time. supervisor kim, you have been around and i've always admired you, even your commercial. and currently, ms. miss brown. the supervisor of district five. i have been with you for a long time. we have been accused of having cupcakes together and all that. i just got a letter here and i will talk about that later. this is the difference of what i am saying. why a black man, the city and county are trying to infringe on my rights. when we talk about --dash we'll talk about what the young men told me. let me tell everybody. whatever you say to me, or do to me, think about it because it could be used against you. i am going to the f.b.i. i am not stopping here. my name is ace. i am going to the f.b.i. to protect me. here we are. this public testimony, unless you have a way to say it, i support that's. i have three daughters. i have three granddaughters. i have three great granddaughters and i would not want them to get raped. i support you. meanwhile, public testimony. hold up.

racism. there is a white man who used to come in and saying. you would not say a damn thing to him. i can sing too. i will show that in our next time appear. we are taking time away from me. telling me how to walk and talk. tell me how i could have been avoided being a black man. i'm up here for one thing and one thing only. representing the black community if you want to stop me and have the sheriff his coming to arrest me like they did here the other day. ok. i am ok. sometimes i get emotional because i have had surgery. i am suffering from post trauma from here at city hall. i call it silly hall. i support all this. but if you will all have -- tell somebody who hasn't told you this. tell them to come tell me to do this. my name is ace and i am on the case. [indiscernible]

>> good afternoon, supervisors. i am a chief of victim services for the district attorney's office. i wanted to be here to support the recommendations of the task force. it was an honor for us to be part of it. we will continue our work and working with the schools and the universities. we have done a red zone events every year for the last four years. and evoke patient -- big push this year was to help government and nongovernor -- government partners to understand the trauma impact to survivors. so we can help create a more effective and engage in communication and improve the services that we offer. we look forward to working with the task force as it continues and in the future, particularly in the area of working with middle school -- middle schools and high schools. it is a very underserved population and hard for us to

engage with those survivors what we really want is for very young women to learn that they have the ability to protect their bodies. that they deserve respect and they deserve for these issues to be addressed and they deserve treatment to recover from the use they don't set the tone for the rest of their lives. thank you very much. >> i'm so sorry i did not acknowledge you. i did not know that a d.a. representative was here today but i appreciate you being here. since you are here and not all members of the public understand the m.o.u., can you describe what the m.o.u. is and the nine campuses that you find this m.o.u. we. >> absolutely. the campus is that we have an m.o.u. with, there are layers to it. it allows for the police department of san francisco to work collaboratively with campus police on all of these universities but it also allows us to provide victim services on those campuses so that we can supplement and enhance the

services that they are receiving on campuses. so they can apply for victim and crime compensation. we have emergency funding where we can play just pay for things like students having to go back home to visit their family. we can pay for books if they were out to semester and need to go back. we can assist with any medical or health services with their victimization. >> what is a source of funding for the services we. >> we have two sources. one is a california victim his crime compensation dollars that all californians have available to them. and we have a secondary pot from the board of supervisors that comes to the victim services division. we can pay for things that pay for things outside of the scope of victim his conference -- compensation. >> what does that mean for a campus police and sfpd to work together on these cases we. >> there will be one agency that takes the lead in an investigation but they will work collaboratively and can share information if the investigation needs to be transferred to the san francisco police department and the campus safety

organizations will give information to the students about victim services and resources off-campus. >> does is help to streamline the interview process for the survivor? >> at this point it does not affect the interview process. sometimes they will have too interview -- two interviews but we are working hard to improve the quality of those interviews and we are meeting as a group with our law enforcement partners to think about streamlining that and doing more of a multidisciplinary interview where a survivor would only need to tell her story one time. we are working on the logistics of that now. >> who are the nine campuses that you currently have an m.o.u. with? >> san francisco state, university of san francisco, city college, conservatory of music, the art institute, -- >> i think she may able to help you. >> we have independence -- in appendix and a report that helps every university. >> the public can't see the report. i think the public would want to

know which nine institutions where you could find this m.o.u. >> you see hastings, ucsf and i think there is one more. and alliant international university. >> who has not signed? >> golden gate university. to fry university has not signed , the fashion institute of design and merchandise has not signed. the arthur a taccone school of dentistry and california college of the arts have not signed. >> and the academy of? >> they have signed. >> is at the art institute or the academy of arts? >> the art institute has not. >> i would love to be able to

