Transcripts For SFGTV Planning Commission 20240712

Expressed interest and are considering participating and then we certainly have, you know, many managers who are engaging with Portfolio Companies around climate risk but perhaps not formally through that initiative. Okay. And then my other concern is, we talked about diversity and i like what youve done in terms of the work around that. Do we use that same [indiscernible] in terms of rps and other things, do we really apply the sfers criteria for the type of diversity were looking for across the board, including [indiscernible] and other sectors . I cant fully comment on that. I guess what i can say is, you know, there is proposition 209 in place in california i know. Thats why i i know. Up to a vote, thats in november. But we do not i want to make clear that we do not ask about diversity characteristics when we send out an rfp or enter a new relationship or a new contract with an external party. Were wanting to be not running afoul of distortion . The board is engaging, we do request form 1 information which basically gives demographic as well as gender and racial diversity within an organization, which is part of the consideration. Certainly weve never again, [indiscernible] cant target it but as we send out an rfp for consultants, we would request that information. We would certainly consider it. A managers Selection Process is obviously a different process. Right, exactly. And then my last question is on part of the oil and gas piece, and i want to check if fracking is part of that piece because i dont see that in there, if they address fracking as part of oil and gas. We do not specifically differentiate between the type of Extraction Technology that a firm is using. So within our portfolio, you know, we have exposure to companies with all types of resources, and many of those, particularly in north america, right, are fracking. And they usually disclose it in lots of cases. Thats why yes. Any other questions for andrew . Andrew, bill, ill turn it back to you. But, andrew, thank you. That was very comprehensive. And i do agree with carmen, there should be a way that others should know about the work that were doing around esg because i think its important because its one of the issues that come up at the board of supervisors and other places what sfers is doing on esg. So we have to figure out a way to get some of the messaging out so theyll know because i think youve done a lot of work to really make sfers in the top tier when it comes to esg and the types of services [indiscernible]. We could certainly highlight it in our annual report. We have an investment [indiscernible] but certainly for the public consumption we could ask andrew to basically update us on all of the activities that were done during the year and include that very specifically as a section of our annual report and that at least would be a start. Weve issued press releases, and press releases are out there. But i think if someone really wants to recommend that they look at what were doing, maybe the annual report, which should be available online, would be the best place to sort of highlight our activities. Before we go to the next item, i want to comment about compensation. Its of special interest to me in the esg suite. I think that is the s part is underappreciated. I do think that capitalism and connecting capital and finance needs to work both profitably for institutionals while also delivering Better Outcomes for people and also that theres work to do and work that should be done at the executive level, better recognizing and rewarding the value of work both on an absolute level, each and every individual, and also in relation to one another. I concur with you, bill, on that. Thats a conversation you and i have had many times. Thats why i like the focus on whats going on with the Investment Team on esg and thats why i asked the question as well, [indiscernible] to do something differently to address the s in the esg. If there are no other board questions or comments, lets move on to the next item. Open for Public Comment, right . Yes. If you have not already done so, please press star 3 to be added to the queue. inaudible . Moderator, are there any callers on the line . Madam secretary, there are [indiscernible]. Thank you. caller hi, thank you. You sounded almost inaudible, so if everyone who is not speaking could mute their lines, i think that would probably help. My name is judd. Im a senior [indiscernible] San Francisco and sent over five years working with board and staff on making their level of knowledge on climate risk and bringing in experts and data to that effect. I want to thank andrew for all of this work. This is truly night and day from the total inaction from this agency before you brought him on board and it is a truly great body of work by any measure. I also desperately wish this body of work had been kicked off in 2013 or 14 when reams of data and multiple experts were brought to you all. The level of action on this is not remotely commensurate with the climate emergency. Your posture is divorced from science on the carbon budget. It seems like me like 22yearolds crowding into bars without masks because they know on balance its other people theyre going to injure and kill and not themselves. Im very glad to hear in this report that staff Began Development of a Climate Action plan to work holistically. I would argue its quite belated and also quite urgent and would love to hear from staff about the time line for its release and presentation to the public. To the board, if this only includes public equities, it will not be a real plan. Esg for your public equity and anything goes for your private investments is not separate but equal and its not a good base for a esg inaudible . What if the city and county were foremost in the country and only incarcerating 45 of individuals experiencing homelessness within a year. Even an elected official would not have that attitude. You would be focused on the real world and what the actual policy outcome is, not in relation to other cities. To that end we need not to see whether were doing better than caller this is jack. Im a retiree. I appreciate andrews report. And i have to say, when i first heard that the portfolio would be net zero by 2050, i thought, well, thats kind of a joke because fossil fuels will be worthless by then. The state has already committed to being Carbon Neutral by 2045. But i think i came to understand that this is not just talking about getting kid of fossil fuels, youre talking about Climate Action 100 and all of the companies and their Carbon Footprint. So that is really good. Im really happy to hear that youre doing that. Companies like general motors, caterpillar, all of these Companies Using fuels. We need to get rid of it. Thats a great use of our esg resources. Im not going to be able to stay for the report thats coming up later, but i do have to call your attention to page 12 of the climate risk memo which points out that in the last ten years, the index has gone up by about 90 whereas the energy funds have gone down by about 30 . So its no wonder that theres only 108 million left of the publicly traded funds. But i would also urge you to look well, also the current divestment, 406,000 out of that 108 million, its less than 1 per year. Thats like a 100year divestment plan. Thats way too slow. You have to move that up a whole lot faster. Id like you to take a look at the real assets update that came out in july it has a lot of energy funds in there too. The Climate Transition risk that you talk about is to understand and manage risk. Okay. Understanding it is very simple. Science says Climate Change is caused by fossil fuels and we have to thats easy. Manage risk. Very simple. Get out of fossil fuels. So dont think its so complicated. Youve made this way too complex. Just get out of fossil fuels. And i do support all youre doing to make sure that we have a Net Zero Company benchmarks. Thanks a lot. Next caller, please. caller this is david paige. Thank you. I have spoken before and i know the oldtimers remember me and my message isnt really any different than in years past. I want to endorse what the previous callers have said. Im no fan of engagement. However, if the meat Packing Companies have improved their worker safety because of any engagement that andrew was talking about, then thats great. And i also want to say thank you to andrew and all of you that are listening. I know you guys work hard and you do good stuff and youre trying to do the best you can. Commissioner chu mentioned something really important, which is the universe of people in finance and investment isnt necessarily the same universe as the people in science and Public Health. In terms of divesting, as a retiree, you know, i just dont feel morally comfortable with any part of my money going into private prisons, for example. But i appreciate how you guys have divested from tobacco and firearms. So im hoping that youre going to, you know, do something radically different than in years past and make a giant change in what youve been doing. Heres what im proposing the retirees like myself have been somewhat supportive of the idea that if you if its not against the law and you can make money at it, then lets invest in that. You know, regardless of the esg. Regardless of how equitable a player, a company we have to do business with. Well, why dont we send out a message like someone was talking about earlier, not in the annual report or in press releases but with the deposit advice that i get every month. A Simple Survey saying, you know, andrew could put together something from the report of Amnesty International or Human Rights Watch that is time. [indiscernible]. Madam secretary, no more callers on the line. Thank you. Hearing no further calls, this item is now closed. Action item 9. I would like to make one compliment and i didnt get my microphone on fast enough. distortion . The Prime Minister of china, mr. Xi. Very similar to the aspirations document that was recommended that the board adopted or recognize a couple of months ago about this whole useful area about esg and climate improvement. Just a coincidence i believe is worth noticing. Thank you. distortion . Item number 8 action item. Rea reading item . Thank you, president bridges. Board members, this is the first of five action numbers on esgrelated matters, an update on our esg policy [indiscernible]. Ill keep my Public Comments relatively brief for this item. Divested from u. S. Tobacco Companies Since 1998, just when the companies were entering the master Settlement Agreement with the states attorneysgeneral. Weve updated the list weve recommended for divestment. In terms of whats happened over the past year, i think weve seen continuing tightening of restrictions on electronic nicotine Delivery Systems or vaping products or ecigarettes. Actually sales of ecigarettes have fallen over the year, about 14 , which is more than the decline of traditional cigarettes category. Theres actually a decline in traditional cigarettes, its much less than predicted probably due to some shortterm issues like stockpiling during the covid pandemic. I think from a regulatory perspective, you know, fda or fda and cdc are moving forward with relabeling requirements. The ecigarette regulations continue to be implemented and approval processes, you know, going through. One of the biggest names, j uhujuul the struggling natuf that category. In terms of updates to our list, theyre really pretty minor. Theyre described on page 2 of the staff memo. Were recommending adding one new ecigarette company thats pretty lightly traded and we dont hold a position in that company and updating the name of another company and then removing three Companies Since theyve been listed over the past year. Like for all of the following members in the appendix we have a list that includes companies reflecting updates in the nothing significant in the overall summary. Commissioners, are there any questions for andrew on this, recommendations on this action item . If not, then ill entertain a motion if there are no questions for andrew. [indiscernible]. A second . Second. Moved by commissioner driscoll and seconded by commissioner chu that we adopt the recommendation to [indiscernible] current policy will [indiscernible] approve a list of restricted companies as outlined in appendix [indiscernible] of the memorandum. Madam secretary, Public Comments, please . Please press star 3 to be added to the queue. For those already on hold, continue to wait until the system indicates [indiscernible]. Are there any callers on the line . Madam secretary, there are [indiscernible]. Thank you. Hearing there are no calls, Public Comment has now closed. Thank you, madam secretary. [indiscernible] roll call then, please. [roll call] [indiscernible] if hes present, he needs to vote. If kevin [indiscernible]. Next item, please. Item number 9 action item targeted divestment in sudan, level iii of sfers esg investment policy. Board members, this is an update on the boards policy by targeted divestment in sudan. Relatively speaking, the experience for the human condition [indiscernible] continues to occur and andrew will provide further context. Andrew . Thank you, bill. We initially divested from Companies Operating in sudan in 2006 at the height of the genocide in darfur. Over the last, you know, 15 years or so, theres really been progress its slow progress but a march towards peace and stability in the country, and that has really culminated in some changing political stances, particularly from the u. S. , towards sudan. President obama and then following through President Trump had loosened sanctions placed on sudan. By and large, there still remain, you know, some select sanctionsanctions and sudanese individuals on our state terrorism watchlist. But by and large the major sanctions have been lifted. Last year the former president who was in power during the genocide and there was a coup. There was a Sovereignty Council which includes some civilians and military leaders on the pathway towards 2022 and they will democratically elect a president. So if you recall in february, we adopted revised criteria for the way that we see and look at Companies Operating in sudan, where we said that given the forward progress in the country, that were comfortable remaining invested in certain companies, those that provide things Like Health Care equipment, telecommunication services, power equipment, other goods and services that citizens need and can actually help contribute to positive development and stabilization, in a way that would be beneficial to citizens. We continue to not invest in companies that provide military equipment or those that were deemed to be complicit in the genocide that occurred in the darfur region. What we do with the remaining set of companies and theres, you know, a large amount of work that adrian was really central in helping with here. In our report is we screened them against their esg Management Practices and want to really get some comfort that the companies that weve identified that have operations in sudan are mitigating and managing their esg risks there. If we dont get comfort with that, then we may recommend them for investment restriction. The next thing were really looking for in sudan is the removal of sudan as a designated state sponsor of terrorism by the u. S. Government, and thats the big next step for the country, which is preventing them from receiving meaningful foreign aid and foreign investment. This is something thats actually in place, not due to the darfur genocide but related to the 2000 bombing of the uss cole by alqaeda and then bombings at u. S. Embassies in kenya and tanzania by alqaeda and that [indiscernible] by the u. S. Government that sudan was complicit in those, the country did harbour Osama Bin Laden for a period of time. So that part is actually proceeding. Theres been one settlement reached for the uss cole bombing. Progress has been made towards the other financial settlements. Secretary of state pompeo was in sudan in august trying to negotiate those and it seems hopeful that that will move forward. So thats the state of play. Its also worth mentioning that [indiscernible] has been brought before the International Criminal court in the hague where hes facing charges of crimes against humanity and this is seen as an important step in helping to get justice for the citizens of the country so important that that is also moving forward. We recommend adding three companies to our restricted list here. One is the company petronas that was involved in directly financing militias in south sudan. Its important that theres comfort that esg controls are in place around their Corporate Activities and where proceeds from their Energy Projects are going. And then two other Companies Due to