>> the meeting will come to order. this is the may 18, budget and appropriations meeting. the meeting will come to order. this is the may 18 budget and appropriations meeting. i'm supervisor hillary ronen chair of the budget and appropriations committee and joined by committee members ahsha safai, connie chan and joined by others later. i would like to thank our clerk and sfgov tv for broadcasting the meeting. i want to apologize to all the departments for the delayed

start and thank you so much for being patient and so kind to us all. really appreciate you all. with that, mr. clerk, do you have any announcements? >> a friendly reminder to silence the public comment taken on this item on the agenda. that person will be commenting first. the public comment number is

415-655-0001, and enter the meeting i.d. of 2485 295 1638 and press pound twice. when connected you will hear the meeting discussions and will be muted and in listening mode only. when your item of interest comes up and public comment is called, for those joining us in person should line up to speak and those on sell phone should be added to speak and turn down the tv and all listening devices you are using. we will take public comment from those attending in person first and go to the public comment line. email them to myself to the budget clerk. and if you submit public comment via email, it will be forwarded to the supervisors and included as part of the official file. you may also send your written comments to u.s. postal service and to the office at city hall,

1 dr. carlton b. goodlett place. and madam chair, that concludes my comments. >> thank you, mr. clerk. please read items one through three. >> the contract amendment and arbitration board and retirement system. for fiscal years 2022 to 2023 and 2023 to 2024. and item 2 is the proposed budget and appropriation ordinance appropriating all estimated receipts and estimated

expenditures for said departments as of may 1, 2022 for fiscal years 2022 to 2023 and 2023 through 2024. and item three is a proposed annual salary as of may 20, 2022. members should call 415-655-0001 and the meeting i.d. is and dial star 3 to line up to speak. the system prompt will indicate that you have raised your hand. when the system indicates you have been unmuted, you may begin your comments. awe thank you so much. welcome to the first day of hearings on departmental budgets. each department will make a

5-minute presentation on the proposed budget and i have asked them to specifically discuss their staffing levels, va can sis and plan to fill vacancies. at the conclusion of the presentations we will hear public comment and continue these hearings to next week when we will hear reports from the budget and legislative analyst. with that, let's begin with the airport. we're going to go in alphabetical order through the departments. so congratulations for starting with a. >> i will try to set the pace. nice to be with you, members of the board, president walton. thank you for the opportunity to share the two-year budget. if we can get the presentation up on the screen please.

>> my apologist. i am trying to get it open correctly. okay. let's see. is it displaying correctly? >> we can see it.

it is not the full screen. >> i will work on that. >> if you could, next slide please. and most notably in the aftermath of the 9/11 and the dot com recession as well as sars, we certainly did from fiscal year 10 and were certainly challenging in fiscal 2020-and 21 and we look forward

to talking more about that and how we're performing. related to passenger traffic, we are seeing steady improvements as you can see and even for the months of most recently march and april, quite a bit of uptick. and what you see here is a reflection of how the virus was transmitted and either expanding or contracting as well as seasonality over the past two years. force fiscal year to date, we are at 58% of the pre-covid numbers through april. of that amount, 65% domestic has recovered and 35% international has recovered. i'll also say that over the last two months of stronger growth, we have seen about 50% inter national recovery which is a

really great indication. annual service payment is certainly an important aspect of our business as this committee is aware, 15% of our revenues that are correlated to traffic, passenger traffic, and go to the city's general fund every year. pre-covid, that number was approaching $50 million and we had been successful growing that number by over 6% a year over about 20 years. very precipitous drop obviously with the pandemic. we are forecasting $31 million for fiscal year 22 which is about $7 million over budget, which is also an indication of the recovery and they are highly subjective to passenger traffic, and we are concerning in our planning and our financial planning and our estimates.