assist in developing that relationship especially the dentist schools and the district that i represent. please do reach out to supervisors for assistance in leveraging our relationships because i would like every higher education institution to sign on with the district attorney's office. >> i appreciate that fact we are meeting tomorrow to talk about the universities we have not signed on yet and how to access them. i am grateful for the opportunity to reach out about that. >> thank you, so much. thank you for the incredible work and of course, this only highlights the work that will continue to happen and i can't say how i continually am disappointed that congress has not passed the cost to act that was introduced by the senator, which is just a simple act that requires confidential advisors on campus and requires universities and institutions to provide information on how to report to their students. something like this is pending in congress and cannot get past.

i think it speaks to the enormous hurdles that survivors continue to have to face in getting their stories listened to and these crimes reported and addressed and i hope that we can continue to do advocacy on that work and on affirmative consent on campuses in the state of california. i also am really grateful we could shine a light on rape kits in 2013 and that san francisco police department has since then move through in -- i don't know if the what the appropriate word is, by moving through and testing all of the rape kits after we have found 753 kids that had never been tested back in 2013. so there are games that have been made but still a lot of work that continues to need to happen but i am really happy that san francisco is undertaking this initiative and effort to. any other comments from colleagues?

seeing none, i will take a motion to file this item. i. i am sure that there will be other colleagues that will continue to take this up. i look forward to our continuing conversation with the department of women status. thank you so much to miss kendall and weber for being here and miss simon for representing the task force. >> madam chair, public comment is still open at this time. >> thank you. we will close public comment on item number 3. thank you. i have made a motion to file this item. can we do that without objection >> mr clerk can be called the final item. item number 7. >> item number 7. it is a hearing to receive the budget and legislative analyst audit the housing authority and mayor's office of housing and community development coordination management and accounting of the section eight voucher program. >> i want to acknowledge supervisor peskin, our vice

chair who is a lead sponsor for this hearing and i want to hand over the hearing to supervisor peskin. >> thank you chair kim and thank you to both yourself and supervisor brown for cosponsoring this hearing, along with president cohen and supervisor he and others. i think that massive amount of cosponsorship speaks to how troubled the legislative branch of government is over the revelations that appeared in an article just ten days ago on october 15th. when i was first on the board of supervisors, some 18 years ago, the housing authority was a troubled agency that was constantly under fire and under scrutiny. when i came back and the program was in full bloom, i felt like things had turned the corner but

these recent revelations of a massive reserve being spent that arguably did not exist made me realize that perhaps things are still troubled and we need to use our power of inquiry to figure out what happened and how we can make sure he does not happen again. particularly in light of a budget and legislative analyst report in 2013 that expressed concerns over a lack of bookkeeping standards and overall management as well as a 2017 controller report that expressed similar concerns. obviously the section eight program is near and dear to almost every member of this board and provides opportunities for people to be house in san francisco. so we all want to make sure that it is going as well as it can

and i think we also want to get to the bottom of how we want to maintain those vouchers and to that end, we have kate here. i want to start with barbara smith, our long-time acting director of the housing authority to help us understand what is happening and how it happened and what we know and what we need to do to protect our most vulnerable citizens. >> good afternoon supervisor peskin and supervisor brown. and members of the public. thank you for providing me with an opportunity to update you on the san francisco housing authority's distressful shortfall situation. i too am dismayed by this unacceptable shortfall situation that we are experiencing with the housing voucher program. this is particularly distressful after years of dedicated managers and staff digging our way out of trouble status and working our -- out to fully

utilize the program that funds to better serve our most vulnerable residents and expand our subsidy programs for thousands of households in need. i want to assure you that everything that we are doing, we are doing everything possible to work carefully with the mayor's office of housing and community development and the u.s. department of housing and development to guarantee that the affordable housing that our participant families and individuals rely upon and every community affordable housing partners are not adversely impacted by the situation. the mayor and o.c.d. have been extremely committed to doing whatever is necessary to fix with -- fix this enormous problem. while we have to measure future expansions, including prioritizing the hope s.f. project, we do not expect to pull back on existing commitments. please allow me to present an overview of where we are at the housing authority.

