run. I could go on, but it is pretty evident why many of you can't run on your records, what to do. As it is apparent that some of you might be more invested in your souls, your political careers, and your personal benefit, rather than the city you were elected to represent, no one can accuse you of not being resourceful. Rather than run on your records, you realized it might be easier to run unopposed. You might have sought the encouragement of past elected officials who are gone but never forgotten as they put their hands on the electoral scale. You might even have solicited endorsement from some San Mateo County party organization. that does minimal background research into candidates, and while not gamblers, wouldn't hesitate to stack the deck. On second thought, I guess I was wrong. In South San Francisco, some of our elected officials don't celebrate democracy, they exploit it. Clearly the only thing they respect less than democracy is this city and the people who call it home.

Okay.

That concludes the speakers that have signed up for today. Is there anyone else in the audience that would like to speak? And we have no speakers online there. We will now move on to presentations. Item number one is a proclamation recognizing September as Childhood Cancer Awareness Month.

So I've asked the dad on the council to present this and then we're going to invite Jesus Peñas with us as he has been for a number of years when we do this presentation. We'll ask him to come to the podium when the vice mayor is done with the presentation.

Thank you, Mr. Mayor. If I can indulge the council and then those in the audience about this amazing young girl named Juliana. who I never got the opportunity to meet her, but her story still resonates with me and a lot of people in South San Francisco. So for those who know, we usually light the tree on Sign Hill. And where Jesus and Juliana are living, they could see the tree. And Juliana would look at it every night and say, that's her tree, that's her light. And in a lot of ways, it became a symbol of who Juliana was. She was a light for a lot of people. And she was taken too young because she was diagnosed with cancer. And she fought, she fought. And I remember reading and following her story Unfortunately, she was taken away too early, too young. But her family and her friends have never forgotten that light that she shined on this community. And so, as my colleagues have mentioned, we have honored that legacy. By every September, we light the tree and her honor and also those children who've been diagnosed with childhood cancer. And so I wanna say as a parent, and I know that Council Member Nicholas as a parent as well knows how important the love that we have for our children. And I wanna say thank you to Jesus and your amazing family for making sure that that light never dies. So I would like to present this proclamation recognizing September as Childhood Cancer Awareness Month. Thank you.

Mayor, thank you Mayor Adiego, Vice Mayor Nogales, fellow council members. Thank you again for recognizing September as Childhood Cancer Awareness Month. As you see, my mom is holding a picture of me and my daughter. As much as you know this, she passed away in 2012, but to this day we keep her memory alive with the help of my family, with the help of my city. South San Francisco is known as the industrial city. known as a biotech leader, but they should also be known as a leader in childhood cancer awareness. You have been the only city that represents childhood cancer awareness every single day of September. There's other cities that may do a night, may do a few hours, but you guys shine that light bright for 30 days straight. And that is a symbol that South City needs to be recognized for because you guys are a leader in the fight against childhood cancer. No other city could say that. And I give you guys the recognition. I've worked with every single one of you as you guys were mayors. And every single one of you have made that promise that that tree will stay lit until we find a cure. We're trying. I do a lot of research. I'm a very big advocate in the childhood cancer community. And with your help, I know someday we're going to get somewheres. Hopefully it's a cure. But I can't thank you enough. I told you guys this at the ceremony. We wouldn't be able to spread as much awareness if it wasn't for the city of South San Francisco, for my city, for my daughter's city. That tree is a beacon of hope for everyone, for families that are going through this, even adults going through childhood cancer. And I know you guys are giving me the proclamation and thanking me for keeping her memory alive, but you guys got to give yourself a pat on the back too because you guys also help keep her memory alive like she's your family. And like I said, it wouldn't be... possible if it wasn't for you as well. So again, I thank you guys very much for what you do for Childhood Cancer Awareness Month, for my daughter, Juliana, and for my family. It really means a lot. And you guys always have my support as much as I know I have your support when it comes to Childhood Cancer Awareness Month. And thank you all very much again. I really, really appreciate it.

And Jesus, thank you for coming in and joining us every year and helping us keep that focus on this issue that affects so many people. Thank you.

Item number two is a proclamation celebrating August as National Water Quality Control Month.

Okay, so this proclamation is gonna be presented by Councilman Coleman. And we're asking Brian Schumacher, is actually the plant superintendent for water quality control. And basically that's the dirty water, but you've got to process the dirty water the right way so that you don't impact the clean water. So that's why we've chosen him on a regular basis. So it's all yours, James.

Yes, water is important, extremely important, extremely essential, and way, way back in the day, we would just dump whatever into the bay, but these days, we're a lot smarter now, we care a lot about the environment, and we also want to make your job a lot easier at the water quality control plant, and so, There are many actions individuals can take to prevent water pollution and includes in participating in community cleanup events, picking up after pets, something that more neighbors should do, assuring that only local rainwater enters storm drains, choosing non-toxic household products and not using chemical fertilizers or pesticides and reducing water usage, especially here in California where we are prone to drought from time to time. And without safe and reliable water and wastewater treatment systems, no community or sector economy from our richly diverse communities to biotech service and manufacturing can thrive and expand. And so it's incredibly important. And I can't think of anyone more worthy of this proclamation every single year than Brian Schumacher, who runs an award-winning water quality control plant right here in South City. So I'll present it to you. And you can say a few words.

Wow, thank you. Good evening, Mayor, Vice Mayor, and council members. As the council member said, I'm Brian Schumacher, the plant superintendent. I do stand here as the plant superintendent, but I represent so many of the hardworking individuals and professionals behind the scenes that are on that team that was just spoken about so highly. They are on duty 24-7 all the time, not only at the plant, but protecting our collection system, protecting our storm drains. When our citizens see a tractor truck, going around town. Those are maintenance vehicles that are helping all of the wastewater get down to the treatment plant where we can turn it into clean water before it goes into San Francisco Bay. So on behalf of all of them and myself, I'd like to thank you for being a forward-looking city council, for all of your continued support in investing in our infrastructure and our workforce. Thank you.

So every year we roll Brian out, but you have to know how obsessed he is about water and water use. So Brian lives on a major street and I drive up and down and sometimes I'll stop and talk to him. And one day I stopped and he was washing his truck with a kit that didn't use water. So I don't know really how it worked or if he's still on that kit, but that's how serious he is about water use. He found a way to clean the truck without using water. Anyway, I'm sure that's gonna catch on Brian and The next item item number three, why don't you read it and then I'll explain what we're doing on on that presentation It's a proclamation celebrating National Hispanic Heritage Month the September 15 through October 15 2026 So sometimes I'm not paying close enough attention to what the administration is doing at City Hall. So this presentation kind of snuck up on me. And I really prefer, we used to have this great celebration for the Fiestas Patrias at City Hall, kind of went away during COVID. And they would do the El Grito, which is kind of the kickoff of Hispanic Heritage Month. So I wanted to have the El Grito occur. And that would be on the 15th. And this is the celebration for the Mexican independence. And then so at the next meeting following El Grito, we'll do a presentation for the month. And we'll invite someone here to receive that presentation. So we're not... We're just delaying it by a couple of weeks. Next item.

Item number four is a countering overview and budget presentation.

Good afternoon, Mayor, Vice Mayor, Council Members. My name is Michelle Bouchard. I'm the executive director for Caltrain. I'm here to introduce my colleague, Casey Frommsen, who's going to give this presentation. I did want to tee it up just to speak to what an amazing result Caltrain has had in the last two years since we've electrified. It's shown to be such a smart investment in transportation. And that is most visible here in South San Francisco, where ridership is more than 200% of what it was pre-COVID. And I think that's a result of not only the fantastic train service that's being provided, but also the partnership with the city. We've worked really hard to get the station done, and it really has proven to be such a boost in customer experience. In the last year, Caltrain overall has been... There was an article that we're the fastest growing transit agency in the United States. And so we really do find ourselves having some really great comeback numbers. We're carrying about 80% of pre-COVID. And on the weekends, we are again carrying over 100% of what we were pre-COVID. We do find ourselves at a bit of an inflection point with respect to the railroads finances. So the purpose of tonight and really appreciate you taking the time is just to talk about some of the great results, but also to talk about the looming fiscal crisis that we've been talking to our board about quite a bit. So this is something that's been discussion at the Caltrain board for about the last, let's call it six to eight months. So with that, I'd like to hand it over to my colleague Casey, and then we're available for any questions you might have.

Good evening, Mayor and council members. I'll go ahead and get started. I know you have a long agenda, so I'm going to go through these pretty quickly. But as Michelle said, we're happy to be here for questions. I'll pull out a couple stats on this slide. Our favorability rating, not just with riders, but people along the system. Our joke is it's up there with libraries and babies. And so we're really proud of the service that we've had and produced and continue to produce now that we have an electrified service. We've been really grateful that a lot of people have been recognizing the improvements we've made, everything from the National Outstanding Public Transportation System Award to even one about driving this for Dodgers. If you haven't seen this, you should take a look at it. It's a good play on our sports rivals. But on a slightly more serious note, you know, Caltrain is part of everyday life for millions of people that end up riding it to get to school, to work, to social events for family and friends. And we have not just that daily impact, but we have a regional impact as well. Caltrain is the spine of the the peninsula and we carry the equivalent of three freeway lanes worth of traffic. So even if you don't ride the train every day, you are glad other people are because without Caltrain you would see an increase in traffic to the magnitude. I think nobody would be interested in experiencing. We also know that we are through the heart of a really robust corridor that's an economic driver, not just for the region, but the state and the country. And when you're closer to Caltrain, that increases property values and local sales taxes as well. And then we are so proud we have a system now that is 100% renewable, and it is something that we can be proud of that we're leaving behind for future generations. Some more stats again of that impact we have. with the local communities. We have a lot of capital projects that we're working on up and down the corridor, including one with the city as well. I wanted to highlight the project on the right, just to say that we are in the business of doing things different, being more cost effective and innovative. At a crossing, we were seeing three vehicles a week turning onto the tracks. We work with technology providers to improve the audio and visual direction so people now know to go past the tracks and then turn right or left. We worked with the local city to change some of their timing on that. And then we put in these really cost effective solo lane markers. And we've had zero vehicles on the track in that location since then. And this was a several hundred dollar investment, not several millions of dollars. So we're rolling this out. throughout the corridor. And this is something that is part of Cal transmission safety always first and always, and is just an example of what we're doing throughout the corridor. When we talk about the service, it's the three legged stool. It's faster, it's more frequent, and it's a better experience. If you have not been on it lately, you really need to see how amazing and a difference that these new electric trains are. And then the last one is the on time performance with a 90% on time performance. This is a schedule now that can take you to any of your destinations, and something you can really rely on. Michelle talked about some of the stats and I'll just pull up that last one at the bottom here. You know, we're a system now that's more diversified, especially since we operate at least a half an hour service seven days a week on it. So 37% are low income, 10% are youth seniors, people with disabilities, and we have a dollar youth fair on there. So we've seen a really big increase in the youth and that's again, kind of building this future generation of transit riders. Michelle talked about the South San Francisco up there for some dramatic growth and we had a wonderful conversation with your city manager a few months ago talking about how can we continue to deepen on the partnerships along with your council members to of you know, not making it just about Caltrain, but what can we do for the city? What are the other creative ways that we can really benefit each other and put our mindset in, you know, what does the city need to be prosperous? And we have so many shared goals. And so we wanted to highlight that when we think about our future, we know that city partnership is really critical for us. We've been around for 160 years. These cities have grown up together and we want to grow together in the future. So shifting over to some of our trends, in 2020, our ridership dropped to 2% of what it was. And so you can see the dramatic increase we've had since then, but it's not as high as it used to be. And we also used to have a much higher fare box recovery. So a lot of our budget was covered by fares in the past, over 70%. Now it's closer to 30%. There's a few reasons that have led then to what we are looking at as a fiscal cliff of a $75 million annual operating deficit. The biggest one is commute patterns have shifted. People used to ride the train five days a week. 80% of the people we're riding it to get to and from work. Now we've diversified it, but these patterns have shifted and we need to shift with them. Ridership is less than what it was. Costs have risen with inflation and we do have a new 51 miles of electrified infrastructure that we need to maintain. We know before we look anywhere else, we need to look internally and tighten our own belt. So here's some of the cost containment strategies we've implemented. Strategic hiring freezes, comprehensive reduction efficiency program, line by line review of our budget, and we held our operator contract, which is the biggest part to the previous level. We've implemented crew efficiencies, recouping costs through electricity. MTC has showed that over the last five years, we've saved $70 million. And just recently, the federal government did an audit and found no findings in showing that we're a business that is doing things well and with transparency. We're also thinking about how can we be creative? You know, parking, special events, naming rights, solar. We have some fiber optic cable that we're gonna lease and we're looking at the future of TOD. We know these are not things that happen overnight, but we also know that we need to be more creative and monetize as many assets as we can on the railroad so we diversify that portfolio of revenue for us. So as Michelle said, we've been talking to the Caltrain Board for several months, and in June, they just adopted a framework for us that really guides what our future could look like. And we're spending the time to go around to the communities along the corridor and making sure you're aware of these conversations and continue to give us input and feedback on what we're considering. So as we look ahead, you know, we're looking at on the left side, you know, the type of service we have today, which we know is what people like and enjoy and has a good future. But because of these fiscal challenges, we are looking at what potential cuts would look like going back to hourly weekday service, no weekend service, early shutdowns, no special events and station closures. And we know that these type of cuts will make the problem worse. When you cut, you'll have fewer riders, fewer revenue, and it is a difficult cycle to reverse. And this conversation that we've had today is about Caltrain, but we know that this is a connected service. People don't just ride service in one county and one city. You go between those, you ride different systems, and we know that there are other connected networks that we need to think about when we think about their challenges and what this could look like for our future as well. So we're at this critical inflection point where we discuss some of the scenarios that we have to unfortunately seriously consider. But we know that we're not doing this alone and we wanted to make sure that we were here talking to our partners along the corridor to make sure that you're helping us inform the tough decisions we may need to make and kind of where we go from here. We're here for any questions at this important crossroads for Caltrain.

Okay. Any questions?

Can we show the ridership for South San Francisco? It went really quick, so I just wanted to see that.

Yeah, and this is from a couple months ago. So I think, as Michelle said, it is probably even higher now. This is from July.

It's great. And I also want this for us. I think all of us were here when when we rededicated the new Cal train station and how it's more improved and more connectivity to the downtown. And so I think that's really helped in terms of getting folks in and out of South San Francisco. So I just wanted to say thank you for the partnership. Absolutely.

Okay.

Thank you for the presentation. I just really loved riding trains when I used to work at Stanford. It was really a community. Whenever you ride a train every day, you form a community. Thank you.

We agree. Thank you for the presentation.

Thank you so much for your partnership. We appreciate it.