next slide. to talk about the context of our budget, we see this as a slow, prolonged recovery we are anticipating for fiscal year 2023 to be below the covid levels and our priorities very much relate to safety and security of the airport and the interim strategic plan called recovery to resilience including the racial equity initiatives supporting our commission work force remaining competitive within our international airport gateway competition peer group and preserving our operating funds. next slide please. this slide gives an important representation of the two largest categories of our budget, debt service and the o&m

growth. and i will talk about investment we have made starting in the late 1990s including the program in right at the economic recession of 2007 with terminal two and the $8 billion program that we are 3/4 of the way through. important to understand how we have been able to underspend our budgets and i will also note that for fiscal year 20 with the first three months of the pandemic, we are able to reduce costs by about 400 million and we still are trending below about 100 million for our fiscal year 22 budget. and you can see for the 23-24

fairly modest growth with a number of the rbs for the growth in o&m and clearly a depiction of the restructuring of the debt and how that will play out in the next couple of years. next slide please. so here is the detail on the budget. it shows the increases that we expect debt service will ramp up and you saw previously. we have a large personnel budget and some expansion and we have a lot of work orders with other city departments around police services and fire services. next slide please. a snapshot of our budgets and our budget and our positions and you can see that we are anticipating about 24 positions in the proposed 23 budget and an

additional four in our 24 budget. our vacancy rate has gone up to about 21%. our historical average is more pre-covid historical average is about 11%. we have a total of 185 positions in various stages of recruitment and we anticipate being within the historical numbers. we have the customer care program to the volunteer program. and also we have our own guest services folks that support our passengers, and we offer

translation services to folks that don't speak -- that speak different languages. we have various means of feedback to the airport including our fly sfo website and including an airport director email that is used more frequently than i would like, but with the comments through that means as well with a dedicated staff really focused on serving the public and community types of impacts and around marketing efforts with how we support our work force. and last slide. and just we thought it would be helpful with a quick snapshot of the importance of sfo and we are the largest employer with 46,000 employees. 75% of those are bipoc

employees. sorry. one slide forward please. thank you. small businesses has always been a hallmark of sfo success as well. and 72% of the leases headquartered in san francisco. we had most of the concessions did close at the start of the pandemic but we are now 85% reactivated with our concessions. really a function of traffic returning and matching the concession offerings with the traffic levels to make sure there is successful revenues generated by the various businesses. $110 million of revenue generated from local owners. and we supported them throughout the pandemic with about 50 million of financial support and that has been very helpful and also benefitted the workers, and we required them if they access this financial support, 30% of their benefit had to go to the

workers themselves through health care or wages. and finally, construction. $950 billion of the work performed be i local business that is still even spended with a large proportion, 70 million in active construction work for local businesses. i thank you for your i feel sf is on a trajectory to continue and hope for a speedier recovery than what we planned for. awe thank you. i would be available to ask questions. >> thank you for modelling a quick presentation. colleagues, any questions? >> madam chair, i apologize for the interruption, but we are hearing that we might need to rebridge the line. we just need a really quick recess of maybe three to five minutes.

>> okay. let's do a 3-minute awe back in session. sorry about that interruption. i wanted to ask you a couple more questions about the vacancies. did you purposely keep more positions vacant during the pandemic in order to save money? or perhaps didn't need quite as big of staff because of the difference and just curious why the vacancy level went up so high. >> that is correct. we made that commitment early on to the staff of no layoffs but we asked a lot of them and we wouldn't be back filling and we staffed to support the level of employment that we have and that was the purpose.

>> got it. and what is for the upcoming year, it sounds like you have a plan to hire 185 positions by the end of 23 to get back to around 15% vacancy. is that the amount of vacancy that you basically keep open for attrition and that you budget for vacancy. >> the adrigs budget is 6%, so it's not -- it is quite a bit lower than what we would budget for attrition. so that difference between 15% vacancy and the attrition that you are budgeting for, what happens to the funds?

