Transcripts For SFGTV SFMTA 20240705 : vimarsana.com

Thats very meaningful to this board and staff and we had a Community Panel advise us on the topic of trust and government. And i personally have taken away very many meaningful remarks and advice from that panel of community members. So i hope to be able to do more topics like that in the future since we have to adopt the budget in april. That is what were focused on today. And uh, vice chair karina and i very much want to make sure that we center time throughout 2024 on topics like trust and government, topics that are meaningful to you. And so we want to make sure that you have a chance to share with us today your priorities. So im going to ask you, as we go through the presentations today to think about three questions. And we have set aside meaningful time in the agenda to be able to discuss these colleagues. These questions are in your timed agenda, but lets read them out loud for everyones benefit. First is what information do you all need as Board Members to be able to adopt the budget . In april . What are your top three priorities that you want to share with the public and the staff in the next year . In 2024 . And what are your top three priorities for the next 5 to 7 years . And this is to give staff a little bit of runway as we jointly plan for the future into how they ought to be prioritizing their work. Um, again, a couple logistical notes. We have worked with staff on the agenda today, and in response to feedback in the past, weve tried to make significant time for board member discussion because, of course, we are only able to talk to one another in these type of forums. Um, so we will stop throughout the day in the presentation for your comments. And i do encourage open dialog to signal youd like to speak just please put your name card verdict and vice chair will look out for those. Um, and then last piece of logistics is we do have a timed agenda. We are going to be aiming for. So we can kind of get out of here, hopefully by five, five. Um, we wont stick to it precisely, im certain. But i did want to share with you all so you have the time to agenda were sort of aiming at. So hopefully you can all keep that in mind and be be mindful, um, as were moving through so we can kind of keep on time. So thank you in advance for all of your, uh, participation. And i would like to hand it off to our hardworking Public Servant director of transportation jeff tumlin. Actually chair ekin, may i call the roll before we get started . Yes. Thank you, director hemminger here. Hemminger director henderson here. Henderson present. Director hinsey. Present hinsey. Present. Director. So here. So present. Director tarlov. Here. Tarlow. Present. Director katina. Here. Katina. Present chair. Ekin. Ekin present. For the record, i do know that director hinsey is attending the meeting remotely. Director hinsey is reminded that she must appear on camera throughout the meeting and in order to speak or vote on any items, i would like to also make the announcement. Item three that the ringing or use of cell phones and similar sound producing Electronic Devices are prohibited. At this meeting. The chair may order the removal from the meeting room any person responsible for the ringing or use of a cell phone or other similar sound, producing electronic device. Uh, now were on item number four. Welcome, chair. Ekin which is done. And also the introduction from our director of transportation. Good morning everyone. Uh, im jeff tumlin. Im the executive director of the sfmta and im looking forward to a whole day talking about budget, arguably, this is the most boring work that we do as an agency. And it is also the most important, uh, particularly in a tough budget year, which we continue to be in in order to make decisions about limited resources in a tough budget year, we again, have to be very clear about what our values are. And so im incredibly grateful to our entire team whove had months of conversations about what on earth do we do with this situation . And i am particularly grateful to members of the community, particularly, um, uh, advocacy organizations and folks who are in the room with us today and listening and online for your contributions and helping us figure out how do we allocate our limited staff time and increase only limited resources in order to serve the highest public good . And in order to set us up for success and in, um, uh, in what will be a big theme of today, which is were were kind of sort of stable for years one and two of this budget. But then the bottom falls out in year three, and much of the sub text of our conversation today is about how do we strategically set us up, um, to not face complete disaster in year three, but instead have an achievable plan that likely relies on getting a two thirds vote from san franciscans . Uh, in order to close that gap and actually deliver on what we all want to see. So were going to be moving back and forth between been short terme spreadsheet. How do we balance the current budget and long terme thinking about how do we actually address this once and for all . The deep underlying structural problems that this agency faced before covid and that worsened by an order of magnitude as a result of the long terme economic changes wrought by covid. So with that, um, let me review what weve done over the last year, because the team, despite everything that we faced, um, actually did a lot. Um, next slide. We all its sort of hard to remember, but but in 2023, we opened the central subway. Um, that was obviously something that we had been working on for a long time. I cant take credit for it. I just happened to be the guy who was here when the thing opened. Um, but i want to remind us all that the central subway has been successful in one of its most important key goals, which is linking the whole east side of the city from viz valley and bayview to mission bay into union square, and particularly chinatown and some of the work that im most proud of is the work that the teams have done, letting Chinatown Community based organizations have a strong sense of ownership of chinatown rose park station almost every single weekend there are events in the plaza at chinatown, rose park station, and increasingly the community is delivering on the program. The art inside the station itself. Um, this is really important work to me. And i think is a model for other stations. Like hopefully what we will do. Um, as part of the harvey milk plaza work, um, in the castro next up, we also in 2023, dealt with a complete insanity of apec. Uh, theres a lot to be said about apec, but one of the things about apec that most impressed me is the degree of collaboration across all of our teams. Apec was assigned to me that the work weve been doing on improving the Agency Culture was paying off. All of our people. Problem solved in the field. They understood how to take risks. We got very, very specific call outs from the United States secret service thanking us for actually understanding how San Francisco works and keeping them out of trouble. Um, our parking control officers who were, of course, working 16 hour shifts, were also thrilled to be doing this work because it was like the olympics of parking control, like every thing, every plan that we had fell apart and our teams all had to just figure it out in the field. As conditions change and relative to all of these heads of state from all over, so it was a great sign of some of the success of our cultural change. Next slide. We also have been working really, really hard at making muni fast, frequent, reliable, clean and safe. As you know, we made substantial progress this year again in expanding our transit only lane network as well as transit priority treatments. And while San Francisco remains one of the cities in the world with the highest rate of work from home, our muni ridership is growing faster than people are returning to work in part because weve been making muni fast, frequent, reliable, clean and safe. And so our overall ridership is up 71 of precovid. But notice the weekend ridership and even more importantly, go into the detailed ridership data at sfmta comunidad data and look at the ridership of our lines that dont go downtown. We have at least half a dozen lines that are way, way over their precovid ridership and depending upon the day of the week, by up to 130 of precovid ridership, particularly on the 49 venice, the 22 fillmore, the 14 mission and the nine san bruno. All four lines that weve made substantial investments in improving what our customers want and those improvements are paying dividends and speak to the theme that weve been working on for the last four years, which is making getting more out of less, making the service more efficient, and really focusing on what the customer needs. Next slide. Weve also spent a lot of time focused on safety. We have been spending the last decade trying to remove all of the state and federal legal and regulatory obstacles that drive such terrible safety outcomes in the United States. So weve worked at changing the way that speed limits are set so that we can actually prioritize safety like a normal country, as opposed to prioritizing, um, motorist convenience. Uh, and so were currently leading the state in implementation of ab 43, which allows us an unlimited number of streets to reduce the speed limit to 20 miles an hour. Weve added 43 miles of streets with a 20 mile an hour speed limit. And we are working on the next round of those improvements right now. As a result of everything that were doing. Uh, that is within our ability and our resources. Were also being incredibly successful, more successful than any other city in the United States at reducing traffic fatalities. There is need to do a lot more, and we are committed to doing more. But i also want to make sure that we take the time to celebrate the success of the incredible work that the staff has done. Uh, we had, um, 39 traffic fatalities in 2022. That number fell to 26 in 2023. Um, thats a 33 decrease. And while there was a tragic fatality in the presidio, uh, among bicyclists, um, in 2023, there were zero fatalities for bikes, uh, bicyclists on San Francisco city streets in 23. Um, a, uh, and the trend line has been about a 50 decrease. Um, we are however, as you know, seeing a significant increase in problems like, uh, people stealing vehicles and then driving insanely or people who are facing Mental Health or addiction issues in cars and then, uh, driving at high speeds into fixed objects. We are committed to continuing to do the work necessary to bring our traffic violence rate down to zero. But i do want to acknowledge, um, the successful work that we have done. Next slide. Um, were also working, for example, on, uh, partnering with Transportation Technology companies in order to advance safety. Um, scooters are a funny , uh, interesting model for how we try to support innovation in the Transportation Technology sector by also, but also being really clear about the unintended negative consequences that they foster. And so our, uh, tax and Accessible Services division regulates scooters in San Francisco and has been focused on dealing with some of the problems that were facing, like sidewalk riding or having two people riding on a scooter or going too fast and, um, those regulatory approaches that they have imposed are actually retrieving remarkable success. And they are leading the entire National Scooter industry to adopt similar practices. Next slide. Um, we also opened the bayview Transportation Resource Center in summer of 2023. Um, this is in partnership with the Community Youth center of San Francisco. And this is to make sure that all san franciscans have ready access to their full array of transportation services, that you dont have to trek down to downtown San Francisco, that you can get your discount cards and other other Services Available in your neighborhood. Uh, particularly in bayview. Next slide. Um, weve also been, of course, uh, dealing with a lot of issues around Autonomous Vehicles in San Francisco. This obviously is rapidly evolving. Um, but we are doing the quiet and necessary staff work, collaborating with the regulatory agencies in the State Government and the federal government in order to make sure that we rapidly take advantage of the upside of this new technology while also keeping our eyes wide open about unintended negative consequences and insisting upon currency and data around those unintended negative consequence aces, while establishing a regulatory level Playing Field that allows the best performers to thrive and the worst performers to be limited in their ability for endless expansion without regard to consequences. Um, more on this topic in the coming year. Uh, next slide. Uh, weve also, of course, uh, been working hard at all of our regular functions. We provided, um, more than half a million paratransit trips to older adults and people with disabilities all over San Francisco, many of them in partnership with our local taxi companies. Uh, weve also next slide continued to make incremental improvements, uh, in the bikeway system, bringing the total of bikeways up to 467 miles with 45 miles of separated bikeways. And very importantly, weve been taking the time to do the critical staff work on the active communities plan so that we can come out the gate swinging in 2025. Um, with a whole variety of other improved routes. And as well talk about, i think, at our next Board Meeting, were about to make some announcements about that, some major, um, uh, gap closure projects, including some Ribbon Cutting events that you all will be invited to next slide. Uh, another, uh, program that we, uh , implemented in response to community desire is our text before tow program. We hate having to tow vehicles. We lose money on vehicle tows and our customers hate it. So we have been able to get over 16,000 people, uh, enrolling their vehicles in the text before tow, uh, 130 uh motorists receive text notifications prior to the tow truck being dispatched. Um allowing more than half of those vehicles to not in fact be towed. People got and out and moved their car, which is our desired result on next slide. Um, and we trained more than 600 staff people, uh, on Racial Equity. Uh, uh, along with some more intensive training for a subset of our staff whose job it is now to bring those trainings out to their individual divisions. So well talk a little bit more about, um, culture, uh, change and the work of our office of Racial Equity and belonging. Um, later there, um, but before, before, uh, i talk more about the future, i want to show a great new video, um, about some of our other accomplishments. Are you ready to cue that up . Um, this video was created by edward wright. Um, in our Strategic Communications team. Sure. How do you feel . Oh, yeah. Please. Your mic, the microphone. Yeah, yeah. Sorry. I think i heard the question. Um, what is the, uh. Well, you can simply google sfmta text puerto and it comes right up on our website. Theres a little form you can fill it out and enter your cell phone number and your license plate. And good to go. Lets do it. Sure, i can also keep going. Were almost there. Okay how did technical issues today . All right. Lets start from the beginning. Alex can you send laptop to write laptop . Muni to me is to keeping us all in touch with each other. You know, i dont need a car. I got a big old limousine right there, 40 foot. No matter how you choose to get around San Francisco, you should be able to do that safely. Using some of our 75 miles of transit lanes. Muni is for all. Im really proud of how many times and how many ways weve changed our Service Planning process and delivery to be really focused on connecting neighborhoods and improving opportunities. Since the pandemic, weve had to become very nimble, delving much deeper into the data, pinpoint the exact times when were seeing crowding on specific lines. We are reducing travel time. Have fast forward program. This last year, weve gotten five projects off the ground and running. In 2023, we hired 1051 employees. We trained over 75 supervisors and managers about how our programs work because theyre the ones who typically interact with their employees every single day. They completed a significant security upgrades, and a lot of our downtown garages, which has led to a 50 reduction in vehicle break ins in those garages. Successfully transitioning the shared spaces, parklet and roadway Closure Program to a permanent program, develop a new special event parking rate system. Completed the deployment of more than 2400 pay stations, covering roughly 12,500 spaces across the city, hosted for over 300 special events and street closures in 2023. Were offering people more options and more ways for them to get around the city just secured 8 million in federal funding to make continuous improvements in the tenderloin. We launched our slow streets mural Pilot Program. Were continuing to expand bike share throughout the city into golden gate park, as well as deeper into the sunset. 34 more new stations that weve installed in 2023. With this fixed week in a ten day period, we actually do maybe about three months of work, and we did a lot of maintenance that we couldnt have done, and it helps a lot with the reliability. To. That was a big boost to the whole subway system. We actually had our very first muni safe day out to have real conversations with our customers about security on muni, some of the things that they experienced, and let them know that some of the things that we were working on already launched our Safety Equity Initiative focuses on harassment on Community Panel<\/a> advise us on the topic of trust and government. And i personally have taken away very many meaningful remarks and advice from that panel of community members. So i hope to be able to do more topics like that in the future since we have to adopt the budget in april. That is what were focused on today. And uh, vice chair karina and i very much want to make sure that we center time throughout 2024 on topics like trust and government, topics that are meaningful to you. And so we want to make sure that you have a chance to share with us today your priorities. So im going to ask you, as we go through the presentations today to think about three questions. And we have set aside meaningful time in the agenda to be able to discuss these colleagues. These questions are in your timed agenda, but lets read them out loud for everyones benefit. First is what information do you all need as Board Members<\/a> to be able to adopt the budget . In april . What are your top three priorities that you want to share with the public and the staff in the next year . In 2024 . And what are your top three priorities for the next 5 to 7 years . And this is to give staff a little bit of runway as we jointly plan for the future into how they ought to be prioritizing their work. Um, again, a couple logistical notes. We have worked with staff on the agenda today, and in response to feedback in the past, weve tried to make significant time for board member discussion because, of course, we are only able to talk to one another in these type of forums. Um, so we will stop throughout the day in the presentation for your comments. And i do encourage open dialog to signal youd like to speak just please put your name card verdict and vice chair will look out for those. Um, and then last piece of logistics is we do have a timed agenda. We are going to be aiming for. So we can kind of get out of here, hopefully by five, five. Um, we wont stick to it precisely, im certain. But i did want to share with you all so you have the time to agenda were sort of aiming at. So hopefully you can all keep that in mind and be be mindful, um, as were moving through so we can kind of keep on time. So thank you in advance for all of your, uh, participation. And i would like to hand it off to our hardworking Public Servant<\/a> director of transportation jeff tumlin. Actually chair ekin, may i call the roll before we get started . Yes. Thank you, director hemminger here. Hemminger director henderson here. Henderson present. Director hinsey. Present hinsey. Present. Director. So here. So present. Director tarlov. Here. Tarlow. Present. Director katina. Here. Katina. Present chair. Ekin. Ekin present. For the record, i do know that director hinsey is attending the meeting remotely. Director hinsey is reminded that she must appear on camera throughout the meeting and in order to speak or vote on any items, i would like to also make the announcement. Item three that the ringing or use of cell phones and similar sound producing Electronic Devices<\/a> are prohibited. At this meeting. The chair may order the removal from the meeting room any person responsible for the ringing or use of a cell phone or other similar sound, producing electronic device. Uh, now were on item number four. Welcome, chair. Ekin which is done. And also the introduction from our director of transportation. Good morning everyone. Uh, im jeff tumlin. Im the executive director of the sfmta and im looking forward to a whole day talking about budget, arguably, this is the most boring work that we do as an agency. And it is also the most important, uh, particularly in a tough budget year, which we continue to be in in order to make decisions about limited resources in a tough budget year, we again, have to be very clear about what our values are. And so im incredibly grateful to our entire team whove had months of conversations about what on earth do we do with this situation . And i am particularly grateful to members of the community, particularly, um, uh, advocacy organizations and folks who are in the room with us today and listening and online for your contributions and helping us figure out how do we allocate our limited staff time and increase only limited resources in order to serve the highest public good . And in order to set us up for success and in, um, uh, in what will be a big theme of today, which is were were kind of sort of stable for years one and two of this budget. But then the bottom falls out in year three, and much of the sub text of our conversation today is about how do we strategically set us up, um, to not face complete disaster in year three, but instead have an achievable plan that likely relies on getting a two thirds vote from san franciscans . Uh, in order to close that gap and actually deliver on what we all want to see. So were going to be moving back and forth between been short terme spreadsheet. How do we balance the current budget and long terme thinking about how do we actually address this once and for all . The deep underlying structural problems that this agency faced before covid and that worsened by an order of magnitude as a result of the long terme economic changes wrought by covid. So with that, um, let me review what weve done over the last year, because the team, despite everything that we faced, um, actually did a lot. Um, next slide. We all its sort of hard to remember, but but in 2023, we opened the central subway. Um, that was obviously something that we had been working on for a long time. I cant take credit for it. I just happened to be the guy who was here when the thing opened. Um, but i want to remind us all that the central subway has been successful in one of its most important key goals, which is linking the whole east side of the city from viz valley and bayview to mission bay into union square, and particularly chinatown and some of the work that im most proud of is the work that the teams have done, letting Chinatown Community<\/a> based organizations have a strong sense of ownership of chinatown rose park station almost every single weekend there are events in the plaza at chinatown, rose park station, and increasingly the community is delivering on the program. The art inside the station itself. Um, this is really important work to me. And i think is a model for other stations. Like hopefully what we will do. Um, as part of the harvey milk plaza work, um, in the castro next up, we also in 2023, dealt with a complete insanity of apec. Uh, theres a lot to be said about apec, but one of the things about apec that most impressed me is the degree of collaboration across all of our teams. Apec was assigned to me that the work weve been doing on improving the Agency Culture<\/a> was paying off. All of our people. Problem solved in the field. They understood how to take risks. We got very, very specific call outs from the United States<\/a> secret service thanking us for actually understanding how San Francisco<\/a> works and keeping them out of trouble. Um, our parking control officers who were, of course, working 16 hour shifts, were also thrilled to be doing this work because it was like the olympics of parking control, like every thing, every plan that we had fell apart and our teams all had to just figure it out in the field. As conditions change and relative to all of these heads of state from all over, so it was a great sign of some of the success of our cultural change. Next slide. We also have been working really, really hard at making muni fast, frequent, reliable, clean and safe. As you know, we made substantial progress this year again in expanding our transit only lane network as well as transit priority treatments. And while San Francisco<\/a> remains one of the cities in the world with the highest rate of work from home, our muni ridership is growing faster than people are returning to work in part because weve been making muni fast, frequent, reliable, clean and safe. And so our overall ridership is up 71 of precovid. But notice the weekend ridership and even more importantly, go into the detailed ridership data at sfmta comunidad data and look at the ridership of our lines that dont go downtown. We have at least half a dozen lines that are way, way over their precovid ridership and depending upon the day of the week, by up to 130 of precovid ridership, particularly on the 49 venice, the 22 fillmore, the 14 mission and the nine san bruno. All four lines that weve made substantial investments in improving what our customers want and those improvements are paying dividends and speak to the theme that weve been working on for the last four years, which is making getting more out of less, making the service more efficient, and really focusing on what the customer needs. Next slide. Weve also spent a lot of time focused on safety. We have been spending the last decade trying to remove all of the state and federal legal and regulatory obstacles that drive such terrible safety outcomes in the United States<\/a>. So weve worked at changing the way that speed limits are set so that we can actually prioritize safety like a normal country, as opposed to prioritizing, um, motorist convenience. Uh, and so were currently leading the state in implementation of ab 43, which allows us an unlimited number of streets to reduce the speed limit to 20 miles an hour. Weve added 43 miles of streets with a 20 mile an hour speed limit. And we are working on the next round of those improvements right now. As a result of everything that were doing. Uh, that is within our ability and our resources. Were also being incredibly successful, more successful than any other city in the United States<\/a> at reducing traffic fatalities. There is need to do a lot more, and we are committed to doing more. But i also want to make sure that we take the time to celebrate the success of the incredible work that the staff has done. Uh, we had, um, 39 traffic fatalities in 2022. That number fell to 26 in 2023. Um, thats a 33 decrease. And while there was a tragic fatality in the presidio, uh, among bicyclists, um, in 2023, there were zero fatalities for bikes, uh, bicyclists on San Francisco<\/a> city streets in 23. Um, a, uh, and the trend line has been about a 50 decrease. Um, we are however, as you know, seeing a significant increase in problems like, uh, people stealing vehicles and then