the housing authority establish close working relationships with the mayor's office of housing and community development. the san francisco controller's office, hope s.f., numerous other city departments over the past few years. we eliminated a $7 million budget deficit through cost-saving measures and concessions with bargaining units. we balance budgets through 2019. although administrative and public housing deficits are projected to return from 2020, due to the difference between it revenues we will be receiving and actual expenditures to maintain our remaining properties. we accelerated repairs and eliminated a 3,000 backlog of work orders for public housing residents and increased rent collections. we recruited and hired key housing choice vouchers, human resources, legal department

department and other management staff we have converted to a new software system and emphasis to a lead that specializes in public housing and housing choice voucher programs. this was no small task, i might add. i know the city has been going through conversion as well. it is an enormous challenge, particularly when you continue to be running an operation. provided, all employees with extensive training and regular performance reviews based on goals established through a five-year strategic plan with a primary goal of being a proactive partner within the san francisco community. we achieved a standard performance status for housing choice voucher. in 2016. we converted 3,500 public housing units to the rental assistance demonstration program with project-based voucher and rad subsidies combined. it is a $2.2 billion

public-private investment that community partners assisted us with. we increase the housing choice voucher utilization through collaborations with city partners. and the veterans administration as well. we became a housing choice voucher standard performer. in 2016, and maintained that status in 2017. after eight years of trouble designation and underutilized of the voucher funding. this was due to extraordinary work by our housing choice director and manager his. we are on track to continue that designation in 2018 based on a rigourous scoring system. despite these improvements, the h. c.v. program now faces an enormous funding shortfall. due to over the utilization of

the housing assistance payments for 2018 that will likely carry over into 2019. supervisor peskin asked about the status of the city services auditor division assessments that was done was conducted and released in a report in august 2017. that report concluded that the finance department was not able to perform critical functions due to staffing and management deficiencies. the status of ever lamenting the recommendations is 19 of the 26 recommendations have been implemented. five have been partially implemented and to have not been implemented. i will not go through the list item by item but i do want to point out with regard to shared services with the city, september 2017, we explored a shared services agreement for

management of the finance operations. in november 2017, the city and county of san francisco offer to recruit and hire a chief financial officer of the housing authority but no viable candidates were identified by february 2018. regarding timely filling a vacant fit positions, we have been successful with the exception of the finance department. we have filled timely through a network of recruitment services despite the challenges with the high cost of living, low unemployment rates and the limited compensation levels for fsh a. staff of continue to be a challenge. in march of 2018, the san francisco housing authority initiated procurement for professional consultant services to take over management of the finance operations.

b.d.o., a national firm was selected for a long-term contract in august of 2018. in september 2018, with b.d.o. in place, sfh eight terminated the director of finance and senior budget analyst in charge of the voucher management system reporting. >> you said that was in september cleat. >> that was in september 2018. just this past september. it took following that procurement policies for us to get the contractor in place. b.d.o. now oversees finance operations including management of the ms reporting. we are still struggling. until recently with the general fund thanked reconciliations. i asked the city auditor to help us with reconciliation of the full fiscal year 2017 reconciliations. she graciously accepted and this

was completed by june of 2018. under b.d.o.'s oversight, the general fund reconciliations are being completed. they have been completed through february 2018 and will be fully up-to-date by december. that is just a few highlights of the controller's office assessment. and our accomplishments in that area. we dramatically expanded the housing choice voucher programs by 4,641 households over the past five years. this provides more people with better housing. through mid-2017, we urged the housing authority to increase the overall -- i'm sorry. thank you. you are keeping up with that. to increase the overall housing choice voucher program utilization. get its funds under contract, avoid recapture of its reserves and serve more people.

reserve estimates at the beginning of calendar year or voucher program is on a calendar year. there were some errors in our report were -- our reporting his the actual account ended up being $28.4 million for calendar year 2018 expenses. that is the reserve amount. 3,500 public housing units were rescued from chronic underfunding and demonstrated a project-based voucher subsidized and community partner owned housing with services for residents. beginning in calendar year 2015 and 2016. 1141 project-based vouchers and vouchers were committed primarily in 2017 for new affordable housing, city funded local operating subsidy programs , which were previously funded by the city.