Thank you, Mayor. We will now move on to consent calendar. Item number five is a motion to approve the minutes from the meeting of August 26, 2026. Item number six is a report regarding a resolution amending the city's conflict of interest code to update the list of designated positions. Item six A is a resolution. Item seven is a report regarding a resolution authorizing the acceptance of Older Americans Act grant funds from the San Mateo County Aging and Disability Services Division in the amount of $114,907 and amending the Parks and Recreation Department fiscal year 2026-27 operating budget. Item 7A is a resolution. Item 8 is a report regarding a resolution accepting $79,700 from the State of California Office of Traffic Safety for the Selective Traffic Enforcement Program to be used for personnel overtime equipment and training expenses and amend the Police Department's operating budget for fiscal year 2026-27. Item 8A is a resolution. Item 9 is a report regarding a resolution authorizing acceptance of a grant from the California Department of Fish and Wildlife in the amount of $12,000 for the purchase of specialized oil spill response equipment designed to address hazardous material spills or leaks on San Francisco Bay waters, amending the fire department's fiscal year 2026-27 operating budget, and authorizing the city manager or designee to enter into an agreement with the California Department of Fish and Wildlife. Item 9A is a resolution. Item 10 is a report regarding a resolution authorizing a first amendment to the services agreement with Wastewater Solids Management Company for anaerobic digester cleaning services in an amount not to exceed $97,500, increasing the total contract authority to $727,863, extending the term to June 30th, 2027, and authorizing the city manager or designee to execute the agreement on behalf of the city. Item 10A is a resolution. Item 11 is a report regarding a resolution to rescind the contract authorization for Heimberger and Company and approve a new contract with Univar Solutions USA LLC to supply bulk sodium bisulfite for fiscal years 2026-27 and authorize the city manager or designee to execute the necessary agreement Item 11a is a resolution. Item 12 is a report regarding a resolution authorizing the submittal of an application to the Metropolitan Transportation Commission for the Cycle 2 Transit and Bay Trail Grant Program and similar grant applications requiring no more than $700,000 in local match funds for the Bay Trail Centennial way trail gap closure project. Item 12 is a resolution. Item 13 is a report regarding a resolution authorizing the city manager or designee to execute a purchase agreement with ceremony Ford for the purchase of a Ford F three 50 crane truck in an amount not to exceed $179,836 and 62 cents. Item 13A is a resolution. Item 14 is a report regarding adoption of an ordinance amending Title 20 of the South San Francisco Municipal Code to update regulations pertaining to accessory dwelling units to comply with California state law. Item 14A is the ordinance. Item 15 is a report regarding adoption of an ordinance amending title 20 zoning of the South San Francisco Municipal Code to revise section 20.450.011, common procedures, expiration and extension related to the timeframe for residential entitlements. Item 15A is the ordinance.

Okay, thank you, Mrs. Acosta. And would any council person like to remove an item from further discussion? I'll pull number 13. 13, okay. Anyone else?

Seven and 13 for me.

13 also for you? Mm-hmm. You know, I think in having this be read out loud, I'm thinking I'm gonna pull number eight. If we could start maybe with somebody from the police department to come forward The reason I'm doing this is because we see this all the time where we get grants for directed efforts as far as traffic and such. But it's really one of the biggest complaints we get from people on a regular basis is the poor driving habits that people have gotten into. So maybe you can kind of highlight this and others where there are some specific activities that we do to try to get people to be better drivers.

Yeah, sure. Yes. Thank you, Mayor and Vice Mayor and Council for having me here. So we as a police department for almost 20 years now have requested for a grant from Office of Traffic Safety. And the amount has fluctuated, but it's really just based on the fact of how many operations can we do within a year, which is starting from October 1st till September 30th. So we have been tentatively approved by OTS to receive almost $80,000, $79,700. And the way that we broke it down, typically, we have certain operations that we conduct. This is all about preventative measures and trying to stop anyone from being involved in any sort of collisions. And that includes education, traffic safety, presentations. It's not just enforcement. So part of those operations that we do or allocate for with our personnel is maybe distracted driving operations. There's a lot of our National Highway Traffic Safety Administration, NHTSA. They do a lot of campaigning throughout the year. So there's like April is Distracted Driver Awareness Month. We'll do operations during that time. We'll market it and or we'll educate the public through social media. We'll push out, hey, be aware. This might be something that you should be aware of all the time, but highlight it. And then we'll add enforcement to that. The other thing we might do is traffic safety operations that can span speeding, any sort of red lights, anything that is more collision factors that we may see, especially in bad accidents, higher rates of injury or fatalities. The other thing we do is we collaborate with our other agencies within the county. We're not the only ones that ask for this grant, so we'll collaborate with a lot of other agencies for DUI checkpoints or saturation patrols, which means, say, there's Halloween night or a... Super Bowl weekend during the day or in the evening and there's we'll go out and try to saturate an area with law enforcement and trying to highlight. Hey, we're out looking for impaired drivers. We're trying to stop them from being involved in collisions before that happens. So that's the purpose of the the grant is to try to fund our operations for our personnel to be able to do that those extra duties aside from what they already do.

Lieutenant Murphy, thank you. I know I put you on the spot because I just at this moment decided I was going to ask this question.

Yeah.

And you were certainly prepared. So thank you for the information.

No problem. Thank you.

And the next one is seven.

Yeah, seven.

Two colleagues here, number 13. Seven and 13. Oh, seven.

Seven for me. And seven and 13. Yes, 13 too.

Okay, so we'll start with seven.

So I would just like to highlight Parks and Rec, especially the senior services that you provide. So for this grant that we're receiving, is this the fund that we used to utilize for the luncheon?

Yes, it is.

Okay, and do we get, so how is our contract with Moonstar? Is that something that they also provide us with some discounted prices?

Yes, so Moonstar is an approved vendor to offer congregate nutrition meals. So the meals are offered at a rate.

Can you describe to us when these lunches are and how do we provide it for our seniors?

Lunches take place every Tuesday and Thursday. Sign-ups happen once a month. uh, sorry, Tuesday and Thursday from 1230 to two 30 signups take place once a month for reservations the following month. I'm sorry, I can't recall the exact day that happens. Um, but people can call the senior center if they're interested in learning more information. And we do accept people on a drop in basis. If you are not able to make your reservation, it just depends on the number of spaces available for each seating. But we do try to accommodate everyone.

Well, thank you. I just want to highlight what you're doing for our seniors. Thank you. And number 13.

Good evening. Happy to answer any questions about the new crane truck for the water quality control plant and post stations.

So we know that this... this truck is needed. And I know that there is certain qualifications why you chose this F-350. So I know that there's weight constraints and also severe range loss if you don't choose something that's similar to this. However, we're trying to lower our fleet's carbon footprint. I noticed that this is a full, this is a fossil fuel that's being used for this. Is it too late if we try to use, I've been reading on some things that they said there are some fully electric service cranes, so it's like a hybrid. Have you considered that for this replacement or is it really needed now and that's why we can work on something that's a hybrid?

Now, again, thank you for the question. We have considered that, and a couple of things came into play. Timing of the purchase. We're looking at a truck that's, you know, approaching 25 years old. The... Size consideration that we looked at for the vehicle that needs to be specially outfitted with the service body and then the crane really limits the options to that one ton classification. We likely won't be seeing hybrids for until down the road.

Well, I think what the hybrid that they were talking about is that it's still a fully gas or diesel F-350 chassis. It's only that it's a fit with a fully electric service crane. So it's just a crane that's a fully electric.

Yeah, and the crane on this vehicle is fully electric, Councilwoman.

Oh, so this is already a fully electric.

So this is... We got that part right.

Okay, so that's what they were recommending for us.

Electric crane... Unfortunately, it is a fossil fuel vehicle that's much like any other large apparatus.

Yeah, because it wasn't described that there is a fully electric crane and that's what they were recommending to reduce the footprint. Okay, then I'm okay.

I did. You just want to ride on it, right?

I do, actually. I'll play with the crane. No, I know in the past we've, yeah, the next parade, exactly. We tend to purchase new vehicles, and I don't know if we really pushed in terms of asking about the vehicle.

So you were saying that the current vehicle is 15, 20 years old, is that correct? Coming up on 25.

25, and so I'm assuming it's over 100,000 miles on this vehicle.

these types of vehicles don't get a lot of mileage, but they got a lot of, a lot of, they have a lot of lifts of pumps and primarily the really the big factor is every year that the crane is load tested.

Yeah.

It has to meet certain safety specifications. And during those load tests, they look at the chassis of the vehicle and other considerations. And when, when metals get to that age and the cranes get to a serviceability standpoint to where there's aren't Parts readily available. So many of those considerations came into this request and recommendation for purchase of a new vehicle.

Got it. So it's more of the standards of what you're looking for in terms of the purchase for the crane and for the vehicle because as it gets the weight and everything. So that could actually help answer my question.

Correct. And it's so specialized. That's why we're not replacing them like on a normal five-year basis. I mean, we get a lot of life out of these vehicles because they're well-maintained, one. And two, they're specialized and they really are. in that arena of use for lifting and specialized work.

So the purchasing a used vehicle, a slight used vehicle, doesn't really fall under this category in terms.

No, thank you.

Okay, and then I was looking at the, what's categorized as dealer-added accessories, which is the mechanic's body, and did you take a look at seeing if that was something that could be done outside the dealer, potentially, like an independent, in terms of price?

Yeah, price is gonna be probably a little bit more and the lead time's a little bit longer. Okay. And then the impact on the warranty and then the integration into the rest of the vehicle's wiring harnesses and things like that. Okay. I'm not a fleet specialist, but those are some of the questions that I inquired about as well.

Okay, good. I'm trying to see how we can save costs, but it sounds like this was the cheaper option to go with the dealer.

I looked at this one closely because it's a very large dollar amount for that type of vehicle.

Right, that's why I pulled it.

Again, expect a 20, 25-year life on it. So I'm not going to be here in front of this council often for these types of purchases.

Okay. As long as I get to play with it at some point. I'm just kidding.

There's some pumps and other things. It'll be cool.

Good question. Yes, sir. And just, Brian, can you explain, for the purposes of the public, it's not just, I mean, we've established that it's not a Ford truck, because that's what you hear, $179,000. It's a specialty vehicle, and it's not coming out of our general fund. Can you explain what fund it's coming out of, please?

Yes.

Happy to. Council member? Yes. The actual reason why I'm standing here this evening is because, much like any other CEO over a special fund, I also manage the Sewer Enterprise Fund, a large portion of it. Normally, these larger purchases will be made out of fleet, but much like a fire engine or any other large vehicle, that's a specialized purchase. This vehicle begins its life as just a regular body F-350. It rolls off the assembly line, basically the cab of the truck. They take it, it gets retrofitted at the dealer with a service body that holds multitude of specialized tools, lifting harnesses, safety equipment, large wrenches, things like that that would be serviced in a wastewater environment. Then they add the electric crane to that special body. Then they add the outriggers that's a specialized body. So then all those things are certified. So we don't, depreciate vehicles in a sewer or an enterprise fund, if you will, they're capitalized. So these are shared costs with South San Francisco and San Bruno and our other partners that support purchases that have this large nature for these types of vehicles.

Okay, anyone else? Okay, so we all learned a lot about... Thank you for the question. So now we're looking for a motion on our consent. Thank you, Brian. I appreciate it. On our consent calendar. A motion. I'll second. Councilwoman and the Vice Mayor has seconded it. So roll call.

Marianna Diego.

Yes.

Vice Mayor Nogales.

Yes.

Council Member Coleman.

Yes.

Council Member Nicholas. Aye. Council Member Flores.

Yes.

We'll now move on to administrative item number 16 is a report regarding a request by the South San Francisco Housing Authority to partially waive building and fire permit fees for their C Street housing complex electrification project. And while we wait for our staff to come to the podium, we do have speakers on this item. We have a total of five speakers.

Good evening, Mayor, Vice Mayor, Council Members. I'm Nell Seelander, Economic and Community Development Director. Staff recently received a request from the South San Francisco Housing Authority to waive building and fire permit fees for an electrification project that they're working on that's funded by a $3 million federal grant from the U.S. Department of Housing and Urban Development, or HUD. The Housing Authority's C Street complex includes 38 duplexes and triplexes, totaling 80 units. There's also an office. Due to the age of the buildings, some of which date back to the 40s, the Housing Authority is modernizing these units, replacing gas, appliances, and utilities with electric. This is meant to improve resident safety and also further sustainability goals. Since the Housing Authority was awarded this federal grant in 2024, they have designed the project, but not yet bid out the work. Their project manager estimates it will cost roughly $35,000 per unit, or $2.8 million, with the remaining grant funds being used to cover project management and other soft costs. Based on the 2026-2027 Master Fee Schedule, Building and Fire staff estimate that the total permit fees for the project would be $111,883, and that's based on the scope of work as we understand it today. Attachment 1 to the staff report includes an estimate of those fees, so Council can see the breakdown. Council may elect to waive these fees. Also due at the time of building permit issuance are the contractor's business license fees. Those would total roughly $5,100, so $5,100, and those may not be waived. As Council likely recalls, our business license structure was adopted by the voters. Council has taken action on two occasions in the past five to 10 years to waive building permit fees. The first was in 2018 when Council approved a 20% reduction in building permit fees for the 200 Linden condominium project And that was part of a comprehensive set of adjustments to the terms of the city's sale of that property to a private developer. But the city was the landowner at the time, and it was part of sort of a larger look at the terms of that sale. It was also a concession that the developer could have requested under state density bonus law. The second action council took to waive building permit fees was quite recently, in 2025, when the city waived permit fees due for the Oyster Point Marina West Basin Improvement Project. And that project was taking place at a city-owned facility. Though we don't operate it, we do own it. The resolution that staff has prepared for council consideration this evening contemplates a waiver of $59,394 of that fee, so about half of the fee, as the housing authority has indicated that they can accommodate a portion of the fee in their construction budget.

That concludes my presentation.

We're here to answer questions, as is Leah Taylor, the Executive Director of the Housing Authority, and I believe she may have her project manager with her as well. Thank you.

Thank you, Ms. C. Linder. I think we'll go right to the Housing Authority, let them do their presentation, then we'll see what questions are generated by the council.