driving insanely or people who are facing Mental Health<\/a> or addiction issues in cars and then, uh, driving at high speeds into fixed objects. We are committed to continuing to do the work necessary to bring our traffic violence rate down to zero. But i do want to acknowledge, um, the successful work that we have done. Next slide. Um, were also working, for example, on, uh, partnering with Transportation Technology<\/a> companies in order to advance safety. Um, scooters are a funny , uh, interesting model for how we try to support innovation in the Transportation Technology<\/a> sector by also, but also being really clear about the unintended negative consequences that they foster. And so our, uh, tax and Accessible Services<\/a> division regulates scooters in San Francisco<\/a> and has been focused on dealing with some of the problems that were facing, like sidewalk riding or having two people riding on a scooter or going too fast and, um, those regulatory approaches that they have imposed are actually retrieving remarkable success. And they are leading the entire National Scooter<\/a> industry to adopt similar practices. Next slide. Um, we also opened the bayview Transportation Resource Center<\/a> in summer of 2023. Um, this is in partnership with the Community Youth<\/a> center of San Francisco<\/a>. And this is to make sure that all san franciscans have ready access to their full array of transportation services, that you dont have to trek down to downtown San Francisco<\/a>, that you can get your discount cards and other other Services Available<\/a> in your neighborhood. Uh, particularly in bayview. Next slide. Um, weve also been, of course, uh, dealing with a lot of issues around Autonomous Vehicles<\/a> in San Francisco<\/a>. This obviously is rapidly evolving. Um, but we are doing the quiet and necessary staff work, collaborating with the regulatory agencies in the State Government<\/a> and the federal government in order to make sure that we rapidly take advantage of the upside of this new technology while also keeping our eyes wide open about unintended negative consequences and insisting upon currency and data around those unintended negative consequence aces, while establishing a regulatory level Playing Field<\/a> that allows the best performers to thrive and the worst performers to be limited in their ability for endless expansion without regard to consequences. Um, more on this topic in the coming year. Uh, next slide. Uh, weve also, of course, uh, been working hard at all of our regular functions. We provided, um, more than half a million paratransit trips to older adults and people with disabilities all over San Francisco<\/a>, many of them in partnership with our local taxi companies. Uh, weve also next slide continued to make incremental improvements, uh, in the bikeway system, bringing the total of bikeways up to 467 miles with 45 miles of separated bikeways. And very importantly, weve been taking the time to do the critical staff work on the active communities plan so that we can come out the gate swinging in 2025. Um, with a whole variety of other improved routes. And as well talk about, i think, at our next Board Meeting<\/a>, were about to make some announcements about that, some major, um, uh, gap closure projects, including some Ribbon Cutting<\/a> events that you all will be invited to next slide. Uh, another, uh, program that we, uh , implemented in response to community desire is our text before tow program. We hate having to tow vehicles. We lose money on vehicle tows and our customers hate it. So we have been able to get over 16,000 people, uh, enrolling their vehicles in the text before tow, uh, 130 uh motorists receive text notifications prior to the tow truck being dispatched. Um allowing more than half of those vehicles to not in fact be towed. People got and out and moved their car, which is our desired result on next slide. Um, and we trained more than 600 staff people, uh, on Racial Equity<\/a>. Uh, uh, along with some more intensive training for a subset of our staff whose job it is now to bring those trainings out to their individual divisions. So well talk a little bit more about, um, culture, uh, change and the work of our office of Racial Equity<\/a> and belonging. Um, later there, um, but before, before, uh, i talk more about the future, i want to show a great new video, um, about some of our other accomplishments. Are you ready to cue that up . Um, this video was created by edward wright. Um, in our Strategic Communications<\/a> team. Sure. How do you feel . Oh, yeah. Please. Your mic, the microphone. Yeah, yeah. Sorry. I think i heard the question. Um, what is the, uh. Well, you can simply google sfmta text puerto and it comes right up on our website. Theres a little form you can fill it out and enter your cell phone number and your license plate. And good to go. Lets do it. Sure, i can also keep going. Were almost there. Okay how did technical issues today . All right. Lets start from the beginning. Alex can you send laptop to write laptop . Muni to me is to keeping us all in touch with each other. You know, i dont need a car. I got a big old limousine right there, 40 foot. No matter how you choose to get around San Francisco<\/a>, you should be able to do that safely. Using some of our 75 miles of transit lanes. Muni is for all. Im really proud of how many times and how many ways weve changed our Service Planning<\/a> process and delivery to be really focused on connecting neighborhoods and improving opportunities. Since the pandemic, weve had to become very nimble, delving much deeper into the data, pinpoint the exact times when were seeing crowding on specific lines. We are reducing travel time. Have fast forward program. This last year, weve gotten five projects off the ground and running. In 2023, we hired 1051 employees. We trained over 75 supervisors and managers about how our programs work because theyre the ones who typically interact with their employees every single day. They completed a significant security upgrades, and a lot of our downtown garages, which has led to a 50 reduction in vehicle break ins in those garages. Successfully transitioning the shared spaces, parklet and roadway Closure Program<\/a> to a permanent program, develop a new special event parking rate system. Completed the deployment of more than 2400 pay stations, covering roughly 12,500 spaces across the city, hosted for over 300 special events and street closures in 2023. Were offering people more options and more ways for them to get around the city just secured 8 million in federal funding to make continuous improvements in the tenderloin. We launched our slow streets mural Pilot Program<\/a>. Were continuing to expand bike share throughout the city into golden gate park, as well as deeper into the sunset. 34 more new stations that weve installed in 2023. With this fixed week in a ten day period, we actually do maybe about three months of work, and we did a lot of maintenance that we couldnt have done, and it helps a lot with the reliability. To. That was a big boost to the whole subway system. We actually had our very first muni safe day out to have real conversations with our customers about security on muni, some of the things that they experienced, and let them know that some of the things that we were working on already launched our Safety Equity Initiative<\/a> focuses on harassment on Public Transportation<\/a>. Were looking to hire about 20 additional ambassadors, have about 30,000 cameras systemwide, and we developed and launched our employee assault dashboard. The efforts that were implementing now will ultimately render a safer system for everyone. We created a new program for our scooter share operators. They average six hours to respond and correct improper scooter parking issues. And now thats gone down to 45 minutes. So we launched a upfront fare Pilot Program<\/a>. We formalized the essential trip card program, where people who cannot independently use muni on their own. We have 24 hour cleaning services. Now that our standards have increased, we had to clean a different way, making sure that were sanitizing and cleaning not only for covid, but other viruses and things of that nature. So i see the difference in the rise in the standard. Challenging to clean a vehicle to make sure its ready for pull out every day with limited staffing and in spite of it, we still get it done. When i drive by and see a clean shelter and everythings lit up and its it just makes me happy. Our things are up by 50 of where they were a year ago. Platforms are now five days a week. Its part we can almost respond to any incident on a shelter or a platform. Within hours and killed it. For that, we power washed every shelter from top to bottom. In the past few years, muni has changed the standard has been lifted and things have changed. Everyone deserves to have have a safe and comfortable riding experience, making sure people can get their doctors appointments on time, their work on time, school on time. Those are the things that our job is based on and giving people opportunities. Transit first climate action, vision zero, and equity San Francisco<\/a> is actually specifically directing its parking and curb regulations to achieve these larger goals. Were hiring faster. Were creating more training programs, and were constantly improving the pride in our work and what we put out together. We get a lot of work done and we cant do work without each other. Thats pretty much, you know, the sfmta way, just that camaraderie that you have. We can just all wear giants jerseys and come to one common goal. All right. Thank you for that. Um, so now i want to talk a little bit about the future. So as you can see, we spent the last four years working really hard at figuring out how to do more with less. We had extraordinary success. Um, but now were running up against the limits of operating cities for greater efficiency. Um, we can continue on the margin, um, improving efficiency. But the next round of efficiency require changes from other organizations and City Government<\/a> legislation, either at the city level or the state level, or city. Significant changes in citywide policy. Um, we can certainly talk about that, but weve kind of not only have we picked all of the low hanging fruit, like the only fruit thats left is like at the top of the tree behind the thorns. Um, were committed to doing that work, but we cant keep up this pace of improved efficiency and delivery without Additional Resources<\/a> and a lot of help from other departments that said, we do have big plans. For 2024, and most of the plans come under the four key themes that i have been working on for the last four years. And that will continue to be the key themes for 2024. One is continuing to make muni fast, frequent, reliable, clean and safe. Uh, each of those has a program around it, and im incredibly proud of the teams. Ive also been really grateful to this board for allowing us to not continue to gut maintenance in order to sustain operations that we can no longer afford. So much of our improvement in ridership and in Customer Trust<\/a> has been a result of focusing on the core, including maintenance s that quickly turns into reliability, and weve certainly seen what happens to our peers like in boston, where where you dont have that focus. Um, the second area of focus is making it safe and delightful to walk or roll from one neighborhood to any other neighborhood in the city. For people of all ages and abilities. We have a lot more work to do to make it joyful to travel in a wheelchair, or in a bike, or a scooter or skateboard or on foot, um, all over the city. But were committed to doing that work. And the active communities plan is the structure for actually delivering on some of the hard choices. The third key area is to continue building on the success that weve had in changing the culture of the agency. Um, truly making every corner of the agency welcoming to our entire workforce, making sure that the entire workforce feels like they have a viable career path here, fostering creativity and exploration and collaboration, and also Strategic Risk<\/a> taking. Um youve seen a lot of the results of that in, for example, fix it week, and we want to take that success and expand it elsewhere in the agency. And the final and fourth key theme for this coming year is our financial path, as well talk about throughout the day today, were kind of sort of okay for years one and two of this budget and then everything falls off a cliff. In year three, we need a strategy for figuring out how to bridge that year. Three gap. Um, partly because i made a promise to staff early in covid that we would not balance the budget on the backs of the workforce. Guess who got this agency through the worst of covid . So we have been maintaining a path that in the worst Case Financial<\/a> scenario, avoid those layoffs by allowing us to shrink through attrition. And so part of this budget exercise is thinking through what is exactly the length of our glide path. If we do have to start shrinking again , um, and uh, and what risk are we willing to take around the certainty of filling that key gap up in calendar year 26 . Under the assumption that were going to win in the end of 26 for revenue. That comes in sometime late in 27. In addition to those big themes, we also have have a lot of work. We have have labor negotiations, negotiations happening at the same time that were finalizing this very tricky budget. Um, we are committed to, to, uh, an ambitious, active communities plan. We are committed to delivering as quickly as were able to on vision zero projects that allow us to use our limited staff and Financial Resources<\/a> in order to make the biggest difference on safety outcomes. Uh, were continuing to move forward on some really exciting muni forward projects, one of which you will be seeing next week, uh, for the m line. And then weve got a whole series of others queued up. Were continuing to advance, um, our muni equity strategy and being thoughtful while adjusting the whole muni service and schedule about every four months to accommodate rapidly changing travel patterns while centering people with the fewest mobility choices. Were continuing to advance our accessibility strategy, and weve got what will hopefully be a series of good news events, uh, in the coming year around more rapidly being able to deliver, uh, on where our true accessibility needs lie. Um, were continuing to finalize our fleet procurement, which is also been a big part of what people appreciate about muni. Uh, and i will remind you that we have now a 71 Approval Rating<\/a> for muni that is the highest Approval Rating<\/a> that weve had in a decade. Um, and were the only Government Service<\/a> that has risen in voters esteem, um, um, through covid, despite how much, uh, weve been impacted by covid. Um, as you know, were working on, uh, our new train control system so that we dont have to run our train, control our trains off of a 3. 5in floppy disk. Um, and obviously, were spending a lot of time on figuring out what are we doing in year three. Um, so with that, uh, let me just quickly review to the agenda for the day. So were done with the preliminaries. Um, next up, we have have, uh, um, city controller, uh, Ben Rosenfield<\/a> and city economist ted egan, who will talk to you about the larger reality, uh, that were facing. Uh, always is the wet blanket of economic reality. Something we very much appreciate about this team. Well take a little break, and then well go into detail about the choices that were facing. So weve set up the bulk of the day today around framing up the tough choices that staff have been facing in order to help the public as well, you know, understand the context that were in and help you all provide us with clear direction. So well be talking about some options around transit fare revenue. Well be talking about, um, options around parking fees and fines. Um, in between well be talking a little bit about opportunities for merchandizing, which i know people are very excited about. Um, and then well have a series of exercise and conversations about trade offs, because thats ultimately what budgeting is about, is we all want to do more. Um, but we have to be conscious of resources and risk and particularly risk, which is very difficult to evaluate. Its subjective. Um, and then well do a little bit of wrap up. Um, again, i want to you all to reflect back on what chair ekin said at the beginning is what were most interested in from you all is given the limited ability that we have to flex and to spend a little bit more here or a little bit less here. What what are your highest priorities . And i dont we dont even necessarily need highest priorities in terms of specific hiring or projects. But what are the outcomes that youre looking for and what are the risks that we need to focus on closing in order to be able to develop the trust in order to get the voters to help us close our year three budget problem. So with that, questions, okay, we actually dont have time for board questions in this morning session. Uh, were going to just but please write down your questions and we can get into them in a little bit later. I would like to open up for Public Comment<\/a> on item four. Um and just in light of our, um, colleague from other city departments and their time, are there any Public Comment<\/a>s on this section of the agenda. Okay. Seeing none, well close Public Comment<\/a> and we can move on to the next item, please. The places you on item number five, presentation and discussion on the citys economic overview. Its just going to take me one moment to get the slide deck up. Im going to need the control room to come back down. Christine, should we go ahead and take a few board member questions . Go ahead. Yeah. Okay. Are there questions on director tomlins presentation. Im trying to share this powerpoint. Next up is. I cant see it. Its up. Okay. Yeah so. Good morning, Board Members<\/a>. My name is ted egan, and im the chief economist. And the city controllers office. And im going to share some slides with you about the state of the current citys economy. Um, both how its been doing, um, in the past year and what the next year, um, holds in store. And also, i think from a Bigger Picture<\/a> point of view, how is the citys recovery . Um from the changes that the covid pandemic brought to us . And what is the status of that . Um, uh, Ben Rosenfield<\/a>, the city controller, will will follow me with some slides about the state of the citys finances. Um, so to briefly give you some, some context, um, from the us economy and the Macro Economic<\/a> picture, um, for most of 2023, um, there was a lot of concern about whether or not we would enter a recession because the Federal Reserve<\/a> had rapidly raised Interest Rates<\/a> last year to try and control inflation. The purple line, you see, is the line of inflation starting in 2022. Um the standard Economic Policy<\/a> tool with high inflation is to raise Interest Rates<\/a>. The fed did that a lot last year from going basically from 0 to 5. And you know, the short answer is it worked. Inflation has come down. It seems to come down steadily. The forecast which are shown here in a dotted line, are expecting a return to the feds inflation target of 2 by the end of this year. Um, and so thats good news in terms of the inflation fighting front. The other good news is that we havent entered the recession that many economists expected last year. And the median forecasts are for that, not to happen, for us to have whats called a soft landing or a slowing of the economy, maybe for a quarter or 2 in 2024. So it will be a notable slowdown from a very hot labor market that weve had really since the start of the pandemic or the middle of the pandemic, but not a recession. And so unemployment is forecast to increase a little bit. But by the end of the year, we should be back on a on a more rapid growth path. So really a good news story for the us economy. And that will certainly filter through for San Francisco<\/a>. Weve had a weak economy since the start of covid, and we would probably have felt a recession worse than other places. Um, this is what 2023 looks like for the different sectors of the San Francisco<\/a> economy. Um, with their job totals and the last years change in employment is shown in the orange bars here. And it was really a year of rebalancing for San Francisco<\/a>. Um in 2020, 2021, 2022. What we saw was a tremendous amount of growth in industries where the people were working at home, and thats really professional services, information. Our tech sector, financial services, um, as a group, those kind of high Wage Services<\/a> as shed jobs. There were a lot of tech layoffs in late 22 and all throughout 23 and ongoing. Um, although we still have significantly more tech jobs in the city than we did before the pandemic, thats not been a source of job growth. What we did see in 2023, and i expect to see somewhat, um, uh, in the first half of this year is continued recovery of the sectors that were hit really hard by covid and that sectors like restaurants, which was up 6 last year. And food, arts and entertainment, which grew 4, and personal services and accommodation, both of which were above 5. So not a complete rebalancing of the citys economy. We still have, um, far fewer jobs in restaurants and hotels and personal services than we did before the pandemic. And we still have far, far more advanced Services Jobs<\/a> and the blue bars there show the four year change that really emphasize that. But at least we got some rebalance of our economy. Uh, in the past year. Um the main challenge that the citys economy is dealing with at this point is the slow pace of, of return to office and San Francisco<\/a>s return to office has been pretty slow compared to other metros. On a given week, maybe 45, 40, um, of workers are in are physically in the office compared to what the numbers from 2019 would have suggested. And thats at the lower end of the metros that people are tracking, even at the high end, uh, the numbers are like 60 to 65. So this is a national phenomenon. And it has led to damage or impacts in the commercial real estate sector, which are also particularly felt in San Francisco<\/a>. As ive highlighted here, the change in the Office Vacancy<\/a> rates between 2019 and the Third Quarter<\/a> of last year, uh, and highlighted some Bay Area Office<\/a> markets, no cities had a bigger turnaround in the Office Market<\/a> than San Francisco<\/a>. We went from about 6 vacancy, the lowest in the country in 2019, to 30, and now its above 32, uh, which is one of the highest in the country. So, um, really remote work has had a powerful impact, particularly on commercial real estate, but really on every sector of the citys economy. One of the reasons why tourism has been slow to recover is that Business Travel<\/a> has really not recovered. And, um, conventions have not recovered, which are tied into physically being in the office and having a vital commercial, um, downtown down, um, weve seen impacts, obviously on transit. Weve seen impacts more broadly on the citys finances. And so this is a kind of major, major hit to the citys core economy function, um, that we are only beginning to recover from. Now um, this is a map that ill explain in a minute, but it really shows the magnitude of the adjustment that the city is going for. Its a map that thats basically built from every census tract in this part of california. And if the track has one green dot, that means five more people live in that census track and work in San Francisco<\/a> than did in 2019. So this is really showing where the spread of San Francisco<\/a>, uh, resident or not, San Francisco<\/a> residents, but the residents of San Francisco<\/a> workers are. And conversely, if its a red dot, its showing one thats showing five people who used to work in San Francisco<\/a> and no longer do, but who live in that census tract. So generally, where youre seeing the red is in most of San Francisco<\/a>. And we did lose a lot of people. This is through 2021. Um but also Alameda County<\/a> down the peninsula. Theres a lot of red there. Wheres the green . Its places that are pretty far away, the south bay, places like fremont, um, live more, um, san ramon and then sacramento and places beyond. You know, youre seeing madera and santa cruz and yuba city. Theres not tons of people there, but there are people there who are doing that. We dont know how they get to work, or even if they get to work. But really, this is a phenomenon thats made possible by remote work, and its a combination of San Francisco<\/a> workers moving, which is part of it, and also people who live in those areas switching jobs to take jobs in San Francisco<\/a> so that they can do more remotely. Um, both of those phenomenons are going on, and both of those are really expanding the citys labor market. Um, and i think its really important because when people talk about we really got to make progress on return to office, its getting now the people in green to go to San Francisco<\/a> is what return to office looks like. The more this trend persists, the less thats really realistic. Um, this kind of does seem to be the new normal. Uh, obviously this is 2021 data, and well, well well track this trend closely. But again, a major shift just to put some numbers behind it for people who are just uncomfortable with with maps and not numbers, about 39 of San Francisco<\/a> workers lived in the city according to this census measure. In 2019, and thats dropped to 35 in two years. Um, im not showing you the map of la and san diego that i did, which also shows a ton of people who work in san diego and live in los angeles and san diego, because thats also happening as well. Um, so a lot of people look at a map like this and say, wow, work from home tech workers moving to wherever, moving to monterey or places far away. The people we lost, particularly from the San Francisco<\/a> metro, though, are not tech workers. This is a chart from the census from 2019 and 2022 that shows the number of residents of San Francisco<\/a> metro area based on the industry that they work in. And ive kind of ranked the change from top to bottom. So we actually gained as a metro area, people who work in information, which is a key tech sector, and educational services. We basically broke even in professional services. So the tech sector, some of them moved out of the city, but they didnt really move out of the metro. But what we did see is big losses in the sectors that were hit hardest, uh, by covid. And thats accommodation and food services. Administer of support services, arts and entertainment. The tourism sector, that workforce left. And thats one of the reasons why were still seeing post covid recovery. Now um, as those sectors are struggling to hire people and rebuild their workforces. Um, will that map ever reverse itself . It probably will reverse itself to some point, but the way it will reverse it is through a correction in the Housing Market<\/a>. And were seeing that happen as well. So this is a map that sort of showing the four year change in housing prices across this Northern California<\/a> region. And i use the us as a benchmark, which actually, you know, 45 growth in housing prices is Pretty Amazing<\/a> for four years for the us as a whole. Um, no, no county in california, i think, reached that point, at least not in Northern California<\/a>. But the counties that im showing here in yellow, which are Central Valley<\/a> counties, generally did better than the counties that are in blue, which are bay area counties. And of course, San Francisco<\/a> has had a very weak Housing Market<\/a>. So when the us Housing Market<\/a> grew 45, average home values in San Francisco<\/a> over a four year period declined by 4. And that is through the end of 23. And its a sign, really, of the migration and the , um, and i think ultimately tied