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tv   BOS Special Budget and Finance Committee  SFGTV  October 10, 2020 5:15am-6:01am PDT

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good morning, everyone. this is the october 6th, 2020 special budget and finance committee meeting. i'm sandra lee fewer, chair of the budget and finance committee. today i'm joined by committee members supervisor rafael mandelman and supervisor mat haney, substituting today for supervisor walton. our clerk is miss linda long. i'd like to thank sfgov tv for broadcasting this meeting. i'd like to put a motion to excuse supervisor shamann walton. do i please have a roll call
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vote. >> clerk: on the supervisor, supervisor haney? >> comments are opportunities to speak during public comment period, they're available via
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phone call by calling (415)655-0001. again (415)655-000 (415)655-000g i.d. 146 407 0690. again 146 407 0690. then press pound twice. you will hear the meeting discussion, but you will be in mute and in listening-mode only. when the item of interest comes up, dial star 3 to be added to the speaker line. best practices to call from a quiet lotion, speak clearly and slowly and turn down the television or radio. alternatively you may submit public comment in the following way, email to myself, the budget and finance committee clerk. if you submit public comment via email, it will be forwarded to the supervisors and will be included as part of the file. finally items acted upon today are expected to be referred to the full board, as committee reports, for consideration as
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today's worried of supervisor -- board of supervisors meeting today at 2:00 p.m., unless otherwise [clerk reading items 1-4 on agenda]
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[ [clerk reading items 1-4 on the agenda] >> members of the public who wish to provide public comment on the items should call (415)655-0001, meeting i.d.
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146 407 0690. then press point twice. if you have not done so, please dial star three to raise your hand. >> chair fewer: thank you very much, madam clerk. today we have with us jonah lee, director of portfolio management and preservation at mohcd, the finance manager, the program manager for public works and the financial analyst from the office of public finance. the floor is yours. >> somebody. >> thank you, chair fewer. and good morning. jonah lee, director of preservation at mocd. presenting this first item to the preservation and seismic safety program, request for approval for the second issuance
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2020 bonds. i'm pleased to present the sale resolution related to the issuance of up to -- >> chair fewer: mr. lee, so it is not moving. did you want to go to the next slide? >> are we on slide 2? >> chair fewer: now we're on slide 2. thank you. >> sure. i'm pleased to present the sale resolution related to the issuance of up to $102.6 million in bonds for the committee's consideration and positive recommendation to the board, as the committee reports. the 2020 s-bonds are used to finance loans under the preservation and seismic safety pass program, which is a key component of the city's acquisition, preservation, and anti-displacement strategy. before we move on to the presentation, i'd also like to express my gratitude to the committee and clerk for convening this special session
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today. the expedited timeline allow our continuing team the option to price the bonds before the election, if that is advantageous. given the volatility in the markets, this flexibility is critical to financing execution that funds the past program and ensure that during these extraordinarily challenging times, san franciscans can remain stablally housed. next slide, please. the bond authority -- >> chair fewer: excuse me, mr. lee. we're not seeing the slide? there we go. thank you very much. >> the bond authority for the past program originated with the seismic safety loan program of 1992, which funded seismic retrofits to unreinforce masonry
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buildings. they authorized the issuance of $350 million, with suballocations to fund deferred, below-market rates and market-rate loans. over the following 20 plus years, the program was largely underutilized, with $90 million issued. next slide, please. past financing is a flexible, nimble and valuable preservation tool for the city and affordable housing developers. with limited other tools to facilitate affordable housing and especially in the current market, it may be a powe powerfl tool to use in a strategy. eligible uses include seismic retrofits, acquisition rehabilitation, and preservation of affordable, small and large buildings, including s.r.o.s. next slide, please.