Good evening members of the council and thank you Nell for the presentation. I just wanted to clarify, we only have 36 buildings and one office. We do not have 38 buildings. Thank you for the opportunity to present our case and request a permit fee waiver reduction for both building and fire permits combined. We're perfectly fine paying our business license fee. The South San Francisco Housing Authority is a federal public housing agency providing low-income housing resources to 80 families and 340 individual citizens and taxpayers of South San Francisco. The Housing Authority is located at 350 C Street, South San Francisco, and has been operating since April 1st, 1941. We just completed our 85th anniversary. The South San Francisco Housing Authority is a federal public agency operating under the umbrella of HUD, US Department of Housing and Urban Development. Since we received this grant in 2024, a lot of things occurred. One, we had an election, a general election that resulted in a change of administration, which severely impacted us on the federal level. We had two federal closures. We also had tariffs that were imposed. So there were a lot of obstacles affecting this project and that's why it's taken us so long to start. The South San Francisco Housing Authority is not Section 8. We do not administer vouchers. We rely solely on the rent of our tenants. We do get a yearly subsidy from HUD, which is an average of $12,000 a year. We really heavily rely on our rent of our tenants. And those rents range from for a one bedroom could be as low as $200 to on the high end for a four bedroom $3,000. We are very fortunate, a lot of our residents are hardworking and we're able to operate and stay afloat. We do get a yearly subsidy for operational, for cap funds that we earmark towards repairing roofs, water damage and other things that can occur. On September 16, 2024, the Housing Authority was awarded $3 million for a gas-to-electric conversion to eliminate the threat of carbon monoxide. We are not electrifying. We're actually going to be using batteries. And we are getting rid of the gas and converting to electric. However, the end goal is to go solar. That's the end goal. The South San Francisco Housing Authority was also the only housing authority in all of California to receive this grant in spite of heavy competition from Oakland, Los Angeles, Santa Clara County, and numerous other housing authorities in the Bay Area. It was also one of only four agencies in the entire nation to receive this grant. This housing authority meets regularly with the HUD grant department to report and discuss progress and challenges with this grant. Although no permit have been pulled, the housing authority did meet with the planning department in June of 2026 for several hours to discuss every detail of the project, the scope and including implementation. There is no need to install new electrical panels and all electrical wiring is already covered under the building permit. The complete scope of the project has already been presented and discussed with the city planning department. So there's no need for staff's recommendation to include a clause in the resolution to be able to come back and bypass any fee waivers set by the council. We feel this would undermine the council's decision tonight and could potentially derail the project if unnecessary fees are added. We have included the scope of work in your packet. I believe you all received a packet for your reviews so you can clearly understand what is included in our request. We are proposing a fee waiver reduction so we can complete all 80 units, including the office. We are asking that the fees be based per building and not per unit, as we had proposed to the planning department and fire department. We also coordinated with both as to how we would carry out this work so that it would cause the least impact on their time. We would coordinate where we would have several buildings and units inspected at the same time. to minimize their time to not have to come out so often. So that wouldn't take up much of staff time. Staff compares us to developers and contractors. We are neither. We are another government agency just like you, serving the same population of citizens, and we are not doing this to make a profit. Our main goal is to address and eliminate the threat of carbon monoxide in all our 80 units in one office for our residents and our employees. Carbon monoxide is a silent killer, and it is a real threat in our community. Our units are aging and were designed with all wall heaters facing the front doors, which in windy South San Francisco, when the doors open and the wind blows out the pilot lights, our residents are immediately in danger. As you can see in your packet, there is a photo of our wall heater and how it's facing the front door. And then I have a photo of the pilot light in the next photo. So you can see that's what we're dealing with. We were successful in getting this grant because we were able to make the case that there is a legitimate danger because of the design of our buildings and because they are so old. We're here tonight to ask for a fee waiver because that will determine what size of a project we can actually do. We wanna do all 80 units and we wanna do the office. But if we can't get a fee waiver, we're gonna have to decide whether we choose our seniors over our young families. We have to make a decision as to who can actually have their units updated. and won't have to worry about the threat of carbon monoxide. We don't want to have to make that decision, so we're asking for your support. We are requesting a total permit cost for building and fire combined to be $51,313.45, based on 36 buildings which cover 80 units and one office at the South San Francisco Housing Authority site, located at 350 C Street. I have attached in your packet the complete scope of work so that there's no surprises. This is exactly what we're gonna be doing. This is exactly what we're gonna be putting in our bid packets when we put this out to bid for any contractors that wanna take on this job. And we also included what the permit cost breakdown is based on per building, not per unit. And I have with me our project manager. If you have any technical questions that I can't answer, he's here to answer any of that. If you wanna know what type of battery or how we plan to carry this out, he's more than capable of explaining that to you. And I also have our chair, if he wants to say a few words, but I think I'll hand it over to Mike for now.

Good evening, Mike Silva. If you have any questions.

Do you have a presentation for us? I do not. Okay, so we're going to hold you in abeyance, and let's have everybody who'd like to speak to us come up and share your thoughts.

Good evening, Mayor, Vice Mayor, and members of the City Council, City Manager, and members of the public. I appreciate the opportunity to speak today as the chair of the South San Francisco Housing Authority. You're also known as the number one when it comes to national night out cooking, so it's out there. I'm speaking the hope that the city will consider the Housing Authority's request for reduction in permit fees for a gas to electric conversion project. Reducing these fees will allow more of the project funding to directly support critical improvement for our residents. Additionally, I would like to take this opportunity to clarify respective roles and responsibilities between Housing Authority and City of South Francisco. As our executive director has alluded to, that we directly reported to HUD and follow all of HUD's policies and procedures. The city council, you, appoint seven commissioners who are private citizens who serve on the board of commissioners and they and they are alone responsible for overseeing the housing authority governance setting policies and procedures according to HUD's rule and regulations and they work with the executive director who oversees the operations and reports directly to them the staff report appears to give city staff a monitoring role over a housing authority project. That crosses an important line. City staff may review permits, enforce applicable requirements, and conduct inspections. Those responsibilities do not extend to governing the housing authority. We appreciate the coordination, but coordination is not control. Once again, I'd like to have the City Council consider our request in reduction of permit and fees. Thank you.

We had Orlando.

Good evening. My name is Orlando Brandes, and I work for the South San Francisco Authority as a maintenance worker. And I'm also a resident of the South San Francisco Authority for more than 15 years. So tonight I want to share that as a maintenance worker, I have first seen firsthand the trade of carbon monoxide has a lot of the service maintenance calls. I have received in the past four years as being gas related, mostly from our seniors residents who do not know how to reignite the pilot light. Once it's blown out due to the wind, even opening a window, sometimes can blow out the pilot light and their heater. So the problem is worse around the winter months. Please support Defeat Weaver so we can make our communities safe and convert from gas to electric. Thank you.

Robert Cabretta.

Good evening mayor, vice mayor and council members. Uh, I know a lot of you from a lot of activities, uh, around the city with the rotary club. I'm Robert Cabrera, proletarian friend of Leah, um, and also a local business owner, uh, since the late 19 hundreds as my nephew would say. Um, I just wanna support, be here and support Leah and the housing authorities request because being a small business owner and actually being in the renewable industry, I see the importance of making these changes and bringing antiquated systems. to something more modern. As you can see with the speakers from Caltrain, it's the right move. And again, I've worked with most of you with the tree planting efforts. I'm very thankful for that with the Rotary Club. So I think you guys will make the right decision again with this very important matter to help the community the Housing Authority make this project possible for the residents of South San Francisco. So it's more of an encouragement of what you guys have done in the past, which is support us. So continue to do so and thank you for your time.

Thank you.

That concludes the speakers, Mayor.

Okay, thank you. Let's see if we have any questions from... Would anyone like to start off? Any questions? You're Mr. Electrification, right? So you want to advocate or?

I do have a question. So why do you not consider this an electrification project? If that can be answered.

It's a gas to electric conversion. Electrification, it may be a play on words, but this is a safety issue. Not a we're not adding we are adding electrical but it's not purely just add electrical it's to take the threat of carbon dioxide out of the out of the living structure.

Does that help sure I think they can probably be used interchangeably I just.

For this purpose, though, this is to get rid of the interior carbon dioxide and gas appliances inside the residence.

Yes, understood. I was just wondering if there was a reason why in the packet that I was given, it was saying this is not an electrification project, which it seems like it is electrifying, but with... safety being a priority here, which is fine, right?

Yeah. My assumption is that is because of the source of the grant funding, which is very specifically to mitigate the hazard of carbon monoxide. So for the purposes of the federal grant, I think it needs to confine to that hazard.

So you think the federal government would be less willing to give out $3 million if we called it electrification.

So let's please just call it safety. This is a safety issue, I agree. Okay, great. And so this is a time sensitive grant, and I believe it was awarded two years ago. When does this grant expire?

We would have to be in contract and obligated with 90% of our vendors or contractors by next week on the 16th. However, we did manage to get a short extension and so we do have a couple of months to do that now. but we don't have a whole lot of time. The whole complete project has to be completed by September of 2028. So we hope to be in contract within the beginning of next month. We would start the bidding process as soon as we get a decision on what's happening tonight.

Great, thank you. This is clearly a time-sensitive grant and I want to be respectful of that. I'll just give my general thoughts. I see this, I do not see this as setting a precedent just because we're so, closely tied to the Housing Authority, right? It is a governmental agency in a sense, and we want to be responsible and good to our neighbors. This is clearly a safety issue, and we want to ensure that all of our residents are living in safe and sustainable conditions, and we want to be good partners to the Housing Authority. And so, you know, just looking at this, you know, Just looking at this, in the grand scheme of things, in the large general fund, a $50,000 reduction in these fees, I think, is something that we can definitely accommodate, and it's for a good reason for our neighbors, so I'd be in support of this. Thank you.

Councilman?

Yes, I have a question here. It says staff would need to prepare a grant or loan agreement and monitor the project performance and incomes at the complex. Can you explain what that is?

That's if we were using housing funds for it. So all of our housing funds are restricted to certain AMIs. We monitor our housing loans and our housing portfolio. So the resolution is not set up to backfill this with housing funds. It is simply set up as a waiver as we've done this in the past. So there is a minor cost to the general fund, as Council Member Coleman pointed out, but it would not be replaced with housing funds. That's an alternative that we'd be happy to explore. But given the amount of this waiver, didn't feel like it was worth that additional sort of documentation to go through.

And then, so I need clarification. So is it 51,000 or is it 59,000?

So I'm not sure what packet... Is it referred to but in the in the staff report the resolution so The total amount of the fees is a hundred and eleven thousand, right? So we're prepared the staff report sets up that the Housing Authority would pay fifty two thousand four hundred and eighty eight thousand and the fee waiver would be for the remainder which is for fifty nine thousand three hundred and ninety four dollars and the resolution Matches that so the resolution the first whereas now therefore be it resolved sorry the first be it resolved lists fifty nine thousand three hundred and ninety four thousand is the waiver amount

Yeah, so the math is not mathing because it's 38 buildings, now it's 36 buildings, now it's 59,000, now it's 51,000. So does that also affect the amount of fees that they will pay, reduce it from 52 to less?

The information we had when we wrote this report was 38 buildings. The packet that Ms. Taylor refers to, I don't have. So if council would like us to reduce it,

to 36 buildings. It's facts, right? So it's 36, it's not 38? Buildings?

The number that we were originally provided was 38. So if it's 36 buildings, that would be a $62,000 waiver and the housing authority would pay 49,000. But I don't know if the office is being considered a different building.

How many buildings are there is my question.

So it's 36 buildings that have units and one office. So it's a total of 37 buildings, but 36 are housing.

Okay. All right. Um, and then, so how long does this, uh, conversion take? I know you mentioned it needs to be completed by September, uh, 2028, but how long will actually take?

Sure. We anticipate it'll take nine months. Nine months. Okay.

And that is considering every unit within the 36 buildings.

Plus the office. Okay. Okay. Um,

And then the 3 million, are those all the fees? Can you give me some visibility on the 3 million? Is that budget exclusively just for conversion? Does it include contingency? What others?

The $3 million is a grant. Okay. That is the final number from the feds, from the federal government. The cost of the project approaches, it exceeds that at this point. We need reductions from suppliers and vendors and subcontractors with bids to bring it in on budget. And that's what our goal is. Okay. Thank you. Yeah, all that is in progress.

Okay. I'm sorry, let me just back up to what the council member floor is saying. The final cost of the project is still in progress?

We have a budget. Excuse me. We have a budget of $3 million. Yes. A little extra. Probably not a little extra. A little bit more than $3 million from HUD. Until the bids are in and all the suppliers and tariffs and everything else is done, we anticipate it. We have a budget that approaches right to that number. Up to the $3 million.

Yes, exactly. Okay.

No soft costs.

Without the soft costs. Yeah. So without factoring in the soft costs, what if you don't have the money to fulfill the project? Let's say we approve this cut in terms of the fees.

The federal government has mandated us to spend the money to go into contract. So at some point, we will be in contract with vendors and suppliers. And depending on what, as Leah said, is it going to be, how many less are we going to do?

Let me just clarify.

Yeah, OK.

So we will have, based on what you decide tonight, we will have enough to complete all 80 units.

OK.

The last priority is the office and that one will, if we have to get more funding or take a little bit more time than that one, we will do with capital funds, but that will have to be later. So, but that's going to be the least of the priorities. The office, we re we rather serve the residents first since they actually live in the units. Um, we're there only if, you know, eight hours. So we could, we'll take the brunt of the, carbon monoxide or whatever. So, but yes, we, we will be able to complete the project if we're able to get the fee waiver today.

And the time, I don't get, we're running the timeline is 28. Is that 2028? We have to be completed with the whole project. Okay. Yes. And then I was hearing that we have to make a decision. I think within the next, the timeline is basically next week, this is?

Yes, so we would like to, when we got our extension, it was with the hope that whatever's decided tonight, we could then start putting it out for bid. And we already have some bids with some vendors that are going to be selling us the batteries and the heaters and stuff like that. And those should be coming in this week. So we'll be able to start entering into contract with some of those folks. And then we'll be able to at least go back to HUD and let them know that we're putting the bid out for the electrical and the plumbing and that kind of thing.

So I guess my question is... why was this kind of brought to us, seems like at the very last minute in terms of making a decision. So I'm not saying we're being forced to make a decision, but I've seen a couple of projects brought to the council where the timeline is literally in a few weeks and so we were forced to make a decision that's more favorable. Correct. So I'm just trying to figure out the timeline of when this project came to the council and when you realized.

Yes, so. Again, there were setbacks on the federal level, and that's why I got an extension. It's because they recognize the federal government shut down twice. In that process, they locked out a bunch of housing authorities from having access to their grant funds. And then there was nobody around to let us back in. And when they finally came back to work, they had a backlog. And so some of us took, it took me six months to get me back. And I worked with the chair and we worked with HUD and finally we were back in. And then when we met with the city, we realized that, with the planning department, we realized we needed to get a waiver. So we were trying to work with them. They told us the decisions up to the council. We immediately brought it to the attention of city staff and they were very gracious enough to speed this up and put this on the calendar tonight versus at the end of the month. So this is all, no one's dragging their fees. And I apologize if this is coming to you at the 11th hour, but this is nothing that was within our control.