into to work from home and the fact that people just arent willing to pay as much to be in San Francisco<\/a> because they dont need to be to do those jobs and to access the high paying jobs that are still here. So let me close and then hand it over to ben with just some thoughts on Economic Issues<\/a> for the city that im that im watching that i think will be important. Uh, one of which is at some point we think the tech layoffs are probably going to end. The tech layoffs were really a couple of things. It was over hiring during 2020 and 2021, when Venture Capital<\/a> was incredibly prevalent and money was really free for a lot of these companies. So theres a bit of right sizing there. And also high Interest Rates<\/a> are really bad for Venture Capital<\/a>. We saw 50 drops in Venture Capital<\/a> in 22 and 2023, and Venture Capital<\/a> funds a lot of the bay areas tech companies, which are not profitable on their own. If we start to see, um, stable economic growth, the soft landing the fed reduces Interest Rates<\/a> this year as as many people expect, that will probably be good for Venture Capital<\/a>. So id expect to see another rise in tech employment this year and next year. Um, does the Office Market<\/a> finally adjust . Um, these extremely high Office Vacancy<\/a> rates . Um uh, have gone on for a fairly long period of time, like four years. By this point, weve seen some drops in office rents, uh, which is normally the mechanism that the Office Market<\/a> uses, um, to reduce vacancy and to find new tenants. Uh, but we havent seen a lot of that. So one question is, is this the year that the Office Market<\/a> really kind of adjusts as were seeing Office Buildings<\/a> finally transact again . And when they are selling, theyre selling for Something Like<\/a> 60 to 70 discounts versus their precovid value. Were not seeing rents at 60 to 70 below precovid value yet. But it stands to reason we may see Something Like<\/a> that, that will provide a lift to downtown, an Office Occupancy<\/a> and other Economic Activity<\/a> downtown, and the real question is when does that start to happen . Uh, theres a whole bunch of things we could talk about. Uh, the diversification of downtown. And is it going to be a University Campus<\/a> or other academic activities . Is it new kinds of entertainment . Um, those are going to be things to watch. Certainly theres a lot of vacant space downtown, and i dont think anyone expects it all to be filled up with Office Activity<\/a> again. And so those kinds of questions are, what do we do with that office space really is going to put the cities economy postcovid on a on a new trajectory that isnt quite clear yet. And the other thing that will put the citys economy, uh, on a different trajectory is, is who moves back to San Francisco<\/a>, according to the department of finance, we saw some population recovery. Uh, but when you look at the numbers, thats only 1000 people moving into San Francisco<\/a>. So and a little bit of natural increase our housing prices, as i showed, you are still pretty depressed. San francisco is continuing to get more affordable, um, compared to other places. And at some point people will say, im moving to say i can afford to move to San Francisco<\/a> and i will. So who those people are, what that labor force looks like, what are the skills and interests of those folks is going to have . I think, an impact also on the future, um, postcovid economy of the city, which is still four years later, somewhat cloudy. So on that note, ill turn it over to ben. And either of us can take questions when hes done. Good morning. Board members Ben Rosenfield<\/a>, city controller. Thanks again for having us this morning. Ill provide a quick update on the citys budget. My focus here is really the citys general fund, which makes up about half of our budget. But i think a lot of the trends that im talking about matter to the mta for a couple reasons. One, the issues that we face in the general fund are very comparable to the ones macro level that are playing out in the mtas budget. And often, frankly, playing out more significantly in the mtas budget. Looking ahead. And then secondly, of course, the health of the general fund is hugely important to the agency because it drives the contribution from the general fund to the mta, a very source of important source of strength and stability for the agency. Um so each year, twice a year, our office, the Mayors Office<\/a> and the boards budget analysts produce a forward five year forecast. This is showing the latest forecast that we produced for the general fund. Uh, in december. Um, and its not a great outlook, frankly. Um, the good news is that we are not seeing revenue declines, but the blue bar at the bottom of this chart is a summary and a roll up of all of our forecasts of different Revenue Sources<\/a>. And you can see were expecting very tepid Revenue Growth<\/a> during this period of time. And ill come back and hit on some recent trends that were watching at the same time, expenses continue to rise. And while were coming out of a high inflation environment, um, expense pressures remain acute across wages, benefits, nonsalary spending, debt kind of the rest of the citys expense portfolio. And so you see this growing gap between our revenues and expenses. The further out you look. Um, this means that for the general fund, the mayor and the board have to solve a two year budget gap of about 800 million in the coming two years. And more significantly, we for me, are the challenges that sit in year three and four here. So touching on a bit of kind of the of more recent revenue trends that were seeing, ted touched on Office Vacancy<\/a> rates here in the city. This is kind of a longer view of what Office Vacancy<\/a> rates have looked back over time. This is data. So this is q3 at 30 vacancy in San Francisco<\/a> as ted indicated, were above 32 now. And just to put it in some historical context, um, how significantly higher that vacancy rate is than prior . You can see the Great Recession<\/a>. Um approaching 20. And you can see us coming out of the dotcom bust at the very beginning of this current, uh, current curve at about half of our vacancy rate that were experiencing today. This matters for all sorts of city revenues. It matters for our Property Tax Base<\/a>. Looking ahead, which is our largest Single Source<\/a> of general fund revenue, it matters for our business tax base. Our second largest, which is which heavily hinges in our Current System<\/a> on where people are working from. Another important part of the economy and an important part of our revenue mix is our local hospitality industry. And so this is showing you a kind of a core indicator of the hospitality sectors strength, which we call revenue per available room, which is basically a mash up of occupancy rates in our hotels, times the room rate that theyre able to charge given demand. And you can see how significant the impact of the pandemic was at the beginning. Um, where hotel our Hotel Tax Revenue<\/a> over 500 million a year before the pandemic absolutely evaporates overnight, given what happens. But you can also see that come 2021, the very strong recovery that we were experiencing in hospital city, as the as the, um, as the pandemic waned of concern for us, though, when we look at is, is that arrow. And when we look at the last almost a year now of occupancy information on hotels in San Francisco<\/a>, we really see this flattening out, uh, versus the prior year. So our previous hope and expectation that, you know, we would expect to see, you know, kind of less growth in the years ahead than we were in that 21, 22, 23 period. Um, would continue and we would get back to something approaching prepandemic norms. You know, maybe within this forecast window, we no longer believe that. So the dotted line here is our most recent forecast kind of very recovery in hospitality. But very slow. Uh, looking ahead and. Similarly and you see this in San Francisco<\/a> and you see this throughout the state of california at the moment, similar we see notable signs of kind of flattening in sales tax around the state. Another important measure of both hospitality in San Francisco<\/a> and then consumer spending, overall business spending overall. And this is showing us growth rates versus the prior year for a given quarter. Um, and the blue line here is San Francisco<\/a>. The orange line is california. You can see again big losses early in the pandemic. Really strong bounce back in 21 and 22. Um and then you can see the last three quarters that we have this both in San Francisco<\/a> and in california. This dramatically slowing growth rate with the most. Recent quarter, we have effectively showing california flat and we had our first negative quarter for sales tax versus the prior year. Since very early days of the pandemic. So again, previous hopes and expectations of continued recovery. Looking ahead into the forecast, there are early signs, but we see some concerning signs of flattening. And then we combine that on the on the revenue side of our budget. And again i think this is analogous to issues the mta faces. Um, with really heavy use of one time sources that have kind of carried us through the pandemic thus far, kind of disappearing as we spend them down. The majority of this is this chart shows you for the general fund or federal relief that was made available to local governments throughout the country during the pandemic. That really carried us and then reserves and depletion of reserves and as you see, looking ahead, we really drew very heavily on our reserves in 21, 22 to a point 2223 as a city. And there are just fewer left. Um, and that creates a loss of a major source of revenue. Thats thats kind of carried the city thus far through the pandemic. And for the general fund, just to theres a lot going on the expense side. But just to summarize an important driver, this is total spending on salaries and benefits for our employees during this period of time. So during a five year period, we saw 30 growth in general Fund Spending<\/a> on employee costs. This was driven by pressures on medical, um, uh, benefits, pressures on retirement contributions. And importantly, of course, pressures on wages, which were true for us as a government and have been true throughout the country during this period. Um, so, again, flattening Revenue Growth<\/a>, looking ahead, um, Significant Growth<\/a> on the expense side and losses of one time revenues. Um, director tomlin mentioned this beginning, but quickly summarizing a few risks that we see looking ahead beyond the economic ones that ted talked about. Um, again, the continued elevated Interest Rate<\/a> environment does create cost pressures for the government. What happens with Interest Rates<\/a> . Looking ahead matters a lot economically and financially to the city. Um were in kind of unprecedented times when we talk about our Property Tax Base<\/a> in San Francisco<\/a>, heavily driven off of the Office Vacancy<\/a>. Um, uh, discussion and how that plays out over coming years. We will have we have a massive amount of appeals pending how those appeals play out in coming years and how quickly the Office Market<\/a> recovers will be key things to watch. Um, and then we have risks related to state and federal revenues. So the state budget, which provides state and federal money, provides about 20 of our local general Fund Spending<\/a>. Um, and at the state level, we know the state is dealing with very significant budget challenges itself, given some of the same issues that i talked about, uh, related to the city. Um, and we would expect from past experience, that means we will see cuts proposed to subventions to local governments, and indeed, we do see one in the in the governors january budget, a change related to how property taxes are allocated. And that would cost just San Francisco<\/a> 90 million. And our coming two year budget. And thats one example of many that we face. Um, and again, a host of other, uh, risks and unknowns related to the outcome of open labor contract negotiations, future benefit Cost Increases<\/a> and others. Um so true to form, wet blanket form. Um, ill end with a couple of very big picture takeaways. Um, from my view, uh, reviewing some of these things. And these are very high level. Um, but of course, city economies and finances have taken major shocks during the pandemic unlike any that most of us have lived through, uh, in our lifetimes, let alone our professional lifetimes. Um, the recovery from it economically and financially will play out over many, many years. Its not going to play out in the context of the coming two year budget. Uh the recovery is underway, but it is very its slow and slowing here in San Francisco<\/a>. Um, i cant un, uh, you know, overemphasize how significant the importance of federal relief and reserves were to carrying the city and all big cities through the last four years without about record reserves here in San Francisco<\/a> for the general fund for the mta and without record reserves at local governments throughout the country. We would have seen very significant reductions, given the revenue already. And then, of course, uh, huge amount of federal aid, uh, to carry local governments. Thats being largely depleted. Um, the pace of the economic and financial recovery. While its unknown there is no scenario that we can draw up that credibly predicts that that recovery will catch up with the loss of those one time sources. Um, i think, again, the recovery will be slow and the translation of that into revenue means that, um, there is no world where a forecast looking ahead erases the structural gaps. We see, um, during the coming two years or the coming five years, naturally. And so that means that, uh, action will be needed to, to solve for that gap. Um, and if this is close to good news, as im capable after 16 years in this job, um, if there is good news, its that we are better prepared for these events heading into the pandemic than we were in the Great Recession<\/a> in the dotcom bust, significantly. And again, thats true for the city and its true for the mta as well. Efforts to build reserves and build flexibilities into budgets were dramatically improved after the Great Recession<\/a>. And that left us in much better place. And ending, uh, entering 2020 and the pandemic, they werent built to solve for this, this, um, but it does mean while weve drawn heavily on those solutions, some remain and we have bought ourselves still some time. Um, and so if i would have anything, if i would urge anything, its budget actions today to solve for gaps we see ahead in years two and three. And four will pay off. They pay off in the form of savings achieved over more time. They pay off in the form of an improved ability to implement it. More complicated operating budget changes. And they, uh, they, they will pay off in the form of less impacts on our employees ultimately, and less impacts on Service Provider<\/a> non profit and other Service Provider<\/a>s. So um, uh, action would be uh, important looking ahiven the forecast that we see. And i will stop there. And ted and i are available to answer any questions you might have. Thank you so much. We have of, um, colleagues until around five till on our agenda for board questions. And then well go to Public Comment<\/a>. Um, what questions do you have . Director hemminger . Thank you, madam chair. Um i ben, i want to try to give you a chance to Say Something<\/a> positive because i think itd be good for you. Um the folks in this building are considering a ballot measure. Not well, theyre considering one this fall for housing, but another 1 in 2026 for trans kit. Um, do you have any kind of insight on what the economy and the Overall Economic<\/a> environment would look like . Not the next six months, but two years from now . Maybe ill let ted say a couple things about economic expectation, and ill touch on finances. Uh, i would say that, um, other than an economic recovery, macroeconomically that should ease out some of the trends that ben was pointing to about about sales tax and may give, uh, our tech sector a little bit of a lift. I dont think there are major changes. I dont see return to office or the Office Market<\/a> adjusting by 2026. And i think those are those are the major structural issues that the citys economy and the regional economy have to deal with. Um, and then if i were to guess financially, uh, i youre trying to team me up for a positive answer, and im finding it hard. Um, i think the i mean, i think if there is good news there, its the size of that kind of financial challenge. Is in our control to a point, depending on what steps we take in the two years between now and then. As i said, i dont think theres a scenario where kind of on autopilot revenue catches up with Current Expenditure<\/a> levels. Naturally but we do have an ability to control both the revenue and the expenditure, um, side of side of that would change. And we do have two years to do so. And so i think i would hope that the structural gaps were seeing in 2026 today will be lesser. Um, i fear though, uh, the alternate though would be that we, we really heavily lean on depleting other one Time Solutions<\/a> and reserves and other things to carry us to. There and then 2026 becomes one of falling off a cliff to a point. I hope we dont find ourselves there and trust we wont. Yeah. Um just just thinking about the overall narrative for our region. Um, its boom and bust right way back to the gold rush. Uh, and weve had some really strong booms and really strong busts. This one seems to be mostly bust. Um, and the boom is pretty attenuated so far. Is that your sense that thats definitely true so far . Um, i would say we weve had a narrative problem in San Francisco<\/a> thats out of touch with what weve actually seen. Economic for most of the last year to two years as well. The kind of doom loop narrative that kind of nationally and to a point locally has played through local media that we are in kind of a selfperpetuating race down economic losses, compounding financial compound losses, compounding. Thats not what were seeing. What were seeing is really a significant shock. And then recovery, we just slow recovery from there. So, um, absent kind of an external shock to the system, i think we would expect to see recovery continue going. And hopefully well find some distance between that. You know, kind of the narrative of this past year and the narrative at that point where people will feel more optimistic that the signs of recovery that were seeing, you know, are true. Um in the in the world around us. And stop there. You just did it. You said something positive. Thank you, madam chair. Thank you, director henry. Please all right. Thank thank you, uh, gentlemen, for your, um, presentation this morning. Um probably for, uh, comptroller rosenfield. Um, i understood that the board and the mayor are are, um, in considering legislation to sort of. There may be some changes to our, our tax base and how we calculate some taxes. Um, so i dont know to what extent you want to opine. And for us in on some of what those changes might be and some of what those conversations have been. But if you wanted to do that, heres heres your opportunity. Thank you for that opportunity. Um, the mayor and the board president requested our office. The treasurer and the City Attorney<\/a> last summer review potential changes to the citys business tax structure. In light of this, these new economic realities. Uh, our team working with those other offices has been working on that research and analysis, uh, for the better part of the last six months. Were actually scheduled to issue our recommendations regarding those changes, likely late this week or early next week. Um, at that point, it becomes a policy discussion, a policy set of policy choices for the mayor and the board about whether they want to pursue a measure in 2024 or consider, uh, taking more time, uh, and pursuing a measure in 2026. So thats unclear to us at this point. Um we have offered we think, or we will offer a set of recommendations that would, um, work out some of the problems we have in our business tax structure in this new kind of economic environment. A lot of the way we tax businesses in San Francisco<\/a> is based upon where their workers are given the way our tax works, that hurts us in a remote work environment. A lot of our business tax base is hinged on things that were or, uh, which that were good to be hitched to prior to the pandemic. Predominantly the value of commercial office space in San Francisco<\/a>. Those are the wrong things to be hitched to, right now. So weve made were making suggestions to loosen that. Um, and we have created some remarkable volatility in our track structure by virtue of some recent voter initiatives that were hoping to offer some suggestions to stabilize us. Um, again, more to come. Uh, well have recommendations out later this week. Uh but i think the big question then is what do people like and not like about our suggestions . And is there a path to a november 24th ballot measure, or is this a longer time discussion . Because it is a complicated one. Thank you. Thank you madam. Thank you. Um, i, i have a question. Just hearing, uh, director hemingers line of questioning in the boom and bust. Um, since youve been doing this a while, im curious about your thoughts in terms of, um, the thing that will trigger the recovery that happened to trigger the recovery. Ten years ago, or whenever it was, that we had the same sort of pattern. Do you see that . Um in any of your projections or the pictures that you see . Uh, for the for the next couple of years, ill offer a high level take on it. And again, ted will have some perspective as someone thats worked through these same, same moments. Um i think the shape of what were facing is likely to feel very different than the bus we faced in the. Com bust in the Great Recession<\/a>, which were which were really sharp shocks, quick losses, and it was really always the expectation that it was just a question of how long we would it would take to snap back. So is it from a financial perspective . It was this kind of exercise of filling a hole that we could see ahead of us, but we could kind of see that there was another side right . Right. Most of the trends were watching at the moment financially for the city are more structural, like it is hard to envision a world where the Office Market<\/a> recovers at a pace. Um, uh. And the translation of that into office value. And our Property Tax Base<\/a> that recovers appreciably from what im talking about in the next five years. Um but i do think how Downtown Office<\/a> gets refilled and reused, thats going to be the key. I just dont expect it to be fast. We have 25 salesforce towers of Vacant Office<\/a> space in San Francisco<\/a> today, and the remaining 70 plus or slightly less than 70 of office space that is under lease is under occupied today. And as those leases expire, the additional inventory will rise. Um and so i think just that level of that shock, again, i think its more of a generational one than kind of a, an economic cycle. One given the shift in how work is being performed. I just think that will take time. So i do i, i am hopeful for a recovery that beats our expectations. I dont think the recovery that beats our expectations kind of wipes out the challenges that we look, that we see looking ahead financially, it will just mitigate them somewhat. Thank you director. So you reverted. Mhm. Mm. Thank you for the um very insightful presentation. I always love to see the charts and number. And thank you ted, for showing us again. I remember listening to one of your presentation leading into the pandemic like it was a little bit more optimistic than what we see right now. Um, i just wanted to, to think about, like what our, um, direct of transportation shared with us about what our ridership had to increase and especially increase it. Actually, over the weekend to use and with there was a slide that had you mentioning that there are other activities that we are tinkering about and i wonder if your office or yourself had, um, kind of assess and evaluate what type of modes of, um, activities, uh, moving away from our traditional, uh, older conventional way of like, San Francisco<\/a>, you come here to work . Uh which what do you what kind of tendency and trend that you see that we it will be more, more likely to help our controller and maybe perhaps its also something that we can do to enhance our accessibility and transportation to drive those activity to be more attractive. Um, thats a great set of questions. Um uh, director, um, i, i put that as a question because i dont have a lot of great answers there. I know that there are a lot of ideas, um, that are floating in, um, one of the challenge with downtown San Francisco<\/a> that makes it different than other places is that before the pandemic, office was so clearly the most profitable use and people who come to study San Francisco<\/a> say you have too much office in your downtown. You should be more balanced. 