lack of any disclosure or transparency, Risk Management didnt feel comfortable that we could get a sense of firmly not putting them on the list. [indiscernible] pages 7 to 9 of the memo and again the list proposes for adoption a list of changes are in the two appendices in that report. Ill pause there. Im happy to answer any questions on this update. Commissioners, any questions of andrew on trying to get divestment in sudan, level iii . Action item. Ill entertain a motion. I move adoption of the report. Second . Its been moved by commissioner driscoll and seconded by commissioner chu that we adopt the recommendations i in the report reading action item . Madam secretary, please open up the lines for Public Comment. [indiscernible]. Operator, are there any callers on the line . Madam secretary, there are no callers on the line. [indiscernible]. Thank you, madam secretary. It has been proved by commissioner driscoll and seconded by commissioner chu. Roll call then, please. [roll call] [indiscernible] im muted on my screen but im not the controller. Now hes muted. Can you hear me now . [speaking simultaneously] can you hear me now . Yes. Item number 9. Thanks, great. Councilor casciato . Can you hear me . Can you hear me . Yes. Councilor casciato yeah. Can you hear me . We have five yeses. Yes. Councilor casciato . Yes. Can you hear me . Yes, i can hear you. Yes. Yes. Five yes, sirs. The motion passes. [indiscernible]. Item number 10, action number. Targeted Police Vehicle investment of firearms and ammunition Manufacturing Companies and retailers. Thank you, president bridges. Board members, theres been a lot of activity on this item this year. Theres been a spike in sales. A lot of research. Two companies are added to the list. One is falling off. And theres also been a lot of engagement efforts as summarized on page 4 of staffs memo. Ill ask andrew to walk through the item. Thank you, bill. I want to first start and just point out an omission from the tables on page 7 and 8 of two companies that we are recommending to be added to the restricted list this year. [indiscernible]. Okay. They are outlined on page 3 of staffs report and they are first cash and easy corp. And it was my oversight that they did not end up on the list in the appendices. So i want to note that. Any potential motion shouldnt it is recommended include those two companies. So going back to the introduction of this item, as bill said, firearms sales are up in the last year, spiked significantly, and, you know, most estimates say that guns sales are up about 100 through 2020 as compared to last year. Ammunition sales are up over 100 . I think it is fuelled by a number of Different Things happening at the same time the shutdown and sort of need or perception of need for selfprotection, social unrest occurring with social protests and, again, a need for selfprotection. And the uncertainty of the election and the outcome of the election, particularly with a Biden Administration thats proposed, significant gun control regulation. So all of this has resulted in a spike of firearm sales. Gun violence and Mass Shootings continue to occur with a lot of regularity, sadly, throughout the country. There have been almost 500 Mass Shootings in the u. S. To date, which has already eclipsed the number that occurred in 2019, and this is even with the shutdown for several months. You know, on a regulatory front, as i said, the Biden Administration is proposing pretty widespread sweeping gun control regulations. Of course it remains to be seen which of those may be adopted. In particular, tightening background checks is a focus area, and then cracking down on online sales or onlinefacilitated transactions and actually banning those is one of the proposals, as well as a focus on socalled [indiscernible] which are unregistered firearms or actually pieces of firearms that can legally be purchased online and then assembled that dont have an Identification Number or require any background check to purchase. We have productively engaged, as bill said, with some retailers over the past year. On one hand, you know, Dicks Sporting Goods is to some degree backing away from firearms sales and their whole Hunting Department in their stores but they continue to implement bestinclass retail practices going above and beyond federal regulations in terms of age limits and background checks. Walmart is also doing the same. I think, you know, sort of reading between the lines, i think their belief is that the market is sort of better if theyre players in the market and can do it responsibly rather than having transactions occur online or at retail or at gun shows where theres fewer regulations, no need for affirmative background checks. They did stop some of their ammunition sales when there was pushback from some of their customers around this, but it looks like theyre going to stay the course in terms of their updated policies there. In terms of our recommended updates, the one that is reflected in the table there is smith wesson brand, which has been spun out of American Outdoor brands as a Standalone Company that will exclusively sell the firearms that are the Smith Wesson Brands company, American Outdoor brands will no longer be involved in firearms sales but hunting equipment and firearm accessories like storage cases, sight scopes, et cetera. They would fall off our list by criteria, Smith Wesson Brands and [indiscernible] will be on our list. Were recommending the addition of another trade name, armus, to reflect the same name for a company thats already on our list but more commonly referred to name to provide our managers with, and then, as i said, the addition of two pawn shop operators, easy corp. And first cash, which, you know, engage in both new firearms sales but also pawning of firearms. Weve been unable to determine that they restrict the sale of firearms that are illegal for sale in california, so assaultstyle weapons, so therefore we are recommending that until or unless and until policies are put in place, clear policies and communication of those by those companies, that we would add those to the restricted list as well. So ill pause there. Happy to answer any questions. Hopefully the omissions from those tables are clear but can reiterate those again, if thats helpful. Thanks, andrew. Are there any questions of andrew . This is an action item. Are there any questions for him at this time . If not, ill initiate a motion on staffs recommendation. Thank you. Commissioner chu . Casciato, second. Thank you, commissioner casciato. It has been moved and seconded that we adopt the recommendation for the board. And the list of restricted companies identified in appendix b. Madam secretary, please open the lines for Public Comment. Thank you. Callers, if you have not already done so, please press star 3 to be added to the queue. For those already on hold, please continue to wait until the system indicates you have been unmuted. Moderators, do we have any callers on the line . Madam secretary, there are no callers on the line. Thank you. Hearing no callers, Public Comment is now closed. Thank you, madam secretary. Again, its been moved by commissioner chu and seconded by commissioner casciato, roll col, col roll call, please. Pardon me, president bridges. I would like to amend the recommendation to include those two Additional Companies that i mentioned. I dont know if that requires that being specified in the motion. Those two companies are currently not on appendix b. Theyre mentioned in the moment but dont appear on app deck apb in the report. Ill amend to include the staffs recommendation plus the two amendments that andrew articulated distortion . The seconder concurs. Thank you, commissioner chu and commissioner casciato. So we will amend the motion to include the two Additional Companies that staff memo does not include but was recommended by staff. Madam secretary, roll call vote, please. [roll call] the motion passes. Five ayes. Thank you, madam secretary. Next item, please. Item number 11 action item targeted divestment of thermal Coal Companies level iii of sfers esg investment policy. Thank you. Members, good news here for the most part. Coal demand has declined over the past six years and this past year is a record steady decline. Coal demand is significantly [indiscernible] both in the u. S. And europe. There are five new companies being added to the list, none falling off, so there should now be a total of 46. Im going to ask andrew to walk us through the item in detail. Thank you, bill. So as bill said, you know, i think the trajectory of thermal coal has been on over the last several years continues to stay true in terms of demand decreasing, prices decreasing, coal demand continues to fall in the u. S. And europe, as bill said. You know, through the retirement of coal power assets. I think interestingly chinas announcement to be net Carbon Neutral by 2060, you know, as the Largest Consumer of thermal coal will be interesting to see the impact of that announcement and how that strategy plays out on the thermal coal market. Too early to say specifically. No changes in terms of our recommendation here. President trumps 2016 Campaign Promise to revitalize the industry hasnt really been seen as widely effective and doing much more employment or coal prices in the u. S. We continue to reaffirm the recommendation that we stay divested from companies that get a majority of their revenue from thermal coal, and, you know, we last year began to return to look at companies that get a material amount of their revenue from thermal coal. So, in other words, 10 to 50 percent of revenue. And what we were looking for there was, you know, comfort we said that we would be comfortable recommending remaining invested in companies that have between 10 and 50 percent of revenue, but have communicated clear plans and are on a pathway to divest and sell off their thermal coal assets in the near term. Those that dont or havent communicated that, then wed recommend for divestment. So there are a few companies and those we have been in touch with, like anglo american, south 32, contrara energy that do have clear plans or entered into agreements to sell off and fully divest their thermal coal assets. Were not recommending adding those to our restricted list. But there are a set of companies that we are recommending be restricted but that do fall within that range of revenue and dont have any clear plans to exit the industry. So those are outlined again in appendix a and b in staffs memo. Happy to answer any questions. Were going to continue to track you know, we want to make sure that the companies that have announced these plans to exit the industry, you know, make good on that to the degree that they can find buyers for these assets, and well continue to track Companies Like glenfor which received an immaterial amount of revenue and an extremely small amount of their ebitda from thermal coal but are on an absolute tonnage basis still produce a significant amount of thermal coal, continue to track those companies and make any followup recommendations in the future. So hopefully pretty clear here but happy to answer any questions. Thank you, andrew. Commissioners bill, did you want to Say Something on this . No . No. distortion . Commissioners, are there any questions for andrew on this item . It is an action item. If not, ill entertain a motion on staffs recommendation. Move [indiscernible]. Thank you, commissioner driscoll. Second . Ill second it. Thank you, commissioners. Its been moved by commissioner driscoll and seconded by commissioners casciato and chu to reading action item . Madam secretary, please open the phone lines to Public Comment. Thank you. Callers, please press star 3 to be added to the queue. Moderator, are there any callers on the line . There is one caller on the line. Thank you. Caller, please state your name and your two minutes begin when you start. Thank you. caller caller, please statee and your two minutes begin when you start caller okay. Can you hear me . We can hear you. You may begin caller sorry about the confusion from bay area and fossil free San Francisco. Im really perplexed. The staff report does not seem to indicate anywhere what the funds actual exposure in this area is and i dont believe the previous staff report has for those areas either. I would hope that would interest the board. Certainly it interests the public. And im perplexed its not being presented. The discussed changes you all are making to these lists are only part of the picture. Without you indicating your Actual Holdings and preferably a before and after of how that reflects your positions, these lists are somewhat detached from the management of the fund. So its concerning that i cant tell from the staff report how much the fund is invested in thermal coal, notwithstanding these changes that youre making and that the board has not asked about those questions. Lastly, i really urge you to move to an absolute tonnage basis with coal and not percentage of revenues. Its the coal that matters. Its the coal that particularly offends the esg policy, not the money. So as a thought experiment, what if amazon or apple went into tobacco or guns or suicide machines . Ultimately the size of those companies would ensure that the percentage of revenue from these abhorrent products would be low, would be below whatever threshold you would set. It shows that revenue threshold is a absolutely artefactual metric to use when youre talking about these concerns. Ultimately if something is an esg concern, it is a quality and not a quantity. And so we have really been asking for this for four to six years, but you can move to a percentage excuse me, a raw amount of coal produced metric as opposed to percent revenue metric. That would be meaningful, and we urge you to make that case today, please. Thank you very much. Thank you for your call. Moderator, are there any further calls . Madam secretary, there are no more callers on the line. Thank you. [indiscernible]. Thank you, madam secretary. Again, it was moved by commissioner driscoll and seconded by commissioner casciato and chu. Roll call, please. [roll call] i cant hear, darlene. I think you might be on mute. Thank you. Commissioner . We have five ayes. The motion passes. I dont think you heard my aye. distortion . Just for point of clarification, i didnt hear you call my name so i didnt respond aye. But to respond, yes, i support the motion. [indiscernible]. I will call the vote again on item 11. [roll call] i vote aye. Theres something wrong with this computer. You have five ayes. The motion passes. Thank you, madam secretary. Next item, please. Number 12, action item, update on strategies to address climate risk in the sfers portfolio Climate Action plan. [indiscernible] on this item as well as the previous five, theres a great amount of information [indiscernible]. The tenor of the item is on page 37 [indiscernible]. Bill, sorry to interrupt you but we can barely hear you. Can you hear me now . distortion . The centrepiece of this item is on page 37, table 10, Additional Companies to [indiscernible]. I did want to also draw attention to theres just a voluminous amount of information in the report and thanks to andrew for organizing it all. There is a significant decline as far as exposure in the oil and gas industry relative t to e public equity indices. I also wanted to draw attention to the watchlist on table 12 and also to the engagement list on [indiscernible]. Andrew . Thank you, bill. As bill said, this report sort of includes a variety of information. One is a bit of an outline of our Climate Action plan and steps we are taking to address climate risk in the plan and our steps towards that ambition, to be a net zero asset owner by 2050 and then of course the specific recommendations around oil and Gas Companies. To just give an overview of the Climate Action plan that weve begun to flesh out in more detail, this is essentially our road map to work towards that ambition of net zero by 2050. The oil and gas component is one part of it, but, you know, as bill said, its an increasingly small part of our overall exposure, when we see climate risk manifesting in many other ways as an investment risk for us in other Asset Classes in other industries. So our Climate Action plan road map and what well be looking forward towards 20202021 really does fit within the three pillars of our esg platform overall, the active ownership piece, continuing to engage with companies around climate risk, proxy voting, supporting shareholder resolutions around carbon Risk Management, goal setting, governance and strategy around climate Risk Management. Continuing on this, you know, investment and divestment approach, investing in strategies that are aligned with the transition to a low carbon economy, which many of our Investment Strategies are, divesting from companies