they picked up the subsidies to provide additional funding. they serve the formerly homeless that housing for veterans. it set us out -- set aside moving on initiative vouchers out of housing with supportive services. freeing up housing for homeless and set aside vouchers for families with minor children living in s.r.o. these are some of the things that we have been able to support with the funding that we thought we were able support with the funding we had available. in march and april 2018, -- >> that is all federal funding? >> yes. all federal funding. >> in march and april 2018, we began to question the accuracy of the custom two-year tool.

a product that was developed a forecast housing choice voucher and housing assistance payment fund utilization, reserves and potential shortfall or negative balances. in march, we initiated procurement again. i mentioned this earlier for professional consultant services to take over management of the underperforming finance operations including management of the voucher management system reporting and the two-year tool. between march and august, the housing authority began to advise the city and community partners that there might be some shortfall in late 2018 or early 2019. >> one was that we. >> we beat -- we began to advise community partners that may be shortfall of funding. >> that was when? >> that was between march and august. we were still trying to update our two-year tool forecasting.

we have a complicated voucher program in san francisco and it is the two-year tool that helps housing authorities be able to determine whether or not they may be in shortfall at the end of the calendar year. the funding comes to housing authorities on a calendar year basis and then it is renewed for the following calendar year. >> i am aware of the fact that many housing authorities have a consistent shortfall at the end of the year and this is not uncommon and they basically bridge that until the new funding comes. that is my understanding. not anything of this magnitude. but when you advise the city in the march timeframe, who did you advise? >> we talked mostly with o.c.d. and hsh. this was just a casual kind of,

we might run out of funding by the end of the year and we might have to stop issuing vouchers. we might not be able to add additional project-based vouchers units. >> in other words, potrero and sunnydale we. >> not necessarily. we had to be -- we knew that we were starting to get near the end of our large reserve problem and we were becoming fully utilized. >> when you found out or you were told in march that there may be an issue, did you stop giving out vouchers? >> well, we were also in regular consultation with hud. we do meet with them monthly. we did talk with the field office about this. we were all looking at this two-year tool that was giving us erratic predictions.

h.u.d. actually said that they thought we could continue issuing 25 vouchers a month for the moving on initiative. i was between march and august where we were talking with them about that. had wanted us to be fully you develop -- for do you devised so we could -- fully you develop fully utilized. we were -- it is very obvious to us that if we miscalculate by a few percentage points of how much we will spend, we can end up with a large shortfall. h.u.d. does have funding, a limited amount of funding for shortfall situations. it is true that nine out of the 11 bay area housing authorities are in shortfall. they are regularly in shortfall and apply for shortfall funding. the other two housing authorities are moving on -- the moving initiative are moving to work and they are able to use their funds flexibly.

but you pointed out the magnitude is enormous with our program. our program is enormous for the magnitude of the shortfall is very large. >> i have another question. between march and april, you gave out about a hundred 50 vouchers and that had said to keep giving them out. >> twenty-five per month. >> between march and august. ok. since ped said keep giving them out and you should do that, is a head stepping up and going to pay for that we ? because they had asked you or suggested you should keep giving out vouchers after you have said you thought there was an issue. >> well, ultimately, it was our decision and h.u.d. was making -- giving us their advice or recommendation. i don't want to -- if they were

trying to help the housing authority fully utilize their funds. h.u.d. was basing their assessment on the housing authority's process two-year tool. our two-year tool had the finance department -- the finance department was not inputting data accurately. we have, because of the rad conversion of the lost projects and rent increases that landlord his request and are entitled to, we have an enormous number of retroactive rent payments that we have to make. if all the paperwork isn't in for something in the contracts artfully executed, some of those projects we are counting on getting rents back several months and in some cases back eight or nine or ten months. those increased costs were not reflected in the plain-vanilla two-year tool that we are using

in the products that had provides. we find we have to make a lot of manual adjustments to that tool to be able to be able to get reliable projections. so that was really the difficulty. the difficulty was with the housing authority's ability to tailor that tool to our programs and relying on projections that were not accurate. i do have someone from b.d.o. here. >> it seems like the problem was you thought you had $34 million but you only had $28 million. it starts cascading from their attack doesn't it? >> yes. >> here -- this is not a you got your conversation. this is pretty depressing all the way around.