And I think we need to have a discussion in terms of what this final number is. If it's the 51,000, the 52,000, I think we have to decide that in terms. I mean, if that's a decision we're trying to go to, right? So, yeah.

Let's hear from the council. And both are close, so. I mean, yeah. It's close enough, so. It's government work. Thank you.

I was a housing authority commissioner. And then a year ago, when you came over here and requested 15,000 to expand and improve your Wi-Fi and internet, if I remember it correctly, I was your only friend. And so I pride myself to being fair. Now, I know your project's laudable. It benefits residents, improve indoor quality, air quality, the safety, because it reduces the risk of carbon monoxide. and then it moves towards our social and, I mean, our fiscal and environmental sustainability. And also because you are, the housing authority is truly the only option, the housing option for our residents because you only require 30% of whatever income they have. However, I really am having a hard time because of the precedent the precedent that it may have. Because I know that we have some precedents that we have exempted, like, for example, the launch local, wherein we gave relief for small businesses, and then the interagency public infrastructure. to the Harbor District Oyster Point Marina, and then the low cost, the low income and affordable housing projects, like the 1051 mission and the rotor beacon. However, I really still having a hard time about the timing issue. The timing issue is that, so you said you procured all the materials, you already have the batteries and all of those things. Well, that's what I thought I heard. Because, see, you were saying that you have to...

Okay, yeah.

That's what I thought I heard.

Yeah.

We will have procured them in advance of the project because we need to have all the materials ready to go before we turn the contractors loose. I think it was... lack of a full understanding or a complete explanation. The project is we have to procure and then we can, but we're going to procure and bid out at the same time for the labor and procurement. So the materials will be onsite first. So there's no waiting.

Yeah, I still am having a hard time with the timing because, you know, in order for you to put together the RFP, right?

We went to, I'm sorry for interrupting. Go ahead. Just to clarify, we started with the planning department in June. And we started saying, okay, here's our project, here's what we're going to do. We sat down at their conference room table, and we went through it with them. And then the head of the planning department retired, and he told us up front he was retired. We came back, and we met with Gary Lamb, and he gave us the fee schedule. And this was in... in July, and then it's progressed to here. So it wasn't this week that we started this. It was in June, and that's how we got here.

However, the RFP should have been also, because I was trying to, I haven't done my own construction and everything. Usually my husband takes care of it. So anyhow, don't they have to have the RFP and all of those things before all of this fees and planning fees? Design.

Design first.

Yes.

And understanding what we're going to build, budgets, fees, costs, all that put to bed.

Correct.

And then.

So you already have that.

Then permits, understanding what it's going to cost for the permit and if it can be done with what we're, not if it can be done, but explain and project to people what we're doing. So when they see it, they're understanding it months and months in advance. And that's what we've been doing. And then go out for bid. So there are change orders. So there's no missteps along the way once the project is let.

Shouldn't there be a definitive plan and everything before we compute for the fees? That's true. Because usually, say for example, you already have the plan and you're ready for construction, but something comes up, right? So... there are so many things that could go differently from what you had planned. And so you have to recompute and recalculate the fees. Isn't it how it works?

Not on the permit phase. So if we stick to our plan.

Yeah, I want to hear from now. Sure.

So I don't know if Matt Rubel is still here. Somebody from engineering. But they're going to have the best sense of how you build things in the order in which you do that.

My next one is a civil engineer, so he understands all of this. I'm not.

But because we don't, although ECD is responsible for entitling and permitting projects, we don't actually go out and build them. So the RFP process, I think, if you want the definitive answer on how public agencies do construction RFPs, maybe there's somebody from engineering that can answer that but what I would say is that typically we would receive we would receive the construction drawings and then there is an iterative process where they are plan reviewed and then a final plan is put in place and that's what you bid out so you have some certainty of what you're building in this case it's sort of it's it's it's a unique project and that from the building perspective it can be done over the counter and so there isn't a lengthy built plan review process on the fire side though there is a plan review process because adding those additional electrical appliances does require a fire plan review and so there there may be some iteration and that we have to make sure that it can go through that plan review cross the fire plan review process and then and then be properly permitted that's why staff has put in there the scope of work that we know today because while there has been I think a really lengthy verbal discussion about what the project is and maybe some illustration of it it's not a complete construction permit set like we would traditionally get and that we would be assessing fees on and it is per on the building side it really is per new appliance new you know fixture and so those fees are pretty well known like we understand what those fees are we don't expect there to be large variation and last for example there needs to be a pan electrical panel upgrade which I think the housing authority has said they don't anticipate needing but if there was a need for electrical panel upgrade that would be a substantially different and larger project. I don't know if that sort of answers your question.

Yeah, but so right now, we don't have those definitive plans. It's just a scope of work, kind of like a somewhat scope of work. Is that what I'm getting?

Good evening, Council, Mayor, Vice Mayor. The fee valuation that we're being asked to estimate.

You don't often speak to us, so you might want to include your name.

I'm sorry, sir. I'm Ian Hartage. I'm your fire marshal. Thank you. It's my pleasure to be in front of you tonight. Valuation is literally an estimate. We don't typically get a contract valuation, the exact dollar amount. So the dollar amount between $36 billion, $38 billion is still an estimate. So don't let these things be stoppers for your consideration. The valuation is an estimate. Our fee schedule that is adopted here by the council has associated fees based on that estimated value. These are the numbers that were provided to you. They're somewhat flexible because they're based upon an estimate. So again, this is I'm trying to build some comfort for you guys while you're evaluating this. On the fire side, this is more like a true construction project than it is on the building side, because they're simply replacing devices. Battery systems are specifically regulated in the fire code. There is a specific construction permit for those. Those don't exist today. They are new systems being brought into the buildings. And that's why our fees are based fairly straightforward on construction valuation. And our fees were, we pulled just the battery piece out and gave you fees for your consideration on the ESS systems. We were 28,000 one way, 29,000 the other way. Call it 28,000 with 36 buildings is a rough estimate that I don't think should be a difference for your consideration tonight for the waiver, because it's not a full waiver anyways, it's a partial waiver. Hopefully this gives you a little bit more context in what you're being asked to evaluate tonight.

Thank you, Mr. Hardidge. Yunjun, Mr. Kim, did you want to add to our confusion?

Good evening, council. My name is Yunjun Kim, public works director. As Ian says, there is some variation in the construction. Even after you get the bid, the actual conditions of each piece of work in each building has some variation that was not contemplated. the fees are based upon a good estimate. But the actual cost of the project will vary a bit. That's why we have contingency on our typical projects.

And that's why. Right, right.

Ms. Taylor, could you come to the podium? I think Councilwoman Nicholas mentioned that she was your only friend with Wi-Fi.

I think you're all very friendly. I was not.

I was not. And I think as I came to this meeting, I was more on the page, just a little frustrated at how this came to be, similar to my colleagues to my right here. But when you made your presentation and you talked about what you secured, the $3 million, and that we were one of four in the country. I can't spoil that for you.

Thank you.

I have to support this at some level. So this is going to be a great leap of faith for me. But I do want to know a little bit about more about your operation. Do you have reserves? Do you have capital reserves? Yes. How much?

Right now we have about 400,000 in reserves.

Okay. You don't want to tap those.

Excuse me.

You don't want to tap those.

We want to keep building those.

If needed.

I'm not going to disappoint your good efforts. And I really think that some of what you've experienced from the federal government was by design. You got the bid, but then they made it as difficult as possible because you might not be able to bring it over the finish line. And anyway, there's some people that are working against us at that level. So I won't be one of them tonight.

Thank you, I appreciate it.

I wanna see this battery system though that you're using. To me, it's a little scary.

It's amazing and it's top of the line and we're paving the way for solar.

Okay, all right, very good.

I think, Mayor, if I can, I just wanted to highlight that one of the council priorities that we've laid out is improving the quality of life of our residents. Yes, of course, we have to be good financial stewards of this beautiful city, and that's first and foremost. But also, I think about, you know, the winter season, and when I see the horrific news that sometimes comes and says carbon monoxide killed this older couple or this, you know, while they were sleeping, etc. It's predicted that this winter season is going to be one of the worst. El Nino is coming and it's gonna hit us hard and we need to prepare for it. And in terms of emergency management and preparedness, this is one way that we could address this. This is pioneering work also. I mean, some of us on the council were able to do the ribbon cutting with West Light Energy for a new project that here in South San Francisco is being built on electrical vehicle, utilization and being able to provide that and I see this as another opportunity to to be a an example not only for our region but also for the country now and three million doesn't come on doesn't come by often right and especially with this with this government the current federal agencies. So I wish you best of luck on this. I hope there is a set schedule and a set process so that it could be monitored, especially you and working with the housing authority commissioners. And this is an important, again, how I started my comments, relationship to improving the quality of life of our residents.

please may just add a comment um you know it's not just carbon monoxide it's also nitrous oxide that comes out of cooking stove tops that can help lead to childhood asthma and other respiratory conditions so this is this really is a quality of life issue and just hearing that you know you're You're adding battery storage, and you're looking at solar in the future. I sit on the board of a sense of clean energy now called Westlight Energy. And right now in California, we actually produce more solar energy during the day than we need, and we need more energy at night. And so actually battery storage is all the rage right now. It's what everyone is talking about, large-scale battery storage and more. more and more people in their households are buying larger batteries for their households. And so what you're doing is really visionary and it's really with the times right now with what families are needing. And I wanted to make sure that we can get you over to finish line.

Mr. Mayor, I will support the project. And I'm taking a leap of faith on this in terms of making sure that the project is completed. But it was something that my colleagues were talking about that actually reminded me of what we talked about earlier this year that Council Member Flores led on was air quality. And we made the commitment that we would look at how we can really tackle this issue in terms of just asthma rates and just really bad air quality. And this is one of those things that I think is one of those projects we look at, right? So if we really mean it, I think we have to support this project. So I will be supporting this project.

May I have a quick question, though? So when we waive this, this will be out of our general funds in a way. So would we still be able to do a commercial linkage fee?

If council would like to direct staff to or amend, suggest it. Make a motion to amend the resolution to direct the funding from commercial linkage fees. It is an eligible expense We would end up doing a grant agreement of some sort just we have to document how we spend those funds and if it's for a construction project we need to Actually put that in writing I prefer it.

Will the documentation cost more than $51,000? Probably. Honestly, no, it won't.

It's our staff. It's staff time, right?

It's staff time. Yeah. But I think that I would prefer it that way. And just to confirm, if we do that documentation for commercial linkage fee, it will not require the ongoing monitoring, correct?

We would do something to document the incomes at the property now, but no, it wouldn't be ongoing.

Okay, I think we're almost there, and I just wanted to, Councilman Flores brought up something that I'm not sure why Westlight Energy wasn't involved at some level. I think this is such a, pardon me? It's such a superior project compared to the one that everybody is remarking on, which was the Peninsula Pines project that was, I don't know, 200 units or something. And Westlight paid for all those. A good portion. Yeah. And who owns the Peninsula Pines? A corporation, I believe. A real estate corporation. And how many below market rate units do they have at that Peninsula Pines? Zero. And do you think that maybe they raised the rent after they were able to add this amenity on the backs of the Westlite customers? Because my understanding is that what we pay for electricity with Westlite is getting very close to what PG&E charges. When it started out, there was more of a differential. I've had this on my mind for a while.

It's still 5% less, right?

What's that? It's at 5% now. And there are, we might get too wonky, but there's this thing called the PCIA charge, which is basically the charge of transmission. And that calculation is very complex. And so there's a state bill right now to give more transparency in how PCIA is calculated so that we can keep, you know, or CCA rates across the state lower than PG&E, which right now it's 5%, but because PCI is so high right now, it's getting a little difficult. But any excess revenue that we generate, even with rates lowered in PG&E, that is invested in these safety programs, right? For better air quality. and electric stovetops and so on.

I'm just suggesting that there might have been a better project like this one.

I would still encourage Liam to apply for the grant with Westlake. They're always looking for great projects.

Okay, I have a couple of questions because I'm not understanding. I'm aware of some wall heaters in Windy South City that sometimes I have to work on relighting. But the gas doesn't flow when the pilot light goes out. I mean, not the units that I have. There's no danger of the place blowing up. So the gentleman who takes care of your appliances... Can you correct me? You gave the impression that when the pilot light blows out, that the gas is flowing.

Exactly. I receive a work order, and I go directly and relight the pilot. But when I'm working hours, when I'm not there, who's going to, you know? No.

Okay. We know we started off with these buildings were built in the 1940s. I'm sure the appliances are a little newer than that, right? They have electronic light.

Your wall heaters are how old?

They are pretty old. Well past their useful life. But when the pilot light blows out, does the gas continue to flow? Of course, yeah. That's terrible.

The old system.

Yeah.

We're talking about the old system, yes.

Right.

It keep going slowly, slowly. I had to go and shut it off. Horrible situation.

Yeah. Okay. More reason to move ahead. So what are we looking for a motion?

Yeah, with an amendment to use the commercial linkage fee for the fees so that won't take out from our general fund.

Mayor, may I also suggest an additional amendment based on what I heard earlier that the fees would be partially waived. It says in the approximate amount of $59,000 and we could add but based on the number of buildings. so that that would give the city manager per the second resolved the ability to modify if necessary.

Okay. Sounds reasonable. Sounds good. So you made a motion. Yes, I made a motion. Second comes from Mr. Electricity Donor. Second. Okay, that's great. Roll call.

Council Member Coleman.

Yes.

Council Member Nicholas. Aye. Council Member Flores.

Yes.

Mayor Adiego.

Yes.

And Vice Mayor Nogales.

Yes. Congratulations, Ms. Taylor.

Thank you very much. Moving on to item number 17 is a report regarding a study session on potential storefront retail cannabis regulations.

Good evening mayor, vice mayor, council members, Nell C. Lander, economic and community development director. Cecilia Mariscal is going to give a very thorough presentation, but I wanted to provide a very brief introduction. Cecilia has worked very closely with our police department, our economic development team, our finance department, and many other colleagues throughout the city to bring this item to council this evening. I do want to mention that this is in response to Council's 2026 strategic planning session and where there was direction provided to staff to bring forward consideration of retail storefront cannabis businesses, which are not currently allowed in South San Francisco. We understand there may not be full council consensus on this topic but we have structured the presentation in a way that goes through five key program components from let' s call it hardest where should these businesses be located to easiest what should the tax rate be? we're going to pause Cecilia will pause after each of these key components and and if council would like to give feedback at those pauses that would be really helpful in arriving at sort of a finished product that then council could consider as a whole as is this program something that council would like to move forward with now it's it's a suggestion on how to structure this session but we thought it might be helpful in guiding the conversation So with that, I will hand it over to Cecilia to walk you through the presentation.