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past, deferred and below-market rate loans require permanent affordability. and to maximize affordability and minimize the use of public resources, average rent and income is 80% of a.m.i. and capped at 10020% a.m.i. to date the program is largely serving lower-income households, learn 660% a. m.ism. next slide, please. most loans, in the past program, are structured as permanent take-out financing. however, the program may also provide direct financing. to achieve the lowest cost of capital for many affordable
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housing housing properties as possible, each project receives a blend of below-market rate and market-rate funds. and is structured with up to a 40-year term. loans that were funded with the 2019a bond, less than 3.5%. the blended rate, based on the 2020 bonds, is expected to be even more -- approximately 3%. next slide, please. quick update on the first issuance pipeline. the strong continued demand for past funding, all of the bond proceeds from the first issuance have been either closed or committed. since may of 2019, mocd has closed financing, a little preserved over 200 units. another roughly $18 million in
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loans are scheduled to close by the end of this calendar year. and in aggregate, more than 350 units are expected to be preserved with a financing from the first issuance. at this time additional hunting is critical to the continuation of the city's anti-displacement and preservation initiatives. next slide, please. staff is recommending the approval of the second issuance, in a maximum amount not to exceed $102,580,000, based on the strong demand and the bond capacity available this year. the bonds would fund over $101 million in loans, with the remaining amounts for cost of issuance and other fees. next slide, please.
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the anticipated pipeline for the second issuance, including approximately 34 projects, with over 500 units, including commercial spaces. with california oversubscribes two to one on the volume cap and preservation projects in california structurally disadvantaged by the state's competitive scoring criteria, there is a huge need for preservation finance tools. that need is particularly acute, given the acquisition opportunities in the current economic climates. and the recent unlocking upon this funding from prop c. indeed, past funding is uniquely positioned to lock in historically low-cost, and long-term funding to meet these needs and execute on a countercyclical, anti-displacement acquisition and placement strategy. this pipeline includes appear range of small and large preservation projects, with critical needs and serving
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priority at-risk populations. mohcd is also providing over $3 million separately funded through the s.s.p. capacity building funds to support our non-profit housers and identify new preservation opportunities aligned with our racial and geographic equity goals. next slide, please. i want to thank you for this opportunity to present on the past program. the second issuance of past bonds will provide critical funding for the city to continue executing on the anti-displace acquisition and preservation strategy. this concludes my remarks. at this time i'd be happy to answer any questions. >> chair fewer: thank you very much, mr. lee. any comments or questions from my colleagues? seeing none, this actually -- mr. lee, you actually covered item 1. do you have a presentation for
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item 2? i see you are the speaker for item 2, 3, and 4. would you like to go through those items now? >> my colleague raleigh is line up to speak to the next item. >> >> chair fewer: let's hear the b.l.a. report, please, for item number 1. >> thank you, chair fewer. nick menard from the b.l.a. which have one combined report for all three -- all four items. >> chair fewer: yes. mr. menard, could we hear you report after we conclude the presentations from items 1, 2, 3 and 4. >> yes. >> chair fewer: thank you very much, mr. menard. so now we have mr. katapang? is that how you pronounce your last name? so sorry if i butchered that. >> that's good enough. >> chair fewer: is that how you pronounce it? >> that's pretty good.
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>> chair fewer: thank you. so the floor is yours. you are presenting an item. thank you. >> okay. can we please put our slides up. >> clerk: the only slides that we showed are the only slides that we received. is there other slides to be shared? >> it's a combined slide. so i think the next -- if you just click on the next one, it would be me. thanks. >> clerk: thank you for the clarification. >> good morning, supervisors. finance manager at mocd. here to request the reproposal of the 2019 affordable housing bond. in the amount not to exceed $260 million. i'm also joined by our deputy director for housing, as well as
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our c.f.o. next slide. next slide, please. next slide. thank you. next slide, please. thank you. right. thank you. the $600 million affordable housing bond passed in november 2019. as you may notice, this bond measure is almost double the one passed in 2015. so bond allocates $150 million for public housing, $220 million for low-income housing, $80 million for preservation and middle income, $150 million for senior housing, and $20 million for educator housing. we're askin asking approval fort $253 million in program funds and the next slide i'll go into each of the program categories.