and industries that we feel like have high unmitigated climate risk, like thermal Coal Companies and like some oil and Gas Companies. Well continue on the manager and Due Diligence monitoring piece building on that work that weve done with our public Equity Managers to engage and understand how theyre thinking about climate risk. And continue to apply metrics, analytics, so its not just the Carbon Footprint but were now trialing different tools that can measure alignment, corporate alignment with the Paris Agreement. We can understand which companies are invested within in and announce plans that are aligned with the objectives of the Paris Agreement to decarbonize by 2050, which ones arent, these different scenariobased tools. So well be working to apply those to the portfolio over the next year. And then, you know, where opportunities for policy advocacy arise, we certainly will do so when thats appropriate for us to do that, but certainly we will partner with other asset owners, many asset owners, in addition to governments, corporations, are working towards net zero, and we need to be part of that dialog and collaboration for us to be successful in this goal. So we will continue to build out those frameworks and those analytics, provide an update next year around that and try to set a suitable target for 2025 or 2030 in terms of our overall Carbon Footprint, something that is ambitious and fits with our overall ambition, but is something that is attainable and realistic. So, you know, the Climate Action plan really, as i said, looks at this range of Climate Risks across sectors, Asset Classes. But we do continue to pay close attention to the fossil fuel sector, just given its contribution overall to Climate Change. Its been an interesting year for the sector, right, to say the least, between the oversupply and demand disruption due to the pandemic, sending oil futures negative for a period, to rebound a bit in the second half so far this year. But its been a tough year for the sector. The industry, oil and gas, consumable fuel industry through september 30th had negative 38 return on the year versus 10 for the broader imi. I think case in point is sort of exxonmobil which has fallen out of the Dow Jones Industrial index for the first time in i think almost 100 years, there was a period over the last couple of days when chevron overtook exxon as the largest market Cap Oil Company in the u. S. For the first time, exxon is no longer the Biggest Energy company, nextera, the largest producer of renewables, is the Biggest Energy company by market cap. Just a lot of turmoil. We tried to prioritize some commentary in the report of different views on what may be next. In the near term, i think, assuming the reopening occurs, that production cuts have been effective, many people are calling for a rebound into 2021, 2022, potentially even, you know, depending on how production cuts, how drastic theyve been for even the sort of super cycle of significant price increase over the next couple years. On the other hand, b. P. Has said Peak Oil Demand within 2019, they in their energy outlook, two of the three scenarios they outlined had a 2019 peak of oil demand. So it remains to be seen. We continue to look at this closely. Like most of our peers, we continue to have some investment in the oil and gas sector. As bill said, thats small. Itits less than last year and its about a quarter of what it was five years ago. So at 108 million total in the public equity and fixed income portfolio, this is a really small absolute exposure. But something we still continue to apply the transition risk framework to. We continue to engage with these companies. And i think the last year or so has been really instructive as to why engagement with oil and Gas Companies is so important for the climate future and the global future. Given the commitments that have been secured at Companies Like shell and bp, totals, rexol, many Utility Companies these are commitments by these companies i can pretty confidently made would not have been made if we had Institutional Investors at the table working with them on these commitments and remaining invested and these companies having an Investor Base that sees a future and a pathway towards decarbonization, reimagining of a business model. So i think this just really highlights the importance of maintaining a seat at the table where there are companies that are thinking about their strategy in the future. Bill already highlighted for you table 10 on page 37, which is the full list of recommended oil and Gas Companies that we identified using our framework and applying that, similarly as weve done in 2018 and 2019. The framework identified one Additional Company this year, apache, that were recommending adding to the list of 10 current companies. Were not recommending removing any of the companies from the list. Two companies did improve according to one of our metrics in the framework but were recommending to actually see sustained improvement over time before we may think about recommending removing from the restricted list. And then theres three other companies that have actually fallen out of the universe due to either bankruptcy or being delisted, you know, having a share price below 1. But we recommended retaining them if they issue debt or if their share price does recover. The overall universe we looked at also really shrank this year by almost 25 . It went down from 153 or so companies to 114 companies, and again, this is bankruptcies and other things so the industry is certainly shrinking our exposure, but well continue to apply this framework and take action with engagement, you know, based on the criteria that we outline. Were recommending a list of 11 companies for engagement activities where we have more meaningful equity, Long Exposure to those companies. Many of those companies are ones that we are already in dialog with, are taking steps and being responsive to shareholders around climate Risk Management plans, but weve added a few new companies to that list and we will continue to work on engaging with those but also opportunities to engage and support engagement with a broader list of 24 companies as they arise in the future. So ill pause there. Happy to, again, answer any questions either on the Climate Action plan or the list of companies. Commissioners, are there any questions from action item are there any questions of andrew on either the Climate Action plan or the list of companies that hes recommended . If not, then i will then ask for a motion. This is an action item. I just want to recognize andrew again in his involvement in this report to include the results. So thank you distortion . Ill echo those thanks and ill make a motion to adopt staff recommendations. Thank you, commissioner casciato. Second. Commissioner driscoll with a second. Yes, i do. Madam secretary, please open the lines for Public Comment. inaudible . For those already on hold, please continue to wait. Moderator, are there any callers on the line . Madam secretary, there are two callers on the line. Thank you. Caller, please state your name and you have two minutes within which to speak caller thank you very much, madam secretary. Im from fossil free San Francisco. As i said earlier i really do appreciate all the work by andrew. And in only two minutes, i have to cut the pleasantries. The staff report says things like, quote, as of june 2020, we have less than half the amount invested in publicly traded oil and Gas Companies than it did the year prior. Unquote. It does not indicate why. That is unbelievable to me, truly, and ive been watching you guys for six years now. So far today ive seen the fiduciaries in public make Investment Decisions on items 8 through 11 without considering your own positions and exposures and counting hundreds of millions of dollars in losses in item 12 without even questioning it. The value of your fossil fuel stocks by dropped by over 400 million since i started coming here. How much of that is from your manager selling assets and how much of that is loss of value to the fund based on your inactions and youre ignoring reams of data and experts brought to you. That data is not presented and it makes me suspect that they dont want to present for the beneficiaries and the city that theyre talk has resulted in material losses that will not only affect the grotesquely excuse me, that will not affect really anyone on this board or in this room. We have done a back of the envelope that i think over 300 million of losses have occurred from your inaction, and now that the public equity are down to just over 30 seconds. Thank you. You should focus on applying the same iterative framework to your own investments that you always told us not to talk about. It shows in your Natural Resources and despite discourse at the time, staff has made significant investments in the energy sector, likely primarily oil and gas, and that needs to be included in everything that we heard today as well. Thank you. Thank you for your call. Next caller, please state your name. You have two minutes within which to speak caller hello, commissioners. Im jeremy pollock, speaking here as part of fossil free San Francisco. I first spoke to this commission about this back in 2013. I was a single man. I was an uninvested city employee. Im now married. My child had his first birthday. Im an invested city employee. My future and my sons future is in this Retirement Fund and its just really depressing to look at the charts of what has happened over the last seven years of your inaction and tiny little steps on divesting from this sector that the science is clear, the economics is clear, had no future, and the risk didnt justify holding onto these stocks. You know, i just want to ask you to please shut this barn door before these last stragglers get out. I think ill second everyones compliments to mr. Collins and his excellent work here. Hes developed a great model for evaluating carbon risk. But i dont see any analysis of how that corresponds to performance. And i think this report doesnt give you the information you need to make informed fiduciary decisions about these holdings. Commissioner stansbury in the past has asked for these reports to include analysis how these companies are we losing or making money from these divestments . In your current list, i dont see how they perform restricted to perform. If you look at exxon and chevron, these are actually candidate to divestment companies that have not committed to Carbon Neutral. They have lost 12 to 15 percent over the last year. You cant identify Conoco Phillips that lost more than 20 that you continue to hold. The report talks about energy is the worst performing sector, 2018, 2019, 2020. Sorry, time has passed. Thank you for your comments. Moderator, are there any other callers on the line . Madam secretary, there are no more callers on the line. Thank you. Hearing no calls, Public Comment is now closed. Thank you, madam secretary. Moved by commissioner casciato and seconded by commissioner driscoll. Madam secretary, roll call, please. [roll call] thank you. Five yeses. Motion passes. Commissioner bridges . Thank you, madam secretary. I would like to thank andrew for his comprehensive reporting on our esg investing. Its a lot of summation, a lot of details, and i know a lot of work has gone into it from your team. So we are very appreciative. So thank you very much to the Investment Team for giving us all the information and data we needed to make an informed decision. Thank you, andrew, to you and your team. Thank you. Madam secretary, next item, please. Thank you. Item number 13, discussion item. Risk review for sfers total plan. Board members, good afternoon. We do have one more large item to walk through. Its an important item. This conveys our risk exposures across the plan. Our primary active and absolute risk to our exposure in technology, health care, active management. Anna and i are going to share this item. Theres an extensive powerpoint presentation. There is also some in the word document. Anna, if you would pull up the powerpoint presentation, we will walk through it together. Certainly. I will just start with a few comments that this is a total plan review. This is hopefully you will have a view of the total exposures and concentration for total plan rather than one recommendation than the other. These are the largest key risks in the total portfolio. And we also examined whether we were compensated for those risks. I also would like to start by noting that similar to esg items, this is an item that is an overview for Risk Management as per its. So its an annual update on the Risk Management. We will talk about the overall Risk Management framework once i pull up the presentation, but this is the annual report. We also would like to highlight that Risk Management is not an exercise by just bill and myself. Every member of the Investment Team is involved and every member of Investment Team has contributed to this report, and i thank everyone in the Investment Team. Special thanks for alo martins who put together the power point and made it much more readable. I also would like to acknowledge our partnership with multiple Risk Analytics providers, including names . You will see all of the and names . All of them contributed significantly to this report. So let me see if i can share the report. Are you able to see . Good. Hopefully we can. So as i mentioned to you, the comprehensive Risk Management framework has three main pillars. Its to review Strategic Asset allocation that is coming up next week and weve actually been working on it throughout this year, and we present annual updates. Liquidity management that we covered expanse civil in the beginning of this expansively. There was dislocation due to covid, and measurement and monitoring of key risk drivers for the total fund. This is what well present in review today for the total plan and etf if we have some time. Quickly we will go through risk performance overview. We will spend the bulk of todays presentation on the exposure analysis, highlighting key geography and sectors, understanding whether we were paid for those. We will talk about two different ways to assess leverage in the total plan. And well also cover core exposure for each asset class. And we will conclude with [indiscernible]. There are dozens of different ways we will look at the portfolio and exercise scenarios in historical stress tests and Single Market factor. So lets start with the risk and performance. On slide 4, very quickly, i think what i like about this slide, less than 25 years ago we were only 5 billion. We are now over 28 billion. And as we look at the Asset Allocation, next week, i think were targeting how is the plan going to will look like when its a 40 billion plan and its the Asset Allocation and the business model, as bill mentioned. You will see that theres a similar view in the weights, not the capital allocation, and you will see, if we zoom in on the last five years on page 6, that over the last five years, a lot of innovation in the Asset Allocation, increased allocation to return, private credit and decreased significantly decreased allocation to public equity from 50 to actually at the end of march we were at 31. Id like to quickly read to you the risk allocation, not just we do plan to be compensated from taking those risks. Wed like to i would also like to highlight the treasuries are truly diversifying, the contribution to risk, and all other Asset Classes are diversifying [indiscernible] the capital allocated to it. On the bottom chart, the thick black line that says 12. 2 , thats the estimate of the total volatility, annual volatility for our portfolios based on the policy weights. And i think thats a good gauge. We will present other estimates next week from both wiltshire and an analysis, but i think its a good gauge of where we are and its a good way to think about the risk appetite, 12 . And as you see in the analysis later on, 12 annual expected annual volatility is approximately in line with a 70 30 portfolio. So a little more equities than the 60 40. Here we outlined what i just said, that if you review growth assets of public and private equity, we see that 33 on the top right chart, 73 of risk distribution comes from growth assets. Similar analysis for the current Asset Allocation, id like to highlight that we do while we do have a bit more in public and private equity, we also have a 3 allocated to cash, to compensate for the volatility, expected volatility, and be prepared for escalation of the capital [indiscernible]. Quickly here, whether diversification actually works, and you will see from this chart annual returns, thats what youre using, the annual return from each asset class, the red diamond is the total for that year. Its calendar year, not fiscal year returns. But the core thing is you will see the dark blue indicating public equity drives the performance. As we said in expected volatility, we see that the actual realized volatility mostly came from public equity. Its also worth noting that even though we expect quite a lot of volatility for private equity, that has not been the case. We havent seen much of the volatility or certainly not to the extent of the public equity in the last 20 years. Similar results im going to speak to those. So the next pages examine one, three, five, tenyear and the performance and risk. And i highlighted here the annual volatility. Its interesting. Even with covid and one of the largest market dislocations, oneyear volatility is only 8. 