>> those funds we experience an underrun in personnel costs, pre-covid we did. that gets reconciled in the rates and charges and they go into the costs with the the rate making with the flexibility with deferred aviation revenues that we can balance into the rate base and sfo is incredible and

my mom said the same thing. sfo is so pleasant. it is so different from other airports. off one of the general statements for the different departments coming together is what was highlighted and focused and concerned on funded but vacant position and how that impacts the service delivery for the city. you already answered that question, but want to give you a minute or two to talk about the internship and training program as it ties into your commitment to equity and diversity and hiring. with a history of internship and the first year with opportunities for all with the

business partners, we had 30 # o students that were able to benefit from the work and you see that in the budget. and career pathways is number of them and with the to gain experience in hr and analyst jobs and in 911 operator and the airfield is great communities for the local community. we advance them that way. we have a strong engineering architecture summer program and we have been successful in bringing those folks in. >> an i want to state for the record that i was disappointed -- not in you all, but disappointed that city college chose to eliminate the

instructor position which was a pipeline for job opportunities at sfo. so something we'll be watching and hopefully have that resurrected and i know we talked about that. >> if i could offer one more note, i totally agree and we have an important initiative around our sfo academy approach that would bring back the a&p program in the future and train for jobs that the service providers are critically short of. we do have an initiative to provide a broader set of activities for the community. >> an i understand from speaking with you that the areas with the

highest vacancies are building trades, labor, etc., is that right? >> yes, sir. we are work on the initiative on the hiring hall and apprenticeship program and staff of the positions quicker. >> thank you, madam chair. >> president walton. >> thank you, chair ronen. a quick question because i know you because of an ofa and pathways through that program. >> we have identified 30 positions and reaching it to get more traction with them as well. and the pipeline work with four to six in career pipelines and the engineering and those are probably the three big categories of internships we'll

be offering. 68 this year and up to 88 next year. >> how much of that is privately funded? >> private money? >> you are reaching out to the private partners. >> this is all airport number. that does not not reflect anything else. >> thank you. member chan? >> a brief question about contract management to kind of understand contract including con vegss, capital improvement and professional services in the context of lbey and what is your general approach and knowing that we are -- that the airport is going through a tough time. nonetheless, kind of projection around contract management. >> thank you, supervisor.

and we have had great support throughout the crisis of so many of our vendors and contracted the companies. we asked for a voluntary 5% reduction in management fees and almost all the firms offered that. there is an executive directive that will sunset in the future. i don't have a timing yet on that. we had a lot of our firms take advantage of the $50 million of the stimulus money we were able to offer them. the suspension of the mag and it defines how the mag gets reinstated. we will have to be at 80% of the base year passenger numbers before we can re-instate the mag.

so it is we don't anticipation we will be at 80% for a year and a half and right now we are going through the calculus of how long does that $50 million last in support of these small business concessioners. >> thank you so much. we will see you next week. >> next we'll hear from the board of appeals. >> one moment. if you could allow me to share.

>> someone gave me a share function. >> the issuance of denial, suspension, revocation and modification of city objects and the appeal volume is very low for the 10-year average of 164 appeals for this year and we

anticipate 112 appeals. with that in mind, they are primarily from the department of building inspection with planning department approval. those make up the bulk of the work and a significant number from public works and mainly tree removal orders. 97% of our revenue budget is imposition on surcharges from permits and 3% from filing fees. so every year rates are evaluated by the controller's office and the rates are proportional to percentage of cases originating from each department and they are just as needed -- they are adjusted as needed. you can see here our budget summary. we are requesting an increase for fiscal year 23 due to mainly anticipated increase in costs of our interdepartmental work orders. and we anticipate that will go down in fiscal year 24.

as well as interdepartmental work orders and infrastructure costs such as rent. we have five commissioners positions, a department head, one legal assistant, and three legal process clerks. we currently have one vacancy. and this is the slide addressing chair ronen's question. we only have one vacancy. the 8106 position has been vacant since july 2021 and it hasn't impacted our services at all due to the reduced volume of appeals. we just would like to hold on to that because the volume of appeals fluctuates and we are providing excellent service to the public. so moving along, here are our

surcharge rates that we propose increasing two surcharge rates. those imposed on planning department actions and dbi permits. we propose increasing the purr charge for those two departments and we propose some reductions for other departments. [please stand by]