30 years ago, San Francisco<\/a> was more balanced, and now we have far more office space and Office Employment<\/a>. Before the pandemic than we had other activities. So, notwithstanding the fact that the Office Market<\/a> is going to adjust, and i do think there will be some kind of reflux of Office Workers<\/a> when rents come down. Uh, there isnt going to be as much Office Activity<\/a> in a stabilized downtown San Francisco<\/a> going forward. And i think that entertainment uses maybe even before residential uses are going to be the thing that, um, that works the best. Mainly because thats it could more than residential. It can potentially leverage whats distinctive about downtown, which is its transportation access, and particularly its transit access to the entire city, to the entire area. So if you are in an entertainment business, you have a larger draw than you would for example, in a neighborhood. Um, having said that, thats not a very concrete answer. Um, but it does sort of point to an idea that that a lot of people are talking about, which is we need to expand entertainment and the arts downtown. Thats got kind of clear implications for things like the timing of transit and other and other issues. The night time economy becomes significantly more important. So i think at that point, thats all i can offer. A lot of this is people are going to try things and some things will work and some things wont, and well need to stay flexible. Thank you. Thank you. Director kahina. Thank you, chair. Um, i was going to ask one of you if you could speak on the projected impact of office to residential conversions in the downtown in. Uh, im happy to say a little bit about that because its a continuation of what i was saying. Um, you know, the office to residential was sort of in the National Conversation<\/a> about cities during covid was, well, were not going to need these offices anymore. So they should. And will convert to housing and that really isnt happening anywhere. I read a stat from cbre that theyre only like 34 of these in the entire country. Um, its a particularly challenging thing to make work financially in San Francisco<\/a> because, like i said in my chart, San Francisco<\/a>s Housing Market<\/a> is really depressed and the most depressed part of the San Francisco<\/a> Housing Market<\/a> is downtown. So its much worse than 4 down. When you look at downtown San Francisco<\/a>, which is a long way of saying the market for residing downtown has not recovered. And until it does, youre not going to see Housing Construction<\/a> downtown or housing conversions. And thats a you know, and thats, again, its a function of the type of downtown we were in, which every thing was hinged to the growth of offices. When Office Growth<\/a> was growing, people wanted to live downtown, to be near their jobs, and you could do nightlife businesses after work. And there were there was a lot of people there. But when you take out that enormous source of really market or demand for housing, um, something has to fill it. And housing is kind of a follower sector. Not really a leading sector. So it may happen someday. Um the Office Building<\/a> market that i mentioned before is now trading 60 to 70 below pandemic. That still seems to be too rich for what a housing developer could afford if they wanted to do a conversion. Uh, it may fall further. Um, and i, and i would expect at the end of the day, sort of at the end of this process, you probably will see the market doing some housing to residential conversions. Its not something i just expect to see very much of in the near terme. Thank you for that. Um, could could, um, either one of you speak a little bit about, um, neighborhood and recovery . So weve heard a lot about downtown. Its not really recovering that quickly. Um, weve seen the trends change in terms of transit patterns across the city, and i dont know if youve noticed anything. Well, i mean, i think the transit patterns that im sure youve heard about are one of the most interesting things in which the city has changed since the pandemic, and that there is more travel between the neighborhoods. Um, its certainly true that downtown has done worse than virtually every other neighborhood of the city. For all the reasons that we talked about. I mean, the Office Employment<\/a> and the hotels are there. Um, it is kind of a its a common misperception that the neighborhoods are doing great. And downtown is the problem. Not very many neighborhoods are doing great. Um, i do a map every, every quarter when we get the data of where weve seen kind of recovery on a zip code by zip code basis, its getting better. Um, but i would say maybe half when you adjusted for inflation, maybe half the neighborhoods are back to where they were before the pandemic. And San Francisco<\/a> as a whole is still suffering from the population loss and is still kind of a laggard among california counties. Um, there definitely. I mean, again, you just have to walk around to see the signs of life and the signs of renewal. There but but i would say in terms of commercial activity and the volume of sales, were not were not seeing spectac fuller recovery in the neighborhoods. Uh, okay. I had some hope there, but thank you. Keep trying. Mr. Tarloff, thank you very much for your presentation this morning. Um, i wonder if, uh, one or both of you could talk a little bit more about, uh, flexibility. Um, with the business tax, um, structure and the upcoming changes, uh, specifically as it relates to the growth in remote workers. And i dont know what the mechanism is for that, i suspect, is payroll taxes. But um, and how thats, um, factoring into the, you know, the thinking, the general thinking. So the city has been modifying its business tax every few years since prop 13 passed. So this is kind of an ongoing set of changes. Um the voters approved a very significant the last very significant change to our business tax in the early 20 tens, where we shifted away from a payroll tax to a gross receipts tax. Um that was a good shift for us in these in these moments, because in a payroll tax environment, the tax is assessed based on where someone is working on that day. And in a world where half of our workers were Office Workers<\/a> were no longer working in downtown, but in the east, homes from the east bay in many cases, or the south bay, that would have been a pure dollar for dollar export of our tax in constructing the gross receipts tax, though, you need to arrive at rules in how these things work, whether its for gross receipts, taxes or Corporate Income<\/a> taxes at state levels that a portion a companys national receipts to San Francisco<\/a> that we are then able to tax and so these apportionment rules become very important. We still have parts under our current structure. We still have parts of how that apportionment works that are driven in part by the payroll earned in San Francisco<\/a>, um, as opposed to for example, in other cases in our gross receipts tax structure, how much someone is selling in San Francisco<\/a> . Um so it was a very significant shift for us that helped us at this moment. But we still have important kind of tethers from our business tax structure where calculations are based upon where people are working from for parts of our tax base. Um, so kind of shifting increasingly away from that over time to a tax structure that is more based on how much people are selling into San Francisco<\/a>. So we believe will have the benefit of kind of unlinking us or softening the linkage we have between our tax structure and where people are. How many people are working on a given day in San Francisco<\/a>. So thats an important change that that we think would serve us well in a remote work environment. But it also would it would also serve us well in an environment where we are going to be competing for employers in San Francisco<\/a>, as we work to fill up this massive amount of office space. Um, because it would reduce the kind of spread between the tax that a company pays in San Francisco<\/a>, as opposed to choosing to fill Vacant Office<\/a> space in Alameda County<\/a> or the south bay, um, which are going to be choices. Every company faces. So, i mean, i think thats probably the most significant change that were suggesting, and i think thats direct. Its directly designed to try to, um, get to this kind of new economic reality of remote work. I dont know if that answers your question, board member, but im happy. Happy to elaborate. If it didnt , okay, okay. And i just have one question on, um, director tomlin, in his opening remarks, spoke about how many of the operational efficiencies that we control at sfmta have already been made and that now, in order to pursue additional operational efficiencies, we would need Partnership Help<\/a> and support from the city at large. And im just wondering, as you look at that sobering chart, is there a conversation about some of these rules that slow down city business, like it takes a year to hire someone in that this particular financial context might open up an opportunity to talk about what should we as Board Members<\/a>, as were thinking about decisions made beyond the control of this agency and the potential of those decisions to increase our operational efficiencies . What should we be thinking about . So great question. Um, i certainly hope so. Um, i think that if there is good that comes from harder Financial Times<\/a> and the kind of challenges were likely to be facing is that it does lead us to be able to open up and look at questions that seem like we cant ask them during other times coming out of the pandemic , uh, an initiative was spun up between our office, the city administrator and the department of Human Resources<\/a> to focus on kind of the city recovering, coming out of the pandemic for some core business processes, hiring, contracting and money, which are really the three issues that impede any any city worker, you ask what what are the things that make your job hard . They will mention one or all of those three things, and we have processes in all cases have been built up over decades. One page of code at a time, one procedure at a time. All well meaning, um, and the effort to continue. So weve been working on this over the last couple of years and made some initial progress on some important changes to hiring, for example, or to have the citys contracting works. But there this is a long slog, and i would hope it can accelerate over the next several years. And the choices get harder and harder as you work through that. They involve changes, potentially to Civil Service<\/a> code and to ballot , uh, to some of our procurement rules that have been enshrined by the board of supervisors over time. But youre right, they they would yield remarkable return in a world where our government is shrinking. Um, hopefully by attrition. Um, as director tomlin indicated, and were kind of because were using our reserves and our time wisely. Um, things that let workers work faster and easier, like in these three areas, would have a it would really allow us to make gain or minimize service losses, even while our workforce is getting smaller. So i really hope this is part of the strategy. Looking ahead over the next several years. Its long overdue, and it does feel like theres an opportunity to do it just so we understand who in the city family is sort of owning and driving that inquiry. And process. Its a at the moment, its a three party group. It is the city administrator, carmen chu, me as city controller and the director of Human Resources<\/a>, carol eisen. Um, expand from kind of our initial small wins to kind of a broader kind of multiple front kind of exercise. Well take work. Um, but those are kind of the three, the three offices that i think will be at the heart of a lot of it with, of course, heavy involvement and participation needed from the mayor and the board to really drive some of the harder to tackle issues. There are some good news to end on. Director hemminger, thank you so much for that. Okay. Thank you for the presentation. So im going to open up for Public Comment<\/a> for anyone in the room on this item. Good morning, director cyrus hall. Uh, sustainable transportation, an advocate that was bracing. Um, all is pleasant to hear. Economic news in the city right now. We clearly have a budget emergency. And this is not something, of course, that this board can just declare a city wide budget emergency. But id like to suggest that the city is in an emergency, just like we had an emergency during covid and we declared an emergency as a city. And then we were able to take radical action as a city. We need to do that again, and we need to enable the agency and other city departments to do things like go through less process when doing transit priority lanes or trying to implement transit priority so we can use our operational budget more efficiently. We have to get back on to an emergency footing to deal with the 240 million deficit, three years from now to two. As we think about the next two years, i want to put the idea out there that we need to build reserve funds. Now is not the time to spend down reserve. Perhaps ironically , it feels like it is because we want more service. We have, you know, a small deficit to deal with. But if we can find additional revenue above and beyond the 17 million that we need to raise over the next two years, one of the places to put it is into the reserve fund for that third year. So we can try to cushion that third year and have as little cuts as possible. If we cannot find alternative funding. So thank you very much. I look forward to the rest of the discussion. Thank you for your comment. There. Speakers in the room. Hello, directors. Um, my name is dylan fabris. I work at San Francisco<\/a> transit riders and i just, uh, wanted to second that. I think we should be looking to, um, uh, find as much revenue as we can. Uh, above that budget gap. I also wanted to just highlight, um, something that the chief economist said, which was that as San Francisco<\/a> gets more affordable and rents go down, more people will come in. And i think as we are looking at the trade offs and, uh, um, Revenue Sources<\/a> that that were looking at today, i think its important to, to, uh, keep that in mind, that affordability aspect. And as people move back to San Francisco<\/a>, if we want them to be taking muni and transit instead of cars, we should be, uh, prioritizing, keeping transit affordable, um, over the cost of driving. Uh, so i just wanted to say that. And looking forward to the rest of the conversation today. Thanks so much. Thanks so much. Next speaker, please. Uh, good morning. My name is christopher peterson. Um, i have a bit of a micro comments or question. Uh, last year there was a lot of discussion about the possibility of expanding, uh, parking meter hours and a lot of concerns expressed about what effects that would have on, uh, Small Businesses<\/a> throughout the city. That versus the benefits to that being an additional source of revenue, uh, to avoid transit cuts. Um, we were promised that we would have the outcome of a study last september, and hopefully then we could move forward with making decisions about that. Thus far, no public announcements about the outcome of that study, which i would hope would look at both, uh, predicted effects on the business economy, but also take into account the benefits for transit of that additional revenue. So i would hope we could hear something today, uh, about the outcome of some of the research thats gone into that. Thank you. Thank you. Other speakers. Hi. Board members luke bornheimer. Um, i just wanted to talk briefly about, uh, an opportunity i see for the city both downtown and throughout the city as a whole. Um, through streets and transportation, uh, transfer station, um, including before a stronger recovery for the city. Um, so i think what this looks like is pricing on street private car storage appropriately, um, to generate more revenue for the for the agency, um, and reduce the amount of cars on our streets. Um more transit only lanes, uh, and quick build boarding islands to speed up service and make our service more reliable. Um a connected network of protected bike lanes, uh, car free streets and pedestrian plazas, especially on merchant corridors and downtown. Um and an improved the original better market street. Um and just to briefly touch on what i think this will do um, obviously it will stimulate and increase Economic Activity<\/a> by getting more people out and about in our city, um, reduce car traffic, um, increase use of Public Transportation<\/a>, bikes and scooters, um, and make streets and merchant corridors safer and more vibrant. Um, and specifically on how to do this. Um, you know, i think we need to think a lot about to dylan and cyruss point, reducing bureaucracy and time to installation. Um, specifically by eliminating costly outreach, um, and also empowering and imploring staff to, to implement projects, even when other city agencies are obstructing them. Notably, the Fire Department<\/a>. So i hear often about the Fire Department<\/a> objecting to something, um, or holding something up or putting something on hold. Um, this can oftentimes lead to months or years of obstruction on projects that are critically needed. Um, for reasons that have no legalgs an agency, i think we need to be thinking about just reducing bureaucracy and outreach. Um, and for the Fire Department<\/a>, really just looking at what the letter of the law says and imploring staff to stick to that. Thank you. Thank you. Are there any other speakers in the room . Okay uh, i want to thank you. Ben and ted, for your presentations. And before you go, uh, ben, on behalf of this board and this agency, we would like to just take a moment to acknowledge you for your service to this city. Ben has worked for the city for 26 years. Is that right . The last, uh, under five administrations and has served as the city controller since 2008 and as controller, he presided over a years long economic boom that helped grow the citys budget to 14 billion and oversaw countless audits and investigations. He also managed the citys budget, of course, through those dips in the charts that we saw, the Global Financial<\/a> crisis and the covid 19 pandemic developed and implemented. This is particularly impressive. Uh, policy that led to record Fund Balances<\/a> for the city and also helped to achieve a triple a Municipal Bond<\/a> rating, which was once thought impossible for San Francisco<\/a>. He helped to ensure accurate and timely payments for all employers and contractors. Hes helped structure major financing for important City Partners<\/a> like Transbay Joint Powers Authority<\/a> and, of course, the asian art museum. He helped to reform city policies like the business tax, which we spoke about today, the Pension System<\/a> and inclusionary housing requirements. So i just want to thank you so much for your service to the city and your partnership with this agency. We enjoy your annual presentations. Um, and in recognition of our thanks, we have a couple of, uh, tokens of our appreciation that director tumlin and director kirschbaum are going to present to you. Thank you. Um, can i say yes . Um you know, as you all know, muni needs a lot of friends. Um, and one of our best friends, um, has has been ben. He, uh, kind of inherited a responsibility for us from his predecessor, ed harrington, who worked at the puc back in the day when muni was part of the puc. And really, i think, carried that that mission and has looked out for the sfmta to in his entire tenure as as the controller, um, financially for sure, but has also been been a huge supporter of our analytic needs. Um, and oftentimes our political needs. So uh, really creating things like the Muni Working Group<\/a> when we desperately needed some, um, cover there, um, as well as, you know, coming on and, uh, championing the transit effectiveness project, which was the predecessor to the incredible Muni Forward Program<\/a> that you all have, um, really madelook at that. Thank you very much. I was hoping for a parting gift at some point through this process from somebody, but i never dreamed that it would be a street sign. This is really what ive wanted. Um, thank you very much for the kind words. Uh, madam chair, uh, and julie and others, uh, it has been a pleasure and honor to work for the city. Um uh, for all of these years. And the highlight has really been working on solving problems with just an amazing array of fans, city staff, uh, and, and leaders throughout, throughout the city. Uh, thats really been the joy of the of the job uh, ive had is solving problems little and big. Uh, and the people ive learned from and worked with doing it. And you have a great team here at the mta. Um, working on those problems with you. And im sure my successor, greg wagner, will look forward to working with them in the same way that i have. So thank you again, though, for the recognition i appreciate it. Thank you again and best of luck. Okay. We are going to take a ten minute recess now. Please come back at 1027. Thank call the next item places you on item number six. Presentation and discussion on the two year e. Youre introducing. Brian. I am all right. Uh, welcome back, everyone. So, uh, director heminger asked for some good news. So i am going to completely reformat my introduction to the budget, uh, by trying to actually focus on the good news, because there is, in fact, a lot of good news. And weve been focused a little bit more on the bad news. So one particularly good part of good news that we dont talk a lot about is, is we knew from the very beginning of covid just how significant the Economic Impact<\/a> was going to be and how long lasting, as well as the impact on staff morale. And we have been prepared. We have been doing scenario planning from that first, most crucial week. And in every case, uh, our, our scenarios have included what actually happened. Of course, the bad news is that at almost every turn, the scenario that actually happened was our worst case scenario. And that happened again and again. But we remain prepared. We have a dozen contingencies for what we know is going to be flung at us over the next three years, and were ready for it, and we will continue to be ready for it at every step. Theres the good news that we had an unprecedented amount of federal relief funding that we could not have survived without bad news is, of course, that is completely drying up this year. Theres the good news that we had a completely unprecedented amount of state and regional relief funding. And for the first time, that relief funding was really directed at those of us who needed it the most in order to sustain our operations. And i am so grateful to the state legislature as well as the all of the leadership in this building here at mtc for delivering that. The bad news is that money comes with conditions. That money is only for sustaining muni to buy us time to develop the long range plan for finally restructuring our finances, to be able to close our budget. It comes with real constraints and we have to report on how were using that money regularly. Um the, uh, the good news i guess, is that that the that weve had a Strong Partnership<\/a> with other city departments around efficiency and around collaboration thats allowed us to deliver all sorts of incredible things, including, you know, things like, uh, jfk promenade. Um, the bad news is, of course, the city general fund , which is now our largest source of revenue, is weakening. And we are expecting a couple of rounds of delays, priest expectations for general fund returns. And we need to be prepared for that. Um, and we are, uh, the good news is that we have, um, we have achieved far greater efficiencies than i had thought possible. Um, this agency is delivering more across all, all Service Areas<\/a> than it has in my 30 years in San Francisco<\/a>. And were doing it at a time with the worst possible resource situation. And in fact, the financial crisis as, um, as, uh, ben alluded to the financial crisis, this unlocked some ability to rethink the way we do business, um, that we would not have been able to do in an up economy. Um, so weve had extraordinary success around improved efficiency. The bad news is, of course, theres not a lot more that we can do. For the last four years, weve scraped through most of it, and the next remaining rounds of efficiencies are the things like ben talked about around procurement and hiring that will take years of slogging to get through in order to really be able to deliver, um, the good news as well is that were continuing to get really, really strong support from mtc and the state around thinking about how to close our revenue gap. Um, in, uh, on the ballot in 2026, as well as a very long list of other things, many of which have been suggested by advocates in this room, of other things that we can do to close the gap. Those do require some pretty significant legislative changes, but we have strong partners. The bad news is that our current, um , state and regional relief runs out before those new revenues kick in, and we still have a dire gap. Um, the good news is that because we have been prepared and weve known known for four years, that there was going to be a big financial challenge hitting us all of our reserves are still intact. We are saving those reserves to save our workforce. If our new revenue plans dont pan out as expected. Again, i really want to emphasize this that we are maintaining a path so that we can shrink through attrition rather than shrinking through massive layoffs, because thats incredibly destructive to everything that weve done at this agency. I also want to remind you that, you know, your really i mean, the primary responsibility of any, any board or commission in government is, is the budget. And our budget is fragile, agile and full of risk and uncertainty. Our revenues and expenses always need to balance. Um, were an enterprise organization. And if the revenue we bring in, uh, doesnt match our expenditure, no one comes to our rescue when that happens. After weve drained the reserves , that automatically triggers layoffs. So i want us to make sure that we are are very careful about our fundamental responsibility around protecting the stability of government in San Francisco<\/a> and particularly protecting this workforce who got the city through the worst of the last four years. Um, so with that, um, good news and bad news and some, uh, hopefulness as well as some seriousness, i do want to introduce our extraordinary, um, chief Financial Officer<\/a>, bree mcwhorter, who will start delving into the details if, uh, there we are. We find the slide advancer. Um, bree mcwhorter. Good morning. Board members. Um, my name is bree marauder. Im the chief Financial Officer<\/a> of the mta. And following in bens, um, august footsteps, i will let you know i am a real wet blanket. So sorry to continue to the, uh, sad news vibes. Um christine, i am seeing me, not the presentation. Thank you. Oh, there we go. Okay so, um, as you can see on this slide, um, this is a picture of our five year forecast. And the shape should look familiar because its very similar to what ben just presented for the overall city outlook, where things in the short terms look more balanced. And then when we reach year three, were facing a really significant difference between revenue and expenditure. And that difference is driven by the fact that expenditure continues to go up at a slow and steady climb. Um, but our revenue really decreases in year three. As director tumlin mentioned, when we spend through our federal and state um, relief. And i was really sort of struck by bens graph, um, and made a note to myself to do the same about the with the stacked line graph that was showing the use of federal of one time funds, reserves and fund balance, because we the situation that ben described at the city is the same situation that were facing here at the mta, as one time reserves get expended and we are facing real problems. And so, um, to sort of remind you of what weve been talking about over the past couple months in fiscal year 24, 25, we have a balance budget thanks to our judicious use of federal relief and our, um, very generous relief from the state. But in year two, in 25, 26, when those dollars are expended, then we have a small but manageable budget deficit of 13 million. And when those funds are fully expended in 2627, thats when the rubber really hits the road and we reach the point of a 240 million annual deficit ongoing and a deficit that will continue to grow because the expenditure will is continuing to grow faster than revenue due to the natural cost of inflation and cost of living increases. So, um , for me, the trick of this years budget is really being able to hold two ideas in your head in the short terme. We have a small but manageable budget deficit that can be solved with more modest increases and administrative to the administrative fares, fees and fines over which the agency has control in the long terme we have a very big problem. Um, and we need to use the next two years. We need to pass a budget this year that is balanced to buy ourselves a two year runway. That will allow us to take the necessary action and think the big ideas and do the big things to get us to fiscal year 26, 27. And those two things are equally important because. As before, we can get. On that runway to 26, 27, we have to balance our budget and present a balanced 24, 25, 25, 26 budget. Christine, could you maybe i dont know, what am i supposed to point at that. Nothing. Nothings happening. Okay. Um so. Um, that being said, said, um, i do want to point out similar to what ben said, our future is uncertain. As ben mentioned. You know, i think something that i see that maybe you guys dont see is that we have been through the longest period of expansion and the most general fund growth year over year in the citys history. And so what that has meant is that mta could reliably depend on our general fund support to grow significantly. Year over year. And as ben just pointed out, that is no longer the case. What we are expecting is very limited growth year over year. So weve been able to support a growth in expenditure over the years because of the success of the citys general fund. And as goes the citys general fund, so goes the mta and the report that the comptroller released last year, uh, or last week, is showing, um, thankfully, no changes to the amount of revenue that were expecting to get in 2425. But in 25, 26, it actually shows a small decrease. And that decrease is based on the fact that we had projections up here. And the citys rat sitting down where it thought it would be two years from now, as as the city adjusts to this idea of a more protracted and slower bounce back from covid, um, on the state side, if youll recall back to the graph, that ben presented about showing state sales tax and local sales tax, much of our state operating grants are funded by state sales tax. And so, as you saw, the growth in those numbers decrease. That means what comes to us decreases as well. And already in current year, the state has reduced its projections of what will receive by 11 million. And they expect that to roll into the next cycle. They havent released their numbers yet, but that already means that we are likely to be dealing with less money in the next two years than we have gotten in the current two years. Um, and then beyond lay beyond our revenue expenditure is still extremely uncertain. Um, as everyone knows, our mous with our labor partners are about to be open for negotiation again. And um, our labor budget is over 900 million. So even a small change of 1 is going to mean a really significant increase in expenditure for us. And in this moment, that increases unknown, because we havent even started negotiation yet. So were still dealing with a lot of uncertainty. Um, so i in the short terms, we have a 13 million budget deficit and we are here today to make the case and present to you our ideas for solving that 13 million budget deficit. And i want to acknowledge from the top that 13 million seems like a small amount in a budget of 1. 