if in 2017 the city said and you have identified that the finance department is the problem and by february 18, nobody can find -- where is the oversight were somebody says why kate we have a higher b.d.o., like two years ago. everybody knew that there was weakness. this is not a city agency. this is a weird thing for us. we do this all the time and say to the controller, what is happening in this shop or that shop? is not happening here. where is the oversight? you have a commission, right? do they ask these questions? how often do they meet? >> our commission meets regularly and they get detailed reports. reports are based on -- our commission, for the past year, we have been looking at ways to

have our finance operations, basically, completely revamped. we have been working on this for one option or another. one was to get another qualified chief financial officer in place and that didn't pan out. we then immediately started a procurement process which made things quite likely -- lengthy to get in a qualified consulting firm that has the capacities to manage these kinds of financial issues. so it took longer than we expected to get the right oversight in place. i think that, given the resources the city has, city resources and a closer relationship between the housing authority and the city is what is needed to increase the

capacity in that area and to provide the necessary oversight for those operations. >> this is going back to the oversight issue. so the website, because i looked on the website, it does not have any record of a meeting for the last year and a half. what you are saying that the website has not been updated? >> i go to the website regularly it does have, actually it does have every commission meeting. that has all the reports that are presented to the commission. the commission gets -- has standing committees for very detailed reporting and there are full commission meetings regularly. they are all on the website. it might be a little challenging to move her but it has commission -- it has commission as one of the headings on the website.

there has been strong oversight by the commission, but again, if the data is incorrect, that can distort what is going on. so i maybe want to briefly -- i briefly mentions the fact that there are retroactive payments and there is also a per unit cost in this two-year tool that had bases on looking at the average for all of the payments. that is another area in the two-year tool that has to be manually updated for the housing authority housing authority. because we have such a big gap between the subsidy levels for some programs versus a subsidy levels for other programs. the fair market rents in san francisco have had to be increased. we did a special market study to do that in order to keep

landlords in the program. that is another situation that h.u.d. has created. it is a gap between the funding we have available and the amount that we need to keep people in the programs. >> just so that is clear, i am actually looking at the website that has not been updated since april 11th 2017. i have just been informed that there is an old housing authority website that has not been updated for a year and a half and there is a new housing authority website. that is a little problem. [laughter] >> we are both right but they are on different websites which is not that hopeful. >> i think the old website is for historic information. you can be referred back. i don't know if you want more detail on that. >> no, i just want one website that has archival material so people like me who knows how to use the internet doesn't end up on the wrong website and not being able to find a year and a half or the notices.

>> good morning. i am an attorney for the housing authority and director of policy i was responsible for the old website. the new website is under the i.t. department. if you go to our website, under commission, you click on commission and meetings in all of our meetings are there. we have not had any complaints in the last year and a half since we switched to this new website. we were asked to the public to keep our old archive. we spent a significant amount of time archiving are documents ten years back to ensure people were aware of our history. we do believe that it is pretty substantial. all of our information is there. >> out of curiosity, your commissioners are appointed at how? >> they are appointed by the mayor. >> is at the same commission that is up on the website? there have been no changes? >> there are changes recently. we had two retirements and those are the two changes. we also recently, another

resident commissioner was sworn in. >> ok. the reason i am asking is when i went to the website, this is not a city agency, but it looks like the city. if you look at the roster of the commissioners, it is eight who's who of the city. it is amazing to me is amazing to me that people from -- with finance backgrounds and purchasing backgrounds would not have alerted everybody. and particularly the board of supervisors. the reason i say that is we do our budget here in july and to the extent that we would have known there might have been a significant cash call, we could have, as a policy matter, had a conversation in the budget process and instead, we learned about it in the newspaper in the middle of october that you guys knew about it in some form or

fashion until march. do we even know how much the deficit is yet? >> yes, we do. there has been a lot of work put into that. it seems to be about $25.9 million. that is the deficit. we do have $7 million for the housing authority and m. o.c.d. has committed to provide a loan to the housing authority and head is working to find shortfall money for the housing authority. >> so, we will talk to ms. miss hartley in a minute to, but as to real life and real-world impacts, what does that mean for projects that were stalled. what does it mean we. >> i will let her talk about that. i do want to say that we are

applying for shortfall funds. we should have had our two-year tool working and able to give us projections even as late as september when the head quality assurance division came in to review everything, it took them a while to identify what the shortfall was. they thought it may be anywhere -- this was in september. they thought it might be between $600,024,000,000. -- 600,000 and $24 million. >> did you contact the city? >> yes. we had already contacted the city. >> and you don't contact the legislative branch of government mo hcd? >> we do not have a formal relationship with the legislative branch of the city.