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my presence will be more high level, but if you need more detail, lydia and the rest of our team are available for questions. this will be the city's biggest issuance of affordable housing bonds to date. and this is primarily driven by the increased need to finance the city's growing affordable housing pipeline. next slide. >> the first spending category is public housing. these are typically for householdhouseholds with less t% a.m.i. the majority of the funds requested will be spent on vertical and infrastructure development at sunnydale block 3, 7 and 9. we're using funds to accelerate rehabilitation, that's been public housing stock to meet housing quality standards. this $45 million investment will produce almost 300 units. next slide, please.
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aside from spending in sunnydale, we're budgeting for multi-family units, similar to our rad program. we expect this investment to yield 70 units. next slide. >> the next spending income is low-income housing. these are typically for households with less than 80% a.m.i. next slide. we will be allocating $15 million for geographic equity family acquisition, which will be used for land acquisition for predevelopment of new housing projects in areas with limited production or loss of units with protected status. this investment will produce 75 units. next slide. we've also identified five developments which need construction financing in 2021. low-income gap funding, tolling over $113 million is the biggest
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component of this first issuance, and will produce over 550 units. next slide. lastly, we're allocating $15 million for permanent spode for single adults and people with chronic illness. for permanent housing for single adults, we will most likely use the $10 million allocation to purchase land, although a particular site has yet to be identified. for persons with chronic mental illness, we plan on acquiring several single-family units that can each house three to five individuals. next slide. moving on to the next spending category, which is preservation and middle income, preservation will serve households with 30 to 120% a.m.i. and middle income will serve households with 80% to 175% a.m.i.
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we're allocating $29.4 million for serving rent-controlled units, similar to the small sites and $7.5 million as a gap financing for knight and howard, which will contain over 100 middle-income units. next slide. here you can see the picture on howard. next slide. our last program category for this first issuance is senior housing. these are typically for households with less than 80% a.m.i. similar to low income, we are also dedicating $15 million for geographic equity housing, but this time for seniors. we're also funding senior housing to be built in laguna honda hospital and senior housing in chinatown. we expect to produce almost 250 senior housing units. next slide. the bulk of the funds will be
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spent in 2021 and 2022. next slide. we break down the bond sources. next slide. thank you very much. and happy to answer questions. >> chair fewer: any comments or questions from my colleagues? seeing none, let's go on to item number 3. and who is presenting that? is that mr. joe chen that is presenting that? >> hi, madam chair. i'm presenting item 4, is that up? >> chair fewer: oh, you're item 4. >> yes. the public safety bond program. or 2 and 3? >> chair fewer: who is doing item number 3? >> let me just chime in. i'm the public finance. i'm sorry. the presentations were a little out of order.