4 billion. Who cares about 13 million . So let me tell you why we should care. Number one, we have not indexed our fares, fees and fines in two budget cycles in four years. And that means a couple of things. One, thats 19 million that we didnt collect over the last four years. And so thats 19 million of our federal and state relief that we had to spend, that we wouldnt have had to spend in the year over year impact of that. You know, were always told its better to save a dollar on the day youre born than to save 100 on your 100th birthday, because because every year, every dollar that you put away grows and compounds upon itself. And the same thing is true for indexing every year that we do not index, we lose the compounding benefit of indexing. And weve already passed on that opportunity twice. Um, i think that when you think about the larger dynamics that are going on economically, and we look back at student debt and how challenging it was for the Biden Administration<\/a> to start restart student debt, i, i find that policy debate very akin to what were dealing with now. One s people got used to not paying student debt. It they it kind of seemed like that just wasnt a thing that we did anymore. And it was really challenging to acknowledge that this is an expenditure for thats part of our daily life. Just like paying for our bus fare or paying if we unfortunately get one for a parking ticket or paying for parking at a meter at the garage, thats an expense in our daily life. Its something that we pay for. Its something thats built into our daily budget. And then i think the third reason that its important is its the first step in building the case for a regional revenue measure in 2026, which is what is going to help us address that 240 million budget gap that starts in year three. I think it it makes the case that says we as San Francisco<\/a> recognize that part of this is our burden. We need to pay for transit. We need to pay for parking. But not as diana will talk about later this afternoon when i look at all of the revenues in front of me, if i pull them all out and i pull them slightly harder than theyve been pulled in previous cycles, i come up with 13 million. Thats it. Thats what the agency can do with what is in its own administrative control, without out either the support of elected officials, policymakers, or a vote of the people. So what to me this says is that theres a portion of this burden that we as san franciscans, can pick up as carry and carry. But beyond that, we are going to need some help. And that is the difference between the 13 million and the 240 million. And the reason that 13 million is important is because it shows that we are willing to pick up and carry our share of the burden. That being said, um, the 240 million i do want to emphasize is a very significant problem. And we do need to be keeping our eye on it. And the minute that we pass this budget, we need to transit in to dealing with year three. Um, you know, the board has really encouraged me to think big. And i know 13 million does not feel very big, but i would argue that it is quite big because weve tried two cycles. Weve tried for four years and it didnt happen. So even though the number is small, i think the concept is big. And you know what . We are in our meeting. You know, we do extensive feedback. And i would say that the 13 million is it is not a slam dunk. We need to make a case for it. And thats why were here today to make the case. So um all that being said, our current budget strategy is to focus on revenues that are available on july first, 2024, and what i mean by that is by by focusing on revenues that we have control over and that are administratively feasible to begin to flow in the first year of the budget, all of the other ideas that we have, and there are a lot of them, and we will Start Talking<\/a> about them as soon as we pass this budget. Are were going to require a lot of administrative work, bureaucratic change, a vote of the people of change in legislation and those things will not come to fruition in the two years of this budget cycle. So what we are presenting to you is the revenue that we know well. It is the fruit that is within our grasp and we are able to pick. We dont need to climb a ladder or trim any hedges to get it, like its there for the taking. Um, the strategy is to control expenditure, and what that means is director tomlinson is making hard choices and knowing that even though we desperately want to augment our services, that we dont have the funds to do so, um, and on the point of controlling expenditure, what that means is service neutral revenue neutral service changes, which means not expanding service keep adding service at the level that it is, but moving it around within the system to make sure that were optimizing to meet the needs of our passengers by controlling expenditure, allows us to stretch our one time sources like federal and state relief so they they last us till 2026. And, um, it requires, as i mentioned, keeping those two ideas in our head idea one, we have to pass a balanced budget for the next two year cycle. And year two, we need to use the next two years to be planning for 26, 27. So we would never come to elected officials, to policymakers, to the public to ask for more revenue. If we hadnt done the hard work ourselves and so i, as director tomlin mentioned, i want to highlight some of the things that weve done to make ourselves more efficient and spread those, spend those precious dollars wisely, wisely, um, reinvesting in muni forward. And i think a marquee project of muni forward is the transit only lanes. Its something the public will be familiar with thats allowed us to reduce travel times on those corridors. So that we could turn those savings into Additional Services<\/a>. Weve been using components from our old baretta vehicles, um, to repair our vehicles so that were not buying new parts. Weve been using the changes in travel demand. So travel demand used to be during the commuting hours, but its now spread both throughout the day and throughout the week. Weve been leveraging those changes to make sure that we are putting out more operator hours per shift. Um, weve consolidated some agency functions. Were resulting in administrative savings. Weve improved our Capital Project<\/a> delivery, which allows us to press to, um, stretch our capital dollars further. And weve been using, um, techniques like preventative and predictive maintenance, like fixit week, where we close down the system to do really critical maintenance, um, to make ourselves more efficient and do our maintenance more efficiently. Um, so theres a concept today that has kind of a wonky word that goes with it. Its a i p automatic indexing implementation plan, which is really just a fancy way of, of saying that we escalate our costs consistent or we escalate the charges for the public consistent with what it costs to provide service. So, um, every year we look at projected inflation. When we looked at projected, uh, increases in in labor, we combine those things and we come up with an indexing rate by which we increase our fares, fees and fines. But i want to emphasize that because because a i p or indexing because our indexing rate is tied to the amount that our costs go up, all that means is as our costs go up, our revenue goes up. A tiny bit, our costs go up a tiny bit, our revenue goes up a tiny bit. They move exactly in tandem. So if we do, if the only thing we do is, is index, we will not keep up with the rising cost of expenditure. We will not we will not get we if we if all we do is index, we will not get a leg up on that 240 million deficit. We wont be putting any dirt into the hole. Well just make sure that the hole doesnt get any bigger. So its really important, um, to do so. Thats why were presenting to you this concept of doing just just a little bit more than indexing so that we can try to get a leg up on that 240 million problem and put a little bit of dirt in the hole. Um, as i mentioned, the impact of not indexing is significant. Both because its revenue dollars that we dont raise and because we lose that, that compounding impact of indexing over time. And i think something that we dont think about also is that indexing allows certainty. When we index, we increase the cost for things slowly over time in a way thats manageable for the public. Right . I think one of the reasons that inflation was so challenging last year was because it happened so fast, all at once, and i think for the public, its easier to absorb 1 a year over five years than it is to absorb five years in year five. Right . And the way that we prevent that big, painful increase all at once is by slowly increasing over time. So so, um, i think one thing that sort of lost in this discussion is the, the math of it all. If you look at the distribute ation of the mtas budget, the vast majority of our budget is in transit as i have said frequently before, our Second Division<\/a> is the Streets Division<\/a>. The Streets Division<\/a>, if we which we would never do because streets is obviously a critical function to keeping people moving. But if we closed down the Streets Division<\/a> and we had no traffic control, no traffic signals, no painted curbs, you know, no parking management, that is not enough money to close a 240 million budget deficit in year three, closing down our second biggest division does not do the job. So what that means is mathematically, there is no other choice than to make cuts in muni service, which none of us want to do and which the community doesnt want us to do. As you can see from this slide, when we ask the Community Whats<\/a> most important to them 46 of people in the Community Say<\/a> that improving the speed, frequency and reliability of muni busses and trains is their number one priority. When it comes to the Transportation Network<\/a> and so those two things are really at odds, right . What the public most wants is fast, reliable, frequent transportation. And the only way if we have to cut our budget to make it balance, it would be through service cuts. So i think thats, um, its not mathematically, its not a choice that that is the mathematical equation. So, um, on that chipper and cheerful note, i will highlight for you the kind of information that we are requesting from the board today. Number one, what are your Top Priorities<\/a> . Something that my staff hear me say a lot is when everythings a priority, nothings a priority. And 1. 4 billion is a very large budget. And we can do a lot with 1. 4 million. So my question to you is how would you like us to direct our existing resources . Because how we choose to spend our time and energy, how we choose to spend our existing dollars, as you know, director tomlin mentioned, we can achieve a lot with what we already have. And so wed like to ask you, how would how, how would you like us to direct our existing resources to achieve your priorities . Number two, um, as we go through the day, diana is going to present our revenue options. Um, you know, what are your thoughts on those revenue options . And so that we can get your feedback back. And then with regard to the reserve for our, you know, right now, the reserve is 10 of our operating budget. Thats 140 million was um, if we dont receive additional funding, what what are the circumstances where you see us using that reserve . Um you know, 10 of our, of our operating budget is obviously not a lot. Um, its not even, you know, its like a months worth of expenditures, right . If if we had zero revenue coming in. So so, um, 140 million sounds like a lot, but youd be surprised at how fast it goes. So so, um, i think where i would like to hear some policy direction from you is what should we be planning for and thinking about as we go into the next two years about where, when, and for what it is appropriate to spend the reserve . Um, and i want to also point out, um, transportation 2050, as director tomlin mentioned, we have a we have plan a, b, c, d, e, f, and g for how to close the 240 million gap in 26, 27. And i thats not what were going to talk about today because the focus of today is how to close our two year, how to balance our two year budget. But but um, absence of talking does not mean absence of thinking. Were thinking a lot about it and planning a lot for it. And, um, you can see a lot of the ideas that are on the table in transportation 2050 and, and, um, as, as we move on throughout this fiscal year, once we finish with the budget, well be transitioning into coming back to you to really outline our strategy for how were going to move through the ideas in 2050 to get us to that 240 million in 26, 27. Um and so with that, do i do i take questions . Christine . No. Okay. Thank you. All right. Thank you. I look forward to your questions later in the day. All right. Uh good morning. Members of the board, diana hammond, senior revenue manager for the mta. Um, and as bree mentioned, i, uh, today will be going over our more detail in the revenue options that have been developed in order to close the next two year budget gap. All right. Um, so to start, i just wanted to take a little bit of time. Its been a while since weve talked about fair policy and pricing. Um, since, uh, uh, fy 21, um, to be, um, specific. Um, so to, to just start, um, our fair policy and pricing, um, its approved as part of our two year budget, and it sets forward not only the amount for the different fares, but the types of product, um, and also the details on our discount programs and what we try to achieve with our fare policy, um, is promoting equity, enhancing Customer Service<\/a> and incentivizing transit ridership. Um, and how can people pay their muni fare currently theres three different options. We have , uh, the cash, clipper and muni mobile. Um and youll see on the diagram, um, sort of how the distribution of the revenue is between the different types of products. Our single ride day passes, which are, you know, primarily for like infrequent riders, um, monthly passes for, for folks who are riding, you know, on a regular basis. And our visitor and cable car tickets, which, um, primarily, uh, support our visitor community. And whats important to note on this is that when we look at, um, the distribution of how people are paying for muni, uh, we find that, um, that in terms of cash paying customers versus those paying by muni mobile or clipper, um, that theres a, um, a difference of about 21 of, of, um, people paying cash that are low people with low incomes. Um, and overall, right now, about 79 is paid with clipper and muni mobile. Um so i just want to also to remind you of the next generation of clipper. Um weve had a presentation in more detail, but theres a lot of opportunities for our fare programs that come with this. Its set to launch, um, in the fall of this year for, um, expanded, uh, fare product availability, which were super excited about. Finally we will have our lifeline, which is our 50 discounted pass for people with low incomes. Um, on, um, on clipper. So that that those customers can buy them the same way that all of the rest of our customers buy it through tvms vendor or Retail Network<\/a>s. And also our one day muni only pass, which has been incredibly, um, popular, but also right now only available on muni mobile because we dont we were in this sort of period where we couldnt be adding products while a new system was being developed, and i know something thats very important to this board is an expanded Retail Network<\/a> to include improve access in underserved areas. Were actually already, um, there is a regional, um, working group that has been developed, um, in order for the transit agencies to talk about how we want to approach, theres going to be a 50 increase in the number of vendors. But we want to make sure that the Transit Agency<\/a> is are informing where and how many of those vendors are located in our communities. So that conversation has been starting. And also the new equipment does not require the vendors to have a dedicated hardware phone line, which well get rid of. The probably one of the Biggest Barriers<\/a> right now. Um, also, um, another issue that comes up or question that comes up with the transition to the new system. People will also be able to pay full fare, um, tapping their credit card, um, on busses and in the system. Um, and for later phases, well be able to do um, theyll be development of , of discount fares, but theyll receiving all the same transfer discounts both within our agency and regional. So basically just a clipper card, but with your using your credit card. Um, it also will enable some of the regional Pilot Program<\/a>s that weve been talking about. Um, the bay pass, which is universities and some. Um, Housing Developments<\/a> are currently, um, using um, but very exciting is this idea of free and discount transfers. Um, this is a pilot that will assess the benefit of providing, um, free discount or free, um, transfers bus to bus agencies and discounted transfers from bus to rail or ferry. Um so that will that that is a policy that the region has been wanting to implement and it will be able to be done with the transition to the clipper program. And then just wanted to quick overview, um, of all of the amazing, um, work that has been done by this board to try to provide relief, um, to customers, um, transit fares. Um, we have wont go into a lot of details. Uh, most of you are very familiar with all that we do. Um, but also to point out that there is an impact act, um, both on the labor side and potentially on the revenue side for providing these, these are decisions that the board has made in the past. Um, and, um, the assumption always is that we plan on continuing to provide this relief for our customers. And then also just very quickly, how do we set fares . Um, so this is a quick overview of our pricing model. When we look at our fare increase, we dont just do indexing across, you know, monthly pass goes up by 4, the same as um, the single ride fare. Because what happens is they get they start. Not representing the value for the customer. Um we found that particularly with the passports, where, you know, if you took a look at what the prices were previously, you would have to ride the cable car. You know, twice, plus muni for 4 or 5 times in one day to get the value of it. So we implemented this, um, several years ago to try to really, um, the base of our fares is on the single ride, um, single ride fare and the cable car fare, and then also, um, the for the discounts, the monthly pass and i just to give an example of what bree was talking about in terms of the impact, the compounding impact of suspending the indexing on, um, this shows you since 2021, the impact of the revenue loss versus spending. Um, the, the fares. And this is based on actual revenue for fiscal year 21. Um, so youll see that the, um, the impact of that gets higher over time. And and since as of this fiscal year, we lost approximately 18 million through the suspension of indexing. And if we continue that, that grows to over 51 million. So as, um, as bree mentioned, were going to be talking about some, uh, options that we have put together in order to close this 12. 7 million, um, gap and just to, um , to be clear, it can be a little, uh, a little confusing, but assumed in our budget right now is that were indexing. Were going back to the policy that the board set, believe in 20 or 2009, establishing that as our policy. So so suspending the fare indexing, no changes to fares would result in a 6. 8 million on top of the 12. 7 that were talking about. Um, so the option that staff is recommending and that we it also reflects the decision that were that the initial budget that was approved in um, fiscal year 2021 is to reduce to keep the cash fare the same. Um, um, and to incur mentally remove the discount for the clipper. Um, the clipper single ride fare. Um and a couple of reasons why that, um, couple. Well why were recommending this is one for equity reasons, as you saw. Um, theres a much higher percentage of people with low incomes that are, um, using the cash fare and on a positive note, we feel that the implement of this discount in january 2017 was to encourage the use of clipper as the primary de um fare Payment System<\/a>. Uh, in the bay area, we feel at this point, and i should also mention that it also applies to muni mobile for single ride fares. So um, its the discount is on both of those, but where its 78 of fares being paid on those two. Right to, um, systems right now. So we feel like weve achieved that goal that we had initially. Um, were interested in when we implemented that, um, and also we find that its, its remained pretty flat. So were not seeing a lot of, um, increases in that number. Um, so we think this is a good time to be able to make that change. Um, and also with all of the i think in conjunction with this, um, so many improvements that have been made leading to lead up to the implementation of the next generation clipper with the virtual card, um, on clipper, where people now can just tag their phone with their card, and also know, um, i dont know, every one has has noticed this, but with the replacement of the new clipper card readers on our vehicles, theres no longer the 4 or 5 day delay. Um, that people were seeing. So that we know that that was one reason why people were a little hesitant to use the clipper system is because there was that risk that it could take several days, so that has been a huge improvement for our customers. And then just to, um, oh, and on the side, i just again, for the for the math, the elimination of that, that discount rate is 5. 2 million of additional revenue. So the impact of, um, the cumulative impact of that is 6. 8 plus 5. 2. So it is a um, you have to take take the negative, make it a positive and add that. So it is a pretty significant increase in revenue. And this just is an overview of what it would look like to the customer. Um, again were proposing that the. Um, single ride fare for cash customers remains unchanged during the next two year budget. Um and there would be a 50 cent increase in in the single ride fare for clipper muni mobile during that time. Um, youll also note, however, though, because the going back to the prior slide that our monthly pass is set by 32 times the rate of this, the clipper muni mobile fare that that it does result in a significant increase in the, um, the monthly pass as compared to simple indexing. But what were finding now is that with the change in the workforce, with more people working from home, the majority of our customers are now using single ride fares. Um, and the monthly passes have really dropped off during this time. Um and now i will turn this over to Kimberly Burris<\/a>, um, to speak about fare compliance. Okay. Thank you. Good morning. Board. Thank you for having me. Im Kimberly Burris<\/a> with sfmta. So. We cant have a robust conversation about budgets and transit fares without looking at fare compliance. Right um, and so there there is of course, is a cost to providing service. And so its imperative that all of our customers pay their fair share. Um, so what id like to do is to start, um, from the same level of understanding when we talk about fare compliance, were looking at it from multiple vantage points, because there are several elements that go into, um, whether our customers are able to abide by our fare policy. Um, and so we look at it from things like what diana just went over policy and products. Um is our fares accessible. Um, what a key element is actually how people pay their fare, because its the way that people pay their fare that kind of leads into this wider spread and belief that people arent paying their fair, and that then kind of ducktales into, um, a culture of noncompliance and paying the fare. And so we need to look at that. We also need to look at education and culture, um, looking at different technology. Which diana just went over. Um, that aids us in both of those areas, but also looking at our proof of Payment System<\/a>, um, and making sure that the system is able to meet the demands, um, that, that we, we have put on us. Um, so looking at actually how many fare inspectors that we have of, uh, that support, uh, our, our actual, uh, uh, proof of Payment System<\/a> and making sure that the system itself aligns with our overall intended goals. So lets take a look at our, uh, proof of Payment Department<\/a>. The proof of Payment Department<\/a> is the department that houses our transit fare inspectors. Um, they are essentially the inspection arms to our fare policy. Our fare inspectors are our uniform, not Law Enforcement<\/a> teams that actually ride the system to ensure, uh, and check for riders that they have complied with paying their fair. They also play a major part, um, in support role throughout the entire system, um, in many different ways. Uh, and, uh, that often takes them away from the core duties, though, um, of focusing on fare inspections. Because our fare inspectors play a pivotal role in providing presence and support on our vehicles that extend beyond fare inspections. Um, we have expanded their training to meet the realities of what they actually see out on the system on a daily basis. Um, and we partnered with a lot of our city agencies to ensure that they had the appropriate training. Um, fare inspectors not only conduct inspections, they actually assist at special events. They uh, deployed to our giants games to help with safety on our platforms. As people are paying to get onto the system and they also assist transit during transit emergencies, um, such as redirecting patrons to bus bridges and any other transit needs. Um, that exist during that time. We estimate about 80 of their time is spent um, on their core duties of fare inspection. With that other 20 on those additional duties that i just went over in their actual training. So lets talk about evasion itself over studies. What we found is some key findings. Um, one thing that was key is that the increase inspections actually have a direct correlation to reducing fare evasion. But from 2014, up until now, what weve seen been, um, is that weve had a steady increase in fare evasion. And at the same time, weve had a decline in staffing. So weve had a decline in staffing. And we know that inspections, um, reduced fare evasion. Um, were not properly aligned there. So mta has been conducting fare studies as far back as 2009. And between 2009 and 2014, um, our evasion rates seem to have been pretty flat. They were hovering around 8. 