Thank you, Nell. Good evening, mayor, vice mayor, and council members. My name is Cecilia Mariscal. I'm an associate planner with the planning division. The purpose of tonight's session, as Nell mentioned, is to receive feedback on staff recommendations and direction on where to proceed, on whether to proceed with the storefront retail ordinance. So we will begin with the review of the purpose of cannabis programs and regulations and review of South San Francisco's current regulations, potential approaches, staff recommendations, and like Nell said, we've reserved time for each section for questions and a brief discussion. So current cannabis regulations. So this first section provides an overview of the guiding principles in developing a cannabis program as well as the city's existing regulations. So the purpose of cannabis programs and regulations and what they're trying to achieve is what this slide summarizes. So cannabis regulations ensure the proposed use is compatible with the surrounding uses, mitigate safety and hazard issues and potential environmental impacts in addition to providing opportunities for economic development and safe access to medicinal cannabis. South San Francisco allows several types of cannabis businesses, delivery only retail, testing, manufacturing, and distribution, indoor cultivation. All currently permitted uses require a conditional use permit, an operator's permit, and related uses must maintain, cannabis related uses must maintain a minimum 600 foot radius from residential areas and sensitive uses. Those are defined as K through 12 schools, daycare centers, and youth centers. This map shows where cannabis is currently allowed in the city, shaded in green. As you can see, all of that is East of 101. Although a variety of cannabis uses are permitted in South San Francisco, we currently only have three active businesses, all of which are delivery-only retailers. So before we get into the individual recommendations, we'll go through each key program component and the questions that were contemplated for each. So here are the five program components ranked from hardest to easiest from a policy decision standpoint, as well as a summary of the questions that guided each. So first is location. Where could storefront retail be allowed? What geographic limits or additional buffers should be modified or imposed? Number two is the number of retail storefronts. So how many, what is that sweet spot on how many to allow that provides some additional business opportunities, but doesn't oversaturate the market or put a strain on city resources. Three, applications and permits. What should that application and permitting process look like? How should applicants be selected and what level of discretion and oversight should apply? Four is performance standards. So the city does have the use specific performance standards in place. In addition to state required standards for storefront, what other performance standards should be added? And five is fiscal approach. What is the appropriate tax rate? What rate balances revenue generation with business viability and market interest? So with these considerations in mind, we'll move into the individual program components. I just wanna pause here and ask if there are any clarifying questions on the existing retail, I'm sorry, the existing ordinance or regulations that we have in place in the city? Okay, great. So location, so that's one. Where should it be permitted? This is just, I'd like to provide a high level background for strategies used to control where cannabis can be located, in addition to where it currently is allowed regionally. So there are two primary zoning mechanisms, and I think it could be helpful to put them into two broad buckets. So they both achieve the same goal, but there are some subtle differences between them. So on the left, the first is geographic. These determine where a business may be located based on zoning or land use characteristics, development patterns. So for example, a city might allow cannabis businesses only in commercial or only in industrial, only East of Highway 101 or excluding it from its downtown. Where the second tool is a buffer or a separation requirement. Buffers regulate location based on proximity to another use or activity. Uh, so examples of this include sensitive use buffers, as mentioned before, uh, first from residential areas, um, or a minimum distance between retailers, also known as a saturation buffer. So this map shows where storefront retail is available or permitted in nearby communities, um, just to help give the idea of availability of storefront retail in the area and the proximity of some of these options to South San Francisco. We interviewed several cities throughout San Mateo County, in addition to Santa Cruz and Santa Rosa, and our main finding is that there is no single approach used. In addition to land use patterns and geography, location is heavily influenced by market conditions, the level of community concern about cannabis, and that kind of accounts for the variability you see here. So just to kind of illustrate this range for you, I'd like to point out Belmont, which is at the top of the list as an example of a more restrictive approach. So Belmont has implemented a geographic buffer through designation of an overlay zone in addition to an over-concentration buffer and maintaining a sensitive use buffer. And on the other end of that would be something like Redwood City, which permits it in all zoning districts that allow retail while also maintaining a sensitive use buffer. So based on this research, staff recommends removing the 600-foot residential buffer and allowing storefront retail in two general areas. So first, east of Highway 101, where other types of cannabis businesses are already permitted, and selected non-residential areas, that front El Camino Real, Allowing some storefront east of 101 could expand the range of economic activities available in the area where other cannabis businesses are already permitted. And then allowing storefront retail in certain districts along the ECR could provide a more central and transit accessible option and provide some opportunities to occupy vacant commercial spaces along the corridor. So to help us visualize what this might look like, we have a map of South San Francisco, very similar to the map you've seen before. The green shading on the east of 101 shows where it's currently permitted. And then the green hashed area along El Camino Real represent the non-residential districts that are proposed to allow retail with the residential buffer removed and maintaining sensitive use buffers. Just to give you the background, we are proposing to remove the residential buffer because of the geography along the ECR. If it were to remain in place, there would not be any land available to move the storefront. Here's a close-up image of the corridor to illustrate how the zoning strategy would look, highlighting a few key landmarks. So this might help give you an idea of where storefront could potentially be located, especially in some of those areas that have high tenant vacancies. So I'd like to pause here so that council can have the opportunity to ask questions and discuss. In addition to thoughts that you might have, we are seeking feedback on the following two questions. Does council support allowing storefront retail east of Highway 101, removing the residential buffer, maintaining sensitive use buffer, and does council support allowing storefront or and or, does council support allowing storefront retail along the UCR with the residential buffer removed and the sensitive use buffer intact?

Mr. Mayor. Lito. South City High School? Yeah. I mean, just eyeballing that.

Sure. The South Shopping Center, the next one.

Yeah, I think we're going back to this to show that all of that area shaded in red is the areas that are within the buffer. So it's only those green hatched areas that you can see along the ECR where it could potentially be permitted.

It's not on top of the high school, but how far is it from the high school?

600.

Can you go back to the other slide?

Yeah.

I guess my issue is... I would have preferred not to have this in the residential area. I think if we decide to move forward with this, we're gonna get some neighborhood pushback. And I think we do need to get feedback from the community to see how they would feel to have that within residential areas. And some might argue that it's still too close to the schools. I understand potentially why we weren't doing this. I'm trying to be sensitive about this because I've seen other cities where they have put it in strategic areas like this where there's a shopping area, but it's too close to the neighborhood, neighborhoods have come out and pushed back. And I'm trying to, I guess, compromise with staff and my colleagues on how we can move forward with this. And I understand what you're saying is that if we restrict it, you're basically saying there is no, we can't do this anywhere.

I'm saying that without removal of the residential buffer, we wouldn't be able to place it anywhere else in the, in South San Francisco aside from East of 101. Yes, that's correct.

I mean, I guess where I'm looking at this, again, you still have more on the presentation, but

You know, I'll let you finish before I see if anybody else has my turn to District five. I do.

And I will have many questions. This is not one slide type of giving. Let's go back to a few slides. How many cannabis retail are in Daly City in Pacifica and in San Bruno to the city?

Sure. Currently, San Bruno has one retail use. I'm sorry, Daily City? Was that the other question? The neighboring city. Yeah, Daily City has seven cannabis overlay zones where in each zone permits one use. They do not have a use in every zone. I believe they have five right now.

Five stores or five zones?

Seven zones, five stores. And then Redwood City, I believe has either five or six. Pacifica also has about five or six.

Okay, and then thank you for bringing up this slide. Can you give some, because you researched, right, other approaches, what was their thinking in terms of the overlay zones, in terms of the numbers that they've established? Did you dig into any of that?

Sure, I can speak to that a little bit. And I'm sorry, I'm a Dean of Friedman, Chief Planner. Good evening. Just kind of just jumped in. Yes, we talked to all of these cities. We had kind of different conversations with everybody, depending on who on staff we talked to and kind of where they were in their cannabis journey. But so in terms of Daly City, they really focused on commercial districts, looking at commercial shopping centers, essentially, saying that these would be locations where storefronts could be located. Pacifica as well looked at different commercial zones. There are some zones in Pacifica that do overlap with the downtown. Some of the other districts, I know Redwood City looked at basically, they have a fairly permissive approach where retail cannabis would be permitted anywhere where general retail is permitted. And then other cities we talked to kind of took a little bit of a different approach, like the city of Santa Cruz, They allow retail cannabis in all of their commercial and industrial districts, which is kind of similar to our east of one on one area. However, they do not permitted in the downtown. And the reason there is basically to support kind of other uses in the downtown. They really wanted to focus on retail. restaurants, coffee shops, that type of thing.

So those are some of the other. Thank you for that. That's helpful. Did you get any feedback on what complaints, quote unquote, they receive from residents in any of these districts or zones?

We did not get specific feedback about complaints from residents. I know, I will say.

I'm not saying our residents. I'm saying the cities.

Yes, understood. Yeah, we did not get specific information on that. Do you recall? I don't think so.

Yeah, I think a lot of the feedback that was received from the community and all of the jurisdictions that we spoke to were mainly just attitudes about cannabis viewed as like a drug, even though it was in, sorry to interrupt.

It wasn't a particular sector, for example, business owners or a chamber of commerce saying they didn't want it in their business corridor.

I think there was some, mostly the, all of the feedback was around safety. So from neighboring businesses and then also the community around just the way that cannabis is, that that was viewed by them and seeing it as a, as a substance.

Sure, the report also keeps the sensitive use buffers but drops their residential buffers on El Camino. Can you walk us through exactly which buffers survive on that corridor and which don't? Would.

So the, okay, sure.

Yes, absolutely, this is something that we would ask for council's feedback on to see because we could, you know, if council wishes to move forward with this ordinance, we can draft an ordinance that has any, you know, buffers in place that council wishes to see. So the way the ordinance is now, we have a sensitive use buffer in place, so any cannabis use has to be 600 foot from a sensitive use. And that includes schools, K through 12 schools, daycare centers, and youth centers. So those are the three sensitive uses that are defined in our ordinance currently, and staff's current recommendation would be to maintain that same definition.

And last question, I'll turn it over so you guys can continue. You mentioned schools, preschools, childcare, youth centers, but I did not see libraries or parks or rec centers. Should that also be on the list given how many kids in this city walk past them every day too?

Yes, those can definitely be included on the list. And actually, I believe the way that we do our buffer calculation now does include some of those. The definition I looked up, the definition of a youth center, which actually pulls from the state code. And that definition is basically any center where children congregate and recreate. So for example, we would include the boys and girls club. We would include this building because there's children's programs here, classes, that type of thing.

The paradise Valley site that the city owns too. Yes. Okay. All right. Thank you. I'll pause there. Thanks.

Sure, I understand that there might be a stigma in the community about cannabis use, but for anyone who has gone to a cannabis dispensary, you cannot walk in unless you show your ID.

That's correct.

And so while I understand that there are buffers and I agree that there should, any child can walk into a Safeway and they see bottles of wine and alcohol there, right? But they cannot walk into a bar, you have to show your ID. And they cannot walk into a cannabis dispensary because they have to show your ID. And so, My position on the location is I am okay with it being on El Camino. I'm also okay with it just being on the east of 101 and we can try that out for a few years and maybe if there is a market for additional and maybe the times change a little bit, we could, legalized in El Camino as well, but I think I'm totally fine if it's, to the comfort of my colleagues as well, I'm totally okay if it's just in the east of 101 for this time.

I have no personal stake here. I used to work in a pharmacy. We have Mary Knoll as the legal THC. This is a moderate revenue generator, so I don't really quite... I'm not too convinced that we should be spending a lot more time about this I think what we have is already enough that we have it on a 101 In terms of the El Camino real. I don't think there's anywhere there that that could be a Storefront should this council decide because most of those areas where you had it we have schools preschools we have Like for example, for the Pacific supermarket area there around that, that you have, this is very close to us. And then for the Walgreens, that's St. Veronica, and there's also an area there where there's a preschool. The Walgreens that's behind it is St. Veronica. The Southwest Shopping Center is across from South City High. I know that there is a preschool close to over there too.

It's the Chinese immersion school.

Yeah, so I really don't think there's anything in El Camino Real that that would be an appropriate place for a storefront.

I'm sorry.

No, no, I'm done.

I was actually thinking of what Council Member Coleman was talking about in terms of maybe phasing this in in the sense that maybe if we were going to do this, maybe we start in the east of 101 and see how that industry... and then we can kind of come back in a couple years. There's more things to discuss, but in terms of what works, what doesn't, and then see if there is an appetite to expand that onto the El Camino Real corridor. because I think if we jump right into the El Camino corridor, I think we might get some pushback from the community, and I get it. I think Councilor Marconi, you're absolutely right. You do need to show your ID in terms of dispensaries, but I also think there's also optics involved in this. And so I think if we were gonna do that, move that direction, I'm okay with maybe phasing that in through the east of 101 and then taking a step back in a couple years to see how well we're doing in terms of the industry. Because by then, depending on what we do in terms of the number of dispensaries, we could then potentially increase it depending how the industry is, right? Because there's still, there's data out there that says this works and some data says it doesn't work depending on which city, right? So I think we need to for me, is to take steps on this to make sure if we're gonna do this, we do this correctly.

Okay. Is that enough for the location?

Yeah.

If you, yeah, if councils have any additional comments. Staff is taking notes of this, and I think this is a great segue into our next section. So number two is the number of storefronts. Our second program component is how many should be allowed. In addition to regulating location, many of the jurisdictions we interviewed also limit the number or concentration of storefront retailers. So on the left is a list of the main themes identified in limiting the number of storefronts or the approaches that were taken by the jurisdictions we talked to. And on the right is a summary of Stacks' recommendation. To spotlight a restrictive approach, I think Daily City is a really good example. Daily City has seven cannabis overlay zones and a maximum number allowed within each zone. So there's a cap within each of their seven zones. And on the other side of that spectrum would be a city like Santa Rosa, who doesn't have any kind of numerical cap. Rather, they use development standards and buffers, essentially allowing the market, in addition to these standards, to determine the final number of stores. Staff recommends establishing an initial citywide cap, allowing three storefronts as a starting point, just to allow geographic distribution and avoid a pressurized application process. The initial cap would allow city to monitor market conditions, community benefits, and operational demands and potential impacts before considering whether the cap should be changed. So at this point, we'll pause here. Sorry. Staff would like feedback on whether an initial city-wide cap of three storefront retailers would be appropriate. So I'll turn it over to you.

Okay, who would like to start on numbers?

Sure, I'll start. So my question is, does a cap force there to be multiple applicants? Like if there's a cap, then maybe more applicants would want to apply because they think that if we reach that cap, they won't get their spot in the market?

I didn't get that feedback from cities we've spoken to, and I don't know if Adina wants to add something here.

Do you understand that question?

Yeah, I think I understand the question. I think it really depends on the market. We've had, you know, based on our research, there are some cities nearby that do have caps, but have not reached them. For example, San Bruno does have a cap of three, and they have one retail use. That's just one example.