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the first -- the past presentation for mr. lee was for item 3. the recent presentation by mr. catpump ang for items 1 and 2, so now we're on to item 4. items 1 and 2 were together. 1 a master resolution for authorizing the entire $600 million bond program for the 2019 affordable housing bond. as well as the first issuance, separate resolution of not to exceed $260 million for the first issuance. kqed okay. wait a minute. we did hear a presentation about the $260 million. no? >> that was the presentation just now. >> chair fewer: yeah. okay. and then so what item are we hearing now? >> we're ready for item number 4, which is the public health and safety bond issue of $126,000,000.925000. >> okay. we heard item 1 and 2 and 3
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already? >> >> chair fewer: mr. chen is shaking his head. mr. chen, now you are now presenting item number 4. >> that's correct, madam chair. >> chair fewer: all right. >> so are we ready to go? >> chair fewer: the floor is yours. >> okay. thank you. good morning, madam chair, supervisor haney and mandelman. i'm the public works program manager for the public health and safety program. the approval to proceed with the third bond sale for the public health and safety bond program. okay. we'll keep it on this slide. to be more specific, we are requesting the budget and finance committee's consideration and positive recommendation to approve the resolution to authorize and direct the sale of $126,925,000 for the 2016 public health and safety bond program. the p.h.s.2016 was approved in june 2016, for a total of
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350 million -- $350 million. the first bond sale was completed in 2016, and the second bond sale was completed in 2018. for a combined total of $223 million. next slide, please. the p.h.s.2016 provides funding for six bond components for three client departments. the three client departments include the department of public health, the department -- >> chair fewer: mr. chen, excuse me, could we have the next slide, please. >> oh, okay. sorry. oh, maybe -- i think we're still -- i think it's on the -- i'm still on the previous slide. >> chair fewer: okay. on the bond program overview? >> i am. i think there's a slight lag maybe. >> chair fewer: that is great. now we can -- we can follow to what you're saying. >> okay. sorry. maybe i'll slow down a little bit to make sure technology
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catches up. the p.h.s. provides funding for six bond components, three client departments. background noise. the three client departments include the department of public health, san francisco fire department, and the department of homelessness and supportive housing. the six bond components, the first three components in the table are for depp, including building 5, southeast health center, and other community health centers. the next two components include the ambulance deployment facility and a neighborhood fire station. and those are for the san francisco fire department. and last but not least, the homeless service site component is for the department of homelessness and supportive housing. next slide. since the approval -- let me just -- do you see the next slide, which is 29? >> chair fewer: not yet. not yet. there we go. >> okay. i'm getting the hang of it now. so since the approval of the second bond since 2018, the team has continued to make
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significant progress across all six components on the building 5 component, the team continues to advance the 19 core projects that are part of this component. of the 19 projects, 16 of them are currently active. and different phases of the project life cycle with one project completed. on the southeast health component, public works has successfully awarded the construction contract to clw builders in april of 2020, with construction to be issued in may of 2020. a few activities have commenced. on the slide in front of you, various photos to highlight some of the most recent construction activities. next slide, please. on the community health center component, we are tracking two health centers that are undergoing comprehensive seismic upgrade and renovation. maxine hall health center is well under construction with the recent completion of all shared walls. another is in a bidding phase,
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with bids received on september 16th. public works is targeting start construction by the end o end oe year. on the a.d.f. project, construction is also well under way with a target completion date of december or january of 2021. on the component, public works awarded the construction contract to argo construction for the host tower fire station locations. 6, 11, 12, 21, 38. construction t.p. was issued in july of this year. and on the homeless component, it's completed and closed out. next slide. the various projects under the p.h.s. program by component. this table provides a summary of the projects that were in the planning phase, design phase, and construction phase. let me just take a few minutes to point out a few dates in the table. for example, the southeast
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health center project is trac tracking to a completion date toward the end of 2022. and a.d.f. is also tracking to a completion date of january 2021. next slide. this slide provides more detailed breakdown of the previous two bond sales and the current bond sale by component. this table shows a breakdown of the $350 million allocation by component. of the 350 million, $272 million is allocated to d.p.h. $258 million allocated to the san francisco fire department and the other to s.h.s. the second bond sale provided funding for two components. the third and final bond sale provided funding for the remainder of the four components. totaling $126.9 million. next slide.
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the third bond sale, as i mentioned earlier, provide funding for the six components for the southeast health center and community health center components. the funds will be used to fund the construction contracts, as design has already been completed. for the building 5 and n.s.s. component, the third bond sale will fund both design and construction-related activities. next slide. this table provides summary of expenditures and encumbrances spent by various components. i won't go through all of the numbers on the table. let me walk you through how to interpret some of the numbers. the expenditures column highlights the portion of the funds that's been paid or spent to date on construction or design-related services. th-- construction contracts or professional service contracts. next slide.