2 . If we compare it to what i said of the risk appetite, 70 30, its about its almost twice that 15. 2 . And we also put mean public db over one billion, its one of the peer analysis, and they have much higher volatility as well as 12 . So that estimate that we looked at typically was an at typically was an here what this indicates is that our these are rolling 20year periods since once it goes back to 1989. And so what id like to point out here is that our rolling 20year period, so long period of time, 20 years is a long time, is that our 20year returns really for the first time in recent years have fallen below 7 . Theyve fallen below 7. 4, which is our current required rate of return and its been below 7. 4 for the last couple of years. 20year return right now is 6. 3 or 6. 4 . So quite a change. I would also like to note that in 20 years ago, in 1999, the assumed rate of return per the actuary, it may have been name , i dont recall who it was, 20 years ago the assumed rate of return for the next 20 years, from 2019, or say fiscal year 20192020, the assumed rate of return was 8. 5 annualized. Well, our actual return over that same period has been about 6. 3 or 6. 4. So its [indiscernible] when you compound that difference over a 20year period. And with that, we can turn to the next unless there are questions, we can turn it other to the next section, which is the exposure analysis of the plans risk exposures. Thank you, bill. I will start with the country exposure and highlight that the largest country concentration is in china. We are 7. 1 overweight on china, which is a large overweight, largest country overweight. We are also before i move on, id like to make sure that this overweight is calculated versus the benchmark that we use for cash overlay, which is 68 msci equity and 32 u. S. Bonds. So its again, its very close to that kind of risk profile for the total fund. But we are a little underweight united states. We are substantially underweight japan. And across europe, we are underweight germany, and i dont see [indiscernible] and the u. K. Next, page 21 is a very important page because thats where we, both on the sector and country exposure, these exposures are intentional and we will examine whether we were compensated for this key risk drivers. Here we could see were very large overweight on the information technology. We have 23 of total plan assets are invested in i. T. So almost a quarter were getting close to a quarter of plan assets being invested in technology. And thats mostly in public and private equity, but we do have sector exposures through debt as well. The next largest concentration is in real estate. Again, more than half of it, 10 , comes from our direct Real Estate Equity allocation, and the rest comes from real estate debt, either from liquid credits through mds and cmds or absolute returns where its mostly structures, credit, and we also have some of it in private debt. The next largest overweight is health care. Its very intentional. You will see that it is highly profiled, specifically in public and private equity but also have some of it in debt, royalties, specifically private credit [indiscernible]. The underweights are in financial and utilities and materials and industrials. So a lot of color on page 22, but id like to highlight, just look at the bottom of the chart and look at the evolution of our concentration in technology. Five years ago, sfers invested 12 of total assets in i. T. Now its 23. So almost double over the five years. Now, bill as bill outlined in the staff memo, the Technology Sector is broad and its massive. It includes software and hardware and semiconductors and securities and data and Data Analysis and fintec, its brought and growing. As you will see in the presentation next week, the we are big deliverers in technology and innovation, and again, this is an Intentional Growth and Intentional Growth in the overweight of the i. T. Now, this slide, let me walk you through it because its important to understand how we approach the answer to the question were we compensated for our [indiscernible] in health care and technology. Before i let me just flip to page 33. This is public equity sector exposure, and you can see 7. 6 overweight in technology. Very big overweight in technology. And health care overweight 5. 2 versus the benchmark. So this was very intentional, large in i. T. And health care in our public equity portfolio. Lets see if we were compensated for this type of tilt. Back to page 23. Page 23. So this is whats called [indiscernible] Sector Performance distribution. Our colleagues helped us over the time horizons. I will tell you that i have seen in my life a number of performance attributions. Ive never seen positive numbers across the board. Its amazing. Now, what is it that we are looking at . We are looking at cumulative active return. So this is the return over msci global benchmark. Cumulatively over the years. So lets focus on five years. Over the five years that i said that we increased our allocation significantly to i. T. And health care, were we compensated for that . So if you look at the bottom row, overfive years, the cumulative active return, the outperformance over the benchmark for first public equity portfolio is 11. 36 , the numbers are here in percentages. Thats quite substantial. More than half of that comes from two Sectors Health care and information technology. Now, lets open up say health care. The active returns, or cumulative return over five years for health care is 2. 43 . And its interesting that if we were to invest just in health care index, so we were in this sector and we put all the money there, the sector outperformed msci equity. So we would have it would have made us 87 cumulative over five years. But the managers that we selected added to their stock pick, through their stock, specific stock investors, another 1. 65 . So that tells us that not only did we pick the right sectors to overweight, we also benefitted from active management within those sectors. We selected managers that added through stock through their Stock Selection acumen. Similar for information technology, and that is interesting that its consistent through all time, the forward time horizon. As i mentioned, the health care and technology overweights are mainly in public and private equity. Lets see similar analysis for private equity. I apologize, the format is different because the data comes from a different system. This is thanks to our partners at askia, formerly name . Again, lets pick five years. Here session the internal rate of returns, the i, rrr over five years. Versus cambridges health care backbench, 14. 6. So again we benefitted from selecting managers in health care. Similar in information technology, our Team Managers and here this is not just the managers, this is from bottomup investments in technology delivered 16. 3 versus cambridges benchmark of 16. 1. And the last point that id like to make on this page, if you look on the bottom row, pe total portfolio, the irr is 14. 2 , which is lower for both it and health care. Again, that tells us that the tilts toward i. T. And health care benefitted that portfolio. Next we move to our geographical tilt. As we mentioned, the largest geographical tilt was in china. Here we define china even broader. Well define it as Greater China, including hong kong exposures as well as taiwan and macao. So if we include Greater China exposures, then 11. 2 of funds, of total fund, is invested in Greater China. This is a bottomup analysis, so we do include global managers that Like Companies in china. Or its close to 2. 9 billion of the fund is invested in Greater China. Now, were we compensated for those . Again, most of the china exposure, as bill covered previously, came from public equity and private equity. So here we highlight that our china managers yeartodate delivered 17. 6 . By a wide margin beating any indices. So we were paid for our china tilt within public equity. Now, private equity china now, its very new exposure for us. Its about 5 years, i think closer to 4year average exposure, duration on our portfolios. Even then, the yeartodate irr of china managers is 20 , well over total which is 16 and cambridges china benchmark is 19. So we have covered three largest key exposures and concentrations within total fund i. T. , health care, and china. The last one that id like to highlight is the exposure to active management. Ill present two measures of active management, and as weve seen that weve benefitted from active management increasing active management, the measures that ill present are looking at our public equity portfolio. So receipt now wha right now whg at is a tracking error, thats expected volatility of active returns, returns over msci benchmark, msci equity benchmark. And we measure that volatility here using an analytics kit. Five years ago that estimate was so the standard deviation of active returns was about 57 bips five years ago. Now it is 300 bips. So more than five times. So over the last five years, we increased active risk by this measure, by the measure of [indiscernible] in our public Equity Portfolios by more than five times. We look at another measure of active risk. Its called active share. That is measuring how our portfolios from this benchmark. Or the other way you could say is, what is the overlap with the benchmark . Five years ago, active share was 32 . That means that 32 of positions of position weights weigh different from the benchmark and 68 were the same as benchmark. So we were quite and 32 for a portfolio of two dozen managers is not a bad measure. But over the last five years, we increased active share of our public equity portfolio to 52 . That means that more than half of our positions are truly active and different from the benchmark. And as i mentioned in the brinson attribution on page 23, we were paid for that for taking that active risk. Unless there are any questions, i will move on to two measures of leverage. Could i just make a quick couple of comments beginning on page 23 . Ill just be real brief. So Board Members here, lets look at the fiveyear column. So on highlighted there, our current weight in public equity to health care is like 17 . But the weighted average over the last five years has been closer to like 13 or 14 . But look on the total column, the 2. 43 as a percentage of 11. 36. That Means Health Care has been 13 or 14 of our exposure, but its been about 22 of our excess returns. Thats really, really good. In addition to that, technology on a highlighted its current weight is 27. Its about doubled over that time, over the last five years. The weighted average of about five years is maybe 20 or 21, Something Like that. But you can see here it constitutes just under 34 of our excess returns. So even though we have a large weight to both sectors, weve outperformed by even more than those large weights, by a material amount. And then one thing id like to point out on page 24 is looking at the Cambridge Technology benchmark. The Technology Benchmark for cambridge includes a whole roster of Venture Capital managers that we dont have access to. Really, any public plan doesnt have access to. And those managers are elite. I dont know exactly what their returns are, but from word of mouth and conversations with peers that are in the e f and family office, their returns have been really, really good. So i think if you look at this on an adjusted ill ask cambridge if they might be able to put a composite of whats investable for us, is i think in technology we have outperformed by more than this line item appears. And just as anna highlighted, here we have 51 of our private equity portfolio in technology, another about 16 or something is in health care. But look how much those two sectors have outperformed the rest of our portfolio . The rest of our portfolios are in 12, are investments in technology have earned more than 16 and in health care theyve earned 22. Our sector weight and our decisions, manager decisions in both sectors have added a ton of value over the benchmark and then the same would be about china which [indiscernible]. Thank you, anna. Back to you. Okay, bill. Now well cover two estimates of leverage. I really dont like saying leverage from growth and net exposures. These are really an assessment of gross and net exposures. Gross exposures cover every bit of exposures. Theyre not volatility adjusted but they cover currency [indiscernible] and any derivatives that we have and any of the shortterm positions that we have, all of it is here. And the reason were doing it is to make sure that to see if we count everything, what is exactly we are putting to work and you will see that in public equity weve increased so our gross exposure is 48 of the total plan while the net is 38. 49 versus 38. Private equity, we have a little bit more, and i expect that comes from fx hedging on the growth exposure. Real assets, not net and gross, are the same. Absolute return is the largest, because thats where we have loans derivatives. By the way, these gross exposure calculations by and large do not include netting. And so when we look at it on the total fund, i think its an interesting way to look at it and saying that the net exposure is a little higher than 100 , so 106 , and the gross exposure is less than that. So this is one way to measure risk, is how much money is put to work in different instrument. Its not apples to apples, but its one good measure. And then we tried to assess a different leverage of the fund in a different way, calling it an economic leverage. And here the public equity is 100 because every dollar is added invested in public equity is actually invested in a company. Private equity here Venture Capital do not use that much leverage, or not at all, but the buyouts do. So most of the leverage comes from the buyout allocation. Real assets, again, the Natural Resources we didnt assume much leverage but the real estate, which is about 60 of the fund, 60 ltd, loan to value. Absolute return, again many thanks to our partners, Asset Managers who tracked this diligently, polling every manager for their estimates not estimates but the actual leverage numbers, Balance Sheet leverage, so the estimate is 418, and similar, private credit is a conservative 30 leverage. Leading to the total Fund Leverage estimate here on less than 1. 5 x. Next i will quickly cover the its key exposures for each asset class. Again, here i mention that for public equity or exposure geographically is china, 11. 4 versus 3. 7. Were also overweight united states, underweight united kingdom, japan [indiscernible] germany. Sector, recovered that previously. Largest overweight in i. T. In health care and underweights in energy, materials, real estate, and industrials. Im not going to cover treasuries. I joke with vicki that this is where i expect absolutely no surprises, retract treasury index to the bit. You could see that. Liquid credit, however, is where we take quite a bit of credit risk, intentionally. And ill just draw your attention to, first, the duration is lower than the benchmark. The bench is u. S. Bloomberg averages bond index. So 5. 1 years for sfers liquid credit portfolio versus 6. 3 years for the ags. But look at the yield to maturity. 6 expected yield to maturity for liquid credit versus 1. 