on october 16th, the mayor wrote a letter to h.u.d. and expressed how alarmed she was with the depth of the housing authority's financial distress and the program. while all good intentions to expand the program and serve more people, we served 4,600 more households. that does not, in any way give us reason for going over budget. so the mayor has committed to accelerate actions so we make sure that the residents are protected. we don't think that this shortfall is going to impact existing contracts that we have. but we are going to have to be careful going forward and make sure that we measure the funding that we have a very carefully

with the commitments we are making. >> in your experience, has had ever had this kind of shortfall? >> we don't know. h.u.d. has $75 million set aside for nationally for shortfall. and our shortfall is more than a third of that. we have a big ask for h.u.d. >> do you guys have annual audited financial statements? >> yes, we do. >> 2017 looked good. >> 2016 and 2017 did not identify any problems with the housing choice voucher payment. it did identify problems with the finance department operations. >> it just seems kind of mind-boggling that those kind of material weaknesses could be identified in 2016 and that this

problem could existing 2018. i don't know what to say. i don't want to pick on you. colleagues, do you have any questions? is the 29.5 million, has somebody independently verified that that is the right number? that is the real number? >> b.d.o., and i have joe here, the financial consultant. they have been working closely with h.u.d. there are a lot of variables that go into identifying the amounts. the amount has to be -- because we have commitments to projects that are coming online very slowly, rad properties come on in phases. they come on not always with the documentation that we need to be able to meet the h.u.d. requirements. that delays things further.

the projects that we took on, which were costing the city about $9 million a year are now in our budget at $12 million a year. we picked up those properties, but again, they are serving formerly homeless individuals and there is a lot of challenges getting documentation together and getting those projects online. so we ended up with an enormous amount of retroactive payments that aren't reflected in that two-year tool but are movements that we had to make. so working with h.u.d., all of our data had to be carefully reviewed and corrected. going back about three years. and then to determine our reserve balances and also all of our transactions had to be analysed to really look at what our expenses would be in november and december.

would we still have the same level of retroactive payments? what projects are coming online? there is a lot of things that go into getting the final number pinned down. >> i have another question. when do you think h.u.d. will give you the go if they will -- for the shortfall? do you have any predictions on how much that will be that they would give us? since they only have $75 million , do you think they will do four or $5 million? what are they saying? >> well, it has been an evolving number. i hesitate to say. we did have a conference call this morning. it seems as though they are coming up with more money than they originally thought they could. we will not know definitively for another week. >> is it a loan? >> know , it is not a loan. -- no, it is not a loan.

h.u.d. has increased our budget authority. by addressing this issue now, we end up starting out next year with a much higher budget authority then we have had previously. we have actually gone -- over the past five years, we have increased our funding at a time when it is difficult to get federal funding by about $89 million. we believe we may be able to increase the funding going into next year by an additional amount. it will help us maintain all of the housing that we have and we are also looking at how we can accommodate additional commitments, although we will have a tight budget for least a year or two, more than likely. we can't apply for shortfall funding. although we can next year. we certainly would not want to have that be a small amount and

it would have to be justifiable based on the market in san francisco. we expect our fair market rents -- or additional landlords may be asking for rent increases based on our payment standards. we want to keep them in our program as much as we can. if the landlords can forgo some of those rent increases, we would ask them to. i think next year will be challenging for sure. but it should level off over the following years. one of the conditions of h.u.d. providing funds is going to be a city assumption of responsibilities for the essential functions. once the housing authority has satisfied any required meet and