Although in San Bruno, there's more to it than that. I believe their council has to approve each one, and there's...

That's correct, and we will, we're actually in a, yes, that's true.

The reason they might not have met the cap is not the market, but because of politics.

Yes, and then in other cities, sorry, I kind of, oh, the question was about would there be pressure if there was a cap?

A pressure for more applicants to apply if there was a cap.

I'm not sure that I can,

versus if we were to just, and I'm not advocating for one thing or another, but if there was no, I'm not advocating for no cap, but if there was no cap, then maybe it would be more so the market would decide how many there would be. Maybe too broad of a question, maybe too philosophical of a question. But.

I feel that that informed like the reason of picking three, right? Because one seemed like too few and that we thought that might kind of like produce the effect that you're talking about.

Because what I'm getting at is if we have a cap that maybe it's a little too high, right? I think what I heard is in Redwood City, that there was a cap and I think it might have been five and it oversaturated the market and it might not have caused the business to do well as they could have. And so is three the right number? Is it too high? Could it be two or?

Yeah, I think it could definitely be. Again, I think staff's recommendation of having more than one was to eliminate a possible use the term feeding frenzy for lack of a better descriptor, that that might feel like a very pressurized environment and applicants would want to feel like they need to get their hat in the ring. And the idea was having a little bit more than that would give a little bit of pressure, take a little bit of pressure off of that. This was also somewhat predicated on the idea of geographic diversity. you know, thinking that if council did direct staff to move forward to permit them on east of 101 and the ECR corridor, say that there could be potentially two east of 101, one on ECR. If that approach doesn't make sense, then it may make sense to revisit the recommendation of three as well.

And then have we done any outreach to our existing cannabis delivery businesses?

We haven't done outreach specifically about this. I do know my colleague Ernesto Lucero, our economic development managers here. I will ask him if he's heard from them.

I ask that because I wonder how many applicants we might be expecting, especially from how many delivery businesses do we have in South? We have five? Three. Three. Okay, we have three. Okay, and then my next question would be, would we prioritize those delivery businesses who are already located in South City, or could we?

I think that would be at council's discretion.

Mr. Mayor, when you were looking at the other retail canvases in other cities, you were talking about oversaturation. Did you see, let's just say, a company having multiple businesses in multiple cities?

There are chains. In California, I know there are definitely chains that have multiple businesses. I don't know specifically about the ones nearby or that we spoke to.

Yeah, and that kind of leads to, I think, a conversation when we get there in terms of how we select these. I'm not sure if I really want to go with a chain per se. I guess I'll talk about it when it gets there. If we, as we were talking about in terms of the east of 101, it sounds like two would potentially work to the east side of 101, three would be maybe a little hard to do. I guess I'm trying to figure out in terms of the, you're talking about the geographical locations and...

Interesting information that we got from our sales tax consultant who does have sort of a specialty in assisting cities with cannabis retailers we haven't engaged with them to provide us advice. Yet at this stage, but they did give us some really useful information to inform this number of retailers, which is that typically they see. one retail, like in a successful environment, one retailer per 12 to 15,000 residents in a community. So that would provide us with roughly five. Like there might be, you might anticipate that there is demand here for five, given there are other communities nearby us that have their own retailers given we thought council might want to take a measured approach, a sort of tiptoe into these waters if there is interest, that we adjusted that cap down at least initially. And that's really how we arrived at three retailers to start. As both Adina and Cecilia mentioned, we're really nervous about one. One feels like you do create a beauty pageant, a feeding frenzy, and we wanted to avoid that. But two, three, four, even five seems like within the realm of reasonable given the size of our community and what's nearby us. And so really it's at council's discretion.

I guess I'm also looking at in terms of, again, the revenue generated from this. Again, it's a hit and miss depending on the city, right? And so if you do too much, you know, let's say we do four or five and we're not generating the revenue that we were expecting, then we overshot our number of businesses compared to maybe starting off slow and doing two and making sure, or not making sure, but seeing if it actually generates the revenue we think, then we can slowly increase the number in terms of the number of retailers in the city. Because if we're gonna do this, we obviously want it to be successful and generate revenue for the city, but... I guess I look at it, what you're saying is like, well, if San Bruno has one, Pacifica has five, and now we're going to have two, Daly City, so now you're going to have competition amongst those who want to go, right? And so that's kind of where my head is in terms of trying to find the right numbers. Maybe for me, I would start off at two. And again, if we're gonna go there, I wanna see that the revenue actually is generating that we wanna look at.

Yeah, all of the current storefronts are like around 15 minutes away from here. So I really don't think that we need a lot of those if ever we allow storefronts because there will be just a lot of competition

Yeah, I was actually interested in, I think it was Councilman Coleman's thought about, well, if we look at the delivery services that we have, and if they have a good track record with us, and maybe that's why Lieutenant Kirby is in the audience, maybe that would be a natural place to start. Because I think we've received some correspondence some time ago from a delivery service that wanted to, you know, have the first retail for obvious reasons. But the reality is, I don't think we can just think about, you know, the city boundaries because, you know, Mark's neighbors up in Westboro, the ones that want weed, they're gonna drive to Pacifica. They're not gonna drive to the industrial part, right? Or maybe Daly City, depending. I'm okay with the idea of El Camino Real too until it gets to my neighborhood. And I don't want to deal with the neighbors if there's one in the Sunshine Center. People that live on Holly Avenue are going to drive by and comment to me. And if you want one in Brentwood, go right ahead. I know I'll hear it too. I'll definitely hear it too. So I think East of 101 is a natural place to start and hopefully we get all that freeway business. A lot of people, I guess, want to get off the freeway and get high and then get back on. I don't know.

Hopefully not. Or potentially out-of-towners that have come into SFO. Right, right. Pharmaceutical employees, biotech employees. They want their way home. Yeah.

So...

Yeah, I think that was great feedback on this section, and I think Cecilia's gonna keep going.

Sorry, just to go on the record, I would support two.

Two.

Yeah, to start. Two.

Thank you.

Two is fine, thank you.

Does anyone know where the delivery services are currently located? I mean, I don't wanna, could you point on the map and show us?

There's one on Harbor Way. There's one, I believe, on Littlefield.

I used to work close to those areas.

Oh, yes, South Airport and Beacon, thank you. All used to 101, yeah.

South Airport Boulevard.

Yeah. That's gonna be the winner, because of the traffic. Harbor Way and Littlefield. Yeah, okay, interest.

Yeah, and they're all in the, that's a good point, they're in the like, we're talking about, exactly.

So it gets easier as we go on.

Now moving into our third program component, so application and permitting processes. As with location regulations, the application and permitting approach is used by other jurisdictions very considerably. So we've summarized the application and permit processes from other cities on this table. So there are many approaches to application selection and permitting. There's no one-size-fits-all. And again, the process appeared mainly determined by staff capacity, the anticipated level of community concern, the desired amount of public review and the number of businesses seeking permits. Permitting processes range from staff level approval to discretionary approval through a public hearing. Some jurisdictions also use a competitive selection ranking or lottery process before applicants can apply for their land use and or operating permits. Cannabis businesses in South San Francisco currently must obtain a conditional use permit, which is reviewed by the planning commission and renewed every five years and operators permit, which is renewed annually. Um, the process has proved to provide an appropriate level of review and oversight and has helped establish three delivery only cannabis retail businesses. Therefore, staff recommends applying the existing process of storefront retail due to its success with our current cannabis businesses and I'll pause here for discussion. We're seeking feedback on whether storefront retailers should be subject to the city's existing conditional use permit and operator's permit requirements.

Mr. I like the the process of having initially having the planning staff review the application and having our PD also reviewing the application but where I would like to see is for the final selection it's none of us none of the plan commissioners and maybe doing a lottery system so it takes it takes out That's the word I'm looking for. The politics, thank you. The politics of the issue. So it seems a little more fair in terms of the process. And that's so that no one can say, well, someone's... someone's making favoritism to initially one company over another, right? So it's the luck of the draw. And I think that's the safe way to play it out in terms of just keeping the hands out of us and also with the planning commission. And then I guess in terms of the lottery system, I'm not sure who would be planning the staff, I guess, that would be in charge of that. Or I can give it to the city manager just for fun.

If you want me to quit. May I make a clarification?

Yeah.

There are, several cities and i think this is the um that use a lottery process as well as a use permit so that and so a lottery could be you know say there were multiple candidates who applied and then there would be i'm just yeah you know we haven't designed it but i'm just kind of talking through how it worked And then staff would review and do a pre-screening to basically say these are the applicants, let's say three applied, and there's two locations. And let's say that two were, or all three were.

They could qualify, whatever.

Yes, pre-qualified.

Right.

staff could conduct a lottery to see which two would be allowed to move forward to the conditional use permit process so there could be a combination correct and then where would pd fall under this in terms of the application process the way it works now is that pd is actually the um kind of the first stop for the operator's permit to do the pre-qualification okay

Go ahead. But it wouldn't be a first-come, first-served type of process, right?

No.

Like, let's say eight qualified operators applied, you wouldn't move them to the conditional permit phase, the first three, right, that applied? I mean, you would give everyone a chance and review all of them. Correct.

What we've seen is that cities typically open a window, and they say, okay, there'll be six weeks, we're gonna accept applications at the end of that window, then we'll do pre-qualifications, so yes.

Can we limit in terms, I don't know if we can do that, in terms of, because I'm a little worried in terms of like if a chain comes in and then they apply or a business has multiple operations in another city and now they're kind of taking over the market. Is that something we can limit or is that something we can't do?

I believe that the council could set up criteria such as local business ownership.

As a preference or, I guess, because obviously it's very limited right now in terms of the industry, but, you know, I don't want to see someone dominating the market. Sure.

We could, I mean, Nell just had a suggestion, and this is, you know, San Francisco's style is to exclude formula retail from being, you know, I had a qualified applicant.

What's your definition?

Yeah, and we would define it to say, you know, a location that has four locations within, you know, the Bay Area or something like that. But San Francisco has very specific definitions about what formula retail is.

So will that be part of pre-qualification criteria?

I would picture that to be in the zoning ordinance to say, you know, that that would be just a development standard.

Mayor, can I offer just a comment and a suggestion? I am really impressed by and grateful for your discussion. This is fabulous feedback, fabulous questions, fabulous ideas. I'm also really grateful to staff trying to answer all the questions. Just a reminder to emphasize what the director said. This is a study session and we are looking for your feedback. So the questions about I just want to make sure that you realize this is all within policy realm of the city council. So staff is not here to defend or say yes or no on anything. We're looking for your direction. So just keep that in mind in terms of the preferences that you have. We're trying to find some consensus on each of these areas.

Thank you for the clarifications. I'm going to go back to the idea that we have three delivery companies. And assuming that they have not been any kind of a problem and someone can talk to us, I think they should have the first opportunity. Because if they have a track record with us, that means a lot to me. And, of course, I'd also like to know that they aren't, you know, Weed Mart or some major retailer.

Yeah. I agree with the mayor I also maybe you could look into a point system if there is during pre-qualification where we're giving them additional points because their local businesses here I am not knowledgeable on perhaps the pros of a chain operator perhaps because they've done it many times there might be a plus there that you all could look into We'd like to see if that brings any positive impact or even reduce costs or whatever on that end.

I think just generally maybe we conduct some outreach to the three dispensaries, the delivery dispensaries in the city and gauge their interest in this.

And thank you for that, reminds me, another stakeholder just to engage with our Chamber of Commerce, with maybe their board, and see what they're thinking, where they're kind of landing. Yeah.

Okay. Was there more to discuss?

The question here, so I think we have really good feedback in terms of the process for developing a pre qualification system, or at least some direction to look into doing that we still did have the question about maintaining our current process, which is using the operators permit as the first step and then moving on to a conditional use permit.

Well, I would just say if it works, I would stay with it. But I know, Vice Mayor, you're waiting. I agree. Yeah. Anyone else wanna weigh in?

No, I'm good. If you all have seen any room for improvement in that process, bring it back to council and say, this is a piece that is a little wonky and has a gap, and maybe we could clean that up. Good point.

Thank you very much. But also clarifying that there would be the addition of the lottery to get to the CUP process. Is that correct? Did I hear that correctly?

That was what I was proposing.

Okay, I think that's what I was hearing. I just want to confirm.

Okay, great. I am going to turn it back over to Cecilia to talk about the next two considerations. There's two more. They're the easy ones. Okay. See, we're almost there.

All right. So the fourth program component is performance to stand performance standards in what additional standards would we want to apply to cannabis storefront retail? Performance standards are intended to reduce or prevent impacts associated with the operation of the cannabis business. Common areas addressed by standards include building and entrance design, signs and exterior advertising, storefront window transparency, visibility of cannabis products from public areas, odor control, and hours of operation, security, and surveillance. Staff recommends retaining the city's existing use-specific cannabis performance standards and adding standards tailored specifically to storefront retail. The additional standards would include on-site security, a prohibition against loitering, and clearly visible signs at the entrance stating that loitering is prohibited.

I believe that in Pacifica, they were also talking about the waste.

Yes, we do have performance standards that do talk about, oh, are you, I'm sorry, are you talking about like from customers?

Right. Yeah. Yeah, so that's something I think that we have to make sure. Gotcha.

We call it litter or weed waste.

Weed waste. Weed waste. Yeah, sometimes sell them.

I believe, you know, this was a couple years ago, but I think it might have been, it's one of the nonprofits, I think it was Daily City Partnership that we might have met with, and they advocate for regulations regarding safety when it comes to legalizing these, and one of the things they talked about was safe disposal, right? Not just throwing, I guess, your expired gummies into the trash where someone could, you know, rummage around, do some dumpster diving, like we don't want that, but just ensuring that there are safe disposal regulations regulations so that they're properly disposed and no one is eating a gummy that they probably shouldn't be.

Yeah, so just to summarize the feedback that we're requesting. So we're specifically requesting feedback on whether these performance standards adequately address the potential impacts of storefront retail and whether council would like to evaluate any additional standards.

Appreciate this. I know when I was talking to staff the things that I asked for are here in terms of having on-site security Not being able to test a product on site. I know that when I talked to Asian American recovery services and I know they were involved heavily in the Pacifica kind of planning. That was something that they suggested they also talked about I guess the type of cannabis I don't think we've talked, I'm not an expert on the different types, but I guess there's a certain type, THC, am I, is that, again, I'm not the expert on this. There's a difference in terms of a type of weed and some, I think some industries sell different kinds and I think there was a talk about being specific in terms of what kind of product they sell and I'm not the expert on that, but that's something that I heard that we should have conversations in terms of the type of product. Again, I need education on this and maybe when you come back, that's something that staff can provide at least for me in terms of more information.

We can do that.