3 for the ag. And that comes from a strong tilt to credit quality. If you look at the average credit quality s p equivalent is doubleb plus versus doublea minus. This is only 6 notches down. So we took quite a bit of credit risk, but we feel that we are compensated for that with a 6 yield to maturity. A lot more information the private sector i cover quickly because theres been a detailed overview during the july presentation by both our private equity and real assets as well as cambridge. So here i just will highlight that our private equity exposure is 51 in i. T. So more than half of our private equity exposure is in technology. And also ill mention that we have more than a quarter in asia pacific versus 15 for the benchmark. Private credit, id like to highlight how diversified we are in Different Industries on the direct lending as well as others where we find different ways of either Real Estate Investments or other private credit opportunities. Real assets, real estate, again, very diversified. A bit of underweight in office and apartments and retail. Thanks to blackstone, you could see that and here were comparing to [indiscernible] index which is different. Were not able to get the data from fund to fund. We could not look through the benchmark. But here one thing that i will highlight is that we take more risk and we have larger allocation in Credit Strategies within our absolute return portfolio. Again, this is intentional. And we have strong underweight in equities to make sure that we bring a diversified return from absolute from the absolute return allocation. That concludes the exposure analysis, and im cognizant of time. Ill briefly just highlight the stress test and Scenario Analysis that we do, and iuest hundreds of stress tests on the Single Market factor stress test. And here we highlight core factors where we have stressed this, which is a global equityey index. And well go through that. From changes from last year we removed s p stress tests and if you looked at it, we didnt feel that it added that much. But we added the dollar stress test because we felt that is something that had a large allocation and in the narcotic market. And you can national market. And we were plus or minus 20 and based on this analysis we d not expect a meaningful impact to our portfolio. Opening up the msti, very strong stress test, so more than that, 40 down in world equity. You can see that the sensitivity, i call it the sensitivity analysis, if you look at the last columns that we call data, and you can see the sensitivity of that class. If you look at the top column, the top row, last column, the da public equity has data to msci at 1. 05. That means that whether msci is down 40 , we expect the public equity portfolio to be down 42 . Second column. We expect private equity to be down almost 30 , etc. This is based on recent correlations, daily daily prices over the last year. So based on this analysis we expect in this year, that our portfolio will be about 25 down. Or lose 6. 4 billion dollars. And im going to and those historical stress tests here ill just go over the new stress test, historical stress test, that we introduced with covid covid19. Lets go to g. F. C. And the way that we define g. F. C. , the historical stress test, we dont do the correlations and we just replace the market movements over almost 18 months from october 8, 2007 to march 9, 2009. So the peak and the trough in market movements and we replay it. Is that going to play fully and then public equity will go down 47. 1 , and private equity is down 37 and real assets 34. 8 , etc. So in this g. F. C. Attached stress test our portfolio is expected to go down 30. 5 . And lastly, lets replay the covid scenario. This is very interesting. And we just look at the 18 month span for g. F. C. And the scenario, again, taking the peak of the market and the trough of the market, in less than six weeks starting february 12, 2020, and ending march 23,2020. So over that span, the public equities would be down 28. 2 . Real assets will be down 23. 5 . The aggregate portfolio is expected to be down about 20 , 19. 8 . Again, that was not our experience because we actually have the land in public equity valuation, but this is a simultaneous shock which gives us an assessment of how to think about it, what to be prepared and also it gives us an assessment of liquidity management. However, its not necessarily good gauge for our fiscal return. Ill stop there, and i know that bill wanted to add a couple of comments and we are going to open up for your questions. Just one or two quick questions and then well turn it over to the board for questions. One is these percentage losses that you have seen in the stress test, these are not reflective of a fiscal year loss, they are peaktotrough. And peaktotrough could mean something in a month, and it could mean six months, it could mean as during the bursting of the internet bubble, meaning more than two years. So i wanted to point that out that. Its peaktotrough and not predictive of the fiscal year. Often time when you have a large loss, its followed by a very rapid recovery, very large recovery. For example, this year covid, the market was down 35 in a month and then we finished the fiscal year up. And i think that the s p 500 is up 9 or 10 or something for the year. So, you know, its turning out that february 20 to march 23rd was a nonevent, though it felt like a horror was opening up. I wanted to just point those one or two caveats about the stress test. With that well turn it over to the board for questions. I also wanted to note that this is a really long item. Its very important. Its very important for us that you know this. And we do have four or five active tilts in the portfolio technology, health care, china, active management, and there is a fifth, and we have highlighted it in the memo, and that is our exposure to real assets. And that consists of two segments. Real estate and Natural Resources. Real estate is arguably office and hotels and it could be arguably more impacted by covid over an intermediate time period. And Natural Resources, i am of the opinion that this is the time certainly over the next decade, perhaps much sooner than that, that we will hit peak oil. For the first time oil has competition. It didnt have competition for 90 years. Now it has competition from gas and now it has competition from variables. Investor sentiment is important to determining asset values and its an asset class that is out of favor. People are not willing to pay for it, even though prices are low. And, lastly, i do expect demand that this is a change for demand for oil. So its going to take time to work through our Management Resources and investments and we have uncertainty about real estate. And theres still places to make money in Natural Resources, and through infrastructure. We have a keen eye on renewables, we dont bring many to you, but we look at many. Were very aware that the Human Experience needs to change how we produce energy. And the other active tilts that we have, health care and technology and china and active management, they have all worked splendidly well in the last three to five years. Those are three things that we wanted the board to take away from this presentation. Next year we will make sure that e. S. G. And risks are presented in two separate months. So as to not crowd the board. With that well turn it over to the board. Thank you for your presentation. We open it up for the board comments. Commissioners . Ill start. I have a lot of questions but because how loaded this presentation and how major it was im going to not ask all of the questions. But ill have a couple though. With the total risk review and you have picked the three major ones, im curious, is there any other data regarding our risk to two major item its Interest Rate and currency . indiscernible [garbled] and we could touch upon the impacts that include those i believe in indiscernible and i believe that there are some indiscernible . We didnt highlight them because of the impact indiscernible on us. Absolutely. So commissioner driscoll, during this question we didnt have trough depth. If you look at the picture, kind of the sensitivity analysis, we show on page 45 we have up and down 200 basis points. These are very strong shocks. And they do result in meaningful impact, but nothing compared to equity shocks that we just discussed. So i would just draw your attention to the Interest Rate shock to 200 plus and minus. This is the sensitivity to the Interest Rates. And then your next was the currency risk. Again, we shock at 20 . So these shocks are three standard deviations of expected volatilities. Again, we do not expect meaningful impact in this. Hopefully that answers your questions. Basically it does. If your estimates are correct, and its a risk not worth hedging out. So this risk is one that we will accept and focus on the major ones. Secondly, in terms of the use of word risk throughout this loaded wonderful presentation, are you mainly talking about volatility . Its a wonderful indiscernible and im so happy that you asked that because risk is never meant to be one number. If you remember, even active risk, we measured it here, and represented two measures. We look at others as well, such as tracking errors and active share. For the total portfolio well look at different types of concentrations, right . We look at volatility. We look at stress and different types of stress. We also look at Scenario Analysis that we didnt have a way to look at. So the answer is, no, its not just volatility. Commissioner, i would like to go back to your question on currency and whether its worth hedging. The risk the currency risk in terms of other risks. If we were to look at the annualized volatility of every stock, say, in the 2500, and the volatility of the index, so just take all 2,500 stocks and take the standard deviation of a stock in any given year, and the volatility is 40 to 50 , in some years its 100 . As it is this year. This year its running at about 100 . The variability between the top performers and the bottom. Compare that volatility to the volatility of sector returns. It averages about 10 , 12 , 13 year. Countries are also about 10 or 12 . The least volatile of the four is currencies. So the place where we make the most amount of money, and the place where you have the most amount of money is in stocks. Currencies would be least. Any other questions or comments . Commissioner driscoll. The microphone is on. Sure, thank you, commissioner. It says on page 3, volatility number there compared to our peers it shows significant and indeed four other charts, the 1, 3, 5, 10, and the 30year plus one, and its about volatility. And trying to draw our attention to it and that leads us into the Asset Allocation mix. Absolutely. Commissioner driscoll, absolutely i agree with you on that. Because wed like to highlight and we have asked and discussed it in february and saying that the estimate for volatility is very important, specifically for where its overestimated. And we have presented methodology to decrease the expected risk or volatilities that we use for and we will present next year and allocation and the liability studies from an a. T. C. I forget exactly which page you wrote it into, the question. It had to do with what is the boards risk tolerance or appetite for risk. It was said several different ways. We have never been individually polled for it, and no need for an individual poll, but there is a question about how much risk we should accept or plan for. Its all done on expectations and then you have Great Results and youre showing us. Relative to our peers, i can show you on the five charts where you made all of the comparisons and for the 1, 3, 5, 7 and long term, only the last one where our volatility was higher than our peers, but then you go back and look at the total return number. You alluded to this in one of your sentences, that you either take on more risk or i forget how you said it to change it to increase our total return. You pointed out if we need to increase 200 basis points of return well have to do something. My point is that the tradeoff for taking on more risk to get the return, the longterm return, that youre showing there, was it worth the 9 volatility to get the 2,042 return over that long period of time . Its difficult for us to understand and answer. Commissioner, the answer to that question is, yes, and you can see that in the short preparation. That is total risk, total return per unit of risk. Whether the volatility was up or down. And the sharp ratio is slightly highigher than our public plannd peers and not as large a variability over the last one, three, and five years but itsae been marginally positive. So we have been compensated for taking that additional risk. Sito yes, we have. Been the question is is it ye e efficient enough . Is this is, the integral with the Asset Allocation and the Security Market line and we keet talking about more efficiency. I think we all could throw in more mixes, likes one of our mo managers i think that trades in 160 different markets pursuing the perfect most efficient portfolio. Im not suggesting that wethe pm should do that, im trying togew show that if wee keep pursuingwt fficiency, if wereha taking o eye offff total returns, i thinr that were going to miss something. Im going to try to point thisot out two different ways. One, the way that it is phrased on i forget which page that it is but the statement is staffs objective is to have s objectivists who have greater returns than our peers. Its a great objective, but i dont offense, i dont agree with that as our objective. I think our objective has to be what is the rate of return we can achieve with the amount of risk we want to accept with all of the constraints and restraints that we have on us. Commissioner, i think youre absolutely right. I think thats a great idea. So by the way, under the word summary at the top of page 9 is where that sentence is. You said today, youre looking for some direction from the board on what to do or not do. I think the longterm volatility was 8 or 8. 2. Yes. That was the result. Okay. Going back to the last assess allocation mix we adopted, after many months of study and work by you, our Investment Teams, and the cmac, the allocation mix we adopted, you want to guess the mix we adopted . Im going to guess 13. Good guess. Bill, we adopted 13. 5. Were trying to show our stakeholders and members that were willing to reach out to accept the best risk. Im not trying to dismiss our peers, but what can we achieve, and then, weve got to convince the Mayors Office or budget to let us have them. I think theyre all great points. Fantastic. Thank you. That concludes my comments, commissioner bridges. Thank you, commissioner driscoll. Are there any other comments from other commissioners at this time on staff plan recommendations . Were happy, and i see you next week, so maybe at that time we can try to poll the board on their risk constitution . I was going to ask you, is it possible, i havent seen the total agenda, so we would roll this into that . I think so. I think we should. We should find a way to do that. Okay. We can talk about it offline. You can talk with us offline about that. Yeah. This was a discussion item only, so are there any questions from other commissioners about sfers and the terms to the plan . And bill, we can follow up before next week, as well. Okay. Any other questions or concerns . If not, well open it up. This was a discussion item only, but we can open it up, the lines, to Public Comment. Clerk thank you. Callers, if you havent already done so, press star, three to be added to the queue. Those of you who have already done so, please wait until the system indicates you have been unmuted. Operator, are there any callers on the line . Operator madam secretary, there are no callers. Clerk thank you. Hearing no callers, Public Comment is now closed. President bridges . [inaudible] and well do the follow up and talk to you afterwards to see what we can do for presenting this at next weeks meeting, as well. I know you put a lot of time and effort into this, so thank you very much. Thank you, commissioner, and thank you, Board Members, for hearing this item. Madam secretary, next item, please. Clerk thank you. Item number 14, discussion item. Chief Investment Officer report. Thank you. Commissioners, ill be real salient. Our report lost 77 investment points. It resisted the decline last month, as it has done pretty well in every month except one. Except for march, the downside capture was that. Provide equity up, you know, 12 private equity up 12 . Its been backed by a very strong i. P. O. Market. Public equity has also posted a very strong rebound, record setting rebound, actually, and is now up about 9 for the year. Where we have major tilts in technology and china, theyre up about 15 this year. You heard me comment about Natural Resources there. I coudo have some comments the at the bottom of page 20. Asia alts recommended an allocation. Blue torch, which is a new relationship for us, credit strategy, the board approved 15 million last month, and it did close at 15 million. In june, the board approved an allocation of 75 million to their Flagship Fund as well as [inaudible] fund. Good news today is we just did receive an allocation for the 50 million in the Flagship Funds. [inaudible] one of our Flagship Investments in the life science phase, very difficult capacity here. We did request 75 million. We received 50 million. That was primarily because of our going back and forth earlier in the spring excuse me, yeah, early spring, march, april period about just where we stood with regards to liquidity concerns and our capacity, and so, you know, that may have been a fallout or a little bit of a casualty, so less an learned for us, for me, for our staff. All of us on the board, as well, for planning, pacing schedule, and a commitment, and being able to honor that across all foreseeable forecast conditions. Real quick, managers under review, please note the additions to the item. If the board would like to learn more, please contact myself, pert, or hahn. Were right about at the center of where we thought we would be. 1. 