5. Um and then between. 2014 and 20. Oh, let me step back for a minute. But then we had our, uh, in 2012, we had all door boarding. We introduced all door boarding. And when we introduced our door boarding, we complemented that policy change with, um, redeployment of our fare inspectors. So their focus went from primary being in our subways to now being topside on our busses. Um, and the change in that policy with that complement actually saw a slight reduction in, um, in fare evasion. Uh, in 2014. But between 2014 and 2019 is where we saw, uh, our greatest increase of fare evasion with the highest levels being at 12. 9. Um, and then right after 2019, of course, that leads us right into covid, which changed the world for everybody as we knew it. Um, and of course, Public Transportation<\/a> was not spared some of the impacts, um, that covid left behind. What we know right now is, um, we have conducted. Were in the process of conducting, uh, a, a full fare analysis, another fare study. Weve actually we are actually in the process of conducting a Financial Analysis<\/a>, um, and plan to conduct the observation study, um, over the summer or close to the summer time. What we do know is, um, our proof of payment unit actually collects observation, uh, data daily, right . Every day they come in, they, uh, collect data. Um, and what we see through the tfi data, which is our ongoing Data Collection<\/a> that we use in between studies, is, um, is that in 2019, the evasion rate was at 6. 72. Um, and right now in 2023, its at 11. 33. So a 68. 6 increase over. 2019. So one thing we want to be sure of is whats driving it. And so we know there is a change in the composition of our riders. Um, and we want to be clear on the impact that has on our fare revenue and where evasion actually ties into the declines. We know that evasion is a part of the story. We just want to be sure how much of the story it really is. And looking at some of the factors that actually contribute to evasion, we took a look at our staffing since 2014. Um, and our staffing numbers have declined a bit over time with a. Period between 2022 and 23 where we saw the lowest number of staff actually available to us to put on the system. Um, and thats the difference between how many people we have, uh, hired based on how many people are actually available to work. Um, and unavailable due to, like, long terme, um, leave or, uh, workers comp and stuff like that. And so as we study evasion, what were looking to do is also, uh, look at the optimal number of Staffing Levels<\/a>, um, that we need because our staffing has to be proportional to our goals. So because our staffing numbers have declined since 2014, um, its no surprise that the declines in our staffing numbers have a direct impact on our productivity. As we see, um, the declines in staff. And we also start to see the decline in fare inspections and again, what weve learned from the study is that fare inspections helps with the evasion rate. Um, and of course, um, what youll see in this illustration is that during the pandemic, you see citations decline, but warnings increased. And i do want to note that many of those warnings were paid warnings. And so while the inspectors were out in the system, when they did come in contact with, um, our customers during this very traumatic time, um, citations werent issued, but there were still payments still going on because, uh, our riders were still paying at that time. So using the tf ice or the fare inspectors, um, performs this data. Um, what we did is we took a look at and did a comparison of pre using prepandemic numbers and, um, post pandemic data and so what we see, um, through this data is that the evasion rate has increased according to their data. Um, and what we also see is that direct correlation between increased inspections and reduced evasion. Um, and so over time, because, because our Staffing Levels<\/a> changed and did not keep up with the actual problem. So that problem was expanding. And as the problem was expanding, our staffing was decreasing. We saw a 65 decrease. S um, in inspections. As we come together internally and look at, uh, fare evasion and fare compliance as a whole, we want to do it in a way, um, that we put reduction strategies in the forefront. Right. Um, and so we want to approach it from a holistic standpoint, using tools in each of these areas of prevention, deterrence and penalty. Um, to make sure that, uh, we continue to drive, uh, our internal conversations as we collect the data and conduct analysis and let that data and analysis, um, also drive the conversations, um, come with some collective agreement and then ultimate decisions once that has been done. Um, i can then bring this information back to the board with some updates. Um, and we can go over findings, recommendations and next steps. Okay. Thank you so much. Uh, bri and diana and kim, um, colleagues, we are going to pause now for board member comments and questions on these three presentations. And then were going to go kind of go into merch and then lunch and then finish item six after lunch. Um, so i want to open it up for questions on any of the last three substantive presentations. We heard. And im happy to lead off if nobody is getting in the queue. Okay. Director hemminger, thank you. Uh, madam chair, uh, and im afraid im a bit confused about clipper. Um, and i shouldnt be, because i know it quite well. Um, so the current clipper discount is. I thought its 0. 50. Is that right . Thats correct, thats right. And i think what you mailed to us, uh, was unclear on that point. Um, and whats in our agenda . Your options include removing 25 cent clipper discount. But its. But its 0. 50 or 25. Closing only to reduce it to 25. Um 0. 25 each of the next two years, bringing the eliminating it by the second year. Got it. Um, you know, i get a monthly report from mtc. I assume you probably do too. That, and ive asked this question before. It just isnt sinking in. Um, the, the, uh, the market share for muni, according to the mtc report, is about 33. What you stated today was in the 70s. Um, is that just adding the muni mobile deal . Um, it is a 33 a couple of things. The way that that report is created, its um, using our automated passenger counter data. Um, and compared to the, to the boardings on or. Im sorry, the tags on clipper. Um, and so one of the things that that report misses, uh, is the fact that, you know, many of, like, people transferring, um, on single ride fares and people using monthly passes, there is a tendency to not tag every time. So it is doesnt really reflect the behavior of people. Its only if you tag. So if somebody tags every single time on their monthly pass, um, they are encouraged to do so. But oftentimes do not. Um, so theres, theres some, uh, problems with the way that thats reported. Um but as kimberly mentioned, we need to get a better sense of whats going on with our riders and the riders survey. That will be conducted will give us a lot more information. But the number that im talking about is strictly of the revenue that we collect. Um, so well dig into that more. And in a way, i think its less important to know the precise percentage than to get the general drift. Um, and one of, uh, your questions, madam chair, is what information do Board Members<\/a> need in order to adopt the budget . I think one piece of information were missing is the cost to the agency for collecting fares the way we do. So, um, and as long as we have cash fares, youre going to have at least two means of collecting fares. Uh, and it would seem to me that itd be better to have one. Um, you know, bart went through this process themselves, as you well know. Um, and eventually decided to just go all in on clipper. And thats what it is today. You cant use cash to ride bart. Um, and ive heard some criticism of that idea because of the income differential, but the fact is, you can load clipper every day. You could load value on your clipper card every day. You dont have to get a monthly pass. Its not the most efficient way to do things. Uh, but if thats a persons choice, uh, so be it. Um so i think the information that i would like to have, uh, is what is the cost of running two fare Collection System<\/a>s . Um, and what would be the savings if we only ran one . Okay. Im happy to bring that back. Um so, uh, thank you. Also for bearing with me on clipper, because i think i finally understand what were doing. Um, i will say that my preference would be to limit the damage there. Uh and not go all the way to eliminating the discount, but reducing it. Maybe going from 0. 50 to a quarter. Um, and take it from there. I think thats what ac transit is doing, if i recall correctly. Um, but obviously its a its a policy call whether you go with, with 25 or 50, um, uh, that would be my preference. And let me just express now, madam chair, uh, my view is that we ought to reinstate indexing across the board for all modes. Um, everybodys got skin in the game. Uh i think it was reasonable for us to suspend it, uh, during the pandemic. Uh, because they dont come around every couple of weeks. Um, but the pandemics over. Um, and i think its time i think bri uses the phrase, uh, regular order. Uh, i think its time to get back to regular order on our fare Collection System<\/a>. Um, so that were not losing money every year at least, even if were not covering fully, uh, all costs. Thank you. Madam chair. Thank you. Uh, director hemminger, can i just ask a quick follow up on that . Because its an important clarification. Because because theres an option in front of us to say, spend fare indexing and then reduce the clipper discount. And youre youre putting are you putting a third option on the table, which is not to suspend. And to reduce the clipper. Yeah i, i think weve got an option three here. Um, and my view again would be that we dont eliminate the clipper discount, we just reduce it to 0. 25. For example. Okay i dont know if bri, um, maybe like, you can take the lunch break to do the numbers on that option three. Um, but it would be helpful to know where that stacks up in the order. Yeah. Okay. Thank you. Uh, director. So please, uh, yeah, just to make sure i understand. Its could you use the mic, please . Just to clarify , that would mean indexing fares and reducing or and reducing by 0. 25, but only reducing by 0. 25, not 50. Yes. Okay. And 0. 25 in year one. Uh, sure. Okay. Okay thank you. Director. So. Thank you. Um i have a question for each one of you, but maybe ill save diana from moving around. So start with diana. Uh. The clipper card lady. Um, thank you for the presentation. I remember you gave us a really good presentation on the Board Meeting<\/a> two way back when. And um, may i ask this clipper card timeline . The options that youre proposing here actually is really implementable within this year. It is . Yes okay. And, um, what about that visa Payment System<\/a> that you mentioned to us when that presentation on our board . Yes. So effective with the next when the launch occurs. Um, in fall of this year, um, adult customers will be able to tap with their any credit card. So this is actually, um, will be able to happen within this year or. Yes. Oh, thats great. Um, i dont have any other additional. Well, um, opshop options. Throw in there from, um, i think we will wait to see these numbers, but, um, i also actually wanted to bring up one thing to think about that maybe you already have done so is, uh, partner with our corporations to offer some type of clipper monthly pass for commuter to, um, have have we explored that revenue of potential . Um through that type of, lets say if we were partner with like a labor workforce council, then we can actually have a, you know, better, uh, ridership tip and also maybe be revenue coming in. How is that working out . A great question. And i think its probably, um, timely in that, uh, having an update to the board on the regional efforts that are going on around, um, fare pilots there. One thing we know is that for employers, um, or even universities having a muni only pass is not really helpful. Um, and so it really needs to be a regional approach. So theres a Pilot Program<\/a> underway right now thats being funded by mtc, that is piloting as i mentioned right now, um, theres universities that are and its an unlimited pass. So you can use this pass to ride on any Transit Agency<\/a> in the bay area. Um, so this is being extended to employers, but that will be a fee recovery so that whatever they charge the employers, um, is expected to cover the revenue. But yes, that is being piloted with the idea of examining whether it increases transit ridership. Um, and also to understand what the price points would be. So um, were super excited about that. And that is theyre very close to launching on a couple of employers and director. So this is, uh, also on our list as potential strategies for future revenue. Um, were realizing that, uh, the same time, this amazing nine county clipper bay pass program is moving forward and doing so in a way that would be affordable to employers. Its happening at the same time. Employers are trying to bring their workforce back into offices throughout the bay area. So it is one of those things where we might be able to strike a deal with, uh, Business Community<\/a> advocates to agree to some significant funding in exchange for ubiquitous bay pass among regional employers or ubiquitous bay pass here for San Francisco<\/a> employers. This is really illuminating to hear because, um, this is something that we will be talking about in the future for later agenda as one of our long terme revenue strategy, that thats lovely. I like to talk more about that by that point. So thank you, diana, um, have a question to kim. I really appreciate these numbers that you actually put together. Um, also specifically looking at the trend i have a question of like looking at just one big question. Why do we never hire what we budget for . Enough of the tfi in, um, inspectors. This is even before the pandemic. You know, in 2014, we never were able to hire the, the, um, were only able to hire up to maybe like 80 of what was budgeted in, in, in what we need. And so i think theres a couple of things that, um, goes into that one on, um, to be hired as a fare inspector, you have to have a post certificate called the pc. 832. Right. And in order to have, in order to so the pc 32 is a, a course in, um law in Law Enforcement<\/a>, um, as a limited, uh, Public Servant<\/a>, um, uh, you have to have that course to be a fare inspector, right . So what we what we found is that when we put out the announcement for our hiring, youre not. You dont have to have that certificate prior to hiring it. It becomes important once youve been, um, offered the position. And so theres a time lag between when people can be actually hired, when they and when they actually receive their pc. 832 thats one, um, the second thing is, uh, it takes some time as you you already are aware, um, through our hiring process to onboard people in addition to that other caveat with the, um, the post certification, thats thats another thing. And then, um, what what we actually looked at is, uh, when you look at the number of positions that were budgeted for versus versus, um, how many we hire, um, sometimes times, uh, in the past, there have been situations where we had to make some tough budget decisions. Um, and based on policy and budget decisions, um, we have held off on doing hiring in specific times, but the other, uh, issue with, um, the well, what i will say for right now, we are facing we have 45 budgeted right now. Um, we do have were at 38, right now. But what we what were facing right now is we have seven in the queue waiting for that post certification. And so its just a lag in the hiring process. In addition to the requirement of that certification in and director. So i should add that we are um, previously we sort of looked at transit fare inspectors as an expense. What the analysis that kamberis and her team, as well as the controllers office, have helped us understand better is theres a very strong correlation between transit fare inspector presence and fare compliance. And so were measuring the usefulness of transit fare inspectors based upon transit fare revenue, not transit citation revenue, but transit fare revenue. Um, and whats clear is where nowhere near the optimal number of transit fare inspector that we think getting back to a 2018 number of fare inspectors will more than pay for itself through improved, uh, transit fare compliance. And in addition, creates really significant benefits for um, uh, personal security for our passengers as well as our operators. But were hearing from our riders as well as our operators. Is a lot of support for more uniform presence on our vehicles. Um, that focus again on getting everyone to do the right thing. Uh, well, thank you for the explanation. I think we should look into how can we help to streamline these efforts . Um, because hiring the right talent is really difficult. And then usually the right talent. This is not just for one time type of job, but just in general. When theyre good, they got snatched by other the other agency that got poached, you know, just like the wire people that jeff, you were telling me about the overhead wiring guys, uh, ladies too. So, um, i would like to see if we can do something to help kims team to get the resources and focus as a priority to bring more of them back up, because i personally felt way much better, too. When im on the number 49 or number 14 on, um. They are Amazing Ladies<\/a> and gentlemen, to do the work. They are really, uh, helpful and really, um, approach people in a very, uh, appropriate and respect full way. So thank you, kim, for explaining these. And i would actually like to get us back to the number of what we have budgeted for and if not more. More. Okay and, um, i have one last basic question to bree and, uh, bree, its, um, the same question that i asked to you one on one. Um you explained about the indexing really well of, like, what we should have, what it should happen and what whats happened, and id like just to look at some number in perspective to share with everyone. May i ask you, like what is if you have to analyze the last two fiscal cycle of total four years of indexing fare, and what is that percentage that we would have to look at right now and then compare to what are the percentage that youre proposing . I know that you didnt do the annualized percentage because that will be an enormous amount of percentage, but i want everyone to get a good understand of what that means at least to myself. Be able to tell my, um, Community Friends<\/a> of it would have been this amount of percent. But instead we cut that 19 million, uh, loss, and were only going to index the fare increase only looking at just this year, do you know the number difference . It was its 19 million in revenue. But i think the question that youre asking me is, um, what what do we have . What would we have to increase to what percentage would we have to increase to make up the difference . Is that the question youre asking . Yeah. Like, say, if you compound the Interest Rate<\/a>, right. Like if we do that every fiscal cycle, we vote to continue to do that in the past. Like how would we catch up . Like what is the cumulative percentage that were looking at right now to, to catch up. So then we actually did not have that 19 million, uh, loss in revenue. Let me come back to you with that. Okay so what is the percentage that you think . What is the percentage that youre proposing right now without all that, you know, what is the revenue option that were proposing . What youre proposing an index, uh, increase. Youre proposing to bring back the indexing rate. I just want to know what is that rate in just numeric number . Oh, i see. Its about 4. Okay thank you, thank you. Uh, director tarloff, actually, um, aubrey, i have several questions for you. And then, uh, a question for diana as well. So, um, how did dynamic a factor in is increasing ridership up in terms of closing the budget gap . You know, if we were able to increase bus ridership, uh, of full fare paying riders by, say, 5, you know, how how important is that in the in the whole picture . You know, revenue projections are sort of a venn diagram of what do people pay, how many people are riding and what are fare evasion rate is and what sort of discounts are we providing right. And so the amount that we cover in revenue sort of depends on like which lever we pull, how hard i mean, i will say that, um, we have seen an increase in ridership over the last couple months, which is encouraging thing. Um but there is but the correlation to revenue increases is not direct. Right. Like we saw more revenue, we saw transit ridership go up 1. So revenue went one up percent, went up 1. Because it also depends whos riding right. Is it a rider who has a monthly pass and theyre there for and their riding more often because their travel patterns are changing. But that doesnt change the revenue to the agency. So um, as kim mentioned, were going to be doing an on board survey this spring thats going to help us tease out the answer to a more specific answer to your question. Okay. Thank you very much. And then also, um, i thought it was very interesting in the, um, pie chart. Uh uh, regarding, you know, what, um, what, uh, the general public felt were should be the Top Priorities<\/a> that that, uh, for, um, pedestrian and bicycle safety. It was near the, near the bottom. Um, um, in terms of what, um, people said and how does that inform your thinking about about the budget in particular because of vision zero being a very Strong Initiative<\/a> for mta and, um, and yeah, just like to hear more of your thoughts about that. You know, i think like any difficult policy question, its a question of balance. Um, and you have to also think about proportionality. Right . So i think a lot of the reason that the data comes out that way is because of the very large number of riders that we have, right . So if you ride muni, you very likely care a lot about safety, reliability and transit. I know, or safety, reliability and cleanliness. I happen to bike to work every day, so i care a lot about safety of the bike network as i ride to work. But there are more transit riders than there are bikers. And so i think that that is the way that the why the data shapes out the way it does. But like anything, its not an all or nothing proposition, right . The precise question is how do we, um, how do we balance the, the, the trade offs so that were trying to meet the needs of the whole population . Um, its just that math thematically, transportation is a very intense, live, resource driven Operational Program<\/a> because every time a vehicle is moving, that vehicle needs to be driven clean and maintained, stored and gassed paint, you know, all of the things. Whereas like the bike network, for example, is more of a, you know, a capital investment. So its also a question of what kinds of dollars can fund what and whats an ongoing expense versus whats a one time investment. Thank you. That that helps a lot. And i also have a question for diana. Um this is a this is a basic kind of newbie question. I would really like to understand better the, the need. Um for both having the, the muni mobile and the clipper systems working simultaneously. And im just, uh, specifically interested in in is, um, if, uh, the reasons are about. And im, im guessing theres a variety of reasons. Um, but, um, our are the reasons why what categories do they fall into . Um, a convenience for mta in terms of, of, uh, you know, administrative function, uh, versus, uh, what are just for National Issues<\/a> that, um, are, um, encountered, you know, in, in, in the Transit System<\/a> and then, um, i didnt finish writing the third one, but so id like to be very im very curious. Thank you for that question. I think its very important. Um, and i, i wont look at director hemminger when i answer this question. Um, uh, so, so, um, the muni mobile, um, has been implemented to really fill some gaps that clipper couldnt fill at the time. Um, so, so and, you know, the metropolitan Transportation Commission<\/a> has made it very clear that clipper is the investment that the region has made for a single fare Payment System<\/a>. Um, so as we transition to the new system, um, theres going to be more functionality available that will negate the need to continue on with a separate mobile app. Um, you know, for instance, the single ride fares, um, are available on muni mobile because of the issue that sometimes it would take 4 or 5 days for people to be able to load their value. Um, what has been and also our lifeline pass, its not available on clipper. Um, where the app has been incredibly successful is with visitors, um, for cable. Thats the overwhelming, um, percentage cable car tickets and visitor passes, muni cable car. Um, and again, when youre traveling with with four people in including children on a vacation, youre, you know, not going to buy four cards, 3 each, it really does not serve group travel because you cant tag a clipper card four times and pay for fares. You have to have four different cards. Um, so the next generation of clipper will also include a app that sort of mirrors these, um, standalone applications that transit agencies have had. So we will be able to transition away from that because ideally, as director hemminger said, um, fae actually have three, uh, currently. So, um, yes, we that is our goal. Um, and one of the reasons why were so excited about the transition to the new system. Thank you. Director hinsey, i think you have your hands in the queue. I did, and i have questions for, uh, miss harrington and also miss burris. Uh, and so, um, miss hammond, if you could. And this is this was actually one of the revenue ideas we got from one of the members of the public who sent us a communication about, um, special events, free muni passes, kind of a warriors ticket or, uh, outside lands, esc, esc, pilot, uh, where the ticket is your, uh, free muni pass. So are we looking into possibly expand expanding that to with partnerships with more like event companies. Yes. Thank you for that question. Um, and again, the timing is perfect. We just had, um, uh, conversations with sf travel and similar to, similar to the issue with employee passes that a lot of these events, it doesnt really work if its only muni. Um, especially with conventions, youre missing that leg of travel from bart to San Francisco<\/a>, right . Um, and so we are, um, entering into those discussions, meeting with joint meetings with sf travel bart, and also bringing in the Moscone Center<\/a> into these conversations, but also not to limit ourselves to just big Moscone Center<\/a> events. But perhaps have some menu of something that allows, uh, you know, this muni bart pass to be able to be to purchase. So we are looking into that. And again, its one of those things that we couldnt do , um, in the existing clipper system. So it provides much more flexibility to create those passes and create them much more quickly. Um, and not, uh, incredibly expensive either. So yes, we are absolutely. Its an ideal. Um, but we do need to partner with our other agencies to make that happen. Okay. And i and i saw in the paper yesterday that bart is eliminating, like a transfer, a transfer fee or a transfer discount or some such. So maybe maybe thatll help. Um uh, and then miss, uh, burris, my question for you is, is obviously weve seen the merits of your, the team of folks that you manage, um, and so and obviously they cant be on every vehicle all the time. So i wonder if you could sort of talk about with the public how you prioritize these and kind of how you look at at, um, best staff offing, um, given the resources that you do have on what lines etc. Great question. Thank you for that. So what we actually do is we use the data that the fare inspectors