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the information on this slide is provided by the office of public finance. the third bond sale amount is $126.5 million. as a source of a prior amount, the $126.9 million will be allocated in three categories. the $125.5 million is project funds, which will be used to deliver projects or projects. the remaining funds will be used to fund city services, auditing fees or expenses related to the geo bond sales or fees. next slide. and at this point it concludes my presentation for this morning. and i'm available for any questions anyone may have. >> chair fewer: thank you very much, mr. chen. could we have the b.l.a. report, please on items 1-4. any questions from my colleagues? >> this is the office of public finance. if you would allow, ave few remarks to make regarding the financial terms of the three bond series that have been
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proposed? >> chair fewer: of course, mr. chiaretti. >> i will briefly take each of the three different bond issues, presented today, and describe some of them financing parameters and then i'll also then cover the sort of sum total of the impact to the property -- to the debt limit and capital plans for all three series together. based on the consumer market interest rate of 3.51%, we assume an annual debt service cost for the bonds of approximately $4,820,000, based on not to exceed -- and over the life of the bonds, generate about $87.5 million in interest payments, with a total debt service amount of $190 million or so over the life of the bonds, we're assuming a 40-year
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term. with the final maturity of june 15th, 2060. the repayment of annual debt service on the bonds, because of the structure of the past program, it will be recovered through increases in the annual project tax rates, but because this -- the way the program is set up, the debt service is offset by loan repayments. mr. lee described three categories of loans made through the bond program. and borrows of blow-market rate loans are expected to pay at a third of the borrowing cost. repay the full borrowing cost and an additional 1% for the administrative costs and deferred loans are repaid in full at the end of the loan term. therefore, we would anticipate that these loans repayments, offsetting the city's borrowing costs would vary over the term of the bonds, as loans are made and then re-collected over time.
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the increase in property tax associated with these bonds is estimated to range from about 3 cents to about $1.67 per $100,000 of assessed valuation over the expected 40-year term of the bonds. so the owner of a residence at $600,000, assuming the homeowner's exemption of $700,000, would pay additional property taxes to range from 17 cents cents up to $9.988 per year, if the bonds are sold. we are pursuing a negotiated transaction for this bond issuance and we selected underwriters. the senior manager for this will be r.b.c. capital markets l.l.c. and comanagers will be u.b.s. financial services inc. and b lablock. i can take questions for this or move on to the next, if you would prefer, chair fewer? >> chair fewer: colleagues, any comments and questions seeing no one in the queue, let's move on. >> the affordable housing bond
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program, we have an estimated market rate of 3.39% for the taxable general obligation bonds. that would create an annual debt service cost of $13.5 million. we're anticipating $255,555,000 and generate interest rates, resulting in $405 million as total debt service, about a 30man year term of the bonds as currently estimated. the property tax impact of this bond sale is approximately $4.54 per $100,000 of assessed value. so the owner of a residence of $600,000, the homeowner's exemption, would pay average property tax increases of $26.91 per year, if the bonds are sold. we are also pursuing a negotiated transaction for this issuance and we have selected underwriters again through an
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r.f.p., as with the 2020f bonds. they're to be morgan stanley and company, as a senior manager. citigroup will market will be the consenior manager and the comanagers are raymond james and an anticipated 20-year term of
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the bonds. so the increase of the property tax from these bonds would be about $2.77 per $100,000 of assessed value of the term of the bond. so the owner of a $600,000 home, with a homeowner's exemption, would pay an average of $16.42 per year, if the bonds are sold. and now i'll turn to the anticipated debt limit impact for all of these three issues i- issuances together. it allows 3% of the total assessed value of property in san francisco. currently for a fiscal year 2021, the certificate -- the certificate assessed property is worth about $9.04 billion. so 3% creates a debt limit -- sorry. the total assessed value is 301.4, creating a debt limit of
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approximately $9.04 billion. but as of september, 2020, the city had an outstanding debt of $2.15 billion in assessed -- in aggregate full amount. so we have a total outstanding geo debt of approximately .71%. out of the 3% debt limit. if we issued all of these three series of bonds, that total amount of aggregate principle would increase from .71%, still well within the 3% limit. the capital plan is also imposed a financial constrain on the city's use of general obligation bonds, such as that the any -- the property tax in any given year would not be over 2006 property tax rate of .1120 in assessed value and if the board of supervisors approvings this bonds, the property tax rate still maintained within that