6, and median allocation was 1. 95. Strategy updates on page 6, this completes the cycle that youre hearing this year. He just heard the e. S. G. And Risk Assessment items. And finally, we have some important meetings coming up. We have an investment meeting coming up next month. I do want to take a moment to thank the board you heard about orby med. Its one of our very largest relationship in the life science spaces, both private as well as health care royaltys. And matrix, performing something around 20 or 30 so far the first eight months with our relationship with them. The Board Meeting, quick note, on page 7, its not november 11. November 11 is actually a holiday, veterans day, and so the Board Meeting has been moved to tuesday, november 10. Last item, i am thrilled to announce the hiring of bob doe. Bob is our inaugural manager of investment operations. Youll read his profile. Bob brings experience. He managed investment operations for a very large Investment Platform and also managed investment operations on behalf of on state street for calstrs, and calstrs raved about bob. Bob, welcome to sfers, and youre well come to say a few words. Obviously, im very excited to join this family and very excited to be a part of my first Board Meeting. Ive been a part of management operations for the better part of 19, 20 years, both the custodial and assess management side. Im proud to bring my experience and knowledge here. Mainly, related to what i think kind of the three things ill be focusing on really is what i kind of call proper location, control, and processes, so looking with the team to make sure that everything is square our processes belong where they are, we have controls in place. And then, what i call is looking for places that we can have efficiencies rgs right . Where we can look at our systems and auto mamation where can be better where we are, get better at data and technology and definitely want to work to identify those. And then really, just working with ourselves, our vendors, and our peers to identify industry best practices, to make sure were really at the forefront of building out policy, programs, and practices. Were looking to be very up front in the way we invest and managing a list of the markets that we go into. And i want to shuck sure, on the investment make sure, on the Investment Opportunity side, that we do that and we dont fall under. Definitely looking to really build out a team and be very cognizant about how we build it out. Like myself, it is going to be the inaugural person, but i am going to be looking to build out the team and how we move into the future. We have 20someodd investment professionals who have been waiting anxiously for your arrival. No pressure. To wrap this up, we do have two recruitments pending. We do have an analyst to support justin and an analyst to support ana. Justin and ana have been here alone for six months. And special thank you to their work. Theyre all very important items. We look forward to seeing you next week at neex weaks meeting. Science and tech and Asset Allocation are important items. We look forward to seeing you next week. Board members . Members, are there any questions on the c. I. O. Report . This is a discussion item only. If not, thank you, and we would like to welcome bob, as well, to sfers, and look forward to working with him. So welcome. Madam secretary, at this time, if there are no questions or comments on the report, well open up the lines for Public Comment. Clerk thank you. Callers, a reminder to press star, three to be added to the queue. Operations, do we have any callers on the line . Operator madam secretary, there are no callers on the line. Clerk thank you. Hearing no public callers, Public Comment is now closed. President bridges . Thank you, madam secretary. Next item, please. Clerk item 15, discussion item. Deferred Compensation Committee report. President bridges, i would suggest that you accept this report as submitted. These are for the last three deferred Comp Committee meetings that date back to march, august, and the most recent one in september. You were chair of that committee for one of those meetings, and commissioner casciato was chair for the other two, unless youd like to walkthrough what took place, but this is the minutes for the three Different Committee meetings. Thank you, mr. Peters. Commissioner casciato, is that okay with you . Do you have any comments or anything to add to that . Do you have any comments . I have nothing to add to his comments. Commissioner casciato . Commissioner casciato . Hello . Hes not on . Hes not he cant hear us . You can hear us, but we cant hear him, so maybe we can take the report as submitted. We can take the report as submitted. Hes nodding his head. Okay. This is discussion item, and commission, we will take the report as submitted. Are there any questions from commissioners on the report as submitted . Again, this is a discussion item for the deferred Compensation Committee report. If there is no discussion, we will take the report as submitted. Madam secretary, at this time, if you could open up the lines for Public Comment. Clerk callers, a reminder to press star, three to be added to the queue. Moderator, are there any callers on the line . Operator madam secretary, there are no callers on the line. Clerk thank you. Hearing no further callers, Public Comment is now closed. President bridges . Thank you, madam secretary. Next item, please. Clerk item number 16, discussion item. Deferred compensation manager report. Good evening, everyone. Thanks for your time today. Im here to present the deferred compensation management report. In the interest of time, i can just briefly go over some of the highlights of the attached report. Attached is the sfucp deferred compensation report. I wanted to provide you with some more updated numbers as of the end of last month. So as of the end of september 2020, weve had an aggregate total of 55 coronavirus related loans issue for a little over a total of 15. 1 million. Weve had a total of 542 coronavirus related distributions, for a total of a little over 18 million. Next, i did want to speak on a participant issue that arose recently. We were made aware of an issue that a participant had when they were setting up a withdrawal. I wanted to let you know of the situation and the steps that we have taken in response to this. In case you werent aware, there was a participant that encountered some obstacles when trying to withdraw some money from his account. He subsequently sent a letter documenting his experience. After receiving his letter, we researched the circumstances surrounding his withdrawal request. His calls were reviewed, and we also looked over the webpages he visited and the correspondence that was sent to me. After conducting this review, while we concluded this wasnt a systematic issue, changes could be made to prevent this from happening in the future. Voya has agreed to address training with their call center reps, specifically regarding the timing of installments and when those installments would be available to the participant. They will update their website and forms, and we are planning to update our wording in our sfgp guide. As a full follow up, we also sent another letter of correspondence to his address of record last week. Ill keep you updated if anything else arises, but i dont anticipate there should be any further issue with the situation. Also wanted to mention, on the topic of communications, currently, were in the middle of National Retirement security month. This month is a National Campaign held by congress to emphasize the benefits of saving for retirement. If you visited our sfgcp website this month, you probably have seen our special section dedicated to National Security retirement month on the top of our webpage. If you havent, we highly encourage you to do so. And if you do that, youll see the links that we have to the daily webinars. Additionally, on top of that, we are also holding live daily webinars throughout the month, and these presentation topics rotate weekly. There are topics from voya on the topics of Financial Wellness and links to the biography fliers for our retirement counselors to encourage members to reach out and contact our reps, and the sfgcp has been sending out communications to participants at various points throughout the month. Were trying to tie in the weekly themes for the presentations and the communications. So as an example, next week, the webinar will focus on Online Access and tools available, and we will be encouraging members to register one or both of their accounts online. Those are the topics that i wanted to cover. If you have any questions, im happy to answer them, and if not, i thank you for your time. Thank you, steve, for the record on deferred compensation. This is a discussion item only. Commissioners, do you have any questions for steve at this time . If there are no questions on the deferred compensation managers report, madam secretary, can you open the phone lines for Public Comment, please . Clerk thank you, callers. Please press star, three to be added to the queue. Moderator, are there any callers on the line . Operator madam secretary, there are no callers on the line. Clerk thank you. Hearing no callers, Public Comment is now closed. President bridges . Thank you, madam secretary. Next item, please. Clerk item number 17, action item. Approval to issue request for proposals for sfdcf Investment Consulting services. Members of the board, as youre aware, your board policy requires that consultants who are hired and report to the retirement board, that the services for Investment Consulting would go out every five years. Coan has been providing Consulting Services for the sfdcp since june or july of 2016, so the contract would expire in june. So what were proposing, weve presented this to the deferred Comp Committee at the september Board Meeting, and they forwarded a recommendation that we revise the attached r. F. P. To solicit bids from qualified providers. I will note that the r. F. P. Will be updated on page 9, section h. It will be updated to reflect the new language on the San Francisco campaign and governmental code. That was outdated long. The key dates on this r. F. P. Is if the board approves it today, we intend to issue it on friday. We intend to give them until december 14 to submit proposals, and that we would be on time to present recommendations from the Evaluation Team to the february deferred Comp Committee meeting with hopefully a recommendation from the deferred Comp Committee meeting and coming to the retirement board no later than april of 2021, so that if, in fact, we time these contract negotiations, well have sufficient time. So with that, ill be happy to answer any questions. Thank you, executive director. Board members, this is an action item. Are there any questions for our executive director on the proposal for the r. F. P. . Again, this is the request for proposals to the sfdcp Investment Consulting services. Yeah, this is [inaudible] the question i asked at the Committee Meeting that i didnt have an answer to yet. Who will be the scoring committee that will pick the finalists for the presentations in february . [inaudible] will be diane with justin. She will be returning from her leave right after the first of the year. Steve moyes, acting director. I will also be part of the Evaluation Team, and were hoping that we can solicit the participation of someone from the Public Markets Investment Team or the Investment Team to help us evaluate the proposal. [please stand by] clerk we have four yeses. Motion passes. President bridges . Thank you, madam secretary. Next item, please. Clerk item number 18, discussion item. Presentation of sfers audited Financial Statement and required communications for years ended june 30, 2019 and june 30, 2018. Commissioners, this is an item that has been continued for a number of months. It is to present the finding of the audit for 2019 june 30, 2019. Like i said, it s been continued since early this year. Each year, the department hires a consultant to come in and do an audit. N. G. O. Has done the audit the last few years, as well as recommendations. Its strange for us because they are just finishing up the final touches of the 2020 audit, which the city, i believe, will be issuing in november, no later than december, and hopefully, craig will be back early next year to present the 2020 results to the board, but we just needed to get this presented to the board, and so i will turn it over to craig at this point. All right. Thank you. Thank you, jay, and thank you, everyone, members of the committee and the board. Ill keep this kind of brief because as jay mentioned, there wasnt really anything in the audit. We did an audit for the years ended june 30, 2019 and june 30, 2018. We issued our independent auditors important on june 30, 2019, and its the highest level that an independent auditor can give a department. With the required communications, a few things that our professional standards require us to communicate to the state board of retirement. Ill go over those briefly. As i said, there wasnt anything we didnt have any disagreements with management during the course of the audit. Management didnt look for second opinions with other accountants. We didnt have any difficulties in emergency roperforming our we didnt have any corrected statements or material misstatements, as well. Couple more things that are kind of significant to the audit that were required to communicate is that theres certain areas of the Financial Statements where management has to make estimates about the balances or the numbers in disclosures, and the two most significant ones are the fair values of investment and the actuarial information which are based on actuarial estimations and actuarial statements. We found all the estimates and assumptions are key assumptions, and all the estimates and assumptions to be reasonable. And with that said, we didnt have any other audit findings, we didnt have any, you know, internal control deficiencies [inaudible] or material weaknesses in internal controls, and we also doesnt have note any noncompliance with laws, regulations, or contracts. So everything was in pretty good shape, and thats kind of a testament to the finance the finance and the Financial Reporting team that sfers has with the boards oversight. I would join frank again in congratulating and thanking the accounting team. This is my 20th Straight Year where weve had what ive considered to abe aad great au. There are no material discrepancies, so i think we have a great team, and again, thank you to n. G. O. We are finalizing our latest audit, but well see him back early next week. Yes. And with that, were happy to take any questions the Board Members may have. This is not an action item, its just a presentation of a report to the board. Thank you, mr. Hughes, and craig, for this presentation. Commission, do you have any questions for either of them [inaudible] . If not, we cthis is a discussi item. So madam secretary, you can open up the Public Comment lines. Clerk just a reminder, callers, president star, three to be added to the queue. Moderator, are there any callers on the line . Operator madam secretary, there are no callers on the linum. Clerk thank you. Hearing no further calls, Public Comment is now closed. President bridges . Thank you, madam secretary, and thank you [inaudible] for presenting these communications to the board, so thank you very much. Madam secretary, next item, please. Clerk item number 19, auction item. Approve request to adjustment industrial disability retirement allowance from 50 to 90 . Members, this is a standard request that we asked of you. In this case, james perry was awarded a disability retirement and set at an initial allowance of 50 . His Workers Compensation case was completed, and he was provided with a 90 rating. Under the charter, we are permitted to ask you to allow his increase to 90 until hes provided with a service retirement, and im happy to answer any questions. This is an action item, and ill ask the board if there are any questions on this item. If there are no questions, i would also entertain a motion. Sorry. Im waiting for commissioner casciato. I want to make a motion to [inaudible] i said i make a motion to adopt this item. Thank you, commissioner casciato. Is there a second . This is brian. I will second. Thank you, commissioner stansbury. It has been moved by commissioner casciato and seconded by commissioner stansbury that we move the retirement percentage from 50 to 90 for james perry, iii. Madam secretary, if you can open the phone lines. Clerk thank you. Press star, three to enter the queue. Ma moderator, are there any callers on the line . Operator madam secretary, there are no callers on the line. Clerk hearing no callers on the line, Public Comment is closed. President bridges . Yes. Lets have a roll call vote on the item. [roll call] clerk thank you. We have four yeses. Motion passes. Thank you, madam secretary. Please call next item, please. Clerk next item, number 20, discussion item, executive directors report. I will keep mine very short, however, i do want to point out that weve been extremely lucky since the shelter in place order. Weve been able to hire two of our t members of our Leadership Team into permanent positions. Ba do is on the reporting side, and were more than happy that bill and his team have adopted him and have assured us that they will be always available to help him be successful in his job. A second key hire that we have brought on board last month and a project that ive been working on for 15 years, and that is to get a Quality Assurance Operational Risk office started in the department, and i have been working with mr. Derwin brown for nearly two years, i think over two years, frankly. Tried to convince him that he needed to leave the l. A. County plan and come up and join us in San Francisco. He agreed to do that. He started work at the end of last month. He has over 20 years of experience working with lucera. 