collect daily, and we do an analysis of that data, and we build out a 30 day calendar used um, that data, um, and that data kind of tells us is, uh, we kind of rank lines, we use, uh, specific data points, like our evasion rate, our ridership, and security related incidents on each of the lines to rate and rank airlines. And, um, they look at the first ten lines as high lines and then based on, um, that ranking, we do a 30 day calendar and they deploy it in that way. And so what were trying to do is, uh, let data drive our deployment decisions to get, um, more of an impact out of our deployments based on the limited resources that we have and going on those limited resources. If you were to, uh, get at those eight. Well assuming youre going to get those eight out of sort of what ill call pre hiring, um, process. I guess, and assuming you get those eight, how, how how much will that increase your staff in terms of the amount of, uh, busses and routes that youll be able to cover . Um, well, with this, this, this recent hire, i dont think it will give us much of an impact, but, uh, as we did go over, we are looking at an optimal number of fare inspectors based on the work that were doing with the controllers office. And their modeling to determine what is the best number of, uh, fare inspectors for us to be able to increase the amount of Service Coverage<\/a> that we can give so that we can see the inspections increase. Um, and based on the number of inspections increasing, really driving and more revenue, as opposed to issuing citations. Great. And do you know if well have that data before we have to consider and adopt the budget . I doubt it because we have to complete or conclude an observation study, and we wont be able to do that until, uh, around spring. Ah, okay. Well thank you. Well well look well look forward to seeing it whenever it is that you have it. Uh, madam chair, since director hemminger sort of gave his perspective on the whole fare conversation, i think now is a good time to do that. Do you . Do you want me to go . All right. I think i think director, director. Hinsey just to orient sort of you and everyone. It is this afternoon under item seven that were going to kind of look at all the revenue options, including the parking and fines and everything, and then sort of have that robust discussion with the board. Um, but i mean, brief comments. Sure. But just know that that we have time set aside for that this afternoon. Okay. Perfect. Um ill just add to with the fare conversation, um, im supportive of the staffs original, uh, original recommendation to index, uh, the bill, eliminate the clipper, uh, discount, and not in, uh, indexing cash. I think that is the sort of the most noble. Nobody wants fares indexed. And i think this is the most, uh, equitable way we have in terms of trying to recover some, uh, revenue. It would be great. Like, it would be great if we could index fares across the board. But i think that this is the most equitable way. What staff has proposed is probably the most equitable way of doing doing it. And i think, um, since were talking about fare Collection System<\/a>s, i think well always have to have some degree of a cash, a cash fare Collection System<\/a> for folks that are on banked, folks that are you know, low income and dont use clipper and that are less tech savvy for older folks. And maybe some folks with disabilities, i think well always have to, uh, have options available for those communities. And so i do think that this is the most equitable way to try to recover our, um, our fare revenue if were faced with, uh, these, these options. So ill leave that there for now. Madam chair. And well have more to say this afternoon. Thats very helpful, director. Thank you, vice chair. Kahena, please. Thank you. Chair for, um, im trying to figure out which order i should do this. Uh, ill start with barry brea. You just have one question. Um, so in terms of, um, or a comment rather, but in terms of information that id love to, um, analyze more and get a better sense of is specifically what Investment Strategies<\/a> will have a net positive impact on our budget. So we heard from kim talking about the fees and having more of their presence. And also, jeff, um, increase us fare compliance and improves transit rider experience, which brings more riders to our, um, to our system, which is great. Uh, fix it week was another great example of that as well. So i think, you know, as we try to get a better understand of what our budget, um, decisions look like, i think thats something that this board would really benefit from knowing. Thats just a comment. Just okay. Yeah. Right down. Thank you. Um, and in terms of dna, um, questions and comments for you. Um, so one of my main goals, um, is mode shift and ensuring that our transit ridership numbers go up. Um, and in terms of the different, um, fare, um, systems that we have cash, non cash, um, as you do that analysis, i think itd be wonderful to also get a sense of how many unbanked people there are in San Francisco<\/a>, just to get a sense of what real life impacts would have on, like changing that system for folks. Um, so just asking you to include that in your analysis, um, slide 39 of your presentation talked about a lot of the disadvantages or some of the impacts of, um, our transit discount programs. And i wanted to give you an opportunity to speak a little bit more about the gains of our transit discount programs. So what are the whats the good side of it . Um, i actually would, um, reframe that as investment, right . I mean, thats thats really what that is the, the, um. So that i appreciate that comment because that, that really is the investment that you all have made in providing these discounts. Its our fare policy has been, um, very clear that thats where we want to focus our, you know, our reduction and, and, um, you know, providing relief for, for people with low incomes. Um, absolutely. Um, the positive of the programs is that it provides Financial Relief<\/a> to people. The free muni for all youth. Weve seen a significant increase in, in youth ridership. So all of these programs, um, combined kind, um, help provide people with access. And also the other side of it that people dont think about as much that we heard during the initial free muni for youth implementation is that also, um, there are people that are writing muni because they cant and they cant afford it, they cant pay. And that fear for of being, um, you know, having a fare inspector walk up to them. And meanwhile, its all they could do to get to work. Um, and so that was something, a message that i think really struck me during those conversations is its not writing because they cant afford to pay. Its people not paying and writing and being fearful of that interaction and the embarrassment at, um, when theyre just trying to get to work or get to school so that thats also the other side of it. Um, we have the most comprehensive discount program, um, of any Transit Agency<\/a> in the country. And really, you know, i field a lot of phone calls from other agencies as youre able to share best practices and lessons learned. So its something that all of you should feel very proud of. And again, have to work on reframing that as an investment that weve made instead of a, um, a cost. So i appreciate that. Thank you for that. Um, and i love seeing in your recommendations, uh, the free muni, uh, for Youth Programs<\/a> still there. Um, so i just wanted to shout that out and just say thank you for doing that. Um, in terms of transit fare inspectors, um, can thank you so much for your presentation. I think this is probably been the most comprehensive analysis that weve gotten on on your work and the program that you manage. Um, and im just floored by just like the amazing work youve been doing with your team, um, specifically around just like the comprehensive training that you subject your team to. Its absolutely amazing. And you know, 80 of their job is the fare inspection, but its that 20 that really makes a difference for transit riders that feel safe, that feel seen, that feel, um, and i would also assume for our operators, too, um, just having additional staff on the bus on the line, while some of these really challenging incidences happen on the bus, i think its a game changer for a lot of folks in terms of their decision to take transit or not. Um, so i just really want to shout out the work that youre doing there. Um, a lot of the questions is my team, the team here already took from me. So like, uh, theyve been asked, um , but i do wanted to ask a little bit more, um, specifics down the line. Perhaps not at this moment around some of the times and lines that you would like Additional Support<\/a> in. Um, if some of the through some of the analysis youve already done, youve identified kind of these like key like hotspots or areas or even in, um, times where youre like, were understaffed specifically here, this is where we would really appreciate some more support. Um just to give us a better picture of what that investment would look like. Um, and, and i would love to i think the board would also benefit from seeing that analysis that that really does show that net positive of having more fare inspectors and, you know, the compliance that comes from, uh, and the increased revenue and fares, i think having that analysis before us, i think would really benefit us. And just really understanding how important the work that you do is. Um, so hoping to see that down the line as well. Well, were building on that. Thank you. Thank you. Vice chair karina. Okay. I also have questions for all three presenters. Thank you for your presentations. Im going to start with, uh, our cfo. Um, and really just sort of a high level strategic question for the board. And this came up through the Public Comment<\/a>. You may have seen, um, as well is, um, i think through the, um, economic presentations this morning and your presentation, we are convinced that were facing massive uncertainty. Um, and so my question for you is, is 12 million the right number to be solving for given all of that uncertainty ante given, you know, there are assumptions baked in about general fund that may not materialize. We dont know. We are all uncertain. We are all fearful. So why are we only and im not talking about the 240 million that we talked about at the last conversation now. But given that such a small number and there are these bigger uncertainties, should we be looking at an exercise today that doubles that 12 million, for example, or triples that 12 million in terms of the tools that we have in front of us . And i wonder just how you think about that. Yeah, its a great question. Um when i, um, you know, we actually talked for the first time like a year ago today. Um, so one of the things that i was did to learn about as a new cfo are, you know, what are are the levers that we have to pull when it comes to generating revenue and that was sort of the mindset that i came to todays presentation with, because so many of you are also new. I thought you might also want to know how what are the levers that we have to pull and how do we pull them . And so i did kind of a comprehensive review of all of our revenues and what the drivers of those revenues are. And and um, i think when it comes to transit, that that is something within, in our control. And we could push, you know, there was a revenue option that we considered that was indexing fares and eliminating the clipper discount. Together but that was a really significant rate increase to fares and, you know, it was Something Like<\/a> 25, which and thats kind of exactly what we want to avoid with indexing. Right. Like you dont want to do nothing, nothing, nothing. And then boom, um, and when we sat down and thought about what would it mean for the public to absorb that, knowing all of the other challenges that the public is facing, how expensive it is to live in the bay area . That seemed beyond the realm of what was politically possible. So, um, so that was the analysis on transit. The analysis on parking was was, um, parking comes primarily from four revenue streams, parking meters, parking garages, parking fines and parking permits. Parking meters are set based on variable rate demand pricing. What that means is we change the cost of a meter based on the usage of that meter. Its like an economist dream, right . Its like the perfect demand curve. If a parking space is underutilized and then we drop the price to make it more attractive to park there. Um, so that were pulling cars out of circulation when we dont want people circling, we want them to park and get out of the way of muni, get out of the way of the drivers, get themselves parked and get them to their destination. On the other hand, if we see that, uh, um, there, if we see that utilization points us to raise the fee so that we have more turnover to influence circulation, we do that. So so the cost of meters is based on our policy objectives of circulation as well as the economics. Right because theres something called the laffer curve where you can increase your the tax that you charge up to a certain point, youll generate more revenue. But at some point you have increased the charge the to the point where you decrease utilization. And our variable rate pricing makes sure that we never go to the other side of the laffer curve. The same is true for garage rates. We apply this exact same analysis to garage rates, and were also now, um, doing regular looks at comps in the neighborhood. Right . Particularly for downtown garages. Sure could we say that that were going to charge 200 a day for garages in San Francisco<\/a> . Sure. We could say that, but probably people would choose not to park in our garages and move to the garage thats parking. Thats charging 30 a day, right . So you have to be aware of both supply and demand on the parking, um, permit option. We have, um, according to state law, we are allowed to charge Cost Recovery<\/a> for certain Government Service<\/a>s. And that is that process is managed by the comptroller, who every year we have to submit something called the prop j analysis that looks at what it costs us to provide a service and what were charging. And those two things must be in alignment. We cannot charge more on the cost of the service. So theres a theres a legal limitation there. And then on the fine side, um, in some cases, depending on the fines and where the fine lives in our legal code, there are maximums that can be charged and, and, um, where we are is, you know, where we can only go up to that maximum. And historically, you know, our policy has been to index. And so what were presenting to the board later this afternoon is 5. Thats which is beyond indexing. So were already pushing just a little bit farther than we normally would. Um, and again, you know, looking at all of the economic challenges that our riders that are, that our customers are facing, thats what we thought was, um, politically feasible and, you know, fair to the community. We have to balance Revenue Generation<\/a> with political considerations. And, you know, how how that will be received by our customer base. Um, our other major sources of income are the general fund out of our control, the other major source of income is operating grants. Similarly out of our control. And then we have miscellaneous revenues. Miscellaneous revenues are driven primarily by our advertising contracts. Um, and wireless poll rentals. And um, rent generated from leasing of Real Estate Properties<\/a> that we own. And so all three of those sources are facing some economic up winds. Right. Like advertising on fair shuttles and busses is less enticing when theres less people on the bus. And is standing in a Transit Center<\/a> or at a as a transit shelter are unfortunately, our wireless revenue, um, which is the revenue that we get by generating, um, renting our poles to wireless carriers that was cut by about 50 because of federal regulation that limits the amount that we can charge. So thats something that we have to absorb in the next two year budget. And then similarly, rents, you know, ben just went through an extensive conversation about how rents are down throughout the city. And the same is true for mta properties. You know, we used to get some pretty significant rent income from retail spaces in our garages. But when people are not parking in the garages, theyre also not stopping off to get a snack or buy flowers or, you know, do small retail transactions in those garages. So those, you know, those and those incomes are negotiated through multiyear contracts. That are approved by the board. So there wasnt a lot of room there for, um, so when i look at the options that we have that are, again, within our control collectible by july, you know, starting july 1st, um, political feasible and seem fair and reasonable for the public to accept. This is where we landed, you know, could we increase the parking fines by 10, not 5 . Um, i think that would be a question that we would have to understand. You know, how would that be received by the community and how would that be received by elected officials and policymakers . But thats pretty much, you know, we kind of already went over the transit fare thing, parking meters and garages are already, you know, in the ideally in the Perfect Place<\/a> in the laffer curve. Other revenues are negotiated by contract. Those are the things that are within our control. Thats really, really helpful detail. Thank you for laying that all out. Um, and i could just easily see a scenario where in five minutes its a 25 million gap instead of a 12 million gap. Its just not hard to imagine at all. So can you just help us understand . Is it helpful in the context of this budget process for us to think about like a two tiered approach, or one is solving the 12,000,001 is if we got kind of a contingency situation, if we got to the 25 million scenario, what the board would want you to do next, next, next, or would you rather not have that conversation now solve the 12 million problem. And if we come back mid cycle to a bigger gap rather than you all thinking this is as much revenue as the board has authorized us to generate, so we must now go to cutting to come back to us mid cycle then, and have a conversation about revenue. How do you want to proceed . I mean, personally i always im a cfo so i plan for the worst case scenario. Um, and i find that change change is easier to absorb over time. So with long lead times because that allows the operational divisions and the public to be aware, absorb, react, change behavior. Um i think its very difficult to have hard conversations. I sort of think of like an x graph and a y graph. Theres like difficult of Conversation Time<\/a> to have conversation. And i think Difficult Conversations<\/a> in a short period of time, i would put in the bad quadrant, um, and so i think harder conversations require longer time periods. And i think, you know, based on what i just walked through in terms of, you know, what are the levers available to us, i think the remainder of the conversations are, quite honestly, hard and so the sooner we begin to have them, you know, the better. Okay. So let me appetite through this process. Although let me let me add so our priority for today is closing the budget for the next two years. Um, and the harder stuff cant be done in time. We are eager to have those conversations, but i want to make sure that we focus on this present, difficult budget and allow us to do a little bit additional staff work for the harder but important work to bring in additional revenue. I think from a schedule standpoint , by the time we close this budget and do some additional staff work, were looking at a very good time being the First Quarter<\/a> of calendar year 25, which is the right sort of time frame for potentially like if were successful at new revenue of doing potentially a supplemental, uh, either up or down, depending upon the net. Um, for the second year of this budget, the second fiscal year. Okay thank you. Um, and then another process question for you just kind of building off director sues question. Then it seemed to be support for increased, uh, staff on fare compliance, for example, because that promotes a sense of safety. And, um, its been appreciated. Um, and thank you for your service. Um, well, all were talking about today is revenue. Were not talking about scenarios of increased expenditures. For example, five additional fare inspectors at what point . Just so this board understands that public understands at what point are we going to have that conversation . Because again, were solving a 12 million problem. Um, based on an assumption, a scenario of staffing and expenditures and there may be desire among this board. I know i have desire to talk about additional potential expenditures towards our goals. And youre all going to hear from us our priorities today. So how is that going to happen through the process . Thats a great question. So i tend to think of the budget in phases. The first phase of the budget is what is technically referred to as establishing the base rate. You look at your your what is a reasonable expectation of revenue that you think youre going to bring in. And thats why i wanted to have the revenue question early. Right. Because i need to know what number am i balancing around. Then you look at your expenditure and you see how much does all the stuff i already do cost. And then you merge those two things together. You try to solve the problem and or celebrate when youre like, whoa, theres so much money. Yay um, i hope to see that happen in my tenure. Um, and you, you bring those two things together and thats thats your balancedn right now is a balanced base. And that is what im going to present to you on march fifth. And then i think that its at that time where we know where we are, um, with base budget that we can talk about what our, our other options. And of course, based on your feedback today, um, will be doing work in the background to cost things out to understand how that will, you know, back to the point of the office. How can that be offset by increased revenues . So based on your direction today, ill be putting together the numbers that we need to have that conversation on. On march 5th. So the plan to summarize is to come to you with a balanced base in march 5th. And then, um, understand what what the what other our desires, like additional fees cost. I just want to make sure we save enough time between march 5th and our adoption date on april 16th for real iteration on. Yeah. Okay. Yeah. I think, um, you know todays january 31st. So i think , you know, the next month is about, um, taking the boards feedback today and then turning that into, you know, really data that you have something how do i turn your desire into to, like, a decision point. And thats where well be in march. Okay. Great. Hi my next questions are for miss hammons. Just two quick questions. One, i just i wish director borden were still here to hear you say this is the year that were going to have credit card payment on muni, because she would be just doing cartwheels. So thank you for your work. This is a huge step forward right . Really . I mean, this is this is very big. Now my question is on the fare capping piece because this is all we want to make. We want to make it as easy and intuitive as possible for people to pay for muni. And that fare capping. Uh, you know, i grew up in new york. I just spent some time in new york knowing that you are sort of you can just ride transit with abandon, and youre not going to pay on a weekly basis more than a certain amount. It just gives such a sense of sort of confidence and security and freedom. And i just wonder where we are in that fare capping conversation. Yes. Thank you. So the transition to the new clipper system, um, allows it to happen. It is part of what has been built into the fare rule. So its not going to be as we you know, i didnt mean it used to be a one year, 1 million for any change. Thats not going to be the case. So its on the new system. Well be able to implement it. But what is important is that we really take the time to, um, evaluate the impact, um, to understand and our customers again, the on board survey will be helpful. Um, and surprisingly, from the conversations ive had with other agencies, you know, going back even, you know, years ago when portland introduced theirs to la, most recently, the communication and outreach regarding this change is so incredibly important because as we all understand, this, you know, accumulates and passes fare capping, but it is very difficult to communicate it to the public. And they dont understand it. They dont trust it. Um. La said. They spent almost a year during that transition in a significant amount of resources. Need to be dedicated to that conversation. Um, agencies have done it wrong, have actually rolled it back. Um, so, so that that piece to me is probably the most important. Um, and also just from an operations perspective, i mentioned earlier, our monthly pass holders dont always tag, um, which you know, thats thats actually helpful from a service perspective. We encourage them to, but its not technically a violation, but that retraining process, because if you dont tag and you have an active monthly pass, its not a violation, as i mentioned, but but if you dont tag and you have, you know, weve moved to accumulate or it will be a violation. Um, so we really thats its not only communicating to customers what is fare capping like. Right. And then the second piece is okay. So now you have to tag every time you get on a vehicle. Um, but the benefits particularly for, um, our low Income Customers<\/a> is um, is, is huge that we talk about the gap between, um, the number of people that are participating in our lifeline program. Um, and even the Start Program<\/a> with clipper has not been has not seen the uptake. Um, but on the monthly pass, i mean, having people be able to pay up to that, you know, monthly value is, is so important. So its really from a um, Equity Perspective<\/a> is important. So yes, long answer to your question, but the stage will be set. And then we need to we are have done preliminary work but then need to take a look to see how we get to that next step. Okay and so just to clarify its gonna be a monthly fare cap not a weekly. Those are things that need to be evaluated okay. As part of it possible to do both daily monthly okay. And then this would be with credit card as well. Or just with the clipper either one. Okay. Um, but there. Yeah. No thats perfect. Thats thats the right answer. Thank you. Okay now id like to ask miss vera some questions. Um, so i do. This is so helpful. Im so happy were talking about this. We have this time and space to talk about fare compliance, because its been a missing piece of the conversation. Um, i am a little bit confused, and i just want to make sure theres a lot of numbers. I want to make sure everybody walks away, sort of just with a with an important understood ending of sort of where we are now. So i was a bit confused because in the, in the diagram, you showed that it was 12. 8 in 2019, which is prepandemic. But i think in your remarks, you then said, now in 2023, were at 11, but those are apples to oranges data comparisons. Is that right . Correct. I would assume its just i would my gut would be that it would be higher. Now because weve sort of leaned off of enforcement over the last couple of years. So can you help us understand where we are now and then also how that current number benchmarks against other agencies . And do you basically think were doing okay, or do you think like this is a problem we need to solve . Ill start with that one. I think were doing much better than, um, agencies that we have reviewed, such as new york. Were in a much better situation than new york. Um, but that being said, we do see an increase in our fare evasion. Um, and the difference in the numbers, the fare study, of course, um, has a much larger sample size. And what we what we tend to do in between studies is use the fare inspector data, which is a smaller sample size. And so when we looked at the fare inspector data and compared it apples to apples, um, in 2019, their data suggested we were at 6. 