Okay. And then another thing that I wanted to, in terms of the structure, in terms of the building, one of the things I know I don't want to see is like neon signs that kind of, in terms of enticing the product, in a sense, I think that's kind of universal in terms of a lot of the A lot of the cities, I think they've said they don't want to see that, and so I think that's something we should definitely have in there. But everything else here, I mentioned the staff previously, and it sounds like that's been implemented here, right?

So is on-site security something that most of our neighbors are requiring of the retail?

Yes.

It is.

I am good with the staff recommendation table there, security guard. But I also want to make sure, to the vice mayor's point, that this place looks, I mean, I've seen, you know, locations in San Francisco on Mission Street. They look really nice, the storefront, right? You would never tell, right, that it looks a particular type of place. of store. Um, but I would like to hear mayor if I can, um, Lieutenant, what, what are you guys comfortable with and what are you guys looking for that we might not be thinking about that you would like included as part of safety and security?

Sure. Good evening. Uh, Lieutenant John Kirby, South San Francisco police department. Um, Yes, these are great stuff. This is a great start. I think some of the list that we compiled was based on the mic just so people can hear you outside was based on the California Department of Cannabis Control. They have already a lot of standards there. So we have those set standards and then we can build upon those to make it specific to South San Francisco. and what we see from our neighbors and the crime trends that come with that. So some of the things that we were looking at was a complete review by the police department and site-specific, right? So every building is going to be a little bit different and have their own nuances to, it may have their own security risk as well. So having an actual, a representative from the police department there to do a security assessment and see what the building really needs. Do we need to put bollards in there to make sure cars aren't crashing through a building and doing a big kind of smash and grab type crime as well. Ensuring that some of the product is put away at the end of each workday. So that's not sitting there to entice people to break into these buildings, right? Clean it up, clean up your display cases, lock it up in a safe, lighting, signage, a good neighbor clause as well. Making sure that you pick up the trash around you, making sure people aren't loitering, there's no loud music, checking of IDs, you know, security is a big one as well. alarm system, security cameras, a must, you know, things like that. We have a laundry list here that I have ready to address when we go to the ordinance part of this. Thank you. Appreciate that.

Good question.

Was one of the application process when also in terms of the employees, the background check employees, did I see that in the application?

Yes, yes. Okay. Yeah, so there's also gonna be, just like our pawn shops and stuff like that, the employees have to kind of go through a background check themselves and go through a live scan process to make sure there's that criminal element that's just not there. Okay.

Okay. We're done with that one? So you got enough for that one?

All right. Last but not least, the fifth programming component is fiscal approach. So what is the appropriate tax rate? So what tax rate should be applied that balances generating revenue while not deterring potential businesses? Tax rates from other cities generally range from 3% to 7% with two of the cities that opted for a tiered system. As many of you probably already know, most of the cities we interviewed experienced lower cannabis tax revenue than initially anticipated. Voters have approved a maximum tax rate of 5% on cannabis businesses. Research showed that a 6% tax rate could be viable. However, that would require placing a measure before voters. It was also found that lowering tax rate would not likely generate enough additional sales to offset offset that rate reduction. And then adding storefront could increase total revenue, but sales could decline as local market is divided among businesses. So for these reasons, staff recommends imposing a tax rate of 5%. And staff is seeking council feedback on that proposed tax rate. And we'll break here for more questions and discussion.

Yeah, I think I'd like to lead off on this because I've long thought that the taxes that are put on this at all the different levels is just really destroying the initial idea was to move it out of back alleys and into a safe retail environment so people that wanted to purchase could purchase and it would make sense and if if the we that they get um on the lane or behind someplace is less expensive and that that's a problem so i'm not sure about this five percent i don't think that's the place to start what's the rate currently

We don't have storefront retail, are you talking about? Or what's the rate for delivery? 3%.

What's our delivery number?

3%. 3? So it's a 66% increase.

I would note that the state is really the bigger factor here. The state's rate is 15%.

I know, but I don't want to add to that.

Of course. I just wanted to provide that as context.

Yeah, and it's... So it's not taking off the way it could if you were able to back off on some of those taxes.

I think especially at the beginning, right, when you are getting these new businesses, we kind of want to help them be successful at the beginning and maybe in the future, right? And we see these businesses being very successful and maybe it might warrant a raise in the future. I think for now we can start with three and in the future...

I think two would be a good number. If you want to get it out of the illegal aspect, then you want those retailers to be successful. So you want to be gentle on the taxes. Because nobody else is.

Shall we move on?

I'm indifferent on this one. I mean, if you want to go with two, I'm fine with two. I mean, I also want to be able to see the industry also succeed in a sense, right? Because, you know, if the and one of the goals here is also to generate revenue, because we've all talked about the VLF, and this is, you know, it's not gonna recover that much money in terms of the VLF, but anything helps in terms of what we're looking at, right? And so, I mean, I'm fine with two.

Yeah. We don't have to decide that tonight.

That's true. You got some feedback. Yeah, look in two, look in three. Two, three, yeah. Maybe the variable rate starts at two and then eventually increases to three.

So next steps. The final section summarizes staff's recommendations and explains next steps if council decides to proceed with requesting staff to draft an ordinance. So if Council directs staff to proceed, staff will prepare a draft ordinance based on the feedback received tonight. Development of the draft ordinance would incorporate input from all reviewing departments and the draft ordinance be publicly noticed and presented to the Planning Commission for review and recommendation. It would then return to City Council for consideration and potential adoption in 2027. And that concludes my portion of the presentation.

I'll turn it over to now. And I think that, you know, with all we've invested tonight, I can't imagine we wouldn't move ahead.

Yeah.

I mean, we've, we've had the discussion, right? So let's, let's see what the, what the final product looks like. And then we can, we can adjust if need be and we'll see what happens. I do appreciate my colleagues collaborating on this. I know we've kind of danced around this issue for quite some time. And it sounds like we're getting close to landing this plane in terms of moving forward. And I also want to thank staff. on this, so.

Yeah, it is very comprehensive to your point, and I like how you all separated out into the different areas because it gives us a different outlook on what things to focus on, so appreciate the delivery of this item.

That was a great strategy that other departments should apply when they're talking to us about things, you know, kind of compartmentalize it so, you know, we can, Deal with it in bits and pieces, yes. And don't get lost in the weeds.

Mayor, before we move on, we did have three speakers sign up for this if they're still in the audience.

Great.

I have Farhad Doctor. Is that you?

I do have one wrap-up slide. should we do that you have one more slide slide no just the one up just up there I was just wondering um so I wanted to just very quickly thank council so much for the feedback and for the thoughtful conversation and I was wondering if I could just do a very quick wrap up to memorialize what we heard you want to go over all the no I'm not go ahead 30 seconds knock yourself out so So location, so I'm just gonna go through each of these. Location, east of 101, two storefronts, keep the application and permitting process as it is, but have a lottery window at the beginning to pre-screen. Performance standards, the list we have looked good, include safe disposal, no neon signage, and make sure to include whatever PD needs to manage security. And for tax approach, look at two to 3% and come back with a recommendation about what makes the most sense. Did we hear you?

And I think there was a question that I have in terms of the type of product that's gonna be sold. And I need to just understand, because I think there was, in the conversations I've had with different organizations, they were definitely,

It's like the strength, are you talking about the strength?

I think what the vice mayor is referring to is THC and CBD content. And there being varying levels of potency with what is offered at the store.

Okay, we can research, obviously, what the state allows and how the other jurisdictions are handling that and bring that information back to you.

That would be helpful, thank you. And I think one more thing that might have been lost is just there being some sort of preference given to the operators that are already in the city.

Absolutely, I apologize, I did miss that. That is on my notes, a local or existing business preference. Yes, great, thank you so much.

Okay, thank you, Ms. Friedman.

That's it.

Thank you. Thank you. And now onto the public comments.

I'm Farah Doctor. I own a cannabis business in South San Francisco. We actually opened in January 10th of 2020. So we've been here for a while. I wanna thank you all for considering this and taking the time to have staff put this together and have a engaging conversation. Um, let me refer to my notes real quick. Uh, there's two topics that I wanted to touch on. The first one is, um, considering the existing businesses. Thank you for bringing that up and, you know, recognizing our efforts to the city and being here. Um, the lottery aspect, it, while it seems fair from like your initial look at it, um, There's a lot of big players out there that might saturate the lottery with a lot of different applications, different corporations. They have the money to do this, and it actually could adversely create an unfair playing field. And the other thing is there's a lot of people who are masters at this application process. They go in, they put a bunch of applications in, once they get it, they turn around and sell it. And we don't want that, right? We want the people who are gonna be here and be here for the community and doing this the right way and introducing this into the community the right way. Um, the second thing that I wanted to touch on is while we have delivery licenses right now, the state allows us retail storefront license to also do delivery so that can be in the ordinance where the storefront applicants, if they have an existing delivery, can continue to operate that delivery service under the same roof and under the same license, just so we don't have to have two separate licenses, two separate locations. Those were my only two comments. Everything else, I'm really thankful for all of your engagement, and I appreciate your efforts.

Do we have Josh Lewis in the audience? We do.

Good evening, honorable mayor, members of the council, Josh Lewis. I'm, oh my God, I'm throwing things. I'm director of government and public affairs for Embark. We operate the store just 10 minutes down El Camino in San Bruno. Just largely, first of all, wanted to thank staff. This is one of the most thorough and in-depth study sessions I've ever seen, especially this early in a process. I think it's a testament to how much you all care about this city. But second of all, I wanted to speak a little bit more broadly about both the importance of moving forward and also the way that it might be best to move forward. In our experience operating in 20 plus jurisdictions in the state, there are two key factors that determine both the commercial success of the businesses you welcome here, but also the success of the program for the city's goals. And those are, first of all, location, and second of all, the selection process and ultimately the operators that operate at those locations. On that first piece, location obviously a challenging thing to really hammer down on the details when we're looking at large-scale maps and zoning district-wide kind of analysis. On the operator, I would echo the previous speaker's comments that lotteries are often abused processes in this state that are rife for bad actors and frequently push away good actors because the investment isn't worth leaving it up to chance. If you do move forward with the competitive process, we would strongly recommend a merit-based process with some level of either staff or council deliberation, even an objective rubric to distinguish applicants. But both of those two factors together can be addressed by a system that hasn't been discussed tonight, and that is the use of a development agreement to license cannabis retail locally. wherein under a development agreement, after either a competitive selection process or otherwise of the city's choosing, the city would be able to work with a specific operator, first selecting the operator and then working with them to identify a very specific location. So we don't run the risk of a zoning overlay, including six parcels that might be more problematic than the other 12. you are able to work directly with the applicant in order to identify the property where they will eventually do business. That development agreement would also offer a fee structure that would allow flexibility on financing, both for the city and for the applicant, meaning revenue could be generated through a fee assessed on the development agreement itself or via traditional tax structure like you all discussed tonight. We'd be more than happy to be a resource for you in this process. I think to the question of, you know, is South San Francisco of interest to the industry, it absolutely is. And I'm sure the few of us that are here tonight will not be the only applicants in this process in the future. But we'd love to show you around our shop just 10 minutes down the road. I checked on Google Maps five minutes ago.

Where are you in San Bruno?

We're on El Camino.

You are.

We operate the one retail location there. We have four other locations in the Bay, including our newest in San Pablo that just opened last week. So I'm happy to leave my card with the clerk. I would love to be in touch with all of you. Thank you so much. Thank you.

And then do we have Aaron in the audience?

Hi, guys. I'm Erin. I am a private citizen, no affiliation to any dispensary. I just wanted to say this is great. I would really love to see us get some money, especially as we're going to see a lot of fiscal challenges with the VLF coming up. So I would really love to see us continue to move forward with this. I think the staff did a really great job, and I look forward to seeing where we're going. Thanks.

Those are all the speakers that I have for this item. Okay, wonderful.

So I think great study session and thank you to the staff for bringing this along. It was pretty painless.

Thank you. Thank you mayor. Moving on to item number 18 is a report regarding a resolution of the city council amending the fiscal year 2026 27 master fee scheduled to incorporate parking meter rates and parking meter fees approved by the parking place commission for the downtown parking district. Item 18 a is a resolution.

Good evening. Mayor at Diego, vice mayor and a call us and city council members. I'm Marissa Guerin, a public public works program manager. This evening I'm here before you to provide you with a brief overview of the fiscal year 26-27 parking meter and parking rate adjustments for the downtown parking district. Information on the proposed adjustments, key findings from the recent downtown parking study, the rates approved by the Parking Place Commission and how these changes are intended to improve parking turnover and availability while supporting the long-term sustainability of the parking system is all included. These charges would be the city's first parking rate adjustment since 2020. The proposed changes are intended primarily to respond to increased parking demand downtown, improve turnover and availability, and encourage greater use of available off-street parking, as well as particularly the Miller parking garage. The adjustments will also help offset increased maintenance costs associated with operating and maintaining the city's parking system. The recent downtown parking studies showed the parking demand is particularly high during peak periods. Weekend occupancy reached approximately 96% at noon, while weekday occupancy reached approximately 83% at 6 p.m. As a point of reference, the industry generally targets approximately 85% occupancy, which helps maintain some available spaces and allows motorists to find parking more easily. Importantly, the study also found that the Miller parking garage generally had available capacity, even when on-street parking was heavily utilized. The study also identified several operational challenges downtown, including illegal parking, delivery and service vehicles occupying multiple spaces, vehicles stopping in travel lanes, and high demand during peak periods. At the same time, the city continues to experience increasing costs for maintenance, technology, enforcement, and administration of the parking program. These findings reinforce the need to look at parking comprehensively, not just through pricing, but also through enforcement, operations, signage and better utilization of existing parking facilities. On June 9th, the Parking Place Commission approved the rate adjustments shown here. For on-street parking, rates would increase by up to 25 cents per hour, resulting in rates between $1.50 and $1.75 per hour. Surface lots would increase to $1.50 per hour, while the Miller parking garage hourly rate would remain unchanged at $1.25. Monthly and quarterly parking permit fees would also increase as shown on the slide. Staff also compared the proposed rates with several nearby peninsula cities. As shown here, South San Francisco's proposed rates remain generally consistent with the comparable downtown parking districts. The adjustments are projected to increase annual parking revenue from approximately 1.02 million to approximately 1.38 million, an increase of approximately 360,000 per year or 35%. This additional revenue will improve the parking funds financial position and help offset increasing operating costs, although it will not fully address the funds existing structural shortfall. An important component of the strategy is keeping the Miller Garage hourly rate unchanged at $1.25 an hour. Because the garage generally has available capacity while curbside parking experiences higher utilization, maintaining the lower garage rate provides an incentive for longer term parkers to use the garage rather than higher demand curbside parking spaces. We are also continuing to improve parking availability signage and way finding to make it easier for drivers to identify available garage parking. Overall, the proposed changes are intended to improve parking turnover and availability, make better use of the Miller Garage and other off street facilities, and provide additional revenue to support parking operations and maintenance. Currently, annual parking fund expenditures exceed annual revenues. These rate adjustments will help reduce that gap and improve the fund's financial position. The broader goal is a downtown parking system that better balances customer access, business needs, parking demand, and longer term financial sustainability. The rate adjustments are one component of a broader parking management strategy. Staff will continue improving garage signage and wayfinding, evaluating enforcement and operational improvements and monitoring parking utilization and demand over time. This will allow us to evaluate the effectiveness of these changes and identify whether additional adjustments or operational measures are needed in the future. The Parking Place Commission approved the revised rates on June 9th of this year. This evening, city council is being asked to amend the fiscal year 2627 master fee schedule to incorporate these approved rates. Following council action, the revised rates will be publicly posted for a minimum of 30 days before implementation. With that staff recommends that the City of Council adopt the resolution amending our fiscal year 26-27 master fee schedule incorporating the new parking meter rates and parking permit fees approved by the Parking Place Commission. That concludes my presentation and I'm happy to answer any questions.