confer obligations with the labour organizations. >> in other words, the housing authority will become a city agency for all intents and purposes? >> will become part of the city in one form or another. that is one of the h.u.d. requirements for the shortfall funding. >> why has that not happened over our torturous history? >> well, i go back to hope six when we were trying to rebuild public housing sites and i would go to the city and i would say to rebuild the project, we have a gap and we need some funding. the response was, that is a federal program. that is not a city program. and this has evolved over the years. i think, absolutely over the past five years, having commissioners who have been with the city who are leaders in their departments, partly just the working relationship we have had with mohcd hcd, things have

improved dramatically in terms of a working relationship. it has not gone far enough, but years ago, the housing authority was considered to be a separate agency and i'm not sure how willing the city was to embrace the housing authority and all of its challenges. so this future could be a good thing all the way around for the housing authority and for the city. obviously, we have enormous resources. we serve over 12,000 households with our voucher program. and another 1400 at our remaining public housing sites. it is an enormous resource to continue to have -- house low-income people in san francisco and it is an important resource.

>> we all agree it is also important for that financial house to be in order. thank you. >> thank you. >> ok. >> i would like to ask kate hartley to come up. i hope she is still here. >> she is right behind you. >> i just want to say to you, thank you. i have worked -- i know supervisor peskin has worked a lot with the housing authority over the years and i definitely feel there is a huge difference of working in the last five years with the housing authority and the responsiveness to the things that our district has needed and our residents. i definitely want to thank the housing authority for their responsiveness and for really moving forward. thank you. >> thank you, supervisor. we have welcomed the supervisors wanting to work with us and wanting to have us be part of

the challenges and meeting the challenges that we all face here with a low income residents. >> thank you, barbara. ms. miss hartley. i know my colleagues want to wrap up so i will ask you a few short questions if they don't have -- they may have questions as well. every year we go through the budget process and every year we think we know what financial policies we are setting. it is always a little disturbing when -- an agency like yours, which always says they don't have enough money for small site acquisitions in the region the paper one day, wow, they have money to cover this shortfall and you said yourself, how in the heck, as the appropriators, does that happen? what trade-offs are being made, and what is being delayed? moreover, insofar as we are the

appropriators and the mayor proposes on the board disposes, we really should know in march 14 september that there could be a large cash call. we have two different relationships. one between the housing authority which is technically not a city agency, and the other within the city between the executive branch on the legislative branch. the bottom line is, we are learning about this after the fact. i. i'm not even sure how i can read in the newspaper that you've got 20 million bucks to spend. anyway. those are my questions. >> great, thank you, supervisor. i am very happy to be here to be able to address that question. first of all, as you know very well, the budget is comprised of multiple sources of funds that have their own sets of restrictions on them. so we are limited in the way in

which we can use funds depending on the type of project and where that money is coming from. we have been saying, indeed, that we have limited money for a new small programs and new land acquisitions and new construction. that is largely a function of the fact that our projections for our inclusionary housing fees and our job housing linkage fees for 18 and 19 have dropped off quite a bit. those are the funds that we use for small sites and we use for land acquisitions and we use for new construction projects. because of the drop off in market rate projects going forward to provide the in lieu fees, despite there having been entitled, the amount of inclusionary and jobs housing fees are lower, we now are really working hard to make sure that the pipeline projects that we have in place that need in the neighbourhood of 100-

$120 million can move forward to. which is why we are saying no to some projects now. as you know, our budget is complicated and it is multi year it is comprised of these different sources. that doesn't mean that other projects that the board has previously authorized come to a screeching halt. in 2016, the board approved the leveraging of the housing trust fund, $75 million in debt, $51 million of which would go to public housing revitalization. at that time, we were embarking upon rad which is a 2 billion-dollar transaction. it was on unprecedented in scope and risk. there were many times during those years where we thought that r.a.d. would fall apart. we had to put in our loan agreements. really unique language to say that if we did not deliver on resources, that developers could

walk away. we've never done anything like that. but the risks were so high. immediately out of the gate in the 51 million-dollar allocation , we spent about $21 million to get started and then we held reserve funds for permanent financing take out. and in case something went wrong because this was such a high risk proposition. so fortunately, as the r.a.d. project of phase one is complete , they have completed. they are very successful. we have all been at the grand openings and we are proud of that work and grateful to our nonprofit developer partners who did the hard work. we have avoided any major catastrophe that would have called upon those reserve funds. at the same time, the needs of people have accelerated. the habitability conditions are terrible in potrero and we want to make sure that our hope s.f.