9. I think, or so. Um, in 2019, um, where right now, just using their data, not the study data. Um were at 11. 33. So a huge jump. And thats the difference. Um, what we have seen, weve been studying this over the last couple of, uh, weeks is, um, the fare inspector data. If you kind of double that, the actual Percentage Rate<\/a> that brings you closer to, like, the study numbers, the Percentage Rate<\/a> that we see in the study numbers. And so, for instance, if youre looking at 11. 33, you double that. Youre looking at about 23. Um uh, of invasionary. Um, so that is a really significant problem. Okay um, but in terms of a percentage point increase, its not that huge, right . In terms of percentage over base, but in terms of point increase, it is actually less than we had thought it was. And particularly compared to when you look at, uh, i know la metro is at a 34 fare evasion rate as well. Um, the other thing that we observe, of course, is the impact of, um, uh, not only the free programs, particularly free muni for youth, but the number of ways that you can pay without having to tag. So with muni mobile, theres no tagging, um, with outside lands and with any event at the chase arena and increasingly, you know, other events as well. We have universal pass programs, which there is nothing to tag because we have a proof of Payment System<\/a>. And so one of the policy questions that were going to need to be facing later is, do do we need to do we need to change our technology to invent ways of being able to have universal pass programs that actually require tagging . Because what we find is that that our customers think all of these people who are getting on, who have a perfectly valid, uh, you know, pass, but are not tagging clearly, they are not following the rules. So therefore, why should i follow the rules . So theres a theres a theres a voter psychology challenge that were facing, uh, that either we need to educate folks that there are 17 different ways of paying, only one of which is tagging, or we need to get everyone to tag. And this this is actually a psychological problem that systems around the world have faced as well. Yeah. Great. Great. And you know, we are talking about some some ways to generate revenue that are going to be unpopular and so i just feel like i have to ask the question, uh, what . Well i just feel the public deserves to know what do we have any sense of the amount of revenue were missing from fare evasion . So how much that could go towards solving the 12 million problem were trying to solve . So we dont have it fully . Um, and what were going to do between the Financial Analysis<\/a> that were currently conducting in the observational study is come back to you with that, uh, definitive response on that. Uh, but for the time being, like, you know, based upon your analysis and the controllers office, like, we have to spend money in order to get more fare money from compliance. We believe that getting back to a 2018 level of fare inspector fares is net revenue positive. But its net revenue negative in the short turn. Um, but we do believe thats an investment worth making. And as we make that investment, assuming its approved in the budget, we would track very carefully to see where the laffer curve is for fare inspectors as well, because at a certain point, you know, you make more money with more fare inspectors and then at a certain point, you cap out and the new fare inspectors cost more than any net fare revenue. Youre bringing in. Um, i think thats what and thats the work that were doing with executive office. Yeah, yeah. Great um, and then my last question for you is just sort of, um, just harkening back to this workshop last year and trust building and government and kind of culture of caring is how how do you think about culture, of caring in, in fair compliance . And i love what you said, jeff, which is that, you know, and thats one of those like, silver bullets we always look for if the present of the operators is what encourages fair compliance as opposed to the punitive citation, how are we sort of adjusting our policies and practices in light of that information . So our approach, everything is, um, contingent on our approach. Right um, and so what we do, to be fair and equitable is to rank those lines. And so what we did, um, i think i came to the board before, um, going over our deployment strategy is that, yes, we know where our hotspots are. We do deploy to those hotspots. But at the same time, we also have to deploy to areas and on lines that may not have the same amount of fare evasion, but definitely have evasion. And so we also deploy to those lines so that were not overly concentrated in specific areas where we see, uh, security related issues and fare evasion on, on our vehicles. So thats kind of how we balance it. Um, we balancing it, we balance it, uh, looking at our Deployment Strategies<\/a> and the idea came up through written Public Comment<\/a>. We received, which is sort of when we find someone who hasnt paid is there an option for just to allow them to pay right there on the spot . And how do you think about that idea . So were not there yet . Um, we did kind of go through that during the pandemic because as the pandemic, i mean, it was a traumatic time, right . And we didnt want to pile on to our customers. And so when we did find people, um, that were in compliant because some people didnt even understand that we had not suspended our fares at that time. Right, because everything was so chaotic, so at that time, we did allow the fare inspectors to, to, uh, allow people to pay, although they were in violation. We arent there in terms of a policy set yet. Um, but that is definitely something that were looking at in the whole scheme of compliance. And inspections. Okay. Thank you. So much for your service and for your thoughtful approach to the work. Really appreciate it. Okay were running well behind schedule. Uh, so i am going to recommend actually that we break now for lunch. Its 1230, uh, that we just do a half hour lunch instead. And we come back at 1 00 and then we come back with a merch presentation and the Public Comment<\/a> on item six after lunch. Um, and the last announcement is Board Members<\/a>. Were gonna try to do a quick photo, so please just step outside the door, um, into the atrium. Now, before your break. Thank you. Everyone come back at 1 00, please. Okay. We have 15 minutes. Uh, itll be a quick call together. Um, andum, andum, andd secretary silva tosilva tosilva the item. Thank you. Ank you. Ank. So were going to,oing to,oing e could have ourhave ourhave ourhe audienceaudienceaudienceaudienc, are continuing on onng on onng r six. Presentation andion andion discussion. Uh, now, withw, wita sfmta brand merchandizingndizint. Did you bring thisng thisng tr do do do do wellassembled. Okayd. Okayd. Good afternoon. Mynoon. Mynoon. N brophy. Imhy. Imhy. Imhy. Ii dont know at know at know at k, because of yourof yourof yourofi si the external communicationicationicationicati oversee marketingrketingrketing. That meansat meansat meansat m , brand, it means branded social. It means digital comms. It means the web. It means, uh, creative services, archive photography and video. We like to call ourselves madcaps. When you put all those together, um, because its usually pretty madcap in our in our, in our group. So today im going to give you an update on brand merchandizing and licensing. In other words, im going to talk about things like socks. Um so the next slide okay. When we think about strategic licensing and brand merchandizing, this conversation, were going to really talk about two different components that would make up the whole, um, while this is in no way something that can close the revenue gap, um, it can help in terms of what i like to call marketing and intangible currency, which is brand advocacy and brand affinity and one thing that we know from the ridership study, which my team manages, is that people love our brand. People want to advocate for us. I a day doesnt go by when i get an email from staff or from a member of the public saying, hey, i want a t shirt, i want a tote bag with the, you know, with the j church on it. They they want the stuff. Um, so , so the first part that were going to talk about is Strategic Partnership<\/a> program. This is basically a brand partnership. Um, they often come in the form of a media sponsorship, which we do do through our psa program with like stern grove. Um the presidio, places like that. This is more of, um, it helps bring Brand Awareness<\/a> to each of the parties. It generates a loyal customer, and it puts each of the other brands in front of the other people. So were piloting a new this is very new to us, and this is a sports sponsorship. We are doing, uh, with the if i can get this right, San Francisco<\/a> City Football Club<\/a> this is a, uh, a soccer club, really a football club. Because, you know, were going to be european for a moment. Um, and they this is a team that came out of, of covid. They, they self organized and for whatever reason in muni has become their kind of rallying point. Um, they have numbers that are on our route lines. They have um, uh, theres a muni chair rally song. So, um, they reached out to director tomlin and myself, and they wanted to do something. You know, they need support for their club. Um, as as director tom likes to say, its very scrappy organization like ourselves. And, um, we decided after putting together a formal sponsorship and how it might work, theres no Financial Exchange<\/a> of monies at all. Um, its all in kind, and were going to support them, and theyre going to put our brand in front of their their crowds so the first effort that we did is what you see on the screen. There and they that this launched the partnership. It was a two week window of selling jerseys. And um, you know, when i was talking to the contact, he was like, do you think we could sell like at least 100 . I said, oh no, he goes, no, no, no, were going to sell about 650 of them. And hes like, i dont know where you come up with that number. I said, i know. And we ended up selling about 825 of those, which basically helped put the club in a really Strong Financial<\/a> position for their next season. So well be working with them to promote the club, promote the schedule. Were going to have a muni day at the game. Well have a muni rally section, things like that. So so thats one part of this branded merchandise conversation. And if its successful, we want to look at how we can support local artisans in our Small Businesses<\/a> to, you know, can we license our logo out to you and we can promote you and you get the sales, things like that. So thats still in the very kind of new stage. Um, but the we really feel good about the, uh, the club sponsorship. So the next one is a brand merchandise where in the beginning stages of a retail store pilot and this is um, this would be around doing what we call in the business soft goods. So beanies, hoodies, caps. Um, im working with my partners in Revenue Management<\/a> who has done, um, Emmett Nelson<\/a> has done a lot of work in terms of reaching out to transit agencies and canada and in the us and actually in europe. And we feel weve found a vendor, um, that can help us in terms of start up costs. Thats the biggest obstacle we have is, you know, were in no financial position to, you know, buy the inventory. So this vendor would help us in in making that investment. We would determine quantities mutually and which would mitigate our risk. And then in terms than we would realize about 10 to 15 of the sales. So not a significant source of revenue, but its zero cost neutral, right . Um, right now what were doing is, um, were talking about doing 20 products just to learn and grow and kind of step into this area and, and, um. If that works out, we will, um, we would be able to promote the artists on the, the website that we launch. So thats, thats kind of the, the nut of it, um, where we are now, this is, this is appendix has cases where we are now is were working with our procurement folks. Were doing a what do you call it, aro uh, request for information. Rfi um, and put it out to see if we can attract other vendors who might be able to meet those requirements. I laid out from that point. Point . Um, we may need to go into our procurement process, which might be 8 to 9 months, but, um, well see how that all shakes out after the request for information. So thats the thats the snapshot from merchandise. Happy to take questions okay. Thank you. I think were going to move through the rest of item six. Then take Public Comment<\/a>. And then well come to board questions and things for you. Thank you so much for leading on this. This is so exciting to see. All right. I think Diana Hammonds<\/a> is up. I actually think were ready for Public Comment<\/a>. Okay okay. No further slides. Is that right on on item six. I thought we were going to get into parking and other slides. Christine. Oh im sorry. Okay my mistake. Fees and fines. Slide 61. Okay thank you. Great. You arent enjoying lunch . Um. Good afternoon. Um, so i am here now to speak with you about the options for parking fees and fines. Um and just as its been touched on earlier, um, there are limits, um, that govern a lot of our fees and fines that we have jurisdiction over, um, state law establishes maximum rates on many of these things. But the sfmta, a board can and has, um, used, uh, discretion to be able to make some changes based on policy goals such as in instituting the indexing policy, sometimes suspending collection of fees, creating discount programs, and establishing the demand responsive process. Uh, parking pricing. So ive been told that i need to hurry along. So im going to try to keep a little bit brief. So these are our goals, um, for our parking fees and fines. Um, really to promote safety, things like the Residential Parking Permit Program<\/a> discourages long time parking, incentivizes transit at garage rates, promote turnover and support local businesses. Um, i think im going to skip this part because bree went over the, um, how the mta the demand responsive pricing for parking garages and, and, uh, parking meters, if thats okay with with you on that. Um, basically for both of those, uh, fees, they are set through a process where we try to balance the, the demand, um, and the rates to reach that laffer point. Um, so i will, i will go one thing to note on this is that the transportation code allows or authorizes the staff to make those changes. They adjust them every quarterly average rate is 2. 40 per hour. Um, and blocks at 0. 50 an hour, or about 17. And those that are 10 or more, an hour are about its about 0. 5 of all of our meters. And then again, um, im going to reframe, um, a here we have a summary of our, our, um, commitments that we have made to providing, um, payment alternate um, discounts and relief programs. Um, and, and again, in credibly extensive the most comprehensive of, of probably any transit uh Transportation Agency<\/a> in uh definitely in california. Um, i would argue also in the country. Um, so these are all policies that we put into place to help support and provide relief, um, for our customers. And then moving on to the parking, uh, parking fine and fee options. Um, historically, these fee, these fines have been capped at 100. Um, there are exceptions where the state vehicle code, um, creates, uh, specific fines. Um, for example, bus zones and disabled parking are at much higher rates than regular to achieve policy goals, we pass through 8 of state managed fees mandated fees on parking violations. Um, and to note right now 43 of our fines are at that maximum level. Um, so thats why you may see, uh, i think going back to the earlier conversation on, you know, increasing all the fee fines by another by 10 instead of five is going, not going to generate that much incremental revenue because so many are so close to the cap. And if not, would reach it year one, definitely year two. And then were kind of at that, um, maximum, uh, what we generally do is increase them through indexing and occasionally to support some policy goals. Um, and again, some color to the park, uh, transit fares. Were proposing a couple of options. The first, which is assumed in the budget, is that we index parking fines. Um and, uh, second, suspend indexing. And then the other asbury mentioned earlier, increasing it to 5 just a bit beyond normal indexing. This is what this looks like. Um, if you decide not to raise parking fines, um, as of 5. 4 million would be added on to the deficit that needs to be closed. Um, escalating the fines by 5 instead of the approximately 4 currently. So just about 1 higher generates about 3. 7 million over the next two fiscal years. And again, just want to show what that looks like in terms of what those, uh, fines would be under the different options. Um, for example, our most common, um, parking fine street cleaning, uh, in the first year, um, in indexing would be 93. It would go up to 95. So um, just a small increment there. And then moving on for the residential parking fee options. Um, same first two options. And the second that were showing is, um, indexing the fees as normal, but also incorporating some additional costs for, uh, for functions that we werent previously, including in the assessment. Um, and specifically to name thats the cost of, uh, processing citations, fines, conducting protests, surveys and also the, um, the planning for the rpp program and again, the different options is, uh, if we dont index the rpp fees, we add another 1. 5 million recovering additional, uh, costs in the, um, fee would generate 2. 9 million over two years. And again, youll see what the impact of that is. Um, depending on the choice, it would increase the, uh, the fee first year from 5 to 12 or 2 to 13. And then the next thing that we wanted to, uh, also recommend for inclusion is related to taxi fees, taxi fees have been suspended since july. Um, or. Im sorry. Since since the beginning of the pandemic. Um. Im sorry. July 2020. Theres the date. Um, so. So in order for it to be equitable, to start getting back to where we were, um, getting back to normal, in addition to indexing the other fares and fines, we also are proposing to reinstate the taxi fees that were, uh, suspended as part of the, um, pandemic. And unlike the other options, this was not assumed in the budget. So the two options here are just to continue to suspend the fees if you reinstate them, if generates about 1. 2 million more, um, and here is just an example of what this would look like. And to highlight the driver permit renewals and applications would continue to be suspended. Um, as well as as, uh, just highlighting the medallion holder renewal, which was eliminated in 2018. Um, so really trying to, um, uh, you know, continue the, the, the, um , the suspension of those fees for the driver related, um, fees. So i think, yes, that is all i have on this one. Okay thank you. I know there will be. Thank you. Um, there will be board questions, but i think colleagues, the public have been very patient. And id like to open up to Public Comment<\/a> on this entire item, item six, which has been some of, um, including prelaunch conversations and the slides you just saw. So i will, uh, take speakers now. Two minutes. Huh hello, board. Uh, cyrus hall. Uh with only two minutes, so much substantive discussion over the last two hours, i want to focus on two things. First, i want to focus on the language were using to discuss the either fare indexing, reimplementation of fare indexing, or the increase in clipper saying thats back to normal. But when we talk about increasing parking fines, 10, we say that is politically unfeasible. Were talking about a 20 increase in single fares over two years. So i just want to put that out there that like we live in two different worlds here where increasing fares are politically feasible, increased fines not feasible, and not on the table at all. Is inflation indexing, uh, parking meters and garage . The demand responsive parking gets to the point that for a given amount of supply. But if demand is flat, the cost of providing that supply still goes up. So the agencys margin just got reduced because were not including the cost of inflation around the unit cost of the supply. This is broken. This needs to, uh, to be fixed. Otherwise parking will become cheaper and cheaper over time as we do not index it for inflation. So second point, if were going to double down on doing enforcement on fares, then we need to double down on lifeline and access pass. Lifeline on only has a 46 Adoption Rate<\/a> by agency estimates as of october 2023. The agency only sets a 40 target for other programs. It sets a 90 target. Why are we setting such a small target . 30s thank you. Um, the first time someone, uh, is caught evading a fare, they should just get that form and whatever language they speak. That should be the very first step. So thank you very much. Okay. Thank you for your comments. Next speaker, please. Hello uh, dillon faber, San Francisco<\/a> transit riders. Um, yeah, theres a lot to cover here. Uh, i think the first thing i wanted to mention, um, is, is the, uh, um, the fact that theres no real equitable way of increasing fares. So right now, now, um, based on the, the data that was shared, it seems like theres actually more low income clipper users than there are cash users total. So, you know, saying that the clipper discount is more equitable is kind of debatable. Uh, in either case, youre increasing the fares for a lot of muni riders who cant afford to pay that. And that ties into the, uh, fare evasion question as well. If more folks are unable to pay for the bus, theres going to be fewer people who do pay for the bus. So i would encourage you all to focus on keeping fares low. Um, and also so there might be some better uses of the budget than putting it towards fare enforcement. I think, um, it seems like a decent chunk of the money there hasnt been spent in previous years might be better used towards, um, funding. Uh, muni ambassadors who can provide Additional Services<\/a> beyond fare enforcement. And could you know, provide some of that encouragement and visible, um, presence of the agency on, uh, transit vehicles. Um i, i, i also also wanted to talk about parking. Uh like cyrus mentioned , its a 10 increase year over year for, uh, fare increases for fare increases. But somehow that were maxed out at 5 for parking. The increase there should be at least equal, if not higher for parking. If were trying to encourage mode shift and get more people on muni and out of their cars. Thank you, thank you. Next speaker, please. Hey, good afternoon. Uh, my name is jaime viloria. Im a organizer and, uh, tender loin. Um equity costs money and resources. And i think just put that out there. And were also talking about like, whats the most equitable way . Im not sure if thats the right way to look into it. Uh, were pitting, um, people that needs the equity against others, so lets not i prefer not to go that route. Um, and i understand that indexing fares is was supposed to have happened. Um, but we also had a pandemic. Um, but what are we doing in terms of, like, reaching out to the communities that can actually cant pay fares . Like, kind of like what cyrus mentioned . Like we need to increase that goal of the lifeline pass, um, making it easier for people to access it. Um, i dont know. Are my housing nonprofit Property Managers<\/a> might hate me for suggesting this because its going to add more to their paperwork. People get recertified every year. Uh, maybe partnering with them, making the application process so much easier. Um, and also, before we even think about increasing fares, um, lets improve how we pay for it. Um, we have like two systems. Um i like clipper because i can use my apple watch. My hands are free. I can go in and out. Um, so i encourage more of the tagging. Um, a lot of our residents at tenderloin, um, are seniors, people with disabilities. But i also encourage them to get that clipper card so you can get that Real Time Data<\/a> to show mta that you are using it. Um, and then finally, i think for the fare, um, evasion data, before we even look into that, we need to have that data. Um, if i remember right, a lot of people that are getting ticketed are. Folks in my community in the bayview and the t line. Um, so is that equitable . Um, i dont think so. Um same thing with parking. Um, i know thats been, um, an issue this our last year in terms of parking fee increase and, you know, at least us advocates are working on that. Um, we also need to make sure that all these other projects from active communities slow streets, the only thing this will be envisioned zero. The only way this will be successful is if you front load a good Transit System<\/a>. If were trying to get rid of cars as the replacement should be ready and it should be cheaper than owning a car. Um, so i think these are the things that we should think about. Um, i would really highly suggest that. Lets even hold off increasing anything be taken on the reserves, maybe for another year or so while we advocates and folks outside try to work with board of supervisors and legislators to find a way to, um, fill this gap, uh, i mean, we saw it last year. There was a huge, um, opposition on parking. So thank you for your time. Uh, nice beanie, by the way. Uh, next speaker, please. Good afternoon. My name is christopher peterson. Uh, three points. Uh, today, uh, first, i was disappointed that the presentation didnt provide any estimates of revenue that could come from expanding parking meter enforcement. I understand its a political hot potato. I understand the mayor and the board of supervisors do not want to do it. But we should at least know how much money were giving up by not doing it. So number one, i hope that information is made public. Uh, number two, residential parking permits. Um, it was stated earlier that state law limits, uh, that to Cost Recovery<\/a>. Its my understanding that theres significant, um, legal disagreements about whether or not, uh, the city really is actually limited only to Cost Recovery<\/a>, uh, in terms of residential parking permits. Maybe you would require some restructuring, but it seems like thats something that should also be considered, and some estimates should be put out there in terms of what kind of money that could raise. Uh, third point, this is more of a long time issue. Um looking at what kind of revenue the sfmta can get out of its real estate, i live just off of ocean avenue. There are two sfmta owned parking lots in ocean avenue. One of them isnt used for parking at all anymore. Another one is very lightly used. So thats just two examples in my own neighborhood of where where theyre currently sitting. Without generating meaningful income for muni. So i hope that sfmta will look into them as, uh, future sources of revenue. Thank you. Thank you for these ideas. Next speaker, please. Hi. Board members, luke bornheimer. Um, i just want to focus my comment on residential parking permits, um, and increasing revenue through that program, specifically. Um, i think the city is and the agency has grossly missing out on an opportunity to increase revenue there. Um notably through expanding the program citywide, whether that be actual permits or a whole city wide program. Um, also pricing the program appropriately. And i will just put out there in addition to the questions of whether it is actually legally restricted, i dont know if were including all of the costs that could be included in that. 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