15 years of that were working towards building they started 15 years ago was spent working towards a Quality Assurance program at lucera. I believe the last five years of his job at lucera, he was the chief of the Quality Control department there. Just wanted to let ba and bill know, this wasnt an extremely long meeting no, im kidding. This was an extremely long meeting. I will offer derwin an opportunity to speak to the board, hopefully, hes still here. Thank you, jay. Hello and good evening, president , and fellow commissioners. As jay mentioned, i have 20 years in los angeles county. In 200 1, our c. E. O. Split the retirement operations into three separate divisions, which was member services, benefits, and Quality Assurance. The manager who hired me went to Quality Assurance, and i went with him. And he started building the actual Quality Assurance in 2001 and 2002 from the ground. We started with procedures, documenting procedures for our business processes, developing criteria, adding measurements, doing analysis, doing regular audits. From then, i moved up to supervisor within Quality Assurance, where i was fortunate enough to be the project manager for several data cleanup project that [inaudible] on our radar to take care of because one of the things that we had and im sorry if im taking up too much time but we had a Data Conversion Program that i was involved in. Im very happy to be here with you guys, improving the processes, contributing as much as i can, and being a part of this great team. It has been a pretty short meeting, and my patience is still here, so i appreciate the time of day, and thank you, karen, and thank you, all. Pleasure to be here. Thank you. The other thing i would like to point out thats not on the agenda is we had presented to you [inaudible] the board has declared a vacancy, and commissioner driscolls appointment will be ending in february. So back in june, we sent a proposed schedule. You adopted it, and you declared a vacancy. Weve worked with the department of elections i should say darlene worked with the department of elections. They have agreed to reschedule. Just wanted you to know that we will be sending out notice of that vacancy tomorrow, and that we are going to have the period for nominations start on october 19 through, i believe, september 14, which is September December 14, which is a friday. We will vote in january, and just wanted to give the board the heads up that we will be opening up the nomination period effective monday, october 19, and well be sending notices out to labor organizations, to the city, the department heads, and to employees and retired employees. With that, ill be happy to answer any questions that any board member has. Thank you, executive director huish, for your report. Wed like to welcome you to the family. And yes, this is a long meeting, but we ask you for your patience as we go through this report. Commissioners, are there any questions for the director . If not, madam secretary, well open up the publhone lines for Public Comment on the directors report. Clerk thank you, madam president. Members of the public, press star, three to be entered into the queue. Moderator, are there any public callers on the line . Madam secretary, there are no callers on the line. Clerk thank you, moderator. Seeing no further callers, Public Comment is closed. President bridges . Thank you, madam secretary. This is [inaudible]. Thank you. Thank you. Commissioners, at this time, we have the floor open if you have any comments, suggestions, or anything youd like to state for the good of the order, you can do that now. So it is open for any suggestions. Commissioner driscoll again. To my fellow colleagues on the Governance Committee, ill be asking darlene [inaudible] help in terms of getting out guidance to the Governance Committee in the next several weeks. Thank you. Thank you, commissioner driscoll. Anyone else . If not, well open the phone lines for general Public Comment. Clerk thank you. Any callers on the line, please press star, three to be added to the queue. Moderator, are there any callers on the line . Operator madam secretary, there are no callers on the line. Clerk thank you. Hearing no further calls, Public Comment is now closed. President bridges . Madam secretary, i think that was our last item, and thats the end of the meeting, so the meeting is adjourned at 7 15 p. M. Thank you everyone for your patience. Thank you very much, and have a wonderful evening. Good morning, everyone. This is the october 6th, 2020 special budget and finance Committee Meeting. Im sandra lee fewer, chair of the budget and finance committee. Today im joined by Committee Members supervisor Rafael Mandelman and supervisor mat haney, substituting today for supervisor walton. Our clerk is miss linda long. Id like to thank sfgov tv for broadcasting this meeting. Id like to put a motion to excuse supervisor shamann walton. Do i please have a roll call vote. Clerk on the supervisor, supervisor haney . Comments are opportunities to speak during Public Comment period, theyre available via phone call by calling 415 6550001. Again 415 655000 415 655000g i. D. 146 407 0690. Again 146 407 0690. Then press pound twice. You will hear the meeting discussion, but you will be in mute and in listeningmode only. When the item of interest comes up, dial star 3 to be added to the speaker line. Best practices to call from a quiet lotion, speak clearly and slowly and turn down the television or radio. Alternatively you may submit Public Comment in the following way, email to myself, the budget and finance committee clerk. If you submit Public Comment via email, it will be forwarded to the supervisors and will be included as part of the file. Finally items acted upon today are expected to be referred to the full board, as Committee Reports, for consideration as todays worried of supervisor board of supervisors meeting today at 2 00 p. M. , unless otherwise [clerk reading items 14 on agenda] [ [clerk reading items 14 on the agenda] members of the public who wish to provide Public Comment on the items should call 415 6550001, meeting i. D. 146 407 0690. Then press point twice. If you have not done so, please dial star three to raise your hand. Chair fewer thank you very much, madam clerk. Today we have with us jonah lee, director of Portfolio Management and preservation at mohcd, the finance manager, the Program Manager for public works and the financial analyst from the office of public finance. The floor is yours. Somebody. Thank you, chair fewer. And good morning. Jonah lee, director of preservation at mocd. Presenting this first item to the preservation and seismic safety program, request for approval for the second issuance 2020 bonds. Im pleased to present the sale resolution related to the issuance of up to chair fewer mr. Lee, so it is not moving. Did you want to go to the next slide . Are we on slide 2 . Chair fewer now were on slide 2. Thank you. Sure. Im pleased to present the sale resolution related to the issuance of up to 102. 6 million in bonds for the committees consideration and positive recommendation to the board, as the Committee Reports. The 2020 sbonds are used to finance loans under the preservation and seismic safety pass program, which is a key component of the citys acquisition, preservation, and antidisplacement strategy. Before we move on to the presentation, id also like to express my gratitude to the committee and clerk for convening this special session today. The expedited timeline allow our continuing team the option to price the bonds before the election, if that is advantageous. Given the volatility in the markets, this flexibility is critical to financing execution that funds the past program and ensure that during these extraordinarily challenging times, san franciscans can remain stablally housed. Next slide, please. The Bond Authority chair fewer excuse me, mr. Lee. Were not seeing the slide . There we go. Thank you very much. The Bond Authority for the past program originated with the seismic safety loan program of 1992, which funded seismic retrofits to unreinforce masonry buildings. They authorized the issuance of 350 million, with suballocations to fund deferred, belowmarket rates and marketrate loans. Over the following 20 plus years, the program was largely underutilized, with 90 million issued. Next slide, please. Past financing is a flexible, nimble and valuable preservation tool for the city and Affordable Housing developers. With limited other tools to facilitate Affordable Housing and especially in the current market, it may be a powe powerfl tool to use in a strategy. Eligible uses include seismic retrofits, acquisition rehabilitation, and preservation of affordable, small and large buildings, including s. R. O. S. Next slide, please. Past, deferred and belowmarket rate loans require permanent affordability. And to maximize affordability and minimize the use of public resources, average rent and income is 80 of a. M. I. And capped at 10020 a. M. I. To date the program is largely serving lowerincome households, learn 660 a. M. Ism. Next slide, please. Most loans, in the past program, are structured as permanent takeout financing. However, the program may also provide direct financing. To achieve the lowest cost of capital for many Affordable Housing Housing Properties as possible, each project receives a blend of belowmarket rate and marketrate funds. And is structured with up to a 40year term. Loans that were funded with the 2019a bond, less than 3. 5 . The blended rate, based on the 2020 bonds, is expected to be even more approximately 3 . Next slide, please. Quick update on the First Issuance pipeline. The strong continued demand for past funding, all of the bond proceeds from the First Issuance have been either closed or committed. Since may of 2019, mocd has closed financing, a little preserved over 200 units. Another roughly 18 million in loans are scheduled to close by the end of this calendar year. And in aggregate, more than 350 units are expected to be preserved with a financing from the First Issuance. At this time additional hunting is critical to the continuation of the citys antidisplacement and preservation initiatives. Next slide, please. Staff is recommending the approval of the second issuance, in a maximum amount not to exceed 102,580,000, based on the Strong Demand and the bond capacity available this year. The bonds would fund over 101 million in loans, with the remaining amounts for cost of issuance and other fees. Next slide, please. The anticipated pipeline for the second issuance, including approximately 34 projects, with over 500 units, including commercial spaces. With california oversubscribes two to one on the volume cap and preservation projects in california structurally disadvantaged by the states competitive scoring criteria, there is a huge need for preservation finance tools. That need is particularly acute, given the acquisition opportunities in the current economic climates. And the recent unlocking upon this funding from prop c. Indeed, past funding is uniquely positioned to lock in historically lowcost, and longterm funding to meet these needs and execute on a countercyclical, antidisplacement acquisition and placement strategy. This pipeline includes appear range of small and large preservation projects, with critical needs and serving priority atrisk populations. Mohcd is also providing over 3 million separately funded through the s. S. P. Capacity building funds to support our nonprofit housers and identify new preservation opportunities aligned with our racial and geographic equity goals. Next slide, please. I want to thank you for this opportunity to present on the past program. The second issuance of past bonds will provide critical funding for the city to continue executing on the antidisplace acquisition and preservation strategy. This concludes my remarks. At this time id be happy to answer any questions. Chair fewer thank you very much, mr. Lee. Any comments or questions from my colleagues . Seeing none, this actually mr. Lee, you actually covered item 1. Do you have a presentation for item 2 . I see you are the speaker for item 2, 3, and 4. Would you like to go through those items now . My colleague raleigh is line up to speak to the next item. Chair fewer lets hear the b. L. A. Report, please, for item number 1. Thank you, chair fewer. Nick menard from the b. L. A. Which have one combined report for all three all four items. Chair fewer yes. Mr. Menard, could we hear you report after we conclude the presentations from items 1, 2, 3 and 4. Yes. Chair fewer thank you very much, mr. Menard. So now we have mr. Katapang . Is that how you pronounce your last name . So sorry if i butchered that. Thats good enough. Chair fewer is that how you pronounce it . Thats pretty good. Chair fewer thank you. So the floor is yours. You are presenting an item. Thank you. Okay. Can we please put our slides up. Clerk the only slides that we showed are the only slides that we received. Is there other slides to be shared . Its a combined slide. So i think the next if you just click on the next one, it would be me. Thanks. Clerk thank you for the clarification. Good morning, supervisors. Finance manager at mocd. Here to request the reproposal of the 2019 Affordable Housing bond. In the amount not to exceed 260 million. Im also joined by our Deputy Director for housing, as well as our c. F. O. Next slide. Next slide, please. Next slide. Thank you. Next slide, please. Thank you. Right. Thank you. The 600 million Affordable Housing bond passed in november 2019. As you may notice, this bond measure is almost double the one passed in 2015. So bond allocates 150 million for Public Housing, 220 million for lowincome housing, 80 million for preservation and middle income, 150 million for Senior Housing, and 20 million for educator housing. Were askin asking approval fort 253 million in Program Funds and the next slide ill go into each of the program categories. My presence will be more high level, but if you need more detail, lydia and the rest of our team are available for questions. This will be the citys biggest issuance of Affordable Housing bonds to date. And this is primarily driven by the increased need to finance the citys growing Affordable Housing pipeline. Next slide. The first spending category is Public Housing. These are typically for householdhouseholds with less t a. M. I. The majority of the funds requested will be spent on vertical and Infrastructure Development at sunnydale block 3, 7 and 9. Were using funds to accelerate rehabilitation, thats been Public Housing stock to meet Housing Quality standards. This 45 Million Investment will produce almost 300 units. Next slide, please. Aside from spending in sunnydale, were budgeting for multifamily units, similar to our rad program. We expect this investment to yield 70 units. Next slide. The next spending income is lowincome housing. These are typically for households with less than 80 a. M. I. Next slide. We will be allocating 15 million for geographic equity family acquisition, which will be used for Land Acquisition for predevelopment of new housing projects in areas with limited production or loss of units with protected status. This investment will produce 75 units. Next slide. Weve also identified five developments which need Construction Financing in 2021. Lowincome gap funding, tolling over 113 million is the biggest component of this First Issuance, and will produce over 550 units. Next slide. Lastly, were allocating 15 million for permanent spode for single adults and people with chronic illness. For permanent housing for single adults, we will most likely use the 10 million allocation to purchase land, although a particular site has yet to be identified. For persons with chronic mental illness, we plan on acquiring several singlefamily units that can each house three to five individuals. Next slide. Moving on to the next spending category, which is preservation and middle income, preservation will serve households with 30 to 120 a. M. I. And middle income will serve households with 80 to 175 a. M. I. Were allocating 29. 