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constraint. so that's all i have on the financial impact of these bonds and if there are any questions, i'd be happy to answer. >> chair fewer: i just wanted to mention that i think in this instance, it would have been helpful to have a power point, it's almost impossible to keep track of all of the numbers in a series of four items. it would be different if it was one item. but because we are discussing four items together, i just just think that the numbers that you're rambling off to us and reading off to us, are very complicated to actually see it in sort of this larger context of what we're voting on. i just wanted to mention that. i think that -- i see no comments from my colleagues in the queue. and so let's move on to our b.l.a. report for items 1-4, please. >> thank you, chair fewer. and good morning, members of the
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committee. this is anything menard from the budget and elective analyst's office. authorize $600 million 2019 affordable housing bonds, sale of $260 million of the 2019 affordable housing bonds. sale of $102.6 million of preservation and seismic safety bonds, and sale of $126.9 million of public health and safety bonds. the bond sales totaled $489.5 million. around you can see the proposed uses of these bond proceeds on page 5 of our report. as we noted on page 7 of our report, annual debt service for all three bond sales would be approximately $26.7 million, which would be recovered from increases to property tax rates. an ordinance authorizing the spending authority has been introduced. it will be considered at a later budget and finance meeting. as was said, the sales are
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consistent with the city debt policy. we, therefore, recommend approval of all four resolutions. >> chair fewer: thank you very much, mr. menard. madam clerk, can we open up this for public comment, items 1-4, please. >> clerk: yes, madam chair. operations is checking to see if callers are in the queue. operations, please let us know if anybody is ready. please wait until the system indicates you have been unmuted. please let us know if any callers wish to comment on items 1-4. >> madam chair, there are no callers in the queue. >> chair fewer: thank you very much. so, colleagues, any comments or questions for our presenters at all? no. you know, this is pretty commonplace the sale of bonds. so i want to thank our presenters for being here today. and then i'd like to make a motion to move this as a committee report to the full board. could i please have a roll call vote. >> clerk: yes. on the motion to recommend items
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1-4 to the full board as a committee report. supervisor haney. >> supervisor haney: aye. >> clerk: supervisor mandelman? >> supervisor mandelman: aye. >> clerk: chair fewer? >> chair fewer: aye. >> clerk: there are three ayes. >> chair fewer: thank you very much. any more business before us today? we are adjourned. thank you very much, colleagues. thanks. >> my name is ahsha safai, and
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i'm the current district 11 supervisor. we're building housing on a scale we've never done before, almost 600 units, 65% of it being affordable to working families. we've planted over 2,000 trees, and we've investing in our transportation like we've never done before. we've done speed cushions, we're doing transportation improvements on mission and general geneva, and we're making sure we have affordable and accessible transportation. during this time of crisis, we are -- we've been in constant reaction mode to make sure our citizens have the protection and access to health care that we need. we've opened up ultimate multiple testing sites in our districts. we've distributed thousands of masks to families and individuals to make sure that
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they're safe. we've been on constant, constant mode of delivering services during this crisis. one of the largest things that's also happened in our city and our nation is black lives matter movement. we've eninsured, working with our mayor and supervisor walton, that we've invested in the community life never been done before. we've directed over $120 million in black led organizations and in the black community. in my district in particular, it's building on the success we started over three years ago where we've been investing in those communities and those leaders and those businesses consistently. i would appreciate your support. i'm running for reelection to continue to work aggressively for the residents of san francisco and the residents of district 11. thank you.
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>> welcome to the october 5, 2020 rules committee. i am hillary ronen, chair of the committee. with me on the phone is rules committee member gordon mar, and we will soon be joined by supervisor catherine stefani. our clerk today is victor young. mr. young, do you have any announcements today?