projects move forward so we have been shifting the focus of the remaining housing trust fund money that was allocated to public housing to hope s.f. as the risk in r.a.d. has diminished. we had $20 million that we were intending to put into sunnyvale and potrero, emergency rehab needs for the board process authorization in 2016, and now we have this situation. so, in answer to your second question, we did not know -- we did not know the magnitude of the financial crisis. in march and april when the original shortfall noticing happened, h.u.d. staff were literally sitting side-by-side with housing authority staff, going through, line by line, the budget. the budgeting is extremely he so tarik. a normal accountant or finance

person cannot sit down and look at the voucher management system entries and look at this two-year utilization tool and say, i see the errors. it takes a very specialized knowledge base. so we weren't rat liens on the fact that h.u.d. was sitting with the housing authority and saying, you know, we urge you to continue issuing vouchers. >> i am with you on that -- that is why there is nine out of 11 agencies in the bay area that have a shortfall. we are used to that. that is not how you miscalculate your reserves by $6 million. that is just -- i mean, that is just been caught -- unconscionable. >> it was terrible incompetence. we know now on the part of the finance staff. i'm o.c.d. and the city staff have no way of checking that. we are reliant upon h.u.d. and

reliant upon the data we get from a separate, independent agency. and so, as h.u.d. moved forward and said, you rok, issue vouchers, we move forward too. so we feel that this is a very appropriate use of funds to protect tenants. that is to cover the housing assistance payments contracts for december of 2018 on these existing obligations. because what we have here is essentially the equivalent of a bankruptcy. >> kate, i am not disagreeing with you about the importance. what i am quibbling about is the fact that if the board of supervisors appropriated $51 million for certain uses and you want to spend them on other uses, i think that policy conversation is supposed to happen. i am trying to force the policy

conversation. i think that -- may be this is a question for the controller or the city attorney, you have to come back and say we would like to be appropriate these dollars to this. instead of what is happening, which is, hey, i am sitting on $30 million of contingency money i did not have to spend. i will spend it over here. i don't think it works like that >> i disagree with you that this use of funds is different than the original appropriation. it was for public housing revitalization and we are using these funds to protect the public housing revitalization in the form of the r.a.d. housing assistance payments contracts. because we cannot let those buildings go into default. that is what we are using those funds for. the original intent of the appropriation. >> they are not being used for tenant vouchers? >> and to protect the tenant -based vouchers, yes. but without this allocation of

funds to us, the projects cannot cover their december 2018 payments either. >> yeah,. i will take it off-line with your department and the controller in the city attorney 's office and we will read the language and decide. my larger point is, you have to keep the appropriators in the loop as a matter of practice and policy and good government. and that is part of the reason i i'm having this hearing today. i don't know if there are any other questions from this board. you want to have lunch and get on with your day instead of a three and half our special meeting and there are people here from the public would like to comment. i believe we have one really important question for the controller. i want to thank the budget and legislative analyst for being here. i don't know if she is still here but i don't think we need to rehash your 2013 report at this point. i do think there may be a role for the b.l.a. and controller's office relative to some real oversight, which clearly, i

don't think, no offence, i don't think there has been strong oversight or we would not be in this mess right now. to the extent that conditions coming from h.u.d. are that we take -- the city take over that there is a role for the controller's office and the budget and legislative analyst. and this board and making sure that it is taken over appropriately there may be a role for your department. here is my big question in the same vein to the controller's office you are mark. >> correct. >> i know one of the recommendations from the report is there a financial system mesh with ours. can you speak to that on the status of that as barbara spoke to? that is a critical step number 1 we cannot rely on their numbers right now because we cannot see

their numbers. >> i speak a little bit more. that was one of the recommendations that we let out back in 2017. we believe that if the san francisco housing authority leveraged the new system that we have, that it incorporates finance purchasing and human resources, that there will be some deficiencies. and i can -- it will connect the way they process things. from the staff is provided by the authority, i believe they have not implemented that. i know that they have been in dialogue with the city. >> but you have made that offer clear to them? >> correct. >> they have not yet availed themselves of it we? >> i will have the authority speak on that. >> in the list of recommendations, we did say that we have not implemented -- implemented that. we have worked with the city auditor on a num