4 million for serving rentcontrolled units, similar to the small sites and 7. 5 million as a Gap Financing for knight and howard, which will contain over 100 middleincome units. Next slide. Here you can see the picture on howard. Next slide. Our last Program Category for this First Issuance is Senior Housing. These are typically for households with less than 80 a. M. I. Similar to low income, we are also dedicating 15 million for geographic equity housing, but this time for seniors. Were also funding Senior Housing to be built in laguna honda hospital and Senior Housing in chinatown. We expect to produce almost 250 Senior Housing units. Next slide. The bulk of the funds will be spent in 2021 and 2022. Next slide. We break down the bond sources. Next slide. Thank you very much. And happy to answer questions. Chair fewer any comments or questions from my colleagues . Seeing none, lets go on to item number 3. And who is presenting that . Is that mr. Joe chen that is presenting that . Hi, madam chair. Im presenting item 4, is that up . Chair fewer oh, youre item 4. Yes. The Public Safety bond program. Or 2 and 3 . Chair fewer who is doing item number 3 . Let me just chime in. Im the public finance. Im sorry. The presentations were a little out of order. The first the past presentation for mr. Lee was for item 3. The recent presentation by mr. Catpump ang for items 1 and 2, so now were on to item 4. Items 1 and 2 were together. 1 a master resolution for authorizing the entire 600 million bond program for the 2019 Affordable Housing bond. As well as the First Issuance, separate resolution of not to exceed 260 million for the First Issuance. Kqed okay. Wait a minute. We did hear a presentation about the 260 million. No . That was the presentation just now. Chair fewer yeah. Okay. And then so what item are we hearing now . Were ready for item number 4, which is the Public Health and safety bond issue of 126,000,000. 925000. Okay. We heard item 1 and 2 and 3 already . Chair fewer mr. Chen is shaking his head. Mr. Chen, now you are now presenting item number 4. Thats correct, madam chair. Chair fewer all right. So are we ready to go . Chair fewer the floor is yours. Okay. Thank you. Good morning, madam chair, supervisor haney and mandelman. Im the public works Program Manager for the Public Health and safety program. The approval to proceed with the third bond sale for the Public Health and safety bond program. Okay. Well keep it on this slide. To be more specific, we are requesting the budget and finance committees consideration and positive recommendation to approve the resolution to authorize and direct the sale of 126,925,000 for the 2016 Public Health and safety bond program. The p. H. S. 2016 was approved in june 2016, for a total of 350 million 350 million. The first bond sale was completed in 2016, and the second bond sale was completed in 2018. For a combined total of 223 million. Next slide, please. The p. H. S. 2016 provides funding for six bond components for three client departments. The three client departments include the department of Public Health, the Department Chair fewer mr. Chen, excuse me, could we have the next slide, please. Oh, okay. Sorry. Oh, maybe i think were still i think its on the im still on the previous slide. Chair fewer okay. On the bond Program Overview . I am. I think theres a slight lag maybe. Chair fewer that is great. Now we can we can follow to what youre saying. Okay. Sorry. Maybe ill slow down a little bit to make sure Technology Catches up. The p. H. S. Provides funding for six bond components, three client departments. Background noise. The three client departments include the department of Public Health, San Francisco Fire Department, and the department of homelessness and supportive housing. The six bond components, the first three components in the table are for depp, including building 5, Southeast Health center, and other Community Health centers. The next two components include the ambulance deployment facility and a neighborhood fire station. And those are for the San Francisco Fire Department. And last but not least, the Homeless Service site component is for the department of homelessness and supportive housing. Next slide. Since the approval let me just do you see the next slide, which is 29 . Chair fewer not yet. Not yet. There we go. Okay. Im getting the hang of it now. So since the approval of the second bond since 2018, the team has continued to make significant progress across all six components on the building 5 component, the Team Continues to advance the 19 core projects that are part of this component. Of the 19 projects, 16 of them are currently active. And different phases of the project life cycle with one project completed. On the Southeast Health component, public works has successfully awarded the construction contract to clw builders in april of 2020, with construction to be issued in may of 2020. A few activities have commenced. On the slide in front of you, various photos to highlight some of the most recent construction activities. Next slide, please. On the Community Health center component, we are tracking two Health Centers that are undergoing comprehensive seismic upgrade and renovation. Maxine hall Health Center is well under construction with the recent completion of all shared walls. Another is in a bidding phase, with bids received on september 16th. Public works is targeting Start Construction by the end o end oe year. On the a. D. F. Project, construction is also well under way with a target completion date of december or january of 2021. On the component, public works awarded the construction contract to argo construction for the host tower fire station locations. 6, 11, 12, 21, 38. Construction t. P. Was issued in july of this year. And on the homeless component, its completed and closed out. Next slide. The various projects under the p. H. S. Program by component. This table provides a summary of the projects that were in the planning phase, design phase, and construction phase. Let me just take a few minutes to point out a few dates in the table. For example, the Southeast Health Center Project is trac tracking to a completion date toward the end of 2022. And a. D. F. Is also tracking to a completion date of january 2021. Next slide. This slide provides more detailed breakdown of the previous two bond sales and the current bond sale by component. This table shows a breakdown of the 350 million allocation by component. Of the 350 million, 272 million is allocated to d. P. H. 258 million allocated to the San Francisco Fire Department and the other to s. H. S. The second bond sale provided funding for two components. The third and final bond sale provided funding for the remainder of the four components. Totaling 126. 9 million. Next slide. The third bond sale, as i mentioned earlier, provide funding for the six components for the Southeast Health center and Community Health center components. The funds will be used to fund the Construction Contracts, as design has already been completed. For the building 5 and n. S. S. Component, the third bond sale will fund both design and constructionrelated activities. Next slide. This table provides summary of expenditures and encumbrances spent by various components. I wont go through all of the numbers on the table. Let me walk you through how to interpret some of the numbers. The expenditures column highlights the portion of the funds thats been paid or spent to date on construction or designrelated services. Th Construction Contracts or professional service contracts. Next slide. The information on this slide is provided by the office of public finance. The third bond sale amount is 126. 5 million. As a source of a prior amount, the 126. 9 million will be allocated in three categories. The 125. 5 million is project funds, which will be used to deliver projects or projects. The remaining funds will be used to fund city services, auditing fees or expenses related to the geo bond sales or fees. Next slide. And at this point it concludes my presentation for this morning. And im available for any questions anyone may have. Chair fewer thank you very much, mr. Chen. Could we have the b. L. A. Report, please on items 14. Any questions from my colleagues . This is the office of public finance. If you would allow, ave few remarks to make regarding the financial terms of the three bond series that have been proposed . Chair fewer of course, mr. Chiaretti. I will briefly take each of the three different bond issues, presented today, and describe some of them financing parameters and then ill also then cover the sort of sum total of the impact to the property to the debt limit and capital plans for all three series together. Based on the Consumer Market Interest Rate of 3. 51 , we assume an annual Debt Service Cost for the bonds of approximately 4,820,000, based on not to exceed and over the life of the bonds, generate about 87. 5 million in interest payments, with a total Debt Service Amount of 190 million or so over the life of the bonds, were assuming a 40year term. With the final maturity of june 15th, 2060. The repayment of annual debt service on the bonds, because of the structure of the past program, it will be recovered through increases in the annual project tax rates, but because this the way the program is set up, the debt service is offset by loan repayments. Mr. Lee described three categories of loans made through the bond program. And borrows of blowmarket rate loans are expected to pay at a third of the borrowing cost. Repay the full borrowing cost and an additional 1 for the administrative costs and deferred loans are repaid in full at the end of the loan term. Therefore, we would anticipate that these loans repayments, offsetting the citys borrowing costs would vary over the term of the bonds, as loans are made and then recollected over time. The increase in property tax associated with these bonds is estimated to range from about 3 cents to about 1. 67 per 100,000 of assessed valuation over the expected 40year term of the bonds. So the owner of a residence at 600,000, assuming the homeowners exemption of 700,000, would pay additional property taxes to range from 17 cents cents up to 9. 988 per year, if the bonds are sold. We are pursuing a negotiated transaction for this bond issuance and we selected underwriters. The senior manager for this will be r. B. C. Capital markets l. L. C. And comanagers will be u. B. S. Financial services inc. And b lablock. I can take questions for this or move on to the next, if you would prefer, chair fewer . Chair fewer colleagues, any comments and questions seeing no one in the queue, lets move on. The Affordable Housing bond program, we have an estimated market rate of 3. 39 for the taxable general obligation bonds. That would create an annual Debt Service Cost of 13. 5 million. Were anticipating 255,555,000 and generate Interest Rates, resulting in 405 million as total debt service, about a 30man year term of the bonds as currently estimated. The property tax impact of this bond sale is approximately 4. 54 per 100,000 of assessed value. So the owner of a residence of 600,000, the homeowners exemption, would pay average property tax increases of 26. 91 per year, if the bonds are sold. We are also pursuing a negotiated transaction for this issuance and we have selected underwriters again through an r. F. P. , as with the 2020f bonds. Theyre to be Morgan Stanley and company, as a senior manager. Citigroup will market will be the consenior manager and the comanagers are Raymond James and an anticipated 20year term of the bonds. So the increase of the property tax from these bonds would be about 2. 77 per 100,000 of assessed value of the term of the bond. So the owner of a 600,000 home, with a homeowners exemption, would pay an average of 16. 42 per year, if the bonds are sold. And now ill turn to the anticipated debt limit impact for all of these three issues i issuances together. It allows 3 of the total assessed value of property in San Francisco. Currently for a fiscal year 2021, the certificate the certificate assessed property is worth about 9. 04 billion. So 3 creates a debt limit sorry. The total assessed value is 301. 4, creating a debt limit of approximately 9. 04 billion. But as of september, 2020, the city had an outstanding debt of 2. 15 billion in assessed in aggregate full amount. So we have a total outstanding geo debt of approximately. 71 . Out of the 3 debt limit. If we issued all of these three series of bonds, that total amount of aggregate principle would increase from. 71 , still well within the 3 limit. The capital plan is also imposed a financial constrain on the citys use of general obligation bonds, such as that the any the property tax in any given year would not be over 2006 property tax rate of. 1120 in assessed value and if the board of supervisors approvings this bonds, the property tax rate still maintained within that constraint. So thats all i have on the Financial Impact of these bonds and if there are any questions, id be happy to answer. Chair fewer i just wanted to mention that i think in this instance, it would have been helpful to have a power point, its almost impossible to keep track of all of the numbers in a series of four items. It would be different if it was one item. But because we are discussing four items together, i just just think that the numbers that youre rambling off to us and reading off to us, are very complicated to actually see it in sort of this larger context of what were voting on. I just wanted to mention that. I think that i see no comments from my colleagues in the queue. And so lets move on to our b. L. A. Report for items 14, please. Thank you, chair fewer. And good morning, members of the committee. This is anything menard from the budget and elective analysts office. Authorize 600 million 2019 Affordable Housing bonds, sale of 260 million of the 2019 Affordable Housing bonds. Sale of 102. 6 million of preservation and seismic safety bonds, and sale of 126. 9 million of Public Health and safety bonds. The bond sales totaled 489. 5 million. Around you can see the proposed uses of these bond proceeds on page 5 of our report. As we noted on page 7 of our report, annual debt service for all three bond sales would be approximately 26. 7 million, which would be recovered from increases to property tax rates. An ordinance authorizing the Spending Authority has been introduced. It will be considered at a later budget and finance meeting. As was said, the sales are consistent with the city debt policy. We, therefore, recommend approval of all four resolutions. Chair fewer thank you very much, mr. Menard. Madam clerk, can we open up this for Public Comment, items 14, please. Clerk yes, madam chair. Operations is checking to see if callers are in the queue. Operations, please let us know if anybody is ready. Please wait until the system indicates you have been unmuted. Please let us know if any callers wish to comment on items 14. Madam chair, there are no callers in the queue. Chair fewer thank you very much. So, colleagues, any comments or questions for our presenters at all . No. You know, this is pretty commonplace the sale of bonds. So i want to thank our presenters for being here today. And then id like to make a motion to move this as a Committee Report to the full board. Could i please have a roll call vote. Clerk yes. On the motion to recommend items 14 to the full board as a Committee Report. Supervisor haney. Supervisor haney aye. Clerk supervisor mandelman . Supervisor mandelman aye. Clerk chair fewer . Chair fewer aye. Clerk there are three ayes. Chair fewer thank you very much. Any more business before us today . We are adjourned. Thank you very much, colleagues. Thanks. And the Port Commission on tuesday, october 13, 2020. Commission president brandon called the meeting to order at 2 08 p. M. Item one is roll call. President kimberly brandon. [roll call]