Let's see if we have. Jump in.

Hi, Marisa. Thank you for the presentation. I just have a question. What is the frequency usually that we evaluate this parking rates? Because the last one is 2020, right? Correct.

So there's no set schedule. But after the last parking study, we're going to do it on a pretty more regular basis. So at least every two years. But at the same time, our parking meter technician also provides us with some occupancy data while he's out in the field as well. So in between professional studies such as this last one done by Kim Lee Horn, we do have in-house staff that provides us an idea of what our occupancy is throughout the year.

Okay, great. Because in some places it's an annual evaluation and in San Francisco actually it's every six months because it's a supply and demand kind of thing. Now that we know the challenges, are those things also, I don't know, we already know that those are the challenges, right? Are we doing something about it too? With the parking challenges?

Yes, absolutely. So with the findings of the study, we found that it was recommended for us to include more short term parking spaces such as 24 minute parking spaces where there's higher utilization of where there's higher demand for the parking, specifically in the downtown core along Grand Avenue, Linden Avenue and such. So public work staff will be installing those parking spaces soon, as well as additional loading zones throughout the downtown core along Grand Avenue, Linden Avenue, near Cypress. And so we have at least five or six of those zones that are going to be installed here in the next coming weeks.

They're not going to be installed before we provide you all complete information on it. That's being prepared now.

So will that be part of what you will be advising or giving notice to people?

Absolutely, so before any actions are taken, we would communicate it out to the public and to the storefronts and the business owners and such.

That's great because we don't want to catch them by surprise. What else is my question? I was just wondering why do we still have the surface lot parking permits? I think if we just combine all those parking permits in Miller parking garage, you will have more space for people in the surface parking.

We may explore that. We know that for the downtown businesses, they do prefer to park in the surface lots that are, of course, closer to the business that they work. So those are mostly highly utilized by the employees of the downtown businesses that are closest to those surface lots. So they are the most common purchasers of those permits.

And do you coordinate with LAZ in terms of implementing all this, making sure that the people who are parking are not, or whatever the challenges we have in our parking, is eliminated by having greater, my God, my brain is not working. Enforcement. Yes, enforcement.

We do coordinate with the police department and with LAHS, and so definitely with the findings of this study, we are asking that enforcement continues and that we make sure that anybody who is abusing our time limits, that they are, you know, properly enforced.

Thank you, several comments and questions. To lead with what the Councilwoman was saying, could we engage also the Chamber of Commerce to publicize when it does become the new rates? Not just the website, I know it might be part of the process, I guess you were saying here, that it's been used, but could we amplify that to get more in front of business owners as well as residents? I mentioned earlier in the night that I had conversations with some of the business owners. We had a meeting in terms of the upcoming park and the parking issues there. Many are very optimistic of this 24 hour turnaround in the delivery zone. So I'm looking forward to what that looks like, but also being open and I'd like to request which leads me to the point that I'd like to request to bring this item back maybe earlier in the year so that our new configuration of the council could really understand what this study wants, maybe have a presentation on this parking study, because I mean, you sent us the document, I don't think we've fully absorbed it. because I think there's a lot to unpack there. One of it is yes, it gives a lot of recommendations of where we should be in taking different measurements and whatnot. But I also wanna look at whether we should increase perhaps our surface lot cost. I'm glad that we're not increasing the Miller garage because obviously we wanna increase utilization there. but I know that many of the new downtown apartment complexes, their rents are uncoupled with their parking spaces. Many of them are charging up to $100 for parking. We're here in our table charging, what are we saying? 50?

$1.25.

So I think there's room for us to grow there, right? Be at market rate, perhaps, that we could look at that. The other thing that I was a little kind of confused, and I'd like also to bring it back at some point, to really under, I know it's the parking commission that kind of oversees this, but I'd like a little bit more visibility on the parking fund budget, because it's saying it's $1.6 million. It's saying we have... I guess a projection of about 630,000, 630,000 gap between current annual and parking revenue and budget expenditures. I'd like to understand a little bit what those budget expenditures are and if we're projecting accordingly. because obviously this is not gonna get us anywhere close to clearing that gap, but I think the council needs to understand it so that we have a clear vision where we're headed. And if we need to pivot, right? For example, some business owners were saying, yes, we want meters, but some residents are saying, we don't want meters near the park. That doesn't make sense, right? So maybe we pivot to a, parking permit type of model, I don't know. I don't wanna even get there until we try different things, but I wanna be knowledgeable and the council to take us there with you so that we are all making a conscious decision on these numbers and not losing any potential revenue that we could get. But for this purposes of right now, I'm in approval of what you've proposed. Thank you, Marissa.

Okay, move ahead then with the motion to the resolution.

I move approval.

Motion on the floor. I'll second. Second by Council Member Coleman. We'll call.

Mayor Adiego. Yes. Council Member Flores. Yes. Council Member Nicholas. Aye. Vice Mayor Nogales. Yes. And Council Member Coleman.

Yes.

Thank you. We'll now move on to item number 19 is a report regarding a single employer section 115 pension pre-funding trust.

Thank you, Mrs. Garon.

Good evening, council, mayor, vice mayor, council members. public and and city staff thank you so much for having me tonight my name is christy donnelly i'm the finance director um i will give you fair warning that it is now past my bedtime and so i will do my best to keep this exciting and i'm going to start by saying that i actually am really excited tonight to bring this topic to you and it's not just because i love talking about numbers In this situation, we're talking about saving money, finding opportunities for generating additional revenue and setting the city's financial status in an even stronger position so that it can weather financial fluctuations. Those things are exciting to me. So we're going to be talking tonight about pensions. Ooh, everybody's favorite topic. specifically the growing and pervasive pension costs that we have identified and what will be a useful tool in managing the rising costs. So we're gonna go ahead and dive in. I wanna set a bit of a groundwork. There is a lot of data behind the slide, but we're gonna do a summary overview. If you need more details, please arrange with Laura and contact me and we can go into more details. What you see in front of you is our combined UAL payments. Now UAL stands for unfunded accrued liabilities and basically means our past bill. We are about the ninth column in. So this shows a historical perspective as well as our projected numbers. The main thing to see here is that right now where we are has more than doubled over the last seven years, our unfunded liability. There is a little bit of a silver lining. Had I done this graph about a month ago, these bars would have been higher by about $2.7 million each one. And that's because there was a good investment return by CalPERS. This is including an 11.6 investment return. And that's pretty much where the silver lining ends. We are still looking at annual employer pension costs at total, including UAL and normal costs at about $36.6 million. And it's expected to continue above 35 million for about the next nine years. What we're seeing is one good year can help our UAL, but one bad year can hurt it just as much. And those swings, provide inconsistency and difficulty in planning. So having a reserve can smooth those difficult years and create somewhat of a shock absorber to bad years or to difficult years. So we're talking about a pension reserve and what does the Section 115 trust do? On the left side of the screen, you can see the breakdown of our UAL and our normal costs. We've talked about this a little bit just now on the prior slide. A pension only reserve, first and foremost, can pay both parts of the pension costs, UAL or normal costs. We are going to have normal costs Always, as long as we have employees, we will have normal cost for pension. UAL is anticipated to continue at this 25 plus million for the next nine years. A pension only reserve can pay either of those. It could pay a dollar of that, it could pay 100% of it, or anywhere in between. In addition, a 115 trust allows more investment flexibility. And what that means is right now we are limited by government code 53601 to have only investments that are limited to five year in duration and limited to fixed income. Having a 115 trust eliminates that limitation and opens the options to longer term as well as equity investments. Now we're not gonna go crazy. We are going to look at, municipal advisors and investment advisors. We're going to have an investment policy that would create parameters around what is acceptable. But right now we have a small radius of what we can invest in. A 115 trust opens that up. Our policy establishes it based upon what we are comfortable with and what is advisable for South City. I wanna make sure that I note that prior historical investment returns is not a guarantee of future performance, but as far as, had to say that, right? Right now we have, in our last period, our pension reserve, the city held pension reserve, which we have about $6.4 million in, received a return of about 4.2%. In comparison, CalPERS discount rate is 6.8%. That's their goal. So CalPERS is already investing in stocks and in equities and in real estate. And I'm not saying that we're gonna do all of that, but there's already risk involved with those assets. S&P 500 as of yesterday was 7.7%. Again, not a guarantee, but it does open up the opportunity. So if we were to move forward with a 115 trust, we as staff recommend a single employer trust. Right now we have a city-held reserve that is subject to the government code. A multi-employer trust would be prepackaged. It's companies that are already out there. We could join in to the pool that is already established. It has a preset investment menu and Our recommendation, given the size of what we were wanting to do and the size of the city, we believe that a single employer trust would be a better option. It would give the city more control. It allows us to set an investment policy and an investment strategy specific to our needs. And it allows us to select our advisors and providers.

Ms. Donnelly.

in regards to the multi-employer trust, I mean, would we be able to know what their return is on investment?

So there is, there are a few different players in the field. And depending upon the year, obviously it has different returns. I don't know that number off the top of my head, but we can definitely find out what the historical average.

I mean, before we walk away from that, I think it would be good to know sometimes there's advantage Why would you suggest just the local control aspect on a single employer?

So really being able to set up our investment policy and set up the terms of the trust, the idea of being able to utilize the money for, under what circumstances would we withdraw the money? Would we use the money to offset the difference in in normal cost. So if you go back to the screen here, if you look at our current state at 2025, 26, if it were to increase say by $4 million above our budget, that provides us an opportunity to apply that difference and to take that out of the reserve rather than taking it out of the general fund. And that's the case for either.

No, I mean, you couldn't do that in the multi-employer?

You can, but you have better control over the terms. It is preset. And we could look at the multi-employer trust

And then, Ms. Donnelly, if we set up our own, we choose the advisors, would it be something like what we use generally for the Chandler Asset Management? A group like that?

It would be something like that. It may not be the exact same advisor. It could be. We would go out to RFP and work with a municipal advisor and... look for somebody, an expert within this space. Because it is a unique, a little bit more niche aspect of investments. Okay. Let's see. So tonight, we are asking for direction on authorizing staff to develop either a single trust, a single employer section 115 trust. We could also come back with information on a multi-employer trust if that was how the council wanted to proceed. We would then engage a municipal advisor to help us analyze the right size. Now my opinion as of right now, based upon the data that I have seen, is that our preliminary target is going to be in the range of $24 million. That would be the 6 million that we currently have plus an additional 18 million. That amount, sorry I have it down here, retains the sufficient unrestricted reserve to absorb other general fund budget fluctuations and still remain above our minimum policy levels. We would then bring back trust terms, providers, and a funding recommendation.

So Ms. Donnelly, we don't build this over time, we do it all at once, we create the trust, and then we load in all the money?

That would be my recommendation. Because of the fact, and I'm gonna go back to this slide here, because we are at the ninth bar in, which I don't have a little pointer to show, we are close to the peak of this curve. And so we want to be able to leverage the full power of a reserve as soon as possible. And that is the end of my presentation. Just to summarize, we talked about the UAL and the normal costs. I looked at the peak, where we are with that. the shock absorbing effect of a pension reserve, increased investment opportunities of a 115 trust, and the next steps. One of the things that I wanna actually really quick clarify, the difference between the multi-employer and the single employer has to do with choosing our own investment strategy. Most of these predetermined multi-employer have one or two tiers. You pick either a low risk, a moderate risk, or a higher risk, or a medium risk. And then they are the ones who are picking the investments. Whereas with a single employer trust, we work with our investment advisors to pick the investment portfolio. So now I'm done.

OK. Any questions?

We've been talking about Section 115. since I became part of City Council. And the biggest fear then was tying funds into, tying funds which we may need. But I think it's gotten to a point now that I think this is really needed. It's just that I would like to ask how did you come up with 24 million, which you said was the six million plus the 18, and keeping the 20% reserves that we still are required to keep. On the multi, was it multi? Multi-employer. Multi-employer. You were saying that we just have to choose whether it's low risk, high risk, or medium risk, or shouldn't they be diversified?

Well, they would be diversified, but they have an investment menu already established. They have a trust already established. And we would be joining in a trust that is in place already. And the investment advisors then provide a menu of investment options to the participants. My experience is limited to an OPEB 115 trust. And so in that particular multi-employer trust, I know that they had three tiers. And you could choose whether you were going to be in tier one, two, or three.

So you can think of it a little bit like your own, think of it like your own IRA, your own retirement account, your own 401k, your own IRA. You can choose mutual funds and you can choose Dreyfus or you can choose something else, but they have some manager and they're making all of those individual and daily decisions. you're not. Whereas if you want to put your funds into stocks and pick the stocks, you can do that too. So the multi-employer is more like the mutual fund approach and the single employer gives us that authority, it's your own. You get to make every decision. Within the parameters that the council sets, we would be recommending a set of parameters. So for both, we have both risks.

I think she just talked me out of the single employer because in my experience, my mutual funds do perform better

And that's why I would like to see, you know, the historical, at least historical, how do they invest and what's the rate of... It will be very interesting and I really am also concerned, you know, that we will be the one tailoring the governance and investment policy. And I hope that there will be someone guiding us and how to do that.

We would absolutely have investment advisor, just like you said with Chandler. I don't know that it would be Chandler specifically, but we would have people who are in this space helping us develop a policy. And what that would do is allow us to say, you know, are we going to allow for investment in some of the more risky things that CalPERS may be doing like real estate? are we going to allow that? And we would evaluate whether, and it would be more of those big, the bigger ideas. And then the daily transactions would be much like with Chandler, they're making daily transactions and then they report on that on a quarterly basis.

So from that aspect, it would be basically an advisor specific to South San Francisco, as opposed to the advisor we have probably never met.